Rule 497(k)
File No. 333-181507
First Trust
FIRST TRUST Exchange-Traded Fund V
SUMMARY PROSPECTUS
FIRST TRUST MORNINGSTAR MANAGED FUTURES STRATEGY FUND
Ticker Symbol: FMF
Exchange: NYSE Arca, Inc.
Before you invest, you may want to review the Fund's prospectus, which contains
more information about the Fund and its risks. You can find the Fund's
prospectus and other information about the Fund, including the statement of
additional information and most recent reports to shareholders, online at
http://www.ftportfolios.com/retail/ETF/ETFfundnews.aspx?Ticker=FMF. You can also
get this information at no cost by calling (800) 621-1675 or by sending an
e-mail request to info@ftportfolios.com. The Fund's prospectus and statement of
additional information, both dated August 2, 2013, are all incorporated by
reference into this Summary Prospectus.
INVESTMENT OBJECTIVE
First Trust Morningstar Managed Futures Strategy Fund (the "Fund") seeks to
provide investors with positive returns.
August 2, 2013
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. Investors purchasing and selling shares may be subject
to costs (including customary brokerage commissions) charged by their broker,
which are not reflected in the example below.
SHAREHOLDER FEES (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
ANNUAL FUND OPERATING EXPENSES (Expenses that you pay each year as a percentage
of the value of your investment)
Management Fees 0.95%
Distribution and Service (12b-1) Fees (1) 0.00%
Total Other Expenses (2)(3)
Other Expenses of the Fund 0.00%
Expenses of the Subsidiary 0.00%
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Total Annual Fund Operating Expenses 0.95%
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EXAMPLE
The example below is intended to help you compare the cost of investing in the
Fund with the cost of investing in other funds. This example does not take
into account customary brokerage commissions that you pay when purchasing or
selling shares of the Fund in the secondary market.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain at current levels until July 31, 2014 and
thereafter at 1.20% to represent the imposition of the 12b-1 fee of 0.25% per
annum of the Fund's average daily net assets. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS
$97 $356
----------------------
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(1) Although the Fund has adopted a 12b-1 plan that permits it to pay up to
0.25% per annum, it will not pay 12b-1 fees at any time before July 31,
2014.
(2) The Fund had not fully commenced operations as of the date of this
prospectus. "Total Other Expenses" are estimates based on the expenses
the Fund expects to incur for the current fiscal year.
(3) Pursuant to the Investment Management Agreement, First Trust will manage
the investment of the Fund's assets and will be responsible for the Fund
and the Subsidiary's expenses, including the cost of transfer agency,
custody, fund administration, legal, audit and other services, but
excluding fee payments under the Investment Management Agreement,
interest, taxes, brokerage commissions and other expenses connected with
the execution of portfolio transactions, distribution and service fees
pursuant to a 12b-1 plan, if any, and extraordinary expenses.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the Fund's
performance.
PRINCIPAL INVESTMENT STRATEGIES
The Fund is an actively managed exchange-traded fund ("ETF") that seeks to
achieve positive returns that are not directly correlated to broad market equity
or fixed income returns. The Fund uses as a benchmark, the Morningstar
Diversified Futures Index (the "Benchmark"), which is developed, maintained and
sponsored by Morningstar, Inc. ("Morningstar"). The Fund seeks to exceed the
performance of the Benchmark by actively selecting investments for the Fund with
varying maturities from the underlying components of the Benchmark. The Fund is
not an "index tracking" ETF and is not required to invest in all of the
components of the Benchmark. However, the Fund will generally seek to hold
similar instruments to those included in the Benchmark and seek exposure to
commodities, currencies and equity indexes included in the Benchmark.
The Fund is not sponsored, endorsed, sold or promoted by Morningstar.
Morningstar's only relationship to the Fund is the licensing of certain service
marks and service names of Morningstar and of the Benchmark, which is
determined, composed and calculated by Morningstar without regard to the Fund's
advisor or the Fund. Morningstar has no obligation to take the needs of the
Fund's advisor or the Fund into consideration in determining, composing or
calculating the Benchmark. The Benchmark seeks to reflect trends (in either
direction) in the commodity futures, currencies futures and financial futures
markets. The Benchmark is a fully collateralized futures index that includes
highly-liquid futures contracts in commodities, currencies and equity indexes.
