|
First
Trust
Exchange-Traded
Fund VIII |
Prospectus
First Trust
Innovation Leaders ETF
|
Ticker
Symbol: |
ILDR |
|
Exchange: |
NYSE
Arca |
The First Trust
Innovation Leaders ETF (the “Fund”) lists and
principally trades its shares on NYSE Arca, Inc. ("NYSE
Arca" or
the “Exchange”). Market prices may
differ to some degree from the net asset value of the shares. Unlike mutual
funds, the Fund issues and redeems shares at net asset value, only in large
blocks of shares called "Creation
Units."
The
Fund is a series of First Trust Exchange-Traded Fund VIII (the “Trust”) and an
actively-managed exchange-traded fund organized as a separate series of a
registered management investment company.
Except
when aggregated in Creation Units, the shares are not redeemable securities of
the Fund.
The
Securities and Exchange Commission has not approved or disapproved of these
securities or passed upon
the adequacy or accuracy of this prospectus. Any representation to the contrary
is a criminal offense.
NOT
FDIC INSURED MAY
LOSE VALUE NO
BANK GUARANTEE
January
3, 2023
Summary
Information
(fees paid directly from your investment)
|
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) |
|
(expenses that you pay each year as a percentage of the value of your investment)
|
Management
Fees(1) |
|
|
Distribution
and Service (12b-1) Fees |
|
|
Other
Expenses |
|
|
Total Annual
Fund Operating Expenses |
|
(1)
|
1
Year |
3
Years |
5
Years |
10
Years |
|
$ |
$ |
$ |
$ |
3
4
5
6
Management
Investment
Advisor
First
Trust Advisors L.P. (“First
Trust”
or the “Advisor”)
Portfolio
Managers
The
following persons serve as portfolio managers of the Fund.
•
Bob Hensley, CFA,
Vice President of First Trust
•
David McGarel, CFA,
Chief Investment Officer, Chief Operating Officer and Managing Director of First
Trust
•
Chris Peterson, CFA,
Senior Vice President of First Trust
•
Jared Wollen, CFA,
Vice President of First Trust
Each
portfolio manager has served in such capacity for the Fund since
2021.
Purchase
and Sale of Fund Shares
The
Fund issues and redeems shares on a continuous basis, at net asset value, only
in large blocks of shares called “Creation Units.” Individual
shares of the Fund may only be purchased and sold on the secondary market
through a broker-dealer. Since shares of the Fund trade on securities exchanges
in the secondary market at their market price rather than their net asset value,
the Fund’s shares may trade at a price greater than (premium) or less than
(discount) the Fund’s net asset value. An investor may incur costs attributable
to the difference between the highest price a buyer is willing to pay to
purchase shares of the Fund (bid) and the lowest price a seller is willing to
accept for shares of the Fund (ask) when buying or selling shares in the
secondary market (the “bid-ask
spread”). Recent
information, including the Fund’s net asset value, market price, premiums and
discounts, bid-ask spreads and the median bid-ask spread for the Fund’s most
recent fiscal year, is available online at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Tax
Information
The
Fund’s distributions are taxable and will generally be taxed as ordinary income
or capital gains. Distributions on shares held in a
tax-deferred account, while not immediately taxable, will be subject to tax when
the shares are no longer held in a tax-deferred account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If you purchase
shares of the Fund through a broker-dealer, registered investment adviser, bank
or other financial intermediary (collectively, “intermediaries”), First Trust and
First Trust Portfolios L.P., the Fund’s distributor, may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment. Ask your
salesperson or visit your financial intermediary’s website for more
information.
7
Additional
Information on the Fund's Investment Objective and Strategies
The
Fund is a series of First Trust Exchange-Traded Fund VIII and is regulated as an
“investment company” under the 1940 Act. The Fund is
actively managed and does not seek to track the performance of an index. The
Fund’s investment objective is fundamental and may not be changed without
approval by the holders of a majority of the outstanding voting securities of
the Fund. Unless an investment policy is identified as being fundamental, all
investment policies included in this prospectus and the Fund’s Statement of
Additional Information (“SAI”) are
non-fundamental and may be changed by the Board of Trustees of the Trust (the
“Board”) without
shareholder approval. If there is a material change to the Fund’s principal
investment strategies, you should consider whether the Fund remains an
appropriate investment for you. There is no guarantee that the Fund will achieve
its investment objective.
The Fund may invest
in securities issued by companies in initial public offerings ("IPOs").
While
it is not expected that the Fund will invest in the securities of other
investment companies, any such investments would be subject to
limitations imposed by the 1940 Act and the related rules and interpretations.
The Fund has adopted a policy that it will not invest in other investment
companies in excess of 1940 Act limits in reliance on Sections 12(d)(1)(F) or
12(d)(1)(G) of the 1940 Act.
Fund
Investments
Principal
Investments
Equity
Securities
The
Fund invests in equity securities, including common stocks and depositary
receipts. Common stock represents an equity ownership interest in
issuers. Holders of common stock are entitled to the income and increase in the
value of the assets and business of the issuers after all debt obligations and
obligations to preferred stockholders are satisfied. Depositary receipts are
certificates typically issued by a bank or trust company that represent
ownership interests in securities of non-U.S. companies. Depositary receipts may
or may not be jointly sponsored by the underlying issuer.
Non-Principal
Investments
Cash
Equivalents and Short-Term Investments
Normally,
the Fund invests substantially all of its assets to meet its investment
objectives. The Fund may invest the remainder of its assets in
securities with maturities of less than one year or in cash equivalents, or it
may hold cash. The percentage of the Fund invested in such holdings varies and
depends on several factors, including market conditions. For temporary defensive
purposes and during periods of high cash inflows or outflows, the Fund may
depart from its principal investment strategies and invest part or all of its
assets in these securities, or it may hold cash. During such periods, the Fund
may not be able to achieve its investment objectives. The Fund may adopt a
temporary defensive strategy when the portfolio managers believe securities in
which the Fund normally invests have elevated risks due to political or economic
factors and in other extraordinary circumstances. For more information on
eligible short-term investments, see the SAI.
Real
Estate Investment Trusts ("REITs")
The
Fund may invest in REITs. REITs are financial vehicles that pool investors’
capital to purchase or finance real estate. REITs are generally
classified as equity REITs, mortgage REITs or a combination of equity and
mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents. Equity
REITs can also realize capital gains by selling properties that have appreciated
in value. Mortgage REITs invest the majority of their assets in real estate
mortgages and derive income from the collection of interest payments. REITs are
not taxed on income distributed to shareholders provided they comply with the
applicable tax requirements.
Illiquid
Investments
The
Fund may invest up to 15% of its net assets in investments and other instruments
that are, at the time of investment, illiquid (determined
using the Securities and Exchange Commission's standard applicable to investment
companies, i.e., any investment that
the Fund reasonably expects cannot be sold or disposed of in current market
conditions in seven calendar days or less without the sale or disposition
significantly changing the market value of the investment). For this purpose,
illiquid investments may include, but are not limited to, restricted securities
(securities the disposition of which is restricted under
8
the
federal securities laws), securities that may only be resold pursuant to Rule
144A under the Securities Act of 1933, as amended (the
“Securities
Act”),
that are deemed to be illiquid, and certain repurchase agreements.
Disclosure
of Portfolio Holdings
The
Fund’s portfolio holdings are available on the Fund's website at
www.ftportfolios.com. A description of the policies and procedures with
respect to the disclosure of the Fund's portfolio securities is included in the
Fund's SAI, which is also available on the Fund's website.
Risks
of Investing in the Fund
Risk
is inherent in all investing. Investing in the Fund involves risk, including the
risk that you may lose all or part of your investment. There can
be no assurance that the Fund will meet its stated objective. Before you invest,
you should consider the following disclosure pertaining to the Principal Risks
set forth above as well as additional Non-Principal Risks set forth below in
this prospectus. The order of the below risk factors does not indicate the
significance of any particular risk factor.
Principal
Risks
AUTHORIZED
PARTICIPANT CONCENTRATION RISK. Only an authorized participant may
engage in creation or redemption transactions directly with the Fund. A limited
number of institutions act as authorized participants for the Fund. However,
participants are not obligated to make a market in the Fund’s shares or submit
purchase and redemption orders for creation units. To the extent that these
institutions exit the business, reduce their role or are unable to proceed with
creation and/or redemption orders and no other authorized participant steps
forward to create or redeem, the Fund’s shares may trade at a premium or
discount to the Fund’s net asset value and possibly face delisting and the
bid/ask spread on the Fund’s shares may widen.
BIOTECHNOLOGY
COMPANIES RISK. The Fund
may invest in biotechnology companies. Biotechnology companies invest heavily in
research and development which may not necessarily lead to commercially
successful products. Biotechnology companies are subject to increased
governmental regulation which may delay or inhibit the release of new products.
The effects of high development costs and increased regulation may be
exacerbated by a company’s inability to raise prices to cover costs because of
managed care pressure or price controls. Many biotechnology companies are
dependent upon their ability to use and enforce intellectual property rights and
patents. Any impairment of such rights may have adverse financial consequences.
