UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number 811-22080
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First Trust Active Dividend Income Fund
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(Exact name of registrant as specified in charter)

120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Address of principal executive offices) (Zip code)

W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Name and address of agent for service)

Registrant's telephone number, including area code: 630-765-8000
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Date of fiscal year end: November 30
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Date of reporting period: November 30, 2011
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.

ITEM 1. REPORTS TO STOCKHOLDERS.

The Report to Shareholders is attached herewith.

FIRST TRUST

ANNUAL REPORT
FOR THE YEAR ENDED
NOVEMBER 30, 2011

FIRST TRUST
ACTIVE DIVIDEND
INCOME
FUND

AVIANCE
------------------
Capital Management

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TABLE OF CONTENTS
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FIRST TRUST ACTIVE DIVIDEND INCOME FUND (FAV)
ANNUAL REPORT
NOVEMBER 30, 2011

Shareholder Letter............................................................ 1
At A Glance................................................................... 2
Portfolio Commentary.......................................................... 3
Portfolio of Investments...................................................... 7
Statement of Assets and Liabilities...........................................12
Statement of Operations.......................................................13
Statements of Changes in Net Assets...........................................14
Financial Highlights..........................................................15
Notes to Financial Statements.................................................16
Report of Independent Registered Public Accounting Firm.......................22
Additional Information........................................................23
Board of Trustees and Officers................................................25
Privacy Policy................................................................27

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and/or Aviance Capital Management, LLC ("Aviance" or
the "Sub-Advisor") and their respective representatives, taking into account the
information currently available to them. Forward-looking statements include all
statements that do not relate solely to current or historical fact. For example,
forward-looking statements include the use of words such as "anticipate,"
"estimate," "intend," "expect," "believe," "plan," "may," "should," "would" or
other words that convey uncertainty of future events or outcomes.

Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
First Trust Active Dividend Income Fund (the "Fund") to be materially different
from any future results, performance or achievements expressed or implied by the
forward-looking statements. When evaluating the information included in this
report, you are cautioned not to place undue reliance on these forward-looking
statements, which reflect the judgment of the Advisor and/or Sub-Advisor and
their respective representatives only as of the date hereof. We undertake no
obligation to publicly revise or update these forward-looking statements to
reflect events and circumstances that arise after the date hereof.

PERFORMANCE AND RISK DISCLOSURE

There is no assurance that the Fund will achieve its investment objectives. The
Fund is subject to market risk, which is the possibility that the market values
of securities owned by the Fund will decline and that the value of the Fund
shares may therefore be less than what you paid for them. Accordingly, you can
lose money by investing in the Fund. See "Risk Considerations" in the Notes to
Financial Statements for a discussion of certain other risks of investing in the
Fund.

Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, net asset value and common share price will fluctuate and Fund shares,
when sold, may be worth more or less than their original cost.

HOW TO READ THIS REPORT

This report contains information that may help you evaluate your investment. It
includes details about the Fund and presents data and analysis that provide
insight into the Fund's performance and investment approach.

By reading the portfolio commentary by the portfolio management team of the
Fund, you may obtain an understanding of how the market environment affected the
Fund's performance. The statistical information that follows may help you
understand the Fund's performance compared to that of relevant market
benchmarks.

It is important to keep in mind that the opinions expressed by personnel of
Aviance are just that: informed opinions. They should not be considered to be
promises or advice. The opinions, like the statistics, cover the period through
the date on the cover of this report. The risks of investing in the Fund are
spelled out in the prospectus, the statement of additional information, this
report and other Fund regulatory filings.

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SHAREHOLDER LETTER
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FIRST TRUST ACTIVE DIVIDEND INCOME FUND (FAV)
ANNUAL LETTER FROM THE PRESIDENT
NOVEMBER 30, 2011

Dear Shareholders:

I am pleased to present you with the annual report for your investment in First
Trust Active Dividend Income Fund (the "Fund").

First Trust Advisors L.P. ("First Trust"), now in our 21st year, has always
believed that staying invested in quality products and having a long-term
horizon can help investors reach their financial goals. Like many successful
investors, we understand that success in the markets doesn't just happen--it
requires a long-term investment perspective through all kinds of markets.
Although the markets have been somewhat choppy over the past six months, the
equity market is well above the lows it sank to during the recent recession.

