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First Trust Dow Jones Internet Index Fund (FDN)
  • 2016 Estimated Capital Gain Distributions
    Certain First Trust Exchange-Traded Funds are expected to pay a long-term capital gain distribution in December.  For a list of exchange-traded funds expected to pay a long-term capital gain distribution, please click here.  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 noted above. 
Investment Objective/Strategy - The First Trust Dow Jones Internet Index Fund is an exchange-traded index fund. The Fund seeks investment results that correspond generally to the price and yield , before the Fund's fees and expenses, of an equity index called the Dow Jones Internet Composite IndexSM.
There can be no assurance that the Fund's investment objectives will be achieved.
  • For a stock to be included in the selection universe for the index, a company must generate at least 50% of its annual sales/revenues from the Internet.
  • To be eligible for the Dow Jones Internet Composite IndexSM, a stock issued through an initial public offering must have a minimum of three months’ trading history. Spinoffs will require this history only if the parent stock has itself been trading for less than three months. An index-eligible stock also must have:
    • A three-month average market capitalization of at least $100 million;
    • A three-month average closing price above $10 if it is not currently in the index;
    • Sufficient trading activity to pass liquidity tests.
  • Index components are selected from the eligible universe using a combination of three-month average float-adjusted market capitalization and three-month average share volume with a goal of capturing 80% of the float-adjusted selection universe.
  • The index composition is reviewed each quarter. Rebalancing takes effect after the close of trading on the third Friday of March, June, September and December.
Fund Overview
TickerFDN
Fund TypeInternet
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBank of New York Mellon
CUSIP33733E302
ISINUS33733E3027
Intraday NAVFDNIV
Fiscal Year-End12/31
ExchangeNYSE Arca
Inception6/19/2006
Inception Price$20.00
Inception NAV$20.00
Rebalance FrequencyQuarterly
Gross Expense Ratio*0.54%
Net Expense Ratio*0.54%
* As of 5/20/2016
Expenses are capped contractually at 0.60% per year, at least until May 19, 2017.
Current Fund Data (as of 12/6/2016)
Closing NAV1$80.44
Closing Share Price2$80.47
Bid/Ask Midpoint$80.44
Bid/Ask Discount0.01%
Total Net Assets$3,551,502,777
Outstanding Shares44,150,002
Daily Volume412,234
Average 30-Day Daily Volume623,360
Closing Share Price 52-Week High/Low$82.95 / $57.33
Closing NAV 52-Week High/Low$82.99 / $57.34
Number of Holdings41
Fund Characteristics (as of 11/30/2016)4
Maximum Market Cap.$528,612
Median Market Cap.$6,493
Minimum Market Cap.$298
Price/Earnings37.54
Price/Book4.05
Price/Cash Flow28.11
Price/Sales3.66
Top Holdings (as of 12/6/2016)
Holding Percent
Amazon.com, Inc. 9.86%
Facebook, Inc. (Class A) 9.05%
Netflix, Inc. 5.80%
Alphabet Inc. (Class A) 4.94%
Alphabet Inc. (Class C) 4.84%
PayPal Holdings, Inc. 4.70%
salesforce.com, inc. 4.60%
Yahoo! Inc. 3.99%
eBay Inc. 3.63%
LinkedIn Corporation (Class A) 3.55%

Holdings are subject to change.

NAV History (Since Inception)
Past performance is not indicative of future results.
Overall Morningstar RatingTM (as of 11/30/2016)3

