Rule 497(k)
File No. 333-125751
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First Trust
Exchange-Traded Fund
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SUMMARY PROSPECTUS
FT Vest Gold Strategy Target Income ETF®
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Ticker Symbol:
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IGLD
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Exchange:
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Cboe BZX Exchange, Inc.
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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=IGLD. 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 May 1, 2024, are all incorporated by reference into this Summary Prospectus.
January 8, 2025
Investment Objective
The FT Vest Gold Strategy Target Income ETF® seeks to deliver participation in the price returns of the SPDR Gold Trust (the “Underlying ETF”) while providing a consistent level of income.
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.
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)
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Management Fees
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0.85%
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Distribution and Service (12b-1) Fees
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0.00%
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Other Expenses
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0.00%
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Total Annual Fund Operating Expenses
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0.85%
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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:
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1 Year
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3 Years
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5 Years
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10 Years
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$66
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$208
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$362
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$811
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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. During the most recent fiscal year, the Fund’s portfolio turnover rate was 0% of the average value of its portfolio.
Principal Investment Strategies
The Fund seeks to deliver participation in the price returns of the SPDR Gold Trust
(the “Underlying ETF”) while providing a consistent level of income through a portfolio substantially composed of short-term U.S. Treasury
securities, cash and cash equivalents, and in the shares of a wholly-owned subsidiary (the “Subsidiary”) that holds FLexible Exchange Options (“FLEX Options”) that reference the price performance of the Underlying ETF. The Fund’s investment sub-advisor is Vest Financial LLC (“Vest” or the “Sub-Advisor”). As discussed in greater detail below, the Fund will not fully participate in gains experienced
by the Underlying ETF. Additional information regarding the Underlying ETF is set forth below.
In seeking to achieve its objective, the Fund, through the Subsidiary, will generally
purchase or sell FLEX Options. FLEX Options are customized equity or index option contracts that trade on an exchange but provide
investors with the ability to customize key contract terms like exercise prices, styles and expiration dates. In general, an option gives
the purchaser of the option the right to purchase (for a call option) or sell (for a put option) the underlying asset (or deliver cash
equal to the value of an underlying asset) at a specified price (the “strike price”). The Fund will gain exposure to increases in value experienced by the Underlying
ETF through the purchase of call options. As a buyer of these options, the Fund pays a premium to the seller
of the options. The Fund will gain exposure to decreases in value experienced by the Underlying ETF through the sale of put options. As the
seller of these options, the Fund receives a premium from the buyer of the options. Each of these FLEX Options is expected to have a term
of approximately one year. In combination, the purchased call and sold put options generally provide exposure to price returns
of the Underlying ETF both on the upside and downside.
Additionally, as a means to generate income, the Fund will employ a “partial covered call strategy” that seeks to sell call options having a strike price roughly equal to the value of the Underlying ETF at the inception of
the Fund or each subsequent roll of the strategy (such options are said to be “at-the-money”) on only a portion of the notional value of the call options purchased by the Fund.
This strategy effectively converts a portion of the upside price return growth of the Underlying
ETF into current income. By doing so, the Fund is giving up full participation potential in Underlying ETF gains in exchange
for call option premiums. To execute this strategy,
Target Income ETF is a registered trademark of Vest Financial.
the Fund will sell call options with an expiration date less than or equal to approximately
one month in the future (the “Target Income Period”). The amount of call options sold by the Fund is based on a calculation designed
to result in the Fund generating income over the Target Income Period on the average assets of the Fund from premiums from writing
call options that is approximately 3.85% higher annually than the annual yield from one-month U.S. Treasury securities, before
Fund fees and expenses.