The report you hold contains detailed information about your investment; a
portfolio commentary from the Fund's management team that provides a recap of
the period; a performance analysis and a market and Fund outlook. Additionally,
you will find the Fund's financial statements for the period this report covers.
I encourage you to read this document and discuss it with your financial
advisor. A successful investor is also typically a knowledgeable one, as we have
found to be the case at First Trust.

First Trust remains committed to being a long-term investor and investment
manager and to bringing you quality investment solutions regardless of market
ups and downs. We offer a variety of products that may fit many financial plans
to help those investors seeking long-term investment success. You may want to
talk to your advisor about the other investments First Trust offers that might
also fit your financial goals.

First Trust will continue to make available up-to-date information about your
investments so you and your financial advisor are current on any First Trust
investments you own. We value our relationship with you, and thank you for the
opportunity to assist you in achieving your financial goals. I look forward to
2012 and to the next edition of your Fund's report.

Sincerely,

/s/ James A. Bowen

James A. Bowen
Chairman of the Board of Trustees of First Trust Active Dividend Income Fund and
Chief Executive Officer of First Trust

Page 1

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
"AT A GLANCE"
AS OF NOVEMBER 30, 2011 (UNAUDITED)

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FUND STATISTICS
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Symbol on New York Stock Exchange FAV
Common Share Price $8.41
Common Share Net Asset Value ("NAV") $9.20
Premium (Discount) to NAV (8.59)%
Net Assets Applicable to Common Shares $75,980,170
Current Quarterly Distribution per Common Share (1) $0.2300
Current Annualized Distribution per Common Share $0.9200
Current Distribution Rate on Closing Common Share Price (2) 10.94%
Current Distribution Rate on NAV (2) 10.00%

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COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
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Common Share Price NAV

11/10 10.47 9.92
10.73 10.25
10.88 10.29
10.79 10.28
11.10 10.43
12/10 10.99 10.46
11.50 10.60
10.96 10.84
10.81 10.37
1/11 10.75 10.41
10.99 10.67
11.05 10.77
11.10 10.85
2/11 10.62 10.62
10.75 10.59
10.92 10.36
10.82 10.24
3/11 11.07 10.52
11.37 10.70
11.33 10.63
11.31 10.56
10.93 10.35
4/11 10.88 10.54
10.74 10.36
10.59 10.33
10.67 10.38
5/11 10.73 10.33
10.60 10.16
10.37 9.94
10.19 9.90
6/11 10.72 9.90
10.89 10.37
11.17 10.35
10.41 10.21
10.17 10.14
7/11 9.43 9.81
8.74 9.11
8.57 9.05
8.52 8.82
8/11 8.91 9.07
9.02 9.14
8.91 9.07
9.12 9.32
8.49 8.77
9/11 8.38 8.76
8.30 8.92
8.78 9.34
8.66 9.20
10/11 8.90 9.51
8.81 9.30
8.60 9.32
8.31 9.03
8.03 8.69
11/11 8.41 9.20

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PERFORMANCE
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Average Annual Total Return
---------------------------
Inception
1 Year Ended (9/20/2007)
11/30/2011 to 11/30/2011

FUND PERFORMANCE (3)
NAV 2.81% -3.69%
Market Value -10.96% -6.76%

INDEX PERFORMANCE
Russell 1000 Value Index 6.17% 5.37%
S&P 500 Index 7.83% -5.32%

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% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
-----------------------------------------------------------
National Grid PLC 4.2%
Reynolds American, Inc. 4.1
Merck & Co., Inc. 3.8
DTE Energy Co. 3.3
Wal-Mart Stores, Inc. 3.3
PPL Corp. 3.0
Total S.A., ADR 2.6
Dominion Resources, Inc. 2.6
Kimberly-Clark Corp. 2.5
Altria Group, Inc. 2.4
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Total 31.8%
=====

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% OF TOTAL
SECTOR ALLOCATION INVESTMENTS
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Consumer Staples 19.4%
Utilities 19.3
Energy 13.3
Financials 12.2
Telecommunication Services 8.7
Health Care 7.9
Consumer Discretionary 7.5
Industrials 7.3
Information Technology 3.5
Materials 0.8
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Total 100.0%
======

(1) Most recent distribution paid or declared through 11/30/2011. Subject
to change in the future. The distribution was decreased subsequent to
11/30/11. See Note 8 - Subsequent Events in the Notes to Financial
Statements.

