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First Trust International Developed Capital Strength® Portfolio
Investment Objective/Strategy - The First Trust International Developed Capital Strength® Portfolio (the "Fund") seeks to provide capital appreciation.
There can be no assurance that the Fund's investment objectives will be achieved.
INVESTMENT PROCESS: The Index seeks to provide exposure to well-capitalized non-U.S companies in developed markets (as defined by the Index Provider)* with strong market positions that have the potential to provide their stockholders with a greater degree of stability and performance over time. The Fund may invest in securities of any market capitalization.

BEGIN WITH UNIVERSE: The Index's initial universe consists of the securities comprising the Nasdaq Developed Markets ex-US™ Index, an index seeking to track the performance of small-, mid- and large- capitalization international companies.

SELECT: The Index then excludes all securities with a three-month average daily trading volume of less than $5 million and multiple share classes of the same issuer.

SCREEN: The Index then ranks the remaining securities by float-adjusted market capitalization and excludes all securities not ranked in the top 500. The universe is further narrowed by excluding:
  • Securities issued by companies with less than $500 million in cash and short-term investments
  • Companies with a long-term debt to market capitalization ratio greater than 30%
  • Companies with a return on equity that is 15% or less.
RANK: The remaining securities are then given a volatility score based upon a combination of their short-term (3-month) and long-term (12-month) realized volatility. The 50 securities with the lowest volatility score are chosen for inclusion in the lndex.

FINAL SELECTION: A review is then enacted to determine if any industry (as determined by the lndustry Classification Benchmark ("ICB") has a cumulative weight greater than 30%.
  • If an industry has a weight greater than 30%, the worst-ranking security by volatility will be removed and replaced with the next eligible security (e.g., the 51st ranked by volatility) from a different industry/country
  • This process is repeated until no industry has a weight greater than 30%
  • Once finalized, each security is equal-dollar weighted.
SEMI-ANNUAL REBALANCE:The Index is rebalanced and reconstituted semi-annually and the Fund will make corresponding changes to its portfolio shortly after the lndex changes are made public. The lndex's semi-annual rebalance and reconstitution schedule may cause the Fund to experience a higher rate of portfolio turnover. The Fund will be concentrated in an industry or a group of industries to the extent that the lndex is so concentrated. As of April 6, 2020, the lndex was composed of 50 securities and the Fund had significant investments in industrials, health care and European companies, although this may change from time to time. To the extent the Fund invests a significant portion of its assets in a given jurisdiction or investment sector, the Fund may be exposed to the risks associated with that jurisdiction or investment sector.

*The Index Provider considers the following countries to be "developed markets": Austria, Australia, Belgium, Canada, Switzerland, Germany, Denmark, Spain, Finland, France, United Kingdom, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Korea, Netherlands, Norway, New Zealand, Portugal, Sweden and Singapore.
Fund Overview
Fiscal Year-End12/31
Inception Date5/1/2020
Inception NAV$10.00
Gross Expense Ratio
(5/1/2024)
3.17%
Net Expense Ratio1.20%
Expenses are capped contractually at 1.20% per year, at least through May 01, 2025.
Current Fund Data (as of 6/11/2024)
Net Asset Value1$12.84
Dividend FrequencySemi-Annual
NAV 52-Week High/Low$13.11 / $10.72
Top Holdings (as of 5/31/2024)2
Percent
Alfa Laval AB 2.22%
Swiss Re AG 2.17%
Aristocrat Leisure Limited 2.13%
Unilever Plc 2.13%
Thomson Reuters Corporation 2.10%
Investor AB (Class B) 2.08%
GSK Plc 2.08%
Muenchener Rueckversicherungs-Gesellschaft AG 2.07%
Schneider Electric SE 2.07%
ABB Ltd 2.06%
NAV History (Since Inception)
Past performance is not indicative of future results.
Sector Breakdown (as of 5/31/2024)2
  Percent
Industrials 28.47%
Financials 18.45%
Consumer Discretionary 17.82%
Consumer Staples 9.84%
Health Care 8.29%
Technology 7.36%
Basic Materials 5.77%
Utilities 2.06%
Energy 1.94%
Month End Performance (as of 5/31/2024)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception3
Fund Performance *
Fund Performance 1.89% 3.85% 12.89% 1.82% N/A N/A 11.99%
Index Performance **
MSCI World ex USA Index 4.48% 6.72% 18.48% 2.92% N/A N/A 12.46%
Quarter End Performance (as of 3/28/2024)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception3
Fund Performance *
Fund Performance 3.13% 3.13% 11.14% 4.52% N/A N/A 12.33%
Index Performance **
MSCI World ex USA Index 5.49% 5.49% 15.18% 4.90% N/A N/A 12.69%

*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. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative.

Fund expenses and return figures do not reflect the deduction of sales charges or other expenses associated with variable products. If such fees were included, expenses would be higher and the performance would be lower. The Fund's performance reflects fee waivers and expense reimbursements, absent which performance would have been lower.

**Indexes are unmanaged and an investor cannot invest directly in an index. Any Benchmarks or Indexes shown reflect no deduction for fees, expenses, or taxes.

MSCI World ex USA Index - The Index includes developed markets and is designed to provide a broad measure of stock performance throughout the world, with the exception of U.S.-based companies.

