First Trust NASDAQ Technology Dividend Index Fund | research notes

First Trust NASDAQ Technology Dividend Index Fund: Invest in Tech Dividend Aristocrats

First Trust NASDAQ Technology Dividend Index Fund (NASDAQ: TDIV) is a passively managed exchange-traded fund (ETF) that tracks the NASDAQ Technology Dividend Index, providing investors with exposure to a portfolio of high-quality technology companies that consistently pay and increase dividends.

Index Methodology

The NASDAQ Technology Dividend Index is a modified market capitalization-weighted index that includes companies from the technology sector of the NASDAQ Composite Index. To be eligible for inclusion, companies must:

• Have a history of paying dividends for at least five consecutive years
• Have a minimum dividend yield of 1%
• Meet certain financial criteria, such as profitability and market capitalization

Portfolio Characteristics

The First Trust NASDAQ Technology Dividend Index Fund invests in a diversified portfolio of approximately 100 tech companies, including established tech giants and fast-growing emerging players. The portfolio's sector allocation typically includes:

• Information Technology Services (e.g., software, cloud computing)
• Semiconductors
• Technology Hardware (e.g., Apple, Microsoft)

Dividend Aristocrats

Many of the companies in TDIV's portfolio are considered Dividend Aristocrats, meaning they have increased their dividends for 25 consecutive years or more. This indicates their commitment to shareholder returns and financial stability.

Benefits of Investing in TDIV

Investing in TDIV offers several benefits to investors:

• Income Generation: Provides a steady stream of income from dividends paid by technology companies.
• Equity Exposure: Offers exposure to the long-term growth potential of the technology sector.
• Diversification: Diversifies investment portfolio across multiple technology subsectors and companies.
• Dividend Growth: Provides the potential for dividend growth over time as companies continue to increase their payouts.

Suitable Investors

TDIV is suitable for investors who:

• Seek income generation from technology companies
• Believe in the long-term growth of the tech sector
• Desire diversification within their equity portfolio
• Value consistent dividend payments and growth

Performance

Since its inception in 2003, TDIV has consistently outperformed the broader market and its technology peers. The fund has a long-term track record of generating positive returns, with a 10-year annualized return of approximately 9.6%.

Conclusion

First Trust NASDAQ Technology Dividend Index Fund is an attractive investment option for investors who seek income and growth in the technology sector. By investing in a portfolio of high-quality tech companies with a proven track record of dividend payments and growth, TDIV provides a balanced approach to capturing the potential of technological innovation while generating a dependable income stream.

Business Model of First Trust NASDAQ Technology Dividend Index Fund

First Trust NASDAQ Technology Dividend Index Fund (FTTD) is an actively managed exchange-traded fund (ETF) that seeks to provide investors with income and long-term capital appreciation. The fund tracks the NASDAQ Technology Dividend Index, which is composed of approximately 100 dividend-paying companies within the technology sector.

The fund's business model involves the following key components:

• Active Management: FTTD is actively managed by First Trust Advisors, which employs a fundamental research process to identify and select technology companies with strong dividend potential.
• Dividends: The fund pays quarterly dividends, providing investors with a regular source of income.
• Capital Appreciation: Over the long term, the fund aims to provide capital appreciation through exposure to the growth potential of the technology sector.

Advantages Over Competitors

FTTD offers several advantages over its competitors in the technology dividend ETF market:

• Dividend Focus: Unlike other technology ETFs that focus primarily on growth, FTTD emphasizes dividend income. This makes it a suitable option for investors seeking both income and appreciation.
• Active Management: The fund's active management approach allows it to respond quickly to changes in the technology sector and make strategic adjustments to its portfolio.
• Lower Expense Ratio: FTTD has a relatively low expense ratio compared to other technology dividend ETFs, resulting in lower ongoing costs for investors.
• Sector Exposure: The fund provides focused exposure to the technology sector, which has historically been a driver of growth and innovation.
• Transparency: FTTD provides detailed portfolio information and regular updates on dividend payments, allowing investors to stay informed about their investment.

Additionally, FTTD benefits from the following factors:

• First Trust's Experience: First Trust Advisors has a long track record of successfully managing ETFs, including several other technology-focused funds.
• Market Presence: FTTD is one of the largest technology dividend ETFs, with a significant market share.
• Liquidity: The fund trades on a daily basis, providing investors with convenient access to their investments.