Biotechnology stocks, especially those issued by smaller, less-seasoned
companies, tend to be more volatile than the overall market. Biotechnology
companies can also be significantly affected by technological change and
obsolescence, product liability lawsuits and consequential high insurance
costs.
CURRENCY
RISK. The Fund may
invest in securities denominated in a non-U.S. currency. Changes in currency
exchange rates affect the value of investments denominated in a foreign
currency, the value of dividends and interest earned from such securities and
gains and losses realized on the sale of such securities. The Fund’s net asset
value could decline if a currency to which the the Fund has exposure depreciates
against the U.S. dollar or if there are delays or limits on repatriation of such
currency. Currency exchange rates can be very volatile and can change quickly
and unpredictably. Changes in currency exchange rates may affect the Fund's net
asset value, the value of dividends and interest earned, and gains and losses
realized on the sale of securities. An increase in the strength of the U.S.
dollar relative to other currencies may cause the value of the Fund to decline.
Certain non-U.S. currencies may be particularly volatile, and non-U.S.
governments may intervene in the currency markets, causing a decline in value or
liquidity in the Fund's non-U.S. holdings whose value is tied to the affected
non-U.S. currency. Additionally, the prices of non-U.S. securities that are
traded in U.S. dollars are often indirectly influenced by currency
fluctuations.
CYBER
SECURITY RISK. The Fund is
susceptible to operational risks through breaches in cyber security. A breach in
cyber security refers to both intentional and unintentional events that may
cause the Fund to lose proprietary information, suffer data corruption or lose
operational capacity. Such events could cause the Fund to incur regulatory
penalties, reputational damage, additional compliance costs associated with
corrective measures and/or financial loss. These risks typically are not covered
by insurance. In general, cyber incidents can result from deliberate attacks or
unintentional events. Cyber incidents include, but are not limited to, gaining
unauthorized access to digital systems (e.g., through “hacking”
or malicious software coding) for purposes of misappropriating assets or
sensitive information, corrupting data or causing operational disruption. Cyber
attacks may also be carried out in a manner that does not require gaining
unauthorized access, such as causing denial-of-service attacks on websites
(i.e., efforts to make
network services unavailable to intended users). Cyber security failures by or
breaches of the systems of the Advisor, distributor and other service providers
(including, but not limited to,
9
sub-advisors,
index providers, fund accountants, custodians, transfer agents and
administrators), market makers, authorized participants or the
issuers of securities in which the Fund invests, have the ability to cause
disruptions and impact business operations, potentially resulting in: financial
losses; interference with the Fund’s ability to calculate its net asset value;
disclosure of confidential trading information; impediments to trading;
submission of erroneous trades or erroneous creation or redemption orders; the
inability of the Fund or its service providers to transact business; violations
of applicable privacy and other laws; regulatory fines penalties, reputational
damage, reimbursement or other compensation costs; or additional compliance
costs. Substantial costs may be incurred by the Fund in order to resolve or
prevent cyber incidents in the future. While the Fund has established business
continuity plans in the event of, and risk management systems to prevent, such
cyber attacks, there are inherent limitations in such plans and systems,
including the possibility that certain risks have not been identified and that
prevention and remediation efforts will not be successful. Furthermore, the Fund
cannot control the cyber security plans and systems put in place by service
providers to the Fund, issuers in which the Fund invests, market makers or
authorized participants. However, there is no guarantee that such efforts will
succeed, and the Fund and its shareholders could be negatively impacted as a
result.
DEPOSITARY
RECEIPTS RISK. Depositary receipts are securities
issued by a bank or trust company reflecting ownership of underlying securities
issued by a foreign company. An investment in depositary receipts involves
further risks due to certain unique features. Any distributions paid to the
holders of depositary receipts are usually subject to a fee charged by the
depositary. Holders of depositary receipts may have limited voting rights
pursuant to a deposit agreement between the underlying issuer and the
depositary. In certain cases, the depositary will vote the shares deposited with
it as directed by the underlying issuer’s board of directors. Furthermore,
investment restrictions in certain countries may adversely impact the value of
depositary receipts because such restrictions may limit the ability to convert
shares into depositary receipts and vice versa. Such restrictions may cause
shares of the underlying issuer to trade at a discount or premium to the market
price of the depositary receipt. Moreover, if depositary receipts are converted
into shares, the laws in certain countries may limit the ability of a
non-resident to trade the shares and to reconvert the shares to depositary
receipts. Depositary receipts may be “sponsored” or “unsponsored.” Sponsored
depositary receipts are established jointly by a depositary and the underlying
issuer, whereas unsponsored depositary receipts may be established by a
depositary without participation by the underlying issuer. Holders of
unsponsored depositary receipts generally bear all the costs associated with
establishing the unsponsored depositary receipts. In addition, the issuers of
the securities underlying unsponsored depositary receipts are not obligated to
disclose material information in the U.S. and, therefore, there may be less
information available regarding such issuers and there may not be a correlation
between such information and the market value of the depositary
receipts.
EQUITY
SECURITIES RISK. The value of the
Fund’s shares will fluctuate with changes in the value of the equity securities
in which it invests.
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 equity market, such as market volatility, or when political or
economic events affecting the issuers occur. 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. Additionally, holders of an issuer's
common stock may be subject to greater risks than holders of its preferred stock
and debt securities because common stockholders' claims are subordinated to
those of holders of preferred stocks and debt securities upon the bankruptcy of
an issuer.
INDEX
OR MODEL CONSTITUENT RISK. The Fund may be a constituent of one
or more indices or ETF models. As a result, the Fund may be included in one or
more index-tracking ETFs or mutual funds. Being a component security of such a
vehicle could greatly affect the trading activity involving the Fund's shares,
the size of the Fund and the market volatility of the Fund’s shares. 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, the Fund’s net asset value could be negatively impacted and the Fund’s
market price may be below the Fund’s net asset value during certain periods. In
addition, index rebalances may potentially result in increased trading activity.
To the extent buying or selling activity increases, the Fund can be exposed to
increased brokerage costs and adverse tax consequences and the market price of
the Fund can be negatively affected.
INFORMATION
TECHNOLOGY COMPANIES RISK. The Fund invests
significantly in information technology companies. Information technology
companies produce and provide hardware, software and information technology
systems and services. Information technology companies are generally subject to
the following risks: rapidly changing technologies and existing product
obsolescence; short product life cycles; fierce competition; aggressive pricing
and reduced profit margins; the loss of patent, copyright and trademark
protections; cyclical market patterns; evolving industry standards; and frequent
new product introductions and new market entrants. Information technology
companies may be smaller and less experienced companies, with limited product
lines, markets or financial resources and fewer experienced management or
marketing
10
personnel.
Information technology company stocks, particularly those involved with the
internet, have experienced extreme price and volume
fluctuations that are often unrelated to their operating performance. In
addition, information technology companies are particularly vulnerable to
federal, state and local government regulation, and competition and
consolidation, both domestically and internationally, including competition from
foreign competitors with lower production costs. Information technology
companies also face competition for services of qualified personnel and heavily
rely on patents and intellectual property rights and the ability to enforce such
rights to maintain a competitive advantage.
INNOVATIVE
COMPANIES RISK. The Fund invests in
companies that the Advisor believes offer exposure to emerging opportunities
across areas of innovation. However, companies that the Advisor believes are
capitalizing on disruptive innovation and developing technologies to displace
older technologies or create new markets may not in fact do so. Companies that
initially develop a novel technology may not be able to capitalize on the
technology. Companies that develop disruptive technologies may face political or
legal attacks from competitors, industry groups or local and national
governments. These companies may also be exposed to risks applicable to sectors
other than the disruptive innovation theme for which they are chosen, and the
securities issued by these companies may underperform the securities of other
companies that are primarily focused on a particular theme. The Fund may invest
in a company that does not currently derive any revenue from disruptive
innovations or technologies, and there is no assurance that a company will
derive any revenue from disruptive innovations or technologies in the future. A
disruptive innovation or technology may constitute a small portion of a
company’s overall business. As a result, the success of a disruptive innovation
or technology may not affect the value of the equity securities issued by the
company.
LARGE
CAPITALIZATION COMPANIES RISK. Large capitalization
companies may grow at a slower rate and be less able to adapt to changing market
conditions than smaller capitalization companies. Thus, the return on investment
in securities of large capitalization companies may be less than the return on
investment in securities of small and/or mid capitalization companies. The
performance of large capitalization companies also tends to trail the overall
market during different market cycles.
MANAGEMENT
RISK.
The Fund is subject to management risk because it is an actively managed
portfolio. In managing the Fund’s investment portfolio, the portfolio managers
will apply investment techniques and risk analyses that may not produce the
desired result. There can be no guarantee that the Fund will meet its investment
objective(s), meet relevant benchmarks or perform as well as other funds with
similar objectives.
