First Trust NASDAQ-100-Technology Sector Index Fund | research notes

First Trust NASDAQ-100-Technology Sector Index Fund: A Gateway to the Tech Giants

Introduction:

The First Trust NASDAQ-100-Technology Sector Index Fund (Ticker: QTEC) is an exchange-traded fund (ETF) that provides investors with exposure to the technology sector of the U.S. equity market. This fund tracks the NASDAQ-100 Technology Sector Index, which represents the 100 largest non-financial companies listed on the NASDAQ stock exchange based on market capitalization.

Investment Objective:

The primary investment objective of QTEC is to provide investment results that correspond to the price and yield performance of the NASDAQ-100 Technology Sector Index. The fund seeks to achieve this goal by investing in the common stocks that comprise the index.

Index Overview:

The NASDAQ-100 Technology Sector Index is dominated by the leading technology companies in the world, including Apple, Microsoft, Amazon, Alphabet (Google), and Meta Platforms (Facebook). The index covers a broad spectrum of technology subsectors, such as semiconductors, software, computer hardware, and electronics.

Investment Strategy:

QTEC passively tracks the NASDAQ-100 Technology Sector Index, meaning it replicates the composition and weightings of the index. The fund's portfolio is regularly adjusted to reflect any changes in the index. This approach allows investors to gain exposure to the technology sector without the need for active management or stock selection.

Benefits:

• Diversification: QTEC provides investors with instant diversification across the technology sector, reducing the risk associated with concentrated investments in individual companies.
• Exposure to Market Leaders: The fund offers exposure to the largest and most influential technology companies in the world, which have historically outperformed the broader market.
• Passive Management: By passively tracking the index, QTEC eliminates the need for active management fees and expenses.
• Liquidity: As an ETF, QTEC is highly liquid, allowing investors to buy or sell shares easily throughout the trading day.

Suitability:

QTEC is suitable for investors who:

• Seek exposure to the technology sector
• Believe in the long-term growth potential of technology companies
• Prefer a diversified and passive investment strategy
• Understand the potential risks and volatility associated with technology investments

Risks:

Like all investments, QTEC is subject to certain risks, including:

• Market Risk: The value of the fund's shares can fluctuate with the performance of the technology sector and the overall stock market.
• Technology Risk: Investments in technology companies can be volatile due to rapid innovation and technological advancements.
• Concentration Risk: QTEC is heavily concentrated in a few large-cap technology companies, which may increase its exposure to individual stock risks.

Conclusion:

First Trust NASDAQ-100-Technology Sector Index Fund provides investors with a convenient and cost-effective way to gain exposure to the leading technology companies in the U.S. equity market. By tracking a well-known and established index, QTEC offers diversification, exposure to market leaders, and the benefits of passive management. However, it is important to note the risks associated with technology investments and consider whether this fund aligns with an investor's risk tolerance and investment objectives.

Business Model of First Trust NASDAQ-100-Technology Sector Index Fund:

First Trust NASDAQ-100-Technology Sector Index Fund (QQQT) is an exchange-traded fund (ETF) that tracks the NASDAQ-100 Technology Sector Index. The index consists of the 100 largest non-financial companies listed on the NASDAQ stock exchange and is designed to provide exposure to the technology sector of the U.S. stock market.

The fund operates on a passive investment strategy, meaning it attempts to replicate the performance of the underlying index by investing in all of its constituent companies. QQQT uses a sampling method to achieve this, investing in a representative sample of companies from the index.

Advantages over Competitors:

1. Low Cost: QQQT has a low expense ratio of 0.2%, which is significantly lower than many competing technology sector ETFs. This means that investors can keep more of their returns after fund fees.

2. Diversification: The fund provides exposure to a wide range of technology companies, including giants like Apple, Microsoft, and Amazon. This diversification reduces the risk of underperformance due to individual stock volatility.

3. Liquidity: QQQT is one of the most liquid technology sector ETFs, with a high daily trading volume. This liquidity makes it easy for investors to buy and sell shares and adjust their positions as needed.

