FIRST TRUST
First Trust Exchange-Traded Fund II
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Book 1
First Trust STOXX(R) European Select Dividend Index Fund (FDD)
First Trust Alerian Disruptive Technology Real Estate ETF (DTRE)
(formerly known as First Trust FTSE EPRA/NAREIT Developed Markets Real
Estate Index Fund (FFR))
First Trust Dow Jones Global Select Dividend Index Fund (FGD)
First Trust Global Wind Energy ETF (FAN)
First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD)
(formerly known as First Trust Global Engineering and Construction ETF (FLM))
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund (GRID)
First Trust Indxx Global Natural Resources Income ETF (FTRI)
First Trust Indxx Global Agriculture ETF (FTAG)
First Trust BICK Index Fund (BICK)
First Trust Indxx NextG ETF (NXTG)
First Trust S-Network Future Vehicles & Technology ETF (CARZ)
(formerly known as First Trust NASDAQ Global Auto Index Fund)
First Trust Cloud Computing ETF (SKYY)
First Trust International Equity Opportunities ETF (FPXI)
First Trust Nasdaq Cybersecurity ETF (CIBR)
First Trust IPOX(R) Europe Equity Opportunities ETF (FPXE)
First Trust Dow Jones International Internet ETF (FDNI)
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Annual Report
September 30, 2022
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TABLE OF CONTENTS
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FIRST TRUST EXCHANGE-TRADED FUND II
ANNUAL REPORT
SEPTEMBER 30, 2022
Shareholder Letter ......................................................................... 2
Market Overview ............................................................................ 3
Fund Performance Overview
First Trust STOXX(R) European Select Dividend Index Fund (FDD) ....................... 4
First Trust Alerian Disruptive Technology Real Estate ETF (DTRE)...................... 6
First Trust Dow Jones Global Select Dividend Index Fund (FGD)......................... 8
First Trust Global Wind Energy ETF (FAN).............................................. 10
First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD)............................ 12
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund (GRID)....... 14
First Trust Indxx Global Natural Resources Income ETF (FTRI).......................... 16
First Trust Indxx Global Agriculture ETF (FTAG)....................................... 18
First Trust BICK Index Fund (BICK).................................................... 20
First Trust Indxx NextG ETF (NXTG).................................................... 22
First Trust S-Network Future Vehicles & Technology ETF (CARZ)......................... 24
First Trust Cloud Computing ETF (SKYY)................................................ 26
First Trust International Equity Opportunities ETF (FPXI)............................. 28
First Trust Nasdaq Cybersecurity ETF (CIBR) .......................................... 30
First Trust IPOX(R) Europe Equity Opportunities ETF (FPXE) ........................... 32
First Trust Dow Jones International Internet ETF (FDNI)............................... 34
Notes to Fund Performance Overview.......................................................... 36
Understanding Your Fund Expenses............................................................ 37
Portfolio of Investments
First Trust STOXX(R) European Select Dividend Index Fund (FDD)........................ 39
First Trust Alerian Disruptive Technology Real Estate ETF (DTRE)...................... 41
First Trust Dow Jones Global Select Dividend Index Fund (FGD)......................... 43
First Trust Global Wind Energy ETF (FAN).............................................. 46
First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD)............................ 50
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund (GRID)....... 52
First Trust Indxx Global Natural Resources Income ETF (FTRI).......................... 55
First Trust Indxx Global Agriculture ETF (FTAG)....................................... 58
First Trust BICK Index Fund (BICK).................................................... 60
First Trust Indxx NextG ETF (NXTG).................................................... 63
First Trust S-Network Future Vehicles & Technology ETF (CARZ)......................... 67
First Trust Cloud Computing ETF (SKYY)................................................ 70
First Trust International Equity Opportunities ETF (FPXI)............................. 72
First Trust Nasdaq Cybersecurity ETF (CIBR)........................................... 75
First Trust IPOX(R) Europe Equity Opportunities ETF (FPXE)............................ 77
First Trust Dow Jones International Internet ETF (FDNI)............................... 80
Statements of Assets and Liabilities........................................................ 82
Statements of Operations.................................................................... 86
Statements of Changes in Net Assets......................................................... 90
Financial Highlights........................................................................ 97
Notes to Financial Statements............................................................... 105
Report of Independent Registered Public Accounting Firm..................................... 118
Additional Information...................................................................... 120
Board of Trustees and Officers.............................................................. 135
Privacy Policy.............................................................................. 137
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CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and its representatives, taking into account the
information currently available to them. Forward-looking statements include all
statements that do not relate solely to current or historical fact. For example,
forward-looking statements include the use of words such as "anticipate,"
"estimate," "intend," "expect," "believe," "plan," "may," "should," "would" or
other words that convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
any series of First Trust Exchange-Traded Fund II (the "Trust") described in
this report (each such series is referred to as a "Fund" and collectively, as
the "Funds") to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. When
evaluating the information included in this report, you are cautioned not to
place undue reliance on these forward-looking statements, which reflect the
judgment of the Advisor and its representatives only as of the date hereof. We
undertake no obligation to publicly revise or update these forward-looking
statements to reflect events and circumstances that arise after the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that any Fund described in this report will achieve its
investment objective. Each Fund is subject to market risk, which is the
possibility that the market values of securities owned by the Fund will decline
and that the value of the Fund's shares may therefore be less than what you paid
for them. Accordingly, you can lose money by investing in a Fund. See "Risk
Considerations" in the Additional Information section of this report for a
discussion of certain other risks of investing in the Funds.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
www.ftportfolios.com or speak with your financial advisor. Investment returns,
net asset value and share price will fluctuate and Fund shares, when sold, may
be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund
performance on each Fund's webpage at www.ftportfolios.com.
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
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SHAREHOLDER LETTER
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FIRST TRUST EXCHANGE-TRADED FUND II
ANNUAL LETTER FROM THE CHAIRMAN AND CEO
SEPTEMBER 30, 2022
Dear Shareholders,
First Trust is pleased to provide you with the annual report for certain series
of the First Trust Exchange-Traded Fund II (the "Funds"), which contains
detailed information about the Funds for the twelve months ended September 30,
2022.
It is times like these that really test the mettle of investors. Are you someone
that is implementing an investment plan with a long time horizon, a trader by
nature, or do you fall somewhere in between? Frankly, the current climate is
challenging for just about any strategy. While most investors are accustomed to
dealing with high levels of volatility in the stock market, some of the daily
swings we have witnessed lately have not only been uncharacteristically sharp
but have occasionally seemed nearly inexplicable, in my opinion.
In case you have not noticed, volatility is also elevated in the fixed-income
market. Bond valuations are down big in 2022. Year-to-date through October 31,
2022, the ICE BofA 15+ Year U.S. Treasury Index experienced a price decline of
33.51%, according to Bloomberg. It was down 31.87% on a total return basis,
which includes reinvested interest. To put this into perspective, over the past
40 years, the worst annual showing by the U.S. Long-Term Government Bond Index
(20-Year) tracked by Morningstar was the -14.90% total return posted in 2009
(think 2008-2009 global financial crisis). For those who may be unaware,
investors benefitted from a trend of declining bond yields from September 1981
through August 2020. While that is an incredible run, nothing lasts forever.
Suffice it to say, a lot of pain has been endured by investors in the markets
this year and we believe there could be more to come in the near-term. The
aggressive interest rate hikes by the Federal Reserve (the "Fed") are a signal
to the markets that it is behind the inflation curve. Moving forward, the Fed
will be looking to lower inflation while simultaneously engineering a soft
landing in the economy. That will be easier said than done, in my opinion.
There are far more headwinds challenging the securities markets than tailwinds.
Here are just a few of those headwinds: stubbornly high inflation; additional
rate hikes expected from the Fed from their November and December 2022 meetings,
which could potentially push bond yields higher; the ongoing war between Russia
and Ukraine, which is impacting the supply and prices of crude oil and natural
gas; China enforcing a zero-tolerance policy to combat the spread of the
coronavirus by locking down entire cities to its own economic detriment; and the
potential for food and energy shortages this coming winter. With the housing
market looking like it is finally cooling off, due largely to a huge spike in
mortgage rates this year, which were up more than double the rate at the start
of the year, the last big tailwind standing may just be the strong U.S. labor
market. If the job market can hang in there, the Fed's goal of a soft landing
for the economy may be attainable. I think we will have a clearer picture of
things at the start of 2023.
Year-to-date through October 31, 2022, the S&P 500(R) Index (the "Index") posted
a total return of -17.70%, according to Bloomberg, which puts the Index in bear
market territory. A bear market is defined as a 20% or greater decline in the
price of a security or index from its most recent peak. While the 17.70% decline
in the Index would technically qualify as a stock market correction, investors
should continue to view the current downturn as a bear market, in my opinion.
Keep in mind, since World War II, there have been 12 bear markets in the Index,
excluding the current bear market, according to Yardeni Research. The average
price decline of those 12 bear markets was 33.6%. The average price gain over
the 12-months following the trough reached during those bear markets was 40.8%,
according to Bloomberg. Bear markets come and go. You can't catch the turn if
you are not in the market when the turn comes.
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
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MARKET OVERVIEW
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FIRST TRUST EXCHANGE-TRADED FUND II
ANNUAL REPORT
SEPTEMBER 30, 2022
ROBERT F. CAREY, CFA
SENIOR VICE PRESIDENT AND CHIEF MARKET STRATEGIST
FIRST TRUST ADVISORS L.P.
Mr. Carey is responsible for the overall management of research and analysis of
the First Trust product line. Mr. Carey has more than 30 years of experience as
an Equity and Fixed-Income Analyst and is a recipient of the Chartered Financial
Analyst ("CFA") designation. He is a graduate of the University of Illinois at
Champaign-Urbana with a B.S. in Physics. He is also a member of the Investment
Analysts Society of Chicago and the CFA Institute. Mr. Carey has appeared as a
guest on such programs as Bloomberg TV, CNBC, and WBBM Radio, and has been
quoted by several publications, including The Wall Street Journal, The Wall
Street Reporter, Bloomberg News Service and Registered Rep.
STATE OF THE GLOBAL ECONOMY
The International Monetary Fund ("IMF") reported in its October 2022 release
that global gross domestic product ("GDP") growth is expected to come in at 3.2%
in 2022 and 2.7% in 2023, down from 6.0% in 2021. The IMF sees the U.S. economy
growing 1.6% in 2022 and 1.0% in 2023, down from 5.7% in 2021. With respect to
all Advanced Economies, the IMF is projecting GDP growth of 2.4% in 2022 and
1.1% in 2023, down from 5.2% in 2021. Lastly, it sees Emerging Markets and
Developing Economies growing 3.7% in 2022 and 3.7% again in 2023, down from 6.6%
in 2021. From 1970 to 2021, the average global GDP growth rate was 3.6%,
according to the IMF. Looking ahead, the IMF notes that the global economy must
navigate three key pressures: the war in Ukraine, world-wide inflation and
continued economic headwinds in the U.S., Europe and China.
Russia's war with Ukraine continues to destabilize the global economy,
increasing the cost of living and impeding economic growth. European natural gas
prices have spiked four-fold since 2021, according to the IMF. Russia has
decreased natural gas deliveries to Europe by over 80% of their 2021 total,
greatly increasing the likelihood of an energy shortage. Worldwide inflationary
pressures continue to fester, with global inflation forecast to surge to 8.8% in
2022, up from 4.7% in 2021. Central banks have rapidly tightened monetary policy
in response, and will likely have to continue to do so, in our opinion. These
tighter financial conditions have produced significant headwinds to growth among
most major economies and are likely to have at least some impact in 2023.
PERFORMANCE OF GLOBAL STOCKS AND BONDS
U.S. equities have turned negative over the past year. The S&P 500(R) (the
"Index"), S&P MidCap 400(R) and S&P SmallCap 600(R) Indices posted total returns
of -15.47%, -15.25% and -18.83%, respectively, for the 12-month period ended
September 30, 2022, according to Bloomberg. Value stocks outperformed growth
stocks over the period. The S&P 500(R) Value Index posted a total return of
-9.63% versus -21.11% for the S&P 500(R) Growth Index; an indication that
investors may be anticipating slower growth over the near-term and are opting
for companies that are trading at more attractive valuations. Nine of the eleven
sectors that comprise the Index were down on a total return basis, with Energy
and Utilities posting the only positive returns. The top-performer was Energy,
up 45.70%, while the worst showing came from Communication Services, down
39.05%.
A Bloomberg survey of 23 equity strategists found that the average 2022 year-end
price target for the Index was 4,346 as of September 15, 2022, down from 4,376
on August 16, 2022, according to its own release. Heading into 2022 (December
16, 2021), strategists had an average target of 4,950. The highest and lowest
estimates on September 15, 2022, were 5,100 and 3,400, respectively. On
September 15, 2022, the Index closed at 3,901.35, which was 18.66% below its
all-time closing high of 4,796.56 on January 3, 2022. As of September 30, 2022,
Bloomberg's 2022, 2023 and 2024 consensus earnings growth rate estimates for the
Index stood at 9.61%, 6.14% and 8.44%, respectively.
The performance of foreign equities continues to lag that of major U.S. stock
indices. Over the past 12 months, the MSCI World ex USA and MSCI Emerging
Markets equity indices posted total returns of -23.91% (USD) and -28.11% (USD),
respectively, according to Bloomberg. Major foreign bond indices were also in
negative territory. The Bloomberg Global Aggregate Index of higher quality debt
posted a total return of -20.43% (USD), while the EM Hard Currency Aggregate
Index of emerging markets debt fell by 23.01% (USD), according to Bloomberg.
Over that same period, the U.S. dollar surged by 18.98% against a basket of
major currencies, as measured by the U.S. Dollar Index (DXY), pressuring the
returns on unhedged foreign securities held by U.S. investors.
U.S. bond indices have not been immune to the aggressive tightening of monetary
policy by central banks, particularly the U.S. Federal Reserve. The best
performing index we track was the U.S. Treasury: Intermediate Index, which
posted a total return of -9.23% for the 12-month period ended September 30,
2022. The worst performer was the U.S. Corporate Investment Grade Index which
posted a total return of -18.53% for the same period. The yield on the benchmark
10-Year Treasury Note ("T-Note") rose by 234 basis points (a 157.47% increase
over the period) to close at 3.83% on September 30, 2022, according to
Bloomberg. For comparative purposes, the average yield on the 10-Year T-Note was
2.10% for the 10-year period ended September 30, 2022.
Page 3
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FUND PERFORMANCE OVERVIEW (UNAUDITED)
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FIRST TRUST STOXX(R) EUROPEAN SELECT DIVIDEND INDEX FUND (FDD)
First Trust STOXX(R) European Select Dividend Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the STOXX(R) Europe Select
Dividend 30 Index (the "STOXX Index"). The shares of the Fund are listed and
trade on the NYSE Arca, Inc. under the ticker symbol "FDD." The Fund will
normally invest at least 90% of its net assets (including investment borrowings)
in the common stocks and depositary receipts that comprise the STOXX Index.
The STOXX Index is compiled and maintained by STOXX Limited (the "Index
Provider"). According to the Index Provider, the STOXX Index consists of 30 high
dividend-yielding securities selected from the STOXX(R) Europe 600 Index,
including secondary lines of those companies (where there are multiple lines of
equity capital in a company), which covers 18 European countries: Austria,
Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland
and the United Kingdom. In addition, a company must have a non-negative
five-year dividend-per-share growth rate and a dividend-to-earnings ratio of 60%
or less.
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PERFORMANCE
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AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (8/27/07) Ended Ended (8/27/07)
9/30/22 9/30/22 9/30/22 to 9/30/22 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -27.88% -2.54% 2.11% -2.96% -12.06% 23.20% -36.43%
Market Price -28.25% -2.66% 1.96% -2.99% -12.62% 21.47% -36.79%
INDEX PERFORMANCE
STOXX(R) Europe Select
Dividend 30 Index -27.98% -2.13% 2.50% -2.52% -10.19% 27.97% -31.94%
STOXX(R) Europe 600 Index -26.04% -1.24% 3.66% 0.89% -6.07% 43.20% 14.37%
MSCI Europe Index -24.80% -1.24% 3.45% 0.71% -6.05% 40.36% 11.22%
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(See Notes to Fund Performance Overview on page 36.)
PERFORMANCE REVIEW
The Fund generated a net asset value ("NAV") return of -27.88% during the
12-month period covered by this report. During the same period, the MSCI Europe
Index (the "Benchmark") generated a return of -24.80%. The greatest allocation
in the Fund was to investments in the United Kingdom, which received an
allocation of 23.4% and contributed -2.0% to the Fund's return. The -4.9%
contribution to the Fund's return from German investments was the greatest drag
of any country to the Fund's return. Investments in Switzerland contributed 0.2%
to the Fund's total return and Switzerland was the only country with a positive
contribution to the Fund's performance. The Fund's currency exposure had a
-13.4% impact on the Fund's performance during the period covered by this
report.
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The STOXX(R) Europe Select Dividend 30 Index ("STOXX Index") is the intellectual
property (including registered trademarks) of STOXX Ltd., Zug, Switzerland
("STOXX"), Deutsche Borse Group or their licensors, which is used under license.
The Fund is neither sponsored nor promoted, distributed or in any other manner
supported by STOXX Deutsche Borse Group or their licensors, research partners or
data providers and STOXX, Deutsche Borse Group and their licensors, research
partners or data providers do not give any warranty, and exclude any liability
(whether in negligence or otherwise) with respect thereto generally or
specifically in relation to any errors, omissions or interruptions in the STOXX
Index or its data.
Page 4
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FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
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FIRST TRUST STOXX(R) EUROPEAN SELECT DIVIDEND INDEX FUND (FDD) (CONTINUED)
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% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
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Financials 39.0%
Utilities 17.6
Materials 15.1
Industrials 10.0
Communication Services 7.7
Consumer Discretionary 7.5
Real Estate 3.1
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Total 100.0%
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% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
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Rio Tinto PLC 6.6%
Electricite de France S.A. 6.3
ACS Actividades de Construccion y
Servicios S.A. 5.1
AP Moller - Maersk A/S, Class A 4.9
ASR Nederland N.V. 4.3
IG Group Holdings PLC 4.2
Legal & General Group PLC 4.0
Bayerische Motoren Werke AG
(Preference Shares) 4.0
NN Group N.V. 3.7
Holcim AG 3.7
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Total 46.8%
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PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2012 - SEPTEMBER 30, 2022
First Trust STOXX(R) STOXX(R) Europe
European Select Dividend Select Dividend 30 STOXX(R) Europe MSCI Europe
Index Fund Index 600 Index Index
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9/30/12 $10,000 $10,000 $10,000 $10,000
3/31/13 9,991 10,006 11,027 10,991
9/30/13 11,329 11,381 12,522 12,423
3/31/14 12,674 12,751 13,856 13,684
9/30/14 12,313 12,407 13,267 13,146
3/31/15 12,102 12,232 13,182 13,008
9/30/15 11,340 11,428 12,196 11,919
3/31/16 11,647 11,802 12,200 11,909
9/30/16 11,780 11,932 12,465 12,215
3/31/17 12,368 12,578 13,318 13,071
9/30/17 14,010 14,250 15,248 14,939
3/31/18 14,360 14,623 15,291 14,966
9/30/18 14,113 14,404 15,204 14,894
3/31/19 13,910 14,221 14,690 14,408
9/30/19 14,446 14,759 15,082 14,781
3/31/20 10,963 11,443 12,473 12,174
9/30/20 12,185 12,569 15,226 14,665
3/31/21 16,820 17,450 18,299 17,646
9/30/21 17,082 17,771 19,366 18,664
3/31/22 16,573 17,344 18,793 18,268
9/30/22 12,320 12,797 14,320 14,036
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
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FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
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FIRST TRUST ALERIAN DISRUPTIVE TECHNOLOGY REAL ESTATE ETF (DTRE)
First Trust Alerian Disruptive Technology Real Estate ETF, formerly First Trust
EPRA/NAREIT Developed Markets Real Estate Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the Alerian Disruptive
Technology Real Estate Index (the "Index"). The shares of the Fund are listed
and trade on the NYSE Arca, Inc. under the ticker symbol "DTRE." The Fund will
normally invest at least 90% of its net assets (including investment borrowings)
in the common stocks, real estate investment trusts ("REITs") and depositary
receipts that comprise the Index.
The Index is compiled and maintained by VettaFi LLC (the "Index Provider").
According to the Index Provider, the Index includes common stocks, REITs and
depositary receipts of companies listed on a global securities exchange that are
constituents of the S-Network Global 5000 Index or the S-Network Global REIT
Index and derive at least 50 percent of their revenues from the following
disruptive technology business segments: (i) Rapid Data Transfer; (ii)
Distributed Data Handling; or (iii) E-Commerce Warehousing.
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PERFORMANCE
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AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (8/27/07) Ended Ended (8/27/07)
9/30/22 9/30/22 9/30/22 to 9/30/22 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -22.72% -0.65% 2.99% 1.36% -3.21% 34.33% 22.66%
Market Price -24.02% -1.00% 2.82% 1.25% -4.90% 32.08% 20.65%
INDEX PERFORMANCE
Alerian Disruptive Technology
Real Estate Index(1) (2) N/A N/A N/A N/A N/A N/A N/A
FTSE EPRA/NAREIT
Developed Index -22.10% 0.07% 3.77% 2.18% 0.34% 44.73% 38.47%
S&P Global REIT Index -20.49% 0.17% 3.58% 2.11% 0.84% 42.20% 37.01%
MSCI World REIT Index -18.82% 2.48% 4.78% 2.61% 13.02% 59.53% 47.53%
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(See Notes to Fund Performance Overview on page 36.)
(1) On September 30, 2022, the Fund's underlying index changed from the FTSE
EPRA/NAREIT Developed Index to the Alerian Disruptive Technology Real
Estate Index. Therefore, the Fund's performance and historical returns
shown for the periods prior to this date are not necessarily indicative of
the performance that the Fund, based on its current index, would have
generated.
(2) Performance data is not available for all the periods shown in the table
for the index because performance data does not exist for some of the
entire periods.
PERFORMANCE REVIEW
The Fund generated a NAV return of -22.72% during the 12-month period covered by
this report. During the same period, the S&P Global REIT Index (the "Benchmark")
generated a return of -20.49%. The Fund invested 60.8% of its assets in
securities within the United States during the period. The country with the
second greatest exposure during the same period was Japan with a 9.5%
allocation. The U.S. investments accounted for -10.1% of the Fund's overall
return, which was by far the most negative contribution to the Fund's return of
any individual country. The Fund's investments were split between two
industries: an 84.5% allocation was given to Equity Real Estate Investment
Trusts, which contributed -16.7% to the Fund's return, while 14.8% of the Fund's
assets were in securities within the Real Estate Management & Development
industry, which accounted for -5.1% of the Fund's overall return. The total
currency effect to the Fund during the period covered by this report was -5.0%.
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Alerian and Alerian Disruptive Technology Real Estate Index are service marks of
VettaFi LLC and have been licensed for use by First Trust Advisors L.P. The Fund
is not issued, sponsored, endorsed, sold or promoted by VettaFi LLC or its
affiliates (collectively, "VettaFi"). VettaFi makes no representation or
warranty, express or implied, to the purchasers or owners of the Fund or any
member of the public regarding the advisability of investing in securities
generally or in the Fund particularly or the ability of the Index to track
general market performance.
Page 6
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FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST ALERIAN DISRUPTIVE TECHNOLOGY REAL ESTATE ETF (DTRE) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Real Estate 100.0%
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
SBA Communications Corp. 7.0%
Equinix, Inc. 6.9
Crown Castle, Inc. 6.8
American Tower Corp. 6.7
Prologis, Inc. 6.6
Digital Realty Trust, Inc. 6.2
First Industrial Realty Trust, Inc. 4.7
EastGroup Properties, Inc. 4.7
STAG Industrial, Inc. 4.7
Americold Realty Trust, Inc. 3.9
------
Total 58.2%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2012 - SEPTEMBER 30, 2022
First Trust Alerian FTSE
Disruptive Technology EPRA/NAREIT S&P Global MSCI World
Real Estate ETF Developed Index REIT Index REIT Index
----------------------------- ---------------------- --------------- ----------
9/30/12 $10,000 $10,000 $10,000 $10,000
3/31/13 11,227 11,254 11,178 10,945
9/30/13 11,002 11,095 10,669 10,417
3/31/14 11,342 11,484 11,305 10,950
9/30/14 11,647 11,839 11,705 11,468
3/31/15 13,060 13,328 13,304 12,932
9/30/15 11,993 12,262 12,186 12,041
3/31/16 13,128 13,497 13,668 13,605
9/30/16 13,786 14,206 14,248 14,149
3/31/17 13,286 13,749 13,715 13,642
9/30/17 13,879 14,423 14,103 14,115
3/31/18 13,754 14,319 13,681 13,848
9/30/18 14,432 15,088 14,505 14,563
3/31/19 15,608 16,384 15,587 16,147
9/30/19 16,335 17,216 16,692 17,528
3/31/20 11,882 12,580 11,943 13,433
9/30/20 13,374 14,203 13,591 15,471
3/31/21 16,013 17,103 16,248 17,635
9/30/21 17,385 18,581 17,882 19,652
3/31/22 18,352 19,735 19,325 21,236
9/30/22 13,433 14,473 14,220 15,953
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
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD)
First Trust Dow Jones Global Select Dividend Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the Dow Jones Global Select
Dividend Index (the "Index"). The shares of the Fund are listed and trade on the
NYSE Arca, Inc. under the ticker symbol "FGD." The Fund will normally invest at
least 90% of its net assets (including investment borrowings) in the common
stocks and depositary receipts that comprise the Select Dividend Index.
The Index is compiled and maintained by S&P Dow Jones Indices LLC (the "Index
Provider"). According to the Index Provider, the Index is an indicated annual
dividend yield weighted index of 100 stocks selected from the developed-market
portion of the Dow Jones World Index(SM). Indicated annual dividend yield is a
stock's unadjusted indicated annual dividend (not including any special
dividends) divided by its unadjusted price.
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (11/21/07) Ended Ended (11/21/07)
9/30/22 9/30/22 9/30/22 to 9/30/22 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -20.98% -0.78% 2.85% 1.93% -3.84% 32.45% 32.88%
Market Price -21.21% -0.89% 2.81% 1.91% -4.38% 31.97% 32.38%
INDEX PERFORMANCE
Dow Jones Global Select Dividend
Index -20.93% -0.49% 3.06% 2.13% -2.44% 35.20% 36.84%
Dow Jones World Developed Markets
Index(SM) -20.63% 4.97% 8.18% 5.27% 27.47% 119.56% 114.36%
MSCI World Index -19.63% 5.30% 8.11% 5.01% 29.47% 118.09% 106.78%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -20.98% during the 12-month period covered by
this report. During the same period, the MSCI World Index (the "Benchmark")
generated a return of -19.63%. During the same period, the Fund had significant
investment allocations to many countries. The countries with the largest
allocations were South Korea with 12.7%, Canada with 11.9%, the United States
with 11.2%, the United Kingdom ("U.K") with 9.2%, Spain with 9.2%, and Japan
with 7.5%. The largest allocation, South Korea, with 12.7% average weight,
caused a -3.7% contribution to the Fund's return. Investments in the UK also had
a -3.7% contribution to the Fund's return, and the allocation to these two
countries had the worst contribution to the Fund's return of any country during
the period covered by this report. No invested country had a significant
positive contribution to the Fund's return. The investments in the United States
had the most positive contribution to the Fund's return. These investments
received an allocation of 11.2% and contributed 0.2% to the Fund's overall
return. The total currency effect to the Fund over the period covered by his
report was -11.5%.
-----------------------------
Dow Jones Global Select Dividend Index ("Index") is a product of S&P Dow Jones
Indices LLC or its affiliates ("SPDJI") and has been licensed for use by First
Trust. S&P(R) is a registered trademark of Standard & Poor's Financial Services
LLC ("S&P"); Dow Jones(R) is a registered trademark of Dow Jones Trademark
Holdings LLC ("Dow Jones"); and these trademarks have been licensed for use by
SPDJI and sublicensed for certain purposes by First Trust. The Fund is not
sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their
respective affiliates, and none of such parties make any representation
regarding the advisability of investing in such product(s) nor do they have any
liability for any errors, omissions, or interruptions of the Index.
Page 8
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Financials 43.5%
Materials 10.1
Communication Services 9.3
Industrials 7.9
Consumer Discretionary 7.8
Utilities 6.4
Consumer Staples 6.0
Real Estate 5.2
Energy 3.8
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Fortescue Metals Group Ltd. 2.7%
Cia de Distribucion Integral Logista
Holdings S.A. 1.7
AP Moller - Maersk A/S, Class A 1.6
H&R Block, Inc. 1.6
ACS Actividades de Construccion y
Servicios S.A. 1.5
Rio Tinto PLC 1.5
PCCW Ltd. 1.5
Japan Tobacco, Inc. 1.4
Camping World Holdings, Inc., Class A 1.4
Mitsui OSK Lines Ltd. 1.4
------
Total 16.3%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2012 - SEPTEMBER 30, 2022
First Trust Dow Jones Global Dow Jones Global Dow Jones World Developed MSCI
Select Dividend Index Fund Select Dividend Index Markets Index(SM) World Index
---------------------------- ----------------------- ------------------------- ----------
9/30/12 $10,000 $10,000 $10,000 $10,000
3/31/13 10,518 10,513 11,120 11,042
9/30/13 11,439 11,452 12,144 12,021
3/31/14 12,577 12,608 13,313 13,146
9/30/14 12,418 12,443 13,599 13,487
3/31/15 12,054 12,090 14,118 13,939
9/30/15 10,616 10,597 12,967 12,802
3/31/16 11,291 11,345 13,657 13,459
9/30/16 12,068 12,082 14,517 14,256
3/31/17 12,739 12,819 15,744 15,446
9/30/17 13,775 13,860 17,224 16,845
3/31/18 13,902 13,956 18,009 17,534
9/30/18 14,087 14,183 19,153 18,739
3/31/19 13,342 13,433 18,598 18,250
9/30/19 13,634 13,726 19,381 19,082
3/31/20 9,867 9,960 16,513 16,353
9/30/20 11,401 11,555 21,341 21,066
3/31/21 16,316 16,622 25,823 25,189
9/30/21 16,764 17,103 27,665 27,141
3/31/22 17,389 17,809 27,998 27,742
9/30/22 13,245 13,520 21,956 21,809
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
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
First Trust Global Wind Energy ETF (the "Fund") seeks investment results that
correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the ISE Clean Edge Global Wind Energy
Index(TM) (the "Index"). The shares of the Fund are listed and trade on the NYSE
Arca, Inc. under the ticker symbol "FAN." The Fund will normally invest at least
90% of its net assets (including investment borrowings) in the common stocks and
depositary receipts that comprise the Index.
The Index is developed, maintained and sponsored by Nasdaq, Inc. (the "Index
Provider"). According to the Index Provider, the Index provides a benchmark for
investors interested in tracking public companies throughout the world that are
active in the wind energy industry. According to the Index Provider, in order to
be eligible for inclusion in the Index, a security must be issued by a company
that is actively engaged in some aspect of the wind energy industry, such as the
development or management of a wind farm, the production or distribution of
electricity generated by wind power, or involvement in the design, manufacture
or distribution of machinery or materials designed specifically for the wind
energy industry. In addition, in order to be eligible for inclusion in the Index
a security must have a market capitalization of at least $100 million, a minimum
three-month average daily dollar trading volume of $500,000, a minimum free
float of 25%, be listed on an Index-eligible global exchange and have seasoned
on an Index-eligible global exchange for at least three months.
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (6/16/08) Ended Ended (6/16/08)
9/30/22 9/30/22 9/30/22 to 9/30/22 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -26.43% 4.84% 11.06% -2.71% 26.69% 185.59% -32.49%
Market Price -26.44% 4.69% 11.11% -2.72% 25.77% 186.81% -32.59%
INDEX PERFORMANCE
ISE Clean Edge Global Wind
Energy Index(TM) -25.85% 5.70% 11.95% -1.90% 31.95% 209.13% -24.02%
Russell 3000(R) Index -17.63% 8.62% 11.39% 9.01% 51.17% 193.95% 242.99%
MSCI World Index -19.63% 5.30% 8.11% 5.48% 29.47% 118.09% 114.35%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -26.43% during the 12-month period covered by
this report. During the same period, the MSCI World Index (the "Benchmark")
generated a return of -19.63%. Investments in the Independent Power and
Renewable Electricity Producers industry constituted an allocation of 35.7% and
contributed -6.7% to the Fund's return. The investments in the Electrical
Equipment industry generated the least return in the Fund with a -11.2%
contribution, stemming from its 24.0% allocation and -42.3% return. The
Multi-Utilities industry generated a positive return for the Fund with a 0.2%
contribution, stemming from its 2.6% allocation and 4.7% return. The total
currency effect to the Fund over the period covered by this report was -9.5%.
-----------------------------
Nasdaq(R), Clean Edge(R), and ISE Clean Edge Global Wind Energy Index(TM) 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
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Utilities 67.4%
Industrials 30.1
Materials 2.3
Energy 0.2
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Northland Power, Inc. 8.1%
Orsted A/S 7.7
Vestas Wind Systems A/S 6.9
EDP Renovaveis S.A. 6.6
China Longyuan Power Group Corp.,
Ltd., Class H 5.6
Boralex, Inc., Class A 3.8
Innergex Renewable Energy, Inc. 2.7
Engie S.A. 2.3
Owens Corning 2.3
RWE AG 2.3
------
Total 48.3%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2012 - SEPTEMBER 30, 2022
First Trust Global ISE Clean Edge Global Russell 3000(R) MSCI World
Wind Energy ETF Wind Energy Index(TM) Index Index
------------------ ------------------------ --------------- ----------
9/30/12 $10,000 $10,000 $10,000 $10,000
3/31/13 11,476 11,475 11,135 11,042
9/30/13 15,662 15,754 12,159 12,021
3/31/14 18,242 18,421 13,652 13,146
9/30/14 17,569 17,778 14,318 13,486
3/31/15 16,908 17,195 15,339 13,938
9/30/15 16,274 16,576 14,247 12,801
3/31/16 18,435 18,946 15,287 13,458
9/30/16 21,224 21,847 16,378 14,255
3/31/17 21,078 21,891 18,047 15,445
9/30/17 22,543 23,430 19,440 16,844
3/31/18 22,953 23,819 20,538 17,533
9/30/18 21,883 22,864 22,857 18,738
3/31/19 23,122 24,218 22,338 18,249
9/30/19 23,543 24,797 23,524 19,081
3/31/20 22,032 23,359 20,301 16,352
9/30/20 31,885 33,866 27,053 21,065
3/31/21 41,055 43,887 32,994 25,187
9/30/21 38,823 41,690 35,684 27,138
3/31/22 36,685 39,768 36,936 27,739
9/30/22 28,559 30,913 29,395 21,809
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
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST ALERIAN U.S. NEXTGEN INFRASTRUCTURE ETF (RBLD)
First Trust Alerian U.S. NextGen Infrastructure ETF (formerly First Trust Global
Engineering and Construction ETF) (the "Fund") seeks investment results that
correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the Alerian U.S. NextGen Infrastructure
Index (the "Index"). The shares of the Fund are listed and trade on the NYSE
Arca, Inc. under the ticker symbol "RBLD." The Fund will normally invest in at
least 90% of its net assets (including investment borrowings) in the common
stocks and real estate investment trusts ("REITs") that comprise the Index.
The Index is developed, maintained and sponsored by VettaFi LLC (the "Index
Provider"). According to the Index Provider, the Index seeks to provide exposure
to U.S. infrastructure companies with securities listed on recognized U.S.
securities exchanges that build, operate and own infrastructure assets. U.S.
infrastructure companies are companies that are domiciled and incorporated in
the United States and are included in the Global Industry Classification
("GICS") sub-industries or custom segments within the S-Network US EquityWR 3000
Index. According to the Index Provider, in addition to comprising one of the
GICS sub-industries or custom segments, in order to be eligible for inclusion in
the Index a company's stock must trade on a recognized U.S. stock exchange and
meet the size, float and liquidity standards of the Index.
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (10/13/08) Ended Ended (10/13/08)
9/30/22 9/30/22 9/30/22 to 9/30/22 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -17.80% -3.22% 2.95% 4.50% -15.12% 33.79% 84.96%
Market Price -17.88% -3.25% 3.00% 4.50% -15.24% 34.37% 84.93%
INDEX PERFORMANCE
Alerian U.S. NextGen
Infrastructure Index(1) (2) -10.21% N/A N/A N/A N/A N/A N/A
MSCI World Industrials Index -22.04% 1.95% 7.38% 8.20% 10.12% 103.77% 200.50%
Russell 3000(R) Index -17.63% 8.62% 11.39% 11.67% 51.17% 193.95% 366.97%
MSCI USA Infrastructure Index(2) -2.87% 4.57% 6.47% N/A 25.03% 87.15% N/A
ISE Global Engineering and
Construction(TM) Index(1) -17.76% -2.32% 4.02% 5.91% -11.10% 48.35% 122.87%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
(1) On July 29, 2022, the Fund's underlying index changed from the ISE Global
Engineering and Construction(TM) Index to Alerian U.S. NextGen
Infrastructure Index. Therefore, the Fund's performance and historical
returns shown for the periods prior to this date are not necessarily
indicative of the performance that the Fund, based on its current index,
would have generated. Since the Fund's new underlying index had an
inception date of April 30, 2021, it was not in existence for all the
periods shown.
(2) Performance data is not available for all the periods shown in the table
for the index because performance data does not exist for some of the
entire periods.
PERFORMANCE REVIEW
The Fund generated a NAV return of -17.80% during the 12-month period covered by
this report. During the same period, the MSCI World Industrials Index (the
"Benchmark") generated a return of -22.04%. The most significant allocation in
the Fund during the period covered by this report was to securities in the
United States. Investments in this country received an average weight of 37.7%
and contributed -7.4% to the Fund's overall performance. The country with the
second greatest allocation was Japan. Japanese investments received an
allocation of 23.7% and accounted for -3.0% of the Fund's overall return. The
only country with a contribution to return greater than 0.1% were the
investments in China. Chinese securities received an allocation of 1.8% and
contributed 0.4% to the Fund's overall return. The total currency effect to the
Fund over the period covered in this report was -8.5%.
-----------------------------
Alerian and Alerian U.S. NextGen Infrastructure Index ("Index") are service
marks of VettaFi LLC and have been licensed for use by First Trust Advisors L.P.
The Fund is not issued, sponsored, endorsed, sold or promoted by VettaFi LLC or
its affiliates (collectively, "VettaFi"). VettaFi makes no representation or
warranty, express or implied, to the purchasers or owners of the Fund or any
member of the public regarding the advisability of investing in securities
generally or in the Fund particularly or the ability of the Index to track
general market performance.
Page 12
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST ALERIAN U.S. NEXTGEN INFRASTRUCTURE ETF (RBLD) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Industrials 39.2%
Utilities 32.8
Energy 8.1
Materials 7.3
Information Technology 7.2
Real Estate 5.4
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Constellation Energy Corp. 1.5%
Cheniere Energy, Inc. 1.3
PG&E Corp. 1.3
Hubbell, Inc. 1.3
Carlisle Cos., Inc. 1.2
Trane Technologies PLC 1.2
Plug Power, Inc. 1.2
Xylem, Inc. 1.1
Vulcan Materials Co. 1.1
Snowflake, Inc., Class A 1.1
------
Total 12.3%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2012 - SEPTEMBER 30, 2022
ISE Global
MSCI USA Engineering and
First Trust Alerian U.S. MSCI World Russell 3000(R) Infrastructure Construction(TM)
NextGen Infrastructure ETF Industrials Index Index Index Index
---------------------------- ---------------------- --------------- ----------------- -----------------
9/30/12 $10,000 $10,000 $10,000 $10,000 $10,000
3/31/13 11,029 11,489 11,135 10,693 11,047
9/30/13 12,504 12,818 12,159 10,468 12,634
3/31/14 13,698 13,975 13,652 11,591 13,896
9/30/14 12,761 13,865 14,318 12,456 13,003
3/31/15 12,432 14,353 15,339 12,771 12,859
9/30/15 11,843 12,899 14,247 11,922 12,285
3/31/16 12,568 14,244 15,287 13,666 13,134
9/30/16 13,312 15,211 16,378 14,233 13,937
3/31/17 14,285 16,603 18,047 14,810 15,060
9/30/17 15,761 18,504 19,440 14,969 16,685
3/31/18 15,873 19,116 20,538 14,398 16,770
9/30/18 16,025 19,867 22,857 15,596 17,065
3/31/19 14,166 19,023 22,338 16,700 15,161
9/30/19 13,517 19,792 23,524 18,664 14,520
3/31/20 10,434 15,695 20,301 15,594 11,395
9/30/20 12,502 20,577 27,053 17,183 13,646
3/31/21 16,476 25,575 32,994 19,064 18,131
9/30/21 16,273 26,140 35,684 19,269 18,033
3/31/22 16,514 25,950 36,936 21,330 18,432
9/30/22 13,379 20,377 29,395 18,715 14,835
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
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund (the
"Fund") seeks investment results that correspond generally to the price and
yield (before the Fund's fees and expenses) of an equity index called the Nasdaq
Clean Edge Smart Grid Infrastructure Index(TM) (the "Index"). The shares of the
Fund are listed and trade on The Nasdaq Stock Market LLC under the ticker symbol
"GRID." The Fund will normally invest at least 90% of its net assets (including
investment borrowings) in the common stocks and depositary receipts that
comprise the Index.
Clean Edge, Inc. and Nasdaq, Inc. serve as index providers to the Index (the
"Index Providers"). According to the Index Providers, the Index is designed to
act as a transparent and liquid benchmark for the grid and electric energy
infrastructure sector. The Index includes companies that are primarily engaged
and involved in electric grid, electric meters and devices, networks, energy
storage and management, and enabling software used by the smart grid
infrastructure sector.
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (11/16/09) Ended Ended (11/16/09)
9/30/22 9/30/22 9/30/22 to 9/30/22 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -17.70% 10.13% 11.32% 8.57% 61.99% 192.14% 188.05%
Market Price -17.88% 10.05% 11.34% 8.55% 61.43% 192.68% 187.59%
INDEX PERFORMANCE
Nasdaq Clean Edge Smart Grid
Infrastructure Index(TM) -16.86% 11.18% 12.27% 9.50% 69.89% 218.23% 221.55%
Russell 3000(R) Index -17.63% 8.62% 11.39% 11.55% 51.17% 193.95% 308.45%
S&P Composite 1500(R) Industrials
Index -13.68% 5.24% 10.70% 11.09% 29.12% 176.34% 286.94%
MSCI World Industrials Index -22.04% 1.95% 7.38% 7.40% 10.12% 103.77% 150.70%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -17.70% during the 12-month period covered by
this report. During the same period, the S&P Composite 1500(R) Industrials Index
(the "Benchmark") generated a return of -13.68%. The greatest allocation and
most negative contribution to the Fund's return were the investments in the
Electrical Equipment industry. Investments in this industry carried an average
weight in the Fund of 33.6% and caused a -5.6% contribution to the Fund's
return. The most positive contribution to the Fund's return was the 1.2%
contribution from investments in the Semiconductors & Semiconductor Equipment
industry. The total currency effect to the Fund over the period covered by this
report was -5.8%.
-----------------------------
Nasdaq(R), Clean Edge(R), and Nasdaq Clean Edge Smart Grid Infrastructure
Index(TM) 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
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
(CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Industrials 47.7%
Information Technology 28.1
Utilities 17.8
Consumer Discretionary 6.4
Materials 0.0*
------
Total 100.0%
======
* Amount is less than 0.1%.
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Eaton Corp. PLC 8.7%
Schneider Electric SE 8.5
ABB Ltd. 8.4
Enphase Energy, Inc. 8.1
National Grid PLC 7.3
Johnson Controls International PLC 4.1
Quanta Services, Inc. 4.0
Samsung SDI Co., Ltd. 3.8
Aptiv PLC 3.7
SolarEdge Technologies, Inc. 3.7
------
Total 60.3%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2012 - SEPTEMBER 30, 2022
First Trust NASDAQ(R) NASDAQ Russell S&P Composite MSCI World
Clean Edge(R) Smart Grid Clean Edge Smart Grid 3000(R) 1500(R) Industrials Industrials
Infrastructure Index Fund Infrastructure Index(TM) Index Index Index
------------------------- --------------------------- ------- ------------------- -----------
9/30/12 $10,000 $10,000 $10,000 $10,000 $10,000
3/31/13 11,152 11,199 11,135 11,692 11,489
9/30/13 11,844 11,959 12,159 13,073 12,818
3/31/14 13,641 13,831 13,652 14,829 13,975
9/30/14 12,577 12,799 14,318 15,069 13,865
3/31/15 12,762 13,033 15,339 16,064 14,353
9/30/15 11,322 11,579 14,247 14,530 12,899
3/31/16 12,476 12,845 15,287 16,410 14,244
9/30/16 14,234 14,677 16,378 17,401 15,211
3/31/17 15,277 15,823 18,047 19,583 16,603
9/30/17 18,038 18,734 19,440 21,400 18,504
3/31/18 18,292 19,017 20,538 22,391 19,116
9/30/18 17,740 18,536 22,857 23,963 19,867
3/31/19 16,323 17,111 22,338 23,019 19,023
9/30/19 18,685 19,734 23,524 24,149 19,792
3/31/20 16,234 17,267 20,301 18,527 15,695
9/30/20 23,935 25,526 27,053 24,448 20,576
3/31/21 32,793 35,177 32,994 31,980 25,574
9/30/21 35,498 38,278 35,684 32,010 26,137
3/31/22 36,162 39,231 36,936 33,777 25,947
9/30/22 29,214 31,823 29,395 27,634 20,377
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
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI)
First Trust Indxx Global Natural Resources Income ETF (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the Indxx Global Natural
Resources Income Index (the "Index"). The shares of the Fund are listed and
traded on The Nasdaq Stock Market LLC under the ticker symbol "FTRI." The Fund
will normally invest at least 90% of its net assets (including investment
borrowings) in the common stocks and depositary receipts that comprise the
Index.
The Index is owned and is developed, maintained and sponsored by Indxx, Inc.
(the "Index Provider"). According to the Index Provider, the Index is a free
float adjusted market capitalization weighted index designed to measure the
market performance of the 50 highest dividend yielding companies involved in the
upstream (i.e., generally exploration and production) segment of the natural
resources sector.
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (3/11/10) Ended Ended (3/11/10)
9/30/22 9/30/22 9/30/22 to 9/30/22 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV 3.27% 6.69% -4.16% -3.22% 38.22% -34.65% -33.72%
Market Price 2.78% 6.64% -4.13% -3.23% 37.90% -34.43% -33.80%
INDEX PERFORMANCE
Indxx Global Natural Resources
Income Index* 4.08% 7.81% N/A N/A 45.62% N/A N/A
MSCI ACWI Materials Index -18.50% 2.83% 3.29% 2.66% 14.97% 38.16% 39.08%
MSCI ACWI Index -20.66% 4.44% 7.28% 7.03% 24.27% 101.95% 134.70%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
* Effective on the close of business December 18, 2015, the Fund's underlying
index changed from the ISE Global Copper(TM) Index to the Indxx Global Natural
Resources Income Index. Therefore, the Fund's performance and total returns
shown for the period prior to December 18, 2015, are not necessarily indicative
of the performance the Fund, based on its current index, would have generated.
