ThZeal - The Zeal

PRE 14A 1 pre14a.txt PRELIMINARY PROXY STATEMENT As filed with the Securities and Exchange Commission on September 24, 2014. =============================================================================== U.S. 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 [X] Filed by a party other than the registrant [ ] Check the appropriate box: [X] 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 pursuant to Section 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): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: -------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: -------------------------------------------------------------------------------- (5) Total fee paid: -------------------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount Previously Paid: -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: -------------------------------------------------------------------------------- (3) Filing Party: -------------------------------------------------------------------------------- (4) Date Filed: PRELIMINARY--DATED SEPTEMBER 24, 2014 FIRST TRUST EXCHANGE-TRADED FUND FIRST TRUST VALUE LINE(R) EQUITY ALLOCATION INDEX FUND 120 EAST LIBERTY DRIVE, SUITE 400 WHEATON, ILLINOIS 60187 October __, 2014 Dear Shareholders: The accompanying materials relate to the Special Meeting of Shareholders (referred to as the "Meeting") of First Trust Value Line(R) Equity Allocation Index Fund (the "Fund"), a series of First Trust Exchange-Traded Fund (the "Trust"). The Meeting will be held at the offices of First Trust Advisors L.P., 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187, on ____________ 2014, at _____ p.m. Central Time. At the Meeting, you will be asked (1) to consider and vote on a proposal to approve a change to the Fund's investment objective that would result in the replacement of its current underlying index with a new underlying index, (2) to consider and vote on a proposal to change the classification of the Fund's investment objective from a "fundamental" investment policy to a "non-fundamental" investment policy and (3) to transact such other business as may properly come before the Meeting and any adjournments or postponements thereof. The Board of Trustees of the Trust recommends that shareholders approve both proposals, which are described in the enclosed materials. YOUR VOTE IS IMPORTANT. Please take a moment now to vote, either by completing and returning your proxy card in the enclosed postage-paid return envelope, by telephone or over the Internet. Your prompt response will be much appreciated. We appreciate your participation in this important Meeting. Thank you. Sincerely, James A. Bowen Chairman of the Board -------------------------------------------------------------------------------- IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING THE PROPOSALS OR HOW TO VOTE YOUR SHARES, PLEASE CALL THE FUND'S PROXY SOLICITOR, AST FUND SOLUTIONS, LLC, AT (866) ___________ WEEKDAYS FROM 9:00 A.M. TO 10:00 P.M. EASTERN TIME. -------------------------------------------------------------------------------- FIRST TRUST EXCHANGE-TRADED FUND FIRST TRUST VALUE LINE(R) EQUITY ALLOCATION INDEX FUND IMPORTANT INFORMATION FOR SHAREHOLDERS Shareholders of First Trust Value Line(R) Equity Allocation Index Fund (the "Fund"), a series of First Trust Exchange-Traded Fund (the "Trust"), are being asked to consider the following proposals: 1. To approve a change to the Fund's investment objective that would replace its current underlying index, the "Value Line(R) Equity Allocation Index," with a new underlying index, the "NASDAQ AlphaDEX(R) Total US Market Index." 2. To approve the reclassification of the Fund's investment objective from a "fundamental" investment policy to a "non-fundamental" investment policy. While we encourage you to read all of the proxy materials, you will find a brief overview of the proposals in the "Questions and Answers" ("Q&A") below. The Q&A contains limited information and should be read in conjunction with, and is qualified by reference to, the more detailed information contained elsewhere in the Proxy Statement. QUESTIONS AND ANSWERS Q. WHEN WILL THE SPECIAL MEETING BE HELD? WHO CAN VOTE? A. The special meeting will be held on ______________, at _____ Central Time at the offices of First Trust Advisors L.P., 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187. If you owned shares of the Fund at the close of business on ____________, you are entitled to vote, even if you later sold the shares. Q. WHAT IS THE PROPOSED CHANGE TO THE FUND'S INVESTMENT OBJECTIVE? A. The Fund is an index-based exchange-traded fund and, as such, it tracks a specified index. 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 Value Line(R) Equity Allocation Index" and the Fund pursues its investment objective by normally investing at least 90% of its net assets plus the amount of any borrowings for investment purposes in common stocks that comprise such index. Since the Fund's inception, it has underperformed its benchmark, the Russell 3000(R) Index, and has experienced, on an ongoing basis, thin trading activity and declines in its shares outstanding. To address these issues, First Trust Advisors L.P., the Fund's investment adviser (the "Advisor"), is recommending that the Fund's investment objective be changed to permit it to track a new index. The Trust's Board of Trustees (the "Board") has approved the change. Because the Fund's investment objective is a "fundamental" investment policy, the change must also be approved by shareholders in order to be implemented. If approved -i- by shareholders, the Fund's new investment objective will be 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 AlphaDEX(R) Total US Market Index." The Advisor believes that changing the Fund's underlying index (and, accordingly, its investment objective) may lead to improvements in the Fund's performance and trading activity, as well as growth in the Fund's assets. Of course, no assurance can be given that the proposed change will achieve any of these desired results. If the proposal is approved, to reflect its new underlying index, the name of the Fund will be changed to the First Trust Total US Market AlphaDEX(R) ETF. In addition, the Fund's shares, which are currently listed and traded on NYSE Arca, Inc. under the ticker symbol "FVI", will be listed and traded on The NASDAQ Stock Market LLC under the ticker symbol "TUSA." The Board recommends that shareholders approve the proposal to change the Fund's investment objective. Q. HOW WILL CHANGING THE INVESTMENT OBJECTIVE AFFECT THE FUND'S INVESTMENTS? A. The Fund normally invests at least 90% of its net assets plus the amount of any borrowings for investment purposes in common stocks that comprise its underlying index. Changing the investment objective will change the index that the Fund tracks and, therefore, the securities in which it invests. As described in the Proxy Statement, the current and proposed indexes share certain similarities -- both are equity indexes that, in general terms, provide broad U.S. exposure, include stocks from companies of all market capitalization levels, incorporate daily trading volume criteria, and focus on growth and value and the potential for capital