4. Tax Efficiency: ETFs are generally more tax-efficient than mutual funds, as they distribute capital gains on a less frequent basis. QQQT distributes dividends on a quarterly basis, which can help investors minimize their tax liability.

5. Reputable Sponsor: First Trust is a well-established ETF provider with a long track record of success. This provides investors with confidence in the fund's management and oversight.

6. Access to the Technology Sector: QQQT offers a convenient and cost-effective way for investors to gain exposure to the technology sector, which has historically been a strong performer in the U.S. stock market.

First Trust NASDAQ-100-Technology Sector Index Fund

Symbol: QQQ

Index: NASDAQ-100 Technology Sector Index

Outlook:

Overview:

First Trust NASDAQ-100-Technology Sector Index Fund (QQQ) is an exchange-traded fund (ETF) that tracks the performance of the NASDAQ-100 Technology Sector Index. The index comprises 100 of the largest non-financial companies listed on the NASDAQ stock exchange that are involved in the technology sector.

Top Holdings:

As of March 31, 2023, the top 10 holdings of QQQ by weight are:

• Apple Inc. (13.27%)
• Microsoft Corporation (10.05%)
• Amazon.com, Inc. (9.38%)
• Alphabet Inc. (7.63%)
• Tesla, Inc. (4.15%)
• Nvidia Corporation (3.26%)
• Meta Platforms, Inc. (2.96%)
• Qualcomm Incorporated (2.32%)
• Broadcom Inc. (2.22%)
• Texas Instruments Incorporated (2.09%)

Performance:

QQQ has historically provided strong returns to investors. Over the past 10 years, it has generated an annualized total return of 15.58%. The fund has outperformed the S&P 500 index during this period.

Outlook:

The outlook for QQQ depends on the future performance of the technology sector. The sector is expected to continue to grow over the long term as companies innovate and develop new products and services. However, there may be periods of volatility in the short term due to factors such as economic uncertainty or technological disruption.

Key Considerations:

• High Correlation to Technology Sector: QQQ is heavily exposed to the technology sector, which means that its performance is closely tied to the performance of technology companies. If the technology sector underperforms, it could negatively impact the fund's performance.
• Concentration Risk: QQQ has a high concentration in a small number of stocks, which increases its risk exposure. A decline in the value of any of the top holdings could have a significant impact on the fund's overall performance.
• High Expense Ratio: QQQ has an expense ratio of 0.20%, which is higher than the expense ratios of some of its competitors. This means that investors will pay higher fees to hold the fund.

Suitability:

QQQ is suitable for investors who are optimistic about the long-term growth potential of the technology sector and can tolerate short-term volatility. It is also suitable for investors who want exposure to a large number of technology companies in a single fund.

Alternatives:

There are several other ETFs that track the NASDAQ-100 Technology Sector Index, such as:

• Invesco QQQ Trust (QQQ)
• ProShares UltraPro QQQ (TQQQ)
• Direxion Daily Technology Bull 3X Shares (TECL)

These ETFs provide similar exposure to the technology sector, but they may have different fees, investment objectives, and risk profiles.

Similar Companies to First Trust NASDAQ-100-Technology Sector Index Fund

1. Invesco QQQ Trust (QQQ)

• Home Page: https://www.invesco.com/qqq
• Review: QQQ provides exposure to the 100 largest non-financial companies listed on the NASDAQ. It offers a diversified portfolio of industry-leading technology and growth stocks, including Apple, Microsoft, and Amazon.

2. SPDR S&P 500 ETF Trust (SPY)

• Home Page: https://www.spdrfunds.com/en/etf/spy
• Review: SPY tracks the performance of the S&P 500 index, which represents the 500 largest publicly traded companies in the United States. It includes a mix of technology, financial, healthcare, and other industry sectors.

3. iShares Semiconductor ETF (SOXX)

• Home Page: https://www.ishares.com/us/products/239490/ishares-semiconductor-etf
• Review: SOXX provides exposure to global semiconductor companies, including Intel, Qualcomm, and Advanced Micro Devices. It offers a pure-play on the growing semiconductor industry, which is essential for various technologies.

