FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND
FIRST TRUST ENERGY ALPHADEX(R) FUND
FIRST TRUST MID CAP CORE ALPHADEX(R) FUND
FIRST TRUST SMALL CAP CORE ALPHADEX(R) FUND
(each a "Fund" and collectively the "Funds")
SUPPLEMENT TO THE PROSPECTUS DATED NOVEMBER 30, 2011, AS SUPPLEMENTED
DATED FEBRUARY 1, 2012 AND MARCH 6, 2012
DATED NOVEMBER 13, 2012
1. In the "Summary Information -- First Trust Energy AlphaDEX(R) Fund --
Principal Investment Strategies" section, the following paragraph is added as
the last paragraph of this section:
The Fund may lend securities representing up to 20% of the value of its
total assets to broker-dealers, banks and other institutions to generate
additional income. When the Fund loans its portfolio securities, it will
receive, at the inception of each loan, cash collateral equal to at least 102%
(for domestic securities) or 105% (for international securities) of the market
value of the loaned securities.
2. In the "Summary Information -- First Trust Energy AlphaDEX(R) Fund --
Principal Risks" section, the following paragraph is added as the last paragraph
of this section:
SECURITIES LENDING RISK. The Fund may engage in securities lending.
Securities lending involves the risk that the Fund may lose money because
the borrower of the Fund's loaned securities fails to return the
securities in a timely manner or at all. The Fund could also lose money in
the event of a decline in the value of the collateral provided for the
loaned securities or a decline in the value of any investments made with
cash collateral. These events could also trigger adverse tax consequences
for the Fund.
3. In the "Summary Information -- First Trust Mid Cap Core AlphaDEX(R)
Fund -- Principal Investment Strategies" section, the following paragraph is
added as the last paragraph of this section:
The Fund may lend securities representing up to 20% of the value of its
total assets to broker-dealers, banks and other institutions to generate
additional income. When the Fund loans its portfolio securities, it will
receive, at the inception of each loan, cash collateral equal to at least 102%
(for domestic securities) or 105% (for international securities) of the market
value of the loaned securities.
4. In the "Summary Information -- First Trust Mid Cap Core AlphaDEX(R)
Fund -- Principal Risks" section, the following paragraph is added as the last
paragraph of this section:
SECURITIES LENDING RISK. The Fund may engage in securities lending.
Securities lending involves the risk that the Fund may lose money because
the borrower of the Fund's loaned securities fails to return the
securities in a timely manner or at all. The Fund could also lose money in
the event of a decline in the value of the collateral provided for the
loaned securities or a decline in the value of any investments made with
cash collateral. These events could also trigger adverse tax consequences
for the Fund.
5. In the "Summary Information -- First Trust Small Cap Core AlphaDEX(R)
Fund -- Principal Investment Strategies" section, the following paragraph is
added as the last paragraph of this section:
The Fund may lend securities representing up to 20% of the value of its
total assets to broker-dealers, banks and other institutions to generate
additional income. When the Fund loans its portfolio securities, it will
receive, at the inception of each loan, cash collateral equal to at least 102%
(for domestic securities) or 105% (for international securities) of the market
value of the loaned securities.
6. In the "Summary Information -- First Trust Small Cap Core AlphaDEX(R)
Fund -- Principal Risks" section, the following paragraph is added as the last
paragraph of this section:
SECURITIES LENDING RISK. The Fund may engage in securities lending.
Securities lending involves the risk that the Fund may lose money because
the borrower of the Fund's loaned securities fails to return the
securities in a timely manner or at all. The Fund could also lose money in
the event of a decline in the value of the collateral provided for the
loaned securities or a decline in the value of any investments made with
cash collateral. These events could also trigger adverse tax consequences
for the Fund.
7. The "Additional Risks of Investing in the Funds" section of the
Prospectus is revised to add the following paragraphs as the last paragraphs of
this section:
SECURITIES LENDING RISK. Each Fund may lend securities representing up to
20% of the value of its total assets to broker-dealers, banks, and other
institutions to generate additional income. Under these Funds' securities
lending agreement, the securities lending agent will generally bear the
risk that a borrower may default on its obligation to return loaned
securities. The Funds, however, will be responsible for the risks
associated with the investment of cash collateral. A Fund may lose money
on its investment of cash collateral or may fail to earn sufficient income
on its investment to meet its obligations to the borrower.
When a dividend is paid on a security that is out on loan, the borrower
receives the dividend and in turn makes a payment of the same amount to
the fund. Dividends, if they constitute "qualified dividends," are taxable
at the same rate as long-term capital gains. These payments made by
borrowers, however, are not qualified dividends, and are taxable at higher
ordinary income rates. As a result, some of the distributions received by
shareholders who hold Fund shares in taxable accounts may be subject to
taxation at a higher rate than if the Fund had not loaned its portfolio
securities.
PLEASE KEEP THIS SUPPLEMENT WITH YOUR FUND PROSPECTUS FOR FUTURE REFERENCE
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND
FIRST TRUST ENERGY ALPHADEX(R) FUND
FIRST TRUST MID CAP CORE ALPHADEX(R) FUND
FIRST TRUST SMALL CAP CORE ALPHADEX(R) FUND
(each a "Fund" and collectively the "Funds")
SUPPLEMENT TO THE STATEMENT OF ADDITIONAL INFORMATION DATED NOVEMBER 30, 2011,
AS SUPPLEMENTED DATED MARCH 6, 2012
DATED NOVEMBER 13, 2012
The "Investment Strategies" section of the Statement of Additional
Information is revised to add the following paragraphs as the last paragraphs of
this section:
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, as a non-principal investment
strategy each of the Funds may lend portfolio securities representing up to 20%
of the value of its total assets to broker-dealers, banks or other institutional
borrowers of securities. As with other extensions of credit, there may be risks
of delay in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially. However, the Funds will
only enter into domestic loan arrangements with broker-dealers, banks, or other
institutions which First Trust has determined are creditworthy under guidelines
established by the Board of Trustees. The Funds will pay a portion of the income
earned on the lending transaction to the placing broker and may pay
administrative and custodial fees in connection with these loans.
In these loan arrangements, the Funds will receive collateral in the form
of cash, U.S. government securities or other high-grade debt obligations equal
to at least 102% (for domestic securities) or 105% (for international
securities) of the market value of the securities loaned as determined at the
time of loan origination. This collateral must be valued daily by First Trust or
the applicable Fund's lending agent and, if the market value of the loaned
securities increases, the borrower must furnish additional collateral to the
lending Fund. During the time portfolio securities are on loan, the borrower
pays the lending Fund any dividends or interest paid on the securities. Loans
are subject to termination at any time by the lending Fund or the borrower.
While a Fund does not have the right to vote securities on loan, it would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment. When a Fund lends portfolio securities
to a borrower, payments in lieu of dividends made by the borrower to the Fund
will not constitute "qualified dividends" taxable at the same rate as long-term
capital gains, even if the actual dividends would have constituted qualified
dividends had the Fund held the securities.
PLEASE KEEP THIS SUPPLEMENT WITH YOUR FUND STATEMENT OF ADDITIONAL
INFORMATION FOR FUTURE REFERENCE