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EquityCompass Tactical Risk Manager ETF (TERM)
  • December 8, 2020 – First Trust Advisors L.P. (“FTA”) announced that the Board of Trustees of EquityCompass Tactical Risk Manager ETF (NYSE Arca: TERM) and Equity Compass Risk Manager ETF (NYSE Arca: ERM), each, an actively managed exchange-traded fund (“ETF”) managed by FTA and sub-advised by EquityCompass Investment Management, LLC (“EquityCompass”), approved the reorganization of TERM into ERM. ERM will be the surviving fund. Under the terms of the proposed transaction, which is expected to be tax-free, the assets of TERM would be transferred to, and the liabilities of TERM would be assumed by, ERM, and shareholders of TERM would receive shares of ERM with an aggregate net asset value equal to the aggregate net asset value of the TERM shares held by them. It is currently expected that the transaction will be consummated no later than the end of 2021, subject to requisite shareholder approval of TERM and ERM and satisfaction of applicable regulatory requirements and approvals and customary closing conditions. There is no assurance when or whether such approvals, or any other approvals required for the transaction, will be obtained. More information can be found here.
Investment Objective/Strategy - The EquityCompass Tactical Risk Manager ETF is an actively managed exchange-traded fund. The Fund's investment objective is to to provide long term capital appreciation with capital preservation as a secondary objective. Under normal market conditions, the Fund will seek to achieve its investment objectives by investing in equity securities of U.S. companies. During periods when the U.S. equity market is determined to be unfavorable by the Fund's sub-advisor, EquityCompass Investment Management, LLC, the Fund may invest all or a portion of its assets in cash, cash equivalents and short term fixed income. During such periods, the Fund may also invest a significant portion of its assets in securities designed to provide short exposure to broad U.S. market indexes.
There can be no assurance that the Fund's investment objectives will be achieved.
Fund Overview
TickerTERM
Fund TypeTactical Equity
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBNY Mellon Investment Servicing (US) Inc.
Portfolio Manager/Sub-AdvisorEquityCompass Investment Management, LLC
CUSIP33740F706
ISINUS33740F7069
Intraday NAVTERMIV
Fiscal Year-End08/31
ExchangeNYSE Arca
Inception4/10/2017
Inception Price$20.05
Inception NAV$20.05
Rebalance FrequencyPeriodically
Gross Expense Ratio*0.67%
Net Expense Ratio*0.67%
* As of 1/4/2021
First Trust has contractually agreed to reduce management fees earned by the fund for management fees due to be paid to the underlying investment companies advised by First Trust. The agreement is expected to remain in place until at least January 5, 2022, or until its termination at the direction of the Trust's Board of Trustees, or the termination of the Investment Management Agreement. Please see the Fees and Expenses of the Fund section in the fund's prospectus for more details.
Current Fund Data (as of 7/22/2021)
Closing NAV1$21.85
Closing Market Price2$21.84
Bid/Ask Midpoint$21.84
Bid/Ask Discount0.05%
30-Day Median Bid/Ask Spread30.23%
Total Net Assets$12,015,225
Outstanding Shares550,002
Daily Volume75
Average 30-Day Daily Volume576
Closing Market Price 52-Week High/Low$22.29 / $14.99
Closing NAV 52-Week High/Low$22.31 / $15.01
Number of Holdings (excluding cash)150
Top Holdings (as of 7/22/2021)*
Holding Percent
Amazon.com, Inc. 0.51%
NVIDIA Corporation 0.51%
3M Company 0.50%
Abbott Laboratories 0.50%
AbbVie Inc. 0.50%
Accenture Plc 0.50%
Adobe Incorporated 0.50%
Akamai Technologies, Inc. 0.50%
Altria Group, Inc. 0.50%
American Express Company 0.50%

* Excluding cash.  Holdings are subject to change.

