Defined Australia Index.
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 stocks and/or depositary receipts 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 in the “Defined Index Series,” a family of custom enhanced indices developed, maintained and sponsored by Standard & Poor’s Financial Services LLC (“S&P” or the “Index Provider”). The Index is a modified equal-dollar weighted index designed by S&P to objectively identify and select securities from the S&P Australia BMI Index (the “Base Index”) that may generate positive alpha relative to traditional passive-style indices through the use of the AlphaDEX(R) selection methodology. The Base Index is a comprehensive, rules-based index
designed to measure stock market performance in Australia. The Base Index covers all publicly listed equities with float adjusted market values of $100 million or more and annual dollar value traded of at least $50 million. Alpha is an indication of how much an investment outperforms or underperforms on a risk-adjusted basis relative to its benchmark. As of _______, the Index was comprised of __ securities. The Index is rebalanced and reconstituted as of the last business day of the semi-annual periods ended _______ and _______.
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.
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