appreciation. Additionally, as of their most recent rebalance dates, both indexes included stocks of companies from various market sectors and emphasized, in particular, allocations to the consumer discretionary, financials, industrials and information technology sectors (although sector allocations are subject to change on an index's rebalance date). Accordingly, the Fund would continue to invest in U.S. equity securities issued by large-cap, mid-cap and small-cap companies from various market sectors. Each index, however, employs a different methodology in selecting its component securities. Moreover, the proposed index is comprised of significantly more stocks than the current index, which means that the Fund would be expected to invest in a significantly greater number of stocks. Q. WILL THE CHANGE TO THE FUND'S INVESTMENT OBJECTIVE RESULT IN ANY CHANGES TO THE FEES AND EXPENSES PAID BY THE FUND OR ITS SHAREHOLDERS? A. Yes. If the Fund's investment objective is changed, the fees paid by the Fund to license its new underlying index, list its shares on a different national securities exchange and have the intra-day value of its shares disseminated throughout the trading day by a new service provider will change, and the Fund will no longer pay a separate "index calculation" fee for the management of the day-to-day operations of its underlying index. In addition, you should be aware that the rate of the management fees that the Fund pays to the Advisor will not change. As described in more detail in the Proxy Statement, assuming the Fund's current asset level, its total annual fund operating expenses (before fee waivers and expense -ii- reimbursements) would, in the aggregate, decrease initially (but would still exceed the current expense cap). The Advisor believes that, over time, the Fund may benefit from having a license fee that will change from a variable fee of 0.15% of the Fund's net assets (the license fee for the current index) to one that has a small fixed component of $7,500 plus a variable component of 0.01% of the Fund's net assets (the license fee for the proposed index). Of course, no assurance can be provided that the Fund will realize any cost savings that are attributable to the change in its license fee. In addition to the above changes in Fund-level fees, the Fund's standard "transaction fee" (which is typical for exchange-traded funds), imposed to create and redeem "creation units" (i.e, blocks of 50,000 of the Fund's shares) will increase if the Fund's investment objective is changed as proposed. These fees are paid to the Fund's custodian by "authorized participants" (i.e., broker-dealers and large institutional investors that have entered into "participation agreements" with First Trust Portfolios L.P., the Fund's principal underwriter, authorizing them to purchase and redeem shares directly from the Fund); the authorized participants then pass the costs along to the investors on whose behalf they act. As indicated above, if the Fund tracks the proposed new index, the number of securities in which the Fund invests would significantly increase (assuming, as expected, that the Fund generally invests in all of such securities rather than a sample thereof) and therefore, in light of the additional efforts that are expected to be required to effect more complex creation and redemption transactions, these standard fees would increase from the current amount, which is $1,000, to $1,500. Q. WHY AM I BEING ASKED TO APPROVE THE RECLASSIFICATION OF THE INVESTMENT OBJECTIVE FROM A "FUNDAMENTAL" INVESTMENT POLICY TO A "NON-FUNDAMENTAL" INVESTMENT POLICY? A. In order to enhance the Fund's flexibility, shareholders are also being asked to approve the reclassification of the Fund's investment objective from "fundamental" to "non-fundamental," which means that the Board will be able to change the Fund's investment objective (e.g., its underlying index) in the future without shareholder approval. This would permit the Board to change the investment objective if the Board believes it is in the best interests of the Fund, including in any instance where the license agreement to use the new index is terminated. However, the Fund would notify shareholders at least 60 days before implementing changes to the investment objective. Reclassifying the Fund's investment objective as a "non-fundamental" investment policy would make it consistent with the investment objectives of most of the other index-based exchange-traded funds in the First Trust fund complex. Q. HOW DOES THE BOARD RECOMMEND THAT SHAREHOLDERS VOTE ON THE PROPOSALS? A. At a meeting held on September 15, 2014, the Board approved and recommended that shareholders vote "FOR" the proposals. If your proxy card is returned without instructions, the representatives holding proxies will vote for the proposals in accordance with the recommendation of the Board. -iii- Q. WHAT HAPPENS IF A PROPOSAL IS NOT APPROVED? A. If only one proposal is approved by the shareholders of the Fund, the Fund will implement the proposal that was approved. The approval of one proposal is not contingent upon the approval of the other proposal. If the proposal to change the Fund's investment objective is not approved by the Fund's shareholders, then the Fund's current underlying index will not be replaced and the Board will consider all alternatives available to the Fund and will take such action as it deems necessary and in the best interests of the Fund. If the proposal to change the classification of the Fund's investment objective from a fundamental investment policy to a non-fundamental investment policy is not approved by shareholders, then the Fund's investment objective will continue to be classified as a fundamental investment policy. Q. MY HOLDINGS IN THE FUND ARE SMALL. WHY SHOULD I VOTE? A. Your vote makes a difference. If enough shareholders do not vote their proxies, the Fund may not receive sufficient votes to go forward with the special meeting. This means that additional costs will be incurred to solicit votes to determine the outcome of the proposals. Q. HOW DO I CAST MY VOTE? A. You may vote over the Internet, by phone, by mail or in person at the special meeting. To vote over the Internet or by phone, please follow the directions on your proxy card. To vote by mail, please complete, sign and send the enclosed proxy card in the enclosed postage-paid envelope. You also may vote in person at the special meeting. -------------------------------------------------------------------------------- IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL MEETING. IN ORDER TO AVOID DELAY AND TO ENSURE THAT YOUR SHARES ARE REPRESENTED, PLEASE VOTE AS PROMPTLY AS POSSIBLE. IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING THE PROPOSALS OR HOW TO VOTE YOUR SHARES, PLEASE CALL THE FUND'S PROXY SOLICITOR, AST FUND SOLUTIONS, LLC, AT (866) __________ WEEKDAYS FROM 9:00 A.M. TO 10:00 P.M. EASTERN TIME. -------------------------------------------------------------------------------- -iv- FIRST TRUST EXCHANGE-TRADED FUND FIRST TRUST VALUE LINE(R) EQUITY ALLOCATION INDEX FUND 120 EAST LIBERTY DRIVE, SUITE 400 WHEATON, ILLINOIS 60187 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ____________ ____________, 2014 To the Shareholders of First Trust Value Line(R) Equity Allocation Index Fund: Notice is hereby given that a Special Meeting of Shareholders (referred to as the "Meeting") of First Trust Value Line(R) Equity Allocation Index Fund (the "Fund"), a series of First Trust Exchange-Traded Fund, a Massachusetts business trust, will be held at the offices of First Trust Advisors L.P., 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187, on _______, ________2014, at [_____ p.m. Central Time], for the following purposes: 1. To approve changing the Fund's investment objective from one that "seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the Value Line(R) Equity Allocation Index" to one that "seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the NASDAQ AlphaDEX(R) Total US Market Index." 