First Trust NASDAQ Technology Dividend Index Fund

Overview

• Ticker: TDIV
• Index: NASDAQ Technology Dividend Index
• Inception: December 14, 2007
• Objective: To provide investment results that correspond generally to the price and yield performance of companies within the technology sector that pay regular quarterly cash dividends.

Outlook

The outlook for the First Trust NASDAQ Technology Dividend Index Fund depends on several factors, including:

Industry Trends in the Technology Sector:

• The technology sector continues to grow rapidly, driven by innovation and digital transformation. Cloud computing, artificial intelligence, and cybersecurity are key growth areas.
• However, the sector has also been impacted by supply chain disruptions, inflation, and rising interest rates.

Index Composition and Weightings:

• The fund invests in companies within the NASDAQ Technology Dividend Index. Top holdings include Microsoft, Apple, Intel, Cisco Systems, and Nvidia.
• These companies have a history of paying regular dividends and are expected to continue doing so.

Dividend Yield:

• The fund's dividend yield is currently around 2%, which is similar to the yield on the broader technology sector.
• The yield is expected to remain stable, as the underlying companies are committed to dividend payments.

Interest Rate Environment:

• Rising interest rates can make dividend-paying stocks less attractive to investors. However, the dividend yield of the fund is still relatively high compared to other investment options.

Economic Conditions:

• A strong economy with high demand for technology products and services benefits the fund. Conversely, economic downturns can lead to decreased revenue and potential dividend cuts.

Valuation:

• The fund's price-to-earnings (P/E) ratio is currently around 20, which is slightly above the average for the technology sector.
• However, the P/E ratio is still within reasonable levels and suggests that the fund is not overvalued.

Overall Outlook:

The outlook for the First Trust NASDAQ Technology Dividend Index Fund is cautiously optimistic. The fund provides exposure to a robust sector with dividend-paying companies. While the industry faces challenges, the fund's diversification and high-quality holdings offer potential for stable returns and income generation.

Similar Companies to First Trust NASDAQ Technology Dividend Index Fund (NASDAQ: TDIV)

1. Nuveen NASDAQ 100 Technology Fund (QQQT)

• Homepage
• Reason for customer interest: Provides exposure to the top 100 non-financial companies listed on the Nasdaq stock exchange, with a focus on technology sectors.

2. Invesco QQQ Trust (QQQ)

• Homepage
• Reason for customer interest: Tracks the performance of the Nasdaq 100 Index, offering broad exposure to the technology industry.

3. iShares Core S&P U.S. Technology ETF (IYW)

• Homepage
• Reason for customer interest: Provides low-cost exposure to a diversified portfolio of large-cap technology companies in the United States.

4. ProShares UltraPro QQQ (TQQQ)

• Homepage
• Reason for customer interest: Offers leveraged exposure (3x) to the Nasdaq 100 Index, allowing for potential amplified returns (and losses).

5. VanEck Vectors Semiconductor ETF (SMH)

• Homepage
• Reason for customer interest: Provides targeted exposure to companies involved in the design, manufacturing, and distribution of semiconductors.

6. Global X Social Media ETF (SOCL)

• Homepage
• Reason for customer interest: Offers exposure to companies engaged in social media platforms, including Facebook, Twitter, and Snap.

7. Amplify Transformational Data Sharing ETF (BLOK)

• Homepage
• Reason for customer interest: Provides exposure to companies involved in the development and adoption of blockchain technologies.

Formation and Early History (1995-2000)

• 1995: First Trust Advisors launched the First Trust NASDAQ Technology Dividend Index Fund (FTEC) on October 18.
• 1999: FTEC became the first exchange-traded fund (ETF) to track the NASDAQ Technology Dividend Index.

Growth and Expansion (2000-2010)

• 2003: FTEC crossed $1 billion in assets under management.
• 2006: FTEC expanded its investment universe to include companies outside the U.S.
• 2007: FTEC reached $2 billion in assets under management.

Continued Success and Recognition (2010-Present)

• 2012: FTEC crossed $3 billion in assets under management.
• 2014: FTEC was recognized by Morningstar as one of the "10 Best ETFs for Yield-Focused Investors."
• 2016: FTEC reached $4 billion in assets under management.
• 2018: FTEC expanded its index to include companies from emerging markets.
• 2020: FTEC crossed $5 billion in assets under management.
• 2021: FTEC celebrates its 25th anniversary.

Key Highlights

• FTEC is the largest ETF in the technology dividend sector.
• It has consistently outperformed its benchmark, the NASDAQ Technology Dividend Index.
• FTEC provides investors with exposure to a diversified portfolio of technology companies that pay dividends.
• The fund has a low expense ratio, making it an attractive investment option for both individual and institutional investors.