However, the Fund is not obligated to invest in the same instruments included in
the Benchmark. There can be no assurance that the Fund's performance will exceed
the performance of the Benchmark at any time.
Under normal market conditions, the Fund through a wholly-owned subsidiary of
the Fund organized under the laws of the Cayman Islands (the "Subsidiary"),
invests in a portfolio of exchange-listed commodity futures, currency futures
and equity index futures (collectively, "Futures Instruments").
The Fund will not invest directly in Futures Instruments. The Fund expects to
gain exposure to these investments exclusively by investing in the Subsidiary.
The Subsidiary is advised by First Trust Advisors L.P., the Fund's advisor. The
Fund's investment in the Subsidiary is intended to provide the Fund with
exposure to commodity markets within the limits of current federal income tax
laws applicable to investment companies such as the Fund, which limit the
ability of investment companies to invest directly in Futures Instruments. The
Subsidiary has the same investment objective as the Fund, but unlike the Fund,
it may invest without limitation in Futures Instruments. Except as otherwise
noted, for purposes of this prospectus, references to the Fund's investments
include the Fund's indirect investments through the Subsidiary. The Fund will
invest up to 25% of its total assets in the Subsidiary. The Subsidiary's
investments provide the Fund with exposure to domestic and international
markets.
The Benchmark and the Subsidiary's holdings in futures contracts will consist
of, but are not limited to, commodities, equity indexes and currencies (Euro,
Japanese Yen, British Pound, Canadian Dollar, Australian Dollar and Swiss
Franc). The Subsidiary's exposure is generally weighted 50% in commodity
futures, 25% in equity futures and 25% in currency futures. The base weights are
typically rebalanced quarterly to maintain the 50%/25%/25% allocation.
The Fund through the Subsidiary attempts to capture the economic benefit derived
from rising and declining trends based on the "moving average" price changes of
commodity futures, currency futures and equity index futures. Each of the
Subsidiary's investments will generally be positioned long, short or flat based
on its price relative to its average price over a recent period, with the
ability to change positions as frequently as daily if the Benchmark is so
adjusted. As a result, the Fund may frequently trade commodity futures
contracts. To be "long" means to hold or be exposed to a security or instrument
with the expectation that its value will increase over time. To be "short" means
to sell or be exposed to a security or instrument with the expectation that it
will fall in value. To be "flat" means to move a position to cash. The Fund,
through the Subsidiary, will benefit if it has a long position in a security or
instrument that increases in value or a short position in a security or
instrument that decreases in value. Conversely, the Fund, through the
Subsidiary, will be adversely impacted if it holds a long position in a security
or instrument that decreases in value and a short position that increases in
value. The Fund through the Subsidiary may have a higher or lower exposure to
any sector or component within the Benchmark at any time.
The remainder of the Fund's assets will be invested in (1) short-term investment
grade fixed income securities that include U.S. government and agency
securities, sovereign debt obligations of non-U.S. countries and repurchase
agreements, (2) money market instruments, (3) ETFs and other investment
companies and (4) cash and other cash equivalents. The Fund uses fixed income
securities as investments and to collateralize the Subsidiary's commodity
exposure on a day-to-day basis. The Fund may also invest directly in ETFs and
other investment companies, including closed-end funds, that provide exposure to
commodities, equity securities and fixed income securities to the extent
permitted under the Investment Company Act of 1940, as amended (the "1940 Act").
The Fund may enter into repurchase agreements with counterparties that are
deemed to present acceptable credit risks. A repurchase agreement is a
transaction in which the Fund purchases securities or other obligations from a
bank or securities dealer and simultaneously commits to resell them to a
counterparty at an agreed-upon date or upon demand and at a price reflecting a
market rate of interest unrelated to the coupon rate or maturity of the
purchased obligations.
PRINCIPAL RISKS
You could lose money by investing in the Fund. An investment in the Fund is not
a deposit of a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other governmental agency. There can be no
assurance that the Fund's investment objective will be achieved. The risks of
the Fund will result from both the Fund's direct investments and its indirect
investments made through the Subsidiary. Accordingly, the risks that result from
the Subsidiary's activities will be described herein as the Fund's risks.