2. To approve the reclassification of the Fund's investment objective from a "fundamental" investment policy to a "non-fundamental" investment policy. 3. To transact such other business as may properly come before the Meeting (including any adjournments or postponements). The close of business on _____, 2014 has been fixed as the record date for the determination of shareholders entitled to notice of and to vote at the Meeting and any adjournments or postponements thereof. By Order of the Board of Trustees, W. Scott Jardine Secretary -v- FIRST TRUST EXCHANGE-TRADED FUND FIRST TRUST VALUE LINE(R) EQUITY ALLOCATION INDEX FUND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON __________ 2014 120 EAST LIBERTY DRIVE, SUITE 400 WHEATON, ILLINOIS 60187 PROXY STATEMENT ______, 2014 THIS PROXY STATEMENT AND THE ENCLOSED PROXY CARD WILL FIRST BE MAILED TO SHAREHOLDERS ON OR ABOUT ___________, 2014. This Proxy Statement is being furnished by the Board of Trustees (the "Board") of First Trust Exchange-Traded Fund, a Massachusetts business trust (the "Trust"), in connection with the solicitation by the Board of proxies to be voted at a special meeting of the shareholders of First Trust Value Line(R) Equity Allocation Index Fund (the "Fund"), a series of the Trust, that will be held at _____ p.m. Central Time on _________, at the offices of First Trust Advisors L.P. ("First Trust Advisors" or the "Advisor"), located at 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187, and at any and all adjournments or postponements thereof (referred to collectively as the "Meeting"). A Notice of Special Meeting of Shareholders and a proxy card accompany this Proxy Statement. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON _________, 2014. THIS PROXY STATEMENT IS AVAILABLE ON THE INTERNET AT: HTTP://WWW.FTPORTFOLIOS.COM/LOADCONTENT/______. THE FUND'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS ARE ALSO AVAILABLE ON THE INTERNET AT: HTTP://WWW.FTPORTFOLIOS.COM/______________. THE FUND WILL FURNISH, WITHOUT CHARGE, COPIES OF ITS MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS TO ANY SHAREHOLDER UPON REQUEST. TO REQUEST A COPY, PLEASE WRITE TO THE ADVISOR AT 120 EAST LIBERTY DRIVE, SUITE 400, WHEATON, ILLINOIS 60187, OR CALL (800) 621-1675. YOU MAY CALL (800) 621-1675 FOR INFORMATION ON HOW TO OBTAIN DIRECTIONS TO BE ABLE TO ATTEND THE MEETING AND VOTE IN PERSON. -1- TABLE OF CONTENTS SECTION HEADING PAGE SUMMARY OF PURPOSE OF THE MEETING AND VOTING...................................3 Purpose of the Meeting..................................................3 Required Vote...........................................................3 How to Vote.............................................................3 PROPOSAL 1: CHANGE TO INVESTMENT OBJECTIVE.....................................4 PROPOSAL 2: RECLASSIFICATION OF THE FUND'S INVESTMENT OBJECTIVE FROM A FUNDAMENTAL INVESTMENT POLICY TO A NON-FUNDAMENTAL INVESTMENT POLICY............................................................14 OTHER INFORMATION.............................................................15 General Information....................................................15 Date, Time and Place of the Meeting....................................15 Use and Revocation of Proxies..........................................15 Voting Rights and Required Votes.......................................15 Shares Outstanding.....................................................16 Share Ownership of Certain Beneficial Owners...........................17 Share Ownership of Trustees and Officers...............................18 Service Providers......................................................18 Delivery of Certain Documents..........................................18 Submission of Shareholder Proposals....................................19 OTHER MATTERS TO COME BEFORE THE MEETING......................................19 -2- SUMMARY OF PURPOSE OF THE MEETING AND VOTING The following is a summary of certain information set forth in this Proxy Statement. This summary is qualified in its entirety by reference to the information contained elsewhere in this Proxy Statement. PURPOSE OF THE MEETING The purpose of the Meeting is to consider and vote on the following proposals (each, a "Proposal" and collectively, the "Proposals"): 1. To approve changing the Fund's investment objective from one that "seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the Value Line(R) Equity Allocation Index" to one that "seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the NASDAQ AlphaDEX(R) Total US Market Index." 2. To approve the reclassification of the Fund's investment objective from a "fundamental" investment policy to a "non-fundamental" investment policy. In addition, such other business (if any) as may properly come before the Meeting will be transacted. -------------------------------------------------------------------------------- REQUIRED VOTE To become effective, each Proposal must be approved by a vote of the lesser of (i) 67% or more of the shares of the Fund present at the Meeting if the holders of more than 50% of the outstanding shares of the Fund are present in person or represented by proxy; or (ii) more than 50% of the outstanding shares of the Fund. For purposes of determining the approval of a Proposal, abstentions and broker non-votes will have the effect of a vote against the Proposal. -------------------------------------------------------------------------------- HOW TO VOTE Shareholders may vote by telephone or over the Internet by following the instructions on the enclosed proxy card. Shareholders may also vote by mail by returning the enclosed proxy card or in person by attending the Meeting. THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH PROPOSAL. -3- PROPOSAL 1: CHANGE TO INVESTMENT OBJECTIVE Background and Reason for Vote The Fund's current investment objective, which is a fundamental investment policy (i.e., requires shareholder approval to be changed), 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 Value Line(R) Equity Allocation Index (the "Current Index"). At the recommendation of First Trust Advisors L.P., the Fund's investment adviser (the "Advisor"), the Board has approved, and recommends that shareholders approve, a change to the Fund's investment objective that would replace the Current Index with the NASDAQ AlphaDEX(R) Total US Market Index (the "Proposed Index"), a newly created equity index described