Since the Fund's new underlying index had an inception date of June 1, 2015, it
was not in existence for all the periods disclosed.
PERFORMANCE REVIEW
The Fund generated a NAV return of 3.27% during the 12-month period covered by
this report. During the same period, the MSCI ACWI Materials Index (the
"Benchmark") generated a return of -18.50%. The Metals & Mining industry
received a higher allocation in the Fund than any other industry. This industry
carried an average weight of 40.5% and caused a 3.1% contribution to the Fund's
overall return. The industry with the greatest contribution to the Fund's return
was the Oil, Gas, & Consumable Fuels industry. Investments in this industry
received an allocation of 19.2% and caused a 3.6% contribution to the Fund's
return. The most negative contribution to the Fund's return came from
investments in the Containers & Packaging industry. These investments received
an allocation of 5.8% and had a -2.8% contribution to the Fund's overall return.
The total currency effect to the Fund during the period covered by this report
was -4.5%.
-----------------------------
Indxx and Indxx Global Natural Resources Income Index ("Index") are trademarks
of Indxx, Inc. ("Indxx") and have been licensed for use for certain purposes by
First Trust. The Fund is not sponsored, endorsed, sold or promoted by Indxx, and
Indxx makes no representation regarding the advisability of trading in such
product. The Index is determined, composed and calculated by Indxx without
regard to First Trust or the Fund.
Page 16
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Materials 59.1%
Energy 28.2
Consumer Staples 8.5
Utilities 4.2
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
BHP Group Ltd., ADR 10.7%
Vale S.A., ADR 10.7
Rio Tinto PLC, ADR 10.7
Petroleo Brasileiro S.A., ADR 7.7
Suncor Energy, Inc. 4.4
Nutrien Ltd. 4.4
Archer-Daniels-Midland Co. 4.4
Coterra Energy, Inc. 4.1
CF Industries Holdings, Inc. 3.9
Tyson Foods, Inc., Class A 3.8
------
Total 64.8%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2012 - SEPTEMBER 30, 2022
First Trust Indxx Global MSCI ACWI MSCI ACWI
Natural Resources Income ETF Materials Index Index
---------------------------- ----------------- ------------
9/30/12 $10,000 $10,000 $10,000
3/31/13 9,127 10,015 10,955
9/30/13 7,973 10,039 11,773
3/31/14 7,916 10,531 12,771
9/30/14 7,784 10,241 13,106
3/31/15 6,103 9,787 13,464
9/30/15 4,087 7,828 12,233
3/31/16 3,821 8,571 12,879
9/30/16 4,095 9,710 13,696
3/31/17 4,376 10,777 14,816
9/30/17 4,729 12,017 16,250
3/31/18 5,039 12,480 17,004
9/30/18 5,257 12,572 17,839
3/31/19 5,187 12,102 17,459
9/30/19 5,025 11,964 18,086
3/31/20 3,759 9,527 15,495
9/30/20 4,432 13,365 19,975
3/31/21 6,236 16,825 23,956
9/30/21 6,330 16,947 25,456
3/31/22 8,340 18,656 25,700
9/30/22 6,535 13,816 20,195
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
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INDXX GLOBAL AGRICULTURE ETF (FTAG)
First Trust Indxx Global Agriculture ETF (the "Fund") seeks investment results
that correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the Indxx Global Agriculture Index (the
"Index"). The shares of the Fund are listed and traded on The Nasdaq Stock
Market LLC under the ticker symbol "FTAG." The Fund will normally invest at
least 90% of its net assets (including investment borrowings) in the common
stocks and depositary receipts that comprise the Index.
The Index is owned and is developed, maintained and sponsored by Indxx, Inc.
(the "Index Provider"). According to the Index Provider, the Index is a market
capitalization weighted index designed to measure the performance of companies
that are directly or indirectly engaged in improving agricultural yields. The
Index is composed of farmland companies and firms involved in chemicals and
fertilizers, seeds, irrigation equipment, and farm machinery.
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (3/11/10) Ended Ended (3/11/10)
9/30/22 9/30/22 9/30/22 to 9/30/22 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -8.28% 1.63% -7.90% -11.56% 8.44% -56.06% -78.60%
Market Price -8.01% 1.65% -7.96% -11.56% 8.54% -56.38% -78.62%
INDEX PERFORMANCE
Indxx Global Agriculture Index* -7.00% 2.78% N/A N/A 14.70% N/A N/A
MSCI ACWI Index -20.66% 4.44% 7.28% 7.03% 24.27% 101.95% 134.70%
MSCI ACWI Materials Index -18.50% 2.83% 3.29% 2.66% 14.97% 38.16% 39.08%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
* Effective on the close of business December 18, 2015, the Fund's underlying
index changed from the ISE Global Platinum(TM) Index to the Indxx Global
Agriculture Index. Therefore, the Fund's performance and total returns shown for
the period prior to December 18, 2015, are not necessarily indicative of the
performance the Fund, based on its current Index, would have generated. Since
the Fund's new underlying index had an inception date of June 1, 2015, it was
not in existence for all the periods disclosed.
PERFORMANCE REVIEW
The Fund generated a NAV return of -8.28% during the 12-month period covered by
this report. During the same period, the MSCI ACWI Materials Index (the
"Benchmark") generated a return of -18.50%. During the same period, the Fund
allocated 53.8% to the Chemicals industry, which contributed -2.6% to the Fund's
overall performance, the worst of any industry during the period. The industry
with the second highest average weight was the Machinery industry. This industry
received an allocation of 21.8% and contributed -2.5% to the Fund's overall
return. The industry with the greatest contribution to the Fund's return during
the period was the Automobiles industry. This allocation included only one
security, Mahindra & Mahindra Ltd., and generated a 1.0% contribution to the
Fund's return. The total currency effect to the Fund over the period covered by
this report was -7.9%.
-----------------------------
Indxx and the Indxx Global Agriculture Index ("Index") are trademarks of Indxx,
Inc. ("Indxx") and have been licensed for use for certain purposes by First
Trust. The Fund is not sponsored, endorsed, sold or promoted by Indxx and Indxx
makes no representation regarding the advisability of trading in such product.
The Index is determined, composed and calculated by Indxx without regard to
First Trust or the Fund.
Page 18
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INDXX GLOBAL AGRICULTURE ETF (FTAG) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Materials 55.1%
Industrials 26.6
Health Care 8.4
Consumer Staples 6.1
Consumer Discretionary 3.8
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Deere & Co. 9.8%
Bayer AG 8.4
Nutrien Ltd. 8.4
Corteva, Inc. 7.6
Industries Qatar QSC 4.6
BASF SE 4.4
Mahindra & Mahindra Ltd. 3.8
CF Industries Holdings, Inc. 3.8
Wilmar International Ltd. 3.3
Mosaic (The) Co. 3.3
------
Total 57.4%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2012 - SEPTEMBER 30, 2022
First Trust Indxx MSCI ACWI MSCI ACWI
Global Agriculture ETF Index Materials Index
---------------------- ------------- ------------------
9/30/12 $10,000 $10,000 $10,000
3/31/13 9,581 10,955 10,015
9/30/13 9,016 11,773 10,039
3/31/14 8,957 12,771 10,531
9/30/14 8,056 13,106 10,241
3/31/15 6,667 13,464 9,787
9/30/15 3,932 12,233 7,828
3/31/16 3,040 12,879 8,571
9/30/16 3,188 13,696 9,710
3/31/17 3,660 14,816 10,777
9/30/17 4,051 16,250 12,017
3/31/18 3,996 17,004 12,480
9/30/18 3,989 17,839 12,572
3/31/19 3,572 17,459 12,102
9/30/19 3,586 18,086 11,965
3/31/20 2,560 15,494 9,528
9/30/20 3,474 19,973 13,367
3/31/21 4,845 23,954 16,828
9/30/21 4,790 25,455 16,952
3/31/22 5,441 25,697 18,660
9/30/22 4,394 20,195 13,816
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
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST BICK INDEX FUND (BICK)
The First Trust BICK Index Fund (the "Fund") seeks investment results that
correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the ISE BICK(TM) Index (the "Index"). The
shares of the Fund are listed and trade on The Nasdaq Stock Market LLC under the
ticker symbol "BICK." The Fund will normally invest at least 90% of its net
assets (including investment borrowings) in the common stocks and depositary
receipts that comprise the Index.
The Index is developed, maintained and sponsored by Nasdaq, Inc. (the "Index
Provider"). According to the Index Provider, the Index is designed to provide a
benchmark for investors interested in tracking some of the largest and most
liquid public companies that are domiciled in Brazil, India, China (including
Hong Kong) and South Korea that are accessible for investment by U.S. investors.
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (4/12/10) Ended Ended (4/12/10)
9/30/22 9/30/22 9/30/22 to 9/30/22 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -28.39% -2.42% 1.40% -0.35% -11.55% 14.93% -4.29%
Market Price -28.20% -2.55% 1.48% -0.35% -12.10% 15.83% -4.22%
INDEX PERFORMANCE
ISE BICK(TM) Index -27.85% -1.36% 2.36% 0.58% -6.61% 26.24% 7.49%
MSCI ACWI Index -20.66% 4.44% 7.28% 6.72% 24.27% 101.95% 125.03%
MSCI Emerging Markets Index -28.11% -1.81% 1.05% 1.07% -8.71% 10.99% 14.12%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -28.39% during the 12-month period covered by
this report. During the same period, the MSCI Emerging Markets Index (the
"Benchmark") generated a return of -28.11%. The greatest weight in the Fund
during the period covered by this report went to investments in South Korea,
which received an allocation of 22.9%. Exposure to this country was also the
greatest source of negative return for the Fund, with a contribution to the
Fund's return totaling -12.6%. None of the invested countries had a positive
contribution to the Fund's return during the period covered by this report. The
total currency effect to the Fund during the period report was -3.1%.
-----------------------------
Nasdaq(R) and ISE BICK(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 20
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST BICK INDEX FUND (BICK) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Financials 22.2%
Consumer Discretionary 21.5
Information Technology 14.6
Utilities 7.9
Health Care 7.9
Energy 5.8
Industrials 5.7
Communication Services 5.3
Materials 5.1
Consumer Staples 2.9
Real Estate 1.1
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Azure Power Global Ltd. 3.6%
Dr. Reddy's Laboratories Ltd., ADR 2.3
WNS (Holdings) Ltd., ADR 2.3
State Bank of India, GDR 2.3
ICICI Bank Ltd., ADR 2.2
HDFC Bank Ltd., ADR 2.2
Wipro Ltd., ADR 2.2
Infosys Ltd., ADR 2.2
MakeMyTrip Ltd. 2.2
ReNew Energy Global PLC, Class A 2.1
------
Total 23.6%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2012 - SEPTEMBER 30, 2022
First Trust BICK ISE BICK(TM) MSCI ACWI MSCI Emerging
Index Fund Index Index Markets Index
---------------- ------------ ------------ -------------
9/30/12 $10,000 $10,000 $10,000 $10,000
3/31/13 10,182 10,176 10,955 10,364
9/30/13 10,069 10,159 11,773 10,098
3/31/14 10,576 10,719 12,771 10,238
9/30/14 10,867 11,077 13,106 10,532
3/31/15 10,203 10,476 13,464 10,282
9/30/15 8,243 8,412 12,233 8,500
3/31/16 8,865 9,128 12,879 9,045
9/30/16 10,220 10,519 13,696 9,927
3/31/17 11,087 11,466 14,816 10,602
9/30/17 12,994 13,518 16,250 12,156
3/31/18 13,944 14,482 17,004 13,227
9/30/18 12,109 12,760 17,839 12,058
3/31/19 12,592 13,342 17,459 12,264
9/30/19 11,895 12,632 18,085 11,817
3/31/20 9,581 10,280 15,494 10,098
9/30/20 13,568 14,561 19,975 13,062
3/31/21 17,484 18,907 23,956 15,992
9/30/21 16,050 17,497 25,455 15,440
3/31/22 14,809 16,244 25,699 14,174
9/30/22 11,493 12,624 20,195 11,099
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
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INDXX NEXTG ETF (NXTG)
The First Trust Indxx NextG ETF (the "Fund") seeks investment results that
correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the Indxx 5G & NextG Thematic Index(SM) (the
"Index"). The shares of the Fund are listed and trade on The Nasdaq Stock Market
LLC under the ticker symbol "NXTG." The Fund will normally invest at least 90%
of its net assets (including investment borrowings) in the common stocks and
depositary receipts that comprise the Index.
The Index is owned and is developed, maintained and sponsored by Indxx, Inc.
(the "Index Provider"). According to the Index Provider, the Index is designed
to track the performance of companies that have devoted, or have committed to
devote, material resources to the research, development and application of fifth
generation (5G) and next generation digital cellular technologies as they
emerge.
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (2/17/11) Ended Ended (2/17/11)
9/30/22 9/30/22 9/30/22 to 9/30/22 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -24.71% 3.59% 10.67% 6.82% 19.31% 175.72% 115.22%
Market Price -24.84% 3.55% 10.65% 6.80% 19.08% 175.11% 114.76%
INDEX PERFORMANCE
Indxx 5G & NextG Thematic
Index(SM) (1) (2) -24.04% N/A N/A N/A N/A N/A N/A
MSCI ACWI Information
Technology Index -26.63% 12.57% 14.62% 13.00% 80.75% 291.49% 313.63%
MSCI ACWI Index -20.66% 4.44% 7.28% 6.20% 24.27% 101.95% 101.02%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
(1) On May 30, 2019, the Fund's underlying index changed from the Nasdaq CTA
Smartphone Index(SM) to the Indxx 5G & NextG Thematic Index(SM).
Therefore, the Fund's performance and historical returns shown for the
periods prior to this date are not necessarily indicative of the
performance that the Fund, based on its current index, would have
generated.
(2) Performance data is not available for all the periods shown in the table
for the index because performance data does not exist for some of the
entire periods.
PERFORMANCE REVIEW
The Fund generated a NAV return of -24.71% during the 12-month period covered by
this report. During the same period, the MSCI ACWI Information Technology Index
(the "Benchmark") generated a return of -26.63%. The industry with the greatest
allocation in the Fund during the period was the Semiconductors & Semiconductor
Equipment industry. This industry received an average weight of 23.2% and
contributed -6.9% to the Fund's overall return. This contribution was the worst
of any industry during the period. There was no industry in the Fund that had a
positive contribution to the Fund's return during the period. The IT Services
industry caused a -4.4% return, the second worst contribution for the period.
Even the Entertainment industry, for which Warner Brothers was the lone
representative in the Fund, had a slightly negative contribution to the Fund's
return of -0.1% during the period. The total currency effect to the Fund over
the period covered by this report was -7.0%.
-----------------------------
Indxx and Indxx 5G & NextG Thematic Index(SM) ("Index") are trademarks of Indxx,
Inc. ("Indxx") and have been licensed for use for certain purposes by First
Trust. The Fund is not sponsored, endorsed, sold or promoted by Indxx and Indxx
makes no representation regarding the advisability of trading in such product.
The Index is determined, composed and calculated by Indxx without regard to
First Trust or the Fund.
Page 22
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INDXX NEXTG ETF (NXTG) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 61.2%
Communication Services 29.1
Real Estate 6.3
Consumer Discretionary 2.1
Industrials 1.3
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Arista Networks, Inc. 1.8%
Keysight Technologies, Inc. 1.7
Delta Electronics, Inc. 1.5
Apple, Inc. 1.5
Amdocs Ltd. 1.5
Nippon Telegraph & Telephone Corp. 1.4
Microchip Technology, Inc. 1.4
SoftBank Corp. 1.4
Cisco Systems, Inc. 1.4
Infosys Ltd., ADR 1.4
------
Total 15.0%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2012 - SEPTEMBER 30, 2022
First Trust MSCI ACWI Information MSCI ACWI
Indxx NextG ETF Technology Index Index
-------------------- --------------------- -------------
9/30/12 $10,000 $10,000 $10,000
3/31/13 11,558 10,197 10,955
9/30/13 14,061 11,126 11,773
3/31/14 15,525 12,640 12,771
9/30/14 16,334 13,725 13,106
3/31/15 17,835 14,656 13,464
9/30/15 15,623 13,561 12,233
3/31/16 16,781 14,940 12,879
9/30/16 18,686 16,663 13,696
3/31/17 21,106 18,664 14,816
9/30/17 23,113 21,660 16,250
3/31/18 24,255 24,123 17,004
9/30/18 23,159 26,608 17,839
3/31/19 22,826 26,201 17,459
9/30/19 23,570 28,289 18,086
3/31/20 21,939 27,958 15,494
9/30/20 28,040 40,958 19,973
3/31/21 34,643 48,007 23,954
9/30/21 36,624 53,364 25,455
3/31/22 36,880 53,908 25,699
9/30/22 27,572 39,149 20,195
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 23
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST S-NETWORK FUTURE VEHICLES & TECHNOLOGY ETF (CARZ)
The First Trust S-Network Future Vehicles & Technology ETF (the "Fund"),
formerly First Trust NASDAQ Global Auto Index Fund, seeks investment results
that correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the S-Network Electric & Future Vehicle
Ecosystem Index (the "Index"). The shares of the Fund are listed and trade on
The Nasdaq Stock Market LLC under the ticker symbol "CARZ." The Fund will
normally invest at least 90% of its net assets (including investment borrowings)
in the common stocks and depositary receipts that comprise the Index.
The Index is owned and is developed, maintained and sponsored by S-Network
Global Indexes, Inc. (the "Index Provider"). According to the Index Provider, to
be eligible for inclusion in the Index a company must be listed on a major
recognized stock exchange and engaged in one of the following sectors: (a)
electric and autonomous vehicle manufacturing; (b) enabling technologies; or (c)
enabling materials.
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (5/9/11) Ended Ended (5/9/11)
9/30/22 9/30/22 9/30/22 to 9/30/22 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -28.66% 2.17% 7.12% 4.48% 11.35% 98.99% 64.81%
Market Price -28.75% 2.18% 7.19% 4.51% 11.38% 100.31% 65.22%
INDEX PERFORMANCE
S-Network Electric & Future
Vehicle Ecosystem Index(1) (2) -30.06% N/A N/A N/A N/A N/A N/A
MSCI World Index -19.63% 5.30% 8.11% 7.09% 29.47% 118.09% 118.30%
NASDAQ Global Auto Index(SM) (1) -25.71% 3.83% 8.44% 5.78% 20.65% 124.77% 89.67%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
(1) On January 26, 2022, the Fund's underlying index changed from the Nasdaq
Global Auto Index(SM) to the S-Network Electric & Future Vehicle Ecosystem
Index. Therefore, the Fund's performance and historical returns shown for
the periods prior to this date are not necessarily indicative of the
performance that the Fund, based on its current index, would have
generated.
(2) Performance data is not available for all the periods shown in the table
for the index because performance data does not exist for some of the
entire periods.
PERFORMANCE REVIEW
The Fund generated a NAV return of -28.66% during the 12-month period covered by
this report. During the same period, the MSCI World Index (the "Benchmark")
generated a return of -19.63%. During the same period, the Fund allocated 47.1%
of the Fund's assets to the Automobiles industry, which caused a -5.6%
contribution to the Fund's return. The Fund also allocated 26.0% to the
Semiconductors & Semiconductor Equipment industry, and investments in this
industry contributed -13.2% to the Fund's overall return. These two industries
carried the most weight, by far, of any industry in the Fund and had the most
significantly negative contribution to the Fund's overall return for the period
covered by this report. No industry had a positive contribution to the Fund's
during the period. The total currency effect to the Fund over the period covered
in this report was -5.2%.
-----------------------------
S-Network and S-Network Electric & Future Vehicle Ecosystem Index ("Index") are
service marks of S-Network Global Indexes, Inc. and have been licensed for use
by First Trust Advisors L.P. The Fund is not issued, sponsored, endorsed, sold
or promoted by S-Network Global Indexes, Inc. or its affiliates (collectively,
"S-Network"). S-Network makes no representation or warranty, express or implied,
to the purchasers or owners of the Fund or any member of the public regarding
the advisability of investing in securities generally or in the Fund
particularly or the ability of the Index to track general market performance.
Page 24
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST S-NETWORK FUTURE VEHICLES & TECHNOLOGY ETF (CARZ) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 53.0%
Consumer Discretionary 27.3
Industrials 7.4
Materials 7.4
Communication Services 4.9
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Tesla, Inc. 5.6%
Apple, Inc. 4.9
Microsoft Corp. 4.5
Taiwan Semiconductor Manufacturing
Co., Ltd., ADR 4.4
QUALCOMM, Inc. 4.3
Samsung Electronics Co., Ltd. 4.2
Alphabet, Inc., Class A 4.1
NVIDIA Corp. 3.9
Intel Corp. 3.5
Texas Instruments, Inc. 3.2
------
Total 42.6%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2012 - SEPTEMBER 30, 2022
First Trust S-Network Future MSCI World Nasdaq Global
Vehicles & Technology ETF Index Auto Index(SM)
---------------------------- ---------- --------------------
9/30/12 $10,000 $10,000 $10,000
3/31/13 12,328 11,042 12,326
9/30/13 15,944 12,021 16,093
3/31/14 16,413 13,146 16,635
9/30/14 15,799 13,486 16,063
3/31/15 16,944 13,938 17,301
9/30/15 14,158 12,801 14,465
3/31/16 14,277 13,458 14,714
9/30/16 14,475 14,255 14,870
3/31/17 15,804 15,445 16,412
9/30/17 17,871 16,844 18,626
3/31/18 18,352 17,533 19,088
9/30/18 16,519 18,738 17,366
3/31/19 15,077 18,249 15,909
9/30/19 15,035 19,083 15,949
3/31/20 11,343 16,355 12,125
9/30/20 18,542 21,069 19,890
3/31/21 27,328 25,193 29,469
9/30/21 27,893 27,143 30,253
3/31/22 28,160 27,743 27,748
9/30/22 19,898 21,809 22,477
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 25
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CLOUD COMPUTING ETF (SKYY)
The First Trust Cloud Computing ETF (the "Fund") seeks investment results that
correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the ISE CTA Cloud Computing Index(TM) (the
"Index"). The shares of the Fund are listed and trade on The Nasdaq Stock Market
LLC under the ticker symbol "SKYY." The Fund will normally invest at least 90%
of its net assets (including investment borrowings) in the common stocks and
depositary receipts that comprise the Index.
The Index is developed, maintained and sponsored by Nasdaq, Inc. (the "Index
Provider"). According to the Index Provider, the Index is designed to track the
performance of companies involved in the cloud computing industry. To be
eligible for inclusion in the Index, a security must be issued by a "cloud
computing" company as classified by the Consumer Technology Association ("CTA").
A cloud computing company is a company engaged in one or more of the following
activities: Infrastructure-as-a-Service, Platform-as-a-Service or
Software-as-a-Service. According to the Index Provider, in order to be eligible
for inclusion in the Index, a security's issuer must not be identified by the
U.S. Securities and Exchange Commission as having used to audit its financial
statements an accounting firm that has been identified by the Public Company
Accounting Oversight Board ("PCAOB") under the Holding Foreign Companies
Accountable Act ("HFCAA").
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (7/5/11) Ended Ended (7/5/11)
9/30/22 9/30/22 9/30/22 to 9/30/22 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -42.32% 8.14% 12.18% 10.63% 47.89% 215.64% 211.35%
Market Price -42.30% 8.16% 12.15% 10.64% 48.01% 214.79% 211.45%
INDEX PERFORMANCE
ISE CTA Cloud Computing Index(TM) (1) -42.02% 8.83% 12.80% 11.25% 52.66% 233.40% 231.24%
S&P 500(R) Index -15.47% 9.24% 11.70% 11.35% 55.55% 202.44% 234.75%
S&P Composite 1500(R) Information
Technology Index -20.06% 16.27% 16.86% 16.48% 112.51% 375.06% 455.54%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
(1) On June 24, 2019, the Fund's underlying index changed its methodology and
changed its name from "ISE Cloud Computing(TM) Index" to "ISE CTA Cloud
Computing Index(TM)."
PERFORMANCE REVIEW
The Fund generated a NAV return of -42.32% during the 12-month period covered by
this report. During the same period, the S&P 500(R) Index (the "Benchmark")
generated a return of -15.47%. The Fund allocated the greatest weight to the
Information Technology sector. Investments in this sector received an allocation
of 85.8%. This sector created the largest drag on the Fund's return at -36.9%
for the period. No sector generated a positive contribution to the Fund's return
during the period.
-----------------------------
Nasdaq(R) and ISE CTA Cloud Computing Index(TM) 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 26
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CLOUD COMPUTING ETF (SKYY) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 88.4%
Communication Services 7.4
Consumer Discretionary 3.6
Health Care 0.6
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Pure Storage, Inc., Class A 3.9%
Arista Networks, Inc. 3.9
International Business Machines Corp. 3.8
Rackspace Technology, Inc. 3.7
Amazon.com, Inc. 3.7
Microsoft Corp. 3.7
Alphabet, Inc., Class A 3.6
DigitalOcean Holdings, Inc. 3.5
Oracle Corp. 3.4
Lumen Technologies, Inc. 2.5
------
Total 35.7%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
SEPTEMBER 30, 2012 - SEPTEMBER 30, 2022
First Trust Cloud ISE CTA Cloud S&P 500(R) S&P Composite 1500(R)
Computing ETF Computing Index(TM) Index Information Technology Index
--------------------- ----------------------- ---------- ----------------------------
9/30/12 $10,000 $10,000 $10,000 $10,000
3/31/13 10,676 10,711 11,019 9,989
9/30/13 12,382 12,458 11,934 10,875
3/31/14 13,574 13,703 13,427 12,531
9/30/14 13,768 13,944 14,289 13,812
3/31/15 14,751 14,984 15,136 14,753
9/30/15 14,186 14,449 14,201 14,150
3/31/16 14,992 15,348 15,407 15,798
9/30/16 17,349 17,814 16,393 17,379
3/31/17 19,658 20,062 18,052 19,816
9/30/17 21,341 21,845 19,444 22,356
3/31/18 24,704 25,366 20,580 25,135
9/30/18 28,983 29,863 22,928 29,152
3/31/19 29,681 30,696 22,534 28,884
9/30/18 29,147 30,272 23,904 31,596
3/31/20 28,235 29,397 20,961 31,492
9/30/20 40,673 42,482 27,524 45,789
3/31/21 49,658 52,032 32,773 52,868
9/30/21 54,732 57,511 35,783 59,416
3/31/22 47,321 49,891 37,902 63,350
9/30/22 31,564 33,340 30,244 47,506
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 27
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI)
First Trust International Equity Opportunities ETF (the "Fund") seeks investment
results that correspond generally to the price and yield (before the Fund's fees
and expenses) of an index called the IPOX(R) International Index (the "Index").
The shares of the Fund are listed and trade on The Nasdaq Stock Market LLC under
the ticker symbol "FPXI." The Fund will normally invest at least 90% of its net
assets (including investment borrowings) in the common stocks and depositary
receipts that comprise the Index.
The Index is owned and is developed, maintained and sponsored by IPOX(R)
Schuster LLC (the "Index Provider"). According to the Index Provider, the Index
is a market-cap weighted portfolio measuring the performance of the top 50
companies domiciled outside the United States ranked quarterly by market
capitalization in the IPOX(R) Global Composite Index (the "Base Index") and
represents, on average, 25% of the total market capitalization of the Base
Index, a fully market capitalization-weighted index constructed and managed to
provide a broad and objective view of global aftermarket performance of initial
public offerings and spin-offs in all world countries (both developed and
emerging market countries).
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
1 Year 5 Years Inception 5 Years Inception
Ended Ended (11/4/14) Ended (11/4/14)
9/30/22 9/30/22 to 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -43.78% 1.55% 3.28% 7.99% 29.06%
Market Price -43.68% 1.43% 3.27% 7.35% 28.95%
INDEX PERFORMANCE
IPOX(R) International Index -43.12% 2.52% 4.18% 13.25% 38.20%
MSCI ACWI ex USA Index -25.17% -0.81% 1.48% -4.00% 12.29%
MSCI World ex USA Index -23.91% -0.39% 1.78% -1.96% 14.92%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -43.78% during the 12-month period covered by
this report. During the same period, the MSCI World ex USA Index (the
"Benchmark") generated a return of -23.91%. During the same period, the Consumer
Discretionary sector received the greatest allocation and created the greatest
drag on the Fund's return. With an average weight of 20.4%, this sector returned
-47.8% and contributed -10.2% to the Fund's total return during the period. The
greatest contribution to the Fund's return came from investments in the Energy
sector. This sector received an allocation of 9.0%, returned 10.3%, and
contributed 0.9% to the Fund's total return for the period. The Fund's currency
exposure caused -7.0% of underperformance during the period covered by this
report.
-----------------------------
IPOX(R) and IPOX(R) International Index ("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 28
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Consumer Discretionary 21.5%
Financials 16.1
Utilities 11.4
Communication Services 10.1
Information Technology 9.1
Health Care 8.5
Industrials 8.3
Consumer Staples 6.6
Energy 6.2
Materials 2.2
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Intact Financial Corp. 8.2%
SoftBank Corp. 7.0
Pinduoduo, Inc., ADR 5.5
Saudi Arabian Oil Co. 5.1
Gulf Energy Development PCL 4.7
Prosus N.V. 4.6
Corp ACCIONA Energias Renovables S.A. 4.5
TDK Corp. 4.4
Astellas Pharma, Inc. 3.8
Asset World Corp. PCL 3.4
------
Total 51.2%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
NOVEMBER 4, 2014 - SEPTEMBER 30, 2022
First Trust International IPOX(R) International MSCI ACWI MSCI World
Equity Opportunities ETF Index ex USA Index ex USA Index
------------------------- --------------------- ------------ ------------
11/4/14 $10,000 $10,000 $10,000 $10,000
3/31/15 9,798 9,813 10,137 10,252
9/30/15 8,526 8,522 8,950 9,212
3/31/16 8,864 8,954 9,206 9,386
9/30/16 9,432 9,523 9,779 9,872
3/31/17 9,913 10,072 10,415 10,506
9/30/17 11,952 12,204 11,696 11,722
3/31/18 12,949 13,217 12,118 11,951
9/30/18 12,352 12,713 11,903 12,036
3/31/19 12,308 12,716 11,625 11,594
9/30/19 12,920 13,403 11,756 11,922
3/31/20 13,086 13,684 9,815 9,866
9/30/20 20,185 21,054 12,109 11,940
3/31/21 23,365 24,630 14,664 14,391
9/30/21 22,956 24,297 15,005 15,104
3/31/22 17,567 18,788 14,447 14,829
9/30/22 12,906 13,820 11,230 11,492
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 29
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ CYBERSECURITY ETF (CIBR)
The First Trust Nasdaq Cybersecurity ETF (the "Fund") seeks investment results
that correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the Nasdaq CTA Cybersecurity Index(TM) (the
"Index"). The shares of the Fund are listed and trade on The Nasdaq Stock Market
LLC under the ticker symbol "CIBR." The Fund will normally invest at least 90%
of its net assets (including investment borrowings) in the common stocks and
depositary receipts that comprise the Index.
The Index is owned by Nasdaq, Inc. (the "Index Provider"). The Index Provider
and the Consumer Technology Association ("CTA") have jointly developed the
eligibility and selection criteria and rules for the Index. According to the
Index Provider and CTA, the Index includes securities of companies classified as
"cybersecurity" companies by the CTA. Effective September 19, 2022, according to
the Index Provider, in order to be eligible for inclusion in the Index, a
company must have a minimum market capitalization of $500 million. Additionally,
effective September 19, 2022, according to the Index Provider, the weighting
methodology described in the Fund's prospectus and summary prospectus will
change to be based on free float market capitalization instead of liquidity, and
a minimum security weight of 0.25% will be implemented. The Index will cap the
weighting of the securities with the five largest free float market
capitalizations at 6% each. The excess weight of any capped security will be
distributed proportionally across the securities of the remaining constituent
companies. The securities of the remaining companies will be capped at 3%. Any
security of those remaining constituent companies with a weight in excess of 3%
will have that excess weight redistributed proportionally across the securities
of any remaining companies. No security may be weighted less than 0.25%.
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
1 Year 5 Years Inception 5 Years Inception
Ended Ended (7/6/15) Ended (7/6/15)
9/30/22 9/30/22 to 9/30/22 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -20.53% 12.69% 10.17% 81.69% 101.54%
Market Price -20.55% 12.69% 10.16% 81.76% 101.43%
INDEX PERFORMANCE
Nasdaq CTA Cybersecurity Index(TM) -19.96% 13.49% 10.97% 88.29% 112.34%
S&P 500(R) Index -15.47% 9.24% 9.95% 55.55% 98.65%
S&P Composite 1500(R) Information Technology Index -20.06% 16.27% 17.47% 112.51% 220.56%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -20.53% during the 12-month period covered by
this report. During the same period, the S&P Composite 1500(R) Information
Technology Index (the "Benchmark") generated a return of -20.06%. The Software
industry carried more weight than any other industry with a 56.3% allocation in
the Fund and contributed -10.1% to the Fund's return, which was also the
greatest drag on the Fund's performance during the period. The greatest
contribution to the Fund's performance came from investments in the Aerospace &
Defense industry, which received a 2.5% weight and contributed 0.6% to the
Fund's return. The Fund's currency exposure caused -1.2% of underperformance
during the period covered by this report.
-----------------------------
Nasdaq(R) and Nasdaq CTA Cybersecurity Index(TM) 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 30
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ CYBERSECURITY ETF (CIBR) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 87.5%
Industrials 12.5
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Infosys Ltd., ADR 6.0%
Crowdstrike Holdings, Inc., Class A 6.0
Cisco Systems, Inc. 5.9
Broadcom, Inc. 5.9
Palo Alto Networks, Inc. 5.9
CyberArk Software Ltd. 3.5
Zscaler, Inc. 3.4
Fortinet, Inc. 3.4
Science Applications International Corp. 3.2
Booz Allen Hamilton Holding Corp. 3.2
------
Total 46.4%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
JULY 6, 2015 - SEPTEMBER 30, 2022
First Trust Nasdaq Nasdaq CTA S&P 500(R) S&P Composite 1500(R)
Cybersecurity ETF Cybersecurity Index(TM) Index Information Technology Index
--------------------- ----------------------- ---------- ----------------------------
7/6/15 $10,000 $10,000 $10,000 $10,000
9/30/15 8,575 8,585 9,328 9,547
3/31/16 8,595 8,645 10,120 10,659
9/30/16 10,018 10,113 10,768 11,726
3/31/17 10,993 11,137 11,858 13,370
9/30/17 11,093 11,276 12,772 15,084
3/31/18 12,713 12,943 13,518 16,959
9/30/18 14,475 14,808 15,060 19,669
3/31/19 14,271 14,642 14,801 19,488
9/30/19 14,074 14,493 15,701 21,318
3/31/20 13,318 13,794 13,767 21,250
9/30/20 18,050 18,758 18,077 30,898
3/31/21 21,665 22,591 21,525 35,674
9/30/21 25,359 26,529 23,501 40,098
3/31/22 27,647 29,091 24,893 42,751
9/30/22 20,154 21,234 19,865 32,056
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 31
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE)
The First Trust IPOX(R) Europe Equity Opportunities ETF (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the IPOX(R)-100 Europe Index
(the "Index"). The shares of the Fund are listed and trade on The Nasdaq Stock
Market LLC under the ticker symbol "FPXE." The Fund will normally invest at
least 90% of its net assets (including investment borrowings) in the common
stocks and depositary receipts that comprise the Index. The Index is owned,
developed, maintained and sponsored by IPOX(R) Schuster LLC. (the "Index
Provider"). According to the Index Provider, the Index seeks to measure the
performance of the equity securities of the 100 largest and typically most
liquid initial public offerings ("IPOs") (including spin-offs and equity
carve-outs) of companies that are economically tied to Europe.
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
Inception Inception
1 Year Ended (10/4/18) (10/4/18)
9/30/22 to 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -42.95% -2.04% -7.88%
Market Price -43.35% -2.20% -8.48%
INDEX PERFORMANCE
IPOX(R)-100 Europe Index -42.02% -0.71% -2.78%
MSCI Europe Index -24.80% -1.07% -4.20%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -42.95% during the 12-month period covered by
this report. During the same period, the MSCI Europe Index (the "Benchmark")
generated a return of -24.80%. During the same period, the Fund allocated 19.2%
to the Health Care Sector, which was more weight than given to any other sector.
Investments in the Health Care sector returned -43.8% during the period,
contributing -8.4% to the Fund's return. Investments in the Information
Technology sector caused the greatest drag on the portfolio. This sector
received a 16.5% allocation, returned -55.1% during the period and contributed
-10.0% to the Fund's total return. No sector contributed positively to the
Fund's return during the period. The Fund's currency exposure caused -11.0%
performance during the period covered by this report.
-----------------------------
IPOX(R) and IPOX(R)-100 Europe Index ("Index") are registered international
trademarks 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.
IPOX(R) is an international trademark of IPOX Schuster LLC. Index of Initial
Public Offerings (IPOX) and IPOX Derivatives Patent No. US 7,698,197.
Page 32
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Energy 16.6%
Health Care 14.6
Industrials 13.3
Consumer Discretionary 12.7
Financials 11.8
Utilities 10.5
Consumer Staples 6.4
Information Technology 5.8
Communication Services 5.0
Materials 2.9
Real Estate 0.4
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Prosus N.V. 8.2%
BP PLC 6.5
Corp ACCIONA Energias
Renovables S.A. 5.1
Haleon PLC 4.5
Swedish Orphan Biovitrum AB 3.7
NatWest Group PLC 3.1
SolarEdge Technologies, Inc. 2.7
Arch Capital Group Ltd. 2.6
BioNTech SE, ADR 2.6
Argenx SE, ADR 2.5
------
Total 41.5%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
OCTOBER 4, 2018 - SEPTEMBER 30, 2022
First Trust IPOX(R)
Europe Equity IPOX(R)-100 MSCI Europe
Opportunities ETF Europe Index Index
--------------------- ------------ ----------
10/4/18 $10,000 $10,000 $10,000
3/31/19 9,715 9,769 9,836
9/30/19 10,132 10,255 10,091
3/31/20 9,587 9,800 8,311
9/30/20 13,003 13,352 10,011
3/31/21 14,757 15,217 12,046
9/30/21 16,147 16,766 12,739
3/31/22 13,283 13,986 12,469
9/30/22 9,212 9,722 9,580
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 33
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF (FDNI)
The First Trust Dow Jones International Internet ETF (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the Dow Jones International
Internet Index (the "Index"). The shares of the Fund are listed and trade on The
Nasdaq Stock Market LLC under the ticker symbol "FDNI." The Fund will normally
invest at least 90% of its net assets (including investment borrowings) in the
common stocks and depositary receipts that comprise the Index. The Index is
developed, maintained and sponsored by S&P Dow Jones Indices LLC (the "Index
Provider"). According to the Index Provider, the Index is designed to measure
the performance of securities of non-US issuers whose primary business focus is
Internet-related.
---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
Inception Inception
1 Year Ended (11/5/18) (11/5/18)
9/30/22 to 9/30/22 to 9/30/22
FUND PERFORMANCE
NAV -51.23% 0.65% 2.58%
Market Price -50.69% 0.89% 3.53%
INDEX PERFORMANCE
Dow Jones International Internet Index -50.46% 1.66% 6.65%
MSCI ACWI ex-USA Information
Technology Index -39.27% 6.75% 29.02%
MSCI ACWI ex-USA Index -25.17% 0.27% 1.07%
---------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 36.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -51.23% during the 12-month period covered by
this report. During the same period, the MSCI ACWI ex-USA Information Technology
Index (the "Benchmark") generated a return of -39.27%. During the same period,
the Fund was most heavily weighted towards the Consumer Discretionary sector.
This sector received an allocation of 42.0% and contributed -15.1% to the Fund's
overall return. The Communication Services sector contributed -19.9% to the
Fund's return, the most negative of any other sector in the Fund during the same
period. No sector contributed positively to the Fund's total return. The Fund's
currency exposure caused -4.9% of underperformance during the period covered by
this report.
-----------------------------
Dow Jones International Internet Index ("Index") is a product of S&P Dow Jones
Indices LLC or its affiliates ("SPDJI") and has been licensed for use by First
Trust. S&P(R) is a registered trademark 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 34
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF (FDNI) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Consumer Discretionary 49.2%
Communication Services 33.3
Information Technology 15.5
Health Care 1.5
Financials 0.5
------
Total 100.0%
======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Meituan, Class B 10.8%
Alibaba Group Holding Ltd., ADR 10.1
Tencent Holdings Ltd. 9.8
Prosus N.V. 7.9
JD.com, Inc., ADR 6.6
Adyen N.V. 4.9
Pinduoduo, Inc., ADR 4.3
Baidu, Inc., ADR 4.2
Shopify, Inc., Class A 4.0
Atlassian Corp. PLC, Class A 3.9
------
Total 66.5%
======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
NOVEMBER 5, 2018 - SEPTEMBER 30, 2022
MSCI All Country
First Trust Dow Jones World ex-USA MSCI All
Dow Jones International International Information Country World
Internet ETF Internet Index Technology Index ex-USA Index
----------------------- -------------- ---------------- -------------
11/5/18 $10,000 $10,000 $10,000 $10,000
3/31/19 11,275 11,318 10,863 10,463
9/30/19 10,907 10,977 11,546 10,581
3/31/20 11,865 12,008 11,000 8,834
9/30/20 20,535 20,785 15,539 10,899
3/31/21 23,574 24,042 20,050 13,199
9/30/21 21,033 21,527 21,243 13,505
3/31/22 13,770 14,322 18,976 13,003
9/30/22 10,258 10,665 12,902 10,107
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 35
--------------------------------------------------------------------------------
NOTES TO FUND PERFORMANCE OVERVIEW (UNAUDITED)
--------------------------------------------------------------------------------
Total returns for the periods since inception are calculated from the inception
date of each Fund. "Average Annual Total Returns" represent the average annual
change in value of an investment over the periods indicated. "Cumulative Total
Returns" represent the total change in value of an investment over the periods
indicated. For certain Funds, the total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the Advisor.
Each Fund's per share net asset value ("NAV") is the value of one share of the
Fund and is computed by dividing the value of all assets of the Fund (including
accrued interest and dividends), less all liabilities (including accrued
expenses and dividends declared but unpaid), by the total number of outstanding
shares. The price used to calculate market return ("Market Price") is determined
by using the midpoint of the national best bid and offer price ("NBBO") as of
the time that the Fund's NAV is calculated. Under 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 36
FIRST TRUST EXCHANGE-TRADED FUND II
UNDERSTANDING YOUR FUND EXPENSES
SEPTEMBER 30, 2022 (UNAUDITED)
As a shareholder of First Trust STOXX(R) European Select Dividend Index Fund,
First Trust Alerian Disruptive Technology Real Estate ETF, First Trust Dow Jones
Global Select Dividend Index Fund, First Trust Global Wind Energy ETF, First
Trust Alerian U.S. NextGen Infrastructure ETF, First Trust NASDAQ(R) Clean
Edge(R) Smart Grid Infrastructure Index Fund, First Trust Indxx Global Natural
Resources Income ETF, First Trust Indxx Global Agriculture ETF, First Trust BICK
Index Fund, First Trust Indxx NextG ETF, First Trust S-Network Future Vehicles &
Technology ETF, First Trust Cloud Computing ETF, First Trust International
Equity Opportunities ETF, First Trust Nasdaq Cybersecurity ETF, First Trust
IPOX(R) Europe Equity Opportunities ETF or First Trust Dow Jones International
Internet ETF (each a "Fund" and collectively, the "Funds"), you incur two types
of costs: (1) transaction costs; and (2) ongoing costs, including management
fees, distribution and/or service (12b-1) fees, if any, and other Fund expenses.
This Example is intended to help you understand your ongoing costs (in U.S.
dollars) of investing in the Funds and to compare these costs with the ongoing
costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held through the six-month period ended September 30, 2022.
ACTUAL EXPENSES
The first line in the following table provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During the Six-Month
Period" to estimate the expenses you paid on your account during this six-month
period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the following table provides information about hypothetical
account values and hypothetical expenses based on each Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
each Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Funds and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as brokerage
commissions. Therefore, the second line in the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO EXPENSES PAID
BEGINNING ENDING BASED ON THE DURING THE
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH SIX-MONTH
APRIL 1, 2022 SEPTEMBER 30, 2022 PERIOD (a) PERIOD (b)
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST STOXX(R) EUROPEAN SELECT DIVIDEND INDEX FUND (FDD)
Actual $1,000.00 $ 743.30 0.59% $2.58
Hypothetical (5% return before expenses) $1,000.00 $1,022.11 0.59% $2.99
FIRST TRUST ALERIAN DISRUPTIVE TECHNOLOGY REAL ESTATE ETF (DTRE)
Actual $1,000.00 $ 732.10 0.60% $2.61
Hypothetical (5% return before expenses) $1,000.00 $1,022.06 0.60% $3.04
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD)
Actual $1,000.00 $ 761.80 0.56% $2.47
Hypothetical (5% return before expenses) $1,000.00 $1,022.26 0.56% $2.84
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
Actual $1,000.00 $ 778.60 0.60% $2.68
Hypothetical (5% return before expenses) $1,000.00 $1,022.06 0.60% $3.04
FIRST TRUST ALERIAN U.S. NEXTGEN INFRASTRUCTURE ETF (RBLD)
Actual $1,000.00 $ 810.10 0.68% $3.09
Hypothetical (5% return before expenses) $1,000.00 $1,021.66 0.68% $3.45
Page 37
FIRST TRUST EXCHANGE-TRADED FUND II
UNDERSTANDING YOUR FUND EXPENSES (CONTINUED)
SEPTEMBER 30, 2022 (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO EXPENSES PAID
BEGINNING ENDING BASED ON THE DURING THE
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH SIX-MONTH
APRIL 1, 2022 SEPTEMBER 30, 2022 PERIOD (a) PERIOD (b)
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
Actual $1,000.00 $ 807.90 0.59% $2.67
Hypothetical (5% return before expenses) $1,000.00 $1,022.11 0.59% $2.99
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI)
Actual $1,000.00 $ 783.90 0.70% $3.13
Hypothetical (5% return before expenses) $1,000.00 $1,021.56 0.70% $3.55
FIRST TRUST INDXX GLOBAL AGRICULTURE ETF (FTAG)
Actual $1,000.00 $ 807.20 0.70% $3.17
Hypothetical (5% return before expenses) $1,000.00 $1,021.56 0.70% $3.55
FIRST TRUST BICK INDEX FUND (BICK)
Actual $1,000.00 $ 776.10 0.64% $2.85
Hypothetical (5% return before expenses) $1,000.00 $1,021.86 0.64% $3.24
FIRST TRUST INDXX NEXTG ETF (NXTG)
Actual $1,000.00 $ 747.60 0.70% $3.07
Hypothetical (5% return before expenses) $1,000.00 $1,021.56 0.70% $3.55
FIRST TRUST S-NETWORK FUTURE VEHICLES & TECHNOLOGY ETF (CARZ)
Actual $1,000.00 $ 706.60 0.70% $2.99
Hypothetical (5% return before expenses) $1,000.00 $1,021.56 0.70% $3.55
FIRST TRUST CLOUD COMPUTING ETF (SKYY)
Actual $1,000.00 $ 667.10 0.60% $2.51
Hypothetical (5% return before expenses) $1,000.00 $1,022.06 0.60% $3.04
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI)
Actual $1,000.00 $ 734.70 0.70% $3.04
Hypothetical (5% return before expenses) $1,000.00 $1,021.56 0.70% $3.55
FIRST TRUST NASDAQ CYBERSECURITY ETF (CIBR)
Actual $1,000.00 $ 729.00 0.60% $2.60
Hypothetical (5% return before expenses) $1,000.00 $1,022.06 0.60% $3.04
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE)
Actual $1,000.00 $ 693.50 0.70% $2.97
Hypothetical (5% return before expenses) $1,000.00 $1,021.56 0.70% $3.55
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF (FDNI)
Actual $1,000.00 $ 745.00 0.65% $2.84
Hypothetical (5% return before expenses) $1,000.00 $1,021.81 0.65% $3.29
(a) These expense ratios reflect expense caps for certain Funds. See Note 3 in
the Notes to Financial Statements.
