FIRST TRUST
First Trust Exchange-Traded Fund
Book 1
First Trust Dow Jones Select MicroCap Index Fund (FDM)
First Trust Morningstar Dividend Leaders Index Fund (FDL)
First Trust US Equity Opportunities ETF (FPX)
First Trust NYSE(R) Arca(R) Biotechnology Index Fund (FBT)
First Trust Dow Jones Internet Index Fund (FDN)
First Trust Capital Strength ETF (FTCS)
First Trust Value Line(R) Dividend Index Fund (FVD)
Annual Report
December 31, 2022
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TABLE OF CONTENTS
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FIRST TRUST EXCHANGE-TRADED FUND
ANNUAL REPORT
DECEMBER 31, 2022
Shareholder Letter.......................................................... 2
Market Overview............................................................. 3
Fund Performance Overview
First Trust Dow Jones Select MicroCap Index Fund (FDM)................... 4
First Trust Morningstar Dividend Leaders Index Fund (FDL)................ 6
First Trust US Equity Opportunities ETF (FPX)............................ 8
First Trust NYSE(R) Arca(R) Biotechnology Index Fund (FBT)............... 10
First Trust Dow Jones Internet Index Fund (FDN).......................... 12
First Trust Capital Strength ETF (FTCS).................................. 14
First Trust Value Line(R) Dividend Index Fund (FVD)...................... 16
Notes to Fund Performance Overview.......................................... 18
Understanding Your Fund Expenses............................................ 19
Portfolio of Investments
First Trust Dow Jones Select MicroCap Index Fund (FDM)................... 21
First Trust Morningstar Dividend Leaders Index Fund (FDL)................ 25
First Trust US Equity Opportunities ETF (FPX)............................ 27
First Trust NYSE(R) Arca(R) Biotechnology Index Fund (FBT)............... 30
First Trust Dow Jones Internet Index Fund (FDN).......................... 31
First Trust Capital Strength ETF (FTCS).................................. 33
First Trust Value Line(R) Dividend Index Fund (FVD)...................... 35
Statements of Assets and Liabilities........................................ 38
Statements of Operations.................................................... 40
Statements of Changes in Net Assets......................................... 42
Financial Highlights........................................................ 45
Notes to Financial Statements............................................... 49
Report of Independent Registered Public Accounting Firm..................... 58
Additional Information...................................................... 59
Board of Trustees and Officers.............................................. 64
Privacy Policy.............................................................. 66
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CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and its representatives, taking into account the
information currently available to them. Forward-looking statements include all
statements that do not relate solely to current or historical fact. For example,
forward-looking statements include the use of words such as "anticipate,"
"estimate," "intend," "expect," "believe," "plan," "may," "should," "would" or
other words that convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
any series of First Trust Exchange-Traded Fund (the "Trust") described in this
report (each such series is referred to as a "Fund" and collectively, as the
"Funds") to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. When
evaluating the information included in this report, you are cautioned not to
place undue reliance on these forward-looking statements, which reflect the
judgment of the Advisor and its representatives only as of the date hereof. We
undertake no obligation to publicly revise or update these forward-looking
statements to reflect events and circumstances that arise after the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that any Fund described in this report will achieve its
investment objective. Each Fund is subject to market risk, which is the
possibility that the market values of securities owned by the Fund will decline
and that the value of the Fund's shares may therefore be less than what you paid
for them. Accordingly, you can lose money by investing in a Fund. See "Risk
Considerations" in the Additional Information section of this report for a
discussion of certain other risks of investing in the Funds.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
www.ftportfolios.com or speak with your financial advisor. Investment returns,
net asset value and share price will fluctuate and Fund shares, when sold, may
be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund
performance on each Fund's webpage at www.ftportfolios.com.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment. It
includes details about each Fund and presents data and analysis that provide
insight into each Fund's performance and investment approach.
By reading the market overview by Robert F. Carey, Chief Market Strategist of
the Advisor, you may obtain an understanding of how the market environment
affected the performance of each Fund. The statistical information that follows
may help you understand each Fund's performance compared to that of relevant
market benchmarks.
It is important to keep in mind that the opinions expressed by personnel of the
Advisor are just that: informed opinions. They should not be considered to be
promises or advice. The opinions, like the statistics, cover the period through
the date on the cover of this report. The material risks of investing in each
Fund are spelled out in its prospectus, statement of additional information, and
other Fund regulatory filings.
Page 1
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SHAREHOLDER LETTER
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FIRST TRUST EXCHANGE-TRADED FUND
ANNUAL LETTER FROM THE CHAIRMAN AND CEO
DECEMBER 31, 2022
Dear Shareholders:
First Trust is pleased to provide you with the annual report for certain funds
in the First Trust Exchange-Traded Fund (the "Funds"), which contains detailed
information about the Funds for the twelve months ended December 31, 2022.
The past year was filled with challenges, several of which surely tested the
resolve of even the most seasoned investors. The year began with the same
headwinds that existed at the end of 2021, namely: stubbornly high inflation and
rising interest rates. When Russia invaded Ukraine in late February 2022, we
added war, geopolitical tension, and potential food and energy shortages to the
list. Considering the bleak backdrop at the start of the year, it probably does
not surprise you to read that with a total return of -18.11%, 2022 was the worst
year for the S&P 500(R) Index since 2008. Even the bond market struggled to
provide a haven to weary investors. The Bloomberg U.S. Aggregate Bond Index
posted a total return of -13.01% for the year; its worst total return in 45
years.
A common topic of discussion in 2022 was whether central banks around the world
had tightened monetary policy enough to quell inflation without causing excess
damage to their economies. In the U.S., the Federal Reserve (the "Fed")
described this as a "soft landing," stating it was their intent to keep the
labor market strong but to increase interest rates enough to bring inflation
down to 2.0%. True to their word, over the course of seven interest rate hikes,
the Fed increased the Federal Funds target rate (upper bound) from 0.25% (where
it stood in March 2022) to 4.50% as of December 2022. This is the highest the
Federal Funds rate has been since 2008.
The economic impact of the Fed's tighter monetary policy quickly became evident.
Excluding the economic contraction from COVID-19 in 2020, the U.S. experienced
its first decline in the gross domestic product ("GDP") growth rate since March
2014. Data from the U.S. Bureau of Economic Analysis indicates that annualized
real GDP growth rates over the first three quarters of 2022 were -1.6%, -0.6%,
and 3.2%, respectively. Thankfully, inflation, as measured by the trailing
12-month rate on the Consumer Price Index ("CPI"), appears to be responding to
the Fed's tightening. After peaking at 9.1% in June 2022, the CPI rate fell to
6.5% at the end of December 2022. For comparative purposes, the CPI rate has
averaged 2.5% over the past 30 years. Job creation has provided a respite from
dreary economic data in recent months, but that could quickly change. Nearly
125,000 employees have lost their jobs since June 2022 as more than 120 U.S.
companies announced layoffs, according to Forbes. The jury is still out on
whether the Fed will be able to pull off a soft landing, but the job market will
tell the tale, in my opinion.
Since 1928, the S&P 500(R) Index has only fallen for two consecutive years on
four occasions: The Great Depression, World War II, the oil crisis of the 1970s
and the burst of the dot-com bubble in the early 2000s. As we enter 2023, the
U.S. economy has significant obstacles to overcome to avoid a recession and
another negative year. We will be watching and reporting on what transpires.
Thank you for giving First Trust the opportunity to play a role in your
financial future. We value our relationship with you and will report on the
Funds again in six months.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 2
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MARKET OVERVIEW
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FIRST TRUST EXCHANGE-TRADED FUND
ANNUAL REPORT
DECEMBER 31, 2022 (UNAUDITED)
ROBERT F. CAREY, CFA
SENIOR VICE PRESIDENT AND CHIEF MARKET STRATEGIST
FIRST TRUST ADVISORS L.P.
Mr. Carey is responsible for the overall management of research and analysis of
the First Trust product line. Mr. Carey has more than 30 years of experience as
an Equity and Fixed-Income Analyst and is a recipient of the Chartered Financial
Analyst ("CFA") designation. He is a graduate of the University of Illinois at
Champaign-Urbana with a B.S. in Physics. He is also a member of the Investment
Analysts Society of Chicago and the CFA Institute. Mr. Carey has appeared as a
guest on such programs as Bloomberg TV, CNBC, and WBBM Radio, and has been
quoted by several publications, including The Wall Street Journal, The Wall
Street Reporter, Bloomberg News Service, and Registered Rep.
STATE OF THE ECONOMY/INVESTING
The Federal Reserve (the "Fed") remained steadfast in its battle with stubbornly
high inflation in 2022. The Federal Funds target rate (upper bound), which stood
at a mere 0.25% in January 2022 closed the year at 4.50%, its highest level in
over a decade. Fortunately, it appears that inflation, as measured by the
Consumer Price Index ("CPI") is responding to the Fed's tightening. After
peaking at 9.1% on a trailing 12-month basis in June 2022, the CPI fell to 6.5%
in December 2022. While we were glad to see a decline in the CPI, it still
stands significantly higher than the Fed's stated goal of 2.0%, suggesting that
further action by the Fed may be warranted, in my opinion.
The global growth forecast from the International Monetary Fund ("IMF") released
in October 2022 projected a 2.7% real gross domestic product ("GDP") growth rate
for 2023, down from 3.2% in 2022. The IMF is calling for a 1.0% growth rate for
the U.S. GDP in 2023, down from its 1.6% estimate for 2022. As has been the case
for many years, Emerging Market and Developing Economies are expected to grow
faster than Advanced Economies. Their 2023 growth rate estimates are 3.7% and
1.1%, respectively.
Investors continued to funnel capital into exchange-traded funds ("ETFs") and
related exchange-traded products ("ETPs") in 2022 despite the sharp sell-off in
the markets. ETFGI, an independent research and consultancy firm, reported that
total assets invested in ETFs/ETPs listed in the U.S. stood at $6.51 trillion as
of year-end, down 9.8% from $7.21 trillion at the end of 2021, according to its
own release. Net inflows to ETFs/ETPs listed in the U.S. stood at $607.23
billion in 2022, their second highest level on record, surpassed only by the
$919.78 billion of inflows in 2021.
U.S. STOCKS AND BONDS
In 2022, three of the major U.S. stock indices posted substantial double-digit
losses. The S&P 500(R) Index, the S&P MidCap 400(R) Index and the S&P SmallCap
600(R) Index posted total returns of -18.11%, -13.06%, and -16.10%,
respectively, according to Bloomberg. Of the 11 major sectors that comprise the
S&P 500(R) Index, only the Energy and Utilities sectors posted positive total
returns, up 65.72% and 1.57%, respectively. The two worst-performing sectors
were the Communication Services sector, down 39.89% and the Consumer
Discretionary sector, down 37.03%. Bloomberg's consensus year-over-year earnings
growth rate estimates for the S&P 500(R) Index for 2023 and 2024 were 1.97% and
9.87%, respectively, as of January 6, 2023.
The yield on the benchmark 10-Year Treasury Note ("T-Note") closed trading on
December 30, 2022, at 3.88%, according to Bloomberg. The 3.88% yield stood 173
basis points ("bps") above its 2.15% average for the 10-year period ended
December 30, 2022. Its yield rose 237 bps in 2022. Most bond investors likely
know that as yields increase, prices fall. As indicated by the sizeable increase
in the yield on the 10-Year T-Note, bond investors endured a challenging year of
declines in 2022. In the U.S. bond market, all the major bond groups posted
negative total returns in 2022. The top performing major debt group we track was
intermediate Treasuries. The Bloomberg U.S. Treasury Intermediate Index posted a
total return of -7.77%.
FOREIGN STOCKS AND BONDS
The U.S. dollar appreciated by 8.21% against a basket of major currencies in
2022, as measured by the U.S. Dollar Index ("DXY"), according to Bloomberg. The
DXY Index closed 2022 at a reading of 103.52, significantly above its 20-year
average of 88.53. The stronger U.S. dollar likely had a negative influence on
the returns of unhedged foreign securities held by U.S. investors.
The Bloomberg EM Hard Currency Aggregate Index of emerging markets debt posted a
total return of -16.60% (USD), while the Bloomberg Global Aggregate Index of
higher quality debt declined 16.25% (USD). With respect to equities, the MSCI
Emerging Markets Index of stocks posted a total return of -20.09% (USD), while
the MSCI World ex USA Index declined by 14.29% (USD) on a total return basis,
according to Bloomberg.
Page 3
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FUND PERFORMANCE OVERVIEW (UNAUDITED)
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FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
The First Trust Dow Jones Select MicroCap Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the Dow Jones Select
MicroCap Index(SM) (the "Index"). The Fund will normally invest at least 80% of
its net assets (including investment borrowings) in the common stocks of U.S.
micro-capitalization companies which are publicly traded in the United States.
The Fund will normally invest at least 90% of its net assets (including
investment borrowings) in the common stocks that comprise the Index. The Index
is designed to measure the performance of micro-cap stocks issued by U.S.
companies that are comparatively liquid and have strong fundamentals relative to
the micro-cap segment as a whole. The Index is rebalanced quarterly and
reconstituted annually and the Fund will make corresponding changes to its
portfolio shortly after the Index changes are made public. The Fund's shares are
listed for trading on the NYSE Arca, Inc. ("NYSE Arca"). The first day of
secondary market trading in shares of the Fund was September 30, 2005.
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PERFORMANCE
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AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (9/27/05) Ended Ended (9/27/05)
12/31/22 12/31/22 12/31/22 to 12/31/22 12/31/22 12/31/22 to 12/31/22
FUND PERFORMANCE
NAV -11.56% 4.85% 10.71% 7.24% 26.74% 176.55% 234.38%
Market Price
-11.68% 4.78% 10.71% 7.24% 26.28% 176.50% 234.05%
INDEX PERFORMANCE
Dow Jones Select MicroCap Index(SM) -11.03% 5.65% 11.45% 7.98% 31.61% 195.79% 276.48%
Russell 2000(R) Index -20.44% 4.13% 9.01% 7.29% 22.41% 136.96% 237.07%
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(See Notes to Fund Performance Overview on page 18.)
PERFORMANCE REVIEW
The Fund generated a net asset value ("NAV") return of -11.56% during the
12-month period covered by this report. During the same period, the Russell
2000(R) Index (the "Benchmark") generated a return of -20.44%. The Fund
allocated 34.0% to the Financials sector, which was noticeably more than the
allocation to any other sector. The sector with the second highest weight was
the Industrials sector, with an allocation of only 15.3%. The Financials sector
contributed -3.6% to the Fund's return. The sector with the greatest
contribution to the Fund's return was the Energy sector. Investments in Energy
securities received an allocation of 4.4% and contributed 1.5% to the Fund's
return. The most negative contribution to the Fund's return came from the
Consumer Discretionary sector. These investments carried an average weight of
14.8% and contributed -5.7% to the overall Fund return.
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The Dow Jones Select MicroCap Index(SM) ("Index") is a product of S&P Dow Jones
Indices LLC or its affiliates ("SPDJI") and has been licensed for use by First
Trust. S&P(R) is a registered trademark of Standard & Poor's Financial Services
LLC ("S&P"); Dow Jones(R) is a registered trademark of Dow Jones Trademark
Holdings LLC ("Dow Jones"); and these trademarks have been licensed for use by
SPDJI and sublicensed for certain purposes by First Trust. The Fund is not
sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their
respective affiliates and none of such parties make any representation regarding
the advisability of investing in such products nor do they have any liability
for any errors, omissions, or interruptions of the Index.
Page 4
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FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
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FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM) (CONTINUED)
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% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
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Financials 31.8%
Consumer Discretionary 18.8
Industrials 16.4
Energy 8.4
Information Technology 6.8
Materials 4.6
Health Care 4.2
Real Estate 3.7
Communication Services 2.4
Consumer Staples 2.1
Utilities 0.8
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Total 100.0%
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% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
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Sitio Royalties Corp., Class A 3.6%
Modine Manufacturing Co. 1.8
Titan Machinery, Inc. 1.4
RCI Hospitality Holdings, Inc. 1.4
Heritage Commerce Corp. 1.3
Collegium Pharmaceutical, Inc. 1.3
First Bancshares (The), Inc. 1.3
John B Sanfilippo & Son, Inc. 1.2
SunCoke Energy, Inc. 1.2
TrustCo Bank Corp. 1.2
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Total 15.7%
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PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2012 - DECEMBER 31, 2022
First Trust Dow Jones
Select MicroCap Dow Jones Select Russell 2000(R)
Index Fund MicroCap Index(SM) Index
12/12 $10,000 $10,000 $10,000
06/13 11,624 11,659 11,586
12/13 14,331 14,425 13,882
06/14 14,235 14,373 14,325
12/14 14,772 14,954 14,561
06/15 15,540 15,776 15,253
12/15 14,855 15,134 13,918
06/16 15,226 15,555 14,227
12/16 20,121 20,610 16,885
06/17 20,246 20,785 17,728
12/17 21,821 22,473 19,359
06/18 23,595 24,370 20,842
12/18 19,047 19,734 17,225
06/19 21,270 22,114 20,150
12/19 24,240 25,265 21,622
06/20 18,751 19,581 18,816
12/20 23,209 24,522 25,941
06/21 29,991 31,781 30,491
12/21 31,272 33,252 29,787
06/22 25,928 27,629 22,808
12/22 27,655 29,579 23,696
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 5
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FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
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FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL)
The First Trust Morningstar Dividend Leaders Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the Morningstar(R) Dividend
Leaders Index(SM) (the "Index"). The Fund will normally invest at least 90% of
its net assets (including investment borrowings) in the common stocks that
comprise the Index. The Index is designed to measure the performance of the 100
highest-yielding stocks that have a consistent record of dividend payment and
have the ability to sustain their dividend payments. The securities comprising
the Morningstar(R) US Market Index(SM) serve as the Fund's selection universe.
The Index is rebalanced quarterly and reconstituted annually and the Fund will
make corresponding changes to its portfolio shortly after the Index changes are
made public. The Fund's shares are listed for trading on the NYSE Arca. The
first day of secondary market trading in shares of the Fund was March 15, 2006.
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PERFORMANCE
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AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (3/9/06) Ended Ended (3/9/06)
12/31/22 12/31/22 12/31/22 to 12/31/22 12/31/22 12/31/22 to 12/31/22
FUND PERFORMANCE
NAV 6.71% 8.30% 11.10% 7.73% 48.96% 186.62% 249.80%
Market Price
6.68% 8.27% 11.10% 7.73% 48.81% 186.61% 249.69%
INDEX PERFORMANCE
Morningstar(R) Dividend Leaders Index(SM) 7.08% 8.86% 11.67% 8.27% 52.86% 201.61% 280.56%
S&P 500(R) Index -18.11% 9.42% 12.56% 8.96% 56.88% 226.54% 323.35%
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(See Notes to Fund Performance Overview on page 18.)
PERFORMANCE REVIEW
The Fund generated a NAV return of 6.71% during the 12-month period covered by
this report. During the same period, the S&P 500(R) Index (the "Benchmark")
generated a return of -18.11%. The largest sector allocation was to the Energy
sector, with an average portfolio weight of 16.4%. This sector also contributed
the most to the Fund's return, contributing 6.8%. The most negative contribution
to the Fund's return came from the Financials sector. This sector had an average
weight of 14.1% and contributed -1.1% to the Fund's return.
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Morningstar(R) and Morningstar(R) Dividend Leaders Index(SM) are registered
trademarks and service marks of Morningstar, Inc. ("Morningstar") and have been
licensed for use by First Trust on behalf of the Fund. The Fund is not
sponsored, endorsed, issued, sold or promoted by Morningstar and Morningstar
makes no representation regarding the advisability of investing in the Fund.
Page 6
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FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
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FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL) (CONTINUED)
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% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
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Energy 21.6%
Financials 18.3
Consumer Staples 13.5
Health Care 10.1
Information Technology 9.4
Communication Services 9.2
Utilities 7.8
Industrials 6.0
Consumer Discretionary 2.6
Materials 1.5
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Total 100.0%
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% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
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Exxon Mobil Corp. 10.6%
Verizon Communications, Inc. 8.4
AbbVie, Inc. 7.1
Philip Morris International, Inc. 5.7
Altria Group, Inc. 4.8
Cisco Systems, Inc. 4.5
International Business Machines Corp. 4.1
Pioneer Natural Resources Co. 3.9
United Parcel Service, Inc., Class B 3.2
Citigroup, Inc. 2.9
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Total 55.2%
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PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2012 - DECEMBER 31, 2022
First Trust Morningstar
Dividend Leaders Morningstar(R) Dividend S&P 500(R)
Index Fund Leaders Index(SM) Index
12/12 $10,000 $10,000 $10,000
06/13 11,396 11,427 11,382
12/13 12,272 12,337 13,238
06/14 13,535 13,646 14,183
12/14 13,863 14,009 15,051
06/15 13,443 13,614 15,236
12/15 14,242 14,454 15,259
06/16 16,338 16,631 15,845
12/16 17,192 17,537 17,084
06/17 17,694 18,098 18,680
12/17 19,244 19,732 20,813
06/18 18,605 19,126 21,365
12/18 18,114 18,652 19,901
06/19 20,701 21,381 23,591
12/19 22,527 23,339 26,167
06/20 18,035 18,734 25,361
12/20 21,532 22,436 30,981
06/21 24,559 25,674 35,706
12/21 26,863 28,170 39,873
06/22 26,970 28,333 31,914
12/22 28,662 30,161 32,654
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 7
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FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
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FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
The First Trust US Equity Opportunities ETF (the "Fund") seeks investment
results that correspond generally to the price and yield (before the Fund's fees
and expenses) of an equity index called the IPOX(R)-100 U.S. Index (the
"Index"). The Fund will normally invest at least 90% of its net assets
(including investment borrowings) in the common stocks that comprise the Index.
The Index seeks to measure the performance of the equity securities of the 100
typically largest and most liquid initial public offerings ("IPOs") (including
spin-offs and equity carve-outs) of U.S. companies. The Index is rebalanced and
reconstituted quarterly and the Fund will make corresponding changes to its
portfolio shortly after the Index changes are made public. The Fund's shares are
listed for trading on the NYSE Arca. The first day of secondary market trading
in shares of the Fund was April 13, 2006.
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PERFORMANCE
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AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (4/12/06) Ended Ended (4/12/06)
12/31/22 12/31/22 12/31/22 to 12/31/22 12/31/22 12/31/22 to 12/31/22
FUND PERFORMANCE
NAV -35.05% 3.56% 10.57% 9.38% 19.12% 173.09% 347.68%
Market Price
-35.15% 3.51% 10.50% 9.37% 18.83% 171.45% 347.01%
INDEX PERFORMANCE
IPOX(R)-100 U.S. Index -34.76% 4.03% 11.13% 9.99% 21.85% 187.35% 391.10%
S&P 500(R) Index -18.11% 9.42% 12.56% 8.92% 56.88% 226.54% 317.57%
Russell 3000(R) Index -19.21% 8.79% 12.13% 8.72% 52.37% 214.28% 304.54%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 18.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -35.05% during the 12-month period covered by
this report. During the same period, the Russell 3000(R) Index (the "Benchmark")
generated a return of -19.21%. The largest sector allocation was to the
Information Technology with 24.5% average weight. This allocation generated a
-17.6% contribution to the Fund's return. This was by far the Fund's largest
sector weight, with the second most being allocated to the Health Care sector at
a 15.2% weight. The allocation to the Health Care sector generated a -2.3%
contribution to the Fund's return. The greatest contribution to the Fund's
return came from the Energy sector, which contributed 1.5%.
-----------------------------
IPOX(R) and IPOX(R)-100 U.S. Index are registered international trademarks and
service marks of IPOX(R) Schuster LLC ("IPOX") and have been licensed for use by
First Trust. The Fund is not sponsored, endorsed, sold or promoted by IPOX, and
IPOX makes no representation regarding the advisability of trading in such Fund.
IPOX(R) is an international trademark of IPOX Schuster LLC. Index of Initial
Public Offerings (IPOX) and IPOX Derivatives Patent No. 7,698,197.
