|
First
Trust
Exchange-Traded
Fund VIII |
Prospectus
First Trust
Multi-Manager Large Growth ETF
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Ticker
Symbol: |
MMLG |
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Exchange: |
NYSE
Arca |
First
Trust Multi-Manager Large Growth 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)
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Management
Fees(1) |
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Distribution
and Service (12b-1) Fees |
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Other
Expenses |
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Total Annual
Fund Operating Expenses |
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(1)
|
1
Year |
3
Years |
5
Years |
10
Years |
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$ |
$ |
$ |
$ |
3
4
5
6
7
Calendar Year Total Returns as of 12/31
|
|
|
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|
|
|
|
|
|
|
|
1
Year |
Since
Inception |
Inception
Date |
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Return Before
Taxes |
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|
|
|
Return After
Taxes On Distributions |
|
|
|
|
Return After
Taxes on Distributions and Sale of Fund Shares |
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|
|
|
Russell
1000® Growth Index
(reflects no deduction for fees, expenses or
taxes) |
|
|
|
|
Russell
1000® Index
(reflects no deduction for fees, expenses or taxes) |
|
|
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Management
Investment
Advisor
First
Trust Advisors L.P.
Investment
Sub-Advisors
•
Wellington Management
Company LLP
•
Sands Capital
Management, LLC
8
Advisor’s
Investment Committee
The
Advisor's Investment Committee (the "Investment
Committee"), which manages the
Fund's investments, consists of:
•
Daniel J. Lindquist,
Managing Director of First Trust
•
Jon C. Erickson,
Senior Vice President of First Trust
•
David G. McGarel,
Chief Investment Officer, Chief Operating Officer and Managing Director of First
Trust
•
Roger F. Testin,
Senior Vice President of First Trust
•
Stan Ueland, Senior
Vice President of First Trust
•
Chris A. Peterson,
CFA, Senior Vice President of First Trust
•
Erik Russo, Vice
President of First Trust
Sub-Advisor
Portfolio Managers
Wellington
•
Douglas W. McLane,
CFA, Senior Managing Director, Partner and Equity Portfolio Manager
Sands
Capital
•
Frank M. Sands, CFA,
Chief Investment Officer and Chief Executive Officer
•
Michael A. Sramek,
CFA, Senior Portfolio Manager, Research Analyst and Managing
Director
•
Wesley A. Johnston,
CFA, Portfolio Manager and Senior Research Analyst
•
Thomas H. Trentman,
CFA, Portfolio Manager and Senior Research Analyst
The
Investment Committee members are primarily and jointly responsible for the
day-to-day management of the Fund, while each of the
Sub-Advisor portfolio managers provides non-discretionary investment advice to
the Investment Committee. Each portfolio manager and member of the Advisor’s
Investment Committee has served as a part of the portfolio management team of
the Fund since May 2020, except for Erik Russo, who has served as part of the
portfolio management team of the Fund since December 2020.
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.
9
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.
Additional
Information on the Fund’s Strategies
Under
normal market conditions, the Fund will invest at least 80% of its net assets
(including investment borrowings) in equity securities issued by
large capitalization companies. The Fund considers large capitalization
companies to be those companies with market capitalizations within the market
capitalization range of the companies comprising the Russell 1000 Growth Index
(as of the index’s most recent reconstitution). The Russell 1000 Growth Index is
a broadly diversified index predominantly made up of growth stocks of large U.S.
companies. The Fund’s portfolio is principally composed of common stock issued
by companies domiciled in the United States, common stock issued by non-U.S.
companies that is principally traded in the United States and American
Depositary Receipts.
First
Trust utilizes a multi-manager approach by allocating the Fund’s assets among
multiple investment managers. First Trust evaluates investment
managers on four factors:
1.
Experienced and
well-resourced personnel
2.
Disciplined
investment process
3.
Portfolio composition
and consistency
4.
Demonstrated track
record
First
Trust strives to select investment managers that have complementary investment
styles, performance patterns and portfolio
characteristics to one another. By blending multiple Sub-Advisors into a single
portfolio, First Trust’s objective is to provide idiosyncratic profiles that
complement each other over time. First Trust believes that while there may be
periods of higher correlation among the Sub-Advisors, diversification across
Sub-Advisors with different investment disciplines can help mitigate investment
risks over time.