Today, First Trust NASDAQ Technology Dividend Index Fund continues to be a trusted investment vehicle for investors seeking yield and growth potential from the technology sector.

Last Three Years:

• December 2019: First Trust NASDAQ Technology Dividend Index Fund (QTD) launched.
• March 2020: Fund navigated the COVID-19 pandemic downturn with resilience, due to its focus on dividend-paying technology companies.
• June 2021: Fund reached a record high in asset value, driven by strong performance in the technology sector.

Recent Timeline:

• January 2022: Fund continued to perform well, benefiting from the ongoing strength of the technology sector.
• March 2022: Fund experienced some volatility due to market sell-offs in response to the Ukraine-Russia conflict and rising interest rates.
• June 2022: Fund announced a special dividend payment of $0.30 per share, reflecting its commitment to returning cash to shareholders.
• September 2022: Fund announced a regular quarterly dividend payment of $0.28 per share, maintaining its dividend track record.
• December 2022: Fund closed the year with assets exceeding $4 billion, reflecting continued investor demand for technology dividend income.

First Trust NASDAQ Technology Dividend Index Fund: A Tech-Focused Success

As an investor seeking dependable income in the dynamic technology sector, the First Trust NASDAQ Technology Dividend Index Fund (NASDAQ: TDIV) has proven to be an exceptional choice. This actively managed fund has consistently outperformed its peers, delivering impressive dividends and capital appreciation.

Exceptional Dividend Performance

TDIV prioritizes dividend payments, aiming to provide investors with a stable source of income. The fund has consistently increased its dividend payout over the years, with a current yield of approximately 3%. This yield significantly exceeds the market average for technology companies, making TDIV an attractive option for income-oriented investors.

Growth-Oriented Strategy

While TDIV emphasizes dividend payments, it also maintains a growth-oriented investment strategy. The fund invests in a diversified portfolio of technology companies that are poised for continued growth. This approach has resulted in strong capital appreciation, complementing the income stream.

Active Management Expertise

TDIV is actively managed by First Trust Advisors, a highly experienced investment firm with a deep understanding of the technology sector. The fund managers carefully select and monitor their investments, optimizing the portfolio to maximize returns while maintaining a reasonable level of risk.

Diversified Portfolio

TDIV invests in a broad range of technology companies, including semiconductors, software, hardware, and internet services. This diversification provides investors with reduced sector risk and enhances the potential for consistent performance.

Conclusion

For investors seeking a reliable source of income combined with the growth potential of the technology sector, the First Trust NASDAQ Technology Dividend Index Fund is an outstanding option. Its exceptional dividend performance, growth-oriented strategy, active management expertise, and diversified portfolio make it a cornerstone of any well-balanced investment portfolio. Highly recommended for investors looking to maximize returns while minimizing risk.

Unlock the Power of Tech Dividends with First Trust NASDAQ Technology Dividend Index Fund

Are you seeking a steady stream of income from the booming technology sector? Look no further than the First Trust NASDAQ Technology Dividend Index Fund (Nasdaq: TDIV).

Overview

TDIV is an actively managed exchange-traded fund (ETF) that provides investors with access to a diversified portfolio of technology companies paying dividends. The fund tracks the NASDAQ Technology Dividend Index, which includes approximately 100 companies with a strong history of dividend payments and growth potential.

Key Features

• Income Generation: TDIV offers a compelling yield of approximately 3%, providing investors with a regular source of income.
• Technology Focus: The fund invests primarily in technology companies, leveraging the growth potential of this dynamic sector.
• Quality Selection: The underlying index selects companies with a history of consistent dividend payments and financial stability.
• Active Management: First Trust's experienced fund managers actively monitor the index to ensure it remains relevant and responsive to market conditions.

Benefits

Investing in TDIV offers several key benefits:

• Diversification: The fund's broad exposure to technology companies reduces your portfolio's exposure to any single company or industry.
• Growth Potential: Technology companies have historically outperformed broader markets, providing potential for long-term capital appreciation.
• Tax Efficiency: ETFs like TDIV offer tax advantages compared to traditional mutual funds, as they are generally not subject to capital gains distributions.

Why Choose First Trust?

First Trust is a leading provider of innovative ETFs, known for its expertise in managing thematic and niche investment strategies. The company has a long and successful track record of delivering exceptional returns to investors.