MARKET
MAKER RISK. The Fund faces
numerous market trading risks, including the potential lack of an active market
for Fund shares due to a limited number of market markers. Decisions by market
makers or authorized participants to reduce their role or step away from these
activities in times of market stress could inhibit the effectiveness of the
arbitrage process in maintaining the relationship between the underlying values
of the Fund’s portfolio securities and the Fund’s market price. The Fund may
rely on a small number of third-party market makers to provide a market for the
purchase and sale of shares. Any trading halt or other problem relating to the
trading activity of these market makers could result in a dramatic change in the
spread between the Fund’s net asset value and the price at which the Fund’s
shares are trading on the Exchange, which could result in a decrease in value of
the Fund’s shares. This reduced effectiveness could result in Fund shares
trading at a discount to net asset value and also in greater than normal
intraday bid-ask spreads for Fund shares.
MARKET
RISK. Market risk is the
risk that a particular security, or shares of the Fund in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates and perceived trends in securities prices. Shares of the Fund could
decline in value or underperform other investments due to short-term market
movements or any longer periods during more prolonged market downturns. 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 the Fund and its
investments. For example, the coronavirus disease 2019 (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, negatively
impacting global growth prospects. 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. Additionally, 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. These events also adversely affect the prices and liquidity
of the 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 the Fund’s shares and result in
increased market volatility. During any such events, the Fund’s shares may trade
at increased premiums or discounts to their net asset value and the bid/ask
spread on the Fund’s shares may widen.
11
NON-DIVERSIFICATION
RISK. As
a “non-diversified” fund, the Fund may hold a smaller number of portfolio
securities than many other funds and may be more sensitive to any single
economic, business, political or regulatory occurrence than a diversified fund.
To the extent the Fund invests in a relatively small number of issuers due to
the high percentage of the Fund’s assets invested in that security, a decline in
the market value of a particular security held by the Fund may affect its value
more than if it invested in a larger number of issuers. The value of the Fund’s
shares may be more volatile than the values of shares of more diversified
funds.
NON-U.S.
SECURITIES RISK. An investment in
securities of non-U.S. companies involves risks not associated with domestic
issuers. Investment in non-U.S. securities may involve higher costs than
investment in U.S. securities, including higher transaction and custody costs as
well as the imposition of additional taxes by non-U.S. governments. Non-U.S.
investments may also involve risks associated with the level of currency
exchange rates, less complete financial information about the issuers, less
market liquidity, more market volatility and political instability. Future
political and economic developments, the possible imposition of withholding
taxes on dividend income, the possible seizure or nationalization of non-U.S.
holdings, the imposition of sanctions by foreign governments, the possible
establishment of capital controls, exchange controls or freezes on the
convertibility of currency or the adoption of other governmental restrictions
might adversely affect an investment in non-U.S. securities. Additionally,
non-U.S. issuers may be subject to less stringent regulation, and to different
accounting, auditing and recordkeeping requirements. The U.S. and non-U.S.
markets often rise and fall at different times or by different amounts due to
economic or other regional developments particular to a given country or
region.
OPERATIONAL
RISK.
The Fund is subject to risks arising from various operational factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. The 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
the Fund’s ability to meet its investment objective. Although the Fund and the
Fund’s investment advisor seek to reduce these operational risks through
controls and procedures, there is no way to completely protect against such
risks.
PREMIUM/DISCOUNT
RISK. The market price
of the Fund’s shares will generally fluctuate in accordance with changes in the
Fund’s net asset value as well as the relative supply of and demand for shares
on the Exchange. First Trust cannot predict whether shares will trade below, at
or above their net asset value because the shares trade on the Exchange at
market prices and not at net asset value. Price differences may be due, in large
part, to the fact that supply and demand forces at work in the secondary trading
market for shares will be closely related, but not identical, to the same forces
influencing the prices of the holdings of the Fund trading individually or in
the aggregate at any point in time. However, given that shares can only be
purchased and redeemed in Creation Units, and only to and from broker-dealers
and large institutional investors that have entered into participation
agreements (unlike shares of closed-end funds, which frequently trade at
appreciable discounts from, and sometimes at premiums to, their net asset
value), First Trust believes that large discounts or premiums to the net asset
value of shares should not be sustained absent disruptions to the creation and
redemption mechanism, extreme market volatility or potential lack of authorized
participants. During stressed market conditions, the market for the Fund’s
shares may become less liquid in response to deteriorating liquidity in the
market for the Fund’s underlying portfolio holdings, which could in turn lead to
differences between the market price of the Fund’s shares and their net asset
value and the bid/ask spread on the Fund’s shares may widen.
SIGNIFICANT
EXPOSURE RISK. To the extent that
the Fund invests a significant percentage of its assets in a single asset class
or industry or sector, an adverse economic, business or political development
that affected a particular asset class, region or industry may affect the value
of the Fund’s investments more than if the Fund were more broadly diversified. A
significant exposure makes the Fund more susceptible to any single occurrence
and may subject the Fund to greater volatility and market risk than a fund that
is more broadly diversified.
SMALLER
COMPANIES RISK. The stock price of
small and/or mid capitalization companies may be more volatile than those of
larger companies and therefore the Fund’s share price may be more volatile than
those of funds that invest a larger percentage of their assets in stocks issued
by large capitalization companies. Stock prices of small and/or mid
capitalization companies are also generally more vulnerable than those of large
capitalization companies to adverse business and economic developments.
Securities of small and/or mid capitalization companies may be thinly traded,
making it difficult for the Fund to buy and sell them. In addition, small and/or
mid capitalization companies are typically less financially stable than larger,
more established companies and may reinvest a high proportion of their earnings
in their business and may not pay dividends. Small and/or mid capitalization
companies may also depend on a small number of essential personnel who may also
be less experienced than the management of larger companies, making these
companies more vulnerable to experiencing adverse
12
effects
due to the loss or inexperience of personnel. Small and/or mid capitalization
companies also normally have less diverse product lines than
those of large capitalization companies and are more susceptible to adverse
developments concerning their products.
TRADING
ISSUES RISK. Trading in Fund
shares on the Exchange may be halted due to market conditions or for reasons
that, in the view of the Exchange, make trading in shares inadvisable. In
addition, trading in Fund shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged. The Fund may have difficulty maintaining its listing on the
Exchange in the event the Fund’s assets are small, the Fund does not have enough
shareholders, or if the Fund is unable to proceed with creation and/or
redemption orders.
Non-Principal
Risks
ASIA
RISK. The Fund may
invest in the securities of Asian issuers. Such investments subject the Fund to
certain risks associated specifically with investments in securities of Asian
issuers, including distinct legal, regulatory, political and economic risks.
Many Asian economies have experienced rapid growth and industrialization, and
there is no assurance that this growth rate will be maintained. Some Asian
economies are highly dependent on trade, and economic conditions in other
countries within and outside Asia can impact these economies. Certain of these
economies may be adversely affected by trade or policy disputes with its major
trade partners. There is also a high concentration of market capitalization and
trading volume in a small number of issuers representing a limited number of
industries, as well as a high concentration of investors and financial
intermediaries. Certain Asian countries have experienced and may in the future
experience expropriation and nationalization of assets, confiscatory taxation,
currency manipulation, political instability, armed conflict and social
instability as a result of religious, ethnic, socio-economic and/or political
unrest. In particular, escalated tensions involving North Korea and any outbreak
of hostilities involving North Korea could have a severe adverse effect on Asian
economies. Governments of certain Asian countries have exercised, and continue
to exercise, substantial influence over many aspects of the private sector. In
certain cases, the government owns or controls many companies, including the
largest in the country. Accordingly, government actions could have a significant
effect on the issuers of the Fund’s securities or on economic conditions
generally. Issuers in Asia may not be subject to the same accounting, auditing
and financial reporting standards as U.S. companies and if their securities are
not listed on a U.S. exchange, they may not be subject to the same corporate
governance standards as U.S. issuers. In addition, satisfactory custodial
services for investment securities may not be available in some Asia countries,
which may result in the Fund incurring additional costs and delays in providing
transportation and custody services for such securities outside such countries.
Recent developments in relations between the U.S. and China have heightened
concerns of increased tariffs and restrictions on trade between the two
countries. An increase in tariffs or trade restrictions, or even the threat of
such developments, could lead to a significant reduction in international trade,
which could have a negative impact on the economy of Asian countries and a
commensurately negative impact on the Fund.
BORROWING
AND LEVERAGE RISK. If
the Fund borrows money, it must pay interest and other fees, which may reduce
the Fund’s returns. Any such borrowings are intended to be temporary. However,
under certain market conditions, including periods of decreased liquidity, such
borrowings might be outstanding for longer periods of time. As prescribed by the
1940 Act, the Fund will be required to maintain specified asset coverage of at
least 300% with respect to any bank borrowing immediately following such
borrowing and at all times thereafter. The Fund may be required to dispose of
assets on unfavorable terms if market fluctuations or other factors reduce the
Fund’s asset coverage to less than the prescribed amount.
