UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-21944
-----------
First Trust Exchange-Traded Fund II
--------------------------------------------------
(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
--------------------------------------------------
(Address of principal executive offices)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
--------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (630) 765-8000
----------------
Date of fiscal year end: September 30
--------------
Date of reporting period: March 31, 2019
----------------
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. ss. 3507.
ITEM 1. REPORT TO STOCKHOLDERS.
The registrant's semi-annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940 is as follows:
FIRST TRUST
First Trust Exchange-Traded Fund II
--------------------------------------------------------------------------------
Book 1
First Trust STOXX(R) European Select Dividend Index Fund (FDD)
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund (FFR)
First Trust Dow Jones Global Select Dividend Index Fund (FGD)
First Trust Global Wind Energy ETF (FAN)
First Trust Global Engineering and Construction ETF (FLM)
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund (GRID)
First Trust Indxx Global Natural Resources Income ETF (FTRI)
First Trust Indxx Global Agriculture ETF (FTAG)
First Trust BICK Index Fund (BICK)
First Trust Nasdaq Smartphone Index Fund (FONE)
First Trust NASDAQ Global Auto Index Fund (CARZ)
First Trust Cloud Computing ETF (SKYY)
First Trust International Equity Opportunities ETF (FPXI)
(formerly First Trust International IPO ETF)
First Trust Nasdaq Cybersecurity ETF (CIBR)
----------------------
Semi-Annual Report
March 31, 2019
----------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEMI-ANNUAL REPORT
MARCH 31, 2019
Shareholder Letter....................................................................... 2
Market Overview.......................................................................... 3
Fund Performance Overview
First Trust STOXX(R) European Select Dividend Index Fund (FDD)..................... 4
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund (FFR)........ 6
First Trust Dow Jones Global Select Dividend Index Fund (FGD)...................... 8
First Trust Global Wind Energy ETF (FAN)........................................... 10
First Trust Global Engineering and Construction ETF (FLM).......................... 12
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund (GRID).... 14
First Trust Indxx Global Natural Resources Income ETF (FTRI)....................... 16
First Trust Indxx Global Agriculture ETF (FTAG).................................... 18
First Trust BICK Index Fund (BICK)................................................. 20
First Trust Nasdaq Smartphone Index Fund (FONE).................................... 22
First Trust NASDAQ Global Auto Index Fund (CARZ)................................... 24
First Trust Cloud Computing ETF (SKYY)............................................. 26
First Trust International Equity Opportunities ETF (FPXI).......................... 28
First Trust Nasdaq Cybersecurity ETF (CIBR)........................................ 30
Notes to Fund Performance Overview....................................................... 32
Understanding Your Fund Expenses......................................................... 33
Portfolio of Investments
First Trust STOXX(R) European Select Dividend Index Fund (FDD)..................... 35
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund (FFR)........ 36
First Trust Dow Jones Global Select Dividend Index Fund (FGD)...................... 41
First Trust Global Wind Energy ETF (FAN)........................................... 43
First Trust Global Engineering and Construction ETF (FLM).......................... 46
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund (GRID).... 49
First Trust Indxx Global Natural Resources Income ETF (FTRI)....................... 52
First Trust Indxx Global Agriculture ETF (FTAG).................................... 55
First Trust BICK Index Fund (BICK)................................................. 57
First Trust Nasdaq Smartphone Index Fund (FONE).................................... 59
First Trust NASDAQ Global Auto Index Fund (CARZ)................................... 62
First Trust Cloud Computing ETF (SKYY)............................................. 64
First Trust International Equity Opportunities ETF (FPXI).......................... 65
First Trust Nasdaq Cybersecurity ETF (CIBR)........................................ 67
Statements of Assets and Liabilities..................................................... 68
Statements of Operations................................................................. 72
Statements of Changes in Net Assets...................................................... 76
Financial Highlights..................................................................... 84
Notes to Financial Statements............................................................ 91
Additional Information................................................................... 103
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and its representatives, taking into account the
information currently available to them. Forward-looking statements include all
statements that do not relate solely to current or historical fact. For example,
forward-looking statements include the use of words such as "anticipate,"
"estimate," "intend," "expect," "believe," "plan," "may," "should," "would" or
other words that convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
any series of First Trust Exchange-Traded Fund II (the "Trust") described in
this report (each such series is referred to as a "Fund" and collectively, as
the "Funds") to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. When
evaluating the information included in this report, you are cautioned not to
place undue reliance on these forward-looking statements, which reflect the
judgment of the Advisor and its representatives only as of the date hereof. We
undertake no obligation to publicly revise or update these forward-looking
statements to reflect events and circumstances that arise after the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that any Fund described in this report will achieve its
investment objective. Each Fund is subject to market risk, which is the
possibility that the market values of securities owned by the Fund will decline
and that the value of the Fund shares may therefore be less than what you paid
for them. Accordingly, you can lose money by investing in a Fund. See "Risk
Considerations" in the Additional Information section of this report for a
discussion of other risks of investing in the Funds.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
www.ftportfolios.com or speak with your financial advisor. Investment returns,
net asset value and share price will fluctuate and Fund shares, when sold, may
be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund
performance on each Fund's webpage at www.ftportfolios.com.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment. It
includes details about each Fund and presents data and analysis that provide
insight into each Fund's performance and investment approach.
By reading the market overview by Robert F. Carey, Chief Market Strategist of
the Advisor, you may obtain an understanding of how the market environment
affected the performance of each Fund. The statistical information that follows
may help you understand each Fund's performance compared to that of relevant
market benchmarks.
It is important to keep in mind that the opinions expressed by personnel of the
Advisor are just that: informed opinions. They should not be considered to be
promises or advice. The opinions, like the statistics, cover the period through
the date on the cover of this report. The material risks of investing in each
Fund are spelled out in its prospectus, statement of additional information, and
other Fund regulatory filings.
Page 1
--------------------------------------------------------------------------------
SHAREHOLDER LETTER
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
MARCH 31, 2019
Dear Shareholders,
First Trust is pleased to provide you with the semi-annual report for certain
series of the First Trust Exchange-Traded Fund II (the "Funds"), which contains
detailed information about the Funds for the six months ended March 31, 2019. We
encourage you to read this report carefully and discuss it with your financial
advisor.
Market volatility was the norm over the last six months. At the close of the
third quarter in September 2018, the markets had moved higher into positive
territory. In fact, all three major U.S. indices (the Nasdaq Composite Index,
the Dow Jones Industrial Average (the "DJIA") and the S&P 500(R) Index) hit
record levels during the third quarter. In October, markets were again very
volatile, surprising analysts and investors alike. Both global markets and U.S.
markets fell on fears of slowing growth, trade wars and higher interest rates.
The DJIA was down 4.98% for October and the MSCI EAFE Index, an index of stocks
in 21 developed markets (excluding the U.S. and Canada), was down 7.96%.
However, as November ended, the DJIA climbed 617 points (2.49%) to its biggest
one-day gain in eight months. The MSCI EAFE Index ended November down slightly.
December held its own shocks as it became the worst December for stocks since
the Great Depression. The DJIA and MSCI EAFE Index ended December with
year-to-date returns of -3.48% and -13.79%, respectively. For the first time in
nine years, the S&P 500(R) Index posted a negative return in 2018, down 4.38%.
During the fourth quarter of 2018, international equities outperformed U.S.
equities. Emerging markets, which suffered throughout most of 2018, dropped
7.50% in the fourth quarter, yet still managed to outperform the U.S. and
developed markets by over 500 basis points. Municipal securities ended 2018 with
a solid gain of 1.69% in the fourth quarter, which saw a distinct return of
volatility in both bond and equity markets. An interest rate rally in the last
two months of the fourth quarter led to solid gains for municipal securities.
As 2019 began, investors wondered if the volatility of 2018 would continue. For
the month of January, the DJIA rose steadily, ending the month up 7.29% from
December's low. The MSCI EAFE Index also trended upward, ending January up
6.57%. At the end of the first quarter, both the DJIA and the MSCI EAFE Index
were up 11.81% and 10.15%, respectively. Municipal securities were steady at
1.57% at the end of the first quarter.
The Federal Reserve (the "Fed") raised interest rates in September 2018 and
again in December 2018 to a target range of 2.25-2.50%, for a total of four
increases in 2018. The Fed had been expected to raise interest rates again in
2019, but they signaled in January that they would take a "patient" approach to
interest rate increases. No interest rate increases are expected in 2019.
While trade tensions have had an impact on markets around the world and could
continue to do so in the future, our First Trust economists believe that the
long-term impact of U.S. tariffs will be to encourage countries to talk about
more equal trade. We continue to believe that the combination of low interest
rates, low inflation and strong corporate earnings still point to a positive
economic environment and further growth, though we understand that past
performance can never guarantee future performance.
We continue to believe that you should invest for the long term and be prepared
for market movements, which can happen at any time. You can do this by keeping
current on your portfolio and speaking regularly with your investment
professional. Markets go up and they also go down, but savvy investors are
prepared for either through careful attention to investment goals.
Thank you for giving First Trust the opportunity to be a part of your financial
plan. We value our relationship with you and will report on the Funds again in
six months.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 2
--------------------------------------------------------------------------------
MARKET OVERVIEW
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEMI-ANNUAL REPORT
MARCH 31, 2019
ROBERT F. CAREY, CFA
SENIOR VICE PRESIDENT AND CHIEF MARKET STRATEGIST
FIRST TRUST ADVISORS L.P.
Mr. Carey is responsible for the overall management of research and analysis of
the First Trust product line. Mr. Carey has over 25 years of experience as an
Equity and Fixed-Income Analyst and is a recipient of the Chartered Financial
Analyst ("CFA") designation. He is a graduate of the University of Illinois at
Champaign-Urbana with a B.S. in Physics. He is also a member of the Investment
Analysts Society of Chicago and the CFA Institute. Mr. Carey has appeared as a
guest on such programs as Bloomberg TV, CNBC, and WBBM Radio, and has been
quoted by several publications, including The Wall Street Journal, The Wall
Street Reporter, Bloomberg News Service and Registered Rep.
STATE OF THE GLOBAL ECONOMY
A semi-annual survey conducted by the National Association for Business
Economics found that approximately 75% of its member panelists expect an
economic recession in the U.S. by the end of 2021, according to its own release.
While only 10% of those polled believe a recession will occur in 2019, 42% see
it happening in 2020 and 25% expect one in 2021. The remaining members either
expressed no opinion or said that the next recession will arrive after 2021. If
the U.S. economy continues to grow over the next two quarters, as we are
forecasting, the current U.S. expansion that commenced in July 2009 will become
the longest in U.S. history, supplanting the previous record from 1991-2001,
according to Business Insider. In our opinion, we see no threat of a recession
in the current climate.
The U.S. economy could benefit moving forward from the repatriation of overseas
profits. The passage of the "Tax Cuts and Jobs Act of 2017" in December 2017
reduced the tax rate on repatriated foreign profits to 15.5% for cash holdings
and 8.0% for more illiquid assets. Data from the Commerce Department indicates
that U.S. companies repatriated $85.9 billion in the fourth quarter of 2018
(most recent), according to Reuters. In 2018, U.S. companies repatriated a
record $664.9 billion, more than four times the $155.1 billion brought back in
2017 and more than double the previous record in 2005. Investment banks and
think tanks estimate that U.S. companies have offshore cash holdings totaling
$1.5 trillion to $2.5 trillion, according to Bloomberg. That is a lot of
potential dry powder that can be used by companies in any number of ways, be it
growth opportunities, including acquisitions, or enhancing shareholder value via
stock buybacks and dividends, in our opinion.
Just a little over a year ago, on March 8, 2018, the Trump administration
enacted new trade tariffs on steel and aluminum imports from the United States'
biggest trading partners. As a result, a serious trade battle ensued between the
U.S. and China, the two largest economies on the globe. While the two countries
have been in the process of negotiating a new trade agreement for several
months, one has yet to be reached. Some economists, as well as the International
Monetary Fund, have trimmed their global growth estimates in recent months due
largely to the uncertainty over the near-term outlook on global trade. We
believe that a new trade agreement between the U.S. and China would be paramount
to fostering a more robust trade climate moving forward, which in turn could
boost estimates on global growth.
GLOBAL EQUITIES MARKETS
For the six-month period ended March 31, 2019, the MSCI World ex USA and MSCI
Emerging Markets indices posted total returns of -3.67% (USD) and 1.71% (USD),
respectively, according to Bloomberg. Over that same period, the U.S. dollar
appreciated 2.26% against a basket of major currencies, as measured by the U.S.
Dollar Index (DXY). The stronger U.S. dollar provided a drag on the performance
of the two foreign stock indices, in our opinion. With respect to U.S. equities,
the S&P 500(R) Index posted a total return of -1.72% during the same period.
Only three of the 11 sectors were up on a total return basis. The top-performers
were Real Estate, Utilities and Consumer Staples, up 13.03%, 12.35% and 6.17%,
respectively, while the worst results came from Energy and Financials, down
11.26% and 5.67%, respectively.
Investors funneled an estimated net $66.66 billion into U.S. Equity mutual funds
and exchange-traded funds (ETFs) for the 12-month period ended March 31, 2019,
more than double the $24.42 billion that went into International Equity mutual
funds and ETFs, according to Morningstar. Investors continue to favor passive
funds over active funds in a big way. Passive U.S. Equity mutual funds and ETFs
reported estimated net inflows totaling $217.16 billion in the period, compared
to estimated net outflows totaling $150.50 billion. Active International Equity
mutual funds and ETFs reported estimated net inflows totaling $94.56 billion,
compared to estimated net outflows totaling $70.14 billion.
ETFGI, an independent research and consultancy firm, reported that total assets
invested in exchange-traded funds/exchange-traded products (ETFs/ETPs) listed
globally reached a record $5.40 trillion in March 2019, up 2.86% from $5.25
trillion at the close of September 2018, according to its own releases. March
marked the 62nd consecutive month of net new cash inflows into ETFs/ETPs listed
globally.
Page 3
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED)
--------------------------------------------------------------------------------
FIRST TRUST STOXX(R) EUROPEAN SELECT DIVIDEND INDEX FUND (FDD)
First Trust STOXX(R) European Select Dividend Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the STOXX(R) Europe Select
Dividend 30 Index (the "STOXX Index"). The shares of the Fund are listed and
trade on the NYSE Arca, Inc. under the ticker symbol "FDD." The Fund will
normally invest at least 90% of its net assets (including investment borrowings)
in the common stocks and depositary receipts that comprise the STOXX Index.
The STOXX Index consists of 30 high dividend-yielding securities selected from
the STOXX(R) Europe 600 Index, including secondary lines of those companies
(where there are multiple lines of equity capital in a company), which covers 18
European countries: Austria, Belgium, Czech Republic, Denmark, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal,
Spain, Sweden, Switzerland and the United Kingdom. In addition, a company must
have a non-negative five-year dividend-per-share growth rate and a
dividend-to-earnings ratio of 60% or less. The STOXX Index is compiled and
maintained by STOXX Limited.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (8/27/07) Ended Ended (8/27/07)
3/31/19 3/31/19 3/31/19 3/31/19 to 3/31/19 3/31/19 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV -1.44% -3.13% 1.88% 8.41% -2.82% 9.76% 124.23% -28.23%
Market Price -1.21% -3.05% 1.77% 8.10% -2.82% 9.19% 117.94% -28.27%
INDEX PERFORMANCE
STOXX(R) Europe Select
Dividend 30 Index -1.27% -2.75% 2.21% 8.77% -2.38% 11.53% 131.77% -24.37%
STOXX(R) Europe 600 Index -3.38% -3.93% 1.17% 9.26% 1.39% 6.00% 142.54% 17.30%
MSCI Europe Index -3.26% -3.72% 1.04% 8.95% 1.15% 5.31% 135.60% 14.18%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
-----------------------------
The STOXX(R) Europe Select Dividend 30 Index is the intellectual property
(including registered trademarks) of STOXX Limited, Zug, Switzerland ("STOXX"),
Deutsche Borse 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 Borse Group or their licensors, research partners or data
providers and STOXX, Deutsche Borse 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(R) Europe Select
Dividend 30 Index or its data.
Page 4
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST STOXX(R) EUROPEAN SELECT DIVIDEND INDEX FUND (FDD) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Financials 40.54%
Utilities 18.95
Real Estate 13.80
Energy 9.84
Industrials 6.73
Communication Services 6.06
Health Care 4.08
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
SSE PLC 5.68%
Intesa Sanpaolo S.p.A. 4.96
Royal Dutch Shell PLC, Class B 4.40
Societe Generale S.A. 4.11
GlaxoSmithKline PLC 4.08
UBS Group AG 4.01
Unibail-Rodamco-Westfield 3.91
National Grid PLC 3.88
Aareal Bank AG 3.79
Proximus S.A., DP 3.69
------
Total 42.51%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2008 - MARCH 31, 2019
First Trust STOXX(R) European STOXX(R) Europe Select STOXX(R)Europe MSCI Europe
Select Dividend Index Fund Dividend 30 Index 600 Index Index
----------------------------- ---------------------- --------------- -----------
9/30/08 $10,000 $10,000 $10,000 $10,000
3/31/09 3,201 3,263 4,836 4,846
9/30/09 9,317 9,523 10,206 10,157
3/31/10 9,086 9,347 10,364 10,297
9/30/10 9,228 9,516 10,496 10,424
3/31/11 10,214 10,551 11,691 11,597
9/30/11 8,610 8,953 9,254 9,193
3/31/12 9,261 9,577 10,810 10,722
9/30/12 9,276 9,602 10,892 10,784
3/31/13 9,268 9,608 12,011 11,853
9/30/13 10,509 10,928 13,639 13,397
3/31/14 11,756 12,244 15,092 14,757
9/30/14 11,421 11,913 14,451 14,177
3/31/15 11,226 11,745 14,359 14,028
9/30/15 10,519 10,973 13,285 12,854
3/31/16 10,804 11,332 13,289 12,844
9/30/16 10,927 11,457 13,577 13,174
3/31/17 11,472 12,077 14,506 14,097
9/30/17 12,995 13,682 16,608 16,111
3/31/18 13,320 14,040 16,655 16,140
9/30/18 13,091 13,829 16,560 16,063
3/31/19 12,902 13,653 16,000 15,539
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 1, 2013 through March
31, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/1/13 - 9/30/14 150 81 3 0 16 1 0 1
10/1/14 - 9/30/15 145 32 2 0 63 10 0 0
10/1/15 - 9/30/16 158 27 2 0 54 12 0 0
10/1/16 - 9/30/17 181 30 0 0 38 2 0 0
10/1/17 - 9/30/18 147 4 0 0 96 4 0 0
10/1/18 - 3/31/19 46 1 1 0 75 0 0 1
Page 5
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST FTSE EPRA/NAREIT DEVELOPED MARKETS REAL ESTATE INDEX FUND (FFR)
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund (the
"Fund") seeks investment results that correspond generally to the price and
yield (before the Fund's fees and expenses) of an equity index called the FTSE
EPRA/NAREIT Developed Index (the "FTSE Index"). The shares of the Fund are
listed and trade on the NYSE Arca, Inc. under the ticker symbol "FFR." The Fund
will normally invest at least 90% of its net assets (including investment
borrowings) in the common stocks and depositary receipts that comprise the FTSE
Index.
The FTSE Index is compiled and maintained by FTSE International Limited. The
FTSE Index is modified market cap weighted based on free float market
capitalization and includes the securities of listed real estate companies or
real estate investment trusts ("REITs") in the FTSE EPRA/NAREIT North America
Series, the FTSE EPRA/NAREIT Europe Series and the FTSE EPRA/NAREIT Asia Series.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (8/27/07) Ended Ended (8/27/07)
3/31/19 3/31/19 3/31/19 3/31/19 to 3/31/19 3/31/19 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV 8.15% 13.48% 6.59% 13.99% 3.10% 37.61% 270.29% 42.53%
Market Price 8.60% 13.84% 6.60% 14.10% 3.12% 37.67% 273.92% 42.72%
INDEX PERFORMANCE
FTSE EPRA/NAREIT
Developed Index 8.59% 14.42% 7.37% 14.90% 3.95% 42.68% 301.08% 56.77%
S&P Global REIT Index 7.46% 13.93% 6.63% 14.84% 3.57% 37.88% 299.13% 50.17%
MSCI World REIT Index 10.88% 16.61% 8.08% 15.04% 3.52% 47.48% 306.06% 49.34%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
-----------------------------
The FTSE EPRA/NAREIT Developed Index is calculated by FTSE International Limited
("FTSE"). FTSE does not sponsor, endorse or promote the First Trust FTSE
EPRA/NAREIT Developed Markets Real Estate Index Fund. All copyright in the index
values and constituent list vests in FTSE and/or its licensors. First Trust and
the Fund have obtained full license from FTSE to use such copyright in the
creation of the First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index
Fund. "FTSE(R)", "FT-SE(R)" and "Footsie(R)" are trademarks jointly owned by the
London Stock Exchange Plc and the Financial Times Limited and are used by FTSE
under license. "NAREIT(R)" is the trademark of the National Association of Real
Estate Investment Trusts and "EPRA(R)" is the trademark of the European Public
Real Estate Association and are used by FTSE under license.
Page 6
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST FTSE EPRA/NAREIT DEVELOPED MARKETS REAL ESTATE INDEX FUND (FFR)
(CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Real Estate 99.76%
Health Care 0.15
Consumer Discretionary 0.09
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Simon Property Group, Inc. 3.58%
Prologis, Inc. 2.87
Public Storage 2.06
Welltower, Inc. 1.84
AvalonBay Communities, Inc. 1.77
Equity Residential 1.72
Vonovia SE 1.72
Link REIT 1.58
Digital Realty Trust, Inc. 1.56
Sun Hung Kai Properties Ltd. 1.55
------
Total 20.25%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2008 - MARCH 31, 2019
First Trust FTSE EPRA/NAREIT Developed FTSE EPRA/NAREIT S&P Global MSCI World
Markets Real Estate Index Fund Developed Index REIT Index REIT Index
-------------------------------------- ---------------- ---------- ----------
9/30/08 $10,000 $10,000 $10,000 $10,000
3/31/09 3,849 3,909 3,762 3,678
9/30/09 8,733 8,955 8,055 7,703
3/31/10 9,434 9,719 8,836 8,326
9/30/10 10,260 10,604 9,624 9,016
3/31/11 11,171 11,599 10,824 10,261
9/30/11 9,422 9,874 9,463 9,031
3/31/12 11,444 11,968 11,448 10,887
9/30/12 12,269 12,894 12,188 11,704
3/31/13 13,774 14,511 13,624 12,810
9/30/13 13,498 14,306 13,003 12,192
3/31/14 13,915 14,808 13,778 12,816
9/30/14 14,289 15,266 14,266 13,422
3/31/15 16,022 17,186 16,215 15,136
9/30/15 14,713 15,811 14,853 14,093
3/31/16 16,105 17,403 16,659 15,924
9/30/16 16,912 18,317 17,365 16,561
3/31/17 16,298 17,727 16,716 15,968
9/30/17 17,025 18,596 17,189 16,522
3/31/18 16,872 18,462 16,675 16,210
9/30/18 17,704 19,453 17,679 17,046
3/31/19 19,147 21,124 18,998 18,901
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 1, 2013 through March
31, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/1/13 - 9/30/14 158 21 0 0 70 3 0 0
10/1/14 - 9/30/15 67 14 0 0 127 44 0 0
10/1/15 - 9/30/16 35 0 0 0 184 33 1 0
10/1/16 - 9/30/17 144 4 0 0 102 1 0 0
10/1/17 - 9/30/18 34 0 0 1 209 7 0 0
10/1/18 - 3/31/19 43 1 0 0 79 0 1 0
Page 7
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD)
First Trust Dow Jones Global Select Dividend Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the Dow Jones Global Select
Dividend Index(SM) (the "Select Dividend Index"). The shares of the Fund are
listed and trade on the NYSE Arca, Inc. under the ticker symbol "FGD." The Fund
will normally invest at least 90% of its net assets (including investment
borrowings) in the common stocks and depositary receipts that comprise the
Select Dividend Index.
The Select Dividend Index is an indicated annual dividend yield weighted index
of 100 stocks selected from the developed-market portion of the Dow Jones World
Index(SM). Indicated annual dividend yield is a stock's unadjusted indicated
annual dividend (not including any special dividends) divided by its unadjusted
price.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (11/21/07) Ended Ended (11/21/07)
3/31/19 3/31/19 3/31/19 3/31/19 to 3/31/19 3/31/19 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV -5.29% -4.03% 1.19% 11.83% 2.60% 6.07% 205.89% 33.84%
Market Price -4.89% -3.67% 1.17% 11.83% 2.60% 6.00% 205.93% 33.92%
INDEX PERFORMANCE
Dow Jones Global Select
Dividend Index(SM) -5.29% -3.75% 1.27% 11.95% 2.74% 6.54% 209.25% 35.95%
Dow Jones World Developed
Markets Index(SM) -2.90% 3.26% 6.91% 12.86% 5.39% 39.69% 235.19% 81.56%
MSCI World Index -2.61% 4.08% 6.78% 12.38% 4.95% 38.80% 221.33% 73.02%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
-----------------------------
The Index is a product of S&P Dow Jones Indices LLC or its affiliates ("SPDJI"),
and has been licensed for use by First Trust. Standard & Poor's(R) and S&P(R)
are registered trademarks of Standard & Poor's Financial Services LLC ("S&P");
Dow Jones(R) 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 Index 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.
Page 8
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Financials 42.17%
Consumer Discretionary 17.34
Communication Services 14.75
Utilities 7.01
Energy 5.10
Industrials 4.07
Information Technology 3.41
Consumer Staples 3.20
Materials 2.95
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
GameStop Corp., Class A 1.86%
Standard Life Aberdeen PLC 1.70
Intesa Sanpaolo S.p.A. 1.46
Harvey Norman Holdings Ltd. 1.45
Galliford Try PLC 1.37
Azimut Holding S.p.A. 1.36
Dixons Carphone PLC 1.31
BE Semiconductor Industries N.V. 1.29
National Australia Bank Ltd. 1.28
CenturyLink, Inc. 1.28
------
Total 14.36%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2008 - MARCH 31, 2019
First Trust Dow Jones Global Dow Jones Global Select Dow Jones World Developed MSCI World
Select Dividend Index Fund Dividend Index(SM) Markets Index(SM) Index
---------------------------- ----------------------- ------------------------- ----------
9/30/08 $10,000 $10,000 $10,000 $10,000
3/31/09 4,375 6,325 5,416 5,385
9/30/09 11,180 11,369 9,935 9,771
3/31/10 11,612 11,841 10,724 10,498
9/30/10 12,335 12,576 10,712 10,432
3/31/11 13,736 14,023 12,297 11,911
9/30/11 12,141 12,472 10,265 9,979
3/31/12 13,733 13,982 12,336 11,978
9/30/12 14,275 14,561 12,488 12,133
3/31/13 15,014 15,308 13,887 13,397
9/30/13 16,329 16,675 15,165 14,585
3/31/14 17,954 18,358 16,625 15,950
9/30/14 17,727 18,118 16,982 16,364
3/31/15 17,208 17,603 17,631 16,912
9/30/15 15,155 15,429 16,194 15,532
3/31/16 16,119 16,518 17,056 16,329
9/30/16 17,228 17,592 18,131 17,296
3/31/17 18,186 18,665 19,663 18,740
9/30/17 19,665 20,181 21,511 20,438
3/31/18 19,846 20,320 22,492 21,274
9/30/18 20,110 20,651 23,920 22,736
3/31/19 19,046 19,559 23,226 22,143
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 1, 2013 through March
31, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/1/13 - 9/30/14 219 16 0 0 17 0 0 0
10/1/14 - 9/30/15 105 3 0 0 136 8 0 0
10/1/15 - 9/30/16 65 2 0 0 176 10 0 0
10/1/16 - 9/30/17 184 3 0 0 62 2 0 0
10/1/17 - 9/30/18 171 3 0 0 74 2 1 0
10/1/18 - 3/31/19 82 3 0 0 37 1 0 1
Page 9
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
First Trust Global Wind Energy ETF (the "Fund") seeks investment results that
correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the ISE Clean Edge Global Wind Energy(TM)
Index (the "Index"). The shares of the Fund are listed and trade on the NYSE
Arca, Inc. under the ticker symbol "FAN." The Fund will normally invest at least
90% of its net assets (including investment borrowings) in the common stocks and
depositary receipts that comprise the Index.
The Index is developed, maintained and sponsored by Nasdaq, Inc. The Index
provides a benchmark for investors interested in tracking public companies
throughout the world that are active in the wind energy industry based on
analysis of the products and services offered by those companies.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (6/16/08) Ended Ended (6/16/08)
3/31/19 3/31/19 3/31/19 3/31/19 to 3/31/19 3/31/19 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV 5.66% 0.73% 4.85% 4.55% -5.44% 26.75% 56.11% -45.34%
Market Price 6.01% 0.43% 4.86% 4.44% -5.45% 26.80% 54.48% -45.39%
INDEX PERFORMANCE
ISE Clean Edge Global Wind
Energy(TM) Index 5.92% 1.67% 5.62% 5.41% -4.69% 31.47% 69.36% -40.48%
Russell 3000(R) Index -2.27% 8.77% 10.36% 16.00% 9.29% 63.67% 341.05% 160.73%
MSCI World Index -2.61% 4.08% 6.78% 12.38% 5.56% 38.80% 221.33% 79.35%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
-----------------------------
The Fund is not sponsored, endorsed, sold or promoted by Nasdaq, Inc., or its
affiliates (Nasdaq, Inc., with its affiliates, are referred to as the
"Corporations"). The Corporations' only relationship to First Trust is in the
licensing of Nasdaq, Inc. and certain trade names of the Corporations and the
use of the Index which is determined, composed and calculated by Nasdaq, Inc.
without regard to First Trust or the Fund. The Fund has not been passed on by
the Corporations as to its legality or suitability. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 10
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Utilities 59.81%
Industrials 38.19
Materials 1.90
Energy 0.10
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Orsted A/S 8.28%
Siemens Gamesa Renewable Energy S.A. 8.25
Vestas Wind Systems A/S 8.01
China Longyuan Power Group Corp., Ltd.,
Class H 6.26
Northland Power, Inc. 6.24
Pattern Energy Group, Inc., Class A 4.18
Renewables Infrastructure Group (The)
Ltd. 3.90
Boralex, Inc., Class A 3.22
Nordex SE 3.12
Xinjiang Goldwind Science & Technology
Co., Ltd., Class H 2.73
------
Total 54.19%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2008 - MARCH 31, 2019
First Trust Global ISE Clean Edge Global Russell 3000(R) MSCI World
Wind Energy ETF Wind Energy(TM) Index Index Index
------------------ --------------------- --------------- ----------
9/30/08 $10,000 $10,000 $10,000 $10,000
3/31/09 5,497 5,566 6,888 6,890
9/30/09 8,574 8,729 9,359 9,771
3/31/10 7,181 7,358 10,500 10,498
9/30/10 5,565 5,743 10,385 10,431
3/31/11 6,377 6,592 12,328 11,910
9/30/11 4,426 4,620 10,442 9,978
3/31/12 4,295 4,477 13,214 11,977
9/30/12 3,711 3,892 13,596 12,133
3/31/13 4,259 4,466 15,139 13,397
9/30/13 5,813 6,131 16,532 14,585
3/31/14 6,770 7,169 18,562 15,950
9/30/14 6,520 6,919 19,468 16,363
3/31/15 6,275 6,692 20,856 16,911
9/30/15 6,040 6,451 19,371 15,531
3/31/16 6,842 7,373 20,785 16,328
9/30/16 7,877 8,502 22,269 17,295
3/31/17 7,823 8,519 24,538 18,739
9/30/17 8,367 9,118 26,432 20,437
3/31/18 8,519 9,269 27,925 21,273
9/30/18 8,122 8,897 31,078 22,734
3/31/19 8,582 9,424 30,373 22,141
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 1, 2013 through March
31, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/1/13 - 9/30/14 123 31 0 0 83 15 0 0
10/1/14 - 9/30/15 58 8 0 0 130 53 2 1
10/1/15 - 9/30/16 102 20 5 1 96 27 2 0
10/1/16 - 9/30/17 138 31 0 0 79 3 0 0
10/1/17 - 9/30/18 85 13 0 0 140 12 1 0
10/1/18 - 3/31/19 16 0 0 0 94 14 0 0
Page 11
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST GLOBAL ENGINEERING AND CONSTRUCTION ETF (FLM)
First Trust Global Engineering and Construction ETF (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the ISE Global Engineering
and Construction(TM) Index (the "Index"). The shares of the Fund are listed and
trade on the NYSE Arca, Inc. under the ticker symbol "FLM." The Fund will
normally invest in at least 90% of its net assets (including investment
borrowings) in the common stocks and depositary receipts that comprise the
Index.
The Index is developed, maintained and sponsored by Nasdaq, Inc. The Index
provides a benchmark for investors interested in tracking public companies
throughout the world that are active in the engineering and construction
industries, based on analysis of the products and services offered by those
companies.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (10/13/08) Ended Ended (10/13/08)
3/31/19 3/31/19 3/31/19 3/31/19 to 3/31/19 3/31/19 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV -11.60% -10.75% 0.67% 8.10% 6.63% 3.42% 117.93% 95.85%
Market Price -11.30% -10.49% 0.71% 8.00% 6.64% 3.59% 115.98% 95.89%
INDEX PERFORMANCE
ISE Global Engineering and
Construction(TM) Index -11.16% -9.59% 1.76% 9.27% 8.19% 9.12% 142.67% 127.80%
Russell 3000(R) Index -2.27% 8.77% 10.36% 16.00% 12.87% 63.67% 341.05% 254.97%
MSCI World Industrials Index -4.25% -0.49% 6.36% 13.74% 10.36% 36.13% 262.44% 180.55%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
-----------------------------
The Fund is not sponsored, endorsed, sold or promoted by Nasdaq, Inc., or its
affiliates (Nasdaq, Inc., with its affiliates, are referred to as the
"Corporations"). The Corporations' only relationship to First Trust is in the
licensing of Nasdaq, Inc. and certain trade names of the Corporations and the
use of the Index which is determined, composed and calculated by Nasdaq, Inc.
without regard to First Trust or the Fund. The Fund has not been passed on by
the Corporations as to its legality or suitability. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 12
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST GLOBAL ENGINEERING AND CONSTRUCTION ETF (FLM) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Industrials 96.19%
Energy 2.98
Utilities 0.83
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Vinci S.A. 3.43%
Jacobs Engineering Group, Inc. 3.42
ACS Actividades de Construccion y
Servicios S.A. 3.11
Taisei Corp. 2.95
Quanta Services, Inc. 2.85
Skanska AB, Class B 2.70
Kajima Corp. 2.69
MasTec, Inc. 2.67
Eiffage S.A. 2.65
Bouygues S.A. 2.64
------
Total 29.11%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
OCTOBER 13, 2008 - MARCH 31, 2019
First Trust Global Engineering ISE Global Engineering and Russell 3000(R) MSCI World
and Construction ETF Construction(TM) Index Index Industrials Index
------------------------------ -------------------------- --------------- -----------------
10/13/08 $10,000 $10,000 $10,000 $10,000
3/31/09 8,987 9,387 8,048 7,741
9/30/09 13,384 14,102 10,935 11,514
3/31/10 13,471 14,262 12,268 12,962
9/30/10 13,522 14,368 12,133 13,182
3/31/11 16,745 17,882 14,404 15,710
9/30/11 11,724 12,719 12,200 12,196
3/31/12 14,306 15,435 15,439 15,071
9/30/12 13,827 15,023 15,885 14,748
3/31/13 15,249 16,595 17,688 16,944
9/30/13 17,288 18,980 19,316 18,904
3/31/14 18,939 20,876 21,687 20,610
9/30/14 17,644 19,534 22,746 20,448
3/31/15 17,190 19,318 24,369 21,168
9/30/15 16,376 18,456 22,634 19,024
3/31/16 17,378 19,732 24,286 21,008
9/30/16 18,407 20,939 26,021 22,434
3/31/17 19,753 22,626 28,674 24,487
9/30/17 21,793 25,067 30,888 27,291
3/31/18 21,948 25,195 32,633 28,194
9/30/18 22,159 25,638 36,317 29,302
3/31/19 19,589 22,777 35,493 28,057
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 1, 2013 through March
31, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/1/13 - 9/30/14 109 0 0 0 136 7 0 0
10/1/14 - 9/30/15 62 2 1 0 170 17 0 0
10/1/15 - 9/30/16 64 3 1 0 159 24 2 0
10/1/16 - 9/30/17 82 0 0 0 163 6 0 0
10/1/17 - 9/30/18 85 9 0 0 148 9 0 0
10/1/18 - 3/31/19 74 6 0 0 42 2 0 0
Page 13
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund (the
"Fund") seeks investment results that correspond generally to the price and
yield (before the Fund's fees and expenses) of an equity index called the NASDAQ
OMX(R) Clean Edge(R) Smart Grid Infrastructure Index(SM) (the "Index"). The
shares of the Fund are listed and trade on The Nasdaq Stock Market LLC under the
ticker symbol "GRID." The Fund will normally invest at least 90% of its net
assets (including investment borrowings) in the common stocks and depositary
receipts that comprise the Index.
The Index is designed to act as a transparent and liquid benchmark for the grid
and electric energy infrastructure sector. The Index includes companies that are
primarily engaged and involved in electric grid, electric meters and devices,
networks, energy storage and management, and enabling software used by the smart
grid infrastructure sector. Clean Edge, Inc. provides a list of companies to be
included in the Index to Nasdaq, Inc., which then compiles the Index.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months 1 Year 5 Years Inception 5 Years Inception
Ended Ended Ended (11/16/09) Ended (11/16/09)
3/31/19 3/31/19 3/31/19 to 3/31/19 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV -7.99% -10.77% 3.65% 5.21% 19.63% 60.90%
Market Price -8.74% -10.78% 3.61% 5.20% 19.42% 60.78%
INDEX PERFORMANCE
NASDAQ OMX(R) Clean Edge(R) Smart Grid
Infrastructure Index(SM) -7.69% -10.02% 4.35% 6.02% 23.70% 72.87%
Russell 3000(R) Index -2.27% 8.77% 10.36% 12.85% 63.67% 210.48%
S&P Composite 1500(R) Industrials Index -3.94% 2.81% 9.20% 13.31% 55.25% 222.36%
MSCI World Industrials Index -4.25% -0.49% 6.36% 9.50% 36.13% 134.06%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
-----------------------------
NASDAQ(R), NASDAQ OMX(R), and Clean Edge(R) are the registered trademarks (the
"Marks") of Nasdaq, Inc. ("Nasdaq") and Clean Edge, Inc. ("Clean Edge")
respectively. Nasdaq and Clean Edge are, collectively with their affiliates, the
"Corporations." The Marks 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 Fund should
not be construed in any way as investment advice by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 14
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
(CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Industrials 45.74%
Information Technology 31.20
Consumer Discretionary 12.21
Utilities 10.85
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Schneider Electric SE 8.37%
Red Electrica Corp., S.A. 8.18
Aptiv PLC 7.94
ABB Ltd. 7.86
Prysmian S.p.A. 7.69
Quanta Services, Inc. 4.40
Advanced Energy Industries, Inc. 4.09
nVent Electric PLC 4.08
Itron, Inc. 3.65
SolarEdge Technologies, Inc. 3.51
------
Total 59.77%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
NOVEMBER 16, 2009 - MARCH 31, 2019
First Trust NASDAQ(R) NASDAQ OMX(R) Russell S&P Composite MSCI World
Clean Edge(R) Smart Grid Clean Edge(R) Smart Grid 3000(R) 1500(R) Industrials Industrials
Infrastructure Index Fund Infrastructure Index(SM) Index Index Index
------------------------- ------------------------ ------- ------------------- -----------
11/16/09 $10,000 $10,000 $10,000 $10,000 $10,000
3/31/10 10,257 10,297 10,731 11,205 10,814
9/30/10 10,154 10,236 10,614 11,249 10,997
3/31/11 11,775 11,912 12,600 13,832 13,106
9/30/11 8,161 8,341 10,672 10,743 10,174
3/31/12 9,553 9,741 13,505 14,081 12,572
9/30/12 9,860 10,103 13,895 14,004 12,302
3/31/13 10,996 11,314 15,472 16,373 14,134
9/30/13 11,678 12,082 16,896 18,307 15,769
3/31/14 13,450 13,973 18,971 20,766 17,193
9/30/14 12,401 12,931 19,897 21,102 17,057
3/31/15 12,583 13,168 21,316 22,495 17,657
9/30/15 11,164 11,698 19,798 20,347 15,868
3/31/16 12,302 12,977 21,243 22,980 17,523
9/30/16 14,035 14,828 22,760 24,368 18,713
3/31/17 15,064 15,986 25,079 27,424 20,425
9/30/17 17,786 18,927 27,015 29,969 22,764
3/31/18 18,037 19,213 28,541 31,357 23,517
9/30/18 17,492 18,727 31,763 33,558 24,441
3/31/19 16,094 17,287 31,042 32,236 23,402
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 1, 2013 through March
31, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/1/13 - 9/30/14 186 15 0 0 44 7 0 0
10/1/14 - 9/30/15 72 28 13 2 99 32 4 2
10/1/15 - 9/30/16 68 48 2 0 98 37 0 0
10/1/16 - 9/30/17 150 29 4 5 59 4 0 0
10/1/17 - 9/30/18 167 20 0 1 44 19 0 0
10/1/18 - 3/31/19 34 3 0 0 86 1 0 0
Page 15
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI)
First Trust Indxx Global Natural Resources Income ETF (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the Indxx Global Natural
Resources Income Index (the "Index"). The shares of the Fund are listed and
traded on The Nasdaq Stock Market LLC under the ticker symbol "FTRI." The Fund
will normally invest at least 90% of its net assets (including investment
borrowings) in the common stocks and depositary receipts that comprise the
Index.