(2) Distribution rates are calculated by annualizing the most recent
distribution paid or declared through the report date and then
dividing by Common Share price or NAV, as applicable, as of
11/30/2011. Subject to change in the future.

(3) Total return is based on the combination of reinvested dividend,
capital gain and return of capital distributions, if any, at prices
obtained by the Dividend Reinvestment Plan and changes in NAV per
share for net asset value returns and changes in Common Share price
for market value returns. Total returns do not reflect sales load and
are not annualized for periods less than one year. Past performance is
not indicative of future results.

Page 2

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PORTFOLIO COMMENTARY
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FIRST TRUST ACTIVE DIVIDEND INCOME FUND (FAV)
ANNUAL REPORT
NOVEMBER 30, 2011

Aviance Capital Management, LLC ("Aviance"), a registered investment advisor, is
the sub-advisor to the First Trust Active Dividend Income Fund. Aviance is an
asset management firm focused on managing multi-cap value and growth portfolios
and is currently managed by Christian C. Bertelsen, Michael J. Dixon, and Edward
C. Bertelsen, who are all Founding Members of the firm. Aviance is responsible
for the day-to-day management of the Fund's portfolio, utilizing a team made up
of Christian C. Bertelsen, James R. Neel, Edward C. Bertelsen and Mark Belanian.
The team has approximately seven years of experience working together and more
than 80 years of cumulative industry experience.

PORTFOLIO MANAGEMENT TEAM

CHRISTIAN C. BERTELSEN, CHIEF INVESTMENT OFFICER AND SENIOR PORTFOLIO MANAGER

Christian C. Bertelsen has over 42 years of investment experience. In November
2004, he became Chief Investment Officer at Global Financial Private Capital
("GFPC"), the incubator company of Aviance. From July 1997 to December 2003, Mr.
Bertelsen was director of the value equity group for Phoenix Investment Counsel,
during which time he was responsible for developing strategies that focused on
the analysis of dividends as a means of identifying undervalued companies and
generating income. He served as Chief Investment Officer at Dreman Value
Advisors between January 1996 and July 1997, and was a Senior Vice President
with Eagle Asset Management between April 1993 and January 1996. From June 1986
to April 1993, Mr. Bertelsen headed the equity investment department at Colonial
Advisory Services, Inc., and managed the Colonial Fund. Prior to 1986, he held
positions with Batterymarch Financial Management and State Street Bank & Trust
Company. Mr. Bertelsen holds an M.B.A. and a B.A. in Economics and History from
Boston University.

JAMES R. NEEL, CFA, PORTFOLIO MANAGER

James R. Neel, CFA, has over 31 years of experience in investment management.
Mr. Neel joined Aviance as a portfolio manager in January 2009. He has also been
a portfolio manager for Aviance Capital Partners, a registered investment
advisor, since January 2009. From September 2006 to December 2008, Mr. Neel was
a portfolio manager for YHB Investment Advisors, Inc. From June 2005 to
September 2006 he was a portfolio manager for Gibraltar Private Bank and from
December 2004 to June 2005 he served in the same role at Thomas Partners, Inc.
While managing equity mutual funds for Kemper in the 1990s, Mr. Neel won a
Lipper Award in the Growth and Income category. Mr. Neel also served as the
portfolio strategist for Kemper Financial Services; CEO of Dreman Value
Advisors, where he worked with Christian Bertelsen; and Partner at Loomis
Sayles. Mr. Neel is a graduate of Michigan State University, where he received a
B.A. in 1965. He received an M.B.A. from Michigan State University in 1966. Mr.
Neel earned the Chartered Financial Analyst designation in 1976 and also served
four years as a U.S. Navy officer.

