Rule 497(k)
File No. 333-125751
|
First Trust
Exchange-Traded Fund
|
SUMMARY PROSPECTUS
First Trust WCM Developing World Equity ETF
|
Ticker Symbol:
|
WCME
|
|
Exchange:
|
NYSE Arca, Inc.
|
Before you invest, you may want to review the Fund’s prospectus, which contains more information about the Fund and its risks. You can find the Fund’s statutory prospectus and other information about the Fund, including the statement of additional information and most recent reports to shareholders, online at www.ftportfolios.com/retail/ETF/ETFfundnews.aspx?Ticker=WCME. You can also get this information at no cost by calling (800) 621-1675 or by sending an e-mail request to
info@ftportfolios.com. The Fund’s prospectus and statement of additional information, both dated October 7, 2024, are all incorporated by reference into this Summary Prospectus.
December 13, 2024
Investment Objective
The First Trust WCM Developing World Equity ETF (the "Fund") seeks to provide investors with long-term capital appreciation.
Fees and Expenses of the Fund
The following table describes the fees and expenses you may pay if you buy, hold and
sell shares of the Fund. Investors may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which
are not reflected in the table and example below.
Shareholder Fees
(fees paid directly from your investment)
(fees paid directly from your investment)
|
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)
|
None
|
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
(expenses that you pay each year as a percentage of the value of your investment)
|
Management Fees
|
0.95%
|
|
Distribution and Service (12b-1) Fees
|
0.00%
|
|
Other Expenses(1)
|
0.00%
|
|
Total Annual Fund Operating Expenses
|
0.95%
|
(1)
“Other Expenses” is an estimate based on the expenses the Fund expects to incur for the current fiscal year.
Example
The example below is intended to help you compare the cost of investing in the Fund
with the cost of investing in other funds.
The example assumes that you invest $10,000 in the Fund for the time periods indicated
and then hold or sell all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain at current levels. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
|
1 Year
|
3 Years
|
|
$97
|
$303
|
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes
when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. As a result of a reorganization (the “Reorganization”), the Fund acquired all of the assets, subject to the liabilities, of WCM Developing
World Equity Fund, an open-end management company and a series of Investment Managers Series Trust
(the “Predecessor Fund”). During the most recent fiscal year ending December 31, 2023, the Predecessor Fund’s portfolio turnover rate was 46% of the average value of its portfolio.
Principal Investment Strategies
Under normal circumstances, the Fund will invest at least 80% of its net assets (plus
any borrowings for investment purposes) in equity securities of companies located in developing countries. Such equity securities may
include common stock and depositary receipts (including American Depositary Receipts (“ADRs”), European Depositary Receipts (“EDRs”), Canadian Depositary Receipts (“CDRs”) and Global Depositary Receipts (“GDRs”)). ADRs and CDRs are receipts that represent interests in foreign securities held
on deposit by U.S. and Canadian banks or trust companies, respectively. EDRs and GDRs have the
same qualities as ADRs, although they may be traded in several international trading markets.
In determining whether a country is a developing country, the Fund’s investment sub-advisor, WCM Investment Management, LLC (the “Sub-Advisor”), will consider, among other things: (i) whether the country is considered to be a developing country as classified by the World Bank or included in any of the Morgan Stanley Capital International (MSCI)
emerging markets or frontier markets indices; (ii) the country’s per capita gross domestic product; (iii) the percentage of the country’s economy that is industrialized; (iv) market capitalization as a percentage of the country’s gross domestic product; and (v) the overall regulatory environment of the country, including the presence of governmental regulation limiting or banning foreign ownership
and restrictions on repatriation of initial capital, dividends, interest and/or capital gains. For example, the Sub-Advisor expects that
most countries classified by the World Bank as having low- to middle-income economies, or that are included in any of the Morgan
Stanley Capital International (“MSCI”) emerging markets or frontier markets indices, will be treated as developing countries. The
Sub-Advisor considers a company to be located in a country: (i) if the company has been organized under the laws of, has its principal offices in,
or has its securities principally traded in,
the country; or (ii) if the company derives at least 50% of its revenues or net profits from, or has at
least 50% of its assets or production capacities in, the country. Under normal market conditions, the Fund invests in the
equity securities of companies located in at least three different countries outside of the United States, and the Fund may invest in
securities of any market capitalization. From time to time, the Fund may invest a significant portion of its assets in the securities
of companies located in one or a few developing countries or regions.