Page 8
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 23.6%
Health Care 21.8
Industrials 14.6
Utilities 8.8
Materials 7.2
Consumer Discretionary 6.5
Financials 6.0
Consumer Staples 3.9
Communication Services 3.5
Energy 2.8
Real Estate 1.3
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Corteva, Inc. 6.5%
Block, Inc. 5.5
Sempra Energy 4.9
Regeneron Pharmaceuticals, Inc. 4.6
United Therapeutics Corp. 4.2
ON Semiconductor Corp. 3.6
Constellation Energy Corp. 3.1
Gitlab, Inc., Class A 2.7
Academy Sports & Outdoors, Inc. 2.6
Eli Lilly & Co. 2.6
-------
Total 40.3%
=======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2012 - DECEMBER 31, 2022
First Trust
US Equity IPOX(R)-100 S&P 500(R) Russell 3000(R)
Opportunities ETF U.S. Index Index Index
12/12 $10,000 $10,000 $10,000 $10,000
06/13 11,679 11,708 11,382 11,406
12/13 14,798 14,888 13,238 13,355
06/14 15,776 15,923 14,183 14,282
12/14 16,560 16,764 15,051 15,032
06/15 17,991 18,266 15,236 15,324
12/15 16,922 17,232 15,259 15,105
06/16 16,812 17,160 15,845 15,652
12/16 18,056 18,480 17,084 17,028
06/17 19,986 20,505 18,680 18,549
12/17 22,924 23,581 20,813 20,626
06/18 24,123 24,866 21,365 21,290
12/18 21,040 21,745 19,901 19,544
06/19 26,470 27,429 23,591 23,201
12/19 27,444 28,477 26,167 25,607
06/20 28,739 29,870 25,361 24,716
12/20 40,554 42,272 30,981 30,954
06/21 43,705 45,666 35,706 35,631
12/21 42,040 44,040 39,873 38,898
06/22 28,251 29,665 31,914 30,691
12/22 27,309 28,735 32,654 31,428
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 9
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NYSE(R) ARCA(R) BIOTECHNOLOGY INDEX FUND (FBT)
The First Trust NYSE(R) Arca(R) Biotechnology Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the NYSE(R) Arca(R)
Biotechnology Index (the "Index"). The Fund will normally invest at least 90% of
its net assets (including investment borrowings) in the common stocks and
depositary receipts that comprise the Index. The Index is an equal-dollar
weighted index designed to measure the performance of a cross section of small,
mid and large capitalization companies in the biotechnology industry that are
primarily involved in the use of biological processes to develop products or
provide services. Such processes include, but are not limited to, recombinant
DNA technology, molecular biology, genetic engineering, monoclonal
antibody-based technology, lipid/liposome technology and genomics. This Index is
rebalanced and reconstituted quarterly and the Fund will make corresponding
changes to its portfolio shortly after the Index changes are made public. The
Fund's shares are listed for trading on the NYSE Arca. The first day of
secondary market trading in shares of the Fund was June 23, 2006.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (6/19/06) Ended Ended (6/19/06)
12/31/22 12/31/22 12/31/22 to 12/31/22 12/31/22 12/31/22 to 12/31/22
FUND PERFORMANCE
NAV -4.60% 4.41% 12.89% 13.26% 24.09% 236.08% 683.07%
Market Price -4.67% 4.40% 12.90% 13.25% 24.04% 236.51% 682.71%
INDEX PERFORMANCE
NYSE(R) Arca(R) Biotechnology Index -4.04% 4.89% 13.39% 13.84% 26.97% 251.21% 752.37%
S&P Composite 1500(R) Health Care Index -3.31% 12.27% 15.09% 11.80% 78.33% 307.71% 532.25%
Nasdaq(R) Biotechnology Index -10.12% 5.32% 11.95% 11.69% 29.59% 209.08% 522.16%
S&P 500(R) Index -18.11% 9.42% 12.56% 9.26% 56.88% 226.54% 332.21%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 18.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -4.60% during the 12-month period covered by
this report. During the same period, the S&P Composite 1500(R) Health Care Index
(the "Benchmark") returned -3.31%. The Fund was highly concentrated in the
Biotechnology industry, which received a 79.0% allocation in the Fund during the
period covered by this report. The Biotechnology investments in the Fund
contributed 5.4% to the Fund's overall return, by far the most significant
driver of return. The Fund's only other significant allocation was 19.6%
allocation to the Life Sciences Tools & Services industry, which contributed
-6.0% to the Fund's return.
-----------------------------
Source ICE Data Indices, LLC, is used with permission. "NYSE(R)" is a
service/trade mark of ICE Data Indices, LLC or its affiliates. This trademark
has been licensed, along with the NYSE(R) Arca(R) Biotechnology Index (the
"Index") for use by First Trust Portfolios L.P. in connection with the First
Trust NYSE(R) Arca(R) Biotechnology Index Fund (the "Product"). Neither First
Trust Portfolios L.P., First Trust Exchange-Traded Fund (the "Trust") nor the
Product, as applicable, is sponsored, endorsed, sold or promoted by ICE Data
Indices, LLC, its affiliates or its Third Party Suppliers ("ICE Data and its
Suppliers"). ICE Data and its Suppliers make no representations or warranties
regarding the advisability of investing in securities generally, in the Product
particularly, the Trust or the ability of the Index to track general market
performance. Past performance of an Index is not an indicator of or a guarantee
of future results.
ICE DATA AND ITS SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS,
EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE INDICES, INDEX DATA AND ANY
INFORMATION INCLUDED IN, RELATED TO, OR DERIVED THEREFROM ("INDEX DATA"). ICE
DATA AND ITS SUPPLIERS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH
RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE INDICES AND
THE INDEX DATA, WHICH ARE PROVIDED ON AN "AS IS" BASIS AND YOUR USE IS AT YOUR
OWN RISK.
Page 10
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NYSE(R) ARCA(R) BIOTECHNOLOGY INDEX FUND (FBT) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
INDUSTRY CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Biotechnology 80.1%
Life Sciences Tools & Services 19.9
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Exact Sciences Corp. 4.5%
Moderna, Inc. 4.1
Grifols S.A., ADR 4.1
United Therapeutics Corp. 3.8
Gilead Sciences, Inc. 3.7
Mettler-Toledo International, Inc. 3.6
Ultragenyx Pharmaceutical, Inc. 3.6
Alnylam Pharmaceuticals, Inc. 3.5
QIAGEN N.V. 3.5
Alkermes PLC 3.5
-------
Total 37.9%
=======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2012 - DECEMBER 31, 2022
First Trust NYSE(R) NYSE(R) Arca(R) Nasdaq(R) S&P Composite
Arca(R) Biotechnology Biotechnology Biotechnology S&P 500(R) 1500(R) Health
Index Fund Index Index Index Care Index
12/12 $10,000 $10,000 $10,000 $10,000 $10,000
06/13 12,623 12,651 12,688 11,382 12,061
12/13 15,010 15,080 16,597 13,238 14,219
06/14 17,877 17,980 18,839 14,183 15,669
12/14 22,160 22,306 22,307 15,051 17,744
06/15 26,964 27,187 27,168 15,236 19,554
12/15 24,588 24,846 24,932 15,259 19,059
06/16 19,469 19,733 19,011 15,845 19,170
12/16 19,769 20,088 19,610 17,084 18,668
06/17 24,786 25,249 23,010 18,680 21,743
12/17 27,081 27,660 23,852 20,813 22,863
06/18 30,461 31,176 24,601 21,365 23,613
12/18 27,025 27,734 21,737 19,901 24,397
06/19 30,625 31,511 24,552 23,591 26,446
12/19 32,371 33,399 27,196 26,167 29,487
06/20 36,476 37,734 30,968 25,361 29,304
12/20 36,556 37,930 34,384 30,981 33,779
06/21 37,558 39,083 37,324 35,706 37,768
12/21 35,226 36,593 34,390 39,873 42,172
06/22 29,495 30,727 27,405 31,914 38,305
12/22 33,608 35,121 30,908 32,654 40,771
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 11
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
The First Trust Dow Jones Internet Index Fund (the "Fund") seeks investment
results that correspond generally to the price and yield (before the Fund's fees
and expenses) of an equity index called the Dow Jones Internet Composite
Index(SM) (the "Index"). The Fund will normally invest at least 90% of its net
assets (including investment borrowings) in the common stocks that comprise the
Index. The Index is designed to measure the performance of the largest and most
actively traded securities issued by U.S. companies in the Internet industry.
The Index is rebalanced and reconstituted quarterly and the Fund will make
corresponding changes to its portfolio shortly after the Index changes are made
public. The Fund's shares are listed for trading on the NYSE Arca. The first day
of secondary market trading in shares of the Fund was June 23, 2006.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (6/19/06) Ended Ended (6/19/06)
12/31/22 12/31/22 12/31/22 to 12/31/22 12/31/22 12/31/22 to 12/31/22
FUND PERFORMANCE
NAV -45.51% 2.32% 12.18% 11.65% 12.15% 215.69% 518.41%
Market Price -45.54% 2.31% 12.18% 11.65% 12.09% 215.61% 518.26%
INDEX PERFORMANCE
Dow Jones Internet Composite Index(SM) -45.24% 2.89% 12.78% 12.25% 15.29% 232.86% 576.24%
S&P Composite 1500(R) Information
Technology Index -27.91% 15.47% 18.02% 13.72% 105.27% 424.14% 737.86%
S&P 500(R) Index -18.11% 9.42% 12.56% 9.26% 56.88% 226.54% 332.21%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 18.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -45.51% during the 12-month period covered by
this report. During the same period, the S&P Composite 1500(R) Information
Technology Index (the "Benchmark") generated a return of -27.91%. The largest
sector allocation was to the Information Technology sector with 46.1% average
weight. This allocation caused a -18.0% contribution to the Fund's return, which
was the most significant contribution to the Fund's return. This was the largest
weight in the Fund, with the second most being the Communication Services
sector, which had an average weight of 30.0% and contributed -15.2% to the
Fund's return over the period. No sector allocation caused significant positive
return to the Fund during the period covered by this report.
-----------------------------
The Dow Jones Internet Composite Index(SM) ("Index") is a product of S&P Dow
Jones Indices LLC or its affiliates ("SPDJI") and has been licensed for use by
First Trust. S&P(R) is a registered trademark of Standard & Poor's Financial
Services LLC ("S&P"); Dow Jones(R) is a registered trademark of Dow Jones
Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed
for use by SPDJI and sublicensed for certain purposes by First Trust. The Fund
is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their
respective affiliates and none of such parties make any representation regarding
the advisability of investing in such product nor do they have any liability for
any errors, omissions, or interruptions of the Index.
Page 12
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 48.5%
Communication Services 27.3
Consumer Discretionary 18.9
Health Care 3.4
Real Estate 1.9
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Amazon.com, Inc. 8.4%
Meta Platforms, Inc., Class A 6.5
Cisco Systems, Inc. 5.5
Alphabet, Inc., Class A 4.9
Salesforce, Inc. 4.7
Netflix, Inc. 4.6
Alphabet, Inc., Class C 4.4
PayPal Holdings, Inc. 3.8
Snowflake, Inc., Class A 3.1
Workday, Inc., Class A 2.8
-------
Total 48.7%
=======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2012 - DECEMBER 31, 2022
First Trust Dow Jones S&P Composite 1500(R)
Internet Dow Jones Internet Composite S&P 500(R) Information Technology
Index Fund Index(SM) Index Index
12/12 $10,000 $10,000 $10,000 $10,000
06/13 11,628 11,660 11,382 10,673
12/13 15,340 15,435 13,238 12,899
06/14 15,266 15,388 14,183 13,989
12/14 15,712 15,866 15,051 15,343
06/15 17,219 17,435 15,236 15,542
12/15 19,132 19,420 15,259 16,201
06/16 18,485 18,810 15,845 16,211
12/16 20,454 20,866 17,084 18,597
06/17 24,283 24,839 18,680 21,688
12/17 28,149 28,868 20,813 25,531
06/18 35,285 36,276 21,365 28,222
12/18 29,901 30,824 19,901 25,341
06/19 36,832 38,123 23,591 32,183
12/19 35,661 37,014 26,167 37,947
06/20 43,710 45,512 25,361 43,153
12/20 54,436 56,817 30,981 54,351
06/21 62,759 65,658 35,706 61,775
12/21 57,943 60,783 39,877 72,715
06/22 32,564 34,257 31,918 53,198
12/22 31,569 33,286 32,654 52,414
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 13
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
The First Trust Capital Strength ETF (the "Fund") seeks investment results that
correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called The Capital Strength Index(SM) (the
"Index"). The Fund will normally invest at least 90% of its net assets
(including investment borrowings) in the common stocks and real estate
investment trusts that comprise the Index. The Index seeks to provide exposure
to well-capitalized companies with strong market positions that have the
potential to provide their stockholders with a greater degree of stability and
performance over time. The Index is rebalanced and reconstituted quarterly and
the Fund will make corresponding changes to its portfolio shortly after the
Index changes are made public. The Fund's shares are listed for trading on The
Nasdaq Stock Market LLC. The first day of secondary market trading in shares of
the Fund was July 11, 2006.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (7/6/06) Ended Ended (7/6/06)
12/31/22 12/31/22 12/31/22 to 12/31/22 12/31/22 12/31/22 to 12/31/22
FUND PERFORMANCE
NAV -10.28% 9.31% 13.08% 9.91% 56.09% 241.86% 374.96%
Market Price -10.27% 9.27% 13.09% 9.91% 55.81% 242.03% 375.02%
INDEX PERFORMANCE
The Capital Strength Index(SM)* -9.77% 9.99% N/A N/A 60.95% N/A N/A
S&P 500(R) Index -18.11% 9.42% 12.56% 9.10% 56.88% 226.54% 320.27%
------------------------------------------------------------------------------------------------------------------------------------
* On June 4, 2013, the Fund's underlying index changed from the Credit
Suisse U.S. Value Index, Powered by HOLT(TM) to The Capital Strength
Index(SM). On June 18, 2010, the Fund's underlying index changed from the
Deutsche Bank CROCI(R) US+ Index(TM) to the Credit Suisse U.S. Value
Index, Powered by HOLT(TM). Since the Fund's new underlying index had an
inception date of March 20, 2013, it was not in existence for some of the
periods disclosed.
(See Notes to Fund Performance Overview on page 18.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -10.28% during the 12-month period covered by
this report. During the same period, the S&P 500(R) Index (the "Benchmark")
generated a return of -18.11%. The Fund allocated 27.7% to the Health Care
sector, which was the largest sector weight in the Fund. The second highest
weight was the Industrials sector, which had an average weight of 21.9%. These
sectors contributed -0.3% each to the Fund's overall return. The most
significant contribution to the Fund's return came from the allocation to the
Information Technology sector. These investments received an allocation of 13.3%
and contributed -3.5% to the Fund's return. No sector allocation has a
significantly positive contribution to the Fund's return during the period
covered by this report.
-----------------------------
Nasdaq(R) and The Capital Strength Index(SM) are registered trademarks and
service marks of Nasdaq, Inc. (together with its affiliates hereinafter referred
to as the "Corporations") and are licensed for use by First Trust. The Fund has
not been passed on by the Corporations as to its legality or suitability. The
Fund is not issued, endorsed, sold or promoted by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 14
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CAPITAL STRENGTH ETF (FTCS) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Health Care 32.0%
Industrials 20.2
Information Technology 17.5
Consumer Staples 12.1
Financials 12.1
Real Estate 3.7
Materials 2.4
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Air Products and Chemicals, Inc. 2.4%
Hologic, Inc. 2.2
Procter & Gamble (The) Co. 2.2
Honeywell International, Inc. 2.2
Trane Technologies PLC 2.2
Merck & Co., Inc. 2.2
Monster Beverage Corp. 2.2
Emerson Electric Co. 2.2
Abbott Laboratories 2.2
Moody's Corp. 2.1
-------
Total 22.1%
=======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2012 - DECEMBER 31, 2022 
First Trust Capital S&P 500(R)
Strength ETF Index
12/12 $10,000 $10,000
06/13 11,665 11,382
12/13 13,590 13,238
06/14 14,348 14,183
12/14 15,691 15,051
06/15 15,664 15,236
12/15 15,949 15,259
06/16 16,801 15,845
12/16 17,317 17,084
06/17 19,463 18,680
12/17 21,904 20,813
06/18 22,086 21,365
12/18 21,006 19,901
06/19 24,697 23,591
12/19 26,625 26,167
06/20 25,938 25,362
12/20 30,099 30,985
06/21 33,879 35,708
12/21 38,100 39,877
06/22 31,695 31,918
12/22 34,186 32,654
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the index does
not actually hold a portfolio of securities and therefore does not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 15
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
The First Trust Value Line(R) Dividend Index Fund (the "Fund") seeks investment
results that correspond generally to the price and yield (before the Fund's fees
and expenses) of an equity index called the Value Line(R) Dividend Index (the
"Index"). The Fund will normally invest at least 90% of its net assets
(including investment borrowings) in the common stocks and depositary receipts
that comprise the Index. The Index seeks to measure the performance of the
securities ranked #1 or #2 according to Value Line Publishing, LLC's proprietary
Value Line(R) Safety(SM) Ranking System that are also still expected to provide
above-average dividend yield. The Index is rebalanced and reconstituted monthly,
and the Fund will make corresponding changes to its portfolio shortly after the
Index changes are made public. The Fund's shares are listed for trading on the
NYSE Arca.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended (8/19/03) Ended Ended (8/19/03)
12/31/22 12/31/22 12/31/22 to 12/31/22 12/31/22 12/31/22 to 12/31/22
FUND PERFORMANCE
NAV -5.24% 7.65% 11.23% 9.47% 44.59% 189.85% 476.39%
Market Price -5.26% 7.64% 11.23% 9.47% 44.49% 189.84% 476.38%
INDEX PERFORMANCE
Value Line(R) Dividend Index* -4.60% 8.52% 12.13% N/A 50.52% 214.13% N/A
S&P 500(R) Index -18.11% 9.42% 12.56% 9.33% 56.88% 226.54% 462.66%
Dow Jones U.S. Select Dividend Index(SM)* 2.31% 8.38% 11.92% N/A 49.51% 208.30% N/A
------------------------------------------------------------------------------------------------------------------------------------
On December 15, 2006, the Fund acquired the assets and adopted the
financial and performance history of First Trust Value Line(R) Dividend
Fund (the "Predecessor FVD Fund," a closed-end fund), which had an
inception date of August 19, 2003. The inception date total returns at net
asset value ("NAV") include the sales load of $0.675 per share on the
initial offering. The investment goals, strategies and policies of the
Fund are substantially similar to those of the Predecessor FVD Fund. The
inception date of the Index was July 3, 2006. Returns for the Index are
only disclosed for those periods in which the Index was in existence for
the entire period. The cumulative total returns for the period from the
reorganization date (December 15, 2006) through period end (December 31,
2022) were 256.35% and 258.05% at NAV and Market Price, respectively. That
compares to an Index return of 304.55% for the same period. The average
annual total returns for the period from the reorganization date (December
15, 2006) through period end (December 31, 2022) were 8.24% and 8.27% at
NAV and Market Price, respectively. That compares to an Index return of
9.10% for the same period.
NAV and Market Price returns assume that all distributions have been
reinvested in the Fund at NAV and Market Price, respectively. Prior to
December 15, 2006, NAV and Market Price returns assumed that all
distributions were reinvested at prices obtained by the Dividend
Reinvestment Plan of the Predecessor FVD Fund and the price used to
calculate Market Price return was the AMEX (now known as the NYSE
American) closing market price of the Predecessor FVD Fund.
* Performance data is not available for all the periods shown in the table
because performance data does not exist for the periods shown.
(See Notes to Fund Performance Overview on page 18.)
PERFORMANCE REVIEW
The Fund generated a NAV return of -5.24% during the 12-month period covered by
this report. During the same period, the S&P 500(R) Index (the "Benchmark")
generated a return of -18.11%. The Fund allocated 19.8% to the Utilities sector,
which was the largest sector weight in the Fund. This allocation contributed
0.4% to the Fund's return. Other notable sector weights included the Information
Technology sector, the Industrials sector, the Financials sector, and the
Consumer Staples sector, all of which had 10-16% average weight over the period.
The largest contributor to the Fund's return was the Information Technology
sector, which contributed -1.75%. The Consumer Staples sector contributed most
positively to the Fund's return at 0.8%.
-----------------------------
Value Line(R) and Value Line(R) Dividend Index are trademarks or registered
trademarks of Value Line, Inc. ("Value Line") and have been licensed for use for
certain purposes by First Trust. The Fund is not sponsored, endorsed,
recommended, sold or promoted by Value Line and Value Line makes no
representation regarding the advisability of investing in products utilizing
such strategy.
Page 16
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD) (CONTINUED)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Utilities 21.8%
Consumer Staples 15.9
Industrials 13.3
Financials 12.1
Information Technology 11.0
Health Care 9.2
Consumer Discretionary 5.2
Materials 4.6
Real Estate 3.4
Communication Services 2.9
Energy 0.6
-------
Total 100.0%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Rogers Communications, Inc., Class B 0.6%
Tractor Supply Co. 0.6
Verizon Communications, Inc. 0.6
Open Text Corp. 0.6
JPMorgan Chase & Co. 0.6
Cognizant Technology Solutions Corp.,
Class A 0.6
Bank of New York Mellon (The) Corp. 0.6
Amdocs Ltd. 0.6
Raytheon Technologies Corp. 0.6
Baxter International, Inc. 0.6
-------
Total 6.0%
=======
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2012 - DECEMBER 31, 2022
First Trust
Value Line(R) Value Line(R) S&P 500(R) Dow Jones U.S. Select
Dividend Index Fund Dividend Index Index Dividend Index(SM)
12/12 $10,000 $10,000 $10,000 $10,000
06/13 11,389 11,439 11,382 11,385
12/13 12,657 12,759 13,238 12,906
06/14 13,736 13,910 14,183 14,179
12/14 14,676 14,918 15,051 14,888
06/15 14,371 14,664 15,236 14,356
12/15 14,860 15,230 15,259 14,645
06/16 16,952 17,451 15,845 16,922
12/16 17,823 18,418 17,084 17,865
06/17 18,793 19,495 18,680 18,953
12/17 20,048 20,871 20,813 20,623
06/18 19,892 20,790 21,365 20,833
12/18 19,359 20,299 19,901 19,396
06/19 22,666 23,870 23,591 22,042
12/19 24,502 25,908 26,167 23,878
06/20 20,935 22,260 25,361 18,701
12/20 24,494 26,162 30,981 22,787
06/21 28,016 30,042 35,706 28,185
12/21 30,585 32,926 39,873 30,135
06/22 27,832 30,078 31,914 29,364
12/22 28,985 31,413 32,654 30,830
Performance figures assume reinvestment of all distributions and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption or sale of Fund shares. An index is a statistical composite that
tracks a specified financial market or sector. Unlike the Fund, the indices do
not actually hold a portfolio of securities and therefore do not incur the
expenses incurred by the Fund. These expenses negatively impact the performance
of the Fund. The Fund's past performance does not predict future performance.
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Information showing the number of days the market price of the Fund's shares was
greater (at a premium) and less (at a discount) than the Fund's net asset value
for the most recently completed year, and the most recently completed calendar
quarters since that year (or life of the Fund, if shorter) is available at
https://www.ftportfolios.com/Retail/etf/home.aspx.
Page 17
--------------------------------------------------------------------------------
NOTES TO FUND PERFORMANCE OVERVIEW (UNAUDITED)
--------------------------------------------------------------------------------
Total returns for the periods since inception are calculated from the inception
date of each Fund. "Average Annual Total Returns" represent the average annual
change in value of an investment over the periods indicated. "Cumulative Total
Returns" represent the total change in value of an investment over the periods
indicated. The total returns would have been lower if certain fees had not been
waived and expenses reimbursed by the Advisor.
Each Fund's per share net asset value ("NAV") is the value of one share of the
Fund and is computed by dividing the value of all assets of the Fund (including
accrued interest and dividends), less all liabilities (including accrued
expenses and dividends declared but unpaid), by the total number of outstanding
shares. The price used to calculate market return ("Market Price") is determined
by using the midpoint of the national best bid and offer price ("NBBO") as of
the time that the Fund's NAV is calculated. Under SEC rules, the NBBO consists
of the highest displayed buy and lowest sell prices among the various exchanges
trading the Fund at the time the Fund's NAV is calculated. Prior to January 1,
2019, the price used was the midpoint between the highest bid and the lowest
offer on the stock exchange on which shares of the Fund were listed for trading
as of the time that the Fund's NAV was calculated. Since shares of each Fund did
not trade in the secondary market until after the Fund's inception, for the
period from inception to the first day of secondary market trading in shares of
the Fund, the NAV of each Fund is used as a proxy for the secondary market
trading price to calculate market returns. NAV and market returns assume that
all distributions have been reinvested in each Fund at NAV and Market Price,
respectively.
An index is a statistical composite that tracks a specified financial market or
sector. Unlike each Fund, the indices do not actually hold a portfolio of
securities and therefore do not incur the expenses incurred by each Fund. These
expenses negatively impact the performance of each Fund. Also, market returns do
not include brokerage commissions that may be payable on secondary market
transactions. If brokerage commissions were included, market returns would be
lower. The total returns presented reflect the reinvestment of dividends on
securities in the indices. The returns presented do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption or
sale of Fund shares. The investment return and principal value of shares of each
Fund will vary with changes in market conditions. Shares of each Fund may be
worth more or less than their original cost when they are redeemed or sold in
the market. Each Fund's past performance is no guarantee of future performance.
Page 18
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES
DECEMBER 31, 2022 (UNAUDITED)
As a shareholder of First Trust Dow Jones Select MicroCap Index Fund, First
Trust Morningstar Dividend Leaders Index Fund, First Trust US Equity
Opportunities ETF, First Trust NYSE(R) Arca(R) Biotechnology Index Fund, First
Trust Dow Jones Internet Index Fund, First Trust Capital Strength ETF or First
Trust Value Line(R) Dividend Index Fund (each a "Fund" and collectively, the
"Funds"), you incur two types of costs: (1) transaction costs; and (2) ongoing
costs, including management fees, distribution and/or service (12b-1) fees, if
any, and other Fund expenses. This Example is intended to help you understand
your ongoing costs of investing in the Funds and to compare these costs with the
ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held through the six-month period ended December 31, 2022.