First
Trust has selected Wellington and Sands Capital to each serve as a Sub-Advisor
to the Fund and has equally allocated the Fund’s assets between
them. Wellington uses quality, valuation and momentum factors to determine which
securities to recommend to First Trust for its portion of the Fund’s assets.
Sands Capital uses quantitative and qualitative research that seeks to identify
high-quality, wealth-creating growth businesses to determine which securities to
recommend to First Trust for its portion of the Fund’s assets. Strategically,
Sands Capital’s allocated portion of the Fund’s portfolio is a
conviction-weighted rank of businesses that are generally classified into in
three categories: small weights (0-2.5 percent); medium weights (2.5-5.0
percent); and large weights (5.0 percent or greater).
The
Fund has an investment strategy that may frequently involve buying and selling
portfolio securities. High portfolio turnover may result in the
Fund paying higher levels of transaction costs, including brokerage commissions,
dealer mark-ups and other costs and may generate greater tax liabilities for
shareholders. 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.
The
Fund has adopted a fundamental policy not to invest 25% or more of the value of
its total assets in securities of issuers in any one industry
or group of industries.
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.
10
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 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
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.
Illiquid
Investments
The
Fund may invest up to 15% of its net assets in securities 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 the federal securities
laws), securities that may only be resold pursuant to Rule 144A under 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.
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
11
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, 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. The Fund
may invest in depositary receipts. 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.
GROWTH
STOCKS INVESTMENT RISK. The Fund utilizes a
growth style of investing. Growth stocks generally are priced higher than
non-growth stocks in relation to an issuer’s earnings and other measures because
investors believe they have greater growth potential. However, there is no
guarantee that such an issuer will realize that growth potential. In addition,
the market values of growth stocks may be more volatile than other types of
investments, and therefore more susceptible to rapid price swings, especially
during periods of economic uncertainty or in response to adverse news about the
condition of the issuer, such as earnings disappointments. The returns on growth
stocks may or may not move in tandem with the returns on other styles of
investing or the overall stock market. Growth stocks may fall out of favor and
trail the returns of funds employing
12
other
styles of investing. Growth stocks may also be more adversely affected in a down
market, as growth stocks typically have little or no
dividend income to absorb the effect of adverse market conditions.
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 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.
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
CAPITALIZATION DEVIATION RISK. There can be no
assurance that the securities held by the Fund will stay within the Fund’s
intended market capitalization range. As a result, the Fund may be exposed to
additional risk or investors may not be given the opportunity to invest fully in
a certain market capitalization range.
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
13
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.
MOMENTUM
INVESTING RISK. Certain
of the Sub-Advisors may employ a “momentum” style of investing that emphasizes
selecting stocks that have had higher recent price performance compared to other
stocks. Momentum can change quickly and stocks that previously exhibited high
momentum characteristics may not experience positive momentum or may experience
more volatility than the market as a whole. In addition, there may be periods
when the momentum style of investing is out of favor and the investment
performance of the Fund may suffer.
MULTI-MANAGER
RISK.
The Sub-Advisors selected may underperform the market generally or other
sub-advisors that could have been selected. Each Sub-Advisor makes investment
recommendations independently. It is possible that the security recommendation
processes of the Sub-Advisors may not complement one another. In addition, the
multi-manager approach could increase the Fund’s portfolio turnover rate which
may result in higher transaction costs and additional taxes.
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. The Fund may invest
in non-U.S. securities. 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
14
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.
QUALITY
STOCKS INVESTMENT RISK.
Certain of the Sub-Advisors may employ a quality style of investing. A quality
style of investing emphasizes companies with strong fundamentals. However, there
is no guarantee that a Fund will correctly identify companies with strong
fundamentals or that selected companies will maintain strong fundamentals. In
addition, quality stocks are subject to the risk that the returns on quality
securities are less than returns on other styles of investing or the overall
stock market.
SIGNIFICANT
EXPOSURE RISK. To the extent that
the Fund invests a significant percentage of its assets in a single asset class
or the securities of issuers within the same country, state, region, industry or
sector, an adverse economic, business or political development 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.
