First Trust Exchange-Traded Fund VIII
08/09/2024 | Press release | Distributed by Public on 08/09/2024 09:02
Annual Report by Investment Company Form N CSR
8dcacc4e991b5bc
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number
811-23147
First Trust Exchange-Traded Fund VIII
(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Name and address of agent for service)
Registrant's telephone number, including area code:
(630) 765-8000
Date of fiscal year end:
May 31
Date of reporting period:
May 31, 2024
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Report to Shareholders.
(a) The registrant's annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:
FT Raymond James
Multicap Growth Equity ETF
Multicap Growth Equity ETF
RJMG | NYSE Arca, Inc.
ANNUAL SHAREHOLDER REPORT | May 31, 2024
This annual shareholder report contains important information about the FT Raymond James Multicap Growth Equity ETF (the "Fund") for the period of January 17, 2024 (commencement of investment operations) to May 31, 2024 (the "Period").You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/RJMG. You can also request this information by contacting us at 1-800-621-1675 or [email protected].
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment |
Costs paid as a percentage of a $10,000 investment |
| FT Raymond James Multicap Growth Equity ETF | $33(1) | 0.85%(2) |
|
(1)
|
The Fund commenced investment operations on January 17, 2024. Had the Fund been in operation for a complete fiscal year, the cost of a $10,000 investment would have been higher.
|
|
(2)
|
Annualized.
|
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND'S PERFORMANCE?
The Fund returned 6.76% for the period from the Fund's inception on January 17, 2024 through May 31, 2024. The Fund underperformed its benchmark, the Russell 3000® Growth Index, which returned 12.69% for the Period.
-
The Consumer Discretionary and Health Care sectors were the top contributing sectors during the Period, while the Information Technology sector was the biggest detractor to the Fund's performance during the Period.
-
Individual security selection in the Consumer Discretionary and Health Care sectors aided in performance during the Period. Security selection in the Information Technology sector was a headwind over the Period.
-
As of the end of the Period, the Fund's portfolio maintains an overweight to the Real Estate and Financials sectors, and an underweight to the Information Technology and Industrials sectors, relative to its benchmark.
-
As of the end of the Period, the Fund's portfolio maintained a broad diversification across Market Caps with an underweight to Large Caps relative to its benchmark.
-
Top contributors to the Fund's performance during the Period included NVIDIA Corp., which had an average weight of 2.73%, appreciated by 91.99%, and contributed 2.00% to the Fund's overall performance; and Natera, Inc., which had an average weight of 2.75%, appreciated by 57.68%, and contributed 1.35% to the Fund's overall performance.
-
Top detractors from the Fund's performance during the Period included Fastly, Inc., which had an average weight of 2.22%, depreciated 55.96%, and detracted 1.65% from the Fund's overall performance; and Lululemon Athletica, Inc., which had an average weight of 2.13%, depreciated 34.65%, and detracted 0.91% from the Fund's overall performance.
FUND PERFORMANCE (January 17, 2024 to May 31, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods as of the end of the Period. Both the line graph and performance table compare the Fund's performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of May 31, 2024) |
Since Inception (1/17/24) |
| FT Raymond James Multicap Growth Equity ETF | 6.76% |
| Russell 3000® Index | 11.34% |
| Russell 3000® Growth Index | 12.69% |
Visit www.ftportfolios.com/etf/RJMGfor more recent performance information.
The Fund's past performance is not a good predictor of the Fund's future performance.The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of May 31, 2024)
| Fund net assets | $8,523,041 |
| Total number of portfolio holdings | 40 |
| Total advisory fee paid | $18,472 |
| Portfolio turnover rate | 34% |
WHAT DID THE FUND INVEST IN? (As of May 31, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
Top Ten Holdings
| Alphabet, Inc., Class A | 3.2% |
| NVIDIA Corp. | 3.1% |
| Natera, Inc. | 3.1% |
| Chipotle Mexican Grill, Inc. | 3.0% |
| Spotify Technology S.A. | 3.0% |
| Construction Partners, Inc., Class A | 2.9% |
| Boston Scientific Corp. | 2.9% |
| Apple, Inc. | 2.9% |
| Welltower, Inc. | 2.9% |
| Costco Wholesale Corp. | 2.8% |
Sector Allocation
HOW HAS THE FUND MATERIALLY CHANGED?
As of May 31, 2024, the Fund's investment adviser determined that there were no material changes to the Fund during the Period.
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/RJMGto view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or [email protected].
FT Vest U.S. Equity Max Buffer ETF - March
MARM | CBOE BZX EXCHANGE, INC.
ANNUAL SHAREHOLDER REPORT | May 31, 2024
This annual shareholder report contains important information about the FT Vest U.S. Equity Max Buffer ETF - March (the "Fund") for the period of March 26, 2024 (commencement of investment operations) to May 31, 2024 (the "Period").You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/MARM. You can also request this information by contacting us at 1-800-621-1675 or [email protected].
This report describes changes to the Fund that occurred during the Period.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment |
Costs paid as a percentage of a $10,000 investment |
| FT Vest U.S. Equity Max Buffer ETF - March | $16(1) | 0.85%(2) |
|
(1)
|
The Fund commenced investment operations on March 26, 2024. Had the Fund been in operation for a complete fiscal year, the cost of a $10,000 investment would have been higher.
|
|
(2)
|
Annualized.
|
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND'S PERFORMANCE?
The Fund returned 1.00% from the Fund's inception date on March 26, 2024 through May 31, 2024. The Fund underperformed its benchmark, the S&P 500® Index, which returned 1.67% for the Period.
This underperformance was primarily due to the lower risk/reward design of the Fund relative to its benchmark.
The Fund's performance from the Fund's inception date on March 26, 2024 through May 31, 2024 can be attributed as follows:
+1.15% Performance Due to Options Positions Held
- 0.15%Expenses
+1.00% Total Fund Performance
- 0.15%Expenses
+1.00% Total Fund Performance
The Fund is designed to participate in the positive price returns (before fees and expenses) of the SPDR® S&P 500® ETF Trust ("SPY" or the "Underlying ETF") up to a predetermined upside cap while seeking to provide the maximum available buffer (before fees and expenses) against SPY losses over an approximate period of one year (the "Target Outcome Period"). Over the Target Outcome Period from March 27, 2024 through March 21, 2025, the Fund will seek to buffer against 100% of the Underlying ETF losses and limit gains up to a predetermined upside cap of 9.23%.
While the cap and buffer provide the intended outcomes only for investors that hold their shares throughout the complete term of the Target Outcome Period, an investor can expect their shares to generally move in the same direction as the Underlying ETF during the Target Outcome Period. However, during the Target Outcome Period an investor's shares may not experience price movement to the same extent as the price movement of the Underlying ETF. During the Target Outcome Period, there may be periods of significant disparity between the Fund's Net Asset Value and the Underlying ETF's price performance.
The Fund held an option package that consisted of a deep-in-the-money long call, a long put, and a short call. The long call generally moves in line with SPY. The other two options, the long put and short call, are "bearish" positions that generally move in the opposite direction of SPY. (These two options provide the buffer and limit, or "cap" the upside potential of the Fund.) The combined impact of all three options is generally in the same direction as SPY, but to a lesser extent than SPY.
FUND PERFORMANCE (March 26, 2024 to May 31, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods as of the end of the Period. Both the line graph and performance table compare the Fund's performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of May 31, 2024) |
Since Inception (3/26/24) |
| FT Vest U.S. Equity Max Buffer ETF - March | 1.00% |
| S&P 500® Index | 1.67% |
Visit www.ftportfolios.com/etf/MARMfor more recent performance information.
The Fund's past performance is not a good predictor of the Fund's future performance.The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of May 31, 2024)
| Fund net assets | $199,523,652 |
| Total number of portfolio holdings | 4 |
| Total advisory fee paid | $184,291 |
| Portfolio turnover rate | 0% |
WHAT DID THE FUND INVEST IN? (As of May 31, 2024)
The table below shows the investment makeup of the Fund, representing the percentage of net assets of the Fund.
Fund Allocation
| Money Market Funds | 1.0% |
| Purchased Options | 101.8% |
| Written Options | (2.7%) |
| Net Other Assets and Liabilities | (0.1%) |
| Total | 100.0% |
HOW HAS THE FUND MATERIALLY CHANGED?
This is a summary of certain changes to the Fund since March 27, 2024. For more complete information, you may review the supplement to the Fund's prospectus dated April 5, 2024 available at www.ftportfolios.com/fund-documents/etf/MARMor upon request at 1-800-621-1675 or [email protected].
Notwithstanding anything to the contrary in the Fund's prospectus, for a Target Outcome Period in which the Fund can set the buffer against 100% of the Underlying ETF losses while setting a cap of at least 7%, the Fund may not sell any put options as described in the Fund's prospectus. Accordingly, for such a Target Outcome Period, the Fund may only hold three kinds of FLEX Options.
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/MARMto view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or [email protected].
OTHER INFORMATION
The Fund is not sponsored, endorsed, sold or promoted by SPDR® S&P 500® ETF Trust, PDR Services, LLC, or Standard & Poor's® (together with their affiliates hereinafter referred to as the "Corporations"). The Corporations have not passed on the legality or suitability of, or the accuracy or adequacy of, descriptions and disclosures relating to the Fund or the FLEX Options. The Corporations make no representations or warranties, express or implied, regarding the advisability of investing in the Fund or the FLEX Options or results to be obtained by the Fund or the FLEX Options, shareholders or any other person or entity from use of the SPDR® S&P 500® ETF Trust. The Corporations have no liability in connection with the management, administration, marketing or trading of the Fund or the FLEX Options.
| (b) | Not applicable to the Registrant. |
Item 2. Code of Ethics.
| (a) | The First Trust Exchange-Traded Fund VIII ("Registrant"), as of the end of the period covered by this report, has adopted a code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party. |
| (c) | There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party, and that relates to any element of the code of ethics description. |
| (d) | The Registrant, during the period covered by this report, has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item's instructions. |
| (e) | Not applicable. |
| (f) | A copy of the code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller is filed as an exhibit pursuant to Item 13(a)(1). |
Item 3. Audit Committee Financial Expert.
As of the end of the period covered by the report, the Registrant's Board of Trustees has determined that Thomas R. Kadlec, Robert F. Keith and Bronwyn Wright are qualified to serve as audit committee financial experts serving on its audit committee and that each of them is "independent," as defined by Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
| (a) | Audit Fees (Registrant) -- The aggregate fees billed for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were $0 for the fiscal year ended 2023 and $24,000 for the fiscal year ended 2024. |
| (b) | Audit-Related Fees (Registrant) -- The aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024. |
Audit-Related Fees (Investment Advisor) -- The aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
Audit-Related Fees (Distributor) -- The aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended2024.
| (c) | Tax Fees (Registrant) -- The aggregate fees billed for professional services rendered by the principal accountant for tax return review and debt instrument tax analysis and reporting were $0 for the fiscal year ended 2023 and $8,500 for the fiscal year ended 2024. |
Tax Fees (Investment Advisor) -- The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning to the Registrant's advisor and distributor $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 0.