ACTUAL EXPENSES
The first line in the following table provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During the Six-Month
Period" to estimate the expenses you paid on your account during this six-month
period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the following table provides information about hypothetical
account values and hypothetical expenses based on each Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
each Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Funds and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as brokerage
commissions. Therefore, the second line in the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
--------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO EXPENSES PAID
BEGINNING ENDING BASED ON THE DURING THE
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH SIX-MONTH
JULY 1, 2022 DECEMBER 31, 2022 PERIOD (a) PERIOD (b)
--------------------------------------------------------------------------------------------------------------------------
FIRST TRUST DOW JONES SELECT MICROCAP INDEX
FUND (FDM)
Actual $1,000.00 $1,066.80 0.60% $3.13
Hypothetical (5% return before expenses) $1,000.00 $1,022.18 0.60% $3.06
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX
FUND (FDL)
Actual $1,000.00 $1,062.90 0.45% $2.34
Hypothetical (5% return before expenses) $1,000.00 $1,022.94 0.45% $2.29
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
Actual $1,000.00 $ 966.50 0.58% $2.87
Hypothetical (5% return before expenses) $1,000.00 $1,022.28 0.58% $2.96
FIRST TRUST NYSE(R) ARCA(R) BIOTECHNOLOGY INDEX
FUND (FBT)
Actual $1,000.00 $1,139.40 0.55% $2.97
Hypothetical (5% return before expenses) $1,000.00 $1,022.43 0.55% $2.80
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
Actual $1,000.00 $ 969.50 0.52% $2.58
Hypothetical (5% return before expenses) $1,000.00 $1,022.58 0.52% $2.65
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
Actual $1,000.00 $1,078.50 0.55% $2.88
Hypothetical (5% return before expenses) $1,000.00 $1,022.43 0.55% $2.80
Page 19
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES (CONTINUED)
DECEMBER 31, 2022 (UNAUDITED)
--------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO EXPENSES PAID
BEGINNING ENDING BASED ON THE DURING THE
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH SIX-MONTH
JULY 1, 2022 DECEMBER 31, 2022 PERIOD (a) PERIOD (b)
--------------------------------------------------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
Actual $1,000.00 $1,041.30 0.62% $3.19
Hypothetical (5% return before expenses) $1,000.00 $1,022.08 0.62% $3.16
(a) These expense ratios reflect expense caps for certain Funds. See Note 3 in
Notes to Financial Statements.
(b) Expenses are equal to the annualized expense ratio as indicated in the
table multiplied by the average account value over the period (July 1,
2022 through December 31, 2022), multiplied by 184/365 (to reflect the
six-month period).
Page 20
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS -- 100.0%
AEROSPACE & DEFENSE -- 0.6%
12,496 National Presto Industries, Inc. $ 855,476
---------------
AIR FREIGHT & LOGISTICS -- 0.3%
92,175 Radiant Logistics, Inc. (a) 469,171
---------------
AUTO COMPONENTS -- 1.8%
128,129 Modine Manufacturing Co. (a) 2,544,642
---------------
BANKS -- 21.6%
20,929 ACNB Corp. 833,184
43,751 Amalgamated Financial Corp. 1,008,023
35,084 Bank of Marin Bancorp 1,153,562
15,928 Bankwell Financial Group, Inc. 468,761
36,558 BCB Bancorp, Inc. 657,678
59,294 Carter Bankshares, Inc. (a) 983,687
26,140 Coastal Financial Corp. (a) 1,242,173
104,024 CrossFirst Bankshares, Inc. (a) 1,290,938
16,834 Esquire Financial Holdings, Inc. 728,239
30,787 Farmers & Merchants Bancorp,
Inc. (b) 836,791
11,356 Fidelity D&D Bancorp, Inc. 535,322
59,093 First Bancshares (The), Inc. 1,891,567
18,039 First Business Financial
Services, Inc. 659,325
26,905 First Financial Corp. 1,239,782
13,442 First Guaranty Bancshares,
Inc. (b) 315,215
52,940 First of Long Island (The) Corp. 952,920
69,635 Flushing Financial Corp. 1,349,526
28,905 FVCBankcorp, Inc. (a) 551,218
149,328 Heritage Commerce Corp. 1,941,264
34,207 HomeTrust Bancshares, Inc. 826,783
51,806 Independent Bank Corp. 1,239,200
28,386 John Marshall Bancorp, Inc. (b) 816,949
44,815 Metrocity Bankshares, Inc. 969,348
54,472 Midland States Bancorp, Inc. 1,450,045
96,467 Old Second Bancorp, Inc. 1,547,331
26,261 Orrstown Financial Services, Inc. 608,205
35,449 PCSB Financial Corp. (b) 674,949
39,226 Peapack-Gladstone Financial
Corp. 1,459,992
31,935 Professional Holding Corp.,
Class A (a) 885,877
35,068 RBB Bancorp 731,168
112,949 Republic First Bancorp, Inc. (a) 242,840
42,977 Shore Bancshares, Inc. 749,089
14,782 Unity Bancorp, Inc. 403,992
---------------
31,244,943
---------------
BIOTECHNOLOGY -- 0.7%
25,608 Eagle Pharmaceuticals, Inc. (a) 748,522
282,265 Selecta Biosciences, Inc. (a) 318,959
---------------
1,067,481
---------------
BUILDING PRODUCTS -- 0.9%
47,903 Insteel Industries, Inc. 1,318,291
---------------
CAPITAL MARKETS -- 1.4%
66,174 Bridge Investment Group
Holdings, Inc., Class A 797,397
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
CAPITAL MARKETS (CONTINUED)
103,880 GCM Grosvenor, Inc., Class A (b) $ 790,527
21,545 Silvercrest Asset Management
Group, Inc., Class A 404,399
---------------
1,992,323
---------------
CHEMICALS -- 1.3%
63,500 FutureFuel Corp. 516,255
23,885 Intrepid Potash, Inc. (a) 689,560
61,879 Tredegar Corp. 632,403
---------------
1,838,218
---------------
COMMERCIAL SERVICES & SUPPLIES
-- 2.7%
231,819 ACCO Brands Corp. 1,295,868
63,539 Ennis, Inc. 1,408,024
25,813 VSE Corp. 1,210,114
---------------
3,914,006
---------------
COMMUNICATIONS EQUIPMENT
-- 1.0%
26,448 Aviat Networks, Inc. (a) 824,913
27,925 Cambium Networks Corp. (a) 605,135
---------------
1,430,048
---------------
CONSTRUCTION & ENGINEERING
-- 1.1%
24,414 Northwest Pipe Co. (a) 822,752
103,827 Tutor Perini Corp. (a) 783,894
---------------
1,606,646
---------------
CONSUMER FINANCE -- 0.9%
23,599 Consumer Portfolio Services,
Inc. (a) (b) 208,851
132,029 EZCORP, Inc., Class A (a) 1,076,036
---------------
1,284,887
---------------
DISTRIBUTORS -- 0.2%
16,565 Weyco Group, Inc. 350,515
---------------
DIVERSIFIED CONSUMER SERVICES
-- 1.4%
46,462 American Public Education,
Inc. (a) 571,018
32,208 Carriage Services, Inc. 887,008
83,044 Universal Technical Institute,
Inc. (a) 558,056
---------------
2,016,082
---------------
DIVERSIFIED FINANCIAL SERVICES
-- 1.3%
94,782 Acacia Research Corp. (a) 399,032
44,413 A-Mark Precious Metals, Inc. 1,542,464
---------------
1,941,496
---------------
ELECTRICAL EQUIPMENT -- 2.3%
180,923 Babcock & Wilcox Enterprises,
Inc. (a) 1,043,926
7,260 Preformed Line Products Co. 604,685
82,370 Thermon Group Holdings, Inc. (a) 1,653,990
---------------
3,302,601
---------------
See Notes to Financial Statements Page 21
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 2.8%
25,425 Bel Fuse, Inc., Class B $ 836,991
60,770 Kimball Electronics, Inc. (a) 1,372,794
26,807 Richardson Electronics Ltd. 571,793
30,867 Vishay Precision Group, Inc. (a) 1,193,010
---------------
3,974,588
---------------
ENTERTAINMENT -- 1.0%
83,908 Reservoir Media, Inc. (a) (b) 500,931
55,817 Sciplay Corp., Class A (a) 897,537
---------------
1,398,468
---------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 2.1%
97,682 City Office REIT, Inc. 818,575
40,687 CTO Realty Growth, Inc. 743,758
73,421 Urstadt Biddle Properties, Inc.,
Class A 1,391,328
---------------
2,953,661
---------------
FOOD & STAPLES RETAILING -- 0.1%
20,088 Natural Grocers by Vitamin
Cottage, Inc. 183,604
---------------
FOOD PRODUCTS -- 2.0%
21,959 John B Sanfilippo & Son, Inc. 1,785,706
13,013 Seneca Foods Corp., Class A (a) 793,142
84,665 Whole Earth Brands, Inc. (a) 344,587
---------------
2,923,435
---------------
HEALTH CARE EQUIPMENT &
SUPPLIES -- 0.8%
76,037 Co-Diagnostics, Inc. (a) (b) 191,613
32,275 Sensus Healthcare, Inc. (a) 239,481
53,423 Zynex, Inc. (b) 743,114
---------------
1,174,208
---------------
HOTELS, RESTAURANTS & LEISURE
-- 4.6%
44,258 Chuy's Holdings, Inc. (a) 1,252,501
140,755 Denny's Corp. (a) 1,296,354
48,291 El Pollo Loco Holdings, Inc. 480,978
6,923 Nathan's Famous, Inc. 465,295
20,915 RCI Hospitality Holdings, Inc. 1,949,069
74,543 Ruth's Hospitality Group, Inc. 1,153,926
---------------
6,598,123
---------------
HOUSEHOLD DURABLES -- 2.2%
20,716 Bassett Furniture Industries,
Inc. 360,044
71,387 Beazer Homes USA, Inc. (a) 910,898
51,761 Dream Finders Homes, Inc.,
Class A (a) (b) 448,251
56,103 Ethan Allen Interiors, Inc. 1,482,241
---------------
3,201,434
---------------
INSURANCE -- 1.5%
111,911 Citizens, Inc. (a) (b) 238,370
5,915 National Western Life Group,
Inc., Class A 1,662,115
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
INSURANCE (CONTINUED)
44,088 Trean Insurance Group, Inc. (a) $ 264,528
---------------
2,165,013
---------------
INTERNET & DIRECT MARKETING
RETAIL -- 0.8%
32,576 Lands' End, Inc. (a) 247,252
66,510 Liquidity Services, Inc. (a) 935,130
---------------
1,182,382
---------------
IT SERVICES -- 2.0%
29,901 Cass Information Systems, Inc. 1,370,064
56,712 Hackett Group (The), Inc. 1,155,224
83,814 Information Services Group, Inc. 385,544
---------------
2,910,832
---------------
LEISURE PRODUCTS -- 1.9%
215,734 AMMO, Inc. (a) (b) 373,220
17,458 JAKKS Pacific, Inc. (a) 305,340
13,540 Johnson Outdoors, Inc., Class A 895,265
43,786 MasterCraft Boat Holdings,
Inc. (a) 1,132,744
---------------
2,706,569
---------------
MACHINERY -- 0.9%
73,049 Commercial Vehicle Group,
Inc. (a) 497,464
86,531 Manitowoc (The) Co., Inc. (a) 792,624
---------------
1,290,088
---------------
MARINE -- 0.3%
88,093 Pangaea Logistics Solutions Ltd. 453,679
---------------
MEDIA -- 1.4%
151,165 Entravision Communications Corp.,
Class A 725,592
106,174 PubMatic, Inc., Class A (a) 1,360,089
---------------
2,085,681
---------------
METALS & MINING -- 3.3%
217,400 Gold Resource Corp. 332,622
30,648 Haynes International, Inc. 1,400,307
23,540 Olympic Steel, Inc. 790,473
59,681 Ramaco Resources, Inc. 524,596
205,113 SunCoke Energy, Inc. 1,770,125
---------------
4,818,123
---------------
MORTGAGE REAL ESTATE INVESTMENT
TRUSTS -- 2.4%
39,565 AFC Gamma, Inc. 622,358
113,990 Dynex Capital, Inc. 1,449,953
128,748 Granite Point Mortgage Trust,
Inc. 690,089
56,301 Great Ajax Corp. 408,182
91,301 Sachem Capital Corp. (b) 301,293
---------------
3,471,875
---------------
OIL, GAS & CONSUMABLE FUELS
-- 8.4%
163,694 Alto Ingredients, Inc. (a) 471,439
29,232 Centrus Energy Corp., Class A (a) 949,455
78,397 Dorian LPG Ltd. 1,485,623
42,473 Epsilon Energy Ltd. 281,596
75,456 Evolution Petroleum Corp. 569,693
231,624 Ring Energy, Inc. (a) (b) 569,795
Page 22 See Notes to Financial Statements
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (CONTINUED)
OIL, GAS & CONSUMABLE FUELS
(CONTINUED)
77,977 SandRidge Energy, Inc. (a) $ 1,327,948
182,202 Sitio Royalties Corp.,
Class A (b) 5,256,528
258,534 VAALCO Energy, Inc. 1,178,915
---------------
12,090,992
---------------
PHARMACEUTICALS -- 2.6%
186,398 Atea Pharmaceuticals, Inc. (a) 896,575
82,565 Collegium Pharmaceutical,
Inc. (a) 1,915,508
50,018 Phibro Animal Health Corp.,
Class A 670,741
32,427 ProPhase Labs, Inc. (b) 312,272
---------------
3,795,096
---------------
PROFESSIONAL SERVICES -- 3.3%
17,122 Barrett Business Services, Inc. 1,597,140
48,845 Heidrick & Struggles
International, Inc. 1,366,195
16,701 RCM Technologies, Inc. (a) 206,090
80,467 TrueBlue, Inc. (a) 1,575,544
---------------
4,744,969
---------------
REAL ESTATE MANAGEMENT &
DEVELOPMENT -- 1.6%
165,847 Douglas Elliman, Inc. 674,997
44,056 Forestar Group, Inc. (a) 678,903
35,072 RMR Group (The), Inc., Class A 990,784
---------------
2,344,684
---------------
ROAD & RAIL -- 0.5%
20,555 Covenant Logistics Group, Inc. 710,586
---------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 0.3%
99,613 AXT, Inc. (a) 436,305
---------------
SOFTWARE -- 0.3%
15,074 CoreCard Corp. (a) 436,694
---------------
SPECIALTY RETAIL -- 4.9%
52,087 Arhaus, Inc. (a) 507,848
31,624 Build-A-Bear Workshop, Inc. (a) 753,916
307,645 Chico's FAS, Inc. (a) 1,513,613
133,653 Destination XL Group, Inc. (a) 902,158
32,534 Haverty Furniture Cos., Inc. 972,767
19,695 Lazydays Holdings, Inc. (a) (b) 235,158
26,763 OneWater Marine, Inc.,
Class A (a) 765,422
30,686 TravelCenters of America,
Inc. (a) 1,374,119
---------------
7,025,001
---------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 0.4%
82,419 Immersion Corp. (a) 579,406
---------------
TEXTILES, APPAREL & LUXURY GOODS
-- 1.1%
39,076 Movado Group, Inc. 1,260,201
31,050 Unifi, Inc. (a) 267,340
---------------
1,527,541
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE
-- 2.7%
16,053 Ocwen Financial Corp. (a) $ 490,901
18,839 Southern Missouri Bancorp, Inc. 863,391
46,855 TrustCo Bank Corp. 1,761,280
227,675 UWM Holdings Corp. (b) 753,604
---------------
3,869,176
---------------
TRADING COMPANIES &
DISTRIBUTORS -- 3.5%
38,765 DXP Enterprises, Inc. (a) 1,067,976
95,337 Hudson Technologies, Inc. (a) 964,810
18,140 Rush Enterprises, Inc., Class B 1,020,738
49,397 Titan Machinery, Inc. (a) 1,962,543
---------------
5,016,067
---------------
WATER UTILITIES -- 0.8%
18,846 Artesian Resources Corp.,
Class A 1,103,999
---------------
TOTAL COMMON STOCKS -- 100.0% 144,349,105
(Cost $154,502,442) ---------------
MONEY MARKET FUNDS -- 5.2%
7,533,156 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
4.14% (c) (d) 7,533,156
(Cost $7,533,156) ---------------
TOTAL INVESTMENTS -- 105.2% 151,882,261
(Cost $162,035,598)
NET OTHER ASSETS AND
LIABILITIES -- (5.2)% (7,440,711)
---------------
NET ASSETS -- 100.0% $ 144,441,550
===============
(a) Non-income producing security.
(b) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $7,244,228 and the
total value of the collateral held by the Fund is $7,533,156.
(c) Rate shown reflects yield as of December 31, 2022.
(d) This security serves as collateral for securities on loan.
See Notes to Financial Statements Page 23
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2022
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
--------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
--------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 7,244,228
Non-cash Collateral(2) (7,244,228)
---------------
Net Amount $ --
===============
(1) The amount presented on the Statements of Assets and Liabilities, which is
included in "Investments, at value," is not offset and is shown on a gross
basis.
(2) At December 31, 2022, the value of the collateral received from each
borrower exceeded the value of the related securities loaned. This amount
is disclosed on the Portfolio of Investments.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of December 31,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks*................................ $ 144,349,105 $ 144,349,105 $ -- $ --
Money Market Funds............................ 7,533,156 7,533,156 -- --
------------------------------------------------------------------
Total Investments............................. $ 151,882,261 $ 151,882,261 $ -- $ --
==================================================================
* See Portfolio of Investments for industry breakout.
Page 24 See Notes to Financial Statements
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS -- 99.7%
AIR FREIGHT & LOGISTICS -- 3.2%
886,347 United Parcel Service, Inc.,
Class B $ 154,082,562
---------------
BANKS -- 11.9%
189,187 Associated Banc-Corp. 4,368,328
50,714 Bank of Hawaii Corp. 3,933,378
208,668 Cadence Bank 5,145,753
80,861 Cathay General Bancorp 3,298,320
3,077,389 Citigroup, Inc. 139,190,304
733,468 Citizens Financial Group, Inc. 28,876,635
104,951 Columbia Banking System, Inc. 3,162,174
447,473 F.N.B. Corp. 5,839,523
121,084 First Financial Bancorp 2,933,865
188,772 First Hawaiian, Inc. 4,915,623
143,488 First Interstate BancSystem,
Inc., Class A 5,545,811
201,509 Fulton Financial Corp. 3,391,396
2,120,749 Huntington Bancshares, Inc. 29,902,561
1,541,721 KeyCorp 26,856,780
315,641 Old National Bancorp 5,675,225
552,020 PNC Financial Services Group
(The), Inc. 87,186,039
2,294,287 Truist Financial Corp. 98,723,170
2,073,547 U.S. Bancorp 90,427,385
341,613 Umpqua Holdings Corp. 6,097,792
164,295 United Bankshares, Inc. 6,652,304
555,570 Valley National Bancorp 6,283,497
72,206 WesBanco, Inc. 2,670,178
---------------
571,076,041
---------------
BIOTECHNOLOGY -- 9.6%
2,097,732 AbbVie, Inc. 339,014,468
1,450,509 Gilead Sciences, Inc. 124,526,198
---------------
463,540,666
---------------
CAPITAL MARKETS -- 3.6%
184,844 Ares Management Corp., Class A 12,650,723
152,902 Artisan Partners Asset
Management, Inc., Class A 4,541,190
1,132,042 Blackstone, Inc. 83,986,196
338,161 Carlyle Group (The), Inc. 10,090,724
428,127 Franklin Resources, Inc. 11,293,990
218,403 Jefferies Financial Group, Inc. 7,486,855
132,384 Moelis & Co., Class A 5,079,574
310,851 T. Rowe Price Group, Inc. 33,901,410
147,101 Virtu Financial, Inc., Class A 3,002,332
---------------
172,032,994
---------------
CHEMICALS -- 0.9%
515,962 LyondellBasell Industries N.V.,
Class A 42,840,325
---------------
COMMUNICATIONS EQUIPMENT
-- 4.5%
4,545,529 Cisco Systems, Inc. 216,549,002
---------------
CONSUMER FINANCE -- 0.0%
147,556 Navient Corp. 2,427,296
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
CONTAINERS & PACKAGING -- 0.6%
644,591 International Paper Co. $ 22,322,186
109,727 Sonoco Products Co. 6,661,526
---------------
28,983,712
---------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 8.4%
10,260,551 Verizon Communications, Inc. 404,265,709
---------------
ELECTRIC UTILITIES -- 7.3%
79,729 ALLETE, Inc. 5,143,318
100,682 Avangrid, Inc. 4,327,312
1,081,541 Duke Energy Corp. 111,387,908
568,442 Edison International 36,164,280
261,119 Entergy Corp. 29,375,887
706,576 FirstEnergy Corp. 29,633,797
292,170 OGE Energy Corp. 11,555,324
175,347 Pinnacle West Capital Corp. 13,333,386
116,510 Portland General Electric Co. 5,708,990
1,468,650 Southern (The) Co. 104,876,297
---------------
351,506,499
---------------
FOOD & STAPLES RETAILING -- 0.9%
1,178,894 Walgreens Boots Alliance, Inc. 44,043,480
---------------
FOOD PRODUCTS -- 0.9%
576,734 Conagra Brands, Inc. 22,319,606
283,485 Kellogg Co. 20,195,471
---------------
42,515,077
---------------
GAS UTILITIES -- 0.2%
150,725 South Jersey Industries, Inc. 5,355,259
72,771 Spire, Inc. 5,011,011
---------------
10,366,270
---------------
HEALTH CARE PROVIDERS & SERVICES
-- 0.4%
234,479 Cardinal Health, Inc. 18,024,401
---------------
HOTELS, RESTAURANTS & LEISURE
-- 0.5%
43,074 Cracker Barrel Old Country Store,
Inc. 4,080,831
145,144 Darden Restaurants, Inc. 20,077,769
---------------
24,158,600
---------------
HOUSEHOLD DURABLES -- 0.8%
233,908 Leggett & Platt, Inc. 7,538,855
122,588 M.D.C. Holdings, Inc. 3,873,781
940,519 Newell Brands, Inc. 12,301,988
92,971 Whirlpool Corp. 13,151,678
---------------
36,866,302
---------------
HOUSEHOLD PRODUCTS -- 1.2%
80,663 Energizer Holdings, Inc. 2,706,244
398,754 Kimberly-Clark Corp. 54,130,855
---------------
56,837,099
---------------
INDUSTRIAL CONGLOMERATES -- 2.3%
908,636 3M Co. 108,963,629
---------------
INSURANCE -- 2.4%
36,716 CNA Financial Corp. 1,552,353
452,538 Fidelity National Financial, Inc. 17,024,480
See Notes to Financial Statements Page 25
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL)
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (CONTINUED)
INSURANCE (CONTINUED)
145,532 First American Financial Corp. $ 7,617,145
383,843 Old Republic International Corp. 9,269,808
228,789 Principal Financial Group, Inc. 19,199,973
605,338 Prudential Financial, Inc. 60,206,917
---------------
114,870,676
---------------
IT SERVICES -- 4.4%
1,408,346 International Business Machines
Corp. 198,421,868
916,261 Western Union (The) Co. 12,616,914
---------------
211,038,782
---------------
MACHINERY -- 0.0%
89,349 Trinity Industries, Inc. 2,642,050
---------------
MEDIA -- 0.8%
491,653 Interpublic Group of (The) Cos.,
Inc. 16,376,961
263,707 Omnicom Group, Inc. 21,510,580
---------------
37,887,541
---------------
MULTI-UTILITIES -- 0.2%
107,208 Avista Corp. 4,753,603
85,679 NorthWestern Corp. 5,084,192
---------------
9,837,795
---------------
OIL, GAS & CONSUMABLE FUELS
-- 21.6%
2,198,551 Devon Energy Corp. 135,232,872
4,615,642 Exxon Mobil Corp. 509,105,312
4,244,566 Kinder Morgan, Inc. 76,741,753
910,757 ONEOK, Inc. 59,836,735
630,450 Phillips 66 65,617,236
826,894 Pioneer Natural Resources Co. 188,854,321
---------------
1,035,388,229
---------------
SPECIALTY RETAIL -- 0.7%
246,983 American Eagle Outfitters, Inc. 3,447,883
301,650 Best Buy Co., Inc. 24,195,346
115,040 Foot Locker, Inc. 4,347,362
---------------
31,990,591
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 0.5%
361,951 Seagate Technology Holdings
PLC $ 19,042,242
246,671 Xerox Holdings Corp. 3,601,397
---------------
22,643,639
---------------
TEXTILES, APPAREL & LUXURY
GOODS -- 0.7%
56,721 Carter's, Inc. 4,231,954
1,152,658 Hanesbrands, Inc. 7,330,905
793,225 VF Corp. 21,900,942
---------------
33,463,801
---------------
THRIFTS & MORTGAGE FINANCE
-- 0.3%
1,283,969 New York Community Bancorp,
Inc. 11,042,133
245,980 Radian Group, Inc. 4,690,839
---------------
15,732,972
---------------
TOBACCO -- 10.5%
5,080,706 Altria Group, Inc. 232,239,071
2,689,380 Philip Morris International, Inc. 272,192,150
---------------
504,431,221
---------------
TRADING COMPANIES & DISTRIBUTORS
-- 0.4%
61,995 MSC Industrial Direct Co., Inc.,
Class A 5,064,991
84,927 Triton International Ltd. 5,841,279
39,609 Watsco, Inc. 9,878,485
---------------
20,784,755
---------------
TOTAL INVESTMENTS -- 99.7% 4,789,791,716
(Cost $4,564,937,066) ---------------
NET OTHER ASSETS AND
LIABILITIES -- 0.3% 12,025,690
---------------
NET ASSETS -- 100.0% $ 4,801,817,406
===============
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of December 31,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks*................................ $ 4,789,791,716 $ 4,789,791,716 $ -- $ --
==================================================================
* See Portfolio of Investments for industry breakout.
