UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-21774
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First Trust Exchange-Traded Fund
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(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Name and address of agent for service)
Registrant's telephone number, including area code: (630) 765-8000
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2019
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORT TO STOCKHOLDERS.
The registrant's semi-annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940 is as follows:
FIRST TRUST
First Trust Exchange-Traded Fund
Book 1
First Trust Dow Jones Select MicroCap Index Fund (FDM)
First Trust Morningstar Dividend Leaders Index Fund (FDL)
First Trust US Equity Opportunities ETF (FPX)
First Trust NYSE Arca 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)
First Trust Value Line(R) 100 Exchange-Traded Fund (FVL)
Semi-Annual Report
For the Six Months Ended
June 30, 2019
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TABLE OF CONTENTS
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FIRST TRUST EXCHANGE-TRADED FUND
SEMI-ANNUAL REPORT
JUNE 30, 2019
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 Arca 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
First Trust Value Line(R) 100 Exchange-Traded Fund (FVL)................. 18
Notes to Fund Performance Overview.......................................... 20
Understanding Your Fund Expenses............................................ 21
Portfolio of Investments
First Trust Dow Jones Select MicroCap Index Fund (FDM)................... 23
First Trust Morningstar Dividend Leaders Index Fund (FDL)................ 28
First Trust US Equity Opportunities ETF (FPX)............................ 30
First Trust NYSE Arca Biotechnology Index Fund (FBT)..................... 33
First Trust Dow Jones Internet Index Fund (FDN).......................... 34
First Trust Capital Strength ETF (FTCS).................................. 36
First Trust Value Line(R) Dividend Index Fund (FVD)...................... 38
First Trust Value Line(R) 100 Exchange-Traded Fund (FVL)................. 42
Statements of Assets and Liabilities........................................ 44
Statements of Operations.................................................... 46
Statements of Changes in Net Assets......................................... 48
Financial Highlights........................................................ 52
Notes to Financial Statements............................................... 56
Additional Information...................................................... 65
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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 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 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
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
JUNE 30, 2019
Dear Shareholders:
One thing we can all agree on and expect: headline news coming out of
Washington, DC continues to influence the financial markets. As January 2019
unfolded, the longest partial government shutdown in U.S. history was wrapping
up while we were beginning to learn about President Trump's approach to
international trade policy. By June's end, trade talks with China were
reengaging and the threat of 5% tariffs on Mexican imports was averted.
Investors breathed a collective sigh of relief and, once again, the free market
began to rally.
At the Markets' close on June 28, 2019, both U.S. and world equities had
performed resiliently, as indicated by the S&P 500(R) Index and the MSCI All
Country World Index returns of 18.54% and 16.23%, respectively, for the calendar
year-to-date. Bonds, as measured by the Bloomberg Barclays U.S. Aggregate Bond
Index, returned 6.11%, for the same period. The 10-Year U.S. Treasury Note yield
fell from over 3% in late 2018 to just above 2% for the six-month period ended
June 30, 2019 and the Federal Reserve has clearly indicated that another rate
cut is on the way.
Despite the ongoing bluster of the news cycle, we believe the economy is doing
well and productivity growth, due to deregulation and lower taxes on corporate
profits, has improved over the last two years.
o The Consumer Confidence Index of 121.5 for June remains strong.
o The U.S. inflation rate hovers near 2%, on average, as it has for
the last decade.
o June's unemployment rate of 3.7% barely moved from May's 3.6%, the
lowest level since December of 1969.
Before you reach for the antacids due to the latest political equivocation, keep
a balanced perspective in view. Remember, no one can predict the inevitable and
expected market fluctuations. Speak periodically with your investment
professional who can provide insight when it comes to investing and discovering
opportunities when they arise.
Thank you for giving First Trust the opportunity to be a part of your financial
plan. We value our relationship with you.
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
SEMI-ANNUAL REPORT
JUNE 30, 2019 (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 over 25 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 trade conflict between the U.S. and China was approaching 16-months-old at
the close of June 2019. In our opinion, the most notable change in the first
half of 2019 was the Trump Administration's ratcheting up of tariffs on roughly
$200 billion of imported goods from China. On May 10, 2019, tariffs jumped from
10% to 25%. President Trump continues to threaten China with extending the
tariffs to the remaining $300 billion or so in goods shipped to the U.S.
annually. The ongoing dispute has become a drag on global growth, according to
organizations such as the International Monetary Fund.
While the U.S. economy continues to flourish relative to many other developed
and emerging economies, recent data suggests that China's economy is being
stressed by the tariffs. China's gross domestic product rose at an annualized
pace of 6.2% in the second quarter of 2019, the slowest growth rate in 27 years,
according to MarketWatch. CNBC reported that, as of July 1, 2019, the current
U.S. economic expansion will become the longest in its history, breaking the
previous record of 120 months of growth from March 1991 to March 2001, according
to data from the National Bureau of Economic Research.
Investors continue to embrace exchange-traded funds (ETFs) and related
exchange-traded products (ETPs). ETFGI, an independent research and consultancy
firm, reported that total assets invested in ETFs/ETPs listed globally stood at
an all-time high of $5.64 trillion at the end of June 2019, up from $4.99
trillion at this point a year ago, according to its own release. In June 2019,
net inflows to ETFs/ETPs listed globally totaled $68.95 billion, bringing
year-to-date net inflows to $209.54 billion.
U.S. STOCKS AND BONDS
In the first half of 2019, three of the major U.S. stock indices posted
double-digit gains. The S&P 500(R) Index, S&P MidCap 400(R) Index and S&P
SmallCap 600(R) Index posted total returns of 18.54%, 17.97%, and 13.69%,
respectively, according to Bloomberg. The S&P 500(R) Index posted its best
showing for the first half of a year since 1997, according to CNBC. All 11 major
S&P 500(R) Index sectors posted positive total returns. The top-performing
sectors were Information Technology, Consumer Discretionary, Industrials and
Real Estate, up 27.13%, 21.84%, 21.38% and 20.42%, respectively, while the two
sectors with the poorest showing, despite generating positive returns, were
Health Care, up 8.07%, and Energy, up 13.13%.
At the end of March 2019, both President Trump and White House economic advisor
Larry Kudlow called on the Federal Reserve (the "Fed") to lower the federal
funds target rate by 50 basis points ("bps"), according to CNBC. While the Fed
has yet to make any rate cuts, bond investors, through their purchasing power,
pushed the yield on the 10-year Treasury Note (T-Note) down from 2.50% at the
close on April 30, 2019 to 2.01% on June 28, 2019, or 49 bps, according to
Bloomberg. Investors have signaled to the Fed that they like the idea of a
couple of rate cuts over the coming months. The Fed has indicated that it would
consider easing rates if the U.S. economy were to weaken.
In the U.S. bond market, all the major bond groups posted positive returns in
the first half of 2019. The top-performing major debt group we track was high
yield corporate bonds. The Bloomberg Barclays U.S. Corporate High Yield Index
posted a total return of 9.94%. The worst-performing debt group that we track
was government bonds. The Bloomberg Barclays U.S. Treasury: Intermediate Index
posted a total return of 3.99%.
FOREIGN STOCKS AND BONDS
The U.S. dollar fell by 0.04% against a basket of major currencies in the first
half of 2019, as measured by the U.S. Dollar Index. With respect to U.S.
investors, a flat U.S. dollar would have little to no impact on the returns of
foreign securities. In the first half of 2019, foreign stocks and bonds
performed well.
The Bloomberg Barclays EM Hard Currency Aggregate Index of emerging markets debt
posted a total return of 8.85% (USD), while the Bloomberg Barclays Global
Aggregate Index of higher quality debt rose 5.57% (USD). With respect to
equities, the MSCI Emerging Markets Index of stocks posted a total return of
10.59% (USD), while the MSCI World ex USA Index posted a total return of 14.64%
(USD).
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 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 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. 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
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (9/27/05) Ended Ended (9/27/05)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 11.67% -9.83% 8.37% 13.33% 7.11% 49.46% 249.43% 157.26%
Market Value 11.69% -10.03% 8.34% 13.30% 7.10% 49.28% 248.44% 156.89%
INDEX PERFORMANCE
Dow Jones Select MicroCap Index(SM) 12.06% -9.28% 8.99% 14.03% 7.81% 53.82% 271.85% 181.41%
Russell 2000(R) Index 16.98% -3.31% 7.06% 13.45% 7.96% 40.67% 253.13% 186.65%
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(See Notes to Fund Performance Overview on page 20.)
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% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
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Financials 39.71%
Consumer Discretionary 15.97
Industrials 13.24
Information Technology 8.34
Real Estate 6.02
Energy 5.35
Materials 3.39
Consumer Staples 3.17
Health Care 2.95
Communication Services 1.25
Utilities 0.61
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Total 100.00%
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% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
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CVR Energy, Inc. 1.80%
Enphase Energy, Inc. 1.78
PennyMac Financial Services, Inc. 1.67
Veritex Holdings, Inc. 1.46
K12, Inc. 1.40
TPG RE Finance Trust, Inc. 1.32
World Acceptance Corp. 1.28
Arbor Realty Trust, Inc. 1.25
Boot Barn Holdings, Inc. 1.25
NexPoint Residential Trust, Inc. 1.09
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Total 14.30%
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Dow Jones and Dow Jones Select MicroCap Index(SM) are products of S&P Dow Jones
Indices LLC ("SPDJI"), and have been licensed for use by First Trust on behalf
of the Fund. The Fund, based on the Dow Jones Select MicroCap Index(SM), is not
sponsored, endorsed, sold or promoted by SPDJI, Dow Jones Trademark Holdings LLC
("Dow Jones") or their respective affiliates, and SPDJI, Dow Jones and their
respective affiliates make no representation regarding the advisability of
trading in the Fund.
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)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust Dow Jones
Select MicroCap Dow Jones Select Russell 2000(R)
Index Fund MicroCap Index(SM) Index
12/08 $10,000 $10,000 $10,000
06/09 9,791 9,820 10,264
12/09 12,085 12,189 12,717
06/10 11,748 11,877 12,469
12/10 15,198 15,410 16,132
06/11 15,709 15,985 17,134
12/11 13,879 14,153 15,460
06/12 14,773 15,114 16,779
12/12 16,082 16,515 17,987
06/13 18,694 19,255 20,840
12/13 23,048 23,822 24,970
06/14 22,894 23,736 25,767
12/14 23,757 24,695 26,192
06/15 24,992 26,053 27,436
12/15 23,890 24,993 25,035
06/16 24,487 25,688 25,591
12/16 32,360 34,037 30,371
06/17 32,561 34,326 31,887
12/17 35,094 37,113 34,821
06/18 37,947 40,245 37,488
12/18 30,637 32,584 30,983
06/19 34,211 36,514 36,244
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
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NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
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FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 93 1 0 0
01/01/15 - 12/31/15 112 0 0 0
01/01/16 - 12/31/16 133 0 0 0
01/01/17 - 12/31/17 180 0 0 0
01/01/18 - 12/31/18 164 4 0 1
01/01/19 - 06/30/19 42 0 0 0
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NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
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FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 158 0 0 0
01/01/15 - 12/31/15 140 0 0 0
01/01/16 - 12/31/16 119 0 0 0
01/01/17 - 12/31/17 71 0 0 0
01/01/18 - 12/31/18 81 1 0 0
01/01/19 - 06/30/19 82 0 0 0
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 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 from the securities
comprising the Morningstar(R) US Market Index(SM). The Index is rebalanced
quarterly. 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
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (3/9/06) Ended Ended (3/9/06)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 14.28% 11.26% 8.87% 13.76% 7.21% 52.93% 262.89% 152.61%
Market Value 14.32% 10.91% 8.86% 13.76% 7.21% 52.86% 262.86% 152.53%
INDEX PERFORMANCE
Morningstar(R) Dividend Leaders
Index(SM) 14.63% 11.78% 9.40% 14.33% 7.74% 56.68% 281.73% 169.75%
S&P 500(R) Index 18.54% 10.42% 10.71% 14.70% 8.76% 66.33% 294.16% 205.85%
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(See Notes to Fund Performance Overview on page 20.)
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% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
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Energy 22.53%
Communication Services 17.61
Financials 12.09
Consumer Staples 10.81
Information Technology 8.61
Utilities 7.88
Consumer Discretionary 7.84
Health Care 6.57
Industrials 3.51
Materials 2.55
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Total 100.00%
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% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
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AT&T, Inc. 10.17%
Exxon Mobil Corp. 10.05
Verizon Communications, Inc. 7.10
Chevron Corp. 6.71
Wells Fargo & Co. 5.56
Philip Morris International, Inc. 5.16
International Business Machines Corp. 4.22
AbbVie, Inc. 4.18
Altria Group, Inc. 3.94
Broadcom, Inc. 3.09
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Total 60.18%
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Morningstar(R) is a service mark of Morningstar, Inc. and has been licensed for
use by First Trust on behalf of the Fund. The Fund is not sponsored, endorsed,
issued, sold or promoted by Morningstar, Inc., nor does this company make any
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)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust Morningstar Morningstar(R)
Dividend Leaders Dividend S&P 500(R)
Index Fund Leaders Index(SM) Index
12/08 $10,000 $10,000 $10,000
06/09 9,445 9,470 10,315
12/09 11,425 11,480 12,644
06/10 10,907 10,984 11,803
12/10 13,257 13,393 14,550
06/11 14,294 14,479 15,424
12/11 15,172 15,406 14,855
06/12 16,427 16,737 16,265
12/12 16,558 16,909 17,233
06/13 18,869 19,322 19,615
12/13 20,320 20,860 22,814
06/14 22,411 23,073 24,443
12/14 22,953 23,687 25,939
06/15 22,258 23,019 26,258
12/15 23,580 24,439 26,297
06/16 27,051 28,120 27,307
12/16 28,466 29,653 29,445
06/17 29,297 30,602 32,198
12/17 31,863 33,365 35,878
06/18 30,805 32,341 36,832
12/18 29,992 31,538 34,298
06/19 34,274 36,152 40,664
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
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NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 190 0 0 0
01/01/15 - 12/31/15 151 0 0 0
01/01/16 - 12/31/16 161 0 0 0
01/01/17 - 12/31/17 131 0 0 0
01/01/18 - 12/31/18 140 1 0 0
01/01/19 - 06/30/19 94 1 0 0
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NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
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FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 62 0 0 0
01/01/15 - 12/31/15 101 0 0 0
01/01/16 - 12/31/16 91 0 0 0
01/01/17 - 12/31/17 120 0 0 0
01/01/18 - 12/31/18 108 2 0 0
01/01/19 - 06/30/19 29 0 0 0
Page 7
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FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
The First Trust US Equity Opportunities ETF (the "Fund") seeks investment
results that correspond generally to the price and yield (before the Fund's fees
and expenses) of an equity index called the IPOX(R)-100 U.S. Index (the
"Index"). The Fund will normally invest at least 90% of its net assets
(including investment borrowings) in common stocks that comprise the Index. The
Index seeks to measure the performance of the equity securities of the 100
largest and typically most liquid initial public offerings ("IPOs") (including
spin-offs and equity carve-outs) of U.S. companies. The Index is rebalanced
quarterly. 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.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (4/12/06) Ended Ended (4/12/06)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 25.81% 9.73% 10.91% 18.29% 11.75% 67.81% 436.61% 333.98%
Market Value 25.89% 9.67% 10.91% 18.39% 11.75% 67.81% 440.82% 334.10%
INDEX PERFORMANCE
IPOX(R)-100 U.S. Index 26.14% 10.31% 11.49% 18.98% 12.40% 72.28% 468.41% 368.83%
S&P 500(R) Index 18.54% 10.42% 10.71% 14.70% 8.71% 66.33% 294.16% 201.67%
Russell 3000(R) Index 18.71% 8.98% 10.19% 14.67% 8.63% 62.46% 293.01% 198.66%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 20.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 32.91%
Health Care 19.05
Communication Services 13.74
Consumer Staples 9.96
Consumer Discretionary 7.58
Industrials 5.96
Utilities 3.53
Real Estate 3.01
Financials 1.86
Materials 1.23
Energy 1.17
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
PayPal Holdings, Inc. 8.96%
Thermo Fisher Scientific, Inc. 4.31
Stryker Corp. 4.10
Verizon Communications, Inc. 3.94
Worldpay, Inc., Class A 2.79
Sempra Energy 2.51
Takeda Pharmaceutical Co., Ltd., ADR 2.42
Hershey (The) Co. 2.33
Tyson Foods, Inc., Class A 2.22
Keurig Dr Pepper, Inc. 2.17
-------
Total 35.75%
=======
-----------------------------
The Fund is not sponsored, endorsed, sold or promoted by IPOX(R). IPOX(R) makes
no representation or warranty, express or implied, to the owners of the Fund or
any member of the public regarding the advisability of trading in the Fund.
Page 8
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust
US Equity IPOX(R)-100 S&P 500(R) Russell 3000(R)
Opportunities ETF U.S. Index Index Index
12/08 $10,000 $10,000 $10,000 $10,000
06/09 11,336 11,385 10,316 10,420
12/09 14,493 14,597 12,645 12,834
06/10 13,634 13,775 11,803 12,058
12/10 17,142 17,383 14,550 15,007
06/11 18,839 19,170 15,426 15,960
12/11 17,673 18,041 14,857 15,160
06/12 20,066 20,545 16,267 16,573
12/12 22,978 23,592 17,235 17,649
06/13 26,836 27,622 19,617 20,130
12/13 34,004 35,124 22,817 23,570
06/14 36,252 37,565 24,446 25,206
12/14 38,054 39,548 25,942 26,529
06/15 41,342 43,092 26,261 27,044
12/15 38,886 40,653 26,300 26,657
06/16 38,633 40,482 27,309 27,622
12/16 41,492 43,595 29,451 30,056
06/17 45,927 48,373 32,202 32,740
12/17 52,678 55,629 35,879 36,407
06/18 55,433 58,661 36,830 37,579
12/18 48,349 51,299 34,307 34,498
06/19 60,828 64,711 40,663 40,950
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 158 0 0 0
01/01/15 - 12/31/15 172 0 0 0
01/01/16 - 12/31/16 118 0 0 0
01/01/17 - 12/31/17 179 0 0 0
01/01/18 - 12/31/18 157 3 1 0
01/01/19 - 06/30/19 102 0 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 94 0 0 0
01/01/15 - 12/31/15 80 0 0 0
01/01/16 - 12/31/16 134 0 0 0
01/01/17 - 12/31/17 72 0 0 0
01/01/18 - 12/31/18 87 3 0 0
01/01/19 - 06/30/19 22 0 0 0
Page 9
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NYSE ARCA BIOTECHNOLOGY INDEX FUND (FBT)
The First Trust NYSE Arca 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 Arca Biotechnology Index(SM)
(the "Index"). The Fund will normally invest at least 90% of its net assets
(including investment borrowings) in common stocks that comprise the Index. The
Index is 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 quarterly. 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
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (6/19/06) Ended Ended (6/19/06)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 13.32% 0.54% 11.37% 20.87% 16.28% 71.32% 565.55% 613.58%
Market Value 13.30% 0.53% 11.36% 20.87% 16.28% 71.29% 565.82% 613.53%
INDEX PERFORMANCE
NYSE Arca Biotechnology Index(SM) 13.62% 1.08% 11.88% 21.49% 16.90% 75.26% 600.34% 664.82%
S&P Composite 1500(R) Health Care
Index 8.40% 12.00% 11.03% 15.99% 11.44% 68.77% 340.72% 310.10%
NASDAQ(R) Biotechnology Index 12.95% -0.20% 5.44% 16.80% 13.05% 30.32% 372.54% 394.20%
S&P 500(R) Index 18.54% 10.42% 10.71% 14.70% 9.13% 66.33% 294.16% 212.26%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 20.)
-----------------------------------------------------------
% OF TOTAL
INDUSTRY CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Biotechnology 78.35%
Life Sciences Tools & Services 18.02
Pharmaceuticals 3.63
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Sarepta Therapeutics, Inc. 4.21%
Exact Sciences Corp. 4.14
IQVIA Holdings, Inc. 3.91
Illumina, Inc. 3.73
Incyte Corp. 3.72
ACADIA Pharmaceuticals, Inc. 3.67
Grifols S.A., ADR 3.66
Nektar Therapeutics 3.63
Bio-Techne Corp. 3.56
Vertex Pharmaceuticals, Inc. 3.53
-------
Total 37.76%
=======
-----------------------------
The NYSE Arca Biotechnology Index(SM) is a trademark of NYSE Group, Inc. or its
affiliates ("NYSE Group, Inc.") and is licensed for use by First Trust. The Fund
is not sponsored or endorsed by NYSE Group, Inc. NYSE Group, Inc. makes no
representation or warranty, express or implied, to the owners of the Fund or any
member of the public regarding the advisability of investing in the Fund or the
ability of the Fund to track the performance of the various sectors represented
in the stock market.
Page 10
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NYSE ARCA BIOTECHNOLOGY INDEX FUND (FBT) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust NYSE NYSE Arca NASDAQ(R) S&P Composite
Arca Biotechnology Biotechnology Biotechnology S&P 500(R) 1500(R) Health
Index Fund Index(SM) Index Index Care Index
12/08 $10,000 $10,000 $10,000 $10,000 $10,000
06/09 10,756 10,773 10,285 10,316 10,094
12/09 14,487 14,559 11,584 12,646 12,075
06/10 15,679 15,810 10,995 11,805 11,198
12/10 19,831 20,053 13,351 14,552 12,703
06/11 22,252 22,572 15,266 15,428 14,506
12/11 16,587 16,866 14,964 14,859 14,213
06/12 22,256 22,703 18,678 16,269 15,846
12/12 23,373 23,906 19,796 17,237 16,822
06/13 29,504 30,243 25,117 19,619 20,289
12/13 35,083 36,050 32,856 22,819 23,919
06/14 41,784 42,982 37,295 24,448 26,359
12/14 51,795 53,323 44,160 25,944 29,849
06/15 63,024 64,990 53,784 26,263 32,894
12/15 57,472 59,394 49,357 26,302 32,062
06/16 45,506 47,171 37,635 27,312 32,248
12/16 46,207 48,020 38,821 29,448 31,403
06/17 57,934 60,356 45,553 32,198 36,575
12/17 63,299 66,120 47,220 35,875 38,459
06/18 71,199 74,524 48,703 36,826 39,720
12/18 63,174 66,400 43,029 34,304 41,038
06/19 71,595 75,444 48,596 40,663 44,484
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 183 0 0 0
01/01/15 - 12/31/15 159 0 0 0
01/01/16 - 12/31/16 129 1 0 0
01/01/17 - 12/31/17 136 0 0 0
01/01/18 - 12/31/18 156 1 2 1
01/01/19 - 06/30/19 67 1 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 69 0 0 0
01/01/15 - 12/31/15 93 0 0 0
01/01/16 - 12/31/16 122 0 0 0
01/01/17 - 12/31/17 115 0 0 0
01/01/18 - 12/31/18 88 3 0 0
01/01/19 - 06/30/19 56 0 0 0
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 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 quarterly. 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
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (6/19/06) Ended Ended (6/19/06)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 23.18% 4.39% 19.26% 22.64% 16.38% 141.29% 669.77% 621.56%
Market Value 23.11% 4.21% 19.26% 22.63% 16.37% 141.21% 669.09% 621.30%
INDEX PERFORMANCE
Dow Jones Internet Composite
Index(SM) 23.68% 5.09% 19.90% 23.32% 17.01% 147.76% 713.31% 674.60%
S&P 500(R) Index 18.54% 10.42% 10.71% 14.70% 9.13% 66.33% 294.16% 212.26%
S&P Composite 1500(R) Information
Technology Index 27.00% 14.03% 18.13% 18.40% 13.40% 130.08% 441.24% 414.51%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 20.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 40.26%
Communication Services 31.92
Consumer Discretionary 20.08
Financials 5.09
Health Care 2.65
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Amazon.com, Inc. 10.00%
Facebook, Inc., Class A 8.45
Netflix, Inc. 5.77
PayPal Holdings, Inc. 5.16
salesforce.com, Inc. 4.88
Alphabet, Inc., Class C 4.64
Alphabet, Inc., Class A 4.54
eBay, Inc. 3.29
Twitter, Inc. 2.83
VeriSign, Inc. 2.79
-------
Total 52.35%
=======
-----------------------------
Dow Jones and Dow Jones Internet Composite Index(SM) are products of S&P Dow
Jones Indices ("SPDJI") and have been licensed for use by First Trust. The Fund,
based on the Dow Jones Internet Composite Index(SM), is not sponsored, endorsed,
sold or promoted by SPDJI, Dow Jones Trademark Holdings LLC ("Dow Jones") or
their respective affiliates and SPDJI, Dow Jones and their respective affiliates
make no representation regarding the advisability of trading in the Fund.
Page 12
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust Dow Jones S&P Composite 1500(R)
Dow Jones Internet Internet Composite S&P 500(R) Information Technology
Index Fund Index(SM) Index Index
12/08 $ 10,000 $ 10,000 $10,000 $10,000
06/09 13,348 13,387 10,316 12,460
12/09 17,924 18,027 12,646 16,103
06/10 17,060 17,179 11,805 14,489
12/10 24,490 24,742 14,552 18,055
06/11 25,898 26,229 15,428 18,499
12/11 23,083 23,476 14,859 18,257
06/12 25,264 25,773 16,269 20,579
12/12 27,897 28,555 17,237 20,949
06/13 32,439 33,296 19,619 22,359
12/13 42,794 44,077 22,819 27,023
06/14 42,589 43,943 24,448 29,306
12/14 43,833 45,309 25,944 32,143
06/15 48,037 49,791 26,263 32,561
12/15 53,374 55,459 26,302 33,942
06/16 51,570 53,718 27,312 33,962
12/16 57,062 59,589 29,448 38,961
06/17 67,744 70,935 32,198 45,436
12/17 78,529 82,441 35,875 53,487
06/18 98,436 103,595 36,826 59,125
12/18 83,411 88,037 34,304 53,101
06/19 102,746 108,880 40,663 67,439
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 148 0 0 0
01/01/15 - 12/31/15 201 0 0 0
01/01/16 - 12/31/16 124 0 0 0
01/01/17 - 12/31/17 129 0 0 0
01/01/18 - 12/31/18 116 4 2 0
01/01/19 - 06/30/19 56 0 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 104 0 0 0
01/01/15 - 12/31/15 51 0 0 0
01/01/16 - 12/31/16 128 0 0 0
01/01/17 - 12/31/17 122 0 0 0
01/01/18 - 12/31/18 125 4 0 0
01/01/19 - 06/30/19 68 0 0 0
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 common stocks 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
quarterly. The Fund's shares are listed for trading on the Nasdaq. The first day
of secondary market trading in shares of the Fund was July 11, 2006.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (7/6/06) Ended Ended (7/6/06)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 17.57% 11.83% 11.47% 14.79% 9.96% 72.13% 297.12% 243.11%
Market Value 17.51% 11.77% 11.44% 14.76% 9.96% 71.85% 296.32% 243.05%
INDEX PERFORMANCE
The Capital Strength Index(SM)* 18.00% 12.55% 12.20% N/A N/A 77.83% N/A N/A
S&P 500(R) Index 18.54% 10.42% 10.71% 14.70% 8.93% 66.33% 294.16% 203.63%
------------------------------------------------------------------------------------------------------------------------------------
* 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 20.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 21.88%
Health Care 19.02
Industrials 18.63
Financials 12.06
Consumer Discretionary 9.84
Consumer Staples 8.28
Communication Services 4.03
Materials 2.25
Real Estate 2.08
Energy 1.93
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Zoetis, Inc. 2.25%
Merck & Co., Inc. 2.25
Air Products and Chemicals, Inc. 2.25
FleetCor Technologies, Inc. 2.19
Starbucks Corp. 2.17
Baxter International, Inc. 2.17
UnitedHealth Group, Inc. 2.16
Pfizer, Inc. 2.16
Mastercard, Inc., Class A 2.16
Visa, Inc., Class A 2.13
-------
Total 21.89%
=======
-----------------------------
NASDAQ(R) and the Capital Strength Index(SM) are trademarks (the "Marks") of
Nasdaq, Inc. (collectively with its affiliates, "NASDAQ"). The Marks are
licensed for use by First Trust. The Fund has not been passed on by NASDAQ as to
its legality or suitability. The Fund is not issued, endorsed, sold or promoted
by NASDAQ. The Fund should not be construed in any way as investment advice by
NASDAQ. NASDAQ MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO THE
FUND.
Page 14
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CAPITAL STRENGTH ETF (FTCS) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust Capital S&P 500(R)
Strength ETF Index
12/08 $10,000 $10,000
06/09 11,273 10,316
12/09 13,944 12,646
06/10 12,893 11,805
12/10 15,901 14,552
06/11 17,152 15,428
12/11 15,433 14,859
06/12 16,271 16,269
12/12 18,126 17,237
06/13 21,144 19,619
12/13 24,633 22,819
06/14 26,008 24,448
12/14 28,442 25,944
06/15 28,394 26,263
12/15 28,911 26,302
06/16 30,455 27,312
12/16 31,390 29,448
06/17 35,279 32,198
12/17 39,703 35,875
06/18 40,033 36,826
12/18 38,075 34,303
06/19 44,765 40,663
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 108 9 0 0
01/01/15 - 12/31/15 190 2 0 0
01/01/16 - 12/31/16 194 0 0 0
01/01/17 - 12/31/17 197 0 0 0
01/01/18 - 12/31/18 161 3 0 1
01/01/19 - 06/30/19 111 0 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 131 4 0 0
01/01/15 - 12/31/15 57 3 0 0
01/01/16 - 12/31/16 58 0 0 0
01/01/17 - 12/31/17 54 0 0 0
01/01/18 - 12/31/18 84 1 1 0
01/01/19 - 06/30/19 13 0 0 0
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 common stocks that comprise the Index. The
Index seeks to measure the performance of the securities ranked #1 or #2
according to the Value Line Publishing, LLC's proprietary Value Line(R)
Safety(TM) Ranking System that are also still expected to provide above-average
dividend yield. The Index is rebalanced on a monthly basis. The Fund's shares
are listed for trading on the NYSE Arca.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (8/19/03) Ended Ended (8/19/03)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 17.08% 13.94% 10.53% 14.46% 9.95% 64.99% 286.00% 350.67%
Market Value 17.11% 13.90% 10.52% 14.45% 9.96% 64.90% 285.75% 350.80%
INDEX PERFORMANCE
Value Line(R) Dividend Index* 17.59% 14.82% 11.40% 15.38% N/A 71.59% 318.24% N/A
S&P 500(R) Index 18.54% 10.42% 10.71% 14.70% 9.24% 66.33% 294.16% 306.50%
Dow Jones U.S. Select Dividend
Index(SM)* 13.64% 5.80% 9.22% 15.23% N/A 55.44% 312.85% 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 (June 30, 2019)
were 178.63% and 180.04% at NAV and Market Value, respectively. That
compares to an Index return of 210.40% for the same period. The average
annual total returns for the period from the reorganization date (December
15, 2006) through period end (June 30, 2019) were 8.51% and 8.56% at NAV
and Market Value, respectively. That compares to an Index return of 9.39%
for the same period.
NAV and Market Value returns assume that all distributions have been
reinvested in the Fund at NAV and Market Value, respectively. Prior to
December 15, 2006, NAV and Market Value returns assumed that all
distributions were reinvested at prices obtained by the Dividend
Reinvestment Plan of the Predecessor FVD Fund and the price used to
calculate Market Value return was the AMEX (now known as the NYSE
American) closing market price of the Predecessor FVD Fund.
* Performance data is not available for all the periods shown in the table
because performance data does not exist for the periods shown.
(See Notes to Fund Performance Overview on page 20.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Utilities 21.52%
Financials 20.50
Industrials 14.15
Consumer Staples 11.75
Health Care 6.17
Consumer Discretionary 5.76
Information Technology 5.66
Real Estate 4.57
Communication Services 4.16
Materials 3.15
Energy 2.61
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Washington Federal, Inc. 0.55%
Walgreens Boots Alliance, Inc. 0.55
Bank of Hawaii Corp. 0.55
Northwest Bancshares, Inc. 0.54
Park National Corp. 0.54
Phillips 66 0.54
MGE Energy, Inc. 0.54
Capitol Federal Financial, Inc. 0.54
Hubbell, Inc. 0.54
United Parcel Service, Inc., Class B 0.54
-------
Total 5.43%
=======
-----------------------------
Value Line(R) and Safety(TM) are trademarks of Value Line, Inc. that are
licensed to First Trust. The Fund is not sponsored, recommended, sold, or
promoted by Value Line Publishing LLC, Value Line, Inc. or any of their
affiliates.
Page 16
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
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)
12/08 $10,000 $10,000 $10,000 $10,000
06/09 9,880 9,910 10,315 8,746
12/09 11,959 12,052 12,644 11,113
06/10 11,615 11,746 11,803 10,970
12/10 13,883 14,100 14,550 13,149
06/11 15,012 15,308 15,426 14,252
12/11 15,137 15,493 14,857 14,782
06/12 16,096 16,554 16,267 15,749
12/12 16,829 17,365 17,235 16,385
06/13 19,167 19,864 19,617 18,655
12/13 21,301 22,156 22,817 21,147
06/14 23,117 24,154 24,446 23,233
12/14 24,698 25,905 25,942 24,395
06/15 24,184 25,465 26,261 23,524
12/15 25,006 26,448 26,300 23,997
06/16 28,527 30,304 27,310 27,729
12/16 29,993 31,983 29,446 29,274
06/17 31,625 33,854 32,196 31,057
12/17 33,738 36,244 35,873 33,793
06/18 33,475 36,103 36,824 34,138
12/18 32,578 35,251 34,302 31,782
06/19 38,135 41,452 40,663 36,135
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 223 0 0 0
01/01/15 - 12/31/15 179 0 0 0
01/01/16 - 12/31/16 182 0 0 0
01/01/17 - 12/31/17 185 0 0 0
01/01/18 - 12/31/18 143 1 0 0
01/01/19 - 06/30/19 118 0 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 29 0 0 0
01/01/15 - 12/31/15 73 0 0 0
01/01/16 - 12/31/16 70 0 0 0
01/01/17 - 12/31/17 66 0 0 0
01/01/18 - 12/31/18 106 1 0 0
01/01/19 - 06/30/19 6 0 0 0
Page 17
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) 100 EXCHANGE-TRADED FUND (FVL)
The First Trust Value Line(R) 100 Exchange-Traded 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) 100 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 100
highest ranked securities according to Value Line Publishing, LLC's proprietary
Value Line(R) Timeliness(TM) Ranking System. The Index is rebalanced quarterly.
The Fund's shares are listed for trading on the NYSE Arca.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (6/12/03) Ended Ended (6/12/03)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 18.91% -1.91% 2.44% 10.22% 5.35% 12.82% 164.67% 130.99%
Market Value 18.88% -2.04% 2.42% 10.21% 5.34% 12.72% 164.32% 130.69%
INDEX PERFORMANCE
Value Line(R) 100 Index* 19.39% -1.12% 3.39% 11.25% N/A 18.13% 190.49% N/A
Russell 3000(R) Index 18.71% 8.98% 10.19% 14.67% 9.38% 62.46% 293.01% 321.79%
------------------------------------------------------------------------------------------------------------------------------------
On June 15, 2007, the Fund acquired the assets and adopted the financial
and performance history of First Trust Value Line(R) 100 Fund (the
"Predecessor FVL Fund," a closed-end fund), which had an inception date of
June 12, 2003. The inception date total returns at 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 FVL Fund. The inception date of the Index was January 16,
2007. 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 (June 15, 2007)
through period end (June 30, 2019) were 40.21% and 40.03% at NAV and
Market Value, respectively. That compares to an Index return of 57.23% for
that same period. The average annual total returns for the period from the
reorganization date (June 15, 2007) through period end (June 30, 2019)
were 2.85% and 2.84% at NAV and Market Value, respectively. That compares
to an Index return of 3.80% for the same period.
NAV and Market Value returns assume that all distributions have been
reinvested in the Fund at NAV and Market Value, respectively. Prior to
June 15, 2007, NAV and Market Value returns assumed that all distributions
were reinvested at prices obtained by the Dividend Reinvestment Plan of
the Predecessor FVL Fund and the price used to calculate Market Value
return was the AMEX (now known as the NYSE American) closing market price
of the Predecessor FVL 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 20.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 22.63%
Energy 12.27
Health Care 9.68
Utilities 8.06
Consumer Staples 7.95
Financials 7.83
Consumer Discretionary 7.62
Materials 7.52
Industrials 6.56
Real Estate 4.96
Communication Services 4.92
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Erie Indemnity Co., Class A 1.75%
Cadence Design Systems, Inc. 1.40
Motorola Solutions, Inc. 1.32
Air Products and Chemicals, Inc. 1.31
CAE, Inc. 1.26
VeriSign, Inc. 1.25
Fair Isaac Corp. 1.25
IQVIA Holdings, Inc. 1.23
Waste Connections, Inc. 1.21
STERIS PLC 1.21
-------
Total 13.19%
=======
-----------------------------
Value Line(R) and Timeliness(TM) are trademarks of Value Line, Inc. that are
licensed to First Trust. The Fund is not sponsored, recommended, sold, or
promoted by Value Line Publishing LLC, Value Line, Inc. or any of their
affiliates.
Page 18
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) 100 EXCHANGE-TRADED FUND (FVL) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust Value Line(R) 100 Value Line(R) Russell 3000(R)
Exchange-Traded Fund 100 Index Index
12/08 $10,000 $10,000 $10,000
06/09 9,611 9,655 10,420
12/09 11,274 11,383 12,835
06/10 11,177 11,343 12,059
12/10 14,601 14,882 15,008
06/11 15,429 15,840 15,962
12/11 13,445 13,833 15,162
06/12 13,820 14,276 16,574
12/12 14,591 15,131 17,650
06/13 16,765 17,476 20,131
12/13 20,346 21,324 23,572
06/14 22,547 23,740 25,208
12/14 22,653 23,956 26,532
06/15 23,253 24,703 27,047
12/15 21,944 23,401 26,659
06/16 22,699 24,311 27,624
12/16 24,168 26,040 30,052
06/17 23,941 25,967 32,736
12/17 26,369 28,701 36,402
06/18 25,947 28,357 37,574
12/18 21,404 23,485 34,493
06/19 25,437 28,047 40,950
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 165 0 0 0
01/01/15 - 12/31/15 130 0 0 0
01/01/16 - 12/31/16 140 1 0 0
01/01/17 - 12/31/17 137 1 0 0
01/01/18 - 12/31/18 182 4 0 1
01/01/19 - 06/30/19 59 0 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 87 0 0 0
01/01/15 - 12/31/15 122 0 0 0
01/01/16 - 12/31/16 111 0 0 0
01/01/17 - 12/31/17 113 0 0 0
01/01/18 - 12/31/18 63 1 0 0
01/01/19 - 06/30/19 65 0 0 0
Page 19
--------------------------------------------------------------------------------
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 between the highest bid and the lowest offer on the stock
exchange on which shares of the Fund are listed for trading as of the time that
the Fund's NAV is 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 20
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2019 (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 Arca Biotechnology Index Fund, First Trust
Dow Jones Internet Index Fund, First Trust Capital Strength ETF, First Trust
Value Line(R) Dividend Index Fund or First Trust Value Line(R) 100
Exchange-Traded 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 fees, if any, and other Fund
expenses. This Example is intended to help you understand your ongoing costs of
investing in the Funds and to compare these costs with the ongoing costs of
investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held through the six-month period ended June 30, 2019.
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
JANUARY 1, 2019 JUNE 30, 2019 PERIOD (a) PERIOD (b)
--------------------------------------------------------------------------------------------------------------------------
FIRST TRUST DOW JONES SELECT MICROCAP INDEX
FUND (FDM)
Actual $1,000.00 $1,116.70 0.60% $3.15
Hypothetical (5% return before expenses) $1,000.00 $1,021.82 0.60% $3.01
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX
FUND (FDL)
Actual $1,000.00 $1,142.80 0.45% $2.39
Hypothetical (5% return before expenses) $1,000.00 $1,022.56 0.45% $2.26
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
Actual $1,000.00 $1,258.10 0.58% $3.25
Hypothetical (5% return before expenses) $1,000.00 $1,021.92 0.58% $2.91
FIRST TRUST NYSE ARCA BIOTECHNOLOGY INDEX
FUND (FBT)
Actual $1,000.00 $1,133.20 0.54% $2.86
Hypothetical (5% return before expenses) $1,000.00 $1,022.12 0.54% $2.71
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
Actual $1,000.00 $1,231.80 0.52% $2.88
Hypothetical (5% return before expenses) $1,000.00 $1,022.22 0.52% $2.61
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
Actual $1,000.00 $1,175.70 0.58% $3.13
Hypothetical (5% return before expenses) $1,000.00 $1,021.92 0.58% $2.91
Page 21
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
--------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO EXPENSES PAID
BEGINNING ENDING BASED ON THE DURING THE
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH SIX-MONTH
JANUARY 1, 2019 JUNE 30, 2019 PERIOD (a) PERIOD (b)
--------------------------------------------------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
Actual $1,000.00 $1,170.80 0.70% $3.77
Hypothetical (5% return before expenses) $1,000.00 $1,021.32 0.70% $3.51
FIRST TRUST VALUE LINE(R) 100 EXCHANGE-TRADED FUND (FVL)
Actual $1,000.00 $1,189.10 0.70% $3.80
Hypothetical (5% return before expenses) $1,000.00 $1,021.32 0.70% $3.51
(a) These expense ratios reflect expense caps for certain Funds. See Note 3 in
Notes to Financial Statements.
(b) Expenses are equal to the annualized expense ratio as indicated in the
table multiplied by the average account value over the period (January 1,
2019 through June 30, 2019), multiplied by 181/365 (to reflect the
six-month period).
Page 22
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
AEROSPACE & DEFENSE -- 1.7%
18,946 Ducommun, Inc. (a) $ 853,896
9,119 National Presto Industries,
Inc. (b) 850,712
20,684 Vectrus, Inc. (a) 838,943
--------------
2,543,551
--------------
AUTO COMPONENTS -- 0.2%
27,046 Shiloh Industries, Inc. (a) 131,714
41,838 Superior Industries International,
Inc. 144,760
--------------
276,474
--------------
BANKS -- 22.6%
11,561 1st Constitution Bancorp 213,532
20,480 Allegiance Bancshares, Inc. (a) 682,803
26,226 Arrow Financial Corp. 910,829
43,645 Atlantic Capital Bancshares,
Inc. (a) 747,202
24,446 BankFinancial Corp. 342,000
28,108 Bar Harbor Bankshares 747,392
29,598 Byline Bancorp, Inc. (a) 565,914
5,843 C&F Financial Corp. 319,086
6,669 Cambridge Bancorp (b) 543,523
23,136 Capital City Bank Group, Inc. 574,930
9,051 CB Financial Services, Inc. (b) 214,961
26,027 Civista Bancshares, Inc. 584,306
25,938 CNB Financial Corp. 732,489
25,937 Equity Bancshares, Inc.,
Class A (a) 691,480
28,942 Financial Institutions, Inc. 843,659
22,387 First Bancshares, (The), Inc. 679,222
27,895 First Bank 327,487
25,107 First Community Bankshares, Inc. 847,612
12,907 First Community Corp. 238,909
19,583 First Financial Corp. 786,453
14,277 First Financial Northwest, Inc. 202,020
17,341 First Internet Bancorp 373,525
19,326 First Mid Bancshares, Inc. 674,864
41,030 First of Long Island (The) Corp. 823,882
12,836 First United Corp. 252,998
22,403 Franklin Financial Network, Inc. 624,148
70,635 Heritage Commerce Corp. 865,279
29,767 HomeTrust Bancshares, Inc. 748,342
42,503 Independent Bank Corp. 926,140
29,737 Mercantile Bank Corp. 968,831
11,601 Metropolitan Bank Holding
Corp. (a) 510,444
37,035 Midland States Bancorp, Inc. 989,575
19,729 MidWestOne Financial Group, Inc. 551,623
13,272 Nicolet Bankshares, Inc. (a) 823,660
12,403 Northrim BanCorp, Inc. 442,291
6,980 Ohio Valley Banc Corp. 269,219
26,843 Old Line Bancshares, Inc. 714,292
47,638 Old Second Bancorp, Inc. 608,337
39,118 Opus Bank 825,781
9,459 Origin Bancorp, Inc. 312,147
15,002 Parke Bancorp, Inc. 359,298
29,225 Peapack-Gladstone Financial Corp. 821,807
29,959 People's Utah Bancorp 880,795
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
BANKS (CONTINUED)
24,253 QCR Holdings, Inc. $ 845,702
19,628 RBB Bancorp 379,606
17,793 Reliant Bancorp, Inc. 420,449
18,649 Republic Bancorp, Inc., Class A 927,788
10,809 SB One Bancorp 241,581
25,534 Sierra Bancorp 692,482
17,937 SmartFinancial, Inc. (a) 389,054
12,504 Southern First Bancshares,
Inc. (a) 489,657
35,372 Southern National Bancorp of
Virginia, Inc. 541,545
82,536 Veritex Holdings, Inc. 2,141,809
--------------
33,232,760
--------------
BUILDING PRODUCTS -- 1.5%
62,710 Griffon Corp. 1,061,053
59,974 Quanex Building Products Corp. 1,132,909
--------------
2,193,962
--------------
CAPITAL MARKETS -- 1.6%
5,885 Diamond Hill Investment Group,
Inc. 834,022
32,732 GAIN Capital Holdings, Inc. (b) 135,183
16,849 Oppenheimer Holdings, Inc.,
Class A 458,630
26,769 Victory Capital Holdings, Inc.,
Class A (a) 459,891
14,619 Westwood Holdings Group, Inc. 514,589
--------------
2,402,315
--------------
CHEMICALS -- 2.0%
47,353 American Vanguard Corp. 729,710
46,731 FutureFuel Corp. 546,285
39,876 Kronos Worldwide, Inc. 610,900
81,203 OMNOVA Solutions, Inc. (a) 505,895
37,549 Trecora Resources (a) 359,344
49,129 Valhi, Inc. 145,913
--------------
2,898,047
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 2.0%
47,361 Ennis, Inc. 971,848
66,038 Kimball International, Inc.,
Class B 1,151,042
54,329 Quad/Graphics, Inc. 429,743
15,599 VSE Corp. 447,535
--------------
3,000,168
--------------
COMMUNICATIONS EQUIPMENT
-- 0.2%
53,127 Casa Systems, Inc. (a) 341,607
--------------
CONSTRUCTION & ENGINEERING
-- 2.6%
33,434 Ameresco, Inc., Class A (a) 492,483
30,076 MYR Group, Inc. (a) 1,123,338
17,064 NV5 Global, Inc. (a) 1,389,010
52,639 Orion Group Holdings, Inc. (a) 141,072
45,440 Sterling Construction Co.,
Inc. (a) 609,805
--------------
3,755,708
--------------
See Notes to Financial Statements Page 23
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
CONSUMER FINANCE -- 2.5%
24,387 Curo Group Holdings Corp. (a) $ 269,476
33,002 Elevate Credit, Inc. (a) 135,968
95,017 EZCORP, Inc., Class A (a) 899,811
17,524 Regional Management Corp. (a) 462,108
11,462 World Acceptance Corp. (a) 1,881,029
--------------
3,648,392
--------------
CONTAINERS & PACKAGING -- 0.8%
64,211 Myers Industries, Inc. 1,237,346
--------------
DISTRIBUTORS -- 0.7%
30,848 Funko, Inc., Class A (a) (b) 747,139
11,224 Weyco Group, Inc. 299,793
--------------
1,046,932
--------------
DIVERSIFIED CONSUMER SERVICES
-- 2.1%
29,994 Carriage Services, Inc. 570,186
14,411 Collectors Universe, Inc. 307,531
67,697 K12, Inc. (a) 2,058,666
54,714 Zovio, Inc. (a) 195,876
--------------
3,132,259
--------------
DIVERSIFIED FINANCIAL SERVICES
-- 0.3%
16,994 Marlin Business Services Corp. 423,660
--------------
ELECTRIC UTILITIES -- 0.2%
34,191 Genie Energy Ltd., Class B 364,134
--------------
ELECTRICAL EQUIPMENT -- 0.8%
4,946 Preformed Line Products Co. 274,602
33,603 TPI Composites, Inc. (a) 830,666
--------------
1,105,268
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 3.2%
48,521 Control4 Corp. (a) 1,152,374
46,026 Kimball Electronics, Inc. (a) 747,462
20,741 Napco Security Technologies,
Inc. (a) 615,593
20,523 PC Connection, Inc. 717,894
15,758 PCM, Inc. (a) 552,160
22,612 Vishay Precision Group, Inc. (a) 918,726
--------------
4,704,209
--------------
ENERGY EQUIPMENT & SERVICES
-- 0.4%
59,674 FTS International, Inc. (a) 332,981
22,752 Mammoth Energy Services, Inc. 156,534
58,273 Profire Energy, Inc. (a) 87,992
--------------
577,507
--------------
ENTERTAINMENT -- 0.3%
29,672 Reading International, Inc.,
Class A (a) 385,143
--------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 4.4%
16,698 BRT Apartments Corp. 235,943
71,769 City Office REIT, Inc. 860,510
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS (CONTINUED)
21,568 CorEnergy Infrastructure Trust,
Inc. $ 855,387
148,858 New Senior Investment Group, Inc. 1,000,326
38,529 NexPoint Residential Trust, Inc. 1,595,100
26,733 One Liberty Properties, Inc. 774,188
21,055 Saul Centers, Inc. 1,181,817
--------------
6,503,271
--------------
FOOD & STAPLES RETAILING -- 0.8%
25,670 Ingles Markets, Inc., Class A 799,107
14,570 Village Super Market, Inc.,
Class A 386,251
--------------
1,185,358
--------------
FOOD PRODUCTS -- 1.6%
52,842 Landec Corp. (a) 495,130
26,711 Limoneira Co. 532,617
34,260 Tootsie Roll Industries, Inc. 1,265,222
--------------
2,292,969
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 0.2%
11,511 FONAR Corp. (a) 247,602
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 1.9%
21,991 AAC Holdings, Inc. (a) (b) 18,912
18,380 Addus HomeCare Corp. (a) 1,377,581
16,413 CorVel Corp. (a) 1,428,095
--------------
2,824,588
--------------
HOTELS, RESTAURANTS & LEISURE
-- 3.6%
114,957 BBX Capital Corp. 564,439
30,483 Chuy's Holdings, Inc. (a) 698,670
61,879 Del Taco Restaurants, Inc. (a) 793,289
48,928 Lindblad Expeditions Holdings,
Inc. (a) 878,258
21,494 Monarch Casino & Resort, Inc. (a) 918,653
16,319 RCI Hospitality Holdings, Inc. 285,746
23,478 Red Robin Gourmet Burgers,
Inc. (a) 717,722
20,704 Speedway Motorsports, Inc. 384,059
46,592 Town Sports International
Holdings, Inc. (a) 101,105
--------------
5,341,941
--------------
HOUSEHOLD DURABLES -- 2.0%
17,906 Bassett Furniture Industries, Inc. 273,066
44,759 Ethan Allen Interiors, Inc. 942,624
13,293 Flexsteel Industries, Inc. 226,779
44,044 Green Brick Partners, Inc. (a) 366,006
9,600 Hamilton Beach Brands Holding
Co., Class A 182,880
21,339 Hooker Furniture Corp. 440,010
13,246 Turtle Beach Corp. (a) (b) 153,124
52,632 ZAGG, Inc. (a) 366,319
--------------
2,950,808
--------------
Page 24 See Notes to Financial Statements
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
INSURANCE -- 0.8%
18,361 FedNat Holding Co. $ 262,011
19,179 Health Insurance Innovations,
Inc., Class A (a) (b) 497,120
2,428 Investors Title Co. 405,476
--------------
1,164,607
--------------
IT SERVICES -- 1.2%
48,465 Hackett Group (The), Inc. 813,728
93,735 Unisys Corp. (a) 911,104
--------------
1,724,832
--------------
LEISURE PRODUCTS -- 1.1%
10,562 Johnson Outdoors, Inc., Class A 787,608
33,904 MasterCraft Boat Holdings,
Inc. (a) 664,180
53,725 Nautilus, Inc. (a) 118,732
--------------
1,570,520
--------------
MACHINERY -- 1.6%
26,347 Blue Bird Corp. (a) 518,772
11,503 Hurco Cos., Inc. 409,047
15,553 Park-Ohio Holdings Corp. 506,872
56,329 Spartan Motors, Inc. 617,366
18,027 Twin Disc, Inc. (a) 272,208
--------------
2,324,265
--------------
MEDIA -- 1.0%
44,234 Emerald Expositions Events, Inc. 493,209
95,112 Lee Enterprises, Inc. (a) 213,051
112,960 National CineMedia, Inc. 741,018
--------------
1,447,278
--------------
METALS & MINING -- 0.6%
113,008 Gold Resource Corp. 381,967
16,539 Olympic Steel, Inc. 225,758
15,097 Synalloy Corp. 235,815
--------------
843,540
--------------
MORTGAGE REAL ESTATE INVESTMENT
TRUSTS -- 5.3%
151,617 Arbor Realty Trust, Inc. (b) 1,837,598
48,091 Ares Commercial Real Estate Corp. 714,632
27,448 Cherry Hill Mortgage Investment
Corp. 439,168
44,522 Dynex Capital, Inc. 745,743
30,563 Great Ajax Corp. 427,882
53,860 Ready Capital Corp. 802,514
100,345 TPG RE Finance Trust, Inc. 1,935,655
96,373 Western Asset Mortgage Capital
Corp. 961,803
--------------
7,864,995
--------------
OIL, GAS & CONSUMABLE FUELS
-- 5.0%
304,866 Abraxas Petroleum Corp. (a) 314,012
52,789 CVR Energy, Inc. 2,638,922
117,375 Overseas Shipholding Group, Inc.,
Class A (a) 220,665
54,729 Par Pacific Holdings, Inc. (a) 1,123,039
68,117 Renewable Energy Group, Inc. (a) 1,080,336
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS
(CONTINUED)
10,224 REX American Resources Corp. (a) $ 745,329
11,269 SilverBow Resources, Inc. (a) 156,076
101,776 VAALCO Energy, Inc. (a) 169,966
168,078 W&T Offshore, Inc. (a) 833,667
--------------
7,282,012
--------------
PERSONAL PRODUCTS -- 0.3%
23,629 Lifevantage Corp. (a) 306,705
13,008 Natural Health Trends Corp. (b) 104,714
--------------
411,419
--------------
PHARMACEUTICALS -- 0.9%
15,257 ANI Pharmaceuticals, Inc. (a) 1,254,125
--------------
PROFESSIONAL SERVICES -- 1.6%
15,745 BG Staffing, Inc. 297,265
14,560 CRA International, Inc. 558,085
54,502 Resources Connection, Inc. 872,577
17,327 Willdan Group, Inc. (a) 645,431
--------------
2,373,358
--------------
REAL ESTATE MANAGEMENT
& DEVELOPMENT -- 1.6%
9,104 Consolidated-Tomoka Land Co. 543,509
38,886 Marcus & Millichap, Inc. (a) 1,199,633
12,694 RMR Group (The), Inc., Class A 596,364
--------------
2,339,506
--------------
ROAD & RAIL -- 0.6%
22,334 Covenant Transportation Group,
Inc., Class A (a) 328,533
3,986 P.A.M. Transportation Services,
Inc. (a) 247,132
15,143 Universal Logistics Holdings, Inc. 340,263
--------------
915,928
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 3.0%
64,624 AXT, Inc. (a) 255,911
143,703 Enphase Energy, Inc. (a) 2,619,706
121,436 Photronics, Inc. (a) 995,775
22,833 SMART Global Holdings, Inc. (a) 524,931
--------------
4,396,323
--------------
SOFTWARE -- 0.4%
49,875 American Software, Inc., Class A 655,856
--------------
SPECIALTY RETAIL -- 5.6%
51,344 Boot Barn Holdings, Inc. (a) 1,829,900
41,657 Cato (The) Corp., Class A 513,214
20,639 Citi Trends, Inc. 301,742
27,443 Container Store Group, (The),
Inc. (a) 200,883
34,067 Haverty Furniture Cos., Inc. 580,161
33,290 Hibbett Sports, Inc. (a) 605,878
25,551 J. Jill, Inc. (b) 50,846
25,647 Kirkland's, Inc. (a) 57,962
100,197 Party City Holdco, Inc. (a) 734,444
53,996 RTW RetailWinds, Inc. (a) 91,793
17,623 Shoe Carnival, Inc. (b) 486,395
See Notes to Financial Statements Page 25
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
SPECIALTY RETAIL (CONTINUED)
43,293 Sonic Automotive, Inc., Class A $ 1,010,892
68,675 Sportsman's Warehouse Holdings,
Inc. (a) 259,592
69,716 Tile Shop Holdings, Inc. 278,864
39,502 Tilly's, Inc., Class A 301,400
34,491 Zumiez, Inc. (a) 900,215
--------------
8,204,181
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 0.3%
57,135 Immersion Corp. (a) 434,797
--------------
TEXTILES, APPAREL & LUXURY GOODS
-- 0.6%
13,512 Lakeland Industries, Inc. (a) 151,335
12,183 Rocky Brands, Inc. 332,352
37,879 Vera Bradley, Inc. (a) 454,548
--------------
938,235
--------------
THRIFTS & MORTGAGE FINANCE
-- 6.5%
55,494 Dime Community Bancshares, Inc. 1,053,831
12,528 Entegra Financial Corp. (a) 377,343
35,707 First Defiance Financial Corp. 1,020,149
6,918 FS Bancorp, Inc. 358,837
12,693 Home Bancorp, Inc. 488,427
28,586 Merchants Bancorp 486,820
202,046 Ocwen Financial Corp. (a) 418,235
69,387 Oritani Financial Corp. 1,230,925
110,635 PennyMac Financial Services, Inc. 2,453,884
88,353 United Community Financial Corp. 845,538
50,667 Waterstone Financial, Inc. 864,379
--------------
9,598,368
--------------
TOBACCO -- 0.5%
15,607 Turning Point Brands, Inc. 764,431
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 0.8%
26,431 Systemax, Inc. 585,711
12,274 Transcat, Inc. (a) 314,092
5,752 Willis Lease Finance Corp. (a) 335,456
--------------
1,235,259
--------------
WATER UTILITIES -- 0.4%
14,285 Artesian Resources Corp., Class A 530,973
--------------
TOTAL COMMON STOCKS -- 99.9% 146,890,787
(Cost $158,948,454) --------------
MONEY MARKET FUNDS -- 0.2%
351,607 Goldman Sachs Financial Square
Treasury Obligations Fund
2.25% (c) (d) 351,607
(Cost $351,607) --------------
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.8%
$ 2,610,233 BNP Paribas S.A., 2.48% (c),
dated 06/28/19, due 07/01/19,
with a maturity value of
$2,610,772. Collateralized by
U.S. Treasury Note, interest
rate of 2.625%, due 07/31/20.
The value of the collateral
including accrued interest is
$2,663,620. (d) $ 2,610,233
(Cost $2,610,233) --------------
TOTAL INVESTMENTS -- 101.9% 149,852,627
(Cost $161,910,294) (e)
NET OTHER ASSETS AND
LIABILITIES -- (1.9)% (2,784,106)
--------------
NET ASSETS -- 100.0% $ 147,068,521
==============
(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 aggregate value of such
securities is $2,926,726 and the total value of the collateral held by the
Fund is $2,961,840.
(c) Rate shown reflects yield as of June 30, 2019.
(d) This security serves as collateral for securities on loan.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purpose. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $11,416,945 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $23,474,612. The net unrealized depreciation
was $12,057,667.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 146,890,787 $ -- $ --
Money Market
Funds 351,607 -- --
Repurchase
Agreements -- 2,610,233 --
-------------------------------------------------------
Total Investments $ 147,242,394 $ 2,610,233 $ --
=======================================================
* See Portfolio of Investments for industry breakout.
Page 26 See Notes to Financial Statements
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 2,926,726
Non-cash Collateral(2) (2,926,726)
--------------
Net Amount $ --
==============
(1) The amount presented on the Statements of Assets and Liabilities, which is
included in "Investments, at value", is not offset and is shown on a gross
basis.
(2) At June 30, 2019, 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) $ 2,610,233
Non-cash Collateral(4) (2,610,233)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At June 30, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
See Notes to Financial Statements Page 27
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.7%
AIR FREIGHT & LOGISTICS -- 2.0%
315,575 United Parcel Service, Inc.,
Class B $ 32,589,430
--------------
AUTO COMPONENTS -- 0.3%
38,494 Autoliv, Inc. 2,714,212
118,555 Goodyear Tire & Rubber (The) Co. 1,813,891
--------------
4,528,103
--------------
AUTOMOBILES -- 3.4%
2,821,881 Ford Motor Co. 28,867,843
662,193 General Motors Co. 25,514,296
82,116 Harley-Davidson, Inc. 2,942,216
--------------
57,324,355
--------------
BANKS -- 8.6%
72,188 Comerica, Inc. 5,243,736
160,565 F.N.B. Corp. 1,889,850
45,538 First Financial Bancorp 1,102,931
144,212 First Horizon National Corp. 2,153,085
60,144 Hope Bancorp, Inc. 828,784
518,240 Huntington Bancshares, Inc. 7,162,077
115,082 Investors Bancorp, Inc. 1,283,164
477,806 KeyCorp 8,481,057
90,164 PacWest Bancorp 3,501,068
6,994 Park National Corp. 695,134
204,673 People's United Financial, Inc. 3,434,413
474,470 Regions Financial Corp. 7,088,582
68,941 Synovus Financial Corp. 2,412,935
134,624 Umpqua Holdings Corp. 2,233,412
44,420 United Bankshares, Inc. 1,647,538
165,554 Valley National Bancorp 1,784,672
1,945,498 Wells Fargo & Co. 92,060,965
--------------
143,003,403
--------------
BIOTECHNOLOGY -- 4.2%
952,591 AbbVie, Inc. 69,272,418
--------------
CAPITAL MARKETS -- 0.4%
51,473 Artisan Partners Asset
Management, Inc., Class A 1,416,537
285,151 Invesco Ltd. 5,834,189
--------------
7,250,726
--------------
CHEMICALS -- 1.2%
56,574 Eastman Chemical Co. 4,403,154
13,099 Kronos Worldwide, Inc. 200,677
169,016 LyondellBasell Industries N.V.,
Class A 14,557,348
70,889 Olin Corp. 1,553,178
--------------
20,714,357
--------------
CONTAINERS & PACKAGING -- 0.9%
15,200 Greif, Inc., Class A 494,760
218,052 International Paper Co. 9,446,013
151,790 WestRock Co. 5,535,781
--------------
15,476,554
--------------
DIVERSIFIED CONSUMER SERVICES
-- 0.1%
86,802 H&R Block, Inc. 2,543,299
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 17.2%
5,024,589 AT&T, Inc. $ 168,373,977
2,058,128 Verizon Communications, Inc. 117,580,853
--------------
285,954,830
--------------
ELECTRIC UTILITIES -- 5.3%
369,019 Duke Energy Corp. 32,562,237
158,991 Edison International 10,717,583
452,571 PPL Corp. 14,034,227
551,526 Southern (The) Co. 30,488,357
--------------
87,802,404
--------------
ELECTRICAL EQUIPMENT -- 0.9%
181,287 Eaton Corp. PLC 15,097,581
--------------
FOOD PRODUCTS -- 1.6%
58,583 Bunge Ltd. 3,263,659
75,361 Campbell Soup Co. 3,019,716
263,562 General Mills, Inc. 13,842,276
118,579 Kellogg Co. 6,352,277
--------------
26,477,928
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 2.4%
152,218 Cardinal Health, Inc. 7,169,468
573,125 CVS Health Corp. 31,229,581
45,941 Patterson Cos., Inc. 1,052,049
--------------
39,451,098
--------------
HOTELS, RESTAURANTS & LEISURE
-- 1.6%
16,685 Brinker International, Inc. 656,555
177,817 Carnival Corp. 8,277,381
121,084 Extended Stay America, Inc. 2,045,109
235,744 Las Vegas Sands Corp. 13,930,113
46,965 Wyndham Destinations, Inc. 2,061,763
--------------
26,970,921
--------------
HOUSEHOLD DURABLES -- 0.7%
62,434 Leggett & Platt, Inc. 2,395,593
20,976 M.D.C. Holdings, Inc. 687,593
291,375 Newell Brands, Inc. 4,493,003
27,812 Whirlpool Corp. 3,959,316
--------------
11,535,505
--------------
INSURANCE -- 2.9%
13,486 Mercury General Corp. 842,875
412,501 MetLife, Inc. 20,488,924
121,791 Principal Financial Group, Inc. 7,054,135
196,383 Prudential Financial, Inc. 19,834,683
--------------
48,220,617
--------------
IT SERVICES -- 4.5%
506,859 International Business Machines
Corp. 69,895,856
205,263 Western Union (The) Co. 4,082,681
--------------
73,978,537
--------------
Page 28 See Notes to Financial Statements
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDIA -- 0.3%
196,130 Interpublic Group of Cos. (The),
Inc. $ 4,430,577
21,060 Meredith Corp. 1,159,563
--------------
5,590,140
--------------
METALS & MINING -- 0.3%
43,688 Southern Copper Corp. 1,697,279
100,365 Steel Dynamics, Inc. 3,031,023
--------------
4,728,302
--------------
MULTILINE RETAIL -- 0.8%
109,368 Kohl's Corp. 5,200,448
256,624 Macy's, Inc. 5,507,151
58,504 Nordstrom, Inc. 1,863,938
--------------
12,571,537
--------------
MULTI-UTILITIES -- 2.6%
235,779 CenterPoint Energy, Inc. 6,750,353
463,193 Dominion Energy, Inc. 35,814,083
--------------
42,564,436
--------------
OIL, GAS & CONSUMABLE FUELS
-- 22.5%
158,888 Apache Corp. 4,602,986
892,091 Chevron Corp. 111,011,804
2,170,208 Exxon Mobil Corp. 166,303,039
360,439 Marathon Petroleum Corp. 20,141,331
568,231 Occidental Petroleum Corp. 28,570,655
69,874 PBF Energy, Inc., Class A 2,187,056
215,067 Phillips 66 20,117,367
232,980 Valero Energy Corp. 19,945,418
--------------
372,879,656
--------------
PAPER & FOREST PRODUCTS -- 0.1%
29,466 Domtar Corp. 1,312,121
--------------
PERSONAL PRODUCTS -- 0.1%
133,426 Coty, Inc., Class A 1,787,908
--------------
PROFESSIONAL SERVICES -- 0.3%
258,744 Nielsen Holdings PLC 5,847,614
--------------
ROAD & RAIL -- 0.1%
24,267 Ryder System, Inc. 1,414,766
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 3.1%
177,942 Broadcom, Inc. 51,222,384
--------------
SPECIALTY RETAIL -- 0.4%
41,002 Abercrombie & Fitch Co., Class A 657,672
38,128 Designer Brands, Inc., Class A 730,914
48,239 Foot Locker, Inc. 2,022,179
137,762 Gap (The), Inc. 2,475,583
37,096 Guess?, Inc. 599,100
--------------
6,485,448
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 1.0%
175,513 Seagate Technology PLC 8,270,173
190,290 Western Digital Corp. 9,048,289
--------------
17,318,462
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
TEXTILES, APPAREL & LUXURY
GOODS -- 0.5%
159,976 Hanesbrands, Inc. $ 2,754,787
160,974 Tapestry, Inc. 5,107,705
--------------
7,862,492
--------------
THRIFTS & MORTGAGE FINANCE
-- 0.1%
51,757 Northwest Bancshares, Inc. 911,441
28,044 Provident Financial Services, Inc. 680,067
--------------
1,591,508
--------------
TOBACCO -- 9.1%
1,378,340 Altria Group, Inc. 65,264,399
1,088,407 Philip Morris International, Inc. 85,472,602
--------------
150,737,001
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 0.2%
36,711 Aircastle Ltd. 780,476
14,785 Watsco, Inc. 2,417,791
--------------
3,198,267
--------------
TOTAL INVESTMENTS -- 99.7% 1,655,304,108
(Cost $1,653,542,714) (a)
NET OTHER ASSETS AND
LIABILITIES -- 0.3% 5,261,030
--------------
NET ASSETS -- 100.0% $1,660,565,138
==============
(a) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $66,174,842 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $64,413,448. The net unrealized appreciation
was $1,761,394.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 1,655,304,108 $ -- $ --
=======================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 29
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
AUTOMOBILES -- 1.4%
1,243,812 Fiat Chrysler Automobiles N.V. $ 17,189,482
--------------
BEVERAGES -- 2.2%
902,688 Keurig Dr Pepper, Inc. (a) 26,087,683
--------------
BIOTECHNOLOGY -- 1.5%
198,002 Celgene Corp. (b) 18,303,305
--------------
CAPITAL MARKETS -- 0.2%
46,040 Hamilton Lane, Inc., Class A 2,627,042
--------------
CHEMICALS -- 1.2%
299,399 Dow, Inc. 14,763,365
--------------
CONSTRUCTION & ENGINEERING
-- 0.1%
38,784 Arcosa, Inc. 1,459,442
--------------
CONSUMER FINANCE -- 0.6%
282,177 Santander Consumer USA
Holdings, Inc. 6,760,961
--------------
DIVERSIFIED CONSUMER SERVICES
-- 0.2%
67,889 frontdoor, Inc. (b) 2,956,566
--------------
DIVERSIFIED FINANCIAL SERVICES
-- 0.7%
393,962 AXA Equitable Holdings, Inc. 8,233,806
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 3.9%
829,354 Verizon Communications, Inc. 47,380,994
--------------
ELECTRIC UTILITIES -- 1.0%
202,695 Evergy, Inc. 12,192,104
--------------
ELECTRICAL EQUIPMENT -- 0.1%
92,351 Sunrun, Inc. (b) 1,732,505
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 2.2%
117,130 CDW Corp. 13,001,430
150,938 Keysight Technologies, Inc. (b) 13,555,742
--------------
26,557,172
--------------
ENTERTAINMENT -- 1.8%
144,921 Spotify Technology S.A. (b) 21,190,349
--------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 3.0%
153,633 Americold Realty Trust 4,980,782
315,837 Invitation Homes, Inc. 8,442,323
107,562 JBG SMITH Properties 4,231,489
229,142 MGM Growth Properties LLC,
Class A 7,023,202
182,141 STORE Capital Corp. 6,045,260
247,242 VICI Properties, Inc. 5,449,214
--------------
36,172,270
--------------
FOOD & STAPLES RETAILING -- 1.0%
111,617 BJ's Wholesale Club Holdings,
Inc. (b) 2,946,689
84,372 Performance Food Group Co. (b) 3,377,411
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
FOOD & STAPLES RETAILING
(CONTINUED)
175,264 US Foods Holding Corp. (b) $ 6,267,441
--------------
12,591,541
--------------
FOOD PRODUCTS -- 6.6%
480,313 General Mills, Inc. 25,226,039
209,358 Hershey (The) Co. 28,060,253
331,063 Tyson Foods, Inc., Class A 26,730,026
--------------
80,016,318
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 6.7%
392,006 Alcon, Inc. (b) 24,323,972
29,202 Glaukos Corp. (b) 2,201,831
27,864 Penumbra, Inc. (b) 4,458,240
239,877 Stryker Corp. 49,313,914
--------------
80,297,957
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 0.5%
72,673 Guardant Health, Inc. (b) 6,273,860
--------------
HOTELS, RESTAURANTS & LEISURE
-- 0.9%
94,870 Planet Fitness, Inc., Class A (b) 6,872,383
35,373 Wingstop, Inc. 3,351,592
--------------
10,223,975
--------------
HOUSEHOLD DURABLES -- 0.7%
90,977 Roku, Inc. (b) 8,240,697
--------------
INSURANCE -- 0.4%
92,896 Brighthouse Financial, Inc. (b) 3,408,354
29,105 Goosehead Insurance, Inc., Class A 1,391,219
--------------
4,799,573
--------------
INTERACTIVE MEDIA & SERVICES
-- 4.6%
89,230 Cargurus, Inc. (b) 3,222,095
225,503 Match Group, Inc. 15,169,587
1,074,920 Snap, Inc., Class A (b) 15,371,356
616,549 Twitter, Inc. (b) 21,517,560
--------------
55,280,598
--------------
INTERNET & DIRECT MARKETING RETAIL
-- 1.7%
96,404 Etsy, Inc. (b) 5,916,314
113,292 Stitch Fix, Inc., Class A (a) (b) 3,624,211
73,508 Wayfair, Inc., Class A (b) 10,732,168
--------------
20,272,693
--------------
IT SERVICES -- 19.8%
120,228 Black Knight, Inc. (b) 7,231,714
65,718 Evo Payments, Inc., Class A (b) 2,072,088
756,999 First Data Corp., Class A (b) 20,491,963
144,252 GreenSky, Inc., Class A (a) (b) 1,772,857
57,696 MongoDB, Inc. (b) 8,774,985
91,555 Okta, Inc. (b) 11,307,958
942,460 PayPal Holdings, Inc. (b) 107,873,972
130,531 Perspecta, Inc. 3,055,731
339,279 Square, Inc., Class A (b) 24,607,906
Page 30 See Notes to Financial Statements
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
IT SERVICES (CONTINUED)
197,182 Switch, Inc., Class A $ 2,581,112
106,734 Twilio, Inc., Class A (b) 14,553,181
274,153 Worldpay, Inc., Class A (b) 33,597,450
--------------
237,920,917
--------------
LEISURE PRODUCTS -- 0.2%
67,776 YETI Holdings, Inc. (a) (b) 1,962,115
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 6.9%
302,323 Avantor, Inc. (b) 5,771,346
158,215 IQVIA Holdings, Inc. (b) 25,456,794
176,462 Thermo Fisher Scientific, Inc. 51,823,360
--------------
83,051,500
--------------
MACHINERY -- 1.8%
268,797 Fortive Corp. 21,912,331
--------------
MEDIA -- 3.4%
667,429 Altice USA, Inc., Class A (b) 16,251,896
5,943 Cable One, Inc. 6,959,193
497,748 Fox Corp., Class A 18,237,487
--------------
41,448,576
--------------
MULTILINE RETAIL -- 0.4%
50,923 Ollie's Bargain Outlet Holdings,
Inc. (b) 4,435,902
--------------
MULTI-UTILITIES -- 2.5%
220,117 Sempra Energy 30,252,880
--------------
OIL, GAS & CONSUMABLE FUELS
-- 1.2%
206,481 Cheniere Energy, Inc. (b) 14,133,624
--------------
PHARMACEUTICALS -- 3.4%
293,348 Elanco Animal Health, Inc. (b) 9,915,162
24,109 Reata Pharmaceuticals, Inc.,
Class A (b) 2,274,684
1,643,797 Takeda Pharmaceutical Co., Ltd.,
ADR 29,095,207
--------------
41,285,053
--------------
PROFESSIONAL SERVICES -- 2.6%
318,530 IHS Markit Ltd. (b) 20,296,732
150,240 TransUnion 11,044,142
--------------
31,340,874
--------------
ROAD & RAIL -- 1.3%
233,107 Lyft, Inc., Class A (a) (b) 15,317,461
--------------
SOFTWARE -- 9.0%
57,124 Altair Engineering, Inc.,
Class A (b) 2,307,238
50,167 Alteryx, Inc., Class A (b) 5,474,223
103,606 Anaplan, Inc. (b) 5,228,995
27,276 Appfolio, Inc., Class A (b) 2,789,517
51,899 Appian Corp. (a) (b) 1,871,997
59,388 Avalara, Inc. (b) 4,287,814
44,155 Blackline, Inc. (b) 2,362,734
112,974 Ceridian HCM Holding, Inc. (b) 5,671,295
49,549 Coupa Software, Inc. (b) 6,273,399
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SOFTWARE (CONTINUED)
95,964 Crowdstrike Holdings, Inc.,
Class A (b) $ 6,553,382
329,822 Dropbox, Inc., Class A (b) 8,262,041
26,411 Everbridge, Inc. (b) 2,361,672
33,772 HubSpot, Inc. (b) 5,758,801
46,931 Paycom Software, Inc. (b) 10,640,196
111,073 Pluralsight, Inc., Class A (b) 3,367,733
91,586 Smartsheet, Inc., Class A (b) 4,432,762
248,711 SolarWinds Corp. (b) 4,561,360
77,384 Tenable Holdings, Inc. (b) 2,208,539
35,716 Trade Desk (The), Inc.,
Class A (b) 8,135,390
87,886 Zendesk, Inc. (b) 7,824,491
100,798 Zscaler, Inc. (b) 7,725,159
--------------
108,098,738
--------------
SPECIALTY RETAIL -- 1.4%
53,235 Burlington Stores, Inc. (b) 9,057,935
124,132 Carvana Co. (a) (b) 7,769,422
--------------
16,827,357
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 1.9%
144,094 Dell Technologies, Inc.,
Class C (b) 7,319,975
1,074,184 Hewlett Packard Enterprise Co. 16,059,051
--------------
23,379,026
--------------
TEXTILES, APPAREL & LUXURY GOODS
-- 0.8%
361,775 Under Armour, Inc., Class A (b) 9,170,996
--------------
TOBACCO -- 0.1%
23,569 Turning Point Brands, Inc. 1,154,410
--------------
TOTAL COMMON STOCKS -- 99.9% 1,203,296,018
(Cost $934,705,654) --------------
MONEY MARKET FUNDS -- 0.2%
2,536,500 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.25% (c) (d) 2,536,500
(Cost $2,536,500) --------------
See Notes to Financial Statements Page 31
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.6%
$ 18,830,267 BNP Paribas S.A., 2.48% (c),
dated 06/28/19, due 07/01/19,
with a maturity value of
$18,834,158. Collateralized by
U.S. Treasury Note, interest
rate of 2.625%, due 07/31/20.