The Fund’s sale of call options to generate the desired level of income affects the degree to which the Fund will participate in increases in value experienced by the Underlying ETF over the Target Income period. The more
call options the Fund needs to sell in order to generate the desired level of income, the less the Fund will participate in Underlying
ETF gains. This means that if the Underlying ETF experiences an increase in value, the Fund will likely not experience that increase
to the same extent, and may significantly underperform the Underlying ETF over the Target Income Period. The degree of participation in Underlying ETF gains will depend on prevailing market conditions, especially market volatility, at the time the Fund enters into the call options. The Fund’s rate of participation in Underlying ETF gains is approximately the ratio of the notional value of the Fund’s purchased call options to the notional value of the Fund’s sold call options. For instance, if the notional value of the Fund’s purchased call options is approximately 75% greater than the notional value of the Fund’s sold call options, the Fund would be expected to participate in approximately 75% of the price return gains experienced by the Underlying ETF over the Target Income Period,
in addition to providing the consistent level of income. In that same example, for every 10% increase in the value of the Underlying
ETF, the Fund would experience an approximately 7.5% increase in value (before Fund fees and expenses). In general, the Fund expects
to participate in between 50% and 100% of Underlying ETF gains (before fees and expenses), although such participation is subject
to market conditions and may be below those levels.
The sale of call options to generate income will not have the same impact on any decreases
experienced by the Underlying ETF over the Target Income Period. The Fund expects to fully participate in all Underlying
ETF losses (e.g. if the Underlying ETF decreases in value by 5%, the Fund should be expected to decrease in value by approximately 5%,
before Fund fees and expenses).
General Information on the FLEX Options
FLEX Options are customizable exchange-traded option contracts guaranteed for settlement
by the Options Clearing Corporation (“OCC”). The OCC guarantees performance by each of the counterparties to the FLEX Options, becoming the “buyer for every seller and the seller for every buyer,” protecting clearing members and options traders from counterparty risk.
The FLEX Options that the Fund will hold through the Subsidiary that reference the
Underlying ETF will give the Fund the right to receive or deliver shares of the Underlying ETF or cash-settle the FLEX Options on
the option expiration date at a strike price, depending on whether the option is a put or call option and whether the Fund purchases or sells
the option. The FLEX Options held by the Fund are European style options, which are exercisable at the strike price only on the
FLEX Option expiration date.
The Fund is classified as “non-diversified” under the Investment Company Act of 1940, as amended (the “1940 Act”).
The Underlying ETF
The Underlying ETF is an exchange-traded investment trust that holds physical gold
bars. World Gold Trust Services, LLC serves as the Underlying ETF’s sponsor and HSBC Bank plc serves as the Underlying ETF’s custodian. The Underlying ETF's custodian may utilize subcustodians that hold the Underlying ETF's gold on its behalf. The Underlying ETF
is not expected to pay dividends. You can find the Underlying ETF’s prospectus and other information about the ETF, including the most recent reports to shareholders, online at spdrgoldshares.com.
The summary information below regarding the Underlying ETF comes from its filings
with the SEC. You are urged to refer to the SEC filings made by the Underlying ETF and to other publicly available information (e.g., the ETF’s annual reports) to obtain an understanding of the ETF’s business and financial prospects.
The following description of the Underlying ETF’s principal investment strategies was taken directly from the Underlying ETF’s prospectus, dated October 4, 2022 (“GLD” refers to the Underlying ETF; other defined terms have been modified).
The investment objective of GLD is for its shares to reflect the performance of the price of gold bullion, less GLD’s expenses. WGTS believes that, for many investors, GLD's shares represent a cost-effective investment in gold. GLD’s shares represent units of fractional undivided beneficial interest in and ownership of GLD and trade under the ticker symbol “GLD” on the NYSE Arca.
GLD is treated as a “grantor trust” for U.S. federal income tax purposes. As a result, GLD itself is not subject to U.S. federal income tax. Instead, GLD’s income and expenses “flow through” to the shareholders, and the Trustee will report the GLD’s income, gains, losses and deductions to the Internal Revenue Service on that basis.
At August 31, 2022 the amount of gold owned by GLD and held by GLD's custodian in
its vault was 31,582,529 ounces, 100% of which is allocated gold in the form of London Good Delivery gold bars with a market
value of $53,698,529,317 based on the London Bullion Market Association Gold Price PM on August 31, 2022 (cost—$50,824,771,861).