Page 26 See Notes to Financial Statements
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS -- 99.6%
AEROSPACE & DEFENSE -- 4.4%
64,048 General Dynamics Corp. $ 15,890,949
220,718 Leonardo DRS, Inc. (a) 2,820,776
351,206 Parsons Corp. (a) 16,243,278
---------------
34,955,003
---------------
AUTO COMPONENTS -- 1.2%
272,105 Mobileye Global, Inc.,
Class A (a) (b) 9,540,001
---------------
AUTOMOBILES -- 0.4%
154,924 Rivian Automotive, Inc.,
Class A (a) 2,855,249
---------------
BEVERAGES -- 2.3%
516,608 Keurig Dr Pepper, Inc. 18,422,241
---------------
BIOTECHNOLOGY -- 12.4%
29,761 Arcellx, Inc. (a) 921,996
26,522 Cerevel Therapeutics Holdings,
Inc. (a) 836,504
8,745 Karuna Therapeutics, Inc. (a) 1,718,392
320,160 Legend Biotech Corp., ADR (a) 15,982,387
47,323 Prometheus Biosciences, Inc. (a) 5,205,530
50,810 Regeneron Pharmaceuticals,
Inc. (a) 36,658,907
165,708 REVOLUTION Medicines,
Inc. (a) 3,947,165
119,854 United Therapeutics Corp. (a) 33,330,199
20,098 Vaxcyte, Inc. (a) 963,699
---------------
99,564,779
---------------
BUILDING PRODUCTS -- 1.1%
212,822 Carrier Global Corp. 8,778,908
---------------
CAPITAL MARKETS -- 2.4%
66,815 Owl Rock Capital Corp. (b) 771,713
419,256 TPG, Inc. 11,667,894
99,404 Tradeweb Markets, Inc., Class A 6,454,302
---------------
18,893,909
---------------
CHEMICALS -- 7.2%
883,906 Corteva, Inc. 51,955,995
119,401 Dow, Inc. 6,016,616
---------------
57,972,611
---------------
COMMERCIAL SERVICES & SUPPLIES
-- 1.6%
49,702 Driven Brands Holdings, Inc. (a) 1,357,362
91,141 Republic Services, Inc. 11,756,277
---------------
13,113,639
---------------
CONSTRUCTION & ENGINEERING
-- 1.2%
212,643 WillScot Mobile Mini Holdings
Corp. (a) 9,605,084
---------------
DIVERSIFIED FINANCIAL SERVICES
-- 0.9%
328,294 Corebridge Financial, Inc. 6,585,577
28,177 Jackson Financial, Inc., Class A 980,278
---------------
7,565,855
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
ELECTRIC UTILITIES -- 3.9%
290,967 Constellation Energy Corp. $ 25,084,265
97,334 Evergy, Inc. 6,125,229
---------------
31,209,494
---------------
ELECTRICAL EQUIPMENT -- 1.1%
389,367 Array Technologies, Inc. (a) 7,526,464
57,454 Shoals Technologies Group, Inc.,
Class A (a) 1,417,390
---------------
8,943,854
---------------
ENERGY EQUIPMENT & SERVICES
-- 1.5%
382,297 Baker Hughes Co. 11,289,231
39,471 ProFrac Holding Corp.,
Class A (a) 994,669
---------------
12,283,900
---------------
ENTERTAINMENT -- 0.8%
32,129 Sciplay Corp., Class A (a) 516,635
412,002 Warner Bros Discovery, Inc. (a) 3,905,779
65,513 Warner Music Group Corp.,
Class A 2,294,265
---------------
6,716,679
---------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 1.3%
335,014 Phillips Edison & Co., Inc. 10,666,846
---------------
FOOD & STAPLES RETAILING -- 1.0%
158,864 Albertsons Cos., Inc., Class A 3,294,839
68,426 BJ's Wholesale Club Holdings,
Inc. (a) 4,527,064
20,631 Grocery Outlet Holding Corp. (a) 602,219
---------------
8,424,122
---------------
FOOD PRODUCTS -- 0.3%
90,862 Hostess Brands, Inc. (a) 2,038,943
---------------
HEALTH CARE EQUIPMENT &
SUPPLIES -- 4.0%
142,857 Axonics, Inc. (a) 8,932,848
178,145 Bausch + Lomb Corp. (a) 2,763,029
27,661 Envista Holdings Corp. (a) 931,346
9,102 Inari Medical, Inc. (a) 578,523
72,080 PROCEPT BioRobotics
Corp. (a) (b) 2,994,203
67,450 Shockwave Medical, Inc. (a) 13,868,395
37,914 TransMedics Group, Inc. (a) 2,340,052
---------------
32,408,396
---------------
HEALTH CARE PROVIDERS & SERVICES
-- 0.8%
69,874 agilon health, Inc. (a) 1,127,766
63,543 Alignment Healthcare, Inc. (a) 747,266
68,211 HealthEquity, Inc. (a) 4,204,526
---------------
6,079,558
---------------
HOTELS, RESTAURANTS & LEISURE
-- 1.4%
130,784 Airbnb, Inc., Class A (a) 11,182,032
---------------
HOUSEHOLD PRODUCTS -- 0.2%
53,408 Reynolds Consumer Products, Inc. 1,601,172
---------------
See Notes to Financial Statements Page 27
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (CONTINUED)
INSURANCE -- 2.6%
14,262 Markel Corp. (a) $ 18,790,042
44,044 Ryan Specialty Holdings, Inc. (a) 1,828,267
---------------
20,618,309
---------------
INTERACTIVE MEDIA & SERVICES
-- 2.7%
55,002 Bumble, Inc., Class A (a) 1,157,792
747,632 Pinterest, Inc., Class A (a) 18,152,505
68,484 ZoomInfo Technologies, Inc. (a) 2,062,053
---------------
21,372,350
---------------
INTERNET & DIRECT MARKETING
RETAIL -- 0.9%
89,782 Chewy, Inc., Class A (a) 3,329,117
76,365 DoorDash, Inc., Class A (a) 3,728,139
---------------
7,057,256
---------------
IT SERVICES -- 8.3%
706,637 Block, Inc. (a) 44,405,069
69,692 Cloudflare, Inc., Class A (a) 3,150,775
45,469 Shift4 Payments, Inc.,
Class A (a) 2,543,081
81,845 Snowflake, Inc., Class A (a) 11,748,031
265,047 Toast, Inc., Class A (a) 4,778,798
31,784 Verra Mobility Corp. (a) 439,573
---------------
67,065,327
---------------
MACHINERY -- 2.8%
35,889 Cummins, Inc. 8,695,545
28,031 Esab Corp. 1,315,215
26,294 Hillenbrand, Inc. 1,121,965
148,423 Otis Worldwide Corp. 11,623,005
---------------
22,755,730
---------------
MULTI-UTILITIES -- 4.9%
253,317 Sempra Energy 39,147,609
---------------
OIL, GAS & CONSUMABLE FUELS
-- 1.2%
55,111 Excelerate Energy, Inc., Class A 1,380,531
57,599 HighPeak Energy, Inc. (b) 1,317,289
55,020 Magnolia Oil & Gas Corp.,
Class A 1,290,219
53,131 New Fortress Energy, Inc. 2,253,817
120,907 Sitio Royalties Corp.,
Class A (b) 3,488,167
---------------
9,730,023
---------------
PERSONAL PRODUCTS -- 0.1%
34,454 BellRing Brands, Inc. (a) 883,401
---------------
PHARMACEUTICALS -- 4.5%
56,204 Amylyx Pharmaceuticals, Inc. (a) 2,076,738
56,421 Eli Lilly & Co. 20,641,059
150,958 Harmony Biosciences Holdings,
Inc. (a) 8,317,786
127,224 Royalty Pharma PLC, Class A 5,027,892
---------------
36,063,475
---------------
ROAD & RAIL -- 2.3%
761,338 Uber Technologies, Inc. (a) 18,827,889
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 6.3%
194,744 Allegro MicroSystems, Inc. (a) $ 5,846,215
174,299 Credo Technology Group Holding
Ltd. (a) 2,319,920
254,312 GLOBALFOUNDRIES,
Inc. (a) (b) 13,704,873
458,532 ON Semiconductor Corp. (a) 28,598,641
---------------
50,469,649
---------------
SOFTWARE -- 8.8%
108,062 Bentley Systems, Inc., Class B 3,993,972
49,302 Bill.com Holdings, Inc. (a) 5,371,946
58,189 Clear Secure, Inc., Class A 1,596,124
42,460 Clearwater Analytics Holdings,
Inc., Class A (a) 796,125
157,392 Crowdstrike Holdings, Inc.,
Class A (a) 16,571,804
79,278 Datadog, Inc., Class A (a) 5,826,933
482,564 Gitlab, Inc., Class A (a) 21,927,708
72,530 Instructure Holdings, Inc. (a) 1,700,103
89,507 Paycor HCM, Inc. (a) 2,190,236
202,875 PowerSchool Holdings, Inc.,
Class A (a) 4,682,355
198,074 Samsara, Inc., Class A (a) 2,462,060
38,184 Vertex, Inc., Class A (a) 554,050
49,596 Zoom Video Communications,
Inc., Class A (a) 3,359,633
---------------
71,033,049
---------------
SPECIALTY RETAIL -- 2.6%
401,058 Academy Sports & Outdoors, Inc. 21,071,587
---------------
THRIFTS & MORTGAGE FINANCE
-- 0.2%
55,256 Enact Holdings, Inc. 1,332,775
---------------
TOTAL COMMON STOCKS -- 99.6% 800,250,704
(Cost $839,812,957) ---------------
PRINCIPAL
VALUE DESCRIPTION VALUE
--------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.9%
$ 479,932 Bank of America Corp., 4.25% (c),
dated 12/30/22, due 01/03/23,
with a maturity value of
$479,989. Collateralized by
U.S. Treasury Securities,
interest rates of 0.75% to
4.50%, due 11/15/25 to
03/31/26. The value of the
collateral including accrued
interest is $489,531. (d) 479,932
7,528,680 Citigroup, Inc., 4.25% (c),
dated 12/30/22, due 01/03/23,
with a maturity value of
$7,529,569. Collateralized by
U.S. Treasury Securities,
interest rates of 0.00% to
6.25%, due 06/01/23 to
02/15/52. The value of the
collateral including accrued
interest is $7,679,254. (d) 7,528,680
Page 28 See Notes to Financial Statements
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2022
PRINCIPAL
VALUE DESCRIPTION VALUE
--------------------------------------------------------------
$ 7,528,680 JPMorgan Chase & Co., 4.26% (c),
dated 12/30/22, due 01/03/23,
with a maturity value of
$7,529,571. Collateralized by
U.S. Treasury Securities,
interest rates of 0.00% to
0.13%, due 05/15/23 to
12/28/23. The value of the
collateral including accrued
interest is $7,679,254. (d) $ 7,528,680
---------------
TOTAL REPURCHASE AGREEMENTS
-- 1.9% 15,537,292
(Cost $15,537,292) ---------------
TOTAL INVESTMENTS -- 101.5% 815,787,996
(Cost $855,350,249)
NET OTHER ASSETS AND
LIABILITIES -- (1.5)% (12,694,246)
---------------
NET ASSETS -- 100.0% $ 803,093,750
===============
(a) Non-income producing security.
(b) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $15,228,066 and the
total value of the collateral held by the Fund is $15,537,292.
(c) Rate shown reflects yield as of December 31, 2022.
(d) This security serves as collateral for securities on loan.
ADR - American Depositary Receipt
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
--------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
--------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 15,228,066
Non-cash Collateral(2) (15,228,066)
---------------
Net Amount $ --
===============
(1) The amount presented on the Statements of Assets and Liabilities, which is
included in "Investments, at value," is not offset and is shown on a gross
basis.
(2) At December 31, 2022, the value of the collateral received from each
borrower exceeded the value of the related securities loaned. This amount
is disclosed on the Portfolio of Investments.
The Fund's investments in repurchase agreements were all subject to an
enforceable Master Repurchase Agreement. Repurchase Agreements on a gross basis
were as follows:
REPURCHASE AGREEMENTS
--------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(3) $ 15,537,292
Non-cash Collateral(4) (15,537,292)
---------------
Net Amount $ --
===============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At December 31, 2022, the value of the collateral received from each
seller exceeded the value of the repurchase agreements.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of December 31,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks*................................ $ 800,250,704 $ 800,250,704 $ -- $ --
Repurchase Agreements......................... 15,537,292 -- 15,537,292 --
------------------------------------------------------------------
Total Investments............................. $ 815,787,996 $ 800,250,704 $ 15,537,292 $ --
==================================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 29
FIRST TRUST NYSE(R) ARCA(R) BIOTECHNOLOGY INDEX FUND (FBT)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS -- 100.0%
BIOTECHNOLOGY -- 80.1%
2,760,493 ACADIA Pharmaceuticals,
Inc. (a) $ 43,947,049
1,623,579 Agios Pharmaceuticals, Inc. (a) 45,590,098
1,969,300 Alkermes PLC (a) 51,457,809
220,417 Alnylam Pharmaceuticals, Inc. (a) 52,382,100
173,996 Amgen, Inc. 45,698,310
163,805 Biogen, Inc. (a) 45,360,881
487,020 BioMarin Pharmaceutical, Inc. (a) 50,401,700
333,004 BioNTech SE, ADR 50,023,861
1,334,042 Exact Sciences Corp. (a) 66,048,419
2,664,841 Exelixis, Inc. (a) 42,744,050
2,672,965 FibroGen, Inc. (a) 42,820,899
1,187,341 Genmab A/S, ADR (a) 50,319,512
646,653 Gilead Sciences, Inc. 55,515,160
7,209,972 Grifols S.A., ADR (a) 61,284,762
621,091 Incyte Corp. (a) 49,886,029
975,231 Ionis Pharmaceuticals, Inc. (a) 36,834,475
341,620 Moderna, Inc. (a) 61,361,784
395,138 Neurocrine Biosciences, Inc. (a) 47,195,283
61,404 Regeneron Pharmaceuticals,
Inc. (a) 44,302,372
388,967 Sarepta Therapeutics, Inc. (a) 50,402,344
340,241 Seagen, Inc. (a) 43,724,371
1,138,910 Ultragenyx Pharmaceutical,
Inc. (a) 52,765,700
199,893 United Therapeutics Corp. (a) 55,588,244
146,122 Vertex Pharmaceuticals, Inc. (a) 42,197,111
---------------
1,187,852,323
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES
-- 19.9%
618,965 Bio-Techne Corp. $ 51,299,819
218,986 Charles River Laboratories
International, Inc. (a) 47,717,049
199,248 Illumina, Inc. (a) 40,287,946
246,066 IQVIA Holdings, Inc. (a) 50,416,463
37,327 Mettler-Toledo International,
Inc. (a) 53,954,312
1,039,522 QIAGEN N.V. (a) 51,840,962
---------------
295,516,551
---------------
TOTAL INVESTMENTS -- 100.0% 1,483,368,874
(Cost $1,383,496,890)
NET OTHER ASSETS AND
LIABILITIES -- (0.0)% (13,797)
---------------
NET ASSETS -- 100.0% $ 1,483,355,077
===============
(a) Non-income producing security.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of December 31,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks*................................ $ 1,483,368,874 $ 1,483,368,874 $ -- $ --
==================================================================
* See Portfolio of Investments for industry breakout.
Page 30 See Notes to Financial Statements
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS -- 100.0%
COMMUNICATIONS EQUIPMENT -- 12.1%
759,896 Arista Networks, Inc. (a) $ 92,213,380
1,127,905 Ciena Corp. (a) 57,500,597
4,083,554 Cisco Systems, Inc. 194,540,512
3,611,989 CommScope Holding Co., Inc. (a) 26,548,119
1,883,809 Juniper Networks, Inc. 60,206,536
---------------
431,009,144
---------------
ENTERTAINMENT -- 4.6%
550,326 Netflix, Inc. (a) 162,280,131
---------------
HEALTH CARE TECHNOLOGY -- 3.4%
1,571,258 Teladoc Health, Inc. (a) 37,160,252
514,547 Veeva Systems, Inc., Class A (a) 83,037,595
---------------
120,197,847
---------------
HOTELS, RESTAURANTS & LEISURE
-- 4.5%
1,124,119 Airbnb, Inc., Class A (a) 96,112,174
748,898 Expedia Group, Inc. (a) 65,603,465
---------------
161,715,639
---------------
INTERACTIVE MEDIA & SERVICES
-- 22.8%
1,989,384 Alphabet, Inc., Class A (a) 175,523,350
1,763,507 Alphabet, Inc., Class C (a) 156,475,976
1,492,189 Match Group, Inc. (a) 61,910,922
1,923,396 Meta Platforms, Inc., Class A (a) 231,461,475
2,964,043 Pinterest, Inc., Class A (a) 71,966,964
6,188,906 Snap, Inc., Class A (a) 55,390,709
1,861,731 ZoomInfo Technologies, Inc. (a) 56,056,720
---------------
808,786,116
---------------
INTERNET & DIRECT MARKETING
RETAIL -- 14.4%
3,549,518 Amazon.com, Inc. (a) 298,159,512
1,285,401 DoorDash, Inc., Class A (a) 62,753,277
1,978,087 eBay, Inc. 82,031,268
565,391 Etsy, Inc. (a) 67,722,534
---------------
510,666,591
---------------
IT SERVICES -- 14.8%
768,813 Akamai Technologies, Inc. (a) 64,810,936
1,481,576 Cloudflare, Inc., Class A (a) 66,982,051
2,498,862 Fastly, Inc., Class A (a) 20,465,680
847,864 GoDaddy, Inc., Class A (a) 63,437,184
933,983 Okta, Inc. (a) 63,819,058
1,880,435 PayPal Holdings, Inc. (a) 133,924,581
772,390 Snowflake, Inc., Class A (a) 110,868,861
---------------
524,308,351
---------------
REAL ESTATE MANAGEMENT &
DEVELOPMENT -- 1.8%
15,325,757 Opendoor Technologies,
Inc. (a) (b) 17,777,878
395,467 Zillow Group, Inc., Class A (a) 12,342,525
1,107,047 Zillow Group, Inc., Class C (a) 35,657,984
---------------
65,778,387
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
SOFTWARE -- 21.6%
1,426,418 Box, Inc., Class A (a) $ 44,404,392
1,736,328 Confluent, Inc., Class A (a) 38,615,935
695,031 Coupa Software, Inc. (a) 55,025,604
1,094,749 Datadog, Inc., Class A (a) 80,464,052
1,308,585 DocuSign, Inc. (a) 72,521,781
2,139,564 Dropbox, Inc., Class A (a) 47,883,442
1,675,463 Nutanix, Inc., Class A (a) 43,645,811
1,272,037 Salesforce, Inc. (a) 168,659,386
1,189,751 Smartsheet, Inc., Class A (a) 46,828,599
598,839 Workday, Inc., Class A (a) 100,203,730
1,026,329 Zoom Video Communications,
Inc., Class A (a) 69,523,526
---------------
767,776,258
---------------
TOTAL COMMON STOCKS -- 100.0% 3,552,518,464
(Cost $5,815,215,594) ---------------
MONEY MARKET FUNDS -- 0.0%
191,980 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
4.14% (c) (d) 191,980
651,347 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 4.10% (c) 651,347
---------------
TOTAL MONEY MARKET FUNDS
-- 0.0% 843,327
(Cost $843,327) ---------------
TOTAL INVESTMENTS -- 100.0% 3,553,361,791
(Cost $5,816,058,921)
NET OTHER ASSETS AND
LIABILITIES -- (0.0)% (521,931)
---------------
NET ASSETS -- 100.0% $ 3,552,839,860
===============
(a) Non-income producing security.
(b) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The remaining contractual
maturity of all of the securities lending transactions is overnight and
continuous. The aggregate value of such securities is $191,980 and the
total value of the collateral held by the Fund is $191,980.
(c) Rate shown reflects yield as of December 31, 2022.
(d) This security serves as collateral for securities on loan.
See Notes to Financial Statements Page 31
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2022
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
--------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
--------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 191,980
Non-cash Collateral(2) (191,980)
---------------
Net Amount $ --
===============
(1) The amount presented on the Statements of Assets and Liabilities, which is
included in "Investments, at value," is not offset and is shown on a gross
basis.
(2) The collateral requirements are determined at the beginning of each
business day based on the market value of the loaned securities from the
end of the prior day. On December 30, 2022, the last business day of the
period, there was sufficient collateral based on the end of day market
value from the prior business day; however, as a result of market movement
from December 29 to December 30, the value of the related securities
loaned was equal to the collateral value received. See Note 2D -
Securities Lending in the Notes to Financial Statements.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of December 31,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks*................................ $ 3,552,518,464 $ 3,552,518,464 $ -- $ --
Money Market Funds............................ 843,327 843,327 -- --
------------------------------------------------------------------
Total Investments............................. $ 3,553,361,791 $ 3,553,361,791 $ -- $ --
==================================================================
* See Portfolio of Investments for industry breakout.
Page 32 See Notes to Financial Statements
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS -- 100.0%
AEROSPACE & DEFENSE -- 5.8%
666,754 General Dynamics Corp. $ 165,428,335
355,810 Lockheed Martin Corp. 173,098,007
309,492 Northrop Grumman Corp. 168,861,930
---------------
507,388,272
---------------
AIR FREIGHT & LOGISTICS -- 4.0%
1,740,248 Expeditors International of
Washington, Inc. 180,846,572
977,072 United Parcel Service, Inc.,
Class B 169,854,197
---------------
350,700,769
---------------
BEVERAGES -- 6.2%
2,890,577 Coca-Cola (The) Co. 183,869,603
1,846,740 Monster Beverage Corp. (a) 187,499,512
934,679 PepsiCo, Inc. 168,859,108
---------------
540,228,223
---------------
BIOTECHNOLOGY -- 6.1%
1,099,929 AbbVie, Inc. 177,759,526
642,050 Amgen, Inc. 168,628,012
2,291,765 Incyte Corp. (a) 184,074,565
---------------
530,462,103
---------------
BUILDING PRODUCTS -- 2.2%
1,116,626 Trane Technologies PLC 187,693,664
---------------
CAPITAL MARKETS -- 8.2%
668,308 Moody's Corp. 186,203,975
2,801,350 Nasdaq, Inc. 171,862,822
1,601,639 Raymond James Financial, Inc. 171,135,127
546,571 S&P Global, Inc. 183,068,491
---------------
712,270,415
---------------
CHEMICALS -- 2.4%
670,373 Air Products and Chemicals, Inc. 206,649,181
---------------
COMMUNICATIONS EQUIPMENT
-- 2.1%
3,779,325 Cisco Systems, Inc. 180,047,043
---------------
ELECTRICAL EQUIPMENT -- 2.2%
1,945,082 Emerson Electric Co. 186,844,577
---------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 3.8%
2,260,726 Amphenol Corp., Class A 172,131,678
5,025,031 Corning, Inc. 160,499,490
---------------
332,631,168
---------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 3.7%
552,666 Public Storage 154,851,487
5,398,902 Weyerhaeuser Co. 167,365,962
---------------
322,217,449
---------------
FOOD & STAPLES RETAILING -- 3.7%
338,270 Costco Wholesale Corp. 154,420,255
1,182,440 Walmart, Inc. 167,658,168
---------------
322,078,423
---------------
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
HEALTH CARE EQUIPMENT &
SUPPLIES -- 4.4%
1,701,619 Abbott Laboratories $ 186,820,750
2,587,642 Hologic, Inc. (a) 193,581,498
---------------
380,402,248
---------------
HEALTH CARE PROVIDERS &
SERVICES -- 7.5%
1,094,916 AmerisourceBergen Corp. 181,438,530
316,520 Elevance Health, Inc. 162,365,264
448,845 Molina Healthcare, Inc. (a) 148,217,596
303,071 UnitedHealth Group, Inc. 160,682,183
---------------
652,703,573
---------------
HOUSEHOLD PRODUCTS -- 2.2%
1,258,022 Procter & Gamble (The) Co. 190,665,814
---------------
INDUSTRIAL CONGLOMERATES -- 4.1%
1,384,750 3M Co. 166,059,220
884,807 Honeywell International, Inc. 189,614,140
---------------
355,673,360
---------------
INSURANCE -- 3.9%
2,051,663 Principal Financial Group, Inc. 172,175,559
2,267,089 W.R. Berkley Corp. 164,522,649
---------------
336,698,208
---------------
IT SERVICES -- 11.6%
600,047 Accenture PLC, Class A 160,116,541
695,002 Automatic Data Processing, Inc. 166,008,178
2,683,392 Cognizant Technology Solutions
Corp., Class A 153,463,188
534,949 Mastercard, Inc., Class A 186,017,816
1,442,175 Paychex, Inc. 166,657,743
849,677 Visa, Inc., Class A 176,528,894
---------------
1,008,792,360
---------------
LIFE SCIENCES TOOLS & SERVICES
-- 2.1%
325,625 Thermo Fisher Scientific, Inc. 179,318,431
---------------
MACHINERY -- 1.9%
694,853 Cummins, Inc. 168,355,933
---------------
PHARMACEUTICALS -- 11.9%
2,240,079 Bristol-Myers Squibb Co. 161,173,684
474,667 Eli Lilly & Co. 173,652,175
958,788 Johnson & Johnson 169,369,900
1,690,779 Merck & Co., Inc. 187,591,930
3,598,573 Pfizer, Inc. 184,390,881
1,098,786 Zoetis, Inc. 161,027,088
---------------
1,037,205,658
---------------
TOTAL INVESTMENTS -- 100.0% 8,689,026,872
(Cost $8,149,347,016)
NET OTHER ASSETS AND
LIABILITIES -- 0.0% 3,120,729
---------------
NET ASSETS -- 100.0% $ 8,692,147,601
===============
(a) Non-income producing security.
See Notes to Financial Statements Page 33
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2022
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of December 31,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks*................................ $ 8,689,026,872 $ 8,689,026,872 $ -- $ --
==================================================================
* See Portfolio of Investments for industry breakout.
