UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21774
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First Trust Exchange-Traded Fund
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(Exact name of registrant as specified in charter)
1001 Warrenville Road, Suite 300
Lisle, IL 60532
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(Address of principal executive offices) (Zip code)
W.Scott Jardine, Esq.
First Trust Portfolios L.P.
1001 Warrenville Road, Suite 300
Lisle, IL 60532
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(Name and address of agent for service)
registrant's telephone number, including area code: (630) 241-4141
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2005
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
[LOGO][GRAPHIC OMITTED]
FRIST TRUST ADVISORS L.P.
FIRST TRUST EXCHANGE-TRADED FUND
________________________________________________________________________________
Annual Report for the Period
September 27, 2005 (Commencement of Investment Operations)
through December 31, 2005
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TABLE OF CONTENTS
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FIRST TRUST EXCHANGE-TRADED FUND
DECEMBER 31, 2005
Shareholder Letter 1
Portfolio Commentary 2
Portfolio Components 3
Understanding Your Fund Expenses 4
Portfolio of Investments 5
Statement of Assets and Liabilities 15
Statement of Operations 16
Statement of Changes in Net Assets 17
Financial Highlights 18
Notes to Financial Statements 19
Report of Independent Registered Public Accounting Firm 22
Additional Information 23
Proxy Voting Policies and Procedures
Portfolio Holdings
Federal Income Tax Information
Advisory Agreement
Trustees and Officers 25
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933. Forward-looking statements
include statements regarding the goals, beliefs, plans or current expectations
of First Trust Advisors L.P. (the "Advisor") and its respective representatives,
taking into account the information currently available to them. Forward-looking
statements include all statements that do not relate solely to current or
historical fact. For example, forward-looking statements include the use of
words such as "anticipate," "estimate," "intend," "expect," "believe," "plan,"
"may," "should," "would" or other words that convey uncertainty of future events
or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the First Trust Dow Jones Select MicroCap IndexSM
Fund's (the "Fund") actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. When evaluating the information
included in this Annual Report, you are cautioned not to place undue reliance on
these forward-looking statements, which reflect the judgment of the Advisor and
its respective representatives only as of the date hereof. We undertake no
obligation to publicly revise or update these forward-looking statements to
reflect events and circumstances that arise after the date hereof.
HOW TO READ THIS REPORT
This report contains information that can help you evaluate your investment. It
includes details about the portfolio and presents data and analysis that provide
insight into the Fund's performance and investment approach.
By reading the letter from the President of First Trust Exchange-Traded Fund,
James A. Bowen, together with the portfolio commentary you will obtain an
understanding of how the market environment affected its performance. The
statistical information that follows can help you understand the Fund's
performance compared to that of relevant market benchmarks.
It is important to keep in mind that the opinions expressed by Mr. Bowen and
personnel of the Advisor are just that: informed opinions. They should not be
considered to be promises or advice. The opinions, like the statistics, cover
the period through the date on the cover of this report. Of course, the risks of
investing in the Fund are spelled out in the prospectus.
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SHAREHOLDER LETTER
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First Trust Exchange-Traded Fund
Annual Report
December 31, 2005
Dear Shareholders:
We are pleased to present the first annual report to shareholders of First Trust
Dow Jones Select MicroCap Indexsm Fund (the "Fund" AMEX: FDM), the initial
series of the First Trust Exchange-Traded Fund. Although it is a short reporting
period, the Fund is off to a good start. The Fund declared and distributed its
first dividend in December and ended the year with a slight appreciation in net
asset value ("NAV").
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 Dow
Jones Select MicroCap Indexsm (the "Index"). The Index measures the performance
of micro-capitalization stocks traded on the major U.S. exchanges, screening for
size, trading volume and fundamentals. Micro caps exhibit a low correlation with
the broad U.S. market and generally perform differently from equities overall.
Therefore, they are viewed as an effective tool for portfolio diversification.
Following is a review of the portfolio and an update on the Fund's performance.
We thank you for your investment and look forward to serving you in the future.
Sincerely,
/s/ JAMES A. BOWEN
James A. Bowen
President of the First Trust Exchange-Traded Fund
February 10, 2006
Page 1
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PORTFOLIO COMMENTARY
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First Trust Exchange-Traded Fund
2005 Annual Report
First Trust Dow Jones Select MicroCap Index(sm) Fund
The First Trust Dow Jones Select MicroCap Index(sm) Fund (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 Dow Jones Select
MicroCap Index(sm) (the "Index"). The Index measures the performance of selected
U.S. micro-capitalization companies chosen from all common stocks traded on the
New York Stock Exchange ("NYSE"), the American Stock Exchange, Inc. ("AMEX") and
the NASDAQ National Market ("NASDAQ") that are comparatively liquid and have
strong fundamentals relative to the microcapitalization segment as a whole. In
seeking to achieve the Fund's objective, the Fund generally will invest in all
of the stocks comprising the Index in proportion to their weightings in the
Index. For the period September 27, 2005 (commencement of investment operations)
through December 31, 2005, the Fund returned 3.74%, while the Index returned
3.97%.
Portfolio Allocation as of December 31, 2005
% OF % OF
SECTOR NET ASSETS SECTOR NET ASSETS
Consumer Discretionary 16.7 Information Technology 19.0
Consumer Staples 2.5 Materials 4.7
Energy 3.9 Telecommunications 0.9
Financial Services 19.4 Utility 1.2
Health Care 10.0 Cash and Equivalents 0.8
Industrials 20.9
Distributions
On December 30, 2005, the Fund paid ordinary distributions of $0.0184 per share.
Market Overview
Microcap stocks slightly outperformed the overall market for the period
September 27, 2005 through December 31, 2005. The S&P 500 Index advanced a total
of 3.21%. The Index returned 3.97% for the same period.
The best performing sector for the Fund was materials. The largest sector weight
as of December 31, 2005, industrials, produced a minimally positive return for
the period. The top performing stocks, by percentage gain, were Citi Trends,
Inc., Multi-Fineline Electronix, Inc., Gymboree Corp., Candela Corp. and The
Andersons, Inc. The four sectors which carried the lowest weightings for the
Fund as of December 31, 2005, consumer staples, energy, telecommunications and
utility, all declined for the period. The worst performing stocks, by percentage
loss, were Nash Finch Co., Bottomline Technologies, Inc., Presstek, Inc., Sonic
Solutions, Inc. and Merit Medical Systems, Inc.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
- --------------------------------------------------------------------------------
Growth of a $10,000 Initial Investment
September 27, 2005 - December 31, 2005
9/27/05 12/31/05
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First Trust Dow Jones Select MicroCap Index(sm) Fund $10,000 $10,374
The Dow Jones Select MicroCap Index(sm) $10,000 $10,397
- --------------------------------------------------------------------------------
Performance figures assume reinvestment
of all dividend distributions and do not
reflect the deduction of taxes that a
shareholder would pay on Fund
distributions or the redemption of Fund
shares. An index is a statistical composite
that tracks a specified financial market or
sector. Unlike the Fund, the Index does
not actually hold a portfolio of securities
and therefore does not incur the expenses
incurred by the Fund. These expenses
negatively impact the performance of the
Fund. The Fund's past performance is no
guarantee of future results.