An allocated account is an account with a bullion dealer, which may also be a bank,
to which individually identified gold bars owned by the account holder are credited. The gold bars in an allocated gold account are
specific to that account and are identified by a
list which shows, for each gold bar, the refiner, assay or fineness, serial number and gross and fine weight. All of the GLD’s gold is fully allocated at the end of each business day. GLD’s custodian provides the trustee with regular reports detailing the gold transfers in and out of GLD’s allocated account at the custodian and identifying the gold bars held in GLD’s allocated account at the custodian. Gold held in GLD’s allocated account is the property of GLD and is not traded, leased or loaned under any circumstances.
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.
The risks of the Fund will result from both the Fund’s direct investments and its indirect investments made through the Subsidiary. Accordingly, the risks that result from the Subsidiary’s activities will be described herein as the Fund’s risks.
ABSENCE OF AN ACTIVE MARKET 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 makers or authorized participants.
The Fund may rely on a small number of third-party market makers to provide a market for the purchase and sale of shares and market makers
are under no obligation to make a market in the Fund’s shares. Additionally, only a limited number of institutions act as authorized participants for the Fund and only an authorized participant may engage in creation or redemption transactions directly with the Fund
and are not obligated to submit purchase or redemption orders for Creation Units. 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. Any trading halt or other problem relating to the trading activity of these market makers or any issues disrupting the authorized participants’ ability to proceed with creation and/or redemption orders 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 premium or discount to net asset value and also
in greater than normal intraday bid-ask spreads for Fund shares.
CALL OPTIONS RISK. The use of call options involves risks different from those associated with ordinary
portfolio securities transactions and depends on the ability of the Fund's portfolio managers to forecast market movements
correctly. As the seller (writer) of a call option, the Fund will tend to lose money if the value of the reference index or security
rises above the strike price. As the purchaser of a call option, the Fund will generally only exercise the option if the value of
the reference index or security rises above the strike price. If the value of the reference index or security does not rise above the level
of the strike price, the option is likely to expire worthless. When writing a call option, the Fund will have no control over the exercise of the
option by the option holder and the American style options sold by the Fund may be exercised at any time before the option expiration
date. A number of factors may influence the option holder’s decision to exercise the option, including the value of the underlying security or index, price volatility, currency exchange rates, dividend yield and interest rates. To the extent that these factors increase
the value of the call option, the option holder is more likely to exercise the option, which may negatively affect the Fund. The effective
use of options also depends on the Fund's ability to terminate option positions at times deemed desirable to do so. There is no assurance
that the Fund will be able to effect closing transactions at any particular time or at an acceptable price. In addition, there
may at times be an imperfect correlation between the movement in values of options and their reference index or security and there may
at times not be a liquid secondary market for certain options. Options may also involve the use of leverage, which could result in greater
price volatility than other markets.
CASH TRANSACTIONS RISK. The Fund will effect some or all of its creations and redemptions for cash rather
than in-kind. As a result, an investment in the Fund may be less tax-efficient than an investment in an ETF that
effects all of its creations and redemptions in-kind. Because the Fund may effect redemptions for cash, it may be required to sell portfolio
securities in order to obtain the cash needed to distribute redemption proceeds. A sale of portfolio securities may result in capital
gains or losses and may also result in higher brokerage costs.
COMMODITIES RISK. Commodity prices can have significant volatility, and exposure to commodities can cause the value of the Fund’s shares to decline or fluctuate in a rapid and unpredictable manner. The values of
physical commodities may be affected by changes in overall market movements, real or perceived inflationary trends, commodity index
volatility, changes in interest rates or currency exchange rates, population growth and changing demographics, international economic,
political and regulatory developments, and factors affecting a particular region, industry or commodity, such as drought, floods,
or other weather conditions, livestock disease, changes in storage costs, trade embargoes, competition from substitute products, transportation
bottlenecks or shortages, fluctuations in supply and demand, and tariffs. The commodity markets are subject to temporary
distortions or other disruptions due to, among other factors, lack of liquidity, the participation of speculators, and government
regulation and other actions.