The Index is owned and is developed, maintained and sponsored by Indxx, LLC. The
Index is a 50-stock free float adjusted market capitalization weighted index
designed to measure the market performance of the 50 highest dividend yielding
companies involved in the upstream (i.e., generally exploration and production)
segment of the natural resources sector.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months 1 Year 5 Years Inception 5 Years Inception
Ended Ended Ended (3/11/10) Ended (3/11/10)
3/31/19 3/31/19 3/31/19 to 3/31/19 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV -1.33% 2.90% -8.12% -6.85% -34.51% -47.42%
Market Price -0.70% 3.80% -8.01% -6.80% -34.12% -47.15%
INDEX PERFORMANCE
Indxx Global Natural Resources Income Index* -0.97% 4.25% N/A N/A N/A N/A
MSCI All Country World Materials Index -3.74% -3.02% 2.82% 2.21% 14.94% 21.83%
MSCI All Country World Index -2.13% 2.68% 6.45% 8.13% 36.71% 102.90%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
* Effective on the close of business December 18, 2015, the Fund's underlying
index changed from the ISE Global Copper(TM) 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 new underlying index had an inception date of June 1, 2015, it
was not in existence for all the periods disclosed.
-----------------------------
"Indxx" and "Indxx Global Natural Resources Income Index" are trademarks of
Indxx, LLC ("Licensor") and have been licensed for use for certain purposes by
First Trust. First Trust Indxx Global Natural Resources Income ETF is based on
the Index and is not sponsored, endorsed, sold or promoted by Licensor, and
Licensor makes no representation regarding the advisability of trading in such
product.
Page 16
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Energy 47.49%
Materials 30.17
Utilities 14.71
Consumer Staples 7.24
Industrials 0.39
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Exxon Mobil Corp. 10.19%
Royal Dutch Shell PLC, Class A, ADR 10.03
Rio Tinto PLC 9.86
TOTAL S.A., ADR 9.67
International Paper Co. 4.57
Tatneft PJSC 4.50
Woodside Petroleum Ltd. 4.46
UPM-Kymmene OYJ 4.36
Veolia Environnement S.A. 4.24
Mowi ASA 3.47
------
Total 65.35%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
MARCH 11, 2010 - MARCH 31, 2019
First Trust Indxx Global MSCI All Country MSCI All Country
Natural Resources Income ETF World Materials Index World Index
---------------------------- --------------------- ----------------
3/11/10 $10,000 $10,000 $10,000
3/31/10 10,297 10,291 10,172
9/30/10 11,208 10,440 10,220
3/31/11 14,567 12,429 11,604
9/30/11 8,910 9,096 9,606
3/31/12 10,984 10,529 11,519
9/30/12 10,141 10,066 11,621
3/31/13 9,256 10,081 12,731
9/30/13 8,085 10,105 13,681
3/31/14 8,027 10,600 14,841
9/30/14 7,893 10,309 15,230
3/31/15 6,189 9,852 15,646
9/30/15 4,144 7,880 14,216
3/31/16 3,874 8,628 14,967
9/30/16 4,152 9,775 15,916
3/31/17 4,436 10,849 17,218
9/30/17 4,794 12,098 18,885
3/31/18 5,108 12,564 19,761
9/30/18 5,327 12,657 20,731
3/31/19 5,256 12,184 20,289
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 1, 2013 through March
31, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/1/13 - 9/30/14 82 7 0 0 135 25 3 0
10/1/14 - 9/30/15 104 14 2 0 119 13 0 0
10/1/15 - 9/30/16 74 21 2 1 114 31 10 0
10/1/16 - 9/30/17 115 7 0 0 129 0 0 0
10/1/17 - 9/30/18 51 19 0 0 93 85 3 0
10/1/18 - 3/31/19 87 23 3 1 10 0 0 0
Page 17
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INDXX GLOBAL AGRICULTURE ETF (FTAG)
First Trust Indxx Global Agriculture ETF (the "Fund") seeks investment results
that correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the Indxx Global Agriculture Index (the
"Index"). The shares of the Fund are listed and traded on The Nasdaq Stock
Market LLC under the ticker symbol "FTAG." The Fund will normally invest at
least 90% of its net assets (including investment borrowings) in the common
stocks and depositary receipts that comprise the Index.
The Index is owned and is developed, maintained and sponsored by Indxx, LLC. The
Index is a market capitalization weighted index designed to measure the
performance of companies that are directly or indirectly engaged in improving
agricultural yields. The Index is comprised of farmland companies and firms
involved in chemicals and fertilizers, seeds, irrigation equipment, and farm
machinery.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months 1 Year 5 Years Inception 5 Years Inception
Ended Ended Ended (3/11/10) Ended (3/11/10)
3/31/19 3/31/19 3/31/19 to 3/31/19 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV -10.52% -10.60% -16.79% -17.56% -60.12% -82.60%
Market Price -10.55% -10.93% -16.90% -17.59% -60.36% -82.65%
INDEX PERFORMANCE
Indxx Global Agriculture Index* -10.44% -9.64% N/A N/A N/A N/A
MSCI All Country World Index -2.13% 2.68% 6.45% 8.13% 36.71% 102.90%
MSCI All Country World Materials Index -3.74% -3.02% 2.82% 2.21% 14.94% 21.83%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
* Effective on the close of business December 18, 2015, the Fund's underlying
index changed from the ISE Global Platinum(TM) 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 new underlying index had an inception date of June 1, 2015, it was
not in existence for all the periods disclosed.
-----------------------------
"Indxx" and "Indxx Global Agriculture Index" are trademarks of Indxx, LLC
("Licensor") and have been licensed for use for certain purposes by First Trust.
First Trust Indxx Global Agriculture ETF is based on the Index and is not
sponsored, endorsed, sold or promoted by Licensor, and Licensor makes no
representation regarding the advisability of trading in such product.
Page 18
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INDXX GLOBAL AGRICULTURE ETF (FTAG) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Materials 58.55%
Industrials 23.86
Health Care 8.07
Consumer Staples 6.51
Consumer Discretionary 3.01
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Deere & Co. 10.34%
DowDuPont, Inc. 10.02
BASF SE 9.77
Bayer AG 8.07
Nutrien Ltd. 4.53
Petronas Chemicals Group Bhd 4.47
Kubota Corp. 4.44
Wilmar International Ltd. 3.89
CNH Industrial N.V. 3.44
Evonik Industries AG 3.16
------
Total 62.13%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
MARCH 11, 2010 - MARCH 31, 2019
First Trust Indxx MSCI All Country MSCI All Country World
Global Agriculture ETF World Index Materials Index
---------------------- ---------------- ----------------------
3/11/10 $10,000 $10,000 $10,000
3/31/10 10,337 10,172 10,291
9/30/10 9,794 10,220 10,440
3/31/11 10,930 11,604 12,429
9/30/11 6,416 9,606 9,096
3/31/12 6,576 11,519 10,529
9/30/12 4,871 11,621 10,066
3/31/13 4,667 12,731 10,081
9/30/13 4,392 13,681 10,105
3/31/14 4,363 14,841 10,600
9/30/14 3,924 15,230 10,309
3/31/15 3,248 15,646 9,852
9/30/15 1,915 14,216 7,880
3/31/16 1,480 14,967 8,628
9/30/16 1,552 15,916 9,775
3/31/17 1,782 17,218 10,849
9/30/17 1,972 18,885 12,098
3/31/18 1,945 19,761 12,564
9/30/18 1,942 20,731 12,657
3/31/19 1,739 20,289 12,184
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 1, 2013 through March
31, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/1/13 - 9/30/14 103 36 9 0 56 35 12 1
10/1/14 - 9/30/15 96 52 7 1 55 38 3 0
10/1/15 - 9/30/16 37 20 15 16 72 47 22 24
10/1/16 - 9/30/17 120 0 0 0 122 7 2 0
10/1/17 - 9/30/18 171 5 0 0 72 3 0 0
10/1/18 - 3/31/19 15 0 0 0 104 5 0 0
Page 19
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST BICK INDEX FUND (BICK)
The First Trust BICK Index Fund (the "Fund") seeks investment results that
correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the ISE BICK(TM) Index (the "Index"). The
shares of the Fund are listed and trade on The Nasdaq Stock Market LLC under the
ticker symbol "BICK." The Fund will normally invest at least 90% of its net
assets (including investment borrowings) in the common stocks and depositary
receipts that comprise the Index.
The Index is developed, maintained and sponsored by Nasdaq, Inc. The Index is
designed to provide a benchmark for investors interested in tracking some of the
largest and most liquid public companies that are domiciled in Brazil, India,
China (including Hong Kong) and South Korea that are accessible for investment
by U.S. investors.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months 1 Year 5 Years Inception 5 Years Inception
Ended Ended Ended (4/12/10) Ended (4/12/10)
3/31/19 3/31/19 3/31/19 to 3/31/19 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV 3.99% -9.70% 3.55% 0.53% 19.06% 4.86%
Market Price 3.39% -10.41% 3.60% 0.48% 19.34% 4.40%
INDEX PERFORMANCE
ISE BICK(TM) Index 4.56% -7.88% 4.47% 1.43% 24.45% 13.58%
MSCI All Country World Index -2.13% 2.68% 6.45% 7.70% 36.71% 94.55%
MSCI Emerging Markets Index 1.71% -7.28% 3.68% 2.62% 19.80% 26.12%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
-----------------------------
The Fund is not sponsored, endorsed, sold or promoted by Nasdaq, Inc., or its
affiliates (Nasdaq, Inc., with its affiliates, are referred to as the
"Corporations"). The Corporations' only relationship to First Trust is in the
licensing of Nasdaq, Inc. and certain trade names of the Corporations and the
use of the ISE Index which is determined, composed and calculated by Nasdaq,
Inc. without regard to First Trust or the Fund. The Fund has not been passed on
by the Corporations as to its legality or suitability. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 20
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST BICK INDEX FUND (BICK) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Financials 21.90%
Consumer Discretionary 20.42
Information Technology 12.13
Communication Services 11.75
Materials 7.73
Energy 6.90
Industrials 5.68
Health Care 5.48
Consumer Staples 4.08
Utilities 2.73
Real Estate 1.20
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
State Bank of India, GDR 2.19%
ICICI Bank Ltd., ADR 2.09
Reliance Industries Ltd., GDR 2.08
HDFC Bank Ltd., ADR 2.06
Axis Bank Ltd., GDR 2.02
Vedanta Ltd., ADR 1.98
Larsen & Toubro Ltd., GDR 1.97
Dr. Reddy's Laboratories Ltd., ADR 1.93
Infosys Ltd., ADR 1.83
WNS (Holdings) Ltd., ADR 1.81
------
Total 19.96%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
APRIL 12, 2010 - MARCH 31, 2019
First Trust BICK ISE BICK(TM) MSCI All Country MSCI Emerging
Index Fund Index World Index Markets Index
---------------- ------------ ---------------- -------------
4/12/10 $10,000 $10,000 $10,000 $10,000
9/30/10 10,417 10,488 9,800 10,487
3/31/11 11,231 11,311 11,127 11,486
9/30/11 7,586 7,795 9,211 8,793
3/31/12 8,996 9,139 11,045 10,475
9/30/12 8,328 8,515 11,143 10,282
3/31/13 8,480 8,665 12,207 10,656
9/30/13 8,385 8,650 13,119 10,383
3/31/14 8,808 9,127 14,231 10,527
9/30/14 9,050 9,432 14,604 10,829
3/31/15 8,497 8,920 15,003 10,572
9/30/15 6,865 7,163 13,632 8,740
3/31/16 7,383 7,773 14,352 9,300
9/30/16 8,512 8,958 15,262 10,207
3/31/17 9,234 9,764 16,510 10,901
9/30/17 10,822 11,512 18,108 12,499
3/31/18 11,613 12,333 18,948 13,600
9/30/18 10,085 10,867 19,878 12,398
3/31/19 10,487 11,358 19,455 12,610
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 1, 2013 through March
31, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/1/13 - 9/30/14 28 1 0 0 131 82 10 0
10/1/14 - 9/30/15 38 6 0 0 116 79 13 0
10/1/15 - 9/30/16 34 0 0 0 113 97 8 1
10/1/16 - 9/30/17 65 26 0 0 51 99 10 0
10/1/17 - 9/30/18 120 37 2 0 76 14 2 0
10/1/18 - 3/31/19 33 4 1 0 61 24 1 0
Page 21
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ SMARTPHONE INDEX FUND (FONE)
The First Trust Nasdaq Smartphone Index Fund (the "Fund") seeks investment
results that correspond generally to the price and yield (before the Fund's fees
and expenses) of an equity index called the Nasdaq CTA Smartphone Index(SM) (the
"Index"). The shares of the Fund are listed and trade on The Nasdaq Stock Market
LLC under the ticker symbol "FONE." The Fund will normally invest at least 90%
of its net assets (including investment borrowings) in the common stocks and
depositary receipts that comprise the Index.
The Index is owned, calculated and maintained by Nasdaq, Inc. (the "Index
Provider"). The Index Provider and the Consumer Technology Association ("CTA")
have jointly developed the eligibility and selection criteria and rules for the
Index. The Index is designed to track the performance of companies engaged in
the smartphone segment of the telecommunications and technology sectors as
classified by CTA. To be eligible for the Index, issuers of the securities must
be identified as being engaged in the smartphone industry by the CTA. Component
securities must be listed on an index-eligible global stock exchange, as
determined by the Index Provider, have a minimum worldwide market capitalization
of $250 million, a minimum three-month average daily dollar trading volume of $1
million and a minimum free float of 20%.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months 1 Year 5 Years Inception 5 Years Inception
Ended Ended Ended (2/17/11) Ended (2/17/11)
3/31/19 3/31/19 3/31/19 to 3/31/19 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV -1.44% -5.89% 8.01% 7.37% 47.00% 78.14%
Market Price -1.39% -6.37% 8.03% 7.31% 47.13% 77.30%
INDEX PERFORMANCE
Nasdaq CTA Smartphone Index(SM) -1.30% -4.87% 8.94% 8.32% 53.43% 91.29%
MSCI World Index -2.61% 4.08% 6.78% 7.74% 38.80% 83.08%
MSCI All Country World Information Technology Index -1.53% 8.61% 15.69% 13.37% 107.27% 176.81%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
-----------------------------
Nasdaq(R), and Nasdaq CTA Smartphone Index(SM), formerly NASDAQ OMX CEA
Smartphone Index(SM), are registered trademarks and service marks of Nasdaq,
Inc. (which with its affiliates is 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.
Page 22
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ SMARTPHONE INDEX FUND (FONE) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 73.74%
Communication Services 11.40
Real Estate 6.71
Consumer Discretionary 6.60
Industrials 1.55
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Wistron Corp. 3.80%
Apple, Inc. 3.76
HTC Corp. 3.71
Kyocera Corp. 3.66
LG Electronics, Inc. 3.62
Asustek Computer, Inc. 3.47
Pegatron Corp. 3.45
Lenovo Group Ltd. 3.42
Inventec Corp. 3.37
Samsung Electronics Co., Ltd. 3.36
------
Total 35.62%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
FEBRUARY 17, 2011 - MARCH 31, 2019
First Trust Nasdaq Nasdaq CTA MSCI World MSCI All Country World
Smartphone Index Fund Smartphone Index(SM) Index Information Technology Index
--------------------- -------------------- ---------- ----------------------------
2/17/11 $10,000 $10,000 $10,000 $10,000
3/31/11 9,399 9,412 9,849 9,547
9/30/11 7,503 7,595 8,251 8,390
3/31/12 9,238 9,328 9,904 10,774
9/30/12 7,805 7,925 10,032 10,566
3/31/13 9,021 9,180 11,077 10,774
9/30/13 10,975 11,245 12,059 11,756
3/31/14 12,117 12,470 13,188 13,356
9/30/14 12,748 13,187 13,530 14,502
3/31/15 13,920 14,460 13,983 15,485
9/30/15 12,194 12,706 12,842 14,328
3/31/16 13,098 13,739 13,501 15,785
9/30/16 14,585 15,322 14,300 17,605
3/31/17 16,474 17,413 15,494 19,719
9/30/17 18,041 19,153 16,898 22,884
3/31/18 18,932 20,114 17,589 25,486
9/30/18 18,076 19,388 18,797 28,111
3/31/19 17,816 19,129 18,306 27,681
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 1, 2013 through March
31, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/1/13 - 9/30/14 139 12 0 0 86 14 1 0
10/1/14 - 9/30/15 123 4 0 0 118 7 0 0
10/1/15 - 9/30/16 19 0 0 0 164 67 3 0
10/1/16 - 9/30/17 59 0 0 0 159 32 1 0
10/1/17 - 9/30/18 61 1 0 0 166 21 2 0
10/1/18 - 3/31/19 27 7 0 0 83 7 0 0
Page 23
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ GLOBAL AUTO INDEX FUND (CARZ)
The First Trust NASDAQ Global Auto Index Fund (the "Fund") seeks investment
results that correspond generally to the price and yield (before the Fund's fees
and expenses) of an equity index called the NASDAQ OMX Global Auto Index(SM)
(the "Index"). The shares of the Fund are listed and trade on The Nasdaq Stock
Market LLC under the ticker symbol "CARZ." The Fund will normally invest at
least 90% of its net assets (including investment borrowings) in the common
stocks and depositary receipts that comprise the Index.
The Index is owned and was developed by Nasdaq, Inc. (the "Index Provider"). The
Index Provider has contracted with Standard & Poor's Dow Jones Indices to
calculate and maintain the Index. The Index is designed to track the performance
of the largest and most liquid companies engaged in manufacturing of
automobiles. To be eligible for the Index, component securities must be listed
on an Index-eligible global stock exchange, as determined by the Index Provider,
have a minimum float-adjusted worldwide market capitalization of at least $500
million and a minimum three-month average daily dollar trading volume of $1
million.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months 1 Year 5 Years Inception 5 Years Inception
Ended Ended Ended (5/9/11) Ended (5/9/11)
3/31/19 3/31/19 3/31/19 to 3/31/19 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV -8.73% -17.84% -1.68% 2.85% -8.14% 24.86%
Market Price -8.83% -17.82% -1.73% 2.85% -8.36% 24.84%
INDEX PERFORMANCE
NASDAQ OMX Global Auto Index(SM) -8.39% -16.65% -0.88% 3.80% -4.35% 34.28%
MSCI World Index -2.61% 4.08% 6.78% 7.93% 38.80% 82.66%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
-----------------------------
NASDAQ(R), OMX(R), NASDAQ OMX(R), and NASDAQ OMX Global Auto Index(SM), are the
registered trademarks and service marks of Nasdaq, Inc. (which with its
affiliates is 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.
Page 24
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ GLOBAL AUTO INDEX FUND (CARZ) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Consumer Discretionary 99.39%
Industrials 0.61
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Daimler AG 8.25%
Toyota Motor Corp. 8.22
Honda Motor Co., Ltd. 8.06
General Motors Co. 7.94
Volkswagen AG (Preference Shares) 7.56
Ford Motor Co. 4.23
Renault S.A. 4.07
Peugeot S.A. 4.04
Nissan Motor Co., Ltd. 4.00
Hyundai Motor Co. 3.95
------
Total 60.32%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
MAY 9, 2011 - MARCH 31, 2019
First Trust NASDAQ NASDAQ OMX Global MSCI World
Global Auto Index Fund Auto Index(SM) Index
---------------------- ----------------- ----------
5/9/11 $10,000 $10,000 $10,000
9/30/11 7,545 7,717 8,232
3/31/12 9,324 9,459 9,881
9/30/12 8,282 8,439 10,009
3/31/13 10,210 10,402 11,052
9/30/13 13,205 13,581 12,032
3/31/14 13,593 14,039 13,158
9/30/14 13,085 13,556 13,499
3/31/15 14,034 14,601 13,951
9/30/15 11,727 12,208 12,813
3/31/16 11,826 12,418 13,470
9/30/16 11,990 12,550 14,267
3/31/17 13,091 13,851 15,458
9/30/17 14,803 15,719 16,858
3/31/18 15,201 16,109 17,547
9/30/18 13,682 14,656 18,752
3/31/19 12,488 13,426 18,266
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 1, 2013 through March
31, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/1/13 - 9/30/14 133 17 0 0 88 14 0 0
10/1/14 - 9/30/15 90 12 1 1 129 19 0 0
10/1/15 - 9/30/16 78 7 2 0 118 42 5 1
10/1/16 - 9/30/17 91 9 0 0 124 26 1 0
10/1/17 - 9/30/18 120 12 1 0 113 5 0 0
10/1/18 - 3/31/19 64 5 0 0 54 1 0 0
Page 25
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CLOUD COMPUTING ETF (SKYY)
The First Trust Cloud Computing ETF (the "Fund") seeks investment results that
correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the ISE Cloud Computing(TM) Index (the
"Index"). The shares of the Fund are listed and trade on The Nasdaq Stock Market
LLC under the ticker symbol "SKYY." The Fund will normally invest at least 90%
of its net assets (including investment borrowings) in the common stocks and
depositary receipts that comprise the Index.
The Index is developed, maintained and sponsored by Nasdaq, Inc. To be eligible
for the Index, a security must be actively engaged in a business activity
supporting or utilizing the cloud computing space. Component securities must
have a market capitalization of at least $100 million.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months 1 Year 5 Years Inception 5 Years Inception
Ended Ended Ended (7/5/11) Ended (7/5/11)
3/31/19 3/31/19 3/31/19 to 3/31/19 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV 2.41% 20.14% 16.94% 14.89% 118.65% 192.79%
Market Price 2.37% 19.69% 16.95% 14.89% 118.77% 192.84%
INDEX PERFORMANCE
ISE Cloud Computing(TM) Index 2.79% 21.02% 17.50% 15.50% 123.99% 204.92%
S&P 500(R) Index -1.72% 9.50% 10.91% 12.54% 67.81% 149.39%
S&P Composite 1500 Information Technology Index -0.92% 14.92% 18.18% 17.04% 130.49% 237.77%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
-----------------------------
The Fund is not sponsored, endorsed, sold or promoted by Nasdaq, Inc., or its
affiliates (Nasdaq, Inc., with its affiliates, are referred to as the
"Corporations"). The Corporations' only relationship to First Trust is in the
licensing of Nasdaq, Inc. and certain trade names of the Corporations and the
use of the ISE Index which is determined, composed and calculated by Nasdaq,
Inc. without regard to First Trust or the Fund. The Fund has not been passed on
by the Corporations as to its legality or suitability. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 26
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CLOUD COMPUTING ETF (SKYY) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 68.69%
Communication Services 21.97
Real Estate 4.85
Consumer Discretionary 4.49
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Zynga, Inc., Class A 6.27%
VMware, Inc., Class A 5.50
Netflix, Inc. 5.31
Teradata Corp. 4.94
Equinix, Inc. 4.85
Cisco Systems, Inc. 4.80
SAP SE, ADR 4.74
Facebook, Inc., Class A 4.71
Oracle Corp. 4.69
Open Text Corp. 4.63
------
Total 50.44%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
JULY 5, 2011 - MARCH 31, 2019
First Trust Cloud ISE Cloud S&P 500(R) S&P Composite 1500
Computing ETF Computing(TM) Index Index Information Technology Index
----------------- ------------------- ---------- ----------------------------
07/5/11 $10,000 $10,000 $10,000 $10,000
9/30/11 7,902 7,909 8,501 8,886
3/31/12 10,604 10,641 10,702 11,739
9/30/12 9,864 9,934 11,068 11,695
3/31/13 10,531 10,640 12,196 11,682
9/30/13 12,214 12,376 13,209 12,718
3/31/14 13,390 13,612 14,861 14,655
9/30/14 13,581 13,852 15,815 16,153
3/31/15 14,551 14,885 16,753 17,253
9/30/15 13,994 14,354 15,718 16,547
3/31/16 14,789 15,247 17,052 18,475
9/30/16 17,114 17,697 18,143 20,324
3/31/17 19,392 19,930 19,979 23,173
9/30/17 21,052 21,701 21,519 26,144
3/31/18 24,370 25,195 22,776 29,394
9/30/18 28,591 29,662 25,375 34,091
3/31/19 29,280 30,490 24,939 33,777
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 1, 2013 through March
31, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/1/13 - 9/30/14 191 18 0 0 38 5 0 0
10/1/14 - 9/30/15 193 9 0 0 48 2 0 0
10/1/15 - 9/30/16 146 1 0 0 106 0 0 0
10/1/16 - 9/30/17 188 0 0 0 62 1 0 0
10/1/17 - 9/30/18 176 1 0 0 74 0 0 0
10/1/18 - 3/31/19 84 5 0 0 29 4 2 0
Page 27
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI)
First Trust International Equity Opportunities ETF, formerly First Trust
International IPO ETF, (the "Fund") seeks investment results that correspond
generally to the price and yield (before the Fund's fees and expenses) of an
index called the IPOX International Index (the "Index"). The shares of the Fund
are listed and trade on The Nasdaq Stock Market LLC under the ticker symbol
"FPXI." The Fund will normally invest at least 90% of its net assets (including
investment borrowings) in the common stocks and depositary receipts that
comprise the Index.
The Index is owned and is developed, maintained and sponsored by IPOX(R)
Schuster LLC (the "Index Provider"). The Index is a market-cap weighted
portfolio measuring the performance of the top 50 companies domiciled outside
the United States ranked quarterly by market capitalization in the IPOX Global
Composite Index (the "Base Index") and represents, on average, 25% of the total
market capitalization of the Base Index, a fully market capitalization-weighted
index constructed and managed to provide a broad and objective view of global
aftermath performance of initial public offerings and spin-offs in all world
countries (both developed and emerging market countries).
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months Ended 1 Year Ended Inception (11/4/14) Inception (11/4/14)
3/31/19 3/31/19 to 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV -0.36% -4.95% 4.83% 23.07%
Market Price -0.67% -5.35% 4.77% 22.75%
INDEX PERFORMANCE
IPOX International Index 0.02% -3.79% 5.61% 27.15%
MSCI World ex USA Index -3.67% -2.99% 3.41% 15.93%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
-----------------------------
IPOX(R) and IPOX International Index are registered international trademarks and
service marks of IPOX(R) Schuster LLC and have been licensed for use for certain
purposes by First Trust.
Page 28
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 16.80%
Communication Services 16.50
Financials 15.87
Health Care 11.71
Real Estate 11.09
Consumer Discretionary 10.58
Industrials 9.79
Utilities 6.84
Consumer Staples 0.82
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
China Vanke Co., Ltd., Class H 6.50%
Postal Savings Bank of China Co., Ltd.,
Class H 6.49
Japan Post Holdings Co., Ltd. 5.89
Siemens Healthineers AG 5.83
China Tower Corp. Ltd., Class H 5.71
Orsted A/S 5.57
CK Asset Holdings Ltd. 4.60
Ferrari N.V. 4.59
Pinduoduo, Inc., ADR 4.04
Atlassian Corp. PLC, Class A 3.77
------
Total 52.99%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
NOVEMBER 4, 2014 - MARCH 31, 2019
First Trust International IPOX International MSCI World
Equity Opportunities ETF Index ex USA Index
------------------------- ------------------ -----------
11/4/14 $10,000 $10,000 $10,000
3/31/15 9,798 9,813 10,252
9/30/15 8,526 8,522 9,212
3/31/16 8,864 8,954 9,386
9/30/16 9,432 9,523 9,872
3/31/17 9,913 10,072 10,506
9/30/17 11,952 12,204 11,722
3/31/18 12,949 13,217 11,951
9/30/18 12,352 12,713 12,036
3/31/19 12,308 12,716 11,594
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period November 5, 2014
(commencement of trading) through March 31, 2019. Shareholders may pay more than
NAV when they buy Fund shares and receive less than NAV when they sell those
shares because shares are bought and sold at current market price. Data
presented represents past performance and cannot be used to predict future
results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
11/5/14 - 9/30/15 90 11 1 0 117 8 0 1
10/1/15 - 9/30/16 109 30 0 0 86 28 0 0
10/1/16 - 9/30/17 138 32 0 0 63 17 1 0
10/1/17 - 9/30/18 152 27 1 0 67 4 0 0
10/1/18 - 3/31/19 44 11 4 0 49 14 2 0
Page 29
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ CYBERSECURITY ETF (CIBR)
The First Trust Nasdaq Cybersecurity ETF (the "Fund") seeks investment results
that correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the Nasdaq CTA Cybersecurity Index(SM) (the
"Index"). The shares of the Fund are listed and trade on The Nasdaq Stock Market
LLC under the ticker symbol "CIBR." The Fund will normally invest at least 90%
of its net assets (including investment borrowings) in the common stocks and
depositary receipts that comprise the Index.
The Index is owned, calculated and maintained by Nasdaq, Inc. (the "Index
Provider"). The Index Provider and the Consumer Technology Association ("CTA")
have jointly developed the eligibility and selection criteria and rules for the
Index. The Index will include securities of companies classified as
"cybersecurity" companies by the CTA.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months Ended 1 Year Ended Inception (7/6/15) Inception (7/6/15)
3/31/19 3/31/19 to 3/31/19 to 3/31/19
FUND PERFORMANCE
NAV -1.41% 12.25% 9.98% 42.69%
Market Price -1.59% 12.33% 10.00% 42.80%
INDEX PERFORMANCE
Nasdaq CTA Cybersecurity Index(SM) -1.12% 13.13% 10.75% 46.44%
S&P 500(R) Index -1.72% 9.50% 11.07% 48.00%
S&P Composite 1500 Information Technology Index -0.92% 14.92% 19.57% 94.90%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 32.)
-----------------------------
Nasdaq(R), and Nasdaq CTA Cybersecurity Index(SM), formerly Nasdaq CEA
Cybersecurity Index(SM), are registered trademarks and service marks of Nasdaq,
Inc. (which with its affiliates is 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.
Page 30
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ CYBERSECURITY ETF (CIBR) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 87.46%
Industrials 12.54
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Cisco Systems, Inc. 6.19%
Palo Alto Networks, Inc. 5.85
Raytheon Co. 5.79
Fortinet, Inc. 5.74
Splunk, Inc. 5.44
Zscaler, Inc. 4.24
Booz Allen Hamilton Holding Corp. 3.26
CyberArk Software Ltd. 3.22
Check Point Software Technologies Ltd. 3.07
Akamai Technologies, Inc. 3.05
------
Total 45.85%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
JULY 6, 2015 - MARCH 31, 2019
First Trust Nasdaq Nasdaq CTA S&P 500(R) S&P Composite 1500
Cybersecurity ETF Cybersecurity Index(SM) Index Information Technology Index
------------------ ----------------------- ---------- ----------------------------
7/6/15 $10,000 $10,000 $10,000 $10,000
9/30/15 8,575 8,585 9,328 9,547
3/31/16 8,595 8,645 10,120 10,659
9/30/16 10,018 10,113 10,768 11,726
3/31/17 10,993 11,137 11,858 13,370
9/30/17 11,093 11,276 12,772 15,084
3/31/18 12,713 12,943 13,518 16,959
9/30/18 14,475 14,808 15,060 19,669
3/31/19 14,271 14,642 14,801 19,488
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period July 7, 2015 (commencement of
trading) through March 31, 2019. Shareholders may pay more than NAV when they
buy Fund shares and receive less than NAV when they sell those shares because
shares are bought and sold at current market price. Data presented represents
past performance and cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
7/7/15 - 9/30/15 49 7 1 0 4 0 0 0
10/1/15 - 9/30/16 140 0 0 0 113 0 0 0
10/1/16 - 9/30/17 228 2 0 0 21 0 0 0
10/1/17 - 9/30/18 222 1 0 0 28 0 0 0
10/1/18 - 3/31/19 76 4 0 0 42 2 0 0
Page 31
--------------------------------------------------------------------------------
NOTES TO FUND PERFORMANCE OVERVIEW (UNAUDITED)
--------------------------------------------------------------------------------
Total returns for the periods since inception are calculated from the inception
date of each Fund. "Average Annual Total Returns" represent the average annual
change in value of an investment over the periods indicated. "Cumulative Total
Returns" represent the total change in value of an investment over the periods
indicated. For certain Funds, the total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the Advisor.
Each Fund's per share net asset value ("NAV") is the value of one share of the
Fund and is computed by dividing the value of all assets of the Fund (including
accrued interest and dividends), less all liabilities (including accrued
expenses and dividends declared but unpaid), by the total number of outstanding
shares. The price used to calculate market return ("Market Price") is determined
by using the midpoint between the highest bid and the lowest offer on the stock
exchange on which shares of the Fund are listed for trading as of the time that
the Fund's NAV is calculated. Since shares of each Fund did not trade in the
secondary market until after the Fund's inception, for the period from inception
to the first day of secondary market trading in shares of the Fund, the NAV of
each Fund is used as a proxy for the secondary market trading price to calculate
market returns. NAV and market returns assume that all distributions have been
reinvested in each Fund at NAV and Market Price, respectively.
An index is a statistical composite that tracks a specified financial market or
sector. Unlike each Fund, the indices do not actually hold a portfolio of
securities and therefore do not incur the expenses incurred by each Fund. These
expenses negatively impact the performance of each Fund. Also, market returns do
not include brokerage commissions that may be payable on secondary market
transactions. If brokerage commissions were included, market returns would be
lower. The total returns presented reflect the reinvestment of dividends on
securities in the indices. The returns presented do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption or
sale of Fund shares. The investment return and principal value of shares of each
Fund will vary with changes in market conditions. Shares of each Fund may be
worth more or less than their original cost when they are redeemed or sold in
the market. Each Fund's past performance is no guarantee of future performance.
Page 32
FIRST TRUST EXCHANGE-TRADED FUND II
UNDERSTANDING YOUR FUND EXPENSES
MARCH 31, 2019 (UNAUDITED)
As a shareholder of First Trust STOXX(R) European Select Dividend Index Fund,
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund, First
Trust Dow Jones Global Select Dividend Index Fund, First Trust Global Wind
Energy ETF, First Trust Global Engineering and Construction ETF, First Trust
NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund, First Trust Indxx
Global Natural Resources Income ETF, First Trust Indxx Global Agriculture ETF,
First Trust BICK Index Fund, First Trust Nasdaq Smartphone Index Fund, First
Trust NASDAQ Global Auto Index Fund, First Trust Cloud Computing ETF, First
Trust International Equity Opportunities ETF or First Trust Nasdaq Cybersecurity
ETF (each a "Fund" and collectively, the "Funds"), you incur two types of costs:
(1) transaction costs; and (2) ongoing costs, including management fees,
distribution and/or service fees, if any, and other Fund expenses. This Example
is intended to help you understand your ongoing costs (in U.S. dollars) of
investing in the Funds and to compare these costs with the ongoing costs of
investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held through the six-month period ended March 31, 2019.
ACTUAL EXPENSES
The first line in the following table provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During the Six-Month
Period" to estimate the expenses you paid on your account during this six-month
period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the following table provides information about hypothetical
account values and hypothetical expenses based on each Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
each Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Funds and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as brokerage
commissions. Therefore, the second line in the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
-------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO
BEGINNING ENDING BASED ON THE EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH DURING THE
OCTOBER 1, 2018 MARCH 31, 2019 PERIOD (a) SIX-MONTH PERIOD (b)
-------------------------------------------------------------------------------------------------------------------------------
FIRST TRUST STOXX(R) EUROPEAN SELECT DIVIDEND INDEX FUND (FDD)
Actual $1,000.00 $ 985.60 0.56% $2.77
Hypothetical (5% return before expenses) $1,000.00 $1,022.14 0.56% $2.82
FIRST TRUST FTSE EPRA/NAREIT DEVELOPED MARKETS REAL ESTATE INDEX FUND (FFR)
Actual $1,000.00 $1,081.50 0.60% $3.11
Hypothetical (5% return before expenses) $1,000.00 $1,021.94 0.60% $3.02
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD)
Actual $1,000.00 $ 947.10 0.56% $2.72
Hypothetical (5% return before expenses) $1,000.00 $1,022.14 0.56% $2.82
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
Actual $1,000.00 $1,056.60 0.60% $3.08
Hypothetical (5% return before expenses) $1,000.00 $1,021.94 0.60% $3.02
FIRST TRUST GLOBAL ENGINEERING AND CONSTRUCTION ETF (FLM)
Actual $1,000.00 $ 884.00 0.70% $3.29
Hypothetical (5% return before expenses) $1,000.00 $1,021.44 0.70% $3.53
Page 33
FIRST TRUST EXCHANGE-TRADED FUND II
UNDERSTANDING YOUR FUND EXPENSES (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO
BEGINNING ENDING BASED ON THE EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH DURING THE
OCTOBER 1, 2018 MARCH 31, 2019 PERIOD (a) SIX-MONTH PERIOD (b)
-------------------------------------------------------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
Actual $1,000.00 $ 920.10 0.70% $3.35
Hypothetical (5% return before expenses) $1,000.00 $1,021.44 0.70% $3.53
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI)
Actual $1,000.00 $ 986.70 0.70% $3.47
Hypothetical (5% return before expenses) $1,000.00 $1,021.44 0.70% $3.53
FIRST TRUST INDXX GLOBAL AGRICULTURE ETF (FTAG)
Actual $1,000.00 $ 894.80 0.70% $3.31
Hypothetical (5% return before expenses) $1,000.00 $1,021.44 0.70% $3.53
FIRST TRUST BICK INDEX FUND (BICK)
Actual $1,000.00 $1,039.90 0.64% $3.25
Hypothetical (5% return before expenses) $1,000.00 $1,021.74 0.64% $3.23
FIRST TRUST NASDAQ SMARTPHONE INDEX FUND (FONE)
Actual $1,000.00 $ 985.60 0.70% $3.47
Hypothetical (5% return before expenses) $1,000.00 $1,021.44 0.70% $3.53
FIRST TRUST NASDAQ GLOBAL AUTO INDEX FUND (CARZ)
Actual $1,000.00 $ 912.70 0.70% $3.34
Hypothetical (5% return before expenses) $1,000.00 $1,021.44 0.70% $3.53
FIRST TRUST CLOUD COMPUTING ETF (SKYY)
Actual $1,000.00 $1,024.10 0.60% $3.03
Hypothetical (5% return before expenses) $1,000.00 $1,021.94 0.60% $3.02
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI)
Actual $1,000.00 $ 996.40 0.70% $3.48
Hypothetical (5% return before expenses) $1,000.00 $1,021.44 0.70% $3.53
FIRST TRUST NASDAQ CYBERSECURITY ETF (CIBR)
Actual $1,000.00 $ 985.90 0.60% $2.97
Hypothetical (5% return before expenses) $1,000.00 $1,021.94 0.60% $3.02
(a) These expense ratios reflect expense caps for certain Funds. See Note 3 in
the Notes to Financial Statements.
(b) Expenses are equal to the annualized expense ratio as indicated in the
table multiplied by the average account value over the period (October 1,
2018 through March 31, 2019), multiplied by 182/365 (to reflect the
six-month period).
Page 34
FIRST TRUST STOXX(R) EUROPEAN SELECT DIVIDEND INDEX FUND (FDD)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 98.5%
BELGIUM -- 3.6%
439,628 Proximus S.A., DP $ 12,679,016
--------------
FINLAND -- 2.6%
446,585 Fortum OYJ 9,132,484
--------------
FRANCE -- 17.2%
338,555 CNP Assurances 7,451,203
90,839 Covivio 9,639,658
357,952 Klepierre S.A. 12,519,848
176,457 SCOR SE 7,513,862
488,031 Societe Generale S.A. 14,110,559
155,945 TOTAL S.A. 8,662,639
--------------
59,897,769
--------------
GERMANY -- 11.7%
422,532 Aareal Bank AG 13,024,902
38,117 Allianz SE 8,478,046
340,357 Deutsche Post AG 11,072,121
35,007 Muenchener Rueckversicherungs-
Gesellschaft AG in Muenchen 8,285,820
--------------
40,860,889
--------------
ITALY -- 10.8%
563,158 Assicurazioni Generali S.p.A. 10,423,471
6,992,077 Intesa Sanpaolo S.p.A. 17,028,021
1,948,598 Snam S.p.A. 10,009,008
--------------
37,460,500
--------------
MULTI-NATIONAL -- 3.9%
81,879 Unibail-Rodamco-Westfield 13,422,697
--------------
PORTUGAL -- 3.4%
3,026,917 EDP-Energias de Portugal S.A. 11,901,088
--------------
SPAIN -- 3.0%
2,261,817 Banco Santander S.A. 10,515,447
--------------
SWEDEN -- 2.8%
1,128,592 Skandinaviska Enskilda Banken
AB, Class A 9,769,405
--------------
SWITZERLAND -- 15.1%
134,317 Swiss Prime Site AG 11,769,177
94,526 Swiss Re AG 9,234,737
16,593 Swisscom AG 8,115,281
1,136,463 UBS Group AG 13,775,655
28,818 Zurich Insurance Group AG 9,538,953
--------------
52,433,803
--------------
UNITED KINGDOM -- 24.4%
1,916,608 BAE Systems PLC 12,042,144
672,552 GlaxoSmithKline PLC 13,987,484
1,202,377 National Grid PLC 13,323,899
477,933 Royal Dutch Shell PLC, Class B 15,113,982
1,261,044 SSE PLC 19,495,939
1,054,951 United Utilities Group PLC 11,190,082
--------------
85,153,530
--------------
TOTAL COMMON STOCKS -- 98.5% 343,226,628
(Cost $355,671,513) --------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
MONEY MARKET FUNDS -- 0.3%
1,005,401 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 2.30% (b) $ 1,005,401
(Cost $1,005,401) --------------
TOTAL INVESTMENTS -- 98.8% 344,232,029
(Cost $356,676,914) (c)
NET OTHER ASSETS AND
LIABILITIES -- 1.2% 4,323,431
--------------
NET ASSETS -- 100.0% $ 348,555,460
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) Rate shown reflects yield as of March 31, 2019.