BENCHMARK RISK. The Fund seeks to exceed the performance of the Benchmark. The
Benchmark is entirely model-based. As market dynamics shift over time, the model
may become outdated or inaccurate. The Benchmark and the Fund will take both
long and short positions and should not be used as proxies for taking long-only
positions. The Benchmark and the Fund could lose significant value during
periods when long-only indexes rise. Similarly, the Benchmark and the Fund are
not a substitute for short-only positions. The Benchmark is based on historical
price trends. There can be no assurance that such trends will be reflected in
future market movements. In markets without sustained price trends, or markets
with significant price movements that quickly reverse, the Benchmark and the
Fund may suffer significant losses. The Benchmark is based on the price of
futures contracts. Futures contracts reflect the expected future value of a
commodity, currency or equity index. The Benchmark and the Fund do not reflect
"spot" prices. Spot prices reflect immediate delivery value, not expected future
value.
CASH TRANSACTION RISK. Unlike most ETFs, the Fund currently intends to effect
most creations and redemptions, in whole or in part, for cash, rather than
in-kind, because of the nature of the Fund's underlying investments. As a
result, an investment in the Fund may be less tax efficient than an investment
in a more conventional ETF.
CLEARING BROKER RISK. The failure or bankruptcy of the Fund's and the
Subsidiary's clearing broker could result in a substantial loss of Fund assets.
Under current Commodity Futures Trading Commission ("CFTC") regulations, a
clearing broker maintains customers' assets in a bulk segregated account. If a
clearing broker fails to do so, or is unable to satisfy a substantial deficit in
a customer account, its other customers may be subject to risk of loss of their
funds in the event of that clearing broker's bankruptcy. In that event, the
clearing broker's customers, such as the Fund and the Subsidiary, are entitled
to recover, even in respect of property specifically traceable to them, only a
proportional share of all property available for distribution to all of that
clearing broker's customers.
COMMODITY RISK. The value of Futures Instruments typically is based upon the
price movements of a physical commodity or an economic variable linked to such
price movements. The prices of Futures Instruments may fluctuate quickly and
dramatically and may not correlate to price movements in other asset classes. An
active trading market may not exist for certain commodities. Each of these
factors and events could have a significant negative impact on the Fund.
COUNTERPARTY RISK. The Fund bears the risk that the counterparty to a commodity
derivative or other contract with a third party may default on its obligations
or otherwise fail to honor its obligations. If a counterparty defaults on its
payment obligations, the Fund will lose money and the value of an investment in
Fund shares may decrease. In addition, the Fund may engage in such investment
transactions with a limited number of counterparties.
CREDIT 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.
CURRENCY EXCHANGE RATE RISK. The Fund holds investments that are denominated in
non-U.S. currencies, or in securities that provide exposure to such currencies,
currency exchange rates or interest rates denominated in such currencies.
Changes in currency exchange rates and the relative value of non-U.S. currencies
will affect the value of the Fund's investment and the value of your Fund
shares. Currency exchange rates can be very volatile and can change quickly and
unpredictably. As a result, the value of an investment in the Fund may change
quickly and without warning and you may lose money.
ETF RISK. An ETF trades like common stock and represents a portfolio of
securities. The risks of owning an ETF generally reflect the risks of owning the
underlying securities, although lack of liquidity in an ETF could result in it
being more volatile and ETFs have management fees that increase their costs.
FOREIGN COMMODITY MARKETS RISK. The Fund, through the Subsidiary, will engage in
trading on commodity markets outside the United States on behalf of the Fund.
Trading on such markets is not regulated by any United States government agency
and may involve certain risks not applicable to trading on United States
exchanges. The Fund may not have the same access to certain trades as do various
other participants in foreign markets. Furthermore, as the Fund will determine
its net assets in United States dollars, with respect to trading in foreign
markets the Fund will be subject to the risk of fluctuations in the exchange
rate between the local currency and dollars as well as the possibility of
exchange controls. Certain futures contracts traded on foreign exchanges are
treated differently for federal income tax purposes than are domestic contracts.
FREQUENT TRADING RISK. The Fund regularly purchases and subsequently sells, i.e.