The value of the collateral
including accrued interest is
$19,215,402. (d) $ 18,830,267
(Cost $18,830,267) --------------
TOTAL INVESTMENTS -- 101.7% 1,224,662,785
(Cost $956,072,421) (e)
NET OTHER ASSETS AND
LIABILITIES -- (1.7)% (20,831,411)
--------------
NET ASSETS -- 100.0% $1,203,831,374
==============
(a) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The aggregate value of such
securities is $21,256,298 and the total value of the collateral held by
the Fund is $21,366,767.
(b) Non-income producing security.
(c) Rate shown reflects yield as of June 30, 2019.
(d) This security serves as collateral for securities on loan.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $279,931,763 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $11,341,399. The net unrealized appreciation
was $268,590,364.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 1,203,296,018 $ -- $ --
Money Market
Funds 2,536,500 -- --
Repurchase
Agreements -- 18,830,267 --
-------------------------------------------------------
Total Investments $ 1,205,832,518 $ 18,830,267 $ --
=======================================================
* See Portfolio of Investments for industry breakout.
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 21,256,298
Non-cash Collateral(2) (21,256,298)
--------------
Net Amount $ --
==============
(1) The amount presented on the Statements of Assets and Liabilities, which is
included in "Investments, at value", is not offset and is shown on a gross
basis.
(2) At June 30, 2019, 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) $ 18,830,267
Non-cash Collateral(4) (18,830,267)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At June 30, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
Page 32 See Notes to Financial Statements
FIRST TRUST NYSE ARCA BIOTECHNOLOGY INDEX FUND (FBT)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 100.0%
BIOTECHNOLOGY -- 78.3%
4,014,904 ACADIA Pharmaceuticals, Inc. (a) $ 107,318,384
1,691,448 Agios Pharmaceuticals, Inc. (a) 84,369,426
751,760 Alexion Pharmaceuticals, Inc. (a) 98,465,525
2,819,910 Alkermes PLC (a) 63,560,771
1,153,228 Alnylam Pharmaceuticals, Inc. (a) 83,678,224
533,965 Amgen, Inc. 98,399,070
418,612 Biogen, Inc. (a) 97,900,788
1,138,791 BioMarin Pharmaceutical, Inc. (a) 97,537,449
691,136 Bluebird Bio, Inc. (a) 87,912,499
1,026,866 Exact Sciences Corp. (a) 121,211,263
4,530,330 Exelixis, Inc. (a) 96,813,152
2,005,843 FibroGen, Inc. (a) 90,623,987
1,504,429 Gilead Sciences, Inc. 101,639,223
5,073,910 Grifols S.A., ADR 107,059,501
1,280,555 Incyte Corp. (a) 108,795,953
1,083,284 Intercept Pharmaceuticals,
Inc. (a) 86,196,908
1,296,791 Ionis Pharmaceuticals, Inc. (a) 83,344,758
1,207,179 Neurocrine Biosciences, Inc. (a) 101,922,123
283,643 Regeneron Pharmaceuticals,
Inc. (a) 88,780,259
811,614 Sarepta Therapeutics, Inc. (a) 123,324,747
1,368,620 Seattle Genetics, Inc. (a) 94,722,190
1,469,321 Ultragenyx Pharmaceutical,
Inc. (a) 93,301,884
944,015 United Therapeutics Corp. (a) 73,689,811
562,997 Vertex Pharmaceuticals, Inc. (a) 103,242,390
--------------
2,293,810,285
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 18.0%
500,594 Bio-Techne Corp. 104,368,843
700,520 Charles River Laboratories
International, Inc. (a) 99,403,788
296,439 Illumina, Inc. (a) 109,134,018
711,628 IQVIA Holdings, Inc. (a) 114,500,945
2,472,375 QIAGEN N.V. (a) 100,254,806
--------------
527,662,400
--------------
PHARMACEUTICALS -- 3.7%
2,988,250 Nektar Therapeutics (a) 106,321,935
--------------
TOTAL INVESTMENTS -- 100.0% 2,927,794,620
(Cost $3,006,248,316) (b)
NET OTHER ASSETS AND
LIABILITIES -- 0.0% 843,583
--------------
NET ASSETS -- 100.0% $2,928,638,203
==============
(a) Non-income producing security.
(b) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $250,988,932 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $329,442,628. The net unrealized depreciation
was $78,453,696.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 2,927,794,620 $ -- $ --
=======================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 33
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
CAPITAL MARKETS -- 5.1%
2,453,845 Blucora, Inc. (a) $ 74,523,273
4,045,274 E*TRADE Financial Corp. 180,419,220
3,940,921 TD Ameritrade Holding Corp. 196,730,776
--------------
451,673,269
--------------
COMMUNICATIONS EQUIPMENT
-- 4.9%
805,830 Arista Networks, Inc. (a) 209,209,585
6,300,162 Juniper Networks, Inc. 167,773,314
2,320,403 NETGEAR, Inc. (a) 58,682,992
--------------
435,665,891
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 2.1%
1,595,871 Cogent Communications
Holdings, Inc. 94,730,902
8,471,432 Vonage Holdings Corp. (a) 95,981,325
--------------
190,712,227
--------------
ENTERTAINMENT -- 5.8%
1,394,907 Netflix, Inc. (a) 512,377,239
--------------
HEALTH CARE TECHNOLOGY -- 2.6%
1,453,399 Veeva Systems, Inc., Class A (a) 235,610,512
--------------
INTERACTIVE MEDIA & SERVICES
-- 24.0%
371,992 Alphabet, Inc., Class A (a) 402,792,938
380,733 Alphabet, Inc., Class C (a) 411,538,107
3,885,386 Facebook, Inc., Class A (a) 749,879,498
12,982,556 Snap, Inc., Class A (a) 185,650,551
2,794,167 TripAdvisor, Inc. (a) 129,341,990
7,200,885 Twitter, Inc. (a) 251,310,886
--------------
2,130,513,970
--------------
INTERNET & DIRECT MARKETING
RETAIL -- 20.1%
469,081 Amazon.com, Inc. (a) 888,265,854
7,401,771 eBay, Inc. 292,369,955
2,338,466 Etsy, Inc. (a) 143,511,658
1,677,481 Expedia Group, Inc. 223,155,297
20,897,122 Groupon, Inc. (a) 74,811,697
2,061,534 GrubHub, Inc. (a) 160,779,037
--------------
1,782,893,498
--------------
IT SERVICES -- 15.0%
2,487,739 Akamai Technologies, Inc. (a) 199,367,403
9,929,005 Endurance International Group
Holdings, Inc. (a) 47,659,224
2,709,609 GoDaddy, Inc., Class A (a) 190,079,071
1,546,213 Okta, Inc. (a) 190,972,768
4,000,130 PayPal Holdings, Inc. (a) 457,854,880
1,183,213 VeriSign, Inc. (a) 247,480,831
--------------
1,333,414,177
--------------
SOFTWARE -- 20.3%
2,475,630 2U, Inc. (a) 93,182,713
3,817,984 8x8, Inc. (a) 92,013,414
5,496,098 Box, Inc., Class A (a) 96,786,286
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SOFTWARE (CONTINUED)
1,976,393 Citrix Systems, Inc. $ 193,963,209
1,935,348 Cornerstone OnDemand, Inc. (a) 112,114,710
1,440,497 DocuSign, Inc. (a) 71,607,106
5,404,782 Dropbox, Inc., Class A (a) 135,389,789
855,440 HubSpot, Inc. (a) 145,869,629
1,371,011 j2 Global, Inc. 121,869,168
1,579,708 LogMeIn, Inc. 116,392,885
1,288,559 New Relic, Inc. (a) 111,473,239
2,715,349 Pluralsight, Inc., Class A (a) 82,329,382
2,853,141 salesforce.com, Inc. (a) 432,907,084
--------------
1,805,898,614
--------------
TOTAL COMMON STOCKS -- 99.9% 8,878,759,397
(Cost $7,393,499,185) --------------
MONEY MARKET FUNDS -- 0.2%
14,781,752 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 2.19% (b) 14,781,752
(Cost $14,781,752) --------------
TOTAL INVESTMENTS -- 100.1% 8,893,541,149
(Cost $7,408,280,937) (c)
NET OTHER ASSETS AND
LIABILITIES -- (0.1)% (6,216,248)
--------------
NET ASSETS -- 100.0% $8,887,324,901
==============
(a) Non-income producing security.
(b) Rate shown reflects yield as of June 30, 2019.
(c) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purpose. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $1,686,620,919 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $201,360,707. The net unrealized appreciation
was $1,485,260,212.
Page 34 See Notes to Financial Statements
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 8,878,759,397 $ -- $ --
Money Market
Funds 14,781,752 -- --
-------------------------------------------------------
Total Investments $ 8,893,541,149 $ -- $ --
=======================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 35
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
AEROSPACE & DEFENSE -- 1.9%
265,811 Raytheon Co. $ 46,219,217
--------------
AIR FREIGHT & LOGISTICS -- 1.8%
424,993 United Parcel Service, Inc.,
Class B 43,889,027
--------------
BEVERAGES -- 4.1%
1,021,733 Coca-Cola (The) Co. 52,026,644
381,734 PepsiCo, Inc. 50,056,780
--------------
102,083,424
--------------
BIOTECHNOLOGY -- 4.1%
273,385 Amgen, Inc. 50,379,388
770,732 Gilead Sciences, Inc. 52,070,654
--------------
102,450,042
--------------
CAPITAL MARKETS -- 7.9%
256,611 Moody's Corp. 50,118,694
528,108 Northern Trust Corp. 47,529,720
543,940 Raymond James Financial, Inc. 45,990,127
223,362 S&P Global, Inc. 50,879,630
--------------
194,518,171
--------------
CHEMICALS -- 2.2%
244,929 Air Products and Chemicals, Inc. 55,444,578
--------------
COMMUNICATIONS EQUIPMENT
-- 1.9%
860,187 Cisco Systems, Inc. 47,078,034
--------------
ELECTRICAL EQUIPMENT -- 1.8%
669,085 Emerson Electric Co. 44,641,351
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 1.8%
463,969 Amphenol Corp., Class A 44,513,186
--------------
ENTERTAINMENT -- 2.1%
366,266 Walt Disney (The) Co. 51,145,384
--------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 2.1%
251,488 American Tower Corp. 51,416,722
--------------
FOOD & STAPLES RETAILING -- 2.1%
197,337 Costco Wholesale Corp. 52,148,276
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 2.2%
652,730 Baxter International, Inc. 53,458,587
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 2.2%
218,802 UnitedHealth Group, Inc. 53,389,876
--------------
HOTELS, RESTAURANTS & LEISURE
-- 2.2%
637,839 Starbucks Corp. 53,470,043
--------------
HOUSEHOLD PRODUCTS -- 2.0%
457,444 Procter & Gamble (The) Co. 50,158,735
--------------
INDUSTRIAL CONGLOMERATES -- 3.6%
221,645 3M Co. 38,419,944
286,986 Honeywell International, Inc. 50,104,886
--------------
88,524,830
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
INSURANCE -- 4.2%
517,665 Marsh & McLennan Cos., Inc. $ 51,637,084
646,800 Progressive (The) Corp. 51,698,724
--------------
103,335,808
--------------
IT SERVICES -- 14.2%
271,616 Accenture PLC, Class A 50,186,488
298,667 Automatic Data Processing, Inc. 49,378,615
680,051 Cognizant Technology Solutions
Corp., Class A 43,108,433
192,939 FleetCor Technologies, Inc. (a) 54,186,918
345,756 International Business Machines
Corp. 47,679,753
201,403 Mastercard, Inc., Class A 53,277,136
302,928 Visa, Inc., Class A 52,573,154
--------------
350,390,497
--------------
MACHINERY -- 7.6%
289,051 Cummins, Inc. 49,525,998
548,198 Fortive Corp. 44,689,101
306,426 Illinois Tool Works, Inc. 46,212,105
679,065 PACCAR, Inc. 48,661,798
--------------
189,089,002
--------------
MEDIA -- 2.0%
589,437 Omnicom Group, Inc. 48,304,362
--------------
OIL, GAS & CONSUMABLE FUELS
-- 1.9%
508,408 Phillips 66 47,556,484
--------------
PHARMACEUTICALS -- 10.5%
421,184 Eli Lilly & Co. 46,662,975
352,799 Johnson & Johnson 49,137,845
662,941 Merck & Co., Inc. 55,587,603
1,232,007 Pfizer, Inc. 53,370,543
489,891 Zoetis, Inc. 55,597,730
--------------
260,356,696
--------------
ROAD & RAIL -- 1.9%
614,294 CSX Corp. 47,527,927
--------------
SOFTWARE -- 4.0%
484,605 Citrix Systems, Inc. 47,559,135
889,862 Oracle Corp. 50,695,438
--------------
98,254,573
--------------
SPECIALTY RETAIL -- 5.8%
235,870 Home Depot (The), Inc. 49,053,884
485,144 Ross Stores, Inc. 48,087,473
880,159 TJX (The) Cos., Inc. 46,542,808
--------------
143,684,165
--------------
TEXTILES, APPAREL & LUXURY GOODS
-- 1.8%
543,873 NIKE, Inc., Class B 45,658,138
--------------
TOTAL INVESTMENTS -- 99.9% 2,468,707,135
(Cost $2,281,989,726) (b)
NET OTHER ASSETS AND
LIABILITIES -- 0.1% 2,717,152
--------------
NET ASSETS -- 100.0% $2,471,424,287
==============
Page 36 See Notes to Financial Statements
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
(a) Non-income producing security.
(b) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $214,265,675 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $27,548,266. The net unrealized appreciation
was $186,717,409.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 2,468,707,135 $ -- $ --
=======================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 37
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.8%
AEROSPACE & DEFENSE -- 2.6%
89,997 Boeing (The) Co. $ 32,759,808
189,301 General Dynamics Corp. 34,418,708
93,503 Lockheed Martin Corp. 33,992,081
182,942 Raytheon Co. 31,809,955
258,577 United Technologies Corp. 33,666,725
--------------
166,647,277
--------------
AIR FREIGHT & LOGISTICS -- 1.1%
406,220 C.H. Robinson Worldwide, Inc. 34,264,657
337,579 United Parcel Service, Inc.,
Class B 34,861,783
--------------
69,126,440
--------------
AUTOMOBILES -- 0.5%
269,750 Toyota Motor Corp., ADR 33,446,303
--------------
BANKS -- 7.4%
425,792 Bank of Hawaii Corp. 35,302,415
444,986 Bank of Montreal 33,574,194
619,365 Bank of Nova Scotia (The) 33,662,488
694,230 BB&T Corp. 34,107,520
422,002 Canadian Imperial Bank of
Commerce 33,152,477
309,811 JPMorgan Chase & Co. 34,636,870
203,462 M&T Bank Corp. 34,602,782
353,048 Park National Corp. 35,089,441
2,063,932 People's United Financial, Inc. 34,632,779
251,847 PNC Financial Services Group
(The), Inc. 34,573,556
422,685 Royal Bank of Canada 33,561,189
577,398 Toronto-Dominion (The) Bank 33,696,947
643,634 U.S. Bancorp 33,726,421
727,519 Wells Fargo & Co. 34,426,199
--------------
478,745,278
--------------
BEVERAGES -- 1.5%
648,368 Coca-Cola (The) Co. 33,014,899
192,848 Diageo PLC, ADR 33,231,567
250,944 PepsiCo, Inc. 32,906,287
--------------
99,152,753
--------------
BIOTECHNOLOGY -- 0.5%
182,116 Amgen, Inc. 33,560,337
--------------
CAPITAL MARKETS -- 2.6%
781,391 Bank of New York Mellon (The)
Corp. 34,498,413
72,646 BlackRock, Inc. 34,092,768
979,994 Franklin Resources, Inc. 34,103,791
347,491 Nasdaq, Inc. 33,418,209
314,434 T. Rowe Price Group, Inc. 34,496,554
--------------
170,609,735
--------------
CHEMICALS -- 2.1%
150,517 Air Products and Chemicals, Inc. 34,072,533
678,968 Dow, Inc. 33,479,912
229,584 International Flavors & Fragrances,
Inc. 33,310,343
462,014 Sensient Technologies Corp. 33,948,789
--------------
134,811,577
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
-- 0.5%
588,710 Cisco Systems, Inc. $ 32,220,098
--------------
CONSUMER FINANCE -- 0.5%
433,858 Discover Financial Services 33,663,042
--------------
CONTAINERS & PACKAGING -- 1.1%
301,328 Avery Dennison Corp. 34,857,623
522,794 Sonoco Products Co. 34,159,360
--------------
69,016,983
--------------
DISTRIBUTORS -- 0.5%
323,830 Genuine Parts Co. 33,542,311
--------------
DIVERSIFIED FINANCIAL SERVICES
-- 0.5%
1,634,898 AXA Equitable Holdings, Inc. 34,169,368
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 2.1%
1,033,238 AT&T, Inc. 34,623,805
738,699 BCE, Inc. 33,596,031
916,754 TELUS Corp. 33,837,390
577,693 Verizon Communications, Inc. 33,003,601
--------------
135,060,827
--------------
ELECTRIC UTILITIES -- 11.3%
399,135 ALLETE, Inc. 33,212,023
675,827 Alliant Energy Corp. 33,169,589
370,316 American Electric Power Co., Inc. 32,591,511
654,276 Avangrid, Inc. 33,040,938
374,394 Duke Energy Corp. 33,036,527
514,488 El Paso Electric Co. 33,647,515
550,221 Evergy, Inc. 33,095,793
434,969 Eversource Energy 32,953,251
671,117 Exelon Corp. 32,173,349
771,909 FirstEnergy Corp. 33,045,424
844,323 Fortis, Inc. 33,325,429
773,141 Hawaiian Electric Industries, Inc. 33,670,291
323,181 IDACORP, Inc. 32,457,068
479,532 MGE Energy, Inc. 35,044,199
161,683 NextEra Energy, Inc. 33,122,379
777,778 OGE Energy Corp. 33,102,232
644,887 Otter Tail Corp. 34,056,483
347,103 Pinnacle West Capital Corp. 32,658,921
612,264 Portland General Electric Co. 33,166,341
1,065,941 PPL Corp. 33,054,830
598,141 Southern (The) Co. 33,065,235
549,419 Xcel Energy, Inc. 32,684,936
--------------
729,374,264
--------------
ELECTRICAL EQUIPMENT -- 2.6%
1,689,038 ABB Ltd., ADR 33,831,431
409,163 Eaton Corp. PLC 34,075,095
514,644 Emerson Electric Co. 34,337,048
268,236 Hubbell, Inc. 34,977,974
207,575 Rockwell Automation, Inc. 34,007,012
--------------
171,228,560
--------------
Page 38 See Notes to Financial Statements
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 0.5%
354,340 TE Connectivity Ltd. $ 33,938,685
--------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 4.6%
161,728 AvalonBay Communities, Inc. 32,859,895
430,089 Equity Residential 32,652,357
253,867 Federal Realty Investment Trust 32,687,915
283,318 Mid-America Apartment
Communities, Inc. 33,363,528
140,357 Public Storage 33,428,827
468,970 Realty Income Corp. 32,344,861
207,756 Simon Property Group, Inc. 33,191,098
1,234,867 Washington Real Estate Investment
Trust 33,007,995
393,155 WP Carey, Inc. 31,916,323
--------------
295,452,799
--------------
FOOD & STAPLES RETAILING -- 1.6%
473,385 Sysco Corp. 33,477,787
647,994 Walgreens Boots Alliance, Inc. 35,425,832
302,623 Walmart, Inc. 33,436,815
--------------
102,340,434
--------------
FOOD PRODUCTS -- 4.5%
826,486 Archer-Daniels-Midland Co. 33,720,629
830,561 Campbell Soup Co. 33,280,579
1,197,972 Conagra Brands, Inc. 31,770,217
627,213 General Mills, Inc. 32,941,227
244,915 Hershey (The) Co. 32,825,958
798,836 Hormel Foods Corp. 32,384,811
277,486 J.M. Smucker (The) Co. 31,963,612
603,385 Kellogg Co. 32,323,335
608,390 Mondelez International, Inc.,
Class A 32,792,221
--------------
294,002,589
--------------
GAS UTILITIES -- 3.6%
314,552 Atmos Energy Corp. 33,204,109
666,445 New Jersey Resources Corp. 33,168,968
488,078 Northwest Natural Holding Co. 33,921,421
368,105 ONE Gas, Inc. 33,239,882
1,003,655 South Jersey Industries, Inc. 33,853,283
395,755 Spire, Inc. 33,211,760
630,389 UGI Corp. 33,669,076
--------------
234,268,499
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 0.5%
339,470 Medtronic PLC 33,060,983
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 1.1%
633,478 CVS Health Corp. 34,518,216
333,632 Quest Diagnostics, Inc. 33,967,074
--------------
68,485,290
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE
-- 1.6%
775,467 Cheesecake Factory (The), Inc. $ 33,903,417
198,159 Cracker Barrel Old Country
Store, Inc. 33,831,686
165,081 McDonald's Corp. 34,280,721
--------------
102,015,824
--------------
HOUSEHOLD DURABLES -- 1.0%
413,963 Garmin Ltd. 33,034,247
891,961 Leggett & Platt, Inc. 34,224,544
--------------
67,258,791
--------------
HOUSEHOLD PRODUCTS -- 2.0%
216,874 Clorox (The) Co. 33,205,578
455,076 Colgate-Palmolive Co. 32,615,297
244,318 Kimberly-Clark Corp. 32,562,703
299,679 Procter & Gamble (The) Co. 32,859,802
--------------
131,243,380
--------------
INDUSTRIAL CONGLOMERATES -- 1.0%
194,170 3M Co. 33,657,428
192,785 Honeywell International, Inc. 33,658,333
--------------
67,315,761
--------------
INSURANCE -- 7.8%
611,823 Aflac, Inc. 33,534,019
329,422 Allstate (The) Corp. 33,498,923
387,025 Arthur J. Gallagher & Co. 33,899,520
317,912 Assurant, Inc. 33,819,479
563,216 Axis Capital Holdings Ltd. 33,595,834
224,287 Chubb Ltd. 33,035,232
320,526 Cincinnati Financial Corp. 33,228,930
713,507 CNA Financial Corp. 33,584,774
133,849 Everest Re Group Ltd. 33,084,796
833,244 Fidelity National Financial, Inc. 33,579,733
611,712 First American Financial Corp. 32,848,934
266,942 Hanover Insurance Group (The),
Inc. 34,248,659
604,458 Hartford Financial Services
Group (The), Inc. 33,680,400
343,208 Marsh & McLennan Cos., Inc. 34,234,998
221,448 Travelers (The) Cos., Inc. 33,110,905
--------------
502,985,136
--------------
IT SERVICES -- 2.0%
200,654 Automatic Data Processing, Inc. 33,174,126
3,151,941 Infosys Ltd., ADR 33,725,768
241,573 International Business Machines
Corp. 33,312,917
390,621 Paychex, Inc. 32,144,202
--------------
132,357,013
--------------
MACHINERY -- 3.2%
250,517 Caterpillar, Inc. 34,142,962
197,818 Cummins, Inc. 33,894,136
343,659 Dover Corp. 34,434,632
221,403 Illinois Tool Works, Inc. 33,389,786
198,263 Parker-Hannifin Corp. 33,706,693
207,044 Snap-on, Inc. 34,294,768
--------------
203,862,977
--------------
See Notes to Financial Statements Page 39
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDIA -- 2.1%
772,086 Comcast Corp., Class A $ 32,643,796
413,356 Omnicom Group, Inc. 33,874,524
1,641,285 Shaw Communications, Inc.,
Class B 33,449,388
545,941 WPP PLC, ADR 34,345,149
--------------
134,312,857
--------------
MULTI-UTILITIES -- 6.1%
437,749 Ameren Corp. 32,879,327
751,913 Avista Corp. 33,535,320
412,325 Black Hills Corp. 32,231,445
570,352 CMS Energy Corp. 33,029,084
375,498 Consolidated Edison, Inc. 32,923,665
424,938 Dominion Energy, Inc. 32,856,206
255,828 DTE Energy Co. 32,715,285
1,305,275 MDU Resources Group, Inc. 33,676,095
460,508 NorthWestern Corp. 33,225,652
550,756 Public Service Enterprise Group,
Inc. 32,395,468
238,990 Sempra Energy 32,846,786
394,831 WEC Energy Group, Inc. 32,917,060
--------------
395,231,393
--------------
OIL, GAS & CONSUMABLE FUELS
-- 2.6%
269,493 Chevron Corp. 33,535,709
437,468 Exxon Mobil Corp. 33,523,173
375,044 Phillips 66 35,081,616
503,929 Royal Dutch Shell PLC, Class B,
ADR 33,128,292
603,812 TOTAL S.A., ADR 33,686,671
--------------
168,955,461
--------------
PERSONAL PRODUCTS -- 0.5%
534,918 Unilever PLC, ADR 33,148,868
--------------
PHARMACEUTICALS -- 4.1%
736,932 Bristol-Myers Squibb Co. 33,419,866
291,131 Eli Lilly and Co. 32,254,404
829,342 GlaxoSmithKline PLC, ADR 33,190,267
235,297 Johnson & Johnson 32,772,166
393,658 Merck & Co., Inc. 33,008,223
362,736 Novartis AG, ADR 33,121,424
769,254 Pfizer, Inc. 33,324,083
767,862 Sanofi, ADR 33,225,389
--------------
264,315,822
--------------
PROFESSIONAL SERVICES -- 1.0%
604,565 Robert Half International, Inc. 34,466,251
511,357 Thomson Reuters Corp. 32,962,072
--------------
67,428,323
--------------
ROAD & RAIL -- 0.5%
201,261 Union Pacific Corp. 34,035,248
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 2.1%
298,177 Analog Devices, Inc. $ 33,655,238
706,760 Intel Corp. 33,832,601
841,987 Taiwan Semiconductor
Manufacturing Co., Ltd., ADR 32,980,631
298,621 Texas Instruments, Inc. 34,269,746
--------------
134,738,216
--------------
SPECIALTY RETAIL -- 1.6%
163,821 Home Depot (The), Inc. 34,069,854
339,946 Lowe's Cos., Inc. 34,303,951
366,488 Tiffany & Co. 34,317,936
--------------
102,691,741
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 0.5%
1,121,722 Canon, Inc., ADR 32,832,803
--------------
TEXTILES, APPAREL & LUXURY GOODS
-- 0.5%
383,193 VF Corp. 33,471,909
--------------
THRIFTS & MORTGAGE FINANCE
-- 1.6%
2,540,583 Capitol Federal Financial, Inc. 34,983,828
1,997,794 Northwest Bancshares, Inc. 35,181,152
1,019,459 Washington Federal, Inc. 35,609,703
--------------
105,774,683
--------------
TOBACCO -- 1.6%
694,230 Altria Group, Inc. 32,871,791
956,333 British American Tobacco PLC,
ADR 33,347,332
432,529 Philip Morris International, Inc. 33,966,502
--------------
100,185,625
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 2.1%
1,032,294 Fastenal Co. 33,642,461
465,402 MSC Industrial Direct Co., Inc.,
Class A 34,560,753
124,193 W.W. Grainger, Inc. 33,312,288
208,366 Watsco, Inc. 34,074,092
--------------
135,589,594
--------------
WATER UTILITIES -- 0.5%
803,977 Aqua America, Inc. 33,260,529
--------------
TOTAL INVESTMENTS -- 99.8% 6,468,936,386
(Cost $5,889,532,996) (a)
NET OTHER ASSETS AND
LIABILITIES -- 0.2% 12,274,296
--------------
NET ASSETS -- 100.0% $6,481,210,682
==============
Page 40 See Notes to Financial Statements
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
(a) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $656,983,066 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $77,579,676. The net unrealized appreciation
was $579,403,390.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 6,468,936,386 $ -- $ --
=======================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 41
FIRST TRUST VALUE LINE(R) 100 EXCHANGE-TRADED FUND (FVL)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 100.0%
AEROSPACE & DEFENSE -- 1.3%
19,810 CAE, Inc. $ 532,097
--------------
BEVERAGES -- 1.0%
3,174 PepsiCo, Inc. 416,207
--------------
CAPITAL MARKETS -- 2.0%
1,465 FactSet Research Systems, Inc. 419,810
1,348 MarketAxess Holdings, Inc. 433,274
--------------
853,084
--------------
CHEMICALS -- 5.5%
2,435 Air Products and Chemicals, Inc. 551,211
2,452 Ecolab, Inc. 484,123
4,908 Innospec, Inc. 447,806
2,834 International Flavors & Fragrances,
Inc. 411,185
5,717 WR Grace & Co. 435,121
--------------
2,329,446
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 2.3%
5,315 Waste Connections, Inc. 508,008
3,822 Waste Management, Inc. 440,944
--------------
948,952
--------------
COMMUNICATIONS EQUIPMENT -- 4.2%
8,473 Cisco Systems, Inc. 463,727
3,329 Motorola Solutions, Inc. 555,044
42,055 Telefonaktiebolaget LM Ericsson,
ADR 399,523
4,392 ViaSat, Inc. (a) 354,961
--------------
1,773,255
--------------
DIVERSIFIED CONSUMER SERVICES
-- 2.2%
3,272 Bright Horizons Family Solutions,
Inc. (a) 493,647
22,399 Career Education Corp. (a) 427,149
--------------
920,796
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 2.0%
12,269 TELUS Corp. 452,849
6,526 Verizon Communications, Inc. 372,830
--------------
825,679
--------------
ELECTRIC UTILITIES -- 5.0%
4,571 American Electric Power Co., Inc. 402,294
5,369 Eversource Energy 406,755
10,421 Fortis, Inc. 411,317
10,269 Hawaiian Electric Industries, Inc. 447,215
7,696 Xcel Energy, Inc. 457,835
--------------
2,125,416
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 2.1%
3,864 CDW Corp. 428,904
3,946 OSI Systems, Inc. (a) 444,438
--------------
873,342
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
ENTERTAINMENT -- 1.0%
2,985 Walt Disney (The) Co. $ 416,825
--------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 5.0%
2,083 American Tower Corp. 425,869
3,562 Crown Castle International Corp. 464,307
815 Equinix, Inc. 410,996
3,875 Extra Space Storage, Inc. 411,137
4,631 WP Carey, Inc. 375,945
--------------
2,088,254
--------------
FOOD PRODUCTS -- 3.7%
17,779 Flowers Foods, Inc. 413,717
7,742 General Mills, Inc. 406,610
3,094 Hershey (The) Co. 414,689
9,133 Tootsie Roll Industries, Inc. 337,282
--------------
1,572,298
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 5.4%
5,612 Abbott Laboratories 471,969
2,872 Masimo Corp. (a) 427,411
3,411 STERIS PLC 507,830
1,940 Stryker Corp. 398,825
3,328 Varian Medical Systems, Inc. (a) 453,041
--------------
2,259,076
--------------
HEALTH CARE TECHNOLOGY -- 1.0%
5,719 Cerner Corp. 419,203
--------------
HOTELS, RESTAURANTS & LEISURE
-- 2.2%
596 Chipotle Mexican Grill, Inc. (a) 436,797
6,027 Starbucks Corp. 505,243
--------------
942,040
--------------
HOUSEHOLD DURABLES -- 1.0%
5,282 Garmin Ltd. 421,504
--------------
HOUSEHOLD PRODUCTS -- 2.2%
6,458 Church & Dwight Co., Inc. 471,821
4,307 Procter & Gamble (The) Co. 472,263
--------------
944,084
--------------
INDUSTRIAL CONGLOMERATES -- 1.0%
1,174 Roper Technologies, Inc. 429,989
--------------
INSURANCE -- 5.8%
2,147 Aon PLC 414,328
11,484 Arch Capital Group Ltd. (a) 425,826
4,433 Cincinnati Financial Corp. 459,569
2,896 Erie Indemnity Co., Class A 736,395
2,279 RenaissanceRe Holdings Ltd. 405,685
--------------
2,441,803
--------------
IT SERVICES -- 9.5%
2,271 Accenture PLC, Class A 419,613
2,623 Automatic Data Processing, Inc. 433,661
7,090 Black Knight, Inc. (a) 426,463
7,297 Booz Allen Hamilton Holding
Corp. 483,134
9,002 CSG Systems International, Inc. 439,568
Page 42 See Notes to Financial Statements
FIRST TRUST VALUE LINE(R) 100 EXCHANGE-TRADED FUND (FVL)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
IT SERVICES (CONTINUED)
1,513 FleetCor Technologies, Inc. (a) $ 424,926
9,799 Genpact Ltd. 373,244
5,644 Paychex, Inc. 464,445
2,513 VeriSign, Inc. (a) 525,619
--------------
3,990,673
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 1.2%
3,229 IQVIA Holdings, Inc. (a) 519,546
--------------
MEDIA -- 2.0%
1,074 Charter Communications, Inc.,
Class A (a) 424,423
9,538 Comcast Corp., Class A 403,267
--------------
827,690
--------------
METALS & MINING -- 1.0%
4,814 Franco-Nevada Corp. 408,612
--------------
MULTI-UTILITIES -- 2.1%
5,969 Black Hills Corp. 466,597
5,684 NorthWestern Corp. 410,100
--------------
876,697
--------------
OIL, GAS & CONSUMABLE FUELS
-- 12.3%
18,330 Alliance Resource Partners,
L.P. (b) 311,243
17,409 Cabot Oil & Gas Corp. 399,711
9,978 Cheniere Energy Partners, L.P. (b) 420,872
28,269 Energy Transfer, L.P. (b) 398,028
6,845 Hess Corp. 435,137
20,377 Kinder Morgan, Inc. 425,472
11,860 MPLX, L.P. (b) 381,773
11,714 Natural Resource Partners,
L.P. (b) 415,378
19,010 Shell Midstream Partners, L.P. (b) 393,887
13,045 Suncor Energy, Inc. 406,482
17,553 Tallgrass Energy, L.P. (b) (c) 370,544
7,053 TOTAL S.A., ADR 393,487
13,427 Western Midstream Partners,
L.P. (b) 413,149
--------------
5,165,163
--------------
PAPER & FOREST PRODUCTS -- 1.0%
9,622 Domtar Corp. 428,468
--------------
PERSONAL PRODUCTS -- 1.0%
2,259 Estee Lauder (The) Cos., Inc.,
Class A 413,645
--------------
PHARMACEUTICALS -- 2.1%
5,118 Merck & Co., Inc. 429,144
3,971 Zoetis, Inc. 450,669
--------------
879,813
--------------
PROFESSIONAL SERVICES -- 1.0%
2,857 Verisk Analytics, Inc. 418,436
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 2.0%
4,031 Cabot Microelectronics Corp. 443,732
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT (CONTINUED)
29,219 DSP Group, Inc. (a) $ 419,585
--------------
863,317
--------------
SOFTWARE -- 4.8%
8,327 Cadence Design Systems, Inc. (a) 589,635
1,673 Fair Isaac Corp. (a) 525,355
4,830 j2 Global, Inc. 429,339
11,708 Open Text Corp. 482,370
--------------
2,026,699
--------------
SPECIALTY RETAIL -- 2.2%
441 AutoZone, Inc. (a) 484,866
4,043 Tractor Supply Co. 439,879
--------------
924,745
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 1.0%
13,334 Fastenal Co. 434,555
--------------
WATER UTILITIES -- 0.9%
3,368 American Water Works Co., Inc. 390,688
--------------
TOTAL INVESTMENTS -- 100.0% 42,102,097
(Cost $38,394,764) (d)
NET OTHER ASSETS AND
LIABILITIES -- 0.0% (1,460)
--------------
NET ASSETS -- 100.0% $ 42,100,637
==============
(a) Non-income producing security.
(b) Security is a Master Limited Partnership ("MLP").
(c) This security is taxed as a "C" corporation for federal income tax
purposes.
(d) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $3,907,552 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $200,219. The net unrealized appreciation was
$3,707,333.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 42,102,097 $ -- $ --
=======================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 43
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2019 (UNAUDITED)
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............................................... $ 149,852,627 $ 1,655,304,108 $1,224,662,785
Cash................................................................ 146,535 2,676,817 1,113,638
Receivables:........................................................
Investment securities sold.................................... 1,244,938 -- --
Capital shares sold........................................... -- -- --
Dividends..................................................... 240,584 3,915,974 572,052
Securities lending income..................................... 12,166 -- 68,859
Reclaims...................................................... -- -- --
Prepaid expenses.................................................... 3,011 9,486 5,996
-------------- --------------- --------------
Total Assets.................................................. 151,499,861 1,661,906,385 1,226,423,330
-------------- --------------- --------------
LIABILITIES:
Payables:
Collateral for securities on loan............................. 2,961,840 -- 21,366,767
Investment securities purchased............................... 1,273,462 -- 188,913
Capital shares redeemed....................................... -- -- --
Licensing fees................................................ 57,081 369,161 270,974
Investment advisory fees...................................... 46,022 472,980 382,767
Audit and tax fees............................................ 14,292 14,292 14,292
Shareholder reporting fees.................................... 9,875 52,949 42,383
Other liabilities................................................... 68,768 431,865 325,860
-------------- --------------- --------------
Total Liabilities............................................. 4,431,340 1,341,247 22,591,956
-------------- --------------- --------------
NET ASSETS.......................................................... $ 147,068,521 $ 1,660,565,138 $1,203,831,374
============== =============== ==============
NET ASSETS CONSIST OF:
Paid-in capital..................................................... $ 175,268,486 $ 1,655,814,781 $1,040,065,421
Par value........................................................... 32,550 542,000 154,500
Accumulated distributable earnings (loss)........................... (28,232,515) 4,208,357 163,611,453
-------------- --------------- --------------
NET ASSETS.......................................................... $ 147,068,521 $ 1,660,565,138 $1,203,831,374
============== =============== ==============
NET ASSET VALUE, per share.......................................... $ 45.18 $ 30.64 $ 77.92
============== =============== ==============
Number of shares outstanding (unlimited number of shares
authorized, par value $0.01 per share)........................... 3,255,000 54,200,002 15,450,002
============== =============== ==============
Investments, at cost................................................ $ 161,910,294 $ 1,653,542,714 $ 956,072,421
============== =============== ==============
Securities on loan, at value........................................ $ 2,926,726 $ -- $ 21,256,298
============== =============== ==============
Page 44 See Notes to Financial Statements
FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST
NYSE ARCA DOW JONES CAPITAL VALUE LINE(R) VALUE LINE(R) 100
BIOTECHNOLOGY INTERNET STRENGTH DIVIDEND EXCHANGE-TRADED
INDEX FUND INDEX FUND ETF INDEX FUND FUND
(FBT) (FDN) (FTCS) (FVD) (FVL)
---------------- ---------------- ---------------- ---------------- ----------------
$2,927,794,620 $8,893,541,149 $2,468,707,135 $6,468,936,386 $ 42,102,097
3,623,236 -- 1,323,635 4,606,879 34,043
-- 14,355,908 -- -- --
-- -- -- 18,433,866 --
-- 18,763 3,028,366 13,217,860 39,638
-- 1,267 -- -- --
69,717 -- -- 732,844 7,190
12,405 31,474 3,942 20,800 2,708
-------------- -------------- -------------- -------------- --------------
2,931,499,978 8,907,948,561 2,473,063,078 6,505,948,635 42,185,676
-------------- -------------- -------------- -------------- --------------
-- -- -- -- --
-- -- -- 18,399,723 --
-- 14,369,159 -- -- --
1,128,789 1,318,342 52,336 2,253,613 15,764
922,757 2,890,671 977,847 2,697,234 8,995
14,292 14,292 14,292 14,292 14,292
93,114 334,148 55,923 161,378 5,317
702,823 1,697,048 538,393 1,211,713 40,671
-------------- -------------- -------------- -------------- --------------
2,861,775 20,623,660 1,638,791 24,737,953 85,039
-------------- -------------- -------------- -------------- --------------
$2,928,638,203 $8,887,324,901 $2,471,424,287 $6,481,210,682 $ 42,100,637
============== ============== ============== ============== ==============
$3,335,553,932 $7,343,761,486 $2,292,024,016 $6,007,342,516 $ 50,206,345
208,000 618,500 438,000 1,921,880 18,900
(407,123,729) 1,542,944,915 178,962,271 471,946,286 (8,124,608)
-------------- -------------- -------------- -------------- --------------
$2,928,638,203 $8,887,324,901 $2,471,424,287 $6,481,210,682 $ 42,100,637
============== ============== ============== ============== ==============
$ 140.80 $ 143.69 $ 56.43 $ 33.72 $ 22.28
============== ============== ============== ============== ==============
20,800,002 61,850,002 43,800,002 192,187,986 1,889,982
============== ============== ============== ============== ==============
$3,006,248,316 $7,408,280,937 $2,281,989,726 $5,889,532,996 $ 38,394,764
============== ============== ============== ============== ==============
$ -- $ -- $ -- $ -- $ --
============== ============== ============== ============== ==============
See Notes to Financial Statements Page 45
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2019 (UNAUDITED)
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........................................................... $ 1,753,409 $ 34,089,131 $ 7,564,680
Securities lending income (net of fees)............................. 48,539 -- 417,994
Foreign withholding tax............................................. -- -- --
-------------- --------------- --------------
Total investment income....................................... 1,801,948 34,089,131 7,982,674
-------------- --------------- --------------
EXPENSES:
Investment advisory fees............................................ 371,673 2,334,364 2,142,048
Licensing fees...................................................... 44,600 704,025 535,512
Accounting and administration fees.................................. 38,773 361,574 264,446
Custodian fees...................................................... 29,604 28,669 47,428
Shareholder reporting fees.......................................... 12,262 53,779 40,637
Audit and tax fees.................................................. 11,368 11,368 11,368
Transfer agent fees................................................. 3,716 31,849 25,716
Trustees' fees and expenses......................................... 3,647 4,591 4,213
Listing fees........................................................ 3,471 5,910 3,471
Legal fees.......................................................... 1,830 20,496 18,344
Registration and filing fees........................................ (95) 49 (14,844)
Other expenses...................................................... 1,726 3,340 7,760
-------------- --------------- --------------
Total expenses................................................ 522,575 3,560,014 3,086,099
Less fees waived and expenses reimbursed by the investment
advisor.................................................... (76,567) (58,467) --
-------------- --------------- --------------
Net expenses.................................................. 446,008 3,501,547 3,086,099
-------------- --------------- --------------
NET INVESTMENT INCOME (LOSS)........................................ 1,355,940 30,587,584 4,896,575
-------------- --------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments................................................... (528,395) (30,313,717) (10,994,927)
In-kind redemptions........................................... 1,890,627 134,511,123 15,309,970
Foreign currency transactions................................. -- -- --
-------------- --------------- --------------
Net realized gain (loss)............................................ 1,362,232 104,197,406 4,315,043
-------------- --------------- --------------
Net change in unrealized appreciation (depreciation) on:
Investments................................................... 13,610,741 68,523,766 225,345,280
Foreign currency translation.................................. -- -- --
-------------- --------------- --------------
Net change in unrealized appreciation (depreciation)................ 13,610,741 68,523,766 225,345,280
-------------- --------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)............................. 14,972,973 172,721,172 229,660,323
-------------- --------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................................. $ 16,328,913 $ 203,308,756 $ 234,556,898
============== =============== ==============
Page 46 See Notes to Financial Statements
FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST
NYSE ARCA DOW JONES CAPITAL VALUE LINE(R) VALUE LINE(R) 100
BIOTECHNOLOGY INTERNET STRENGTH DIVIDEND EXCHANGE-TRADED
INDEX FUND INDEX FUND ETF INDEX FUND FUND
(FBT) (FDN) (FTCS) (FVD) (FVL)
---------------- ---------------- ---------------- ---------------- ----------------
$ 4,465,201 $ 14,563,160 $ 22,189,218 $ 90,943,852 $ 375,582
98,740 87,778 -- -- --
(152,691) -- -- (1,816,804) (4,620)
-------------- -------------- -------------- -------------- --------------
4,411,250 14,650,938 22,189,218 89,127,048 370,962
-------------- -------------- -------------- -------------- --------------
5,643,938 16,680,261 4,964,619 13,584,171 99,109
1,128,788 2,499,544 96,817 4,107,179 30,827
597,401 1,298,481 447,380 968,893 11,817
108,499 400,526 81,658 127,112 7,898
124,465 388,155 74,235 180,088 6,328
11,368 11,368 11,368 11,368 11,368
47,667 116,632 37,229 80,314 991
5,616 8,491 4,845 7,105 3,568
3,471 5,910 525 15,786 10,868
30,388 115,785 22,562 60,404 677
(36,389) (91,146) 534 (23,813) 49
18,398 50,013 8,556 18,254 1,516
-------------- -------------- -------------- -------------- --------------
7,683,610 21,484,020 5,750,328 19,136,861 185,016
-- -- -- (119,030) (46,262)
-------------- -------------- -------------- -------------- --------------
7,683,610 21,484,020 5,750,328 19,017,831 138,754
-------------- -------------- -------------- -------------- --------------
(3,272,360) (6,833,082) 16,438,890 70,109,217 232,208
-------------- -------------- -------------- -------------- --------------
(142,087,443) (57,337,804) (34,635,928) (65,306,666) 1,457,312
32,075,203 477,464,929 71,948,662 120,459,392 76,224
-- -- -- (789) (60)
-------------- -------------- -------------- -------------- --------------
(110,012,240) 420,127,125 37,312,734 55,151,937 1,533,476
-------------- -------------- -------------- -------------- --------------
407,265,433 1,187,451,160 246,949,077 685,198,194 5,084,822
-- -- -- 634 97
-------------- -------------- -------------- -------------- --------------
407,265,433 1,187,451,160 246,949,077 685,198,828 5,084,919
-------------- -------------- -------------- -------------- --------------
297,253,193 1,607,578,285 284,261,811 740,350,765 6,618,395
-------------- -------------- -------------- -------------- --------------
$ 293,980,833 $1,600,745,203 $ 300,700,701 $ 810,459,982 $ 6,850,603
============== ============== ============== ============== ==============
See Notes to Financial Statements Page 47
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)
------------------------------- -------------------------------
Six Months Six Months
Ended Ended
6/30/2019 Year Ended 6/30/2019 Year Ended
(Unaudited) 12/31/2018 (Unaudited) 12/31/2018
-------------- -------------- -------------- --------------
OPERATIONS:
Net investment income (loss)................................ $ 1,355,940 $ 1,594,378 $ 30,587,584 $ 55,726,737
Net realized gain (loss).................................... 1,362,232 13,232,312 104,197,406 64,064,556
Net change in unrealized appreciation (depreciation)........ 13,610,741 (35,961,521) 68,523,766 (213,401,301)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations.......................................... 16,328,913 (21,134,831) 203,308,756 (93,610,008)
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations....................................... (1,101,066) (1,417,591) (25,764,481) (55,170,342)
-------------- -------------- -------------- --------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold................................... 4,399,178 140,816,685 710,642,719 387,762,741
Cost of shares redeemed..................................... (11,335,316) (76,499,080) (614,104,954) (571,798,626)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from shareholder transactions............................ (6,936,138) 64,317,605 96,537,765 (184,035,885)
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets..................... 8,291,709 41,765,183 274,082,040 (332,816,235)
NET ASSETS:
Beginning of period......................................... 138,776,812 97,011,629 1,386,483,098 1,719,299,333
-------------- -------------- -------------- --------------
End of period............................................... $ 147,068,521 $ 138,776,812 $1,660,565,138 $1,386,483,098
============== ============== ============== ==============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period..................... 3,405,000 2,055,000 50,900,002 57,200,002
Shares sold................................................. 100,000 2,850,000 23,450,000 13,450,000
Shares redeemed............................................. (250,000) (1,500,000) (20,150,000) (19,750,000)
-------------- -------------- -------------- --------------
Shares outstanding, end of period........................... 3,255,000 3,405,000 54,200,002 50,900,002
============== ============== ============== ==============
Page 48 See Notes to Financial Statements
FIRST TRUST FIRST TRUST FIRST TRUST
US EQUITY NYSE ARCA DOW JONES
OPPORTUNITIES BIOTECHNOLOGY INTERNET
ETF INDEX FUND INDEX FUND
(FPX) (FBT) (FDN)
------------------------------- ------------------------------- -------------------------------
Six Months Six Months Six Months
Ended Ended Ended
6/30/2019 Year Ended 6/30/2019 Year Ended 6/30/2019 Year Ended
(Unaudited) 12/31/2018 (Unaudited) 12/31/2018 (Unaudited) 12/31/2018
-------------- -------------- -------------- -------------- -------------- --------------
$ 4,896,575 $ 8,164,263 $ (3,272,360) $ (4,195,069) $ (6,833,082) $ (21,307,396)
4,315,043 43,343,388 (110,012,240) 216,117,246 420,127,125 934,554,669
225,345,280 (144,486,852) 407,265,433 (565,874,934) 1,187,451,160 (796,446,658)
-------------- -------------- -------------- -------------- -------------- --------------
234,556,898 (92,979,201) 293,980,833 (353,952,757) 1,600,745,203 116,800,615
-------------- -------------- -------------- -------------- -------------- --------------
(2,548,561) (8,618,366) -- -- -- --
-------------- -------------- -------------- -------------- -------------- --------------
119,116,209 314,592,694 475,826,176 2,320,112,972 1,330,908,441 4,019,193,398
(59,771,832) (282,248,146) (183,381,616) (831,758,091) (1,061,135,958) (2,610,007,206)
-------------- -------------- -------------- -------------- -------------- --------------
59,344,377 32,344,548 292,444,560 1,488,354,881 269,772,483 1,409,186,192
-------------- -------------- -------------- -------------- -------------- --------------
291,352,714 (69,253,019) 586,425,393 1,134,402,124 1,870,517,686 1,525,986,807
912,478,660 981,731,679 2,342,212,810 1,207,810,686 7,016,807,215 5,490,820,408
-------------- -------------- -------------- -------------- -------------- --------------
$1,203,831,374 $ 912,478,660 $2,928,638,203 $2,342,212,810 $8,887,324,901 $7,016,807,215
============== ============== ============== ============== ============== ==============
14,700,002 14,400,002 18 ,850,002 9,700,002 60,150,002 50,000,002
1,600,000 4,400,000 3,300,000 15,450,000 9,450,000 30,750,000
(850,000) (4,100,000) (1,350,000) (6,300,000) (7,750,000) (20,600,000)
-------------- -------------- -------------- -------------- -------------- --------------
15,450,002 14,700,002 20,800,002 18,850,002 61,850,002 60,150,002
============== ============== ============== ============== ============== ==============
See Notes to Financial Statements Page 49
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)
------------------------------- -------------------------------
Six Months Six Months
Ended Ended
6/30/2019 Year Ended 6/30/2019 Year Ended
(Unaudited) 12/31/2018 (Unaudited) 12/31/2018
-------------- -------------- -------------- --------------
OPERATIONS:
Net investment income (loss)................................ $ 16,438,890 $ 12,868,717 $ 70,109,217 $ 102,024,585
Net realized gain (loss).................................... 37,312,734 44,264,086 55,151,937 195,923,909
Net change in unrealized appreciation (depreciation)........ 246,949,077 (141,037,098) 685,198,828 (464,993,579)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations.......................................... 300,700,701 (83,904,295) 810,459,982 (167,045,085)
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations....................................... (12,862,231) (13,023,451) (54,744,495) (102,072,326)
-------------- -------------- -------------- --------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold................................... 1,463,581,150 1,360,944,668 2,213,642,241 2,031,003,840
Cost of shares redeemed..................................... (656,126,430) (511,985,305) (862,629,940) (1,582,233,890)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from shareholder transactions............................ 807,454,720 848,959,363 1,351,012,301 448,769,950
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets..................... 1,095,293,190 752,031,617 2,106,727,788 179,652,539
NET ASSETS:
Beginning of period......................................... 1,376,131,097 624,099,480 4,374,482,894 4,194,830,355
-------------- -------------- -------------- --------------
End of period............................................... $2,471,424,287 $1,376,131,097 $6,481,210,682 $4,374,482,894
============== ============== ============== ==============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period..................... 28,500,002 12,250,002 150,487,986 136,037,986
Shares sold................................................. 27,150,000 26,050,000 68,600,000 66,050,000
Shares redeemed............................................. (11,850,000) (9,800,000) (26,900,000) (51,600,000)
-------------- -------------- -------------- --------------
Shares outstanding, end of period........................... 43,800,002 28,500,002 192,187,986 150,487,986
============== ============== ============== ==============
Page 50 See Notes to Financial Statements
FIRST TRUST
VALUE LINE(R) 100
EXCHANGE-TRADED FUND
(FVL)
-------------------------------
Six Months
Ended
6/30/2019 Year Ended
(Unaudited) 12/31/2018
-------------- --------------
$ 232,208 $ 285,088
1,533,476 (7,657,763)
5,084,919 (2,046,735)
-------------- --------------
6,850,603 (9,419,410)
-------------- --------------
(185,609) (292,079)
-------------- --------------
-- 39,520,882
(1,070,564) (49,060,514)
-------------- --------------
(1,070,564) (9,539,632)
-------------- --------------
5,594,430 (19,251,121)
36,506,207 55,757,328
-------------- --------------
$ 42,100,637 $ 36,506,207
============== ==============
1,939,982 2,389,982
-- 1,650,000
(50,000) (2,100,000)
-------------- --------------
1,889,982 1,939,982
============== ==============
See Notes to Financial Statements Page 51
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST DOW JONES SELECT MICROCAP INDEX FUND (FDM)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 40.76 $ 47.21 $ 43.98 $ 32.92 $ 33.21 $ 32.47
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.42 0.56 0.42 0.49 0.49 0.23
Net realized and unrealized gain (loss) 4.34 (6.50) 3.27 11.07 (0.30) 0.76
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 4.76 (5.94) 3.69 11.56 0.19 0.99
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.34) (0.51) (0.46) (0.50) (0.48) (0.25)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 45.18 $ 40.76 $ 47.21 $ 43.98 $ 32.92 $ 33.21
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 11.67% (12.68)% 8.44% 35.45% 0.55% 3.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 147,069 $ 138,777 $ 97,012 $ 116,776 $ 49,551 $ 51,648
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.70% (b) 0.73% 0.71% 0.75% 0.73% 0.70%
Ratio of net expenses to average
net assets 0.60% (b) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 1.82% (b) 1.29% 0.89% 1.52% 1.46% 0.71%
Portfolio turnover rate (c) 7% 75% 55% 48% 63% 49%
FIRST TRUST MORNINGSTAR DIVIDEND LEADERS INDEX FUND (FDL)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 27.24 $ 30.06 $ 27.75 $ 23.69 $ 23.94 $ 21.93
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.57 1.09 0.93 0.82 0.86 0.80
Net realized and unrealized gain (loss) 3.31 (2.83) 2.34 4.05 (0.25) 2.01
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.88 (1.74) 3.27 4.87 0.61 2.81
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.48) (1.08) (0.96) (0.81) (0.86) (0.80)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 30.64 $ 27.24 $ 30.06 $ 27.75 $ 23.69 $ 23.94
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 14.28% (5.87)% 11.93% 20.72% 2.73% 12.96%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 1,660,565 $1,386,483 $1,719,299 $1,778,464 $ 875,294 $ 985,151
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.46% (b) 0.47% 0.47% 0.48% 0.48% 0.49%
Ratio of net expenses to average
net assets 0.45% (b) 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of net investment income (loss) to
average net assets 3.93% (b) 3.70% 3.18% 3.27% 3.59% 3.55%
Portfolio turnover rate (c) 30% 39% 43% 50% 61% 40%
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year. The total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the investment
advisor.
(b) Annualized.
(c) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
Page 52 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST US EQUITY OPPORTUNITIES ETF (FPX)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 62.07 $ 68.18 $ 54.10 $ 51.11 $ 50.32 $ 45.34
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.32 0.52 0.43 0.31 0.31 0.41
Net realized and unrealized gain (loss) 15.70 (6.08) 14.12 3.10 0.80 4.97
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 16.02 (5.56) 14.55 3.41 1.11 5.38
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.17) (0.55) (0.47) (0.42) (0.32) (0.40)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 77.92 $ 62.07 $ 68.18 $ 54.10 $ 51.11 $ 50.32
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 25.81% (8.22)% 26.96% 6.70% 2.19% 11.91%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 1,203,831 $ 912,479 $ 981,732 $ 614,024 $ 789,693 $ 535,943
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.58% (b) 0.59% 0.59% 0.60% 0.60% 0.60%
Ratio of net expenses to average
net assets 0.58% (b) 0.59% 0.59% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 0.91% (b) 0.74% 0.71% 0.58% 0.61% 0.89%
Portfolio turnover rate (c) 38% 57% 31% 41% 41% 46%
FIRST TRUST NYSE ARCA BIOTECHNOLOGY INDEX FUND (FBT)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 124.26 $ 124.52 $ 90.89 $ 113.06 $ 101.99 $ 69.12
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.16) (0.22) (0.08) (0.32) 0.09 0.04
Net realized and unrealized gain (loss) 16.70 (0.04) 33.71 (21.85) 11.11 32.88
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 16.54 (0.26) 33.63 (22.17) 11.20 32.92
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income -- -- -- -- (0.13) (0.05)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 140.80 $ 124.26 $ 124.52 $ 90.89 $ 113.06 $ 101.99
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 13.32% (0.21)% 36.99% (19.60)% 10.97% 47.63%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 2,928,638 $2,342,213 $1,207,811 $ 804,385 $3,437,024 $2,126,581
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.54% (b) 0.57% 0.56% 0.56% 0.55% 0.58%
Ratio of net expenses to average
net assets 0.54% (b) 0.57% 0.56% 0.56% 0.55% 0.58%
Ratio of net investment income (loss) to
average net assets (0.23)%(b) (0.21)% (0.08)% (0.27)% 0.08% 0.06%
Portfolio turnover rate (c) 17% 37% 36% 42% 30% 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.
(b) Annualized.
(c) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
See Notes to Financial Statements Page 53
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST DOW JONES INTERNET INDEX FUND (FDN)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 116.66 $ 109.82 $ 79.79 $ 74.64 $ 61.30 $ 59.84
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.11) (0.35) (0.28) (0.27) (0.14) (0.08)
Net realized and unrealized gain (loss) 27.14 7.19 30.31 5.42 13.48 1.54
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 27.03 6.84 30.03 5.15 13.34 1.46
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income -- -- -- -- -- --
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 143.69 $ 116.66 $ 109.82 $ 79.79 $ 74.64 $ 61.30
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 23.18% 6.23% 37.62% 6.91% 21.77% 2.42%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 8,887,325 $7,016,807 $5,490,820 $3,486,734 $4,914,821 $1,976,793
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.52% (b) 0.52% 0.53% 0.54% 0.54% 0.54%
Ratio of net expenses to average
net assets 0.52% (b) 0.52% 0.53% 0.54% 0.54% 0.54%
Ratio of net investment income (loss) to
average net assets (0.16)%(b) (0.27)% (0.32)% (0.35)% (0.29)% (0.13)%
Portfolio turnover rate (c) 11% 21% 22% 21% 28% 27%
FIRST TRUST CAPITAL STRENGTH ETF (FTCS)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 48.29 $ 50.95 $ 40.79 $ 38.12 $ 38.08 $ 33.70
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.41 0.60 0.59 0.58 0.57 0.72
Net realized and unrealized gain (loss) 8.06 (2.65) 10.16 2.67 0.04 4.43
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 8.47 (2.05) 10.75 3.25 0.61 5.15
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.33) (0.61) (0.59) (0.58) (0.57) (0.77)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 56.43 $ 48.29 $ 50.95 $ 40.79 $ 38.12 $ 38.08
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 17.57% (4.09)% 26.49% 8.57% 1.64% 15.46%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 2,471,424 $1,376,131 $ 624,099 $ 320,190 $ 165,815 $ 85,686
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.58% (b) 0.60% 0.61% 0.64% 0.65% 0.66%
Ratio of net expenses to average
net assets 0.58% (b) 0.60% 0.61% 0.64% 0.65% 0.65%
Ratio of net investment income (loss) to
average net assets 1.66% (b) 1.30% 1.33% 1.55% 1.59% 2.07%
Portfolio turnover rate (c) 77% 117% 85% 85% 96% 89%
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year. The total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the investment
advisor.
(b) Annualized.
(c) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
Page 54 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST VALUE LINE(R) DIVIDEND INDEX FUND (FVD)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 29.07 $ 30.84 $ 28.02 $ 23.86 $ 24.13 $ 21.36
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.39 0.73 0.63 0.56 0.55 0.58
Net realized and unrealized gain (loss) 4.57 (1.77) 2.84 4.17 (0.26) 2.78
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 4.96 (1.04) 3.47 4.73 0.29 3.36
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.31) (0.73) (0.65) (0.57) (0.56) (0.59)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 33.72 $ 29.07 $ 30.84 $ 28.02 $ 23.86 $ 24.13
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 17.08% (3.44)% 12.48% 19.94% 1.26% 15.94%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 6,481,211 $4,374,483 $4,194,830 $2,892,982 $1,188,031 $1,089,299
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.70% (b) 0.72% 0.72% 0.73% 0.74% 0.75%
Ratio of net expenses to average
net assets 0.70% (b) 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 2.58% (b) 2.40% 2.19% 2.31% 2.40% 2.63%
Portfolio turnover rate (c) 28% 58% 50% 60% 82% 63%
FIRST TRUST VALUE LINE(R) 100 EXCHANGE-TRADED FUND (FVL)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 18.82 $ 23.33 $ 21.58 $ 19.71 $ 20.41 $ 18.44
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.12 0.13 0.16 0.12 0.07 0.11
Net realized and unrealized gain (loss) 3.44 (4.51) 1.78 1.87 (0.71) (d) 1.98
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.56 (4.38) 1.94 1.99 (0.64) 2.09
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.10) (0.13) (0.19) (0.12) (0.06) (0.12)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 22.28 $ 18.82 $ 23.33 $ 21.58 $ 19.71 $ 20.41
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 18.91% (18.83)% 9.05% 10.14% (3.13)%(d) 11.33%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 42,101 $ 36,506 $ 55,757 $ 52,643 $ 53,013 $ 60,008
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.93% (b) 0.89% 0.85% 0.87% 0.84% 0.84%
Ratio of net expenses to average
net assets 0.70% (b) 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 1.17% (b) 0.56% 0.73% 0.59% 0.32% 0.57%
Portfolio turnover rate (c) 156% 424% 466% 491% 404% 325%
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year. The total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the investment
advisor.
(b) Annualized.
(c) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
(d) The Fund received a payment from the Advisor in the amount of $95,996 in
connection with a trade error, which represents $0.03 per share. Since the
Advisor reimbursed the Fund, there was no effect on the Fund's total
return.
See Notes to Financial Statements Page 55
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
1. ORGANIZATION
First Trust Exchange-Traded Fund (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on August 8,
2003, and is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act").
The Trust currently consists of twenty-one exchange-traded funds. This report
covers the eight 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 Arca 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")
First Trust Value Line(R) 100 Exchange-Traded Fund - (NYSE Arca ticker
"FVL")
Each fund represents a separate series of shares of beneficial interest in the
Trust (each a "Fund" and collectively, the "Funds"). Unlike conventional mutual
funds, each Fund issues and redeems shares on a continuous basis, at net asset
value ("NAV"), only in large specified blocks consisting of 50,000 shares called
a "Creation Unit." Creation Units are generally issued and redeemed in-kind for
securities in which a Fund invests and, in certain circumstances, for cash, and
only to and from broker-dealers and large institutional investors that have
entered into participation agreements. Except when aggregated in Creation Units,
each Fund's shares are not redeemable securities. 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 Arca Biotechnology Index Fund NYSE Arca Biotechnology Index(SM)
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
First Trust Value Line(R) 100 Exchange-Traded Fund Value Line(R) 100 Index
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are each considered an investment company and follow accounting and
reporting guidance under Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") Topic 946, "Financial
Services-Investment Companies." The following is a summary of significant
accounting policies consistently followed by the Funds in the preparation of the
financial statements. The preparation of the financial statements in accordance
with accounting principles generally accepted in the United States of America
("U.S. GAAP") requires management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
A. PORTFOLIO VALUATION
Each Fund's NAV is determined daily as of the close of regular trading on the
New York Stock Exchange ("NYSE"), normally 4:00 p.m. Eastern time, on each day
the NYSE is open for trading. If the NYSE closes early on a valuation day, the
NAV is determined as of that time. Foreign securities are priced using data
reflecting the earlier closing of the principal markets for those securities.
Each Fund's NAV is calculated by dividing the value of all assets of each Fund
(including accrued interest and dividends), less all liabilities (including
accrued expenses and dividends declared but unpaid), by the total number of
shares outstanding.
Each Fund's investments are valued daily at market value or, in the absence of
market value with respect to any portfolio securities, at fair value. Market
value prices represent last sale or official closing prices from a national or
foreign exchange (i.e., a regulated market) and are primarily obtained from
third-party pricing services. Fair value prices represent any prices not
considered market value prices and are either obtained from a third-party
pricing service or are determined by the Pricing Committee of the Funds'
investment advisor, First Trust Advisors L.P. ("First Trust" or the "Advisor"),
in accordance with valuation procedures adopted by the Trust's Board of
Trustees, and in accordance with provisions of the 1940 Act. Investments valued
by the Advisor's Pricing Committee, if any, are footnoted as such in the
footnotes to the Portfolio of Investments. Each Fund's investments are valued as
follows:
Page 56
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
Common stocks and other equity securities listed on any national or
foreign exchange (excluding Nasdaq and the London Stock Exchange
Alternative Investment Market ("AIM")) are valued at the last sale price
on the exchange on which they are principally traded or, for Nasdaq and
AIM securities, the official closing price. Securities traded on more than
one securities exchange are valued at the last sale price or official
closing price, as applicable, at the close of the securities exchange
representing the principal market for such securities.