(c) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $15,911,342 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $28,356,227. The net unrealized depreciation
was $12,444,885.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 343,226,628 $ -- $ --
Money Market
Funds 1,005,401 -- --
----------------------------------------------
Total Investments $ 344,232,029 $ -- $ --
==============================================
* See Portfolio of Investments for country breakout.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
Euro 56.9%
British Pound Sterling 24.7
Swiss Franc 15.2
Swedish Krona 2.9
United States Dollar 0.3
------
Total 100.0%
======
See Notes to Financial Statements Page 35
FIRST TRUST FTSE EPRA/NAREIT DEVELOPED MARKETS REAL ESTATE INDEX FUND (FFR)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.6%
AUSTRALIA -- 4.7%
196,196 BGP Holdings PLC (b) (c) (d) $ 0
15,535 BWP Trust 41,255
10,678 Charter Hall Retail REIT 35,256
53,812 Cromwell Property Group 41,839
32,504 Dexus 294,033
56,443 Goodman Group 535,033
57,674 GPT Group (The) 254,309
116,765 Mirvac Group 228,000
163,328 Scentre Group 476,641
29,576 Shopping Centres Australasia
Property Group 55,441
76,788 Stockland 209,915
101,306 Vicinity Centres 187,024
--------------
2,358,746
--------------
AUSTRIA -- 0.2%
2,204 CA Immobilien Anlagen AG 79,610
--------------
BELGIUM -- 0.8%
589 Aedifica S.A. 56,227
165 Ascencio 10,402
617 Befimmo S.A. 36,337
710 Cofinimmo S.A. 94,299
696 Intervest Offices & Warehouses
N.V. 18,777
78 Leasinvest Real Estate S.C.A. 8,697
380 Montea C.V.A. 31,373
274 Retail Estates N.V. 24,958
563 Warehouses De Pauw C.V.A 90,311
70 Wereldhave Belgium Comm VA 7,051
351 Xior Student Housing N.V. 16,655
--------------
395,087
--------------
BERMUDA -- 0.5%
37,322 Hongkong Land Holdings Ltd. 265,359
--------------
CANADA -- 2.9%
3,319 Allied Properties Real Estate
Investment Trust 122,443
4,317 Artis Real Estate Investment
Trust 35,890
1,212 Boardwalk Real Estate Investment
Trust 36,985
4,589 Canadian Apartment Properties
REIT 176,404
6,723 Chartwell Retirement Residences 75,362
7,285 Choice Properties Real Estate
Investment Trust 76,647
5,785 Cominar Real Estate Investment
Trust 51,168
2,800 Crombie Real Estate Investment
Trust 29,816
5,706 Dream Global Real Estate
Investment Trust 60,504
1,574 Dream Office Real Estate
Investment Trust 29,128
4,940 First Capital Realty, Inc. 79,108
1,465 Granite Real Estate Investment
Trust 69,997
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
CANADA (CONTINUED)
9,121 H&R Real Estate Investment Trust $ 159,780
3,174 InterRent Real Estate Investment
Trust 34,534
2,722 Killam Apartment Real Estate
Investment Trust 39,516
1,506 Northview Apartment Real Estate
Investment Trust 32,704
2,856 NorthWest Healthcare Properties
Real Estate Investment Trust 24,919
9,762 RioCan Real Estate Investment
Trust 193,363
4,015 SmartCentres Real Estate
Investment Trust 105,186
--------------
1,433,454
--------------
CAYMAN ISLANDS -- 2.1%
85,882 CK Asset Holdings Ltd. 763,644
38,856 Wharf Real Estate Investment Co.,
Ltd. 289,318
--------------
1,052,962
--------------
FINLAND -- 0.1%
490 Citycon OYJ 5,015
2,769 Kojamo OYJ 33,329
--------------
38,344
--------------
FRANCE -- 1.5%
981 Carmila S.A. 18,730
1,410 Covivio 149,626
1,668 Gecina S.A. 246,609
1,024 ICADE 86,610
6,230 Klepierre S.A. 217,903
1,962 Mercialys S.A. 27,511
--------------
746,989
--------------
GERMANY -- 4.0%
925 ADLER Real Estate AG 13,634
5,050 alstria office REIT-AG 82,141
1,631 Deutsche EuroShop AG 49,435
11,333 Deutsche Wohnen SE 549,577
1,415 DIC Asset AG 15,936
2,230 Hamborner REIT AG 23,339
2,019 LEG Immobilien AG 247,885
4,029 TAG Immobilien AG 99,430
2,710 TLG Immobilien AG 81,593
16,555 Vonovia SE 858,336
--------------
2,021,306
--------------
GUERNSEY -- 0.2%
7,659 F&C UK Real Estate Investment
Ltd. 8,739
10,148 Regional REIT Ltd. (e) 13,878
16,554 Schroder Real Estate Investment
Trust Ltd. 11,945
29,623 Sirius Real Estate Ltd. 24,461
12,870 Standard Life Investment Property
Income Trust Ltd. 15,103
--------------
74,126
--------------
Page 36 See Notes to Financial Statements
FIRST TRUST FTSE EPRA/NAREIT DEVELOPED MARKETS REAL ESTATE INDEX FUND (FFR)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
HONG KONG -- 5.8%
62,614 Champion REIT $ 54,239
65,073 Hang Lung Properties Ltd. 158,829
37,907 Henderson Land Development
Co., Ltd. 240,965
19,576 Hysan Development Co., Ltd. 104,863
67,532 Link REIT 789,742
182,251 New World Development Co., Ltd. 302,283
101,492 Sino Land Co., Ltd. 196,262
45,243 Sun Hung Kai Properties Ltd. 776,340
33,583 Swire Properties Ltd. 144,387
38,856 Wharf Holdings (The) Ltd. 117,311
--------------
2,885,221
--------------
IRELAND -- 0.2%
21,966 Green REIT PLC 36,961
22,129 Hibernia REIT PLC 33,164
11,611 Irish Residential Properties
REIT PLC 20,709
--------------
90,834
--------------
ISLE OF MAN -- 0.0%
8,103 RDI REIT PLC 16,042
--------------
ISRAEL -- 0.1%
1,168 Azrieli Group Ltd. 69,162
--------------
ITALY -- 0.0%
1,557 Immobiliare Grande Distribuzione
SIIQ S.p.A. 11,248
--------------
JAPAN -- 11.0%
22 Activia Properties, Inc. 91,311
40 Advance Residence Investment
Corp. 111,342
3,827 AEON Mall Co., Ltd. 62,845
47 AEON REIT Investment Corp. 55,384
19 Comforia Residential REIT, Inc. 52,030
59 Daiwa House REIT Investment
Corp. 130,798
9 Daiwa Office Investment Corp. 63,990
14 Frontier Real Estate Investment
Corp. 58,675
23 Fukuoka REIT Corp. 35,342
108 GLP J-REIT 115,669
11,300 Hulic Co., Ltd. 110,726
35 Hulic REIT, Inc. 59,623
50 Industrial & Infrastructure Fund
Investment Corp. 55,806
268 Invesco Office J-Reit, Inc. 42,511
146 Invincible Investment Corp. 71,399
38 Japan Excellent, Inc. 55,167
142 Japan Hotel REIT Investment Corp. 114,415
27 Japan Logistics Fund, Inc. 57,226
27 Japan Prime Realty Investment
Corp. 111,089
41 Japan Real Estate Investment
Corp. 241,568
48 Japan Rental Housing Investments,
Inc. 38,199
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
JAPAN (CONTINUED)
84 Japan Retail Fund Investment
Corp. $ 168,788
12 Kenedix Office Investment Corp. 83,263
27 Kenedix Residential Next
Investment Corp. 44,752
16 Kenedix Retail REIT Corp. 39,022
49 MCUBS MidCity Investment Corp. 45,008
37,730 Mitsubishi Estate Co., Ltd. 682,735
30,181 Mitsui Fudosan Co., Ltd. 757,725
49 Mori Hills REIT Investment Corp. 65,787
32 Mori Trust Sogo REIT, Inc. 49,719
14 Nippon Accommodations Fund, Inc. 70,992
40 Nippon Building Fund, Inc. 270,685
60 Nippon Prologis REIT, Inc. 127,655
14 NIPPON REIT Investment Corp. 53,938
3,700 Nomura Real Estate Holdings, Inc. 70,942
131 Nomura Real Estate Master Fund,
Inc. 192,901
84 Orix JREIT, Inc. 144,080
40 Premier Investment Corp. 50,383
113 Sekisui House REIT, Inc. 85,339
12,644 Sumitomo Realty & Development
Co., Ltd. 523,192
6,587 Tokyo Tatemono Co., Ltd. 80,651
28 Tokyu REIT, Inc. 45,298
93 United Urban Investment Corp. 146,763
--------------
5,534,733
--------------
JERSEY -- 0.1%
2,740 Phoenix Spree Deutschland Ltd. 13,205
12,290 Target Healthcare REIT Ltd. 18,408
--------------
31,613
--------------
LUXEMBOURG -- 0.7%
930 ADO Properties S.A. (e) 52,840
21,566 Aroundtown S.A. 177,809
3,515 Grand City Properties S.A. 84,774
695 Shurgard Self Storage S.A. (c) 22,948
--------------
338,371
--------------
MULTI-NATIONAL -- 1.4%
4,300 Unibail-Rodamco-Westfield 704,913
--------------
NETHERLANDS -- 0.3%
1,523 Eurocommercial Properties N.V. 43,941
564 NSI N.V. 23,946
580 Vastned Retail N.V. 22,479
1,287 Wereldhave N.V. 35,183
--------------
125,549
--------------
NEW ZEALAND -- 0.1%
45,372 Kiwi Property Group Ltd. 45,884
--------------
NORWAY -- 0.1%
3,491 Entra ASA (e) 52,699
--------------
SINGAPORE -- 2.6%
80,600 Ascendas Real Estate Investment
Trust 173,065
77,890 CapitaLand Commercial Trust 111,497
80,230 CapitaLand Ltd. 216,078
See Notes to Financial Statements Page 37
FIRST TRUST FTSE EPRA/NAREIT DEVELOPED MARKETS REAL ESTATE INDEX FUND (FFR)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
SINGAPORE (CONTINUED)
76,483 CapitaLand Mall Trust $ 134,314
24,900 CDL Hospitality Trusts 29,948
15,000 City Developments Ltd. 100,166
42,233 Fortune Real Estate Investment
Trust 55,630
47,200 Frasers Logistics & Industrial
Trust 40,400
62,700 Keppel REIT 59,681
60,821 Mapletree Commercial Trust 84,820
41,900 Mapletree Industrial Trust 64,925
76,753 Mapletree Logistics Trust 82,685
62,297 Suntec Real Estate Investment
Trust 89,636
15,700 UOL Group Ltd. 80,513
--------------
1,323,358
--------------
SPAIN -- 0.5%
10,094 Inmobiliaria Colonial Socimi S.A. 103,775
2,144 Lar Espana Real Estate
Socimi S.A. 17,894
10,648 Merlin Properties Socimi S.A. 139,332
--------------
261,001
--------------
SWEDEN -- 1.6%
8,602 Castellum AB 166,862
652 Catena AB 18,058
2,686 Dios Fastigheter AB 22,043
8,420 Fabege AB 122,261
3,094 Fastighets AB Balder, Class B (c) 99,170
1,142 Hembla AB (c) 22,110
5,092 Hemfosa Fastigheter AB 44,664
3,494 Hufvudstaden AB, Class A 60,618
16,326 Klovern AB, Class B 22,389
6,023 Kungsleden AB 47,939
5,092 Nyfosa AB (c) 30,506
2,394 Pandox AB 42,847
2,974 Sagax AB, Class D 11,100
1,106 Victoria Park AB, Class B 4,389
5,217 Wallenstam AB, Class B 52,662
4,233 Wihlborgs Fastigheter AB 57,695
--------------
825,313
--------------
SWITZERLAND -- 1.0%
448 Allreal Holding AG 76,260
89 Hiag Immobilien Holding AG 11,709
207 Mobimo Holding AG 52,075
1,252 PSP Swiss Property AG 136,044
2,397 Swiss Prime Site AG 210,031
--------------
486,119
--------------
UNITED KINGDOM -- 4.2%
74,832 Assura PLC 55,945
4,888 Big Yellow Group PLC 63,123
30,478 British Land (The) Co. PLC 233,811
23,414 Capital & Counties Properties PLC 73,373
17,340 Capital & Regional PLC 5,748
19,887 Civitas Social Housing PLC 24,866
11,605 Custodian REIT PLC 16,778
162 Daejan Holdings PLC 12,364
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
UNITED KINGDOM (CONTINUED)
3,199 Derwent London PLC $ 134,288
18,715 Empiric Student Property PLC 22,304
13,113 GCP Student Living PLC 26,097
19,192 Grainger PLC 59,142
8,774 Great Portland Estates PLC 85,308
24,684 Hammerson PLC 107,959
12,841 Hansteen Holdings PLC 16,290
3,148 Helical PLC 13,551
28,285 Intu Properties PLC 39,271
22,749 Land Securities Group PLC 270,637
20,519 LondonMetric Property PLC 53,370
11,241 LXI REIT PLC 18,082
9,546 NewRiver REIT PLC 29,653
33,828 Primary Health Properties PLC 57,189
6,519 Safestore Holdings PLC 50,647
34,443 Segro PLC 302,091
7,325 Shaftesbury PLC 83,956
10,159 Triple Point Social Housing REIT
PLC (e) 13,430
53,162 Tritax Big Box REIT PLC 99,430
8,293 UNITE Group (The) PLC 99,102
4,243 Workspace Group PLC 53,937
--------------
2,121,742
--------------
UNITED STATES -- 52.9%
2,551 Acadia Realty Trust 69,566
1,061 Agree Realty Corp. 73,570
67 Alexander's, Inc. 25,203
3,551 Alexandria Real Estate Equities,
Inc. 506,231
1,219 American Assets Trust, Inc. 55,903
4,339 American Campus Communities,
Inc. 206,450
8,236 American Homes 4 Rent, Class A 187,122
4,025 Americold Realty Trust 122,803
4,795 Apartment Investment &
Management Co., Class A 241,140
6,900 Apple Hospitality REIT, Inc. 112,470
2,756 Ashford Hospitality Trust, Inc. 13,091
4,401 AvalonBay Communities, Inc. 883,413
4,924 Boston Properties, Inc. 659,225
5,593 Brandywine Realty Trust 88,705
9,608 Brixmor Property Group, Inc. 176,499
3,997 Brookfield Property REIT, Inc.,
Class A 81,898
2,828 Camden Property Trust 287,042
2,636 CareTrust REIT, Inc. 61,841
1,453 Chatham Lodging Trust 27,956
1,879 Chesapeake Lodging Trust 52,255
15,313 Colony Capital, Inc. 81,465
3,768 Columbia Property Trust, Inc. 84,818
3,288 Corporate Office Properties Trust 89,762
13,317 Cousins Properties, Inc. 128,642
5,905 CubeSmart 189,196
3,334 CyrusOne, Inc. 174,835
6,565 DiamondRock Hospitality Co. 71,099
6,553 Digital Realty Trust, Inc. 779,807
Page 38 See Notes to Financial Statements
FIRST TRUST FTSE EPRA/NAREIT DEVELOPED MARKETS REAL ESTATE INDEX FUND (FFR)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
UNITED STATES (CONTINUED)
5,115 Douglas Emmett, Inc. $ 206,748
11,367 Duke Realty Corp. 347,603
1,917 Easterly Government Properties,
Inc. 34,525
1,114 EastGroup Properties, Inc. 124,367
4,516 Empire State Realty Trust, Inc.,
Class A 71,353
2,349 EPR Properties 180,638
3,740 Equity Commonwealth 122,261
2,727 Equity LifeStyle Properties, Inc. 311,696
11,441 Equity Residential 861,736
2,095 Essex Property Trust, Inc. 605,958
3,888 Extra Space Storage, Inc. 396,226
2,321 Federal Realty Investment Trust 319,950
3,945 First Industrial Realty Trust,
Inc. 139,495
2,145 Four Corners Property Trust, Inc. 63,492
3,301 Franklin Street Properties Corp. 23,734
6,422 Gaming and Leisure Properties,
Inc. 247,696
1,037 Getty Realty Corp. 33,215
2,425 Global Net Lease, Inc. 45,832
15,236 HCP, Inc. 476,887
3,927 Healthcare Realty Trust, Inc. 126,096
6,570 Healthcare Trust of America, Inc.,
Class A 187,836
1,128 Hersha Hospitality Trust 19,334
3,238 Highwoods Properties, Inc. 151,474
5,184 Hospitality Properties Trust 136,391
23,339 Host Hotels & Resorts, Inc. 441,107
4,910 Hudson Pacific Properties, Inc. 169,002
2,824 Independence Realty Trust, Inc. 30,471
380 Investors Real Estate Trust 22,766
9,516 Invitation Homes, Inc. 231,524
3,332 JBG SMITH Properties 137,778
3,968 Kennedy-Wilson Holdings, Inc. 84,875
3,147 Kilroy Realty Corp. 239,046
12,953 Kimco Realty Corp. 239,630
2,620 Kite Realty Group Trust 41,894
6,717 Lexington Realty Trust 60,856
4,697 Liberty Property Trust 227,429
1,460 Life Storage, Inc. 142,014
1,246 LTC Properties, Inc. 57,067
4,333 Macerich (The) Co. 187,835
2,865 Mack-Cali Realty Corp. 63,603
11,745 Medical Properties Trust, Inc. 217,400
3,614 Mid-America Apartment
Communities, Inc. 395,119
2,824 Monmouth Real Estate Investment
Corp. 37,220
1,295 National Health Investors, Inc. 101,722
5,045 National Retail Properties, Inc. 279,443
1,793 National Storage Affiliates Trust 51,118
1,510 Office Properties Income Trust 41,736
6,307 Omega Healthcare Investors, Inc. 240,612
6,514 Paramount Group, Inc. 92,434
6,402 Park Hotels & Resorts, Inc. 198,974
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
UNITED STATES (CONTINUED)
4,112 Pebblebrook Hotel Trust $ 127,719
2,179 Pennsylvania Real Estate
Investment Trust 13,706
5,785 Physicians Realty Trust 108,816
3,996 Piedmont Office Realty Trust,
Inc., Class A 83,317
19,965 Prologis, Inc. 1,436,482
631 PS Business Parks, Inc. 98,960
4,732 Public Storage 1,030,535
1,613 QTS Realty Trust, Inc., Class A 72,569
9,407 Realty Income Corp. 691,979
4,840 Regency Centers Corp. 326,652
3,558 Retail Opportunity Investments
Corp. 61,696
6,851 Retail Properties of America,
Inc., Class A 83,514
486 Retail Value, Inc. 15,149
2,922 Rexford Industrial Realty, Inc. 104,637
5,507 RLJ Lodging Trust 96,758
2,512 RPT Realty 30,169
1,416 Ryman Hospitality Properties,
Inc. 116,452
5,634 Sabra Health Care REIT, Inc. 109,694
374 Saul Centers, Inc. 19,212
7,491 Senior Housing Properties Trust 88,244
1,034 Seritage Growth Properties,
Class A 45,951
9,827 Simon Property Group, Inc. 1,790,578
4,861 SITE Centers Corp. 66,207
2,576 SL Green Realty Corp. 231,634
2,726 Spirit Realty Capital, Inc. 108,304
3,099 STAG Industrial, Inc. 91,885
6,104 STORE Capital Corp. 204,484
3,275 Summit Hotel Properties, Inc. 37,368
2,679 Sun Communities, Inc. 317,515
7,227 Sunstone Hotel Investors, Inc. 104,069
2,910 Tanger Factory Outlet Centers,
Inc. 61,052
1,887 Taubman Centers, Inc. 99,785
1,902 Terreno Realty Corp. 79,960
1,698 Tier REIT, Inc. 48,665
8,707 UDR, Inc. 395,820
406 Universal Health Realty Income
Trust 30,738
3,464 Urban Edge Properties 65,816
936 Urstadt Biddle Properties, Inc.,
Class A 19,319
11,348 Ventas, Inc. 724,116
30,895 VEREIT, Inc. 258,591
12,916 VICI Properties, Inc. 282,602
5,494 Vornado Realty Trust 370,515
5,919 Washington Prime Group, Inc. 33,442
2,534 Washington Real Estate Investment
Trust 71,915
3,804 Weingarten Realty Investors 111,723
11,866 Welltower, Inc. 920,802
5,066 WP Carey, Inc. 396,820
3,568 Xenia Hotels & Resorts, Inc. 78,175
--------------
26,563,336
--------------
See Notes to Financial Statements Page 39
FIRST TRUST FTSE EPRA/NAREIT DEVELOPED MARKETS REAL ESTATE INDEX FUND (FFR)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
TOTAL COMMON STOCKS -- 99.6% $ 49,953,121
(Cost $42,553,330) --------------
INVESTMENT COMPANIES (a) -- 0.1%
GUERNSEY -- 0.1%
16,808 F&C Commercial Property Trust
Ltd. 26,183
17,229 Picton Property Income Ltd. 19,859
20,843 UK Commercial Property REIT
Ltd. 23,292
--------------
TOTAL INVESTMENT
COMPANIES -- 0.1% 69,334
(Cost $74,844) --------------
TOTAL INVESTMENTS -- 99.7% 50,022,455
(Cost $42,628,174) (f)
NET OTHER ASSETS AND
LIABILITIES -- 0.3% 154,213
--------------
NET ASSETS -- 100.0% $ 50,176,668
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures adopted by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940, as
amended. At March 31, 2019, securities noted as such are valued at $0 or
0.0% of net assets.
(c) Non-income producing security.
(d) This is a restricted security which cannot be traded as a result of the
in-specie distribution. It was acquired on August 6, 2009 at a cost of $0
and has a carrying value per share of $0.
(e) This security is restricted in the U.S. and cannot be offered for public
sale without first being registered under the Securities Act of 1933, as
amended. This security is not restricted on the foreign exchange where it
trades freely without any additional registration. As such, it does not
require the additional disclosure required of restricted securities.
(f) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $10,089,424 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $2,695,143. The net unrealized appreciation was
$7,394,281.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
TOTAL
VALUE AT
3/31/2019 LEVEL 1 LEVEL 2 LEVEL 3
---------------------------------------------------------
Common
Stocks:
Australia $ 2,358,746 $ 2,358,746 $ --** $ --
Other Country
Categories* 47,594,375 47,594,375 -- --
---------------------------------------------------------
Total Common
Stocks 49,953,121 49,953,121 --** --
Investment
Companies* 69,334 69,334 -- --
---------------------------------------------------------
Total
Investments $ 50,022,455 $ 50,022,455 $ --** $ --
=========================================================
* See Portfolio of Investments for country breakout.
** Investment is valued at $0.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
United States Dollar 53.6%
Japanese Yen 11.1
Euro 9.6
Hong Kong Dollar 8.0
Australian Dollar 4.7
British Pound Sterling 4.6
Canadian Dollar 2.9
Singapore Dollar 2.5
Swedish Krona 1.7
Swiss Franc 1.0
Israeli Shekel 0.1
Norwegian Krone 0.1
New Zealand Dollar 0.1
------
Total 100.0%
======
Page 40 See Notes to Financial Statements
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.0%
AUSTRALIA -- 14.3%
235,212 Australia & New Zealand Banking
Group Ltd. $ 4,347,334
824,176 Bendigo and Adelaide Bank Ltd. 5,664,802
89,159 Commonwealth Bank of Australia 4,472,036
513,895 Crown Resorts Ltd. 4,199,902
2,599,032 CSR Ltd. 6,126,876
884,955 Fortescue Metals Group Ltd. 4,467,661
2,507,666 Harvey Norman Holdings Ltd. 7,157,892
315,803 JB Hi-Fi Ltd. 5,594,692
353,874 National Australia Bank Ltd. 6,349,555
406,555 Suncorp Group Ltd. 3,977,937
830,644 Sydney Airport 4,382,210
1,082,465 Tabcorp Holdings Ltd. 3,550,956
222,149 Wesfarmers Ltd. 5,465,589
292,620 Westpac Banking Corp. 5,385,530
--------------
71,142,972
--------------
BERMUDA -- 2.2%
259,290 Invesco Ltd. 5,006,890
586,068 VTech Holdings Ltd. 5,991,370
--------------
10,998,260
--------------
CANADA -- 10.8%
70,560 Bank of Nova Scotia (The) 3,756,230
99,176 BCE, Inc. 4,403,864
47,960 Canadian Imperial Bank of
Commerce 3,789,858
114,409 Emera, Inc. 4,278,084
112,427 Genworth MI Canada, Inc. 3,406,420
207,392 IGM Financial, Inc. 5,335,531
170,429 Laurentian Bank of Canada 5,171,472
72,834 National Bank of Canada 3,287,027
144,910 Norbord, Inc. 3,992,656
283,980 Russel Metals, Inc. 5,000,224
172,030 Shaw Communications, Inc.,
Class B 3,580,016
103,737 TELUS Corp. 3,839,437
91,058 TransCanada Corp. 4,089,723
--------------
53,930,542
--------------
DENMARK -- 0.9%
266,962 Danske Bank A/S 4,685,092
--------------
FINLAND -- 3.9%
205,879 Fortum OYJ 4,210,143
114,302 Nokian Renkaat OYJ 3,826,051
795,551 Nordea Bank Abp 6,053,933
114,122 Sampo OYJ, Class A 5,173,166
--------------
19,263,293
--------------
FRANCE -- 9.5%
190,900 AXA S.A. 4,803,230
106,496 BNP Paribas S.A. 5,090,295
111,361 Bouygues S.A. 3,978,696
103,906 Casino Guichard Perrachon S.A. 4,504,932
396,321 Credit Agricole S.A. 4,788,075
306,454 Engie S.A. 4,565,218
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
FRANCE (CONTINUED)
177,956 Lagardere S.C.A. $ 4,575,361
920,521 Natixis S.A. 4,926,531
213,412 Societe Generale S.A. 6,170,433
71,268 TOTAL S.A. 3,958,889
--------------
47,361,660
--------------
GERMANY -- 3.9%
179,708 Aareal Bank AG 5,539,649
16,460 Allianz SE 3,661,060
83,951 Daimler AG 4,920,512
580,648 TUI AG 5,563,113
--------------
19,684,334
--------------
HONG KONG -- 1.1%
8,921,083 PCCW Ltd. 5,545,880
--------------
IRELAND -- 0.9%
94,018 Seagate Technology PLC 4,502,522
--------------
ITALY -- 6.8%
240,564 Assicurazioni Generali S.p.A. 4,452,590
395,970 Azimut Holding S.p.A. 6,729,349
742,504 Banca Mediolanum S.p.A. 5,259,813
254,313 Eni S.p.A. 4,494,253
2,955,538 Intesa Sanpaolo S.p.A. 7,197,713
2,100,519 UnipolSai Assicurazioni S.p.A. 5,664,469
--------------
33,798,187
--------------
JAPAN -- 1.8%
159,478 Aozora Bank Ltd. 3,936,947
1,371,400 Tokai Tokyo Financial Holdings,
Inc. 4,961,936
--------------
8,898,883
--------------
JERSEY ISLAND -- 1.1%
506,911 WPP PLC 5,353,141
--------------
MALTA -- 0.9%
462,268 Kindred Group PLC 4,628,994
--------------
NETHERLANDS -- 2.2%
928,412 Aegon N.V. 4,461,577
238,703 BE Semiconductor Industries N.V. 6,351,418
--------------
10,812,995
--------------
NEW ZEALAND -- 1.1%
2,124,424 Spark New Zealand Ltd. 5,497,580
--------------
NORWAY -- 0.7%
151,264 Equinor ASA 3,312,043
--------------
PORTUGAL -- 1.0%
1,297,517 EDP-Energias de Portugal S.A. 5,101,516
--------------
SINGAPORE -- 0.9%
2,121,340 Singapore Telecommunications
Ltd. 4,727,133
--------------
SPAIN -- 3.5%
1,662,961 Mapfre S.A. 4,581,509
166,343 Naturgy Energy Group S.A. 4,651,842
196,201 Red Electrica Corp., S.A. 4,181,701
497,207 Telefonica S.A. 4,165,794
--------------
17,580,846
--------------
See Notes to Financial Statements Page 41
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
SWEDEN -- 3.8%
248,607 JM AB $ 4,454,834
510,822 Skandinaviska Enskilda Banken
AB, Class A 4,421,816
359,100 Swedbank AB, Class A 5,073,278
1,089,640 Telia Co., AB 4,916,524
--------------
18,866,452
--------------
SWITZERLAND -- 2.7%
46,586 Swiss Re AG 4,551,229
8,295 Swisscom AG 4,056,907
14,086 Zurich Insurance Group AG 4,662,561
--------------
13,270,697
--------------
UNITED KINGDOM -- 14.3%
277,023 Bovis Homes Group PLC 3,837,218
147,430 British American Tobacco PLC 6,133,156
1,990,004 BT Group PLC 5,778,627
1,307,563 Crest Nicholson Holdings PLC 6,301,262
3,399,434 Dixons Carphone PLC 6,497,525
778,685 Galliford Try PLC 6,759,665
613,378 HSBC Holdings PLC 4,979,532
2,775,298 ITV PLC 4,594,290
1,233,852 Legal & General Group PLC 4,424,177
587,689 Phoenix Group Holdings PLC 5,185,851
159,790 Royal Dutch Shell PLC, Class A 5,022,964
2,448,103 Standard Life Aberdeen PLC 8,416,171
343,317 United Utilities Group PLC 3,641,634
--------------
71,572,072
--------------
UNITED STATES -- 10.7%
89,746 Altria Group, Inc. 5,154,113
176,711 AT&T, Inc. 5,541,657
527,028 CenturyLink, Inc. 6,319,066
640,766 Ford Motor Co. 5,625,926
903,100 GameStop Corp., Class A 9,175,496
77,730 Helmerich & Payne, Inc. 4,318,679
203,612 Macy's, Inc. 4,892,796
116,581 PacWest Bancorp 4,384,611
77,427 Southern (The) Co. 4,001,427
241,861 Waddell & Reed Financial, Inc.,
Class A 4,181,777
--------------
53,595,548
--------------
TOTAL INVESTMENTS -- 99.0% 494,130,642
(Cost $528,284,955) (b)
NET OTHER ASSETS AND
LIABILITIES -- 1.0% 5,128,650
--------------
NET ASSETS -- 100.0% $ 499,259,292
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $17,662,638 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $51,816,951. The net unrealized depreciation
was $34,154,313.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 494,130,642 $ -- $ --
==============================================
* See Portfolio of Investments for country breakout.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
Euro 28.7%
British Pound Sterling 16.7
Australian Dollar 14.4
United States Dollar 12.8
Canadian Dollar 10.9
Swedish Krona 6.0
Swiss Franc 2.7
Hong Kong Dollar 2.3
Japanese Yen 1.8
New Zealand Dollar 1.1
Singapore Dollar 1.0
Danish Krone 0.9
Norwegian Krone 0.7
------
Total 100.0%
======
Page 42 See Notes to Financial Statements
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.4%
AUSTRALIA -- 2.8%
94,979 AGL Energy Ltd. $ 1,468,167
1,924,214 Infigen Energy (b) 601,167
--------------
2,069,334
--------------
CANADA -- 9.7%
163,631 Boralex, Inc., Class A 2,321,580
254,509 Northland Power, Inc. 4,494,640
17,933 TransAlta Renewables, Inc. 181,699
--------------
6,997,919
--------------
CAYMAN ISLANDS -- 1.1%
940,077 China High Speed Transmission
Equipment Group Co., Ltd. (c) 814,339
--------------
CHINA -- 9.0%
6,488,039 China Longyuan Power Group
Corp., Ltd., Class H 4,512,728
241,255 China Suntien Green Energy Corp.,
Ltd., Class H 73,453
1,365,070 Xinjiang Goldwind Science &
Technology Co., Ltd., Class H 1,965,018
--------------
6,551,199
--------------
DENMARK -- 16.2%
78,682 Orsted A/S (d) 5,963,158
68,595 Vestas Wind Systems A/S 5,771,734
--------------
11,734,892
--------------
FRANCE -- 1.9%
94,712 Engie S.A. 1,410,916
--------------
GERMANY -- 9.2%
129,575 E. ON SE 1,440,723
137,206 Nordex SE (b) 2,244,031
58,478 RWE AG 1,567,792
13,055 Siemens AG 1,404,995
--------------
6,657,541
--------------
GREECE -- 1.0%
100,729 Terna Energy S.A. 728,807
--------------
GUERNSEY -- 3.9%
1,828,846 Renewables Infrastructure Group
(The) Ltd. 2,805,987
--------------
ITALY -- 3.3%
236,150 Enel S.p.A 1,511,004
46,806 Prysmian S.p.A. 885,495
--------------
2,396,499
--------------
JAPAN -- 3.8%
91,010 Mitsui & Co., Ltd. 1,411,177
205,404 Toray Industries, Inc. 1,310,115
--------------
2,721,292
--------------
PORTUGAL -- 2.1%
382,965 EDP-Energias de Portugal S.A. 1,505,724
--------------
SOUTH KOREA -- 0.3%
4,987 Dongkuk Structures &
Construction Co., Ltd. 11,862
171,734 Unison Co., Ltd. (b) 196,683
--------------
208,545
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SPAIN -- 13.1%
3,798 Acciona S.A. $ 423,061
89,750 Audax Renovables S.A. (b) (c) 206,389
55,444 Endesa S.A. 1,414,305
170,881 Iberdrola S.A. 1,500,140
373,077 Siemens Gamesa Renewable
Energy S.A. (b) 5,940,623
--------------
9,484,518
--------------
SWEDEN -- 1.5%
65,580 SKF AB, Class B 1,089,085
--------------
SWITZERLAND -- 2.3%
72,025 ABB Ltd. 1,353,340
3,410 BKW AG 232,527
62 Gurit Holding AG 57,968
--------------
1,643,835
--------------
UNITED KINGDOM -- 1.9%
90,651 SSE PLC 1,401,479
--------------
UNITED STATES -- 16.3%
31,153 Alliant Energy Corp. 1,468,241
42,611 American Superconductor Corp. (b) 547,977
15,938 Duke Energy Corp. 1,434,420
137,536 General Electric Co. 1,373,984
7,612 NextEra Energy, Inc. 1,471,552
137,008 Pattern Energy Group, Inc.,
Class A 3,014,176
41,195 TPI Composites, Inc. (b) 1,179,001
21,181 Trinity Industries, Inc. 460,263
9,103 Woodward, Inc. 863,784
--------------
11,813,398
--------------
TOTAL COMMON STOCKS -- 99.4% 72,035,309
(Cost $70,897,568) --------------
RIGHTS -- 0.1%
CHINA -- 0.1%
259,363 Xinjiang Goldwind Science &
Technology Co., Ltd., expiring
5/23/2019 (b) (e) 102,094
(Cost $0) --------------
MONEY MARKET FUNDS -- 0.1%
5,686 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.42% (f) (g) 5,686
39,831 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 2.30% (f) 39,831
--------------
TOTAL MONEY MARKET FUNDS
-- 0.1% 45,517
(Cost $45,517) --------------
See Notes to Financial Statements Page 43
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 0.1%
$ 32,746 BNP Paribas S.A., 2.50% (f),
dated 03/29/19, due 04/01/19,
with a maturity value of
$32,753. Collateralized by
U.S. Treasury Note, interest
rate of 2.75%, due 02/15/24.
The value of the collateral
including accrued interest is
$33,416. (g) $ 32,746
21,572 JPMorgan Chase & Co.,
2.50% (f), dated 03/29/19, due
04/01/19, with a maturity
value of $21,576.
Collateralized by U.S.
Treasury Note, interest rate
of 1.25%, due 07/31/23. The
value of the collateral
including accrued
interest is $22,017. (g) 21,572
--------------
TOTAL REPURCHASE AGREEMENTS
-- 0.1% 54,318
(Cost $54,318) --------------
TOTAL INVESTMENTS -- 99.7% 72,237,238
(Cost $70,997,403) (h)
NET OTHER ASSETS AND
LIABILITIES -- 0.3% 200,287
--------------
NET ASSETS -- 100.0% $ 72,437,525
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) Non-income producing security.
(c) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The aggregate value of such
securities is $57,178 and the total value of the collateral held by the
Fund is $60,004.
(d) This security is restricted in the U.S. and cannot be offered for public
sale without first being registered under the Securities Act of 1933, as
amended. This security is not restricted on the foreign exchange where it
trades freely without any additional registration. As such, it does not
require the additional disclosure required of restricted securities.
(e) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures adopted by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940, as
amended. At March 31, 2019, securities noted as such are valued at
$102,094 or 0.1% of net assets.
(f) Rate shown reflects yield as of March 31, 2019.
(g) This security serves as collateral for securities on loan.
(h) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $7,423,506 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $6,183,671. The net unrealized appreciation was
$1,239,835.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 72,035,309 $ -- $ --
Rights* -- 102,094 --
Money Market
Funds 45,517 -- --
Repurchase
Agreements -- 54,318 --
----------------------------------------------
Total Investments $ 72,080,826 $ 156,412 $ --
==============================================
* See Portfolio of Investments for country breakout.
Page 44 See Notes to Financial Statements
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 57,178
Non-cash Collateral(2) (57,178)
--------------
Net Amount $ --
==============
(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.
(2) At March 31, 2019, 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:
REPURCHASE AGREEMENTS
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(3) $ 54,318
Non-cash Collateral(4) (54,318)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At March 31, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
Euro 30.7%
United States Dollar 16.6
Danish Krone 16.2
Hong Kong Dollar 10.2
Canadian Dollar 9.7
British Pound Sterling 5.8
Japanese Yen 3.8
Australian Dollar 2.9
Swiss Franc 2.3
Swedish Krona 1.5
South Korean Won 0.3
------
Total 100.0%
======
See Notes to Financial Statements Page 45
FIRST TRUST GLOBAL ENGINEERING AND CONSTRUCTION ETF (FLM)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.3%
AUSTRALIA -- 4.6%
7,563 CIMIC Group Ltd. $ 259,162
44,404 Downer EDI Ltd. 242,143
5,837 Monadelphous Group Ltd. 71,908
--------------
573,213
--------------
CANADA -- 3.5%
5,944 Aecon Group, Inc. 77,572
7,702 SNC-Lavalin Group, Inc. 195,439
7,029 Stantec, Inc. 166,106
--------------
439,117
--------------
CAYMAN ISLANDS -- 1.5%
199,574 China State Construction
International Holdings Ltd. 186,864
--------------
CHINA -- 4.4%
270,697 China Communications
Construction Co., Ltd.,
Class H 280,010
289,877 China Railway Group Ltd., Class H 264,399
--------------
544,409
--------------
FINLAND -- 0.5%
11,279 YIT OYJ 65,349
--------------
FRANCE -- 8.7%
9,177 Bouygues S.A. 327,875
3,426 Eiffage S.A. 329,203
4,384 Vinci S.A. 426,469
--------------
1,083,547
--------------
IRELAND -- 2.6%
7,015 Kingspan Group PLC 324,680
--------------
ITALY -- 0.1%
7,418 Salini Impregilo S.p.A. (b) 17,258
--------------
JAPAN -- 30.2%
60,100 Chiyoda Corp. (b) (c) 143,160
9,800 COMSYS Holdings Corp. 267,040
20,500 JGC Corp. 272,088
22,700 Kajima Corp. 334,673
9,800 Kandenko Co., Ltd. 83,649
11,400 Kinden Corp. 188,646
3,970 Kumagai Gumi Co., Ltd. 123,939
9,600 Kyowa Exeo Corp. 264,621
18,200 Maeda Corp. 180,308
4,400 Maeda Road Construction Co., Ltd. 85,316
3,900 Nippo Corp. 72,630
6,520 Nishimatsu Construction Co., Ltd. 144,307
32,400 Obayashi Corp. 325,666
3,400 Okumura Corp. 107,832
30,300 Penta-Ocean Construction Co.,
Ltd. 140,250
4,800 Raito Kogyo Co., Ltd. 64,618
34,300 Shimizu Corp. 297,723
1,700 SHO-BOND Holdings Co., Ltd. 113,354
7,900 Taisei Corp. 366,381
24,400 Toda Corp. 149,707
3,000 Toshiba Plant Systems & Services
Corp. 53,135
--------------
3,779,043
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
NETHERLANDS -- 2.9%
3,084 Arcadis N.V. $ 48,018
7,786 Boskalis Westminster 201,318
24,831 Koninklijke BAM Groep N.V. 107,072
--------------
356,408
--------------
NORWAY -- 0.4%
5,282 Veidekke ASA 55,423
--------------
PANAMA -- 1.7%
28,148 McDermott International, Inc. (c) 209,421
--------------
PHILIPPINES -- 0.8%
14,280 Manila Electric Co. 103,340
--------------
SOUTH KOREA -- 3.1%
33,043 Daewoo Engineering &
Construction Co., Ltd. (c) 147,880
6,457 GS Engineering & Construction
Corp. 242,329
--------------
390,209
--------------
SPAIN -- 4.7%
8,807 ACS Actividades de Construccion
y Servicios S.A. 386,873
36,103 Sacyr S.A. 91,325
4,082 Tecnicas Reunidas S.A. 114,796
--------------
592,994
--------------
SWEDEN -- 4.9%
9,920 NCC AB, Class B 152,524
14,030 Peab AB 121,251
18,452 Skanska AB, Class B (b) 335,210
--------------
608,985
--------------
UNITED KINGDOM -- 2.4%
56,950 Balfour Beatty PLC 194,413
11,399 Galliford Try PLC 98,953
1,600 Keller Group PLC 12,858
--------------
306,224
--------------
UNITED STATES -- 22.3%
9,018 AECOM (c) 267,564
3,926 Dycom Industries, Inc. (c) 180,360
3,939 EMCOR Group, Inc. 287,862
8,401 Fluor Corp. 309,157
4,606 Granite Construction, Inc. 198,749
5,646 Jacobs Engineering Group, Inc. 424,523
15,457 KBR, Inc. 295,074
6,896 MasTec, Inc. (c) 331,698
2,340 Matrix Service Co. (c) 45,817
9,370 Quanta Services, Inc. 353,624
5,302 Tutor Perini Corp. (c) 90,770
--------------
2,785,198
--------------
TOTAL COMMON STOCKS -- 99.3% 12,421,682
(Cost $12,246,298) --------------
MONEY MARKET FUNDS -- 0.3%
37,789 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.42% (d) (e) 37,789
(Cost $37,789) --------------
Page 46 See Notes to Financial Statements
FIRST TRUST GLOBAL ENGINEERING AND CONSTRUCTION ETF (FLM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 2.9%
$ 217,599 BNP Paribas S.A., 2.50% (d),
dated 03/29/19, due 04/01/19,
with a maturity value of
$217,645. Collateralized by
U.S. Treasury Note, interest
rate of 2.75%, due 02/15/24.