CASH
TRANSACTIONS RISK. The Fund may, under
certain circumstances, effect a portion of creations and redemptions for cash,
rather than in-kind securities. As a result, an investment in the Fund may be
less tax-efficient than an investment in an ETF that effects its creations and
redemptions only in-kind. ETFs are able to make in-kind redemptions and avoid
being taxed on gains on the distributed portfolio securities at the fund level.
A Fund that effects redemptions for cash may be required to sell portfolio
securities in order to obtain the cash needed to distribute redemption proceeds.
Any recognized gain on these sales by the Fund will generally cause the Fund to
recognize a gain it might not otherwise have recognized, or to recognize such
gain sooner than would otherwise be required if it were to distribute portfolio
securities only in-kind. The Fund intends to distribute these gains to
shareholders to avoid being taxed on this gain at the fund level and otherwise
comply with the special tax rules that apply to it. This strategy may cause
shareholders to be subject to tax on gains they would not otherwise be subject
to, or at an earlier date than if they had made an investment in a different
ETF. Moreover, cash transactions may have to be carried out over several days if
the securities market is relatively illiquid and may involve considerable
brokerage fees and taxes. These brokerage fees and taxes, which will be higher
than if the Fund sold and redeemed its shares entirely in-kind, will be passed
on to those purchasing and redeeming Creation Units in the form of creation and
redemption transaction
13
fees.
In addition, these factors may result in wider spreads between the bid and the
offered prices of the Fund’s shares than for ETFs that
distribute portfolio securities in-kind.
DEPENDENCE
ON KEY PERSONNEL RISK. The Advisor is
dependent upon the experience and expertise of the Fund's portfolio managers in
providing advisory services with respect to the Fund's investments. If the
Advisor were to lose the services of any of these portfolio managers, its
ability to service the Fund could be adversely affected. There can be no
assurance that a suitable replacement could be found for any of the portfolio
managers in the event of their death, resignation, retirement or inability to
act on behalf of the Advisor.
EMERGING
MARKETS RISK. Investments in
securities issued by governments and companies operating in emerging market
countries involve additional risks relating to political, economic, or
regulatory conditions not associated with investments in securities and
instruments issued by U.S. companies or by companies operating in other
developed market countries. This is due to, among other things, the potential
for greater market volatility, lower trading volume, a lack of liquidity,
potential for market manipulation, higher levels of inflation, political and
economic instability, greater risk of a market shutdown and more governmental
limitations on foreign investments in emerging market countries than are
typically found in more developed market countries. Moreover, emerging market
countries often have less uniformity in accounting and reporting requirements,
unsettled securities laws, less reliable securities valuations and greater risks
associated with custody of securities than developed markets. In addition, the
Public Company Accounting Oversight Board, which regulates auditors of U.S.
public companies, is unable to inspect audit work papers in certain emerging
market countries. Emerging market countries often have greater risk of capital
controls through such measures as taxes or interest rate control than developed
markets. Certain emerging market countries may also lack the infrastructure
necessary to attract large amounts of foreign trade and investment. Local
securities markets in emerging market countries may trade a small number of
securities and may be unable to respond effectively to increases in trading
volume, potentially making prompt liquidation of holdings difficult or
impossible. Settlement procedures in emerging market countries are frequently
less developed and reliable than those in the U.S. and other developed market
countries. In addition, significant delays may occur in registering the transfer
of securities. Settlement or registration problems may make it more difficult
for the Fund to value its portfolio securities and could cause the the Fund to
miss attractive investment opportunities. Investing in emerging market countries
involves a higher risk of expropriation, nationalization, confiscation of assets
and property or the imposition of restrictions on foreign investments and on
repatriation of capital invested by certain emerging market countries. Enforcing
legal rights may be made difficult, costly and slow in emerging markets as there
may be additional problems enforcing claims against non-U.S. governments. As
such, the rights and remedies associated with emerging market investment
securities may be different than those available for investments in more
developed markets. For example, it may be more difficult for shareholders to
bring derivative litigation or for U.S. regulators to bring enforcement actions
against issuers in emerging markets.
In
addition, due to the differences in regulatory, accounting, audit and financial
recordkeeping standards, including financial disclosures, less
information about emerging market companies is publicly available and
information that is available may be unreliable or outdated. This may affect the
Index Provider’s ability to compute and construct the Index and may further
impede the Advisor’s ability to accurately evaluate the index data provided.
This potential for error in index construction and index data could affect the
overall performance of the Fund.
EUROPE
RISK. The Fund may
invest in the securities of European issuers. Therefore, in addition to the
risks associated with investments in non-U.S. securities generally, the Fund is
subject to certain risks associated specifically with investments in securities
of European issuers. Political or economic disruptions in European countries,
even in countries in which the Fund is not invested, may adversely affect
security values and thus the Fund’s holdings. A significant number of countries
in Europe are member states in the EU, and the member states no longer control
their own monetary policies by directing independent interest rates for their
currencies. In these member states, the authority to direct monetary policies,
including money supply and official interest rates for the Euro, is exercised by
the European Central Bank. In a 2016 referendum, the United Kingdom elected to
withdraw from the EU. After years of negotiations between the United Kingdom and
the EU, a withdrawal agreement was reached whereby the United Kingdom formally
left the EU. As the second largest economy among EU members, the implications of
the United Kingdom’s withdrawal are difficult to gauge and cannot be fully
known. Trade between the United Kingdom and the EU is highly integrated through
supply chains and trade in services, as well as through multinational companies.
The United Kingdom’s departure may negatively impact the EU and Europe as a
whole by causing volatility within the EU, triggering prolonged economic
downturns in certain European countries or sparking additional member states to
contemplate departing the EU (thereby perpetuating political instability in the
region).
FAILURE
TO QUALIFY AS A REGULATED INVESTMENT COMPANY RISK. If, in any year, the
Fund fails to qualify as a regulated investment company under the applicable tax
laws, the Fund would be taxed as an ordinary corporation. In such circumstances,
14
the
Fund could be required to recognize unrealized gains, pay substantial taxes and
interest and make substantial distributions before requalifying
as a regulated investment company that is accorded special tax
treatment.
IPO
RISK.
The Fund may invest in shares recently issued by companies undergoing an IPO.
Shares issued by such companies are often subject to extreme price volatility
and speculative trading due to factors such as the absence of a prior public
market, unseasoned trading, the small number of shares available for trading and
limited information about the issuer’s business model, quality of management,
earnings growth potential and other criteria used to evaluate its investment
prospects. Such stocks may have exhibited price appreciation in connection with
the IPO that is not sustained, and it is not uncommon for stocks to decline in
value in the period following the IPO. In addition, the market for IPO shares
can be speculative and/or inactive for extended periods of time. The limited
number of shares available for trading in some IPOs may make it more difficult
for the Fund to buy or sell significant amounts of shares without an unfavorable
impact on prevailing prices. Investors in IPO shares can be affected by
substantial dilution in the value of their shares, by sales of additional shares
and by concentration of control in existing management and principal
shareholders.
ISSUER
SPECIFIC CHANGES RISK. The value of an
individual security or particular type of security can be more volatile than the
market as a whole and can perform differently from the value of the market as a
whole.
LATIN
AMERICA RISK. The Fund
may invest in Latin American issuers. The economies of Latin American countries
have in the past experienced considerable difficulties, including high inflation
rates, high interest rates, high unemployment, government overspending and
political instability. International economic conditions, particularly those in
the United States, Europe and Asia, as well as world prices for oil and other
commodities may also influence the development of Latin American economies. Many
Latin American countries are highly reliant on the exportation of commodities
and their economies may be significantly impacted by fluctuations in commodity
prices and the global demand for certain commodities. In the past, certain Latin
American economies have been influenced by changing supply and demand for a
particular currency, monetary policies of governments (including exchange
control programs, restrictions on local exchanges or markets and limitations on
foreign investment in a country or on investment by residents of a country in
other countries), and currency devaluations and revaluations. Other Latin
American investment risks may include inadequate investor protection, less
developed regulatory, accounting, auditing and financial standards, unfavorable
changes in laws or regulations, natural disasters, corruption and military
activity. The governments of many Latin American countries may also exercise
substantial influence over many aspects of the private sector, and any such
exercise could have a significant effect on companies in which the Fund invests.
Securities of companies in Latin America may also be subject to significant
price volatility.
LEGISLATION/LITIGATION
RISK.
From time to time, various legislative initiatives are proposed in the United
States and abroad, which may have a negative impact on certain companies in
which the Fund invests. In addition, litigation regarding any of the issuers of
the securities owned by the Fund, or industries represented by these issuers,
may negatively impact the value of the securities. Such legislation or
litigation may cause the Fund to lose value or may result in higher portfolio
turnover if the Advisor determines to sell such a holding.