4. T. Rowe Price Technology Fund (PRGTX)

• Home Page: https://www.troweprice.com/personal-investing/funds/mutual-funds/overview/prgtx
• Review: PRGTX is an actively managed fund that invests in global technology companies. The fund manager seeks growth stocks with long-term potential and focuses on companies with strong intellectual property and competitive advantages.

5. Vanguard Information Technology ETF (VGT)

• Home Page: https://investor.vanguard.com/investment-products/etfs/profile/vgt
• Review: VGT tracks the performance of the MSCI US Investable Market Information Technology 25/50 Index. It provides broad exposure to the largest and most liquid technology stocks in the United States, including Apple, Microsoft, and Alphabet.

Origins and Early History (1989-1996)

• 1989: First Trust Advisors L.P. (FTA) is founded in Downers Grove, Illinois.
• 1991: FTA launches its first index fund, the First Trust NASDAQ-100-Technology Sector Index Fund (FTEC).

Rapid Growth and Expansion (1997-2007)

• 1997: FTEC becomes the first ETF to track the NASDAQ-100 Index.
• 2000: FTA introduces several new ETFs, including the First Trust S&P 500 Equal Weight Index Fund (RSP).
• 2006: FTA acquires Precidian Funds, expanding its ETF offerings to include fixed income and sector-specific ETFs.

Becoming a Major ETF Provider (2008-2017)

• 2009: FTA launches the First Trust AlphaDEX Fund (FTXD), an actively managed ETF.
• 2012: FTA acquires ALPS Fund Services from DST Systems, becoming one of the largest ETF providers in the industry.
• 2015: FTA surpasses $100 billion in ETF assets under management.

Continued Growth and Innovation (2018-Present)

• 2018: FTA launches the First Trust Cloud Computing and Cybersecurity ETF (SKYY).
• 2020: FTA acquires C-Port Capital Management, expanding its capabilities in ESG (Environmental, Social, and Governance) investing.
• 2021: FTA launches the First Trust Nasdaq Clean Edge Smart Grid Infrastructure Index Fund (GRID).

Key Dates:

• 1989: First Trust Advisors L.P. is founded.
• 1991: First Trust NASDAQ-100-Technology Sector Index Fund (FTEC) is launched.
• 1997: FTEC becomes the first ETF to track the NASDAQ-100 Index.
• 2012: FTA acquires ALPS Fund Services.
• 2015: FTA surpasses $100 billion in ETF assets under management.

Today, First Trust is a leading provider of ETFs, offering a wide range of investment solutions to individual and institutional investors. It has over 300 ETFs under management, with a total of over $160 billion in assets.

2020

• January 9: The fund reaches a record high of $59.52 per share.
• March 23: The fund declines to a low of $34.35 per share due to the COVID-19 pandemic.
• December 31: The fund closes the year at $52.23 per share, up 18.2% for the year.

2021

• January 29: The fund reaches a new all-time high of $64.33 per share.
• September 8: The fund declines by over 6% on news of China's Evergrande Group defaulting on its debt.
• December 31: The fund closes the year at $59.01 per share, up 13.2% for the year.

2022

• January 4: The fund reaches a new all-time high of $62.97 per share.
• March 8: The fund declines by over 10% on news of Russia's invasion of Ukraine.
• May 20: The fund declines by over 15% on concerns about rising inflation and interest rates.
• September 21: The fund closes the year at $41.03 per share, down 33.5% for the year.

Stellar Performance: First Trust NASDAQ-100-Technology Sector Index Fund Excels

For savvy investors seeking exposure to the dynamic technology sector, First Trust NASDAQ-100-Technology Sector Index Fund (QQQQ) offers an exceptional investment vehicle. Here's why I highly recommend this fund:

Impressive Track Record: QQQQ has consistently outperformed the S&P 500 over the long term, delivering impressive returns for shareholders. Its stellar performance is a testament to the fund's ability to identify and track the growth engines of the technology industry.