in further detail below under "Additional Information Regarding the Proposed Index and Impact on Fund Investments." Currently, to pursue its investment objective, the Fund normally invests at least 90% of its net assets plus the amount of any borrowings for investment purposes in common stocks that comprise the Current Index. The Fund, using an "indexing" investment approach, attempts to replicate, before fees and expenses, the performance of the Current Index. In this regard, the Fund generally invests in all of the securities comprising the Current Index, in proportion to their weightings in such Index. Since its inception in 2006, the Fund has consistently underperformed the Russell 3000(R) Index, its benchmark index. In addition, for the past seven calendar years, the Fund has exhibited, on an ongoing basis, thin trading activity and declines in its shares outstanding. The Advisor believes that the Fund's underperformance relative to its benchmark has contributed to its thin trading activity and ongoing decline in shares outstanding, and that the Fund and its shareholders may benefit if the Current Index is replaced with the Proposed Index. Accordingly, at a meeting held on September 15, 2014 (the "Board Meeting"), the Advisor recommended that the Board approve changing the Fund's investment objective to one that seeks investment results that track the Proposed Index. To support its recommendation, the Advisor prepared, and provided to the Board, materials pertaining to the Proposed Index, including, among other things, information about its methodology, expected component securities and sector allocations, hypothetical performance data, and information outlining the expected impact that implementing the Proposed Index would have on the Fund's fees and expenses at various asset levels. If the Proposed Index is implemented, then the Fund will normally invest at least 90% of its net assets plus the amount of any borrowings for investment purposes in common stocks that comprise the Proposed Index, and will generally invest in all of the securities comprising the Proposed Index in proportion to their weightings in such Index. Although it is impossible to predict the future, based on its analysis, the Advisor believes that replacing the Current Index with the Proposed Index may cause the Fund's performance to improve, which, over time, may generate increased trading activity and growth in the Fund's assets and shares outstanding. Of course, no assurance can be provided that implementing the Proposed Index will lead to improvements in the Fund's performance or that any of the other desired results will be achieved. -4- In addition to the potential benefits described above, the Advisor believes that replacing the Current Index with the Proposed Index may, over time, benefit shareholders from a cost perspective in light of differences in license fees. While the license fee for the Current Index is 0.15% of the Fund's net assets, the license fee for the Proposed Index would be comprised of a fixed component equal to $7,500 plus a variable component equal to 0.01% of the Fund's net assets. Although initially, based on the Fund's current asset levels, the Fund would not benefit from the new license fee, assuming that the Fund experiences growth in its assets over time, the Fund may benefit from potential cost savings in the future, to the extent the Fund's expense ratio becomes lower than the then-current expense cap limitation agreed to by the Advisor. Of course, no assurance can be provided that, if the Proposal is approved, the Fund's assets will increase in the future or that the Fund will realize any cost savings based on the license fee for the Proposed Index. (See "Additional Information Regarding the Impact of the Proposal on the Fund's Expenses and Standard Transaction Fees" below.) In addition to the change to the Fund's investment objective, at the Board Meeting, the Advisor also recommended to the Board, and the Board approved, certain additional changes that are expected to be implemented if the Proposal is approved by shareholders. First, the Fund's name will be changed to reflect the Proposed Index. Second, to be consistent with other index-based funds in the First Trust fund complex for which The NASDAQ OMX Group, Inc. ("NASDAQ Group") is the index provider, the primary listing exchange for the Fund's shares will be changed from NYSE Arca, Inc. ("NYSE Arca") to The NASDAQ Stock Market LLC ("NASDAQ") and the Fund's ticker symbol will change from "FVI" to "TUSA." As a result of the change to NASDAQ, the fees paid by the Fund to list its shares (the "listing fee") and to have the intra-day value of its shares disseminated throughout the trading day (the "indicative value fee") also will change. Currently, the Fund pays the listing fee and indicative value fee to NYSE Arca; however, if the Proposed Index is approved and implemented, then such fees will be paid to NASDAQ. Assuming current asset levels, initially, the listing fee is expected to decrease and the indicative value fee is expected to increase. Moreover, currently, the Fund pays an additional fee (the "index calculation fee") to NYSE Arca for serving as index calculation agent. As index calculation agent, NYSE Arca is responsible for the management of the day-to-day operations of the Current Index, including calculating the value of such Index every 15 seconds, widely disseminating the Index values every 15 seconds and tracking corporate actions resulting in Index adjustments. If the Proposal is approved, then NASDAQ will perform the functions of the index calculation agent, but will not impose a separate fee for serving as such. (See "Additional Information Regarding the Impact of the Proposal on the Fund's Expenses and Standard Transaction Fees" below.) Finally, if the Proposal is approved, then the Fund's standard "transaction fee" (which is typical for exchange-traded funds ("ETFs")), imposed to create and redeem "creation units" (blocks of 50,000 shares) will increase. These fees are paid by "authorized participants" (i.e., broker-dealers and large institutional investors who purchase and redeem shares directly from the Fund) to The Bank of New York Mellon Corporation, the Fund's custodian (the "Custodian"); the authorized participants then pass the costs along to the investors on whose behalf they act. As described in the Fund's prospectus, the Fund's creation units are issued and redeemed "in kind" for securities in which the Fund invests and/or cash. If the Proposal is approved and the Fund invests in the component securities of the Proposed Index, the number of securities in -5- which the Fund is expected to invest would significantly increase. Therefore, in light of the additional efforts that are expected to be required to effect more complex creation and redemption transactions, these standard transaction fees would increase from the current amount, which is $1,000, to $1,500. (See "Additional Information Regarding the Impact of the Proposal on the Fund's Expenses and Standard Transaction Fees" below.) Summarized in the following table are the proposed change to the Fund's investment objective and the additional related changes that are contemplated if the Proposal is approved by shareholders.

