| Investment Objective: |
The First Trust Nasdaq Food & Beverage ETF (the "Fund") seeks investment results that correspond generally to the price and yield of an equity index called the Nasdaq US Smart Food & Beverage Index (the "Index"). The Index is designed to provide exposure to the 30 to 50 top factor-ranked securities from U.S. food and beverage companies. The Index's initial selection universe consists of the component securities of the Nasdaq US Benchmark Index that have been classified as comprising either the beverages sector or food producers' sector of the Industry Classification Benchmark. The universe is screened by a series of three factors (Volatility, Value, and Growth). The Index Provider then ranks the remaining eligible stocks utilizing a factor model that considers (1) gross income (2) return on assets and (3) momentum. A fourth factor, cash flow, is also considered for tie-breaking situations when other factors are inconclusive. Securities are then selected and a modified factor weighted methodology is applied. The Index will not assign a security weight of greater than 8% and no more than five securities may be assigned the maximum 8% weight. |
