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First Trust Preferred Securities and Income ETF (FPE)
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
TickerFPE
Fund TypePreferred Income
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBrown Brothers Harriman
Portfolio Manager/Sub-AdvisorStonebridge Advisors LLC
CUSIP33739E108
Intraday NAVFPEIV
Fiscal Year-End10/31
ExchangeNYSE Arca
Inception2/11/2013
Inception Price$19.99
Inception NAV$19.99
Expense Ratio0.85%
Current Fund Data (as of 4/23/2014)
Closing NAV1$18.87
Closing Share Price2$18.90
Bid/Ask Midpoint$18.89
Bid/Ask Premium0.08%
Total Net Assets$57,646,950
Outstanding Shares3,055,000
Daily Volume16,810
Average 30-Day Daily Volume28,965
Closing Share Price 52-Week High/Low$20.86 / $17.80
Closing NAV 52-Week High/Low$20.80 / $17.88
Number of Holdings90
Fund Characteristics (as of 3/31/2014)
Weighted Average Effective Duration64.79 Years
Top Holdings (as of 4/23/2014)
Holding Percent
Goldman Sachs Group Inc, Series K, 6.375% Variable Rate 3.49%
CLOVERIE PLC ZURICH INS 8.25% 3.03%
GENWORTH HOLDINGS INC Variable rate, due 11/15/2066 2.45%
LLOYDS BANK PLC Variable rate 2.45%
CHS Inc., Series 2, 7.10% Variable Rate 2.34%
Santander Finance Preferred, SA Unipersonal, Series 10, 10.50% 2.23%
Aspen Insurance Holdings Ltd, 7.401% 2.17%
Aviva Plc, 8.250%, Due 12/01/2041 2.11%
MITSUI SUMITOMO INSURANC 7% (Variable after 03/15/2022), due 03/15/2072 2.08%
NATIXIS Variable rate 2.08%

Holdings are subject to change.

Security Type Breakdown (as of 3/31/2014)
Security Percent
Fixed-to-Floating Rate Securities 67.18%
Fixed Rate Securities 31.93%
Floating Rate Securities 0.89%
Bid/Ask Midpoint and NAV History (Since Inception)
Past performance is not indicative of future results.
Distribution Information
Dividend per Share Amt3$0.0657
30-Day SEC Yield (as of 3/31/2014)45.32%
Distribution Rate (as of 3/31/2014)56.84%
Bid/Ask Midpoint vs. NAV (as of 3/31/2014)
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
3/31/2014 12 2 0 0
12/31/2013 16 0 0 0
9/30/2013 16 0 0 0
6/30/2013 48 2 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
3/31/2014 43 4 0 0
12/31/2013 43 5 0 0
9/30/2013 43 5 0 0
6/30/2013 12 2 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 4/23/2014)
Country Percent
United States 48.89%
United Kingdom 14.37%
Bermuda 7.62%
France 6.34%
Ireland 4.90%
The Netherlands 3.90%
Spain 3.41%
Japan 2.10%
Italy 1.99%
Switzerland 1.90%
Credit Quality (as of 3/31/2014)
AA- 0.99%
A 3.03%
A- 7.74%
BBB+ 9.13%
BBB 19.86%
BBB- 20.92%
BB+ 17.21%
BB 9.27%
BB- 1.89%
B+ 0.92%
B 0.86%
NR 8.18%
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 4/23/2014)
Insurance 32.13%
Banks 30.67%
Diversified Financial Services 9.98%
Capital Markets 9.37%
Electric Utilities 3.89%
Food Products 2.36%
Real Estate Investment Trusts (REITs) 2.20%
Multi-Utilities 1.92%
Oil, Gas & Consumable Fuels 0.99%
Month End Performance (as of 3/31/2014)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception7
Fund Performance *
NAV 5.70% 5.70% -2.46% N/A N/A N/A -0.51%
After Tax Held 5.11% 5.11% -4.69% N/A N/A N/A -2.68%
After Tax Sold 3.22% 3.22% -1.43% N/A N/A N/A -1.39%
Market Price 5.70% 5.70% -2.65% N/A N/A N/A -0.55%
Index Performance
BofA Merrill Lynch Fixed Rate Preferred Securities Index 7.70% 7.70% 0.94% N/A N/A N/A 1.97%
Quarter End Performance (as of 3/31/2014)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception7
Fund Performance *
NAV 5.70% 5.70% -2.46% N/A N/A N/A -0.51%
After Tax Held 5.11% 5.11% -4.69% N/A N/A N/A -2.68%
After Tax Sold 3.22% 3.22% -1.43% N/A N/A N/A -1.39%
Market Price 5.70% 5.70% -2.65% N/A N/A N/A -0.55%
Index Performance
BofA Merrill Lynch Fixed Rate Preferred Securities Index 7.70% 7.70% 0.94% N/A N/A N/A 1.97%

*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.

The expense ratio for this fund is 0.85%.

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

Indexes are unmanaged and an investor cannot invest directly in an 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 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 Distribution rate is calculated by dividing the most recent annualized distribution paid or declared by the Net Asset Value. 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
Downloads and Links to Recently Posted Fund Information

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 may not be fully invested at times. 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.

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. Unlike preferred stocks, distributions from trust preferred securities are treated as interest rather than dividends for federal income tax purposes and therefore, are not eligible for the dividends received deduction and do not constitute qualified dividend income. Distributions on trust preferred securities will be made only if interest payments on the related interest-bearing notes of the operating company are made.

Preferred securities are 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 the related risk that the value of a security may decline because of concerns about the issuer's ability to make such payments. Credit risk may be heightened if the fund invests in "high-yield" or "junk" debt. Interest rate risk is the risk that if interest rates rise, the prices of the fixed-rate instruments held by the fund may fall. Income risk is the risk that if interest rates fall, the income from the fund's portfolio will decline as the fund intends to hold floating rate debt that will adjust lower with falling interest rates.

The fund may invest in lower-quality debt issued by companies that are highly leveraged. Lower-quality debt tends to be less liquid than higher-quality debt. 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. You should be aware that an investment that is concentrated in securities of companies in the financial sector 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 foreign issuers is subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting foreign issuers. Additionally, the fund invests in depositary receipts. Depositary receipts may be less liquid than the underlying shares in their primary trading market. Investment restrictions in certain countries may adversely impact the value of depositary receipts because such restrictions may cause equity shares of the underlying issuer to trade at a discount or premium to the market price of the depositary receipts.

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 guarantee that the fund will meet its investment objective.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value
 
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