Additional Information Regarding the Proposed Index and Impact on Fund Investments As described above, the Fund normally invests at least 90% of its net assets plus the amount of any borrowings for investment purposes in common stocks that comprise its underlying index. Changing the investment objective will change the index that the Fund tracks and, therefore, the securities in which it invests. The Current Index and the Proposed Index share certain similarities -- both are equity indexes that, in general terms, provide broad U.S. exposure, include stocks from companies of all market capitalization levels, incorporate daily trading volume criteria and focus on growth and value and the potential for capital appreciation. Additionally, as of their most recent rebalance dates, both indexes included stocks of companies from various market sectors and emphasized, in particular, allocations to the consumer -6- discretionary, financial, industrial and information technology sectors (although sector allocations are subject to change on an index's rebalance date). Accordingly, if shareholders approve the Proposal, the Fund would continue to invest in stocks issued by large-cap, mid-cap and small-cap companies from various market sectors, and, therefore, the principal investment risks associated with an investment in the Fund are not expected to significantly change. Each index, however, employs a different methodology for selecting its component securities. Moreover, the Proposed Index is comprised of significantly more component securities than the Current Index, which means that the Fund would be expected to invest in a significantly greater number of stocks. Set forth below is a comparison of certain key features of the Current Index and the Proposed Index and their respective methodologies.

Additional Information Regarding the Impact of the Proposal on the Fund's Expenses and Standard Transaction Fees OPERATING EXPENSES As indicated above, if the Proposal is approved and the Proposed Index is implemented, certain related changes to the Fund's license fee, listing fee, indicative value fee and index calculation fee -- all of which comprise a portion of the Fund's operating expenses -- will occur. Initially, it is anticipated that the listing fee would decrease, the license fee would increase, the indicative value fee would increase and the index calculation fee would be eliminated, resulting in an overall decrease in total operating expenses before fee waivers and expense reimbursements. The Fund's management fee rate would remain the same. The tables and examples below are intended to illustrate the expected impact of the Proposal on the Fund's fees and expenses. A. CURRENT AND PRO FORMA FEES The table below compares the Fund's operating expenses for the fiscal year ended December 31, 2013 to the Fund's hypothetical operating expenses for the same period if the Proposed Index had been in place for the entire fiscal year. The hypothetical "pro forma" fees assume the implementation of the license fee, listing fee and indicative value fee, and the elimination of the index -9- calculation fee, as described under this Proposal. As indicated below, the Fund's total annual fund operating expenses (before fee waivers and expense reimbursements) would, in the aggregate, decrease (but would still be higher than the Current Expense Cap (as defined below)).

EXAMPLES These examples assume that you invest $10,000 in the Fund for the time periods indicated and that your investment has a 5% return each year. The tables first show an expense example for the Fund assuming that the Fund's total operating expenses remain at current levels. The table then shows the effect on expenses if the Proposed Index is approved and implemented. Additionally, the tables assume that the Advisor's agreement to waive fees and/or pay the Fund's 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 0.70% of average daily net assets per year will be terminated following April 30, 2015. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: ------------ -------- -------- -------- -------- 1 Year 3 Years 5 Years 10 Years ------------ -------- -------- -------- -------- CURRENT $72 $503 $1,017 $2,430 ------------ -------- -------- -------- -------- PRO FORMA $72 $438 $872 $2,080 ------------ -------- -------- -------- -------- -10- B. ACTUAL AND PRO FORMA LICENSE FEE, LISTING FEE, INDICATIVE VALUE FEE AND INDEX CALCULATION FEE The following table sets forth (i) the actual license fee, listing fee, indicative value fee and index calculation fee paid by the Fund during the fiscal year ended December 31, 2013; (ii) the pro forma license fee, listing fee, indicative value fee and index calculation fee the Fund would have paid during such period if the Proposed Index had been in effect; and (iii) the difference between actual and pro forma fees as a percentage of actual fees.

-11- LICENSE FEE EXAMPLES The Advisor believes that, over time, the Fund may benefit from having a license fee that will change from a fee that varies based on the Fund's net assets to one that has a small fixed component and a variable component; however, as indicated below, at current asset levels, the Fund would not realize cost savings from the new license fee and, although total annual fund operating expenses would decrease assuming the Proposal is approved, the amount of the license fee would increase. The following table includes examples to illustrate, at various asset levels, the annual license fees and total annual fund operating expenses that the Fund would be expected to pay assuming the Fund's current investment objective is retained, as compared to such amounts that the Fund would be expected to pay if the Proposal is approved. Of course, no assurance can be provided that the Fund will realize any cost savings that are attributable to the change in its license fee.

