Form N-CSRS FIRST TRUST EXCHANGE-TRA For: Jun 30
Tweet
Share
E-mail
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 811-21774
First Trust Exchange-Traded Fund
(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Name and address of agent for service)
Registrant's telephone number, including area code: (630) 765-8000
Date of fiscal year end: December 31
Date of reporting period: June 30, 2021
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, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Report to Stockholders.
| (a) | The registrant's semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: |
FIRST TRUST
First Trust Exchange-Traded Fund
Book 1
First Trust Dow Jones Select MicroCap Index Fund (FDM)
First Trust Morningstar Dividend Leaders Index Fund (FDL)
First Trust US Equity Opportunities ETF (FPX)
First Trust NYSE(R) Arca(R) Biotechnology Index Fund (FBT)
First Trust Dow Jones Internet Index Fund (FDN)
First Trust Capital Strength ETF (FTCS)
First Trust Value Line(R) Dividend Index Fund (FVD)
Semi-Annual Report
For the Six Months Ended
June 30, 2021
<PAGE>
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
SEMI-ANNUAL REPORT
JUNE 30, 2021
Shareholder Letter.......................................................... 2
Market Overview............................................................. 3
Fund Performance Overview
First Trust Dow Jones Select MicroCap Index Fund (FDM)................... 4
First Trust Morningstar Dividend Leaders Index Fund (FDL)................ 6
First Trust US Equity Opportunities ETF (FPX)............................ 8
First Trust NYSE(R) Arca(R) Biotechnology Index Fund (FBT)............... 10
First Trust Dow Jones Internet Index Fund (FDN).......................... 12
First Trust Capital Strength ETF (FTCS).................................. 14
First Trust Value Line(R) Dividend Index Fund (FVD)...................... 16
Notes to Fund Performance Overview.......................................... 18
Understanding Your Fund Expenses............................................ 19
Portfolio of Investments
First Trust Dow Jones Select MicroCap Index Fund (FDM)................... 21
First Trust Morningstar Dividend Leaders Index Fund (FDL)................ 25
First Trust US Equity Opportunities ETF (FPX)............................ 27
First Trust NYSE(R) Arca(R) Biotechnology Index Fund (FBT)............... 31
First Trust Dow Jones Internet Index Fund (FDN).......................... 32
First Trust Capital Strength ETF (FTCS).................................. 34
First Trust Value Line(R) Dividend Index Fund (FVD)...................... 36
Statements of Assets and Liabilities........................................ 40
Statements of Operations.................................................... 42
Statements of Changes in Net Assets......................................... 44
Financial Highlights........................................................ 47
Notes to Financial Statements............................................... 51
Additional Information...................................................... 60
<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 (the "Trust") described in this
report (each such series is referred to as a "Fund" and collectively, as the
"Funds") to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. When
evaluating the information included in this report, you are cautioned not to
place undue reliance on these forward-looking statements, which reflect the
judgment of the Advisor and its representatives only as of the date hereof. We
undertake no obligation to publicly revise or update these forward-looking
statements to reflect events and circumstances that arise after the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that any Fund described in this report will achieve its
investment objective. Each Fund is subject to market risk, which is the
possibility that the market values of securities owned by the Fund will decline
and that the value of the Fund's shares may therefore be less than what you paid
for them. Accordingly, you can lose money by investing in a Fund. See "Risk
Considerations" in the Additional Information section of this report for a
discussion of certain other risks of investing in the Funds.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
www.ftportfolios.com or speak with your financial advisor. Investment returns,
net asset value and share price will fluctuate and Fund shares, when sold, may
be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund
performance on each Fund's webpage at www.ftportfolios.com.
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
<PAGE>
--------------------------------------------------------------------------------
SHAREHOLDER LETTER
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
JUNE 30, 2021
Dear Shareholders,
First Trust is pleased to provide you with the semi-annual report for certain
funds in the First Trust Exchange-Traded Fund (the "Funds"), which contains
detailed information about the Funds for the six months ended June 30, 2021.
Since December of 2008, the Federal Reserve (the "Fed") has largely maintained
an extremely accommodating stance on monetary policy. In other words, it has
kept interest rates at very low levels, and has done so on purpose. From
December 2008 through June 2021 (a period that captured a portion of the
financial crisis of 2007-2008 and the entire coronavirus ("COVID-19") pandemic),
the Federal Funds target rate (upper bound) stood at 0.25% for approximately
eight years and three months of that 12.5-year period. That is an aggressive
posture to hold for such a long duration. For comparative purposes, the Federal
Funds target rate averaged 4.50% for the 20-year period ended December 31, 2008.
All along, the Fed has been signaling to savers, investors, and businesses alike
that it wanted them to assume more risk. The Fed did not want money just sitting
idle on the sidelines. It wanted the money to be put to work, so to speak, in
such a way that it would stimulate U.S. economic growth and stave off any
deflationary pressures potentially looming. It has been a tough road to hoe, as
I'm sure those investors who follow the economy closely have noticed.
Why am I taking this trip down memory lane? It is because the Federal Funds
target rate currently stands at 0.25%, just like it did back in December 2008.
We can cite the severe hit to many parts of the U.S. economy from the COVID-19
pandemic, such as the leisure and travel industry, as to why the target rate has
returned to such a low level. For all intents and purposes, until the economy
reaches full employment (4% unemployment rate) and a 2% plus inflation rate for
a sustained period, the Fed has stated that it intends to maintain the status
quo. Since inflation has risen notably in recent months, the Fed is now
forecasting a couple of rate hikes in 2023. At a minimum, that is still 18
months away. Keep in mind, however, the Fed reserves the right to change its
posture at any time.
As previously noted, the Fed has been encouraging savers and investors to assume
more risk for over a decade. One of the best barometers of risk in the
securities markets is the default rate on speculative-grade (below
investment-grade) debt, in my opinion. High yield corporate bonds behave like a
hybrid security between other fixed-income securities and stocks. They share
behavioral characteristics of both, and they are economically sensitive. Moody's
reported that its global speculative-grade default rate stood at 4.0% in June
2021, according to its own release. Moody's puts the historical average default
rate at 4.2%. Its baseline scenario sees the default rate declining to 1.7% by
December 2021. Moody's recorded 28 defaults over the first six months of 2021,
down from 114 defaults over the same period a year ago. I believe that investors
should take some comfort in knowing that defaults are trending lower, not
higher, in the current economic climate.
Companies have heeded the Fed's call for risk-taking, as measured by this year's
robust global mergers and acquisitions ("M&A") activity. Global M&A activity set
a record high in the first half of 2021, with announced deals valued at $2.8
trillion, according to data from Refinitiv. U.S. M&A activity also reached a
record high, coming in at $1.3 trillion for the same period, or around 46% of
the global total. M&A specialists expect deal-making to remain robust for the
rest of 2021, due to low borrowing costs and stronger economic growth.
In closing, we welcome the reopening of the U.S. economy and, hopefully, the
global economy shortly thereafter. We encourage investors to stay the course
even though the markets could experience some turbulence in the months ahead.
The potential for additional volatility represents an opportunity for investors
to check their asset allocation levels to determine if they are suitable for an
extended inflationary climate.
Thank you for giving First Trust the opportunity to play a role in your
financial future. We value our relationship with you and will report on the
Funds again in six months.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 2
<PAGE>
--------------------------------------------------------------------------------
MARKET OVERVIEW
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
SEMI-ANNUAL REPORT
JUNE 30, 2021 (UNAUDITED)
ROBERT F. CAREY, CFA
SENIOR VICE PRESIDENT AND CHIEF MARKET STRATEGIST
FIRST TRUST ADVISORS L.P.
Mr. Carey is responsible for the overall management of research and analysis of
the First Trust product line. Mr. Carey has more than 30 years of experience as
an Equity and Fixed-Income Analyst and is a recipient of the Chartered Financial
Analyst ("CFA") designation. He is a graduate of the University of Illinois at
Champaign-Urbana with a B.S. in Physics. He is also a member of the Investment
Analysts Society of Chicago and the CFA Institute. Mr. Carey has appeared as a
guest on such programs as Bloomberg TV, CNBC, and WBBM Radio, and has been
quoted by several publications, including The Wall Street Journal, The Wall
Street Reporter, Bloomberg News Service, and Registered Rep.
STATE OF THE ECONOMY/INVESTING
We have learned recently that the reopening process for the economy from the
coronavirus ("COVID-19") pandemic, while underway, is likely to be more of a
work in progress than a foregone conclusion. It has to do with the spread of the
highly contagious Delta variant, now found in all 50 states. The Delta variant,
which was first identified in India in 2020, appears to be more problematic for
those individuals who have yet to be vaccinated. Cases are rising rapidly. The
Centers for Disease Control and Prevention expects the Delta variant to account
for approximately 80% of new cases moving forward. The concern has quickly
elevated, and some state and local governments, such as Los Angeles County, are
contemplating reinstating the mask mandate for businesses and other public
venues. This is something we intend to monitor moving forward to assess its
potential near-term impact on the economy.
The global growth forecast from the International Monetary Fund ("IMF") released
in April 2021 projected a rate of 6.0% for real gross domestic product growth
for 2021, up from -3.3% in 2020. The IMF is calling for a 6.4% growth rate for
the U.S. in 2021, up from -3.5% from the previous year. Advanced Economies are
expected to register a 5.1% growth rate, up from -4.7% for the previous year. As
has been the case for many years, Emerging Market and Developing Economies are
expected to grow faster than Advanced Economies in 2021. Their 2021 growth rate
estimate is 6.7%, up from -2.2% a year ago.
The marketplace for exchange-traded funds ("ETFs") and related exchange-traded
products ("ETPs") continues to set records, both domestically and abroad. ETFGI,
an independent research and consultancy firm, reported that total assets
invested in ETFs/ETPs listed in the U.S. stood at an all-time high of $6.51
trillion at the close of June 2021, according to its own release. In the first
half of 2021, net inflows to ETFs/ETPs listed in the U.S. totaled a record high
$472.18 billion, with $327.44 billion of it flowing to equity funds. Total
assets invested in ETFs/ETPs listed globally stood at an all-time high of $9.35
trillion for the same period. In the first half of this year, net inflows to
ETFs/ETPs listed globally totaled a record high $660.73 billion, with $460.73
billion of it flowing to equity funds.
U.S. STOCKS AND BONDS
In the first half of 2021, three of the major U.S. stock indices posted
double-digit gains. The S&P 500(R) Index, S&P MidCap 400(R) Index and S&P
SmallCap 600(R) Index posted total returns of 15.25%, 17.60%, and 23.56%,
respectively, according to Bloomberg. All 11 of the major sectors that comprise
the S&P 500(R) Index posted positive total returns. The top-performing sectors
were Energy, Financials, Real Estate and Communication Services, up 45.64%,
25.69%, 23.30% and 19.67%, respectively, while the worst-performing sectors were
Utilities, up 2.38%, and Consumer Staples, up 5.02%. Bloomberg's 2021 and 2022
consensus earnings growth rate estimates for the S&P 500(R) Index were 35.94%
and 12.41%, respectively, as of July 2, 2021.
Corporate America is cash rich. Non-financial companies in the S&P 500(R) Index
that reported their earnings results in April and May of 2021 increased their
cash holdings by 12% year-over-year, according to Bloomberg. Cash holdings,
which include short-term investments and long-term marketable securities,
reached $2.03 trillion. The sectors holding the most cash are as follows:
Information Technology ($587.7 billion); Communication Services ($345.2
billion); Consumer Discretionary ($294.9 billion); Health Care ($288.4 billion);
and Industrials ($280.4 billion).
In the U.S. bond market, the major bond groups produced a mixed bag of returns
in the first half of 2021. The top-performing major debt group we track is
speculative-grade in nature. The Bloomberg Barclays U.S. Corporate High Yield
Index posted a total return of 3.62%. The worst-performing debt group we track
is a blend of government and investment-grade corporate bonds. The Bloomberg
Barclays U.S. Aggregate Index posted a total return of -1.60%. The yield on the
benchmark 10-Year Treasury Note rose 55 basis points to 1.47% in the first half
of 2021, according to Bloomberg. For comparative purposes, its average yield for
the 20-year period ended June 30, 2021, was 3.07%. It is still extraordinarily
low.
FOREIGN STOCKS AND BONDS
The U.S. dollar rose by 2.78% against a basket of major currencies in the first
half of 2021, as measured by the U.S. Dollar Index ("DXY"), according to
Bloomberg. The DXY closed at a reading of 92.44 on June 30, 2021, above its
20-year average of 89.41. The stronger U.S. dollar likely had a bit of a
negative influence on the returns of foreign securities held by U.S. investors,
providing they were unhedged. The strength in the dollar was more noticeable
with respect to bond returns due to the low interest rate levels persisting in
many foreign debt markets, in our opinion.
The Bloomberg Barclays EM Hard Currency Aggregate Index of emerging markets debt
posted a total return of -0.97% (USD), while the Bloomberg Barclays Global
Aggregate Index of higher quality debt declined by 3.21% (USD). With respect to
equities, the MSCI Emerging Markets Index of stocks posted a total return of
7.45% (USD), while the MSCI World ex USA Index was up 9.92% (USD) on a total
return basis, according to Bloomberg.
Page 3
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
The First Trust Dow Jones Select MicroCap 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 Select
MicroCap Index(SM) (the "Index"). The Fund will normally invest at least 80% of
its net assets (including investment borrowings) in the common stocks of U.S.
micro-capitalization companies which are publicly traded in the United States.
The Fund will normally invest at least 90% of its net assets (including
investment borrowings) in the common stocks that comprise the Index. The Index
is designed to measure the performance of micro-cap stocks issued by U.S.
companies that are comparatively liquid and have strong fundamentals relative to
the micro-cap segment as a whole. The Index is rebalanced quarterly and
reconstituted annually and the Fund will make corresponding changes to its
portfolio shortly after the Index changes are made public. The Fund's shares are
listed for trading on the NYSE Arca, Inc. ("NYSE Arca"). The first day of
secondary market trading in shares of the Fund was September 30, 2005.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (9/27/05) Ended Ended (9/27/05)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 29.21% 59.92% 14.52% 11.87% 8.52% 96.99% 207.01% 262.64%
Market Value 29.09% 60.01% 14.50% 11.89% 8.52% 96.81% 207.53% 262.79%
INDEX PERFORMANCE
Dow Jones Select MicroCap Index(SM) 29.60% 62.31% 15.36% 12.62% 9.27% 104.26% 228.30% 304.44%
Russell 2000(R) Index 17.54% 62.03% 16.47% 12.34% 9.76% 114.29% 220.05% 333.68%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 18.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Financials 31.6%
Industrials 19.9
Health Care 13.8
Consumer Discretionary 8.7
Information Technology 7.0
Energy 6.8
Communication Services 3.4
Materials 3.1
Real Estate 3.1
Consumer Staples 1.9
Utilities 0.7
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Silvergate Capital Corp., Class A 3.5%
Anavex Life Sciences Corp. 2.4
Enova International, Inc. 1.9
US Concrete, Inc. 1.8
Dime Community Bancshares, Inc. 1.8
Clean Energy Fuels Corp. 1.8
WideOpenWest, Inc. 1.6
IES Holdings, Inc. 1.6
Donnelley Financial Solutions, Inc. 1.5
Energy Recovery, Inc. 1.4
-------
Total 19.3%
=======
-----------------------------
The Dow Jones Select MicroCap Index(SM) ("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 products nor do they have any
liability for any errors, omissions, or interruptions of the Index.
Page 4
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust Dow Jones
Select MicroCap Dow Jones Select Russell 2000(R)
Index Fund MicroCap Index(SM) Index
<S> <C> <C> <C>
12/10 $10,000 $10,000 $10,000
06/11 10,336 10,373 10,621
12/11 9,132 9,184 9,583
06/12 9,720 9,808 10,400
12/12 10,581 10,717 11,149
06/13 12,299 12,495 12,917
12/13 15,163 15,459 15,477
06/14 15,061 15,403 15,971
12/14 15,629 16,025 16,235
06/15 16,442 16,906 17,006
12/15 15,717 16,218 15,518
06/16 16,110 16,669 15,862
12/16 21,289 22,086 18,825
06/17 21,421 22,274 19,764
12/17 23,088 24,083 21,582
06/18 24,965 26,116 23,235
12/18 20,153 21,147 19,203
06/19 22,505 23,697 22,464
12/19 25,647 27,073 24,105
06/20 19,840 20,982 20,977
12/20 24,557 26,277 28,920
06/21 31,733 34,055 33,993
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 5
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL)
The First Trust Morningstar Dividend Leaders 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 Morningstar(R) Dividend
Leaders Index(SM) (the "Index"). The Fund will normally invest at least 90% of
its net assets (including investment borrowings) in the common stocks that
comprise the Index. The Index is designed to measure the performance of the 100
highest-yielding stocks that have a consistent record of dividend payment and
have the ability to sustain their dividend payments. The securities comprising
the Morningstar(R) US Market Index(SM) serve as the Fund's selection universe.
The Index is rebalanced quarterly and reconstituted annually and the Fund will
make corresponding changes to its portfolio shortly after the Index changes are
made public. The Fund's shares are listed for trading on the NYSE Arca. The
first day of secondary market trading in shares of the Fund was March 15, 2006.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (3/9/06) Ended Ended (3/9/06)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 14.06% 36.18% 8.49% 11.02% 7.43% 50.33% 184.47% 199.70%
Market Value 14.13% 36.38% 8.50% 11.02% 7.43% 50.37% 184.55% 199.70%
INDEX PERFORMANCE
Morningstar(R) Dividend Leaders
Index(SM) 14.43% 37.04% 9.07% 11.60% 7.98% 54.37% 199.79% 223.91%
S&P 500(R) Index 15.25% 40.79% 17.65% 14.84% 10.53% 125.36% 298.93% 365.94%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 18.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Health Care 20.0%
Communication Services 17.9
Consumer Staples 17.6
Utilities 13.7
Energy 10.6
Information Technology 9.0
Financials 8.1
Materials 2.5
Consumer Discretionary 0.5
Industrials 0.1
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
AT&T, Inc. 10.1%
Verizon Communications, Inc. 7.1
Chevron Corp. 7.0
AbbVie, Inc. 6.3
Pfizer, Inc. 6.0
Philip Morris International, Inc. 5.3
Merck & Co., Inc. 4.8
Coca-Cola (The) Co. 4.4
Altria Group, Inc. 4.3
Broadcom, Inc. 4.2
-------
Total 59.5%
=======
-----------------------------
Morningstar(R) and Morningstar(R) Dividend Leaders Index(SM) are registered
trademarks and service marks of Morningstar, Inc. ("Morningstar") and have been
licensed for use by First Trust on behalf of the Fund. The Fund is not
sponsored, endorsed, issued, sold or promoted by Morningstar and Morningstar
makes no representation regarding the advisability of investing in the Fund.
Page 6
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust Morningstar Morningstar(R)
Dividend Leaders Dividend S&P 500(R)
Index Fund Leaders Index(SM) Index
<S> <C> <C> <C>
12/10 $10,000 $10,000 $10,000
06/11 10,782 10,811 10,601
12/11 11,444 11,503 10,210
06/12 12,390 12,497 11,179
12/12 12,489 12,626 11,844
06/13 14,232 14,428 13,481
12/13 15,326 15,576 15,680
06/14 16,903 17,229 16,800
12/14 17,312 17,687 17,828
06/15 16,787 17,188 18,047
12/15 17,784 18,248 18,074
06/16 20,402 20,996 18,768
12/16 21,469 22,140 20,239
06/17 22,096 22,848 22,132
12/17 24,032 24,911 24,662
06/18 23,234 24,146 25,319
12/18 22,620 23,546 23,580
06/19 25,850 26,991 27,952
12/19 28,135 29,460 30,997
06/20 22,524 23,649 30,043
12/20 26,890 28,322 36,700
06/21 30,672 32,410 42,295
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 7
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
The First Trust US 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 U.S. Index (the
"Index"). The Fund will normally invest at least 90% of its net assets
(including investment borrowings) in the common stocks that comprise the Index.
The Index seeks to measure the performance of the equity securities of the 100
largest and typically most liquid initial public offerings ("IPOs") (including
spin-offs and equity carve-outs) of U.S. companies. The Index is rebalanced and
reconstituted quarterly and the Fund will make corresponding changes to its
portfolio shortly after the Index changes are made public. The Fund's shares are
listed for trading on the NYSE Arca. The first day of secondary market trading
in shares of the Fund was April 13, 2006.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (4/12/06) Ended Ended (4/12/06)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 7.77% 52.07% 21.06% 18.22% 13.82% 159.98% 433.11% 616.54%
Market Value 7.75% 52.31% 21.06% 18.22% 13.82% 159.97% 433.40% 616.67%
INDEX PERFORMANCE
IPOX(R)-100 U.S. Index 8.03% 52.89% 21.62% 18.84% 14.46% 166.13% 462.05% 680.54%
S&P 500(R) Index 15.25% 40.79% 17.65% 14.84% 10.50% 125.36% 298.93% 356.62%
Russell 3000(R) Index 15.11% 44.16% 17.89% 14.70% 10.53% 127.67% 294.05% 358.67%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 18.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 35.6%
Health Care 13.7
Industrials 11.7
Communication Services 10.7
Consumer Discretionary 10.6
Financials 9.3
Materials 4.2
Consumer Staples 2.8
Real Estate 0.7
Energy 0.7
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Marvell Technology, Inc. 8.2%
Snap, Inc., Class A 7.0
Uber Technologies, Inc. 5.2
Tradeweb Markets, Inc., Class A 3.4
Zoom Video Communications, Inc.,
Class A 3.1
DocuSign, Inc. 3.0
Carvana Co. 2.9
Crowdstrike Holdings, Inc., Class A 2.8
Avantor, Inc. 2.5
Pinterest, Inc., Class A 2.4
-------
Total 40.5%
=======
-----------------------------
IPOX(R) and IPOX(R)-100 U.S. Index are registered international trademarks and
service marks of IPOX(R) Schuster LLC ("IPOX") and have been licensed for use by
First Trust. The Fund is not sponsored, endorsed, sold or promoted by IPOX, and
IPOX makes no representation regarding the advisability of trading in such Fund.
Page 8
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust
US Equity IPOX(R)-100 S&P 500(R) Russell 3000(R)
Opportunities ETF U.S. Index Index Index
<S> <C> <C> <C> <C>
12/10 $10,000 $10,000 $10,000 $10,000
06/11 10,990 11,028 10,602 10,635
12/11 10,310 10,378 10,211 10,102
06/12 11,706 11,818 11,180 11,044
12/12 13,405 13,571 11,845 11,761
06/13 15,656 15,889 13,482 13,415
12/13 19,838 20,204 15,681 15,708
06/14 21,149 21,608 16,801 16,798
12/14 22,200 22,749 17,829 17,680
06/15 24,118 24,787 18,048 18,023
12/15 22,685 23,384 18,075 17,765
06/16 22,538 23,286 18,769 18,408
12/16 24,206 25,077 20,237 20,026
06/17 26,794 27,825 22,127 21,814
12/17 30,733 31,999 24,654 24,257
06/18 32,340 33,743 25,307 25,038
12/18 28,207 29,508 23,573 22,985
06/19 35,487 37,223 27,943 27,292
12/19 36,803 38,651 30,994 30,115
06/20 38,536 40,543 30,041 29,068
12/20 54,366 57,375 36,700 36,407
06/21 58,589 61,983 42,295 41,907
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 9
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NYSE(R) ARCA(R) BIOTECHNOLOGY INDEX FUND (FBT)
The First Trust NYSE(R) Arca(R) Biotechnology 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 NYSE(R) Arca(R)
Biotechnology Index (the "Index"). 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 an equal-dollar
weighted index designed to measure the performance of a cross section of small,
mid and large capitalization companies in the biotechnology industry that are
primarily involved in the use of biological processes to develop products or
provide services. Such processes include, but are not limited to, recombinant
DNA technology, molecular biology, genetic engineering, monoclonal
antibody-based technology, lipid/liposome technology and genomics. This Index is
rebalanced and reconstituted quarterly and the Fund will make corresponding
changes to its portfolio shortly after the Index changes are made public. The
Fund's shares are listed for trading on the NYSE Arca. The first day of
secondary market trading in shares of the Fund was June 23, 2006.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (6/19/06) Ended Ended (6/19/06)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 2.74% 2.97% 14.04% 14.71% 15.53% 92.92% 294.53% 775.15%
Market Value 2.74% 2.96% 14.05% 14.70% 15.53% 92.93% 294.15% 775.10%
INDEX PERFORMANCE
NYSE(R) Arca(R) Biotechnology Index 3.04% 3.58% 14.65% 15.28% 16.15% 98.08% 314.62% 848.65%
S&P Composite 1500(R) Health Care
Index 11.81% 28.88% 14.52% 15.91% 12.48% 96.99% 337.90% 485.61%
NASDAQ(R) Biotechnology Index 8.55% 20.52% 14.44% 17.08% 14.36% 96.32% 383.96% 651.25%
S&P 500(R) Index 15.25% 40.79% 17.65% 14.84% 10.89% 125.36% 298.93% 372.63%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 18.)
-----------------------------------------------------------
% OF TOTAL
INDUSTRY CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Biotechnology 80.1%
Life Sciences Tools & Services 17.1
Pharmaceuticals 2.8
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Moderna, Inc. 4.3%
FibroGen, Inc. 4.2
Biogen, Inc. 4.0
Alkermes PLC 3.9
Alnylam Pharmaceuticals, Inc. 3.8
Illumina, Inc. 3.7
ACADIA Pharmaceuticals, Inc. 3.6
Charles River Laboratories
International, Inc. 3.6
Bluebird Bio, Inc. 3.5
IQVIA Holdings, Inc. 3.5
-------
Total 38.1%
=======
-----------------------------
NYSE and NYSE(R) Arca(R) Biotechnology Index ("Index") are service/trademarks of
ICE Data Indices, LLC or its affiliates ("IDI") and have been licensed for use
by First Trust in connection with the Fund. The Fund is not sponsored, endorsed,
sold or promoted by IDI and IDI makes no representations or warranties regarding
the advisability of investing in the Fund or as to the result to be obtained by
any person from use of the Index in connection with the trading of the Fund. IDI
and its third party suppliers accept no liability in connection with use of the
index or the Fund. See the prospectus for a full copy of the disclaimer.
Page 10
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NYSE(R) ARCA(R) BIOTECHNOLOGY INDEX FUND (FBT) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust NYSE(R) NYSE(R) Arca(R) S&P Composite NASDAQ(R)
Arca(R) Biotechnology Biotechnology 1500(R) Health Biotechnology S&P 500(R)
Index Fund Index Care Index Index Index
<S> <C> <C> <C> <C> <C>
12/10 $10,000 $10,000 $10,000 $10,000 $10,000
06/11 11,221 11,256 11,419 11,434 10,602
12/11 8,364 8,410 11,188 11,208 10,211
06/12 11,223 11,321 12,474 13,989 11,180
12/12 11,786 11,921 13,242 14,827 11,845
06/13 14,877 15,081 15,971 18,812 13,482
12/13 17,690 17,977 18,828 24,608 15,681
06/14 21,069 21,434 20,748 27,933 16,801
12/14 26,117 26,591 23,495 33,075 17,829
06/15 31,779 32,409 25,891 40,283 18,048
12/15 28,979 29,619 25,236 36,967 18,075
06/16 22,946 23,523 25,382 28,187 18,769
12/16 23,299 23,946 24,717 29,075 20,237
06/17 29,212 30,098 28,788 34,117 22,127
12/17 31,917 32,972 30,271 35,366 24,654
06/18 35,900 37,163 31,264 36,476 25,307
12/18 31,856 33,060 32,301 32,225 23,574
06/19 36,105 37,563 35,013 36,393 27,946
12/19 38,158 39,899 39,043 40,325 30,995
06/20 42,993 45,077 38,801 45,917 30,041
12/20 43,088 45,293 44,725 50,978 36,700
06/21 44,270 46,670 50,004 55,336 42,295
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 11
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
The First Trust Dow Jones Internet 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 Internet Composite
Index(SM) (the "Index"). The Fund will normally invest at least 90% of its net
assets (including investment borrowings) in common stocks that comprise the
Index. The Index is designed to measure the performance of the largest and most
actively traded securities issued by U.S. companies in the Internet industry.
The Index is rebalanced and reconstituted quarterly and the Fund will make
corresponding changes to its portfolio shortly after the Index changes are made
public. The Fund's shares are listed for trading on the NYSE Arca. The first day
of secondary market trading in shares of the Fund was June 23, 2006.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (6/19/06) Ended Ended (6/19/06)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 15.29% 43.57% 27.69% 21.06% 18.17% 239.51% 575.97% 1,129.39%
Market Value 15.29% 43.66% 27.68% 21.05% 18.17% 239.29% 575.73% 1,129.29%
INDEX PERFORMANCE
Dow Jones Internet Composite
Index(SM) 15.56% 44.27% 28.41% 21.74% 18.81% 249.07% 614.94% 1,234.14%
S&P Composite 1500(R) Information
Technology Index 13.66% 43.16% 30.68% 21.48% 16.46% 281.08% 599.73% 887.66%
S&P 500(R) Index 15.25% 40.79% 17.65% 14.84% 10.89% 125.36% 298.93% 372.63%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 18.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 44.6%
Communication Services 34.3
Consumer Discretionary 17.1
Health Care 4.0
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Amazon.com, Inc. 9.5%
Facebook, Inc., Class A 7.5
PayPal Holdings, Inc. 5.5
Alphabet, Inc., Class A 4.8
Alphabet, Inc., Class C 4.7
Netflix, Inc. 4.6
salesforce.com, Inc. 4.4
Cisco Systems, Inc. 4.2
Zoom Video Communications, Inc.,
Class A 3.3
Snap, Inc., Class A 2.8
-------
Total 51.3%
=======
-----------------------------
The Dow Jones Internet Composite Index(SM) ("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 nor do they have any liability for any errors, omissions, or
interruptions of the Index.
Page 12
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust Dow Jones S&P Composite 1500(R)
Dow Jones Internet Internet Composite S&P 500(R) Information Technology
Index Fund Index(SM) Index Index
<S> <C> <C> <C> <C>
12/10 $10,000 $10,000 $10,000 $10,000
06/11 10,575 10,601 10,602 10,246
12/11 9,425 9,488 10,211 10,112
06/12 10,316 10,416 11,180 11,398
12/12 11,391 11,540 11,845 11,603
06/13 13,245 13,456 13,482 12,384
12/13 17,473 17,813 15,681 14,967
06/14 17,389 17,759 16,801 16,232
12/14 17,897 18,311 17,829 17,803
06/15 19,613 20,122 18,048 18,034
12/15 21,792 22,413 18,075 18,799
06/16 21,055 21,709 18,769 18,810
12/16 23,297 24,082 20,237 21,579
06/17 27,658 28,667 22,127 25,165
12/17 32,061 33,317 24,654 29,624
06/18 40,188 41,866 25,307 32,746
12/18 34,051 35,586 23,574 29,416
06/19 41,940 44,025 27,946 37,371
12/19 40,618 42,720 30,995 44,031
06/20 49,785 52,532 30,041 50,071
12/20 62,008 65,585 36,700 63,075
06/21 71,484 75,791 42,295 71,694
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 13
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
The First Trust Capital Strength 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 Capital Strength Index(SM) (the
"Index"). The Fund will normally invest at least 90% of its net assets
(including investment borrowings) in the common stocks and real estate
investment trusts that comprise the Index. The Index seeks to provide exposure
to well-capitalized companies with strong market positions that have the
potential to provide their stockholders with a greater degree of stability and
performance over time. The Index is rebalanced and reconstituted quarterly and
the Fund will make corresponding changes to its portfolio shortly after the
Index changes are made public. The Fund's shares are listed for trading on The
Nasdaq Stock Market LLC. The first day of secondary market trading in shares of
the Fund was July 11, 2006.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (7/6/06) Ended Ended (7/6/06)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 12.56% 30.63% 15.06% 13.60% 10.89% 101.65% 258.01% 370.62%
Market Value 12.59% 30.66% 15.05% 13.61% 10.89% 101.57% 258.10% 370.56%
INDEX PERFORMANCE
The Capital Strength Index(SM)* 12.89% 31.44% 15.78% N/A N/A 108.05% N/A N/A
S&P 500(R) Index 15.25% 40.79% 17.65% 14.84% 10.71% 125.36% 298.93% 359.57%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On June 4, 2013, the Fund's underlying index changed from the Credit
Suisse U.S. Value Index, Powered by HOLT(TM) to The Capital Strength
Index(SM). On June 18, 2010, the Fund's underlying index changed from the
Deutsche Bank CROCI(R) US+ Index(TM) to the Credit Suisse U.S. Value
Index, Powered by HOLT(TM). Since the Fund's new underlying index had an
inception date of March 20, 2013, it was not in existence for some of the
periods disclosed.
(See Notes to Fund Performance Overview on page 18.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Industrials 23.9%
Health Care 20.4
Consumer Staples 19.5
Financials 14.6
Consumer Discretionary 9.9
Information Technology 8.0
Communication Services 2.0
Materials 1.7
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Edwards Lifesciences Corp. 2.3%
United Parcel Service, Inc., Class B 2.3
NIKE, Inc., Class B 2.2
Expeditors International of Washington,
Inc. 2.2
Moody's Corp. 2.2
Zoetis, Inc. 2.2
Marsh & McLennan Cos., Inc. 2.2
Agilent Technologies, Inc. 2.1
Nasdaq, Inc. 2.1
S&P Global, Inc. 2.1
-------
Total 21.9%
=======
-----------------------------
Nasdaq(R) and The Capital Strength Index(SM) are registered trademarks and
service marks of Nasdaq, Inc. (together with its affiliates hereinafter referred
to as the "Corporations") and are licensed for use by First Trust. The Fund has
not been passed on by the Corporations as to its legality or suitability. The
Fund is not issued, endorsed, sold or promoted by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 14
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CAPITAL STRENGTH ETF (FTCS) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust Capital S&P 500(R)
Strength ETF Index
<S> <C> <C>
12/10 $10,000 $10,000
06/11 10,787 10,602
12/11 9,706 10,211
06/12 10,233 11,180
12/12 11,400 11,845
06/13 13,298 13,482
12/13 15,492 15,681
06/14 16,356 16,801
12/14 17,887 17,829
06/15 17,857 18,048
12/15 18,182 18,075
06/16 19,153 18,769
12/16 19,741 20,237
06/17 22,187 22,127
12/17 24,969 24,654
06/18 25,176 25,307
12/18 23,945 23,573
06/19 28,152 27,943
12/19 30,349 30,994
06/20 29,566 30,040
12/20 34,309 36,700
06/21 38,618 42,295
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the index does
not actually hold a portfolio of securities and therefore does not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 15
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
The First Trust Value Line(R) 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 Value Line(R) Dividend Index (the
"Index"). 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 seeks to measure the performance of the
securities ranked #1 or #2 according to Value Line Publishing, LLC's proprietary
Value Line(R) Safety(SM) Ranking System that are also still expected to provide
above-average dividend yield. The Index is rebalanced and reconstituted monthly,
and the Fund will make corresponding changes to its portfolio shortly after the
Index changes are made public. The Fund's shares are listed for trading on the
NYSE Arca.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (8/19/03) Ended Ended (8/19/03)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 14.38% 33.82% 10.57% 12.13% 10.09% 65.29% 214.09% 457.16%
Market Value 14.32% 33.88% 10.57% 12.11% 10.09% 65.24% 213.61% 457.02%
INDEX PERFORMANCE
Value Line(R) Dividend Index* 14.83% 34.96% 11.48% 13.05% N/A 72.15% 240.81% N/A
S&P 500(R) Index 15.25% 40.79% 17.65% 14.84% 10.71% 125.36% 298.93% 515.28%
Dow Jones U.S. Select Dividend
Index(SM)* 23.69% 50.71% 10.74% 12.48% N/A 66.56% 224.01% N/A
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
On December 15, 2006, the Fund acquired the assets and adopted the
financial and performance history of First Trust Value Line(R) Dividend
Fund (the "Predecessor FVD Fund," a closed-end fund), which had an
inception date of August 19, 2003. The inception date total returns at net
asset value ("NAV") include the sales load of $0.675 per share on the
initial offering. The investment goals, strategies and policies of the
Fund are substantially similar to those of the Predecessor FVD Fund. The
inception date of the Index was July 3, 2006. Returns for the Index are
only disclosed for those periods in which the Index was in existence for
the entire period. The cumulative total returns for the period from the
reorganization date (December 15, 2006) through period end (June 30, 2021)
were 244.46% and 246.02% at NAV and Market Value, respectively. That
compares to an Index return of 286.90% for the same period. The average
annual total returns for the period from the reorganization date (December
15, 2006) through period end (June 30, 2021) were 8.88% and 8.91% at NAV
and Market Value, respectively. That compares to an Index return of 9.75%
for the same period.
NAV and Market Value returns assume that all distributions have been
reinvested in the Fund at NAV and Market Value, respectively. Prior to
December 15, 2006, NAV and Market Value returns assumed that all
distributions were reinvested at prices obtained by the Dividend
Reinvestment Plan of the Predecessor FVD Fund and the price used to
calculate Market Value return was the AMEX (now known as the NYSE
American) closing market price of the Predecessor FVD Fund.
* Performance data is not available for all the periods shown in the table
because performance data does not exist for the periods shown.
(See Notes to Fund Performance Overview on page 18.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Utilities 18.4%
Industrials 17.1
Financials 16.6
Health Care 11.0
Consumer Staples 11.0
Information Technology 10.5
Materials 4.5
Consumer Discretionary 4.0
Real Estate 3.4
Communication Services 3.0
Energy 0.5
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Morgan Stanley 0.5%
A.O. Smith Corp. 0.5
Goldman Sachs Group (The), Inc. 0.5
Taiwan Semiconductor Manufacturing
Co., Ltd., ADR 0.5
Houlihan Lokey, Inc. 0.5
Analog Devices, Inc. 0.5
Clorox (The) Co. 0.5
Abbott Laboratories 0.5
Corning, Inc. 0.5
Hubbell, Inc. 0.5
-------
Total 5.0%
=======
-----------------------------
Value Line(R) and Value Line(R) Dividend Index are trademarks or registered
trademarks of Value Line, Inc. ("Value Line") and have been licensed for use for
certain purposes by First Trust. The Fund is not sponsored, endorsed,
recommended, sold or promoted by Value Line and Value Line makes no
representation regarding the advisability of investing in products utilizing
such strategy.
Page 16
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust
Value Line(R) Value Line(R) S&P 500(R) Dow Jones U.S. Select
Dividend Index Fund Dividend Index Index Dividend Index(SM)
<S> <C> <C> <C> <C>
12/10 $10,000 $10,000 $10,000 $10,000
06/11 10,813 10,857 10,602 10,839
12/11 10,903 10,988 10,211 11,242
06/12 11,593 11,741 11,180 11,977
12/12 12,121 12,316 11,845 12,460
06/13 13,805 14,088 13,482 14,186
12/13 15,342 15,714 15,681 16,081
06/14 16,650 17,131 16,801 17,667
12/14 17,789 18,373 17,829 18,550
06/15 17,419 18,061 18,048 17,888
12/15 18,011 18,758 18,075 18,248
06/16 20,547 21,493 18,769 21,086
12/16 21,603 22,684 20,237 22,260
06/17 22,778 24,011 22,127 23,616
12/17 24,300 25,706 24,654 25,697
06/18 24,110 25,606 25,307 25,959
12/18 23,458 25,002 23,575 24,161
06/19 27,465 29,401 27,945 27,457
12/19 29,699 31,903 30,994 29,752
06/20 25,381 27,413 30,040 23,303
12/20 29,694 32,220 36,700 28,393
06/21 33,963 37,002 42,295 35,119
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 17
<PAGE>
--------------------------------------------------------------------------------
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. The total returns would have been lower if certain fees had not been
waived and expenses reimbursed by the Advisor.
Each Fund's per share net asset value ("NAV") is the value of one share of the
Fund and is computed by dividing the value of all assets of the Fund (including
accrued interest and dividends), less all liabilities (including accrued
expenses and dividends declared but unpaid), by the total number of outstanding
shares. The price used to calculate market return ("Market Price") is determined
by using the midpoint of the national best bid and offer price ("NBBO") as of
the time that the Fund's NAV is calculated. Under SEC rules, the NBBO consists
of the highest displayed buy and lowest sell prices among the various exchanges
trading the Fund at the time the Fund's NAV is calculated. Prior to January 1,
2019, the price used was the midpoint between the highest bid and the lowest
offer on the stock exchange on which shares of the Fund were listed for trading
as of the time that the Fund's NAV was calculated. Since shares of each Fund did
not trade in the secondary market until after 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 18
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2021 (UNAUDITED)
As a shareholder of First Trust Dow Jones Select MicroCap Index Fund, First
Trust Morningstar Dividend Leaders Index Fund, First Trust US Equity
Opportunities ETF, First Trust NYSE(R) Arca(R) Biotechnology Index Fund, First
Trust Dow Jones Internet Index Fund, First Trust Capital Strength ETF or First
Trust Value Line(R) Dividend Index Fund (each a "Fund" and collectively, the
"Funds"), you incur two types of costs: (1) transaction costs; and (2) ongoing
costs, including management fees, distribution and/or service (12b-1) fees, if
any, and other Fund expenses. This Example is intended to help you understand
your ongoing costs 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 June 30, 2021.
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.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO EXPENSES PAID
BEGINNING ENDING BASED ON THE DURING THE
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH SIX-MONTH
JANUARY 1, 2021 JUNE 30, 2021 PERIOD (a) PERIOD (b)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIRST TRUST DOW JONES SELECT MICROCAP INDEX
FUND (FDM)
Actual $1,000.00 $1,292.10 0.60% $3.41
Hypothetical (5% return before expenses) $1,000.00 $1,021.82 0.60% $3.01
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX
FUND (FDL)
Actual $1,000.00 $1,140.60 0.45% $2.39
Hypothetical (5% return before expenses) $1,000.00 $1,022.56 0.45% $2.26
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
Actual $1,000.00 $1,077.70 0.57% $2.94
Hypothetical (5% return before expenses) $1,000.00 $1,021.97 0.57% $2.86
FIRST TRUST NYSE(R) ARCA(R) BIOTECHNOLOGY INDEX
FUND (FBT)
Actual $1,000.00 $1,027.40 0.55% $2.76
Hypothetical (5% return before expenses) $1,000.00 $1,022.07 0.55% $2.76
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
Actual $1,000.00 $1,152.90 0.51% $2.72
Hypothetical (5% return before expenses) $1,000.00 $1,022.27 0.51% $2.56
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
Actual $1,000.00 $1,125.60 0.55% $2.90
Hypothetical (5% return before expenses) $1,000.00 $1,022.07 0.55% $2.76
</TABLE>
Page 19
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO EXPENSES PAID
BEGINNING ENDING BASED ON THE DURING THE
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH SIX-MONTH
JANUARY 1, 2021 JUNE 30, 2021 PERIOD (a) PERIOD (b)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
Actual $1,000.00 $1,143.80 0.67% $3.56
Hypothetical (5% return before expenses) $1,000.00 $1,021.47 0.67% $3.36
</TABLE>
(a) These expense ratios reflect expense caps for certain Funds. See Note 3 in
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 (January 1,
2021 through June 30, 2021), multiplied by 181/365 (to reflect the
six-month period).
Page 20
<PAGE>
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS -- 99.9%
AEROSPACE & DEFENSE -- 0.8%
29,759 Vectrus, Inc. (a) $ 1,416,231
----------------
AIR FREIGHT & LOGISTICS -- 0.5%
114,523 Radiant Logistics, Inc. (a) 793,644
----------------
AUTO COMPONENTS -- 0.6%
48,382 Motorcar Parts of America,
Inc. (a) 1,085,692
----------------
BANKS -- 17.8%
69,682 Amalgamated Financial Corp. 1,089,130
39,488 Arrow Financial Corp. 1,419,594
16,087 Bank First Corp. (b) 1,122,390
38,020 Bar Harbor Bankshares 1,088,132
29,522 Capital City Bank Group, Inc. 761,372
89,741 Dime Community Bancshares, Inc. 3,017,092
65,403 Farmers National Banc Corp. 1,014,401
53,365 First Bancshares (The), Inc. 1,997,452
56,762 First of Long Island (The) Corp. 1,205,057
142,624 HarborOne Bancorp, Inc. 2,045,228
55,310 Independent Bank Corp. 1,200,780
19,704 Metropolitan Bank Holding
Corp. (a) 1,186,575
19,069 Northeast Bank 569,591
15,759 Northrim BanCorp, Inc. 673,697
65,572 Old Second Bancorp, Inc. 813,093
34,674 Professional Holding Corp.,
Class A (a) (b) 624,826
37,820 QCR Holdings, Inc. 1,818,764
12,426 Red River Bancshares, Inc. 627,637
38,480 Reliant Bancorp, Inc. 1,067,050
52,749 Silvergate Capital Corp.,
Class A (a) 5,977,517
37,829 West BanCorp, Inc. 1,049,755
----------------
30,369,133
----------------
BIOTECHNOLOGY -- 8.2%
51,273 Actinium Pharmaceuticals,
Inc. (a) (b) 405,569
146,320 Aldeyra Therapeutics, Inc. (a) (b) 1,657,806
177,823 Anavex Life Sciences Corp. (a) 4,065,034
45,013 Axcella Health, Inc. (a) (b) 180,502
74,691 BrainStorm Cell Therapeutics,
Inc. (a) (b) 283,826
35,952 Cabaletta Bio, Inc. (a) (b) 309,187
174,841 Calithera Biosciences,
Inc. (a) (b) 365,418
244,062 Catalyst Pharmaceuticals, Inc. (a) 1,403,356
86,881 ContraFect Corp. (a) (b) 382,276
37,618 Enochian Biosciences, Inc. (a) (b) 186,961
44,238 Equillium, Inc. (a) (b) 260,562
108,228 Genprex, Inc. (a) 362,564
213,109 IVERIC bio, Inc. (a) 1,344,718
72,807 Jounce Therapeutics, Inc. (a) 495,088
96,456 Kezar Life Sciences, Inc. (a) 523,756
73,098 NeuBase Therapeutics, Inc. (a) (b) 350,139
110,180 Ovid therapeutics, Inc. (a) 430,804
537,351 Palatin Technologies, Inc. (a) (b) 327,784
154,019 Solid Biosciences, Inc. (a) 563,710
----------------
13,899,060
----------------
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
CAPITAL MARKETS -- 3.7%
7,379 Diamond Hill Investment Group,
Inc. $ 1,234,580
75,619 Donnelley Financial Solutions,
Inc. (a) 2,495,427
23,327 Oppenheimer Holdings, Inc.,
Class A 1,185,945
40,755 Victory Capital Holdings, Inc.,
Class A 1,315,979
----------------
6,231,931
----------------
COMMERCIAL SERVICES & SUPPLIES
-- 0.9%
92,906 Kimball International, Inc.,
Class B 1,221,714
84,572 Quad/Graphics, Inc. (a) 350,974
----------------
1,572,688
----------------
COMMUNICATIONS EQUIPMENT
-- 0.5%
88,395 Casa Systems, Inc. (a) 784,064
----------------
CONSTRUCTION & ENGINEERING
-- 3.6%
155,670 HC2 Holdings, Inc. (a) 619,566
52,911 IES Holdings, Inc. (a) 2,717,509
25,029 Northwest Pipe Co. (a) 707,069
71,901 Orion Group Holdings, Inc. (a) 413,431
72,628 Sterling Construction Co.,
Inc. (a) 1,752,514
----------------
6,210,089
----------------
CONSTRUCTION MATERIALS -- 1.8%
40,948 US Concrete, Inc. (a) 3,021,962
----------------
CONSUMER FINANCE -- 2.8%
43,337 Curo Group Holdings Corp. 736,729
93,310 Enova International, Inc. (a) 3,192,135
44,754 Oportun Financial Corp. (a) 896,423
----------------
4,825,287
----------------
CONTAINERS & PACKAGING -- 0.6%
17,390 UFP Technologies, Inc. (a) 998,534
----------------
DIVERSIFIED CONSUMER SERVICES
-- 0.3%
79,146 Universal Technical Institute,
Inc. (a) 513,658
----------------
DIVERSIFIED FINANCIAL SERVICES
-- 1.2%
36,661 Alerus Financial Corp. 1,063,536
20,640 A-Mark Precious Metals, Inc. 959,760
----------------
2,023,296
----------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 0.2%
120,879 Alaska Communications Systems
Group, Inc. (a) 402,527
----------------
ELECTRIC UTILITIES -- 0.2%
29,338 Spark Energy, Inc., Class A (b) 332,399
----------------
See Notes to Financial Statements Page 21
<PAGE>
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ELECTRICAL EQUIPMENT -- 1.6%
30,239 Allied Motion Technologies, Inc. $ 1,044,152
67,279 LSI Industries, Inc. 538,905
65,700 Orion Energy Systems, Inc. (a) 376,461
22,561 Powell Industries, Inc. 698,263
----------------
2,657,781
----------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 2.2%
63,364 Kimball Electronics, Inc. (a) 1,377,533
56,657 LightPath Technologies, Inc.,
Class A (a) (b) 143,909
29,819 Napco Security Technologies,
Inc. (a) 1,084,517
31,957 Vishay Precision Group, Inc. (a) 1,087,816
----------------
3,693,775
----------------
ENERGY EQUIPMENT & SERVICES
-- 0.2%
63,383 Exterran Corp. (a) 301,703
----------------
ENTERTAINMENT -- 0.6%
61,909 Sciplay Corp., Class A (a) 1,049,358
----------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 2.1%
41,057 One Liberty Properties, Inc. 1,165,608
106,671 UMH Properties, Inc. 2,327,561
----------------
3,493,169
----------------
FOOD & STAPLES RETAILING -- 0.5%
32,142 Natural Grocers by Vitamin
Cottage, Inc. 345,205
21,358 Village Super Market, Inc.,
Class A 502,127
----------------
847,332
----------------
FOOD PRODUCTS -- 0.5%
16,982 Seneca Foods Corp., Class A (a) 867,441
----------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 0.6%
20,515 Bellerophon Therapeutics, Inc. (a) 99,293
16,640 FONAR Corp. (a) 294,195
88,740 Invacare Corp. (a) 716,132
----------------
1,109,620
----------------
HEALTH CARE PROVIDERS & SERVICES
-- 0.8%
60,121 Triple-S Management Corp. (a) 1,338,895
----------------
HEALTH CARE TECHNOLOGY -- 0.6%
32,534 Computer Programs and Systems,
Inc. 1,081,105
----------------
HOTELS, RESTAURANTS & LEISURE
-- 0.8%
20,794 RCI Hospitality Holdings, Inc. 1,376,563
----------------
HOUSEHOLD DURABLES -- 2.5%
75,480 Beazer Homes USA, Inc. (a) 1,456,009
55,657 Ethan Allen Interiors, Inc. 1,536,133
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
HOUSEHOLD DURABLES (CONTINUED)
11,507 Hovnanian Enterprises, Inc.,
Class A (a) $ 1,223,079
----------------
4,215,221
----------------
HOUSEHOLD PRODUCTS -- 0.8%
24,752 Central Garden & Pet Co. (a) 1,310,123
----------------
INSURANCE -- 1.7%
16,584 HCI Group, Inc. 1,648,947
62,481 Heritage Insurance Holdings, Inc. 536,087
3,655 Investors Title Co. 638,273
----------------
2,823,307
----------------
IT SERVICES -- 2.3%
133,318 GreenSky, Inc., Class A (a) 739,915
64,644 Grid Dynamics Holdings, Inc. (a) 971,599
68,852 Hackett Group (The), Inc. 1,240,713
67,579 International Money Express,
Inc. (a) 1,003,548
----------------
3,955,775
----------------
LEISURE PRODUCTS -- 1.7%
61,218 Clarus Corp. 1,573,303
48,112 MasterCraft Boat Holdings,
Inc. (a) 1,264,864
----------------
2,838,167
----------------
MACHINERY -- 5.6%
38,607 Blue Bird Corp. (a) 959,770
105,153 Energy Recovery, Inc. (a) 2,395,385
24,701 Hyster-Yale Materials Handling,
Inc. 1,802,679
88,189 Manitowoc (The) Co., Inc. (a) 2,160,630
28,972 Miller Industries, Inc. 1,142,656
69,033 REV Group, Inc. 1,083,128
----------------
9,544,248
----------------
MARINE -- 0.9%
31,871 Eagle Bulk Shipping, Inc. (a) (b) 1,508,136
----------------
MEDIA -- 2.6%
110,341 MSG Networks, Inc., Class A (a) 1,608,772
132,719 WideOpenWest, Inc. (a) 2,748,610
----------------
4,357,382
----------------
MORTGAGE REAL ESTATE INVESTMENT
TRUSTS -- 1.9%
40,360 Cherry Hill Mortgage Investment
Corp. (b) 397,949
111,159 Ellington Financial, Inc. 2,128,695
58,367 Great Ajax Corp. 757,604
----------------
3,284,248
----------------
OIL, GAS & CONSUMABLE FUELS
-- 6.6%
171,620 Berry Corp. 1,153,286
48,378 Bonanza Creek Energy, Inc. 2,277,153
294,393 Clean Energy Fuels Corp. (a) (b) 2,988,089
76,945 CONSOL Energy, Inc. (a) 1,421,174
63,902 Diamond S Shipping, Inc. (a) 636,464
68,847 Dorian LPG Ltd. (a) 972,120
71,310 International Seaways, Inc. 1,367,726
Page 22 See Notes to Financial Statements
<PAGE>
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS (CONTINUED)
OIL, GAS & CONSUMABLE FUELS
(CONTINUED)
183,048 Overseas Shipholding Group, Inc.,
Class A (a) $ 382,570
----------------
11,198,582
----------------
PAPER & FOREST PRODUCTS -- 0.8%
75,177 Verso Corp., Class A 1,330,633
----------------
PERSONAL PRODUCTS -- 0.1%
32,357 Lifevantage Corp. (a) (b) 237,824
----------------
PHARMACEUTICALS -- 3.6%
457,091 Ampio Pharmaceuticals,
Inc. (a) (b) 763,342
55,056 Kaleido Biosciences, Inc. (a) (b) 409,617
9,242 Lyra Therapeutics, Inc. (a) (b) 74,213
85,567 Marinus Pharmaceuticals, Inc. (a) 1,535,072
51,636 Phibro Animal Health Corp.,
Class A 1,491,248
136,768 Provention Bio, Inc. (a) (b) 1,152,954
20,012 Satsuma Pharmaceuticals, Inc. (a) 141,085
23,614 scPharmaceuticals, Inc. (a) 144,281
37,350 TFF Pharmaceuticals, Inc. (a) 358,933
----------------
6,070,745
----------------
PROFESSIONAL SERVICES -- 2.4%
19,207 Barrett Business Services, Inc. 1,394,621
18,592 CRA International, Inc. 1,591,475
29,555 Willdan Group, Inc. (a) 1,112,450
----------------
4,098,546
----------------
REAL ESTATE MANAGEMENT
& DEVELOPMENT -- 1.0%
22,073 Altisource Portfolio Solutions
S.A. (a) (b) 196,229
39,132 RMR Group (The), Inc., Class A 1,512,060
----------------
1,708,289
----------------
ROAD & RAIL -- 0.6%
157,246 Daseke, Inc. (a) 1,018,954
----------------
SOFTWARE -- 0.7%
112,108 Smith Micro Software, Inc. (a) 585,204
160,567 VirnetX Holding Corp. (a) (b) 685,621
----------------
1,270,825
----------------
SPECIALTY RETAIL -- 2.5%
53,197 Big 5 Sporting Goods Corp. (b) 1,366,099
42,976 Haverty Furniture Cos., Inc. 1,837,654
36,972 TravelCenters of America, Inc. (a) 1,081,061
----------------
4,284,814
----------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 1.3%
144,939 Quantum Corp. (a) 998,630
40,168 Turtle Beach Corp. (a) 1,282,162
----------------
2,280,792
----------------
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS
-- 0.3%
20,380 Lakeland Industries, Inc. (a) (b) $ 455,085
----------------
THRIFTS & MORTGAGE FINANCE
-- 2.4%
4,071 Hingham Institution for Savings 1,182,625
117,229 Northfield Bancorp, Inc. 1,922,556
53,171 Waterstone Financial, Inc. 1,045,342
----------------
4,150,523
----------------
TRADING COMPANIES & DISTRIBUTORS
-- 2.9%
24,038 BlueLinx Holdings, Inc. (a) 1,208,631
40,858 CAI International, Inc. 2,288,048
48,028 Titan Machinery, Inc. (a) 1,485,986
----------------
4,982,665
----------------
WATER UTILITIES -- 0.5%
21,588 Artesian Resources Corp., Class A 793,791
----------------
TOTAL COMMON STOCKS -- 99.9% 170,015,612
(Cost $122,466,487) ----------------
MONEY MARKET FUNDS -- 7.8%
13,209,339 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
0.01% (c) (d) 13,209,339
(Cost $13,209,339) ----------------
TOTAL INVESTMENTS -- 107.7% 183,224,951
(Cost $135,675,826) (e)
NET OTHER ASSETS AND
LIABILITIES -- (7.7)% (13,052,322)
----------------
NET ASSETS -- 100.0% $ 170,172,629
================
(a) Non-income producing security.
(b) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $12,502,869 and the
total value of the collateral held by the Fund is $13,209,339.
(c) Rate shown reflects yield as of June 30, 2021.
(d) This security serves as collateral for securities on loan.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $53,146,519 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $5,597,394. The net unrealized appreciation was
$47,549,125.
See Notes to Financial Statements Page 23
<PAGE>
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 170,015,612 $ -- $ --
Money Market
Funds 13,209,339 -- --
------------------------------------------------
Total Investments $ 183,224,951 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
---------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
---------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 12,502,869
Non-cash Collateral(2) (12,502,869)
----------------
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 June 30, 2021, 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.
Page 24 See Notes to Financial Statements
<PAGE>
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS -- 99.8%
BANKS -- 2.9%
55,577 Associated Banc-Corp. $ 1,138,217
13,752 Bank of Hawaii Corp. 1,158,193
155,515 Citizens Financial Group, Inc. 7,133,473
56,494 Comerica, Inc. 4,030,282
46,887 CVB Financial Corp. 965,403
133,213 F.N.B. Corp. 1,642,516
40,065 First Financial Bancorp 946,736
201,480 First Horizon Corp. 3,481,574
60,288 Fulton Financial Corp. 951,345
462,515 Huntington Bancshares, Inc. 6,600,089
96,241 Investors Bancorp, Inc. 1,372,397
365,845 KeyCorp 7,554,699
189,910 People's United Financial, Inc. 3,255,057
110,342 Umpqua Holdings Corp. 2,035,810
53,892 United Bankshares, Inc. 1,967,058
143,471 Valley National Bancorp 1,926,816
26,374 WesBanco, Inc. 939,706
----------------
47,099,371
----------------
BEVERAGES -- 4.4%
1,334,051 Coca-Cola (The) Co. 72,185,500
----------------
BIOTECHNOLOGY -- 8.8%
914,974 AbbVie, Inc. 103,062,671
590,500 Gilead Sciences, Inc. 40,661,830
----------------
143,724,501
----------------
CAPITAL MARKETS -- 2.6%
83,840 Apollo Global Management, Inc. 5,214,848
39,285 Ares Management Corp., Class A 2,498,133
47,126 Artisan Partners Asset Management,
Inc., Class A 2,394,943
270,474 Blackstone Group (The), Inc. 26,273,844
35,728 Federated Hermes, Inc. 1,211,537
99,803 Franklin Resources, Inc. 3,192,698
26,997 Moelis & Co., Class A 1,535,859
30,284 Virtu Financial, Inc., Class A 836,747
----------------
43,158,609
----------------
CHEMICALS -- 0.7%
109,546 LyondellBasell Industries N.V.,
Class A 11,268,997
----------------
COMMUNICATIONS EQUIPMENT
-- 0.2%
104,713 Juniper Networks, Inc. 2,863,901
----------------
CONSUMER FINANCE -- 0.1%
69,948 Navient Corp. 1,352,095
----------------
CONTAINERS & PACKAGING -- 0.6%
144,657 International Paper Co. 8,868,921
----------------
DIVERSIFIED CONSUMER SERVICES
-- 0.1%
83,953 H&R Block, Inc. 1,971,216
----------------
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 17.1%
5,720,280 AT&T, Inc. $ 164,629,658
2,068,104 Verizon Communications, Inc. 115,875,867
----------------
280,505,525
----------------
ELECTRIC UTILITIES -- 9.9%
21,292 ALLETE, Inc. 1,490,014
197,719 American Electric Power Co., Inc. 16,725,050
20,421 Avangrid, Inc. 1,050,252
332,413 Duke Energy Corp. 32,815,811
200,687 Edison International 11,603,722
80,408 Entergy Corp. 8,016,678
87,069 Evergy, Inc. 5,261,580
366,014 Exelon Corp. 16,218,080
250,089 FirstEnergy Corp. 9,305,812
38,033 Hawaiian Electric Industries, Inc. 1,608,035
98,536 NRG Energy, Inc. 3,971,001
106,090 OGE Energy Corp. 3,569,929
48,758 Pinnacle West Capital Corp. 3,996,693
33,418 Portland General Electric Co. 1,539,901
500,181 PPL Corp. 13,990,063
497,974 Southern (The) Co. 30,132,407
----------------
161,295,028
----------------
FOOD & STAPLES RETAILING -- 0.9%
285,114 Walgreens Boots Alliance, Inc. 14,999,848
----------------
FOOD PRODUCTS -- 1.6%
74,309 Campbell Soup Co. 3,387,747
72,937 Flowers Foods, Inc. 1,765,076
228,086 General Mills, Inc. 13,897,280
103,512 Kellogg Co. 6,658,927
----------------
25,709,030
----------------
GAS UTILITIES -- 0.5%
33,789 National Fuel Gas Co. 1,765,475
33,216 New Jersey Resources Corp. 1,314,357
18,306 ONE Gas, Inc. 1,356,841
49,873 South Jersey Industries, Inc. 1,293,207
23,018 Southwest Gas Holdings, Inc. 1,523,562
20,645 Spire, Inc. 1,492,014
----------------
8,745,456
----------------
HEALTH CARE PROVIDERS & SERVICES
-- 0.4%
110,715 Cardinal Health, Inc. 6,320,720
29,006 Patterson Cos., Inc. 881,492
----------------
7,202,212
----------------
HOUSEHOLD DURABLES -- 0.2%
141,193 Newell Brands, Inc. 3,878,572
----------------
HOUSEHOLD PRODUCTS -- 1.1%
135,406 Kimberly-Clark Corp. 18,114,615
----------------
INSURANCE -- 2.3%
29,389 Axis Capital Holdings Ltd. 1,440,355
100,586 Fidelity National Financial, Inc. 4,371,468
12,717 Mercury General Corp. 825,969
107,889 Old Republic International Corp. 2,687,515
See Notes to Financial Statements Page 25
<PAGE>
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS (CONTINUED)
INSURANCE (CONTINUED)
99,123 Principal Financial Group, Inc. $ 6,263,582
195,534 Prudential Financial, Inc. 20,036,369
85,185 Unum Group 2,419,254
----------------
38,044,512
----------------
IT SERVICES -- 4.2%
441,944 International Business Machines
Corp. 64,784,571
174,324 Western Union (The) Co. 4,004,222
----------------
68,788,793
----------------
MEDIA -- 0.7%
142,984 Interpublic Group of (The) Cos.,
Inc. 4,645,550
81,871 Omnicom Group, Inc. 6,548,861
----------------
11,194,411
----------------
METALS & MINING -- 1.3%
285,758 Newmont Corp. 18,111,342
40,617 Southern Copper Corp. 2,612,485
----------------
20,723,827
----------------
MULTI-UTILITIES -- 3.3%
29,647 Avista Corp. 1,265,037
23,347 Black Hills Corp. 1,532,264
156,840 Consolidated Edison, Inc. 11,248,565
68,732 DTE Energy Co. 8,907,667
152,892 NiSource, Inc. 3,745,854
22,051 NorthWestern Corp. 1,327,911
191,468 Public Service Enterprise Group,
Inc. 11,438,298
112,870 Sempra Energy 14,953,018
----------------
54,418,614
----------------
OIL, GAS & CONSUMABLE FUELS
-- 10.5%
1,090,849 Chevron Corp. 114,255,524
443,508 ConocoPhillips 27,009,637
269,758 Devon Energy Corp. 7,874,236
1,268,403 Kinder Morgan, Inc. 23,122,987
----------------
172,262,384
----------------
PHARMACEUTICALS -- 10.7%
1,009,325 Merck & Co., Inc. 78,495,205
2,482,735 Pfizer, Inc. 97,223,903
----------------
175,719,108
----------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 4.2%
143,933 Broadcom, Inc. 68,633,012
----------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 0.4%
453,315 Hewlett Packard Enterprise Co. 6,609,333
----------------
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS
-- 0.2%
123,177 Hanesbrands, Inc. $ 2,299,715
----------------
THRIFTS & MORTGAGE FINANCE
-- 0.2%
301,523 New York Community Bancorp,
Inc. 3,322,783
----------------
TOBACCO -- 9.6%
1,455,505 Altria Group, Inc. 69,398,478
877,637 Philip Morris International, Inc. 86,982,603
----------------
156,381,081
----------------
TRADING COMPANIES & DISTRIBUTORS
-- 0.1%
17,393 MSC Industrial Direct Co., Inc.,
Class A 1,560,674
----------------
TOTAL INVESTMENTS -- 99.8% 1,632,901,644
(Cost $1,495,406,402) (a)
NET OTHER ASSETS AND
LIABILITIES -- 0.2% 3,639,428
----------------
NET ASSETS -- 100.0% $ 1,636,541,072
================
(a) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $148,592,080 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $11,096,838. The net unrealized appreciation
was $137,495,242.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 1,632,901,644 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
Page 26 See Notes to Financial Statements
<PAGE>
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS -- 100.0%
AUTO COMPONENTS -- 0.6%
245,297 BorgWarner, Inc. $ 11,906,716
----------------
BANKS -- 0.8%
496,284 KeyCorp 10,248,264
151,976 Synovus Financial Corp. 6,668,707
----------------
16,916,971
----------------
BEVERAGES -- 1.2%
724,813 Keurig Dr Pepper, Inc. 25,542,410
----------------
BIOTECHNOLOGY -- 3.2%
141,275 Alexion Pharmaceuticals, Inc. (a) 25,953,630
33,276 Biohaven Pharmaceutical Holding
Co., Ltd. (a) 3,230,434
22,089 C4 Therapeutics, Inc. (a) 835,848
87,724 Exact Sciences Corp. (a) 10,904,971
229,875 Horizon Therapeutics PLC (a) 21,525,495
45,191 Karuna Therapeutics, Inc. (a) 5,151,322
----------------
67,601,700
----------------
BUILDING PRODUCTS -- 1.3%
555,463 Carrier Global Corp. 26,995,502
----------------
CAPITAL MARKETS -- 6.1%
186,727 Coinbase Global, Inc., Class A (a) 47,297,949
184,448 Focus Financial Partners, Inc.,
Class A (a) 8,945,728
831,251 Tradeweb Markets, Inc., Class A 70,290,585
----------------
126,534,262
----------------
CHEMICALS -- 4.0%
755,094 Corteva, Inc. 33,488,419
762,156 Dow, Inc. 48,229,232
51,302 Zymergen, Inc. (a) 2,052,593
----------------
83,770,244
----------------
CONSTRUCTION & ENGINEERING
-- 0.5%
61,585 Arcosa, Inc. 3,617,503
231,979 WillScot Mobile Mini Holdings
Corp. (a) 6,465,255
----------------
10,082,758
----------------
CONSUMER FINANCE -- 0.6%
406,374 SoFi Technologies, Inc. (a) 7,790,190
39,325 Upstart Holdings, Inc. (a) 4,911,692
----------------
12,701,882
----------------
DIVERSIFIED FINANCIAL SERVICES
-- 0.3%
219,001 Equitable Holdings, Inc. 6,668,580
----------------
ELECTRICAL EQUIPMENT -- 0.4%
48,052 Atkore, Inc. (a) 3,411,692
180,104 Vertiv Holdings Co. 4,916,839
----------------
8,328,531
----------------
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 2.7%
827,164 Corning, Inc. $ 33,831,008
141,308 Keysight Technologies, Inc. (a) 21,819,368
----------------
55,650,376
----------------
ENERGY EQUIPMENT & SERVICES
-- 0.2%
154,435 ChampionX Corp. (a) 3,961,258
----------------
ENTERTAINMENT -- 1.0%
233,111 ROBLOX Corp., Class A (a) 20,975,328
----------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 0.5%
747,334 DigitalBridge Group, Inc. (a) 5,903,939
54,473 Safehold, Inc. 4,276,130
----------------
10,180,069
----------------
FOOD & STAPLES RETAILING -- 0.7%
238,557 Albertsons Cos., Inc., Class A (b) 4,690,031
210,374 BJ's Wholesale Club Holdings,
Inc. (a) 10,009,595
----------------
14,699,626
----------------
FOOD PRODUCTS -- 0.9%
64,496 Beyond Meat, Inc. (a) (b) 10,157,475
195,877 Simply Good Foods (The) Co. (a) 7,151,469
69,987 Utz Brands, Inc. 1,525,017
----------------
18,833,961
----------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 1.7%
312,708 Alcon, Inc. 21,970,864
164,430 Envista Holdings Corp. (a) 7,105,020
120,126 Ortho Clinical Diagnostics
Holdings PLC (a) 2,571,898
17,889 Shockwave Medical, Inc. (a) 3,394,080
----------------
35,041,862
----------------
HEALTH CARE PROVIDERS & SERVICES
-- 1.3%
69,004 Accolade, Inc. (a) 3,747,607
199,856 agilon health, Inc. (a) 8,108,158
63,963 HealthEquity, Inc. (a) 5,147,742
123,127 Oak Street Health, Inc. (a) 7,211,549
45,268 Progyny, Inc. (a) 2,670,812
----------------
26,885,868
----------------
HEALTH CARE TECHNOLOGY -- 0.1%
22,766 Health Catalyst, Inc. (a) 1,263,741
----------------
HOTELS, RESTAURANTS & LEISURE
-- 3.0%
221,043 Airbnb, Inc., Class A (a) 33,850,525
304,512 DraftKings, Inc., Class A (a) 15,886,391
75,155 Expedia Group, Inc. (a) 12,303,625
----------------
62,040,541
----------------
HOUSEHOLD DURABLES -- 0.4%
254,857 Sonos, Inc. (a) 8,978,612
----------------
See Notes to Financial Statements Page 27
<PAGE>
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS (CONTINUED)
INSURANCE -- 0.7%
78,506 Lemonade, Inc. (a) (b) $ 8,589,341
334,204 Selectquote, Inc. (a) 6,436,769
----------------
15,026,110
----------------
INTERACTIVE MEDIA & SERVICES
-- 9.7%
96,683 Bumble, Inc., Class A (a) (b) 5,568,941
635,046 Pinterest, Inc., Class A (a) 50,136,881
2,142,391 Snap, Inc., Class A (a) 145,982,523
----------------
201,688,345
----------------
INTERNET & DIRECT MARKETING
RETAIL -- 1.2%
180,563 Chewy, Inc., Class A (a) 14,392,677
232,182 RealReal (The), Inc. (a) 4,587,916
109,562 Stitch Fix, Inc., Class A (a) 6,606,589
----------------
25,587,182
----------------
IT SERVICES -- 3.1%
289,670 Shift4 Payments, Inc., Class A (a) 27,147,872
123,527 Switch, Inc., Class A 2,607,655
88,310 Twilio, Inc., Class A (a) 34,808,270
----------------
64,563,797
----------------
LEISURE PRODUCTS -- 1.6%
113,619 Acushnet Holdings Corp. 5,612,778
312,279 YETI Holdings, Inc. (a) 28,673,458
----------------
34,286,236
----------------
LIFE SCIENCES TOOLS & SERVICES
-- 6.5%
123,523 10X Genomics, Inc., Class A (a) 24,188,274
1,488,409 Avantor, Inc. (a) 52,853,404
263,513 Maravai LifeSciences Holdings,
Inc., Class A (a) 10,996,397
128,763 Medpace Holdings, Inc. (a) 22,743,409
538,762 PPD, Inc. (a) 24,831,540
----------------
135,613,024
----------------
MACHINERY -- 1.7%
447,358 Gates Industrial Corp. PLC (a) 8,083,759
329,170 Otis Worldwide Corp. 26,916,231
----------------
34,999,990
----------------
METALS & MINING -- 0.2%
112,532 Arconic Corp. (a) 4,008,390
----------------
OIL, GAS & CONSUMABLE FUELS
-- 0.5%
663,732 Range Resources Corp. (a) 11,124,148
----------------
PHARMACEUTICALS -- 0.9%
544,209 Elanco Animal Health, Inc. (a) 18,878,610
----------------
PROFESSIONAL SERVICES -- 1.3%
199,761 Jacobs Engineering Group, Inc. 26,652,113
----------------
REAL ESTATE MANAGEMENT
& DEVELOPMENT -- 0.3%
26,236 Jones Lang LaSalle, Inc. (a) 5,128,089
----------------
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
ROAD & RAIL -- 6.5%
336,855 Lyft, Inc., Class A (a) $ 20,372,990
106,895 TuSimple Holdings, Inc.,
Class A (a) 7,615,200
2,160,726 Uber Technologies, Inc. (a) 108,295,587
----------------
136,283,777
----------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 8.2%
2,933,413 Marvell Technology, Inc. 171,105,980
----------------
SOFTWARE -- 19.4%
186,478 AppLovin Corp., Class A (a) (b) 14,017,551
83,674 Asana, Inc., Class A (a) (b) 5,190,298
95,516 Bill.com Holdings, Inc. (a) 17,496,621
317,683 Cloudflare, Inc., Class A (a) 33,623,569
230,940 Crowdstrike Holdings, Inc.,
Class A (a) 58,037,531
224,170 DocuSign, Inc. (a) 62,671,207
820,652 Dropbox, Inc., Class A (a) 24,873,962
580,196 Dynatrace, Inc. (a) 33,895,050
23,069 J2 Global, Inc. (a) 3,173,141
661,278 McAfee Corp., Class A 18,529,010
959,692 Palantir Technologies, Inc.,
Class A (a) 25,297,481
66,004 Procore Technologies, Inc. (a) 6,267,080
219,238 Sprout Social, Inc., Class A (a) 19,604,262
33,238 Verint Systems, Inc. (a) 1,498,037
165,737 Zoom Video Communications, Inc.,
Class A (a) 64,145,191
70,049 Zscaler, Inc. (a) 15,134,787
----------------
403,454,778
----------------
SPECIALTY RETAIL -- 3.2%
141,288 Academy Sports & Outdoors,
Inc. (a) 5,826,717
198,337 Carvana Co. (a) 59,862,073
----------------
65,688,790
----------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 2.2%
468,624 Dell Technologies, Inc.,
Class C (a) 46,707,754
----------------
TEXTILES, APPAREL & LUXURY GOODS
-- 0.6%
58,941 Kontoor Brands, Inc. 3,324,862
307,095 Levi Strauss & Co., Class A 8,512,673
----------------
11,837,535
----------------
THRIFTS & MORTGAGE FINANCE
-- 0.7%
761,422 Rocket Cos., Inc., Class A (b) 14,733,516
----------------
TOTAL COMMON STOCKS
-- 100.0% 2,082,928,962
(Cost $1,606,124,819) ----------------
Page 28 See Notes to Financial Statements
<PAGE>
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
PRINCIPAL
VALUE DESCRIPTION VALUE
---------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.3%
$ 13,341,527 Bank of America Corp.,
0.05% (c), dated 06/30/21, due
07/01/21, with a maturity
value of $13,341,546.
Collateralized by U.S.
Treasury Securities, interest
rate of 2.875% to 3.625%, due
02/15/2044 to 05/15/2049. The
value of the collateral
including accrued interest is
$13,608,358. (d) $ 13,341,527
13,341,527 JPMorgan Chase & Co.,
0.05% (c), dated 06/30/21, due
07/01/21, with a maturity
value of $13,341,546.
Collateralized by U.S.
Treasury Securities, interest
rate of 0.125% to 2.750%, due
12/31/2022 to 11/15/2023. The
value of the collateral
including accrued interest is
$13,608,361. (d) 13,341,527
853,603 Mizuho Financial Group, Inc.,
0.04% (c), dated 06/30/21, due
07/01/21, with a maturity
value of $853,604.
Collateralized by U.S.
Treasury Securities, interest
rate of 0.125% to 2.875%, due
07/31/2021 to 11/15/2030. The
value of the collateral
including accrued interest is
$870,676. (d) 853,603
----------------
TOTAL REPURCHASE AGREEMENTS
-- 1.3% 27,536,657
(Cost $27,536,657) ----------------
TOTAL INVESTMENTS -- 101.3% 2,110,465,619
(Cost $1,633,661,476) (e)
NET OTHER ASSETS AND
LIABILITIES -- (1.3)% (27,378,292)
----------------
NET ASSETS -- 100.0% $ 2,083,087,327
================
(a) Non-income producing security.
(b) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $26,313,728 and the
total value of the collateral held by the Fund is $27,536,657.
(c) Rate shown reflects yield as of June 30, 2021.
(d) This security serves as collateral for securities on loan.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $495,125,353 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $18,321,210. The net unrealized appreciation
was $476,804,143.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 2,082,928,962 $ -- $ --
Repurchase
Agreements -- 27,536,657 --
------------------------------------------------
Total Investments $ 2,082,928,962 $ 27,536,657 $ --
================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 29
<PAGE>
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (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) $ 26,313,728
Non-cash Collateral(2) (26,313,728)
----------------
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 June 30, 2021, 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) $ 27,536,657
Non-cash Collateral(4) (27,536,657)
----------------
Net Amount $ --
================
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At June 30, 2021, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
Page 30 See Notes to Financial Statements
<PAGE>
FIRST TRUST NYSE(R) ARCA(R) BIOTECHNOLOGY INDEX FUND (FBT)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS -- 100.0%
BIOTECHNOLOGY -- 80.1%
2,904,300 ACADIA Pharmaceuticals,
Inc. (a) $ 70,835,877
1,123,212 Agios Pharmaceuticals, Inc. (a) 61,900,213
375,334 Alexion Pharmaceuticals, Inc. (a) 68,952,609
3,091,268 Alkermes PLC (a) 75,797,891
442,138 Alnylam Pharmaceuticals, Inc. (a) 74,951,234
240,322 Amgen, Inc. 58,578,488
227,336 Biogen, Inc. (a) 78,719,637
773,861 BioMarin Pharmaceutical, Inc. (a) 64,570,962
2,172,193 Bluebird Bio, Inc. (a) 69,466,732
472,310 Exact Sciences Corp. (a) 58,712,856
2,604,125 Exelixis, Inc. (a) 47,447,158
3,085,239 FibroGen, Inc. (a) 82,159,915
918,610 Gilead Sciences, Inc. 63,255,485
3,416,492 Grifols S.A., ADR 59,276,136
742,777 Incyte Corp. (a) 62,489,829
1,506,432 Ionis Pharmaceuticals, Inc. (a) 60,091,572
359,618 Moderna, Inc. (a) 84,503,038
636,070 Neurocrine Biosciences, Inc. (a) 61,902,332
122,015 Regeneron Pharmaceuticals,
Inc. (a) 68,150,258
855,514 Sarepta Therapeutics, Inc. (a) 66,507,658
422,190 Seagen, Inc. (a) 66,655,357
565,088 Ultragenyx Pharmaceutical,
Inc. (a) 53,881,141
301,567 United Therapeutics Corp. (a) 54,104,135
279,762 Vertex Pharmaceuticals, Inc. (a) 56,408,412
----------------
1,569,318,925
----------------
LIFE SCIENCES TOOLS & SERVICES
-- 17.1%
146,606 Bio-Techne Corp. 66,010,817
189,753 Charles River Laboratories
International, Inc. (a) 70,193,430
154,027 Illumina, Inc. (a) 72,887,117
284,862 IQVIA Holdings, Inc. (a) 69,027,760
1,164,503 QIAGEN N.V. (a) 56,338,655
----------------
334,457,779
----------------
PHARMACEUTICALS -- 2.8%
3,232,773 Nektar Therapeutics (a) 55,474,385
----------------
TOTAL INVESTMENTS -- 100.0% 1,959,251,089
(Cost $1,852,394,344) (b)
NET OTHER ASSETS AND
LIABILITIES -- 0.0% 639,581
----------------
NET ASSETS -- 100.0% $ 1,959,890,670
================
(a) Non-income producing security.