"rolls," individual commodity futures contracts throughout the year so as to
maintain a fully invested position. As the commodity contracts near their
expiration dates, the Fund rolls them over into new contracts. This frequent
trading of contracts may increase the amount of commissions or mark-ups to
broker-dealers that the Fund pays when it buys and sells contracts, which may
detract from the Fund's performance.
FUTURES RISK. The Fund invests in futures through the Subsidiary. All futures
and futures-related products are highly volatile. Price movements are influenced
by, among other things, changing supply and demand relationships; climate;
government agricultural, trade, fiscal, monetary and exchange control programs
and policies; national and international political and economic events; crop
diseases; the purchasing and marketing programs of different nations; and
changes in interest rates. In addition, governments from time to time intervene,
directly and by regulation, in certain markets, particularly those in
currencies.
GAP RISK. The Fund is subject to the risk that a commodity price will change
from one level to another with no trading in between. Usually such movements
occur when there are adverse news announcements, which can cause a commodity
price to drop substantially from the previous day's closing price.
INCOME RISK. Income from the Fund's fixed income investments could decline
during periods of falling interest rates.
INTEREST RATE RISK. Interest rate risk is the risk that the value of the
securities in the Fund will decline because of rising market interest rates.
Interest rate risk is generally lower for shorter term investments and higher
for longer term investments.
INVESTMENT COMPANIES RISK. The Fund may invest in securities of other investment
companies, including ETFs. As a shareholder in other investment companies, the
Fund will bear its ratable share of that investment company's expenses, and
would remain subject to payment of the Fund's advisory and administrative fees
with respect to assets so invested. In addition, the Fund will incur brokerage
costs when purchasing and selling shares of ETFs or other exchange-traded
investment companies.
ISSUER SPECIFIC RISK. Issuer specific events, including changes in the financial
condition of an issuer, can have a negative impact on the value of the Fund.
LIQUIDITY RISK. The Fund invests in Futures Instruments, which may be less
liquid than other types of investments. The illiquidity of Futures Instruments
could have a negative effect on the Fund's ability to achieve its investment
objective and may result in losses to Fund shareholders.
MANAGEMENT RISK. The Fund is subject to management risk because it is an
actively managed portfolio. The Advisor will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that the Fund will meet its investment objective.
MARKET RISK. The trading prices of commodities futures, fixed income securities
and other instruments fluctuate in response to a variety of factors. The Fund's
net asset value and market price may fluctuate significantly in response to
these factors. As a result, an investor could lose money over short or long
periods of time.
NEW FUND RISK. The Fund currently has fewer assets than larger funds, and like
other relatively new funds, large inflows and outflows may impact the Fund's
market exposure for limited periods of time. This impact may be positive or
negative, depending on the direction of market movement during the period
affected.
NON-CORRELATION RISK. The Fund's return may not correlate the return of the
Benchmark for a number of reasons. For example, the Fund incurs operating
expenses not applicable to the Benchmark, and may incur costs in buying and
selling securities, especially when rebalancing the Fund's portfolio holdings to
reflect changes in the composition of the Benchmark. In addition, the Fund's
portfolio holdings may not exactly replicate the securities included in the
Benchmark or the ratios between the securities included in the Benchmark.
NON-DIVERSIFICATION RISK. The Fund is classified as "non-diversified" under the
1940 Act. As a result, the Fund is only limited as to the percentage of its
assets that may be invested in the securities of any one issuer by the
diversification requirements imposed by the Internal Revenue Code of 1986, as
amended (the "Code"). The Fund 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.
NON-U.S. INVESTMENT RISK. The Fund may invest in commodity futures contracts
traded on non-U.S. exchanges. Transactions on non-U.S. exchanges or with
non-U.S. counterparties present risks because they may not subject to the same
degree of regulation as their U.S. counterparts.
PORTFOLIO TURNOVER RISK. The Fund's strategy may frequently involve buying and
selling portfolio securities to rebalance the Fund's exposure to various market
sectors. Higher portfolio turnover may result in the Fund paying higher levels
of transaction costs and generating greater tax liabilities for shareholders.
Portfolio turnover risk may cause the Fund's performance to be less than you
expect.