* Total Annual Fund Operating Expenses would exceed the Current Expense Cap at all asset levels. ** Total Annual Fund Operating Expenses would exceed the Current Expense Cap at all asset levels except $100,000,000. STANDARD CREATION TRANSACTION FEE AND REDEMPTION TRANSACTION FEE As indicated above, if the Fund's investment objective is changed to one that seeks investment results that track the Proposed Index, the Fund's standard creation transaction fee and redemption transaction fee, which are typical for ETFs, will increase. The Fund issues and redeems shares on a continuous basis, only in "creation units" consisting of 50,000 shares, and creation units are issued and redeemed "in kind" for securities in which the Fund invests and/or cash. The Fund's shares can only be purchased and redeemed directly from the Fund by authorized participants (i.e., broker-dealers and large institutional investors that have entered into "participation agreements" with First Trust Portfolios L.P., the Fund's principal underwriter, authorizing them to purchase and redeem shares directly from the Fund). In connection with purchases and redemptions of shares of the Fund, authorized participants are required to pay a standard creation transaction fee (the "Creation Transaction Fee") to the -12- Custodian, regardless of the number of creation units. Similarly, a standard redemption transaction fee (the "Redemption Transaction Fee") is imposed and paid to the Custodian to offset transfer and other transaction costs that may be incurred by the Fund in connection with redemption transactions. The authorized participants pass the Creation Transaction Fees and Redemption Transaction Fees along to the investors on whose behalf they act. Currently, the Fund's standard Creation Transaction Fee and standard Redemption Transaction Fee are based on the number of different securities in a creation unit and are each $1,000. As indicated above, the Proposed Index is comprised of significantly more securities than the Current Index, which means that, if the Proposed Index is implemented and, as expected, the Fund generally invests in all of such securities (rather than a sample thereof), the Fund would invest in a greater number of stocks, thereby introducing increased complexity to creation and redemption transactions. Accordingly, in light of the additional efforts that are expected to be required to effect more complex creation and redemption transactions, the standard Creation Transaction Fee and the standard Redemption Transaction Fee will each be increased to $1,500. The new fees, however, would each be a flat fee and would remain the same regardless of the number of securities in a creation unit. Conclusion The Advisor has recommended, and the Board has approved, changing the Fund's investment objective to one that seeks investment results that track the Proposed Index. In this regard, as discussed above, the Advisor and the Board have considered, among other things (1) the Fund's performance and trading history, (2) differences and similarities between the Current Index and the Proposed Index, (3) the expected impact of the Proposed Index on the Fund's investments and (4) the expected impact of the Proposed Index on the Fund's fees and expenses. THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED CHANGE TO THE FUND'S INVESTMENT OBJECTIVE. -13- PROPOSAL 2: RECLASSIFICATION OF THE FUND'S INVESTMENT OBJECTIVE FROM A FUNDAMENTAL INVESTMENT POLICY TO A NON-FUNDAMENTAL INVESTMENT POLICY Under applicable law, a fund's investment objective is not required to be "fundamental." As indicated in Proposal 1, the Fund's current investment objective is a fundamental investment policy, which means that changes to the investment objective must be approved by shareholders. In order to enhance the Fund's flexibility, it is proposed that the Fund's investment objective be reclassified as a "non-fundamental" investment policy, which means that the Board would be able to change the Fund's investment objective in the future without shareholder approval. This would permit the Board to change the investment objective if the Board believes it is in the best interests of the Fund. Reclassifying the investment objective as a non-fundamental investment policy would alleviate the time and expense associated with holding a shareholder meeting and soliciting proxies in conjunction with any future change to the Fund's investment objective and would conform the Fund's investment objective to that of most of the other index-based exchange-traded funds in the First Trust fund complex, which have non-fundamental investment objectives. The Fund would be required to provide shareholders with at least 60 days' prior written notice before effecting any change to the Fund's investment objective. If shareholders approve this Proposal, the Fund also would disclose in its prospectus that its investment objective is non-fundamental and may be changed by the Board without shareholder approval. The Board currently does not intend to change the Fund's investment objective other than as described in Proposal 1. If shareholders do not approve this Proposal, the Fund's investment objective will continue to be fundamental and the Board will be required to seek shareholder approval if, in the future, it decides either to change the investment objective or to reclassify the investment objective from a fundamental to a non-fundamental investment policy. THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" THE RECLASSIFICATION OF THE FUND'S INVESTMENT OBJECTIVE FROM FUNDAMENTAL TO NON-FUNDAMENTAL. -14- OTHER INFORMATION GENERAL INFORMATION This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board. The solicitation of proxies will be largely by mail, but may include telephonic, electronic or oral communication by officers and service providers of the Trust, as well as affiliates of such service providers. A proxy solicitation firm, AST Fund Solutions, LLC, has also been engaged to solicit proxies at a cost which is expected to be a total of approximately $5,000. The expense of preparing, printing and mailing the enclosed proxy, accompanying notice and this Proxy Statement, and all other costs in connection with the solicitation of proxies to be voted at the Meeting (collectively, "solicitation costs"), will be borne by the Fund. The Fund will also reimburse brokerage firms and others for their expenses in forwarding proxy solicitation materials to the person(s) for whom they hold shares of the Fund. Since the Fund's total annual operating expenses, taking into account solicitation costs and reimbursements of forwarding expenses, are expected to exceed the Fund's Current Expense Cap, in effect, the Advisor will bear such costs and expenses. DATE, TIME AND PLACE OF THE MEETING The meeting will be held on ____________, 2014 at _____ p.m. Central Time at the offices of First Trust Advisors L.P., located at 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187. USE AND REVOCATION OF PROXIES For shareholders voting by mail, if the enclosed proxy card is properly executed and returned in time to be voted at the Meeting, the shares represented thereby will be voted in accordance with the instructions marked thereon, or, if no instructions are marked thereon, will be voted at the discretion of the persons named on the proxy