First Trust Morningstar Dividend Leaders Index Fund ETF (FDL)

The First Trust Morningstar Dividend Leaders Index Fund ETF (FDL), as its name suggests, tracks the Morningstar Dividend Leaders Index, minus expenses and fees. The ETF's approach to tracking the index is full replication. It attempts to own all the stocks in the index.

The Morningstar Dividend Leaders Index tracks the performance of the 100 highest yielding US stocks that have paid dividends consistently in the past and are able to sustain their distributions. REITs are excluded. As of July 2008, the index was spread over the following sectors:

Consumer Goods 2.34%
Consumer Services 1.42%
Financials 38.4%
Health Care 23.2%
Materials 4.16%
Telecommunication Services 16%
Utilities 14.41%


The ETF is passively managed, with an expense ratio of 0.45%. As of December 2007, FDL's gross expense ratio was actually 0.68%. First Trust has agreed, however, to limit expenses to 0.45% through May 2009. Note that the expense ratio may rise after that date. The fund's most recent annual turnover rate was 9%. FDL rebalances quarterly.

Although this is subject to change, the ETF pays dividends on a quarterly basis, in March, June, September, and December. The dividend is irregular, and past distributions have ranged from $0.20 a share to $0.263 a share.

As of July 2008, the First Trust Morningstar Dividend Leaders Index Fund ETF held 100 stocks.

The ETF's holdings are listed below.