Page 34 See Notes to Financial Statements
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS -- 99.8%
AEROSPACE & DEFENSE -- 2.3%
289,077 General Dynamics Corp. $ 71,722,895
347,482 L3Harris Technologies, Inc. 72,349,227
148,286 Lockheed Martin Corp. 72,139,656
721,689 Raytheon Technologies Corp. 72,832,854
---------------
289,044,632
---------------
AIR FREIGHT & LOGISTICS -- 1.1%
769,907 C.H. Robinson Worldwide, Inc. 70,492,685
404,855 United Parcel Service, Inc.,
Class B 70,379,993
---------------
140,872,678
---------------
AUTO COMPONENTS -- 0.6%
2,655,189 Gentex Corp. 72,407,004
---------------
AUTOMOBILES -- 0.6%
522,559 Toyota Motor Corp., ADR 71,371,108
---------------
BANKS -- 4.0%
793,610 Bank of Montreal 71,901,066
1,467,611 Bank of Nova Scotia (The) 71,883,587
1,748,741 Canadian Imperial Bank of
Commerce 70,736,573
545,884 JPMorgan Chase & Co. 73,203,044
759,392 Royal Bank of Canada 71,398,036
1,102,858 Toronto-Dominion (The) Bank 71,421,084
1,658,877 U.S. Bancorp 72,343,626
---------------
502,887,016
---------------
BEVERAGES -- 2.3%
1,122,899 Coca-Cola (The) Co. 71,427,605
397,866 Diageo PLC, ADR 70,895,743
1,970,400 Keurig Dr Pepper, Inc. 70,264,464
393,192 PepsiCo, Inc. 71,034,067
---------------
283,621,879
---------------
BIOTECHNOLOGY -- 1.7%
439,378 AbbVie, Inc. 71,007,879
271,540 Amgen, Inc. 71,317,266
845,591 Gilead Sciences, Inc. 72,593,987
---------------
214,919,132
---------------
BUILDING PRODUCTS -- 1.2%
1,259,466 A.O. Smith Corp. 72,091,834
1,117,992 Johnson Controls International
PLC 71,551,488
---------------
143,643,322
---------------
CAPITAL MARKETS -- 3.4%
1,605,003 Bank of New York Mellon (The)
Corp. 73,059,737
101,799 BlackRock, Inc. 72,137,825
424,470 CME Group, Inc. 71,378,875
207,408 Goldman Sachs Group (The), Inc. 71,219,759
803,856 Houlihan Lokey, Inc. 70,064,089
644,915 T. Rowe Price Group, Inc. 70,334,430
---------------
428,194,715
---------------
CHEMICALS -- 2.9%
229,666 Air Products and Chemicals, Inc. 70,796,841
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
CHEMICALS (CONTINUED)
689,741 International Flavors &
Fragrances, Inc. $ 72,312,446
231,128 NewMarket Corp. 71,906,232
565,529 PPG Industries, Inc. 71,109,617
982,639 Sensient Technologies Corp. 71,654,036
---------------
357,779,172
---------------
COMMUNICATIONS EQUIPMENT
-- 1.2%
1,509,340 Cisco Systems, Inc. 71,904,958
2,262,823 Juniper Networks, Inc. 72,319,823
---------------
144,224,781
---------------
CONTAINERS & PACKAGING -- 1.7%
395,683 Avery Dennison Corp. 71,618,623
556,822 Packaging Corp. of America 71,223,102
1,185,894 Sonoco Products Co. 71,995,625
---------------
214,837,350
---------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 1.7%
1,622,813 BCE, Inc. 71,322,631
3,643,287 TELUS Corp. 70,351,872
1,865,748 Verizon Communications, Inc. 73,510,471
---------------
215,184,974
---------------
ELECTRIC UTILITIES -- 11.5%
1,108,490 ALLETE, Inc. 71,508,690
1,295,906 Alliant Energy Corp. 71,546,970
748,913 American Electric Power Co., Inc. 71,109,289
1,657,349 Avangrid, Inc. 71,232,860
695,838 Duke Energy Corp. 71,664,356
631,784 Entergy Corp. 71,075,700
1,131,405 Evergy, Inc. 71,199,317
850,800 Eversource Energy 71,331,072
1,665,046 Exelon Corp. 71,979,938
1,768,594 Fortis, Inc. 70,814,504
1,719,380 Hawaiian Electric Industries,
Inc. 71,956,053
664,286 IDACORP, Inc. 71,643,245
851,414 NextEra Energy, Inc. 71,178,210
1,790,692 OGE Energy Corp. 70,821,869
1,230,480 Otter Tail Corp. 72,241,481
919,582 Pinnacle West Capital Corp. 69,925,015
1,470,325 PNM Resources, Inc. 71,737,157
1,462,819 Portland General Electric Co. 71,678,131
998,931 Southern (The) Co. 71,333,663
1,010,340 Xcel Energy, Inc. 70,834,937
---------------
1,426,812,457
---------------
ELECTRICAL EQUIPMENT -- 1.7%
2,365,131 ABB Ltd., ADR 72,041,890
750,087 Emerson Electric Co. 72,053,357
304,025 Hubbell, Inc. 71,348,587
---------------
215,443,834
---------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 1.2%
1,716,898 Avnet, Inc. 71,388,619
628,905 TE Connectivity Ltd. 72,198,294
---------------
143,586,913
---------------
See Notes to Financial Statements Page 35
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (CONTINUED)
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 3.4%
337,319 American Tower Corp. $ 71,464,403
643,818 Camden Property Trust 72,030,358
523,168 Crown Castle, Inc. 70,962,507
458,345 Mid-America Apartment
Communities, Inc. 71,955,582
253,048 Public Storage 70,901,519
1,112,609 Realty Income Corp. 70,572,789
---------------
427,887,158
---------------
FOOD & STAPLES RETAILING -- 0.6%
1,561,629 Kroger (The) Co. 69,617,421
---------------
FOOD PRODUCTS -- 8.4%
757,374 Archer-Daniels-Midland Co. 70,322,176
1,108,828 Cal-Maine Foods, Inc. 60,375,685
1,251,115 Campbell Soup Co. 71,000,776
1,845,098 Conagra Brands, Inc. 71,405,293
2,453,384 Flowers Foods, Inc. 70,510,256
839,054 General Mills, Inc. 70,354,678
303,815 Hershey (The) Co. 70,354,440
1,570,535 Hormel Foods Corp. 71,537,869
724,823 Ingredion, Inc. 70,981,916
467,168 J & J Snack Foods Corp. 69,939,721
449,469 J.M. Smucker (The) Co. 71,222,858
992,839 Kellogg Co. 70,729,850
356,818 Lancaster Colony Corp. 70,400,191
850,900 McCormick & Co., Inc. 70,531,101
1,068,006 Mondelez International, Inc.,
Class A 71,182,600
---------------
1,050,849,410
---------------
GAS UTILITIES -- 3.4%
622,620 Atmos Energy Corp. 69,777,023
599,841 Chesapeake Utilities Corp. 70,889,209
1,443,659 New Jersey Resources Corp. 71,634,360
948,679 ONE Gas, Inc. 71,833,974
1,028,172 Spire, Inc. 70,799,924
1,919,733 UGI Corp. 71,164,502
---------------
426,098,992
---------------
HEALTH CARE EQUIPMENT &
SUPPLIES -- 1.7%
662,443 Abbott Laboratories 72,729,617
1,428,413 Baxter International, Inc. 72,806,211
924,689 Medtronic PLC 71,866,829
---------------
217,402,657
---------------
HEALTH CARE PROVIDERS & SERVICES
-- 1.7%
765,965 CVS Health Corp. 71,380,279
2,037,637 Premier, Inc., Class A 71,276,542
458,466 Quest Diagnostics, Inc. 71,722,421
---------------
214,379,242
---------------
HOTELS, RESTAURANTS & LEISURE
-- 1.7%
267,834 McDonald's Corp. 70,582,294
729,254 Starbucks Corp. 72,341,997
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE
(CONTINUED)
555,958 Yum! Brands, Inc. $ 71,207,100
---------------
214,131,391
---------------
HOUSEHOLD DURABLES -- 0.6%
785,270 Garmin Ltd. 72,472,568
---------------
HOUSEHOLD PRODUCTS -- 3.4%
497,284 Clorox (The) Co. 69,783,864
902,001 Colgate-Palmolive Co. 71,068,659
522,521 Kimberly-Clark Corp. 70,932,226
469,549 Procter & Gamble (The) Co. 71,164,846
2,358,900 Reynolds Consumer Products, Inc. 70,719,822
445,525 WD-40 Co. 71,823,085
---------------
425,492,502
---------------
INDUSTRIAL CONGLOMERATES -- 1.2%
596,503 3M Co. 71,532,640
335,082 Honeywell International, Inc. 71,808,072
---------------
143,340,712
---------------
INSURANCE -- 4.6%
998,793 Aflac, Inc. 71,853,168
525,505 Allstate (The) Corp. 71,258,478
573,171 Assurant, Inc. 71,680,765
1,307,254 Axis Capital Holdings Ltd. 70,813,949
213,971 Everest Re Group Ltd. 70,882,173
521,613 Hanover Insurance Group (The),
Inc. 70,485,565
1,542,473 Sun Life Financial, Inc. 71,601,597
378,218 Travelers (The) Cos., Inc. 70,912,093
---------------
569,487,788
---------------
IT SERVICES -- 5.2%
269,318 Accenture PLC, Class A 71,864,815
801,968 Amdocs Ltd. 72,898,891
297,435 Automatic Data Processing, Inc. 71,045,324
532,887 Broadridge Financial Solutions,
Inc. 71,476,133
1,279,247 Cognizant Technology Solutions
Corp., Class A 73,160,136
1,261,232 CSG Systems International, Inc. 72,142,470
1,070,887 Fidelity National Information
Services, Inc. 72,659,683
3,999,075 Infosys Ltd., ADR 72,023,341
617,735 Paychex, Inc. 71,385,457
---------------
648,656,250
---------------
MACHINERY -- 2.3%
298,764 Caterpillar, Inc. 71,571,904
297,042 Cummins, Inc. 71,970,306
322,854 Illinois Tool Works, Inc. 71,124,736
314,668 Snap-on, Inc. 71,898,492
---------------
286,565,438
---------------
MEDIA -- 0.6%
2,039,370 Comcast Corp., Class A 71,316,769
---------------
MULTI-UTILITIES -- 6.3%
800,438 Ameren Corp. 71,174,947
1,634,659 Avista Corp. 72,480,780
Page 36 See Notes to Financial Statements
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2022
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MULTI-UTILITIES (CONTINUED)
1,026,254 Black Hills Corp. $ 72,186,707
1,126,433 CMS Energy Corp. 71,337,002
747,662 Consolidated Edison, Inc. 71,259,665
1,178,872 Dominion Energy, Inc. 72,288,431
604,555 DTE Energy Co. 71,053,349
1,225,218 NorthWestern Corp. 72,704,436
1,173,272 Public Service Enterprise Group,
Inc. 71,886,376
454,287 Sempra Energy 70,205,513
750,557 WEC Energy Group, Inc. 70,372,224
---------------
786,949,430
---------------
OIL, GAS & CONSUMABLE FUELS
-- 0.6%
1,814,727 Enbridge, Inc. 70,955,826
---------------
PERSONAL PRODUCTS -- 0.6%
1,403,243 Unilever PLC, ADR 70,653,285
---------------
PHARMACEUTICALS -- 4.0%
1,054,184 AstraZeneca PLC, ADR 71,473,675
983,176 Bristol-Myers Squibb Co. 70,739,513
403,786 Johnson & Johnson 71,328,797
640,657 Merck & Co., Inc. 71,080,894
788,631 Novartis AG, ADR 71,544,605
1,382,670 Pfizer, Inc. 70,848,011
1,476,993 Sanofi, ADR 71,530,771
---------------
498,546,266
---------------
PROFESSIONAL SERVICES -- 0.6%
976,614 Robert Half International, Inc. 72,103,412
---------------
ROAD & RAIL -- 1.7%
595,006 Canadian National Railway Co. 70,734,313
289,542 Norfolk Southern Corp. 71,348,940
341,406 Union Pacific Corp. 70,694,940
---------------
212,778,193
---------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 2.3%
437,396 Analog Devices, Inc. 71,746,066
2,746,775 Intel Corp. 72,597,263
SHARES DESCRIPTION VALUE
--------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT (CONTINUED)
956,914 Taiwan Semiconductor
Manufacturing Co., Ltd., ADR $ 71,280,524
435,962 Texas Instruments, Inc. 72,029,642
---------------
287,653,495
---------------
SOFTWARE -- 1.2%
2,474,573 Open Text Corp. 73,346,344
692,398 SAP SE, ADR 71,448,549
---------------
144,794,893
---------------
SPECIALTY RETAIL -- 1.7%
224,842 Home Depot (The), Inc. 71,018,594
354,980 Lowe's Cos., Inc. 70,726,215
330,158 Tractor Supply Co. 74,275,646
---------------
216,020,455
---------------
TOBACCO -- 0.6%
1,549,811 Altria Group, Inc. 70,841,861
---------------
TRADING COMPANIES & DISTRIBUTORS
-- 1.1%
1,500,497 Fastenal Co. 71,003,518
284,194 Watsco, Inc. 70,877,984
---------------
141,881,502
---------------
WATER UTILITIES -- 0.6%
764,659 American States Water Co. 70,769,190
---------------
WIRELESS TELECOMMUNICATION
SERVICES -- 0.6%
1,588,993 Rogers Communications, Inc.,
Class B 74,428,432
---------------
TOTAL INVESTMENTS -- 99.8% 12,420,905,505
(Cost $11,256,857,192) ---------------
NET OTHER ASSETS AND
LIABILITIES -- 0.2% 21,765,290
---------------
NET ASSETS -- 100.0% $12,442,670,795
===============
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of December 31,
2022 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2022 PRICES INPUTS INPUTS
------------------------------------------------------------------
Common Stocks*................................ $ 12,420,905,505 $ 12,420,905,505 $ -- $ --
==================================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 37
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2022
FIRST TRUST FIRST TRUST FIRST TRUST
DOW JONES SELECT MORNINGSTAR US EQUITY
MICROCAP DIVIDEND LEADERS OPPORTUNITIES
INDEX FUND INDEX FUND ETF
(FDM) (FDL) (FPX)
------------------ ------------------ ------------------
ASSETS:
Investments, at value............................................... $ 151,882,261 $ 4,789,791,716 $ 815,787,996
Cash................................................................ 4,379,894 2,878,783 120,669
Receivables:
Dividends..................................................... 168,430 11,614,397 3,413,491
Securities lending income..................................... 13,162 -- 35,974
Capital shares sold........................................... -- 54,825,614 --
Investment securities sold.................................... -- -- --
Reclaims...................................................... 268 -- 10,993
Prepaid expenses.................................................... 1,095 29,574 5,543
---------------- ---------------- ----------------
Total Assets.................................................. 156,445,110 4,859,140,084 819,374,666
---------------- ---------------- ----------------
LIABILITIES:
Payables:
Collateral for securities on loan............................. 7,533,156 -- 15,537,292
Investment securities purchased............................... 4,313,869 54,685,545 --
Investment advisory fees...................................... 54,168 1,095,333 289,463
Licensing fees................................................ 38,625 889,571 214,210
Audit and tax fees............................................ 28,697 29,500 29,564
Shareholder reporting fees.................................... 6,421 75,825 50,899
Trustees' fees................................................ 39 -- 74
Capital shares redeemed....................................... -- -- --
Other liabilities................................................... 28,585 546,904 159,414
---------------- ---------------- ----------------
Total Liabilities............................................. 12,003,560 57,322,678 16,280,916
---------------- ---------------- ----------------
NET ASSETS.......................................................... $ 144,441,550 $ 4,801,817,406 $ 803,093,750
================ ================ ================
NET ASSETS CONSIST OF:
Paid-in capital..................................................... $ 209,656,622 $ 4,996,649,913 $ 1,457,083,621
Par value........................................................... 26,050 1,314,000 102,000
Accumulated distributable earnings (loss)........................... (65,241,122) (196,146,507) (654,091,871)
---------------- ---------------- ----------------
NET ASSETS.......................................................... $ 144,441,550 $ 4,801,817,406 $ 803,093,750
================ ================ ================
NET ASSET VALUE, per share.......................................... $ 55.45 $ 36.54 $ 78.73
================ ================ ================
Number of shares outstanding (unlimited number of shares
authorized, par value $0.01 per share)........................... 2,605,000 131,400,002 10,200,002
================ ================ ================
Investments, at cost................................................ $ 162,035,598 $ 4,564,937,066 $ 855,350,249
================ ================ ================
Securities on loan, at value........................................ $ 7,244,228 $ -- $ 15,228,066
================ ================ ================
Page 38 See Notes to Financial Statements
FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST
NYSE(R) ARCA(R) DOW JONES CAPITAL VALUE LINE(R)
BIOTECHNOLOGY INTERNET STRENGTH DIVIDEND
INDEX FUND INDEX FUND ETF INDEX FUND
(FBT) (FDN) (FTCS) (FVD)
------------------ ------------------ ------------------ ------------------
$ 1,483,368,874 $ 3,553,361,791 $ 8,689,026,872 $ 12,420,905,505
460,816 -- 1,870,497 6,958,654
-- 3,894 6,133,720 24,103,915
172 392 -- --
-- -- 15,032,583 25,993,442
558,391 8,693,084 -- 616,275,038
69,294 -- -- 2,608,764
8,060 14,645 59,611 90,055
---------------- ---------------- ---------------- ----------------
1,484,465,607 3,562,073,806 8,712,123,283 13,096,935,373
---------------- ---------------- ---------------- ----------------
-- 191,980 -- --
-- -- 15,027,325 641,859,384
505,396 1,276,011 3,632,217 5,088,746
282,027 717,197 -- 5,537,519
29,802 34,413 33,600 35,509
65,819 295,250 284,002 401,040
-- 121 65 --
-- 6,157,256 -- --
227,486 561,718 998,473 1,342,380
---------------- ---------------- ---------------- ----------------
1,110,530 9,233,946 19,975,682 654,264,578
---------------- ---------------- ---------------- ----------------
$ 1,483,355,077 $ 3,552,839,860 $ 8,692,147,601 $ 12,442,670,795
================ ================ ================ ================
$ 2,026,803,489 $ 6,607,035,565 $ 9,012,894,078 $ 12,087,493,902
96,000 288,500 1,161,000 3,119,409
(543,544,412) (3,054,484,205) (321,907,477) 352,057,484
---------------- ---------------- ---------------- ----------------
$ 1,483,355,077 $ 3,552,839,860 $ 8,692,147,601 $ 12,442,670,795
================ ================ ================ ================
$ 154.52 $ 123.15 $ 74.87 $ 39.89
================ ================ ================ ================
9,600,002 28,850,002 116,100,002 311,940,884
================ ================ ================ ================
$ 1,383,496,890 $ 5,816,058,921 $ 8,149,347,016 $ 11,256,857,192
================ ================ ================ ================
$ -- $ 191,980 $ -- $ --
================ ================ ================ ================
See Notes to Financial Statements Page 39
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2022
FIRST TRUST FIRST TRUST FIRST TRUST
DOW JONES SELECT MORNINGSTAR US EQUITY
MICROCAP DIVIDEND LEADERS OPPORTUNITIES
INDEX FUND INDEX FUND ETF
(FDM) (FDL) (FPX)
------------------ ------------------ ------------------
INVESTMENT INCOME:
Dividends........................................................... $ 3,493,333 $ 135,775,633 $ 15,888,322
Securities lending income (net of fees)............................. 136,895 -- 805,225
Foreign withholding tax............................................. (1,676) -- (7,393)
---------------- ---------------- ----------------
Total investment income....................................... 3,628,552 135,775,633 16,686,154
---------------- ---------------- ----------------
EXPENSES:
Investment advisory fees............................................ 780,485 8,823,942 4,647,348
Licensing fees...................................................... 93,658 2,666,829 1,161,837
Accounting and administration fees.................................. 82,336 1,219,066 563,749
Shareholder reporting fees.......................................... 30,910 205,977 113,563
Audit and tax fees.................................................. 28,226 29,888 30,032
Custodian fees...................................................... 26,713 175,011 77,510
Listing fees........................................................ 7,812 9,751 7,812
Transfer agent fees................................................. 7,805 98,735 53,375
Trustees' fees and expenses......................................... 7,227 8,614 7,811
Legal fees.......................................................... 3,550 75,024 26,043
Registration and filing fees........................................ 525 39 --
Other expenses...................................................... 3,354 34,614 25,350
---------------- ---------------- ----------------
Total expenses................................................ 1,072,601 13,347,490 6,714,430
Less fees waived and expenses reimbursed by the investment
advisor.................................................... (136,019) (75,072) --
---------------- ---------------- ----------------
Net expenses.................................................. 936,582 13,272,418 6,714,430
---------------- ---------------- ----------------
NET INVESTMENT INCOME (LOSS)........................................ 2,691,970 122,503,215 9,971,724
---------------- ---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments................................................... (16,057,374) (88,499,113) (276,052,696)
In-kind redemptions........................................... 24,436,797 123,659,147 74,963,856
Foreign currency transactions................................. -- -- --
---------------- ---------------- ----------------
Net realized gain (loss)............................................ 8,379,423 35,160,034 (201,088,840)
---------------- ---------------- ----------------
Net change in unrealized appreciation (depreciation) on:
Investments................................................... (34,793,960) (5,208,289) (386,182,483)
Foreign currency translation.................................. -- -- --
---------------- ---------------- ----------------
Net change in unrealized appreciation (depreciation)................ (34,793,960) (5,208,289) (386,182,483)
---------------- ---------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS)............................. (26,414,537) 29,951,745 (587,271,323)
---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................................. $ (23,722,567) $ 152,454,960 $ (577,299,599)
================ ================ ================
Page 40 See Notes to Financial Statements
FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST
NYSE(R) ARCA(R) DOW JONES CAPITAL VALUE LINE(R)
BIOTECHNOLOGY INTERNET STRENGTH DIVIDEND
INDEX FUND INDEX FUND ETF INDEX FUND
(FBT) (FDN) (FTCS) (FVD)
------------------ ------------------ ------------------ ------------------
$ 4,314,578 $ 13,366,695 $ 148,015,195 $ 338,140,219
14,159 19,816 -- --
(88,964) -- -- (7,456,737)
---------------- ---------------- ---------------- ----------------
4,239,773 13,386,511 148,015,195 330,683,482
---------------- ---------------- ---------------- ----------------
5,601,871 20,800,689 41,668,743 61,052,150
1,120,374 3,123,531 92,650 12,402,873
661,525 1,855,276 2,611,800 3,497,946
142,075 549,548 651,905 904,885
30,173 39,457 38,078 41,933
94,202 381,341 555,250 727,226
7,812 9,750 4,529 53,909
60,012 155,147 234,504 332,864
7,873 10,022 11,919 13,962
31,201 100,271 202,099 286,684
-- -- 6,759 1,857
16,499 83,887 141,102 182,424
---------------- ---------------- ---------------- ----------------
7,773,617 27,108,919 46,219,338 79,498,713
-- -- -- --
---------------- ---------------- ---------------- ----------------
7,773,617 27,108,919 46,219,338 79,498,713
---------------- ---------------- ---------------- ----------------
(3,533,844) (13,722,408) 101,795,857 251,184,769
---------------- ---------------- ---------------- ----------------
(275,662,615) (467,650,573) (527,075,265) (120,102,011)
44,401,009 868,612,522 409,524,456 614,909,039
-- -- -- (6,949)
---------------- ---------------- ---------------- ----------------
(231,261,606) 400,961,949 (117,550,809) 494,800,079
---------------- ---------------- ---------------- ----------------
140,025,277 (4,159,637,254) (1,009,131,344) (1,448,622,484)
-- -- -- (1,061)
---------------- ---------------- ---------------- ----------------
140,025,277 (4,159,637,254) (1,009,131,344) (1,448,623,545)
---------------- ---------------- ---------------- ----------------
(91,236,329) (3,758,675,305) (1,126,682,153) (953,823,466)
---------------- ---------------- ---------------- ----------------
$ (94,770,173) $ (3,772,397,713) $ (1,024,886,296) $ (702,638,697)
================ ================ ================ ================
See Notes to Financial Statements Page 41
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF CHANGES IN NET ASSETS
FIRST TRUST FIRST TRUST
DOW JONES SELECT MORNINGSTAR
MICROCAP DIVIDEND LEADERS
INDEX FUND INDEX FUND
(FDM) (FDL)
--------------------------------- ---------------------------------
Year Ended Year Ended Year Ended Year Ended
12/31/2022 12/31/2021 12/31/2022 12/31/2021
--------------- --------------- --------------- ---------------
OPERATIONS:
Net investment income (loss)............................. $ 2,691,970 $ 1,782,779 $ 122,503,215 $ 63,417,589
Net realized gain (loss)................................. 8,379,423 33,159,253 35,160,034 191,507,868
Net change in unrealized appreciation (depreciation)..... (34,793,960) 8,369,281 (5,208,289) 87,772,838
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from operations....................................... (23,722,567) 43,311,313 152,454,960 342,698,295
--------------- --------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations.................................... (2,696,103) (1,928,374) (122,518,973) (63,399,697)
--------------- --------------- --------------- ---------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold................................ 113,413,517 86,724,692 3,837,574,234 644,763,236
Cost of shares redeemed.................................. (131,289,899) (61,853,301) (828,602,429) (560,634,737)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from shareholder transactions......................... (17,876,382) 24,871,391 3,008,971,805 84,128,499
--------------- --------------- --------------- ---------------
Total increase (decrease) in net assets.................. (44,295,052) 66,254,330 3,038,907,792 363,427,097
NET ASSETS:
Beginning of period...................................... 188,736,602 122,482,272 1,762,909,614 1,399,482,517
--------------- --------------- --------------- ---------------
End of period............................................ $ 144,441,550 $ 188,736,602 $ 4,801,817,406 $ 1,762,909,614
=============== =============== =============== ===============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period.................. 2,955,000 2,555,000 49,600,002 47,300,002
Shares sold.............................................. 1,900,000 1,450,000 105,600,000 19,250,000
Shares redeemed.......................................... (2,250,000) (1,050,000) (23,800,000) (16,950,000)
--------------- --------------- --------------- ---------------
Shares outstanding, end of period........................ 2,605,000 2,955,000 131,400,002 49,600,002
=============== =============== =============== ===============
Page 42 See Notes to Financial Statements
FIRST TRUST FIRST TRUST FIRST TRUST
US EQUITY NYSE(R) ARCA(R) DOW JONES
OPPORTUNITIES BIOTECHNOLOGY INTERNET
ETF INDEX FUND INDEX FUND
(FPX) (FBT) (FDN)
--------------------------------- --------------------------------- ---------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/2022 12/31/2021 12/31/2022 12/31/2021 12/31/2022 12/31/2021
--------------- --------------- --------------- --------------- --------------- ---------------
$ 9,971,724 $ 1,412,875 $ (3,533,844) $ (4,455,580) $ (13,722,408) $ (32,149,322)
(201,088,840) 298,792,377 (231,261,606) (8,792,422) 400,961,949 2,146,301,949
(386,182,483) (231,648,485) 140,025,277 (58,114,526) (4,159,637,254) (1,439,319,817)
--------------- --------------- --------------- --------------- --------------- ---------------
(577,299,599) 68,556,767 (94,770,173) (71,362,528) (3,772,397,713) 674,832,810
--------------- --------------- --------------- --------------- --------------- ---------------
(9,427,777) (2,739,625) -- -- -- --
--------------- --------------- --------------- --------------- --------------- ---------------
49,560,039 991,605,700 126,254,644 52,174,778 2,488,710,947 3,348,838,868
(515,443,931) (1,148,090,496) (256,885,942) (314,229,031) (5,131,046,629) (5,131,127,308)
--------------- --------------- --------------- --------------- --------------- ---------------
(465,883,892) (156,484,796) (130,631,298) (262,054,253) (2,642,335,682) (1,782,288,440)
--------------- --------------- --------------- --------------- --------------- ---------------
(1,052,611,268) (90,667,654) (225,401,471) (333,416,781) (6,414,733,395) (1,107,455,630)
1,855,705,018 1,946,372,672 1,708,756,548 2,042,173,329 9,967,573,255 11,075,028,885
--------------- --------------- --------------- --------------- --------------- ---------------