Shares of open-end funds are valued at fair value which is based on NAV
per share.
Securities traded in an over-the-counter market are fair valued at the
mean of their most recent bid and asked price, if available, and otherwise
at their closing bid price.
Overnight repurchase agreements are valued at amortized cost when it
represents the best estimate of fair value.
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Trust's Board of Trustees or its
delegate, the Advisor's Pricing Committee, at fair value. These securities
generally include, but are not limited to, restricted securities (securities
which may not be publicly sold without registration under the Securities Act of
1933, as amended) for which a third-party pricing service is unable to provide a
market price; securities whose trading has been formally suspended; a security
whose market or fair value price is not available from a pre-established pricing
source; a security with respect to which an event has occurred that is likely to
materially affect the value of the security after the market has closed but
before the calculation of a Fund's NAV or make it difficult or impossible to
obtain a reliable market quotation; and a security whose price, as provided by
the third-party pricing service, does not reflect the security's fair value. As
a general principle, the current fair value of a security would appear to be the
amount which the owner might reasonably expect to receive for the security upon
its current sale. When fair value prices are used, generally they will differ
from market quotations or official closing prices on the applicable exchanges. A
variety of factors may be considered in determining the fair value of such
securities, including, but not limited to, the following:
1) the type of security;
2) the size of the holding;
3) the initial cost of the security;
4) transactions in comparable securities;
5) price quotes from dealers and/or third-party pricing services;
6) relationships among various securities;
7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;
8) an analysis of the issuer's financial statements; and
9) the existence of merger proposals or tender offers that might affect
the value of the security.
In addition, differences between the prices used to calculate a Fund's NAV and
the prices used by such Fund's corresponding index could result in a difference
between a Fund's performance and the performance of its underlying index.
The Funds are subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
Page 57
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
The inputs or methodologies used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value each Fund's investments as of June 30, 2019, is
included with each Fund's Portfolio of Investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income, if any, is
recorded on the accrual basis.
Withholding taxes and tax reclaims on foreign dividends have been provided for
in accordance with each Fund's understanding of the applicable country's tax
rules and rates.
Distributions received from a Fund's investments in real estate investment trust
("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. The Funds, however, will be
responsible for the risks associated with the investment of cash collateral. A
Fund may lose money on its investment of cash collateral, which may affect its
ability to repay the collateral to the borrower without the use of other Fund
assets. Each Fund that engages in securities lending receives compensation (net
of any rebate and securities lending agent fees) for lending its securities.
Compensation can be in the form of fees received from the securities lending
agent or dividends or interest earned from the investment of cash collateral.
The fees received from the securities lending agent are accrued daily. The
dividend and interest earned on the securities loaned is accounted for in the
same manner as other dividend and interest income. At June 30, 2019, only FDM
and FPX had securities in the securities lending program. During the six months
ended June 30, 2019, 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 will
exercise any and all remedies provided under the applicable borrower agreement
to make the Funds whole. These remedies include purchasing replacement
securities by applying the collateral held from the defaulting broker against
the purchase cost of the replacement securities. If, despite such efforts by BBH
to exercise these remedies, a Fund sustains losses as a result of a borrower's
default, BBH will indemnify the Fund by purchasing replacement securities
Page 58
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
at its own expense, or paying the Fund an amount equal to the market value of
the replacement securities, subject to certain limitations which are set forth
in detail in the Securities Lending Agency Agreement between the Trust on behalf
of the Funds and BBH.
E. REPURCHASE AGREEMENTS
Repurchase agreements involve the purchase of securities subject to the seller's
agreement to repurchase the securities at a mutually agreed upon date and price,
under the terms of a Master Repurchase Agreement ("MRA"). During the term of a
repurchase agreement, the value of the underlying securities held as collateral
on behalf of a Fund, including accrued interest, is required to exceed the value
of the repurchase agreement, including accrued interest. The underlying
securities for all repurchase agreements are held at the Funds' custodian or
designated sub-custodians under tri-party repurchase agreements.
MRAs govern transactions between a Fund and select counterparties. The MRAs
contain provisions for, among other things, initiation, income payments, events
of default, and maintenance of collateral for repurchase agreements.
Repurchase agreements received for lending securities are collateralized by U.S.
Treasury securities. The U.S. Treasury securities are held in a joint custody
account at BBH on behalf of the Funds participating in the securities lending
program. In the event the counterparty defaults on the repurchase agreement, the
U.S. Treasury securities can either be maintained as part of a Fund's portfolio
or sold for cash. A Fund could suffer a loss to the extent that the proceeds
from the sale of the underlying collateral held by the Fund is less than the
repurchase price and the Fund's costs associated with the delay and enforcement
of the MRA.
While the Funds may invest in repurchase agreements, any repurchase agreements
held by the Funds during the six months ended June 30, 2019, were received as
collateral for lending securities.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income of each Fund, if any, are declared and paid
quarterly or as the Board of Trustees may determine from time to time.
Distributions of net realized gains earned by each Fund, if any, are distributed
at least annually.
Distributions from net investment income and realized capital gains are
determined in accordance with federal income tax regulations, which may differ
from U.S. GAAP. Certain capital accounts in the financial statements are
periodically adjusted for permanent differences in order to reflect their tax
character. These permanent differences are primarily due to the varying
treatment of income and gain/loss on portfolio securities held by the Funds and
have no impact on net assets or NAV per share. Temporary differences, which
arise from recognizing certain items of income, expense and gain/loss in
different periods for financial statement and tax purposes, will reverse at some
time in the future.
The tax character of distributions paid by each Fund during the fiscal year
ended December 31, 2018 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 $ 1,417,591 $ -- $ --
First Trust Morningstar Dividend Leaders Index Fund 55,170,342 -- --
First Trust US Equity Opportunities ETF 8,618,366 -- --
First Trust NYSE Arca Biotechnology Index Fund -- -- --
First Trust Dow Jones Internet Index Fund -- -- --
First Trust Capital Strength ETF 13,023,451 -- --
First Trust Value Line(R) Dividend Index Fund 102,072,326 -- --
First Trust Value Line(R) 100 Exchange-Traded Fund 292,079 -- --
Page 59
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
As of December 31, 2018, 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 $ 200,386 $(16,493,170) $ (27,167,578)
First Trust Morningstar Dividend Leaders Index Fund 135,366 (83,142,112) (90,329,172)
First Trust US Equity Opportunities ETF -- (104,241,056) 35,844,172
First Trust NYSE Arca Biotechnology Index Fund -- (136,416,636) (564,687,926)
First Trust Dow Jones Internet Index Fund -- (150,836,952) 93,036,664
First Trust Capital Strength ETF -- (43,880,883) (64,995,316)
First Trust Value Line(R) Dividend Index Fund -- (69,543,177) (214,226,024)
First Trust Value Line(R) 100 Exchange-Traded Fund -- (13,408,733) (1,380,869)
G. INCOME TAXES
Each Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no
provision has been made for federal and state income taxes. However, due to the
timing and amount of distributions, each Fund may be subject to an excise tax of
4% of the amount by which approximately 98% of each Fund's taxable income
exceeds the distributions from such taxable income for the calendar year.
The Funds are subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ending 2015, 2016,
2017, and 2018 remain open to federal and state audit. As of June 30, 2019,
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.
Under the Regulated Investment Company Modernization Act of 2010 (the "Act"),
net capital losses arising in taxable years beginning after December 22, 2010,
may be carried forward indefinitely, and their character is retained as
short-term and/or long-term losses. Previously, net capital losses were carried
forward for up to eight years and treated as short-term losses. As a transition
rule, the Act requires that post-enactment net capital losses be used before
pre-enactment net capital losses. At December 31, 2018, the Funds had
post-enactment net capital losses for federal income tax purposes as shown in
the following table. 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 Fund shareholders. The Funds are 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.
Post
Enactment -
No Expiration
--------------------
First Trust Dow Jones Select MicroCap Index Fund $ 16,493,170
First Trust Morningstar Dividend Leaders Index Fund 83,142,112
First Trust US Equity Opportunities ETF 104,241,056
First Trust NYSE Arca Biotechnology Index Fund 136,416,636
First Trust Dow Jones Internet Index Fund 150,836,952
First Trust Capital Strength ETF 43,880,883
First Trust Value Line(R) Dividend Index Fund 69,543,177
First Trust Value Line(R) 100 Exchange-Traded Fund 13,408,733
During the taxable year ended December 31, 2018, the following Fund utilized
capital loss carryforwards in the following amount:
Post-Enactment
Capital Loss
Carryforward
Utilized
--------------------
First Trust NYSE Arca Biotechnology Index Fund $ 66,225,459
Page 60
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
H. EXPENSES
Expenses that are directly related to one of the Funds are charged directly to
the respective Fund. General expenses of the Trust are allocated to all the
Funds based upon the net assets of each Fund.
First Trust has entered into licensing agreements with each of the following
"Licensors" for the respective Funds:
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 Arca 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
First Trust Value Line(R) 100 Exchange-Traded 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.
I. NEW ACCOUNTING PRONOUNCEMENT
On August 28, 2018, the FASB issued Accounting Standards Update ("ASU") 2018-13,
"Disclosure Framework - Changes to the Disclosure Requirements for Fair Value
Measurement," which amends the fair value measurement disclosure requirements of
ASC 820. The amendments of ASU 2018-13 include new, eliminated, and modified
disclosure requirements of ASC 820. In addition, the amendments clarify that
materiality is an appropriate consideration of entities when evaluating
disclosure requirements. The ASU is effective for fiscal years beginning after
December 15, 2019, including interim periods therein. Early adoption is
permitted for any eliminated or modified disclosures upon issuance of this ASU.
The Funds have early adopted ASU 2018-13 for these financial statements, which
did not result in a material impact.
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust, the investment advisor to the Funds, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. The Charger Corporation is an Illinois corporation
controlled by James A. Bowen, Chief Executive Officer of First Trust. First
Trust is responsible for the selection and ongoing monitoring of the securities
in each Fund's portfolio, managing the Funds' business affairs and providing
certain administrative services necessary for the management of the Funds.
For these services, First Trust is entitled to receive monthly fees from each
Fund calculated at the following annual rates:
% 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 Arca 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%
First Trust Value Line(R) 100 Exchange-Traded Fund 0.50%
Page 61
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
The Trust and First Trust have entered into an Expense Reimbursement, Fee Waiver
and Recovery Agreement ("Recovery Agreement") in which First Trust has agreed to
waive fees and/or reimburse Fund expenses to the extent that the operating
expenses of each Fund (excluding interest expense, brokerage commissions and
other trading expenses, acquired fund fees and expenses, taxes and extraordinary
expenses) exceed the below amount as a percentage of average daily net assets
per year (the "Expense Cap"). The Expense Cap will be in effect until at least
April 30, 2021.
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 Arca 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%
First Trust Value Line(R) 100 Exchange-Traded Fund 0.70%
Expenses reimbursed and fees waived by First Trust under the Recovery Agreement
are subject to recovery by First Trust for up to three years from the date the
fee was waived or expense was incurred, but no reimbursement payment will be
made by a Fund if it results in the Fund exceeding an expense ratio equal to the
Expense Cap in place at the time the expenses were reimbursed or fees waived by
First Trust. These amounts would be included in "Expenses previously waived or
reimbursed" on the Statements of Operations.
The advisory fee waivers and expense reimbursements for the six months ended
June 30, 2019 and the fees waived or expenses borne by First Trust subject to
recovery from the applicable Fund for the periods indicated were as follows:
Fees Waived or Expenses Borne by First Trust
Subject to Recovery
--------------------------------------------------------------
Advisory Six Months Year Year Six Months
Fee Expense Ended Ended Ended Ended
Waivers Reimbursement 12/31/2016 12/31/2017 12/31/2018 6/30/2019 Total
--------- ------------- ---------- ---------- ---------- ---------- ----------
First Trust Dow Jones Select MicroCap
Index Fund $ 76,567 $ -- $ 36,843 $ 97,709 $ 162,786 $ 76,567 $ 373,905
First Trust Morningstar Dividend
Leaders Index Fund 58,467 -- 229,632 289,110 256,355 58,467 833,564
First Trust Value Line(R) Dividend
Index Fund 119,030 -- 416,233 816,754 768,292 119,030 2,120,309
First Trust Value Line(R) 100 Exchange-
Traded Fund 46,262 -- 42,166 82,527 94,969 46,262 265,924
First Trust US Equity Opportunities ETF, First Trust NYSE Arca Biotechnology
Index Fund, First Trust Dow Jones Internet Index Fund and First Trust Capital
Strength ETF do not have any remaining fees previously waived or expenses
reimbursed that are subject to recovery.
The Trust has multiple service agreements with The Bank of New York Mellon
("BNYM"). Under the service agreements, BNYM performs custodial, fund
accounting, certain administrative services, and transfer agency services for
each Fund. As custodian, BNYM is responsible for custody of each Fund's assets.
As fund accountant and administrator, BNYM is responsible for maintaining the
books and records of each Fund's securities and cash. As transfer agent, BNYM is
responsible for maintaining shareholder records for each Fund. BNYM is a
subsidiary of The Bank of New York Mellon Corporation, a financial holding
company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that
varies based on whether the fund is a closed-end or other actively managed fund,
or is an index fund.
Additionally, the Lead Independent Trustee and the Chairmen of the Audit
Committee, Nominating and Governance Committee and Valuation Committee are paid
annual fees to serve in such capacities, with such compensation allocated pro
rata among each fund in the First Trust Fund Complex based on net assets.
Independent Trustees are reimbursed for travel and out-of-pocket expenses in
connection with all meetings. The Lead Independent Trustee and Committee
Chairmen rotate every three years. The officers and "Interested" Trustee receive
no compensation from the Trust for acting in such capacities.
Page 62
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2019, 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 $ 11,558,028 $ 10,415,493
First Trust Morningstar Dividend Leaders Index Fund 469,519,832 466,734,126
First Trust US Equity Opportunities ETF 407,227,294 406,020,877
First Trust NYSE Arca Biotechnology Index Fund 480,449,588 483,718,318
First Trust Dow Jones Internet Index Fund 917,728,442 930,682,709
First Trust Capital Strength ETF 1,521,135,220 1,516,847,092
First Trust Value Line(R) Dividend Index Fund 1,545,009,398 1,529,734,631
First Trust Value Line(R) 100 Exchange-Traded Fund 62,242,380 62,005,610
For the six months ended June 30, 2019, 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 $ 4,392,930 $ 11,303,175
First Trust Morningstar Dividend Leaders Index Fund 708,675,929 612,389,860
First Trust US Equity Opportunities ETF 118,227,467 58,609,605
First Trust NYSE Arca Biotechnology Index Fund 475,312,976 183,313,025
First Trust Dow Jones Internet Index Fund 1,329,245,599 1,057,373,496
First Trust Capital Strength ETF 1,461,045,786 656,031,734
First Trust Value Line(R) Dividend Index Fund 2,206,733,107 864,710,202
First Trust Value Line(R) 100 Exchange-Traded Fund -- 1,070,604
5. CREATION, REDEMPTION AND TRANSACTION FEES
Shares are created and redeemed by each Fund only in Creation Unit size
aggregations of 50,000 shares in transactions with broker-dealers or large
institutional investors that have entered into a participation agreement (an
"Authorized Participant'). In order to purchase Creation Units of each Fund, an
Authorized Participant must deposit (i) a designated portfolio of equity
securities determined by First Trust (the "Deposit Securities") and generally
make or receive a cash payment referred to as the "Cash Component," which is an
amount equal to the difference between the NAV of the Fund Shares (per Creation
Unit Aggregation) and the market value of the Deposit Securities, and/or (ii)
cash in lieu of all or a portion of the Deposit Securities. If the Cash
Component is a positive number (i.e., the NAV per Creation Unit Aggregation
exceeds the Deposit Amount), the Authorized Participant will deliver the Cash
Component. If the Cash Component is a negative number (i.e., the NAV per
Creation Unit Aggregation is less than the Deposit Amount), the Authorized
Participant will receive the Cash Component. Authorized Participants purchasing
Creation Units must pay to BNYM, as transfer agent, a creation transaction fee
(the "Creation Transaction Fee") regardless of the number of Creation Units
purchased in the transaction. The Creation Transaction Fee may vary and is based
on the composition of the securities included in each Fund's portfolio and the
countries in which the transactions are settled. The Creation Transaction Fee is
currently $500 for each Fund, except First Trust Dow Jones Select MicroCap Index
Fund and First Trust Value Line(R) Dividend Index Fund for which the Creation
Transaction Fee is $1,000. The price for each Creation Unit will equal the daily
NAV per share 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 or stamp taxes. When a Fund permits an Authorized
Participant to substitute cash or a different security in lieu of depositing one
or more of the requisite Deposit Securities, the Authorized Participant may also
be assessed an amount to cover the cost of purchasing the Deposit Securities
and/or disposing of the substituted securities, including 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 such Deposit
Securities and/or substitute securities.
Authorized Participants redeeming Creation Units must pay to BNYM, as transfer
agent, a standard redemption transaction fee (the "Redemption Transaction Fee"),
regardless of the number of Creation Units redeemed in the transaction. The
Redemption Transaction Fee may vary and is based on the composition of the
securities included in each Fund's portfolio and the countries in which the
transactions are settled. The Redemption Transaction Fee is currently $500 for
each Fund, except First Trust Dow Jones Select MicroCap Index Fund and First
Trust Value Line(R) Dividend Index Fund for which the Redemption Transaction Fee
is $1,000. Each Fund reserves the right to effect redemptions in cash. An
Authorized Participant may request cash redemption in lieu of securities;
however, a Fund may, in its discretion, reject any such request.
Page 63
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
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, 2021.
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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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Trust uses to determine
how to vote proxies and information on how each Fund voted proxies relating to
its portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
each Fund's website at www.ftportfolios.com; and (3) on the Securities and
Exchange Commission's ("SEC") website at www.sec.gov.
PORTFOLIO HOLDINGS
Each Fund files portfolio holdings information for each month in a fiscal
quarter within 60 days after the end of the relevant fiscal quarter on Form
N-PORT. Portfolio holdings information for the third month of each fiscal
quarter will be publicly available on the SEC's website at www.sec.gov. Each
Fund's complete schedule of portfolio holdings for the second and fourth
quarters of each fiscal year is included in the semi-annual and annual reports
to shareholders, respectively, and is filed with the SEC on Form N-CSR. The
semi-annual and annual report for each Fund is available to investors within 60
days after the period to which it relates. Each Fund's Forms N-PORT and Forms
N-CSR are available on the SEC's website listed above.
RISK CONSIDERATIONS
RISKS ARE INHERENT IN ALL INVESTING. CERTAIN GENERAL RISKS THAT MAY BE
APPLICABLE TO A FUND ARE IDENTIFIED BELOW, BUT NOT ALL OF THE MATERIAL RISKS
RELEVANT TO EACH FUND ARE INCLUDED IN THIS REPORT AND NOT ALL OF THE RISKS BELOW
APPLY TO EACH FUND. THE MATERIAL RISKS OF INVESTING IN EACH FUND ARE SPELLED OUT
IN ITS PROSPECTUS, STATEMENT OF ADDITIONAL INFORMATION AND OTHER REGULATORY
FILINGS. BEFORE INVESTING, YOU SHOULD CONSIDER EACH FUND'S INVESTMENT OBJECTIVE,
RISKS, CHARGES AND EXPENSES, AND READ EACH FUND'S PROSPECTUS AND STATEMENT OF
ADDITIONAL INFORMATION CAREFULLY. YOU CAN DOWNLOAD EACH FUND'S PROSPECTUS AT
WWW.FTPORTFOLIOS.COM OR CONTACT FIRST TRUST PORTFOLIOS L.P. AT (800) 621-1675 TO
REQUEST A PROSPECTUS, WHICH CONTAINS THIS AND OTHER INFORMATION ABOUT EACH FUND.
CONCENTRATION RISK. To the extent that a fund is able to invest a large
percentage of its assets in a single asset class or the securities of issuers
within the same country, state, region, industry or sector, an adverse economic,
business or political development may affect the value of the fund's investments
more than if the fund were more broadly diversified. A fund that tracks an index
will be concentrated to the extent the fund's corresponding index is
concentrated. A concentration makes a fund more susceptible to any single
occurrence and may subject the fund to greater market risk than a fund that is
not concentrated.
CREDIT RISK. Credit risk is the risk that an issuer of a security will be unable
or unwilling to make dividend, interest and/or principal payments when due and
the related risk that the value of a security may decline because of concerns
about the issuer's ability to make such payments.
CYBER SECURITY RISK. The funds are susceptible to potential operational risks
through breaches in cyber security. A breach in cyber security refers to both
intentional and unintentional events that may cause a fund to lose proprietary
information, suffer data corruption or lose operational capacity. Such events
could cause a fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial
loss. In addition, cyber security breaches of a fund's third-party service
providers, such as its administrator, transfer agent, custodian, or sub-advisor,
as applicable, or issuers in which the fund invests, can also subject a fund to
many of the same risks associated with direct cyber security breaches.
DERIVATIVES RISK. To the extent a fund uses derivative instruments such as
futures contracts, options contracts and swaps, the fund may experience losses
because of adverse movements in the price or value of the underlying asset,
index or rate, which may be magnified by certain features of the derivative.
These risks are heightened when a fund's portfolio managers use derivatives to
enhance the fund's return or as a substitute for a position or security, rather
than solely to hedge (or offset) the risk of a position or security held by the
fund.
EQUITY SECURITIES RISK. To the extent a fund invests in equity securities, the
value of the fund's shares will fluctuate with changes in the value of the
equity securities. Equity securities prices fluctuate for several reasons,
including changes in investors' perceptions of the financial condition of an
issuer or the general condition of the relevant stock market, such as market
volatility, or when political or economic events affecting the issuers occur. In
addition, common stock prices may be particularly sensitive to rising interest
rates, as the cost of capital rises and borrowing costs increase. Equity
securities may decline significantly in price over short or extended periods of
time, and such declines may occur in the equity market as a whole, or they may
occur in only a particular country, company, industry or sector of the market.
ETF RISK. The shares of an ETF trade like common stock and represent an interest
in a portfolio of securities. The risks of owning an ETF generally reflect the
risks of owning the underlying securities, although lack of liquidity in an ETF
could result in it being more volatile and ETFs have management fees that
increase their costs. Shares of an ETF trade on an exchange at market prices
rather than net asset value, which may cause the shares to trade at a price
Page 65
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
greater than net asset value (premium) or less than net asset value (discount).
In times of market stress, decisions by market makers to reduce or step away
from their role of providing a market for an ETF's shares, or decisions by an
ETF's authorized participants that they are unable or unwilling to proceed with
creation and/or redemption orders of an ETF's shares, could result in shares of
the ETF trading at a discount to net asset value and in greater than normal
intraday bid-ask spreads.
FIXED INCOME SECURITIES RISK. To the extent a fund invests in fixed income
securities, the fund will be subject to credit risk, income risk, interest rate
risk, liquidity risk and prepayment risk. Income risk is the risk that income
from a fund's fixed income investments could decline during periods of falling
interest rates. Interest rate risk is the risk that the value of a fund's fixed
income securities will decline because of rising interest rates. Liquidity risk
is the risk that a security cannot be purchased or sold at the time desired, or
cannot be purchased or sold without adversely affecting the price. Prepayment
risk is the risk that the securities will be redeemed or prepaid by the issuer,
resulting in lower interest payments received by the fund. In addition to these
risks, high yield securities, or "junk" bonds, are subject to greater market
fluctuations and risk of loss than securities with higher ratings, and the
market for high yield securities is generally smaller and less liquid than that
for investment grade securities.
INDEX CONSTITUENT RISK. Certain funds may be a constituent of one or more
indices. As a result, such a fund may be included in one or more index-tracking
exchange-traded funds or mutual funds. Being a component security of such a
vehicle could greatly affect the trading activity involving a fund, the size of
the fund and the market volatility of the fund. Inclusion in an index could
significantly increase demand for the fund and removal from an index could
result in outsized selling activity in a relatively short period of time. As a
result, a fund's net asset value could be negatively impacted and the fund's
market price may be significantly below its net asset value during certain
periods.
INDEX PROVIDER RISK. To the extent a fund seeks to track an index, it is subject
to Index Provider Risk. There is no assurance that the Index Provider will
compile the Index accurately, or that the Index will be determined, maintained,
constructed, reconstituted, rebalanced, composed, calculated or disseminated
accurately. To correct any such error, the Index Provider may carry out an
unscheduled rebalance or other modification of the Index constituents or
weightings, which may increase the fund's costs. The Index Provider does not
provide any representation or warranty in relation to the quality, accuracy or
completeness of data in the Index, and it does not guarantee that the Index will
be calculated in accordance with its stated methodology. Losses or costs
associated with any Index Provider errors generally will be borne by the fund
and its shareholders.
INVESTMENT COMPANIES RISK. To the extent a fund invests in the securities of
other investment vehicles, the fund will incur additional fees and expenses that
would not be present in a direct investment in those investment vehicles.
Furthermore, the fund's investment performance and risks are directly related to
the investment performance and risks of the investment vehicles in which the
fund invests.
MANAGEMENT RISK. To the extent that a fund is actively managed, it is subject to
management risk. In managing an actively-managed fund's investment portfolio,
the fund's portfolio managers will apply investment techniques and risk analyses
that may not have the desired result. There can be no guarantee that a fund will
meet its investment objective.
MARKET RISK. Securities held by a fund, as well as shares of a fund itself, are
subject to market fluctuations caused by factors such as general economic
conditions, political events, regulatory or market developments, changes in
interest rates and perceived trends in securities prices. Shares of a fund could
decline in value or underperform other investments as a result of the risk of
loss associated with these market fluctuations.
NON-U.S. SECURITIES RISK. To the extent a fund invests in non-U.S. securities,
it is subject to additional risks not associated with securities of domestic
issuers. Non-U.S. securities are subject to higher volatility than securities of
domestic issuers due to: possible adverse political, social or economic
developments; restrictions on foreign investment or exchange of securities; lack
of liquidity; currency exchange rates; excessive taxation; government seizure of
assets; different legal or accounting standards; and less government supervision
and regulation of exchanges in foreign countries. Investments in non-U.S.
securities may involve higher costs than investments in U.S. securities,
including higher transaction and custody costs, as well as additional taxes
imposed by non-U.S. governments. These risks may be heightened for securities of
companies located, or with significant operations, in emerging market countries.
PASSIVE INVESTMENT RISK. To the extent a fund seeks to track an index, the fund
will invest in the securities included in, or representative of, the index
regardless of their investment merit. A fund generally will not attempt to take
defensive positions in declining markets.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
ADVISORY AGREEMENT
BOARD CONSIDERATIONS REGARDING APPROVAL OF CONTINUATION OF INVESTMENT MANAGEMENT
AGREEMENT
The Board of Trustees (the "Board") of First Trust Exchange-Traded Fund (the
"Trust"), including the Independent Trustees, unanimously approved the
continuation of the Investment Management Agreement (the "Agreement") with First
Trust Advisors L.P. (the "Advisor") on behalf of the following eight series of
the Trust (each a "Fund" and collectively, the "Funds"):
First Trust Value Line(R) 100 Exchange-Traded Fund (FVL)
First Trust Value Line(R) Dividend Index Fund (FVD)
First Trust Dow Jones Select MicroCap Index Fund (FDM)
First Trust Morningstar Dividend Leaders Index Fund (FDL)
First Trust US Equity Opportunities ETF (FPX)
First Trust NYSE Arca Biotechnology Index Fund (FBT)
First Trust Dow Jones Internet Index Fund (FDN)
First Trust Capital Strength ETF (FTCS)
The Board approved the continuation of the Agreement for each Fund for a
one-year period ending June 30, 2020 at a meeting held on June 2, 2019. The
Board determined for each Fund that the continuation of the Agreement is in the
best interests of the Fund in light of the nature, extent and quality of the
services provided and such other matters as the Board considered to be relevant
in the exercise of its reasonable business judgment.
To reach this determination for each Fund, the Board considered its duties under
the Investment Company Act of 1940, as amended (the "1940 Act"), as well as
under the general principles of state law, in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. At meetings held on April 18, 2019 and June 2, 2019, the
Board, including the Independent Trustees, reviewed materials provided by the
Advisor responding to requests for information from counsel to the Independent
Trustees, submitted on behalf of the Independent Trustees, that, among other
things, outlined: the services provided by the Advisor to each Fund (including
the relevant personnel responsible for these services and their experience); the
advisory fee rate payable by each Fund as compared to fees charged to a peer
group of funds (the "Expense Group") and a broad peer universe of funds (the
"Expense Universe"), each assembled by Broadridge Financial Solutions, Inc.
("Broadridge"), an independent source, and as compared to fees charged to other
clients of the Advisor, including other exchange-traded funds ("ETFs") managed
by the Advisor; the expense ratio of each Fund as compared to expense ratios of
the funds in the Fund's Expense Group and Expense Universe; performance
information for each Fund, including comparisons of each Fund's performance to
that of one or more relevant benchmark indexes and to that of a performance
group of funds and a broad performance universe of funds (the "Performance
Universe"), each assembled by Broadridge; the nature of expenses incurred in
providing services to each Fund and the potential for economies of scale, if
any; financial data on the Advisor; any fall-out benefits to the Advisor and its
affiliate, First Trust Portfolios L.P. ("FTP"); and information on the Advisor's
compliance program. The Board reviewed initial materials with the Advisor at the
meeting held on April 18, 2019, prior to which the Independent Trustees and
their counsel met separately to discuss the information provided by the Advisor.
Following the April meeting, independent legal counsel on behalf of the
Independent Trustees requested certain clarifications and supplements to the
materials provided, and the information provided in response to those requests
was considered at an executive session of the Independent Trustees and
independent legal counsel held prior to the June 2, 2019 meeting, as well as at
the meeting held that day. The Board applied its business judgment to determine
whether the arrangement between the Trust and the Advisor continues to be a
reasonable business arrangement from each Fund's perspective. The Board
determined that, given the totality of the information provided with respect to
the Agreement, the Board had received sufficient information to renew the
Agreement. The Board considered that shareholders chose to invest or remain
invested in a Fund knowing that the Advisor manages the Fund and knowing the
Fund's advisory fee.
In reviewing the Agreement for each Fund, the Board considered the nature,
extent and quality of the services provided by the Advisor under the Agreement.
The Board considered that the Advisor is responsible for the overall management
and administration of the Trust and each Fund and reviewed all of the services
provided by the Advisor to the Funds, as well as the background and experience
of the persons responsible for such services. In reviewing the services
provided, the Board noted the compliance program that had been developed by the
Advisor and considered that it includes a robust program for monitoring the
Advisor's and each Fund's compliance with the 1940 Act, as well as each Fund's
compliance with its investment objective, policies and restrictions. The Board
also considered a report from the Advisor with respect to its risk management
functions related to the operation of the Funds. Finally, as part of the Board's
consideration of the Advisor's services, the Advisor, in its written materials
and at the April 18, 2019 meeting, described to the Board the scope of its
ongoing investment in additional infrastructure and personnel to maintain and
improve the quality of services provided to the Funds and the other funds in the
Page 67
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
First Trust Fund Complex. In light of the information presented and the
considerations made, the Board concluded that the nature, extent and quality of
the services provided to the Trust and each Fund by the Advisor under the
Agreement have been and are expected to remain satisfactory and that the Advisor
has managed each Fund consistent with its investment objective, policies and
restrictions.
The Board considered the advisory fee rate payable by each Fund under the
Agreement for the services provided. The Board considered that the Advisor
agreed to extend the current expense cap for each Fund through April 30, 2021.
For each Fund, the Board noted that expenses borne or fees waived by the Advisor
are to be subject to reimbursement by the Fund for up to three years from the
date the expense was incurred or fee was waived, but no reimbursement payment
would be made by the Fund if it would result in the Fund exceeding an expense
ratio equal to the expense cap in place at the time the expenses were borne or
fees were waived by the Advisor. The Board received and reviewed information
showing the advisory or unitary fee rates and expense ratios of the peer funds
in the Expense Groups, as well as advisory and unitary fee rates charged by the
Advisor to other fund (including ETFs) and non-fund clients, as applicable.
Because each Fund's Expense Group included peer funds that pay a unitary fee,
the Board determined that expense ratios were the most relevant comparative data
point. Based on the information provided, the Board noted that the total (net)
expense ratio of FPX was equal to the median total (net) expense ratio of the
peer funds in its Expense Group and that the total (net) expense ratio of each
other Fund was above the median total (net) expense ratio of the peer funds in
its respective Expense Group. With respect to the Expense Groups, the Board, at
the April 18, 2019 meeting, discussed with Broadridge its methodology for
assembling peer groups and discussed with the Advisor limitations in creating
peer groups for index ETFs, including differences in underlying indexes and
index-tracking methodologies that can result in greater management complexities
across seemingly comparable ETFs and different business models that may affect
the pricing of services among ETF sponsors. The Board took these limitations and
differences into account in considering the peer data. With respect to fees
charged to other non-ETF clients, the Board considered differences between the
Funds and other non-ETF clients that limited their comparability. In considering
the advisory fee rates overall, the Board also considered the Advisor's
statement that it seeks to meet investor needs through innovative and
value-added investment solutions and the Advisor's description of its long-term
commitment to each Fund.
The Board considered performance information for each Fund. The Board noted the
process it has established for monitoring each Fund's performance and portfolio
risk on an ongoing basis, which includes quarterly performance reporting from
the Advisor for the Funds. The Board determined that this process continues to
be effective for reviewing each Fund's performance. The Board received and
reviewed information for periods ended December 31, 2018 regarding the
performance of each Fund's underlying index, the correlation between each Fund's
performance and that of its underlying index, each Fund's tracking difference
and each Fund's excess return as compared to its benchmark index. Based on the
information provided and its ongoing review of performance, the Board concluded
that each Fund was correlated to its underlying index and that the tracking
difference for each Fund was within a reasonable range. In addition, the Board
reviewed data prepared by Broadridge comparing each Fund's performance to that
of its respective Performance Universe and to that of a broad-based benchmark,
but given each Fund's objective of seeking investment results that correspond
generally to the performance of its underlying index, the Board placed more
emphasis on its review of correlation and tracking difference.
On the basis of all the information provided on the fees, expenses and
performance of each Fund and the ongoing oversight by the Board, the Board
concluded that the advisory fee for each Fund continues to be reasonable and
appropriate in light of the nature, extent and quality of the services provided
by the Advisor to each Fund under the Agreement.
The Board considered information and discussed with the Advisor whether there
were any economies of scale in connection with providing advisory services to
the Funds and noted the Advisor's statement that it believes its expenses will
likely increase over the next twelve months as the Advisor continues to hire
personnel and build infrastructure, including technology, to improve the
services to the Funds. The Board considered the revenues and allocated costs
(including the allocation methodology) of the Advisor in serving as investment
advisor to each Fund for the twelve months ended December 31, 2018 and the
estimated profitability level for each Fund calculated by the Advisor based on
such data, as well as complex-wide and product-line profitability data, for the
same period. The Board noted the inherent limitations in the profitability
analysis and concluded that, based on the information provided, the Advisor's
profitability level for each Fund was not unreasonable. In addition, the Board
considered fall-out benefits described by the Advisor that may be realized from
its relationship with the Funds. The Board considered that the Advisor had
identified as a fall-out benefit to the Advisor and FTP their exposure to
investors and brokers who, absent their exposure to the Funds, may have had no
dealings with the Advisor or FTP, and noted that the Advisor does not utilize
soft dollars in connection with the Funds. The Board concluded that the
character and amount of potential fall-out benefits to the Advisor were not
unreasonable.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, unanimously determined that the terms
of the Agreement continue to be fair and reasonable and that the continuation of
the Agreement is in the best interests of each Fund. No single factor was
determinative in the Board's analysis.
Page 68
FIRST TRUST
First Trust Exchange-Traded Fund
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
ADMINISTRATOR, CUSTODIAN,
FUND ACCOUNTANT &
TRANSFER AGENT
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
[BLANK BACK COVER]
FIRST TRUST
First Trust Exchange-Traded Fund
Book 2
First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW)
First Trust NASDAQ-100-Technology Sector Index Fund (QTEC)
First Trust NASDAQ-100 Ex-Technology Sector Index Fund (QQXT)
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund (QCLN)
First Trust S&P REIT Index Fund (FRI)
First Trust Water ETF (FIW)
First Trust Natural Gas ETF (FCG)
First Trust Chindia ETF (FNI)
First Trust NASDAQ(R) ABA Community Bank Index Fund (QABA)
Semi-Annual Report
For the Six Months Ended
June 30, 2019
--------------------------------------------------------------------------------
TABLE OF CONTENTS
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FIRST TRUST EXCHANGE-TRADED FUND
SEMI-ANNUAL REPORT
JUNE 30, 2019
Shareholder Letter.......................................................... 2
Market Overview............................................................. 3
Fund Performance Overview
First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW).................. 4
First Trust NASDAQ-100-Technology Sector Index Fund (QTEC)............... 6
First Trust NASDAQ-100 Ex-Technology Sector Index Fund (QQXT)............ 8
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund (QCLN)....... 10
First Trust S&P REIT Index Fund (FRI).................................... 12
First Trust Water ETF (FIW).............................................. 14
First Trust Natural Gas ETF (FCG)........................................ 16
First Trust Chindia ETF (FNI)............................................ 18
First Trust NASDAQ(R) ABA Community Bank Index Fund (QABA)............... 20
Notes to Fund Performance Overview.......................................... 22
Understanding Your Fund Expenses............................................ 23
Portfolio of Investments
First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW).................. 25
First Trust NASDAQ-100-Technology Sector Index Fund (QTEC)............... 28
First Trust NASDAQ-100 Ex-Technology Sector Index Fund (QQXT)............ 29
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund (QCLN)....... 32
First Trust S&P REIT Index Fund (FRI).................................... 34
First Trust Water ETF (FIW).............................................. 37
First Trust Natural Gas ETF (FCG)........................................ 38
First Trust Chindia ETF (FNI)............................................ 40
First Trust NASDAQ(R) ABA Community Bank Index Fund (QABA)............... 43
Statements of Assets and Liabilities........................................ 46
Statements of Operations.................................................... 48
Statements of Changes in Net Assets......................................... 50
Financial Highlights........................................................ 54
Notes to Financial Statements............................................... 59
Additional Information...................................................... 68
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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 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 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
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
JUNE 30, 2019
Dear Shareholders:
One thing we can all agree on and expect: headline news coming out of
Washington, DC continues to influence the financial markets. As January 2019
unfolded, the longest partial government shutdown in U.S. history was wrapping
up while we were beginning to learn about President Trump's approach to
international trade policy. By June's end, trade talks with China were
reengaging and the threat of 5% tariffs on Mexican imports was averted.
Investors breathed a collective sigh of relief and, once again, the free market
began to rally.
At the Markets' close on June 28, 2019, both U.S. and world equities had
performed resiliently, as indicated by the S&P 500(R) Index and the MSCI All
Country World Index returns of 18.54% and 16.23%, respectively, for the calendar
year-to-date. Bonds, as measured by the Bloomberg Barclays U.S. Aggregate Bond
Index, returned 6.11%, for the same period. The 10-Year U.S. Treasury Note yield
fell from over 3% in late 2018 to just above 2% for the six-month period ended
June 30, 2019 and the Federal Reserve has clearly indicated that another rate
cut is on the way.
Despite the ongoing bluster of the news cycle, we believe the economy is doing
well and productivity growth, due to deregulation and lower taxes on corporate
profits, has improved over the last two years.
o The Consumer Confidence Index of 121.5 for June remains strong.
o The U.S. inflation rate hovers near 2%, on average, as it has for
the last decade.
o June's unemployment rate of 3.7% barely moved from May's 3.6%, the
lowest level since December of 1969.
Before you reach for the antacids due to the latest political equivocation, keep
a balanced perspective in view. Remember, no one can predict the inevitable and
expected market fluctuations. Speak periodically with your investment
professional who can provide insight when it comes to investing and discovering
opportunities when they arise.
Thank you for giving First Trust the opportunity to be a part of your financial
plan. We value our relationship with you.
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
SEMI-ANNUAL REPORT
JUNE 30, 2019
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 over 25 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 trade conflict between the U.S. and China was approaching 16-months-old at
the close of June 2019. In our opinion, the most notable change in the first
half of 2019 was the Trump Administration's ratcheting up of tariffs on roughly
$200 billion of imported goods from China. On May 10, 2019, tariffs jumped from
10% to 25%. President Trump continues to threaten China with extending the
tariffs to the remaining $300 billion or so in goods shipped to the U.S.
annually. The ongoing dispute has become a drag on global growth, according to
organizations such as the International Monetary Fund.
While the U.S. economy continues to flourish relative to many other developed
and emerging economies, recent data suggests that China's economy is being
stressed by the tariffs. China's gross domestic product rose at an annualized
pace of 6.2% in the second quarter of 2019, the slowest growth rate in 27 years,
according to MarketWatch. CNBC reported that, as of July 1, 2019, the current
U.S. economic expansion will become the longest in its history, breaking the
previous record of 120 months of growth from March 1991 to March 2001, according
to data from the National Bureau of Economic Research.
Investors continue to embrace exchange-traded funds (ETFs) and related
exchange-traded products (ETPs). ETFGI, an independent research and consultancy
firm, reported that total assets invested in ETFs/ETPs listed globally stood at
an all-time high of $5.64 trillion at the end of June 2019, up from $4.99
trillion at this point a year ago, according to its own release. In June 2019,
net inflows to ETFs/ETPs listed globally totaled $68.95 billion, bringing
year-to-date net inflows to $209.54 billion.
U.S. STOCKS AND BONDS
In the first half of 2019, three of the major U.S. stock indices posted
double-digit gains. The S&P 500(R) Index, S&P MidCap 400(R) Index and S&P
SmallCap 600(R) Index posted total returns of 18.54%, 17.97%, and 13.69%,
respectively, according to Bloomberg. The S&P 500(R) Index posted its best
showing for the first half of a year since 1997, according to CNBC. All 11 major
S&P 500(R) Index sectors posted positive total returns. The top-performing
sectors were Information Technology, Consumer Discretionary, Industrials and
Real Estate, up 27.13%, 21.84%, 21.38% and 20.42%, respectively, while the two
sectors with the poorest showing, despite generating positive returns, were
Health Care, up 8.07%, and Energy, up 13.13%.
At the end of March 2019, both President Trump and White House economic advisor
Larry Kudlow called on the Federal Reserve (the "Fed") to lower the federal
funds target rate by 50 basis points ("bps"), according to CNBC. While the Fed
has yet to make any rate cuts, bond investors, through their purchasing power,
pushed the yield on the 10-year Treasury Note (T-Note) down from 2.50% at the
close on April 30, 2019 to 2.01% on June 28, 2019, or 49 bps, according to
Bloomberg. Investors have signaled to the Fed that they like the idea of a
couple of rate cuts over the coming months. The Fed has indicated that it would
consider easing rates if the U.S. economy were to weaken.
In the U.S. bond market, all the major bond groups posted positive returns in
the first half of 2019. The top-performing major debt group we track was high
yield corporate bonds. The Bloomberg Barclays U.S. Corporate High Yield Index
posted a total return of 9.94%. The worst-performing debt group that we track
was government bonds. The Bloomberg Barclays U.S. Treasury: Intermediate Index
posted a total return of 3.99%.
FOREIGN STOCKS AND BONDS
The U.S. dollar fell by 0.04% against a basket of major currencies in the first
half of 2019, as measured by the U.S. Dollar Index. With respect to U.S.
investors, a flat U.S. dollar would have little to no impact on the returns of
foreign securities. In the first half of 2019, foreign stocks and bonds
performed well.
The Bloomberg Barclays EM Hard Currency Aggregate Index of emerging markets debt
posted a total return of 8.85% (USD), while the Bloomberg Barclays Global
Aggregate Index of higher quality debt rose 5.57% (USD). With respect to
equities, the MSCI Emerging Markets Index of stocks posted a total return of
10.59% (USD), while the MSCI World ex USA Index posted a total return of 14.64%
(USD).
Page 3
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX FUND (QQEW)
The First Trust NASDAQ-100 Equal Weighted Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the NASDAQ-100 Equal
Weighted Index(SM) (the "Index"). The Fund will normally invest at least 90% of
its net assets (including investment borrowings) in common stocks that comprise
the Index. The Index is the equal-weighted version of the NASDAQ-100 Index(R),
which includes 100 of the largest U.S. and international non-financial companies
listed on The Nasdaq Stock Market LLC ("Nasdaq") based on market capitalization.
The Index is rebalanced quarterly. The Fund's shares are listed for trading on
the Nasdaq. The first day of secondary market trading in shares of the Fund was
April 25, 2006.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (4/19/06) Ended Ended (4/19/06)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 22.36% 10.82% 12.03% 16.63% 10.11% 76.49% 365.78% 256.45%
Market Value 22.36% 10.60% 12.02% 16.63% 10.11% 76.42% 365.70% 256.40%
INDEX PERFORMANCE
NASDAQ-100 Equal Weighted
Index(SM) 22.76% 11.51% 12.72% 17.36% 10.80% 81.94% 395.82% 286.87%
S&P 500(R) Index 18.54% 10.42% 10.71% 14.70% 8.59% 66.33% 294.16% 196.62%
NASDAQ-100 Index(R) 21.85% 10.16% 16.14% 19.24% 13.03% 111.28% 480.98% 403.70%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 37.35%
Consumer Discretionary 16.85
Health Care 15.94
Communication Services 13.94
Industrials 7.99
Consumer Staples 5.96
Financials 1.00
Utilities 0.97
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Western Digital Corp. 1.20%
Micron Technology, Inc. 1.15
Electronic Arts, Inc. 1.08
NVIDIA Corp. 1.06
Mylan N.V. 1.05
Symantec Corp. 1.05
Applied Materials, Inc. 1.04
QUALCOMM, Inc. 1.04
Xilinx, Inc. 1.04
KLA-Tencor Corp. 1.03
-------
Total 10.74%
=======
-----------------------------
Nasdaq(R), Nasdaq-100(R), Nasdaq-100 Index(R), and Nasdaq-100 Equal Weighted
Index(SM) are trademarks of Nasdaq, Inc. (which with its affiliates is referred
to as the "Corporations") and are licensed for use by First Trust. The Fund has
not been passed on by the Corporations as to its legality or suitability. The
Fund is not issued, endorsed, sold, or promoted by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 4
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX FUND (QQEW) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust
NASDAQ-100 Equal NASDAQ-100 Equal S&P 500(R) NASDAQ-100
Weighted Index Fund Weighted Index(SM) Index Index(R)
12/08 $10,000 $10,000 $10,000 $10,000
06/09 12,369 12,401 10,316 12,240
12/09 15,955 16,052 12,646 15,462
06/10 15,055 15,195 11,805 14,508
12/10 19,344 19,582 14,552 18,577
06/11 20,797 21,119 15,427 19,549
12/11 18,807 19,172 14,858 19,258
06/12 20,533 20,984 16,268 22,230
12/12 21,601 22,134 17,236 22,788
06/13 24,971 25,702 19,618 25,087
12/13 30,230 31,207 22,818 31,206
06/14 32,642 33,800 24,447 33,662
12/14 36,014 37,396 25,943 37,264
06/15 36,868 38,394 26,262 38,911
12/15 36,816 38,475 26,301 40,899
06/16 35,756 37,463 27,311 39,603
12/16 39,400 41,419 29,447 43,876
06/17 45,637 48,116 32,197 51,238
12/17 49,648 52,514 35,874 58,350
06/18 51,991 55,145 36,825 64,564
12/18 47,088 50,094 34,302 58,372
06/19 57,610 61,483 40,662 71,108
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 161 3 0 0
01/01/15 - 12/31/15 126 1 0 0
01/01/16 - 12/31/16 107 0 0 0
01/01/17 - 12/31/17 178 0 0 0
01/01/18 - 12/31/18 148 2 0 0
01/01/19 - 06/30/19 56 1 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 87 1 0 0
01/01/15 - 12/31/15 122 3 0 0
01/01/16 - 12/31/16 145 0 0 0
01/01/17 - 12/31/17 73 0 0 0
01/01/18 - 12/31/18 99 2 0 0
01/01/19 - 06/30/19 67 0 0 0
Page 5
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100-TECHNOLOGY SECTOR INDEX FUND (QTEC)
The First Trust NASDAQ-100-Technology Sector Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the NASDAQ-100 Technology
Sector Index(SM) (the "Index"). The Fund will normally invest at least 90% of
its net assets (including investment borrowings) in common stocks that comprise
the Index. The Index is an equal-weighted index based on the securities of the
NASDAQ-100 Index(R) that are classified as "technology" according to the
Industry Classification Benchmark classification system. The NASDAQ-100 Index(R)
includes 100 of the largest U.S. and international non-financial companies
listed on the Nasdaq based on market capitalization. The Index is rebalanced
quarterly. The Fund's shares are listed for trading on the Nasdaq. The first day
of secondary market trading in shares of the Fund was April 25, 2006.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (4/19/06) Ended Ended (4/19/06)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 26.26% 12.09% 17.73% 19.39% 12.34% 126.15% 488.49% 364.32%
Market Value 26.20% 11.90% 17.71% 19.39% 12.34% 125.95% 488.41% 364.25%
INDEX PERFORMANCE
NASDAQ-100 Technology Sector
Index(SM) 26.65% 12.77% 18.47% 20.15% 13.05% 133.34% 526.76% 404.44%
S&P 500(R) Index 18.54% 10.42% 10.71% 14.70% 8.59% 66.33% 294.16% 196.62%
S&P 500 Information Technology
Index 27.13% 14.34% 18.53% 18.57% 12.39% 134.01% 449.43% 367.11%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION (1) LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 87.13%
Communication Services 10.23
Health Care 2.64
-------
Total 100.00%
=======
(1) The above sector classification is based on Standard & Poor's Global
Industry Classification Standard ("GICS"), and is different than the
industry sector classification system used by the Index to select
securities, which is the Industry Classification Benchmark ("ICB") system,
the joint classification system of Dow Jones Indexes and FTSE Group.
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Western Digital Corp. 3.12%
Micron Technology, Inc. 3.00
NVIDIA Corp. 2.77
Symantec Corp. 2.73
Applied Materials, Inc. 2.71
QUALCOMM, Inc. 2.71
Xilinx, Inc. 2.70
KLA-Tencor Corp. 2.69
Broadcom, Inc. 2.69
ASML Holding N.V. 2.68
-------
Total 27.80%
=======
-----------------------------
Nasdaq(R), Nasdaq-100(R), Nasdaq-100 Index(R), and Nasdaq-100 Technology Sector
Index(SM) are trademarks of Nasdaq, Inc. (which with its affiliates is referred
to as the "Corporations") and are licensed for use by First Trust. The Fund has
not been passed on by the Corporations as to its legality or suitability. The
Fund is not issued, endorsed, sold, or promoted by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 6
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100-TECHNOLOGY SECTOR INDEX FUND (QTEC) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust
NASDAQ-100- NASDAQ-100
Technology Sector Technology Sector S&P 500 Information S&P 500(R)
Index Fund Index(SM) Technology Index Index
12/08 $10,000 $10,000 $10,000 $10,000
06/09 13,407 13,452 12,486 10,316
12/09 17,990 18,115 16,171 12,645
06/10 16,623 16,784 14,462 11,804
12/10 21,934 22,220 17,820 14,551
06/11 22,103 22,458 18,187 15,426
12/11 20,673 21,072 18,251 14,857
06/12 21,616 22,102 20,686 16,267
12/12 22,331 22,904 20,957 17,235
06/13 24,948 25,671 22,288 19,617
12/13 30,843 31,840 26,915 22,817
06/14 34,890 36,132 29,321 24,446
12/14 38,501 40,002 32,329 25,942
06/15 37,550 39,122 32,575 26,261
12/15 37,971 39,685 34,246 26,300
06/16 39,084 40,995 34,136 27,310
12/16 47,567 50,073 38,987 29,448
06/17 56,629 59,782 45,704 32,198
12/17 65,579 69,434 54,125 35,882
06/18 70,392 74,746 60,008 36,833
12/18 62,494 66,554 53,971 34,310
06/19 78,905 84,316 68,607 40,064
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 171 4 0 0
01/01/15 - 12/31/15 164 2 0 0
01/01/16 - 12/31/16 147 0 0 0
01/01/17 - 12/31/17 146 0 0 0
01/01/18 - 12/31/18 132 3 1 0
01/01/19 - 06/30/19 71 0 1 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 76 1 0 0
01/01/15 - 12/31/15 85 1 0 0
01/01/16 - 12/31/16 105 0 0 0
01/01/17 - 12/31/17 105 0 0 0
01/01/18 - 12/31/18 111 4 0 0
01/01/19 - 06/30/19 52 0 0 0
Page 7
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR INDEX FUND (QQXT)
The First Trust NASDAQ-100 Ex-Technology Sector Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the NASDAQ-100 Ex-Tech
Sector Index(SM) (the "Index"). The Fund will normally invest at least 90% of
its net assets (including investment borrowings) in common stocks that comprise
the Index. The Index is an equal-weighted index composed of the securities
comprising the NASDAQ-100 Index(R) that are not classified as "technology"
according to the Industry Classification Benchmark classification system. The
NASDAQ-100 Index(R) includes 100 of the largest U.S. and international
non-financial companies listed on the Nasdaq based on market capitalization. The
Index is rebalanced quarterly. The Fund's shares are listed for trading on the
Nasdaq. The first day of secondary market trading in shares of the Fund was
February 15, 2007.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (2/8/07) Ended Ended (2/8/07)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 19.93% 9.78% 9.04% 15.15% 8.95% 54.17% 309.75% 189.29%
Market Value 19.93% 9.78% 9.06% 15.12% 8.95% 54.26% 308.89% 189.30%
INDEX PERFORMANCE
NASDAQ-100 Ex-Tech Sector
Index(SM) 20.34% 10.47% 9.68% 15.86% 9.63% 58.73% 335.70% 212.32%
Russell 1000(R) Index 18.84% 10.02% 10.45% 14.77% 8.20% 64.38% 296.42% 165.36%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Consumer Discretionary 27.43%
Health Care 23.97
Communication Services 16.27
Industrials 13.11
Consumer Staples 9.68
Information Technology 6.35
Financials 1.62
Utilities 1.57
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Electronic Arts, Inc. 1.72%
JD.com, Inc., ADR 1.69
Walgreens Boots Alliance, Inc. 1.69
Mylan N.V. 1.68
American Airlines Group, Inc. 1.67
J.B. Hunt Transport Services, Inc. 1.67
Activision Blizzard, Inc. 1.67
Ctrip.com International Ltd., ADR 1.66
Marriott International, Inc., Class A 1.66
Cintas Corp. 1.65
-------
Total 16.76%
=======
-----------------------------
Nasdaq(R), Nasdaq-100(R), Nasdaq-100 Index(R), and Nasdaq-100 Ex-Tech Sector
Index(SM) are trademarks of Nasdaq, Inc. (which with its affiliates is referred
to as the "Corporations") and are licensed for use by First Trust. The Fund has
not been passed on by the Corporations as to its legality or suitability. The
Fund is not issued, endorsed, sold, or promoted by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 8
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR INDEX FUND (QQXT) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust
NASDAQ-100 NASDAQ-100
Ex-Technology Sector Ex-Tech Sector Russell 1000(R)
Index Fund Index(SM) Index
12/08 $10,000 $10,000 $10,000
06/09 11,710 11,742 10,432
12/09 14,675 14,763 12,843
06/10 14,022 14,147 12,021
12/10 17,704 17,920 14,910
06/11 19,839 20,147 15,860
12/11 17,512 17,852 15,134
06/12 19,748 20,183 16,554
12/12 21,069 21,584 17,620
06/13 25,026 25,761 20,071
12/13 29,758 30,715 23,455
06/14 31,121 32,229 25,160
12/14 34,326 35,639 26,561
06/15 36,190 37,699 27,015
12/15 35,955 37,586 26,804
06/16 33,780 35,383 27,806
12/16 35,189 36,961 30,033
06/17 40,214 42,372 32,817
12/17 42,369 44,770 36,545
06/18 43,704 46,306 37,587
12/18 40,007 42,504 34,798
06/19 47,980 51,159 41,354
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 151 14 0 0
01/01/15 - 12/31/15 201 6 0 0
01/01/16 - 12/31/16 80 0 0 0
01/01/17 - 12/31/17 44 0 0 0
01/01/18 - 12/31/18 96 2 0 0
01/01/19 - 06/30/19 64 1 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 79 7 1 0
01/01/15 - 12/31/15 42 3 0 0
01/01/16 - 12/31/16 172 0 0 0
01/01/17 - 12/31/17 207 0 0 0
01/01/18 - 12/31/18 150 3 0 0
01/01/19 - 06/30/19 59 0 0 0
Page 9
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) GREEN ENERGY INDEX FUND (QCLN)
The First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund (the "Fund")
seeks investment results that correspond generally to the price and yield
(before the Fund's fees and expenses) of an equity index called the NASDAQ(R)
Clean Edge(R) Green Energy Index(SM) (the "Index"). The Fund will normally
invest at least 90% of its net assets (including investment borrowings) in
common stocks that comprise the Index. The Index is designed to track the
performance of small, mid and large capitalization clean-energy companies that
are publicly traded in the United States. The Index is rebalanced quarterly. The
Fund's shares are listed for trading on the Nasdaq. The first day of secondary
market trading in shares of the Fund was February 14, 2007.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (2/8/07) Ended Ended (2/8/07)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 20.43% 9.79% 1.46% 4.99% 0.97% 7.51% 62.81% 12.66%
Market Value 20.81% 9.62% 1.48% 5.01% 0.98% 7.61% 63.10% 12.78%
INDEX PERFORMANCE
NASDAQ(R) Clean Edge(R) Green
Energy Index(SM) 20.51% 9.91% 1.43% 5.05% 1.15% 7.34% 63.66% 15.18%
Russell 2000(R) Index 16.98% -3.31% 7.06% 13.45% 6.87% 40.67% 253.13% 127.72%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 43.31%
Industrials 18.93
Utilities 17.28
Consumer Discretionary 10.11
Materials 8.17
Real Estate 1.65
Energy 0.55
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Tesla, Inc. 8.58%
Universal Display Corp. 7.32
ON Semiconductor Corp. 6.87
Albemarle Corp. 6.15
Hexcel Corp. 5.66
First Solar, Inc. 4.02
Acuity Brands, Inc. 3.97
Littelfuse, Inc. 3.85
Brookfield Renewable Partners, L.P. 3.82
Cree, Inc. 3.62
-------
Total 53.86%
=======
-----------------------------
Nasdaq(R) and Clean Edge(R) are the registered trademarks (the "Marks") of
Nasdaq, Inc. ("Nasdaq") and Clean Edge, Inc. ("Clean Edge(R)") respectively.
Nasdaq and Clean Edge(R) are, collectively with their affiliates, the
"Corporations." The Marks 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 sponsored, endorsed, sold, or promoted by the Corporations. The Fund
should not be construed in any way as investment advice by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 10
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) GREEN ENERGY INDEX FUND (QCLN) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust
NASDAQ(R) NASDAQ(R)
Clean Edge(R) Green Clean Edge(R) Russell 2000(R)
Energy Index Fund Green Energy Index(SM) Index
12/08 $10,000 $10,000 $10,000
06/09 12,368 12,402 10,264
12/09 14,379 14,472 12,717
06/10 11,913 12,025 12,469
12/10 14,674 14,863 16,132
06/11 13,656 13,885 17,134
12/11 8,624 8,798 15,460
06/12 8,347 8,498 16,779
12/12 8,581 8,682 17,987
06/13 12,828 12,944 20,840
12/13 16,285 16,438 24,970
06/14 18,729 18,910 25,767
12/14 15,789 15,924 26,192
06/15 16,945 17,093 27,436
12/15 14,773 14,909 25,035
06/16 13,325 13,414 25,591
12/16 14,459 14,514 30,371
06/17 16,904 16,989 31,887
12/17 19,047 19,165 34,821
06/18 18,338 18,469 37,488
12/18 16,721 16,842 30,983
06/19 20,137 20,296 36,244
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 122 3 0 0
01/01/15 - 12/31/15 160 1 0 0
01/01/16 - 12/31/16 68 0 0 0
01/01/17 - 12/31/17 164 0 0 0
01/01/18 - 12/31/18 151 2 1 0
01/01/19 - 06/30/19 73 0 0 1
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 124 3 0 0
01/01/15 - 12/31/15 89 2 0 0
01/01/16 - 12/31/16 184 0 0 0
01/01/17 - 12/31/17 87 0 0 0
01/01/18 - 12/31/18 95 2 0 0
01/01/19 - 06/30/19 50 0 0 0
Page 11
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST S&P REIT INDEX FUND (FRI)
The First Trust S&P REIT Index Fund (the "Fund") seeks investment results that
correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the S&P United States REIT Index (the
"Index"). The Fund will normally invest at least 90% of its net assets
(including investment borrowings) in common stocks that comprise the Index. The
Index seeks to measure the performance of publicly-traded REITs domiciled in the
United States that meet certain eligibility requirements. The Index is
rebalanced quarterly. The Fund's shares are listed for trading on the NYSE Arca.
The first day of secondary market trading in shares of the Fund was May 10,
2007.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (5/8/07) Ended Ended (5/8/07)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 16.37% 10.28% 7.06% 14.83% 4.58% 40.65% 298.64% 72.18%
Market Value 16.33% 10.24% 7.05% 14.83% 4.57% 40.59% 298.47% 72.13%
INDEX PERFORMANCE
S&P United States REIT Index* 16.74% 10.80% 7.62% 15.43% N/A 44.35% 319.84% N/A
FTSE EPRA/NAREIT North America
Index 16.82% 10.50% 7.20% 15.03% 4.85% 41.54% 305.72% 77.76%
Russell 3000(R) Index 18.71% 8.98% 10.19% 14.67% 7.90% 62.46% 293.01% 151.71%
------------------------------------------------------------------------------------------------------------------------------------
* On November 6, 2008, the Fund's underlying index changed from the S&P REIT
Composite Index to the S&P United States REIT Index. Effective December
31, 2008, the S&P REIT Composite Index was discontinued. Therefore, the
Fund's performance and historical returns shown for the periods prior to
November 6, 2008 are not necessarily indicative of the performance that
the Fund, based on its current Index, would have generated. The inception
date of the Index was June 30, 2008. Returns for the Index are only
disclosed for those periods in which the Index was in existence for the
whole period.
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
REIT CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Residential 19.18%
Retail 17.21
Specialized 15.57
Health Care 13.22
Office 12.56
Industrial 10.41
Diversified 6.19
Hotel & Resort 5.66
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Prologis, Inc. 5.72%
Simon Property Group, Inc. 5.59
Public Storage 4.05
Welltower, Inc. 3.74
AvalonBay Communities, Inc. 3.21
Equity Residential 3.18
Ventas, Inc. 2.86
Digital Realty Trust, Inc. 2.78
Realty Income Corp. 2.46
Boston Properties, Inc. 2.26
-------
Total 35.85%
=======
-----------------------------
The S&P United States REIT Index is a product of S&P Dow Jones Indices LLC
("SPDJI"). Standard & Poor's(R) and S&P(R) are registered trademarks of Standard
& Poor's Financial Services LLC ("S&P"). The marks have been licensed for use by
SPDJI and sub-licensed by First Trust. The Fund is not sponsored, endorsed, sold
or promoted by SPDJI or its affiliates, and SPDJI and its affiliates make no
representation, warranty or condition regarding the advisability of buying,
selling or holding shares of the Fund.
Page 12
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST S&P REIT INDEX FUND (FRI) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust S&P United States FTSE EPRA/NAREIT Russell 3000(R)
S&P REIT Index Fund REIT Index North America Index Index
12/08 $10,000 $10,000 $10,000 $10,000
06/09 8,731 8,757 8,993 10,420
12/09 12,801 12,859 13,222 12,834
06/10 13,500 13,593 13,900 12,058
12/10 16,351 16,521 17,009 15,007
06/11 17,986 18,219 18,807 15,960
12/11 17,642 17,920 18,401 15,160
06/12 20,225 20,595 21,091 16,573
12/12 20,710 21,143 21,741 17,649
06/13 21,971 22,502 22,763 20,130
12/13 21,088 21,649 22,019 23,570
06/14 24,749 25,468 25,780 25,206
12/14 27,333 28,203 28,219 26,529
06/15 25,603 26,483 26,509 27,044
12/15 27,871 28,919 28,730 26,657
06/16 31,483 32,762 32,499 27,622
12/16 30,079 31,376 31,079 30,050
06/17 30,614 32,025 31,642 32,733
12/17 31,217 32,736 32,499 36,399
06/18 31,564 33,184 33,022 37,571
12/18 29,907 31,494 31,232 34,495
06/19 34,803 36,766 36,485 40,949
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 193 0 0 0
01/01/15 - 12/31/15 130 0 0 0
01/01/16 - 12/31/16 156 0 0 0
01/01/17 - 12/31/17 106 0 0 0
01/01/18 - 12/31/18 86 3 1 0
01/01/19 - 06/30/19 75 0 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 59 0 0 0
01/01/15 - 12/31/15 122 0 0 0
01/01/16 - 12/31/16 96 0 0 0
01/01/17 - 12/31/17 145 0 0 0
01/01/18 - 12/31/18 160 0 1 0
01/01/19 - 06/30/19 49 0 0 0
Page 13
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST WATER ETF (FIW)
The First Trust Water ETF (the "Fund") seeks investment results that correspond
generally to the price and yield (before the Fund's fees and expenses) of an
equity index called the ISE Clean Edge Water Index (the "Index"). The Fund will
normally invest at least 90% of its net assets (including investment borrowings)
in common stocks that comprise the Index. The Index is designed to track the
performance of small, mid and large capitalization companies that derive a
substantial portion of their revenue from the potable water and wastewater
industry, according to Clean Edge. The Index is rebalanced semi-annually. The
Fund's shares are listed for trading on the NYSE Arca. The first day of
secondary market trading in shares of the Fund was May 11, 2007.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (5/8/07) Ended Ended (5/8/07)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 25.01% 14.82% 10.49% 13.97% 9.53% 64.66% 269.67% 201.94%
Market Value 25.07% 14.75% 10.50% 13.95% 9.53% 64.71% 269.19% 201.92%
INDEX PERFORMANCE
ISE Clean Edge Water Index 25.40% 15.46% 11.05% 14.66% 10.19% 68.89% 292.84% 225.12%
Russell 3000(R) Index 18.71% 8.98% 10.19% 14.67% 7.90% 62.46% 293.01% 151.71%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Industrials 56.51%
Utilities 21.65
Health Care 12.48
Materials 4.33
Information Technology 4.06
Consumer Staples 0.97
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
IDEXX Laboratories, Inc. 4.83%
IDEX Corp. 4.42
Ecolab, Inc. 4.33
Tetra Tech, Inc. 4.24
American Water Works Co., Inc. 4.23
Roper Technologies, Inc. 4.19
Danaher Corp. 4.17
Xylem, Inc. 4.10
AECOM 3.96
Flowserve Corp. 3.84
-------
Total 42.31%
=======
-----------------------------
"International Securities Exchange(TM)", "ISE(TM)" and "ISE Clean Edge Water
Index" are trademarks of the International Securities Exchange, LLC and have
been licensed for use for certain purposes by First Trust. The Fund, based on
the ISE Clean Edge Water Index, is not sponsored, endorsed, sold or promoted by
the International Securities Exchange, LLC and the International Securities
Exchange, LLC makes no representation regarding the advisability of trading in
such product.
Page 14
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST WATER ETF (FIW) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust ISE Clean Edge Russell 3000(R)
Water ETF Water Index Index
12/08 $10,000 $10,000 $10,000
06/09 10,320 10,362 10,420
12/09 12,031 12,121 12,834
06/10 11,357 11,479 12,058
12/10 14,376 14,591 15,007
06/11 15,049 15,329 15,960
12/11 13,568 13,868 15,160
06/12 14,914 15,306 16,573
12/12 17,209 17,720 17,649
06/13 18,429 19,056 20,130
12/13 22,529 23,372 23,570
06/14 23,171 24,104 25,206
12/14 22,610 23,598 26,529
06/15 21,113 22,102 27,044
12/15 20,391 21,415 26,657
06/16 23,937 25,227 27,622
12/16 26,958 28,486 30,050
06/17 29,433 31,115 32,733
12/17 33,495 35,512 36,399
06/18 33,227 35,256 37,571
12/18 30,516 32,460 34,490
06/19 38,148 40,705 40,943
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 195 0 0 0
01/01/15 - 12/31/15 133 0 0 0
01/01/16 - 12/31/16 152 0 0 0
01/01/17 - 12/31/17 184 0 0 0
01/01/18 - 12/31/18 177 5 1 1
01/01/19 - 06/30/19 107 0 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 56 1 0 0
01/01/15 - 12/31/15 119 0 0 0
01/01/16 - 12/31/16 100 0 0 0
01/01/17 - 12/31/17 67 0 0 0
01/01/18 - 12/31/18 65 1 0 1
01/01/19 - 06/30/19 16 0 1 0
Page 15
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NATURAL GAS ETF (FCG)
The First Trust Natural Gas ETF (the "Fund") seeks investment results that
correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the ISE-Revere Natural Gas(TM) Index (the
"Index"). The Fund will normally invest at least 90% of its net assets
(including investment borrowings) in equity securities that comprise the Index.
The Index is designed to track the performance of mid and large capitalization
companies that derive a substantial portion of their revenue from mid-stream
securities and/or the exploration and production of natural gas. The Index is
rebalanced quarterly. The Fund's shares are listed for trading on the NYSE Arca.
The first day of secondary market trading in shares of the Fund was May 11,
2007.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (5/8/07) Ended Ended (5/8/07)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV -0.19% -36.91% -33.03% -12.78% -13.81% -86.53% -74.53% -83.56%
Market Value -0.26% -37.01% -33.05% -12.80% -13.82% -86.55% -74.58% -83.57%
INDEX PERFORMANCE
ISE-Revere Natural Gas(TM) Index 0.17% -36.66% -33.03% -12.46% -13.48% -86.53% -73.57% -82.77%
S&P Composite 1500(R) Energy Index 12.29% -15.66% -6.67% 4.48% 1.51% -29.19% 55.06% 20.02%
Russell 3000(R) Index 18.71% 8.98% 10.19% 14.67% 7.90% 62.46% 293.01% 151.71%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SUB-INDUSTRY CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Oil & Gas Exploration & Production 83.35%
Oil & Gas Storage & Transportation 15.03
Integrated Oil & Gas 1.62
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Matador Resources Co. 5.31%
Continental Resources, Inc. 5.28
Devon Energy Corp. 4.98
PDC Energy, Inc. 4.91
Concho Resources, Inc. 4.62
Noble Energy, Inc. 4.60
Cimarex Energy Co. 4.56
Murphy Oil Corp. 4.36
Encana Corp. 4.28
Cabot Oil & Gas Corp. 4.03
-------
Total 46.93%
=======
-----------------------------
"International Securities Exchange(TM)", "ISE(TM)" and "ISE-Revere Natural
Gas(TM) Index" are trademarks of the International Securities Exchange, LLC and
have been licensed for use for certain purposes by First Trust. The Fund, based
on the ISE-Revere Natural Gas(TM) Index, is not sponsored, endorsed, sold or
promoted by the International Securities Exchange, LLC and the International
Securities Exchange, LLC makes no representation regarding the advisability of
trading in such product.