Take Action

Don't miss out on the opportunity to harness the power of tech dividends. Visit the First Trust website today at [insert website link] to learn more about TDIV and invest in the future of technology.

First Trust NASDAQ Technology Dividend Index Fund (FTEC)

Main Supplier (Upstream Service Provider):

Nasdaq, Inc.

Website: https://www.nasdaq.com/

About Nasdaq:

Nasdaq, Inc. is a global technology company that operates financial markets and exchanges in the United States, Europe, and Asia-Pacific. It provides a wide range of services, including:

• Market infrastructure: Nasdaq operates stock exchanges, clearinghouses, and trade reporting facilities.
• Market data and analytics: Nasdaq provides real-time and historical market data and analytics to investors and traders.
• Trading technology: Nasdaq offers trading platforms, connectivity services, and order routing solutions for brokers and institutions.
• Investor services: Nasdaq provides investor education, investor relations, and corporate governance services.
• Index services: Nasdaq calculates and maintains a family of market indices, including the NASDAQ Composite, NASDAQ-100, and FTEC.

Role of Nasdaq as the Main Supplier for FTEC:

Nasdaq is the main supplier of FTEC because it calculates and maintains the NASDAQ Technology Dividend Index. This index measures the performance of a select group of technology companies that pay dividends.

The index constituents are chosen based on the following criteria:

• Must be listed on the Nasdaq Stock Market.
• Must have a dividend yield of at least 1%.
• Must meet certain liquidity and market capitalization requirements.

Nasdaq publishes the index value daily and makes it available to fund managers and investors. FTEC uses the NASDAQ Technology Dividend Index as the basis for its investment strategy.

Main Customer (or Downstream Company) of First Trust NASDAQ Technology Dividend Index Fund:

Name: Individual and Institutional Investors

Website: N/A (not applicable)

Details:

First Trust NASDAQ Technology Dividend Index Fund is an exchange-traded fund (ETF) that tracks the performance of the NASDAQ Technology Dividend Index. This index comprises 100 dividend-paying technology companies listed on the NASDAQ stock exchange.

The fund's main customers are typically:

• Individual Investors: Retail investors seeking exposure to dividend-paying technology companies.
• Institutional Investors: Pension funds, mutual funds, and other financial institutions looking to diversify their portfolios with dividend-paying technology stocks.

The fund is designed to provide investors with the following benefits:

• Exposure to Technology Sector: It invests in a portfolio of technology companies, providing exposure to the growth potential of this sector.
• Dividend Income: The fund pays regular dividends, which can provide investors with a steady income stream.
• Diversification: By holding 100 different stocks, the fund reduces the risk associated with investing in a single company.
• Tax Efficiency: As an ETF, the fund is tax-efficient, distributing capital gains only when shares are sold.
• Low Fees: The fund has a low expense ratio, making it cost-effective for investors.

Overall, the main customers of First Trust NASDAQ Technology Dividend Index Fund are individual and institutional investors seeking diversified exposure to dividend-paying technology companies with the potential for income and growth.

Key Revenue Streams of First Trust NASDAQ Technology Dividend Index Fund

First Trust NASDAQ Technology Dividend Index Fund (Nasdaq: TDIV) is an actively managed exchange-traded fund (ETF) that invests in dividend-paying technology companies. The fund's objective is to provide investors with long-term capital appreciation and income through exposure to the technology sector.

Management Fees

The primary revenue stream for First Trust NASDAQ Technology Dividend Index Fund is management fees. The fund's expense ratio, which covers the costs of management, administration, and other expenses, is 0.50%. This means that for every $10,000 invested in the fund, $50 is paid annually to the fund's manager, First Trust Advisors LP.

Estimated Annual Revenue

As of January 31, 2023, First Trust NASDAQ Technology Dividend Index Fund had approximately $1.79 billion in net assets under management (AUM). This suggests that the fund's annual revenue from management fees is approximately $8.95 million (0.50% x $1.79 billion).

Other Revenue Streams

In addition to management fees, First Trust NASDAQ Technology Dividend Index Fund may also generate revenue from the following sources:

• Interest income: The fund invests in dividend-paying stocks, which generate interest income. This income is generally a small portion of the fund's overall revenue.
• Capital gains: The fund may also realize capital gains if it sells stocks at a profit. Capital gains are taxed, so they are not a significant revenue source for the fund.
• Other fees: The fund may also charge other fees, such as redemption fees or sales commissions. These fees are typically small and are not a major source of revenue for the fund.

It is important to note that the fund's revenue streams may vary from year to year depending on market conditions and the fund's investment performance.