Tax Fees (Distributor) -- The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning to the Registrant's distributor were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024. These fees were for tax consultation and/or tax return preparation.
| (d) | All Other Fees (Registrant) -- The aggregate fees billed for products and services provided by the principal accountant to the Registrant, other than the services reported in paragraphs (a) through (c) of this Item $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024. |
All Other Fees (Investment Advisor) -- The aggregate fees billed for products and services provided by the principal accountant to the Registrant's investment advisor, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
All Other Fees (Distributor) -- The aggregate fees billed for products and services provided by the principal accountant to the Registrant's distributor, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
| (e)(1) | Disclose the audit committee's pre-approval policies and procedures described in paragraph (c) (7) of Rule 2-01 of Regulation S-X. |
Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval Policy, the Audit Committee (the "Committee") is responsible for the pre-approval of all audit services and permitted non-audit services (including the fees and terms thereof) to be performed for the Registrant by its independent auditors. The Chairman of the Committee is authorized to give such pre-approvals on behalf of the Committee up to $25,000 and report any such pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the independent auditor's engagements for non-audit services with the Registrant's advisor (not including a sub-advisor whose role is primarily portfolio management and is sub-contracted or overseen by another investment advisor) and any entity controlling, controlled by or under common control with the investment advisor that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant, subject to the de minimis exceptions for non-audit services described in Rule 2-01 of Regulation S-X. If the independent auditor has provided non-audit services to the Registrant's advisor (other than any sub-advisor whose role is primarily portfolio management and is sub-contracted with or overseen by another investment advisor) and any entity controlling, controlled by or under common control with the investment advisor that provides ongoing services to the Registrant that were not pre-approved pursuant to its policies, the Committee will consider whether the provision of such non-audit services is compatible with the auditor's independence.
| (e)(2) | The percentage of services described in each of paragraphs (b) through (d) for the Registrant and the Registrant's investment advisor and distributor of this Item that were approved by the audit committee pursuant to the pre-approval exceptions included in paragraph (c)(7)(i)(C) or paragraph(C)(7)(ii) of Rule 2-01 of Regulation S-X are as follows: |
Registrant: Advisor and Distributor:
(b) 0% (b) 0%
(c) 0% (c) 0%
(d) 0% (d) 0%
| (f) | The percentage of hours expended on the principal accountant's engagement to audit the Registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than fifty percent. |
| (g) | The aggregate non-audit fees billed by the Registrant's accountant for services rendered to the Registrant, and rendered to the Registrant's investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the advisor that provides ongoing services to the Registrant for the fiscal year ended 2023 were $0 for the Registrant, $0 for the Registrant's investment advisor and $0 for the Registrant's distributor; and for the fiscal year ended 2024 were $8,500 for the Registrant, $15,600 for the Registrant's investment advisor and $18,000 for the Registrant's distributor. |
| (h) | The Registrant's audit committee of its Board of Trustees has determined that the provision of non-audit services that were rendered to the Registrant's investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the investment advisor that provides ongoing services to the Registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. |
| (i) | Not applicable to the Registrant. |
| (j) | Not applicable to the Registrant. |
Item 5. Audit Committee of Listed Registrants.
| (a) | The Registrant has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 consisting of all the independent directors of the Registrant. The audit committee of the Registrant is comprised of: Richard E. Erickson, Thomas R. Kadlec, Denise M. Keefe, Robert F. Keith, Niel B. Nielson and Bronwyn Wright. |
| (b) | Not applicable to the Registrant. |
Item 6. Investments.
| (a) | The Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included in the Financial Statements and Other Information filed under Item 7(a) of this Form N-CSR. |
| (b) | Not applicable to the Registrant. |
Item 7. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
| (a) | Following is a copy of the annual financial statements required, and for the periods specified, by Regulation S-X. |
|
Annual Financial
Statements and
Other Information
|
|
For the Period
January 17, 2024
(Commencement of Operations)
through May 31, 2024
|
First Trust Exchange-Traded Fund VIII
|
FT Raymond James Multicap Growth Equity ETF (RJMG)
|
Table of Contents
FT Raymond James Multicap Growth Equity ETF (RJMG)
Annual Financial Statements and Other Information
May 31, 2024
Annual Financial Statements and Other Information
May 31, 2024
|
Portfolio of Investments
|
1
|
|
Statement of Assets and Liabilities
|
3
|
|
Statement of Operations
|
4
|
|
Statement of Changes in Net Assets
|
5
|
|
Financial Highlights
|
6
|
|
Notes to Financial Statements
|
7
|
|
Report of Independent Registered Public Accounting Firm
|
13
|
|
Other Information
|
14
|
Performance and Risk Disclosure
There is no assurance that FT Raymond James Multicap Growth Equity ETF (the "Fund") will achieve its investment objective. The Fund is subject to market risk, which is the possibility that the market values of securities owned by the Fund will decline and that the value of the Fund's shares may therefore be less than what you paid for them. Accordingly, you can lose money by investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, please visit www.ftportfolios.comor speak with your financial advisor. Investment returns, net asset value and share price will fluctuate and Fund shares, when sold, may be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund performance on the Fund's webpage at www.ftportfolios.com.
How to Read This Report
This report contains information that may help you evaluate your investment in the Fund. It includes details about the Fund and presents data that provides insight into the Fund's performance and investment approach.
The material risks of investing in the Fund are spelled out in its prospectus, statement of additional information, and other Fund regulatory filings.
FT Raymond James Multicap Growth Equity ETF (RJMG)Portfolio of InvestmentsMay 31, 2024
|
Shares
|
Description
|
Value
|
|
COMMON STOCKS - 100.0%
|
||
|
Biotechnology - 3.1%
|
||
|
2,440
|
Natera, Inc. (a)
|
$259,933
|
|
Broadline Retail - 4.9%
|
||
|
1,240
|
Amazon.com, Inc. (a)
|
218,786
|
|
6,423
|
Global-e Online Ltd. (a)
|
200,526
|
|
|
419,312
|
|
|
Capital Markets - 2.7%
|
||
|
2,106
|
Tradeweb Markets, Inc., Class A
|
229,575
|
|
Commercial Services &
Supplies - 2.6%
|
||
|
1,041
|
Waste Management, Inc.
|
219,370
|
|
Communications Equipment
- 2.8%
|
||
|
647
|
Motorola Solutions, Inc.
|
236,097
|
|
Construction & Engineering
- 2.9%
|
||
|
4,270
|
Construction Partners, Inc.,
Class A (a)
|
248,557
|
|
Construction Materials -
2.5%
|
||
|
367
|
Martin Marietta Materials, Inc.
|
209,953
|
|
Consumer Staples Distribution
& Retail - 2.8%
|
||
|
298
|
Costco Wholesale Corp.
|
241,347
|
|
Entertainment - 2.9%
|
||
|
847
|
Spotify Technology S.A. (a)
|
251,373
|
|
Financial Services - 2.5%
|
||
|
775
|
Visa, Inc., Class A
|
211,156
|
|
Health Care Equipment &
Supplies - 5.4%
|
||
|
3,265
|
Boston Scientific Corp. (a)
|
246,736
|
|
1,199
|
Insulet Corp. (a)
|
212,451
|
|
|
459,187
|
|
|
Health Care REITs - 2.9%
|
||
|
2,356
|
Welltower, Inc.
|
244,246
|
|
Health Care Technology -
1.9%
|
||
|
950
|
Veeva Systems, Inc., Class A (a)
|
165,537
|
|
Hotels, Restaurants & Leisure
- 5.4%
|
||
|
81
|
Chipotle Mexican Grill, Inc. (a)
|
253,491
|
|
2,136
|
Shake Shack, Inc., Class A (a)
|
202,685
|
|
|
456,176
|
|
|
Household Durables - 2.6%
|
||
|
1,804
|
Toll Brothers, Inc.
|
219,439
|
|
Shares
|
Description
|
Value
|
|
|
||
|
Insurance - 5.4%
|
||
|
1,384
|
Allstate (The) Corp.
|
$231,848
|
|
2,225
|
Hartford Financial Services
Group (The), Inc.
|
230,176
|
|
|
462,024
|
|
|
Interactive Media & Services
- 5.6%
|
||
|
1,583
|
Alphabet, Inc., Class A (a)
|
273,068
|
|
440
|
Meta Platforms, Inc., Class A
|
205,405
|
|
|
478,473
|
|
|
IT Services - 1.4%
|
||
|
15,528
|
Fastly, Inc., Class A (a)
|
121,739
|
|
Personal Care Products -
2.3%
|
||
|
1,070
|
elf Beauty, Inc. (a)
|
199,994
|
|
Semiconductors &
Semiconductor Equipment
- 10.3%
|
||
|
232
|
Lam Research Corp.
|
216,326
|
|
297
|
Monolithic Power Systems, Inc.
|
218,482
|
|
241
|
NVIDIA Corp.
|
264,216
|
|
1,837
|
Qorvo, Inc. (a)
|
180,742
|
|
|
879,766
|
|
|
Software - 17.9%
|
||
|
1,338
|
Check Point Software
Technologies Ltd. (a)
|
201,369
|
|
663
|
Crowdstrike Holdings, Inc.,
Class A (a)
|
207,963
|
|
3,059
|
Fortinet, Inc. (a)
|
181,460
|
|
1,897
|
Guidewire Software, Inc. (a)
|
216,106
|
|
352
|
HubSpot, Inc. (a)
|
215,090
|
|
851
|
Manhattan Associates, Inc. (a)
|
186,829
|
|
4,036
|
Rapid7, Inc. (a)
|
145,861
|
|
714
|
Salesforce, Inc.
|
167,390
|
|
|
1,522,068
|
|
|
Specialized REITs - 2.2%
|
||
|
242
|
Equinix, Inc.
|
184,641
|
|
Technology Hardware, Storage
& Peripherals - 5.3%
|
||
|
1,271
|
Apple, Inc.
|
244,350
|
|
11,786
|
Hewlett Packard Enterprise Co.
|
208,023
|
|
|
452,373
|
See Notes to Financial Statements
Page 1
FT Raymond James Multicap Growth Equity ETF (RJMG)Portfolio of Investments (Continued)May 31, 2024
|
Shares
|
Description
|
Value
|
|
COMMON STOCKS (Continued)
|
||
|
Textiles, Apparel & Luxury
Goods - 1.7%
|
||
|
471
|
Lululemon Athletica, Inc. (a)
|
$146,947
|
|
Total Investments - 100.0%
|
8,519,283
|
|
|
(Cost $8,580,942)
|
||
|
Net Other Assets and
Liabilities - 0.0%
|
3,758
|
|
|
Net Assets - 100.0%
|
$8,523,041
|
|
(a)
|
Non-income producing security.
|
|
Abbreviations throughout the Portfolio of Investments:
|
|
|
REITs
|
- Real Estate Investment Trusts
|
Valuation Inputs
A summary of the inputs used to value the Fund's investments as of May 31, 2024 is as follows (see Note 2A- Portfolio Valuation in the Notes to Financial Statements):
|
|
Total
Value at
5/31/2024
|
Level 1
Quoted
Prices
|
Level 2
Significant
Observable
Inputs
|
Level 3
Significant
Unobservable
Inputs
|
|
Common Stocks*
|
$ 8,519,283
|
$ 8,519,283
|
$ -
|
$ -
|
|
*
|
See Portfolio of Investments for industry breakout.
|
See Notes to Financial Statements
Page 2
FT Raymond James Multicap Growth Equity ETF (RJMG)
Statement of Assets and Liabilities
May 31, 2024
|
ASSETS:
|
|
|
Investments, at value
|
$8,519,283
|
|
Cash
|
7,130
|
|
Dividends receivable
|
2,783
|
|
Total Assets
|
8,529,196
|
|
|
|
|
LIABILITIES:
|
|
|
Investment advisory fees payable
|
6,155
|
|
Total Liabilities
|
6,155
|
|
NET ASSETS
|
$8,523,041
|
|
|
|
|
NET ASSETS consist of:
|
|
|
Paid-in capital
|
$8,674,226
|
|
Par value
|
4,000
|
|
Accumulated distributable earnings (loss)
|
(155,185)
|
|
NET ASSETS
|
$8,523,041
|
|
NET ASSET VALUE,per share
|
$21.31
|
|
Number of shares outstanding (unlimited number of shares authorized, par value $0.01 per share)
|
400,002
|
|
Investments, at cost
|
$8,580,942
|
See Notes to Financial Statements
Page 3
FT Raymond James Multicap Growth Equity ETF (RJMG)
Statement of Operations
For the Period Ended May 31, 2024 (a)
|
INVESTMENT INCOME:
|
|
|
Dividends
|
$10,355
|
|
Total investment income
|
10,355
|
|
|
|
|
EXPENSES:
|
|
|
Investment advisory fees
|
18,472
|
|
Total expenses
|
18,472
|
|
NET INVESTMENT INCOME (LOSS)
|
(8,117)
|
|
|
|
|
NET REALIZED AND UNREALIZED GAIN (LOSS):
|
|
|
Net realized gain (loss) on:
|
|
|
Investments
|
(96,550)
|
|
In-kind redemptions
|
230,268
|
|
Net realized gain (loss)
|
133,718
|
|
Net change in unrealized appreciation (depreciation) on investments
|
(61,659)
|
|
NET REALIZED AND UNREALIZED GAIN (LOSS)
|
72,059
|
|
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
|
$63,942
|
|
(a)
|
Inception date is January 17, 2024, which is consistent with the commencement of investment operations and is the date the initial
creation units were established.
|
See Notes to Financial Statements
Page 4
FT Raymond James Multicap Growth Equity ETF (RJMG)
Statement of Changes in Net Assets
|
|
Period
Ended
5/31/2024 (a)
|
|
OPERATIONS:
|
|
|
Net investment income (loss)
|
$(8,117)
|
|
Net realized gain (loss)
|
133,718
|
|
Net change in unrealized appreciation (depreciation)
|
(61,659)
|
|
Net increase (decrease) in net assets resulting from operations
|
63,942
|
|
|
|
|
SHAREHOLDER TRANSACTIONS:
|
|
|
Proceeds from shares sold
|
10,652,261
|
|
Cost of shares redeemed
|
(2,193,162)
|
|
Net increase (decrease) in net assets resulting from shareholder transactions
|
8,459,099
|
|
Total increase (decrease) in net assets
|
8,523,041
|
|
|
|
|
NET ASSETS:
|
|
|
Beginning of period
|
-
|
|
End of period
|
$8,523,041
|
|
|
|
|
CHANGES IN SHARES OUTSTANDING:
|
|
|
Shares outstanding, beginning of period
|
-
|
|
Shares sold
|
500,002
|
|
Shares redeemed
|
(100,000)
|
|
Shares outstanding, end of period
|
400,002
|
|
(a)
|
Inception date is January 17, 2024, which is consistent with the commencement of investment operations and is the date the initial
creation units were established.
|
See Notes to Financial Statements
Page 5
FT Raymond James Multicap Growth Equity ETF (RJMG)
Financial Highlights
For a share outstanding throughout the period
|
|
Period
Ended
5/31/2024 (a)
|
|
|
|
|
Net asset value, beginning of period
|
$19.96
|
|
Income from investment operations:
|
|
|
Net investment income (loss) (b)
|
(0.03
)
|
|
Net realized and unrealized gain (loss)
|
1.38
|
|
Total from investment operations
|
1.35
|
|
Net asset value, end of period
|
$21.31
|
|
Total return(c)
|
6.76
%
|
|
|
|
|
Ratios to average net assets/supplemental data:
|
|
|
Net assets, end of period (in 000's)
|
$8,523
|
|
Ratio of total expenses to average net assets
|
0.85
% (d)
|
|
Ratio of net investment income (loss) to average net assets
|
(0.37
)% (d)
|
|
Portfolio turnover rate (e)
|
34
%
|
|
(a)
|
Inception date is January 17, 2024, which is consistent with the commencement of investment operations and is the date the initial creation units
were established.
|
|
(b)
|
Based on average shares outstanding.
|
|
(c)
|
Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The return presented does not
reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods of less than a year.
|
|
(d)
|
Annualized.
|
|
(e)
|
Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions and in-kind transactions.
|
See Notes to Financial Statements
Page 6
Notes to Financial Statements
FT Raymond James Multicap Growth Equity ETF (RJMG)May 31, 2024
1. Organization
First Trust Exchange-Traded Fund VIII (the "Trust") is an open-end management investment company organized as a Massachusetts business trust on February 22, 2016, and is registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended (the "1940 Act").