REIT
RISK. The Fund invests in
REITs. REITs typically own and operate income-producing real estate, such as
residential or commercial buildings, or real-estate related assets, including
mortgages. As a result, investments in REITs are subject to the risks associated
with investing in real estate, which may include, but are not limited to:
fluctuations in the value of underlying properties; defaults by borrowers or
tenants; market saturation; changes in general and local operating expenses; and
other economic, political or regulatory occurrences affecting companies in the
real estate sector. Additionally, investing in REITs involves certain other
risks related to their structure and focus, which include, but are not limited
to, dependency upon management skills, limited diversification, the risks of
locating and managing financing for projects, heavy cash flow dependency,
possible default by borrowers, the costs and potential losses of
self-liquidation of one or more holdings, the risk of a possible lack of
mortgage funds and associated interest rate risks, overbuilding, property
vacancies, increases in property taxes and operating expenses, changes in zoning
laws, losses due to environmental damages, changes in neighborhood values and
appeal to purchasers, the possibility of failing to maintain exemptions from
registration under the 1940 Act, failure to satisfy the requirements of the
Internal Revenue Code of 1986 for maintaining REIT status and, in many cases,
relatively small market capitalization, which may result in less market
liquidity and greater price volatility for a REIT’s shares. REITs are also
subject to the risk that the real estate market may experience an economic
downturn generally, which may have a material effect on the real estate in which
the REITs invest and their underlying portfolio securities.
RESTRICTED
SECURITIES RISK. Restricted
securities are securities that cannot be offered for public resale unless
registered under the applicable securities laws or that have a contractual
restriction that prohibits or limits their resale. Restricted securities include
private placement securities that have not been registered under the applicable
securities laws, such as Rule 144A securities, and securities of U.S. and
non-U.S. issuers that are issued pursuant to Regulation S. Private placements
are generally
15
subject
to strict restrictions on resale. Restricted securities may be illiquid as they
generally are not listed on an exchange and may have no active
trading market. The Fund may be unable to sell a restricted security on short
notice or may be able to sell them only at a price below current value. It may
be more difficult to determine a market value for a restricted security. Also,
the Fund may get limited information about the issuer of a restricted security,
so it may be less able to predict a loss. In addition, if Fund management
receives material non-public information about the issuer, the Fund may as a
result be unable to sell the securities. Certain restricted securities may
involve a high degree of business and financial risk and may result in
substantial losses.
SECURITIES
LENDING RISK. The Fund may engage
in securities lending. Securities lending involves exposure to certain risks,
including counterparty risk, collateral risk and operational risk. Counterparty
risk is the risk that the borrower may fail to return the securities in a timely
manner or at all. As a result, to the extent the Fund engages in securities
lending, in such transactions it may suffer a loss and experience delays in
recovering the lent securities. Any delay in the return of securities on loan
may restrict the ability of the Fund to meet delivery or payment obligations.
Collateral risk is the risk that the collateral received may be realized at a
value lower than the value of the securities lent, whether due to inaccurate
pricing of the collateral, adverse market movements in the value of the
collateral, intra-day increases in the value of the securities lent, a
deterioration in the credit rating of the collateral issuer, or the illiquidity
of the market in which the collateral is traded. Securities lending also entails
operational risks, such as settlement failures or delays in the settlement of
instructions. Such failures or delays may restrict the ability of the Fund to
meet delivery or payment obligations. Lastly, securities lending activities may
result in adverse tax consequences for the Fund and its shareholders. For
instance, substitute payments for dividends received by the Fund for securities
loaned out by the Fund will not be considered qualified dividend income. The
Fund could lose money if its short-term investment of the collateral declines in
value over the period of the loan.
Fund
Organization
The Fund is a series
of the Trust, an investment company registered under the 1940 Act. The Fund is
treated as a separate fund with its own investment
objectives and policies. The Trust is organized as a Massachusetts business
trust. The Board is responsible for the overall management and direction of the
Trust. The Board elects the Trust’s officers and approves all significant
agreements, including those with the Advisor, distributor, custodian and fund
administrative and accounting agent.
Management
of the Fund
First
Trust Advisors L.P., 120 East Liberty Drive, Wheaton, Illinois 60187, is the
investment advisor to the Fund. In this capacity, First Trust is
responsible for the selection and ongoing monitoring of the securities in the
Fund's portfolio and certain other services necessary for the management of the
Fund.
First Trust is a
limited partnership with one limited partner, Grace Partners of DuPage L.P., and
one general partner, The Charger Corporation. Grace Partners of DuPage
L.P. is a limited partnership with one general partner, The Charger Corporation,
and a number of limited partners. The Charger Corporation is an Illinois
corporation controlled by James A. Bowen, the Chief Executive Officer of First
Trust. First Trust discharges its responsibilities subject to the policies of
the Fund.
First Trust serves
as advisor or sub-advisor for 9 mutual fund portfolios, 10
exchange-traded funds consisting of 199 series and 15 closed-end funds. It is
also the portfolio supervisor of certain unit investment trusts sponsored by
First Trust Portfolios L.P. (“FTP”), an affiliate of First Trust, 120
East Liberty Drive, Wheaton, Illinois 60187. FTP specializes in the
underwriting, trading and distribution of unit investment trusts and other
securities. FTP is the principal underwriter of the shares of the
Fund.
Bob Hensley, David
McGarel, Chris Peterson and Jared Wollen are the Fund’s portfolio managers and
are jointly and
primarily responsible for the day-to-day management of the Fund’s investment
portfolio.
•
Mr. Hensley is a
member of the Strategy Research group. He joined FTA in March 2005. Mr.
Hensley’s duties include developing and implementing quantitative equity and
asset allocation strategies, as well as conducting equity research. Mr. Hensley
received bachelor’s degrees in Economics and Accounting from the University of
Oklahoma in 1997 and his M.S. in Finance from the DePaul University’s Kellstadt
School of Business in 2004. He has over 19 years of financial services industry
experience and is a recipient of the Chartered Financial Analyst
designation.
•
Mr. McGarel is the
Chief Investment Officer, Chief Operating Officer and a Managing Director of
First Trust and FTP. As First Trust’s Chief Investment Officer, Mr. McGarel
consults with the other members of the Investment
16
Committee
on market conditions and First Trust’s general investment philosophy. Mr.
McGarel was a Senior Vice President of
First Trust and FTP from January 2004 to July 2012. Mr. McGarel is a recipient
of the Chartered Financial Analyst designation.
•
Mr. Peterson is a
Senior Vice President and head of First Trust’s Strategy Research group. He
joined First Trust in January of 2000. Mr. Peterson is responsible for
developing and implementing quantitative equity investment strategies. Mr.
Peterson received his B.S. in Finance from Bradley University in 1997 and his
M.B.A. from the University of Chicago Booth School of Business in 2005. He has
over 20 years of financial services industry experience and is a recipient of
the Chartered Financial Analyst designation.
•
Mr. Wollen is a
fundamental equity analyst with First Trust Portfolios. Mr. Wollen joined First
Trust in 2009 in the Tax department before moving to the Equity Research group
in 2013. He is responsible for fundamental equity research across various UIT
and SMA portfolios . Prior to First Trust, Mr. Wollen began his career within
the PricewaterhouseCoopers audit practice. Mr. Wollen received his Masters of
Accounting and Bachelor of Science in Accounting from The University of Kansas
in 2007 and 2006 respectively. He has over 12 years of financial services
industry experience and is a recipient of the Chartered Financial Analyst
designation.
For
additional information concerning First Trust, including a description of the
services provided to the Fund, see the Fund's SAI. Additional
information about the compensation of Investment Committee members, other
accounts managed by members of the Investment Committee and ownership by members
of the Investment Committee of shares of the Fund is provided in the
SAI.
Management
Fee
Pursuant
to an investment management agreement between First Trust and the Trust, on
behalf of the Fund (the “Investment
Management Agreement”), First Trust
manages the investment of the Fund's assets. First Trust is paid an annual
unitary management fee by the Fund equal to 0.75% of the Fund's average daily
net assets and is responsible for the Fund's expenses, including the cost of
transfer agency, custody, fund administration, legal, audit and other services,
but excluding fee payments under the Investment Management Agreement, interest,
taxes, acquired fund fees and expenses, if any, brokerage commissions and other
expenses connected with the execution of portfolio transactions, expenses
associated with short sales transactions, distribution and service fees payable
pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses.
Effective November
1, 2022, as approved by the Trust’s Board of Trustees, the management fee paid
to First Trust will be reduced at certain levels of Fund net
assets (“breakpoints”). See the Fund's Statement of
Additional Information for more information on the breakpoints.
A discussion
regarding the Board’s approval of the continuation of the Investment
Management Agreement is available in the Fund’s Annual Report to Shareholders
for the fiscal year ended August 31, 2022.
How
to Buy and Sell Shares
Most
investors buy and sell shares of the Fund in secondary market transactions
through brokers. Shares of the Fund are listed for trading on the
secondary market on one or more national securities exchanges. Shares can be
bought and sold throughout the trading day like other publicly traded shares.
There is no minimum investment when buying shares on the Exchange. Although
shares are generally purchased and sold in “round lots” of 100 shares, brokerage
firms typically permit investors to purchase or sell shares in smaller “odd
lots,” at no per-share price differential. When buying or selling shares through
a broker, investors should expect to pay brokerage commissions, investors may
receive less than the net asset value of the shares because shares are bought
and sold at market prices rather than at net asset value, and investors may pay
some or all of the bid-ask spread for each transaction (purchase or sale) of
Fund shares. Share prices are reported in dollars and cents per
share.