Page 16
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NATURAL GAS ETF (FCG) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust ISE-Revere Natural Russell 3000(R) S&P Composite 1500(R)
Natural Gas ETF Gas(TM) Index Index Energy Index
12/08 $10,000 $10,000 $10,000 $10,000
06/09 10,816 10,834 10,420 9,910
12/09 14,920 14,988 12,834 11,641
06/10 12,991 13,116 12,058 10,263
12/10 16,744 17,044 15,007 14,129
06/11 18,454 18,852 15,960 15,752
12/11 15,599 15,990 15,160 14,682
06/12 14,120 14,519 16,573 14,250
12/12 13,492 13,921 17,649 15,319
06/13 13,893 14,360 20,130 16,808
12/13 16,884 17,503 23,570 19,210
06/14 20,462 21,259 25,206 21,700
12/14 9,791 10,147 26,529 17,449
06/15 8,347 8,575 27,044 16,631
12/15 4,005 4,091 26,657 13,598
06/16 4,442 4,526 27,622 15,715
12/16 4,785 4,900 30,050 17,310
06/17 3,812 3,917 32,733 14,918
12/17 4,233 4,367 36,399 16,956
06/18 4,368 4,521 37,571 18,216
12/18 2,761 2,859 34,490 13,682
06/19 2,756 2,864 40,943 15,364
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 140 1 0 0
01/01/15 - 12/31/15 155 1 0 0
01/01/16 - 12/31/16 156 6 1 0
01/01/17 - 12/31/17 116 0 0 0
01/01/18 - 12/31/18 104 6 2 0
01/01/19 - 06/30/19 69 1 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 111 0 0 0
01/01/15 - 12/31/15 93 3 0 0
01/01/16 - 12/31/16 88 1 0 0
01/01/17 - 12/31/17 135 0 0 0
01/01/18 - 12/31/18 137 2 0 0
01/01/19 - 06/30/19 54 0 0 0
Page 17
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CHINDIA ETF (FNI)
The First Trust Chindia ETF (the "Fund") seeks investment results that
correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the ISE ChIndia(TM) Index (the "Index"). The
Fund will normally invest at least 90% of its net assets (including investment
borrowings) in securities that comprise the Index. The Index is a modified
market capitalization weighted index designed to track the performance of
U.S.-listed securities issued by small, mid and large capitalization companies
domiciled in China or India. The Index is rebalanced semi-annually. The Fund's
shares are listed for trading on the NYSE Arca. The first day of secondary
market trading in shares of the Fund was May 11, 2007.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (5/8/07) Ended Ended (5/8/07)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 16.20% -6.02% 5.00% 9.42% 6.08% 27.64% 145.92% 104.82%
Market Value 16.32% -5.97% 5.04% 9.40% 6.08% 27.86% 145.56% 104.76%
INDEX PERFORMANCE
ISE ChIndia(TM) Index 16.49% -5.50% 5.52% 9.95% 6.63% 30.82% 158.18% 118.16%
Russell 3000(R) Index 18.71% 8.98% 10.19% 14.67% 7.90% 62.46% 293.01% 151.71%
MSCI Emerging Markets Index 10.59% 1.21% 2.49% 5.81% 2.93% 13.07% 75.87% 41.96%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Consumer Discretionary 38.07%
Communication Services 20.85
Financials 16.62
Information Technology 13.23
Health Care 5.08
Materials 2.08
Industrials 2.07
Energy 2.00
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
JD.com, Inc., ADR 7.77%
Alibaba Group Holding Ltd., ADR 7.50
Baidu, Inc., ADR 7.05
ICICI Bank Ltd., ADR 6.93
HDFC Bank Ltd., ADR 6.92
Infosys Ltd., ADR 6.75
Ctrip.com International Ltd., ADR 4.03
Pinduoduo, Inc., ADR 4.01
NetEase, Inc., ADR 3.89
Dr. Reddy's Laboratories Ltd., ADR 3.71
-------
Total 58.56%
=======
-----------------------------
"International Securities Exchange(TM)", "ISE(TM)" and "ISE ChIndia(TM) Index"
are trademarks of the International Securities Exchange, LLC and have been
licensed for use for certain purposes by First Trust. The Fund, based on the ISE
ChIndia(TM) Index, is not sponsored, endorsed, sold or promoted by the
International Securities Exchange, LLC and the International Securities
Exchange, LLC makes no representation regarding the advisability of trading in
such product.
Page 18
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST CHINDIA ETF (FNI) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust ISE ChIndia(TM) Russell 3000(R) MSCI Emerging
Chindia ETF Index Index Markets Index
12/08 $10,000 $10,000 $10,000 $10,000
06/09 13,956 14,012 10,420 13,601
12/09 18,157 18,288 12,834 17,850
06/10 17,661 17,851 12,058 16,749
12/10 21,508 21,842 15,007 21,219
06/11 21,861 22,325 15,960 21,406
12/11 15,913 16,199 15,160 17,311
06/12 16,871 17,200 16,573 17,991
12/12 18,634 19,037 17,649 20,465
06/13 18,863 19,328 20,130 18,506
12/13 25,305 25,969 23,570 19,931
06/14 26,887 27,652 25,206 21,155
12/14 25,906 26,684 26,529 19,496
06/15 27,748 28,635 27,044 20,071
12/15 25,822 26,725 26,657 16,587
06/16 24,882 25,822 27,622 17,650
12/16 25,268 26,318 30,050 18,442
06/17 32,437 33,869 32,733 21,841
12/17 37,234 38,949 36,399 25,318
06/18 36,515 38,283 37,571 23,632
12/18 29,533 31,055 34,490 21,626
06/19 34,317 36,176 40,943 23,917
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
QUARTER ENDED 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 96 0 0 0
01/01/15 - 12/31/15 147 0 0 0
01/01/16 - 12/31/16 132 0 0 0
01/01/17 - 12/31/17 189 0 0 0
01/01/18 - 12/31/18 143 1 0 1
01/01/19 - 06/30/19 46 0 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
QUARTER ENDED 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 155 1 0 0
01/01/15 - 12/31/15 105 0 0 0
01/01/16 - 12/31/16 120 0 0 0
01/01/17 - 12/31/17 62 0 0 0
01/01/18 - 12/31/18 105 1 0 0
01/01/19 - 06/30/19 78 0 0 0
Page 19
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK INDEX FUND (QABA)
The First Trust NASDAQ(R) ABA Community Bank Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an equity index called the NASDAQ OMX(R) ABA
Community Bank Index(SM) (the "Index"). The Fund will normally invest at least
90% of its net assets (including investment borrowings) in common stocks that
comprise the Index. The Index is designed to track the performance of small, mid
and large capitalization companies that comprise the community banking industry.
The Index is rebalanced quarterly. The Fund's shares are listed for trading on
the Nasdaq. The first day of secondary market trading in shares of the Fund was
July 1, 2009.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (6/29/09) Ended Ended (6/29/09)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 12.22% -10.47% 7.61% 10.97% 10.78% 44.29% 183.18% 178.36%
Market Value
12.23% -10.54% 7.61% 10.78% 10.77% 44.31% 178.27% 178.27%
INDEX PERFORMANCE
NASDAQ OMX(R) ABA Community
Bank Index(SM) 12.59% -9.96% 8.27% 11.67% 11.48% 48.76% 201.66% 196.52%
S&P Composite 1500(R) Financials
Index 17.18% 5.48% 10.68% 13.37% 13.25% 66.07% 250.62% 247.20%
Russell 3000(R) Index 18.71% 8.98% 10.19% 14.67% 14.58% 62.46% 293.01% 290.05%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 22.)
-----------------------------------------------------------
% OF TOTAL
INDUSTRY CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Banks 87.99%
Thrifts & Mortgage Finance 11.73
IT Services 0.28
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
East West Bancorp, Inc. 2.75%
Commerce Bancshares, Inc. 2.66
BOK Financial Corp. 2.18
Popular, Inc. 2.11
TFS Financial Corp. 2.04
First Citizens BancShares, Inc., Class A 1.88
PacWest Bancorp 1.86
Pinnacle Financial Partners, Inc. 1.78
First Financial Bankshares, Inc. 1.69
Wintrust Financial Corp. 1.67
-------
Total 20.62%
=======
-----------------------------
Nasdaq(R), OMX(R), Nasdaq OMX(R), and NASDAQ OMX(R) ABA Community Bank Index(SM)
are trademarks of Nasdaq, Inc. ("Nasdaq") and American Bankers Association
("ABA") (Nasdaq and ABA, collectively with their affiliates, are referred to as
the "Corporations") and are licensed for use by First Trust. The Fund has not
been passed on by the Corporations as to its legality or suitability. The Fund
is not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS
MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Page 20
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK INDEX FUND (QABA) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust
NASDAQ(R) ABA NASDAQ OMX(R)
Community Bank ABA Community S&P Composite 1500(R) Russell 3000(R)
Index Fund Bank Index(SM) Financials Index Index
06/09 $10,000 $10,000 $10,000 $10,000
12/09 11,280 11,318 12,112 12,224
06/10 11,438 11,505 11,744 11,484
12/10 12,721 12,846 13,722 14,293
06/11 12,520 12,688 13,420 15,201
12/11 11,898 12,095 11,662 14,439
06/12 13,081 13,343 13,227 15,785
12/12 13,507 13,817 14,806 16,809
06/13 16,006 16,427 17,584 19,172
12/13 19,302 19,873 19,879 22,448
06/14 19,296 19,929 20,907 24,006
12/14 19,827 20,537 22,839 25,266
06/15 21,637 22,484 22,892 25,756
12/15 21,390 22,288 22,677 25,388
06/16 21,026 21,976 22,310 26,307
12/16 29,426 30,865 28,184 28,619
06/17 28,402 29,883 29,940 31,175
12/17 29,581 31,239 34,069 34,674
06/18 31,092 32,931 32,917 35,790
12/18 24,805 26,338 29,629 32,855
06/19 27,836 29,654 34,719 39,002
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 115 9 0 0
01/01/15 - 12/31/15 137 5 0 0
01/01/16 - 12/31/16 133 0 0 0
01/01/17 - 12/31/17 128 5 0 0
01/01/18 - 12/31/18 125 12 0 0
01/01/19 - 06/30/19 7 0 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 116 12 0 0
01/01/15 - 12/31/15 110 0 0 0
01/01/16 - 12/31/16 119 0 0 0
01/01/17 - 12/31/17 116 1 1 0
01/01/18 - 12/31/18 106 7 1 0
01/01/19 - 06/30/19 117 0 0 0
Page 21
--------------------------------------------------------------------------------
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 between the highest bid and the lowest offer on the stock
exchange on which shares of the Fund are listed for trading as of the time that
the Fund's NAV is calculated. Since shares of each Fund did not trade in the
secondary market until after the Fund's inception, for the period from inception
to the first day of secondary market trading in shares of the Fund, the NAV of
each Fund is used as a proxy for the secondary market trading price to calculate
market returns. NAV and market returns assume that all distributions have been
reinvested in each Fund at NAV and Market Price, respectively.
An index is a statistical composite that tracks a specified financial market or
sector. Unlike each Fund, the indices do not actually hold a portfolio of
securities and therefore do not incur the expenses incurred by each Fund. These
expenses negatively impact the performance of each Fund. Also, market returns do
not include brokerage commissions that may be payable on secondary market
transactions. If brokerage commissions were included, market returns would be
lower. The total returns presented reflect the reinvestment of dividends on
securities in the indices. The returns presented do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption or
sale of Fund shares. The investment return and principal value of shares of each
Fund will vary with changes in market conditions. Shares of each Fund may be
worth more or less than their original cost when they are redeemed or sold in
the market. Each Fund's past performance is no guarantee of future performance.
Page 22
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2019 (UNAUDITED)
As a shareholder of First Trust NASDAQ-100 Equal Weighted Index Fund, First
Trust NASDAQ-100-Technology Sector Index Fund, First Trust NASDAQ-100
Ex-Technology Sector Index Fund, First Trust NASDAQ(R) Clean Edge(R) Green
Energy Index Fund, First Trust S&P REIT Index Fund, First Trust Water ETF, First
Trust Natural Gas ETF, First Trust Chindia ETF or First Trust NASDAQ(R) ABA
Community Bank Index Fund (each a "Fund" and collectively, the "Funds"), you
incur two types of costs: (1) transaction costs; and (2) ongoing costs,
including management fees, distribution and/or service fees, if any, and other
Fund expenses. This Example is intended to help you understand your ongoing
costs of investing in the Funds and to compare these costs with the ongoing
costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held through the six-month period ended June 30, 2019.
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
JANUARY 1, 2019 JUNE 30, 2019 PERIOD (a) PERIOD (b)
--------------------------------------------------------------------------------------------------------------------------
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX
FUND (QQEW)
Actual $1,000.00 $1,223.60 0.58% $3.20
Hypothetical (5% return before expenses) $1,000.00 $1,021.92 0.58% $2.91
FIRST TRUST NASDAQ-100-TECHNOLOGY SECTOR INDEX
FUND (QTEC)
Actual $1,000.00 $1,262.60 0.57% $3.20
Hypothetical (5% return before expenses) $1,000.00 $1,021.97 0.57% $2.86
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR
INDEX FUND (QQXT)
Actual $1,000.00 $1,199.30 0.60% $3.27
Hypothetical (5% return before expenses) $1,000.00 $1,021.82 0.60% $3.01
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) GREEN ENERGY
INDEX FUND (QCLN)
Actual $1,000.00 $1,204.30 0.60% $3.28
Hypothetical (5% return before expenses) $1,000.00 $1,021.82 0.60% $3.01
FIRST TRUST S&P REIT INDEX FUND (FRI)
Actual $1,000.00 $1,163.70 0.50% $2.68
Hypothetical (5% return before expenses) $1,000.00 $1,022.32 0.50% $2.51
FIRST TRUST WATER ETF (FIW)
Actual $1,000.00 $1,250.10 0.55% $3.07
Hypothetical (5% return before expenses) $1,000.00 $1,022.07 0.55% $2.76
Page 23
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
--------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
EXPENSE RATIO EXPENSES PAID
BEGINNING ENDING BASED ON THE DURING THE
ACCOUNT VALUE ACCOUNT VALUE SIX-MONTH SIX-MONTH
JANUARY 1, 2019 JUNE 30, 2019 PERIOD (a) PERIOD (b)
--------------------------------------------------------------------------------------------------------------------------
FIRST TRUST NATURAL GAS ETF (FCG)
Actual $1,000.00 $ 998.10 0.60% $2.97
Hypothetical (5% return before expenses) $1,000.00 $1,021.82 0.60% $3.01
FIRST TRUST CHINDIA ETF (FNI)
Actual $1,000.00 $1,162.00 0.59% $3.16
Hypothetical (5% return before expenses) $1,000.00 $1,021.87 0.59% $2.96
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK
INDEX FUND (QABA)
Actual $1,000.00 $1,122.20 0.60% $3.16
Hypothetical (5% return before expenses) $1,000.00 $1,021.82 0.60% $3.01
(a) These expense ratios reflect an expense cap for certain Funds. See Note 3
in Notes to Financial Statements.
(b) Expenses are equal to the annualized expense ratio as indicated in the
table multiplied by the average account value over the period (January 1,
2019 through June 30, 2019), multiplied by 181/365 (to reflect the
six-month period).
Page 24
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX FUND (QQEW)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
AIRLINES -- 2.0%
239,146 American Airlines Group, Inc. $ 7,798,551
87,876 United Airlines Holdings, Inc. (a) 7,693,544
--------------
15,492,095
--------------
AUTOMOBILES -- 1.0%
35,146 Tesla, Inc. (a) (b) 7,853,725
--------------
BEVERAGES -- 2.0%
121,838 Monster Beverage Corp. (a) 7,776,919
57,523 PepsiCo, Inc. 7,542,991
--------------
15,319,910
--------------
BIOTECHNOLOGY -- 8.9%
60,343 Alexion Pharmaceuticals, Inc. (a) 7,903,726
41,827 Amgen, Inc. 7,707,880
32,981 Biogen, Inc. (a) 7,713,267
89,412 BioMarin Pharmaceutical, Inc. (a) 7,658,138
78,860 Celgene Corp. (a) 7,289,818
111,969 Gilead Sciences, Inc. 7,564,626
88,339 Incyte Corp. (a) 7,505,281
24,325 Regeneron Pharmaceuticals,
Inc. (a) 7,613,725
42,314 Vertex Pharmaceuticals, Inc. (a) 7,759,541
--------------
68,716,002
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 1.0%
33,103 Cintas Corp. 7,855,011
--------------
COMMUNICATIONS EQUIPMENT
-- 0.9%
133,091 Cisco Systems, Inc. 7,284,070
--------------
ELECTRIC UTILITIES -- 1.0%
126,358 Xcel Energy, Inc. 7,517,037
--------------
ENTERTAINMENT -- 5.1%
169,312 Activision Blizzard, Inc. 7,991,527
82,300 Electronic Arts, Inc. (a) 8,333,698
28,926 NetEase, Inc., ADR 7,398,403
20,863 Netflix, Inc. (a) 7,663,397
68,604 Take-Two Interactive Software,
Inc. (a) 7,788,612
--------------
39,175,637
--------------
FOOD & STAPLES RETAILING -- 2.0%
28,726 Costco Wholesale Corp. 7,591,133
145,800 Walgreens Boots Alliance, Inc. 7,970,886
--------------
15,562,019
--------------
FOOD PRODUCTS -- 2.0%
248,542 Kraft Heinz (The) Co. 7,714,744
138,799 Mondelez International, Inc.,
Class A 7,481,266
--------------
15,196,010
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 2.9%
26,892 Align Technology, Inc. (a) 7,360,340
28,374 IDEXX Laboratories, Inc. (a) 7,812,214
14,664 Intuitive Surgical, Inc. (a) 7,692,001
--------------
22,864,555
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES
-- 1.0%
110,563 Henry Schein, Inc. (a) $ 7,728,354
--------------
HEALTH CARE TECHNOLOGY -- 1.0%
106,754 Cerner Corp. 7,825,068
--------------
HOTELS, RESTAURANTS & LEISURE
-- 3.0%
55,994 Marriott International, Inc.,
Class A 7,855,398
91,263 Starbucks Corp. 7,650,577
63,162 Wynn Resorts Ltd. 7,831,457
--------------
23,337,432
--------------
INSURANCE -- 1.0%
40,348 Willis Towers Watson PLC 7,728,256
--------------
INTERACTIVE MEDIA & SERVICES
-- 3.0%
3,440 Alphabet, Inc., Class A (a) 3,724,832
3,447 Alphabet, Inc., Class C (a) 3,725,897
65,762 Baidu, Inc., ADR (a) 7,717,828
40,312 Facebook, Inc., Class A (a) 7,780,216
--------------
22,948,773
--------------
INTERNET & DIRECT MARKETING RETAIL
-- 7.0%
4,014 Amazon.com, Inc. (a) 7,601,031
4,126 Booking Holdings, Inc. (a) 7,735,053
212,157 Ctrip.com International Ltd.,
ADR (a) 7,830,715
193,439 eBay, Inc. 7,640,841
59,026 Expedia Group, Inc. 7,852,229
262,046 JD.com, Inc., ADR (a) 7,937,373
12,146 MercadoLibre, Inc. (a) 7,430,558
--------------
54,027,800
--------------
IT SERVICES -- 5.8%
45,394 Automatic Data Processing, Inc. 7,504,990
119,629 Cognizant Technology Solutions
Corp., Class A 7,583,282
84,388 Fiserv, Inc. (a) 7,692,810
88,479 Paychex, Inc. 7,280,937
66,101 PayPal Holdings, Inc. (a) 7,565,921
36,632 VeriSign, Inc. (a) 7,661,949
--------------
45,289,889
--------------
LEISURE PRODUCTS -- 1.0%
72,029 Hasbro, Inc. 7,612,025
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 1.0%
21,506 Illumina, Inc. (a) 7,917,434
--------------
MACHINERY -- 1.0%
106,976 PACCAR, Inc. 7,665,900
--------------
MEDIA -- 4.9%
19,461 Charter Communications, Inc.,
Class A (a) 7,690,598
176,656 Comcast Corp., Class A 7,469,016
107,618 Fox Corp., Class A 3,943,123
108,418 Fox Corp., Class B 3,960,510
139,653 Liberty Global PLC, Class A (a) 3,769,234
See Notes to Financial Statements Page 25
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX FUND (QQEW)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDIA (CONTINUED)
143,709 Liberty Global PLC, Class C (a) $ 3,812,600
1,349,167 Sirius XM Holdings, Inc. 7,528,352
--------------
38,173,433
--------------
MULTILINE RETAIL -- 1.0%
69,282 Dollar Tree, Inc. (a) 7,440,194
--------------
PHARMACEUTICALS -- 1.0%
426,603 Mylan N.V. (a) 8,122,521
--------------
PROFESSIONAL SERVICES -- 1.0%
53,094 Verisk Analytics, Inc. 7,776,147
--------------
ROAD & RAIL -- 2.0%
97,158 CSX Corp. 7,517,114
85,349 J.B. Hunt Transport Services, Inc. 7,801,752
--------------
15,318,866
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 17.5%
258,967 Advanced Micro Devices, Inc. (a) 7,864,828
68,409 Analog Devices, Inc. 7,721,324
179,428 Applied Materials, Inc. 8,058,111
38,264 ASML Holding N.V. 7,956,233
27,623 Broadcom, Inc. 7,951,557
162,161 Intel Corp. 7,762,647
67,623 KLA-Tencor Corp. 7,993,039
41,819 Lam Research Corp. 7,855,281
132,746 Maxim Integrated Products, Inc. 7,940,866
90,060 Microchip Technology, Inc. 7,808,202
230,572 Micron Technology, Inc. (a) 8,897,773
49,874 NVIDIA Corp. 8,190,807
78,820 NXP Semiconductors N.V. 7,693,620
105,716 QUALCOMM, Inc. 8,041,816
102,203 Skyworks Solutions, Inc. 7,897,226
68,317 Texas Instruments, Inc. 7,840,059
68,005 Xilinx, Inc. 8,019,150
--------------
135,492,539
--------------
SOFTWARE -- 9.8%
25,657 Adobe, Inc. (a) 7,559,835
45,218 Autodesk, Inc. (a) 7,366,012
107,618 Cadence Design Systems, Inc. (a) 7,620,431
67,253 Check Point Software Technologies
Ltd. (a) 7,775,119
77,273 Citrix Systems, Inc. 7,583,572
29,054 Intuit, Inc. 7,592,682
56,113 Microsoft Corp. 7,516,897
372,275 Symantec Corp. 8,100,704
59,579 Synopsys, Inc. (a) 7,667,222
35,274 Workday, Inc., Class A (a) 7,251,629
--------------
76,034,103
--------------
SPECIALTY RETAIL -- 2.9%
20,534 O'Reilly Automotive, Inc. (a) 7,583,617
73,540 Ross Stores, Inc. 7,289,285
21,536 Ulta Beauty, Inc. (a) 7,470,623
--------------
22,343,525
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 3.2%
38,525 Apple, Inc. $ 7,624,868
124,230 NetApp, Inc. 7,664,991
194,732 Western Digital Corp. 9,259,507
--------------
24,549,366
--------------
TEXTILES, APPAREL & LUXURY GOODS
-- 1.0%
42,348 Lululemon Athletica, Inc. (a) 7,631,533
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 1.0%
233,891 Fastenal Co. 7,622,508
--------------
WIRELESS TELECOMMUNICATION
SERVICES -- 1.0%
100,773 T-Mobile US, Inc. (a) 7,471,310
--------------
TOTAL COMMON STOCKS -- 99.9% 772,893,047
(Cost $660,448,446) --------------
MONEY MARKET FUNDS -- 0.1%
667,654 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.25% (c) (d) 667,654
(Cost $667,654) --------------
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 0.6%
$ 4,956,478 BNP Paribas S.A., 2.48% (c),
dated 06/28/19, due 07/01/19,
with a maturity value of
$4,957,502. Collateralized by
U.S. Treasury Note, interest
rate of 2.625%, due 07/31/20.
The value of the collateral
including accrued interest is
$5,057,853. (d) 4,956,478
(Cost $4,956,478) --------------
TOTAL INVESTMENTS -- 100.6% 778,517,179
(Cost $666,072,578) (e)
NET OTHER ASSETS AND
LIABILITIES -- (0.6)% (4,864,255)
--------------
NET ASSETS -- 100.0% $ 773,652,924
==============
(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 aggregate value of such
securities is $5,524,602 and the total value of the collateral held by the
Fund is $5,624,132.
(c) Rate shown reflects yield as of June 30, 2019.
(d) This security serves as collateral for securities on loan.
Page 26 See Notes to Financial Statements
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX FUND (QQEW)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $141,313,376 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $28,868,775. The net unrealized appreciation
was $112,444,601.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 772,893,047 $ -- $ --
Money Market
Funds 667,654 -- --
Repurchase
Agreements -- 4,956,478 --
-------------------------------------------------------
Total Investments $ 773,560,701 $ 4,956,478 $ --
=======================================================
* See Portfolio of Investments for industry breakout.
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 5,524,602
Non-cash Collateral(2) (5,524,602)
--------------
Net Amount $ --
==============
(1) The amount presented on the Statements of Assets and Liabilities, which is
included in "Investments, at value", is not offset and is shown on a gross
basis.
(2) At June 30, 2019, 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) $ 4,956,478
Non-cash Collateral(4) (4,956,478)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At June 30, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
See Notes to Financial Statements Page 27
FIRST TRUST NASDAQ-100-TECHNOLOGY SECTOR INDEX FUND (QTEC)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
COMMUNICATIONS EQUIPMENT
-- 2.5%
1,093,340 Cisco Systems, Inc. $ 59,838,498
--------------
ENTERTAINMENT -- 2.5%
237,482 NetEase, Inc., ADR 60,740,771
--------------
HEALTH CARE TECHNOLOGY -- 2.6%
874,641 Cerner Corp. 64,111,186
--------------
INTERACTIVE MEDIA & SERVICES
-- 7.7%
28,153 Alphabet, Inc., Class A (a) 30,484,068
28,217 Alphabet, Inc., Class C (a) 30,500,038
539,590 Baidu, Inc., ADR (a) 63,326,282
330,339 Facebook, Inc., Class A (a) 63,755,427
--------------
188,065,815
--------------
IT SERVICES -- 5.1%
979,372 Cognizant Technology Solutions
Corp., Class A 62,082,391
300,466 VeriSign, Inc. (a) 62,845,469
--------------
124,927,860
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 45.6%
2,133,952 Advanced Micro Devices, Inc. (a) 64,808,122
559,452 Analog Devices, Inc. 63,145,347
1,469,769 Applied Materials, Inc. 66,007,326
312,997 ASML Holding N.V. 65,081,466
226,918 Broadcom, Inc. 65,320,616
1,327,812 Intel Corp. 63,562,360
554,153 KLA-Tencor Corp. 65,500,885
342,278 Lam Research Corp. 64,293,500
1,087,714 Maxim Integrated Products, Inc. 65,067,051
738,486 Microchip Technology, Inc. 64,026,736
1,889,568 Micron Technology, Inc. (a) 72,918,429
409,719 NVIDIA Corp. 67,288,151
644,611 NXP Semiconductors N.V. 62,920,480
865,658 QUALCOMM, Inc. 65,850,604
837,337 Skyworks Solutions, Inc. 64,701,030
559,999 Texas Instruments, Inc. 64,265,485
557,493 Xilinx, Inc. 65,739,575
--------------
1,110,497,163
--------------
SOFTWARE -- 25.6%
210,261 Adobe, Inc. (a) 61,953,404
370,734 Autodesk, Inc. (a) 60,392,569
881,014 Cadence Design Systems, Inc. (a) 62,384,601
550,295 Check Point Software Technologies
Ltd. (a) 63,619,605
632,603 Citrix Systems, Inc. 62,083,658
237,994 Intuit, Inc. 62,194,972
459,974 Microsoft Corp. 61,618,117
3,050,893 Symantec Corp. 66,387,432
488,181 Synopsys, Inc. (a) 62,824,013
289,218 Workday, Inc., Class A (a) 59,457,436
--------------
622,915,807
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 8.3%
315,695 Apple, Inc. $ 62,482,355
1,017,322 NetApp, Inc. 62,768,767
1,595,171 Western Digital Corp. 75,850,381
--------------
201,101,503
--------------
TOTAL INVESTMENTS -- 99.9% 2,432,198,603
(Cost $2,039,473,092) (b)
NET OTHER ASSETS AND
LIABILITIES -- 0.1% 1,613,695
--------------
NET ASSETS -- 100.0% $2,433,812,298
==============
(a) Non-income producing security.
(b) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $457,765,448 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $65,039,937. The net unrealized appreciation
was $392,725,511.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 2,432,198,603 $ -- $ --
=======================================================
* See Portfolio of Investments for industry breakout.
Page 28 See Notes to Financial Statements
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR INDEX FUND (QQXT)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) -- 100.0%
AIRLINES -- 3.3%
49,111 American Airlines Group, Inc. $ 1,601,510
17,879 United Airlines Holdings, Inc. (b) 1,565,306
--------------
3,166,816
--------------
AUTOMOBILES -- 1.6%
6,988 Tesla, Inc. (b) (c) 1,561,539
--------------
BEVERAGES -- 3.2%
24,309 Monster Beverage Corp. (b) 1,551,643
11,574 PepsiCo, Inc. 1,517,699
--------------
3,069,342
--------------
BIOTECHNOLOGY -- 14.2%
11,711 Alexion Pharmaceuticals, Inc. (b) 1,533,907
8,286 Amgen, Inc. 1,526,944
6,485 Biogen, Inc. (b) 1,516,647
17,637 BioMarin Pharmaceutical, Inc. (b) 1,510,609
15,675 Celgene Corp. (b) 1,448,997
22,347 Gilead Sciences, Inc. 1,509,763
17,480 Incyte Corp. (b) 1,485,101
4,841 Regeneron Pharmaceuticals,
Inc. (b) 1,515,233
8,428 Vertex Pharmaceuticals, Inc. (b) 1,545,527
--------------
13,592,728
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 1.7%
6,672 Cintas Corp. 1,583,199
--------------
ELECTRIC UTILITIES -- 1.6%
25,194 Xcel Energy, Inc. 1,498,791
--------------
ENTERTAINMENT -- 6.6%
33,771 Activision Blizzard, Inc. 1,593,991
16,264 Electronic Arts, Inc. (b) 1,646,892
4,199 Netflix, Inc. (b) 1,542,377
13,764 Take-Two Interactive Software,
Inc. (b) 1,562,627
--------------
6,345,887
--------------
FOOD & STAPLES RETAILING -- 3.3%
5,826 Costco Wholesale Corp. 1,539,579
29,560 Walgreens Boots Alliance, Inc. 1,616,045
--------------
3,155,624
--------------
FOOD PRODUCTS -- 3.2%
49,251 Kraft Heinz (The) Co. 1,528,751
28,062 Mondelez International, Inc.,
Class A 1,512,542
--------------
3,041,293
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 4.8%
5,468 Align Technology, Inc. (b) 1,496,592
5,660 IDEXX Laboratories, Inc. (b) 1,558,368
2,941 Intuitive Surgical, Inc. (b) 1,542,701
--------------
4,597,661
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES
-- 1.6%
22,187 Henry Schein, Inc. (b) $ 1,550,871
--------------
HOTELS, RESTAURANTS & LEISURE
-- 4.9%
11,311 Marriott International, Inc.,
Class A 1,586,820
18,497 Starbucks Corp. 1,550,604
12,761 Wynn Resorts Ltd. 1,582,236
--------------
4,719,660
--------------
INSURANCE -- 1.6%
8,082 Willis Towers Watson PLC 1,548,026
--------------
INTERNET & DIRECT MARKETING RETAIL
-- 11.4%
811 Amazon.com, Inc. (b) 1,535,734
825 Booking Holdings, Inc. (b) 1,546,636
43,008 Ctrip.com International Ltd.,
ADR (b) 1,587,425
38,712 eBay, Inc. 1,529,124
11,883 Expedia Group, Inc. 1,580,796
53,353 JD.com, Inc., ADR (b) 1,616,062
2,458 MercadoLibre, Inc. (b) 1,503,731
--------------
10,899,508
--------------
IT SERVICES -- 6.3%
9,220 Automatic Data Processing, Inc. 1,524,342
16,948 Fiserv, Inc. (b) 1,544,980
17,920 Paychex, Inc. 1,474,637
13,342 PayPal Holdings, Inc. (b) 1,527,125
--------------
6,071,084
--------------
LEISURE PRODUCTS -- 1.6%
14,454 Hasbro, Inc. 1,527,499
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 1.7%
4,288 Illumina, Inc. (b) 1,578,627
--------------
MACHINERY -- 1.6%
21,733 PACCAR, Inc. 1,557,387
--------------
MEDIA -- 8.1%
3,928 Charter Communications, Inc.,
Class A (b) 1,552,267
35,593 Comcast Corp., Class A 1,504,872
21,427 Fox Corp., Class A 785,085
21,606 Fox Corp., Class B 789,267
28,190 Liberty Global PLC, Class A (b) 760,848
28,883 Liberty Global PLC, Class C (b) 766,266
276,863 Sirius XM Holdings, Inc. 1,544,896
--------------
7,703,501
--------------
MULTILINE RETAIL -- 1.6%
13,820 Dollar Tree, Inc. (b) 1,484,130
--------------
PHARMACEUTICALS -- 1.7%
84,631 Mylan N.V. (b) 1,611,374
--------------
PROFESSIONAL SERVICES -- 1.6%
10,687 Verisk Analytics, Inc. 1,565,218
--------------
See Notes to Financial Statements Page 29
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR INDEX FUND (QQXT)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (a) (CONTINUED)
ROAD & RAIL -- 3.3%
19,708 CSX Corp. $ 1,524,808
17,438 J.B. Hunt Transport Services, Inc. 1,594,008
--------------
3,118,816
--------------
SPECIALTY RETAIL -- 4.7%
4,121 O'Reilly Automotive, Inc. (b) 1,521,968
14,914 Ross Stores, Inc. 1,478,275
4,357 Ulta Beauty, Inc. (b) 1,511,400
--------------
4,511,643
--------------
TEXTILES, APPAREL & LUXURY GOODS
-- 1.6%
8,525 Lululemon Athletica, Inc. (b) 1,536,290
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 1.6%
47,559 Fastenal Co. 1,549,948
--------------
WIRELESS TELECOMMUNICATION
SERVICES -- 1.6%
20,481 T-Mobile US, Inc. (b) 1,518,461
--------------
TOTAL COMMON STOCKS -- 100.0% 95,664,923
(Cost $78,690,250) --------------
MONEY MARKET FUNDS -- 0.2%
108,446 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class 2.19% (d) 108,446
128,608 Goldman Sachs Financial Square
Treasury Obligations Fund
2.25% (d) (e) 128,608
--------------
TOTAL MONEY MARKET FUNDS
-- 0.2% 237,054
(Cost $237,054) --------------
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.0%
$ 954,745 BNP Paribas S.A., 2.48% (d),
dated 06/28/19, due 07/01/19,
with a maturity value of
$954,943. Collateralized by
U.S. Treasury Note, interest
rate of 2.625%, due 07/31/20.
The value of the collateral
including accrued interest is
$974,273. (e) 954,745
(Cost $954,745) --------------
TOTAL INVESTMENTS -- 101.2% 96,856,722
(Cost $79,882,049) (f)
NET OTHER ASSETS AND
LIABILITIES -- (1.2)% (1,158,375)
--------------
NET ASSETS -- 100.0% $ 95,698,347
==============
(a) The industry allocation is based on Standard & Poor's Global Industry
Classification Standard (GICS), and is different than the industry sector
classification system used by the Index to select securities, which is the
Industry Classification Benchmark (ICB) system, which is maintained by
FTSE International Limited.
(b) Non-income producing security.
(c) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The aggregate value of such
securities is $1,064,117 and the total value of the collateral held by the
Fund is $1,083,353.
(d) Rate shown reflects yield as of June 30, 2019.
(e) This security serves as collateral for securities on loan.
(f) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $22,520,242 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $5,545,569. The net unrealized appreciation was
$16,974,673.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 95,664,923 $ -- $ --
Money Market
Funds 237,054 -- --
Repurchase
Agreements -- 954,745 --
-------------------------------------------------------
Total Investments $ 95,901,977 $ 954,745 $ --
=======================================================
* See Portfolio of Investments for industry breakout.
Page 30 See Notes to Financial Statements
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR INDEX FUND (QQXT)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 1,064,117
Non-cash Collateral(2) (1,064,117)
--------------
Net Amount $ --
==============
(1) The amount presented on the Statements of Assets and Liabilities, which is
included in "Investments, at value", is not offset and is shown on a gross
basis.
(2) At June 30, 2019, 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) $ 954,745
Non-cash Collateral(4) (954,745)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At June 30, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
See Notes to Financial Statements Page 31
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) GREEN ENERGY INDEX FUND (QCLN)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
AEROSPACE & DEFENSE -- 5.6%
73,959 Hexcel Corp. $ 5,981,804
--------------
AUTOMOBILES -- 10.1%
631,191 NIO, Inc., ADR (a) (b) 1,609,537
40,603 Tesla, Inc. (a) (b) 9,073,147
--------------
10,682,684
--------------
CHEMICALS -- 8.2%
92,315 Albemarle Corp. 6,499,899
141,406 Livent Corp. (b) 978,529
37,361 Sociedad Quimica y Minera de
Chile S.A., ADR (a) 1,162,301
--------------
8,640,729
--------------
ELECTRICAL EQUIPMENT -- 13.3%
30,396 Acuity Brands, Inc. 4,191,912
20,744 American Superconductor
Corp. (a) (b) 192,504
225,037 Ballard Power Systems,
Inc. (a) (b) 918,151
58,132 Bloom Energy Corp.,
Class A (a) (b) 713,280
41,508 EnerSys 2,843,298
237,690 Plug Power, Inc. (a) (b) 534,803
111,506 Sunrun, Inc. (b) 2,091,853
33,913 TPI Composites, Inc. (b) 838,329
27,609 Vicor Corp. (b) 857,259
116,815 Vivint Solar, Inc. (b) 852,750
--------------
14,034,139
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 8.7%
163,756 AVX Corp. 2,718,349
38,110 Itron, Inc. (b) 2,384,543
23,032 Littelfuse, Inc. 4,074,591
--------------
9,177,483
--------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 1.6%
61,851 Hannon Armstrong Sustainable
Infrastructure Capital, Inc. 1,742,961
--------------
INDEPENDENT POWER AND RENEWABLE
ELECTRICITY PRODUCERS -- 17.3%
97,063 Atlantica Yield PLC 2,200,418
116,777 Brookfield Renewable Partners,
L.P. (c) 4,039,316
71,018 Clearway Energy, Inc., Class C 1,197,364
54,382 NextEra Energy Partners,
L.P. (c) (d) 2,623,932
49,155 Ormat Technologies, Inc. 3,115,935
95,158 Pattern Energy Group, Inc.,
Class A 2,197,198
202,559 TerraForm Power, Inc., Class A 2,896,594
--------------
18,270,757
--------------
OIL, GAS & CONSUMABLE FUELS
-- 0.5%
36,435 Renewable Energy Group, Inc. (b) 577,859
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 34.6%
37,032 Advanced Energy Industries,
Inc. (b) $ 2,083,791
57,566 Canadian Solar, Inc. (b) 1,256,666
68,173 Cree, Inc. (b) 3,829,959
9,756 Daqo New Energy Corp., ADR (b) 413,362
106,757 Enphase Energy, Inc. (b) 1,946,180
64,767 First Solar, Inc. (b) 4,253,897
28,698 JinkoSolar Holding Co., Ltd.,
ADR (a) (b) 622,460
359,315 ON Semiconductor Corp. (b) 7,261,756
28,349 Power Integrations, Inc. 2,273,023
46,051 SolarEdge Technologies, Inc. (b) 2,876,345
137,921 SunPower Corp. (a) (b) 1,474,375
41,131 Universal Display Corp. 7,735,096
47,143 Veeco Instruments, Inc. (b) 576,087
--------------
36,602,997
--------------
TOTAL COMMON STOCKS -- 99.9% 105,711,413
(Cost $88,998,329) --------------
MONEY MARKET FUNDS -- 1.2%
1,335,639 Goldman Sachs Financial Square
Treasury Obligations Fund
2.25% (e) (f) 1,335,639
(Cost $1,335,639) --------------
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 9.4%
$ 9,915,407 BNP Paribas S.A., 2.48% (e),
dated 06/28/19, due 07/01/19,
with a maturity value of
$9,917,456. Collateralized by
U.S. Treasury Note, interest
rate of 2.625%, due 07/31/20.
The value of the collateral
including accrued interest is
$10,118,207. (f) 9,915,407
(Cost $9,915,407) --------------
TOTAL INVESTMENTS -- 110.5% 116,962,459
(Cost $100,249,375) (g)
NET OTHER ASSETS AND
LIABILITIES -- (10.5)% (11,140,385)
--------------
NET ASSETS -- 100.0% $ 105,822,074
==============
(a) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The aggregate value of such
securities is $10,999,952 and the total value of the collateral held by
the Fund is $11,251,046.
(b) Non-income producing security.
(c) Security is a Master Limited Partnership ("MLP").
(d) NextEra Energy Partners, L.P. is taxed as a "C" corporation for federal
income tax purposes.
Page 32 See Notes to Financial Statements
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) GREEN ENERGY INDEX FUND (QCLN)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
(e) Rate shown reflects yield as of June 30, 2019.
(f) This security serves as collateral for securities on loan.
(g) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $24,778,195 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $8,065,111. The net unrealized appreciation was
$16,713,084.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 105,711,413 $ -- $ --
Money Market
Funds 1,335,639 -- --
Repurchase
Agreements -- 9,915,407 --
-------------------------------------------------------
Total Investments $ 107,047,052 $ 9,915,407 $ --
=======================================================
* See Portfolio of Investments for industry breakout.
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 10,999,952
Non-cash Collateral(2) (10,999,952)
--------------
Net Amount $ --
==============
(1) The amount presented on the Statements of Assets and Liabilities, which is
included in "Investments, at value", is not offset and is shown on a gross
basis.
(2) At June 30, 2019, 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) $ 9,915,407
Non-cash Collateral(4) (9,915,407)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At June 30, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
See Notes to Financial Statements Page 33
FIRST TRUST S&P REIT INDEX FUND (FRI)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.7%
DIVERSIFIED REITS -- 6.2%
8,227 American Assets Trust, Inc. $ 387,656
84,642 Colony Capital, Inc. 423,210
24,885 Empire State Realty Trust, Inc.,
Class A 368,547
8,577 Essential Properties Realty Trust,
Inc. 171,883
5,286 Gladstone Commercial Corp. 112,169
14,630 Global Net Lease, Inc. 287,041
36,476 Lexington Realty Trust 343,239
25,874 Liberty Property Trust 1,294,735
2,576 One Liberty Properties, Inc. 74,601
3,493 PS Business Parks, Inc. 588,675
35,265 STORE Capital Corp. 1,170,445
169,842 VEREIT, Inc. 1,530,277
13,966 Washington Real Estate Investment
Trust 373,311
29,734 WP Carey, Inc. 2,413,806
--------------
9,539,595
--------------
HEALTH CARE REITS -- 13.2%
16,679 CareTrust REIT, Inc. 396,627
3,127 Community Healthcare Trust, Inc. 123,235
4,703 Global Medical REIT, Inc. 49,381
83,408 HCP, Inc. 2,667,388
22,548 Healthcare Realty Trust, Inc. 706,203
35,789 Healthcare Trust of America, Inc.,
Class A 981,692
6,934 LTC Properties, Inc. 316,606
68,827 Medical Properties Trust, Inc. 1,200,343
7,538 National Health Investors, Inc. 588,190
14,346 New Senior Investment Group, Inc. 96,405
37,435 Omega Healthcare Investors, Inc. 1,375,736
32,332 Physicians Realty Trust 563,870
31,323 Sabra Health Care REIT, Inc. 616,750
41,484 Senior Housing Properties Trust 343,073
2,207 Universal Health Realty Income
Trust 187,441
64,462 Ventas, Inc. 4,405,978
70,662 Welltower, Inc. 5,761,073
--------------
20,379,991
--------------
HOTEL & RESORT REITS -- 5.6%
36,721 Apple Hospitality REIT, Inc. 582,395
15,328 Ashford Hospitality Trust, Inc. 45,524
5,394 Braemar Hotels & Resorts, Inc. 53,401
8,127 Chatham Lodging Trust 153,356
10,604 Chesapeake Lodging Trust 301,366
35,153 DiamondRock Hospitality Co. 363,482
6,296 Hersha Hospitality Trust 104,136
28,695 Hospitality Properties Trust 717,375
129,286 Host Hotels & Resorts, Inc. 2,355,591
35,175 Park Hotels & Resorts, Inc. 969,423
22,796 Pebblebrook Hotel Trust 642,391
30,302 RLJ Lodging Trust 537,557
8,976 Ryman Hospitality Properties, Inc. 727,864
18,337 Summit Hotel Properties, Inc. 210,325
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
HOTEL & RESORT REITS (CONTINUED)
39,898 Sunstone Hotel Investors, Inc. $ 547,002
19,656 Xenia Hotels & Resorts, Inc. 409,828
--------------
8,721,016
--------------
INDUSTRIAL REITS -- 10.4%
33,422 Americold Realty Trust 1,083,541
62,720 Duke Realty Corp. 1,982,579
6,413 EastGroup Properties, Inc. 743,780
22,072 First Industrial Realty Trust,
Inc. 810,925
11,355 Industrial Logistics Properties
Trust 236,411
1,711 Innovative Industrial Properties,
Inc. 211,411
16,436 Monmouth Real Estate Investment
Corp. 222,708
110,073 Prologis, Inc. 8,816,847
18,153 Rexford Industrial Realty, Inc. 732,837
21,926 STAG Industrial, Inc. 663,042
11,016 Terreno Realty Corp. 540,225
--------------
16,044,306
--------------
OFFICE REITS -- 12.5%
19,707 Alexandria Real Estate Equities,
Inc. 2,780,461
26,964 Boston Properties, Inc. 3,478,356
30,736 Brandywine Realty Trust 440,139
6,916 City Office REIT, Inc. 82,923
20,396 Columbia Property Trust, Inc. 423,013
19,530 Corporate Office Properties Trust 515,006
25,357 Cousins Properties, Inc. 917,163
28,229 Douglas Emmett, Inc. 1,124,643
11,870 Easterly Government Properties,
Inc. 214,966
21,271 Equity Commonwealth 691,733
18,712 Franklin Street Properties Corp. 138,095
18,094 Highwoods Properties, Inc. 747,282
26,938 Hudson Pacific Properties, Inc. 896,227
21,059 JBG SMITH Properties 828,461
17,620 Kilroy Realty Corp. 1,300,532
15,764 Mack-Cali Realty Corp. 367,144
8,780 NorthStar Realty Europe Corp. 144,255
8,392 Office Properties Income Trust 220,458
35,188 Paramount Group, Inc. 492,984
21,917 Piedmont Office Realty Trust, Inc.,
Class A 436,806
14,715 SL Green Realty Corp. 1,182,644
30,292 Vornado Realty Trust 1,941,717
--------------
19,365,008
--------------
RESIDENTIAL REITS -- 19.1%
23,952 American Campus Communities,
Inc. 1,105,624
45,405 American Homes 4 Rent, Class A 1,103,796
25,970 Apartment Investment &
Management Co., Class A 1,301,616
24,326 AvalonBay Communities, Inc. 4,942,557
3,919 Bluerock Residential Growth
REIT, Inc. 46,048
1,609 BRT Apartments Corp. 22,735
Page 34 See Notes to Financial Statements
FIRST TRUST S&P REIT INDEX FUND (FRI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
RESIDENTIAL REITS (CONTINUED)
16,871 Camden Property Trust $ 1,761,164
2,642 Clipper Realty, Inc. 29,538
15,693 Equity LifeStyle Properties, Inc. 1,904,189
64,646 Equity Residential 4,907,924
11,468 Essex Property Trust, Inc. 3,347,853
8,516 Front Yard Residential Corp. 104,066
15,676 Independence Realty Trust, Inc. 181,371
2,051 Investors Real Estate Trust 120,332
66,876 Invitation Homes, Inc. 1,787,595
19,892 Mid-America Apartment
Communities, Inc. 2,342,482
3,713 NexPoint Residential Trust, Inc. 153,718
7,566 Preferred Apartment Communities,
Inc., Class A 113,112
15,737 Sun Communities, Inc. 2,017,326
49,173 UDR, Inc. 2,207,376
6,343 UMH Properties, Inc. 78,717
--------------
29,579,139
--------------
RETAIL REITS -- 17.2%
14,443 Acadia Realty Trust 395,305
6,712 Agree Realty Corp. 429,904
659 Alexander's, Inc. 244,028
9,452 American Finance Trust, Inc. 103,027
51,999 Brixmor Property Group, Inc. 929,742
30,272 CBL & Associates Properties, Inc. 31,483
14,995 Cedar Realty Trust, Inc. 39,737
13,071 Federal Realty Investment Trust 1,683,022
5,938 Getty Realty Corp. 182,653
73,646 Kimco Realty Corp. 1,360,978
14,647 Kite Realty Group Trust 221,609
18,485 Macerich (The) Co. 619,063
28,387 National Retail Properties, Inc. 1,504,795
10,398 Pennsylvania Real Estate
Investment Trust 67,587
54,936 Realty Income Corp. 3,788,936
29,160 Regency Centers Corp. 1,946,138
19,947 Retail Opportunity Investments
Corp. 341,692
37,271 Retail Properties of America,
Inc., Class A 438,307
2,758 Retail Value, Inc. 95,978
14,022 RPT Realty 169,806
2,029 Saul Centers, Inc. 113,888
4,858 Seritage Growth Properties,
Class A 208,700
53,918 Simon Property Group, Inc. 8,613,940
24,889 SITE Centers Corp. 329,530
7,531 Spirit MTA REIT 62,809
15,240 Spirit Realty Capital, Inc. 650,138
16,421 Tanger Factory Outlet Centers,
Inc. 266,184
10,674 Taubman Centers, Inc. 435,819
21,011 Urban Edge Properties 364,121
5,218 Urstadt Biddle Properties, Inc.,
Class A 109,578
32,544 Washington Prime Group, Inc. 124,318
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
RETAIL REITS (CONTINUED)
20,877 Weingarten Realty Investors $ 572,447
6,950 Whitestone REIT 88,196
--------------
26,533,458
--------------
SPECIALIZED REITS -- 15.5%
20,777 CoreCivic, Inc. 431,330
6,439 CoreSite Realty Corp. 741,580
32,888 CubeSmart 1,099,775
19,749 CyrusOne, Inc. 1,139,912
36,345 Digital Realty Trust, Inc. 4,281,078
13,174 EPR Properties 982,649
22,241 Extra Space Storage, Inc. 2,359,770
5,198 Farmland Partners, Inc. 36,646
11,936 Four Corners Property Trust, Inc. 326,211
35,207 Gaming and Leisure Properties,
Inc. 1,372,369
21,150 GEO Group (The), Inc. 444,361
2,803 Gladstone Land Corp. 32,319
50,061 Iron Mountain, Inc. 1,566,909
8,137 Life Storage, Inc. 773,666
9,926 National Storage Affiliates Trust 287,258
26,191 Public Storage 6,237,910
9,659 QTS Realty Trust, Inc., Class A 446,053
1,398 Safehold, Inc. 42,220
63,826 VICI Properties, Inc. 1,406,725
--------------
24,008,741
--------------
TOTAL COMMON STOCKS -- 99.7% 154,171,254
(Cost $162,218,088) --------------
MONEY MARKET FUNDS -- 0.1%
214,419 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class 2.19% (a) 214,419
(Cost $214,419) --------------
TOTAL INVESTMENTS -- 99.8% 154,385,673
(Cost $162,432,507) (b)
NET OTHER ASSETS AND
LIABILITIES -- 0.2% 341,445
--------------
NET ASSETS -- 100.0% $ 154,727,118
==============
(a) Rate shown reflects yield as of June 30, 2019.
(b) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $6,775,404 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $14,822,238. The net unrealized depreciation
was $8,046,834.
See Notes to Financial Statements Page 35
FIRST TRUST S&P REIT INDEX FUND (FRI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 154,171,254 $ -- $ --
Money Market
Funds 214,419 -- --
-------------------------------------------------------
Total Investments $ 154,385,673 $ -- $ --
=======================================================
* See Portfolio of Investments for industry breakout.
Page 36 See Notes to Financial Statements
FIRST TRUST WATER ETF (FIW)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 100.0%
BEVERAGES -- 1.0%
306,491 Primo Water Corp. (a) $ 3,769,839
--------------
BUILDING PRODUCTS -- 5.8%
277,065 A.O. Smith Corp. 13,066,386
292,985 Advanced Drainage Systems, Inc. 9,606,978
--------------
22,673,364
--------------
CHEMICALS -- 4.3%
85,182 Ecolab, Inc. 16,818,334
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 4.2%
209,754 Tetra Tech, Inc. 16,476,177
--------------
CONSTRUCTION & ENGINEERING
-- 8.2%
406,640 AECOM (a) 15,391,324
259,002 Aegion Corp. (a) 4,765,637
92,170 Valmont Industries, Inc. 11,688,078
--------------
31,845,039
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 4.1%
122,264 Badger Meter, Inc. 7,297,938
135,713 Itron, Inc. (a) 8,491,563
--------------
15,789,501
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 9.0%
113,275 Danaher Corp. 16,189,263
68,180 IDEXX Laboratories, Inc. (a) 18,771,999
--------------
34,961,262
--------------
INDUSTRIAL CONGLOMERATES -- 4.2%
44,455 Roper Technologies, Inc. 16,282,088
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 3.5%
181,116 Agilent Technologies, Inc. 13,523,932
--------------
MACHINERY -- 34.0%
560,631 Energy Recovery, Inc. (a) 5,841,775
529,753 Evoqua Water Technologies
Corp. (a) 7,543,683
283,482 Flowserve Corp. 14,936,667
202,799 Franklin Electric Co., Inc. 9,632,952
132,989 Gorman-Rupp (The) Co. 4,366,029
99,847 IDEX Corp. 17,187,663
77,799 Lindsay Corp. 6,395,856
217,671 Mueller Industries, Inc. 6,371,230
689,084 Mueller Water Products, Inc.,
Class A 6,766,805
338,224 Pentair PLC 12,581,933
404,611 Rexnord Corp. (a) 12,227,344
133,986 Watts Water Technologies, Inc.,
Class A 12,484,815
190,443 Xylem, Inc. 15,928,652
--------------
132,265,404
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
WATER UTILITIES -- 21.7%
151,706 American States Water Co. $ 11,414,359
141,586 American Water Works Co., Inc. 16,423,976
350,294 Aqua America, Inc. 14,491,663
203,264 AquaVenture Holdings Ltd. (a) 4,059,182
207,441 California Water Service Group 10,502,738
691,731 Cia de Saneamento Basico do
Estado de Sao Paulo, ADR 8,418,366
122,204 Middlesex Water Co. 7,240,587
117,606 SJW Group 7,146,917
123,356 York Water (The) Co. 4,406,276
--------------
84,104,064
--------------
TOTAL COMMON STOCKS -- 100.0% 388,509,004
(Cost $319,323,878) --------------
MONEY MARKET FUNDS -- 0.0%
36,971 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class 2.19% (b) 36,971
(Cost $36,971) --------------
TOTAL INVESTMENTS -- 100.0% 388,545,975
(Cost $319,360,849) (c)
NET OTHER ASSETS AND
LIABILITIES -- 0.0% 24,990
--------------
NET ASSETS -- 100.0% $ 388,570,965
==============
(a) Non-income producing security.
(b) Rate shown reflects yield as of June 30, 2019.
(c) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $80,986,105 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $11,800,979. The net unrealized appreciation
was $69,185,126.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 388,509,004 $ -- $ --
Money Market
Funds 36,971 -- --
-------------------------------------------------------
Total Investments $ 388,545,975 $ -- $ --
=======================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 37
FIRST TRUST NATURAL GAS ETF (FCG)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.8%
OIL, GAS & CONSUMABLE FUELS
-- 99.8%
550,506 Antero Resources Corp. (a) $ 3,044,298
144,557 Cabot Oil & Gas Corp. 3,319,029
63,242 Cimarex Energy Co. 3,752,148
67,905 CNX Midstream Partners, L.P. (b) 954,065
378,780 CNX Resources Corp. (a) 2,768,882
44,126 Comstock Resources, Inc. (a) (c) 245,782
36,903 Concho Resources, Inc. 3,807,651
103,338 Continental Resources, Inc. (a) 4,349,496
59,146 DCP Midstream, L.P. (b) 1,732,978
143,753 Devon Energy Corp. 4,099,836
117,884 Enable Midstream Partners,
L.P. (b) 1,616,190
686,303 Encana Corp. 3,520,734
384,673 Enerplus Corp. 2,896,588
7,919 EQM Midstream Partners, L.P. (b) 353,821
197,640 EQT Corp. 3,124,688
398,829 Gulfport Energy Corp. (a) 1,958,250
23,817 Hess Midstream Partners, L.P. (b) 464,431
220,001 Matador Resources Co. (a) 4,373,620
85,120 MPLX, L.P. (b) 2,740,013
145,546 Murphy Oil Corp. 3,587,709
169,010 Noble Energy, Inc. 3,785,824
112,033 PDC Energy, Inc. (a) 4,039,910
387,359 QEP Resources, Inc. (a) 2,800,606
462,509 Range Resources Corp. 3,228,313
240,792 SM Energy Co. 3,014,716
460,253 SRC Energy, Inc. (a) 2,282,855
100,218 Summit Midstream Partners,
L.P. (b) 745,622
34,872 TC PipeLines, L.P. (b) 1,311,885
149,586 Unit Corp. (a) 1,329,819
145,417 Vermilion Energy, Inc. (c) 3,159,911
297,986 W&T Offshore, Inc. (a) 1,478,011
79,995 Western Midstream Partners,
L.P. (b) 2,461,446
--------------
TOTAL COMMON STOCKS -- 99.8% 82,349,127
(Cost $122,323,393) --------------
MONEY MARKET FUNDS -- 0.4%
313,193 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.25% (d) (e) 313,193
(Cost $313,193) --------------
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 2.8%
$ 2,325,057 BNP Paribas S.A., 2.48% (d),
dated 06/28/19, due 07/01/19,
with a maturity value of
$2,325,537. Collateralized by
U.S. Treasury Note, interest
rate of 2.625%, due 07/31/20.
The value of the collateral
including accrued interest is
$2,372,611. (e) $ 2,325,057
(Cost $2,325,057) --------------
TOTAL INVESTMENTS -- 103.0% 84,987,377
(Cost $124,961,643) (f)
NET OTHER ASSETS AND
LIABILITIES -- (3.0)% (2,494,936)
--------------
NET ASSETS -- 100.0% $ 82,492,441
==============
(a) Non-income producing security.
(b) Security is a Master Limited Partnership ("MLP").
(c) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The aggregate value of such
securities is $2,610,525 and the total value of the collateral held by the
Fund is $2,638,250.
(d) Rate shown reflects yield as of June 30, 2019.
(e) This security serves as collateral for securities on loan.
(f) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $1,010,345 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $40,984,611. The net unrealized depreciation
was $39,974,266.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 82,349,127 $ -- $ --
Money Market
Funds 313,193 -- --
Repurchase
Agreements -- 2,325,057 --
-------------------------------------------------------
Total Investments $ 82,662,320 $ 2,325,057 $ --
=======================================================
* See Portfolio of Investments for industry breakout.
Page 38 See Notes to Financial Statements
FIRST TRUST NATURAL GAS ETF (FCG)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 2,610,525
Non-cash Collateral(2) (2,610,525)
--------------
Net Amount $ --
==============
(1) The amount presented on the Statements of Assets and Liabilities, which is
included in "Investments, at value", is not offset and is shown on a gross
basis.
(2) At June 30, 2019, 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) $ 2,325,057
Non-cash Collateral(4) (2,325,057)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At June 30, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
See Notes to Financial Statements Page 39
FIRST TRUST CHINDIA ETF (FNI)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.8%
AIR FREIGHT & LOGISTICS -- 0.7%
38,083 ZTO Express Cayman, Inc., ADR $ 728,147
--------------
AUTOMOBILES -- 4.1%
225,269 NIO, Inc., ADR (a) (b) 574,436
319,543 Tata Motors Ltd., ADR (b) 3,732,262
--------------
4,306,698
--------------
BANKS -- 13.8%
56,343 HDFC Bank Ltd., ADR 7,326,844
582,965 ICICI Bank Ltd., ADR 7,339,529
--------------
14,666,373
--------------
BIOTECHNOLOGY -- 1.4%
5,825 BeiGene Ltd., ADR (b) 722,009
7,648 China Biologic Products Holdings,
Inc. (b) 728,854
--------------
1,450,863
--------------
CAPITAL MARKETS -- 0.7%
17,965 Noah Holdings Ltd., ADR (b) 764,411
--------------
CONSUMER FINANCE -- 1.3%
60,800 LexinFintech Holdings Ltd.,
ADR (b) 678,528
100,302 Qudian, Inc., ADR (b) 752,265
--------------
1,430,793
--------------
DIVERSIFIED CONSUMER SERVICES
-- 2.8%
8,022 New Oriental Education &
Technology Group, Inc., ADR (b) 774,765
58,083 TAL Education Group, ADR (b) 2,212,962
--------------
2,987,727
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 1.3%
14,151 China Telecom Corp., Ltd., ADR 707,975
65,435 China Unicom (Hong Kong) Ltd.,
ADR 713,241
--------------
1,421,216
--------------
ENTERTAINMENT -- 6.2%
50,892 Bilibili, Inc., ADR (b) 828,013
88,886 Eros International PLC (a) (b) 119,996
32,151 HUYA, Inc., ADR (b) 794,451
37,688 iQIYI, Inc., ADR (b) 778,257
16,077 NetEase, Inc., ADR 4,112,014
--------------
6,632,731
--------------
HOTELS, RESTAURANTS & LEISURE
-- 3.7%
22,451 Huazhu Group Ltd., ADR 813,849
35,602 Melco Resorts & Entertainment
Ltd., ADR 773,275
49,954 Yum China Holdings, Inc. 2,307,875
--------------
3,894,999
--------------
INSURANCE -- 0.7%
59,129 China Life Insurance Co., Ltd.,
ADR 731,426
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
INTERACTIVE MEDIA & SERVICES
-- 11.3%
12,049 58.com, Inc., ADR (b) $ 749,086
7,996 Autohome, Inc., ADR (b) 684,618
63,596 Baidu, Inc., ADR (b) 7,463,627
24,923 Momo, Inc., ADR 892,243
17,067 SINA Corp. (b) 736,100
16,551 Weibo Corp., ADR (b) 720,796
10,038 YY, Inc., ADR (b) 699,548
--------------
11,946,018
--------------
INTERNET & DIRECT MARKETING RETAIL
-- 27.5%
46,871 Alibaba Group Holding Ltd.,
ADR (b) 7,942,291
17,513 Baozun, Inc., ADR (a) (b) 873,198
115,671 Ctrip.com International Ltd.,
ADR (b) 4,269,417
271,567 JD.com, Inc., ADR (b) 8,225,765
85,050 MakeMyTrip Ltd. (b) 2,109,240
205,843 Pinduoduo, Inc., ADR (b) 4,246,541
298,726 Uxin Ltd., ADR (a) (b) 657,197
91,126 Vipshop Holdings Ltd., ADR (b) 786,417
--------------
29,110,066
--------------
IT SERVICES -- 13.2%
21,150 GDS Holdings Ltd., ADR (a) (b) 794,605
668,155 Infosys Ltd., ADR 7,149,258
904,408 Wipro Ltd., ADR 3,916,087
36,119 WNS (Holdings) Ltd., ADR (b) 2,138,245
--------------
13,998,195
--------------
MARINE -- 0.7%
73,798 Seaspan Corp. (a) 723,958
--------------
METALS & MINING -- 2.1%
216,316 Vedanta Ltd., ADR 2,199,934
--------------
OIL, GAS & CONSUMABLE FUELS
-- 2.0%
10,394 China Petroleum & Chemical
Corp., ADR 708,871
4,230 CNOOC Ltd., ADR 720,581
12,420 PetroChina Co., Ltd., ADR (a) 683,969
--------------
2,113,421
--------------
PHARMACEUTICALS -- 3.7%
104,892 Dr. Reddy's Laboratories Ltd.,
ADR 3,930,303
--------------
PROFESSIONAL SERVICES -- 0.7%
9,764 51job, Inc., ADR (b) 737,182
--------------
WIRELESS TELECOMMUNICATION
SERVICES -- 1.9%
45,613 China Mobile Ltd., ADR 2,065,813
--------------
TOTAL COMMON STOCKS -- 99.8% 105,840,274
(Cost $121,578,476) --------------
Page 40 See Notes to Financial Statements
FIRST TRUST CHINDIA ETF (FNI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
MONEY MARKET FUNDS -- 0.4%
439,936 Goldman Sachs Financial Square
Treasury Obligations Fund
2.25% (c) (d) $ 439,936
(Cost $439,936) --------------
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 3.1%
$ 3,265,958 BNP Paribas S.A., 2.48% (c),
dated 06/28/19, due 07/01/19,
with a maturity value of
$3,266,633. Collateralized by
U.S. Treasury Note, interest
rate of 2.625%, due 07/31/20.
The value of the collateral
including accrued interest is
$3,332,757. (d) 3,265,958
(Cost $3,265,958) --------------
TOTAL INVESTMENTS -- 103.3% 109,546,168
(Cost $125,284,370) (e)
NET OTHER ASSETS AND
LIABILITIES -- (3.3)% (3,524,213)
--------------
NET ASSETS -- 100.0% $ 106,021,955
==============
(a) All or a portion of this security is on loan (see Note 2D - Securities
Lending in the Notes to Financial Statements). The aggregate value of such
securities is $3,634,765 and the total value of the collateral held by the
Fund is $3,705,894.
(b) Non-income producing security.
(c) Rate shown reflects yield as of June 30, 2019.
(d) This security serves as collateral for securities on loan.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $8,272,283 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $24,010,485. The net unrealized depreciation
was $15,738,202.
ADR - American Depositary Receipt
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 105,840,274 $ -- $ --
Money Market
Funds 439,936 -- --
Repurchase
Agreements -- 3,265,958 --
-------------------------------------------------------
Total Investments $ 106,280,210 $ 3,265,958 $ --
=======================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 41
FIRST TRUST CHINDIA ETF (FNI)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 3,634,765
Non-cash Collateral(2) (3,634,765)
--------------
Net Amount $ --
==============
(1) The amount presented on the Statements of Assets and Liabilities, which is
included in "Investments, at value", is not offset and is shown on a gross
basis.