NAV History (Since Inception)
Past performance is not indicative of future results.
Distribution Information
Dividend per Share Amt (as of 7/24/2021)4$0.0729
30-Day SEC Yield (as of 6/30/2021)51.23%
Unsubsidized 30-Day SEC Yield (as of 6/30/2021)61.23%
12-Month Distribution Rate (as of 6/30/2021)71.09%
Fund Characteristics (as of 6/30/2021)9
Maximum Market Cap.$2,285,538
Median Market Cap.$86,363
Minimum Market Cap.$4,079
Price/Earnings23.55
Price/Book2.98
Price/Cash Flow15.13
Price/Sales1.99
Bid/Ask Premium/Discount (as of 7/22/2021)
  2020 Q1 2021 Q2 2021 Q3 2021
Days Traded at Premium 14 2 12 13
Days Traded at Discount 239 59 51 2
Hypothetical Growth of $10,000 Since Inception (as of 7/22/2021) *


Month End Performance (as of 6/30/2021)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception10
Fund Performance *
Net Asset Value (NAV) 7.28% 20.44% 46.37% 1.41% N/A N/A 3.71%
After Tax Held 7.13% 20.22% 45.62% 0.73% N/A N/A 3.07%
After Tax Sold 4.31% 12.10% 27.39% 0.75% N/A N/A 2.55%
Market Price 7.28% 20.57% 46.66% 1.34% N/A N/A 3.71%
Index Performance **
Hedge Fund Research HFRI Equity Hedge Index 5.07% 12.26% 36.88% 11.37% N/A N/A N/A
S&P 500 Index 8.55% 15.25% 40.79% 18.67% N/A N/A 17.48%
Quarter End Performance (as of 6/30/2021)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception10
Fund Performance *
Net Asset Value (NAV) 7.28% 20.44% 46.37% 1.41% N/A N/A 3.71%
After Tax Held 7.13% 20.22% 45.62% 0.73% N/A N/A 3.07%
After Tax Sold 4.31% 12.10% 27.39% 0.75% N/A N/A 2.55%
Market Price 7.28% 20.57% 46.66% 1.34% N/A N/A 3.71%
Index Performance **
Hedge Fund Research HFRI Equity Hedge Index 5.07% 12.26% 36.88% 11.37% N/A N/A N/A
S&P 500 Index 8.55% 15.25% 40.79% 18.67% N/A N/A 17.48%
3-Year Statistics (as of 6/30/2021)
  Standard Deviation Alpha Beta Sharpe Ratio Correlation
TERM 20.67% -13.13 0.87 0.11 0.78
S&P 500 Index 18.52% --- 1.00 0.94 1.00
Standard Deviation is a measure of price variability (risk). Alpha is an indication of how much an investment outperforms or underperforms on a risk-adjusted basis relative to its benchmark.Beta is a measure of price variability relative to the market. Sharpe Ratio is a measure of excess reward per unit of volatility. Correlation is a measure of the similarity of performance.

*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 determined by using the midpoint of the national best bid offer price ("NBBO") 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.

The Hedge Fund Research HFRI Equity Hedge Index returns are published as estimates and updated three times per month, therefore returns shown are subject to change. Returns for the index are not available since the fund’s inception as the index is calculated monthly. Unlike most asset class indexes, the Hedge Fund Research HFRI Equity Hedge Index returns reflect the fees and expenses of the funds it tracks, but the index itself does not assess a fee.

Hedge Fund Research HFRI Equity Hedge Index - The Index tracks the performance of equity hedge strategies that maintain positions both long and short in primarily equity and equity derivative securities.

S&P 500 Index - The Index is an unmanaged index of 500 stocks used to measure large-cap U.S. stock market performance.

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 market 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 The median bid-ask spread is calculated by identifying the national best bid and national best offer ("NBBO") for the fund as of the end of each 10 second interval during each trading day of the last 30 calendar days and dividing the difference between each such bid and offer by the midpoint of the NBBO. The median of those values is identified and that value is expressed as a percentage rounded to the nearest hundredth.
4 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.
5 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.
6 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.
7 12-Month Distribution Rate is calculated by dividing the sum of the fund's trailing 12-month ordinary distributions paid or declared by the NAV price. Distribution rates may vary.
8 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.
9 All market capitalization numbers are in USD$ Millions.
10 Inception Date is 4/10/2017

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.

Risk Considerations

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. A fund's 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 a fund by authorized participants in very large creation/redemption units. If a 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 a fund's net asset value and possibly face delisting.