Footnotes
1 The NAV represents the fund's net assets (assets less liabilities) divided by the fund's outstanding shares.
2 Market value information used in calculating the percentages is based upon trade date plus one recording of transactions, which can differ from regulatory financial reports (Forms N-CSR and N-PORT Part F) that are based on trade date recording of security transactions. Holdings are subject to change.
3 Inception Date is 5/1/2020

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

Risk Considerations

Please refer to the fund's prospectus and Statement of Additional Information for additional details on the fund's risks. The order of the below risk factors does not indicate the significance of any particular risk factor.

The fund offers its shares only to separate accounts of insurance companies that offer variable annuity and variable life insurance products.

The fund's shares will change in value and you could lose money by investing in the fund. An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. There can be no assurance that the fund's investment objective will be achieved.

Changes in currency exchange rates and the relative value of non-US currencies may affect the value of a fund's investments and the value of a fund's shares.

Current market conditions risk is the risk that a particular investment, or shares of the fund in general, may fall in value due to current market conditions. As a means to fight inflation, the Federal Reserve and certain foreign central banks have raised interest rates and expect to continue to do so, and the Federal Reserve has announced that it intends to reverse previously implemented quantitative easing. Recent and potential future bank failures could result in disruption to the broader banking industry or markets generally and reduce confidence in financial institutions and the economy as a whole, which may also heighten market volatility and reduce liquidity. Ongoing armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant groups in the Middle East, have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, the Middle East and the United States. The hostilities and sanctions resulting from those hostilities have and could continue to have a significant impact on certain fund investments as well as fund performance and liquidity. The COVID-19 global pandemic, or any future public health crisis, and the ensuing policies enacted by governments and central banks have caused and may continue to cause significant volatility and uncertainty in global financial markets, negatively impacting global growth prospects.

A fund is susceptible to operational risks through breaches in cyber security. Such events could cause a fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss.

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.

Political or economic disruptions in European countries, even in countries in which a fund is not invested, may adversely affect security values and thus the fund's holdings. A significant number of countries in Europe are member states in the European Union, and the member states no longer control their own monetary policies. In these member states, the authority to direct monetary policies, including money supply and official interest rates for the Euro, is exercised by the European Central Bank. The implications of the United Kingdom's withdrawal from the European Union are difficult to gauge and cannot yet be fully known.

An index fund will be concentrated in an industry or a group of industries to the extent that the index is so concentrated. A fund with significant exposure to a single asset class, or the securities of issuers within the same country, state, region, industry, or sector may have its value more affected by an adverse economic, business or political development than a broadly diversified fund.

There is no assurance that the index provider or its agents will compile or maintain the index accurately. Losses or costs associated with any index provider errors generally will be borne by a fund and its shareholders.

Industrials and producer durables companies are subject to certain risks, including the general state of the economy, intense competition, consolidation, domestic and international politics, excess capacity and consumer demand and spending trends. They may also be significantly affected by overall capital spending levels, economic cycles, technical obsolescence, delays in modernization, labor relations, and government regulations.

Since securities that trade on non-U.S. exchanges are closed when a fund's primary listing is open, there are likely to be deviations between the current price of an underlying security and the last quoted price from the closed foreign market, resulting in premiums or discounts to a fund's NAV.

Large capitalization companies may grow at a slower rate than the overall market.

A portfolio comprised of low volatility stocks may not produce investment exposure that has lower variability to changes in such stocks' price levels. Low volatility stocks are likely to underperform the broader market during periods of rapidly rising stock prices.

Market risk is the risk that a particular security, or shares of a fund in general may fall in value. Securities are subject to market fluctuations caused by such factors 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. In addition, local, regional or global events such as war, acts of terrorism, spread of infectious disease or other public health issues, recessions, natural disasters or other events could have significant negative impact on a fund.

An index fund's return may not match the return of the index for a number of reasons including operating expenses, costs of buying and selling securities to reflect changes in the index, and the fact that a fund's portfolio holdings may not exactly replicate the index.

Securities of non-U.S. issuers are subject to additional risks, including currency fluctuations, political risks, withholding, lack of liquidity, lack of adequate financial information, and exchange control restrictions impacting non-U.S. issuers.

A fund and a fund's advisor may seek to reduce various operational risks through controls and procedures, but it is not possible to completely protect against such risks. The fund also relies on third parties for a range of services, including custody, and any delay or failure related to those services may affect the fund's ability to meet its objective.

A fund that invests in securities included in or representative of an index will hold those securities regardless of investment merit and the fund generally will not take defensive positions in declining markets.

Securities of small- and mid-capitalization companies may experience greater price volatility and be less liquid than larger, more established companies.

Nasdaq, Inc. and its affiliates (the "Corporations") only relationship to First Trust with respect to the Fund is in the licensing of The International Developed Capital Strength™ Index, and certain trade names of the Corporations and the use of The International Developed Capital Strength™ Index, which are determined, composed and calculated by Nasdaq without regard to First Trust or the Fund. 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.

CUSIP identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by FactSet Research Systems Inc. and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2024 CUSIP Global Services. "CUSIP" is a registered trademark of the American Bankers Association.

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, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
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