First Trust Proposes QQEW Index Shift, Unitary Fee Structure

TL;DR

**QQEW is ditching its broad equal-weight strategy for a concentrated 'quality and growth' focus and a new unitary fee, so expect a different ride and predictable costs.**

AI Summary

First Trust Exchange-Traded Fund is proposing two significant changes for its First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW). First, shareholders will vote on changing the Fund's investment objective to track the Nasdaq-100 Select Equal Weight™ Index, replacing the current NASDAQ-100 Equal Weighted™ Index. This new index focuses on 50 Nasdaq-100 companies with the highest 'Blended Quality and Growth Scores,' which include metrics like 3-year revenue growth and return on equity. Second, the Fund proposes a new investment management agreement to transition to a unitary fee structure, where the Advisor, First Trust Advisors L.P., will receive a fee of 0.55% of average daily net assets and cover most Fund expenses. This 0.55% unitary fee matches the Fund's most recent fiscal year's net operating expense ratio, ensuring no immediate increase in the expense ratio at current asset levels. The current Expense Limitation Agreement, which caps expenses at 0.60% through April 30, 2027, would be terminated. The Board of Trustees unanimously recommends approval of both proposals, with a special meeting scheduled for October 14, 2025, at 12:00 noon Central Time.

Why It Matters

These proposals could significantly alter QQEW's investment profile and fee structure, impacting investors seeking exposure to the Nasdaq-100. The shift from a broad equal-weighted index to a 'quality and growth' focused subset means a more concentrated portfolio, potentially offering different risk-reward characteristics compared to its peers. The unitary fee structure, while common in ETFs, provides fee predictability but eliminates potential expense ratio reductions if operational costs decrease, which could benefit First Trust Advisors L.P. This move aligns QQEW with other First Trust ETFs and broader industry trends, but investors must weigh the trade-offs in investment focus and fee transparency.

Risk Assessment

Risk Level: medium — The risk level is medium due to the proposed change in investment objective, which will alter the Fund's underlying index from the NASDAQ-100 Equal Weighted™ Index to the Nasdaq-100 Select Equal Weight™ Index. This involves a 'Repositioning' of securities, incurring trading costs and potential taxable gains/losses for shareholders. Additionally, the Fund will now be subject to 'growth stocks investment risk' due to the New Index's methodology.

Analyst Insight

Investors should carefully review the proposed changes to QQEW's investment objective and fee structure. Consider if the new 'quality and growth' focus aligns with your investment goals and risk tolerance, and understand that while the unitary fee offers predictability, it removes the possibility of expense ratio reductions from lower operating costs.

Key Numbers

• 0.55% — Proposed unitary fee rate (Annual rate of average daily net assets, matching current net operating expense ratio)
• 0.40% — Current investment management fee rate (Annual rate of average daily net assets, subject to reduction)
• 0.60% — Current Expense Cap (Maximum operating expenses through April 30, 2027, under Expense Limitation Agreement)
• 100 — Number of companies in Nasdaq-100 Index® (Basis for both current and new indices)
• 50 — Number of companies in New Index (Selected from Nasdaq-100 Index® based on Blended Quality and Growth Scores)
• 90% — Current net assets investment policy (Minimum percentage of net assets invested in Current Index securities)
• 80% — Proposed net assets investment policy (Minimum percentage of net assets invested in New Index securities)
• October 14, 2025 — Date of Special Meeting (Shareholders to vote on proposals)
• July 28, 2025 — Record Date for voting (Shareholders owning shares on this date are entitled to vote)
• (800) 347-4826 — Proxy Solicitor contact number (For shareholder assistance with voting)

Key Players & Entities

• FIRST TRUST EXCHANGE-TRADED FUND (company) — Registrant and Trust for QQEW
• First Trust NASDAQ-100 Equal Weighted Index Fund (company) — Fund undergoing proposed changes, ticker QQEW
• First Trust Advisors L.P. (company) — Advisor to the Fund and proposer of changes
• NASDAQ-100 Equal Weighted™ Index (company) — Current index tracked by the Fund
• Nasdaq-100 Select Equal Weight™ Index (company) — Proposed new index for the Fund
• James A. Bowen (person) — Chairman of the Board for First Trust Exchange-Traded Fund
• EQ Fund Solutions, LLC (company) — Proxy Solicitor for the Fund
• W. Scott Jardine (person) — Secretary of the Board of Trustees
• Securities and Exchange Commission (regulator) — Regulatory body for the filing
• Investment Company Act of 1940 (regulator) — Governing act for 'interested persons' definition