$ 803,093,750 $ 1,855,705,018 $ 1,483,355,077 $ 1,708,756,548 $ 3,552,839,860 $ 9,967,573,255
=============== =============== =============== =============== =============== ===============
15,150,002 16,450,002 10,550,002 12,150,002 44,100,002 52,150,002
500,000 8,000,000 850,000 300,000 17,850,000 14,450,000
(5,450,000) (9,300,000) (1,800,000) (1,900,000) (33,100,000) (22,500,000)
--------------- --------------- --------------- --------------- --------------- ---------------
10,200,002 15,150,002 9,600,002 10,550,002 28,850,002 44,100,002
=============== =============== =============== =============== =============== ===============
See Notes to Financial Statements Page 43
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIRST TRUST FIRST TRUST
CAPITAL STRENGTH VALUE LINE(R) DIVIDEND
ETF INDEX FUND
(FTCS) (FVD)
--------------------------------- ---------------------------------
Year Ended Year Ended Year Ended Year Ended
12/31/2022 12/31/2021 12/31/2022 12/31/2021
--------------- --------------- --------------- ---------------
OPERATIONS:
Net investment income (loss)............................. $ 101,795,857 $ 99,342,131 $ 251,184,769 $ 221,888,137
Net realized gain (loss)................................. (117,550,809) 1,078,138,583 494,800,079 841,450,993
Net change in unrealized appreciation (depreciation)..... (1,009,131,344) 761,114,952 (1,448,623,545) 1,485,603,970
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from operations....................................... (1,024,886,296) 1,938,595,666 (702,638,697) 2,548,943,100
--------------- --------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations.................................... (104,442,497) (96,596,007) (255,493,903) (223,826,833)
--------------- --------------- --------------- ---------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold................................ 3,134,829,083 7,347,607,864 2,857,719,852 2,745,034,380
Cost of shares redeemed.................................. (2,805,284,887) (6,719,583,961) (2,411,103,178) (2,265,168,318)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from shareholder transactions......................... 329,544,196 628,023,903 446,616,674 479,866,062
--------------- --------------- --------------- ---------------
Total increase (decrease) in net assets.................. (799,784,597) 2,470,023,562 (511,515,926) 2,804,982,329
NET ASSETS:
Beginning of period...................................... 9,491,932,198 7,021,908,636 12,954,186,721 10,149,204,392
--------------- --------------- --------------- ---------------
End of period............................................ $ 8,692,147,601 $ 9,491,932,198 $12,442,670,795 $12,954,186,721
=============== =============== =============== ===============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period.................. 112,300,002 103,950,002 301,240,884 289,190,884
Shares sold.............................................. 40,300,000 98,850,000 70,050,000 68,500,000
Shares redeemed.......................................... (36,500,000) (90,500,000) (59,350,000) (56,450,000)
--------------- --------------- --------------- ---------------
Shares outstanding, end of period........................ 116,100,002 112,300,002 311,940,884 301,240,884
=============== =============== =============== ===============
Page 44 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 63.87 $ 47.94 $ 51.09 $ 40.76 $ 47.21
------------ ------------ ------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 1.00 0.64 0.80 0.66 0.56
Net realized and unrealized gain (loss) (8.42) 15.98 (3.15) 10.37 (6.50)
------------ ------------ ------------ ------------ ------------
Total from investment operations (7.42) 16.62 (2.35) 11.03 (5.94)
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (1.00) (0.69) (0.80) (0.70) (0.51)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 55.45 $ 63.87 $ 47.94 $ 51.09 $ 40.76
============ ============ ============ ============ ============
TOTAL RETURN (a) (11.56)% 34.71% (4.25)% 27.25% (12.68)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 144,442 $ 188,737 $ 122,482 $ 156,067 $ 138,777
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.69% 0.69% 0.71% 0.70% 0.73%
Ratio of net expenses to average net assets 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 1.72% 1.10% 1.88% 1.42% 1.29%
Portfolio turnover rate (b) 84% 95% 95% 64% 75%
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 35.54 $ 29.59 $ 32.58 $ 27.24 $ 30.06
------------ ------------ ------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 1.30 1.29 1.32 1.22 1.09
Net realized and unrealized gain (loss) 1.01 5.95 (2.98) 5.34 (2.83)
------------ ------------ ------------ ------------ ------------
Total from investment operations 2.31 7.24 (1.66) 6.56 (1.74)
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (1.31) (1.29) (1.33) (1.22) (1.08)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 36.54 $ 35.54 $ 29.59 $ 32.58 $ 27.24
============ ============ ============ ============ ============
TOTAL RETURN (a) 6.71% 24.76% (4.42)% 24.36% (5.87)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 4,801,817 $ 1,762,910 $ 1,399,483 $ 1,841,000 $ 1,386,483
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.45% 0.46% 0.46% 0.46% 0.47%
Ratio of net expenses to average net assets 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of net investment income (loss) to
average net assets 4.15% 3.90% 4.73% 4.06% 3.70%
Portfolio turnover rate (b) 60% 59% 63% 39% 39%
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year. The total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the investment
advisor.
(b) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
See Notes to Financial Statements Page 45
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 122.49 $ 118.32 $ 80.41 $ 62.07 $ 68.18
------------ ------------ ------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.90 0.08 0.24 0.58 0.52
Net realized and unrealized gain (loss) (43.81) 4.26 38.01 18.30 (6.08)
------------ ------------ ------------ ------------ ------------
Total from investment operations (42.91) 4.34 38.25 18.88 (5.56)
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.85) (0.17) (0.34) (0.54) (0.55)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 78.73 $ 122.49 $ 118.32 $ 80.41 $ 62.07
============ ============ ============ ============ ============
TOTAL RETURN (a) (35.05)% 3.67% 47.76% 30.45% (8.22)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 803,094 $ 1,855,705 $ 1,946,373 $ 1,330,835 $ 912,479
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.58% 0.57% 0.57% 0.58% 0.59%
Ratio of net expenses to average net assets 0.58% 0.57% 0.57% 0.58% 0.59%
Ratio of net investment income (loss) to
average net assets 0.86% 0.07% 0.26% 0.79% 0.74%
Portfolio turnover rate (b) 115% 85% 75% 81% 57%
FIRST TRUST NYSE(R) ARCA(R) BIOTECHNOLOGY INDEX FUND (FBT)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 161.97 $ 168.08 $ 148.84 $ 124.26 $ 124.52
------------ ------------ ------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.37) (0.42) (0.45) (0.51) (0.22)
Net realized and unrealized gain (loss) (7.08) (5.69) 19.69 25.09 (0.04)
------------ ------------ ------------ ------------ ------------
Total from investment operations (7.45) (6.11) 19.24 24.58 (0.26)
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 154.52 $ 161.97 $ 168.08 $ 148.84 $ 124.26
============ ============ ============ ============ ============
TOTAL RETURN (a) (4.60)% (3.64)% 12.93% 19.78% (0.21)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 1,483,355 $ 1,708,757 $ 2,042,173 $ 1,800,927 $ 2,342,213
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.56% 0.55% 0.55% 0.55% 0.57%
Ratio of net expenses to average net assets 0.56% 0.55% 0.55% 0.55% 0.57%
Ratio of net investment income (loss) to
average net assets (0.25)% (0.23)% (0.28)% (0.25)% (0.21)%
Portfolio turnover rate (b) 39% 39% 26% 31% 37%
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year.
(b) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
Page 46 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 226.02 $ 212.37 $ 139.12 $ 116.66 $ 109.82
------------ ------------ ------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.48) (0.73) (0.34) (0.14) (0.35)
Net realized and unrealized gain (loss) (102.39) 14.38 73.59 22.60 7.19
------------ ------------ ------------ ------------ ------------
Total from investment operations (102.87) 13.65 73.25 22.46 6.84
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 123.15 $ 226.02 $ 212.37 $ 139.12 $ 116.66
============ ============ ============ ============ ============
TOTAL RETURN (a) (45.51)% 6.43% 52.65% 19.26% 6.23%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 3,552,840 $ 9,967,573 $ 11,075,029 $ 7,853,367 $ 7,016,807
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.52% 0.51% 0.51% 0.52% 0.52%
Ratio of net expenses to average net assets 0.52% 0.51% 0.51% 0.52% 0.52%
Ratio of net investment income (loss) to
average net assets (0.26)% (0.30)% (0.20)% (0.10)% (0.27)%
Portfolio turnover rate (b) 24% 19% 39% 28% 21%
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 84.52 $ 67.55 $ 60.37 $ 48.29 $ 50.95
------------ ------------ ------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.90 0.91 0.63 0.76 0.60
Net realized and unrealized gain (loss) (9.63) 16.95 7.18 12.08 (2.65)
------------ ------------ ------------ ------------ ------------
Total from investment operations (8.73) 17.86 7.81 12.84 (2.05)
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.92) (0.89) (0.63) (0.76) (0.61)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 74.87 $ 84.52 $ 67.55 $ 60.37 $ 48.29
============ ============ ============ ============ ============
TOTAL RETURN (a) (10.28)% 26.61% 13.07% 26.72% (4.09)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 8,692,148 $ 9,491,932 $ 7,021,909 $ 3,392,623 $ 1,376,131
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.55% 0.55% 0.56% 0.58% 0.60%
Ratio of net expenses to average net assets 0.55% 0.55% 0.56% 0.58% 0.60%
Ratio of net investment income (loss) to
average net assets 1.21% 1.23% 1.10 1.46% 1.30%
Portfolio turnover rate (b) 135% 117% 133% 125% 117%
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year.
(b) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
See Notes to Financial Statements Page 47
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
2022 2021 2020 2019 2018
------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 43.00 $ 35.10 $ 36.03 $ 29.07 $ 30.84
------------ ------------ ------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.82 0.74 0.79 0.73 0.73
Net realized and unrealized gain (loss) (3.10) 7.91 (0.91) 6.96 (1.77)
------------ ------------ ------------ ------------ ------------
Total from investment operations (2.28) 8.65 (0.12) 7.69 (1.04)
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.83) (0.75) (0.81) (0.73) (0.73)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 39.89 $ 43.00 $ 35.10 $ 36.03 $ 29.07
============ ============ ============ ============ ============
TOTAL RETURN (a) (5.24)% 24.86% (0.04)% 26.60% (3.44)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 12,442,671 $ 12,954,187 $ 10,149,204 $ 9,665,219 $ 4,374,483
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average net assets 0.65% 0.67% 0.70% 0.71% 0.72%
Ratio of net expenses to average net assets 0.65% 0.67% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 2.04% 1.91% 2.47% 2.36% 2.40%
Portfolio turnover rate (b) 53% 47% 86% 53% 58%
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year. The total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the investment
advisor.
(b) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
Page 48 See Notes to Financial Statements
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022
1. ORGANIZATION
First Trust Exchange-Traded Fund (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on August 8,
2003, and is registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940, as amended (the "1940 Act").
The Trust currently consists of twenty-three exchange-traded funds. This report
covers the seven funds (each a "Fund" and collectively, the "Funds") listed
below:
First Trust Dow Jones Select MicroCap Index Fund - (NYSE Arca, Inc.
("NYSE Arca") ticker "FDM")
First Trust Morningstar Dividend Leaders Index Fund - (NYSE Arca ticker
"FDL")
First Trust US Equity Opportunities ETF - (NYSE Arca ticker "FPX")
First Trust NYSE(R) Arca(R) Biotechnology Index Fund - (NYSE Arca ticker
"FBT")
First Trust Dow Jones Internet Index Fund - (NYSE Arca ticker "FDN")
First Trust Capital Strength ETF - (The Nasdaq Stock Market LLC
("Nasdaq") ticker "FTCS")
First Trust Value Line(R) Dividend Index Fund - (NYSE Arca ticker "FVD")
Each Fund represents a separate series of beneficial interest in the Trust.
Unlike conventional mutual funds, each Fund issues and redeems shares on a
continuous basis at net asset value ("NAV"), only in large blocks of shares
known as "Creation Units." The investment objective of each Fund is to seek
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of the following indices:
FUND INDEX
First Trust Dow Jones Select MicroCap Index Fund Dow Jones Select MicroCap Index(SM)
First Trust Morningstar Dividend Leaders Index Fund Morningstar(R) Dividend Leaders Index(SM)
First Trust US Equity Opportunities ETF IPOX(R)-100 U.S. Index
First Trust NYSE(R) Arca(R) Biotechnology Index Fund NYSE(R) Arca(R) Biotechnology Index
First Trust Dow Jones Internet Index Fund Dow Jones Internet Composite Index(SM)
First Trust Capital Strength ETF The Capital Strength Index(SM)
First Trust Value Line(R) Dividend Index Fund Value Line(R) Dividend Index
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are each considered an investment company and follow accounting and
reporting guidance under Financial Accounting Standards Board Accounting
Standards Codification Topic 946, "Financial Services-Investment Companies." The
following is a summary of significant accounting policies consistently followed
by the Funds in the preparation of the financial statements. The preparation of
the financial statements in accordance with accounting principles generally
accepted in the United States of America ("U.S. GAAP") requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
A. PORTFOLIO VALUATION
Each Fund's NAV is determined daily as of the close of regular trading on the
New York Stock Exchange ("NYSE"), normally 4:00 p.m. Eastern time, on each day
the NYSE is open for trading. If the NYSE closes early on a valuation day, the
NAV is determined as of that time. Foreign securities are priced using data
reflecting the earlier closing of the principal markets for those securities.
Each Fund's NAV is calculated by dividing the value of all assets of each Fund
(including accrued interest and dividends), less all liabilities (including
accrued expenses and dividends declared but unpaid), by the total number of
shares outstanding.
Each Fund's investments are valued daily at market value or, in the absence of
market value with respect to any portfolio securities, at fair value. Market
value prices represent readily available market quotations such as last sale or
official closing prices from a national or foreign exchange (i.e., a regulated
market) and are primarily obtained from third-party pricing services. Fair value
prices represent any prices not considered market value prices and are either
obtained from a third-party pricing service or are determined by the Pricing
Committee of the Funds' investment advisor, First Trust Advisors L.P. ("First
Trust" or the "Advisor"), in accordance with valuation procedures approved by
the Trust's Board of Trustees, and in accordance with provisions of the 1940 Act
and rules thereunder. Investments valued by the Advisor's Pricing Committee, if
any, are footnoted as such in the footnotes to the Portfolio of Investments.
Each Fund's investments are valued as follows:
Common stocks and other equity securities listed on any national or
foreign exchange (excluding Nasdaq and the London Stock Exchange
Alternative Investment Market ("AIM")) are valued at the last sale price
on the exchange on which they are principally traded or, for Nasdaq and
AIM securities, the official closing price. Securities traded on more than
one securities exchange are valued at the last sale price or official
closing price, as applicable, at the close of the securities exchange
representing the primary exchange for such securities.
Page 49
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022
Shares of open-end funds are valued based on NAV per share.
Securities traded in an over-the-counter market are valued at the mean of
their most recent bid and asked price, if available, and otherwise at
their last trade price.
Overnight repurchase agreements are valued at amortized cost when it
represents the most appropriate reflection of fair market value.
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Advisor's Pricing Committee at
fair value. These securities generally include, but are not limited to,
restricted securities (securities which may not be publicly sold without
registration under the Securities Act of 1933, as amended) for which a
third-party pricing service is unable to provide a market price; securities
whose trading has been formally suspended; a security whose market or fair value
price is not available from a pre-established pricing source; a security with
respect to which an event has occurred that is likely to materially affect the
value of the security after the market has closed but before the calculation of
a Fund's NAV or make it difficult or impossible to obtain a reliable market
quotation; and a security whose price, as provided by the third-party pricing
service, does not reflect the security's fair value. As a general principle, the
current fair value of a security would appear to be the amount which the owner
might reasonably expect to receive for the security upon its current sale. When
fair value prices are used, generally they will differ from market quotations or
official closing prices on the applicable exchanges. A variety of factors may be
considered in determining the fair value of such securities, including, but not
limited to, the following:
1) the last sale price on the exchange on which they are principally
traded or, for Nasdaq and AIM securities, the official closing
price;
2) the type of security;
3) the size of the holding;
4) the initial cost of the security;
5) transactions in comparable securities;
6) price quotes from dealers and/or third-party pricing services;
7) relationships among various securities;
8) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;
9) an analysis of the issuer's financial statements;
10) the existence of merger proposals or tender offers that might affect
the value of the security; and
11) other relevant factors.
In addition, differences between the prices used to calculate a Fund's NAV and
the prices used by such Fund's corresponding index could result in a difference
between a Fund's performance and the performance of its underlying index.
The Funds are subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or methodologies used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value each Fund's investments as of December 31, 2022, is
included with each Fund's Portfolio of Investments.
Page 50
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022
In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, establishing
requirements to determine fair value in good faith for purposes of the 1940 Act.
The rule permits fund boards to designate a fund's investment advisor to perform
fair value determinations, subject to board oversight and certain other
conditions. The rule also defines when market quotations are "readily available"
for purposes of the 1940 Act and requires a fund to fair value a portfolio
investment when a market quotation is not readily available. The SEC also
adopted new Rule 31a-4 under the 1940 Act, which sets forth recordkeeping
requirements associated with fair value determinations. The compliance date for
Rule 2a-5 and Rule 31a-4 was September 8, 2022.
Effective September 8, 2022 and pursuant to the requirements of Rule 2a-5, the
Trust's Board of Trustees designated the Advisor as its valuation designee to
perform fair value determinations and approved new Advisor Valuation Procedures
for the Trust.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income, if any, is
recorded on the accrual basis.
Withholding taxes and tax reclaims on foreign dividends have been provided for
in accordance with each Fund's understanding of the applicable country's tax
rules and rates.
Distributions received from a Fund's investments in real estate investment
trusts ("REITs") may be comprised of return of capital, capital gains and
income. The actual character of the amounts received during the year is not
known until after the REITs' fiscal year end. A Fund records the character of
distributions received from REITs during the year based on estimates available.
The characterization of distributions received by a Fund may be subsequently
revised based on information received from the REITs after their tax reporting
periods conclude.
C. OFFSETTING ON THE STATEMENTS OF ASSETS AND LIABILITIES
Offsetting Assets and Liabilities require entities to disclose both gross and
net information about instruments and transactions eligible for offset on the
Statements of Assets and Liabilities, and disclose instruments and transactions
subject to master netting or similar agreements. These disclosure requirements
are intended to help investors and other financial statement users better assess
the effect or potential effect of offsetting arrangements on a fund's financial
position. The transactions subject to offsetting disclosures are derivative
instruments, repurchase agreements and reverse repurchase agreements, and
securities borrowing and securities lending transactions.
This disclosure, if applicable, is included within each Fund's Portfolio of
Investments under the heading "Offsetting Assets and Liabilities." For financial
reporting purposes, the Funds do not offset financial assets and financial
liabilities that are subject to master netting arrangements ("MNAs") or similar
agreements on the Statements of Assets and Liabilities. MNAs provide the right,
in the event of default (including bankruptcy and insolvency), for the
non-defaulting counterparty to liquidate the collateral and calculate the net
exposure to the defaulting party or request additional collateral.
D. SECURITIES LENDING
The Funds may lend securities representing up to 33 1/3% of the value of their
total assets to broker-dealers, banks and other institutions to generate
additional income. When a Fund loans its portfolio securities, it will receive,
at the inception of each loan, collateral equal to at least 102% (for domestic
securities) or 105% (for international securities) of the market value of the
loaned securities. The collateral amount is valued at the beginning of each
business day and is compared to the market value of the loaned securities from
the prior business day to determine if additional collateral is required. If
additional collateral is required, a request is sent to the borrower. Securities
lending involves the risk that the Fund may lose money because the borrower of
the Fund's loaned securities fails to return the securities in a timely manner
or at all. The Fund could also lose money in the event of (i) a decline in the
value of the collateral provided for the loaned securities, (ii) a decline in
the value of any investments made with cash collateral or (iii) an increase in
the value of the loaned securities if the borrower does not increase the
collateral accordingly and the borrower fails to return the securities. These
events could also trigger adverse tax consequences for the Funds.
Under the Funds' Securities Lending Agency Agreement, the securities lending
agent will generally bear the risk that a borrower may default on its obligation
to return loaned securities. Brown Brothers Harriman & Co. ("BBH") acts as the
Funds' securities lending agent and is responsible for executing the lending of
the portfolio securities to creditworthy borrowers with the exception of FPX.
The Bank of New York Mellon ("BNYM") acts as FPX's securities lending agent and
is responsible for executing the lending of the portfolio securities to
creditworthy borrowers. The Funds, however, will be responsible for the risks
associated with the investment of cash collateral. A Fund may lose money on its
investment of cash collateral, which may affect its ability to repay the
collateral to the borrower without the use of other Fund assets. Each Fund that
engages in securities lending receives compensation (net of any rebate and
securities lending agent fees) for lending its securities. Compensation can be
in the form of fees received from the securities lending agent or dividends or
Page 51
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022
interest earned from the investment of cash collateral. The fees received from
the securities lending agent are accrued daily. The dividend and interest earned
on the securities loaned is accounted for in the same manner as other dividend
and interest income. At December 31, 2022, only FDM, FPX and FDN had securities
in the securities lending program. During the fiscal year ended December 31,
2022, FDM, FPX, FBT and FDN participated in the securities lending program.
In the event of a default by a borrower with respect to any loan, BBH or BNYM
will exercise any and all remedies provided under the applicable borrower
agreement to make the Funds whole. These remedies include purchasing replacement
securities by applying the collateral held from the defaulting broker against
the purchase cost of the replacement securities. If, despite such efforts by BBH
and BNYM to exercise these remedies, a Fund sustains losses as a result of a
borrower's default, BBH or BNYM will indemnify the Fund by purchasing
replacement securities at its own expense, or paying the Fund an amount equal to
the market value of the replacement securities, subject to certain limitations
which are set forth in detail in the Securities Lending Agency Agreement between
the Trust on behalf of the Funds and BBH or BNYM.
E. REPURCHASE AGREEMENTS
Repurchase agreements involve the purchase of securities subject to the seller's
agreement to repurchase the securities at a mutually agreed upon date and price,
under the terms of a Master Repurchase Agreement ("MRA"). During the term of a
repurchase agreement, the value of the underlying securities held as collateral
on behalf of a Fund, including accrued interest, is required to exceed the value
of the repurchase agreement, including accrued interest. The underlying
securities for all repurchase agreements are held at the Funds' custodian or
designated sub-custodians under tri-party repurchase agreements.
MRAs govern transactions between a Fund and select counterparties. The MRAs
contain provisions for, among other things, initiation, income payments, events
of default, and maintenance of collateral for repurchase agreements.
Repurchase agreements received for lending securities are collateralized by U.S.