(b) Expenses are equal to the annualized expense ratio as indicated in the
table multiplied by the average account value over the period (April 1,
2022 through September 30, 2022), multiplied by 183/365 (to reflect the
six-month period).
Page 38
FIRST TRUST STOXX(R) EUROPEAN SELECT DIVIDEND INDEX FUND (FDD)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 98.5%
BELGIUM -- 5.4%
137,325 Ageas S.A./N.V. (b) $ 5,008,459
351,647 Proximus SADP (b) 3,645,886
---------------
8,654,345
---------------
DENMARK -- 4.8%
4,363 AP Moller - Maersk A/S,
Class A (b) 7,708,386
---------------
FINLAND -- 2.5%
301,420 Fortum OYJ (b) 4,050,183
---------------
FRANCE -- 23.8%
134,778 BNP Paribas S.A. (b) 5,692,901
72,090 Covivio (b) 3,472,824
711,247 Credit Agricole S.A. (b) 5,773,903
857,299 Electricite de France S.A. (b) 9,942,445
584,620 Orange S.A. (b) 5,287,598
231,785 Rubis SCA (b) 4,823,472
225,976 SCOR SE (b) 3,267,009
---------------
38,260,152
---------------
GERMANY -- 15.5%
25,050 Allianz SE (b) 3,946,221
96,709 Bayerische Motoren Werke AG
(Preference Shares) (b) 6,280,088
169,629 Covestro AG (b) (c) (d) 4,849,957
165,765 Evonik Industries AG (b) 2,776,162
112,644 Mercedes-Benz Group AG (b) 5,696,050
178,400 TAG Immobilien AG (b) 1,423,724
---------------
24,972,202
---------------
ITALY -- 7.4%
318,355 Assicurazioni Generali
S.p.A. (b) 4,346,907
484,073 Poste Italiane
S.p.A. (b) (c) (d) 3,657,162
978,562 Snam S.p.A. (b) 3,955,268
---------------
11,959,337
---------------
NETHERLANDS -- 7.9%
179,240 ASR Nederland N.V. (b) 6,890,476
151,619 NN Group N.V. (b) 5,897,038
---------------
12,787,514
---------------
SPAIN -- 5.0%
359,812 ACS Actividades de
Construccion y Servicios
S.A. (b) 8,084,712
---------------
SWEDEN -- 2.0%
380,852 Tele2 AB, Class B (b) 3,286,591
---------------
SWITZERLAND -- 6.4%
142,828 Holcim AG (b) 5,853,170
11,091 Zurich Insurance Group AG (b) 4,421,437
---------------
10,274,607
---------------
UNITED KINGDOM -- 17.8%
781,205 IG Group Holdings PLC (b) 6,620,502
2,675,086 Legal & General Group
PLC (b) 6,385,350
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
UNITED KINGDOM (CONTINUED)
193,132 Rio Tinto PLC (b) $ 10,449,530
306,763 SSE PLC (b) 5,179,977
---------------
28,635,359
---------------
TOTAL COMMON STOCKS
-- 98.5% 158,673,388
(Cost $214,369,472) ---------------
MONEY MARKET FUNDS -- 0.1%
166,388 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 2.77% (e) 166,388
(Cost $166,388) ---------------
TOTAL INVESTMENTS -- 98.6% 158,839,776
(Cost $214,535,860)
NET OTHER ASSETS AND
LIABILITIES -- 1.4% 2,210,657
---------------
NET ASSETS -- 100.0% $ 161,050,433
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $158,673,388 or 98.5% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(c) This security is exempt from registration upon resale under Rule 144A of
the Securities Act of 1933, as amended (the "1933 Act") and may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. This security is not restricted on the foreign
exchange where it trades freely without any additional registration. As
such, it does not require the additional disclosure required of restricted
securities.
(d) This security may be resold to qualified foreign investors and foreign
institutional buyers under Regulation S of the 1933 Act.
(e) Rate shown reflects yield as of September 30, 2022.
See Notes to Financial Statements Page 39
FIRST TRUST STOXX(R) EUROPEAN SELECT DIVIDEND INDEX FUND (FDD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
Euro 68.5%
British Pound Sterling 18.0
Swiss Franc 6.5
Danish Krone 4.8
Swedish Krona 2.1
United States Dollar 0.1
------
Total 100.0%
======
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks*.................................. $ 158,673,388 $ -- $ 158,673,388 $ --
Money Market Funds.............................. 166,388 166,388 -- --
------------------------------------------------------------------
Total Investments............................... $ 158,839,776 $ 166,388 $ 158,673,388 $ --
==================================================================
* See Portfolio of Investments for country breakout.
Page 40 See Notes to Financial Statements
FIRST TRUST ALERIAN DISRUPTIVE TECHNOLOGY REAL ESTATE ETF (DTRE)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.2%
AUSTRALIA -- 3.9%
196,196 BGP Holdings
PLC (b) (c) (d) (e) (f) $ 0
92,690 Goodman Group (b) 936,804
---------------
936,804
---------------
BELGIUM -- 2.0%
936 VGP N.V. (b) 89,277
16,201 Warehouses De Pauw
C.V.A. (b) 397,905
---------------
487,182
---------------
CANADA -- 1.8%
25,722 Dream Industrial Real Estate
Investment Trust 199,802
4,853 Granite Real Estate Investment
Trust 234,227
---------------
434,029
---------------
CAYMAN ISLANDS -- 1.3%
119,600 ESR Group Ltd. (b) (g) (h) 300,838
---------------
ISRAEL -- 0.2%
2,737 Amot Investments Ltd. (b) 15,648
614 Azrieli Group Ltd. (b) 41,904
---------------
57,552
---------------
JAPAN -- 8.7%
166 Daiwa House REIT Investment
Corp. (b) 346,688
407 GLP J-REIT (b) 451,384
178 Industrial & Infrastructure
Fund Investment Corp. (b) 201,698
75 Japan Logistics Fund, Inc. (b) 160,810
153 LaSalle Logiport REIT (b) 171,166
47 Mitsubishi Estate Logistics
REIT Investment Corp. (b) 146,731
55 Mitsui Fudosan Logistics Park,
Inc. (b) 188,236
195 Nippon Prologis REIT, Inc. (b) 427,521
---------------
2,094,234
---------------
SINGAPORE -- 5.7%
228,200 Digital Core REIT
Management Pte Ltd. (b) 159,740
273,964 Frasers Logistics &
Commercial Trust (b) (h) 233,899
171,994 Keppel DC REIT (b) 202,821
178,682 Mapletree Industrial Trust (b) 295,683
432,777 Mapletree Logistics Trust 470,066
---------------
1,362,209
---------------
UNITED KINGDOM -- 5.6%
75,313 LondonMetric Property
PLC (b) 146,352
101,104 Segro PLC (b) 843,594
235,813 Tritax Big Box REIT PLC (b) 355,858
---------------
1,345,804
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
UNITED STATES -- 70.0%
7,430 American Tower Corp. $ 1,595,221
38,226 Americold Realty Trust, Inc. 940,360
11,132 Crown Castle, Inc. 1,609,131
14,878 Digital Realty Trust, Inc. 1,475,600
56,546 DigitalBridge Group, Inc. 707,390
7,743 EastGroup Properties, Inc. 1,117,625
2,892 Equinix, Inc. 1,645,085
25,100 First Industrial Realty Trust,
Inc. 1,124,731
92,075 LXP Industrial Trust 843,407
11,496 Plymouth Industrial REIT, Inc. 193,248
15,589 Prologis, Inc. 1,583,842
5,855 SBA Communications Corp. 1,666,626
39,136 STAG Industrial, Inc. 1,112,636
14,702 Terreno Realty Corp. 779,059
60,187 Uniti Group, Inc. 418,300
---------------
16,812,261
---------------
TOTAL COMMON STOCKS
-- 99.2% 23,830,913
(Cost $24,043,915) ---------------
MONEY MARKET FUNDS -- 0.2%
48,414 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 2.77% (i) 48,414
(Cost $48,414) ---------------
TOTAL INVESTMENTS -- 99.4% 23,879,327
(Cost $24,092,329)
NET OTHER ASSETS AND
LIABILITIES -- 0.6% 150,580
---------------
NET ASSETS -- 100.0% $ 24,029,907
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $6,114,557 or 25.4% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(c) This security's value was determined using significant unobservable inputs
(see Note 2A - Portfolio Valuation in the Notes to Financial Statements).
See Notes to Financial Statements Page 41
FIRST TRUST ALERIAN DISRUPTIVE TECHNOLOGY REAL ESTATE ETF (DTRE)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
(d) Pursuant to procedures adopted by the Trust's Board of Trustees, this
security has been determined to be illiquid by First Trust Advisors, L.P.,
the Fund's Advisor.
(e) Non-income producing security.
(f) This is a restricted security which cannot be traded as a result of the
in-specie distribution. It was acquired on August 6, 2009 at a cost of $0
and has a carrying value per share of $0.
(g) This security is exempt from registration upon resale under Rule 144A of
the Securities Act of 1933, as amended (the "1933 Act") and may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. This security is not restricted on the foreign
exchange where it trades freely without any additional registration. As
such, it does not require the additional disclosure required of restricted
securities.
(h) This security may be resold to qualified foreign investors and foreign
institutional buyers under Regulation S of the 1933 Act.
(i) Rate shown reflects yield as of September 30, 2022.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
United States Dollar 71.3%
Japanese Yen 8.8
British Pound Sterling 5.6
Singapore Dollar 5.0
Australian Dollar 3.9
Euro 2.0
Canadian Dollar 1.8
Hong Kong Dollar 1.3
Israeli Shekel 0.3
------
Total 100.0%
======
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
Australia.................................... $ 936,804 $ -- $ 936,804 $ -- **
Canada....................................... 434,029 434,029 -- --
Singapore.................................... 1,362,209 470,066 892,143 --
United States................................ 16,812,261 16,812,261 -- --
Other Country Categories*.................... 4,285,610 -- 4,285,610 --
Money Market Funds.............................. 48,414 48,414 -- --
------------------------------------------------------------------
Total Investments............................... $ 23,879,327 $ 17,764,770 $ 6,114,557 $ -- **
==================================================================
* See Portfolio of Investments for country breakout.
** Investment is valued at $0.
Level 3 Common Stocks are fair valued by the Advisor's Pricing Committee and are
footnoted in the Portfolio of Investments.
Level 3 Common Stocks values are based on unobservable and non-quantitative
inputs.
Page 42 See Notes to Financial Statements
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.1%
AUSTRALIA -- 5.5%
1,221,321 Fortescue Metals Group
Ltd. (b) $ 13,111,355
1,774,497 Harvey Norman Holdings
Ltd. (b) 4,590,536
154,867 JB Hi-Fi Ltd. (b) 3,747,871
1,038,863 Super Retail Group Ltd. (b) 5,908,159
---------------
27,357,921
---------------
BELGIUM -- 1.0%
137,929 Ageas S.A./N.V. (b) 5,030,488
---------------
BERMUDA -- 1.9%
810,292 CK Infrastructure Holdings
Ltd. (b) 4,132,754
167,248 Lazard Ltd., Class A 5,323,504
---------------
9,456,258
---------------
CANADA -- 9.3%
61,949 Bank of Nova Scotia (The) 2,946,429
105,253 BCE, Inc. 4,413,258
66,418 Canadian Imperial Bank of
Commerce 2,907,034
183,915 Canadian Utilities Ltd.,
Class A 4,783,774
186,733 Great-West Lifeco, Inc. 4,031,113
145,984 IGM Financial, Inc. 3,637,579
260,222 Labrador Iron Ore Royalty
Corp. 5,446,134
129,151 Laurentian Bank of Canada 2,769,358
269,150 Manulife Financial Corp. 4,224,253
173,938 Power Corp. of Canada 3,919,854
97,647 TC Energy Corp. 3,933,166
161,148 TELUS Corp. 3,199,978
---------------
46,211,930
---------------
CAYMAN ISLANDS -- 0.8%
693,804 CK Hutchison Holdings
Ltd. (b) 3,820,257
---------------
DENMARK -- 1.6%
4,417 AP Moller - Maersk A/S,
Class A (b) 7,803,791
---------------
FINLAND -- 0.9%
336,779 Fortum OYJ (b) 4,525,303
---------------
FRANCE -- 1.9%
205,290 Nexity S.A. (b) 4,167,694
116,637 TotalEnergies SE (b) 5,471,955
---------------
9,639,649
---------------
GERMANY -- 2.6%
24,534 Allianz SE (b) 3,864,934
97,514 BASF SE (b) 3,742,417
269,367 Freenet AG (b) 5,104,873
---------------
12,712,224
---------------
HONG KONG -- 6.7%
1,331,351 BOC Hong Kong Holdings
Ltd. (b) 4,427,697
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
HONG KONG (CONTINUED)
1,418,400 Henderson Land Development
Co., Ltd. (b) $ 3,971,821
2,359,065 Hysan Development Co.,
Ltd. (b) 5,936,431
1,778,977 New World Development Co.,
Ltd. (b) 5,052,452
15,969,479 PCCW Ltd. (b) 7,204,778
881,227 Swire Pacific Ltd., Class A (b) 6,586,764
---------------
33,179,943
---------------
ISRAEL -- 1.1%
294,354 Plus500 Ltd. (b) 5,385,201
---------------
ITALY -- 4.6%
3,022,713 A2A S.p.A. (b) 2,936,418
1,325,957 Anima Holding
S.p.A. (b) (c) (d) 3,763,611
201,051 Azimut Holding S.p.A. (b) 2,867,639
331,562 Eni S.p.A. (b) 3,524,059
455,757 Poste Italiane
S.p.A. (b) (c) (d) 3,443,235
3,003,257 UnipolSai Assicurazioni
S.p.A. (b) 6,228,500
---------------
22,763,462
---------------
JAPAN -- 8.9%
281,254 Aozora Bank Ltd. (b) 5,028,379
1,117,600 Daiwa Securities Group,
Inc. (b) 4,386,469
416,600 Haseko Corp. (b) 4,518,834
418,670 Japan Tobacco, Inc. (b) 6,879,903
382,600 Mitsui OSK Lines Ltd. (b) 6,845,708
138,600 MS&AD Insurance Group
Holdings, Inc. (b) 3,670,505
1,002,400 Resona Holdings, Inc. (b) 3,668,243
369,500 Sumitomo Corp. (b) 4,564,944
164,300 Sumitomo Mitsui Financial
Group, Inc. (b) 4,554,639
---------------
44,117,624
---------------
JERSEY -- 1.4%
3,978,329 Centamin PLC (b) 3,990,997
145,925 Janus Henderson Group PLC 2,963,737
---------------
6,954,734
---------------
LUXEMBOURG -- 0.4%
83,397 APERAM S.A. (b) 1,968,010
---------------
NETHERLANDS -- 4.0%
152,089 ASR Nederland N.V. (b) 5,846,717
48,600 LyondellBasell Industries N.V.,
Class A 3,658,608
128,387 NN Group N.V. (b) 4,993,458
440,750 SBM Offshore N.V. (b) 5,530,916
---------------
20,029,699
---------------
NEW ZEALAND -- 1.2%
2,087,759 Spark New Zealand Ltd. (b) 5,841,039
---------------
SOUTH KOREA -- 12.9%
1,233,462 BNK Financial Group, Inc. (b) 5,150,052
128,665 DB Insurance Co., Ltd. (b) 4,929,290
See Notes to Financial Statements Page 43
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
SOUTH KOREA (CONTINUED)
958,587 DGB Financial Group, Inc. (b) $ 4,647,630
182,809 Hana Financial Group, Inc. (b) 4,488,873
85,940 Hyundai Motor Co. (Preference
Shares) (b) 4,996,479
896,225 Industrial Bank of Korea (b) 5,926,801
117,769 KB Financial Group, Inc. (b) 3,556,452
94,945 KT&G Corp. (b) 5,732,779
685,380 NH Investment & Securities
Co., Ltd. (b) 4,278,279
27,446 POSCO Holdings, Inc. (b) 4,003,485
44,277 Samsung Fire & Marine
Insurance Co., Ltd. (b) 5,662,958
278,758 Samsung Securities Co.,
Ltd. (b) 5,934,105
593,117 Woori Financial Group, Inc. (b) 4,401,633
---------------
63,708,816
---------------
SPAIN -- 8.7%
325,427 ACS Actividades de
Construccion y Servicios
S.A. (b) 7,312,106
451,346 Cia de Distribucion Integral
Logista Holdings S.A. (b) 8,225,260
420,574 Enagas S.A. (b) 6,510,020
4,400,881 Mapfre S.A. (b) 6,815,728
185,831 Naturgy Energy Group S.A. (b) 4,298,922
291,644 Red Electrica Corp., S.A. (b) 4,475,434
1,645,605 Telefonica S.A. (b) 5,440,215
---------------
43,077,685
---------------
SWEDEN -- 1.0%
1,648,079 Telia Co., AB (b) 4,746,604
---------------
SWITZERLAND -- 2.9%
39,724 Helvetia Holding AG (b) 3,722,360
78,991 Swiss Re AG (b) 5,825,902
12,083 Zurich Insurance Group AG (b) 4,816,898
---------------
14,365,160
---------------
UNITED KINGDOM -- 9.6%
2,894,481 abrdn PLC (b) 4,427,704
367,127 Antofagasta PLC (b) 4,498,672
2,309,315 Ashmore Group PLC (b) 5,042,628
170,446 British American Tobacco
PLC (b) 6,111,746
2,290,636 Direct Line Insurance Group
PLC (b) 4,725,925
3,391,059 Jupiter Fund Management
PLC (b) 3,458,277
1,933,441 Legal & General Group
PLC (b) 4,615,066
974,808 Phoenix Group Holdings
PLC (b) 5,677,109
134,019 Rio Tinto PLC (b) 7,251,183
1,692,422 Synthomer PLC (b) 1,993,827
---------------
47,802,137
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
UNITED STATES -- 10.2%
141,535 Altria Group, Inc. $ 5,715,183
207,163 AT&T, Inc. 3,177,880
271,462 Camping World Holdings, Inc.,
Class A 6,873,418
181,391 H&R Block, Inc. 7,716,373
934,714 Lumen Technologies, Inc. 6,804,718
423,420 Northwest Bancshares, Inc. 5,720,404
41,359 Prudential Financial, Inc. 3,547,775
105,344 Universal Corp. 4,850,038
160,496 Unum Group 6,227,245
---------------
50,633,034
---------------
TOTAL INVESTMENTS -- 99.1% 491,130,969
(Cost $641,323,853)
NET OTHER ASSETS AND
LIABILITIES -- 0.9% 4,445,488
---------------
NET ASSETS -- 100.0% $ 495,576,457
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $382,340,156 or 77.2% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(c) This security is exempt from registration upon resale under Rule 144A of
the Securities Act of 1933, as amended (the "1933 Act") and may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. This security is not restricted on the foreign
exchange where it trades freely without any additional registration. As
such, it does not require the additional disclosure required of restricted
securities.
(d) This security may be resold to qualified foreign investors and foreign
institutional buyers under Regulation S of the 1933 Act.
Page 44 See Notes to Financial Statements
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
Euro 23.6%
South Korean Won 13.0
United States Dollar 12.7
British Pound Sterling 11.6
Canadian Dollar 9.4
Japanese Yen 9.0
Hong Kong Dollar 8.4
Australian Dollar 5.6
Swiss Franc 2.9
Danish Krone 1.6
New Zealand Dollar 1.2
Swedish Krona 1.0
------
Total 100.0%
======
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
Bermuda...................................... $ 9,456,258 $ 5,323,504 $ 4,132,754 $ --
Canada....................................... 46,211,930 46,211,930 -- --
Jersey....................................... 6,954,734 2,963,737 3,990,997 --
Netherlands.................................. 20,029,699 3,658,608 16,371,091 --
United States................................ 50,633,034 50,633,034 -- --
Other Country Categories*.................... 357,845,314 -- 357,845,314 --
------------------------------------------------------------------
Total Investments............................... $ 491,130,969 $ 108,790,813 $ 382,340,156 $ --
==================================================================
* See Portfolio of Investments for country breakout.
See Notes to Financial Statements Page 45
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.0%
BERMUDA -- 0.7%
20,496,219 Concord New Energy Group
Ltd. (b) $ 1,693,397
---------------
BRAZIL -- 0.8%
1,231,952 Aeris Industria E Comercio De
Equipamentos Para Geracao
De Energia S.A. 459,040
824,244 Omega Energia S.A. (c) 1,570,760
---------------
2,029,800
---------------
CANADA -- 16.0%
287,489 Boralex, Inc., Class A 9,130,302
525,098 Innergex Renewable Energy,
Inc. 6,610,529
668,988 Northland Power, Inc. 19,589,941
343,259 TransAlta Renewables, Inc. 3,633,001
---------------
38,963,773
---------------
CAYMAN ISLANDS -- 0.2%
1,367,353 China High Speed
Transmission Equipment
Group Co., Ltd. (b) (c) 614,654
---------------
CHINA -- 7.3%
6,594,892 China Datang Corp. Renewable
Power Co., Ltd., Class H (b) 1,527,857
10,739,999 China Longyuan Power Group
Corp., Ltd., Class H (b) 13,420,669
1,568,063 China Suntien Green Energy
Corp., Ltd., Class H (b) 571,975
2,039,725 Xinjiang Goldwind Science &
Technology Co., Ltd.,
Class H (b) 2,352,222
---------------
17,872,723
---------------
DENMARK -- 14.9%
270,190 Cadeler A/S (b) (c) (d) 829,532
233,692 Orsted A/S (b) (e) (f) 18,625,433
911,233 Vestas Wind Systems A/S (b) 16,778,406
---------------
36,233,371
---------------
FRANCE -- 2.9%
481,136 Engie S.A. (b) 5,537,801
46,833 Neoen S.A. (b) (d) (e) (f) 1,560,737
---------------
7,098,538
---------------
GERMANY -- 6.9%
22,042 Energiekontor AG (b) 1,796,273
408,930 Nordex SE (b) (c) 3,222,206
105,861 PNE AG (b) 1,829,654
149,948 RWE AG (b) 5,511,469
52,152 SGL Carbon SE (b) (c) (d) 302,240
389,106 Siemens Energy AG (b) (d) 4,284,338
---------------
16,946,180
---------------
GREECE -- 1.1%
167,647 Terna Energy S.A. (b) 2,710,614
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
ITALY -- 6.3%
1,216,077 Enel S.p.A. (b) $ 4,987,386
178,853 ERG S.p.A. (b) 4,923,369
186,546 Prysmian S.p.A. (b) 5,343,383
---------------
15,254,138
---------------
JAPAN -- 2.0%
996,310 Toray Industries, Inc. (b) 4,903,672
---------------
PORTUGAL -- 2.1%
1,199,097 EDP - Energias de Portugal
S.A. (b) 5,204,077
---------------
SOUTH KOREA -- 1.8%
57,303 CS Bearing Co., Ltd. (b) (g) 345,991
82,721 CS Wind Corp. (b) 3,473,347
26,478 Dongkuk Structures &
Construction Co., Ltd. (b) 101,097
342,007 Unison Co., Ltd. (b) (c) 460,511
---------------
4,380,946
---------------
SPAIN -- 12.1%
22,876 Acciona S.A. (b) 4,020,580
772,212 EDP Renovaveis S.A. (b) 15,884,474
294,343 Endesa S.A. (b) 4,420,886
549,839 Iberdrola S.A. (b) 5,126,780
---------------
29,452,720
---------------
SWEDEN -- 3.1%
69,882 Eolus Vind AB, Class B (b) (d) 735,644
324,241 OX2 AB (b) (c) 2,429,064
327,624 SKF AB, Class B (b) 4,389,052
---------------
7,553,760
---------------
SWITZERLAND -- 3.4%
207,777 ABB Ltd. (b) 5,364,683
18,105 BKW AG (b) 2,157,497
9,932 Gurit Holding AG (b) (d) 722,878
---------------
8,245,058
---------------
UNITED KINGDOM -- 3.1%
417,829 ReNew Energy Global PLC,
Class A (c) (d) 2,515,331
298,611 SSE PLC (b) 5,042,322
---------------
7,557,653
---------------
UNITED STATES -- 14.3%
94,067 Alliant Energy Corp. 4,984,610
25,149 American Superconductor
Corp. (c) 110,153
38,092 Arcosa, Inc. 2,178,101
63,224 Clearway Energy, Inc., Class C 2,013,684
53,706 Duke Energy Corp. 4,995,732
78,182 General Electric Co. 4,840,248
70,925 Hexcel Corp. 3,668,241
67,501 NextEra Energy, Inc. 5,292,753
70,254 Owens Corning 5,522,667
110,308 TPI Composites, Inc. (c) 1,244,274
---------------
34,850,463
---------------
Page 46 See Notes to Financial Statements
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
TOTAL COMMON STOCKS
-- 99.0% $ 241,565,537
(Cost $309,374,176) ---------------
MONEY MARKET FUNDS -- 0.8%
1,909,069 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 2.77% (h) 1,909,069
(Cost $1,909,069) ---------------
PRINCIPAL
VALUE DESCRIPTION VALUE
--------------------------------------------------------------
REPURCHASE AGREEMENTS -- 2.3%
$ 2,702,139 Citigroup, Inc., 2.98% (h),
dated 09/30/22, due 10/03/22,
with a maturity value of
$2,702,363. Collateralized
by U.S. Treasury Securities,
interest rates of 0.13% to
6.13%, due 01/31/23 to
08/15/52. The value of the
collateral including accrued
interest is $2,756,182. (i) 2,702,139
2,702,139 Daiwa Capital Markets
America, Inc., 2.96% (h),
dated 09/30/22, due 10/03/22,
with a maturity value of
$2,702,361. Collateralized
by U.S. Treasury Securities,
interest rates of 0.00% to
6.13%, due 12/22/22 to
08/15/51. The value of the
collateral including accrued
interest is $2,756,182. (i) 2,702,139
172,421 JPMorgan Chase & Co.,
2.97% (h), dated 09/30/22,
due 10/03/22, with a
maturity value of $172,435.
Collateralized by U.S.
Treasury Securities,
interest rates of 0.25% to
3.88%, due 09/30/23 to
09/30/29. The value of the
collateral including accrued
interest is $175,869. (i) 172,421
---------------
TOTAL REPURCHASE
AGREEMENTS -- 2.3% 5,576,699
(Cost $5,576,699) ---------------
TOTAL INVESTMENTS -- 102.1% 249,051,305
(Cost $316,859,944)
NET OTHER ASSETS AND
LIABILITIES -- (2.1)% (5,120,208)
---------------
NET ASSETS -- 100.0% $ 243,931,097
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $163,206,170 or 66.9% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(c) Non-income producing security.
(d) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $5,201,510 and the
total value of the collateral held by the Fund is $5,576,699.
(e) This security is exempt from registration upon resale under Rule 144A of
the Securities Act of 1933, as amended (the "1933 Act") and may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. This security is not restricted on the foreign
exchange where it trades freely without any additional registration. As
such, it does not require the additional disclosure required of restricted
securities.
(f) This security may be resold to qualified foreign investors and foreign
institutional buyers under Regulation S of the 1933 Act.
(g) Non-income producing security which makes payment-in-kind ("PIK")
distributions. For the fiscal year ended September 30, 2022, the Fund
received 20,484 PIK shares of CS Bearing Co., Ltd.
(h) Rate shown reflects yield as of September 30, 2022.
(i) This security serves as collateral for securities on loan.
See Notes to Financial Statements Page 47
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
---------------------------------
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) $ 5,201,510
Non-cash Collateral(2) (5,201,510)
---------------
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 September 30, 2022, 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) $ 5,576,699
Non-cash Collateral(4) (5,576,699)
---------------
Net Amount $ --
===============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At September 30, 2022, the value of the collateral received from each
seller exceeded the value of the repurchase agreements.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
Euro 30.8%
United States Dollar 18.0
Canadian Dollar 15.7
Danish Krone 14.2
Hong Kong Dollar 8.1
Swiss Franc 3.3
Swedish Krona 3.0
British Pound Sterling 2.0
Japanese Yen 2.0
South Korean Won 1.8
Brazilian Real 0.8
Norwegian Krone 0.3
------
Total 100.0%
======
Page 48 See Notes to Financial Statements
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
Brazil....................................... $ 2,029,800 $ 2,029,800 $ -- $ --
Canada....................................... 38,963,773 38,963,773 -- --
United Kingdom............................... 7,557,653 2,515,331 5,042,322 --
United States................................ 34,850,463 34,850,463 -- --
Other Country Categories*.................... 158,163,848 -- 158,163,848 --
Money Market Funds.............................. 1,909,069 1,909,069 -- --
Repurchase Agreements........................... 5,576,699 -- 5,576,699 --
------------------------------------------------------------------
Total Investments............................... $ 249,051,305 $ 80,268,436 $ 168,782,869 $ --
==================================================================
* See Portfolio of Investments for country breakout.
See Notes to Financial Statements Page 49
FIRST TRUST ALERIAN U.S. NEXTGEN INFRASTRUCTURE ETF (RBLD)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS -- 99.8%
BUILDING PRODUCTS -- 7.4%
904 Allegion PLC $ 81,071
1,509 Builders FirstSource, Inc. (a) 88,910
367 Carlisle Cos., Inc. 102,911
2,509 Carrier Global Corp. 89,220
1,927 Johnson Controls International
PLC 94,847
1,741 Masco Corp. 81,287
699 Trane Technologies PLC 101,222
---------------
639,468
---------------
CONSTRUCTION & ENGINEERING
-- 2.1%
1,397 AECOM 95,513
691 Quanta Services, Inc. 88,026
---------------
183,539
---------------
CONSTRUCTION MATERIALS -- 2.2%
295 Martin Marietta Materials, Inc. 95,017
620 Vulcan Materials Co. 97,780
---------------
192,797
---------------
ELECTRIC UTILITIES -- 17.4%
1,580 Alliant Energy Corp. 83,724
967 American Electric Power Co.,
Inc. 83,597
1,545 Constellation Energy Corp. 128,529
855 Duke Energy Corp. 79,532
1,456 Edison International 82,380
825 Entergy Corp. 83,020
1,417 Evergy, Inc. 84,170
1,093 Eversource Energy 85,210
2,059 Exelon Corp. 77,130
2,453 FirstEnergy Corp. 90,761
1,136 NextEra Energy, Inc. 89,074
2,423 NRG Energy, Inc. 92,728
8,965 PG&E Corp. (a) 112,063
1,281 Pinnacle West Capital Corp. 82,637
3,352 PPL Corp. 84,973
1,281 Southern (The) Co. 87,108
1,313 Xcel Energy, Inc. 84,032
---------------
1,510,668
---------------
ELECTRICAL EQUIPMENT -- 7.4%
805 AMETEK, Inc. 91,295
705 Eaton Corp. PLC 94,019
1,129 Emerson Electric Co. 82,665
397 Generac Holdings, Inc. (a) 70,721
491 Hubbell, Inc. 109,493
4,773 Plug Power, Inc. (a) 100,281
451 Rockwell Automation, Inc. 97,015
---------------
645,489
---------------
ENERGY EQUIPMENT & SERVICES
-- 2.8%
3,209 Baker Hughes Co. 67,261
3,056 Halliburton Co. 75,239
2,657 Schlumberger N.V. 95,386
---------------
237,886
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 5.4%
355 American Tower Corp. $ 76,218
532 Crown Castle, Inc. 76,901
711 Digital Realty Trust, Inc. 70,517
139 Equinix, Inc. 79,069
1,864 Iron Mountain, Inc. 81,960
280 SBA Communications Corp. 79,702
---------------
464,367
---------------
GAS UTILITIES -- 1.8%
813 Atmos Energy Corp. 82,804
2,323 UGI Corp. 75,103
---------------
157,907
---------------
INDEPENDENT POWER AND RENEWABLE
ELECTRICITY PRODUCERS -- 2.1%
4,267 AES (The) Corp. 96,434
4,109 Vistra Corp. 86,289
---------------
182,723
---------------
INDUSTRIAL CONGLOMERATES -- 2.9%
703 3M Co. 77,682
1,451 General Electric Co. 89,831
525 Honeywell International, Inc. 87,659
---------------
255,172
---------------
IT SERVICES -- 7.2%
984 Akamai Technologies, Inc. (a) 79,035
1,732 Cloudflare, Inc., Class A (a) 95,797
1,245 GoDaddy, Inc., Class A (a) 88,246
289 MongoDB, Inc. (a) 57,384
881 Okta, Inc. (a) 50,102
575 Snowflake, Inc., Class A (a) 97,727
976 Twilio, Inc., Class A (a) 67,481
512 VeriSign, Inc. (a) 88,934
---------------
624,706
---------------
MACHINERY -- 16.4%
507 Caterpillar, Inc. 83,189
453 Cummins, Inc. 92,190
739 Dover Corp. 86,153
1,633 Fortive Corp. 95,204
1,491 Graco, Inc. 89,385
488 IDEX Corp. 97,527
492 Illinois Tool Works, Inc. 88,880
2,117 Ingersoll Rand, Inc. 91,581
433 Nordson Corp. 91,913
1,304 Otis Worldwide Corp. 83,195
1,111 PACCAR, Inc. 92,980
364 Parker-Hannifin Corp. 88,201
453 Snap-on, Inc. 91,211
816 Stanley Black & Decker, Inc. 61,371
1,091 Westinghouse Air Brake
Technologies Corp. 88,753
1,137 Xylem, Inc. 99,328
---------------
1,421,061
---------------
METALS & MINING -- 5.1%
5,812 Cleveland-Cliffs, Inc. (a) 78,288
3,127 Freeport-McMoRan, Inc. 85,461
Page 50 See Notes to Financial Statements
FIRST TRUST ALERIAN U.S. NEXTGEN INFRASTRUCTURE ETF (RBLD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (CONTINUED)
METALS & MINING (CONTINUED)
827 Nucor Corp. $ 88,481
524 Reliance Steel & Aluminum
Co. 91,391
1,372 Steel Dynamics, Inc. 97,343
---------------
440,964
---------------
MULTI-UTILITIES -- 9.6%
1,035 Ameren Corp. 83,369
3,117 CenterPoint Energy, Inc. 87,837
1,376 CMS Energy Corp. 80,138
989 Consolidated Edison, Inc. 84,817
1,144 Dominion Energy, Inc. 79,062
729 DTE Energy Co. 83,871
3,205 NiSource, Inc. 80,734
1,455 Public Service Enterprise
Group, Inc. 81,815
619 Sempra Energy 92,813
915 WEC Energy Group, Inc. 81,828
---------------
836,284
---------------
OIL, GAS & CONSUMABLE FUELS
-- 5.3%
692 Cheniere Energy, Inc. 114,810
5,409 Kinder Morgan, Inc. 90,006
1,616 ONEOK, Inc. 82,804
1,527 Targa Resources Corp. 92,139
2,929 Williams (The) Cos., Inc. 83,857
---------------
463,616
---------------
ROAD & RAIL -- 2.9%
3,124 CSX Corp. 83,223
400 Norfolk Southern Corp. 83,860
429 Union Pacific Corp. 83,578
---------------
250,661
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
WATER UTILITIES -- 1.8%
596 American Water Works Co.,
Inc. $ 77,576
1,940 Essential Utilities, Inc. 80,277
---------------
157,853
---------------
TOTAL COMMON STOCKS
-- 99.8% 8,665,161
(Cost $9,773,185) ---------------
WARRANTS -- 0.0%
CONSTRUCTION & ENGINEERING
-- 0.0%
1,985 Webuild S.p.A., expiring
7/5/23 (a) (b) 19
(Cost $0) ---------------
TOTAL INVESTMENTS -- 99.8% 8,665,180
(Cost $9,773,185)
NET OTHER ASSETS AND
LIABILITIES -- 0.2% 19,395
---------------
NET ASSETS -- 100.0% $ 8,684,575
===============
(a) Non-income producing security.
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $19 or 0.0% of net assets.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks*.................................. $ 8,665,161 $ 8,665,161 $ -- $ --
Warrants*....................................... 19 -- 19 --
------------------------------------------------------------------
Total Investments............................... $ 8,665,180 $ 8,665,161 $ 19 $ --
==================================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 51
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.8%
AUSTRIA -- 0.1%
7,304 Verbund AG (b) $ 623,594
---------------
BELGIUM -- 1.3%
61,237 Elia Group S.A./N.V. (b) 7,205,804
---------------
CANADA -- 2.5%
29,339 Fortis, Inc. 1,114,642
508,639 Hydro One Ltd. (c) (d) 12,438,430
2,878 Stella-Jones, Inc. 80,797
---------------
13,633,869
---------------
CHINA -- 0.3%
54,129 BYD Co., Ltd., Class H (b) 1,333,498
---------------
DENMARK -- 0.6%
68,888 NKT A/S (b) (e) 3,252,348
---------------
FRANCE -- 9.4%
113,437 Engie S.A. (b) 1,305,642
40,677 Nexans S.A. (b) 3,620,975
401,870 Schneider Electric SE (b) 45,391,357
8,288 SPIE S.A. (b) 173,598
---------------
50,491,572
---------------
GERMANY -- 1.6%
137,604 E. ON SE (b) 1,057,176
74,438 Infineon Technologies AG (b) 1,628,997
45,846 Siemens AG (b) 4,481,103
30,036 SMA Solar Technology
AG (b) (e) (f) 1,392,972
---------------
8,560,248
---------------
IRELAND -- 14.2%
351,282 Eaton Corp. PLC 46,846,967
443,287 Johnson Controls International
PLC 21,818,586
245,519 nVent Electric PLC 7,760,856
---------------
76,426,409
---------------
ITALY -- 5.1%
442,416 Enel S.p.A. (b) 1,814,441
408,325 Prysmian S.p.A. (b) 11,695,972
2,255,311 Terna - Rete Elettrica
Nazionale S.p.A. (b) 13,735,986
---------------
27,246,399
---------------
JAPAN -- 1.3%
4,435 GS Yuasa Corp. (b) 69,205
59,324 Hitachi Ltd. (b) 2,524,598
63,399 Meidensha Corp. (b) 866,575
15,525 NGK Insulators Ltd. (b) 193,236
84,690 Nissin Electric Co., Ltd. (b) 778,866
150,470 Panasonic Holdings Corp. (b) 1,056,606
86,000 Renesas Electronics
Corp. (b) (e) 720,959
16,900 Takaoka Toko Co., Ltd. (b) 206,515
22,086 Toshiba Corp. (b) 786,820
---------------
7,203,380
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
JERSEY -- 3.7%
256,872 Aptiv PLC (e) $ 20,089,959
---------------
NETHERLANDS -- 1.0%
32,424 Alfen Beheer BV (b) (c) (d) (e) 2,969,277
13,842 NXP Semiconductors N.V. 2,041,834
4,332 STMicroelectronics N.V. 134,032
---------------
5,145,143
---------------
PORTUGAL -- 0.4%
160,419 EDP - Energias de Portugal
S.A. (b) 696,218
566,814 REN - Redes Energeticas
Nacionais SGPS S.A. (b) 1,340,127
---------------
2,036,345
---------------
SOUTH KOREA -- 3.8%
263 Hyosung Heavy Industries
Corp. (b) (e) 10,828
53,679 Samsung SDI Co., Ltd. (b) 20,191,009
---------------
20,201,837
---------------
SPAIN -- 2.4%
335,345 Iberdrola S.A. (b) 3,126,807
650,485 Red Electrica Corp., S.A. (b) 9,982,042
---------------
13,108,849
---------------
SWITZERLAND -- 8.7%
1,736,919 ABB Ltd. (b) 44,846,254
34,291 Landis+Gyr Group AG (b) 1,865,348
---------------
46,711,602
---------------
TAIWAN -- 0.1%
29,978 Advantech Co., Ltd. (b) 276,142
25,389 Chung-Hsin Electric &
Machinery Manufacturing
Corp. (b) 45,326
---------------
321,468
---------------
UNITED KINGDOM -- 7.5%
3,826,578 National Grid PLC (b) 39,391,041
60,859 SSE PLC (b) 1,027,660
---------------
40,418,701
---------------
UNITED STATES -- 35.8%
51,500 Advanced Energy Industries,
Inc. 3,986,615
33,160 AES (The) Corp. 749,416
43,500 American Superconductor
Corp. (e) 190,530
31,524 Analog Devices, Inc. 4,392,554
2,520 Arcosa, Inc. 144,094
1,291 AZZ, Inc. 47,134
2,214 Belden, Inc. 132,884
241,112 Cisco Systems, Inc. 9,644,480
1,579 Digi International, Inc. (e) 54,586
36,241 Emerson Electric Co. 2,653,566
2,243 EnerSys 130,475
157,695 Enphase Energy, Inc. (e) 43,755,632
1,172 ESCO Technologies, Inc. 86,072
144,747 Fluence Energy, Inc. (e) (f) 2,111,859
Page 52 See Notes to Financial Statements
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
UNITED STATES (CONTINUED)
3,717 Generac Holdings, Inc. (e) $ 662,146
55,110 General Electric Co. 3,411,860
41,291 Honeywell International, Inc. 6,894,358
74,856 Hubbell, Inc. 16,692,888
52,589 International Business
Machines Corp. 6,248,099
57,160 Itron, Inc. (e) 2,407,008
1,290 Littelfuse, Inc. 256,310
3,241 MasTec, Inc. (e) 205,804
21,092 MYR Group, Inc. (e) 1,787,125
7,461 National Instruments Corp. 281,578
79,500 NVIDIA Corp. 9,650,505
93,101 Oracle Corp. 5,685,678
4,989 Preformed Line Products Co. 354,967
68,829 QUALCOMM, Inc. 7,776,300
169,848 Quanta Services, Inc. 21,636,937
84,720 SolarEdge Technologies,
Inc. (e) 19,609,291
43,538 Tesla, Inc. (e) 11,548,455
52,641 Texas Instruments, Inc. 8,147,774
13,509 Trimble, Inc. (e) 733,134
1,126 Valmont Industries, Inc. 302,466
2,740 WESCO International, Inc. (e) 327,101
17,671 Willdan Group, Inc. (e) 261,708
---------------
192,961,389
---------------
TOTAL COMMON STOCKS
-- 99.8% 536,972,414
(Cost $624,738,904) ---------------
MONEY MARKET FUNDS -- 0.6%
3,377,340 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.77% (g) (h) 3,377,340
(Cost $3,377,340) ---------------
TOTAL INVESTMENTS -- 100.4% 540,349,754
(Cost $628,116,244)
NET OTHER ASSETS AND
LIABILITIES -- (0.4)% (1,919,748)
---------------
NET ASSETS -- 100.0% $ 538,430,006
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $231,684,922 or 43.0% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(c) This security is exempt from registration upon resale under Rule 144A of
the Securities Act of 1933, as amended (the "1933 Act") and may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. This security is not restricted on the foreign
exchange where it trades freely without any additional registration. As
such, it does not require the additional disclosure required of restricted
securities.
(d) This security may be resold to qualified foreign investors and foreign
institutional buyers under Regulation S of the 1933 Act.
(e) Non-income producing security.
(f) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $3,259,781 and the
total value of the collateral held by the Fund is $3,377,340.
(g) Rate shown reflects yield as of September 30, 2022.
(h) This security serves as collateral for securities on loan.
See Notes to Financial Statements Page 53
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
---------------------------------
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) $ 3,259,781
Non-cash Collateral(2) (3,259,781)
---------------
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 September 30, 2022, 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.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
United States Dollar 54.6%
Euro 20.8
Swiss Franc 8.6
British Pound Sterling 7.5
South Korean Won 3.7
Canadian Dollar 2.5
Japanese Yen 1.3
Danish Krone 0.6
Hong Kong Dollar 0.3
New Taiwan Dollar 0.1
------
Total 100.0%
======
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
Canada....................................... $ 13,633,869 $ 13,633,869 $ -- $ --
Ireland...................................... 76,426,409 76,426,409 -- --
Jersey....................................... 20,089,959 20,089,959 -- --
Netherlands.................................. 5,145,143 2,175,866 2,969,277 --
United States................................ 192,961,389 192,961,389 -- --
Other Country Categories*.................... 228,715,645 -- 228,715,645 --
Money Market Funds.............................. 3,377,340 3,377,340 -- --
------------------------------------------------------------------
Total Investments............................... $ 540,349,754 $ 308,664,832 $ 231,684,922 $ --
==================================================================
* See Portfolio of Investments for country breakout.
Page 54 See Notes to Financial Statements
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.6%
AUSTRALIA -- 14.5%
942,695 Alumina Ltd. (b) $ 763,159
427,427 BHP Group Ltd., ADR 21,388,447
632,421 Fortescue Metals Group
Ltd. (b) 6,789,285
---------------
28,940,891
---------------
BERMUDA -- 0.3%
322,360 China Water Affairs Group
Ltd. (b) 254,970
616,389 Nine Dragons Paper Holdings
Ltd. (b) 382,441
---------------
637,411
---------------
BRAZIL -- 18.5%
1,245,680 Petroleo Brasileiro S.A., ADR 15,371,691
39,138 SLC Agricola S.A. 313,650
1,600,430 Vale S.A., ADR 21,317,727
---------------
37,003,068
---------------
CANADA -- 10.5%
90,364 Enerplus Corp. 1,279,560
105,449 Nutrien Ltd. 8,792,338
66,500 Peyto Exploration &
Development Corp. (c) 530,517
314,063 Suncor Energy, Inc. 8,844,283
22,453 West Fraser Timber Co., Ltd. 1,624,301
---------------
21,070,999
---------------
CHILE -- 0.1%
24,036 CAP S.A. 155,438
---------------
CHINA -- 3.1%
1,364,070 China Shenhua Energy Co.,
Ltd., Class H (b) 4,059,006
151,284 Shandong Chenming Paper
Holdings Ltd.,
Class H (b) (d) 41,750
583,916 Yankuang Energy Group Co.,
Ltd., Class H (b) 2,108,341
---------------
6,209,097
---------------
COLOMBIA -- 3.7%
830,443 Ecopetrol S.A., ADR (c) 7,415,856
---------------
INDIA -- 2.8%
842,243 Coal India Ltd. (b) 2,182,595
1,072,990 GAIL India Ltd. (b) 1,140,344
455,549 NMDC Ltd. (b) 710,049
452,778 Vedanta Ltd. (b) 1,485,841
---------------
5,518,829
---------------
INDONESIA -- 0.7%
5,650,129 Adaro Energy Indonesia Tbk
PT (b) 1,457,066
---------------
JAPAN -- 2.0%
31,200 Daio Paper Corp. (b) (c) 250,269
391,300 Inpex Corp. (b) 3,649,689
---------------
3,899,958
---------------
LUXEMBOURG -- 0.2%
17,913 APERAM S.A. (b) 422,713
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
NORWAY -- 1.1%
62,002 Yara International ASA (b) $ 2,175,970
---------------
PORTUGAL -- 0.1%
85,716 Navigator (The) Co., S.A. (b) 292,054
---------------
SOUTH AFRICA -- 2.8%
42,548 African Rainbow Minerals Ltd. 574,798
96,953 Exxaro Resources Ltd. (b) 1,076,763
340,006 Impala Platinum Holdings
Ltd. (b) 3,161,246
22,484 Kumba Iron Ore Ltd. (b) 476,955
31,521 Royal Bafokeng Platinum
Ltd. (b) 248,586
---------------
5,538,348
---------------
SWEDEN -- 1.7%
107,922 Boliden AB (b) 3,334,350
---------------
TAIWAN -- 0.4%
288,249 Taiwan Fertilizer Co., Ltd. (b) 498,220
420,700 YFY, Inc. (b) 312,513
---------------
810,733
---------------
UNITED KINGDOM -- 13.3%
204,815 Ferrexpo PLC (b) 273,408
385,494 Rio Tinto PLC, ADR (c) 21,225,300
94,426 Severn Trent PLC (b) 2,468,436
269,848 United Utilities Group PLC (b) 2,664,509
---------------
26,631,653
---------------
UNITED STATES -- 23.8%
12,795 Andersons (The), Inc. 397,029
109,137 Archer-Daniels-Midland Co. 8,780,072
21,746 California Water Service
Group 1,145,797
80,062 CF Industries Holdings, Inc. 7,705,967
314,567 Coterra Energy, Inc. 8,216,490
50,610 FMC Corp. 5,349,477
145,157 International Paper Co. 4,601,477
10,778 SJW Group 620,813
113,870 Tyson Foods, Inc., Class A 7,507,449
101,210 Westrock Co. 3,126,377
---------------
47,450,948
---------------
TOTAL COMMON STOCKS
-- 99.6% 198,965,382
(Cost $238,288,109) ---------------
MONEY MARKET FUNDS -- 7.2%
14,276,247 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.77% (e) (f) 14,276,247
(Cost $14,276,247) ---------------
TOTAL INVESTMENTS -- 106.8% 213,241,629
(Cost $252,564,356)
NET OTHER ASSETS AND
LIABILITIES -- (6.8)% (13,494,187)
---------------
NET ASSETS -- 100.0% $ 199,747,442
===============
See Notes to Financial Statements Page 55
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $42,680,528 or 21.4% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(c) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $13,841,952 and the
total value of the collateral held by the Fund is $14,276,247.