(b) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $333,867,096 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $227,010,351. The net unrealized appreciation
was $106,856,745.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 1,959,251,089 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 31
<PAGE>
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS -- 100.0%
COMMUNICATIONS EQUIPMENT
-- 8.6%
461,760 Arista Networks, Inc. (a) $ 167,300,266
1,952,728 Ciena Corp. (a) 111,090,696
8,638,505 Cisco Systems, Inc. 457,840,765
3,884,465 CommScope Holding Co., Inc. (a) 82,777,949
4,124,588 Juniper Networks, Inc. 112,807,482
----------------
931,817,158
----------------
ENTERTAINMENT -- 4.6%
934,980 Netflix, Inc. (a) 493,865,786
----------------
HEALTH CARE TECHNOLOGY -- 4.0%
1,103,970 Teladoc Health, Inc. (a) 183,579,171
798,849 Veeva Systems, Inc., Class A (a) 248,402,097
----------------
431,981,268
----------------
HOTELS, RESTAURANTS & LEISURE
-- 1.6%
1,065,678 Expedia Group, Inc. (a) 174,462,145
----------------
INTERACTIVE MEDIA & SERVICES
-- 29.8%
212,485 Alphabet, Inc., Class A (a) 518,843,748
201,182 Alphabet, Inc., Class C (a) 504,226,470
1,371,088 Bumble, Inc., Class A (a) 78,974,669
2,320,921 Facebook, Inc., Class A (a) 807,007,441
1,601,548 Match Group, Inc. (a) 258,249,615
3,339,846 Pinterest, Inc., Class A (a) 263,680,842
4,478,553 Snap, Inc., Class A (a) 305,168,601
4,226,995 Twitter, Inc. (a) 290,859,526
292,427 Zillow Group, Inc., Class A (a) 35,831,080
1,273,693 Zillow Group, Inc., Class C (a) 155,670,759
----------------
3,218,512,751
----------------
INTERNET & DIRECT MARKETING
RETAIL -- 15.4%
297,764 Amazon.com, Inc. (a) 1,024,355,802
3,627,845 eBay, Inc. 254,710,998
1,028,691 Etsy, Inc. (a) 211,745,755
562,553 Wayfair, Inc., Class A (a) 177,603,608
----------------
1,668,416,163
----------------
IT SERVICES -- 14.3%
1,390,209 Akamai Technologies, Inc. (a) 162,098,370
1,578,443 Fastly, Inc., Class A (a) (b) 94,075,203
1,712,983 GoDaddy, Inc., Class A (a) 148,961,002
891,915 Okta, Inc. (a) 218,233,762
2,035,905 PayPal Holdings, Inc. (a) 593,425,589
596,614 Snowflake, Inc., Class A (a) 144,261,265
795,980 VeriSign, Inc. (a) 181,236,686
----------------
1,542,291,877
----------------
SOFTWARE -- 21.7%
3,094,036 Box, Inc., Class A (a) 79,052,620
1,220,119 Citrix Systems, Inc. 143,083,355
4,740,182 Cloudera, Inc. (a) 75,179,287
690,656 Coupa Software, Inc. (a) 181,027,844
1,819,438 Datadog, Inc., Class A (a) 189,367,107
1,046,226 DocuSign, Inc. (a) 292,493,403
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
SOFTWARE (CONTINUED)
3,883,779 Dropbox, Inc., Class A (a) $ 117,717,341
2,977,245 Nutanix, Inc., Class A (a) 113,790,304
1,937,955 salesforce.com, Inc. (a) 473,384,268
5,133,824 Vonage Holdings Corp. (a) 73,978,404
1,060,406 Workday, Inc., Class A (a) 253,161,328
912,148 Zoom Video Communications,
Inc., Class A (a) 353,028,640
----------------
2,345,263,901
----------------
TOTAL COMMON STOCKS
-- 100.0% 10,806,611,049
(Cost $7,399,383,503) ----------------
MONEY MARKET FUNDS -- 0.4%
33,401,137 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
0.01% (c) (d) 33,401,137
8,272,092 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 0.01% (c) 8,272,092
----------------
TOTAL MONEY MARKET FUNDS
-- 0.4% 41,673,229
(Cost $41,673,229) ----------------
TOTAL INVESTMENTS -- 100.4% 10,848,284,278
(Cost $7,441,056,732) (e)
NET OTHER ASSETS AND
LIABILITIES -- (0.4)% (39,649,938)
----------------
NET ASSETS -- 100.0% $ 10,808,634,340
================
(a) Non-income producing security.
(b) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $32,190,377 and the
total value of the collateral held by the Fund is $33,401,137.
(c) Rate shown reflects yield as of June 30, 2021.
(d) This security serves as collateral for securities on loan.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $3,512,588,102 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $105,360,556. The net unrealized appreciation
was $3,407,227,546.
Page 32 See Notes to Financial Statements
<PAGE>
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $10,806,611,049 $ -- $ --
Money Market
Funds 41,673,229 -- --
------------------------------------------------
Total Investments $10,848,284,278 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
---------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
---------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 32,190,377
Non-cash Collateral(2) (32,190,377)
----------------
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 June 30, 2021, the value of the collateral received from each borrower
exceeded the value of the related securities loaned. This amount is
disclosed on the Portfolio of Investments.
See Notes to Financial Statements Page 33
<PAGE>
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS -- 99.9%
AEROSPACE & DEFENSE -- 5.9%
857,805 General Dynamics Corp. $ 161,490,369
403,867 Lockheed Martin Corp. 152,803,080
456,774 Northrop Grumman Corp. 166,005,375
----------------
480,298,824
----------------
AIR FREIGHT & LOGISTICS -- 4.5%
1,422,633 Expeditors International of
Washington, Inc. 180,105,338
880,527 United Parcel Service, Inc.,
Class B 183,123,200
----------------
363,228,538
----------------
BEVERAGES -- 7.7%
2,130,880 Brown-Forman Corp., Class B 159,688,147
2,947,827 Coca-Cola (The) Co. 159,506,919
1,611,892 Monster Beverage Corp. (a) 147,246,334
1,097,666 PepsiCo, Inc. 162,641,172
----------------
629,082,572
----------------
BIOTECHNOLOGY -- 1.9%
618,822 Amgen, Inc. 150,837,863
----------------
CAPITAL MARKETS -- 6.4%
491,429 Moody's Corp. 178,079,127
987,948 Nasdaq, Inc. 173,681,258
418,542 S&P Global, Inc. 171,790,564
----------------
523,550,949
----------------
COMMUNICATIONS EQUIPMENT -- 2.0%
2,996,956 Cisco Systems, Inc. 158,838,668
----------------
CONTAINERS & PACKAGING -- 1.7%
1,738,703 Ball Corp. 140,869,717
----------------
ELECTRICAL EQUIPMENT -- 2.0%
1,191,112 AMETEK, Inc. 159,013,452
----------------
ENTERTAINMENT -- 2.0%
1,121,863 Electronic Arts, Inc. 161,357,555
----------------
FOOD & STAPLES RETAILING -- 4.0%
426,845 Costco Wholesale Corp. 168,889,761
1,125,378 Walmart, Inc. 158,700,806
----------------
327,590,567
----------------
FOOD PRODUCTS -- 4.0%
2,581,391 General Mills, Inc. 157,284,154
982,914 Hershey (The) Co. 171,203,960
----------------
328,488,114
----------------
HEALTH CARE EQUIPMENT
& SUPPLIES -- 2.3%
1,777,572 Edwards Lifesciences Corp. (a) 184,103,132
----------------
HEALTH CARE PROVIDERS & SERVICES
-- 6.0%
363,534 Humana, Inc. 160,943,773
1,216,197 Quest Diagnostics, Inc. 160,501,518
404,694 UnitedHealth Group, Inc. 162,055,665
----------------
483,500,956
----------------
HEALTH CARE TECHNOLOGY -- 2.0%
2,101,171 Cerner Corp. 164,227,525
----------------
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
HOUSEHOLD DURABLES -- 2.0%
1,125,459 Garmin Ltd. $ 162,786,390
----------------
HOUSEHOLD PRODUCTS -- 1.9%
1,152,926 Procter & Gamble (The) Co. 155,564,305
----------------
INDUSTRIAL CONGLOMERATES -- 3.8%
796,856 3M Co. 158,279,507
681,742 Honeywell International, Inc. 149,540,108
----------------
307,819,615
----------------
INSURANCE -- 8.1%
1,294,921 Allstate (The) Corp. 168,909,495
661,755 Aon PLC, Class A 158,000,624
1,241,678 Marsh & McLennan Cos., Inc. 174,679,261
1,602,261 Progressive (The) Corp. 157,358,053
----------------
658,947,433
----------------
IT SERVICES -- 4.0%
551,436 Accenture PLC, Class A 162,557,819
820,149 Automatic Data Processing, Inc. 162,897,994
----------------
325,455,813
----------------
LIFE SCIENCES TOOLS & SERVICES
-- 2.1%
1,175,798 Agilent Technologies, Inc. 173,794,702
----------------
MACHINERY -- 3.9%
717,409 IDEX Corp. 157,865,850
706,333 Illinois Tool Works, Inc. 157,907,806
----------------
315,773,656
----------------
MULTILINE RETAIL -- 2.0%
730,090 Dollar General Corp. 157,984,175
----------------
PHARMACEUTICALS -- 6.2%
975,343 Johnson & Johnson 160,678,006
2,122,519 Merck & Co., Inc. 165,068,303
943,979 Zoetis, Inc. 175,919,926
----------------
501,666,235
----------------
ROAD & RAIL -- 3.8%
4,812,632 CSX Corp. 154,389,234
710,518 Union Pacific Corp. 156,264,224
----------------
310,653,458
----------------
SOFTWARE -- 2.0%
606,886 Microsoft Corp. 164,405,417
----------------
SPECIALTY RETAIL -- 3.7%
482,321 Home Depot (The), Inc. 153,807,344
759,854 Lowe's Cos., Inc. 147,388,880
----------------
301,196,224
----------------
TEXTILES, APPAREL & LUXURY GOODS
-- 2.2%
1,178,163 NIKE, Inc., Class B 182,014,402
----------------
TOBACCO -- 1.8%
3,025,030 Altria Group, Inc. 144,233,430
----------------
TOTAL INVESTMENTS -- 99.9% 8,117,283,687
(Cost $7,051,182,634) (b)
NET OTHER ASSETS AND
LIABILITIES -- 0.1% 8,268,698
----------------
NET ASSETS -- 100.0% $ 8,125,552,385
================
Page 34 See Notes to Financial Statements
<PAGE>
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
(a) Non-income producing security.
(b) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $1,128,775,648 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $62,674,595. The net unrealized appreciation
was $1,066,101,053.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 8,117,283,687 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 35
<PAGE>
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS -- 99.9%
AEROSPACE & DEFENSE -- 2.4%
306,821 General Dynamics Corp. $ 57,762,121
262,857 L3Harris Technologies, Inc. 56,816,541
153,031 Lockheed Martin Corp. 57,899,279
156,802 Northrop Grumman Corp. 56,986,551
665,161 Raytheon Technologies Corp. 56,744,885
----------------
286,209,377
----------------
AIR FREIGHT & LOGISTICS -- 1.0%
620,392 C.H. Robinson Worldwide, Inc. 58,112,119
287,888 United Parcel Service, Inc.,
Class B 59,872,067
----------------
117,984,186
----------------
AUTOMOBILES -- 0.5%
327,224 Toyota Motor Corp., ADR 57,211,844
----------------
BANKS -- 5.0%
564,946 Bank of Montreal 57,940,862
905,399 Bank of Nova Scotia (The) 58,914,313
493,997 Canadian Imperial Bank of
Commerce 56,246,498
797,576 Commerce Bancshares, Inc. 59,467,267
389,117 JPMorgan Chase & Co. 60,523,258
396,442 M&T Bank Corp. 57,606,987
317,869 PNC Financial Services Group
(The), Inc. 60,636,690
572,795 Royal Bank of Canada 58,029,862
825,471 Toronto-Dominion (The) Bank 57,824,244
1,045,625 U.S. Bancorp 59,569,256
----------------
586,759,237
----------------
BEVERAGES -- 2.0%
1,076,788 Coca-Cola (The) Co. 58,264,999
259,077 Constellation Brands, Inc.,
Class A 60,595,519
301,200 Diageo PLC, ADR 57,737,028
399,381 PepsiCo, Inc. 59,176,283
----------------
235,773,829
----------------
BIOTECHNOLOGY -- 1.0%
243,647 Amgen, Inc. 59,388,956
869,106 Gilead Sciences, Inc. 59,846,639
----------------
119,235,595
----------------
BUILDING PRODUCTS -- 1.0%
865,382 A.O. Smith Corp. 62,359,427
882,475 Johnson Controls International
PLC 60,564,259
----------------
122,923,686
----------------
CAPITAL MARKETS -- 4.6%
1,178,693 Bank of New York Mellon (The)
Corp. 60,384,442
67,959 BlackRock, Inc. 59,462,086
495,879 Cboe Global Markets, Inc. 59,034,395
270,982 CME Group, Inc. 57,632,452
1,805,500 Franklin Resources, Inc. 57,757,945
163,719 Goldman Sachs Group (The), Inc. 62,136,272
751,107 Houlihan Lokey, Inc. 61,433,042
681,109 Morgan Stanley 62,450,884
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
CAPITAL MARKETS (CONTINUED)
304,907 T. Rowe Price Group, Inc. $ 60,362,439
----------------
540,653,957
----------------
CHEMICALS -- 2.5%
197,372 Air Products and Chemicals, Inc. 56,779,977
394,409 International Flavors &
Fragrances, Inc. 58,924,704
203,008 Linde PLC 58,689,613
186,412 NewMarket Corp. 60,020,936
662,907 Sensient Technologies Corp. 57,381,230
----------------
291,796,460
----------------
COMMERCIAL SERVICES & SUPPLIES
-- 1.0%
539,832 Republic Services, Inc. 59,386,918
420,024 Waste Management, Inc. 58,849,563
----------------
118,236,481
----------------
COMMUNICATIONS EQUIPMENT
-- 1.5%
1,100,679 Cisco Systems, Inc. 58,335,987
2,117,738 Juniper Networks, Inc. 57,920,134
277,011 Motorola Solutions, Inc. 60,069,836
----------------
176,325,957
----------------
CONTAINERS & PACKAGING -- 1.5%
432,532 Packaging Corp. of America 58,573,483
1,428,007 Silgan Holdings, Inc. 59,262,290
889,445 Sonoco Products Co. 59,503,871
----------------
177,339,644
----------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 2.0%
2,023,306 AT&T, Inc. 58,230,747
1,181,793 BCE, Inc. 58,286,031
2,607,317 TELUS Corp. 58,482,120
1,038,027 Verizon Communications, Inc. 58,160,653
----------------
233,159,551
----------------
ELECTRIC UTILITIES -- 9.7%
855,636 ALLETE, Inc. 59,877,407
1,021,002 Alliant Energy Corp. 56,931,072
703,619 American Electric Power Co., Inc. 59,519,131
1,117,704 Avangrid, Inc. 57,483,517
577,767 Duke Energy Corp. 57,037,158
560,188 Entergy Corp. 55,850,744
918,763 Evergy, Inc. 55,520,848
725,418 Eversource Energy 58,207,540
1,280,560 Fortis, Inc. 56,639,169
1,362,522 Hawaiian Electric Industries,
Inc. 57,607,430
581,793 IDACORP, Inc. 56,724,818
773,131 MGE Energy, Inc. 57,551,872
787,494 NextEra Energy, Inc. 57,707,560
1,705,542 OGE Energy Corp. 57,391,488
1,198,735 Otter Tail Corp. 58,510,255
708,388 Pinnacle West Capital Corp. 58,066,564
1,196,779 PNM Resources, Inc. 58,366,912
2,081,592 PPL Corp. 58,222,128
936,552 Southern (The) Co. 56,670,762
Page 36 See Notes to Financial Statements
<PAGE>
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ELECTRIC UTILITIES (CONTINUED)
871,824 Xcel Energy, Inc. $ 57,435,765
----------------
1,151,322,140
----------------
ELECTRICAL EQUIPMENT -- 2.0%
1,734,859 ABB Ltd., ADR 58,967,857
616,607 Emerson Electric Co. 59,342,258
325,069 Hubbell, Inc. 60,735,892
208,807 Rockwell Automation, Inc. 59,722,978
----------------
238,768,985
----------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 1.5%
1,484,886 Avnet, Inc. 59,514,231
1,486,015 Corning, Inc. 60,778,013
444,652 TE Connectivity Ltd. 60,121,397
----------------
180,413,641
----------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 3.4%
218,627 American Tower Corp. 59,059,898
432,181 Camden Property Trust 57,337,453
296,154 Crown Castle International Corp. 57,779,646
1,200,701 Duke Realty Corp. 56,853,192
342,350 Mid-America Apartment
Communities, Inc. 57,658,587
477,479 Prologis, Inc. 57,073,065
192,828 Public Storage 57,981,451
----------------
403,743,292
----------------
FOOD & STAPLES RETAILING -- 0.5%
429,133 Walmart, Inc. 60,516,336
----------------
FOOD PRODUCTS -- 6.0%
946,539 Archer-Daniels-Midland Co. 57,360,263
1,285,052 Campbell Soup Co. 58,585,521
973,300 General Mills, Inc. 59,303,169
339,836 Hershey (The) Co. 59,192,635
1,224,052 Hormel Foods Corp. 58,448,483
644,220 Ingredion, Inc. 58,301,910
337,629 J & J Snack Foods Corp. 58,885,874
446,414 J.M. Smucker (The) Co. 57,841,862
912,180 Kellogg Co. 58,680,539
303,286 Lancaster Colony Corp. 58,688,874
671,493 McCormick & Co., Inc. 59,306,262
934,157 Mondelez International, Inc.,
Class A 58,328,763
----------------
702,924,155
----------------
GAS UTILITIES -- 2.9%
591,022 Atmos Energy Corp. 56,803,124
489,332 Chesapeake Utilities Corp. 58,881,320
1,387,400 New Jersey Resources Corp. 54,899,418
773,032 ONE Gas, Inc. 57,297,132
783,902 Spire, Inc. 56,652,597
1,264,780 UGI Corp. 58,571,962
----------------
343,105,553
----------------
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 2.0%
525,249 Abbott Laboratories $ 60,892,117
718,124 Baxter International, Inc. 57,808,982
243,050 Becton, Dickinson and Co. 59,107,329
466,268 Medtronic PLC 57,877,847
----------------
235,686,275
----------------
HEALTH CARE PROVIDERS & SERVICES
-- 3.0%
501,928 AmerisourceBergen Corp. 57,465,737
696,670 CVS Health Corp. 58,130,145
1,411,144 Fresenius Medical Care AG & Co.
KGaA, ADR 58,661,256
1,703,063 Premier, Inc., Class A 59,249,562
452,245 Quest Diagnostics, Inc. 59,682,773
147,049 UnitedHealth Group, Inc. 58,884,301
----------------
352,073,774
----------------
HOTELS, RESTAURANTS & LEISURE
-- 1.5%
251,323 McDonald's Corp. 58,053,100
527,482 Starbucks Corp. 58,977,762
501,317 Yum! Brands, Inc. 57,666,495
----------------
174,697,357
----------------
HOUSEHOLD DURABLES -- 0.5%
412,181 Garmin Ltd. 59,617,860
----------------
HOUSEHOLD PRODUCTS -- 2.0%
338,502 Clorox (The) Co. 60,899,895
718,741 Colgate-Palmolive Co. 58,469,580
452,140 Kimberly-Clark Corp. 60,487,289
439,873 Procter & Gamble (The) Co. 59,352,064
----------------
239,208,828
----------------
INDUSTRIAL CONGLOMERATES -- 1.0%
299,851 3M Co. 59,559,404
270,998 Honeywell International, Inc. 59,443,411
----------------
119,002,815
----------------
INSURANCE -- 7.0%
1,102,964 Aflac, Inc. 59,185,048
456,731 Allstate (The) Corp. 59,575,992
419,125 Arthur J. Gallagher & Co. 58,711,030
378,304 Assurant, Inc. 59,083,519
1,197,757 Axis Capital Holdings Ltd. 58,702,070
368,071 Chubb Ltd. 58,501,205
1,282,239 CNA Financial Corp. 58,329,052
307,851 Erie Indemnity Co., Class A 59,522,991
240,305 Everest Re Group Ltd. 60,559,263
436,730 Hanover Insurance Group (The),
Inc. 59,238,057
941,828 Hartford Financial Services Group
(The), Inc. 58,365,081
429,322 Marsh & McLennan Cos., Inc. 60,397,019
1,152,930 Sun Life Financial, Inc. 59,422,012
393,766 Travelers (The) Cos., Inc. 58,950,708
----------------
828,543,047
----------------
See Notes to Financial Statements Page 37
<PAGE>
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
COMMON STOCKS (CONTINUED)
IT SERVICES -- 3.5%
738,877 Amdocs Ltd. $ 57,159,525
297,927 Automatic Data Processing, Inc. 59,174,261
363,810 Broadridge Financial Solutions,
Inc. 58,766,229
840,770 Cognizant Technology Solutions
Corp., Class A 58,231,730
2,851,151 Infosys Ltd., ADR 60,415,890
399,141 International Business Machines
Corp. 58,510,079
564,674 Paychex, Inc. 60,589,520
----------------
412,847,234
----------------
MACHINERY -- 4.1%
274,533 Caterpillar, Inc. 59,746,617
248,143 Cummins, Inc. 60,499,745
942,131 Donaldson Co., Inc. 59,853,582
400,098 Dover Corp. 60,254,759
262,350 Illinois Tool Works, Inc. 58,650,966
458,404 Lincoln Electric Holdings, Inc. 60,376,391
669,731 PACCAR, Inc. 59,773,491
265,430 Snap-on, Inc. 59,305,025
----------------
478,460,576
----------------
MEDIA -- 0.5%
1,021,891 Comcast Corp., Class A 58,268,225
----------------
METALS & MINING -- 0.5%
1,461,895 Kirkland Lake Gold Ltd. 56,326,814
----------------
MULTILINE RETAIL -- 0.5%
250,392 Target Corp. 60,529,762
----------------
MULTI-UTILITIES -- 5.3%
701,930 Ameren Corp. 56,182,477
1,318,338 Avista Corp. 56,253,482
841,618 Black Hills Corp. 55,235,389
1,000,071 CMS Energy Corp. 59,084,195
778,480 Consolidated Edison, Inc. 55,832,586
771,201 Dominion Energy, Inc. 56,737,258
440,401 DTE Energy Co. 57,075,970
939,705 NorthWestern Corp. 56,589,035
974,592 Public Service Enterprise Group,
Inc. 58,222,126
422,749 Sempra Energy 56,005,787
645,579 WEC Energy Group, Inc. 57,424,252
----------------
624,642,557
----------------
OIL, GAS & CONSUMABLE FUELS
-- 0.5%
1,463,349 Enbridge, Inc. 58,592,494
----------------
PERSONAL PRODUCTS -- 0.5%
975,893 Unilever PLC, ADR 57,089,740
----------------
PHARMACEUTICALS -- 5.0%
1,003,841 AstraZeneca PLC, ADR 60,130,076
875,861 Bristol-Myers Squibb Co. 58,525,032
262,868 Eli Lilly and Co. 60,333,463
1,471,448 GlaxoSmithKline PLC, ADR 58,593,059
SHARES DESCRIPTION VALUE
---------------------------------------------------------------
PHARMACEUTICALS (CONTINUED)
357,263 Johnson & Johnson $ 58,855,507
762,658 Merck & Co., Inc. 59,311,913
623,300 Novartis AG, ADR 56,869,892
708,215 Novo Nordisk A/S, ADR 59,327,170
1,484,886 Pfizer, Inc. 58,148,136
1,112,391 Sanofi, ADR 58,578,510
----------------
588,672,758
----------------
PROFESSIONAL SERVICES -- 1.0%
665,611 Robert Half International, Inc. 59,219,411
594,437 Thomson Reuters Corp. 59,039,483
----------------
118,258,894
----------------
ROAD & RAIL -- 1.5%
557,260 Canadian National Railway Co. 58,802,075
221,079 Norfolk Southern Corp. 58,676,577
269,106 Union Pacific Corp. 59,184,483
----------------
176,663,135
----------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 2.0%
356,589 Analog Devices, Inc. 61,390,362
1,047,685 Intel Corp. 58,817,036
512,825 Taiwan Semiconductor
Manufacturing Co., Ltd., ADR 61,621,052
314,513 Texas Instruments, Inc. 60,480,850
----------------
242,309,300
----------------
SOFTWARE -- 1.5%
1,170,447 Open Text Corp. 59,458,707
750,532 Oracle Corp. 58,421,411
415,784 SAP SE, ADR 58,401,021
----------------
176,281,139
----------------
SPECIALTY RETAIL -- 1.0%
190,292 Home Depot (The), Inc. 60,682,216
309,896 Lowe's Cos., Inc. 60,110,527
----------------
120,792,743
----------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 0.5%
2,491,880 Canon, Inc., ADR 56,391,244
----------------
TRADING COMPANIES & DISTRIBUTORS
-- 2.0%
1,137,474 Fastenal Co. 59,148,648
654,965 MSC Industrial Direct Co., Inc.,
Class A 58,770,010
131,510 W.W. Grainger, Inc. 57,601,380
207,730 Watsco, Inc. 59,543,727
----------------
235,063,765
----------------
WATER UTILITIES -- 0.5%
716,717 American States Water Co. 57,022,005
----------------
WIRELESS TELECOMMUNICATION
SERVICES -- 0.5%
1,123,497 Rogers Communications, Inc.,
Class B 59,702,631
----------------
Page 38 See Notes to Financial Statements
<PAGE>
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
DESCRIPTION VALUE
---------------------------------------------------------------
TOTAL INVESTMENTS -- 99.9% $ 11,791,148,878
(Cost $9,729,479,023) (a)
NET OTHER ASSETS AND
LIABILITIES -- 0.1% 14,705,038
----------------
NET ASSETS -- 100.0% $ 11,805,853,916
================
(a) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $2,116,235,227 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $54,565,372. The net unrealized appreciation
was $2,061,669,855.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $11,791,148,878 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 39
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2021 (UNAUDITED)
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST FIRST TRUST
DOW JONES SELECT MORNINGSTAR US EQUITY
MICROCAP DIVIDEND LEADERS OPPORTUNITIES
INDEX FUND INDEX FUND ETF
(FDM) (FDL) (FPX)
----------------- ------------------ -----------------
<S> <C> <C> <C>
ASSETS:
Investments, at value............................................... $ 183,224,951 $ 1,632,901,644 $ 2,110,465,619
Cash................................................................ 223,236 1,217,539 10,617,964
Receivables:
Dividends..................................................... 87,413 3,512,222 369,859
Securities lending income..................................... 6,877 -- 14,251
Capital shares sold........................................... -- 1,658,096 6,370,413
Investment securities sold.................................... -- -- --
Reclaims...................................................... -- -- 1,135
Prepaid expenses.................................................... 3,258 9,526 7,289
--------------- ---------------- ---------------
Total Assets.................................................. 183,545,735 1,639,299,027 2,127,846,530
--------------- ---------------- ---------------
LIABILITIES:
Payables:
Collateral for securities on loan............................. 13,209,339 -- 27,536,657
Investment securities purchased............................... 388 1,654,551 15,708,535
Capital shares redeemed....................................... -- -- --
Licensing fees................................................ 61,606 336,434 480,895
Investment advisory fees...................................... 43,041 451,391 666,859
Shareholder reporting fees.................................... 6,877 41,348 49,266
Audit and tax fees............................................ 17,960 17,960 17,959
Trustees' fees................................................ 1,570 1,798 1,892
Other liabilities................................................... 32,325 254,473 297,140
--------------- ---------------- ---------------
Total Liabilities............................................. 13,373,106 2,757,955 44,759,203
--------------- ---------------- ---------------
NET ASSETS.......................................................... $ 170,172,629 $ 1,636,541,072 $ 2,083,087,327
=============== ================ ===============
NET ASSETS CONSIST OF:
Paid-in capital..................................................... $ 167,031,016 $ 1,729,451,141 $ 1,632,462,701
Par value........................................................... 27,550 493,500 163,500
Accumulated distributable earnings (loss)........................... 3,114,063 (93,403,569) 450,461,126
--------------- ---------------- ---------------
NET ASSETS.......................................................... $ 170,172,629 $ 1,636,541,072 $ 2,083,087,327
=============== ================ ===============
NET ASSET VALUE, per share.......................................... $ 61.77 $ 33.16 $ 127.41
=============== ================ ===============
Number of shares outstanding (unlimited number of shares
authorized, par value $0.01 per share)........................... 2,755,000 49,350,002 16,350,002
=============== ================ ===============
Investments, at cost................................................ $ 135,675,826 $ 1,495,406,402 $ 1,633,661,476
=============== ================ ===============
Securities on loan, at value........................................ $ 12,502,869 $ -- $ 26,313,728
=============== ================ ===============
</TABLE>
Page 40 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST
NYSE(R) ARCA(R) DOW JONES CAPITAL VALUE LINE(R)
BIOTECHNOLOGY INTERNET STRENGTH DIVIDEND
INDEX FUND INDEX FUND ETF INDEX FUND
(FBT) (FDN) (FTCS) (FVD)
----------------- ------------------ ----------------- -----------------
<S> <C> <C> <C>
$ 1,959,251,089 $ 10,848,284,278 $ 8,117,283,687 $11,791,148,878
2,382,789 -- 3,457,990 5,537,309
-- -- 9,219,031 18,158,748
2,572 51,476 -- --
-- -- -- 17,877,290
-- -- 7,531,165 --
53,363 -- -- 1,293,226
8,531 35,005 19,901 35,514
--------------- ---------------- --------------- ---------------
1,961,698,344 10,848,370,759 8,137,511,774 11,834,050,965
--------------- ---------------- --------------- ---------------
-- 33,401,137 -- --
-- -- -- 17,843,838
-- -- 7,540,917 --
790,297 1,536,178 7,500 3,960,857
640,468 3,405,290 3,310,996 4,888,909
80,353 329,413 186,903 284,754
17,960 17,960 17,960 17,959
1,903 3,344 2,701 3,280
276,693 1,043,097 892,412 1,197,452
--------------- ---------------- --------------- ---------------
1,807,674 39,736,419 11,959,389 28,197,049
--------------- ---------------- --------------- ---------------
$ 1,959,890,670 $ 10,808,634,340 $ 8,125,552,385 $11,805,853,916
=============== ================ =============== ===============
$ 2,203,508,563 $ 6,546,351,532 $ 6,767,421,965 $10,359,601,056
113,500 441,500 1,075,500 2,969,409
(243,731,393) 4,261,841,308 1,357,054,920 1,443,283,451
--------------- ---------------- --------------- ---------------
$ 1,959,890,670 $ 10,808,634,340 $ 8,125,552,385 $11,805,853,916
=============== ================ =============== ===============
$ 172.68 $ 244.82 $ 75.55 $ 39.76
=============== ================ =============== ===============
11,350,002 44,150,002 107,550,002 296,940,884
=============== ================ =============== ===============
$ 1,852,394,344 $ 7,441,056,732 $ 7,051,182,634 $ 9,729,479,023
=============== ================ =============== ===============
$ -- $ 32,190,377 $ -- $ --
=============== ================ =============== ===============
</TABLE>
See Notes to Financial Statements Page 41
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 (UNAUDITED)
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST FIRST TRUST
DOW JONES SELECT MORNINGSTAR US EQUITY
MICROCAP DIVIDEND LEADERS OPPORTUNITIES
INDEX FUND INDEX FUND ETF
(FDM) (FDL) (FPX)
----------------- ------------------ -----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends........................................................... $ 1,018,944 $ 33,206,396 $ 5,221,305
Securities lending income (net of fees)............................. 47,984 -- 1,246,334
Foreign withholding tax............................................. -- -- (4,031)
--------------- ---------------- ---------------
Total investment income....................................... 1,066,928 33,206,396 6,463,608
--------------- ---------------- ---------------
EXPENSES:
Investment advisory fees............................................ 386,181 2,344,965 4,014,164
Licensing fees...................................................... 61,359 751,815 1,000,106
Accounting and administration fees.................................. 40,464 362,953 451,805
Audit and tax fees.................................................. 15,603 15,603 15,193
Shareholder reporting fees.......................................... 11,050 43,367 64,408
Custodian fees...................................................... 8,993 (25,320) 79,749
Listing fees........................................................ 3,917 6,794 3,917
Transfer agent fees................................................. 3,862 31,939 37,486
Trustees' fees and expenses......................................... 3,106 3,467 3,765
Legal fees.......................................................... 1,488 15,828 15,602
Registration and filing fees........................................ 389 2,525 --
Expenses previously waived or reimbursed............................ -- -- --
Other expenses...................................................... 2,503 8,536 12,477
--------------- ---------------- ---------------
Total expenses................................................ 538,915 3,562,472 5,698,672
Less fees waived and expenses reimbursed by the investment
advisor.................................................... (75,499) (45,332) --
--------------- ---------------- ---------------
Net expenses.................................................. 463,416 3,517,140 5,698,672
--------------- ---------------- ---------------
NET INVESTMENT INCOME (LOSS)........................................ 603,512 29,689,256 764,936
--------------- ---------------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments................................................... 749,547 7,982,762 (46,394,419)
In-kind redemptions........................................... 3,027,759 156,870,204 294,260,998
Foreign currency transactions................................. -- -- --
--------------- ---------------- ---------------
Net realized gain (loss)............................................ 3,777,306 164,852,966 247,866,579
--------------- ---------------- ---------------
Net change in unrealized appreciation (depreciation) on:
Investments................................................... 31,277,783 (4,794,859) (101,464,572)
Foreign currency translation.................................. -- -- --
--------------- ---------------- ---------------
Net change in unrealized appreciation (depreciation)................ 31,277,783 (4,794,859) (101,464,572)
--------------- ---------------- ---------------
NET REALIZED AND UNREALIZED GAIN (LOSS)............................. 35,055,089 160,058,107 146,402,007
--------------- ---------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................................. $ 35,658,601 $ 189,747,363 $ 147,166,943
=============== ================ ===============
</TABLE>
Page 42 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST
NYSE(R) ARCA(R) DOW JONES CAPITAL VALUE LINE(R)
BIOTECHNOLOGY INTERNET STRENGTH DIVIDEND
INDEX FUND INDEX FUND ETF INDEX FUND
(FBT) (FDN) (FTCS) (FVD)
----------------- ------------------ ----------------- -----------------
<S> <C> <C> <C>
$ 4,057,834 $ 11,348,066 $ 68,439,412 $ 154,770,158
2,572 120,879 -- --
(237,081) -- -- (4,117,419)
--------------- ---------------- --------------- ---------------
3,823,325 11,468,945 68,439,412 150,652,739
--------------- ---------------- --------------- ---------------
3,951,671 20,653,718 18,683,274 27,398,747
790,296 3,026,803 47,566 6,557,541
445,430 1,521,905 1,200,892 1,593,522
15,603 15,603 15,193 16,046
79,641 347,615 226,356 293,511
73,985 392,689 279,488 406,595
3,917 6,794 2,483 42,706
37,095 141,483 105,814 149,391
3,649 6,452 5,477 6,081
14,187 72,151 65,577 97,746
(7,376) (22,127) (19,874) 270
-- -- -- 255,932
7,992 68,250 52,684 86,280
--------------- ---------------- --------------- ---------------
5,416,090 26,231,336 20,664,930 36,904,368
-- -- -- --
--------------- ---------------- --------------- ---------------
5,416,090 26,231,336 20,664,930 36,904,368
--------------- ---------------- --------------- ---------------
(1,592,765) (14,762,391) 47,774,482 113,748,371
--------------- ---------------- --------------- ---------------
(79,653,602) (25,323,510) (21,363,102) 97,316,627
39,862,665 1,486,285,559 596,299,520 312,907,732
-- -- -- 4,089
--------------- ---------------- --------------- ---------------
(39,790,937) 1,460,962,049 574,936,418 410,228,448
--------------- ---------------- --------------- ---------------
88,895,512 70,967,605 278,404,805 934,602,927
-- -- -- 356
--------------- ---------------- --------------- ---------------
88,895,512 70,967,605 278,404,805 934,603,283
--------------- ---------------- --------------- ---------------
49,104,575 1,531,929,654 853,341,223 1,344,831,731
--------------- ---------------- --------------- ---------------
$ 47,511,810 $ 1,517,167,263 $ 901,115,705 $ 1,458,580,102
=============== ================ =============== ===============
</TABLE>
See Notes to Financial Statements Page 43
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST
DOW JONES SELECT MORNINGSTAR
MICROCAP DIVIDEND LEADERS
INDEX FUND INDEX FUND
(FDM) (FDL)
--------------------------------- ---------------------------------
Six Months Six Months
Ended Ended
6/30/2021 Year Ended 6/30/2021 Year Ended
(Unaudited) 12/31/2020 (Unaudited) 12/31/2020
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............................ $ 603,512 $ 2,111,719 $ 29,689,256 $ 66,323,992
Net realized gain (loss)................................ 3,777,306 (29,360,877) 164,852,966 (263,732,972)
Net change in unrealized appreciation (depreciation).... 31,277,783 7,286,636 (4,794,859) 33,378,185
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from operations...................................... 35,658,601 (19,962,522) 189,747,363 (164,030,795)
--------------- --------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations................................... (462,424) (2,126,197) (28,539,271) (66,635,153)
--------------- --------------- --------------- ---------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold............................... 21,038,520 29,127,047 622,796,577 83,773,486
Proceeds from shares acquired through reorganization.... -- -- -- --
Cost of shares redeemed................................. (8,544,340) (40,623,522) (546,946,114) (294,624,818)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from shareholder transactions........................ 12,494,180 (11,496,475) 75,850,463 (210,851,332)
--------------- --------------- --------------- ---------------
Total increase (decrease) in net assets................. 47,690,357 (33,585,194) 237,058,555 (441,517,280)
NET ASSETS:
Beginning of period..................................... 122,482,272 156,067,466 1,399,482,517 1,840,999,797
--------------- --------------- --------------- ---------------
End of period........................................... $ 170,172,629 $ 122,482,272 $ 1,636,541,072 $ 1,399,482,517
=============== =============== =============== ===============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period................. 2,555,000 3,055,000 47,300,002 56,500,002
Shares sold............................................. 350,000 700,000 18,600,000 2,750,000
Shares issued through reorganization.................... -- -- -- --
Shares redeemed......................................... (150,000) (1,200,000) (16,550,000) (11,950,000)
--------------- --------------- --------------- ---------------
Shares outstanding, end of period....................... 2,755,000 2,555,000 49,350,002 47,300,002
=============== =============== =============== ===============
</TABLE>
Page 44 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST FIRST TRUST
US EQUITY NYSE(R) ARCA(R) DOW JONES
OPPORTUNITIES BIOTECHNOLOGY INTERNET
ETF INDEX FUND INDEX FUND
(FPX) (FBT) (FDN)
------------------------------- -------------------------------- ---------------------------------
Six Months Six Months Six Months
Ended Ended Ended
6/30/2021 Year Ended 6/30/2021 Year Ended 6/30/2021 Year Ended
(Unaudited) 12/31/2020 (Unaudited) 12/31/2020 (Unaudited) 12/31/2020
-------------- -------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
$ 764,936 $ 3,650,043 $ (1,592,765) $ (5,453,767) $ (14,762,391) $ (17,892,891)
247,866,579 181,468,921 (39,790,937) 56,195,268 1,460,962,049 1,460,876,048
(101,464,572) 391,055,130 88,895,512 153,873,484 70,967,605 2,472,751,255
-------------- -------------- -------------- --------------- --------------- ---------------
147,166,943 576,174,094 47,511,810 204,614,985 1,517,167,263 3,915,734,412
-------------- -------------- -------------- --------------- --------------- ---------------
(1,447,600) (5,290,041) -- -- -- --
-------------- -------------- -------------- --------------- --------------- ---------------
914,610,662 978,879,034 52,174,778 403,631,644 1,590,510,278 3,121,562,471
-- -- -- -- -- --
(923,615,350) (934,225,504) (181,969,247) (367,000,398) (3,374,072,086) (3,815,634,985)
-------------- -------------- -------------- --------------- --------------- ---------------
(9,004,688) 44,653,530 (129,794,469) 36,631,246 (1,783,561,808) (694,072,514)
-------------- -------------- -------------- --------------- --------------- ---------------
136,714,655 615,537,583 (82,282,659) 241,246,231 (266,394,545) 3,221,661,898
1,946,372,672 1,330,835,089 2,042,173,329 1,800,927,098 11,075,028,885 7,853,366,987
-------------- -------------- -------------- --------------- --------------- ---------------
$2,083,087,327 $1,946,372,672 $1,959,890,670 $ 2,042,173,329 $10,808,634,340 $11,075,028,885
============== ============== ============== =============== =============== ===============
16,450,002 16,550,002 12,150,002 12,100,002 52,150,002 56,450,002
7,400,000 10,100,000 300,000 2,550,000 7,050,000 18,050,000
-- -- -- -- -- --
(7,500,000) (10,200,000) (1,100,000) (2,500,000) (15,050,000) (22,350,000)
-------------- -------------- -------------- --------------- --------------- ---------------
16,350,002 16,450,002 11,350,002 12,150,002 44,150,002 52,150,002
============== ============== ============== =============== =============== ===============
</TABLE>
See Notes to Financial Statements Page 45
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST
CAPITAL STRENGTH VALUE LINE(R) DIVIDEND
ETF INDEX FUND
(FTCS) (FVD)
--------------------------------- ---------------------------------
Six Months Six Months
Ended Ended
6/30/2021 Year Ended 6/30/2021 Year Ended
(Unaudited) 12/31/2020 (Unaudited) 12/31/2020
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............................ $ 47,774,482 $ 55,537,289 $ 113,748,371 $ 225,598,348
Net realized gain (loss)................................ 574,936,418 471,532,595 410,228,448 (446,982,237)
Net change in unrealized appreciation (depreciation).... 278,404,805 416,336,797 934,603,283 94,895,748
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from operations...................................... 901,115,705 943,406,681 1,458,580,102 (126,488,141)
--------------- --------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations................................... (48,131,311) (55,671,376) (107,398,203) (231,083,030)
--------------- --------------- --------------- ---------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold............................... 3,663,565,069 6,487,496,472 1,575,185,220 3,432,557,406
Proceeds from shares acquired through reorganization.... -- -- -- 36,820,323
Cost of shares redeemed................................. (3,412,905,714) (3,745,945,946) (1,269,717,595) (2,627,820,910)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from shareholder transactions........................ 250,659,355 2,741,550,526 305,467,625 841,556,819
--------------- --------------- --------------- ---------------
Total increase (decrease) in net assets................. 1,103,643,749 3,629,285,831 1,656,649,524 483,985,648
NET ASSETS:
Beginning of period..................................... 7,021,908,636 3,392,622,805 10,149,204,392 9,665,218,744
--------------- --------------- --------------- ---------------
End of period........................................... $ 8,125,552,385 $ 7,021,908,636 $11,805,853,916 $10,149,204,392
=============== =============== =============== ===============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period................. 103,950,002 56,200,002 289,190,884 268,287,986
Shares sold............................................. 51,400,000 107,300,000 40,150,000 100,550,000
Shares issued through reorganization.................... -- -- -- 1,052,898
Shares redeemed......................................... (47,800,000) (59,550,000) (32,400,000) (80,700,000)
--------------- --------------- --------------- ---------------
Shares outstanding, end of period....................... 107,550,002 103,950,002 296,940,884 289,190,884
=============== =============== =============== ===============
</TABLE>
Page 46 See Notes to Financial Statements
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -------------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 47.94 $ 51.09 $ 40.76 $ 47.21 $ 43.98 $ 32.92
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.22 0.80 0.66 0.56 0.42 0.49
Net realized and unrealized gain (loss) 13.78 (3.15) 10.37 (6.50) 3.27 11.07
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 14.00 (2.35) 11.03 (5.94) 3.69 11.56
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.17) (0.80) (0.70) (0.51) (0.46) (0.50)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 61.77 $ 47.94 $ 51.09 $ 40.76 $ 47.21 $ 43.98
=========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) 29.21% (4.25)% 27.25% (12.68)% 8.44% 35.45%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 170,173 $ 122,482 $ 156,067 $ 138,777 $ 97,012 $ 116,776
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.70% (b) 0.71% 0.70% 0.73% 0.71% 0.75%
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 0.78% (b) 1.88% 1.42% 1.29% 0.89% 1.52%
Portfolio turnover rate (c) 6% 95% 64% 75% 55% 48%
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -------------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 29.59 $ 32.58 $ 27.24 $ 30.06 $ 27.75 $ 23.69
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.61 1.32 1.22 1.09 0.93 0.82
Net realized and unrealized gain (loss) 3.55 (2.98) 5.34 (2.83) 2.34 4.05
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 4.16 (1.66) 6.56 (1.74) 3.27 4.87
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.59) (1.33) (1.22) (1.08) (0.96) (0.81)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 33.16 $ 29.59 $ 32.58 $ 27.24 $ 30.06 $ 27.75
=========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) 14.06% (4.42)% 24.36% (5.87)% 11.93% 20.72%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 1,636,541 $ 1,339,483 $ 1,841,000 $ 1,386,483 $ 1,719,299 $ 1,778,464
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.46% (b) 0.46% 0.46% 0.47% 0.47% 0.48%
Ratio of net expenses to average
net assets 0.45% (b) 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of net investment income (loss) to
average net assets 3.80% (b) 4.73% 4.06% 3.70% 3.18% 3.27%
Portfolio turnover rate (c) 48% 63% 39% 39% 43% 50%
</TABLE>
(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 47
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -------------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 118.32 $ 80.41 $ 62.07 $ 68.18 $ 54.10 $ 51.11
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.05 0.24 0.58 0.52 0.43 0.31
Net realized and unrealized gain (loss) 9.13 38.01 18.30 (6.08) 14.12 3.10
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 9.18 38.25 18.88 (5.56) 14.55 3.41
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.09) (0.34) (0.54) (0.55) (0.47) (0.42)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 127.41 $ 118.32 $ 80.41 $ 62.07 $ 68.18 $ 54.10
=========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) 7.77% 47.76% 30.45% (8.22)% 26.96% 6.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 2,083,087 $ 1,946,373 $ 1,330,835 $ 912,479 $ 981,732 $ 614,024
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.57% (b) 0.57% 0.58% 0.59% 0.59% 0.60%
Ratio of net expenses to average
net assets 0.57% (b) 0.57% 0.58% 0.59% 0.59% 0.60%
Ratio of net investment income (loss) to
average net assets 0.08% (b) 0.26% 0.79% 0.74% 0.71% 0.58%
Portfolio turnover rate (c) 38% 75% 81% 57% 31% 41%
FIRST TRUST NYSE(R) ARCA(R) BIOTECHNOLOGY INDEX FUND (FBT)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -------------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 168.08 $ 148.84 $ 124.26 $ 124.52 $ 90.89 $ 113.06
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.14) (0.45) (0.51) (0.22) (0.08) (0.32)
Net realized and unrealized gain (loss) 4.74 19.69 25.09 (0.04) 33.71 (21.85)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 4.60 19.24 24.58 (0.26) 33.63 (22.17)
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 172.68 $ 168.08 $ 148.84 $ 124.26 $ 124.52 $ 90.89
=========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) 2.74% 12.93% 19.78% (0.21)% 36.99% (19.60)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 1,959,891 $ 2,042,173 $ 1,800,927 $ 2,342,213 $ 1,207,811 $ 804,385
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.55% (b) 0.55% 0.55% 0.57% 0.56% 0.56%
Ratio of net expenses to average
net assets 0.55% (b) 0.55% 0.55% 0.57% 0.56% 0.56%
Ratio of net investment income (loss) to
average net assets (0.16)%(b) (0.28)% (0.25)% (0.21)% (0.08)% (0.27)%
Portfolio turnover rate (c) 19% 26% 31% 37% 36% 42%
</TABLE>
(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 48 See Notes to Financial Statements
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -------------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 212.37 $ 139.12 $ 116.66 $ 109.82 $ 79.79 $ 74.64
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.33) (0.34) (0.14) (0.35) (0.28) (0.27)
Net realized and unrealized gain (loss) 32.78 73.59 22.60 7.19 30.31 5.42
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 32.45 73.25 22.46 6.84 30.03 5.15
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 244.82 $ 212.37 $ 139.12 $ 116.66 $ 109.82 $ 79.79
=========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) 15.29% 52.65% 19.26% 6.23% 37.62% 6.91%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $10,808,634 $11,075,029 $ 7,853,367 $ 7,016,807 $ 5,490,820 $ 3,486,734
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.51% (b) 0.51% 0.52% 0.52% 0.53% 0.54%
Ratio of net expenses to average
net assets 0.51% (b) 0.51% 0.52% 0.52% 0.53% 0.54%
Ratio of net investment income (loss) to
average net assets (0.29)%(b) (0.20)% (0.10)% (0.27)% (0.32)% (0.35)%
Portfolio turnover rate (c) 7% 39% 28% 21% 22% 21%
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -------------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 67.55 $ 60.37 $ 48.29 $ 50.95 $ 40.79 $ 38.12
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.45 0.63 0.76 0.60 0.59 0.58
Net realized and unrealized gain (loss) 8.00 7.18 12.08 (2.65) 10.16 2.67
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 8.45 7.81 12.84 (2.05) 10.75 3.25
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.45) (0.63) (0.76) (0.61) (0.59) (0.58)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 75.55 $ 67.55 $ 60.37 $ 48.29 $ 50.95 $ 40.79
=========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) 12.56% 13.07% 26.72% (4.09)% 26.49% 8.57%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 8,125,552 $ 7,021,909 $ 3,392,623 $ 1,376,131 $ 624,099 $ 320,190
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.55% (b) .56% 0.58% 0.60% 0.61% 0.64%
Ratio of net expenses to average
net assets 0.55% (b) 0.56% 0.58% 0.60% 0.61% 0.64%
Ratio of net investment income (loss) to
average net assets 1.28% (b) 1.10% 1.46% 1.30% 1.33% 1.55%
Portfolio turnover rate (c) 67% 133% 125% 117% 85% 85%
</TABLE>
(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 49
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -------------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 35.10 $ 36.03 $ 29.07 $ 30.84 $ 28.02 $ 23.86
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.39 0.79 0.73 0.73 0.63 0.56
Net realized and unrealized gain (loss) 4.64 (0.91) 6.96 (1.77) 2.84 4.17
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 5.03 (0.12) 7.69 (1.04) 3.47 4.73
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.37) (0.81) (0.73) (0.73) (0.65) (0.57)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 39.76 $ 35.10 $ 36.03 $ 29.07 $ 30.84 $ 28.02
=========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) 14.38% (0.04)% 26.60% (3.44)% 12.48% 19.94%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $11,805,854 $10,149,204 $ 9,665,219 $ 4,374,483 $ 4,194,830 $ 2,892,982
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.67% (b) 0.70% 0.71% 0.72% 0.72% 0.73%
Ratio of net expenses to average
net assets 0.67% (b) 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 2.08% (b) 2.47% 2.36% 2.40% 2.19% 2.31%
Portfolio turnover rate (c) 29% 86% 53% 58% 50% 60%
</TABLE>
(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 50 See Notes to Financial Statements
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
1. ORGANIZATION
First Trust Exchange-Traded Fund (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on August 8,
2003, 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 twenty-two exchange-traded funds. This report
covers the seven funds (each a "Fund" and collectively, the "Funds") listed
below:
First Trust Dow Jones Select MicroCap Index Fund - (NYSE Arca, Inc.
("NYSE Arca") ticker "FDM")
First Trust Morningstar Dividend Leaders Index Fund - (NYSE Arca ticker
"FDL")
First Trust US Equity Opportunities ETF - (NYSE Arca ticker "FPX")
First Trust NYSE(R) Arca(R) Biotechnology Index Fund - (NYSE Arca ticker
"FBT")
First Trust Dow Jones Internet Index Fund - (NYSE Arca ticker "FDN")
First Trust Capital Strength ETF - (The Nasdaq Stock Market LLC ("Nasdaq")
ticker "FTCS")
First Trust Value Line(R) Dividend Index Fund - (NYSE Arca ticker "FVD")
Each Fund represents a separate series of beneficial interest in the Trust.
Unlike conventional mutual funds, each Fund issues and redeems shares on a
continuous basis at net asset value ("NAV"), only in large blocks of shares
known as "Creation Units." The investment objective of each Fund is to seek
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of the following indices:
<TABLE>
<CAPTION>
FUND INDEX
<S> <C>
First Trust Dow Jones Select MicroCap Index Fund Dow Jones Select MicroCap Index(SM)
First Trust Morningstar Dividend Leaders Index Fund Morningstar(R) Dividend Leaders Index(SM)
First Trust US Equity Opportunities ETF IPOX(R)-100 U.S. Index
First Trust NYSE(R) Arca(R) Biotechnology Index Fund NYSE(R) Arca(R) Biotechnology Index
First Trust Dow Jones Internet Index Fund Dow Jones Internet Composite Index(SM)
First Trust Capital Strength ETF The Capital Strength Index(SM)
First Trust Value Line(R) Dividend Index Fund Value Line(R) Dividend Index
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are each considered an investment company and follow accounting and
reporting guidance under Financial Accounting Standards Board Accounting
Standards Codification Topic 946, "Financial Services-Investment Companies." The
following is a summary of significant accounting policies consistently followed
by the Funds in the preparation of the financial statements. The preparation of
the financial statements in accordance with accounting principles generally
accepted in the United States of America ("U.S. GAAP") requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
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:
Page 51
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
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.
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.
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.
Page 52
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
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 June 30, 2021, 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 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. 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 with the exception of FPX.
The Bank of New York Mellon ("BNYM") acts as FPX's securities lending agent and
is responsible for executing the lending of the portfolio securities to
creditworthy borrowers. The Funds, however, will be responsible for the risks
associated with the investment of cash collateral. A Fund may lose money on its
investment of cash collateral, which may affect its ability to repay the
collateral to the borrower without the use of other Fund assets. Each Fund that
engages in securities lending receives compensation (net of any rebate and
securities lending agent fees) for lending its securities. Compensation can be
in the form of fees received from the securities lending agent or dividends or
interest earned from the investment of cash collateral. The fees received from
the securities lending agent are accrued daily. The dividend and interest earned
on the securities loaned is accounted for in the same manner as other dividend
and interest income. At June 30, 2021, only FDM, FPX and FDN had securities in
the securities lending program. During the six months ended June 30, 2021, FDM,
FPX, FBT and FDN participated in the securities lending program.
Page 53
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
In the event of a default by a borrower with respect to any loan, BBH or BNYM
will exercise any and all remedies provided under the applicable borrower
agreement to make the Funds whole. These remedies include purchasing replacement
securities by applying the collateral held from the defaulting broker against
the purchase cost of the replacement securities. If, despite such efforts by BBH
and BNYM to exercise these remedies, a Fund sustains losses as a result of a
borrower's default, BBH or BNYM will indemnify the Fund by purchasing
replacement securities at its own expense, or paying the Fund an amount equal to
the market value of the replacement securities, subject to certain limitations
which are set forth in detail in the Securities Lending Agency Agreement between
the Trust on behalf of the Funds and BBH or BNYM.
E. 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 or BNYM on behalf of the Funds participating in the securities
lending program. In the event the counterparty defaults on the repurchase
agreement, the U.S. Treasury securities can either be maintained as part of a
Fund's portfolio or sold for cash. A Fund could suffer a loss to the extent that
the proceeds from the sale of the underlying collateral held by the Fund 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 June 30, 2021, were received as
collateral for lending securities.
F. 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 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 December 31, 2020 was as follows:
<TABLE>
<CAPTION>
Distributions Distributions Distributions
paid from paid from paid from
Ordinary Income Capital Gains Return of Capital
------------------ ---------------- -----------------
<S> <C> <C> <C>
First Trust Dow Jones Select MicroCap Index Fund $ 2,126,197 $ -- $ --
First Trust Morningstar Dividend Leaders Index Fund 66,635,153 -- --
First Trust US Equity Opportunities ETF 5,290,041 -- --
First Trust NYSE(R) Arca(R) Biotechnology Index Fund -- -- --
First Trust Dow Jones Internet Index Fund -- -- --
First Trust Capital Strength ETF 55,671,376 -- --
First Trust Value Line(R) Dividend Index Fund 231,083,030 -- --
</TABLE>
Page 54
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
As of December 31, 2020, the components of distributable earnings on a tax basis
for each Fund were as follows:
<TABLE>
<CAPTION>
Accumulated
Undistributed Capital and Net Unrealized
Ordinary Other Appreciation
Income Gain (Loss) (Depreciation)
------------------ ---------------- -----------------
<S> <C> <C> <C>
First Trust Dow Jones Select MicroCap Index Fund $ 90,691 $ (46,311,470) $ 14,138,665
First Trust Morningstar Dividend Leaders Index Fund 425,955 (362,640,978) 107,603,362
First Trust US Equity Opportunities ETF -- (266,483,167) 571,224,950
First Trust NYSE(R) Arca(R) Biotechnology Index Fund -- (248,674,487) (42,568,716)
First Trust Dow Jones Internet Index Fund -- (420,915,508) 3,165,589,553
First Trust Capital Strength ETF 66,259 (266,180,343) 770,184,610
First Trust Value Line(R) Dividend Index Fund -- (699,218,855) 791,320,407
</TABLE>
G. INCOME 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.
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 ended 2017, 2018,
2019, and 2020 remain open to federal and state audit. As of June 30, 2021,
management has evaluated the application of these standards to the Funds, and
has determined that no provision for income tax is required in the Funds'
financial statements for uncertain tax positions.
Each Fund intends to utilize provisions of the federal income tax laws, which
allow it to carry a realized capital loss forward indefinitely following the
year of the loss and offset such loss against any future realized capital gains.
Each Fund is subject to certain limitations under U.S. tax rules on the use of
capital loss carryforwards and net unrealized built-in losses. These limitations
apply when there has been a 50% change in ownership. At December 31, 2020, for
federal income tax purposes, each applicable Fund had a capital loss
carryforward available that is shown in the table below, to the extent provided
by regulations, to offset future capital gains. To the extent that these loss
carryforwards are used to offset future capital gains, it is probable that the
capital gains so offset will not be distributed to each applicable Fund's
shareholders.
<TABLE>
<CAPTION>
Non-Expiring Capital
Loss Carryforwards
--------------------
<S> <C>
First Trust Dow Jones Select MicroCap Index Fund $ 46,311,470
First Trust Morningstar Dividend Leaders Index Fund 362,640,978
First Trust US Equity Opportunities ETF 266,483,167
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 248,674,487
First Trust Dow Jones Internet Index Fund 420,915,508
First Trust Capital Strength ETF 266,180,343
First Trust Value Line(R) Dividend Index Fund* 699,218,855
</TABLE>
* $11,006,415 of First Trust Value Line(R) Dividend Index Fund's non-expiring
net capital losses is subject to loss limitation resulting from reorganization
activity. This limitation generally reduces the utilization of these losses to a
maximum of $364,521 per year.
During the taxable year ended December 31, 2020, the following Fund utilized
non-expiring capital loss carryforwards in the following amount:
<TABLE>
<CAPTION>
Capital Loss
Carryforward
Utilized
--------------------
<S> <C>
First Trust NYSE(R) Arca(R) Biotechnology Index Fund $ 18,664,932
</TABLE>
Certain losses realized during the current fiscal year may be deferred and
treated as occurring on the first day of the following fiscal year for federal
income tax purposes. For the fiscal year ended December 31, 2020, the Funds had
no net late year ordinary or capital losses.
Page 55
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
H. EXPENSES
Expenses that are directly related to one of the Funds are charged directly to
the respective Fund. 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:
<TABLE>
<CAPTION>
FUND LICENSOR
<S> <C>
First Trust Dow Jones Select MicroCap Index Fund S&P Dow Jones Indices LLC
First Trust Morningstar Dividend Leaders Index Fund Morningstar, Inc.
First Trust US Equity Opportunities ETF IPOX(R) Schuster LLC
First Trust NYSE(R) Arca(R) Biotechnology Index Fund ICE Data Indices, LLC
First Trust Dow Jones Internet Index Fund S&P Dow Jones Indices LLC
First Trust Capital Strength ETF Nasdaq, Inc.
First Trust Value Line(R) Dividend Index Fund Value Line Publishing LLC
</TABLE>
The respective license agreements allow for the use by First Trust of certain
trademarks and trade names of the respective Licensors. The Funds are
sub-licensees to the applicable license agreement. The respective Funds are
required to pay licensing fees, which are shown on the Statements of Operations.
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 these services, First Trust is entitled to receive monthly fees from each
Fund calculated at the following annual rates:
<TABLE>
<CAPTION>
% of Average
Daily Net Assets
----------------
<S> <C>
First Trust Dow Jones Select MicroCap Index Fund 0.50%
First Trust Morningstar Dividend Leaders Index Fund 0.30%
First Trust US Equity Opportunities ETF 0.40%
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 0.40%
First Trust Dow Jones Internet Index Fund 0.40%
First Trust Capital Strength ETF 0.50%
First Trust Value Line(R) Dividend Index Fund 0.50%
</TABLE>
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 Fund (excluding interest expense, brokerage commissions and
other trading expenses, acquired fund fees and expenses, taxes and extraordinary
expenses) exceed the below amount as a percentage of average daily net assets
per year (the "Expense Cap"). The Expense Cap will be in effect until at least
April 30, 2023.
<TABLE>
<CAPTION>
Expense Cap
----------------
<S> <C>
First Trust Dow Jones Select MicroCap Index Fund 0.60%
First Trust Morningstar Dividend Leaders Index Fund 0.45%
First Trust US Equity Opportunities ETF 0.60%
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 0.60%
First Trust Dow Jones Internet Index Fund 0.60%
First Trust Capital Strength ETF 0.65%
First Trust Value Line(R) Dividend Index Fund 0.70%
</TABLE>
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's expenses exceeding (i) the applicable expense
limitation in place for the most recent fiscal year for which such expense
limitation was in place, (ii) the applicable expense limitation in place at the
time the fees were waived or expenses were reimbursed, or (iii) the current
expense limitation. These amounts would be included in "Expenses previously
waived or reimbursed" on the Statements of Operations.
Page 56
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
The advisory fee waivers and expense reimbursements for the six months ended
June 30, 2021 and the fees waived or expenses borne by First Trust subject to
recovery from the applicable Fund for the periods indicated were as follows:
<TABLE>
<CAPTION>
Fees Waived or Expenses Borne by First Trust
Subject to Recovery
--------------------------------------------------------------
Advisory Six Months Year Year Six Months
Fee Expense Ended Ended Ended Ended
Waivers Reimbursement 12/31/2018 12/31/2019 12/31/2020 6/30/2021 Total
--------- ------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
First Trust Dow Jones Select MicroCap
Index Fund $ 75,499 $ -- $ 95,671 $ 149,166 $ 127,387 $ 75,499 $ 447,723
First Trust Morningstar Dividend
Leaders Index Fund 45,332 -- 139,505 178,254 162,827 45,332 525,918
</TABLE>
During the six months ended June 30, 2021, First Trust recovered fees that were
previously waived from First Trust Value Line(R) Dividend Index Fund of
$255,932.
The Trust has multiple service agreements with BNYM. Under the service
agreements, BNYM performs custodial, fund accounting, certain administrative
services, and transfer agency services for each Fund. As custodian, BNYM is
responsible for custody of each Fund's assets. As fund accountant and
administrator, BNYM is responsible for maintaining the books and records of each
Fund's securities and cash. As transfer agent, BNYM is responsible for
maintaining shareholder records for each Fund. BNYM is a subsidiary of The Bank
of New York Mellon Corporation, a financial holding company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that
varies based on whether the fund is a closed-end or other actively managed fund,
a defined-outcome 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. REORGANIZATION
On January 30, 2020, the Board of Trustees of First Trust Value Line(R) 100
Exchange-Traded Fund ("FVL") and FVD approved a reorganization of FVD with FVL.
The reorganization was completed on December 14, 2020. FVD was the surviving
fund.
Under the terms of the reorganization, which was tax-free, the assets of FVL
were transferred to, and the liabilities of FVL were assumed by, FVD in exchange
for shares of FVD. The cost of the investments received from FVL was carried
forward to FVD for U.S. GAAP and tax purposes. The FVD shares were then
distributed to FVL shareholders and the separate existence of FVD ceased. The
reorganization was subject to certain conditions, including that the
reorganization was approved on November 16, 2020, by the shareholders of FVL.
When the reorganization occurred, the transactions were based on the relative
NAVs of FVL and FVD.
The following table summarizes the asset transfers and conversion ratios for the
reorganization.
<TABLE>
<CAPTION>
Net Assets on Unrealized Accumulated Shares Acquiring Net Assets on
Acquired Shares December 11, Appreciation Net Realized Conversion (Surviving) Shares December 11,
Fund Redeemed 2020 (Depreciation) Gain (Loss) Ratio Fund Issued* 2020**
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FVL 1,589,982 $ 36,820,323 $ (118,448) $ (8,573,998) 0.662214 FVD 1,052,908 $10,030,756,341
</TABLE>
* Amount includes 10 shares that were distributed cash in lieu.
** Amount reflects net assets of FVD prior to the reorganization.
Page 57
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
The following table summarizes the operations of the Acquired Fund for the
period January 1, 2020 to December 11, 2020, and the operations of FVD, the
Acquiring (Surviving) Fund, for the fiscal year ended December 31, 2020, as
presented in the Statements of Operations and the combined Acquired and
Acquiring (Surviving) Funds' pro-forma results of operations for the fiscal year
ended December 31, 2020, assuming the acquisition had been completed on January
1, 2020.
Because the combined investment portfolios have been managed as a single
integrated portfolio since the reorganization was completed, it is not
practicable to separate the amounts of revenue and earnings of FVL that have
been included in FVD's Statement of Operations since December 11, 2020.
<TABLE>
<CAPTION>
Net Realized and
Change in
Unrealized Gain Net Increase
Net Investment (Loss) on (Decrease) from
Income Investments Operations
-------------- ---------------- ---------------
<S> <C> <C> <C>
Acquired Fund for the period January 1, 2020 to December 11, 2020
FVL $ 300,669 $ (36,518) $ 264,151
Acquiring Fund for the fiscal year ended December 31, 2020
FVD 229,162,401 (355,768,990) (126,606,589)
-------------- ---------------- ---------------
Combined Total $ 229,463,070 $ (355,805,508) $ (126,342,438)
============== ================ ===============
</TABLE>
5. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2021, the cost of purchases and proceeds from
sales of investments for each Fund, excluding short-term investments and in-kind
transactions, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
--------------- ---------------
<S> <C> <C>
First Trust Dow Jones Select MicroCap Index Fund $ 9,027,115 $ 9,034,475
First Trust Morningstar Dividend Leaders Index Fund 750,783,276 743,173,844
First Trust US Equity Opportunities ETF 760,482,254 759,326,586
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 377,659,514 380,201,165
First Trust Dow Jones Internet Index Fund 702,630,529 718,799,918
First Trust Capital Strength ETF 5,048,319,154 5,015,324,763
First Trust Value Line(R) Dividend Index Fund 3,134,618,775 3,117,533,469
</TABLE>
For the six months ended June 30, 2021, the cost of in-kind purchases and
proceeds from in-kind sales for each Fund were as follows:
<TABLE>
<CAPTION>
Purchases Sales
--------------- ---------------
<S> <C> <C>
First Trust Dow Jones Select MicroCap Index Fund $ 21,060,986 $ 8,554,608
First Trust Morningstar Dividend Leaders Index Fund 619,033,844 545,615,648
First Trust US Equity Opportunities ETF 913,189,130 921,393,948
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 52,157,372 181,925,777
First Trust Dow Jones Internet Index Fund 1,590,534,930 3,373,444,868
First Trust Capital Strength ETF 3,639,550,296 3,428,963,598
First Trust Value Line(R) Dividend Index Fund 1,565,490,763 1,270,533,673
</TABLE>
6. CREATION, REDEMPTION AND TRANSACTION FEES
Each Fund generally issues and redeems its shares in primary market transactions
through a creation and redemption mechanism and does not sell or redeem
individual shares. Instead, financial entities known as "Authorized
Participants" have contractual arrangements with a Fund or one of the Fund's
service providers to purchase and redeem Fund shares directly with the Fund in
large blocks of shares known as "Creation Units." Prior to the start of trading
on every business day, a Fund publishes through the National Securities Clearing
Corporation ("NSCC") the "basket" of securities, cash or other assets that it
will accept in exchange for a Creation Unit of the Fund's shares. An Authorized
Participant that wishes to effectuate a creation of a Fund's shares deposits
with the Fund the "basket" of securities, cash or other assets identified by the
Fund that day, and then receives the Creation Unit of the Fund's shares in
return for those assets. After purchasing a Creation Unit, the Authorized
Participant may continue to hold the Fund's shares or sell them in the secondary
market. The redemption process is the reverse of the purchase process: the
Page 58
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
Authorized Participant redeems a Creation Unit of a Fund's shares for a basket
of securities, cash or other assets. The combination of the creation and
redemption process with secondary market trading in a Fund's shares and
underlying securities provides arbitrage opportunities that are designed to help
keep the market price of a Fund's shares at or close to the NAV per share of the
Fund.
Each Fund imposes fees in connection with the purchase of Creation Units. These
fees may vary based upon various facts-based circumstances, including, but not
limited to, the composition of the securities included in the Creation Unit or
the countries in which the transactions are settled. The price for each Creation
Unit will equal the daily NAV per share of a Fund times the number of shares in
a Creation Unit, plus the fees described above and, if applicable, any
operational processing and brokerage costs, transfer fees, stamp taxes and part
or all of the spread between the expected bid and offer side of the market
related to the securities comprising the creation basket.
Each Fund also imposes fees in connection with the redemption of Creation Units.
These fees may vary based upon various fact-based circumstances, including, but
not limited to, the composition of the securities included in the Creation Unit
or the countries in which the transactions are settled. The price received for
each Creation Unit will equal the daily NAV per share of a Fund times the number
of shares in a Creation Unit, minus the fees described above and, if applicable,
any operational processing and brokerage costs, transfer fees, stamp taxes and
part or all of the spread between the expected bid and offer side of the market
related to the securities comprising the redemption basket. Investors who use
the services of a broker or other such intermediary in addition to an Authorized
Participant to effect a redemption of a Creation Unit may also be assessed an
amount to cover the cost of such services. The redemption fee charged by a Fund
will comply with Rule 22c-2 of the 1940 Act which limits redemption fees to no
more than 2% of the value of the shares redeemed.
7. 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 April 30, 2023.
8. 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.
9. 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 59
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (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
Page 60
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
greater than net asset value (premium) or less than net asset value (discount).
In times of market stress, decisions by market makers to reduce or step away
from their role of providing a market for an ETF's shares, or decisions by an
ETF's authorized participants that they are unable or unwilling to proceed with
creation and/or redemption orders of an ETF's shares, could result in shares of
the ETF trading at a discount to net asset value and in greater than normal
intraday bid-ask spreads.
FIXED INCOME SECURITIES RISK. To the extent a fund invests in fixed income
securities, the fund will be subject to credit risk, income risk, interest rate
risk, liquidity risk and prepayment risk. Income risk is the risk that income
from a fund's fixed income investments could decline during periods of falling
interest rates. Interest rate risk is the risk that the value of a fund's fixed
income securities will decline because of rising interest rates. Liquidity risk
is the risk that a security cannot be purchased or sold at the time desired, or
cannot be purchased or sold without adversely affecting the price. Prepayment
risk is the risk that the securities will be redeemed or prepaid by the issuer,
resulting in lower interest payments received by the fund. In addition to these
risks, high yield securities, or "junk" bonds, are subject to greater market
fluctuations and risk of loss than securities with higher ratings, and the
market for high yield securities is generally smaller and less liquid than that
for investment grade securities.
INDEX 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.
LIBOR RISK. To the extent a fund invests in floating or variable rate
obligations that use the London Interbank Offered Rate ("LIBOR") as a reference
interest rate, it is subject to LIBOR Risk. The United Kingdom's Financial
Conduct Authority, which regulates LIBOR, will cease making LIBOR available as a
reference rate over a phase-out period that will begin immediately after
December 31, 2021. The unavailability or replacement of LIBOR may affect the
value, liquidity or return on certain fund investments and may result in costs
incurred in connection with closing out positions and entering into new trades.
Any potential effects of the transition away from LIBOR on the fund or on
certain instruments in which the fund invests can be difficult to ascertain, and
they may vary depending on a variety of factors, and they could result in losses
to the fund.
MANAGEMENT RISK. To the extent that a fund is actively managed, it is subject to
management risk. In managing an actively-managed fund's investment portfolio,
the fund's portfolio managers will apply investment techniques and risk analyses
that may not have the desired result. There can be no guarantee that a fund will
meet its investment objective.
MARKET RISK. Securities held by a fund, as well as shares of a fund itself, are
subject to market fluctuations caused by factors such as general economic
conditions, political events, regulatory or market developments, changes in
interest rates and perceived trends in securities prices. Shares of a fund could
decline in value or underperform other investments as a result of the risk of
loss associated with these market fluctuations. In addition, local, regional or
global events such as war, acts of terrorism, spread of infectious diseases or
other public health issues, recessions, or other events could have a significant
negative impact on a fund and its investments. Such events may affect certain
geographic regions, countries, sectors and industries more significantly than
others. The outbreak of the respiratory disease designated as COVID-19 in
December 2019 has caused significant volatility and declines in global financial
markets, which have caused losses for investors. While the development of
vaccines has slowed the spread of the virus and allowed for the resumption of
"reasonably" normal business activity in the United States, many countries
continue to impose lockdown measures in an attempt to slow the spread.
Additionally, there is no guarantee that vaccines will be effective against
emerging variants of the disease.
Page 61
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
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.
OPERATIONAL RISK. Each fund is subject to risks arising from various operational
factors, including, but not limited to, human error, processing and
communication errors, errors of a fund's service providers, counterparties or
other third-parties, failed or inadequate processes and technology or systems
failures. Although the funds and the Advisor seek to reduce these operational
risks through controls and procedures, there is no way to completely protect
against such risks.
PASSIVE INVESTMENT RISK. To the extent a fund seeks to track an index, the fund
will invest in the securities included in, or representative of, the index
regardless of their investment merit. A fund generally will not attempt to take
defensive positions in declining markets.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
ADVISORY AGREEMENTS
BOARD CONSIDERATIONS REGARDING APPROVAL OF CONTINUATION OF INVESTMENT MANAGEMENT
AGREEMENTS
The Board of Trustees of First Trust Exchange-Traded Fund (the "Trust"),
including the Independent Trustees, unanimously approved the continuation of the
Investment Management Agreement (the "Agreement") with First Trust Advisors L.P.
(the "Advisor") on behalf of the following seven series of the Trust (each a
"Fund" and collectively, the "Funds"):
First Trust Value Line(R) Dividend Index Fund (FVD)
First Trust Dow Jones Select MicroCap Index Fund (FDM)
First Trust Morningstar Dividend Leaders Index Fund (FDL)
First Trust US Equity Opportunities ETF (FPX)
First Trust NYSE(R) Arca(R) Biotechnology Index Fund (FBT)
First Trust Dow Jones Internet Index Fund (FDN)
First Trust Capital Strength ETF (FTCS)
The Board approved the continuation of the Agreement for each Fund for a
one-year period ending June 30, 2022 at a meeting held on June 6-7, 2021. The
Board determined for each Fund that the continuation of the Agreement is in the
best interests of the Fund in light of the nature, extent and quality of the
services provided and such other matters as the Board considered to be relevant
in the exercise of its business judgment.
To reach this determination for each Fund, the Board considered its duties under
the Investment Company Act of 1940, as amended (the "1940 Act"), as well as
under the general principles of state law, in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. At meetings held on April 26, 2021 and June 6-7, 2021, the
Board, including the Independent Trustees, reviewed materials provided by the
Advisor responding to requests for information from counsel to the Independent
Trustees, submitted on behalf of the Independent Trustees, that, among other
things, outlined: the services provided by the Advisor to each Fund (including
the relevant personnel responsible for these services and their experience); the
advisory fee rate payable by each Fund as compared to fees charged to a peer
group of funds (the "Expense Group") and a broad peer universe of funds (the
"Expense Universe"), each assembled by Broadridge Financial Solutions, Inc.
("Broadridge"), an independent source, and as compared to fees charged to other
clients of the Advisor, including other exchange-traded funds ("ETFs") managed
by the Advisor; the expense ratio of each Fund as compared to expense ratios of
the funds in the Fund's Expense Group and Expense Universe; performance
information for each Fund, including comparisons of each Fund's performance to
that of one or more relevant benchmark indexes and to that of a performance
group of funds and a broad performance universe of funds (the "Performance
Universe"), each assembled by Broadridge; the nature of expenses incurred in
providing services to each Fund and the potential for the Advisor to realize
economies of scale, if any; profitability and other financial data for the
Advisor; any fall-out benefits to the Advisor and its affiliate, First Trust
Portfolios L.P. ("FTP"); and information on the Advisor's compliance program.
The Board reviewed initial materials with the Advisor at the meeting held on
Page 62
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
April 26, 2021, prior to which the Independent Trustees and their counsel met
separately to discuss the information provided by the Advisor. Following the
April meeting, counsel to the Independent Trustees, on behalf of the Independent
Trustees, requested certain clarifications and supplements to the materials
provided, and the information provided in response to those requests was
considered at an executive session of the Independent Trustees and their counsel
held prior to the June 6-7, 2021 meeting, as well as at the June meeting. The
Board applied its business judgment to determine whether the arrangement between
the Trust and the Advisor continues to be a reasonable business arrangement from
each Fund's perspective. The Board determined that, given the totality of the
information provided with respect to the Agreement, the Board had received
sufficient information to renew the Agreement. The Board considered that
shareholders chose to invest or remain invested in a Fund knowing that the
Advisor manages the Fund and knowing the Fund's advisory fee.
In reviewing the Agreement for each Fund, the Board considered the nature,
extent and quality of the services provided by the Advisor under the Agreement.
The Board considered that the Advisor is responsible for the overall management
and administration of the Trust and each Fund and reviewed all of the services
provided by the Advisor to the Funds, as well as the background and experience
of the persons responsible for such services. In reviewing the services
provided, the Board noted the compliance program that had been developed by the
Advisor and considered that it includes a robust program for monitoring the
Advisor's and each Fund's compliance with the 1940 Act, as well as each Fund's
compliance with its investment objective, policies and restrictions. The Board
also considered a report from the Advisor with respect to its risk management
functions related to the operation of the Funds. Finally, as part of the Board's
consideration of the Advisor's services, the Advisor, in its written materials
and at the April 26, 2021 meeting, described to the Board the scope of its
ongoing investment in additional personnel and infrastructure to maintain and
improve the quality of services provided to the Funds and the other funds in the
First Trust Fund Complex. In light of the information presented and the
considerations made, the Board concluded that the nature, extent and quality of
the services provided to the Trust and each Fund by the Advisor under the
Agreement have been and are expected to remain satisfactory and that the Advisor
has managed each Fund consistent with its investment objective, policies and
restrictions.
The Board considered the advisory fee rate payable by each Fund under the
Agreement for the services provided. The Board considered that the Advisor
agreed to extend the current expense cap for each Fund through April 30, 2023.
For each Fund, the Board noted that expenses reimbursed and fees waived are
subject to recovery by the Advisor for up to three years from the date the fee
was waived or expense was incurred, but no reimbursement payment would be made
by the Fund if it results in the Fund exceeding (i) the applicable expense
limitation in place for the most recent fiscal year for which such expense
limitation was in place, (ii) the applicable expense limitation in place at the
time the fees were waived, or (iii) the current expense limitation. The Board
received and reviewed information showing the advisory or unitary fee rates and
expense ratios of the peer funds in the Expense Groups, as well as advisory and
unitary fee rates charged by the Advisor to other fund (including ETFs) and
non-fund clients, as applicable. Because each Fund's Expense Group included peer
funds that pay a unitary fee, the Board determined that expense ratios were the
most relevant comparative data point. Based on the information provided, the
Board noted that the total (net) expense ratio of each Fund was above the median
total (net) expense ratio of the peer funds in its respective Expense Group.
With respect to the Expense Groups, the Board, at the April 26, 2021 meeting,
discussed with the Advisor limitations in creating peer groups for index ETFs,
including differences in underlying indexes and index-tracking methodologies
that can result in greater management complexities across seemingly comparable
ETFs, and different business models that may affect the pricing of services
among ETF sponsors. The Board took these limitations and differences into
account in considering the peer data. With respect to fees charged to other
non-ETF clients, the Board considered differences between the Funds and other
non-ETF clients that limited their comparability. In considering the advisory
fee rates overall, the Board also considered the Advisor's statement that it
seeks to meet investor needs through innovative and value-added investment
solutions and the Advisor's demonstrated long-term commitment to each Fund and
the other funds in the First Trust Fund Complex.
The Board considered performance information for each Fund. The Board noted the
process it has established for monitoring each Fund's performance and portfolio
risk on an ongoing basis, which includes quarterly performance reporting from
the Advisor for the Funds. The Board determined that this process continues to
be effective for reviewing each Fund's performance. The Board received and
reviewed information for periods ended December 31, 2020 regarding the
performance of each Fund's underlying index, the correlation between each Fund's
performance and that of its underlying index, each Fund's tracking difference
and each Fund's excess return as compared to its benchmark index. With respect
to FTCS, the Board noted that during 2013, the Fund changed its underlying index
to The Capital Strength Index(SM), and that the performance information included
a blend of the old and new indexes. Based on the information provided and its
ongoing review of performance, the Board concluded that each Fund was correlated
to its underlying index and that the tracking difference for each Fund was
within a reasonable range. In addition, the Board reviewed data prepared by
Broadridge comparing each Fund's performance to that of its respective
Performance Universe and to that of a broad-based benchmark index, but given
each Fund's objective of seeking investment results that correspond generally to
the performance of its underlying index, the Board placed more emphasis on its
review of correlation and tracking difference.
Page 63
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
On the basis of all the information provided on the fees, expenses and
performance of each Fund and the ongoing oversight by the Board, the Board
concluded that the advisory fee for each Fund continues to be reasonable and
appropriate in light of the nature, extent and quality of the services provided
by the Advisor to each Fund under the Agreement.
The Board considered information and discussed with the Advisor whether there
were any economies of scale in connection with providing advisory services to
the Funds and noted the Advisor's statement that it believes its expenses will
likely increase during the next twelve months as the Advisor continues to hire
personnel and build infrastructure, including technology, to improve the
services to the Funds. The Board considered the revenues and allocated costs
(including the allocation methodology) of the Advisor in serving as investment
advisor to each Fund for the twelve months ended December 31, 2020 and the
estimated profitability level for each Fund calculated by the Advisor based on
such data, as well as complex-wide and product-line profitability data, for the
same period. The Board noted the inherent limitations in the profitability
analysis and concluded that, based on the information provided, the Advisor's
profitability level for each Fund was not unreasonable. In addition, the Board
considered fall-out benefits described by the Advisor that may be realized from
its relationship with the Funds. 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 Funds, may have had no
dealings with the Advisor or FTP, and noted that the Advisor does not utilize
soft dollars in connection with the Funds. The Board concluded that the
character and amount of potential 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 continue to be fair and reasonable and that the continuation of
the Agreement is in the best interests of each Fund. No single factor was
determinative in the Board's analysis.