COUNTERPARTY RISK. Fund transactions involving a counterparty are subject to the risk that the counterparty
will not fulfill its obligation to the Fund. Counterparty risk may arise because of the counterparty’s financial condition (i.e., financial difficulties, bankruptcy, or insolvency), market activities and developments, or other reasons, whether foreseen or not. A counterparty’s inability to fulfill its obligation may result in significant financial loss to the Fund. The
Fund may be unable to recover its investment from the counterparty or may obtain a limited recovery, and/or recovery may be delayed. The
OCC acts as guarantor and central counterparty with respect to the FLEX Options. As a result, the ability of the Fund to meet its
objective depends on the OCC being able to meet its
obligations. In the unlikely event that the OCC becomes insolvent or is otherwise
unable to meet its settlement obligations, the Fund could suffer significant losses.
COVERED CALL STRATEGY RISK. The writer of a covered call option forgoes any profit from increases in the market
value of the underlying security covering the call option above the sum of the premium and the
strike price of the call but retains the risk of loss if the underlying security declines in value. The premiums received from the options
may not be sufficient to offset any losses sustained on the underlying stocks over time. In addition, the Fund’s ability to sell the securities underlying the options will be limited while the options are in effect unless the Fund cancels out the option positions through the
purchase of offsetting identical options prior to the expiration of the written options. The Fund will have no control over the exercise
of the option by the option holder and may lose the benefit from any capital appreciation on the underlying security. A number of factors may influence the option holder’s decision to exercise the option, including the value of the underlying security, price volatility,
dividend yield and interest rates. To the extent that these factors increase the value of the call option, the option holder is more likely
to exercise the option, which may negatively affect the Fund.
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, and the Federal
Reserve has begun the process to reverse previously implemented quantitative easing. 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.
DEBT SECURITIES RISK. Investments in debt securities subject the holder to the credit risk of the issuer.
Credit risk refers to the possibility that the issuer or other obligor of a security will not be able or willing
to make payments of interest and principal when due. Generally, the value of debt securities will change inversely with changes in interest
rates. To the extent that interest rates rise, certain underlying obligations may be paid off substantially slower than originally anticipated
and the value of those securities may fall sharply. During periods of falling interest rates, the income received by the Fund may decline.
If the principal on a debt security is prepaid before expected, the prepayments of principal may have to be reinvested in obligations
paying interest at lower rates. Debt securities generally do not trade on a securities exchange making them generally less liquid
and more difficult to value than common stock.
DERIVATIVES RISK. The use of derivative instruments involves risks different from, or possibly greater
than, the risks associated with investing directly in securities and other traditional investments. These risks include:
(i) the risk that the counterparty to a derivative transaction may not fulfill its contractual obligations; (ii) risk of mispricing or
improper valuation; and (iii) the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset. Derivative
prices are highly volatile and may fluctuate substantially during a short period of time. Such prices are influenced by numerous
factors that affect the markets, including, but not limited to: changing supply and demand relationships; government programs and policies;
national and international political and economic events, changes in interest rates, inflation and deflation and changes in
supply and demand relationships. Trading derivative instruments involves risks different from, or possibly greater than, the risks associated
with investing directly in securities. Derivative contracts ordinarily have leverage inherent in their terms. The low margin deposits
normally required in trading derivatives, including futures contracts, permit a high degree of leverage. Accordingly, a relatively small
price movement may result in an immediate and substantial loss. The use of leverage may also cause the Fund to liquidate portfolio
positions when it would not be advantageous to do so. The use of leveraged derivatives can magnify potential for gain or loss and,
therefore, amplify the effects of market volatility on share price.
DISTRIBUTION TAX RISK. The Fund currently expects to make distributions on a regular basis. While the Fund
will normally pay its income as distributions, the Fund's distributions may exceed the Fund's income and
gains for the Fund's taxable year. The Fund may be required to reduce its distributions if it has insufficient income. Additionally,
there may be times the Fund needs to sell securities when it would not otherwise do so and could cause the distributions from that sale
to constitute return of capital. Distributions in excess of the Fund's current and accumulated earnings and profits will be treated
as a return of capital. Distributions in excess of the Fund's minimum distribution requirements, but not in excess of the Fund's earnings
and profits, will be taxable to Fund shareholders and will not constitute nontaxable returns of capital. A return of capital distribution
generally will not be taxable but will reduce the shareholder's cost basis and will result in a higher capital gain or lower capital
loss when those Fund shares on which the distribution was received are sold. Once a Fund shareholder's cost basis is reduced to zero, further
distributions will be treated as capital gain, if the Fund shareholder holds shares of the Fund as capital assets. Additionally, any
capital returned through distributions will be distributed after payment of Fund fees and expenses. Because the Fund's distributions may consist
of return of capital, the Fund may not be an appropriate investment for investors who do not want their principal investment in
the Fund to decrease over time or who do not wish to receive return of capital in a given period. In the event that a shareholder
purchases shares of the Fund shortly before a distribution by the Fund, the entire distribution may be taxable to the shareholder
even though a portion of the distribution effectively represents a return of the purchase price.