FAQ

Risk Factors

• Index Tracking Risk [medium — market]: The Fund aims to track the Nasdaq-100 Select Equal Weight™ Index. There is a risk that the Fund may not perfectly replicate the performance of this new index due to factors like trading costs, cash drag, and tracking error. The transition to the new index will involve repositioning securities, incurring trading costs and potentially recognizing taxable gains or losses.
• Index Methodology Changes [medium — operational]: The New Index, Nasdaq-100 Select Equal Weight™, relies on 'Blended Quality and Growth Scores' derived from metrics like 3-year revenue growth, EPS growth, free cash flow growth, return on equity, and profit margin. Changes to these underlying metrics or the methodology for calculating the scores could impact the index composition and the Fund's performance.
• Unitary Fee Structure Impact [low — financial]: The proposed unitary fee of 0.55% means the Advisor covers most expenses. While this matches the current net operating expense ratio, it eliminates the possibility of the expense ratio decreasing if operational costs fall. Any such savings would benefit the Advisor, not the Fund's shareholders.
• Shareholder Approval Requirement [medium — regulatory]: Both the change in investment objective and the new investment management agreement require shareholder approval. Failure to obtain the necessary votes could prevent the proposed changes from being implemented, leaving the Fund operating under its current structure.

Industry Context

The exchange-traded fund (ETF) industry continues to see innovation in index construction and fee structures. Competitors are increasingly offering specialized indices that go beyond broad market benchmarks, focusing on factors like quality, growth, or equal weighting. The shift towards unitary fee structures is also a trend, aiming to simplify expenses for investors and align advisor incentives.

Regulatory Implications

The proposed changes require shareholder approval under the Investment Company Act of 1940. The transition to a new index and fee structure must comply with disclosure requirements, ensuring investors are fully informed about the implications for their investment.

What Investors Should Do

1. Review the Proxy Statement thoroughly.
2. Vote on Proposal 1 (Investment Objective Change).
3. Vote on Proposal 2 (New Investment Management Agreement).
4. Submit your proxy vote by October 14, 2025.
5. Contact EQ Fund Solutions, LLC for assistance.

Key Dates

• 2025-10-14: Special Meeting of Shareholders — Shareholders will vote on the proposed changes to the Fund's investment objective and investment management agreement.
• 2025-07-28: Record Date for Voting — Shareholders who owned shares on this date are entitled to vote at the special meeting.
• 2025-08-29: Filing of Definitive Proxy Statement — Public disclosure of the proposals and information for shareholders to make an informed voting decision.

Glossary

Unitary Fee Structure

A fee arrangement where a single fee is paid to the investment advisor, who then covers most of the fund's operating expenses, excluding certain specified costs. (This is a proposed change for QQEW, aiming for fee clarity and predictability, with the advisor taking on more expense responsibility.)

Investment Objective

The primary goal of a fund, outlining what it aims to achieve for its investors, such as capital appreciation or income generation, and the benchmark it seeks to track. (QQEW is proposing to change its investment objective to track a new index, the Nasdaq-100 Select Equal Weight™ Index.)

Blended Quality and Growth Scores

A composite score calculated for companies based on a combination of quality and growth metrics, such as revenue growth, return on equity, and profit margins. (These scores are used to select the 50 companies that will comprise the new Nasdaq-100 Select Equal Weight™ Index.)

Expense Limitation Agreement

An agreement where a fund manager agrees to cap the fund's operating expenses at a certain level for a specified period. (The current expense cap of 0.60% through April 30, 2027, will be terminated if the new unitary fee structure is approved.)

Net Operating Expense Ratio

The annual cost of operating a mutual fund or ETF, expressed as a percentage of the fund's average net assets. (The proposed 0.55% unitary fee matches the Fund's most recent fiscal year's net operating expense ratio.)