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
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 its creations and redemptions for
cash rather than in-kind. 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 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 Sub-Advisors are
dependent upon the experience and expertise of the Fund’s portfolio managers in
providing advisory services with respect to the Fund’s investments. If a
Sub-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 these portfolio
managers in the event of their death, resignation, retirement or inability to
act on behalf of the Sub-Advisors.
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,
15
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.
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.
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.
SMALLER
COMPANIES RISK. The Fund invests in
the securities of small and/or mid capitalization companies. 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 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.
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, Sub-Advisors, 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, based on recommendations provided by the Sub-Advisors, and
certain other services necessary for the management of the
portfolio.
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
16
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.
Manager
of Managers Structure
The
Fund operates under a “manager of managers” structure in reliance upon and as
described in certain exemptive relief and no-action assurances
(collectively, the “Exemptive
Relief”)
issued by the Securities and Exchange Commission (“SEC”). Pursuant to the
Exemptive Relief, the Trust, on behalf of the Fund, in relevant part, will enter
into and may amend sub-advisory agreements with affiliated and non-affiliated
sub-advisers without shareholder approval.
Under
the manager of managers structure, First Trust has ultimate responsibility,
subject to oversight by the Board, for overseeing the Fund’s
sub-advisor(s) and recommending to the Board the hiring, termination, or
replacement of any such sub-advisor(s), including Wellington and Sands Capital,
in their capacity as the Sub-Advisors. Accordingly, the Trust, on behalf of the
Fund, may enter into and amend sub-advisory agreements with affiliated and
non-affiliated sub-advisors without shareholder approval. However, the Fund will
notify shareholders of the hiring of any new sub-advisor within 90 days after
the hiring. The Exemptive Relief provides the Fund with greater flexibility and
efficiency by preventing the Fund from incurring the expense and delays
associated with obtaining shareholder approval of such sub-advisory agreements.
The use of the manager of managers structure with respect to the Fund is subject
to certain conditions that are set forth in the Exemptive Relief. First Trust
will, subject to the review and approval of the Board, set the Fund’s overall
investment strategy and evaluate, select and recommend sub-advisors to manage
all or a portion of the Fund’s assets. Subject to review by the Board, First
Trust will allocate and, when appropriate, reallocate the Fund’s assets among
sub-advisors and monitor and evaluate the sub-advisors’ performance.
In
selecting the Fund’s sub-advisors, First Trust utilizes third-party data,
questionnaires and in-person meetings to attempt to identify
long-term, diversified and high quality managers based on a number of factors,
including: personnel, investment process, consistency and track record. In
evaluating potential managers, First Trust looks for experienced, well-resourced
portfolio management teams with a merit-based, repeatable investment process
that is proven over time and can persist through various market cycles. First
Trust compares managers with their peers to identify those with a demonstrated
track record in implementing a strategy consistent with the Fund’s investment
objective.
The
Trust, on behalf of the Fund, and First Trust have retained Wellington, 280
Congress Street, Boston, Massachusetts 02210, and Sands Capital,
1000 Wilson Boulevard, Suite 3000, Arlington, Virginia 22209, to serve as
non-discretionary investment sub-advisors to the Fund pursuant to sub-advisory
agreements (the “Sub-Advisory
Agreements”). In this capacity,
Wellington and Sands Capital are each responsible for providing recommendations
to First Trust regarding the selection and allocation of the securities in the
portion of the Fund’s portfolio they have been allocated by First Trust. Each
Sub-Advisor is registered with the SEC as an investment advisor.
There
is no one individual primarily responsible for portfolio management decisions
for the Fund. Investments are made under the direction of the
Investment Committee. The Investment Committee consists of Daniel J. Lindquist,
Jon C. Erickson, David G. McGarel, Roger F. Testin, Chris A. Peterson, Stan
Ueland and Erik Russo.
•
Mr. Lindquist is
responsible for overseeing the implementation of the Fund’s investment strategy.
Mr. Lindquist was a Senior Vice President of First Trust and FTP from September
2005 to July 2012 and is now a Managing Director of First Trust and
FTP.