The value of the collateral
including accrued interest is
$222,051. (e) $ 217,599
143,347 JPMorgan Chase & Co.,
2.50% (d), dated 03/29/19, due
04/01/19, with a maturity
value of $143,377.
Collateralized by U.S.
Treasury Note, interest rate
of 1.25%, due 07/31/23. The
value of the collateral
including accrued interest is
$146,303. (e) 143,347
--------------
TOTAL REPURCHASE AGREEMENTS
-- 2.9% 360,946
(Cost $360,946) --------------
TOTAL INVESTMENTS -- 102.5% 12,820,417
(Cost $12,645,033) (f)
NET OTHER ASSETS AND
LIABILITIES -- (2.5)% (310,482)
--------------
NET ASSETS -- 100.0% $ 12,509,935
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The aggregate value of such
securities is $369,926 and the total value of the collateral held by the
Fund is $398,735.
(c) Non-income producing security.
(d) Rate shown reflects yield as of March 31, 2019.
(e) This security serves as collateral for securities on loan.
(f) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $1,758,797 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $1,583,413. The net unrealized appreciation was
$175,384.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 12,421,682 $ -- $ --
Money Market
Funds 37,789 -- --
Repurchase
Agreements -- 360,946 --
----------------------------------------------
Total Investments $ 12,459,471 $ 360,946 $ --
==============================================
* See Portfolio of Investments for country breakout.
See Notes to Financial Statements Page 47
FIRST TRUST GLOBAL ENGINEERING AND CONSTRUCTION ETF (FLM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 369,926
Non-cash Collateral(2) (369,926)
--------------
Net Amount $ --
==============
(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.
(2) At March 31, 2019, 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:
REPURCHASE AGREEMENTS
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(3) $ 360,946
Non-cash Collateral(4) (360,946)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At March 31, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
Japanese Yen 29.5%
United States Dollar 26.5
Euro 19.0
Hong Kong Dollar 5.7
Swedish Krona 4.8
Australian Dollar 4.5
Canadian Dollar 3.4
South Korean Won 3.0
British Pound Sterling 2.4
Philippine Peso 0.8
Norwegian Krone 0.4
------
Total 100.0%
======
Page 48 See Notes to Financial Statements
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.9%
CANADA -- 0.3%
2,337 Fortis, Inc. $ 86,373
--------------
CHINA -- 0.1%
3,622 BYD Co., Ltd., Class H 21,824
--------------
FRANCE -- 8.9%
10,096 Engie S.A. 150,399
27,945 Schneider Electric SE 2,192,441
--------------
2,342,840
--------------
GERMANY -- 3.5%
4,080 Siemens AG 439,095
23,261 SMA Solar Technology AG 476,200
--------------
915,295
--------------
IRELAND -- 5.4%
2,195 Eaton Corp. PLC 176,829
4,616 Johnson Controls International
PLC 170,515
39,571 nVent Electric PLC 1,067,626
--------------
1,414,970
--------------
ITALY -- 8.7%
42,149 Enel S.p.A 269,690
106,401 Prysmian S.p.A. 2,012,937
--------------
2,282,627
--------------
JAPAN -- 2.9%
1,300 NEC Corp. 43,928
1,600 NGK Insulators Ltd. 23,214
35,400 Nissin Electric Co., Ltd. 324,199
30,400 Osaki Electric Co., Ltd. 188,989
13,400 Panasonic Corp. 115,368
2,100 Toshiba Corp. 66,791
--------------
762,489
--------------
JERSEY ISLAND -- 7.9%
26,168 Aptiv PLC 2,080,094
--------------
NETHERLANDS -- 0.0%
529 STMicroelectronics N.V. 7,856
--------------
SPAIN -- 8.2%
100,521 Red Electrica Corp., S.A. 2,142,439
--------------
SWITZERLAND -- 11.2%
109,615 ABB Ltd. 2,059,650
13,650 Landis+Gyr Group AG 863,621
--------------
2,923,271
--------------
TAIWAN -- 0.1%
2,363 Advantech Co., Ltd. 19,627
--------------
UNITED KINGDOM -- 0.7%
17,300 National Grid PLC 191,707
--------------
UNITED STATES -- 42.0%
148 Adesto Technologies Corp. (b) 895
21,588 Advanced Energy Industries,
Inc. (b) 1,072,492
12,922 American Superconductor
Corp. (b) 166,177
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
UNITED STATES (CONTINUED)
1,909 Analog Devices, Inc. $ 200,960
236 Arcosa, Inc. 7,210
105 AZZ, Inc. 4,298
15,808 Badger Meter, Inc. 879,557
174 Belden, Inc. 9,344
10,502 Cisco Systems, Inc. 567,003
15,289 Control4 Corp. (b) 258,843
130 Digi International, Inc. (b) 1,647
211 EnerSys 13,749
52,742 Enphase Energy, Inc. (b) (c) 486,809
106 ESCO Technologies, Inc. 7,105
44,162 General Electric Co. 441,178
3,529 Honeywell International, Inc. 560,829
253 Hubbell, Inc. 29,849
3,936 International Business Machines
Corp. 555,370
20,513 Itron, Inc. (b) 956,931
290 MasTec, Inc. (b) 13,949
8,661 MYR Group, Inc. (b) 299,930
3,041 NVIDIA Corp. 546,042
10,430 Oracle Corp. 560,195
30,511 Quanta Services, Inc. 1,151,485
24,392 SolarEdge Technologies, Inc. (b) 919,091
594 Tesla, Inc. (b) 166,237
1,098 Trimble, Inc. (b) 44,359
92 Valmont Industries, Inc. 11,969
35,583 Veoneer, Inc. (b) (c) 813,783
224 WESCO International, Inc. (b) 11,874
6,524 Willdan Group, Inc. (b) 241,845
--------------
11,001,005
--------------
TOTAL COMMON STOCKS -- 99.9% 26,192,417
(Cost $28,073,806) --------------
MONEY MARKET FUNDS -- 0.4%
94,865 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.42% (d) (e) 94,865
(Cost $94,865) --------------
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 3.4%
$ 546,265 BNP Paribas S.A., 2.50% (d),
dated 03/29/19, due 04/01/19,
with a maturity value of
$546,379. Collateralized by
U.S. Treasury Note, interest
rate of 2.75%, due 02/15/24.
The value of the collateral
including accrued
interest is $557,442. (e) 546,265
See Notes to Financial Statements Page 49
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
$ 359,862 JPMorgan Chase & Co., 2.50% (d),
dated 03/29/19, due 04/01/19,
with a maturity value of
$359,937. Collateralized by
U.S. Treasury Note, interest
rate of 1.25%, due 07/31/23.
The value of the collateral
including accrued interest is
$367,282. (e) $ 359,862
--------------
TOTAL REPURCHASE AGREEMENTS
-- 3.4% 906,127
(Cost $906,127) --------------
TOTAL INVESTMENTS -- 103.7% 27,193,409
(Cost $29,074,798) (f)
NET OTHER ASSETS AND
LIABILITIES -- (3.7)% (976,178)
--------------
NET ASSETS -- 100.0 % $ 26,217,231
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) Non-income producing security.
(c) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The aggregate value of such
securities is $974,843 and the total value of the collateral held by the
Fund is $1,000,992.
(d) Rate shown reflects yield as of March 31, 2019.
(e) This security serves as collateral for securities on loan.
(f) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $2,092,316 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $3,973,705. The net unrealized depreciation was
$1,881,389.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 26,192,417 $ -- $ --
Money Market
Funds 94,865 -- --
Repurchase
Agreements -- 906,127 --
----------------------------------------------
Total Investments $ 26,287,282 $ 906,127 $ --
==============================================
* See Portfolio of Investments for country breakout.
Page 50 See Notes to Financial Statements
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 974,843
Non-cash Collateral(2) (974,843)
--------------
Net Amount $ --
==============
(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.
(2) At March 31, 2019, 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:
REPURCHASE AGREEMENTS
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(3) $ 906,127
Non-cash Collateral(4) (906,127)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At March 31, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
United States Dollar 57.0%
Euro 28.3
Swiss Franc 10.7
Japanese Yen 2.8
British Pound Sterling 0.7
Canadian Dollar 0.3
Hong Kong Dollar 0.1
New Taiwan Dollar 0.1
------
Total 100.0%
======
See Notes to Financial Statements Page 51
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 98.8%
AUSTRALIA -- 8.5%
69,948 Alumina Ltd. $ 120,193
40,296 Fortescue Metals Group Ltd. 203,433
7,396 Inghams Group Ltd. (b) 22,949
15,328 Woodside Petroleum Ltd. 376,792
--------------
723,367
--------------
BRAZIL -- 0.5%
1,889 Cia de Saneamento de Minas
Gerais-COPASA 29,531
1,314 SLC Agricola S.A. 13,810
--------------
43,341
--------------
CANADA -- 2.5%
10,531 ARC Resources Ltd. 71,870
1,840 Russel Metals, Inc. 32,398
4,426 Vermilion Energy, Inc. 109,263
--------------
213,531
--------------
CAYMAN ISLANDS -- 0.3%
42,205 China Zhongwang Holdings Ltd. 23,011
--------------
CHILE -- 0.5%
78,451 Aguas Andinas S.A., Class A 44,603
--------------
CHINA -- 1.4%
50,000 Yanzhou Coal Mining Co., Ltd.,
Class H 49,108
172,000 Zijin Mining Group Co., Ltd.,
Class H 71,211
--------------
120,319
--------------
FINLAND -- 4.3%
12,619 UPM-Kymmene OYJ 368,041
--------------
FRANCE -- 15.3%
10,100 Suez 133,804
14,664 TOTAL S.A., ADR 816,052
16,008 Veolia Environnement S.A. 357,884
--------------
1,307,740
--------------
HONG KONG -- 1.9%
83,546 Guangdong Investment Ltd. 161,346
--------------
INDIA -- 1.7%
26,891 National Aluminium Co., Ltd. 21,524
9,288 Oil India Ltd. 24,864
9,619 Vedanta Ltd., ADR 101,577
--------------
147,965
--------------
INDONESIA -- 0.9%
420,635 Adaro Energy Tbk PT 39,730
76,311 Bukit Asam Tbk PT 22,508
9,656 Indo Tambangraya Megah Tbk PT 16,223
--------------
78,461
--------------
JAPAN -- 0.6%
2,700 Nippon Paper Industries Co., Ltd. 55,691
--------------
MALAYSIA -- 0.2%
46,300 FGV Holdings Bhd (c) 13,382
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
NORWAY -- 4.3%
13,139 Mowi ASA $ 293,249
1,547 Salmar ASA 74,221
--------------
367,470
--------------
PORTUGAL -- 0.2%
2,027 Altri S.G.P.S. S.A. 15,871
--------------
RUSSIA -- 6.8%
52,768 Magnitogorsk Iron & Steel Works
PJSC 36,913
2,873 Novolipetsk Steel PJSC, GDR 73,750
5,657 Severstal PJSC, GDR 88,249
33,013 Tatneft PJSC 379,865
--------------
578,777
--------------
SINGAPORE -- 1.5%
54,300 Wilmar International Ltd. 132,620
--------------
SOUTH AFRICA -- 1.6%
3,056 African Rainbow Minerals Ltd. 35,942
805 Assore Ltd. 20,866
7,201 Exxaro Resources Ltd. 82,023
--------------
138,831
--------------
SOUTH KOREA -- 3.1%
1,655 SK Innovation Co., Ltd. 261,715
--------------
TAIWAN -- 0.4%
20,477 Taiwan Fertilizer Co., Ltd. 30,629
--------------
THAILAND -- 0.7%
99,800 Thai Union Group PCL 60,695
--------------
TURKEY -- 0.7%
37,334 Eregli Demir ve Celik Fabrikalari
TAS 61,068
--------------
UNITED KINGDOM -- 25.7%
12,583 Pennon Group PLC 121,867
14,330 Rio Tinto PLC 832,610
13,526 Royal Dutch Shell PLC, Class A,
ADR 846,592
7,032 Severn Trent PLC 180,979
19,956 United Utilities Group PLC 211,678
--------------
2,193,726
--------------
UNITED STATES -- 15.2%
2,544 Alliance Resource Partners,
L.P. (d) 51,796
10,645 Exxon Mobil Corp. 860,116
8,343 International Paper Co. 386,030
--------------
1,297,942
--------------
TOTAL COMMON STOCKS -- 98.8% 8,440,142
(Cost $7,798,409) --------------
MONEY MARKET FUNDS -- 0.0%
1,695 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.42% (e) (f) 1,695
(Cost $1,695) --------------
Page 52 See Notes to Financial Statements
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 0.2%
$ 9,764 BNP Paribas S.A., 2.50% (e),
dated 03/29/19, due 04/01/19,
with a maturity value of
$9,766. Collateralized by U.S.
Treasury Note, interest rate
of 2.75%, due 02/15/24. The
value of the collateral
including accrued interest is
$9,963. (f) $ 9,764
6,432 JPMorgan Chase & Co.,
2.50% (e), dated 03/29/19, due
04/01/19, with a maturity
value of $6,433.
Collateralized by U.S.
Treasury Note, interest rate
of 1.25%, due 07/31/23. The
value of the collateral
including accrued interest is
$6,565. (f) 6,432
--------------
TOTAL REPURCHASE AGREEMENTS
-- 0.2% 16,196
(Cost $16,196) --------------
TOTAL INVESTMENTS -- 99.0% 8,458,033
(Cost $7,816,300) (g)
NET OTHER ASSETS AND
LIABILITIES -- 1.0% 88,917
--------------
NET ASSETS -- 100.0% $ 8,546,950
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The aggregate value of such
securities is $17,082 and the total value of the collateral held by the
Fund is $17,891.
(c) Non-income producing security.
(d) Security is a Master Limited Partnership ("MLP").
(e) Rate shown reflects yield as of March 31, 2019.
(f) This security serves as collateral for securities on loan.
(g) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $994,337 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $352,604. The net unrealized appreciation was
$641,733.
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 8,440,142 $ -- $ --
Money Market
Funds 1,695 -- --
Repurchase
Agreements -- 16,196 --
----------------------------------------------
Total Investments $ 8,441,837 $ 16,196 $ --
==============================================
* See Portfolio of Investments for country breakout.
See Notes to Financial Statements Page 53
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 17,082
Non-cash Collateral(2) (17,082)
--------------
Net Amount $ --
==============
(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.
(2) At March 31, 2019, 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:
REPURCHASE AGREEMENTS
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(3) $ 16,196
Non-cash Collateral(4) (16,196)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At March 31, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
United States Dollar 38.3%
British Pound Sterling 15.9
Euro 10.4
Australian Dollar 8.6
Russian Ruble 4.9
Norwegian Krone 4.3
Hong Kong Dollar 3.6
South Korean Won 3.1
Canadian Dollar 2.5
South African Rand 1.6
Singapore Dollar 1.6
Indonesian Rupiah 0.9
Turkish Lira 0.7
Thai Baht 0.7
Japanese Yen 0.7
Indian Rupee 0.6
Chilean Peso 0.5
Brazilian Real 0.5
New Taiwan Dollar 0.4
Malaysian Ringgit 0.2
------
Total 100.0%
======
Page 54 See Notes to Financial Statements
FIRST TRUST INDXX GLOBAL AGRICULTURE ETF (FTAG)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.6%
AUSTRALIA -- 1.6%
2,500 GrainCorp Ltd., Class A $ 16,296
17,545 Incitec Pivot Ltd. 38,868
4,148 Nufarm Ltd. 13,872
--------------
69,036
--------------
BELGIUM -- 0.4%
471 Tessenderlo Group S.A. (b) 15,877
--------------
BERMUDA -- 1.8%
1,542 Bunge Ltd. 81,834
--------------
CANADA -- 4.5%
3,773 Nutrien Ltd. 198,991
--------------
CHILE -- 1.1%
1,315 Sociedad Quimica y Minera de
Chile S.A., ADR 50,549
--------------
GERMANY -- 21.8%
5,835 BASF SE 428,923
5,481 Bayer AG 354,144
5,092 Evonik Industries AG 138,687
2,091 K+S AG 38,327
--------------
960,081
--------------
INDIA -- 5.6%
1,339 Escorts Ltd. 15,387
13,583 Mahindra & Mahindra Ltd. 132,134
2,783 Tata Chemicals Ltd. 23,654
5,565 UPL Ltd. 77,026
--------------
248,201
--------------
ISRAEL -- 1.6%
13,933 Israel Chemicals Ltd. 73,009
--------------
JAPAN -- 9.6%
13,500 Kubota Corp. 194,832
2,200 Mitsui Chemicals, Inc. 53,020
1,600 Nissan Chemical Corp. 73,193
500 Sakata Seed Corp. 16,986
18,100 Sumitomo Chemical Co., Ltd. 84,106
--------------
422,137
--------------
MALAYSIA -- 4.4%
87,401 Petronas Chemicals Group Bhd 196,104
--------------
NETHERLANDS -- 4.9%
14,792 CNH Industrial N.V. 150,878
2,302 OCI N.V. (b) 63,266
--------------
214,144
--------------
NORWAY -- 2.8%
2,985 Yara International ASA 122,100
--------------
RUSSIA -- 1.2%
1,415 PhosAgro PJSC 51,605
--------------
SINGAPORE -- 3.9%
70,000 Wilmar International Ltd. 170,965
--------------
SWITZERLAND -- 0.8%
112 Bucher Industries AG 37,455
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
TAIWAN -- 0.4%
10,707 Taiwan Fertilizer Co., Ltd. $ 16,015
--------------
TURKEY -- 0.4%
4,043 Tekfen Holding AS 16,345
--------------
UNITED STATES -- 32.8%
836 AGCO Corp. 58,144
2,435 CF Industries Holdings, Inc. 99,543
2,841 Deere & Co. 454,105
8,254 DowDuPont, Inc. 440,021
1,445 FMC Corp. 111,005
4,212 Mosaic (The) Co. 115,030
393 Raven Industries, Inc. 15,079
605 Scotts Miracle-Gro (The) Co. 47,541
447 SiteOne Landscape Supply,
Inc. (b) 25,546
1,159 Toro (The) Co. 79,785
--------------
1,445,799
--------------
TOTAL INVESTMENTS -- 99.6% 4,390,247
(Cost $4,752,756) (c)
NET OTHER ASSETS AND
LIABILITIES -- 0.4% 15,987
--------------
NET ASSETS -- 100.0% $ 4,406,234
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $226,049 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $588,558. The net unrealized depreciation was
$362,509.
ADR - American Depositary Receipt
See Notes to Financial Statements Page 55
FIRST TRUST INDXX GLOBAL AGRICULTURE ETF (FTAG)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 4,390,247 $ -- $ --
==============================================
* See Portfolio of Investments for country breakout.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
United States Dollar 41.0%
Euro 23.7
Japanese Yen 9.6
Indian Rupee 5.7
Canadian Dollar 4.5
Malaysian Ringgit 4.5
Singapore Dollar 3.9
Norwegian Krone 2.8
Australian Dollar 1.5
Russian Ruble 1.2
Swiss Franc 0.8
Turkish Lira 0.4
New Taiwan Dollar 0.4
------
Total 100.0%
======
Page 56 See Notes to Financial Statements
FIRST TRUST BICK INDEX FUND (BICK)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.6%
BRAZIL -- 22.5%
336,793 Ambev S.A., ADR $ 1,448,210
118,338 B2W Cia Digital (b) 1,268,506
174,768 B3 S.A. - Brasil Bolsa Balcao 1,423,016
132,898 Banco Bradesco S.A., ADR 1,449,917
113,254 Banco do Brasil S.A. 1,402,315
209,914 BB Seguridade Participacoes S.A. 1,410,024
278,155 BRF S.A. (b) 1,599,870
154,723 Centrais Eletricas Brasileiras
S.A. (b) 1,441,976
397,337 Cia Energetica de Minas Gerais
(Preference Shares) 1,400,450
527,199 Cielo S.A. 1,275,129
377,916 Gerdau S.A. (Preference Shares) 1,458,442
162,306 Itau Unibanco Holding S.A., ADR 1,429,916
462,543 Itausa - Investimentos Itau S.A.
(Preference Shares) 1,411,723
521,573 Kroton Educacional S.A. 1,396,066
165,605 Localiza Rent A Car S.A. 1,383,513
132,201 Lojas Renner S.A. 1,470,119
32,985 Magazine Luiza S.A. 1,446,914
234,015 Petrobras Distribuidora S.A. 1,383,045
97,053 Petroleo Brasileiro S.A., ADR 1,545,084
294,021 Rumo S.A. (b) 1,428,296
120,052 Suzano Papel e Celulose S.A. 1,419,645
122,249 Telefonica Brasil S.A., ADR 1,475,545
107,296 Ultrapar Participacoes S.A. 1,283,052
122,249 Vale S.A., ADR 1,596,572
--------------
34,247,345
--------------
CAYMAN ISLANDS -- 17.5%
8,336 Alibaba Group Holding Ltd.,
ADR (b) 1,520,903
9,386 Baidu, Inc., ADR (b) 1,547,282
44,702 Ctrip.com International Ltd.,
ADR (b) 1,953,030
812,081 Geely Automobile Holdings Ltd. 1,551,757
56,174 iQIYI, Inc., ADR (b) 1,343,682
55,059 JD.com, Inc., ADR (b) 1,660,029
196,700 Meituan Dianping, Class B (b) 1,325,541
45,996 Momo, Inc., ADR (b) 1,758,887
6,835 NetEase, Inc., ADR 1,650,311
18,592 New Oriental Education &
Technology Group,
Inc., ADR (b) 1,674,953
54,237 Pagseguro Digital Ltd.,
Class A (b) 1,618,975
50,958 Pinduoduo, Inc., ADR (b) 1,263,758
365,000 Sunac China Holdings Ltd. 1,818,037
42,856 TAL Education Group, ADR (b) 1,546,245
35,711 Tencent Holdings Ltd. 1,642,262
21,117 Weibo Corp., ADR (b) 1,309,043
1,001,400 Xiaomi Corp., Class B (b) (c) 1,451,720
--------------
26,636,415
--------------
CHINA -- 6.9%
3,272,115 Bank of China Ltd., Class H 1,483,924
1,715,919 China Construction Bank Corp.,
Class H 1,471,109
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
CHINA (CONTINUED)
554,159 China Life Insurance Co., Ltd.,
Class H $ 1,489,532
332,615 China Merchants Bank Co., Ltd.,
Class H 1,616,477
1,766,161 China Petroleum & Chemical
Corp., Class H 1,392,689
1,982,798 Industrial & Commercial Bank of
China Ltd., Class H 1,452,377
144,902 Ping An Insurance (Group) Co. of
China Ltd., Class H 1,622,544
--------------
10,528,652
--------------
HONG KONG -- 1.1%
884,490 CNOOC Ltd. 1,656,316
--------------
INDIA -- 21.6%
54,817 Axis Bank Ltd., GDR (b) 3,064,270
72,304 Dr. Reddy's Laboratories Ltd.,
ADR 2,928,312
26,942 HDFC Bank Ltd., ADR 3,122,847
276,310 ICICI Bank Ltd., ADR 3,166,512
254,143 Infosys Ltd., ADR 2,777,783
150,354 Larsen & Toubro Ltd., GDR 2,995,052
78,513 Reliance Industries Ltd., GDR (c) 3,148,371
71,884 State Bank of India, GDR (b) 3,324,635
217,953 Tata Motors Ltd., ADR (b) 2,737,490
283,793 Vedanta Ltd., ADR 2,996,854
648,670 Wipro Ltd., ADR 2,581,707
--------------
32,843,833
--------------
ISLE OF MAN -- 1.7%
283,498 Eros International PLC (b) 2,591,172
--------------
JERSEY ISLAND -- 1.8%
51,599 WNS (Holdings) Ltd., ADR (b) 2,748,679
--------------
MAURITIUS -- 1.7%
96,508 MakeMyTrip Ltd. (b) 2,663,621
--------------
SOUTH KOREA -- 23.7%
8,580 Amorepacific Corp. 1,424,835
24,583 Celltrion Healthcare Co.,
Ltd. (d) 1,446,696
8,391 Celltrion, Inc. (d) 1,338,006
29,999 Hyundai Engineering &
Construction Co., Ltd. 1,411,282
7,782 Hyundai Mobis Co., Ltd. 1,429,431
13,565 Hyundai Motor Co. 1,428,083
38,690 KB Financial Group, Inc. 1,426,462
49,237 Korea Electric Power Corp. (b) 1,296,966
4,394 LG Chem Ltd. 1,416,795
24,339 LG Electronics, Inc. 1,610,307
1,377 LG Household & Health Care Ltd. 1,718,975
5,379 Lotte Chemical Corp. 1,376,618
12,902 NAVER Corp. 1,409,434
3,722 NCSoft Corp. 1,626,387
6,524 POSCO 1,454,120
4,564 Samsung Biologics Co.,
Ltd. (b) (c) 1,284,643
14,856 Samsung C&T Corp. 1,400,398
See Notes to Financial Statements Page 57
FIRST TRUST BICK INDEX FUND (BICK)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
SOUTH KOREA (CONTINUED)
16,037 Samsung Electro-Mechanics Co.,
Ltd. $ 1,476,404
38,047 Samsung Electronics Co., Ltd. 1,496,607
7,225 Samsung SDI Co., Ltd. 1,365,309
39,311 Shinhan Financial Group Co., Ltd. 1,454,552
23,094 SillaJen, Inc. (b) 1,308,206
24,513 SK Hynix, Inc. 1,602,383
9,127 SK Innovation Co., Ltd. 1,443,306
6,587 SK Telecom Co., Ltd. 1,459,458
--------------
36,105,663
--------------
UNITED STATES -- 1.1%
36,569 Yum China Holdings, Inc. 1,642,314
--------------
TOTAL INVESTMENTS -- 99.6% 151,664,010
(Cost $147,879,782) (e)
NET OTHER ASSETS AND
LIABILITIES -- 0.4% 642,501
--------------
NET ASSETS -- 100.0% $ 152,306,511
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) Non-income producing security.
(c) This security is restricted in the U.S. and cannot be offered for public
sale without first being registered under the Securities Act of 1933, as
amended. This security is not restricted on the foreign exchange where it
trades freely without any additional registration. As such, it does not
require the additional disclosure required of restricted securities.
(d) Non-income producing security which makes payment-in-kind ("PIK")
distributions. For the six months ended March 31, 2019, the Fund received
424 and 139 shares of Celltrion Healthcare Co., Ltd. and Celltrion, Inc.,
respectively.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $17,031,641 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $13,247,413. The net unrealized appreciation
was $3,784,228.
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 151,664,010 $ -- $ --
==============================================
* See Portfolio of Investments for country breakout.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
United States Dollar 46.3%
South Korean Won 23.8
Brazilian Real 16.7
Hong Kong Dollar 13.2
------
Total 100.0%
======
Page 58 See Notes to Financial Statements
FIRST TRUST NASDAQ SMARTPHONE INDEX FUND (FONE)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.5%
CANADA -- 3.3%
25,741 BlackBerry Ltd. (b) $ 259,726
17,802 Sierra Wireless, Inc. (b) (c) 220,211
--------------
479,937
--------------
CAYMAN ISLANDS -- 3.2%
327,800 Xiaomi Corp., Class B (b) (c) (d) 475,209
--------------
CHINA -- 2.2%
565,253 BOE Technology Group Co., Ltd.,
Class B 217,462
1,769 China Telecom Corp., Ltd., ADR 99,081
--------------
316,543
--------------
FINLAND -- 1.4%
36,773 Nokia OYJ, ADR 210,342
--------------
FRANCE -- 0.7%
6,294 Orange S.A. 102,375
--------------
GERMANY -- 0.7%
5,833 Deutsche Telekom AG 96,807
--------------
GUERNSEY -- 1.5%
4,030 Amdocs Ltd. 218,063
--------------
HONG KONG -- 4.0%
9,173 China Mobile Ltd. 93,483
555,224 Lenovo Group Ltd. 499,351
--------------
592,834
--------------
ITALY -- 0.7%
157,698 Telecom Italia S.p.A. (b) 98,073
--------------
JAPAN -- 11.5%
351,100 Japan Display, Inc. (b) (c) 218,586
3,950 KDDI Corp. 85,002
9,100 Kyocera Corp. 533,700
4,170 NTT DOCOMO, Inc. 92,238
1,000 SoftBank Group Corp. 96,950
10,400 Sony Corp. 435,875
7,100 Toshiba Corp. 225,819
--------------
1,688,170
--------------
NETHERLANDS -- 1.4%
13,686 STMicroelectronics N.V. 202,114
--------------
RUSSIA -- 0.6%
12,447 Mobile TeleSystems PJSC, ADR 94,099
--------------
SINGAPORE -- 3.2%
47,398 Flex Ltd. (b) 473,980
--------------
SOUTH KOREA -- 9.8%
7,196 KT Corp., ADR 89,518
7,970 LG Electronics, Inc. 527,308
12,458 Samsung Electronics Co., Ltd. 490,045
3,598 SK Hynix, Inc. 235,197
3,758 SK Telecom Co., Ltd., ADR 92,033
--------------
1,434,101
--------------
SPAIN -- 0.6%
11,146 Telefonica S.A. 93,386
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SWEDEN -- 1.5%
24,452 Telefonaktiebolaget LM Ericsson,
Class B $ 224,655
--------------
TAIWAN -- 20.9%
70,046 Asustek Computer, Inc. 506,814
417,802 HTC Corp. (b) 541,561
646,013 Inventec Corp. 491,524
24,615 MediaTek, Inc. 225,620
291,195 Pegatron Corp. 503,583
5,735 Taiwan Semiconductor
Manufacturing Co., Ltd., ADR 234,906
720,146 Wistron Corp. 553,770
--------------
3,057,778
--------------
UNITED KINGDOM -- 0.7%
54,022 Vodafone Group PLC 98,365
--------------
UNITED STATES -- 31.6%
200 Alphabet, Inc., Class C (b) 234,662
1,271 American Tower Corp. 250,463
2,094 Analog Devices, Inc. 220,435
2,885 Apple, Inc. 548,006
3,092 AT&T, Inc. 96,965
813 Broadcom, Inc. 244,477
8,050 CEVA, Inc. (b) 217,028
5,250 Ciena Corp. (b) 196,035
1,886 Crown Castle International Corp. 241,408
529 Equinix, Inc. 239,722
4,229 Intel Corp. 227,097
4,114 Maxim Integrated Products, Inc. 218,741
5,478 Micron Technology, Inc. (b) 226,406
1,565 Motorola Solutions, Inc. 219,757
4,195 QUALCOMM, Inc. 239,241
1,240 SBA Communications Corp. (b) 247,579
2,742 Skyworks Solutions, Inc. 226,160
5,349 Synaptics, Inc. (b) 212,623
2,117 Texas Instruments, Inc. 224,550
1,690 Verizon Communications, Inc. 99,930
--------------
4,631,285
--------------
TOTAL COMMON STOCKS -- 99.5% 14,588,116
(Cost $13,763,790) --------------
MONEY MARKET FUNDS -- 0.5%
67,876 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.42% (e) (f) 67,876
(Cost $67,876) --------------
See Notes to Financial Statements Page 59
FIRST TRUST NASDAQ SMARTPHONE INDEX FUND (FONE)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 4.4%
$ 390,853 BNP Paribas S.A., 2.50% (e),
dated 03/29/19, due 04/01/19,
with a maturity value of
$390,934. Collateralized by
U.S. Treasury Note, interest
rate of 2.75%, due 02/15/24.
The value of the collateral
including accrued interest is
$398,850. (f) $ 390,853
257,481 JPMorgan Chase & Co.,
2.50% (e), dated 03/29/19, due
04/01/19, with a maturity
value of $257,535.
Collateralized by U.S.
Treasury Note, interest rate
of 1.25%, due 07/31/23. The
value of the collateral
including accrued interest is
$262,790. (f) 257,481
--------------
TOTAL REPURCHASE AGREEMENTS
-- 4.4% 648,334
(Cost $648,334) --------------
TOTAL INVESTMENTS -- 104.4% 15,304,326
(Cost $14,480,000) (g)
NET OTHER ASSETS AND
LIABILITIES -- (4.4)% (648,676)
--------------
NET ASSETS -- 100.0% $ 14,655,650
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) Non-income producing security.
(c) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The aggregate value of such
securities is $684,795 and the total value of the collateral held by the
Fund is $716,210.
(d) This security is restricted in the U.S. and cannot be offered for public
sale without first being registered under the Securities Act of 1933, as
amended. This security is not restricted on the foreign exchange where it
trades freely without any additional registration. As such, it does not
require the additional disclosure required of restricted securities.
(e) Rate shown reflects yield as of March 31, 2019.
(f) This security serves as collateral for securities on loan.
(g) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $1,581,874 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $757,548. The net unrealized appreciation was
$824,326.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 14,588,116 $ -- $ --
Money Market
Funds 67,876 -- --
Repurchase
Agreements -- 648,334 --
----------------------------------------------
Total Investments $ 14,655,992 $ 648,334 $ --
==============================================
* See Portfolio of Investments for country breakout.
Page 60 See Notes to Financial Statements
FIRST TRUST NASDAQ SMARTPHONE INDEX FUND (FONE)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 684,795
Non-cash Collateral(2) (684,795)
--------------
Net Amount $ --
==============
(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
(2) At March 31, 2019, 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:
REPURCHASE AGREEMENTS
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(3) $ 648,334
Non-cash Collateral(4) (648,334)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At March 31, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
United States Dollar 48.0%
New Taiwan Dollar 18.4
Japanese Yen 11.0
Hong Kong Dollar 8.4
South Korean Won 8.2
Euro 3.9
Swedish Krona 1.5
British Pound Sterling 0.6
------
Total 100.0%
======
See Notes to Financial Statements Page 61
FIRST TRUST NASDAQ GLOBAL AUTO INDEX FUND (CARZ)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.2%
BERMUDA -- 1.5%
297,122 Brilliance China Automotive
Holdings Ltd. $ 294,475
--------------
CAYMAN ISLANDS -- 3.8%
57,095 China Harmony New Energy Auto
Holding Ltd. 21,383
377,899 Geely Automobile Holdings Ltd. 722,105
--------------
743,488
--------------
CHINA -- 5.3%
186,514 AviChina Industry & Technology
Co., Ltd., Class H 119,037
107,372 BAIC Motor Corp., Ltd.,
Class H (b) 70,168
46,543 BYD Co., Ltd., Class H (c) 280,446
48,260 Chongqing Changan Automobile
Co., Ltd., Class B 25,636
169,372 Dongfeng Motor Group Co., Ltd.,
Class H 169,589
209,849 Great Wall Motor Co., Ltd.,
Class H (c) 157,455
191,140 Guangzhou Automobile Group Co.,
Ltd., Class H 225,717
--------------
1,048,048
--------------
FRANCE -- 8.1%
32,431 Peugeot S.A. 790,893
12,040 Renault S.A. 795,635
--------------
1,586,528
--------------
GERMANY -- 22.8%
9,759 Bayerische Motoren Werke AG 752,621
27,541 Daimler AG 1,614,225
10,377 Porsche Automobil Holding SE
(Preference Shares) 651,167
9,398 Volkswagen AG (Preference
Shares) 1,479,290
--------------
4,497,303
--------------
ITALY -- 0.1%
10,679 Piaggio & C. S.p.A. 26,043
--------------
JAPAN -- 33.2%
58,335 Honda Motor Co., Ltd. 1,576,408
40,659 Mazda Motor Corp. 454,355
46,500 Mitsubishi Motors Corp. 246,702
95,476 Nissan Motor Co., Ltd. 782,381
3,600 Nissan Shatai Co., Ltd. 31,151
32,565 Subaru Corp. 741,182
16,159 Suzuki Motor Corp. 714,128
27,476 Toyota Motor Corp. 1,608,200
19,912 Yamaha Motor Co., Ltd. 390,047
--------------
6,544,554
--------------
MALAYSIA -- 0.1%
20,593 UMW Holdings Bhd 28,903
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SOUTH KOREA -- 6.5%
7,342 Hyundai Motor Co. $ 772,944
16,482 Kia Motors Corp. 513,293
--------------
1,286,237
--------------
TAIWAN -- 0.2%
58,624 Yulon Motor Co., Ltd. 36,996
--------------
UNITED STATES -- 17.6%
94,155 Ford Motor Co. 826,681
41,831 General Motors Co. 1,551,930
10,163 Harley-Davidson, Inc. 362,412
2,581 Tesla, Inc. (d) 722,319
--------------
3,463,342
--------------
TOTAL COMMON STOCKS -- 99.2% 19,555,917
(Cost $22,552,070) --------------
MONEY MARKET FUNDS -- 0.2%
32,692 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.42% (e) (f) 32,692
(Cost $32,692) --------------
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.6%
$ 188,251 BNP Paribas S.A., 2.50% (e),
dated 03/29/19, due 04/01/19,
with a maturity value
of $188,290. Collateralized by
U.S. Treasury Note, interest
rate of 2.75%, due 02/15/24.
The value of the collateral
including accrued interest is
$192,102. (f) 188,251
124,013 JPMorgan Chase & Co.,
2.50% (e), dated 03/29/19, due
04/01/19, with a maturity
value of $124,039.
Collateralized by U.S.
Treasury Note, interest rate
of 1.25%, due 07/31/23. The
value of the collateral
including accrued
interest is $126,570. (f) 124,013
--------------
TOTAL REPURCHASE AGREEMENTS
-- 1.6% 312,264
(Cost $312,264) --------------
TOTAL INVESTMENTS -- 101.0% 19,900,873
(Cost $22,897,026) (g)
NET OTHER ASSETS AND
LIABILITIES -- (1.0)% (191,953)
--------------
NET ASSETS -- 100.0% $ 19,708,920
==============
Page 62 See Notes to Financial Statements
FIRST TRUST NASDAQ GLOBAL AUTO INDEX FUND (CARZ)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is restricted in the U.S. and cannot be offered for public
sale without first being registered under the Securities Act of 1933, as
amended. This security is not restricted on the foreign exchange where it
trades freely without any additional registration. As such, it does not
require the additional disclosure required of restricted securities.
(c) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The aggregate value of such
securities is $328,100 and the total value of the collateral held by the
Fund is $344,956.
(d) Non-income producing security.
(e) Rate shown reflects yield as of March 31, 2019.
(f) This security serves as collateral for securities on loan.
(g) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $493,637 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $3,489,790. The net unrealized depreciation was
$2,996,153.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statement):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 19,555,917 $ -- $ --
Money Market
Funds 32,692 -- --
Repurchase
Agreements -- 312,264 --
----------------------------------------------
Total Investments $ 19,588,609 $ 312,264 $ --
==============================================
* 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) $ 328,100
Non-cash Collateral(2) (328,100)
--------------
Net Amount $ --
==============
(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.
(2) At March 31, 2019, 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:
REPURCHASE AGREEMENTS
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(3) $ 312,264
Non-cash Collateral(4) (312,264)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At March 31, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
Japanese Yen 32.9%
Euro 30.7
United States Dollar 19.1
Hong Kong Dollar 10.5
South Korean Won 6.5
New Taiwan Dollar 0.2
Malaysian Ringgit 0.1
------
Total 100.0%
======
See Notes to Financial Statements Page 63
FIRST TRUST CLOUD COMPUTING ETF (SKYY)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.5%
CANADA -- 4.6%
2,540,641 Open Text Corp. $ 97,636,833
--------------
GERMANY -- 4.7%
867,007 SAP SE, ADR 100,104,628
--------------
INDIA -- 1.3%
6,860,807 Wipro Ltd., ADR 27,306,012
--------------
ISRAEL -- 1.4%
240,232 Check Point Software
Technologies Ltd. (b) 30,386,946
--------------
UNITED STATES -- 87.5%
538,518 Activision Blizzard, Inc. 24,518,725
107,039 Adobe, Inc. (b) 28,524,823
1,307,547 Akamai Technologies, Inc. (b) 93,764,195
81,018 Alphabet, Inc., Class A (b) 95,349,274
53,174 Amazon.com, Inc. (b) 94,689,600
266,559 Apple, Inc. 50,632,882
1,877,891 Cisco Systems, Inc. 101,387,335
225,843 Equinix, Inc. 102,343,014
522,714 F5 Networks, Inc. (b) 82,029,508
596,569 Facebook, Inc., Class A (b) 99,442,087
3,173,195 Hewlett Packard Enterprise Co. 48,962,399
383,039 International Business Machines
Corp. 54,046,803
125,213 Intuit, Inc. 32,731,930
363,925 j2 Global, Inc. 31,515,905
3,131,093 Juniper Networks, Inc. 82,880,032
429,200 Microsoft Corp. 50,619,848
1,344,317 NetApp, Inc. 93,214,941
314,153 Netflix, Inc. (b) 112,014,394
1,002,994 NetScout Systems, Inc. (b) 28,154,042
1,843,652 Oracle Corp. 99,022,549
610,182 salesforce.com, Inc. (b) 96,634,523
2,388,881 Teradata Corp. (b) 104,274,656
643,250 VMware, Inc., Class A 116,113,057
24,832,759 Zynga, Inc., Class A (b) 132,358,605
--------------
1,855,225,127
--------------
TOTAL INVESTMENTS -- 99.5% 2,110,659,546
(Cost $1,767,311,597) (c)
NET OTHER ASSETS AND
LIABILITIES -- 0.5% 11,156,448
--------------
NET ASSETS -- 100.0% $2,121,815,994
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $357,120,063 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $13,772,114. The net unrealized appreciation
was $343,347,949.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $2,110,659,546 $ -- $ --
==============================================
* See Portfolio of Investments for country breakout.