The Sub-Advisor’s investment process begins with bottom-up, fundamental research, which involves examining and ranking companies based on the following factors: (i) the company’s corporate performance; (ii) the company’s competitive position; (iii) the company’s potential future growth; and (iv) the company’s intrinsic value, which is determined using a discounted cash flow model, historical EV/EBITDA (compares a company’s Enterprise Value (the measure of a company’s total value) to its Earnings Before Interest, Taxes, Depreciation and Amortization), and next year price to earnings ratio. The Sub-Advisor’s fundamental research also involves an analysis of the company’s environmental, social and governance (“ESG”) characteristics. In the Sub-Advisor’s view, industry specific material ESG factors can have an impact on the short or long-term financial performance of
a company, however, integrating ESG considerations into the research process does not make ESG information the primary consideration
for an investment decision.
As of August 31, 2024, the Fund expects to have significant investments in financial
companies and Asian issuers, although this may change from time to time. Over time, the Fund may have significant investments in a jurisdiction or investment
sector that it may not have had as of August 31, 2024. 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 Fund will not invest 25% or more of the value of its total assets in securities of issuers in any one industry
or group of industries.
The Fund is classified as “non-diversified” under the Investment Company Act of 1940, as amended (the “1940 Act”).
Principal Risks
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. The order of the below risk factors does not indicate
the significance of any particular risk factor.
ASIA RISK. The Fund is subject to certain risks specifically associated with investments in
the securities of Asian issuers. Many Asian economies have experienced rapid growth and industrialization, and there is no assurance
that this growth rate will be maintained. Some Asian economies are highly dependent on trade, and economic conditions in other
countries within and outside Asia can impact these economies. Certain of these economies may be adversely affected by trade or
policy disputes with its major trade partners. There is also a high concentration of market capitalization and trading volume in
a small number of issuers representing a limited number of industries, as well as a high concentration of investors and financial intermediaries.
Certain Asian countries have experienced and may in the future experience expropriation and nationalization of assets, confiscatory
taxation, currency manipulation, political instability, armed conflict and social instability as a result of religious, ethnic,
socio-economic and/or political unrest. In particular, escalated tensions involving North Korea and any outbreak of hostilities involving
North Korea could have a severe adverse effect on Asian economies. Governments of certain Asian countries have exercised, and continue
to exercise, substantial influence over many aspects of the private sector. In certain cases, the government owns or controls many
companies, including the largest in the country. Accordingly, government actions could have a significant effect on the issuers of the Fund’s securities or on economic conditions generally. Recent developments in relations between the U.S. and China have heightened
concerns of increased tariffs and restrictions on trade between the two countries. An increase in tariffs or trade restrictions,
or even the threat of such developments, could lead to a significant reduction in international trade, which could have a negative impact
on the economy of Asian countries and a commensurately negative impact on the Fund.
AUTHORIZED PARTICIPANT CONCENTRATION RISK. Only an authorized participant may engage in creation or redemption transactions directly with the Fund. A limited number of institutions act as authorized
participants for the Fund. To the extent that these institutions exit the business or are unable to proceed with creation and/or
redemption orders and no other authorized participant steps forward to create or redeem, the Fund’s shares may trade at a premium or discount (the difference between the market price of the Fund's shares and the Fund's net asset value) and possibly face delisting and
the bid/ask spread (the difference between the price that someone is willing to pay for shares of the Fund at a specific point in
time versus the price at which someone is willing to sell) on the Fund’s shares may widen.