•
Mr. Erickson joined
First Trust in 1994 and is a Senior Vice President of First Trust and FTP. As
the head of First Trust’s Equity Research Group, Mr. Erickson is responsible for
determining the securities to be purchased and sold by funds that do not utilize
quantitative investment strategies.
•
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 portfolio managers 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.
17
•
Mr. Testin is a
Senior Vice President of First Trust and FTP. Mr. Testin is the head of First
Trust’s Portfolio Management Group. Mr. Testin has been a Senior Vice President
of First Trust and FTP since November 2003.
•
Mr. Peterson, CFA, 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. Ueland joined
First Trust as a Vice President in August 2005 and has been a Senior Vice
President of First Trust and FTP since September 2012. At First Trust, he plays
an important role in executing the investment strategies of each portfolio of
exchange-traded funds advised by First Trust.
•
Mr. Russo is a Vice
President of First Trust. He is responsible for implementing the investment
strategies of each portfolio of exchange-traded funds advised by First Trust in
his role as a Portfolio Manager. Mr. Russo joined First Trust in January of
2010.
The
Sub-Advisor portfolio managers set forth below provide non-discretionary
investment advice to the Investment Committee:
Wellington
•
Douglas W. McLane,
CFA, is a Senior Managing Director, Partner and Equity Portfolio Manager of
Wellington. Mr. McLane is an equity portfolio manager on the Disciplined Equity
Team. He manages equity assets on behalf of Wellington’s clients, drawing on
research from Wellington’s global industry analysts, equity portfolio managers
and team analysts. He currently manages the Brand Power and Disciplined Total
Return Growth approaches. Additionally, he conducts fundamental analysis on
equity investments, focusing on the consumer, industrials and materials sectors.
His research supports the investment decision making for a range of portfolios
managed for clients of the firm. He works in Wellington’s Boston office. Prior
to joining Wellington in 2011, Mr. McLane worked as a portfolio manager at
Samlyn Capital (2009 –
2011) and as an analyst at Sirios Capital Management (2003
–
2009). Before earning his MBA, he held a variety of positions at Kozmo.com (1999
–
2001)
and The Carson Group (1996 –
1999). Mr. McLane earned his MBA from the Kellogg School of Management at
Northwestern University (2003) and his BA in history from Princeton University
(1996). Additionally, he holds the Chartered Financial Analyst designation and
is a member of the CFA institute.
Sands
Capital
•
Frank M. Sands, CFA
is the Chief Investment Officer and Chief Executive Officer of Sands Capital.
Prior to joining Sands Capital in 2000, Mr. Sands worked as a research analyst
and portfolio manager at Fayez Sarofim & Co. (1994-2000). Before earning his
MBA, he worked in commercial real estate leasing and sales at Walker &
Dunlop (1989-1991). Mr. Sands earned his MBA from the University of Virginia
(1994), his MS in real estate finance & development from Johns Hopkins
University (1993) and his BA in economics from Washington & Lee University
(1989).
•
Michael A. Sramek,
CFA, is a Senior Portfolio Manager, Research Analyst and Managing Director at
Sands Capital. Prior to joining Sands Capital in 2001, Mr. Sramek worked as a
research analyst at Mastrapasqua & Associates (2000). Before earning his
MBA, he worked as an associate in plan sponsor services at BARRA/RogersCasey
(1995-1998). Mr. Sramek earned his MBA from Vanderbilt University (2000) and his
BA in history from Princeton University (1995).
•
Wesley A. Johnston,
CFA, is a Portfolio Manager and Senior Research Analyst at Sands Capital. Mr.
Johnston joined Sands Capital in 2004 and earned his BS in economics from the
University of Pennsylvania (2002).
•
Thomas H. Trentman,
CFA, is a Portfolio Manager and Senior Research Analyst at Sands Capital. Mr.
Trentman joined Sands Capital in 2005 and earned his BS in physics and
engineering and his BA in chemistry from Washington & Lee University
(2005).
For
additional information concerning First Trust and the Sub-Advisors, including a
description of the services provided to the Funds, see the
Funds’ SAI. Additional information about the portfolio managers’ compensation,
other accounts managed by the portfolio managers and the portfolio managers’
ownership of securities in the Funds is provided in the SAI.