REGULATORY RISK. The CFTC has adopted amendments to CFTC Rule 4.5, which subject
the Fund and the Subsidiary to regulation by the CFTC and may impose additional
disclosure, reporting and recordkeeping rules on the Fund and the Subsidiary.
Compliance with these additional rules may increase Fund expenses. Certain of
the rules that would apply to the Fund and the Subsidiary have not yet been
adopted, and it is unclear what effect such rules would have on the Fund and the
Subsidiary if they are adopted. In addition, certain exchanges may limit the
maximum net long or net short speculative positions that a party may hold or
control in any particular futures or options contracts, and it is possible that
other regulatory authorities may adopt similar limits. Position limits are
currently the subject of disputes being resolved in the U.S. court system. The
Fund's investment decisions may need to be modified, and commodity contract
positions held by the Fund may have to be liquidated at disadvantageous times or
prices, to avoid exceeding any applicable position limits, potentially
subjecting the Fund to substantial losses. The regulation of commodity
transactions in the United States is a rapidly changing area of law and is
subject to ongoing modification by government, self-regulatory and judicial
action. The effect of any future regulatory change on the Fund is impossible to
predict, but could be substantial and adverse to the Fund.
REPURCHASE AGREEMENT RISK. The Fund's investment in repurchase agreements may be
subject to market and credit risk with respect to the collateral securing the
repurchase agreements. Investments in repurchase agreements also may be subject
to the risk that the market value of the underlying obligations may decline
prior to the expiration of the repurchase agreement term.
SHORT SALES RISK. The Fund may engage in "short sale" transactions. The Fund
will lose value if the security or instrument that is the subject of a short
sale increases in value. The Fund also may enter into a short derivative
position through a futures contracts, or short positions on currency futures. If
the price of the security or derivative that is the subject of a short sale
increases, then the Fund will incur a loss equal to the increase in price from
the time that the short sale was entered into plus any premiums and interest
paid to a third party in connection with the short sale. Therefore, short sales
involve the risk that losses may be exaggerated, potentially losing more money
than the actual cost of the investment. Also, there is the risk that the third
party to the short sale may fail to honor its contract terms, causing a loss to
the Fund.
SUBSIDIARY INVESTMENT RISK. Changes in the laws of the United States and/or the
Cayman Islands, under which the Fund and the Subsidiary are organized,
respectively, could result in the inability of the Fund to operate as intended
and could negatively affect the Fund and its shareholders. The Subsidiary is not
registered under the 1940 Act and is not subject to all the investor protections
of the 1940 Act. Thus, the Fund, as an investor in the Subsidiary, will not have
all the protections offered to investors in registered investment companies.
TAX RISK. The Fund intends to treat any income it may derive from Futures
Instruments (other than derivatives described in Revenue Rulings 2006-1 and
2006-31) received by the Subsidiary as "qualifying income" under the provisions
of the Internal Revenue Code of 1986, as amended, applicable to "regulated
investment companies" ("RICs"), based on a tax opinion received from special
counsel which was based, in part, on numerous private letter rulings ("PLRs")
provided to third parties not associated with the Fund or its affiliates (which
only those parties may rely on as precedent). Shareholders and potential
investors should be aware, however, that, in July 2011, the Internal Revenue
Service ("IRS") suspended the issuance of such PLRs pending its re-examination
of the policies underlying them, which was still ongoing at the date of this
prospectus. If, at the end of that re-examination, the IRS changes its position
with respect to the conclusions reached in those PLRs, then the Fund may be
required to restructure its investments to satisfy the qualifying income
requirement or might cease to qualify as a RIC.
If the Fund did not qualify as a RIC for any taxable year and certain relief
provisions were not available, the Fund's taxable income would be subject to tax
at the Fund level and to a further tax at the shareholder level when such income
is distributed. In such event, in order to re-qualify for taxation as a RIC, the
Fund might be required to recognize unrealized gains, pay substantial taxes and
interest and make certain distributions. This would cause investors to incur
higher tax liabilities than they otherwise would have incurred and would have a
negative impact on Fund returns. In such event, the Fund's Board of Trustees may
determine to reorganize or close the Fund or materially change the Fund's
investment objective and strategies.
