Rule 497(k)
File No. 333-125751
FIRST TRUST FIRST TRUST
EXCHANGE-TRADED FUND
SUMMARY PROSPECTUS
First Trust ISE-Revere Natural Gas Index Fund
Ticker Symbol: FCG
Exchange: NYSE Arca
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=FCG. 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 April 30, 2012, as supplemented November 13,
2012, are all incorporated by reference into this Summary Prospectus.
INVESTMENT OBJECTIVE
The First Trust ISE-Revere Natural Gas 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 ISE-REVERE Natural Gas Index(TM)
(the "Index").
April 30, 2012,
as supplemented
November 13, 2012
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.
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 0.40%
Distribution and Service (12b-1) Fees 0.00%
Other Expenses 0.23%
-----
Total Annual Fund Operating Expenses 0.63%
Fee Waiver and Expense Reimbursement (1) 0.03%
-----
Total Net Annual Fund Operating Expenses After
Fee Waiver and Expense Reimbursement 0.60%
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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 you retain the Shares or 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 annual operating expenses remain at
current levels until April 30, 2013. The example assumes that the Fund
imposes a 12b-1 fee of 0.25% per annum of the Fund's average daily net assets
following April 30, 2013. Additionally, the example assumes that First
Trust's agreement to waive fees and/or pay the Fund's expenses to the extent
necessary to prevent the operating expenses of the Fund (excluding interest
expense, brokerage commissions and other trading expenses, taxes, and
extraordinary expenses) from exceeding 0.60% of average daily net assets per
year will be terminated following April 30, 2013. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$61 $243 $451 $1,050
-------------------
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(1) First Trust has agreed to waive fees and/or pay the Fund's expenses to the
extent necessary to prevent the operating expenses of the Fund (excluding
interest expense, brokerage commissions and other trading expenses, taxes,
and extraordinary expenses) from exceeding 0.60% of its average daily net
assets per year at least until April 30, 2013. Expenses borne or fees
waived by First Trust are subject to reimbursement by the Fund for up to
three years from the date the fee was waived or expense was incurred, but
no reimbursement payment will be made by the Fund at any time if it would
result in the Fund's expenses exceeding 0.60% of its average daily net
assets per year. The agreement may be terminated by the Trust on behalf of
the Fund at any time and by First Trust only after April 30, 2013 upon 60
days' written notice.
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
Fund 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. During the most recent fiscal year, the Fund's portfolio
turnover rate was 43% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The Fund will normally invest at least 90% of its net assets plus the amount of
any borrowings for investment purposes in common stocks that comprise the Index.
The Fund, using an "indexing" investment approach, attempts to replicate, before
fees and expenses, the performance of the Index. First Trust seeks a correlation
of 0.95 or better (before fees and expenses) between the Fund's performance and
the performance of the Index; a figure of 1.00 would represent perfect
correlation. First Trust will regularly monitor the Fund's tracking accuracy and
will seek to maintain an appropriate correlation.
The Index is developed and owned by the International Securities Exchange, LLC
("ISE" or the "Index Provider"), in consultation with S&P(R), which calculates
and maintains the Index. The Index is designed to objectively identify and
select those stocks from the universe of stocks of companies that are involved
in the exploration and production of natural gas, screened by stock performance
variables as well as statistical factors to optimize Index performance and
ensure the Index has significant correlation to the price of natural gas. The
Index is an equal-weighted index comprised of exchange-listed companies that
derive a substantial portion of their revenues from the exploration and
production of natural gas. The inception date of the Index was October 4, 2006.
As of March 31, 2012, there were 28 securities that comprised the Index.
The Fund intends to invest entirely in securities included in the Index;
however, there may also be instances in which the Fund may be overweighted in
certain securities in the Index, purchase securities not in the Index that are
appropriate to substitute for certain securities in the Index or utilize various
combinations of the above techniques in seeking to track the Index.
The Fund may lend securities representing up to 20% of the value of its total
assets to broker-dealers, banks and other institutions to generate additional
income. When the Fund loans its portfolio securities, it will receive, at the
inception of each loan, cash collateral equal to at least 102% (for domestic
securities) or 105% (for international securities) of the market value of the
loaned securities.
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.
MARKET RISK. Market risk is the risk that a particular stock owned by the Fund,
Shares of the Fund or stocks in general may fall in value. Shares are subject to
market fluctuations caused by such factors as economic, political, regulatory or
market developments, changes in interest rates and perceived trends in stock
prices. Overall stock values could decline generally or could underperform other
investments.
