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First Trust Morningstar Dividend Leaders Index Fund (FDL)
Investment Objective/Strategy - The First Trust Morningstar Dividend Leaders Index Fund is an exchange-traded index fund. The investment objective of the Fund is to replicate as closely as possible, before fees and expenses, the price and yield of the Morningstar® Dividend Leaders IndexSM.
There can be no assurance that the Fund's investment objectives will be achieved.
  • The index consists of stocks listed on one of the three major exchanges, NYSE, NYSE Amex or the NASDAQ, that have shown dividend consistency and dividend sustainability. Real Estate Investment Trusts (REITs) are not included.
  • Through the application of Morningstar's proprietary multi-step screening process, a universe is identified. The top 100 stocks, based on dividend yield, are selected for the index.
  • The individual holdings are weighted based on each security's shares outstanding, free float factor, and annual indicated dividend per share. The weighting of each holding is capped to enhance portfolio diversification.
  • The index is reconstituted once annually each June and rebalanced four times annually in March, June, September and December.
Fund Overview
TickerFDL
Fund TypeEquity Income
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBank of New York Mellon
CUSIP336917109
Intraday NAVFDLIV
Fiscal Year-End12/31
ExchangeNYSE Arca
Inception3/9/2006
Inception Price$20.00
Inception NAV$20.00
Rebalance FrequencyQuarterly
Gross Expense Ratio*0.49%
Net Expense Ratio*0.45%
* As of 12/31/2013
Expenses are capped contractually at 0.45% per year, at least until April 30, 2015.
Current Fund Data (as of 10/28/2014)
Closing NAV1$23.77
Closing Share Price2$23.77
Bid/Ask Midpoint$23.77
Bid/Ask Premium0.02%
Total Net Assets$841,307,311
Outstanding Shares35,400,002
Daily Volume260,174
Average 30-Day Daily Volume214,125
Closing Share Price 52-Week High/Low$24.13 / $21.00
Closing NAV 52-Week High/Low$24.12 / $20.99
Number of Holdings99
Fund Characteristics (as of 9/30/2014)8
Median Market Cap.$4,408
Maximum Market Cap.$220,982
Minimum Market Cap.$886
Price/Earnings14.57
Price/Book2.20
Price/Cash Flow7.13
Price/Sales1.74
Top Holdings (as of 10/29/2014)
Holding Percent
AT&T Inc. 9.82%
Verizon Communications Inc. 9.40%
Chevron Corporation 8.11%
Pfizer Inc. 7.22%
Philip Morris International Inc. 6.83%
Intel Corporation 5.05%
Altria Group, Inc. 4.98%
ConocoPhillips 3.92%
Duke Energy Corporation 3.44%
The Southern Company 2.77%

Holdings are subject to change.

NAV History (Since Inception)
Past performance is not indicative of future results.
Overall Morningstar RatingTM (as of 9/30/2014)3

Among 1092 funds in the Large Value category. This fund was rated 2 stars/1092 funds (3 years), 5 stars/966 funds (5 years).
Distribution Information
Dividend per Share Amt4$0.2024
30-Day SEC Yield (as of 9/30/2014)53.72%
12-Month Distribution Rate (as of 9/30/2014)63.35%
Index Yield (as of 9/30/2014)74.04%
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 48 0 0 0
6/30/2014 58 0 0 0
3/31/2014 30 0 0 0
12/31/2013 35 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 16 0 0 0
6/30/2014 5 0 0 0
3/31/2014 31 0 0 0
12/31/2013 29 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 10/29/2014)
Utilities 24.37%
Telecommunication Services 19.26%
Consumer Staples 14.60%
Energy 14.47%
Health Care 9.97%
Information Technology 6.33%
Industrials 3.47%
Financials 3.19%
Consumer Discretionary 2.75%
Materials 1.59%
Month End Performance (as of 9/30/2014)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception9
Fund Performance *
NAV -0.79% 9.42% 16.23% 17.33% 16.36% N/A 5.94%
After Tax Held -1.16% 8.24% 14.53% 15.74% 14.77% N/A 4.44%
After Tax Sold -0.45% 5.32% 9.15% 12.89% 12.40% N/A 3.95%
Market Price -0.79% 9.47% 16.17% 17.30% 16.38% N/A 5.94%
Index Performance **
Morningstar® Dividend Leaders IndexSM -0.67% 9.87% 16.86% 17.97% 16.97% N/A 6.47%
S&P 500 Index 1.13% 8.34% 19.73% 22.99% 15.70% N/A 7.51%
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 -0.79% 9.42% 16.23% 17.33% 16.36% N/A 5.94%
After Tax Held -1.16% 8.24% 14.53% 15.74% 14.77% N/A 4.44%
After Tax Sold -0.45% 5.32% 9.15% 12.89% 12.40% N/A 3.95%
Market Price -0.79% 9.47% 16.17% 17.30% 16.38% N/A 5.94%
Index Performance **
Morningstar® Dividend Leaders IndexSM -0.67% 9.87% 16.86% 17.97% 16.97% N/A 6.47%
S&P 500 Index 1.13% 8.34% 19.73% 22.99% 15.70% N/A 7.51%
3-Year Statistics (as of 9/30/2014)
  Standard Deviation Alpha Beta Sharpe Ratio Correlation
FDL 8.69% 6.16 0.47 1.85 0.58
S&P 500 Index 10.57% --- 1.00 1.99 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.

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 Morningstar® Dividend Leaders IndexSM 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 0.49%. Expenses are capped contractually at 0.45% 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.

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 Morningstar® Dividend Leaders Index(SM)
8 All market capitalization numbers are in USD$ Millions.
9 Inception Date is 3/9/2006

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 NYSE Arca, Inc.

The fund's return may not match the return of the Morningstar® Dividend Leaders IndexSM.  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. 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 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.

Morningstar is a service mark of Morningstar, Inc. and has been licensed for use by First Trust Advisors L.P. The First Trust Morningstar® Dividend Leaders Index Fund is not sponsored, endorsed, issued, sold or promoted by Morningstar, Inc., nor does this company make any representation regarding the advisability of investing in the fund.

©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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