Page 2
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PORTFOLIO COMPONENTS
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First Trust Dow Jones Select MicroCap Index(sm) Fund
Portfolio Components*
December 31, 2005
Commercial Services & Supplies 7.0% Multiline Retail 1.0%
Commercial Banks 6.2% Paper & Forest Products 1.0%
Machinery 4.9% Airlines 0.9%
Electronic Equipment & Instruments 4.7% Distributors 0.9%
Specialty Retail 4.6% Household Durables 0.9%
Health Care Equipment & Supplies 4.5% Internet & Catalog Retail 0.9%
Health Care Providers & Services 4.5% Metals & Mining 0.9%
Real Estate 4.1% Road & Rail 0.8%
Software 3.9% Water Utilities 0.7%
Insurance 3.8% Building Products 0.6%
Oil & Gas & Consumable Fuels 3.4% Diversified Telecommunication Services 0.6%
Thrifts & Mortgage Finance 3.4% Leisure Equipment & Products 0.6%
Hotels, Restaurants & Leisure 3.1% Media 0.6%
Electrical Equipment 3.0% Biotechnology 0.5%
IT Services 2.7% Electric Utilities 0.5%
Aerospace & Defense 2.5% Energy Equipment & Services 0.5%
Semiconductors & Semiconductor Equipment 2.2% Personal Products 0.5%
Internet Software & Services 1.9% Pharmaceuticals 0.5%
Textiles, Apparel & Luxury Goods 1.8% Air Freight & Logistics 0.4%
Chemicals 1.7% Capital Markets 0.4%
Computers & Peripherals 1.7% Diversified Consumer Services 0.4%
Consumer Finance 1.6% Household Products 0.4%
Auto Components 1.5% Industrial Conglomerates 0.4%
Food Products 1.4% Food & Staples Retailing 0.3%
Communications Equipment 1.3% Wireless Telecommunication Services 0.3%
Trading Companies & Distributors 1.1% Beverages 0.2%
Containers & Packaging 1.0% Net Other Assets and Liabilities 0.8%
* Percentages are based upon net assets.
Page 3
FIRST TRUST EXCHANGE-TRADED FUND
UNDERSTANDING YOUR FUND EXPENSES
December 31, 2005
As a shareholder of the First Trust Dow Jones Select MicroCap IndexSM Fund (the
"Fund"), you incur ongoing costs, including management fees, distribution and/or
service fees, and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these cost with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period from September 27, 2005 to December 31,
2005.
Actual Expenses
The first line in the following table provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period
September 27, 2005 (Commencement of Investment Operations) to December 31, 2005"
to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line in the following table provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads). Therefore the second line in the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
Expenses Paid During
Beginning Annualized Period*
Account Value Expense Ratio September 27, 2005
September 27, 2005 Ending Based on the (Commencement of
(Commencement of Account Value Number of Days Investment Operations)
Investment Operations) December 31, 2005 in the Period to December 31, 2005
First Trust Dow Jones Select MicroCap Index(sm) Fund
Actual $1,000 $1,037 0.60% $1.61
Hypothetical (5% return before expenses) $1,000 $1,012 0.60% $1.59
* Expenses are equal to the Fund's annualized expense ratio of 0.60%, multiplied
by the average account value over the period, multiplied by 96/365 (to reflect
the actual period September 27, 2005 (commencement of investment operations) to
December 31, 2005).
Page 4
FIRST TRUST DOW JONES SELECT MICROCAP INDEX(sm) FUND
PORTFOLIO OF INVESTMENTS
December 31, 2005
Market
Shares Value
- ------ ------
COMMON STOCKS--99.2%
Aerospace & Defense--2.5%
10,723 AAR Corp.* $ 256,816
4,762 ARGON ST, Inc.* 147,527
5,504 EDO Corp. 148,938
6,797 Essex Corp.* 115,889
4,992 Herley Industries, Inc.* 82,418
3,522 MTC Technologies, Inc.* 96,432
3,763 United Industrial Corp. 155,675
----------
1,003,695
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Air Freight & Logistics--0.4%
20,480 ABX Air, Inc.* 160,358
----------
Airlines--0.9%
13,368 ExpressJet Holdings, Inc.* 108,147
10,120 Republic Airways Holdings, Inc.* 153,824
7,635 World Air Holdings, Inc.* 73,449
----------
335,420
----------
Auto Components--1.5%
7,474 Aftermarket Technology Corp.* 145,295
5,875 Drew Industries, Inc.* 165,616
5,626 Keystone Automotive Industries, Inc.* 177,106
5,100 Midas, Inc.* 93,636
----------
581,653
----------
Beverages--0.2%
3,197 Boston Beer (The) Co., Inc., Class A* 79,925
----------
Biotechnology--0.5%
7,331 Albany Molecular Research, Inc.* 89,072
3,652 Kendle International, Inc.* 94,002
----------
183,074
----------
Building Products--0.6%
3,858 American Woodmark Corp. 95,640
8,979 Apogee Enterprises, Inc. 145,639
----------
241,279
----------
Capital Markets--0.4%
11,955 TradeStation Group, Inc.* 148,003
----------
Chemicals--1.7%
8,228 Arch Chemicals, Inc. 246,017
12,254 Calgon Carbon Corp. 69,725
3,965 Pioneer Cos., Inc.* 118,831
11,288 Spartech Corp. 247,772
----------
682,345
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See Notes to Financial Statements. Page 5
FIRST TRUST DOW JONES SELECT MICROCAP INDEX(sm) FUND
PORTFOLIO OF INVESTMENTS - (Continued)
December 31, 2005
Market
Shares Value
- ------ ------
COMMON STOCKS - (Continued)
Commercial Banks--6.2%
3,657 Bank of the Ozarks, Inc. $ 134,943
8,561 Cardinal Financial Corp. 94,171
2,507 Columbia Bancorp. 103,414
5,483 Columbia Banking Systems, Inc. 156,540
3,829 First Indiana Corp. 131,641
936 First Regional Bancorp* 63,227
3,085 IBERIABANK Corp. 157,366
5,396 Independent Bank Corp. 153,948
5,673 Main Street Banks, Inc. 154,476
2,666 Mercantile Bank Corp. 102,641
5,480 Old Second Bancorp, Inc. 167,524
4,783 Southwest Bancorp, Inc. 95,660
6,281 Sterling Bancorp 123,924
9,431 Sterling Financial Corp. 186,734
8,233 Texas Capital Bancshares, Inc.* 184,502
7,659 Unizan Financial Corp. 203,422
3,400 Vineyard National Bancorp Co. 104,856
7,941 Wilshire Bancorp, Inc. 136,506
----------
2,455,495
----------
Commercial Services & Supplies--7.0%
12,398 Bowne & Co., Inc. 183,986
6,137 Casella Waste Systems, Inc.* 78,492
4,453 CDI Corp. 122,012
6,232 Central Parking Corp. 85,503
4,599 Clean Harbors, Inc.* 132,497
3,903 CRA International, Inc.* 186,134
4,754 Duratek, Inc.* 70,977
8,933 Ennis, Inc. 162,313
8,407 Healthcare Services Group 174,109
6,720 Heidrick & Struggles International, Inc.* 215,376
2,636 Huron Consulting Group, Inc.* 63,238
4,858 Innovative Solutions & Support, Inc.* 62,085
12,518 Kforce, Inc.* 139,701
4,158 LECG Corp.* 72,266
7,031 McGrath Rentcorp. 195,462
5,342 Mobile Mini, Inc.* 253,212
2,556 Providence Service (The) Corp.* 73,587
1,496 Schawk, Inc. 31,042
5,545 SOURCECORP.* 132,969
21,409 Spherion Corp.* 214,304
5,392 Standard Register (The) Co. 85,248
----------
2,734,513
----------
Communications Equipment--1.3%
6,013 Anaren, Inc.* 93,983
2,939 Bel Fuse, Inc., Class B 93,460
7,085 Inter-Tel, Inc. 138,654
6,283 Spectralink Corp. 74,579
6,017 Superior Essex, Inc.* 121,303
----------
521,979
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Page 6 See Notes to Financial Statements.