LIQUIDITY RISK MANAGEMENT PROGRAM
In accordance with Rule 22e-4 under the Investment Company Act of 1940, as
amended (the "1940 Act"), the Funds and each other fund in the First Trust Fund
Complex, other than the closed-end funds, have adopted and implemented a
liquidity risk management program (the "Program") reasonably designed to assess
and manage the funds' liquidity risk, i.e., the risk that a fund could not meet
requests to redeem shares issued by the fund without significant dilution of
remaining investors' interests in the fund. The Board of Trustees of the First
Trust Funds has appointed First Trust Advisors, L.P. (the "Advisor") as the
person designated to administer the Program, and in this capacity the Advisor
performs its duties primarily through the activities and efforts of the First
Trust Liquidity Committee (the "Liquidity Committee").
Pursuant to the Program, the Liquidity Committee classifies the liquidity of
each fund's portfolio investments into one of the four liquidity categories
specified by Rule 22e-4: highly liquid investments, moderately liquid
investments, less liquid investments and illiquid investments. The Liquidity
Committee determines certain of the inputs for this classification process,
including reasonably anticipated trade sizes and significant investor dilution
thresholds. The Liquidity Committee also determines and periodically reviews a
highly liquid investment minimum for certain funds, monitors the funds' holdings
of assets classified as illiquid investments to seek to ensure they do not
exceed 15% of a fund's net assets and establishes policies and procedures
regarding redemptions in kind.
At the April 26, 2021 meeting of the Board of Trustees, as required by Rule
22e-4 and the Program, the Advisor provided the Board with a written report
prepared by the Advisor that addressed the operation of the Program during the
period from March 20, 2020 through the Liquidity Committee's annual meeting held
on March 16, 2021 and assessed the Program's adequacy and effectiveness of
implementation during this period, including the operation of the highly liquid
investment minimum for each fund that is required under the Program to have one,
and any material changes to the Program. Note that because the Funds primarily
hold assets that are highly liquid investments, the Funds have not adopted a
highly liquid investment minimum.
As stated in the written report, during the review period, no fund breached the
15% limitation on illiquid investments, no fund with a highly liquid investment
minimum breached that minimum and no fund filed a Form N-LIQUID. The Advisor
concluded that each fund's investment strategy is appropriate for an open-end
fund; that the Program operated effectively in all material respects during the
review period; and that the Program is reasonably designed to assess and manage
the liquidity risk of each fund and to maintain compliance with Rule 22e-4.
Page 64
<PAGE>
FIRST TRUST
First Trust Exchange-Traded Fund
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
<PAGE>
[BLANK BACK COVER]
<PAGE>
FIRST TRUST
First Trust Exchange-Traded Fund
Book 2
First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW)
First Trust NASDAQ-100-Technology Sector Index Fund (QTEC)
First Trust NASDAQ-100 Ex-Technology Sector Index Fund (QQXT)
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund (QCLN)
First Trust S&P REIT Index Fund (FRI)
First Trust Water ETF (FIW)
First Trust Natural Gas ETF (FCG)
First Trust Chindia ETF (FNI)
First Trust NASDAQ(R) ABA Community Bank Index Fund (QABA)
Semi-Annual Report
For the Six Months Ended
June 30, 2021
<PAGE>
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
SEMI-ANNUAL REPORT
JUNE 30, 2021
Shareholder Letter.......................................................... 2
Market Overview............................................................. 3
Fund Performance Overview
First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW).................. 4
First Trust NASDAQ-100-Technology Sector Index Fund (QTEC)............... 6
First Trust NASDAQ-100 Ex-Technology Sector Index Fund (QQXT)............ 8
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund (QCLN)....... 10
First Trust S&P REIT Index Fund (FRI).................................... 12
First Trust Water ETF (FIW).............................................. 14
First Trust Natural Gas ETF (FCG)........................................ 16
First Trust Chindia ETF (FNI)............................................ 18
First Trust NASDAQ(R) ABA Community Bank Index Fund (QABA)............... 20
Notes to Fund Performance Overview.......................................... 22
Understanding Your Fund Expenses............................................ 23
Portfolio of Investments
First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW).................. 25
First Trust NASDAQ-100-Technology Sector Index Fund (QTEC)............... 28
First Trust NASDAQ-100 Ex-Technology Sector Index Fund (QQXT)............ 29
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund (QCLN)....... 31
First Trust S&P REIT Index Fund (FRI).................................... 33
First Trust Water ETF (FIW).............................................. 36
First Trust Natural Gas ETF (FCG)........................................ 37
First Trust Chindia ETF (FNI)............................................ 39
First Trust NASDAQ(R) ABA Community Bank Index Fund (QABA)............... 41
Statements of Assets and Liabilities........................................ 44
Statements of Operations.................................................... 46
Statements of Changes in Net Assets......................................... 48
Financial Highlights........................................................ 52
Notes to Financial Statements............................................... 57
Additional Information...................................................... 67
<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 (the "Trust") described in this
report (each such series is referred to as a "Fund" and collectively, as the
"Funds") to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. When
evaluating the information included in this report, you are cautioned not to
place undue reliance on these forward-looking statements, which reflect the
judgment of the Advisor and its representatives only as of the date hereof. We
undertake no obligation to publicly revise or update these forward-looking
statements to reflect events and circumstances that arise after the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that any Fund described in this report will achieve its
investment objective. Each Fund is subject to market risk, which is the
possibility that the market values of securities owned by the Fund will decline
and that the value of the Fund's shares may therefore be less than what you paid
for them. Accordingly, you can lose money by investing in a Fund. See "Risk
Considerations" in the Additional Information section of this report for a
discussion of certain other risks of investing in the Funds.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
www.ftportfolios.com or speak with your financial advisor. Investment returns,
net asset value and share price will fluctuate and Fund shares, when sold, may
be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund
performance on each Fund's webpage at www.ftportfolios.com.
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
<PAGE>
--------------------------------------------------------------------------------
SHAREHOLDER LETTER
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
JUNE 30, 2021
Dear Shareholders,
First Trust is pleased to provide you with the semi-annual report for certain
funds in the First Trust Exchange-Traded Fund (the "Funds"), which contains
detailed information about the Funds for the six months ended June 30, 2021.
Since December of 2008, the Federal Reserve (the "Fed") has largely maintained
an extremely accommodating stance on monetary policy. In other words, it has
kept interest rates at very low levels, and has done so on purpose. From
December 2008 through June 2021 (a period that captured a portion of the
financial crisis of 2007-2008 and the entire coronavirus ("COVID-19") pandemic),
the Federal Funds target rate (upper bound) stood at 0.25% for approximately
eight years and three months of that 12.5-year period. That is an aggressive
posture to hold for such a long duration. For comparative purposes, the Federal
Funds target rate averaged 4.50% for the 20-year period ended December 31, 2008.
All along, the Fed has been signaling to savers, investors, and businesses alike
that it wanted them to assume more risk. The Fed did not want money just sitting
idle on the sidelines. It wanted the money to be put to work, so to speak, in
such a way that it would stimulate U.S. economic growth and stave off any
deflationary pressures potentially looming. It has been a tough road to hoe, as
I'm sure those investors who follow the economy closely have noticed.
Why am I taking this trip down memory lane? It is because the Federal Funds
target rate currently stands at 0.25%, just like it did back in December 2008.
We can cite the severe hit to many parts of the U.S. economy from the COVID-19
pandemic, such as the leisure and travel industry, as to why the target rate has
returned to such a low level. For all intents and purposes, until the economy
reaches full employment (4% unemployment rate) and a 2% plus inflation rate for
a sustained period, the Fed has stated that it intends to maintain the status
quo. Since inflation has risen notably in recent months, the Fed is now
forecasting a couple of rate hikes in 2023. At a minimum, that is still 18
months away. Keep in mind, however, the Fed reserves the right to change its
posture at any time.
As previously noted, the Fed has been encouraging savers and investors to assume
more risk for over a decade. One of the best barometers of risk in the
securities markets is the default rate on speculative-grade (below
investment-grade) debt, in my opinion. High yield corporate bonds behave like a
hybrid security between other fixed-income securities and stocks. They share
behavioral characteristics of both, and they are economically sensitive. Moody's
reported that its global speculative-grade default rate stood at 4.0% in June
2021, according to its own release. Moody's puts the historical average default
rate at 4.2%. Its baseline scenario sees the default rate declining to 1.7% by
December 2021. Moody's recorded 28 defaults over the first six months of 2021,
down from 114 defaults over the same period a year ago. I believe that investors
should take some comfort in knowing that defaults are trending lower, not
higher, in the current economic climate.
Companies have heeded the Fed's call for risk-taking, as measured by this year's
robust global mergers and acquisitions ("M&A") activity. Global M&A activity set
a record high in the first half of 2021, with announced deals valued at $2.8
trillion, according to data from Refinitiv. U.S. M&A activity also reached a
record high, coming in at $1.3 trillion for the same period, or around 46% of
the global total. M&A specialists expect deal-making to remain robust for the
rest of 2021, due to low borrowing costs and stronger economic growth.
In closing, we welcome the reopening of the U.S. economy and, hopefully, the
global economy shortly thereafter. We encourage investors to stay the course
even though the markets could experience some turbulence in the months ahead.
The potential for additional volatility represents an opportunity for investors
to check their asset allocation levels to determine if they are suitable for an
extended inflationary climate.
Thank you for giving First Trust the opportunity to play a role in your
financial future. We value our relationship with you and will report on the
Funds again in six months.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 2
<PAGE>
--------------------------------------------------------------------------------
MARKET OVERVIEW
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
SEMI-ANNUAL REPORT
JUNE 30, 2021
ROBERT F. CAREY, CFA
SENIOR VICE PRESIDENT AND CHIEF MARKET STRATEGIST
FIRST TRUST ADVISORS L.P.
Mr. Carey is responsible for the overall management of research and analysis of
the First Trust product line. Mr. Carey has more than 30 years of experience as
an Equity and Fixed-Income Analyst and is a recipient of the Chartered Financial
Analyst ("CFA") designation. He is a graduate of the University of Illinois at
Champaign-Urbana with a B.S. in Physics. He is also a member of the Investment
Analysts Society of Chicago and the CFA Institute. Mr. Carey has appeared as a
guest on such programs as Bloomberg TV, CNBC, and WBBM Radio, and has been
quoted by several publications, including The Wall Street Journal, The Wall
Street Reporter, Bloomberg News Service, and Registered Rep.
STATE OF THE ECONOMY/INVESTING
We have learned recently that the reopening process for the economy from the
coronavirus ("COVID-19") pandemic, while underway, is likely to be more of a
work in progress than a foregone conclusion. It has to do with the spread of the
highly contagious Delta variant, now found in all 50 states. The Delta variant,
which was first identified in India in 2020, appears to be more problematic for
those individuals who have yet to be vaccinated. Cases are rising rapidly. The
Centers for Disease Control and Prevention expects the Delta variant to account
for approximately 80% of new cases moving forward. The concern has quickly
elevated, and some state and local governments, such as Los Angeles County, are
contemplating reinstating the mask mandate for businesses and other public
venues. This is something we intend to monitor moving forward to assess its
potential near-term impact on the economy.
The global growth forecast from the International Monetary Fund ("IMF") released
in April 2021 projected a rate of 6.0% for real gross domestic product growth
for 2021, up from -3.3% in 2020. The IMF is calling for a 6.4% growth rate for
the U.S. in 2021, up from -3.5% from the previous year. Advanced Economies are
expected to register a 5.1% growth rate, up from -4.7% for the previous year. As
has been the case for many years, Emerging Market and Developing Economies are
expected to grow faster than Advanced Economies in 2021. Their 2021 growth rate
estimate is 6.7%, up from -2.2% a year ago.
The marketplace for exchange-traded funds ("ETFs") and related exchange-traded
products ("ETPs") continues to set records, both domestically and abroad. ETFGI,
an independent research and consultancy firm, reported that total assets
invested in ETFs/ETPs listed in the U.S. stood at an all-time high of $6.51
trillion at the close of June 2021, according to its own release. In the first
half of 2021, net inflows to ETFs/ETPs listed in the U.S. totaled a record high
$472.18 billion, with $327.44 billion of it flowing to equity funds. Total
assets invested in ETFs/ETPs listed globally stood at an all-time high of $9.35
trillion for the same period. In the first half of this year, net inflows to
ETFs/ETPs listed globally totaled a record high $660.73 billion, with $460.73
billion of it flowing to equity funds.
U.S. STOCKS AND BONDS
In the first half of 2021, three of the major U.S. stock indices posted
double-digit gains. The S&P 500(R) Index, S&P MidCap 400(R) Index and S&P
SmallCap 600(R) Index posted total returns of 15.25%, 17.60%, and 23.56%,
respectively, according to Bloomberg. All 11 of the major sectors that comprise
the S&P 500(R) Index posted positive total returns. The top-performing sectors
were Energy, Financials, Real Estate and Communication Services, up 45.64%,
25.69%, 23.30%, and 19.67%, respectively, while the worst-performing sectors
were Utilities, up 2.38%, and Consumer Staples, up 5.02%. Bloomberg's 2021 and
2022 consensus earnings growth rate estimates for the S&P 500(R) Index were
35.94% and 12.41%, respectively, as of July 2, 2021.
Corporate America is cash rich. Non-financial companies in the S&P 500(R) Index
that reported their earnings results in April and May of 2021 increased their
cash holdings by 12% year-over-year, according to Bloomberg. Cash holdings,
which include short-term investments and long-term marketable securities,
reached $2.03 trillion. The sectors holding the most cash are as follows:
Information Technology ($587.7 billion); Communication Services ($345.2
billion); Consumer Discretionary ($294.9 billion); Health Care ($288.4 billion);
and Industrials ($280.4 billion).
In the U.S. bond market, the major bond groups produced a mixed bag of returns
in the first half of 2021. The top-performing major debt group we track is
speculative-grade in nature. The Bloomberg Barclays U.S. Corporate High Yield
Index posted a total return of 3.62%. The worst-performing debt group we track
is a blend of government and investment-grade corporate bonds. The Bloomberg
Barclays U.S. Aggregate Index posted a total return of -1.60%. The yield on the
benchmark 10-Year Treasury Note rose 55 basis points to 1.47% in the first half
of 2021, according to Bloomberg. For comparative purposes, its average yield for
the 20-year period ended June 30, 2021, was 3.07%. It is still extraordinarily
low.
FOREIGN STOCKS AND BONDS
The U.S. dollar rose by 2.78% against a basket of major currencies in the first
half of 2021, as measured by the U.S. Dollar Index ("DXY"), according to
Bloomberg. The DXY closed at a reading of 92.44 on June 30, 2021, above its
20-year average of 89.41. The stronger U.S. dollar likely had a bit of a
negative influence on the returns of foreign securities held by U.S. investors,
providing they were unhedged. The strength in the dollar was more noticeable
with respect to bond returns due to the low interest rate levels persisting in
many foreign debt markets, in our opinion.
The Bloomberg Barclays EM Hard Currency Aggregate Index of emerging markets debt
posted a total return of -0.97% (USD), while the Bloomberg Barclays Global
Aggregate Index of higher quality debt declined by 3.21% (USD). With respect to
equities, the MSCI Emerging Markets Index of stocks posted a total return of
7.45% (USD), while the MSCI World ex USA Index was up 9.92% (USD) on a total
return basis, according to Bloomberg.
Page 3
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX FUND (QQEW)
The First Trust NASDAQ-100 Equal Weighted 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-100 Equal
Weighted Index(SM) (the "Index"). The Fund will normally invest at least 90% of
its net assets (including investment borrowings) in common stocks and depositary
receipts that comprise the Index. The Index is the equal-weighted version of the
NASDAQ-100 Index(R), which includes 100 of the largest U.S. and international
non-financial companies listed on The Nasdaq Stock Market LLC ("Nasdaq") based
on market capitalization. The Index is rebalanced quarterly and reconstituted
annually and the Fund will make corresponding changes to its portfolio shortly
after the Index changes are made public. The Fund's shares are listed for
trading on the Nasdaq. The first day of secondary market trading in shares of
the Fund was April 25, 2006.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (4/19/06) Ended Ended (4/19/06)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 11.31% 40.86% 22.28% 16.74% 12.57% 173.38% 369.98% 504.77%
Market Value 11.38% 40.88% 22.29% 16.73% 12.57% 173.55% 369.88% 504.88%
INDEX PERFORMANCE
NASDAQ-100 Equal Weighted
Index(SM) 11.68% 41.76% 23.04% 17.47% 13.27% 181.97% 400.22% 564.62%
S&P 500(R) Index 15.25% 40.79% 17.65% 14.84% 10.39% 125.36% 298.93% 348.97%
NASDAQ-100 Index(R) 13.34% 44.36% 28.24% 21.53% 16.15% 246.85% 602.52% 872.73%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 41.3%
Consumer Discretionary 15.0
Health Care 14.9
Communication Services 13.0
Consumer Staples 6.9
Industrials 6.0
Utilities 2.9
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Moderna, Inc. 1.1%
Skyworks Solutions, Inc. 1.1
Peloton Interactive, Inc., Class A 1.1
Splunk, Inc. 1.1
Baidu, Inc., ADR 1.1
Advanced Micro Devices, Inc. 1.1
eBay, Inc. 1.1
Micron Technology, Inc. 1.1
JD.com, Inc., ADR 1.1
Xilinx, Inc. 1.1
-------
Total 11.0%
=======
-----------------------------
Nasdaq(R), NASDAQ-100(R), NASDAQ-100 Index(R), and NASDAQ-100 Equal Weighted
Index(SM) are registered trademarks and service marks of Nasdaq, Inc. (together
with its affiliates hereinafter referred to as the "Corporations") and are
licensed for use by First Trust. The Fund has not been passed on by the
Corporations as to its legality or suitability. The Fund is not issued,
endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 4
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX FUND (QQEW) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust
NASDAQ-100 Equal NASDAQ-100 Equal S&P 500(R) NASDAQ-100
Weighted Index Fund Weighted Index(SM) Index Index(R)
<S> <C> <C> <C> <C>
12/10 $10,000 $10,000 $10,000 $10,000
06/11 10,751 10,785 10,602 10,523
12/11 9,722 9,791 10,211 10,366
06/12 10,614 10,716 11,180 11,967
12/12 11,166 11,303 11,845 12,269
06/13 12,908 13,125 13,482 13,507
12/13 15,626 15,936 15,681 16,799
06/14 16,873 17,260 16,801 18,121
12/14 18,616 19,096 17,829 20,060
06/15 19,057 19,606 18,048 20,947
12/15 19,030 19,647 18,075 22,017
06/16 18,482 19,130 18,769 21,319
12/16 20,365 21,150 20,237 23,619
06/17 23,589 24,570 22,127 27,582
12/17 25,662 26,816 24,654 31,410
06/18 26,873 28,159 25,307 34,755
12/18 24,339 25,580 23,573 31,422
06/19 29,781 31,402 27,943 38,288
12/19 33,048 34,954 30,994 43,821
06/20 35,870 38,054 30,039 51,222
12/20 45,392 48,304 36,700 65,224
06/21 50,526 53,946 42,297 73,925
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 5
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100-TECHNOLOGY SECTOR INDEX FUND (QTEC)
The First Trust NASDAQ-100-Technology Sector 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-100 Technology
Sector Index(SM) (the "Index"). The Fund will normally invest at least 90% of
its net assets (including investment borrowings) in common stocks and depositary
receipts that comprise the Index. The Index is an equal-weighted index composed
of the securities comprising the NASDAQ-100 Index(R) that are classified as
"technology" according to the Industry Classification Benchmark classification
system. The NASDAQ-100 Index(R) includes 100 of the largest U.S. and
international non-financial companies listed on the Nasdaq based on market
capitalization. The Index is rebalanced quarterly and reconstituted annually and
the Fund will make corresponding changes to its portfolio shortly after the
Index changes are made public. The Fund's shares are listed for trading on the
Nasdaq. The first day of secondary market trading in shares of the Fund was
April 25, 2006.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (4/19/06) Ended Ended (4/19/06)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 15.14% 45.93% 30.55% 20.96% 15.32% 279.17% 570.50% 772.11%
Market Value 15.19% 46.04% 30.55% 20.96% 15.32% 279.26% 570.49% 772.09%
INDEX PERFORMANCE
NASDAQ-100 Technology Sector
Index(SM) 15.46% 46.77% 31.36% 21.72% 16.04% 291.07% 613.91% 859.21%
S&P 500(R) Index 15.25% 40.79% 17.65% 14.84% 10.39% 125.36% 298.93% 348.97%
S&P 500 Information Technology
Index 13.76% 42.40% 31.21% 21.99% 15.59% 288.95% 630.01% 803.93%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION(1) LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 90.0%
Communication Services 10.0
-------
Total 100.0%
=======
(1) The above sector classification is based on Standard & Poor's Global
Industry Classification Standard ("GICS"), and is different than the
industry sector classification system used by the Index to select
securities, which is the Industry Classification Benchmark ("ICB") system,
the joint classification system of Dow Jones Indexes and FTSE Group.
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Skyworks Solutions, Inc. 2.7%
Splunk, Inc. 2.7
Advanced Micro Devices, Inc. 2.6
Micron Technology, Inc. 2.6
Xilinx, Inc. 2.6
Baidu, Inc., ADR 2.6
Applied Materials, Inc. 2.6
Marvell Technology, Inc. 2.6
QUALCOMM, Inc. 2.6
NVIDIA Corp. 2.6
-------
Total 26.2%
=======
-----------------------------
Nasdaq(R), NASDAQ-100(R), NASDAQ-100 Index(R), and NASDAQ-100 Technology Sector
Index(SM) are registered trademarks and service marks of Nasdaq, Inc. (together
with its affiliates hereinafter referred to as the "Corporations") and are
licensed for use by First Trust. The Fund has not been passed on by the
Corporations as to its legality or suitability. The Fund is not issued,
endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 6
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100-TECHNOLOGY SECTOR INDEX FUND (QTEC) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust
NASDAQ-100- NASDAQ-100
Technology Sector Technology Sector S&P 500(R) S&P 500 Information
Index Fund Index(SM) Index Technology Index
<S> <C> <C> <C> <C>
12/10 $10,000 $10,000 $10,000 $10,000
06/11 10,077 10,107 10,602 10,206
12/11 9,425 9,483 10,211 10,242
06/12 9,855 9,947 11,180 11,608
12/12 10,181 10,308 11,845 11,760
06/13 11,374 11,553 13,482 12,507
12/13 14,062 14,329 15,681 15,103
06/14 15,907 16,261 16,801 16,453
12/14 17,553 18,003 17,829 18,141
06/15 17,119 17,607 18,048 18,279
12/15 17,311 17,861 18,075 19,217
06/16 17,818 18,450 18,769 19,156
12/16 21,685 22,537 20,237 21,878
06/17 25,816 26,907 22,127 25,648
12/17 29,895 31,255 24,654 30,375
06/18 32,089 33,646 25,307 33,677
12/18 28,489 29,958 23,573 30,289
06/19 35,970 37,942 27,943 38,506
12/19 42,268 44,730 30,994 45,522
06/20 46,296 49,154 30,039 52,328
12/20 58,683 62,496 36,700 65,490
06/21 67,568 72,158 42,297 74,501
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 7
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR INDEX FUND (QQXT)
The First Trust NASDAQ-100 Ex-Technology Sector 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-100 Ex-Tech
Sector Index(SM) (the "Index"). The Fund will normally invest at least 90% of
its net assets (including investment borrowings) in common stocks and depositary
receipts that comprise the Index. The Index is an equal-weighted index composed
of the securities comprising the NASDAQ-100 Index(R) that are not classified as
"technology" according to the Industry Classification Benchmark classification
system. The NASDAQ-100 Index(R) includes 100 of the largest U.S. and
international non-financial companies listed on the Nasdaq based on market
capitalization. The Index is rebalanced quarterly and reconstituted annually and
the Fund will make corresponding changes to its portfolio shortly after the
Index changes are made public. The Fund's shares are listed for trading on the
Nasdaq. The first day of secondary market trading in shares of the Fund was
February 15, 2007.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (2/8/07) Ended Ended (2/8/07)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 8.87% 37.82% 17.70% 14.42% 11.19% 125.87% 284.62% 360.07%
Market Value 8.93% 37.98% 17.71% 14.42% 11.19% 126.01% 284.76% 360.24%
INDEX PERFORMANCE
NASDAQ-100 Ex-Tech Sector
Index(SM) 9.22% 38.70% 18.41% 15.12% 11.88% 132.75% 308.79% 402.81%
Russell 1000(R) Index 14.95% 43.07% 17.99% 14.90% 10.27% 128.71% 300.96% 308.05%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Consumer Discretionary 25.2%
Health Care 25.1
Communication Services 15.0
Consumer Staples 11.5
Industrials 10.0
Information Technology 8.3
Utilities 4.9
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Moderna, Inc. 1.9%
Peloton Interactive, Inc., Class A 1.8
eBay, Inc. 1.8
JD.com, Inc., ADR 1.8
Tesla, Inc. 1.8
Vertex Pharmaceuticals, Inc. 1.7
Cintas Corp. 1.7
Ross Stores, Inc. 1.7
NetEase, Inc., ADR 1.7
MercadoLibre, Inc. 1.7
-------
Total 17.6%
=======
-----------------------------
Nasdaq(R), NASDAQ-100(R), NASDAQ-100 Index(R), and NASDAQ-100 Ex-Tech Sector
Index(SM) are registered trademarks and service marks of Nasdaq, Inc. (together
with its affiliates hereinafter referred to as the "Corporations") and are
licensed for use by First Trust. The Fund has not been passed on by the
Corporations as to its legality or suitability. The Fund is not issued,
endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 8
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR INDEX FUND (QQXT) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust
NASDAQ-100 NASDAQ-100
Ex-Technology Sector Ex-Tech Sector Russell 1000(R)
Index Fund Index(SM) Index
<S> <C> <C> <C>
12/10 $10,000 $10,000 $10,000
06/11 11,206 11,243 10,637
12/11 9,892 9,962 10,150
06/12 11,155 11,263 11,102
12/12 11,901 12,045 11,817
06/13 14,136 14,376 13,461
12/13 16,809 17,141 15,731
06/14 17,579 17,986 16,875
12/14 19,390 19,889 17,815
06/15 20,443 21,039 18,120
12/15 20,310 20,976 17,979
06/16 19,081 19,747 18,651
12/16 19,877 20,628 20,145
06/17 22,715 23,648 22,012
12/17 23,933 24,986 24,513
06/18 24,687 25,843 25,212
12/18 22,598 23,721 23,341
06/19 27,102 28,546 27,738
12/19 29,005 30,638 30,675
06/20 31,273 33,132 29,813
12/20 39,588 42,082 37,102
06/21 43,099 45,962 42,649
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 9
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) GREEN ENERGY INDEX FUND (QCLN)
The First Trust NASDAQ(R) Clean Edge(R) Green Energy 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(R)
Clean Edge(R) Green Energy Index(SM) (the "Index"). The Fund will normally
invest at least 90% of its net assets (including investment borrowings) in
common stocks and depositary receipts that comprise the Index. The Index is
designed to track the performance of small, mid and large capitalization
clean-energy companies that are publicly traded in the United States. The Index
is rebalanced quarterly and reconstituted semi-annually and the Fund will make
corresponding changes to its portfolio shortly after the Index changes are made
public. The Fund's shares are listed for trading on the Nasdaq. The first day of
secondary market trading in shares of the Fund was February 14, 2007.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (2/8/07) Ended Ended (2/8/07)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV -1.39% 133.47% 38.00% 17.19% 9.58% 400.57% 388.52% 273.23%
Market Value -1.40% 133.43% 38.03% 17.18% 9.59% 400.99% 388.33% 273.32%
INDEX PERFORMANCE
NASDAQ(R) Clean Edge(R) Green
Energy Index(SM) -1.14% 135.06% 38.22% 17.16% 9.80% 404.44% 387.24% 283.94%
Russell 2000(R) Index 17.54% 62.03% 16.47% 12.34% 8.98% 114.29% 220.05% 244.52%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 35.5%
Consumer Discretionary 24.2
Industrials 20.3
Utilities 10.1
Materials 7.6
Financials 1.4
Energy 0.9
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
NIO, Inc., ADR 9.9%
Tesla, Inc. 7.8
Enphase Energy, Inc. 7.5
Albemarle Corp. 5.9
Plug Power, Inc. 5.8
XPeng, Inc., ADR 4.9
SolarEdge Technologies, Inc. 3.8
Sunrun, Inc. 3.6
Cree, Inc. 3.5
ON Semiconductor Corp. 3.4
-------
Total 56.1%
=======
-----------------------------
Nasdaq(R), Clean Edge(R), and NASDAQ(R) Clean Edge(R) Green Energy Index(SM) are
registered trademarks and service marks of Nasdaq, Inc. and Clean Edge, Inc.,
respectively (together with its affiliates hereinafter referred to as the
"Corporations") and are licensed for use by First Trust. The Fund has not been
passed on by the Corporations as to its legality or suitability. The Fund is not
issued, endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 10
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) GREEN ENERGY INDEX FUND (QCLN) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust
NASDAQ(R) NASDAQ(R)
Clean Edge(R) Green Clean Edge(R) Russell 2000(R)
Energy Index Fund Green Energy Index(SM) Index
<S> <C> <C> <C>
12/10 $10,000 $10,000 $10,000
06/11 9,306 9,342 10,621
12/11 5,877 5,919 9,583
06/12 5,688 5,717 10,400
12/12 5,847 5,841 11,149
06/13 8,741 8,708 12,917
12/13 11,097 11,058 15,477
06/14 12,763 12,721 15,971
12/14 10,759 10,712 16,235
06/15 11,547 11,498 17,006
12/15 10,067 10,029 15,518
06/16 9,080 9,023 15,862
12/16 9,853 9,763 18,825
06/17 11,519 11,428 19,764
12/17 12,980 12,892 21,582
06/18 12,497 12,424 23,235
12/18 11,394 11,331 19,204
06/19 13,727 13,655 22,465
12/19 16,257 16,165 24,105
06/20 19,468 19,364 20,976
12/20 46,100 46,043 28,920
06/21 45,459 45,518 33,993
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 11
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST S&P REIT INDEX FUND (FRI)
The First Trust S&P REIT 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 S&P United States REIT Index (the
"Index"). The Fund will normally invest at least 90% of its net assets
(including investment borrowings) in the real estate investment trusts ("REITs")
that comprise the Index. The Index seeks to measure the performance of publicly
traded REITs domiciled in the U.S. that meet certain eligibility requirements.
The Index is rebalanced quarterly and the Fund will make corresponding changes
to its portfolio shortly after the Index changes are made public. The Fund's
shares are listed for trading on the NYSE Arca. The first day of secondary
market trading in shares of the Fund was May 10, 2007.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (5/8/07) Ended Ended (5/8/07)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 21.38% 37.03% 5.56% 8.66% 5.17% 31.05% 129.38% 104.09%
Market Value 21.38% 37.16% 5.55% 8.65% 5.17% 31.00% 129.24% 104.11%
INDEX PERFORMANCE
S&P United States REIT Index* 21.70% 37.82% 6.13% 9.24% N/A 34.63% 142.11% N/A
FTSE EPRA/NAREIT North
America Index 22.15% 39.52% 5.70% 8.59% 5.35% 31.93% 127.94% 108.87%
Russell 3000(R) Index 15.11% 44.16% 17.89% 14.70% 10.03% 127.67% 294.05% 286.57%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On November 6, 2008, the Fund's underlying index changed from the S&P REIT
Composite Index to the S&P United States REIT Index. Effective December
31, 2008, the S&P REIT Composite Index was discontinued. Therefore, the
Fund's performance and historical returns shown for the periods prior to
November 6, 2008 are not necessarily indicative of the performance that
the Fund, based on its current Index, would have generated. The inception
date of the Index was June 30, 2008. Returns for the Index are only
disclosed for those periods in which the Index was in existence for the
whole period.
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
REIT CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Specialized 24.3%
Residential 18.6
Industrial 14.3
Retail 13.4
Health Care 11.1
Office 9.5
Diversified 5.1
Hotel & Resort 3.7
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Prologis, Inc. 7.9%
Equinix, Inc. 6.5
Public Storage 4.1
Simon Property Group, Inc. 3.9
Digital Realty Trust, Inc. 3.8
Welltower, Inc. 3.1
AvalonBay Communities, Inc. 2.6
Equity Residential 2.4
Alexandria Real Estate Equities, Inc. 2.2
Realty Income Corp. 2.2
-------
Total 38.7%
=======
-----------------------------
S&P United States REIT Index ("Index") is a product of S&P Dow Jones Indices LLC
or its affiliates ("SPDJI") and has been licensed for use by First Trust.
Standard & Poor's(R) and S&P(R) are registered trademarks of Standard & Poor's
Financial Services LLC ("S&P"); 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 nor do they have any liability for
any errors, omissions, or interruptions of the Index.
Page 12
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST S&P REIT INDEX FUND (FRI) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust S&P United States FTSE EPRA/NAREIT Russell 3000(R)
S&P REIT Index Fund REIT Index North America Index Index
<S> <C> <C> <C> <C>
12/10 $10,000 $10,000 $10,000 $10,000
06/11 11,000 11,028 11,057 10,635
12/11 10,790 10,847 10,818 10,102
06/12 12,370 12,466 12,400 11,044
12/12 12,667 12,798 12,782 11,761
06/13 13,438 13,621 13,383 13,415
12/13 12,898 13,105 12,945 15,708
06/14 15,137 15,417 15,156 16,798
12/14 16,717 17,073 16,590 17,680
06/15 15,659 16,032 15,585 18,023
12/15 17,046 17,507 16,891 17,765
06/16 19,255 19,834 19,107 18,408
12/16 18,396 18,995 18,272 20,026
06/17 18,723 19,388 18,603 21,814
12/17 19,092 19,818 19,107 24,257
06/18 19,304 20,090 19,415 25,038
12/18 18,288 19,066 18,361 22,990
06/19 21,282 22,258 21,449 27,291
12/19 22,616 23,727 22,860 30,121
06/20 18,409 19,375 18,064 29,073
12/20 20,788 21,939 20,633 36,407
06/21 25,232 26,700 25,203 41,908
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 13
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST WATER ETF (FIW)
The First Trust Water 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 Water Index (the "Index"). 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 track the performance of small, mid and large capitalization
companies that derive a substantial portion of their revenues from the potable
water and wastewater industries. The Fund's shares are listed for trading on the
NYSE Arca. The Index is rebalanced and reconstituted semi-annually and the Fund
will make corresponding changes to its portfolio shortly after the changes are
made public. The first day of secondary market trading in shares of the Fund was
May 11, 2007.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (5/8/07) Ended Ended (5/8/07)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 15.96% 50.67% 19.69% 14.60% 11.48% 145.67% 290.79% 365.43%
Market Value 15.99% 50.82% 19.70% 14.61% 11.49% 145.72% 291.12% 365.63%
INDEX PERFORMANCE
ISE Clean Edge Water Index 16.28% 51.55% 20.32% 15.29% 12.18% 152.14% 314.98% 408.01%
Russell 3000(R) Index 15.11% 44.16% 17.89% 14.70% 10.03% 127.67% 294.05% 286.57%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Industrials 56.8%
Utilities 20.4
Health Care 13.2
Information Technology 3.9
Materials 3.6
Consumer Staples 2.1
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Roper Technologies, Inc. 4.5%
Danaher Corp. 4.4
IDEXX Laboratories, Inc. 4.4
Agilent Technologies, Inc. 4.4
Pentair PLC 4.4
Xylem, Inc. 4.4
IDEX Corp. 4.1
Essential Utilities, Inc. 3.9
American Water Works Co., Inc. 3.9
A.O. Smith Corp. 3.8
-------
Total 42.2%
=======
-----------------------------
"Nasdaq(R), Clean Edge(R), and ISE Clean Edge Water Index are registered
trademarks and service marks of Nasdaq, Inc. and Clean Edge, Inc., respectively
(together with its affiliates hereinafter referred to as the "Corporations") and
are licensed for use by First Trust. The Fund has not been passed on by the
Corporations as to its legality or suitability. The Fund is not issued,
endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 14
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST WATER ETF (FIW) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust ISE Clean Edge Russell 3000(R)
Water ETF Water Index Index
<S> <C> <C> <C>
12/10 $10,000 $10,000 $10,000
06/11 10,468 10,506 10,635
12/11 9,438 9,505 10,102
06/12 10,374 10,491 11,044
12/12 11,971 12,145 11,761
06/13 12,820 13,061 13,415
12/13 15,672 16,019 15,708
06/14 16,119 16,520 16,798
12/14 15,729 16,173 17,680
06/15 14,688 15,148 18,023
12/15 14,186 14,677 17,765
06/16 16,653 17,290 18,408
12/16 18,755 19,524 20,026
06/17 20,477 21,326 21,814
12/17 23,303 24,339 24,257
06/18 23,117 24,164 25,038
12/18 21,231 22,248 22,985
06/19 26,541 27,899 27,285
12/19 29,110 30,686 30,114
06/20 27,154 28,762 29,066
12/20 35,281 37,486 36,402
06/21 40,912 43,589 41,908
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 15
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NATURAL GAS ETF (FCG)
The First Trust Natural Gas 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-Revere Natural Gas(TM) Index (the
"Index"). The Fund will normally invest at least 90% of its net assets
(including investment borrowings) in the common stocks, depositary receipts and
master limited partnership ("MLP") units that comprise the Index. The Index is
designed to track the performance of mid and large capitalization companies that
derive a substantial portion of their revenue from mid-stream activities and/or
the exploration and production of natural gas. The Fund's shares are listed for
trading on the NYSE Arca. The Index is rebalanced and reconstituted quarterly
and the Fund will make corresponding changes to its portfolio shortly after the
Index changes are made public. The first day of secondary market trading in
shares of the Fund was May 11, 2007.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (5/8/07) Ended Ended (5/8/07)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 87.12% 126.56% -5.55% -15.72% -10.78% -24.84% -81.92% -80.09%
Market Value 87.23% 127.02% -5.54% -15.71% -10.78% -24.79% -81.90% -80.07%
INDEX PERFORMANCE
ISE-Revere Natural Gas(TM) Index 87.92% 127.00% -5.86% -15.88% -10.71% -26.08% -82.25% -79.87%
S&P Composite 1500(R) Energy Index 47.15% 52.70% -1.37% -0.71% 0.97% -6.67% -6.88% 14.57%
Russell 3000(R) Index 15.11% 44.16% 17.89% 14.70% 10.03% 127.67% 294.05% 286.57%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SUB-INDUSTRY CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Oil & Gas Exploration & Production 84.1%
Oil & Gas Storage & Transportation 11.1
Integrated Oil & Gas 4.8
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
DCP Midstream, L.P. 4.8%
Occidental Petroleum Corp. 4.8
ConocoPhillips 4.3
Devon Energy Corp. 4.3
Diamondback Energy, Inc. 4.3
Western Midstream Partners, L.P. 4.3
Pioneer Natural Resources Co. 4.2
EOG Resources, Inc. 4.1
Marathon Oil Corp. 4.0
Hess Corp. 3.9
-------
Total 43.0%
=======
-----------------------------
"Nasdaq(R) and ISE-Revere Natural Gas(TM) Index are registered trademarks and
service marks of Nasdaq, Inc. (together with its affiliates hereinafter referred
to as the "Corporations") and are licensed for use by First Trust. The Fund has
not been passed on by the Corporations as to its legality or suitability. The
Fund is not issued, endorsed, sold or promoted by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 16
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NATURAL GAS ETF (FCG) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust Natural ISE-Revere Natural S&P Composite 1500(R) Russell 3000(R)
Gas ETF Gas(TM) Index Energy Index Index
<S> <C> <C> <C> <C>
12/10 $10,000 $10,000 $10,000 $10,000
06/11 11,021 11,061 11,149 10,635
12/11 9,316 9,382 10,392 10,102
06/12 8,433 8,519 10,086 11,044
12/12 8,058 8,168 10,842 11,761
06/13 8,297 8,425 11,896 13,415
12/13 10,083 10,269 13,596 15,708
06/14 12,220 12,473 15,358 16,798
12/14 5,847 5,953 12,349 17,680
06/15 4,985 5,031 11,770 18,023
12/15 2,392 2,400 9,623 17,765
06/16 2,653 2,655 11,121 18,408
12/16 2,858 2,874 12,250 20,026
06/17 2,277 2,297 10,557 21,814
12/17 2,529 2,561 11,999 24,257
06/18 2,610 2,651 12,891 25,038
12/18 1,650 1,676 9,682 22,985
06/19 1,647 1,679 10,872 27,285
12/19 1,388 1,421 10,655 30,114
06/20 880 864 6,797 29,066
12/20 1,066 1,044 7,053 36,402
06/21 1,995 1,962 10,378 41,908
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 17
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CHINDIA ETF (FNI)
The First Trust Chindia 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 ChIndia(TM) Index (the "Index"). The
Fund will normally invest at least 90% of its net assets (including investment
borrowings) in common stocks and depositary receipts that comprise the Index.
The Index is a modified market capitalization weighted index designed to track
the performance of U.S. listed securities issued by small, mid and large
capitalization companies domiciled in China or India. The Fund's shares are
listed for trading on the NYSE Arca. The Index is rebalanced and reconstituted
semi-annually and the Fund will make corresponding changes to its portfolio
shortly after the Index changes are made public. The first day of secondary
market trading in shares of the Fund was May 11, 2007.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (5/8/07) Ended Ended (5/8/07)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 5.91% 54.32% 19.33% 10.66% 9.46% 141.96% 175.40% 259.31%
Market Value 5.86% 54.43% 19.31% 10.68% 9.46% 141.76% 175.84% 259.02%
INDEX PERFORMANCE
ISE ChIndia(TM) Index 6.13% 55.25% 19.97% 11.14% 10.04% 148.55% 187.45% 287.04%
Russell 3000(R) Index 15.11% 44.16% 17.89% 14.70% 10.03% 127.67% 294.05% 286.57%
MSCI Emerging Markets Index 7.45% 40.90% 13.03% 4.28% 4.77% 84.47% 52.12% 93.26%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Consumer Discretionary 41.6%
Information Technology 16.3
Financials 16.0
Communication Services 14.1
Health Care 5.2
Materials 1.8
Real Estate 1.8
Industrials 1.3
Consumer Staples 1.0
Utilities 0.9
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
COUNTRY ALLOCATION(1) LONG-TERM INVESTMENTS
-----------------------------------------------------------
China 60.0%
India 39.4
Hong Kong 0.6
-------
Total 100.0%
=======
(1) Calculated based on country of risk.
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
NIO, Inc., ADR 9.2%
Infosys Ltd., ADR 7.3
Alibaba Group Holding Ltd., ADR 7.1
Pinduoduo, Inc., ADR 6.8
HDFC Bank Ltd., ADR 6.4
ICICI Bank Ltd., ADR 6.4
Bilibili, Inc., ADR 4.4
JD.com, Inc., ADR 4.1
Tata Motors Ltd., ADR 4.0
Baidu, Inc., ADR 4.0
-------
Total 59.7%
=======
-----------------------------
Nasdaq(R) and ISE ChIndia(TM) Index are registered trademarks and service marks
of Nasdaq, Inc. (together with its affiliates hereinafter referred to as the
"Corporations") and are licensed for use by First Trust. The Fund has not been
passed on by the Corporations as to its legality or suitability. The Fund is not
issued, endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 18
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CHINDIA ETF (FNI) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust ISE ChIndia(TM) Russell 3000(R) MSCI Emerging
Chindia ETF Index Index Markets Index
<S> <C> <C> <C> <C>
12/10 $10,000 $10,000 $10,000 $10,000
06/11 10,164 10,221 10,635 10,088
12/11 7,398 7,416 10,102 8,158
06/12 7,843 7,874 11,044 8,479
12/12 8,663 8,715 11,761 9,645
06/13 8,770 8,848 13,415 8,722
12/13 11,765 11,888 15,708 9,394
06/14 12,500 12,658 16,798 9,971
12/14 12,044 12,215 17,680 9,189
06/15 12,900 13,108 18,023 9,460
12/15 12,005 12,234 17,765 7,818
06/16 11,568 11,820 18,408 8,319
12/16 11,747 12,047 20,026 8,693
06/17 15,080 15,503 21,814 10,295
12/17 17,310 17,828 24,257 11,934
06/18 16,976 17,523 25,038 11,139
12/18 13,730 14,215 22,985 10,193
06/19 15,954 16,559 27,285 11,273
12/19 17,706 18,417 30,114 12,072
06/20 18,136 18,923 29,066 10,891
12/20 26,426 27,681 36,402 14,282
06/21 27,988 29,378 41,908 15,346
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 19
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK INDEX FUND (QABA)
The First Trust NASDAQ(R) ABA Community Bank 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) ABA
Community Bank Index(SM) (the "Index"). The Fund will normally invest at least
90% of its net assets (including investment borrowings) in the common stocks
that comprise the Index. The Index is designed to track the performance of
small, mid and large capitalization companies that comprise the community
banking industry. The Fund's shares are listed for trading on the Nasdaq. The
Index is rebalanced quarterly and reconstituted semi-annually and the Fund will
make corresponding changes to its portfolio shortly after the Index changes are
made public. The first day of secondary market trading in shares of the Fund was
July 1, 2009.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (6/29/09) Ended Ended (6/29/09)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 24.44% 59.68% 9.92% 10.42% 10.66% 60.49% 169.48% 237.36%
Market Value 24.42% 59.86% 9.95% 10.43% 10.67% 60.66% 169.67% 237.58%
INDEX PERFORMANCE
NASDAQ OMX(R) ABA Community
Bank Index(SM) 24.87% 60.83% 10.64% 11.13% 11.37% 65.77% 187.16% 264.35%
S&P Composite 1500(R) Financials
Index 25.16% 61.15% 16.43% 13.53% 13.91% 113.99% 255.71% 377.34%
Russell 3000(R) Index 15.11% 44.16% 17.89% 14.70% 16.08% 127.67% 294.05% 499.03%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
INDUSTRY CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Banks 89.8%
Thrifts & Mortgage Finance 10.0
IT Services 0.2
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Commerce Bancshares, Inc. 3.2%
First Citizens BancShares, Inc., Class A 2.7
First Financial Bankshares, Inc. 2.6
Pinnacle Financial Partners, Inc. 2.5
BOK Financial Corp. 2.2
South State Corp. 2.1
TFS Financial Corp. 2.1
Bank OZK 2.0
Valley National Bancorp 2.0
Glacier Bancorp, Inc. 1.9
-------
Total 23.3%
=======
-----------------------------
Nasdaq(R), NASDAQ OMX(R), OMX(R), American Bankers Association(R), ABA(R) and
the NASDAQ OMX(R) ABA Community Bank Index(SM) are registered trademarks and
service marks of Nasdaq, Inc. and American Bankers Association (together with
its affiliates hereinafter referred to as the "Corporations") and are licensed
for use by First Trust. The Fund has not been passed on by the Corporations as
to its legality or suitability. The Fund is not issued, endorsed, sold or
promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO
LIABILITY WITH RESPECT TO THE FUND.
Page 20
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK INDEX FUND (QABA) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust
NASDAQ(R) ABA NASDAQ OMX(R)
Community Bank ABA Community S&P Composite 1500(R) Russell 3000(R)
Index Fund Bank Index(SM) Financials Index Index
<S> <C> <C> <C> <C>
12/10 $10,000 $10,000 $10,000 $10,000
06/11 9,842 9,877 9,780 10,635
12/11 9,353 9,416 8,499 10,102
06/12 10,283 10,388 9,640 11,044
12/12 10,618 10,757 10,791 11,761
06/13 12,582 12,789 12,815 13,415
12/13 15,173 15,472 14,487 15,708
06/14 15,168 15,515 15,236 16,798
12/14 15,585 15,988 16,644 17,680
06/15 17,008 17,504 16,682 18,023
12/15 16,814 17,352 16,525 17,765
06/16 16,528 17,109 16,257 18,408
12/16 23,131 24,030 20,537 20,026
06/17 22,326 23,266 21,816 21,814
12/17 23,259 24,318 24,829 24,257
06/18 24,448 25,636 23,990 25,038
12/18 19,505 20,504 21,593 22,985
06/19 21,889 23,085 25,303 27,285
12/19 23,953 25,340 28,334 30,114
06/20 16,614 17,637 21,585 29,066
12/20 21,313 22,715 27,794 36,407
06/21 26,522 28,364 34,787 41,908
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 21
<PAGE>
--------------------------------------------------------------------------------
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. The total returns would have been lower if certain fees had not been
waived and expenses reimbursed by the Advisor.
Each Fund's per share net asset value ("NAV") is the value of one share of the
Fund and is computed by dividing the value of all assets of the Fund (including
accrued interest and dividends), less all liabilities (including accrued
expenses and dividends declared but unpaid), by the total number of outstanding
shares. The price used to calculate market return ("Market Price") is determined
by using the midpoint of the national best bid and offer price ("NBBO") as of
the time that the Fund's NAV is calculated. Under SEC rules, the NBBO consists
of the highest displayed buy and lowest sell prices among the various exchanges
trading the Fund at the time the Fund's NAV is calculated. Prior to January 1,
2019, the price used was the midpoint between the highest bid and the lowest
offer on the stock exchange on which shares of the Fund were listed for trading
as of the time that the Fund's NAV was calculated. Since shares of each Fund did
not trade in the secondary market until after 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 22
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2021 (UNAUDITED)
As a shareholder of First Trust NASDAQ-100 Equal Weighted Index Fund, First
Trust NASDAQ-100-Technology Sector Index Fund, First Trust NASDAQ-100
Ex-Technology Sector Index Fund, First Trust NASDAQ(R) Clean Edge(R) Green
Energy Index Fund, First Trust S&P REIT Index Fund, First Trust Water ETF, First
Trust Natural Gas ETF, First Trust Chindia ETF or First Trust NASDAQ(R) ABA
Community Bank Index Fund (each a "Fund" and collectively, the "Funds"), you
incur two types of costs: (1) transaction costs; and (2) ongoing costs,
including management fees, distribution and/or service (12b-1) fees, if any, and
other Fund expenses. This Example is intended to help you understand your
ongoing costs 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 June 30, 2021.
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.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO EXPENSES PAID
BEGINNING ENDING BASED ON THE DURING THE
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH SIX-MONTH
JANUARY 1, 2021 JUNE 30, 2021 PERIOD (a) PERIOD (b)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX
FUND (QQEW)
Actual $1,000.00 $1,113.10 0.58% $3.04
Hypothetical (5% return before expenses) $1,000.00 $1,021.92 0.58% $2.91
FIRST TRUST NASDAQ-100-TECHNOLOGY SECTOR INDEX
FUND (QTEC)
Actual $1,000.00 $1,151.40 0.56% $2.99
Hypothetical (5% return before expenses) $1,000.00 $1,022.02 0.56% $2.81
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR
INDEX FUND (QQXT)
Actual $1,000.00 $1,088.70 0.60% $3.11
Hypothetical (5% return before expenses) $1,000.00 $1,021.82 0.60% $3.01
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) GREEN ENERGY
INDEX FUND (QCLN)
Actual $1,000.00 $ 986.10 0.58% $2.86
Hypothetical (5% return before expenses) $1,000.00 $1,021.92 0.58% $2.91
FIRST TRUST S&P REIT INDEX FUND (FRI)
Actual $1,000.00 $1,213.80 0.50% $2.74
Hypothetical (5% return before expenses) $1,000.00 $1,022.32 0.50% $2.51
FIRST TRUST WATER ETF (FIW)
Actual $1,000.00 $1,159.60 0.53% $2.84
Hypothetical (5% return before expenses) $1,000.00 $1,022.17 0.53% $2.66
</TABLE>
Page 23
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO EXPENSES PAID
BEGINNING ENDING BASED ON THE DURING THE
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH SIX-MONTH
JANUARY 1, 2021 JUNE 30, 2021 PERIOD (a) PERIOD (b)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIRST TRUST NATURAL GAS ETF (FCG)
Actual $1,000.00 $1,871.20 0.64% $4.56
Hypothetical (5% return before expenses) $1,000.00 $1,021.62 0.64% $3.21
FIRST TRUST CHINDIA ETF (FNI)
Actual $1,000.00 $1,059.10 0.58% $2.96
Hypothetical (5% return before expenses) $1,000.00 $1,021.92 0.58% $2.91
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK
INDEX FUND (QABA)
Actual $1,000.00 $1,244.40 0.60% $3.34
Hypothetical (5% return before expenses) $1,000.00 $1,021.82 0.60% $3.01
</TABLE>
(a) These expense ratios reflect an expense cap for certain Funds. See Note 3
in 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 (January 1,
2021 through June 30, 2021), multiplied by 181/365 (to reflect the
six-month period).
Page 24
<PAGE>
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX FUND (QQEW)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 100.0%
AUTOMOBILES -- 1.0%
19,783 Tesla, Inc. (a) $ 13,446,505
--------------
BEVERAGES -- 2.9%
362,385 Keurig Dr Pepper, Inc. 12,770,448
134,311 Monster Beverage Corp. (a) 12,269,310
84,637 PepsiCo, Inc. 12,540,664
--------------
37,580,422
--------------
BIOTECHNOLOGY -- 9.0%
69,373 Alexion Pharmaceuticals, Inc. (a) 12,744,514
52,278 Amgen, Inc. 12,742,762
32,337 Biogen, Inc. (a) 11,197,333
187,855 Gilead Sciences, Inc. 12,935,695
148,238 Incyte Corp. (a) 12,471,263
62,714 Moderna, Inc. (a) 14,736,536
23,097 Regeneron Pharmaceuticals,
Inc. (a) 12,900,598
80,802 Seagen, Inc. (a) 12,757,020
66,247 Vertex Pharmaceuticals, Inc. (a) 13,357,383
--------------
115,843,104
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 2.0%
34,565 Cintas Corp. 13,203,830
96,882 Copart, Inc. (a) 12,771,954
--------------
25,975,784
--------------
COMMUNICATIONS EQUIPMENT
-- 1.0%
238,333 Cisco Systems, Inc. 12,631,649
--------------
ELECTRIC UTILITIES -- 2.9%
149,866 American Electric Power Co., Inc. 12,677,165
274,575 Exelon Corp. 12,166,418
183,958 Xcel Energy, Inc. 12,119,153
--------------
36,962,736
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 1.0%
74,523 CDW Corp. 13,015,442
--------------
ENTERTAINMENT -- 4.0%
134,944 Activision Blizzard, Inc. 12,879,056
88,428 Electronic Arts, Inc. 12,718,599
114,227 NetEase, Inc., ADR 13,164,662
24,649 Netflix, Inc. (a) 13,019,848
--------------
51,782,165
--------------
FOOD & STAPLES RETAILING -- 2.0%
32,555 Costco Wholesale Corp. 12,881,037
242,074 Walgreens Boots Alliance, Inc. 12,735,513
--------------
25,616,550
--------------
FOOD PRODUCTS -- 1.9%
307,114 Kraft Heinz (The) Co. 12,524,109
198,600 Mondelez International, Inc.,
Class A 12,400,584
--------------
24,924,693
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 4.0%
20,325 Align Technology, Inc. (a) $ 12,418,575
29,799 Dexcom, Inc. (a) 12,724,173
20,534 IDEXX Laboratories, Inc. (a) 12,968,248
14,027 Intuitive Surgical, Inc. (a) 12,899,790
--------------
51,010,786
--------------
HEALTH CARE TECHNOLOGY -- 1.0%
157,421 Cerner Corp. 12,304,025
--------------
HOTELS, RESTAURANTS & LEISURE
-- 2.9%
5,508 Booking Holdings, Inc. (a) 12,051,999
88,636 Marriott International, Inc.,
Class A (a) 12,100,587
113,016 Starbucks Corp. 12,636,319
--------------
36,788,905
--------------
INTERACTIVE MEDIA & SERVICES
-- 4.1%
2,564 Alphabet, Inc., Class A (a) 6,260,750
2,473 Alphabet, Inc., Class C (a) 6,198,129
67,344 Baidu, Inc., ADR (a) 13,731,442
37,304 Facebook, Inc., Class A (a) 12,970,974
79,966 Match Group, Inc. (a) 12,894,517
--------------
52,055,812
--------------
INTERNET & DIRECT MARKETING
RETAIL -- 6.0%
3,545 Amazon.com, Inc. (a) 12,195,367
195,060 eBay, Inc. 13,695,163
170,679 JD.com, Inc., ADR (a) 13,621,891
8,422 MercadoLibre, Inc. (a) 13,119,707
98,520 Pinduoduo, Inc., ADR (a) 12,514,010
332,269 Trip.com Group Ltd., ADR (a) 11,782,259
--------------
76,928,397
--------------
IT SERVICES -- 6.9%
64,054 Automatic Data Processing, Inc. 12,722,406
181,444 Cognizant Technology Solutions
Corp., Class A 12,566,812
114,888 Fiserv, Inc. (a) 12,280,378
51,390 Okta, Inc. (a) 12,574,105
121,202 Paychex, Inc. 13,004,975
43,457 PayPal Holdings, Inc. (a) 12,666,846
55,435 VeriSign, Inc. (a) 12,621,995
--------------
88,437,517
--------------
LEISURE PRODUCTS -- 1.1%
113,118 Peloton Interactive, Inc.,
Class A (a) 14,028,894
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 1.0%
27,361 Illumina, Inc. (a) 12,947,499
--------------
MACHINERY -- 1.0%
141,764 PACCAR, Inc. 12,652,437
--------------
See Notes to Financial Statements Page 25
<PAGE>
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX FUND (QQEW)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDIA -- 3.9%
18,136 Charter Communications, Inc.,
Class A (a) $ 13,084,217
219,108 Comcast Corp., Class A 12,493,538
164,593 Fox Corp., Class A 6,111,338
172,796 Fox Corp., Class B 6,082,419
1,959,519 Sirius XM Holdings, Inc. (b) 12,815,255
--------------
50,586,767
--------------
MULTILINE RETAIL -- 1.0%
123,751 Dollar Tree, Inc. (a) 12,313,225
--------------
PROFESSIONAL SERVICES -- 1.0%
72,266 Verisk Analytics, Inc. 12,626,316
--------------
ROAD & RAIL -- 1.0%
392,542 CSX Corp. 12,592,747
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 18.5%
145,963 Advanced Micro Devices, Inc. (a) 13,710,304
76,445 Analog Devices, Inc. 13,160,771
94,449 Applied Materials, Inc. 13,449,538
18,456 ASML Holding N.V. 12,750,143
26,772 Broadcom, Inc. 12,765,960
224,070 Intel Corp. 12,579,290
40,636 KLA Corp. 13,174,597
20,204 Lam Research Corp. 13,146,743
226,338 Marvell Technology, Inc. 13,202,295
123,985 Maxim Integrated Products, Inc. 13,063,060
85,234 Microchip Technology, Inc. 12,762,939
160,964 Micron Technology, Inc. (a) 13,678,721
16,206 NVIDIA Corp. 12,966,421
63,957 NXP Semiconductors N.V. 13,157,234
93,354 QUALCOMM, Inc. 13,343,087
73,565 Skyworks Solutions, Inc. 14,106,089
67,532 Texas Instruments, Inc. 12,986,404
93,586 Xilinx, Inc. 13,536,279
--------------
237,539,875
--------------
SOFTWARE -- 12.9%
22,015 Adobe, Inc. (a) 12,892,865
37,300 ANSYS, Inc. (a) 12,945,338
46,525 Atlassian Corp. PLC, Class A (a) 11,950,411
44,585 Autodesk, Inc. (a) 13,014,361
94,615 Cadence Design Systems, Inc. (a) 12,945,224
104,403 Check Point Software Technologies
Ltd. (a) 12,124,320
45,124 DocuSign, Inc. (a) 12,615,317
26,109 Intuit, Inc. 12,797,849
47,595 Microsoft Corp. 12,893,485
96,232 Splunk, Inc. (a) 13,913,223
46,744 Synopsys, Inc. (a) 12,891,528
52,497 Workday, Inc., Class A (a) 12,533,134
32,965 Zoom Video Communications, Inc.,
Class A (a) 12,758,444
--------------
166,275,499
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SPECIALTY RETAIL -- 2.0%
23,180 O'Reilly Automotive, Inc. (a) $ 13,124,748
106,146 Ross Stores, Inc. 13,162,104
--------------
26,286,852
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 1.0%
94,719 Apple, Inc. 12,972,714
--------------
TEXTILES, APPAREL & LUXURY GOODS
-- 1.0%
35,403 Lululemon Athletica, Inc. (a) 12,921,033
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 1.0%
245,497 Fastenal Co. 12,765,844
--------------
WIRELESS TELECOMMUNICATION
SERVICES -- 1.0%
84,960 T-Mobile US, Inc. (a) 12,304,757
--------------
TOTAL COMMON STOCKS
-- 100.0% 1,284,118,951
(Cost $971,519,524) --------------
MONEY MARKET FUNDS -- 0.9%
11,643,630 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
0.01% (c) (d) 11,643,630
(Cost $11,643,630) --------------
TOTAL INVESTMENTS -- 100.9% 1,295,762,581
(Cost $983,163,154) (e)
NET OTHER ASSETS AND
LIABILITIES -- (0.9)% (11,640,471)
--------------
NET ASSETS -- 100.0% $1,284,122,110
==============
(a) Non-income producing security.
(b) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $11,382,354 and the
total value of the collateral held by the Fund is $11,643,630.
(c) Rate shown reflects yield as of June 30, 2021.
(d) This security serves as collateral for securities on loan.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $316,904,916 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $4,305,489. The net unrealized appreciation was
$312,599,427.
ADR - American Depositary Receipt
Page 26 See Notes to Financial Statements
<PAGE>
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX FUND (QQEW)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $1,284,118,951 $ -- $ --
Money Market
Funds 11,643,630 -- --
------------------------------------------------
Total Investments $1,295,762,581 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 11,382,354
Non-cash Collateral(2) (11,382,354)
--------------
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 June 30, 2021, the value of the collateral received from each borrower
exceeded the value of the related securities loaned. This amount is
disclosed on the Portfolio of Investments.
See Notes to Financial Statements Page 27
<PAGE>
FIRST TRUST NASDAQ-100-TECHNOLOGY SECTOR INDEX FUND (QTEC)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 100.0%
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 2.5%
513,976 CDW Corp. $ 89,765,908
--------------
INTERACTIVE MEDIA & SERVICES
-- 10.0%
17,735 Alphabet, Inc., Class A (a) 43,305,146
16,965 Alphabet, Inc., Class C (a) 42,519,719
457,266 Baidu, Inc., ADR (a) 93,236,537
258,470 Facebook, Inc., Class A (a) 89,872,604
553,580 Match Group, Inc. (a) 89,264,775
--------------
358,198,781
--------------
IT SERVICES -- 7.3%
1,247,175 Cognizant Technology Solutions
Corp., Class A 86,379,341
356,127 Okta, Inc. (a) 87,137,154
381,803 VeriSign, Inc. (a) 86,932,725
--------------
260,449,220
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 45.7%
1,006,580 Advanced Micro Devices, Inc. (a) 94,548,059
525,353 Analog Devices, Inc. 90,444,773
649,295 Applied Materials, Inc. 92,459,608
126,972 ASML Holding N.V. 87,717,337
183,834 Broadcom, Inc. 87,659,405
1,530,574 Intel Corp. 85,926,424
279,845 KLA Corp. 90,728,548
139,077 Lam Research Corp. 90,497,404
1,570,058 Marvell Technology, Inc. 91,581,483
852,923 Maxim Integrated Products, Inc. 89,863,967
585,133 Microchip Technology, Inc. 87,617,815
1,107,304 Micron Technology, Inc. (a) 94,098,694
114,287 NVIDIA Corp. 91,441,029
441,258 NXP Semiconductors N.V. 90,775,596
640,655 QUALCOMM, Inc. 91,568,819
506,251 Skyworks Solutions, Inc. 97,073,629
465,434 Texas Instruments, Inc. 89,502,958
645,899 Xilinx, Inc. 93,422,831
--------------
1,636,928,379
--------------
SOFTWARE -- 32.0%
150,652 Adobe, Inc. (a) 88,227,837
257,089 ANSYS, Inc. (a) 89,225,308
319,654 Atlassian Corp. PLC, Class A (a) 82,106,327
306,522 Autodesk, Inc. (a) 89,473,772
653,078 Cadence Design Systems, Inc. (a) 89,354,132
717,593 Check Point Software Technologies
Ltd. (a) 83,334,075
310,488 DocuSign, Inc. (a) 86,803,130
179,990 Intuit, Inc. 88,225,698
328,439 Microsoft Corp. 88,974,125
660,059 Splunk, Inc. (a) 95,431,330
320,496 Synopsys, Inc. (a) 88,389,592
360,299 Workday, Inc., Class A (a) 86,017,783
227,680 Zoom Video Communications, Inc.,
Class A (a) 88,118,991
--------------
1,143,682,100
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 2.5%
653,127 Apple, Inc. $ 89,452,274
--------------
TOTAL INVESTMENTS -- 100.0% 3,578,476,662
(Cost $2,527,971,871) (b)
NET OTHER ASSETS AND
LIABILITIES -- (0.0)% (416,382)
--------------
NET ASSETS -- 100.0% $3,578,060,280
==============
(a) Non-income producing security.
(b) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $1,061,133,083 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $10,628,292. The net unrealized appreciation
was $1,050,504,791.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $3,578,476,662 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
Page 28 See Notes to Financial Statements
<PAGE>
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR INDEX FUND (QQXT)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 99.9%
AUTOMOBILES -- 1.8%
3,799 Tesla, Inc. (b) $ 2,582,180
--------------
BEVERAGES -- 4.9%
69,442 Keurig Dr Pepper, Inc. 2,447,136
25,740 Monster Beverage Corp. (b) 2,351,349
16,227 PepsiCo, Inc. 2,404,355
--------------
7,202,840
--------------
BIOTECHNOLOGY -- 15.1%
13,295 Alexion Pharmaceuticals, Inc. (b) 2,442,425
10,023 Amgen, Inc. 2,443,106
6,185 Biogen, Inc. (b) 2,141,680
35,966 Gilead Sciences, Inc. 2,476,619
28,346 Incyte Corp. (b) 2,384,749
12,038 Moderna, Inc. (b) 2,828,689
4,427 Regeneron Pharmaceuticals,
Inc. (b) 2,472,657
15,473 Seagen, Inc. (b) 2,442,877
12,710 Vertex Pharmaceuticals, Inc. (b) 2,562,717
--------------
22,195,519
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 3.4%
6,624 Cintas Corp. 2,530,368
18,557 Copart, Inc. (b) 2,446,369
--------------
4,976,737
--------------
COMMUNICATIONS EQUIPMENT
-- 1.7%
45,697 Cisco Systems, Inc. 2,421,941
--------------
ELECTRIC UTILITIES -- 4.8%
28,726 American Electric Power Co., Inc. 2,429,932
52,655 Exelon Corp. 2,333,143
35,252 Xcel Energy, Inc. 2,322,402
--------------
7,085,477
--------------
ENTERTAINMENT -- 6.8%
25,832 Activision Blizzard, Inc. 2,465,406
16,935 Electronic Arts, Inc. 2,435,761
21,883 NetEase, Inc., ADR 2,522,016
4,724 Netflix, Inc. (b) 2,495,264
--------------
9,918,447
--------------
FOOD & STAPLES RETAILING -- 3.3%
6,238 Costco Wholesale Corp. 2,468,190
46,469 Walgreens Boots Alliance, Inc. 2,444,734
--------------
4,912,924
--------------
FOOD PRODUCTS -- 3.3%
58,938 Kraft Heinz (The) Co. 2,403,492
38,117 Mondelez International, Inc.,
Class A 2,380,025
--------------
4,783,517
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 6.7%
3,905 Align Technology, Inc. (b) 2,385,955
5,711 Dexcom, Inc. (b) 2,438,597
3,939 IDEXX Laboratories, Inc. (b) 2,487,675
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES
(CONTINUED)
2,689 Intuitive Surgical, Inc. (b) $ 2,472,912
--------------
9,785,139
--------------
HEALTH CARE TECHNOLOGY -- 1.6%
30,193 Cerner Corp. 2,359,885
--------------
HOTELS, RESTAURANTS & LEISURE
-- 4.8%
1,059 Booking Holdings, Inc. (b) 2,317,187
17,003 Marriott International, Inc.,
Class A (b) 2,321,250
21,705 Starbucks Corp. 2,426,836
--------------
7,065,273
--------------
INTERNET & DIRECT MARKETING
RETAIL -- 10.1%
681 Amazon.com, Inc. (b) 2,342,749
37,418 eBay, Inc. 2,627,118
32,737 JD.com, Inc., ADR (b) 2,612,740
1,617 MercadoLibre, Inc. (b) 2,518,946
18,904 Pinduoduo, Inc., ADR (b) 2,401,186
63,699 Trip.com Group Ltd., ADR (b) 2,258,767
--------------
14,761,506
--------------
IT SERVICES -- 6.6%
12,277 Automatic Data Processing, Inc. 2,438,458
22,016 Fiserv, Inc. (b) 2,353,290
23,225 Paychex, Inc. 2,492,042
8,375 PayPal Holdings, Inc. (b) 2,441,145
--------------
9,724,935
--------------
LEISURE PRODUCTS -- 1.8%
21,766 Peloton Interactive, Inc.,
Class A (b) 2,699,419
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 1.7%
5,248 Illumina, Inc. (b) 2,483,406
--------------
MACHINERY -- 1.7%
27,182 PACCAR, Inc. 2,425,994
--------------
MEDIA -- 6.6%
3,476 Charter Communications, Inc.,
Class A (b) 2,507,760
42,036 Comcast Corp., Class A 2,396,893
31,551 Fox Corp., Class A 1,171,489
33,111 Fox Corp., Class B 1,165,507
376,165 Sirius XM Holdings, Inc. (c) 2,460,119
--------------
9,701,768
--------------
MULTILINE RETAIL -- 1.6%
23,726 Dollar Tree, Inc. (b) 2,360,737
--------------
PROFESSIONAL SERVICES -- 1.6%
13,861 Verisk Analytics, Inc. 2,421,794
--------------
ROAD & RAIL -- 1.6%
75,228 CSX Corp. 2,413,314
--------------
See Notes to Financial Statements Page 29
<PAGE>
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR INDEX FUND (QQXT)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
SPECIALTY RETAIL -- 3.4%
4,444 O'Reilly Automotive, Inc. (b) $ 2,516,237
20,402 Ross Stores, Inc. 2,529,848
--------------
5,046,085
--------------
TEXTILES, APPAREL & LUXURY GOODS
-- 1.7%
6,789 Lululemon Athletica, Inc. (b) 2,477,781
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 1.7%
47,049 Fastenal Co. 2,446,548
--------------
WIRELESS TELECOMMUNICATION
SERVICES -- 1.6%
16,289 T-Mobile US, Inc. (b) 2,359,136
--------------
TOTAL COMMON STOCKS -- 99.9% 146,612,302
(Cost $107,091,614) --------------
MONEY MARKET FUNDS -- 1.7%
2,264,404 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
0.01% (d) (e) 2,264,404
151,412 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 0.01% (d) 151,412
--------------
TOTAL MONEY MARKET FUNDS
-- 1.7% 2,415,816
(Cost $2,415,816) --------------
TOTAL INVESTMENTS -- 101.6% 149,028,118
(Cost $109,507,430) (f)
NET OTHER ASSETS AND
LIABILITIES -- (1.6)% (2,330,736)
--------------
NET ASSETS -- 100.0% $ 146,697,382
==============
(a) The industry allocation is based on Standard & Poor's Global Industry
Classification Standard (GICS), and is different than the industry sector
classification system used by the Index to select securities, which is the
Industry Classification Benchmark (ICB) system, which is maintained by
FTSE International Limited.
(b) Non-income producing security.
(c) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $2,213,633 and the
total value of the collateral held by the Fund is $2,264,404.
(d) Rate shown reflects yield as of June 30, 2021.
(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 June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $40,067,124 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $546,436. The net unrealized appreciation was
$39,520,688.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 146,612,302 $ -- $ --
Money Market
Funds 2,415,816 -- --
------------------------------------------------
Total Investments $ 149,028,118 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 2,213,633
Non-cash Collateral(2) (2,213,633)
--------------
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 June 30, 2021, 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.
Page 30 See Notes to Financial Statements
<PAGE>
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) GREEN ENERGY INDEX FUND (QCLN)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 100.0%
AUTOMOBILES -- 23.7%
5,208,114 NIO, Inc., ADR (a) $ 277,071,665
389,164 Niu Technologies, ADR (a) 12,706,205
321,711 Tesla, Inc. (a) 218,666,967
1,086,809 Workhorse Group, Inc. (a) (b) 18,030,161
3,130,056 XPeng, Inc., ADR (a) 139,037,087
--------------
665,512,085
--------------
CHEMICALS -- 7.6%
984,790 Albemarle Corp. 165,897,723
1,292,302 Livent Corp. (a) 25,018,967
481,555 Sociedad Quimica y Minera de
Chile S.A., ADR 22,791,998
--------------
213,708,688
--------------
CONSTRUCTION & ENGINEERING
-- 0.9%
293,353 Ameresco, Inc., Class A (a) 18,399,100
219,081 Infrastructure and Energy
Alternatives, Inc. (a) (b) 2,817,382
352,893 ReneSola Ltd., ADR (a) (b) 3,211,326
--------------
24,427,808
--------------
ELECTRICAL EQUIPMENT -- 19.3%
314,817 Acuity Brands, Inc. 58,880,224
246,077 American Superconductor
Corp. (a) 4,279,279
1,119,727 Array Technologies, Inc. (a) 17,467,741
2,622,919 Ballard Power Systems,
Inc. (a) (b) 47,527,292
1,275,106 Bloom Energy Corp., Class A (a) 34,262,098
779,395 CBAK Energy Technology,
Inc. (a) (b) 3,670,950
377,663 EnerSys 36,909,005
116,855 Flux Power Holdings, Inc. (a) (b) 1,359,024
2,842,914 FuelCell Energy, Inc. (a) 25,301,935
233,638 LSI Industries, Inc. 1,871,440
271,222 Orion Energy Systems, Inc. (a) 1,554,102
4,794,958 Plug Power, Inc. (a) 163,939,614
1,798,087 Sunrun, Inc. (a) 100,297,293
323,690 TPI Composites, Inc. (a) 15,673,070
280,062 Vicor Corp. (a) 29,613,756
--------------
542,606,823
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 4.7%
338,722 Advanced Energy Industries, Inc. 38,177,357
397,934 Itron, Inc. (a) 39,785,441
216,503 Littelfuse, Inc. 55,162,799
--------------
133,125,597
--------------
INDEPENDENT POWER AND RENEWABLE
ELECTRICITY PRODUCERS -- 10.1%
976,928 Atlantica Sustainable
Infrastructure PLC 36,361,260
420,147 Azure Power Global Ltd. (a) 11,310,357
2,423,689 Brookfield Renewable Partners,
L.P. (c) 93,481,685
720,893 Clearway Energy, Inc., Class C 19,089,247
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
INDEPENDENT POWER AND RENEWABLE
ELECTRICITY PRODUCERS
(CONTINUED)
669,157 NextEra Energy Partners,
L.P. (c) (d) $ 51,096,828
493,621 Ormat Technologies, Inc. 34,321,468
987,254 Sunnova Energy International,
Inc. (a) 37,179,986
--------------
282,840,831
--------------
MACHINERY -- 0.1%
184,220 GreenPower Motor Co.,
Inc. (a) (b) 3,616,239
--------------
MORTGAGE REAL ESTATE INVESTMENT
TRUSTS -- 1.4%
693,642 Hannon Armstrong Sustainable
Infrastructure Capital, Inc. 38,947,998
--------------
OIL, GAS & CONSUMABLE FUELS
-- 0.9%
420,250 Renewable Energy Group, Inc. (a) 26,198,385
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 30.8%
529,015 Canadian Solar, Inc. (a) 23,721,033
1,005,587 Cree, Inc. (a) 98,477,135
514,058 Daqo New Energy Corp., ADR (a) 33,424,051
1,144,902 Enphase Energy, Inc. (a) 210,238,354
937,369 First Solar, Inc. (a) 84,841,268
351,319 JinkoSolar Holding Co., Ltd.,
ADR (a) (b) 19,680,890
379,500 Maxeon Solar Technologies
Ltd. (a) (b) 8,132,685
294,268 O2Micro International Ltd.,
ADR (a) (b) 2,121,672
2,511,698 ON Semiconductor Corp. (a) 96,147,800
534,810 Power Integrations, Inc. 43,886,509
389,779 SolarEdge Technologies, Inc. (a) 107,723,222
1,521,146 SunPower Corp. (a) 44,447,886
415,635 Universal Display Corp. 92,408,130
--------------
865,250,635
--------------
SPECIALTY RETAIL -- 0.5%
370,175 Blink Charging Co. (a) (b) 15,240,105
--------------
TOTAL COMMON STOCKS
-- 100.0% 2,811,475,194
(Cost $2,491,189,899) --------------
MONEY MARKET FUNDS -- 2.4%
67,614,984 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
0.01% (e) (f) 67,614,984
(Cost $67,614,984) --------------
TOTAL INVESTMENTS -- 102.4% 2,879,090,178
(Cost $2,558,804,883) (g)
NET OTHER ASSETS AND
LIABILITIES -- (2.4)% (66,401,054)
--------------
NET ASSETS -- 100.0% $2,812,689,124
==============
See Notes to Financial Statements Page 31
<PAGE>
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) GREEN ENERGY INDEX FUND (QCLN)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
(a) Non-income producing security.
(b) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $64,643,227 and the
total value of the collateral held by the Fund is $67,614,984.
(c) Security is a Master Limited Partnership ("MLP").
(d) NextEra Energy Partners, L.P. is taxed as a "C" corporation for federal
income tax purposes.
(e) Rate shown reflects yield as of June 30, 2021.
(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 June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $386,320,333 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $66,035,038. The net unrealized appreciation
was $320,285,295.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $2,811,475,194 $ -- $ --
Money Market
Funds 67,614,984 -- --
------------------------------------------------
Total Investments $2,879,090,178 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 64,643,227
Non-cash Collateral(2) (64,643,227)
--------------
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 June 30, 2021, 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.