This report covers the FT Raymond James Multicap Growth Equity ETF (the "Fund"), a non-diversified series of the Trust, which trades under the ticker "RJMG" on NYSE Arca, Inc. The Fund represents a separate series of shares of beneficial interest in the Trust. Unlike conventional mutual funds, the Fund issues and redeems shares on a continuous basis, at net asset value ("NAV"), only in large blocks of shares known as "Creation Units."
The Fund is an actively managed exchange-traded fund. The Fund seeks to provide long-term capital appreciation. Under normal market conditions, the Fund will invest at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of growth companies, as identified by the Fund's sub-advisor, Raymond James & Associates, Inc. ("Raymond James" or the "Sub-Advisor").There can be no assurances that the Fund will achieve its investment objective. The Fund may not be appropriate for all investors.
2. Significant Accounting Policies
The Fund is considered an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board Accounting Standards Codification Topic 946, "Financial Services-Investment Companies." The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of the financial statements. The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
A. Portfolio Valuation
The Fund's NAV is determined daily as of the close of regular trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m. Eastern time, on each day the NYSE is open for trading. If the NYSE closes early on a valuation day, the NAV is determined as of that time. The Fund's NAV is calculated by dividing the value of all assets of the Fund (including accrued interest and dividends), less all liabilities (including accrued expenses and dividends declared but unpaid), by the total number of shares outstanding.
The Fund's investments are valued daily at market value or, in the absence of market value with respect to any portfolio securities, at fair value. Market value prices represent readily available market quotations such as last sale or official closing prices from a national or foreign exchange (i.e., a regulated market) and are primarily obtained from third-party pricing services. Fair value prices represent any prices not considered market value prices and are either obtained from a third-party pricing service or are determined by the Pricing Committee of the Fund's investment advisor, First Trust Advisors L.P. ("First Trust" or the "Advisor"), in accordance with valuation procedures approved by the Trust's Board of Trustees, and in accordance with provisions of the 1940 Act and rules thereunder. Investments valued by the Advisor's Pricing Committee, if any, are footnoted as such in the footnotes to the Portfolio of Investments. The Fund's investments are valued as follows:
Common stocks and other equity securities listed on any national or foreign exchange (excluding Nasdaq, Inc. ("Nasdaq") and the London Stock Exchange Alternative Investment Market ("AIM")) are valued at the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing price. Securities traded on more than one securities exchange are valued at the last sale price or official closing price, as applicable, at the close of the securities exchange representing the primary exchange for such securities.
Equity securities traded in an over-the-counter market are valued at the close price or the last trade price.
Certain securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by the Advisor's Pricing Committee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended) for which a third-party pricing service is unable to provide a market price; securities whose trading has been formally suspended; a security whose market or fair value price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of the Fund's NAV or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the third-party pricing service, does not
Page 7
Notes to Financial Statements (Continued)
FT Raymond James Multicap Growth Equity ETF (RJMG)May 31, 2024
reflect the security's fair value. As a general principle, the current fair value of a security would appear to be the amount which the owner might reasonably expect to receive for the security upon its current sale. When fair value prices are used, generally they will differ from market quotations or official closing prices on the applicable exchanges. A variety of factors may be considered in determining the fair value of such securities, including, but not limited to, the following:
1)
the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing price;
2)
the type of security;
3)
the size of the holding;
4)
the initial cost of the security;
5)
transactions in comparable securities;
6)
price quotes from dealers and/or third-party pricing services;
7)
relationships among various securities;
8)
information obtained by contacting the issuer, analysts, or the appropriate stock exchange;
9)
an analysis of the issuer's financial statements;
10)
the existence of merger proposals or tender offers that might affect the value of the security; and
11)
other relevant factors.
The Fund is subject to fair value accounting standards that define fair value, establish the framework for measuring fair value and provide a three-level hierarchy for fair valuation based upon the inputs to the valuation as of the measurement date. The three levels of the fair value hierarchy are as follows:
• Level 1 - Level 1 inputs are quoted prices in active markets for identical investments. An active market is a market in which transactions for the investment occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
• Level 2 - Level 2 inputs are observable inputs, either directly or indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets that are non-active. A non-active market is a market where there are few transactions for the investment, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly.
o Inputs other than quoted prices that are observable for the investment (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates).
o Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
• Level 3 - Level 3 inputs are unobservable inputs. Unobservable inputs may reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing the investment.
The inputs or methodologies used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. A summary of the inputs used to value the Fund's investments as of May 31, 2024, is included with the Fund's Portfolio of Investments.
B. Securities Transactions and Investment Income
Securities transactions are recorded as of the trade date. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income, if any, is recorded on the accrual basis.
Distributions received from the Fund's investments in real estate investment trusts ("REITs") may be comprised of return of capital, capital gains, and income. The actual character of the amounts received during the year are not known until after the REITs' fiscal year end. The Fund records the character of distributions received from the REITs during the year based on estimates available. The characterization of distributions received by the Fund may be subsequently revised based on information received from the REITs after their tax reporting periods conclude.
C. Dividends and Distributions to Shareholders
Dividends from net investment income of the Fund, if any, are declared and paid quarterly, or as the Board of Trustees may determine from time to time. Distributions of net realized capital gains earned by the Fund, if any, are distributed at least annually. The Fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
Page 8
Notes to Financial Statements (Continued)
FT Raymond James Multicap Growth Equity ETF (RJMG)May 31, 2024
Distributions from net investment income and realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These permanent differences are primarily due to the varying treatment of income and gain/loss on portfolio securities held by the Fund and have no impact on net assets or NAV per share. Temporary differences, which arise from recognizing certain items of income, expense and gain/loss in different periods for financial statement and tax purposes, will reverse at some time in the future.
There were no distributions paid during the fiscal period ended May 31, 2024.
As of May 31, 2024, the components of distributable earnings on a tax basis for the Fund were as follows:
|
Undistributed ordinary income
|
$-
|
|
Accumulated capital and other gain (loss)
|
(72,904
)
|
|
Net unrealized appreciation (depreciation)
|
(82,281
)
|
D. Income Taxes
The Fund intends to qualify as a regulated investment company by complying with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, which includes distributing substantially all of its net investment income and net realized gains to shareholders. Accordingly, no provision has been made for federal and state income taxes. However, due to the timing and amount of distributions, the Fund may be subject to an excise tax of 4% of the amount by which approximately 98% of the Fund's taxable income exceeds the distributions from such taxable income for the calendar year.
The Fund is subject to accounting standards that establish a minimum threshold for recognizing, and a system for measuring, the benefits of a tax position taken or expected to be taken in a tax return. The taxable period ended May 31, 2024 remains open to federal and state audit. As of May 31, 2024, management has evaluated the application of these standards to the Fund and has determined that no provision for income tax is required in the Fund's financial statements for uncertain tax positions.
The Fund intends to utilize provisions of the federal income tax laws, which allow it to carry a realized capital loss forward indefinitely following the year of the loss and offset such loss against any future realized capital gains. The Fund is subject to certain limitations under U.S. tax rules on the use of capital loss carryforwards and net unrealized built-in losses. These limitations apply when there has been a 50% change in ownership. At May 31, 2024, for federal income tax purposes, the Fund had $72,904 of non-expiringcapital loss carryforwards available, to the extent provided by regulations, to offset future capital gains. To the extent that these loss carryforwards are used to offset future capital gains, it is probable that the capital gains so offset will not be distributed to the Fund's shareholders.
In order to present paid-in capital and accumulated distributable earnings (loss) (which consists of accumulated net investment income (loss), accumulated net realized gain (loss) on investments and net unrealized appreciation (depreciation) on investments) on the Statement of Assets and Liabilities that more closely represent their tax character, certain adjustments have been made to paid-in capital, accumulated net investment income (loss) and accumulated net realized gain (loss) on investments. These adjustments are primarily due to the difference between book and tax treatments of income and gains on various investment securities held by the Fund and in-kind transactions. The results of operations and net assets were not affected by these adjustments. For the fiscal period ended May 31, 2024, the adjustments for the Fund were as follows:
|
Accumulated
Net Investment
Income (Loss)
|
Accumulated
Net Realized
Gain (Loss)
on Investments
|
Paid-In
Capital
|
|
$8,117
|
$(227,244
)
|
$219,127
|
Page 9
Notes to Financial Statements (Continued)
FT Raymond James Multicap Growth Equity ETF (RJMG)May 31, 2024
As of May 31, 2024, the aggregate cost, gross unrealized appreciation, gross unrealized depreciation, and net unrealized appreciation/(depreciation) on investments (including short positions and derivatives, if any) for federal income tax purposes were as follows:
|
Tax Cost
|
Gross
Unrealized
Appreciation
|
Gross
Unrealized
(Depreciation)
|
Net Unrealized
Appreciation
(Depreciation)
|
|
$8,601,564
|
$502,933
|
$(585,214
)
|
$(82,281
)
|
E. Expenses
Expenses, other than the investment advisory fee and other excluded expenses, are paid by the Advisor (see Note 3).
3. Investment Advisory Fee, Affiliated Transactions and Other Fee Arrangements
First Trust, the investment advisor to the Fund, is a limited partnership with one limited partner, Grace Partners of DuPage L.P., and one general partner, The Charger Corporation. The Charger Corporation is an Illinois corporation controlled by James A. Bowen, Chief Executive Officer of First Trust. First Trust is responsible for the selection and ongoing monitoring of the securities in the Fund's portfolio, managing the Fund's business affairs and providing certain administrative services necessary for the management of the Fund.
Pursuant to the Investment Management Agreement between the Trust and the Advisor, First Trust manages the investment of the Fund's portfolio based on recommendations provided by the Sub-Advisor and is responsible for the Fund's expenses, including the cost of transfer agency, custody, fund administration, legal, audit, and other services, but excluding fee payments under the Investment Management Agreement, interest, taxes, acquired fund fees and expenses, if any, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution and service fees payable pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses. The annual unitary management fee payable by the Fund to First Trust for these services will be reduced at certain levels of the Fund's net assets ("breakpoints") and calculated pursuant to the following schedule:
|
Breakpoints
|
|
|
Fund net assets up to and including $2.5 billion
|
0.85000
%
|
|
Fund net assets greater than $2.5 billion up to and including $5 billion
|
0.82875
%
|
|
Fund net assets greater than $5 billion up to and including $7.5 billion
|
0.80750
%
|
|
Fund net assets greater than $7.5 billion up to and including $10 billion
|
0.78625
%
|
|
Fund net assets greater than $10 billion up to and including $15 billion
|
0.76500
%
|
|
Fund net assets greater than $15 billion
|
0.72250
%
|
The Trust, on behalf of the Fund, and First Trust have retained Raymond James to serve as non-discretionary investment sub-advisor pursuant to a sub-advisory agreement (the "Sub-Advisory Agreement"). In this capacity, Raymond James is responsible for providing recommendations to First Trust regarding the selection and allocation of the securities in the Fund's portfolio. Pursuant to the Sub-AdvisoryAgreement, the Advisor has agreed to pay for the services and facilities provided by the Sub-Advisor through sub-advisory fees. The Sub-Advisor receives a sub-advisory fee equal to an annual rate of 0.30% of the Fund's average daily net assets. The Sub-Advisor'sfees are paid by the Advisor out of the Advisor's management fee.
