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First Trust Preferred Securities and Income ETF (FPE)
  • 2015 Estimated Capital Gain Distributions
    The First Trust Exchange-Traded Funds, except for First Trust Managed Municipal ETF (FMB), are not expecting to pay long-term capital gain distributions during the remainder of 2015. 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 Preferred Securities and Income ETF is an actively managed exchange-traded fund. The fund's investment objective is to seek total return and to provide current income. Under normal market conditions, the fund invests at least 80% of its net assets (including investment borrowings) in preferred securities and income-producing debt securities including corporate bonds, high yield securities and convertible securities.
There can be no assurance that the Fund's investment objectives will be achieved.
Fund Overview
Fund TypePreferred Income
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBrown Brothers Harriman
Portfolio Manager/Sub-AdvisorStonebridge Advisors LLC
Fiscal Year-End10/31
ExchangeNYSE Arca
Inception Price$19.99
Inception NAV$19.99
Expense Ratio0.87%
Current Fund Data (as of 11/23/2015)
Closing NAV1$18.95
Closing Share Price2$18.96
Bid/Ask Midpoint$18.98
Bid/Ask Premium0.11%
Total Net Assets$515,638,390
Outstanding Shares27,205,000
Daily Volume295,350
Average 30-Day Daily Volume348,952
Closing Share Price 52-Week High/Low$19.32 / $18.74
Closing NAV 52-Week High/Low$19.27 / $18.70
Number of Holdings146
Fund Characteristics (as of 10/30/2015)
Weighted Average Effective Duration64.19 Years
Top Holdings (as of 11/23/2015)
Holding Percent
CHS Inc., Series 2, 7.10% Variable Rate 2.56%
First Niagara Financial Group, Inc., Series B, 8.625% Variable Rate 2.50%
GMAC Capital Trust I, Series 2, 8.125% Variable Rate, Due 02/15/2040 2.49%
ENEL SPA Variable rate, due 09/24/2073 2.40%
Morgan Stanley, 6.875% Variable Rate 2.31%
Citigroup Capital XIII, Variable Rate, due 10/30/2040 2.25%
Goldman Sachs Group Inc, Series K, 6.375% Variable Rate 2.25%
CITIGROUP INC Variable rate 1.97%
Aviva Plc, 8.250%, Due 12/01/2041 1.85%
VEREIT, Inc., Series F, 6.70% 1.70%

Holdings are subject to change.