(d) Non-income producing security.
(e) Rate shown reflects yield as of September 30, 2022.
(f) This security serves as collateral for securities on loan.
ADR - American Depositary Receipt
---------------------------------
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) $ 13,841,952
Non-cash Collateral(2) (13,841,952)
---------------
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 September 30, 2022, 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.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
United States Dollar 73.7%
Canadian Dollar 5.8
Australian Dollar 3.5
Hong Kong Dollar 3.2
South African Rand 2.6
Indian Rupee 2.6
British Pound Sterling 2.5
Japanese Yen 1.8
Swedish Krona 1.6
Norwegian Krone 1.0
Indonesian Rupiah 0.7
New Taiwan Dollar 0.4
Euro 0.3
Brazilian Real 0.2
Chilean Peso 0.1
------
Total 100.0%
======
Page 56 See Notes to Financial Statements
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
Australia.................................... $ 28,940,891 $ 21,388,447 $ 7,552,444 $ --
Brazil....................................... 37,003,068 37,003,068 -- --
Canada....................................... 21,070,999 21,070,999 -- --
Chile........................................ 155,438 155,438 -- --
Colombia..................................... 7,415,856 7,415,856 -- --
South Africa................................. 5,538,348 574,798 4,963,550 --
United Kingdom............................... 26,631,653 21,225,300 5,406,353 --
United States................................ 47,450,948 47,450,948 -- --
Other Country Categories*.................... 24,758,181 -- 24,758,181 --
Money Market Funds.............................. 14,276,247 14,276,247 -- --
------------------------------------------------------------------
Total Investments............................... $ 213,241,629 $ 170,561,101 $ 42,680,528 $ --
==================================================================
* See Portfolio of Investments for country breakout.
See Notes to Financial Statements Page 57
FIRST TRUST INDXX GLOBAL AGRICULTURE ETF (FTAG)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.8%
AUSTRALIA -- 1.1%
84,583 Incitec Pivot Ltd. (b) $ 192,332
16,556 Nufarm Ltd. (b) 53,055
---------------
245,387
---------------
BERMUDA -- 2.5%
6,635 Bunge Ltd. 547,852
---------------
CANADA -- 8.3%
22,391 Nutrien Ltd. 1,867,335
---------------
CHILE -- 2.5%
6,238 Sociedad Quimica y Minera
de Chile S.A., ADR 566,099
---------------
CHINA -- 0.1%
76,405 China BlueChemical Ltd.,
Class H (b) 15,792
---------------
GERMANY -- 15.0%
25,609 BASF SE (b) 982,829
40,565 Bayer AG (b) 1,869,007
20,224 Evonik Industries AG (b) 338,703
8,307 K+S AG (b) 157,309
---------------
3,347,848
---------------
INDIA -- 9.8%
1,961 Bayer CropScience Ltd. (b) 117,431
18,160 Chambal Fertilisers and
Chemicals Ltd. (b) 70,769
12,833 Coromandel International
Ltd. (b) 156,161
5,761 Escorts Kubota Ltd. (b) 149,809
6,788 Gujarat Narmada Valley
Fertilizers & Chemicals
Ltd. (b) 53,102
54,252 Mahindra & Mahindra Ltd. (b) 839,379
6,624 PI Industries Ltd. (b) 242,720
21,757 Sumitomo Chemical India
Ltd. (b) 133,890
11,146 Tata Chemicals Ltd. (b) 150,230
32,743 UPL Ltd. (b) 268,591
---------------
2,182,082
---------------
ISRAEL -- 2.0%
56,082 ICL Group Ltd. (b) 449,466
---------------
JAPAN -- 6.7%
52,300 Kubota Corp. (b) 726,807
8,900 Mitsui Chemicals, Inc. (b) 173,477
6,200 Nissan Chemical Corp. (b) 276,977
2,100 Sakata Seed Corp. (b) 69,857
72,100 Sumitomo Chemical Co.,
Ltd. (b) 247,995
---------------
1,495,113
---------------
MALAYSIA -- 2.8%
349,401 Petronas Chemicals Group
Bhd (b) 628,355
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
MEXICO -- 0.7%
87,295 Orbia Advance Corp. SAB
de CV $ 146,940
---------------
NETHERLANDS -- 4.4%
59,154 CNH Industrial N.V. 660,750
9,145 OCI N.V. (b) 334,812
---------------
995,562
---------------
NORWAY -- 1.7%
11,111 Yara International ASA (b) 389,942
---------------
QATAR -- 4.6%
222,198 Industries Qatar QSC (b) 1,025,730
---------------
RUSSIA -- 0.0%
1,918 PhosAgro PJSC (b) (c) (d) 4,104
---------------
SINGAPORE -- 3.3%
279,400 Wilmar International Ltd. (b) 743,313
---------------
SWITZERLAND -- 0.6%
446 Bucher Industries AG (b) 139,140
---------------
TAIWAN -- 0.3%
42,804 Taiwan Fertilizer Co., Ltd. (b) 73,984
---------------
TURKEY -- 0.5%
14,583 Gubre Fabrikalari TAS (b) (e) 99,382
---------------
UNITED STATES -- 32.9%
3,258 AGCO Corp. 313,322
523 Alamo Group, Inc. 63,947
8,703 CF Industries Holdings, Inc. 837,664
1,492 Compass Minerals
International, Inc. 57,487
29,862 Corteva, Inc. 1,706,613
462 CVR Partners, L.P. (f) 52,867
6,577 Deere & Co. 2,195,994
5,502 FMC Corp. 581,561
480 Lindsay Corp. 68,774
3,875 LSB Industries, Inc. (g) 55,219
15,081 Mosaic (The) Co. 728,865
2,420 Scotts Miracle-Gro (The) Co. 103,455
1,967 SiteOne Landscape Supply,
Inc. (e) 204,843
4,568 Toro (The) Co. 395,041
---------------
7,365,652
---------------
TOTAL INVESTMENTS -- 99.8% 22,329,078
(Cost $27,211,436)
NET OTHER ASSETS AND
LIABILITIES -- 0.2% 40,696
---------------
NET ASSETS -- 100.0% $ 22,369,774
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
Page 58 See Notes to Financial Statements
FIRST TRUST INDXX GLOBAL AGRICULTURE ETF (FTAG)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $11,174,450 or 50.0% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(c) This security's value was determined using significant unobservable inputs
(see Note 2A - Portfolio Valuation in the Notes to Financial Statements).
(d) Pursuant to procedures adopted by the Trust's Board of Trustees, this
security has been determined to be illiquid by First Trust Advisors, L.P.,
the Fund's Advisor.
(e) Non-income producing security.
(f) Security is a Master Limited Partnership ("MLP").
(g) Non-income producing security which makes payment-in-kind ("PIK")
distributions. There were no in-kind distributions received for the fiscal
year ended September 30, 2022.
ADR - American Depositary Receipt
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
United States Dollar 40.9%
Euro 16.5
Indian Rupee 9.8
Canadian Dollar 8.4
Japanese Yen 6.7
Qatar Riyal 4.6
Singapore Dollar 3.3
Malaysian Ringgit 2.8
Israeli Shekel 2.0
Norwegian Krone 1.8
Australian Dollar 1.1
Mexican Peso 0.7
Swiss Franc 0.6
Turkish Lira 0.4
New Taiwan Dollar 0.3
Hong Kong Dollar 0.1
Russian Ruble 0.0*
------
Total 100.0%
======
*Amount is less than 0.1%
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
Bermuda...................................... $ 547,852 $ 547,852 $ -- $ --
Canada....................................... 1,867,335 1,867,335 -- --
Chile........................................ 566,099 566,099 -- --
Mexico....................................... 146,940 146,940 -- --
Netherlands.................................. 995,562 660,750 334,812 --
Russia....................................... 4,104 -- -- 4,104
United States................................ 7,365,652 7,365,652 -- --
Other Country Categories*.................... 10,835,534 -- 10,835,534 --
------------------------------------------------------------------
Total Common Stocks............................. $ 22,329,078 $ 11,154,628 $ 11,170,346 $ 4,104
==================================================================
* See Portfolio of Investments for country breakout.
Level 3 Common Stocks are fair valued by the Advisor's Pricing Committee and are
footnoted in the Portfolio of Investments.
Level 3 Common Stocks values are based on unobservable and non-quantitative
inputs.
See Notes to Financial Statements Page 59
FIRST TRUST BICK INDEX FUND (BICK)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.9%
BRAZIL -- 23.9%
169,172 Ambev S.A., ADR $ 478,757
214,498 B3 S.A. - Brasil Bolsa Balcao 522,889
135,151 Banco Bradesco S.A., ADR 497,356
60,969 Banco do Brasil S.A. 434,577
55,125 Centrais Eletricas Brasileiras
S.A. 440,236
127,217 Cosan S.A. 409,172
105,120 Equatorial Energia S.A. 523,422
108,996 Gerdau S.A. (Preference
Shares) 493,825
349,148 Hapvida Participacoes e
Investimentos S.A. (b) (c) 491,908
99,312 Itau Unibanco Holding S.A.,
ADR 513,443
277,792 Itausa S.A. (Preference Shares) 502,094
85,901 JBS S.A. 401,928
41,792 Localiza Rent a Car S.A. 471,892
96,026 Lojas Renner S.A. 497,010
595,268 Magazine Luiza S.A. (d) 497,680
93,072 Petro Rio S.A. (d) 475,509
34,332 Petroleo Brasileiro S.A., ADR 423,657
76,262 Rede D'Or Sao Luiz
S.A. (b) (c) 421,718
125,769 Rumo S.A. 432,492
57,429 Suzano S.A. 475,563
39,501 Vale S.A., ADR 526,153
89,848 WEG S.A. 533,823
---------------
10,465,104
---------------
CAYMAN ISLANDS -- 19.7%
5,142 Alibaba Group Holding Ltd.,
ADR (d) 411,309
40,648 ANTA Sports Products Ltd. (e) 426,674
3,408 Baidu, Inc., ADR (d) 400,406
7,727 JD.com, Inc., ADR 388,668
27,195 KE Holdings, Inc., ADR (d) 476,456
56,012 Kuaishou
Technology (b) (c) (d) (e) 359,269
17,052 Li Auto, Inc., ADR (d) 392,367
53,637 Li Ning Co., Ltd. (e) 406,991
20,267 Meituan, Class B (b) (c) (d) (e) 425,941
5,543 NetEase, Inc., ADR 419,051
24,641 NIO, Inc., ADR (d) 388,589
100,122 NU Holdings Ltd., Class A (d) 440,537
6,881 Pinduoduo, Inc., ADR (d) 430,613
51,751 StoneCo., Ltd., Class A (d) 493,187
35,700 Sunny Optical Technology
Group Co., Ltd. (e) 339,279
11,805 Tencent Holdings Ltd. (e) 398,729
19,075 Trip.com Group Ltd., ADR (d) 520,938
55,093 Wuxi Biologics Cayman,
Inc. (b) (c) (d) (e) 327,960
333,120 Xiaomi Corp.,
Class B (b) (c) (d) (e) 377,216
25,499 XP, Inc., Class A (d) 484,736
26,490 XPeng, Inc., ADR (d) 316,555
---------------
8,625,471
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
CHINA -- 5.9%
1,395,346 Bank of China Ltd., Class H (e) $ 455,714
15,853 BYD Co., Ltd., Class H (e) 390,548
790,793 China Construction Bank
Corp., Class H (e) 456,447
95,306 China Merchants Bank Co.,
Ltd., Class H (e) 441,063
962,655 Industrial & Commercial Bank
of China Ltd., Class H (e) 451,587
83,045 Ping An Insurance (Group) Co.
of China Ltd., Class H (e) 414,294
---------------
2,609,653
---------------
INDIA -- 17.4%
19,546 Dr. Reddy's Laboratories Ltd.,
ADR 1,023,038
16,742 HDFC Bank Ltd., ADR 978,068
46,799 ICICI Bank Ltd., ADR 981,375
55,851 Infosys Ltd., ADR 947,791
15,510 Reliance Industries Ltd.,
GDR (b) (e) 899,924
15,416 State Bank of India,
GDR (c) (e) 992,392
35,244 Tata Motors Ltd., ADR (d) (f) 855,019
204,008 Wipro Ltd., ADR 960,878
---------------
7,638,485
---------------
JERSEY -- 2.3%
12,132 WNS (Holdings) Ltd.,
ADR (d) 992,883
---------------
MAURITIUS -- 5.7%
284,703 Azure Power Global
Ltd. (d) (f) 1,577,254
30,647 MakeMyTrip Ltd. (d) 940,863
---------------
2,518,117
---------------
SOUTH KOREA -- 20.7%
3,463 Celltrion, Inc. (e) 420,292
32,246 Doosan Enerbility Co.,
Ltd. (d) (e) 316,755
5,848 Ecopro BM Co., Ltd. (e) 353,784
29,492 HMM Co., Ltd. (e) 376,557
3,348 Hyundai Motor Co. (e) 408,585
8,940 Kakao Corp. 356,800
24,037 KakaoBank Corp. (d) (e) 332,978
13,270 KB Financial Group, Inc. (e) 400,735
8,121 Kia Corp. (e) 404,198
2,847 L&F Co., Ltd. (d) (e) 346,205
1,038 LG Chem Ltd. (e) 383,266
6,497 LG Electronics, Inc. (e) 352,563
922 LG H&H Co., Ltd. (e) 404,130
1,908 LG Innotek Co., Ltd. (e) 359,630
2,734 NAVER Corp. (e) 364,213
2,573 POSCO Holdings, Inc. (e) 375,318
786 Samsung Biologics Co.,
Ltd. (b) (c) (d) (e) 439,979
4,687 Samsung Electro-Mechanics
Co., Ltd. (e) 361,623
10,992 Samsung Electronics Co.,
Ltd. (e) 403,618
Page 60 See Notes to Financial Statements
FIRST TRUST BICK INDEX FUND (BICK)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
SOUTH KOREA (CONTINUED)
1,097 Samsung SDI Co., Ltd. (e) $ 412,630
17,929 Shinhan Financial Group Co.,
Ltd. (e) 416,475
5,807 SK Bioscience Co., Ltd. (d) (e) 321,447
6,893 SK Hynix, Inc. (e) 394,281
3,454 SK Innovation Co.,
Ltd. (e) (g) 342,283
---------------
9,048,345
---------------
UNITED KINGDOM -- 2.1%
150,750 ReNew Energy Global PLC,
Class A (d) 907,515
---------------
UNITED STATES -- 2.2%
29,030 Coupang, Inc. (d) 483,930
9,790 Yum China Holdings, Inc. 463,361
---------------
947,291
---------------
TOTAL COMMON STOCKS
-- 99.9% 43,752,864
(Cost $49,271,343) ---------------
RIGHTS (a) -- 0.0%
BRAZIL -- 0.0%
128 Localiza Rent a Car S.A.,
expiring 11/7/22 (d) (h) 261
(Cost $0) ---------------
MONEY MARKET FUNDS -- 1.7%
739,375 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.77% (i) (j) 739,375
(Cost $739,375) ---------------
TOTAL INVESTMENTS -- 101.6% 44,492,500
(Cost $50,010,718)
NET OTHER ASSETS AND
LIABILITIES -- (1.6)% (694,024)
---------------
NET ASSETS -- 100.0% $ 43,798,476
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is exempt from registration upon resale under Rule 144A of
the Securities Act of 1933, as amended (the "1933 Act") and may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. This security is not restricted on the foreign
exchange where it trades freely without any additional registration. As
such, it does not require the additional disclosure required of restricted
securities.
(c) This security may be resold to qualified foreign investors and foreign
institutional buyers under Regulation S of the 1933 Act.
(d) Non-income producing security.
(e) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $16,255,573 or 37.1% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(f) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $739,778 and the
total value of the collateral held by the Fund is $739,375.
(g) Non-income producing security which makes payment-in-kind ("PIK")
distributions. For the fiscal year ended September 30, 2022, the Fund
received 16 PIK shares of SK Innovation Co., Ltd.
(h) Pursuant to procedures adopted by the Trust's Board of Trustees, this
security has been determined to be illiquid by First Trust Advisors, L.P.,
the Fund's Advisor.
(i) Rate shown reflects yield as of September 30, 2022.
(j) This security serves as collateral for securities on loan.
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
See Notes to Financial Statements Page 61
FIRST TRUST BICK INDEX FUND (BICK)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
---------------------------------
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) $ 739,778
Non-cash Collateral(2) (739,375)
---------------
Net Amount $ 403
===============
(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 September 30, 2022, the last business day of the
period, there was sufficient collateral based on the end of day market
value from the prior business day; however, as a result of market movement
from September 29 to September 30, the value of the related securities
loaned was above the collateral value received. See Note 2E - Securities
Lending in the Notes to Financial Statements.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
United States Dollar 48.9%
South Korean Won 20.3
Brazilian Real 18.0
Hong Kong Dollar 12.8
------
Total 100.0%
======
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
Cayman Islands............................... $ 8,625,471 $ 5,563,412 $ 3,062,059 $ --
China........................................ 2,609,653 -- 2,609,653 --
India........................................ 7,638,485 5,746,169 1,892,316 --
South Korea.................................. 9,048,345 356,800 8,691,545 --
Other Country Categories*.................... 15,830,910 15,830,910 -- --
Rights*......................................... 261 261 -- --
Money Market Funds.............................. 739,375 739,375 -- --
------------------------------------------------------------------
Total Investments............................... $ 44,492,500 $ 28,236,927 $ 16,255,573 $ --
==================================================================
* See Portfolio of Investments for country breakout.
Page 62 See Notes to Financial Statements
FIRST TRUST INDXX NEXTG ETF (NXTG)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.7%
AUSTRALIA -- 0.6%
1,173,082 Telstra Corp., Ltd. (b) $ 2,896,618
---------------
BRAZIL -- 0.5%
339,846 Telefonica Brasil S.A.,
ADR (c) 2,555,642
---------------
CANADA -- 1.6%
60,220 BCE, Inc. 2,525,024
65,941 Rogers Communications, Inc.,
Class B 2,540,066
132,719 TELUS Corp. 2,635,453
---------------
7,700,543
---------------
CAYMAN ISLANDS -- 2.0%
231,100 GDS Holdings Ltd.,
ADR (c) (d) 4,081,226
4,676,121 Xiaomi Corp.,
Class B (b) (d) (e) (f) 5,295,107
---------------
9,376,333
---------------
CHINA -- 2.6%
59,954,174 China Tower Corp., Ltd.,
Class H (b) (e) (f) 6,405,614
3,354,402 ZTE Corp., Class H (b) 5,990,389
---------------
12,396,003
---------------
FINLAND -- 2.6%
128,408 Elisa OYJ (b) 5,818,023
1,496,197 Nokia OYJ, ADR 6,388,761
---------------
12,206,784
---------------
FRANCE -- 0.5%
279,041 Orange S.A. (b) 2,523,787
---------------
GERMANY -- 2.2%
163,155 Deutsche Telekom AG (b) 2,777,161
247,488 Infineon Technologies AG (b) 5,416,015
1,111,657 Telefonica Deutschland
Holding AG (b) 2,247,561
---------------
10,440,737
---------------
GUERNSEY -- 1.4%
86,131 Amdocs Ltd. 6,843,108
---------------
HONG KONG -- 1.1%
7,378,622 Lenovo Group Ltd. (b) 5,103,756
---------------
INDIA -- 7.3%
370,794 Bharti Airtel Ltd. (b) 3,628,953
548,554 HCL Technologies Ltd. (b) 6,229,973
384,351 Infosys Ltd., ADR 6,522,437
164,649 Tata Consultancy Services
Ltd. (b) 6,034,204
495,582 Tech Mahindra Ltd. (b) 6,083,060
1,232,013 Wipro Ltd., ADR 5,802,781
---------------
34,301,408
---------------
ITALY -- 1.7%
668,631 Infrastrutture Wireless Italiane
S.p.A. (b) (e) (f) 5,833,469
11,124,739 Telecom Italia S.p.A. (b) (d) 2,057,700
---------------
7,891,169
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
JAPAN -- 10.8%
51,332 Fujitsu Ltd. (b) $ 5,628,658
96,648 KDDI Corp. (b) 2,825,628
128,771 Kyocera Corp. (b) 6,487,320
655,765 Mitsubishi Electric Corp. (b) 5,933,394
183,159 NEC Corp. (b) 5,864,799
248,366 Nippon Telegraph &
Telephone Corp. (b) 6,699,006
671,059 Renesas Electronics
Corp. (b) (d) 5,625,649
661,498 SoftBank Corp. (b) 6,605,672
79,276 Sony Group Corp. (b) 5,106,521
---------------
50,776,647
---------------
MALAYSIA -- 0.7%
4,386,855 DiGi.Com Bhd (b) 3,187,810
---------------
MEXICO -- 0.6%
3,245,985 America Movil SAB de CV,
Series L 2,673,894
162,299 Sitios Latinoamerica SAB de
CV (d) 73,899
---------------
2,747,793
---------------
NETHERLANDS -- 3.0%
914,298 Koninklijke KPN N.V. (b) 2,474,415
39,391 NXP Semiconductors N.V. 5,810,566
189,233 STMicroelectronics N.V. (b) 5,882,261
---------------
14,167,242
---------------
NEW ZEALAND -- 0.6%
1,046,930 Spark New Zealand Ltd. (b) 2,929,054
---------------
NORWAY -- 0.5%
240,252 Telenor ASA (b) 2,198,815
---------------
PHILIPPINES -- 0.6%
76,535 Globe Telecom, Inc. (b) 2,643,373
---------------
QATAR -- 0.8%
1,496,768 Ooredoo QPSC (b) 3,647,700
---------------
RUSSIA -- 0.0%
755,018 Mobile TeleSystems PJSC,
ADR (b) (g) (h) 103,951
---------------
SINGAPORE -- 0.7%
1,751,952 Singapore Telecommunications
Ltd. (b) 3,232,772
---------------
SOUTH AFRICA -- 1.0%
339,218 MTN Group Ltd. (b) 2,238,158
364,704 Vodacom Group Ltd. (b) 2,450,480
---------------
4,688,638
---------------
SOUTH KOREA -- 4.3%
215,612 KT Corp., ADR 2,634,779
88,980 LG Electronics, Inc. (b) 4,828,538
139,883 Samsung Electronics Co.,
Ltd. (b) 5,136,399
63,117 Samsung SDS Co., Ltd. (b) 5,026,562
72,905 SK Telecom Co., Ltd. (b) 2,573,811
---------------
20,200,089
---------------
See Notes to Financial Statements Page 63
FIRST TRUST INDXX NEXTG ETF (NXTG)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
SPAIN -- 0.9%
73,535 Cellnex Telecom
S.A. (b) (e) (f) $ 2,268,295
664,360 Telefonica S.A. (b) 2,196,312
---------------
4,464,607
---------------
SWEDEN -- 2.1%
265,744 Tele2 AB, Class B (b) 2,293,258
881,959 Telefonaktiebolaget LM
Ericsson, Class B (b) (c) 5,155,449
806,986 Telia Co., AB (b) 2,324,186
---------------
9,772,893
---------------
SWITZERLAND -- 0.6%
5,703 Swisscom AG (b) 2,670,379
---------------
TAIWAN -- 9.2%
607,248 Advantech Co., Ltd. (b) 5,593,651
2,041,511 ASE Technology Holding Co.,
Ltd. (b) 5,075,395
756,115 Chunghwa Telecom Co.,
Ltd. (b) 2,706,240
912,164 Delta Electronics, Inc. (b) 7,245,434
1,173,282 Far EasTone
Telecommunications Co.,
Ltd. (b) 2,669,617
231,990 MediaTek, Inc. (b) 4,003,315
1,994,034 Taiwan Mobile Co., Ltd. (b) 6,001,430
79,874 Taiwan Semiconductor
Manufacturing Co., Ltd.,
ADR 5,476,162
4,138,197 United Microelectronics
Corp. (b) 4,631,047
---------------
43,402,291
---------------
THAILAND -- 0.6%
524,600 Advanced Info Service
PCL (b) 2,705,711
---------------
UNITED ARAB EMIRATES -- 0.6%
427,965 Emirates Telecommunications
Group Co. PJSC (b) 2,720,150
---------------
UNITED KINGDOM -- 1.4%
3,192,422 BT Group PLC (b) 4,291,559
2,041,011 Vodafone Group PLC (b) 2,284,288
---------------
6,575,847
---------------
UNITED STATES -- 36.6%
73,447 Advanced Micro Devices,
Inc. (d) 4,653,602
27,888 American Tower Corp. 5,987,554
44,902 Analog Devices, Inc. 6,256,645
50,873 Apple, Inc. 7,030,649
73,738 Arista Networks, Inc. (d) 8,324,283
154,461 AT&T, Inc. 2,369,432
13,046 Broadcom, Inc. 5,792,554
155,187 Ciena Corp. (d) 6,274,210
163,953 Cisco Systems, Inc. 6,558,120
40,397 Crown Castle, Inc. 5,839,386
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
UNITED STATES (CONTINUED)
54,470 Digital Realty Trust, Inc. $ 5,402,335
11,021 Equinix, Inc. 6,269,186
44,796 F5, Inc. (d) 6,483,325
494,316 Hewlett Packard Enterprise Co. 5,921,906
181,369 Intel Corp. 4,673,879
52,599 International Business
Machines Corp. 6,249,287
245,320 Juniper Networks, Inc. 6,407,758
50,442 Keysight Technologies, Inc. (d) 7,937,553
85,815 Lumentum Holdings, Inc. (d) 5,884,334
128,480 Marvell Technology, Inc. 5,513,077
108,908 Microchip Technology, Inc. 6,646,655
109,914 Micron Technology, Inc. 5,506,691
40,207 NVIDIA Corp. 4,880,728
69,025 Qorvo, Inc. (d) 5,481,275
53,080 QUALCOMM, Inc. 5,996,978
21,749 SBA Communications Corp. 6,190,853
70,132 Skyworks Solutions, Inc. 5,980,156
24,245 T-Mobile US, Inc. (d) 3,252,952
63,312 Verizon Communications, Inc. 2,403,957
57,111 VMware, Inc., Class A 6,080,037
---------------
172,249,357
---------------
TOTAL COMMON STOCKS
-- 99.7% 469,321,007
(Cost $586,232,777) ---------------
RIGHTS (a) -- 0.0%
PHILIPPINES -- 0.0%
5,410 Globe Telecom, Inc., expiring
10/21/22 (b) (d) (h) 32,299
(Cost $0) ---------------
MONEY MARKET FUNDS -- 2.3%
10,893,912 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.77% (i) (j) 10,893,912
(Cost $10,893,912) ---------------
TOTAL INVESTMENTS -- 102.0% 480,247,218
(Cost $597,126,689)
NET OTHER ASSETS AND
LIABILITIES -- (2.0)% (9,191,330)
---------------
NET ASSETS -- 100.0% $ 471,055,888
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
Page 64 See Notes to Financial Statements
FIRST TRUST INDXX NEXTG ETF (NXTG)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $240,540,151 or 51.1% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(c) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $10,573,085 and the
total value of the collateral held by the Fund is $10,893,912.
(d) Non-income producing security.
(e) This security is exempt from registration upon resale under Rule 144A of
the Securities Act of 1933, as amended (the "1933 Act") and may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. This security is not restricted on the foreign
exchange where it trades freely without any additional registration. As
such, it does not require the additional disclosure required of restricted
securities.
(f) This security may be resold to qualified foreign investors and foreign
institutional buyers under Regulation S of the 1933 Act.
(g) This security's value was determined using significant unobservable inputs
(see Note 2A - Portfolio Valuation in the Notes to Financial Statements).
(h) Pursuant to procedures adopted by the Trust's Board of Trustees, this
security has been determined to be illiquid by First Trust Advisors, L.P.,
the Fund's Advisor.
(i) Rate shown reflects yield as of September 30, 2022.
(j) This security serves as collateral for securities on loan.
ADR - American Depositary Receipt
---------------------------------
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) $ 10,573,085
Non-cash Collateral(2) (10,573,085)
---------------
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 September 30, 2022, 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.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
United States Dollar 47.8%
Japanese Yen 10.6
Euro 8.2
New Taiwan Dollar 7.9
Hong Kong Dollar 4.7
Indian Rupee 4.6
South Korean Won 3.6
Swedish Krona 2.0
Canadian Dollar 1.6
British Pound Sterling 1.4
South African Rand 1.0
Qatar Riyal 0.8
Singapore Dollar 0.7
Malaysian Ringgit 0.7
New Zealand Dollar 0.6
Australian Dollar 0.6
Mexican Peso 0.6
United Arab Emirates Dirham 0.6
Thai Baht 0.6
Philippine Peso 0.5
Swiss Franc 0.5
Norwegian Krone 0.4
------
Total 100.0%
======
See Notes to Financial Statements Page 65
FIRST TRUST INDXX NEXTG ETF (NXTG)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
Brazil....................................... $ 2,555,642 $ 2,555,642 $ -- $ --
Canada....................................... 7,700,543 7,700,543 -- --
Cayman Islands............................... 9,376,333 4,081,226 5,295,107 --
Finland...................................... 12,206,784 6,388,761 5,818,023 --
Guernsey..................................... 6,843,108 6,843,108 -- --
India........................................ 34,301,408 12,325,218 21,976,190 --
Mexico....................................... 2,747,793 2,747,793 -- --
Netherlands.................................. 14,167,242 5,810,566 8,356,676 --
Russia....................................... 103,951 -- -- 103,951
South Korea.................................. 20,200,089 2,634,779 17,565,310 --
Taiwan....................................... 43,402,291 5,476,162 37,926,129 --
United States................................ 172,249,357 172,249,357 -- --
Other Country Categories*.................... 143,466,466 -- 143,466,466 --
Rights*......................................... 32,299 -- 32,299 --
Money Market Funds.............................. 10,893,912 10,893,912 -- --
------------------------------------------------------------------
Total Investments............................... $ 480,247,218 $ 239,707,067 $ 240,436,200 $ 103,951
==================================================================
* See Portfolio of Investments for country breakout.
Level 3 Common Stocks are fair valued by the Advisor's Pricing Committee and are
footnoted in the Portfolio of Investments.
Level 3 Common Stocks values are based on unobservable and non-quantitative
inputs.
Page 66 See Notes to Financial Statements
FIRST TRUST S-NETWORK FUTURE VEHICLES & TECHNOLOGY ETF (CARZ)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.8%
AUSTRALIA -- 2.3%
33,930 Allkem Ltd. (b) (c) $ 300,061
358,791 Nickel Industries Ltd. (b) 181,139
153,302 Pilbara Minerals Ltd. (b) (c) 442,314
---------------
923,514
---------------
AUSTRIA -- 0.5%
29,294 ams-OSRAM AG (b) (c) 182,347
---------------
BELGIUM -- 0.5%
2,852 Solvay S.A. (b) 220,807
---------------
CANADA -- 1.2%
10,638 Lithium Americas Corp. (c) (d) 279,167
4,090 Magna International, Inc. 194,026
---------------
473,193
---------------
CAYMAN ISLANDS -- 3.5%
3,320 Ambarella, Inc. (c) 186,518
2,472 Baidu, Inc., ADR (c) 290,435
102,882 Geely Automobile Holdings
Ltd. (b) 140,793
34,660 Himax Technologies, Inc.,
ADR (d) 167,754
7,496 Li Auto, Inc., ADR (c) 172,483
13,120 NIO, Inc., ADR (c) 206,902
7,105 XPeng, Inc., ADR (c) 84,905
113,490 Yadea Group Holdings
Ltd. (b) (e) (f) 181,389
---------------
1,431,179
---------------
CHILE -- 0.6%
2,585 Sociedad Quimica y Minera de
Chile S.A., ADR 234,589
---------------
CHINA -- 2.8%
24,050 BYD Co., Ltd., Class H (b) 592,485
27,090 Ganfeng Lithium Co., Ltd.,
Class H (b) (d) (e) (f) 178,957
187,390 Great Wall Motor Co., Ltd.,
Class H (b) 213,632
225,964 Guangzhou Automobile Group
Co., Ltd., Class H (b) 160,557
---------------
1,145,631
---------------
FRANCE -- 1.3%
4,814 Schneider Electric SE (b) 543,743
---------------
GERMANY -- 2.9%
3,136 Bayerische Motoren Werke
AG (b) 212,549
3,448 Continental AG (b) 152,999
11,631 Infineon Technologies AG (b) 254,532
7,411 Mercedes-Benz Group AG (b) 374,751
1,679 Wacker Chemie AG (b) 172,611
---------------
1,167,442
---------------
INDIA -- 0.5%
8,321 Tata Motors Ltd., ADR (c) (d) 201,867
---------------
JAPAN -- 6.4%
7,600 Aisin Corp. (b) 195,622
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
JAPAN (CONTINUED)
4,400 Denso Corp. (b) $ 201,182
12,664 Honda Motor Co., Ltd. (b) 274,882
62,709 Nissan Motor Co., Ltd. (b) 202,088
28,000 Panasonic Holdings Corp. (b) 196,617
26,100 Renesas Electronics
Corp. (b) (c) 218,803
13,610 Subaru Corp. (b) 205,679
82,160 Toyota Motor Corp. (b) 1,073,868
---------------
2,568,741
---------------
JERSEY -- 0.5%
2,486 Aptiv PLC (c) 194,430
---------------
NETHERLANDS -- 3.1%
2,253 Alfen Beheer BV (b) (c) (e) (f) 206,322
1,197 Ferrari N.V. 221,445
2,362 NXP Semiconductors N.V. 348,419
19,232 Stellantis N.V. (b) 227,176
7,506 STMicroelectronics N.V. (b) 233,322
7,107 Yandex N.V.,
Class A (b) (c) (g) (h) 3,370
---------------
1,240,054
---------------
SOUTH KOREA -- 8.2%
2,572 Ecopro BM Co., Ltd. (b) (d) 155,597
1,547 Hyundai Mobis Co., Ltd. (b) 204,209
1,711 Hyundai Motor Co. (b) 208,808
4,277 Iljin Materials Co., Ltd. (b) 149,528
3,955 Kia Corp. (b) 196,848
571 LG Chem Ltd. (b) 210,833
3,148 LX Semicon Co., Ltd. (b) 164,835
46,295 Samsung Electronics Co.,
Ltd. (b) 1,699,918
553 Samsung SDI Co., Ltd. (b) 208,007
3,655 SK IE Technology Co.,
Ltd. (b) (c) (e) (f) 132,030
---------------
3,330,613
---------------
SWEDEN -- 0.6%
17,338 Volvo AB, Class B (b) 245,349
---------------
TAIWAN -- 4.4%
25,721 Taiwan Semiconductor
Manufacturing Co., Ltd.,
ADR 1,763,432
---------------
UNITED STATES -- 60.5%
14,579 Advanced Micro Devices,
Inc. (c) 923,725
1,135 Albemarle Corp. 300,139
11,343 Allegro MicroSystems, Inc. (c) 247,844
17,464 Alphabet, Inc., Class A (c) 1,670,432
4,677 Analog Devices, Inc. 651,693
913 ANSYS, Inc. (c) 202,412
14,174 Apple, Inc. 1,958,847
3,044 Autoliv, Inc. 202,822
12,609 Blink Charging Co. (c) (d) 223,431
6,650 BorgWarner, Inc. 208,810
8,351 Cerence, Inc. (c) 131,528
See Notes to Financial Statements Page 67
FIRST TRUST S-NETWORK FUTURE VEHICLES & TECHNOLOGY ETF (CARZ)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
UNITED STATES (CONTINUED)
16,763 ChargePoint Holdings,
Inc. (c) (d) $ 247,422
3,204 Cirrus Logic, Inc. (c) 220,435
1,231 Cummins, Inc. 250,521
35,528 Ford Motor Co. 397,914
12,464 General Motors Co. 399,970
8,056 Gentex Corp. 192,055
37,909 indie Semiconductor, Inc.,
Class A (c) (d) 277,494
54,388 Intel Corp. 1,401,579
1,765 Lear Corp. 211,253
10,529 Livent Corp. (c) 322,714
11,635 Lucid Group, Inc. (c) (d) 162,541
36,527 Luminar Technologies,
Inc. (c) (d) 266,099
7,570 Marvell Technology, Inc. 324,829
6,911 MaxLinear, Inc. (c) 225,437
4,889 Microchip Technology, Inc. 298,376
10,047 Micron Technology, Inc. 503,355
7,729 Microsoft Corp. 1,800,084
95,637 Microvast Holdings,
Inc. (c) (d) 173,103
13,081 NVIDIA Corp. 1,587,903
4,432 ON Semiconductor Corp. (c) 276,246
3,065 PACCAR, Inc. 256,510
12,042 Plug Power, Inc. (c) 253,002
45,105 Proterra, Inc. (c) (d) 224,623
2,294 Qorvo, Inc. (c) 182,166
15,434 QUALCOMM, Inc. 1,743,733
10,735 Rambus, Inc. (c) 272,884
7,287 Rivian Automotive, Inc.,
Class A (c) 239,815
1,808 Silicon Laboratories, Inc. (c) 223,179
1,531 SiTime Corp. (c) 120,536
2,346 Skyworks Solutions, Inc. 200,043
1,908 Synaptics, Inc. (c) 188,911
8,483 Tesla, Inc. (c) 2,250,116
8,296 Texas Instruments, Inc. 1,284,055
27,406 TuSimple Holdings, Inc.,
Class A (c) (d) 208,286
3,298 Wolfspeed, Inc. (c) 340,881
15,469 Xperi Holding Corp. 218,732
---------------
24,468,485
---------------
TOTAL COMMON STOCKS
-- 99.8% 40,335,416
(Cost $55,554,257) ---------------
MONEY MARKET FUNDS -- 5.4%
2,191,487 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.77% (i) (j) 2,191,487
(Cost $2,191,487) ---------------
DESCRIPTION VALUE
--------------------------------------------------------------
TOTAL INVESTMENTS -- 105.2% $ 42,526,903
(Cost $57,745,744)
NET OTHER ASSETS AND
LIABILITIES -- (5.2)% (2,111,979)
---------------
NET ASSETS -- 100.0% $ 40,414,924
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $11,320,559 or 28.0% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(c) Non-income producing security.
(d) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $2,105,168 and the
total value of the collateral held by the Fund is $2,191,487.
(e) This security is exempt from registration upon resale under Rule 144A of
the Securities Act of 1933, as amended (the "1933 Act") and may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. This security is not restricted on the foreign
exchange where it trades freely without any additional registration. As
such, it does not require the additional disclosure required of restricted
securities.
(f) This security may be resold to qualified foreign investors and foreign
institutional buyers under Regulation S of the 1933 Act.
(g) This security's value was determined using significant unobservable inputs
(see Note 2A - Portfolio Valuation in the Notes to Financial Statements).
(h) Pursuant to procedures adopted by the Trust's Board of Trustees, this
security has been determined to be illiquid by First Trust Advisors, L.P.,
the Fund's Advisor.
(i) Rate shown reflects yield as of September 30, 2022.
(j) This security serves as collateral for securities on loan.
ADR - American Depositary Receipt
Page 68 See Notes to Financial Statements
FIRST TRUST S-NETWORK FUTURE VEHICLES & TECHNOLOGY ETF (CARZ)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
---------------------------------
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) $ 2,105,168
Non-cash Collateral(2) (2,105,168)
---------------
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 September 30, 2022, 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.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
United States Dollar 72.3%
South Korean Won 7.8
Euro 6.1
Japanese Yen 6.0
Hong Kong Dollar 3.5
Australian Dollar 2.2
Canadian Dollar 1.1
Swedish Krona 0.6
Swiss Franc 0.4
------
Total 100.0%
======
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
Canada....................................... $ 473,193 $ 473,193 $ -- $ --
Cayman Islands............................... 1,431,179 1,108,997 322,182 --
Chile........................................ 234,589 234,589 -- --
India........................................ 201,867 201,867 -- --
Jersey....................................... 194,430 194,430 -- --
Netherlands.................................. 1,240,054 569,864 666,820 3,370
Taiwan....................................... 1,763,432 1,763,432 -- --
United States................................ 24,468,485 24,468,485 -- --
Other Country Categories*.................... 10,328,187 -- 10,328,187 --
Money Market Funds.............................. 2,191,487 2,191,487 -- --
------------------------------------------------------------------
Total Investments............................... $ 42,526,903 $ 31,206,344 $ 11,317,189 $ 3,370
==================================================================
* See Portfolio of Investments for country breakout.
Level 3 Common Stocks are fair valued by the Advisor's Pricing Committee and are
footnoted in the Portfolio of Investments. Level 3 Common Stocks values are
based on unobservable and non-quantitative inputs.
See Notes to Financial Statements Page 69
FIRST TRUST CLOUD COMPUTING ETF (SKYY)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.6%
CANADA -- 2.3%
639,900 Open Text Corp. $ 16,918,956
1,909,388 Shopify, Inc., Class A (b) 51,438,913
---------------
68,357,869
---------------
GERMANY -- 1.3%
472,752 SAP SE, ADR (c) 38,411,100
---------------
ISRAEL -- 1.7%
636,565 Wix.com Ltd. (b) 49,798,480
---------------
NETHERLANDS -- 0.6%
240,068 Elastic N.V. (b) 17,222,478
---------------
UNITED STATES -- 93.7%
161,825 Adobe, Inc. (b) 44,534,240
892,515 Akamai Technologies, Inc. (b) 71,686,805
1,116,840 Alphabet, Inc., Class A (b) 106,825,746
953,415 Amazon.com, Inc. (b) 107,735,895
198,699 Appfolio, Inc., Class A (b) 20,807,759
859,023 Appian Corp., Class A (b) 35,073,909
2,453,600 AppLovin Corp., Class A (b) 47,820,664
1,008,212 Arista Networks, Inc. (b) 113,817,053
1,051,908 Asana, Inc., Class A (b) (c) 23,383,915
244,013 Atlassian Corp. PLC,
Class A (b) 51,386,698
385,164 Blackbaud, Inc. (b) 16,970,326
296,499 Blackline, Inc. (b) 17,760,290
782,292 Box, Inc., Class A (b) 19,080,102
1,801,794 Cisco Systems, Inc. 72,071,760
1,287,776 Cloudflare, Inc., Class A (b) 71,226,891
2,208,778 Confluent, Inc., Class A (b) 52,502,653
344,933 Coupa Software, Inc. (b) 20,282,060
110,313 Crowdstrike Holdings, Inc.,
Class A (b) 18,180,685
191,940 Datadog, Inc., Class A (b) 17,040,433
2,871,567 DigitalOcean Holdings,
Inc. (b) (c) 103,864,578
345,999 DocuSign, Inc. (b) 18,500,567
2,091,800 Domo, Inc., Class B (b) 37,631,482
941,750 Dropbox, Inc., Class A (b) 19,513,060
2,833,199 Eventbrite, Inc., Class A (b) 17,225,850
506,387 Everbridge, Inc. (b) 15,637,231
6,463,330 Fastly, Inc., Class A (b) 59,204,103
1,709,536 HashiCorp, Inc., Class A (b) 55,029,964
4,443,539 Hewlett Packard Enterprise Co. 53,233,597
179,303 HubSpot, Inc. (b) 48,433,326
940,943 International Business
Machines Corp. 111,793,438
46,654 Intuit, Inc. 18,070,027
10,112,474 Lumen Technologies, Inc. 73,618,811
462,250 Microsoft Corp. 107,658,025
311,961 MongoDB, Inc. (b) 61,942,976
837,823 NetApp, Inc. 51,819,353
1,629,997 Oracle Corp. 99,543,917
108,533 Palo Alto Networks, Inc. (b) 17,776,620
57,359 Paycom Software, Inc. (b) 18,927,896
83,585 Paylocity Holding Corp. (b) 20,192,464
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
UNITED STATES (CONTINUED)
4,172,049 Pure Storage, Inc., Class A (b) $ 114,188,981
507,146 Q2 Holdings, Inc. (b) 16,330,101
1,644,412 Qualtrics International, Inc.,
Class A (b) 16,740,114
132,613 Qualys, Inc. (b) 18,484,926
26,993,269 Rackspace Technology,
Inc. (b) (c) 110,132,537
1,404,093 RingCentral, Inc., Class A (b) 56,107,556
387,088 Salesforce, Inc. (b) 55,678,738
139,046 ServiceNow, Inc. (b) 52,505,160
605,472 Smartsheet, Inc., Class A (b) 20,804,018
111,325 Snowflake, Inc., Class A (b) 18,920,797
671,245 Splunk, Inc. (b) 50,477,624
335,509 Sprout Social, Inc., Class A (b) 20,358,686
959,241 Squarespace, Inc., Class A (b) 20,489,388
1,064,135 Toast, Inc., Class A (b) (c) 17,792,337
321,277 Trade Desk (The), Inc.,
Class A (b) 19,196,301
868,526 Twilio, Inc., Class A (b) 60,049,888
101,064 Veeva Systems, Inc.,
Class A (b) 16,663,432
122,412 Workday, Inc., Class A (b) 18,633,555
890,147 Workiva, Inc. (b) 69,253,437
250,549 Zoom Video Communications,
Inc., Class A (b) 18,437,901
126,501 Zscaler, Inc. (b) 20,792,969
2,622,921 Zuora, Inc., Class A (b) 19,357,157
---------------
2,769,200,772
---------------
TOTAL COMMON STOCKS
-- 99.6% 2,942,990,699
(Cost $4,169,346,924) ---------------
MONEY MARKET FUNDS -- 1.2%
35,120,068 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.77% (d) (e) 35,120,068
(Cost $35,120,068) ---------------
TOTAL INVESTMENTS -- 100.8% 2,978,110,767
(Cost $4,204,466,992)
NET OTHER ASSETS AND
LIABILITIES -- (0.8)% (23,537,698)
---------------
NET ASSETS -- 100.0% $ 2,954,573,069
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) Non-income producing security.