(2) At June 30, 2019, 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) $ 3,265,958
Non-cash Collateral(4) (3,265,958)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At June 30, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
Page 42 See Notes to Financial Statements
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK INDEX FUND (QABA)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
BANKS -- 87.9%
18,375 1st Source Corp. $ 852,600
15,278 Allegiance Bancshares, Inc. (a) 509,368
22,745 Amalgamated Bank, Class A 396,900
20,751 Amerant Bancorp, Inc. (a) (b) 409,002
7,995 American National Bankshares, Inc. 309,806
34,065 Ameris Bancorp 1,335,007
17,256 Atlantic Capital Bancshares,
Inc. (a) 295,423
58,740 Atlantic Union Bankshares Corp. 2,075,284
23,356 BancFirst Corp. 1,299,995
40,424 Bancorp (The), Inc. (a) 360,582
9,842 Bank of Marin Bancorp 403,719
92,325 Bank OZK 2,778,059
11,109 BankFinancial Corp. 155,415
25,142 Banner Corp. 1,361,439
51,149 BOK Financial Corp. 3,860,727
59,973 Boston Private Financial Holdings,
Inc. 723,874
14,212 Bridge Bancorp, Inc. 418,686
57,107 Brookline Bancorp, Inc. 878,306
14,423 Bryn Mawr Bank Corp. 538,266
11,112 Camden National Corp. 509,707
12,561 Capstar Financial Holdings, Inc. 190,299
15,975 Carolina Financial Corp. 560,563
57,545 Cathay General Bancorp 2,066,441
18,612 CBTX, Inc. 523,742
93,494 CenterState Bank Corp. 2,153,167
2,584 Century Bancorp, Inc., Class A 227,134
51,222 Chemical Financial Corp. 2,105,736
3,463 Chemung Financial Corp. 167,401
11,799 City Holding Co. 899,792
11,185 Civista Bancshares, Inc. 251,103
52,656 Columbia Banking System, Inc. 1,905,094
79,109 Commerce Bancshares, Inc. 4,719,643
12,723 Community Trust Bancorp, Inc. 538,056
25,382 ConnectOne Bancorp, Inc. 575,156
100,230 CVB Financial Corp. 2,107,837
24,726 Eagle Bancorp, Inc. 1,338,418
104,191 East West Bancorp, Inc. 4,873,013
19,243 Enterprise Financial Services
Corp. 800,509
11,268 Equity Bancshares, Inc.,
Class A (a) 300,405
11,442 Financial Institutions, Inc. 333,534
21,294 First Bancorp 775,527
12,293 First Bancshares, (The), Inc. 372,970
39,820 First Busey Corp. 1,051,646
7,426 First Citizens BancShares, Inc.,
Class A 3,343,705
11,280 First Community Bankshares, Inc. 380,813
70,594 First Financial Bancorp 1,709,787
97,144 First Financial Bankshares, Inc. 2,991,064
8,798 First Financial Corp. 353,328
31,942 First Foundation, Inc. 429,300
96,651 First Hawaiian, Inc. 2,500,361
7,216 First Internet Bancorp 155,433
30,639 First Interstate BancSystem, Inc.,
Class A 1,213,611
35,557 First Merchants Corp. 1,347,610
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
BANKS (CONTINUED)
11,939 First Mid Bancshares, Inc. $ 416,910
76,529 First Midwest Bancorp, Inc. 1,566,549
17,826 First of Long Island (The) Corp. 357,946
20,178 Flushing Financial Corp. 447,952
120,845 Fulton Financial Corp. 1,978,233
17,891 German American Bancorp, Inc. 538,877
62,020 Glacier Bancorp, Inc. 2,514,911
10,163 Great Southern Bancorp, Inc. 608,256
8,380 Guaranty Bancshares, Inc. 261,037
61,365 Hancock Whitney Corp. 2,458,282
22,141 Hanmi Financial Corp. 493,080
23,309 HarborOne Bancorp, Inc. (a) 436,578
26,247 Heartland Financial USA, Inc. 1,174,028
31,029 Heritage Commerce Corp. 380,105
26,415 Heritage Financial Corp. 780,299
120,265 Home BancShares, Inc. 2,316,304
13,056 HomeTrust Bancshares, Inc. 328,228
90,674 Hope Bancorp, Inc. 1,249,488
32,252 Horizon Bancorp, Inc. 526,998
38,956 IBERIABANK Corp. 2,954,813
24,562 Independent Bank Corp. 1,870,396
16,804 Independent Bank Corp./MI 366,159
31,260 Independent Bank Group, Inc. 1,718,050
46,995 International Bancshares Corp. 1,772,181
199,523 Investors Bancorp, Inc. 2,224,681
36,109 Lakeland Bancorp, Inc. 583,160
18,336 Lakeland Financial Corp. 858,675
34,866 LegacyTexas Financial Group, Inc. 1,419,395
25,442 Live Oak Bancshares, Inc. 436,330
11,757 Mercantile Bank Corp. 383,043
17,226 Midland States Bancorp, Inc. 460,279
11,642 MidWestOne Financial Group, Inc. 325,510
4,657 National Bankshares, Inc. 181,297
31,325 NBT Bancorp, Inc. 1,175,001
6,727 Nicolet Bankshares, Inc. (a) 417,478
12,198 Old Line Bancshares, Inc. 324,589
124,546 Old National Bancorp 2,066,218
21,402 Old Second Bancorp, Inc. 273,304
25,903 Opus Bank 546,812
16,999 Origin Bancorp, Inc. 560,967
6,790 Orrstown Financial Services, Inc. 149,312
44,878 Pacific Premier Bancorp, Inc. 1,385,833
85,068 PacWest Bancorp 3,303,190
13,921 Peapack-Gladstone Financial Corp. 391,459
14,813 Peoples Bancorp, Inc. 477,867
13,459 People's Utah Bancorp 395,695
55,092 Pinnacle Financial Partners, Inc. 3,166,688
69,186 Popular, Inc. 3,752,649
10,943 Preferred Bank 517,057
11,281 QCR Holdings, Inc. 393,368
14,370 RBB Bancorp 277,916
41,970 Renasant Corp. 1,508,402
13,406 Republic Bancorp, Inc., Class A 666,948
42,123 Republic First Bancorp, Inc. (a) 206,824
24,576 S&T Bancorp, Inc. 921,108
25,487 Sandy Spring Bancorp, Inc. 888,987
See Notes to Financial Statements Page 43
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK INDEX FUND (QABA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
BANKS (CONTINUED)
36,806 Seacoast Banking Corp. of
Florida (a) $ 936,345
38,307 ServisFirst Bancshares, Inc. 1,312,398
10,973 Sierra Bancorp 297,588
68,635 Simmons First National Corp.,
Class A 1,596,450
9,987 SmartFinancial, Inc. (a) 216,618
25,319 South State Corp. 1,865,251
5,373 Southern First Bancshares,
Inc. (a) 210,407
17,265 Southern National Bancorp of
Virginia, Inc. 264,327
24,138 Southside Bancshares, Inc. 781,588
16,338 Stock Yards Bancorp, Inc. 590,619
9,071 Summit Financial Group, Inc. 243,556
35,990 Texas Capital Bancshares, Inc. (a) 2,208,706
51,980 TowneBank 1,418,014
21,798 TriCo Bancshares 823,964
21,014 TriState Capital Holdings,
Inc. (a) 448,439
19,118 Triumph Bancorp, Inc. (a) 555,378
46,345 Trustmark Corp. 1,540,971
35,125 UMB Financial Corp. 2,311,927
157,837 Umpqua Holdings Corp. 2,618,516
73,087 United Bankshares, Inc. 2,710,797
56,581 United Community Banks, Inc. 1,615,953
20,966 Univest Financial Corp. 550,567
237,488 Valley National Bancorp 2,560,121
38,846 Veritex Holdings, Inc. 1,008,054
12,402 Washington Trust Bancorp, Inc. 647,136
39,086 WesBanco, Inc. 1,506,765
11,710 West Bancorporation, Inc. 248,486
19,278 Westamerica Bancorporation 1,187,718
40,563 Wintrust Financial Corp. 2,967,589
--------------
156,134,313
--------------
IT SERVICES -- 0.3%
10,398 Cass Information Systems, Inc. 504,095
--------------
THRIFTS & MORTGAGE FINANCE
-- 11.7%
21,526 Bridgewater Bancshares, Inc. (a) 248,410
101,203 Capitol Federal Financial, Inc. 1,393,565
82,961 Columbia Financial, Inc. (a) 1,252,711
25,811 Dime Community Bancshares, Inc. 490,151
14,117 First Defiance Financial Corp. 403,323
1,526 Hingham Institution for Savings 302,163
19,305 HomeStreet, Inc. (a) 572,200
64,816 Kearny Financial Corp. 861,405
40,316 Luther Burbank Corp. 439,041
38,329 Meridian Bancorp, Inc. 685,706
28,240 Meta Financial Group, Inc. 792,132
35,634 Northfield Bancorp, Inc. 556,247
76,062 Northwest Bancshares, Inc. 1,339,452
36,682 OceanFirst Financial Corp. 911,548
32,274 Oritani Financial Corp. 572,541
12,746 PCSB Financial Corp. 258,106
6,675 Southern Missouri Bancorp, Inc. 232,490
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE
(CONTINUED)
37,107 Sterling Bancorp, Inc. $ 369,957
200,435 TFS Financial Corp. 3,621,860
69,312 TrustCo Bank Corp. NY 548,951
34,930 United Community Financial Corp. 334,280
36,601 United Financial Bancorp, Inc. 519,002
57,586 Washington Federal, Inc. 2,011,479
20,031 Waterstone Financial, Inc. 341,729
19,295 Western New England Bancorp,
Inc. 180,215
38,232 WSFS Financial Corp. 1,578,982
--------------
20,817,646
--------------
TOTAL COMMON STOCKS -- 99.9% 177,456,054
(Cost $199,893,396) --------------
MONEY MARKET FUNDS -- 0.0%
14,359 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.25% (c) (d) 14,359
(Cost $14,359) --------------
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 0.0%
$ 106,601 BNP Paribas S.A., 2.48% (c),
dated 06/28/19, due 07/01/19,
with a maturity value of
$106,623. Collateralized by
U.S. Treasury Note, interest
rate of 2.625%, due 07/31/20.
The value of the collateral
including accrued interest is
$108,781. (d) 106,601
(Cost $106,601) --------------
TOTAL INVESTMENTS -- 99.9% 177,577,014
(Cost $200,014,356) (e)
NET OTHER ASSETS AND
LIABILITIES -- 0.1% 109,998
--------------
NET ASSETS -- 100.0% $ 177,687,012
==============
(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 aggregate value of such
securities is $124,173 and the total value of the collateral held by the
Fund is $120,960.
(c) Rate shown reflects yield as of June 30, 2019.
(d) This security serves as collateral for securities on loan.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $3,408,533 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $25,845,875. The net unrealized depreciation
was $22,437,342.
Page 44 See Notes to Financial Statements
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK INDEX FUND (QABA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 177,456,054 $ -- $ --
Money Market
Funds 14,359 -- --
Repurchase
Agreements -- 106,601 --
-------------------------------------------------------
Total Investments $ 177,470,413 $ 106,601 $ --
=======================================================
* See Portfolio of Investments for industry breakout.
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 124,173
Non-cash Collateral(2) (120,960)
--------------
Net Amount $ 3,213
==============
(1) The amount presented on the Statements of Assets and Liabilities, which is
included in "Investments, at value", is not offset and is shown on a gross
basis.
(2) The collateral requirements are determined at the beginning of each
business day based on the market value of the loaned securities from the
end of the prior day. On June 28, 2019, 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 June 27 to June 28, the value of the related securities loaned was
above the collateral value received. See Note 2D -- Securities Lending in
the Notes to Financial Statements.
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) $ 106,601
Non-cash Collateral(4) (106,601)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At June 30, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
See Notes to Financial Statements Page 45
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2019 (UNAUDITED)
FIRST TRUST FIRST TRUST
NASDAQ-100 FIRST TRUST NASDAQ-100
EQUAL NASDAQ-100- EX-TECHNOLOGY
WEIGHTED TECHNOLOGY SECTOR SECTOR
INDEX FUND INDEX FUND INDEX FUND
(QQEW) (QTEC) (QQXT)
---------------- ----------------- ----------------
ASSETS:
Investments, at value............................................... $ 778,517,179 $ 2,432,198,603 $ 96,856,722
Cash................................................................ 1,031,582 1,639,929 --
Receivables:
Investment securities sold.................................... -- -- 413,503
Capital shares sold........................................... 6,669,420 -- --
Dividends..................................................... 399,403 2,081,904 30,969
Securities lending income..................................... 1,941 -- 398
Prepaid expenses.................................................... 1,725 7,647 285
-------------- --------------- --------------
Total Assets.................................................. 786,621,250 2,435,928,083 97,301,877
-------------- --------------- --------------
LIABILITIES:
Due to custodian.................................................... -- -- 20
Payables:
Investment securities purchased............................... 6,663,393 -- 413,749
Capital shares redeemed....................................... -- -- --
Collateral for securities on loan............................. 5,624,132 -- 1,083,353
Investment advisory fees...................................... 242,184 773,455 29,439
Licensing fees................................................ 185,112 609,919 22,724
Shareholder reporting fees.................................... 27,374 97,697 8,516
Audit and tax fees............................................ 14,292 14,292 14,292
Other liabilities................................................... 211,839 620,422 31,437
-------------- --------------- --------------
Total Liabilities............................................. 12,968,326 2,115,785 1,603,530
-------------- --------------- --------------
NET ASSETS.......................................................... $ 773,652,924 $ 2,433,812,298 $ 95,698,347
============== =============== ==============
NET ASSETS CONSIST OF:
Paid-in capital..................................................... $ 673,840,875 $ 1,992,262,956 $ 93,361,720
Par value........................................................... 116,000 284,500 17,500
Accumulated distributable earnings (loss)........................... 99,696,049 441,264,842 2,319,127
-------------- --------------- --------------
NET ASSETS.......................................................... $ 773,652,924 $ 2,433,812,298 $ 95,698,347
============== =============== ==============
NET ASSET VALUE, per share.......................................... $ 66.69 $ 85.55 $ 54.68
============== =============== ==============
Number of shares outstanding (unlimited number of shares
authorized, par value $0.01 per share)........................... 11,600,002 28,450,002 1,750,002
============== =============== ==============
Investments, at cost................................................ $ 666,072,578 $ 2,039,473,092 $ 79,882,049
============== =============== ==============
Securities on loan, at value........................................ $ 5,524,602 $ -- $ 1,064,117
============== =============== ==============
Page 46 See Notes to Financial Statements
FIRST TRUST FIRST TRUST
NASDAQ(R) FIRST TRUST NASDAQ(R) ABA
CLEAN EDGE(R) S&P FIRST TRUST FIRST TRUST FIRST TRUST COMMUNITY
GREEN ENERGY REIT WATER NATURAL GAS CHINDIA BANK
INDEX FUND INDEX FUND ETF ETF ETF INDEX FUND
(QCLN) (FRI) (FIW) (FCG) (FNI) (QABA)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
$ 116,962,459 $ 154,385,673 $ 388,545,975 $ 84,987,377 $ 109,546,168 $ 177,577,014
113,397 -- 3,645 226,986 221,101 155,311
-- -- -- -- 10,764,630 --
-- -- 2,736,414 -- -- --
73,221 668,716 323,134 24,792 124,037 303,288
40,986 -- -- 1,797 4,278 464
342 2,854 3,588 3,003 3,471 1,200
-------------- -------------- -------------- -------------- -------------- --------------
117,190,405 155,057,243 391,612,756 85,243,955 120,663,685 178,037,277
-------------- -------------- -------------- -------------- -------------- --------------
-- -- -- -- -- --
-- 180,062 2,735,927 -- -- --
-- -- -- -- 10,782,430 --
11,251,046 -- -- 2,638,250 3,705,894 120,960
34,212 33,009 118,211 28,473 56,253 79,847
25,023 36,997 43,344 22,509 24,060 42,813
11,487 11,680 23,590 12,568 11,381 20,505
14,293 14,292 14,292 14,292 14,292 14,292
32,270 54,085 106,427 35,422 47,420 71,848
-------------- -------------- -------------- -------------- -------------- --------------
11,368,331 330,125 3,041,791 2,751,514 14,641,730 350,265
-------------- -------------- -------------- -------------- -------------- --------------
$ 105,822,074 $ 154,727,118 $ 388,570,965 $ 82,492,441 $ 106,021,955 $ 177,687,012
============== ============== ============== ============== ============== ==============
$ 124,048,335 $ 161,662,657 $ 327,066,577 $ 595,969,901 $ 183,819,963 $ 213,433,073
50,000 62,000 71,000 56,984 29,500 37,000
(18,276,261) (6,997,539) 61,433,388 (513,534,444) (77,827,508) (35,783,061)
-------------- -------------- -------------- -------------- -------------- --------------
$ 105,822,074 $ 154,727,118 $ 388,570,965 $ 82,492,441 $ 106,021,955 $ 177,687,012
============== ============== ============== ============== ============== ==============
$ 21.16 $ 24.96 $ 54.73 $ 14.48 $ 35.94 $ 48.02
============== ============== ============== ============== ============== ==============
5,000,002 6,200,002 7,100,002 5,698,365 2,950,002 3,700,002
============== ============== ============== ============== ============== ==============
$ 100,249,375 $ 162,432,507 $ 319,360,849 $ 124,961,643 $ 125,284,370 $ 200,014,356
============== ============== ============== ============== ============== ==============
$ 10,999,952 $ -- $ -- $ 2,610,525 $ 3,634,765 $ 124,173
============== ============== ============== ============== ============== ==============
See Notes to Financial Statements Page 47
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2019 (UNAUDITED)
FIRST TRUST FIRST TRUST
NASDAQ-100 FIRST TRUST NASDAQ-100
EQUAL NASDAQ-100- EX-TECHNOLOGY
WEIGHTED TECHNOLOGY SECTOR SECTOR
INDEX FUND INDEX FUND INDEX FUND
(QQEW) (QTEC) (QQXT)
---------------- ----------------- ----------------
INVESTMENT INCOME:
Dividends........................................................... $ 3,767,559 $ 16,272,064 $ 403,060
Securities lending income (net of fees)............................. 40,134 1,896 9,786
Foreign withholding tax............................................. (19,853) (168,689) --
-------------- --------------- --------------
Total investment income....................................... 3,787,840 16,105,271 412,846
-------------- --------------- --------------
EXPENSES:
Investment advisory fees............................................ 1,352,559 4,606,540 176,502
Licensing fees...................................................... 336,350 1,143,990 43,802
Accounting and administration fees.................................. 169,795 510,265 22,737
Custodian fees...................................................... 34,012 69,075 6,901
Shareholder reporting fees.......................................... 30,721 98,770 10,340
Expenses previously waived or reimbursed............................ -- -- --
Transfer agent fees................................................. 16,905 41,181 2,206
Audit and tax fees.................................................. 11,368 11,368 11,368
Legal fees.......................................................... 8,165 34,690 1,283
Trustees' fees and expenses......................................... 3,987 4,986 3,601
Listing fees........................................................ 3,061 3,246 2,967
Registration and filing fees........................................ (1,412) (28,244) 49
Other expenses...................................................... 3,219 14,075 1,320
-------------- --------------- --------------
Total expenses................................................ 1,968,730 6,509,942 283,076
Less fees waived and expenses reimbursed by the investment
advisor.................................................... -- -- (18,322)
-------------- --------------- --------------
Net expenses.................................................. 1,968,730 6,509,942 264,754
-------------- --------------- --------------
NET INVESTMENT INCOME (LOSS)........................................ 1,819,110 9,595,329 148,092
-------------- --------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments................................................... (2,300,223) (13,677,784) 937,384
In-kind redemptions........................................... 30,298,513 127,713,032 --
Foreign currency transactions................................. -- -- --
-------------- --------------- --------------
Net realized gain (loss)............................................ 27,998,290 114,035,248 937,384
-------------- --------------- --------------
Net change in unrealized appreciation (depreciation) on:
Investments................................................... 88,190,514 369,920,867 14,504,152
Foreign currency translation.................................. -- -- --
-------------- --------------- --------------
Net change in unrealized appreciation (depreciation)................ 88,190,514 369,920,867 14,504,152
-------------- --------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)............................. 116,188,804 483,956,115 15,441,536
-------------- --------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................................. $ 118,007,914 $ 493,551,444 $ 15,589,628
============== =============== ==============
Page 48 See Notes to Financial Statements
FIRST TRUST FIRST TRUST
NASDAQ(R) FIRST TRUST NASDAQ(R) ABA
CLEAN EDGE(R) S&P FIRST TRUST FIRST TRUST FIRST TRUST COMMUNITY
GREEN ENERGY REIT WATER NATURAL GAS CHINDIA BANK
INDEX FUND INDEX FUND ETF ETF ETF INDEX FUND
(QCLN) (FRI) (FIW) (FCG) (FNI) (QABA)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
$ 458,121 $ 2,822,787 $ 2,241,235 $ 465,483 $ 487,951 $ 2,681,163
305,822 -- 8,185 13,520 84,123 4,229
(25,217) -- -- (26,977) (9,196) (5,059)
-------------- -------------- -------------- -------------- -------------- --------------
738,726 2,822,787 2,249,420 452,026 562,878 2,680,333
-------------- -------------- -------------- -------------- -------------- --------------
192,421 201,012 666,071 189,760 254,391 414,104
47,817 53,604 82,807 46,916 49,824 92,324
24,796 34,651 83,974 24,435 32,644 53,079
3,251 20,690 22,074 7,095 1,054 11,628
13,486 15,186 27,506 12,540 6,247 18,049
-- -- -- -- -- 8,669
2,405 3,350 8,325 2,371 3,179 5,175
11,368 11,368 11,368 11,368 11,368 11,368
1,315 1,506 4,605 1,816 4,450 4,606
3,609 3,625 3,760 3,607 3,583 3,677
3,035 4,421 5,646 5,688 5,688 3,040
596 49 (1,853) 49 49 (6,526)
1,978 254 2,671 980 2,922 1,963
-------------- -------------- -------------- -------------- -------------- --------------
306,077 349,716 916,954 306,625 375,399 621,156
(17,444) (14,697) -- (21,985) -- --
-------------- -------------- -------------- -------------- -------------- --------------
288,633 335,019 916,954 284,640 375,399 621,156
-------------- -------------- -------------- -------------- -------------- --------------
450,093 2,487,768 1,332,466 167,386 187,479 2,059,177
-------------- -------------- -------------- -------------- -------------- --------------
1,320,030 (599,485) (185,784) (7,669,119) (2,371,446) (1,886,719)
180,367 1,839,793 2,012,368 2,888,620 6,649,177 (4,555,406)
-- -- -- 329 -- --
-------------- -------------- -------------- -------------- -------------- --------------
1,500,397 1,240,308 1,826,584 (4,780,170) 4,277,731 (6,442,125)
-------------- -------------- -------------- -------------- -------------- --------------
15,111,917 13,799,383 69,995,776 5,608,177 16,127,329 30,312,796
-- -- -- 2 -- --
-------------- -------------- -------------- -------------- -------------- --------------
15,111,917 13,799,383 69,995,776 5,608,179 16,127,329 30,312,796
-------------- -------------- -------------- -------------- -------------- --------------
16,612,314 15,039,691 71,822,360 828,009 20,405,060 23,870,671
-------------- -------------- -------------- -------------- -------------- --------------
$ 17,062,407 $ 17,527,459 $ 73,154,826 $ 995,395 $ 20,592,539 $ 25,929,848
============== ============== ============== ============== ============== ==============
See Notes to Financial Statements Page 49
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF CHANGES IN NET ASSETS
FIRST TRUST FIRST TRUST
NASDAQ-100 NASDAQ-100-
EQUAL WEIGHTED TECHNOLOGY SECTOR
INDEX FUND INDEX FUND
(QQEW) (QTEC)
------------------------------- -------------------------------
Six Months Six Months
Ended Ended
6/30/2019 Year Ended 6/30/2019 Year Ended
(Unaudited) 12/31/2018 (Unaudited) 12/31/2018
-------------- -------------- -------------- --------------
OPERATIONS:
Net investment income (loss)................................ $ 1,819,110 $ 2,814,614 $ 9,595,329 $ 20,449,136
Net realized gain (loss).................................... 27,998,290 36,660,258 114,035,248 258,441,729
Net increase from payment by the advisor.................... -- 22,098 -- --
Net change in unrealized appreciation (depreciation)........ 88,190,514 (64,499,253) 369,920,867 (404,848,814)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations.......................................... 118,007,914 (25,002,283) 493,551,444 (125,957,949)
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations....................................... (1,470,915) (2,716,080) (7,513,261) (19,564,271)
Return of capital........................................... -- -- -- --
-------------- -------------- -------------- --------------
Total distributions to shareholders......................... (1,470,915) (2,716,080) (7,513,261) (19,564,271)
-------------- -------------- -------------- --------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold................................... 277,369,552 79,723,310 404,854,407 936,219,196
Cost of shares redeemed..................................... (81,718,118) (120,172,606) (407,749,079) (1,040,739,511)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from shareholder transactions............................ 195,651,434 (40,449,296) (2,894,672) (104,520,315)
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets..................... 312,188,433 (68,167,659) 483,143,511 (250,042,535)
NET ASSETS:
Beginning of period......................................... 461,464,491 529,632,150 1,950,668,787 2,200,711,322
-------------- -------------- -------------- --------------
End of period............................................... $ 773,652,924 $ 461,464,491 $2,433,812,298 $1,950,668,787
============== ============== ============== ==============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period..................... 8,450,002 9,150,002 28,700,002 30,600,002
Shares sold................................................. 4,400,000 1,300,000 4,850,000 11,950,000
Shares redeemed............................................. (1,250,000) (2,000,000) (5,100,000) (13,850,000)
-------------- -------------- -------------- --------------
Shares outstanding, end of period........................... 11,600,002 8,450,002 28,450,002 28,700,002
============== ============== ============== ==============
Page 50 See Notes to Financial Statements
FIRST TRUST FIRST TRUST FIRST TRUST
NASDAQ-100 NASDAQ(R) S&P FIRST TRUST
EX-TECHNOLOGY SECTOR CLEAN EDGE(R) GREEN ENERGY REIT WATER
INDEX FUND INDEX FUND INDEX FUND ETF
(QQXT) (QCLN) (FRI) (FIW)
----------------------------- ------------------------------- ------------------------------- -------------------------------
Six Months Six Months Six Months Six Months
Ended Ended Ended Ended
6/30/2019 Year Ended 6/30/2019 Year Ended 6/30/2019 Year Ended 6/30/2019 Year Ended
(Unaudited) 12/31/2018 (Unaudited) 12/31/2018 (Unaudited) 12/31/2018 (Unaudited) 12/31/2018
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
$ 148,092 $ 317,901 $ 450,093 $ 550,270 $ 2,487,768 $ 3,481,597 $ 1,332,466 $ 2,289,394
937,384 6,319,501 1,500,397 (1,384,642) 1,240,308 (8,816,597) 1,826,584 25,993,912
-- -- -- -- -- -- -- --
14,504,152 (11,325,769) 15,111,917 (11,072,153) 13,799,383 (5,846,287) 69,995,776 (57,825,167)
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
15,589,628 (4,688,367) 17,062,407 (11,906,525) 17,527,459 (11,181,287) 73,154,826 (29,541,861)
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
(132,850) (308,595) (331,450) (510,967) (1,159,630) (3,585,667) (1,476,980) (2,110,505)
-- -- -- (350,683) -- -- -- --
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
(132,850) (308,595) (331,450) (861,650) (1,159,630) (3,585,667) (1,476,980) (2,110,505)
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
2,623,365 10,002,377 6,211,394 11,063,662 51,179,138 60,347,868 34,041,981 110,251,184
-- (29,301,259) (851,667) (5,826,072) (28,515,701) (91,675,775) (7,256,305) (87,266,237)
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
2,623,365 (19,298,882) 5,359,727 5,237,590 22,663,437 (31,327,907) 26,785,676 22,984,947
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
18,080,143 (24,295,844) 22,090,684 (7,530,585) 39,031,266 (46,094,861) 98,463,522 (8,667,419)
77,618,204 101,914,048 83,731,390 91,261,975 115,695,852 161,790,713 290,107,443 298,774,862
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
$ 95,698,347 $ 77,618,204 $ 105,822,074 $ 83,731,390 $ 154,727,118 $ 115,695,852 $ 388,570,965 $ 290,107,443
============= ============= ============== ============== ============== ============== ============== ==============
1,700,002 2,100,002 4,750,002 4,500,002 5,350,002 6,950,002 6,600,002 6,150,002
50,000 200,000 300,000 550,000 2,050,000 2,550,000 650,000 2,250,000
-- (600,000) (50,000) (300,000) (1,200,000) (4,150,000) (150,000) (1,800,000)
------------- ------------- -------------- -------------- -------------- -------------- -------------- --------------
1,750,002 1,700,002 5,000,002 4,750,002 6,200,002 5,350,002 7,100,002 6,600,002
============= ============= ============== ============== ============== ============== ============== ==============
See Notes to Financial Statements Page 51
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIRST TRUST FIRST TRUST
NATURAL GAS CHINDIA
ETF ETF
(FCG) (FNI)
------------------------------- -------------------------------
Six Months Six Months
Ended Ended
6/30/2019 Year Ended 6/30/2019 Year Ended
(Unaudited) 12/31/2018 (Unaudited) 12/31/2018
-------------- -------------- -------------- --------------
OPERATIONS:
Net investment income (loss)................................ $ 167,386 $ 107,831 $ 187,479 $ 3,676,414
Net realized gain (loss).................................... (4,780,170) (16,202,838) 4,277,731 22,238,027
Net increase from payment by the advisor.................... -- -- -- --
Net change in unrealized appreciation (depreciation)........ 5,608,179 (34,785,338) 16,127,329 (102,311,847)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations.......................................... 995,395 (50,880,345) 20,592,539 (76,397,406)
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations....................................... (1,104,091) -- -- (4,434,111)
Return of capital........................................... -- (1,420,088) -- --
-------------- -------------- -------------- --------------
Total distributions to shareholders......................... (1,104,091) (1,420,088) -- (4,434,111)
-------------- -------------- -------------- --------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold................................... 28,212,574 31,493,285 5,706,997 123,727,641
Cost of shares redeemed..................................... (34,485,425) (74,580,615) (53,284,298) (285,804,842)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from shareholder transactions............................ (6,272,851) (43,087,330) (47,577,301) (162,077,201)
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets..................... (6,381,547) (95,387,763) (26,984,762) (242,908,718)
NET ASSETS:
Beginning of period......................................... 88,873,988 184,261,751 133,006,717 375,915,435
-------------- -------------- -------------- --------------
End of period............................................... $ 82,492,441 $ 88,873,988 $ 106,021,955 $ 133,006,717
============== ============== ============== ==============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period..................... 6,048,365 8,098,365 4,300,002 9,500,002
Shares sold................................................. 1,700,000 1,450,000 150,000 3,200,000
Shares redeemed............................................. (2,050,000) (3,500,000) (1,500,000) (8,400,000)
-------------- -------------- -------------- --------------
Shares outstanding, end of period........................... 5,698,365 6,048,365 2,950,002 4,300,002
============== ============== ============== ==============
Page 52 See Notes to Financial Statements
FIRST TRUST
NASDAQ(R) ABA
COMMUNITY BANK
INDEX FUND
(QABA)
-----------------------------
Six Months
Ended
6/30/2019 Year Ended
(Unaudited) 12/31/2018
-----------------------------
$ 2,059,177 $ 5,190,750
(6,442,125) 3,065,123
-- --
30,312,796 (67,237,070)
------------- -------------
25,929,848 (58,981,197)
------------- -------------
(1,683,791) (5,212,126)
-- --
------------- -------------
(1,683,791) (5,212,126)
------------- -------------
-- 115,204,523
(75,321,052) (136,281,236)
------------- -------------
(75,321,052) (21,076,713)
------------- -------------
(51,074,995) (85,270,036)
228,762,007 314,032,043
------------- -------------
$ 177,687,012 $ 228,762,007
============= =============
5,300,002 6,000,002
-- 2,050,000
(1,600,000) (2,750,000)
------------- -------------
3,700,002 5,300,002
============= =============
See Notes to Financial Statements Page 53
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST NASDAQ-100 EQUAL WEIGHTED INDEX FUND (QQEW)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 54.61 $ 57.88 $ 46.18 $ 43.48 $ 42.80 $ 36.35
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.16 0.32 0.24 0.31 0.22 0.41
Net realized and unrealized gain (loss) 12.05 (3.29) (a) 11.74 2.73 0.73 6.49
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 12.21 (2.97) 11.98 3.04 0.95 6.90
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.13) (0.30) (0.28) (0.34) (0.27) (0.45)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 66.69 $ 54.61 $ 57.88 $ 46.18 $ 43.48 $ 42.80
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (b) 22.36% (5.16)%(a) 26.00% 7.02% 2.22% 19.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 773,653 $ 461,464 $ 529,632 $ 404,044 $ 532,679 $ 577,828
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.58% (c) 0.60% 0.60% 0.61% 0.60% 0.61%
Ratio of net expenses to average
net assets 0.58% (c) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 0.54% (c) 0.52% 0.45% 0.72% 0.51% 1.10%
Portfolio turnover rate (d) 11% 27% 26% 29% 31% 27%
FIRST TRUST NASDAQ-100-TECHNOLOGY SECTOR INDEX FUND (QTEC)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 67.97 $ 71.92 $ 52.62 $ 42.64 $ 43.67 $ 35.43
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.33 0.65 0.48 0.67 0.37 0.45
Net realized and unrealized gain (loss) 17.51 (3.98) 19.39 9.99 (0.98) 8.32
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 17.84 (3.33) 19.87 10.66 (0.61) 8.77
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.26) (0.62) (0.57) (0.68) (0.42) (0.53)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 85.55 $ 67.97 $ 71.92 $ 52.62 $ 42.64 $ 43.67
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (b) 26.26% (4.70)% 37.86% 25.27% (1.37)% 24.83%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 2,433,812 $1,950,669 $2,200,711 $1,570,855 $ 302,735 $ 366,869
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.57% (c) 0.57% 0.58% 0.60% 0.60% 0.61%
Ratio of net expenses to average
net assets 0.57% (c) 0.57% 0.58% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 0.83% (c) 0.84% 0.76% 1.40% 0.83% 1.32%
Portfolio turnover rate (d) 7% 21% 21% 27% 23% 20%
(a) The Fund received a reimbursement from the Advisor in the amount of
$22,098 in connection with a trade error, which represents less than $0.01
per share. Since the Advisor reimbursed the Fund, there was no effect on
the Fund's total return.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year. The total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the investment
advisor.
(c) Annualized.
(d) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
Page 54 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST NASDAQ-100 EX-TECHNOLOGY SECTOR INDEX FUND (QQXT)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 45.66 $ 48.53 $ 40.44 $ 41.45 $ 39.73 $ 34.77
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.09 0.18 0.12 0.09 0.13 0.32
Net realized and unrealized gain (loss) 9.01 (2.88) 8.13 (0.98) 1.75 4.97
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 9.10 (2.70) 8.25 (0.89) 1.88 5.29
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.08) (0.17) (0.16) (0.12) (0.16) (0.33)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 54.68 $ 45.66 $ 48.53 $ 40.44 $ 41.45 $ 39.73
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 19.93% (5.58)% 20.41% (2.13)% 4.75% 15.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 95,698 $ 77,618 $ 101,914 $ 103,118 $ 184,447 $ 117,195
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.64% (b) 0.64% 0.63% 0.64% 0.63% 0.64%
Ratio of net expenses to average
net assets 0.60% (b) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 0.34% (b) 0.34% 0.25% 0.23% 0.33% 0.90%
Portfolio turnover rate (c) 13% 26% 25% 30% 39% 23%
FIRST TRUST NASDAQ(R) CLEAN EDGE(R) GREEN ENERGY INDEX FUND (QCLN)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 17.63 $ 20.28 $ 15.47 $ 16.01 $ 17.23 $ 17.90
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.09 0.12 0.05 0.17 0.11 0.13
Net realized and unrealized gain (loss) 3.51 (2.59) 4.85 (0.52) (1.21) (0.66)
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.60 (2.47) 4.90 (0.35) (1.10) (0.53)
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.07) (0.11) (0.09) (0.19) (0.12) (0.14)
Return of capital -- (0.07) -- -- -- --
----------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.07) (0.18) (0.09) (0.19) (0.12) (0.14)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 21.16 $ 17.63 $ 20.28 $ 15.47 $ 16.01 $ 17.23
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 20.43% (12.22)% 31.73% (2.12)% (6.43)% (3.05)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 105,822 $ 83,731 $ 91,262 $ 51,837 $ 69,655 $ 89,616
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.64% (b) 0.65% 0.66% 0.68% 0.65% 0.64%
Ratio of net expenses to average
net assets 0.60% (b) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 0.94% (b) 0.59% 0.23% 1.18% 0.65% 0.61%
Portfolio turnover rate (c) 17% 45% 32% 49% 35% 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. The total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the investment
advisor.
(b) Annualized.
(c) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
See Notes to Financial Statements Page 55
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST S&P REIT INDEX FUND (FRI)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 21.63 $ 23.28 $ 23.07 $ 22.07 $ 22.24 $ 17.54
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.42 0.69 0.71 0.62 0.55 0.41
Net realized and unrealized gain (loss) 3.12 (1.65) 0.16 1.13 (0.13) 4.75
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.54 (0.96) 0.87 1.75 0.42 5.16
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.21) (0.69) (0.66) (0.75) (0.59) (0.46)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 24.96 $ 21.63 $ 23.28 $ 23.07 $ 22.07 $ 22.24
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 16.37% (4.19)% 3.79% 7.92% 1.97% 29.61%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 154,727 $ 115,696 $ 161,791 $ 236,426 $ 226,250 $ 339,130
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.52% (b) 0.52% 0.48% 0.49% 0.48% 0.50%
Ratio of net expenses to average
net assets 0.50% (b) 0.50% 0.48% 0.49% 0.48% 0.50%
Ratio of net investment income (loss) to
average net assets 3.71% (b) 3.05% 2.77% 2.52% 2.30% 2.35%
Portfolio turnover rate (c) 2% 10% 7% 6% 8% 11%
FIRST TRUST WATER ETF (FIW)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 43.96 $ 48.58 $ 39.61 $ 30.13 $ 33.65 $ 33.79
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.20 0.35 0.54 0.20 0.23 0.25
Net realized and unrealized gain (loss) 10.79 (4.65) 8.98 9.48 (3.52) (0.14)
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 10.99 (4.30) 9.52 9.68 (3.29) 0.11
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.22) (0.32) (0.55) (0.20) (0.23) (0.25)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 54.73 $ 43.96 $ 48.58 $ 39.61 $ 30.13 $ 33.65
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 25.01% (8.89)% 24.25% 32.21% (9.81)% 0.36%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 388,571 $ 290,107 $ 298,775 $ 221,791 $ 102,432 $ 198,550
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.55% (b) 0.55% 0.56% 0.57% 0.57% 0.59%
Ratio of net expenses to average
net assets 0.55% (b) 0.55% 0.56% 0.57% 0.57% 0.59%
Ratio of net investment income (loss) to
average net assets 0.80% (b) 0.72% 1.26% 0.58% 0.70% 0.75%
Portfolio turnover rate (c) 7% 11% 24% 42% 17% 24%
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year. The total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the investment
advisor.
(b) Annualized.
(c) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
Page 56 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST NATURAL GAS ETF (FCG)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 (a) 2014 (a)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 14.69 $ 22.75 $ 26.15 $ 22.30 $ 56.10 $ 97.65
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.03 0.02 (0.02) 0.13 1.00 0.70
Net realized and unrealized gain (loss) (0.05) (7.86) (3.02) 4.16 (33.75) (41.50)
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (0.02) (7.84) (3.04) 4.29 (32.75) (40.80)
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.19) -- (0.23) (0.44) (1.05) (0.75)
Return of capital -- (0.22) (0.13) -- -- --
----------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.19) (0.22) (0.36) (0.44) (1.05) (0.75)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 14.48 $ 14.69 $ 22.75 $ 26.15 $ 22.30 $ 56.10
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (b) (0.19)% (34.77)% (11.53)% 19.48% (59.10)% (42.02)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 82,492 $ 88,874 $ 184,262 $ 251,024 $ 153,042 $ 246,946
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.65% (c) 0.63% 0.64% (d) 0.64% (d) 0.62% 0.61%
Ratio of net expenses to average
net assets 0.60% (c) 0.60% 0.63% (d) 0.61% (d) 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 0.35% (c) 0.07% (0.11)% 0.54% 2.44% 0.74%
Portfolio turnover rate (e) 22% 47% 53% 103% 67% 42%
FIRST TRUST CHINDIA ETF (FNI)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 30.93 $ 39.57 $ 27.39 $ 28.36 $ 28.63 $ 28.22
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.06 0.04 0.34 0.25 0.15 0.20
Net realized and unrealized gain (loss) 4.95 (8.16) 12.61 (0.85) (0.24) 0.48
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 5.01 (8.12) 12.95 (0.60) (0.09) 0.68
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income -- (0.52) (0.77) (0.37) (0.18) (0.27)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 35.94 $ 30.93 $ 39.57 $ 27.39 $ 28.36 $ 28.63
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (b) 16.20% (20.68)% 47.36% (2.15)% (0.32)% 2.37%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 106,022 $ 133,007 $ 375,915 $ 131,466 $ 221,188 $ 111,663
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.59% (c) 0.59% 0.60% 0.60% 0.62% 0.65%
Ratio of net expenses to average
net assets 0.59% (c) 0.59% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 0.29% (c) 1.06% 0.91% 0.91% 0.64% 0.54%
Portfolio turnover rate (e) 13% 22% 35% 47% 68% 40%
(a) All per share amounts and net asset values have been adjusted to reflect
the impact of the 1-for-5 reverse share split on May 2, 2016. The net
asset values reported on December 31, 2015 and 2014 prior to the reverse
share split restatement were $4.46 and $11.22, respectively.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year. The total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the investment
advisor.
(c) Annualized.
(d) For the years ended December 31, 2017 and 2016, ratios reflect excise tax
of 0.03% and 0.01%, respectively, which are not included in the expense
cap.
(e) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
See Notes to Financial Statements Page 57
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST NASDAQ(R) ABA COMMUNITY BANK INDEX FUND (QABA)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ----------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 43.16 $ 52.34 $ 52.81 $ 38.94 $ 36.61 $ 36.11
----------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.51 0.81 0.74 0.58 0.56 0.47
Net realized and unrealized gain (loss) 4.76 (9.17) (0.46) 13.89 2.31 0.50
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 5.27 (8.36) 0.28 14.47 2.87 0.97
----------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.41) (0.82) (0.75) (0.60) (0.54) (0.47)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 48.02 $ 43.16 $ 52.34 $ 52.81 $ 38.94 $ 36.61
=========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 12.22% (16.14)% 0.55% 37.57% 7.88% 2.72%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 177,687 $ 228,762 $ 314,032 $ 404,023 $ 223,902 $ 109,818
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.60% (b) 0.60% 0.60% 0.61% 0.62% 0.64%
Ratio of net expenses to average
net assets 0.60% (b) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 1.99% (b) 1.50% 1.37% 1.54% 1.52% 1.41%
Portfolio turnover rate (c) 5% 11% 14% 16% 19% 26%
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year. The total returns would have been lower if certain
fees had not been waived and expenses reimbursed by the investment
advisor.
(b) Annualized.
(c) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
Page 58 See Notes to Financial Statements
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
1. ORGANIZATION
First Trust Exchange-Traded Fund (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on August 8,
2003, and is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act").
The Trust currently consists of twenty-one exchange-traded funds. This report
covers the nine funds listed below:
First Trust NASDAQ-100 Equal Weighted Index Fund - (The Nasdaq Stock
Market LLC ("Nasdaq") ticker "QQEW")
First Trust NASDAQ-100-Technology Sector Index Fund - (Nasdaq ticker
"QTEC")
First Trust NASDAQ-100 Ex-Technology Sector Index Fund - (Nasdaq
ticker "QQXT")
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund - (Nasdaq
ticker "QCLN")
First Trust S&P REIT Index Fund - (NYSE Arca, Inc. ("NYSE Arca") ticker
"FRI") First Trust Water ETF - (NYSE Arca ticker "FIW")
First Trust Natural Gas ETF - (NYSE Arca ticker "FCG")
First Trust Chindia ETF - (NYSE Arca ticker "FNI")
First Trust NASDAQ(R) ABA Community Bank Index Fund - (Nasdaq ticker
"QABA")
Each fund represents a separate series of shares of beneficial interest in the
Trust (each a "Fund" and collectively, the "Funds"). Unlike conventional mutual
funds, each Fund issues and redeems shares on a continuous basis, at net asset
value ("NAV"), only in large specified blocks consisting of 50,000 shares called
a "Creation Unit." Creation Units are generally issued and redeemed in-kind for
securities in which a Fund invests and, in certain circumstances, for cash, and
only to and from broker-dealer and large institutional investors that have
entered into participation agreements. Except when aggregated in Creation Units,
each Fund's shares are not redeemable securities. 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 NASDAQ-100 Equal Weighted Index Fund NASDAQ-100 Equal Weighted Index(SM)
First Trust NASDAQ-100-Technology Sector Index Fund NASDAQ-100 Technology Sector Index(SM)
First Trust NASDAQ-100 Ex-Technology Sector Index Fund NASDAQ-100 Ex-Tech Sector Index(SM)
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund NASDAQ(R) Clean Edge(R) Green Energy Index(SM)
First Trust S&P REIT Index Fund S&P United States REIT Index
First Trust Water ETF ISE Clean Edge Water Index
First Trust Natural Gas ETF ISE-Revere Natural Gas(TM) Index
First Trust Chindia ETF ISE ChIndia(TM) Index
First Trust NASDAQ(R) ABA Community Bank Index Fund NASDAQ OMX(R) ABA Community Bank Index(SM)
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are each considered an investment company and follow accounting and
reporting guidance under Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") Topic 946, "Financial
Services-Investment Companies." The following is a summary of significant
accounting policies consistently followed by the Funds in the preparation of the
financial statements. The preparation of the financial statements in accordance
with accounting principles generally accepted in the United States of America
("U.S. GAAP") requires management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
A. PORTFOLIO VALUATION
Each Fund's NAV is determined daily as of the close of regular trading on the
New York Stock Exchange ("NYSE"), normally 4:00 p.m. Eastern time, on each day
the NYSE is open for trading. If the NYSE closes early on a valuation day, the
NAV is determined as of that time. Foreign securities are priced using the data
reflecting the earlier closing of the principal markets for those securities.
Each Fund's NAV is calculated by dividing the value of all assets of each Fund
(including accrued interest and dividends), less all liabilities (including
accrued expenses and dividends declared but unpaid), by the total number of
shares outstanding.
Each Fund's investments are valued daily at market value or, in the absence of
market value with respect to any portfolio securities, at fair value. Market
value prices represent last sale or official closing prices from a national or
foreign exchange (i.e., a regulated market) and are primarily obtained from
third-party pricing services. Fair value prices represent any prices not
considered market value prices and are either obtained from a third-party
pricing service or are determined by the Pricing Committee of the Funds'
Page 59
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
investment advisor, First Trust Advisors L.P. ("First Trust" or the "Advisor"),
in accordance with valuation procedures adopted by the Trust's Board of
Trustees, and in accordance with the 1940 Act. Investments valued by the
Advisor's Pricing Committee, if any, are footnoted as such in the footnotes to
the Portfolio of Investments. Each Fund's investments are valued as follows:
Common stocks, real estate investment trusts ("REITs"), master limited
partnerships ("MLPs") and other equity securities listed on any national
or foreign exchange (excluding Nasdaq and the London Stock Exchange
Alternative Investment Market ("AIM")) are valued at the last sale price
on the exchange on which they are principally traded or, for Nasdaq and
AIM securities, the official closing price. Securities traded on more than
one securities exchange are valued at the last sale price or official
closing price, as applicable, at the close of the securities exchange
representing the principal market for such securities.
Shares of open-end funds are valued at fair value which is based on NAV
per share.
Securities traded in an over-the-counter market are fair valued at the
mean of their most recent bid and asked price, if available, and otherwise
at their closing bid price.
Overnight repurchase agreements are valued at amortized cost when it
represents the best estimate of fair value.
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Trust's Board of Trustees or its
delegate, the Advisor's Pricing Committee, at fair value. These securities
generally include, but are not limited to, restricted securities (securities
which may not be publicly sold without registration under the Securities Act of
1933, as amended) for which a third-party pricing service is unable to provide a
market price; securities whose trading has been formally suspended; a security
whose market or fair value price is not available from a pre-established pricing
source; a security with respect to which an event has occurred that is likely to
materially affect the value of the security after the market has closed but
before the calculation of a Fund's NAV or make it difficult or impossible to
obtain a reliable market quotation; and a security whose price, as provided by
the third-party pricing service, does not reflect the security's fair value. As
a general principle, the current fair value of a security would appear to be the
amount which the owner might reasonably expect to receive for the security upon
its current sale. When fair value prices are used, generally they will differ
from market quotations or official closing prices on the applicable exchanges. A
variety of factors may be considered in determining the fair value of such
securities, including, but not limited to, the following:
1) the type of security;
2) the size of the holding;
3) the initial cost of the security;
4) transactions in comparable securities;
5) price quotes from dealers and/or third-party pricing services;
6) relationships among various securities;
7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;
8) an analysis of the issuer's financial statements; and
9) the existence of merger proposals or tender offers that might affect
the value of the security.
In addition, differences between the prices used to calculate a Fund's NAV and
the prices used by such Fund's corresponding index could result in a difference
between a Fund's performance and the performance of its underlying index.
The Funds are subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
Page 60
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
The inputs or methodologies used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value each Fund's investments as of June 30, 2019, is
included with each Fund's Portfolio of Investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income, if any, is
recorded on the accrual basis.
Withholding taxes and tax reclaims on foreign dividends have been provided for
in accordance with each Fund's understanding of the applicable country's tax
rules and rates.
Distributions received from a Fund's investments in MLPs generally are comprised
of return of capital and investment income. A Fund records estimated return of
capital and investment income based on historical information available from
each MLP. These estimates may subsequently be revised based on information
received from the MLPs after their tax reporting periods are concluded.
Distributions received from a Fund's investments in REITs may be comprised of
return of capital, capital gains and income. The actual character of the amounts
received during the year is not known until after the REITs' fiscal year end. A
Fund records the character of distributions received from the REITs during the
year based on estimates available. The characterization of distributions
received by a Fund may be subsequently revised based on information received
from the REITs after their tax reporting periods conclude.
C. OFFSETTING ON THE STATEMENTS OF ASSETS AND LIABILITIES
Offsetting Assets and Liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset on the
Statements of Assets and Liabilities, and disclose instruments and transactions
subject to master netting or similar agreements. These disclosure requirements
are intended to help investors and other financial statement users better assess
the effect or potential effect of offsetting arrangements on a fund's financial
position. The transactions subject to offsetting disclosures are derivative
instruments, repurchase agreements and reverse repurchase agreements, and
securities borrowing and securities lending transactions.
This disclosure, if applicable, is included within each Fund's Portfolio of
Investments under the heading "Offsetting Assets and Liabilities". For financial
reporting purposes, the Funds do not offset financial assets and financial
liabilities that are subject to master netting arrangements ("MNAs") or similar
agreements on the Statements of Assets and Liabilities. MNAs provide the right,
in the event of default (including bankruptcy and insolvency), for the
non-defaulting counterparty to liquidate the collateral and calculate the net
exposure to the defaulting party or request additional collateral.
D. SECURITIES LENDING
The Funds may lend securities representing up to 33 1/3% of the value of their
total assets to broker-dealers, banks and other institutions to generate
additional income. When a Fund loans its portfolio securities, it will receive,
at the inception of each loan, collateral equal to at least 102% (for domestic
securities) or 105% (for international securities) of the market value of the
loaned securities. The collateral amount is valued at the beginning of each
business day and is compared to the market value of the loaned securities from
the prior business day to determine if additional collateral is required. If
additional collateral is required, a request is sent to the borrower. Securities
lending involves the risk that the Fund may lose money because the borrower of
the Fund's loaned securities fails to return the securities in a timely manner
or at all. The Fund could also lose money in the event of (i) a decline in the
value of the collateral provided for the loaned securities, (ii) a decline in
the value of any investments made with cash collateral or (iii) an increase in
the value of the loaned securities if the borrower does not increase the
collateral accordingly and the borrower fails to return the securities. These
events could also trigger adverse tax consequences for the Funds.
Under the Funds' Securities Lending Agency Agreement, the securities lending
agent will generally bear the risk that a borrower may default on its obligation
to return loaned securities. Brown Brothers Harriman & Co. ("BBH") acts as the
Funds' securities lending agent and is responsible for executing the lending of
the portfolio securities to creditworthy borrowers. The Funds, however, will be
responsible for the risks associated with the investment of cash collateral. A
Fund may lose money on its investment of cash collateral, which may affect its
ability to repay the collateral to the borrower without the use of other Fund
assets. Each Fund that engages in securities lending receives compensation (net
of any rebate and securities lending agent fees) for lending its securities.
Compensation can be in the form of fees received from the securities lending
agent or dividends or interest earned from the investment of cash collateral.
The fees received from the securities lending agent are accrued daily. The
dividend and interest earned on the securities loaned is accounted for in the
same manner as other dividend and interest income. At June 30, 2019, QQEW, QQXT,
QCLN, FCG, FNI, and QABA had securities in the securities lending program.
During the six months ended June 30, 2019, QQEW, QTEC, QQXT, QCLN, FIW, FCG,
FNI, and QABA participated in the securities lending program.
Page 61
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
In the event of a default by a borrower with respect to any loan, BBH will
exercise any and all remedies provided under the applicable borrower agreement
to make the Funds whole. These remedies include purchasing replacement
securities by applying the collateral held from the defaulting broker against
the purchase cost of the replacement securities. If, despite such efforts by BBH
to exercise these remedies, a Fund sustains losses as a result of a borrower's
default, BBH will indemnify the Fund by purchasing replacement securities at its
own expense, or paying the Fund an amount equal to the market value of the
replacement securities, subject to certain limitations which are set forth in
detail in the Securities Lending Agency Agreement between the Trust on behalf of
the Funds and BBH.
E. REPURCHASE AGREEMENTS
Repurchase agreements involve the purchase of securities subject to the seller's
agreement to repurchase the securities at a mutually agreed upon date and price,
under the terms of a Master Repurchase Agreement ("MRA"). During the term of a
repurchase agreement, the value of the underlying securities held as collateral
on behalf of a Fund, including accrued interest, is required to exceed the value
of the repurchase agreement, including accrued interest. The underlying
securities for all repurchase agreements are held at the Funds' custodian or
designated sub-custodians under tri-party repurchase agreements.
MRAs govern transactions between a Fund and select counterparties. The MRAs
contain provisions for, among other things, initiation, income payments, events
of default, and maintenance of collateral for repurchase agreements.
Repurchase agreements received for lending securities are collateralized by U.S.
Treasury securities. The U.S. Treasury securities are held in a joint custody
account at BBH on behalf of the Funds participating in the securities lending
program. In the event the counterparty defaults on the repurchase agreement, the
U.S. Treasury securities can either be maintained as part of a Fund's portfolio
or sold for cash. A Fund could suffer a loss to the extent that the proceeds
from the sale of the underlying collateral held by the Fund is less than the
repurchase price and the Fund's costs associated with the delay and enforcement
of the MRA.
While the Funds may invest in repurchase agreements, any repurchase agreements
held by the Funds during the six months ended June 30, 2019, were received as
collateral for lending securities.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income of each Fund, if any, are declared and paid
quarterly or as the Board of Trustees may determine from time to time.
Distributions of net realized gains earned by each Fund, if any, are distributed
at least annually.
Distributions from net investment income and realized capital gains are
determined in accordance with federal income tax regulations, which may differ
from U.S. GAAP. Certain capital accounts in the financial statements are
periodically adjusted for permanent differences in order to reflect their tax
character. These permanent differences are primarily due to the varying
treatment of income and gain/loss on portfolio securities held by the Funds and
have no impact on net assets or NAV per share. Temporary differences, which
arise from recognizing certain items of income, expense and gain/loss in
different periods for financial statement and tax purposes, will reverse at some
time in the future. The tax character of distributions paid by each Fund during
the fiscal year ended December 31, 2018 was as follows:
Distributions Distributions Distributions
paid from paid from paid from
Ordinary Income Capital Gains Return of Capital
------------------ ---------------- -----------------
First Trust NASDAQ-100 Equal Weighted Index Fund $ 2,716,080 $ -- $ --
First Trust NASDAQ-100-Technology Sector Index Fund 19,564,271 -- --
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 308,595 -- --
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 510,967 -- 350,683
First Trust S&P REIT Index Fund 3,585,667 -- --
First Trust Water ETF 2,110,505 -- --
First Trust Natural Gas ETF -- -- 1,420,088
First Trust Chindia ETF 4,434,111 -- --
First Trust NASDAQ(R)ABA Community Bank Index Fund 5,212,126 -- --
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
As of December 31, 2018, 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 NASDAQ-100 Equal Weighted Index Fund $ 42,934 $(37,030,279) $ 20,146,395
First Trust NASDAQ-100-Technology Sector Index Fund 202,049 (47,202,665) 2,227,275
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 9,306 (14,965,979) 1,819,022
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund -- (34,906,225) (100,993)
First Trust S&P REIT Index Fund 290,492 (445,058) (23,210,802)
First Trust Water ETF 178,889 (6,895,306) (3,528,041)
First Trust Natural Gas ETF -- (461,527,796) (51,897,952)
First Trust Chindia ETF -- (64,902,798) (33,517,249)
First Trust NASDAQ(R) ABA Community Bank Index Fund -- (4,971,951) (55,057,167)
G. INCOME TAXES
Each Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no
provision has been made for federal and state income taxes. However, due to the
timing and amount of distributions, each Fund may be subject to an excise tax of
4% of the amount by which approximately 98% of each Fund's taxable income
exceeds the distributions from such taxable income for the calendar year.
The Funds are subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ending 2015, 2016,
2017, and 2018 remain open to federal and state audit. As of June 30, 2019,
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.
Under the Regulated Investment Company Modernization Act of 2010 (the "Act"),
net capital losses arising in taxable years beginning after December 22, 2010,
may be carried forward indefinitely, and their character is retained as
short-term and/or long-term losses. Previously, net capital losses were carried
forward for up to eight years and treated as short-term losses. As a transition
rule, the Act requires that post-enactment net capital losses be used before
pre-enactment net capital losses. At December 31, 2018, the Funds had
post-enactment net capital losses for federal income tax purposes as shown in
the following table. 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 Fund shareholders. The Funds are 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.
Pre-Enactment -
No Expiration
------------------
First Trust NASDAQ-100 Equal Weighted Index Fund $ 37,030,279
First Trust NASDAQ-100-Technology Sector Index Fund 47,202,665
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 14,965,979
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 34,906,225
First Trust S&P REIT Index Fund 445,058
First Trust Water ETF 6,895,306
First Trust Natural Gas ETF 461,527,796
First Trust Chindia ETF 64,902,798
First Trust NASDAQ(R) ABA Community Bank Index Fund 4,971,951
Page 63
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
H. EXPENSES
Expenses that are directly related to one of the Funds are charged directly to
the respective Fund. General expenses of the Trust are allocated to all the
Funds based upon the net assets of each Fund.
First Trust has entered into licensing agreements with each of the following
"Licensors" for the respective Funds:
FUND LICENSOR
First Trust NASDAQ-100 Equal Weighted Index Fund Nasdaq, Inc.
First Trust NASDAQ-100-Technology Sector Index Fund Nasdaq, Inc.
First Trust NASDAQ-100 Ex-Technology Sector Index Fund Nasdaq, Inc.
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund Nasdaq, Inc.
First Trust S&P REIT Index Fund S&P Dow Jones Indices LLC
First Trust Water ETF International Securities Exchange, LLC
First Trust Natural Gas ETF International Securities Exchange, LLC
First Trust Chindia ETF International Securities Exchange, LLC
First Trust NASDAQ(R)ABA Community Bank Index Fund Nasdaq, Inc. and American Bankers Association
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.
I. NEW ACCOUNTING PRONOUNCEMENT
On August 28, 2018, the FASB issued Accounting Standards Update ("ASU") 2018-13,
"Disclosure Framework - Changes to the Disclosure Requirements for Fair Value
Measurement," which amends the fair value measurement disclosure requirements of
ASC 820. The amendments of ASU 2018-13 include new, eliminated, and modified
disclosure requirements of ASC 820. In addition, the amendments clarify that
materiality is an appropriate consideration of entities when evaluating
disclosure requirements. The ASU is effective for fiscal years beginning after
December 15, 2019, including interim periods therein. Early adoption is
permitted for any eliminated or modified disclosures upon issuance of this ASU.
The Funds have early adopted ASU 2018-13 for these financial statements, which
did not result in a material impact.
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust, the investment advisor to the Funds, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. The Charger Corporation is an Illinois corporation
controlled by James A. Bowen, Chief Executive Officer of First Trust. First
Trust is responsible for the selection and ongoing monitoring of the securities
in each Fund's portfolio, managing the Funds' business affairs and providing
certain administrative services necessary for the management of the Funds.
For these services, First Trust is entitled to receive monthly fees from each
Fund calculated at the following annual rates:
% of Average
Daily Net Assets
----------------
First Trust NASDAQ-100 Equal Weighted Index Fund 0.40%
First Trust NASDAQ-100-Technology Sector Index Fund 0.40%
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 0.40%
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 0.40%
First Trust S&P REIT Index Fund 0.30%
First Trust Water ETF 0.40%
First Trust Natural Gas ETF 0.40%
First Trust Chindia ETF 0.40%
First Trust NASDAQ(R)ABA Community Bank Index Fund 0.40%
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, 2021.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
Expense Cap
----------------
First Trust NASDAQ-100 Equal Weighted Index Fund 0.60%
First Trust NASDAQ-100-Technology Sector Index Fund 0.60%
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 0.60%
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 0.60%
First Trust S&P REIT Index Fund 0.50%
First Trust Water ETF 0.60%
First Trust Natural Gas ETF 0.60%
First Trust Chindia ETF 0.60%
First Trust NASDAQ(R)ABA Community Bank Index Fund 0.60%
Expenses reimbursed and fees waived by First Trust under the Recovery Agreement
are subject to recovery by First Trust for up to three years from the date the
fee was waived or expense was incurred, but no reimbursement payment will be
made by a Fund if it results in the Fund exceeding an expense ratio equal to the
Expense Cap in place at the time the expenses were reimbursed or fees were
waived by First Trust. These amounts are included in "Expenses previously waived
or reimbursed" on the Statements of Operations.
The advisory fee waivers and expense reimbursements for the six months ended
June 30, 2019 and fees waived or expenses borne by First Trust subject to
recovery from the applicable Fund for the periods indicated were as follows:
Fees Waived or Expenses Borne by First Trust
Subject to Recovery
--------------------------------------------------------------
Advisory Six Months Year Year Six Months
Fee Expense Ended Ended Ended Ended
Waivers Reimbursement 12/31/2016 12/31/2017 12/31/2018 6/30/2019 Total
--------- ------------- ---------- ---------- ---------- ---------- ----------
First Trust NASDAQ-100 Ex-Technology
Sector Index Fund $ 18,322 $ -- $ 14,190 $ 26,900 $ 35,900 $ 18,322 $ 95,312
First Trust NASDAQ(R) Clean Edge(R) Green
Energy Index Fund 17,444 -- 20,220 39,255 43,615 17,444 120,534
First Trust S&P REIT Index Fund 14,697 -- -- -- 25,848 14,697 40,545
First Trust Natural Gas ETF 21,985 -- 14,648 25,164 39,782 21,985 101,579
First Trust NASDAQ(R) ABA Community
Bank Index Fund -- -- 8,918 -- -- -- 8,918
During the six months ended June 30, 2019, First Trust recovered fees that were
previously waived from First Trust NASDAQ(R) ABA Community Bank Index Fund of
$8,669.
During the fiscal year ended December 31, 2018, First Trust NASDAQ-100 Equal
Weighted Index Fund received a reimbursement from the Advisor of $22,098 in
connection with a trade error.
The Trust has multiple service agreements with The Bank of New York Mellon
("BNYM"). Under the service agreements, BNYM performs custodial, fund
accounting, certain administrative services, and transfer agency services for
each Fund. As custodian, BNYM is responsible for custody of each Fund's assets.
As fund accountant and administrator, BNYM is responsible for maintaining the
books and records of each Fund's securities and cash. As transfer agent, BNYM is
responsible for maintaining shareholder records for each Fund. BNYM is a
subsidiary of The Bank of New York Mellon Corporation, a financial holding
company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that
varies based on whether the fund is a closed-end or other actively managed fund,
or is an index fund.
Additionally, the Lead Independent Trustee and the Chairmen of the Audit
Committee, Nominating and Governance Committee and Valuation Committee are paid
annual fees to serve in such capacities, with such compensation allocated pro
rata among each fund in the First Trust Fund Complex based on net assets.
Independent Trustees are reimbursed for travel and out-of-pocket expenses in
connection with all meetings. The Lead Independent Trustee and Committee
Chairmen rotate every three years. The officers and "Interested" Trustee receive
no compensation from the Trust for acting in such capacities.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2019, 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 NASDAQ-100 Equal Weighted Index Fund $ 71,083,197 $ 70,501,358
First Trust NASDAQ-100-Technology Sector Index Fund 166,527,289 162,917,272
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 11,277,472 11,079,756
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 16,642,113 16,151,838
First Trust S&P REIT Index Fund 4,544,276 2,969,654
First Trust Water ETF 23,155,576 23,258,459
First Trust Natural Gas ETF 20,565,256 20,773,561
First Trust Chindia ETF 16,316,932 16,486,246
First Trust NASDAQ(R)ABA Community Bank Index Fund 10,729,253 10,444,658
For the six months ended June 30, 2019, the cost of in-kind purchases and
proceeds from in-kind sales for each Fund were as follows:
Purchases Sales
--------------- ---------------
First Trust NASDAQ-100 Equal Weighted Index Fund $ 276,940,159 $ 81,468,267
First Trust NASDAQ-100-Technology Sector Index Fund 404,642,765 406,700,542
First Trust NASDAQ-100 Ex-Technology Sector Index Fund 2,621,528 --
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 6,203,913 849,487
First Trust S&P REIT Index Fund 51,029,489 28,415,358
First Trust Water ETF 34,024,672 7,254,435
First Trust Natural Gas ETF 28,156,592 34,410,557
First Trust Chindia ETF 5,708,890 53,267,544
First Trust NASDAQ(R)ABA Community Bank Index Fund -- 75,238,757
5. CREATION, REDEMPTION AND TRANSACTION FEES
Shares are created and redeemed by each Fund only in Creation Unit size
aggregations of 50,000 shares in transactions with broker-dealers or large
institutional investors that have entered into a participation agreement (an
"Authorized Participant'). In order to purchase Creation Units of each Fund, an
Authorized Participant must deposit (i) a designated portfolio of equity
securities determined by First Trust (the "Deposit Securities") and generally
make or receive a cash payment referred to as the "Cash Component," which is an
amount equal to the difference between the NAV of the Fund Shares (per Creation
Unit Aggregation) and the market value of the Deposit Securities, and/or (ii)
cash in lieu of all or a portion of the Deposit Securities. If the Cash
Component is a positive number (i.e., the NAV per Creation Unit Aggregation
exceeds the Deposit Amount), the Authorized Participant will deliver the Cash
Component. If the Cash Component is a negative number (i.e., the NAV per
Creation Unit Aggregation is less than the Deposit Amount), the Authorized
Participant will receive the Cash Component. Authorized Participants purchasing
Creation Units must pay to BNYM, as transfer agent, a creation transaction fee
(the "Creation Transaction Fee") regardless of the number of Creation Units
purchased in the transaction. The Creation Transaction Fee may vary and is based
on the composition of the securities included in each Fund's portfolio and the
countries in which the transactions are settled. The Creation Transaction Fee is
currently $500 for each Fund, except First Trust S&P REIT Index Fund and First
Trust NASDAQ(R) ABA Community Bank Index Fund for which the Creation Transaction
Fee is $1,000. The price for each Creation Unit will equal the daily NAV per
share 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 or stamp taxes. When a Fund permits an Authorized Participant to
substitute cash or a different security in lieu of depositing one or more of the
requisite Deposit Securities, the Authorized Participant may also be assessed an
amount to cover the cost of purchasing the Deposit Securities and/or disposing
of the substituted securities, including 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 such Deposit Securities
and/or substitute securities.
Authorized Participants redeeming Creation Units must pay to BNYM, as transfer
agent, a standard redemption transaction fee (the "Redemption Transaction Fee"),
regardless of the number of Creation Units redeemed in the transaction. The
Redemption Transaction Fee may vary and is based on the composition of the
securities included in each Fund's portfolio and the countries in which the
transactions are settled. The Redemption Transaction Fee is currently $500 for
each Fund, except First Trust S&P REIT Index Fund and First Trust NASDAQ(R) ABA
Community Bank Index Fund for which the Redemption Transaction Fee is $1,000.
Each Fund reserves the right to effect redemptions in cash. An Authorized
Participant may request cash redemption in lieu of securities; however, a Fund
may, in its discretion, reject any such request.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
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, 2021.
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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ADDITIONAL INFORMATION
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Trust uses to determine
how to vote proxies and information on how each Fund voted proxies relating to
its portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
each Fund's website at www.ftportfolios.com; and (3) on the Securities and
Exchange Commission's ("SEC") website at www.sec.gov.
PORTFOLIO HOLDINGS
Each Fund files portfolio holdings information for each month in a fiscal
quarter within 60 days after the end of the relevant fiscal quarter on Form
N-PORT. Portfolio holdings information for the third month of each fiscal
quarter will be publicly available on the SEC's website at www.sec.gov. Each
Fund's complete schedule of portfolio holdings for the second and fourth
quarters of each fiscal year is included in the semi-annual and annual reports
to shareholders, respectively, and is filed with the SEC on Form N-CSR. The
semi-annual and annual report for each Fund is available to investors within 60
days after the period to which it relates. Each Fund's Forms N-PORT and Forms
N-CSR are available on the SEC's website listed above.
RISK CONSIDERATIONS
RISKS ARE INHERENT IN ALL INVESTING. CERTAIN GENERAL RISKS THAT MAY BE
APPLICABLE TO A FUND ARE IDENTIFIED BELOW, BUT NOT ALL OF THE MATERIAL RISKS
RELEVANT TO EACH FUND ARE INCLUDED IN THIS REPORT AND NOT ALL OF THE RISKS BELOW
APPLY TO EACH FUND. THE MATERIAL RISKS OF INVESTING IN EACH FUND ARE SPELLED OUT
IN ITS PROSPECTUS, STATEMENT OF ADDITIONAL INFORMATION AND OTHER REGULATORY
FILINGS. BEFORE INVESTING, YOU SHOULD CONSIDER EACH FUND'S INVESTMENT OBJECTIVE,
RISKS, CHARGES AND EXPENSES, AND READ EACH FUND'S PROSPECTUS AND STATEMENT OF
ADDITIONAL INFORMATION CAREFULLY. YOU CAN DOWNLOAD EACH FUND'S PROSPECTUS AT
WWW.FTPORTFOLIOS.COM OR CONTACT FIRST TRUST PORTFOLIOS L.P. AT (800) 621-1675 TO
REQUEST A PROSPECTUS, WHICH CONTAINS THIS AND OTHER INFORMATION ABOUT EACH FUND.
CONCENTRATION RISK. To the extent that a fund is able to invest a large
percentage of its assets in a single asset class or the securities of issuers
within the same country, state, region, industry or sector, an adverse economic,
business or political development may affect the value of the fund's investments
more than if the fund were more broadly diversified. A fund that tracks an index
will be concentrated to the extent the fund's corresponding index is
concentrated. A concentration makes a fund more susceptible to any single
occurrence and may subject the fund to greater market risk than a fund that is
not concentrated.
CREDIT RISK. Credit risk is the risk that an issuer of a security will be unable
or unwilling to make dividend, interest and/or principal payments when due and
the related risk that the value of a security may decline because of concerns
about the issuer's ability to make such payments.
CYBER SECURITY RISK. The funds are susceptible to potential operational risks
through breaches in cyber security. A breach in cyber security refers to both
intentional and unintentional events that may cause a fund to lose proprietary
information, suffer data corruption or lose operational capacity. Such events
could cause a fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial
loss. In addition, cyber security breaches of a fund's third-party service
providers, such as its administrator, transfer agent, custodian, or sub-advisor,
as applicable, or issuers in which the fund invests, can also subject a fund to
many of the same risks associated with direct cyber security breaches.
DERIVATIVES RISK. To the extent a fund uses derivative instruments such as
futures contracts, options contracts and swaps, the fund may experience losses
because of adverse movements in the price or value of the underlying asset,
index or rate, which may be magnified by certain features of the derivative.
These risks are heightened when a fund's portfolio managers use derivatives to
enhance the fund's return or as a substitute for a position or security, rather
than solely to hedge (or offset) the risk of a position or security held by the
fund.
EQUITY SECURITIES RISK. To the extent a fund invests in equity securities, the
value of the fund's shares will fluctuate with changes in the value of the
equity securities. Equity securities prices fluctuate for several reasons,
including changes in investors' perceptions of the financial condition of an
issuer or the general condition of the relevant stock market, such as market
volatility, or when political or economic events affecting the issuers occur. In
addition, common stock prices may be particularly sensitive to rising interest
rates, as the cost of capital rises and borrowing costs increase. Equity
securities may decline significantly in price over short or extended periods of
time, and such declines may occur in the equity market as a whole, or they may
occur in only a particular country, company, industry or sector of the market.
ETF RISK. The shares of an ETF trade like common stock and represent an interest
in a portfolio of securities. The risks of owning an ETF generally reflect the
risks of owning the underlying securities, although lack of liquidity in an ETF
could result in it being more volatile and ETFs have management fees that
increase their costs. Shares of an ETF trade on an exchange at market prices
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
rather than net asset value, which may cause the shares to trade at a price
greater than net asset value (premium) or less than net asset value (discount).
In times of market stress, decisions by market makers to reduce or step away
from their role of providing a market for an ETF's shares, or decisions by an
ETF's authorized participants that they are unable or unwilling to proceed with
creation and/or redemption orders of an ETF's shares, could result in shares of
the ETF trading at a discount to net asset value and in greater than normal
intraday bid-ask spreads.
FIXED INCOME SECURITIES RISK. To the extent a fund invests in fixed income
securities, the fund will be subject to credit risk, income risk, interest rate
risk, liquidity risk and prepayment risk. Income risk is the risk that income
from a fund's fixed income investments could decline during periods of falling
interest rates. Interest rate risk is the risk that the value of a fund's fixed
income securities will decline because of rising interest rates. Liquidity risk
is the risk that a security cannot be purchased or sold at the time desired, or
cannot be purchased or sold without adversely affecting the price. Prepayment
risk is the risk that the securities will be redeemed or prepaid by the issuer,
resulting in lower interest payments received by the fund. In addition to these
risks, high yield securities, or "junk" bonds, are subject to greater market
fluctuations and risk of loss than securities with higher ratings, and the
market for high yield securities is generally smaller and less liquid than that
for investment grade securities.
INDEX CONSTITUENT RISK. Certain funds may be a constituent of one or more
indices. As a result, such a fund may be included in one or more index-tracking
exchange-traded funds or mutual funds. Being a component security of such a
vehicle could greatly affect the trading activity involving a fund, the size of
the fund and the market volatility of the fund. Inclusion in an index could
significantly increase demand for the fund and removal from an index could
result in outsized selling activity in a relatively short period of time. As a
result, a fund's net asset value could be negatively impacted and the fund's
market price may be significantly below its net asset value during certain
periods.
INDEX PROVIDER RISK. To the extent a fund seeks to track an index, it is subject
to Index Provider Risk. There is no assurance that the Index Provider will
compile the Index accurately, or that the Index will be determined, maintained,
constructed, reconstituted, rebalanced, composed, calculated or disseminated
accurately. To correct any such error, the Index Provider may carry out an
unscheduled rebalance or other modification of the Index constituents or
weightings, which may increase the fund's costs. The Index Provider does not
provide any representation or warranty in relation to the quality, accuracy or
completeness of data in the Index, and it does not guarantee that the Index will
be calculated in accordance with its stated methodology. Losses or costs
associated with any Index Provider errors generally will be borne by the fund
and its shareholders.