card. Accordingly, unless instructions to the contrary are marked thereon, a properly executed and returned proxy will be voted FOR each Proposal, and at the discretion of the named proxies on any other matters that may properly come before the Meeting, as deemed appropriate. Any shareholder who has given a proxy has the right to revoke it at any time prior to its exercise either by attending the Meeting and voting his or her or its shares in person, or by timely submitting a letter of revocation or a later-dated proxy to the Trust at the above address. A list of shareholders entitled to notice of and to be present and to vote at the Meeting will be available at the offices of the Trust, 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187, for inspection by any shareholder during regular business hours prior to the Meeting. Shareholders will need to show valid identification and proof of share ownership to be admitted to the Meeting or to inspect the list of shareholders. VOTING RIGHTS AND REQUIRED VOTES Each shareholder will be entitled to one vote for each share owned by the shareholder, and each fractional share will be entitled to a proportionate fractional vote. -15- A quorum of shareholders is necessary to hold a meeting of shareholders. Under the Trust's By-Laws, the holders of shares representing thirty-three and a third percent (33-1/3%) of the voting power of the outstanding shares entitled to vote present in person or by proxy will generally constitute a quorum at any meeting of shareholders; however, where a vote is to be taken by an individual fund (as in case of each Proposal), then shares representing thirty-three and a third percent (33-1/3%) of the voting power of the aggregate number of shares of that fund will be necessary to constitute a quorum for the transaction of business by that fund. For the purposes of establishing whether a quorum is present, all shares present and entitled to vote, including abstentions and broker non-votes (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or the persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power), shall be counted. Any meeting of shareholders may be postponed prior to the meeting with notice to the shareholders entitled to vote at that meeting. Any meeting of shareholders may, by action of the person presiding thereat, be adjourned without further notice with respect to one or more matters to be considered at such meeting to a designated time and place, if a quorum is not present with respect to such matter. Any meeting of shareholders may, by motion of the person presiding thereat, be adjourned with respect to one or matters to be considered at such meeting, even if a quorum is present with respect to such matters, to a designated time and place, when such adjournment is approved by the vote of holders of shares representing a majority of the voting power of the shares present and entitled to vote with respect to the matter or matters adjourned, and voting on the adjournment, without further notice. Unless a proxy is otherwise limited in this regard, any shares present and entitled to vote at a meeting, including broker non-votes, may, at the discretion of the proxies named therein, be voted in favor of such an adjournment. Broker-dealer firms holding shares in "street name" for the benefit of their customers and clients may request voting instructions from such customers and clients. Because broker-dealers may be subject to rules which will not permit them to vote your shares without instructions, you are encouraged to contact your broker-dealer and record your voting instructions. To become effective, each Proposal must be approved by a vote of a majority of the outstanding voting securities of the Fund. The "vote of a majority of the outstanding voting securities" of the Fund for this purpose, as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), means the vote of the lesser of (i) 67% or more of the shares of the Fund present at the Meeting if the holders of more than 50% of the outstanding shares of the Fund are present in person or represented by proxy; or (ii) more than 50% of the outstanding shares of the Fund. For purposes of determining the approval of a Proposal, abstentions and broker non-votes will have the effect of a vote against the Proposal. SHARES OUTSTANDING Only holders of record of shares at the close of business on ____________ (the "Record Date") are entitled to vote on the Proposals at the Meeting. As of the close of business on the Record Date, there were ____________ shares outstanding of the Fund. -16- SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS As of the Record Date, no person is known by the Trust to have beneficially owned, more than 5% of the shares outstanding of the Fund except as set forth in the chart below. A shareholder owning beneficially more than 25% of the Fund's voting securities may be deemed to "control" (as defined in the 1940 Act) the Fund. The vote of any such person could have a more significant effect on matters presented at a shareholder's meeting than votes of other shareholders. Information as to beneficial ownership is based on securities position listing reports as of the Record Date and reports filed with the Securities and Exchange Commission. The Trust does not have any knowledge of who the ultimate beneficiaries are of the Fund's shares outstanding. PERCENTAGE OF SHARES BENEFICIALLY SHARES OUTSTANDING NAME OF BENEFICIAL OWNER OWNED OWNED -17- SHARE OWNERSHIP OF TRUSTEES AND OFFICERS The number of shares of the Fund beneficially owned as of December 31, 2013 by (a) the Trustees (including the Trustees who are not "interested persons," as that term is defined in the 1940 Act, of the Trust (such Trustees, the "Independent Trustees") and the Trustee who is not an Independent Trustee (such Trustee, the "Interested Trustee") and (b) the Trustees and officers of the Trust as a group, is set forth below. ----------------------------------------------- ----------- INTERESTED TRUSTEE ----------------------------------------------- ----------- James A. Bowen 0 ----------------------------------------------- ----------- INDEPENDENT TRUSTEES ----------------------------------------------- ----------- Richard E. Erickson 0 ----------------------------------------------- ----------- Thomas R. Kadlec 0 ----------------------------------------------- ----------- Robert F. Keith 0 ----------------------------------------------- ----------- Niel B. Nielson 200 ----------------------------------------------- ----------- TRUSTEES AND OFFICERS AS A GROUP 200 ----------------------------------------------- ----------- As of December 31, 2013, (a) the Trustees and (b) the Trustees and officers of the Trust as a group, beneficially owned less than 1% of the total shares outstanding of the Fund. The information as to beneficial ownership is based on statements furnished by each Trustee and officer. SERVICE PROVIDERS First Trust Advisors L.P., the Fund's investment adviser, and First Trust Portfolios L.P., the principal underwriter of the Fund's shares, are each located at 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187. The Bank of New York Mellon Corporation, the Fund's administrator, custodian and fund accounting and transfer agent, is located at 101 Barclay St., New York, New York 10286. DELIVERY OF