FLEX OPTIONS RISK. Trading FLEX Options involves risks different from, or possibly greater than, the
risks associated with investing directly in securities. The Fund may experience substantial downside from specific
FLEX Option positions and certain FLEX Option positions may expire worthless. The FLEX Options are listed on an exchange; however,
no one can guarantee that a liquid secondary trading market will exist for the FLEX Options. In the event that trading in the FLEX
Options is limited or absent, the value of the Fund's FLEX Options may decrease. In a less liquid market for the FLEX Options, liquidating
the FLEX Options may require the payment of a premium (for written FLEX Options) or acceptance of a discounted price (for purchased
FLEX Options) and may take longer to complete. A less liquid trading market may adversely impact the value of the FLEX Options and
Fund shares and result in the Fund being unable to achieve its investment objective. Less liquidity in the trading of the Fund’s FLEX Options could have an impact on the prices paid or received by the Fund for the FLEX Options in connection with creations and redemptions of the Fund’s shares. Depending on the nature of this impact to pricing, the Fund may be forced to pay more for redemptions
(or receive less for creations) than the price at which it currently values the FLEX Options. Such overpayment or under collection may
impact the value of the Fund and whether the Fund can satisfy its investment objective. Additionally, in a less liquid market for
the FLEX Options, the liquidation of a large number of options may more significantly impact the price. A less liquid trading market may
adversely impact the value of the FLEX Options and the value of your investment. The trading in FLEX Options may be less deep and
liquid than the market for certain other exchange-traded options, non-customized options or other securities.
INCOME RISK. The Fund’s income may decline when interest rates fall or if there are defaults in its portfolio. This decline can occur because the Fund may subsequently invest in lower-yielding securities as debt securities
in its portfolio mature, are near maturity or are called, or the Fund otherwise needs to purchase additional debt securities. The
Fund's strategy may not provide the level of income sought by the Fund.
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.
INFLATION RISK. 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. As inflation increases, the present value of the Fund’s assets and distributions may decline.
INTEREST RATE RISK. Interest rate risk is the risk that the value of the debt securities in the Fund’s portfolio will decline because of rising market interest rates. Interest rate risk is generally lower for shorter term
debt securities and higher for longer-term debt securities. The Fund may be subject to a greater risk of rising interest rates than would normally
be the case during periods of low interest rates. Duration is a reasonably accurate measure of a debt security’s price sensitivity to changes in interest rates and a common measure of interest rate risk. Duration measures a debt security’s expected life on a present value basis, taking into account the debt security’s yield, interest payments and final maturity. In general, duration represents the expected
percentage change in the value of a security for an immediate 1% change in interest rates. For example, the price of a debt security
with a three-year duration would be expected to drop by approximately 3% in response to a 1% increase in interest rates. Therefore,
prices of debt securities with shorter durations tend to be less sensitive to interest rate changes than debt securities with longer
durations. Higher sensitivity to interest rates is generally correlated with higher levels of volatility and, therefore, greater risk. As the value
of a debt security changes over time, so will its duration.
LEVERAGE RISK. Certain ETPs in which the Fund may invest utilize leverage. Leverage may result in
losses that exceed the amount originally invested and may accelerate the rates of losses. Leverage tends to magnify,
sometimes significantly, the effect of any increase or decrease in an underlying ETP’s exposure to an asset or class of assets and may cause the value of the underlying fund’s shares to be volatile and sensitive to market swings.
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.