FIRST TRUST DOW JONES SELECT MICROCAP INDEX(sm) FUND
PORTFOLIO OF INVESTMENTS - (Continued)
December 31, 2005
Market
Shares Value
- ------ ------
COMMON STOCKS - (Continued)
Computers & Peripherals--1.7%
21,507 Advanced Digital Information Corp.* $ 210,554
15,247 Dot Hill Systems Corp.* 105,662
9,739 Novatel Wireless, Inc.* 117,939
4,903 Presstek, Inc.* 44,323
2,894 Rimage Corp.* 83,868
3,645 Stratasys, Inc.* 91,161
----------
653,507
----------
Consumer Finance--1.6%
4,516 ACE Cash Express, Inc.* 105,449
5,906 Collegiate Funding Services, Inc.* 116,644
3,645 Dollar Financial Corp.* 43,740
4,731 First Cash Financial Services, Inc.* 137,956
2,012 United PanAm Financial Corp.* 52,050
5,779 World Acceptance Corp.* 164,701
----------
620,540
----------
Containers & Packaging--1.0%
6,857 Chesapeake Corp. 116,432
9,447 Myers Industries, Inc. 137,737
10,930 Rock-Tenn Co., Class A 149,195
----------
403,364
----------
Distributors--0.9%
2,635 Andersons (The), Inc. 113,516
6,674 Audiovox Corp.* 92,502
11,710 Source Interlink Cos., Inc.* 130,215
----------
336,233
----------
Diversified Consumer Services--0.4%
5,492 Encore Capital Group, Inc.* 95,286
2,311 Escala Group, Inc.* 46,867
----------
142,153
----------
Diversified Telecommunication Services--0.6%
14,863 General Communication, Inc., Class A* 153,534
9,720 Talk America Holdings, Inc.* 83,884
----------
237,418
----------
Electric Utilities--0.5%
8,972 Empire District Electric (The) Co. 182,401
----------
Electrical Equipment--3.0%
13,081 Artesyn Technologies, Inc.* 134,734
12,901 CTS Corp. 142,685
5,698 Daktronics, Inc. 168,490
7,145 EnerSys* 93,171
17,224 General Cable Corp.* 339,313
8,647 II-VI, Inc.* 154,522
See Notes to Financial Statements. Page 7
FIRST TRUST DOW JONES SELECT MICROCAP INDEX(sm) FUND
PORTFOLIO OF INVESTMENTS - (Continued)
December 31, 2005
Market
Shares Value
- ------ ------
COMMON STOCKS - (Continued)
Electrical Equipment--(Continued)
3,530 LaBarge, Inc. $ 50,726
6,935 LSI Industries, Inc. 108,602
----------
1,192,243
----------
Electronic Equipment & Instruments--4.7%
10,680 Agilysys, Inc. 194,590
9,831 Bell Microproducts, Inc.* 75,207
8,932 Brightpoint, Inc.* 247,683
6,130 Digital Theater Systems, Inc.* 90,724
6,084 LoJack Corp.* 146,807
4,795 Measurement Specialties, Inc.* 116,758
7,395 Mercury Computer Systems, Inc.* 152,559
13,132 Methode Electronics, Inc., Class A 130,926
2,969 Multi-Fineline Electronix, Inc.* 143,017
1,826 PAR Technology Corp.* 50,690
6,362 Park Electrochemical Corp. 165,285
7,011 Radisys Corp.* 121,571
5,245 Rofin-Sinar Technologies, Inc.* 228,000
----------
1,863,817
----------
Energy Equipment & Services--0.5%
7,063 GulfMark Offshore, Inc.* 209,206
----------
Food & Staples Retailing--0.3%
2,948 Nash Finch Co. 75,115
4,503 Smart & Final, Inc.* 57,999
----------
133,114
----------
Food Products--1.4%
1,532 Green Mountain Coffee Roasters, Inc.* 62,199
2,423 J & J Snack Foods Corp. 143,950
10,228 Lance, Inc. 190,548
4,891 Peet's Coffee & Tea, Inc.* 148,442
----------
545,139
----------
Health Care Equipment & Supplies--4.5%
3,715 Angiodynamics, Inc.* 94,844
7,891 Candela Corp.* 113,946
4,056 Cantel Medical Corp.* 72,765
3,250 Cutera, Inc.* 85,670
4,367 Datascope Corp. 144,329
6,278 DJ Orthopedics, Inc.* 173,147
14,457 Encore Medical Corp.* 71,562
7,517 Greatbatch, Inc.* 195,517
4,403 ICU Medical, Inc.* 172,642
7,888 Meridian Bioscience, Inc. 158,864
5,685 Merit Medical Systems, Inc.* 69,016
6,125 Molecular Devices Corp.* 177,196
5,480 SonoSite, Inc.* 191,855
9,651 TriPath Imaging, Inc.* 58,292
----------
1,779,645
----------
Page 8 See Notes to Financial Statements.
FIRST TRUST DOW JONES SELECT MICROCAP INDEX(sm) FUND
PORTFOLIO OF INVESTMENTS - (Continued)
December 31, 2005
Market
Shares Value
- ------ ------
COMMON STOCKS - (Continued)
Health Care Providers & Services--4.5%
11,460 Allied Healthcare International, Inc.* $ 70,364
10,105 AMN Healthcare Services, Inc.* 199,877
2,783 Computer Programs & Systems, Inc. 115,300
8,184 Gentiva Health Services, Inc.* 120,632
11,058 HealthTronics, Inc.* 84,594
4,336 Horizon Health Corp.* 98,124
4,334 Lifeline Systems, Inc.* 158,451
1,838 Medcath Corp.* 34,095
12,126 Odyssey HealthCare, Inc.* 226,028
7,319 Option Care, Inc. 97,782
5,908 Phase Forward, Inc.* 57,603
3,888 Radiation Therapy Services, Inc.* 137,285
5,909 RehabCare Group, Inc.* 119,362
6,360 Res-Care, Inc.* 110,473
6,001 Symbion, Inc.* 138,023
----------
1,767,993
----------
Hotels, Restaurants & Leisure--3.1%
7,283 AFC Enterprises* 110,119
4,936 BJ'S Restaurants, Inc.* 112,837
3,144 Churchill Downs, Inc. 115,479
4,997 Dave & Buster's, Inc.* 87,997
6,338 Lone Star Steakhouse & Saloon, Inc. 150,464
7,900 Luby's, Inc.* 105,070
13,285 Progressive Gaming Corp.* 131,123
3,055 Monarch Casino & Resort, Inc.* 69,043
14,642 Ryan's Restaurant Group, Inc.* 176,583
9,660 Steak N Shake (The) Co.* 163,737
----------
1,222,452
----------
Household Durables--0.9%
1,530 Avatar Holdings, Inc.* 84,028
16,188 Interface, Inc., Class A* 133,065
2,089 Orleans Homebuilders, Inc. 38,333
4,572 Stanley Furniture Co., Inc. 105,979
----------
361,405
----------
Household Products--0.4%
5,524 WD-40 Co. 145,060
----------
Industrial Conglomerates--0.4%
6,004 Raven Industries, Inc. 173,215
----------
Insurance--3.8%
2,475 Affirmative Insurance Holdings, Inc. 36,110
15,944 American Equity Investment Life Holding Co. 208,069
2,995 American Physicians Capital, Inc.* 137,141
2,879 Baldwin & Lyons, Inc. 69,960
6,543 Bristol West Holdings, Inc. 124,513
4,605 Clark, Inc. 61,016
See Notes to Financial Statements. Page 9
FIRST TRUST DOW JONES SELECT MICROCAP INDEX(sm) FUND
PORTFOLIO OF INVESTMENTS - (Continued)
December 31, 2005
Market
Shares Value
- ------ ------
COMMON STOCKS - (Continued)
Insurance--(Continued)
5,828 Direct General Corp. $ 98,493
3,428 FPIC Insurance Group, Inc.* 118,952
4,142 Navigators Group, Inc.* 180,633
7,568 Presidential Life Corp. 144,095
4,820 Safety Insurance Group, Inc. 194,583
5,961 Tower Group, Inc. 131,023
----------
1,504,588
----------
Internet & Catalog Retail--0.9%
1,375 Blair Corp. 53,543
5,637 Blue Nile, Inc.* 227,227
6,472 PetMed Express, Inc.* 91,708
----------
372,478
----------
Internet Software & Services--1.9%
4,275 Blue Coat Systems, Inc.* 195,454
6,283 eCollege.com, Inc.* 113,282
17,890 Entrust, Inc.* 86,588
17,491 Ipass, Inc.* 114,741
8,667 Online Resources Corp.* 95,770
18,934 SonicWALL, Inc.* 149,957
----------
755,792
----------
IT Services--2.7%
19,142 Ciber, Inc.* 126,337
4,721 Forrester Research, Inc.* 88,519
9,466 vGevity HR, Inc. 243,466
12,361 ivvvnfoUSA, Inc.* 135,106
5,246 Intrado, Inc.* 120,763
5,790 RightNow Technologies, Inc.* 106,883
3,737 SI International, Inc.* 114,240
8,662 SYKES Enterprises, Inc.* 115,811
----------
1,051,125
----------
Leisure Equipment & Products--0.6%
9,465 Jakks Pacific, Inc.* 198,197
7,677 Sturm Ruger & Co., Inc. 53,816
----------
252,013
----------
Machinery--4.9%
4,493 3D Systems* 80,874
7,473 Accuride Corp.* 96,402
2,876 American Science & Engineering, Inc.* 179,376
5,342 Astec Industries, Inc.* 174,470
1,908 Badger Meter, Inc. 74,870
3,834 Cascade Corp. 179,853
6,036 Columbus McKinnon Corp.* 132,671
7,373 Commercial Vehicle Group, Inc.* 138,465
6,187 Flanders Corp.* 75,234
3,625 Gehl Co.* 95,156
Page 10 See Notes to Financial Statements.