Under
normal circumstances, the Fund will pay out redemption proceeds to a redeeming
authorized participant within two days after the
authorized participant’s redemption request is received, in accordance with the
process set forth in the Fund’s SAI and in the agreement between the authorized
participant and the Fund’s distributor. However, the Fund reserves the right,
including under stressed market conditions, to take up to seven days after the
receipt of a redemption request to pay an authorized participant, all as
permitted by the 1940 Act. If the Fund has foreign investments in a country
where a local market holiday, or series of consecutive holidays, or the extended
delivery cycles for transferring foreign investments to redeeming authorized
participants prevents the Fund from delivering such foreign investments to an
authorized participant in response to a redemption request, the Fund may take up
to 15 days after the receipt of the redemption request to deliver such
investments to the authorized participant.
17
For purposes of the
1940 Act, the Fund is treated as a registered investment company,
and
the acquisition of
shares by other registered investment companies and companies relying on
Sections 3(c)(1) and 3(c)(7) of the 1940 Act is subject to the restrictions of
Section 12(d)(1) of the 1940 Act and the related rules and
interpretations.
Book
Entry
Shares
are held in book-entry form, which means that no share certificates are issued.
The Depository Trust Company (“DTC”) or its nominee is
the record owner of all outstanding shares of the Fund and is recognized as the
owner of all shares for all purposes.
Investors
owning shares are beneficial owners as shown on the records of DTC or its
participants. DTC serves as the securities depository for all
shares. Participants in DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and other institutions that directly or
indirectly maintain a custodial relationship with DTC. As a beneficial owner of
shares, you are not entitled to receive physical delivery of share certificates
or to have shares registered in your name, and you are not considered a
registered owner of shares. Therefore, to exercise any right as an owner of
shares, you must rely upon the procedures of DTC and its participants. These
procedures are the same as those that apply to any other stocks that you hold in
book-entry or “street name” form.
Share
Trading Prices
The
trading price of shares of the Fund on the secondary market is based on market
price and may differ from the Fund’s daily net asset value and
can be affected by market forces of supply and demand, economic conditions and
other factors.
Frequent
Purchases and Redemptions of the Fund's Shares
The Fund imposes no
restrictions on the frequency of purchases and redemptions (“market
timing”). In determining
not to approve a written, established policy, the Board evaluated the risks of
market timing activities by the Fund's shareholders. The Board considered that
the Fund's shares can only be purchased and redeemed directly from the Fund in
Creation Units by broker-dealers and large institutional investors that have
entered into participation agreements (i.e., authorized participants
(“APs”)) and that the vast majority of
trading in the Fund's shares occurs on the secondary market. Because the
secondary market trades do not involve the Fund directly, it is unlikely those
trades would cause many of the harmful effects of market timing, including
dilution, disruption of portfolio management, increases in the Fund's trading
costs and the realization of capital gains. With respect to trades directly with
the Fund, to the extent effected in-kind (i.e., for securities), those trades do
not cause any of the harmful effects that may result from frequent cash trades.
To the extent that the Fund may effect the purchase or redemption of Creation
Units in exchange wholly or partially for cash, the Board noted that such trades
could result in dilution to the Fund and increased transaction costs, which
could negatively impact the Fund's ability to achieve its investment objective.
However, the Board noted that direct trading by APs is critical to ensuring that
the shares trade at or close to net asset value. In addition, the Fund imposes
fixed and variable transaction fees on purchases and redemptions of Creation
Units to cover the custodial and other costs incurred by the Fund in effecting
trades. Finally, the Advisor monitors purchase and redemption orders from APs
for patterns of abusive trading and the Fund reserves the right to not accept
orders from APs that the Advisor has determined may be disruptive to the
management of the Fund.
Dividends,
Distributions and Taxes
Dividends
from net investment income, if any, are declared and paid quarterly by the Fund.
The Fund distributes its net realized capital gains, if
any, to shareholders at least annually.
Distributions
in cash may be reinvested automatically in additional whole shares only if the
broker through whom you purchased shares makes such
option available. Such shares will generally be reinvested by the broker based
upon the market price of those shares and investors may be subject to customary
brokerage commissions charged by the broker.
Federal
Tax Matters
This
section summarizes some of the main U.S. federal income tax consequences of
owning shares of the Fund. This section is current as of the
date of this prospectus. Tax laws and interpretations change frequently, and
these summaries do not describe all of the tax consequences to all taxpayers.
For example, these summaries generally do not describe your situation if you are
a corporation, a non-U.S. person, a broker-dealer, or other investor with
special circumstances. In addition, this section does not describe your state,
local or non-U.S. tax consequences.
18
This federal income
tax summary is based in part on the advice of counsel to the Fund. The Internal
Revenue Service ("IRS") could disagree with any conclusions
set forth in this section. The following disclosure may not be sufficient for
you to use for the purpose of avoiding penalties under federal tax
law.
As with any
investment, you should seek advice based on your individual circumstances from
your own tax advisor.
Fund
Status
The Fund intends to
continue to qualify as a “regulated investment company” (a “RIC”) under the federal tax laws. If the
Fund qualifies as a RIC and distributes its income as required by the tax law,
the Fund generally will not pay federal income taxes.
Distributions
The
Fund’s distributions are generally taxable. After the end of each year, you will
receive a tax statement that separates the distributions of the
Fund into two categories, ordinary income distributions and capital gain
dividends. Ordinary income distributions are generally taxed at your ordinary
tax rate, however, as further discussed below certain ordinary income
distributions received from the Fund may be taxed at the capital gains tax
rates.Some portion of the ordinary income distributions that are attributable to
dividends received by the Fund from shares in certain real estate investment
trusts may be designated by the Fund as eligible for a deduction for qualified
business income, provided certain holding period requirements are satisfied.
Generally, you will treat all capital gain dividends as long-term capital gains
regardless of how long you have owned your shares.
To
determine your actual tax liability for your capital gain dividends, you must
calculate your total net capital gain or loss for the tax year after
considering all of your other taxable transactions, as described below. In
addition, the Fund may make distributions that represent a return of capital for
tax purposes and thus will generally not be taxable to you; however, such
distributions may reduce your tax basis in your shares, which could result in
you having to pay higher taxes in the future when shares are sold, even if you
sell the shares at a loss from your original investment. A “return of capital”
is a return, in whole or in part, of the funds that you previously invested in
the Fund. A return of capital distribution should not be considered part of a
Fund’s dividend yield or total return of an investment in Fund shares. The tax
status of your distributions from the Fund is not affected by whether you
reinvest your distributions in additional shares or receive them in cash. The
income from the Fund that you must take into account for federal income tax
purposes is not reduced by amounts used to pay a deferred sales fee, if any. The
tax laws may require you to treat distributions made to you in January as if you
had received them on December 31 of the previous year.
Income
from the Fund may also be subject to a 3.8% “Medicare tax.” This tax generally
applies to your net investment income if your adjusted
gross income exceeds certain threshold amounts, which are $250,000 in the case
of married couples filing joint returns and $200,000 in the case of single
individuals.
Dividends
Received Deduction
A corporation that
owns shares generally will not be entitled to the dividends received deduction
with respect to many dividends received from the Fund because the
dividends received deduction is generally not available for distributions from
RICs. However, certain ordinary income dividends on shares that are attributable
to qualifying dividends received by the Fund from certain corporations may be
reported by the Fund as being eligible for the dividends received
deduction.
Capital
Gains and Losses and Certain Ordinary Income Dividends
If
you are an individual, the maximum marginal stated federal tax rate for net
capital gain is generally 20% (15% or 0% for taxpayers with
taxable incomes below certain thresholds). Some capital gains, including some
portion of your capital gain dividends may be taxed at a higher maximum stated
tax rate. Capital gain received from assets held for more than one year that is
considered “unrecaptured section 1250 gain” (which may be the case, for example,
with some capital gains attributable to equity interests in real estate
investment trusts that constitute interests in entities treated as real estate
investment trusts for federal income tax purposes) is taxed at a maximum
marginal stated federal tax rate of 25%. In the case of capital gain dividends,
the determination of which portion of the capital gain dividend, if any, is
subject to the 25% tax rate, will be made based on rules prescribed by the
United States Treasury. Capital gains may also be subject to the Medicare tax
described above.
Net
capital gain equals net long-term capital gain minus net short-term capital loss
for the taxable year. Capital gain or loss is long-term if the
holding period for the asset is more than one year and is short-term if the
holding period for the asset is one year or less. You must exclude the date you
purchase your shares to determine your holding period. However, if you receive a
capital gain dividend from the Fund and sell your share at a loss after holding
it for six months or less, the loss will be
19
recharacterized
as long-term capital loss to the extent of the capital gain dividend received.
The tax rates for capital gains realized from assets
held for one year or less are generally the same as for ordinary income. The
Internal Revenue Code of 1986, as amended, treats certain capital gains as
ordinary income in special situations.
