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First Trust RBA American Industrial RenaissanceTM ETF (AIRR)
Investment Objective/Strategy - The Fund seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an index called the Richard Bernstein Advisors American Industrial Renaissance Index (the "Index"). The Fund will normally invest at least 90% of its net assets (plus the amount of any borrowings for investment purposes) in U.S. equity securities that comprise the Index. The Index is designed to measure the performance of small and mid cap U.S. companies in the industrial and community banking sectors.
There can be no assurance that the Fund's investment objectives will be achieved.
  • The Richard Bernstein Advisors American Industrial Renaissance Index™ is designed to measure the performance of small and mid cap U.S. companies in the industrial and community banking sectors.
  • To construct the index, Richard Bernstein Advisors LLC (RBA) begins with the Russell 2500 Index and eliminates companies not directly related to manufacturing and related infrastructure, and banking.
  • Banks will then be chosen from states considered to be traditional manufacturing hubs.
  • Bank stocks will be limited to approximately 10% of the index at rebalance.
  • RBA screens to exclude companies with non-U.S. sales greater than or equal to 25% and for positive 12-month forward earnings estimates.
  • RBA uses a proprietary portfolio optimization method to weight each individual constituent company. No position will exceed approximately 3% of the total index at rebalance. Other criteria:
    • $6 minimum share price
    • $200 million minimum market cap
    • Liquidity of at least $500k trading volume on average each day
  • At each quarter the index is rebalanced such that each segment of the index will be capped at its predetermined weight. If at any time during the year other than the rebalancing date, a security no longer meets the eligibility criteria, or is otherwise determined to have become ineligible for inclusion in the index, the security is removed from the index and is not replaced.
Fund Overview
TickerAIRR
Fund TypeIndustrials
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBrown Brothers Harriman
CUSIP33738R704
Intraday NAVAIRRIV
Fiscal Year-End09/30
ExchangeNASDAQ Stock Market
Inception3/10/2014
Inception Price$20.00
Inception NAV$19.98
Rebalance FrequencyQuarterly
Expense Ratio0.70%
Current Fund Data (as of 9/30/2014)
Closing NAV1$18.27
Closing Share Price2$18.54
Bid/Ask Midpoint$18.27
Bid/Ask Discount0.00%
Total Net Assets$79,455,492
Outstanding Shares4,350,002
Daily Volume32,730
Average 30-Day Daily Volume59,860
Closing Share Price 52-Week High/Low$20.00 / $17.64
Closing NAV 52-Week High/Low$19.98 / $17.62
Number of Holdings52
Fund Characteristics (as of 8/29/2014)6
Median Market Cap.$1,315
Maximum Market Cap.$8,133
Minimum Market Cap.$280
Price/Earnings19.14
Price/Book2.12
Price/Cash Flow10.95
Price/Sales0.83
Top Holdings (as of 9/30/2014)
Holding Percent
FreightCar America Inc. 4.40%
Pike Corporation 4.29%
Douglas Dynamics, Inc. 3.33%
Trinity Industries, Inc. 3.23%
Dycom Industries, Inc. 3.22%
Acuity Brands, Inc. 3.20%
Quanta Services, Inc. 3.20%
Primoris Services Corporation 3.18%
Covanta Holding Corporation 3.17%
Hubbell Incorporated (Class B) 3.08%

Holdings are subject to change.

Bid/Ask Midpoint and NAV History (Since Inception)
Past performance is not indicative of future results.
Distribution Information
Dividend per Share Amt3$0.0072
30-Day SEC Yield (as of 8/29/2014)40.61%
Index Yield (as of 8/29/2014)51.12%
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 41 2 0 0
3/31/2014 12 1 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 17 3 0 0
3/31/2014 2 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 Industry Exposure (as of 9/30/2014)
Industrials 90.24%
Financials 9.76%
Month End Performance (as of 8/29/2014)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception7
Fund Performance *
NAV 2.60% N/A N/A N/A N/A N/A -3.05%
After Tax Held 2.53% N/A N/A N/A N/A N/A -3.11%
After Tax Sold 1.47% N/A N/A N/A N/A N/A -1.72%
Market Price 2.33% N/A N/A N/A N/A N/A -3.05%
Index Performance **
Richard Bernstein Advisors American Industrial Renaissance Index™ 2.77% N/A N/A N/A N/A N/A -2.69%
S&P 500 Industrials Index 0.31% N/A N/A N/A N/A N/A 3.37%
S&P 500 Index 4.68% N/A N/A N/A N/A N/A 7.75%
Quarter End Performance (as of 6/30/2014)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception7
Fund Performance *
NAV -0.71% N/A N/A N/A N/A N/A -2.65%
After Tax Held -0.78% N/A N/A N/A N/A N/A -2.71%
After Tax Sold -0.40% N/A N/A N/A N/A N/A -1.50%
Market Price -0.81% N/A N/A N/A N/A N/A -2.65%
Index Performance **
Richard Bernstein Advisors American Industrial Renaissance Index™ -0.51% N/A N/A N/A N/A N/A -2.40%
S&P 500 Industrials Index 3.85% N/A N/A N/A N/A N/A 3.38%
S&P 500 Index 5.23% N/A N/A N/A N/A N/A 5.06%

*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.

**Performance information for the Richard Bernstein Advisors American Industrial Renaissance 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 expense ratio for this fund is 0.70%.

The S&P 500 Industrials Index is an unmanaged index which includes the stocks in the industrials sector of the S&P 500 Index.

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

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 Index yield represents the weighted average trailing 12-month dividend of the constituents of the Richard Bernstein Advisors American Industrial Renaissance Index(TM)
6 All market capitalization numbers are in USD$ Millions.
7 Inception Date is 3/10/2014

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's return may not match the return of the Richard Bernstein Advisors American Industrial Renaissance 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 small capitalization and mid capitalization companies. Such companies may experience greater price volatility than larger, more established companies.

The fund invests in industrials companies, financial companies and community banks. The fund is concentrated in securities of companies in the industrials sector which involves additional risks, including limited diversification. General risks of industrials companies include the general state of the economy, intense competition, consolidation, domestic and international politics, excess capacity and consumer demand and spending trends. In addition, they may be significantly affected by overall capital spending levels, economic cycles, technical obsolescence, delays in modernization, labor relations, and government regulations.

Financial companies are especially subject to the adverse effects of economic recession, currency exchange rates, government regulation, decreases in the availability of capital, volatile interest rates, portfolio concentrations in geographic markets and in commercial and residential real estate loans, and competition from new entrants in their fields of business. Unlike larger national or other regional banks that are more geographically diversified, a community bank's financial performance may be highly dependent upon the business environment in certain geographic regions of the U.S. and may be adversely impacted by any downturn or unfavorable economic or employment developments in its local market and the U.S. as a whole.

The fund is classified as "non-diversified" and may invest a relatively high percentage of its assets in a limited number of issuers. As a result, the fund may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, experience increased volatility and be highly concentrated in certain 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.

The fund is not sponsored, endorsed, sold or promoted by RBA. RBA makes no representation or warranty, express or implied, to the owners of the fund or any member of the public regarding the advisability of trading in the fund. RBA's only relationship to First Trust Advisors L.P. ("First Trust") is the licensing of certain trademarks and trade names of RBA and of the index, which is determined, composed and calculated by RBA without regard to First Trust or the fund. Licensor has no obligation to take the needs of First Trust or the owners of the fund into consideration in determining, composing or calculating the index. Licensor is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the fund to be listed or in the determination or calculation of the equation by which the fund is to be converted into cash. Licensor has no obligation or liability in connection with the administration, marketing or trading of the fund.

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