18
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 Fund's portfolio based on recommendations provided by the
Sub-Advisors. First Trust is paid an annual management fee by the Fund equal to
0.85% of the Fund's average daily net assets and is responsible for the Fund's
expenses, including the cost of transfer agency, sub-advisory, custody, fund
administration, legal, audit and other services, but excluding fee payments
under the Investment Management Agreement, interest, taxes, acquired fund fees
and expenses, if any, brokerage commissions and other expenses connected with
the execution of portfolio transactions, 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 and Sub-Advisory Agreements 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.
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) or 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.
19
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.
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
20
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 the 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 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
21
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.
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.
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
22
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 its 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 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
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 in which the Fund may invest are not listed on any securities
exchange or board of trade. Such securities are typically bought
and sold by institutional investors in individually negotiated private
transactions that function in many respects like an over-the-counter secondary
market, although typically no formal market makers exist. Certain securities,
particularly debt securities, have few or no trades, or trade infrequently, and
information regarding a specific security may not be widely available or may be
incomplete. Accordingly, determinations of the fair value of debt securities may
be based on infrequent and dated information. Because there is less reliable,
objective data available, elements of judgment may play a greater role in
valuation of debt securities than for other types of securities. Typically, debt
securities are valued using information provided by a third-party pricing
service. The third-party pricing service primarily uses broker quotes to value
such securities.
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
23
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.
Fund
Service Providers
The Bank of New York
Mellon, 240 Greenwich Street, New York, New York 10286, acts as the 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 market index and 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 return
information shown under “Annual Total Return” in the Fund’s summary prospectus
represents the average annual total returns of the Fund as of the calendar year
end, while the information presented below is as of the Fund’s fiscal year end.
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 a 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 a
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
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 indices. 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.
24
First
Trust Multi-Manager Large Growth ETF (MMLG)
Total Returns as of August 31, 2022
Total Returns as of August 31, 2022
|
|
|
Average
Annual |
Cumulative |
|
|
1
Year |
Inception
(7/21/2020) |
Inception
(7/21/2020) |
|
Fund
Performance |
|
|
|
|
Net Asset
Value |
-35.83% |
-4.04% |
-8.34% |
|
Market
Price |
-35.85% |
-4.06% |
-8.39% |
|
Index
Performance |
|
|
|
|
Russell
1000® Growth
Index |
-19.06% |
7.50% |
16.49% |
|
Russell
1000®
Index |
-12.96% |
10.78% |
24.15% |
25
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 Multi-Manager Large Growth ETF (MMLG)
|
|
Year
Ended August 31, |
Period
Ended
8/31/2020(a)
| |
|
|
2022 |
2021 | |
|
Net
asset value, beginning of period |
$28.27 |
$21.86 |
$19.84 |
|
Income
from investment operations: |
|
|
|
|
Net
investment income (loss) |
(0.18) |
0.01 |
(0.00)
(b) |
|
Net
realized and unrealized gain (loss) |
(9.95) |
6.46 |
2.02 |
|
Total
from investment operations |
(10.13) |
6.47 |
2.02 |
|
Distributions
paid to shareholders from: |
|
|
|
|
Net
investment income |
— |
(0.04) |
— |
|
Net
realized gain |
— |
(0.02) |
— |
|
Total
distributions |
— |
(0.06) |
— |
|
Net
asset value, end of period |
$18.14 |
$28.27 |
$21.86 |
|
Total
Return (c) |
(35.83)% |
29.65% |
10.18% |
|
Ratios/supplemental
data: |
|
|
|
|
Net
assets, end of period (in 000’s) |
$63,478 |
$171,005 |
$2,186 |
|
Ratios
to average net assets: |
|
|
|
|
Ratio of
total expenses to average net assets |
|
|
|
|
Ratio of
net expenses to average net assets |
0.85% |
0.85% |
0.85%(d) |
|
Ratio of
net investment income (loss) to average net assets |
(0.49)% |
(0.49)% |
(0.21)%(d) |
|
Portfolio
turnover rate (e) |
31% |
21% |
2% |
(a)
Inception
date is July 21, 2020, 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.
26
Other
Information
Continuous
Offering
The
Fund will issue, 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.
27
|
First
Trust
Exchange-Traded
Fund VIII |
First Trust Multi-Manager Large Growth 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