An
election may be available to you to defer recognition of the gain attributable
to a capital gain dividend if you make certain qualifying
investments within a limited time. You should talk to your tax advisor about the
availability of this deferral election and its requirements.
Ordinary income
dividends received by an individual shareholder from a RIC such as the Fund are generally
taxed at the same rates that apply to net capital gain (as discussed above),
provided certain holding period requirements are satisfied and provided the
dividends are attributable to qualifying dividends received by the Fund
itself.Distributions with respect to shares in real estate investment trusts and
foreign corporations are qualifying dividends only in limited
circumstances.
The Fund will provide
notice to its shareholders of the amount of any distribution which may be taken
into account as a dividend which is eligible for the capital gains tax
rates.
Sale
of Shares
If you sell or
redeem your shares, you will generally recognize a taxable gain or loss. To
determine the amount of this gain or loss, you must subtract your tax
basis in your shares from the amount you receive in the transaction. Your tax
basis in your shares is generally equal to the cost of your shares, generally
including brokerage fees, if any. In some cases, however, you may have to adjust
your tax basis after you purchase your shares. An election may be available to
you to defer recognition of capital gain if you make certain qualifying
investments within a limited time. You should talk to your tax advisor about the
availability of this deferral election and its requirements.
Taxes
on Purchase and Redemption of Creation Units
If you exchange
securities for Creation Units, you will generally recognize a gain or a loss.
The gain or loss will be equal to the difference between the market value
of the Creation Units at the time and your aggregate basis in the securities
surrendered and the cash component paid. If you exchange Creation Units for
securities, you will generally recognize a gain or loss equal to the difference
between your basis in the Creation Units and the aggregate market value of the
securities received and the cash redemption amount. The IRS, however, may assert
that a loss realized upon an exchange of securities for Creation Units or
Creation Units for securities cannot be deducted currently under the rules
governing “wash sales,” or on the basis that there has been no significant
change in economic position.
Treatment
of Fund Expenses
Expenses incurred and
deducted by the Fund will generally not be treated as income taxable to
you.
Non-U.S.
Tax Credit
Because the Fund may
invest in non-U.S.
securities, the tax statement that you receive may include an item showing
non-U.S. taxes the Fund paid to other countries. In this case, dividends taxed
to you will include your share of the taxes the Fund paid to other countries.
You may be able to deduct or receive a tax credit for your share of these
taxes.
Non-U.S.
Investors
If you are a
non-U.S. investor (i.e., an investor other than a U.S.
citizen or resident or a U.S. corporation, partnership, estate or trust), you
should be aware that, generally, subject to applicable tax treaties,
distributions from the Fund will be characterized as dividends for federal
income tax purposes (other than dividends which the Fund properly reports as
capital gain dividends) and will be subject to U.S. federal income taxes,
including withholding taxes, subject to certain exceptions described below.
However, distributions received by a non-U.S. investor from the Fund that are
properly reported by the Fund as capital gain dividends may not be subject to
U.S. federal income taxes, including withholding taxes, provided that the Fund
makes certain elections and certain other conditions are met. Distributions from
the Fund that are properly reported by the Fund as an interest-related dividend
attributable to certain interest income received by the Fund or as a short-term
capital gain dividend attributable to certain net short-term capital gain income
received by the Fund may not be subject to U.S. federal income taxes, including
withholding taxes when received by certain non-U.S. investors, provided that the
Fund makes certain elections and certain other conditions are met. For tax years
after December 31, 2022, amounts paid to or recognized by a non-U.S. affiliate
that are excluded from tax under the portfolio interest, capital gain dividends,
short-term capital gains or tax-exempt interest dividend exceptions or
applicable treaties, may be taken into consideration in determining whether a
corporation is an “applicable corporation” subject to a 15% minimum tax on
adjusted financial statement income.
20
Distributions
may be subject to a U.S. withholding tax of 30% in the case of distributions to
(i) certain non-U.S. financial institutions that
have not entered into an agreement with the U.S. Treasury to collect and
disclose certain information and are not resident in a jurisdiction that has
entered into such an agreement with the U.S. Treasury and (ii) certain other
non-U.S. entities that do not provide certain certifications and information
about the entity’s U.S. owners. This withholding tax is also currently scheduled
to apply to the gross proceeds from the disposition of securities that produce
U.S. source interest or
dividends. However,
proposed regulations may eliminate the requirement to withhold on payments of
gross proceeds from dispositions.
It is the
responsibility of the entity through which you hold your shares to determine the
applicable withholding.
Investments
in Certain Non-U.S. Corporations
If
the Fund holds an equity interest in any “passive foreign investment companies”
(“PFICs”), which are
generally certain non-U.S. corporations that receive at least 75% of their
annual gross income from passive sources (such as interest, dividends, certain
rents and royalties or capital gains) or that hold at least 50% of their assets
in investments producing such passive income, the Fund could be subject to U.S.
federal income tax and additional interest charges on gains and certain
distributions with respect to those equity interests, even if all the income or
gain is timely distributed to its shareholders. The Fund will not be able to
pass through to its shareholders any credit or deduction for such taxes. The
Fund may be able to make an election that could ameliorate these adverse tax
consequences. In this case, the Fund would recognize as ordinary income any
increase in the value of such PFIC shares, and as ordinary loss any decrease in
such value to the extent it did not exceed prior increases included in income.
Under this election, the Fund might be required to recognize in a year income in
excess of its distributions from PFICs and its proceeds from dispositions of
PFIC stock during that year, and such income would nevertheless be subject to
the distribution requirement and would be taken into account for purposes of the
4% excise tax. Dividends paid by PFICs are not treated as qualified dividend
income.
Distribution
Plan
FTP
serves as the distributor of Creation Units for the Fund on an agency basis. FTP
does not maintain a secondary market in shares.
The
Board has adopted a Distribution and Service Plan pursuant to Rule 12b-1 under
the 1940 Act. In accordance with the Rule 12b-1 plan, the
Fund is authorized to pay an amount up to 0.25% of their average daily net
assets each year to reimburse FTP 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 APs for providing distribution assistance, including
broker-dealer and shareholder support and educational and promotional
services.
The Fund does not
currently pay 12b-1 fees, and pursuant to a contractual arrangement, the Fund
will not pay 12b-1 fees any time before December 31, 2023.
However, in the event 12b-1 fees are charged in the future, because these fees
are paid out of the Fund's assets, over time these fees will increase the cost
of your investment and may cost you more than certain other types of sales
charges.
Net
Asset Value
The
Fund's net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern Time) on each day the New York Stock Exchange
is open for business. Net asset value is calculated for the Fund by taking the
market price of the Fund’s total assets, including interest or dividends accrued
but not yet collected, less all liabilities, and dividing such amount by the
total number of shares outstanding. The result, rounded to the nearest cent, is
the net asset value per share. All valuations are subject to review by the Board
or its delegate.
The Fund's
investments are valued daily at market value or, in the absence of market value
with respect to any portfolio securities, at fair value, in
accordance with valuation procedures approved by the Board and in accordance
with the 1940 Act and the rules thereunder. Rule 2a-5 under the 1940 Act
requires the fair valuation of all portfolio investments for which market
quotations are not readily available. Pursuant to Rule 2a-5 under the 1940 Act,
the Board has appointed the Advisor as its valuation designee for all portfolio
investments. Portfolio securities listed on any exchange other than The Nasdaq
Stock Market LLC ("Nasdaq") and the London Stock Exchange
Alternative Investment Market (“AIM”) are valued at the last sale price
on the business day as of which such value is being determined. Securities
listed on Nasdaq or the AIM are valued at the official closing price on the
business day as of which such value is being determined. Portfolio securities
traded on more than one securities exchange are valued at the last sale price or
official closing price, as applicable, on the business day as of which such
21
value is being
determined at the close of the exchange representing the primary exchange for such securities.
Portfolio securities traded in the over-the-counter market, but excluding
securities trading on Nasdaq or the AIM, are valued at the mean of the most
recent bid and asked price, if available, and otherwise at the last trade price.
Short-term investments that mature in less than 60 days when purchased are fair
valued at cost adjusted for amortization of premiums and accretion of discount,
provided the Advisor has determined that the use of amortized cost is an
appropriate reflection of fair value given market and issuer-specific conditions
existing at the time of determination. Net asset value may change on days when
investors may not sell or redeem Fund shares.
Certain securities
may not be able to be priced by pre-established pricing methods. Such securities
may be valued by the Advisor at fair value. The use of fair value
pricing by the Fund is governed by valuation procedures approved by the Board
and in accordance with the provisions of the 1940 Act and the rules thereunder.
These securities generally include, but are not limited to, certain restricted
securities (securities which may not be publicly sold without registration under
the Securities Act) for which a 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 the Fund's net asset value or make it difficult or
impossible to obtain a reliable market quotation; and a security whose price, as
provided by the pricing service, does not, in the opinion of the Advisor,
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 portfolio investment upon the measurement
date under current market conditions. When fair value prices are used, generally
they will differ from the current market quotations or official closing prices
on the applicable exchange. A variety of factors may be considered in
determining the fair value of such securities. See the Fund's SAI for
details.