Page 64 See Notes to Financial Statements
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.7%
AUSTRALIA -- 0.9%
9,410 Netwealth Group Ltd. $ 55,056
9,526 WiseTech Global Ltd. 156,383
--------------
211,439
--------------
BRAZIL -- 1.6%
9,871 IRB Brasil Resseguros S.A. 229,420
16,730 Notre Dame Intermedica
Participacoes S.A. 139,597
--------------
369,017
--------------
CANADA -- 3.2%
3,491 Shopify, Inc., Class A (b) 721,310
--------------
CAYMAN ISLANDS -- 25.8%
9,604 Bilibili, Inc., ADR (b) 181,996
116,855 CK Asset Holdings Ltd. 1,039,049
84,362 Country Garden Services Holdings
Co., Ltd. (b) 157,118
9,487 Farfetch Ltd., Class A (b) 255,295
4,978 GDS Holdings Ltd., ADR (b) 177,665
31,833 HKBN Ltd. 50,690
36,708 Innovent Biologics, Inc. (b) (c) 133,973
36,775 Pinduoduo, Inc., ADR (b) 912,020
12,801 Sea Ltd., ADR (b) 301,080
8,901 StoneCo., Ltd., Class A (b) 365,920
25,869 Tencent Music Entertainment
Group, ADR (b) 468,229
38,678 Wuxi Biologics Cayman,
Inc. (b) (c) 376,189
545,410 Xiaomi Corp., Class B (b) (c) 790,676
41,417 Yihai International Holding Ltd. 184,399
24,851 ZTO Express Cayman, Inc., ADR 454,276
--------------
5,848,575
--------------
CHINA -- 19.0%
5,568,422 China Tower Corp. Ltd.,
Class H (b) (c) 1,291,031
349,213 China Vanke Co., Ltd., Class H 1,468,039
2,563,661 Postal Savings Bank of China Co.,
Ltd., Class H (c) 1,466,358
17,800 YiChang HEC ChangJiang
Pharmaceutical Co., Ltd.,
Class H (c) 77,096
--------------
4,302,524
--------------
DENMARK -- 6.3%
1,465 Ascendis Pharma A/S, ADR (b) 172,430
16,625 Orsted A/S (c) 1,259,977
--------------
1,432,407
--------------
FINLAND -- 0.5%
4,741 Valmet OYJ 119,980
--------------
GERMANY -- 9.1%
5,100 Knorr-Bremse AG (b) 506,476
3,404 Scout24 AG (c) 176,260
31,638 Siemens Healthineers AG (c) 1,318,457
1,512 Varta AG (b) 64,519
--------------
2,065,712
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
HONG KONG -- 0.3%
68,000 Genertec Universal Medical Group
Co., Ltd. (c) $ 61,850
--------------
IRELAND -- 0.8%
7,009 nVent Electric PLC 189,103
--------------
ITALY -- 2.7%
51,654 Poste Italiane S.p.A. (c) 502,483
7,949 Technogym S.p.A. (c) 97,818
--------------
600,301
--------------
JAPAN -- 10.3%
113,900 Japan Post Holdings Co., Ltd. 1,331,899
6,300 Kyushu Railway Co. 206,912
12,700 SG Holdings Co., Ltd. 369,552
37,900 Softbank Corp. 426,431
--------------
2,334,794
--------------
JERSEY ISLAND -- 1.0%
4,508 Novocure Ltd. (b) 217,150
--------------
MULTI-NATIONAL -- 1.3%
279,749 HK Electric Investments & HK
Electric Investments Ltd. 285,809
--------------
NETHERLANDS -- 8.5%
935 Adyen N.V. (b) (c) 732,091
1,199 Argenx SE, ADR (b) 149,683
7,733 Ferrari N.V. 1,036,607
--------------
1,918,381
--------------
SINGAPORE -- 0.6%
17,612 BOC Aviation Ltd. (c) 143,701
--------------
SPAIN -- 1.2%
9,163 Cellnex Telecom S.A. (c) 268,889
--------------
SWEDEN -- 2.0%
1,139 Evolution Gaming Group AB (c) 89,738
27,302 Tele2 AB, Class B 363,692
--------------
453,430
--------------
UNITED KINGDOM -- 4.6%
7,578 Atlassian Corp. PLC, Class A (b) 851,691
29,543 Auto Trader Group PLC (c) 200,704
--------------
1,052,395
--------------
TOTAL INVESTMENTS -- 99.7% 22,596,767
(Cost $20,379,134) (d)
NET OTHER ASSETS AND
LIABILITIES -- 0.3% 65,387
--------------
NET ASSETS -- 100.0% $ 22,662,154
==============
See Notes to Financial Statements Page 65
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) Non-income producing security.
(c) This security is restricted in the U.S. and cannot be offered for public
sale without first being registered under the Securities Act of 1933, as
amended. This security is not restricted on the foreign exchange where it
trades freely without any additional registration. As such, it does not
require the additional disclosure required of restricted securities.
(d) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $2,766,114 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $548,481. The net unrealized appreciation was
$2,217,633.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 22,596,767 $ -- $ --
==============================================
* See Portfolio of Investments for country breakout.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
Hong Kong Dollar 33.3%
United States Dollar 24.0
Euro 21.4
Japanese Yen 10.3
Danish Krone 5.6
Swedish Krona 2.0
Brazilian Real 1.6
Australian Dollar 0.9
British Pound Sterling 0.9
------
Total 100.0%
======
Page 66 See Notes to Financial Statements
FIRST TRUST NASDAQ CYBERSECURITY ETF (CIBR)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.9%
FRANCE -- 2.9%
194,293 Thales S.A. $ 23,266,078
--------------
ISRAEL -- 6.7%
195,825 Check Point Software
Technologies Ltd. (b) 24,769,904
218,179 CyberArk Software Ltd. (b) 25,974,210
143,156 Radware Ltd. (b) 3,740,666
--------------
54,484,780
--------------
JAPAN -- 3.2%
72,300 FFRI, Inc. (b) 2,074,474
485,536 Trend Micro, Inc. 23,613,093
--------------
25,687,567
--------------
JERSEY -- 1.7%
295,297 Mimecast Ltd. (b) 13,982,313
--------------
SOUTH KOREA -- 0.3%
47,245 Ahnlab, Inc. 2,176,824
--------------
UNITED KINGDOM -- 4.8%
1,066,461 Avast PLC (b) (c) 3,935,091
3,863,894 BAE Systems PLC 24,277,038
839,914 NCC Group PLC 1,531,532
1,285,487 Sophos Group PLC (c) 5,036,267
214,259 Ultra Electronics Holdings PLC 4,453,846
--------------
39,233,774
--------------
UNITED STATES -- 80.3%
245,515 A10 Networks, Inc. (b) 1,740,701
343,805 Akamai Technologies, Inc. (b) 24,654,257
453,074 Booz Allen Hamilton Holding
Corp. 26,341,722
1,002,429 Carbon Black, Inc. (b) 13,983,885
925,224 Cisco Systems, Inc. 49,952,844
142,437 F5 Networks, Inc. (b) 22,352,638
1,428,965 FireEye, Inc. (b) 23,992,322
278,728 ForeScout Technologies, Inc. (b) 11,681,491
551,894 Fortinet, Inc. (b) 46,342,539
162,778 Itron, Inc. (b) 7,593,594
884,395 Juniper Networks, Inc. 23,409,936
285,542 KeyW Holding (The) Corp. (b) 2,461,372
370,792 Leidos Holdings, Inc. 23,764,059
94,588 ManTech International Corp.,
Class A 5,109,644
384,270 MobileIron, Inc. (b) 2,101,957
282,157 Okta, Inc. (b) 23,342,849
136,208 OneSpan, Inc. (b) 2,617,918
194,498 Palo Alto Networks, Inc. (b) 47,239,674
202,807 Proofpoint, Inc. (b) 24,626,854
286,374 Qualys, Inc. (b) 23,694,585
331,501 Rapid7, Inc. (b) 16,777,266
256,831 Raytheon Co. 46,763,788
230,700 Ribbon Communications, Inc. (b) 1,188,105
609,060 SailPoint Technologies Holding,
Inc. (b) 17,492,203
190,748 SecureWorks Corp., Class A (b) 3,509,763
352,509 Splunk, Inc. (b) 43,922,621
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
UNITED STATES (CONTINUED)
1,064,894 Symantec Corp. $ 24,481,913
299,241 Tenable Holdings, Inc. (b) 9,473,970
293,261 Varonis Systems, Inc. (b) 17,487,153
134,518 VeriSign, Inc. (b) 24,423,088
219,927 Zix Corp. (b) 1,513,098
482,074 Zscaler, Inc. (b) 34,193,509
--------------
648,231,318
--------------
TOTAL INVESTMENTS -- 99.9% 807,062,654
(Cost $717,864,983) (d)
NET OTHER ASSETS AND
LIABILITIES -- 0.1% 443,732
--------------
NET ASSETS -- 100.0% $ 807,506,386
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) Non-income producing security.
(c) This security is restricted in the U.S. and cannot be offered for public
sale without first being registered under the Securities Act of 1933, as
amended. This security is not restricted on the foreign exchange where it
trades freely without any additional registration. As such, it does not
require the additional disclosure required of restricted securities.
(d) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $110,152,889 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $20,955,218. The net unrealized appreciation
was $89,197,671.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 807,062,654 $ -- $ --
==============================================
* See Portfolio of Investments for country breakout.
See Notes to Financial Statements Page 67
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 2019 (UNAUDITED)
FIRST TRUST
FIRST TRUST FTSE EPRA/NAREIT
STOXX(R) EUROPEAN DEVELOPED MARKETS
SELECT DIVIDEND REAL ESTATE
INDEX FUND INDEX FUND
(FDD) (FFR)
---------------------- ----------------------
ASSETS:
Investments, at value ................................................. $ 344,232,029 $ 50,022,455
Cash .................................................................. 89,465 --
Foreign currency, at value ............................................ 420,553 29,134
Receivables:
Investment securities sold ......................................... -- --
Capital shares sold ................................................ -- --
Reclaims ........................................................... 2,544,111 36,318
Dividends .......................................................... 1,613,597 189,410
Securities lending income .......................................... -- --
From investment advisor ............................................ -- 7,048
Foreign capital gains tax .......................................... -- --
Prepaid expenses ...................................................... 8,298 4,081
---------------- ----------------
TOTAL ASSETS ....................................................... 348,908,053 50,288,446
---------------- ----------------
LIABILITIES:
Due to custodian ...................................................... -- 23,878
Due to custodian foreign currency ..................................... -- --
Payables:
Investment securities purchased .................................... -- --
Investment advisory fees ........................................... 120,381 --
Licensing fees ..................................................... 51,780 14,201
Shareholder reporting fees ......................................... 29,363 8,354
Audit and tax fees ................................................. 15,105 17,964
Trustees' fees ..................................................... 188 162
Collateral for securities on loan .................................. -- --
Other liabilities ..................................................... 135,776 47,219
---------------- ----------------
TOTAL LIABILITIES .................................................. 352,593 111,778
---------------- ----------------
NET ASSETS ............................................................ $ 348,555,460 $ 50,176,668
================ ================
NET ASSETS CONSIST OF:
Paid-in capital ....................................................... $ 372,558,995 $ 44,323,479
Par value ............................................................. 272,033 10,500
Accumulated distributable earnings (loss) ............................. (24,275,568) 5,842,689
---------------- ----------------
NET ASSETS ............................................................ $ 348,555,460 $ 50,176,668
================ ================
NET ASSET VALUE, per share ............................................ $ 12.81 $ 47.79
================ ================
Number of shares outstanding (unlimited number of shares
authorized, par value $0.01 per share) ............................. 27,203,334 1,050,002
================ ================
Investments, at cost .................................................. $ 356,676,914 $ 42,628,174
================ ================
Foreign currency, at cost (proceeds) .................................. $ 420,556 $ 29,128
================ ================
Securities on loan, at value .......................................... $ -- $ --
================ ================
Page 68 See Notes to Financial Statements
FIRST TRUST FIRST TRUST
FIRST TRUST FIRST TRUST GLOBAL NASDAQ(R) CLEAN FIRST TRUST
DOW JONES GLOBAL GLOBAL ENGINEERING EDGE(R) SMART GRID INDXX GLOBAL
SELECT DIVIDEND WIND ENERGY AND CONSTRUCTION INFRASTRUCTURE NATURAL RESOURCES
INDEX FUND ETF ETF INDEX FUND INCOME ETF
(FGD) (FAN) (FLM) (GRID) (FTRI)
--------------------- --------------------- --------------------- --------------------- ---------------------
$ 494,130,642 $ 72,237,238 $ 12,820,417 $ 27,193,409 $ 8,458,033
-- -- 24,034 27,403 2,491
4,701,669 741 -- -- 1,638
1,213 -- -- -- --
-- -- -- -- --
1,228,112 200,981 10,494 34,700 17,046
4,594,282 154,677 85,902 11,118 90,755
-- 3,466 266 1,599 30
-- -- -- -- --
-- -- -- -- --
6,513 4,136 3,837 192 --
--------------- --------------- --------------- --------------- ---------------
504,662,431 72,601,239 12,944,950 27,268,421 8,569,993
--------------- --------------- --------------- --------------- ---------------
391,233 -- -- -- --
-- -- 5 1 --
4,578,099 -- -- -- --
172,674 18,602 1,923 5,683 5,152
29,877 17,877 3,069 5,839 --
32,820 12,944 6,471 7,964 --
17,963 16,830 16,830 16,830 --
172 163 161 163 --
-- 60,004 398,735 1,000,992 17,891
180,301 37,294 7,821 13,718 --
--------------- --------------- --------------- --------------- ---------------
5,403,139 163,714 435,015 1,051,190 23,043
--------------- --------------- --------------- --------------- ---------------
$ 499,259,292 $ 72,437,525 $ 12,509,935 $ 26,217,231 $ 8,546,950
=============== =============== =============== =============== ===============
$ 590,590,884 $ 132,462,435 $ 20,007,729 $ 30,157,258 $ 69,261,809
214,500 55,500 2,500 6,000 7,000
(91,546,092) (60,080,410) (7,500,294) (3,946,027) (60,721,859)
--------------- --------------- --------------- --------------- ---------------
$ 499,259,292 $ 72,437,525 $ 12,509,935 $ 26,217,231 $ 8,546,950
=============== =============== =============== =============== ===============
$ 23.28 $ 13.05 $ 50.04 $ 43.70 $ 12.21
=============== =============== =============== =============== ===============
21,450,002 5,550,002 250,002 600,002 700,002
=============== =============== =============== =============== ===============
$ 528,284,955 $ 70,997,403 $ 12,645,033 $ 29,074,798 $ 7,816,300
=============== =============== =============== =============== ===============
$ 4,746,876 $ 746 $ -- $ (1) $ 1,638
=============== =============== =============== =============== ===============
$ -- $ 57,178 $ 369,926 $ 974,843 $ 17,082
=============== =============== =============== =============== ===============
See Notes to Financial Statements Page 69
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
FIRST TRUST FIRST TRUST
INDXX GLOBAL BICK
AGRICULTURE ETF INDEX FUND
(FTAG) (BICK)
---------------------- ----------------------
ASSETS:
Investments, at value ................................................. $ 4,390,247 $ 151,664,010
Cash .................................................................. -- --
Foreign currency, at value ............................................ 54 6
Receivables:
Investment securities sold ......................................... -- --
Capital shares sold ................................................ -- --
Reclaims ........................................................... 12,684 29,086
Dividends .......................................................... 7,437 703,150
Securities lending income .......................................... -- --
From investment advisor ............................................ -- --
Foreign capital gains tax .......................................... 282 --
Prepaid expenses ...................................................... -- --
---------------- ----------------
TOTAL ASSETS ....................................................... 4,410,704 152,396,252
---------------- ----------------
LIABILITIES:
Due to custodian ...................................................... 1,795 6,406
Due to custodian foreign currency ..................................... -- --
Payables:
Investment securities purchased .................................... -- 83,335
Investment advisory fees ........................................... 2,675 --
Licensing fees ..................................................... -- --
Shareholder reporting fees ......................................... -- --
Audit and tax fees ................................................. -- --
Trustees' fees ..................................................... -- --
Collateral for securities on loan .................................. -- --
Other liabilities ..................................................... -- --
---------------- ----------------
TOTAL LIABILITIES .................................................. 4,470 89,741
---------------- ----------------
NET ASSETS ............................................................ $ 4,406,234 $ 152,306,511
================ ================
NET ASSETS CONSIST OF:
Paid-in capital ....................................................... $ 23,895,612 $ 170,821,829
Par value ............................................................. 1,899 56,000
Accumulated distributable earnings (loss) ............................. (19,491,277) (18,571,318)
---------------- ----------------
NET ASSETS ............................................................ $ 4,406,234 $ 152,306,511
================ ================
NET ASSET VALUE, per share ............................................ $ 23.20 $ 27.20
================ ================
Number of shares outstanding (unlimited number of shares
authorized, par value $0.01 per share) ............................. 189,928 5,600,002
================ ================
Investments, at cost .................................................. $ 4,752,756 $ 147,879,782
================ ================
Foreign currency, at cost (proceeds) .................................. $ 52 $ 6
================ ================
Securities on loan, at value .......................................... $ -- $ --
================ ================
Page 70 See Notes to Financial Statements
FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST
NASDAQ NASDAQ GLOBAL CLOUD INTERNATIONAL NASDAQ
SMARTPHONE AUTO COMPUTING EQUITY CYBERSECURITY
INDEX FUND INDEX FUND ETF OPPORTUNITIES ETF ETF
(FONE) (CARZ) (SKYY) (FPXI) (CIBR)
--------------------- --------------------- --------------------- --------------------- ---------------------
$ 15,304,326 $ 19,900,873 $ 2,110,659,546 $ 22,596,767 $ 807,062,654
43,784 -- 11,531,223 1,055 817,949
2 8,004 -- -- --
-- -- -- -- --
-- -- 2,878,990 -- --
1,828 26,097 118,427 17,833 7,310
29,468 130,798 552,575 59,904 31,089
1,092 346 1,465 -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
--------------- --------------- --------------- --------------- ---------------
15,380,500 20,066,118 2,125,742,226 22,675,559 807,919,002
--------------- --------------- --------------- --------------- ---------------
-- 350 -- -- --
-- -- -- -- 48
-- -- 2,863,305 -- --
8,640 11,892 1,062,927 13,405 412,568
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
716,210 344,956 -- -- --
-- -- -- -- --
--------------- --------------- --------------- --------------- ---------------
724,850 357,198 3,926,232 13,405 412,616
--------------- --------------- --------------- --------------- ---------------
$ 14,655,650 $ 19,708,920 $ 2,121,815,994 $ 22,662,154 $ 807,506,386
=============== =============== =============== =============== ===============
$ 15,224,761 $ 26,150,479 $ 1,702,188,110 $ 22,632,131 $ 733,898,591
3,000 6,000 368,500 6,500 288,000
(572,111) (6,447,559) 419,259,384 23,523 73,319,795
--------------- --------------- --------------- --------------- ---------------
$ 14,655,650 $ 19,708,920 $ 2,121,815,994 $ 22,662,154 $ 807,506,386
=============== =============== =============== =============== ===============
$ 48.85 $ 32.85 $ 57.58 $ 34.86 $ 28.04
=============== =============== =============== =============== ===============
300,002 600,002 36,850,002 650,002 28,800,002
=============== =============== =============== =============== ===============
$ 14,480,000 $ 22,897,026 $ 1,767,311,597 $ 20,379,134 $ 717,864,983
=============== =============== =============== =============== ===============
$ 2 $ 7,986 $ -- $ -- $ (48)
=============== =============== =============== =============== ===============
$ 684,795 $ 328,100 $ -- $ -- $ --
=============== =============== =============== =============== ===============
See Notes to Financial Statements Page 71
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2019 (UNAUDITED)
FIRST TRUST
FIRST TRUST FTSE EPRA/NAREIT
STOXX(R) EUROPEAN DEVELOPED MARKETS
SELECT DIVIDEND REAL ESTATE
INDEX FUND INDEX FUND
(FDD) (FFR)
---------------------- ----------------------
INVESTMENT INCOME:
Dividends ............................................................. $ 6,168,042 $ 859,958
Securities lending income (net of fees) ............................... -- --
Foreign withholding tax ............................................... (378,290) (36,232)
---------------- ----------------
Total investment income ............................................ 5,789,752 823,726
---------------- ----------------
EXPENSES:
Investment advisory fees .............................................. 744,422 91,605
Licensing fees ........................................................ 95,631 27,482
Accounting and administration fees .................................... 93,807 14,487
Custodian fees ........................................................ 44,885 47,426
Shareholder reporting fees ............................................ 25,420 8,876
Audit and tax fees .................................................... 11,430 13,213
Transfer agent fees ................................................... 9,305 1,145
Legal fees ............................................................ 6,595 758
Listing fees .......................................................... 4,423 3,491
Trustees' fees and expenses ........................................... 3,823 3,678
Registration and filing fees .......................................... 50 50
Other expenses ........................................................ 5,455 2,237
---------------- ----------------
Total expenses ..................................................... 1,045,246 214,448
Less fees waived and expenses reimbursed by
the investment advisor .......................................... -- (77,041)
---------------- ----------------
Net expenses ....................................................... 1,045,246 137,407
---------------- ----------------
NET INVESTMENT INCOME (LOSS) .......................................... 4,744,506 686,319
---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ........................................................ (3,469,854) (123,453)
In-kind redemptions ................................................ 7,076,487 --
Foreign currency transactions ...................................... 3,791 (1,594)
---------------- ----------------
Net realized gain (loss) .............................................. 3,610,424 (125,047)
---------------- ----------------
Net change in unrealized appreciation (depreciation) on:
Investments ........................................................ (17,939,401) 3,322,738
Foreign currency translation ....................................... (74,818) (504)
Deferred foreign capital gains tax ................................. -- --
---------------- ----------------
Net change in unrealized appreciation (depreciation) .................. (18,014,219) 3,322,234
---------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ............................... (14,403,795) 3,197,187
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS .................................................... $ (9,659,289) $ 3,883,506
================ ================
(a) Fund is subject to a unitary fee (see Note 3 in the Notes to Financial
Statements).
Page 72 See Notes to Financial Statements
FIRST TRUST FIRST TRUST
FIRST TRUST FIRST TRUST GLOBAL NASDAQ(R) CLEAN FIRST TRUST
DOW JONES GLOBAL GLOBAL ENGINEERING EDGE(R) SMART GRID INDXX GLOBAL
SELECT DIVIDEND WIND ENERGY AND CONSTRUCTION INFRASTRUCTURE NATURAL RESOURCES
INDEX FUND ETF ETF INDEX FUND INCOME ETF
(FGD) (FAN) (FLM) (GRID) (FTRI)
--------------------- --------------------- --------------------- --------------------- ---------------------
$ 15,227,211 $ 882,240 $ 134,372 $ 171,116 $ 262,135
-- 49,689 3,471 15,276 140
(893,207) (73,886) (12,321) (9,650) (13,311)
--------------- --------------- --------------- --------------- ---------------
14,334,004 858,043 125,522 176,742 248,964
--------------- --------------- --------------- --------------- ---------------
937,039 142,948 24,807 55,068 28,998 (a)
119,900 35,627 6,180 12,348 --
118,487 18,697 4,203 7,679 --
69,381 23,273 7,626 8,499 --
32,561 12,808 6,898 8,627 --
13,213 12,839 12,839 12,839 --
11,712 1,786 310 688 --
8,042 1,220 181 541 --
3,491 3,735 3,735 2,990 --
3,888 3,688 3,659 3,668 --
(451) 50 5 (151) --
6,097 1,128 426 365 --
--------------- --------------- --------------- --------------- ---------------
1,323,360 257,799 70,869 113,161 28,998
-- (43,377) (27,456) (16,793) --
--------------- --------------- --------------- --------------- ---------------
1,323,360 214,422 43,413 96,368 28,998
--------------- --------------- --------------- --------------- ---------------
13,010,644 643,621 82,109 80,374 219,966
--------------- --------------- --------------- --------------- ---------------
(24,288,126) (1,188,719) (395,453) (329,643) (81,566)
23,889,797 823,723 -- (223,824) --
(57,660) (11,301) (1,370) 8,179 (519)
--------------- --------------- --------------- --------------- ---------------
(455,989) (376,297) (396,823) (545,288) (82,085)
--------------- --------------- --------------- --------------- ---------------
(38,043,177) 3,203,036 (1,332,957) (2,636,877) (265,728)
(61,738) (3,971) (386) (8,611) (448)
-- -- -- -- --
--------------- --------------- --------------- --------------- ---------------
(38,104,915) 3,199,065 (1,333,343) (2,645,488) (266,176)
--------------- --------------- --------------- --------------- ---------------
(38,560,904) 2,822,768 (1,730,166) (3,190,776) (348,261)
--------------- --------------- --------------- --------------- ---------------
$ (25,550,260) $ 3,466,389 $ (1,648,057) $ (3,110,402) $ (128,295)
=============== =============== =============== =============== ===============
See Notes to Financial Statements Page 73
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE SIX MONTHS ENDED MARCH 31, 2019 (UNAUDITED)
FIRST TRUST
INDXX GLOBAL FIRST TRUST
AGRICULTURE BICK
ETF INDEX FUND
(FTAG) (BICK)
---------------------- ----------------------
INVESTMENT INCOME:
Dividends ............................................................. $ 32,869 $ 1,665,336
Securities lending income (net of fees) ............................... -- --
Foreign withholding tax................................................ (1,576) (94,896)
---------------- ----------------
Total investment income ............................................ 31,293 1,570,440
---------------- ----------------
EXPENSES:
Investment advisory fees .............................................. 15,714 (a) 497,339 (a)
Licensing fees ........................................................ -- --
Accounting and administration fees .................................... -- --
Custodian fees ........................................................ -- --
Shareholder reporting fees ............................................ -- --
Audit and tax fees .................................................... -- --
Transfer agent fees ................................................... -- --
Legal fees ............................................................ -- --
Listing fees .......................................................... -- --
Trustees' fees and expenses ........................................... -- --
Registration and filing fees .......................................... -- --
Other expenses ........................................................ -- --
---------------- ----------------
Total expenses ..................................................... 15,714 497,339
Less fees waived and expenses reimbursed by
the investment advisor .......................................... -- --
---------------- ----------------
Net expenses ....................................................... 15,714 497,339
---------------- ----------------
NET INVESTMENT INCOME (LOSS) .......................................... 15,579 1,073,101
---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ........................................................ (91,813) (8,308,255)
In-kind redemptions ................................................ -- 337,431
Foreign currency transactions ...................................... (285) (75,203)
---------------- ----------------
Net realized gain (loss) .............................................. (92,098) (8,046,027)
---------------- ----------------
Net change in unrealized appreciation (depreciation) on:
Investments ........................................................ (461,212) 9,209,695
Foreign currency translation ....................................... (294) (6,738)
Deferred foreign capital gains tax ................................. 12,289 --
---------------- ----------------
Net change in unrealized appreciation (depreciation)................... (449,217) 9,202,957
---------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ............................... (541,315) 1,156,930
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS .................................................... $ (525,736) $ 2,230,031
================ ================
(a) Fund is subject to a unitary fee (see Note 3 in the Notes to Financial
Statements).
Page 74 See Notes to Financial Statements
FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST
NASDAQ NASDAQ GLOBAL CLOUD INTERNATIONAL NASDAQ
SMARTPHONE AUTO COMPUTING EQUITY CYBERSECURITY
INDEX FUND INDEX FUND ETF OPPORTUNITIES ETF ETF
(FONE) (CARZ) (SKYY) (FPXI) (CIBR)
--------------------- --------------------- --------------------- --------------------- ---------------------
$ 97,409 $ 271,097 $ 16,815,327 $ 116,758 $ 2,978,573
5,800 4,479 20,182 -- --
(5,226) (20,386) (110,090) (10,512) (76,553)
--------------- --------------- --------------- --------------- ---------------
97,983 255,190 16,725,419 106,246 2,902,020
--------------- --------------- --------------- --------------- ---------------
48,755 (a) 68,170 (a) 5,553,347 (a) 76,532 (a) 2,224,983 (a)
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
--------------- --------------- --------------- --------------- ---------------
48,755 68,170 5,553,347 76,532 2,224,983
-- -- -- -- --
--------------- --------------- --------------- --------------- ---------------
48,755 68,170 5,553,347 76,532 2,224,983
--------------- --------------- --------------- --------------- ---------------
49,228 187,020 11,172,072 29,714 677,037
--------------- --------------- --------------- --------------- ---------------
(650,309) (1,059,534) (17,081,695) (884,589) (29,410,044)
353,224 514,388 111,130,916 471,160 36,736,351
(2,349) (2,964) -- 3,616 (25,806)
--------------- --------------- --------------- --------------- ---------------
(299,434) (548,110) 94,049,221 (409,813) 7,300,501
--------------- --------------- --------------- --------------- ---------------
(140,056) (927,485) (76,584,679) (285,195) (28,273,460)
(33) (925) -- (227) 238
-- -- -- -- --
--------------- --------------- --------------- --------------- ---------------
(140,089) (928,410) (76,584,679) (285,422) (28,273,222)
--------------- --------------- --------------- --------------- ---------------
(439,523) (1,476,520) 17,464,542 (695,235) (20,972,721)
--------------- --------------- --------------- --------------- ---------------
$ (390,295) $ (1,289,500) $ 28,636,614 $ (665,521) $ (20,295,684)
=============== =============== =============== =============== ===============
See Notes to Financial Statements Page 75
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF CHANGES IN NET ASSETS
FIRST TRUST
STOXX(R) EUROPEAN
SELECT DIVIDEND
INDEX FUND
(FDD)
---------------------------------------
Six Months Ended
3/31/2019 Year Ended
(Unaudited) 9/30/2018
------------------ ------------------
OPERATIONS:
Net investment income (loss)........................................................ $ 4,744,506 $ 22,830,152
Net realized gain (loss)............................................................ 3,610,424 12,482,381
Net change in unrealized appreciation (depreciation)................................ (18,014,219) (31,561,559)
---------------- ----------------
Net increase (decrease) in net assets resulting
from operations.................................................................. (9,659,289) 3,750,974
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations............................................................... (3,295,434) (22,961,086)
---------------- ----------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold........................................................... 20,077,185 33,402,329
Cost of shares redeemed............................................................. (113,390,956) (88,895,004)
---------------- ----------------
Net increase (decrease) in net assets resulting
from shareholder transactions.................................................... (93,313,771) (55,492,675)
---------------- ----------------
Total increase (decrease) in net assets............................................. (106,268,494) (74,702,787)
NET ASSETS:
Beginning of period................................................................. 454,823,954 529,526,741
---------------- ----------------
End of period....................................................................... $ 348,555,460 $ 454,823,954
================ ================
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period............................................. 34,653,334 38,903,334
Shares sold......................................................................... 1,550,000 2,400,000
Shares redeemed..................................................................... (9,000,000) (6,650,000)
---------------- ----------------
Shares outstanding, end of period................................................... 27,203,334 34,653,334
================ ================
Page 76 See Notes to Financial Statements
FIRST TRUST FIRST TRUST
FTSE EPRA/NAREIT DOW JONES FIRST TRUST
DEVELOPED MARKETS REAL ESTATE GLOBAL SELECT DIVIDEND GLOBAL WIND ENERGY
INDEX FUND INDEX FUND ETF
(FFR) (FGD) (FAN)
---------------------------------------- --------------------------------------- ---------------------------------------
Six Months Ended Six Months Ended Six Months Ended
3/31/2019 Year Ended 3/31/2019 Year Ended 3/31/2019 Year Ended
(Unaudited) 9/30/2018 (Unaudited) 9/30/2018 (Unaudited) 9/30/2018
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 686,319 $ 1,644,323 $ 13,010,644 $ 22,306,646 $ 643,621 $ 2,021,405
(125,047) 1,216,974 (455,989) 6,707,884 (376,297) 7,703,093
3,322,234 (1,125,678) (38,104,915) (18,687,717) 3,199,065 (12,612,504)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
3,883,506 1,735,619 (25,550,260) 10,326,813 3,466,389 (2,888,006)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(872,527) (1,810,508) (10,543,681) (22,052,312) (841,250) (1,611,016)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
2,091,995 -- 144,382,679 58,302,537 3,188,790 17,312,970
-- (6,551,405) (93,309,432) (33,183,708) (12,738,765) (33,918,808)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
2,091,995 (6,551,405) 51,073,247 25,118,829 (9,549,975) (16,605,838)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
5,102,974 (6,626,294) 14,979,306 13,393,330 (6,924,836) (21,104,860)
45,073,694 51,699,988 484,279,986 470,886,656 79,362,361 100,467,221
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
$ 50,176,668 $ 45,073,694 $ 499,259,292 $ 484,279,986 $ 72,437,525 $ 79,362,361
================ ================ ================ ================ ================ ================
1,000,002 1,150,002 19,250,002 18,300,002 6,350,002 7,650,002
50,000 -- 6,100,000 2,250,000 250,000 1,300,000
-- (150,000) (3,900,000) (1,300,000) (1,050,000) (2,600,000)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
1,050,002 1,000,002 21,450,002 19,250,002 5,550,002 6,350,002
================ ================ ================ ================ ================ ================
See Notes to Financial Statements Page 77
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIRST TRUST
GLOBAL ENGINEERING
AND CONSTRUCTION
ETF
(FLM)
---------------------------------------
Six Months Ended
3/31/2019 Year Ended
(Unaudited) 9/30/2018
------------------ ------------------
OPERATIONS:
Net investment income (loss)........................................................ $ 82,109 $ 271,464
Net realized gain (loss)............................................................ (396,823) 1,341,015
Net change in unrealized appreciation (depreciation)................................ (1,333,343) (1,767,255)
---------------- ----------------
Net increase (decrease) in net assets resulting
from operations.................................................................. (1,648,057) (154,776)
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations............................................................... (36,325) (341,187)
---------------- ----------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold........................................................... -- 3,108,725
Cost of shares redeemed............................................................. -- (5,484,426)
---------------- ----------------
Net increase (decrease) in net assets resulting
from shareholder transactions.................................................... -- (2,375,701)
---------------- ----------------
Total increase (decrease) in net assets............................................. (1,684,382) (2,871,664)
NET ASSETS:
Beginning of period................................................................. 14,194,317 17,065,981
---------------- ----------------
End of period....................................................................... $ 12,509,935 $ 14,194,317
================ ================
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period............................................. 250,002 300,002
Shares sold......................................................................... -- 50,000
Shares redeemed..................................................................... -- (100,000)
---------------- ----------------
Shares outstanding, end of period................................................... 250,002 250,002
================ ================
Page 78 See Notes to Financial Statements
FIRST TRUST FIRST TRUST
NASDAQ(R) CLEAN EDGE(R) INDXX GLOBAL FIRST TRUST
SMART GRID INFRASTRUCTURE NATURAL RESOURCES INDXX GLOBAL
INDEX FUND INCOME ETF AGRICULTURE ETF
(GRID) (FTRI) (FTAG)
---------------------------------------- --------------------------------------- ---------------------------------------
Six Months Ended Six Months Ended Six Months Ended
3/31/2019 Year Ended 3/31/2019 Year Ended 3/31/2019 Year Ended
(Unaudited) 9/30/2018 (Unaudited) 9/30/2018 (Unaudited) 9/30/2018
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 80,374 $ 363,210 $ 219,966 $ 331,431 $ 15,579 $ 103,491
(545,288) 3,091,956 (82,085) 503,050 (92,098) 823,269
(2,645,488) (4,075,063) (266,176) 89,168 (449,217) (1,051,274)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(3,110,402) (619,897) (128,295) 923,649 (525,736) (124,514)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(68,790) (398,796) (232,541) (320,671) (46,893) (90,971)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
-- 12,522,625 -- -- -- 1,350,249
(3,936,651) (5,121,525) -- (608,642) -- (3,972,391)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(3,936,651) 7,401,100 -- (608,642) -- (2,622,142)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(7,115,843) 6,382,407 (360,836) (5,664) (572,629) (2,837,627)
33,333,074 26,950,667 8,907,786 8,913,450 4,978,863 7,816,490
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
$ 26,217,231 $ 33,333,074 $ 8,546,950 $ 8,907,786 $ 4,406,234 $ 4,978,863
================ ================ ================ ================ ================ ================
700,002 550,002 700,002 750,002 189,928 289,928
-- 250,000 -- -- -- 50,000
(100,000) (100,000) -- (50,000) -- (150,000)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
600,002 700,002 700,002 700,002 189,928 189,928
================ ================ ================ ================ ================ ================
See Notes to Financial Statements Page 79
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIRST TRUST
BICK
INDEX FUND
(BICK)
---------------------------------------
Six Months Ended
3/31/2019 Year Ended
(Unaudited) 9/30/2018
------------------ ------------------
OPERATIONS:
Net investment income (loss)........................................................ $ 1,073,101 $ 3,028,554
Net realized gain (loss)............................................................ (8,046,027) 1,367,638
Net change in unrealized appreciation (depreciation)................................ 9,202,957 (22,488,608)
---------------- ----------------
Net increase (decrease) in net assets resulting
from operations.................................................................. 2,230,031 (18,092,416)
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations............................................................... (1,885,171) (2,678,851)
---------------- ----------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold........................................................... 17,363,531 38,356,789
Cost of shares redeemed............................................................. (56,050,336) (29,799,700)
---------------- ----------------
Net increase (decrease) in net assets resulting
from shareholder transactions.................................................... (38,686,805) 8,557,089
---------------- ----------------
Total increase (decrease) in net assets............................................. (38,341,945) (12,214,178)
NET ASSETS:
Beginning of period................................................................. 190,648,456 202,862,634
---------------- ----------------
End of period....................................................................... $ 152,306,511 $ 190,648,456
================ ================
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period............................................. 7,200,002 7,050,002
Shares sold......................................................................... 650,000 1,250,000
Shares redeemed..................................................................... (2,250,000) (1,100,000)
---------------- ----------------
Shares outstanding, end of period................................................... 5,600,002 7,200,002
================ ================
Page 80 See Notes to Financial Statements
FIRST TRUST FIRST TRUST
NASDAQ NASDAQ FIRST TRUST
SMARTPHONE GLOBAL AUTO CLOUD COMPUTING
INDEX FUND INDEX FUND ETF
(FONE) (CARZ) (SKYY)
---------------------------------------- --------------------------------------- ---------------------------------------
Six Months Ended Six Months Ended Six Months Ended
3/31/2019 Year Ended 3/31/2019 Year Ended 3/31/2019 Year Ended
(Unaudited) 9/30/2018 (Unaudited) 9/30/2018 (Unaudited) 9/30/2018
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 49,228 $ 215,764 $ 187,020 $ 492,875 $ 11,172,072 $ 4,152,426
(299,434) 3,299,218 (548,110) 212,654 94,049,221 197,763,353
(140,089) (3,474,504) (928,410) (2,274,354) (76,584,679) 242,652,662
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(390,295) 40,478 (1,289,500) (1,568,825) 28,636,614 444,568,441
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(17,340) (316,837) (179,040) (458,452) (15,044,661) (4,648,945)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
-- 10,472,764 6,429,002 4,140,193 383,847,245 969,178,677
(2,306,358) (10,510,233) (3,418,979) (2,057,562) (342,762,712) (430,888,455)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(2,306,358) (37,469) 3,010,023 2,082,631 41,084,533 538,290,222
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(2,713,993) (313,828) 1,541,483 55,354 54,676,486 978,209,718
17,369,643 17,683,471 18,167,437 18,112,083 2,067,139,508 1,088,929,790
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
$ 14,655,650 $ 17,369,643 $ 19,708,920 $ 18,167,437 $ 2,121,815,994 $ 2,067,139,508
================ ================ ================ ================ ================ ================
350,002 350,002 500,002 450,002 36,450,002 26,000,002
200,000 200,000 100,000 7,350,000 18,850,000
(50,000) (200,000) (100,000) (50,000) (6,950,000) (8,400,000)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
300,002 350,002 600,002 500,002 36,850,002 36,450,002
================ ================ ================ ================ ================ ================
See Notes to Financial Statements Page 81
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIRST TRUST
INTERNATIONAL
EQUITY
OPPORTUNITIES ETF
(FPXI)
---------------------------------------
Six Months Ended
3/31/2019 Year Ended
(Unaudited) 9/30/2018
------------------ ------------------
OPERATIONS:
Net investment income (loss)........................................................ $ 29,714 $ 351,989
Net realized gain (loss)............................................................ (409,813) (888,129)
Net change in unrealized appreciation (depreciation)................................ (285,422) 971,566
---------------- ----------------
Net increase (decrease) in net assets resulting
from operations.................................................................. (665,521) 435,426
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations............................................................... (65,715) (400,571)
---------------- ----------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold........................................................... 3,404,060 5,608,443
Cost of shares redeemed............................................................. (6,332,370) (1,751,068)
---------------- ----------------
Net increase (decrease) in net assets resulting
from shareholder transactions.................................................... (2,928,310) 3,857,375
---------------- ----------------
Total increase (decrease) in net assets............................................. (3,659,546) 3,892,230
NET ASSETS:
Beginning of period................................................................. 26,321,700 22,429,470
---------------- ----------------
End of period....................................................................... $ 22,662,154 $ 26,321,700
================ ================
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period............................................. 750,002 650,002
Shares sold......................................................................... 100,000 150,000
Shares redeemed..................................................................... (200,000) (50,000)
---------------- ----------------
Shares outstanding, end of period................................................... 650,002 750,002
================ ================
Page 82 See Notes to Financial Statements
FIRST TRUST
NASDAQ
CYBERSECURITY ETF
(CIBR)
----------------------------------------
Six Months Ended
3/31/2019 Year Ended
(Unaudited) 9/30/2018
------------------ ------------------
$ 677,037 $ 233,083
7,300,501 39,357,016
(28,273,222) 94,156,868
---------------- ----------------
(20,295,684) 133,746,967
---------------- ----------------
(1,128,810) (387,720)
---------------- ----------------
140,336,569 587,931,146
(159,079,175) (187,191,788)
---------------- ----------------
(18,742,606) 400,739,358
---------------- ----------------
(40,167,100) 534,098,605
847,673,486 313,574,881
---------------- ----------------
$ 807,506,386 $ 847,673,486
================ ================
29,750,002 14,350,002
5,100,000 22,200,000
(6,050,000) (6,800,000)
---------------- ----------------
28,800,002 29,750,002
================ ================
See Notes to Financial Statements Page 83
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST STOXX(R) EUROPEAN SELECT DIVIDEND INDEX FUND (FDD)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 13.12 $ 13.61 $ 11.82 $ 11.92 $ 13.50 $ 12.94
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.17 0.59 0.42 0.55 0.55 0.58
Net realized and unrealized gain (loss) (0.36) (0.49) 1.79 (0.10) (1.59) 0.57
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (0.19) 0.10 2.21 0.45 (1.04) 1.15
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.12) (0.59) (0.42) (0.55) (0.54) (0.59)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 12.81 $ 13.12 $ 13.61 $ 11.82 $ 11.92 $ 13.50
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) (1.44)% 0.74% 18.93% 3.88% (7.90)% 8.68%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 348,555 $ 454,824 $ 529,527 $ 165,490 $ 165,751 $ 167,480
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.56%(b) 0.57% 0.60% 0.60% 0.60% 0.64%
Ratio of net expenses to average net
assets 0.56%(b) 0.57% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 2.55%(b) 4.25% 3.96% 4.63% 4.45% 4.90%
Portfolio turnover rate (c) 19% 35% 21% 34% 33% 32%
FIRST TRUST FTSE EPRA/NAREIT DEVELOPED MARKETS REAL ESTATE INDEX FUND (FFR)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 45.07 $ 44.96 $ 46.18 $ 41.00 $ 41.09 $ 39.87
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.69 1.48 0.89 0.90 1.15 1.05
Net realized and unrealized gain (loss) 2.89 0.31 (0.65) 5.20 0.11 1.27
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.58 1.79 0.24 6.10 1.26 2.32
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.86) (1.68) (1.46) (0.92) (1.35) (1.10)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 47.79 $ 45.07 $ 44.96 $ 46.18 $ 41.00 $ 41.09
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 8.15% 3.99% 0.67% 14.95% 2.97% 5.86%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 50,177 $ 45,074 $ 51,700 $ 71,576 $ 98,394 $ 108,887
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.94%(b) 0.85% 0.70% 0.72% 0.71% 0.71%
Ratio of net expenses to average net
assets 0.60%(b) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 3.00%(b) 3.48% 2.40% 2.53% 2.76% 2.45%
Portfolio turnover rate (c) 3% 9% 6% 6% 10% 12%
(a) 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.