INVESTMENT COMPANIES RISK. To the extent a fund invests in the securities of
other investment vehicles, the fund will incur additional fees and expenses that
would not be present in a direct investment in those investment vehicles.
Furthermore, the fund's investment performance and risks are directly related to
the investment performance and risks of the investment vehicles in which the
fund invests.
MANAGEMENT RISK. To the extent that a fund is actively managed, it is subject to
management risk. In managing an actively-managed fund's investment portfolio,
the fund's portfolio managers will apply investment techniques and risk analyses
that may not have the desired result. There can be no guarantee that a fund will
meet its investment objective.
MARKET RISK. Securities held by a fund, as well as shares of a fund itself, are
subject to market fluctuations caused by factors such as general economic
conditions, political events, regulatory or market developments, changes in
interest rates and perceived trends in securities prices. Shares of a fund could
decline in value or underperform other investments as a result of the risk of
loss associated with these market fluctuations.
NON-U.S. SECURITIES RISK. To the extent a fund invests in non-U.S. securities,
it is subject to additional risks not associated with securities of domestic
issuers. Non-U.S. securities are subject to higher volatility than securities of
domestic issuers due to: possible adverse political, social or economic
developments; restrictions on foreign investment or exchange of securities; lack
of liquidity; currency exchange rates; excessive taxation; government seizure of
assets; different legal or accounting standards; and less government supervision
and regulation of exchanges in foreign countries. Investments in non-U.S.
securities may involve higher costs than investments in U.S. securities,
including higher transaction and custody costs, as well as additional taxes
imposed by non-U.S. governments. These risks may be heightened for securities of
companies located, or with significant operations, in emerging market countries.
PASSIVE INVESTMENT RISK. To the extent a fund seeks to track an index, the fund
will invest in the securities included in, or representative of, the index
regardless of their investment merit. A fund generally will not attempt to take
defensive positions in declining markets.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
Page 69
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
ADVISORY AGREEMENT
BOARD CONSIDERATIONS REGARDING APPROVAL OF CONTINUATION OF INVESTMENT MANAGEMENT
AGREEMENT
The Board of Trustees (the "Board") of First Trust Exchange-Traded Fund (the
"Trust"), including the Independent Trustees, unanimously approved the
continuation of the Investment Management Agreement (the "Agreement") with First
Trust Advisors L.P. (the "Advisor") on behalf of the following nine series of
the Trust (each a "Fund" and collectively, the "Funds"):
First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW)
First Trust NASDAQ-100-Technology Sector Index Fund (QTEC)
First Trust NASDAQ-100 Ex-Technology Sector Index Fund (QQXT)
First Trust Chindia ETF (FNI)
First Trust Water ETF (FIW)
First Trust Natural Gas ETF (FCG)
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund (QCLN)
First Trust S&P REIT Index Fund (FRI)
First Trust NASDAQ(R) ABA Community Bank Index Fund (QABA)
The Board approved the continuation of the Agreement for each Fund for a
one-year period ending June 30, 2020 at a meeting held on June 2, 2019. The
Board determined for each Fund that the continuation of the Agreement is in the
best interests of the Fund in light of the nature, extent and quality of the
services provided and such other matters as the Board considered to be relevant
in the exercise of its reasonable business judgment.
To reach this determination for each Fund, the Board considered its duties under
the Investment Company Act of 1940, as amended (the "1940 Act"), as well as
under the general principles of state law, in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. At meetings held on April 18, 2019 and June 2, 2019, the
Board, including the Independent Trustees, reviewed materials provided by the
Advisor responding to requests for information from counsel to the Independent
Trustees, submitted on behalf of the Independent Trustees, that, among other
things, outlined: the services provided by the Advisor to each Fund (including
the relevant personnel responsible for these services and their experience); the
advisory fee rate payable by each Fund as compared to fees charged to a peer
group of funds (the "Expense Group") and a broad peer universe of funds (the
"Expense Universe"), each assembled by Broadridge Financial Solutions, Inc.
("Broadridge"), an independent source, and as compared to fees charged to other
clients of the Advisor, including other exchange-traded funds ("ETFs") managed
by the Advisor; the expense ratio of each Fund as compared to expense ratios of
the funds in the Fund's Expense Group and Expense Universe; performance
information for each Fund, including comparisons of each Fund's performance to
that of one or more relevant benchmark indexes and to that of a performance
group of funds and a broad performance universe of funds (the "Performance
Universe"), each assembled by Broadridge; the nature of expenses incurred in
providing services to each Fund and the potential for economies of scale, if
any; financial data on the Advisor; any fall-out benefits to the Advisor and its
affiliate, First Trust Portfolios L.P. ("FTP"); and information on the Advisor's
compliance program. The Board reviewed initial materials with the Advisor at the
meeting held on April 18, 2019, prior to which the Independent Trustees and
their counsel met separately to discuss the information provided by the Advisor.
Following the April meeting, independent legal counsel on behalf of the
Independent Trustees requested certain clarifications and supplements to the
materials provided, and the information provided in response to those requests
was considered at an executive session of the Independent Trustees and
independent legal counsel held prior to the June 2, 2019 meeting, as well as at
the meeting held that day. The Board applied its business judgment to determine
whether the arrangement between the Trust and the Advisor continues to be a
reasonable business arrangement from each Fund's perspective. The Board
determined that, given the totality of the information provided with respect to
the Agreement, the Board had received sufficient information to renew the
Agreement. The Board considered that shareholders chose to invest or remain
invested in a Fund knowing that the Advisor manages the Fund and knowing the
Fund's advisory fee.
In reviewing the Agreement for each Fund, the Board considered the nature,
extent and quality of the services provided by the Advisor under the Agreement.
The Board considered that the Advisor is responsible for the overall management
and administration of the Trust and each Fund and reviewed all of the services
provided by the Advisor to the Funds, as well as the background and experience
of the persons responsible for such services. In reviewing the services
provided, the Board noted the compliance program that had been developed by the
Advisor and considered that it includes a robust program for monitoring the
Advisor's and each Fund's compliance with the 1940 Act, as well as each Fund's
compliance with its investment objective, policies and restrictions. The Board
also considered a report from the Advisor with respect to its risk management
functions related to the operation of the Funds. Finally, as part of the Board's
consideration of the Advisor's services, the Advisor, in its written materials
and at the April 18, 2019 meeting, described to the Board the scope of its
ongoing investment in additional infrastructure and personnel to maintain and
Page 70
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
improve the quality of services provided to the Funds and the other funds in the
First Trust Fund Complex. In light of the information presented and the
considerations made, the Board concluded that the nature, extent and quality of
the services provided to the Trust and each Fund by the Advisor under the
Agreement have been and are expected to remain satisfactory and that the Advisor
has managed each Fund consistent with its investment objective, policies and
restrictions.
The Board considered the advisory fee rate payable by each Fund under the
Agreement for the services provided. The Board considered that the Advisor
agreed to extend the current expense cap for each Fund through April 30, 2021.
For each Fund, the Board noted that expenses borne or fees waived by the Advisor
are to be subject to reimbursement by the Fund for up to three years from the
date the expense was incurred or fee was waived, but no reimbursement payment
would be made by the Fund if it would result in the Fund exceeding an expense
ratio equal to the expense cap in place at the time the expenses were borne or
fees were waived by the Advisor. The Board received and reviewed information
showing the advisory or unitary fee rates and expense ratios of the peer funds
in the Expense Groups, as well as advisory and unitary fee rates charged by the
Advisor to other fund (including ETFs) and non-fund clients, as applicable.
Because each Fund's Expense Group included peer funds that pay a unitary fee,
the Board determined that expense ratios were the most relevant comparative data
point. Based on the information provided, the Board noted that the total (net)
expense ratio of FNI was below the median total (net) expense ratio of the peer
funds in its Expense Group and that the total (net) expense ratio of each other
Fund was above the median total (net) expense ratio of the peer funds in its
respective Expense Group. With respect to the Expense Groups, the Board, at the
April 18, 2019 meeting, discussed with Broadridge its methodology for assembling
peer groups and discussed with the Advisor limitations in creating peer groups
for index ETFs, including differences in underlying indexes and index-tracking
methodologies that can result in greater management complexities across
seemingly comparable ETFs and different business models that may affect the
pricing of services among ETF sponsors. The Board took these limitations and
differences into account in considering the peer data. With respect to fees
charged to other non-ETF clients, the Board considered differences between the
Funds and other non-ETF clients that limited their comparability. In considering
the advisory fee rates overall, the Board also considered the Advisor's
statement that it seeks to meet investor needs through innovative and
value-added investment solutions and the Advisor's description of its long-term
commitment to each Fund.
The Board considered performance information for each Fund. The Board noted the
process it has established for monitoring each Fund's performance and portfolio
risk on an ongoing basis, which includes quarterly performance reporting from
the Advisor for the Funds. The Board determined that this process continues to
be effective for reviewing each Fund's performance. The Board received and
reviewed information for periods ended December 31, 2018 regarding the
performance of each Fund's underlying index, the correlation between each Fund's
performance and that of its underlying index, each Fund's tracking difference
and each Fund's excess return as compared to its benchmark index. Based on the
information provided and its ongoing review of performance, the Board concluded
that each Fund was correlated to its underlying index and that the tracking
difference for each Fund was within a reasonable range. In addition, the Board
reviewed data prepared by Broadridge comparing each Fund's performance to that
of its respective Performance Universe and to that of a broad-based benchmark,
but given each Fund's objective of seeking investment results that correspond
generally to the performance of its underlying index, the Board placed more
emphasis on its review of correlation and tracking difference.
On the basis of all the information provided on the fees, expenses and
performance of each Fund and the ongoing oversight by the Board, the Board
concluded that the advisory fee for each Fund continues to be reasonable and
appropriate in light of the nature, extent and quality of the services provided
by the Advisor to each Fund under the Agreement.
The Board considered information and discussed with the Advisor whether there
were any economies of scale in connection with providing advisory services to
the Funds and noted the Advisor's statement that it believes its expenses will
likely increase over the next twelve months as the Advisor continues to hire
personnel and build infrastructure, including technology, to improve the
services to the Funds. The Board considered the revenues and allocated costs
(including the allocation methodology) of the Advisor in serving as investment
advisor to each Fund for the twelve months ended December 31, 2018 and the
estimated profitability level for each Fund calculated by the Advisor based on
such data, as well as complex-wide and product-line profitability data, for the
same period. The Board noted the inherent limitations in the profitability
analysis and concluded that, based on the information provided, the Advisor's
profitability level for each Fund was not unreasonable. In addition, the Board
considered fall-out benefits described by the Advisor that may be realized from
its relationship with the Funds. The Board considered that the Advisor had
identified as a fall-out benefit to the Advisor and FTP their exposure to
investors and brokers who, absent their exposure to the Funds, may have had no
dealings with the Advisor or FTP, and noted that the Advisor does not utilize
soft dollars in connection with the Funds. The Board concluded that the
character and amount of potential fall-out benefits to the Advisor were not
unreasonable.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, unanimously determined that the terms
of the Agreement continue to be fair and reasonable and that the continuation of
the Agreement is in the best interests of each Fund. No single factor was
determinative in the Board's analysis.
Page 71
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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
111 W. Monroe Street
Chicago, IL 60603
[BLANK BACK COVER]
FIRST TRUST
First Trust Exchange-Traded Fund
Book 3
First Trust Total US Market AlphaDEX(R) ETF (TUSA)
First Trust Dorsey Wright People's Portfolio ETF (DWPP)
First Trust Dow 30 Equal Weight ETF (EDOW)
First Trust Lunt U.S. Factor Rotation ETF (FCTR)
Semi-Annual Report
For the Six Months Ended
June 30, 2019
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
SEMI-ANNUAL REPORT
JUNE 30, 2019
Shareholder Letter.......................................................... 2
Market Overview............................................................. 3
Fund Performance Overview
First Trust Total US Market AlphaDEX(R) ETF (TUSA)....................... 4
First Trust Dorsey Wright People's Portfolio ETF (DWPP).................. 6
First Trust Dow 30 Equal Weight ETF (EDOW)............................... 8
First Trust Lunt U.S. Factor Rotation ETF (FCTR)......................... 10
Notes to Fund Performance Overview.......................................... 12
Understanding Your Fund Expenses............................................ 13
Portfolio of Investments
First Trust Total US Market AlphaDEX(R) ETF (TUSA)....................... 14
First Trust Dorsey Wright People's Portfolio ETF (DWPP).................. 29
First Trust Dow 30 Equal Weight ETF (EDOW)............................... 36
First Trust Lunt U.S. Factor Rotation ETF (FCTR)......................... 37
Statements of Assets and Liabilities........................................ 40
Statements of Operations.................................................... 41
Statements of Changes in Net Assets......................................... 42
Financial Highlights........................................................ 44
Notes to Financial Statements............................................... 46
Additional Information...................................................... 54
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 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 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
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
JUNE 30, 2019
Dear Shareholders:
One thing we can all agree on and expect: headline news coming out of
Washington, DC continues to influence the financial markets. As January 2019
unfolded, the longest partial government shutdown in U.S. history was wrapping
up while we were beginning to learn about President Trump's approach to
international trade policy. By June's end, trade talks with China were
reengaging and the threat of 5% tariffs on Mexican imports was averted.
Investors breathed a collective sigh of relief and, once again, the free market
began to rally.
At the Markets' close on June 28, 2019, both U.S. and world equities had
performed resiliently, as indicated by the S&P 500(R) Index and the MSCI All
Country World Index returns of 18.54% and 16.23%, respectively, for the calendar
year-to-date. Bonds, as measured by the Bloomberg Barclays U.S. Aggregate Bond
Index, returned 6.11%, for the same period. The 10-Year U.S. Treasury Note yield
fell from over 3% in late 2018 to just above 2% for the six-month period ended
June 30, 2019 and the Federal Reserve has clearly indicated that another rate
cut is on the way.
Despite the ongoing bluster of the news cycle, we believe the economy is doing
well and productivity growth, due to deregulation and lower taxes on corporate
profits, has improved over the last two years.
o The Consumer Confidence Index of 121.5 for June remains strong.
o The U.S. inflation rate hovers near 2%, on average, as it has for
the last decade.
o June's unemployment rate of 3.7% barely moved from May's 3.6%, the
lowest level since December of 1969.
Before you reach for the antacids due to the latest political equivocation, keep
a balanced perspective in view. Remember, no one can predict the inevitable and
expected market fluctuations. Speak periodically with your investment
professional who can provide insight when it comes to investing and discovering
opportunities when they arise.
Thank you for giving First Trust the opportunity to be a part of your financial
plan. We value our relationship with you.
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
SEMI-ANNUAL REPORT
JUNE 30, 2019
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 over 25 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 trade conflict between the U.S. and China was approaching 16-months-old at
the close of June 2019. In our opinion, the most notable change in the first
half of 2019 was the Trump Administration's ratcheting up of tariffs on roughly
$200 billion of imported goods from China. On May 10, 2019, tariffs jumped from
10% to 25%. President Trump continues to threaten China with extending the
tariffs to the remaining $300 billion or so in goods shipped to the U.S.
annually. The ongoing dispute has become a drag on global growth, according to
organizations such as the International Monetary Fund.
While the U.S. economy continues to flourish relative to many other developed
and emerging economies, recent data suggests that China's economy is being
stressed by the tariffs. China's gross domestic product rose at an annualized
pace of 6.2% in the second quarter of 2019, the slowest growth rate in 27 years,
according to MarketWatch. CNBC reported that, as of July 1, 2019, the current
U.S. economic expansion will become the longest in its history, breaking the
previous record of 120 months of growth from March 1991 to March 2001, according
to data from the National Bureau of Economic Research.
Investors continue to embrace exchange-traded funds (ETFs) and related
exchange-traded products (ETPs). ETFGI, an independent research and consultancy
firm, reported that total assets invested in ETFs/ETPs listed globally stood at
an all-time high of $5.64 trillion at the end of June 2019, up from $4.99
trillion at this point a year ago, according to its own release. In June 2019,
net inflows to ETFs/ETPs listed globally totaled $68.95 billion, bringing
year-to-date net inflows to $209.54 billion.
U.S. STOCKS AND BONDS
In the first half of 2019, three of the major U.S. stock indices posted
double-digit gains. The S&P 500(R) Index, S&P MidCap 400(R) Index and S&P
SmallCap 600(R) Index posted total returns of 18.54%, 17.97%, and 13.69%,
respectively, according to Bloomberg. The S&P 500(R) Index posted its best
showing for the first half of a year since 1997, according to CNBC. All 11 major
S&P 500(R) Index sectors posted positive total returns. The top-performing
sectors were Information Technology, Consumer Discretionary, Industrials and
Real Estate, up 27.13%, 21.84%, 21.38% and 20.42%, respectively, while the two
sectors with the poorest showing, despite generating positive returns, were
Health Care, up 8.07%, and Energy, up 13.13%.
At the end of March 2019, both President Trump and White House economic advisor
Larry Kudlow called on the Federal Reserve (the "Fed") to lower the federal
funds target rate by 50 basis points ("bps"), according to CNBC. While the Fed
has yet to make any rate cuts, bond investors, through their purchasing power,
pushed the yield on the 10-year Treasury Note (T-Note) down from 2.50% at the
close on April 30, 2019 to 2.01% on June 28, 2019, or 49 bps, according to
Bloomberg. Investors have signaled to the Fed that they like the idea of a
couple of rate cuts over the coming months. The Fed has indicated that it would
consider easing rates if the U.S. economy were to weaken.
In the U.S. bond market, all the major bond groups posted positive returns in
the first half of 2019. The top-performing major debt group we track was high
yield corporate bonds. The Bloomberg Barclays U.S. Corporate High Yield Index
posted a total return of 9.94%. The worst-performing debt group that we track
was government bonds. The Bloomberg Barclays U.S. Treasury: Intermediate Index
posted a total return of 3.99%.
FOREIGN STOCKS AND BONDS
The U.S. dollar fell by 0.04% against a basket of major currencies in the first
half of 2019, as measured by the U.S. Dollar Index. With respect to U.S.
investors, a flat U.S. dollar would have little to no impact on the returns of
foreign securities. In the first half of 2019, foreign stocks and bonds
performed well.
The Bloomberg Barclays EM Hard Currency Aggregate Index of emerging markets debt
posted a total return of 8.85% (USD), while the Bloomberg Barclays Global
Aggregate Index of higher quality debt rose 5.57% (USD). With respect to
equities, the MSCI Emerging Markets Index of stocks posted a total return of
10.59% (USD), while the MSCI World ex USA Index posted a total return of 14.64%
(USD).
Page 3
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FUND PERFORMANCE OVERVIEW (UNAUDITED)
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FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
The First Trust Total US Market AlphaDEX(R) ETF (the "Fund") seeks investment
results that correspond generally to the price and yield (before the Fund's fees
and expenses) of an equity index called the NASDAQ AlphaDEX(R) Total US Market
Index (the "Index"). The Fund will normally invest at least 90% of its assets
(including investment borrowings) in common stocks that comprise the Index. The
Index is a modified market capitalization index designed to quantitatively
identify and select U.S. exchange-listed securities issued by small, mid and
large cap U.S. companies that exhibit growth and value factors and appear to
have the greatest potential for capital appreciation. The Index is rebalanced
quarterly. The Fund's shares are listed for trading on The Nasdaq Stock Market
LLC. The first day of secondary market trading in shares of the Fund was
December 7, 2006.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
6 Months 1 Year 5 Years 10 Years Inception 5 Years 10 Years Inception
Ended Ended Ended Ended (12/5/06) Ended Ended (12/5/06)
6/30/19 6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 17.07% 0.75% 5.86% 10.93% 5.61% 32.95% 182.26% 98.63%
Market Value 16.84% 0.55% 5.81% 10.90% 5.59% 32.64% 181.39% 98.20%
INDEX PERFORMANCE
NASDAQ AlphaDEX(R) Total US
Market Index* 17.58% 1.46% N/A N/A N/A N/A N/A N/A
Russell 3000(R) Index 18.71% 8.98% 10.19% 14.67% 8.23% 62.46% 293.01% 170.14%
------------------------------------------------------------------------------------------------------------------------------------
* On January 9, 2015, the Fund's underlying index changed from the Value
Line(R) Equity Allocation Index to the NASDAQ AlphaDEX(R) Total US Market
Index. Therefore, the Fund's performance and total returns shown for the
periods prior to January 9, 2015, are not necessarily indicative of the
performance the Fund, based on its current index, would have generated.
Since the Fund's current underlying index had an inception date of
September 8, 2014, it was not in existence for all of the periods
disclosed.
(See Notes to Fund Performance Overview on page 12.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 19.29%
Consumer Discretionary 15.38
Industrials 15.05
Financials 13.97
Health Care 8.67
Energy 6.43
Materials 5.72
Communication Services 4.87
Real Estate 4.54
Consumer Staples 3.18
Utilities 2.90
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Veeva Systems, Inc., Class A 0.52%
Ball Corp. 0.49
TE Connectivity Ltd. 0.48
CDW Corp. 0.47
Starbucks Corp. 0.46
IQVIA Holdings, Inc. 0.46
Synopsys, Inc. 0.46
Cadence Design Systems, Inc. 0.45
ServiceNow, Inc. 0.45
PayPal Holdings, Inc. 0.45
-------
Total 4.69%
=======
-----------------------------
The NASDAQ AlphaDEX(R) Total US Market Index (the "Index") is a trademark of The
Nasdaq OMX Group and has been licensed for use by First Trust Portfolios L.P.
AlphaDEX(R) is a trademark owned by First Trust Portfolios L.P. and has been
licensed to The Nasdaq OMX Group for use in the name of the Index. The First
Trust Total US Market AlphaDEX(R) ETF is not sponsored, endorsed, sold or
promoted by The Nasdaq OMX Group and The Nasdaq OMX Group makes no
representation or warranty regarding the advisability of investing in the First
Trust Total US Market AlphaDEX(R) ETF or as to the result to be obtained by any
person from use of the Index in connection with the trading of the First Trust
Total US Market AlphaDEX(R) ETF.
Page 4
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FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
DECEMBER 31, 2008 - JUNE 30, 2019
First Trust Total US Russell 3000(R)
Market AlphaDEX(R) ETF Index
12/08 $10,000 $10,000
06/09 10,533 10,420
12/09 13,415 12,834
06/10 13,219 12,058
12/10 16,078 15,007
06/11 16,430 15,960
12/11 14,541 15,160
06/12 14,794 16,573
12/12 15,812 17,649
06/13 18,094 20,130
12/13 21,291 23,570
06/14 22,364 25,206
12/14 21,794 26,529
06/15 22,051 27,044
12/15 20,490 26,657
06/16 21,158 27,622
12/16 23,661 30,050
06/17 25,447 32,733
12/17 28,259 36,397
06/18 29,511 37,567
12/18 25,397 34,490
06/19 29,732 40,943
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 178 0 0 0
01/01/15 - 12/31/15 115 15 0 0
01/01/16 - 12/31/16 121 0 0 0
01/01/17 - 12/31/17 216 0 0 0
01/01/18 - 12/31/18 168 2 0 0
01/01/19 - 06/30/19 59 0 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 68 6 0 0
01/01/15 - 12/31/15 110 12 0 0
01/01/16 - 12/31/16 131 0 0 0
01/01/17 - 12/31/17 35 0 0 0
01/01/18 - 12/31/18 79 1 1 0
01/01/19 - 06/30/19 65 0 0 0
Page 5
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
The First Trust Dorsey Wright People's Portfolio ETF (the "Fund") seeks
investment results that correspond generally to the price and yield (before the
Fund's fees and expenses) of an index called the Nasdaq Dorsey Wright People's
Portfolio Index (the "Index"). The Fund will normally invest at least 80% of its
total assets (including investment borrowings) in common stocks or U.S. Treasury
Bills ("T-Bills") that comprise the Index. The Index is a modified market
capitalization index designed to tactically allocate exposure to one of three
indices: the Nasdaq US 500 Large Cap Index, the Nasdaq US 500 Large Cap Equal
Weight Index or the Nasdaq US T-Bill Index based on daily relative strength
readings. The Index is rebalanced periodically. The Fund's shares are listed and
trade on The Nasdaq Stock Market LLC under the ticker symbol "DWPP." The first
day of secondary market trading in shares of the Fund was August 30, 2012.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months 1 Year 5 Years Inception 5 Years Inception
Ended Ended Ended (8/29/12) Ended (8/29/12)
6/30/19 6/30/19 6/30/19 to 6/30/19 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 19.92% 8.60% 6.94% 8.20% 39.88% 71.35%
Market Value 19.82% 8.60% 6.96% 8.20% 39.98% 71.40%
INDEX PERFORMANCE
Nasdaq Dorsey Wright People's Portfolio
Index* 20.33% 9.21% N/A N/A N/A N/A
S&P 500(R) Index 18.54% 10.42% 10.71% 13.70% 66.33% 140.46%
Nasdaq US 500 Large Cap Index 19.14% 10.72% N/A N/A N/A N/A
------------------------------------------------------------------------------------------------------------------------------------
* On August 18, 2017, the Fund's underlying index changed from CBOE(R)
VIX(R) Tail Hedge Index to the Nasdaq Dorsey Wright People's Portfolio
Index (the "Index"). Therefore, the Fund's performance and total returns
for the periods prior to August 18, 2017, are not necessarily indicative
of the performance the Fund, based on its current index, would have
generated. Since the Index had an inception date of July 24, 2017, it was
not in existence for all of the periods disclosed.
(See Notes to Fund Performance Overview on page 12.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 15.75%
Financials 13.76
Health Care 13.06
Industrials 12.53
Consumer Discretionary 10.84
Consumer Staples 6.55
Real Estate 6.46
Utilities 5.88
Energy 5.86
Communication Services 4.82
Materials 4.49
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Allergan PLC 0.26%
Western Digital Corp. 0.24
Sarepta Therapeutics, Inc. 0.23
Micron Technology, Inc. 0.23
NVIDIA Corp. 0.22
Constellation Brands, Inc., Class A 0.21
Mosaic (The) Co. 0.21
Electronic Arts, Inc. 0.21
Marathon Petroleum Corp. 0.21
Arconic, Inc. 0.21
-------
Total 2.23%
=======
-----------------------------
The Fund is not sponsored, endorsed, sold or promoted by Nasdaq, Inc. or its
affiliates (Nasdaq, with its affiliates are referred to as the "Corporations").
The Corporations have not passed on the legality or suitability of, or the
accuracy or descriptions and disclosure relating to, the Fund. The Corporations
make no representation or warranty, express or implied to the owners of the Fund
or any member of the public regarding the advisability of investing in
securities generally or in the Fund particularly.
Page 6
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
AUGUST 29, 2012 - JUNE 30, 2019
First Trust Dorsey Wright S&P 500(R)
People's Portfolio ETF Index
08/12 $10,000 $10,000
12/12 9,863 10,193
06/13 10,686 11,602
12/13 11,738 13,494
06/14 12,251 14,457
12/14 13,525 15,342
06/15 13,175 15,531
12/15 12,730 15,554
06/16 12,551 16,151
12/16 12,800 17,414
06/17 13,952 19,040
12/17 15,579 21,214
06/18 15,782 21,776
12/18 14,292 20,284
06/19 17,139 24,045
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period January 1, 2014 through June
30, 2019. Shareholders may pay more than NAV when they buy Fund shares and
receive less than NAV when they sell those shares because shares are bought and
sold at current market price. Data presented represents past performance and
cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 152 2 0 1
01/01/15 - 12/31/15 98 1 0 1
01/01/16 - 12/31/16 76 3 0 0
01/01/17 - 12/31/17 175 0 0 1
01/01/18 - 12/31/18 162 3 0 0
01/01/19 - 06/30/19 82 0 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
01/01/14 - 12/31/14 95 2 0 0
01/01/15 - 12/31/15 148 1 1 2
01/01/16 - 12/31/16 168 4 1 0
01/01/17 - 12/31/17 75 0 0 0
01/01/18 - 12/31/18 84 2 0 0
01/01/19 - 06/30/19 42 0 0 0
Page 7
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW 30 EQUAL WEIGHT ETF (EDOW)
The First Trust Dow 30 Equal Weight ETF (the "Fund") seeks investment results
that correspond generally to the price and yield (before the Fund's fees and
expenses) of an equity index called the Dow Jones Industrial Average Equal
Weight Index (the "Index"). The Fund will normally invest at least 90% of its
net assets (including investment borrowings) in common stocks that comprise the
Index. The Index is an equal weight version of the Dow Jones Industrial
Average(TM) (the "DJIA"), which is composed of 30 securities issued by blue-chip
U.S. companies covering all industries, with the exception of transportation and
utilities (as of May 1, 2019). While inclusion in the DJIA is not governed by
quantitative rules, a stock is typically only added if the company has an
excellent reputation, demonstrates sustained growth and is of interest to a
large number of investors. The Fund's shares are listed for trading on the NYSE
Arca, Inc. The Index is rebalanced quarterly. The first day of secondary market
trading in shares of the Fund was August 9, 2017.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL CUMULATIVE
TOTAL RETURNS TOTAL RETURNS
6 Months 1 Year Inception Inception
Ended Ended (8/8/17) (8/8/17)
6/30/19 6/30/19 to 6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 14.64% 14.44% 13.06% 26.16%
Market Value 14.80% 14.43% 13.08% 26.21%
INDEX PERFORMANCE
Dow Jones Industrial Average Equal Weight Index 14.98% 15.08% 13.64% 27.38%
Dow Jones Industrial Average(TM) 15.40% 12.20% 12.93% 25.89%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 12.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 20.07%
Industrials 13.78
Financials 13.43
Consumer Staples 13.23
Health Care 13.18
Consumer Discretionary 9.94
Energy 6.76
Communication Services 6.45
Materials 3.16
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
Caterpillar, Inc. 3.52%
Goldman Sachs Group (The), Inc. 3.50
Boeing (The) Co. 3.44
3M Co. 3.41
Walgreens Boots Alliance, Inc. 3.41
United Technologies Corp. 3.41
Intel Corp. 3.40
Exxon Mobil Corp. 3.38
Chevron Corp. 3.38
Apple, Inc. 3.37
-------
Total 34.22%
=======
-----------------------------
The Dow Jones Industrial Average Equal Weight Index is a product of S&P Dow
Jones Indices LLC ("SPDJI"), and has been licensed for use by First Trust. Dow
Jones(R) and Dow Jones Industrial Average Equal Weight Index are trademarks of
Dow Jones Trademark Holdings LLC ("Dow Jones") and have been licensed to SPDJI
and have been sublicensed for use for certain purposes by First Trust. The First
Trust Dow 30 Equal Weight Index ETF is not sponsored, endorsed, sold or promoted
by SPDJI, Dow Jones or their respective affiliates and none of them makes any
representation regarding the advisability of investing in such fund.
Page 8
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DOW 30 EQUAL WEIGHT ETF (EDOW) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
AUGUST 8, 2017 - JUNE 30, 2019
Dow Jones Industrial
First Trust Dow 30 Average Equal Dow Jones Industrial
Equal Weight ETF Weight Index Average(TM)
08/17 $10,000 $10,000 $10,000
12/17 11,102 11,124 11,302
06/18 11,024 11,069 11,219
12/18 11,004 11,079 10,908
06/19 12,615 12,739 12,588
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period August 9, 2017 (commencement
of trading) through June 30, 2019. Shareholders may pay more than NAV when they
buy Fund shares and receive less than NAV when they sell those shares because
shares are bought and sold at current market price. Data presented represents
past performance and cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
08/09/17 - 12/31/17 94 0 0 0
01/01/18 - 12/31/18 171 4 0 0
01/01/19 - 06/30/19 81 0 0 0
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
08/09/17 - 12/31/17 6 0 0 0
01/01/18 - 12/31/18 74 2 0 0
01/01/19 - 06/30/19 42 0 1 0
Page 9
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR)
The First Trust Lunt U.S. Factor Rotation ETF (the "Fund") seeks investment
results that correspond generally to the price and yield (before the Fund's fees
and expenses) of an equity index called the Lunt Capital Large Cap Factor
Rotation Index (the "Index"). The Fund will normally invest at least 90% of its
net assets (including investment borrowings) in common stocks that comprise the
Index. The Index is designed to track the performance of U.S. securities
exhibiting desirable factor exposure. The Index is rebalanced periodically. The
Fund's shares are listed for trading on CBOE BZX, Inc. The first day of
secondary market trading in shares of the Fund was July 26, 2018.
------------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
CUMULATIVE
TOTAL RETURNS
6 Months Inception
Ended (7/25/18)
6/30/19 to 6/30/19
FUND PERFORMANCE
NAV 23.17% 8.27%
Market Value 23.28% 8.37%
INDEX PERFORMANCE
Lunt Capital Large Cap Factor Rotation Index 23.69% 9.01%
Nasdaq US 500 Large Cap Index 19.14% 5.67%
------------------------------------------------------------------------------------------------------------------------------------
(See Notes to Fund Performance Overview on page 12.)
-----------------------------------------------------------
% OF TOTAL
SECTOR CLASSIFICATION LONG-TERM INVESTMENTS
-----------------------------------------------------------
Information Technology 22.34%
Health Care 15.92
Real Estate 12.35
Financials 11.78
Utilities 9.69
Industrials 9.44
Consumer Staples 7.88
Consumer Discretionary 5.49
Materials 2.80
Communication Services 1.74
Energy 0.57
-------
Total 100.00%
=======
-----------------------------------------------------------
% OF TOTAL
TOP TEN HOLDINGS LONG-TERM INVESTMENTS
-----------------------------------------------------------
MSCI, Inc. 2.18%
Twilio, Inc., Class A 2.17
Veeva Systems, Inc., Class A 2.03
Mastercard, Inc., Class A 2.01
Visa, Inc., Class A 1.89
Intuit, Inc. 1.88
SBA Communications Corp. 1.87
American Tower Corp. 1.67
PepsiCo, Inc. 1.65
Paychex, Inc. 1.55
-------
Total 18.90%
=======
-----------------------------
Lunt Capital Management, Inc. ("Licensor") and the Lunt Capital Large Cap Factor
Rotation Index, ("Licensor Index") are trademarks of Licensor and have been
licensed for use for certain purposes by First Trust Advisors L.P. The First
Trust Lunt U.S. Factor Rotation ETF is based on the Licensor Index and is not
sponsored, endorsed, sold or promoted by Licensor, and Licensor makes no
representation regarding the advisability of trading in such fund.
Page 10
--------------------------------------------------------------------------------
FUND PERFORMANCE OVERVIEW (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR) (CONTINUED)
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
JULY 25, 2018 - JUNE 30, 2019
First Trust Lunt U.S. Lunt Capital Large Cap Nasdaq US 500
Factor Rotation ETF Factor Rotation Index Large Cap Index
07/18 $10,000 $10,000 $10,000
12/18 8,791 8,813 8,869
06/19 10,828 10,901 10,567
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
BID/ASK MIDPOINT VS. NAV AS OF JUNE 30, 2019
The following Frequency Distribution of Discounts and Premiums charts are
provided to show the frequency at which the bid/ask midpoint price for the Fund
was at a discount or premium to the daily NAV. The following tables are for
comparative purposes only and represent the period July 26, 2018 (commencement
of trading) through June 30, 2019. Shareholders may pay more than NAV when they
buy Fund shares and receive less than NAV when they sell those shares because
shares are bought and sold at current market price. Data presented represents
past performance and cannot be used to predict future results.
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT AT/ABOVE NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
07/26/18 - 12/31/18 91 2 0 0
01/01/19 - 06/30/19 123 0 0 1
--------------------------------------------------------------------------------
NUMBER OF DAYS BID/ASK MIDPOINT BELOW NAV
--------------------------------------------------------------------------------
FOR THE PERIOD 0.00%-0.49% 0.50%-0.99% 1.00%-1.99% >=2.00%
07/26/18 - 12/31/18 15 1 0 0
01/01/19 - 06/30/19 0 0 0 0
Page 11
--------------------------------------------------------------------------------
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 between the highest bid and the lowest offer on the stock
exchange on which shares of the Fund are listed for trading as of the time that
the Fund's NAV is calculated. Since shares of each Fund did not trade in the
secondary market until after the Fund's inception, for the period from inception
to the first day of secondary market trading in shares of the Fund, the NAV of
each Fund is used as a proxy for the secondary market trading price to calculate
market returns. NAV and market returns assume that all distributions have been
reinvested in each Fund at NAV and Market Price, respectively.
An index is a statistical composite that tracks a specified financial market or
sector. Unlike each Fund, the indices do not actually hold a portfolio of
securities and therefore do not incur the expenses incurred by each Fund. These
expenses negatively impact the performance of each Fund. Also, market returns do
not include brokerage commissions that may be payable on secondary market
transactions. If brokerage commissions were included, market returns would be
lower. The total returns presented reflect the reinvestment of dividends on
securities in the indices. The returns presented do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption or
sale of Fund shares. The investment return and principal value of shares of each
Fund will vary with changes in market conditions. Shares of each Fund may be
worth more or less than their original cost when they are redeemed or sold in
the market. Each Fund's past performance is no guarantee of future performance.
Page 12
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2019 (UNAUDITED)
As a shareholder of First Trust Total US Market AlphaDEX(R) ETF, First Trust
Dorsey Wright People's Portfolio ETF, First Trust Dow 30 Equal Weight ETF or
First Trust Lunt U.S. Factor Rotation ETF (each a "Fund" and collectively, the
"Funds"), you incur two types of costs: (1) transaction costs; and (2) ongoing
costs, including management fees, distribution and/or service fees, if any, and
other Fund expenses. This Example is intended to help you understand your
ongoing costs of investing in the Funds and to compare these costs with the
ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held through the six-month period ended June 30, 2019.
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
JANUARY 1, 2019 JUNE 30, 2019 PERIOD PERIOD (b)
--------------------------------------------------------------------------------------------------------------------------
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
Actual $1,000.00 $1,170.70 0.70% (a) $3.77
Hypothetical (5% return before expenses) $1,000.00 $1,021.32 0.70% (a) $3.51
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO
ETF (DWPP)
Actual $1,000.00 $1,199.20 0.60% $3.27
Hypothetical (5% return before expenses) $1,000.00 $1,021.82 0.60% $3.01
FIRST TRUST DOW 30 EQUAL WEIGHT ETF (EDOW)
Actual $1,000.00 $1,146.40 0.50% $2.66
Hypothetical (5% return before expenses) $1,000.00 $1,022.32 0.50% $2.51
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR)
Actual $1,000.00 $1,231.70 0.65% $3.60
Hypothetical (5% return before expenses) $1,000.00 $1,021.57 0.65% $3.26
(a) These expense ratios reflect an expense cap. See Note 3 in Notes to
Financial Statements.
(b) Expenses are equal to the annualized expense ratio as indicated in the
table multiplied by the average account value over the period (January 1,
2019 through June 30, 2019), multiplied by 181/365 (to reflect the
six-month period).
Page 13
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.8%
AEROSPACE & DEFENSE -- 1.5%
870 Arconic, Inc. $ 22,463
56 Astronics Corp. (a) 2,252
73 Boeing (The) Co. 26,573
73 Curtiss-Wright Corp. 9,281
175 HEICO Corp. 23,417
60 Hexcel Corp. 4,853
60 Huntington Ingalls Industries,
Inc. 13,484
118 Kratos Defense & Security
Solutions, Inc. (a) 2,701
144 Mercury Systems, Inc. (a) 10,130
34 National Presto Industries, Inc. 3,172
91 Spirit AeroSystems Holdings, Inc.,
Class A 7,405
35 Teledyne Technologies, Inc. (a) 9,585
1,094 Textron, Inc. 58,026
122 TransDigm Group, Inc. (a) 59,024
420 Wesco Aircraft Holdings, Inc. (a) 4,662
--------------
257,028
--------------
AIR FREIGHT & LOGISTICS -- 0.5%
183 Atlas Air Worldwide Holdings,
Inc. (a) 8,169
149 Echo Global Logistics, Inc. (a) 3,110
305 FedEx Corp. 50,078
114 Forward Air Corp. 6,743
136 Hub Group, Inc., Class A (a) 5,709
309 XPO Logistics, Inc. (a) 17,863
--------------
91,672
--------------
AIRLINES -- 1.5%
296 Alaska Air Group, Inc. 18,917
43 Allegiant Travel Co. 6,171
1,073 Delta Air Lines, Inc. 60,893
352 Hawaiian Holdings, Inc. 9,655
1,016 JetBlue Airways Corp. (a) 18,786
170 SkyWest, Inc. 10,314
1,068 Southwest Airlines Co. 54,233
236 Spirit Airlines, Inc. (a) 11,264
695 United Airlines Holdings, Inc. (a) 60,847
--------------
251,080
--------------
AUTO COMPONENTS -- 1.0%
387 American Axle & Manufacturing
Holdings, Inc. (a) 4,938
541 BorgWarner, Inc. 22,711
247 Cooper Tire & Rubber Co. 7,793
197 Cooper-Standard Holdings, Inc. (a) 9,027
521 Dana, Inc. 10,389
42 Dorman Products, Inc. (a) 3,660
106 Fox Factory Holding Corp. (a) 8,746
376 Garrett Motion, Inc. (a) 5,772
1,005 Gentex Corp. 24,733
1,145 Goodyear Tire & Rubber (The) Co. 17,519
96 LCI Industries 8,640
153 Lear Corp. 21,308
666 Modine Manufacturing Co. (a) 9,530
128 Stoneridge, Inc. (a) 4,038
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
AUTO COMPONENTS (CONTINUED)
333 Tenneco, Inc., Class A $ 3,693
55 Visteon Corp. (a) 3,222
--------------
165,719
--------------
AUTOMOBILES -- 1.0%
6,311 Ford Motor Co. 64,562
1,867 General Motors Co. 71,936
350 Harley-Davidson, Inc. 12,540
267 Thor Industries, Inc. 15,606
296 Winnebago Industries, Inc. 11,440
--------------
176,084
--------------
BANKS -- 5.0%
41 1st Source Corp. 1,902
108 Ameris Bancorp 4,232
584 Associated Banc-Corp. 12,346
133 Banc of California, Inc. 1,858
131 BancorpSouth Bank 3,804
1,004 Bank of America Corp. 29,116
574 Bank OZK 17,272
373 BankUnited, Inc. 12,585
298 BB&T Corp. 14,641
136 Berkshire Hills Bancorp, Inc. 4,269
102 BOK Financial Corp. 7,699
337 Boston Private Financial Holdings,
Inc. 4,068
128 Brookline Bancorp, Inc. 1,969
53 Carolina Financial Corp. 1,860
109 Cathay General Bancorp 3,914
135 Chemical Financial Corp. 5,550
347 CIT Group, Inc. 18,231
668 Citigroup, Inc. 46,780
1,279 Citizens Financial Group, Inc. 45,225
113 Columbia Banking System, Inc. 4,088
189 Comerica, Inc. 13,729
188 ConnectOne Bancorp, Inc. 4,260
43 Cullen/Frost Bankers, Inc. 4,027
37 Eagle Bancorp, Inc. 2,003
260 East West Bancorp, Inc. 12,160
1,568 F.N.B. Corp. 18,455
1,099 Fifth Third Bancorp 30,662
645 First BanCorp 7,121
76 First Busey Corp. 2,007
31 First Citizens BancShares, Inc.,
Class A 13,958
319 First Hawaiian, Inc. 8,253
1,189 First Horizon National Corp. 17,752
90 First Midwest Bancorp, Inc. 1,842
119 Fulton Financial Corp. 1,948
71 Great Southern Bancorp, Inc. 4,249
175 Great Western Bancorp, Inc. 6,251
309 Hancock Whitney Corp. 12,379
174 Hanmi Financial Corp. 3,875
87 Heartland Financial USA, Inc. 3,891
101 Hilltop Holdings, Inc. 2,148
315 Home BancShares, Inc. 6,067
565 Hope Bancorp, Inc. 7,786
Page 14 See Notes to Financial Statements
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
BANKS (CONTINUED)
2,185 Huntington Bancshares, Inc. $ 30,197
174 IBERIABANK Corp. 13,198
23 Independent Bank Corp. 1,751
97 International Bancshares Corp. 3,658
351 Investors Bancorp, Inc. 3,914
137 JPMorgan Chase & Co. 15,317
2,639 KeyCorp 46,842
247 Lakeland Bancorp, Inc. 3,989
41 Lakeland Financial Corp. 1,920
280 OFG Bancorp 6,656
113 Old National Bancorp 1,875
209 Pacific Premier Bancorp, Inc. 6,454
442 PacWest Bancorp 17,163
506 People's United Financial, Inc. 8,491
228 Pinnacle Financial Partners, Inc. 13,105
226 PNC Financial Services Group
(The), Inc. 31,025
319 Popular, Inc. 17,303
82 Preferred Bank 3,874
60 Prosperity Bancshares, Inc. 3,963
2,937 Regions Financial Corp. 43,879
109 Renasant Corp. 3,917
177 Sandy Spring Bancorp, Inc. 6,174
32 Signature Bank 3,867
226 Simmons First National Corp.,
Class A 5,257
54 South State Corp. 3,978
223 Sterling Bancorp 4,745
121 Synovus Financial Corp. 4,235
102 Texas Capital Bancshares, Inc. (a) 6,260
149 TowneBank 4,065
63 Triumph Bancorp, Inc. (a) 1,830
55 Trustmark Corp. 1,829
756 Umpqua Holdings Corp. 12,542
229 United Bankshares, Inc. 8,494
148 United Community Banks, Inc. 4,227
76 Univest Financial Corp. 1,996
1,301 Valley National Bancorp 14,025
573 Wells Fargo & Co. 27,114
46 WesBanco, Inc. 1,773
304 Western Alliance Bancorp (a) 13,595
185 Wintrust Financial Corp. 13,535
275 Zions Bancorp N.A. 12,644
--------------
856,908
--------------
BEVERAGES -- 0.4%
25 Boston Beer (The) Co., Inc.,
Class A (a) 9,444
929 Molson Coors Brewing Co.,
Class B 52,024
--------------
61,468
--------------
BIOTECHNOLOGY -- 2.0%
344 ACADIA Pharmaceuticals, Inc. (a) 9,195
27 Agios Pharmaceuticals, Inc. (a) 1,347
407 Amicus Therapeutics, Inc. (a) 5,079
852 Array BioPharma, Inc. (a) 39,473
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
BIOTECHNOLOGY (CONTINUED)
403 Arrowhead Pharmaceuticals,
Inc. (a) $ 10,680
79 Bluebird Bio, Inc. (a) 10,049
46 Blueprint Medicines Corp. (a) 4,339
282 Cara Therapeutics, Inc. (a) 6,063
176 CareDx, Inc. (a) 6,334
504 Dicerna Pharmaceuticals, Inc. (a) 7,938
77 Enanta Pharmaceuticals, Inc. (a) 6,497
447 Epizyme, Inc. (a) 5,610
240 Exact Sciences Corp. (a) 28,330
699 Exelixis, Inc. (a) 14,938
210 Fate Therapeutics, Inc. (a) 4,263
76 FibroGen, Inc. (a) 3,434
53 Genomic Health, Inc. (a) 3,083
483 Incyte Corp. (a) 41,036
37 Intercept Pharmaceuticals,
Inc. (a) 2,944
394 Invitae Corp. (a) 9,259
205 Ionis Pharmaceuticals, Inc. (a) 13,175
179 Natera, Inc. (a) 4,937
47 Neurocrine Biosciences, Inc. (a) 3,968
266 Portola Pharmaceuticals, Inc. (a) 7,217
48 Puma Biotechnology, Inc. (a) 610
93 Radius Health, Inc. (a) 2,265
97 REGENXBIO, Inc. (a) 4,983
94 Repligen Corp. (a) 8,079
35 Sarepta Therapeutics, Inc. (a) 5,318
378 Seattle Genetics, Inc. (a) 26,161
107 Ultragenyx Pharmaceutical,
Inc. (a) 6,795
93 uniQure N.V. (a) 7,268
177 United Therapeutics Corp. (a) 13,817
295 Veracyte, Inc. (a) 8,410
211 Vericel Corp. (a) 3,986
--------------
336,880
--------------
BUILDING PRODUCTS -- 1.1%
78 A.O. Smith Corp. 3,678
120 AAON, Inc. 6,022
92 Allegion PLC 10,171
67 American Woodmark Corp. (a) 5,670
197 Apogee Enterprises, Inc. 8,558
157 Armstrong World Industries, Inc. 15,260
554 Builders FirstSource, Inc. (a) 9,340
900 Cornerstone Building Brands,
Inc. (a) 5,247
97 CSW Industrials, Inc. 6,611
175 Fortune Brands Home & Security,
Inc. 9,998
45 Gibraltar Industries, Inc. (a) 1,816
314 JELD-WEN Holding, Inc. (a) 6,666
750 Johnson Controls International
PLC 30,982
63 Lennox International, Inc. 17,325
106 Masco Corp. 4,159
441 Owens Corning 25,666
163 Patrick Industries, Inc. (a) 8,018
247 Universal Forest Products, Inc. 9,401
--------------
184,588
--------------
See Notes to Financial Statements Page 15
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
CAPITAL MARKETS -- 3.0%
78 Affiliated Managers Group, Inc. $ 7,187
275 Bank of New York Mellon (The)
Corp. 12,141
696 BGC Partners, Inc., Class A 3,640
55 Blucora, Inc. (a) 1,670
309 Eaton Vance Corp. 13,327
137 Evercore, Inc., Class A 12,134
50 FactSet Research Systems, Inc. 14,328
126 Federated Investors, Inc., Class B 4,095
1,672 Franklin Resources, Inc. 58,186
216 Goldman Sachs Group (The), Inc. 44,194
81 Houlihan Lokey, Inc. 3,607
95 INTL. FCStone, Inc. (a) 3,761
1,076 Invesco Ltd. 22,015
345 Lazard Ltd., Class A 11,865
239 LPL Financial Holdings, Inc. 19,495
34 MarketAxess Holdings, Inc. 10,928
985 Morgan Stanley 43,153
66 Morningstar, Inc. 9,546
279 MSCI, Inc. 66,622
1,783 Oaktree Specialty Lending Corp. 9,664
25 Piper Jaffray Cos. 1,857
172 Raymond James Financial, Inc. 14,543
239 SEI Investments Co. 13,408
421 State Street Corp. 23,601
236 Stifel Financial Corp. 13,938
415 T. Rowe Price Group, Inc. 45,530
130 TCG BDC, Inc. (b) 1,981
76 Virtus Investment Partners, Inc. 8,162
534 Waddell & Reed Financial, Inc.,
Class A 8,902
--------------
503,480
--------------
CHEMICALS -- 2.5%
259 AdvanSix, Inc. (a) 6,327
203 Albemarle Corp. 14,293
53 Ashland Global Holdings, Inc. 4,238
44 Cabot Corp. 2,099
203 CF Industries Holdings, Inc. 9,482
447 Chemours (The) Co. 10,728
86 DuPont de Nemours, Inc. 6,456
913 Eastman Chemical Co. 71,059
157 Ecolab, Inc. 30,998
216 FMC Corp. 17,917
76 H.B. Fuller Co. 3,526
924 Huntsman Corp. 18,887
157 Ingevity Corp. (a) 16,512
230 Kraton Corp. (a) 7,146
659 Kronos Worldwide, Inc. 10,096
824 LyondellBasell Industries N.V.,
Class A 70,971
126 Minerals Technologies, Inc. 6,742
1,522 Mosaic (The) Co. 38,096
10 NewMarket Corp. 4,009
898 Olin Corp. 19,675
63 PolyOne Corp. 1,978
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
CHEMICALS (CONTINUED)
9 Quaker Chemical Corp. $ 1,826
681 Rayonier Advanced Materials, Inc. 4,420
27 Sensient Technologies Corp. 1,984
42 Stepan Co. 3,860
163 Trinseo S.A. 6,902
306 Westlake Chemical Corp. 21,255
213 WR Grace & Co. 16,212
--------------
427,694
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 1.3%
51 ABM Industries, Inc. 2,040
1,079 ACCO Brands Corp. 8,492
2,602 ADT, Inc. (b) 15,924
40 Brady Corp., Class A 1,973
165 Brink's (The) Co. 13,395
208 Casella Waste Systems, Inc.,
Class A (a) 8,243
129 Clean Harbors, Inc. (a) 9,172
915 Copart, Inc. (a) 68,387
427 Covanta Holding Corp. 7,648
169 Deluxe Corp. 6,872
158 Herman Miller, Inc. 7,063
102 HNI Corp. 3,609
241 Interface, Inc. 3,694
293 Knoll, Inc. 6,733
200 Matthews International Corp.,
Class A 6,970
33 McGrath RentCorp 2,051
80 MSA Safety, Inc. 8,431
269 Pitney Bowes, Inc. 1,151
162 SP Plus Corp. (a) 5,173
381 Steelcase, Inc., Class A 6,515
62 Tetra Tech, Inc. 4,870
48 UniFirst Corp. 9,051
33 Viad Corp. 2,186
133 Waste Management, Inc. 15,344
--------------
224,987
--------------
COMMUNICATIONS EQUIPMENT
-- 1.1%
97 Acacia Communications, Inc. (a) 4,575
220 Arista Networks, Inc. (a) 57,116
445 Casa Systems, Inc. (a) 2,861
383 CommScope Holding Co., Inc. (a) 6,025
152 EchoStar Corp., Class A (a) 6,737
986 Extreme Networks, Inc. (a) 6,379
471 Juniper Networks, Inc. 12,543
74 Lumentum Holdings, Inc. (a) 3,952
395 Motorola Solutions, Inc. 65,858
139 Ubiquiti Networks, Inc. 18,279
746 Viavi Solutions, Inc. (a) 9,914
--------------
194,239
--------------
CONSTRUCTION & ENGINEERING
-- 0.7%
140 AECOM (a) 5,299
457 Ameresco, Inc., Class A (a) 6,732
Page 16 See Notes to Financial Statements
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
CONSTRUCTION & ENGINEERING
(CONTINUED)
148 Argan, Inc. $ 6,003
176 Comfort Systems USA, Inc. 8,974
121 Dycom Industries, Inc. (a) 7,123
171 EMCOR Group, Inc. 15,065
226 Fluor Corp. 7,614
43 Granite Construction, Inc. 2,072
346 MasTec, Inc. (a) 17,829
357 Primoris Services Corp. 7,472
551 Quanta Services, Inc. 21,043
539 Tutor Perini Corp. (a) 7,476
--------------
112,702
--------------
CONSTRUCTION MATERIALS -- 0.1%
66 Eagle Materials, Inc. 6,118
233 Summit Materials, Inc.,
Class A (a) 4,485
89 US Concrete, Inc. (a) 4,423
--------------
15,026
--------------
CONSUMER FINANCE -- 1.5%
605 Ally Financial, Inc. 18,749
678 Capital One Financial Corp. 61,522
28 Credit Acceptance Corp. (a) 13,547
389 Discover Financial Services 30,182
339 Encore Capital Group, Inc. (a) 11,482
243 Enova International, Inc. (a) 5,601
96 FirstCash, Inc. 9,602
479 Navient Corp. 6,538
101 Nelnet, Inc., Class A 5,981
524 OneMain Holdings, Inc. 17,716
69 PRA Group, Inc. (a) 1,942
787 Santander Consumer USA
Holdings, Inc. 18,857
1,258 SLM Corp. 12,228
1,303 Synchrony Financial 45,175
--------------
259,122
--------------
CONTAINERS & PACKAGING -- 1.3%
78 AptarGroup, Inc. 9,699
1,197 Ball Corp. 83,778
231 Berry Global Group, Inc. (a) 12,148
1,316 Graphic Packaging Holding Co. 18,398
179 Greif, Inc., Class A 5,827
898 International Paper Co. 38,901
97 Owens-Illinois, Inc. 1,675
167 Packaging Corp. of America 15,918
62 Silgan Holdings, Inc. 1,897
135 Sonoco Products Co. 8,821
542 WestRock Co. 19,767
--------------
216,829
--------------
DISTRIBUTORS -- 0.2%
425 Funko, Inc., Class A (a) (b) 10,293
439 LKQ Corp. (a) 11,682
50 Pool Corp. 9,550
--------------
31,525
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES
-- 0.4%
98 Bright Horizons Family Solutions,
Inc. (a) $ 14,785
545 Chegg, Inc. (a) 21,032
11 Graham Holdings Co., Class B 7,590
271 K12, Inc. (a) 8,241
617 Laureate Education, Inc.,
Class A (a) 9,693
--------------
61,341
--------------
DIVERSIFIED FINANCIAL SERVICES
-- 0.2%
825 AXA Equitable Holdings, Inc. 17,242
664 Jefferies Financial Group, Inc. 12,769
83 Voya Financial, Inc. 4,590
--------------
34,601
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 0.8%
2,209 AT&T, Inc. 74,024
3,466 CenturyLink, Inc. 40,760
34 Cogent Communications Holdings,
Inc. 2,018
169 Consolidated Communications
Holdings, Inc. 833
210 Iridium Communications, Inc. (a) 4,885
234 Verizon Communications, Inc. 13,368
--------------
135,888
--------------
ELECTRIC UTILITIES -- 1.2%
101 ALLETE, Inc. 8,404
88 Alliant Energy Corp. 4,319
165 American Electric Power Co., Inc. 14,522
154 Duke Energy Corp. 13,589
31 El Paso Electric Co. 2,027
290 Entergy Corp. 29,850
829 Exelon Corp. 39,742
102 Hawaiian Electric Industries, Inc. 4,442
96 OGE Energy Corp. 4,086
37 Otter Tail Corp. 1,954
130 Pinnacle West Capital Corp. 12,232
176 PNM Resources, Inc. 8,960
241 Portland General Electric Co. 13,055
1,309 PPL Corp. 40,592
--------------
197,774
--------------
ELECTRICAL EQUIPMENT -- 0.7%
139 Acuity Brands, Inc. 19,169
257 Atkore International Group,
Inc. (a) 6,649
181 AZZ, Inc. 8,330
344 Eaton Corp. PLC 28,648
129 Encore Wire Corp. 7,557
255 EnerSys 17,467
72 Generac Holdings, Inc. (a) 4,998
70 Hubbell, Inc. 9,128
90 Regal Beloit Corp. 7,354
657 Sunrun, Inc. (a) 12,325
258 TPI Composites, Inc. (a) 6,378
--------------
128,003
--------------
See Notes to Financial Statements Page 17
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 2.9%
132 Anixter International, Inc. (a) $ 7,882
270 Arrow Electronics, Inc. (a) 19,243
192 Avnet, Inc. 8,692
533 AVX Corp. 8,848
66 Badger Meter, Inc. 3,940
138 Belden, Inc. 8,221
70 Benchmark Electronics, Inc. 1,758
719 CDW Corp. 79,809
82 Cognex Corp. 3,934
52 Coherent, Inc. (a) 7,091
63 CTS Corp. 1,738
71 Fabrinet (a) 3,527
87 FLIR Systems, Inc. 4,707
99 II-VI, Inc. (a) 3,619
101 Insight Enterprises, Inc. (a) 5,878
55 IPG Photonics Corp. (a) 8,484
469 Jabil, Inc. 14,820
544 KEMET Corp. 10,233
794 Keysight Technologies, Inc. (a) 71,309
314 Knowles Corp. (a) 5,749
23 Littelfuse, Inc. 4,069
321 Methode Electronics, Inc. 9,171
105 OSI Systems, Inc. (a) 11,826
151 PC Connection, Inc. 5,282
91 Plexus Corp. (a) 5,312
192 Sanmina Corp. (a) 5,814
206 ScanSource, Inc. (a) 6,707
218 SYNNEX Corp. 21,451
858 TE Connectivity Ltd. 82,179
162 Tech Data Corp. (a) 16,945
206 Trimble, Inc. (a) 9,293
787 TTM Technologies, Inc. (a) 8,027
500 Vishay Intertechnology, Inc. 8,260
99 Zebra Technologies Corp.,
Class A (a) 20,739
--------------
494,557
--------------
ENERGY EQUIPMENT & SERVICES
-- 0.9%
378 Archrock, Inc. 4,007
119 C&J Energy Services, Inc. (a) 1,402
156 Cactus, Inc., Class A (a) 5,167
352 Diamond Offshore Drilling,
Inc. (a) 3,122
186 DMC Global, Inc. 11,783
739 FTS International, Inc. (a) 4,124
1,418 Halliburton Co. 32,245
934 Helix Energy Solutions Group,
Inc. (a) 8,060
75 Helmerich & Payne, Inc. 3,797
509 Keane Group, Inc. (a) 3,421
240 Liberty Oilfield Services, Inc.,
Class A 3,883
555 Mammoth Energy Services, Inc. 3,818
1,611 Nabors Industries Ltd. 4,672
605 Newpark Resources, Inc. (a) 4,489
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES
(CONTINUED)
218 Oil States International,
Inc. (a) $ 3,989
395 Patterson-UTI Energy, Inc. 4,547
328 ProPetro Holding Corp. (a) 6,790
648 RPC, Inc. 4,672
318 Schlumberger Ltd. 12,637
218 SEACOR Holdings, Inc. (a) 10,357
461 Select Energy Services, Inc.,
Class A (a) 5,352
337 Solaris Oilfield Infrastructure,
Inc., Class A 5,048
--------------
147,382
--------------
ENTERTAINMENT -- 1.4%
498 AMC Entertainment Holdings,
Inc., Class A 4,646
208 Cinemark Holdings, Inc. 7,509
844 Glu Mobile, Inc. (a) 6,060
1,090 Live Nation Entertainment,
Inc. (a) 72,213