Page 70 See Notes to Financial Statements
FIRST TRUST CLOUD COMPUTING ETF (SKYY)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
(c) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $33,318,349 and the
total value of the collateral held by the Fund is $35,120,068.
(d) Rate shown reflects yield as of September 30, 2022.
(e) This security serves as collateral for securities on loan.
ADR - American Depositary Receipt
---------------------------------
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) $ 33,318,349
Non-cash Collateral(2) (33,318,349)
---------------
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 September 30, 2022, 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.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks*.................................. $ 2,942,990,699 $ 2,942,990,699 $ -- $ --
Money Market Funds.............................. 35,120,068 35,120,068 -- --
------------------------------------------------------------------
Total Investments............................... $ 2,978,110,767 $ 2,978,110,767 $ -- $ --
==================================================================
* See Portfolio of Investments for country breakout.
See Notes to Financial Statements Page 71
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.6%
AUSTRALIA -- 0.4%
548,734 Lottery (The) Corp. (b) (c) $ 1,470,583
---------------
BERMUDA -- 1.2%
82,733 Arch Capital Group Ltd. (c) 3,767,661
---------------
BRAZIL -- 3.3%
1,344,745 Caixa Seguridade
Participacoes S.A. 2,133,903
2,568,650 Sendas Distribuidora S.A. 8,356,856
---------------
10,490,759
---------------
CANADA -- 11.3%
363,641 Definity Financial Corp. 10,219,382
184,896 Intact Financial Corp. 26,166,663
---------------
36,386,045
---------------
CAYMAN ISLANDS -- 13.3%
246,680 Chindata Group Holdings Ltd.,
ADR (c) 1,993,174
198,369 Dlocal Ltd. (c) 4,070,532
977,614 Jiumaojiu International
Holdings Ltd. (b) (d) (e) 1,589,813
1,516,800 Kuaishou
Technology (b) (c) (d) (e) 9,728,982
327,043 Li Auto, Inc., ADR (c) 7,525,260
283,380 Pinduoduo, Inc., ADR (c) 17,733,920
---------------
42,641,681
---------------
CHINA -- 2.3%
161,209 China Tourism Group Duty
Free Corp., Ltd.,
Class H (c) (d) (e) 4,051,969
367,853 Tianqi Lithium Corp.,
Class H (c) 3,210,070
---------------
7,262,039
---------------
FRANCE -- 0.5%
105,369 Euroapi S.A. (b) (c) 1,749,129
---------------
GERMANY -- 2.1%
239,776 Daimler Truck Holding
AG (b) (c) 5,420,709
72,182 Encavis AG (b) 1,290,098
---------------
6,710,807
---------------
INDONESIA -- 1.3%
265,444,645 GoTo Gojek Tokopedia Tbk
PT (b) (c) 4,241,047
---------------
IRELAND -- 2.6%
12,790 ICON PLC (c) 2,350,546
186,570 nVent Electric PLC 5,897,478
---------------
8,248,024
---------------
ITALY -- 0.4%
90,405 Industrie De Nora S.p.A. (b) (c) 1,382,125
---------------
JAPAN -- 17.6%
925,800 Astellas Pharma, Inc. (b) 12,264,348
173,500 Dexerials Corp. (b) (f) 3,884,212
2,253,117 SoftBank Corp. (b) 22,499,467
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
JAPAN (CONTINUED)
283,699 Takeda Pharmaceutical Co.,
Ltd., ADR (f) $ 3,679,576
457,400 TDK Corp. (b) 14,120,105
---------------
56,447,708
---------------
LUXEMBOURG -- 1.2%
1,611,498 Samsonite International
S.A. (b) (c) (d) (e) 3,865,023
---------------
NETHERLANDS -- 8.1%
68,246 Alfen Beheer BV (b) (c) (d) (e) 6,249,731
112,678 JDE Peet's N.V. (b) 3,294,478
281,314 Prosus N.V. (b) 14,635,761
161,215 Technip Energies N.V. (b) 1,827,004
---------------
26,006,974
---------------
NORWAY -- 0.5%
503,555 Var Energi ASA (b) 1,636,132
---------------
SAUDI ARABIA -- 9.4%
122,893 ACWA Power Co. (b) 5,473,104
31,377 Dr. Sulaiman Al Habib Medical
Services Group Co. (b) 1,727,389
27,791 Elm Co. (b) 2,323,782
58,272 Nahdi Medical Co. (b) 2,925,009
1,725,756 Saudi Arabian Oil
Co. (b) (d) (e) 16,429,173
26,895 Saudi Tadawul Group Holding
Co. (b) 1,429,637
---------------
30,308,094
---------------
SOUTH KOREA -- 2.4%
26,223 LG Energy Solution Ltd. (b) (c) 7,732,070
---------------
SPAIN -- 4.5%
387,413 Corp ACCIONA Energias
Renovables S.A. (b) 14,459,909
---------------
SWEDEN -- 3.0%
126,070 Nordnet AB publ (b) 1,427,559
275,327 Swedish Orphan Biovitrum
AB (b) (c) 5,321,227
667,783 Volvo Car AB, Class B (b) (c) 2,897,711
---------------
9,646,497
---------------
SWITZERLAND -- 0.4%
64,257 SIG Group AG (b) 1,304,681
---------------
THAILAND -- 10.1%
71,721,500 Asset World Corp. PCL (b) 10,985,964
10,913,200 Gulf Energy Development
PCL (b) (e) 15,122,502
15,397,300 Thai Life Insurance PCL (c) 6,531,198
---------------
32,639,664
---------------
UNITED ARAB EMIRATES -- 0.8%
1,581,448 Fertiglobe PLC (b) 2,457,798
---------------
UNITED KINGDOM -- 2.0%
2,069,692 Haleon PLC (c) 6,453,200
---------------
Page 72 See Notes to Financial Statements
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
UNITED STATES -- 0.9%
12,469 SolarEdge Technologies,
Inc. (c) $ 2,886,075
---------------
TOTAL COMMON STOCKS
-- 99.6% 320,193,725
(Cost $357,133,278) ---------------
MONEY MARKET FUNDS -- 1.6%
5,243,340 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.77% (g) (h) 5,243,340
(Cost $5,243,340) ---------------
TOTAL INVESTMENTS -- 101.2% 325,437,065
(Cost $362,376,618)
NET OTHER ASSETS AND
LIABILITIES -- (1.2)% (4,015,781)
---------------
NET ASSETS -- 100.0% $ 321,421,284
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $203,166,262 or 63.2% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(c) Non-income producing security.
(d) This security is exempt from registration upon resale under Rule 144A of
the Securities Act of 1933, as amended (the "1933 Act") and may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. This security is not restricted on the foreign
exchange where it trades freely without any additional registration. As
such, it does not require the additional disclosure required of restricted
securities.
(e) This security may be resold to qualified foreign investors and foreign
institutional buyers under Regulation S of the 1933 Act.
(f) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $5,001,856 and the
total value of the collateral held by the Fund is $5,243,340.
(g) Rate shown reflects yield as of September 30, 2022.
(h) This security serves as collateral for securities on loan.
ADR - American Depositary Receipt
---------------------------------
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) $ 5,001,856
Non-cash Collateral(2) (5,001,856)
---------------
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 September 30, 2022, 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 73
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
United States Dollar 16.9%
Japanese Yen 16.2
Euro 15.5
Canadian Dollar 11.2
Thai Baht 10.0
Saudi Riyad 9.3
Hong Kong Dollar 6.9
Brazilian Real 3.2
Swedish Krona 3.0
South Korean Won 2.4
British Pound Sterling 2.0
Indonesian Rupiah 1.3
United Arab Emirates Dirham 0.8
Norwegian Krone 0.5
Australian Dollar 0.4
Swiss Franc 0.4
------
Total 100.0%
======
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
Bermuda...................................... $ 3,767,661 $ 3,767,661 $ -- $ --
Brazil....................................... 10,490,759 10,490,759 -- --
Canada....................................... 36,386,045 36,386,045 -- --
Cayman Islands............................... 42,641,681 31,322,886 11,318,795 --
China........................................ 7,262,039 7,262,039 -- --
Ireland...................................... 8,248,024 8,248,024 -- --
Japan........................................ 56,447,708 3,679,576 52,768,132 --
Thailand..................................... 32,639,664 6,531,198 26,108,466 --
United Kingdom............................... 6,453,200 6,453,200 -- --
United States................................ 2,886,075 2,886,075 -- --
Other Country Categories*.................... 112,970,869 -- 112,970,869 --
Money Market Funds.............................. 5,243,340 5,243,340 -- --
------------------------------------------------------------------
Total Investments............................... $ 325,437,065 $ 122,270,803 $ 203,166,262 $ --
==================================================================
* See Portfolio of Investments for country breakout.
Page 74 See Notes to Financial Statements
FIRST TRUST NASDAQ CYBERSECURITY ETF (CIBR)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.5%
CAYMAN ISLANDS -- 0.2%
2,146,826 Arqit Quantum, Inc. (b) (c) $ 12,086,630
---------------
FRANCE -- 3.0%
1,294,418 Thales S.A. (d) 142,636,529
---------------
INDIA -- 6.0%
16,646,588 Infosys Ltd., ADR 282,492,598
---------------
ISRAEL -- 7.1%
1,300,630 Check Point Software
Technologies Ltd. (c) 145,696,573
1,083,915 CyberArk Software Ltd. (c) 162,522,215
1,380,375 Radware Ltd. (c) 30,078,371
---------------
338,297,159
---------------
JAPAN -- 2.9%
2,515,073 Trend Micro, Inc. (d) 135,468,742
---------------
SOUTH KOREA -- 0.2%
208,862 Ahnlab, Inc. (d) 8,928,666
---------------
UNITED KINGDOM -- 1.6%
16,043,564 Darktrace PLC (c) (d) 52,399,858
9,548,589 NCC Group PLC (d) 23,033,367
---------------
75,433,225
---------------
UNITED STATES -- 78.5%
2,075,349 A10 Networks, Inc. 27,539,881
1,732,247 Akamai Technologies, Inc. (c) 139,134,079
1,634,141 Booz Allen Hamilton Holding
Corp. 150,912,921
627,427 Broadcom, Inc. 278,583,862
6,994,075 Cisco Systems, Inc. 279,763,000
2,499,397 Cloudflare, Inc., Class A (c) 138,241,648
1,712,804 Crowdstrike Holdings, Inc.,
Class A (c) 282,287,227
995,714 F5, Inc. (c) 144,109,687
3,211,902 Fortinet, Inc. (c) 157,800,745
5,502,728 Juniper Networks, Inc. 143,731,255
2,114,352 KnowBe4, Inc., Class A (c) 43,999,665
1,645,321 Leidos Holdings, Inc. 143,916,228
2,124,684 NetScout Systems, Inc. (c) 66,545,103
6,922,868 NortonLifeLock, Inc. 139,426,562
1,711,027 Okta, Inc. (c) 97,306,106
1,685,179 Palo Alto Networks, Inc. (c) 276,015,469
1,029,539 Qualys, Inc. (c) 143,507,441
1,931,652 Rapid7, Inc. (c) 82,867,871
4,370,714 Ribbon Communications,
Inc. (c) 9,702,985
1,717,222 Science Applications
International Corp. 151,853,942
5,726,383 SentinelOne, Inc., Class A (c) 146,366,350
1,737,057 Splunk, Inc. (c) 130,626,686
1,578,548 Telos Corp. (c) 14,033,292
3,397,350 Tenable Holdings, Inc. (c) 118,227,780
3,616,161 Varonis Systems, Inc. (c) 95,900,590
858,232 VeriSign, Inc. (c) 149,074,898
982,087 Zscaler, Inc. (c) 161,425,640
---------------
3,712,900,913
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
TOTAL COMMON STOCKS
-- 99.5% $ 4,708,244,462
(Cost $5,182,827,655) ---------------
MONEY MARKET FUNDS -- 0.1%
3,053,070 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.77% (e) (f) 3,053,070
(Cost $3,053,070) ---------------
TOTAL INVESTMENTS -- 99.6% 4,711,297,532
(Cost $5,185,880,725)
NET OTHER ASSETS AND
LIABILITIES -- 0.4% 19,785,101
---------------
NET ASSETS -- 100.0% $ 4,731,082,633
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) All or a portion of this security is on loan (see Note 2E - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $2,872,426 and the
total value of the collateral held by the Fund is $3,053,070.
(c) Non-income producing security.
(d) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $362,467,162 or 7.7% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(e) Rate shown reflects yield as of September 30, 2022.
(f) This security serves as collateral for securities on loan.
ADR - American Depositary Receipt
See Notes to Financial Statements Page 75
FIRST TRUST NASDAQ CYBERSECURITY ETF (CIBR)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
---------------------------------
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) $ 2,872,426
Non-cash Collateral(2) (2,872,426)
---------------
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 September 30, 2022, 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.
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
United States Dollar 92.3%
Euro 3.0
Japanese Yen 2.9
British Pound Sterling 1.6
South Korean Won 0.2
------
Total 100.0%
======
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
France....................................... $ 142,636,529 $ -- $ 142,636,529 $ --
Japan........................................ 135,468,742 -- 135,468,742 --
South Korea.................................. 8,928,666 -- 8,928,666 --
United Kingdom............................... 75,433,225 -- 75,433,225 --
Other Country Categories*.................... 4,345,777,300 4,345,777,300 -- --
Money Market Funds.............................. 3,053,070 3,053,070 -- --
------------------------------------------------------------------
Total Investments............................... $ 4,711,297,532 $ 4,348,830,370 $ 362,467,162 $ --
==================================================================
* See Portfolio of Investments for country breakout.
Page 76 See Notes to Financial Statements
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.7%
AUSTRIA -- 1.9%
1,110 ANDRITZ AG (b) $ 46,975
1,189 BAWAG Group AG (b) (c) (d) 51,113
---------------
98,088
---------------
BELGIUM -- 3.3%
295 D'ieteren Group (b) 41,565
8,220 Euronav N.V. (b) 128,288
---------------
169,853
---------------
BERMUDA -- 4.5%
2,955 Arch Capital Group Ltd. (e) 134,571
9,639 BW Energy Ltd. (b) (e) 19,069
18,807 Hafnia Ltd. 76,948
---------------
230,588
---------------
CYPRUS -- 0.0%
1,795 HeadHunter Group PLC,
ADR (b) (f) (g) 675
---------------
DENMARK -- 0.1%
1,249 Everfuel A/S (b) (e) 5,122
---------------
FINLAND -- 0.9%
1,779 Kempower OYJ (b) (e) 30,409
632 TietoEVRY OYJ (b) 14,301
---------------
44,710
---------------
FRANCE -- 3.5%
932 Antin Infrastructure Partners
S.A. (b) 19,417
3,513 Euroapi S.A. (b) (e) 58,316
1,019 La Francaise des Jeux
SAEM (b) (c) (d) 30,227
1,722 Neoen S.A. (b) (c) (d) 57,387
653 Verallia S.A. (b) (c) (d) 14,680
---------------
180,027
---------------
GERMANY -- 7.7%
971 BioNTech SE, ADR 130,968
5,490 Daimler Truck Holding
AG (b) (e) 124,115
2,578 Encavis AG (b) 46,076
560 Hensoldt AG (b) 11,181
995 TeamViewer AG (b) (c) (d) (e) 7,679
2,430 Vantage Towers AG (b) 62,864
214 Vitesco Technologies Group
AG (b) (e) 10,404
---------------
393,287
---------------
IRELAND -- 3.4%
12,182 Greencoat Renewables PLC (d) 13,849
413 ICON PLC (e) 75,901
2,666 nVent Electric PLC 84,273
---------------
174,023
---------------
ITALY -- 1.6%
1,076 Industrie De Nora S.p.A. (b) (e) 16,450
4,325 Italgas S.p.A. (b) 20,084
1,351 Stevanato Group S.p.A. 22,886
3,208 Technoprobe S.p.A. (b) (e) 22,147
---------------
81,567
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
JERSEY -- 0.9%
10,750 Yellow Cake
PLC (b) (c) (d) (e) $ 47,973
---------------
LUXEMBOURG -- 0.3%
356 Shurgard Self Storage S.A. (b) 14,473
---------------
NETHERLANDS -- 19.2%
1,393 Alfen Beheer BV (b) (c) (d) (e) 127,566
367 Argenx SE, ADR (e) 129,569
630 Ebusco Holding N.V. (b) (e) 9,834
1,844 Iveco Group N.V. (b) (e) 8,696
3,354 JDE Peet's N.V. (b) 98,064
8,039 Prosus N.V. (b) 418,240
5,759 Technip Energies N.V. (b) 65,265
6,775 Universal Music Group
N.V. (b) 126,896
---------------
984,130
---------------
NORWAY -- 4.5%
23,890 Elkem ASA (b) (c) (d) 76,774
6,109 Hoegh Autoliners ASA 20,899
2,516 Norske Skog ASA (b) (c) (e) 12,705
3,326 OKEA ASA (b) 11,011
33,310 Var Energi ASA (b) 108,230
---------------
229,619
---------------
PORTUGAL -- 0.7%
4,457 Greenvolt-Energias
Renovaveis S.A. (b) (e) 37,609
---------------
SPAIN -- 5.4%
7,029 Corp ACCIONA Energias
Renovables S.A. (b) 262,352
14,170 Unicaja Banco S.A. (b) (c) (d) 12,777
---------------
275,129
---------------
SWEDEN -- 10.2%
2,798 BoneSupport Holding
AB (b) (c) (d) (e) 18,449
4,013 EQT AB (b) 77,540
810 Hemnet Group AB (b) 10,279
5,337 Nordnet AB publ (b) 60,434
13,091 OX2 AB (b) (e) 98,072
9,835 Swedish Orphan Biovitrum
AB (b) (e) 190,080
15,903 Volvo Car AB, Class B (b) (e) 69,008
---------------
523,862
---------------
SWITZERLAND -- 3.4%
1,569 Alcon, Inc. (b) 91,136
1,836 On Holding AG, Class A (e) 29,468
2,040 SIG Group AG (b) 41,420
534 Stadler Rail AG (b) 14,666
---------------
176,690
---------------
UNITED KINGDOM -- 24.4%
40,117 Airtel Africa PLC (b) (c) (d) 57,539
8,168 Biffa PLC (c) (d) 37,574
70,094 BP PLC (b) 334,935
9,583 Darktrace PLC (b) (e) 31,299
13,351 Dr. Martens PLC (b) 32,712
See Notes to Financial Statements Page 77
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
UNITED KINGDOM (CONTINUED)
17,111 Drax Group PLC (b) $ 113,843
6,652 Energean PLC 99,079
1,532 Finablr PLC (b) (c) (e) (f) (g) 0
73,931 Haleon PLC (e) 230,513
39,935 M&G PLC (b) 73,565
64,467 NatWest Group PLC (b) 160,569
6,628 Supermarket Income REIT
PLC (b) 7,907
2,566 Trainline PLC (c) (d) (e) 9,045
1,279 Watches of Switzerland Group
PLC (b) (c) (e) 9,453
7,598 Wise PLC, Class A (b) (e) 55,453
---------------
1,253,486
---------------
UNITED STATES -- 3.2%
355 MKS Instruments, Inc. 29,337
594 SolarEdge Technologies,
Inc. (e) 137,487
---------------
166,824
---------------
VIRGIN ISLANDS -- 0.6%
518 Establishment Labs Holdings,
Inc. (e) 28,288
---------------
TOTAL INVESTMENTS -- 99.7% 5,116,023
(Cost $5,942,110)
NET OTHER ASSETS AND
LIABILITIES -- 0.3% 15,031
---------------
NET ASSETS -- 100.0% $ 5,131,054
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $3,825,368 or 74.6% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(c) This security is exempt from registration upon resale under Rule 144A of
the Securities Act of 1933, as amended (the "1933 Act") and may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. This security is not restricted on the foreign
exchange where it trades freely without any additional registration. As
such, it does not require the additional disclosure required of restricted
securities.
(d) This security may be resold to qualified foreign investors and foreign
institutional buyers under Regulation S of the 1933 Act.
(e) Non-income producing security.
(f) This security's value was determined using significant unobservable inputs
(see Note 2A - Portfolio Valuation in the Notes to Financial Statements).
(g) Pursuant to procedures adopted by the Trust's Board of Trustees, this
security has been determined to be illiquid by First Trust Advisors, L.P.,
the Fund's Advisor.
ADR - American Depositary Receipt
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
Euro 39.3%
British Pound Sterling 25.4
United States Dollar 15.7
Swedish Krona 10.2
Norwegian Krone 6.5
Swiss Franc 2.9
------
Total 100.0%
======
Page 78 See Notes to Financial Statements
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
Bermuda...................................... $ 230,588 $ 211,519 $ 19,069 $ --
Cyprus....................................... 675 -- -- 675
Germany...................................... 393,287 130,968 262,319 --
Ireland...................................... 174,023 174,023 -- --
Italy........................................ 81,567 22,886 58,681 --
Netherlands.................................. 984,130 129,569 854,561 --
Norway....................................... 229,619 20,899 208,720 --
Switzerland.................................. 176,690 29,468 147,222 --
United Kingdom............................... 1,253,486 376,211 877,275 -- *
United States................................ 166,824 166,824 -- --
Virgin Islands............................... 28,288 28,288 -- --
Other Country Categories**................... 1,396,846 -- 1,396,846 --
------------------------------------------------------------------
Total Investments............................... $ 5,116,023 $ 1,290,655 $ 3,824,693 $ 675
==================================================================
* Investment is valued at $0.
** See Portfolio of Investments for country breakout.
Level 3 Common Stocks are fair valued by the Advisor's Pricing Committee and are
footnoted in the Portfolio of Investments. Level 3 Common Stocks values are
based on unobservable and non-quantitative inputs.
See Notes to Financial Statements Page 79
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF (FDNI)
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (a) -- 99.1%
AUSTRALIA -- 1.7%
1,886 REA Group Ltd. (b) $ 137,276
12,983 SEEK Ltd. (b) 157,793
6,331 WiseTech Global Ltd. (b) 206,850
---------------
501,919
---------------
CANADA -- 4.7%
3,103 Descartes Systems Group
(The), Inc. (c) 197,027
43,424 Shopify, Inc., Class A (c) 1,169,102
---------------
1,366,129
---------------
CAYMAN ISLANDS -- 54.1%
36,660 Alibaba Group Holding Ltd.,
ADR (c) 2,932,433
10,380 Baidu, Inc., ADR (c) 1,219,546
8,143 Bilibili, Inc., ADR (c) 124,751
38,374 JD Health International,
Inc. (b) (c) (d) (e) 218,592
38,141 JD.com, Inc., ADR 1,918,492
70,985 Kuaishou
Technology (b) (c) (d) (e) 455,308
149,182 Meituan, Class B (b) (c) (d) (e) 3,135,277
13,404 NetEase, Inc., ADR 1,013,342
19,899 Pinduoduo, Inc., ADR (c) 1,245,280
13,174 Sea Ltd., ADR (c) 738,403
83,678 Tencent Holdings Ltd. (b) 2,826,335
---------------
15,827,759
---------------
GERMANY -- 1.9%
6,710 Delivery Hero SE (b) (c) (d) (e) 245,096
2,935 Scout24 SE (b) (d) (e) 147,073
8,155 Zalando SE (b) (c) (d) (e) 159,291
---------------
551,460
---------------
IRELAND -- 2.1%
5,597 Flutter Entertainment
PLC (b) (c) 616,965
---------------
ISLE OF MAN -- 0.9%
21,549 Entain PLC (b) 257,649
---------------
ISRAEL -- 0.6%
2,095 Wix.com Ltd. (c) 163,892
---------------
JAPAN -- 4.4%
15,200 CyberAgent, Inc. (b) 127,986
15,672 M3, Inc. (b) 437,590
17,182 Nexon Co., Ltd. (b) 303,567
33,673 Rakuten Group, Inc. (b) 144,103
97,276 Z Holdings Corp. (b) 257,846
---------------
1,271,092
---------------
LUXEMBOURG -- 1.5%
5,153 Spotify Technology S.A. (c) 444,704
---------------
NETHERLANDS -- 13.0%
1,134 Adyen N.V. (b) (c) (d) (e) 1,414,277
5,586 Just Eat Takeaway.com
N.V. (b) (c) (d) (e) 86,648
44,019 Prosus N.V. (b) 2,290,151
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
NETHERLANDS (CONTINUED)
15,088 Yandex N.V.,
Class A (b) (c) (f) (g) $ 7,154
---------------
3,798,230
---------------
NEW ZEALAND -- 0.8%
5,106 Xero Ltd. (b) (c) 236,289
---------------
SOUTH AFRICA -- 3.4%
7,970 Naspers Ltd., Class N (b) 988,468
---------------
SOUTH KOREA -- 4.5%
11,405 Kakao Corp. 455,180
5,464 NAVER Corp. (b) 727,893
579 NCSoft Corp. (b) 138,495
---------------
1,321,568
---------------
UNITED KINGDOM -- 1.7%
35,465 Auto Trader Group
PLC (b) (d) (e) 201,124
15,795 IG Group Holdings PLC (b) 133,858
32,045 Rightmove PLC (b) 170,956
---------------
505,938
---------------
UNITED STATES -- 3.8%
5,303 Atlassian Corp. PLC,
Class A (c) 1,116,759
---------------
TOTAL INVESTMENTS -- 99.1% 28,968,821
(Cost $60,553,321)
NET OTHER ASSETS AND
LIABILITIES -- 0.9% 263,344
---------------
NET ASSETS -- 100.0% $ 29,232,165
===============
(a) Portfolio securities are categorized based upon their country of
incorporation, which can be different from the country categorization of
the Fund's underlying index. For a breakdown of the portfolio securities
by sector, please see the Fund Performance Overview.
(b) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures approved by the Trust's Board of Trustees, and
in accordance with provisions of the Investment Company Act of 1940 and
rules thereunder, as amended. At September 30, 2022, securities noted as
such are valued at $16,229,910 or 55.5% of net assets. Certain of these
securities are fair valued using a factor provided by a third-party
pricing service due to the change in value between the foreign markets'
close and the New York Stock Exchange close exceeding a certain threshold.
On days when this threshold is not exceeded, these securities are
typically valued at the last sale price on the exchange on which they are
principally traded.
(c) Non-income producing security.
Page 80 See Notes to Financial Statements
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF (FDNI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2022
(d) This security is exempt from registration upon resale under Rule 144A of
the Securities Act of 1933, as amended (the "1933 Act") and may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. This security is not restricted on the foreign
exchange where it trades freely without any additional registration. As
such, it does not require the additional disclosure required of restricted
securities.
(e) This security may be resold to qualified foreign investors and foreign
institutional buyers under Regulation S of the 1933 Act.
(f) This security's value was determined using significant unobservable inputs
(see Note 2A - Portfolio Valuation in the Notes to Financial Statements).
(g) Pursuant to procedures adopted by the Trust's Board of Trustees, this
security has been determined to be illiquid by First Trust Advisors, L.P.,
the Fund's Advisor.
ADR - American Depositary Receipt
% OF TOTAL
CURRENCY EXPOSURE DIVERSIFICATION INVESTMENTS
--------------------------------------------------------------
United States Dollar 37.7%
Hong Kong Dollar 22.9
Euro 17.1
Canadian Dollar 4.7
South Korean Won 4.6
Japanese Yen 4.4
South African Rand 3.4
British Pound Sterling 2.6
Australian Dollar 2.6
------
Total 100.0%
======
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of September 30,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
9/30/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks:
Canada....................................... $ 1,366,129 $ 1,366,129 $ -- $ --
Cayman Islands............................... 15,827,759 9,192,247 6,635,512 --
Israel....................................... 163,892 163,892 -- --
Luxembourg................................... 444,704 444,704 -- --
Netherlands.................................. 3,798,230 -- 3,791,076 7,154
South Korea.................................. 1,321,568 455,180 866,388 --
United States................................ 1,116,759 1,116,759 -- --
Other Country Categories*.................... 4,929,780 -- 4,929,780 --
------------------------------------------------------------------
Total Investments............................... $ 28,968,821 $ 12,738,911 $ 16,222,756 $ 7,154
==================================================================
* See Portfolio of Investments for country breakout.
Level 3 Common Stocks are fair valued by the Advisor's Pricing Committee and are
footnoted in the Portfolio of Investments. Level 3 Common Stocks values are
based on unobservable and non-quantitative inputs.
See Notes to Financial Statements Page 81
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2022
First Trust First Trust First Trust
STOXX(R) Alerian Dow Jones
European Disruptive Global Select
Select Dividend Technology Dividend
Index Fund Real Estate ETF Index Fund
(FDD) (DTRE) (FGD)
---------------- ---------------- ----------------
ASSETS:
Investments, at value ............................................... $ 158,839,776 $ 23,879,327 $ 491,130,969
Cash ................................................................ -- -- --
Foreign currency, at value .......................................... 4,116 2,929 1,483,966
Receivables:
Reclaims ......................................................... 1,734,094 11,521 1,094,763
Dividends ........................................................ 758,866 105,942 4,339,934
Investment securities sold ....................................... -- 19,807,166 2,570,124
Capital shares sold .............................................. -- -- --
Securities lending income ........................................ -- -- --
Prepaid expenses ................................................. 1,551 -- 1,481
---------------- ---------------- ----------------
TOTAL ASSETS ..................................................... 161,338,403 43,806,885 500,621,237
---------------- ---------------- ----------------
LIABILITIES:
Due to custodian .................................................... -- -- 4,590,881
Due to custodian foreign currency ................................... -- -- --
Payables:
Licensing fees ................................................... 104,847 8,526 90,855
Audit and tax fees ............................................... 78,271 35,111 82,506
Investment advisory fees ......................................... 58,081 1,470 178,644
Shareholder reporting fees ....................................... 16,345 3,940 17,483
Trustees' fees ................................................... 21 13 21
Investment securities purchased .................................. -- 19,714,287 --
Capital shares purchased ......................................... -- -- --
Foreign capital gains tax ........................................ -- -- --
Collateral for securities on loan ................................ -- -- --
Other liabilities ................................................... 30,405 13,631 84,390
---------------- ---------------- ----------------
TOTAL LIABILITIES ................................................ 287,970 19,776,978 5,044,780
---------------- ---------------- ----------------
NET ASSETS .......................................................... $ 161,050,433 $ 24,029,907 $ 495,576,457
================ ================ ================
NET ASSETS consist of:
Paid-in capital ..................................................... $ 288,257,265 $ 32,033,124 $ 834,467,164
Par value ........................................................... 171,533 6,416 267,000
Accumulated distributable earnings (loss) ........................... (127,378,365) (8,009,633) (339,157,707)
---------------- ---------------- ----------------
NET ASSETS .......................................................... $ 161,050,433 $ 24,029,907 $ 495,576,457
================ ================ ================
NET ASSET VALUE, per share .......................................... $ 9.39 $ 37.45 $ 18.56
================ ================ ================
Number of shares outstanding (unlimited number of shares
authorized, par value $0.01 per share) ........................... 17,153,334 641,608 26,700,002
================ ================ ================
Investments, at cost ................................................ $ 214,535,860 $ 24,092,329 $ 641,323,853
================ ================ ================
Foreign currency, at cost (proceeds) ................................ $ 4,117 $ 2,924 $ 1,535,856
================ ================ ================
Securities on loan, at value ........................................ $ -- $ -- $ --
================ ================ ================
Page 82 See Notes to Financial Statements
First Trust First Trust
First Trust Alerian NASDAQ(R) Clean First Trust First Trust
Global U.S. NextGen Edge(R) Smart Grid Indxx Global Indxx Global
Wind Energy Infrastructure Infrastructure Natural Resources Agriculture
ETF ETF Index Fund Income ETF ETF
(FAN) (RBLD) (GRID) (FTRI) (FTAG)
--------------------- --------------------- --------------------- --------------------- ---------------------
$ 249,051,305 $ 8,665,180 $ 540,349,754 $ 213,241,629 $ 22,329,078
-- 15,331 1,050,121 151,861 54,392
19,137 -- -- 498,741 --
542,902 6,561 635,855 57,657 5,678
165,026 8,585 256,704 195,270 38,900
-- -- -- 7,752 --
64 -- -- -- --
3,881 6 9,043 7,669 --
1,618 -- 1,064 -- --
--------------- --------------- --------------- --------------- ---------------
249,783,933 8,695,663 542,302,541 214,160,579 22,428,048
--------------- --------------- --------------- --------------- ---------------
-- -- -- -- --
-- -- 401 -- --
72,718 -- 133,532 -- --
32,617 -- 37,507 -- --
94,931 5,098 193,331 124,809 13,814
33,181 -- 20,443 -- --
12 -- 7 -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- 12,081 44,460
5,576,699 -- 3,377,340 14,276,247 --
42,678 5,990 109,974 -- --
--------------- --------------- --------------- --------------- ---------------
5,852,836 11,088 3,872,535 14,413,137 58,274
--------------- --------------- --------------- --------------- ---------------
$ 243,931,097 $ 8,684,575 $ 538,430,006 $ 199,747,442 $ 22,369,774
=============== =============== =============== =============== ===============
$ 382,538,335 $ 18,782,757 $ 678,144,178 $ 314,136,993 $ 47,523,901
161,000 2,000 71,500 163,500 8,399
(138,768,238) (10,100,182) (139,785,672) (114,553,051) (25,162,526)
--------------- --------------- --------------- --------------- ---------------
$ 243,931,097 $ 8,684,575 $ 538,430,006 $ 199,747,442 $ 22,369,774
=============== =============== =============== =============== ===============
$ 15.15 $ 43.42 $ 75.30 $ 12.22 $ 26.63
=============== =============== =============== =============== ===============
16,100,002 200,002 7,150,002 16,350,002 839,928
=============== =============== =============== =============== ===============
$ 316,859,944 $ 9,773,185 $ 628,116,244 $ 252,564,356 $ 27,211,436
=============== =============== =============== =============== ===============
$ 19,276 $ -- $ (395) $ 506,497 $ --
=============== =============== =============== =============== ===============
$ 5,201,510 $ -- $ 3,259,781 $ 13,841,952 $ --
=============== =============== =============== =============== ===============
See Notes to Financial Statements Page 83
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
SEPTEMBER 30, 2022
First Trust
S-Network
First Trust First Trust Future Vehicles
BICK Indxx NextG & Technology
Index Fund ETF ETF
(BICK) (NXTG) (CARZ)
---------------- ---------------- ----------------
ASSETS:
Investments, at value ............................................... $ 44,492,500 $ 480,247,218 $ 42,526,903
Cash ................................................................ 6,095 130,430 --
Foreign currency, at value .......................................... 4,320 26,949 16
Receivables:
Reclaims ......................................................... -- 292,008 23,653
Dividends ........................................................ 52,958 1,549,577 54,324
Investment securities sold ....................................... -- -- 45,372
Capital shares sold .............................................. -- -- --
Securities lending income ........................................ 1,796 2,942 5,448
Prepaid expenses ................................................. -- -- --
---------------- ---------------- ----------------
TOTAL ASSETS ..................................................... 44,557,669 482,249,124 42,655,716
---------------- ---------------- ----------------
LIABILITIES:
Due to custodian .................................................... -- -- 4,377
Due to custodian foreign currency ................................... -- -- --
Payables:
Licensing fees ................................................... -- -- --
Audit and tax fees ............................................... -- -- --
Investment advisory fees ......................................... 19,818 298,320 26,916
Shareholder reporting fees ....................................... -- -- --
Trustees' fees ................................................... -- -- --
Investment securities purchased .................................. -- -- 18,012
Capital shares purchased ......................................... -- -- --
Foreign capital gains tax ........................................ -- 1,004 --
Collateral for securities on loan ................................ 739,375 10,893,912 2,191,487
Other liabilities ................................................... -- -- --
---------------- ---------------- ----------------
TOTAL LIABILITIES ................................................ 759,193 11,193,236 2,240,792
---------------- ---------------- ----------------
NET ASSETS .......................................................... $ 43,798,476 $ 471,055,888 $ 40,414,924
================ ================ ================
NET ASSETS consist of:
Paid-in capital ..................................................... $ 85,291,285 $ 594,819,388 $ 68,146,914
Par value ........................................................... 18,500 84,500 10,000
Accumulated distributable earnings (loss) ........................... (41,511,309) (123,848,000) (27,741,990)
---------------- ---------------- ----------------
NET ASSETS ......................................................... $ 43,798,476 $ 471,055,888 $ 40,414,924
================ ================ ================
NET ASSET VALUE, per share .......................................... $ 23.67 $ 55.75 $ 40.41
================ ================ ================
Number of shares outstanding (unlimited number of shares
authorized, par value $0.01 per share) ........................... 1,850,002 8,450,002 1,000,002
================ ================ ================
Investments, at cost ................................................ $ 50,010,718 $ 597,126,689 $ 57,745,744
================ ================ ================
Foreign currency, at cost (proceeds) ................................ $ 4,335 $ 27,012 $ 16
================ ================ ================
Securities on loan, at value ........................................ $ 739,778 $ 10,573,085 $ 2,105,168
================ ================ ================
Page 84 See Notes to Financial Statements
First Trust First Trust
First Trust First Trust First Trust IPOX(R) Europe Dow Jones
Cloud International Nasdaq Equity International
Computing Equity Cybersecurity Opportunities Internet
ETF Opportunities ETF ETF ETF ETF
(SKYY) (FPXI) (CIBR) (FPXE) (FDNI)
--------------------- --------------------- --------------------- --------------------- ---------------------
$ 2,978,110,767 $ 325,437,065 $ 4,711,297,532 $ 5,116,023 $ 28,968,821
17,249,688 -- 25,106,160 20,796 20,001
-- -- -- 171 --
536,857 233,900 75,055 6,714 --
447,930 1,041,539 -- 537 10,291
9,043,934 609,081 -- -- 251,444
-- 1,043 -- -- --
114,663 972 150,608 -- --
-- -- -- -- --
--------------- --------------- --------------- --------------- ---------------
3,005,503,839 327,323,600 4,736,629,355 5,144,241 29,250,557
--------------- --------------- --------------- --------------- ---------------
-- 441,370 -- -- --
-- 3 -- -- 643
-- -- -- -- --
-- -- -- -- --
1,584,185 199,579 2,493,652 3,236 17,749
-- -- -- -- --
-- -- -- -- --
5,143,454 18,024 -- -- --
9,083,063 -- -- -- --
-- -- -- -- --
35,120,068 5,243,340 3,053,070 -- --
-- -- -- 9,951 --
--------------- --------------- --------------- --------------- ---------------
50,930,770 5,902,316 5,546,722 13,187 18,392
--------------- --------------- --------------- --------------- ---------------
$ 2,954,573,069 $ 321,421,284 $ 4,731,082,633 $ 5,131,054 $ 29,232,165
=============== =============== =============== =============== ===============
$ 5,035,332,445 $ 690,286,051 $ 5,715,598,447 $ 9,586,973 $ 73,208,906
490,000 90,000 1,227,000 3,000 15,000
(2,081,249,376) (368,954,767) (985,742,814) (4,458,919) (43,991,741)
--------------- --------------- --------------- --------------- ---------------
$ 2,954,573,069 $ 321,421,284 $ 4,731,082,633 $ 5,131,054 $ 29,232,165
=============== =============== =============== =============== ===============
$ 60.30 $ 35.71 $ 38.56 $ 17.10 $ 19.49
=============== =============== =============== =============== ===============
49,000,002 9,000,002 122,700,002 300,002 1,500,002
=============== =============== =============== =============== ===============
$ 4,204,466,992 $ 362,376,618 $ 5,185,880,725 $ 5,942,110 $ 60,553,321
=============== =============== =============== =============== ===============
$ -- $ (2) $ -- $ 170 $ (669)
=============== =============== =============== =============== ===============
$ 33,318,349 $ 5,001,856 $ 2,872,426 $ -- $ --
=============== =============== =============== =============== ===============
See Notes to Financial Statements Page 85
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2022
First Trust First Trust First Trust
STOXX(R) Alerian Dow Jones
European Disruptive Global Select
Select Dividend Technology Dividend
Index Fund Real Estate ETF Index Fund
(FDD) (DTRE) (FGD)
---------------- ---------------- ----------------
INVESTMENT INCOME:
Dividends ........................................................... $ 16,180,828 $ 957,612 $ 38,664,127
Securities lending income (net of fees) ............................. -- -- --
Foreign withholding tax ............................................. (1,110,523) (63,271) (2,701,185)
---------------- ---------------- ----------------
Total investment income .......................................... 15,070,305 894,341 35,962,942
---------------- ---------------- ----------------
EXPENSES:
Investment advisory fees ............................................ 1,014,859 133,529 2,284,237
Licensing fees ...................................................... 152,229 40,058 331,487
Accounting and administration fees .................................. 128,406 23,460 288,065
Audit and tax fees .................................................. 53,539 37,509 58,645
Shareholder reporting fees .......................................... 48,972 17,671 68,100
Custodian fees ...................................................... 29,839 48,965 98,032
Transfer agent fees ................................................. 12,686 1,669 28,553
Trustees' fees and expenses ......................................... 7,304 7,178 7,486
Legal fees .......................................................... 6,894 1,659 13,812
Listing fees ........................................................ 5,832 7,313 5,832
Registration and filing fees ........................................ 88 -- (56)
Excise tax .......................................................... -- -- --
Other expenses ...................................................... 4,834 1,750 7,521
---------------- ---------------- ----------------
Total expenses ................................................... 1,465,482 320,761 3,191,714
Less fees waived and expenses reimbursed by the investment
advisor ....................................................... -- (120,467) --
---------------- ---------------- ----------------
Net expenses ..................................................... 1,465,482 200,294 3,191,714
---------------- ---------------- ----------------
NET INVESTMENT INCOME (LOSS) ........................................ 13,604,823 694,047 32,771,228
---------------- ---------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ...................................................... (5,605,588) (5,726,799) 5,872,731
In-kind redemptions .............................................. (309,172) 1,043,690 2,327,955
Foreign currency transactions .................................... (244,290) (8,392) (723,260)
Foreign capital gains tax ........................................ -- -- --
---------------- ---------------- ----------------
Net realized gain (loss) ............................................ (6,159,050) (4,691,501) 7,477,426
---------------- ---------------- ----------------
Net change in unrealized appreciation (depreciation) on:
Investments ...................................................... (79,434,705) (3,421,320) (181,181,854)
Foreign currency translation ..................................... (310,623) (1,703) (385,768)
Deferred foreign capital gains tax ............................... -- -- --
---------------- ---------------- ----------------
Net change in unrealized appreciation (depreciation) ................ (79,745,328) (3,423,023) (181,567,622)
---------------- ---------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ............................. (85,904,378) (8,114,524) (174,090,196)
---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS .................................................. $ (72,299,555) $ (7,420,477) $ (141,318,968)
================ ================ ================
(a) Fund is subject to a unitary fee (see Note 3 in the Notes to Financial
Statements).
Page 86 See Notes to Financial Statements
First Trust First Trust
First Trust Alerian NASDAQ(R) Clean First Trust First Trust
Global U.S. NextGen Edge(R) Smart Grid Indxx Global Indxx Global
Wind Energy Infrastructure Infrastructure Natural Resources Agriculture
ETF ETF Index Fund Income ETF ETF
(FAN) (RBLD) (GRID) (FTRI) (FTAG)
--------------------- --------------------- --------------------- --------------------- ---------------------
$ 6,751,611 $ 252,482 $ 11,514,097 $ 15,805,000 $ 550,737
88,243 5,811 169,064 40,405 --
(788,809) (19,887) (966,952) (387,384) (63,657)
--------------- --------------- --------------- --------------- ---------------
6,051,045 238,406 10,716,209 15,458,021 487,080
--------------- --------------- --------------- --------------- ---------------
1,287,011 44,152 2,672,206 862,306 (a) 106,476 (a)
321,753 8,467 599,948 -- --
162,775 6,044 335,888 -- --
33,068 (6,109) 34,557 -- --
77,490 13,234 91,585 -- --
39,560 4,078 59,832 -- --
16,088 423 33,403 -- --
7,338 5,383 7,523 -- --
8,740 196 16,306 -- --
6,318 7,993 13,077 -- --
737 53 4,493 -- --
-- -- 2,102 -- --
7,410 2,076 8,468 -- --
--------------- --------------- --------------- --------------- ---------------
1,968,288 85,990 3,879,388 862,306 106,476
(37,841) (16,432) -- -- --
--------------- --------------- --------------- --------------- ---------------
1,930,447 69,558 3,879,388 862,306 106,476
--------------- --------------- --------------- --------------- ---------------
4,120,598 168,848 6,836,821 14,595,715 380,604
--------------- --------------- --------------- --------------- ---------------
(15,730,396) (535,906) (48,742,069) (15,728,467) (919,066)
17,232,346 540,796 34,112,951 2,028,199 1,874,007
(73,124) (30,185) 73,537 (42,692) (9,458)
-- -- -- (3,686) (19,378)
--------------- --------------- --------------- --------------- ---------------
1,428,826 (25,295) (14,555,581) (13,746,646) 926,105
--------------- --------------- --------------- --------------- ---------------
(98,655,940) (2,106,744) (138,438,361) (36,919,638) (5,649,414)
(63,094) (1,393) (53,893) (8,221) (1,235)
-- -- -- (6,019) (33,916)
--------------- --------------- --------------- --------------- ---------------
(98,719,034) (2,108,137) (138,492,254) (36,933,878) (5,684,565)
--------------- --------------- --------------- --------------- ---------------
(97,290,208) (2,133,432) (153,047,835) (50,680,524) (4,758,460)
--------------- --------------- --------------- --------------- ---------------
$ (93,169,610) $ (1,964,584) $ (146,211,014) $ (36,084,809) $ (4,377,856)
=============== =============== =============== =============== ===============
See Notes to Financial Statements Page 87
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED SEPTEMBER 30, 2022
First Trust
S-Network
First Trust First Trust Future Vehicles
BICK Indxx NextG & Technology
Index Fund ETF ETF
(BICK) (NXTG) (CARZ)
---------------- ---------------- ----------------
INVESTMENT INCOME:
Dividends ........................................................... $ 790,397 $ 25,978,641 $ 2,081,144
Securities lending income (net of fees) ............................. 17,422 151,053 136,473
Foreign withholding tax ............................................. (25,874) (2,083,615) (93,838)
---------------- ---------------- ----------------
Total investment income .......................................... 781,945 24,046,079 2,123,779
---------------- ---------------- ----------------
EXPENSES:
Investment advisory fees ............................................ 163,030(a) 5,964,169(a) 454,364(a)
Licensing fees ...................................................... -- -- --
Accounting and administration fees .................................. -- -- --
Audit and tax fees .................................................. -- -- --
Shareholder reporting fees .......................................... -- -- --
Custodian fees ...................................................... -- -- --
Transfer agent fees ................................................. -- -- --
Trustees' fees and expenses ......................................... -- -- --
Legal fees .......................................................... -- -- --
Listing fees ........................................................ -- -- --
Registration and filing fees ........................................ -- -- --
Excise tax .......................................................... -- -- --
Other expenses ...................................................... -- -- --
---------------- ---------------- ----------------
Total expenses ................................................... 163,030 5,964,169 454,364
Less fees waived and expenses reimbursed by the investment
advisor........................................................ -- -- --
---------------- ---------------- ----------------
Net expenses ..................................................... 163,030 5,964,169 454,364
---------------- ---------------- ----------------
NET INVESTMENT INCOME (LOSS) ........................................ 618,915 18,081,910 1,669,415
---------------- ---------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ...................................................... (3,834,722) 2,323,999 (7,599,145)
In-kind redemptions .............................................. 11,583,388 96,408,576 4,820,617
Foreign currency transactions .................................... 26,081 (435,380) (43,968)
Foreign capital gains tax ........................................ -- (1,203,819) --
---------------- ---------------- ----------------
Net realized gain (loss) ............................................ 7,774,747 97,093,376 (2,822,496)
---------------- ---------------- ----------------
Net change in unrealized appreciation (depreciation) on:
Investments ...................................................... (15,497,164) (294,611,441) (18,391,171)
Foreign currency translation ..................................... (754) (58,808) (5,092)
Deferred foreign capital gains tax ............................... -- 2,629,467 --
---------------- ---------------- ----------------
Net change in unrealized appreciation (depreciation) ................ (15,497,918) (292,040,782) (18,396,263)
---------------- ---------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ............................. (7,723,171) (194,947,406) (21,218,759)
---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS .................................................. $ (7,104,256) $ (176,865,496) $ (19,549,344)
================ ================ ================
(a) Fund is subject to a unitary fee (see Note 3 in the Notes to Financial
Statements).
