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First Trust TCW Unconstrained Plus Bond ETF (UCON)
  • 2018 Estimated Capital Gain Distributions
    Certain First Trust Exchange-Traded Funds are expected to pay a long-term capital gain distribution in December. For a list of exchange-traded funds expected to pay a long-term capital gain distribution, please click here. Short-term capital gain distributions, if any, are expected to be nominal and are taxed like ordinary income. Final determination of the source and tax status of all distributions paid in the current year are to be made after year-end and could differ from the expectations noted above.
Investment Objective/Strategy - The investment objective of the First Trust TCW Unconstrained Plus Bond ETF (the "Fund") is to seek to maximize long-term total return. Under normal market conditions, the Fund intends to invest at least 80% of its net assets (including investment borrowings) in a portfolio of fixed income securities. The Fund's investment sub-advisor, TCW Investment Management Company LLC ("TCW" or the "Sub-Advisor"), will manage the Fund's portfolio in an "unconstrained" manner, meaning that its investment universe is not limited to the securities of any particular index and it has discretion to invest in fixed income securities of any type or credit quality, including up to 70% in high yield (or "junk") securities, up to 60% in emerging market securities and up to 50% in securities denominated in foreign currencies. Additionally, under normal market conditions, the Fund's average portfolio duration will vary from between 0 to 10 years. Duration is a measure of the expected price volatility of a fixed income security as a result of changes in market rates of interest.
There can be no assurance that the Fund's investment objectives will be achieved.
Fund Overview
TickerUCON
Fund TypeNon-Traditional Bond
Investment AdvisorFirst Trust Advisors L.P.
Investment Advisor/Portfolio ManagerTCW Investment Management Company LLC
Investor Servicing AgentBank of New York Mellon
Sub-AdvisorTCW Investment Management Company LLC
CUSIP33740F888
ISINUS33740F8885
Intraday NAVUCONIV
Fiscal Year-End08/31
ExchangeNYSE Arca
Inception6/4/2018
Inception Price$25.00
Inception NAV$25.00
Gross Expense Ratio*0.85%
Net Expense Ratio*0.75%
* As of 5/29/2018
First Trust has contractually agreed to waive management fees of 0.10% of average daily net assets until June 5, 2019.
Current Fund Data (as of 11/15/2018)
Closing NAV1$25.01
Closing Share Price2$25.07
Bid/Ask Midpoint$25.03
Bid/Ask Premium0.07%
Total Net Assets$131,315,973
Outstanding Shares5,250,002
Daily Volume99,374
Average 30-Day Daily Volume38,471
Closing Share Price 52-Week High/Low$25.26 / $25.00
Closing NAV 52-Week High/Low$25.22 / $25.00
Number of Holdings449
Fund Characteristics (as of 10/31/2018)
Weighted Average Effective Duration72.20 Years
Weighted Average Maturity4.63 Years
Top Holdings (as of 11/15/2018)
Holding Percent
U.S. Treasury Bill, 0%, due 04/11/2019 10.23%
U.S. Treasury Bill, 0%, due 04/04/2019 4.02%
MORGAN STANLEY 3.70%, due 10/23/2024 1.27%
JPMORGAN CHASE & CO Variable rate, due 07/23/2029 1.10%
FHLMC MULTIFAMILY STRUCTURED PASS THROUGH CERTS. Series K709, Class A2, 2.086%, due 03/25/2019 1.07%
CITIGROUP INC 2.90%, due 12/08/2021 1.02%
BANK OF AMERICA CORP Variable rate, due 05/17/2022 0.95%
WELLS FARGO & COMPANY N/C, 2.625%, due 07/22/2022 0.94%
GOLDMAN SACHS GROUP INC Variable rate, due 05/01/2029 0.87%
Fannie Mae FN 468102, 4.34%, due 06/01/2021 0.78%

Holdings are subject to change.

