First Trust To Begin Trading The First Trust NASDAQ CEA Smartphone Index Fund (FONE) Friday February 18

First Trust will begin trading its new “First Trust NASDAQ CEA Smartphone Index Fund” (NASDAQ:FONE) Friday, February 18, 2011. 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 NASDAQ OMX CEA Smartphone Index.The NASDAQ OMX CEA Smartphone Index is designed to track the performance of companies engaged in the Smartphone segment of the telecom and technology sectors. The Index includes companies primarily involved in the building and design of handsets, hardware, software, and mobile networks associated with the development, sale, and usage of Smartphone’s. A Smartphone is defined as a wireless, mobile communication device offering advanced capabilities and functionalities, including web access, through the use of an identifiable operating system.

PRINCIPAL INVESTMENT STRATEGIES

The Fund will normally invest at least 90% of its net assets in common stocks and depositary receipts included in the Index.

The Fund, using an “indexing” investment approach, attempts to replicate, before fees and expenses, the performance of the Index. First Trust Advisors L.P. (“First Trust”), the Fund’s investment advisor, 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.

The Index is jointly owned and was developed by The NASDAQ OMX Group, Inc. (the “Index Provider”) and the Consumer Electronics Association (the “CEA”). The Index is calculated and maintained by the Index Provider. The Index is designed to track the performance of companies engaged in the Smartphone segment of the telecommunications and technology sectors. The Index includes companies
primarily involved in the building, design and distribution of handsets, hardware, software and mobile networks associated with the development, sale and usage of Smartphones. The Index Provider defines a Smartphone as a wireless, mobile communication device offering advanced capabilities and functionalities, including web access, through the use of an identifiable operating system.

The Index uses a modified equal dollar weighting methodology. The Index Provider evaluates the Index components semi-annually in March and September of each year for eligibility, using market data through the end of February and August, respectively. Eligible components for the Index are identified as such using the eligibility criteria set forth in this Prospectus under “Index Information.”
Changes to the Index are made effective after the close of trading on the third Friday in March and September. The Index is rebalanced quarterly, each March, June, September and December. As of July 30, 2010, there were 81 securities that comprised the Index.

INDEX REBALANCING

The Index employs a modified equal dollar weighting methodology. At the Evaluation, the Index Securities are classified as Handsets, Software Applications/Hardware Components, or Providers and each sector’s weight will be as follows:

     Handsets: 45%

     Software Applications/Hardware Components: 45%

     Providers: 10%

HANDSETS: Companies primarily engaged in the manufacturing of wireless equipment, specifically of Smartphone handheld devices.

SOFTWARE APPLICATIONS/HARDWARE COMPONENTS: Companies primarily engaged in the support of Smartphones through creation of operating systems, processor chips, network hardware and software, and other elements to support the operations of a Smartphone.

PROVIDERS: Companies engaged in providing the wireless network access for use by Smartphones.

Within each Sector, the Index Securities will be equal weighted.

The Index employs an equal-dollar weighting methodology and is rebalanced quarterly to an equal-dollar value. The Index Securities market values are set to an equal-dollar value corresponding to an equal percent weight of the market value of their respective sector. Index Shares are then calculated by dividing this equal-dollar value for each Index Security by the corresponding last sale
price of the security at the close of trading on the third Friday in March, June, September, and December. The changes are made effective after the close of trading on the same date.

For the comlpete filing click: HERE

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