Page 88 See Notes to Financial Statements
First Trust First Trust
First Trust First Trust First Trust IPOX(R) Europe Dow Jones
Cloud International Nasdaq Equity International
Computing Equity Cybersecurity Opportunities Internet
ETF Opportunities ETF ETF ETF ETF
(SKYY) (FPXI) (CIBR) (FPXE) (FDNI)
--------------------- --------------------- --------------------- --------------------- ---------------------
$ 73,426,151 $ 9,869,309 $ 65,114,835 $ 190,677 $ 367,970
2,346,061 407,257 2,992,636 3,317 --
(272,343) (979,563) (1,065,896) (23,373) (3,797)
--------------- --------------- --------------- --------------- ---------------
75,499,869 9,297,003 67,041,575 170,621 364,173
--------------- --------------- --------------- --------------- ---------------
29,068,379 (a) 4,530,238 (a) 32,674,891 (a) 59,330 (a) 362,608 (a)
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
--------------- --------------- --------------- --------------- ---------------
29,068,379 4,530,238 32,674,891 59,330 362,608
-- -- -- -- --
--------------- --------------- --------------- --------------- ---------------
29,068,379 4,530,238 32,674,891 59,330 362,608
--------------- --------------- --------------- --------------- ---------------
46,431,490 4,766,765 34,366,684 111,291 1,565
--------------- --------------- --------------- --------------- ---------------
(719,377,589) (243,212,398) (449,280,640) (3,210,018) (9,578,556)
442,588,815 12,569,697 437,840,303 95,946 (1,676,302)
-- (1,175,811) (348,744) (3,748) (5,490)
-- -- -- -- --
--------------- --------------- --------------- --------------- ---------------
(276,788,774) (231,818,512) (11,789,081) (3,117,820) (11,260,348)
--------------- --------------- --------------- --------------- ---------------
(2,264,731,256) (133,476,720) (1,344,833,057) (1,553,769) (25,653,345)
-- (48,810) (6,387) (608) (223)
-- -- -- -- --
--------------- --------------- --------------- --------------- ---------------
(2,264,731,256) (133,525,530) (1,344,839,444) (1,554,377) (25,653,568)
--------------- --------------- --------------- --------------- ---------------
(2,541,520,030) (365,344,042) (1,356,628,525) (4,672,197) (36,913,916)
--------------- --------------- --------------- --------------- ---------------
$(2,495,088,540) $ (360,577,277) $(1,322,261,841) $ (4,560,906) $ (36,912,351)
=============== =============== =============== =============== ===============
See Notes to Financial Statements Page 89
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF CHANGES IN NET ASSETS
First Trust First Trust
STOXX(R) European Alerian Disruptive
Select Dividend Technology
Index Fund Real Estate ETF
(FDD) (DTRE)
-------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
9/30/2022 9/30/2021 9/30/2022 9/30/2021
--------------- --------------- --------------- ---------------
OPERATIONS:
Net investment income (loss) ............................. $ 13,604,823 $ 9,854,187 $ 694,047 $ 745,716
Net realized gain (loss) ................................. (6,159,050) 21,411,028 (4,691,501) 1,100,313
Net change in unrealized appreciation (depreciation) ..... (79,745,328) 35,038,440 (3,423,023) 6,368,752
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from operations ....................................... (72,299,555) 66,303,655 (7,420,477) 8,214,781
--------------- --------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations .................................... (13,077,255) (9,883,719) (1,182,167) (233,141)
--------------- --------------- --------------- ---------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold ................................ 14,995,535 81,399,807 2,663,290 2,562,370
Cost of shares redeemed .................................. (54,599,138) (32,016,164) (4,687,732) (8,557,560)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from shareholder transactions ......................... (39,603,603) 49,383,643 (2,024,442) (5,995,190)
--------------- --------------- --------------- ---------------
Total increase (decrease) in net assets .................. (124,980,413) 105,803,579 (10,627,086) 1,986,450
NET ASSETS:
Beginning of period ...................................... 286,030,846 180,227,267 34,656,993 32,670,543
--------------- --------------- --------------- ---------------
End of period ............................................ $ 161,050,433 $ 286,030,846 $ 24,029,907 $ 34,656,993
=============== =============== =============== ===============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period .................. 20,603,334 17,553,334 691,608 841,608
Shares sold .............................................. 1,050,000 5,550,000 50,000 50,000
Shares redeemed .......................................... (4,500,000) (2,500,000) (100,000) (200,000)
--------------- --------------- --------------- ---------------
Shares outstanding, end of period ........................ 17,153,334 20,603,334 641,608 691,608
=============== =============== =============== ===============
Page 90 See Notes to Financial Statements
First Trust First Trust
Dow Jones First Trust Alerian U.S. NextGen
Global Select Dividend Global Wind Energy Infrastructure
Index Fund ETF ETF
(FGD) (FAN) (RBLD)
---------------------------------------- --------------------------------------- ---------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
9/30/2022 9/30/2021 9/30/2022 9/30/2021 9/30/2022 9/30/2021
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 32,771,228 $ 23,115,111 $ 4,120,598 $ 5,180,381 $ 168,848 $ 160,246
7,477,426 46,690,866 1,428,826 35,096,746 (25,295) (280,169)
(181,567,622) 76,332,374 (98,719,034) (2,908,716) (2,108,137) 1,887,797
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
(141,318,968) 146,138,351 (93,169,610) 37,368,411 (1,964,584) 1,767,874
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
(33,007,963) (22,659,267) (4,523,536) (6,120,596) (174,012) (143,267)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
183,686,839 231,712,385 29,990,153 237,937,542 2,488,028 2,855,164
(18,237,594) (195,225,987) (74,286,166) (88,339,911) (2,454,490) --
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
165,449,245 36,486,398 (44,296,013) 149,597,631 33,538 2,855,164
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
(8,877,686) 159,965,482 (141,989,159) 180,845,446 (2,105,058) 4,479,771
504,454,143 344,488,661 385,920,256 205,074,810 10,789,633 6,309,862
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 495,576,457 $ 504,454,143 $ 243,931,097 $ 385,920,256 $ 8,684,575 $ 10,789,633
================== ================== ================== ================== ================== ==================
20,200,002 19,300,002 18,450,002 11,750,002 200,002 150,002
7,250,000 9,050,000 1,500,000 10,800,000 50,000 50,000
(750,000) (8,150,000) (3,850,000) (4,100,000) (50,000) --
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
26,700,002 20,200,002 16,100,002 18,450,002 200,002 200,002
================== ================== ================== ================== ================== ==================
See Notes to Financial Statements Page 91
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
First Trust First Trust
NASDAQ(R) Clean Edge(R) Indxx Global
Smart Grid Infrastructure Natural Resources
Index Fund Index Fund
(GRID) (FTRI)
-------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
9/30/2022 9/30/2021 9/30/2022 9/30/2021
--------------- --------------- --------------- ---------------
OPERATIONS:
Net investment income (loss) ............................. $ 6,836,821 $ 3,242,273 $ 14,595,715 $ 1,894,518
Net realized gain (loss) ................................. (14,555,581) 8,840,140 (13,746,646) 1,321,619
Net change in unrealized appreciation (depreciation) ..... (138,492,254) 42,350,049 (36,933,878) (2,205,536)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from operations ....................................... (146,211,014) 54,432,462 (36,084,809) 1,010,601
--------------- --------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations .................................... (6,402,097) (3,258,036) (14,042,378) (1,526,281)
--------------- --------------- --------------- ---------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold ................................ 287,294,194 474,084,702 226,862,215 31,087,104
Cost of shares redeemed .................................. (146,513,572) (31,575,616) (13,299,327) --
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from shareholder transactions ......................... 140,780,622 442,509,086 213,562,888 31,087,104
--------------- --------------- --------------- ---------------
Total increase (decrease) in net assets .................. (11,832,489) 493,683,512 163,435,701 30,571,424
NET ASSETS:
Beginning of period ...................................... 550,262,495 56,578,983 36,311,741 5,740,317
--------------- --------------- --------------- ---------------
End of period ............................................ $ 538,430,006 $ 550,262,495 $ 199,747,442 $ 36,311,741
=============== =============== =============== ===============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period .................. 5,950,002 900,002 2,800,002 600,002
Shares sold .............................................. 2,900,000 5,400,000 14,550,000 2,200,000
Shares redeemed .......................................... (1,700,000) (350,000) (1,000,000) --
--------------- --------------- --------------- ---------------
Shares outstanding, end of period ........................ 7,150,002 5,950,002 16,350,002 2,800,002
=============== =============== =============== ===============
Page 92 See Notes to Financial Statements
First Trust First Trust First Trust
Indxx Global BICK Indxx NextG
Agriculture ETF Index Fund ETF
(FTAG) (BICK) (NXTG)
---------------------------------------- --------------------------------------- ---------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
9/30/2022 9/30/2021 9/30/2022 9/30/2021 9/30/2022 9/30/2021
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 380,604 $ 83,374 $ 618,915 $ 704,323 $ 18,081,910 $ 13,190,505
926,105 46,035 7,774,747 286,285 97,093,376 81,514,040
(5,684,565) 942,633 (15,497,918) 8,021,532 (292,040,782) 114,759,221
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
(4,377,856) 1,072,042 (7,104,256) 9,012,140 (176,865,496) 209,463,766
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
(278,287) (76,502) (755,321) (563,280) (25,616,645) (8,671,946)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
32,602,633 1,573,503 34,290,818 24,312,835 72,484,061 509,273,872
(11,185,760) -- (69,598,007) (6,733,788) (480,555,665) (218,991,266)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
21,416,873 1,573,503 (35,307,189) 17,579,047 (408,071,604) 290,282,606
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
16,760,730 2,569,043 (43,166,766) 26,027,907 (610,553,745) 491,074,426
5,609,044 3,040,001 86,965,242 60,937,335 1,081,609,633 590,535,207
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 22,369,774 $ 5,609,044 $ 43,798,476 $ 86,965,242 $ 471,055,888 $ 1,081,609,633
================== ================== ================== ================== ================== ==================
189,928 139,928 2,550,002 2,100,002 14,150,002 10,000,002
1,000,000 50,000 1,300,000 650,000 900,000 7,200,000
(350,000) -- (2,000,000) (200,000) (6,600,000) (3,050,000)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
839,928 189,928 1,850,002 2,550,002 8,450,002 14,150,002
================== ================== ================== ================== ================== ==================
See Notes to Financial Statements Page 93
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
First Trust
S-Network Future First Trust
Vehicles & Technology Cloud Computing
ETF ETF
(CARZ) (SKYY)
-------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
9/30/2022 9/30/2021 9/30/2022 9/30/2021
--------------- --------------- --------------- ---------------
OPERATIONS:
Net investment income (loss) ............................. $ 1,669,415 $ 691,487 $ 46,431,490 $ 9,472,360
Net realized gain (loss) ................................. (2,822,496) 10,838,183 (276,788,774) 1,433,936,513
Net change in unrealized appreciation (depreciation) ..... (18,396,263) 5,024,127 (2,264,731,256) 235,787,379
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from operations ....................................... (19,549,344) 16,553,797 (2,495,088,540) 1,679,196,252
--------------- --------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations .................................... (1,776,897) (535,126) (47,254,977) (11,051,410)
--------------- --------------- --------------- ---------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold ................................ 38,858,818 66,534,380 946,949,156 2,762,307,799
Cost of shares redeemed .................................. (41,107,013) (47,810,092) (1,689,481,713) (3,154,828,076)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from shareholder transactions ......................... (2,248,195) 18,724,288 (742,532,557) (392,520,277)
--------------- --------------- --------------- ---------------
Total increase (decrease) in net assets .................. (23,574,436) 34,742,959 (3,284,876,074) 1,275,624,565
NET ASSETS:
Beginning of period ...................................... 63,989,360 29,246,401 6,239,449,143 4,963,824,578
--------------- --------------- --------------- ---------------
End of period ............................................ $ 40,414,924 $ 63,989,360 $ 2,954,573,069 $ 6,239,449,143
=============== =============== =============== ===============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period .................. 1,100,002 750,002 59,200,002 63,250,002
Shares sold .............................................. 650,000 1,200,000 10,000,000 27,200,000
Shares redeemed .......................................... (750,000) (850,000) (20,200,000) (31,250,000)
--------------- --------------- --------------- ---------------
Shares outstanding, end of period ........................ 1,000,002 1,100,002 49,000,002 59,200,002
=============== =============== =============== ===============
Page 94 See Notes to Financial Statements
First Trust First Trust
International First Trust IPOX(R) Europe
Equity Nasdaq Equity
Opportunities ETF Cybersecurity ETF Opportunities ETF
(FPXI) (CIBR) (FPXE)
---------------------------------------- --------------------------------------- ---------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
9/30/2022 9/30/2021 9/30/2022 9/30/2021 9/30/2022 9/30/2021
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 4,766,765 $ 7,462,351 $ 34,366,684 $ 2,436,706 $ 111,291 $ 26,647
(231,818,512) (58,454,798) (11,789,081) 415,138,506 (3,117,820) 47,668
(133,525,530) 60,066,212 (1,344,839,444) 582,202,103 (1,554,377) 182,124
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
(360,577,277) 9,073,765 (1,322,261,841) 999,777,315 (4,560,906) 256,439
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
(4,260,436) (6,104,611) (33,554,011) (4,694,250) (115,891) (43,541)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
35,411,414 893,325,867 2,858,661,276 2,560,530,212 1,384,468 9,415,730
(512,411,220) (89,839,649) (1,542,060,355) (964,304,085) (2,268,546) (1,424,855)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
(476,999,806) 803,486,218 1,316,600,921 1,596,226,127 (884,078) 7,990,875
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
(841,837,519) 806,455,372 (39,214,931) 2,591,309,192 (5,560,875) 8,203,773
1,163,258,803 356,803,431 4,770,297,564 2,178,988,372 10,691,929 2,488,156
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 321,421,284 $ 1,163,258,803 $ 4,731,082,633 $ 4,770,297,564 $ 5,131,054 $ 10,691,929
================== ================== ================== ================== ================== ==================
18,150,002 6,300,002 97,750,002 62,650,002 350,002 100,002
700,000 13,200,000 58,400,000 55,350,000 50,000 300,000
(9,850,000) (1,350,000) (33,450,000) (20,250,000) (100,000) (50,000)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
9,000,002 18,150,002 122,700,002 97,750,002 300,002 350,002
================== ================== ================== ================== ================== ==================
See Notes to Financial Statements Page 95
FIRST TRUST EXCHANGE-TRADED FUND II
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
First Trust
Dow Jones
International
Internet ETF
(FDNI)
--------------------------------
Year Ended Year Ended
9/30/2022 9/30/2021
--------------- ---------------
OPERATIONS:
Net investment income (loss) ............................. $ 1,565 $ (591,485)
Net realized gain (loss) ................................. (11,260,348) 4,460,345
Net change in unrealized appreciation (depreciation) ..... (25,653,568) (12,737,659)
--------------- ---------------
Net increase (decrease) in net assets resulting
from operations ....................................... (36,912,351) (8,868,799)
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations .................................... -- (145,080)
--------------- ---------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold ................................ 3,599,371 93,036,318
Cost of shares redeemed .................................. (41,357,597) (28,969,729)
--------------- ---------------
Net increase (decrease) in net assets resulting
from shareholder transactions ......................... (37,758,226) 64,066,589
--------------- ---------------
Total increase (decrease) in net assets .................. (74,670,577) 55,052,710
NET ASSETS:
Beginning of period ...................................... 103,902,742 48,850,032
--------------- ---------------
End of period ............................................ $ 29,232,165 $ 103,902,742
=============== ===============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period .................. 2,600,002 1,250,002
Shares sold .............................................. 150,000 2,000,000
Shares redeemed .......................................... (1,250,000) (650,000)
--------------- ---------------
Shares outstanding, end of period ........................ 1,500,002 2,600,002
=============== ===============
Page 96 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST STOXX(R) EUROPEAN SELECT DIVIDEND INDEX FUND (FDD)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 13.88 $ 10.27 $ 12.75 $ 13.12 $ 13.61
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.73 0.52 0.52 0.66 0.59
Net realized and unrealized gain (loss) (4.52) 3.61 (2.50) (0.37) (0.49)
----------- ----------- ----------- ----------- -----------
Total from investment operations (3.79) 4.13 (1.98) 0.29 0.10
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.70) (0.52) (0.50) (0.66) (0.59)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 9.39 $ 13.88 $ 10.27 $ 12.75 $ 13.12
=========== =========== =========== =========== ===========
TOTAL RETURN (a) (27.88)% 40.19% (15.64)% 2.35% 0.74%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 161,050 $ 286,031 $ 180,227 $ 293,918 $ 454,824
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.58% 0.58% 0.57% 0.58% 0.57%
Ratio of net expenses to average net assets 0.58% 0.58% 0.57% 0.58% 0.57%
Ratio of net investment income (loss) to
average net assets 5.36% 4.06% 3.84% 4.84% 4.25%
Portfolio turnover rate (b) 57% 58% 98% 24% 35%
FIRST TRUST ALERIAN DISRUPTIVE TECHNOLOGY REAL ESTATE ETF (DTRE)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 50.11 $ 38.82 $ 49.44 $ 45.07 $ 44.96
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.89 0.89 0.62 1.25 1.48
Net realized and unrealized gain (loss) (11.90) 10.74 (9.27) 4.55 0.31
----------- ----------- ----------- ----------- -----------
Total from investment operations (11.01) 11.63 (8.65) 5.80 1.79
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (1.65) (0.34) (1.97) (1.43) (1.68)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 37.45 $ 50.11 $ 38.82 $ 49.44 $ 45.07
=========== =========== =========== =========== ===========
TOTAL RETURN (a) (22.72)% 29.95% (18.12)% 13.19% 3.99%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 24,030 $ 34,657 $ 32,671 $ 56,436 $ 45,074
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.96% 0.92% 0.85% 0.89% 0.85%
Ratio of net expenses to average net assets 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 2.08% 2.21% 2.52% 2.61% 3.48%
Portfolio turnover rate (b) 70% (c) 11% 7% 7% 9%
(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) 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.
(c) The variation in the portfolio turnover rate is due to the change in the
Fund's underlying index effective September 30, 2022, which resulted in a
complete rebalance of the Fund's portfolio.
See Notes to Financial Statements Page 97
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST DOW JONES GLOBAL SELECT DIVIDEND INDEX FUND (FGD)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 24.97 $ 17.85 $ 22.90 $ 25.16 $ 25.73
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 1.33 1.22 1.30 1.39 1.15
Net realized and unrealized gain (loss) (6.38) 7.10 (5.04) (2.24) (0.58)
----------- ----------- ----------- ----------- -----------
Total from investment operations (5.05) 8.32 (3.74) (0.85) 0.57
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (1.36) (1.20) (1.31) (1.41) (1.14)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 18.56 $ 24.97 $ 17.85 $ 22.90 $ 25.16
=========== =========== =========== =========== ===========
TOTAL RETURN (a) (20.98)% 46.94% (16.33)% (3.21)% 2.26%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 495,576 $ 504,454 $ 344,489 532,532 $ 484,280
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.56% 0.57% 0.57% 0.59% 0.58%
Ratio of net expenses to average net assets 0.56% 0.57% 0.57% 0.59% 0.58%
Ratio of net investment income (loss) to
average net assets 5.74% 5.11% 6.16% 6.20% 4.48%
Portfolio turnover rate (b) 35% 38% 67% 31% 31%
FIRST TRUST GLOBAL WIND ENERGY ETF (FAN)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 20.92 $ 17.45 $ 13.13 $ 12.50 $ 13.13
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.25 0.28 0.26 0.30 0.28
Net realized and unrealized gain (loss) (5.75) 3.52 4.33 0.64 (0.66)
----------- ----------- ----------- ----------- -----------
Total from investment operations (5.50) 3.80 4.59 0.94 (0.38)
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.27) (0.33) (0.27) (0.31) (0.25)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 15.15 $ 20.92 $ 17.45 $ 13.13 $ 12.50
=========== =========== =========== =========== ===========
TOTAL RETURN (a) (26.43)% 21.76% 35.42% 7.58% (2.92)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 243,931 $ 385,920 $ 205,075 $ 75,502 $ 79,362
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.61% 0.62% 0.66% 0.71% 0.68%
Ratio of net expenses to average net assets 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 1.28% 1.34% 1.86% 2.32% 2.21%
Portfolio turnover rate (b) 21% 31% 42% 30% 22%
(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) 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 98 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST ALERIAN U.S. NEXTGEN INFRASTRUCTURE ETF (RBLD)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 53.95 $ 42.07 $ 47.05 $ 56.78 $ 56.89
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 1.01 0.87 1.28 0.87 0.79
Net realized and unrealized gain (loss) (10.50) 11.79 (4.93) (9.71) 0.16
----------- ----------- ----------- ----------- -----------
Total from investment operations (9.49) 12.66 (3.65) (8.84) 0.95
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (1.04) (0.78) (1.33) (0.89) (1.06)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 43.42 $ 53.95 $ 42.07 $ 47.05 $ 56.78
=========== =========== =========== =========== ===========
TOTAL RETURN (a) (17.80)% 30.19% (7.52)% (15.64)% 1.67%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 8,685 $ 10,790 $ 6,310 $ 9,409 $ 14,194
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.86% 1.42% 1.43% 1.21% 0.88%
Ratio of net expenses to average net assets 0.69% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 1.68% 1.81% 2.68% 1.64% 1.45%
Portfolio turnover rate (b) 92% (c) 18% 20% 14% 16%
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) SMART GRID INFRASTRUCTURE INDEX FUND (GRID)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 92.48 $ 62.87 $ 49.51 $ 47.62 $ 49.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.93 0.64 0.58 0.67 0.52
Net realized and unrealized gain (loss) (17.24) 29.73 13.27 1.84 (1.32)
----------- ----------- ----------- ----------- -----------
Total from investment operations (16.31) 30.37 13.85 2.51 (0.80)
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.87) (0.76) (0.49) (0.62) (0.58)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 75.30 $ 92.48 $ 62.87 $ 49.51 $ 47.62
=========== =========== =========== =========== ===========
TOTAL RETURN (a) (17.70)% 48.35% 28.10% 5.32% (1.66)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 538,430 $ 550,262 $ 56,579 $ 27,232 $ 33,333
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.58% 0.63% 0.75% 0.82% 0.74%
Ratio of net expenses to average net assets 0.58% 0.63% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 1.02% 1.11% 1.30% 1.40% 1.10%
Portfolio turnover rate (b) 33% 20% 53% 31% 60%
(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) 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.
(c) The variation in the portfolio turnover rate is due to the change in the
Fund's underlying index effective July 29, 2022, which resulted in a
complete rebalance of the Fund's portfolio.
See Notes to Financial Statements Page 99
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST INDXX GLOBAL NATURAL RESOURCES INCOME ETF (FTRI)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 12.97 $ 9.57 $ 11.47 $ 12.73 $ 11.88
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 1.17 0.80 0.53 0.72 0.48
Net realized and unrealized gain (loss) (0.67) 3.29 (a) (1.86) (1.28) 0.83
----------- ----------- ----------- ----------- -----------
Total from investment operations 0.50 4.09 (1.33) (0.56) 1.31
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (1.25) (0.69) (0.57) (0.70) (0.46)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 12.22 $ 12.97 $ 9.57 $ 11.47 $ 12.73
=========== =========== =========== =========== ===========
TOTAL RETURN (b) 3.27% 42.87% (11.80)% (4.42)% 11.12%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 199,747 $ 36,312 $ 5,740 $ 7,452 $ 8,908
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 11.85% 9.06% 4.94% 5.95% 3.74%
Portfolio turnover rate (c) 69% 99% 66% 84% 50%
FIRST TRUST INDXX GLOBAL AGRICULTURE ETF (FTAG)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 29.53 $ 21.73 $ 22.87 $ 26.21 $ 26.96
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.56 0.45 0.45 0.51 0.44
Net realized and unrealized gain (loss) (2.97) 7.78 (1.20) (3.17) (0.83)
----------- ----------- ----------- ----------- -----------
Total from investment operations (2.41) 8.23 (0.75) (2.66) (0.39)
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.49) (0.43) (0.39) (0.64) (0.36)
Return of capital -- -- -- (0.04) --
----------- ----------- ----------- ----------- -----------
Total distributions (0.49) (0.43) (0.39) (0.68) (0.36)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 26.63 $ 29.53 $ 21.73 $ 22.87 $ 26.21
=========== =========== =========== =========== ===========
TOTAL RETURN (b) (8.28)% 37.94% (3.19)% (10.16)% (1.46)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 22,370 $ 5,609 $ 3,040 $ 3,200 $ 4,979
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 2.50% 1.84% 2.16% 1.93% 1.56%
Portfolio turnover rate (c) 26% 12% 17% 20% 30%
(a) 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.
(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) 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 100 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST BICK INDEX FUND (BICK)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 34.10 $ 29.02 $ 25.61 $ 26.48 $ 28.77
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.90 0.30 0.08 0.33 0.40
Net realized and unrealized gain (loss) (10.36) 5.01 3.53 (0.80) (2.34)
----------- ----------- ----------- ----------- -----------
Total from investment operations (9.46) 5.31 3.61 (0.47) (1.94)
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.97) (0.23) (0.20) (0.40) (0.35)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 23.67 $ 34.10 $ 29.02 $ 25.61 $ 26.48
=========== =========== =========== =========== ===========
TOTAL RETURN (a) (28.39)% 18.28% 14.07% (1.76)% (6.82)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 43,798 $ 86,965 $ 60,937 $ 116,503 $ 190,648
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.64% 0.64% 0.64% 0.64% 0.64%
Ratio of net expenses to average net assets 0.64% 0.64% 0.64% 0.64% 0.64%
Ratio of net investment income (loss) to
average net assets 2.43% 0.83% 0.60% 1.25% 1.33%
Portfolio turnover rate (b) 126% 92% 58% 66% 65%
FIRST TRUST INDXX NEXTG ETF (NXTG)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 76.44 $ 59.05 $ 50.26 $ 49.63 $ 50.52
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 1.72 0.95 0.69 0.37 0.72
Net realized and unrealized gain (loss) (20.13) 17.10 8.79 0.50 (0.60)
----------- ----------- ----------- ----------- -----------
Total from investment operations (18.41) 18.05 9.48 0.87 0.12
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (1.88) (0.62) (0.69) (0.24) (1.01)
Net realized gain (0.40) (0.04) -- -- --
----------- ----------- ----------- ----------- -----------
Total distributions (2.28) (0.66) (0.69) (0.24) (1.01)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 55.75 $ 76.44 $ 59.05 $ 50.26 $ 49.63
=========== =========== =========== =========== ===========
TOTAL RETURN (a) (24.71)% 30.62% 18.97% 1.78% 0.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 471,056 $ 1,081,610 $ 590,535 $ 196,015 $ 17,370
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 2.12% 1.42% 1.52% 1.73% 1.34%
Portfolio turnover rate (b) 21% 27% 30% 59% 80%
(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) 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 101
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST S-NETWORK FUTURE VEHICLES & TECHNOLOGY ETF (CARZ)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 58.17 $ 39.00 $ 32.04 $ 36.33 $ 40.25
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 1.38 0.60 0.34 1.02 0.98
Net realized and unrealized gain (loss) (17.67) 19.04 7.07 (4.28) (3.98)
----------- ----------- ----------- ----------- -----------
Total from investment operations (16.29) 19.64 7.41 (3.26) (3.00)
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (1.47) (0.47) (0.45) (1.03) (0.92)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 40.41 $ 58.17 $ 39.00 $ 32.04 $ 36.33
=========== =========== =========== =========== ===========
TOTAL RETURN (a) (28.66)% 50.43% 23.33% (8.97)% (7.57)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 40,415 $ 63,989 $ 29,246 $ 17,623 $ 18,167
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 2.57% 1.17% 1.09% 3.19% 2.44%
Portfolio turnover rate (b) 133% (c) 42% 36% 24% 16%
FIRST TRUST CLOUD COMPUTING ETF (SKYY)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 105.40 $ 78.48 $ 56.39 $ 56.71 $ 41.88
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.79 0.15 0.16 0.59 0.14
Net realized and unrealized gain (loss) (45.08) 26.95 22.10 (0.31) 14.84
----------- ----------- ----------- ----------- -----------
Total from investment operations (44.29) 27.10 22.26 0.28 14.98
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.81) (0.18) (0.17) (0.60) (0.15)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 60.30 $ 105.40 $ 78.48 $ 56.39 $ 56.71
=========== =========== =========== =========== ===========
TOTAL RETURN (a) (42.32)% 34.55% 39.54% 0.57% 35.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 2,954,573 $ 6,239,449 $ 4,963,825 $ 2,168,198 $ 2,067,140
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net expenses to average net assets 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 0.96% 0.16% 0.24% 1.02% 0.28%
Portfolio turnover rate (b) 42% 33% 35% 85% 7%
(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) 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.
(c) The variation in the portfolio turnover rate is due to the change in the
Fund's underlying index effective January 26, 2022, which resulted in a
complete rebalance of the Fund's portfolio.
Page 102 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST INTERNATIONAL EQUITY OPPORTUNITIES ETF (FPXI)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 64.09 $ 56.64 $ 36.39 $ 35.10 $ 34.51
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.54 0.40 0.11 0.30 0.49
Net realized and unrealized gain (loss) (28.51) 7.39 20.32 (a) 1.29 0.66
----------- ----------- ----------- ----------- -----------
Total from investment operations (27.97) 7.79 20.43 1.59 1.15
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.41) (0.34) (0.18) (0.30) (0.56)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 35.71 $ 64.09 $ 56.64 $ 36.39 $ 35.10
=========== =========== =========== =========== ===========
TOTAL RETURN (b) (43.78)% 13.73% 56.24% (a) 4.60% 3.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 321,421 $ 1,163,259 $ 356,803 $ 30,931 $ 26,322
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 0.74% 0.76% 0.38% 0.86% 1.42%
Portfolio turnover rate (c) 119% 118% 114% 98% 83%
FIRST TRUST NASDAQ CYBERSECURITY ETF (CIBR)
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of period $ 48.80 $ 34.78 $ 27.63 $ 28.49 $ 21.85
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.31 0.04 0.50 0.06 0.02
Net realized and unrealized gain (loss) (10.25) 14.04 7.16 (0.86) 6.64
----------- ----------- ----------- ----------- -----------
Total from investment operations (9.94) 14.08 7.66 (0.80) 6.66
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.30) (0.06) (0.51) (0.06) (0.02)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 38.56 $ 48.80 $ 34.78 $ 27.63 $ 28.49
=========== =========== =========== =========== ===========
TOTAL RETURN (b) (20.53)% 40.50% 28.27% (2.78)% 30.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 4,731,083 $ 4,770,298 $ 2,178,988 $ 979,650 $ 847,673
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net expenses to average net assets 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 0.63% 0.07% 1.54% 0.20% 0.04%
Portfolio turnover rate (c) 54% 35% 46% 58% 56%
(a) The Fund received a payment from the advisor in the amount of $806, which
represents less than $0.01 per share. Since the advisor reimbursed the
Fund, there was no effect on the Fund's total return.
(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) 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 103
FIRST TRUST EXCHANGE-TRADED FUND II
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST IPOX(R) EUROPE EQUITY OPPORTUNITIES ETF (FPXE)
Year Ended September 30, Period
----------------------------------------------- Ended
2022 2021 2020 9/30/2019 (a)
------------- ------------- ------------- -------------
Net asset value, beginning of period $ 30.55 $ 24.88 $ 19.66 $ 19.70
----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.36 0.25 0.22 0.33
Net realized and unrealized gain (loss) (13.43) 5.75 5.30 (0.06)
----------- ----------- ----------- -----------
Total from investment operations (13.07) 6.00 5.52 0.27
----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.38) (0.33) (0.30) (0.31)
----------- ----------- ----------- -----------
Net asset value, end of period $ 17.10 $ 30.55 $ 24.88 $ 19.66
=========== =========== =========== ===========
TOTAL RETURN (b) (42.95)% 24.19% 28.33% 1.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 5,131 $ 10,692 $ 2,488 $ 1,966
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.70% 0.70% 0.70% 0.70% (c)
Ratio of net investment income (loss) to
average net assets 1.31% 0.51% 0.74% 1.77% (c)
Portfolio turnover rate (d) 118% 118% 63% 67%
FIRST TRUST DOW JONES INTERNATIONAL INTERNET ETF (FDNI)
Year Ended September 30, Period
----------------------------------------------- Ended
2022 2021 2020 9/30/2019 (a)
------------- ------------- ------------- -------------
Net asset value, beginning of period $ 39.96 $ 39.08 $ 21.02 $ 19.69
----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.00(e)(f) (0.18) (0.03) 0.75
Net realized and unrealized gain (loss) (20.47) 1.13 (g) 18.40 1.04
----------- ----------- ----------- -----------
Total from investment operations (20.47) 0.95 18.37 1.79
----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income -- (0.07) (0.31) (0.46)
----------- ----------- ----------- -----------
Net asset value, end of period $ 19.49 $ 39.96 $ 39.08 $ 21.02
=========== =========== =========== ===========
TOTAL RETURN (b) (51.23)% 2.42% 88.27% 9.07%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 29,232 $ 103,903 $ 48,850 $ 4,204
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.65% 0.65% 0.65% 0.65% (c)
Ratio of net investment income (loss) to
average net assets 0.00% (h) (0.55)% (0.50)% 4.42% (c)
Portfolio turnover rate (d) 29% 34% 23% 61%
(a) Inception dates for FPXE and FDNI are October 4, 2018 and November 5,
2018, respectively, which are consistent with the respective Fund's
commencement of investment operations and are the dates the initial
creation units were established.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The 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.
(e) Based on average shares outstanding.
(f) Amount is less than $0.01.
(g) 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.
(h) Amount is less than 0.01%.
Page 104 See Notes to Financial Statements
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022
1. ORGANIZATION
First Trust Exchange-Traded Fund II (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on July 6, 2006,
and is registered with the Securities and Exchange Commission ("SEC") under the
Investment Company Act of 1940, as amended (the "1940 Act").
The Trust currently consists of eighteen exchange-traded funds. This report
covers the sixteen funds (each a "Fund" and collectively, the "Funds") listed
below:
First Trust STOXX(R) European Select Dividend Index Fund - (NYSE Arca,
Inc. ("NYSE Arca") ticker "FDD")
First Trust Alerian Disruptive Technology Real Estate ETF - (NYSE Arca
ticker "DTRE")(1)
First Trust Dow Jones Global Select Dividend Index Fund - (NYSE Arca
ticker "FGD")
First Trust Global Wind Energy ETF - (NYSE Arca ticker "FAN")
First Trust Alerian U.S. NextGen Infrastructure ETF - (NYSE Arca ticker
"RBLD")(2)
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index
Fund - (The Nasdaq Stock Market LLC ("Nasdaq") ticker "GRID")
First Trust Indxx Global Natural Resources Income ETF - (Nasdaq ticker
"FTRI")
First Trust Indxx Global Agriculture ETF - (Nasdaq ticker "FTAG")
First Trust BICK Index Fund - (Nasdaq ticker "BICK")
First Trust Indxx NextG ETF - (Nasdaq ticker "NXTG")
First Trust S-Network Future Vehicles & Technology ETF - (Nasdaq ticker
"CARZ")(3)
First Trust Cloud Computing ETF - (Nasdaq ticker "SKYY")
First Trust International Equity Opportunities ETF - (Nasdaq ticker
"FPXI")
First Trust Nasdaq Cybersecurity ETF - (Nasdaq ticker "CIBR")
First Trust IPOX(R) Europe Equity Opportunities ETF - (Nasdaq ticker
"FPXE")
First Trust Dow Jones International Internet ETF - (Nasdaq ticker
"FDNI")
(1) Effective September 30, 2022, First Trust FTSE EPRA/NAREIT Developed
Markets Real Estate Index Fund (NYSE Arca ticker "FFR") changed its
name and ticker to First Trust Alerian Disruptive Technology Real
Estate ETF (NYSE Arca ticker "DTRE").
(2) Effective July 29, 2022, First Trust Global Engineering and
Construction ETF (NYSE Arca ticker "FLM") changed its name and
ticker to First Trust Alerian U.S. NextGen Infrastructure ETF (NYSE
Arca ticker "RBLD").
(3) Effective January 26, 2022, First Trust NASDAQ Global Auto Index
Fund changed its name to First Trust S-Network Future Vehicles &
Technology ETF. The Fund's ticker symbol was not changed.
Each Fund represents a separate series of shares of beneficial interest in the
Trust. Unlike conventional mutual funds, each Fund issues and redeems shares on
a continuous basis, at net asset value ("NAV"), only in large blocks of shares
known as "Creation Units." The investment objective of each Fund is to seek
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of the following indices:
FUND INDEX
First Trust STOXX(R) European Select Dividend Index Fund STOXX(R) Europe Select Dividend 30 Index
First Trust Alerian Disruptive Technology Real Estate ETF Alerian Disruptive Technology Real Estate Index(4)
First Trust Dow Jones Global Select Dividend Index Fund Dow Jones Global Select Dividend Index
First Trust Global Wind Energy ETF ISE Clean Edge Global Wind Energy Index(TM)
First Trust Alerian U.S. NextGen Infrastructure ETF Alerian U.S. NextGen Infrastructure Index(5)
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund Nasdaq Clean Edge Smart Grid Infrastructure
Index(TM)
First Trust Indxx Global Natural Resources Income ETF Indxx Global Natural Resources Income Index
First Trust Indxx Global Agriculture ETF Indxx Global Agriculture Index
First Trust BICK Index Fund ISE BICK(TM) Index
First Trust Indxx NextG ETF Indxx 5G & NextG Thematic Index(SM)
First Trust S-Network Future Vehicles & Technology ETF S-Network Electric & Future Vehicle Ecosystem
Index(6)
First Trust Cloud Computing ETF ISE CTA Cloud Computing Index(TM)
First Trust International Equity Opportunities ETF IPOX(R) International Index
First Trust Nasdaq Cybersecurity ETF Nasdaq CTA Cybersecurity Index(TM)
First Trust IPOX(R) Europe Equity Opportunities ETF IPOX(R)-100 Europe Index
First Trust Dow Jones International Internet ETF Dow Jones International Internet Index
(4) Prior to September 30, 2022, the index was the FTSE EPRA/NAREIT
Developed Index.
(5) Prior to July 29, 2022, the index was ISE Global Engineering and
Construction(TM) Index.
(6) Prior to January 26, 2022, the index was Nasdaq Global Auto
Index(SM).
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FIRST TRUST EXCHANGE-TRADED FUND II
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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 readily available market quotations such as last sale or
official closing prices from a national or foreign exchange (i.e., a regulated
market) and are primarily obtained from third-party pricing services. Fair value
prices represent any prices not considered market value prices and are either
obtained from a third-party pricing service or are determined by the Pricing
Committee of the Funds' investment advisor, First Trust Advisors L.P. ("First
Trust" or the "Advisor"), in accordance with valuation procedures approved by
the Trust's Board of Trustees, and in accordance with provisions of the 1940 Act
and rules thereunder. Investments valued by the Advisor's Pricing Committee, if
any, are footnoted as such in the footnotes to the Portfolio of Investments.
Each Fund's investments are valued as follows:
Common stocks and other equity securities listed on any national or
foreign exchange (excluding Nasdaq and the London Stock Exchange
Alternative Investment Market ("AIM")) are valued at the last sale price
on the exchange on which they are principally traded or, for Nasdaq and
AIM securities, the official closing price. Securities traded on more than
one securities exchange are valued at the last sale price or official
closing price, as applicable, at the close of the securities exchange
representing the primary exchange for such securities.
Securities trading on foreign exchanges or over-the-counter markets that
close prior to the NYSE close may be valued using a systematic fair
valuation model provided by a third-party pricing service. If these
foreign securities meet certain criteria in relation to the valuation
model, their valuation is systematically adjusted to reflect the impact of
movement in the U.S. market after the close of the foreign markets.
Shares of open-end funds are valued based on NAV per share.
Securities traded in an over-the-counter market are valued at the mean of
their most recent bid and asked price, if available, and otherwise at
their last trade price.
Overnight repurchase agreements are valued at amortized cost when it
represents the most appropriate reflection of fair market value.
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Advisor's Pricing Committee at
fair value. These securities generally include, but are not limited to,
restricted securities (securities which may not be publicly sold without
registration under the Securities Act of 1933, as amended) for which a
third-party pricing service is unable to provide a market price; securities
whose trading has been formally suspended; a security whose market or fair value
price is not available from a pre-established pricing source; a security with
respect to which an event has occurred that is likely to materially affect the
value of the security after the market has closed but before the calculation of
a Fund's NAV or make it difficult or impossible to obtain a reliable market
quotation; and a security whose price, as provided by the third-party pricing
service, does not reflect the security's fair value. As a general principle, the
current fair value of a security would appear to be the amount which the owner
might reasonably expect to receive for the security upon its current sale. When
fair value prices are used, generally they will differ from market quotations or
official closing prices on the applicable exchanges. A variety of factors may be
considered in determining the fair value of such securities, including, but not
limited to, the following:
1) the last sale price on the exchange on which they are principally
traded or, for Nasdaq and AIM securities, the official closing
price;
2) the type of security;
3) the size of the holding;
4) the initial cost of the security;
5) transactions in comparable securities;
6) price quotes from dealers and/or third-party pricing services;
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022
7) relationships among various securities;
8) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;
9) an analysis of the issuer's financial statements;
10) the existence of merger proposals or tender offers that might affect
the value of the security; and
11) other relevant factors.
If the securities in question are foreign securities, the following additional
information may be considered:
1) the value of similar foreign securities traded on other foreign
markets;
2) ADR trading of similar securities;
3) closed-end fund or exchange-traded fund trading of similar
securities;
4) foreign currency exchange activity;
5) the trading prices of financial products that are tied to baskets of
foreign securities;
6) factors relating to the event that precipitated the pricing problem;
7) whether the event is likely to recur;
8) whether the effects of the event are isolated or whether they affect
entire markets, countries or regions; and
9) other relevant factors.
In addition, differences between the prices used to calculate a Fund's NAV and
the prices used by such Fund's corresponding index could result in a difference
between a Fund's performance and the performance of its underlying index.
Because foreign markets may be open on different days than the days during which
investors may transact in the shares of a Fund, the value of the Fund's
securities may change on the days when investors are not able to transact in the
shares of the Fund. The value of securities denominated in foreign currencies is
converted into U.S. dollars using exchange rates determined daily as of the
close of regular trading on the NYSE. Any use of a different rate from the rates
used by a relevant index may adversely affect the Fund's ability to track the
index.
The Funds are subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or methodologies used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value each Fund's investments as of September 30, 2022, is
included with each Fund's Portfolio of Investments.
In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, establishing
requirements to determine fair value in good faith for purposes of the 1940 Act.
The rule permits fund boards to designate a fund's investment adviser to perform
fair value determinations, subject to board oversight and certain other
conditions. The rule also defines when market quotations are "readily available"
for purposes of the 1940 Act and requires a fund to fair value a portfolio
investment when a market quotation is not readily available. The SEC also
adopted new Rule 31a-4 under the 1940 Act, which sets forth recordkeeping
requirements associated with fair value determinations. The compliance date for
Rule 2a-5 and Rule 31a-4 was September 8, 2022.
Effective September 8, 2022 and pursuant to the requirements of Rule 2a-5, the
Trust's Board of Trustees designated the Advisor as its valuation designee to
perform fair value determinations and approved new Advisor Valuation Procedures
for the Trust.
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.
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022
Withholding taxes and tax reclaims on foreign dividends have been provided for
in accordance with each Fund's understanding of the applicable country's tax
rules and rates.
Distributions received from a Fund's investments in master limited partnerships
("MLPs") generally are comprised of return of capital and investment income. A
Fund records estimated return of capital and investment income based on
historical information available from each MLP. These estimates may subsequently
be revised based on information received from the MLPs after their tax reporting
periods are concluded.
Distributions received from a Fund's investments in real estate investment
trusts ("REITs") may be comprised of return of capital, capital gains and
income. The actual character of the amounts received during the year 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. FOREIGN CURRENCY
The books and records of the Funds are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period.
Purchases and sales of investments and items of income and expense are
translated on the respective dates of such transactions. Unrealized gains and
losses on assets and liabilities, other than investments in securities, which
result from changes in foreign currency exchange rates have been included in
"Net change in unrealized appreciation (depreciation) on foreign currency
translation" on the Statements of Operations. Unrealized gains and losses on
investments in securities which result from changes in foreign exchange rates
are included with fluctuations arising from changes in market price and are
shown in "Net change in unrealized appreciation (depreciation) on investments"
on the Statements of Operations. Net realized foreign currency gains and losses
include the effect of changes in exchange rates between trade date and
settlement date on investment security transactions, foreign currency
transactions and interest and dividends received and are included in "Net
realized gain (loss) on foreign currency transactions" on the Statements of
Operations. The portion of foreign currency gains and losses related to
fluctuations in exchange rates between the initial purchase settlement date and
subsequent sale trade date is included in "Net realized gain (loss) on
investments" on the Statements of Operations.
E. SECURITIES LENDING
The Funds may lend securities representing up to 33 1/3% of the value of their
total assets to broker-dealers, banks and other institutions to generate
additional income. When a Fund loans its portfolio securities, it will receive,
at the inception of each loan, collateral equal to at least 102% (for domestic
securities) or 105% (for international securities) of the market value of the
loaned securities. The collateral amount is valued at the beginning of each
business day and is compared to the market value of the loaned securities from
the prior business day to determine if additional collateral is required. If
additional collateral is required, a request is sent to the borrower. Securities
lending involves the risk that the Fund may lose money because the borrower of
the Fund's loaned securities fails to return the securities in a timely manner
or at all. The Fund could also lose money in the event of (i) a decline in the
value of the collateral provided for the loaned securities, (ii) a decline in
the value of any investments made with cash collateral or (iii) an increase in
the value of the loaned securities if the borrower does not increase the
collateral accordingly and the borrower fails to return the securities. These
events could also trigger adverse tax consequences for the Funds.