(b) Annualized.
(c) 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.
Page 84 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 25.16 $ 25.73 $ 23.49 $ 21.62 $ 26.64 $ 25.62
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.63 1.15 1.03 1.07 1.21 1.21
Net realized and unrealized gain (loss) (1.99) (0.58) 2.23 1.82 (4.97) 1.02
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (1.36) 0.57 3.26 2.89 (3.76) 2.23
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.52) (1.14) (1.02) (1.02) (1.26) (1.21)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 23.28 $ 25.16 $ 25.73 $ 23.49 $ 21.62 $ 26.64
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) (5.29)% 2.26% 14.14% 13.68% (14.51)% 8.56%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 499,259 $ 484,280 $ 470,887 $ 344,068 $ 407,445 $ 562,192
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.56%(b) 0.58% 0.58% 0.58% 0.60% 0.60%
Ratio of net expenses to average net
assets 0.56%(b) 0.58% 0.58% 0.58% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 5.55%(b) 4.48% 4.43% 4.63% 4.71% 4.56%
Portfolio turnover rate (c) 28% 31% 35% 43% 34% 33%
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 12.50 $ 13.13 $ 13.30 $ 10.38 $ 11.57 $ 10.43
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.11 0.28 0.41 0.20 0.31 0.14
Net realized and unrealized gain (loss) 0.59 (0.66) 0.32 2.93 (1.15) 1.14
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.70 (0.38) 0.73 3.13 (0.84) 1.28
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.15) (0.25) (0.90) (0.21) (0.35) (0.14)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 13.05 $ 12.50 $ 13.13 $ 13.30 $ 10.38 $ 11.57
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 5.66% (2.92)% 6.21% 30.42% (7.37)% 12.17%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 72,438 $ 79,362 $ 100,467 $ 87,096 $ 39,959 $ 86,745
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.72%(b) 0.68% 0.71% 0.74% 0.75% 0.70%
Ratio of net expenses to average net
assets 0.60%(b) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 1.80%(b) 2.21% 2.88% 1.80% 2.75% 1.23%
Portfolio turnover rate (c) 18% 22% 78% 26% 25% 24%
(a) 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.
(b) Annualized.
(c) 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 Page 85
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST GLOBAL ENGINEERING AND CONSTRUCTION ETF (FLM)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 56.78 $ 56.89 $ 48.63 $ 44.17 $ 48.12 $ 47.92
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.33 0.79 0.62 0.96 0.60 0.62
Net realized and unrealized gain (loss) (6.92) 0.16 8.27 4.46 (4.02) 0.42
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (6.59) 0.95 8.89 5.42 (3.42) 1.04
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.15) (1.06) (0.63) (0.96) (0.53) (0.84)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 50.04 $ 56.78 $ 56.89 $ 48.63 $ 44.17 $ 48.12
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) (11.60)% 1.67% 18.39% 12.40% (7.19)% 2.06%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 12,510 $ 14,194 $ 17,066 $ 14,588 $ 15,460 $ 16,841
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 1.14%(b) 0.88% 0.92% 1.03% 0.99% 0.87%
Ratio of net expenses to average net
assets 0.70%(b) 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 1.32%(b) 1.45% 1.20% 2.01% 1.21% 1.30%
Portfolio turnover rate (c) 7% 16% 20% 28% 46% 41%
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 47.62 $ 49.00 $ 39.19 $ 31.52 $ 35.38 $ 33.83
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.13 0.52 0.57 0.42 0.38 0.51
Net realized and unrealized gain (loss) (3.94) (1.32) 9.82 7.65 (3.88) 1.61
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (3.81) (0.80) 10.39 8.07 (3.50) 2.12
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.11) (0.58) (0.58) (0.40) (0.36) (0.57)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 43.70 $ 47.62 $ 49.00 $ 39.19 $ 31.52 $ 35.38
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) (7.99)% (1.66)% 26.73% 25.77% (9.97)% 6.19%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 26,217 $ 33,333 $ 26,951 $ 13,715 $ 11,034 $ 14,152
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.82%(b) 0.74% 0.84% 1.07% 0.99% 0.98%
Ratio of net expenses to average net
assets 0.70%(b) 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 0.58%(b) 1.10% 1.44% 1.27% 1.02% 1.45%
Portfolio turnover rate (c) 7% 60% 32% 37% 18% 35%
(a) 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.
(b) Annualized.
(c) 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.
Page 86 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 12.73 $ 11.88 $ 10.66 $ 10.99 $ 21.19 $ 22.16
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.31 0.48 0.41 0.33 0.23 0.41
Net realized and unrealized gain (loss) (0.50) 0.83 1.22 (0.32) (10.23) (0.92)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (0.19) 1.31 1.63 0.01 (10.00) (0.51)
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.33) (0.46) (0.41) (0.34) (0.20) (0.41)
Return of capital -- -- -- -- -- (0.05)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.33) (0.46) (0.41) (0.34) (0.20) (0.46)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 12.21 $ 12.73 $ 11.88 $ 10.66 $ 10.99 $ 21.19
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) (1.33)% 11.12% 15.47% 0.20% (47.50)% (2.38)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 8,547 $ 8,908 $ 8,913 $ 10,663 $ 12,643 $ 26,486
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.70%(b) 0.70% 0.70% 0.70% 0.70% 0.71% (c)
Ratio of net expenses to average net
assets 0.70%(b) 0.70% 0.70% 0.70% 0.70% 0.71% (c)
Ratio of net investment income (loss) to
average net assets 5.31%(b) 3.74% 3.39% 3.00% 1.27% 1.74%
Portfolio turnover rate (d) 6% 50% 61% 179%(e) 40% 28%
FIRST TRUST INDXX GLOBAL AGRICULTURE ETF (FTAG)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 (g) 2014 (g)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 26.21 $ 26.96 $ 21.55 $ 26.90 $ 56.20 $ 64.35
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.08 0.44 0.39 0.20 0.60 0.45
Net realized and unrealized gain (loss) (2.84) (0.83) 5.41 (5.46) (28.95) (7.15)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (2.76) (0.39) 5.80 (5.26) (28.35) (6.70)
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.25) (0.36) (0.39) (0.09) (0.95) (1.45)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 23.20 $ 26.21 $ 26.96 $ 21.55 $ 26.90 $ 56.20
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) (10.52)% (1.46)% 27.09% (18.92)% (51.20)% (10.64)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 4,406 $ 4,979 $ 7,816 $ 4,093 $ 5,380 $ 10,677
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.70%(b) 0.70% 0.70% 0.72%(f) 0.70% 0.72% (c)
Ratio of net expenses to average net
assets 0.70%(b) 0.70% 0.70% 0.72%(f) 0.70% 0.72% (c)
Ratio of net investment income (loss) to
average net assets 0.69%(b) 1.56% 1.80% 1.74% 1.17% 0.46%
Portfolio turnover rate (d) 8% 30% 38% 137%(e) 40% 43%
(a) 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.
(b) Annualized.
(c) Includes excise tax. If this excise tax expense was not included, the
expense ratio would have been 0.70%.
(d) 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.
(e) The variation in the portfolio turnover rate is due to the change in the
Fund's underlying index effective on the close of business December 18,
2015, which resulted in a complete rebalance of the Fund's portfolio.
(f) Includes foreign capital gains tax. If this tax expense was not included,
the expense ratio would have been 0.70%.
(g) All per share amounts and net asset values have been adjusted to reflect
the impact of the 1-for-5 reverse share split on May 2, 2016. The net
asset values reported on September 30, 2015 and 2014 prior to the reverse
share split restatement were $5.38 and $11.24, respectively.
See Notes to Financial Statements Page 87
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST BICK INDEX FUND (BICK)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 26.48 $ 28.77 $ 22.94 $ 18.76 $ 25.12 $ 23.65
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.18 0.40 0.33 0.28 0.32 0.35
Net realized and unrealized gain (loss) 0.86 (2.34) 5.85 4.19 (6.34) 1.53
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 1.04 (1.94) 6.18 4.47 (6.02) 1.88
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.32) (0.35) (0.35) (0.29) (0.34) (0.41)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 27.20 $ 26.48 $ 28.77 $ 22.94 $ 18.76 $ 25.12
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 3.99% (6.82)% 27.14% 23.99% (24.15)% 7.92%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 152,307 $ 190,648 $ 202,863 $ 8,029 $ 7,503 $ 17,581
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.64%(b) 0.64% 0.64% 0.64% 0.64% 0.64%
Ratio of net expenses to average net
assets 0.64%(b) 0.64% 0.64% 0.64% 0.64% 0.64%
Ratio of net investment income (loss) to
average net assets 1.38%(b) 1.33% 2.15% 1.37% 1.17% 1.35%
Portfolio turnover rate (c) 32% 65% 86% 59% 70% 126%
FIRST TRUST NASDAQ SMARTPHONE INDEX FUND (FONE)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 49.63 $ 50.52 $ 41.29 $ 34.93 $ 36.86 $ 32.10
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.16 0.72 0.44 0.47 0.36 0.43
Net realized and unrealized gain (loss) (0.88) (0.60) 9.29 6.34 (1.95) 4.75
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (0.72) 0.12 9.73 6.81 (1.59) 5.18
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.06) (1.01) (0.50) (0.45) (0.34) (0.42)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 48.85 $ 49.63 $ 50.52 $ 41.29 $ 34.93 $ 36.86
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) (1.44)% 0.20% 23.68% 19.60% (4.35)% 16.16%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 14,656 $ 17,370 $ 17,683 $ 10,324 $ 10,479 $ 11,059
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.70%(b) 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net expenses to average net
assets 0.70%(b) 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 0.71%(b) 1.34% 1.04% 1.14% 0.93% 1.22%
Portfolio turnover rate (c) 22% 80% 18% 28% 28% 32%
(a) 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.
(b) Annualized.
(c) 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.
Page 88 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST NASDAQ GLOBAL AUTO INDEX FUND (CARZ)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 36.33 $ 40.25 $ 33.39 $ 33.46 $ 37.93 $ 38.75
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.28 0.98 0.87 0.80 0.64 0.51
Net realized and unrealized gain (loss) (3.46) (3.98) 6.87 (0.09) (4.50) (0.84)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (3.18) (3.00) 7.74 0.71 (3.86) (0.33)
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.30) (0.92) (0.88) (0.78) (0.61) (0.49)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 32.85 $ 36.33 $ 40.25 $ 33.39 $ 33.46 $ 37.93
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) (8.73)% (7.57)% 23.46% 2.24% (10.38)% (0.92)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 19,709 $ 18,167 $ 18,112 $ 21,705 $ 31,791 $ 64,481
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.70%(b) 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net expenses to average net
assets 0.70%(b) 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 1.92%(b) 2.44% 2.20% 2.16% 1.34% 1.35%
Portfolio turnover rate (c) 11% 16% 17% 17% 18% 20%
FIRST TRUST CLOUD COMPUTING ETF (SKYY)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 56.71 $ 41.88 $ 34.17 $ 28.08 $ 27.34 $ 24.60
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.33 0.14 0.13 0.15 0.09 0.02
Net realized and unrealized gain (loss) 0.98 14.84 7.72 6.09 0.74 2.74
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 1.31 14.98 7.85 6.24 0.83 2.76
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.44) (0.15) (0.14) (0.15) (0.09) (0.02)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 57.58 $ 56.71 $ 41.88 $ 34.17 $ 28.08 $ 27.34
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 2.41% 35.80% 23.00% 22.30% 3.04% 11.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $2,121,816 $2,067,140 $1,088,930 $ 587,642 $ 470,291 $ 341,751
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.60%(b) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net expenses to average net
assets 0.60%(b) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 1.21%(b) 0.28% 0.34% 0.49% 0.31% 0.10%
Portfolio turnover rate (c) 5% 7% 14% 23% 25% 12%
(a) 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.
(b) Annualized.
(c) 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 Page 89
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------ PERIOD ENDED
(UNAUDITED) 2018 2017 2016 9/30/2015 (a)
------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 35.10 $ 34.51 $ 27.47 $ 25.24 $ 30.00
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.06 0.49 0.22 0.51 0.37
Net realized and unrealized gain (loss) (0.20) 0.66 7.07 2.14 (4.76)
---------- ---------- ---------- ---------- ----------
Total from investment operations (0.14) 1.15 7.29 2.65 (4.39)
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.10) (0.56) (0.25) (0.42) (0.37)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 34.86 $ 35.10 $ 34.51 $ 27.47 $ 25.24
========== ========== ========== ========== ==========
TOTAL RETURN (b) (0.36)% 3.35% 26.71% 10.62% (14.74)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 22,662 $ 26,322 $ 22,429 $ 2,748 $ 1,262
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.70%(c) 0.70% 0.70% 0.71%(d) 0.70% (c)
Ratio of net expenses to average net
assets 0.70%(c) 0.70% 0.70% 0.71%(d) 0.70% (c)
Ratio of net investment income (loss) to
average net assets 0.27%(c) 1.42% 1.62% 2.25% 1.01% (c)
Portfolio turnover rate (e) 35% 83% 58% 75% 98%
FIRST TRUST NASDAQ CYBERSECURITY ETF (CIBR)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
3/31/2019 ------------------------------------------ PERIOD ENDED
(UNAUDITED) 2018 2017 2016 9/30/2015 (a)
------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 28.49 $ 21.85 $ 19.77 $ 17.15 $ 20.00
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.02 0.02 0.03 0.23 (0.01)
Net realized and unrealized gain (loss) (0.43) 6.64 2.09 2.62 (2.84)
---------- ---------- ---------- ---------- ----------
Total from investment operations (0.41) 6.66 2.12 2.85 (2.85)
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.04) (0.02) (0.04) (0.23) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 28.04 $ 28.49 $ 21.85 $ 19.77 $ 17.15
========== ========== ========== ========== ==========
TOTAL RETURN (b) (1.41)% 30.49% 10.73% 16.83% (14.25)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 807,506 $ 847,673 $ 313,575 $ 102,815 $ 79,753
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.60%(c) 0.60% 0.60% 0.60% 0.60% (c)
Ratio of net expenses to average net
assets 0.60%(c) 0.60% 0.60% 0.60% 0.60% (c)
Ratio of net investment income (loss) to
average net assets 0.18%(c) 0.04% 0.13% 1.37% (0.30)% (c)
Portfolio turnover rate (e) 31% 56% 67% 49% 7%
(a) Inception dates for FPXI and CIBR are November 4, 2014 and July 6, 2015,
respectively, which are consistent with the respective Fund's commencement
of investment operations and are the dates the initial creation units were
established.
(b) 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.
(c) Annualized.
(d) Includes excise tax. If this excise tax expense was not included, the
expense ratio would have been 0.70%.
(e) 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.
Page 90 See Notes to Financial Statements
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
1. ORGANIZATION
First Trust Exchange-Traded Fund II (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on July 6, 2006,
and is registered with the Securities and Exchange Commission (the "SEC") under
the Investment Company Act of 1940, as amended (the "1940 Act").
The Trust currently consists of sixteen exchange-traded funds. This report
covers the fourteen funds listed below:
First Trust STOXX(R) European Select Dividend Index Fund - (NYSE Arca, Inc.
("NYSE Arca") ticker "FDD")
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund -
(NYSE Arca ticker "FFR")
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 Global Engineering and Construction ETF - (NYSE Arca ticker
"FLM")
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund -
(The Nasdaq Stock Market LLC ("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 BICK Index Fund - (Nasdaq ticker "BICK")
First Trust Nasdaq Smartphone Index Fund - (Nasdaq ticker "FONE")
First Trust NASDAQ Global Auto Index Fund - (Nasdaq ticker "CARZ")
First Trust Cloud Computing ETF - (Nasdaq ticker "SKYY")
First Trust International Equity Opportunities ETF - (Nasdaq ticker
"FPXI")(1)
First Trust Nasdaq Cybersecurity ETF - (Nasdaq ticker "CIBR")
(1) Effective on January 2, 2019, First Trust International IPO ETF changed
its name to First Trust International Equity Opportunities ETF. The Fund's
ticker symbol was not changed.
Each fund represents a separate series of shares of beneficial interest in the
Trust (each a "Fund" and collectively, the "Funds"). Unlike conventional mutual
funds, each Fund issues and redeems shares on a continuous basis, at net asset
value ("NAV"), only in large specified blocks consisting of 50,000 shares called
a "Creation Unit." Each Fund's Creation Units are generally issued and redeemed
in-kind for securities in which a Fund invests, and in certain circumstances,
for cash, and only to and from broker-dealers and large institutional investors
that have entered into participation agreements. Except when aggregated in
Creation Units, each Fund's shares are not redeemable securities. 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:
FUND INDEX
First Trust STOXX(R) European Select Dividend Index Fund STOXX(R) Europe Select Dividend 30 Index
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund FTSE EPRA/NAREIT Developed Index
First Trust Dow Jones Global Select Dividend Index Fund Dow Jones Global Select Dividend Index(SM)
First Trust Global Wind Energy ETF ISE Clean Edge Global Wind Energy(TM) Index
First Trust Global Engineering and Construction ETF ISE Global Engineering and Construction(TM) Index
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund NASDAQ OMX(R) Clean Edge(R) Smart Grid
Infrastructure Index(SM)
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 BICK Index Fund ISE BICK(TM) Index
First Trust Nasdaq Smartphone Index Fund Nasdaq CTA Smartphone Index(SM)
First Trust NASDAQ Global Auto Index Fund NASDAQ OMX Global Auto Index(SM)
First Trust Cloud Computing ETF ISE Cloud Computing(TM) Index
First Trust International Equity Opportunities ETF IPOX International Index
First Trust Nasdaq Cybersecurity ETF Nasdaq CTA Cybersecurity Index(SM)
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are each considered an investment company and follow accounting and
reporting guidance under Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") 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.
Page 91
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
A. PORTFOLIO VALUATION
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 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 adopted by the Trust's Board of
Trustees, and in accordance with provisions of the 1940 Act. 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 principal market for such securities.
Shares of open-end funds are valued at fair value which is based on NAV
per share.
Securities traded in an over-the-counter market are fair valued at the
mean of their most recent bid and asked price, if available, and otherwise
at their closing bid price.
Overnight repurchase agreements are valued at amortized cost when it
represents the best estimate of fair value.
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Trust's Board of Trustees or its
delegate, 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 type of security;
2) the size of the holding;
3) the initial cost of the security;
4) transactions in comparable securities;
5) price quotes from dealers and/or third-party pricing services;
6) relationships among various securities;
7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;
8) an analysis of the issuer's financial statements; and
9) the existence of merger proposals or tender offers that might affect
the value of the security.
If the securities in question are foreign securities, the following additional
information may be considered:
1) the value of similar foreign securities traded on other foreign
markets;
2) ADR trading of similar securities;
3) closed-end fund or exchange-traded fund trading of similar
securities;
4) foreign currency exchange activity;
5) the trading prices of financial products that are tied to baskets of
foreign securities;
6) factors relating to the event that precipitated the pricing problem;
7) whether the event is likely to recur; and
8) whether the effects of the event are isolated or whether they affect
entire markets, countries or regions.
Page 92
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
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 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:
o 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.
o 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.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or methodologies used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value each Fund's investments as of March 31, 2019, 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. 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 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 is 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 require 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.
D. FOREIGN CURRENCY
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
Page 93
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
"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.
E. SECURITIES LENDING
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 sent to the borrower. Securities
lending involves the risk that the Fund may lose money because the borrower of
the Fund's loaned securities fails to return the securities in a timely manner
or at all. The Fund could also lose money in the event of (i) a decline in the
value of the collateral provided for the loaned securities, (ii) a decline in
the value of any investments made with cash collateral or (iii) an increase in
the value of the loaned securities if the borrower does not increase the
collateral accordingly and the borrower fails to return the securities. These
events could also trigger adverse tax consequences for the Funds.
Under the Funds' Securities Lending Agency Agreement, the securities lending
agent will generally bear the risk that a borrower may default on its obligation
to return loaned securities. Brown Brothers Harriman & Co. ("BBH") acts as the
Funds' securities lending agent and is responsible for executing the lending of
the portfolio securities to creditworthy borrowers. The Funds, however, will be
responsible for the risks associated with the investment of cash collateral. A
Fund may lose money on its investment of cash collateral, which may affect its
ability to repay the collateral to the borrower without the use of other Fund
assets. Each Fund that engages in securities lending receives compensation (net
of any rebate and securities lending agent fees) for lending its securities.
Compensation can be in the form of fees received from the securities lending
agent or dividends or interest earned from the investment of cash collateral.
The fees received from the securities lending agent are accrued daily. The
dividend and interest earned on the securities loaned is accounted for in the
same manner as other dividend and interest income. At March 31, 2019, only FAN,
FLM, GRID, FTRI, FONE and CARZ had securities in the securities lending program.
During the six months ended March 31, 2019, only FAN, FLM, GRID, FTRI, FONE,
CARZ and SKYY participated in the securities lending program.
In the event of a default by a borrower with respect to any loan, BBH 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
to exercise these remedies, a Fund sustains losses as a result of a borrower's
default, BBH 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.
F. REPURCHASE AGREEMENTS
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 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 is less than the
repurchase price and the Fund's costs associated with the delay and enforcement
of the MRA.
While the Funds may invest in repurchase agreements, any repurchase agreements
held by the Funds during the six months ended March 31, 2019, were received as
collateral for lending securities.
Page 94
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
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 gains earned by each Fund, if any, are distributed
at least annually.
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 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, 2018 was as follows:
Distributions Distributions Distributions
paid from paid from paid from
Ordinary Capital Return of
Income Gains Capital
----------------- -------------- --------------
First Trust STOXX(R) European Select Dividend Index Fund $ 22,961,086 $ -- $ --
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund 1,810,508 -- --
First Trust Dow Jones Global Select Dividend Index Fund 22,052,312 -- --
First Trust Global Wind Energy ETF 1,611,016 -- --
First Trust Global Engineering and Construction ETF 341,187 -- --
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 398,796 -- --
First Trust Indxx Global Natural Resources Income ETF 320,671 -- --
First Trust Indxx Global Agriculture ETF 90,971 -- --
First Trust BICK Index Fund 2,678,851 -- --
First Trust Nasdaq Smartphone Index Fund 316,837 -- --
First Trust NASDAQ Global Auto Index Fund 458,452 -- --
First Trust Cloud Computing ETF 4,648,945 -- --
First Trust International Equity Opportunities ETF 400,571 -- --
First Trust Nasdaq Cybersecurity ETF 387,720 -- --
As of September 30, 2018, the components of distributable earnings on a tax
basis for each Fund were as follows:
Accumulated Net
Undistributed Capital and Unrealized
Ordinary Other Appreciation
Income Gain (Loss) (Depreciation)
----------------- -------------- --------------
First Trust STOXX(R) European Select Dividend Index Fund $ 204,981 $ (12,805,588) $ 1,279,762
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund 506,337 (561,318) 2,886,691
First Trust Dow Jones Global Select Dividend Index Fund 1,800,059 (56,418,880) (833,330)
First Trust Global Wind Energy ETF 331,505 (58,330,813) (4,706,241)
First Trust Global Engineering and Construction ETF 28,083 (7,242,242) 1,398,247
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund (7,896) (1,384,015) 625,076
First Trust Indxx Global Natural Resources Income ETF 22,275 (61,284,474) 901,176
First Trust Indxx Global Agriculture ETF 19,755 (19,010,611) 72,208
First Trust BICK Index Fund 815,353 (11,451,439) (8,280,092)
First Trust Nasdaq Smartphone Index Fund (4,247) (734,447) 574,218
First Trust NASDAQ Global Auto Index Fund 85,558 (2,583,438) (2,481,139)
First Trust Cloud Computing ETF (77) (5,702,175) 411,369,683
First Trust International Equity Opportunities ETF 65,701 (1,775,031) 2,464,089
First Trust Nasdaq Cybersecurity ETF -- (9,806,210) 104,550,499
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.
Page 95
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
Certain countries assess a capital gains tax on securities sold in their local
markets. This tax is accrued as the securities in these foreign markets
appreciate in value and is paid at the time of sale to the extent a capital gain
is realized. Taxes accrued on securities in an unrealized appreciation position
are included in "Net change in unrealized appreciation (depreciation) on
deferred foreign capital gains tax" on the Statements of Operations. The capital
gains tax paid on securities sold, if any, is included in "Net realized gain
(loss) on foreign capital gains tax" on the Statements of Operations.
India's Finance Bill, 2018 ("Finance Bill, 2018") was enacted into law on March
29, 2018, and amongst other provisions, it introduced a long-term capital gains
tax beginning April 1, 2018. Long-term capital gains on the sale of listed
shares in excess of INR 0.1 million are taxed at the rate of 10% (plus
applicable surcharge and cess (which is a type of tax)) subject to satisfaction
of certain conditions. Long-term capital gains accruing as of January 31, 2018,
are considered exempt due to a grandfather clause in the provision. The
aforesaid exemption from long-term capital gains tax is available with respect
to shares acquired between October 1, 2004, and March 31, 2018, only if on such
acquisitions Securities Transaction Tax ("STT") was chargeable. Certain
exceptions in this regard, such as acquisition of shares in a public offer,
bonus, rights issued, etc. for which the condition of chargeability of STT on
acquisition is not applicable, have been notified.
In the case of the sale of listed shares held by a Fund for one year or less,
the income is classified as short-term capital gains and is taxable at 15% (plus
applicable surcharge and cess) provided the shares are sold on the stock
exchange and subjected to STT. For above purposes, the applicable rate of
surcharge is 2% or 5% (depending on the level of income of the Fund). The
Finance Bill, 2018 increases the cess imposed on the sum of tax and surcharge
from 3% to 4%. The cess 4% rate is applied to the capital gains tax, resulting
in a higher effective rate of capital gains tax.
Where the sale of shares is outside the stock exchange and not subject to STT,
the long-term capital gains are taxed at 10% (plus applicable surcharge and
cess) and short-term capital gains are taxed at 30% (plus applicable surcharge
and cess). The Finance Bill, 2018, approves the carry forward of long-term
capital losses to be offset against long-term capital gains. Short-term losses
and long-term losses can be netted against short-term gains and long-term gains,
respectively.
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. Taxable years ending 2015, 2016,
2017, and 2018 remain open to federal and state audit. As of March 31, 2019,
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.
Under the Regulated Investment Company Modernization Act of 2010 (the "Act"),
net capital losses arising in taxable years beginning after December 22, 2010,
may be carried forward indefinitely, and their character is retained as
short-term and/or long-term losses. Previously, net capital losses were carried
forward for up to eight years and treated as short-term losses. As a transition
rule, the Act requires that post-enactment net capital losses be used before
pre-enactment net capital losses. At September 30, 2018, the Funds had
pre-enactment and post-enactment net capital losses for federal income tax
purposes as shown in the following table. 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 Fund shareholders. The Funds
are 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.
Page 96
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
Capital Loss Post Total Capital
Available through Enactment - Loss
9/30/2019 No Expiration Available
----------------- -------------- --------------
First Trust STOXX(R) European Select Dividend Index Fund $ 161,155 $ 12,644,433 $ 12,805,588
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate
Index Fund 1,838 559,480 561,318
First Trust Dow Jones Global Select Dividend Index Fund 323,583 56,095,297 56,418,880
First Trust Global Wind Energy ETF 9,549,964 48,780,849 58,330,813
First Trust Global Engineering and Construction ETF 615,538 6,626,704 7,242,242
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure
Index Fund -- 1,384,015 1,384,015
First Trust Indxx Global Natural Resources Income ETF -- 61,284,474 61,284,474
First Trust Indxx Global Agriculture ETF -- 19,010,611 19,010,611
First Trust BICK Index Fund -- 11,451,439 11,451,439
First Trust Nasdaq Smartphone Index Fund -- 734,447 734,447
First Trust NASDAQ Global Auto Index Fund -- 2,583,438 2,583,438
First Trust Cloud Computing ETF -- 5,702,175 5,702,175
First Trust International Equity Opportunities ETF -- 1,775,031 1,775,031
First Trust Nasdaq Cybersecurity ETF -- 9,806,210 9,806,210
During the taxable year ended September 30, 2018, the following Funds utilized
capital loss carryforwards in the following amounts:
Capital Loss
Carryforward Utilized
---------------------
First Trust STOXX(R) European Select Dividend Index Fund $ 4,489,236
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund 34,535
First Trust Dow Jones Global Select Dividend Index Fund 4,013,289
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 1,498,927
First Trust Indxx Global Natural Resources Income ETF 434,001
First Trust Indxx Global Agriculture ETF 148,724
First Trust BICK Index Fund 981,694
First Trust Nasdaq Smartphone Index Fund 205,494
First Trust Cloud Computing ETF 28,719
Certain losses realized during the current fiscal year may be deferred and
treated as occurring the first day on the following fiscal year for federal
income tax purposes. For the fiscal year ended September 30, 2018, the following
Funds incurred and elected to defer late year ordinary or capital losses in the
following amounts:
Qualified Late Year Losses
--------------------------
Ordinary Losses Capital Losses
--------------- --------------
First Trust NASDAQ(R) Clean Edge(R) Smart Grid
Infrastructure Index Fund $ 7,896 $ --
First Trust Nasdaq Smartphone Index Fund 4,247 --
First Trust Cloud Computing ETF 77 --
I. EXPENSES
Expenses that are directly related to one of the Funds are charged directly to
the respective Fund, except for First Trust Indxx Global Natural Resources
Income ETF, First Trust Indxx Global Agriculture ETF, First Trust BICK Index
Fund, First Trust Nasdaq Smartphone Index Fund, First Trust NASDAQ Global Auto
Index Fund, First Trust Cloud Computing ETF, First Trust International Equity
Opportunities ETF, and First Trust Nasdaq Cybersecurity 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.
Page 97
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
First Trust has entered into licensing agreements with each of the following
"Licensors" for the respective Funds:
FUND LICENSOR
First Trust STOXX(R) European Select Dividend Index Fund STOXX Limited
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund FTSE International Limited
First Trust Dow Jones Global Select Dividend Index Fund Dow Jones & Company, Inc.
First Trust Global Wind Energy ETF Nasdaq, Inc.
First Trust Global Engineering and Construction ETF Nasdaq, Inc.
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund Nasdaq, Inc.
First Trust Indxx Global Natural Resources Income ETF Indxx, LLC
First Trust Indxx Global Agriculture ETF Indxx, LLC
First Trust BICK Index Fund Nasdaq, Inc.
First Trust Nasdaq Smartphone Index Fund Nasdaq, Inc.
First Trust NASDAQ Global Auto Index Fund Nasdaq, Inc.
First Trust Cloud Computing ETF Nasdaq, Inc.
First Trust International Equity Opportunities ETF IPOX(R) Schuster LLC
First Trust Nasdaq Cybersecurity ETF Nasdaq, Inc.
The respective license agreements allow for the use 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.
J. NEW ACCOUNTING PRONOUNCEMENT
On August 28, 2018, the FASB issued Accounting Standards Update ("ASU") 2018-13,
"Disclosure Framework - Changes to the Disclosure Requirements for Fair Value
Measurement," which amends the fair value measurement disclosure requirements of
ASC 820. The amendments of ASU 2018-13 include new, eliminated, and modified
disclosure requirements of ASC 820. In addition, the amendments clarify that
materiality is an appropriate consideration of entities when evaluating
disclosure requirements. The ASU is effective for fiscal years beginning after
December 15, 2019, including interim periods therein. Early adoption is
permitted for any eliminated or modified disclosures upon issuance of this ASU.
The Funds have early adopted ASU 2018-13 for these financial statements, which
did not result in a material impact.
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 following Unitary Fee Funds, First Trust is paid an annual unitary
management fee at the specified rate of such 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 and other services, and
excluding fee payments under the Investment Management Agreement, distribution
and service fees payable pursuant to a Rule 12b-1 plan, if any, brokerage
expense, acquired fund fees and expenses, taxes, interest, and extraordinary
expenses.
% of Daily
Net Assets
------------
First Trust Indxx Global Natural Resources Income ETF 0.70%
First Trust Indxx Global Agriculture ETF 0.70%
First Trust BICK Index Fund 0.64%
First Trust Nasdaq Smartphone Index Fund 0.70%
First Trust NASDAQ Global Auto Index Fund 0.70%
First Trust Cloud Computing ETF 0.60%
First Trust International Equity Opportunities ETF 0.70%
First Trust Nasdaq Cybersecurity ETF 0.60%
For the First Trust STOXX(R) European Select Dividend Index Fund, First Trust
FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund, First Trust Dow Jones
Global Select Dividend Index Fund, First Trust Global Wind Energy ETF, First
Trust Global Engineering and Construction ETF and First Trust NASDAQ(R) Clean
Edge(R) Smart Grid Infrastructure Index Fund (such Funds, the "Expense Cap
Funds"), First Trust is paid an annual management fee of 0.40% of such Fund's
average daily net assets.
Page 98
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
For the Expense Cap Funds, the Trust and First Trust have entered into an
Expense Reimbursement, Fee Waiver and Recovery Agreement ("Recovery Agreement")
in which First Trust has agreed to waive fees and/or reimburse Fund expenses to
the extent that the operating expenses of each such 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") at least
through January 31, 2020.
Expense Cap
-------------
First Trust STOXX(R) European Select Dividend Index Fund 0.60%
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund 0.60%
First Trust Dow Jones Global Select Dividend Index Fund 0.60%
First Trust Global Wind Energy ETF 0.60%
First Trust Global Engineering and Construction ETF 0.70%
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 0.70%
Expenses reimbursed and fees waived by First Trust under the Recovery Agreement
are subject to recovery by First Trust for up to three years from the date the
fee or expense was incurred, but no reimbursement payment will be made by a Fund
if it results in the Fund exceeding an expense ratio equal to the Expense Cap in
place at the time the expenses were reimbursed or fees waived by First Trust.
These amounts would be included in "Expenses previously waived or reimbursed" on
the Statements of Operations.
The advisory fee waivers and expense reimbursements for the six months ended
March 31, 2019 and the fees waived or expenses borne by First Trust subject to
recovery from the applicable Fund for the periods indicated were as follows:
Fees Waived or Expenses Borne by First Trust
Subject to Recovery
--------------------------------------------------------
Advisory Expense Six Months Year Year Six Months
Fee Reim- Ended Ended Ended Ended
Waivers bursements 9/30/2016 9/30/2017 9/30/2018 3/31/2019 Total
---------- ---------- ---------- ---------- ---------- ---------- --------
First Trust FTSE EPRA/NAREIT
Developed Markets Real Estate
Index Fund $ 77,041 $ -- $ 50,600 $ 60,987 $ 117,546 $ 77,041 $306,174
First Trust Global Wind Energy ETF 43,377 -- 40,427 93,898 71,385 43,377 249,087
First Trust Global Engineering and
Construction ETF 24,807 2,649 25,052 33,893 33,419 27,456 119,820
First Trust NASDAQ(R) Clean Edge(R)
Smart Grid Infrastructure Index Fund 16,793 -- 22,822 28,627 13,940 16,793 82,182
The Trust has multiple service agreements with The Bank of New York Mellon
("BNYM"). Under the service agreements, BNYM performs custodial, fund
accounting, certain administrative services, and transfer agency services for
each Fund. As custodian, BNYM is responsible for custody of each Fund's assets.
As fund accountant and administrator, BNYM is responsible for maintaining the
books and records of each Fund's securities and cash. As transfer agent, BNYM is
responsible for maintaining shareholder records for each Fund. BNYM is a
subsidiary of The Bank of New York Mellon Corporation, a financial holding
company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that
varies based on whether the fund is a closed-end or other actively managed fund,
or is an index fund.
Additionally, the Lead Independent Trustee and the Chairmen of the Audit
Committee, Nominating and Governance Committee and Valuation Committee 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 Lead Independent Trustee and Committee
Chairmen rotate every three years. The officers and "Interested" Trustee receive
no compensation from the Trust for acting in such capacities.
Page 99
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
4. PURCHASES AND SALES OF SECURITIES
For the six months ended March 31, 2019, the cost of purchases and proceeds from
sales of investments for each Fund, excluding short-term investments and in-kind
transactions, were as follows:
Purchases Sales
---------------- --------------
First Trust STOXX(R) European Select Dividend Index Fund $ 69,195,356 $ 69,773,496
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund 1,771,657 1,602,453
First Trust Dow Jones Global Select Dividend Index Fund 134,599,159 131,460,056
First Trust Global Wind Energy ETF 13,259,478 13,691,124
First Trust Global Engineering and Construction ETF 852,207 869,027
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 2,035,364 2,099,383
First Trust Indxx Global Natural Resources Income ETF 497,938 594,314
First Trust Indxx Global Agriculture ETF 340,657 356,135
First Trust BICK Index Fund 51,206,230 67,495,836
First Trust Nasdaq Smartphone Index Fund 3,137,679 3,364,831
First Trust NASDAQ Global Auto Index Fund 2,322,389 2,168,684
First Trust Cloud Computing ETF 89,881,189 96,709,966
First Trust International Equity Opportunities ETF 8,614,274 7,803,788
First Trust Nasdaq Cybersecurity ETF 237,717,016 241,403,890
For the six months ended March 31, 2019, the cost of in-kind purchases and
proceeds from in-kind sales for each Fund were as follows:
Purchases Sales
---------------- --------------
First Trust STOXX(R) European Select Dividend Index Fund $ 19,790,314 $ 112,283,032
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund 2,079,492 --
First Trust Dow Jones Global Select Dividend Index Fund 141,708,563 93,288,084
First Trust Global Wind Energy ETF 3,157,329 12,615,210
First Trust Global Engineering and Construction ETF -- --
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund -- 3,917,156
First Trust Indxx Global Natural Resources Income ETF -- --
First Trust Indxx Global Agriculture ETF -- --
First Trust BICK Index Fund 7,829,022 31,395,608
First Trust Nasdaq Smartphone Index Fund -- 1,829,111
First Trust NASDAQ Global Auto Index Fund 5,919,330 3,134,237
First Trust Cloud Computing ETF 382,738,753 344,324,308
First Trust International Equity Opportunities ETF 2,303,926 6,062,872
First Trust Nasdaq Cybersecurity ETF 139,805,924 158,315,251
5. CREATIONS, REDEMPTIONS AND TRANSACTION FEES
Shares are created and redeemed by each Fund only in Creation Unit size
aggregations of 50,000 shares in transactions with broker-dealers or large
institutional investors that have entered into a participation agreement (an
"Authorized Participant"). In order to purchase Creation Units of a Fund, an
Authorized Participant must deposit (i) a designated portfolio of equity
securities determined by First Trust (the "Deposit Securities") and generally
make or receive a cash payment referred to as the "Cash Component," which is an
amount equal to the difference between the NAV of the Fund Shares (per Creation
Unit Aggregation) and the market value of the Deposit Securities, and/or (ii)
cash in lieu of all or a portion of the Deposit Securities. If the Cash
Component is a positive number (i.e., the NAV per Creation Unit Aggregation
exceeds the Deposit Amount), the Authorized Participant will deliver the Cash
Component. If the Cash Component is a negative number (i.e., the NAV per
Creation Unit Aggregation is less than the Deposit Amount), the Authorized
Participant will receive the Cash Component. Authorized Participants purchasing
Creation Units must pay to BNYM, as transfer agent, a creation fee (the
"Creation Transaction Fee") regardless of the number of Creation Units purchased
in the transaction. The Creation Transaction Fee may vary and is based on the
composition of the securities included in each Fund's portfolio and the
countries in which the transactions are settled. The Creation Transaction Fee
may increase or decrease as each Fund's portfolio is adjusted to conform to
changes in the composition of its corresponding index. The price for each
Creation Unit will equal the daily NAV per share 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 or stamp taxes. When a Fund
permits an Authorized Participant to substitute cash or a different security in
lieu of depositing one or more of the requisite Deposit Securities, the
Authorized Participant may also be assessed an amount to cover the cost of
purchasing the Deposit Securities and/or disposing of the substituted
Page 100
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
securities, including 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 such Deposit Securities and/or substitute
securities.