FIRST TRUST DOW JONES SELECT MICROCAP INDEX(sm) FUND
PORTFOLIO OF INVESTMENTS - (Continued)
December 31, 2005
Market
Shares Value
- ------ ------
COMMON STOCKS - (Continued)
Machinery--(Continued)
4,217 Greenbrier Cos., Inc. $ 119,763
3,869 Lindsay Manufacturing Co. 74,401
2,167 Middleby Corp.* 187,445
4,045 Robbins & Myers, Inc. 82,316
2,477 Tennant Co. 128,804
6,280 Titan International, Inc. 108,330
----------
1,928,430
----------
Media--0.6%
3,850 Courier Corp. 132,209
7,228 Playboy Enterprises, Inc.* 100,397
----------
232,606
----------
Metals & Mining--0.9%
8,735 AMCOL International Corp. 179,242
8,016 Ryerson Tull, Inc. 194,949
----------
374,191
----------
Multiline Retail--1.0%
3,618 Bon-Ton Stores (The), Inc. 69,212
2,905 Conn's, Inc.* 107,107
12,900 Fred's, Inc. 209,884
----------
386,203
----------
Oil & Gas & Consumable Fuels--3.4%
4,686 Atlas America, Inc.* 282,190
3,715 Atlas Pipeline Partners LP (Master Limited Partnership) 150,829
5,872 Callon Petroleum Co.* 103,641
5,693 Edge Petroleum Corp.* 141,813
4,726 Giant Industries, Inc.* 245,563
2,809 Maritrans, Inc. 73,090
15,433 Petroquest Energy, Inc.* 127,785
5,293 Resource America, Inc., Class A 90,246
17,476 Transmontaigne, Inc.* 115,342
----------
1,330,499
----------
Paper & Forest Products--1.0%
3,897 Deltic Timber Corp. 202,099
13,460 Glatfelter 190,997
----------
393,096
----------
Personal Products--0.5%
2,677 Inter Parfums, Inc. 48,079
3,942 Nature's Sunshine Products, Inc. 71,271
2,343 Parlux Fragrances, Inc.* 71,532
----------
190,882
----------
See Notes to Financial Statements. Page 11
FIRST TRUST DOW JONES SELECT MICROCAP INDEX(sm) FUND
PORTFOLIO OF INVESTMENTS - (Continued)
December 31, 2005
Market
Shares Value
- ------ ------
COMMON STOCKS - (Continued)
Pharmaceuticals--0.5%
6,333 Bentley Pharmaceuticals, Inc.* $ 103,925
4,651 CNS, Inc. 101,903
----------
205,828
----------
Real Estate--4.1%
16,954 Anworth Mortgage Asset Corp. 123,764
5,886 Arbor Realty Trust, Inc. 152,565
15,395 Ashford Hospitality Trust, Inc. 161,494
8,458 Bimini Mortgage Management, Inc. 76,545
6,116 Boykin Lodging Co.* 74,738
16,512 Highland Hospitality Corp. 182,458
9,716 Kite Realty Group Trust 150,307
9,595 MortgageIT Holdings, Inc. 131,068
5,911 Ramco-Gershenson Properties 157,528
5,936 Tarragon Corp.* 122,400
5,794 Town & Country Trust (The) 195,894
9,257 Winston Hotels, Inc. 91,644
----------
1,620,405
----------
Road & Rail--0.8%
3,230 Marten Transport Ltd.* 58,851
13,555 RailAmerica, Inc.* 148,969
3,546 USA Truck, Inc.* 103,295
----------
311,115
----------
Semiconductors & Semiconductor Equipment--2.2%
3,704 ADE Corp.* 89,118
7,157 Cohu, Inc. 163,681
6,822 Diodes, Inc.* 211,823
6,959 IXYS Corp.* 81,351
4,576 Portal Player, Inc.* 129,592
7,329 Standard Microsystems Corp.* 210,269
----------
885,834
----------
Software--3.9%
2,557 Ansoft Corp.* 87,066
4,748 Blackbaud, Inc. 81,096
7,557 Bottomline Technologies, Inc.* 83,278
4,671 EPIQ Systems, Inc.* 86,600
13,388 InterVoice, Inc.* 106,568
10,213 JDA Software Group, Inc.* 173,723
7,142 MRO Software, Inc.* 100,274
6,437 Open Solutions, Inc.* 147,536
7,598 Radiant Systems, Inc.* 92,392
11,843 Secure Computing Corp.* 145,195
5,861 Sonic Solutions, Inc.* 88,560
5,851 SPSS, Inc.* 180,971
9,482 Witness Systems, Inc.* 186,511
----------
1,559,770
----------
Page 12 See Notes to Financial Statements.
FIRST TRUST DOW JONES SELECT MICROCAP INDEX(sm) FUND
PORTFOLIO OF INVESTMENTS - (Continued)
December 31, 2005
Market
Shares Value
- ------ ------
COMMON STOCKS - (Continued)
Specialty Retail--4.6%
3,060 America's Car-Mart, Inc.* $ 50,551
7,967 Big 5 Sporting Goods Corp. 174,398
4,801 Cache, Inc.* 83,153
9,944 Casual Male Retail Group, Inc.* 60,957
10,771 Cato (The) Corp. 231,038
5,654 Charlotte Russe Holding, Inc.* 117,773
12,826 Christopher & Banks Corp. 240,872
1,592 Citi Trends, Inc.* 67,962
2,045 DEB Shops, Inc. 60,798
10,807 Gymboree Corp.* 252,884
4,678 JOS A Bank Clothiers, Inc.* 203,072
5,448 Lithia Motors, Inc. 171,285
2,375 Zumiez Inc.* 102,648
----------
1,817,391
----------
Textiles, Apparel & Luxury Goods--1.8%
9,946 Hartmarx Corp.* 77,678
7,844 Iconix Brand Group, Inc.* 79,930
4,259 Kenneth Cole Productions, Inc., Class A 108,605
6,442 Movado Group, Inc. 117,889
2,639 Perry Ellis International, Inc.* 50,141
3,980 Steven Madden Ltd.* 116,335
12,770 Stride Rite Corp. 173,161
----------
723,739
----------
Thrifts & Mortgage Finance--3.4%
11,857 Dime Community Bancshares 173,231
2,994 Federal Agricultural Mortgage Corp. 89,610
8,215 Franklin Bank Corp.* 147,788
2,022 ITLA Capital Corp.* 98,775
10,851 KNBT Bancorp, Inc. 176,763
14,848 Partners Trust Financial Group, Inc. 178,917
16,134 Provident New York Bancorp 177,635
5,743 TierOne Corp. 168,902
2,278 WSFS Financial Corp. 139,528
----------
1,351,149
----------
Trading Companies & Distributors--1.1%
9,771 Interline Brands, Inc.* 222,290
4,960 Nuco2, Inc.* 138,285
5,214 Rush Enterprises, Inc., Class A* 77,584
----------
438,159
----------
Water Utilities--0.7%
5,860 American States Water Co. 180,488
7,137 Southwest Water Co. 102,130
----------
282,618
----------
See Notes to Financial Statements. Page 13
FIRST TRUST DOW JONES SELECT MICROCAP INDEX(sm) FUND
PORTFOLIO OF INVESTMENTS - (Continued)
December 31, 2005
Market
Shares Value
- ------ ------
COMMON STOCKS - (Continued)
Wireless Telecommunication Services--0.3%
8,183 Iowa Telecommunications Services, Inc. $ 126,755
-----------
Total Common Stocks 39,191,310
(Cost $38,268,021) -----------
Total Investments--99.2%
(Cost $38,268,021)** 39,191,310
Net Other Assets & Liabilities--0.8% 300,630
-----------
Net Assets--100.0% $39,491,940
===========
- -----------------------------
* Non-income producing security.