A fund's shares will change in value, and you could lose money by investing in a fund. One of the principal risks of investing in a fund is market risk. Market risk is the risk that a particular stock owned by a fund, fund shares or stocks in general may fall in value. There can be no assurance that a fund's investment objective will be achieved. The outbreak of the respiratory disease designated as COVID-19 in December 2019 has caused significant volatility and declines in global financial markets, which have caused losses for investors. While the development of vaccines has slowed the spread of the virus and allowed for the resumption of "reasonably" normal business activity in the United States, many countries continue to impose lockdown measures in an attempt to slow the spread. Additionally, there is no guarantee that vaccines will be effective against emerging variants of the disease.

In managing a fund's investment portfolio, the portfolio managers will apply investment techniques and risk analyses that may not have the desired result.

Asset-backed securities are generally not backed by the full faith and credit of the U.S. government and are subject to the risk of default on the underlying asset or loan, particularly during periods of economic downturn.

Compounding affects all investments but has a more significant impact on an inverse fund. This effect becomes more pronounced as index volatility increases. This risk may be especially heightened for funds with an investment process that only periodically considers significant portfolio changes.

A fund may be subject to the risk that a counterparty will not fulfill its obligations which may result in significant financial loss to a fund.

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

Certain securities are subject to call, credit, inflation, income, interest rate, extension and prepayment risks. These risks could result in a decline in a security's value and/or income, increased volatility as interest rates rise or fall and have an adverse impact on a fund's performance.

A fund may invest in the shares of other ETFs, which involves additional expenses that would not be present in a direct investment in the underlying funds. In addition, a fund's investment performance and risks may be related to the investment performance and risks of the underlying funds.

The market value of floating rate securities may fall in a declining interest rate environment and may also fall in a rising interest rate environment if there is a lag between the rise in interest rates and the reset. Income earned by a fund on floating rate securities may decline due to lower coupon payments on floating-rate securities.

High yield securities, or "junk" bonds, are subject to greater market fluctuations and risk of loss than securities with higher ratings, and therefore, are considered to be highly speculative.

Inverse ETFs are designed to rise when the value of the underlying benchmark is falling and fall in price when the underlying benchmark is rising. Since most inverse ETFs reset daily, their performance over longer terms can perform very differently than underlying assets and benchmarks. The return of an inverse ETF for periods longer than a single day will be the result of its return for each day compounded over the period. An inverse ETF's returns for periods longer than a single day will very likely differ in amount, and possibly even direction, from the underlying ETF's stated multiple (-1x) times the return of the underlying ETF's index for the same period. For periods longer than a single day, an inverse ETF will lose money if its underlying index's performance is flat, and it is possible that the inverse ETF will lose money even if the level of the underlying index falls.

A fund's investment in other investment companies is restricted by federal securities laws and a fund's associated exemptive relief which limits the size of the position a fund can take in another investment company.

To the extent a fund invests in floating or variable rate obligations that use the London Interbank Offered Rate ("LIBOR") as a reference interest rate, it is subject to LIBOR Risk. The United Kingdom's Financial Conduct Authority, which regulates LIBOR, will cease making LIBOR available as a reference rate over a phase-out period that will begin immediately after December 31, 2021. The unavailability or replacement of LIBOR may affect the value, liquidity or return on certain fund investments and may result in costs incurred in connection with closing out positions and entering into new trades. Any potential effects of the transition away from LIBOR on a fund or on certain instruments in which a fund invests can be difficult to ascertain, and they may vary depending on a variety of factors, and they could result in losses to a fund.

Mortgage-related securities are more susceptible to adverse economic, political or regulatory events that affect the value of real estate. They are also subject to the risk that the rate of mortgage prepayments decreases, which extends the average life of a security and increases the interest rate exposure.

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.

Short selling creates special risks which could result in increased gains or losses and volatility of returns. Because losses on short sales arise from increases in the value of the security sold short, such losses are theoretically unlimited.

A fund with significant exposure to a single asset class, country, region, industry, or sector may be more affected by an adverse economic or political development than a broadly diversified fund.

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

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 or other government debt obligations.

Trading on the exchange may be halted due to market conditions or other reasons. There can be no assurance that the requirements to maintain the listing of a fund on the exchange will continue to be met or be unchanged.

Due to the lack of centralized information and trading, and variations in lot sizes of certain debt securities, the valuation of debt securities may carry more uncertainty and risk than that of publicly traded securities.

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, 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.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
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