Fund Composition (as of 10/31/2018)
Percent
Investment Grade Credit 38.70%
Non-Agency MBS 17.10%
CMBS 16.90%
Cash & Equivalents 13.30%
High Yield Credit 6.50%
Emerging Market Credit 3.20%
ABS 2.00%
Agency MBS 1.90%
US Government/Agency 0.40%
NAV History (Since Inception)
Past performance is not indicative of future results.
Distribution Information
Dividend per Share Amt (as of 11/16/2018)3$0.0700
30-Day SEC Yield (as of 10/31/2018)42.86%
Unsubsidized 30-Day SEC Yield (as of 10/31/2018)52.76%
Distribution Rate (as of 10/31/2018)63.35%
Bid/Ask Midpoint vs. NAV (as of 9/30/2018)
Number of Days Bid/Ask Midpoint Above NAV
Quarter Ended 0-49
Basis Points
50-99
Basis Points
100-199
Basis Points
>=200
Basis Points
9/30/2018 56 0 0 0
6/30/2018 12 0 0 0
Number of Days Bid/Ask Midpoint Below NAV
Quarter Ended 0-49
Basis Points
50-99
Basis Points
100-199
Basis Points
>=200
Basis Points
9/30/2018 7 0 0 0
6/30/2018 7 0 0 0

The price used to calculate market return 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.

Maturity Exposure (as of 10/31/2018)
Years Percent
0-1 Years 20.30%
1-3 Years 18.50%
3-5 Years 15.40%
5-7 Years 12.60%
7-10 Years 17.30%
10-20 Years 10.20%
>20 Years 5.70%
Credit Quality (as of 10/31/2018)
Government/Agency 31.80%
AAA 1.00%
AA+ 0.70%
AA 0.70%
AA- 0.90%
A+ 1.50%
A 1.50%
A- 6.40%
BBB+ 9.50%
BBB 12.00%
BBB- 11.40%
BB+ 3.90%
BB 1.50%
BB- 1.50%
B+ 1.40%
B 2.70%
B- 1.40%
CCC+ 0.20%
CCC 7.00%
CCC- 1.30%
CC 1.10%
C 0.30%
D 0.30%
The credit quality and ratings information presented above reflect the ratings assigned by one or more nationally recognized statistical rating organizations (NRSROs), including Standard & Poor's Rating Group, a division of the McGraw Hill Companies, Inc., Moody's Investors Service, Inc., Fitch Ratings, or a comparably rated NRSRO. For situations in which a security is rated by more than one NRSRO and the ratings are not equivalent, the lowest ratings are used. Sub-investment grade ratings are those rated BB+/Ba1 or lower. Investment grade ratings are those rated BBB-/Baa3 or higher. The credit ratings shown relate to the creditworthiness of the issuers of the underlying securities in the fund, and not to the fund or its shares. U.S. Treasury, U.S. Agency and U.S. Agency mortgage-backed securities appear under "Government/Agency". Credit ratings are subject to change.
Month End Performance (as of 10/31/2018)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception8
Fund Performance *
Net Asset Value (NAV) 0.38% N/A N/A N/A N/A N/A 1.30%
After Tax Held 0.03% N/A N/A N/A N/A N/A 0.83%
After Tax Sold 0.22% N/A N/A N/A N/A N/A 0.77%
Market Price 0.50% N/A N/A N/A N/A N/A 1.50%
Index Performance
ICE BofAML US Dollar 3-Month Deposit Offered Rate Average Index 0.60% N/A N/A N/A N/A N/A 0.97%
Quarter End Performance (as of 9/28/2018)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception8
Fund Performance *
Net Asset Value (NAV) 1.14% N/A N/A N/A N/A N/A 1.50%
After Tax Held 0.79% N/A N/A N/A N/A N/A 1.15%
After Tax Sold 0.67% N/A N/A N/A N/A N/A 0.89%
Market Price 1.06% N/A N/A N/A N/A N/A 1.42%
Index Performance
ICE BofAML US Dollar 3-Month Deposit Offered Rate Average Index 0.59% N/A N/A N/A N/A N/A 0.75%

*Performance data quoted represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares when sold or redeemed, may be worth more or less than their original cost.