** Aggregate cost for federal income tax purposes is $38,336,070.
Page 14 See Notes to Financial Statements.
FIRST TRUST EXCHANGE-TRADED FUND
Statement of Assets and Liabilities
December 31, 2005
First Trust Dow Jones
Select MicroCap
Index(sm) Fund
---------------------
ASSETS:
Investments at value, (Cost $38,268,021) $ 39,191,310
Cash 2,226
Receivables:
Capital shares sold 4,146,013
Investment securities sold 307,040
Dividends 34,723
From investment advisor 68,239
Other assets 745
------------
Total Assets 43,750,296
------------
LIABILITIES:
Payables:
Investment securities purchased 4,162,731
Investment advisory fees 40,534
Accrued expenses 55,091
------------
Total Liabilities 4,258,356
------------
NET ASSETS $ 39,491,940
============
NET ASSETS consist of:
Paid-in capital $ 38,646,897
Par value 19,050
Undistributed net investment income 9,834
Accumulated net realized loss on investments (107,130)
Net unrealized appreciation on investments 923,289
------------
NET ASSETS $ 39,491,940
============
Shares outstanding (unlimited amount authorized, $0.01 par value) 1,905,000
------------
Net asset value per share $ 20.73
============
See Notes to Financial Statements. Page 15
FIRST TRUST EXCHANGE-TRADED FUND
Statement of Operations
For the Period September 27, 2005* through December 31, 2005
First Trust Dow Jones
Select MicroCap
Index(sm) Fund
---------------------
INVESTMENT INCOME:
Dividends $ 89,853
------------
Total Income 89,853
------------
EXPENSES:
Investment advisory fees 40,534
Audit and tax fees 35,481
Trustees' fees and expenses 10,192
Legal fees 6,370
Licensing fees 6,370
Listing fees 6,244
Printing fees 5,009
Accounting and administration fees 4,053
Custodian fees 1,013
Transfer agent fees 405
Other expenses 1,209
------------
Total Expenses 116,880
Less fees waived and expenses reimbursed by
the investment advisor (68,239)
------------
Net Expenses 48,641
------------
NET INVESTMENT INCOME 41,212
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on investments (107,136)
Net change in unrealized appreciation of investments 923,289
------------
Net realized and unrealized gain on investments 816,153
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 857,365
============
* Commencement of investment operations.
Page 16 See Notes to Financial Statements.
FIRST TRUST EXCHANGE-TRADED FUND
Statement of Changes in Net Assets
For the Period September 27, 2005* through December 31, 2005
First Trust Dow Jones
Select MicroCap
Index(sm) Fund
---------------------
OPERATIONS:
Net investment income $ 41,212
Net realized loss on investments (107,136)
Net change in unrealized appreciation of investments 923,289
------------
Net increase in net assets resulting from operations 857,365
------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (31,372)
------------
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold 38,665,947
------------
Net increase in net assets resulting from
shareholder transactions 38,665,947
------------
Net increase in net assets 39,491,940
NET ASSETS:
Beginning of Period --
------------
End of Period $ 39,491,940
============
Undistributed net investment income at end of period $ 9,834
============
CHANGES IN SHARES OUTSTANDING:
Shares sold 1,905,000
Shares repurchased --
Shares outstanding, beginning of period --
------------
Shares outstanding, end of period 1,905,000
============
* Commencement of investment operations.
See Notes to Financial Statements. Page 17
FIRST TRUST EXCHANGE-TRADED FUND
First Trust Dow Jones Select MicroCap IndexSM Fund
Financial Highlights
For a Share outstanding throughout the period
For the Period
September 27, 2005*
through
December 31, 2005
--------------------
Net asset value, beginning of period $ 20.00
------------
Income from Investment Operations:
Net investment income** 0.03
Net realized and unrealized gain on investments 0.72
------------
Total from investment operations 0.75
------------
Distributions paid to shareholders from:
Net investment income $ (0.02)
------------
Net asset value, end of period $ 20.73
------------
TOTAL RETURN *** 3.74%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 39,492
Ratios to average net assets:
Ratio of net expenses to average net assets ++ 0.60%
Ratio of total expenses to average net assets ++ 1.44%
Ratio of net investment income to average net assets ++ 0.51%
Portfolio turnover rate + 6.06%
* Commencement of investment operations.
** Based on average shares outstanding.
*** Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividend
distributions at net asset value during the period, and redemption at net
asset value on the last day of the period. Total return calculated for a
period of less than one year is not annualized. The total return would
have been lower if certain fees had not been waived and expenses reimbursed
by the investment advisor.
+ Portfolio turnover is not annualized and does not include securities received
or delivered from processing creations or redemptions.
++ Annualized.
Page 18 See Notes to Financial Statements.
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
First Trust Exchange-Traded Fund
December 31, 2005
Note 1. Organization
First Trust Exchange-Traded Fund (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on August 8,
2003, and is registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust
currently consists of one fund, the First Trust Dow Jones Select MicroCap
IndexSM Fund (the "Fund"), which represents a separate series of beneficial
interest in the Trust. The Fund's inception date was September 22, 2005 and it
commenced investment operations on September 27, 2005. The Fund was listed on
the American Stock Exchange, Inc. ("AMEX") on September 30, 2005 and trades
under the ticker symbol FDM at market prices that may differ from the net asset
value ("NAV") of the shares. Unlike conventional mutual funds, the Fund issues
and redeems shares on a continuous basis, at NAV, only in large specified blocks
consisting of 50,000 shares called a "Creation Unit." Creation Units are issued
and redeemed principally in-kind for securities included in The Dow Jones Select
MicroCap IndexSM (the "Index"). Except when aggregated in Creation Units, shares
are not redeemable securities of the Fund. The investment objective of the Fund
is to seek investment results that correspond generally to the price and yield
(before the Fund's fees and expenses) of the Index.
Note 2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
A. Portfolio Valuation
The Fund determines the NAV of its shares daily, as of the close of regular
session trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m.
Eastern time, on each day the NYSE is open for trading. The NAV is computed by
dividing the value of all assets of the Fund (including accrued interest and
dividends), less all liabilities (including accrued expenses and dividend
declared but unpaid), by the total number of shares outstanding.
The Fund's investments are valued at market value or, in the absence of market
value with respect to any portfolio securities, at fair value according to
procedures adopted by the Trust's Board of Trustees. Portfolio securities listed
on any exchange other than the NASDAQ National Market ("NASDAQ") are valued at
the last sale price on the business day as of which such value is being
determined. If there has been no sale on such day, the securities are valued at
the mean of the most recent bid and asked prices on such day. Securities traded
on the NASDAQ are valued at the NASDAQ Official Closing Price as determined by
NASDAQ. Portfolio securities traded on more than one securities exchange are
valued at the last sale price on the business day as of which such value is
being determined at the close of the exchange representing the principal market
for such securities. Portfolio securities traded in the over-the-counter market,
but excluding securities traded on the NASDAQ, are valued at the closing bid
prices. Short-term investments that mature in less than 60 days are valued at
amortized cost.
B. Securities Transactions and Investment Income
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income, if any, is
recorded on the accrual basis.