Security Type Breakdown (as of 10/30/2015)
Security Percent
Fixed-to-Floating Rate Securities 66.70%
Fixed Rate Securities 30.29%
Floating Rate Securities 3.01%
NAV History (Since Inception)
Past performance is not indicative of future results.
Distribution Information
Dividend per Share Amt3$0.1230
30-Day SEC Yield (as of 10/30/2015)45.89%
12-Month Distribution Rate (as of 10/30/2015)55.97%
Bid/Ask Midpoint vs. NAV (as of 9/30/2015)
Number of Days Bid/Ask Midpoint Above NAV
Quarter Ended 0-49
Basis Points
Basis Points
Basis Points
Basis Points
9/30/2015 46 9 0 0
6/30/2015 62 0 0 0
3/31/2015 59 0 0 0
12/31/2014 53 1 0 0
Number of Days Bid/Ask Midpoint Below NAV
Quarter Ended 0-49
Basis Points
Basis Points
Basis Points
Basis Points
9/30/2015 9 0 0 0
6/30/2015 1 0 0 0
3/31/2015 2 0 0 0
12/31/2014 10 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 Country Breakdown (as of 11/23/2015)
Country Percent
United States 60.09%
United Kingdom 9.40%
Bermuda 7.46%
France 7.34%
The Netherlands 3.73%
Italy 3.42%
Germany 1.80%
Ireland 1.80%
Australia 1.77%
Spain 0.81%
Credit Quality (as of 10/30/2015)
A+ 0.84%
A 0.14%
A- 2.94%
BBB+ 3.35%
BBB 12.88%
BBB- 13.36%
BB+ 18.89%
BB 14.13%
BB- 5.48%
B+ 4.99%
B 6.70%
B- 1.11%
NR 15.19%
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 Industry Exposure (as of 11/23/2015)
Banks 33.70%
Insurance 20.57%
Capital Markets 12.00%
Food Products 5.66%
Diversified Financial Services 5.64%
Consumer Finance 5.01%
Real Estate Investment Trusts (REITs) 4.56%
Electric Utilities 4.02%
Diversified Telecommunication Services 3.04%
Month End Performance (as of 10/30/2015)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund Performance *
Net Asset Value (NAV) 1.09% 5.48% 5.75% N/A N/A N/A 3.59%
After Tax Held 0.41% 3.50% 3.05% N/A N/A N/A 1.17%
After Tax Sold 0.61% 3.08% 3.21% N/A N/A N/A 1.60%
Market Price 1.20% 5.47% 5.96% N/A N/A N/A 3.69%
Index Performance
Bank of America Merrill Lynch Fixed Rate Preferred Securities Index 2.38% 6.34% 7.50% N/A N/A N/A 5.79%
Bank of America Merrill Lynch U.S. Capital Securities Index -0.33% 1.67% 1.60% N/A N/A N/A 5.43%
Blended Index 1.02% 3.99% 4.52% N/A N/A N/A 5.63%
Quarter End Performance (as of 9/30/2015)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund Performance *
Net Asset Value (NAV) 0.42% 3.60% 4.85% N/A N/A N/A 3.00%
After Tax Held -0.22% 1.84% 2.20% N/A N/A N/A 0.59%
After Tax Sold 0.24% 2.04% 2.73% N/A N/A N/A 1.17%
Market Price 0.47% 3.54% 4.96% N/A N/A N/A 3.09%
Index Performance
Bank of America Merrill Lynch Fixed Rate Preferred Securities Index 1.73% 3.98% 6.80% N/A N/A N/A 5.08%
Bank of America Merrill Lynch U.S. Capital Securities Index -1.29% 0.63% 1.22% N/A N/A N/A 5.20%
Blended Index 0.22% 2.30% 3.98% N/A N/A N/A 5.16%

*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.

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.

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 expense ratio for this fund is 0.87%.

Bank of America Merrill Lynch Fixed Rate Preferred Securities Index - The Index tracks the performance of fixed rate US dollar denominated preferred securities issued in the US domestic market.

Bank of America Merrill Lynch U.S. Capital Securities Index - The Index is a subset of the BofA Merrill Lynch U.S. Corporate Index including all fixed-to-floating rate, perpetual callable and capital securities.

Blended Index - The Blended Index consists of a 50/50 blend of the BofA Merrill Lynch Fixed Rate Preferred Securities Index and the BofA Merrill Lynch U.S. Capital Securities Index. The Blended Index was added to reflect the diverse allocation of institutional preferred and hybrid securities in the fund's portfolio. The indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

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 Most recent distribution paid or declared to today's date. Subject to change in the future. There is no guarantee that the fund will declare dividends.
4 The 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 and includes the effects of fee waivers and expense reimbursements, if applicable.
5 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.
6 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.
7 Inception Date is 2/11/2013

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.

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 sub-advisor will apply investment techniques and risk analyses that may not have the desired result. There can be no assurance that the fund's investment objectives will be achieved.

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. Some of the securities held by the fund may be illiquid.

Preferred securities combine some of the characteristics of both common stocks and bonds. Preferred securities are typically subordinated to bonds and other debt instruments in a company's capital structure, in terms of priority to corporate income, and therefore will be subject to greater credit risk than those debt instruments. Preferred securities are also subject to credit risk, interest rate risk and income 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 that the value of a security may decline as a result. Interest rate risk is the risk that the value of fixed-income securities in the fund will decline because of rising market interest rates. Income risk is the risk that income from the fund's portfolio could decline if interest rates fall.

The fund may invest in high yield securities, or "junk" bonds, which 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.

The fund is concentrated in securities of companies in the financial sector which involves additional risks, including limited diversification. 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.

The fund may invest in REITs. Companies involved in the real estate industry are subject to changes in the real estate market, vacancy rates and competition, volatile interest rates and economic recession.

An investment in a fund containing securities of non-U.S. issuers is subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting non-U.S. issuers.

The fund may invest in depositary receipts which may be less liquid than the underlying shares in their primary trading market. The fund may effect a portion of creations and redemptions for cash, rather than in-kind securities. As a result, the fund may be less tax-efficient.

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.

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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