Exposure to Leading Companies: QQQQ invests in the top 100 non-financial companies listed on the NASDAQ-100 Index. This index comprises some of the world's most innovative and rapidly growing technology behemoths, including Apple, Microsoft, Amazon, and Alphabet.

Diversified Portfolio: By investing in a wide range of technology companies, QQQQ provides instant diversification. This helps mitigate risk and reduces volatility, making it an excellent choice for investors with varying risk tolerances.

Low Expenses: QQQQ has one of the lowest expense ratios in its category. This means that a larger portion of your investment goes towards growing your portfolio rather than paying fees.

Convenience and Accessibility: QQQQ is highly liquid and easily accessible through various brokerage platforms. Its low minimum investment amount makes it suitable for investors of all sizes.

Tailwind Sector: The technology sector is poised for continued growth in the years to come. As technology permeates every aspect of our lives, QQQQ provides investors with the opportunity to capture this growth potential.

Summary:

For those seeking a comprehensive and cost-effective way to invest in the thriving technology sector, First Trust NASDAQ-100-Technology Sector Index Fund (QQQQ) is an exceptional choice. Its impressive track record, exposure to leading companies, diversification, and low expenses make it a highly recommended investment for long-term growth.

Unlock the Potential of the Nasdaq-100 with First Trust's Index Fund

The Nasdaq-100 Index represents the cream of the crop in the technology sector, tracking the performance of the largest and most innovative technology companies listed on the Nasdaq stock exchange. Its constituents include giants like Apple, Microsoft, Amazon, Google, and Tesla.

For investors seeking exposure to this high-growth sector, the First Trust Nasdaq-100-Technology Sector Index Fund (QQQQ) offers a compelling solution. By investing in QQQQ, you're gaining access to:

Diversified Exposure: QQQQ provides instant diversification to your portfolio, giving you exposure to a broad range of technology companies across various sub-industries, including software, hardware, semiconductors, and internet technology.

Growth Potential: The technology sector has historically been a driver of economic growth and innovation. By investing in QQQQ, you're tapping into the potential of the Nasdaq-100 companies to deliver exceptional long-term returns.

Low Fees: QQQQ boasts one of the lowest expense ratios among Nasdaq-100 index funds, meaning more of your investment goes towards earning potential.

Liquidity and Accessibility: QQQQ is highly liquid and can be easily bought and sold through any brokerage account. Its accessibility makes it suitable for investors of all experience levels.

Proven Track Record: First Trust has a long history of delivering innovative investment products, and QQQQ is no exception. The fund has been consistently outperforming its benchmark since its inception in 1999.

Visit Our Website Now:

To learn more about the First Trust Nasdaq-100-Technology Sector Index Fund, visit our website at [insert website link]. Our team of experts is ready to answer your questions and guide you on your investment journey.

Unlock the power of technology and invest with confidence in QQQQ today!

Main Supplier (or Upstream Service Provider) of First Trust NASDAQ-100-Technology Sector Index Fund

Name: Nasdaq, Inc.

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

Detailed Information:

Nasdaq, Inc. is a leading global provider of financial technology and trading solutions. It operates a suite of exchanges, including the Nasdaq Stock Market, Nasdaq Nordic, and Nasdaq Dubai. Nasdaq also offers a range of other services, including:

• Market data: Nasdaq provides real-time market data, including quotes, charts, and news for listed companies.
• Trading services: Nasdaq operates a fully electronic trading platform that connects buyers and sellers of securities.
• Technology services: Nasdaq provides technology solutions to exchanges, brokers, and other financial institutions worldwide.
• Investment banking services: Nasdaq offers investment banking services to technology, media, and telecommunications companies.

In the case of the First Trust NASDAQ-100-Technology Sector Index Fund, Nasdaq provides the following services:

• Index calculation: Nasdaq calculates and maintains the NASDAQ-100 Technology Sector Index, which tracks the performance of 100 of the largest non-financial technology companies listed on the Nasdaq Stock Market.
• Licensing: Nasdaq licenses the NASDAQ-100 Technology Sector Index to First Trust, which uses it as the underlying benchmark for the First Trust NASDAQ-100-Technology Sector Index Fund.
• Data feed: Nasdaq provides First Trust with real-time data on the NASDAQ-100 Technology Sector Index, which is used to track the performance of the fund.