The Fund may hold publicly-traded master limited partnerships. Distributions
from such investments may include a return of capital component.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income on such securities
is not accrued until settlement date. The Fund instructs the custodian to
segregate assets of the Fund with a current value at least equal to the amount
of its when-issued purchase commitments.
Page 19
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (Continued)
- -------------------------------------------------------------------------------
First Trust Exchange-Traded Fund
December 31, 2005
C. Dividends and Distribution to Shareholders
Dividends from net investment income of the Fund, if any, are declared and paid
semi-annually or as the Board of Trustees may determine from time to time.
Distributions of net capital gains earned by the Fund, if any, are distributed
at least annually.
Distributions from income and capital gains are determined in accordance with
income tax regulations, which may differ from accounting principles generally
accepted in the United States of America. These differences are primarily due to
differing treatments of income and gains on various investment securities held
by the Fund, timing differences and differing characterization of distributions
made by the Fund. Permanent differences incurred during the period ended
December 31, 2005, resulting in book and tax accounting differences, have been
reclassified at period end to reflect a decrease in accumulated net realized
loss on investments by $6 and a decrease in undistributed net investment income
by $6. Net assets were not affected by this reclassification.
The tax character of distributions paid during the period ended December 31,
2005 is as follows:
Distributions paid from:
2005
---------
Ordinary Income $31,372
As of December 31, 2005, the components of distributable earnings on a tax basis
were as follows:
Undistributed Ordinary Income $ 10,469
Net Unrealized Appreciation $855,240
Capital losses incurred after October 31 ("post-October losses") within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund will defer post-October losses in the amount of $39,717.
D. Income Taxes
The Fund intends to qualify as a regulated investment company by complying with
the requirements under Subchapter M of the Internal Revenue Code of 1986, as
amended, and by distributing substantially all of its net investment income and
net realized gains to shareholders. Accordingly, no provision has been made for
federal and state income taxes.
E. Expenses
The Fund will pay all expenses directly related to its operations. First Trust
Advisors L.P. ("First Trust") has entered into a non-transferable, non-exclusive
license agreement with Dow Jones & Company, Inc. ("Dow Jones"), which allows for
the use by First Trust of certain trademarks and trade names of Dow Jones and
the Index. The Fund is a sub-licensee to this license agreement.
Note 3. Investment Advisory Fee and Other Affiliated Transactions
First Trust (or the "Advisor") is a limited partnership with one limited
partner, Grace Partners of DuPage L.P., and one general partner, The Charger
Corporation. First Trust serves as investment advisor to the Fund pursuant to an
Investment Management Agreement. First Trust is responsible for the selection
and ongoing monitoring of the securities in the Fund's portfolio and certain
other services necessary for the management of the Fund. For these services,
First Trust is entitled to a monthly fee calculated at an annual rate of 0.50%
of the Fund's average daily net assets.
The Bank of New York is the administrator, custodian, fund accountant and
transfer agent for the Fund.
The Trust and the Advisor have entered into an Excess Expense Agreement in
which the Advisor has agreed to waive fees and/or pay Fund expenses to the
extent necessary to prevent the operating expenses of the Fund (excluding
interest expense, brokerage commissions and other trading expenses, taxes
and extraordinary expenses) from exceeding 0.60% of average daily net assets
per year (the "Expense Cap"), at least until September 30, 2007. Expenses
borne by the Advisor are subject to reimbursement by the Fund up to three
years from the date the fee or expense was incurred, but no reimbursement
Page 20
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (Continued)
- -------------------------------------------------------------------------------
First Trust Exchange-Traded Fund
December 31, 2005
payment will be made by the Fund if it would result in the Fund exceeding its
Expense Cap.
The Trust pays each Trustee who is not an officer or employee of First Trust or
any of its affiliates an annual retainer of $10,000 which includes compensation
for all regular quarterly board meetings and regular committee meetings. No
additional meeting fees are paid in connection with regular quarterly board
meetings or regular committee meetings. Additional fees of $1,000 and $500 are
paid to non-interested Trustees for special board meetings and non-regular
committee meetings, respectively. These additional fees are shared by the Fund
and by other funds in the First Trust fund complex, not part of this Trust, that
participate in the particular meeting and are not per fund fees. Trustees are
also reimbursed for travel and out-of-pocket expenses in connection with all
meetings. Effective January 1, 2006, non-interested Trustees will no longer be
paid additional fees of $1,000 and $500 for special board meetings and
non-regular committee meetings, respectively.
Note 4. Purchases and Sales of Securities
Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments and in-kind transactions, for the period ended December
31, 2005, were $1,624,380 and $1,845,009, respectively. For the period ended
December 31, 2005, the cost of in-kind purchases was $38,603,072. There were no
in-kind sale transactions. Gains on in-kind transactions are not considered
taxable for federal income tax purposes.
As of December 31, 2005, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $2,377,503
and the aggregate gross unrealized depreciation from all securities in which
there was an excess of tax cost over value was $1,522,263.
Note 5. Capital
As of December 31, 2005, 1,905,000 shares were issued and outstanding with a par
value of $0.01 per share.
Shares are created and redeemed by the Fund only in Creation Unit size
aggregations of 50,000 shares. Transaction fees at scheduled amounts ranging
from $500 to $2,000 per Creation Unit are charged to those persons creating or
redeeming Creation Units. Such transactions are generally permitted on an
in-kind basis, with a balancing cash component to equate the transactions to the
net asset value per unit of the Fund on the transaction date.
Page 21
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- -------------------------------------------------------------------------------
To the Board of Trustees of First Trust Exchange-Traded Fund and Shareholders of
First Trust Dow Jones Select MicroCap IndexSM Fund:
We have audited the accompanying statement of assets and liabilities of First
Trust Dow Jones Select MicroCap IndexSM Fund (the "Fund"), a series of the First
Trust Exchange-Traded Fund, including the portfolio of investments, as of
December 31, 2005, and the related statements of operations and changes in net
assets, and the financial highlights for the period September 27, 2005
(commencement of investment operations) through December 31, 2005. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of December 31, 2005, by correspondence with the Fund's
custodian and broker. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of First
Trust Dow Jones Select MicroCap IndexSM Fund as of December 31, 2005, the
results of its operations, the changes in its net assets, and the financial
highlights for the period September 27, 2005 (commencement of investment
operations) through December 31, 2005, in conformity with accounting principles
generally accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
February 17, 2006
Page 22
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------
First Trust Exchange-Traded Fund
December 31, 2005 (Unaudited)
Proxy Voting Policies and Procedures
A description of the policies and procedures that the Trust uses to determine
how to vote proxies and information on how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 will
be available (1) without charge, upon request, by calling (800) 988-5891; (2) on
the Trust's website located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's website at http://www.sec.gov.
Portfolio Holdings
The Trust files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Trust's Forms N-Q are available (1) by calling (800)
988-5891; (2) on the Trust's website located at http://www.ftportfolios.com; (3)
on the SEC's website at http://www.sec.gov; and (4) for review and copying at
the SEC's Public Reference Room ("PRR") in Washington, DC. Information regarding
the operation of the PRR may be obtained by calling 1-800- SEC-0330.
Federal Income Tax Information
100% of investment income (dividend income plus short-term gains, if any) for
the Fund qualifies for the dividends-received deduction and as qualified
dividend income.
Advisory Agreement
Board Considerations Regarding Approval of Advisory Contract for the First Trust
Dow Jones Select MicroCap Index(sm) Fund
The Board of Trustees unanimously approved the First Trust Dow Jones Select
MicroCap IndexSM Fund's (the "Fund") Investment Management Agreement (the
"Agreement") for an initial two-year term at a meeting held on June 13, 2005.
The Board of Trustees determined that the Agreement is in the best interests of
the Fund and the shareholders and that the compensation arrangement set forth in
the Agreement is fair and reasonable in light of the services, expenses and such
other matters as the Trustees considered to be relevant in the exercise of their
reasonable business judgment.
