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First Trust Dow Jones Internet Index Fund (FDN)
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.
  • The Dow Jones Internet Composite IndexSM, is a float-adjusted market capitalization weighted index designed to represent the largest and most actively traded stocks of U.S. companies in the Internet industry.
  • To be eligible for the Dow Jones Internet Composite IndexSM, a stock must be listed on the NYSE, NYSE MKT or Nasdaq stock exchange and meet the following criteria:
    • Generate a majority of sales/revenues from the Internet.
    • Minimum trading history of three months.
    • Minimum three-month average float-adjusted market capitalization of $100 million.
  • Eligible stocks are ranked first by three-month average float-adjusted market capitalization and then by three-month average share volume. A final rank is calculated based on an equally weighted average of the market cap and volume rankings.
  • Companies are sorted by final rank and 40 companies are selected, consisting of 15 classified as Internet Commerce and 25 classified as Internet Services.
  • The index is weighted by float-adjusted market capitalization.
    • The weight of any individual security is restricted to 10% and the aggregate weight of individual securities with weights of 4.5% or more is restricted to 45%.
  • The index is rebalanced quarterly.
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*0.52%
Net Expense Ratio*0.52%
* As of 5/1/2020
Expenses are capped contractually at 0.60% per year, at least until April 30, 2021.
Current Fund Data (as of 10/21/2020)
Closing NAV1$197.88
Closing Market Price2$197.75
Bid/Ask Midpoint$197.83
Bid/Ask Discount0.03%
30-Day Median Bid/Ask Spread (as of 10/20/2020)30.04%
Total Net Assets$10,497,438,145
Outstanding Shares53,050,002
Daily Volume1,134,774
Average 30-Day Daily Volume620,955
Closing Market Price 52-Week High/Low$206.48 / $107.38
Closing NAV 52-Week High/Low$206.59 / $107.86
Number of Holdings (excluding cash)40
Top Holdings (as of 10/21/2020)*
Holding Percent
Amazon.com, Inc. 9.42%
Facebook, Inc. (Class A) 7.20%
PayPal Holdings, Inc. 5.40%
salesforce.com, inc. 5.00%
Netflix, Inc. 4.75%
Zoom Video Communications, Inc. (Class A) 4.67%
Cisco Systems, Inc. 4.22%
Alphabet Inc. (Class A) 4.21%
Alphabet Inc. (Class C) 4.14%
Snap Inc. (Class A) 2.99%

* Excluding cash.  Holdings are subject to change.

NAV History (Since Inception)
Past performance is not indicative of future results.
Overall Morningstar RatingTM (as of 9/30/2020)4

Among 195 funds in the Technology category. This fund was rated 3 stars/195 funds (3 years), 3 stars/176 funds (5 years), 4 stars/156 funds (10 years) based on risk adjusted returns.
Fund Characteristics (as of 9/30/2020)5
Maximum Market Cap.$1,577,166
Median Market Cap.$18,881
Minimum Market Cap.$1,621
Price/Earnings37.66
Price/Book7.55
Price/Cash Flow26.40
Price/Sales5.37
Bid/Ask Premium/Discount (as of 10/21/2020)
  2019 Q1 2020 Q2 2020 Q3 2020
Days Traded at Premium 114 20 23 35
Days Traded at Discount 138 42 40 29
Top Sector Exposure (as of 10/21/2020)
Information Technology 47.07%
Communication Services 31.87%
Consumer Discretionary 16.51%
Health Care 4.55%
Financials 0.00%
Please note that percentage of 0.00 indicates an amount less than 0.01%.
Month End Performance (as of 9/30/2020)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception6
Fund Performance *
Net Asset Value (NAV) 10.42% 35.34% 39.85% 22.53% 23.28% 20.18% 17.03%
After Tax Held 10.42% 35.34% 39.85% 22.53% 23.28% 20.18% 17.02%
After Tax Sold 6.17% 20.92% 23.59% 17.92% 19.22% 17.52% 15.08%
Market Price 10.44% 35.35% 39.83% 22.52% 23.29% 20.16% 17.03%
Index Performance **
Dow Jones Internet Composite IndexSM 10.55% 35.93% 40.66% 23.25% 23.98% 20.86% 17.68%
S&P Composite 1500 Information Technology Index 11.58% 26.88% 44.92% 27.00% 26.48% 20.02% 15.36%
S&P 500 Index 8.93% 5.57% 15.15% 12.28% 14.15% 13.74% 9.50%
Quarter End Performance (as of 9/30/2020)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception6
Fund Performance *
Net Asset Value (NAV) 10.42% 35.34% 39.85% 22.53% 23.28% 20.18% 17.03%
After Tax Held 10.42% 35.34% 39.85% 22.53% 23.28% 20.18% 17.02%
After Tax Sold 6.17% 20.92% 23.59% 17.92% 19.22% 17.52% 15.08%
Market Price 10.44% 35.35% 39.83% 22.52% 23.29% 20.16% 17.03%
Index Performance **
Dow Jones Internet Composite IndexSM 10.55% 35.93% 40.66% 23.25% 23.98% 20.86% 17.68%
S&P Composite 1500 Information Technology Index 11.58% 26.88% 44.92% 27.00% 26.48% 20.02% 15.36%
S&P 500 Index 8.93% 5.57% 15.15% 12.28% 14.15% 13.74% 9.50%
3-Year Statistics (as of 9/30/2020)
  Standard Deviation Alpha Beta Sharpe Ratio Correlation
FDN 22.70% 8.43 1.12 0.92 0.87
S&P Composite 1500 Information Technology Index 20.62% 12.19 1.07 1.18 0.92
S&P 500 Index 17.74% --- 1.00 0.64 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.

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 market 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 median bid-ask spread is calculated by identifying the national best bid and national best offer ("NBBO") for the fund as of the end of each 10 second interval during each trading day of the last 30 calendar days and dividing the difference between each such bid and offer by the midpoint of the NBBO. The median of those values is identified and that value is expressed as a percentage rounded to the nearest hundredth.
4
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 Morningstar Rating does not include any adjustment for sales loads. 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.
5 All market capitalization numbers are in USD$ Millions.
6 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 security owned by the fund, fund shares or securities in general may fall in value. There can be no assurance that the fund's investment objective will be achieved. The outbreak of the respiratory disease designated as COVID-19 in December 2019 has caused significant volatility and declines in global financial markets, which have caused losses for investors. The COVID-19 pandemic may last for an extended period of time, and will continue to impact the economy for the foreseeable future.

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 Index℠ (“Index”) is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by First Trust. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by First Trust. The Fund is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product nor do they have any liability for any errors, omissions, or interruptions of the Index.

©2020 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
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
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