Authorized Participants redeeming Creation Units must pay to BNYM, as transfer
agent, a redemption transaction fee (the "Redemption Transaction Fee"),
regardless of the number of Creation Units redeemed in the transaction. The
Redemption Transaction Fee may vary and is based on the composition of the
securities included in each Fund's portfolio and the countries in which the
transactions are settled. The Redemption Transaction Fee may increase or
decrease as each Fund's portfolio is adjusted to conform to changes in the
composition of its corresponding index. Each Fund reserves the right to effect
redemptions in cash. An Authorized Participant may request a cash redemption in
lieu of securities; however, each Fund may, in its discretion, reject any such
request.
The standard Creation Transaction Fees and the Redemption Transaction Fees are
as follows:
Creation Redemption
Transaction Transaction
Fees Fees
---------------- --------------
First Trust STOXX(R) European Select Dividend Index Fund $ 500 $ 500
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund 4,500 4,500
First Trust Dow Jones Global Select Dividend Index Fund 2,000 2,000
First Trust Global Wind Energy ETF 1,000 1,000
First Trust Global Engineering and Construction ETF 1,500 1,500
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 500 500
First Trust Indxx Global Natural Resources Income ETF 2,000 2,000
First Trust Indxx Global Agriculture ETF 2,000 2,000
First Trust BICK Index Fund 2,500 2,500
First Trust Nasdaq Smartphone Index Fund 1,000 1,000
First Trust NASDAQ Global Auto Index Fund 1,000 1,000
First Trust Cloud Computing ETF 500 500
First Trust International Equity Opportunities ETF 1,000 1,000
First Trust Nasdaq Cybersecurity ETF 500 500
6. DISTRIBUTION PLAN
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, 2020.
7. INDEMNIFICATION
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.
8. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events on the Funds
through the date the financial statements were issued, and has determined there
were the following subsequent events:
On March 13, 2019, the Board of Trustees of First Trust Heitman Global Prime
Real Estate ETF (NYSE Arca: PRME) and First Trust FTSE EPRA/NAREIT Developed
Markets Real Estate Index Fund (NYSE Arca: FFR) approved the merger of PRME into
FFR. FFR will be the surviving fund. Under the terms of the proposed
transaction, which is expected to be tax free, the assets of PRME would be
transferred to, and the liabilities of PRME would be assumed by, FFR, and
shareholders of PRME would receive shares of FFR with a value equal to the
aggregate net asset value of the PRME shares held by them. It is currently
expected that the transaction will be consummated later this year, subject to
requisite shareholder approval of PRME and satisfaction of applicable regulatory
requirements and approvals and customary closing conditions. There is no
Page 101
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
assurance when or whether such approvals, or any other approvals required for
the transaction, will be obtained. More information on the proposed transaction
will be contained in registration statement/proxy materials that will be filed
with the SEC. Upon completion of the proposed transaction, the investment
objectives and strategies of FFR will remain unchanged.
On or around May 29, 2019, the new investment objective for the First Trust
Nasdaq Smartphone Index Fund will be to seek investment results that correspond
generally to the price and yield (before the Fund's fees and expenses) of an
index called the Indxx 5G & NextG Thematic Index (the "New Index"). The New
Index is expected to be composed of up to 100 securities issued by companies
that have devoted, or have committed to devote, material resources to the
research, development and application of fifth generation (5G) and next
generation cellular technologies. In addition, the Fund will change its name to
First Trust Indxx NextG ETF. The Fund will continue to list and trade its shares
on Nasdaq but will change its ticker symbol to "NXTG." When these changes are
effective, the Fund's shares will also trade under a new CUSIP number.
On or about June 24, 2019, the index which First Trust Cloud Computing ETF seeks
to track will change its name from "ISE Cloud Computing(TM) Index" to "ISE CTA
Cloud Computing Index(TM)" (the "Index"). The Index is designed to provide a
benchmark for investors interested in tracking companies involved in the cloud
computing industry. The cloud computing industry is a group of companies that
offers internet and technology products, services, support and applications
delivered via the Internet. In addition, securities included in the Index must
have a minimum capitalization of $500 million.
Page 102
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Trust uses to determine
how to vote proxies and information on how each Fund voted proxies relating to
its portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
each Fund's website at www.ftportfolios.com; and (3) on the Securities and
Exchange Commission's ("SEC") website at www.sec.gov.
PORTFOLIO HOLDINGS
Each Fund files portfolio holdings information for each month in a fiscal
quarter within 60 days after the end of the relevant fiscal quarter on Form
N-PORT. Portfolio holdings information for the third month of each fiscal
quarter will be publicly available on the SEC's website at www.sec.gov. Each
Fund's complete schedule of portfolio holdings for the second and fourth
quarters of each fiscal year is included in the semi-annual and annual reports
to shareholders, respectively, and is filed with the SEC on Form N-CSR. The
semi-annual and annual report for each Fund is available to investors within 60
days after the period to which it relates. Each Fund's Forms N-PORT and Forms
N-CSR are available on the SEC's website listed above.
RISK CONSIDERATIONS
RISKS ARE INHERENT IN ALL INVESTING. CERTAIN GENERAL RISKS THAT MAY BE
APPLICABLE TO A FUND ARE IDENTIFIED BELOW, BUT NOT ALL OF THE MATERIAL RISKS
RELEVANT TO EACH FUND ARE INCLUDED IN THIS REPORT AND NOT ALL OF THE RISKS BELOW
APPLY TO EACH FUND. THE MATERIAL RISKS OF INVESTING IN EACH FUND ARE SPELLED OUT
IN ITS PROSPECTUS, STATEMENT OF ADDITIONAL INFORMATION AND OTHER REGULATORY
FILINGS. BEFORE INVESTING, YOU SHOULD CONSIDER EACH FUND'S INVESTMENT OBJECTIVE,
RISKS, CHARGES AND EXPENSES, AND READ EACH FUND'S PROSPECTUS AND STATEMENT OF
ADDITIONAL INFORMATION CAREFULLY. YOU CAN DOWNLOAD EACH FUND'S PROSPECTUS AT
WWW.FTPORTFOLIOS.COM OR CONTACT FIRST TRUST PORTFOLIOS L.P. AT (800) 621-1675 TO
REQUEST A PROSPECTUS, WHICH CONTAINS THIS AND OTHER INFORMATION ABOUT EACH FUND.
CONCENTRATION RISK. To the extent that a fund is able to invest a large
percentage of its assets in a single asset class or the securities of issuers
within the same country, state, region, industry or sector, an adverse economic,
business or political development may affect the value of the fund's investments
more than if the fund were more broadly diversified. A fund that tracks an index
will be concentrated to the extent the fund's corresponding index is
concentrated. A concentration makes a fund more susceptible to any single
occurrence and may subject the fund to greater market risk than a fund that is
not concentrated.
CREDIT RISK. Credit risk is the risk that an issuer of a security will be unable
or unwilling to make dividend, interest and/or principal payments when due and
the related risk that the value of a security may decline because of concerns
about the issuer's ability to make such payments.
CYBER SECURITY RISK. The funds are susceptible to potential operational risks
through breaches in cyber security. A breach in cyber security refers to both
intentional and unintentional events that may cause a fund to lose proprietary
information, suffer data corruption or lose operational capacity. Such events
could cause a fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial
loss. In addition, cyber security breaches of a fund's third-party service
providers, such as its administrator, transfer agent, custodian, or sub-advisor,
as applicable, or issuers in which the fund invests, can also subject a fund to
many of the same risks associated with direct cyber security breaches.
DERIVATIVES RISK. To the extent a fund uses derivative instruments such as
futures contracts, options contracts and swaps, the fund may experience losses
because of adverse movements in the price or value of the underlying asset,
index or rate, which may be magnified by certain features of the derivative.
These risks are heightened when a fund's portfolio managers use derivatives to
enhance the fund's return or as a substitute for a position or security, rather
than solely to hedge (or offset) the risk of a position or security held by the
fund.
EQUITY SECURITIES RISK. To the extent a fund invests in equity securities, the
value of the fund's shares will fluctuate with changes in the value of the
equity securities. Equity securities prices fluctuate for several reasons,
including changes in investors' perceptions of the financial condition of an
issuer or the general condition of the relevant stock market, such as market
volatility, or when political or economic events affecting the issuers occur. In
addition, common stock prices may be particularly sensitive to rising interest
rates, as the cost of capital rises and borrowing costs increase. Equity
securities may decline significantly in price over short or extended periods of
time, and such declines may occur in the equity market as a whole, or they may
occur in only a particular country, company, industry or sector of the market.
ETF RISK. The shares of an ETF trade like common stock and represent an interest
in a portfolio of securities. The risks of owning an ETF generally reflect the
risks of owning the underlying securities, although lack of liquidity in an ETF
could result in it being more volatile and ETFs have management fees that
increase their costs. Shares of an ETF trade on an exchange at market prices
rather than net asset value, which may cause the shares to trade at a price
greater than net asset value (premium) or less than net asset value (discount).
In times of market stress, decisions by market makers to reduce or step away
Page 103
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
from their role of providing a market for an ETF's shares, or decisions by an
ETF's authorized participants that they are unable or unwilling to proceed with
creation and/or redemption orders of an ETF's shares, could result in shares of
the ETF trading at a discount to net asset value and in greater than normal
intraday bid-ask spreads.
FIXED INCOME SECURITIES RISK. To the extent a fund invests in fixed income
securities, the fund will be subject to credit risk, income risk, interest rate
risk, liquidity risk and prepayment risk. Income risk is the risk that income
from a fund's fixed income investments could decline during periods of falling
interest rates. Interest rate risk is the risk that the value of a fund's fixed
income securities will decline because of rising interest rates. Liquidity risk
is the risk that a security cannot be purchased or sold at the time desired, or
cannot be purchased or sold without adversely affecting the price. Prepayment
risk is the risk that the securities will be redeemed or prepaid by the issuer,
resulting in lower interest payments received by the fund. In addition to these
risks, high yield securities, or "junk" bonds, are subject to greater market
fluctuations and risk of loss than securities with higher ratings, and the
market for high yield securities is generally smaller and less liquid than that
for investment grade securities.
INDEX CONSTITUENT RISK. Certain funds may be a constituent of one or more
indices. As a result, such a fund may be included in one or more index-tracking
exchange-traded funds or mutual funds. Being a component security of such a
vehicle could greatly affect the trading activity involving a fund, the size of
the fund and the market volatility of the fund. Inclusion in an index could
significantly increase demand for the fund and removal from an index could
result in outsized selling activity in a relatively short period of time. As a
result, a fund's net asset value could be negatively impacted and the fund's
market price may be significantly below its net asset value during certain
periods.
INDEX PROVIDER RISK. To the extent a fund seeks to track an index, it is subject
to Index Provider Risk. There is no assurance that the Index Provider will
compile the Index accurately, or that the Index will be determined, maintained,
constructed, reconstituted, rebalanced, composed, calculated or disseminated
accurately. To correct any such error, the Index Provider may carry out an
unscheduled rebalance or other modification of the Index constituents or
weightings, which may increase the fund's costs. The Index Provider does not
provide any representation or warranty in relation to the quality, accuracy or
completeness of data in the Index, and it does not guarantee that the Index will
be calculated in accordance with its stated methodology. Losses or costs
associated with any Index Provider errors generally will be borne by the fund
and its shareholders.
INVESTMENT COMPANIES RISK. To the extent a fund invests in the securities of
other investment vehicles, the fund will incur additional fees and expenses that
would not be present in a direct investment in those investment vehicles.
Furthermore, the fund's investment performance and risks are directly related to
the investment performance and risks of the investment vehicles in which the
fund invests.
MANAGEMENT RISK. To the extent that a fund is actively managed, it is subject to
management risk. In managing an actively-managed fund's investment portfolio,
the fund's portfolio managers will apply investment techniques and risk analyses
that may not have the desired result. There can be no guarantee that a fund will
meet its investment objective.
MARKET RISK. Securities held by a fund, as well as shares of a fund itself, are
subject to market fluctuations caused by factors such as general economic
conditions, political events, regulatory or market developments, changes in
interest rates and perceived trends in securities prices. Shares of a fund could
decline in value or underperform other investments as a result of the risk of
loss associated with these market fluctuations.
NON-U.S. SECURITIES RISK. To the extent a fund invests in non-U.S. securities,
it is subject to additional risks not associated with securities of domestic
issuers. Non-U.S. securities are subject to higher volatility than securities of
domestic issuers due to: possible adverse political, social or economic
developments; restrictions on foreign investment or exchange of securities; lack
of liquidity; currency exchange rates; excessive taxation; government seizure of
assets; different legal or accounting standards; and less government supervision
and regulation of exchanges in foreign countries. Investments in non-U.S.
securities may involve higher costs than investments in U.S. securities,
including higher transaction and custody costs, as well as additional taxes
imposed by non-U.S. governments. These risks may be heightened for securities of
companies located, or with significant operations, in emerging market countries.
PASSIVE INVESTMENT RISK. To the extent a fund seeks to track an index, the fund
will invest in the securities included in, or representative of, the index
regardless of their investment merit. A fund generally will not attempt to take
defensive positions in declining markets.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
Page 104
FIRST TRUST
First Trust Exchange-Traded Fund II
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
ADMINISTRATOR, CUSTODIAN,
FUND ACCOUNTANT &
TRANSFER AGENT
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
[BLANK BACK COVER]
FIRST TRUST
First Trust Exchange-Traded Fund II
--------------------------------------------------------------------------------
Book 2
First Trust IPOX(R) Europe Equity Opportunities ETF (FPXE)
First Trust Dow Jones International Internet ETF (FDNI)
----------------------
Semi-Annual Report
For the Period Ended
March 31, 2019
----------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEMI-ANNUAL REPORT
MARCH 31, 2019
Shareholder Letter ...................................................................... 2
Market Overview ......................................................................... 3
Fund Performance Overview
First Trust IPOX(R) Europe Equity Opportunities ETF (FPXE) ........................ 4
First Trust Dow Jones International Internet ETF (FDNI) ........................... 6
Notes to Fund Performance Overview ...................................................... 8
Understanding Your Fund Expenses ........................................................ 9
Portfolio of Investments
First Trust IPOX(R) Europe Equity Opportunities ETF (FPXE) ........................ 10
First Trust Dow Jones International Internet ETF (FDNI) ........................... 12
Statements of Assets and Liabilities .................................................... 14
Statements of Operations ................................................................ 15
Statements of Changes in Net Assets ..................................................... 16
Financial Highlights .................................................................... 17
Notes to Financial Statements ........................................................... 18
Additional Information .................................................................. 23
<Page>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and its representatives, taking into account the
information currently available to them. Forward-looking statements include all
statements that do not relate solely to current or historical fact. For example,
forward-looking statements include the use of words such as "anticipate,"
"estimate," "intend," "expect," "believe," "plan," "may," "should," "would" or
other words that convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
any series of First Trust Exchange-Traded Fund II (the "Trust") described in
this report (each such series is referred to as a "Fund" and collectively, as
the "Funds") to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. When
evaluating the information included in this report, you are cautioned not to
place undue reliance on these forward-looking statements, which reflect the
judgment of the Advisor and its representatives only as of the date hereof. We
undertake no obligation to publicly revise or update these forward-looking
statements to reflect events and circumstances that arise after the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that any Fund described in this report will achieve its
investment objective. Each Fund is subject to market risk, which is the
possibility that the market values of securities owned by the Fund will decline
and that the value of the Fund shares may therefore be less than what you paid
for them. Accordingly, you can lose money by investing in a Fund. See "Risk
Considerations" in the Additional Information section of this report for a
discussion of other risks of investing in the Funds.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
www.ftportfolios.com or speak with your financial advisor. Investment returns,
net asset value and share price will fluctuate and Fund shares, when sold, may
be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund
performance on each Fund's webpage at www.ftportfolios.com.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment. It
includes details about each Fund and presents data and analysis that provide
insight into each Fund's performance and investment approach.
By reading the market overview by Robert F. Carey, Chief Market Strategist of
the Advisor, you may obtain an understanding of how the market environment
affected the performance of each Fund. The statistical information that follows
may help you understand each Fund's performance compared to that of relevant
market benchmarks.
It is important to keep in mind that the opinions expressed by personnel of the
Advisor are just that: informed opinions. They should not be considered to be
promises or advice. The opinions, like the statistics, cover the period through
the date on the cover of this report. The material risks of investing in each
Fund are spelled out in its prospectus, statement of additional information, and
other Fund regulatory filings.
Page 1
--------------------------------------------------------------------------------
SHAREHOLDER LETTER
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
MARCH 31, 2019
Dear Shareholders,
First Trust is pleased to provide you with the semi-annual report for certain
series of the First Trust Exchange-Traded Fund II (the "Funds"), which contains
detailed information about the Funds since their respective inception on October
4, 2018, for First Trust IPOX(R) Europe Equity Opportunities ETF, and November
5, 2018, for First Trust Dow Jones International Internet ETF, to March 31,
2019. We encourage you to read this report carefully and discuss it with your
financial advisor.
Market volatility was the norm over the last six months. At the close of the
third quarter in September 2018, the markets had moved higher into positive
territory. In fact, all three major U.S. indices (the Nasdaq Composite Index,
the Dow Jones Industrial Average (the "DJIA") and the S&P 500(R) Index) hit
record levels during the third quarter. In October, markets were again very
volatile, surprising analysts and investors alike. Both global markets and U.S.
markets fell on fears of slowing growth, trade wars and higher interest rates.
The DJIA was down 4.98% for October and the MSCI EAFE Index, an index of stocks
in 21 developed markets (excluding the U.S. and Canada), was down 7.96%.
However, as November ended, the DJIA climbed 617 points (2.49%) to its biggest
one-day gain in eight months. The MSCI EAFE Index ended November down slightly.
December held its own shocks as it became the worst December for stocks since
the Great Depression. The DJIA and MSCI EAFE Index ended December with
year-to-date returns of -3.48% and -13.79%, respectively. For the first time in
nine years, the S&P 500(R) Index posted a negative return in 2018, down 4.38%.
During the fourth quarter of 2018, international equities outperformed U.S.
equities. Emerging markets, which suffered throughout most of 2018, dropped
7.50% in the fourth quarter, yet still managed to outperform the U.S. and
developed markets by over 500 basis points. Municipal securities ended 2018 with
a solid gain of 1.69% in the fourth quarter, which saw a distinct return of
volatility in both bond and equity markets. An interest rate rally in the last
two months of the fourth quarter led to solid gains for municipal securities.
As 2019 began, investors wondered if the volatility of 2018 would continue. For
the month of January, the DJIA rose steadily, ending the month up 7.29% from
December's low. The MSCI EAFE Index also trended upward, ending January up
6.57%. At the end of the first quarter, both the DJIA and the MSCI EAFE Index
were up 11.81% and 10.15%, respectively. Municipal securities were steady at
1.57% at the end of the first quarter.
The Federal Reserve (the "Fed") raised interest rates in September 2018 and
again in December 2018 to a target range of 2.25-2.50%, for a total of four
increases in 2018. The Fed had been expected to raise interest rates again in
2019, but they signaled in January that they would take a "patient" approach to
interest rate increases. No interest rate increases are expected in 2019.
While trade tensions have had an impact on markets around the world and could
continue to do so in the future, our First Trust economists believe that the
long-term impact of U.S. tariffs will be to encourage countries to talk about
more equal trade. We continue to believe that the combination of low interest
rates, low inflation and strong corporate earnings still point to a positive
economic environment and further growth, though we understand that past
performance can never guarantee future performance.
We continue to believe that you should invest for the long term and be prepared
for market movements, which can happen at any time. You can do this by keeping
current on your portfolio and speaking regularly with your investment
professional. Markets go up and they also go down, but savvy investors are
prepared for either through careful attention to investment goals.
Thank you for giving First Trust the opportunity to be a part of your financial
plan. We value our relationship with you and will report on the Funds again in
six months.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 2
--------------------------------------------------------------------------------
MARKET OVERVIEW
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEMI-ANNUAL REPORT
MARCH 31, 2019
ROBERT F. CAREY, CFA
SENIOR VICE PRESIDENT AND CHIEF MARKET STRATEGIST
FIRST TRUST ADVISORS L.P.
Mr. Carey is responsible for the overall management of research and analysis of
the First Trust product line. Mr. Carey has over 25 years of experience as an
Equity and Fixed-Income Analyst and is a recipient of the Chartered Financial
Analyst ("CFA") designation. He is a graduate of the University of Illinois at
Champaign-Urbana with a B.S. in Physics. He is also a member of the Investment
Analysts Society of Chicago and the CFA Institute. Mr. Carey has appeared as a
guest on such programs as Bloomberg TV, CNBC, and WBBM Radio, and has been
quoted by several publications, including The Wall Street Journal, The Wall
Street Reporter, Bloomberg News Service and Registered Rep.
STATE OF THE GLOBAL ECONOMY
A semi-annual survey conducted by the National Association for Business
Economics found that approximately 75% of its member panelists expect an
economic recession in the U.S. by the end of 2021, according to its own release.
While only 10% of those polled believe a recession will occur in 2019, 42% see
it happening in 2020 and 25% expect one in 2021. The remaining members either
expressed no opinion or said that the next recession will arrive after 2021. If
the U.S. economy continues to grow over the next two quarters, as we are
forecasting, the current U.S. expansion that commenced in July 2009 will become
the longest in U.S. history, supplanting the previous record from 1991-2001,
according to Business Insider. In our opinion, we see no threat of a recession
in the current climate.
The U.S. economy could benefit moving forward from the repatriation of overseas
profits. The passage of the "Tax Cuts and Jobs Act of 2017" in December 2017
reduced the tax rate on repatriated foreign profits to 15.5% for cash holdings
and 8.0% for more illiquid assets. Data from the Commerce Department indicates
that U.S. companies repatriated $85.9 billion in the fourth quarter of 2018
(most recent), according to Reuters. In 2018, U.S. companies repatriated a
record $664.9 billion, more than four times the $155.1 billion brought back in
2017 and more than double the previous record in 2005. Investment banks and
think tanks estimate that U.S. companies have offshore cash holdings totaling
$1.5 trillion to $2.5 trillion, according to Bloomberg. That is a lot of
potential dry powder that can be used by companies in any number of ways, be it
growth opportunities, including acquisitions, or enhancing shareholder value via
stock buybacks and dividends, in our opinion.
Just a little over a year ago, on March 8, 2018, the Trump administration
enacted new trade tariffs on steel and aluminum imports from the United States'
biggest trading partners. As a result, a serious trade battle ensued between the
U.S. and China, the two largest economies on the globe. While the two countries
have been in the process of negotiating a new trade agreement for several
months, one has yet to be reached. Some economists, as well as the International
Monetary Fund, have trimmed their global growth estimates in recent months due
largely to the uncertainty over the near-term outlook on global trade. We
believe that a new trade agreement between the U.S. and China would be paramount
to fostering a more robust trade climate moving forward, which in turn could
boost estimates on global growth.
GLOBAL EQUITIES MARKETS
For the six-month period ended March 31, 2019, the MSCI World ex USA and MSCI
Emerging Markets indices posted total returns of -3.67% (USD) and 1.71% (USD),
respectively, according to Bloomberg. Over that same period, the U.S. dollar
appreciated 2.26% against a basket of major currencies, as measured by the U.S.
Dollar Index (DXY). The stronger U.S. dollar provided a drag on the performance
of the two foreign stock indices, in our opinion. With respect to U.S. equities,
the S&P 500(R) Index posted a total return of -1.72% during the same period.
Only three of the 11 sectors were up on a total return basis. The top-performers
were Real Estate, Utilities and Consumer Staples, up 13.03%, 12.35% and 6.17%,
respectively, while the worst results came from Energy and Financials, down
11.26% and 5.67%, respectively.
Investors funneled an estimated net $66.66 billion into U.S. Equity mutual funds
and exchange-traded funds (ETFs) for the 12-month period ended March 31, 2019,
more than double the $24.42 billion that went into International Equity mutual
funds and ETFs, according to Morningstar. Investors continue to favor passive
funds over active funds in a big way. Passive U.S. Equity mutual funds and ETFs
reported estimated net inflows totaling $217.16 billion in the period, compared
to estimated net outflows totaling $150.50 billion. Active International Equity
mutual funds and ETFs reported estimated net inflows totaling $94.56 billion,
compared to estimated net outflows totaling $70.14 billion.
ETFGI, an independent research and consultancy firm, reported that total assets
invested in exchange-traded funds/exchange-traded products (ETFs/ETPs) listed
globally reached a record $5.40 trillion in March 2019, up 2.86% from $5.25
trillion at the close of September 2018, according to its own releases. March
marked the 62nd consecutive month of net new cash inflows into ETFs/ETPs listed
globally.
Page 3
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED)
--------------------------------------------------------------------------------
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE)
The First Trust IPOX(R) Europe Equity Opportunities ETF (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the IPOX(R) 100 Europe Index
(the "Index"). The shares of the Fund are listed and trade on The Nasdaq Stock
Market LLC under the ticker symbol "FPXE." The Fund will normally invest at
least 90% of its net assets (including investment borrowings) in common stocks
and/or depositary receipts that comprise the Index.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
CUMULATIVE
TOTAL RETURNS
Inception
(10/4/18)
to 3/31/19
FUND PERFORMANCE
NAV -2.85%
Market Price -2.65%
INDEX PERFORMANCE
IPOX(R) 100 Europe Index -2.31%
MSCI Europe Index -1.64%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 8.)
-----------------------------
IPOX(R) is an international trademark of IPOX(R) Schuster LLC used under
license. Initial Public Offerings Indexes (IPOX) and IPOX Derivatives, Pat. No.
7,698,197. The Fund is based on the IPOX(R) index and is not sponsored,
endorsed, sold or promoted by IPOX(R) Schuster LLC, and IPOX(R) Schuster LLC
makes no representation regarding the advisability of trading in such
product(s).
Page 4
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Health Care 19.23%
Financials 16.42
Industrials 13.90
Information Technology 13.79
Consumer Discretionary 12.07
Utilities 8.10
Real Estate 7.43
Communication Services 6.31
Materials 2.17
Energy 0.58
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Novartis AG 10.52%
Siemens Healthineers AG 5.72
Orsted A/S 5.47
Vonovia SE 4.61
Ferrari N.V. 4.49
Aena SME S.A. 3.70
Atlassian Corp. PLC, Class A 3.70
Adyen N.V. 3.16
ABN AMRO Group N.V. 2.91
Knorr-Bremse AG 2.20
------
Total 46.48%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
OCTOBER 4, 2018 - MARCH 31, 2019
First Trust IPOX(R) Europe IPOX(R) 100 MSCI Europe
Equity Opportunities ETF Europe Index Index
-------------------------- ------------ -----------
10/4/18 $10,000 $10,000 $10,000
3/31/19 9,715 9,769 9,836
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period October 5, 2018 (commencement
of trading) through March 31, 2019. Shareholders may pay more than NAV when they
buy Fund shares and receive less than NAV when they sell those shares because
shares are bought and sold at current market price. Data presented represents
past performance and cannot be used to predict future results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
10/5/18 - 3/31/19 93 5 0 0 19 3 0 0
Page 5
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF (FDNI)
The First Trust Dow Jones International Internet ETF (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the Dow Jones International
Internet Index (the "Index"). The shares of the Fund are listed and trade on The
Nasdaq Stock Market LLC under the ticker symbol "FDNI." The Fund will normally
invest at least 90% of its net assets (including investment borrowings) in the
securities that comprise the Index.
-------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------------------------
CUMULATIVE
TOTAL RETURNS
Inception
(11/5/18)
to 3/31/19
FUND PERFORMANCE
NAV 12.75%
Market Price 12.80%
INDEX PERFORMANCE
Dow Jones International Internet Index 13.18%
MSCI All Country World ex-USA Information Technology Index 8.77%
-------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 8.)
-----------------------------
The Index is a product of S&P Dow Jones Indices LLC or its affiliates ("SPDJI"),
and has been licensed for use by First Trust. Standard & Poor's(R) and S&P(R)
are registered trademarks of Standard & Poor's Financial Services LLC ("S&P");
Dow Jones(R) 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.
Page 6
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF (FDNI) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Communication Services 51.18%
Consumer Discretionary 32.35
Information Technology 14.75
Health Care 1.72
------
Total 100.00%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Tencent Holdings Ltd. 9.83%
Alibaba Group Holding Ltd., ADR 9.75
Baidu, Inc., ADR 9.53
JD.com, Inc., ADR 6.11
Shopify, Inc., Class A 5.00
Adyen N.V. 4.46
NetEase, Inc., ADR 4.39
Ctrip.com International Ltd., ADR 4.13
NAVER Corp. 3.96
Atlassian Corp. PLC, Class A 3.12
------
Total 60.28%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
NOVEMBER 5, 2018 - MARCH 31, 2019
First Trust Dow Jones Dow Jones International MSCI All Country World ex-USA
International Internet ETF Internet Index Information Technology Index
-------------------------- ----------------------- -----------------------------
11/5/18 $10,000 $10,000 $10,000
3/31/19 11,275 11,318 10,877
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK MIDPOINT VS. NAV THROUGH MARCH 31, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period November 6, 2018
(commencement of trading) through March 31, 2019. Shareholders may pay more than
NAV when they buy Fund shares and receive less than NAV when they sell those
shares because shares are bought and sold at current market price. Data
presented represents past performance and cannot be used to predict future
results.
NUMBER OF DAYS BID/ASK MIDPOINT NUMBER OF DAYS BID/ASK MIDPOINT
AT/ABOVE NAV BELOW NAV
---------------------------------------- ----------------------------------------
0.00%- 0.50%- 1.00%- 0.00%- 0.50%- 1.00%-
FOR THE PERIOD 0.49% 0.99% 1.99% >=2.00% 0.49% 0.99% 1.99% >=2.00%
11/6/18 - 3/31/19 55 13 0 0 30 0 0 0
Page 7
--------------------------------------------------------------------------------
NOTES TO FUND PERFORMANCE OVERVIEW (UNAUDITED)
--------------------------------------------------------------------------------
Total returns for the periods since inception are calculated from the inception
date of each Fund. "Cumulative Total Returns" represent the total change in
value of an investment over the periods indicated.
Each Fund's per share net asset value ("NAV") is the value of one share of the
Fund and is computed by dividing the value of all assets of the Fund (including
accrued interest and dividends), less all liabilities (including accrued
expenses and dividends declared but unpaid), by the total number of outstanding
shares. The price used to calculate market return ("Market Price") is determined
by using the midpoint between the highest bid and the lowest offer on the stock
exchange on which shares of the Fund are listed for trading as of the time that
the Fund's NAV is calculated. Since shares of each Fund did not trade in the
secondary market until after the Fund's inception, for the period from inception
to the first day of secondary market trading in shares of the Fund, the NAV of
each Fund is used as a proxy for the secondary market trading price to calculate
market returns. NAV and market returns assume that all distributions have been
reinvested in each Fund at NAV and Market Price, respectively.
An index is a statistical composite that tracks a specified financial market or
sector. Unlike each Fund, the indices do not actually hold a portfolio of
securities and therefore do not incur the expenses incurred by each Fund. These
expenses negatively impact the performance of each Fund. Also, market returns do
not include brokerage commissions that may be payable on secondary market
transactions. If brokerage commissions were included, market returns would be
lower. The total returns presented reflect the reinvestment of dividends on
securities in the indices. The returns presented do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption or
sale of Fund shares. The investment return and principal value of shares of each
Fund will vary with changes in market conditions. Shares of each Fund may be
worth more or less than their original cost when they are redeemed or sold in
the market. Each Fund's past performance is no guarantee of future performance.
Page 8
FIRST TRUST EXCHANGE-TRADED FUND II
UNDERSTANDING YOUR FUND EXPENSES
MARCH 31, 2019 (UNAUDITED)
As a shareholder of First Trust IPOX(R) Europe Equity Opportunities ETF or First
Trust Dow Jones International Internet ETF (each a "Fund" and collectively, the
"Funds"), you incur two types of costs: (1) transaction costs; and (2) ongoing
costs, including management fees, distribution and/or service fees, if any, and
other Fund expenses. This Example is intended to help you understand your
ongoing costs (in U.S. dollars) of investing in the Funds and to compare these
costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period (or since inception) and held through the six-month (or shorter) period
ended March 31, 2019.
ACTUAL EXPENSES
The first line in the following table provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During the Period"
to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the following table provides information about hypothetical
account values and hypothetical expenses based on each Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
each Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Funds and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as brokerage
commissions. Therefore, the second line in the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
----------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED EXPENSES PAID
EXPENSE RATIO DURING THE PERIOD
BEGINNING ENDING BASED ON THE OCTOBER 4, 2018 (a)
ACCOUNT VALUE ACCOUNT VALUE NUMBER OF DAYS TO
OCTOBER 4, 2018 (a) MARCH 31, 2019 IN THE PERIOD MARCH 31, 2019 (b)
----------------------------------------------------------------------------------------------------------------------------------
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE)
Actual $1,000.00 $ 971.50 0.70% $3.38
Hypothetical (5% return before expenses) $1,000.00 $1,021.44 0.70% $3.53
(a) Inception date.
(b) Actual expenses are equal to the annualized expense ratio as indicated in
the table multiplied by the average account value over the period (October
4, 2018 through March 31, 2019), multiplied by 179/365. Hypothetical
expenses are assumed for the most recent six-month period.
----------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED EXPENSES PAID
EXPENSE RATIO DURING THE PERIOD
BEGINNING ENDING BASED ON THE NOVEMBER 5, 2018 (a)
ACCOUNT VALUE ACCOUNT VALUE NUMBER OF DAYS TO
NOVEMBER 5, 2018 (a) MARCH 31, 2019 IN THE PERIOD MARCH 31, 2019 (b)
----------------------------------------------------------------------------------------------------------------------------------
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF (FDNI)
Actual $1,000.00 $1,127.50 0.65% $2.78
Hypothetical (5% return before expenses) $1,000.00 $1,021.69 0.65% $3.28
(a) Inception date.
(b) Actual expenses are equal to the annualized expense ratio as indicated in
the table multiplied by the average account value over the period
(November 5, 2018 through March 31, 2019), multiplied by 147/365.
Hypothetical expenses are assumed for the most recent six-month period.
Page 9
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.9%
AUSTRIA -- 0.6%
262 BAWAG Group AG (b) $ 11,562
--------------
CAYMAN ISLANDS -- 1.2%
784 Farfetch Ltd., Class A (c) 21,098
288 Opera Ltd., ADR (c) 1,892
--------------
22,990
--------------
DENMARK -- 6.5%
121 Ascendis Pharma A/S, ADR (c) 14,242
131 Netcompany Group A/S (b) (c) 4,690
1,375 Orsted A/S (b) 104,209
--------------
123,141
--------------
FINLAND -- 0.9%
346 DNA OYJ 7,173
392 Valmet OYJ 9,920
--------------
17,093
--------------
FRANCE -- 4.6%
1,057 ALD S.A. (b) 14,762
528 Amundi S.A. (b) 33,227
121 Gaztransport Et Technigaz S.A. 11,008
478 Worldline S.A. (b) (c) 28,311
--------------
87,308
--------------
GERMANY -- 20.5%
383 Covestro AG (b) 21,061
491 Delivery Hero SE (b) (c) 17,735
523 DWS Group GmbH & Co.
KGaA (b) (c) 18,187
460 Hapag-Lloyd AG (b) 14,552
422 Knorr-Bremse AG (c) 41,908
333 MorphoSys AG, ADR (c) 7,559
399 Rocket Internet SE (b) (c) 10,115
281 Scout24 AG (b) 14,550
2,616 Siemens Healthineers AG (b) 109,017
78 Siltronic AG 6,881
271 TLG Immobilien AG 8,159
957 Uniper SE 28,867
125 Varta AG (c) 5,334
1,694 Vonovia SE 87,830
--------------
391,755
--------------
IRELAND -- 2.1%
5,326 AIB Group PLC 23,910
580 nVent Electric PLC 15,648
--------------
39,558
--------------
ISRAEL -- 0.7%
118 CyberArk Software Ltd. (c) 14,048
--------------
ITALY -- 6.8%
50 Bio On S.p.A. (c) 3,096
1,420 Enav S.p.A. (b) 7,738
4,434 Fincantieri S.p.A. 5,451
1,592 FinecoBank Banca Fineco S.p.A. 20,939
1,572 Infrastrutture Wireless Italiane
S.p.A. (b) 14,054
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
ITALY (CONTINUED)
2,646 Italgas S.p.A. $ 16,337
1,962 Pirelli & C S.p.A. (b) (c) 12,629
4,271 Poste Italiane S.p.A. (b) 41,548
658 Technogym S.p.A. (b) 8,097
--------------
129,889
--------------
JERSEY ISLAND -- 1.9%
158 Mimecast Ltd. (c) 7,481
373 Novocure Ltd. (c) 17,967
268 Wizz Air Holdings PLC (b) (c) 10,507
--------------
35,955
--------------
LUXEMBOURG -- 1.1%
115 ADO Properties S.A. (b) 6,534
94 Globant S.A. (c) 6,712
233 Shurgard Self Storage S.A. (c) 7,693
--------------
20,939
--------------
NETHERLANDS -- 18.0%
2,459 ABN AMRO Group N.V. (b) 55,444
77 Adyen N.V. (b) (c) 60,290
99 Argenx SE, ADR (c) 12,359
461 ASR Nederland N.V. 19,186
143 Basic-Fit N.V. (b) (c) 4,812
187 Elastic N.V. (c) 14,936
183 Euronext N.V. (b) 11,598
639 Ferrari N.V. 85,658
138 IMCD N.V. 10,503
235 Intertrust N.V. (b) 4,429
209 Koninklijke Volkerwessels N.V. 4,309
387 NIBC Holding N.V. (b) 3,544
892 NN Group N.V. 37,053
336 Signify N.V. (b) 8,989
135 Takeaway.com N.V. (b) (c) 10,252
--------------
343,362
--------------
NORWAY -- 0.8%
1,523 Elkem ASA (b) (c) 5,396
481 Entra ASA (b) 7,261
280 Sbanken ASA (b) 2,542
--------------
15,199
--------------
SPAIN -- 6.8%
392 Aena SME S.A. (b) 70,576
758 Cellnex Telecom S.A. (b) 22,244
468 Euskaltel S.A. (b) 4,360
1,508 Gestamp Automocion S.A. (b) 8,703
1,229 Merlin Properties Socimi S.A. 16,082
3,931 Prosegur Cash S.A. (b) 8,678
--------------
130,643
--------------
SWEDEN -- 4.7%
662 Bravida Holding AB (b) 5,835
94 Evolution Gaming Group AB (b) 7,406
549 Hemfosa Fastigheter AB 4,816
238 Lifco AB, Class B 9,702
549 Nyfosa AB (c) 3,289
439 Pandox AB 7,857
277 Paradox Interactive AB 4,290
Page 10 See Notes to Financial Statements
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
SWEDEN (CONTINUED)
524 Resurs Holding AB (b) $ 3,246
2,257 Tele2 AB, Class B 30,066
315 THQ Nordic AB (c) 7,030
270 Thule Group AB (b) 6,099
--------------
89,636
--------------
SWITZERLAND -- 11.6%
137 CRISPR Therapeutics AG (c) 4,894
2,085 Novartis AG 200,554
837 SIG Combibloc Group AG (c) 8,574
78 VAT Group AG (b) 8,201
--------------
222,223
--------------
UNITED KINGDOM -- 11.1%
1,334 AJ Bell PLC (c) 5,595
263 Atlantica Yield PLC 5,118
627 Atlassian Corp. PLC, Class A (c) 70,468
2,443 Auto Trader Group PLC (b) 16,597
2,500 Avast PLC (b) (c) 9,225
2,055 BCA Marketplace PLC 5,289
199 Blue Prism Group PLC (c) 4,297
1,179 Countryside Properties PLC (b) 4,988
3,746 CYBG PLC 9,685
1,071 Ibstock PLC (b) 3,345
868 IntegraFin Holdings PLC 3,957
1,608 John Laing Group PLC (b) 7,958
1,078 Micro Focus International PLC 28,032
6,220 Quilter PLC (b) 11,896
520 Softcat PLC 5,621
1,527 SSP Group PLC 13,769
3,315 Vivo Energy PLC (b) 5,540
--------------
211,380
--------------
TOTAL INVESTMENTS -- 99.9% 1,906,681
(Cost $1,827,617) (d)
NET OTHER ASSETS AND
LIABILITIES -- 0.1% 2,128
--------------
NET ASSETS -- 100.0% $ 1,908,809
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is restricted in the U.S. and cannot be offered for public
sale without first being registered under the Securities Act of 1933, as
amended. This security is not restricted on the foreign exchange where it
trades freely without any additional registration. As such, it does not
require the additional disclosure required of restricted securities.
(c) Non-income producing security.