Among 197 funds in the Technology category. This fund was rated 3 stars/197 funds (3 years), 5 stars/186 funds (5 years), 5 stars/144 funds (10 years).
Bid/Ask Midpoint vs. NAV (as of 9/30/2016)
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
9/30/2016 35 0 0 0
6/30/2016 36 0 0 0
3/31/2016 25 0 0 0
12/31/2015 46 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
9/30/2016 29 0 0 0
6/30/2016 28 0 0 0
3/31/2016 36 0 0 0
12/31/2015 18 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 12/6/2016)
Information Technology 69.50%
Consumer Discretionary 21.13%
Financials 5.63%
Health Care 2.71%
Telecommunication Services 1.03%
Month End Performance (as of 11/30/2016)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception5
Fund Performance *
Net Asset Value (NAV) 1.05% 7.09% 4.83% 12.25% 19.85% 13.20% 14.22%
After Tax Held 1.05% 7.09% 4.83% 12.25% 19.85% 13.18% 14.21%
After Tax Sold 0.59% 4.01% 2.73% 9.58% 16.24% 11.11% 12.08%
Market Price 1.09% 7.12% 4.80% 12.27% 19.86% 13.21% 14.22%
Index Performance **
Dow Jones Internet Composite IndexSM 1.18% 7.58% 5.36% 12.77% 20.51% 13.81% 14.84%
S&P Composite 1500 Information Technology Index 2.50% 12.92% 10.11% 13.89% 15.74% 9.58% 10.82%
S&P 500 Index 1.83% 9.79% 8.06% 9.07% 14.45% 6.89% 7.92%
Quarter End Performance (as of 9/30/2016)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception5
Fund Performance *
Net Asset Value (NAV) 13.13% 9.31% 23.40% 14.96% 22.71% 14.62% 14.70%
After Tax Held 13.13% 9.31% 23.40% 14.96% 22.71% 14.60% 14.68%
After Tax Sold 7.43% 5.27% 13.24% 11.76% 18.72% 12.40% 12.50%
Market Price 13.01% 9.27% 23.43% 14.92% 22.71% 14.61% 14.69%
Index Performance **
Dow Jones Internet Composite IndexSM 13.27% 9.72% 24.05% 15.53% 23.40% 15.25% 15.32%
S&P Composite 1500 Information Technology Index 12.72% 12.79% 22.83% 16.91% 17.99% 10.36% 10.99%
S&P 500 Index 3.85% 7.84% 15.43% 11.16% 16.37% 7.24% 7.86%
3-Year Statistics (as of 11/30/2016)
  Standard Deviation Alpha Beta Sharpe Ratio Correlation
FDN 17.29% 1.90 1.21 0.73 0.75
S&P Composite 1500 Information Technology Index 14.11% 3.32 1.16 0.96 0.89
S&P 500 Index 10.77% --- 1.00 0.82 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 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. 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 Dow Jones Internet Composite IndexSM is for illustrative purposes only and does not represent actual fund performance.
Indexes do 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 0.54%. Expenses are capped contractually at 0.60% per year, at least until May 19, 2017.

S&P Composite 1500 Information Technology Index - The Index is a capitalization-weighted index of companies classified by GICS as information technology within the S&P Composite 1500 Index.

S&P 500 Index - The 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 outstanding shares .
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 for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product 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 Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
4 All market capitalization numbers are in USD$ Millions.
5 Inception Date is 6/19/2006

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 Dow Jones Internet Composite 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. If the fund's authorized participants are unable to proceed with creation/redemption orders and no other authorized participant is able to step forward to create or redeem, fund shares may trade at a discount to the fund's net asset value and possibly face delisting.

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 information technology companies, which are subject to certain risks, including rapidly changing technologies, short product life cycles, fierce competition, aggressive pricing and reduced profit margins, loss of patent, copyright and trademark protections, cyclical market patterns, evolving industry standards and frequent new product introductions. Certain companies may be smaller and less experienced companies, with limited product lines, markets or financial resources. Information technology company stocks, especially those which are Internet related, have experienced extreme price and volume fluctuations that are often unrelated to their operating performance.

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 Dow Jones Internet Composite IndexSM is a product of S&P Dow Jones Indices LLC ("SPDJI"), and has been licensed for use by First Trust. Dow Jones® and Dow Jones Internet Composite IndexSM are trademarks of Dow Jones Trademark Holdings LLC ("Dow Jones") and have been licensed to SPDJI and have been sublicensed for use for certain purposes by First Trust on behalf of the Fund. The First Trust Dow Jones Internet Index Fund is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones or their respective affiliates and none of them makes any representation regarding the advisability of investing in such product.

©2016 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
 
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
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