Page 32 See Notes to Financial Statements
<PAGE>
FIRST TRUST S&P REIT INDEX FUND (FRI)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.5%
DIVERSIFIED REITS -- 5.1%
7,348 Alexander & Baldwin, Inc. $ 134,615
5,094 American Assets Trust, Inc. 189,955
6,122 Armada Hoffler Properties, Inc. 81,361
15,812 Broadstone Net Lease, Inc. 370,159
603 CTO Realty Growth, Inc. 32,273
49,362 DigitalBridge Group, Inc. (a) 389,960
14,308 Empire State Realty Trust, Inc.,
Class A 171,696
11,923 Essential Properties Realty
Trust, Inc. 322,398
3,695 Gladstone Commercial Corp. 83,359
9,682 Global Net Lease, Inc. 179,117
1,640 One Liberty Properties, Inc. 46,560
2,039 PS Business Parks, Inc. 301,935
24,705 STORE Capital Corp. 852,570
23,252 VEREIT, Inc. 1,067,964
8,584 Washington Real Estate Investment
Trust 197,432
18,060 WP Carey, Inc. 1,347,637
--------------
5,768,991
--------------
HEALTH CARE REITS -- 11.0%
9,821 CareTrust REIT, Inc. 228,142
2,330 Community Healthcare Trust, Inc. 110,582
24,181 Diversified Healthcare Trust 101,076
5,554 Global Medical REIT, Inc. 81,977
14,375 Healthcare Realty Trust, Inc. 434,125
22,207 Healthcare Trust of America,
Inc., Class A 592,927
54,692 Healthpeak Properties, Inc. 1,820,697
3,994 LTC Properties, Inc. 153,330
59,692 Medical Properties Trust, Inc. 1,199,809
4,652 National Health Investors, Inc. 311,916
7,912 New Senior Investment Group, Inc. 69,467
23,885 Omega Healthcare Investors, Inc. 866,787
21,866 Physicians Realty Trust 403,865
21,915 Sabra Health Care REIT, Inc. 398,853
1,300 Universal Health Realty Income
Trust 80,015
38,070 Ventas, Inc. 2,173,797
42,371 Welltower, Inc. 3,521,030
--------------
12,548,395
--------------
HOTEL & RESORT REITS -- 3.7%
21,110 Apple Hospitality REIT, Inc. 322,139
4,934 Chatham Lodging Trust (a) 63,501
3,979 CorePoint Lodging, Inc. (a) 42,575
21,336 DiamondRock Hospitality Co. (a) 206,959
3,733 Hersha Hospitality Trust (a) 40,167
71,656 Host Hotels & Resorts, Inc. (a) 1,224,601
23,999 Park Hotels & Resorts, Inc. (a) 494,619
13,334 Pebblebrook Hotel Trust 314,016
16,737 RLJ Lodging Trust 254,905
5,588 Ryman Hospitality Properties,
Inc. (a) 441,228
16,725 Service Properties Trust 210,735
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
HOTEL & RESORT REITS (CONTINUED)
10,770 Summit Hotel Properties, Inc. (a) $ 100,484
21,945 Sunstone Hotel Investors,
Inc. (a) 272,557
11,550 Xenia Hotels & Resorts, Inc. (a) 216,331
--------------
4,204,817
--------------
INDUSTRIAL REITS -- 14.2%
25,627 Americold Realty Trust 969,982
38,055 Duke Realty Corp. 1,801,904
4,061 EastGroup Properties, Inc. 667,831
13,105 First Industrial Realty Trust,
Inc. 684,474
6,627 Industrial Logistics Properties
Trust 173,230
2,428 Innovative Industrial Properties,
Inc. 463,797
28,175 Lexington Realty Trust 336,691
9,975 Monmouth Real Estate Investment
Corp. 186,732
2,985 Plymouth Industrial REIT, Inc. 59,760
75,075 Prologis, Inc. 8,973,715
13,605 Rexford Industrial Realty, Inc. 774,805
16,205 STAG Industrial, Inc. 606,553
7,059 Terreno Realty Corp. 455,447
--------------
16,154,921
--------------
OFFICE REITS -- 9.4%
13,922 Alexandria Real Estate Equities,
Inc. 2,532,969
14,413 Boston Properties, Inc. 1,651,586
17,339 Brandywine Realty Trust 237,718
2,290 CIM Commercial Trust Corp. 20,495
4,403 City Office REIT, Inc. 54,729
11,657 Columbia Property Trust, Inc. 202,715
11,400 Corporate Office Properties Trust 319,086
15,085 Cousins Properties, Inc. 554,826
16,740 Douglas Emmett, Inc. 562,799
8,511 Easterly Government Properties,
Inc. 179,412
12,374 Equity Commonwealth 324,199
9,803 Franklin Street Properties Corp. 51,564
10,559 Highwoods Properties, Inc. 476,950
15,319 Hudson Pacific Properties, Inc. 426,175
11,209 JBG SMITH Properties 353,196
10,755 Kilroy Realty Corp. 748,978
8,747 Mack-Cali Realty Corp. 150,011
4,905 Office Properties Income Trust 143,765
16,886 Paramount Group, Inc. 170,042
12,586 Piedmont Office Realty Trust,
Inc., Class A 232,463
7,039 SL Green Realty Corp. 563,120
15,934 Vornado Realty Trust 743,640
--------------
10,700,438
--------------
RESIDENTIAL REITS -- 18.5%
13,992 American Campus Communities,
Inc. 653,706
27,790 American Homes 4 Rent, Class A 1,079,641
15,914 Apartment Income REIT Corp. 754,801
See Notes to Financial Statements Page 33
<PAGE>
FIRST TRUST S&P REIT INDEX FUND (FRI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
RESIDENTIAL REITS (CONTINUED)
15,229 Apartment Investment and
Management Co., Class A $ 102,187
14,168 AvalonBay Communities, Inc. 2,956,720
2,862 Bluerock Residential Growth
REIT, Inc. 29,107
1,159 BRT Apartments Corp. 20,097
9,912 Camden Property Trust 1,315,025
1,316 Centerspace 103,832
1,370 Clipper Realty, Inc. 10,070
17,205 Equity LifeStyle Properties, Inc. 1,278,504
34,918 Equity Residential 2,688,686
6,595 Essex Property Trust, Inc. 1,978,566
10,366 Independence Realty Trust, Inc. 188,972
57,606 Invitation Homes, Inc. 2,148,128
11,617 Mid-America Apartment
Communities, Inc. 1,956,535
2,294 NexPoint Residential Trust, Inc. 126,124
5,167 Preferred Apartment Communities,
Inc., Class A 50,378
11,348 Sun Communities, Inc. 1,945,047
30,124 UDR, Inc. 1,475,474
4,265 UMH Properties, Inc. 93,062
--------------
20,954,662
--------------
RETAIL REITS -- 13.4%
8,758 Acadia Realty Trust 192,326
6,914 Agree Realty Corp. 487,368
219 Alexander's, Inc. 58,681
11,045 American Finance Trust, Inc. 93,662
30,136 Brixmor Property Group, Inc. 689,813
7,182 Federal Realty Investment Trust 841,515
3,786 Getty Realty Corp. 117,934
43,988 Kimco Realty Corp. 917,150
8,574 Kite Realty Group Trust 188,714
16,977 Macerich (The) Co. 309,830
17,818 National Retail Properties, Inc. 835,308
2,519 NETSTREIT Corp. 58,088
6,273 Pennsylvania Real Estate
Investment Trust (a) 15,620
37,911 Realty Income Corp. 2,530,180
16,032 Regency Centers Corp. 1,027,170
12,054 Retail Opportunity Investments
Corp. 212,874
21,792 Retail Properties of America,
Inc., Class A 249,518
1,755 Retail Value, Inc. 38,171
8,238 RPT Realty 106,929
1,311 Saul Centers, Inc. 59,585
4,036 Seritage Growth Properties,
Class A (a) 74,262
33,341 Simon Property Group, Inc. 4,350,334
17,134 SITE Centers Corp. 258,038
11,667 Spirit Realty Capital, Inc. 558,149
10,229 Tanger Factory Outlet Centers,
Inc. 192,817
11,164 Urban Edge Properties 213,232
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
RETAIL REITS (CONTINUED)
3,055 Urstadt Biddle Properties, Inc.,
Class A $ 59,206
12,174 Weingarten Realty Investors 390,420
4,052 Whitestone REIT 33,429
--------------
15,160,323
--------------
SPECIALIZED REITS -- 24.2%
4,363 CoreSite Realty Corp. 587,260
20,449 CubeSmart 947,198
12,437 CyrusOne, Inc. 889,494
28,577 Digital Realty Trust, Inc. 4,299,695
7,589 EPR Properties (a) 399,788
9,090 Equinix, Inc. 7,295,634
13,572 Extra Space Storage, Inc. 2,223,365
2,817 Farmland Partners, Inc. 33,945
7,729 Four Corners Property Trust, Inc. 213,398
22,206 Gaming and Leisure Properties,
Inc. 1,028,804
12,342 GEO Group (The), Inc. 87,875
2,652 Gladstone Land Corp. 63,807
29,302 Iron Mountain, Inc. 1,240,061
7,799 Life Storage, Inc. 837,223
6,996 National Storage Affiliates Trust 353,718
15,450 Public Storage 4,645,660
6,979 QTS Realty Trust, Inc., Class A 539,477
1,459 Safehold, Inc. 114,531
54,501 VICI Properties, Inc. 1,690,621
--------------
27,491,554
--------------
TOTAL COMMON STOCKS -- 99.5% 112,984,101
(Cost $111,980,383) --------------
MONEY MARKET FUNDS -- 0.2%
196,377 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class 0.01% (b) 196,377
(Cost $196,377) --------------
TOTAL INVESTMENTS -- 99.7% 113,180,478
(Cost $112,176,760) (c)
NET OTHER ASSETS AND
LIABILITIES -- 0.3% 293,981
--------------
NET ASSETS -- 100.0% $ 113,474,459
==============
(a) Non-income producing security.
(b) Rate shown reflects yield as of June 30, 2021.
(c) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $11,353,683 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $10,349,965. The net unrealized appreciation
was $1,003,718.
Page 34 See Notes to Financial Statements
<PAGE>
FIRST TRUST S&P REIT INDEX FUND (FRI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 112,984,101 $ -- $ --
Money Market
Funds 196,377 -- --
------------------------------------------------
Total Investments $ 113,180,478 $ -- $ --
================================================
* See Portfolio of Investments for Subindustry breakout.
See Notes to Financial Statements Page 35
<PAGE>
FIRST TRUST WATER ETF (FIW)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 100.0%
BEVERAGES -- 2.1%
1,313,500 Primo Water Corp. $ 21,974,855
--------------
BUILDING PRODUCTS -- 7.2%
553,268 A.O. Smith Corp. 39,868,492
298,558 Advanced Drainage Systems, Inc. 34,802,906
--------------
74,671,398
--------------
CHEMICALS -- 3.6%
179,304 Ecolab, Inc. 36,931,245
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 4.0%
240,006 Montrose Environmental Group,
Inc. (a) 12,878,722
237,375 Tetra Tech, Inc. 28,969,245
--------------
41,847,967
--------------
CONSTRUCTION & ENGINEERING
-- 6.2%
567,421 AECOM (a) 35,929,098
119,031 Valmont Industries, Inc. 28,097,267
--------------
64,026,365
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 3.9%
172,844 Badger Meter, Inc. 16,959,453
240,131 Itron, Inc. (a) 24,008,298
--------------
40,967,751
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 8.8%
170,880 Danaher Corp. 45,857,357
72,175 IDEXX Laboratories, Inc. (a) 45,582,121
--------------
91,439,478
--------------
INDUSTRIAL CONGLOMERATES -- 4.5%
99,402 Roper Technologies, Inc. 46,738,820
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 4.4%
307,526 Agilent Technologies, Inc. 45,455,418
--------------
MACHINERY -- 35.0%
666,551 Energy Recovery, Inc. (a) 15,184,032
764,579 Evoqua Water Technologies
Corp. (a) 25,827,479
760,944 Flowserve Corp. 30,681,262
375,083 Franklin Electric Co., Inc. 30,239,192
366,725 Gorman-Rupp (The) Co. 12,630,009
192,327 IDEX Corp. 42,321,556
117,113 Lindsay Corp. 19,356,437
461,865 Mueller Industries, Inc. 20,003,373
1,456,164 Mueller Water Products, Inc.,
Class A 20,997,885
671,212 Pentair PLC 45,300,098
626,381 Rexnord Corp. 31,344,105
164,530 Watts Water Technologies, Inc.,
Class A 24,006,572
377,048 Xylem, Inc. 45,230,678
--------------
363,122,678
--------------
MULTI-UTILITIES -- 3.0%
2,124,680 Algonquin Power & Utilities
Corp. 31,615,239
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
WATER UTILITIES -- 17.3%
256,950 American States Water Co. $ 20,442,942
264,605 American Water Works Co., Inc. 40,783,569
341,590 California Water Service Group 18,971,908
1,777,445 Cia de Saneamento Basico do
Estado de Sao Paulo, ADR 13,153,093
892,515 Essential Utilities, Inc. 40,787,935
170,831 Middlesex Water Co. 13,962,018
299,471 SJW Group 18,956,514
281,922 York Water (The) Co. 12,771,067
--------------
179,829,046
--------------
TOTAL COMMON STOCKS
-- 100.0% 1,038,620,260
(Cost $773,285,550) --------------
MONEY MARKET FUNDS -- 0.0%
319,141 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 0.01% (b) 319,141
(Cost $319,141) --------------
TOTAL INVESTMENTS -- 100.0% 1,038,939,401
(Cost $773,604,691) (c)
NET OTHER ASSETS AND
LIABILITIES -- 0.0% 188,880
--------------
NET ASSETS -- 100.0% $1,039,128,281
==============
(a) Non-income producing security.
(b) Rate shown reflects yield as of June 30, 2021.
(c) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $267,211,899 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $1,877,189. The net unrealized appreciation was
$265,334,710.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $1,038,620,260 $ -- $ --
Money Market
Funds 319,141 -- --
------------------------------------------------
Total Investments $1,038,939,401 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
Page 36 See Notes to Financial Statements
<PAGE>
FIRST TRUST NATURAL GAS ETF (FCG)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
OIL, GAS & CONSUMABLE FUELS
-- 99.9%
673,060 Antero Resources Corp. (a) $ 10,116,092
490,396 APA Corp. 10,607,265
52,769 Bonanza Creek Energy, Inc. 2,483,837
598,937 Cabot Oil & Gas Corp. 10,457,440
186,579 Callon Petroleum Co. (a) (b) 10,763,743
785,586 Centennial Resource Development,
Inc., Class A (a) 5,326,273
416,075 CNX Resources Corp. (a) 5,683,584
335,511 Comstock Resources, Inc. (a) 2,237,858
213,888 ConocoPhillips 13,025,779
259,941 Contango Oil & Gas Co. (a) 1,122,945
473,661 DCP Midstream, L.P. (c) 14,536,656
440,956 Devon Energy Corp. 12,871,506
136,833 Diamondback Energy, Inc. 12,847,250
39,310 Earthstone Energy, Inc.,
Class A (a) 435,162
519,113 Enerplus Corp. 3,732,422
148,385 EOG Resources, Inc. 12,381,244
452,346 EQT Corp. (a) 10,069,222
135,206 Hess Corp. 11,806,188
236,161 Hess Midstream, L.P.,
Class A (c) (d) 5,963,065
47,083 Laredo Petroleum, Inc. (a) 4,368,832
380,135 Magnolia Oil & Gas Corp.,
Class A (a) 5,941,510
873,502 Marathon Oil Corp. 11,897,097
258,939 Matador Resources Co. 9,324,393
313,513 Murphy Oil Corp. 7,298,583
42,632 Oasis Petroleum, Inc. 4,286,648
459,232 Occidental Petroleum Corp. 14,360,185
340,485 Ovintiv, Inc. 10,715,063
143,168 PDC Energy, Inc. 6,555,663
78,326 Pioneer Natural Resources Co. 12,729,542
557,207 Range Resources Corp. (a) 9,338,789
322,728 SM Energy Co. 7,948,791
1,607,632 Southwestern Energy Co. (a) 9,115,273
53,281 Talos Energy, Inc. (a) 833,315
1,213,101 Tellurian, Inc. (a) 5,640,920
392,520 Vermilion Energy, Inc. (a) 3,434,550
404,055 W&T Offshore, Inc. (a) 1,959,667
596,692 Western Midstream Partners,
L.P. (c) 12,781,143
99,011 Whiting Petroleum Corp. (a) 5,401,050
--------------
TOTAL COMMON STOCKS -- 99.9% 300,398,545
(Cost $207,168,216) --------------
MONEY MARKET FUNDS -- 1.1%
2,941,542 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
0.01% (e) (f) 2,941,542
337,194 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 0.01% (e) 337,194
--------------
TOTAL MONEY MARKET FUNDS
-- 1.1% 3,278,736
(Cost $3,278,736) --------------
DESCRIPTION VALUE
-------------------------------------------------------------
TOTAL INVESTMENTS -- 101.0% $ 303,677,281
(Cost $210,446,952) (g)
NET OTHER ASSETS AND
LIABILITIES -- (1.0)% (3,094,711)
--------------
NET ASSETS -- 100.0% $ 300,582,570
==============
(a) Non-income producing security.
(b) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $2,965,266 and the
total value of the collateral held by the Fund is $2,941,542.
(c) Security is a Master Limited Partnership ("MLP").
(d) Hess Midstream, L.P. is taxed as a "C" corporation for federal income tax
purposes.
(e) Rate shown reflects yield as of June 30, 2021.
(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 June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $93,464,234 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $233,905. The net unrealized appreciation was
$93,230,329.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 300,398,545 $ -- $ --
Money Market
Funds 3,278,736 -- --
------------------------------------------------
Total Investments $ 303,677,281 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 37
<PAGE>
FIRST TRUST NATURAL GAS ETF (FCG)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (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) $ 2,965,266
Non-cash Collateral(2) (2,941,542)
--------------
Net Amount $ 23,724
==============
(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) The collateral requirements are determined at the beginning of each
business day based on the market value of the loaned securities from the
end of the prior day. On June 30, 2021, there was sufficient collateral
based on the end of day market value from the prior business day; however,
as a result of market movement from June 29 to June 30, the value of the
related securities loaned was above the collateral value received.
Page 38 See Notes to Financial Statements
<PAGE>
FIRST TRUST CHINDIA ETF (FNI)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.8%
AIR FREIGHT & LOGISTICS -- 0.6%
49,947 ZTO Express Cayman, Inc., ADR $ 1,515,891
--------------
AUTOMOBILES -- 15.1%
68,790 Li Auto, Inc., ADR (a) 2,403,523
422,565 NIO, Inc., ADR (a) 22,480,458
429,149 Tata Motors Ltd., ADR (a) 9,776,014
49,885 XPeng, Inc., ADR (a) 2,215,892
--------------
36,875,887
--------------
BANKS -- 12.7%
213,243 HDFC Bank Ltd., ADR (a) 15,592,328
906,133 ICICI Bank Ltd., ADR (a) 15,494,874
--------------
31,087,202
--------------
BIOTECHNOLOGY -- 1.3%
4,471 BeiGene Ltd., ADR (a) 1,534,402
9,022 Zai Lab Ltd., ADR (a) 1,596,804
--------------
3,131,206
--------------
CAPITAL MARKETS -- 1.7%
11,266 Futu Holdings Ltd., ADR (a) 2,017,628
70,329 Up Fintech Holding Ltd.,
ADR (a) (b) 2,038,134
--------------
4,055,762
--------------
CONSUMER FINANCE -- 1.6%
57,100 360 DigiTech, Inc., ADR (a) 2,389,064
131,485 Lufax Holding Ltd., ADR (a) (b) 1,485,781
--------------
3,874,845
--------------
DIVERSIFIED CONSUMER SERVICES
-- 1.5%
86,451 Gaotu Techedu, Inc., ADR (a) (b) 1,276,881
156,677 New Oriental Education &
Technology Group, Inc., ADR (a) 1,283,185
40,100 TAL Education Group, ADR (a) 1,011,723
--------------
3,571,789
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 0.7%
497,765 Sify Technologies Ltd.,
ADR (a) (b) 1,801,909
--------------
ENTERTAINMENT -- 7.6%
87,007 Bilibili, Inc., ADR (a) 10,600,933
112,399 iQIYI, Inc., ADR (a) 1,751,176
39,538 NetEase, Inc., ADR 4,556,755
101,830 Tencent Music Entertainment
Group, ADR (a) 1,576,328
--------------
18,485,192
--------------
HOTELS, RESTAURANTS & LEISURE
-- 4.0%
28,036 Huazhu Group Ltd., ADR (a) 1,480,581
169,553 MakeMyTrip Ltd. (a) 5,095,068
93,240 Melco Resorts & Entertainment
Ltd., ADR (a) 1,544,987
23,696 Yum China Holdings, Inc. 1,569,860
--------------
9,690,496
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
INDEPENDENT POWER AND RENEWABLE
ELECTRICITY PRODUCERS -- 0.9%
77,021 Azure Power Global Ltd. (a) $ 2,073,405
--------------
INTERACTIVE MEDIA & SERVICES
-- 5.8%
20,797 Autohome, Inc., ADR 1,330,176
47,513 Baidu, Inc., ADR (a) 9,687,901
20,829 JOYY, Inc., ADR 1,374,089
31,526 Weibo Corp., ADR (a) 1,658,898
--------------
14,051,064
--------------
INTERNET & DIRECT MARKETING
RETAIL -- 21.0%
76,273 Alibaba Group Holding Ltd.,
ADR (a) 17,297,191
63,780 Dada Nexus Ltd., ADR (a) 1,850,258
126,121 JD.com, Inc., ADR (a) 10,065,717
130,681 Pinduoduo, Inc., ADR (a) 16,599,101
38,299 Trip.com Group Ltd., ADR (a) 1,358,082
201,587 Vipshop Holdings Ltd., ADR (a) 4,047,867
--------------
51,218,216
--------------
IT SERVICES -- 14.4%
21,308 GDS Holdings Ltd., ADR (a) 1,672,465
843,819 Infosys Ltd., ADR 17,880,524
41,034 Kingsoft Cloud Holdings Ltd.,
ADR (a) 1,392,283
1,175,965 Wipro Ltd., ADR 9,184,287
62,587 WNS (Holdings) Ltd., ADR (a) 4,998,824
--------------
35,128,383
--------------
METALS & MINING -- 1.8%
314,410 Vedanta Ltd., ADR 4,464,622
--------------
PERSONAL PRODUCTS -- 0.5%
141,216 Yatsen Holding Ltd., ADR (a) 1,323,194
--------------
PHARMACEUTICALS -- 3.9%
130,663 Dr. Reddy's Laboratories Ltd.,
ADR 9,605,037
--------------
PROFESSIONAL SERVICES -- 0.6%
475,609 SOS Ltd., ADR (a) (b) 1,574,266
--------------
REAL ESTATE MANAGEMENT
& DEVELOPMENT -- 1.8%
89,857 KE Holdings, Inc., ADR (a) 4,284,382
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 0.6%
21,549 Daqo New Energy Corp., ADR (a) 1,401,116
--------------
SOFTWARE -- 0.6%
35,865 Agora, Inc., ADR (a) (b) 1,504,895
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 0.6%
190,810 Canaan, Inc., ADR (a) (b) 1,555,102
--------------
TOBACCO -- 0.5%
141,716 RLX Technology, Inc., ADR (a) (b) 1,237,181
--------------
TOTAL COMMON STOCKS -- 99.8% 243,511,042
(Cost $188,970,359) --------------
See Notes to Financial Statements Page 39
<PAGE>
FIRST TRUST CHINDIA ETF (FNI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 2.5%
$ 2,985,496 Bank of America Corp., 0.05% (c),
dated 06/30/21, due 07/01/21,
with a maturity value of
$2,985,500. Collateralized by
U.S. Treasury Securities,
interest rate of 2.875% to
3.625%, due 02/15/2044 to
05/15/2049. The value of the
collateral including accrued
interest is $3,045,206. (d) $ 2,985,496
2,985,496 JPMorgan Chase & Co., 0.05% (c),
dated 06/30/21, due 07/01/21,
with a maturity value of
$2,985,500. Collateralized by
U.S. Treasury Securities,
interest rate of 0.125% to
2.750%, due 12/31/2022 to
11/15/2023. The value of the
collateral including accrued
interest is $3,045,207. (d) 2,985,496
191,013 Mizuho Financial Group, Inc.,
0.04% (c), dated 06/30/21, due
07/01/21, with a maturity
value of $191,013.
Collateralized by U.S.
Treasury Securities, interest
rate of 0.125% to 2.875%, due
07/31/2021 to 11/15/2030. The
value of the collateral
including accrued interest is
$194,833. (d) 191,013
--------------
TOTAL REPURCHASE AGREEMENTS
-- 2.5% 6,162,005
(Cost $6,162,005) --------------
TOTAL INVESTMENTS -- 102.3% 249,673,047
(Cost $195,132,364) (e)
NET OTHER ASSETS AND
LIABILITIES -- (2.3)% (5,710,657)
--------------
NET ASSETS -- 100.0% $ 243,962,390
==============
(a) Non-income producing security.
(b) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $5,899,314 and the
total value of the collateral held by the Fund is $6,162,005.
(c) Rate shown reflects yield as of June 30, 2021.
(d) This security serves as collateral for securities on loan.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $61,189,051 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $6,648,368. The net unrealized appreciation was
$54,540,683.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 243,511,042 $ -- $ --
Repurchase
Agreements -- 6,162,005 --
------------------------------------------------
Total Investments $ 243,511,042 $ 6,162,005 $ --
================================================
* See Portfolio of Investments for industry breakout.
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 5,899,314
Non-cash Collateral(2) (5,899,314)
--------------
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 June 30, 2021, 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) $ 6,162,005
Non-cash Collateral(4) (6,162,005)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At June 30, 2021, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
Page 40 See Notes to Financial Statements
<PAGE>
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK INDEX FUND (QABA)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
BANKS -- 89.7%
13,104 1st Source Corp. $ 608,812
4,519 ACNB Corp. 126,125
10,466 Allegiance Bancshares, Inc. 402,313
16,173 Amalgamated Financial Corp. 252,784
15,039 Amerant Bancorp, Inc. (a) 321,534
5,675 American National Bankshares,
Inc. 176,436
36,161 Ameris Bancorp 1,830,831
4,731 Ames National Corp. 115,957
8,066 Arrow Financial Corp. 289,973
10,544 Atlantic Capital Bancshares,
Inc. (a) 268,450
40,973 Atlantic Union Bankshares Corp. 1,484,042
16,996 BancFirst Corp. 1,061,060
29,687 Bancorp (The), Inc. (a) 683,098
4,007 Bank First Corp. 279,568
3,528 Bank of (The) Princeton (b) 101,148
8,752 Bank of Commerce Holdings 131,455
6,850 Bank of Marin Bancorp 218,515
67,265 Bank OZK 2,835,892
4,101 Bankwell Financial Group, Inc. 113,352
18,045 Banner Corp. 978,219
5,657 BayCom Corp. (a) 101,543
8,879 BCB Bancorp, Inc. (b) 119,423
36,071 BOK Financial Corp. 3,123,749
40,548 Brookline Bancorp, Inc. 606,193
10,782 Business First Bancshares, Inc. 247,447
3,609 Cambridge Bancorp 299,511
7,748 Camden National Corp. 370,044
7,138 Capital Bancorp, Inc. (a) 145,972
8,739 Capital City Bank Group, Inc. 225,379
11,458 Capstar Financial Holdings, Inc. 234,889
13,725 Carter Bankshares, Inc. (a) 171,700
41,314 Cathay General Bancorp 1,626,119
12,754 CBTX, Inc. 348,312
6,497 Central Valley Community
Bancorp 130,915
2,418 Chemung Financial Corp. (b) 107,142
8,297 Citizens & Northern Corp. 203,276
8,132 City Holding Co. 611,852
8,101 Civista Bancshares, Inc. 179,032
8,756 CNB Financial Corp. 199,812
6,219 Coastal Financial Corp. (a) 177,615
37,198 Columbia Banking System, Inc. 1,434,355
60,691 Commerce Bancshares, Inc. 4,525,121
3,059 Community Financial (The)
Corp. (b) 105,535
9,247 Community Trust Bancorp, Inc. 373,394
20,625 ConnectOne Bancorp, Inc. 539,756
26,748 CrossFirst Bankshares, Inc. (a) 367,785
70,484 CVB Financial Corp. 1,451,266
21,564 Dime Community Bancshares, Inc. 724,982
16,575 Eagle Bancorp, Inc. 929,526
6,226 Enterprise Bancorp, Inc. 203,901
16,210 Enterprise Financial Services
Corp. 751,982
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
BANKS (CONTINUED)
7,434 Equity Bancshares, Inc.,
Class A (a) $ 226,663
14,680 Farmers National Banc Corp. 227,687
8,208 Financial Institutions, Inc. 246,240
14,774 First Bancorp 604,404
10,900 First Bancshares (The), Inc. 407,987
10,197 First Bank 138,067
28,148 First Busey Corp. 694,130
4,444 First Business Financial Services,
Inc. 120,299
4,569 First Citizens BancShares, Inc.,
Class A 3,804,789
9,095 First Community Bankshares, Inc. 271,486
50,447 First Financial Bancorp 1,192,063
73,785 First Financial Bankshares, Inc. 3,625,057
7,020 First Financial Corp. 286,556
23,223 First Foundation, Inc. 522,750
67,607 First Hawaiian, Inc. 1,915,982
5,110 First Internet Bancorp 158,308
21,564 First Interstate BancSystem,
Inc., Class A 902,022
28,195 First Merchants Corp. 1,174,886
8,679 First Mid Bancshares, Inc. 351,586
59,291 First Midwest Bancorp, Inc. 1,175,741
12,334 First of Long Island (The) Corp. 261,851
4,146 First Western Financial, Inc. (a) 107,340
16,052 Flushing Financial Corp. 343,994
84,323 Fulton Financial Corp. 1,330,617
13,766 German American Bancorp, Inc. 512,095
49,526 Glacier Bancorp, Inc. 2,727,892
7,112 Great Southern Bancorp, Inc. 383,337
6,252 Guaranty Bancshares, Inc. 213,006
45,012 Hancock Whitney Corp. 2,000,333
15,917 Hanmi Financial Corp. 303,378
29,131 HarborOne Bancorp, Inc. 417,739
14,191 HBT Financial, Inc. 247,065
21,871 Heartland Financial USA, Inc. 1,027,718
31,168 Heritage Commerce Corp. 346,900
18,659 Heritage Financial Corp. 466,848
85,482 Home BancShares, Inc. 2,109,696
8,617 HomeTrust Bancshares, Inc. 240,414
64,078 Hope Bancorp, Inc. 908,626
22,791 Horizon Bancorp, Inc. 397,247
17,129 Independent Bank Corp. 1,293,239
11,297 Independent Bank Corp./MI 245,258
22,398 Independent Bank Group, Inc. 1,657,004
32,857 International Bancshares Corp. 1,410,880
5,400 Investar Holding Corp. 123,606
128,434 Investors Bancorp, Inc. 1,831,469
26,240 Lakeland Bancorp, Inc. 458,675
13,115 Lakeland Financial Corp. 808,409
6,725 LCNB Corp. 110,088
3,956 Level One Bancorp, Inc. 107,999
22,088 Live Oak Bancshares, Inc. 1,303,192
17,732 Macatawa Bank Corp. 155,155
8,379 Mercantile Bank Corp. 253,046
5,915 Mid Penn Bancorp, Inc. 162,367
See Notes to Financial Statements Page 41
<PAGE>
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK INDEX FUND (QABA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
BANKS (CONTINUED)
11,598 Midland States Bancorp, Inc. $ 304,679
8,286 MidWestOne Financial Group, Inc. 238,388
6,027 MVB Financial Corp. 257,112
3,218 National Bankshares, Inc. 112,662
22,519 NBT Bancorp, Inc. 810,008
5,163 Nicolet Bankshares, Inc. (a) 363,165
4,327 Northeast Bank 129,247
3,219 Northrim BanCorp, Inc. 137,612
4,262 Norwood Financial Corp. (b) 110,812
31,287 OceanFirst Financial Corp. 652,021
85,915 Old National Bancorp 1,512,963
14,966 Old Second Bancorp, Inc. 185,578
12,181 Origin Bancorp, Inc. 517,205
5,840 Orrstown Financial Services, Inc. 134,729
49,083 Pacific Premier Bancorp, Inc. 2,075,720
60,629 PacWest Bancorp 2,495,490
6,166 Parke Bancorp, Inc. 120,607
8,037 PCB Bancorp 129,396
9,871 Peapack-Gladstone Financial Corp. 306,692
10,190 Peoples Bancorp, Inc. 301,828
3,736 Peoples Financial Services Corp. 159,154
39,461 Pinnacle Financial Partners, Inc. 3,484,012
7,754 Preferred Bank 490,596
12,721 Primis Financial Corp. 194,122
7,084 Professional Holding Corp.,
Class A (a) (b) 127,654
8,218 QCR Holdings, Inc. 395,204
10,150 RBB Bancorp 245,833
3,788 Red River Bancshares, Inc. 191,332
8,508 Reliant Bancorp, Inc. 235,927
29,203 Renasant Corp. 1,168,120
9,642 Republic Bancorp, Inc., Class A 444,785
30,530 Republic First Bancorp, Inc. (a) 121,815
20,411 S&T Bancorp, Inc. 638,864
24,512 Sandy Spring Bancorp, Inc. 1,081,715
28,674 Seacoast Banking Corp. of Florida 979,217
8,933 Select Bancorp, Inc. (a) 144,000
6,094 Shore Bancshares, Inc. (b) 102,074
7,992 Sierra Bancorp 203,396
56,186 Simmons First National Corp.,
Class A 1,648,497
7,833 SmartFinancial, Inc. 188,070
36,857 South State Corp. 3,013,428
4,072 Southern First Bancshares,
Inc. (a) 208,324
16,899 Southside Bancshares, Inc. 646,049
8,891 Spirit of Texas Bancshares, Inc. 203,070
11,814 Stock Yards Bancorp, Inc. 601,214
26,230 Texas Capital Bancshares, Inc. (a) 1,665,343
37,676 TowneBank 1,146,104
15,409 TriCo Bancshares 656,115
17,195 TriState Capital Holdings,
Inc. (a) 350,606
12,902 Triumph Bancorp, Inc. (a) 957,973
32,879 Trustmark Corp. 1,012,673
25,051 UMB Financial Corp. 2,331,246
114,409 Umpqua Holdings Corp. 2,110,846
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
BANKS (CONTINUED)
66,990 United Bankshares, Inc. $ 2,445,135
45,001 United Community Banks, Inc. 1,440,482
5,402 Unity Bancorp, Inc. 119,114
15,235 Univest Financial Corp. 401,747
210,480 Valley National Bancorp 2,826,746
25,650 Veritex Holdings, Inc. 908,267
8,977 Washington Trust Bancorp, Inc. 460,969
34,908 WesBanco, Inc. 1,243,772
8,585 West BanCorp, Inc. 238,234
13,932 Westamerica Bancorporation 808,474
29,579 Wintrust Financial Corp. 2,237,060
--------------
126,403,570
--------------
IT SERVICES -- 0.2%
7,468 Cass Information Systems, Inc. 304,321
--------------
THRIFTS & MORTGAGE FINANCE
-- 10.0%
14,594 Bridgewater Bancshares, Inc. (a) 235,693
71,983 Capitol Federal Financial, Inc. 847,960
56,322 Columbia Financial, Inc. (a) 969,865
2,192 FS Bancorp, Inc. 156,224
1,108 Hingham Institution for Savings 321,874
4,518 Home Bancorp, Inc. 172,181
11,074 HomeStreet, Inc. 451,155
41,897 Kearny Financial Corp. 500,669
27,077 Luther Burbank Corp. 321,133
14,926 Merchants Bancorp 585,696
16,555 Meta Financial Group, Inc. 838,180
26,604 Northfield Bancorp, Inc. 436,305
65,990 Northwest Bancshares, Inc. 900,103
8,280 PCSB Financial Corp. 150,448
19,345 Premier Financial Corp. 549,591
10,100 Provident Bancorp, Inc. 164,731
4,633 Southern Missouri Bancorp, Inc. 208,300
4,938 Territorial Bancorp, Inc. 128,240
145,520 TFS Financial Corp. 2,954,056
4,337 Timberland Bancorp, Inc. 121,956
10,002 TrustCo Bank Corp. NY 343,869
37,547 Washington Federal, Inc. 1,193,244
13,085 Waterstone Financial, Inc. 257,251
12,661 Western New England Bancorp,
Inc. 103,187
24,649 WSFS Financial Corp. 1,148,397
--------------
14,060,308
--------------
TOTAL COMMON STOCKS -- 99.9% $ 140,768,199
(Cost $134,517,021) --------------
MONEY MARKET FUNDS -- 0.4%
638,155 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
0.01% (c) (d) 638,155
(Cost $638,155) --------------
Page 42 See Notes to Financial Statements
<PAGE>
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK INDEX FUND (QABA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
DESCRIPTION VALUE
-------------------------------------------------------------
TOTAL INVESTMENTS -- 100.3% $ 141,406,354
(Cost $135,155,176) (e)
NET OTHER ASSETS AND
LIABILITIES -- (0.3)% (485,416)
--------------
NET ASSETS -- 100.0% $ 140,920,938
==============
(a) Non-income producing security.
(b) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $622,648 and the
total value of the collateral held by the Fund is $638,155.
(c) Rate shown reflects yield as of June 30, 2021.
(d) This security serves as collateral for securities on loan.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $10,895,952 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $4,644,774. The net unrealized appreciation was
$6,251,178.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 140,768,199 $ -- $ --
Money Market
Funds 638,155 -- --
------------------------------------------------
Total Investments $ 141,406,354 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 622,648
Non-cash Collateral(2) (622,648)
--------------
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 June 30, 2021, the value of the collateral received from each borrower
exceeded the value of the related securities loaned. This amount is
disclosed on the Portfolio of Investments.
See Notes to Financial Statements Page 43
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2021 (UNAUDITED)
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST
NASDAQ-100 FIRST TRUST NASDAQ-100
EQUAL NASDAQ-100- EX-TECHNOLOGY
WEIGHTED TECHNOLOGY SECTOR SECTOR
INDEX FUND INDEX FUND INDEX FUND
(QQEW) (QTEC) (QQXT)
---------------- ----------------- ----------------
<S> <C> <C> <C>
ASSETS:
Investments, at value................................................. $1,295,762,581 $ 3,578,476,662 $ 149,028,118
Cash.................................................................. 599,398 1,729,631 --
Receivables:
Capital shares sold............................................. 5,616,871 -- --
Dividends....................................................... 362,737 404,282 59,310
Securities lending income....................................... 2,094 -- 420
Reclaims........................................................ -- -- --
Prepaid expenses...................................................... 3,011 8,357 396
-------------- --------------- --------------
Total Assets.................................................... 1,302,346,692 3,580,618,932 149,088,244
-------------- --------------- --------------
LIABILITIES:
Payables:
Collateral for securities on loan............................... 11,643,630 -- 2,264,404
Investment securities purchased................................. 5,615,109 -- --
Investment advisory fees........................................ 404,499 1,130,983 39,525
Licensing fees.................................................. 305,941 839,630 35,495
Shareholder reporting fees...................................... 39,592 109,235 7,205
Audit and tax fees.............................................. 17,960 17,960 17,960
Trustees' fees.................................................. 1,750 2,114 1,568
Other liabilities..................................................... 196,101 458,730 24,705
-------------- --------------- --------------
Total Liabilities............................................... 18,224,582 2,558,652 2,390,862
-------------- --------------- --------------
NET ASSETS............................................................ $1,284,122,110 $ 3,578,060,280 $ 146,697,382
============== =============== ==============
NET ASSETS CONSIST OF:
Paid-in capital....................................................... $ 933,786,975 $ 2,253,728,021 $ 117,189,537
Par value............................................................. 114,500 225,000 17,000
Accumulated distributable earnings (loss)............................. 350,220,635 1,324,107,259 29,490,845
-------------- --------------- --------------
NET ASSETS............................................................ $1,284,122,110 $ 3,578,060,280 $ 146,697,382
============== =============== ==============
NET ASSET VALUE, per share............................................ $ 112.15 $ 159.02 $ 86.29
============== =============== ==============
Number of shares outstanding (unlimited number of shares
authorized, par value $0.01 per share)............................. 11,450,002 22,500,002 1,700,002
============== =============== ==============
Investments, at cost.................................................. $ 983,163,154 $ 2,527,971,871 $ 109,507,430
============== =============== ==============
Securities on loan, at value.......................................... $ 11,382,354 $ -- $ 2,213,633
============== =============== ==============
</TABLE>
Page 44 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST
NASDAQ(R) FIRST TRUST NASDAQ(R) ABA
CLEAN EDGE(R) S&P FIRST TRUST FIRST TRUST FIRST TRUST COMMUNITY
GREEN ENERGY REIT WATER NATURAL GAS CHINDIA BANK
INDEX FUND INDEX FUND ETF ETF ETF INDEX FUND
(QCLN) (FRI) (FIW) (FCG) (FNI) (QABA)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
$2,879,090,178 $ 113,180,478 $1,038,939,401 $ 303,677,281 $ 249,673,047 $ 141,406,354
1,652,746 -- -- -- 589,739 82,678
27,729,528 -- 8,346,800 4,035,283 -- --
1,111,001 357,087 784,212 46,826 60,128 195,681
396,346 -- -- 291 4,806 147
-- -- 61,725 -- -- --
179,827 8,069 4,439 3,079 4,088 243
-------------- -------------- -------------- -------------- -------------- --------------
2,910,159,626 113,545,634 1,048,136,577 307,762,760 250,331,808 141,685,103
-------------- -------------- -------------- -------------- -------------- --------------
67,614,984 -- -- 2,941,542 6,162,005 638,155
27,713,296 -- 8,341,869 4,031,907 -- --
842,925 19,026 331,796 82,404 79,865 43,286
633,534 -- 118,201 54,057 51,485 31,296
245,213 7,185 30,665 9,418 11,108 6,101
17,960 20,687 17,960 18,951 18,951 17,959
1,996 1,560 1,672 1,572 1,599 1,564
400,594 22,717 166,133 40,339 44,405 25,804
-------------- -------------- -------------- -------------- -------------- --------------
97,470,502 71,175 9,008,296 7,180,190 6,369,418 764,165
-------------- -------------- -------------- -------------- -------------- --------------
$2,812,689,124 $ 113,474,459 $1,039,128,281 $ 300,582,570 $ 243,962,390 $ 140,920,938
============== ============== ============== ============== ============== ==============
$2,404,588,605 $ 116,161,678 $ 754,056,669 $ 713,889,603 $ 230,106,394 $ 148,440,393
406,500 40,500 124,500 183,484 39,000 25,500
407,694,019 (2,727,719) 284,947,112 (413,490,517) 13,816,996 (7,544,955)
-------------- -------------- -------------- -------------- -------------- --------------
$2,812,689,124 $ 113,474,459 $1,039,128,281 $ 300,582,570 $ 243,962,390 $ 140,920,938
============== ============== ============== ============== ============== ==============
$ 69.19 $ 28.02 $ 83.46 $ 16.38 $ 62.55 $ 55.26
============== ============== ============== ============== ============== ==============
40,650,002 4,050,002 12,450,002 18,348,365 3,900,002 2,550,002
============== ============== ============== ============== ============== ==============
$2,558,804,883 $ 112,176,760 $ 773,604,691 $ 210,446,952 $ 195,132,364 $ 135,155,176
============== ============== ============== ============== ============== ==============
$ 64,643,227 $ -- $ -- $ 2,965,266 $ 5,899,314 $ 622,648
============== ============== ============== ============== ============== ==============
</TABLE>
See Notes to Financial Statements Page 45
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 (UNAUDITED)
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST
NASDAQ-100 FIRST TRUST NASDAQ-100
EQUAL NASDAQ-100- EX-TECHNOLOGY
WEIGHTED TECHNOLOGY SECTOR SECTOR
INDEX FUND INDEX FUND INDEX FUND
(QQEW) (QTEC) (QQXT)
---------------- ----------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................................................. $ 5,078,543 $ 9,945,590 $ 706,538
Securities lending income (net of fees)............................... 11,284 -- 1,761
Foreign withholding tax............................................... (17,387) (118,163) --
-------------- --------------- --------------
Total investment income......................................... 5,072,440 9,827,427 708,299
-------------- --------------- --------------
EXPENSES:
Investment advisory fees.............................................. 2,450,346 6,724,024 285,713
Licensing fees........................................................ 613,544 1,683,649 71,539
Accounting and administration fees.................................... 295,315 678,479 36,355
Shareholder reporting fees............................................ 48,643 114,210 12,791
Custodian fees........................................................ 46,138 126,120 6,036
Transfer agent fees................................................... 27,712 54,422 3,571
Audit and tax fees.................................................... 15,603 15,603 15,603
Legal fees............................................................ 10,279 26,960 1,189
Trustees' fees and expenses........................................... 3,474 4,128 3,111
Listing fees.......................................................... 3,314 3,760 3,017
Registration and filing fees.......................................... -- 15,230 208
Expenses previously waived or reimbursed.............................. -- -- --
Excise Tax............................................................ -- -- --
Other expenses........................................................ 8,253 21,907 1,834
-------------- --------------- --------------
Total expenses.................................................. 3,522,621 9,468,492 440,967
Less fees waived and expenses reimbursed by the investment
advisor...................................................... -- -- (12,397)
-------------- --------------- --------------
Net expenses.................................................... 3,522,621 9,468,492 428,570
-------------- --------------- --------------
NET INVESTMENT INCOME (LOSS).......................................... 1,549,819 358,935 279,729
-------------- --------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments..................................................... 2,059,820 (3,851,757) 930,365
In-kind redemptions............................................. 85,083,011 404,884,213 4,999,236
-------------- --------------- --------------
Net realized gain (loss).............................................. 87,142,831 401,032,456 5,929,601
-------------- --------------- --------------
Net change in unrealized appreciation (depreciation) on investments... 39,644,333 76,283,202 5,900,352
-------------- --------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)............................... 126,787,164 477,315,658 11,829,953
-------------- --------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................................... $ 128,336,983 $ 477,674,593 $ 12,109,682
============== =============== ==============
</TABLE>
Page 46 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST
NASDAQ(R) FIRST TRUST NASDAQ(R) ABA
CLEAN EDGE(R) S&P FIRST TRUST FIRST TRUST FIRST TRUST COMMUNITY
GREEN ENERGY REIT WATER NATURAL GAS CHINDIA BANK
INDEX FUND INDEX FUND ETF ETF ETF INDEX FUND
(QCLN) (FRI) (FIW) (FCG) (FNI) (QABA)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 5,204,747 $ 1,427,469 $ 4,587,468 $ 1,163,719 $ 474,008 $ 1,488,605
1,857,921 -- 1,341 9,854 276,012 403
(40,628) -- (115,331) (3,752) (31,989) --
-------------- -------------- -------------- -------------- -------------- --------------
7,022,040 1,427,469 4,473,478 1,169,821 718,031 1,489,008
-------------- -------------- -------------- -------------- -------------- --------------
5,410,051 130,601 1,707,873 368,957 570,816 246,378
1,355,939 34,830 213,631 92,431 114,466 55,454
577,935 22,833 214,062 46,822 72,192 32,265
145,003 10,250 38,766 13,382 17,797 10,549
102,897 10,225 32,544 7,746 10,951 8,495
46,210 2,177 21,327 4,612 7,135 3,080
15,603 18,330 15,603 16,595 16,595 15,603
26,568 (134) 8,771 2,021 2,328 1,364
4,212 3,079 3,312 3,118 3,183 3,094
3,121 4,909 6,148 6,148 6,148 3,041
49,728 353 12,061 1,608 (1,351) 791
78,177 -- -- -- -- --
-- -- -- 34,748 -- --
5,021 1,473 5,610 1,331 1,869 1,009
-------------- -------------- -------------- -------------- -------------- --------------
7,820,465 238,926 2,279,708 599,519 822,129 381,123
-- (21,257) -- (11,334) -- (11,564)
-------------- -------------- -------------- -------------- -------------- --------------
7,820,465 217,669 2,279,708 588,185 822,129 369,559
-------------- -------------- -------------- -------------- -------------- --------------
(798,425) 1,209,800 2,193,770 581,636 (104,098) 1,119,449
-------------- -------------- -------------- -------------- -------------- --------------
(83,982,672) (668,243) (3,670,054) 4,697,570 (3,443,012) (119,728)
201,194,077 (902,321) 40,872,229 14,231,313 39,851,473 --
-------------- -------------- -------------- -------------- -------------- --------------
117,211,405 (1,570,564) 37,202,175 18,928,883 36,408,461 (119,728)
-------------- -------------- -------------- -------------- -------------- --------------
(329,368,554) 16,735,810 81,956,361 80,983,526 (25,954,068) 19,608,377
-------------- -------------- -------------- -------------- -------------- --------------
(212,157,149) 15,165,246 119,158,536 99,912,409 10,454,393 19,488,649
-------------- -------------- -------------- -------------- -------------- --------------
$ (212,955,574) $ 16,375,046 $ 121,352,306 $ 100,494,045 $ 10,350,295 $ 20,608,098
============== ============== ============== ============== ============== ==============
</TABLE>
See Notes to Financial Statements Page 47
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST
NASDAQ-100 NASDAQ-100-
EQUAL WEIGHTED TECHNOLOGY SECTOR
INDEX FUND INDEX FUND
(QQEW) (QTEC)
------------------------------- -------------------------------
Six Months Six Months
Ended Ended
6/30/2021 Year Ended 6/30/2021 Year Ended
(Unaudited) 12/31/2020 (Unaudited) 12/31/2020
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............................ $ 1,549,819 $ 3,623,684 $ 358,935 $ 13,868,845
Net realized gain (loss)................................ 87,142,831 143,193,386 401,032,456 488,919,986
Net change in unrealized appreciation (depreciation).... 39,644,333 126,318,441 76,283,202 318,775,768
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations...................................... 128,336,983 273,135,511 477,674,593 821,564,599
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations................................... (1,614,210) (3,745,681) (375,450) (14,694,706)
Return of capital....................................... -- -- -- --
-------------- -------------- -------------- --------------
Total distributions to shareholders..................... (1,614,210) (3,745,681) (375,450) (14,694,706)
-------------- -------------- -------------- --------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold............................... 190,536,047 469,620,748 595,536,902 1,270,455,298
Cost of shares redeemed................................. (208,406,866) (471,178,171) (844,687,031) (1,639,801,831)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from shareholder transactions........................ (17,870,819) (1,557,423) (249,150,129) (369,346,533)
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets................. 108,851,954 267,832,407 228,149,014 437,523,360
NET ASSETS:
Beginning of period..................................... 1,175,270,156 907,437,749 3,349,911,266 2,912,387,906
-------------- -------------- -------------- --------------
End of period........................................... $1,284,122,110 $1,175,270,156 $3,578,060,280 $3,349,911,266
============== ============== ============== ==============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period................. 11,650,002 12,300,002 24,250,002 29,100,002
Shares sold............................................. 1,800,000 5,550,000 4,100,000 10,800,000
Shares redeemed......................................... (2,000,000) (6,200,000) (5,850,000) (15,650,000)
-------------- -------------- -------------- --------------
Shares outstanding, end of period....................... 11,450,002 11,650,002 22,500,002 24,250,002
============== ============== ============== ==============
</TABLE>
Page 48 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST FIRST TRUST
NASDAQ-100 NASDAQ(R) S&P FIRST TRUST
EX-TECHNOLOGY SECTOR CLEAN EDGE(R) GREEN ENERGY REIT WATER
INDEX FUND INDEX FUND INDEX FUND ETF
(QQXT) (QCLN) (FRI) (FIW)
----------------------------- ------------------------------- ------------------------------- -------------------------------
Six Months Six Months Six Months Six Months
Ended Ended Ended Ended
6/30/2021 Year Ended 6/30/2021 Year Ended 6/30/2021 Year Ended 6/30/2021 Year Ended
(Unaudited) 12/31/2020 (Unaudited) 12/31/2020 (Unaudited) 12/31/2020 (Unaudited) 12/31/2020
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 279,729 $ 384,225 $ (798,425) $ 211,101 $ 1,209,800 $ 2,036,020 $ 2,193,770 $ 3,515,620
5,929,601 26,614,296 117,211,405 65,171,162 (1,570,564) (10,709,851) 37,202,175 29,359,613
5,900,352 12,091,041 (329,368,554) 611,432,069 16,735,810 (14,457,019) 81,956,361 71,918,615
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
12,109,682 39,089,562 (212,955,574) 676,814,332 16,375,046 (23,130,850) 121,352,306 104,793,848
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
(295,421) (389,766) (275,655) (3,181,371) (622,170) (2,857,361) (1,842,960) (3,656,056)
-- -- -- -- -- -- -- --
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
(295,421) (389,766) (275,655) (3,181,371) (622,170) (2,857,361) (1,842,960) (3,656,056)
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
-- 76,102,422 1,362,571,199 1,267,759,656 30,217,509 -- 311,652,490 153,090,861
(12,055,286) (70,046,805) (336,453,459) (86,057,101) (6,840,308) (98,309,474) (80,827,741) (101,602,162)
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
(12,055,286) 6,055,617 1,026,117,740 1,181,702,555 23,377,201 (98,309,474) 230,824,749 51,488,699
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
(241,025) 44,755,413 812,886,511 1,855,335,516 39,130,077 (124,297,685) 350,334,095 152,626,491
46,938,407 102,182,994 1,999,802,613 144,467,097 74,344,382 198,642,067 688,794,186 536,167,695
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
$ 146,697,382 $ 146,938,407 $2,812,689,124 $1,999,802,613 $ 113,474,459 $ 74,344,382 $1,039,128,281 $ 688,794,186
============= ============= ============== ============== ============== ============== ============== ==============
1,850,002 1,750,002 28,500,002 5,800,002 3,200,002 7,600,002 9,550,002 8,950,002
-- 1,200,000 17,400,000 25,400,000 1,150,000 -- 3,950,000 2,500,000
(150,000) (1,100,000) (5,250,000) (2,700,000) (300,000) (4,400,000) (1,050,000) (1,900,000)
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
1,700,002 1,850,002 40,650,002 28,500,002 4,050,002 3,200,002 12,450,002 9,550,002
============= ============= ============== ============== ============== ============== ============== ==============
</TABLE>
See Notes to Financial Statements Page 49
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST
NATURAL GAS CHINDIA
ETF ETF
(FCG) (FNI)
------------------------------- -------------------------------
Six Months Six Months
Ended Ended
6/30/2021 Year Ended 6/30/2021 Year Ended
(Unaudited) 12/31/2020 (Unaudited) 12/31/2020
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............................ $ 581,636 $ 1,210,304 $ (104,098) $ 307,787
Net realized gain (loss)................................ 18,928,883 (35,101,100) 36,408,461 (1,131,009)
Net change in unrealized appreciation (depreciation).... 80,983,526 28,758,767 (25,954,068) 86,193,314
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations...................................... 100,494,045 (5,132,029) 10,350,295 85,370,092
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations................................... (1,243,935) (6,156) -- (754,006)
Return of capital....................................... -- (3,810,423) -- --
-------------- -------------- -------------- --------------
Total distributions to shareholders..................... (1,243,935) (3,816,579) -- (754,006)
-------------- -------------- -------------- --------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold............................... 126,082,316 127,269,397 59,830,676 96,283,160
Cost of shares redeemed................................. (28,178,563) (110,100,974) (83,167,370) (35,241,060)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from shareholder transactions........................ 97,903,753 17,168,423 (23,336,694) 61,042,100
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets................. 197,153,863 8,219,815 (12,986,399) 145,658,186
NET ASSETS:
Beginning of period..................................... 103,428,707 95,208,892 256,948,789 111,290,603
-------------- -------------- -------------- --------------
End of period........................................... $ 300,582,570 $ 103,428,707 $ 243,962,390 $ 256,948,789
============== ============== ============== ==============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period................. 11,748,365 7,898,365 4,350,002 2,800,002
Shares sold............................................. 8,750,000 21,850,000 900,000 2,500,000
Shares redeemed......................................... (2,150,000) (18,000,000) (1,350,000) (950,000)
-------------- -------------- -------------- --------------
Shares outstanding, end of period....................... 18,348,365 11,748,365 3,900,002 4,350,002
============== ============== ============== ==============
</TABLE>
Page 50 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
FIRST TRUST
NASDAQ(R) ABA
COMMUNITY BANK
INDEX FUND
(QABA)
-----------------------------
Six Months
Ended
6/30/2021 Year Ended
(Unaudited) 12/31/2020
------------- -------------
<S> <C>
$ 1,119,449 $ 2,220,401
(119,728) (21,079,361)
19,608,377 (7,035,863)
------------- -------------
20,608,098 (25,894,823)
------------- -------------
(1,048,345) (2,302,952)
-- --
------------- -------------
(1,048,345) (2,302,952)
------------- -------------
36,341,209 20,210,038
-- (49,744,762)
------------- -------------
36,341,209 (29,534,724)
------------- -------------
55,900,962 (57,732,499)
85,019,976 142,752,475
------------- -------------
$ 140,920,938 $ 85,019,976
============= =============
1,900,002 2,750,002
650,000 500,000
-- (1,350,000)
------------- -------------
2,550,002 1,900,002
============= =============
</TABLE>
See Notes to Financial Statements Page 51
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX FUND (QQEW)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -----------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 100.88 $ 73.78 $ 54.61 $ 57.88 $ 46.18 $ 43.48
---------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.13 0.34 0.36 0.32 0.24 0.31
Net realized and unrealized gain (loss) 11.28 27.11 19.16 (3.29)(a) 11.74 2.73
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 11.41 27.45 19.52 (2.97) 11.98 3.04
---------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.14) (0.35) (0.35) (0.30) (0.28) (0.34)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 112.15 100.88 $ 73.78 $ 54.61 $ 57.88 $ 46.18
========== =========== =========== =========== =========== ===========
TOTAL RETURN (b) 11.31% 37.35% 35.78% (5.16)%(a) 26.00% 7.02%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $1,284,122 $ 1,175,270 $ 907,438 $ 461,464 $ 529,632 $ 404,044
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.58% (c) 0.58% 0.59% 0.60% 0.60% 0.61%
Ratio of net expenses to average net
assets 0.58% (c) 0.58% 0.59% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 0.25% (c) 0.41% 0.56% 0.52% 0.45% 0.72%
Portfolio turnover rate (d) 8% 28% 29% 27% 26% 29%
FIRST TRUST NASDAQ-100-TECHNOLOGY SECTOR INDEX FUND (QTEC)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -----------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 138.14 $ 100.08 $ 67.97 $ 71.92 $ 52.62 $ 42.64
---------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.02 0.58 0.70 0.65 0.48 0.67
Net realized and unrealized gain (loss) 20.88 38.09 32.09 (3.98) 19.39 9.99
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 20.90 38.67 32.79 (3.33) 19.87 10.66
---------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.02) (0.61) (0.68) (0.62) (0.57) (0.68)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 159.02 $ 138.14 $ 100.08 $ 67.97 $ 71.92 $ 52.62
========== =========== =========== =========== =========== ===========
TOTAL RETURN (b) 15.14% 38.82% 48.36% (4.70)% 37.86% 25.27%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $3,578,060 $ 3,349,911 $ 2,912,388 $ 1,950,669 $ 2,200,711 $ 1,570,855
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.56% (c) 0.57% 0.57% 0.57% 0.58% 0.60%
Ratio of net expenses to average net
assets 0.56% (c) 0.57% 0.57% 0.57% 0.58% 0.60%
Ratio of net investment income (loss) to
average net assets 0.02% (c) 0.50% 0.82% 0.84% 0.76% 1.40%
Portfolio turnover rate (d) 7% 31% 23% 21% 21% 27%
</TABLE>
(a) The Fund received a reimbursement from the Advisor in the amount of
$22,098 in connection with a trade error, which represents less than $0.01
per share. Since the Advisor reimbursed the Fund, there was no effect on
the Fund's total return.
(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. The total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the investment
advisor.
(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.
Page 52 See Notes to Financial Statements
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR INDEX FUND (QQXT)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -----------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 79.43 $ 58.39 $ 45.66 $ 48.53 $ 40.44 $ 41.45
---------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.16 0.22 0.20 0.18 0.12 0.09
Net realized and unrealized gain (loss) 6.87 21.04 12.73 (2.88) 8.13 (0.98)
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 7.03 21.26 12.93 (2.70) 8.25 (0.89)
---------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.17) (0.22) (0.20) (0.17) (0.16) (0.12)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 86.29 $ 79.43 $ 58.39 $ 45.66 $ 48.53 $ 40.44
========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) 8.87% 36.48% 28.35% (5.58)% 20.41% (2.13)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 146,697 $ 146,938 $ 102,183 $ 77,618 $ 101,914 $ 103,118
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.62% (b) 0.62% 0.64% 0.64% 0.63% 0.64%
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 0.39% (b) 0.34% 0.38% 0.34% 0.25% 0.23%
Portfolio turnover rate (c) 8% 35% 31% 26% 25% 30%
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) GREEN ENERGY INDEX FUND (QCLN)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -----------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 70.17 $ 24.91 $ 17.63 $ 20.28 $ 15.47 $ 16.01
---------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.02) (d) 0.11 0.13 0.12 0.05 0.17
Net realized and unrealized gain (loss) (0.95) 45.36 7.36 (2.59) 4.85 (0.52)
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations (0.97) 45.47 7.49 (2.47) 4.90 (0.35)
---------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.01) (0.21) (0.21) (0.11) (0.09) (0.19)
Return of capital -- -- -- (0.07) -- --
---------- ----------- ----------- ----------- ----------- -----------
Total distributions (0.01) (0.21) (0.21) (0.18) (0.09) (0.19)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 69.19 $ 70.17 $ 24.91 $ 17.63 $ 20.28 $ 15.47
========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) (1.39)% 183.52% 42.69% (12.22)% 31.73% (2.12)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $2,812,689 $ 1,999,803 $ 144,467 $ 83,731 $ 91,262 $ 51,837
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.58% (b) 0.60% 0.63% 0.65% 0.66% 0.68%
Ratio of net expenses to average net
assets 0.58% (b) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets (0.06)%(b) 0.04% 0.58% 0.59% 0.23% 1.18%
Portfolio turnover rate (c) 13% 43% 26% 45% 32% 49%
</TABLE>
(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.
(d) Based on average shares outstanding.
See Notes to Financial Statements Page 53
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FIRST TRUST S&P REIT INDEX FUND (FRI)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -----------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.23 $ 26.14 $ 21.63 $ 23.28 $ 23.07 $ 22.07
---------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.32 0.52 0.56 0.69 0.71 0.62
Net realized and unrealized gain (loss) 4.64 (2.72) 4.55 (1.65) 0.16 1.13
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 4.96 (2.20) 5.11 (0.96) 0.87 1.75
---------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.17) (0.71) (0.60) (0.69) (0.66) (0.75)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 28.02 $ 23.23 $ 26.14 $ 21.63 $ 23.28 $ 23.07
========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) 21.38% (8.10)% 23.67% (4.19)% 3.79% 7.92%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 113,474 $ 74,344 $ 198,642 $ 115,696 $ 161,791 $ 236,426
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.55% (b) 0.52% 0.51% 0.52% 0.48% 0.49%
Ratio of net expenses to average net
assets 0.50% (b) 0.50% 0.50% 0.50% 0.48% 0.49%
Ratio of net investment income (loss) to
average net assets 2.78% (b) 2.04% 2.40% 3.05% 2.77% 2.52%
Portfolio turnover rate (c) 2% 6% 10% 10% 7% 6%
FIRST TRUST WATER ETF (FIW)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -----------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 72.13 $ 59.91 $ 43.96 $ 48.58 $ 39.61 $ 30.13
---------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.19 0.38 0.32 0.35 0.54 0.20
Net realized and unrealized gain (loss) 11.30 12.24 15.96 (4.65) 8.98 9.48
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 11.49 12.62 16.28 (4.30) 9.52 9.68
---------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.16) (0.40) (0.33) (0.32) (0.55) (0.20)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 83.46 $ 72.13 $ 59.91 $ 43.96 $ 48.58 $ 39.61
========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) 15.96% 21.20% 37.11% (8.89)% 24.25% 32.21%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $1,039,128 $ 688,794 $ 536,168 $ 290,107 $ 298,775 $ 221,791
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.53% (b) 0.54% 0.55% 0.55% 0.56% 0.57%
Ratio of net expenses to average net
assets 0.53% (b) 0.54% 0.55% 0.55% 0.56% 0.57%
Ratio of net investment income (loss) to
average net assets 0.51% (b) 0.66% 0.61% 0.72% 1.26% 0.58%
Portfolio turnover rate (c) 7% 15% 12% 11% 24% 42%
</TABLE>
(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 54 See Notes to Financial Statements
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FIRST TRUST NATURAL GAS ETF (FCG)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 ---------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.80 $ 12.05 $ 14.69 $ 22.75 $ 26.15 $ 22.30
--------- ----------- ----------- ----------- ----------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.04 0.10 0.10 0.02 (0.02) 0.13
Net realized and unrealized gain (loss) 7.62 (3.01) (2.39) (7.86) (3.02) 4.16
--------- ----------- ----------- ----------- ----------- ----------
Total from investment operations 7.66 (2.91) (2.29) (7.84) (3.04) 4.29
--------- ----------- ----------- ----------- ----------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.08) -- (0.11) -- (0.23) (0.44)
Return of capital -- (0.34) (0.24) (0.22) (0.13) --
--------- ----------- ----------- ----------- ----------- ----------
Total distributions (0.08) (0.34) (0.35) (0.22) (0.36) (0.44)
--------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of period $ 16.38 $ 8.80 $ 12.05 $ 14.69 $ 22.75 $ 26.15
========= =========== =========== =========== =========== ==========
TOTAL RETURN (a) 87.12% (23.22)% (15.87)% (34.77)% (11.53)% 19.48%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 300,583 $ 103,429 $ 95,209 $ 88,874 $ 184,262 $ 251,024
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.65% (b)(c) 0.67% 0.65% 0.63% 0.64%(c) 0.64%(c)
Ratio of net expenses to average net
assets 0.64% (b)(c) 0.60% 0.60% 0.60% 0.63%(c) 0.61%(c)
Ratio of net investment income (loss) to
average net assets 0.63% (b) 1.48% 0.65% 0.07% (0.11)% 0.54%
Portfolio turnover rate (d) 31% 103% 61% 47% 53% 103%
FIRST TRUST CHINDIA ETF (FNI)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -----------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 59.07 $ 39.75 $ 30.93 $ 39.57 $ 27.39 $ 28.36
---------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.04) 0.09 0.14 0.04 0.34 0.25
Net realized and unrealized gain (loss) 3.52 19.42 8.81 (8.16) 12.61 (0.85)
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 3.48 19.51 8.95 (8.12) 12.95 (0.60)
---------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income -- (0.19) (0.13) (0.52) (0.77) (0.37)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 62.55 $ 59.07 $ 39.75 $ 30.93 $ 39.57 $ 27.39
========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) 5.91% 49.25% 28.96% (20.68)% 47.36% (2.15)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 243,962 $ 256,949 $ 111,291 $ 133,007 $ 375,915 $ 131,466
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.58% (b) 0.60% 0.60% 0.59% 0.60% 0.60%
Ratio of net expenses to average net
assets 0.58% (b) 0.60% 0.60% 0.59% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets (0.07)%(b) 0.20% 0.35% 1.06% 0.91% 0.91%
Portfolio turnover rate (d) 23% 46% 26% 22% 35% 47%
</TABLE>
(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) For the six months ended June 30, 2021 and the years ended December 31,
2017 and 2016, ratios reflect excise tax of 0.04%, 0.03% and 0.01%,
respectively, which are not included in the expense cap.
(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 55
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK INDEX FUND (QABA)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 -----------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 44.75 $ 51.91 $ 43.16 $ 52.34 $ 52.81 $ 38.94
---------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.46 1.11 1.04 0.81 0.74 0.58
Net realized and unrealized gain (loss) 10.48 (7.13) 8.72 (9.17) (0.46) 13.89
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 10.94 (6.02) 9.76 (8.36) 0.28 14.47
---------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.43) (1.14) (1.01) (0.82) (0.75) (0.60)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 55.26 $ 44.75 $ 51.91 $ 43.16 $ 52.34 $ 52.81
========== =========== =========== =========== =========== ===========
TOTAL RETURN (a) 24.44% (11.00)% 22.80% (16.14)% 0.55% 37.57%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 140,921 $ 85,020 $ 142,752 $ 228,762 $ 314,032 $ 404,023
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.62% (b) 0.64% 0.60% 0.60% 0.60% 0.61%
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 1.82% (b) 2.75% 1.98% 1.50% 1.37% 1.54%
Portfolio turnover rate (c) 8% 14% 15% 11% 14% 16%
</TABLE>
(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 56 See Notes to Financial Statements
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
1. ORGANIZATION
First Trust Exchange-Traded Fund (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on August 8,
2003, 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 twenty-two exchange-traded funds. This report
covers the nine funds (each a "Fund" and collectively, the "Funds") listed
below:
First Trust NASDAQ-100 Equal Weighted Index Fund - (The Nasdaq Stock
Market LLC ("Nasdaq") ticker "QQEW")
First Trust NASDAQ-100-Technology Sector Index Fund - (Nasdaq ticker
"QTEC")
First Trust NASDAQ-100 Ex-Technology Sector Index Fund - (Nasdaq
ticker "QQXT")
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund - (Nasdaq
ticker "QCLN")
First Trust S&P REIT Index Fund - (NYSE Arca, Inc. ("NYSE Arca") ticker
"FRI")
First Trust Water ETF - (NYSE Arca ticker "FIW")
First Trust Natural Gas ETF - (NYSE Arca ticker "FCG")
First Trust Chindia ETF - (NYSE Arca ticker "FNI")
First Trust NASDAQ(R) ABA Community Bank Index Fund - (Nasdaq ticker
"QABA")
Each Fund represents a separate series of beneficial interest in the Trust.
Unlike conventional mutual funds, each Fund issues and redeems shares on a
continuous basis, at net asset value ("NAV"), only in large blocks of shares
known as "Creation Units." The investment objective of each Fund is to seek
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of the following indices:
<TABLE>
<CAPTION>
FUND INDEX
<S> <C>
First Trust NASDAQ-100 Equal Weighted Index Fund NASDAQ-100 Equal Weighted Index(SM)
First Trust NASDAQ-100-Technology Sector Index Fund NASDAQ-100 Technology Sector Index(SM)
First Trust NASDAQ-100 Ex-Technology Sector Index Fund NASDAQ-100 Ex-Tech Sector Index(SM)
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund NASDAQ(R) Clean Edge(R) Green Energy Index(SM)
First Trust S&P REIT Index Fund S&P United States REIT Index
First Trust Water ETF ISE Clean Edge Water Index
First Trust Natural Gas ETF ISE-Revere Natural Gas(TM) Index
First Trust Chindia ETF ISE ChIndia(TM) Index
First Trust NASDAQ(R) ABA Community Bank Index Fund NASDAQ OMX(R) ABA Community Bank Index(SM)
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are each considered an investment company and follow accounting and
reporting guidance under Financial Accounting Standards Board Accounting
Standards Codification Topic 946, "Financial Services-Investment Companies." The
following is a summary of significant accounting policies consistently followed
by the Funds in the preparation of the financial statements. The preparation of
the financial statements in accordance with accounting principles generally
accepted in the United States of America ("U.S. GAAP") requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
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 the 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 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:
Page 57
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
Common stocks, real estate investment trusts ("REITs"), master limited
partnerships ("MLPs") 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.
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.
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 June 30, 2021, is
included with each Fund's Portfolio of Investments.
Page 58
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (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.
Distributions received from a Fund's investments in MLPs generally are comprised
of return of capital and investment income. A Fund records estimated return of
capital and investment income based on historical information available from
each MLP. These estimates may subsequently be revised based on information
received from the MLPs after their tax reporting periods are concluded.
Distributions received from a Fund's investments in 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 requires entities to disclose both gross and
net information about instruments and transactions eligible for offset on the
Statements of Assets and Liabilities, and disclose instruments and transactions
subject to master netting or similar agreements. These disclosure requirements
are intended to help investors and other financial statement users better assess
the effect or potential effect of offsetting arrangements on a fund's financial
position. The transactions subject to offsetting disclosures are derivative
instruments, repurchase agreements and reverse repurchase agreements, and
securities borrowing and securities lending transactions.
This disclosure, if applicable, is included within each Fund's Portfolio of
Investments under the heading "Offsetting Assets and Liabilities." For financial
reporting purposes, the Funds do not offset financial assets and financial
liabilities that are subject to master netting arrangements ("MNAs") or similar
agreements on the Statements of Assets and Liabilities. MNAs provide the right,
in the event of default (including bankruptcy and insolvency), for the
non-defaulting counterparty to liquidate the collateral and calculate the net
exposure to the defaulting party or request additional collateral.
D. 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 with the exception of FNI.
The Bank of New York Mellon ("BNYM") acts as FNI's securities lending agent and
is responsible for executing the lending of the portfolio securities to
creditworthy borrowers. The Funds, however, will be responsible for the risks
associated with the investment of cash collateral. A Fund may lose money on its
investment of cash collateral, which may affect its ability to repay the
collateral to the borrower without the use of other Fund assets. Each Fund that
engages in securities lending receives compensation (net of any rebate and
securities lending agent fees) for lending its securities. Compensation can be
in the form of fees received from the securities lending agent or dividends or
interest earned from the investment of cash collateral. The fees received from
the securities lending agent are accrued daily. The dividend and interest earned
on the securities loaned is accounted for in the same manner as other dividend
and interest income. At June 30, 2021, QQEW, QQXT, QCLN, FCG, FNI, and QABA had
securities in the securities lending program. During the six months ended June
30, 2021, QQEW, QQXT, QCLN, FIW, FCG, FNI, and QABA participated in the
securities lending program.
In the event of a default by a borrower with respect to any loan, BBH or BNYM
will exercise any and all remedies provided under the applicable borrower
agreement to make the Funds whole. These remedies include purchasing replacement
securities by applying the collateral held from the defaulting broker against
the purchase cost of the replacement securities. If, despite such efforts by BBH
and BNYM to exercise these remedies, a Fund sustains losses as a result of a
Page 59
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
borrower's default, BBH or BNYM will indemnify the Fund by purchasing
replacement securities at its own expense, or paying the Fund an amount equal to
the market value of the replacement securities, subject to certain limitations
which are set forth in detail in the Securities Lending Agency Agreement between
the Trust on behalf of the Funds and BBH or BNYM.
E. 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 or BNYM on behalf of the Funds participating in the securities
lending program. In the event the counterparty defaults on the repurchase
agreement, the U.S. Treasury securities can either be maintained as part of a
Fund's portfolio or sold for cash. A Fund could suffer a loss to the extent that
the proceeds from the sale of the underlying collateral held by the Fund 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 June 30, 2021 were received as
collateral for lending securities.
F. 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 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 December 31, 2020 was as follows:
<TABLE>
<CAPTION>
Distributions Distributions Distributions
paid from paid from paid from
Ordinary Income Capital Gains Return of Capital
------------------ ---------------- -----------------
<S> <C> <C> <C>
First Trust NASDAQ-100 Equal Weighted Index Fund $ 3,745,681 $ -- $ --
First Trust NASDAQ-100-Technology Sector Index Fund 14,694,706 -- --
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 389,766 -- --
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 3,181,371 -- --
First Trust S&P REIT Index Fund 2,857,361 -- --
First Trust Water ETF 3,656,056 -- --
First Trust Natural Gas ETF 6,156 -- 3,810,423
First Trust Chindia ETF 754,006 -- --
First Trust NASDAQ(R) ABA Community Bank Index Fund 2,302,952 -- --
</TABLE>
Page 60
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
As of December 31, 2020, the components of distributable earnings on a tax basis
for each Fund were as follows:
<TABLE>
<CAPTION>
Accumulated
Undistributed Capital and Net Unrealized
Ordinary Other Appreciation
Income Gain (Loss) (Depreciation)
------------------ ---------------- -----------------
<S> <C> <C> <C>
First Trust NASDAQ-100 Equal Weighted Index Fund $ 24,851 $(39,986,550) $ 263,459,561
First Trust NASDAQ-100-Technology Sector Index Fund -- (87,680,923) 934,489,039
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 9,725 (14,045,683) 31,712,542
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund -- (13,904,213) 634,829,461
First Trust S&P REIT Index Fund -- (2,120,541) (16,360,054)
First Trust Water ETF -- (12,648,688) 178,086,454
First Trust Natural Gas ETF -- (517,519,964) 4,779,337
First Trust Chindia ETF (156,043) (72,479,739) 76,102,483
First Trust NASDAQ(R) ABA Community Bank Index Fund -- (13,213,868) (13,890,840)
</TABLE>
G. INCOME TAXES
Each Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no
provision has been made for federal and state income taxes. However, due to the
timing and amount of distributions, each Fund may be subject to an excise tax of
4% of the amount by which approximately 98% of each Fund's taxable income
exceeds the distributions from such taxable income for the calendar year.
Certain countries assess a capital gains tax on securities sold in their local
markets. This tax is accrued as the securities in these foreign markets
appreciate in value and is paid at the time of sale to the extent a capital gain
is realized. Taxes accrued on securities in an unrealized appreciation position,
if any, are included in "Net change in unrealized appreciation (depreciation) on
deferred foreign capital gains tax" on the Statements of Operations. The capital
gains tax paid on securities sold, if any, is included in "Net realized gain
(loss) on foreign capital gains tax" on the Statements of Operations.
India's Finance Bill, 2018 ("Finance Bill, 2018") was enacted into law on March
29, 2018 and amongst other provisions, it introduced a long-term capital gains
tax beginning April 1, 2018. Long-term capital gains on the sale of listed
shares in excess of INR 0.1 million are taxed at the rate of 10% (plus
applicable surcharge and cess (which is a type of tax)) subject to satisfaction
of certain conditions. Long-term capital gains accruing as of January 31, 2018
are considered exempt due to a grandfather clause in the provision. The
aforesaid exemption from long-term capital gains tax is available with respect
to shares acquired between October 1, 2004 and March 31, 2018 only if on such
acquisitions Securities Transaction Tax ("STT") was chargeable. Certain
exceptions in this regard, such as acquisition of shares in a public offer,
bonus, rights issued, etc. for which the condition of chargeability of STT on
acquisition is not applicable, have been notified.
In the case of the sale of listed shares held by a Fund for one year or less,
the income is classified as short-term capital gains and is taxable at 15% (plus
applicable surcharge and cess) provided the shares are sold on the stock
exchange and subjected to STT. For above purposes, the applicable rate of
surcharge is 2% or 5% (depending on the level of income of the Fund). The
Finance Bill, 2018 increases the cess imposed on the sum of tax and surcharge
from 3% to 4%. The cess 4% rate is applied to the capital gains tax, resulting
in a higher effective rate of capital gains tax.
Where the sale of shares is outside the stock exchange and not subject to STT,
the long-term capital gains are taxed at 10% (plus applicable surcharge and
cess) and short-term capital gains are taxed at 30% (plus applicable surcharge
and cess). The Finance Bill, 2018, approves the carry forward of long-term
capital losses to be offset against long-term capital gains. Short-term losses
can be netted against both short-term gains and long-term gains.
Until March 31, 2020, dividends received by a Fund from Indian companies were
exempt from tax in India because Indian companies were required to pay dividend
distribution tax. The Indian Finance Act, 2020 has amended the dividend taxation
framework effective April 1, 2020 and accordingly dividends would now be taxable
in the hands of the shareholders at 20%, plus applicable surcharge and cess.
Subsequent to the Indian Finance Act, 2020, "The Taxation and Other Laws
(Relaxation and Amendment of Certain Provisions) Bill, 2020" (the "Bill") was
enacted into law and is effective retroactively to April 1, 2020. The Bill caps
the maximum surcharge at 15% of the tax on dividend income earned by the Fund.
The highest effective tax rate proposed for non-corporate entities on dividends
will be 23.92%. Note the Fund will not obtain relief under the US-India tax
treaty as the treaty rate of 25% is higher than the domestic rate. Any excess
taxes withheld can be off-set against capital gains tax liability during the
year or claimed as a refund in the annual tax return.
Page 61
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
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 ended 2017, 2018,
2019, and 2020 remain open to federal and state audit. As of June 30, 2021,
management has evaluated the application of these standards to the Funds, and
has determined that no provision for income tax is required in the Funds'
financial statements for uncertain tax positions.
Each Fund intends to utilize provisions of the federal income tax laws, which
allow it to carry a realized capital loss forward indefinitely following the
year of the loss and offset such loss against any future realized capital gains.
Each Fund is subject to certain limitations under U.S. tax rules on the use of
capital loss carryforwards and net unrealized built-in losses. These limitations
apply when there has been a 50% change in ownership. At December 31, 2020, for
federal income tax purposes, each applicable Fund had a capital loss
carryforward available that is shown in the table below, to the extent provided
by regulations, to offset future capital gains. To the extent that these loss
carryforwards are used to offset future capital gains, it is probable that the
capital gains so offset will not be distributed to each applicable Fund's
shareholders.
<TABLE>
<CAPTION>
Non-Expiring
Capital Loss
Carryforwards
------------------
<S> <C>
First Trust NASDAQ-100 Equal Weighted Index Fund $ 39,986,550
First Trust NASDAQ-100-Technology Sector Index Fund 87,680,923
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 14,045,683
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 13,904,213
First Trust S&P REIT Index Fund 2,120,541
First Trust Water ETF 12,648,688
First Trust Natural Gas ETF 517,519,964
First Trust Chindia ETF 72,479,739
First Trust NASDAQ(R) ABA Community Bank Index Fund 13,213,868
</TABLE>
During the taxable year ended December 31, 2020, the following Fund utilized
non-expiring capital loss carryforwards in the following amount:
<TABLE>
<CAPTION>
Capital Loss
Carryforward
Utilized
------------------
<S> <C>
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund $ 18,724,713
</TABLE>
Certain losses realized during the current fiscal year may be deferred and
treated as occurring on the first day of the following fiscal year for federal
income tax purposes. For the fiscal year ended December 31, 2020, the Fund
listed below incurred and elected to defer late year ordinary or capital losses
as follows:
<TABLE>
<CAPTION>
Qualified Late Year Losses
-----------------------------------------
Ordinary Losses Capital Losses
------------------- ------------------
<S> <C> <C>
First Trust Chindia ETF $ 156,043 $ --
</TABLE>
H. EXPENSES
Expenses that are directly related to one of the Funds are charged directly to
the respective Fund. General expenses of the Trust are allocated to all the
Funds based upon the net assets of each Fund.
Page 62
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
First Trust has entered into licensing agreements with each of the following
"Licensors" for the respective Funds:
<TABLE>
<CAPTION>
FUND LICENSOR
<S> <C>
First Trust NASDAQ-100 Equal Weighted Index Fund Nasdaq, Inc.
First Trust NASDAQ-100-Technology Sector Index Fund Nasdaq, Inc.
First Trust NASDAQ-100 Ex-Technology Sector Index Fund Nasdaq, Inc.
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund Nasdaq, Inc. and Clean Edge(R)
First Trust S&P REIT Index Fund S&P Dow Jones Indices LLC
First Trust Water ETF International Securities Exchange, LLC
First Trust Natural Gas ETF International Securities Exchange, LLC
First Trust Chindia ETF International Securities Exchange, LLC
First Trust NASDAQ(R) ABA Community Bank Index Fund Nasdaq, Inc. and American Bankers Association
</TABLE>
The respective license agreements allow for the use by First Trust of certain
trademarks and trade names of the respective Licensors. The Funds are
sub-licensees to the applicable license agreement. The respective Funds are
required to pay licensing fees, which are shown on the Statements of Operations.
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 these services, First Trust is entitled to receive monthly fees from each
Fund calculated at the following annual rates:
<TABLE>
<CAPTION>
% of Average
Daily Net Assets
----------------
<S> <C>
First Trust NASDAQ-100 Equal Weighted Index Fund 0.40%
First Trust NASDAQ-100-Technology Sector Index Fund 0.40%
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 0.40%
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 0.40%
First Trust S&P REIT Index Fund 0.30%
First Trust Water ETF 0.40%
First Trust Natural Gas ETF 0.40%
First Trust Chindia ETF 0.40%
First Trust NASDAQ(R) ABA Community Bank Index Fund 0.40%
</TABLE>
The Trust and the Advisor 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 Fund (excluding interest expense, brokerage commissions and
other trading expenses, acquired fund fees and expenses, taxes and extraordinary
expenses) exceed the below amount as a percentage of average daily net assets
per year (the "Expense Cap"). The Expense Cap will be in effect until at least
April 30, 2023.
<TABLE>
<CAPTION>
Expense Cap
----------------
<S> <C>
First Trust NASDAQ-100 Equal Weighted Index Fund 0.60%
First Trust NASDAQ-100-Technology Sector Index Fund 0.60%
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 0.60%
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 0.60%
First Trust S&P REIT Index Fund 0.50%
First Trust Water ETF 0.60%
First Trust Natural Gas ETF 0.60%
First Trust Chindia ETF 0.60%
First Trust NASDAQ(R) ABA Community Bank Index Fund 0.60%
</TABLE>
Page 63
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
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 (i) the applicable expense limitation in
place for the most recent fiscal year for which such expense limitation was in
place, (ii) the applicable expense limitation in place at the time the fees were
waived, or (iii) the current expense limitation. 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
June 30, 2021 and the fees waived or expenses borne by First Trust subject to
recovery from the applicable Fund for the periods indicated were as follows:
<TABLE>
<CAPTION>
Fees Waived or Expenses Borne by First Trust
Subject to Recovery
--------------------------------------------------------------
Advisory Six Months Year Year Six Months
Fee Expense Ended Ended Ended Ended
Waivers Reimbursement 12/31/2018 12/31/2019 12/31/2020 6/30/2021 Total
--------- ------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
First Trust NASDAQ-100 Ex-Technology
Sector Index Fund $ 12,397 $ -- $ 22,005 $ 34,524 $ 24,666 $ 12,397 $ 93,592
First Trust S&P REIT Index Fund 21,257 -- 15,356 22,365 24,447 21,257 83,425
First Trust Natural Gas ETF 11,334 -- 23,209 41,266 59,597 11,334 135,406
First Trust NASDAQ(R) ABA Community
Bank Index Fund 11,564 -- -- -- 31,508 11,564 43,072
</TABLE>
During the six months ended June 30, 2021, First Trust recovered fees that were
previously waived from First Trust NASDAQ(R) Clean Edge(R) Green Energy Index
Fund of $78,177. As of June 30, 2021, the Fund did not have any remaining fees
previously waived or expenses reimbursed that were subject to recovery.