Under the Funds' Securities Lending Agency Agreement, the securities lending
agent will generally bear the risk that a borrower may default on its obligation
to return loaned securities. Brown Brothers Harriman & Co. ("BBH") acts as each
Fund's securities lending agent and is responsible for executing the lending of
the portfolio securities to creditworthy borrowers with the exception of FAN.
The Bank of New York Mellon ("BNYM") acts as FAN's securities lending agent and
is responsible for executing the lending of the portfolio securities to
creditworthy borrowers. The Funds, however, will be responsible for the risks
associated with the investment of cash collateral. A Fund may lose money on its
investment of cash collateral, which may affect its ability to repay the
collateral to the borrower without the use of other Fund assets. Each Fund that
engages in securities lending receives compensation (net of any rebate and
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022
securities lending agent fees) for lending its securities. Compensation can be
in the form of fees received from the securities lending agent or dividends or
interest earned from the investment of cash collateral. The fees received from
the securities lending agent are accrued daily. The dividend and interest earned
on the securities loaned is accounted for in the same manner as other dividend
and interest income. At September 30, 2022, FAN, GRID, FTRI, BICK, NXTG, CARZ,
SKYY, FPXI, and CIBR had securities in the securities lending program. During
the fiscal year ended September 30, 2022, FAN, RBLD, GRID, FTRI, BICK, NXTG,
CARZ, SKYY, FPXI, CIBR, and FPXE participated in the securities lending program.
In the event of a default by a borrower with respect to any loan, BBH or 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.
F. REPURCHASE AGREEMENTS
Repurchase agreements involve the purchase of securities subject to the seller's
agreement to repurchase the securities at a mutually agreed upon date and price,
under the terms of a Master Repurchase Agreement ("MRA"). During the term of a
repurchase agreement, the value of the underlying securities held as collateral
on behalf of a Fund, including accrued interest, is required to exceed the value
of the repurchase agreement, including accrued interest. The underlying
securities for all repurchase agreements are held at the Funds' custodian or
designated sub-custodians under tri-party repurchase agreements.
MRAs govern transactions between a Fund and select counterparties. The MRAs
contain provisions for, among other things, initiation, income payments, events
of default, and maintenance of collateral for repurchase agreements.
Repurchase agreements received for lending securities are collateralized by U.S.
Treasury securities. The U.S. Treasury securities are held in a joint custody
account at BBH 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 fiscal year ended September 30, 2022, were received
as collateral for lending securities.
G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income of each Fund, if any, are declared and paid
quarterly, or as the Board of Trustees may determine from time to time.
Distributions of net realized gains earned by each Fund, if any, are distributed
at least annually. A fund may also designate a portion of the amount paid to
redeeming shareholders as a distribution for tax purposes.
Distributions from net investment income and realized capital gains are
determined in accordance with federal income tax regulations, which may differ
from U.S. GAAP. Certain capital accounts in the financial statements are
periodically adjusted for permanent differences in order to reflect their tax
character. These permanent differences are primarily due to the varying
treatment of income and gain/loss on significantly modified portfolio securities
held by the Funds and have no impact on net assets or NAV per share. Temporary
differences, which arise from recognizing certain items of income, expense and
gain/loss in different periods for financial statement and tax purposes, will
reverse at some time in the future.
The tax character of distributions paid by each Fund during the fiscal year
ended September 30, 2022 was as follows:
Distributions Distributions Distributions
paid from paid from paid from
Ordinary Capital Return of
Income Gains Capital
---------------- -------------- --------------
First Trust STOXX(R) European Select Dividend Index Fund $ 13,077,255 $ -- $ --
First Trust Alerian Disruptive Technology Real Estate ETF 1,182,167 -- --
First Trust Dow Jones Global Select Dividend Index Fund 33,007,963 -- --
First Trust Global Wind Energy ETF 4,523,536 -- --
First Trust Alerian U.S. NextGen Infrastructure ETF 174,012 -- --
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 6,402,097 -- --
First Trust Indxx Global Natural Resources Income ETF 14,042,378 -- --
First Trust Indxx Global Agriculture ETF 278,287 -- --
First Trust BICK Index Fund 755,321 -- --
First Trust Indxx NextG ETF 21,161,695 4,454,950 --
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022
Distributions Distributions Distributions
paid from paid from paid from
Ordinary Capital Return of
Income Gains Capital
---------------- -------------- --------------
First Trust S-Network Future Vehicles & Technology ETF $ 1,776,897 $ -- $ --
First Trust Cloud Computing ETF 47,254,977 -- --
First Trust International Equity Opportunities ETF 4,260,436 -- --
First Trust Nasdaq Cybersecurity ETF 33,554,011 -- --
First Trust IPOX(R) Europe Equity Opportunities ETF 115,891 -- --
First Trust Dow Jones International Internet ETF -- -- --
The tax character of distributions paid by each Fund during the fiscal year
ended September 30, 2021 was as follows:
Distributions Distributions Distributions
paid from paid from paid from
Ordinary Capital Return of
Income Gains Capital
---------------- -------------- --------------
First Trust STOXX(R) European Select Dividend Index Fund $ 9,883,719 $ -- $ --
First Trust Alerian Disruptive Technology Real Estate ETF 233,141 -- --
First Trust Dow Jones Global Select Dividend Index Fund 22,659,267 -- --
First Trust Global Wind Energy ETF 6,120,596 -- --
First Trust Alerian U.S. NextGen Infrastructure ETF 143,267 -- --
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 3,258,036 -- --
First Trust Indxx Global Natural Resources Income ETF 1,526,281 -- --
First Trust Indxx Global Agriculture ETF 76,502 -- --
First Trust BICK Index Fund 563,280 -- --
First Trust Indxx NextG ETF 8,671,946 -- --
First Trust S-Network Future Vehicles & Technology ETF 535,126 -- --
First Trust Cloud Computing ETF 11,051,410 -- --
First Trust International Equity Opportunities ETF 6,104,611 -- --
First Trust Nasdaq Cybersecurity ETF 4,694,250 -- --
First Trust IPOX(R) Europe Equity Opportunities ETF 43,541 -- --
First Trust Dow Jones International Internet ETF 145,080 -- --
As of September 30, 2022, the components of distributable earnings on a tax
basis for each Fund were as follows:
Accumulated Net
Undistributed Capital and Unrealized
Ordinary Other Appreciation
Income Gain (Loss) (Depreciation)
---------------- -------------- --------------
First Trust STOXX(R) European Select Dividend Index Fund $ 318,040 $ (70,213,661) $ (57,482,744)
First Trust Alerian Disruptive Technology Real Estate ETF (353,747) (7,386,506) (269,380)
First Trust Dow Jones Global Select Dividend Index Fund 2,432,960 (174,119,735) (167,470,932)
First Trust Global Wind Energy ETF 368,144 (68,984,173) (70,152,209)
First Trust Alerian U.S. NextGen Infrastructure ETF -- (8,989,529) (1,110,653)
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 560,260 (45,761,808) (94,584,124)
First Trust Indxx Global Natural Resources Income ETF 906,239 (68,386,405) (47,072,885)
First Trust Indxx Global Agriculture ETF 88,972 (20,071,117) (5,180,381)
First Trust BICK Index Fund 62,567 (34,443,676) (7,130,200)
First Trust Indxx NextG ETF -- -- (123,848,000)
First Trust S-Network Future Vehicles & Technology ETF 117,402 (12,270,499) (15,588,893)
First Trust Cloud Computing ETF -- (806,662,690) (1,274,586,686)
First Trust International Equity Opportunities ETF 758,414 (329,849,523) (39,863,658)
First Trust Nasdaq Cybersecurity ETF 463,929 (384,198,734) (602,008,009)
First Trust IPOX(R) Europe Equity Opportunities ETF -- (3,590,694) (868,225)
First Trust Dow Jones International Internet ETF (4,757) (9,782,902) (34,204,082)
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022
H. INCOME AND OTHER TAXES
Each Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no
provision has been made for federal and state income taxes. However, due to the
timing and amount of distributions, each Fund may be subject to an excise tax of
4% of the amount by which approximately 98% of each Fund's taxable income
exceeds the distributions from such taxable income for the calendar year.
Certain countries assess a capital gains tax on securities sold in their local
markets. This tax is accrued as the securities in these foreign markets
appreciate in value and is paid at the time of sale to the extent a capital gain
is realized. Taxes accrued on securities in an unrealized appreciation position
are included in "Net change in unrealized appreciation (depreciation) on
deferred foreign capital gains tax" on the Statements of Operations. The capital
gains tax paid on securities sold, if any, is included in "Net realized gain
(loss) on foreign capital gains tax" on the Statements of Operations.
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 the Fund from Indian companies were
exempt from tax in India because Indian companies were required to pay dividend
distribution tax. The Indian Finance Act, 2020 has amended the dividend taxation
framework effective April 1, 2020 and accordingly dividends would now be taxable
in the hands of the shareholders at 20%, plus applicable surcharge and cess.
Subsequent to the Indian Finance Act, 2020, "The Taxation and Other Laws
(Relaxation and Amendment of Certain Provisions) Bill, 2020" (the "Bill") was
enacted into law and is effective retroactively to April 1, 2020. The Bill caps
the maximum surcharge at 15% of the tax on dividend income earned by the Fund.
The highest effective tax rate proposed for non-corporate entities on dividends
will be 23.92%. Note the Fund will not obtain relief under the US-India tax
treaty as the treaty rate of 25% is higher than the domestic rate. Any excess
taxes withheld can be offset against capital gains tax liability during the year
or claimed as a refund in the annual tax return.
Please note that the above description is based on current provisions of Indian
law, and any change or modification made by subsequent legislation, regulation,
or administrative or judicial decision could increase the Indian tax liability
of a Fund and thus reduce the return to a Fund's shareholders. There can be no
assurance that the Indian tax authorities and/or regulators will not take a
position contrary to the views expressed herein. If the Indian tax authorities
and/or regulators take a position contrary to the views expressed herein,
adverse unpredictable consequences may follow.
The Funds are subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ended 2019, 2020,
2021, and 2022 remain open to federal and state audit. As of September 30, 2022,
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.
Page 111
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022
Each Fund intends to utilize provisions of the federal income tax laws, which
allow it to carry a realized capital loss forward indefinitely following the
year of the loss and offset such loss against any future realized capital gains.
Each Fund is subject to certain limitations under U.S. tax rules on the use of
capital loss carryforwards and net unrealized built-in losses. These limitations
apply when there has been a 50% change in ownership. At September 30, 2022, 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.
Non-Expiring
Capital Loss
Carryforward
---------------------
First Trust STOXX(R) European Select Dividend Index Fund $ 70,213,661
First Trust Alerian Disruptive Technology Real Estate ETF* 7,386,506
First Trust Dow Jones Global Select Dividend Index Fund 174,119,735
First Trust Global Wind Energy ETF 68,984,173
First Trust Alerian U.S. NextGen Infrastructure ETF 8,989,529
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 45,761,808
First Trust Indxx Global Natural Resources Income ETF 68,386,405
First Trust Indxx Global Agriculture ETF 20,071,117
First Trust BICK Index Fund 34,443,676
First Trust Indxx NextG ETF --
First Trust S-Network Future Vehicles & Technology ETF 12,270,499
First Trust Cloud Computing ETF 806,662,690
First Trust International Equity Opportunities ETF 329,849,523
First Trust Nasdaq Cybersecurity ETF 384,198,734
First Trust IPOX(R) Europe Equity Opportunities ETF 3,590,694
First Trust Dow Jones International Internet ETF 9,782,902
* $75,097 of First Trust Alerian Disruptive Technology Real Estate ETF's
non-expiring net capital losses is subject to loss limitation resulting from
reorganization activity. This limitation generally reduces the utilization of
these losses to a maximum of $34,965 per year.
During the taxable year ended September 30, 2022, the following Fund utilized
non-expiring capital loss carryforwards in the following amounts:
Capital Loss
Carryforward
Utilized
---------------------
First Trust Dow Jones Global Select Dividend Index Fund $ 14,051,962
Certain losses realized during the current fiscal year may be deferred and
treated as occurring on the first day of the following fiscal year for federal
income tax purposes. For the fiscal year ended September 30, 2022, the following
Funds incurred and elected to defer late year ordinary or capital losses as
follows:
Qualified Late Year Losses
----------------------------------
Ordinary Losses Capital Losses
--------------- --------------
First Trust Alerian Disruptive Technology Real Estate ETF $ 372,647 $ --
First Trust Dow Jones International Internet ETF 4,757 --
In order to present paid-in capital and accumulated distributable earnings
(loss) (which consists of accumulated net investment income (loss), accumulated
net realized gain (loss) on investments and net unrealized appreciation
(depreciation) on investments) on the Statements of Assets and Liabilities that
more closely represent their tax character, certain adjustments have been made
to paid-in capital, accumulated net investment income (loss) and accumulated net
realized gain (loss) on investments. These adjustments are primarily due to the
difference between book and tax treatments of income and gains on various
investment securities held by the Funds and in-kind transactions. The results of
operations and net assets were not affected by these adjustments. For the fiscal
year ended September 30, 2022, the adjustments for each Fund were as follows:
Page 112
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022
Accumulated
Accumulated Net Realized
Net Investment Gain (Loss) on Paid-in
Income (Loss) Investments Capital
---------------- -------------- --------------
First Trust STOXX(R) European Select Dividend Index Fund $ (521,553) $ 2,007,728 $ (1,486,175)
First Trust Alerian Disruptive Technology Real Estate ETF 147,161 (859,181) 712,020
First Trust Dow Jones Global Select Dividend Index Fund (1,356,044) (1,023,462) 2,379,506
First Trust Global Wind Energy ETF (73,123) (16,256,509) 16,329,632
First Trust Alerian U.S. NextGen Infrastructure ETF (11,218) (477,923) 489,141
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure
Index Fund 75,639 (32,896,268) 32,820,629
First Trust Indxx Global Natural Resources Income ETF (46,004) (1,466,461) 1,512,465
First Trust Indxx Global Agriculture ETF (24,919) (1,800,214) 1,825,133
First Trust BICK Index Fund 128,207 (11,288,327) 11,160,120
First Trust Indxx NextG ETF (1,137,519) (94,276,251) 95,413,770
First Trust S-Network Future Vehicles & Technology ETF 41,872 (4,447,409) 4,405,537
First Trust Cloud Computing ETF 823,487 (406,369,078) 405,545,591
First Trust International Equity Opportunities ETF (1,175,811) (8,403,330) 9,579,141
First Trust Nasdaq Cybersecurity ETF (348,744) (394,764,485) 395,113,229
First Trust IPOX(R) Europe Equity Opportunities ETF 10,181 (89,957) 79,776
First Trust Dow Jones International Internet ETF 720,515 3,446,635 (4,167,150)
As of September 30, 2022, the aggregate cost, gross unrealized appreciation,
gross unrealized depreciation, and net unrealized appreciation/(depreciation) on
investments (including short positions and derivatives, if any) for federal
income tax purposes were as follows:
Gross Gross Net Unrealized
Unrealized Unrealized Appreciation
Tax Cost Appreciation (Depreciation) (Depreciation)
---------------- -------------- -------------- --------------
First Trust STOXX(R) European Select
Dividend Index Fund $ 216,018,449 $ 3,774,341 $ (60,953,014) $ (57,178,673)
First Trust Alerian Disruptive Technology
Real Estate ETF 24,146,475 643,976 (911,124) (267,148)
First Trust Dow Jones Global Select Dividend
Index Fund 658,210,743 15,488,861 (182,568,635) (167,079,774)
First Trust Global Wind Energy ETF 319,130,985 13,373,727 (83,453,407) (70,079,680)
First Trust Alerian U.S. NextGen
Infrastructure ETF 9,774,417 159,730 (1,268,967) (1,109,237)
First Trust NASDAQ(R) Clean Edge(R) Smart
Grid Infrastructure Index Fund 634,879,523 23,861,450 (118,391,219) (94,529,769)
First Trust Indxx Global Natural Resources
Income ETF 260,294,377 3,982,439 (51,035,187) (47,052,748)
First Trust Indxx Global Agriculture ETF 27,463,866 700,736 (5,835,524) (5,134,788)
First Trust BICK Index Fund 51,621,498 1,322,495 (8,451,493) (7,128,998)
First Trust Indxx NextG ETF 604,033,625 18,875,527 (142,661,934) (123,786,407)
First Trust S-Network Future Vehicles &
Technology ETF 58,110,430 1,164,271 (16,747,798) (15,583,527)
First Trust Cloud Computing ETF 4,252,697,453 212,388,518 (1,486,975,204) (1,274,586,686)
First Trust International Equity
Opportunities ETF 365,257,471 8,509,583 (48,329,989) (39,820,406)
First Trust Nasdaq Cybersecurity ETF 5,313,286,954 360,860,622 (962,850,044) (601,989,422)
First Trust IPOX(R) Europe Equity
Opportunities ETF 5,983,675 120,710 (988,362) (867,652)
First Trust Dow Jones International
Internet ETF 63,172,753 113,623 (34,317,555) (34,203,932)
Page 113
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022
I. EXPENSES
Expenses that are directly related to one of the Funds are charged directly to
the respective Fund, except for First Trust Alerian Disruptive Technology Real
Estate ETF, First Trust Alerian U.S. NextGen Infrastructure ETF, First Trust
Indxx Global Natural Resources Income ETF, First Trust Indxx Global Agriculture
ETF, First Trust BICK Index Fund, First Trust Indxx NextG ETF, First Trust
S-Network Future Vehicles & Technology ETF, First Trust Cloud Computing ETF,
First Trust International Equity Opportunities ETF, First Trust Nasdaq
Cybersecurity ETF, First Trust IPOX(R) Europe Equity Opportunities ETF, and
First Trust Dow Jones International Internet ETF (the "Unitary Fee Funds"), for
which expenses other than excluded expenses (discussed in Note 3) are paid by
the Advisor. General expenses of the Trust are allocated to all the Funds based
upon the net assets of each Fund.
First Trust has entered into licensing agreements with each of the following
"Licensors" for the respective Funds:
FUND LICENSOR
First Trust STOXX(R) European Select Dividend Index Fund STOXX Limited
First Trust Alerian Disruptive Technology Real Estate ETF VettaFi LLC
First Trust Dow Jones Global Select Dividend Index Fund S&P Dow Jones Indices
LLC First Trust Global Wind Energy ETF Nasdaq, Inc.
First Trust Alerian U.S. NextGen Infrastructure ETF VettaFi LLC
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund Nasdaq, Inc.
First Trust Indxx Global Natural Resources Income ETF Indxx, Inc.
First Trust Indxx Global Agriculture ETF Indxx, Inc.
First Trust BICK Index Fund Nasdaq, Inc.
First Trust Indxx NextG ETF Indxx, Inc.
First Trust S-Network Future Vehicles & Technology ETF S-Network Global Indexes, Inc.
First Trust Cloud Computing ETF Nasdaq, Inc.
First Trust International Equity Opportunities ETF IPOX(R) Schuster LLC
First Trust Nasdaq Cybersecurity ETF Nasdaq, Inc.
First Trust IPOX(R) Europe Equity Opportunities ETF IPOX(R) Schuster LLC
First Trust Dow Jones International Internet ETF S&P Dow Jones Indices LLC
The respective license agreements allow for the use of each Fund's respective
index and of certain trademarks and trade names of the respective Licensors. The
Funds are sub-licensees to the applicable license agreements. The Funds, except
for the Unitary Fee Funds, are required to pay licensing fees, which are shown
on the Statements of Operations. The licensing fees for the Unitary Fee Funds
are paid by First Trust from the unitary investment advisory fees it receives
from each of these Funds.
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust, the investment advisor to the Funds, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. The Charger Corporation is an Illinois corporation
controlled by James A. Bowen, Chief Executive Officer of First Trust. First
Trust is responsible for the selection and ongoing monitoring of the securities
in each Fund's portfolio, managing the Funds' business affairs and providing
certain administrative services necessary for the management of the Funds.
For the following Unitary Fee Funds, First Trust is paid an annual unitary
management fee at the specified rate of such Fund's average daily net assets and
is responsible for the expenses of such Fund including the cost of transfer
agency, custody, fund administration, legal, audit and other services, and
excluding fee payments under the Investment Management Agreement, distribution
and service fees payable pursuant to a Rule 12b-1 plan, if any, brokerage
expense, acquired fund fees and expenses, taxes, interest, and extraordinary
expenses.
Page 114
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022
% of Daily
Net Assets
------------
First Trust Alerian Disruptive Technology Real Estate ETF(1) 0.60%
First Trust Alerian U.S. NextGen Infrastructure ETF(2) 0.65%
First Trust Indxx Global Natural Resources Income ETF 0.70%
First Trust Indxx Global Agriculture ETF 0.70%
First Trust BICK Index Fund 0.64%
First Trust Indxx NextG ETF 0.70%
First Trust S-Network Future Vehicles & Technology ETF 0.70%
First Trust Cloud Computing ETF 0.60%
First Trust International Equity Opportunities ETF 0.70%
First Trust Nasdaq Cybersecurity ETF 0.60%
First Trust IPOX(R) Europe Equity Opportunities ETF 0.70%
First Trust Dow Jones International Internet ETF 0.65%
(1) During the fiscal year ended September 30, 2022, the Fund paid an annual
management fee of 0.40% of the Fund's average daily net assets as well as
other Fund expenses. Pursuant to an Expense Reimbursement, Fee Waiver and
Recovery Agreement, FTA agreed to waive fees and/or reimburse Fund
expenses in order to keep the Fund's operating expenses from exceeding
0.60% of its average daily net assets per year. Subsequent to September
30, 2022, the Fund will transition to a unitary fee structure.
(2) Prior to July 29, 2022, the Fund paid an annual management fee of 0.40% of
the Fund's average daily net assets as well as other Fund expenses.
Pursuant to an Expense Reimbursement, Fee Waiver and Recovery Agreement,
FTA agreed to waive fees and/or reimburse Fund expenses in order to keep
the Fund's operating expenses from exceeding 0.70% of its average daily
net assets per year.
For the First Trust STOXX(R) European Select Dividend Index Fund, First Trust
Dow Jones Global Select Dividend Index Fund, First Trust Global Wind Energy ETF,
and First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund
(such Funds, the "Expense Cap Funds"), First Trust is paid an annual management
fee of 0.40% of such Fund's average daily net assets.
For the Expense Cap Funds, the Trust and First Trust have entered into an
Expense Reimbursement, Fee Waiver and Recovery Agreement ("Recovery Agreement")
in which First Trust has agreed to waive fees and/or reimburse Fund expenses to
the extent that the operating expenses of each such Fund (excluding interest
expense, brokerage commissions and other trading expenses, acquired fund fees
and expenses, taxes and extraordinary expenses) exceed the following amount as a
percentage of average daily net assets per year (the "Expense Cap") at least
through January 31, 2024.
Expense Cap
-------------
First Trust STOXX(R) European Select Dividend Index Fund 0.60%
First Trust Dow Jones Global Select Dividend Index Fund 0.60%
First Trust Global Wind Energy ETF 0.60%
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 0.70%
Expenses reimbursed and fees waived by First Trust under the Recovery Agreement
are subject to recovery by First Trust for up to three years from the date the
fee or expense was incurred, but no reimbursement payment will be made by a Fund
if it results in the Fund exceeding (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 fiscal year ended
September 30, 2022 and the fees waived or expenses borne by First Trust subject
to recovery from the applicable Fund for the periods indicated were as follows:
Fees Waived or Expenses Borne by First Trust
Subject to Recovery
--------------------------------------------
Advisory Expense Year Year Year
Fee Reim- Ended Ended Ended
Waivers bursements 9/30/2020 9/30/2021 9/30/2022 Total
---------- ---------- ---------- ---------- ---------- --------
First Trust Alerian Disruptive
Technology Real Estate ETF $ 120,467 $ -- $ -- $ -- $ -- $ --
First Trust Global Wind Energy ETF 37,841 -- 69,675 66,999 37,841 174,515
First Trust Alerian U.S. NextGen
Infrastructure ETF 16,432 -- -- -- -- --
Page 115
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022
The Trust has multiple service agreements with BNYM. Under the service
agreements, BNYM performs custodial, fund accounting, certain administrative
services, and transfer agency services for each Fund. As custodian, BNYM is
responsible for custody of each Fund's assets. As fund accountant and
administrator, BNYM is responsible for maintaining the books and records of each
Fund's securities and cash. As transfer agent, BNYM is responsible for
maintaining shareholder records for each Fund. BNYM is a subsidiary of The Bank
of New York Mellon Corporation, a financial holding company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that
varies based on whether the fund is a closed-end or other actively managed fund,
a target outcome fund or an index fund.
Additionally, the Lead Independent Trustee and the Chairs 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 Chairs
rotate every three years. The officers and "Interested" Trustee receive no
compensation from the Trust for acting in such capacities.
4. PURCHASES AND SALES OF SECURITIES
For the fiscal year ended September 30, 2022, the cost of purchases and proceeds
from sales of investments for each Fund, excluding short-term investments and
in-kind transactions, were as follows:
Purchases Sales
---------------- --------------
First Trust STOXX(R) European Select Dividend Index Fund $ 140,654,199 $ 140,788,861
First Trust Alerian Disruptive Technology Real Estate ETF 23,088,687 23,028,036
First Trust Dow Jones Global Select Dividend Index Fund 230,891,715 196,910,327
First Trust Global Wind Energy ETF 66,461,631 66,555,480
First Trust Alerian U.S. NextGen Infrastructure ETF 9,116,838 9,245,767
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 246,791,224 217,544,577
First Trust Indxx Global Natural Resources Income ETF 99,919,538 82,879,351
First Trust Indxx Global Agriculture ETF 6,918,926 3,714,456
First Trust BICK Index Fund 34,446,263 50,746,210
First Trust Indxx NextG ETF 175,514,359 240,477,318
First Trust S-Network Future Vehicles & Technology ETF 87,343,473 84,717,334
First Trust Cloud Computing ETF 2,002,800,651 1,999,124,935
First Trust International Equity Opportunities ETF 780,149,950 845,158,900
First Trust Nasdaq Cybersecurity ETF 2,934,630,738 2,920,738,009
First Trust IPOX(R) Europe Equity Opportunities ETF 10,035,716 10,061,519
First Trust Dow Jones International Internet ETF 18,055,410 16,179,714
For the fiscal year ended September 30, 2022, the cost of in-kind purchases and
proceeds from in-kind sales for each Fund were as follows:
Purchases Sales
---------------- --------------
First Trust STOXX(R) European Select Dividend Index Fund $ 14,875,643 $ 53,907,212
First Trust Alerian Disruptive Technology Real Estate ETF 2,548,883 4,663,423
First Trust Dow Jones Global Select Dividend Index Fund 147,116,704 15,951,704
First Trust Global Wind Energy ETF 26,305,423 72,546,907
First Trust Alerian U.S. NextGen Infrastructure ETF 2,484,840 2,333,662
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 251,638,954 140,678,013
First Trust Indxx Global Natural Resources Income ETF 209,631,314 12,757,880
First Trust Indxx Global Agriculture ETF 27,693,135 9,470,715
First Trust BICK Index Fund 16,993,399 36,017,041
First Trust Indxx NextG ETF 58,245,302 406,882,996
First Trust S-Network Future Vehicles & Technology ETF 34,357,869 39,135,182
First Trust Cloud Computing ETF 945,366,376 1,690,249,174
First Trust International Equity Opportunities ETF 26,684,996 436,768,685
First Trust Nasdaq Cybersecurity ETF 2,807,116,866 1,515,290,960
First Trust IPOX(R) Europe Equity Opportunities ETF 1,382,278 2,256,456
First Trust Dow Jones International Internet ETF 2,610,315 38,797,540
Page 116
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022
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 January 31, 2024.
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 was the following subsequent event:
At a meeting on October 24, 2022, the Board of Trustees approved a breakpoint
pricing arrangement for each of the series of the Trust, including the Funds.
Pursuant to this arrangement, which is effective as of November 1, 2022, the
management fee each Fund pays to First Trust, as investment manager, will be
discounted as the Fund's net assets reach certain predefined levels.
Page 117
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF FIRST TRUST EXCHANGE-TRADED FUND
II:
OPINION ON THE FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS
We have audited the accompanying statements of assets and liabilities of First
Trust STOXX(R) European Select Dividend Index Fund, First Trust Alerian
Disruptive Technology Real Estate ETF (formerly known as First Trust FTSE
EPRA/NAREIT Developed Markets Real Estate Index Fund), First Trust Dow Jones
Global Select Dividend Index Fund, First Trust Global Wind Energy ETF, First
Trust Alerian U.S. NextGen Infrastructure ETF (formerly known as First Trust
Global Engineering and Construction ETF), First Trust NASDAQ(R) Clean Edge(R)
Smart Grid Infrastructure Index Fund, First Trust Indxx Global Natural Resources
Income ETF, First Trust Indxx Global Agriculture ETF, First Trust BICK Index
Fund, First Trust Indxx NextG ETF, First Trust S-Network Future Vehicles &
Technology ETF (formerly known as First Trust NASDAQ Global Auto Index Fund),
First Trust Cloud Computing ETF, First Trust International Equity Opportunities
ETF, First Trust Nasdaq Cybersecurity ETF, First Trust IPOX(R) Europe Equity
Opportunities ETF, and First Trust Dow Jones International Internet ETF (the
"Funds"), each a series of the First Trust Exchange-Traded Fund II, including
the portfolios of investments, as of September 30, 2022, the related statements
of operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, the financial highlights for
each of the periods listed in the table below, and the related notes. In our
opinion, the financial statements and financial highlights present fairly, in
all material respects, the financial position of the Funds as of September 30,
2022, and the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended, and the
financial highlights for the periods listed in the table below, in conformity
with accounting principles generally accepted in the United States of America.
------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL FUNDS
INCLUDED IN THE TRUST FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------------------------------------
First Trust STOXX(R) European Select For the years ended September 30, 2022, 2021, 2020, 2019 and 2018
Dividend Index Fund
First Trust Alerian Disruptive Technology
Real Estate ETF (formerly known as First
Trust FTSE EPRA/NAREIT Developed
Markets Real Estate Index Fund)
First Trust Dow Jones Global Select
Dividend Index Fund
First Trust Global Wind Energy ETF
First Trust Alerian U.S. NextGen
Infrastructure ETF (formerly known as
First Trust Global Engineering and
Construction ETF)
First Trust NASDAQ(R) Clean Edge(R)
Smart Grid Infrastructure Index Fund
First Trust Indxx Global Natural
Resources Income ETF
First Trust Indxx Global Agriculture ETF
First Trust BICK Index Fund
First Trust Indxx NextG ETF
First Trust S-Network Future Vehicles &
Technology ETF (formerly known as First
Trust NASDAQ Global Auto Index Fund)
First Trust Cloud Computing ETF
First Trust International Equity
Opportunities ETF
First Trust Nasdaq Cybersecurity ETF
------------------------------------------------------------------------------------------------------------------------------
First Trust IPOX(R) Europe Equity For the years ended September 30, 2022, 2021, 2020 and for the period from
Opportunities ETF October 4, 2018 (commencement of operations) through September 30, 2019
------------------------------------------------------------------------------------------------------------------------------
First Trust Dow Jones International For the years ended September 30, 2022, 2021, and 2020 and for the period from
Internet ETF November 5, 2018 (commencement of operations) through September 30, 2019
------------------------------------------------------------------------------------------------------------------------------
Page 118
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONTINUED)
--------------------------------------------------------------------------------
BASIS FOR OPINION
These financial statements and financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on the Funds'
financial statements and financial highlights based on our audits. We are a
public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to
the Funds in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement, whether due to error or fraud. The Funds are not
required to have, nor were we engaged to perform, an audit of their internal
control over financial reporting. As part of our audits we are required to
obtain an understanding of internal control over financial reporting but not for
the purpose of expressing an opinion on the effectiveness of the Funds' internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material
misstatement of the financial statements and financial highlights, whether due
to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements and financial highlights. Our audits
also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of September 30, 2022, by correspondence
with the custodian and brokers; when replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Chicago, Illinois
November 22, 2022
We have served as the auditor of one or more First Trust investment companies
since 2001.
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SEPTEMBER 30, 2022 (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.
FEDERAL TAX INFORMATION
For the taxable year ended September 30, 2022, the following percentages of
income dividend paid by the Funds qualify for the dividends received deduction
available to corporations:
Dividends Received
Deduction
---------------------
First Trust STOXX(R) European Select Dividend Index Fund 0.00%
First Trust Alerian Disruptive Technology Real Estate ETF 0.00%
First Trust Dow Jones Global Select Dividend Index Fund 10.78%
First Trust Global Wind Energy ETF 14.63%
First Trust Alerian U.S. NextGen Infrastructure ETF 25.92%
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 21.30%
First Trust Indxx Global Natural Resources Income ETF 7.00%
First Trust Indxx Global Agriculture ETF 16.19%
First Trust BICK Index Fund 0.00%
First Trust Indxx NextG ETF 18.63%
First Trust S-Network Future Vehicles & Technology ETF 14.21%
First Trust Cloud Computing ETF 65.70%
First Trust International Equity Opportunities ETF 0.00%
First Trust Nasdaq Cybersecurity ETF 100.00%
First Trust IPOX(R) Europe Equity Opportunities ETF 0.00%
First Trust Dow Jones International Internet ETF 0.00%
For the taxable year ended September 30, 2022, the following percentages of
income dividend paid by the Funds are hereby designated as qualified dividend
income:
Qualified Dividend
Income
---------------------
First Trust STOXX(R) European Select Dividend Index Fund 100.00%
First Trust Alerian Disruptive Technology Real Estate ETF 47.20%
First Trust Dow Jones Global Select Dividend Index Fund 100.00%
First Trust Global Wind Energy ETF 100.00%
First Trust Alerian U.S. NextGen Infrastructure ETF 100.00%
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 100.00%
First Trust Indxx Global Natural Resources Income ETF 93.69%
First Trust Indxx Global Agriculture ETF 100.00%
First Trust BICK Index Fund 86.20%
First Trust Indxx NextG ETF 84.86%
First Trust S-Network Future Vehicles & Technology ETF 100.00%
First Trust Cloud Computing ETF 69.48%
First Trust International Equity Opportunities ETF 91.95%
First Trust Nasdaq Cybersecurity ETF 100.00%
First Trust IPOX(R) Europe Equity Opportunities ETF 100.00%
First Trust Dow Jones International Internet ETF 0.00%
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
A portion of each of the Funds' 2022 ordinary dividends (including short-term
capital gains) paid to its shareholders during the fiscal year ended September
30, 2022, may be eligible for the Qualified Business Income Deduction (QBI)
under the Internal Revenue Code of 1986, as amended (the "Code"), Section 199A
for the aggregate dividends each Fund received from the underlying Real Estate
Investment Trusts (REITs) these Funds invest in.
For the tax year ended September 30, 2022, the First Trust Indxx NextG ETF
designated $3,085,182, or amounts necessary, as long-term capital gain. During
the tax year, Fund shareholders redeemed amounts in excess of the long-term
capital gain and of these proceeds, $3,085,182, or amounts necessary, represents
long-term capital gain from the Fund.
Long-term capital gain distributions designated by the Funds are taxable at the
applicable capital gain tax rates for federal income tax purposes. For the
fiscal year ended September 30, 2022, the below Fund designated long-term
capital gain distributions in the following amounts:
Long-Term Capital Gain
Distributions
----------------------
First Trust Indxx NextG ETF $4,454,950
The following Funds meet the requirements of Section 853 of the Code and elects
to pass through to their shareholders credit for foreign taxes paid. For the
taxable year ended September 30, 2022, the total amounts of income received by
the Funds from sources within foreign countries and possessions of the United
States and of taxes paid to such countries are as follows:
Gross Foreign Income Foreign Taxes Paid
--------------------------- ---------------------------
Amount Per Share Amount Per Share
------------- ------------ ------------- ------------
First Trust STOXX(R) European Select Dividend Index Fund $ 16,180,828 $ 0.94 $ 1,367,399 $ 0.08
First Trust Alerian Disruptive Technology Real Estate ETF -- N/A -- N/A
First Trust Dow Jones Global Select Dividend Index Fund 34,640,703 1.30 3,278,824 0.12
First Trust Global Wind Energy ETF 5,997,831 0.37 624,279 0.04
First Trust Alerian U.S. NextGen Infrastructure ETF -- N/A -- N/A
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure
Index Fund 9,898,169 1.38 657,471 0.09
First Trust Indxx Global Natural Resources Income ETF 14,755,203 0.90 359,220 0.02
First Trust Indxx Global Agriculture ETF 481,351 0.57 82,969 0.10
First Trust BICK Index Fund 788,376 0.43 24,254 0.01
First Trust Indxx NextG ETF 20,490,051 2.42 2,948,371 0.35
First Trust S-Network Future Vehicles & Technology ETF -- N/A -- N/A
First Trust Cloud Computing ETF -- N/A -- N/A
First Trust International Equity Opportunities ETF 9,870,654 1.10 669,533 0.07
First Trust Nasdaq Cybersecurity ETF -- N/A -- N/A
First Trust IPOX(R) Europe Equity Opportunities ETF 190,677 0.64 15,058 0.05
First Trust Dow Jones International Internet ETF -- N/A -- N/A
SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
At a special meeting of shareholders of First Trust Alerian U.S. NextGen
Infrastructure ETF (formerly known as First Trust Global Engineering and
Construction ETF) held on July 25, 2022, shareholders of the Fund voted to
approve a new investment management agreement between the Trust, on behalf of
the Fund, and First Trust (the "New Management Agreement"), under which the Fund
will transition to a "unitary fee structure." Shareholders were asked to approve
the New Management Agreement in connection with a change to the Fund's
investment objective. The Fund's investment objective subsequently changed by
replacing its index with the Alerian U.S. NextGen Infrastructure Index, and the
Fund changed its name. Under the New Management Agreement, the Fund transitioned
to a unitary fee structure. The Fund previously paid an investment management
fee equal to 0.40% of average daily net assets to First Trust and also paid
other expenses, and pursuant to an Expense Reimbursement, Fee Waiver and
Recovery Agreement, First Trust agreed to waive fees and/or reimburse Fund
expenses in order to keep the Fund's operating expenses (subject to certain
exclusions) from exceeding 0.70% of its average daily net assets per year. Under
the New Management Agreement, which was implemented in conjunction with the
Fund's investment objective change, the Fund pays First Trust a unitary
management fee equal to 0.65% of the Fund's average daily net assets and the
Fund's Expense Reimbursement, Fee Waiver and Recovery Agreement was terminated.
In addition to being responsible for providing management and administration
services to the Fund, under the New Management Agreement, First Trust is
responsible for most of the Fund's expenses (subject to exclusions that include
the investment management fee, interest, taxes, brokerage commissions, acquired
fund fees and expenses, if any, and other expenses connected with the execution
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SEPTEMBER 30, 2022 (UNAUDITED)
of portfolio transactions, distribution and service fees payable pursuant to a
Rule 12b-1 plan, if any, and extraordinary expenses). In connection with the
proposal to approve the New Management Agreement, 87,215 shares voted in favor
of the proposal, 603 shares voted against the proposal, 12,188 shares abstained,
and there were 99,996 broker non-votes.
At a special meeting of shareholders of First Trust Alerian Disruptive
Technology Real Estate ETF (formerly First Trust FTSE EPRA/NAREIT Developed
Markets Real Estate Index Fund) held on September 1, 2022, shareholders of the
Fund voted to approve 1) a change in the Fund's diversification status from
"diversified" to "non-diversified" under the 1940 Act, and 2) a new investment
management agreement between the Trust, on behalf of the Fund, and First Trust
(the "New Management Agreement"), under which the Fund transitioned to a
"unitary fee structure." Shareholders were asked to approve the change in
diversification status and the New Management Agreement in connection with a
change to the Fund's investment objective. The Fund's investment objective
subsequently changed by replacing its index with the Alerian Disruptive
Technology Real Estate Index, and the Fund changed its name. Under the New
Management Agreement, the Fund transitioned to a unitary fee structure. The Fund
previously paid an investment management fee equal to 0.40% of average daily net
assets to First Trust and also paid other expenses, and pursuant to an Expense
Reimbursement, Fee Waiver and Recovery Agreement, First Trust agreed to waive
fees and/or reimburse Fund expenses in order to keep the Fund's operating
expenses (subject to certain exclusions) from exceeding 0.60% of its average
daily net assets per year. Under the New Management Agreement, which was
implemented in conjunction with the Fund's investment objective change, the Fund
pays First Trust a unitary management fee equal to 0.60% of the Fund's average
daily net assets and the Fund's Expense Reimbursement, Fee Waiver and Recovery
Agreement was terminated. In addition to being responsible for providing
management and administration services to the Fund, under the New Management
Agreement, First Trust is responsible for most of the Fund's expenses (subject
to exclusions that include the investment management fee, interest, taxes,
brokerage commissions, acquired fund fees and expenses, if any, 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). In connection with the proposal to change the Fund's
diversification status, 293,329 shares voted in favor of the proposal, 17,563
shares voted against the proposal, 37,701 shares abstained, and there were
343,015 broker-non-votes. In connection with the proposal to approve the New
Management Agreement, 294,862 shares voted in favor of the proposal, 14,252
shares voted against the proposal, 39,479 shares abstained, and there were
343,015 broker non-votes.
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 significant
percentage of its assets in a single asset class or the securities of issuers
within the same country, state, region, industry or sector, an adverse economic,
business or political development may affect the value of the fund's investments
more than if the fund were more broadly diversified. A fund that tracks an index
will be concentrated to the extent the fund's corresponding index is
concentrated. A concentration makes a fund more susceptible to any single
occurrence and may subject the fund to greater market risk than a fund that is
more broadly diversified.
CREDIT RISK. Credit risk is the risk that an issuer of a security will be unable
or unwilling to make dividend, interest and/or principal payments when due and
the related risk that the value of a security may decline because of concerns
about the issuer's ability to make such payments.
CYBER SECURITY RISK. The funds are susceptible to potential operational risks
through breaches in cyber security. A breach in cyber security refers to both
intentional and unintentional events that may cause a fund to lose proprietary
information, suffer data corruption or lose operational capacity. Such events
could cause a fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial
loss. In addition, cyber security breaches of a fund's third-party service
providers, such as its administrator, transfer agent, custodian, or sub-advisor,
as applicable, or issuers in which the fund invests, can also subject a fund to
many of the same risks associated with direct cyber security breaches.
DEFINED OUTCOME FUNDS RISK. To the extent a fund's investment strategy is
designed to deliver returns tied to the price performance of an underlying ETF,
an investor may not realize the returns the fund seeks to achieve if that
investor does not hold shares for the entire target outcome period. In the event
an investor purchases shares after the first day of the target outcome period or
sells shares prior to the end of the target outcome period, the buffer that the
fund seeks to provide against a decline in the value of the underlying ETF may
not be available, the enhanced returns that the fund seeks to provide (if any)
may not be available and the investor may not participate in a gain in the value
of the underlying ETF up to the cap for the investor's investment period.
Additionally, the fund will not participate in gains of the underlying ETF above
the cap and a shareholder may lose their entire investment. If the fund seeks
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SEPTEMBER 30, 2022 (UNAUDITED)
enhanced returns, there are certain time periods when the value of the fund may
fall faster than the value of the underlying ETF, and it is very unlikely that,
on any given day during which the underlying ETF share price increases in value,
the fund's share price will increase at the same rate as the enhanced returns
sought by the fund, which is designed for an entire target outcome period.
Trading flexible exchange options involves risks different from, or possibly
greater than, the risks associated with investing directly in securities, such
as less liquidity and correlation and valuation risks. A fund may experience
substantial downside from specific flexible exchange option positions and
certain positions may expire worthless.
DERIVATIVES RISK. To the extent a fund uses derivative instruments such as
futures contracts, options contracts and swaps, the fund may experience losses
because of adverse movements in the price or value of the underlying asset,
index or rate, which may be magnified by certain features of the derivative.
These risks are heightened when a fund's portfolio managers use derivatives to
enhance the fund's return or as a substitute for a position or security, rather
than solely to hedge (or offset) the risk of a position or security held by the
fund.
EQUITY SECURITIES RISK. To the extent a fund invests in equity securities, the
value of the fund's shares will fluctuate with changes in the value of the
equity securities. Equity securities prices fluctuate for several reasons,
including changes in investors' perceptions of the financial condition of an
issuer or the general condition of the relevant stock market, such as market
volatility, or when political or economic events affecting the issuers occur. In
addition, common stock prices may be particularly sensitive to rising interest
rates, as the cost of capital rises and borrowing costs increase. Equity
securities may decline significantly in price over short or extended periods of
time, and such declines may occur in the equity market as a whole, or they may
occur in only a particular country, company, industry or sector of the market.
ETF RISK. The shares of an ETF trade like common stock and represent an interest
in a portfolio of securities. The risks of owning an ETF generally reflect the
risks of owning the underlying securities, although lack of liquidity in an ETF
could result in it being more volatile and ETFs have management fees that
increase their costs. Shares of an ETF trade on an exchange at market prices
rather than net asset value, which may cause the shares to trade at a price
greater than net asset value (premium) or less than net asset value (discount).
In times of market stress, decisions by market makers to reduce or step away
from their role of providing a market for an ETF's shares, or decisions by an
ETF's authorized participants that they are unable or unwilling to proceed with
creation and/or redemption orders of an ETF's shares, could result in shares of
the ETF trading at a discount to net asset value and in greater than normal
intraday bid-ask spreads.
FIXED INCOME SECURITIES RISK. To the extent a fund invests in fixed income
securities, the fund will be subject to credit risk, income risk, interest rate
risk, liquidity risk and prepayment risk. Income risk is the risk that income
from a fund's fixed income investments could decline during periods of falling
interest rates. Interest rate risk is the risk that the value of a fund's fixed
income securities will decline because of rising interest rates. Liquidity risk
is the risk that a security cannot be purchased or sold at the time desired, or
cannot be purchased or sold without adversely affecting the price. Prepayment
risk is the risk that the securities will be redeemed or prepaid by the issuer,
resulting in lower interest payments received by the fund. In addition to these
risks, high yield securities, or "junk" bonds, are subject to greater market
fluctuations and risk of loss than securities with higher ratings, and the
market for high yield securities is generally smaller and less liquid than that
for investment grade securities.
INDEX OR MODEL CONSTITUENT RISK. Certain funds may be a constituent of one or
more indices or ETF models. As a result, such a fund may be included in one or
more index-tracking exchange-traded funds or mutual funds. Being a component
security of such a vehicle could greatly affect the trading activity involving a
fund, the size of the fund and the market volatility of the fund. Inclusion in
an index could increase demand for the fund and removal from an index could
result in outsized selling activity in a relatively short period of time. As a
result, a fund's net asset value could be negatively impacted and the fund's
market price may be significantly below its net asset value during certain
periods. In addition, index rebalances may potentially result in increased
trading activity in a fund's shares.