Treasury securities. The U.S. Treasury securities are held in a joint custody
account at BBH or BNYM on behalf of the Funds participating in the securities
lending program. In the event the counterparty defaults on the repurchase
agreement, the U.S. Treasury securities can either be maintained as part of a
Fund's portfolio or sold for cash. A Fund could suffer a loss to the extent that
the proceeds from the sale of the underlying collateral held by the Fund is less
than the repurchase price and the Fund's costs associated with the delay and
enforcement of the MRA.
While the Funds may invest in repurchase agreements, any repurchase agreements
held by the Funds during the fiscal year ended December 31, 2022, were received
as collateral for lending securities.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income of each Fund, if any, are declared and paid
quarterly, or as the Board of Trustees may determine from time to time.
Distributions of net realized gains earned by each Fund, if any, are distributed
at least annually. A Fund may also designate a portion of the amount paid to
redeeming shareholders as a distribution for tax purposes.
Distributions from net investment income and realized capital gains are
determined in accordance with federal income tax regulations, which may differ
from U.S. GAAP. Certain capital accounts in the financial statements are
periodically adjusted for permanent differences in order to reflect their tax
character. These permanent differences are primarily due to the varying
treatment of income and gain/loss on portfolio securities held by the Funds and
have no impact on net assets or NAV per share. Temporary differences, which
arise from recognizing certain items of income, expense and gain/loss in
different periods for financial statement and tax purposes, will reverse at some
time in the future.
The tax character of distributions paid by each Fund during the fiscal year
ended December 31, 2022 was as follows:
Distributions Distributions Distributions
paid from paid from paid from
Ordinary Income Capital Gains Return of Capital
------------------ ---------------- -----------------
First Trust Dow Jones Select MicroCap Index Fund $ 2,696,103 $ -- $ --
First Trust Morningstar Dividend Leaders Index Fund 122,518,973 -- --
First Trust US Equity Opportunities ETF 9,427,777 -- --
First Trust NYSE(R) Arca(R) Biotechnology Index Fund -- -- --
First Trust Dow Jones Internet Index Fund -- -- --
First Trust Capital Strength ETF 104,442,497 -- --
First Trust Value Line(R) Dividend Index Fund 255,493,903 -- --
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022
The tax character of distributions paid by each Fund during the fiscal year
ended December 31, 2021 was as follows:
Distributions Distributions Distributions
paid from paid from paid from
Ordinary Income Capital Gains Return of Capital
------------------ ---------------- -----------------
First Trust Dow Jones Select MicroCap Index Fund $ 1,928,374 $ -- $ --
First Trust Morningstar Dividend Leaders Index Fund 63,399,697 -- --
First Trust US Equity Opportunities ETF 2,739,625 -- --
First Trust NYSE(R) Arca(R) Biotechnology Index Fund -- -- --
First Trust Dow Jones Internet Index Fund -- -- --
First Trust Capital Strength ETF 96,596,007 -- --
First Trust Value Line(R) Dividend Index Fund 223,826,833 -- --
As of December 31, 2022, the components of distributable earnings on a tax basis
for each Fund were as follows:
Accumulated
Undistributed Capital and Net Unrealized
Ordinary Other Appreciation
Income Gain (Loss) (Depreciation)
------------------ ---------------- -----------------
First Trust Dow Jones Select MicroCap Index Fund $ -- $ (53,504,160) $ (11,736,962)
First Trust Morningstar Dividend Leaders Index Fund 428,089 (339,388,648) 142,814,052
First Trust US Equity Opportunities ETF 564,575 (614,449,867) (40,206,579)
First Trust NYSE(R) Arca(R) Biotechnology Index Fund -- (608,689,298) 65,144,886
First Trust Dow Jones Internet Index Fund -- (570,251,563) (2,484,232,642)
First Trust Capital Strength ETF 165,743 (835,844,643) 513,771,423
First Trust Value Line(R) Dividend Index Fund -- (482,206,022) 834,263,506
G. INCOME TAXES
Each Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no
provision has been made for federal and state income taxes. However, due to the
timing and amount of distributions, each Fund may be subject to an excise tax of
4% of the amount by which approximately 98% of each Fund's taxable income
exceeds the distributions from such taxable income for the calendar year.
The Funds are subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. The taxable years ended 2019,
2020, 2021, and 2022 remain open to federal and state audit. As of December 31,
2022, management has evaluated the application of these standards to the Funds,
and has determined that no provision for income tax is required in the Funds'
financial statements for uncertain tax positions.
Each Fund intends to utilize provisions of the federal income tax laws, which
allow it to carry a realized capital loss forward indefinitely following the
year of the loss and offset such loss against any future realized capital gains.
Each Fund is subject to certain limitations under U.S. tax rules on the use of
capital loss carryforwards and net unrealized built-in losses. These limitations
apply when there has been a 50% change in ownership. At December 31, 2022, for
federal income tax purposes, each applicable Fund had a capital loss
carryforward available that is shown in the table below, to the extent provided
by regulations, to offset future capital gains. To the extent that these loss
carryforwards are used to offset future capital gains, it is probable that the
capital gains so offset will not be distributed to each applicable Fund's
shareholders.
Non-Expiring Capital
Loss Carryforwards
---------------------
First Trust Dow Jones Select MicroCap Index Fund $ 53,504,160
First Trust Morningstar Dividend Leaders Index Fund 339,388,648
First Trust US Equity Opportunities ETF 614,449,867
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 608,689,298
First Trust Dow Jones Internet Index Fund 570,251,563
First Trust Capital Strength ETF 835,844,643
First Trust Value Line(R) Dividend Index Fund* 482,206,022
* $11,007,161 of First Trust Value Line(R) Dividend Index Fund's non-expiring
net capital losses is subject to loss limitation resulting from reorganization
activity. This limitation generally reduces the utilization of these losses to a
maximum of $364,518 per year.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022
Certain losses realized during the current fiscal year may be deferred and
treated as occurring on the first day of the following fiscal year for federal
income tax purposes. For the fiscal year ended December 31, 2022, the Funds had
no net late year ordinary or capital losses.
In order to present paid-in capital and accumulated distributable earnings
(loss) (which consists of accumulated net investment income (loss), accumulated
net realized gain (loss) on investments and net unrealized appreciation
(depreciation) on investments) on the Statements of Assets and Liabilities that
more closely represent their tax character, certain adjustments have been made
to paid-in capital, accumulated net investment income (loss) and accumulated net
realized gain (loss) on investments. These adjustments are primarily due to the
difference between book and tax treatments of income and gains on various
investment securities held by the Funds and in-kind transactions. The results of
operations and net assets were not affected by these adjustments. For the fiscal
year ended December 31, 2022, the adjustments for each Fund were as follows:
Accumulated
Accumulated Net Realized
Net Investment Gain (Loss) Paid-in
Income (Loss) on Investments Capital
------------------ ---------------- -----------------
First Trust Dow Jones Select MicroCap Index Fund $ 4,133 $ (21,805,709) $ 21,801,576
First Trust Morningstar Dividend Leaders Index Fund -- (98,567,582) 98,567,582
First Trust US Equity Opportunities ETF 1,126 (71,346,627) 71,345,501
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 3,533,844 (38,279,503) 34,745,659
First Trust Dow Jones Internet Index Fund 13,722,408 (632,963,406) 619,240,998
First Trust Capital Strength ETF -- (390,929,178) 390,929,178
First Trust Value Line(R) Dividend Index Fund 4,309,134 (562,922,699) 558,613,565
As of December 31, 2022, the aggregate cost, gross unrealized appreciation,
gross unrealized depreciation, and net unrealized appreciation/(depreciation) on
investments (including short positions and derivatives, if any) for federal
income tax purposes were as follows:
Gross Gross Net Unrealized
Unrealized Unrealized Appreciation
Tax Cost Appreciation (Depreciation) (Depreciation)
---------------- ------------------ ---------------- -----------------
First Trust Dow Jones Select MicroCap Index Fund $ 163,619,223 $ 8,387,352 $ (20,124,314) $ (11,736,962)
First Trust Morningstar Dividend Leaders Index Fund 4,646,977,664 380,030,909 (237,216,857) 142,814,052
First Trust US Equity Opportunities ETF 855,994,575 49,229,448 (89,436,027) (40,206,579)
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 1,418,223,988 258,066,097 (192,921,211) 65,144,886
First Trust Dow Jones Internet Index Fund 6,037,594,433 53,700,010 (2,537,932,652) (2,484,232,642)
First Trust Capital Strength ETF 8,175,255,449 758,726,485 (244,955,062) 513,771,423
First Trust Value Line(R) Dividend Index Fund 11,586,641,769 1,501,917,776 (667,654,040) 834,263,736
H. EXPENSES
Expenses that are directly related to one of the Funds are charged directly to
the respective Fund. General expenses of the Trust are allocated to all the
Funds based upon the net assets of each Fund.
First Trust has entered into licensing agreements with each of the following
"Licensors" for the respective Funds:
FUND LICENSOR
First Trust Dow Jones Select MicroCap Index Fund S&P Dow Jones Indices LLC
First Trust Morningstar Dividend Leaders Index Fund Morningstar, Inc.
First Trust US Equity Opportunities ETF IPOX(R) Schuster LLC
First Trust NYSE(R) Arca(R) Biotechnology Index Fund ICE Data Indices, LLC
First Trust Dow Jones Internet Index Fund S&P Dow Jones Indices LLC
First Trust Capital Strength ETF Nasdaq, Inc.
First Trust Value Line(R) Dividend Index Fund Value Line Publishing LLC
The respective license agreements allow for the use by First Trust of certain
trademarks and trade names of the respective Licensors. The Funds are
sub-licensees to the applicable license agreement. The respective Funds are
required to pay licensing fees, which are shown on the Statements of Operations.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust, the investment advisor to the Funds, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. The Charger Corporation is an Illinois corporation
controlled by James A. Bowen, Chief Executive Officer of First Trust. First
Trust is responsible for the selection and ongoing monitoring of the securities
in each Fund's portfolio, managing the Funds' business affairs and providing
certain administrative services necessary for the management of the Funds.
Effective November 1, 2022, the management fee payable by each Fund to First
Trust for these services will be reduced at certain levels of each Fund's net
assets ("breakpoints") and calculated pursuant to the schedule below:
Breakpoints FDM FDL FPX FBT FDN FTCS FVD
------------------------------------------------------------- -------------------------------------------------------------
Fund net assets up to and including $2.5 billion 0.5000% 0.3000% 0.40% 0.40% 0.40% 0.5000% 0.5000%
Fund net assets greater than $2.5 billion up to and including
$5 billion 0.4875% 0.2925% 0.39% 0.39% 0.39% 0.4875% 0.4875%
Fund net assets greater than $5 billion up to and including
$7.5 billion 0.4750% 0.2850% 0.38% 0.38% 0.38% 0.4750% 0.4750%
Fund net assets greater than $7.5 billion up to and including
$10 billion 0.4625% 0.2775% 0.37% 0.37% 0.37% 0.4625% 0.4625%
Fund net assets greater than $10 billion up to and including
$15 billion 0.4500% 0.2700% 0.36% 0.36% 0.36% 0.4500% 0.4500%
Fund net assets greater than $15 billion 0.4250% 0.2550% 0.34% 0.34% 0.34% 0.4250% 0.4250%
Prior to November 1, 2022, First Trust was entitled to receive monthly fees from
each Fund calculated at the following annual rates:
% of Average
Daily Net Assets
----------------
First Trust Dow Jones Select MicroCap Index Fund 0.50%
First Trust Morningstar Dividend Leaders Index Fund 0.30%
First Trust US Equity Opportunities ETF 0.40%
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 0.40%
First Trust Dow Jones Internet Index Fund 0.40%
First Trust Capital Strength ETF 0.50%
First Trust Value Line(R) Dividend Index Fund 0.50%
The Trust and the Advisor have entered into an Expense Reimbursement, Fee Waiver
and Recovery Agreement ("Recovery Agreement") in which First Trust has agreed to
waive fees and/or reimburse Fund expenses to the extent that the operating
expenses of each Fund (excluding interest expense, brokerage commissions and
other trading expenses, acquired fund fees and expenses, taxes and extraordinary
expenses) exceed the below amount as a percentage of average daily net assets
per year (the "Expense Cap"). The Expense Cap will be in effect until at least
April 30, 2024.
Expense Cap
----------------
First Trust Dow Jones Select MicroCap Index Fund 0.60%
First Trust Morningstar Dividend Leaders Index Fund 0.45%
First Trust US Equity Opportunities ETF 0.60%
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 0.60%
First Trust Dow Jones Internet Index Fund 0.60%
First Trust Capital Strength ETF 0.65%
First Trust Value Line(R) Dividend Index Fund 0.70%
Prior to November 1, 2022, expenses reimbursed and fees waived by First Trust
under the Recovery Agreement were subject to recovery by First Trust for up to
three years from the date the fee or expense was incurred, but no reimbursement
payment would be made by a Fund if it resulted in the Fund exceeding (i) the
applicable expense limitation in place for the most recent fiscal year for which
such expense limitation was in place, (ii) the applicable expense limitation in
place at the time the fees were waived, or (iii) the current expense limitation.
These amounts would be included in "Expenses previously waived or reimbursed" on
the Statements of Operations. First Trust did not recover expenses from any
Funds during the year. Effective November 1, 2022, in connection with the
introduction of breakpoints discussed above, First Trust has agreed to remove
its ability to recover previous expenses borne and fees waived under the
Recovery Agreement.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022
The Trust has multiple service agreements with BNYM. Under the service
agreements, BNYM performs custodial, fund accounting, certain administrative
services, and transfer agency services for each Fund. As custodian, BNYM is
responsible for custody of each Fund's assets. As fund accountant and
administrator, BNYM is responsible for maintaining the books and records of each
Fund's securities and cash. As transfer agent, BNYM is responsible for
maintaining shareholder records for each Fund. BNYM is a subsidiary of The Bank
of New York Mellon Corporation, a financial holding company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that
varies based on whether the fund is a closed-end or other actively managed fund,
a target outcome fund or an index fund. Additionally, the Lead Independent
Trustee and the Chairs of the Audit Committee, Nominating and Governance
Committee and Valuation Committee are paid annual fees to serve in such
capacities, with such compensation allocated pro rata among each fund in the
First Trust Fund Complex based on net assets. Independent Trustees are
reimbursed for travel and out-of-pocket expenses in connection with all
meetings. The Lead Independent Trustee and Committee Chairs rotate every three
years. The officers and "Interested" Trustee receive no compensation from the
Trust for acting in such capacities.
4. PURCHASES AND SALES OF SECURITIES
For the fiscal year ended December 31, 2022, the cost of purchases and proceeds
from sales of investments for each Fund, excluding short-term investments and
in-kind transactions, were as follows:
Purchases Sales
--------------- ----------------
First Trust Dow Jones Select MicroCap Index Fund $ 131,056,048 $ 130,339,718
First Trust Morningstar Dividend Leaders Index Fund 1,763,531,857 1,762,398,655
First Trust US Equity Opportunities ETF 1,352,447,834 1,351,967,020
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 554,373,169 558,235,059
First Trust Dow Jones Internet Index Fund 1,326,762,827 1,338,175,822
First Trust Capital Strength ETF 11,327,486,939 11,322,886,717
First Trust Value Line(R) Dividend Index Fund 6,578,928,534 6,570,976,285
For the fiscal year ended December 31, 2022, the cost of in-kind purchases and
proceeds from in-kind sales for each Fund were as follows:
Purchases Sales
--------------- ----------------
First Trust Dow Jones Select MicroCap Index Fund $ 113,193,549 $ 131,476,879
First Trust Morningstar Dividend Leaders Index Fund 3,822,124,767 816,139,682
First Trust US Equity Opportunities ETF 49,535,014 514,788,444
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 126,235,523 256,686,261
First Trust Dow Jones Internet Index Fund 2,485,146,421 5,130,551,782
First Trust Capital Strength ETF 3,131,453,354 2,803,988,769
First Trust Value Line(R) Dividend Index Fund 2,843,444,102 2,401,526,667
5. CREATION, REDEMPTION AND TRANSACTION FEES
Each Fund generally issues and redeems its shares in primary market transactions
through a creation and redemption mechanism and does not sell or redeem
individual shares. Instead, financial entities known as "Authorized
Participants" have contractual arrangements with a Fund or one of the Fund's
service providers to purchase and redeem Fund shares directly with the Fund in
large blocks of shares known as "Creation Units." Prior to the start of trading
on every business day, a Fund publishes through the National Securities Clearing
Corporation ("NSCC") the "basket" of securities, cash or other assets that it
will accept in exchange for a Creation Unit of the Fund's shares. An Authorized
Participant that wishes to effectuate a creation of a Fund's shares deposits
with the Fund the "basket" of securities, cash or other assets identified by the
Fund that day, and then receives the Creation Unit of the Fund's shares in
return for those assets. After purchasing a Creation Unit, the Authorized
Participant may continue to hold the Fund's shares or sell them in the secondary
market. The redemption process is the reverse of the purchase process: the
Authorized Participant redeems a Creation Unit of a Fund's shares for a basket
of securities, cash or other assets. The combination of the creation and
redemption process with secondary market trading in a Fund's shares and
underlying securities provides arbitrage opportunities that are designed to help
keep the market price of a Fund's shares at or close to the NAV per share of the
Fund.
Page 56
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022
Each Fund imposes fees in connection with the purchase of Creation Units. These
fees may vary based upon various facts-based circumstances, including, but not
limited to, the composition of the securities included in the Creation Unit or
the countries in which the transactions are settled. The price for each Creation
Unit will equal the daily NAV per share of a Fund times the number of shares in
a Creation Unit, plus the fees described above and, if applicable, any
operational processing and brokerage costs, transfer fees, stamp taxes and part
or all of the spread between the expected bid and offer side of the market
related to the securities comprising the creation basket.
Each Fund also imposes fees in connection with the redemption of Creation Units.
These fees may vary based upon various fact-based circumstances, including, but
not limited to, the composition of the securities included in the Creation Unit
or the countries in which the transactions are settled. The price received for
each Creation Unit will equal the daily NAV per share of a Fund times the number
of shares in a Creation Unit, minus the fees described above and, if applicable,
any operational processing and brokerage costs, transfer fees, stamp taxes and
part or all of the spread between the expected bid and offer side of the market
related to the securities comprising the redemption basket. Investors who use
the services of a broker or other such intermediary in addition to an Authorized
Participant to effect a redemption of a Creation Unit may also be assessed an
amount to cover the cost of such services. The redemption fee charged by a Fund
will comply with Rule 22c-2 of the 1940 Act which limits redemption fees to no
more than 2% of the value of the shares redeemed.
6. DISTRIBUTION PLAN
The Board of Trustees adopted a Distribution and Service Plan pursuant to Rule
12b-1 under the 1940 Act. In accordance with the Rule 12b-1 plan, the Funds are
authorized to pay an amount up to 0.25% of their average daily net assets each
year to reimburse First Trust Portfolios L.P. ("FTP"), the distributor of the
Funds, for amounts expended to finance activities primarily intended to result
in the sale of Creation Units or the provision of investor services. FTP may
also use this amount to compensate securities dealers or other persons that are
Authorized Participants for providing distribution assistance, including
broker-dealer and shareholder support and educational and promotional services.
No 12b-1 fees are currently paid by the Funds, and pursuant to a contractual
arrangement, no 12b-1 fees will be paid any time before April 30, 2024.
7. INDEMNIFICATION
The Trust, on behalf of the Funds, has a variety of indemnification obligations
under contracts with its service providers. The Trust's maximum exposure under
these arrangements is unknown. However, the Trust has not had prior claims or
losses pursuant to these contracts and expects the risk of loss to be remote.
8. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events on the Funds
through the date the financial statements were issued and has determined that
there were no subsequent events requiring recognition or disclosure in the
financial statements that have not already been disclosed.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND THE BOARD OF TRUSTEES OF FIRST TRUST EXCHANGE-TRADED
FUND:
OPINION ON THE FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS
We have audited the accompanying statements of assets and liabilities of First
Trust Dow Jones Select MicroCap Index Fund, First Trust Morningstar Dividend
Leaders Index Fund, First Trust US Equity Opportunities ETF, First Trust NYSE(R)
Arca(R) Biotechnology Index Fund, First Trust Dow Jones Internet Index Fund,
First Trust Capital Strength ETF, and First Trust Value Line(R) Dividend Index
Fund (the "Funds"), each a series of First Trust Exchange-Traded Fund, including
the portfolios of investments, as of December 31, 2022, the related statements
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, the financial highlights for
each of the five years in the period then ended, and the related notes. In our
opinion, the financial statements and financial highlights present fairly, in
all material respects, the financial position of each of the Funds as of
December 31, 2022, and the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended in conformity with accounting principles generally accepted in the
United States of America.
BASIS FOR OPINION
These financial statements and financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on the Funds'
financial statements and financial highlights based on our audits. We are a
public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to
the Funds in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement, whether due to error or fraud. The Funds are not
required to have, nor were we engaged to perform, an audit of their internal
control over financial reporting. As part of our audits we are required to
obtain an understanding of internal control over financial reporting but not for
the purpose of expressing an opinion on the effectiveness of the Funds' internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material
misstatement of the financial statements and financial highlights, whether due
to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements and financial highlights. Our audits
also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 2022, by correspondence with
the custodian and brokers; when replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 23, 2023
We have served as the auditor of one or more First Trust investment companies
since 2001.
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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022 (UNAUDITED)
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Trust uses to determine
how to vote proxies and information on how each Fund voted proxies relating to
its portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
each Fund's website at www.ftportfolios.com; and (3) on the Securities and
Exchange Commission's ("SEC") website at www.sec.gov.
PORTFOLIO HOLDINGS
Each Fund files portfolio holdings information for each month in a fiscal
quarter within 60 days after the end of the relevant fiscal quarter on Form
N-PORT. Portfolio holdings information for the third month of each fiscal
quarter will be publicly available on the SEC's website at www.sec.gov. Each
Fund's complete schedule of portfolio holdings for the second and fourth
quarters of each fiscal year is included in the semi-annual and annual reports
to shareholders, respectively, and is filed with the SEC on Form N-CSR. The
semi-annual and annual report for each Fund is available to investors within 60
days after the period to which it relates. Each Fund's Forms N-PORT and Forms
N-CSR are available on the SEC's website listed above.
FEDERAL TAX INFORMATION
For the taxable year ended December 31, 2022, the following percentages of
income dividends paid by the Funds qualify for the dividends received deduction
available to corporations:
Dividends Received Deduction
----------------------------
First Trust Dow Jones Select MicroCap Index Fund 91.54%
First Trust Morningstar Dividend Leaders Index Fund 100.00%
First Trust US Equity Opportunities ETF 100.00%
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 0.00%
First Trust Dow Jones Internet Index Fund 0.00%
First Trust Capital Strength ETF 100.00%
First Trust Value Line(R) Dividend Index Fund 100.00%
For the taxable year ended December 31, 2022, the following percentages of
income dividends paid by the Funds are hereby designated as qualified dividend
income:
Qualified Dividend Income
----------------------------
First Trust Dow Jones Select MicroCap Index Fund 91.54%
First Trust Morningstar Dividend Leaders Index Fund 100.00%
First Trust US Equity Opportunities ETF 100.00%
First Trust NYSE(R) Arca(R) Biotechnology Index Fund 0.00%
First Trust Dow Jones Internet Index Fund 0.00%
First Trust Capital Strength ETF 100.00%
First Trust Value Line(R) Dividend Index Fund 100.00%
A portion of each of the Funds' 2022 ordinary dividends (including short-term
capital gains) paid to its shareholders during the fiscal year ended December
31, 2022, may be eligible for the Qualified Business Income Deduction (QBI)
under Internal Revenue Code Section 199A for the aggregate dividends each Fund
received from the underlying Real Estate Investment Trusts (REITs) these Funds
invest in.
RISK CONSIDERATIONS
RISKS ARE INHERENT IN ALL INVESTING. CERTAIN GENERAL RISKS THAT MAY BE
APPLICABLE TO A FUND ARE IDENTIFIED BELOW, BUT NOT ALL OF THE MATERIAL RISKS
RELEVANT TO EACH FUND ARE INCLUDED IN THIS REPORT AND NOT ALL OF THE RISKS BELOW
APPLY TO EACH FUND. THE MATERIAL RISKS OF INVESTING IN EACH FUND ARE SPELLED OUT
IN ITS PROSPECTUS, STATEMENT OF ADDITIONAL INFORMATION AND OTHER REGULATORY
FILINGS. BEFORE INVESTING, YOU SHOULD CONSIDER EACH FUND'S INVESTMENT OBJECTIVE,
RISKS, CHARGES AND EXPENSES, AND READ EACH FUND'S PROSPECTUS AND STATEMENT OF
ADDITIONAL INFORMATION CAREFULLY. YOU CAN DOWNLOAD EACH FUND'S PROSPECTUS AT
WWW.FTPORTFOLIOS.COM OR CONTACT FIRST TRUST PORTFOLIOS L.P. AT (800) 621-1675 TO
REQUEST A PROSPECTUS, WHICH CONTAINS THIS AND OTHER INFORMATION ABOUT EACH FUND.
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FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022 (UNAUDITED)
CONCENTRATION RISK. To the extent that a fund is able to invest a significant
percentage of its assets in a single asset class or the securities of issuers
within the same country, state, region, industry or sector, an adverse economic,
business or political development may affect the value of the fund's investments
more than if the fund were more broadly diversified. A fund that tracks an index
will be concentrated to the extent the fund's corresponding index is
concentrated. A concentration makes a fund more susceptible to any single
occurrence and may subject the fund to greater market risk than a fund that is
more broadly diversified.