NON-CORRELATION RISK. The Fund's return may not match the return of the Index
for a number of reasons. For example, the Fund incurs operating expenses not
applicable to the Index, 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 Index. In addition, the Fund's portfolio holdings may not
exactly replicate the securities included in the Index or the ratios between the
securities included in the Index.
REPLICATION MANAGEMENT RISK. The Fund is exposed to additional market risk due
to its policy of investing principally in the securities included in the Index.
As a result of this policy, securities held by the Fund will generally not be
bought or sold in response to market fluctuations, and the securities may be
issued by companies concentrated in a particular industry. Therefore, the Fund
will generally not sell a stock because the stock's issuer is in financial
trouble, unless that stock is removed or is anticipated to be removed from the
Index.
NON-DIVERSIFICATION RISK. The Fund is classified as "non-diversified" under the
Investment Company Act of 1940, as amended (the "1940 Act"). As a result, the
Fund is only limited as to the percentage of its assets which 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.
INDEX TRACKING RISK. You should anticipate that the value of Fund Shares will
decline, more or less, in correlation with any decline in the value of the
Fund's Index.
NON-U.S. SECURITIES AND EMERGING MARKETS RISK. The Fund invests in securities of
non-U.S. issuers in the form of U.S. dollar-denominated securities of non-U.S.
issuers traded in the United States. Such securities are subject to higher
volatility than securities of domestic issuers due to possible adverse
political, social or economic developments; restrictions on foreign investment
or exchange of securities; lack of liquidity; excessive taxation; government
seizure of assets; different legal or accounting standards; and less government
supervision and regulation of exchanges in foreign countries. These risks may be
heightened for securities of companies located in, or with significant
operations in, emerging market countries.
DEPOSITARY RECEIPTS RISK. Depositary receipts may be less liquid than the
underlying shares in their primary trading market. Any distributions paid to the
holders of depositary receipts are usually subject to a fee charged by the
depositary. Holders of depositary receipts may have limited voting rights, and
investment restrictions in certain countries may adversely impact the value of
depositary receipts because such restrictions may limit the ability to convert
equity shares into depositary receipts and vice versa. 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.
ENERGY COMPANIES RISK. The Fund invests in energy companies. Energy companies
include integrated oil companies that are involved in the exploration,
production and refining process, gas distributors and pipeline-related companies
and other energy companies involved with mining, producing and delivering
energy-related services and drilling. General problems of energy companies
include volatile fluctuations in price and supply of energy fuels, international
politics, terrorist attacks, reduced demand as a result of increases in energy
efficiency and energy conservation, the success of exploration projects,
clean-up and litigation costs relating to oil spills and environmental damage,
and tax and other regulatory policies of various governments. Natural disasters
such as hurricanes in the Gulf of Mexico will also impact the petroleum
industry. Oil production and refining companies are subject to extensive
federal, state and local environmental laws and regulations regarding air
emissions and the disposal of hazardous materials. In addition, recently oil
prices have been extremely volatile.
NATURAL GAS COMPANIES RISK. One of natural gas companies' primary risks is the
competitive risk associated with the prices of alternative fuels, such as coal
and oil. For example, major natural gas customers such as industrial users and
electric power generators often have the ability to switch between the use of
coal, oil or natural gas. During periods when competing fuels are less
expensive, the revenues of gas utility companies may decline with a
corresponding impact on earnings. After years of booming production, natural gas
firms have recently begun scaling back after record low prices and huge
surpluses. Weather is another risk that may affect natural gas companies. Recent
overproduction and a mild winter have contributed to a scaled back demand for
natural gas in the United States and declining stock prices for natural gas
companies. Additionally, natural gas companies are sensitive to increased
interest rates because of the capital intensive nature of their business.
Furthermore, there are additional risks and hazards that are inherent to natural
gas companies that may cause the price of natural gas to widely fluctuate. The
exploration for, and production of, natural gas is an uncertain process with
many risks. The cost of drilling, completing and operating wells for natural gas
is often uncertain, and a number of factors can delay or prevent drilling
operations or production, including:
o unexpected drilling conditions;
o pressure or irregularities in formations;
o equipment failures or repairs;
o fires or other accidents;
o adverse weather conditions;
o pipeline ruptures or spills; and
o shortages or delays in the availability of drilling rigs and the
delivery of equipment.