In the event that the Fund fails to qualify as a RIC, the Fund will promptly
notify shareholders of the implications of that failure.
The Fund may invest a portion of its assets in equity repurchase agreements.
Recent changes in the law have the potential of changing the character and
source of such instruments potentially subjecting them to unexpected U.S.
taxation. Depending upon the terms of the contracts, the Fund may be required to
indemnify the counterparty for such increased tax.
U.S. GOVERNMENT AND AGENCY SECURITIES RISK. The Fund may invest in U.S.
government obligations. U.S. government obligations include U.S. Treasury
obligations and securities issued or guaranteed by various agencies of the U.S.
government or by various instrumentalities which have been established or
sponsored by the U.S. government. U.S. Treasury obligations are backed by the
"full faith and credit" of the U.S. government. Securities issued or guaranteed
by federal agencies and U.S. government sponsored instrumentalities may or may
not be backed by the full faith and credit of the U.S. government.
VOLATILITY RISK. The Fund seeks to exceed the performance of the Benchmark. The
Fund and Benchmark are designed to capture the long-term economic benefits of
rising or declining market trends. Frequent or significant short-term price
movements could adversely impact the performance of the Benchmark and the Fund.
In addition, the net asset value of the Fund over short-term periods may be more
volatile than other investment options because of the Fund's significant use of
financial instruments that have a leveraging effect. For example, because of the
low margin deposits required, futures trading involves an extremely high degree
of leverage and as a result, a relatively small price movement in a Futures
Instrument may result in immediate and substantial losses to the Fund.
WHIPSAW MARKETS RISK. The Fund may be subject to the forces of "whipsaw" markets
(as opposed to choppy or stable markets), in which significant price movements
develop but then repeatedly reverse, which could cause substantial losses to the
Subsidiary.
PERFORMANCE
The Fund has not yet commenced operations and, therefore, does not have a
performance history. Once available, the Fund's performance information will be
available on the Fund's website at www.ftportfolios.com.
MANAGEMENT
INVESTMENT ADVISOR
First Trust Advisors L.P. ("First Trust" or the "Advisor")
PORTFOLIO MANAGERS
The Fund's portfolio is managed by a team (the "Investment Committee"). The
Investment Committee consists of:
o John Gambla, CFA, FRM, PRM, Senior Portfolio Manager, Alternatives
Investment Team of First Trust;
o Rob A. Guttschow, CFA, Senior Portfolio Manager, Alternatives
Investment Team of First Trust;
o Daniel J. Lindquist, Chairman of the Investment Committee and Managing
Director of First Trust;
o Jon C. Erickson, Senior Vice President of First Trust;
o David G. McGarel, Chief Investment Officer and Managing Director of
First Trust;
o Roger F. Testin, Senior Vice President of First Trust;
o Todd Larson, CFA, Vice President, Fixed Income Portfolio Manager of
First Trust; and
o Timothy S. Henry, CFA, ETF Portfolio Manager of First Trust.
Each Investment Committee member has served as a part of the portfolio
management team of the Fund since inception.
PURCHASE AND SALE OF FUND SHARES
The Fund issues and redeems shares on a continuous basis, at net asset value,
only in Creation Units consisting of 50,000 shares. The Fund's Creation Units
are issued for securities in which the Fund invests and/or cash, and redeemed
for securities and/or cash. Individual shares may only be purchased and sold on
NYSE Arca through a broker-dealer and large institutional investors that have
entered into participation agreements. Shares of the Fund will trade on NYSE
Arca at market prices rather than net asset value, which may cause the shares to
trade at a price greater than net asset value (premium) or less than net asset
value (discount).
TAX INFORMATION
The Fund's distributions are taxable and will generally be taxed as ordinary
income or capital gains. Distributions on shares held in a tax deferred account,
while not immediately taxable, will be subject to tax when the shares are no
longer held in a tax deferred account.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), First Trust and First Trust Portfolios L.P., the
Fund's distributor, may pay the intermediary for the sale of Fund shares and
related services. These payments may create a conflict of interest by
influencing the broker-dealer or other intermediary and your salesperson to
recommend the Fund over another investment. Ask your salesperson or visit your
financial intermediary's website for more information.
FMFSP0080213
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