Year-Over-Year Comparison

This filing represents a significant strategic shift for the First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW), unlike a typical annual filing. The primary focus is on shareholder approval for a new investment objective and a new fee structure. There is no direct comparison of financial metrics like revenue or net income to a prior year's filing, as this document is a proxy statement detailing proposed changes rather than a financial performance report.

Filing Documents

• def14a.htm (DEF 14A) — 389KB
• cac.jpg (GRAPHIC) — 27KB
• pc1_1.jpg (GRAPHIC) — 1266KB
• pc1_2.jpg (GRAPHIC) — 327KB
• sig_bowen.jpg (GRAPHIC) — 16KB
• sig_jardine.jpg (GRAPHIC) — 4KB
• 0001445546-25-005871.txt ( ) — 2645KB
• S000011047
• C000030477 (QQEW)

From the Filing

DEF 14A 1 def14a.htm DEFINITIVE PROXY STATEMENT As filed with the Securities and Exchange Commission on August 29, 2025 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant Filed by a Party other than the Registrant Check the appropriate box: Preliminary Proxy Statement Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) Definitive Proxy Statement Definitive Additional Materials Soliciting Material under §240.14a-12 FIRST TRUST EXCHANGE-TRADED FUND (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): No fee required. Fee paid previously with preliminary materials. Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. First Trust Exchange-Traded Fund First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW) 120 East Liberty Drive, Suite 400 Wheaton, Illinois 60187 August 28, 2025 Dear Shareholders: I am writing to notify you of an important special meeting of the shareholders of First Trust NASDAQ-100 Equal Weighted Index Fund (the “Fund” ), a series of First Trust Exchange-Traded Fund (the “Trust” ) (the special meeting for the Fund is referred to as the “Meeting” ). The Meeting is scheduled to be held at the offices of First Trust Advisors L.P., located at 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187, on Tuesday, October 14, 2025, at 12:00 noon Central Time. At the Meeting, shareholders will be asked to consider and approve the following: (1) a change to the Fund’s investment objective; and (2) a new investment management agreement for the Fund. Currently, the Fund’s investment objective is to seek investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the NASDAQ-100 Equal Weighted™ Index (the “Current Index” ). At the recommendation of First Trust Advisors L.P. (the “Advisor” ), however, the Board of Trustees of the Trust has approved, Index with the Nasdaq-100 Select Equal Weight™ Index (the “New Index” ). As discussed in the enclosed materials, the Current Index is the equal-weighted version of the Nasdaq-100 Index ® , while the New Index, which is also equal-weighted, is designed to track the performance of the fifty companies from the Nasdaq-100 Index ® with the highest combined “Blended Quality and Growth Scores.” At the Meeting, shareholders are being asked to approve the change to the Fund’s investment objective so that the Fund may seek investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of the New Index ( “Proposal 1” ). If shareholders approve Proposal 1, the Fund’s name is expected to change to First Trust Nasdaq-100 Select Equal Weight ETF, but its ticker symbol is expected to remain the same. In addition, the Board of Trustees of the Trust, including the Independent Trustees ( i.e., the Trustees who are not “interested persons,” as defined in the Investment Company Act of 1940, as amended, of the Fund), has approved a new investment management agreement for the Fund, subject to shareholder approval. Accordingly, shareholders are being asked to approve this new investment management agreement ( “Proposal 2” and, collectively with Proposal 1, the “Proposals” ). Currently, the Fund pays an investment management fee to the Advisor under its investment management agreement and also separately pays other Fund operating expenses. Under the proposed new investment management agreement, the Fund would instead pay a single “unitary fee” to the Advisor, and the Advisor would then be responsible for paying all other expenses of the Fund (except for certain enumerated exclusions). The unitary fee structure, which is commonly used by exchange-traded funds, is intended to benefit shareholders by generally providing clarity and consistency of fees, including a more predictable expense ratio. However, the unitary fee structure also generally eliminates the possibility of a reduction in a fund’s expense ratio if expenses associated with the fund’s management and operations decrease, and any such decrease would benefit the investment advisor. It is important to note that approval of Proposal 2 will not cause the Fund’s current net operating expense ratio, calculated at current asset levels, to increase or change the level of services provided to the Fund by the Advisor. Each Proposal is described in detail in the enclosed materials. Further, each Proposal is

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