(d) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $148,674 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $69,610. The net unrealized appreciation was
$79,064.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 1,906,681 $ -- $ --
==============================================
* See Portfolio of Investments for country breakout.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
Euro 58.5%
Swiss Franc 11.4
United States Dollar 11.2
British Pound Sterling 7.7
Danish Krone 5.7
Swedish Krona 4.7
Norwegian Krone 0.8
------
Total 100.0%
======
See Notes to Financial Statements Page 11
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF (FDNI)
PORTFOLIO OF INVESTMENTS
MARCH 31, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.7%
CANADA -- 5.9%
805 Shopify, Inc., Class A (b) $ 166,174
1,796 Stars Group (The), Inc. (b) 31,395
--------------
197,569
--------------
CAYMAN ISLANDS -- 50.5%
738 58.com, Inc., ADR (b) 48,472
1,774 Alibaba Group Holding Ltd.,
ADR (b) 323,666
454 Autohome, Inc., ADR (b) 47,724
1,919 Baidu, Inc., ADR (b) 316,347
3,136 Ctrip.com International Ltd.,
ADR (b) 137,012
6,728 JD.com, Inc., ADR (b) 202,849
1,136 Momo, Inc., ADR (b) 43,441
604 NetEase, Inc., ADR 145,836
517 SINA Corp. (b) 30,627
7,100 Tencent Holdings Ltd. 326,512
3,444 Vipshop Holdings Ltd., ADR (b) 27,655
519 Weibo Corp., ADR (b) 32,173
--------------
1,682,314
--------------
GERMANY -- 4.7%
947 Delivery Hero SE (b) (c) 34,206
884 Scout24 AG (c) 45,774
1,028 United Internet AG 37,513
988 Zalando SE (b) (c) 38,513
--------------
156,006
--------------
ISLE OF MAN -- 1.0%
4,752 GVC Holdings PLC 34,598
--------------
ISRAEL -- 1.3%
346 Wix.com Ltd. (b) 41,807
--------------
JAPAN -- 7.2%
800 CyberAgent, Inc. 32,590
3,400 M3, Inc. 56,968
3,700 Nexon Co., Ltd. (b) 57,889
6,700 Rakuten, Inc. 63,355
1,600 ZOZO, Inc. 30,115
--------------
240,917
--------------
LUXEMBOURG -- 1.9%
461 Spotify Technology S.A. (b) 63,987
--------------
MALTA -- 0.6%
1,876 Kindred Group PLC 18,786
--------------
NETHERLANDS -- 6.5%
189 Adyen N.V. (b) (c) 147,984
1,957 Yandex N.V., Class A (b) 67,203
--------------
215,187
--------------
NEW ZEALAND -- 0.9%
876 Xero Ltd. (b) 30,261
--------------
NORWAY -- 0.8%
657 Schibsted ASA, Class A 25,793
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SOUTH KOREA -- 8.3%
500 Kakao Corp. $ 45,591
1,205 NAVER Corp. 131,636
142 NCSoft Corp. 62,049
329 Netmarble Corp. (b) (c) 36,230
--------------
275,506
--------------
UNITED KINGDOM -- 10.1%
922 Atlassian Corp. PLC, Class A (b) 103,624
7,718 Auto Trader Group PLC (c) 52,433
4,824 Just Eat PLC (b) 47,186
4,756 Ocado Group PLC (b) 84,895
7,479 Rightmove PLC 49,679
--------------
337,817
--------------
TOTAL INVESTMENTS -- 99.7% 3,320,548
(Cost $3,089,837) (d)
NET OTHER ASSETS AND
LIABILITIES -- 0.3% 9,724
--------------
NET ASSETS -- 100.0% $ 3,330,272
==============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) Non-income producing security.
(c) This security is restricted in the U.S. and cannot be offered for public
sale without first being registered under the Securities Act of 1933, as
amended. This security is not restricted on the foreign exchange where it
trades freely without any additional registration. As such, it does not
require the additional disclosure required of restricted securities.
(d) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of March 31, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $284,262 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $53,551. The net unrealized appreciation was
$230,711.
ADR - American Depositary Receipt
Page 12 See Notes to Financial Statements
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF (FDNI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2019 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2019 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
Level 1 - Quoted Prices
Level 2 - Other Significant Observable Inputs
Level 3 - Significant Unobservable Inputs
LEVEL 1 LEVEL 2 LEVEL 3
----------------------------------------------
Common Stocks* $ 3,320,548 $ -- $ --
==============================================
* See Portfolio of Investments for country breakout.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
-------------------------------------------------------------
United States Dollar 49.2%
Hong Kong Dollar 9.8
Euro 9.1
South Korean Won 8.3
British Pound Sterling 8.1
Japanese Yen 7.3
Canadian Dollar 5.9
Australian Dollar 0.9
Norwegian Krone 0.8
Swedish Krona 0.6
------
Total 100.0%
======
See Notes to Financial Statements Page 13
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 2019 (UNAUDITED)
FIRST TRUST FIRST TRUST
IPOX(R) EUROPE DOW JONES
EQUITY INTERNATIONAL
OPPORTUNITIES ETF INTERNET ETF
(FPXE) (FDNI)
---------------------- ----------------------
ASSETS:
ASSETS:
Investments, at value ................................................. $ 1,906,681 $ 3,320,548
Cash .................................................................. 17 9,051
Foreign currency, at value ............................................ 91 --
Receivables:
Dividends .......................................................... 1,621 2,510
Reclaims ........................................................... 1,527 16
---------------- ----------------
Total Assets ....................................................... 1,909,937 3,332,125
---------------- ----------------
LIABILITIES:
Investment advisory fees payable ...................................... 1,128 1,853
---------------- ----------------
Total Liabilities .................................................. 1,128 1,853
---------------- ----------------
NET ASSETS ............................................................ $ 1,908,809 $ 3,330,272
================ ================
NET ASSETS CONSIST OF:
Paid-in capital ....................................................... $ 1,968,757 $ 2,934,663
Par value ............................................................. 1,000 1,500
Accumulated distributable earnings (loss) ............................. (60,948) 394,109
---------------- ----------------
NET ASSETS ............................................................ $ 1,908,809 $ 3,330,272
================ ================
NET ASSET VALUE, per share ............................................ $ 19.09 $ 22.20
================ ================
Number of shares outstanding (unlimited number of shares
authorized, par value $0.01 per share) ............................. 100,002 150,002
================ ================
Investments, at cost .................................................. $ 1,827,617 $ 3,089,837
================ ================
Foreign currency, at cost (proceeds) .................................. $ 91 $ --
================ ================
Page 14 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 2019 (a) (UNAUDITED)
FIRST TRUST FIRST TRUST
IPOX(R) EUROPE DOW JONES
EQUITY INTERNATIONAL
OPPORTUNITIES ETF INTERNET ETF
(FPXE) (FDNI)
---------------------- ----------------------
INVESTMENT INCOME:
Dividends ............................................................. $ 13,523 $ 3,824
Foreign withholding tax ............................................... (1,619) (290)
---------------- ----------------
Total investment income ............................................ 11,904 3,534
---------------- ----------------
EXPENSES:
Investment advisory fees .............................................. 6,137 7,203
---------------- ----------------
Total expenses ..................................................... 6,137 7,203
---------------- ----------------
NET INVESTMENT INCOME (LOSS)........................................... 5,767 (3,669)
---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ........................................................ (140,735) (47,329)
In-kind redemptions ................................................ -- 215,945
Foreign currency transactions ...................................... (177) (1,525)
---------------- ----------------
Net realized gain (loss) .............................................. (140,912) 167,091
---------------- ----------------
Net change in unrealized appreciation (depreciation) on:
Investments ........................................................ 79,064 230,711
Foreign currency translation ....................................... (7) (24)
---------------- ----------------
Net change in unrealized appreciation (depreciation) .................. 79,057 230,687
---------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ............................... (61,855) 397,778
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS .................................................... $ (56,088) $ 394,109
================ ================
(a) Inception dates for FPXE and FDNI are October 4, 2018 and November 5,
2018, respectively, which are consistent with the respective Fund's
commencement of investment operations and are the dates the initial
creation units were established.
See Notes to Financial Statements Page 15
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF CHANGES IN NET ASSETS
FIRST TRUST FIRST TRUST
IPOX(R) EUROPE DOW JONES
EQUITY INTERNATIONAL
OPPORTUNITIES ETF INTERNET ETF
(FPXE) (FDNI)
---------------------- ----------------------
Period Ended Period Ended
3/31/2019 (a) 3/31/2019 (a)
(Unaudited) (Unaudited)
------------------ ------------------
OPERATIONS:
Net investment income (loss)................................................... $ 5,767 $ (3,669)
Net realized gain (loss)....................................................... (140,912) 167,091
Net change in unrealized appreciation (depreciation)........................... 79,057 230,687
------------------ ------------------
Net increase (decrease) in net assets resulting
from operations............................................................. (56,088) 394,109
------------------ ------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations.......................................................... (4,860) --
------------------ ------------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold...................................................... 1,969,757 4,028,628
Cost of shares redeemed........................................................ -- (1,092,465)
------------------ ------------------
Net increase (decrease) in net assets resulting
from shareholder transactions............................................... 1,969,757 2,936,163
------------------ ------------------
Total increase (decrease) in net assets........................................ 1,908,809 3,330,272
------------------ ------------------
NET ASSETS:
Beginning of period............................................................ -- --
------------------ ------------------
End of period.................................................................. $ 1,908,809 $ 3,330,272
================== ==================
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period........................................ -- --
Shares sold.................................................................... 100,002 200,002
Shares redeemed................................................................ -- (50,000)
------------------ ------------------
Shares outstanding, end of period.............................................. 100,002 150,002
================== ==================
(a) Inception dates for FPXE and FDNI are October 4, 2018 and November 5,
2018, respectively, which are consistent with the respective Fund's
commencement of investment operations and are the dates the initial
creation units were established.
Page 16 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE)
PERIOD ENDED
3/31/2019 (a)
(UNAUDITED)
------------
Net asset value, beginning of period $ 19.70
----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.06
Net realized and unrealized gain (loss) (0.62)
----------
Total from investment operations (0.56)
----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.05)
----------
Net asset value, end of period $ 19.09
==========
TOTAL RETURN (b) (2.85)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 1,909
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.70% (c)
Ratio of net investment income (loss) to
average net assets 0.66% (c)
Portfolio turnover rate (d) 35%
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF (FDNI)
PERIOD ENDED
3/31/2019 (a)
(UNAUDITED)
------------
Net asset value, beginning of period $ 19.69
----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.02)
Net realized and unrealized gain (loss) 2.53
----------
Total from investment operations 2.51
----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income --
----------
Net asset value, end of period $ 22.20
==========
TOTAL RETURN (b) 12.75%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 3,330
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.65% (c)
Ratio of net investment income (loss) to
average net assets (0.33)% (c)
Portfolio turnover rate (d) 21%
(a) Inception dates for FPXE and FDNI are October 4, 2018 and November 5,
2018, respectively, which are consistent with the respective Fund's
commencement of investment operations and are the dates the initial
creation units were established.
(b) 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.
(c) Annualized.
(d) 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 Page 17
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
1. ORGANIZATION
First Trust Exchange-Traded Fund II (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on July 6, 2006,
and is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act").
The Trust currently consists of sixteen exchange-traded funds. This report
covers the two funds listed below:
First Trust IPOX(R) Europe Equity Opportunities ETF - (The Nasdaq Stock
Market LLC ("Nasdaq") ticker "FPXE")(1)
First Trust Dow Jones International Internet ETF - (Nasdaq ticker "FDNI")(1)
(1) FPXE and FDNI commenced investment operations on October 4, 2018 and
November 5, 2018, respectively.
Each fund represents a separate series of shares of beneficial interest in the
Trust (each a "Fund" and collectively, the "Funds"). Unlike conventional mutual
funds, each Fund issues and redeems shares on a continuous basis, at net asset
value ("NAV"), only in large specified blocks consisting of 50,000 shares called
a "Creation Unit." Each Fund's Creation Units are generally issued and redeemed
in-kind for securities in which a Fund invests, and in certain circumstances,
for cash, and only to and from broker-dealers and large institutional investors
that have entered into participation agreements. Except when aggregated in
Creation Units, each Fund's shares are not redeemable securities. 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:
FUND INDEX
First Trust IPOX(R) Europe Equity Opportunities ETF IPOX(R) 100 Europe Index
First Trust Dow Jones International Internet ETF Dow Jones International Internet Index
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are each considered an investment company and follow accounting and
reporting guidance under Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") 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.
A. PORTFOLIO VALUATION
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 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 adopted by the Trust's Board of
Trustees, and in accordance with provisions of the 1940 Act. 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 principal market for such securities.
Shares of open-end funds are valued at fair value which is based on NAV
per share.
Securities traded in an over-the-counter market are fair valued at the
mean of their most recent bid and asked price, if available, and otherwise
at their closing bid price.
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Trust's Board of Trustees or its
delegate, 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
Page 18
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
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 type of security;
2) the size of the holding;
3) the initial cost of the security;
4) transactions in comparable securities;
5) price quotes from dealers and/or third-party pricing services;
6) relationships among various securities;
7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;
8) an analysis of the issuer's financial statements; and
9) the existence of merger proposals or tender offers that might affect
the value of the security.
If the securities in question are foreign securities, the following additional
information may be considered:
1) the value of similar foreign securities traded on other foreign
markets;
2) ADR trading of similar securities;
3) closed-end fund or exchange-traded fund trading of similar
securities;
4) foreign currency exchange activity;
5) the trading prices of financial products that are tied to baskets of
foreign securities;
6) factors relating to the event that precipitated the pricing problem;
7) whether the event is likely to recur; and
8) whether the effects of the event are isolated or whether they affect
entire markets, countries or regions.
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 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:
o 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.
o 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.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or methodologies used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value each Fund's investments as of March 31, 2019, is
included with each Fund's Portfolio of Investments.
Page 19
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. 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.
C. FOREIGN CURRENCY
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 gains earned by each Fund, if any, are distributed
at least annually.
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 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.
E. INCOME TAXES
Each Fund intends 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. As of March 31, 2019, 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.
Certain losses realized during the current fiscal year may be deferred and
treated as occurring the first day on the following fiscal year for federal
income tax purposes.
F. EXPENSES
Expenses, other than the investment advisory fee and other excluded expenses,
are paid by the Advisor (see Note 3). General expenses of the Trust are
allocated to all the Funds based upon the net assets of each Fund.
First Trust has entered into licensing agreements with each of the following
"Licensors" for the respective Funds:
FUND LICENSOR
First Trust IPOX(R) Europe Equity Opportunities ETF IPOX(R) Schuster LLC
First Trust Dow Jones International Internet ETF S&P Dow Jones Indices LLC
Page 20
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
The respective license agreements allow for the use 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'
licensing fees are paid by First Trust from the unitary investment advisory fees
it receives from each of the Funds.
G. NEW ACCOUNTING PRONOUNCEMENT
On August 28, 2018, the FASB issued Accounting Standards Update ("ASU") 2018-13,
"Disclosure Framework - Changes to the Disclosure Requirements for Fair Value
Measurement," which amends the fair value measurement disclosure requirements of
ASC 820. The amendments of ASU 2018-13 include new, eliminated, and modified
disclosure requirements of ASC 820. In addition, the amendments clarify that
materiality is an appropriate consideration of entities when evaluating
disclosure requirements. The ASU is effective for fiscal years beginning after
December 15, 2019, including interim periods therein. Early adoption is
permitted for any eliminated or modified disclosures upon issuance of this ASU.
The Funds have early adopted ASU 2018-13 for these financial statements, which
did not result in a material impact.
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 the Funds' assets and is
responsible for the expenses of each Fund including the cost of transfer agency,
custody, fund administration, legal, audit and other services and license fees
(if any), but excluding fee payments under the Investment Management Agreement,
interest, taxes, acquired fund fees and expenses, 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, and
extraordinary expenses, which are paid by each respective Fund. FPXE and FDNI
have each agreed to pay First Trust an annual unitary management fee equal to
0.70% and 0.65% of its average daily net assets, respectively.
The Trust has multiple service agreements with The Bank of New York Mellon
("BNYM"). Under the service agreements, BNYM performs custodial, fund
accounting, certain administrative services, and transfer agency services for
each Fund. As custodian, BNYM is responsible for custody of each Fund's assets.
As fund accountant and administrator, BNYM is responsible for maintaining the
books and records of each Fund's securities and cash. As transfer agent, BNYM is
responsible for maintaining shareholder records for each Fund. BNYM is a
subsidiary of The Bank of New York Mellon Corporation, a financial holding
company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that
varies based on whether the fund is a closed-end or other actively managed fund,
or is an index fund.
Additionally, the Lead Independent Trustee and the Chairmen of the Audit
Committee, Nominating and Governance Committee and Valuation Committee 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 Lead Independent Trustee and Committee
Chairmen rotate every three years. The officers and "Interested" Trustee receive
no compensation from the Trust for acting in such capacities.
4. PURCHASES AND SALES OF SECURITIES
For the fiscal period ended March 31, 2019, the cost of purchases and proceeds
from sales of investments for each Fund, excluding short-term investments and
in-kind transactions, were as follows:
Purchases Sales
---------------- --------------
First Trust IPOX(R) Europe Equity Opportunities ETF $ 637,256 $ 631,162
First Trust Dow Jones International Internet ETF 1,040,338 559,281
For the fiscal period ended March 31, 2019, the cost of in-kind purchases and
proceeds from in-kind sales for each Fund were as follows:
Purchases Sales
---------------- --------------
First Trust IPOX(R) Europe Equity Opportunities ETF $ 1,963,624 $ --
First Trust Dow Jones International Internet ETF 3,527,314 1,087,150
Page 21
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
5. CREATIONS, REDEMPTIONS AND TRANSACTION FEES
Shares are created and redeemed by each Fund only in Creation Unit size
aggregations of 50,000 shares in transactions with broker-dealers or large
institutional investors that have entered into a participation agreement (an
"Authorized Participant"). In order to purchase Creation Units of a Fund, an
Authorized Participant must deposit (i) a designated portfolio of equity
securities determined by First Trust (the "Deposit Securities") and generally
make or receive a cash payment referred to as the "Cash Component," which is an
amount equal to the difference between the NAV of the Fund Shares (per Creation
Unit Aggregation) and the market value of the Deposit Securities, and/or (ii)
cash in lieu of all or a portion of the Deposit Securities. If the Cash
Component is a positive number (i.e., the NAV per Creation Unit Aggregation
exceeds the Deposit Amount), the Authorized Participant will deliver the Cash
Component. If the Cash Component is a negative number (i.e., the NAV per
Creation Unit Aggregation is less than the Deposit Amount), the Authorized
Participant will receive the Cash Component. Authorized Participants purchasing
Creation Units must pay to BNYM, as transfer agent, a creation fee (the
"Creation Transaction Fee") regardless of the number of Creation Units purchased
in the transaction. The Creation Transaction Fee may vary and is based on the
composition of the securities included in each Fund's portfolio and the
countries in which the transactions are settled. The Creation Transaction Fee
may increase or decrease as each Fund's portfolio is adjusted to conform to
changes in the composition of its corresponding index. The price for each
Creation Unit will equal the daily NAV per share 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 or stamp taxes. When a Fund
permits an Authorized Participant to substitute cash or a different security in
lieu of depositing one or more of the requisite Deposit Securities, the
Authorized Participant may also be assessed an amount to cover the cost of
purchasing the Deposit Securities and/or disposing of the substituted
securities, including 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 such Deposit Securities and/or substitute
securities.
Authorized Participants redeeming Creation Units must pay to BNYM, as transfer
agent, a redemption transaction fee (the "Redemption Transaction Fee"),
regardless of the number of Creation Units redeemed in the transaction. The
Redemption Transaction Fee may vary and is based on the composition of the
securities included in each Fund's portfolio and the countries in which the
transactions are settled. The Redemption Transaction Fee may increase or
decrease as each Fund's portfolio is adjusted to conform to changes in the
composition of its corresponding index. Each Fund reserves the right to effect
redemptions in cash. An Authorized Participant may request a cash redemption in
lieu of securities; however, each Fund may, in its discretion, reject any such
request.
The standard Creation Transaction Fees and the Redemption Transaction Fees are
as follows:
Creation Redemption
Transaction Transaction
Fees Fees
---------------- --------------
First Trust IPOX(R) Europe Equity Opportunities ETF $ 1,500 $ 1,500
First Trust Dow Jones International Internet ETF 500 500
6. DISTRIBUTION PLAN
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 October 1, 2020 for
First Trust IPOX(R) Europe Equity Opportunities ETF, and October 31, 2020 for
First Trust Dow Jones International Internet ETF.
7. INDEMNIFICATION
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.
8. SUBSEQUENT EVENTS
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.
Page 22
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Trust uses to determine
how to vote proxies and information on how each Fund voted proxies relating to
its portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
each Fund's website at www.ftportfolios.com; and (3) on the Securities and
Exchange Commission's ("SEC") website at www.sec.gov.
PORTFOLIO HOLDINGS
Each Fund files portfolio holdings information for each month in a fiscal
quarter within 60 days after the end of the relevant fiscal quarter on Form
N-PORT. Portfolio holdings information for the third month of each fiscal
quarter will be publicly available on the SEC's website at www.sec.gov. Each
Fund's complete schedule of portfolio holdings for the second and fourth
quarters of each fiscal year is included in the semi-annual and annual reports
to shareholders, respectively, and is filed with the SEC on Form N-CSR. The
semi-annual and annual report for each Fund is available to investors within 60
days after the period to which it relates. Each Fund's Forms N-PORT and Forms
N-CSR are available on the SEC's website listed above.
RISK CONSIDERATIONS
RISKS ARE INHERENT IN ALL INVESTING. CERTAIN GENERAL RISKS THAT MAY BE
APPLICABLE TO A FUND ARE IDENTIFIED BELOW, BUT NOT ALL OF THE MATERIAL RISKS
RELEVANT TO EACH FUND ARE INCLUDED IN THIS REPORT AND NOT ALL OF THE RISKS BELOW
APPLY TO EACH FUND. THE MATERIAL RISKS OF INVESTING IN EACH FUND ARE SPELLED OUT
IN ITS PROSPECTUS, STATEMENT OF ADDITIONAL INFORMATION AND OTHER REGULATORY
FILINGS. BEFORE INVESTING, YOU SHOULD CONSIDER EACH FUND'S INVESTMENT OBJECTIVE,
RISKS, CHARGES AND EXPENSES, AND READ EACH FUND'S PROSPECTUS AND STATEMENT OF
ADDITIONAL INFORMATION CAREFULLY. YOU CAN DOWNLOAD EACH FUND'S PROSPECTUS AT
WWW.FTPORTFOLIOS.COM OR CONTACT FIRST TRUST PORTFOLIOS L.P. AT (800) 621-1675 TO
REQUEST A PROSPECTUS, WHICH CONTAINS THIS AND OTHER INFORMATION ABOUT EACH FUND.
CONCENTRATION RISK. To the extent that a fund is able to invest a large
percentage of its assets in a single asset class or the securities of issuers
within the same country, state, region, industry or sector, an adverse economic,
business or political development may affect the value of the fund's investments
more than if the fund were more broadly diversified. A fund that tracks an index
will be concentrated to the extent the fund's corresponding index is
concentrated. A concentration makes a fund more susceptible to any single
occurrence and may subject the fund to greater market risk than a fund that is
not concentrated.
CREDIT RISK. Credit risk is the risk that an issuer of a security will be unable
or unwilling to make dividend, interest and/or principal payments when due and
the related risk that the value of a security may decline because of concerns
about the issuer's ability to make such payments.
CYBER SECURITY RISK. The funds are susceptible to potential operational risks
through breaches in cyber security. A breach in cyber security refers to both
intentional and unintentional events that may cause a fund to lose proprietary
information, suffer data corruption or lose operational capacity. Such events
could cause a fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial
loss. In addition, cyber security breaches of a fund's third-party service
providers, such as its administrator, transfer agent, custodian, or sub-advisor,
as applicable, or issuers in which the fund invests, can also subject a fund to
many of the same risks associated with direct cyber security breaches.
DERIVATIVES RISK. To the extent a fund uses derivative instruments such as
futures contracts, options contracts and swaps, the fund may experience losses
because of adverse movements in the price or value of the underlying asset,
index or rate, which may be magnified by certain features of the derivative.
These risks are heightened when a fund's portfolio managers use derivatives to
enhance the fund's return or as a substitute for a position or security, rather
than solely to hedge (or offset) the risk of a position or security held by the
fund.
EQUITY SECURITIES RISK. To the extent a fund invests in equity securities, the
value of the fund's shares will fluctuate with changes in the value of the
equity securities. Equity securities prices fluctuate for several reasons,
including changes in investors' perceptions of the financial condition of an
issuer or the general condition of the relevant stock market, such as market
volatility, or when political or economic events affecting the issuers occur. In
addition, common stock prices may be particularly sensitive to rising interest
rates, as the cost of capital rises and borrowing costs increase. Equity
securities may decline significantly in price over short or extended periods of
time, and such declines may occur in the equity market as a whole, or they may
occur in only a particular country, company, industry or sector of the market.
ETF RISK. The shares of an ETF trade like common stock and represent an interest
in a portfolio of securities. The risks of owning an ETF generally reflect the
risks of owning the underlying securities, although lack of liquidity in an ETF
could result in it being more volatile and ETFs have management fees that
increase their costs. Shares of an ETF trade on an exchange at market prices
rather than net asset value, which may cause the shares to trade at a price
greater than net asset value (premium) or less than net asset value (discount).
In times of market stress, decisions by market makers to reduce or step away
Page 23
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
from their role of providing a market for an ETF's shares, or decisions by an
ETF's authorized participants that they are unable or unwilling to proceed with
creation and/or redemption orders of an ETF's shares, could result in shares of
the ETF trading at a discount to net asset value and in greater than normal
intraday bid-ask spreads.
FIXED INCOME SECURITIES RISK. To the extent a fund invests in fixed income
securities, the fund will be subject to credit risk, income risk, interest rate
risk, liquidity risk and prepayment risk. Income risk is the risk that income
from a fund's fixed income investments could decline during periods of falling
interest rates. Interest rate risk is the risk that the value of a fund's fixed
income securities will decline because of rising interest rates. Liquidity risk
is the risk that a security cannot be purchased or sold at the time desired, or
cannot be purchased or sold without adversely affecting the price. Prepayment
risk is the risk that the securities will be redeemed or prepaid by the issuer,
resulting in lower interest payments received by the fund. In addition to these
risks, high yield securities, or "junk" bonds, are subject to greater market
fluctuations and risk of loss than securities with higher ratings, and the
market for high yield securities is generally smaller and less liquid than that
for investment grade securities.
INDEX CONSTITUENT RISK. Certain funds may be a constituent of one or more
indices. As a result, such a fund may be included in one or more index-tracking
exchange-traded funds or mutual funds. Being a component security of such a
vehicle could greatly affect the trading activity involving a fund, the size of
the fund and the market volatility of the fund. Inclusion in an index could
significantly increase demand for the fund and removal from an index could
result in outsized selling activity in a relatively short period of time. As a
result, a fund's net asset value could be negatively impacted and the fund's
market price may be significantly below its net asset value during certain
periods.
INDEX PROVIDER RISK. To the extent a fund seeks to track an index, it is subject
to Index Provider Risk. There is no assurance that the Index Provider will
compile the Index accurately, or that the Index will be determined, maintained,
constructed, reconstituted, rebalanced, composed, calculated or disseminated
accurately. To correct any such error, the Index Provider may carry out an
unscheduled rebalance or other modification of the Index constituents or
weightings, which may increase the fund's costs. The Index Provider does not
provide any representation or warranty in relation to the quality, accuracy or
completeness of data in the Index, and it does not guarantee that the Index will
be calculated in accordance with its stated methodology. Losses or costs
associated with any Index Provider errors generally will be borne by the fund
and its shareholders.
INVESTMENT COMPANIES RISK. To the extent a fund invests in the securities of
other investment vehicles, the fund will incur additional fees and expenses that
would not be present in a direct investment in those investment vehicles.
Furthermore, the fund's investment performance and risks are directly related to
the investment performance and risks of the investment vehicles in which the
fund invests.
MANAGEMENT RISK. To the extent that a fund is actively managed, it is subject to
management risk. In managing an actively-managed fund's investment portfolio,
the fund's portfolio managers will apply investment techniques and risk analyses
that may not have the desired result. There can be no guarantee that a fund will
meet its investment objective.
MARKET RISK. Securities held by a fund, as well as shares of a fund itself, are
subject to market fluctuations caused by factors such as general economic
conditions, political events, regulatory or market developments, changes in
interest rates and perceived trends in securities prices. Shares of a fund could
decline in value or underperform other investments as a result of the risk of
loss associated with these market fluctuations.
NON-U.S. SECURITIES RISK. To the extent a fund invests in non-U.S. securities,
it is subject to additional risks not associated with securities of domestic
issuers. Non-U.S. securities are subject to higher volatility than securities of
domestic issuers due to: possible adverse political, social or economic
developments; restrictions on foreign investment or exchange of securities; lack
of liquidity; currency exchange rates; excessive taxation; government seizure of
assets; different legal or accounting standards; and less government supervision
and regulation of exchanges in foreign countries. Investments in non-U.S.
securities may involve higher costs than investments in U.S. securities,
including higher transaction and custody costs, as well as additional taxes
imposed by non-U.S. governments. These risks may be heightened for securities of
companies located, or with significant operations, in emerging market countries.
PASSIVE INVESTMENT RISK. To the extent a fund seeks to track an index, the fund
will invest in the securities included in, or representative of, the index
regardless of their investment merit. A fund generally will not attempt to take
defensive positions in declining markets.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
Page 24
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
ADVISORY AGREEMENTS
BOARD CONSIDERATIONS REGARDING APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT FOR
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF
The Board of Trustees (the "Board") of First Trust Exchange-Traded Fund II (the
"Trust"), including the Independent Trustees, unanimously approved the
Investment Management Agreement (the "Agreement") with First Trust Advisors L.P.
(the "Advisor"), on behalf of First Trust IPOX(R) Europe Equity Opportunities
ETF (the "Fund"), for an initial two-year term at a meeting held on June 11,
2018. The Board determined that the Agreement is in the best interests of the
Fund in light of the nature, extent and quality of the services expected to be
provided and such other matters as the Board considered to be relevant in the
exercise of its reasonable business judgment.
To reach this determination, the Board considered its duties under the
Investment Company Act of 1940, as amended (the "1940 Act"), as well as under
the general principles of state law, in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. To assist the Board in its evaluation of the Agreement for
the Fund, the Independent Trustees received a report from the Advisor in advance
of the Board meeting responding to a request for information provided on behalf
of the Independent Trustees that, among other things, outlined the services to
be provided by the Advisor to the Fund (including the relevant personnel
responsible for these services and their experience); the proposed unitary fee
rate payable by the Fund as compared to fee rates charged to a peer group of
funds (all of which were exchange-traded funds ("ETFs")) compiled by Management
Practice, Inc. ("MPI"), an independent source (the "Peer Group"), and as
compared to fee rates charged to other ETFs managed by the Advisor; the
estimated expenses of the Fund as compared to expense ratios of the peer funds
in the Peer Group; the nature of the expenses to be incurred in providing
services to the Fund and the potential for economies of scale, if any; financial
data on the Advisor; any fall-out benefits to the Advisor and its affiliate,
First Trust Portfolios L.P. ("FTP"); and information on the Advisor's compliance
program. The Independent Trustees also met separately with their independent
legal counsel to discuss the information provided by the Advisor. The Board
applied its business judgment to determine whether the arrangement between the
Trust and the Advisor is a reasonable business arrangement from the Fund's
perspective.
In evaluating whether to approve the Agreement for the Fund, the Board
considered the nature, extent and quality of the services to be provided by the
Advisor under the Agreement and considered that employees of the Advisor provide
management services to other ETFs and to other investment companies in the First
Trust fund complex with diligence and care. The Board considered that the
Advisor will be responsible for the overall management and administration of the
Fund and reviewed all of the services to be provided by the Advisor to the Fund.
The Board considered the background and experience of the persons who will be
responsible for the day-to-day management of the Fund. In reviewing the services
to be provided, the Board noted the compliance program that had been developed
by the Advisor and considered that it includes a robust program for monitoring
the Advisor's and the Fund's compliance with the 1940 Act, as well as the Fund's
compliance with its investment objective, policies and restrictions. Since the
Fund had yet to commence investment operations, the Board could not consider the
historical investment performance of the Fund. Because the Fund is an index ETF
that is designed to track the performance of an underlying index, the Board
considered reports it receives on a quarterly basis showing the correlation and
tracking error between other ETFs for which the Advisor serves as investment
advisor and their applicable underlying indexes. In light of the information
presented and the considerations made, the Board concluded that the nature,
extent and quality of the services to be provided to the Fund by the Advisor
under the Agreement are expected to be satisfactory.
The Board considered the proposed unitary fee rate payable by the Fund under the
Agreement for the services to be provided. The Board noted that, under the
unitary fee arrangement, the Fund would pay the Advisor a unitary fee equal to
an annual rate of 0.70% of its average daily net assets. The Board noted that
the Advisor would be responsible for the Fund's expenses, including the cost of
transfer agency, custody, fund administration, legal, audit and other services
and license fees (if any), but excluding the fee payments under the Agreement,
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. The Board received and
reviewed information for the Fund showing the unitary fee rates and expense
ratios of the peer funds in the Peer Group, as well as advisory and unitary fee
rates charged by the Advisor to other ETFs it manages. Because the Fund's Peer
Group included peer funds that pay unitary fees and because the Fund will pay a
unitary fee, the Board determined that expense ratios were the most relevant
comparative data point. Based on the information provided, the Board noted that
the unitary fee rate for the Fund was slightly above the median total (net)
expense ratio of the peer funds in its Peer Group. With respect to the Peer
Group, the Board discussed with representatives of the Advisor how the Peer
Group was assembled and how the Fund compared and differed from the peer funds.
The Board took this information into account in considering the peer data. The
Board noted that the Fund's unitary fee rate was in line with the total (net)
expense ratios of comparable index ETFs advised by the Advisor that, like the
Fund, focus on targeted exposures with robust selection and weighting
methodologies, and objectives to add alpha compared to relevant investment
category benchmarks. In light of the information considered and the nature,
extent and quality of the services expected to be provided to the Fund under the
Agreement, the Board determined that the proposed unitary fee rate for the Fund
was fair and reasonable.
Page 25
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
The Board noted that the proposed unitary fee for the Fund was not structured to
pass the benefits of any economies of scale on to shareholders as the Fund's
assets grow. The Board noted that any reduction in fixed costs associated with
the management of the Fund would benefit the Advisor, but that the unitary fee
structure provides a level of certainty in expenses for the Fund. The Board
noted that the Advisor has continued to invest in infrastructure and personnel
for the First Trust fund complex. The Board took the types of costs to be borne
by the Advisor in connection with its services to be performed for the Fund
under the Agreement into consideration and noted that the Advisor was unable to
estimate the profitability of the Agreement for the Fund to the Advisor at this
time. The Board considered fall-out benefits described by the Advisor that may
be realized from its and FTP's relationship with the Fund. The Board considered
that the Advisor had identified as a fall-out 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. The Board also noted that the
Advisor would not utilize soft dollars in connection with its management of the
Fund's portfolio. The Board concluded that the character and amount of potential
fall-out 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 are fair and reasonable and that the approval of the Agreement
is in the best interests of the Fund. No single factor was determinative in the
Board's analysis.
BOARD CONSIDERATIONS REGARDING APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT FOR
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF
The Board of Trustees (the "Board") of First Trust Exchange-Traded Fund II (the
"Trust"), including the Independent Trustees, unanimously approved the
Investment Management Agreement (the "Agreement") with First Trust Advisors L.P.
(the "Advisor"), on behalf of First Trust Dow Jones International Internet ETF
(the "Fund"), for an initial two-year term at a meeting held on September 9-10,
2018. The Board determined that the Agreement is in the best interests of the
Fund in light of the nature, extent and quality of the services expected to be
provided and such other matters as the Board considered to be relevant in the
exercise of its reasonable business judgment.
To reach this determination, the Board considered its duties under the
Investment Company Act of 1940, as amended (the "1940 Act"), as well as under
the general principles of state law, in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. To assist the Board in its evaluation of the Agreement for
the Fund, the Independent Trustees received a report from the Advisor in advance
of the Board meeting responding to a request for information provided on behalf
of the Independent Trustees that, among other things, outlined the services to
be provided by the Advisor to the Fund (including the relevant personnel
responsible for these services and their experience); the proposed unitary fee
rate payable by the Fund as compared to fee rates charged to a peer group of
funds (all of which were exchange-traded funds ("ETFs")) compiled by Management
Practice, Inc. ("MPI"), an independent source (the "Peer Group"), and as
compared to fee rates charged to other ETFs managed by the Advisor; the
estimated expenses of the Fund as compared to expense ratios of the peer funds
in the Peer Group; the nature of the expenses to be incurred in providing
services to the Fund and the potential for economies of scale, if any; financial
data on the Advisor; any fall-out benefits to the Advisor and its affiliate,
First Trust Portfolios L.P. ("FTP"); and information on the Advisor's compliance
program. The Independent Trustees also met separately with their independent
legal counsel to discuss the information provided by the Advisor. The Board
applied its business judgment to determine whether the arrangement between the
Trust and the Advisor is a reasonable business arrangement from the Fund's
perspective.
In evaluating whether to approve the Agreement for the Fund, the Board
considered the nature, extent and quality of the services to be provided by the
Advisor under the Agreement and considered that employees of the Advisor provide
management services to other ETFs and to other investment companies in the First
Trust Fund Complex with diligence and care. The Board considered that the
Advisor will be responsible for the overall management and administration of the
Fund and reviewed all of the services to be provided by the Advisor to the Fund.
The Board considered the background and experience of the persons who will be
responsible for the day-to-day management of the Fund. In reviewing the services
to be provided, the Board noted the compliance program that had been developed
by the Advisor and considered that it includes a robust program for monitoring
the Advisor's and the Fund's compliance with the 1940 Act, as well as the Fund's
compliance with its investment objective, policies and restrictions. Because the
Fund had yet to commence investment operations, the Board could not consider the
historical investment performance of the Fund. Because the Fund is an index ETF
that is designed to track the performance of an underlying index, the Board
considered reports it receives on a quarterly basis showing the correlation and
tracking error between other ETFs for which the Advisor serves as investment
advisor and their applicable underlying indexes. In light of the information
presented and the considerations made, the Board concluded that the nature,
extent and quality of the services to be provided to the Fund by the Advisor
under the Agreement are expected to be satisfactory.
Page 26
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
MARCH 31, 2019 (UNAUDITED)
The Board considered the proposed unitary fee rate payable by the Fund under the
Agreement for the services to be provided. The Board noted that, under the
unitary fee arrangement, the Fund would pay the Advisor a unitary fee equal to
an annual rate of 0.65% of its average daily net assets. The Board noted that
the Advisor would be responsible for the Fund's expenses, including the cost of
transfer agency, custody, fund administration, legal, audit and other services
and license fees (if any), but excluding the fee payments under the Agreement,
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. The Board received and
reviewed information for the Fund showing the unitary fee rates and expense
ratios of the peer funds in the Peer Group, as well as advisory and unitary fee
rates charged by the Advisor to other ETFs it manages. Because the Fund's Peer
Group included peer funds that pay unitary fees and because the Fund will pay a
unitary fee, the Board determined that expense ratios were the most relevant
comparative data point. Based on the information provided, the Board noted that
the unitary fee rate for the Fund was below the median total (net) expense ratio
of the peer funds in its Peer Group. With respect to the Peer Group, the Board
discussed with representatives of the Advisor how the Peer Group was assembled
and how the Fund compared and differed from the peer funds. The Board took this
information into account in considering the peer data. The Board noted that the
Fund's unitary fee rate was in line with the unitary fees of comparable index
ETFs advised by the Advisor that, like the Fund, focus on targeted exposures
with robust selection methodologies, and objectives to track a given market
segment. In light of the information considered and the nature, extent and
quality of the services expected to be provided to the Fund under the Agreement,
the Board determined that the proposed unitary fee rate for the Fund was fair
and reasonable.
The Board noted that the proposed unitary fee for the Fund was not structured to
pass the benefits of any economies of scale on to shareholders as the Fund's
assets grow. The Board noted that any reduction in fixed costs associated with
the management of the Fund would benefit the Advisor, but that the unitary fee
structure provides a level of certainty in expenses for the Fund. The Board
noted that the Advisor has continued to invest in infrastructure and personnel
for the First Trust Fund Complex. The Board took the types of costs to be borne
by the Advisor in connection with its services to be performed for the Fund
under the Agreement into consideration and noted that the Advisor was unable to
estimate the profitability of the Agreement for the Fund to the Advisor at this
time. The Board considered fall-out benefits described by the Advisor that may
be realized from its and FTP's relationship with the Fund. The Board considered
that the Advisor had identified as a fall-out 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. The Board also noted that the
Advisor would not utilize soft dollars in connection with its management of the
Fund's portfolio. The Board concluded that the character and amount of potential
fall-out 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 are fair and reasonable and that the approval of the Agreement
is in the best interests of the Fund. No single factor was determinative in the
Board's analysis.
Page 27
This page intentionally left blank.
FIRST TRUST
First Trust Exchange-Traded Fund II
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
ADMINISTRATOR, CUSTODIAN,
FUND ACCOUNTANT &
TRANSFER AGENT
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
[BLANK BACK COVER]
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
(a) Schedules of Investments in securities of unaffiliated issuers as of the
close of the reporting period are included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers, or
persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3 (c))) are effective, as of a date within 90 days of the filing
date of the report that includes the disclosure required by this
paragraph, based on their evaluation of these controls and procedures
required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and
Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as
amended (17 CFR 240.13a-15(b) or 240.15d-15 (b)).
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the registrant's last fiscal quarter of
the period covered by this report that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control
over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT
INVESTMENT COMPANIES
(a) Not applicable.
(b) Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(a)(4) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section
906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
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)
Date: June 10, 2019
---------------
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)
Date: June 10, 2019
---------------
By (Signature and Title) /s/ Donald P. Swade
----------------------------------------
Donald P. Swade, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: June 10, 2019
---------------