The Trust has multiple service agreements with BNYM. Under the service
agreements, BNYM performs custodial, fund accounting, certain administrative
services, and transfer agency services for each Fund. As custodian, BNYM is
responsible for custody of each Fund's assets. As fund accountant and
administrator, BNYM is responsible for maintaining the books and records of each
Fund's securities and cash. As transfer agent, BNYM is responsible for
maintaining shareholder records for each Fund. BNYM is a subsidiary of The Bank
of New York Mellon Corporation, a financial holding company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that
varies based on whether the fund is a closed-end or other actively managed fund,
a defined-outcome 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 six months ended June 30, 2021, the cost of purchases and proceeds from
sales of investments for each Fund, excluding short-term investments and in-kind
transactions, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
--------------- ---------------
<S> <C> <C>
First Trust NASDAQ-100 Equal Weighted Index Fund $ 95,816,506 $ 95,205,626
First Trust NASDAQ-100-Technology Sector Index Fund 252,579,886 253,219,642
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 11,843,076 11,839,125
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 359,456,650 360,880,144
First Trust S&P REIT Index Fund 2,327,066 1,851,426
First Trust Water ETF 56,648,474 56,588,877
First Trust Natural Gas ETF 57,064,829 57,075,977
First Trust Chindia ETF 63,624,761 63,749,802
First Trust NASDAQ(R) ABA Community Bank Index Fund 9,999,901 9,886,599
</TABLE>
Page 64
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
For the six months ended June 30, 2021, the cost of in-kind purchases and
proceeds from in-kind sales for each Fund were as follows:
<TABLE>
<CAPTION>
Purchases Sales
--------------- ---------------
<S> <C> <C>
First Trust NASDAQ-100 Equal Weighted Index Fund $ 190,518,290 $ 208,623,185
First Trust NASDAQ-100-Technology Sector Index Fund 595,393,243 843,637,901
First Trust NASDAQ-100 Ex-Technology Sector Index Fund -- 12,050,298
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 1,362,700,696 336,421,379
First Trust S&P REIT Index Fund 30,148,649 6,825,064
First Trust Water ETF 311,360,214 80,417,593
First Trust Natural Gas ETF 125,890,153 28,155,449
First Trust Chindia ETF 59,500,833 83,007,601
First Trust NASDAQ(R) ABA Community Bank Index Fund 36,213,630 --
</TABLE>
5. CREATIONS, REDEMPTIONS AND TRANSACTION FEES
Each Fund generally issues and redeems its shares in primary market transactions
through a creation and redemption mechanism and does not sell or redeem
individual shares. Instead, financial entities known as "Authorized
Participants" have contractual arrangements with a Fund or one of the Fund's
service providers to purchase and redeem Fund shares directly with the Fund in
large blocks of shares known as "Creation Units." Prior to the start of trading
on every business day, a Fund publishes through the National Securities Clearing
Corporation ("NSCC") the "basket" of securities, cash or other assets that it
will accept in exchange for a Creation Unit of the Fund's shares. An Authorized
Participant that wishes to effectuate a creation of a Fund's shares deposits
with the Fund the "basket" of securities, cash or other assets identified by the
Fund that day, and then receives the Creation Unit of the Fund's shares in
return for those assets. After purchasing a Creation Unit, the Authorized
Participant may continue to hold the Fund's shares or sell them in the secondary
market. The redemption process is the reverse of the purchase process: the
Authorized Participant redeems a Creation Unit of a Fund's shares for a basket
of securities, cash or other assets. The combination of the creation and
redemption process with secondary market trading in a Fund's shares and
underlying securities provides arbitrage opportunities that are designed to help
keep the market price of a Fund's shares at or close to the NAV per share of the
Fund.
Each Fund imposes fees in connection with the purchase of Creation Units. These
fees may vary based upon various fact-based circumstances, including, but not
limited to, the composition of the securities included in the Creation Unit or
the countries in which the transactions are settled. The price for each Creation
Unit will equal the daily NAV per share of a Fund times the number of shares in
a Creation Unit, plus the fees described above and, if applicable, any
operational processing and brokerage costs, transfer fees, stamp taxes and part
or all of the spread between the expected bid and offer side of the market
related to the securities comprising the creation basket.
Each Fund also imposes fees in connection with the redemption of Creation Units.
These fees may vary based upon various fact-based circumstances, including, but
not limited to, the composition of the securities included in the Creation Unit
or the countries in which the transactions are settled. The price received for
each Creation Unit will equal the daily NAV per share of a Fund times the number
of shares in a Creation Unit, minus the fees described above and, if applicable,
any operational processing and brokerage costs, transfer fees, stamp taxes and
part or all of the spread between the expected bid and offer side of the market
related to the securities comprising the redemption basket. Investors who use
the services of a broker or other such intermediary in addition to an Authorized
Participant to effect a redemption of a Creation Unit may also be assessed an
amount to cover the cost of such services. The redemption fee charged by a Fund
will comply with Rule 22c-2 of the 1940 Act which limits redemption fees to no
more than 2% of the value of the shares redeemed.
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 April 30, 2023.
Page 65
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
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 66
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (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
Page 67
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
rather than net asset value, which may cause the shares to trade at a price
greater than net asset value (premium) or less than net asset value (discount).
In times of market stress, decisions by market makers to reduce or step away
from their role of providing a market for an ETF's shares, or decisions by an
ETF's authorized participants that they are unable or unwilling to proceed with
creation and/or redemption orders of an ETF's shares, could result in shares of
the ETF trading at a discount to net asset value and in greater than normal
intraday bid-ask spreads.
FIXED INCOME SECURITIES RISK. To the extent a fund invests in fixed income
securities, the fund will be subject to credit risk, income risk, interest rate
risk, liquidity risk and prepayment risk. Income risk is the risk that income
from a fund's fixed income investments could decline during periods of falling
interest rates. Interest rate risk is the risk that the value of a fund's fixed
income securities will decline because of rising interest rates. Liquidity risk
is the risk that a security cannot be purchased or sold at the time desired, or
cannot be purchased or sold without adversely affecting the price. Prepayment
risk is the risk that the securities will be redeemed or prepaid by the issuer,
resulting in lower interest payments received by the fund. In addition to these
risks, high yield securities, or "junk" bonds, are subject to greater market
fluctuations and risk of loss than securities with higher ratings, and the
market for high yield securities is generally smaller and less liquid than that
for investment grade securities.
INDEX 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.
LIBOR RISK. To the extent a fund invests in floating or variable rate
obligations that use the London Interbank Offered Rate ("LIBOR") as a reference
interest rate, it is subject to LIBOR Risk. The United Kingdom's Financial
Conduct Authority, which regulates LIBOR, will cease making LIBOR available as a
reference rate over a phase-out period that will begin immediately after
December 31, 2021. The unavailability or replacement of LIBOR may affect the
value, liquidity or return on certain fund investments and may result in costs
incurred in connection with closing out positions and entering into new trades.
Any potential effects of the transition away from LIBOR on the fund or on
certain instruments in which the fund invests can be difficult to ascertain, and
they may vary depending on a variety of factors, and they could result in losses
to the fund.
MANAGEMENT RISK. To the extent that a fund is actively managed, it is subject to
management risk. In managing an actively-managed fund's investment portfolio,
the fund's portfolio managers will apply investment techniques and risk analyses
that may not have the desired result. There can be no guarantee that a fund will
meet its investment objective.
MARKET RISK. Securities held by a fund, as well as shares of a fund itself, are
subject to market fluctuations caused by factors such as general economic
conditions, political events, regulatory or market developments, changes in
interest rates and perceived trends in securities prices. Shares of a fund could
decline in value or underperform other investments as a result of the risk of
loss associated with these market fluctuations. In addition, local, regional or
global events such as war, acts of terrorism, spread of infectious diseases or
other public health issues, recessions, or other events could have a significant
negative impact on a fund and its investments. Such events may affect certain
geographic regions, countries, sectors and industries more significantly than
others. The outbreak of the respiratory disease designated as COVID-19 in
December 2019 has caused significant volatility and declines in global financial
markets, which have caused losses for investors. While the development of
vaccines has slowed the spread of the virus and allowed for the resumption of
"reasonably" normal business activity in the United States, many countries
continue to impose lockdown measures in an attempt to slow the spread.
Additionally, there is no guarantee that vaccines will be effective against
emerging variants of the disease.
Page 68
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
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.
OPERATIONAL RISK. Each fund is subject to risks arising from various operational
factors, including, but not limited to, human error, processing and
communication errors, errors of a fund's service providers, counterparties or
other third-parties, failed or inadequate processes and technology or systems
failures. Although the funds and the Advisor seek to reduce these operational
risks through controls and procedures, there is no way to completely protect
against such risks.
PASSIVE INVESTMENT RISK. To the extent a fund seeks to track an index, the fund
will invest in the securities included in, or representative of, the index
regardless of their investment merit. A fund generally will not attempt to take
defensive positions in declining markets.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
ADVISORY AGREEMENT
BOARD CONSIDERATIONS REGARDING APPROVAL OF CONTINUATION OF INVESTMENT MANAGEMENT
AGREEMENT
The Board of Trustees of First Trust Exchange-Traded Fund (the "Trust"),
including the Independent Trustees, unanimously approved the continuation of the
Investment Management Agreement (the "Agreement") with First Trust Advisors L.P.
(the "Advisor") on behalf of the following nine series of the Trust (each a
"Fund" and collectively, the "Funds"):
First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW)
First Trust NASDAQ-100-Technology Sector Index Fund (QTEC)
First Trust NASDAQ-100 Ex-Technology Sector Index Fund (QQXT)
First Trust Chindia ETF (FNI)
First Trust Water ETF (FIW)
First Trust Natural Gas ETF (FCG)
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund (QCLN)
First Trust S&P REIT Index Fund (FRI)
First Trust NASDAQ(R) ABA Community Bank Index Fund (QABA)
The Board approved the continuation of the Agreement for each Fund for a
one-year period ending June 30, 2022 at a meeting held on June 6-7, 2021. The
Board determined for each Fund that the continuation of the Agreement is in the
best interests of the Fund in light of the nature, extent and quality of the
services provided and such other matters as the Board considered to be relevant
in the exercise of its business judgment.
To reach this determination for each Fund, the Board considered its duties under
the Investment Company Act of 1940, as amended (the "1940 Act"), as well as
under the general principles of state law, in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. At meetings held on April 26, 2021 and June 6-7, 2021, the
Board, including the Independent Trustees, reviewed materials provided by the
Advisor responding to requests for information from counsel to the Independent
Trustees, submitted on behalf of the Independent Trustees, that, among other
things, outlined: the services provided by the Advisor to each Fund (including
the relevant personnel responsible for these services and their experience); the
advisory fee rate payable by each Fund as compared to fees charged to a peer
group of funds (the "Expense Group") and a broad peer universe of funds (the
"Expense Universe"), each assembled by Broadridge Financial Solutions, Inc.
("Broadridge"), an independent source, and as compared to fees charged to other
clients of the Advisor, including other exchange-traded funds ("ETFs") managed
by the Advisor; the expense ratio of each Fund as compared to expense ratios of
the funds in the Fund's Expense Group and Expense Universe; performance
information for each Fund, including comparisons of each Fund's performance to
that of one or more relevant benchmark indexes and to that of a performance
group of funds and a broad performance universe of funds (the "Performance
Page 69
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
Universe"), each assembled by Broadridge; the nature of expenses incurred in
providing services to each Fund and the potential for the Advisor to realize
economies of scale, if any; profitability and other financial data for the
Advisor; any fall-out benefits to the Advisor and its affiliate, First Trust
Portfolios L.P. ("FTP"); and information on the Advisor's compliance program.
The Board reviewed initial materials with the Advisor at the meeting held on
April 26, 2021, prior to which the Independent Trustees and their counsel met
separately to discuss the information provided by the Advisor. Following the
April meeting, counsel to the Independent Trustees, on behalf of the Independent
Trustees, requested certain clarifications and supplements to the materials
provided, and the information provided in response to those requests was
considered at an executive session of the Independent Trustees and their counsel
held prior to the June 6-7, 2021 meeting, as well as at the June meeting. The
Board applied its business judgment to determine whether the arrangement between
the Trust and the Advisor continues to be a reasonable business arrangement from
each Fund's perspective. The Board determined that, given the totality of the
information provided with respect to the Agreement, the Board had received
sufficient information to renew the Agreement. The Board considered that
shareholders chose to invest or remain invested in a Fund knowing that the
Advisor manages the Fund and knowing the Fund's advisory fee.
In reviewing the Agreement for each Fund, the Board considered the nature,
extent and quality of the services provided by the Advisor under the Agreement.
The Board considered that the Advisor is responsible for the overall management
and administration of the Trust and each Fund and reviewed all of the services
provided by the Advisor to the Funds, as well as the background and experience
of the persons responsible for such services. In reviewing the services
provided, the Board noted the compliance program that had been developed by the
Advisor and considered that it includes a robust program for monitoring the
Advisor's and each Fund's compliance with the 1940 Act, as well as each Fund's
compliance with its investment objective, policies and restrictions. The Board
also considered a report from the Advisor with respect to its risk management
functions related to the operation of the Funds. Finally, as part of the Board's
consideration of the Advisor's services, the Advisor, in its written materials
and at the April 26, 2021 meeting, described to the Board the scope of its
ongoing investment in additional personnel and infrastructure to maintain and
improve the quality of services provided to the Funds and the other funds in the
First Trust Fund Complex. In light of the information presented and the
considerations made, the Board concluded that the nature, extent and quality of
the services provided to the Trust and each Fund by the Advisor under the
Agreement have been and are expected to remain satisfactory and that the Advisor
has managed each Fund consistent with its investment objective, policies and
restrictions.
The Board considered the advisory fee rate payable by each Fund under the
Agreement for the services provided. The Board considered that the Advisor
agreed to extend the current expense cap for each Fund through April 30, 2023.
For each Fund, the Board noted that expenses reimbursed and fees waived are
subject to recovery by the Advisor for up to three years from the date the fee
was waived or expense was incurred, but no reimbursement payment would be made
by the Fund if it results in the Fund exceeding (i) the applicable expense
limitation in place for the most recent fiscal year for which such expense
limitation was in place, (ii) the applicable expense limitation in place at the
time the fees were waived, or (iii) the current expense limitation. The Board
received and reviewed information showing the advisory or unitary fee rates and
expense ratios of the peer funds in the Expense Groups, as well as advisory and
unitary fee rates charged by the Advisor to other fund (including ETFs) and
non-fund clients, as applicable. Because each Fund's Expense Group included peer
funds that pay a unitary fee, the Board determined that expense ratios were the
most relevant comparative data point. Based on the information provided, the
Board noted that the total (net) expense ratio of QCLN was below the median
total (net) expense ratio of the peer funds in its Expense Group and that the
total (net) expense ratio of each other Fund was above the median total (net)
expense ratio of the peer funds in its respective Expense Group. With respect to
the Expense Groups, the Board, at the April 26, 2021 meeting, discussed with the
Advisor limitations in creating peer groups for index ETFs, including
differences in underlying indexes and index-tracking methodologies that can
result in greater management complexities across seemingly comparable ETFs, and
different business models that may affect the pricing of services among ETF
sponsors. The Board took these limitations and differences into account in
considering the peer data. With respect to fees charged to other non-ETF
clients, the Board considered differences between the Funds and other non-ETF
clients that limited their comparability. In considering the advisory fee rates
overall, the Board also considered the Advisor's statement that it seeks to meet
investor needs through innovative and value-added investment solutions and the
Advisor's demonstrated long-term commitment to each Fund and the other funds in
the First Trust Fund Complex.
The Board considered performance information for each Fund. The Board noted the
process it has established for monitoring each Fund's performance and portfolio
risk on an ongoing basis, which includes quarterly performance reporting from
the Advisor for the Funds. The Board determined that this process continues to
be effective for reviewing each Fund's performance. The Board received and
reviewed information for periods ended December 31, 2020 regarding the
performance of each Fund's underlying index, the correlation between each Fund's
performance and that of its underlying index, each Fund's tracking difference
and each Fund's excess return as compared to its benchmark index. Based on the
information provided and its ongoing review of performance, the Board concluded
that each Fund was correlated to its underlying index and that the tracking
difference for each Fund was within a reasonable range. In addition, the Board
reviewed data prepared by Broadridge comparing each Fund's performance to that
of its respective Performance Universe and to that of a broad-based benchmark
Page 70
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
index, and noted the Advisor's discussion of FCG's and QABA's performance at the
April 26, 2021 meeting. However, given each Fund's objective of seeking
investment results that correspond generally to the performance of its
underlying index, the Board placed more emphasis on its review of correlation
and tracking difference.
On the basis of all the information provided on the fees, expenses and
performance of each Fund and the ongoing oversight by the Board, the Board
concluded that the advisory fee for each Fund continues to be reasonable and
appropriate in light of the nature, extent and quality of the services provided
by the Advisor to each Fund under the Agreement.
The Board considered information and discussed with the Advisor whether there
were any economies of scale in connection with providing advisory services to
the Funds and noted the Advisor's statement that it believes its expenses will
likely increase during the next twelve months as the Advisor continues to hire
personnel and build infrastructure, including technology, to improve the
services to the Funds. The Board considered the revenues and allocated costs
(including the allocation methodology) of the Advisor in serving as investment
advisor to each Fund for the twelve months ended December 31, 2020 and the
estimated profitability level for each Fund calculated by the Advisor based on
such data, as well as complex-wide and product-line profitability data, for the
same period. The Board noted the inherent limitations in the profitability
analysis and concluded that, based on the information provided, the Advisor's
profitability level for each Fund was not unreasonable. In addition, the Board
considered fall-out benefits described by the Advisor that may be realized from
its relationship with the Funds. 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 Funds, may have had no
dealings with the Advisor or FTP, and noted that the Advisor does not utilize
soft dollars in connection with the Funds. The Board concluded that the
character and amount of potential 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 continue to be fair and reasonable and that the continuation of
the Agreement is in the best interests of each Fund. No single factor was
determinative in the Board's analysis.
LIQUIDITY RISK MANAGEMENT PROGRAM
In accordance with Rule 22e-4 under the Investment Company Act of 1940, as
amended (the "1940 Act"), the Funds and each other fund in the First Trust Fund
Complex, other than the closed-end funds, have adopted and implemented a
liquidity risk management program (the "Program") reasonably designed to assess
and manage the funds' liquidity risk, i.e., the risk that a fund could not meet
requests to redeem shares issued by the fund without significant dilution of
remaining investors' interests in the fund. The Board of Trustees of the First
Trust Funds has appointed First Trust Advisors, L.P. (the "Advisor") as the
person designated to administer the Program, and in this capacity the Advisor
performs its duties primarily through the activities and efforts of the First
Trust Liquidity Committee (the "Liquidity Committee").
Pursuant to the Program, the Liquidity Committee classifies the liquidity of
each fund's portfolio investments into one of the four liquidity categories
specified by Rule 22e-4: highly liquid investments, moderately liquid
investments, less liquid investments and illiquid investments. The Liquidity
Committee determines certain of the inputs for this classification process,
including reasonably anticipated trade sizes and significant investor dilution
thresholds. The Liquidity Committee also determines and periodically reviews a
highly liquid investment minimum for certain funds, monitors the funds' holdings
of assets classified as illiquid investments to seek to ensure they do not
exceed 15% of a fund's net assets and establishes policies and procedures
regarding redemptions in kind.
At the April 26, 2021 meeting of the Board of Trustees, as required by Rule
22e-4 and the Program, the Advisor provided the Board with a written report
prepared by the Advisor that addressed the operation of the Program during the
period from March 20, 2020 through the Liquidity Committee's annual meeting held
on March 16, 2021 and assessed the Program's adequacy and effectiveness of
implementation during this period, including the operation of the highly liquid
investment minimum for each fund that is required under the Program to have one,
and any material changes to the Program. Note that because the Funds primarily
hold assets that are highly liquid investments, the Funds have not adopted any
highly liquid investment minimums.
As stated in the written report, during the review period, no fund breached the
15% limitation on illiquid investments, no fund with a highly liquid investment
minimum breached that minimum and no fund filed a Form N-LIQUID. The Advisor
concluded that each fund's investment strategy is appropriate for an open-end
fund; that the Program operated effectively in all material respects during the
review period; and that the Program is reasonably designed to assess and manage
the liquidity risk of each fund and to maintain compliance with Rule 22e-4.
Page 71
<PAGE>
This page intentionally left blank.
<PAGE>
FIRST TRUST
First Trust Exchange-Traded Fund
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
<PAGE>
[BLANK BACK COVER]
<PAGE>
FIRST TRUST
First Trust Exchange-Traded Fund
Book 3
First Trust Total US Market AlphaDEX(R) ETF (TUSA)
First Trust Dorsey Wright People's Portfolio ETF (DWPP)
First Trust Dow 30 Equal Weight ETF (EDOW)
First Trust Lunt U.S. Factor Rotation ETF (FCTR)
Semi-Annual Report
For the Six Months Ended
June 30, 2021
<PAGE>
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
SEMI-ANNUAL REPORT
JUNE 30, 2021
Shareholder Letter.......................................................... 2
Market Overview............................................................. 3
Fund Performance Overview
First Trust Total US Market AlphaDEX(R) ETF (TUSA)....................... 4
First Trust Dorsey Wright People's Portfolio ETF (DWPP).................. 6
First Trust Dow 30 Equal Weight ETF (EDOW)............................... 8
First Trust Lunt U.S. Factor Rotation ETF (FCTR)......................... 10
Notes to Fund Performance Overview.......................................... 12
Understanding Your Fund Expenses............................................ 13
Portfolio of Investments
First Trust Total US Market AlphaDEX(R) ETF (TUSA)....................... 14
First Trust Dorsey Wright People's Portfolio ETF (DWPP).................. 29
First Trust Dow 30 Equal Weight ETF (EDOW)............................... 36
First Trust Lunt U.S. Factor Rotation ETF (FCTR)......................... 37
Statements of Assets and Liabilities........................................ 40
Statements of Operations.................................................... 41
Statements of Changes in Net Assets......................................... 42
Financial Highlights........................................................ 44
Notes to Financial Statements............................................... 46
Additional Information...................................................... 54
<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 (the "Trust") described in this
report (each such series is referred to as a "Fund" and collectively, as the
"Funds") to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. When
evaluating the information included in this report, you are cautioned not to
place undue reliance on these forward-looking statements, which reflect the
judgment of the Advisor and its representatives only as of the date hereof. We
undertake no obligation to publicly revise or update these forward-looking
statements to reflect events and circumstances that arise after the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that any Fund described in this report will achieve its
investment objective. Each Fund is subject to market risk, which is the
possibility that the market values of securities owned by the Fund will decline
and that the value of the Fund's shares may therefore be less than what you paid
for them. Accordingly, you can lose money by investing in a Fund. See "Risk
Considerations" in the Additional Information section of this report for a
discussion of certain other risks of investing in the Funds.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
www.ftportfolios.com or speak with your financial advisor. Investment returns,
net asset value and share price will fluctuate and Fund shares, when sold, may
be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund
performance on each Fund's webpage at www.ftportfolios.com.
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
<PAGE>
--------------------------------------------------------------------------------
SHAREHOLDER LETTER
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
JUNE 30, 2021
Dear Shareholders,
First Trust is pleased to provide you with the semi-annual report for certain
funds in the First Trust Exchange-Traded Fund (the "Funds"), which contains
detailed information about the Funds for the six months ended June 30, 2021.
Since December of 2008, the Federal Reserve (the "Fed") has largely maintained
an extremely accommodating stance on monetary policy. In other words, it has
kept interest rates at very low levels, and has done so on purpose. From
December 2008 through June 2021 (a period that captured a portion of the
financial crisis of 2007-2008 and the entire coronavirus ("COVID-19") pandemic),
the Federal Funds target rate (upper bound) stood at 0.25% for approximately
eight years and three months of that 12.5-year period. That is an aggressive
posture to hold for such a long duration. For comparative purposes, the Federal
Funds target rate averaged 4.50% for the 20-year period ended December 31, 2008.
All along, the Fed has been signaling to savers, investors, and businesses alike
that it wanted them to assume more risk. The Fed did not want money just sitting
idle on the sidelines. It wanted the money to be put to work, so to speak, in
such a way that it would stimulate U.S. economic growth and stave off any
deflationary pressures potentially looming. It has been a tough road to hoe, as
I'm sure those investors who follow the economy closely have noticed.
Why am I taking this trip down memory lane? It is because the Federal Funds
target rate currently stands at 0.25%, just like it did back in December 2008.
We can cite the severe hit to many parts of the U.S. economy from the COVID-19
pandemic, such as the leisure and travel industry, as to why the target rate has
returned to such a low level. For all intents and purposes, until the economy
reaches full employment (4% unemployment rate) and a 2% plus inflation rate for
a sustained period, the Fed has stated that it intends to maintain the status
quo. Since inflation has risen notably in recent months, the Fed is now
forecasting a couple of rate hikes in 2023. At a minimum, that is still 18
months away. Keep in mind, however, the Fed reserves the right to change its
posture at any time.
As previously noted, the Fed has been encouraging savers and investors to assume
more risk for over a decade. One of the best barometers of risk in the
securities markets is the default rate on speculative-grade (below
investment-grade) debt, in my opinion. High yield corporate bonds behave like a
hybrid security between other fixed-income securities and stocks. They share
behavioral characteristics of both, and they are economically sensitive. Moody's
reported that its global speculative-grade default rate stood at 4.0% in June
2021, according to its own release. Moody's puts the historical average default
rate at 4.2%. Its baseline scenario sees the default rate declining to 1.7% by
December 2021. Moody's recorded 28 defaults over the first six months of 2021,
down from 114 defaults over the same period a year ago. I believe that investors
should take some comfort in knowing that defaults are trending lower, not
higher, in the current economic climate.
Companies have heeded the Fed's call for risk-taking, as measured by this year's
robust global mergers and acquisitions ("M&A") activity. Global M&A activity set
a record high in the first half of 2021, with announced deals valued at $2.8
trillion, according to data from Refinitiv. U.S. M&A activity also reached a
record high, coming in at $1.3 trillion for the same period, or around 46% of
the global total. M&A specialists expect deal-making to remain robust for the
rest of 2021, due to low borrowing costs and stronger economic growth.
In closing, we welcome the reopening of the U.S. economy and, hopefully, the
global economy shortly thereafter. We encourage investors to stay the course
even though the markets could experience some turbulence in the months ahead.
The potential for additional volatility represents an opportunity for investors
to check their asset allocation levels to determine if they are suitable for an
extended inflationary climate.
Thank you for giving First Trust the opportunity to play a role in your
financial future. We value our relationship with you and will report on the
Funds again in six months.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 2
<PAGE>
--------------------------------------------------------------------------------
MARKET OVERVIEW
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
SEMI-ANNUAL REPORT
JUNE 30, 2021
ROBERT F. CAREY, CFA
SENIOR VICE PRESIDENT AND CHIEF MARKET STRATEGIST
FIRST TRUST ADVISORS L.P.
Mr. Carey is responsible for the overall management of research and analysis of
the First Trust product line. Mr. Carey has more than 30 years of experience as
an Equity and Fixed-Income Analyst and is a recipient of the Chartered Financial
Analyst ("CFA") designation. He is a graduate of the University of Illinois at
Champaign-Urbana with a B.S. in Physics. He is also a member of the Investment
Analysts Society of Chicago and the CFA Institute. Mr. Carey has appeared as a
guest on such programs as Bloomberg TV, CNBC, and WBBM Radio, and has been
quoted by several publications, including The Wall Street Journal, The Wall
Street Reporter, Bloomberg News Service, and Registered Rep.
STATE OF THE ECONOMY/INVESTING
We have learned recently that the reopening process for the economy from the
coronavirus ("COVID-19") pandemic, while underway, is likely to be more of a
work in progress than a foregone conclusion. It has to do with the spread of the
highly contagious Delta variant, now found in all 50 states. The Delta variant,
which was first identified in India in 2020, appears to be more problematic for
those individuals who have yet to be vaccinated. Cases are rising rapidly. The
Centers for Disease Control and Prevention expects the Delta variant to account
for approximately 80% of new cases moving forward. The concern has quickly
elevated, and some state and local governments, such as Los Angeles County, are
contemplating reinstating the mask mandate for businesses and other public
venues. This is something we intend to monitor moving forward to assess its
potential near-term impact on the economy.
The global growth forecast from the International Monetary Fund ("IMF") released
in April 2021 projected a rate of 6.0% for real gross domestic product growth
for 2021, up from -3.3% in 2020. The IMF is calling for a 6.4% growth rate for
the U.S. in 2021, up from -3.5% from the previous year. Advanced Economies are
expected to register a 5.1% growth rate, up from -4.7% for the previous year. As
has been the case for many years, Emerging Market and Developing Economies are
expected to grow faster than Advanced Economies in 2021. Their 2021 growth rate
estimate is 6.7%, up from -2.2% a year ago.
The marketplace for exchange-traded funds ("ETFs") and related exchange-traded
products ("ETPs") continues to set records, both domestically and abroad. ETFGI,
an independent research and consultancy firm, reported that total assets
invested in ETFs/ETPs listed in the U.S. stood at an all-time high of $6.51
trillion at the close of June 2021, according to its own release. In the first
half of 2021, net inflows to ETFs/ETPs listed in the U.S. totaled a record high
$472.18 billion, with $327.44 billion of it flowing to equity funds. Total
assets invested in ETFs/ETPs listed globally stood at an all-time high of $9.35
trillion for the same period. In the first half of this year, net inflows to
ETFs/ETPs listed globally totaled a record high $660.73 billion, with $460.73
billion of it flowing to equity funds.
U.S. STOCKS AND BONDS
In the first half of 2021, three of the major U.S. stock indices posted
double-digit gains. The S&P 500(R) Index, S&P MidCap 400(R) Index and S&P
SmallCap 600(R) Index posted total returns of 15.25%, 17.60%, and 23.56%,
respectively, according to Bloomberg. All 11 of the major sectors that comprise
the S&P 500(R) Index posted positive total returns. The top-performing sectors
were Energy, Financials, Real Estate and Communication Services, up 45.64%,
25.69%, 23.30% and 19.67%, respectively, while the worst-performing sectors were
Utilities, up 2.38%, and Consumer Staples, up 5.02%. Bloomberg's 2021 and 2022
consensus earnings growth rate estimates for the S&P 500(R) Index were 35.94%
and 12.41%, respectively, as of July 2, 2021.
Corporate America is cash rich. Non-financial companies in the S&P 500(R) Index
that reported their earnings results in April and May of 2021 increased their
cash holdings by 12% year-over-year, according to Bloomberg. Cash holdings,
which include short-term investments and long-term marketable securities,
reached $2.03 trillion. The sectors holding the most cash are as follows:
Information Technology ($587.7 billion); Communication Services ($345.2
billion); Consumer Discretionary ($294.9 billion); Health Care ($288.4 billion);
and Industrials ($280.4 billion).
In the U.S. bond market, the major bond groups produced a mixed bag of returns
in the first half of 2021. The top-performing major debt group we track is
speculative-grade in nature. The Bloomberg Barclays U.S. Corporate High Yield
Index posted a total return of 3.62%. The worst-performing debt group we track
is a blend of government and investment-grade corporate bonds. The Bloomberg
Barclays U.S. Aggregate Index posted a total return of -1.60%. The yield on the
benchmark 10-Year Treasury Note rose 55 basis points to 1.47% in the first half
of 2021, according to Bloomberg. For comparative purposes, its average yield for
the 20-year period ended June 30, 2021, was 3.07%. It is still extraordinarily
low.
FOREIGN STOCKS AND BONDS
The U.S. dollar rose by 2.78% against a basket of major currencies in the first
half of 2021, as measured by the U.S. Dollar Index ("DXY"), according to
Bloomberg. The DXY closed at a reading of 92.44 on June 30, 2021, above its
20-year average of 89.41. The stronger U.S. dollar likely had a bit of a
negative influence on the returns of foreign securities held by U.S. investors,
providing they were unhedged. The strength in the dollar was more noticeable
with respect to bond returns due to the low interest rate levels persisting in
many foreign debt markets, in our opinion.
The Bloomberg Barclays EM Hard Currency Aggregate Index of emerging markets debt
posted a total return of -0.97% (USD), while the Bloomberg Barclays Global
Aggregate Index of higher quality debt declined by 3.21% (USD). With respect to
equities, the MSCI Emerging Markets Index of stocks posted a total return of
7.45% (USD), while the MSCI World ex USA Index was up 9.92% (USD) on a total
return basis, according to Bloomberg.
Page 3
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED)
--------------------------------------------------------------------------------
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
The First Trust Total US Market AlphaDEX(R) 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 AlphaDEX(R) Total US Market
Index (the "Index"). The Fund will normally invest at least 90% of its net
assets (including investment borrowings) in the common stocks that comprise the
Index. The Index is a modified market capitalization index designed to
quantitatively identify and select U.S. exchange-listed securities issued by
small, mid and large cap U.S. companies that exhibit growth and value factors
and appear to have the greatest potential for capital appreciation. The Index is
rebalanced and reconstituted quarterly and the Fund will make corresponding
changes to its portfolio shortly after the Index changes are made public. The
Fund's shares are listed for trading on The Nasdaq Stock Market LLC. The first
day of secondary market trading in shares of the Fund was December 7, 2006.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
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 (12/5/06) Ended Ended (12/5/06)
6/30/21 6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 18.56% 54.35% 15.18% 10.07% 7.50% 102.76% 161.07% 186.58%
Market Value 18.77% 55.16% 15.27% 10.09% 7.51% 103.51% 161.62% 187.22%
INDEX PERFORMANCE
NASDAQ AlphaDEX(R) Total US
Market Index* 19.02% 55.56% 16.05% N/A N/A 110.49% N/A N/A
Russell 3000(R) Index 15.11% 44.16% 17.89% 14.70% 10.26% 127.67% 294.05% 314.88%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On January 9, 2015, the Fund's underlying index changed from the Value
Line(R) Equity Allocation Index to the NASDAQ AlphaDEX(R) Total US Market
Index. Therefore, the Fund's performance and total returns shown for the
periods prior to January 9, 2015, are not necessarily indicative of the
performance the Fund, based on its current index, would have generated.
Since the Fund's current underlying index had an inception date of
September 8, 2014, it was not in existence for all of the periods
disclosed.
(See Notes to Fund Performance Overview on page 12.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Financials 19.5%
Consumer Discretionary 13.6
Information Technology 12.7
Industrials 12.6
Health Care 11.4
Utilities 7.6
Consumer Staples 5.9
Communication Services 5.2
Real Estate 4.8
Materials 4.7
Energy 2.0
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Moderna, Inc. 0.7%
Biogen, Inc. 0.5
Target Corp. 0.5
eBay, Inc. 0.5
Allstate (The) Corp. 0.5
SVB Financial Group 0.4
Freeport-McMoRan, Inc. 0.4
CVS Health Corp. 0.4
Lam Research Corp. 0.4
Berkshire Hathaway, Inc., Class B 0.4
-------
Total 4.7%
=======
-----------------------------
Nasdaq(R) and NASDAQ AlphaDEX(R) Total US Market Index are registered trademarks
and service marks of Nasdaq, Inc. (together with its affiliates hereinafter
referred to as the "Corporations") and are licensed for use by First Trust.
AlphaDEX(R) is a registered trademark owned by First Trust that has been
licensed to Nasdaq, Inc. for use in the name of the Index. 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 4
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2010 - JUNE 30, 2021
First Trust Total US Russell 3000(R)
Market AlphaDEX(R) ETF Index
<S> <C> <C>
12/10 $10,000 $10,000
06/11 10,219 10,635
12/11 9,044 10,102
06/12 9,201 11,044
12/12 9,834 11,761
06/13 11,253 13,415
12/13 13,241 15,708
06/14 13,908 16,798
12/14 13,553 17,680
06/15 13,713 18,023
12/15 12,742 17,765
06/16 13,157 18,408
12/16 14,713 20,026
06/17 15,824 21,814
12/17 17,573 24,257
06/18 18,351 25,038
12/18 15,793 22,985
06/19 18,489 27,285
12/19 19,797 30,114
06/20 17,281 29,066
12/20 22,503 36,407
06/21 26,680 41,908
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the index does
not actually hold a portfolio of securities and therefore does not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 5
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
The First Trust Dorsey Wright People's Portfolio 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 Nasdaq Dorsey Wright People's
Portfolio Index (the "Index"). The Fund will normally invest at least 80% of its
total assets (including investment borrowings) in the common stocks or an
exchange-traded fund ("ETF") that comprise the Index. The Index is a modified
market-capitalization weighted index designed to tactically allocate exposure to
one of three allocations: (i) Nasdaq US 500 Large Cap Index; (ii) Nasdaq US 500
Large Cap Equal Weight Index; or (iii) First Trust Enhanced Short Maturity ETF
("FTSM") (each, an "Underlying Allocation"), based on daily relative strength
readings. The Nasdaq US 500 Large Cap Index and the Nasdaq US 500 Large Cap
Equal Weight Index (each, an "Underlying Equity Index") are equity indices that
seek to provide exposure to the 500 securities with the highest float-adjusted
market capitalization comprising the Nasdaq US Benchmark Index. Therefore, each
Underlying Equity Index is composed of the same constituent securities. What
differs, however, is the methodology each Underlying Equity Index utilizes to
assign security weights. The Nasdaq US 500 Large Cap Index assigns security
weights based on market capitalization and the Nasdaq US 500 Large Cap Equal
Weight Index weights components equally. The third Underlying Allocation is
FTSM. FTSM is an actively-managed ETF that invests in short-duration securities,
which are primarily U.S. dollar-denominated, investment-grade securities. The
Index is rebalanced and reconstituted periodically and the Fund will make
corresponding changes to its portfolio shortly after the Index changes are made
public. The Fund's shares are listed for trading on the Nasdaq Stock Market LLC.
The first day of secondary market trading in shares of the Fund was August 30,
2012.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months 1 Year 5 Years Inception 5 Year Inception
Ended Ended Ended (8/29/12) Ended (8/29/12)
6/30/21 6/30/21 6/30/21 to 6/30/21 6/30/21 to 6/30/21
<S> <C> <C> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 14.01% 27.81% 7.67% 6.98% 44.69% 81.57%
Market Value 14.06% 27.88% 7.70% 6.98% 44.90% 81.45%
INDEX PERFORMANCE
Nasdaq Dorsey Wright People's Portfolio
Index* 14.36% 28.64% N/A N/A N/A N/A
S&P 500(R) Index 15.25% 40.79% 17.65% 15.74% 125.36% 263.96%
Nasdaq US 500 Large Cap Index 14.36% 41.30% 18.09% N/A 129.69% N/A
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On August 18, 2017, the Fund's underlying index changed from the CBOE(R)
VIX(R) Tail Hedge Index to the Nasdaq Dorsey Wright People's Portfolio
Index (the "Index"). Therefore, the Fund's performance and total returns
for the periods prior to August 18, 2017, are not necessarily indicative
of the performance the Fund, based on its current index, would have
generated. Since the Index had an inception date of July 24, 2017, it was
not in existence for all of the periods disclosed.
(See Notes to Fund Performance Overview on page 12.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 29.8%
Health Care 13.5
Consumer Discretionary 12.3
Financials 11.0
Communication Services 9.9
Industrials 8.5
Consumer Staples 6.0
Energy 2.7
Real Estate 2.4
Utilities 2.1
Materials 1.8
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Apple, Inc. 6.1%
Microsoft Corp. 5.8
Amazon.com, Inc. 4.2
Facebook, Inc., Class A 2.2
Alphabet, Inc., Class A 2.1
Tesla, Inc. 1.5
JPMorgan Chase & Co. 1.3
NVIDIA Corp. 1.3
Johnson & Johnson 1.2
Visa, Inc., Class A 1.1
-------
Total 26.8%
=======
-----------------------------
Nasdaq(R) and Nasdaq Dorsey Wright People's Portfolio Index are registered
trademarks and service marks of Nasdaq, Inc. (together with its affiliates
hereinafter referred to as the "Corporations") and are licensed for use by First
Trust. The Fund has not been passed on by the Corporations as to its legality or
suitability. The Fund is not issued, endorsed, sold or promoted by the
Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH
RESPECT TO THE FUND.
Page 6
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
AUGUST 29, 2012 - JUNE 30, 2021
First Trust Dorsey Wright S&P 500(R)
People's Portfolio ETF Index
<S> <C> <C>
08/12 $10,000 $10,000
12/12 9,863 10,193
06/13 10,686 11,602
12/13 11,738 13,494
06/14 12,251 14,457
12/14 13,525 15,342
06/15 13,175 15,531
12/15 12,730 15,554
06/16 12,551 16,151
12/16 12,800 17,414
06/17 13,952 19,040
12/17 15,579 21,214
06/18 15,782 21,776
12/18 14,292 20,284
06/19 17,139 24,045
12/19 18,609 26,673
06/20 14,206 25,851
12/20 15,925 31,580
06/21 18,157 36,396
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the index does
not actually hold a portfolio of securities and therefore does not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 7
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW 30 EQUAL WEIGHT ETF (EDOW)
The First Trust Dow 30 Equal Weight 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 Industrial Average(R) Equal
Weight Index (the "Index"). The Fund will normally invest at least 90% of its
net assets (including investment borrowings) in the common stocks that comprise
the Index. The Index is an equal weight version of the Dow Jones Industrial
Average(R) (the "DJIA"). The 30 securities comprising the DJIA are issued by
blue-chip U.S. companies covering all industries, with the exception of
transportation and utilities. Inclusion in the DJIA is not governed by
quantitative rules but rather is based on the following criteria: (i) the
company is not a utility or in the transportation business; (ii) the company has
a premier reputation in its field; (iii) the company has a history of successful
growth; (iv) there is wide interest in the company among individual and
institutional investors; and (v) the company should be incorporated and
headquartered in the U.S. Whenever one component is changed, the others are
reviewed. For the sake of historical continuity, composition changes are rarely
made. In the event that there is a change in the components of the DJIA, the
component removed from the DJIA will simultaneously be removed from the Index,
and the component that replaces the removed component will be added to the Index
at the same weight as the component that was removed. The Index is rebalanced
quarterly and reconstituted as needed and the Fund will make corresponding
changes to its portfolio shortly after the Index changes are made public. The
Fund's shares are listed for trading on the NYSE Arca, Inc. The first day of
secondary market trading in shares of the Fund was August 9, 2017.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months 1 Year Inception Inception
Ended Ended (8/8/17) (8/8/17)
6/30/21 6/30/21 to 6/30/21 to 6/30/21
<S> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 13.39% 33.70% 13.73% 65.00%
Market Value 13.38% 33.63% 13.74% 65.05%
INDEX PERFORMANCE
Dow Jones Industrial Average(R) Equal Weight Index 13.77% 34.56% 14.47% 69.22%
Dow Jones Industrial Average(R) 13.79% 36.34% 14.73% 70.72%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 12.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 23.6%
Health Care 13.5
Financials 13.2
Consumer Staples 13.1
Industrials 13.1
Consumer Discretionary 10.6
Communication Services 6.6
Energy 3.2
Materials 3.1
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
NIKE, Inc., Class B 3.9%
Apple, Inc. 3.6
Microsoft Corp. 3.5
Home Depot (The), Inc. 3.4
Merck & Co., Inc. 3.4
salesforce.com, Inc. 3.4
UnitedHealth Group, Inc. 3.4
American Express Co. 3.4
Amgen, Inc. 3.4
Goldman Sachs Group (The), Inc. 3.4
-------
Total 34.8%
=======
-----------------------------
Dow Jones Industrial Average(R) Equal Weight Index ("Index") is a product of S&P
Dow Jones Indices LLC or its affiliates ("SPDJI") and has been licensed for use
by First Trust. 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 nor do they have any liability for any errors, omissions, or
interruptions of the Index.
Page 8
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW 30 EQUAL WEIGHT ETF (EDOW) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
AUGUST 8, 2017 - JUNE 30, 2021
Dow Jones Industrial
First Trust Dow 30 Average(R) Equal Dow Jones Industrial
Equal Weight ETF Weight Index Average(R)
<S> <C> <C> <C>
08/17 $10,000 $10,000 $10,000
12/17 11,102 11,124 11,302
06/18 11,024 11,069 11,219
12/18 11,004 11,079 10,908
06/19 12,615 12,739 12,588
12/19 13,676 13,849 13,674
06/20 12,342 12,576 12,521
12/20 14,552 14,874 15,004
06/21 16,500 16,922 17,072
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 9
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR)
The First Trust Lunt U.S. Factor Rotation 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 Lunt Capital Large Cap Factor
Rotation Index (the "Index"). The Fund will normally invest at least 90% of its
net assets (including investment borrowings) in the common stocks that comprise
the Index. The Index is owned and was developed by Lunt Capital Management, Inc.
(the "Index Provider"). The Index is calculated and maintained by Nasdaq, Inc.
The Index is designed to track the performance of U.S. securities exhibiting
desirable factor exposure. The Index utilizes the Index Provider's risk-adjusted
relative strength methodology to allocate exposure to securities exhibiting
either high or low levels of the characteristics associated with one of four
primary investing factors: momentum, value, quality and volatility. The Index is
rebalanced and reconstituted periodically and the Fund will make corresponding
changes to its portfolio after the Index changes are made public. The Fund's
shares are listed for trading on CBOE BZX Exchange, Inc. The first day of
secondary market trading in shares of the Fund was July 26, 2018.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months 1 Year Inception Inception
Ended Ended (7/25/18) (7/25/18)
6/30/21 6/30/21 to 6/30/21 to 6/30/21
<S> <C> <C> <C> <C>
FUND PERFORMANCE
NAV 18.31% 47.04% 21.33% 76.27%
Market Value 18.34% 47.24% 21.36% 76.37%
INDEX PERFORMANCE
Lunt Capital Large Cap Factor Rotation Index 18.75% 48.19% 22.28% 80.32%
Nasdaq US 500 Large Cap Index 14.36% 41.30% 18.04% 62.61%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes to Fund Performance Overview on page 12.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Health Care 29.4%
Financials 19.0
Consumer Staples 13.3
Information Technology 12.5
Consumer Discretionary 7.4
Industrials 6.6
Utilities 5.2
Real Estate 4.2
Materials 1.6
Communication Services 0.4
Energy 0.4
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Regeneron Pharmaceuticals, Inc. 2.5%
Seagen, Inc. 2.3
BioMarin Pharmaceutical, Inc. 2.3
Splunk, Inc. 2.2
Vertex Pharmaceuticals, Inc. 2.2
Clorox (The) Co. 1.9
Merck & Co., Inc. 1.6
Moody's Corp. 1.6
Gilead Sciences, Inc. 1.5
O'Reilly Automotive, Inc. 1.5
-------
Total 19.6%
=======
-----------------------------
Lunt Capital Management, Inc. ("Lunt") and the Lunt Capital Large Cap Factor
Rotation Index ("Lunt Index") are trademarks of Lunt and have been licensed for
use for certain purposes by First Trust. The First Trust Lunt U.S. Factor
Rotation ETF is based on the Lunt Index and is not sponsored, endorsed, sold or
promoted by Lunt, and Lunt makes no representation regarding the advisability of
trading in such fund. Lunt has contracted with Nasdaq, Inc. to calculate and
maintain the Lunt Index. The Fund is not sponsored, endorsed, sold or promoted
by Nasdaq, Inc. or its affiliates (Nasdaq, with its affiliates, hereinafter
referred to as the "Corporations"). The Corporations have not passed on the
legality or suitability of, or the accuracy or adequacy of descriptions and
disclosures relating to, the Fund. The Corporations make no representation or
warranty, express or implied to the owners of the Fund or any member of the
public regarding the advisability of investing in securities generally or in the
Fund particularly, or the ability of the Lunt Index to track general stock
performance.
Page 10
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
JULY 25, 2018 - JUNE 30, 2021
First Trust Lunt U.S. Lunt Capital Large Cap Nasdaq US 500
Factor Rotation ETF Factor Rotation Index Large Cap Index
<S> <C> <C> <C>
07/18 $10,000 $10,000 $10,000
12/18 8,791 8,813 8,869
06/19 10,828 10,901 10,567
12/19 11,459 11,578 11,711
06/20 11,988 12,168 11,509
12/20 14,899 15,184 14,220
06/21 17,627 18,031 16,261
</TABLE>
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 11
<PAGE>
--------------------------------------------------------------------------------
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. The total returns would have been lower if certain fees had not been
waived and expenses reimbursed by the Advisor.
Each Fund's per share net asset value ("NAV") is the value of one share of the
Fund and is computed by dividing the value of all assets of the Fund (including
accrued interest and dividends), less all liabilities (including accrued
expenses and dividends declared but unpaid), by the total number of outstanding
shares. The price used to calculate market return ("Market Price") is determined
by using the midpoint of the national best bid and offer price ("NBBO") as of
the time that the Fund's NAV is calculated. Under SEC rules, the NBBO consists
of the highest displayed buy and lowest sell prices among the various exchanges
trading the Fund at the time the Fund's NAV is calculated. Prior to January 1,
2019, the price used was the midpoint between the highest bid and the lowest
offer on the stock exchange on which shares of the Fund were listed for trading
as of the time that the Fund's NAV was calculated. Since shares of each Fund did
not trade in the secondary market until after 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 12
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2021 (UNAUDITED)
As a shareholder of First Trust Total US Market AlphaDEX(R) ETF, First Trust
Dorsey Wright People's Portfolio ETF, First Trust Dow 30 Equal Weight ETF or
First Trust Lunt U.S. Factor Rotation ETF (each a "Fund" and collectively, the
"Funds"), you incur two types of costs: (1) transaction costs; and (2) ongoing
costs, including management fees, distribution and/or service (12b-1) fees, if
any, and other Fund expenses. This Example is intended to help you understand
your ongoing costs 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 June 30, 2021.
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.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO EXPENSES PAID
BEGINNING ENDING BASED ON THE DURING THE
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH SIX-MONTH
JANUARY 1, 2021 JUNE 30, 2021 PERIOD PERIOD (b)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
Actual $1,000.00 $1,185.60 0.70% (a) $3.79
Hypothetical (5% return before expenses) $1,000.00 $1,021.32 0.70% (a) $3.51
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO
ETF (DWPP)
Actual $1,000.00 $1,140.10 0.60% $3.18
Hypothetical (5% return before expenses) $1,000.00 $1,021.82 0.60% $3.01
FIRST TRUST DOW 30 EQUAL WEIGHT ETF (EDOW)
Actual $1,000.00 $1,133.90 0.50% $2.65
Hypothetical (5% return before expenses) $1,000.00 $1,022.32 0.50% $2.51
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR)
Actual $1,000.00 $1,183.10 0.65% $3.52
Hypothetical (5% return before expenses) $1,000.00 $1,021.57 0.65% $3.26
</TABLE>
(a) These expense ratios reflect an expense cap. See Note 3 in 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 (January 1,
2021 through June 30, 2021), multiplied by 181/365 (to reflect the
six-month period).
Page 13
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
AEROSPACE & DEFENSE -- 1.6%
55 AAR Corp. (a) $ 2,131
59 AeroVironment, Inc. (a) 5,909
108 Axon Enterprise, Inc. (a) 19,094
156 BWX Technologies, Inc. 9,067
58 Curtiss-Wright Corp. 6,888
378 General Dynamics Corp. 71,162
160 Howmet Aerospace, Inc. (a) 5,515
125 Huntington Ingalls Industries,
Inc. 26,344
169 L3Harris Technologies, Inc. 36,529
93 Lockheed Martin Corp. 35,187
121 Maxar Technologies, Inc. 4,830
159 Northrop Grumman Corp. 57,785
113 Parsons Corp. (a) 4,448
12 Teledyne Technologies, Inc. (a) 5,026
275 Textron, Inc. 18,912
497 Triumph Group, Inc. (a) 10,313
336 Virgin Galactic Holdings, Inc. (a) 15,456
--------------
334,596
--------------
AIR FREIGHT & LOGISTICS -- 0.5%
189 Atlas Air Worldwide Holdings,
Inc. (a) 12,873
108 C.H. Robinson Worldwide, Inc. 10,116
143 Expeditors International of
Washington, Inc. 18,104
181 FedEx Corp. 53,998
136 Hub Group, Inc., Class A (a) 8,973
83 XPO Logistics, Inc. (a) 11,611
--------------
115,675
--------------
AIRLINES -- 0.1%
861 American Airlines Group, Inc. (a) 18,262
168 SkyWest, Inc. (a) 7,236
--------------
25,498
--------------
AUTO COMPONENTS -- 1.0%
497 Aptiv PLC (a) 78,193
555 BorgWarner, Inc. 26,940
188 Dana, Inc. 4,467
22 Dorman Products, Inc. (a) 2,281
162 Fox Factory Holding Corp. (a) 25,217
577 Gentex Corp. 19,093
62 Gentherm, Inc. (a) 4,405
17 LCI Industries 2,234
85 Lear Corp. 14,899
81 Patrick Industries, Inc. 5,913
275 Standard Motor Products, Inc. 11,921
19 Visteon Corp. (a) 2,298
88 XPEL, Inc. (a) (b) 7,380
--------------
205,241
--------------
AUTOMOBILES -- 0.9%
4,198 Ford Motor Co. (a) 62,382
1,491 General Motors Co. (a) 88,223
128 Harley-Davidson, Inc. 5,865
26 Tesla, Inc. (a) 17,672
191 Thor Industries, Inc. 21,583
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
AUTOMOBILES (CONTINUED)
119 Winnebago Industries, Inc. $ 8,087
--------------
203,812
--------------
BANKS -- 7.4%
192 1st Source Corp. 8,920
174 Ameris Bancorp 8,810
535 Associated Banc-Corp. 10,957
179 Atlantic Union Bankshares Corp. 6,483
126 Banc of California, Inc. 2,210
32 BancFirst Corp. 1,998
441 Bancorp (The), Inc. (a) 10,147
281 BancorpSouth Bank 7,961
443 Bank of America Corp. 18,265
26 Bank of Hawaii Corp. 2,190
503 Bank OZK 21,207
104 BankUnited, Inc. 4,440
129 Banner Corp. 6,993
230 BOK Financial Corp. 19,918
152 Brookline Bancorp, Inc. 2,272
168 Cathay General Bancorp 6,613
942 Citigroup, Inc. 66,647
1,553 Citizens Financial Group, Inc. 71,236
84 City Holding Co. 6,320
106 Columbia Banking System, Inc. 4,087
215 Comerica, Inc. 15,338
134 Commerce Bancshares, Inc. 9,991
30 Community Bank System, Inc. 2,270
361 ConnectOne Bancorp, Inc. 9,447
142 Cullen/Frost Bankers, Inc. 15,904
287 Customers Bancorp, Inc. (a) 11,190
310 CVB Financial Corp. 6,383
172 Eagle Bancorp, Inc. 9,646
209 East West Bancorp, Inc. 14,983
92 Enterprise Financial Services
Corp. 4,268
720 F.N.B. Corp. 8,878
51 FB Financial Corp. 1,903
915 Fifth Third Bancorp 34,980
158 First Bancorp 6,464
406 First BanCorp 4,840
356 First Busey Corp. 8,779
18 First Citizens BancShares, Inc.,
Class A 14,989
477 First Commonwealth Financial
Corp. 6,711
381 First Financial Bancorp 9,003
330 First Financial Bankshares, Inc. 16,213
390 First Foundation, Inc. 8,779
250 First Hawaiian, Inc. 7,085
1,520 First Horizon Corp. 26,266
149 First Interstate BancSystem, Inc.,
Class A 6,233
147 First Merchants Corp. 6,126
209 First Midwest Bancorp, Inc. 4,144
308 First Republic Bank 57,648
403 Fulton Financial Corp. 6,359
99 German American Bancorp, Inc. 3,683
80 Glacier Bancorp, Inc. 4,406
Page 14 See Notes to Financial Statements
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
BANKS (CONTINUED)
54 Hancock Whitney Corp. $ 2,400
182 Heartland Financial USA, Inc. 8,552
243 Heritage Financial Corp. 6,080
335 Hilltop Holdings, Inc. 12,194
169 Home BancShares, Inc. 4,171
455 Hope Bancorp, Inc. 6,452
1,308 Huntington Bancshares, Inc. 18,665
27 Independent Bank Corp. 2,039
32 Independent Bank Group, Inc. 2,367
148 International Bancshares Corp. 6,355
467 Investors Bancorp, Inc. 6,659
225 JPMorgan Chase & Co. 34,997
2,574 KeyCorp 53,153
33 Lakeland Financial Corp. 2,034
167 Live Oak Bancshares, Inc. 9,853
339 M&T Bank Corp. 49,260
230 National Bank Holdings Corp.,
Class A 8,680
172 NBT Bancorp, Inc. 6,187
191 OceanFirst Financial Corp. 3,980
404 OFG Bancorp 8,937
473 Old National Bancorp 8,330
216 Origin Bancorp, Inc. 9,171
105 Pacific Premier Bancorp, Inc. 4,440
35 Park National Corp. 4,110
174 Pinnacle Financial Partners, Inc. 15,362
391 PNC Financial Services Group
(The), Inc. 74,587
366 Popular, Inc. 27,468
108 Preferred Bank 6,833
275 Prosperity Bancshares, Inc. 19,745
2,489 Regions Financial Corp. 50,228
110 Renasant Corp. 4,400
68 S&T Bancorp, Inc. 2,128
105 Sandy Spring Bancorp, Inc. 4,634
63 Seacoast Banking Corp. of Florida 2,151
75 ServisFirst Bancshares, Inc. 5,099
114 Signature Bank 28,004
80 Silvergate Capital Corp.,
Class A (a) 9,066
308 Simmons First National Corp.,
Class A 9,037
131 South State Corp. 10,711
178 Southside Bancshares, Inc. 6,805
298 Sterling Bancorp 7,387
45 Stock Yards Bancorp, Inc. 2,290
174 SVB Financial Group (a) 96,819
450 Synovus Financial Corp. 19,746
32 Texas Capital Bancshares,
Inc. (a) 2,032
55 Tompkins Financial Corp. 4,266
301 TowneBank 9,156
96 TriCo Bancshares 4,088
148 Triumph Bancorp, Inc. (a) 10,989
882 Truist Financial Corp. 48,951
272 Trustmark Corp. 8,378
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
BANKS (CONTINUED)
620 U.S. Bancorp $ 35,321
74 UMB Financial Corp. 6,886
178 United Bankshares, Inc. 6,497
134 United Community Banks, Inc. 4,289
665 Valley National Bancorp 8,931
140 Veritex Holdings, Inc. 4,957
41 Webster Financial Corp. 2,187
1,316 Wells Fargo & Co. 59,602
190 WesBanco, Inc. 6,770
73 Westamerica Bancorporation 4,236
272 Western Alliance Bancorp 25,255
121 Wintrust Financial Corp. 9,151
374 Zions Bancorp N.A. 19,770
--------------
1,593,861
--------------
BEVERAGES -- 0.5%
17 Boston Beer (The) Co., Inc.,
Class A (a) 17,354
95 Celsius Holdings, Inc. (a) 7,229
16 Coca-Cola Consolidated, Inc. 6,434
150 Constellation Brands, Inc.,
Class A 35,083
116 MGP Ingredients, Inc. 7,846
101 Molson Coors Beverage Co.,
Class B (a) 5,423
421 National Beverage Corp. 19,884
--------------
99,253
--------------
BIOTECHNOLOGY -- 3.2%
38 Acceleron Pharma, Inc. (a) 4,769
81 Arcus Biosciences, Inc. (a) 2,224
501 Avid Bioservices, Inc. (a) 12,851
193 Beam Therapeutics, Inc. (a) 24,841
449 BioCryst Pharmaceuticals,
Inc. (a) 7,099
306 Biogen, Inc. (a) 105,959
53 Blueprint Medicines Corp. (a) 4,662
34 CareDx, Inc. (a) 3,112
404 Curis, Inc. (a) 3,260
180 Denali Therapeutics, Inc. (a) 14,119
180 DermTech, Inc. (a) 7,483
930 Dynavax Technologies Corp. (a) 9,160
111 Emergent BioSolutions, Inc. (a) 6,992
130 Exact Sciences Corp. (a) 16,160
187 Fate Therapeutics, Inc. (a) 16,230
247 Halozyme Therapeutics, Inc. (a) 11,216
745 Horizon Therapeutics PLC (a) 69,762
481 ImmunityBio, Inc. (a) 6,869
846 ImmunoGen, Inc. (a) 5,575
114 Intellia Therapeutics, Inc. (a) 18,458
45 Ligand Pharmaceuticals, Inc. (a) 5,903
215 MacroGenics, Inc. (a) 5,775
30 Mirati Therapeutics, Inc. (a) 4,846
654 Moderna, Inc. (a) 153,677
181 Morphic Holding, Inc. (a) 10,388
101 Natera, Inc. (a) 11,466
142 Novavax, Inc. (a) 30,148
1,065 OPKO Health, Inc. (a) (c) 4,313
627 Organogenesis Holdings, Inc. (a) 10,421
See Notes to Financial Statements Page 15
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
BIOTECHNOLOGY (CONTINUED)
176 Protagonist Therapeutics,
Inc. (a) $ 7,899
273 Prothena Corp. PLC (a) 14,035
219 Radius Health, Inc. (a) 3,995
137 Sage Therapeutics, Inc. (a) 7,783
107 TG Therapeutics, Inc. (a) 4,150
83 Twist Bioscience Corp. (a) 11,060
90 Ultragenyx Pharmaceutical,
Inc. (a) 8,581
154 United Therapeutics Corp. (a) 27,629
165 Vericel Corp. (a) 8,662
301 Vir Biotechnology, Inc. (a) 14,231
--------------
695,763
--------------
BUILDING PRODUCTS -- 1.1%
152 A.O. Smith Corp. 10,953
249 Advanced Drainage Systems, Inc. 29,026
41 Allegion PLC 5,711
93 American Woodmark Corp. (a) 7,597
280 Apogee Enterprises, Inc. 11,404
554 Builders FirstSource, Inc. (a) 23,634
812 Carrier Global Corp. 39,463
814 Cornerstone Building Brands,
Inc. (a) 14,799
17 CSW Industrials, Inc. 2,014
161 Fortune Brands Home & Security,
Inc. 16,037
50 Gibraltar Industries, Inc. (a) 3,815
252 Griffon Corp. 6,459
165 JELD-WEN Holding, Inc. (a) 4,333
16 Lennox International, Inc. 5,613
86 Masco Corp. 5,066
56 Owens Corning 5,482
362 PGT Innovations, Inc. (a) 8,409
404 Resideo Technologies, Inc. (a) 12,120
112 Trex Co., Inc. (a) 11,448
90 UFP Industries, Inc. 6,691
--------------
230,074
--------------
CAPITAL MARKETS -- 3.6%
104 Affiliated Managers Group, Inc. 16,038
92 Ares Management Corp., Class A 5,850
210 B. Riley Financial, Inc. 15,855
1,450 Bank of New York Mellon (The)
Corp. 74,284
948 BGC Partners, Inc., Class A 5,375
23 BlackRock, Inc. 20,124
112 Brightsphere Investment Group,
Inc. 2,624
140 Carlyle Group (The), Inc. 6,507
208 Cboe Global Markets, Inc. 24,763
325 Cowen, Inc., Class A 13,341
411 Donnelley Financial Solutions,
Inc. (a) 13,563
69 Evercore, Inc., Class A 9,713
365 Federated Hermes, Inc. 12,377
869 Franklin Resources, Inc. 27,799
210 Goldman Sachs Group (The), Inc. 79,701
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
CAPITAL MARKETS (CONTINUED)
469 Golub Capital BDC, Inc. $ 7,232
1,019 Invesco Ltd. 27,238
854 Jefferies Financial Group, Inc. 29,207
351 KKR & Co., Inc. 20,793
473 Lazard Ltd., Class A 21,403
181 LPL Financial Holdings, Inc. 24,431
43 Moelis & Co., Class A 2,446
883 Morgan Stanley 80,962
46 Morningstar, Inc. 11,827
116 Nasdaq, Inc. 20,393
63 Piper Sandler Cos. 8,162
126 Raymond James Financial, Inc. 16,368
209 Sculptor Capital Management, Inc. 5,139
338 SEI Investments Co. 20,946
816 State Street Corp. 67,141
321 Stifel Financial Corp. 20,820
140 StoneX Group, Inc. (a) 8,494
200 T. Rowe Price Group, Inc. 39,594
69 Tradeweb Markets, Inc., Class A 5,835
89 Victory Capital Holdings, Inc.,
Class A 2,874
147 Virtu Financial, Inc., Class A 4,062
19 Virtus Investment Partners, Inc. 5,278
731 WisdomTree Investments, Inc. 4,532
--------------
783,091
--------------
CHEMICALS -- 1.7%
359 Amyris, Inc. (a) 5,877
58 Ashland Global Holdings, Inc. 5,075
97 Avient Corp. 4,769
174 Axalta Coating Systems Ltd. (a) 5,305
172 Celanese Corp. 26,075
453 CF Industries Holdings, Inc. 23,307
39 Chase Corp. 4,002
164 Chemours (The) Co. 5,707
735 Corteva, Inc. 32,597
268 Dow, Inc. 16,959
187 Eastman Chemical Co. 21,832
125 Element Solutions, Inc. 2,922
136 Ferro Corp. (a) 2,934
373 GCP Applied Technologies,
Inc. (a) 8,676
73 H.B. Fuller Co. 4,644
535 Huntsman Corp. 14,188
22 Innospec, Inc. 1,993
37 International Flavors &
Fragrances, Inc. 5,528
448 Kronos Worldwide, Inc. 6,415
329 LyondellBasell Industries N.V.,
Class A 33,844
121 Minerals Technologies, Inc. 9,519
813 Mosaic (The) Co. 25,943
18 NewMarket Corp. 5,796
301 Olin Corp. 13,924
116 Orion Engineered Carbons S.A. (a) 2,203
42 Quaker Chemical Corp. 9,962
112 RPM International, Inc. 9,932
105 Scotts Miracle-Gro (The) Co. 20,152
Page 16 See Notes to Financial Statements
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
CHEMICALS (CONTINUED)
54 Stepan Co. $ 6,495
88 Valvoline, Inc. 2,856
232 Westlake Chemical Corp. 20,901
--------------
360,332
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 0.7%
45 ABM Industries, Inc. 1,996
1,828 ADT, Inc. 19,724
86 Brady Corp., Class A 4,819
135 BrightView Holdings, Inc. (a) 2,176
58 Brink's (The) Co. 4,457
54 Clean Harbors, Inc. (a) 5,030
1,263 CoreCivic, Inc. (a) 13,224
54 Deluxe Corp. 2,580
133 Harsco Corp. (a) 2,716
163 Healthcare Services Group, Inc. 5,146
116 HNI Corp. 5,100
457 KAR Auction Services, Inc. (a) 8,020
1,387 Pitney Bowes, Inc. 12,164
345 Republic Services, Inc. 37,953
159 Steelcase, Inc., Class A 2,402
76 Stericycle, Inc. (a) 5,438
114 Tetra Tech, Inc. 13,913
55 US Ecology, Inc. (a) 2,064
--------------
148,922
--------------
COMMUNICATIONS EQUIPMENT
-- 1.2%
264 Calix, Inc. (a) 12,540
245 Cambium Networks Corp. (a) 11,846
376 Ciena Corp. (a) 21,391
994 Cisco Systems, Inc. 52,682
446 CommScope Holding Co., Inc. (a) 9,504
476 EchoStar Corp., Class A (a) 11,562
1,045 Extreme Networks, Inc. (a) 11,662
74 F5 Networks, Inc. (a) 13,813
812 Juniper Networks, Inc. 22,208
56 NETGEAR, Inc. (a) 2,146
243 NetScout Systems, Inc. (a) 6,935
294 Plantronics, Inc. (a) 12,269
1,392 Ribbon Communications, Inc. (a) 10,593
172 Ubiquiti, Inc. 53,697
143 Viasat, Inc. (a) 7,127
--------------
259,975
--------------
CONSTRUCTION & ENGINEERING
-- 0.9%
80 AECOM (a) 5,066
47 Ameresco, Inc., Class A (a) 2,948
221 API Group Corp. (a) (b) (d) 4,617
140 Arcosa, Inc. 8,224