CURRENCY RISK. Changes in currency exchange rates affect the value of investments denominated in
a foreign currency, the value of dividends and interest earned from such securities and gains and losses realized
on the sale of such securities, and therefore the value of such investments or dividends in the Fund’s portfolio. The Fund’s net asset value could decline if a currency to which the Fund has exposure depreciates against the U.S. dollar or if there are delays or limits
on repatriation of such currency. Currency exchange rates can be very volatile and can change quickly and unpredictably. As a result,
the value of an investment in the Fund may change quickly and without warning.
CURRENT MARKET CONDITIONS RISK. 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, which remains at elevated levels, the Federal Reserve and certain foreign central banks have raised interest rates; however, the
Federal Reserve has recently lowered interest rates
and may continue to do so. U.S. regulators have proposed several changes to market
and issuer regulations which would directly impact the Fund, and any regulatory changes could adversely impact the Fund’s ability to achieve its investment strategies or make certain investments. 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. The ongoing adversarial political climate in the United States, as well
as political and diplomatic events both domestic and abroad, have and may continue to have an adverse impact the U.S. regulatory landscape,
markets and investor behavior, which could have a negative impact on the Fund’s investments and operations. Other unexpected political, regulatory and diplomatic events within the U.S. and abroad may affect investor and consumer confidence and may adversely
impact financial markets and the broader economy. For example, 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 economies of the United States and its trading partners, as well as the financial markets generally, may be adversely
impacted by trade disputes and other matters. For example, the United States has imposed trade barriers and restrictions on China.
In addition, the Chinese government is engaged in a longstanding dispute with Taiwan, continually threatening an invasion. If the
political climate between the United States and China does not improve or continues to deteriorate, if China were to attempt invading Taiwan,
or if other geopolitical conflicts develop or worsen, economies, markets and individual securities may be adversely affected, and the value of the Fund’s assets may go down. 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. While vaccines have been developed, there is no guarantee that vaccines
will be effective against emerging future variants of the disease. As this global pandemic illustrated, such events may affect
certain geographic regions, countries, sectors and industries more significantly than others. Advancements in technology may also adversely
impact markets and the overall performance of the Fund. For instance, the economy may be significantly impacted by the advanced
development and increased regulation of artificial intelligence. These events, and any other future events, may adversely affect the prices and liquidity of the Fund’s portfolio investments and could result in disruptions in the trading markets.
CYBER SECURITY RISK. The Fund is susceptible to operational risks through breaches in cyber security.
A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose
proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory
penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized access to the Fund’s digital information systems through “hacking” or malicious software coding but may also result from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to
intended users. In addition, cyber security breaches of the issuers of securities in which the Fund invests or the Fund’s third-party service providers, such as its administrator, transfer agent, custodian, or sub-advisor, as applicable, can also subject the Fund to many
of the same risks associated with direct cyber security breaches. Although the Fund has established risk management systems designed to reduce
the risks associated with cyber security, there is no guarantee that such efforts will succeed, especially because the Fund
does not directly control the cyber security systems of issuers or third-party service providers.
DEPOSITARY RECEIPTS RISK. Depositary receipts represent equity interests in a foreign company that trade on
a local stock exchange. Depositary receipts may be less liquid than the underlying shares in their primary
trading market. Any distributions paid to the holders of depositary receipts are usually subject to a fee charged by the depositary. Holders
of depositary receipts may have limited voting rights, and investment restrictions in certain countries may adversely impact the
value of depositary receipts because such restrictions may limit the ability to convert the equity shares into depositary receipts and vice
versa. Such restrictions may cause the equity shares of the underlying issuer to trade at a discount or premium to the market price of
the depositary receipts.