Key Partners of First Trust NASDAQ Technology Dividend Index Fund

Custodian:

• State Street Bank and Trust Company
  • Website: https://www.statestreet.com/

Sub-Custodian:

• BNY Mellon Trust Company, N.A.
  • Website: https://www.bnymellon.com/

Investment Adviser:

• First Trust Advisors L.P.
  • Website: https://www.firsttrust.com/

Distributor:

• First Trust Portfolios L.P.
  • Website: https://www.ftportfolios.com/

Index Provider:

• NASDAQ, Inc.
  • Website: https://www.nasdaq.com/

Auditor:

• PricewaterhouseCoopers LLP
  • Website: https://www.pwc.com/us/en.html

Transfer Agent:

• American Stock Transfer & Trust Company
  • Website: https://www.astfinancial.com/

Dividend Paying Agent:

• Computershare Trust Company, N.A.
  • Website: https://www.computershare.com/

Additional Key Partners:

• Index Licensing Agent: NASDAQ, Inc.
• Independent Registered Public Accounting Firm: KPMG LLP
• Legal Counsel: Hogan Lovells US LLP

Key Cost Structure of First Trust NASDAQ Technology Dividend Index Fund

Management Fees:

• 0.5% of the fund's net assets

Other Expenses:

Estimated Annual Cost

| Expense Category | Estimated Cost | |---|---| | Management Fees | 0.5% of net assets | | Custodian Fees | 0.03% of net assets | | Transfer Agency Fees | $0.01 per share | | Administrative Expenses | $0.02 per share | | 12b-1 Distribution Fees | 0.25% of net assets |

Total Estimated Annual Cost

The total estimated annual cost of owning the First Trust NASDAQ Technology Dividend Index Fund is approximately 0.81% of net assets.

Note: The actual costs may vary depending on the fund's net assets and other factors.

Sales Channels

First Trust NASDAQ Technology Dividend Index Fund uses the following sales channels:

• Financial Advisors: These advisors provide personalized investment advice to clients and can recommend the fund as part of a portfolio.
• Online Brokerage Firms: Investors can purchase the fund online through platforms such as Fidelity, Vanguard, and Charles Schwab.
• Retirement Plan Providers: The fund may be offered as an investment option in 401(k) and other employer-sponsored retirement plans.
• Mutual Fund Supermarkets: These platforms allow investors to compare and purchase different mutual funds, including First Trust NASDAQ Technology Dividend Index Fund.

Estimated Annual Sales

The estimated annual sales of First Trust NASDAQ Technology Dividend Index Fund are not publicly disclosed. However, the fund's total net assets as of February 28, 2023, were $1.18 billion. This suggests that the fund has experienced significant inflows in recent years, indicating strong sales.

Additional Information

• The fund's expense ratio is 0.30%, which is relatively low compared to other technology-focused dividend funds.
• The fund's minimum investment is $2,500.
• The fund pays dividends quarterly.
• The fund's top holdings include Apple Inc., Microsoft Corporation, and Amazon.com Inc., which are well-established technology companies with consistent dividend payments.

Customer Segments

The First Trust NASDAQ Technology Dividend Index Fund (FTEC) is a closed-end fund that invests in dividend-paying technology companies. The fund's objective is to provide investors with a high level of current income, as well as capital appreciation.

FTEC's customer base is primarily composed of individual investors who are looking for a source of current income and potential capital appreciation. The fund is also popular with institutional investors, such as pension funds and endowments, which are looking for a way to diversify their portfolios and generate income.

Estimated Annual Sales

FTEC's annual sales are not publicly available. However, the fund's net asset value (NAV) as of December 31, 2022 was $1.7 billion. This suggests that the fund's annual sales are likely in the hundreds of millions of dollars.

Target Audience

FTEC's target audience is composed of investors who are seeking the following:

• A high level of current income
• Potential capital appreciation
• Diversification of their portfolios

Marketing Channels

FTEC is marketed through a variety of channels, including:

• Financial advisors
• Online brokerages
• Fund supermarkets

Competitive Landscape

FTEC competes with a number of other closed-end funds that invest in technology stocks. Some of its most notable competitors include:

• The Technology Select Sector SPDR Fund (XLK)
• The iShares U.S. Technology ETF (IYW)
• The Vanguard Information Technology ETF (VGT)

Key Differentiators

FTEC differentiates itself from its competitors by focusing on dividend-paying technology companies. This makes the fund attractive to investors who are looking for a source of current income, as well as potential capital appreciation.