To reach this determination, the Trustees considered their duties under the
Investment Company Act of 1940, as amended (the "1940 Act") as well as under the
general principles of state law in reviewing and approving advisory contracts;
the requirements of the 1940 Act in such matters; the fiduciary duty of
investment advisers with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards of
trustees have fulfilled their duties; and the factors to be considered by the
Trustees in voting on such agreements. To assist the Board in its evaluation of
the proposed advisory contract with First Trust Advisors L.P. ("First Trust"),
the Independent Trustees received a report in advance of the Board meeting
responding to a request for information from counsel to the Independent
Trustees. The report, among other things, outlined the services to be provided
by First Trust (including the relevant personnel responsible for these services
and their experience, an organization chart of First Trust and First Trust's
Form ADV); the proposed advisory fee as compared to those of comparable funds
(prepared by an independent third party); the proposed advisory fee compared to
fees charged to other First Trust clients; estimated expenses of the Fund
compared to comparable funds (prepared by an independent third party as well as
a supplemental expense report of similar exchange-traded funds prepared by First
Trust); the nature of expenses to be incurred in providing services to the Fund
and the potential for economies of scale, if any; the financial statement of
First Trust; fall-out benefits to First Trust and First Trust Portfolios L.P.;
and a summary of First Trust's compliance program. The Board of Trustees also
noted the services provided by First Trust and the advisory fee of 0.50% of
average daily net assets. It also considered that First Trust has agreed to
waive fees and/or pay Fund expenses to the extent necessary to prevent the
operating expenses of the Fund (excluding interest expense, brokerage
commissions, trading expenses, taxes and extraordinary expenses) from exceeding
0.60% of average daily net assets per year for two years. Expenses borne by
First Trust are proposed to be subject to reimbursement by the Fund for up to
three years from the date the fee or expense was incurred, but no reimbursement
payment would be made by the Fund if it would result in the Fund exceeding its
expense cap.
The Board of Trustees applied its business judgment to determine whether the
arrangements between the Fund and First Trust are reasonable business
arrangements from the Fund's perspective as well as from the perspective of
shareholders. In evaluating whether to approve the Agreement, the Independent
Trustees considered the nature, extent and quality of services to be provided
under the Agreement, and noted that First Trust employees provided management
services to other investment companies in the First Trust complex with
Page 23
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION - (Continued)
- -------------------------------------------------------------------------------
First Trust Exchange-Traded Fund
December 31, 2005 (Unaudited)
diligence and care. They also considered the compliance program that had been
developed by First Trust and the skills of its employees who would be working
with the Fund. The Independent Trustees also considered the efforts expended by
First Trust in organizing the Trust and arranging for the service providers,
particularly The Bank of New York, to provide services to the Fund. The
Independent Trustees concluded they were comfortable that First Trust had the
capabilities and resources to oversee the operations of the Fund, including the
services to be provided by the service providers. Since the Fund is newly
organized, the Board did not consider investment performance of the Fund, but
the Board did consider performance of the applicable index. The Independent
Trustees also reviewed information compiled by First Trust from Lipper Inc. on
management and advisory fees charged to "similar" exchange-traded funds, and
they discussed with representatives of First Trust certain differences between
those funds and the Fund, as well as the similarities between the fees and
expense caps for the Fund and other funds, based on information provided by
First Trust. The Independent Trustees noted First Trust's commitment to attempt
to analyze whether economies of scale can be realized as Fund assets increase
and operations experience is accumulated, and noted that First Trust intended to
continue to make investments in infrastructure and personnel. The Independent
Trustees took the costs to be borne by First Trust in connection with its
services to be performed under the Agreement into consideration and noted that
First Trust was unable to estimate the profitability of the Agreement to First
Trust, but had agreed to cap the Fund's expenses for two years. The Independent
Trustees considered that First Trust had identified as a fall-out benefit to
First Trust and First Trust Portfolios, L.P. their exposure to investors and
brokers who, in the absence of the Fund, may have had no dealings with First
Trust, noting that First Trust would not utilize soft dollars in connection with
its management of the Fund's portfolio.
The Board of Trustees concluded that First Trust had the capabilities, resources
and personnel necessary to manage the Fund. Based upon such information as it
considered necessary to the exercise of its reasonable business judgment, the
Board of Trustees concluded unanimously that it was in the best interests of the
Fund to approve the Agreement.
Page 24
- -------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
- -------------------------------------------------------------------------------
First Trust Exchange-Traded Fund
December 31, 2005 (Unaudited)
Board of Trustees and Officers
Information pertaining to the Trustees and officers* of the Trust is set forth
below. The statement of additional information includes additional information
about the Trustees and is available without charge, upon request, by calling
(800) 988-5891.
Number of Other
Portfolios Trusteeships/
Name, D.O.B., Address and Term of Office and Principal Occupation(s) in Fund Complex Directorships
Position(s) with the Registrant Length of Time Served During Past 5 Years Overseen by Trustee Held by Trustee
- ----------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
- ----------------------------------------------------------------------------------------------------------------------------------
Richard E. Erickson, Trustee o One year term Physician; President, 24 portfolios None
D.O.B. 04/51 o 6 months served Wheaton Orthopedics;
c/o First Trust Advisors L.P. Co-owner and Co-
1001 Warrenville Road Director, Sports Med
Suite 300 Center for Fitness;
Lisle, IL 60532 Limited Partner,
Gundersen Real Estate
Partnership
Thomas R. Kadlec, Trustee o One year term Vice President and 24 portfolios None
D.O.B. 11/57 o 6 months served Chief Financial Officer
c/o First Trust Advisors (1990 to present), ADM
L.P. Investor Services, Inc.
1001 Warrenville Road (Futures Commission
Suite 300 Merchant); Registered
Lisle, IL 60532 Representative (2000 to
present), Segerdahl &
Company, Inc., an
NASD member (Broker-
Dealer); President,
ADM Derivatives, Inc.
(May 2005 to present)
Niel B. Nielson, Trustee o One year term President, Covenant 24 portfolios Director of Good
D.O.B. 03/54 o 6 months served College (June 2002 to News Publishers-
c/o First Trust Advisors present); Pastor, College Crossway Books;
L.P. Church in Wheaton Covenant Transport,
1001 Warrenville Road (1997 to June 2002) Inc.
Suite 300
Lisle, IL 60532
David M. Oster, Trustee o One year term Trader (self-employed) 12 portfolios None
D.O.B. 03/64 o 6 months served (1987 to present,
c/o First Trust Advisors Options Trading and
L.P. Market Making)
1001 Warrenville Road
Suite 300
Lisle, IL 60532
Page 25
- -------------------------------------------------------------------------------
TRUSTEES AND OFFICERS - (Continued)
- -------------------------------------------------------------------------------
First Trust Exchange-Traded Fund
December 31, 2005 (Unaudited)
Board of Trustees and Officers (Continued)
Number of Other
Portfolios Trusteeships/
Name, D.O.B., Address and Term of Office and Principal Occupation(s) in Fund Complex Directorships
Position(s) with the Registrant Length of Time Served During Past 5 Years Overseen by Trustee Held by Trustee
- ----------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
- ----------------------------------------------------------------------------------------------------------------------------------
James A. Bowen, Trustee o One year Trustee President, First Trust 24 portfolios None
President, Chairman of the term and indefinite Advisors L.P. and First
Board and CEO officer term Trust Portfolios L.P.;
D.O.B. 09/55 o 6 months served Chairman of the Board,
1001 Warrenville Road BondWave LLC and
Suite 300 Stonebridge Advisors
Lisle, IL 60532 LLC
- ----------------------------------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT TRUSTEES
- ----------------------------------------------------------------------------------------------------------------------------------
Mark R. Bradley, Treasurer, o Indefinite term Chief Financial Officer, N/A N/A
Controller, Chief Financial o 6 months served Managing Director,
Officer, Chief Accounting First Trust Advisors L.P.