After Tax Held returns represent return after taxes on distributions. Assumes shares have not been sold. After Tax Sold returns represent the return after taxes on distributions and the sale of fund shares. Returns do not represent the returns you would receive if you traded shares at other times. Market Price returns are based on the midpoint of the bid/ask spread 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. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative. The fund's performance reflects fee waivers and expense reimbursements, absent which performance would have been lower.

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

Indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. Indexes are unmanaged and an investor cannot invest directly in an index.

ICE BofAML US Dollar 3-Month Deposit Offered Rate Average Index - The Index is a 3-month average of the interest rate that the banks in the index, determined by the ICE Benchmark Administration, pay when they borrow on an unsecured basis.

Footnotes
1 The NAV represents the fund's net assets (assets less liabilities) divided by the fund's outstanding shares .
2 Fund shares are purchased and sold on an exchange at their share price rather than net asset value (NAV), which may cause the shares to trade at a price greater than NAV (premium) or less than NAV (discount).
3 Most recent distribution paid or declared to today's date. Subject to change in the future. There is no guarantee that the fund will declare dividends.
4 The 30-day SEC yield is calculated by dividing the net investment income per share earned during the most recent 30-day period by the maximum offering price per share on the last day of the period and includes the effects of fee waivers and expense reimbursements, if applicable.
5 The unsubsidized 30-day SEC yield is calculated the same as the 30-day SEC yield, however it excludes contractual fee waivers and expense reimbursements.
6 Distribution Rate is calculated by dividing the fund's most recent ordinary distribution paid or declared, on an annualized basis, by the NAV price. Distribution rates may vary.
7 A measure of a bond's sensitivity to interest rate changes that reflects the change in a bond's price given a change in yield. It accounts for the likelihood of changes in the timing of cash flows in response to interest rate movements.
8 Inception Date is 6/4/2018

You should consider the fund's investment objectives, risks, and charges and expenses carefully before investing. You can download a prospectus or summary prospectus, or contact First Trust Portfolios L.P. at 1-800-621-1675 to request a prospectus or summary prospectus which contains this and other information about the fund. The prospectus or summary prospectus should be read carefully before investing.

ETF Characteristics

The fund lists and principally trades its shares on the NYSE Arca, Inc.

Investors buying or selling fund shares on the secondary market may incur customary brokerage commissions. Market prices may differ to some degree from the net asset value of the shares. Investors who sell fund shares may receive less than the share's net asset value. Shares may be sold throughout the day on the exchange through any brokerage account. However, unlike mutual funds, shares may only be redeemed directly from the fund by authorized participants, in very large creation/redemption units. If the fund's authorized participants are unable to proceed with creation/redemption orders and no other authorized participant is able to step forward to create or redeem, fund shares may trade at a discount to the fund's net asset value and possibly face delisting.

Risk Considerations

The fund's shares will change in value, and you could lose money by investing in the fund. One of the principal risks of investing in the fund is market risk. Market risk is the risk that a particular security owned by the fund, fund shares or securities in general may fall in value. The fund is subject to management risk because it is an actively managed portfolio. In managing the fund's investment portfolio, the sub-advisor will apply investment techniques and risk analyses that may not have the desired result. There can be no guarantee that the fund will meet its investment objectives.

The fund is subject to credit risk, call risk, income risk, inflation risk, interest rate risk, extension risk and prepayment 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 that the value of a security may decline as a result. Credit risk is heightened for the bank loans in which the fund invests because companies that issue such loans tend to be highly leveraged and thus are more susceptible to the risks of interest deferral, default and/or bankruptcy. Call risk is the risk that if an issuer calls higher-yielding debt instruments held by the fund, performance could be adversely impacted. Income risk is the risk that income from the fund's fixed income investments could decline during periods of falling interest rates. Inflation risk is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. Interest rate risk is the risk that the value of the fixed income securities in the fund will decline because of rising market interest rates. Extension risk is the risk that, when interest rates rise, certain obligations will be paid off by the issuer (or obligor) more slowly than anticipated, causing the value of these securities to fall. Prepayment risk is the risk that during periods of falling interest rates, an issuer may exercise its right to pay principal on an obligation earlier than expected. This may result in a decline in the fund's income.

Certain of the fixed-income securities in the fund may not have the benefit of covenants which could reduce the ability of the issuer to meet its payment obligations and might result in increased credit risk.