14 Madison Square Garden (The) Co.,
Class A (a) 3,919
92 Marcus (The) Corp. 3,032
117 Netflix, Inc. (a) 42,976
2,468 Viacom, Inc., Class B 73,719
96 World Wrestling Entertainment,
Inc., Class A 6,932
3,119 Zynga, Inc., Class A (a) 19,120
--------------
240,126
--------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 4.1%
53 Agree Realty Corp. 3,395
81 American Assets Trust, Inc. 3,817
175 American Campus Communities,
Inc. 8,078
183 American Homes 4 Rent, Class A 4,449
211 American Tower Corp. 43,139
409 Americold Realty Trust 13,260
83 Apartment Investment &
Management Co., Class A 4,160
1,275 Apple Hospitality REIT, Inc. 20,221
905 Brixmor Property Group, Inc. 16,181
41 Camden Property Trust 4,280
236 CareTrust REIT, Inc. 5,612
288 Chatham Lodging Trust 5,434
199 Chesapeake Lodging Trust 5,656
347 Colony Capital, Inc. 1,735
206 Community Healthcare Trust, Inc. 8,118
380 CoreCivic, Inc. 7,889
39 CoreSite Realty Corp. 4,492
107 Cousins Properties, Inc. 3,870
216 Crown Castle International Corp. 28,156
130 CubeSmart 4,347
512 DiamondRock Hospitality Co. 5,294
206 Douglas Emmett, Inc. 8,207
272 Duke Realty Corp. 8,598
74 EastGroup Properties, Inc. 8,582
216 EPR Properties 16,111
Page 18 See Notes to Financial Statements
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
EQUITY REAL ESTATE INVESTMENT
TRUSTS (CONTINUED)
509 Equity Commonwealth $ 16,553
36 Equity LifeStyle Properties, Inc. 4,368
30 Federal Realty Investment Trust 3,863
118 First Industrial Realty Trust,
Inc. 4,335
771 Franklin Street Properties Corp. 5,690
216 Gaming and Leisure Properties,
Inc. 8,420
192 GEO Group (The), Inc. 4,034
58 Getty Realty Corp. 1,784
288 Hannon Armstrong Sustainable
Infrastructure Capital, Inc. 8,116
129 Healthcare Realty Trust, Inc. 4,040
145 Healthcare Trust of America, Inc.,
Class A 3,977
431 Hersha Hospitality Trust 7,129
632 Hospitality Properties Trust 15,800
3,665 Host Hotels & Resorts, Inc. 66,776
514 Independence Realty Trust, Inc. 5,947
275 Industrial Logistics Properties
Trust 5,725
68 Innovative Industrial Properties,
Inc. 8,402
1,139 Invitation Homes, Inc. 30,445
117 Iron Mountain, Inc. 3,662
302 JBG SMITH Properties 11,881
55 Kilroy Realty Corp. 4,059
449 Kimco Realty Corp. 8,297
52 Lamar Advertising Co., Class A 4,197
86 Liberty Property Trust 4,303
674 Medical Properties Trust, Inc. 11,755
75 National Retail Properties, Inc. 3,976
426 NorthStar Realty Europe Corp. 6,999
109 Omega Healthcare Investors, Inc. 4,006
316 Outfront Media, Inc. 8,150
586 Paramount Group, Inc. 8,210
669 Park Hotels & Resorts, Inc. 18,438
295 Physicians Realty Trust 5,145
177 Piedmont Office Realty Trust,
Inc., Class A 3,528
125 Preferred Apartment Communities,
Inc., Class A 1,869
53 PS Business Parks, Inc. 8,932
41 QTS Realty Trust, Inc., Class A 1,893
123 Regency Centers Corp. 8,209
103 Rexford Industrial Realty, Inc. 4,158
526 RLJ Lodging Trust 9,331
154 RPT Realty 1,865
51 Ryman Hospitality Properties, Inc. 4,136
427 Sabra Health Care REIT, Inc. 8,408
69 SBA Communications Corp. (a) 15,514
314 Senior Housing Properties Trust 2,597
92 SL Green Realty Corp. 7,394
62 STAG Industrial, Inc. 1,875
248 STORE Capital Corp. 8,231
809 Summit Hotel Properties, Inc. 9,279
70 Sun Communities, Inc. 8,973
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS (CONTINUED)
641 Sunstone Hotel Investors, Inc. $ 8,788
44 Terreno Realty Corp. 2,158
24 Universal Health Realty Income
Trust 2,038
497 VEREIT, Inc. 4,478
570 VICI Properties, Inc. 12,563
1,308 Washington Prime Group, Inc. (b) 4,997
422 Xenia Hotels & Resorts, Inc. 8,799
--------------
701,576
--------------
FOOD & STAPLES RETAILING -- 0.8%
172 Andersons (The), Inc. 4,685
65 Casey's General Stores, Inc. 10,139
59 Chefs' Warehouse (The), Inc. (a) 2,069
2,816 Kroger (The) Co. 61,136
105 Performance Food Group Co. (a) 4,203
86 Sprouts Farmers Market, Inc. (a) 1,625
357 US Foods Holding Corp. (a) 12,766
657 Walgreens Boots Alliance, Inc. 35,918
226 Weis Markets, Inc. 8,229
--------------
140,770
--------------
FOOD PRODUCTS -- 1.3%
964 Archer-Daniels-Midland Co. 39,331
235 Bunge Ltd. 13,092
166 Cal-Maine Foods, Inc. 6,926
300 Conagra Brands, Inc. 7,956
576 Darling Ingredients, Inc. (a) 11,457
195 Flowers Foods, Inc. 4,538
218 Freshpet, Inc. (a) 9,921
148 Hostess Brands, Inc. (a) 2,137
176 Ingredion, Inc. 14,518
12 J&J Snack Foods Corp. 1,931
119 J.M. Smucker (The) Co. 13,708
111 Lamb Weston Holdings, Inc. 7,033
27 Lancaster Colony Corp. 4,012
373 Pilgrim's Pride Corp. (a) 9,471
190 Post Holdings, Inc. (a) 19,754
179 Simply Good Foods (The) Co. (a) 4,310
143 TreeHouse Foods, Inc. (a) 7,736
599 Tyson Foods, Inc., Class A 48,363
--------------
226,194
--------------
GAS UTILITIES -- 0.4%
81 Chesapeake Utilities Corp. 7,696
273 National Fuel Gas Co. 14,401
334 New Jersey Resources Corp. 16,623
93 ONE Gas, Inc. 8,398
101 Southwest Gas Holdings, Inc. 9,052
101 Spire, Inc. 8,476
225 UGI Corp. 12,017
--------------
76,663
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 1.6%
162 AngioDynamics, Inc. (a) 3,190
4 Atrion Corp. 3,411
511 Baxter International, Inc. 41,851
See Notes to Financial Statements Page 19
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
HEALTH CARE EQUIPMENT & SUPPLIES
(CONTINUED)
143 Cardiovascular Systems, Inc. (a) $ 6,139
296 Cerus Corp. (a) 1,664
67 CONMED Corp. 5,733
47 Cooper (The) Cos., Inc. 15,834
63 CryoLife, Inc. (a) 1,886
72 Edwards Lifesciences Corp. (a) 13,301
94 Glaukos Corp. (a) 7,088
118 Hill-Rom Holdings, Inc. 12,345
572 Hologic, Inc. (a) 27,467
44 Insulet Corp. (a) 5,253
75 Integra LifeSciences Holdings
Corp. (a) 4,189
302 Lantheus Holdings, Inc. (a) 8,547
90 Masimo Corp. (a) 13,394
60 Merit Medical Systems, Inc. (a) 3,574
16 Mesa Laboratories, Inc. 3,909
59 Nevro Corp. (a) 3,825
345 Novocure Ltd. (a) 21,814
85 Penumbra, Inc. (a) 13,600
113 Quidel Corp. (a) 6,703
140 Stryker Corp. 28,781
35 Tactile Systems Technology,
Inc. (a) 1,992
58 Tandem Diabetes Care, Inc. (a) 3,742
46 Teleflex, Inc. 15,233
250 ViewRay, Inc. (a) 2,202
132 Wright Medical Group N.V. (a) 3,936
--------------
280,603
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 1.3%
101 Amedisys, Inc. (a) 12,262
59 BioTelemetry, Inc. (a) 2,841
26 Chemed Corp. 9,382
57 CorVel Corp. (a) 4,960
180 Ensign Group (The), Inc. 10,246
56 HealthEquity, Inc. (a) 3,662
181 Laboratory Corp. of America
Holdings (a) 31,295
50 LHC Group, Inc. (a) 5,979
28 Magellan Health, Inc. (a) 2,078
340 MEDNAX, Inc. (a) 8,578
117 Molina Healthcare, Inc. (a) 16,747
73 National HealthCare Corp. 5,924
85 Patterson Cos., Inc. 1,947
176 PetIQ, Inc. (a) 5,801
308 Quest Diagnostics, Inc. 31,358
955 R1 RCM, Inc. (a) 12,014
262 Select Medical Holdings Corp. (a) 4,158
320 Tenet Healthcare Corp. (a) 6,611
526 Tivity Health, Inc. (a) 8,647
311 Universal Health Services, Inc.,
Class B 40,551
--------------
225,041
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
HEALTH CARE TECHNOLOGY -- 0.6%
62 HMS Holdings Corp. (a) $ 2,008
149 Inovalon Holdings, Inc.,
Class A (a) 2,162
57 Medidata Solutions, Inc. (a) 5,159
69 Omnicell, Inc. (a) 5,936
75 Teladoc Health, Inc. (a) 4,981
546 Veeva Systems, Inc., Class A (a) 88,512
--------------
108,758
--------------
HOTELS, RESTAURANTS & LEISURE
-- 3.5%
563 Aramark 20,302
68 Boyd Gaming Corp. 1,832
166 Brinker International, Inc. 6,532
1,435 Caesars Entertainment Corp. (a) 16,962
1,366 Carnival Corp. 63,587
38 Cheesecake Factory (The), Inc. 1,661
98 Chipotle Mexican Grill, Inc. (a) 71,822
51 Cracker Barrel Old Country Store,
Inc. 8,707
456 Darden Restaurants, Inc. 55,509
37 Dave & Buster's Entertainment,
Inc. 1,497
503 Denny's Corp. (a) 10,327
101 Dine Brands Global, Inc. 9,642
221 Dunkin' Brands Group, Inc. 17,605
445 Eldorado Resorts, Inc. (a) 20,501
702 Everi Holdings, Inc. (a) 8,375
120 Hilton Grand Vacations, Inc. (a) 3,818
212 International Speedway Corp.,
Class A 9,517
485 Lindblad Expeditions Holdings,
Inc. (a) 8,706
1,008 Norwegian Cruise Line Holdings
Ltd. (a) 54,059
302 Planet Fitness, Inc., Class A (a) 21,877
483 Royal Caribbean Cruises Ltd. 58,544
215 SeaWorld Entertainment, Inc. (a) 6,665
94 Shake Shack, Inc., Class A (a) 6,787
932 Starbucks Corp. 78,130
697 Wendy's (The) Co. 13,647
97 Wingstop, Inc. 9,191
308 Yum China Holdings, Inc. 14,230
--------------
600,032
--------------
HOUSEHOLD DURABLES -- 2.5%
31 Cavco Industries, Inc. (a) 4,884
385 Century Communities, Inc. (a) 10,233
1,674 D.R. Horton, Inc. 72,200
642 Garmin Ltd. 51,232
190 Installed Building Products,
Inc. (a) 11,252
78 iRobot Corp. (a) 7,148
382 KB Home 9,829
168 La-Z-Boy, Inc. 5,151
98 Leggett & Platt, Inc. 3,760
1,411 Lennar Corp., Class A 68,377
123 LGI Homes, Inc. (a) 8,786
318 M.D.C. Holdings, Inc. 10,424
347 M/I Homes, Inc. (a) 9,903
Page 20 See Notes to Financial Statements
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
HOUSEHOLD DURABLES (CONTINUED)
207 Meritage Homes Corp. (a) $ 10,627
165 Mohawk Industries, Inc. (a) 24,333
5 NVR, Inc. (a) 16,851
743 PulteGroup, Inc. 23,494
258 Roku, Inc. (a) 23,370
520 Taylor Morrison Home Corp.,
Class A (a) 10,899
574 Toll Brothers, Inc. 21,020
57 TopBuild Corp. (a) 4,717
731 TRI Pointe Group, Inc. (a) 8,750
72 Tupperware Brands Corp. 1,370
--------------
418,610
--------------
HOUSEHOLD PRODUCTS -- 0.1%
318 Central Garden & Pet Co.,
Class A (a) 7,835
194 Church & Dwight Co., Inc. 14,174
34 Spectrum Brands Holdings, Inc. 1,828
--------------
23,837
--------------
INDEPENDENT POWER AND RENEWABLE
ELECTRICITY PRODUCERS -- 0.7%
919 AES Corp. 15,402
244 Clearway Energy, Inc., Class C 4,114
652 NRG Energy, Inc. 22,898
33 Ormat Technologies, Inc. 2,092
336 Pattern Energy Group, Inc.,
Class A 7,758
269 TerraForm Power, Inc., Class A 3,847
2,661 Vistra Energy Corp. 60,245
--------------
116,356
--------------
INDUSTRIAL CONGLOMERATES -- 0.3%
68 Carlisle Cos., Inc. 9,548
122 Roper Technologies, Inc. 44,684
--------------
54,232
--------------
INSURANCE -- 3.0%
408 Ambac Financial Group, Inc. (a) 6,875
273 American Equity Investment Life
Holding Co. 7,415
43 American Financial Group, Inc. 4,406
965 American International Group, Inc. 51,415
34 American National Insurance Co. 3,960
468 Assured Guaranty Ltd. 19,693
407 Athene Holding Ltd., Class A (a) 17,525
458 Brighthouse Financial, Inc. (a) 16,804
148 eHealth, Inc. (a) 12,743
184 Employers Holdings, Inc. 7,778
116 Erie Indemnity Co., Class A 29,496
341 Fidelity National Financial, Inc. 13,742
323 First American Financial Corp. 17,345
36 Hanover Insurance Group (The),
Inc. 4,619
279 Hartford Financial Services Group
(The), Inc. 15,546
46 James River Group Holdings Ltd. 2,157
164 Kemper Corp. 14,152
108 Kinsale Capital Group, Inc. 9,880
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
INSURANCE (CONTINUED)
472 Lincoln National Corp. $ 30,420
651 MetLife, Inc. 32,335
156 National General Holdings Corp. 3,579
28 National Western Life Group, Inc.,
Class A 7,196
199 Old Republic International Corp. 4,454
136 Primerica, Inc. 16,313
552 Principal Financial Group, Inc. 31,972
769 Progressive (The) Corp. 61,466
151 Prudential Financial, Inc. 15,251
59 Reinsurance Group of America, Inc. 9,206
101 Torchmark Corp. 9,035
101 Travelers (The) Cos., Inc. 15,102
113 Trupanion, Inc. (a) (b) 4,083
246 Unum Group 8,253
74 W.R. Berkley Corp. 4,879
--------------
509,095
--------------
INTERACTIVE MEDIA & SERVICES
-- 0.7%
243 Cars.com, Inc. (a) 4,792
83 Facebook, Inc., Class A (a) 16,019
198 IAC/InterActiveCorp (a) 43,071
130 Liberty TripAdvisor Holdings,
Inc., Class A (a) 1,612
294 Match Group, Inc. 19,778
138 QuinStreet, Inc. (a) 2,187
1,131 Snap, Inc., Class A (a) 16,173
421 Twitter, Inc. (a) 14,693
--------------
118,325
--------------
INTERNET & DIRECT MARKETING RETAIL
-- 0.6%
8 Amazon.com, Inc. (a) 15,149
373 eBay, Inc. 14,733
309 Etsy, Inc. (a) 18,963
129 Liberty Expedia Holdings, Inc.,
Class A (a) 6,165
1,300 Qurate Retail, Inc. (a) 16,107
136 Shutterfly, Inc. (a) 6,875
40 Shutterstock, Inc. 1,568
196 Stitch Fix, Inc., Class A (a) (b) 6,270
140 Wayfair, Inc., Class A (a) 20,440
--------------
106,270
--------------
IT SERVICES -- 3.2%
58 Akamai Technologies, Inc. (a) 4,648
47 Alliance Data Systems Corp. 6,586
173 Automatic Data Processing, Inc. 28,602
153 Black Knight, Inc. (a) 9,203
357 Booz Allen Hamilton Holding
Corp. 23,637
68 CACI International, Inc.,
Class A (a) 13,912
191 Cognizant Technology Solutions
Corp., Class A 12,107
50 CoreLogic, Inc. (a) 2,091
123 EPAM Systems, Inc. (a) 21,291
See Notes to Financial Statements Page 21
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
IT SERVICES (CONTINUED)
146 Euronet Worldwide, Inc. (a) $ 24,563
133 EVERTEC, Inc. 4,349
62 ExlService Holdings, Inc. (a) 4,100
112 FleetCor Technologies, Inc. (a) 31,455
274 Gartner, Inc. (a) 44,098
118 Genpact Ltd. 4,495
106 GTT Communications, Inc. (a) (b) 1,866
387 KBR, Inc. 9,652
195 Leidos Holdings, Inc. 15,571
169 LiveRamp Holdings, Inc. (a) 8,193
34 ManTech International Corp.,
Class A 2,239
177 Mastercard, Inc., Class A 46,822
117 MAXIMUS, Inc. 8,487
63 MongoDB, Inc. (a) 9,582
251 Okta, Inc. (a) 31,001
173 Paychex, Inc. 14,236
667 PayPal Holdings, Inc. (a) 76,345
125 Presidio, Inc. 1,709
370 Square, Inc., Class A (a) 26,836
196 Sykes Enterprises, Inc. (a) 5,382
161 Twilio, Inc., Class A (a) 21,952
450 Western Union (The) Co. 8,951
87 WEX, Inc. (a) 18,105
--------------
542,066
--------------
LEISURE PRODUCTS -- 0.2%
160 Acushnet Holdings Corp. 4,202
248 Brunswick Corp. 11,381
78 Johnson Outdoors, Inc., Class A 5,816
93 Malibu Boats, Inc., Class A (a) 3,613
98 Polaris Industries, Inc. 8,940
70 Sturm Ruger & Co., Inc. 3,814
--------------
37,766
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 2.3%
176 Accelerate Diagnostics,
Inc. (a) (b) 4,027
172 Agilent Technologies, Inc. 12,843
14 Bio-Rad Laboratories, Inc.,
Class A (a) 4,376
63 Bio-Techne Corp. 13,135
432 Bruker Corp. 21,578
190 Cambrex Corp. (a) 8,894
143 Charles River Laboratories
International, Inc. (a) 20,292
270 Codexis, Inc. (a) 4,976
417 Fluidigm Corp. (a) 5,137
482 IQVIA Holdings, Inc. (a) 77,554
125 Medpace Holdings, Inc. (a) 8,178
57 Mettler-Toledo International,
Inc. (a) 47,880
232 NanoString Technologies, Inc. (a) 7,041
271 NeoGenomics, Inc. (a) 5,946
173 PerkinElmer, Inc. 16,667
151 PRA Health Sciences, Inc. (a) 14,972
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES
(CONTINUED)
401 Syneos Health, Inc. (a) $ 20,487
152 Thermo Fisher Scientific, Inc. 44,639
220 Waters Corp. (a) 47,353
--------------
385,975
--------------
MACHINERY -- 3.5%
179 AGCO Corp. 13,885
55 Alamo Group, Inc. 5,496
52 Albany International Corp.,
Class A 4,311
93 Allison Transmission Holdings,
Inc. 4,311
59 Altra Industrial Motion Corp. 2,117
108 Barnes Group, Inc. 6,085
102 Caterpillar, Inc. 13,902
102 Chart Industries, Inc. (a) 7,842
187 Colfax Corp. (a) 5,242
54 Columbus McKinnon Corp. 2,266
147 Crane Co. 12,266
263 Cummins, Inc. 45,062
173 Deere & Co. 28,668
83 Donaldson Co., Inc. 4,221
28 ESCO Technologies, Inc. 2,313
142 Federal Signal Corp. 3,798
661 Fortive Corp. 53,885
145 Franklin Electric Co., Inc. 6,887
299 Gardner Denver Holdings, Inc. (a) 10,345
54 Gorman-Rupp (The) Co. 1,773
168 Graco, Inc. 8,430
287 Greenbrier (The) Cos., Inc. 8,725
79 Helios Technologies, Inc. 3,666
27 IDEX Corp. 4,648
513 Ingersoll-Rand PLC 64,982
215 ITT, Inc. 14,078
20 John Bean Technologies Corp. 2,423
42 Kadant, Inc. 3,814
201 Kennametal, Inc. 7,435
50 Lincoln Electric Holdings, Inc. 4,116
272 Meritor, Inc. (a) 6,596
128 Middleby (The) Corp. (a) 17,370
490 Milacron Holdings Corp. (a) 6,762
59 Mueller Industries, Inc. 1,727
172 Navistar International Corp. (a) 5,925
277 Oshkosh Corp. 23,127
813 PACCAR, Inc. 58,260
81 Parker-Hannifin Corp. 13,771
106 Snap-on, Inc. 17,558
58 SPX FLOW, Inc. (a) 2,428
75 Standex International Corp. 5,485
169 Timken (The) Co. 8,676
181 Toro (The) Co. 12,109
122 TriMas Corp. (a) 3,778
765 Trinity Industries, Inc. 15,874
545 Wabash National Corp. 8,867
219 Woodward, Inc. 24,782
--------------
590,087
--------------
Page 22 See Notes to Financial Statements
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MARINE -- 0.1%
55 Kirby Corp. (a) $ 4,345
154 Matson, Inc. 5,983
--------------
10,328
--------------
MEDIA -- 1.8%
967 Altice USA, Inc., Class A (a) 23,546
33 AMC Networks, Inc., Class A (a) 1,798
17 Cable One, Inc. 19,907
291 CBS Corp., Class B 14,521
120 Charter Communications, Inc.,
Class A (a) 47,422
693 Comcast Corp., Class A 29,300
1,025 Discovery, Inc., Class A (a) 31,467
656 DISH Network Corp., Class A (a) 25,197
440 E.W. Scripps (The) Co., Class A 6,728
351 Gannett Co., Inc. 2,864
432 Gray Television, Inc. (a) 7,080
396 Interpublic Group of Cos. (The),
Inc. 8,946
125 John Wiley & Sons, Inc., Class A 5,732
285 Liberty Latin America Ltd.,
Class C (a) 4,899
704 New Media Investment Group, Inc. 6,646
506 New York Times (The) Co.,
Class A 16,506
334 News Corp., Class A 4,506
192 Nexstar Media Group, Inc., Class A 19,392
139 Scholastic Corp. 4,620
192 Sinclair Broadcast Group, Inc.,
Class A 10,297
524 TEGNA, Inc. 7,939
609 WideOpenWest, Inc. (a) 4,421
--------------
303,734
--------------
METALS & MINING -- 1.6%
672 AK Steel Holding Corp. (a) (b) 1,593
590 Alcoa Corp. (a) 13,812
650 Allegheny Technologies, Inc. (a) 16,380
161 Carpenter Technology Corp. 7,725
740 Cleveland-Cliffs, Inc. (b) 7,896
453 Coeur Mining, Inc. (a) 1,966
433 Commercial Metals Co. 7,729
5,374 Freeport-McMoRan, Inc. 62,392
107 Global Brass & Copper Holdings,
Inc. 4,679
1,606 Hecla Mining Co. 2,891
35 Kaiser Aluminum Corp. 3,416
1,187 Nucor Corp. 65,404
230 Reliance Steel & Aluminum Co. 21,763
589 Steel Dynamics, Inc. 17,788
1,066 United States Steel Corp. 16,320
304 Warrior Met Coal, Inc. 7,940
148 Worthington Industries, Inc. 5,958
--------------
265,652
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
MORTGAGE REAL ESTATE INVESTMENT
TRUSTS -- 0.3%
406 Apollo Commercial Real Estate
Finance, Inc. $ 7,466
570 Arbor Realty Trust, Inc. (b) 6,908
241 Blackstone Mortgage Trust, Inc.,
Class A 8,575
215 Capstead Mortgage Corp. 1,795
444 Chimera Investment Corp. 8,378
99 Granite Point Mortgage Trust, Inc. 1,900
92 KKR Real Estate Finance Trust,
Inc. 1,833
217 Ladder Capital Corp. 3,604
1,016 MFA Financial, Inc. 7,295
268 PennyMac Mortgage Investment
Trust 5,851
114 Redwood Trust, Inc. 1,885
186 Starwood Property Trust, Inc. 4,226
--------------
59,716
--------------
MULTILINE RETAIL -- 1.3%
194 Big Lots, Inc. 5,550
128 Dillard's, Inc., Class A (b) 7,972
465 Dollar General Corp. 62,849
264 Dollar Tree, Inc. (a) 28,351
806 Kohl's Corp. 38,325
865 Macy's, Inc. 18,563
281 Nordstrom, Inc. 8,953
146 Ollie's Bargain Outlet Holdings,
Inc. (a) 12,718
345 Target Corp. 29,881
--------------
213,162
--------------
MULTI-UTILITIES -- 0.6%
136 Avista Corp. 6,066
168 Black Hills Corp. 13,133
327 Consolidated Edison, Inc. 28,671
111 DTE Energy Co. 14,195
483 MDU Resources Group, Inc. 12,461
52 NorthWestern Corp. 3,752
233 Public Service Enterprise Group,
Inc. 13,705
68 Unitil Corp. 4,072
--------------
96,055
--------------
OIL, GAS & CONSUMABLE FUELS
-- 5.5%
837 Antero Resources Corp. (a) 4,629
799 Apache Corp. 23,147
101 Arch Coal, Inc., Class A 9,515
637 Cabot Oil & Gas Corp. 14,626
359 California Resources Corp. (a) 7,065
1,223 Callon Petroleum Co. (a) 8,060
741 Carrizo Oil & Gas, Inc. (a) 7,425
811 Cheniere Energy, Inc. (a) 55,513
596 Chesapeake Energy Corp. (a) (b) 1,162
562 Chevron Corp. 69,935
297 Cimarex Energy Co. 17,621
858 CNX Resources Corp. (a) 6,272
See Notes to Financial Statements Page 23
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
OIL, GAS & CONSUMABLE FUELS
(CONTINUED)
267 Comstock Resources, Inc. (a) (b) $ 1,487
216 CONSOL Energy, Inc. (a) 5,748
128 Contura Energy, Inc. (a) 6,643
404 CVR Energy, Inc. 20,196
152 Delek US Holdings, Inc. 6,159
4,505 Denbury Resources, Inc. (a) 5,586
2,195 Devon Energy Corp. 62,601
2,183 Extraction Oil & Gas, Inc. (a) (b) 9,452
514 Exxon Mobil Corp. 39,388
443 Green Plains, Inc. 4,776
1,152 Gulfport Energy Corp. (a) 5,656
422 HollyFrontier Corp. 19,530
2,077 Kinder Morgan, Inc. 43,368
593 Kosmos Energy Ltd. 3,718
2,989 Laredo Petroleum, Inc. (a) 8,668
4,145 Marathon Oil Corp. 58,900
926 Marathon Petroleum Corp. 51,745
478 Matador Resources Co. (a) 9,503
709 Murphy Oil Corp. 17,477
504 Noble Energy, Inc. 11,290
1,223 Oasis Petroleum, Inc. (a) 6,947
1,046 Occidental Petroleum Corp. 52,593
198 ONEOK, Inc. 13,624
207 Par Pacific Holdings, Inc. (a) 4,248
400 PBF Energy, Inc., Class A 12,520
91 PDC Energy, Inc. (a) 3,281
734 Peabody Energy Corp. 17,689
728 Phillips 66 68,097
711 QEP Resources, Inc. (a) 5,141
168 Renewable Energy Group, Inc. (a) 2,664
376 SemGroup Corp., Class A 4,512
528 SM Energy Co. 6,611
1,969 Southwestern Energy Co. (a) 6,222
1,804 SRC Energy, Inc. (a) 8,948
348 Talos Energy, Inc. (a) 8,369
100 Targa Resources Corp. 3,926
825 Tellurian, Inc. (a) (b) 6,476
519 Unit Corp. (a) 4,614
653 Valero Energy Corp. 55,903
1,071 W&T Offshore, Inc. (a) 5,312
353 Whiting Petroleum Corp. (a) 6,594
256 World Fuel Services Corp. 9,206
1,268 WPX Energy, Inc. (a) 14,595
--------------
944,953
--------------
PAPER & FOREST PRODUCTS -- 0.3%
138 Boise Cascade Co. 3,879
186 Domtar Corp. 8,283
852 Louisiana-Pacific Corp. 22,339
143 Schweitzer-Mauduit International,
Inc. 4,745
431 Verso Corp., Class A (a) 8,211
--------------
47,457
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
PERSONAL PRODUCTS -- 0.4%
84 Edgewell Personal Care Co. (a) $ 2,264
251 Estee Lauder (The) Cos., Inc.,
Class A 45,961
157 Herbalife Nutrition Ltd. (a) 6,713
97 Inter Parfums, Inc. 6,449
174 Nu Skin Enterprises, Inc., Class A 8,582
--------------
69,969
--------------
PHARMACEUTICALS -- 0.8%
181 Amphastar Pharmaceuticals,
Inc. (a) 3,821
131 ANI Pharmaceuticals, Inc. (a) 10,768
682 Dermira, Inc. (a) 6,520
320 Eli Lilly & Co. 35,453
786 Horizon Therapeutics PLC (a) 18,911
29 Jazz Pharmaceuticals PLC (a) 4,134
167 Merck & Co., Inc. 14,003
1,467 Mylan N.V. (a) 27,932
173 Perrigo Co., PLC 8,238
43 Reata Pharmaceuticals, Inc.,
Class A (a) 4,057
34 Zogenix, Inc. (a) 1,625
--------------
135,462
--------------
PROFESSIONAL SERVICES -- 1.2%
29 ASGN, Inc. (a) 1,757
183 CBIZ, Inc. (a) 3,585
119 CoStar Group, Inc. (a) 65,933
64 Exponent, Inc. 3,746
38 Forrester Research, Inc. 1,787
96 FTI Consulting, Inc. (a) 8,049
241 Heidrick & Struggles
International, Inc. 7,223
168 Insperity, Inc. 20,519
84 Kelly Services, Inc., Class A 2,200
53 Kforce, Inc. 1,860
41 Korn Ferry 1,643
251 ManpowerGroup, Inc. 24,247
190 Navigant Consulting, Inc. 4,406
128 Robert Half International, Inc. 7,297
155 TriNet Group, Inc. (a) 10,509
313 TrueBlue, Inc. (a) 6,905
208 Verisk Analytics, Inc. 30,464
--------------
202,130
--------------
REAL ESTATE MANAGEMENT
& DEVELOPMENT -- 0.4%
560 CBRE Group, Inc., Class A (a) 28,728
510 eXp World Holdings, Inc. (a) 5,676
108 Jones Lang LaSalle, Inc. 15,195
86 Kennedy-Wilson Holdings, Inc. 1,769
45 Marcus & Millichap, Inc. (a) 1,388
144 RE/MAX Holdings, Inc., Class A 4,430
810 Realogy Holdings Corp. 5,864
273 Redfin Corp. (a) (b) 4,909
112 St Joe (The) Co. (a) 1,935
--------------
69,894
--------------
Page 24 See Notes to Financial Statements
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ROAD & RAIL -- 1.4%
22 AMERCO $ 8,328
300 ArcBest Corp. 8,433
370 CSX Corp. 28,627
143 Genesee & Wyoming, Inc.,
Class A (a) 14,300
287 Heartland Express, Inc. 5,186
319 Hertz Global Holdings,
Inc. (a) (b) 5,091
108 Kansas City Southern 13,157
636 Knight-Swift Transportation
Holdings, Inc. 20,886
76 Landstar System, Inc. 8,207
518 Marten Transport Ltd. 9,402
297 Norfolk Southern Corp. 59,201
149 Ryder System, Inc. 8,687
121 Saia, Inc. (a) 7,825
439 Schneider National, Inc., Class B 8,007
166 Union Pacific Corp. 28,072
270 Werner Enterprises, Inc. 8,392
--------------
241,801
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 4.3%
112 Advanced Energy Industries,
Inc. (a) 6,302
1,629 Advanced Micro Devices, Inc. (a) 49,473
1,081 Amkor Technology, Inc. (a) 8,064
132 Analog Devices, Inc. 14,899
1,397 Applied Materials, Inc. 62,739
184 Broadcom, Inc. 52,966
33 Cabot Microelectronics Corp. 3,633
44 Cirrus Logic, Inc. (a) 1,923
1,114 Cypress Semiconductor Corp. 24,775
160 Diodes, Inc. (a) 5,819
800 Enphase Energy, Inc. (a) 14,584
466 Entegris, Inc. 17,391
79 First Solar, Inc. (a) 5,189
230 FormFactor, Inc. (a) 3,604
84 Inphi Corp. (a) 4,208
1,290 Intel Corp. 61,752
464 KLA-Tencor Corp. 54,845
310 Lam Research Corp. 58,230
619 Lattice Semiconductor Corp. (a) 9,031
145 MaxLinear, Inc. (a) 3,399
1,676 Micron Technology, Inc. (a) 64,677
223 MKS Instruments, Inc. 17,370
92 Monolithic Power Systems, Inc. 12,492
120 Nanometrics, Inc. (a) 4,165
808 ON Semiconductor Corp. (a) 16,330
58 Qorvo, Inc. (a) 3,863
243 Rudolph Technologies, Inc. (a) 6,714
672 Skyworks Solutions, Inc. 51,926
313 Teradyne, Inc. 14,996
82 Universal Display Corp. 15,421
546 Xilinx, Inc. 64,384
--------------
735,164
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SOFTWARE -- 6.5%
26 2U, Inc. (a) $ 979
91 8x8, Inc. (a) 2,193
379 ACI Worldwide, Inc. (a) 13,015
114 Alarm.com Holdings, Inc. (a) 6,099
110 Alteryx, Inc., Class A (a) 12,003
93 Appfolio, Inc., Class A (a) 9,511
215 Appian Corp. (a) (b) 7,755
40 Aspen Technology, Inc. (a) 4,971
89 Autodesk, Inc. (a) 14,498
439 Avaya Holdings Corp. (a) 5,228
37 Benefitfocus, Inc. (a) 1,005
1,091 Cadence Design Systems, Inc. (a) 77,254
71 CDK Global, Inc. 3,510
76 Cornerstone OnDemand, Inc. (a) 4,403
228 Coupa Software, Inc. (a) 28,867
85 Envestnet, Inc. (a) 5,811
123 Everbridge, Inc. (a) 10,999
77 Fair Isaac Corp. (a) 24,180
140 Five9, Inc. (a) 7,181
176 ForeScout Technologies, Inc. (a) 5,959
165 Fortinet, Inc. (a) 12,677
86 Guidewire Software, Inc. (a) 8,719
125 HubSpot, Inc. (a) 21,315
118 Instructure, Inc. (a) 5,015
265 Intuit, Inc. 69,252
144 j2 Global, Inc. 12,800
191 LivePerson, Inc. (a) 5,356
34 Manhattan Associates, Inc. (a) 2,357
117 Microsoft Corp. 15,673
195 Mimecast Ltd. (a) 9,108
168 New Relic, Inc. (a) 14,534
228 Palo Alto Networks, Inc. (a) 46,457
110 Paycom Software, Inc. (a) 24,939
233 Paylocity Holding Corp. (a) 21,860
83 Progress Software Corp. 3,620
137 Proofpoint, Inc. (a) 16,474
87 PROS Holdings, Inc. (a) 5,504
107 Q2 Holdings, Inc. (a) 8,171
50 Qualys, Inc. (a) 4,354
182 Rapid7, Inc. (a) 10,527
137 RealPage, Inc. (a) 8,062
193 RingCentral, Inc., Class A (a) 22,180
129 SailPoint Technologies Holding,
Inc. (a) 2,585
402 SecureWorks Corp., Class A (a) 5,343
281 ServiceNow, Inc. (a) 77,154
222 Splunk, Inc. (a) 27,917
52 SPS Commerce, Inc. (a) 5,315
1,088 SS&C Technologies Holdings, Inc. 62,680
602 Synopsys, Inc. (a) 77,471
98 Tableau Software, Inc.,
Class A (a) 16,270
190 Teradata Corp. (a) 6,812
105 Trade Desk (The), Inc.,
Class A (a) 23,917
218 Upland Software, Inc. (a) 9,926
123 Verint Systems, Inc. (a) 6,615
307 VMware, Inc., Class A 51,333
359 Workday, Inc., Class A (a) 73,803
See Notes to Financial Statements Page 25
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
SOFTWARE (CONTINUED)
182 Workiva, Inc. (a) $ 10,572
338 Yext, Inc. (a) 6,790
244 Zendesk, Inc. (a) 21,723
293 Zscaler, Inc. (a) 22,456
--------------
1,103,057
--------------
SPECIALTY RETAIL -- 3.7%
237 Aaron's, Inc. 14,554
202 Abercrombie & Fitch Co.,
Class A 3,240
750 American Eagle Outfitters, Inc. 12,675
80 Asbury Automotive Group, Inc. (a) 6,747
582 AutoNation, Inc. (a) 24,409
68 AutoZone, Inc. (a) 74,764
544 Bed Bath & Beyond, Inc. (b) 6,321
390 Best Buy Co., Inc. 27,195
314 Boot Barn Holdings, Inc. (a) 11,191
395 Buckle (The), Inc. 6,838
119 CarMax, Inc. (a) 10,333
95 Carvana Co. (a) 5,946
38 Children's Place (The), Inc. 3,624
323 Conn's, Inc. (a) 5,756
201 Dick's Sporting Goods, Inc. 6,961
134 Five Below, Inc. (a) 16,083
179 Floor & Decor Holdings, Inc.,
Class A (a) 7,500
343 Foot Locker, Inc. 14,379
794 Gap (The), Inc. 14,268
143 Group 1 Automotive, Inc. 11,710
301 L Brands, Inc. 7,856
80 Lithia Motors, Inc., Class A 9,502
253 Lowe's Cos., Inc. 25,530
107 Monro, Inc. 9,127
65 Murphy USA, Inc. (a) 5,462
107 O'Reilly Automotive, Inc. (a) 39,517
2,035 Office Depot, Inc. 4,192
1,163 Party City Holdco, Inc. (a) 8,525
465 Penske Automotive Group, Inc. 21,995
443 Rent-A-Center, Inc. (a) 11,797
201 Sally Beauty Holdings, Inc. (a) 2,681
197 Sleep Number Corp. (a) 7,957
79 Tiffany & Co. 7,398
1,041 TJX (The) Cos., Inc. 55,048
170 Tractor Supply Co. 18,496
199 Ulta Beauty, Inc. (a) 69,031
701 Urban Outfitters, Inc. (a) 15,948
295 Williams-Sonoma, Inc. 19,175
--------------
623,731
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 1.2%
73 Apple, Inc. 14,448
354 Dell Technologies, Inc.,
Class C (a) 17,983
2,694 Hewlett Packard Enterprise Co. 40,275
572 Pure Storage, Inc., Class A (a) 8,735
1,157 Seagate Technology PLC 54,518
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS (CONTINUED)
1,153 Western Digital Corp. $ 54,825
520 Xerox Corp. 18,413
--------------
209,197
--------------
TEXTILES, APPAREL & LUXURY GOODS
-- 1.1%
82 Carter's, Inc. 7,998
199 Columbia Sportswear Co. 19,932
72 Crocs, Inc. (a) 1,422
141 Deckers Outdoor Corp. (a) 24,812
135 Fossil Group, Inc. (a) 1,552
139 G-III Apparel Group Ltd. (a) 4,089
465 Hanesbrands, Inc. 8,007
152 Movado Group, Inc. 4,104
25 Oxford Industries, Inc. 1,895
136 PVH Corp. 12,871
64 Ralph Lauren Corp. 7,270
371 Skechers U.S.A., Inc., Class A (a) 11,683
109 Steven Madden Ltd. 3,701
1,706 Tapestry, Inc. 54,131
590 Under Armour, Inc., Class A (a) 14,957
52 Wolverine World Wide, Inc. 1,432
--------------
179,856
--------------
THRIFTS & MORTGAGE FINANCE
-- 0.9%
64 Axos Financial, Inc. (a) 1,744
99 Dime Community Bancshares, Inc. 1,880
287 Essent Group Ltd. (a) 13,486
77 Federal Agricultural Mortgage
Corp., Class C 5,595
112 Flagstar Bancorp, Inc. 3,712
140 HomeStreet, Inc. (a) 4,149
47 LendingTree, Inc. (a) 19,741
375 Meta Financial Group, Inc. 10,519
1,575 MGIC Investment Corp. (a) 20,695
963 Mr Cooper Group, Inc. (a) 7,714
718 New York Community Bancorp,
Inc. 7,166
357 NMI Holdings, Inc., Class A (a) 10,135
71 Provident Financial Services, Inc. 1,722
1,002 Radian Group, Inc. 22,896
238 TrustCo Bank Corp. NY 1,885
257 United Financial Bancorp, Inc. 3,644
181 Walker & Dunlop, Inc. 9,631
128 Washington Federal, Inc. 4,471
--------------
150,785
--------------
TOBACCO -- 0.1%
200 Turning Point Brands, Inc. 9,796
128 Universal Corp. 7,779
--------------
17,575
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 1.1%
605 Air Lease Corp. 25,011
456 Aircastle Ltd. 9,695
Page 26 See Notes to Financial Statements
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
TRADING COMPANIES & DISTRIBUTORS
(CONTINUED)
93 Applied Industrial Technologies,
Inc. $ 5,722
115 Beacon Roofing Supply, Inc. (a) 4,223
523 BMC Stock Holdings, Inc. (a) 11,088
95 DXP Enterprises, Inc. (a) 3,599
1,292 Fastenal Co. 42,106
97 GATX Corp. 7,691
221 H&E Equipment Services, Inc. 6,429
96 HD Supply Holdings, Inc. (a) 3,867
142 Herc Holdings, Inc. (a) 6,508
106 MRC Global, Inc. (a) 1,815
201 MSC Industrial Direct Co., Inc.,
Class A 14,926
132 NOW, Inc. (a) 1,948
221 Rush Enterprises, Inc., Class A 8,071
59 Triton International Ltd. 1,933
182 United Rentals, Inc. (a) 24,139
29 Watsco, Inc. 4,742
174 WESCO International, Inc. (a) 8,813
--------------
192,326
--------------
TRANSPORTATION INFRASTRUCTURE
-- 0.1%
403 Macquarie Infrastructure Corp. 16,338
--------------
WATER UTILITIES -- 0.0%
68 California Water Service Group 3,443
33 Middlesex Water Co. 1,955
--------------
5,398
--------------
WIRELESS TELECOMMUNICATION
SERVICES -- 0.2%
676 Telephone & Data Systems, Inc. 20,550
201 United States Cellular Corp. (a) 8,979
--------------
29,529
--------------
TOTAL COMMON STOCKS -- 99.8% 16,992,228
(Cost $15,845,834) --------------
RIGHTS -- 0.0%
ROAD & RAIL -- 0.0%
319 Hertz Global Holdings, Inc.,
expiring 7/17/19 (a) (b) 622
(Cost $0) --------------
MONEY MARKET FUNDS -- 0.8%
9,556 Goldman Sachs Financial Square
Treasury Obligations Fund -
Institutional Class -
2.25% (c) (d) 9,556
115,935 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 2.19% (c) 115,935
--------------
TOTAL MONEY MARKET FUNDS
-- 0.8% 125,491
(Cost $125,491) --------------
PRINCIPAL
VALUE DESCRIPTION VALUE
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 0.4%
$ 70,938 BNP Paribas S.A., 2.48% (c),
dated 06/28/19, due 07/01/19,
with a maturity value of
$70,953. Collateralized by U.S.
Treasury Note, interest rate of
2.625%, due 07/31/20. The value
of the collateral including
accrued interest is
$72,389. (d) $ 70,938
(Cost $70,938) --------------
TOTAL INVESTMENTS -- 101.0% 17,189,279
(Cost $16,042,263) (e)
NET OTHER ASSETS AND
LIABILITIES -- (1.0)% (166,287)
--------------
NET ASSETS -- 100.0% $ 17,022,992
==============
(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 aggregate value of such
securities is $78,745 and the total value of the collateral held by the
Fund is $80,494.
(c) Rate shown reflects yield as of June 30, 2019.
(d) This security serves as collateral for securities on loan.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $1,996,073 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $849,057. The net unrealized appreciation was
$1,147,016.
See Notes to Financial Statements Page 27
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 16,992,228 $ -- $ --
Rights* 622 -- --
Money Market
Funds 125,491 -- --
Repurchase
Agreements -- 70,938 --
-------------------------------------------------------
Total Investments $ 17,118,341 $ 70,938 $ --
=======================================================
* See Portfolio of Investments for industry breakout.
---------------------------------
OFFSETTING ASSETS AND LIABILITIES
-------------------------------------------------------------
Offsetting assets and liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset, and to
disclose instruments and transactions subject to master netting or similar
agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities
in the Notes to Financial Statements).
The Fund's loaned securities were all subject to an enforceable Securities
Lending Agency Agreement. Securities lent in accordance with the Securities
Lending Agency Agreement on a gross basis were as follows:
SECURITIES LENDING AGENCY AGREEMENT
-------------------------------------------------------------
Total gross amount presented on the
Statements of Assets and Liabilities(1) $ 78,745
Non-cash Collateral(2) (78,745)
--------------
Net Amount $ --
==============
(1) The amount presented on the Statements of Assets and Liabilities, which is
included in "Investments, at value", is not offset and is shown on a gross
basis.
(2) At June 30, 2019, 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) $ 70,938
Non-cash Collateral(4) (70,938)
--------------
Net Amount $ --
==============
(3) The amount is included in "Investments, at value" on the Statements of
Assets and Liabilities.
(4) At June 30, 2019, the value of the collateral received from each seller
exceeded the value of the repurchase agreements.
Page 28 See Notes to Financial Statements
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
AEROSPACE & DEFENSE -- 2.2%
4,077 Arconic, Inc. $ 105,268
266 Boeing (The) Co. 96,827
559 General Dynamics Corp. 101,637
773 HEICO Corp. 103,435
503 L3Harris Technologies, Inc. 95,132
276 Lockheed Martin Corp. 100,337
308 Northrop Grumman Corp. 99,518
542 Raytheon Co. 94,243
1,912 Textron, Inc. 101,413
199 TransDigm Group, Inc. (a) 96,276
771 United Technologies Corp. 100,384
--------------
1,094,470
--------------
AIR FREIGHT & LOGISTICS -- 0.8%
1,195 C.H. Robinson Worldwide, Inc. 100,798
1,316 Expeditors International of
Washington, Inc. 99,832
600 FedEx Corp. 98,514
971 United Parcel Service, Inc.,
Class B 100,275
--------------
399,419
--------------
AIRLINES -- 0.8%
3,142 American Airlines Group, Inc. 102,461
1,772 Delta Air Lines, Inc. 100,561
1,935 Southwest Airlines Co. 98,259
1,144 United Airlines Holdings, Inc. (a) 100,157
--------------
401,438
--------------
AUTO COMPONENTS -- 0.4%
1,266 Aptiv PLC 102,331
721 Lear Corp. 100,413
--------------
202,744
--------------
AUTOMOBILES -- 0.6%
9,931 Ford Motor Co. 101,594
2,687 General Motors Co. 103,530
447 Tesla, Inc. (a) 99,887
--------------
305,011
--------------
BANKS -- 3.3%
3,528 Bank of America Corp. 102,312
2,040 BB&T Corp. 100,225
1,460 Citigroup, Inc. 102,244
2,852 Citizens Financial Group, Inc. 100,847
1,416 Comerica, Inc. 102,858
3,626 Fifth Third Bancorp 101,166
1,039 First Republic Bank 101,458
7,443 Huntington Bancshares, Inc. 102,862
906 JPMorgan Chase & Co. 101,291
5,819 KeyCorp 103,287
600 M&T Bank Corp. 102,042
745 PNC Financial Services Group
(The), Inc. 102,274
6,782 Regions Financial Corp. 101,323
459 SVB Financial Group (a) 103,087
1,898 U.S. Bancorp 99,455
2,116 Wells Fargo & Co. 100,129
--------------
1,626,860
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
BEVERAGES -- 1.2%
1,800 Brown-Forman Corp., Class B $ 99,774
1,924 Coca-Cola (The) Co. 97,970
540 Constellation Brands, Inc.,
Class A 106,348
1,790 Molson Coors Brewing Co.,
Class B 100,240
1,556 Monster Beverage Corp. (a) 99,319
740 PepsiCo, Inc. 97,036
--------------
600,687
--------------
BIOTECHNOLOGY -- 2.4%
1,259 AbbVie, Inc. 91,555
749 Alexion Pharmaceuticals, Inc. (a) 98,104
531 Amgen, Inc. 97,853
415 Biogen, Inc. (a) 97,056
1,128 BioMarin Pharmaceutical, Inc. (a) 96,613
858 Exact Sciences Corp. (a) 101,278
1,430 Gilead Sciences, Inc. 96,611
1,119 Incyte Corp. (a) 95,070
310 Regeneron Pharmaceuticals,
Inc. (a) 97,030
764 Sarepta Therapeutics, Inc. (a) 116,090
1,383 Seattle Genetics, Inc. (a) 95,717
539 Vertex Pharmaceuticals, Inc. (a) 98,842
--------------
1,181,819
--------------
BUILDING PRODUCTS -- 0.6%
2,474 Johnson Controls International PLC 102,201
370 Lennox International, Inc. 101,750
2,604 Masco Corp. 102,181
--------------
306,132
--------------
CAPITAL MARKETS -- 4.2%
676 Ameriprise Financial, Inc. 98,128
2,285 Bank of New York Mellon (The)
Corp. 100,883
212 BlackRock, Inc. 99,492
932 Cboe Global Markets, Inc. 96,583
2,442 Charles Schwab (The) Corp. 98,144
503 CME Group, Inc. 97,637
2,146 E*TRADE Financial Corp. 95,712
2,898 Franklin Resources, Inc. 100,850
507 Goldman Sachs Group (The), Inc. 103,732
1,144 Intercontinental Exchange, Inc. 98,315
4,035 KKR & Co., Inc., Class A 101,965
510 Moody's Corp. 99,608
2,276 Morgan Stanley 99,712
427 MSCI, Inc. 101,963
1,010 Nasdaq, Inc. 97,132
1,145 Northern Trust Corp. 103,050
1,205 Raymond James Financial, Inc. 101,883
434 S&P Global, Inc. 98,861
1,787 State Street Corp. 100,179
916 T. Rowe Price Group, Inc. 100,494
1,985 TD Ameritrade Holding Corp. 99,091
--------------
2,093,414
--------------
CHEMICALS -- 2.6%
447 Air Products and Chemicals, Inc. 101,187
938 Celanese Corp. 101,117
2,121 CF Industries Holdings, Inc. 99,072
See Notes to Financial Statements Page 29
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
CHEMICALS (CONTINUED)
1,330 DuPont de Nemours, Inc. $ 99,843
1,302 Eastman Chemical Co. 101,335
523 Ecolab, Inc. 103,261
1,202 FMC Corp. 99,706
681 International Flavors & Fragrances,
Inc. 98,806
1,148 LyondellBasell Industries N.V.,
Class A 98,877
4,236 Mosaic (The) Co. 106,027
855 PPG Industries, Inc. 99,787
213 Sherwin-Williams (The) Co. 97,616
1,493 Westlake Chemical Corp. 103,704
--------------
1,310,338
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 1.0%
427 Cintas Corp. 101,323
1,342 Copart, Inc. (a) 100,301
1,144 Republic Services, Inc. 99,116
2,641 Rollins, Inc. 94,733
857 Waste Management, Inc. 98,872
--------------
494,345
--------------
COMMUNICATIONS EQUIPMENT
-- 1.0%
391 Arista Networks, Inc. (a) 101,511
1,739 Cisco Systems, Inc. 95,176
691 F5 Networks, Inc. (a) 100,630
3,701 Juniper Networks, Inc. 98,558
601 Motorola Solutions, Inc. 100,205
--------------
496,080
--------------
CONSTRUCTION & ENGINEERING
-- 0.2%
1,206 Jacobs Engineering Group, Inc. 101,774
--------------
CONSTRUCTION MATERIALS -- 0.4%
441 Martin Marietta Materials, Inc. 101,478
735 Vulcan Materials Co. 100,923
--------------
202,401
--------------
CONSUMER FINANCE -- 1.0%
3,318 Ally Financial, Inc. 102,825
796 American Express Co. 98,258
1,084 Capital One Financial Corp. 98,362
1,266 Discover Financial Services 98,229
2,891 Synchrony Financial 100,231
--------------
497,905
--------------
CONTAINERS & PACKAGING -- 0.8%
886 Avery Dennison Corp. 102,493
1,479 Ball Corp. 103,515
2,275 International Paper Co. 98,553
2,701 WestRock Co. 98,505
--------------
403,066
--------------
DISTRIBUTORS -- 0.2%
954 Genuine Parts Co. 98,815
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES
-- 0.4%
4,791 AXA Equitable Holdings, Inc. $ 100,132
481 Berkshire Hathaway, Inc.,
Class B (a) 102,535
--------------
202,667
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 0.6%
3,058 AT&T, Inc. 102,474
8,748 CenturyLink, Inc. 102,876
1,718 Verizon Communications, Inc. 98,149
--------------
303,499
--------------
ELECTRIC UTILITIES -- 2.8%
1,986 Alliant Energy Corp. 97,473
1,084 American Electric Power Co., Inc. 95,403
1,109 Duke Energy Corp. 97,858
1,516 Edison International 102,194
952 Entergy Corp. 97,989
1,620 Evergy, Inc. 97,443
1,282 Eversource Energy 97,124
1,969 Exelon Corp. 94,394
2,271 FirstEnergy Corp. 97,221
478 NextEra Energy, Inc. 97,923
1,017 Pinnacle West Capital Corp. 95,690
3,125 PPL Corp. 96,906
1,763 Southern (The) Co. 97,459
1,612 Xcel Energy, Inc. 95,898
--------------
1,360,975
--------------
ELECTRICAL EQUIPMENT -- 0.8%
1,130 AMETEK, Inc. 102,649
1,192 Eaton Corp. PLC 99,270
1,511 Emerson Electric Co. 100,814
610 Rockwell Automation, Inc. 99,936
--------------
402,669
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 1.4%
1,038 Amphenol Corp., Class A 99,586
914 CDW Corp. 101,454
2,984 Corning, Inc. 99,158
1,148 Keysight Technologies, Inc. (a) 103,102
1,043 TE Connectivity Ltd. 99,898
2,286 Trimble, Inc. (a) 103,121
495 Zebra Technologies Corp.,
Class A (a) 103,698
--------------
710,017
--------------
ENERGY EQUIPMENT & SERVICES
-- 0.8%
3,942 Baker Hughes a GE Co. 97,091
4,344 Halliburton Co. 98,783
4,653 National Oilwell Varco, Inc. 103,436
2,552 Schlumberger Ltd. 101,417
--------------
400,727
--------------
ENTERTAINMENT -- 1.6%
2,161 Activision Blizzard, Inc. 101,999
1,041 Electronic Arts, Inc. (a) 105,412
Page 30 See Notes to Financial Statements
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ENTERTAINMENT (CONTINUED)
2,618 Liberty Media Corp.-Liberty
Formula One, Class C (a) $ 97,939
1,487 Live Nation Entertainment,
Inc. (a) 98,514
268 Netflix, Inc. (a) 98,442
881 Take-Two Interactive Software,
Inc. (a) 100,020
3,222 Viacom, Inc., Class B 96,241
707 Walt Disney (The) Co. 98,725
--------------
797,292
--------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 6.3%
683 Alexandria Real Estate Equities,
Inc. 96,364
461 American Tower Corp. 94,251
478 AvalonBay Communities, Inc. 97,120
729 Boston Properties, Inc. 94,041
934 Camden Property Trust 97,500
731 Crown Castle International Corp. 95,286
805 Digital Realty Trust, Inc. 94,821
3,109 Duke Realty Corp. 98,275
195 Equinix, Inc. 98,337
812 Equity LifeStyle Properties, Inc. 98,528
1,272 Equity Residential 96,570
330 Essex Property Trust, Inc. 96,337
921 Extra Space Storage, Inc. 97,718
741 Federal Realty Investment Trust 95,411
3,034 HCP, Inc. 97,027
5,461 Host Hotels & Resorts, Inc. 99,499
3,654 Invitation Homes, Inc. 97,671
3,095 Iron Mountain, Inc. 96,874
833 Mid-America Apartment
Communities, Inc. 98,094
1,220 Prologis, Inc. 97,722
413 Public Storage 98,364
1,373 Realty Income Corp. 94,696
1,428 Regency Centers Corp. 95,305
427 SBA Communications Corp. (a) 96,007
605 Simon Property Group, Inc. 96,655
764 Sun Communities, Inc. 97,937
2,172 UDR, Inc. 97,501
1,411 Ventas, Inc. 96,442
1,485 Vornado Realty Trust 95,189
1,186 Welltower, Inc. 96,695
3,794 Weyerhaeuser Co. 99,934
1,159 WP Carey, Inc. 94,088
--------------
3,096,259
--------------
FOOD & STAPLES RETAILING -- 1.0%
373 Costco Wholesale Corp. 98,569
4,461 Kroger (The) Co. 96,848
1,404 Sysco Corp. 99,291
1,891 Walgreens Boots Alliance, Inc. 103,381
893 Walmart, Inc. 98,668
--------------
496,757
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
FOOD PRODUCTS -- 2.6%
2,415 Archer-Daniels-Midland Co. $ 98,532
2,438 Campbell Soup Co. 97,691
3,455 Conagra Brands, Inc. 91,627
1,845 General Mills, Inc. 96,899
724 Hershey (The) Co. 97,038
2,396 Hormel Foods Corp. 97,134
817 J.M. Smucker (The) Co. 94,110
1,785 Kellogg Co. 95,623
3,151 Kraft Heinz (The) Co. 97,807
1,631 Lamb Weston Holdings, Inc. 103,340
642 McCormick & Co., Inc. 99,516
1,796 Mondelez International, Inc.,
Class A 96,804
1,251 Tyson Foods, Inc., Class A 101,006
--------------
1,267,127
--------------
GAS UTILITIES -- 0.4%
923 Atmos Energy Corp. 97,432
1,843 UGI Corp. 98,435
--------------
195,867
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 4.0%
1,167 Abbott Laboratories 98,145
387 ABIOMED, Inc. (a) 100,810
350 Align Technology, Inc. (a) 95,795
1,204 Baxter International, Inc. 98,607
402 Becton, Dickinson and Co. 101,308
2,379 Boston Scientific Corp. (a) 102,249
301 Cooper (The) Cos., Inc. 101,404
691 Danaher Corp. 98,758
1,685 DENTSPLY SIRONA, Inc. 98,337
658 DexCom, Inc. (a) 98,595
513 Edwards Lifesciences Corp. (a) 94,772
2,022 Hologic, Inc. (a) 97,096
362 IDEXX Laboratories, Inc. (a) 99,669
188 Intuitive Surgical, Inc. (a) 98,615
998 Medtronic PLC 97,195
826 ResMed, Inc. 100,797
489 Stryker Corp. 100,529
296 Teleflex, Inc. 98,020
723 Varian Medical Systems, Inc. (a) 98,422
839 Zimmer Biomet Holdings, Inc. 98,784
--------------
1,977,907
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 3.0%
1,175 AmerisourceBergen Corp. 100,180
338 Anthem, Inc. 95,387
2,219 Cardinal Health, Inc. 104,515
1,760 Centene Corp. (a) 92,294
615 Cigna Corp. 96,893
1,849 CVS Health Corp. 100,752
1,868 DaVita, Inc. (a) 105,094
774 HCA Healthcare, Inc. 104,622
1,419 Henry Schein, Inc. (a) 99,188
367 Humana, Inc. 97,365
See Notes to Financial Statements Page 31
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
HEALTH CARE PROVIDERS & SERVICES
(CONTINUED)
581 Laboratory Corp. of America
Holdings (a) $ 100,455
745 McKesson Corp. 100,121
980 Quest Diagnostics, Inc. 99,774
393 UnitedHealth Group, Inc. 95,896
792 Universal Health Services, Inc.,
Class B 103,269
--------------
1,495,805
--------------
HEALTH CARE TECHNOLOGY -- 0.4%
1,376 Cerner Corp. 100,861
587 Veeva Systems, Inc., Class A (a) 95,158
--------------
196,019
--------------
HOTELS, RESTAURANTS & LEISURE
-- 3.1%
2,127 Carnival Corp. 99,012
136 Chipotle Mexican Grill, Inc. (a) 99,671
819 Darden Restaurants, Inc. 99,697
354 Domino's Pizza, Inc. 98,511
1,032 Hilton Worldwide Holdings, Inc. 100,868
1,675 Las Vegas Sands Corp. 98,976
724 Marriott International, Inc.,
Class A 101,570
486 McDonald's Corp. 100,923
3,582 MGM Resorts International 102,338
1,941 Norwegian Cruise Line Holdings
Ltd. (a) 104,096
864 Royal Caribbean Cruises Ltd. 104,725
1,184 Starbucks Corp. 99,255
817 Wynn Resorts Ltd. 101,300
2,153 Yum China Holdings, Inc. 99,468
900 Yum! Brands, Inc. 99,603
--------------
1,510,013
--------------
HOUSEHOLD DURABLES -- 1.2%
2,221 D.R. Horton, Inc. 95,792
1,221 Garmin Ltd. 97,436
1,932 Lennar Corp., Class A 93,625
679 Mohawk Industries, Inc. (a) 100,132
6,459 Newell Brands, Inc. 99,598
30 NVR, Inc. (a) 101,107
--------------
587,690
--------------
HOUSEHOLD PRODUCTS -- 1.0%
1,307 Church & Dwight Co., Inc. 95,489
640 Clorox (The) Co. 97,990
1,361 Colgate-Palmolive Co. 97,543
732 Kimberly-Clark Corp. 97,561
892 Procter & Gamble (The) Co. 97,808
--------------
486,391
--------------
INDEPENDENT POWER AND RENEWABLE
ELECTRICITY PRODUCERS -- 0.6%
5,920 AES Corp. 99,219
2,821 NRG Energy, Inc. 99,074
4,117 Vistra Energy Corp. 93,209
--------------
291,502
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 0.8%
572 3M Co. $ 99,150
9,467 General Electric Co. 99,404
569 Honeywell International, Inc. 99,342
271 Roper Technologies, Inc. 99,256
--------------
397,152
--------------
INSURANCE -- 4.4%
1,805 Aflac, Inc. 98,932
145 Alleghany Corp. (a) 98,761
981 Allstate (The) Corp. 99,758
1,849 American International Group, Inc. 98,515
2,723 Arch Capital Group Ltd. (a) 100,969
1,147 Arthur J. Gallagher & Co. 100,466
663 Chubb Ltd. 97,653
949 Cincinnati Financial Corp. 98,383
2,434 Fidelity National Financial, Inc. 98,090
1,781 Hartford Financial Services Group
(The), Inc. 99,237
1,576 Lincoln National Corp. 101,573
1,835 Loews Corp. 100,320
92 Markel Corp. (a) 100,243
1,023 Marsh & McLennan Cos., Inc. 102,044
2,028 MetLife, Inc. 100,731
1,722 Principal Financial Group, Inc. 99,738
1,239 Progressive (The) Corp. 99,033
996 Prudential Financial, Inc. 100,596
651 Reinsurance Group of America, Inc. 101,576
1,126 Torchmark Corp. 100,732
654 Travelers (The) Cos., Inc. 97,786
1,483 W.R. Berkley Corp. 97,774
--------------
2,192,910
--------------
INTERACTIVE MEDIA & SERVICES
-- 0.8%
88 Alphabet, Inc., Class A (a) 95,286
519 Facebook, Inc., Class A (a) 100,167
452 IAC/InterActiveCorp (a) 98,324
2,833 Twitter, Inc. (a) 98,872
--------------
392,649
--------------
INTERNET & DIRECT MARKETING RETAIL
-- 1.0%
52 Amazon.com, Inc. (a) 98,469
53 Booking Holdings, Inc. (a) 99,360
2,477 eBay, Inc. 97,841
761 Expedia Group, Inc. 101,236
8,001 Qurate Retail, Inc. (a) 99,132
--------------
496,038
--------------
IT SERVICES -- 4.8%
535 Accenture PLC, Class A 98,852
1,263 Akamai Technologies, Inc. (a) 101,217
724 Alliance Data Systems Corp. 101,454
590 Automatic Data Processing, Inc. 97,545
771 Broadridge Financial Solutions,
Inc. 98,441
1,539 Cognizant Technology Solutions
Corp., Class A 97,557
1,822 DXC Technology Co. 100,483
Page 32 See Notes to Financial Statements
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
IT SERVICES (CONTINUED)
808 Fidelity National Information
Services, Inc. $ 99,125
1,085 Fiserv, Inc. (a) 98,908
355 FleetCor Technologies, Inc. (a) 99,702
614 Gartner, Inc. (a) 98,817
616 Global Payments, Inc. 98,640
1,375 GoDaddy, Inc., Class A (a) 96,456
712 International Business Machines
Corp. 98,185
723 Jack Henry & Associates, Inc. 96,824
375 Mastercard, Inc., Class A 99,199
1,147 Paychex, Inc. 94,387
854 PayPal Holdings, Inc. (a) 97,749
1,362 Square, Inc., Class A (a) 98,786
769 Total System Services, Inc. 98,640
689 Twilio, Inc., Class A (a) 93,945
471 VeriSign, Inc. (a) 98,514
572 Visa, Inc., Class A 99,271
818 Worldpay, Inc., Class A (a) 100,246
--------------
2,362,943
--------------
LEISURE PRODUCTS -- 0.2%
925 Hasbro, Inc. 97,754
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 1.4%
1,352 Agilent Technologies, Inc. 100,954
275 Illumina, Inc. (a) 101,241
626 IQVIA Holdings, Inc. (a) 100,724
120 Mettler-Toledo International,
Inc. (a) 100,800
1,041 PerkinElmer, Inc. 100,290
337 Thermo Fisher Scientific, Inc. 98,970
467 Waters Corp. (a) 100,517
--------------
703,496
--------------
MACHINERY -- 2.6%
741 Caterpillar, Inc. 100,991
583 Cummins, Inc. 99,891
604 Deere & Co. 100,089
1,021 Dover Corp. 102,304
1,234 Fortive Corp. 100,596
593 IDEX Corp. 102,079
653 Illinois Tool Works, Inc. 98,479
793 Ingersoll-Rand PLC 100,449
1,390 PACCAR, Inc. 99,608
580 Parker-Hannifin Corp. 98,606
613 Snap-on, Inc. 101,537
692 Stanley Black & Decker, Inc. 100,070
1,214 Xylem, Inc. 101,539
--------------
1,306,238
--------------
MEDIA -- 1.6%
4,249 Altice USA, Inc., Class A (a) 103,463
1,965 CBS Corp., Class B 98,053
252 Charter Communications, Inc.,
Class A (a) 99,585
2,277 Comcast Corp., Class A 96,272
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
MEDIA (CONTINUED)
3,233 Discovery, Inc., Class A (a) $ 99,253
954 Liberty Broadband Corp.,
Class C (a) 99,426
1,219 Omnicom Group, Inc. 99,897
17,717 Sirius XM Holdings, Inc. 98,861
--------------
794,810
--------------
METALS & MINING -- 0.6%
8,748 Freeport-McMoRan, Inc. 101,564
2,647 Newmont Goldcorp Corp. 101,830
1,839 Nucor Corp. 101,329
--------------
304,723
--------------
MORTGAGE REAL ESTATE INVESTMENT
TRUSTS -- 0.4%
5,898 AGNC Investment Corp. 99,204
10,843 Annaly Capital Management, Inc. 98,997
--------------
198,201
--------------
MULTILINE RETAIL -- 0.8%
715 Dollar General Corp. 96,639
885 Dollar Tree, Inc. (a) 95,040
2,088 Kohl's Corp. 99,284
1,132 Target Corp. 98,043
--------------
389,006
--------------
MULTI-UTILITIES -- 2.0%
1,281 Ameren Corp. 96,216
3,316 CenterPoint Energy, Inc. 94,937
1,677 CMS Energy Corp. 97,115
1,112 Consolidated Edison, Inc. 97,500
1,267 Dominion Energy, Inc. 97,964
757 DTE Energy Co. 96,805
3,380 NiSource, Inc. 97,344
1,625 Public Service Enterprise Group,
Inc. 95,583
703 Sempra Energy 96,620
1,161 WEC Energy Group, Inc. 96,793
--------------
966,877
--------------
OIL, GAS & CONSUMABLE FUELS
-- 5.1%
1,411 Anadarko Petroleum Corp. 99,560
3,348 Apache Corp. 96,992
4,234 Cabot Oil & Gas Corp. 97,213
1,440 Cheniere Energy, Inc. (a) 98,568
794 Chevron Corp. 98,805
928 Concho Resources, Inc. 95,751
1,644 ConocoPhillips 100,284
2,427 Continental Resources, Inc. (a) 102,152
3,513 Devon Energy Corp. 100,191
903 Diamondback Energy, Inc. 98,400
1,075 EOG Resources, Inc. 100,147
1,277 Exxon Mobil Corp. 97,856
1,621 Hess Corp. 103,047
2,248 HollyFrontier Corp. 104,037
4,640 Kinder Morgan, Inc. 96,883
7,062 Marathon Oil Corp. 100,351
1,884 Marathon Petroleum Corp. 105,278
4,602 Noble Energy, Inc. 103,085
See Notes to Financial Statements Page 33
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
OIL, GAS & CONSUMABLE FUELS
(CONTINUED)
1,960 Occidental Petroleum Corp. $ 98,549
1,439 ONEOK, Inc. 99,018
1,095 Phillips 66 102,426
639 Pioneer Natural Resources Co. 98,317
2,562 Targa Resources Corp. 100,584
1,211 Valero Energy Corp. 103,674
3,582 Williams (The) Cos., Inc. 100,439
--------------
2,501,607
--------------
PERSONAL PRODUCTS -- 0.4%
547 Estee Lauder (The) Cos., Inc.,
Class A 100,161
2,275 Herbalife Nutrition Ltd. (a) 97,279
--------------
197,440
--------------
PHARMACEUTICALS -- 1.8%
759 Allergan PLC 127,079
2,011 Bristol-Myers Squibb Co. 91,199
2,941 Elanco Animal Health, Inc. (a) 99,406
859 Eli Lilly & Co. 95,169
698 Johnson & Johnson 97,217
1,173 Merck & Co., Inc. 98,356
5,415 Mylan N.V. (a) 103,102
2,272 Pfizer, Inc. 98,423
878 Zoetis, Inc. 99,644
--------------
909,595
--------------
PROFESSIONAL SERVICES -- 0.8%
177 CoStar Group, Inc. (a) 98,069
740 Equifax, Inc. 100,077
1,387 TransUnion 101,958
684 Verisk Analytics, Inc. 100,179
--------------
400,283
--------------
REAL ESTATE MANAGEMENT
& DEVELOPMENT -- 0.2%
1,932 CBRE Group, Inc., Class A (a) 99,112
--------------
ROAD & RAIL -- 1.2%
1,261 CSX Corp. 97,564
1,116 J.B. Hunt Transport Services, Inc. 102,013
830 Kansas City Southern 101,111
503 Norfolk Southern Corp. 100,263
679 Old Dominion Freight Line, Inc. 101,347
587 Union Pacific Corp. 99,268
--------------
601,566
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 3.3%
3,410 Advanced Micro Devices, Inc. (a) 103,562
873 Analog Devices, Inc. 98,536
2,309 Applied Materials, Inc. 103,697
362 Broadcom, Inc. 104,205
2,090 Intel Corp. 100,048
871 KLA-Tencor Corp. 102,952
542 Lam Research Corp. 101,809
4,139 Marvell Technology Group Ltd. 98,798
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT (CONTINUED)
1,698 Maxim Integrated Products, Inc. $ 101,574
1,165 Microchip Technology, Inc. 101,006
2,984 Micron Technology, Inc. (a) 115,153
653 NVIDIA Corp. 107,242
1,365 QUALCOMM, Inc. 103,836
1,319 Skyworks Solutions, Inc. 101,919
884 Texas Instruments, Inc. 101,448
885 Xilinx, Inc. 104,359
--------------
1,650,144
--------------
SOFTWARE -- 4.0%
331 Adobe, Inc. (a) 97,529
493 ANSYS, Inc. (a) 100,976
580 Autodesk, Inc. (a) 94,482
1,390 Cadence Design Systems, Inc. (a) 98,426
994 Citrix Systems, Inc. 97,551
1,303 Fortinet, Inc. (a) 100,110
380 Intuit, Inc. 99,305
725 Microsoft Corp. 97,121
1,768 Oracle Corp. 100,723
485 Palo Alto Networks, Inc. (a) 98,824
1,117 PTC, Inc. (a) 100,262
633 salesforce.com, Inc. (a) 96,045
347 ServiceNow, Inc. (a) 95,276
798 Splunk, Inc. (a) 100,349
1,686 SS&C Technologies Holdings, Inc. 97,130
4,761 Symantec Corp. 103,599
770 Synopsys, Inc. (a) 99,091
581 Tableau Software, Inc.,
Class A (a) 96,458
572 VMware, Inc., Class A 95,644
458 Workday, Inc., Class A (a) 94,156
--------------
1,963,057
--------------
SPECIALTY RETAIL -- 2.8%
647 Advance Auto Parts, Inc. 99,729
89 AutoZone, Inc. (a) 97,853
1,469 Best Buy Co., Inc. 102,433
568 Burlington Stores, Inc. (a) 96,645
1,158 CarMax, Inc. (a) 100,549
5,445 Gap (The), Inc. 97,847
474 Home Depot (The), Inc. 98,578
984 Lowe's Cos., Inc. 99,296
263 O'Reilly Automotive, Inc. (a) 97,131
955 Ross Stores, Inc. 94,660
1,060 Tiffany & Co. 99,258
1,875 TJX (The) Cos., Inc. 99,150
929 Tractor Supply Co. 101,075
279 Ulta Beauty, Inc. (a) 96,782
--------------
1,380,986
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 1.2%
500 Apple, Inc. 98,960
6,641 Hewlett Packard Enterprise Co. 99,283
4,793 HP, Inc. 99,647
1,614 NetApp, Inc. 99,584
2,136 Seagate Technology PLC 100,648
Page 34 See Notes to Financial Statements
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS (CONTINUED)
2,477 Western Digital Corp. $ 117,781
--------------
615,903
--------------
TEXTILES, APPAREL & LUXURY GOODS
-- 0.6%
1,157 NIKE, Inc., Class B 97,130
3,167 Tapestry, Inc. 100,489
1,123 VF Corp. 98,094
--------------
295,713
--------------
TOBACCO -- 0.4%
2,067 Altria Group, Inc. 97,872
1,252 Philip Morris International, Inc. 98,320
--------------
196,192
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 0.6%
3,043 Fastenal Co. 99,172
764 United Rentals, Inc. (a) 101,329
362 W.W. Grainger, Inc. 97,099
--------------
297,600
--------------
WATER UTILITIES -- 0.2%
840 American Water Works Co., Inc. 97,440
--------------
WIRELESS TELECOMMUNICATION
SERVICES -- 0.2%
1,311 T-Mobile US, Inc. (a) 97,198
--------------
TOTAL INVESTMENTS -- 99.9% 49,502,534
(Cost $44,740,441) (b)
NET OTHER ASSETS AND
LIABILITIES -- 0.1% 58,837
--------------
NET ASSETS -- 100.0% $ 49,561,371
==============
(a) Non-income producing security.
(b) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $6,211,853 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $1,449,760. The net unrealized appreciation was
$4,762,093.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 49,502,534 $ -- $ --
=======================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 35
FIRST TRUST DOW 30 EQUAL WEIGHT ETF (EDOW)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.7%
AEROSPACE & DEFENSE -- 6.8%
5,408 Boeing (The) Co. $ 1,968,566
14,984 United Technologies Corp. 1,950,917
--------------
3,919,483
--------------
BANKS -- 3.3%
17,096 JPMorgan Chase & Co. 1,911,333
--------------
BEVERAGES -- 3.2%
36,587 Coca-Cola (The) Co. 1,863,010
--------------
CAPITAL MARKETS -- 3.5%
9,794 Goldman Sachs Group (The), Inc. 2,003,852
--------------
CHEMICALS -- 3.2%
36,703 Dow, Inc. 1,809,825
--------------
COMMUNICATIONS EQUIPMENT
-- 3.3%
34,291 Cisco Systems, Inc. 1,876,746
--------------
CONSUMER FINANCE -- 3.3%
15,387 American Express Co. 1,899,371
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES -- 3.2%
32,212 Verizon Communications, Inc. 1,840,272
--------------
ENTERTAINMENT -- 3.2%
13,254 Walt Disney (The) Co. 1,850,789
--------------
FOOD & STAPLES RETAILING -- 6.7%
35,712 Walgreens Boots Alliance, Inc. 1,952,375
17,212 Walmart, Inc. 1,901,754
--------------
3,854,129
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 3.3%
7,652 UnitedHealth Group, Inc. 1,867,164
--------------
HOTELS, RESTAURANTS & LEISURE
-- 3.3%
9,146 McDonald's Corp. 1,899,258
--------------
HOUSEHOLD PRODUCTS -- 3.2%
16,882 Procter & Gamble (The) Co. 1,851,111
--------------
INDUSTRIAL CONGLOMERATES -- 3.4%
11,264 3M Co. 1,952,502
--------------
INSURANCE -- 3.3%
12,506 Travelers (The) Cos., Inc. 1,869,897
--------------
IT SERVICES -- 6.7%
13,892 International Business Machines
Corp. 1,915,707
11,064 Visa, Inc., Class A 1,920,157
--------------
3,835,864
--------------
MACHINERY -- 3.5%
14,756 Caterpillar, Inc. 2,011,095
--------------
OIL, GAS & CONSUMABLE FUELS
-- 6.7%
15,541 Chevron Corp. 1,933,922
25,250 Exxon Mobil Corp. 1,934,908
--------------
3,868,830
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
PHARMACEUTICALS -- 9.9%
13,401 Johnson & Johnson $ 1,866,492
22,680 Merck & Co., Inc. 1,901,718
43,904 Pfizer, Inc. 1,901,921
--------------
5,670,131
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 3.4%
40,645 Intel Corp. 1,945,676
--------------
SOFTWARE -- 3.3%
14,175 Microsoft Corp. 1,898,883
--------------
SPECIALTY RETAIL -- 3.3%
9,123 Home Depot (The), Inc. 1,897,310
--------------
TECHNOLOGY HARDWARE, STORAGE
& PERIPHERALS -- 3.4%
9,740 Apple, Inc. 1,927,741
--------------
TEXTILES, APPAREL & LUXURY GOODS
-- 3.3%
22,500 NIKE, Inc., Class B 1,888,875
--------------
TOTAL INVESTMENTS -- 99.7% 57,213,147
(Cost $55,943,061) (a)
NET OTHER ASSETS AND
LIABILITIES -- 0.3% 145,286
--------------
NET ASSETS -- 100.0% $ 57,358,433
==============
(a) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $1,516,337 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $246,251. The net unrealized appreciation was
$1,270,086.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 57,213,147 $ -- $ --
=======================================================
* See Portfolio of Investments for industry breakout.