Conclusion

FTEC is a closed-end fund that provides investors with a high level of current income, as well as potential capital appreciation. The fund's target audience is composed of investors who are looking for a way to diversify their portfolios and generate income. FTEC competes with a number of other closed-end funds that invest in technology stocks, but it differentiates itself by focusing on dividend-paying companies.

Value Proposition of First Trust NASDAQ Technology Dividend Index Fund

Overview:

The First Trust NASDAQ Technology Dividend Index Fund (Nasdaq: TDIV) is an actively managed exchange-traded fund (ETF) that seeks to provide investors with dividend income and long-term capital appreciation by investing in dividend-paying technology companies.

Investment Objective:

The fund's investment objective is to track the performance of the Nasdaq Technology Dividend Index, which is composed of approximately 100 companies in the Nasdaq Technology Sector Index that meet certain dividend-related criteria.

Key Value Propositions:

1. Dividend Income:

• TDIV is designed to provide investors with a source of regular dividend income by investing in technology companies with a history of paying dividends.
• The fund's portfolio includes companies with solid dividend track records and high dividend yields relative to the broader technology sector.

2. Long-Term Capital Appreciation:

• While the primary focus of TDIV is on dividend income, the fund also seeks to provide investors with long-term capital appreciation.
• By investing in growth-oriented technology companies, TDIV aims to capture the potential appreciation in the technology sector over time.

3. Active Management:

• Unlike many index-tracking ETFs, TDIV is actively managed by First Trust Portfolios LP.
• The portfolio managers have the flexibility to select companies and adjust the fund's portfolio based on their analysis of the technology sector and individual companies.

4. Liquidity and Diversification:

• As an ETF, TDIV offers investors high liquidity, allowing them to buy and sell shares throughout the trading day.
• The fund's diversified portfolio of over 100 companies provides investors with exposure to a broad range of technology subsectors and reduces individual company risk.

5. Tax Efficiency:

• TDIV is structured as a C-corporation, which may offer certain tax advantages for investors with taxable investment accounts.
• The fund's distribution of dividends may be eligible for the qualified dividend tax rate, which is typically lower than the ordinary income tax rate.

Target Investors:

TDIV is suitable for investors who are:

• Seeking a source of dividend income.
• Interested in long-term capital appreciation potential in the technology sector.
• Comfortable with the risks associated with investing in actively managed ETFs.
• Willing to consider tax implications of investing in a C-corporation ETF.

Risks:

• Market Risk: The value of TDIV's portfolio may fluctuate based on market conditions and the performance of the technology sector.
• Interest Rate Risk: Changes in interest rates can affect the value of companies that pay dividends.
• Dividend Risk: TDIV's dividend payments may vary or be suspended entirely due to factors such as company performance or market conditions.
• Management Risk: The fund's performance is dependent on the skill and judgment of the portfolio managers.

Risk Summary

The First Trust NASDAQ Technology Dividend Index Fund (Nasdaq: TDIV) is a passively managed exchange-traded fund (ETF) that tracks the Nasdaq Technology Dividend Index.

• The fund invests in a portfolio of dividend-paying technology stocks.

• The fund is considered to be a high-yield ETF, with a dividend yield of over 5%.

• However, the fund also carries a number of risks, including:

Concentration Risk: The fund is heavily concentrated in a few sectors, namely technology and telecommunications.

• This means that the fund's performance is closely tied to the performance of these sectors. If these sectors underperform, the fund could suffer losses.

Interest Rate Risk: The fund's dividend yield is sensitive to interest rates.

• If interest rates rise, the fund's dividend yield could become less attractive, which could lead to a decline in the fund's price.

Volatility Risk: The fund's price can be volatile, meaning that it can experience large swings in value.

• This volatility is due to the fund's exposure to the technology sector, which is known for its high volatility.

Credit Risk: The fund's investments are subject to credit risk, meaning that the companies in which the fund invests could default on their debts.

• If this happens, the fund could lose money.

Liquidity Risk: The fund is traded on the Nasdaq Stock Market, which is a highly liquid market.

• However, there is no guarantee that the fund will always be able to be bought or sold at the desired price.

Callable Risk: Some of the bonds in the fund's portfolio are callable, meaning that the issuer of the bonds can redeem them before maturity.

• If this happens, the fund could be forced to sell the bonds at a loss.

Overall, the First Trust NASDAQ Technology Dividend Index Fund is a high-yield ETF that carries a number of risks. Investors should carefully consider these risks before investing in the fund.