EDWARD C. BERTELSEN, PORTFOLIO MANAGER - RESEARCH

Edward C. Bertelsen has over 10 years of experience in supporting and managing
portfolios. He is also responsible for a limited number of selected client
relationships. He joined GFPC/Aviance in April 2004 and was instrumental in
creating its trading environment. Between March 2001 and April 2004, Mr.
Bertelsen was a Senior Portfolio Manager with Salomon Smith Barney. Between
November 1996 and March 2001, Mr. Bertelsen was employed by Legg Mason Wood
Walker as a Portfolio Manager. He graduated with Honors from Albion College in
1993 with a B.A. in Economics and History and started his financial career with
Raymond James in July 1993.

MARK BELANIAN, PORTFOLIO ANALYST

Mark Belanian has over 10 years of investment industry experience. Mr. Belanian
joined GFPC/Aviance in February 2006 from Merrill Lynch's Global Private Client
Group in Sarasota, Florida, where he had worked since February 2005. Mr.
Belanian worked with Christian Bertelsen as a portfolio analyst at Phoenix
Investment Counsel between June 1998 and January 2005. Mr. Belanian graduated
from Trinity College with a B.A. in Modern Language.

COMMENTARY

FIRST TRUST ACTIVE DIVIDEND INCOME FUND

The primary investment objective of the First Trust Active Dividend Income Fund
("FAV" or the "Fund") is to seek a high level of current income. Its secondary
objective is capital appreciation. The Fund pursues its investment objectives by
investing at least 80% of its managed assets in a diversified portfolio of
dividend-paying multi-cap equity securities of both U.S. and non-U.S. issuers
that the Fund's Sub-Advisor believes offer the potential for attractive income
and/or capital appreciation. There can be no assurance that the Fund's
investment objectives will be achieved. The Fund may not be appropriate for all
investors.

Page 3

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PORTFOLIO COMMENTARY - (Continued)
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MARKET RECAP

This section discusses the primary factors which impacted FAV's two integrated
objectives throughout the twelve months ended November 30, 2011.

MARKET CORRECTION

For the twelve months ended November 30, 2011, the Russell 1000 Value Index
("R1000V") gained 6.17%. The Standard & Poor's 500 Index ("S&P 500"), one of the
Fund's secondary benchmarks, rose 7.83% for the same period.

The reporting period was dominated by a short, sharp correction in broad global
equity markets during the last few weeks of July and the first week of August
2011. FAV's major benchmark, the R1000V, fell from 682.56 on July 7th to 551.90
on August 8th; a drop of approximately 19%. The main cause of the precipitous
drop was the uncertainty surrounding a resolution to the raising of the U.S.
debt ceiling. Basically, our country's political system could not make a
decision and markets hate uncertainty. The culmination of this plunge in values
coincided with Standard & Poor's downgrade of United States sovereign debt from
its previous AAA status.

EUROPEAN VOLATILITY

The correction detailed above was both preceded and followed by two distinct
periods of highly volatile recovery. The initial period between December 1, 2010
and July 7, 2011 saw the R1000V rise from 605.96 to 682.56. The second period of
price appreciation saw the R1000V rise from the aforementioned low of 551.90 to
close at 615.09 on November 30, 2011. This volatility was primarily a result of
European sovereign debt concerns. One exception to the generally rising trend
was a much smaller second correction in March of 2011, brought about by the
Japanese earthquake and subsequent after effects. Overall, equity markets were
knocked down, but they got up again fairly swiftly.

Although U.S. corporate earnings continued their positive trend, usually a
fundamentally positive signal for equities discussed below, worries regarding
the spread of debt and GDP growth problems from the weaker Eurozone members to
the stronger members caused a level of "bipolar" activity on U.S. equity
indices. Announcements and actions which aimed to cure the debt concerns were
viewed as positive signals for a day or two, then viewed as unsatisfactory
shortly thereafter.

We started the twelve months of the reporting period feeling that European Union
leaders would "kick the debt can down the road" for an extended period, at least
until structural changes could be made to their various Union agreements and
conditions. We ended the period realizing markets will need something more than
European Union leaders can probably provide until the fundamental Union
agreements are changed and non-European central banks are involved financially.
This level of solution will take much more time, consensus and involve more risk
than is currently being envisaged.