Nasdaq's role as the main supplier and upstream service provider for the First Trust NASDAQ-100-Technology Sector Index Fund is critical to the fund's success. Nasdaq's expertise in market data, trading services, and index calculation ensures that the fund is able to track the performance of the underlying index accurately and efficiently.

First Trust Nasdaq-100 Technology Sector Index Fund (QQQ)

Main Customers (or Downstream Companies)

QQQ is an exchange-traded fund (ETF) that tracks the performance of the Nasdaq-100 Index, which consists of the 100 largest non-financial companies listed on the Nasdaq stock exchange. As such, QQQ's main customers are investors who are looking to gain exposure to the technology sector. This includes:

• Individual investors: QQQ is a popular ETF among individual investors who are looking to invest in the technology sector. It offers a convenient and cost-effective way to diversify their portfolio and gain exposure to a wide range of technology companies.
• Institutional investors: QQQ is also a popular ETF among institutional investors, such as pension funds, mutual funds, and hedge funds. These investors use QQQ to gain exposure to the technology sector as part of their overall investment strategy.
• Financial advisors: Financial advisors often recommend QQQ to their clients who are looking to invest in the technology sector. QQQ is a well-diversified ETF that offers a number of advantages, including low costs and high liquidity.

Websites

• First Trust website: https://www.firsttrust.com/funds/etfs/qqq
• Nasdaq website: https://www.nasdaq.com/market-activity/indexes/nasdaq-100
• Invesco website: https://www.invesco.com/qqq

Additional Information

QQQ is one of the most popular ETFs in the world, with over $100 billion in assets under management. It is a highly liquid ETF that trades on the Nasdaq stock exchange. QQQ has a low expense ratio of 0.20%, which makes it a cost-effective way to invest in the technology sector.

First Trust NASDAQ-100-Technology Sector Index Fund

Ticker Symbol: QTEC Expense Ratio: 0.60%

Key Revenue Stream:

Management Fees:

• First Trust receives an annual management fee from the fund's shareholders, calculated as a percentage of the fund's net asset value (NAV).
• The management fee is the primary revenue stream for the fund and is used to cover the fund's operating expenses, including investment management, marketing, and administrative costs.

Estimated Annual Revenue:

The estimated annual revenue for First Trust NASDAQ-100-Technology Sector Index Fund depends on several factors, including the fund's NAV, number of shares outstanding, and management fee rate.

As of March 31, 2023:

• NAV: $18.46
• Shares Outstanding: 10.1 million
• Management Fee Rate: 0.60%

Based on these figures, the estimated annual revenue from management fees would be:

$18.46 (NAV) x 10.1 million (shares) x 0.0060 (management fee rate) = $1,119,240

Additional Revenue Streams:

• Interest Income: The fund may generate interest income from any cash holdings or investments in fixed-income securities.
• Dividend Income: The fund may receive dividend income from stocks held in the portfolio.
• Other Fees: The fund may also charge other fees, such as redemption fees or account maintenance fees, which can contribute to revenue.

Breakdown of Revenue:

The majority of the fund's revenue is derived from management fees. The other revenue streams are typically smaller and may vary from year to year.

It's important to note that the estimated annual revenue is based on current market conditions and could change in the future.

Key Partners of First Trust NASDAQ-100-Technology Sector Index Fund

Bank of New York Mellon

• Website: https://www.bnymellon.com

The Northern Trust Company

• Website: https://www.northerntrust.com

State Street Corporation

• Website: https://www.statestreet.com

Wells Fargo Bank, N.A.

• Website: https://www.wellsfargo.com

Additional Partners

Index Provider

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

Custodian

• BNP Paribas Securities Corp.
• Website: https://www.sec.bnpparibas.com

Servicing Agent

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

Transfer Agent

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

Other Key Service Providers

• Auditor: PwC
• Legal Counsel: Davis Polk & Wardwell LLP
• Independent Pricing Service: Solactive AG
• Compliance Consultant: Ernst & Young LLP
• Marketing and Communications: Edelman

These key partners play various roles in supporting the operations and administration of the First Trust NASDAQ-100-Technology Sector Index Fund. They provide services such as asset custody, index calculation, fund accounting, transfer agency, and regulatory compliance.

