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First Trust Managed Municipal ETF (FMB)
Investment Objective/Strategy - The primary investment objective of the Fund will be to generate current income that is exempt from regular federal income taxes and its secondary objective will be long term capital appreciation. Under normal market conditions , the Fund will seek to achieve its investment objectives by investing at least 80% of its net assets (including investment borrowings) in municipal debt securities that pay interest that is exempt from regular federal income taxes.
There can be no assurance that the Fund's investment objectives will be achieved.
Fund Overview
TickerFMB
Fund TypeMunicipal Bonds
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBrown Brothers Harriman
Portfolio Manager/Sub-AdvisorFirst Trust Advisors L.P.
CUSIP33739N108
Intraday NAVFMBIV
Fiscal Year-End10/31
ExchangeNASDAQ Stock Market
Inception5/13/2014
Inception Price$50.00
Inception NAV$50.00
Expense Ratio0.65%
Current Fund Data (as of 7/31/2014)
Closing NAV1$50.17
Closing Share Price2$49.98
Bid/Ask Midpoint$50.04
Bid/Ask Discount0.26%
Total Net Assets$20,066,408
Outstanding Shares400,002
Daily Volume0
Average 30-Day Daily Volume959
Closing Share Price 52-Week High/Low$50.14 / $49.48
Closing NAV 52-Week High/Low$50.33 / $49.83
Number of Holdings57
Fund Characteristics (as of 6/30/2014)
Weighted Average Effective Duration76.84 Years
Weighted Average Coupon4.60%
Weighted Average Maturity9.60 Years
Weighted Average Price$107.18
Portfolio information statistics exclude cash and other assets and liabilities.
Top Holdings (as of 7/31/2014)
Holding Percent
PIEDMONT SC MUNI PWR AGY ELEC REF-SER A3, 5%, due 01/01/2023 4.21%
CENTRL PLAINS ENERGY PROJ NE G PROJ NO 3, 5%, due 09/01/2027 4.10%
BROWARD CNTY FL FUEL SYS REVEN N/C, AMT-FT LAUDERDALE FUEL FACS-SER A, 5%, due 04/01/2022 3.52%
MEMPHIS-SHELBY CNTY TN ARPT AUTH AMT-REF-SER B, 5.75%, due 07/01/2023 3.47%
NEW JERSEY ST TRANSIT CORP 5%, due 09/15/2021 3.47%
TEXAS ST MUNI GAS ACQUISITION 5%, due 12/15/2024 3.31%
COLORADO HLTH FACS AUTH REV REF-COVENANT RETMNT CMNTYS-SER A, 5%, due 12/01/2027 3.25%
CONNECTICUT ST N/C, GO, REF-SER C, 5%, due 12/15/2022 3.00%
FLOWER MOUND TX SPL ASSMNT REV RVR WALK PUB IMPT DIST NO 1, 6.125%, due 09/01/2028 3.00%
Washington Health Care Facs. Auth. 6%, due 07/01/2019 2.89%

Holdings are subject to change.

Bid/Ask Midpoint and NAV History (Since Inception)
Past performance is not indicative of future results.
Maturity Exposure (as of 6/30/2014)
Years Percent
0 - 5.99 Years 7.18%
6 - 6.99 Years 6.63%
7 - 7.99 Years 11.63%
8 - 8.99 Years 21.27%
9 - 9.99 Years 11.15%
10 - 14.99 Years 36.04%
15 - 19.99 Years 1.60%
20 - 24.99 Years 1.43%
Distribution Information
Dividend per Share Amt3$0.1500
30-Day SEC Yield (as of 6/30/2014)42.29%
Distribution Rate (as of 6/30/2014)53.59%
Taxable Equivalent Yield (as of 6/30/2014)64.56%
Bid/Ask Midpoint vs. NAV (as of 6/30/2014)
Number of Days Bid/Ask Midpoint Above NAV
Quarter Ended 0-49
Basis Points
50-99
Basis Points
100-199
Basis Points
>=200
Basis Points
6/30/2014 1 0 0 0
Number of Days Bid/Ask Midpoint Below NAV
Quarter Ended 0-49
Basis Points
50-99
Basis Points
100-199
Basis Points
>=200
Basis Points
6/30/2014 14 17 0 0

The price used to calculate market return is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange, on which shares of the Fund are listed for trading, as of the time that the Fund's NAV is calculated.

Credit Quality (as of 6/30/2014)
AA 21.36%
A 25.43%
BBB 32.50%
BB 6.18%
B 4.77%
NR 6.70%
The ratings are by Standard & Poor's except where otherwise indicated. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations except for those debt obligations that are only privately rated. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest). Investment grade is defined as those issuers that have a long-term credit rating of BBB- or higher. "NR" indicates no rating. The credit ratings shown relate to the credit worthiness of the issuers of the underlying securities in the Fund, and not to the Fund or its shares. Credit ratings are subject to change.
Top Sector Exposure (as of 6/30/2014)
Continuing Care Retirement Communities 11.45%
Insured 11.20%
Hospital 10.37%
Utilities 10.35%
Higher Education 8.47%
Gas 7.50%
General Obligation 7.15%
Education 4.81%
Tobacco 4.49%
Student Housing 3.85%
Month End Performance (as of 6/30/2014)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception8
Fund Performance *
NAV N/A N/A N/A N/A N/A N/A 0.46%
After Tax Held N/A N/A N/A N/A N/A N/A 0.33%
After Tax Sold N/A N/A N/A N/A N/A N/A 0.26%
Market Price N/A N/A N/A N/A N/A N/A 0.12%
Index Performance
Barclays Municipal 10 Year Revenue Index N/A N/A N/A N/A N/A N/A 0.62%
Quarter End Performance (as of 6/30/2014)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception8
Fund Performance *
NAV N/A N/A N/A N/A N/A N/A 0.46%
After Tax Held N/A N/A N/A N/A N/A N/A 0.33%
After Tax Sold N/A N/A N/A N/A N/A N/A 0.26%
Market Price N/A N/A N/A N/A N/A N/A 0.12%
Index Performance
Barclays Municipal 10 Year Revenue Index N/A N/A N/A N/A N/A N/A 0.62%

*Performance data quoted represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares when sold or redeemed, may be worth more or less than their original cost.