The Trust has multiple service agreements with The Bank of New York Mellon ("BNYM"). Under the service agreements, BNYM performs custodial, fund accounting, certain administrative services, and transfer agency services for the Fund. As custodian, BNYM is responsible for custody of the Fund's assets. As fund accountant and administrator, BNYM is responsible for maintaining the books and records of the Fund's securities and cash. As transfer agent, BNYM is responsible for maintaining shareholder records for the Fund. BNYM is a subsidiary of The Bank of New York Mellon Corporation, a financial holding company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor or any of their affiliates ("Independent Trustees") is paid a fixed annual retainer that is allocated equally among each fund in the First Trust Fund Complex. Each Independent Trustee is also paid an annual per fund fee that varies based on whether the fund is a closed-end or other actively managed fund, a target outcome fund or an index fund.
Additionally, the Chairs of the Audit Committee, Nominating and Governance Committee and Valuation Committee, the Vice Chair of the Audit Committee, the Lead Independent Trustee and the Vice Lead Independent Trustee are paid annual fees to serve in such
Page 10
Notes to Financial Statements (Continued)
FT Raymond James Multicap Growth Equity ETF (RJMG)May 31, 2024
capacities, with such compensation allocated pro rata among each fund in the First Trust Fund Complex based on net assets. Independent Trustees are reimbursed for travel and out-of-pocket expenses in connection with all meetings. The Committee Chairs, the Audit Committee Vice Chair, the Lead Independent Trustee and the Vice Lead Independent Trustee rotate periodically in serving in such capacities. The officers and "Interested" Trustee receive no compensation from the Trust for acting in such capacities.
4. Purchases and Sales of Securities
For the fiscal period ended May 31, 2024, the cost of purchases and proceeds from sales of investments, excluding short-term investments and in-kind transactions, were $1,805,761 and $1,784,155, respectively.
For the fiscal period ended May 31, 2024, the cost of in-kind purchases and proceeds from in-kind sales were $10,615,333 and $2,189,052, respectively.
5. Creations, Redemptions and Transaction Fees
The Fund generally issues and redeems its shares in primary market transactions through a creation and redemption mechanism and does not sell or redeem individual shares. Instead, financial entities known as "Authorized Participants" have contractual arrangements with the Fund or one of the Fund's service providers to purchase and redeem Fund shares directly with the Fund in Creation Units. Prior to the start of trading on every business day, the Fund publishes through the National Securities Clearing Corporation the "basket" of securities, cash or other assets that it will accept in exchange for a Creation Unit of the Fund's shares. An Authorized Participant that wishes to effectuate a creation of the Fund's shares deposits with the Fund the "basket" of securities, cash or other assets identified by the Fund that day, and then receives the Creation Unit of the Fund's shares in return for those assets. After purchasing a Creation Unit, the Authorized Participant may continue to hold the Fund's shares or sell them in the secondary market. The redemption process is the reverse of the purchase process: the Authorized Participant redeems a Creation Unit of the Fund's shares for a basket of securities, cash or other assets. The combination of the creation and redemption process with secondary market trading in the Fund's shares and underlying securities provides arbitrage opportunities that are designed to help keep the market price of the Fund's shares at or close to the NAV per share of the Fund.
The Fund imposes fees in connection with the purchase of Creation Units. These fees may vary based upon various fact-based circumstances, including, but not limited to, the composition of the securities included in the Creation Unit or the countries in which the transactions are settled. The price for each Creation Unit will equal the daily NAV per share of the Fund times the number of shares in a Creation Unit, plus the fees described above and, if applicable, any operational processing and brokerage costs, transfer fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the securities comprising the creation basket.
The Fund also imposes fees in connection with the redemption of Creation Units. These fees may vary based upon various fact-based circumstances, including, but not limited to, the composition of the securities included in the Creation Unit or the countries in which the transactions are settled. The price received for each Creation Unit will equal the daily NAV per share of the Fund times the number of shares in a Creation Unit, minus the fees described above and, if applicable, any operational processing and brokerage costs, transfer fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the securities comprising the redemption basket. Investors who use the services of a broker or other such intermediary in addition to an Authorized Participant to effect a redemption of a Creation Unit may also be assessed an amount to cover the cost of such services. The redemption fee charged by the Fund will comply with Rule 22c-2 of the 1940 Act which limits redemption fees to no more than 2% of the value of the shares redeemed.
6. Distribution Plan
The Board of Trustees adopted a Distribution and Service Plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with the Rule 12b-1 plan, the Fund is authorized to pay an amount up to 0.25% of its average daily net assets each year to reimburse First Trust Portfolios L.P. ("FTP"), the distributor of the Fund, for amounts expended to finance activities primarily intended to result in the sale of Creation Units or the provision of investor services. FTP may also use this amount to compensate securities dealers or other persons that are Authorized Participants for providing distribution assistance, including broker-dealer and shareholder support and educational and promotional services.
No 12b-1 fees are currently paid by the Fund, and pursuant to a contractual arrangement, no 12b-1 fees will be paid any time before January 12, 2026.
Page 11
Notes to Financial Statements (Continued)
FT Raymond James Multicap Growth Equity ETF (RJMG)May 31, 2024
7. Indemnification
The Trust, on behalf of the Fund, has a variety of indemnification obligations under contracts with its service providers. The Trust's maximum exposure under these arrangements is unknown. However, the Trust has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
8. Subsequent Events
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements that have not already been disclosed.
Page 12
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Trustees of First Trust Exchange-Traded Fund VIII:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of FT Raymond James Multicap Growth Equity ETF (the "Fund"), one of the funds constituting the First Trust Exchange-Traded Fund VIII, as of May 31, 2024, the related statements of operations, changes in net assets, and the financial highlights for the period from January 17, 2024 (commencement of investment operations) through May 31, 2024, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of May 31, 2024, and the results of its operations, the changes in its net assets, and the financial highlights for the period from January 17, 2024 (commencement of investment operations) through May 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements and financial highlights based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of May 31, 2024, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audit provides a reasonable basis for our opinion.
/s/ Deloitte & Touche, LLP
Chicago, Illinois
July 23, 2024
July 23, 2024
We have served as the auditor of one or more First Trust investment companies since 2001.
Page 13
Other Information
FT Raymond James Multicap Growth Equity ETF (RJMG)May 31, 2024 (Unaudited)
Changes in and Disagreements with Accountants (Item 8 of Form N-CSR)
There were no changes in or disagreements with the Fund's accountants during the period ended May 31, 2024.
Proxy Disclosures (Item 9 of Form N-CSR)
There were no matters submitted for vote by shareholders of the Fund during the period ended May 31, 2024.
Remuneration Paid to Directors, Officers, and Others (Item 10 of Form N-CSR)
Directors, officers, and any member of any advisory board of the Fund are compensated through the unitary management fee paid by the Fund to the advisor and not directly by the Fund. The investment advisory fee paid is included in the Financial Statements.
Statement Regarding the Basis for the Board's Approval of Investment Advisory Contract (Item 11 of Form N-CSR)
The Board of Trustees of First Trust Exchange-Traded Fund VIII (the "Trust"), including the Independent Trustees, approved the Investment Management Agreement (the "Advisory Agreement") with First Trust Advisors L.P. (the "Advisor"), on behalf of FT Raymond James Multicap Growth Equity ETF (the "Fund"), and the Investment Sub-Advisory Agreement (the "Sub-Advisory Agreement" and together with the Advisory Agreement, the "Agreements") among the Trust, on behalf of the Fund, the Advisor and Raymond James & Associates, Inc. (the "Sub-Advisor"), for an initial two-year term at a meeting held on December 11, 2023. The Board determined that the Agreements are in the best interests of the Fund in light of the nature, extent and quality of the services expected to be provided and such other matters as the Board considered to be relevant in the exercise of its business judgment.
To reach this determination, the Board considered its duties under the Investment Company Act of 1940, as amended (the "1940 Act"), as well as under the general principles of state law, in reviewing and approving advisory contracts; the requirements of the 1940 Act in such matters; the fiduciary duty of investment advisors with respect to advisory agreements and compensation; the standards used by courts in determining whether investment company boards have fulfilled their duties; and the factors to be considered by the Board in voting on such agreements. To assist the Board in its evaluation of the Agreements for the Fund, the Independent Trustees received a separate report from each of the Advisor and the Sub-Advisor in advance of the Board meeting responding to requests for information from counsel to the Independent Trustees, submitted on behalf of the Independent Trustees, that, among other things, outlined: the services to be provided by the Advisor and the Sub-Advisor to the Fund (including the relevant personnel responsible for these services and their experience); the proposed unitary fee rate schedule payable by the Fund as compared to fees charged to a peer group of funds (the "Expense Group") and a broad peer universe of funds (the "Expense Universe"), each assembled by Broadridge Financial Solutions, Inc. ("Broadridge"), an independent source, and as compared to fees charged to other exchange-traded funds ("ETFs") managed by the Advisor; the proposed sub-advisory fee as compared to fees charged to other clients of the Sub-Advisor; the estimated expense ratio of the Fund as compared to expense ratios of the funds in the Fund's Expense Group and Expense Universe; the nature of expenses to be incurred in providing services to the Fund and the potential for the Advisor and the Sub-Advisor to realize economies of scale, if any; profitability and other financial data for the Advisor; financial data for the Sub-Advisor; any indirect benefits to the Advisor and its affiliate, First Trust Portfolios L.P. ("FTP"), and the Sub-Advisor; and information on the Advisor's and the Sub-Advisor's compliance programs. The Independent Trustees and their counsel also met separately to discuss the information provided by the Advisor and the Sub-Advisor. The Board applied its business judgment to determine whether the arrangements between the Trust and the Advisor and among the Trust, the Advisor and the Sub-Advisor are reasonable business arrangements from the Fund's perspective.
In evaluating whether to approve the Agreements for the Fund, the Board considered the nature, extent and quality of the services to be provided by the Advisor and the Sub-Advisor under the Agreements. With respect to the Advisory Agreement, the Board considered that the Advisor will be responsible for the overall management and administration of the Fund and reviewed all of the services to be provided by the Advisor to the Fund, including the oversight of the Sub-Advisor, as well as the background and experience of the persons responsible for such services. The Board considered that the Fund will be an actively-managed ETF and will employ an advisor/sub-advisor management structure and considered that the Advisor manages other ETFs with a similar structure in the First Trust Fund Complex. The Board noted that the Sub-Advisor will act as a non-discretionary manager providing model portfolio recommendations to the Advisor, and the Advisor will execute the Fund's portfolio trades. The Board considered that the Advisor will oversee the management of the Fund's investments, including portfolio risk monitoring and performance review. In reviewing the services to be provided, the Board noted the compliance program that had been developed by the Advisor and considered that it includes a robust program for monitoring the Advisor's, the Sub-Advisor's and the Fund's compliance with the 1940 Act, as well as the Fund's compliance with its investment objective, policies and restrictions. The Board noted that employees of the Advisor provide management services to other ETFs and to other funds in the First Trust Fund Complex with diligence and care. With
Page 14
Other Information (Continued)
FT Raymond James Multicap Growth Equity ETF (RJMG)May 31, 2024 (Unaudited)
respect to the Sub-Advisory Agreement, the Board reviewed the materials provided by the Sub-Advisor and noted the background and experience of the Sub-Advisor's portfolio management team and the Sub-Advisor's investment style. At the December 11, 2023 meeting, the Trustees received presentations from representatives of the Advisor and the Sub-Advisor, and were able to ask questions about the Sub-Advisor and the proposed investment strategy for the Fund. Because the Fund had yet to commence investment operations, the Board could not consider the historical investment performance of the Fund; however, the Board considered the historical performance composite of the investment strategy that will be used by the Sub-Advisor to create a model portfolio for the Fund. In light of the information presented and the considerations made, the Board concluded that the nature, extent and quality of the services to be provided to the Fund by the Advisor and the Sub-Advisor under the Agreements are expected to be satisfactory.
The Board considered the proposed unitary fee rate schedule payable by the Fund under the Advisory Agreement for the services to be provided. The Board noted that, under the unitary fee arrangement, the Fund would pay the Advisor a unitary fee starting at an annual rate of 0.85% of its average daily net assets, subject to a breakpoint schedule pursuant to which the unitary fee rate would be reduced as assets of the Fund meet certain thresholds. The Board considered that, from the unitary fee for the Fund, the Advisor would pay the Sub-Advisor a sub-advisory fee equal to an annual rate of 0.30% of the Fund's average daily net assets. The Board noted that the Advisor would be responsible for the Fund's expenses, including the cost of sub-advisory, transfer agency, custody, fund administration, legal, audit and other services and license fees, if any, but excluding the fee payment under the Advisory Agreement and interest, taxes, acquired fund fees and expenses, if any, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution and service fees pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses, if any. The Board received and reviewed information showing the fee rates and expense ratios of the peer funds in the Expense Group, as well as advisory and unitary fee rates charged by the Advisor and the Sub-Advisor to other fund (including ETF) and non-fund clients, as applicable. Because the Fund will pay a unitary fee, the Board determined that expense ratios were the most relevant comparative data point. Based on the information provided, the Board noted that the total (net) expense ratio for the Fund was above the median total (net) expense ratio of the peer funds in the Expense Group. With respect to the Expense Group, the Board discussed with representatives of the Advisor how the Expense Group was assembled and how the Fund compared and differed from the peer funds. The Board took this information into account in considering the peer data. With respect to fees charged to other clients, the Board considered the Advisor's statement that the Fund will be unique to the ETF market and the First Trust Fund Complex, but will be most similar to two other actively-managed equity ETFs in the First Trust Fund Complex, each of which has a unitary fee rate schedule starting at an annual rate of 0.85% of its average daily net assets. In light of the information considered and the nature, extent and quality of the services expected to be provided to the Fund under the Agreements, the Board determined that the proposed unitary fee, including the sub-advisory fee to be paid by the Advisor to the Sub-Advisor from the unitary fee, was fair and reasonable.