CREDIT RISK. Credit risk is the risk that an issuer of a security will be unable
or unwilling to make dividend, interest and/or principal payments when due and
the related risk that the value of a security may decline because of concerns
about the issuer's ability to make such payments.
CYBER SECURITY RISK. The funds are susceptible to potential operational risks
through breaches in cyber security. A breach in cyber security refers to both
intentional and unintentional events that may cause a fund to lose proprietary
information, suffer data corruption or lose operational capacity. Such events
could cause a fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial
loss. In addition, cyber security breaches of a fund's third-party service
providers, such as its administrator, transfer agent, custodian, or sub-advisor,
as applicable, or issuers in which the fund invests, can also subject a fund to
many of the same risks associated with direct cyber security breaches.
DEFINED OUTCOME FUNDS RISK. To the extent a fund's investment strategy is
designed to deliver returns tied to the price performance of an underlying ETF,
an investor may not realize the returns the fund seeks to achieve if that
investor does not hold shares for the entire target outcome period. In the event
an investor purchases shares after the first day of the target outcome period or
sells shares prior to the end of the target outcome period, the buffer that the
fund seeks to provide against a decline in the value of the underlying ETF may
not be available, the enhanced returns that the fund seeks to provide (if any)
may not be available and the investor may not participate in a gain in the value
of the underlying ETF up to the cap for the investor's investment period.
Additionally, the fund will not participate in gains of the underlying ETF above
the cap and a shareholder may lose their entire investment. If the fund seeks
enhanced returns, there are certain time periods when the value of the fund may
fall faster than the value of the underlying ETF, and it is very unlikely that,
on any given day during which the underlying ETF share price increases in value,
the fund's share price will increase at the same rate as the enhanced returns
sought by the fund, which is designed for an entire target outcome period.
Trading flexible exchange options involves risks different from, or possibly
greater than, the risks associated with investing directly in securities, such
as less liquidity and correlation and valuation risks. A fund may experience
substantial downside from specific flexible exchange option positions and
certain positions may expire worthless.
DERIVATIVES RISK. To the extent a fund uses derivative instruments such as
futures contracts, options contracts and swaps, the fund may experience losses
because of adverse movements in the price or value of the underlying asset,
index or rate, which may be magnified by certain features of the derivative.
These risks are heightened when a fund's portfolio managers use derivatives to
enhance the fund's return or as a substitute for a position or security, rather
than solely to hedge (or offset) the risk of a position or security held by the
fund.
EQUITY SECURITIES RISK. To the extent a fund invests in equity securities, the
value of the fund's shares will fluctuate with changes in the value of the
equity securities. Equity securities prices fluctuate for several reasons,
including changes in investors' perceptions of the financial condition of an
issuer or the general condition of the relevant stock market, such as market
volatility, or when political or economic events affecting the issuers occur. In
addition, common stock prices may be particularly sensitive to rising interest
rates, as the cost of capital rises and borrowing costs increase. Equity
securities may decline significantly in price over short or extended periods of
time, and such declines may occur in the equity market as a whole, or they may
occur in only a particular country, company, industry or sector of the market.
ETF RISK. The shares of an ETF trade like common stock and represent an interest
in a portfolio of securities. The risks of owning an ETF generally reflect the
risks of owning the underlying securities, although lack of liquidity in an ETF
could result in it being more volatile and ETFs have management fees that
increase their costs. Shares of an ETF trade on an exchange at market prices
rather than net asset value, which may cause the shares to trade at a price
greater than net asset value (premium) or less than net asset value (discount).
In times of market stress, decisions by market makers to reduce or step away
from their role of providing a market for an ETF's shares, or decisions by an
ETF's authorized participants that they are unable or unwilling to proceed with
creation and/or redemption orders of an ETF's shares, could result in shares of
the ETF trading at a discount to net asset value and in greater than normal
intraday bid-ask spreads.
FIXED INCOME SECURITIES RISK. To the extent a fund invests in fixed income
securities, the fund will be subject to credit risk, income risk, interest rate
risk, liquidity risk and prepayment risk. Income risk is the risk that income
from a fund's fixed income investments could decline during periods of falling
interest rates. Interest rate risk is the risk that the value of a fund's fixed
income securities will decline because of rising interest rates. Liquidity risk
is the risk that a security cannot be purchased or sold at the time desired, or
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022 (UNAUDITED)
cannot be purchased or sold without adversely affecting the price. Prepayment
risk is the risk that the securities will be redeemed or prepaid by the issuer,
resulting in lower interest payments received by the fund. In addition to these
risks, high yield securities, or "junk" bonds, are subject to greater market
fluctuations and risk of loss than securities with higher ratings, and the
market for high yield securities is generally smaller and less liquid than that
for investment grade securities.
INDEX OR MODEL CONSTITUENT RISK. Certain funds may be a constituent of one or
more indices or ETF models. As a result, such a fund may be included in one or
more index-tracking exchange-traded funds or mutual funds. Being a component
security of such a vehicle could greatly affect the trading activity involving a
fund, the size of the fund and the market volatility of the fund. Inclusion in
an index could increase demand for the fund and removal from an index could
result in outsized selling activity in a relatively short period of time. As a
result, a fund's net asset value could be negatively impacted and the fund's
market price may be significantly below its net asset value during certain
periods. In addition, index rebalances may potentially result in increased
trading activity in a fund's shares.
INDEX PROVIDER RISK. To the extent a fund seeks to track an index, it is subject
to Index Provider Risk. There is no assurance that the Index Provider will
compile the Index accurately, or that the Index will be determined, maintained,
constructed, reconstituted, rebalanced, composed, calculated or disseminated
accurately. To correct any such error, the Index Provider may carry out an
unscheduled rebalance or other modification of the Index constituents or
weightings, which may increase the fund's costs. The Index Provider does not
provide any representation or warranty in relation to the quality, accuracy or
completeness of data in the Index, and it does not guarantee that the Index will
be calculated in accordance with its stated methodology. Losses or costs
associated with any Index Provider errors generally will be borne by the fund
and its shareholders.
INVESTMENT COMPANIES RISK. To the extent a fund invests in the securities of
other investment vehicles, the fund will incur additional fees and expenses that
would not be present in a direct investment in those investment vehicles.
Furthermore, the fund's investment performance and risks are directly related to
the investment performance and risks of the investment vehicles in which the
fund invests.
LIBOR RISK. To the extent a fund invests in floating or variable rate
obligations that use the London Interbank Offered Rate ("LIBOR") as a reference
interest rate, it is subject to LIBOR Risk. The United Kingdom's Financial
Conduct Authority, which regulates LIBOR has ceased making LIBOR available as a
reference rate over a phase-out period that began December 31, 2021. There is no
assurance that any alternative reference rate, including the Secured Overnight
Financing Rate ("SOFR") will be similar to or produce the same value or economic
equivalence as LIBOR or that instruments using an alternative rate will have the
same volume or liquidity. The unavailability or replacement of LIBOR may affect
the value, liquidity or return on certain fund investments and may result in
costs incurred in connection with closing out positions and entering into new
trades. Any potential effects of the transition away from LIBOR on the fund or
on certain instruments in which the fund invests can be difficult to ascertain,
and they may vary depending on a variety of factors, and they could result in
losses to the fund.
MANAGEMENT RISK. To the extent that a fund is actively managed, it is subject to
management risk. In managing an actively-managed fund's investment portfolio,
the fund's portfolio managers will apply investment techniques and risk analyses
that may not have the desired result. There can be no guarantee that a fund will
meet its investment objective.
MARKET RISK. Market risk is the risk that a particular security, or shares of a
fund in general, may fall in value. Securities held by a fund, as well as shares
of a fund itself, are subject to market fluctuations caused by factors such as
general economic conditions, political events, regulatory or market
developments, changes in interest rates and perceived trends in securities
prices. Shares of a fund could decline in value or underperform other
investments as a result of the risk of loss associated with these market
fluctuations. In addition, local, regional or global events such as war, acts of
terrorism, spread of infectious diseases or other public health issues,
recessions, or other events could have a significant negative impact on a fund
and its investments. Such events may affect certain geographic regions,
countries, sectors and industries more significantly than others. In February
2022, Russia invaded Ukraine which has caused and could continue to cause
significant market disruptions and volatility within the markets in Russia,
Europe, and the United States. The hostilities and sanctions resulting from
those hostilities could have a significant impact on certain fund investments as
well as fund performance. The COVID-19 global pandemic and the ensuing policies
enacted by governments and central banks have caused and may continue to cause
significant volatility and uncertainty in global financial markets. While the
U.S. has resumed "reasonably" normal business activity, many countries continue
to impose lockdown measures. Additionally, there is no guarantee that vaccines
will be effective against emerging variants of the disease. These events also
adversely affect the prices and liquidity of a fund's portfolio securities or
other instruments and could result in disruptions in the trading markets. Any of
such circumstances could have a materially negative impact on the value of a
fund's shares and result in increased market volatility. During any such events,
a fund's shares may trade at increased premiums or discounts to their net asset
value and the bid/ask spread on a fund's shares may widen.
NON-U.S. SECURITIES RISK. To the extent a fund invests in non-U.S. securities,
it is subject to additional risks not associated with securities of domestic
issuers. Non-U.S. securities are subject to higher volatility than securities of
domestic issuers due to: possible adverse political, social or economic
developments; restrictions on foreign investment or exchange of securities;
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022 (UNAUDITED)
capital controls; lack of liquidity; currency exchange rates; excessive
taxation; government seizure of assets; the imposition of sanctions by foreign
governments; different legal or accounting standards; and less government
supervision and regulation of exchanges in foreign countries. Investments in
non-U.S. securities may involve higher costs than investments in U.S.
securities, including higher transaction and custody costs, as well as
additional taxes imposed by non-U.S. governments. These risks may be heightened
for securities of companies located, or with significant operations, in emerging
market countries.
OPERATIONAL RISK. Each fund is subject to risks arising from various operational
factors, including, but not limited to, human error, processing and
communication errors, errors of a fund's service providers, counterparties or
other third-parties, failed or inadequate processes and technology or systems
failures. Each fund relies on third-parties for a range of services, including
custody. Any delay or failure relating to engaging or maintaining such service
providers may affect a fund's ability to meet its investment objective. Although
the funds and the funds' investment advisor seek to reduce these operational
risks through controls and procedures, there is no way to completely protect
against such risks.
PASSIVE INVESTMENT RISK. To the extent a fund seeks to track an index, the fund
will invest in the securities included in, or representative of, the index
regardless of their investment merit. A fund generally will not attempt to take
defensive positions in declining markets.
PREFERRED SECURITIES RISK. Preferred securities combine some of the
characteristics of both common stocks and bonds. Preferred securities are
typically subordinated to bonds and other debt securities in a company's capital
structure in terms of priority to corporate income, subjecting them to greater
credit risk than those debt securities. Generally, holders of preferred
securities have no voting rights with respect to the issuing company unless
preferred dividends have been in arrears for a specified number of periods, at
which time the preferred security holders may obtain limited rights. In certain
circumstances, an issuer of preferred securities may defer payment on the
securities and, in some cases, redeem the securities prior to a specified date.
Preferred securities may also be substantially less liquid than other
securities, including common stock.
VALUATION RISK. The valuation of certain securities may carry more risk than
that of common stock. Uncertainties in the conditions of the financial markets,
unreliable reference data, lack of transparency and inconsistency of valuation
models and processes may lead to inaccurate asset pricing. A fund may hold
investments in sizes smaller than institutionally sized round lot positions
(sometimes referred to as odd lots). However, third-party pricing services
generally provide evaluations on the basis of institutionally-sized round lots.
If a fund sells certain of its investments in an odd lot transaction, the sale
price may be less than the value at which such securities have been held by the
fund. Odd lots often trade at lower prices than institutional round lots. There
is no assurance that the fund will be able to sell a portfolio security at the
price established by the pricing service, which could result in a loss to the
fund.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
ADVISORY AGREEMENT
BOARD CONSIDERATIONS REGARDING APPROVAL OF AMENDMENTS TO THE INVESTMENT
MANAGEMENT AGREEMENT
The Board of Trustees of First Trust Exchange-Traded Fund (the "Trust"),
including the Independent Trustees, unanimously approved the amendment (the
"Amendment") of the Investment Management Agreement (the "Agreement") with First
Trust Advisors L.P. (the "Advisor") on behalf of the following seven series of
the Trust (each a "Fund" and collectively, the "Funds"):
First Trust Dow Jones Select MicroCap Index Fund (FDM)
First Trust Morningstar Dividend Leaders Index Fund (FDL)
First Trust US Equity Opportunities ETF (FPX)
First Trust NYSE(R) Arca(R) Biotechnology Index Fund (FBT)
First Trust Dow Jones Internet Index Fund (FDN)
First Trust Capital Strength ETF (FTCS)
First Trust Value Line(R) Dividend Index Fund (FVD)
The Board approved the Amendment for each Fund at a meeting held on October 24,
2022. As part of the review process, the Board reviewed information and had
preliminary discussions with the Advisor regarding the proposed Amendment at
meetings held on April 18, 2022, June 12-13, 2022 and September 18-19, 2022.
Following those preliminary discussions, the Board requested and received
information from the Advisor regarding the proposed Amendment, and that
information was considered at an executive session of the Independent Trustees
and their counsel held prior to the October 24, 2022 meeting, as well as at the
October meeting.
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022 (UNAUDITED)
In reviewing the Amendment for each Fund, the Board considered that the purpose
of the Amendment is to modify the advisory fee rate for each Fund under the
Agreement by introducing a breakpoint schedule pursuant to which the advisory
fee rate paid by each Fund to the Advisor will be reduced as assets of such Fund
meet certain thresholds. The Board noted the Advisor's representations that the
quality and quantity of the services provided to each Fund by the Advisor under
the Agreement will not be reduced or modified as a result of the Amendment, and
that the obligations of the Advisor under the Agreement will remain the same in
all respects.
The Board noted that it, including the Independent Trustees, last approved the
continuation of the Agreement for each Fund for a one-year period ending June
30, 2023 at a meeting held on June 12-13, 2022. The Board noted that in
connection with such approval it had determined for each Fund, based upon the
information provided, that the terms of the Agreement were fair and reasonable
and that the continuation of the Agreement was in the best interests of the Fund
in light of the nature, extent and quality of the services provided and such
other matters as the Board considered to be relevant in the exercise of its
business judgment.
The Board noted that the Advisor had previously agreed to waive management fees
and reimburse certain expenses for a specified period to prevent each Fund's
expense ratio from exceeding a particular expense cap, that the expense cap for
each Fund would continue following entry into the Amendment, and that under the
current terms of the expense caps, expenses reimbursed and fees waived are
subject to recovery by the Advisor for up to three years from the date the fee
was waived or expense was incurred under certain conditions. The Board noted
that in connection with the Amendment, the Advisor agreed to amend the terms of
the expense caps to eliminate its ability to recover any fees waived or expenses
reimbursed.
Based on all of the information considered, the Board, including the Independent
Trustees, unanimously determined that the terms of the Amendment are fair and
reasonable and that the Amendment is in the best interests of each Fund.
REMUNERATION
First Trust Advisors L.P. ("First Trust") is authorised and regulated by the
U.S. Securities and Exchange Commission and is entitled to market shares of
certain First Trust Exchange-Traded Fund funds it manages (the "Funds") in
certain member states in the European Economic Area in accordance with the
cooperation arrangements in Article 42 of the Alternative Investment Fund
Managers Directive (the "Directive"). First Trust is required under the
Directive to make disclosures in respect of remuneration. The following
disclosures are made in line with First Trust's interpretation of currently
available regulatory guidance on remuneration disclosures.
During the year ended December 31, 2022, the amount of remuneration paid (or to
be paid) by First Trust Advisors L.P. in respect of the Funds is $15,479,311.
This figure is comprised of $600,079 paid (or to be paid) in fixed compensation
and $14,879,232 paid (or to be paid) in variable compensation. There were a
total of 24 beneficiaries of the remuneration described above. Those amounts
include $8,163,831 paid (or to be paid) to senior management of First Trust
Advisors L.P. and $7,315,480 paid (or to be paid) to other employees whose
professional activities have a material impact on the risk profiles of First
Trust Advisors L.P. or the Funds (collectively, "Code Staff").
Code Staff included in the aggregated figures disclosed above are rewarded in
line with First Trust's remuneration policy (the "Remuneration Policy") which is
determined and implemented by First Trust's senior management. The Remuneration
Policy reflects First Trust's ethos of good governance and encapsulates the
following principal objectives:
i. to provide a clear link between remuneration and performance of
First Trust and to avoid rewarding for failure;
ii. to promote sound and effective risk management consistent with the
risk profiles of the Funds managed by First Trust; and
iii. to remunerate staff in line with the business strategy, objectives,
values and interests of First Trust and the Funds managed by First
Trust in a manner that avoids conflicts of interest.
First Trust assesses various risk factors which it is exposed to when
considering and implementing remuneration for Code Staff and considers whether
any potential award to such person(s) would give rise to a conflict of interest.
First Trust does not reward failure, or consider the taking of risk or failure
to take risk in its remuneration of Code Staff.
First Trust assesses performance for the purposes of determining payments in
respect of performance-related remuneration of Code Staff by reference to a
broad range of measures including (i) individual performance (using financial
and non-financial criteria), and (ii) the overall performance of First Trust.
Remuneration is not based upon the performance of the Funds.
The elements of remuneration are balanced between fixed and variable and the
senior management sets fixed salaries at a level sufficient to ensure that
variable remuneration incentivises and rewards strong individual performance but
does not encourage excessive risk taking.
No individual is involved in setting his or her own remuneration.
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BOARD OF TRUSTEES AND OFFICERS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022 (UNAUDITED)
The following tables identify the Trustees and Officers of the Trust. Unless
otherwise indicated, the address of all persons is 120 East Liberty Drive, Suite
400, Wheaton, IL 60187.
The Trust's statement of additional information includes additional information
about the Trustees and is available, without charge, upon request, by calling
(800) 988-5891.
NUMBER OF
PORTFOLIOS IN
TERM OF OFFICE THE FIRST TRUST OTHER TRUSTEESHIPS
NAME, AND YEAR FIRST FUND COMPLEX OR DIRECTORSHIPS HELD
YEAR OF BIRTH AND ELECTED OR PRINCIPAL OCCUPATIONS OVERSEEN BY BY TRUSTEE DURING
POSITION WITH THE TRUST APPOINTED DURING PAST 5 YEARS TRUSTEE PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
------------------------------------------------------------------------------------------------------------------------------------
Richard E. Erickson, Trustee o Indefinite Term Physician, Edward-Elmhurst Medical Group, 222 None
(1951) Physician & Officer, Wheaton Orthopedics
o Since Inception (1990 to 2021)
Thomas R. Kadlec, Trustee o Indefinite Term Retired; President, ADM Investors 222 Director, National Futures
(1957) Services, Inc. (Futures Commission Association and ADMIS
o Since Inception Merchant) (2010 to July 2022) Singapore Ltd.; Formerly,
Director of ADM Investor
Services, Inc., ADM
Investor Services
International, ADMIS Hong
Kong Ltd., and Futures
Industry Association
Denise M. Keefe, Trustee o Indefinite Term Executive Vice President, Advocate Aurora 222 Director and Board Chair
(1964) Health and President, Advocate Aurora of Advocate Home Health
o Since 2021 Continuing Health Division (Integrated Services, Advocate Home
Healthcare System) Care Products and Advocate
Hospice; Director and
Board Chair of Aurora At
Home (since 2018);
Director of Advocate
Physician Partners
Accountable Care
Organization; Director and
Board Chair of RML Long
Term Acute Care Hospitals;
and Director of Senior
Helpers (since 2021)
Robert F. Keith, Trustee o Indefinite Term President, Hibs Enterprises (Financial 222 Formerly, Director of
(1956) and Management Consulting) Trust Company of Illinois
o Since Inception
Niel B. Nielson, Trustee o Indefinite Term Senior Advisor (August 2018 to Present), 222 None
(1954) Managing Director and Chief Operating
o Since Inception Officer (January 2015 to August 2018),
Pelita Harapan Educational Foundation
(Educational Product and Services)
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
James A. Bowen(1), Trustee, o Indefinite Term Chief Executive Officer, First Trust 222 None
Chairman of the Board Advisors L.P. and First Trust Portfolios
(1955) o Since Inception L.P., Chairman of the Board of Directors,
BondWave LLC (Software Development
Company) and Stonebridge Advisors LLC
(Investment Advisor)
-----------------------------
(1) Mr. Bowen is deemed an "interested person" of the Trust due to his
position as Chief Executive Officer of First Trust Advisors L.P.,
investment advisor of the Trust.
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BOARD OF TRUSTEES AND OFFICERS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022 (UNAUDITED)
POSITION AND TERM OF OFFICE
NAME AND OFFICES AND LENGTH OF PRINCIPAL OCCUPATIONS
YEAR OF BIRTH WITH TRUST SERVICE DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS(2)
------------------------------------------------------------------------------------------------------------------------------------
James M. Dykas President and Chief o Indefinite Term Managing Director and Chief Financial Officer,
(1966) Executive Officer First Trust Advisors L.P. and First Trust Portfolios
o Since January 2016 L.P.; Chief Financial Officer, BondWave LLC (Software
Development Company) and Stonebridge Advisors
LLC (Investment Advisor)
Donald P. Swade Treasurer, Chief Financial o Indefinite Term Senior Vice President, First Trust Advisors L.P. and
(1972) Officer and Chief First Trust Portfolios L.P.
Accounting Officer o Since January 2016
W. Scott Jardine Secretary and Chief o Indefinite Term General Counsel, First Trust Advisors L.P. and First
(1960) Legal Officer Trust Portfolios L.P.; Secretary and General Counsel,
o Since Inception BondWave LLC; Secretary, Stonebridge Advisors LLC
Daniel J. Lindquist Vice President o Indefinite Term Managing Director, First Trust Advisors L.P. and First
(1970) Trust Portfolios L.P.
o Since Inception
Kristi A. Maher Chief Compliance Officer o Indefinite Term Deputy General Counsel, First Trust Advisors L.P.
(1966) and Assistant Secretary and First Trust Portfolios L.P.
o Chief Compliance
Officer Since
January 2011
o Assistant Secretary
Since Inception
Roger F. Testin Vice President o Indefinite Term Senior Vice President, First Trust Advisors L.P. and
(1966) First Trust Portfolios L.P.
o Since Inception
Stan Ueland Vice President o Indefinite Term Senior Vice President, First Trust Advisors L.P. and
(1970) First Trust Portfolios L.P.
o Since Inception
-----------------------------
(2) The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
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PRIVACY POLICY
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2022 (UNAUDITED)
PRIVACY POLICY
First Trust values our relationship with you and considers your privacy an
important priority in maintaining that relationship. We are committed to
protecting the security and confidentiality of your personal information.
SOURCES OF INFORMATION
We collect nonpublic personal information about you from the following sources:
o Information we receive from you and your broker-dealer, investment
professional or financial representative through interviews,
applications, agreements or other forms;
o Information about your transactions with us, our affiliates or
others;
o Information we receive from your inquiries by mail, e-mail or
telephone; and
o Information we collect on our website through the use of "cookies."
For example, we may identify the pages on our website that your
browser requests or visits.
INFORMATION COLLECTED
The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.
DISCLOSURE OF INFORMATION
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. In addition to using
this information to verify your identity (as required under law), the permitted
uses may also include the disclosure of such information to unaffiliated
companies for the following reasons:
o In order to provide you with products and services and to effect
transactions that you request or authorize, we may disclose your
personal information as described above to unaffiliated financial
service providers and other companies that perform administrative or
other services on our behalf, such as transfer agents, custodians
and trustees, or that assist us in the distribution of investor
materials such as trustees, banks, financial representatives, proxy
services, solicitors and printers.
o We may release information we have about you if you direct us to do
so, if we are compelled by law to do so, or in other legally limited
circumstances (for example to protect your account from fraud).
In addition, in order to alert you to our other financial products and services,
we may share your personal information within First Trust.
USE OF WEBSITE ANALYTICS
We currently use third party analytics tools, Google Analytics and AddThis, to
gather information for purposes of improving First Trust's website and marketing
our products and services to you. These tools employ cookies, which are small
pieces of text stored in a file by your web browser and sent to websites that
you visit, to collect information, track website usage and viewing trends such
as the number of hits, pages visited, videos and PDFs viewed and the length of
user sessions in order to evaluate website performance and enhance navigation of
the website. We may also collect other anonymous information, which is generally
limited to technical and web navigation information such as the IP address of
your device, internet browser type and operating system for purposes of
analyzing the data to make First Trust's website better and more useful to our
users. The information collected does not include any personal identifiable
information such as your name, address, phone number or email address unless you
provide that information through the website for us to contact you in order to
answer your questions or respond to your requests. To find out how to opt-out of
these services click on: Google Analytics and AddThis.
CONFIDENTIALITY AND SECURITY
With regard to our internal security procedures, First Trust restricts access to
your nonpublic personal information to those First Trust employees who need to
know that information to provide products or services to you. We maintain
physical, electronic and procedural safeguards to protect your nonpublic
personal information.
POLICY UPDATES AND INQUIRIES
As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time, however, if we do change
it, we will tell you promptly. For questions about our policy, or for additional
copies of this notice, please go to www.ftportfolios.com, or contact us at
1-800-621-1675 (First Trust Portfolios) or 1-800-222-6822 (First Trust
Advisors).
March 2022
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FIRST TRUST
First Trust Exchange-Traded Fund
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
ADMINISTRATOR, CUSTODIAN,
FUND ACCOUNTANT &
TRANSFER AGENT
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
320 South Canal Street
Chicago, IL 60606
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