INDEX PROVIDER RISK. To the extent a fund seeks to track an index, it is subject
to Index Provider Risk. There is no assurance that the Index Provider will
compile the Index accurately, or that the Index will be determined, maintained,
constructed, reconstituted, rebalanced, composed, calculated or disseminated
accurately. To correct any such error, the Index Provider may carry out an
unscheduled rebalance or other modification of the Index constituents or
weightings, which may increase the fund's costs. The Index Provider does not
provide any representation or warranty in relation to the quality, accuracy or
completeness of data in the Index, and it does not guarantee that the Index will
be calculated in accordance with its stated methodology. Losses or costs
associated with any Index Provider errors generally will be borne by the fund
and its shareholders.
INVESTMENT COMPANIES RISK. To the extent a fund invests in the securities of
other investment vehicles, the fund will incur additional fees and expenses that
would not be present in a direct investment in those investment vehicles.
Furthermore, the fund's investment performance and risks are directly related to
the investment performance and risks of the investment vehicles in which the
fund invests.
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
LIBOR RISK. To the extent a fund invests in floating or variable rate
obligations that use the London Interbank Offered Rate ("LIBOR") as a reference
interest rate, it is subject to LIBOR Risk. The United Kingdom's Financial
Conduct Authority, which regulates LIBOR has ceased making LIBOR available as a
reference rate over a phase-out period that began December 31, 2021. There is no
assurance that any alternative reference rate, including the Secured Overnight
Financing Rate ("SOFR") will be similar to or produce the same value or economic
equivalence as LIBOR or that instruments using an alternative rate will have the
same volume or liquidity. The unavailability or replacement of LIBOR may affect
the value, liquidity or return on certain fund investments and may result in
costs incurred in connection with closing out positions and entering into new
trades. Any potential effects of the transition away from LIBOR on the fund or
on certain instruments in which the fund invests can be difficult to ascertain,
and they may vary depending on a variety of factors, and they could result in
losses to the fund.
MANAGEMENT RISK. To the extent that a fund is actively managed, it is subject to
management risk. In managing an actively-managed fund's investment portfolio,
the fund's portfolio managers will apply investment techniques and risk analyses
that may not have the desired result. There can be no guarantee that a fund will
meet its investment objective.
MARKET RISK. Market risk is the risk that a particular security, or shares of a
fund in general, may fall in value. Securities held by a fund, as well as shares
of a fund itself, are subject to market fluctuations caused by factors such as
general economic conditions, political events, regulatory or market
developments, changes in interest rates and perceived trends in securities
prices. Shares of a fund could decline in value or underperform other
investments as a result of the risk of loss associated with these market
fluctuations. In addition, local, regional or global events such as war, acts of
terrorism, spread of infectious diseases or other public health issues,
recessions, or other events could have a significant negative impact on a fund
and its investments. Such events may affect certain geographic regions,
countries, sectors and industries more significantly than others. In February
2022, Russia invaded Ukraine which has caused and could continue to cause
significant market disruptions and volatility within the markets in Russia,
Europe, and the United States. The hostilities and sanctions resulting from
those hostilities could have a significant impact on certain fund investments as
well as fund performance. The COVID-19 global pandemic and the ensuing policies
enacted by governments and central banks have caused and may continue to cause
significant volatility and uncertainty in global financial markets. While the
U.S. has resumed "reasonably" normal business activity, many countries continue
to impose lockdown measures. Additionally, there is no guarantee that vaccines
will be effective against emerging variants of the disease. These events also
adversely affect the prices and liquidity of a fund's portfolio securities or
other instruments and could result in disruptions in the trading markets. Any of
such circumstances could have a materially negative impact on the value of a
fund's shares and result in increased market volatility. During any such events,
a fund's shares may trade at increased premiums or discounts to their net asset
value and the bid/ask spread on a fund's shares may widen.
NON-U.S. SECURITIES RISK. To the extent a fund invests in non-U.S. securities,
it is subject to additional risks not associated with securities of domestic
issuers. Non-U.S. securities are subject to higher volatility than securities of
domestic issuers due to: possible adverse political, social or economic
developments; restrictions on foreign investment or exchange of securities;
capital controls; lack of liquidity; currency exchange rates; excessive
taxation; government seizure of assets; the imposition of sanctions by foreign
governments; different legal or accounting standards; and less government
supervision and regulation of exchanges in foreign countries. Investments in
non-U.S. securities may involve higher costs than investments in U.S.
securities, including higher transaction and custody costs, as well as
additional taxes imposed by non-U.S. governments. These risks may be heightened
for securities of companies located, or with significant operations, in emerging
market countries.
OPERATIONAL RISK. Each fund is subject to risks arising from various operational
factors, including, but not limited to, human error, processing and
communication errors, errors of a fund's service providers, counterparties or
other third-parties, failed or inadequate processes and technology or systems
failures. Each fund relies on third-parties for a range of services, including
custody. Any delay or failure relating to engaging or maintaining such service
providers may affect a fund's ability to meet its investment objective. Although
the funds and the funds' investment advisor seek to reduce these operational
risks through controls and procedures, there is no way to completely protect
against such risks.
PASSIVE INVESTMENT RISK. To the extent a fund seeks to track an index, the fund
will invest in the securities included in, or representative of, the index
regardless of their investment merit. A fund generally will not attempt to take
defensive positions in declining markets.
VALUATION RISK. The valuation of certain securities may carry more risk than
that of common stock. Uncertainties in the conditions of the financial markets,
unreliable reference data, lack of transparency and inconsistency of valuation
models and processes may lead to inaccurate asset pricing. A fund may hold
investments in sizes smaller than institutionally sized round lot positions
(sometimes referred to as odd lots). However, third-party pricing services
generally provide evaluations on the basis of institutionally-sized round lots.
If a fund sells certain of its investments in an odd lot transaction, the sale
price may be less than the value at which such securities have been held by the
fund. Odd lots often trade at lower prices than institutional round lots. There
is no assurance that the fund will be able to sell a portfolio security at the
price established by the pricing service, which could result in a loss to the
fund.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
ADVISORY AGREEMENTS
BOARD CONSIDERATIONS REGARDING APPROVAL OF CONTINUATION OF INVESTMENT MANAGEMENT
AGREEMENTS
(UNITARY FEE FUNDS)
The Board of Trustees of First Trust Exchange-Traded Fund II (the "Trust"),
including the Independent Trustees, unanimously approved the continuation of the
Investment Management Agreements (as applicable to a specific Fund, the
"Agreement" and collectively, the "Agreements") with First Trust Advisors L.P.
(the "Advisor") on behalf of the following eight series of the Trust (each a
"Fund" and collectively, the "Funds"):
First Trust Indxx Global Natural Resources Income ETF (FTRI)
First Trust Indxx Global Agriculture ETF (FTAG)
First Trust BICK Index Fund (BICK)
First Trust Indxx NextG ETF (NXTG)
First Trust S-Network Future Vehicles & Technology ETF (CARZ)
First Trust Cloud Computing ETF (SKYY)
First Trust International Equity Opportunities ETF (FPXI)
First Trust Nasdaq Cybersecurity ETF (CIBR)
First Trust IPOX(R) Europe Equity Opportunities ETF (FPXE)
First Trust Dow Jones International Internet ETF (FDNI)
The Board approved the continuation of the Agreement for each Fund for a
one-year period ending June 30, 2023 at a meeting held on June 12-13, 2022. 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 18, 2022 and June 12-13, 2022, the
Board, including the Independent Trustees, reviewed materials provided by the
Advisor responding to requests for information from counsel to the Independent
Trustees, submitted on behalf of the Independent Trustees, that, among other
things, outlined: the services provided by the Advisor to each Fund (including
the relevant personnel responsible for these services and their experience); the
unitary fee rate payable by each Fund as compared to fees charged to a peer
group of funds (the "Expense Group") and a broad peer universe of funds (the
"Expense Universe"), each assembled by Broadridge Financial Solutions, Inc.
("Broadridge"), an independent source, and as compared to fees charged to other
clients of the Advisor, including other exchange-traded funds ("ETFs") managed
by the Advisor; the expense ratio of each Fund as compared to expense ratios of
the funds in the Fund's Expense Group and Expense Universe; performance
information for each Fund, including comparisons of each Fund's performance to
that of one or more relevant benchmark indexes and to that of a performance
group of funds and a broad performance universe of funds (the "Performance
Universe"), each assembled by Broadridge; the nature of expenses incurred in
providing services to each Fund and the potential for the Advisor to realize
economies of scale, if any; profitability and other financial data for the
Advisor; any indirect benefits to the Advisor and its affiliate, First Trust
Portfolios L.P. ("FTP"); and information on the Advisor's compliance program.
The Board reviewed initial materials with the Advisor at the meeting held on
April 18, 2022, 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 12-13, 2022 meeting, as well as at the June meeting. The
Board applied its business judgment to determine whether the arrangement between
the Trust and the Advisor continues to be a reasonable business arrangement from
each Fund's perspective. The Board determined that, given the totality of the
information provided with respect to the Agreements, the Board had received
sufficient information to renew the Agreements. The Board considered that
shareholders chose to invest or remain invested in a Fund knowing that the
Advisor manages the Fund and knowing the Fund's unitary fee.
In reviewing the Agreement for each Fund, the Board considered the nature,
extent and quality of the services provided by the Advisor under the Agreement.
The Board considered that the Advisor is responsible for the overall management
and administration of the Trust and each Fund and reviewed all of the services
provided by the Advisor to the Funds, as well as the background and experience
of the persons responsible for such services. In reviewing the services
provided, the Board noted the compliance program that had been developed by the
Advisor and considered that it includes a robust program for monitoring the
Advisor's and each Fund's compliance with the 1940 Act, as well as each Fund's
compliance with its investment objective, policies and restrictions. The Board
also considered a report from the Advisor with respect to its risk management
functions related to the operation of the Funds. Finally, as part of the Board's
consideration of the Advisor's services, the Advisor, in its written materials
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
and at the April 18, 2022 meeting, described to the Board the scope of its
ongoing investment in additional personnel and infrastructure to maintain and
improve the quality of services provided to the Funds and the other funds in the
First Trust Fund Complex. In light of the information presented and the
considerations made, the Board concluded that the nature, extent and quality of
the services provided to the Trust and each Fund by the Advisor under the
Agreements have been and are expected to remain satisfactory and that the
Advisor has managed each Fund consistent with its investment objective, policies
and restrictions.
The Board considered the unitary fee rate payable by each Fund under the
applicable Agreement for the services provided. The Board considered that as
part of the unitary fee the Advisor is responsible for each Fund's expenses,
including the cost of transfer agency, custody, fund administration, legal,
audit and other services and license fees, if any, but excluding the fee payment
under the applicable Agreement and interest, taxes, brokerage commissions and
other expenses connected with the execution of portfolio transactions,
distribution and service fees pursuant to a Rule 12b-1 plan, if any, and
extraordinary expenses, if any. The Board received and reviewed information
showing the fee rates and expense ratios of the peer funds in the Expense
Groups, as well as advisory and unitary fee rates charged by the Advisor to
other fund (including ETFs) and non-fund clients, as applicable. Because each
Fund pays a unitary fee, the Board determined that expense ratios were the most
relevant comparative data point. Based on the information provided, the Board
noted that the unitary fee rate for each Fund was above the median total (net)
expense ratio of the peer funds in its respective Expense Group. With respect to
the Expense Groups, the Board, at the April 18, 2022 meeting, discussed with
Broadridge its methodology for assembling peer groups and discussed with the
Advisor limitations in creating peer groups for index ETFs, including
differences in underlying indexes and index-tracking methodologies that can
result in greater management complexities across seemingly comparable ETFs, and
different business models that may affect the pricing of services among ETF
sponsors. The Board took these limitations and differences into account in
considering the peer data. With respect to fees charged to other non-ETF
clients, the Board considered differences between the Funds and other non-ETF
clients that limited their comparability. In considering the unitary fee 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, 2021 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 CARZ, the Board noted that during 2021, it approved changes to the Fund's
investment objective and, effective January 26, 2022, the Fund changed its name
and began tracking the S-Network Electric & Future Vehicle Ecosystem Index and
that the performance information reflected the Fund's old index. With respect to
NXTG, the Board noted that during 2019, it approved changes to the Fund's
investment objective and, effective May 29, 2019, the Fund changed its name and
ticker symbol and began tracking the Indxx 5G & NextG Thematic Index and that
the performance information included a blend of the old and new indexes. With
respect to FTRI and FTAG, the Board noted that during 2015, shareholders of each
Fund approved changes to each Fund's investment objective and, effective
December 18, 2015, each Fund changed its name and ticker symbol, FTRI began
tracking the Indxx Global Natural Resources Income Index and FTAG began tracking
the Indxx Global Agricultural Index, and that the performance information
included a blend of the old and new indexes. Based on the information provided
and its ongoing review of performance, the Board concluded that each Fund was
correlated to its underlying index and that the tracking difference for each
Fund was within a reasonable range. In addition, the Board reviewed data
prepared by Broadridge comparing each Fund's performance to that of its
respective Performance Universe and to that of a broad-based benchmark index and
noted the Advisor's discussion of FTRI's, FTAG's, FPXI's and FDNI's performance
at the April 18, 2022 meeting, 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.
On the basis of all the information provided on the unitary fee and performance
of each Fund and the ongoing oversight by the Board, the Board concluded that
the unitary fee for each Fund continues to be reasonable and appropriate in
light of the nature, extent and quality of the services provided by the Advisor
to each Fund under the Agreements.
The Board considered information and discussed with the Advisor whether there
were any economies of scale in connection with providing advisory services to
the Funds and noted the Advisor's statement that it believes that its expenses
relating to providing advisory services to the Funds will likely increase during
the next twelve months as the Advisor continues to build infrastructure and add
new staff. 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, 2021 and the estimated profitability level
for each Fund calculated by the Advisor based on such data, as well as
complex-wide and product-line profitability data, for the same period. The Board
noted the inherent limitations in the profitability analysis and concluded that,
based on the information provided, the Advisor's profitability level for each
Fund was not unreasonable. In addition, the Board considered indirect benefits
described by the Advisor that may be realized from its relationship with the
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
Funds. The Board considered that the Advisor had identified as an indirect
benefit to the Advisor and FTP their exposure to investors and brokers who,
absent their exposure to the Funds, may have had no dealings with the Advisor or
FTP, and noted that the Advisor does not utilize soft dollars in connection with
the Funds. The Board concluded that the character and amount of potential
indirect benefits to the Advisor were not unreasonable.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, unanimously determined that the terms
of the Agreements continue to be fair and reasonable and that the continuation
of the Agreements is in the best interests of each Fund. No single factor was
determinative in the Board's analysis.
(NON-UNITARY FEE FUNDS)
The Board of Trustees of First Trust Exchange-Traded Fund II (the "Trust"),
including the Independent Trustees, unanimously approved the continuation of the
Investment Management Agreement (the "Agreement") with First Trust Advisors L.P.
(the "Advisor") on behalf of the following six series of the Trust (each a
"Fund" and collectively, the "Funds"):
First Trust STOXX(R) European Select Dividend Index Fund (FDD)
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund
(FFR) (now known as First Trust Alerian Disruptive Technology Real
Estate ETF (DTRE))
First Trust Dow Jones Global Select Dividend Index Fund (FGD)
First Trust Global Wind Energy ETF (FAN)
First Trust Global Engineering and Construction ETF (FLM) (now known as
First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD))
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund
(GRID)
The Board approved the continuation of the Agreement for each Fund for a
one-year period ending June 30, 2023 at a meeting held on June 12-13, 2022. 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 18, 2022 and June 12-13, 2022, 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 indirect benefits to the Advisor and its affiliate, First Trust
Portfolios L.P. ("FTP"); and information on the Advisor's compliance program.
The Board reviewed initial materials with the Advisor at the meeting held on
April 18, 2022, 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 12-13, 2022 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
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
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 18, 2022 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 January 31, 2024.
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 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 of FGD and FAN was below the median total
(net) expense ratio of the peer funds in its respective Expense Group and that
the total (net) expense ratio of each of FDD, FFR, FLM and GRID 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 18, 2022
meeting, discussed with Broadridge its methodology for assembling peer groups
and discussed with the Advisor limitations in creating peer groups for index
ETFs, including differences in underlying indexes and index-tracking
methodologies that can result in greater management complexities across
seemingly comparable ETFs, and different business models that may affect the
pricing of services among ETF sponsors. The Board took these limitations and
differences into account in considering the peer data. With respect to fees
charged to other non-ETF clients, the Board considered differences between the
Funds and other non-ETF clients that limited their comparability. With respect
to each of FFR and FLM, the Board noted that at the April 26, 2021 Board
meeting, the Advisor recommended and the Board approved the adoption of a
unitary fee structure for the Fund, subject to shareholder approval. 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, 2021 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 each of FFR and FLM, the Board noted that at the April 26, 2021 Board
meeting, the Advisor recommended and the Board approved changes to the Fund's
investment objective and name. 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.
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 that its expenses
relating to providing advisory services to the Funds will likely increase during
the next twelve months as the Advisor continues to build infrastructure and add
new staff. 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, 2021 and the estimated
profitability level for each Fund calculated by the Advisor based on such data,
as well as complex-wide and product-line profitability data, for the same
period. The Board noted the inherent limitations in the profitability analysis
and concluded that, based on the information provided, the Advisor's
profitability level for each Fund was not unreasonable. In addition, the Board
considered indirect benefits described by the Advisor that may be realized from
its relationship with the Funds. The Board considered that the Advisor had
identified as an indirect benefit to the Advisor and FTP their exposure to
investors and brokers who, absent their exposure to the Funds, may have had no
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
dealings with the Advisor or FTP, and noted that the Advisor does not utilize
soft dollars in connection with the Funds. The Board concluded that the
character and amount of potential indirect benefits to the Advisor were not
unreasonable.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, unanimously determined that the terms
of the Agreement continue to be fair and reasonable and that the continuation of
the Agreement is in the best interests of each Fund. No single factor was
determinative in the Board's analysis.
BOARD CONSIDERATIONS REGARDING APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS
FIRST TRUST ALERIAN DISRUPTIVE TECHNOLOGY REAL ESTATE ETF
(FORMERLY, FIRST TRUST FTSE EPRA/NAREIT DEVELOPED MARKETS REAL
ESTATE INDEX FUND)
The Board of Trustees of First Trust Exchange-Traded Fund II (the "Trust"),
including the Independent Trustees, approved a new Investment Management
Agreement (the "New Agreement") with First Trust Advisors L.P. (the "Advisor"),
on behalf of First Trust Alerian Disruptive Technology Real Estate ETF
(formerly, First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index
Fund) (the "Fund"), for an initial two-year term at a meeting held on April 26,
2021, to change the Fund's non-unitary advisory fee structure under its current
Investment Management Agreement with the Advisor (the "Current Agreement") to a
unitary fee structure, subject to the approval of the Fund's shareholders. The
Board determined that the New Agreement is in the best interests of the Fund in
light of the nature, extent and quality of the services expected to be provided
and such other matters as the Board considered to be relevant in the exercise of
its business judgment.
The Board considered the New Agreement over the course of meetings held on March
6-7, 2021 and April 26, 2021, noting that the principal difference between the
New Agreement and the Current Agreement is the difference in fee structures. In
connection with those meetings, the Board reviewed information provided by the
Advisor relating to the proposed unitary fee structure under the New Agreement,
including supplemental information provided by the Advisor responding to
requests for information from counsel to the Independent Trustees, submitted on
behalf of the Independent Trustees. At the April 26, 2021 meeting, the Board
also reviewed materials provided by the Advisor in connection with the annual
contract review process for the funds in the First Trust Fund Complex, including
the Fund. The Independent Trustees and their counsel also met separately to
discuss the information provided by the Advisor.
The Board noted that, under the Fund's current non-unitary advisory fee
structure, the Fund pays the Advisor an advisory fee equal to an annual rate of
0.40% of its average daily net assets and, separately, the Advisor has agreed to
cap the Fund's total (net) expense ratio at an annual rate of 0.60% of its
average daily net assets, with certain Fund expenses excluded from the expense
cap. The Board considered that, under the proposed unitary fee structure, the
Fund would pay a unitary fee equal to an annual rate of 0.60% of its average
daily net assets and the Advisor would be responsible for the Fund's expenses,
noting the Advisor's statement that the Fund expenses excluded from the proposed
unitary fee would be identical to those currently excluded from the expense cap.
The Board considered that the proposed unitary fee would not result in a change
in the Fund's current total (net) expense ratio. The Board also considered the
Advisor's statements that the proposed unitary fee structure provides clarity
and consistency of fees to shareholders and that the Fund's expense ratio under
the proposed unitary fee rate would remain consistent regardless of the Fund's
net asset level, which may fluctuate based on creation and redemption activity
or market movement. The Board noted that under the Fund's current expense
structure the total expense ratio paid by a shareholder can increase or decrease
depending on the net asset level of the Fund and the level and continuation of
the expense cap. The Board noted that, although the Fund's total expenses are
currently subject to a 0.60% expense cap, the Advisor is under no obligation to
extend the expense cap, and no assurance has been given that any extension would
provide for an expense cap as favorable as the current expense cap. In this
regard, the Board also took into account information from the Advisor indicating
that the Fund's total expense ratio, prior to the application of the expense
cap, has been consistently higher than both the expense cap and the proposed
unitary fee rate since inception and considered that generally it would require
a significant increase in assets or reduction in expenses for the proposed
unitary fee rate to exceed the Fund's total expense ratio (prior to the
application of the expense cap). However, the Board considered that the unitary
fee structure generally would eliminate the possibility for any decrease in the
Fund's total expense ratio during periods of significant asset increases within
the Fund. The Board noted that, after the initial two-year term of the New
Agreement, it would review the unitary fee on an annual basis in connection with
its annual review of the Fund's advisory agreement. On balance, the Board
concluded that the benefit to shareholders resulting from the unitary fee's
protection from the risk of a higher expense ratio outweighed the fact that an
increase in Fund assets would not necessarily result in a decrease in the Fund's
expense ratio.
In addition, the Board considered that the proposed unitary fee structure was
the primary fee structure for exchange-traded funds ("ETFs") in the First Trust
Fund Complex and a common fee structure in the ETF industry and, therefore, may
allow investors to more easily compare the Fund to peer funds. The Board also
considered the Advisor's statements that the services provided to the Fund by
the Advisor under the Current Agreement will not change as a result of the
transition to the proposed unitary fee structure under the New Agreement and
that the Advisor would bear the costs associated with obtaining shareholder
approval of the New Agreement. Based on the foregoing, the Board determined that
the transition to the proposed unitary fee structure under the New Agreement is
in the best interests of the Fund.
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
In addition to considering the change in fee structure, to reach its
determination that the New Agreement is in the best interests of the Fund, the
Board also 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. The
Independent Trustees received information from the Advisor that, among other
things, outlined: the services to be provided by the Advisor to the Fund
(including the relevant personnel responsible for these services and their
experience); the proposed unitary fee rate payable by the Fund as compared to
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 ETFs managed by the Advisor; the estimated expense
ratio of the Fund as compared to expense ratios of the funds in the Fund's
Expense Group and Expense Universe; the nature of expenses to be incurred in
providing services to the Fund and the potential for the Advisor to realize
economies of scale, if any; profitability and other financial data for the
Advisor; any 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 applied its business judgment to determine whether the arrangement
between the Trust and the Advisor is a reasonable business arrangement from the
Fund's perspective.
In evaluating whether to approve the New Agreement for the Fund, the Board
considered the nature, extent and quality of the services to be provided by the
Advisor under the New Agreement, noting the Advisor's statement that the
services provided to the Fund by the Advisor under the Current Agreement will
not change as a result of the transition to the proposed unitary fee structure
under the New Agreement. The Board considered that the Advisor is responsible
for the overall management and administration of the Fund under the Current
Agreement and reviewed all of the services provided by the Advisor to the Fund,
as well as the background and experience of the persons responsible for such
services. In reviewing the services provided, the Board noted the compliance
program that had been developed by the Advisor and considered that it includes a
robust program for monitoring the Advisor's and the Fund's compliance with the
1940 Act, as well as the Fund's compliance with its investment objective,
policies and restrictions. The Board also considered a report from the Advisor
with respect to its risk management functions related to the operation of the
Fund. In addition, the Board considered the Advisor's ongoing investment in
additional personnel and infrastructure to maintain and improve the quality of
services provided to the Fund and the other funds in the First Trust Fund
Complex.
The Board noted that the Fund is an index ETF designed to track the performance
of an underlying index. Because the Fund's underlying index is changing, subject
to the approval by the Fund's shareholders of a change in the Fund's
diversification status under the 1940 Act, the Fund did not have any historical
investment performance based on its new underlying index that the Board could
consider. However, because the Fund will continue to track the performance of an
underlying index, the Board considered reports it receives on a quarterly basis
showing the correlation and tracking difference between the Fund and its current
underlying index and noted that the Fund's performance under the management of
the Advisor has been correlated to that of its current underlying index and that
the Fund's tracking difference has been within a reasonable range. In light of
the information presented and the considerations made, the Board concluded that
the nature, extent and quality of the services to be provided to the Fund by the
Advisor under the New Agreement are expected to remain satisfactory.
The Board considered the proposed unitary fee rate payable by the Fund under the
New 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 0.60% of its average daily net assets. The Board noted that
the Advisor would be responsible for the Fund's expenses, including the cost of
transfer agency, custody, fund administration, legal, audit and other services
and license fees, if any, but excluding the fee payment under the New Agreement
and interest, taxes, acquired fund fees and expenses, if any, brokerage
commissions and other expenses connected with the execution of portfolio
transactions, distribution and service fees pursuant to a Rule 12b-1 plan, if
any, and extraordinary expenses, if any. The Board received and reviewed
information showing the 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 to other ETFs. Because the Fund will pay a unitary fee,
the Board determined that expense ratios were the most relevant comparative data
point. Based on the information provided, the Board noted that the 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 differences between the Fund
and other clients that limited their comparability. The Board considered the
Advisor's statement that the Fund is most comparable to two other ETFs in the
First Trust Fund Complex that follow thematic index strategies managed by the
Advisor due to their shared focus on targeted exposures with robust selection
methodologies and objectives to track a given market segment, and that each such
fund pays a unitary fee equal to an annual rate of 0.60% of its average daily
net assets. The Board considered that the proposed unitary fee would not result
in a change in the Fund's current total (net) expense ratio. In light of the
information considered and the nature, extent and quality of the services
provided under the Current Agreement and expected to continue to be provided to
the Fund under the New Agreement, the Board determined that the proposed 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, 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 New Agreement. The Board considered the Advisor's estimate of the
profitability of the New Agreement to the Advisor at current asset levels. The
Board noted the inherent limitations in the profitability analysis and concluded
that, based on the information provided, the Advisor's estimated profitability
level under the New Agreement was not unreasonable. The Board considered
fall-out benefits described by the Advisor that may be realized from its
relationship with the Fund. The Board considered that the Advisor had identified
as a fall-out benefit to the Advisor and FTP their exposure to investors and
brokers who, absent their exposure to the Fund, may have had no dealings with
the Advisor or FTP, and noted that the Advisor does not utilize soft dollars in
connection with the Fund. The Board concluded that the character and amount of
potential fall-out benefits to the Advisor were not unreasonable.
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, determined that the terms of the New
Agreement are fair and reasonable and that the approval of the New Agreement is
in the best interests of the Fund. No single factor was determinative in the
Board's analysis.
FIRST TRUST ALERIAN U.S. NEXTGEN INFRASTRUCTURE ETF
(FORMERLY, FIRST TRUST GLOBAL ENGINEERING AND CONSTRUCTION ETF)
The Board of Trustees of First Trust Exchange-Traded Fund II (the "Trust"),
including the Independent Trustees, approved a new Investment Management
Agreement (the "New Agreement") with First Trust Advisors L.P. (the "Advisor"),
on behalf of First Trust Alerian US NextGen Infrastructure ETF (formerly, First
Trust Global Engineering and Construction ETF) (the "Fund"), for an initial
two-year term at a meeting held on April 26, 2021, to change the Fund's
non-unitary advisory fee structure under its current Investment Management
Agreement with the Advisor (the "Current Agreement") to a unitary fee structure,
subject to the approval of the Fund's shareholders. The Board determined that
the New Agreement is in the best interests of the Fund in light of the nature,
extent and quality of the services expected to be provided and such other
matters as the Board considered to be relevant in the exercise of its business
judgment.
The Board considered the New Agreement over the course of meetings held on March
6-7, 2021 and April 26, 2021, noting that the principal difference between the
New Agreement and the Current Agreement is the difference in fee structures. In
connection with those meetings, the Board reviewed information provided by the
Advisor relating to the proposed unitary fee structure under the New Agreement,
including supplemental information provided by the Advisor responding to
requests for information from counsel to the Independent Trustees, submitted on
behalf of the Independent Trustees. At the April 26, 2021 meeting, the Board
also reviewed materials provided by the Advisor in connection with the annual
contract review process for the funds in the First Trust Fund Complex, including
the Fund. The Independent Trustees and their counsel also met separately to
discuss the information provided by the Advisor.
The Board noted that, under the Fund's current non-unitary advisory fee
structure, the Fund pays the Advisor an advisory fee equal to an annual rate of
0.40% of its average daily net assets and, separately, the Advisor has agreed to
cap the Fund's total (net) expense ratio at an annual rate of 0.70% of its
average daily net assets, with certain Fund expenses excluded from the expense
cap. The Board considered that, under the proposed unitary fee structure, the
Fund would pay a unitary fee equal to an annual rate of 0.65% of its average
daily net assets and the Advisor would be responsible for the Fund's expenses,
noting the Advisor's statement that the Fund expenses excluded from the proposed
unitary fee would be identical to those currently excluded from the expense cap.
The Board considered that the proposed unitary fee would result in an immediate
reduction in the Fund's total (net) expense ratio equal to an annual rate of
0.05% of the Fund's average daily net assets. The Board also considered the
Advisor's statements that the proposed unitary fee structure provides clarity
and consistency of fees to shareholders and that the Fund's expense ratio under
the proposed unitary fee rate would remain consistent regardless of the Fund's
net asset level, which may fluctuate based on creation and redemption activity
or market movement. The Board noted that under the Fund's current expense
structure the total expense ratio paid by a shareholder can increase or decrease
depending on the net asset level of the Fund and the level and continuation of
the expense cap. The Board noted that, although the Fund's total expenses are
currently subject to a 0.70% expense cap, the Advisor is under no obligation to
extend the expense cap, and no assurance has been given that any extension would
provide for an expense cap as favorable as the current expense cap. In this
regard, the Board also took into account information from the Advisor indicating
that the Fund's total expense ratio, prior to the application of the expense
cap, has been consistently higher than both the expense cap and the proposed
unitary fee rate since inception and considered that generally it would require
a significant increase in assets or reduction in expenses for the proposed
unitary fee rate to exceed the Fund's total expense ratio (prior to the
application of the expense cap). However, the Board considered that the unitary
fee structure generally would eliminate the possibility for any decrease in the
Fund's total expense ratio during periods of significant asset increases within
the Fund. The Board noted that, after the initial two-year term of the New
Agreement, it would review the unitary fee on an annual basis in connection with
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
its annual review of the Fund's advisory agreement. On balance, in conjunction
with the 0.05% reduction from the current expense cap, the Board concluded that
the benefit to shareholders resulting from the unitary fee's protection from the
risk of a higher expense ratio outweighed the fact that an increase in Fund
assets would not necessarily result in a decrease in the Fund's expense ratio.
In addition, the Board considered that the proposed unitary fee structure was
the primary fee structure for exchange-traded funds ("ETFs") in the First Trust
Fund Complex and a common fee structure in the ETF industry and, therefore, may
allow investors to more easily compare the Fund to peer funds. The Board also
considered the Advisor's statements that the services provided to the Fund by
the Advisor under the Current Agreement will not change as a result of the
transition to the proposed unitary fee structure under the New Agreement and
that the Advisor would bear the costs associated with obtaining shareholder
approval of the New Agreement. Based on the foregoing, the Board determined that
the transition to the proposed unitary fee structure under the New Agreement is
in the best interests of the Fund.
In addition to considering the change in fee structure, to reach its
determination that the New Agreement is in the best interests of the Fund, the
Board also 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. The
Independent Trustees received information from the Advisor that, among other
things, outlined: the services to be provided by the Advisor to the Fund
(including the relevant personnel responsible for these services and their
experience); the proposed unitary fee rate payable by the Fund as compared to
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 ETFs managed by the Advisor; the estimated expense
ratio of the Fund as compared to expense ratios of the funds in the Fund's
Expense Group and Expense Universe; the nature of expenses to be incurred in
providing services to the Fund and the potential for the Advisor to realize
economies of scale, if any; profitability and other financial data for the
Advisor; any 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 applied its business judgment to determine whether the arrangement
between the Trust and the Advisor is a reasonable business arrangement from the
Fund's perspective.
In evaluating whether to approve the New Agreement for the Fund, the Board
considered the nature, extent and quality of the services to be provided by the
Advisor under the New Agreement, noting the Advisor's statement that the
services provided to the Fund by the Advisor under the Current Agreement will
not change as a result of the transition to the proposed unitary fee structure
under the New Agreement. The Board considered that the Advisor is responsible
for the overall management and administration of the Fund under the Current
Agreement and reviewed all of the services provided by the Advisor to the Fund,
as well as the background and experience of the persons responsible for such
services. In reviewing the services provided, the Board noted the compliance
program that had been developed by the Advisor and considered that it includes a
robust program for monitoring the Advisor's and the Fund's compliance with the
1940 Act, as well as the Fund's compliance with its investment objective,
policies and restrictions. The Board also considered a report from the Advisor
with respect to its risk management functions related to the operation of the
Fund. In addition, the Board considered the Advisor's ongoing investment in
additional personnel and infrastructure to maintain and improve the quality of
services provided to the Fund and the other funds in the First Trust Fund
Complex.
The Board noted that the Fund is an index ETF designed to track the performance
of an underlying index. Because the Fund's underlying index is changing, the
Fund did not have any historical investment performance based on its new
underlying index that the Board could consider. However, because the Fund will
continue to track the performance of an underlying index, the Board considered
reports it receives on a quarterly basis showing the correlation and tracking
difference between the Fund and its current underlying index and noted that the
Fund's performance under the management of the Advisor has been correlated to
that of its current underlying index and that the Fund's tracking difference has
been within a reasonable range. In light of the information presented and the
considerations made, the Board concluded that the nature, extent and quality of
the services to be provided to the Fund by the Advisor under the New Agreement
are expected to remain satisfactory.
The Board considered the proposed unitary fee rate payable by the Fund under the
New Agreement for the services to be provided. The Board noted that, under the
unitary fee arrangement, the Fund would pay the Advisor a unitary fee equal to
an annual rate of 0.65% of its average daily net assets. The Board noted that
the Advisor would be responsible for the Fund's expenses, including the cost of
transfer agency, custody, fund administration, legal, audit and other services
and license fees, if any, but excluding the fee payment under the New Agreement
and interest, taxes, acquired fund fees and expenses, if any, brokerage
commissions and other expenses connected with the execution of portfolio
transactions, distribution and service fees pursuant to a Rule 12b-1 plan, if
any, and extraordinary expenses, if any. The Board received and reviewed
information showing the 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 to other ETFs. Because the Fund will pay a unitary fee,
the Board determined that expense ratios were the most relevant comparative data
point. Based on the information provided, the Board noted that the 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
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
took this information into account in considering the peer data. With respect to
fees charged to other clients, the Board considered differences between the Fund
and other clients that limited their comparability. The Board considered the
Advisor's statement that the Fund is most comparable to three other ETFs in the
First Trust Fund Complex that follow thematic index strategies managed by the
Advisor due to their shared focus on targeted exposures with robust selection
methodologies and objectives to track a given market segment, and that such
funds pay unitary fees at annual rates that range from 0.60% to 0.70% of their
respective average daily net assets. The Board considered that the proposed
unitary fee would result in an immediate reduction in the Fund's total (net)
expense ratio equal to an annual rate of 0.05% of its average daily net assets.
In light of the information considered and the nature, extent and quality of the
services provided under the Current Agreement and expected to continue to be
provided to the Fund under the New Agreement, the Board determined that the
proposed 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, 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 New Agreement. The Board considered the Advisor's estimate of the
profitability of the New Agreement to the Advisor at current asset levels,
noting that the Advisor estimated that it would provide services at a loss under
the New Agreement at current asset levels. The Board noted the inherent
limitations in the profitability analysis and concluded that, based on the
information provided, the Advisor's estimated profitability level under the New
Agreement was not unreasonable. The Board considered fall-out benefits described
by the Advisor that may be realized from its relationship with the Fund. The
Board considered that the Advisor had identified as a fall-out benefit to the
Advisor and FTP their exposure to investors and brokers who, absent their
exposure to the Fund, may have had no dealings with the Advisor or FTP, and
noted that the Advisor does not utilize soft dollars in connection with the
Fund. The Board concluded that the character and amount of potential 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, determined that the terms of the New
Agreement are fair and reasonable and that the approval of the New Agreement is
in the best interests of the Fund. No single factor was determinative in the
Board's analysis.
REMUNERATION
First Trust Advisors L.P. ("First Trust") is authorised and regulated by the
U.S. Securities and Exchange Commission and is entitled to market shares of
certain First Trust Exchange-Traded Fund II funds it manages (the "Funds") in
certain member states in the European Economic Area in accordance with the
cooperation arrangements in Article 42 of the Alternative Investment Fund
Managers Directive (the "Directive"). First Trust is required under the
Directive to make disclosures in respect of remuneration. The following
disclosures are made in line with First Trust's interpretation of currently
available regulatory guidance on remuneration disclosures.
During the year ended December 31, 2021, the amount of remuneration paid (or to
be paid) by First Trust Advisors L.P. in respect of the Funds is $7,694,209.
This figure is comprised of $296,078 paid (or to be paid) in fixed compensation
and $7,398,131 paid (or to be paid) in variable compensation. There were a total
of 24 beneficiaries of the remuneration described above. Those amounts include
$3,951,240 paid (or to be paid) to senior management of First Trust Advisors
L.P. and $3,742,969 paid (or to be paid) to other employees whose professional
activities have a material impact on the risk profiles of First Trust Advisors
L.P. or the Funds (collectively, "Code Staff").
Code Staff included in the aggregated figures disclosed above are rewarded in
line with First Trust's remuneration policy (the "Remuneration Policy") which is
determined and implemented by First Trust's senior management. The Remuneration
Policy reflects First Trust's ethos of good governance and encapsulates the
following principal objectives:
i. to provide a clear link between remuneration and performance of
First Trust and to avoid rewarding for failure;
ii. to promote sound and effective risk management consistent with the
risk profiles of the funds managed by First Trust; and
iii. to remunerate staff in line with the business strategy, objectives,
values and interests of First Trust and the funds managed by First
Trust in a manner that avoids conflicts of interest.
First Trust assesses various risk factors which it is exposed to when
considering and implementing remuneration for Code Staff and considers whether
any potential award to such person(s) would give rise to a conflict of interest.
First Trust does not reward failure, or consider the taking of risk or failure
to take risk in its remuneration of Code Staff.
First Trust assesses performance for the purposes of determining payments in
respect of performance-related remuneration of Code Staff by reference to a
broad range of measures including (i) individual performance (using financial
and non-financial criteria), and (ii) the overall performance of First Trust.
Remuneration is not based upon the performance of the Funds.
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
The elements of remuneration are balanced between fixed and variable and the
senior management sets fixed salaries at a level sufficient to ensure that
variable remuneration incentivises and rewards strong individual performance but
does not encourage excessive risk taking.
No individual is involved in setting his or her own remuneration.
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 18, 2022 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 16, 2021 through the Liquidity Committee's annual meeting held
on March 17, 2022 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 134
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BOARD OF TRUSTEES AND OFFICERS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
The following tables identify the Trustees and Officers of the Trust. Unless
otherwise indicated, the address of all persons is 120 East Liberty Drive, Suite
400, Wheaton, IL 60187.
The Trust's statement of additional information includes additional information
about the Trustees and is available, without charge, upon request, by calling
(800) 988-5891.
NUMBER OF OTHER
PORTFOLIOS IN TRUSTEESHIPS OR
TERM OF OFFICE THE FIRST TRUST DIRECTORSHIPS
NAME, AND YEAR FIRST FUND COMPLEX HELD BY TRUSTEE
YEAR OF BIRTH AND ELECTED OR PRINCIPAL OCCUPATIONS OVERSEEN BY DURING PAST
POSITION WITH THE TRUST APPOINTED DURING PAST 5 YEARS TRUSTEE 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
------------------------------------------------------------------------------------------------------------------------------------
Richard E. Erickson, Trustee o Indefinite Term Physician, Edward-Elmhurst Medical 221 None
(1951) Group; Physician and Officer,
o Since Inception Wheaton Orthopedics (1990 to 2021)
Thomas R. Kadlec, Trustee o Indefinite Term Retired; President, ADM Investors 221 Director, National Futures
(1957) Services, Inc. (Futures Commission Association and ADMIS
o Since Inception Merchant) (2010 to July 2022) Singapore Ltd.; Formerly,
Director of ADM Investor
Services, Inc., ADM
Investor Services
International, ADMIS
Hong Kong Ltd., and
Futures Industry
Association
Denise M. Keefe, Trustee o Indefinite Term Executive Vice President, Advocate 221 Director and Board Chair
(1964) Aurora Health and President, of Advocate Home Health
o Since 2021 Advocate Aurora Continuing Health Services, Advocate Home
Division (Integrated Healthcare Care Products and
System) Advocate Hospice;
Director and Board Chair
of Aurora At Home (since
2018); Director of
Advocate Physician
Partners Accountable Care
Organization; Director and
Board Chair of RML Long
Term Acute Care
Hospitals; and Director of
Senior Helpers (since
2021)
Robert F. Keith, Trustee o Indefinite Term President, Hibs Enterprises 221 Formerly, Director of
(1956) (Financial and Management Trust Company of Illinois
o Since Inception Consulting)
Niel B. Nielson, Trustee o Indefinite Term Senior Advisor (2018 to Present), 221 None
(1954) Managing Director and Chief
o Since Inception Operating Officer (2015 to 2018),
Pelita Harapan Educational
Foundation (Educational
Products and Services)
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
James A. Bowen(1), Trustee, o Indefinite Term Chief Executive Officer, First 221 None
Chairman of the Board Trust Advisors L.P. and First
(1955) Trust Portfolios L.P.,
o Since Inception Chairman of the Board of
Directors, BondWave LLC (Software
Development Company) and
Stonebridge Advisors LLC
(Investment Advisor)
-----------------------------
(1) Mr. Bowen is deemed an "interested person" of the Trust due to his
position as Chief Executive Officer of First Trust Advisors L.P.,
investment advisor of the Trust.
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BOARD OF TRUSTEES AND OFFICERS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
POSITION AND TERM OF OFFICE
NAME AND OFFICES AND LENGTH OF PRINCIPAL OCCUPATIONS
YEAR OF BIRTH WITH TRUST SERVICE DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS(2)
------------------------------------------------------------------------------------------------------------------------------------
James M. Dykas President and Chief o Indefinite Term Managing Director and Chief Financial Officer, First
(1966) Executive Officer Trust Advisors L.P. and First Trust Portfolios L.P.;
o Since Inception Chief Financial Officer, BondWave LLC (Software
Development Company) and Stonebridge Advisors
LLC (Investment Advisor)
Donald P. Swade Treasurer, Chief Financial Officer o Indefinite Term Senior Vice President, First Trust Advisors L.P. and
(1972) and Chief Accounting Officer First Trust Portfolios L.P.
o Since Inception
W. Scott Jardine Secretary and Chief Legal Officer o Indefinite Term General Counsel, First Trust Advisors L.P. and First
(1960) Trust Portfolios L.P.; Secretary and General Counsel,
o Since Inception BondWave LLC; Secretary, Stonebridge Advisors LLC
Daniel J. Lindquist Vice President o Indefinite Term Managing Director, First Trust Advisors L.P. and
(1970) First Trust Portfolios L.P.
o Since Inception
Kristi A. Maher Chief Compliance Officer and o Indefinite Term Deputy General Counsel, First Trust Advisors L.P. and
(1966) Assistant Secretary First Trust Portfolios L.P.
o Chief Compliance
Officer
Since January 2011
o Assistant Secretary
Since Inception
Roger F. Testin Vice President o Indefinite Term Senior Vice President, First Trust Advisors L.P. and
(1966) First Trust Portfolios L.P.
o Since Inception
Stan Ueland Vice President o Indefinite Term Senior Vice President, First Trust Advisors L.P. and
(1970) First Trust Portfolios L.P.
o Since Inception
-----------------------------
(2) The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
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PRIVACY POLICY
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
SEPTEMBER 30, 2022 (UNAUDITED)
PRIVACY POLICY
First Trust values our relationship with you and considers your privacy an
important priority in maintaining that relationship. We are committed to
protecting the security and confidentiality of your personal information.
SOURCES OF INFORMATION
We collect nonpublic personal information about you from the following sources:
o Information we receive from you and your broker-dealer, investment
professional or financial representative through interviews,
applications, agreements or other forms;
o Information about your transactions with us, our affiliates or
others;
o Information we receive from your inquiries by mail, e-mail or
telephone; and
o Information we collect on our website through the use of "cookies."
For example, we may identify the pages on our website that your
browser requests or visits.
INFORMATION COLLECTED
The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.
DISCLOSURE OF INFORMATION
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. In addition to using
this information to verify your identity (as required under law), the permitted
uses may also include the disclosure of such information to unaffiliated
companies for the following reasons:
o In order to provide you with products and services and to effect
transactions that you request or authorize, we may disclose your
personal information as described above to unaffiliated financial
service providers and other companies that perform administrative or
other services on our behalf, such as transfer agents, custodians
and trustees, or that assist us in the distribution of investor
materials such as trustees, banks, financial representatives, proxy
services, solicitors and printers.
o We may release information we have about you if you direct us to do
so, if we are compelled by law to do so, or in other legally limited
circumstances (for example to protect your account from fraud).
In addition, in order to alert you to our other financial products and services,
we may share your personal information within First Trust.
USE OF WEBSITE ANALYTICS
We currently use third party analytics tools, Google Analytics and AddThis, to
gather information for purposes of improving First Trust's website and marketing
our products and services to you. These tools employ cookies, which are small
pieces of text stored in a file by your web browser and sent to websites that
you visit, to collect information, track website usage and viewing trends such
as the number of hits, pages visited, videos and PDFs viewed and the length of
user sessions in order to evaluate website performance and enhance navigation of
the website. We may also collect other anonymous information, which is generally
limited to technical and web navigation information such as the IP address of
your device, internet browser type and operating system for purposes of
analyzing the data to make First Trust's website better and more useful to our
users. The information collected does not include any personal identifiable
information such as your name, address, phone number or email address unless you
provide that information through the website for us to contact you in order to
answer your questions or respond to your requests. To find out how to opt-out of
these services click on: Google Analytics and AddThis.
CONFIDENTIALITY AND SECURITY
With regard to our internal security procedures, First Trust restricts access to
your nonpublic personal information to those First Trust employees who need to
know that information to provide products or services to you. We maintain
physical, electronic and procedural safeguards to protect your nonpublic
personal information.
POLICY UPDATES AND INQUIRIES
As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time, however, if we do change
it, we will tell you promptly. For questions about our policy, or for additional
copies of this notice, please go to www.ftportfolios.com, or contact us at
1-800-621-1675 (First Trust Portfolios) or 1-800-222-6822 (First Trust
Advisors).
March 2022
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First Trust
First Trust Exchange-Traded Fund II
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
ADMINISTRATOR, CUSTODIAN,
FUND ACCOUNTANT &
TRANSFER AGENT
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
320 South Canal Street
Chicago, IL 60606
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