The Board considered whether there are any potential economies of scale to be achieved in connection with the Advisor providing investment advisory services to the Fund and whether the Fund may benefit from any economies of scale. The Board noted that the proposed unitary fee rate schedule for the Fund includes breakpoints pursuant to which the unitary fee rate would be reduced as assets of the Fund meet certain thresholds. The Board considered that the Advisor has continued to build infrastructure and add new staff to improve the services to the funds in the First Trust Fund Complex. The Board also noted that under the unitary fee structure, any reduction in expenses associated with the management and operations of the Fund generally would benefit the Advisor, but that the unitary fee structure provides a level of certainty in expenses for shareholders of the Fund. The Board concluded that the proposed unitary fee rate schedule for the Fund reflects an appropriate level of sharing of any economies of scale that may be realized in the management of the Fund at reasonably foreseeable future asset levels. The Board considered that the Sub-Advisor would be paid by the Advisor from the Fund's unitary fee and its understanding that the sub-advisory fee for the Fund was the product of an arm's length negotiation. The Board took into consideration the types of costs to be borne by the Advisor in connection with its services to be performed for the Fund under the Advisory Agreement. The Board considered the Advisor's estimate of the asset level for the Fund at which the Advisor expects the Advisory Agreement to be profitable to the Advisor and the Advisor's estimate of the profitability of the Advisory Agreement if the Fund's assets reach $100 million. The Board noted the inherent limitations in the profitability analysis and concluded that, based on the information provided, the Advisor's estimated profitability level for the Fund was not unreasonable. The Board reviewed financial information provided by the Sub-Advisor, but did not review any potential profitability of the Sub-AdvisoryAgreement to the Sub-Advisor. The Board concluded that the profitability analysis for the Advisor was more relevant. In addition, the Board considered indirect benefits described by the Advisor that may be realized from its relationship with the Fund. The Board considered that the Advisor had identified as an indirect benefit to the Advisor and FTP their exposure to investors and brokers who, absent their exposure to the Fund, may have had no dealings with the Advisor or FTP. The Board also noted that the Advisor will be responsible for trade execution for the Fund and will not utilize soft dollars in connection with the Fund. The Board also considered the potential indirect benefits to the Sub-Advisor that may be realized from its relationship with the Fund. The Board concluded that
Page 15
Other Information (Continued)
FT Raymond James Multicap Growth Equity ETF (RJMG)May 31, 2024 (Unaudited)
the character and amount of potential indirect benefits to the Advisor and the Sub-Advisor were not unreasonable. The Board also noted descriptions from the Advisor and the Sub-Advisor of various pre-existing business relationships the Advisor has with the Sub-Advisorand its affiliates.
Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined that the terms of the Agreements are fair and reasonable and that the approval of the Agreements is in the best interests of the Fund. No single factor was determinative in the Board's analysis.
Remuneration Disclosure Under the Alternative Investment Fund Managers Directive
First Trust Advisors L.P. ("First Trust") is authorised and regulated by the U.S. Securities and Exchange Commission and is entitled to market shares of certain funds it manages, including FT Raymond James Multicap Growth Equity ETF (the "Fund"), in certain member states in the European Economic Area in accordance with the cooperation arrangements in Article 42 of the Alternative Investment Fund Managers Directive (the "Directive"). First Trust is required under the Directive to make disclosures in respect of remuneration. The following disclosures are made in line with First Trust's interpretation of currently available regulatory guidance on remuneration disclosures.
During the year ended December 31, 2023, the amount of remuneration paid (or to be paid) by First Trust Advisors L.P. in respect of the Fund is $4,042. This figure is comprised of $178 paid (or to be paid) in fixed compensation and $3,864 paid (or to be paid) in variable compensation. There were a total of 26 beneficiaries of the remuneration described above. Those amounts include $2,019 paid (or to be paid) to senior management of First Trust Advisors L.P. and $2,023 paid (or to be paid) to other employees whose professional activities have a material impact on the risk profiles of First Trust Advisors L.P. or the Fund (collectively, "Code Staff").
Code Staff included in the aggregated figures disclosed above are rewarded in line with First Trust's remuneration policy (the "Remuneration Policy") which is determined and implemented by First Trust's senior management. The Remuneration Policy reflects First Trust's ethos of good governance and encapsulates the following principal objectives:
i.
to provide a clear link between remuneration and performance of First Trust and to avoid rewarding for failure;
ii.
to promote sound and effective risk management consistent with the risk profiles of the funds managed by First Trust; and
iii.
to remunerate staff in line with the business strategy, objectives, values and interests of First Trust and the funds managed by First Trust in a manner that avoids conflicts of interest.
First Trust assesses various risk factors which it is exposed to when considering and implementing remuneration for Code Staff and considers whether any potential award to such person(s) would give rise to a conflict of interest. First Trust does not reward failure, or consider the taking of risk or failure to take risk in its remuneration of Code Staff.
First Trust assesses performance for the purposes of determining payments in respect of performance-related remuneration of Code Staff by reference to a broad range of measures including (i) individual performance (using financial and non-financial criteria), and (ii) the overall performance of First Trust. Remuneration is not based upon the performance of the Fund.
The elements of remuneration are balanced between fixed and variable and the senior management sets fixed salaries at a level sufficient to ensure that variable remuneration incentivises and rewards strong individual performance but does not encourage excessive risk taking.
No individual is involved in setting his or her own remuneration.
Federal Tax Information
There were no distributions made by RJMG during the Fund's fiscal period ended May 31, 2024; therefore, no analysis for the corporate dividends received deduction and qualified dividend income was completed.
Page 16
|
Annual Financial
Statements and
Other Information
|
|
For the Period
March 26, 2024
(Commencement of Operations)
through May 31, 2024
|
First Trust Exchange-Traded Fund VIII
|
FT Vest U.S. Equity Max Buffer ETF - March (MARM)
|
Table of Contents
FT Vest U.S. Equity Max Buffer ETF - March (MARM)
Annual Financial Statements and Other Information
May 31, 2024
Annual Financial Statements and Other Information
May 31, 2024
|
Portfolio of Investments
|
1
|
|
Statement of Assets and Liabilities
|
3
|
|
Statement of Operations
|
4
|
|
Statement of Changes in Net Assets
|
5
|
|
Financial Highlights
|
6
|
|
Notes to Financial Statements
|
7
|
|
Report of Independent Registered Public Accounting Firm
|
14
|
|
Other Information
|
15
|
Performance and Risk Disclosure
There is no assurance that FT Vest U.S. Equity Max Buffer ETF - March (the "Fund") will achieve its investment objective. The Fund is subject to market risk, which is the possibility that the market values of securities owned by the Fund will decline and that the value of the Fund's shares may therefore be less than what you paid for them. Accordingly, you can lose money by investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, please visit www.ftportfolios.comor speak with your financial advisor. Investment returns, net asset value and share price will fluctuate and Fund shares, when sold, may be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund performance on the Fund's webpage at www.ftportfolios.com.
How to Read This Report
This report contains information that may help you evaluate your investment in the Fund. It includes details about the Fund and presents data that provides insight into the Fund's performance and investment approach.
The material risks of investing in the Fund are spelled out in its prospectus, statement of additional information, and other Fund regulatory filings.
FT Vest U.S. Equity Max Buffer ETF - March (MARM)Portfolio of InvestmentsMay 31, 2024
|
Shares
|
Description
|
Value
|
|
MONEY MARKET FUNDS - 1.0%
|
||
|
1,938,924
|
Dreyfus Government Cash Management Fund, Institutional Shares - 5.19% (a)
|
$1,938,924
|
|
(Cost $1,938,924)
|
||
|
Total Investments - 1.0%
|
1,938,924
|
|
|
(Cost $1,938,924)
|
|
Number of
Contracts
|
Description
|
Notional
Amount
|
Exercise
Price
|
Expiration
Date
|
Value
|
|
PURCHASED OPTIONS - 101.8%
|
|||||
|
Call Options Purchased - 98.5%
|
|||||
|
3,808
|
SPDR®S&P 500®ETF Trust
|
$200,822,496
|
$5.19
|
03/21/25
|
196,540,955
|
|
(Cost $191,759,557)
|
|
|
|||
|
Put Options Purchased - 3.3%
|
|||||
|
3,808
|
SPDR®S&P 500®ETF Trust
|
200,822,496
|
518.81
|
03/21/25
|
6,508,770
|
|
(Cost $9,182,649)
|
|
|
|||
|
Total Purchased Options
|
203,049,725
|
||||
|
(Cost $200,942,206)
|
|||||
|
WRITTEN OPTIONS - (2.7)%
|
|||||
|
Call Options Written - (2.7)%
|
|||||
|
(3,808)
|
SPDR®S&P 500®ETF Trust
|
(200,822,496
)
|
566.70
|
03/21/25
|
(5,343,763
)
|
|
(Premiums received $5,562,053)
|
|
|
|||
|
Net Other Assets and Liabilities - (0.1)%
|
(121,234
)
|
||||
|
Net Assets - 100.0%
|
$199,523,652
|
|
(a)
|
Rate shown reflects yield as of May 31, 2024.
|
|
Fund Allocation
|
% of
Net Assets
|
|
Money Market Funds
|
1.0%
|
|
Purchased Options
|
101.8
|
|
Written Options
|
(2.7)
|
|
Net Other Assets and Liabilities
|
(0.1)
|
|
Total
|
100.0%
|
See Notes to Financial Statements
Page 1
FT Vest U.S. Equity Max Buffer ETF - March (MARM)Portfolio of Investments (Continued)May 31, 2024
Valuation Inputs
A summary of the inputs used to value the Fund's investments as of May 31, 2024 is as follows (see Note 2A- Portfolio Valuation in the Notes to Financial Statements):
|
ASSETS TABLE
|
||||
|
|
Total
Value at
5/31/2024
|
Level 1
Quoted
Prices
|
Level 2
Significant
Observable
Inputs
|
Level 3
Significant
Unobservable
Inputs
|
|
Money Market Funds
|
$1,938,924
|
$1,938,924
|
$-
|
$-
|
|
Purchased Options
|
203,049,725
|
-
|
203,049,725
|
-
|
|
Total
|
$204,988,649
|
$1,938,924
|
$203,049,725
|
$-
|
|
LIABILITIES TABLE
|
||||
|
|
Total
Value at
5/31/2024
|
Level 1
Quoted
Prices
|
Level 2
Significant
Observable
Inputs
|
Level 3
Significant
Unobservable
Inputs
|
|
Written Options
|
$(5,343,763
)
|
$-
|
$(5,343,763
)
|
$-
|
See Notes to Financial Statements
Page 2
FT Vest U.S. Equity Max Buffer ETF - March (MARM)
Statement of Assets and Liabilities
May 31, 2024
|
ASSETS:
|
|
|
Investments, at value
|
$1,938,924
|
|
Options contracts purchased, at value
|
203,049,725
|
|
Dividends receivable
|
6,130
|
|
Total Assets
|
204,994,779
|
|
|
|
|
LIABILITIES:
|
|
|
Options contracts written, at value
|
5,343,763
|
|
Due to broker
|
142
|
|
Investment advisory fees payable
|
127,222
|
|
Total Liabilities
|
5,471,127
|
|
NET ASSETS
|
$199,523,652
|
|
|
|
|
NET ASSETS consist of:
|
|
|
Paid-in capital
|
$197,207,819
|
|
Par value
|
68,000
|
|
Accumulated distributable earnings (loss)
|
2,247,833
|
|
NET ASSETS
|
$199,523,652
|
|
NET ASSET VALUE,per share
|
$29.34
|
|
Number of shares outstanding (unlimited number of shares authorized, par value $0.01 per share)
|
6,800,002
|
|
Investments, at cost
|
$1,938,924
|
|
Premiums paid on options contracts purchased
|
$200,942,206
|
|
Premiums received on options contracts written
|
$5,562,053
|
See Notes to Financial Statements
Page 3
FT Vest U.S. Equity Max Buffer ETF - March (MARM)
Statement of Operations
For the Period Ended May 31, 2024 (a)
|
INVESTMENT INCOME:
|
|
|
Dividends
|
$6,130
|
|
Total investment income
|
6,130
|
|
|
|
|
EXPENSES:
|
|
|
Investment advisory fees
|
184,291
|
|
Total expenses
|
184,291
|
|
NET INVESTMENT INCOME (LOSS)
|
(178,161)
|
|
|
|
|
NET REALIZED AND UNREALIZED GAIN (LOSS):
|
|
|
Net realized gain (loss) on:
|
|
|
In-kind redemptions - Purchased options contracts
|
73,625
|
|
In-kind redemptions - Written options contracts
|
26,391
|
|
Net realized gain (loss)
|
100,016
|
|
Net change in unrealized appreciation (depreciation) on:
|
|
|
Purchased options contracts
|
2,107,519
|
|
Written options contracts
|
218,290
|
|
Net change in unrealized appreciation (depreciation)
|
2,325,809
|
|
NET REALIZED AND UNREALIZED GAIN (LOSS)
|
2,425,825
|
|
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
|
$2,247,664
|
|
(a)
|
Inception date is March 26, 2024, which is consistent with the commencement of investment operations and is the date the initial
creation units were established.