EMERGING MARKETS RISK. Investments in securities issued by governments and companies operating in emerging
market countries involve additional risks relating to political, economic, or regulatory conditions
not associated with investments in securities and instruments issued by U.S. companies or by companies operating in other developed
market countries. Investments in emerging markets securities are generally considered speculative in nature and are subject to the following
heightened risks: smaller market capitalization of securities markets which may suffer periods of relative illiquidity; market manipulation;
significant price volatility; restrictions on foreign investment; possible repatriation of investment income and capital; rapid
inflation; and currency convertibility issues. Emerging market countries also often have less uniformity in accounting, auditing and reporting
requirements, unsettled securities laws, unreliable securities valuation and greater risk associated with custody of securities. Financial
and other reporting by companies and government entities also may be less reliable in emerging market countries. Shareholder claims
that are available in the U.S., as well as regulatory oversight and authority that is common in the U.S., including for claims based on
fraud, may be difficult or impossible for shareholders of securities in emerging market countries or for U.S. authorities to pursue. For
funds that track an index or are managed based upon a benchmark, the index may not weight the securities in emerging market countries
on the basis of investor protection limitations, financial reporting quality or available oversight mechanisms. Furthermore, investors
may be required to register the proceeds of sales and future economic or political crises could lead to price controls, forced mergers,
expropriation or confiscatory taxation, seizure, nationalization or creation of government monopolies.
EQUITY SECURITIES RISK. The value of the Fund’s shares will fluctuate with changes in the value of the equity securities in which it invests. 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 equity market, such as market volatility,
or when political or economic events affecting an issuer occur. 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.
FINANCIAL COMPANIES RISK. Financial companies, such as retail and commercial banks, insurance companies and
financial services companies, are especially subject to the adverse effects of economic recession, currency
exchange rates, extensive government regulation, decreases in the availability of capital, volatile interest rates, portfolio
concentrations in geographic markets, industries or products (such as commercial and residential real estate loans), competition from
new entrants and blurred distinctions in their fields of business.
FRONTIER MARKETS RISK. Frontier market countries generally have smaller economies and even less developed
capital markets than traditional emerging markets, and, as a result, the risks of investing in emerging
market countries are magnified in frontier market countries. The magnification of risks is the result of potential for extreme price
volatility and illiquidity in frontier markets; government ownership or control of parts of private sector and of certain companies; trade barriers,
exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by
the countries with which frontier market countries trade; and the relatively new and unsettled securities laws in many frontier market
countries.
INDEX OR MODEL CONSTITUENT RISK. The Fund may be a constituent of one or more indices or ETF models. As a result,
the 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 the Fund’s shares, the size of the Fund and the market volatility of the Fund. Inclusion in an index could increase demand for the Fund and removal from an index could result
in outsized selling activity in a relatively short period of time. As a result, the Fund’s net asset value could be negatively impacted and the Fund’s market price may be below the Fund’s net asset value during certain periods. In addition, index rebalances may potentially result in increased trading activity in the Fund's shares.
INTERNATIONAL CLOSED MARKET TRADING RISK. Because securities held by the Fund trade on non-U.S. exchanges that are closed when the Fund’s primary listing exchange is open, there are likely to be deviations between the current price of an underlying security and the last quoted price for the underlying security (i.e., the Fund’s quote from the closed foreign market) used for purposes of calculating the Fund's net asset value, resulting in premiums or discounts to the Fund’s net asset value that may be greater than those experienced by other exchange-traded funds. In addition, shareholders may not be able
to purchase and sell shares of the Fund on the listing exchange for the Fund, on days when the net asset value of the Fund could
be significantly affected by events in the relevant foreign markets.
LARGE CAPITALIZATION COMPANIES RISK. Large capitalization companies may grow at a slower rate and be less able to adapt
to changing market conditions than smaller capitalization companies. Thus, the return
on investment in securities of large capitalization companies may be less than the return on investment in securities of small and/or
mid capitalization companies. The performance of large capitalization companies also tends to trail the overall market during different
market cycles.
LIQUIDITY RISK. The Fund may hold certain investments that may be subject to restrictions on resale,
trade over-the-counter or in limited volume, or lack an active trading market. Accordingly, the Fund may not be
able to sell or close out of such investments at favorable times or prices (or at all), or at the prices approximating those at which
the Fund currently values them. Illiquid securities may trade at a discount from comparable, more liquid investments and may be subject
to wide fluctuations in market value and the bid/ask spread on the Fund's shares may widen.