CORPORATE EARNINGS

The twelve-month period covered by this report was a time of broadly receding
U.S. economic doubt. For example, the threat of an immediate "double-dip"
recession faded and even domestic employment numbers improved. Even though
doubts concerning global GDP growth were never far from the media's lips, U.S.
corporate earnings continued to beat expectations.

With 497 S&P 500 companies reporting for the third quarter of 2011, at the time
of this writing, 328 had beat expectations, 121 missed and 48 met their
operating estimates. The pace of growth may have slowed a little from recent
quarters, but U.S. corporations are still performing well, a fact that has
helped investors to move prices upwards on the days that European news proved
scarce. However, Europe is clearly a major market for U.S. listed corporations
and therefore, further deterioration in the European situation resulted in
investors discounting future U.S. corporate growth projections.

DIVIDEND RECAP/HOW WERE DIVIDENDS AFFECTED?

A primary objective of the Fund is the generation of yield from the capture of
dividends. Therefore, a major factor which affects the Fund's management is the
availability of dividends. Moreover, an important component of the Fund's
security selection process is the identification of those companies with a
history of consistent and rising dividend payments. Where such dividend raises
are financially sustainable, in the opinion of the Sub-Advisor, the company
assumes a higher probability of selection within the Fund. Moreover, rising
dividends from companies in the Fund's portfolio suggest the potential for
rising aggregate yields for the Fund's investors.

For the third quarter of 2011, "Dividends continue to battle back, adding 14.5%
to their indicated rate this year, but still 6.8% shy of their all-time June
2008 high," said Howard Silverblatt, Senior Index Analyst at S&P Indices. During
the third quarter of 2011, 350 companies initiated positive dividend actions
against 23 with negative actions. The corresponding positive/negative ratio from
the third quarter of 2010 was 299/35.

Page 4

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PORTFOLIO COMMENTARY - (Continued)
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PERFORMANCE ANALYSIS

The net asset value ("NAV") total return(1) of the Fund for the twelve months
ended November 30, 2011 was 2.81%. Over the same period, the total return of the
R1000V, the Fund's primary benchmark index, was 6.17%, while the Fund's
secondary benchmark indices, the S&P 500 and the Dow Jones Select Dividend Index
(DVY), returned 7.83% and 15.38%, respectively.

NAV PERFORMANCE

The Fund's NAV lagged the performance of its main benchmark, the Russell 1000
Value Index, by 3.36% for the twelve-month reporting period.

The Sub-Advisor's primary objective is to manage FAV to capture dividend income,
and secondly to attempt to participate in capital appreciation while seeking to
protect capital. As a result of ongoing Greek-inspired Euro debt contagion
fears, we decided to protect capital by moving the portfolio holdings to a more
defensive position by replacing higher beta names with lower beta names and
periodically increasing cash for opportunistic purposes. This resulted in a
lower level of total return than the benchmark's appreciation performance.

The Fund's underperformance wasn't the result of any one event; consistently
over the reporting period we protected capital to a greater degree than the
R1000V. During the correction, and the volatile period thereafter, the Fund's
defensive positioning reduced its participation in market reversals, FAV's
downside capture. When equities look overvalued, in the opinion of the
Sub-Advisor, the Fund will try to maintain income levels while protecting
capital valuations.

We also overweighted the sectors and businesses which we feel perform better
than the R1000V in times of doubt, for example the Energy and Consumer Staples
sectors.

PRICE PERFORMANCE

The Fund's market value provided a total return1 of -10.96% during the reporting
period. The price of FAV closely followed the price of the R1000V for much of
the fiscal year with the exception of two periods. In July, FAV cut its dividend
and the share price suffered accordingly. In October, FAV didn't fully
participate in the mid-October index rally due to defensive positioning. These
two periods accounted for most of the price underperformance.

Although the price of FAV is not directly managed by the Sub-Advisor, in the
opinion of the Sub-Advisor, the price of many closed-end funds dropped because
of fears of credit shortages, although to a much lesser degree, to the credit
issues of 2008.

