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First Trust Capital Strength ETF (FTCS)
  • 2014 Estimated Capital Gain Distributions
    The First Trust Exchange-Traded Funds are not expecting to pay long-term capital gain distributions during the remainder of 2014.  Short-term capital gain distributions, if any, are expected to be nominal and are taxed like ordinary income.  Final determination of the source and tax status of all distributions paid in the current year are to be made after year-end and could differ from the expectations indicated above.
Investment Objective/Strategy - The First Trust Capital Strength ETF seeks investment results that correspond generally to the price and yield (before the fund's fees and expenses) of an equity index called The Capital Strength Index™
There can be no assurance that the Fund's investment objectives will be achieved.
  • From the stocks in the NASDAQ US Benchmark Index, the largest 500 companies with a minimum three-month average daily dollar trading volume of $5 million are selected.
  • To be eligible for inclusion in the index, companies must have:
    • at least $1 billion in cash or short term investments.
    • a long term debt to market cap ratio less than 30%.
    • a return on equity greater than 15%.
  • Eligible companies are then ranked by a combined short-term (3-month) and long-term (1-year) realized volatility.
  • The 50 companies with the lowest combined volatility score are selected for inclusion in the index.
  • A maximum weight of 30% in any one Industry Classification Benchmark industry is allowed. If an industry has a weight greater than 30%, the highest ranking security by volatility will be removed and replaced with the next eligible security from a different industry. This process is repeated until no industry has a weight greater than 30%.
  • The index stocks are equally weighted initially and on each rebalancing effective date. The index is reconstituted and rebalanced on a quarterly basis.
Fund Overview
TickerFTCS
Fund TypeLarge Cap Value
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBank of New York Mellon
CUSIP33733E104
Intraday NAVFTCSIV
Fiscal Year-End12/31
ExchangeNASDAQ Stock Market
Inception7/6/2006
Inception Price$20.00
Inception NAV$20.00
Rebalance FrequencyQuarterly
Gross Expense Ratio*0.67%
Net Expense Ratio*0.65%
* As of 6/30/2014
Expenses are capped contractually at 0.65% per year, at least until April 30, 2015.
Current Fund Data (as of 12/18/2014)
Closing NAV1$38.51
Closing Share Price2$38.25
Bid/Ask Midpoint$38.51
Bid/Ask Discount0.01%
Total Net Assets$86,645,637
Outstanding Shares2,250,002
Daily Volume23,785
Average 30-Day Daily Volume10,835
Closing Share Price 52-Week High/Low$38.52 / $31.75
Closing NAV 52-Week High/Low$38.57 / $31.74
Number of Holdings50
Fund Characteristics (as of 11/28/2014)8
Median Market Cap.$52,541
Maximum Market Cap.$393,811
Minimum Market Cap.$7,958
Price/Earnings19.16
Price/Book4.42
Price/Cash Flow13.65
Price/Sales1.99
Top Holdings (as of 12/19/2014)
Holding Percent
Lowe's Companies, Inc. 2.27%
KLA-Tencor Corporation 2.26%
Texas Instruments Incorporated 2.22%
PPG Industries, Inc. 2.17%
3M Company 2.15%
Medtronic, Inc. 2.15%
Northrop Grumman Corporation 2.15%
Accenture Plc 2.11%
Automatic Data Processing, Inc. 2.08%
C.R. Bard, Inc. 2.08%

Holdings are subject to change.

NAV History (Since Inception)
Past performance is not indicative of future results.
Overall Morningstar RatingTM (as of 11/30/2014)3

Among 1094 funds in the Large Value category. This fund was rated 4 stars/1094 funds (3 years), 4 stars/968 funds (5 years).
Distribution Information
Dividend per Share Amt4$0.1422
30-Day SEC Yield (as of 11/28/2014)51.48%
12-Month Distribution Rate (as of 11/28/2014)61.53%
Index Yield (as of 11/28/2014)72.64%
Bid/Ask Midpoint vs. NAV (as of 9/30/2014)
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
9/30/2014 27 1 0 0
6/30/2014 37 3 0 0
3/31/2014 16 4 0 0
12/31/2013 31 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
9/30/2014 36 0 0 0
6/30/2014 21 2 0 0
3/31/2014 39 2 0 0
12/31/2013 33 0 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.