Page 36 See Notes to Financial Statements
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR)
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS -- 99.9%
AEROSPACE & DEFENSE -- 2.7%
1,605 HEICO Corp. $ 214,765
376 Lockheed Martin Corp. 136,691
2,457 Raytheon Co. 427,223
1,025 TransDigm Group, Inc. (a) 495,895
--------------
1,274,574
--------------
BANKS -- 1.7%
1,537 Comerica, Inc. 111,648
2,586 JPMorgan Chase & Co. 289,115
1,678 M&T Bank Corp. 285,377
2,291 U.S. Bancorp 120,048
--------------
806,188
--------------
BEVERAGES -- 1.7%
5,845 PepsiCo, Inc. 766,455
--------------
BIOTECHNOLOGY -- 3.3%
2,119 AbbVie, Inc. 154,094
2,075 BioMarin Pharmaceutical, Inc. (a) 177,724
2,961 Exact Sciences Corp. (a) 349,516
2,968 Sarepta Therapeutics, Inc. (a) 450,987
3,185 Seattle Genetics, Inc. (a) 220,434
1,042 Vertex Pharmaceuticals, Inc. (a) 191,082
--------------
1,543,837
--------------
BUILDING PRODUCTS -- 0.4%
731 Lennox International, Inc. 201,025
--------------
CAPITAL MARKETS -- 4.0%
2,388 Moody's Corp. 466,400
4,255 MSCI, Inc. 1,016,051
2,014 Northern Trust Corp. 181,260
835 S&P Global, Inc. 190,205
--------------
1,853,916
--------------
CHEMICALS -- 1.9%
1,286 Air Products and Chemicals, Inc. 291,112
1,127 Celanese Corp. 121,490
2,431 Ecolab, Inc. 479,977
--------------
892,579
--------------
COMMERCIAL SERVICES & SUPPLIES
-- 2.0%
4,098 Republic Services, Inc. 355,051
6,535 Rollins, Inc. 234,410
2,757 Waste Management, Inc. 318,075
--------------
907,536
--------------
COMMUNICATIONS EQUIPMENT
-- 0.4%
638 Arista Networks, Inc. (a) 165,638
--------------
CONSUMER FINANCE -- 1.3%
2,357 American Express Co. 290,948
3,225 Capital One Financial Corp. 292,637
--------------
583,585
--------------
CONTAINERS & PACKAGING -- 0.9%
5,862 Ball Corp. 410,281
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
DISTRIBUTORS -- 0.6%
2,506 Genuine Parts Co. $ 259,572
--------------
ELECTRIC UTILITIES -- 5.1%
5,523 Alliant Energy Corp. 271,069
3,283 American Electric Power Co., Inc. 288,937
3,320 Duke Energy Corp. 292,957
5,809 Exelon Corp. 278,483
2,125 NextEra Energy, Inc. 435,327
7,636 PPL Corp. 236,792
5,124 Southern (The) Co. 283,255
4,785 Xcel Energy, Inc. 284,660
--------------
2,371,480
--------------
ELECTRICAL EQUIPMENT -- 0.5%
1,392 AMETEK, Inc. 126,449
651 Rockwell Automation, Inc. 106,654
--------------
233,103
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS -- 1.1%
5,398 Amphenol Corp., Class A 517,884
--------------
ENTERTAINMENT -- 1.0%
3,964 Live Nation Entertainment,
Inc. (a) 262,615
551 Netflix, Inc. (a) 202,393
--------------
465,008
--------------
EQUITY REAL ESTATE INVESTMENT
TRUSTS -- 12.3%
3,796 American Tower Corp. 776,092
1,384 AvalonBay Communities, Inc. 281,201
2,545 Camden Property Trust 265,673
3,331 Crown Castle International Corp. 434,196
3,410 Equity LifeStyle Properties, Inc. 413,769
3,439 Equity Residential 261,089
885 Essex Property Trust, Inc. 258,358
2,724 Extra Space Storage, Inc. 289,016
3,170 Federal Realty Investment Trust 408,169
2,323 Mid-America Apartment
Communities, Inc. 273,557
1,309 Public Storage 311,765
3,862 SBA Communications Corp. (a) 868,332
1,154 Simon Property Group, Inc. 184,363
9,516 UDR, Inc. 427,173
3,653 WP Carey, Inc. 296,551
--------------
5,749,304
--------------
FOOD & STAPLES RETAILING -- 2.0%
548 Costco Wholesale Corp. 144,815
7,597 Sysco Corp. 537,260
2,429 Walmart, Inc. 268,380
--------------
950,455
--------------
FOOD PRODUCTS -- 2.7%
4,558 Hershey (The) Co. 610,909
2,617 Hormel Foods Corp. 106,093
1,812 McCormick & Co., Inc. 280,878
5,176 Mondelez International, Inc.,
Class A 278,986
--------------
1,276,866
--------------
See Notes to Financial Statements Page 37
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
GAS UTILITIES -- 0.7%
2,536 Atmos Energy Corp. $ 267,700
1,425 UGI Corp. 76,109
--------------
343,809
--------------
HEALTH CARE EQUIPMENT & SUPPLIES
-- 5.6%
798 ABIOMED, Inc. (a) 207,871
676 Align Technology, Inc. (a) 185,021
2,297 Boston Scientific Corp. (a) 98,725
481 Cooper (The) Cos., Inc. 162,044
1,673 Danaher Corp. 239,105
1,737 DexCom, Inc. (a) 260,272
2,077 Edwards Lifesciences Corp. (a) 383,705
896 IDEXX Laboratories, Inc. (a) 246,696
381 Intuitive Surgical, Inc. (a) 199,854
1,105 ResMed, Inc. 134,843
2,275 Stryker Corp. 467,695
--------------
2,585,831
--------------
HEALTH CARE PROVIDERS & SERVICES
-- 0.6%
1,044 UnitedHealth Group, Inc. 254,746
--------------
HEALTH CARE TECHNOLOGY -- 2.0%
5,828 Veeva Systems, Inc., Class A (a) 944,777
--------------
HOTELS, RESTAURANTS & LEISURE
-- 1.7%
974 Domino's Pizza, Inc. 271,045
2,413 McDonald's Corp. 501,083
--------------
772,128
--------------
HOUSEHOLD PRODUCTS -- 0.9%
2,253 Church & Dwight Co., Inc. 164,604
3,729 Colgate-Palmolive Co. 267,258
--------------
431,862
--------------
INDUSTRIAL CONGLOMERATES -- 1.1%
541 3M Co. 93,777
1,587 Honeywell International, Inc. 277,074
435 Roper Technologies, Inc. 159,323
--------------
530,174
--------------
INSURANCE -- 4.0%
5,330 Aflac, Inc. 292,137
2,531 Allstate (The) Corp. 257,377
7,409 Arch Capital Group Ltd. (a) 274,726
1,820 Chubb Ltd. 268,068
2,590 Marsh & McLennan Cos., Inc. 258,353
1,519 Progressive (The) Corp. 121,414
1,820 Travelers (The) Cos., Inc. 272,126
1,730 W.R. Berkley Corp. 114,059
--------------
1,858,260
--------------
INTERNET & DIRECT MARKETING RETAIL
-- 1.0%
257 Booking Holdings, Inc. (a) 481,800
--------------
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
IT SERVICES -- 10.2%
1,561 Accenture PLC, Class A $ 288,426
1,678 Automatic Data Processing, Inc. 277,424
1,560 Cognizant Technology Solutions
Corp., Class A 98,888
1,294 Fiserv, Inc. (a) 117,961
553 Gartner, Inc. (a) 89,000
3,541 Mastercard, Inc., Class A 936,701
8,750 Paychex, Inc. 720,038
4,733 Square, Inc., Class A (a) 343,284
7,405 Twilio, Inc., Class A (a) 1,009,672
5,068 Visa, Inc., Class A 879,551
--------------
4,760,945
--------------
LIFE SCIENCES TOOLS & SERVICES
-- 2.2%
683 Illumina, Inc. (a) 251,447
598 Mettler-Toledo International,
Inc. (a) 502,320
1,313 Waters Corp. (a) 282,610
--------------
1,036,377
--------------
MACHINERY -- 0.8%
746 IDEX Corp. 128,416
781 Illinois Tool Works, Inc. 117,783
1,434 Xylem, Inc. 119,940
--------------
366,139
--------------
MEDIA -- 0.7%
447 Charter Communications, Inc.,
Class A (a) 176,645
30,510 Sirius XM Holdings, Inc. 170,246
--------------
346,891
--------------
MORTGAGE REAL ESTATE INVESTMENT
TRUSTS -- 0.8%
22,694 AGNC Investment Corp. 381,713
--------------
MULTI-UTILITIES -- 3.3%
7,247 CMS Energy Corp. 419,674
2,951 Consolidated Edison, Inc. 258,744
2,280 DTE Energy Co. 291,566
4,466 Public Service Enterprise Group,
Inc. 262,690
2,046 Sempra Energy 281,202
--------------
1,513,876
--------------
OIL, GAS & CONSUMABLE FUELS
-- 0.6%
3,896 Cheniere Energy, Inc. (a) 266,681
--------------
PERSONAL PRODUCTS -- 0.5%
1,337 Estee Lauder (The) Cos., Inc.,
Class A 244,818
--------------
PHARMACEUTICALS -- 2.2%
2,296 Bristol-Myers Squibb Co. 104,123
2,570 Johnson & Johnson 357,950
3,015 Merck & Co., Inc. 252,808
2,907 Zoetis, Inc. 329,915
--------------
1,044,796
--------------
Page 38 See Notes to Financial Statements
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
-------------------------------------------------------------
COMMON STOCKS (CONTINUED)
PROFESSIONAL SERVICES -- 1.5%
377 CoStar Group, Inc. (a) $ 208,881
3,185 Verisk Analytics, Inc. 466,475
--------------
675,356
--------------
ROAD & RAIL -- 0.2%
525 Union Pacific Corp. 88,783
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 1.0%
948 Broadcom, Inc. 272,891
917 KLA-Tencor Corp. 108,390
871 Xilinx, Inc. 102,708
--------------
483,989
--------------
SOFTWARE -- 9.6%
1,071 Adobe, Inc. (a) 315,570
1,456 ANSYS, Inc. (a) 298,218
1,671 Autodesk, Inc. (a) 272,206
6,268 Cadence Design Systems, Inc. (a) 443,837
3,347 Intuit, Inc. 874,671
2,205 Microsoft Corp. 295,382
772 Palo Alto Networks, Inc. (a) 157,303
1,882 PTC, Inc. (a) 168,928
1,105 salesforce.com, Inc. (a) 167,662
2,166 ServiceNow, Inc. (a) 594,719
1,708 Splunk, Inc. (a) 214,781
2,676 SS&C Technologies Holdings, Inc. 154,164
1,491 Tableau Software, Inc.,
Class A (a) 247,536
1,298 Workday, Inc., Class A (a) 266,843
--------------
4,471,820
--------------
SPECIALTY RETAIL -- 2.2%
297 AutoZone, Inc. (a) 326,543
1,367 Home Depot (The), Inc. 284,295
572 O'Reilly Automotive, Inc. (a) 211,251
1,235 Ross Stores, Inc. 122,413
1,858 TJX (The) Cos., Inc. 98,251
--------------
1,042,753
--------------
TRADING COMPANIES & DISTRIBUTORS
-- 0.3%
3,586 Fastenal Co. 116,868
--------------
WATER UTILITIES -- 0.6%
2,447 American Water Works Co., Inc. 283,852
--------------
TOTAL COMMON STOCKS -- 99.9% 46,558,330
(Cost $42,951,997) --------------
MONEY MARKET FUNDS -- 0.0%
23,511 Morgan Stanley Institutional
Liquidity Funds - Treasury
Portfolio - Institutional
Class - 2.19% (b) 23,511
(Cost $23,511) --------------
DESCRIPTION VALUE
-------------------------------------------------------------
TOTAL INVESTMENTS -- 99.9% $ 46,581,841
(Cost $42,975,508) (c)
NET OTHER ASSETS AND
LIABILITIES -- 0.1% 33,695
--------------
NET ASSETS -- 100.0% $ 46,615,536
==============
(a) Non-income producing security.
(b) Rate shown reflects yield as of June 30, 2019.
(c) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $3,879,414 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $273,081. The net unrealized appreciation was
$3,606,333.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
LEVEL 1 SIGNIFICANT SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
-------------------------------------------------------
Common Stocks* $ 46,558,330 $ -- $ --
Money Market
Funds 23,511 -- --
-------------------------------------------------------
Total Investments $ 46,581,841 $ -- $ --
=======================================================
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 39
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2019 (UNAUDITED)
FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST
TOTAL US MARKET DORSEY WRIGHT DOW 30 LUNT U.S.
ALPHADEX(R) PEOPLE'S EQUAL WEIGHT FACTOR ROTATION
ETF ETF PORTFOLIO ETF ETF
(TUSA) (DWPP) (EDOW) (FCTR)
---------------- ---------------- ---------------- ----------------
ASSETS:
Investments, at value............................. $ 17,189,279 $ 49,502,534 $ 57,213,147 $ 46,581,841
Cash.............................................. -- 24,177 127,018 --
Receivables:
Dividends................................... 20,090 58,000 28,045 57,037
Investment securities sold.................. 6,316 -- -- --
From investment advisor..................... 3,657 -- -- --
Securities lending income................... 102 -- -- --
Capital shares sold......................... -- -- 3,661,176 --
Prepaid expenses.................................. 3,831 -- -- --
-------------- -------------- -------------- --------------
Total Assets................................ 17,223,275 49,584,711 61,029,386 46,638,878
-------------- -------------- -------------- --------------
LIABILITIES:
Payables:
Collateral for securities on loan........... 80,494 -- -- --
Audit and tax fees.......................... 14,292 -- -- --
Shareholder reporting fees.................. 7,308 -- -- --
Licensing fees.............................. 622 -- -- --
Investment securities purchased............. -- -- 3,652,149 --
Investment advisory fees.................... -- 23,340 18,804 23,342
Other liabilities................................. 97,567 -- -- --
-------------- -------------- -------------- --------------
Total Liabilities........................... 200,283 23,340 3,670,953 23,342
-------------- -------------- -------------- --------------
NET ASSETS........................................ $ 17,022,992 $ 49,561,371 $ 57,358,433 $ 46,615,536
============== ============== ============== ==============
NET ASSETS CONSIST OF:
Paid-in capital................................... $ 16,989,533 $ 45,959,741 $ 55,809,878 $ 44,450,776
Par value......................................... 5,000 16,000 23,500 21,500
Accumulated distributable earnings (loss)......... 28,459 3,585,630 1,525,055 2,143,260
-------------- -------------- -------------- --------------
NET ASSETS........................................ $ 17,022,992 $ 49,561,371 $ 57,358,433 $ 46,615,536
============== ============== ============== ==============
NET ASSET VALUE, per share........................ $ 34.05 $ 30.98 $ 24.41 $ 21.68
============== ============== ============== ==============
Number of shares outstanding (unlimited number of
shares authorized, par value $0.01 per share).. 500,002 1,600,002 2,350,002 2,150,002
============== ============== ============== ==============
Investments, at cost.............................. $ 16,042,263 $ 44,740,441 $ 55,943,061 $ 42,975,508
============== ============== ============== ==============
Securities on loan, at value...................... $ 78,745 $ -- $ -- $ --
============== ============== ============== ==============
Page 40 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2019 (UNAUDITED)
FIRST TRUST FIRST TRUST FIRST TRUST FIRST TRUST
TOTAL US MARKET DORSEY WRIGHT DOW 30 LUNT U.S.
ALPHADEX(R) PEOPLE'S EQUAL WEIGHT FACTOR ROTATION
ETF ETF PORTFOLIO ETF ETF
(TUSA) (DWPP) (EDOW) (FCTR)
---------------- ---------------- ---------------- ----------------
INVESTMENT INCOME:
Dividends......................................... $ 155,835 $ 425,461 $ 216,318 $ 348,649
Securities lending income (net of fees)........... 868 -- -- --
Foreign withholding tax........................... (20) -- -- --
-------------- -------------- -------------- --------------
Total investment income..................... 156,683 425,461 216,318 348,649
-------------- -------------- -------------- --------------
EXPENSES:
Investment advisory fees.......................... 40,768 128,952 (a) 48,596 (a) 120,142 (a)
Custodian fees.................................... 38,031 -- -- --
Audit and tax fees................................ 11,368 -- -- --
Listing fees...................................... 8,667 -- -- --
Accounting and administration fees................ 7,850 -- -- --
Shareholder reporting fees........................ 7,647 -- -- --
Licensing fees.................................... 4,943 -- -- --
Trustees' fees and expenses....................... 3,555 -- -- --
Legal fees........................................ 428 -- -- --
Transfer agent fees............................... 408 -- -- --
Registration and filing fees...................... 49 -- -- --
Excise tax........................................ -- -- 232 --
Other expenses.................................... (512) -- -- --
-------------- -------------- -------------- --------------
Total expenses.............................. 123,202 128,952 48,828 120,142
Less fees waived and expenses reimbursed by
the investment advisor................... (66,126) -- -- --
-------------- -------------- -------------- --------------
Net expenses................................ 57,076 128,952 48,828 120,142
-------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS)...................... 99,607 296,509 167,490 228,507
-------------- -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments................................. (325,253) (511,832) (108,367) (1,664,566)
In-kind redemptions......................... -- 515,911 460,355 1,976,507
-------------- -------------- -------------- --------------
Net realized gain (loss).......................... (325,253) 4,079 351,988 311,941
Net change in unrealized appreciation
(depreciation) on investments.................. 2,686,474 7,087,703 2,729,382 6,562,551
-------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED
GAIN (LOSS).................................... 2,361,221 7,091,782 3,081,370 6,874,492
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS...................... $ 2,460,828 $ 7,388,291 $ 3,248,860 $ 7,102,999
============== ============== ============== ==============
(a) Fund is subject to a Unitary Fee (see Note 3 in the Notes to Financial
Statements).
See Notes to Financial Statements Page 41
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF CHANGES IN NET ASSETS
FIRST TRUST FIRST TRUST
TOTAL US MARKET DORSEY WRIGHT
ALPHADEX(R) PEOPLE'S
ETF PORTFOLIO ETF
(TUSA) (DWPP)
------------------------------- -------------------------------
Six Months Six Months
Ended Ended
6/30/2019 Year Ended 6/30/2019 Year Ended
(Unaudited) 12/31/2018 (Unaudited) 12/31/2018
-------------- -------------- -------------- --------------
OPERATIONS:
Net investment income (loss)................................ $ 99,607 $ 159,894 $ 296,509 $ 405,034
Net realized gain (loss).................................... (325,253) 1,721,216 4,079 779,150
Net change in unrealized appreciation (depreciation)........ 2,686,474 (3,291,223) 7,087,703 (4,614,714)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations.......................................... 2,460,828 (1,410,113) 7,388,291 (3,430,530)
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations....................................... (78,650) (155,286) (223,575) (417,641)
-------------- -------------- -------------- --------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold................................... 1,489,524 8,707,553 8,900,156 14,676,039
Cost of shares redeemed..................................... -- (8,774,262) (1,545,350) (5,857,923)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from shareholder transactions............................ 1,489,524 (66,709) 7,354,806 8,818,116
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets..................... 3,871,702 (1,632,108) 14,519,522 4,969,945
NET ASSETS:
Beginning of period......................................... 13,151,290 14,783,398 35,041,849 30,071,904
-------------- -------------- -------------- --------------
End of period............................................... $ 17,022,992 $ 13,151,290 $ 49,561,371 $ 35,041,849
============== ============== ============== ==============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period..................... 450,002 450,002 1,350,002 1,050,002
Shares sold................................................. 50,000 250,000 300,000 500,000
Shares redeemed............................................. -- (250,000) (50,000) (200,000)
-------------- -------------- -------------- --------------
Shares outstanding, end of period........................... 500,002 450,002 1,600,002 1,350,002
============== ============== ============== ==============
Page 42 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIRST TRUST FIRST TRUST
DOW 30 LUNT U.S.
EQUAL WEIGHT FACTOR ROTATION
ETF ETF
(EDOW) (FCTR)
------------------------------- -------------------------------
Six Months Six Months
Ended Ended
6/30/2019 Year Ended 6/30/2019 Period Ended
(Unaudited) 12/31/2018 (Unaudited) 12/31/2018 (a)
-------------- -------------- -------------- --------------
OPERATIONS:
Net investment income (loss)................................ $ 167,490 $ 246,112 $ 228,507 $ 184,637
Net realized gain (loss).................................... 351,988 (941,113) 311,941 (746,942)
Net change in unrealized appreciation (depreciation)........ 2,729,382 (1,522,609) 6,562,551 (2,956,218)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations.......................................... 3,248,860 (2,217,610) 7,102,999 (3,518,523)
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations....................................... (147,740) (235,451) (161,910) (184,170)
-------------- -------------- -------------- --------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold................................... 45,057,444 69,038,254 28,880,724 51,620,840
Cost of shares redeemed..................................... (3,658,974) (55,926,566) (17,474,780) (19,649,644)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from shareholder transactions............................ 41,398,470 13,111,688 11,405,944 31,971,196
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets..................... 44,499,590 10,658,627 18,347,033 28,268,503
NET ASSETS:
Beginning of period......................................... 12,858,843 2,200,216 28,268,503 --
-------------- -------------- -------------- --------------
End of period............................................... $ 57,358,433 $ 12,858,843 $ 46,615,536 $ 28,268,503
============== ============== ============== ==============
CHANGES IN SHARES OUTSTANDING:
Shares outstanding, beginning of period..................... 600,002 100,002 1,600,002 --
Shares sold................................................. 1,900,000 3,050,000 1,400,000 2,550,002
Shares redeemed............................................. (150,000) (2,550,000) (850,000) (950,000)
-------------- -------------- -------------- --------------
Shares outstanding, end of period........................... 2,350,002 600,002 2,150,002 1,600,002
============== ============== ============== ==============
(a) Inception date is July 25, 2018, which is consistent with the commencement
of investment operations and is the date the initial creation units were
established.
See Notes to Financial Statements Page 43
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST TOTAL US MARKET ALPHADEX(R) ETF (TUSA)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 29.22 $ 32.85 $ 27.74 $ 24.34 $ 26.13 $ 25.80
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.20 0.34 0.25 0.32 0.22 0.27
Net realized and unrealized gain (loss) 4.79 (3.64) 5.12 3.43 (1.78) 0.34
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 4.99 (3.30) 5.37 3.75 (1.56) 0.61
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.16) (0.33) (0.26) (0.35) (0.23) (0.28)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 34.05 $ 29.22 $ 32.85 $ 27.74 $ 24.34 $ 26.13
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 17.07% (10.13)% 19.44% 15.48% (5.99)% 2.36%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 17,023 $ 13,151 $ 14,783 $ 8,321 $ 8,518 $ 5,225
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 1.51% (b) 1.57% 1.69% 1.96% 1.97% 3.17%
Ratio of net expenses to average
net assets 0.70% (b) 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income (loss) to
average net assets 1.22% (b) 1.03% 0.88% 1.17% 0.96% 1.05%
Portfolio turnover rate (c) 68% 110% 112% 113% 170% 183%
FIRST TRUST DORSEY WRIGHT PEOPLE'S PORTFOLIO ETF (DWPP)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 ------------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 25.96 $ 28.64 $ 23.80 $ 24.07 $ 25.97 $ 22.86
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.19 0.33 0.30 0.38 0.37 0.34
Net realized and unrealized gain (loss) 4.98 (2.67) 4.84 (0.25) (1.89) 3.11
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 5.17 (2.34) 5.14 0.13 (1.52) 3.45
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.15) (0.34) (0.30) (0.40) (0.38) (0.34)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 30.98 $ 25.96 $ 28.64 $ 23.80 $ 24.07 $ 25.97
========== ========== ========== ========== ========== ==========
TOTAL RETURN (a) 19.92% (8.26)% 21.71% 0.54% (5.88)% 15.22%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 49,561 $ 35,042 $ 30,072 $ 3,569 $ 3,610 $ 3,895
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.60% (b) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net expenses to average
net assets 0.60% (b) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 1.38% (b) 1.19% 1.29% 1.59% 1.46% 1.42%
Portfolio turnover rate (c) 15% 32% 30% (d) 4% 7% 7%
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year. The total returns for First Trust Total US Market
AlphaDEX(R) ETF would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
(b) Annualized.
(c) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
(d) The variation in the portfolio turnover rate is due to the change in the
Fund's underlying index effective August 18, 2017, which resulted in a
complete rebalance of the Fund's portfolio.
Page 44 See Notes to Financial Statements
FIRST TRUST EXCHANGE-TRADED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FIRST TRUST DOW 30 EQUAL WEIGHT ETF (EDOW)
SIX MONTHS
ENDED
6/30/2019 YEAR ENDED PERIOD ENDED
(UNAUDITED) 12/31/2018 12/31/2017 (a)
------------ ------------ ------------
Net asset value, beginning of period $ 21.43 $ 22.00 $ 19.97
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.15 0.40 0.17
Net realized and unrealized gain (loss) 2.98 (0.58) 2.03
---------- ---------- ----------
Total from investment operations 3.13 (0.18) 2.20
---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.15) (0.39) (0.17)
---------- ---------- ----------
Net asset value, end of period $ 24.41 $ 21.43 $ 22.00
========== ========== ==========
TOTAL RETURN (b) 14.64% (0.88)% 11.02%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 57,358 $ 12,859 $ 2,200
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.50% (c) 0.50% 0.50% (c)
Ratio of net expenses to average
net assets 0.50% (c) 0.50% 0.50% (c)
Ratio of net investment income (loss) to
average net assets 1.72% (c) 2.33% 1.99% (c)
Portfolio turnover rate (d) 10% 16% 20%
FIRST TRUST LUNT U.S. FACTOR ROTATION ETF (FCTR)
SIX MONTHS
ENDED
6/30/2019 PERIOD ENDED
(UNAUDITED) 12/31/2018 (a)
------------ ------------
Net asset value, beginning of period $ 17.67 $ 20.23
---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.11 0.12
Net realized and unrealized gain (loss) 3.98 (2.56)
---------- ----------
Total from investment operations 4.09 (2.44)
---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (0.08) (0.12)
---------- ----------
Net asset value, end of period $ 21.68 $ 17.67
========== ==========
TOTAL RETURN (b) 23.17% (12.09)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 46,616 $ 28,269
RATIOS TO AVERAGE NET ASSETS:
Ratio of total expenses to average
net assets 0.65% (c) 0.65% (c)
Ratio of net expenses to average
net assets 0.65% (c) 0.65% (c)
Ratio of net investment income (loss) to
average net assets 1.24% (c) 1.48% (c)
Portfolio turnover rate (d) 134% 183%
(a) Inception dates for EDOW and FCTR are August 8, 2017 and July 25, 2018,
respectively, which are consistent with the respective Fund's commencement
of investment operations and are the dates the initial creation units were
established.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. The returns presented do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods
of less than a year.
(c) Annualized.
(d) Portfolio turnover is calculated for the time period presented and is not
annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind
transactions.
See Notes to Financial Statements Page 45
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
1. ORGANIZATION
First Trust Exchange-Traded Fund (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on August 8,
2003, and is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act").
The Trust currently consists of twenty-one exchange-traded funds. This report
covers the four funds listed below:
First Trust Total US Market AlphaDEX(R) ETF - (The Nasdaq Stock Market LLC
("Nasdaq") ticker "TUSA")
First Trust Dorsey Wright People's Portfolio ETF - (Nasdaq ticker "DWPP")
First Trust Dow 30 Equal Weight ETF - (NYSE Arca, Inc. ("NYSE Arca")
ticker "EDOW")
First Trust Lunt U.S. Factor Rotation ETF - (Cboe BZX Exchange, Inc.
("Cboe BZX") ticker "FCTR")
Each fund represents a separate series of shares of beneficial interest in the
Trust (each a "Fund" and collectively, the "Funds"). Unlike conventional mutual
funds, each Fund issues and redeems shares on a continuous basis, at net asset
value ("NAV"), only in large specified blocks consisting of 50,000 shares called
a "Creation Unit." Creation Units are generally issued and redeemed in-kind for
securities in which a Fund invests and, in certain circumstances, for cash, and
only to and from broker-dealers and large institutional investors that have
entered into participation agreements. Except when aggregated in Creation Units,
each Fund's shares are not redeemable securities. 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 Total US Market AlphaDEX(R) ETF NASDAQ AlphaDEX(R) Total US Market Index
First Trust Dorsey Wright People's Portfolio ETF Nasdaq Dorsey Wright People's Portfolio Index
First Trust Dow 30 Equal Weight ETF Dow Jones Industrial Average Equal Weight Index
First Trust Lunt U.S. Factor Rotation ETF Lunt Capital Large Cap Factor Rotation Index
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are each considered an investment company and follow accounting and
reporting guidance under Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") Topic 946, "Financial
Services-Investment Companies." The following is a summary of significant
accounting policies consistently followed by the Funds in the preparation of the
financial statements. The preparation of the financial statements in accordance
with accounting principles generally accepted in the United States of America
("U.S. GAAP") requires management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
A. PORTFOLIO VALUATION
Each Fund's NAV is determined daily as of the close of regular trading on the
New York Stock Exchange ("NYSE"), normally 4:00 p.m. Eastern time, on each day
the NYSE is open for trading. If the NYSE closes early on a valuation day, the
NAV is determined as of that time. Each Fund's NAV is calculated by dividing the
value of all assets of each Fund (including accrued interest and dividends),
less all liabilities (including accrued expenses and dividends declared but
unpaid), by the total number of shares outstanding.
Each Fund's investments are valued daily at market value or, in the absence of
market value with respect to any portfolio securities, at fair value. Market
value prices represent last sale or official closing prices from a national or
foreign exchange (i.e., a regulated market) and are primarily obtained from
third-party pricing services. Fair value prices represent any prices not
considered market value prices and are either obtained from a third-party
pricing service or are determined by the Pricing Committee of the Funds'
investment advisor, First Trust Advisors L.P. ("First Trust" or the "Advisor"),
in accordance with valuation procedures adopted by the Trust's Board of
Trustees, and in accordance with provisions of the 1940 Act. Investments valued
by the Advisor's Pricing Committee, if any, are footnoted as such in the
footnotes to the Portfolio of Investments. Each Fund's investments are valued as
follows:
Common stocks and other equity securities listed on any national or
foreign exchange (excluding Nasdaq and the London Stock Exchange
Alternative Investment Market ("AIM")) are valued at the last sale price
on the exchange on which they are principally traded or, for Nasdaq and
AIM securities, the official closing price. Securities traded on more than
one securities exchange are valued at the last sale price or official
closing price, as applicable, at the close of the securities exchange
representing the principal market for such securities.
Shares of open-end funds are valued at fair value which is based on NAV
per share.
Page 46
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
Securities traded in an over-the-counter market are fair valued at the
mean of their most recent bid and asked price, if available, and otherwise
at their closing bid price.
Overnight repurchase agreements are valued at amortized cost when it
represents the best estimate of fair value.
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Trust's Board of Trustees or its
delegate, the Advisor's Pricing Committee, at fair value. These securities
generally include, but are not limited to, restricted securities (securities
which may not be publicly sold without registration under the Securities Act of
1933, as amended) for which a third-party pricing service is unable to provide a
market price; securities whose trading has been formally suspended; a security
whose market or fair value price is not available from a pre-established pricing
source; a security with respect to which an event has occurred that is likely to
materially affect the value of the security after the market has closed but
before the calculation of a Fund's NAV or make it difficult or impossible to
obtain a reliable market quotation; and a security whose price, as provided by
the third-party pricing service, does not reflect the security's fair value. As
a general principle, the current fair value of a security would appear to be the
amount which the owner might reasonably expect to receive for the security upon
its current sale. When fair value prices are used, generally they will differ
from market quotations or official closing prices on the applicable exchanges. A
variety of factors may be considered in determining the fair value of such
securities, including, but not limited to, the following:
1) the type of security;
2) the size of the holding;
3) the initial cost of the security;
4) transactions in comparable securities;
5) price quotes from dealers and/or third-party pricing services;
6) relationships among various securities;
7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;
8) an analysis of the issuer's financial statements; and
9) the existence of merger proposals or tender offers that might affect
the value of the security.
In addition, differences between the prices used to calculate a Fund's NAV and
the prices used by such Fund's corresponding index could result in a difference
between a Fund's performance and the performance of its underlying index.
The Funds are subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or methodologies used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value each Fund's investments as of June 30, 2019, is
included with each Fund's Portfolio of Investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income, if any, is
recorded on the accrual basis.
Withholding taxes and tax reclaims on foreign dividends have been provided for
in accordance with each Fund's understanding of the applicable country's tax
rules and rates.
Page 47
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
Distributions received from a Fund's investments in real estate investment
trusts ("REITs") may be comprised of return of capital, capital gains and
income. The actual character of the amounts received during the year is not
known until after the REITs' fiscal year end. A Fund records the character of
distributions received from the REITs during the year based on estimates
available. The characterization of distributions received by a Fund may be
subsequently revised based on information received from the REITs after their
tax reporting periods conclude.
C. OFFSETTING ON THE STATEMENTS OF ASSETS AND LIABILITIES
Offsetting Assets and Liabilities requires entities to disclose both gross and
net information about instruments and transactions eligible for offset on the
Statements of Assets and Liabilities, and disclose instruments and transactions
subject to master netting or similar agreements. These disclosure requirements
are intended to help investors and other financial statement users better assess
the effect or potential effect of offsetting arrangements on a fund's financial
position. The transactions subject to offsetting disclosures are derivative
instruments, repurchase agreements and reverse repurchase agreements, and
securities borrowing and securities lending transactions.
This disclosure, if applicable, is included within each Fund's Portfolio of
Investments under the heading "Offsetting Assets and Liabilities". For financial
reporting purposes, the Funds do not offset financial assets and financial
liabilities that are subject to master netting arrangements ("MNAs") or similar
agreements on the Statements of Assets and Liabilities. MNAs provide the right,
in the event of default (including bankruptcy and insolvency), for the
non-defaulting counterparty to liquidate the collateral and calculate the net
exposure to the defaulting party or request additional collateral.
D. SECURITIES LENDING
The Funds may lend securities representing up to 33 1/3% of the value of their
total assets to broker-dealers, banks and other institutions to generate
additional income. When a Fund loans its portfolio securities, it will receive,
at the inception of each loan, collateral equal to at least 102% (for domestic
securities) or 105% (for international securities) of the market value of the
loaned securities. The collateral amount is valued at the beginning of each
business day and is compared to the market value of the loaned securities from
the prior business day to determine if additional collateral is required. If
additional collateral is required, a request is sent to the borrower. Securities
lending involves the risk that the Fund may lose money because the borrower of
the Fund's loaned securities fails to return the securities in a timely manner
or at all. The Fund could also lose money in the event of (i) a decline in the
value of the collateral provided for the loaned securities, (ii) a decline in
the value of any investments made with cash collateral or (iii) an increase in
the value of the loaned securities if the borrower does not increase the
collateral accordingly and the borrower fails to return the securities. These
events could also trigger adverse tax consequences for the Funds.
Under the Funds' Securities Lending Agency Agreement, the securities lending
agent will generally bear the risk that a borrower may default on its obligation
to return loaned securities. Brown Brothers Harriman & Co. ("BBH") acts as the
Funds' securities lending agent and is responsible for executing the lending of
the portfolio securities to creditworthy borrowers. The Funds, however, will be
responsible for the risks associated with the investment of cash collateral. A
Fund may lose money on its investment of cash collateral, which may affect its
ability to repay the collateral to the borrower without the use of other Fund
assets. Each Fund that engages in securities lending receives compensation (net
of any rebate and securities lending agent fees) for lending its securities.
Compensation can be in the form of fees received from the securities lending
agent or dividends or interest earned from the investment of cash collateral.
The fees received from the securities lending agent are accrued daily. The
dividend and interest earned on the securities loaned is accounted for in the
same manner as other dividend and interest income. At June 30, 2019, only TUSA
had securities in the securities lending program.
In the event of a default by a borrower with respect to any loan, BBH will
exercise any and all remedies provided under the applicable borrower agreement
to make the Funds whole. These remedies include purchasing replacement
securities by applying the collateral held from the defaulting broker against
the purchase cost of the replacement securities. If, despite such efforts by BBH
to exercise these remedies, a Fund sustains losses as a result of a borrower's
default, BBH will indemnify the Fund by purchasing replacement securities at its
own expense, or paying the Fund an amount equal to the market value of the
replacement securities, subject to certain limitations which are set forth in
detail in the Securities Lending Agency Agreement between the Trust on behalf of
the Funds and BBH.
E. REPURCHASE AGREEMENTS
Repurchase agreements involve the purchase of securities subject to the seller's
agreement to repurchase the securities at a mutually agreed upon date and price,
under the terms of a Master Repurchase Agreement ("MRA"). During the term of a
repurchase agreement, the value of the underlying securities held as collateral
on behalf of a Fund, including accrued interest, is required to exceed the value
of the repurchase agreement, including accrued interest. The underlying
securities for all repurchase agreements are held at the Funds' custodian or
designated sub-custodians under tri-party repurchase agreements.
Page 48
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
MRAs govern transactions between a Fund and select counterparties. The MRAs
contain provisions for, among other things, initiation, income payments, events
of default, and maintenance of collateral for repurchase agreements.
Repurchase agreements received for lending securities are collateralized by U.S.
Treasury securities. The U.S. Treasury securities are held in a joint custody
account at BBH on behalf of the Funds participating in the securities lending
program. In the event the counterparty defaults on the repurchase agreement, the
U.S. Treasury securities can either be maintained as part of a Fund's portfolio
or sold for cash. A Fund could suffer a loss to the extent that the proceeds
from the sale of the underlying collateral held by the Fund is less than the
repurchase price and the Fund's costs associated with the delay and enforcement
of the MRA.
While the Funds may invest in repurchase agreements, any repurchase agreements
held by the Funds during the six months ended June 30, 2019, were received as
collateral for lending securities.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income of each Fund, if any, are declared and paid
quarterly or as the Board of Trustees may determine from time to time.
Distributions of net realized gains earned by each Fund, if any, are distributed
at least annually.
Distributions from net investment income and realized capital gains are
determined in accordance with federal income tax regulations, which may differ
from U.S. GAAP. Certain capital accounts in the financial statements are
periodically adjusted for permanent differences in order to reflect their tax
character. These permanent differences are primarily due to the varying
treatment of income and gain/loss on portfolio securities held by the Funds and
have no impact on net assets or NAV per share. Temporary differences, which
arise from recognizing certain items of income, expense and gain/loss in
different periods for financial statement and tax purposes, will reverse at some
time in the future.
The tax character of distributions paid by each Fund during the fiscal period
ended December 31, 2018 was as follows:
Distributions Distributions
Distributions paid paid paid
from Ordinary from Capital from Return
Income Gains of Capital
------------------ ---------------- -----------------
First Trust Total US Market AlphaDEX(R) ETF $ 155,286 $ -- $ --
First Trust Dorsey Wright People's Portfolio ETF 417,641 -- --
First Trust Dow 30 Equal Weight ETF 235,451 -- --
First Trust Lunt U.S. Factor Rotation ETF 184,170 -- --
As of December 31, 2018, 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 Total US Market AlphaDEX(R) ETF $ 5,031 $ (666,297) $ (1,692,453)
First Trust Dorsey Wright People's Portfolio ETF -- (1,092,046) (2,487,040)
First Trust Dow 30 Equal Weight ETF 10,767 (74,553) (1,512,279)
First Trust Lunt U.S. Factor Rotation ETF 467 (1,663,858) (3,134,438)
G. INCOME TAXES
Each Fund intends to qualify or 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. For TUSA and DWPP, the taxable
Page 49
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
years ending 2015, 2016, 2017, and 2018 remain open to federal and state audit.
For EDOW, the taxable years ending 2017 and 2018 remain open for federal and
state audit. For FCTR, the taxable year ending 2018 remains open for federal and
state audit. As of June 30, 2019, 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.
Under the Regulated Investment Company Modernization Act of 2010 (the "Act"),
net capital losses arising in taxable years beginning after December 22, 2010,
may be carried forward indefinitely, and their character is retained as
short-term and/or long-term losses. Previously, net capital losses were carried
forward for up to eight years and treated as short-term losses. As a transition
rule, the Act requires that post-enactment net capital losses be used before
pre-enactment net capital losses. At December 31, 2018, the Funds had
post-enactment net capital losses for federal income tax purposes as shown in
the following table. 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 Fund shareholders. The Funds are 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.
Post-Enactment -
No Expiration
------------------
First Trust Total US Market AlphaDEX(R) ETF $ 666,297
First Trust Dorsey Wright People's Portfolio ETF 1,092,046
First Trust Dow 30 Equal Weight ETF 74,553
First Trust Lunt U.S. Factor Rotation ETF 1,663,858
During the taxable year ended December 31, 2018, the following Fund utilized
capital loss carryforwards in the following amount:
Post-Enactment
Capital Loss
Carryforward
Utilized
------------------
First Trust Total US Market AlphaDEX(R) ETF $ 5,052
H. EXPENSES
Expenses that are directly related to First Trust Total US Market AlphaDEX(R)
ETF are charged directly to the Fund. Expenses for First Trust Dorsey Wright
People's Portfolio ETF, First Trust Dow 30 Equal Weight ETF and First Trust Lunt
U.S. Factor Rotation ETF (the "Unitary Fee Funds"), other than excluded expenses
(discussed in Note 3), are paid by the Advisor. General expenses of the Trust
are allocated to all the Funds based upon the net assets of each Fund.
First Trust has entered into licensing agreements with each of the following
"Licensors" for the respective Funds:
FUND LICENSOR
First Trust Total US Market AlphaDEX(R) ETF Nasdaq, Inc.
First Trust Dorsey Wright People's Portfolio ETF Nasdaq, Inc.
First Trust Dow 30 Equal Weight ETF S&P Dow Jones Indices LLC
First Trust Lunt U.S. Factor Rotation ETF Lunt Capital Management, Inc.
The respective license agreements allow for the use by First Trust of certain
trademarks and trade names of the respective Licensors. The Funds are
sub-licensees to the applicable license agreement. The First Trust Total US
Market AlphaDEX(R) ETF is required to pay licensing fees, which are shown on the
Statements of Operations.
I. NEW ACCOUNTING PRONOUNCEMENT
On August 28, 2018, the FASB issued Accounting Standards Update ("ASU") 2018-13,
"Disclosure Framework - Changes to the Disclosure Requirements for Fair Value
Measurement," which amends the fair value measurement disclosure requirements of
ASC 820. The amendments of ASU 2018-13 include new, eliminated, and modified
disclosure requirements of ASC 820. In addition, the amendments clarify that
materiality is an appropriate consideration of entities when evaluating
disclosure requirements. The ASU is effective for fiscal years beginning after
December 15, 2019, including interim periods therein. Early adoption is
permitted for any eliminated or modified disclosures upon issuance of this ASU.
The Funds have early adopted ASU 2018-13 for these financial statements, which
did not result in a material impact.
Page 50
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust, the investment advisor to the Funds, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. The Charger Corporation is an Illinois corporation
controlled by James A. Bowen, Chief Executive Officer of First Trust. First
Trust is responsible for the selection and ongoing monitoring of the securities
in each Fund's portfolio, managing the Funds' business affairs and providing
certain administrative services necessary for the management of the Funds.
For the First Trust Total US Market AlphaDEX(R) ETF, First Trust is paid an
annual management fee of 0.50% of the Fund's average daily net assets. For such
Fund, the Trust and the Advisor have entered into an Expense Reimbursement, Fee
Waiver and Recovery Agreement ("Recovery Agreement") in which First Trust has
agreed to waive fees and/or reimburse Fund expenses to the extent that the
operating expenses of the Fund (excluding interest expense, brokerage
commissions and other trading expenses, acquired fund fees and expenses, taxes
and extraordinary expenses) exceed 0.70% of average daily net assets per year
(the "Expense Cap"). The Expense Cap will be in effect until at least April 30,
2021.
Expenses reimbursed and fees waived by First Trust under the Recovery Agreement
are subject to recovery by First Trust for up to three years from the date the
fee was waived or expense was incurred, but no reimbursement payment will be
made by the Fund if it results in the Fund exceeding an expense ratio equal to
the Expense Cap in place at the time the expenses were reimbursed or fees were
waived by First Trust. This amount would be included in "Expenses previously
waived or reimbursed" on the Statements of Operations.
The advisory fee waivers and expense reimbursements for the six months ended
June 30, 2019 and fees waived or expenses borne by First Trust subject to
recovery from the Fund for the periods indicated were as follows:
Fees Waived and Expenses Borne by
First Trust Subject to Recovery
-------------------------------------------------------------
Advisory Six Months Year Year Six Months
Fee Expense Ended Ended Ended Ended
Waivers Reimbursement 12/31/2016 12/31/2017 12/31/2018 6/30/2019 Total
--------- ------------- ---------- ---------- ---------- ---------- ---------
First Trust Total US Market
AlphaDEX(R) ETF $ 40,768 $ 25,358 $ 49,150 $ 110,596 $ 135,446 $ 66,126 $ 361,318
For the First Trust Dorsey Wright People's Portfolio ETF, First Trust Dow 30
Equal Weight ETF and First Trust Lunt U.S. Factor Rotation ETF, First Trust is
paid an annual unitary management fee of 0.60%, 0.50%, and 0.65%, respectively,
of such Fund's average daily net assets and is responsible for the expenses of
such Fund including the cost of transfer agency, custody, fund administration,
legal, audit, licensing and other services, but excluding fee payments under the
Investment Management Agreement, distribution and service fees pursuant to a
Rule 12b-1 plan, if any, brokerage commissions and other expenses connected with
the execution of portfolio transactions, acquired fund fees and expenses, taxes,
interest, and extraordinary expenses.
The Trust has multiple service agreements with The Bank of New York Mellon
("BNYM"). Under the service agreements, BNYM performs custodial, fund
accounting, certain administrative services, and transfer agency services for
each Fund. As custodian, BNYM is responsible for custody of each Fund's assets.
As fund accountant and administrator, BNYM is responsible for maintaining the
books and records of each Fund's securities and cash. As transfer agent, BNYM is
responsible for maintaining shareholder records for each Fund. BNYM is a
subsidiary of The Bank of New York Mellon Corporation, a financial holding
company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that
varies based on whether the fund is a closed-end or other actively managed fund,
or is an index fund.
Additionally, the Lead Independent Trustee and the Chairmen of the Audit
Committee, Nominating and Governance Committee and Valuation Committee are paid
annual fees to serve in such capacities, with such compensation allocated pro
rata among each fund in the First Trust Fund Complex based on net assets.
Independent Trustees are reimbursed for travel and out-of-pocket expenses in
connection with all meetings. The Lead Independent Trustee and Committee
Chairmen rotate every three years. The officers and "Interested" Trustee receive
no compensation from the Trust for acting in such capacities.
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2019, 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 Total US Market AlphaDEX(R) ETF $ 10,978,529 $ 10,924,589
First Trust Dorsey Wright People's Portfolio ETF 6,493,447 6,393,437
First Trust Dow 30 Equal Weight ETF 2,278,486 2,210,536
First Trust Lunt U.S. Factor Rotation ETF 49,577,540 49,511,034
For the six months ended June 30, 2019, the cost of in-kind purchases and
proceeds from in-kind sales for each Fund were as follows:
Purchases Sales
--------------- ---------------
First Trust Total US Market AlphaDEX(R) ETF $ 1,483,571 $ --
First Trust Dorsey Wright People's Portfolio ETF 8,887,582 1,540,391
First Trust Dow 30 Equal Weight ETF 44,868,321 3,649,968
First Trust Lunt U.S. Factor Rotation ETF 28,861,673 17,455,784
5. CREATION, REDEMPTION AND TRANSACTION FEES
Shares are created and redeemed by each Fund only in Creation Unit size
aggregations of 50,000 shares in transactions with broker-dealers or large
institutional investors that have entered into a participation agreement (an
"Authorized Participant'). In order to purchase Creation Units of each Fund, an
Authorized Participant must deposit (i) a designated portfolio of equity
securities determined by First Trust (the "Deposit Securities") and generally
make or receive a cash payment referred to as the "Cash Component," which is an
amount equal to the difference between the NAV of the Fund Shares (per Creation
Unit Aggregation) and the market value of the Deposit Securities, and/or (ii)
cash in lieu of all or a portion of the Deposit Securities. If the Cash
Component is a positive number (i.e., the NAV per Creation Unit Aggregation
exceeds the Deposit Amount), the Authorized Participant will deliver the Cash
Component. If the Cash Component is a negative number (i.e., the NAV per
Creation Unit Aggregation is less than the Deposit Amount), the Authorized
Participant will receive the Cash Component. Authorized Participants purchasing
Creation Units must pay to BNYM, as transfer agent, a creation transaction fee
(the "Creation Transaction Fee") regardless of the number of Creation Units
purchased in the transaction. The Creation Transaction Fee may vary and is based
on the composition of the securities included in each Fund's portfolio and the
countries in which the transactions are settled. The Creation Transaction Fee is
currently $1,500 for First Trust Total US Market AlphaDEX(R) ETF, $1,000 for
First Trust Dorsey Wright People's Portfolio ETF and First Trust Lunt U.S.
Factor Rotation ETF, and $500 for First Trust Dow 30 Equal Weight ETF. The price
for each Creation Unit will equal the daily NAV per share 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 or stamp taxes. When a
Fund permits an Authorized Participant to substitute cash or a different
security in lieu of depositing one or more of the requisite Deposit Securities,
the Authorized Participant may also be assessed an amount to cover the cost of
purchasing the Deposit Securities and/or disposing of the substituted
securities, including 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 such Deposit Securities and/or substitute
securities.
Authorized Participants redeeming Creation Units must pay to BNYM, as transfer
agent, a standard redemption transaction fee (the "Redemption Transaction Fee"),
regardless of the number of Creation Units redeemed in the transaction. The
Redemption Transaction Fee may vary and is based on the composition of the
securities included in each Fund's portfolio and the countries in which the
transactions are settled. The Redemption Transaction Fee is currently $1,500 for
First Trust Total US Market AlphaDEX(R) ETF, $1,000 for First Trust Dorsey
Wright People's Portfolio ETF and First Trust Lunt U.S. Factor Rotation ETF, and
$500 for First Trust Dow 30 Equal Weight ETF. Each Fund reserves the right to
effect redemptions in cash. An Authorized Participant may request cash
redemption in lieu of securities; however, a Fund may, in its discretion, reject
any such request.
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
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, 2021 for First
Trust Total US Market AlphaDEX(R) ETF, First Trust Dorsey Wright People's
Portfolio ETF, and First Trust Dow 30 Equal Weight ETF and July 20, 2020 for
First Trust Lunt U.S. Factor Rotation ETF.
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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ADDITIONAL INFORMATION
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Trust uses to determine
how to vote proxies and information on how each Fund voted proxies relating to
its portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
each Fund's website at www.ftportfolios.com; and (3) on the Securities and
Exchange Commission's ("SEC") website at www.sec.gov.
PORTFOLIO HOLDINGS
Each Fund files portfolio holdings information for each month in a fiscal
quarter within 60 days after the end of the relevant fiscal quarter on Form
N-PORT. Portfolio holdings information for the third month of each fiscal
quarter will be publicly available on the SEC's website at www.sec.gov. Each
Fund's complete schedule of portfolio holdings for the second and fourth
quarters of each fiscal year is included in the semi-annual and annual reports
to shareholders, respectively, and is filed with the SEC on Form N-CSR. The
semi-annual and annual report for each Fund is available to investors within 60
days after the period to which it relates. Each Fund's Forms N-PORT and Forms
N-CSR are available on the SEC's website listed above.
RISK CONSIDERATIONS
RISKS ARE INHERENT IN ALL INVESTING. CERTAIN GENERAL RISKS THAT MAY BE
APPLICABLE TO A FUND ARE IDENTIFIED BELOW, BUT NOT ALL OF THE MATERIAL RISKS
RELEVANT TO EACH FUND ARE INCLUDED IN THIS REPORT AND NOT ALL OF THE RISKS BELOW
APPLY TO EACH FUND. THE MATERIAL RISKS OF INVESTING IN EACH FUND ARE SPELLED OUT
IN ITS PROSPECTUS, STATEMENT OF ADDITIONAL INFORMATION AND OTHER REGULATORY
FILINGS. BEFORE INVESTING, YOU SHOULD CONSIDER EACH FUND'S INVESTMENT OBJECTIVE,
RISKS, CHARGES AND EXPENSES, AND READ EACH FUND'S PROSPECTUS AND STATEMENT OF
ADDITIONAL INFORMATION CAREFULLY. YOU CAN DOWNLOAD EACH FUND'S PROSPECTUS AT
WWW.FTPORTFOLIOS.COM OR CONTACT FIRST TRUST PORTFOLIOS L.P. AT (800) 621-1675 TO
REQUEST A PROSPECTUS, WHICH CONTAINS THIS AND OTHER INFORMATION ABOUT EACH FUND.
CONCENTRATION RISK. To the extent that a fund is able to invest a large
percentage of its assets in a single asset class or the securities of issuers
within the same country, state, region, industry or sector, an adverse economic,
business or political development may affect the value of the fund's investments
more than if the fund were more broadly diversified. A fund that tracks an index
will be concentrated to the extent the fund's corresponding index is
concentrated. A concentration makes a fund more susceptible to any single
occurrence and may subject the fund to greater market risk than a fund that is
not concentrated.
CREDIT RISK. Credit risk is the risk that an issuer of a security will be unable
or unwilling to make dividend, interest and/or principal payments when due and
the related risk that the value of a security may decline because of concerns
about the issuer's ability to make such payments.
CYBER SECURITY RISK. The funds are susceptible to potential operational risks
through breaches in cyber security. A breach in cyber security refers to both
intentional and unintentional events that may cause a fund to lose proprietary
information, suffer data corruption or lose operational capacity. Such events
could cause a fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial
loss. In addition, cyber security breaches of a fund's third-party service
providers, such as its administrator, transfer agent, custodian, or sub-advisor,
as applicable, or issuers in which the fund invests, can also subject a fund to
many of the same risks associated with direct cyber security breaches.
DERIVATIVES RISK. To the extent a fund uses derivative instruments such as
futures contracts, options contracts and swaps, the fund may experience losses
because of adverse movements in the price or value of the underlying asset,
index or rate, which may be magnified by certain features of the derivative.
These risks are heightened when a fund's portfolio managers use derivatives to
enhance the fund's return or as a substitute for a position or security, rather
than solely to hedge (or offset) the risk of a position or security held by the
fund.
EQUITY SECURITIES RISK. To the extent a fund invests in equity securities, the
value of the fund's shares will fluctuate with changes in the value of the
equity securities. Equity securities prices fluctuate for several reasons,
including changes in investors' perceptions of the financial condition of an
issuer or the general condition of the relevant stock market, such as market
volatility, or when political or economic events affecting the issuers occur. In
addition, common stock prices may be particularly sensitive to rising interest
rates, as the cost of capital rises and borrowing costs increase. Equity
securities may decline significantly in price over short or extended periods of
time, and such declines may occur in the equity market as a whole, or they may
occur in only a particular country, company, industry or sector of the market.
ETF RISK. The shares of an ETF trade like common stock and represent an interest
in a portfolio of securities. The risks of owning an ETF generally reflect the
risks of owning the underlying securities, although lack of liquidity in an ETF
could result in it being more volatile and ETFs have management fees that
increase their costs. Shares of an ETF trade on an exchange at market prices
rather than net asset value, which may cause the shares to trade at a price
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
greater than net asset value (premium) or less than net asset value (discount).
In times of market stress, decisions by market makers to reduce or step away
from their role of providing a market for an ETF's shares, or decisions by an
ETF's authorized participants that they are unable or unwilling to proceed with
creation and/or redemption orders of an ETF's shares, could result in shares of
the ETF trading at a discount to net asset value and in greater than normal
intraday bid-ask spreads.
FIXED INCOME SECURITIES RISK. To the extent a fund invests in fixed income
securities, the fund will be subject to credit risk, income risk, interest rate
risk, liquidity risk and prepayment risk. Income risk is the risk that income
from a fund's fixed income investments could decline during periods of falling
interest rates. Interest rate risk is the risk that the value of a fund's fixed
income securities will decline because of rising interest rates. Liquidity risk
is the risk that a security cannot be purchased or sold at the time desired, or
cannot be purchased or sold without adversely affecting the price. Prepayment
risk is the risk that the securities will be redeemed or prepaid by the issuer,
resulting in lower interest payments received by the fund. In addition to these
risks, high yield securities, or "junk" bonds, are subject to greater market
fluctuations and risk of loss than securities with higher ratings, and the
market for high yield securities is generally smaller and less liquid than that
for investment grade securities.
INDEX CONSTITUENT RISK. Certain funds may be a constituent of one or more
indices. As a result, such a fund may be included in one or more index-tracking
exchange-traded funds or mutual funds. Being a component security of such a
vehicle could greatly affect the trading activity involving a fund, the size of
the fund and the market volatility of the fund. Inclusion in an index could
significantly increase demand for the fund and removal from an index could
result in outsized selling activity in a relatively short period of time. As a
result, a fund's net asset value could be negatively impacted and the fund's
market price may be significantly below its net asset value during certain
periods.
INDEX PROVIDER RISK. To the extent a fund seeks to track an index, it is subject
to Index Provider Risk. There is no assurance that the Index Provider will
compile the Index accurately, or that the Index will be determined, maintained,
constructed, reconstituted, rebalanced, composed, calculated or disseminated
accurately. To correct any such error, the Index Provider may carry out an
unscheduled rebalance or other modification of the Index constituents or
weightings, which may increase the fund's costs. The Index Provider does not
provide any representation or warranty in relation to the quality, accuracy or
completeness of data in the Index, and it does not guarantee that the Index will
be calculated in accordance with its stated methodology. Losses or costs
associated with any Index Provider errors generally will be borne by the fund
and its shareholders.
INVESTMENT COMPANIES RISK. To the extent a fund invests in the securities of
other investment vehicles, the fund will incur additional fees and expenses that
would not be present in a direct investment in those investment vehicles.
Furthermore, the fund's investment performance and risks are directly related to
the investment performance and risks of the investment vehicles in which the
fund invests.
MANAGEMENT RISK. To the extent that a fund is actively managed, it is subject to
management risk. In managing an actively-managed fund's investment portfolio,
the fund's portfolio managers will apply investment techniques and risk analyses
that may not have the desired result. There can be no guarantee that a fund will
meet its investment objective.
MARKET RISK. Securities held by a fund, as well as shares of a fund itself, are
subject to market fluctuations caused by factors such as general economic
conditions, political events, regulatory or market developments, changes in
interest rates and perceived trends in securities prices. Shares of a fund could
decline in value or underperform other investments as a result of the risk of
loss associated with these market fluctuations.
NON-U.S. SECURITIES RISK. To the extent a fund invests in non-U.S. securities,
it is subject to additional risks not associated with securities of domestic
issuers. Non-U.S. securities are subject to higher volatility than securities of
domestic issuers due to: possible adverse political, social or economic
developments; restrictions on foreign investment or exchange of securities; lack
of liquidity; currency exchange rates; excessive taxation; government seizure of
assets; different legal or accounting standards; and less government supervision
and regulation of exchanges in foreign countries. Investments in non-U.S.
securities may involve higher costs than investments in U.S. securities,
including higher transaction and custody costs, as well as additional taxes
imposed by non-U.S. governments. These risks may be heightened for securities of
companies located, or with significant operations, in emerging market countries.
PASSIVE INVESTMENT RISK. To the extent a fund seeks to track an index, the fund
will invest in the securities included in, or representative of, the index
regardless of their investment merit. A fund generally will not attempt to take
defensive positions in declining markets.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
ADVISORY AGREEMENTS
BOARD CONSIDERATIONS REGARDING APPROVAL OF CONTINUATION OF INVESTMENT MANAGEMENT
AGREEMENTS
The Board of Trustees (the "Board") of First Trust Exchange-Traded Fund (the
"Trust"), including the Independent Trustees, unanimously approved the
continuation of the Investment Management Agreements (as applicable to a
specific Fund, the "Agreement" and collectively, the "Agreements") with First
Trust Advisors L.P. (the "Advisor" or "First Trust") on behalf of the following
three series of the Trust (each a "Fund" and collectively, the "Funds"):
First Trust Total US Market AlphaDEX(R) ETF (TUSA)
First Trust Dorsey Wright People's Portfolio ETF (DWPP)
First Trust Dow 30 Equal Weight ETF (EDOW)
The Board approved the continuation of the Agreement for each Fund for a
one-year period ending June 30, 2020 at a meeting held on June 2, 2019. The
Board determined for each Fund that the continuation of the Agreement is in the
best interests of the Fund in light of the nature, extent and quality of the
services provided and such other matters as the Board considered to be relevant
in the exercise of its reasonable business judgment.
To reach this determination for each Fund, the Board considered its duties under
the Investment Company Act of 1940, as amended (the "1940 Act"), as well as
under the general principles of state law, in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. At meetings held on April 18, 2019 and June 2, 2019, the
Board, including the Independent Trustees, reviewed materials provided by the
Advisor responding to requests for information from counsel to the Independent
Trustees, submitted on behalf of the Independent Trustees, that, among other
things, outlined: the services provided by the Advisor to each Fund (including
the relevant personnel responsible for these services and their experience); the
advisory fee rate payable by TUSA and the unitary fee rates payable by DWPP and
EDOW as compared to fees charged to a peer group of funds (the "Expense Group")
and a broad peer universe of funds (the "Expense Universe"), each assembled by
Broadridge Financial Solutions, Inc. ("Broadridge"), an independent source, and
as compared to fees charged to other clients of the Advisor, including other
exchange-traded funds ("ETFs") managed by the Advisor; the expense ratio of each
Fund as compared to expense ratios of the funds in the Fund's Expense Group and
Expense Universe; performance information for each Fund, including comparisons
of each Fund's performance to that of one or more relevant benchmark indexes and
to that of a performance group of funds and a broad performance universe of
funds (the "Performance Universe"), each assembled by Broadridge; the nature of
expenses incurred in providing services to each Fund and the potential for
economies of scale, if any; financial data on the Advisor; any fall-out benefits
to the Advisor and its affiliate, First Trust Portfolios L.P. ("FTP"); and
information on the Advisor's compliance program. The Board reviewed initial
materials with the Advisor at the meeting held on April 18, 2019, prior to which
the Independent Trustees and their counsel met separately to discuss the
information provided by the Advisor. Following the April meeting, independent
legal counsel on behalf of the Independent Trustees requested certain
clarifications and supplements to the materials provided, and the information
provided in response to those requests was considered at an executive session of
the Independent Trustees and independent legal counsel held prior to the June 2,
2019 meeting, as well as at the meeting held that day. The Board applied its
business judgment to determine whether the arrangement between the Trust and the
Advisor continues to be a reasonable business arrangement from each Fund's
perspective. The Board determined that, given the totality of the information
provided with respect to the Agreements, the Board had received sufficient
information to renew the Agreements. The Board considered that shareholders
chose to invest or remain invested in a Fund knowing that the Advisor manages
the Fund and knowing TUSA's advisory fee and DWPP's and EDOW's unitary fees.
In reviewing the Agreement for each Fund, the Board considered the nature,
extent and quality of the services provided by the Advisor under the Agreement.
The Board considered that the Advisor is responsible for the overall management
and administration of the Trust and each Fund and reviewed all of the services
provided by the Advisor to the Funds, as well as the background and experience
of the persons responsible for such services. In reviewing the services
provided, the Board noted the compliance program that had been developed by the
Advisor and considered that it includes a robust program for monitoring the
Advisor's and each Fund's compliance with the 1940 Act, as well as each Fund's
compliance with its investment objective, policies and restrictions. The Board
also considered a report from the Advisor with respect to its risk management
functions related to the operation of the Funds. Finally, as part of the Board's
consideration of the Advisor's services, the Advisor, in its written materials
and at the April 18, 2019 meeting, described to the Board the scope of its
ongoing investment in additional infrastructure and personnel to maintain and
improve the quality of services provided to the Funds and the other funds in the
First Trust Fund Complex. In light of the information presented and the
considerations made, the Board concluded that the nature, extent and quality of
the services provided to the Trust and each Fund by the Advisor under the
Agreements have been and are expected to remain satisfactory and that the
Advisor has managed each Fund consistent its investment objective, policies and
restrictions.
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FIRST TRUST EXCHANGE-TRADED FUND
JUNE 30, 2019 (UNAUDITED)
With respect to TUSA, the Board considered the advisory fee rate payable by TUSA
under the Agreement for the services provided. The Board considered that the
Advisor agreed to extend the current expense cap for TUSA through April 30,
2021. The Board noted that expenses borne or fees waived by the Advisor for TUSA
are to be subject to reimbursement by the Fund for up to three years from the
date the expense was incurred or fee was waived, but no reimbursement payment
would be made by the Fund if it would result in the Fund exceeding an expense
ratio equal to the expense cap in place at the time the expenses were borne or
fees were waived by the Advisor. The Board received and reviewed information
showing the advisory or unitary fee rates and expense ratios of the peer funds
in TUSA's Expense Group, as well as advisory and unitary fee rates charged by
the Advisor to other fund (including ETFs) and non-fund clients, as applicable.
Because TUSA's Expense Group included peer funds that pay a unitary fee, the
Board determined that expense ratios were the most relevant comparative data
point. Based on the information provided, the Board noted that the total (net)
expense ratio of TUSA was above the median total (net) expense ratio of the peer
funds in its Expense Group. With respect to TUSA's Expense Group, the Board, at
the April 18, 2019 meeting, discussed with Broadridge its methodology for
assembling peer groups and discussed with the Advisor limitations in creating
peer groups for index ETFs, including differences in underlying indexes and
index-tracking methodologies that can result in greater management complexities
across seemingly comparable ETFs and different business models that may affect
the pricing of services among ETF sponsors. The Board took these limitations and
differences into account in considering the peer data. With respect to fees
charged to other non-ETF clients, the Board considered differences between TUSA
and other non-ETF clients that limited their comparability. In considering the
advisory fee rate for TUSA overall, the Board also considered the Advisor's
statement that it seeks to meet investor needs through innovative and
value-added investment solutions and the Advisor's description of its long-term
commitment to the Fund.
The Board considered performance information for TUSA. The Board noted the
process it has established for monitoring the Fund's performance and portfolio
risk on an ongoing basis, which includes quarterly performance reporting from
the Advisor for the Fund. The Board determined that this process continues to be
effective for reviewing TUSA's performance. The Board received and reviewed
information for periods ended December 31, 2018 regarding the performance of
TUSA's underlying index, the correlation between TUSA's performance and that of
its underlying index, TUSA's tracking difference and TUSA's excess return as
compared to its benchmark index. For TUSA, the Board noted that during 2015, the
Fund changed its underlying index to an index using the AlphaDEX(R) stock
selection methodology, and that the performance information included a blend of
the old and new indexes. The Board also considered the Advisor's explanations of
how the AlphaDEX(R) stock selection methodology impacts Fund performance in
various market environments, and the Advisor's statement that AlphaDEX(R) is
designed to provide long-term outperformance. Based on the information provided
for TUSA and its ongoing review of performance, the Board concluded that the
Fund was correlated to its underlying index and that the tracking difference for
the Fund was within a reasonable range. In addition, the Board reviewed data
prepared by Broadridge comparing TUSA's performance to that of its Performance
Universe and to that of a broad-based benchmark, but given the Fund's objective
of seeking investment results that correspond generally to the performance of
its underlying index, the Board placed more emphasis on its review of
correlation and tracking difference.
On the basis of all the information provided on the fees, expenses and
performance of TUSA and the ongoing oversight by the Board, the Board concluded
that the advisory fee for TUSA continues to be reasonable and appropriate in
light of the nature, extent and quality of the services provided by the Advisor
to the Fund under the Agreement.
With respect to DWPP and EDOW, the Board considered the unitary fee rate payable
by each Fund under the applicable Agreement for the services provided. The Board
considered that as part of the unitary fee the Advisor is responsible for each
Fund's expenses, including the cost of transfer agency, custody, fund
administration, legal, audit, licensing and other services, but excluding the
fee payment under the applicable Agreement and interest, taxes, brokerage
commissions and other expenses connected with the execution of portfolio
transactions, distribution and service fees pursuant to a Rule 12b-1 plan, if
any, and extraordinary expenses. The Board received and reviewed information
showing the advisory or unitary fee rates and expense ratios of the peer funds
in DWPP's and EDOW's Expense Groups, as well as advisory and unitary fee rates
charged by the Advisor to other fund (including ETFs) and non-fund clients, as
applicable. Because DWPP and EDOW each pay a unitary fee, the Board determined
that expense ratios were the most relevant comparative data point. Based on the
information provided, the Board noted that DWPP's and EDOW's unitary fees were
above the median total (net) expense ratio of the peer funds in each Fund's
respective Expense Group. With respect to DWPP's and EDOW's Expense Groups, the
Board, at the April 18, 2019 meeting, discussed with Broadridge its methodology
for assembling peer groups and discussed with the Advisor limitations in
creating peer groups for index ETFs, including differences in underlying indexes
and index-tracking methodologies that can result in greater management
complexities across seemingly comparable ETFs and different business models that
may affect the pricing of services among ETF sponsors. The Board took these
limitations and differences into account in considering the peer data. With
respect to fees charged to other non-ETF clients, the Board considered the
differences between DWPP and EDOW and other non-ETF clients that limited their
comparability. In considering the unitary fee rates for DWPP and EDOW overall,
the Board also considered the Advisor's statement that it seeks to meet investor
needs through innovative and value-added investment solutions and the Advisor's
description of its long-term commitment to each Fund.
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JUNE 30, 2019 (UNAUDITED)
The Board considered performance information for DWPP and EDOW. The Board noted
the process it has established for monitoring each Fund's performance and
portfolio risk on an ongoing basis, which includes quarterly performance
reporting from the Advisor for the Funds. The Board determined that this process
continues to be effective for reviewing DWPP's and EDOW's performance. For DWPP
and EDOW, the Board received and reviewed information for periods ended December
31, 2018 regarding the performance of each Fund's underlying index, the
correlation between each Fund's performance and that of its underlying index,
each Fund's tracking difference and each Fund's excess return as compared to its
benchmark index. The Board noted that during 2017, DWPP changed its underlying
index to the Nasdaq Dorsey Wright People's Portfolio Index, and that the
performance information included a blend of the old and new indexes. Based on
the information provided for DWPP and EDOW and its ongoing review of
performance, the Board concluded that each Fund was correlated to its underlying
index and that the tracking difference for each Fund was within a reasonable
range. In addition, the Board reviewed data prepared by Broadridge for DWPP and
EDOW comparing each Fund's performance to that of its respective Performance
Universe and to that of a broad-based benchmark, but given each Fund's objective
of seeking investment results that correspond generally to the performance of
its underlying index, the Board placed more emphasis on its review of
correlation and tracking difference.
On the basis of all the information provided on the unitary fees and performance
of DWPP and EDOW and the ongoing oversight by the Board, the Board concluded
that the unitary fees for DWPP and EDOW continue to be reasonable and
appropriate in light of the nature, extent and quality of the services provided
by the Advisor to each Fund under the Agreements.
The Board considered information and discussed with the Advisor whether there
were any economies of scale in connection with providing advisory services to
the Funds and noted the Advisor's statement that it believes its expenses will
likely increase over the next twelve months as the Advisor continues to hire
personnel and build infrastructure, including technology, to improve the
services to the Funds. For DWPP and EDOW, the Board noted that any reduction in
fixed costs associated with the management of the Funds would benefit the
Advisor, but that the unitary fee structure provides a level of certainty in
expenses for the Funds. The Board considered the revenues and allocated costs
(including the allocation methodology) of the Advisor in serving as investment
advisor to each Fund for the twelve months ended December 31, 2018 and the
estimated profitability level for each Fund calculated by the Advisor based on
such data, as well as complex-wide and product-line profitability data, for the
same period. The Board noted the inherent limitations in the profitability
analysis and concluded that, based on the information provided, the Advisor's
profitability level for each Fund was not unreasonable. In addition, the Board
considered fall-out benefits described by the Advisor that may be realized from
its relationship with the Funds. The Board considered that the Advisor had
identified as a fall-out benefit to the Advisor and FTP their exposure to
investors and brokers who, absent their exposure to the Funds, may have had no
dealings with the Advisor or FTP, and noted that the Advisor does not utilize
soft dollars in connection with the Funds. The Board concluded that the
character and amount of potential fall-out benefits to the Advisor were not
unreasonable.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, unanimously determined that the terms
of the Agreements continue to be fair and reasonable and that the continuation
of the Agreements is in the best interests of each Fund. No single factor was
determinative in the Board's analysis.
Page 58
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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
111 W. Monroe Street
Chicago, IL 60603
[BLANK BACK COVER]
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEMS 6. SCHEDULE OF INVESTMENTS.
Schedules of Investments in securities of unaffiliated issuers as of the close
of the reporting period are included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers, or
persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3
(c))) are effective, as of a date within 90 days of the filing date of the
report that includes the disclosure required by this paragraph, based on their
evaluation of these controls and procedures required by Rule 30a-3(b) under the
1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15
(b)).
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d))
that occurred during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not Applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not Applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section
906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) First Trust Exchange-Traded Fund
--------------------------------------------------
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, President and
Chief Executive Officer
(principal executive officer)
Date: September 6, 2019
-------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, President and
Chief Executive Officer
(principal executive officer)
Date: September 6, 2019
-------------------
By (Signature and Title)* /s/ Donald P. Swade
----------------------------------------
Donald P. Swade, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: September 6, 2019
-------------------
* Print the name and title of each signing officer under his or her signature.