122 Comfort Systems USA, Inc. 9,612
76 Construction Partners, Inc.,
Class A (a) 2,386
98 Dycom Industries, Inc. (a) 7,304
92 EMCOR Group, Inc. 11,334
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
CONSTRUCTION & ENGINEERING
(CONTINUED)
627 Great Lakes Dredge & Dock
Corp. (a) $ 9,160
181 IES Holdings, Inc. (a) 9,296
274 MasTec, Inc. (a) 29,071
159 MYR Group, Inc. (a) 14,456
95 NV5 Global, Inc. (a) 8,978
276 Primoris Services Corp. 8,123
292 Quanta Services, Inc. 26,446
603 Tutor Perini Corp. (a) 8,352
38 Valmont Industries, Inc. 8,970
556 WillScot Mobile Mini Holdings
Corp. (a) 15,496
--------------
189,839
--------------
CONSTRUCTION MATERIALS -- 0.5%
191 Eagle Materials, Inc. 27,143
102 Martin Marietta Materials, Inc. 35,885
326 Summit Materials, Inc.,
Class A (a) 11,361
62 US Concrete, Inc. (a) 4,575
102 Vulcan Materials Co. 17,755
--------------
96,719
--------------
CONSUMER FINANCE -- 1.5%
569 Ally Financial, Inc. 28,359
539 Capital One Financial Corp. 83,378
57 Credit Acceptance Corp. (a) 25,884
284 Encore Capital Group, Inc. (a) 13,459
322 Enova International, Inc. (a) 11,016
104 FirstCash, Inc. 7,950
50 Green Dot Corp., Class A (a) 2,342
639 Navient Corp. 12,352
479 OneMain Holdings, Inc. 28,697
308 PRA Group, Inc. (a) 11,849
950 Santander Consumer USA
Holdings, Inc. 34,504
1,145 SLM Corp. 23,976
843 Synchrony Financial 40,902
--------------
324,668
--------------
CONTAINERS & PACKAGING -- 0.9%
73 AptarGroup, Inc. 10,281
84 Avery Dennison Corp. 17,660
335 Berry Global Group, Inc. (a) 21,849
106 Crown Holdings, Inc. 10,834
252 Graphic Packaging Holding Co. 4,571
120 Greif, Inc., Class A 7,266
634 International Paper Co. 38,871
155 O-I Glass, Inc. (a) 2,531
153 Packaging Corp. of America 20,719
570 Ranpak Holdings Corp. (a) 14,267
224 Sealed Air Corp. 13,272
163 Silgan Holdings, Inc. 6,765
244 Sonoco Products Co. 16,324
296 WestRock Co. 15,753
--------------
200,963
--------------
See Notes to Financial Statements Page 17
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
DISTRIBUTORS -- 0.3%
118 Core-Mark Holding Co., Inc. $ 5,311
581 Funko, Inc., Class A (a) 12,363
44 Genuine Parts Co. 5,565
486 LKQ Corp. (a) 23,921
15 Pool Corp. 6,880
--------------
54,040
--------------
DIVERSIFIED CONSUMER SERVICES
-- 0.4%
289 Adtalem Global Education,
Inc. (a) 10,300
120 Chegg, Inc. (a) 9,973
191 Frontdoor, Inc. (a) 9,516
20 Graham Holdings Co., Class B 12,678
64 Grand Canyon Education, Inc. (a) 5,758
302 Service Corp. International 16,184
124 Strategic Education, Inc. 9,431
228 Stride, Inc. (a) 7,326
216 Terminix Global Holdings,
Inc. (a) 10,305
--------------
91,471
--------------
DIVERSIFIED FINANCIAL SERVICES
-- 0.6%
335 Berkshire Hathaway, Inc.,
Class B (a) 93,103
288 Cannae Holdings, Inc. (a) 9,766
631 Equitable Holdings, Inc. 19,214
162 Voya Financial, Inc. 9,963
--------------
132,046
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 0.8%
1,699 AT&T, Inc. 48,897
5,078 Globalstar, Inc. (a) 9,039
249 Iridium Communications, Inc. (a) 9,958
352 Liberty Latin America Ltd.,
Class C (a) 4,963
1,541 Lumen Technologies, Inc. 20,942
1,474 Verizon Communications, Inc. 82,588
--------------
176,387
--------------
ELECTRIC UTILITIES -- 4.2%
170 ALLETE, Inc. 11,897
380 Alliant Energy Corp. 21,189
809 American Electric Power Co., Inc. 68,433
516 Avangrid, Inc. 26,538
533 Duke Energy Corp. 52,618
1,170 Edison International 67,649
862 Entergy Corp. 85,941
432 Evergy, Inc. 26,106
594 Eversource Energy 47,663
1,959 Exelon Corp. 86,803
1,976 FirstEnergy Corp. 73,527
154 Hawaiian Electric Industries,
Inc. 6,511
91 IDACORP, Inc. 8,873
64 MGE Energy, Inc. 4,764
409 NRG Energy, Inc. 16,483
159 OGE Energy Corp. 5,350
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
ELECTRIC UTILITIES (CONTINUED)
198 Otter Tail Corp. $ 9,664
4,391 PG&E Corp. (a) 44,656
316 Pinnacle West Capital Corp. 25,903
193 Portland General Electric Co. 8,893
2,972 PPL Corp. 83,127
1,103 Southern (The) Co. 66,743
773 Xcel Energy, Inc. 50,925
--------------
900,256
--------------
ELECTRICAL EQUIPMENT -- 0.8%
42 Acuity Brands, Inc. 7,855
159 Atkore, Inc. (a) 11,289
45 AZZ, Inc. 2,330
380 Bloom Energy Corp., Class A (a) 10,211
380 Emerson Electric Co. 36,571
170 Encore Wire Corp. 12,884
25 EnerSys 2,443
1,070 FuelCell Energy, Inc. (a) 9,523
79 Generac Holdings, Inc. (a) 32,797
55 Hubbell, Inc. 10,276
478 Plug Power, Inc. (a) 16,343
144 Regal Beloit Corp. 19,226
162 TPI Composites, Inc. (a) 7,844
--------------
179,592
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 1.9%
63 Advanced Energy Industries, Inc. 7,101
232 Arrow Electronics, Inc. (a) 26,408
165 Avnet, Inc. 6,613
148 Benchmark Electronics, Inc. 4,212
62 Cognex Corp. 5,211
1,182 Corning, Inc. 48,344
69 ePlus, Inc. (a) 5,982
301 II-VI, Inc. (a) 21,849
72 Insight Enterprises, Inc. (a) 7,201
394 Jabil, Inc. 22,899
120 Keysight Technologies, Inc. (a) 18,529
109 Knowles Corp. (a) 2,152
39 Littelfuse, Inc. 9,937
272 Methode Electronics, Inc. 13,385
370 MicroVision, Inc. (a) 6,197
71 nLight, Inc. (a) 2,576
148 PC Connection, Inc. 6,848
75 Plexus Corp. (a) 6,856
12 Rogers Corp. (a) 2,410
221 Sanmina Corp. (a) 8,610
80 SYNNEX Corp. 9,741
661 Trimble, Inc. (a) 54,090
158 TTM Technologies, Inc. (a) 2,259
380 Vishay Intertechnology, Inc. 8,569
510 Vontier Corp. 16,616
141 Zebra Technologies Corp.,
Class A (a) 74,658
--------------
399,253
--------------
Page 18 See Notes to Financial Statements
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ENERGY EQUIPMENT & SERVICES
-- 0.1%
482 Archrock, Inc. $ 4,295
375 NOV, Inc. (a) 5,745
214 ProPetro Holding Corp. (a) 1,960
2,575 Transocean Ltd. (a) (c) 11,639
--------------
23,639
--------------
ENTERTAINMENT -- 0.4%
671 AMC Entertainment Holdings,
Inc., Class A (a) (c) 38,032
105 Roku, Inc. (a) 48,221
504 Zynga, Inc., Class A (a) 5,358
--------------
91,611
--------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 4.2%
361 Acadia Realty Trust 7,928
272 Alexander & Baldwin, Inc. 4,983
141 American Assets Trust, Inc. 5,258
357 American Campus Communities,
Inc. 16,679
931 American Finance Trust, Inc. 7,895
1,117 Apartment Investment and
Management Co., Class A 7,495
364 Armada Hoffler Properties, Inc. 4,838
279 AvalonBay Communities, Inc. 58,225
203 Boston Properties, Inc. 23,262
885 Brandywine Realty Trust 12,133
763 Brixmor Property Group, Inc. 17,465
94 Camden Property Trust 12,471
67 Centerspace 5,286
134 Columbia Property Trust, Inc. 2,330
582 Cousins Properties, Inc. 21,406
136 CubeSmart 6,300
1,912 Diversified Healthcare Trust 7,992
328 Douglas Emmett, Inc. 11,027
245 Duke Realty Corp. 11,601
411 Empire State Realty Trust, Inc.,
Class A 4,932
411 Equity Commonwealth 10,768
718 Equity Residential 55,286
126 Essex Property Trust, Inc. 37,801
101 Federal Realty Investment Trust 11,834
485 Gaming and Leisure Properties,
Inc. 22,470
1,472 GEO Group (The), Inc. (c) 10,481
506 Global Net Lease, Inc. 9,361
373 Healthcare Trust of America, Inc.,
Class A 9,959
1,080 Healthpeak Properties, Inc. 35,953
106 Highwoods Properties, Inc. 4,788
305 Host Hotels & Resorts, Inc. (a) 5,213
168 Hudson Pacific Properties, Inc. 4,674
150 Independence Realty Trust, Inc. 2,735
278 Iron Mountain, Inc. 11,765
313 Kilroy Realty Corp. 21,797
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS (CONTINUED)
1,371 Kimco Realty Corp. $ 28,585
237 Kite Realty Group Trust 5,216
110 Lamar Advertising Co., Class A 11,486
1,028 Lexington Realty Trust 12,285
219 LTC Properties, Inc. 8,407
781 Macerich (The) Co. 14,253
148 Mack-Cali Realty Corp. 2,538
242 Medical Properties Trust, Inc. 4,864
71 Mid-America Apartment
Communities, Inc. 11,958
126 National Health Investors, Inc. 8,448
350 National Retail Properties, Inc. 16,408
415 Office Properties Income Trust 12,164
421 Omega Healthcare Investors, Inc. 15,278
902 Paramount Group, Inc. 9,083
270 Realty Income Corp. 18,020
181 Regency Centers Corp. 11,597
288 Retail Opportunity Investments
Corp. 5,086
436 Retail Properties of America,
Inc., Class A 4,992
401 RPT Realty 5,205
658 Sabra Health Care REIT, Inc. 11,976
57 Saul Centers, Inc. 2,591
578 Service Properties Trust 7,283
337 SITE Centers Corp. 5,075
367 SL Green Realty Corp. 29,360
54 Spirit Realty Capital, Inc. 2,583
117 UDR, Inc. 5,731
553 Urban Edge Properties 10,562
643 Ventas, Inc. 36,715
533 VEREIT, Inc. 24,481
364 VICI Properties, Inc. 11,291
113 Vornado Realty Trust 5,274
103 Washington Real Estate Investment
Trust 2,369
255 Weingarten Realty Investors 8,178
481 Weyerhaeuser Co. 16,556
291 WP Carey, Inc. 21,714
--------------
912,003
--------------
FOOD & STAPLES RETAILING -- 1.2%
809 Albertsons Cos., Inc., Class A (c) 15,905
417 Andersons (The), Inc. 12,731
458 BJ's Wholesale Club Holdings,
Inc. (a) 21,792
95 Casey's General Stores, Inc. 18,491
185 Ingles Markets, Inc., Class A 10,780
2,381 Kroger (The) Co. 91,216
89 Performance Food Group Co. (a) 4,316
24 PriceSmart, Inc. 2,184
343 Sprouts Farmers Market, Inc. (a) 8,523
347 United Natural Foods, Inc. (a) 12,832
135 US Foods Holding Corp. (a) 5,179
252 Walmart, Inc. 35,537
202 Weis Markets, Inc. 10,435
--------------
249,921
--------------
See Notes to Financial Statements Page 19
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
FOOD PRODUCTS -- 3.2%
1,203 Archer-Daniels-Midland Co. $ 72,902
294 B&G Foods, Inc. (c) 9,643
40 Beyond Meat, Inc. (a) 6,300
324 Bunge Ltd. 25,321
178 Cal-Maine Foods, Inc. 6,445
307 Campbell Soup Co. 13,996
1,823 Conagra Brands, Inc. 66,321
349 Darling Ingredients, Inc. (a) 23,557
648 Flowers Foods, Inc. 15,682
399 Fresh Del Monte Produce, Inc. 13,119
97 Freshpet, Inc. (a) 15,807
1,118 General Mills, Inc. 68,120
108 Hershey (The) Co. 18,811
717 Hormel Foods Corp. 34,237
637 Hostess Brands, Inc. (a) 10,313
286 Ingredion, Inc. 25,883
203 J.M. Smucker (The) Co. 26,303
101 John B Sanfilippo & Son, Inc. 8,945
542 Kellogg Co. 34,867
879 Mondelez International, Inc.,
Class A 54,885
865 Pilgrim's Pride Corp. (a) 19,186
97 Post Holdings, Inc. (a) 10,521
44 Sanderson Farms, Inc. 8,271
3 Seaboard Corp. 11,606
69 Tootsie Roll Industries, Inc. 2,340
87 TreeHouse Foods, Inc. (a) 3,873
1,153 Tyson Foods, Inc., Class A 85,045
--------------
692,299
--------------
GAS UTILITIES -- 0.5%
260 Atmos Energy Corp. 24,989
39 Chesapeake Utilities Corp. 4,693
172 New Jersey Resources Corp. 6,806
169 Northwest Natural Holding Co. 8,876
119 ONE Gas, Inc. 8,820
506 South Jersey Industries, Inc. 13,121
166 Southwest Gas Holdings, Inc. 10,987
93 Spire, Inc. 6,721
627 UGI Corp. 29,036
--------------
114,049
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 1.3%
32 Align Technology, Inc. (a) 19,552
289 Alphatec Holdings, Inc. (a) 4,427
38 Axonics, Inc. (a) 2,409
223 Cooper (The) Cos., Inc. 88,368
44 CryoPort, Inc. (a) 2,776
81 DENTSPLY SIRONA, Inc. 5,124
252 Envista Holdings Corp. (a) 10,889
41 Heska Corp. (a) 9,419
140 Hill-Rom Holdings, Inc. 15,903
461 Hologic, Inc. (a) 30,758
11 ICU Medical, Inc. (a) 2,264
50 Integer Holdings Corp. (a) 4,710
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES
(CONTINUED)
74 Integra LifeSciences Holdings
Corp. (a) $ 5,050
47 LeMaitre Vascular, Inc. 2,868
348 Meridian Bioscience, Inc. (a) 7,719
38 Penumbra, Inc. (a) 10,414
1,731 Senseonics Holdings, Inc. (a) (c) 6,647
53 Shockwave Medical, Inc. (a) 10,056
195 STAAR Surgical Co. (a) 29,737
165 TransMedics Group, Inc. (a) 5,475
--------------
274,565
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 4.2%
263 1Life Healthcare, Inc. (a) 8,695
270 Acadia Healthcare Co., Inc. (a) 16,943
124 AdaptHealth Corp. (a) 3,399
31 AMN Healthcare Services, Inc. (a) 3,006
143 Anthem, Inc. 54,597
253 Apollo Medical Holdings, Inc. (a) 15,891
1,889 Brookdale Senior Living, Inc. (a) 14,923
564 Cardinal Health, Inc. 32,199
1,073 Centene Corp. (a) 78,254
355 Cigna Corp. 84,160
169 Community Health Systems,
Inc. (a) 2,609
76 Covetrus, Inc. (a) 2,052
1,139 CVS Health Corp. 95,038
143 DaVita, Inc. (a) 17,222
188 Encompass Health Corp. 14,670
73 Ensign Group (The), Inc. 6,327
118 Fulgent Genetics, Inc. (a) 10,883
101 Guardant Health, Inc. (a) 12,543
76 HealthEquity, Inc. (a) 6,116
297 Henry Schein, Inc. (a) 22,034
164 Humana, Inc. 72,606
336 Laboratory Corp. of America
Holdings (a) 92,686
15 ModivCare, Inc. (a) 2,551
66 Molina Healthcare, Inc. (a) 16,702
117 National HealthCare Corp. 8,178
386 Option Care Health, Inc. (a) 8,442
51 Progyny, Inc. (a) 3,009
668 Quest Diagnostics, Inc. 88,156
417 R1 RCM, Inc. (a) 9,274
105 RadNet, Inc. (a) 3,537
134 Select Medical Holdings Corp. 5,663
258 Surgery Partners, Inc. (a) 17,188
494 Tenet Healthcare Corp. (a) 33,093
205 Tivity Health, Inc. (a) 5,394
46 UnitedHealth Group, Inc. 18,420
193 Universal Health Services, Inc.,
Class B 28,261
--------------
914,721
--------------
Page 20 See Notes to Financial Statements
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
HEALTH CARE TECHNOLOGY -- 0.6%
457 Allscripts Healthcare Solutions,
Inc. (a) $ 8,459
954 Cerner Corp. 74,565
566 Evolent Health, Inc., Class A (a) 11,954
99 Inspire Medical Systems, Inc. (a) 19,133
126 NextGen Healthcare, Inc. (a) 2,090
79 Omnicell, Inc. (a) 11,964
67 Schrodinger, Inc. (a) 5,066
--------------
133,231
--------------
HOTELS, RESTAURANTS & LEISURE
-- 0.6%
106 Bally's Corp. (a) 5,736
349 Boyd Gaming Corp. (a) 21,460
161 Brinker International, Inc. (a) 9,958
176 Caesars Entertainment, Inc. (a) 18,260
45 Churchill Downs, Inc. 8,922
143 Dave & Buster's Entertainment,
Inc. (a) 5,806
76 Dine Brands Global, Inc. (a) 6,783
62 Jack in the Box, Inc. 6,909
135 MGM Resorts International 5,758
327 Penn National Gaming, Inc. (a) 25,012
313 Playa Hotels & Resorts N.V. (a) 2,325
140 Red Rock Resorts, Inc.,
Class A (a) 5,950
20 Shake Shack, Inc., Class A (a) 2,140
49 Six Flags Entertainment Corp. (a) 2,121
54 Texas Roadhouse, Inc. 5,195
18 Vail Resorts, Inc. (a) 5,697
--------------
138,032
--------------
HOUSEHOLD DURABLES -- 2.8%
10 Cavco Industries, Inc. (a) 2,222
189 Century Communities, Inc. 12,576
962 D.R. Horton, Inc. 86,936
260 Garmin Ltd. 37,606
785 GoPro, Inc., Class A (a) 9,145
202 Green Brick Partners, Inc. (a) 4,594
24 Helen of Troy Ltd. (a) 5,475
21 Installed Building Products, Inc. 2,570
94 iRobot Corp. (a) 8,779
246 KB Home 10,017
108 La-Z-Boy, Inc. 4,000
338 Leggett & Platt, Inc. 17,512
847 Lennar Corp., Class A 84,149
61 LGI Homes, Inc. (a) 9,878
192 M.D.C. Holdings, Inc. 9,715
193 M/I Homes, Inc. (a) 11,323
124 Meritage Homes Corp. (a) 11,666
134 Mohawk Industries, Inc. (a) 25,753
15 NVR, Inc. (a) 74,600
490 PulteGroup, Inc. 26,739
202 Skyline Champion Corp. (a) 10,767
305 Sonos, Inc. (a) 10,745
297 Taylor Morrison Home Corp. (a) 7,847
703 Tempur Sealy International, Inc. 27,551
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
HOUSEHOLD DURABLES (CONTINUED)
453 Toll Brothers, Inc. $ 26,188
74 TopBuild Corp. (a) 14,636
561 Tri Pointe Homes, Inc. (a) 12,022
87 Tupperware Brands Corp. (a) 2,066
449 Vuzix Corp. (a) 8,239
93 Whirlpool Corp. 20,276
--------------
595,592
--------------
HOUSEHOLD PRODUCTS -- 0.5%
132 Central Garden & Pet Co.,
Class A (a) 6,376
196 Church & Dwight Co., Inc. 16,703
123 Kimberly-Clark Corp. 16,455
253 Procter & Gamble (The) Co. 34,137
691 Reynolds Consumer Products, Inc. 20,972
81 Spectrum Brands Holdings, Inc. 6,888
--------------
101,531
--------------
INDEPENDENT POWER AND RENEWABLE
ELECTRICITY PRODUCERS -- 0.4%
1,918 AES (The) Corp. 50,002
196 Ormat Technologies, Inc. 13,628
1,454 Vistra Corp. 26,972
--------------
90,602
--------------
INDUSTRIAL CONGLOMERATES -- 0.4%
178 3M Co. 35,356
125 Carlisle Cos., Inc. 23,923
2,611 General Electric Co. 35,144
--------------
94,423
--------------
INSURANCE -- 5.3%
1,674 Aflac, Inc. 89,827
16 Alleghany Corp. (a) 10,673
746 Allstate (The) Corp. 97,308
362 American Equity Investment Life
Holding Co. 11,700
200 American Financial Group, Inc. 24,944
106 American National Group, Inc. 15,746
107 AMERISAFE, Inc. 6,387
670 Arch Capital Group Ltd. (a) 26,090
137 Arthur J. Gallagher & Co. 19,191
145 Assurant, Inc. 22,646
270 Assured Guaranty Ltd. 12,820
46 Axis Capital Holdings Ltd. 2,254
217 Chubb Ltd. 34,490
249 Cincinnati Financial Corp. 29,038
461 CNA Financial Corp. 20,971
470 CNO Financial Group, Inc. 11,101
265 Employers Holdings, Inc. 11,342
46 Enstar Group Ltd. (a) 10,990
83 Everest Re Group Ltd. 20,917
632 Fidelity National Financial, Inc. 27,467
454 First American Financial Corp. 28,307
213 Globe Life, Inc. 20,288
71 Hanover Insurance Group (The),
Inc. 9,630
1,026 Hartford Financial Services Group
(The), Inc. 63,581
See Notes to Financial Statements Page 21
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
INSURANCE (CONTINUED)
212 Horace Mann Educators Corp. $ 7,933
323 Kemper Corp. 23,870
248 Lincoln National Corp. 15,584
100 Loews Corp. 5,465
18 Markel Corp. (a) 21,361
188 Mercury General Corp. 12,211
1,128 MetLife, Inc. 67,511
1,177 Old Republic International Corp. 29,319
104 Primerica, Inc. 15,927
343 Principal Financial Group, Inc. 21,674
896 Progressive (The) Corp. 87,996
122 Reinsurance Group of America,
Inc. 13,908
160 RenaissanceRe Holdings Ltd. 23,811
136 Safety Insurance Group, Inc. 10,646
95 Selective Insurance Group, Inc. 7,709
1,124 SiriusPoint Ltd. (a) 11,319
220 Stewart Information Services Corp. 12,472
456 Travelers (The) Cos., Inc. 68,268
924 Unum Group 26,242
205 W.R. Berkley Corp. 15,258
10 White Mountains Insurance Group
Ltd. 11,480
--------------
1,137,672
--------------
INTERACTIVE MEDIA & SERVICES
-- 1.2%
25 Alphabet, Inc., Class A (a) 61,045
697 fuboTV, Inc. (a) (c) 22,381
926 Pinterest, Inc., Class A (a) 73,108
983 Snap, Inc., Class A (a) 66,981
539 Twitter, Inc. (a) 37,088
--------------
260,603
--------------
INTERNET & DIRECT MARKETING
RETAIL -- 1.7%
83 1-800-Flowers.com, Inc.,
Class A (a) 2,645
182 Chewy, Inc., Class A (a) 14,507
1,399 eBay, Inc. 98,224
340 Etsy, Inc. (a) 69,985
138 Overstock.com, Inc. (a) 12,724
559 Quotient Technology, Inc. (a) 6,043
2,186 Qurate Retail, Inc., Series A 28,615
101 RealReal (The), Inc. (a) 1,996
203 Revolve Group, Inc. (a) 13,987
51 Shutterstock, Inc. 5,007
311 Stitch Fix, Inc., Class A (a) 18,753
272 Wayfair, Inc., Class A (a) 85,873
--------------
358,359
--------------
IT SERVICES -- 1.6%
20 Alliance Data Systems Corp. 2,084
439 Cognizant Technology Solutions
Corp., Class A 30,405
1,373 Conduent, Inc. (a) 10,297
102 CSG Systems International, Inc. 4,812
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
IT SERVICES (CONTINUED)
164 DXC Technology Co. (a) $ 6,386
86 EPAM Systems, Inc. (a) 43,943
37 Euronet Worldwide, Inc. (a) 5,008
76 Fastly, Inc., Class A (a) 4,530
144 Fiserv, Inc. (a) 15,392
56 Gartner, Inc. (a) 13,563
360 Genpact Ltd. 16,355
129 International Business Machines
Corp. 18,910
143 Marathon Digital Holdings,
Inc. (a) (c) 4,486
231 MAXIMUS, Inc. 20,321
71 PayPal Holdings, Inc. (a) 20,695
78 Perficient, Inc. (a) 6,273
226 Square, Inc., Class A (a) 55,099
156 Sykes Enterprises, Inc. (a) 8,377
114 TTEC Holdings, Inc. 11,752
50 Twilio, Inc., Class A (a) 19,708
270 Unisys Corp. (a) 6,834
417 Western Union (The) Co. 9,578
25 WEX, Inc. (a) 4,848
--------------
339,656
--------------
LEISURE PRODUCTS -- 0.5%
270 Brunswick Corp. 26,897
107 Hasbro, Inc. 10,114
64 Johnson Outdoors, Inc., Class A 7,744
57 Malibu Boats, Inc., Class A (a) 4,180
1,033 Mattel, Inc. (a) 20,763
39 Polaris, Inc. 5,341
356 Vista Outdoor, Inc. (a) 16,476
285 YETI Holdings, Inc. (a) 26,169
--------------
117,684
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 1.0%
85 10X Genomics, Inc., Class A (a) 16,645
135 Agilent Technologies, Inc. 19,954
1,185 Avantor, Inc. (a) 42,079
566 Bionano Genomics, Inc. (a) (c) 4,149
40 Bio-Techne Corp. 18,010
240 Bruker Corp. 18,235
53 Charles River Laboratories
International, Inc. (a) 19,606
94 Medpace Holdings, Inc. (a) 16,603
463 Pacific Biosciences of California,
Inc. (a) 16,191
272 PPD, Inc. (a) 12,537
117 Quanterix Corp. (a) 6,863
53 Repligen Corp. (a) 10,580
203 Syneos Health, Inc. (a) 18,167
--------------
219,619
--------------
MACHINERY -- 3.6%
184 AGCO Corp. 23,990
29 Alamo Group, Inc. 4,428
504 Allison Transmission Holdings,
Inc. 20,029
Page 22 See Notes to Financial Statements
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MACHINERY (CONTINUED)
41 Altra Industrial Motion Corp. $ 2,666
30 Astec Industries, Inc. 1,888
92 Barnes Group, Inc. 4,715
222 Caterpillar, Inc. 48,314
48 Chart Industries, Inc. (a) 7,023
52 Colfax Corp. (a) 2,382
87 Columbus McKinnon Corp. 4,197
24 Crane Co. 2,217
198 Cummins, Inc. 48,274
229 Deere & Co. 80,771
177 Donaldson Co., Inc. 11,245
125 Dover Corp. 18,825
498 Energy Recovery, Inc. (a) 11,344
119 Federal Signal Corp. 4,787
265 Flowserve Corp. 10,685
1,213 Fortive Corp. 84,595
194 Greenbrier (The) Cos., Inc. 8,454
63 Helios Technologies, Inc. 4,917
26 Hyster-Yale Materials Handling,
Inc. 1,897
348 Ingersoll Rand, Inc. (a) 16,986
57 ITT, Inc. 5,221
25 Kadant, Inc. 4,402
114 Kennametal, Inc. 4,095
84 Lincoln Electric Holdings, Inc. 11,064
27 Lindsay Corp. 4,463
311 Meritor, Inc. (a) 7,284
31 Middleby (The) Corp. (a) 5,371
221 Mueller Industries, Inc. 9,571
329 Mueller Water Products, Inc.,
Class A 4,744
130 Oshkosh Corp. 16,203
553 PACCAR, Inc. 49,355
272 Parker-Hannifin Corp. 83,534
218 Rexnord Corp. 10,909
184 Shyft Group (The), Inc. 6,883
89 Snap-on, Inc. 19,885
39 SPX Corp. (a) 2,382
72 Standex International Corp. 6,834
172 Stanley Black & Decker, Inc. 35,258
29 Tennant Co. 2,316
190 Timken (The) Co. 15,312
100 Toro (The) Co. 10,988
260 Westinghouse Air Brake
Technologies Corp. 21,398
128 Woodward, Inc. 15,729
--------------
777,830
--------------
MARINE -- 0.0%
103 Matson, Inc. 6,592
--------------
MEDIA -- 2.4%
316 Altice USA, Inc., Class A (a) 10,788
172 AMC Networks, Inc., Class A (a) 11,490
28 Charter Communications, Inc.,
Class A (a) 20,201
1,267 Comcast Corp., Class A 72,244
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
MEDIA (CONTINUED)
1,972 Discovery, Inc., Class A (a) (c) $ 60,501
710 DISH Network Corp., Class A (a) 29,678
593 E.W. Scripps (The) Co., Class A 12,091
1,424 Fox Corp., Class A 52,873
621 Gray Television, Inc. 14,532
352 Interpublic Group of (The) Cos.,
Inc. 11,437
110 Magnite, Inc. (a) 3,722
384 Meredith Corp. (a) 16,681
102 New York Times (The) Co.,
Class A 4,442
1,011 News Corp., Class A 26,054
183 Nexstar Media Group, Inc.,
Class A 27,062
139 Omnicom Group, Inc. 11,119
152 Scholastic Corp. 5,759
156 Sinclair Broadcast Group, Inc.,
Class A 5,182
66 TechTarget, Inc. (a) 5,114
607 TEGNA, Inc. 11,387
1,900 ViacomCBS, Inc., Class B 85,880
841 WideOpenWest, Inc. (a) 17,417
--------------
515,654
--------------
METALS & MINING -- 1.6%
70 Alcoa Corp. (a) 2,579
90 Arconic Corp. (a) 3,206
647 Century Aluminum Co. (a) 8,340
1,278 Cleveland-Cliffs, Inc. (a) 27,554
371 Commercial Metals Co. 11,397
2,602 Freeport-McMoRan, Inc. 96,560
21 Kaiser Aluminum Corp. 2,593
34 Materion Corp. 2,562
1,422 Newmont Corp. 90,126
256 Nucor Corp. 24,558
135 Reliance Steel & Aluminum Co. 20,372
109 Schnitzer Steel Industries, Inc.,
Class A 5,346
507 Steel Dynamics, Inc. 30,217
170 Worthington Industries, Inc. 10,401
--------------
335,811
--------------
MORTGAGE REAL ESTATE INVESTMENT
TRUSTS -- 0.2%
307 AGNC Investment Corp. 5,185
598 Annaly Capital Management, Inc. 5,310
164 Apollo Commercial Real Estate
Finance, Inc. 2,616
287 Arbor Realty Trust, Inc. 5,114
74 Blackstone Mortgage Trust, Inc.,
Class A 2,360
180 Chimera Investment Corp. 2,711
194 Ladder Capital Corp. 2,239
117 PennyMac Mortgage Investment
Trust 2,464
341 Ready Capital Corp. 5,412
624 Starwood Property Trust, Inc. 16,330
--------------
49,741
--------------
See Notes to Financial Statements Page 23
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MULTILINE RETAIL -- 1.0%
167 Big Lots, Inc. $ 11,024
24 Dillard's, Inc., Class A 4,341
599 Dollar Tree, Inc. (a) 59,601
316 Franchise Group, Inc. 11,145
259 Kohl's Corp. 14,274
118 Ollie's Bargain Outlet Holdings,
Inc. (a) 9,927
433 Target Corp. 104,673
--------------
214,985
--------------
MULTI-UTILITIES -- 2.5%
843 Ameren Corp. 67,474
191 Avista Corp. 8,150
137 Black Hills Corp. 8,991
227 CenterPoint Energy, Inc. 5,566
840 CMS Energy Corp. 49,627
917 Consolidated Edison, Inc. 65,767
515 DTE Energy Co. 66,744
813 MDU Resources Group, Inc. 25,479
640 NiSource, Inc. 15,680
140 NorthWestern Corp. 8,431
1,423 Public Service Enterprise Group,
Inc. 85,010
646 Sempra Energy 85,582
549 WEC Energy Group, Inc. 48,834
--------------
541,335
--------------
OIL, GAS & CONSUMABLE FUELS
-- 1.9%
759 Antero Midstream Corp. 7,886
1,095 Cabot Oil & Gas Corp. 19,119
952 Cheniere Energy, Inc. (a) 82,576
164 Chevron Corp. 17,177
115 Cimarex Energy Co. 8,332
665 Clean Energy Fuels Corp. (a) 6,750
795 Continental Resources, Inc. 30,234
236 EOG Resources, Inc. 19,692
1,107 EQT Corp. (a) 24,642
1,400 Equitrans Midstream Corp. 11,914
466 Gevo, Inc. (a) (c) 3,388
144 HollyFrontier Corp. 4,737
2,059 Kinder Morgan, Inc. 37,535
398 Magnolia Oil & Gas Corp.,
Class A (a) 6,221
1,926 Marathon Oil Corp. 26,232
338 ONEOK, Inc. 18,806
133 PDC Energy, Inc. 6,090
664 Range Resources Corp. (a) 11,129
140 SM Energy Co. 3,448
1,966 Southwestern Energy Co. (a) 11,147
13 Texas Pacific Land Corp. 20,797
724 Williams (The) Cos., Inc. 19,222
260 World Fuel Services Corp. 8,250
--------------
405,324
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
PAPER & FOREST PRODUCTS -- 0.1%
186 Domtar Corp. (a) $ 10,222
165 Louisiana-Pacific Corp. 9,948
187 Schweitzer-Mauduit International,
Inc. 7,551
--------------
27,721
--------------
PERSONAL PRODUCTS -- 0.5%
1,712 Coty, Inc., Class A (a) 15,990
85 elf Beauty, Inc. (a) 2,307
177 Estee Lauder (The) Cos., Inc.,
Class A 56,300
232 Herbalife Nutrition Ltd. (a) 12,233
22 Medifast, Inc. 6,226
43 Nu Skin Enterprises, Inc.,
Class A 2,436
70 USANA Health Sciences, Inc. (a) 7,170
--------------
102,662
--------------
PHARMACEUTICALS -- 1.0%
272 Aclaris Therapeutics, Inc. (a) 4,776
1,698 Amneal Pharmaceuticals, Inc. (a) 8,694
316 Cara Therapeutics, Inc. (a) 4,509
163 Catalent, Inc. (a) 17,624
175 Elanco Animal Health, Inc. (a) 6,071
925 Endo International PLC (a) 4,329
956 Innoviva, Inc. (a) 12,820
94 Jazz Pharmaceuticals PLC (a) 16,698
139 Ocular Therapeutix, Inc. (a) 1,971
254 Perrigo Co. PLC 11,646
1,419 Pfizer, Inc. 55,568
187 Phibro Animal Health Corp.,
Class A 5,401
259 Prestige Consumer Healthcare,
Inc. (a) 13,494
3,681 Viatris, Inc. 52,601
--------------
216,202
--------------
PROFESSIONAL SERVICES -- 0.9%
72 ASGN, Inc. (a) 6,979
64 Booz Allen Hamilton Holding
Corp. 5,452
104 CACI International, Inc.,
Class A (a) 26,532
140 CBIZ, Inc. (a) 4,588
33 FTI Consulting, Inc. (a) 4,508
52 ICF International, Inc. 4,569
27 Insperity, Inc. 2,440
80 Jacobs Engineering Group, Inc. 10,674
43 Kforce, Inc. 2,706
37 Korn Ferry 2,684
214 Leidos Holdings, Inc. 21,635
52 ManpowerGroup, Inc. 6,183
79 ManTech International Corp.,
Class A 6,837
132 Robert Half International, Inc. 11,744
246 Science Applications International
Corp. 21,582
198 TriNet Group, Inc. (a) 14,351
574 Upwork, Inc. (a) 33,458
--------------
186,922
--------------
Page 24 See Notes to Financial Statements
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
REAL ESTATE MANAGEMENT
& DEVELOPMENT -- 0.5%
217 CBRE Group, Inc., Class A (a) $ 18,603
564 eXp World Holdings, Inc. (a) 21,866
393 Forestar Group, Inc. (a) 8,218
108 Howard Hughes (The) Corp. (a) 10,526
115 Jones Lang LaSalle, Inc. (a) 22,478
339 Kennedy-Wilson Holdings, Inc. 6,736
203 Marcus & Millichap, Inc. (a) 7,891
686 Newmark Group, Inc., Class A 8,239
154 Redfin Corp. (a) 9,765
53 St. Joe (The) Co. 2,364
--------------
116,686
--------------
ROAD & RAIL -- 0.9%
42 AMERCO 24,755
130 ArcBest Corp. 7,565
534 CSX Corp. 17,131
584 Heartland Express, Inc. 10,004
92 J.B. Hunt Transport Services, Inc. 14,991
535 Knight-Swift Transportation
Holdings, Inc. 24,321
62 Landstar System, Inc. 9,797
244 Lyft, Inc., Class A (a) 14,757
673 Marten Transport Ltd. 11,098
71 Old Dominion Freight Line, Inc. 18,020
91 Ryder System, Inc. 6,764
111 Saia, Inc. (a) 23,253
366 Schneider National, Inc., Class B 7,968
242 Werner Enterprises, Inc. 10,774
--------------
201,198
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 4.2%
482 Amkor Technology, Inc. 11,409
641 Applied Materials, Inc. 91,278
111 Axcelis Technologies, Inc. (a) 4,487
37 Broadcom, Inc. 17,643
252 Brooks Automation, Inc. 24,011
41 CEVA, Inc. (a) 1,939
243 Cirrus Logic, Inc. (a) 20,684
218 Cohu, Inc. (a) 8,020
48 Cree, Inc. (a) 4,701
29 Diodes, Inc. (a) 2,313
106 Enphase Energy, Inc. (a) 19,465
184 Entegris, Inc. 22,627
59 First Solar, Inc. (a) 5,340
51 FormFactor, Inc. (a) 1,859
42 Ichor Holdings Ltd. (a) 2,260
80 Impinj, Inc. (a) 4,127
1,339 Intel Corp. 75,171
208 KLA Corp. 67,436
144 Lam Research Corp. 93,701
228 Lattice Semiconductor Corp. (a) 12,809
79 MACOM Technology Solutions
Holdings, Inc. (a) 5,062
67 MaxLinear, Inc. (a) 2,847
110 Microchip Technology, Inc. 16,471
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT (CONTINUED)
972 Micron Technology, Inc. (a) $ 82,601
139 MKS Instruments, Inc. 24,735
247 ON Semiconductor Corp. (a) 9,455
139 Onto Innovation, Inc. (a) 10,153
126 Power Integrations, Inc. 10,340
375 Qorvo, Inc. (a) 73,369
75 Semtech Corp. (a) 5,160
36 Silicon Laboratories, Inc. (a) 5,517
280 Skyworks Solutions, Inc. 53,690
615 SunPower Corp. (a) 17,970
34 Synaptics, Inc. (a) 5,290
423 Teradyne, Inc. 56,665
91 Texas Instruments, Inc. 17,499
197 Ultra Clean Holdings, Inc. (a) 10,583
22 Universal Display Corp. 4,891
331 Veeco Instruments, Inc. (a) 7,957
--------------
911,535
--------------
SOFTWARE -- 2.6%
70 8x8, Inc. (a) 1,943
48 Agilysys, Inc. (a) 2,730
119 Alarm.com Holdings, Inc. (a) 10,079
77 Appian Corp. (a) 10,607
36 Aspen Technology, Inc. (a) 4,951
408 Avaya Holdings Corp. (a) 10,975
106 Bill.com Holdings, Inc. (a) 19,417
47 Blackline, Inc. (a) 5,230
95 CDK Global, Inc. 4,721
26 Cerence, Inc. (a) 2,774
423 Cloudera, Inc. (a) 6,709
244 Cloudflare, Inc., Class A (a) 25,825
320 Digital Turbine, Inc. (a) 24,330
104 Dolby Laboratories, Inc., Class A 10,222
41 Domo, Inc., Class B (a) 3,314
579 Dropbox, Inc., Class A (a) 17,550
213 Dynatrace, Inc. (a) 12,443
357 Ebix, Inc. 12,102
46 Elastic N.V. (a) 6,705
263 FireEye, Inc. (a) 5,318
33 Five9, Inc. (a) 6,052
372 Fortinet, Inc. (a) 88,607
151 HubSpot, Inc. (a) 87,991
783 Ideanomics, Inc. (a) 2,224
72 InterDigital, Inc. 5,258
129 J2 Global, Inc. (a) 17,744
44 Manhattan Associates, Inc. (a) 6,373
38 MicroStrategy, Inc., Class A (a) 25,251
29 Paylocity Holding Corp. (a) 5,533
149 PTC, Inc. (a) 21,048
69 Rapid7, Inc. (a) 6,529
129 Riot Blockchain, Inc. (a) (c) 4,859
203 Sailpoint Technologies Holdings,
Inc. (a) 10,367
80 Smartsheet, Inc., Class A (a) 5,786
1,179 SolarWinds Corp. (a) 19,913
119 Sprout Social, Inc., Class A (a) 10,641
See Notes to Financial Statements Page 25
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
SOFTWARE (CONTINUED)
178 Teradata Corp. (a) $ 8,895
100 Varonis Systems, Inc. (a) 5,762
452 Verint Systems, Inc. (a) 20,372
34 VMware, Inc., Class A (a) (c) 5,439
210 Xperi Holding Corp. 4,670
--------------
567,259
--------------
SPECIALTY RETAIL -- 3.8%
84 Advance Auto Parts, Inc. 17,232
60 America's Car-Mart, Inc. (a) 8,503
313 American Eagle Outfitters, Inc. 11,747
23 Asbury Automotive Group, Inc. (a) 3,942
398 At Home Group, Inc. (a) 14,662
221 AutoNation, Inc. (a) 20,953
37 AutoZone, Inc. (a) 55,212
392 Bed Bath & Beyond, Inc. (a) 13,050
597 Best Buy Co., Inc. 68,643
167 Blink Charging Co. (a) (c) 6,875
183 Boot Barn Holdings, Inc. (a) 15,381
175 Buckle (The), Inc. 8,706
57 Burlington Stores, Inc. (a) 18,353
251 Camping World Holdings, Inc.,
Class A 10,289
120 Dick's Sporting Goods, Inc. 12,023
81 Five Below, Inc. (a) 15,655
162 Floor & Decor Holdings, Inc.,
Class A (a) 17,123
457 Foot Locker, Inc. 28,165
72 Group 1 Automotive, Inc. 11,119
184 GrowGeneration Corp. (a) 8,850
292 Guess?, Inc. 7,709
166 Hibbett, Inc. (a) 14,879
112 Home Depot (The), Inc. 35,716
416 L Brands, Inc. 29,977
66 Lithia Motors, Inc. 22,680
451 Lowe's Cos., Inc. 87,481
231 MarineMax, Inc. (a) 11,259
63 Murphy USA, Inc. 8,402
68 O'Reilly Automotive, Inc. (a) 38,502
320 Penske Automotive Group, Inc. 24,157
198 Rent-A-Center, Inc. 10,508
34 RH (a) 23,086
114 Sally Beauty Holdings, Inc. (a) 2,516
80 Sleep Number Corp. (a) 8,796
484 Tractor Supply Co. 90,053
61 Urban Outfitters, Inc. (a) 2,514
143 Williams-Sonoma, Inc. 22,830
266 Zumiez, Inc. (a) 13,031
--------------
820,579
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 1.2%
333 3D Systems Corp. (a) 13,310
778 Dell Technologies, Inc.,
Class C (a) 77,543
647 Diebold Nixdorf, Inc. (a) 8,307
3,267 Hewlett Packard Enterprise Co. 47,633
212 NetApp, Inc. 17,346
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS (CONTINUED)
239 Pure Storage, Inc., Class A (a) $ 4,668
447 Seagate Technology Holdings PLC 39,305
176 Super Micro Computer, Inc. (a) 6,192
514 Western Digital Corp. (a) 36,581
471 Xerox Holdings Corp. 11,064
--------------
261,949
--------------
TEXTILES, APPAREL & LUXURY
GOODS -- 0.6%
26 Carter's, Inc. 2,682
97 Columbia Sportswear Co. 9,541
320 Crocs, Inc. (a) 37,286
62 Deckers Outdoor Corp. (a) 23,812
303 G-III Apparel Group Ltd. (a) 9,957
49 PVH Corp. (a) 5,272
247 Skechers U.S.A., Inc., Class A (a) 12,308
624 Tapestry, Inc. (a) 27,132
--------------
127,990
--------------
THRIFTS & MORTGAGE FINANCE
-- 0.9%
194 Axos Financial, Inc. (a) 9,000
178 Capitol Federal Financial, Inc. 2,097
541 Essent Group Ltd. 24,318
23 Federal Agricultural Mortgage
Corp., Class C 2,275
253 Flagstar Bancorp, Inc. 10,694
207 HomeStreet, Inc. 8,433
757 Kearny Financial Corp. 9,046
272 Merchants Bancorp 10,673
372 Meridian Bancorp, Inc. 7,611
202 Meta Financial Group, Inc. 10,227
825 MGIC Investment Corp. 11,220
263 Mr. Cooper Group, Inc. (a) 8,695
2,037 New York Community Bancorp,
Inc. 22,448
158 Northwest Bancshares, Inc. 2,155
68 PennyMac Financial Services, Inc. 4,197
206 Premier Financial Corp. 5,853
308 Provident Financial Services, Inc. 7,050
491 Radian Group, Inc. 10,925
252 TFS Financial Corp. 5,116
67 Walker & Dunlop, Inc. 6,993
297 Washington Federal, Inc. 9,439
138 WSFS Financial Corp. 6,429
--------------
194,894
--------------
TOBACCO -- 0.1%
175 Turning Point Brands, Inc. 8,010
194 Universal Corp. 11,052
164 Vector Group Ltd. 2,319
--------------
21,381
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 1.0%
525 Air Lease Corp. 21,913
87 Beacon Roofing Supply, Inc. (a) 4,633
191 Boise Cascade Co. 11,145
Page 26 See Notes to Financial Statements
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
TRADING COMPANIES & DISTRIBUTORS
(CONTINUED)
99 GATX Corp. $ 8,759
167 Global Industrial Co. 6,131
109 GMS, Inc. (a) 5,247
180 H&E Equipment Services, Inc. 5,989
113 Herc Holdings, Inc. (a) 12,664
113 McGrath RentCorp 9,217
51 MSC Industrial Direct Co., Inc.,
Class A 4,576
183 Rush Enterprises, Inc., Class A 7,913
90 SiteOne Landscape Supply, Inc. (a) 15,233
42 Triton International Ltd. 2,198
260 United Rentals, Inc. (a) 82,943
212 Univar Solutions, Inc. (a) 5,169
39 Watsco, Inc. 11,179
53 WESCO International, Inc. (a) 5,449
--------------
220,358
--------------
WATER UTILITIES -- 0.0%
109 SJW Group 6,900
--------------
WIRELESS TELECOMMUNICATION
SERVICES -- 0.4%
140 Shenandoah Telecommunications
Co. 6,791
498 Telephone and Data Systems, Inc. 11,285
410 T-Mobile US, Inc. (a) 59,380
313 United States Cellular Corp. (a) 11,365
--------------
88,821
--------------
TOTAL COMMON STOCKS -- 99.9% 21,581,468
(Cost $17,853,060) --------------
MONEY MARKET FUNDS -- 1.0%
184,639 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
0.01% (e) (f) 184,639
26,349 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class 0.01% (e) 26,349
--------------
TOTAL MONEY MARKET FUNDS
-- 1.0% 210,988
(Cost $210,988) --------------
TOTAL INVESTMENTS -- 100.9% 21,792,456
(Cost $18,064,048) (g)
NET OTHER ASSETS AND
LIABILITIES -- (0.9)% (199,355)
--------------
NET ASSETS -- 100.0% $ 21,593,101
==============
(a) Non-income producing security.
(b) This security may be resold to qualified foreign investors and foreign
institutional buyers under Regulation S of the 1933 Act, as amended (the
"1933 Act").
(c) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $180,483 and the
total value of the collateral held by the Fund is $184,639.
(d) This security is exempt from registration upon resale under Rule 144A of
the 1933 Act and may be resold in transactions exempt from registration,
normally to qualified institutional buyers. This security is not
restricted on the foreign exchange where it trades freely without any
additional registration. As such, it does not require the additional
disclosure required of restricted securities.
(e) Rate shown reflects yield as of June 30, 2021.
(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 June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $3,939,295 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $210,887. The net unrealized appreciation was
$3,728,408.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 21,581,468 $ -- $ --
Money Market
Funds 210,988 -- --
------------------------------------------------
Total Investments $ 21,792,456 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 27
<PAGE>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (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) $ 180,483
Non-cash Collateral(2) (180,483)
--------------
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 June 30, 2021, 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.
Page 28 See Notes to Financial Statements
<PAGE>
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
AEROSPACE & DEFENSE -- 1.6%
187 Boeing (The) Co. (a) $ 44,798
76 General Dynamics Corp. 14,308
14 HEICO Corp. 1,952
62 L3Harris Technologies, Inc. 13,401
84 Lockheed Martin Corp. 31,781
47 Northrop Grumman Corp. 17,081
484 Raytheon Technologies Corp. 41,290
9 Teledyne Technologies, Inc. (a) 3,770
15 TransDigm Group, Inc. (a) 9,709
--------------
178,090
--------------
AIR FREIGHT & LOGISTICS -- 0.7%
50 Expeditors International of
Washington, Inc. 6,330
74 FedEx Corp. 22,077
231 United Parcel Service, Inc.,
Class B 48,041
--------------
76,448
--------------
AIRLINES -- 0.2%
204 Delta Air Lines, Inc. (a) 8,825
161 Southwest Airlines Co. (a) 8,547
95 United Airlines Holdings, Inc. (a) 4,968
--------------
22,340
--------------
AUTO COMPONENTS -- 0.1%
80 Aptiv PLC (a) 12,586
--------------
AUTOMOBILES -- 1.9%
1,190 Ford Motor Co. (a) 17,683
403 General Motors Co. (a) 23,846
252 Tesla, Inc. (a) 171,284
--------------
212,813
--------------
BANKS -- 4.3%
2,409 Bank of America Corp. 99,323
660 Citigroup, Inc. 46,695
128 Citizens Financial Group, Inc. 5,871
198 Fifth Third Bancorp 7,570
56 First Republic Bank 10,482
387 Huntington Bancshares, Inc. 5,522
967 JPMorgan Chase & Co. 150,407
270 KeyCorp 5,576
38 M&T Bank Corp. 5,522
136 PNC Financial Services Group
(The), Inc. 25,943
289 Regions Financial Corp. 5,832
16 SVB Financial Group (a) 8,903
430 Truist Financial Corp. 23,865
433 U.S. Bancorp 24,668
1,321 Wells Fargo & Co. 59,828
--------------
486,007
--------------
BEVERAGES -- 1.5%
99 Brown-Forman Corp., Class B 7,419
1,254 Coca-Cola (The) Co. 67,854
54 Constellation Brands, Inc.,
Class A 12,630
231 Keurig Dr Pepper, Inc. 8,140
111 Monster Beverage Corp. (a) 10,140
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
BEVERAGES (CONTINUED)
441 PepsiCo, Inc. $ 65,343
--------------
171,526
--------------
BIOTECHNOLOGY -- 2.0%
564 AbbVie, Inc. 63,529
29 Alnylam Pharmaceuticals, Inc. (a) 4,916
163 Amgen, Inc. 39,731
40 Biogen, Inc. (a) 13,851
30 BioMarin Pharmaceutical, Inc. (a) 2,503
46 Exact Sciences Corp. (a) 5,718
337 Gilead Sciences, Inc. 23,206
64 Horizon Therapeutics PLC (a) 5,993
57 Incyte Corp. (a) 4,795
108 Moderna, Inc. (a) 25,378
21 Novavax, Inc. (a) 4,459
26 Regeneron Pharmaceuticals,
Inc. (a) 14,522
53 Seagen, Inc. (a) 8,368
72 Vertex Pharmaceuticals, Inc. (a) 14,517
--------------
231,486
--------------
BUILDING PRODUCTS -- 0.4%
230 Carrier Global Corp. 11,178
229 Johnson Controls International
PLC 15,717
77 Masco Corp. 4,536
73 Trane Technologies PLC 13,442
--------------
44,873
--------------
CAPITAL MARKETS -- 3.3%
35 Ameriprise Financial, Inc. 8,711
257 Bank of New York Mellon (The)
Corp. 13,166
46 BlackRock, Inc. 40,248
219 Blackstone Group (The), Inc. 21,274
537 Charles Schwab (The) Corp. 39,099
104 CME Group, Inc. 22,119
97 Franklin Resources, Inc. 3,103
109 Goldman Sachs Group (The), Inc. 41,369
180 Intercontinental Exchange, Inc. 21,366
186 KKR & Co., Inc. 11,019
11 MarketAxess Holdings, Inc. 5,099
52 Moody's Corp. 18,843
476 Morgan Stanley 43,644
26 MSCI, Inc. 13,860
34 Nasdaq, Inc. 5,977
66 Northern Trust Corp. 7,631
40 Raymond James Financial, Inc. 5,196
77 S&P Global, Inc. 31,605
111 State Street Corp. 9,133
68 T. Rowe Price Group, Inc. 13,462
--------------
375,924
--------------
CHEMICALS -- 1.2%
66 Air Products and Chemicals, Inc. 18,987
35 Albemarle Corp. 5,896
34 Celanese Corp. 5,154
235 Corteva, Inc. 10,422
222 Dow, Inc. 14,048
See Notes to Financial Statements Page 29
<PAGE>
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
CHEMICALS (CONTINUED)
170 DuPont de Nemours, Inc. $ 13,160
37 Eastman Chemical Co. 4,320
81 Ecolab, Inc. 16,684
41 FMC Corp. 4,436
62 LyondellBasell Industries N.V.,
Class A 6,378
72 PPG Industries, Inc. 12,224
78 Sherwin-Williams (The) Co. 21,251
--------------
132,960
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 0.4%
29 Cintas Corp. 11,078
70 Copart, Inc. (a) 9,228
67 Republic Services, Inc. 7,371
86 Rollins, Inc. 2,941
128 Waste Management, Inc. 17,934
--------------
48,552
--------------
COMMUNICATIONS EQUIPMENT
-- 0.8%
19 Arista Networks, Inc. (a) 6,884
1,279 Cisco Systems, Inc. 67,787
51 Motorola Solutions, Inc. 11,059
2 Ubiquiti, Inc. 625
--------------
86,355
--------------
CONSTRUCTION MATERIALS -- 0.1%
18 Martin Marietta Materials, Inc. 6,332
39 Vulcan Materials Co. 6,789
--------------
13,121
--------------
CONSUMER FINANCE -- 0.7%
118 Ally Financial, Inc. 5,881
208 American Express Co. 34,368
136 Capital One Financial Corp. 21,038
92 Discover Financial Services 10,883
158 Synchrony Financial 7,666
--------------
79,836
--------------
CONTAINERS & PACKAGING -- 0.2%
22 Avery Dennison Corp. 4,625
91 Ball Corp. 7,373
103 International Paper Co. 6,315
23 Packaging Corp. of America 3,115
--------------
21,428
--------------
DISTRIBUTORS -- 0.1%
43 Genuine Parts Co. 5,438
12 Pool Corp. 5,504
--------------
10,942
--------------
DIVERSIFIED FINANCIAL SERVICES
-- 1.0%
398 Berkshire Hathaway, Inc.,
Class B (a) 110,612
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 1.3%
2,281 AT&T, Inc. $ 65,647
300 Lumen Technologies, Inc. 4,077
1,323 Verizon Communications, Inc. 74,128
--------------
143,852
--------------
ELECTRIC UTILITIES -- 1.4%
142 American Electric Power Co., Inc. 12,012
18 Avangrid, Inc. 926
233 Duke Energy Corp. 23,002
114 Edison International 6,592
60 Entergy Corp. 5,982
94 Eversource Energy 7,543
278 Exelon Corp. 12,318
163 FirstEnergy Corp. 6,065
595 NextEra Energy, Inc. 43,602
438 PG&E Corp. (a) 4,454
231 PPL Corp. 6,461
338 Southern (The) Co. 20,452
139 Xcel Energy, Inc. 9,157
--------------
158,566
--------------
ELECTRICAL EQUIPMENT -- 0.6%
74 AMETEK, Inc. 9,879
121 Eaton Corp. PLC 17,930
192 Emerson Electric Co. 18,478
18 Generac Holdings, Inc. (a) 7,473
151 Plug Power, Inc. (a) 5,162
35 Rockwell Automation, Inc. 10,011
50 Sunrun, Inc. (a) 2,789
--------------
71,722
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 0.6%
166 Amphenol Corp., Class A 11,356
43 CDW Corp. 7,510
52 Cognex Corp. 4,371
248 Corning, Inc. 10,143
55 Keysight Technologies, Inc. (a) 8,493
106 TE Connectivity Ltd. 14,332
74 Trimble, Inc. (a) 6,055
16 Zebra Technologies Corp.,
Class A (a) 8,472
--------------
70,732
--------------
ENERGY EQUIPMENT & SERVICES
-- 0.2%
183 Baker Hughes Co. 4,185
250 Halliburton Co. 5,780
424 Schlumberger N.V. 13,572
--------------
23,537
--------------
ENTERTAINMENT -- 2.1%
223 Activision Blizzard, Inc. 21,283
86 Electronic Arts, Inc. 12,369
49 Liberty Media Corp.-Liberty
Formula One, Class C (a) 2,362
40 Live Nation Entertainment,
Inc. (a) 3,504
133 Netflix, Inc. (a) 70,252
Page 30 See Notes to Financial Statements
<PAGE>
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ENTERTAINMENT (CONTINUED)
34 Roku, Inc. (a) $ 15,614
34 Take-Two Interactive Software,
Inc. (a) 6,019
580 Walt Disney (The) Co. (a) 101,947
--------------
233,350
--------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 2.3%
41 Alexandria Real Estate Equities,
Inc. 7,460
138 American Tower Corp. 37,279
41 AvalonBay Communities, Inc. 8,556
42 Boston Properties, Inc. 4,813
131 Crown Castle International Corp. 25,558
79 Digital Realty Trust, Inc. 11,886
111 Duke Realty Corp. 5,256
27 Equinix, Inc. 21,670
96 Equity Residential 7,392
19 Essex Property Trust, Inc. 5,700
39 Extra Space Storage, Inc. 6,389
160 Healthpeak Properties, Inc. 5,326
170 Invitation Homes, Inc. 6,339
34 Mid-America Apartment
Communities, Inc. 5,726
222 Prologis, Inc. 26,536
46 Public Storage 13,832
111 Realty Income Corp. 7,408
33 SBA Communications Corp. 10,517
98 Simon Property Group, Inc. 12,787
34 Sun Communities, Inc. 5,828
105 Ventas, Inc. 5,996
148 VICI Properties, Inc. 4,591
124 Welltower, Inc. 10,304
206 Weyerhaeuser Co. 7,091
--------------
264,240
--------------
FOOD & STAPLES RETAILING -- 1.4%
141 Costco Wholesale Corp. 55,789
208 Kroger (The) Co. 7,969
163 Sysco Corp. 12,673
229 Walgreens Boots Alliance, Inc. 12,048
467 Walmart, Inc. 65,856
--------------
154,335
--------------
FOOD PRODUCTS -- 0.8%
154 Archer-Daniels-Midland Co. 9,332
66 Campbell Soup Co. 3,009
135 Conagra Brands, Inc. 4,911
185 General Mills, Inc. 11,272
24 Hershey (The) Co. 4,180
91 Hormel Foods Corp. 4,345
33 J.M. Smucker (The) Co. 4,276
83 Kellogg Co. 5,339
219 Kraft Heinz (The) Co. 8,931
64 McCormick & Co., Inc. 5,653
449 Mondelez International, Inc.,
Class A 28,036
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
FOOD PRODUCTS (CONTINUED)
89 Tyson Foods, Inc., Class A $ 6,565
--------------
95,849
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 3.6%
568 Abbott Laboratories 65,848
13 ABIOMED, Inc. (a) 4,058
23 Align Technology, Inc. (a) 14,053
153 Baxter International, Inc. 12,317
93 Becton, Dickinson and Co. 22,617
431 Boston Scientific Corp. (a) 18,430
14 Cooper (The) Cos., Inc. 5,548
203 Danaher Corp. 54,477
27 Dexcom, Inc. (a) 11,529
189 Edwards Lifesciences Corp. (a) 19,575
56 Hologic, Inc. (a) 3,736
26 IDEXX Laboratories, Inc. (a) 16,420
14 Insulet Corp. (a) 3,843
35 Intuitive Surgical, Inc. (a) 32,187
15 Masimo Corp. (a) 3,637
409 Medtronic PLC 50,769
18 Novocure Ltd. (a) 3,993
41 ResMed, Inc. 10,107
24 STERIS PLC 4,951
105 Stryker Corp. 27,272
13 Teleflex, Inc. 5,223
21 West Pharmaceutical Services, Inc. 7,541
60 Zimmer Biomet Holdings, Inc. 9,649
--------------
407,780
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 2.6%
47 AmerisourceBergen Corp. 5,381
74 Anthem, Inc. 28,253
87 Cardinal Health, Inc. 4,967
175 Centene Corp. (a) 12,763
101 Cigna Corp. 23,944
421 CVS Health Corp. 35,128
22 DaVita, Inc. (a) 2,649
28 Guardant Health, Inc. (a) 3,477
77 HCA Healthcare, Inc. 15,919
35 Humana, Inc. 15,495
30 Laboratory Corp. of America
Holdings (a) 8,276
48 McKesson Corp. 9,180
14 Molina Healthcare, Inc. (a) 3,543
39 Quest Diagnostics, Inc. 5,147
286 UnitedHealth Group, Inc. 114,526
--------------
288,648
--------------
HEALTH CARE TECHNOLOGY -- 0.2%
91 Cerner Corp. 7,113
42 Teladoc Health, Inc. (a) 6,984
41 Veeva Systems, Inc., Class A (a) 12,749
--------------
26,846
--------------
See Notes to Financial Statements Page 31
<PAGE>
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
HOTELS, RESTAURANTS & LEISURE
-- 2.0%
13 Booking Holdings, Inc. (a) $ 28,445
49 Caesars Entertainment, Inc. (a) 5,084
267 Carnival Corp. (a) 7,038
8 Chipotle Mexican Grill, Inc. (a) 12,403
36 Darden Restaurants, Inc. 5,256
10 Domino's Pizza, Inc. 4,665
121 DraftKings, Inc., Class A (a) 6,313
45 Expedia Group, Inc. (a) 7,367
78 Hilton Worldwide Holdings,
Inc. (a) 9,408
132 Las Vegas Sands Corp. (a) 6,955
93 Marriott International, Inc.,
Class A (a) 12,696
238 McDonald's Corp. 54,976
138 MGM Resorts International 5,886
40 Penn National Gaming, Inc. (a) 3,060
62 Royal Caribbean Cruises Ltd. (a) 5,287
376 Starbucks Corp. 42,040
78 Yum! Brands, Inc. 8,972
--------------
225,851
--------------
HOUSEHOLD DURABLES -- 0.2%
94 D.R. Horton, Inc. 8,495
48 Garmin Ltd. 6,943
70 Lennar Corp., Class A 6,954
1 NVR, Inc. (a) 4,973
--------------
27,365
--------------
HOUSEHOLD PRODUCTS -- 1.4%
74 Church & Dwight Co., Inc. 6,306
37 Clorox (The) Co. 6,657
270 Colgate-Palmolive Co. 21,965
101 Kimberly-Clark Corp. 13,512
782 Procter & Gamble (The) Co. 105,515
--------------
153,955
--------------
INDEPENDENT POWER AND RENEWABLE
ELECTRICITY PRODUCERS -- 0.0%
164 AES (The) Corp. 4,275
--------------
INDUSTRIAL CONGLOMERATES -- 1.2%
185 3M Co. 36,747
2,412 General Electric Co. 32,465
222 Honeywell International, Inc. 48,696
30 Roper Technologies, Inc. 14,106
--------------
132,014
--------------
INSURANCE -- 1.7%
200 Aflac, Inc. 10,732
91 Allstate (The) Corp. 11,870
255 American International Group, Inc. 12,138
68 Aon PLC, Class A 16,236
107 Arch Capital Group Ltd. (a) 4,167
62 Arthur J. Gallagher & Co. 8,685
144 Chubb Ltd. 22,887
43 Cincinnati Financial Corp. 5,015
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
INSURANCE (CONTINUED)
114 Hartford Financial Services Group
(The), Inc. $ 7,065
59 Loews Corp. 3,224
4 Markel Corp. (a) 4,747
151 Marsh & McLennan Cos., Inc. 21,243
238 MetLife, Inc. 14,244
71 Principal Financial Group, Inc. 4,486
178 Progressive (The) Corp. 17,481
118 Prudential Financial, Inc. 12,091
67 Travelers (The) Cos., Inc. 10,031
--------------
186,342
--------------
INTERACTIVE MEDIA & SERVICES
-- 5.0%
96 Alphabet, Inc., Class A (a) 234,412
727 Facebook, Inc., Class A (a) 252,785
24 IAC/InterActiveCorp (a) 3,700
77 Match Group, Inc. (a) 12,416
175 Pinterest, Inc., Class A (a) 13,816
336 Snap, Inc., Class A (a) 22,895
255 Twitter, Inc. (a) 17,547
44 Vimeo, Inc. (a) 2,156
43 Zillow Group, Inc., Class C (a) 5,256
--------------
564,983
--------------
INTERNET & DIRECT MARKETING
RETAIL -- 4.5%
139 Amazon.com, Inc. (a) 478,182
218 eBay, Inc. 15,306
36 Etsy, Inc. (a) 7,410
18 Wayfair, Inc., Class A (a) 5,683
--------------
506,581
--------------
IT SERVICES -- 5.8%
203 Accenture PLC, Class A 59,842
49 Akamai Technologies, Inc. (a) 5,714
136 Automatic Data Processing, Inc. 27,012
35 Broadridge Financial Solutions,
Inc. 5,654
169 Cognizant Technology Solutions
Corp., Class A 11,705
18 EPAM Systems, Inc. (a) 9,197
198 Fidelity National Information
Services, Inc. 28,051
175 Fiserv, Inc. (a) 18,706
19 FleetCor Technologies, Inc. (a) 4,865
26 Gartner, Inc. (a) 6,297
80 Global Payments, Inc. 15,003
47 GoDaddy, Inc., Class A (a) 4,087
285 International Business Machines
Corp. 41,778
279 Mastercard, Inc., Class A 101,860
16 MongoDB, Inc. (a) 5,784
35 Okta, Inc. (a) 8,564
97 Paychex, Inc. 10,408
375 PayPal Holdings, Inc. (a) 109,305
125 Square, Inc., Class A (a) 30,475
52 Twilio, Inc., Class A (a) 20,496
Page 32 See Notes to Financial Statements
<PAGE>
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
IT SERVICES (CONTINUED)
32 VeriSign, Inc. (a) $ 7,286
541 Visa, Inc., Class A 126,497
--------------
658,586
--------------
LEISURE PRODUCTS -- 0.1%
36 Hasbro, Inc. 3,403
81 Peloton Interactive, Inc.,
Class A (a) 10,045
--------------
13,448
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 1.3%
25 10X Genomics, Inc., Class A (a) 4,895
85 Agilent Technologies, Inc. 12,564
164 Avantor, Inc. (a) 5,824
6 Bio-Rad Laboratories, Inc.,
Class A (a) 3,866
11 Bio-Techne Corp. 4,953
15 Charles River Laboratories
International, Inc. (a) 5,549
37 Illumina, Inc. (a) 17,509
61 IQVIA Holdings, Inc. (a) 14,782
7 Mettler-Toledo International,
Inc. (a) 9,697
30 PerkinElmer, Inc. 4,632
119 Thermo Fisher Scientific, Inc. 60,032
17 Waters Corp. (a) 5,875
--------------
150,178
--------------
MACHINERY -- 1.6%
175 Caterpillar, Inc. 38,085
44 Cummins, Inc. 10,728
91 Deere & Co. 32,097
43 Dover Corp. 6,476
102 Fortive Corp. 7,113
23 IDEX Corp. 5,061
86 Illinois Tool Works, Inc. 19,226
99 Ingersoll Rand, Inc. (a) 4,832
137 Otis Worldwide Corp. 11,202
104 PACCAR, Inc. 9,282
41 Parker-Hannifin Corp. 12,592
45 Stanley Black & Decker, Inc. 9,225
60 Westinghouse Air Brake
Technologies Corp. 4,938
51 Xylem, Inc. 6,118
--------------
176,975
--------------
MEDIA -- 1.3%
44 Charter Communications, Inc.,
Class A (a) 31,744
1,465 Comcast Corp., Class A 83,534
47 Discovery, Inc., Class A (a) 1,442
92 Fox Corp., Class A 3,416
46 Liberty Broadband Corp.,
Class C (a) 7,988
64 Omnicom Group, Inc. 5,119
301 Sirius XM Holdings, Inc. 1,969
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
MEDIA (CONTINUED)
193 ViacomCBS, Inc., Class B $ 8,724
--------------
143,936
--------------
METALS & MINING -- 0.4%
468 Freeport-McMoRan, Inc. 17,367
241 Newmont Corp. 15,275
76 Nucor Corp. 7,291
--------------
39,933
--------------
MULTILINE RETAIL -- 0.5%
62 Dollar General Corp. 13,416
70 Dollar Tree, Inc. (a) 6,965
150 Target Corp. 36,261
--------------
56,642
--------------
MULTI-UTILITIES -- 0.6%
71 Ameren Corp. 5,683
80 CMS Energy Corp. 4,726
102 Consolidated Edison, Inc. 7,315
258 Dominion Energy, Inc. 18,981
46 DTE Energy Co. 5,962
142 Public Service Enterprise Group,
Inc. 8,483
82 Sempra Energy 10,863
87 WEC Energy Group, Inc. 7,739
--------------
69,752
--------------
OIL, GAS & CONSUMABLE FUELS
-- 2.5%
81 Cheniere Energy, Inc. (a) 7,026
616 Chevron Corp. 64,520
405 ConocoPhillips 24,665
144 EOG Resources, Inc. 12,015
1,353 Exxon Mobil Corp. 85,347
78 Hess Corp. 6,811
644 Kinder Morgan, Inc. 11,740
196 Marathon Petroleum Corp. 11,842
298 Occidental Petroleum Corp. 9,318
132 ONEOK, Inc. 7,344
140 Phillips 66 12,015
78 Pioneer Natural Resources Co. 12,677
124 Valero Energy Corp. 9,682
369 Williams (The) Cos., Inc. 9,797
--------------
284,799
--------------
PERSONAL PRODUCTS -- 0.2%
74 Estee Lauder (The) Cos., Inc.,
Class A 23,538
--------------
PHARMACEUTICALS -- 3.7%
713 Bristol-Myers Squibb Co. 47,643
46 Catalent, Inc. (a) 4,974
119 Elanco Animal Health, Inc. (a) 4,128
254 Eli Lilly and Co. 58,298
841 Johnson & Johnson 138,546
769 Merck & Co., Inc. 59,805
77 Organon & Co. (a) 2,330
1,788 Pfizer, Inc. 70,018
367 Viatris, Inc. 5,244
152 Zoetis, Inc. 28,327
--------------
419,313
--------------
See Notes to Financial Statements Page 33
<PAGE>
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
PROFESSIONAL SERVICES -- 0.4%
110 CoStar Group, Inc. (a) $ 9,110
34 Equifax, Inc. 8,144
40 Jacobs Engineering Group, Inc. 5,337
42 Leidos Holdings, Inc. 4,246
54 TransUnion 5,930
49 Verisk Analytics, Inc. 8,561
--------------
41,328
--------------
REAL ESTATE MANAGEMENT
& DEVELOPMENT -- 0.1%
101 CBRE Group, Inc., Class A (a) 8,659
--------------
ROAD & RAIL -- 1.2%
609 CSX Corp. 19,537
25 J.B. Hunt Transport Services, Inc. 4,074
27 Kansas City Southern 7,651
78 Lyft, Inc., Class A (a) 4,717
76 Norfolk Southern Corp. 20,171
33 Old Dominion Freight Line, Inc. 8,375
538 Uber Technologies, Inc. (a) 26,965
212 Union Pacific Corp. 46,625
--------------
138,115
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 5.5%
388 Advanced Micro Devices, Inc. (a) 36,445
110 Analog Devices, Inc. 18,937
277 Applied Materials, Inc. 39,445
98 Broadcom, Inc. 46,730
41 Enphase Energy, Inc. (a) 7,529
38 Entegris, Inc. 4,673
1,226 Intel Corp. 68,828
41 KLA Corp. 13,293
41 Lam Research Corp. 26,679
217 Marvell Technology, Inc. 12,658
76 Maxim Integrated Products, Inc. 8,007
77 Microchip Technology, Inc. 11,530
358 Micron Technology, Inc. (a) 30,423
14 Monolithic Power Systems, Inc. 5,228
185 NVIDIA Corp. 148,018
80 NXP Semiconductors N.V. 16,458
124 ON Semiconductor Corp. (a) 4,747
34 Qorvo, Inc. (a) 6,652
342 QUALCOMM, Inc. 48,882
50 Skyworks Solutions, Inc. 9,587
50 Teradyne, Inc. 6,698
280 Texas Instruments, Inc. 53,844
--------------
625,291
--------------
SOFTWARE -- 10.5%
145 Adobe, Inc. (a) 84,918
25 ANSYS, Inc. (a) 8,677
70 Autodesk, Inc. (a) 20,433
26 Avalara, Inc. (a) 4,207
38 Black Knight, Inc. (a) 2,963
84 Cadence Design Systems, Inc. (a) 11,493
24 Ceridian HCM Holding, Inc. (a) 2,302
33 Citrix Systems, Inc. 3,870
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SOFTWARE (CONTINUED)
53 Cloudflare, Inc., Class A (a) $ 5,610
21 Coupa Software, Inc. (a) 5,504
64 Crowdstrike Holdings, Inc.,
Class A (a) 16,084
64 Datadog, Inc., Class A (a) 6,661
62 DocuSign, Inc. (a) 17,333
19 Elastic N.V. (a) 2,769
8 Fair Isaac Corp. (a) 4,021
40 Fortinet, Inc. (a) 9,528
13 HubSpot, Inc. (a) 7,575
80 Intuit, Inc. 39,214
2,406 Microsoft Corp. 651,785
156 NortonLifeLock, Inc. 4,246
562 Oracle Corp. 43,746
542 Palantir Technologies, Inc.,
Class A (a) 14,287
31 Palo Alto Networks, Inc. (a) 11,503
17 Paycom Software, Inc. (a) 6,179
31 PTC, Inc. (a) 4,379
22 RingCentral, Inc., Class A (a) 6,393
271 salesforce.com, Inc. (a) 66,197
58 ServiceNow, Inc. (a) 31,874
45 Splunk, Inc. (a) 6,506
72 SS&C Technologies Holdings, Inc. 5,188
43 Synopsys, Inc. (a) 11,859
124 Trade Desk (The), Inc.,
Class A (a) 9,593
12 Tyler Technologies, Inc. (a) 5,428
26 VMware, Inc., Class A (a) 4,159
57 Workday, Inc., Class A (a) 13,608
35 Zendesk, Inc. (a) 5,052
64 Zoom Video Communications, Inc.,
Class A (a) 24,770
26 Zscaler, Inc. (a) 5,618
--------------
1,185,532
--------------
SPECIALTY RETAIL -- 2.3%
7 AutoZone, Inc. (a) 10,446
68 Best Buy Co., Inc. 7,819
17 Burlington Stores, Inc. (a) 5,474
49 CarMax, Inc. (a) 6,328
20 Carvana Co. (a) 6,036
17 GameStop Corp., Class A (a) 3,640
340 Home Depot (The), Inc. 108,423
226 Lowe's Cos., Inc. 43,837
21 O'Reilly Automotive, Inc. (a) 11,890
99 Ross Stores, Inc. 12,276
385 TJX (The) Cos., Inc. 25,957
35 Tractor Supply Co. 6,512
17 Ulta Beauty, Inc. (a) 5,878
--------------
254,516
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 6.5%
5,065 Apple, Inc. 693,702
89 Dell Technologies, Inc.,
Class C (a) 8,871
391 Hewlett Packard Enterprise Co. 5,701
374 HP, Inc. 11,291
50 NetApp, Inc. 4,091
Page 34 See Notes to Financial Statements
<PAGE>
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS (CONTINUED)
69 Seagate Technology Holdings
PLC $ 6,067
93 Western Digital Corp. (a) 6,619
--------------
736,342
--------------
TEXTILES, APPAREL & LUXURY
GOODS -- 0.6%
407 NIKE, Inc., Class B 62,877
95 VF Corp. 7,794
--------------
70,671
--------------
TOBACCO -- 0.6%
520 Altria Group, Inc. 24,794
473 Philip Morris International, Inc. 46,879
--------------
71,673
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 0.2%
174 Fastenal Co. 9,048
23 United Rentals, Inc. (a) 7,337
15 W.W. Grainger, Inc. 6,570
--------------
22,955
--------------
WATER UTILITIES -- 0.1%
55 American Water Works Co., Inc. 8,477
--------------
WIRELESS TELECOMMUNICATION
SERVICES -- 0.3%
227 T-Mobile US, Inc. (a) 32,876
--------------
TOTAL INVESTMENTS -- 99.9% 11,290,257
(Cost $8,967,537) (b)
NET OTHER ASSETS AND
LIABILITIES -- 0.1% 8,401
--------------
NET ASSETS -- 100.0% $ 11,298,658
==============
(a) Non-income producing security.
(b) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $2,374,393 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $51,673. The net unrealized appreciation was
$2,322,720.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 11,290,257 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 35
<PAGE>
FIRST TRUST DOW 30 EQUAL WEIGHT ETF (EDOW)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 100.0%
AEROSPACE & DEFENSE -- 3.2%
14,472 Boeing (The) Co. (a) $ 3,466,912
--------------
BANKS -- 3.2%
22,325 JPMorgan Chase & Co. 3,472,431
--------------
BEVERAGES -- 3.2%
63,720 Coca-Cola (The) Co. 3,447,889
--------------
BIOTECHNOLOGY -- 3.4%
14,740 Amgen, Inc. 3,592,875
--------------
CAPITAL MARKETS -- 3.4%
9,466 Goldman Sachs Group (The), Inc. 3,592,631
--------------
CHEMICALS -- 3.1%
52,626 Dow, Inc. 3,330,173
--------------
COMMUNICATIONS EQUIPMENT
-- 3.2%
65,338 Cisco Systems, Inc. 3,462,914
--------------
CONSUMER FINANCE -- 3.4%
21,753 American Express Co. 3,594,248
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 3.3%
62,420 Verizon Communications, Inc. 3,497,393
--------------
ENTERTAINMENT -- 3.3%
20,174 Walt Disney (The) Co. (a) 3,545,984
--------------
FOOD & STAPLES RETAILING -- 6.5%
64,700 Walgreens Boots Alliance, Inc. 3,403,867
25,425 Walmart, Inc. 3,585,434
--------------
6,989,301
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 3.4%
8,994 UnitedHealth Group, Inc. 3,601,557
--------------
HOTELS, RESTAURANTS & LEISURE
-- 3.3%
15,104 McDonald's Corp. 3,488,873
--------------
HOUSEHOLD PRODUCTS -- 3.4%
26,535 Procter & Gamble (The) Co. 3,580,368
--------------
INDUSTRIAL CONGLOMERATES -- 6.5%
17,645 3M Co. 3,504,827
15,892 Honeywell International, Inc. 3,485,910
--------------
6,990,737
--------------
INSURANCE -- 3.2%
23,165 Travelers (The) Cos., Inc. 3,468,032
--------------
IT SERVICES -- 6.6%
23,655 International Business Machines
Corp. 3,467,586
15,230 Visa, Inc., Class A 3,561,079
--------------
7,028,665
--------------
MACHINERY -- 3.3%
16,215 Caterpillar, Inc. 3,528,871
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS
-- 3.3%
33,162 Chevron Corp. $ 3,473,388
--------------
PHARMACEUTICALS -- 6.8%
21,693 Johnson & Johnson 3,573,705
46,919 Merck & Co., Inc. 3,648,890
--------------
7,222,595
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 3.2%
61,859 Intel Corp. 3,472,764
--------------
SOFTWARE -- 6.9%
13,876 Microsoft Corp. 3,759,008
14,891 salesforce.com, Inc. (a) 3,637,425
--------------
7,396,433
--------------
SPECIALTY RETAIL -- 3.4%
11,515 Home Depot (The), Inc. 3,672,018
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 3.6%
28,100 Apple, Inc. 3,848,576
--------------
TEXTILES, APPAREL & LUXURY
GOODS -- 3.9%
27,123 NIKE, Inc., Class B 4,190,232
--------------
TOTAL INVESTMENTS -- 100.0% 106,955,860
(Cost $97,046,989) (b)
NET OTHER ASSETS AND
LIABILITIES -- 0.0% 52,974
--------------
NET ASSETS -- 100.0% $ 107,008,834
==============
(a) Non-income producing security.
(b) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $10,200,427 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $291,556. The net unrealized appreciation was
$9,908,871.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------
Common Stocks* $ 106,955,860 $ -- $ --
==========================================
* See Portfolio of Investments for industry breakout.
Page 36 See Notes to Financial Statements
<PAGE>
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS --100.0%
AEROSPACE & DEFENSE -- 1.7%
6,901 General Dynamics Corp. $ 1,299,182
5,860 Lockheed Martin Corp. 2,217,131
4,257 Northrop Grumman Corp. 1,547,122
--------------
5,063,435
--------------
AIR FREIGHT & LOGISTICS -- 0.9%
20,097 Expeditors International of
Washington, Inc. 2,544,280
--------------
AUTOMOBILES -- 0.8%
71,431 Ford Motor Co. (a) 1,061,465
22,699 General Motors Co. (a) 1,343,100
--------------
2,404,565
--------------
BANKS -- 3.4%
17,336 Citigroup, Inc. 1,226,522
29,800 Citizens Financial Group, Inc. 1,366,926
25,102 Fifth Third Bancorp 959,650
46,474 KeyCorp 959,688
6,486 M&T Bank Corp. 942,481
9,369 PNC Financial Services Group
(The), Inc. 1,787,230
88,269 Regions Financial Corp. 1,781,268
22,734 Wells Fargo & Co. 1,029,623
--------------
10,053,388
--------------
BEVERAGES -- 1.5%
1,325 Brown-Forman Corp., Class B 99,296
26,900 Coca-Cola (The) Co. 1,455,559
30,920 Monster Beverage Corp. (a) 2,824,542
--------------
4,379,397
--------------
BIOTECHNOLOGY -- 13.7%
679 Alnylam Pharmaceuticals, Inc. (a) 115,104
5,146 Amgen, Inc. 1,254,338
11,508 Biogen, Inc. (a) 3,984,875
81,841 BioMarin Pharmaceutical, Inc. (a) 6,828,813
66,229 Gilead Sciences, Inc. 4,560,529
38,965 Incyte Corp. (a) 3,278,125
13,288 Regeneron Pharmaceuticals,
Inc. (a) 7,421,880
43,625 Seagen, Inc. (a) 6,887,515
32,153 Vertex Pharmaceuticals, Inc. (a) 6,483,009
--------------
40,814,188
--------------
BUILDING PRODUCTS -- 0.4%
19,761 Masco Corp. 1,164,121
--------------
CAPITAL MARKETS -- 3.6%
34,384 Franklin Resources, Inc. 1,099,944
3,196 MarketAxess Holdings, Inc. 1,481,634
13,225 Moody's Corp. 4,792,343
3,342 S&P Global, Inc. 1,371,724
13,272 State Street Corp. 1,092,020
4,029 T. Rowe Price Group, Inc. 797,621
--------------
10,635,286
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
CHEMICALS -- 1.0%
20,971 Corteva, Inc. $ 930,064
7,962 Sherwin-Williams (The) Co. 2,169,247
--------------
3,099,311
--------------
COMMUNICATIONS EQUIPMENT
-- 0.9%
24,501 Cisco Systems, Inc. 1,298,553
6,313 Motorola Solutions, Inc. 1,368,974
--------------
2,667,527
--------------
CONSUMER FINANCE -- 1.3%
26,092 Ally Financial, Inc. 1,300,425
10,457 Capital One Financial Corp. 1,617,594
22,373 Synchrony Financial 1,085,538
--------------
4,003,557
--------------
DISTRIBUTORS -- 0.3%
2,017 Pool Corp. 925,117
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 0.1%
3,048 AT&T, Inc. 87,721
1,601 Verizon Communications, Inc. 89,704
--------------
177,425
--------------
ELECTRIC UTILITIES -- 3.0%
15,539 American Electric Power Co., Inc. 1,314,444
47,806 Avangrid, Inc. 2,458,663
14,124 Duke Energy Corp. 1,394,321
936 Entergy Corp. 93,319
50,486 Exelon Corp. 2,237,035
2,664 FirstEnergy Corp. 99,127
21,670 Southern (The) Co. 1,311,252
1,393 Xcel Energy, Inc. 91,771
--------------
8,999,932
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 0.2%
10,774 Amphenol Corp., Class A 737,049
--------------
ENTERTAINMENT -- 0.0%
704 Electronic Arts, Inc. 101,256
--------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 4.2%
8,088 Alexandria Real Estate Equities,
Inc. 1,471,531
4,007 American Tower Corp. 1,082,451
653 Digital Realty Trust, Inc. 98,250
29,422 Duke Realty Corp. 1,393,132
4,617 Equinix, Inc. 3,705,604
17,982 Realty Income Corp. 1,200,119
11,225 SBA Communications Corp. 3,577,407
--------------
12,528,494
--------------
FOOD & STAPLES RETAILING -- 1.6%
4,735 Costco Wholesale Corp. 1,873,497
45,712 Kroger (The) Co. 1,751,227
19,534 Walgreens Boots Alliance, Inc. 1,027,684
--------------
4,652,408
--------------
See Notes to Financial Statements Page 37
<PAGE>
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
FOOD PRODUCTS -- 5.5%
47,052 Archer-Daniels-Midland Co. $ 2,851,351
1,874 Campbell Soup Co. 85,436
28,858 General Mills, Inc. 1,758,318
15,010 Hershey (The) Co. 2,614,442
30,651 Hormel Foods Corp. 1,463,585
7,973 J.M. Smucker (The) Co. 1,033,061
10,633 Kellogg Co. 684,021
30,140 Kraft Heinz (The) Co. 1,229,109
17,731 McCormick & Co., Inc. 1,566,002
26,682 Mondelez International, Inc.,
Class A 1,666,024
20,476 Tyson Foods, Inc., Class A 1,510,310
--------------
16,461,659
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 3.7%
10,062 Abbott Laboratories 1,166,488
20,024 Baxter International, Inc. 1,611,932
6,047 Becton, Dickinson and Co. 1,470,570
3,123 Danaher Corp. 838,088
259 Dexcom, Inc. (a) 110,593
3,384 IDEXX Laboratories, Inc. (a) 2,137,165
1,599 Masimo Corp. (a) 387,677
10,113 Medtronic PLC 1,255,327
8,328 ResMed, Inc. 2,053,019
--------------
11,030,859
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 3.9%
3,180 Anthem, Inc. 1,214,124
22,978 Cardinal Health, Inc. 1,311,814
26,105 Centene Corp. (a) 1,903,838
22,583 CVS Health Corp. 1,884,325
2,233 Humana, Inc. 988,594
21,616 Quest Diagnostics, Inc. 2,852,664
3,226 UnitedHealth Group, Inc. 1,291,819
--------------
11,447,178
--------------
HEALTH CARE TECHNOLOGY -- 1.8%
30,741 Cerner Corp. 2,402,717
16,801 Teladoc Health, Inc. (a) 2,793,838
--------------
5,196,555
--------------
HOTELS, RESTAURANTS & LEISURE
-- 0.5%
247 Domino's Pizza, Inc. 115,223
11,368 Yum! Brands, Inc. 1,307,661
--------------
1,422,884
--------------
HOUSEHOLD DURABLES -- 1.1%
12,916 D.R. Horton, Inc. 1,167,219
5,411 Garmin Ltd. 782,647
14,078 Lennar Corp., Class A 1,398,649
--------------
3,348,515
--------------
HOUSEHOLD PRODUCTS -- 4.2%
8,107 Church & Dwight Co., Inc. 690,879
30,657 Clorox (The) Co. 5,515,501
35,272 Colgate-Palmolive Co. 2,869,377
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
HOUSEHOLD PRODUCTS (CONTINUED)
3,454 Kimberly-Clark Corp. $ 462,076
20,694 Procter & Gamble (The) Co. 2,792,241
--------------
12,330,074
--------------
INDUSTRIAL CONGLOMERATES -- 1.1%
10,165 3M Co. 2,019,074
2,798 Roper Technologies, Inc. 1,315,620
--------------
3,334,694
--------------
INSURANCE -- 10.7%
35,937 Aflac, Inc. 1,928,379
28,785 Allstate (The) Corp. 3,754,715
25,562 American International Group, Inc. 1,216,751
12,393 Aon PLC, Class A 2,958,953
35,168 Arch Capital Group Ltd. (a) 1,369,442
5,519 Arthur J. Gallagher & Co. 773,102
6,591 Chubb Ltd. 1,047,574
11,096 Cincinnati Financial Corp. 1,294,016
26,674 Hartford Financial Services Group
(The), Inc. 1,652,988
24,007 Loews Corp. 1,311,983
1,023 Markel Corp. (a) 1,214,004
25,240 Marsh & McLennan Cos., Inc. 3,550,763
39,685 MetLife, Inc. 2,375,147
31,352 Principal Financial Group, Inc. 1,981,133
17,321 Progressive (The) Corp. 1,701,095
21,718 Prudential Financial, Inc. 2,225,443
9,143 Travelers (The) Cos., Inc. 1,368,799
--------------
31,724,287
--------------
INTERNET & DIRECT MARKETING
RETAIL -- 0.3%
11,900 eBay, Inc. 835,499
--------------
IT SERVICES -- 4.2%
2,563 Accenture PLC, Class A 755,547
30,326 Akamai Technologies, Inc. (a) 3,536,011
19,394 Broadridge Financial Solutions,
Inc. 3,132,713
1,224 GoDaddy, Inc., Class A (a) 106,439
12,293 Paychex, Inc. 1,319,039
15,681 VeriSign, Inc. (a) 3,570,407
--------------
12,420,156
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 2.6%
2,485 Charles River Laboratories
International, Inc. (a) 919,251
1,440 Mettler-Toledo International,
Inc. (a) 1,994,889
12,782 PerkinElmer, Inc. 1,973,669
3,593 Thermo Fisher Scientific, Inc. 1,812,561
2,549 Waters Corp. (a) 880,960
--------------
7,581,330
--------------
MACHINERY -- 1.3%
8,778 Dover Corp. 1,321,967
5,992 IDEX Corp. 1,318,539
5,946 Illinois Tool Works, Inc. 1,329,288
--------------
3,969,794
--------------
Page 38 See Notes to Financial Statements
<PAGE>
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDIA -- 0.3%
26,667 Fox Corp., Class A $ 990,146
--------------
METALS & MINING -- 0.6%
17,472 Nucor Corp. 1,676,089
--------------
MULTILINE RETAIL -- 1.3%
13,917 Dollar General Corp. 3,011,500
3,641 Target Corp. 880,175
--------------
3,891,675
--------------
MULTI-UTILITIES -- 2.2%
16,122 Ameren Corp. 1,290,405
1,502 CMS Energy Corp. 88,738
25,877 Consolidated Edison, Inc. 1,855,899
27,066 Dominion Energy, Inc. 1,991,246
9,052 DTE Energy Co. 1,173,139
995 WEC Energy Group, Inc. 88,505
--------------
6,487,932
--------------
OIL, GAS & CONSUMABLE FUELS
-- 0.4%
15,363 Valero Energy Corp. 1,199,543
--------------
PHARMACEUTICALS -- 3.8%
4,237 Johnson & Johnson 698,003
62,196 Merck & Co., Inc. 4,836,983
37,965 Pfizer, Inc. 1,486,709
288,440 Viatris, Inc. 4,121,808
--------------
11,143,503
--------------
PROFESSIONAL SERVICES -- 0.6%
965 Leidos Holdings, Inc. 97,561
9,561 Verisk Analytics, Inc. 1,670,498
--------------
1,768,059
--------------
SOFTWARE -- 6.5%
3,545 Adobe, Inc. (a) 2,076,094
27,741 Black Knight, Inc. (a) 2,163,243
21,948 Citrix Systems, Inc. 2,573,842
361 Coupa Software, Inc. (a) 94,622
2,912 Microsoft Corp. 788,861
41,047 Oracle Corp. 3,195,098
45,323 Splunk, Inc. (a) 6,552,799
6,866 Synopsys, Inc. (a) 1,893,574
--------------
19,338,133
--------------
SPECIALTY RETAIL -- 3.0%
2,344 Home Depot (The), Inc. 747,478
3,795 Lowe's Cos., Inc. 736,116
8,031 O'Reilly Automotive, Inc. (a) 4,547,232
16,227 Tractor Supply Co. 3,019,196
--------------
9,050,022
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 0.7%
5,709 Apple, Inc. 781,905
82,854 Hewlett Packard Enterprise Co. 1,208,011
--------------
1,989,916
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
TOBACCO -- 0.5%
14,895 Philip Morris International, Inc. $ 1,476,243
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 0.6%
33,178 Fastenal Co. 1,725,256
--------------
TOTAL COMMON STOCKS
-- 100.0% 296,790,737
(Cost $284,078,143) --------------
MONEY MARKET FUNDS -- 0.0%
12,797 Dreyfus Government Cash
Management Fund, Institutional
Shares - 0.03% (b) 12,797
118,502 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 0.01% (b) 118,502
--------------
TOTAL MONEY MARKET FUNDS
-- 0.0% 131,299
(Cost $131,299) --------------
TOTAL INVESTMENTS -- 100.0% 296,922,036
(Cost $284,209,442) (c)
NET OTHER ASSETS AND
LIABILITIES -- 0.0% 138,996
--------------
NET ASSETS -- 100.0% $ 297,061,032
==============
(a) Non-income producing security.
(b) Rate shown reflects yield as of June 30, 2021.
(c) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $15,610,690 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $2,898,096. The net unrealized appreciation was
$12,712,594.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
------------------------------------------------
Common Stocks* $ 296,790,737 $ -- $ --
Money Market
Funds 131,299 -- --
------------------------------------------------
Total Investments $ 296,922,036 $ -- $ --
================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 39
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2021 (UNAUDITED)
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST
TOTAL US MARKET DORSEY WRIGHT DOW 30 LUNT U.S.