After Tax Held returns represent return after taxes on distributions. Assumes shares have not been sold. After Tax Sold returns represent the return after taxes on distributions and the sale of fund shares. Returns do not represent the returns you would receive if you traded shares at other times. Market Price returns are based on the midpoint of the bid/ask spread. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative. The fund's performance reflects fee waivers and expense reimbursements, absent which performance would have been lower.

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

The expense ratio for this fund is 0.65%.

The Barclays Municipal 10 Year Revenue Index is a subset of the Barclays Municipal Bond Index that measures the performance of investment-grade revenue bond issues with remaining maturities of 8 to 12 years.

Footnotes
1 The NAV represents the fund's net assets (assets less liabilities) divided by the fund's shares outstanding.
2 Fund shares are purchased and sold on an exchange at their share price rather than net asset value (NAV), which may cause the shares to trade at a price greater than NAV (premium) or less than NAV (discount).
3 Most recent distribution paid or declared through today's date. Subject to change in the future.
4 30-day SEC yield is calculated by dividing the net investment income per share earned during the most recent 30-day period by the maximum offering price per share on the last day of the period.
5 Distribution rate is calculated by dividing the most recent annualized distribution paid or declared by the Net Asset Value. Distribution rates may vary.
6 The taxable equivalent yield is for illustrative purposes only. This information illustrates approximately what you would have to earn on taxable investments to equal the tax-exempt estimated current return using the highest federal tax bracket for 2014. This information is based on present law as of the date of publication and does not account for any proposed changes in tax rates. This information does not account for limitations on deductions, the alternative minimum tax or taxes other than Federal personal income tax.
7 A measure of a bond's sensitivity to interest rate changes that reflects the change in a bond's price given a change in yield.
8 Inception Date is 5/13/2014

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

ETF Characteristics

The fund lists and principally trades its shares on the NASDAQ Stock Market LLC.

The fund may not be fully invested at times. Investors buying or selling fund shares on the secondary market may incur customary brokerage commissions. Market prices may differ to some degree from the net asset value of the shares. Investors who sell fund shares may receive less than the share's net asset value. Shares may be sold throughout the day on the exchange through any brokerage account. However, unlike mutual funds, shares may only be redeemed directly from the fund by authorized participants, in very large creation/redemption units.

Risk Considerations

The fund's shares will change in value and you could lose money by investing in the fund. The fund is subject to management risk because it is an actively managed portfolio. In managing the fund's investment portfolio, the investment advisor will apply investment techniques and risk analyses that may not have the desired result. There can be no guarantee that the fund will meet its investment objectives.

The fund is subject to market risk. Market risk is the risk that a particular security owned by the fund or shares of the fund in general may fall in value. Municipal bonds are subject to numerous risks, including credit risk, income risk, interest rate risk, call risk and zero coupon bond risk. Credit risk is the risk that an issuer of a security will be unable or unwilling to make dividend, interest and/or principal payments when due and the related risk that the value of a security may decline because of concerns about the issuer's ability to make such payments. Income risk is the risk that income from the fund's fixed income investments could decline during periods of falling interest rates. Interest rate risk is the risk that the value of the securities in the fund will decline because of rising market interest rates. Call risk is the risk that if an issuer calls higher-yielding debt instruments held by the fund, performance could be adversely impacted. Zero coupon bond risk is the risk that because zero coupon bonds do not pay interest on a current basis, they may be highly volatile as interest rates rise or fall.

The values of municipal securities held by the fund may be adversely affected by local political and economic conditions and developments. Adverse conditions in an industry significant to a local economy could have a correspondingly adverse effect on the financial condition of local issuers.

Income from municipal bonds held by the fund could be declared taxable because of, among other things, unfavorable changes in tax laws, adverse interpretations by the Internal Revenue Service or state tax authorities, or noncompliant conduct of a bond issuer. The fund has no limit as to the amount that can be invested in alternative minimum tax bonds. Therefore, all or a portion of the fund's otherwise exempt-interest dividends may be taxable to those shareholders subject to the federal alternative minimum tax.

High yield securities, or "junk" bonds, are subject to greater market fluctuations and risk of loss than securities with higher ratings, and therefore, may be highly speculative. The market for high yield securities is smaller and less liquid than that for investment grade securities.

Participation interests in municipal leases pose special risks because many leases and contracts contain "non-appropriation" clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for this purpose by the appropriate legislative body.

The fund currently intends to effect a significant portion of creations and redemptions for cash, rather than in-kind securities. As a result, the fund may be less tax- efficient than if it were to sell and redeem its shares principally in-kind.

The fund currently has fewer assets than larger funds, and like other relatively new funds, large inflows and outflows may impact the fund's market exposure for limited periods of time. The fund is classified as "non-diversified." A non-diversified fund generally may invest a larger percentage of its assets in the securities of a smaller number of issuers. As a result, the fund may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.

First Trust Advisors L.P. is the adviser to the fund. First Trust Advisors L.P. is an affiliate of First Trust Portfolios L.P., the fund's distributor.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value
 
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
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