|
See Notes to Financial Statements
Page 4
FT Vest U.S. Equity Max Buffer ETF - March (MARM)
Statement of Changes in Net Assets
|
|
Period
Ended
5/31/2024 (a)
|
|
OPERATIONS:
|
|
|
Net investment income (loss)
|
$(178,161)
|
|
Net realized gain (loss)
|
100,016
|
|
Net change in unrealized appreciation (depreciation)
|
2,325,809
|
|
Net increase (decrease) in net assets resulting from operations
|
2,247,664
|
|
|
|
|
SHAREHOLDER TRANSACTIONS:
|
|
|
Proceeds from shares sold
|
199,455,651
|
|
Cost of shares redeemed
|
(2,179,663)
|
|
Net increase (decrease) in net assets resulting from shareholder transactions
|
197,275,988
|
|
Total increase (decrease) in net assets
|
199,523,652
|
|
|
|
|
NET ASSETS:
|
|
|
Beginning of period
|
-
|
|
End of period
|
$199,523,652
|
|
|
|
|
CHANGES IN SHARES OUTSTANDING:
|
|
|
Shares outstanding, beginning of period
|
-
|
|
Shares sold
|
6,875,002
|
|
Shares redeemed
|
(75,000)
|
|
Shares outstanding, end of period
|
6,800,002
|
|
(a)
|
Inception date is March 26, 2024, which is consistent with the commencement of investment operations and is the date the initial
creation units were established.
|
See Notes to Financial Statements
Page 5
FT Vest U.S. Equity Max Buffer ETF - March (MARM)
Financial Highlights
For a share outstanding throughout the period
|
|
Period
Ended
5/31/2024 (a)
|
|
|
|
|
Net asset value, beginning of period
|
$29.05
|
|
Income from investment operations:
|
|
|
Net investment income (loss) (b)
|
(0.04
)
|
|
Net realized and unrealized gain (loss)
|
0.33
|
|
Total from investment operations
|
0.29
|
|
Net asset value, end of period
|
$29.34
|
|
Total return(c)
|
1.00
%
|
|
|
|
|
Ratios to average net assets/supplemental data:
|
|
|
Net assets, end of period (in 000's)
|
$199,524
|
|
Ratio of total expenses to average net assets
|
0.85
% (d)
|
|
Ratio of net investment income (loss) to average net assets
|
(0.82
)% (d)
|
|
Portfolio turnover rate (e)
|
0
%
|
|
(a)
|
Inception date is March 26, 2024, which is consistent with the commencement of investment operations and is the date the initial creation units
were established.
|
|
(b)
|
Based on average shares outstanding.
|
|
(c)
|
Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all
distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The return presented does not
reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is
calculated for the time period presented and is not annualized for periods of less than a year.
|
|
(d)
|
Annualized.
|
|
(e)
|
Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities
received or delivered from processing creations or redemptions, derivatives and in-kind transactions.
|
See Notes to Financial Statements
Page 6
Notes to Financial Statements
FT Vest U.S. Equity Max Buffer ETF - March (MARM)May 31, 2024
1. Organization
First Trust Exchange-Traded Fund VIII (the "Trust") is an open-end management investment company organized as a Massachusetts business trust on February 22, 2016, and is registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended (the "1940 Act").
This report covers the FT Vest U.S. Equity Max Buffer ETF - March (the "Fund"), a non-diversified series of the Trust, which trades under the ticker "MARM" on Cboe BZX Exchange, Inc. The Fund represents a separate series of shares of beneficial interest in the Trust. Unlike conventional mutual funds, the Fund issues and redeems shares on a continuous basis, at net asset value ("NAV"), only in large blocks of shares known as "Creation Units."
The Fund is an actively managed exchange-traded fund ("ETF").
The investment objective of MARM is to seek to provide investors with returns (before fees and expenses) that match the price return of the SPDR®S&P 500®ETF Trust (the "Underlying ETF"), up to a predetermined upside cap while seeking to provide the maximum available buffer (before fees and expenses) against Underlying ETF losses over an approximate period of one year (the "Target Outcome Period"). Over the Target Outcome Period from March 27, 2024 through March 21, 2025, the Fund seeks to buffer against 100% of Underlying ETF losses and limit gains up to a predetermined upside cap of 9.23%. When the Fund's fees and expenses are taken into account, the cap is 8.39% and the buffer is 99.16%.
Under normal market conditions, the Fund will invest substantially all of its assets in FLexible EXchange®Options ("FLEX Options") that reference the price performance of the Underlying ETF.
2. Significant Accounting Policies
The Fund is considered an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board Accounting Standards Codification Topic 946, "Financial Services-Investment Companies." The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of the financial statements. The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
A. Portfolio Valuation
The Fund's NAV is determined daily as of the close of regular trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m. Eastern time, on each day the NYSE is open for trading. If the NYSE closes early on a valuation day, the NAV is determined as of that time. The Fund's NAV is calculated by dividing the value of all assets of the Fund (including accrued interest and dividends), less all liabilities (including accrued expenses and dividends declared but unpaid), by the total number of shares outstanding.
The Fund's investments are valued daily at market value or, in the absence of market value with respect to any portfolio securities, at fair value. Market value prices represent readily available market quotations such as last sale or official closing prices from a national or foreign exchange (i.e., a regulated market) and are primarily obtained from third-party pricing services. Fair value prices represent any prices not considered market value prices and are either obtained from a third-party pricing service or are determined by the Pricing Committee of the Fund's investment advisor, First Trust Advisors L.P. ("First Trust" or the "Advisor"), in accordance with valuation procedures approved by the Trust's Board of Trustees, and in accordance with provisions of the 1940 Act and rules thereunder. Investments valued by the Advisor's Pricing Committee, if any, are footnoted as such in the footnotes to the Portfolio of Investments. The Fund's investments are valued as follows:
Exchange-traded options contracts (other than FLEX Option contracts) are valued at the closing price in the market where such contracts are principally traded. If no closing price is available, exchange-traded options contracts are fair valued at the mean of their most recent bid and ask price, if both are available. Over-the-counter options contracts are valued as follows, depending on the market in which the instrument trades: (1) the mean of their most recent bid and ask price, if available; or (2) a price based on the equivalent exchange-traded option. FLEX Option contracts are normally valued using a model-based price provided by a third-party pricing vendor. On days when a trade in a FLEX Option contract occurs, the trade price will be used to value such FLEX Option contracts in lieu of the model price.
Page 7
Notes to Financial Statements (Continued)
FT Vest U.S. Equity Max Buffer ETF - March (MARM)May 31, 2024
Common stocks and other equity securities listed on any national or foreign exchange (excluding Nasdaq, Inc. ("Nasdaq") and the London Stock Exchange Alternative Investment Market ("AIM")) are valued at the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing price. Securities traded on more than one securities exchange are valued at the last sale price or official closing price, as applicable, at the close of the securities exchange representing the primary exchange for such securities.
Shares of open-end funds are valued based on NAV per share.
Certain securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by the Advisor's Pricing Committee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended) for which a third-party pricing service is unable to provide a market price; securities whose trading has been formally suspended; a security whose market or fair value price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of the Fund's NAV or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the third-party pricing service, does not reflect the security's fair value. As a general principle, the current fair value of a security would appear to be the amount which the owner might reasonably expect to receive for the security upon its current sale. When fair value prices are used, generally they will differ from market quotations or official closing prices on the applicable exchanges. A variety of factors may be considered in determining the fair value of such securities, including, but not limited to, the following:
1)
the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing price;
2)
the type of security;
3)
the size of the holding;
4)
the initial cost of the security;
5)
transactions in comparable securities;
6)
price quotes from dealers and/or third-party pricing services;
7)
relationships among various securities;
8)
information obtained by contacting the issuer, analysts, or the appropriate stock exchange;
9)
an analysis of the issuer's financial statements;
10)
the existence of merger proposals or tender offers that might affect the value of the security; and
11)
other relevant factors.
The Fund is subject to fair value accounting standards that define fair value, establish the framework for measuring fair value and provide a three-level hierarchy for fair valuation based upon the inputs to the valuation as of the measurement date. The three levels of the fair value hierarchy are as follows:
• Level 1 - Level 1 inputs are quoted prices in active markets for identical investments. An active market is a market in which transactions for the investment occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
• Level 2 - Level 2 inputs are observable inputs, either directly or indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets that are non-active. A non-active market is a market where there are few transactions for the investment, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly.
o Inputs other than quoted prices that are observable for the investment (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates).
o Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
• Level 3 - Level 3 inputs are unobservable inputs. Unobservable inputs may reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing the investment.
The inputs or methodologies used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. A summary of the inputs used to value the Fund's investments as of May 31, 2024, is included with the Fund's Portfolio of Investments.
Page 8
Notes to Financial Statements (Continued)
FT Vest U.S. Equity Max Buffer ETF - March (MARM)May 31, 2024
B. Securities Transactions and Investment Income
Securities transactions are recorded as of the trade date. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recorded on the ex-dividend date.
C. 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. FLEX Options are guaranteed for settlement by the Options Clearing Corporation.
The Fund purchases and sells call and put FLEX Options based on the performance of the Underlying ETF. The FLEX Options that the Fund holds that reference the Underlying ETF will give the Fund the right to receive or deliver shares of the Underlying ETF 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. All options held by the Fund at May 31, 2024 are FLEX Options.
D. Dividends and Distributions to Shareholders
Dividends from net investment income of the Fund, if any, are declared and paid annually, or as the Board of Trustees may determine from time to time. Distributions of net realized capital gains earned by the Fund, if any, are distributed at least annually. The Fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
Distributions from net investment income and realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These permanent differences are primarily due to the varying treatment of income and gain/loss on portfolio securities held by the Fund and have no impact on net assets or NAV per share. Temporary differences, which arise from recognizing certain items of income, expense and gain/loss in different periods for financial statement and tax purposes, will reverse at some time in the future. During the Fund's applicable taxable period, no distributions were paid in 2024.
As of taxable year end March 31, 2024, the components of distributable earnings on a tax basis for the Fund were as follows:
|
Undistributed ordinary income
|
$-
|
|
Accumulated capital and other gain (loss)
|
-
|
|
Net unrealized appreciation (depreciation)
|
2,124
|
E. Income Taxes
The Fund intends to qualify as a regulated investment company by complying with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, which includes distributing substantially all of its net investment income and net realized gains to shareholders. Accordingly, no provision has been made for federal and state income taxes. However, due to the timing and amount of distributions, the Fund may be subject to an excise tax of 4% of the amount by which approximately 98% of the Fund's taxable income exceeds the distributions from such taxable income for the calendar year.
The Fund is subject to accounting standards that establish a minimum threshold for recognizing, and a system for measuring, the benefits of a tax position taken or expected to be taken in a tax return. The taxable year ended 2024 remains open to federal and state audit. As of May 31, 2024, management has evaluated the application of these standards to the Fund and has determined that no provision for income tax is required in the Fund's financial statements for uncertain tax positions.
The Fund intends to utilize provisions of the federal income tax laws, which allow it to carry a realized capital loss forward indefinitely following the year of the loss and offset such loss against any future realized capital gains. The Fund is subject to certain limitations under U.S. tax rules on the use of capital loss carryforwards and net unrealized built-in losses. These limitations apply when there has been a 50% change in ownership. At the Fund's applicable taxable year end, the Fund had no non-expiring capital loss carryforwards available, to the extent provided by regulations, to offset future capital gains.
Certain losses realized during the current taxable year may be deferred and treated as occurring on the first day of the following fiscal year for federal income tax purposes. At the Fund's applicable taxable year end, the Fund had no net late year ordinary or capital losses.
