First Trust Launches the First Trust Long/Short Equity ETF

First Trust Advisors L.P. (“First Trust”), a leading ETF provider and asset manager, has launched a new actively-managed exchange-traded fund (“ETF”), the First Trust Long/Short Equity ETF (NYSE Arca: FTLS) (the “fund”). The fund seeks to provide investors with long-term total return and began trading on September 9, 2014.

The fund’s investment process involves constructing both a long and short portfolio consisting of at least 80% in U.S. exchange-listed equity securities of U.S. and foreign companies such as common stocks and ETFs. “Long” and “short” are investment terms used to describe ownership of securities. To buy securities is to “go long” as opposed to “selling short,” which is an advanced trading strategy that involves selling a borrowed security. Short selling is a technique used by the fund to try and profit if the price of the security goes down.

Earnings quality is a central component of security selection for the fund using Sabrient Systems’ and Gradient Analytics’ Earnings Quality Rank (EQR). EQR is a proprietary forensic accounting methodology that measures the aggressiveness of accounting for each company. Research by Sabrient Systems and Gradient Analytics has shown that aggressive accounting practices (low quality earnings) are associated with lower future stock returns compared to those companies with more conservative accounting practices (higher quality earnings). The methodology seeks to identify those companies that have potential to outperform or underperform the market. There can be no assurance that the fund's investment objective will be achieved.

The fund seeks to systematically provide “long” exposure to high quality earnings stocks and “short” exposure to lower quality earnings stocks. The overall portfolio, under normal market conditions, will be 80 to 100% invested in long positions and 0% to 50% invested in short positions. “Long-short offers the opportunity to profit from both the long positions as well as the short positions,” said John Gambla, CFA, FRM, PRM, Senior Portfolio Manager at First Trust, who serves as one of the fund’s Portfolio Managers. “A further potential benefit is that the long and short exposures may serve to offset one another and thereby have the total portfolio be less dependent on market direction than a long only fund.”

The portfolio is overseen by the First Trust Advisors, L.P. Investment Committee. Along with Mr. Gambla, Rob A. Guttschow, CFA, Senior Portfolio Manager at First Trust, serves as portfolio manager of the fund. The two are responsible for day-to-day management decisions for the fund’s portfolio.

For more information about First Trust, please contact Ryan Issakainen of First Trust at (630) 765-8689 or RIssakainen@FTAdvisors.com.

About First Trust

First Trust Advisors L.P., along with its affiliate First Trust Portfolios L.P., are privately held companies which provide a variety of investment services, including asset management and financial advisory services, with collective assets under management or supervision of approximately $101 billion as of August 31, 2014 through unit investment trusts, exchange-traded funds, closed-end funds, mutual funds and separate managed accounts. First Trust is based in Wheaton, Illinois. For more information, visit http://www.ftportfolios.com.

You should consider the fund’s investment objectives, risks, and charges and expenses carefully before investing. Contact First Trust Portfolios L.P. at 1-800-621-1675 to obtain a prospectus or summary prospectus which contains this and other information about the fund. The prospectus or summary prospectus should be read carefully before investing.

ETF Characteristics

The fund lists and principally trades its shares on the NYSE Arca, Inc.

Investors buying or selling fund shares on the secondary market may incur customary brokerage commissions. Market prices may differ to some degree from the net asset value of the shares. Investors who sell fund shares may receive less than the share’s net asset value. Shares may be sold throughout the day on the exchange through any brokerage account. However, unlike mutual funds, shares may only be redeemed directly from the fund by authorized participants, in very large creation/redemption units.

Risk Considerations

The fund’s shares will change in value, and you could lose money by investing in the fund. One of the principal risks of investing in the fund is market risk. Market risk is the risk that a particular security owned by the fund, fund shares or securities in general may fall in value. The fund is subject to management risk because it is an actively managed portfolio. In managing the fund's investment portfolio, the advisor will apply investment techniques and risk analyses that may not have the desired result.

The fund may invest in small capitalization and mid capitalization companies. Such companies may experience greater price volatility than larger, more established companies. Equity securities prices fluctuate for several reasons, including changes in investors’ perceptions of the financial condition of an issuer or the general condition of the stock market.

An investment in a fund containing securities of non-U.S. issuers is subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting non-U.S. issuers. The fund may invest in depositary receipts which may be less liquid than the underlying shares in their primary trading market.

Alternative investments may employ complex strategies, have unique investment and risk characteristics and may not be suitable for all investors.

Shorting may result in greater gains or greater losses. Short selling creates special risks which could result in increased volatility of returns. Because losses on short sales arise from increases in the value of the security sold short, such losses are theoretically unlimited.

The fund may effect a portion of creations and redemptions for cash rather than in-kind securities. As a result, the fund may be less tax-efficient.

The fund currently has fewer assets than larger funds, and like other relatively new funds, large inflows and outflows may impact the fund’s market exposure for limited periods of time.

The fund may invest in the shares of other ETFs, and therefore, the fund’s investment performance and risks may be related to the investment performance and risks of the underlying ETFs. In general, as a shareholder in other ETFs, the fund bears its ratable share of the underlying ETF’s expenses, and would be subject to duplicative expenses to the extent the fund invests in other ETFs.

The use of futures and other derivatives can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives. These risks are heightened when the fund’s portfolio managers use derivatives to enhance the fund’s return or as a substitute for a position or security, rather than solely to hedge (or offset) the risk of a position or security held by the fund.

The fund is classified as “non-diversified” and 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.

First Trust Advisors L.P. is the adviser to the fund. First Trust Advisors L.P. is an affiliate of First Trust Portfolios L.P., the fund’s distributor.