Top Sector Exposure (as of 12/19/2014)
Industrials 30.25%
Consumer Goods 17.44%
Health Care 12.25%
Consumer Services 12.22%
Financials 11.85%
Technology 10.03%
Basic Materials 4.13%
Oil & Gas 1.83%
Month End Performance (as of 11/28/2014)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception9
Fund Performance *
NAV 7.86% 15.20% 16.94% 22.38% 15.74% N/A 9.69%
After Tax Held 7.67% 14.55% 16.08% 21.45% 14.94% N/A 9.08%
After Tax Sold 4.44% 8.57% 9.54% 17.29% 12.27% N/A 7.55%
Market Price 7.83% 15.00% 16.91% 22.39% 15.72% N/A 9.69%
Index Performance **
The Capital Strength Index™ 8.03% 15.92% 17.76% N/A N/A N/A N/A
S&P 500 Value Index 2.39% 11.75% 14.37% 20.90% 15.14% N/A 6.42%
S&P 500 Index 3.72% 13.98% 16.86% 20.93% 15.96% N/A 8.22%
Quarter End Performance (as of 9/30/2014)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception9
Fund Performance *
NAV 1.08% 6.72% 18.23% 23.53% 15.26% N/A 8.88%
After Tax Held 0.91% 6.12% 17.37% 22.59% 14.47% N/A 8.26%
After Tax Sold 0.61% 3.80% 10.30% 18.25% 11.90% N/A 6.86%
Market Price 0.94% 6.56% 18.15% 23.55% 15.29% N/A 8.88%
Index Performance **
The Capital Strength Index™ 1.26% 7.26% 19.06% N/A N/A N/A N/A
S&P 500 Value Index 0.25% 7.23% 17.77% 23.46% 14.73% N/A 6.02%
S&P 500 Index 1.13% 8.34% 19.73% 22.99% 15.70% N/A 7.73%
3-Year Statistics (as of 11/28/2014)
  Standard Deviation Alpha Beta Sharpe Ratio Correlation
FTCS 12.76% -3.56 1.27 1.63 0.90
S&P 500 Value Index 9.57% -0.53 1.03 2.01 0.97
S&P 500 Index 9.04% --- 1.00 2.13 1.00
Standard Deviation is a measure of price variability (risk). Alpha is an indication of how much an investment outperforms or underperforms on a risk-adjusted basis relative to its benchmark.Beta is a measure of price variability relative to the market. Sharpe Ratio is a measure of excess reward per unit of volatility. Correlation is a measure of the similarity of performance.

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

Following the close of trading on June 3, 2013, the fund's underlying index changed from the Credit Suisse U.S. Value Index, Powered by HOLTTM to The Capital Strength IndexTM. Following the close of trading on June 18, 2010, the fund's underlying index changed from the Deutsche Bank CROCI® US+ IndexTM to the Credit Suisse U.S. Value Index, Powered by HOLTTM.Therefore, the fund's performance and historical returns shown for the periods prior to this date are not necessarily indicative of the performance that the fund, based on its current index, would have generated.

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.

**Performance information for the The Capital Strength Index™ is for illustrative purposes only and does not represent actual fund performance. The Index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. Indexes are unmanaged and an investor cannot invest directly in an index.

The gross expense ratio for this fund is 0.67%. Expenses are capped contractually at 0.65% per year, at least until April 30, 2015.

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

The S&P 500 Value Index contains those securities with value characteristics from the S&P 500 Index.

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
The Morningstar RatingTM is provided for those exchange-traded funds ("ETFs") with at least a three-year history. Ratings are based on the ETF's Morningstar Risk-Adjusted Return measure which accounts for variation in monthly performance, placing more emphasis on downward variations and rewarding consistent performance. An ETF's risk-adjusted return includes a brokerage commission estimate. This estimate is intended to reflect what an average investor would pay when buying or selling an ETF. PLEASE NOTE, this estimate is subject to change and the actual brokerage commission an investor pays may be higher or lower than this estimate. Morningstar compares each ETF's risk-adjusted return to the open-end mutual fund rating breakpoints for that category. Consistent with the open-end mutual fund ratings, the top 10% of ETFs in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The overall rating for an ETF is based on a weighted average of the time-period ratings (e.g., the ETF's 3,5, and 10 year rating). The determination of an ETF's rating does not affect the retail open end mutual fund data published by Morningstar. Past performance is no guarantee of future results.
4 Most recent distribution paid or declared through today's date. Subject to change in the future.
5 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.
6 12-Month Distribution Rate is calculated by dividing the sum of the fund's trailing 12-month ordinary distributions paid or declared by the NAV price. Distribution rates may vary.
7 Index yield represents the weighted average trailing 12-month dividend of the constituents of the The Capital Strength Index(TM)
8 All market capitalization numbers are in USD$ Millions.
9 Inception Date is 7/6/2006

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's return may not match the return of the The Capital Strength Index™.  Securities held by the fund will generally not be bought or sold in response to market fluctuations.

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. One of the principal risks of investing in the fund is market risk. Market risk is the risk that a particular stock owned by the fund, fund shares or stocks in general may fall in value. There can be no assurance that the fund's investment objective will be achieved.

The fund may invest in securities issued by companies concentrated in a particular industry.

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.

The Capital Strength IndexTM is the trademark (the "Mark") of NASDAQ OMX. The Mark is licensed for use by First Trust Portfolios L.P. The fund has not been passed on by NASDAQ OMX as to its legality or suitability. The fund is not issued, endorsed, sold or promoted by NASDAQ OMX. The fund should not be construed in any way as investment advice by NASDAQ OMX. NASDAQ OMX MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO THE FUND OR THE CAPITAL STRENGTH INDEXTM.

©2014 Morningstar, Inc. All Rights Reserved. The Morningstar RatingTM information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value
 
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First Trust Advisors L.P.
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