MANAGEMENT RISK. The Fund is subject to management risk because it is an actively managed portfolio. In managing the Fund’s investment portfolio, the portfolio managers will apply investment techniques and
risk analyses, including through the use of technology, automated processes, algorithms, or other management systems, that may not operate
as intended or produce the desired result. There can be no guarantee that the Fund will meet its investment objective.
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.
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.
SUBSIDIARY INVESTMENT RISK. Changes in the laws of the United States and/or the Cayman Islands, under which the
Fund and the Subsidiary are organized, respectively, could result in the inability of the Fund
to operate as intended and could negatively affect the Fund and its shareholders. The Subsidiary is not registered under the 1940 Act and
is not subject to all the investor protections of the 1940 Act. Thus, the Fund, as an investor in the Subsidiary, will not have all
the protections offered to investors in registered investment companies.
TAX RISK. The Fund intends to treat any income it may derive from FLEX Options on the Underlying
ETF received by the Subsidiary as “qualifying income” under the provisions of the Internal Revenue Code of 1986, as amended, applicable to “regulated investment companies” (“RICs”). The Internal Revenue Service had issued numerous private letter rulings (“PLRs”) provided to third parties not associated with the Fund or its affiliates (which only those parties may rely on as
precedent) concluding that similar arrangements resulted in qualifying income. Many of such PLRs have now been revoked by the Internal
Revenue Service. In March of 2019, the Internal Revenue Service published Regulations that concluded that income from a corporation
similar to the Subsidiary would be qualifying income, if the income is related to the Fund’s business of investing in stocks or securities. Although the Regulations do not require distributions from the Subsidiary, the Fund intends to cause the Subsidiary
to make distributions that would allow the Fund to make timely distributions to its shareholders. The Fund generally will be required
to include in its own taxable income the income of the Subsidiary for a tax year, regardless of whether the Fund receives a distribution of the Subsidiary’s income in that tax year, and this income would nevertheless be subject to the distribution requirement for qualification
as a regulated investment company and would be taken into account for purposes of the 4% excise tax. The Fund intends to
treat any income it may derive from FLEX Options on the Underlying ETF received by the Subsidiary as “qualifying income” for the rules applicable to RICs. Treasury Regulations provide that income from a corporation similar to the Subsidiary is qualifying income, if
(i) the income is distributed to the Fund in the same year the Fund is required to recognize the income or (ii) the income is related to the Fund’s business of investing in stocks or securities. The Fund intends to cause the Subsidiary to make distributions that would allow the
Fund to meet the first requirement. The Fund generally will be required to recognize the income of the Subsidiary, regardless of
whether the Fund receives a distribution of the Subsidiary’s income, and this income would be subject to the distribution requirement for qualification as a RIC and would be taken into account for purposes of the 4% excise tax.
If the Fund did not qualify as a RIC for any taxable year and certain relief provisions were not available, the Fund’s taxable income would be subject to tax at the Fund level and to a further tax at the shareholder
level when such income is distributed. In such event, in order to re-qualify for taxation as a RIC, the Fund might be required to recognize
unrealized gains, pay substantial taxes and interest and make certain distributions. This would cause investors to incur higher tax liabilities
than they otherwise would have incurred and would have a negative impact on Fund returns. In such event, the Fund’s Board of Trustees may determine to reorganize or close the Fund or materially change the Fund’s investment objective and strategies. In the event that the Fund fails to qualify as a RIC, the Fund will promptly notify shareholders of the implications of that failure.
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.
UNDERLYING ETF CONCENTRATION RISK. The Underlying ETF may be susceptible to an increased risk of loss, including losses
due to adverse events that affect the Underlying ETF's investments more than the market
as a whole, to the extent that the Underlying ETF's investments are concentrated in the securities and/or other assets of a particular
issuer or issuers, country, group of countries, region, market, industry, group of industries, sector, market segment or asset class.
UNDERLYING ETF GOLD RISK. The Fund will have exposure to gold through its investments (through the Subsidiary)
in FLEX Options on the Underlying ETF, which invests substantially all of its assets in physical gold
bullion. The price of gold bullion can be significantly affected by international monetary and political developments such as currency devaluation
or revaluation, central bank movements, economic and social conditions within a country, transactional or trade imbalances,
or trade or currency restrictions between countries. Physical gold bullion has sales commission, storage, insurance and auditing expenses.