ALPHADEX(R) PEOPLE'S EQUAL WEIGHT FACTOR ROTATION
ETF ETF PORTFOLIO ETF ETF
(TUSA) (DWPP) (EDOW) (FCTR)
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value............................. $ 21,792,456 $ 11,290,257 $ 106,955,860 $ 296,922,036
Cash.............................................. -- 7,619 32,026 --
Receivables:
Dividends...................................... 19,603 6,258 64,848 287,169
Securities lending income...................... 292 -- -- --
Capital shares sold............................ -- -- -- 3,472,885
Prepaid expenses.................................. 3,834 -- -- --
-------------- -------------- -------------- --------------
Total Assets................................... 21,816,185 11,304,134 107,052,734 300,682,090
-------------- -------------- -------------- --------------
LIABILITIES:
Payables:
Collateral for securities on loan.............. 184,639 -- -- --
Audit and tax fees............................. 17,960 -- -- --
Investment advisory fees....................... 11,401 5,476 43,900 151,415
Shareholder reporting fees..................... 3,363 -- -- --
Trustees' fees................................. 1,548 -- -- --
Licensing fees................................. 524 -- -- --
Investment securities purchased................ -- -- -- 3,469,643
Other liabilities................................. 3,649 -- -- --
-------------- -------------- -------------- --------------
Total Liabilities.............................. 223,084 5,476 43,900 3,621,058
-------------- -------------- -------------- --------------
NET ASSETS........................................ $ 21,593,101 $ 11,298,658 $ 107,008,834 $ 297,061,032
============== ============== ============== ==============
NET ASSETS CONSIST OF:
Paid-in capital................................... $ 18,082,007 $ 19,145,691 $ 99,732,356 $ 266,409,389
Par value......................................... 4,500 3,500 34,978 85,500
Accumulated distributable earnings (loss)......... 3,506,594 (7,850,533) 7,241,500 30,566,143
-------------- -------------- -------------- --------------
NET ASSETS........................................ $ 21,593,101 $ 11,298,658 $ 107,008,834 $ 297,061,032
============== ============== ============== ==============
NET ASSET VALUE, per share........................ $ 47.98 $ 32.28 $ 30.59 $ 34.74
============== ============== ============== ==============
Number of shares outstanding (unlimited number of
shares authorized, par value $0.01 per share).. 450,002 350,002 3,497,756 8,550,002
============== ============== ============== ==============
Investments, at cost.............................. $ 18,064,048 $ 8,967,537 $ 97,046,989 $ 284,209,442
============== ============== ============== ==============
Securities on loan, at value...................... $ 180,483 $ -- $ -- $ --
============== ============== ============== ==============
</TABLE>
Page 40 See Notes to Financial Statements
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 (UNAUDITED)
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST
TOTAL US MARKET DORSEY WRIGHT DOW 30 LUNT U.S.
ALPHADEX(R) PEOPLE'S EQUAL WEIGHT FACTOR ROTATION
ETF ETF PORTFOLIO ETF ETF
(TUSA) (DWPP) (EDOW) (FCTR)
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends......................................... $ 151,576 $ 79,981 $ 907,295 $ 1,662,093
Securities lending income (net of fees)........... 1,160 -- -- --
Foreign withholding tax........................... (33) (13) -- --
-------------- -------------- -------------- --------------
Total investment income........................ 152,703 79,968 907,295 1,662,093
-------------- -------------- -------------- --------------
EXPENSES:
Investment advisory fees.......................... 48,321 33,199 (a) 203,633 (a) 681,056 (a)
Audit and tax fees................................ 15,603 -- -- --
Shareholder reporting fees........................ 7,952 -- -- --
Accounting and administration fees................ 7,866 -- -- --
Licensing fees.................................... 4,685 -- -- --
Trustees' fees and expenses....................... 3,069 -- -- --
Custodian fees.................................... 1,602 -- -- --
Listing fees...................................... 1,254 -- -- --
Transfer agent fees............................... 483 -- -- --
Registration and filing fees...................... 390 -- -- --
Legal fees........................................ 185 -- -- --
Other expenses.................................... 1,086 -- -- --
-------------- -------------- -------------- --------------
Total expenses................................. 92,496 33,199 203,633 681,056
Less fees waived and expenses reimbursed by the
investment advisor.......................... (24,664) -- -- --
-------------- -------------- -------------- --------------
Net expenses................................... 67,832 33,199 203,633 681,056
-------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS)...................... 84,871 46,769 703,662 981,037
-------------- -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.................................... (651) 37,576 (189,773) (8,560,922)
In-kind redemptions............................ 3,070,905 213,433 2,838,697 40,662,301
-------------- -------------- -------------- --------------
Net realized gain (loss).......................... 3,070,254 251,009 2,648,924 32,101,379
-------------- -------------- -------------- --------------
Net change in unrealized appreciation
(depreciation) on investments.................. (22,372) 1,155,906 5,988,297 (3,309,071)
-------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED
GAIN (LOSS).................................... 3,047,882 1,406,915 8,637,221 28,792,308
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS...................... $ 3,132,753 $ 1,453,684 $ 9,340,883 $ 29,773,345
============== ============== ============== ==============
</TABLE>
(a) Fund is subject to a Unitary Fee (see Note 3 in the Notes to Financial
Statements).
See Notes to Financial Statements Page 41
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST
TOTAL US MARKET DORSEY WRIGHT
ALPHADEX(R) PEOPLE'S
ETF PORTFOLIO ETF
(TUSA) (DWPP)
------------------------------- -------------------------------
Six Months Six Months
Ended Ended
6/30/2021 Year Ended 6/30/2021 Year Ended
(Unaudited) 12/31/2020 (Unaudited) 12/31/2020
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......................... $ 84,871 $ 146,002 $ 46,769 $ 211,578
Net realized gain (loss).............................. 3,070,254 (102,951) 251,009 (7,244,534)
Net change in unrealized appreciation (depreciation).. (22,372) 1,663,834 1,155,906 (8,269,108)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations.................................... 3,132,753 1,706,885 1,453,684 (15,302,064)
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations................................. (73,720) (165,965) (44,940) (240,000)
-------------- -------------- -------------- --------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold............................. 11,186,223 5,412,788 -- 6,707,616
Proceeds from shares acquired through reorganization.. -- -- -- --
Cost of shares redeemed............................... (8,900,737) (8,804,718) (1,484,720) (43,298,218)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from shareholder transactions...................... 2,285,486 (3,391,930) (1,484,720) (36,590,602)
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets............... 5,344,519 (1,851,010) (75,976) (52,132,666)
NET ASSETS:
Beginning of period................................... 16,248,582 18,099,592 11,374,634 63,507,300
-------------- -------------- -------------- --------------
End of period......................................... $ 21,593,101 $ 16,248,582 $ 11,298,658 $ 11,374,634
============== ============== ============== ==============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period............... 400,002 500,002 400,002 1,900,002
Shares sold........................................... 250,000 150,000 -- 200,000
Shares issued through reorganization.................. -- -- -- --
Shares redeemed....................................... (200,000) (250,000) (50,000) (1,700,000)
-------------- -------------- -------------- --------------
Shares outstanding, end of period..................... 450,002 400,002 350,002 400,002
============== ============== ============== ==============
</TABLE>
Page 42 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
FIRST TRUST FIRST TRUST
DOW 30 LUNT U.S.
EQUAL WEIGHT FACTOR ROTATION
ETF ETF
(EDOW) (FCTR)
------------------------------- -------------------------------
Six Months Six Months
Ended Ended
6/30/2021 Year Ended 6/30/2021 Year Ended
(Unaudited) 12/31/2020 (Unaudited) 12/31/2020
-------------- -------------- -------------- --------------
<S> <C> <C> <C>
$ 703,662 $ 788,789 $ 981,037 $ 356,145
2,648,924 2,725,877 32,101,379 17,001,136
5,988,297 1,847,818 (3,309,071) 12,191,167
-------------- -------------- -------------- --------------
9,340,883 5,362,484 29,773,345 29,548,448
-------------- -------------- -------------- --------------
(713,042) (796,961) (881,545) (405,400)
-------------- -------------- -------------- --------------
43,101,347 82,844,105 406,154,158 229,904,890
-- 21,476,818 -- --
(16,714,667) (79,969,157) (269,141,430) (190,587,189)
-------------- -------------- -------------- --------------
26,386,680 24,351,766 137,012,728 39,317,701
-------------- -------------- -------------- --------------
35,014,521 28,917,289 165,904,528 68,460,749
71,994,313 43,077,024 131,156,504 62,695,755
-------------- -------------- -------------- --------------
$ 107,008,834 $ 71,994,313 $ 297,061,032 $ 131,156,504
============== ============== ============== ==============
2,647,756 1,650,002 4,450,002 2,750,002
1,450,000 3,650,000 12,300,000 9,500,000
-- 797,754 -- --
(600,000) (3,450,000) (8,200,000) (7,800,000)
-------------- -------------- -------------- --------------
3,497,756 2,647,756 8,550,002 4,450,002
============== ============== ============== ==============
</TABLE>
See Notes to Financial Statements Page 43
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 ------------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 40.62 $ 36.20 $ 29.22 $ 32.85 $ 27.74 $ 24.34
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.20 0.35 0.40 0.34 0.25 0.32
Net realized and unrealized gain (loss) 7.33 4.47 6.99 (3.64) 5.12 3.43
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 7.53 4.82 7.39 (3.30) 5.37 3.75
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.17) (0.40) (0.41) (0.33) (0.26) (0.35)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 47.98 $ 40.62 $ 36.20 $ 29.22 $ 32.85 $ 27.74
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 18.56% 13.65% 25.36% (10.13)% 19.44% 15.48%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 21,593 $ 16,249 $ 18,100 $ 13,151 $ 14,783 $ 8,321
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.96% (b) 1.16% 1.02% 1.57% 1.69% 1.96%
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 0.88% (b) 1.04% 1.20% 1.03% 0.88% 1.17%
Portfolio turnover rate (c) 48% 125% 119% 110% 112% 113%
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 ------------------------------------------------------------------------
(UNAUDITED) 2020 2019 2018 2017 2016
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.44 $ 33.42 $ 25.96 $ 28.64 $ 23.80 $ 24.07
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.14 0.11 0.37 0.33 0.30 0.38
Net realized and unrealized gain (loss) 3.83 (4.94) 7.45 (2.67) 4.84 (0.25)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.97 (4.83) 7.82 (2.34) 5.14 0.13
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.13) (0.15) (0.36) (0.34) (0.30) (0.40)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 32.28 $ 28.44 $ 33.42 $ 25.96 $ 28.64 $ 23.80
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 14.01% (14.42)% 30.24% (8.26)% 21.71% 0.54%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 11,299 $ 11,375 $ 63,507 $ 35,042 $ 30,072 $ 3,569
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 0.85% (b) 0.69% 1.28% 1.19% 1.29% 1.59%
Portfolio turnover rate (c) 4% 114% 30% 32% 30% (d) 4%
</TABLE>
(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 for First Trust Total US Market
AlphaDEX(R) ETF 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.
(d) The variation in the portfolio turnover rate is due to the change in the
Fund's underlying index effective August 18, 2017, which resulted in a
complete rebalance of the Fund's portfolio.
Page 44 See Notes to Financial Statements
<PAGE>
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FIRST TRUST DOW 30 EQUAL WEIGHT ETF (EDOW)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 ------------------------------------------ PERIOD ENDED
(UNAUDITED) 2020 2019 2018 12/31/2017 (a)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 27.19 $ 26.11 $ 21.43 $ 22.00 $ 19.97
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.24 0.50 0.47 0.40 0.17
Net realized and unrealized gain (loss) 3.40 1.08 4.70 (0.58) 2.03
---------- ---------- ---------- ---------- ----------
Total from investment operations 3.64 1.58 5.17 (0.18) 2.20
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.24) (0.50) (0.49) (0.39) (0.17)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 30.59 $ 27.19 $ 26.11 $ 21.43 $ 22.00
========== ========== ========== ========== ==========
TOTAL RETURN (b) 13.39% 6.41% 24.27% (0.88)% 11.02%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 107,009 $ 71,994 $ 43,077 $ 12,859 $ 2,200
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.50% (c) 0.50% 0.50% 0.50% 0.50% (c)
Ratio of net expenses to average net
assets 0.50% (c) 0.50% 0.50% 0.50% 0.50% (c)
Ratio of net investment income (loss) to
average net assets 1.73% (c) 2.11% 1.99% 2.33% 1.99% (c)
Portfolio turnover rate (d) 8% 31% 13% 16% 20%
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2021 --------------------------- PERIOD ENDED
(UNAUDITED) 2020 2019 12/31/2018 (a)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 29.47 $ 22.80 $ 17.67 $ 20.23
---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.13 0.12 0.23 0.12
Net realized and unrealized gain (loss) 5.26 6.68 5.12 (2.56)
---------- ---------- ---------- ----------
Total from investment operations 5.39 6.80 5.35 (2.44)
---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.12) (0.13) (0.22) (0.12)
---------- ---------- ---------- ----------
Net asset value, end of period $ 34.74 $ 29.47 $ 22.80 $ 17.67
========== ========== ========== ==========
TOTAL RETURN (b) 18.31% 30.02% 30.35% (12.09)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 297,061 $ 131,157 $ 62,696 $ 28,269
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net
assets 0.65% (c) 0.65% 0.65% 0.65% (c)
Ratio of net expenses to average net
assets 0.65% (c) 0.65% 0.65% 0.65% (c)
Ratio of net investment income (loss) to
average net assets 0.94% (c) 0.42% 1.17% 1.48% (c)
Portfolio turnover rate (d) 149% 460% 246% 183%
</TABLE>
(a) Inception dates for EDOW and FCTR are August 8, 2017 and July 25, 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 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) 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 45
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
1. ORGANIZATION
First Trust Exchange-Traded Fund (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on August 8,
2003, 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 twenty-two exchange-traded funds. This report
covers the four funds (each a "Fund" and collectively, the "Funds") listed
below:
First Trust Total US Market AlphaDEX(R) ETF - (The Nasdaq Stock Market
LLC ("Nasdaq") ticker "TUSA")
First Trust Dorsey Wright People's Portfolio ETF - (Nasdaq ticker
"DWPP")
First Trust Dow 30 Equal Weight ETF - (NYSE Arca, Inc. ("NYSE Arca")
ticker "EDOW")
First Trust Lunt U.S. Factor Rotation ETF - (Cboe BZX Exchange, Inc.
("Cboe BZX") ticker "FCTR")
Each Fund represents a separate series of beneficial interest in the Trust.
Unlike conventional mutual funds, each Fund issues and redeems shares on a
continuous basis, at net asset value ("NAV"), only in large blocks of shares
known as "Creation Units." The investment objective of each Fund is to seek
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of the following indices:
<TABLE>
<CAPTION>
FUND INDEX
<S> <C>
First Trust Total US Market AlphaDEX(R) ETF NASDAQ AlphaDEX(R) Total US Market Index
First Trust Dorsey Wright People's Portfolio ETF Nasdaq Dorsey Wright People's Portfolio Index
First Trust Dow 30 Equal Weight ETF Dow Jones Industrial Average(R) Equal Weight Index
First Trust Lunt U.S. Factor Rotation ETF Lunt Capital Large Cap Factor Rotation Index
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are each considered an investment company and follow accounting and
reporting guidance under Financial Accounting Standards Board Accounting
Standards Codification Topic 946, "Financial Services-Investment Companies." The
following is a summary of significant accounting policies consistently followed
by the Funds in the preparation of the financial statements. The preparation of
the financial statements in accordance with accounting principles generally
accepted in the United States of America ("U.S. GAAP") requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
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. 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.
Page 46
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
U.S. Treasuries are fair valued on the basis of valuations provided by a
third-party pricing service approved by the Trust's Board of Trustees.
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.
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.
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 June 30, 2021, 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.
Page 47
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
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 requires entities to disclose both gross and
net information about instruments and transactions eligible for offset on the
Statements of Assets and Liabilities, and disclose instruments and transactions
subject to master netting or similar agreements. These disclosure requirements
are intended to help investors and other financial statement users better assess
the effect or potential effect of offsetting arrangements on a fund's financial
position. The transactions subject to offsetting disclosures are derivative
instruments, repurchase agreements and reverse repurchase agreements, and
securities borrowing and securities lending transactions.
This disclosure, if applicable, is included within each Fund's Portfolio of
Investments under the heading "Offsetting Assets and Liabilities." For financial
reporting purposes, the Funds do not offset financial assets and financial
liabilities that are subject to master netting arrangements ("MNAs") or similar
agreements on the Statements of Assets and Liabilities. MNAs provide the right,
in the event of default (including bankruptcy and insolvency), for the
non-defaulting counterparty to liquidate the collateral and calculate the net
exposure to the defaulting party or request additional collateral.
D. 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 June 30, 2021, only TUSA
had securities 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.
E. 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.
Page 48
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
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 June 30, 2021 were received as
collateral for lending securities. There were no repurchase agreements held by
the Funds as of June 30, 2021.
F. 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 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 December 31, 2020 was as follows:
<TABLE>
<CAPTION>
Distributions Distributions
Distributions paid paid paid
from Ordinary from Capital from Return
Income Gains of Capital
------------------ ---------------- -----------------
<S> <C> <C> <C>
First Trust Total US Market AlphaDEX(R) ETF $ 165,965 $ -- $ --
First Trust Dorsey Wright People's Portfolio ETF 240,000 -- --
First Trust Dow 30 Equal Weight ETF 796,961 -- --
First Trust Lunt U.S. Factor Rotation ETF 405,400 -- --
</TABLE>
As of December 31, 2020, the components of distributable earnings on a tax basis
for each Fund were as follows:
<TABLE>
<CAPTION>
Accumulated
Undistributed Capital and Net Unrealized
Ordinary Other Appreciation
Income Gain (Loss) (Depreciation)
------------------ ---------------- -----------------
<S> <C> <C> <C>
First Trust Total US Market AlphaDEX(R) ETF $ 2,446 $ (3,213,939) $ 3,659,054
First Trust Dorsey Wright People's Portfolio ETF -- (10,425,850) 1,166,573
First Trust Dow 30 Equal Weight ETF -- (4,160,749) 2,774,408
First Trust Lunt U.S. Factor Rotation ETF -- (12,812,202) 14,486,545
</TABLE>
G. INCOME 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 49
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
The Funds are subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. For TUSA, DWPP, and EDOW, the
taxable years ended 2017, 2018, 2019, and 2020 remain open to federal and state
audit. For FCTR, the taxable years ended 2018, 2019, and 2020 remain open to
federal and state audit. As of June 30, 2021, management has evaluated the
application of these standards to the Funds, and has determined that no
provision for income tax is required in the Funds' financial statements for
uncertain tax positions.
Each Fund intends to utilize provisions of the federal income tax laws, which
allow it to carry a realized capital loss forward indefinitely following the
year of the loss and offset such loss against any future realized capital gains.
Each Fund is subject to certain limitations under U.S. tax rules on the use of
capital loss carryforwards and net unrealized built-in losses. These limitations
apply when there has been a 50% change in ownership. At December 31, 2020, for
federal income tax purposes, each applicable Fund had a capital loss
carryforward available that is shown in the table below, to the extent provided
by regulations, to offset future capital gains. To the extent that these loss
carryforwards are used to offset future capital gains, it is probable that the
capital gains so offset will not be distributed to each applicable Fund's
shareholders.
<TABLE>
<CAPTION>
Non-Expiring
Capital Loss
Carryforwards
------------------
<S> <C>
First Trust Total US Market AlphaDEX(R) ETF $ 3,213,939
First Trust Dorsey Wright People's Portfolio ETF 10,425,850
First Trust Dow 30 Equal Weight ETF* 4,160,749
First Trust Lunt U.S. Factor Rotation ETF 12,812,202
</TABLE>
* $3,196,583 of First Trust Dow 30 Equal Weight ETF's non-expiring net
capital losses is subject to loss limitation resulting from reorganization
activity. This limitation generally reduces the utilization of these
losses to a maximum of $212,620 per year.
Certain losses realized during the current fiscal year may be deferred and
treated as occurring on the first day of the following fiscal year for federal
income tax purposes. For the fiscal year ended December 31, 2020, the Funds had
no net late year ordinary or capital losses.
H. EXPENSES
Expenses that are directly related to First Trust Total US Market AlphaDEX(R)
ETF are charged directly to the Fund. Expenses for First Trust Dorsey Wright
People's Portfolio ETF, First Trust Dow 30 Equal Weight ETF and First Trust Lunt
U.S. Factor Rotation ETF (the "Unitary Fee Funds"), other than excluded expenses
(discussed in Note 3), are paid by the Advisor. General expenses of the Trust
are allocated to all the Funds based upon the net assets of each Fund.
First Trust has entered into licensing agreements with each of the following
"Licensors" for the respective Funds:
<TABLE>
<CAPTION>
FUND LICENSOR
<S> <C>
First Trust Total US Market AlphaDEX(R) ETF Nasdaq, Inc.
First Trust Dorsey Wright People's Portfolio ETF Nasdaq, Inc.
First Trust Dow 30 Equal Weight ETF S&P Dow Jones Indices LLC
First Trust Lunt U.S. Factor Rotation ETF Lunt Capital Management, Inc.
</TABLE>
The respective license agreements allow for the use by First Trust of certain
trademarks and trade names of the respective Licensors. The Funds are
sub-licensees to the applicable license agreement. The First Trust Total US
Market AlphaDEX(R) ETF is required to pay licensing fees, which are shown on the
Statements of Operations.
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 First Trust Total US Market AlphaDEX(R) ETF, First Trust is paid an
annual management fee of 0.50% of the Fund's average daily net assets. For such
Fund, the Trust and the Advisor 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
Page 50
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
operating expenses of the Fund (excluding interest expense, brokerage
commissions and other trading expenses, acquired fund fees and expenses, taxes
and extraordinary expenses) exceed 0.70% of average daily net assets per year
(the "Expense Cap"). The Expense Cap will be in effect until at least April 30,
2023.
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 (i) the applicable expense limitation in
place for the most recent fiscal year for which such expense limitation was in
place, (ii) the applicable expense limitation in place at the time the fees were
waived, or (iii) the current expense limitation. 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
June 30, 2021 and fees waived or expenses borne by First Trust subject to
recovery from the Fund for the periods indicated were as follows:
<TABLE>
<CAPTION>
Fees Waived and Expenses Borne by
First Trust Subject to Recovery
-------------------------------------------------------------
Advisory Six Months Year Year Six Months
Fee Expense Ended Ended Ended Ended
Waivers Reimbursement 12/31/2018 12/31/2019 12/31/2020 6/30/2021 Total
--------- ------------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
First Trust Total US Market
AlphaDEX(R) ETF $ 24,664 $ -- $ 77,287 $ 54,452 $ 63,952 $ 24,664 $ 220,355
</TABLE>
For the First Trust Dorsey Wright People's Portfolio ETF, First Trust Dow 30
Equal Weight ETF and First Trust Lunt U.S. Factor Rotation ETF, First Trust is
paid an annual unitary management fee of 0.60%, 0.50%, and 0.65%, respectively,
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, licensing and other services, but excluding fee payments under the
Investment Management Agreement, distribution and service fees pursuant to a
Rule 12b-1 plan, if any, brokerage commissions and other expenses connected with
the execution of portfolio transactions, acquired fund fees and expenses, taxes,
interest, and extraordinary expenses. Pursuant to a contractual agreement
between the Trust, on behalf of DWPP, and First Trust, the management fees paid
to First Trust will be reduced by the proportional amount of the acquired fund
fees and expenses of the shares of investment companies held by DWPP so that the
Fund would not bear the indirect costs of holding them, provided that the
investment companies are advised by First Trust. This contractual agreement
shall continue until the earlier of (i) its termination at the direction of the
Trust's Board of Trustees or (ii) upon the termination of the Fund's management
agreement with First Trust. First Trust does not have the right to recover the
fees waived that are attributable to acquired fund fees and expenses of the
shares of investment companies advised by First Trust.
The Trust has multiple service agreements with The Bank of New York Mellon
("BNYM"). Under the service agreements, BNYM performs custodial, fund
accounting, certain administrative services, and transfer agency services for
each Fund. As custodian, BNYM is responsible for custody of each Fund's assets.
As fund accountant and administrator, BNYM is responsible for maintaining the
books and records of each Fund's securities and cash. As transfer agent, BNYM is
responsible for maintaining shareholder records for each Fund. BNYM is a
subsidiary of The Bank of New York Mellon Corporation, a financial holding
company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that
varies based on whether the fund is a closed-end or other actively managed fund,
a defined- outcome 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. REORGANIZATION
On January 30, 2020, the Board of Trustees of First Trust Mega Cap AlphaDEX(R)
Fund ("FMK") and EDOW approved a reorganization of EDOW with FMK. The
reorganization was completed on December 14, 2020. EDOW was the surviving fund.
Page 51
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
Under the terms of the reorganization, which was tax-free, the assets of FMK
were transferred to, and the liabilities of FMK were assumed by, EDOW in
exchange for shares of EDOW. The cost of the investments received from FMK was
carried forward to EDOW for U.S. GAAP and tax purposes. The EDOW shares were
then distributed to FMK shareholders and the separate existence of FMK ceased.
The reorganization was subject to certain conditions, including that the
reorganization was approved on November 9, 2020, by the shareholders of EDOW.
When the reorganization occurred, the transactions were based on the relative
NAVs of FMK and EDOW.
The following table summarizes the asset transfers and conversion ratios for the
reorganization.
<TABLE>
<CAPTION>
Net Assets on Unrealized Accumulated Shares Acquiring Net Assets on
Acquired Shares December 11, Appreciation Net Realized Conversion (Surviving) Shares December 11,
Fund Redeemed 2020 (Depreciation) Gain (Loss) Ratio Fund Issued 2020*
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FMK 500,002 $ 21,476,818 $ 628,735 $ (2,594,062) 1.595502 EDOW 797,754 $ 51,151,076
</TABLE>
* Amount reflects net assets of EDOW prior to the reorganization.
The following table summarizes the operations of the Acquired Fund for the
period August 1, 2020 to December 11, 2020, and the operations of EDOW, the
Acquiring (Surviving) Fund, for the fiscal year ended December 31, 2020, as
presented in the Statements of Operations and the combined Acquired and
Acquiring (Surviving) Funds' pro-forma results of operations for the fiscal year
ended December 31, 2020, assuming the acquisition had been completed on January
1, 2020.
Because the combined investment portfolios have been managed as a single
integrated portfolio since the reorganization was completed, it is not
practicable to separate the amounts of revenue and earnings of FMK that have
been included in EDOW's Statement of Operations since December 11, 2020.
<TABLE>
<CAPTION>
Net Realized and
Change in
Unrealized Net Increase
Net Investment Gain (Loss) (Decrease) from
Income on Investments Operations
--------------- ---------------- ---------------
<S> <C> <C> <C>
Acquired Fund for the period August 1, 2020 to December 11, 2020
FMK $ 109,271 $ 3,543,108 $ 3,652,379
Acquiring Fund for the fiscal year ended December 31, 2020
EDOW 788,789 5,202,430 5,991,219
--------------- ---------------- ---------------
Combined Total $ 898,060 $ 8,745,538 $ 9,643,598
=============== ================ ===============
</TABLE>
5. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2021, the cost of purchases and proceeds from
sales of investments for each Fund, excluding short-term investments and in-kind
transactions, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
--------------- ---------------
<S> <C> <C>
First Trust Total US Market AlphaDEX(R) ETF $ 9,144,686 $ 9,082,143
First Trust Dorsey Wright People's Portfolio ETF 403,714 391,500
First Trust Dow 30 Equal Weight ETF 7,054,254 6,975,970
First Trust Lunt U.S. Factor Rotation ETF 311,531,348 311,506,192
</TABLE>
For the six months ended June 30, 2021, the cost of in-kind purchases and
proceeds from in-kind sales for each Fund were as follows:
<TABLE>
<CAPTION>
Purchases Sales
--------------- ---------------
<S> <C> <C>
First Trust Total US Market AlphaDEX(R) ETF $ 11,143,264 $ 8,914,228
First Trust Dorsey Wright People's Portfolio ETF -- 1,478,213
First Trust Dow 30 Equal Weight ETF 43,029,718 16,678,541
First Trust Lunt U.S. Factor Rotation ETF 405,304,192 268,372,919
</TABLE>
Page 52
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
6. CREATION, REDEMPTION AND TRANSACTION FEES
Each Fund generally issues and redeems its shares in primary market transactions
through a creation and redemption mechanism and does not sell or redeem
individual shares. Instead, financial entities known as "Authorized
Participants" have contractual arrangements with a Fund or one of the Fund's
service providers to purchase and redeem Fund shares directly with the Fund in
large blocks of shares known as "Creation Units." Prior to the start of trading
on every business day, a Fund publishes through the National Securities Clearing
Corporation ("NSCC") the "basket" of securities, cash or other assets that it
will accept in exchange for a Creation Unit of the Fund's shares. An Authorized
Participant that wishes to effectuate a creation of a Fund's shares deposits
with the Fund the "basket" of securities, cash or other assets identified by the
Fund that day, and then receives the Creation Unit of the Fund's shares in
return for those assets. After purchasing a Creation Unit, the Authorized
Participant may continue to hold the Fund's shares or sell them in the secondary
market. The redemption process is the reverse of the purchase process: the
Authorized Participant redeems a Creation Unit of a Fund's shares for a basket
of securities, cash or other assets. The combination of the creation and
redemption process with secondary market trading in a Fund's shares and
underlying securities provides arbitrage opportunities that are designed to help
keep the market price of a Fund's shares at or close to the NAV per share of the
Fund.
Each Fund imposes fees in connection with the purchase of Creation Units. These
fees may vary based upon various fact-based circumstances, including, but not
limited to, the composition of the securities included in the Creation Unit or
the countries in which the transactions are settled. The price for each Creation
Unit will equal the daily NAV per share of a Fund times the number of shares in
a Creation Unit, plus the fees described above and, if applicable, any
operational processing and brokerage costs, transfer fees, stamp taxes and part
or all of the spread between the expected bid and offer side of the market
related to the securities comprising the creation basket.
Each Fund also imposes fees in connection with the redemption of Creation Units.
These fees may vary based upon various fact-based circumstances, including, but
not limited to, the composition of the securities included in the Creation Unit
or the countries in which the transactions are settled. The price received for
each Creation Unit will equal the daily NAV per share of a Fund times the number
of shares in a Creation Unit, minus the fees described above and, if applicable,
any operational processing and brokerage costs, transfer fees, stamp taxes and
part or all of the spread between the expected bid and offer side of the market
related to the securities comprising the redemption basket. Investors who use
the services of a broker or other such intermediary in addition to an Authorized
Participant to effect a redemption of a Creation Unit may also be assessed an
amount to cover the cost of such services. The redemption fee charged by a Fund
will comply with Rule 22c-2 of the 1940 Act which limits redemption fees to no
more than 2% of the value of the shares redeemed.
7. 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 April 30, 2023.
8. 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.
9. 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.
10. OTHER MATTERS
By operation of law, EDOW now operates as a diversified open-end management
investment company as defined in Section 5(b) of the 1940 Act.
Page 53
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (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
Page 54
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
greater than net asset value (premium) or less than net asset value (discount).
In times of market stress, decisions by market makers to reduce or step away
from their role of providing a market for an ETF's shares, or decisions by an
ETF's authorized participants that they are unable or unwilling to proceed with
creation and/or redemption orders of an ETF's shares, could result in shares of
the ETF trading at a discount to net asset value and in greater than normal
intraday bid-ask spreads.
FIXED INCOME SECURITIES RISK. To the extent a fund invests in fixed income
securities, the fund will be subject to credit risk, income risk, interest rate
risk, liquidity risk and prepayment risk. Income risk is the risk that income
from a fund's fixed income investments could decline during periods of falling
interest rates. Interest rate risk is the risk that the value of a fund's fixed
income securities will decline because of rising interest rates. Liquidity risk
is the risk that a security cannot be purchased or sold at the time desired, or
cannot be purchased or sold without adversely affecting the price. Prepayment
risk is the risk that the securities will be redeemed or prepaid by the issuer,
resulting in lower interest payments received by the fund. In addition to these
risks, high yield securities, or "junk" bonds, are subject to greater market
fluctuations and risk of loss than securities with higher ratings, and the
market for high yield securities is generally smaller and less liquid than that
for investment grade securities.
INDEX 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.
LIBOR RISK. To the extent a fund invests in floating or variable rate
obligations that use the London Interbank Offered Rate ("LIBOR") as a reference
interest rate, it is subject to LIBOR Risk. The United Kingdom's Financial
Conduct Authority, which regulates LIBOR, will cease making LIBOR available as a
reference rate over a phase-out period that will begin immediately after
December 31, 2021. The unavailability or replacement of LIBOR may affect the
value, liquidity or return on certain fund investments and may result in costs
incurred in connection with closing out positions and entering into new trades.
Any potential effects of the transition away from LIBOR on the fund or on
certain instruments in which the fund invests can be difficult to ascertain, and
they may vary depending on a variety of factors, and they could result in losses
to the fund.
MANAGEMENT RISK. To the extent that a fund is actively managed, it is subject to
management risk. In managing an actively-managed fund's investment portfolio,
the fund's portfolio managers will apply investment techniques and risk analyses
that may not have the desired result. There can be no guarantee that a fund will
meet its investment objective.
MARKET RISK. Securities held by a fund, as well as shares of a fund itself, are
subject to market fluctuations caused by factors such as general economic
conditions, political events, regulatory or market developments, changes in
interest rates and perceived trends in securities prices. Shares of a fund could
decline in value or underperform other investments as a result of the risk of
loss associated with these market fluctuations. In addition, local, regional or
global events such as war, acts of terrorism, spread of infectious diseases or
other public health issues, recessions, or other events could have a significant
negative impact on a fund and its investments. Such events may affect certain
geographic regions, countries, sectors and industries more significantly than
others. The outbreak of the respiratory disease designated as COVID-19 in
December 2019 has caused significant volatility and declines in global financial
markets, which have caused losses for investors. While the development of
vaccines has slowed the spread of the virus and allowed for the resumption of
"reasonably" normal business activity in the United States, many countries
continue to impose lockdown measures in an attempt to slow the spread.
Additionally, there is no guarantee that vaccines will be effective against
emerging variants of the disease.
Page 55
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
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.
OPERATIONAL RISK. Each fund is subject to risks arising from various operational
factors, including, but not limited to, human error, processing and
communication errors, errors of a fund's service providers, counterparties or
other third-parties, failed or inadequate processes and technology or systems
failures. Although the funds and the Advisor seek to reduce these operational
risks through controls and procedures, there is no way to completely protect
against such risks.
PASSIVE INVESTMENT RISK. To the extent a fund seeks to track an index, the fund
will invest in the securities included in, or representative of, the index
regardless of their investment merit. A fund generally will not attempt to take
defensive positions in declining markets.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
ADVISORY AGREEMENTS
BOARD CONSIDERATIONS REGARDING APPROVAL OF CONTINUATION OF INVESTMENT MANAGEMENT
AGREEMENTS
The Board of Trustees of First Trust Exchange-Traded Fund (the "Trust"),
including the Independent Trustees, unanimously approved the continuation of the
Investment Management Agreements (as applicable to a specific Fund, the
"Agreement" and collectively, the "Agreements") with First Trust Advisors L.P.
(the "Advisor") on behalf of the following four series of the Trust (each a
"Fund" and collectively, the "Funds"):
First Trust Total US Market AlphaDEX(R) ETF (TUSA)
First Trust Dorsey Wright People's Portfolio ETF (DWPP)
First Trust Dow 30 Equal Weight ETF (EDOW)
First Trust Lunt U.S. Factor Rotation ETF (FCTR)
The Board approved the continuation of the Agreement for each Fund for a
one-year period ending June 30, 2022 at a meeting held on June 6-7, 2021. The
Board determined for each Fund that the continuation of the Agreement is in the
best interests of the Fund in light of the nature, extent and quality of the
services provided and such other matters as the Board considered to be relevant
in the exercise of its business judgment.
To reach this determination for each Fund, the Board considered its duties under
the Investment Company Act of 1940, as amended (the "1940 Act"), as well as
under the general principles of state law, in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. At meetings held on April 26, 2021 and June 6-7, 2021, the
Board, including the Independent Trustees, reviewed materials provided by the
Advisor responding to requests for information from counsel to the Independent
Trustees, submitted on behalf of the Independent Trustees, that, among other
things, outlined: the services provided by the Advisor to each Fund (including
the relevant personnel responsible for these services and their experience); the
advisory fee rate payable by TUSA and the unitary fee rates payable by each of
DWPP, EDOW and FCTR (each a "Unitary Fee Fund" and collectively, the "Unitary
Fee Funds") as compared to fees charged to a peer group of funds (the "Expense
Group") and a broad peer universe of funds (the "Expense Universe"), each
assembled by Broadridge Financial Solutions, Inc. ("Broadridge"), an independent
source, and as compared to fees charged to other clients of the Advisor,
including other exchange-traded funds ("ETFs") managed by the Advisor; the
expense ratio of each Fund as compared to expense ratios of the funds in the
Fund's Expense Group and Expense Universe; performance information for each
Fund, including comparisons of each Fund's performance to that of one or more
relevant benchmark indexes and to that of a performance group of funds and a
broad performance universe of funds (the "Performance Universe"), each assembled
by Broadridge; the nature of expenses incurred in providing services to each
Fund and the potential for the Advisor to realize economies of scale, if any;
profitability and other financial data for the Advisor; any fall-out benefits to
the Advisor and its affiliate, First Trust Portfolios L.P. ("FTP"); and
information on the Advisor's compliance program. The Board reviewed initial
Page 56
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
materials with the Advisor at the meeting held on April 26, 2021, prior to which
the Independent Trustees and their counsel met separately to discuss the
information provided by the Advisor. Following the April meeting, counsel to the
Independent Trustees, on behalf of the Independent Trustees, requested certain
clarifications and supplements to the materials provided, and the information
provided in response to those requests was considered at an executive session of
the Independent Trustees and their counsel held prior to the June 6-7, 2021
meeting, as well as at the June meeting. The Board applied its business judgment
to determine whether the arrangement between the Trust and the Advisor continues
to be a reasonable business arrangement from each Fund's perspective. The Board
determined that, given the totality of the information provided with respect to
the Agreements, the Board had received sufficient information to renew the
Agreements. The Board considered that shareholders chose to invest or remain
invested in a Fund knowing that the Advisor manages the Fund and knowing TUSA's
advisory fee and the Unitary Fee Funds' unitary fees.
In reviewing the Agreement for each Fund, the Board considered the nature,
extent and quality of the services provided by the Advisor under the Agreement.
The Board considered that the Advisor is responsible for the overall management
and administration of the Trust and each Fund and reviewed all of the services
provided by the Advisor to the Funds, as well as the background and experience
of the persons responsible for such services. In reviewing the services
provided, the Board noted the compliance program that had been developed by the
Advisor and considered that it includes a robust program for monitoring the
Advisor's and each Fund's compliance with the 1940 Act, as well as each Fund's
compliance with its investment objective, policies and restrictions. The Board
also considered a report from the Advisor with respect to its risk management
functions related to the operation of the Funds. Finally, as part of the Board's
consideration of the Advisor's services, the Advisor, in its written materials
and at the April 26, 2021 meeting, described to the Board the scope of its
ongoing investment in additional personnel and infrastructure to maintain and
improve the quality of services provided to the Funds and the other funds in the
First Trust Fund Complex. In light of the information presented and the
considerations made, the Board concluded that the nature, extent and quality of
the services provided to the Trust and each Fund by the Advisor under the
Agreements have been and are expected to remain satisfactory and that the
Advisor has managed each Fund consistent with its investment objective, policies
and restrictions.
With respect to TUSA, the Board considered the advisory fee rate payable by TUSA
under the Agreement for the services provided. The Board considered that the
Advisor agreed to extend the current expense cap for TUSA through April 30,
2023. The Board noted that expenses reimbursed and fees waived are subject to
recovery by the Advisor for up to three years from the date the fee was waived
or expense was incurred, but no reimbursement payment would be made by the Fund
if it results in the Fund exceeding (i) the applicable expense limitation in
place for the most recent fiscal year for which such expense limitation was in
place, (ii) the applicable expense limitation in place at the time the fees were
waived, or (iii) the current expense limitation. The Board received and reviewed
information showing the advisory or unitary fee rates and expense ratios of the
peer funds in TUSA's Expense Group, as well as advisory and unitary fee rates
charged by the Advisor to other fund (including ETFs) and non-fund clients, as
applicable. Because TUSA's Expense Group included peer funds that pay a unitary
fee, the Board determined that expense ratios were the most relevant comparative
data point. Based on the information provided, the Board noted that the total
(net) expense ratio of TUSA was above the median total (net) expense ratio of
the peer funds in its Expense Group. With respect to TUSA's Expense Group, the
Board, at the April 26, 2021 meeting, discussed with the Advisor limitations in
creating peer groups for index ETFs, including differences in underlying indexes
and index-tracking methodologies that can result in greater management
complexities across seemingly comparable ETFs, and different business models
that may affect the pricing of services among ETF sponsors. The Board took these
limitations and differences into account in considering the peer data. With
respect to fees charged to other non-ETF clients, the Board considered
differences between TUSA and other non-ETF clients that limited their
comparability. In considering the advisory fee rate for TUSA overall, the Board
also considered the Advisor's statement that it seeks to meet investor needs
through innovative and value-added investment solutions and the Advisor's
demonstrated long-term commitment to TUSA and the other funds in the First Trust
Fund Complex.
With respect to each Unitary Fee Fund, the Board considered the unitary fee rate
payable by each Fund under the applicable Agreement for the services provided.
The Board considered that as part of the unitary fee the Advisor is responsible
for each Fund's expenses, including the cost of transfer agency, custody, fund
administration, legal, audit and other services and license fees, if any, but
excluding the fee payment under the applicable Agreement and interest, taxes,
brokerage commissions and other expenses connected with the execution of
portfolio transactions, distribution and service fees pursuant to a Rule 12b-1
plan, if any, and extraordinary expenses, if any. The Board received and
reviewed information showing the advisory or unitary fee rates and expense
ratios of the peer funds in the Unitary Fee Funds' Expense Groups, as well as
advisory and unitary fee rates charged by the Advisor to other fund (including
ETFs) and non-fund clients, as applicable. Because each Unitary Fee Fund pays a
unitary fee, the Board determined that expense ratios were the most relevant
comparative data point. Based on the information provided, the Board noted that
the unitary fee rate for each Unitary Fee Fund was above the median total (net)
expense ratio of the peer funds in its respective Expense Group. With respect to
the Expense Groups for the Unitary Fee Funds, the Board, at the April 26, 2021
meeting, discussed with the Advisor limitations in creating peer groups for
index ETFs, including differences in underlying indexes and index-tracking
methodologies that can result in greater management complexities across
seemingly comparable ETFs and different business models that may affect the
Page 57
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
pricing of services among ETF sponsors. The Board took these limitations and
differences into account in considering the peer data. With respect to fees
charged to other non-ETF clients, the Board considered differences between the
Unitary Fee Funds and other non-ETF clients that limited their comparability. In
considering the unitary fee rates for the Unitary Fee Funds overall, the Board
also considered the Advisor's statement that it seeks to meet investor needs
through innovative and value-added investment solutions and the Advisor's
demonstrated long-term commitment to each Unitary Fee Fund and the other funds
in the First Trust Fund Complex.
The Board considered performance information for each Fund. The Board noted the
process it has established for monitoring each Fund's performance and portfolio
risk on an ongoing basis, which includes quarterly performance reporting from
the Advisor for the Funds. The Board determined that this process continues to
be effective for reviewing each Fund's performance. The Board received and
reviewed information for periods ended December 31, 2020 regarding the
performance of each Fund's underlying index, the correlation between each Fund's
performance and that of its underlying index, each Fund's tracking difference
and each Fund's excess return as compared to its benchmark index. With respect
to TUSA, the Board noted that during 2015, the Fund changed its underlying index
to an index using the AlphaDEX(R) stock selection methodology, and that the
performance information included a blend of the old and new indexes. The Board
also considered the Advisor's explanations of how the AlphaDEX(R) stock
selection methodology impacts Fund performance in various market environments,
and the Advisor's statement that AlphaDEX(R) is designed to provide long-term
outperformance. With respect to DWPP, the Board noted that during 2017, the Fund
changed its underlying index to the Nasdaq Dorsey Wright People's Portfolio
Index, and that the performance information included a blend of the old and new
indexes. Based on the information provided for each Fund and its ongoing review
of performance, the Board concluded that each Fund was correlated to its
underlying index and that the tracking difference for each Fund was within a
reasonable range. In addition, the Board reviewed data prepared by Broadridge
comparing each Fund's performance to that of its respective Performance Universe
and to that of a broad-based benchmark index, and noted the Advisor's discussion
of TUSA's and DWPP's performance at the April 26, 2021 meeting. However, given
each Fund's objective of seeking investment results that correspond generally to
the performance of its underlying index, the Board placed more emphasis on its
review of correlation and tracking difference.
On the basis of all the information provided on the fees and expenses of TUSA,
the unitary fees of the Unitary Fee Funds and the performance of each Fund and
the ongoing oversight by the Board, the Board concluded that the advisory fee
for TUSA and the unitary fee for each Unitary Fee Fund continue to be reasonable
and appropriate in light of the nature, extent and quality of the services
provided by the Advisor to each Fund under the Agreements.
The Board considered information and discussed with the Advisor whether there
were any economies of scale in connection with providing advisory services to
the Funds and noted the Advisor's statement that it believes its expenses will
likely increase during the next twelve months as the Advisor continues to hire
personnel and build infrastructure, including technology, to improve the
services to the Funds. For the Unitary Fee Funds, the Board noted that any
reduction in fixed costs associated with the management of the Funds would
benefit the Advisor, but that the unitary fee structure provides a level of
certainty in expenses for the Funds. The Board considered the revenues and
allocated costs (including the allocation methodology) of the Advisor in serving
as investment advisor to each Fund for the twelve months ended December 31, 2020
and the estimated profitability level for each Fund calculated by the Advisor
based on such data, as well as complex-wide and product-line profitability data,
for the same period. The Board noted the inherent limitations in the
profitability analysis and concluded that, based on the information provided,
the Advisor's profitability level for each Fund was not unreasonable. In
addition, the Board considered fall-out benefits described by the Advisor that
may be realized from its relationship with the Funds. 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 Funds, may
have had no dealings with the Advisor or FTP, and noted that the Advisor does
not utilize soft dollars in connection with the Funds. The Board concluded that
the character and amount of potential 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 Agreements continue to be fair and reasonable and that the continuation
of the Agreements is in the best interests of each Fund. No single factor was
determinative in the Board's analysis.
LIQUIDITY RISK MANAGEMENT PROGRAM
In accordance with Rule 22e-4 under the Investment Company Act of 1940, as
amended (the "1940 Act"), the Funds and each other fund in the First Trust Fund
Complex, other than the closed-end funds, have adopted and implemented a
liquidity risk management program (the "Program") reasonably designed to assess
and manage the funds' liquidity risk, i.e., the risk that a fund could not meet
requests to redeem shares issued by the fund without significant dilution of
remaining investors' interests in the fund. The Board of Trustees of the First
Trust Funds has appointed First Trust Advisors, L.P. (the "Advisor") as the
person designated to administer the Program, and in this capacity the Advisor
performs its duties primarily through the activities and efforts of the First
Trust Liquidity Committee (the "Liquidity Committee").
Page 58
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2021 (UNAUDITED)
Pursuant to the Program, the Liquidity Committee classifies the liquidity of
each fund's portfolio investments into one of the four liquidity categories
specified by Rule 22e-4: highly liquid investments, moderately liquid
investments, less liquid investments and illiquid investments. The Liquidity
Committee determines certain of the inputs for this classification process,
including reasonably anticipated trade sizes and significant investor dilution
thresholds. The Liquidity Committee also determines and periodically reviews a
highly liquid investment minimum for certain funds, monitors the funds' holdings
of assets classified as illiquid investments to seek to ensure they do not
exceed 15% of a fund's net assets and establishes policies and procedures
regarding redemptions in kind.
At the April 26, 2021 meeting of the Board of Trustees, as required by Rule
22e-4 and the Program, the Advisor provided the Board with a written report
prepared by the Advisor that addressed the operation of the Program during the
period from March 20, 2020 through the Liquidity Committee's annual meeting held
on March 16, 2021 and assessed the Program's adequacy and effectiveness of
implementation during this period, including the operation of the highly liquid
investment minimum for each fund that is required under the Program to have one,
and any material changes to the Program. Note that because the Funds primarily
hold assets that are highly liquid investments, the Funds have not adopted a
highly liquid investment minimum.
As stated in the written report, during the review period, no fund breached the
15% limitation on illiquid investments, no fund with a highly liquid investment
minimum breached that minimum and no fund filed a Form N-LIQUID. The Advisor
concluded that each fund's investment strategy is appropriate for an open-end
fund; that the Program operated effectively in all material respects during the
review period; and that the Program is reasonably designed to assess and manage
the liquidity risk of each fund and to maintain compliance with Rule 22e-4.
Page 59
<PAGE>
This page intentionally left blank.
<PAGE>
FIRST TRUST
First Trust Exchange-Traded Fund
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
<PAGE>
[BLANK BACK COVER]
<PAGE>
FIRST TRUST
First Trust Exchange-Traded Fund
--------------------------------------------------------------------------------
FT Cboe Vest Gold Strategy Quarterly Buffer ETF (BGLD)
-------------------------------
Semi-Annual Report
For the Period January 20, 2021
(Commencement of Operations)
through June 30, 2021
-------------------------------
<PAGE>
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
SEMI-ANNUAL REPORT
JUNE 30, 2021
Shareholder Letter........................................................... 1
Fund Performance Overview.................................................... 2
Portfolio Management......................................................... 4
Understanding Your Fund Expenses............................................. 5
Consolidated Portfolio of Investments........................................ 6
Consolidated Statement of Assets and Liabilities............................. 8
Consolidated Statement of Operations......................................... 9
Consolidated Statement of Changes in Net Assets.............................. 10
Consolidated Financial Highlights............................................ 11
Notes to Consolidated Financial Statements................................... 12
Additional Information....................................................... 17
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/or Cboe Vest(SM) Financial LLC ("Cboe Vest" or the
"Sub-Advisor") and their respective 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
the series of First Trust Exchange-Traded Fund (the "Trust") described in this
report (FT Cboe Vest Gold Strategy Quarterly Buffer ETF; hereinafter referred to
as the "Fund") 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/or Sub-Advisor and their respective 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 the Fund will achieve its investment objective. The
Fund is subject to market risk, which is the possibility that the market values
of securities owned by the Fund will decline and that the value of the Fund's
shares may therefore be less than what you paid for them. Accordingly, you can
lose money investing in the Fund. See "Risk Considerations" in the Additional
Information section of this report for a discussion of certain other risks of
investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
www.ftportfolios.com or speak with your financial advisor. Investment returns,
net asset value and share price will fluctuate and Fund shares, when sold, may
be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund
performance on the Fund's webpage at www.ftportfolios.com.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment in
the Fund. It includes details about the Fund and presents data and analysis that
provide insight into the Fund's performance and investment approach.
The statistical information that follows may help you understand the 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 and/or Sub-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 the Fund are spelled out in the prospectus, the statement of
additional information, and other Fund regulatory filings.
<PAGE>
--------------------------------------------------------------------------------
SHAREHOLDER LETTER
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
JUNE 30, 2021
Dear Shareholders:
First Trust is pleased to provide you with the semi-annual report for the FT
Cboe Vest Gold Strategy Quarterly Buffer ETF (the "Fund"), which contains
detailed information about the Fund since its inception on January 20, 2021
through June 30, 2021. Please note that information contained in this letter and
the semi-annual report prior to the Fund's inception date does not apply to the
Fund.
Since December of 2008, the Federal Reserve (the "Fed") has largely maintained
an extremely accommodating stance on monetary policy. In other words, it has
kept interest rates at very low levels, and has done so on purpose. From
December 2008 through June 2021 (a period that captured a portion of the
financial crisis of 2007-2008 and the entire coronavirus ("COVID-19") pandemic),
the Federal Funds target rate (upper bound) stood at 0.25% for approximately
eight years and three months of that 12.5-year period. That is an aggressive
posture to hold for such a long duration. For comparative purposes, the Federal
Funds target rate averaged 4.50% for the 20-year period ended December 31, 2008.
All along, the Fed has been signaling to savers, investors, and businesses alike
that it wanted them to assume more risk. The Fed did not want money just sitting
idle on the sidelines. It wanted the money to be put to work, so to speak, in
such a way that it would stimulate U.S. economic growth and stave off any
deflationary pressures potentially looming. It has been a tough road to hoe, as
I'm sure those investors who follow the economy closely have noticed.
Why am I taking this trip down memory lane? It is because the Federal Funds
target rate currently stands at 0.25%, just like it did back in December 2008.
We can cite the severe hit to many parts of the U.S. economy from the COVID-19
pandemic, such as the leisure and travel industry, as to why the target rate has
returned to such a low level. For all intents and purposes, until the economy
reaches full employment (4% unemployment rate) and a 2% plus inflation rate for
a sustained period, the Fed has stated that it intends to maintain the status
quo. Since inflation has risen notably in recent months, the Fed is now
forecasting a couple of rate hikes in 2023. At a minimum, that is still 18
months away. Keep in mind, however, the Fed reserves the right to change its
posture at any time.
As previously noted, the Fed has been encouraging savers and investors to assume
more risk for over a decade. One of the best barometers of risk in the
securities markets is the default rate on speculative-grade (below
investment-grade) debt, in my opinion. High yield corporate bonds behave like a
hybrid security between other fixed-income securities and stocks. They share
behavioral characteristics of both, and they are economically sensitive. Moody's
reported that its global speculative-grade default rate stood at 4.0% in June
2021, according to its own release. Moody's puts the historical average default
rate at 4.2%. Its baseline scenario sees the default rate declining to 1.7% by
December 2021. Moody's recorded 28 defaults over the first six months of 2021,
down from 114 defaults over the same period a year ago. I believe that investors
should take some comfort in knowing that defaults are trending lower, not
higher, in the current economic climate.
Companies have heeded the Fed's call for risk-taking, as measured by this year's
robust global mergers and acquisitions ("M&A") activity. Global M&A activity set
a record high in the first half of 2021, with announced deals valued at $2.8
trillion, according to data from Refinitiv. U.S. M&A activity also reached a
record high, coming in at $1.3 trillion for the same period, or around 46% of
the global total. M&A specialists expect deal-making to remain robust for the
rest of 2021, due to low borrowing costs and stronger economic growth.
In closing, we welcome the reopening of the U.S. economy and, hopefully, the
global economy shortly thereafter. We encourage investors to stay the course
even though the markets could experience some turbulence in the months ahead.
The potential for additional volatility represents an opportunity for investors
to check their asset allocation levels to determine if they are suitable for an
extended inflationary climate.
Thank you for giving First Trust the opportunity to play a role in your
financial future. We value our relationship with you and will report on the Fund
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 1
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
The investment objective of the FT Cboe Vest Gold Strategy Quarterly Buffer ETF
is to seek to provide investors with returns (before fees, expenses and taxes)
that match the price return of the SPDR(R) Gold Trust (the "Underlying ETF"), up
to a predetermined upside cap of 3.94% (before fees, expenses and taxes) and
3.71% (after fees and expenses, excluding brokerage commissions, trading fees,
taxes and extraordinary expenses not included in the Fund's management fee),
while providing a buffer against Underlying ETF losses between -5% and -15%
(before fees, expenses and taxes) over the period from June 1, 2021 to August
31, 2021 (the "Outcome Period"). Under normal market conditions, the Fund,
through a wholly owned subsidiary (the "Subsidiary"), organized under the laws
of the Cayman Island, will invest substantially all of its assets in FLexible
EXchange(R) Options ("FLEX Options") that reference the price performance of the
Underlying ETF. The Fund does not invest directly in FLEX Options. The Fund
gains exposure to these investments exclusively by investing in the Subsidiary.
The Fund's investment in the Subsidiary may not exceed 25% of the Fund's total
assets at the end of each fiscal quarter.
Subsequent Target Outcome Periods will begin on the day the prior Target Outcome
Period ends and will end on the approximate three-month anniversary of that new
Target Outcome Period. On the first day of each new Outcome Period, the Fund
resets by investing in a new set of FLEX Options that will provide a new cap for
the new Outcome Period. This means that the cap will change for each Outcome
Period based upon prevailing market conditions at the beginning of each Outcome
Period. The Fund will be perpetually offered and not terminate after the initial
or any subsequent Target Outcome Period. An investor that purchases Fund shares
other than on the first day of an Outcome Period and/or sells Fund shares prior
to the end of an Outcome Period may experience results that are very different
from the target outcomes sought by the Fund for that Outcome Period. The Fund is
classified as non-diversified under the Investment Company Act of 1940, as
amended. The shares of the Fund are listed and traded on the Cboe BZX Exchange,
Inc., under the ticker symbol "BGLD".
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
PERFORMANCE
--------------------------------------------------------------------------------
CUMULATIVE
TOTAL RETURNS
Inception (1/20/21)
to 6/30/21
<S> <C>
FUND PERFORMANCE
NAV -3.55%
Market Price -3.30%
INDEX PERFORMANCE
LBMA Gold Price -5.22%
S&P 500(R) Index 11.57%
--------------------------------------------------------------------------------
</TABLE>
Total returns for the period since inception are calculated from the inception
date of the Fund. "Cumulative Total Returns" represent the total change in value
of an investment over the period indicated.
The Fund's per share net asset value ("NAV") is the value of one share of the
Fund and is computed by dividing the value of all assets of the Fund (including
accrued interest and dividends), less all liabilities (including accrued
expenses and dividends declared but unpaid), by the total number of outstanding
shares. The price used to calculate market return ("Market Price") is determined
by using the midpoint of the national best bid and offer price ("NBBO") as of
the time that the Fund's NAV is calculated. Under SEC rules, the NBBO consists
of the highest displayed buy and lowest sell prices among the various exchanges
trading the Fund at the time the Fund's NAV is calculated. Since shares of the
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 the 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 the Fund at NAV and Market Price,
respectively.
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. 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 the
Fund will vary with changes in market conditions. Shares of the Fund may be
worth more or less than their original cost when they are redeemed or sold in
the market. The Fund's past performance is no guarantee of future performance.
Page 2
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD) (CONTINUED)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
JANUARY 20, 2021 - JUNE 30, 2021
FT Cboe Vest
Gold Strategy
Quarterly Buffer ETF LBMA Gold Price S&P 500(R) Index
<S> <C> <C> <C>
1/20/21 $10,000 $10,000 $10,000
6/30/21 9,645 9,478 11,157
</TABLE>
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 does not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 3
<PAGE>
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
SEMI-ANNUAL REPORT
JUNE 30, 2021
ADVISOR
First Trust Advisors L.P. ("First Trust" or the "Advisor") is the investment
advisor to FT Cboe Vest Gold Strategy Quarterly Buffer ETF ("BGLD") (the
"Fund"). First Trust is responsible for the ongoing monitoring of the Fund's
investment portfolio, managing the Fund's business affairs and providing certain
administrative services necessary for the management of the Fund.
SUB-ADVISOR
Cboe Vest(SM) Financial LLC ("Cboe Vest" or the "Sub-Advisor") serves as the
investment sub-advisor to the Fund. In this capacity, Cboe Vest is responsible
for the selection and ongoing monitoring of the securities in the Fund's
investment portfolio. Cboe Vest, with principal offices at 1765 Greensboro
Station Pl., 9th Floor, McLean, Virginia 22102, was founded in 2012. Cboe Vest
had approximately $3,408 million under management or committed to management as
of June 30, 2021.
PORTFOLIO MANAGEMENT TEAM
KARAN SOOD, MANAGING DIRECTOR OF CBOE VEST
HOWARD RUBIN, MANAGING DIRECTOR OF CBOE VEST
Page 4
<PAGE>
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2021 (UNAUDITED)
As a shareholder of FT Cboe Vest Gold Strategy Quarterly Buffer ETF (the
"Fund"), you incur two types of costs: (1) transaction costs; and (2) ongoing
costs, including management fees, distribution and/or service (12b-1) fees, if
any, and other Fund expenses. This Example is intended to help you understand
your ongoing costs of investing in the Fund 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 June 30, 2021.
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 the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the 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 Fund 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.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED EXPENSES PAID
EXPENSE RATIO DURING THE PERIOD
BEGINNING ENDING BASED ON THE JANUARY 20, 2021 (a)
ACCOUNT VALUE ACCOUNT VALUE NUMBER OF DAYS TO
JANUARY 20, 2021 (a) JUNE 30, 2021 IN THE PERIOD JUNE 30, 2021 (b)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
Actual $1,000.00 $ 964.50 0.90% $3.92
Hypothetical (5% return before expenses) $1,000.00 $1,020.33 0.90% $4.51
</TABLE>
(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 (January
20, 2021 through June 30, 2021), multiplied by 162/365. Hypothetical
expenses are assumed for the most recent six-month period.
Page 5
<PAGE>
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
CONSOLIDATED PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
------------- ------------------------------------------------------------------ ------------ ------------ ------------
U.S. TREASURY BILLS -- 98.7%
<S> <C> <C> <C> <C>
$ 7,611,100 U.S. Treasury Bill (a)............................................ (b) 08/26/21 $ 7,610,656
(Cost $7,610,918) ------------
SHARES DESCRIPTION VALUE
------------- ------------------------------------------------------------------------------------------------ ------------
MONEY MARKET FUNDS -- 0.6%
<S> <C> <C>
47,830 Dreyfus Government Cash Management Fund, Institutional Shares - 0.03% (c)....................... 47,830
(Cost $47,830) ------------
TOTAL INVESTMENTS -- 99.3%...................................................................... 7,658,486
(Cost $7,658,748) (d) ------------
NUMBER OF NOTIONAL EXERCISE EXPIRATION
CONTRACTS DESCRIPTION AMOUNT PRICE DATE VALUE
------------- --------------------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CALL OPTIONS PURCHASED -- 1.4%
451 SPDR(R) Gold Shares ............................... $ 7,469,913 $ 169.46 08/31/21 105,712
(Cost $503,325) ------------
WRITTEN OPTIONS -- (0.6)%
CALL OPTIONS WRITTEN -- (0.2)%
(451) SPDR(R) Gold Shares ............................... (7,469,913) 185.41 08/31/21 (12,930)
(Premiums received $131,148) ------------
PUT OPTIONS WRITTEN -- (0.4)%
(451) SPDR(R) Gold Shares ............................... (7,469,913) 151.62 08/31/21 (34,755)
(Premiums received $15,125) ------------
TOTAL WRITTEN OPTIONS........................................................................... (47,685)
(Premiums received $146,273) ------------
NET OTHER ASSETS AND LIABILITIES -- (0.1)%...................................................... (5,062)
------------
NET ASSETS -- 100.0%............................................................................ $ 7,711,451
============
</TABLE>
-----------------------------
(a) This security or a portion of this security is segregated as collateral
for written options contracts.
(b) Zero coupon security.
(c) Rate shown reflects yield as of June 30, 2021.
(d) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $118,218 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $417,505. The net unrealized depreciation was
$299,287. The unrealized amounts presented are inclusive of derivative
contracts.
Page 6 See Notes to Consolidated Financial Statements
<PAGE>
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
CONSOLIDATED PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Consolidated
Financial Statements):
<TABLE>
<CAPTION>
ASSETS TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2021 PRICES INPUTS INPUTS
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
U.S. Treasury Bills.................................. $ 7,610,656 $ -- $ 7,610,656 $ --
Money Market Funds................................... 47,830 47,830 -- --
-------------- -------------- -------------- --------------
Total Investments.................................... 7,658,486 47,830 7,610,656 --
Call Options Purchased............................... 105,712 -- 105,712 --
-------------- -------------- -------------- --------------
Total................................................ $ 7,764,198 $ 47,830 $ 7,716,368 $ --
============== ============== ============== ==============
LIABILITIES TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2021 PRICES INPUTS INPUTS
-------------- -------------- -------------- --------------
Call Options Written................................. $ (12,930) $ -- $ (12,930) $ --
Put Options Written.................................. (34,755) -- (34,755) --
-------------- -------------- -------------- --------------
Total................................................ $ (47,685) $ -- $ (47,685) $ --
============== ============== ============== ==============
</TABLE>
See Notes to Consolidated Financial Statements Page 7
<PAGE>
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2021 (UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value.................................................. $ 7,658,486
Options contracts purchased, at value.................................. 105,712
Cash................................................................... 46
Dividends receivable................................................... 33
---------------
Total Assets........................................................ 7,764,277
---------------
LIABILITIES:
Options contracts written, at value.................................... 47,685
Investment advisory fees payable....................................... 5,141
---------------
Total Liabilities................................................... 52,826
---------------
NET ASSETS............................................................. $ 7,711,451
===============
NET ASSETS CONSIST OF:
Paid-in capital........................................................ $ 7,822,507
Par value.............................................................. 4,000
Accumulated distributable earnings (loss).............................. (115,056)
---------------
NET ASSETS............................................................. $ 7,711,451
===============
NET ASSET VALUE, per share............................................. $ 19.28
===============
Number of shares outstanding (unlimited number of shares
authorized, par value $0.01 per share).............................. 400,002
===============
Investments, at cost................................................... $ 7,658,748
===============
Premiums paid on options contracts purchased........................... $ 503,325
===============
Premiums received on options contracts written......................... $ 146,273
===============
</TABLE>
Page 8 See Notes to Consolidated Financial Statements
<PAGE>
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2021 (a) (UNAUDITED)
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest............................................................... $ 629
Dividends.............................................................. 80
---------------
Total investment income............................................. 709
---------------
EXPENSES:
Investment advisory fees............................................... 22,526
---------------
Total expenses...................................................... 22,526
---------------
NET INVESTMENT INCOME (LOSS)........................................... (21,817)
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments......................................................... 1
Purchased options contracts......................................... 345,107
Written options contracts........................................... (139,060)
---------------
Net realized gain (loss)............................................... 206,048
---------------
Net change in unrealized appreciation (depreciation) on:
Investments......................................................... (262)
Purchased options contracts......................................... (397,613)
Written options contracts........................................... 98,588
---------------
Net change in unrealized appreciation (depreciation)................... (299,287)
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS)................................ (93,239)
---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS..................................................... $ (115,056)
===============
</TABLE>
(a) Inception date is January 20, 2021, which is consistent with the
commencement of investment operations and is the date the initial creation
units were established.
See Notes to Consolidated Financial Statements Page 9
<PAGE>
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD
ENDED
6/30/2021 (a)
(UNAUDITED)
---------------
<S> <C>
OPERATIONS:
Net investment income (loss)........................................... $ (21,817)
Net realized gain (loss)............................................... 206,048
Net change in unrealized appreciation (depreciation)................... (299,287)
---------------
Net increase (decrease) in net assets resulting from operations........ (115,056)
---------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold.............................................. 7,826,507
Cost of shares redeemed................................................ --
---------------
Net increase (decrease) in net assets resulting
from shareholder transactions....................................... 7,826,507
---------------
Total increase (decrease) in net assets................................ 7,711,451
NET ASSETS:
Beginning of period.................................................... --
---------------
End of period.......................................................... $ 7,711,451
===============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period................................ --
Shares sold............................................................ 400,002
Shares redeemed........................................................ --
---------------
Shares outstanding, end of period...................................... 400,002
===============
</TABLE>
(a) Inception date is January 20, 2021, which is consistent with the
commencement of investment operations and is the date the initial creation
units were established.
Page 10 See Notes to Consolidated Financial Statements
<PAGE>
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
CONSOLIDATED FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
PERIOD
ENDED
6/30/2021 (a)
(UNAUDITED)
---------------
<S> <C>
Net asset value, beginning of period........................... $ 19.99
---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................................... (0.05)
Net realized and unrealized gain (loss)........................ (0.66)
---------
Total from investment operations............................... (0.71)
---------
Net asset value, end of period................................. $ 19.28
=========
TOTAL RETURN (b)............................................... (3.55)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........................... $ 7,711
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets.................. 0.90% (c)
Ratio of net investment income (loss) to average net assets.... (0.87)% (c)
Portfolio turnover rate (d).................................... 0%
</TABLE>
(a) Inception date is January 20, 2021, which is consistent with the
commencement of investment operations and is the date 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 Consolidated Financial Statements Page 11
<PAGE>
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
JUNE 30, 2021 (UNAUDITED)
1. ORGANIZATION
First Trust Exchange-Traded Fund (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on August 8,
2003, 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 twenty-two exchange-traded funds. This report
covers the FT Cboe Vest Gold Strategy Quarterly Buffer ETF (the "Fund"), which
trades under the ticker "BGLD" on the Cboe BZX Exchange, Inc. ("Cboe BZX"). The
Fund represents a separate series of shares of beneficial interest in the Trust.
Unlike conventional mutual funds, the Fund issues and redeems shares on a
continuous basis, at net asset value ("NAV"), only in large blocks of shares
known as "Creation Units."
The Fund is an actively managed exchange-traded fund. The Fund's investment
objective is to seek to provide investors with returns (before fees, expenses
and taxes) that match the price return of the SPDR(R) Gold Trust (the
"Underlying ETF"), up to a predetermined upside cap of 3.94% (before fees,
expenses and taxes) and 3.71% (after fees and expenses, excluding brokerage
commissions, trading fees, taxes and extraordinary expenses not included in the
Fund's management fee), while providing a buffer against Underlying ETF losses
between -5% and -15% (before fees, expenses and taxes) over the period from June
1, 2021 to August 31, 2021. Under normal market conditions, the Fund, through a
wholly-owned subsidiary (the "Subsidiary"), organized under the laws of the
Cayman Islands, invests in FLexible EXchange(R) Options ("FLEX Options") on the
Underlying ETF. The Fund does not invest directly in FLEX Options. The Fund
gains exposure to these investments exclusively by investing in the Subsidiary.
The Fund's investment in the Subsidiary may not exceed 25% of the Fund's total
assets at the end of each fiscal quarter. As of June 30, 2021, the Fund invested
16.10% of the Fund's total assets in the Subsidiary. There can be no assurance
that the Fund will achieve its investment objective. The Fund may not be
appropriate for all investors.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund is considered an investment company and follows accounting and
reporting guidance under Financial Accounting Standards Board Accounting
Standards Codification Topic 946, "Financial Services-Investment Companies." The
consolidated financial statements include the accounts on a consolidated basis
of the Subsidiary. All intercompany accounts and transactions have been
eliminated in consolidation. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of the
consolidated financial statements. The preparation of the consolidated 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 consolidated
financial statements. Actual results could differ from those estimates.
A. PORTFOLIO VALUATION
The 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. The Fund's NAV is calculated 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 shares outstanding.
The 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 Fund's
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 Consolidated Portfolio of Investments. The Fund's investments
are valued as follows:
Exchange-traded options contracts (other than FLEX Option contracts) are
valued at the closing price in the market where such contracts are
principally traded. If no closing price is available, exchange-traded
options contracts are fair valued at the mean of their most recent bid and
asked price, if available, and otherwise at their closing bid price.
Over-the-counter options contracts are fair valued at the mean of their
most recent bid and asked price, if available, and otherwise at their
closing bid price. FLEX Option contracts are normally valued using a
model-based price provided by a third-party pricing vendor. On days when a
trade in a FLEX Option contract occurs, the trade price will be used to
value such FLEX Option contracts in lieu of the model price.
U.S. Treasuries are fair valued on the basis of valuations provided by a
third-party pricing service approved by the Trust's Board of Trustees.
Shares of open-end funds are valued at fair value which is based on NAV
per share.
Page 12
<PAGE>
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
JUNE 30, 2021 (UNAUDITED)
If the Fund's investments are not able to be priced by pre-established pricing
methods, such investments may be valued by the Trust's Board of Trustees or its
delegate, the Advisor's Pricing Committee, at fair value. A variety of factors
may be considered in determining the fair value of such investments.
Valuing the Fund's holdings using fair value pricing will result in using prices
for those holdings that may differ from current market valuations. The
Subsidiary's holdings will be valued in the same manner as the Fund's holdings.
The Fund is 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 the Fund's investments as of June 30, 2021, is
included with the Fund's Consolidated Portfolio of Investments.
B. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are recorded as of the trade date. Realized gains and
losses from investment transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income, if any, is
recorded daily on the accrual basis. Amortization of premiums and accretion of
discounts are recorded using the effective interest method.
C. FLEX OPTIONS
FLEX Options are customized equity or index option contracts that trade on an
exchange, but provide investors with the ability to customize key contract terms
like exercise prices, styles and expiration dates. FLEX Options are guaranteed
for settlement by the Options Clearing Corporation.
The Fund, through the Subsidiary, purchases and sells call and put FLEX Options
based on the performance of the Underlying ETF. The FLEX Options that the
Subsidiary holds that reference the Underlying ETF will give the Subsidiary the
right to receive or deliver shares of the Underlying ETF on the option
expiration date at a strike price, depending on whether the option is a put or
call option and whether the Subsidiary purchases or sells the option. The FLEX
Options held by the Subsidiary are European style options, which are exercisable
at the strike price only on the FLEX Option expiration date.
When the Subsidiary writes (sells) an option, an amount equal to the premium
received by the Subsidiary is included in "Options contracts written, at value"
on the Consolidated Statement of Assets and Liabilities. Gain or loss on written
options is presented separately as "Net realized gain (loss) on written options
contracts" on the Consolidated Statement of Operations. When the Subsidiary
purchases a call or put option, the premium paid represents the cost of the call
or put option, which is included in "Options contracts purchased, at value" on
the Consolidated Statement of Assets and Liabilities. Gain or loss on purchased
options is included in "Net realized gain (loss) on purchased options contracts"
on the Consolidated Statement of Operations.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any, are declared and paid annually by
the Fund, or as the Board of Trustees may determine from time to time.
Distributions of net realized capital gains earned by the 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 consolidated financial
statements are periodically adjusted for permanent differences in order to
reflect their tax character. These permanent differences are primarily due to
Page 13
<PAGE>
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
JUNE 30, 2021 (UNAUDITED)
the varying treatment of income and gain/loss on significantly modified
portfolio securities held by the Fund 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 consolidated financial
statement and tax purposes, will reverse at some time in the future.
E. INCOME TAXES
The 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 (the "Code"), 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, the Fund may be subject to an excise tax of
4% of the amount by which approximately 98% of the Fund's taxable income exceeds
the distributions from such taxable income for the calendar year.
The Subsidiary is classified as a controlled foreign corporation under
Subchapter N of the Code. Therefore, the Fund is required to increase its
taxable income by its share of the Subsidiary's income, whether or not such
earnings are distributed by the Subsidiary to the Fund. Net investment losses of
the Subsidiary cannot be deducted by the Fund in the current period nor carried
forward to offset taxable income in future periods.
The Fund is 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 June 30, 2021, management
has evaluated the application of these standards to the Fund and has determined
that no provision for income tax is required in the Fund's consolidated
financial statements for uncertain tax positions.
The 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.
The 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 on the first day of 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).
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust, the investment advisor to the Fund, 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 ongoing monitoring of the Fund's and the
Subsidiary's investment portfolios, managing the Fund's business affairs and
providing certain administrative services necessary for the management of the
Fund.
First Trust is responsible for the expenses of the Fund and the Subsidiary
including the cost of transfer agency, sub-advisory, custody, fund
administration, legal, audit and other services, but excluding fee payments
under the Investment Management Agreement, interest, taxes, acquired fund fees
and expenses, if any, brokerage commissions and other expenses connected with
the execution of portfolio transactions, distribution and service fees payable
pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses. The Fund has
agreed to pay First Trust an annual management fee equal to 0.90% of its average
daily net assets. The Subsidiary does not pay First Trust a separate management
fee.
Cboe Vest(SM) Financial LLC ("Cboe Vest"), an affiliate of First Trust, serves
as the Fund's sub-advisor and manages the Fund's portfolio subject to First
Trust's supervision. Pursuant to the Investment Management Agreement, between
the Trust, on behalf of the Fund, and the Advisor, and the Investment
Sub-Advisory Agreement among the Trust, on behalf of the Fund, the Advisor and
Cboe Vest, First Trust will supervise Cboe Vest and its management of the
investment of the Fund's assets and will pay Cboe Vest for its services as the
Fund's sub-advisor a sub-advisory fee equal to 50% of any remaining monthly
unitary management fee paid to the Advisor after the average Fund's expenses
accrued during the most recent twelve months are subtracted from the unitary
management fee for that month.
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
the Fund. As custodian, BNYM is responsible for custody of the Fund's assets. As
fund accountant and administrator, BNYM is responsible for maintaining the books
and records of the Fund's securities and cash. As transfer agent, BNYM is
responsible for maintaining shareholder records for the Fund. BNYM is a
subsidiary of The Bank of New York Mellon Corporation, a financial holding
company.
Page 14
<PAGE>
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
JUNE 30, 2021 (UNAUDITED)
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,
defined-outcome 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
The cost of purchases and proceeds from sales of securities, excluding
short-term investments, derivatives, and in-kind transactions, for the period
ended June 30, 2021, were $0 and $0, respectively.
For the period ended June 30, 2021, the Fund did not have any in-kind purchases
or sales.
5. DERIVATIVE TRANSACTIONS
The following table presents the types of derivatives held by the Subsidiary at
June 30, 2021, the primary underlying risk exposure and the location of these
instruments as presented on the Consolidated Statement of Assets and
Liabilities.
<TABLE>
<CAPTION>
ASSET DERIVATIVES LIABILITY DERIVATIVES
---------------------------------------- ----------------------------------------
CONSOLIDATED CONSOLIDATED
DERIVATIVES STATEMENT OF ASSETS AND STATEMENT OF ASSETS AND
INSTRUMENT RISK EXPOSURE LIABILITIES LOCATION VALUE LIABILITIES LOCATION VALUE
----------------- ----------------- ------------------------ ------------- ------------------------ -------------
<S> <C> <C> <C> <C> <C>
Commodity Options contracts Options contracts
Options Risk purchased, at value $ 105,712 written, at value $ 47,685
</TABLE>
The following table presents the amount of net realized gain (loss) and change
in net unrealized appreciation (depreciation) recognized for the period ended
June 30, 2021, on derivative instruments, as well as the primary underlying risk
exposure associated with the instruments.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS LOCATION
-----------------------------------------------------------------------------
COMMODITY RISK EXPOSURE
<S> <C>
Net realized gain (loss) on:
Purchased options contracts $ 345,107
Written options contracts (139,060)
Net change in unrealized appreciation (depreciation) on:
Purchased options contracts (397,613)
Written options contracts 98,588
</TABLE>
During the period ended June 30, 2021, the premiums for purchased options
contracts opened were $1,170,987 and the premiums for purchased options
contracts closed, exercised and expired were $667,662.
During the period ended June 30, 2021, the premiums for written options
contracts opened were $276,759 and the premiums for written options contracts
closed, exercised and expired were $130,486.
The Fund does not have the right to offset financial assets and liabilities
related to options contracts on the Consolidated Statement of Assets and
Liabilities.
6. CREATIONS, REDEMPTIONS AND TRANSACTION FEES
The Fund generally issues and redeems its shares in primary market transactions
through a creation and redemption mechanism and does not sell or redeem
individual shares. Instead, financial entities known as "Authorized
Participants" have contractual arrangements with the Fund's service providers to
purchase and redeem Fund shares directly with the Fund in large blocks of shares
known as "Creation Units." Prior to the start of trading on every business day,
the Fund publishes through the National Securities Clearing Corporation ("NSCC")
the "basket" of securities, cash or other assets that it will accept in exchange
for a Creation Unit of the Fund's shares. An Authorized Participant that wishes
to effectuate a creation of the Fund's shares deposits with the Fund the
Page 15
<PAGE>
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
JUNE 30, 2021 (UNAUDITED)
"basket" of securities, cash or other assets identified by the Fund that day,
and then receives the Creation Unit of the Fund's shares in return for those
assets. After purchasing a Creation Unit, the Authorized Participant may
continue to hold the Fund's shares or sell them in the secondary market. The
redemption process is the reverse of the purchase process: the Authorized
Participant redeems a Creation Unit of the Fund's shares for a basket of
securities, cash or other assets. The combination of the creation and redemption
process with secondary market trading in the Fund's shares and underlying
securities provides arbitrage opportunities that are designed to help keep the
market price of the Fund's shares at or close to the NAV per share of the Fund.
The Fund imposes fees in connection with the purchase of Creation Units. These
fees may vary based upon various fact-based circumstances, including, but not
limited to, the composition of the securities included in the Creation Unit or
the countries in which the transactions are settled. The price for each Creation
Unit will equal the daily NAV per share of the Fund times the number of shares
in a Creation Unit, plus the fees described above and, if applicable, any
operational processing and brokerage costs, transfer fees, stamp taxes and part
or all of the spread between the expected bid and offer side of the market
related to the securities comprising the creation basket.
The Fund also imposes fees in connection with the redemption of Creation Units.
These fees may vary based upon various fact-based circumstances, including, but
not limited to, the composition of the securities included in the Creation Unit
or the countries in which the transactions are settled. The price received for
each Creation Unit will equal the daily NAV per share of the Fund times the
number of shares in a Creation Unit, minus the fees described above and, if
applicable, any operational processing and brokerage costs, transfer fees, stamp
taxes and part or all of the spread between the expected bid and offer side of
the market related to the securities comprising the redemption basket. Investors
who use the services of a broker or other such intermediary in addition to an
Authorized Participant to effect a redemption of a Creation Unit may also be
assessed an amount to cover the cost of such services. The redemption fee
charged by the Fund will comply with Rule 22c-2 of the 1940 Act which limits
redemption fees to no more than 2% of the value of the shares redeemed.