Page 9
Notes to Financial Statements (Continued)
FT Vest U.S. Equity Max Buffer ETF - March (MARM)May 31, 2024
In order to present paid-in capital and accumulated distributable earnings (loss) (which consists of accumulated net investment income (loss), accumulated net realized gain (loss) on investments and net unrealized appreciation (depreciation) on investments) on the Statement of Assets and Liabilities that more closely represent their tax character, certain adjustments have been made to paid-in capital, accumulated net investment income (loss) and accumulated net realized gain (loss) on investments. These adjustments are primarily due to the difference between book and tax treatments of income and gains on various investment securities held by the Funds and in-kind transactions. The results of operations and net assets were not affected by these adjustments. For the Fund's applicable taxable period, the adjustments were as follows:
|
Taxable
Year End
|
Accumulated
Net Investment
Income (Loss)
|
Accumulated
Net Realized
Gain (Loss)
on Investments
|
Paid-In
Capital
|
|
31-Mar-24
|
$169
|
$-
|
$(169
)
|
As of May 31, 2024, the aggregate cost, gross unrealized appreciation, gross unrealized depreciation, and net unrealized appreciation/(depreciation) on investments (including short positions and derivatives, if any) for federal income tax purposes were as follows:
|
Tax Cost
|
Gross
Unrealized
Appreciation
|
Gross
Unrealized
(Depreciation)
|
Net Unrealized
Appreciation
(Depreciation)
|
|
$197,319,077
|
$5,547,699
|
$(3,221,890
)
|
$2,325,809
|
F. Expenses
Expenses, other than the investment advisory fee and other excluded expenses, are paid by the Advisor (see Note 3).
3. Investment Advisory Fee, Affiliated Transactions and Other Fee Arrangements
First Trust, the investment advisor to the Fund, is a limited partnership with one limited partner, Grace Partners of DuPage L.P., and one general partner, The Charger Corporation. The Charger Corporation is an Illinois corporation controlled by James A. Bowen, Chief Executive Officer of First Trust. First Trust is responsible for the ongoing monitoring of the securities in the Fund's portfolio, managing the Fund's business affairs and providing certain administrative services necessary for the management of the Fund.
First Trust is paid an annual unitary management fee based on a percentage of the Fund's average daily net assets. The annual unitary management fee payable by the Fund to First Trust for these services will be reduced at certain levels of the Fund's net assets ("breakpoints") and calculated pursuant to the following schedule:
|
Breakpoints
|
|
|
Fund net assets up to and including $2.5 billion
|
0.85000
%
|
|
Fund net assets greater than $2.5 billion up to and including $5 billion
|
0.82875
%
|
|
Fund net assets greater than $5 billion up to and including $7.5 billion
|
0.80750
%
|
|
Fund net assets greater than $7.5 billion up to and including $10 billion
|
0.78625
%
|
|
Fund net assets greater than $10 billion
|
0.76500
%
|
First Trust and Vest Financial LLC ("Vest"), an affiliate of First Trust, are responsible for the Fund's expenses, including the cost of transfer agency, sub-advisory, custody, fund administration, legal, audit and other services, but excluding fee payments under the Investment Management Agreement, interest, taxes, acquired fund fees and expenses, if any, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution and service fees payable pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses.
Vest serves as the Fund's sub-advisor and manages the Fund's portfolio subject to First Trust's supervision. Pursuant to the Investment Management Agreement, between the Trust, on behalf of the Fund, and the Advisor, and the Investment Sub-Advisory Agreement among the Trust, on behalf of the Fund, the Advisor and Vest, First Trust will supervise Vest and its management of the investment of the Fund's assets and will pay Vest for its services as the Fund's sub-advisor a sub-advisory fee equal to 50% of the monthly unitary management fee paid to the Advisor, less Vest's 50% share of the Fund's expenses for that month. In the event the Sub-Advisor's share of the expenses exceeds the amount of the sub-advisory fee in any month, the Sub-Advisor will pay the difference to the Advisor. During any period in which the Advisor's management fee is reduced in accordance with the breakpoints
Page 10
Notes to Financial Statements (Continued)
FT Vest U.S. Equity Max Buffer ETF - March (MARM)May 31, 2024
described above, the investment sub-advisory fee (which is based on the Advisor's management fee) paid to Vest will be reduced to reflect the reduction in the Advisor's management fee.
The Trust has multiple service agreements with The Bank of New York Mellon ("BNYM"). Under the service agreements, BNYM performs custodial, fund accounting, certain administrative services, and transfer agency services for the Fund. As custodian, BNYM is responsible for custody of the Fund's assets. As fund accountant and administrator, BNYM is responsible for maintaining the books and records of the Fund's securities and cash. As transfer agent, BNYM is responsible for maintaining shareholder records for the Fund. BNYM is a subsidiary of The Bank of New York Mellon Corporation, a financial holding company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor or any of their affiliates ("Independent Trustees") is paid a fixed annual retainer that is allocated equally among each fund in the First Trust Fund Complex. Each Independent Trustee is also paid an annual per fund fee that varies based on whether the fund is a closed-end or other actively managed fund, a target outcome fund or an index fund.
Additionally, the Chairs of the Audit Committee, Nominating and Governance Committee and Valuation Committee, the Vice Chair of the Audit Committee, the Lead Independent Trustee and the Vice Lead Independent Trustee are paid annual fees to serve in such capacities, with such compensation allocated pro rata among each fund in the First Trust Fund Complex based on net assets. Independent Trustees are reimbursed for travel and out-of-pocket expenses in connection with all meetings. The Committee Chairs, the Audit Committee Vice Chair, the Lead Independent Trustee and the Vice Lead Independent Trustee rotate periodically in serving in such capacities. The officers and "Interested" Trustee receive no compensation from the Trust for acting in such capacities.
4. Purchases and Sales of Securities
For the fiscal period ended May 31, 2024, the Fund had no purchases or sales of investments, excluding short-term investments and in-kind transactions. The Fund holds options for a target outcome period of approximately one year based on the expiration date of the options, which occurs on the third Friday of the month corresponding to the month in the Fund name. For securities transactions purposes, the options are considered short-term investments.
For the fiscal period ended May 31, 2024, the cost of in-kind purchases and proceeds from in-kind sales were $0 and $2,158,422, respectively.
5. Derivative Transactions
The following table presents the types of derivatives held by the Fund at May 31, 2024, the primary underlying risk exposure and the location of these instruments as presented on the Statement of Assets and Liabilities.
|
|
|
Asset Derivatives
|
Liability Derivatives
|
||
|
Derivative
Instrument
|
Risk
Exposure
|
Statement of Assets and
Liabilities Location
|
Value
|
Statement of Assets and
Liabilities Location
|
Value
|
|
Options contracts
|
Equity Risk
|
Options contracts
purchased, at value
|
$203,049,725
|
Options contracts written,
at value
|
$5,343,763
|
The following table presents the amount of net realized gain (loss) and change in net unrealized appreciation (depreciation) recognized for the fiscal period ended May 31, 2024, on derivative instruments, as well as the primary underlying risk exposure associated with the instruments.
|
Statement of Operations Location
|
|
|
Equity Risk Exposure
|
|
|
Net realized gain (loss) on:
|
|
|
Purchased options contracts
|
$73,625
|
|
Written options contracts
|
26,391
|
|
Net change in unrealized appreciation
(depreciation) on:
|
|
|
Purchased options contracts
|
2,107,519
|
|
Written options contracts
|
218,290
|
Page 11
Notes to Financial Statements (Continued)
FT Vest U.S. Equity Max Buffer ETF - March (MARM)May 31, 2024
The Fund does not have the right to offset financial assets and financial liabilities related to options contracts on the Statement of Assets and Liabilities.
The following table presents the premiums for purchased options contracts opened, premiums for purchased options contracts closed, exercised and expired, premiums for written options contracts opened, and premiums for written options contracts closed, exercised and expired, for the fiscal year ended May 31, 2024, on the Fund's options contracts.
|
|
Premiums for
purchased
options contracts
opened
|
Premiums for
purchased
options contracts
closed, exercised
and expired
|
Premiums for
written options
contracts opened
|
Premiums for
written options
contracts closed,
exercised and
expired
|
|
|
$203,084,417
|
$2,142,211
|
$5,645,998
|
$83,945
|
6. Creations, Redemptions and Transaction Fees
The Fund generally issues and redeems its shares in primary market transactions through a creation and redemption mechanism and does not sell or redeem individual shares. Instead, financial entities known as "Authorized Participants" have contractual arrangements with the Fund or one of the Fund's service providers to purchase and redeem Fund shares directly with the Fund in Creation Units. Prior to the start of trading on every business day, the Fund publishes through the National Securities Clearing Corporation the "basket" of securities, cash or other assets that it will accept in exchange for a Creation Unit of the Fund's shares. An Authorized Participant that wishes to effectuate a creation of the Fund's shares deposits with the Fund the "basket" of securities, cash or other assets identified by the Fund that day, and then receives the Creation Unit of the Fund's shares in return for those assets. After purchasing a Creation Unit, the Authorized Participant may continue to hold the Fund's shares or sell them in the secondary market. The redemption process is the reverse of the purchase process: the Authorized Participant redeems a Creation Unit of the Fund's shares for a basket of securities, cash or other assets. The combination of the creation and redemption process with secondary market trading in the Fund's shares and underlying securities provides arbitrage opportunities that are designed to help keep the market price of the Fund's shares at or close to the NAV per share of the Fund.
The Fund imposes fees in connection with the purchase of Creation Units. These fees may vary based upon various fact-based circumstances, including, but not limited to, the composition of the securities included in the Creation Unit or the countries in which the transactions are settled. The price for each Creation Unit will equal the daily NAV per share of the Fund times the number of shares in a Creation Unit, plus the fees described above and, if applicable, any operational processing and brokerage costs, transfer fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the securities comprising the creation basket.
The Fund also imposes fees in connection with the redemption of Creation Units. These fees may vary based upon various fact-based circumstances, including, but not limited to, the composition of the securities included in the Creation Unit or the countries in which the transactions are settled. The price received for each Creation Unit will equal the daily NAV per share of the Fund times the number of shares in a Creation Unit, minus the fees described above and, if applicable, any operational processing and brokerage costs, transfer fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the securities comprising the redemption basket. Investors who use the services of a broker or other such intermediary in addition to an Authorized Participant to effect a redemption of a Creation Unit may also be assessed an amount to cover the cost of such services. The redemption fee charged by the Fund will comply with Rule 22c-2 of the 1940 Act which limits redemption fees to no more than 2% of the value of the shares redeemed.
7. Distribution Plan
The Board of Trustees adopted a Distribution and Service Plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with the Rule 12b-1 plan, the Fund is authorized to pay an amount up to 0.25% of its average daily net assets each year to reimburse First Trust Portfolios L.P. ("FTP"), the distributor of the Fund, for amounts expended to finance activities primarily intended to result in the sale of Creation Units or the provision of investor services. FTP may also use this amount to compensate securities dealers or other persons that are Authorized Participants for providing distribution assistance, including broker-dealer and shareholder support and educational and promotional services.
No 12b-1 fees are currently paid by the Fund, and pursuant to a contractual arrangement, no 12b-1 fees will be paid any time before March 22, 2026.
Page 12
Notes to Financial Statements (Continued)
FT Vest U.S. Equity Max Buffer ETF - March (MARM)May 31, 2024
8. Indemnification
The Trust, on behalf of the Fund, has a variety of indemnification obligations under contracts with its service providers. The Trust's maximum exposure under these arrangements is unknown. However, the Trust has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
9. Subsequent Events
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements that have not already been disclosed.
Page 13
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Trustees of First Trust Exchange-Traded Fund VIII:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of FT Vest U.S. Equity Max Buffer ETF - March (the "Fund"), one of the funds constituting the First Trust Exchange-Traded Fund VIII, as of May 31, 2024, and the related statements of operations, changes in net assets, and the financial highlights for the period from March 26, 2024 (commencement of investment operations) through May 31, 2024, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of May 31, 2024, and the results of its operations, the changes in its net assets, and the financial highlights for the period from March 26, 2024 (commencement of investment operations) through May 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements and financial highlights based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of May 31, 2024, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audit provides a reasonable basis for our opinion.
/s/ Deloitte & Touche, LLP
Chicago, Illinois
July 23, 2024
July 23, 2024
We have served as the auditor of one or more First Trust investment companies since 2001.
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Other Information
FT Vest U.S. Equity Max Buffer ETF - March (MARM)May 31, 2024 (Unaudited)
Changes in and Disagreements with Accountants (Item 8 of Form N-CSR)
There were no changes in or disagreements with the Fund's accountants during the period ended May 31, 2024.
Proxy Disclosures (Item 9 of Form N-CSR)
There were no matters submitted for vote by shareholders of the Fund during the period ended May 31, 2024.
Remuneration Paid to Directors, Officers, and Others (Item 10 of Form N-CSR)
Directors, officers, and any member of any advisory board of the Fund are compensated through the unitary management fee paid by the Fund to the advisor and not directly by the Fund. The investment advisory fee paid is included in the Financial Statements.