SMALLER COMPANY RISK. The Fund invests in small and mid capitalization
companies. Such companies may be more vulnerable to adverse general market or
economic developments, and their securities may be less liquid and may
experience greater price volatility than larger, more established companies as a
result of several factors, including limited trading volumes, products or
financial resources, management inexperience and less publicly available
information. Accordingly, such companies are generally subject to greater market
risk than larger, more established companies.
SECURITIES LENDING RISK. The Fund may engage in securities lending. Securities
lending involves the risk that the Fund may lose money because the borrower of
the Fund's loaned securities fails to return the securities in a timely manner
or at all. The Fund could also lose money in the event of a decline in the value
of the collateral provided for the loaned securities or a decline in the value
of any investments made with cash collateral. These events could also trigger
adverse tax consequences for the Fund.
ANNUAL TOTAL RETURN
The bar chart and table below illustrate the annual calendar year returns of the
Fund based on NAV for the past four years as well as the average annual Fund and
Index returns for the one year and since inception periods ended December 31,
2011. The bar chart and table provide an indication of the risks of investing in
the Fund by showing changes in the Fund's performance from year-to-year and by
showing how the Fund's average annual total returns based on NAV compare to
those of the Index, a broad-based market index and a specialized securities
market index. See "Total Return Information" for additional performance
information regarding the Fund. The Fund's performance information is accessible
on the Fund's website at www.ftportfolios.com.
Returns before taxes do not reflect the effects of any income or capital gains
taxes. All after-tax returns are calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
any state or local tax. Returns after taxes on distributions reflect the taxed
return on the payment of dividends and capital gains. Returns after taxes on
distributions and sale of Shares assume you sold your Shares at period end, and,
therefore, are also adjusted for any capital gains or losses incurred. Returns
for the market indices do not include expenses, which are deducted from Fund
returns, or taxes.
Your own actual after-tax returns will depend on your specific tax situation and
may differ from what is shown here. After-tax returns are not relevant to
investors who hold Fund Shares in tax-deferred accounts such as individual
retirement accounts (IRAs) or employee-sponsored retirement plans.
FIRST TRUST ISE-REVERE NATURAL GAS INDEX FUND--TOTAL RETURNS
CALENDAR YEAR TOTAL RETURNS AS OF 12/31
Performance Year Total Return
---------------- ------------
2008 -46.57%
2009 49.21%
2010 12.22%
2011 -6.85%
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During the four-year period ended December 31, 2011, the Fund's highest and
lowest calendar quarter returns were 34.52% and -40.35%, respectively, for the
quarters ended June 30, 2008 and December 31, 2008. The Fund's past performance
(before and after taxes) is not necessarily an indication of how the Fund will
perform in the future.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 2011
1 Year Since Inception
(5/8/2007)
Return Before Taxes -6.85% -1.53%
Return After Taxes on Distributions -6.97% -1.70%
Return After Taxes on Distributions and Sale of Shares -4.44% -1.40%
ISE-REVERE Natural Gas Index(TM) -6.18% -0.83%
Russell 3000(R) Index 1.03% -1.51%
S&P Composite 1500 Energy Index 3.92% 2.99%
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MANAGEMENT
INVESTMENT ADVISOR
First Trust Advisors L.P. ("First Trust")
PORTFOLIO MANAGERS
The Fund's portfolio is managed by a team (the "Investment Committee")
consisting of:
o Daniel J. Lindquist, Chairman of the Investment Committee and Senior
Vice President of First Trust;
o Robert F. Carey, Chief Investment Officer and Senior Vice President
of First Trust;
o Jon C. Erickson, Senior Vice President of First Trust;
o David G. McGarel, Senior Vice President of First Trust;
o Roger F. Testin, Senior Vice President of First Trust; and
o Stan Ueland, Vice President 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 NAV, only in
Creation Units consisting of 50,000 Shares. The Fund's Creation Units are issued
and redeemed principally in-kind for securities included in the Fund's
portfolio. Individual Shares may only be purchased and sold on NYSE Arca through
a broker-dealer. Shares of the Fund will trade on NYSE Arca at market prices
rather than NAV, which may cause the Shares to trade at a price greater than NAV
(premium) or less than NAV (discount).
TAX INFORMATION
The Fund's distributions are taxable and will generally be taxed as ordinary
income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase 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.
FCGSP0111312
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