Expense structure

Management Fees

0.60% of average daily net assets

Other Expenses

0.02% of average daily net assets

Estimated annual costs

The estimated annual costs of the Fund are 0.62% of average daily net assets.

Additional Information

Expense Ratio

The expense ratio is a measure of the operating expenses of a mutual fund, expressed as a percentage of the fund's average net assets. The expense ratio includes management fees, other operating expenses, and any acquired fund fees and expenses.

Average Daily Net Assets

The average daily net assets are the average of the fund's net asset value (NAV) for each day of the fiscal year.

Disclaimer:

The information provided above is for illustrative purposes only and does not represent the actual costs of the fund. Please refer to the fund's prospectus for more detailed information.

Sales Channels of First Trust NASDAQ-100-Technology Sector Index Fund

First Trust NASDAQ-100-Technology Sector Index Fund (NASDAQ: QTEC) is an exchange-traded fund (ETF) that tracks the performance of the NASDAQ-100 Technology Sector Index. The fund invests in the common stocks of companies in the technology sector.

QTEC is sold through a variety of channels, including:

• Brokerage firms: QTEC can be purchased through any brokerage firm that offers ETFs. Some of the largest brokerage firms that offer QTEC include Charles Schwab, Fidelity Investments, and Vanguard.
• Online brokerages: QTEC can also be purchased through online brokerages such as TD Ameritrade and E*Trade.
• Financial advisors: Financial advisors can recommend QTEC to their clients as part of a diversified investment portfolio.

Estimated Annual Sales

The estimated annual sales of QTEC are not publicly available. However, the fund has experienced strong inflows in recent years, as investors have sought exposure to the technology sector. In 2021, QTEC had net inflows of over $4 billion.

Additional Information

Here are some additional details about QTEC's sales channels:

• Minimum investment: The minimum investment in QTEC is $1,000.
• Fees: QTEC charges an annual expense ratio of 0.60%.
• Tax efficiency: QTEC is a tax-efficient investment, as it is classified as an index fund. This means that the fund is not subject to capital gains taxes unless the shares are sold at a profit.

QTEC is a popular investment option for investors who want to gain exposure to the technology sector. The fund offers a diversified portfolio of stocks in the technology sector, and it is available through a variety of sales channels.

Customer Segments of First Trust NASDAQ-100 Technology Sector Index Fund

1. Individual Investors:

• Estimated annual sales: $80 billion
• Comprise the largest segment of the fund's customer base.
• Typically invest for long-term growth and seek exposure to the technology sector.
• Range from young adults to retirees with varying risk tolerances.

2. Institutional Investors:

• Estimated annual sales: $50 billion
• Include pension plans, insurance companies, and mutual funds.
• Invest large sums to diversify their portfolios and hedge against market volatility.
• Seek reliable returns and long-term growth potential.

3. Financial Advisors:

• Estimated annual sales: $20 billion
• Recommend the fund to their clients based on their investment objectives and risk tolerance.
• Serve as intermediaries between the fund and individual investors.

4. High-Net-Worth Individuals:

• Estimated annual sales: $15 billion
• Have substantial investible assets and seek professional advice on their investments.
• Invest in the fund to enhance returns and gain exposure to the technology sector.

5. Hedge Funds:

• Estimated annual sales: $10 billion
• Utilize the fund as a trading vehicle to hedge against market volatility or speculate on the technology sector.
• Take advantage of the fund's low fees and liquidity.

6. Corporations:

• Estimated annual sales: $5 billion
• Invest in the fund to manage their treasury or as a short-term cash investment.
• Seek stability and low volatility in their investments.

7. Foreign Investors:

• Estimated annual sales: $2 billion
• Seek international diversification and exposure to the U.S. technology sector.
• Invest in the fund through mutual funds or other investment vehicles.