Statement Regarding the Basis for the Board's Approval of Investment Advisory Contract (Item 11 of Form N-CSR)
The Board of Trustees of First Trust Exchange-Traded Fund VIII (the "Trust"), including the Independent Trustees, approved the Investment Management Agreement (the "Advisory Agreement") with First Trust Advisors L.P. (the "Advisor"), on behalf of FT Vest U.S. Equity Max Buffer ETF - March (the "Fund"), and the Investment Sub-Advisory Agreement (the "Sub-Advisory Agreement" and together with the Advisory Agreement, the "Agreements") among the Trust, on behalf of the Fund, the Advisor and Vest Financial LLC (the "Sub-Advisor"), for an initial two-year term at a meeting held on February 14, 2024. The Board determined that the Agreements are in the best interests of the Fund in light of the nature, extent and quality of the services expected to be provided and such other matters as the Board considered to be relevant in the exercise of its business judgment.
To reach this determination, the Board considered its duties under the Investment Company Act of 1940, as amended (the "1940 Act"), as well as under the general principles of state law, in reviewing and approving advisory contracts; the requirements of the 1940 Act in such matters; the fiduciary duty of investment advisors with respect to advisory agreements and compensation; the standards used by courts in determining whether investment company boards have fulfilled their duties; and the factors to be considered by the Board in voting on such agreements. To assist the Board in its evaluation of the Agreements for the Fund, the Independent Trustees received a separate report from each of the Advisor and the Sub-Advisor in advance of the Board meeting responding to requests for information from counsel to the Independent Trustees, submitted on behalf of the Independent Trustees, that, among other things, outlined: the services to be provided by the Advisor and the Sub-Advisor to the Fund (including the relevant personnel responsible for these services and their experience); the proposed unitary fee rate schedule payable by the Fund as compared to fees charged to a peer group of funds (the "Expense Group") and a broad peer universe of funds (the "Expense Universe"), each assembled by Broadridge Financial Solutions, Inc. ("Broadridge"), an independent source, and as compared to fees charged to other exchange-traded funds ("ETFs") managed by the Advisor; the proposed sub-advisory fee as compared to fees charged to other clients of the Sub-Advisor; the estimated expense ratio of the Fund as compared to expense ratios of the funds in the Fund's Expense Group and Expense Universe; the nature of expenses to be incurred in providing services to the Fund and the potential for the Advisor and the Sub-Advisor to realize economies of scale, if any; profitability and other financial data for the Advisor; financial data for the Sub-Advisor; any indirect benefits to the Advisor and its affiliates, First Trust Portfolios L.P. ("FTP") and First Trust Capital Partners, LLC ("FTCP"), and the Sub-Advisor; and information on the Advisor's and the Sub-Advisor's compliance programs. The Independent Trustees and their counsel also met separately to discuss the information provided by the Advisor and the Sub-Advisor. The Board applied its business judgment to determine whether the arrangements between the Trust and the Advisor and among the Trust, the Advisor and the Sub-Advisorare reasonable business arrangements from the Fund's perspective.
In evaluating whether to approve the Agreements for the Fund, the Board considered the nature, extent and quality of the services to be provided by the Advisor and the Sub-Advisor under the Agreements. With respect to the Advisory Agreement, the Board considered that the Advisor will be responsible for the overall management and administration of the Fund and reviewed all of the services to be provided by the Advisor to the Fund, including the oversight of the Sub-Advisor, as well as the background and experience of the persons responsible for such services. The Board considered that the Fund will be an actively-managed ETF and will employ an advisor/sub-advisor management structure and considered that the Advisor manages other ETFs with a similar structure in the First Trust Fund Complex. The Board noted that the Advisor will oversee the Sub-Advisor's day-to-day management of the Fund's investments, including portfolio risk monitoring and performance review. In reviewing the services to be provided, the Board noted the compliance program that had been developed by the Advisor and considered that it includes a robust program for monitoring the Advisor's, the Sub-Advisor's and the Fund's compliance with the 1940 Act, as well as the Fund's compliance with its investment objective, policies and restrictions. The Board noted that employees of the Advisor provide management services to other ETFs and to other funds in the First Trust Fund Complex with diligence and care. With respect to the Sub-Advisory Agreement, in addition to the written materials provided by the Sub-Advisor, at the February 14, 2024 meeting, the Board also received a presentation from
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Other Information (Continued)
FT Vest U.S. Equity Max Buffer ETF - March (MARM)May 31, 2024 (Unaudited)
representatives of the Sub-Advisor, who discussed the services that the Sub-Advisor will provide to the Fund, and the Trustees were able to ask questions about the proposed investment strategy for the Fund. The Board noted the background and experience of the Sub-Advisor'sportfolio management team and the Sub-Advisor's investment style. The Board also noted that the Sub-Advisor manages a number of other defined-outcome ETFs with strategies similar to those of the Fund in the First Trust Fund Complex. Because the Fund had yet to commence investment operations, the Board could not consider the historical investment performance of the Fund. In light of the information presented and the considerations made, the Board concluded that the nature, extent and quality of the services to be provided to the Fund by the Advisor and the Sub-Advisor under the Agreements are expected to be satisfactory.
The Board considered the proposed unitary fee rate schedule payable by the Fund under the Advisory Agreement for the services to be provided. The Board noted that, under the unitary fee arrangement, the Fund would pay the Advisor a unitary fee starting at an annual rate of 0.85% of its average daily net assets, subject to a breakpoint schedule pursuant to which the unitary fee rate would be reduced as assets of the Fund meet certain thresholds. The Board considered that, from the unitary fee for the Fund, the Advisor would pay the Sub-Advisor a sub-advisory fee equal to 50% of the Fund's unitary fee less one-half of the Fund's expenses and that the sub-advisory fee would be reduced consistent with the breakpoints in the unitary fee rate schedule. The Board noted that the Advisor and the Sub-Advisorwould be responsible for the Fund's expenses, including the cost of sub-advisory, transfer agency, custody, fund administration, legal, audit and other services and license fees, if any, but excluding the fee payment under the Advisory Agreement and interest, taxes, acquired fund fees and expenses, if any, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution and service fees pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses, if any. The Board received and reviewed information showing the fee rates and expense ratios of the peer funds in the Expense Group, as well as fee rates charged by the Advisor and the Sub-Advisor to other ETFs. Because the Fund will pay a unitary fee, the Board determined that expense ratios were the most relevant comparative data point. Based on the information provided, the Board noted that the total (net) expense ratio for the Fund was above the median total (net) expense ratio of the peer funds in the Expense Group. With respect to the Expense Group, the Board discussed with representatives of the Advisor how the Expense Group was assembled and how the Fund compared and differed from the peer funds. The Board took this information into account in considering the peer data. With respect to fees charged to other clients, the Board considered the Advisor's statement that the Fund will be unique to the market and the First Trust Fund Complex, but will be most similar to the ETFs in the FT Vest U.S. Equity Buffer ETF, FT Vest U.S. Equity Deep Buffer ETF, FT Vest U.S. Equity Moderate Buffer ETF and FT Vest U.S. Equity Enhance & Moderate Buffer ETF product lines in the First Trust Fund Complex that are managed by the Advisor and sub-advised by the Sub-Advisor, each of which has a unitary fee rate schedule starting at an annual rate of 0.85% of its average daily net assets. In light of the information considered and the nature, extent and quality of the services expected to be provided to the Fund under the Agreements, the Board determined that the proposed unitary fee, including the sub-advisory fee to be paid by the Advisor to the Sub-Advisor from the unitary fee, was fair and reasonable.
The Board considered whether there are any potential economies of scale to be achieved in connection with the Advisor providing investment advisory services to the Fund and whether the Fund may benefit from any economies of scale. The Board noted that the proposed unitary fee rate schedule for the Fund includes breakpoints pursuant to which the unitary fee rate would be reduced as assets of the Fund meet certain thresholds. The Board considered that the Advisor has continued to build infrastructure and add new staff to improve the services to the funds in the First Trust Fund Complex. The Board also noted that under the unitary fee structure, any reduction in expenses associated with the management and operations of the Fund generally would benefit the Advisor and the Sub-Advisor,but that the unitary fee structure provides a level of certainty in expenses for shareholders of the Fund. The Board concluded that the proposed unitary fee rate schedule for the Fund reflects an appropriate level of sharing of any economies of scale that may be realized in the management of the Fund at reasonably foreseeable future asset levels. The Board considered that the Sub-Advisor would be paid by the Advisor from the Fund's unitary fee, that the sub-advisory fee would be reduced consistent with the breakpoints in the Fund's unitary fee rate schedule and its understanding that the sub-advisory fee for the Fund was the product of an arm's length negotiation. The Board took into consideration the types of costs to be borne by the Advisor in connection with its services to be performed for the Fund under the Advisory Agreement. The Board considered the Advisor's estimate of the asset level for the Fund at which the Advisor expects the Advisory Agreement to be profitable to the Advisor and the Advisor's estimate of the profitability of the Advisory Agreement if the Fund's assets reach $100 million. The Board noted the inherent limitations in the profitability analysis and concluded that, based on the information provided, the Advisor's estimated profitability level for the Fund was not unreasonable. The Board reviewed financial information provided by the Sub-Advisor, but did not review any potential profitability of the Sub-AdvisoryAgreement to the Sub-Advisor. The Board concluded that the profitability analysis for the Advisor was more relevant. In addition, the Board considered indirect benefits described by the Advisor that may be realized from its relationship with the Fund. The Board noted that FTCP has a controlling ownership interest in the Sub-Advisor's parent company and considered potential indirect benefits to the Advisor from such ownership interest. The Board also considered that the Advisor had identified as an indirect benefit to the Advisor and FTP their exposure to investors and brokers who, absent their exposure to the Fund, may have had no dealings with
Page 16
Other Information (Continued)
FT Vest U.S. Equity Max Buffer ETF - March (MARM)May 31, 2024 (Unaudited)
the Advisor or FTP. The Board also considered the potential indirect benefits to the Sub-Advisor from FTCP's controlling ownership interest in the Sub-Advisor's parent company. The Board noted the Sub-Advisor's statements that it does not foresee any indirect benefits from its relationship with the Fund and that, as a policy, it does not enter into soft-dollar arrangements for the procurement of research services in connection with client securities transactions. The Board concluded that the character and amount of potential indirect benefits to the Advisor and the Sub-Advisor were not unreasonable.
Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined that the terms of the Agreements are fair and reasonable and that the approval of the Agreements is in the best interests of the Fund. No single factor was determinative in the Board's analysis.
Federal Tax Information
There were no distributions made by the Fund during its applicable taxable period; therefore, no analysis for the corporate dividends received deduction and qualified dividend income was completed.
Disclaimer
The Fund is not sponsored, endorsed, sold or promoted by SPDR®S&P 500®ETF Trust, PDR Services, LLC, or Standard & Poor's® (together with their affiliates hereinafter referred to as the "Corporations"). The Corporations have not passed on the legality or suitability of, or the accuracy or adequacy of, descriptions and disclosures relating to the Fund or the FLEX Options. The Corporations make no representations or warranties, express or implied, regarding the advisability of investing in the Fund or the FLEX Options or results to be obtained by the Fund or the FLEX Options, shareholders or any other person or entity from use of the SPDR®S&P 500® ETF Trust. The Corporations have no liability in connection with the management, administration, marketing or trading of the Fund or the FLEX Options.
Page 17
| (b) | The Financial Highlights is included in the Financial Statements and Other Information filed under Item 7(a) of this Form N-CSR. |
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Not applicable to the Registrant.
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
Not applicable to the Registrant.
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
This information is included in the Financial Statements and Other Information filed under Item 7(a) of this Form N-CSR.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
This statement is included in the Financial Statements and Other Information filed under Item 7(a) of this Form N-CSR.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to the Registrant.
Item 15. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the Registrant's board of directors, where those changes were implemented after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 16. Controls and Procedures.
| (a) | The Registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
| (b) | There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. |
Item 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
| (a) | Not applicable to the Registrant. |
| (b) | Not applicable to the Registrant. |
Item 18. Recovery of Erroneously Awarded Compensation.
| (a) | Not applicable to the Registrant. |
| (b) | Not applicable to the Registrant. |
Item 19. Exhibits.
| (a)(1) | Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. |
| (a)(2) | Not applicable. |
| (a)(3) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
| (a)(4) | Not applicable. |
| (a)(5) | Not applicable. |
| (b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| (registrant) | First Trust Exchange-Traded Fund VIII |
| By (Signature and Title)* | /s/ James M. Dykas | |
|
James M. Dykas, President and Chief Executive Officer (principal executive officer) |
| Date: | August 9, 2024 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By (Signature and Title)* | /s/ James M. Dykas | |
|
James M. Dykas, President and Chief Executive Officer (principal executive officer) |
| Date: | August 9, 2024 |
| By (Signature and Title)* | /s/ Derek D. Maltbie | |
|
Derek D. Maltbie, Treasurer, Chief Financial Officer and Chief Accounting Officer (principal financial officer) |
| Date: | August 9, 2024 |
* Print the name and title of each signing officer under his or her signature.