7. 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 Fund is
authorized to pay an amount up to 0.25% of its average daily net assets each
year to reimburse First Trust Portfolios L.P. ("FTP"), the distributor of the
Fund, 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 Fund, and pursuant to a contractual
arrangement, no 12b-1 fees will be paid any time before January 15, 2023.
8. INDEMNIFICATION
The Trust, on behalf of the Fund, 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.
9. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events on the Fund through
the date the consolidated financial statements were issued, and has determined
that there were no subsequent events requiring recognition or disclosure in the
consolidated financial statements that have not already been disclosed.
Page 16
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
JUNE 30, 2021 (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 the 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
the Fund's website at www.ftportfolios.com; and (3) on the Securities and
Exchange Commission's ("SEC") website at www.sec.gov.
PORTFOLIO HOLDINGS
The 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. The 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 the Fund is available to investors within 60 days after the
period to which it relates. The 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).
Page 17
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
JUNE 30, 2021 (UNAUDITED)
In times of market stress, decisions by market makers to reduce or step away
from their role of providing a market for an ETF's shares, or decisions by an
ETF's authorized participants that they are unable or unwilling to proceed with
creation and/or redemption orders of an ETF's shares, could result in shares of
the ETF trading at a discount to net asset value and in greater than normal
intraday bid-ask spreads.
FIXED INCOME SECURITIES RISK. To the extent a fund invests in fixed income
securities, the fund will be subject to credit risk, income risk, interest rate
risk, liquidity risk and prepayment risk. Income risk is the risk that income
from a fund's fixed income investments could decline during periods of falling
interest rates. Interest rate risk is the risk that the value of a fund's fixed
income securities will decline because of rising interest rates. Liquidity risk
is the risk that a security cannot be purchased or sold at the time desired, or
cannot be purchased or sold without adversely affecting the price. Prepayment
risk is the risk that the securities will be redeemed or prepaid by the issuer,
resulting in lower interest payments received by the fund. In addition to these
risks, high yield securities, or "junk" bonds, are subject to greater market
fluctuations and risk of loss than securities with higher ratings, and the
market for high yield securities is generally smaller and less liquid than that
for investment grade securities.
INDEX 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.
LIBOR RISK. To the extent a fund invests in floating or variable rate
obligations that use the London Interbank Offered Rate ("LIBOR") as a reference
interest rate, it is subject to LIBOR Risk. The United Kingdom's Financial
Conduct Authority, which regulates LIBOR, will cease making LIBOR available as a
reference rate over a phase-out period that will begin immediately after
December 31, 2021. The unavailability or replacement of LIBOR may affect the
value, liquidity or return on certain fund investments and may result in costs
incurred in connection with closing out positions and entering into new trades.
Any potential effects of the transition away from LIBOR on the fund or on
certain instruments in which the fund invests can be difficult to ascertain, and
they may vary depending on a variety of factors, and they could result in losses
to the fund.
MANAGEMENT RISK. To the extent that a fund is actively managed, it is subject to
management risk. In managing an actively-managed fund's investment portfolio,
the fund's portfolio managers will apply investment techniques and risk analyses
that may not have the desired result. There can be no guarantee that a fund will
meet its investment objective.
MARKET RISK. Securities held by a fund, as well as shares of a fund itself, are
subject to market fluctuations caused by factors such as general economic
conditions, political events, regulatory or market developments, changes in
interest rates and perceived trends in securities prices. Shares of a fund could
decline in value or underperform other investments as a result of the risk of
loss associated with these market fluctuations. In addition, local, regional or
global events such as war, acts of terrorism, spread of infectious diseases or
other public health issues, recessions, or other events could have a significant
negative impact on a fund and its investments. Such events may affect certain
geographic regions, countries, sectors and industries more significantly than
others. The outbreak of the respiratory disease designated as COVID-19 in
December 2019 has caused significant volatility and declines in global financial
markets, which have caused losses for investors. While the development of
vaccines has slowed the spread of the virus and allowed for the resumption of
"reasonably" normal business activity in the United States, many countries
continue to impose lockdown measures in an attempt to slow the spread.
Additionally, there is no guarantee that vaccines will be effective against
emerging variants of the disease.
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.
Page 18
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
JUNE 30, 2021 (UNAUDITED)
OPERATIONAL RISK. Each fund is subject to risks arising from various operational
factors, including, but not limited to, human error, processing and
communication errors, errors of a fund's service providers, counterparties or
other third-parties, failed or inadequate processes and technology or systems
failures. Although the funds and the Advisor seek to reduce these operational
risks through controls and procedures, there is no way to completely protect
against such risks.
Passive Investment Risk. To the extent a fund seeks to track an index, the fund
will invest in the securities included in, or representative of, the index
regardless of their investment merit. A fund generally will not attempt to take
defensive positions in declining markets.
ADDITIONAL RISK CONSIDERATIONS FOR A TARGET OUTCOME FUND(R)
ABSENCE OF AN ACTIVE MARKET RISK. The Fund faces numerous market trading risks,
including the potential lack of an active market for Fund shares due to a
limited number of market markers or authorized participants. The Fund may rely
on a small number of third party market makers to provide a market for the
purchase and sale of shares and market makers are under no obligation to make a
market in the Fund's shares. Additionally, only a limited number of institutions
act as authorized participants for the Fund and only an authorized participant
may engage in creation or redemption transactions directly with the Fund and are
not obligated to submit purchase or redemption orders for Creation Units.
Decisions by market makers or authorized participants to reduce their role or
step away from these activities in times of market stress could inhibit the
effectiveness of the arbitrage process in maintaining the relationship between
the underlying values of the Fund's portfolio securities and the Fund's market
price. Any trading halt or other problem relating to the trading activity of
these market makers or any issues disrupting the authorized participants'
ability to proceed with creation and/or redemption orders could result in a
dramatic change in the spread between the Fund's net asset value and the price
at which the Fund's shares are trading on the Exchange, which could result in a
decrease in value of the Fund's shares. This reduced effectiveness could result
in Fund shares trading at a premium or discount to net asset value and also in
greater than normal intraday bid-ask spreads for Fund shares.
BUFFERED LOSS RISK. There can be no guarantee that the Fund will be successful
in its strategy to buffer against Underlying ETF losses if the Underlying ETF
decreases over the Target Outcome Period by 10% or less. A shareholder may lose
their entire investment. The Fund's strategy seeks to deliver returns that match
the price return of the Underlying ETF (up to the cap), while limiting downside
losses, if shares are bought on the day on which the Fund enters into the FLEX
Options and held until those FLEX Options expire at the end of each Target
Outcome Period. In the event an investor purchases shares after the date on
which the FLEX Options were entered into or sells shares prior to the expiration
of the FLEX Options, the buffer that the Fund seeks to provide may not be
available.
CAP CHANGE RISK. A new cap is established at the beginning of each Target
Outcome Period and is dependent on prevailing market conditions. As a result,
the cap may rise or fall from one Target Outcome Period to the next and is
unlikely to remain the same for consecutive Target Outcome Periods.
CAPPED UPSIDE RISK. The Fund's strategy seeks to provide returns that match
those of the Underlying ETF for Fund shares purchased on the first day of a
Target Outcome Period and held for the entire Target Outcome Period, subject to
a pre-determined upside cap. If an investor does not hold its Fund shares for an
entire Target Outcome Period, the returns realized by that investor may not
match those that the Fund seeks to achieve. If the Underlying ETF experiences
gains during a Target Outcome Period, the Fund will not participate in those
gains beyond the cap. In the event an investor purchases Fund shares after the
first day of a Target Outcome Period and the Fund has risen in value to a level
near to the cap, there may be little or no ability for that investor to
experience an investment gain on their Fund shares; however, the investor will
remain vulnerable to downside risks.
FLEX OPTIONS RISK. Trading FLEX Options involves risks different from, or
possibly greater than, the risks associated with investing directly in
securities. The Fund may experience substantial downside from specific FLEX
Option positions and certain FLEX Option positions may expire worthless. The
FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund's
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. In a less liquid market for
the FLEX Options, the liquidation of a large number of options may more
significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your investment. The
trading in FLEX Options may be less deep and liquid than the market for certain
other exchange-traded options, non-customized options or other securities.
Transactions in FLEX Options are required to be centrally cleared. In a
transaction involving FLEX Options, the Fund's counterparty is the OCC, rather
than a bank or broker. Since the Fund is not a member of the OCC and only
members ("clearing members") can participate directly in the OCC, the Fund will
hold its FLEX Options through accounts at clearing members. Although clearing
members guarantee performance of their clients' obligations to the OCC, there is
Page 19
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
JUNE 30, 2021 (UNAUDITED)
a risk that the assets of the Fund might not be fully protected in the event of
a clearing member's bankruptcy, as the Fund would be limited to recovering only
a pro rata share of all available funds segregated on behalf of the clearing
member's customers for the relevant account class. Additionally, the OCC may be
unable or unwilling to perform its obligations under the FLEX Options contracts.
FLEX OPTIONS VALUATION RISK. The FLEX Options held by the Fund will be
exercisable at the strike price only on their expiration date. Prior to the
expiration date, the value of the FLEX Options will be determined based upon
market quotations or using other recognized pricing methods. The value of the
FLEX Options does not increase or decrease at the same rate as the Underlying
ETF (although they generally move in the same direction) or its underlying
securities and FLEX Option prices may be highly volatile and may fluctuate
substantially during a short period of time. The value of the FLEX Options prior
to the expiration date may vary because of factors other than the value of the
Underlying ETF, such as interest rate changes, changing supply and demand,
decreased liquidity of the FLEX Options, a change in the actual and perceived
volatility of the stock market and the Underlying ETF and the remaining time to
expiration. During periods of reduced market liquidity or in the absence of
readily available market quotations for the holdings of the Fund, the ability of
the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund's investment adviser (employing the fair value procedures adopted by
the Board of Trustees of the Trust) may play a greater role in the valuation of
the Fund's holdings due to reduced availability of reliable objective pricing
data. Consequently, while such determinations may be made in good faith, it may
nevertheless be more difficult for the Fund to accurately assign a daily value.
Under those circumstances, the value of the FLEX Options will require more
reliance on the investment adviser's judgment than that required for securities
for which there is an active trading market. This creates a risk of mispricing
or improper valuation of the FLEX Options which could impact the value paid for
shares of the Fund.
TARGET OUTCOME PERIOD RISK. The Fund's investment strategies are designed to
deliver returns that match the Underlying ETF if Fund shares are bought on the
day on which the Fund enters into the FLEX Options (i.e., the first day of a
Target Outcome Period) and held until those FLEX Options expire at the end of
the Target Outcome Period. In the event an investor purchases Fund shares after
the first day of a Target Outcome Period or sells shares prior to the expiration
of the Target Outcome Period, the value of that investor's investment in Fund
shares may not be buffered against a decline in the value of the Underlying ETF
and may not participate in a gain in the value of the Underlying ETF up to the
cap for the investor's investment period.
UNDERLYING ETF GOLD RISK. The Fund will have exposure to gold through its
investments (through the Subsidiary) in FLEX Options on the Underlying ETF,
which invests substantially all of its assets in physical gold bullion. The
price of gold bullion can be significantly affected by international monetary
and political developments such as currency devaluation or revaluation, central
bank movements, economic and social conditions within a country, transactional
or trade imbalances, or trade or currency restrictions between countries.
Physical gold bullion has sales commission, storage, insurance and auditing
expenses. Investments in gold generally may be speculative and subject to
greater price volatility than investments in other types of assets. The price of
metals, such as gold, is related to, among other things, worldwide metal prices
and extraction and production costs. Worldwide metal prices may fluctuate
substantially over short periods of time, and as a result, the Fund's share
price may be more volatile than other types of investments. There is a risk that
some or all of the Underlying ETF's gold bars held by its custodian or any
subcustodian could be lost, damaged or stolen. Access to the Underlying ETF's
gold bars could also be restricted by natural events (such as an earthquake) or
human actions (such as a terrorist attack). Any of these events may adversely
affect the operations of the Underlying ETF and, consequently, an investment
based on the value of the Underlying ETF's shares. Additionally, the Underlying
ETF does not insure its gold and a loss may be suffered with respect to the
Underlying ETF's gold which is not covered by insurance and for which no party
is liable for damages.
UNDERLYING ETF RISK. The Fund invests in FLEX Options that reference an ETF,
which subjects the Fund to certain of the risks of owning shares of an ETFs as
well as the types of instruments in which the Underlying ETF invests. The value
of an ETF will fluctuate over time based on fluctuations in the values of the
securities held by the ETF, which may be affected by changes in general economic
conditions, expectations for future growth and profits, interest rates and the
supply and demand for those securities. In addition, ETFs are subject to
authorized participant concentration risk, market maker risk, premium/discount
risk, tracking error risk and trading issues risk. Brokerage, tax and other
expenses may negatively impact the performance of the Underlying ETF and, in
turn, the value of the Fund's shares. An ETF that tracks an index may not
exactly match the performance of the index due to cash drag, differences between
the portfolio of the ETF and the components of the index, expenses and other
factors.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
ADVISORY AND SUB-ADVISORY AGREEMENTS
BOARD CONSIDERATIONS REGARDING APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT AND
INVESTMENT SUB-ADVISORY AGREEMENT FOR FT CBOE VEST GOLD STRATEGY QUARTERLY
BUFFER ETF
The Board of Trustees of First Trust Exchange-Traded Fund (the "Trust"),
including the Independent Trustees, approved the Investment Management Agreement
(the "Fund Advisory Agreement") with First Trust Advisors L.P. (the "Advisor"),
on behalf of FT Cboe Vest Gold Strategy Quarterly Buffer ETF (the "Fund"), and
the Investment Sub-Advisory Agreement (the "Fund Sub-Advisory Agreement" and
Page 20
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
JUNE 30, 2021 (UNAUDITED)
together with the Fund Advisory Agreement, the "Fund Agreements") among the
Trust, on behalf of the Fund, the Advisor and Cboe Vest Financial LLC (the
"Sub-Advisor"), for an initial two-year term at a meeting held on December 7,
2020. Because the Fund will invest in exchange-traded options that reference the
performance of the SPDR Gold Trust through a wholly-owned subsidiary of the Fund
(the "Subsidiary"), the Board, including the Independent Trustees, also approved
an Investment Management Agreement (the "Subsidiary Advisory Agreement") with
the Advisor, on behalf of the Subsidiary, and an Investment Sub-Advisory
Agreement (the "Subsidiary Sub-Advisory Agreement" and together with the
Subsidiary Advisory Agreement, the "Subsidiary Agreements") among the
Subsidiary, the Advisor and the Sub-Advisor, also for an initial two-year term.
The Fund Agreements and the Subsidiary Agreements are referred to herein
collectively as the "Agreements." The Board determined that the Agreements are
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 Agreements, the
Independent Trustees received a separate report from each of the Advisor and the
Sub-Advisor in advance of the Board meeting responding to requests for
information from counsel to the Independent Trustees, submitted on behalf of the
Independent Trustees, that, among other things, outlined: the services to be
provided by the Advisor and the Sub-Advisor to the Fund and the Subsidiary
(including the relevant personnel responsible for these services and their
experience); the proposed unitary fee rate payable by the Fund as compared to
fees charged to a peer group of funds (the "Expense Group") and a broad peer
universe of funds (the "Expense Universe"), each assembled by Broadridge
Financial Solutions, Inc. ("Broadridge"), an independent source, and as compared
to fees charged to other exchange-traded funds ("ETFs") managed by the Advisor;
the proposed sub-advisory fee rate as compared to fees charged to other clients
of the Sub-Advisor; the estimated expense ratio of the Fund as compared to
expense ratios of the funds in the Fund's Expense Group and Expense Universe;
the nature of expenses to be incurred in providing services to the Fund and the
Subsidiary and the potential for the Advisor and the Sub-Advisor to realize
economies of scale, if any; profitability and other financial data for the
Advisor; financial data for the Sub-Advisor; any fall-out benefits to the
Advisor and its affiliates, First Trust Portfolios L.P. ("FTP") and First Trust
Capital Partners, LLC ("FTCP"), and the Sub-Advisor; and information on the
Advisor's and the Sub-Advisor's compliance programs. The Independent Trustees
and their counsel also met separately to discuss the information provided by the
Advisor and the Sub-Advisor. The Board applied its business judgment to
determine whether the arrangements between the Trust and the Advisor, among the
Trust, the Advisor and the Sub-Advisor, between the Subsidiary and the Advisor
and among the Subsidiary, the Advisor and the Sub-Advisor are reasonable
business arrangements from the Fund's and the Subsidiary's perspectives.
In evaluating whether to approve the Agreements, the Board considered the
nature, extent and quality of the services to be provided by the Advisor and the
Sub-Advisor under the Agreements. With respect to the Fund Advisory Agreement
and the Subsidiary Advisory Agreement, the Board considered that the Advisor
will be responsible for the overall management and administration of the Fund
and the Subsidiary and reviewed all of the services to be provided by the
Advisor to the Fund and the Subsidiary, including the oversight of the
Sub-Advisor, as well as the background and experience of the persons responsible
for such services. The Board considered that the Fund will be an actively
managed ETF and will employ an advisor/sub-advisor management structure and
considered that the Advisor manages other ETFs with a similar structure in the
First Trust Fund Complex. The Board noted that the Advisor will oversee the
Sub-Advisor's day-to-day management of the Fund's and the Subsidiary's
investments, including portfolio risk monitoring and performance review. 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, the Sub-Advisor's and the Fund's
compliance with the 1940 Act, as well as the Fund's compliance with its
investment objective, policies and restrictions. The Board noted that employees
of the Advisor provide management services to other ETFs and to other funds in
the First Trust Fund Complex with diligence and care. With respect to the Fund
Sub-Advisory Agreement and the Subsidiary Sub-Advisory Agreement, in addition to
the materials provided by the Sub-Advisor, at the December 7, 2020 meeting, the
Board also received a presentation from representatives of the Sub-Advisor
discussing the services that the Sub-Advisor will provide to the Fund and the
Subsidiary, and the Trustees were able to ask questions about the proposed
investment strategy for the Fund, including the investment in exchange-traded
options through the Subsidiary. The Board noted the background and experience of
the Sub-Advisor's portfolio management team and the Sub-Advisor's investment
style. Because the Fund had yet to commence investment operations, the Board
could not consider the historical investment performance of the Fund. 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
and the Subsidiary by the Advisor and the Sub-Advisor under the Agreements are
expected to be satisfactory.
The Board considered the proposed unitary fee rate payable by the Fund under the
Fund Advisory 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 0.90% of its average daily net assets. The Board
considered that, from the unitary fee for the Fund, the Advisor would pay the
Sub-Advisor a sub-advisory fee equal to 50% of the Fund's unitary fee less
one-half of the Fund's and the Subsidiary's expenses. The Board noted that the
Page 21
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
JUNE 30, 2021 (UNAUDITED)
Advisor and the Sub-Advisor would be responsible for the Fund's and the
Subsidiary's expenses, including the cost of sub-advisory, transfer agency,
custody, fund administration, legal, audit and other services and license fees,
if any, but excluding the fee payment under the Fund Advisory Agreement and
interest, taxes, acquired fund fees and expenses, if any, brokerage commissions
and other expenses connected with the execution of portfolio transactions,
distribution and service fees pursuant to a Rule 12b-1 plan, if any, and
extraordinary expenses, if any. The Board noted that the Advisor would receive
no compensation under the Subsidiary Advisory Agreement and no compensation
would be paid to the Sub-Advisor under the Subsidiary Sub-Advisory Agreement.
The Board received and reviewed information showing the advisory or unitary fee
rates and expense ratios of the peer funds in the Expense Group, as well as
advisory and unitary fee rates charged by the Advisor and the Sub-Advisor to
other fund (including ETF) and non-fund clients, as applicable. 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 above the median total (net)
expense ratio of the peer funds in the Expense Group. With respect to the
Expense Group, the Board discussed with representatives of the Advisor how the
Expense Group was assembled and how the Fund compared and differed from the peer
funds. The Board took this information into account in considering the peer
data. With respect to fees charged to other clients, the Board considered the
Advisor's statement that the Fund will be unique to the market and the First
Trust Fund Complex, but will be most similar to the ETFs in the FT Cboe Vest
U.S. Equity Target Outcome ETF product line in the First Trust Fund Complex that
are managed by the Advisor and sub-advised by the Sub-Advisor, each of which
pays or will pay a unitary fee equal to an annual rate of 0.85% or 0.90% of its
average daily net assets. In light of the information considered and the nature,
extent and quality of the services expected to be provided under the Agreements,
the Board determined that the proposed unitary fee, including the sub-advisory
fee to be paid by the Advisor to the Sub-Advisor from the unitary fee, was fair
and reasonable.
The Board noted that the proposed unitary fee for the Fund was not structured to
pass on to shareholders the benefits of any economies of scale 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 and the Sub-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 hire personnel and build
infrastructure, including technology, to improve the services to the funds in
the First Trust Fund Complex. The Board took into consideration the types of
costs to be borne by the Advisor in connection with its services to be performed
for the Fund under the Fund Advisory Agreement. The Board considered the
Advisor's estimate of the asset level for the Fund at which the Advisor expects
the Fund Advisory Agreement to be profitable to the Advisor and the Advisor's
estimate of the profitability of the Fund Advisory Agreement if the Fund's
assets reach $100 million. The Board noted the inherent limitations in the
profitability analysis and concluded that, based on the information provided,
the Advisor's estimated profitability level for the Fund was not unreasonable.
The Board reviewed financial information provided by the Sub-Advisor, but did
not review any potential profitability of the Fund Sub-Advisory Agreement to the
Sub-Advisor. The Board considered that the Sub-Advisor would be paid by the
Advisor from the Fund's unitary fee and its understanding that the sub-advisory
fee rate was the product of an arm's length negotiation. In addition, the Board
considered fall-out benefits described by the Advisor that may be realized from
its relationship with the Fund. The Board noted that FTCP has a controlling
ownership interest in the Sub-Advisor's parent company and considered potential
fall-out benefits to the Advisor from such ownership interest. The Board also
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
considered the potential fall-out benefits to the Sub-Advisor from FTCP's
controlling ownership interest in the Sub-Advisor's parent company. The Board
noted the Sub-Advisor's statements that it does not foresee any fall-out
benefits from its relationship with the Fund and that, as a policy, it does not
enter into soft-dollar arrangements for the procurement of research services in
connection with client securities transactions. The Board concluded that the
character and amount of potential fall-out benefits to the Advisor and the
Sub-Advisor were not unreasonable.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, determined that the terms of the
Agreements are fair and reasonable and that the approval of the Agreements is in
the best interests of the Fund. No single factor was determinative in the
Board's analysis.
LIQUIDITY RISK MANAGEMENT PROGRAM
In accordance with Rule 22e-4 under the Investment Company Act of 1940, as
amended (the "1940 Act"), the Fund and each other fund in the First Trust Fund
Complex, other than the closed-end funds, have adopted and implemented a
liquidity risk management program (the "Program") reasonably designed to assess
and manage the funds' liquidity risk, i.e., the risk that a fund could not meet
requests to redeem shares issued by the fund without significant dilution of
remaining investors' interests in the fund. The Board of Trustees of the First
Trust Funds has appointed First Trust Advisors, L.P. (the "Advisor") as the
person designated to administer the Program, and in this capacity the Advisor
performs its duties primarily through the activities and efforts of the First
Trust Liquidity Committee (the "Liquidity Committee").
Page 22
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY QUARTERLY BUFFER ETF (BGLD)
JUNE 30, 2021 (UNAUDITED)
Pursuant to the Program, the Liquidity Committee classifies the liquidity of the
fund's portfolio investments into one of the four liquidity categories specified
by Rule 22e-4: highly liquid investments, moderately liquid investments, less
liquid investments and illiquid investments. The Liquidity Committee determines
certain of the inputs for this classification process, including reasonably
anticipated trade sizes and significant investor dilution thresholds. The
Liquidity Committee also determines and periodically reviews a highly liquid
investment minimum for certain funds, monitors the funds' holdings of assets
classified as illiquid investments to seek to ensure they do not exceed 15% of a
fund's net assets and establishes policies and procedures regarding redemptions
in kind.
At the April 26, 2021 meeting of the Board of Trustees, as required by Rule
22e-4 and the Program, the Advisor provided the Board with a written report
prepared by the Advisor that addressed the operation of the Program during the
period from March 20, 2020 through the Liquidity Committee's annual meeting held
on March 16, 2021 and assessed the Program's adequacy and effectiveness of
implementation during this period, including the operation of the highly liquid
investment minimum for each fund that is required under the Program to have one,
and any material changes to the Program. Note that because the Fund primarily
holds assets that are highly liquid investments, the Fund has not adopted any
highly liquid investment minimum.
As stated in the written report, during the review period, no fund breached the
15% limitation on illiquid investments, no fund with a highly liquid investment
minimum breached that minimum and no fund filed a Form N-LIQUID. The Advisor
concluded that the Fund's investment strategy is appropriate for an open-end
fund; that the Program operated effectively in all material respects during the
review period; and that the Program is reasonably designed to assess and manage
the liquidity risk of each fund and to maintain compliance with Rule 22e-4.
Page 23
<PAGE>
This page intentionally left blank.
<PAGE>
FIRST TRUST
First Trust Exchange-Traded Fund
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
INVESTMENT SUB-ADVISOR
Cboe Vest(SM) Financial LLC
1765 Greensboro Station Pl, 9th Floor
McLean, VA 22102
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
<PAGE>
[BLANK BACK COVER]
<PAGE>
FIRST TRUST
First Trust Exchange-Traded Fund
--------------------------------------------------------------------------------
FT Cboe Vest Gold Strategy Target Income ETF(R) (IGLD)
-------------------------------
Semi-Annual Report
For the Period March 2, 2021
(Commencement of Operations)
through June 30, 2021
-------------------------------
<PAGE>
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
SEMI-ANNUAL REPORT
JUNE 30, 2021
Shareholder Letter........................................................... 1
Fund Performance Overview.................................................... 2
Portfolio Management......................................................... 4
Understanding Your Fund Expenses............................................. 5
Consolidated Portfolio of Investments........................................ 6
Consolidated Statement of Assets and Liabilities............................. 8
Consolidated Statement of Operations......................................... 9
Consolidated Statement of Changes in Net Assets.............................. 10
Consolidated Financial Highlights............................................ 11
Notes to Consolidated Financial Statements................................... 12
Additional Information....................................................... 17
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/or Cboe VestSM Financial LLC ("Cboe Vest" or the
"Sub-Advisor") and their respective 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
the series of First Trust Exchange-Traded Fund (the "Trust") described in this
report (FT Cboe Vest Gold Strategy Target Income ETF(R); hereinafter referred to
as the "Fund") 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/or Sub-Advisor and their respective 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 the Fund will achieve its investment objective. The
Fund is subject to market risk, which is the possibility that the market values
of securities owned by the Fund will decline and that the value of the Fund's
shares may therefore be less than what you paid for them. Accordingly, you can
lose money investing in the Fund. See "Risk Considerations" in the Additional
Information section of this report for a discussion of certain other risks of
investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
www.ftportfolios.com or speak with your financial advisor. Investment returns,
net asset value and share price will fluctuate and Fund shares, when sold, may
be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund
performance on the Fund's webpage at www.ftportfolios.com.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment in
the Fund. It includes details about the Fund and presents data and analysis that
provide insight into the Fund's performance and investment approach.
The statistical information that follows may help you understand the 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 and/or Sub-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 the Fund are spelled out in the prospectus, the statement of
additional information, and other Fund regulatory filings.
<PAGE>
--------------------------------------------------------------------------------
SHAREHOLDER LETTER
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
JUNE 30, 2021
Dear Shareholders:
First Trust is pleased to provide you with the semi-annual report for the FT
Cboe Vest Gold Strategy Target Income ETF(R) (the "Fund"), which contains
detailed information about the Fund since its inception on March 2, 2021 through
June 30, 2021. Please note that information contained in this letter and the
semi-annual report prior to the Fund's inception date does not apply to the
Fund.
Since December of 2008, the Federal Reserve (the "Fed") has largely maintained
an extremely accommodating stance on monetary policy. In other words, it has
kept interest rates at very low levels, and has done so on purpose. From
December 2008 through June 2021 (a period that captured a portion of the
financial crisis of 2007-2008 and the entire coronavirus ("COVID-19") pandemic),
the Federal Funds target rate (upper bound) stood at 0.25% for approximately
eight years and three months of that 12.5-year period. That is an aggressive
posture to hold for such a long duration. For comparative purposes, the Federal
Funds target rate averaged 4.50% for the 20-year period ended December 31, 2008.
All along, the Fed has been signaling to savers, investors, and businesses alike
that it wanted them to assume more risk. The Fed did not want money just sitting
idle on the sidelines. It wanted the money to be put to work, so to speak, in
such a way that it would stimulate U.S. economic growth and stave off any
deflationary pressures potentially looming. It has been a tough road to hoe, as
I'm sure those investors who follow the economy closely have noticed.
Why am I taking this trip down memory lane? It is because the Federal Funds
target rate currently stands at 0.25%, just like it did back in December 2008.
We can cite the severe hit to many parts of the U.S. economy from the COVID-19
pandemic, such as the leisure and travel industry, as to why the target rate has
returned to such a low level. For all intents and purposes, until the economy
reaches full employment (4% unemployment rate) and a 2% plus inflation rate for
a sustained period, the Fed has stated that it intends to maintain the status
quo. Since inflation has risen notably in recent months, the Fed is now
forecasting a couple of rate hikes in 2023. At a minimum, that is still 18
months away. Keep in mind, however, the Fed reserves the right to change its
posture at any time.
As previously noted, the Fed has been encouraging savers and investors to assume
more risk for over a decade. One of the best barometers of risk in the
securities markets is the default rate on speculative-grade (below
investment-grade) debt, in my opinion. High yield corporate bonds behave like a
hybrid security between other fixed-income securities and stocks. They share
behavioral characteristics of both, and they are economically sensitive. Moody's
reported that its global speculative-grade default rate stood at 4.0% in June
2021, according to its own release. Moody's puts the historical average default
rate at 4.2%. Its baseline scenario sees the default rate declining to 1.7% by
December 2021. Moody's recorded 28 defaults over the first six months of 2021,
down from 114 defaults over the same period a year ago. I believe that investors
should take some comfort in knowing that defaults are trending lower, not
higher, in the current economic climate.
Companies have heeded the Fed's call for risk-taking, as measured by this year's
robust global mergers and acquisitions ("M&A") activity. Global M&A activity set
a record high in the first half of 2021, with announced deals valued at $2.8
trillion, according to data from Refinitiv. U.S. M&A activity also reached a
record high, coming in at $1.3 trillion for the same period, or around 46% of
the global total. M&A specialists expect deal-making to remain robust for the
rest of 2021, due to low borrowing costs and stronger economic growth.
In closing, we welcome the reopening of the U.S. economy and, hopefully, the
global economy shortly thereafter. We encourage investors to stay the course
even though the markets could experience some turbulence in the months ahead.
The potential for additional volatility represents an opportunity for investors
to check their asset allocation levels to determine if they are suitable for an
extended inflationary climate.
Thank you for giving First Trust the opportunity to play a role in your
financial future. We value our relationship with you and will report on the Fund
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 1
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
The FT Cboe Vest Gold Strategy Target Income ETF(R) (the "Fund") seeks to
deliver participation in the price returns of the SPDR Gold Trust (the
"Underlying ETF") while providing a consistent level of income. The Fund's
investments principally include short-term U.S. Treasury securities, cash and
cash equivalents, and the shares of a wholly-owned subsidiary ("Subsidiary")
that holds FLexible EXchange(R) Options ("FLEX Options") that reference the
price performance of the Underlying ETF. In seeking to achieve its objective,
the Fund, through the Subsidiary, will generally purchase or sell FLEX Options.
FLEX Options are customized equity or index option contracts that trade on an
exchange but provide investors with the ability to customize key contract terms
like exercise prices, styles and expiration dates. In combination, the purchased
call and sold put options generally provide exposure to price returns of the
Underlying ETF both on the upside and downside. The Fund's investment
sub-advisor is Cboe Vest(SM) Financial LLC. Additionally, as a means to generate
income, the Fund will employ a "partial covered call strategy" that seeks to
sell call options having a strike price roughly equal to the value of the
Underlying ETF at the inception of the Fund or each subsequent roll of the
strategy (such options are said to be "at-the-money") on only a portion of the
notional value of the call options purchased by the Fund. To execute this
strategy, the Fund will sell call options with an expiration date less than or
equal to approximately one month in the future (the "Target Income Period"). The
amount of call options sold by the Fund is based on a calculation designed to
result in the Fund generating income over the Target Income Period on the
average assets of the Fund from premiums from writing call options that is
approximately 3.85% higher annually than the annual yield from one-month U.S.
Treasury securities, before Fund fees and expenses. The Fund is classified as
"non-diversified" under the Investment Company Act of 1940, as amended. Shares
of the Fund are listed on the Cboe BZX Exchange, Inc. under the ticker symbol
"IGLD."
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
PERFORMANCE
--------------------------------------------------------------------------------
CUMULATIVE
TOTAL RETURNS
Inception (3/2/21)
to 6/30/21
<S> <C>
FUND PERFORMANCE
NAV 0.29%
Market Value 0.40%
INDEX PERFORMANCE
LBMA Gold Price 1.70%
S&P 500(R) Index 11.04%
--------------------------------------------------------------------------------
</TABLE>
Total returns for the period since inception are calculated from the inception
date of the Fund. "Cumulative Total Returns" represent the total change in value
of an investment over the period indicated.
The Fund's per share net asset value ("NAV") is the value of one share of the
Fund and is computed by dividing the value of all assets of the Fund (including
accrued interest and dividends), less all liabilities (including accrued
expenses and dividends declared but unpaid), by the total number of outstanding
shares. The price used to calculate market return ("Market Price") is determined
by using the midpoint of the national best bid and offer price ("NBBO") as of
the time that the Fund's NAV is calculated. Under SEC rules, the NBBO consists
of the highest displayed buy and lowest sell prices among the various exchanges
trading the Fund at the time the Fund's NAV is calculated. Since shares of the
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 the 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 the Fund at NAV and Market Price,
respectively.
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. 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 the
Fund will vary with changes in market conditions. Shares of the Fund may be
worth more or less than their original cost when they are redeemed or sold in
the market. The Fund's past performance is no guarantee of future performance.
Page 2
<PAGE>
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
<TABLE>
<CAPTION>
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
MARCH 2, 2021 - JUNE 30, 2021
FT Cboe Vest
Gold Strategy
Target Income ETF(R) LBMA Gold Price S&P 500(R) Index
<S> <C> <C> <C>
3/2/21 $10,000 $10,000 $10,000
6/30/21 10,029 10,170 11,104
</TABLE>
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 does not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 3
<PAGE>
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
SEMI-ANNUAL REPORT
JUNE 30, 2021
ADVISOR
First Trust Advisors L.P. ("First Trust" or the "Advisor") is the investment
advisor to the FT Cboe Vest Gold Strategy Target Income ETF(R) (the "Fund").
First Trust is responsible for the ongoing monitoring of the Fund's investment
portfolio, managing the Fund's business affairs and providing certain
administrative services necessary for the management of the Fund.
SUB-ADVISOR
Cboe Vest(SM) Financial LLC ("Cboe Vest" or the "Sub-Advisor") serves as the
investment sub-advisor to the Fund. In this capacity, Cboe Vest is responsible
for the selection and ongoing monitoring of the securities in the Fund's
investment portfolio. Cboe Vest, with principal offices at 1765 Greensboro
Station Pl., 9th Floor, McLean, Virginia 22102, was founded in 2012. Cboe Vest
had approximately $3,408 million under management or committed to management as
of June 30, 2021.
PORTFOLIO MANAGEMENT TEAM
KARAN SOOD, MANAGING DIRECTOR OF CBOE VEST
HOWARD RUBIN, MANAGING DIRECTOR OF CBOE VEST
Page 4
<PAGE>
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2021 (UNAUDITED)
As a shareholder of FT Cboe Vest Gold Strategy Target Income ETF(R) (the
"Fund"), you incur two types of costs: (1) transaction costs; and (2) ongoing
costs, including management fees, distribution and/or service (12b-1) fees, if
any, and other Fund expenses. This Example is intended to help you understand
your ongoing costs of investing in the Fund 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 June 30, 2021.
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 the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the 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 Fund 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.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED EXPENSES PAID
EXPENSE RATIO DURING THE PERIOD
BEGINNING ENDING BASED ON THE MARCH 2, 2021 (a)
ACCOUNT VALUE ACCOUNT VALUE NUMBER OF DAYS TO
JANUARY 20, 2021 (a) JUNE 30, 2021 IN THE PERIOD JUNE 30, 2021 (b)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
Actual $1,000.00 $1,002.90 0.85% $2.82
Hypothetical (5% return before expenses) $1,000.00 $1,020.58 0.85% $4.26
</TABLE>
(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 (March 2,
2021 through June 30, 2021), multiplied by 121/365. Hypothetical expenses
are assumed for the most recent six-month period.
Page 5
<PAGE>
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
CONSOLIDATED PORTFOLIO OF INVESTMENTS
JUNE 30, 2021 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
------------- ------------------------------------------------------------------ ------------ ------------ ------------
U.S. TREASURY BILLS -- 146.4%
<S> <C> <C> <C> <C>
$ 20,555,000 U.S. Treasury Bill (a)............................................ (b) 11/04/21 $ 20,551,583
(Cost $20,552,931) ------------
SHARES DESCRIPTION VALUE
------------- ------------------------------------------------------------------------------------------------ ------------
MONEY MARKET FUNDS -- 0.5%
<S> <C> <C>
64,790 Dreyfus Government Cash Management Fund, Institutional Shares - 0.03% (c)...................... 64,790
(Cost $64,790) ------------
TOTAL INVESTMENTS -- 146.9%..................................................................... 20,616,373
(Cost $20,617,721) (d) ------------
NUMBER OF NOTIONAL EXERCISE EXPIRATION
CONTRACTS DESCRIPTION AMOUNT PRICE DATE VALUE
------------- --------------------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CALL OPTIONS PURCHASED -- 0.0%
844 SPDR(R) Gold Shares ............................... $ 13,979,172 $ 243.62 11/30/21 9,948
(Cost $54,656) ------------
WRITTEN OPTIONS -- (47.2)%
CALL OPTIONS WRITTEN -- (0.3)%
(179) SPDR(R) Gold Shares ............................... (2,964,777) 165.63 07/30/21 (44,392)
(Premiums received $44,064) ------------
PUT OPTIONS WRITTEN -- (46.9)%
(844) SPDR(R) Gold Shares ............................... (13,979,172) 243.62 11/30/21 (6,584,139)
(Premiums received $6,563,626) ------------
TOTAL WRITTEN OPTIONS........................................................................... (6,628,531)
(Premiums received $6,607,690) ------------
NET OTHER ASSETS AND LIABILITIES -- 0.3%........................................................ 38,163
------------
NET ASSETS -- 100.0%............................................................................ $ 14,035,953
============
</TABLE>
-----------------------------
(a) This security or a portion of this security is segregated as collateral
for written options contracts.
(b) Zero coupon security.
(c) Rate shown reflects yield as of June 30, 2021.
(d) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2021, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $0 and the aggregate gross unrealized
depreciation for all investments in which there was an excess of tax cost
over value was $66,897. The net unrealized depreciation was $66,897. The
unrealized amounts presented are inclusive of derivative contracts.
Page 6 See Notes to Consolidated Financial Statements
<PAGE>
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
CONSOLIDATED PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2021 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2021
is as follows (see Note 2A - Portfolio Valuation in the Notes to Consolidated
Financial Statements):
<TABLE>
<CAPTION>
ASSETS TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2021 PRICES INPUTS INPUTS
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
U.S. Treasury Bills.................................. $ 20,551,583 $ -- $ 20,551,583 $ --
Money Market Funds................................... 64,790 64,790 -- --
-------------- -------------- -------------- --------------
Total Investments.................................... 20,616,373 64,790 20,551,583 --
Call Options Purchased............................... 9,948 -- 9,948 --
-------------- -------------- -------------- --------------
Total................................................ $ 20,626,321 $ 64,790 $ 20,561,531 $ --
============== ============== ============== ==============
LIABILITIES TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2021 PRICES INPUTS INPUTS
-------------- -------------- -------------- --------------
Call Options Written................................. $ (44,392) $ -- $ (44,392) $ --
Put Options Written.................................. (6,584,139) -- (6,584,139) --
-------------- -------------- -------------- --------------
Total................................................ $ (6,628,531) $ -- $ (6,628,531) $ --
============== ============== ============== ==============
</TABLE>
See Notes to Consolidated Financial Statements Page 7
<PAGE>
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2021 (UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value.................................................. $ 20,616,373
Options contracts purchased, at value.................................. 9,948
Cash................................................................... 3,724
Receivables:
Investment securities sold.......................................... 44,064
Dividends........................................................... 2
---------------
Total Assets........................................................ 20,674,111
---------------
LIABILITIES:
Options contracts written, at value.................................... 6,628,531
Investment advisory fees payable....................................... 9,627
---------------
Total Liabilities................................................... 6,638,158
---------------
NET ASSETS............................................................. $ 14,035,953
===============
NET ASSETS CONSIST OF:
Paid-in capital........................................................ $ 14,349,124
Par value.............................................................. 7,000
Accumulated distributable earnings (loss).............................. (320,171)
---------------
NET ASSETS............................................................. $ 14,035,953
===============
NET ASSET VALUE, per share............................................. $ 20.05
===============
Number of shares outstanding (unlimited number of shares
authorized, par value $0.01 per share).............................. 700,002
===============
Investments, at cost................................................... $ 20,617,721
===============
Premiums paid on options contracts purchased........................... $ 54,656
===============
Premiums received on options contracts written......................... $ 6,607,690
===============
</TABLE>
Page 8 See Notes to Consolidated Financial Statements
<PAGE>
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2021 (a) (UNAUDITED)
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest............................................................... $ 1,466
Dividends.............................................................. 7
---------------
Total investment income............................................. 1,473
---------------
EXPENSES:
Investment advisory fees............................................... 26,852
---------------
Total expenses...................................................... 26,852
---------------
NET INVESTMENT INCOME (LOSS)........................................... (25,379)
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments......................................................... (32)
Purchased options contracts......................................... (6,539)
Written options contracts........................................... (153,824)
---------------
Net realized gain (loss)............................................... (160,395)
---------------
Net change in unrealized appreciation (depreciation) on:
Investments......................................................... (1,348)
Purchased options contracts......................................... (44,708)
Written options contracts........................................... (20,841)
---------------
Net change in unrealized appreciation (depreciation)................... (66,897)
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS)................................ (227,292)
---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS..................................................... $ (252,671)
===============
</TABLE>
(a) Inception date is March 2, 2021, which is consistent with the commencement
of investment operations and is the date the initial creation units were
established.
See Notes to Consolidated Financial Statements Page 9
<PAGE>
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD
ENDED
6/30/2021 (a)
(UNAUDITED)
---------------
<S> <C>
OPERATIONS:
Net investment income (loss)........................................... $ (25,379)
Net realized gain (loss)............................................... (160,395)
Net change in unrealized appreciation (depreciation)................... (66,897)
---------------
Net increase (decrease) in net assets resulting from operations........ (252,671)
---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations.................................................. (67,500)
---------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold.............................................. 16,353,105
Cost of shares redeemed................................................ (1,996,981)
---------------
Net increase (decrease) in net assets resulting
from shareholder transactions....................................... 14,356,124
---------------
Total increase (decrease) in net assets................................ 14,035,953
NET ASSETS:
Beginning of period.................................................... --
---------------
End of period.......................................................... $ 14,035,953
===============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period................................ --
Shares sold............................................................ 800,002
Shares redeemed........................................................ (100,000)
---------------
Shares outstanding, end of period...................................... 700,002
===============
</TABLE>
(a) Inception date is March 2, 2021, which is consistent with the commencement
of investment operations and is the date the initial creation units were
established.
Page 10 See Notes to Consolidated Financial Statements
<PAGE>
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
CONSOLIDATED FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
PERIOD
ENDED
6/30/2021 (a)
(UNAUDITED)
---------------
<S> <C>
Net asset value, beginning of period........................... $ 20.14
---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................................... (0.05) (b)
Net realized and unrealized gain (loss)........................ 0.11 (c)
---------
Total from investment operations............................... 0.06
---------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.......................................... (0.15)
---------
Net asset value, end of period................................. $ 20.05
=========
TOTAL RETURN (d)............................................... 0.29%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........................... $ 14,036
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets.................. 0.85% (e)
Ratio of net investment income (loss) to average net assets.... (0.80)% (e)
Portfolio turnover rate (f).................................... 0%
</TABLE>
(a) Inception date is March 2, 2021, which is consistent with the commencement
of investment operations and is the date the initial creation units were
established.
(b) Based on average shares outstanding.
(c) The per share amount does not correlate with the aggregate realized and
unrealized gain (loss) due to the timing of the Fund share sales and
repurchases in relation to market value fluctuation of the underlying
investments.
(d) 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.
(e) Annualized.
(f) 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 Consolidated Financial Statements Page 11
<PAGE>
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
JUNE 30, 2021 (UNAUDITED)
1. ORGANIZATION
First Trust Exchange-Traded Fund (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on August 8,
2003, 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 twenty-two exchange-traded funds. This report
covers the FT Cboe Vest Gold Strategy Target Income ETF(R) (the "Fund"), which
trades under the ticker "IGLD" on the Cboe BZX Exchange, Inc. ("Cboe BZX"). The
Fund represents a separate series of shares of beneficial interest in the Trust.
Unlike conventional mutual funds, the Fund issues and redeems shares on a
continuous basis, at net asset value ("NAV"), only in large blocks of shares
known as "Creation Units."
The Fund is an actively managed exchange-traded fund. The Fund's investment
objective seeks to deliver participation in the price returns of the SPDR(R)
Gold Trust (the "Underlying ETF") while providing a consistent level of income.
Under normal market conditions, the Fund, through a wholly-owned subsidiary (the
"Subsidiary"), organized under the laws of the Cayman Islands, invests in
FLexible EXchange(R) Options ("FLEX Options") on the Underlying ETF. The Fund
does not invest directly in FLEX Options. The Fund gains exposure to these
investments exclusively by investing in the Subsidiary. The Fund's investment in
the Subsidiary may not exceed 25% of the Fund's total assets at the end of each
fiscal quarter. As of June 30, 2021, the Fund invested 20% of the Fund's total
assets in the Subsidiary. There can be no assurance that the Fund will achieve
its investment objective. The Fund may not be appropriate for all investors.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund is considered an investment company and follows accounting and
reporting guidance under Financial Accounting Standards Board Accounting
Standards Codification Topic 946, "Financial Services-Investment Companies." The
consolidated financial statements include the accounts on a consolidated basis
of the Subsidiary. All intercompany accounts and transactions have been
eliminated in consolidation. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of the
consolidated financial statements. The preparation of the consolidated 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 consolidated
financial statements. Actual results could differ from those estimates.
A. PORTFOLIO VALUATION
The 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. The Fund's NAV is calculated 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 shares outstanding.
The 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 Fund's
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 Consolidated Portfolio of Investments. The Fund's investments
are valued as follows:
Exchange-traded options contracts (other than FLEX Option contracts) are
valued at the closing price in the market where such contracts are
principally traded. If no closing price is available, exchange-traded
options contracts are fair valued at the mean of their most recent bid and
asked price, if available, and otherwise at their closing bid price.
Over-the-counter options contracts are fair valued at the mean of their
most recent bid and asked price, if available, and otherwise at their
closing bid price. FLEX Option contracts are normally valued using a
model-based price provided by a third-party pricing vendor. On days when a
trade in a FLEX Option contract occurs, the trade price will be used to
value such FLEX Option contracts in lieu of the model price.
U.S. Treasuries are fair valued on the basis of valuations provided by a
third-party pricing service approved by the Trust's Board of Trustees.
Shares of open-end funds are valued at fair value which is based on NAV
per share.
Page 12
<PAGE>
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
JUNE 30, 2021 (UNAUDITED)
If the Fund's investments are not able to be priced by pre-established pricing
methods, such investments may be valued by the Trust's Board of Trustees or its
delegate, the Advisor's Pricing Committee, at fair value. A variety of factors
may be considered in determining the fair value of such investments.
Valuing the Fund's holdings using fair value pricing will result in using prices
for those holdings that may differ from current market valuations. The
Subsidiary's holdings will be valued in the same manner as the Fund's holdings.
The Fund is 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 the Fund's investments as of June 30, 2021, is
included with the Fund's Consolidated Portfolio of Investments.
B. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are recorded as of the trade date. Realized gains and
losses from investment transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income, if any, is
recorded daily on the accrual basis. Amortization of premiums and accretion of
discounts are recorded using the effective interest method.
C. FLEX OPTIONS
FLEX Options are customized equity or index option contracts that trade on an
exchange, but provide investors with the ability to customize key contract terms
like exercise prices, styles and expiration dates. FLEX Options are guaranteed
for settlement by the Options Clearing Corporation.
The Fund, through the Subsidiary, purchases and sells call and put FLEX Options
based on the performance of the Underlying ETF. The FLEX Options that the
Subsidiary holds that reference the Underlying ETF will give the Subsidiary the
right to receive or deliver shares of the Underlying ETF on the option
expiration date at a strike price, depending on whether the option is a put or
call option and whether the Subsidiary purchases or sells the option. The FLEX
Options held by the Subsidiary are European style options, which are exercisable
at the strike price only on the FLEX Option expiration date.
When the Subsidiary writes (sells) an option, an amount equal to the premium
received by the Subsidiary is included in "Options contracts written, at value"
on the Consolidated Statement of Assets and Liabilities. Gain or loss on written
options is presented separately as "Net realized gain (loss) on written options
contracts" on the Consolidated Statement of Operations. When the Subsidiary
purchases a call or put option, the premium paid represents the cost of the call
or put option, which is included in "Options contracts purchased, at value" on
the Consolidated Statement of Assets and Liabilities. Gain or loss on purchased
options is included in "Net realized gain (loss) on purchased options contracts"
on the Consolidated Statement of Operations.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any, are declared and paid monthly by
the Fund, or as the Board of Trustees may determine from time to time.
Distributions of net realized capital gains earned by the 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 consolidated financial
statements are periodically adjusted for permanent differences in order to
reflect their tax character. These permanent differences are primarily due to
Page 13
<PAGE>
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
JUNE 30, 2021 (UNAUDITED)
the varying treatment of income and gain/loss on significantly modified
portfolio securities held by the Fund 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 consolidated financial
statement and tax purposes, will reverse at some time in the future.
E. INCOME TAXES
The 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 (the "Code"), 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, the Fund may be subject to an excise tax of
4% of the amount by which approximately 98% of the Fund's taxable income exceeds
the distributions from such taxable income for the calendar year.
The Subsidiary is classified as a controlled foreign corporation under
Subchapter N of the Code. Therefore, the Fund is required to increase its
taxable income by its share of the Subsidiary's income, whether or not such
earnings are distributed by the Subsidiary to the Fund. Net investment losses of
the Subsidiary cannot be deducted by the Fund in the current period nor carried
forward to offset taxable income in future periods.
The Fund is 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 June 30, 2021, management
has evaluated the application of these standards to the Fund and has determined
that no provision for income tax is required in the Fund's consolidated
financial statements for uncertain tax positions.
The 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.
The 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 on the first day of 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).
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust, the investment advisor to the Fund, 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 ongoing monitoring of the Fund's and the
Subsidiary's investment portfolios, managing the Fund's business affairs and
providing certain administrative services necessary for the management of the
Fund.
First Trust is responsible for the expenses of the Fund and the Subsidiary
including the cost of transfer agency, sub-advisory, custody, fund
administration, legal, audit and other services, but excluding fee payments
under the Investment Management Agreement, interest, taxes, acquired fund fees
and expenses, if any, brokerage commissions and other expenses connected with
the execution of portfolio transactions, distribution and service fees payable
pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses. The Fund has
agreed to pay First Trust an annual management fee equal to 0.85% of its average
daily net assets. The Subsidiary does not pay First Trust a separate management
fee.
Cboe Vest(SM) Financial LLC ("Cboe Vest"), an affiliate of First Trust, serves as
the Fund's sub-advisor and manages the Fund's portfolio subject to First Trust's
supervision. Pursuant to the Investment Management Agreement, between the Trust,
on behalf of the Fund, and the Advisor, and the Investment Sub-Advisory
Agreement among the Trust, on behalf of the Fund, the Advisor and Cboe Vest,
First Trust will supervise Cboe Vest and its management of the investment of the
Fund's assets and will pay Cboe Vest for its services as the Fund's sub-advisor
a sub-advisory fee equal to 50% of any remaining monthly unitary management fee
paid to the Advisor after the average Fund's expenses accrued during the most
recent twelve months are subtracted from the unitary management fee for that
month.
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
the Fund. As custodian, BNYM is responsible for custody of the Fund's assets. As
fund accountant and administrator, BNYM is responsible for maintaining the books
and records of the Fund's securities and cash. As transfer agent, BNYM is
responsible for maintaining shareholder records for the Fund. BNYM is a
subsidiary of The Bank of New York Mellon Corporation, a financial holding
company.
Page 14
<PAGE>
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
JUNE 30, 2021 (UNAUDITED)
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,
defined-outcome 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
The cost of purchases and proceeds from sales of securities, excluding
short-term investments, derivatives, and in-kind transactions, for the period
ended June 30, 2021, were $0 and $0, respectively.
For the period ended June 30, 2021, the Fund did not have any in-kind purchases
or sales.
5. DERIVATIVE TRANSACTIONS
The following table presents the types of derivatives held by the Subsidiary at
June 30, 2021, the primary underlying risk exposure and the location of these
instruments as presented on the Consolidated Statement of Assets and
Liabilities.
<TABLE>
<CAPTION>
ASSET DERIVATIVES LIABILITY DERIVATIVES
---------------------------------------- ----------------------------------------
CONSOLIDATED CONSOLIDATED
DERIVATIVES STATEMENT OF ASSETS AND STATEMENT OF ASSETS AND
INSTRUMENT RISK EXPOSURE LIABILITIES LOCATION VALUE LIABILITIES LOCATION VALUE
----------------- ----------------- ------------------------ ------------- ------------------------ -------------
<S> <C> <C> <C> <C> <C>
Commodity Options contracts Options contracts
Options Risk purchased, at value $ 9,948 written, at value $ 6,628,531
</TABLE>
The following table presents the amount of net realized gain (loss) and change
in net unrealized appreciation (depreciation) recognized for the period ended
June 30, 2021, on derivative instruments, as well as the primary underlying risk
exposure associated with the instruments.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS LOCATION
-----------------------------------------------------------------------------
COMMODITY RISK EXPOSURE
<S> <C>
Net realized gain (loss) on:
Purchased options contracts $ (6,539)
Written options contracts (153,824)
Net change in unrealized appreciation (depreciation) on:
Purchased options contracts (44,708)
Written options contracts (20,841)
</TABLE>
During the period ended June 30, 2021, the premiums for purchased options
contracts opened were $66,725 and the premiums for purchased options contracts
closed, exercised and expired were $12,069.
During the period ended June 30, 2021, the premiums for written options
contracts opened were $7,878,274 and the premiums for written options contracts
closed, exercised and expired were $1,270,584.
The Fund does not have the right to offset financial assets and liabilities
related to options contracts on the Consolidated Statement of Assets and
Liabilities.
6. CREATIONS, REDEMPTIONS AND TRANSACTION FEES
The Fund generally issues and redeems its shares in primary market transactions
through a creation and redemption mechanism and does not sell or redeem
individual shares. Instead, financial entities known as "Authorized
Participants" have contractual arrangements with the Fund's service providers to
purchase and redeem Fund shares directly with the Fund in large blocks of shares
known as "Creation Units." Prior to the start of trading on every business day,
the Fund publishes through the National Securities Clearing Corporation ("NSCC")
the "basket" of securities, cash or other assets that it will accept in exchange
for a Creation Unit of the Fund's shares. An Authorized Participant that wishes
to effectuate a creation of the Fund's shares deposits with the Fund the
Page 15
<PAGE>
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
JUNE 30, 2021 (UNAUDITED)
"basket" of securities, cash or other assets identified by the Fund that day,
and then receives the Creation Unit of the Fund's shares in return for those
assets. After purchasing a Creation Unit, the Authorized Participant may
continue to hold the Fund's shares or sell them in the secondary market. The
redemption process is the reverse of the purchase process: the Authorized
Participant redeems a Creation Unit of the Fund's shares for a basket of
securities, cash or other assets. The combination of the creation and redemption
process with secondary market trading in the Fund's shares and underlying
securities provides arbitrage opportunities that are designed to help keep the
market price of the Fund's shares at or close to the NAV per share of the Fund.
The Fund imposes fees in connection with the purchase of Creation Units. These
fees may vary based upon various fact-based circumstances, including, but not
limited to, the composition of the securities included in the Creation Unit or
the countries in which the transactions are settled. The price for each Creation
Unit will equal the daily NAV per share of the Fund times the number of shares
in a Creation Unit, plus the fees described above and, if applicable, any
operational processing and brokerage costs, transfer fees, stamp taxes and part
or all of the spread between the expected bid and offer side of the market
related to the securities comprising the creation basket.
The Fund also imposes fees in connection with the redemption of Creation Units.
These fees may vary based upon various fact-based circumstances, including, but
not limited to, the composition of the securities included in the Creation Unit
or the countries in which the transactions are settled. The price received for
each Creation Unit will equal the daily NAV per share of the Fund times the
number of shares in a Creation Unit, minus the fees described above and, if
applicable, any operational processing and brokerage costs, transfer fees, stamp
taxes and part or all of the spread between the expected bid and offer side of
the market related to the securities comprising the redemption basket. Investors
who use the services of a broker or other such intermediary in addition to an
Authorized Participant to effect a redemption of a Creation Unit may also be
assessed an amount to cover the cost of such services. The redemption fee
charged by the Fund will comply with Rule 22c-2 of the 1940 Act which limits
redemption fees to no more than 2% of the value of the shares redeemed.
7. 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 Fund is
authorized to pay an amount up to 0.25% of its average daily net assets each
year to reimburse First Trust Portfolios L.P. ("FTP"), the distributor of the
Fund, 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 Fund, and pursuant to a contractual
arrangement, no 12b-1 fees will be paid any time before February 18, 2023.
8. INDEMNIFICATION
The Trust, on behalf of the Fund, 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.
9. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events on the Fund through
the date the consolidated financial statements were issued, and has determined
that there were no subsequent events requiring recognition or disclosure in the
consolidated financial statements that have not already been disclosed.
Page 16
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
JUNE 30, 2021 (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 the 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
the Fund's website at www.ftportfolios.com; and (3) on the Securities and
Exchange Commission's ("SEC") website at www.sec.gov.
PORTFOLIO HOLDINGS
The 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. The 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 the Fund is available to investors within 60 days after the
period to which it relates. The 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
from their role of providing a market for an ETF's shares, or decisions by an
Page 17
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
JUNE 30, 2021 (UNAUDITED)
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.
LIBOR RISK. To the extent a fund invests in floating or variable rate
obligations that use the London Interbank Offered Rate ("LIBOR") as a reference
interest rate, it is subject to LIBOR Risk. The United Kingdom's Financial
Conduct Authority, which regulates LIBOR, will cease making LIBOR available as a
reference rate over a phase-out period that will begin immediately after
December 31, 2021. The unavailability or replacement of LIBOR may affect the
value, liquidity or return on certain fund investments and may result in costs
incurred in connection with closing out positions and entering into new trades.
Any potential effects of the transition away from LIBOR on the fund or on
certain instruments in which the fund invests can be difficult to ascertain, and
they may vary depending on a variety of factors, and they could result in losses
to the fund.
MANAGEMENT RISK. To the extent that a fund is actively managed, it is subject to
management risk. In managing an actively-managed fund's investment portfolio,
the fund's portfolio managers will apply investment techniques and risk analyses
that may not have the desired result. There can be no guarantee that a fund will
meet its investment objective.
MARKET RISK. Securities held by a fund, as well as shares of a fund itself, are
subject to market fluctuations caused by factors such as general economic
conditions, political events, regulatory or market developments, changes in
interest rates and perceived trends in securities prices. Shares of a fund could
decline in value or underperform other investments as a result of the risk of
loss associated with these market fluctuations. In addition, local, regional or
global events such as war, acts of terrorism, spread of infectious diseases or
other public health issues, recessions, or other events could have a significant
negative impact on a fund and its investments. Such events may affect certain
geographic regions, countries, sectors and industries more significantly than
others. The outbreak of the respiratory disease designated as COVID-19 in
December 2019 has caused significant volatility and declines in global financial
markets, which have caused losses for investors. While the development of
vaccines has slowed the spread of the virus and allowed for the resumption of
"reasonably" normal business activity in the United States, many countries
continue to impose lockdown measures in an attempt to slow the spread.
Additionally, there is no guarantee that vaccines will be effective against
emerging variants of the disease.
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.
Page 18
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
JUNE 30, 2021 (UNAUDITED)
OPERATIONAL RISK. Each fund is subject to risks arising from various operational
factors, including, but not limited to, human error, processing and
communication errors, errors of a fund's service providers, counterparties or
other third-parties, failed or inadequate processes and technology or systems
failures. Although the funds and the Advisor seek to reduce these operational
risks through controls and procedures, there is no way to completely protect
against such risks.
Passive Investment Risk. To the extent a fund seeks to track an index, the fund
will invest in the securities included in, or representative of, the index
regardless of their investment merit. A fund generally will not attempt to take
defensive positions in declining markets.
ADDITIONAL RISK CONSIDERATIONS
ABSENCE OF AN ACTIVE MARKET RISK. The Fund faces numerous market trading risks,
including the potential lack of an active market for Fund shares due to a
limited number of market markers or authorized participants. The Fund may rely
on a small number of third party market makers to provide a market for the
purchase and sale of shares and market makers are under no obligation to make a
market in the Fund's shares. Additionally, only a limited number of institutions
act as authorized participants for the Fund and only an authorized participant
may engage in creation or redemption transactions directly with the Fund and are
not obligated to submit purchase or redemption orders for Creation Units.
Decisions by market makers or authorized participants to reduce their role or
step away from these activities in times of market stress could inhibit the
effectiveness of the arbitrage process in maintaining the relationship between
the underlying values of the Fund's portfolio securities and the Fund's market
price. Any trading halt or other problem relating to the trading activity of
these market makers or any issues disrupting the authorized participants'
ability to proceed with creation and/or redemption orders could result in a
dramatic change in the spread between the Fund's net asset value and the price
at which the Fund's shares are trading on the Exchange, which could result in a
decrease in value of the Fund's shares. This reduced effectiveness could result
in Fund shares trading at a premium or discount to net asset value and also in
greater than normal intraday bid-ask spreads for Fund shares.
FLEX OPTIONS RISK. Trading FLEX Options involves risks different from, or
possibly greater than, the risks associated with investing directly in
securities. The Fund may experience substantial downside from specific FLEX
Option positions and certain FLEX Option positions may expire worthless. The
FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund's
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. In a less liquid market for
the FLEX Options, the liquidation of a large number of options may more
significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your investment. The
trading in FLEX Options may be less deep and liquid than the market for certain
other exchange-traded options, non-customized options or other securities.
Transactions in FLEX Options are required to be centrally cleared. In a
transaction involving FLEX Options, the Fund's counterparty is the OCC, rather
than a bank or broker. Since the Fund is not a member of the OCC and only
members ("clearing members") can participate directly in the OCC, the Fund will
hold its FLEX Options through accounts at clearing members. Although clearing
members guarantee performance of their clients' obligations to the OCC, there is
a risk that the assets of the Fund might not be fully protected in the event of
a clearing member's bankruptcy, as the Fund would be limited to recovering only
a pro rata share of all available funds segregated on behalf of the clearing
member's customers for the relevant account class. Additionally, the OCC may be
unable or unwilling to perform its obligations under the FLEX Options contracts.
FLEX OPTIONS VALUATION RISK. The FLEX Options held by the Fund will be
exercisable at the strike price only on their expiration date. Prior to the
expiration date, the value of the FLEX Options will be determined based upon
market quotations or using other recognized pricing methods. The value of the
FLEX Options does not increase or decrease at the same rate as the Underlying
ETF (although they generally move in the same direction) or its underlying
securities and FLEX Option prices may be highly volatile and may fluctuate
substantially during a short period of time. The value of the FLEX Options prior
to the expiration date may vary because of factors other than the value of the
Underlying ETF, such as interest rate changes, changing supply and demand,
decreased liquidity of the FLEX Options, a change in the actual and perceived
volatility of the stock market and the Underlying ETF and the remaining time to
expiration. During periods of reduced market liquidity or in the absence of
readily available market quotations for the holdings of the Fund, the ability of
the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund's investment adviser (employing the fair value procedures adopted by
the Board of Trustees of the Trust) may play a greater role in the valuation of
the Fund's holdings due to reduced availability of reliable objective pricing
data. Consequently, while such determinations may be made in good faith, it may
nevertheless be more difficult for the Fund to accurately assign a daily value.
Under those circumstances, the value of the FLEX Options will require more
reliance on the investment adviser's judgment than that required for securities
for which there is an active trading market. This creates a risk of mispricing
or improper valuation of the FLEX Options which could impact the value paid for
shares of the Fund.
Page 19
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
JUNE 30, 2021 (UNAUDITED)
UNDERLYING ETF GOLD RISK. The Fund will have exposure to gold through its
investments (through the Subsidiary) in FLEX Options on the Underlying ETF,
which invests substantially all of its assets in physical gold bullion. The
price of gold bullion can be significantly affected by international monetary
and political developments such as currency devaluation or revaluation, central
bank movements, economic and social conditions within a country, transactional
or trade imbalances, or trade or currency restrictions between countries.
Physical gold bullion has sales commission, storage, insurance and auditing
expenses. Investments in gold generally may be speculative and subject to
greater price volatility than investments in other types of assets. The price of
metals, such as gold, is related to, among other things, worldwide metal prices
and extraction and production costs. Worldwide metal prices may fluctuate
substantially over short periods of time, and as a result, the Fund's share
price may be more volatile than other types of investments. There is a risk that
some or all of the Underlying ETF's gold bars held by its custodian or any
subcustodian could be lost, damaged or stolen. Access to the Underlying ETF's
gold bars could also be restricted by natural events (such as an earthquake) or
human actions (such as a terrorist attack). Any of these events may adversely
affect the operations of the Underlying ETF and, consequently, an investment
based on the value of the Underlying ETF's shares. Additionally, the Underlying
ETF does not insure its gold and a loss may be suffered with respect to the
Underlying ETF's gold which is not covered by insurance and for which no party
is liable for damages.
UNDERLYING ETF RISK. The Fund invests in FLEX Options that reference an ETF,
which subjects the Fund to certain of the risks of owning shares of an ETFs as
well as the types of instruments in which the Underlying ETF invests. The value
of an ETF will fluctuate over time based on fluctuations in the values of the
securities held by the ETF, which may be affected by changes in general economic
conditions, expectations for future growth and profits, interest rates and the
supply and demand for those securities. In addition, ETFs are subject to
authorized participant concentration risk, market maker risk, premium/discount
risk, tracking error risk and trading issues risk. Brokerage, tax and other
expenses may negatively impact the performance of the Underlying ETF and, in
turn, the value of the Fund's shares. An ETF that tracks an index may not
exactly match the performance of the index due to cash drag, differences between
the portfolio of the ETF and the components of the index, expenses and other
factors.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
ADVISORY AND SUB-ADVISORY AGREEMENTS
BOARD CONSIDERATIONS REGARDING APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT AND
INVESTMENT SUB-ADVISORY AGREEMENT
The Board of Trustees of First Trust Exchange-Traded Fund (the "Trust"),
including the Independent Trustees, approved the Investment Management Agreement
(the "Fund Advisory Agreement") with First Trust Advisors L.P. (the "Advisor"),
on behalf of FT Cboe Vest Gold Strategy Target Income ETF (the "Fund"), and the
Investment Sub-Advisory Agreement (the "Fund Sub-Advisory Agreement" and
together with the Fund Advisory Agreement, the "Fund Agreements") among the
Trust, on behalf of the Fund, the Advisor and Cboe Vest Financial LLC (the
"Sub-Advisor"), for an initial two-year term at a meeting held on December 7,
2020. Because the Fund will invest in exchange-traded options that reference the
performance of the SPDR Gold Trust through a wholly-owned subsidiary of the Fund
(the "Subsidiary"), the Board, including the Independent Trustees, also approved
an Investment Management Agreement (the "Subsidiary Advisory Agreement") with
the Advisor, on behalf of the Subsidiary, and an Investment Sub-Advisory
Agreement (the "Subsidiary Sub-Advisory Agreement" and together with the
Subsidiary Advisory Agreement, the "Subsidiary Agreements") among the
Subsidiary, the Advisor and the Sub-Advisor, also for an initial two-year term.
The Fund Agreements and the Subsidiary Agreements are referred to herein
collectively as the "Agreements." The Board determined that the Agreements are
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 Agreements, the
Independent Trustees received a separate report from each of the Advisor and the
Sub-Advisor in advance of the Board meeting responding to requests for
information from counsel to the Independent Trustees, submitted on behalf of the
Independent Trustees, that, among other things, outlined: the services to be
provided by the Advisor and the Sub-Advisor to the Fund and the Subsidiary
(including the relevant personnel responsible for these services and their
experience); the proposed unitary fee rate payable by the Fund as compared to
fees charged to a peer group of funds (the "Expense Group") and a broad peer
universe of funds (the "Expense Universe"), each assembled by Broadridge
Financial Solutions, Inc. ("Broadridge"), an independent source, and as compared
to fees charged to other exchange-traded funds ("ETFs") managed by the Advisor;
the proposed sub-advisory fee rate as compared to fees charged to other clients
of the Sub-Advisor; the estimated expense ratio of the Fund as compared to
expense ratios of the funds in the Fund's Expense Group and Expense Universe;
the nature of expenses to be incurred in providing services to the Fund and the
Subsidiary and the potential for the Advisor and the Sub-Advisor to realize
economies of scale, if any; profitability and other financial data for the
Advisor; financial data for the Sub-Advisor; any fall-out benefits to the
Page 20
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
JUNE 30, 2021 (UNAUDITED)
Advisor and its affiliates, First Trust Portfolios L.P. ("FTP") and First Trust
Capital Partners, LLC ("FTCP"), and the Sub-Advisor; and information on the
Advisor's and the Sub-Advisor's compliance programs. The Independent Trustees
and their counsel also met separately to discuss the information provided by the
Advisor and the Sub-Advisor. The Board applied its business judgment to
determine whether the arrangements between the Trust and the Advisor, among the
Trust, the Advisor and the Sub-Advisor, between the Subsidiary and the Advisor
and among the Subsidiary, the Advisor and the Sub-Advisor are reasonable
business arrangements from the Fund's and the Subsidiary's perspectives.
In evaluating whether to approve the Agreements, the Board considered the
nature, extent and quality of the services to be provided by the Advisor and the
Sub-Advisor under the Agreements. With respect to the Fund Advisory Agreement
and the Subsidiary Advisory Agreement, the Board considered that the Advisor
will be responsible for the overall management and administration of the Fund
and the Subsidiary and reviewed all of the services to be provided by the
Advisor to the Fund and the Subsidiary, including the oversight of the
Sub-Advisor, as well as the background and experience of the persons responsible
for such services. The Board considered that the Fund will be an
actively-managed ETF and will employ an advisor/sub-advisor management structure
and considered that the Advisor manages other ETFs with a similar structure in
the First Trust Fund Complex. The Board noted that the Advisor will oversee the
Sub-Advisor's day-to-day management of the Fund's and the Subsidiary's
investments, including portfolio risk monitoring and performance review. 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, the Sub-Advisor's and the Fund's
compliance with the 1940 Act, as well as the Fund's compliance with its
investment objective, policies and restrictions. The Board noted that employees
of the Advisor provide management services to other ETFs and to other funds in
the First Trust Fund Complex with diligence and care. With respect to the Fund
Sub-Advisory Agreement and the Subsidiary Sub-Advisory Agreement, in addition to
the materials provided by the Sub-Advisor, at the December 7, 2020 meeting, the
Board also received a presentation from representatives of the Sub-Advisor
discussing the services that the Sub-Advisor will provide to the Fund and the
Subsidiary, and the Trustees were able to ask questions about the proposed
investment strategy for the Fund, including the investment in exchange-traded
options through the Subsidiary. The Board noted the background and experience of
the Sub-Advisor's portfolio management team and the Sub-Advisor's investment
style. Because the Fund had yet to commence investment operations, the Board
could not consider the historical investment performance of the Fund. 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
and the Subsidiary by the Advisor and the Sub-Advisor under the Agreements are
expected to be satisfactory.
The Board considered the proposed unitary fee rate payable by the Fund under the
Fund Advisory 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 0.85% of its average daily net assets. The Board
considered that, from the unitary fee for the Fund, the Advisor would pay the
Sub-Advisor a sub-advisory fee equal to 50% of the Fund's unitary fee less
one-half of the Fund's and the Subsidiary's expenses. The Board noted that the
Advisor and the Sub-Advisor would be responsible for the Fund's and the
Subsidiary's expenses, including the cost of sub-advisory, transfer agency,
custody, fund administration, legal, audit and other services and license fees,
if any, but excluding the fee payment under the Fund Advisory Agreement and
interest, taxes, acquired fund fees and expenses, if any, brokerage commissions
and other expenses connected with the execution of portfolio transactions,
distribution and service fees pursuant to a Rule 12b-1 plan, if any, and
extraordinary expenses, if any. The Board noted that the Advisor would receive
no compensation under the Subsidiary Advisory Agreement and no compensation
would be paid to the Sub-Advisor under the Subsidiary Sub-Advisory Agreement.
The Board received and reviewed information showing the advisory or unitary fee
rates and expense ratios of the peer funds in the Expense Group, as well as
advisory and unitary fee rates charged by the Advisor and the Sub-Advisor to
other fund (including ETF) and non-fund clients, as applicable. 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 above the median total (net)
expense ratio of the peer funds in the Expense Group. With respect to the
Expense Group, the Board discussed with representatives of the Advisor how the
Expense Group was assembled and how the Fund compared and differed from the peer
funds. The Board took this information into account in considering the peer
data. With respect to fees charged to other clients, the Board considered the
Advisor's statement that the Fund will be unique to the market and the First
Trust Fund Complex, but will be most similar to three other actively-managed
ETFs in the First Trust Fund Complex that are managed by the Advisor and employ
options-based strategies, each of which pays or will pay a unitary fee equal to
an annual rate of 0.85% or 0.90% of its average daily net assets. In light of
the information considered and the nature, extent and quality of the services
expected to be provided under the Agreements, the Board determined that the
proposed unitary fee, including the sub-advisory fee to be paid by the Advisor
to the Sub-Advisor from the unitary fee, was fair and reasonable.
The Board noted that the proposed unitary fee for the Fund was not structured to
pass on to shareholders the benefits of any economies of scale 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 and the Sub-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 hire personnel and build
infrastructure, including technology, to improve the services to the funds in
the First Trust Fund Complex. The Board took into consideration the types of
costs to be borne by the Advisor in connection with its services to be performed
for the Fund under the Fund Advisory Agreement. The Board considered the
Page 21
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FT CBOE VEST GOLD STRATEGY TARGET INCOME ETF(R) (IGLD)
JUNE 30, 2021 (UNAUDITED)
Advisor's estimate of the asset level for the Fund at which the Advisor expects
the Fund Advisory Agreement to be profitable to the Advisor and the Advisor's
estimate of the profitability of the Fund Advisory Agreement if the Fund's
assets reach $100 million. The Board noted the inherent limitations in the
profitability analysis and concluded that, based on the information provided,
the Advisor's estimated profitability level for the Fund was not unreasonable.
The Board reviewed financial information provided by the Sub-Advisor, but did
not review any potential profitability of the Fund Sub-Advisory Agreement to the
Sub-Advisor. The Board considered that the Sub-Advisor would be paid by the
Advisor from the Fund's unitary fee and its understanding that the sub-advisory
fee rate was the product of an arm's length negotiation. In addition, the Board
considered fall-out benefits described by the Advisor that may be realized from
its relationship with the Fund. The Board noted that FTCP has a controlling
ownership interest in the Sub-Advisor's parent company and considered potential
fall-out benefits to the Advisor from such ownership interest. The Board also
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
considered the potential fall-out benefits to the Sub-Advisor from FTCP's
controlling ownership interest in the Sub-Advisor's parent company. The Board
noted the Sub-Advisor's statements that it does not foresee any fall-out
benefits from its relationship with the Fund and that, as a policy, it does not
enter into soft-dollar arrangements for the procurement of research services in
connection with client securities transactions. The Board concluded that the
character and amount of potential fall-out benefits to the Advisor and the
Sub-Advisor were not unreasonable.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, determined that the terms of the
Agreements are fair and reasonable and that the approval of the Agreements is in
the best interests of the Fund. No single factor was determinative in the
Board's analysis.
LIQUIDITY RISK MANAGEMENT PROGRAM
In accordance with Rule 22e-4 under the Investment Company Act of 1940, as
amended (the "1940 Act"), the Fund and each other fund in the First Trust Fund
Complex, other than the closed-end funds, have adopted and implemented a
liquidity risk management program (the "Program") reasonably designed to assess
and manage the funds' liquidity risk, i.e., the risk that a fund could not meet
requests to redeem shares issued by the fund without significant dilution of
remaining investors' interests in the fund. The Board of Trustees of the First
Trust Funds has appointed First Trust Advisors, L.P. (the "Advisor") as the
person designated to administer the Program, and in this capacity the Advisor
performs its duties primarily through the activities and efforts of the First
Trust Liquidity Committee (the "Liquidity Committee").
Pursuant to the Program, the Liquidity Committee classifies the liquidity of the
fund's portfolio investments into one of the four liquidity categories specified
by Rule 22e-4: highly liquid investments, moderately liquid investments, less
liquid investments and illiquid investments. The Liquidity Committee determines
certain of the inputs for this classification process, including reasonably
anticipated trade sizes and significant investor dilution thresholds. The
Liquidity Committee also determines and periodically reviews a highly liquid
investment minimum for certain funds, monitors the funds' holdings of assets
classified as illiquid investments to seek to ensure they do not exceed 15% of a
fund's net assets and establishes policies and procedures regarding redemptions
in kind.
At the April 26, 2021 meeting of the Board of Trustees, as required by Rule
22e-4 and the Program, the Advisor provided the Board with a written report
prepared by the Advisor that addressed the operation of the Program during the
period from March 20, 2020 through the Liquidity Committee's annual meeting held
on March 16, 2021 and assessed the Program's adequacy and effectiveness of
implementation during this period, including the operation of the highly liquid
investment minimum for each fund that is required under the Program to have one,
and any material changes to the Program. Note that because the Fund primarily
holds assets that are highly liquid investments, the Fund has not adopted any
highly liquid investment minimums.
As stated in the written report, during the review period, no fund breached the
15% limitation on illiquid investments, no fund with a highly liquid investment
minimum breached that minimum and no fund filed a Form N-LIQUID. The Advisor
concluded that the Fund's investment strategy is appropriate for an open-end
fund; that the Program operated effectively in all material respects during the
review period; and that the Program is reasonably designed to assess and manage
the liquidity risk of each fund and to maintain compliance with Rule 22e-4.
Page 22
<PAGE>
This page intentionally left blank.
<PAGE>
This page intentionally left blank.
<PAGE>
FIRST TRUST
First Trust Exchange-Traded Fund
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
INVESTMENT SUB-ADVISOR
Cboe Vest(SM) Financial LLC
1765 Greensboro Station Pl, 9th Floor
McLean, VA 22102
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
<PAGE>
[BLANK BACK COVER]
<PAGE>
| (b) | Not applicable. |
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. 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 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.
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 |
| By (Signature and Title)* | /s/ James M. Dykas | |
| James M. Dykas, President and Chief Executive Officer (principal executive officer) |
| Date: | September 7, 2021 |
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: | September 7, 2021 |
| By (Signature and Title)* | /s/ Donald P. Swade | |
| Donald P. Swade, Treasurer, Chief Financial Officer and Chief Accounting Officer (principal financial officer) |
| Date: | September 7, 2021 |
* Print the name and title of each signing officer under his or her signature.
Certification Pursuant to Rule 30a-2(a) under
the 1940 Act and Section 302
of the Sarbanes-Oxley Act
I, James M. Dykas, certify that:
| 1. | I have reviewed this report on Form N-CSR of First Trust Exchange-Traded Fund; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
| Date: | September 7, 2021 | /s/ James M. Dykas | |||
| James M. Dykas, President and Chief Executive Officer (principal executive officer) |
Certification Pursuant to Rule 30a-2(a) under
the 1940 Act and Section 302
of the Sarbanes-Oxley Act
I, Donald P. Swade, certify that:
| 1. | I have reviewed this report on Form N-CSR of First Trust Exchange-Traded Fund; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
| Date: | September 7, 2021 | /s/ Donald P. Swade | |||
| Donald P. Swade, Treasurer, Chief Financial Officer and Chief Accounting Officer (principal financial officer) |
Certification Pursuant to Rule 30a-2(b) under the
1940 Act and Section 906
of the Sarbanes-Oxley Act
I, James M. Dykas, President and Chief Executive Officer of First Trust Exchange-Traded Fund (the “Registrant”), certify that:
| 1. | The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
| Date: | September 7, 2021 | /s/ James M. Dykas | |||
| James M. Dykas, President and Chief Executive Officer (principal executive officer) |
I, Donald P. Swade, Treasurer, Chief Financial Officer and Chief Accounting Officer of First Trust Exchange-Traded Fund (the “Registrant”), certify that:
| 1. | The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
| Date: | September 7, 2021 | /s/ Donald P. Swade | |||
| Donald P. Swade, Treasurer, Chief Financial Officer and Chief Accounting Officer (principal financial officer) |
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- HIPPOSOL: A Hippopotamus Themed Memecoin on Solana Blockchain has Announced $HIPPOS Presale for Early Investors
- SYNERGIE : SYNERGIE announces the release of its 2023 Annual Financial Report
- Form 8.3 - LOK'N STORE GROUP PLC
Create E-mail Alert Related Categories
SEC FilingsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