MANAGEMENT RISK. The Fund is subject to management risk because it is an actively managed portfolio. In managing the Fund’s investment portfolio, the Fund's portfolio managers (listed below) will apply investment
techniques and risk analyses that may not produce the desired result. There can be no guarantee that the Fund will meet its
investment objective.
MARKET MAKER RISK. The Fund faces numerous market trading risks, including the potential lack of an
active market for Fund shares due to a limited number of market markers. Decisions by market makers or authorized
participants to reduce their role or step away from these activities in times of market stress could inhibit the effectiveness of
the arbitrage process in maintaining the relationship between the underlying values of the Fund’s portfolio securities and the Fund’s market price. The Fund may rely on a small number of third-party market makers to provide a market for the purchase and sale of shares.
Any trading halt or other problem relating to the trading activity of these market makers could result in a dramatic change in the spread between the Fund’s net asset value and the price at which the Fund’s shares are trading on the Exchange, which could result in a decrease in value of the Fund’s shares. This reduced effectiveness could result in Fund shares trading at a discount to net asset
value and also in greater than normal intraday bid-ask spreads for Fund shares.
MARKET RISK. Market risk is the risk that a particular investment, or shares of the Fund in general,
may fall in value. Securities are subject to market fluctuations caused by real or perceived adverse economic, political,
and regulatory factors or market developments, changes in interest rates and perceived trends in securities prices. Shares of the
Fund could decline in value or underperform other
investments. In addition, local, regional or global events such as war, acts of terrorism,
market manipulation, government defaults, government shutdowns, regulatory actions, political changes, diplomatic developments,
the imposition of sanctions and other similar measures, spread of infectious diseases or other public health issues, recessions,
natural disasters, or other events could have a significant negative impact on the Fund and its investments. Any of such circumstances could have
a materially negative impact on the value of the Fund’s shares, the liquidity of an investment, and may result in increased market volatility. During any such events, the Fund’s shares may trade at increased premiums or discounts to their net asset value, the bid/ask spread on the Fund’s shares may widen and the returns on investment may fluctuate.
NON-DIVERSIFICATION RISK. The Fund is classified as “non-diversified” under the 1940 Act. As a result, the Fund is only limited as to the percentage of its assets which may be invested in the securities of any one
issuer by the diversification requirements imposed by the Internal Revenue Code of 1986, as amended. The Fund 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 invested in certain
issuers.
NON-U.S. SECURITIES RISK. 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, capital controls, lack of liquidity, currency exchange rates, excessive taxation, government seizure of assets,
the imposition of sanctions by foreign governments, different legal or accounting standards, and less government supervision
and regulation of securities exchanges in foreign countries.
OPERATIONAL RISK. The Fund is subject to risks arising from various operational factors, including,
but not limited to, human error, processing and communication errors, errors of the Fund’s service providers, counterparties or other third-parties, failed or inadequate processes and technology or systems failures. The Fund relies on third-parties for
a range of services, including custody. Any delay or failure relating to engaging or maintaining such service providers may affect the Fund’s ability to meet its investment objective. Although the Fund and the Fund's investment advisor seek to reduce these operational risks
through controls and procedures, there is no way to completely protect against such risks.
PREMIUM/DISCOUNT RISK. The market price of the Fund’s shares will generally fluctuate in accordance with changes in the Fund’s net asset value as well as the relative supply of and demand for shares on the Exchange. The Fund’s investment advisor cannot predict whether shares will trade below, at or above their net asset value because the shares
trade on the Exchange at market prices and not at net asset value. Price differences may be due, in large part, to the fact that
supply and demand forces at work in the secondary trading market for shares will be closely related, but not identical, to the same
forces influencing the prices of the holdings of the Fund trading individually or in the aggregate at any point in time. However, given that
shares can only be purchased and redeemed in Creation Units, and only to and from broker-dealers and large institutional investors that
have entered into participation agreements (unlike shares of closed-end funds, which frequently trade at appreciable discounts from,
and sometimes at premiums to, their net asset value), the Fund’s investment advisor believes that large discounts or premiums to the net asset value of shares should not be sustained. During stressed market conditions, the market for the Fund’s shares may become less liquid in response to deteriorating liquidity in the market for the Fund’s underlying portfolio holdings, which could in turn lead to differences between the market price of the Fund’s shares and their net asset value and the bid/ask spread on the Fund’s shares may widen.