Investments in gold generally may be speculative and subject to greater price volatility than investments in other types of assets.
The price of metals, such as gold, is related to, among other things, worldwide metal prices and extraction and production costs. Worldwide
metal prices may fluctuate substantially over short periods of time, and as a result, the Fund’s share price may be more volatile than other types of investments. There is a risk that some or all of the Underlying ETF’s gold bars held by its custodian or any subcustodian could be lost, damaged or stolen. Access to the Underlying ETF’s gold bars could also be restricted by natural events (such as an earthquake) or human actions (such as a terrorist attack). Any of these events may adversely affect the operations of the Underlying
ETF and, consequently, an investment based on
the value of the Underlying ETF’s shares. Additionally, the Underlying ETF does not insure its gold and a loss may be suffered with respect to the Underlying ETF’s gold which is not covered by insurance and for which no party is liable for damages.
UNDERLYING ETF RISK. The Subsidiary invests in FLEX Options that reference an ETF, which subjects the
Subsidiary to certain of the risks of owning shares of an ETF as well as the types of instruments in which
the Underlying ETF invests. The value of an ETF will fluctuate over time based on fluctuations in the values of the securities held by
the ETF, which may be affected by changes in general economic conditions, expectations for future growth and profits, interest rates and
the supply and demand for those securities. In addition, ETFs are subject to the absence of an active market risk, premium/discount
risk, tracking error risk and trading issues risk. Brokerage, tax and other expenses may negatively impact the performance of the Underlying ETF and, in turn, the value of the Fund’s shares. Certain options on an ETF may not qualify as "Section 1256 contracts" under
Section 1256 of the Code, and disposition of such options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
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.
U.S. GOVERNMENT SECURITIES RISK. U.S. government securities are subject to interest rate risk but generally do not
involve the credit risks associated with investments in other types of debt securities. As a result,
the yields available from U.S. government securities are generally lower than the yields available from other debt securities. U.S. government
securities are guaranteed only as to the timely payment of interest and the payment of principal when held to maturity.
Annual Total Return
The bar chart and table below illustrate the annual calendar year returns of the Fund
based on net asset value as well as the average annual Fund returns. The bar chart and table provide an indication of the risks of
investing in the Fund by showing changes in the Fund’s performance from year-to-year and by showing how the Fund’s average annual total returns based on net asset value compared to those of a broad-based market index and a gold price benchmark. The Fund’s performance information is accessible on the Fund’s website at www.ftportfolios.com.
FT Vest Gold Strategy Target Income ETF®
Calendar Year Total Returns as of 12/31
Calendar Year Total Returns as of 12/31
During the periods shown in the chart above:
|
|
Return
|
Period Ended
|
|
Best Quarter
|
8.75%
|
December 31, 2023
|
|
Worst Quarter
|
-6.84%
|
September 30, 2022
|
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 indices 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
|
10.95%
|
3.66%
|
3/2/2021
|
|
Return After Taxes on Distributions
|
7.43%
|
1.51%
|
|
|
Return After Taxes on Distributions and Sale of Fund Shares
|
6.38%
|
1.86%
|
|
|
LBMA Gold Price (reflects no deduction for fees, expenses or taxes)
|
14.59%
|
6.83%
|
|
|
S&P 500® Index (reflects no deduction for fees, expenses or taxes)
|
26.29%
|
9.38%
|
|
Management
Investment Advisor
First Trust Advisors L.P. (“First Trust” or the “Advisor”)
Investment Sub-Advisor
Vest Financial LLC (“Vest” or the “Sub-Advisor”)
Portfolio Managers
The following persons serve as the portfolio managers of the Fund:
●
Karan Sood, Managing Director of Vest
●
Trevor Lack, Managing Director of Vest
The portfolio managers are primarily and jointly responsible for the day-to-day management
of the Fund. Each portfolio manager has served as a part of the portfolio management team of the Fund since 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=IGLD.
IGLDSP010825