Officer and First Trust
D.O.B. 11/57 Portfolios L.P.; Chief
1001 Warrenville Road Financial Officer,
Suite 300 BondWave LLC and
Lisle, IL 60532 Stonebridge Advisors LLC
Susan M. Brix o Indefinite term Representative, First N/A N/A
Assistant Vice President o 6 months served Trust Portfolios L.P.;
D.O.B. 01/60 Assistant Portfolio
1001 Warrenville Road Manager, First Trust
Suite 300 Advisors L.P.
Lisle, IL 60532
Robert F. Carey o Indefinite term Senior Vice President, N/A N/A
Vice President o 6 months served First Trust Advisors L.P.
D.O.B. 07/63 and First Trust
1001 Warrenville Road Portfolios L.P.
Suite 300
Lisle, IL 60532
James M. Dykas o Indefinite term Vice President, First N/A N/A
Assistant Treasurer o 1 month served Trust Advisors L.P. and
D.O.B. 01/66 First Trust Portfolios
1001 Warrenville Road L.P. (January 2005 to
Suite 300 present); Executive
Lisle, IL 60532 Director, Van Kampen Asset
Management and Morgan Stanley
Investment Management (1999-2005)
Page 26
- -------------------------------------------------------------------------------
TRUSTEES AND OFFICERS - (Continued)
- -------------------------------------------------------------------------------
First Trust Exchange-Traded Fund
December 31, 2005 (Unaudited)
Board of Trustees and Officers (Continued)
Number of Other
Portfolios Trusteeships/
Name, D.O.B., Address and Term of Office and Principal Occupation(s) in Fund Complex Directorships
Position(s) with the Registrant Length of Time Served During Past 5 Years Overseen by Trustee Held by Trustee
- ----------------------------------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT TRUSTEES - (Continued)
- ----------------------------------------------------------------------------------------------------------------------------------
W. Scott Jardine, Secretary o Indefinite term General Counsel, N/A N/A
and Chief Compliance o 6 months served First Trust Advisors
Officer L.P. and First Trust
D.O.B. 05/60 Portfolios L.P.;
1001 Warrenville Road Secretary, BondWave
Suite 300 LLC and Stonebridge
Lisle, IL 60532 Advisors LLC
Daniel J. Lindquist o Indefinite term Senior Vice President, N/A N/A
Vice President o 1 month served First Trust Advisors
D.O.B. 02/70 L.P.; Vice President,
1001 Warrenville Road First Trust Portfolios
Suite 300 L.P. (April 2004 to present);
Lisle, IL 60532 Chief Operating Officer,
Mina Capital Management, LLC
(January 2004-April 2004);
Chief Operating Officer,
Samaritan Asset Management
Services, Inc. (April 2000-
January 2004)
Kristi A. Maher o Indefinite term Assistant General N/A N/A
Assistant Secretary o 6 months served Counsel, First Trust
D.O.B. 12/66 Advisors L.P. and First
1001 Warrenville Road Trust Portfolios L.P.
Suite 300 (March 2004 to present);
Lisle, IL 60532 Associate, Chapman and Cutler
LLP (1995-2004)
Roger F. Testin o Indefinite term Senior Vice President, N/A N/A
Vice President o 6 months served First Trust Advisors L.P.
D.O.B. 06/66 and First Trust Portfolios
1001 Warrenville Road L.P. (August 2001 to
Suite 300 present); Analyst, Dolan
Lisle, IL 60532 Capital Management (1998-2001)
- ------------------
<FN>
* The term "officer" means the president, vice president, secretary, treasurer,
controller or any other officer who performs a policy making function.
</FN>
Page 27
This Page Left Blank Intentionally.
This Page Left Blank Intentionally.
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's board of
Trustees has determined that Thomas R. Kadlec is qualified to serve as an audit
committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees (Registrant) -- The aggregate fees billed from
Registrant's inception on September 27, 2005 through December 31, 2005 for
professional services rendered by the principal accountant for the audit of the
Registrant's annual financial statements or services that are normally provided
by the accountant in connection with statutory and regulatory filings or
engagements was $6,000.
(b) Audit-Related Fees (Registrant) -- The aggregate fees billed from
Registrant's inception on September 27, 2005 through December 31, 2005 for
assurance and related services by the principal accountant that are reasonably
related to the performance of the audit of the Registrant's financial statements
and are not reported under paragraph (a) of this Item were $0.
Audit-Related Fees (Investment Adviser) -- The aggregate fees
billed from Registrant's inception on September 27, 2005 through December 31,
2005 for assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the Registrant's financial
statements and are not reported under paragraph (a) of this Item were $0.
(c) Tax Fees (Registrant) -- The aggregate fees billed from inception
on September 27, 2005 through December 31, 2005 for professional services
rendered by the principal accountant for tax compliance, tax advice, and tax
planning to the Registrant were $0.
Tax Fees (Investment Adviser) -- The aggregate fees billed from
inception on September 27, 2005 through December 31, 2005 for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning to the Registrant's adviser were $0.
(d) All Other Fees (Registrant) -- The aggregate fees billed from
inception on September __, 2005, through December 31, 2005 for products and
services provided by the principal accountant to the Registrant, other than the
services reported in paragraphs (a) through (c) of this Item were $54.13. These
fees were for services related to compliance program evaluation.
All Other Fees (Investment Adviser) -- The aggregate fees billed
from inception on September 27, 2005 through December 31, 2005 for products and
services provided by the principal accountant to the Registrant's investment
adviser, other than services reported in paragraphs (a) through (c) of this Item
were $68,619. These fees were for services related to compliance program
evaluation.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c) (7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter and its Audit and Non-Audit Services
Pre-Approval Policy adopted December 12, 2005, the Audit Committee (the
"Committee") is responsible for the pre-approval of all audit services and
permitted non-audit services (including the fees and terms thereof) to be
performed for the Registrant by its independent auditors. The Chairman of the
Committee is authorized to give such pre-approvals on behalf of the Committee up
to $25,000 and report any such pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the
independent auditor's engagements for non-audit services with the Registrant's
adviser (not including a sub-adviser whose role is primarily portfolio
management and is sub-contracted or overseen by another investment adviser) and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the Registrant, if the
engagement relates directly to the operations and financial reporting of the
Registrant, subject to the de minimis exceptions for non-audit services
described in Rule 2-01 of Regulation S-X. If the independent auditor has
provided non-audit services to the Registrant's adviser (other than any
sub-adviser whose role is primarily portfolio management and is sub-contracted
with or overseen by another investment adviser) and any entity controlling,
controlled by or under common control with the investment adviser that provides
ongoing services to the Registrant that were not pre-approved pursuant to the de
minimis exception, the Committee will consider whether the provision of such
non-audit services is compatible with the auditor's independence.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) for the Registrant and the Registrant's investment adviser of this
Item that were approved by the audit committee pursuant to the pre-approval
exceptions included in paragraph (c)(7)(i)(C) or paragraph(C)(7)(ii) of Rule
2-01 of Regulation S-X are as follows:
(b) 0%.
(c) 0%.
(d) 0%.
(f) The percentage of hours expended on the principal accountant's
engagement to audit the Registrant's financial statements for the most recent
fiscal year that were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees was less than fifty
percent.
(g) The aggregate non-audit fees billed by the Registrant's accountant
for services rendered to the Registrant, and rendered to the Registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the Registrant from the
inception of the Registrant on September 27, 2005 through December 31, 2005,
were $54.13 for the Registrant and $68,619 for the Registrant's investment
adviser.
(h) Not applicable. The audit committee pre-approved all non-audit
services rendered to the Registrant's investment adviser and any entity
controlling, controlled by or under common control with the adviser that
provides ongoing services to the Registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) First Trust Exchange-Traded Fund
-------------------------------------------
By (Signature and Title)* /s/ James A. Bowen
-----------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date March 7, 2006
--------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ James A. Bowen
-----------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date March 7, 2006
--------------------------------
By (Signature and Title)* /s/ Mark R. Bradley
-----------------------------------------------------
Mark R. Bradley, Treasurer, Controller, Chief Financial
Officer and Chief Accounting Officer
(principal financial officer)
Date March 7, 2006
--------------------------------
* Print the name and title of each signing officer under his or her signature.