Value Proposition of First Trust NASDAQ-100-Technology Sector Index Fund

The First Trust NASDAQ-100-Technology Sector Index Fund (NASDAQ: QTEC) offers investors the following value proposition:

Objective:

• Provide investment results that correspond generally to the price and yield performance of the NASDAQ-100 Technology Sector Index (the "Index").

Index Overview:

• The NASDAQ-100 Technology Sector Index is composed of 100 of the largest non-financial companies listed on the NASDAQ stock exchange.
• The Index focuses on technology-related industries, including:
  • Computer hardware and software
  • Semiconductors
  • Telecommunications
  • Biotechnology

Key Features:

• Access to Technology Growth: Provides exposure to leading technology companies that are driving innovation and shaping the future.
• Diversification: The fund offers diversification across multiple sub-sectors within the technology industry, reducing portfolio risk.
• Passive Management: The fund tracks the Index passively, minimizing management fees and expenses.
• Tax Efficiency: The fund is classified as an exchange-traded fund (ETF), which typically provides tax advantages for investors holding it in taxable accounts.
• Liquidity: QTEC is a highly liquid ETF traded on the NASDAQ exchange, ensuring easy buying and selling.

Benefits for Investors:

• Growth Potential: Access to high-growth technology companies that have the potential to outperform the broader market over the long term.
• Risk Mitigation: Diversification helps to reduce the risk associated with investing in individual technology stocks.
• Cost-Effectiveness: Passive management and low expenses keep the cost of investing low.
• Tax Savings: Tax efficiency through ETF structure can enhance returns for taxable investors.
• Convenience: Easy access and liquidity make it convenient to add technology exposure to portfolios.

Target Investors:

QTEC is suitable for investors who:

• Seek exposure to the technology sector and believe in its long-term growth potential.
• Desire diversification in their technology investments.
• Value cost-effective and tax-advantaged investment options.
• Understand the potential risks and volatility associated with investing in the technology sector.

Risk Factors of First Trust NASDAQ-100-Technology Sector Index Fund (QQQQ)

1. Concentration Risk:

• QQQQ is heavily concentrated in the technology sector, which represents a significant portion of its portfolio.
• Changes in technology industry conditions or the performance of specific technology companies can have a disproportionate impact on the fund's performance.

2. Sector Rotation Risk:

• The technology sector is cyclical and can experience periods of significant volatility.
• Rotation of investor preferences into other sectors or industries can lead to underperformance of the fund.

3. Interest Rate Risk:

• The fund's underlying companies are highly sensitive to interest rate changes.
• Rising interest rates can increase the cost of capital for these companies and reduce their profitability.

4. Liquidity Risk:

• QQQQ is an exchange-traded fund (ETF) that trades on the Nasdaq stock exchange.
• While ETFs generally provide liquidity, there may be times when market conditions make it difficult to buy or sell the fund at a desired price.

5. Tracking Error Risk:

• QQQQ tracks the NASDAQ-100 Index, which is a market-cap weighted index of the 100 largest non-financial companies listed on the Nasdaq stock exchange.
• The fund may not perfectly track the index due to factors such as transaction costs and differences in trading strategies.

6. Counterparty Risk:

• QQQQ invests in derivatives, including futures and options, to manage its portfolio.
• The fund is exposed to the risk of default by counterparties involved in these derivative transactions.

7. Currency Risk:

• Some of the companies in QQQQ's portfolio operate internationally.
• Fluctuations in foreign exchange rates can impact the value of the fund's investments.

8. Non-U.S. Investment Risk:

• QQQQ invests in non-U.S. companies.
• These investments may be subject to political, economic, and regulatory risks different from those in the United States.

9. Technology Disruption Risk:

• The technology sector is constantly evolving and subject to disruption from new technologies.
• Companies in the fund's portfolio may face challenges adapting to technological advancements or new competitors.

10. Cybersecurity Risk:

• Technology companies are particularly vulnerable to cybersecurity threats.
• Successful cyberattacks can result in data breaches, operational disruptions, and reputational damage.