SIGNIFICANT EXPOSURE RISK. To the extent that the Fund invests a significant percentage of its assets in a single
asset class or 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 significant exposure makes the Fund more
susceptible to any single occurrence and may subject the Fund to greater market risk than a fund that is more broadly diversified.
SMALLER COMPANIES RISK. Small and/or mid capitalization companies may be more vulnerable to adverse general
market or economic developments, and their securities may be less liquid and may experience greater price
volatility than larger, more established companies as a result of several factors, including limited trading volumes, fewer products
or financial resources, management inexperience and less publicly available information. Accordingly, such companies are generally subject
to greater market risk than larger, more established companies.
TRADING ISSUES RISK. Trading in Fund shares on the Exchange may be halted due to market conditions or
for reasons that, in the view of the Exchange, make trading in shares inadvisable. In addition, trading in
Fund shares on the Exchange is subject to trading halts caused by extraordinary market volatility pursuant to the Exchange’s “circuit breaker” rules. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of the Fund will continue
to be met or will remain unchanged. The Fund may have difficulty maintaining its listing on the Exchange in the event the Fund’s assets are small, the Fund does not have enough shareholders, or if the Fund is unable to proceed with creation and/or redemption
orders.
VALUATION RISK. The Fund may hold securities or other assets that may be valued on the basis of factors
other than market quotations. This may occur because the asset or security does not trade on a centralized exchange,
or in times of market turmoil or reduced liquidity. There are multiple methods that can be used to value a portfolio holding when market
quotations are not readily available. The value established for any portfolio holding at a point in time might differ from what would
be produced using a different methodology or if it had been priced using market quotations. Portfolio holdings that are valued using
techniques other than market quotations, including “fair valued” assets or securities, may be subject to greater fluctuation in their valuations from one day to the next than if market
quotations were used. In addition, there is no assurance that the Fund could sell
or close out a portfolio position for the value established for it at any time, and it is possible that the Fund would incur a loss because a
portfolio position is sold or closed out at a discount to the valuation established by the Fund at that time. The Fund’s ability to value investments may be impacted by technological issues or errors by pricing services or other third-party service providers.
Annual Total Return
The shareholders of the Predecessor Fund approved an Agreement and Plan of Reorganization
(the “Plan”) by and between the Predecessor Fund, and the Trust, on behalf the Fund, pursuant to which the Predecessor
Fund would (i) transfer all of its assets to the Fund in exchange solely for newly issued shares of the Fund and the Fund’s assumption of all of the liabilities of the Predecessor Fund, and (ii) immediately distribute such newly issued shares of the Fund to shareholders
of the Predecessor Fund (the “Reorganization”).
As a result of the Reorganization, the Fund has assumed the performance history of
the Predecessor Fund. The bar chart and table below provide some indication of the risks of investing in the Predecessor Fund by
showing you how the performance of the Predecessor Fund has varied from year to year, from its inception on March 31, 2020 until the
date of the Reorganization on October 7, 2024. While the Predecessor Fund and Fund have investment policies and practices that are substantially similar, the Predecessor Fund’s past performance is not necessarily indicative of how the Fund will perform in the
future. Accordingly, any Fund performance and historical returns shown below that incorporate Predecessor Fund performance prior
to October 7, 2024 are not necessarily indicative of the performance that the Fund would have generated.
The bar chart and table below illustrate the annual calendar year returns of the Fund
(having assumed the performance of the Predecessor Fund) based on net asset value as well as the average annual Fund returns. The table also shows how the Fund’s average annual total returns based on net asset value compared to those of a market index. See “Total Return Information” for additional performance information regarding the Fund. The Fund’s performance information is accessible on the Fund’s website at www.ftportfolios.com.