Because
foreign securities exchanges may be open on different days than the days during
which an investor may purchase or sell shares of the
Fund, the value of the Fund's securities may change on days when investors are
not able to purchase or sell shares of the Fund. The value of securities
denominated in foreign currencies is converted into U.S. dollars at the exchange
rates in effect at the time of valuation. Any use of a different rate from the
rates used by the Index may adversely affect a Fund's ability to track the
Index.
Fund
Service Providers
The Bank of New York
Mellon, 240 Greenwich Street, New York, New York 10286, acts as the
administrator, custodian and fund accounting and transfer agent
for the Fund. Chapman and Cutler LLP, 320 S. Canal St., Chicago, Illinois 60606,
serves as legal counsel to the Fund. First Trust serves as the fund reporting
agent for the Fund.
Premium/Discount
Information
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.
Total
Return Information
The table below
compares the total return of the Fund to a broad-based market index. The
information presented for the Fund is for the period indicated.
"Average annual
total returns" represent the average annual change in the value of an investment
over the period indicated. “Cumulative total returns” represent
the total change in value of an investment over the period indicated. The net
asset value per share of the Fund 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 liabilities (including accrued expenses and
dividends declared but unpaid), by the total number of outstanding shares. The
net asset value return is based on the net asset value per share of the Fund and
the market return is based on the market price per share of the Fund. 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 net
asset value 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 net asset value is calculated. Since the shares of
the Fund typically do not trade in the secondary market until several days after
the Fund's inception, for the period from inception to the first day of
secondary market trading in shares of the Fund, the net asset value of the Fund
is used as a proxy for the secondary market trading price to calculate market
returns. Market and net asset value returns assume that all distributions have
been
22
reinvested
in the Fund at Market Price and net asset value, respectively. An index is a
statistical composite that tracks a specified financial market or
sector. Unlike the Fund, an index does not actually hold a portfolio of
securities and therefore does not incur the expenses incurred by the Fund. These
expenses negatively impact the performance of the Fund. 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 reflect the reinvestment of dividends on securities in
the index. The returns shown in the table below do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption or
sale of shares of the Fund. The investment return and principal value of shares
of the Fund will vary with changes in market conditions. Shares of the Fund may
be worth more or less than their original cost when they are redeemed or sold in
the market. The Fund's past performance is no guarantee of future
results.
First
Trust Innovation Leaders ETF (ILDR)
Total Returns as of August 31, 2022
Total Returns as of August 31, 2022
|
|
|
Average
Annual |
Cumulative |
|
|
1
Year |
Inception
(5/25/2021) |
Inception
(5/25/2021) |
|
Fund
Performance |
|
|
|
|
Net Asset
Value |
-33.75% |
-19.66% |
-24.25% |
|
Market
Price |
-33.40% |
-19.24% |
-23.75% |
|
Index
Performance |
|
|
|
|
Russell
3000® Growth
Index |
-19.44% |
-6.90% |
-8.67% |
23
Financial
Highlights
The financial
highlights table is intended to help you understand the Fund's financial
performance for the periods shown. Certain information
reflects financial results for a single share of the Fund. The total returns
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). The
information for the periods indicated has been derived from financial statements
audited by Deloitte & Touche LLP, whose report, along with the Fund's
financial statements, is included in the Annual Report to Shareholders dated
August 31, 2022 and is incorporated by reference in the Fund's SAI, which is
available upon request.
First
Trust Exchange-Traded Fund VIII
Financial
Highlights
For a share outstanding throughout each period
For a share outstanding throughout each period
First
Trust Innovation Leaders ETF (ILDR)
|
|
Year
Ended
August
31, |
Period
Ended
8/31/2021(a)
|
|
|
2022 | |
|
Net
asset value, beginning of period |
$22.95 |
$20.07 |
|
Income
from investment operations: |
|
|
|
Net
investment income (loss) |
(0.08) |
(0.02) |
|
Net
realized and unrealized gain (loss) |
(7.66) |
2.90 |
|
Total
from investment operations |
(7.74) |
2.88 |
|
Distributions
paid to shareholders from: |
|
|
|
Net
investment income |
(0.00)(b)
|
— |
|
Net
realized gain |
(0.03) |
— |
|
Total
distributions |
(0.03) |
— |
|
Net
asset value, end of period |
$15.18 |
$22.95 |
|
Total
Return(c) |
(33.75)% |
14.35% |
|
Ratios/supplemental
data: |
|
|
|
Net
assets, end of period (in 000’s) |
$3,036 |
$3,443 |
|
Ratios
to average net assets: |
|
|
|
Ratio of
total expenses to average net assets |
0.75% |
0.75%(d) |
|
Ratio of
net investment income (loss) to average net assets |
(0.51)% |
(0.49)%(d) |
|
Portfolio
turnover rate(e) |
58% |
9% |
(a)
Inception
date is May 25, 2021, which is consistent with the commencement of investment
operations and is the date the initial creation units were
established.
(b)
Amount is less
than $0.01.
(c)
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.
(d)
Annualized.
(e)
Portfolio
turnover is calculated for the time period presented and is not annualized for
periods of less than a year and does not include securities received or
delivered from processing creations or redemptions, and in-kind
transactions.
24
Other
Information
Continuous
Offering
The
Fund issues, on a continuous offering basis, its shares in one or more groups of
a fixed number of Fund shares (each such group of such
specified number of individual Fund shares, a “Creation
Unit Aggregation”). The method by
which Creation Unit Aggregations of Fund shares are created and traded may raise
certain issues under applicable securities laws. Because new Creation Unit
Aggregations of shares are issued and sold by the Fund on an ongoing basis, a
“distribution,” as such term is used in the Securities Act, may occur at any
point. Broker-dealers and other persons are cautioned that some activities on
their part may, depending on the circumstances, result in their being deemed
participants in a distribution in a manner which could render them statutory
underwriters and subject them to the prospectus delivery requirement and
liability provisions of the Securities Act.
For
example, a broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Unit Aggregations after placing an
order with FTP, breaks them down into constituent shares and sells such shares
directly to customers, or if it chooses to couple the creation of a supply of
new shares with an active selling effort involving solicitation of secondary
market demand for shares. A determination of whether one is an underwriter for
purposes of the Securities Act must take into account all the facts and
circumstances pertaining to the activities of the broker-dealer or its client in
the particular case, and the examples mentioned above should not be considered a
complete description of all the activities that could lead to a characterization
as an underwriter.
Broker-dealer
firms should also note that dealers who are not “underwriters” but are effecting
transactions in shares, whether or not participating
in the distribution of shares, are generally required to deliver a prospectus.
This is because the prospectus delivery exemption in Section 4(a)(3) of the
Securities Act is not available in respect of such transactions as a result of
Section 24(d) of the 1940 Act. As a result, broker-dealer firms should note that
dealers who are not underwriters but are participating in a distribution (as
contrasted with ordinary secondary market transactions) and thus dealing with
the shares that are part of an overallotment within the meaning of Section
4(a)(3)(C) of the Securities Act would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
Firms that incur a prospectus delivery obligation with respect to shares are
reminded that, under the Securities Act Rule 153, a prospectus delivery
obligation under Section 5(b)(2) of the Securities Act owed to a broker-dealer
in connection with a sale on the Exchange is satisfied by the fact that the
prospectus is available from the Exchange upon request. The prospectus delivery
mechanism provided in Rule 153 is available with respect to transactions on a
national securities exchange, a trading facility or an alternative trading
system.
25
|
First
Trust
Exchange-Traded
Fund VIII |
First Trust Innovation Leaders ETF
For
More Information
For
more detailed information on the Fund, several additional sources of information
are available to you. The SAI, incorporated by
reference into this prospectus, contains detailed information on the Fund's
policies and operation. Additional information about the Fund's investments is
available in the annual and semi-annual reports to shareholders. In the Fund's
annual report, you will find a discussion of the market conditions and
investment strategies that significantly impacted the Fund's performance during
the last fiscal year. The Fund's most recent SAI, annual and semi-annual reports
and certain other information are available free of charge by calling the Fund
at (800) 621-1675, on the Fund's website at www.ftportfolios.com or through your
financial advisor. Shareholders may call the toll-free number above with any
inquiries.
You
may obtain this and other information regarding the Fund, including the SAI and
the Codes of Ethics adopted by First Trust, FTP
and the Trust, directly from the Securities and Exchange Commission (the
"SEC"). Information on
the SEC’s website is free of charge. Visit the SEC’s online EDGAR database at
www.sec.gov. You may also request information regarding the Fund by sending a
request (along with a duplication fee) to the SEC by sending an electronic
request to [email protected].
First Trust
Advisors L.P.
120 East Liberty Drive, Suite 400
Wheaton, Illinois 60187
(800) 621-1675
120 East Liberty Drive, Suite 400
Wheaton, Illinois 60187
(800) 621-1675
www.ftportfolios.com
SEC
File #: 333-210186
811-23147
811-23147