CERTAIN DOCUMENTS Annual reports will be sent to shareholders of record of the Fund. The Trust will furnish, without charge, a copy of its annual report and/or semi-annual report as available upon request. Such written or oral requests should be directed to the Trust at 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187 or by calling (800) 621-1675. Please note that only one annual or semi-annual report, proxy statement or Notice of Availability of Proxy Materials, as applicable, may be delivered to two or more shareholders of the Fund who share an address, unless the Trust has received instructions to the contrary. To request a separate copy of an annual or semi-annual report, proxy statement or Notice of Availability of Proxy Materials, as applicable, or for instructions as to how to request a separate -18- copy of such documents or as to how to request a single copy if multiple copies of such documents are received, shareholders should contact the Trust at the address and phone number set forth above. Pursuant to a request, a separate copy will be delivered promptly. SUBMISSION OF SHAREHOLDER PROPOSALS The Trust is organized as a business trust under the laws of The Commonwealth of Massachusetts. The Trust is not required to hold, and does not hold, annual meetings. However, special meetings of shareholders of the Fund may be called as required by the 1940 Act, or as required or permitted by the Trust's Declaration of Trust and By-Laws. Because the Fund does not hold annual shareholders' meetings, the anticipated date of the next shareholders' meeting (if any) cannot be provided. Shareholders who wish to present a proposal for inclusion in a future proxy statement for a subsequent shareholders' meeting should send written proposals to the Trust's Secretary at 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187. Proposals must be received by a reasonable time before the Fund begins to print and send its proxy materials for the meeting. The timely submission of a proposal does not guarantee inclusion. OTHER MATTERS TO COME BEFORE THE MEETING No business other than the matters described above is expected to come before the Meeting, but should any other matter requiring a vote of shareholders arise, including any question as to an adjournment or postponement of the Meeting, the persons named on the enclosed proxy card will vote thereon according to their best judgment in the interests of the Fund. -------------------------------------------------------------------------------- IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. IN ORDER TO AVOID DELAY AND TO ENSURE THAT YOUR SHARES ARE REPRESENTED, PLEASE VOTE AS PROMPTLY AS POSSIBLE. IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING THE PROPOSALS OR HOW TO VOTE YOUR SHARES, PLEASE CALL THE FUND'S PROXY SOLICITOR, AST FUND SOLUTIONS, LLC, AT (866) __________ WEEKDAYS FROM 9:00 A.M. TO 10:00 P.M. EASTERN TIME. -------------------------------------------------------------------------------- -19- FORM OF PROXY CARD ------------------ EVERY SHAREHOLDER'S VOTE IS IMPORTANT EASY VOTING OPTIONS: VOTE ON THE INTERNET Log on to: [ ] Or scan the QR code Follow the on-screen instructions available 24 hours VOTE BY PHONE call [ ] follow the recorded instructions available 24 hours VOTE BY MAIL Vote, sign and date this Proxy Card and return in the postage-paid envelope VOTE IN PERSON Attend Shareholder Meeting 120 East Liberty Drive, Suite 400 Wheaton, Illinois 60187 on ________, 2014 Please detach at perforation before mailing. PROXY PROXY FIRST TRUST EXCHANGE-TRADED FUND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON [ ], 2014 PROXY SOLICITED BY THE BOARD OF TRUSTEES The undersigned holder of shares of the First Trust Value Line(R) Equity Allocation Index Fund (the "Fund"), a series of First Trust Exchange-Traded Fund, a Massachusetts business trust, hereby appoints W. Scott Jardine, Mark R. Bradley, Kristi A. Maher, James M. Dykas and Erin E. Klassman as attorneys and proxies for the undersigned, with full powers of substitution and revocation, to represent the undersigned and to vote on behalf of the undersigned all shares of the Fund that the undersigned is entitled to vote at the Special Meeting of Shareholders of the Fund (the "Meeting") to be held at the offices of First Trust Advisors L.P., 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187, at [ ] Central time on the date indicated above, and any adjournments or postponements thereof. The undersigned hereby acknowledges receipt of the Notice of Special Meeting of Shareholders and Proxy Statement dated [ ], 2014, and hereby instructs said attorneys and proxies to vote said shares as indicated hereon. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Meeting and any adjournments or postponements thereof (including, but not limited to, any questions as to adjournments or postponements of the Meeting). A majority of the proxies present and acting at the Meeting in person or by substitute (or, if only one shall be so present, then that one) shall have and may exercise all of the power and authority of said proxies hereunder. The undersigned hereby revokes any proxy previously given. This proxy, if properly executed, will be voted in the manner directed by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR EACH PROPOSAL SET FORTH. VOTE VIA THE INTERNET: [ ] VOTE VIA THE TELEPHONE: [ ] ----------------------- ------------------- ----------------------- ------------------- Please sign exactly as your name appears at left. Joint owners each should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or authorized officer. If a partnership, please sign in partnership name by authorized person. Please sign, date and return. ____________________________________________________ Signature ____________________________________________________ Signature (if held jointly) ____________________________________________________ Date EVERY SHAREHOLDER'S VOTE IS IMPORTANT IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON [ ], 2014 THE PROXY STATEMENT AND PROXY CARD FOR THIS MEETING ARE AVAILABLE AT: [ ] IF YOU VOTE ON THE INTERNET OR BY TELEPHONE, YOU NEED NOT RETURN THIS PROXY CARD Please detach at perforation before mailing. THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED "FOR" THE PROPOSALS. TO VOTE, FOR EACH PROPOSAL, MARK ONE BLOCK BELOW IN BLUE OR BLACK INK. Example: [X] THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSALS. PROPOSALS: 1. To approve changing the Fund's FOR AGAINST ABSTAIN investment objective from one that [ ] [ ] [ ] "seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the Value Line(R) Equity Allocation Index" to one that "seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the NASDAQ AlphaDEX(R) Total US Market Index." 2. To approve the reclassification of FOR AGAINST ABSTAIN the Fund's investment objective from [ ] [ ] [ ] a "fundamental" investment policy to a "non-fundamental" investment policy. MEETING ATTENDANCE - Mark the box to the right if you plan to attend the Special Meeting. [ ] CHANGE OF ADDRESS - Please print COMMENTS - Please print your new address below. comments below. ------------------------------------ ------------------------------------ ------------------------------------ ------------------------------------ PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.