First Trust WCM Developing World Equity ETF
Calendar Year Total Returns as of 12/31 (1)
Calendar Year Total Returns as of 12/31 (1)
(1)
The Fund's calendar year-to-date total return based on net asset value for the period
1/1/24 to 6/30/24 was 3.12%.
During the periods shown in the chart above:
|
|
Return
|
Period Ended
|
|
Best Quarter
|
15.29%
|
December 31, 2022
|
|
Worst Quarter
|
-13.48%
|
June 30, 2022
|
|
Year-to-Date
|
3.12%
|
June 30, 2024
|
The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.
All after-tax returns are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of any state or local tax. Returns after taxes on distributions reflect the taxed return on the payment of dividends
and capital gains. Returns after taxes on distributions and sale of shares assume you sold your shares
at period end, and, therefore, are also adjusted for any capital gains or losses incurred. Returns for the market index do not include
expenses, which are deducted from Fund returns, or taxes.
Your own actual after-tax returns will depend on your specific tax situation and may
differ from what is shown here. After-tax returns are not relevant to investors who hold Fund shares in tax-deferred accounts such as
individual retirement accounts (IRAs) or employee-sponsored retirement plans.
Average Annual Total Returns for the Periods Ended December 31, 2023
|
|
1 Year
|
Since
Inception
|
Inception
Date
|
|
Return Before Taxes
|
6.86%
|
9.47%
|
3/31/2020
|
|
Return After Taxes on Distributions
|
6.64%
|
8.72%
|
|
|
Return After Taxes on Distributions and Sale of Fund Shares
|
4.48%
|
7.29%
|
|
|
MSCI Emerging Markets Index (reflects no deduction for fees, expenses or taxes)
|
9.83%
|
7.77%
|
|
Management
Investment Advisor
First Trust Advisors L.P. (“First Trust” or the “Advisor”)
Investment Sub-Advisor
WCM Investment Management, LLC (the "WCM" or "Sub-Advisor")
Portfolio Managers
The following persons are members of WCM’s portfolio management team for the Fund:
●
Pablo Echavarria, CFA, Portfolio Manager of WCM
●
Rolf Kelly, CFA, Portfolio Manager of WCM
●
Rob Quirk, Portfolio Manager of WCM
The portfolio managers are primarily and jointly responsible for the day-to-day management
of the Fund. Messrs. Echevarria and Kelly have served as portfolio managers of the Predecessor Fund since its inception
on March 31, 2020. Mr. Quirk has served as a portfolio manager of the Predecessor Fund since June 30, 2021.
Purchase and Sale of Fund Shares
The Fund issues and redeems shares on a continuous basis, at net asset value, only in large blocks of shares called “Creation Units.” Individual shares of the Fund may only be purchased and sold on the secondary market
through a broker-dealer. Since shares of the Fund trade on securities exchanges in the secondary market at their market price rather than their net asset value, the Fund’s shares may trade at a price greater than (premium) or less than (discount) the Fund’s net asset value. An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase
shares of the Fund (bid) and the lowest price a seller is willing to accept for shares of the Fund (ask) when buying or selling shares in
the secondary market (the “bid-ask spread”). Recent information, including the Fund’s net asset value, market price, premiums and discounts, bid-ask spreads and the median bid-ask spread for the Fund’s most recent fiscal year, is available online at https://www.ftportfolios.com/Retail/etf/home.aspx.
Tax Information
The Fund’s distributions are taxable and will generally be taxed as ordinary income or capital gains. Distributions on shares held in a tax-deferred account, while not immediately taxable, will be subject to tax when the
shares are no longer held in a tax-deferred account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer, registered investment
adviser, bank or other financial intermediary (collectively, “intermediaries”), First Trust and First Trust Portfolios L.P., the Fund’s distributor, may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest
by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask
your salesperson or visit your financial intermediary’s website for more information.
You can find the Fund’s statutory prospectus and other information about the Fund, including the statement of additional information and most recent reports to shareholders, online at www.ftportfolios.com/retail/ETF/ETFfundnews.aspx?Ticker=WCME.
WCMESP121324