High-yield securities, or "junk" bonds, are subject to greater market fluctuations and risk of loss than securities with higher ratings, and therefore, may be highly speculative. These securities are issued by companies that may have limited operating history, narrowly focused operations, and/or other impediments to the timely payment of periodic interest and principal at maturity. Lower quality debt tends to be less liquid than higher quality debt.

The risks associated with senior loans are similar to the risks of high-yield fixed income instruments. The loans are usually rated below investment grade but may also be unrated.

Mortgage-related securities, including mortgage-backed securities, are more susceptible to adverse economic, political or regulatory events that affect the value of real estate. Certain asset-backed securities do not have the benefit of the same security interest in the related collateral as do mortgage-backed securities, nor are they provided government guarantees of repayment.

Non-agency debt that are not issued by a government-sponsored entity such as Fannie Mae, Freddie Mac and Ginnie Mae, are not afforded the protections of backing by the U.S. government, making them more susceptible to credit, liquidity and other risks.

The Fund's investment in municipal securities subjects them to municipal obligations risk. Issuers, including governmental issuers, may be unable to pay their obligations as they come due. The values of municipal obligations that depend on a specific revenue source to fund their payment obligations may fluctuate as a result of actual or anticipated changes in the cash flows generated by the revenue source or changes in the priority of the municipal obligation to receive the cash flows generated by the revenue source.

The use of listed and OTC derivatives, including futures, options, swap agreements and forward contracts, can lead to 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 derivatives. These risks are heightened when the fund's portfolio managers use derivatives to enhance the fund's returns 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.

In a falling inflationary environment, both interest payments and the value of Treasury Inflation Protected Securities ("TIPS") will decline.

Securities issued or guaranteed by federal agencies and U.S. government sponsored instrumentalities may or may not be backed by the full faith and credit of the U.S. government.

As the use of Internet technology has become more prevalent in the course of business, the fund has become more susceptible to potential operational risks through breaches in cyber security.

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. These risks may be heightened for securities of companies located in, or with significant operations in, emerging market countries. Changes in currency exchange rates and the relative value of non-U.S. currencies will affect the value of the fund's investment and the value of fund shares. Because the fund's net asset value is determined on the basis of U.S. dollars, you may lose money if the local currency of a foreign market depreciates against the U.S. dollar.

Illiquid securities and restricted securities involve the risk that the securities will not be able to be sold at the time desired by the fund or at prices approximately the value at which the fund is carrying the securities on its books.

Collateralized loan obligations ("CLOs") carry additional risks, including, the possibility that distributions from collateral securities will not be adequate to make interest or other payments, the quality of the collateral may decline in value or default, the possibility that the investments in CLOs are subordinate to other classes or tranches, and the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected investment results.

If a counterparty defaults on its payment obligations, the fund will lose money and the value of fund shares may decrease. The fund's investment in repurchase agreements may be subject to market and credit risk with respect to the collateral securing the agreements.

Investments in sovereign bonds involve special risks because the governmental authority that controls the repayment of the debt may be unwilling or unable to repay the principal and/or interest when due. In times of economic uncertainty, the prices of these securities may be more volatile than those of corporate debt obligations or of other government debt obligations.

The fund is classified as "non-diversified" and may invest a relatively high percentage of its assets in a limited number of issuers. As a result, the fund may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, experience increased volatility and be highly concentrated in certain issuers.

The fund will, under most circumstances, effect a portion of creations and redemptions for cash, rather than in kind securities. As a result, the fund may be less tax efficient.

The fund currently has fewer assets than larger, more established funds, and like other relatively new funds, large inflows and outflows may impact the fund's market exposure for limited periods of time.

First Trust Advisors L.P. is the adviser to the fund. First Trust Advisors L.P. is an affiliate of First Trust Portfolios L.P., the fund's distributor.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA and the Internal Revenue Code. First Trust has no knowledge of and has not been provided any information regarding any investor. Financial advisors must determine whether particular investments are appropriate for their clients. First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks independently and is responsible for exercising independent judgment with respect to its retirement plan clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
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