Fund Description: First Trust Nasdaq ABA Community Bank Index Fund is an exchange-traded index fund or Index ETF which is a separate investment portfolio of First Trust Exchange-Traded Fund, an open-end investment management company. INVESTMENT OBJECTIVE: First Trust Nasdaq ABA Community Bank Index 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 ABA Community Bank Index. INDEX DESCRIPTION: The NASDAQ OMX ABA Community Bank Index is a market capitalization-weighted index. The Index includes a subset of banks and thrifts or their holding companies listed on NASDAQ. The Index is jointly owned and was developed by NASDAQ OMX and the ABA. The Index is calculated and maintained by NASDAQ OMX. For the purposes of the Index, a community bank is considered to be all U.S. banks and thrifts or their holding companies listed on NASDAQ, excluding the 50 largest U.S. banks by asset size. Also excluded are banks that have an international specialization and those banks that have a credit-card specialization, as screened by the ABA based on the most recent data from the FDIC. Securities in the Index have a market capitalization of at least $200 million and as of March 24,2011 there were 99 securities that comprised the Index. FUND STRATEGY: The Fund will normally invest at least 90% of its assets in common stocks that comprise the Index. The Fund, using an indexing investment approach, attempts to replicate, before expenses, the performance of the Index. In seeking to achieve the Fund's investment objective, the Fund generally will invest in all of the stocks comprising the Index in proportion to their weightings in the Index. However, under various circumstances, it may not be possible or practicable to purchase all of those stocks in those weightings. In those circumstances, the Fund may purchase a sample of stocks in the Index. There may also be instances in which the Advisor may choose to overweight certain stocks in the Index, purchase securities not in the Index which are appropriate to substitute for certain securities in the Index, use futures or derivative instruments, or utilize various combinations of the above techniques in seeking to track the Index. The Fund may sell stocks that are represented in the Index in anticipation of their removal from the Index or purchase stocks not represented in the Index in anticipation of their addition to the Index. FUND MANAGEMENT: First Trust Advisors L.P. is the investment advisor to the Fund and is responsible for the selection and ongoing monitoring of the securities and management for the Fund's portfolio.