Two things to note: in 2008, many organizations were caught unaware by a sudden
lack of liquidity following a period of widely-available credit. At the time of
this writing, central banks and governments are focused on providing liquidity.
Companies are keeping costs down while amassing cash and cash-like positions. We
would be surprised to see another significant, protracted credit crisis.
Secondly, FAV is designed as an unleveraged, long-only Fund so that the Fund
does not become encumbered by liquidity issues.

MARKET & FUND OUTLOOK

Our short- to medium-term outlook remains defensive based on the fact that the
solution to European debt problems will take a long time for countries to agree
upon and subsequently implement. At the same time, U.S. corporate earnings look
set to soften. The level of confidence we see returning to global markets
appears overdone for the next quarter or two.

In our opinion, major structural changes need to occur within the European
Monetary Union, including the criteria for membership, more accurately referred
to as the Maastricht convergence requirements.

Moreover, significant financial aid is required to protect any organizations and
corporations exposed to the default of European sovereign debt. We don't expect
this to happen overnight, judging by the horse trading that has taken place to
raise the amount available in the European Financial Stability Fund to something
close to a trillion dollars.

--------------
1 Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by the
Dividend Reinvestment Plan and changes in NAV per share for net asset value
returns and changes in Common Share price for market value returns. Total
returns do not reflect sales load and are not annualized for periods less than
one year. Past performance is not indicative of future results.

Page 5

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PORTFOLIO COMMENTARY - (Continued)
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The Great Debt & Derivative Unwind now includes Europe. It will take many years
for the effects of our recent fiscal profligacy to unwind. That said, we do not
expect another 2008-like liquidity crisis. Governments and central banks across
the world are committed to providing enough liquidity to keep the wheels of
global financial markets turning. Our goal will remain the same: generate income
and protect capital in down markets.

FURTHER U.S. EASING

The U.S. Federal Reserve might bring about a change in future U.S. equity market
direction with a commitment to further Quantitative Easing (QE); a third leg to
the previous two QE programs. A QE-inspired rally would be short-lived in our
opinion; we'd rather see debt continue to unwind. However, at the low interest
rates being paid by the U.S. Government to borrow, further printing of money
can't be ruled out.

We will monitor Federal Reserve activity for signs of renewed monetary easing.

EARNINGS

For some time, many commentators have predicted the demise of recent excellent
U.S. corporate earnings. For a similar amount of time, U.S. corporations have
continued to report above median expectations and prior year performance. At the
time of writing, we see corporate guidance softening. We expect this to flow
through into lower earnings in the next few quarters; nothing too dramatic, but
the earnings growth curve should start to flatten.

2012: A U.S. POLITICAL YEAR

History tells us that election years are good for equity markets, although two
of the three down market election years since 1928 have occurred in the last
three election years. Our defensive positioning doesn't ignore this factor; we
will carefully evaluate the progress being made on political consensus and the
Government efforts to bring about an economic "feel good factor" after the first
quarter.

Page 6

FIRST TRUST ACTIVE DIVIDEND INCOME FUND (FAV)
PORTFOLIO OF INVESTMENTS (a)
NOVEMBER 30, 2011

SHARES DESCRIPTION VALUE
------------ ------------------------------------------------- --------------
COMMON STOCKS - 80.8%

AEROSPACE & DEFENSE - 2.1%
20,000 Lockheed Martin Corp............................. $ 1,563,000
-------------
AUTO COMPONENTS - 0.2%
5,000 Johnson Controls, Inc............................ 157,400
-------------
BEVERAGES - 2.5%
5,000 Coca-Cola (The) Co............................... 336,150
25,000 PepsiCo, Inc..................................... 1,600,000
-------------
1,936,150
-------------
CHEMICALS - 0.0%
1,000 Dow Chemical (The) Co............................ 27,710
-------------
COMMERCIAL BANKS - 1.1%
17,000 Bank of Nova Scotia.............................. 856,290
-------------
COMMUNICATIONS EQUIPMENT - 1.9%
26,000 Chorus Ltd., ADR (b)............................. 322,400
20,000 QUALCOMM, Inc.................................... 1,096,000
-------------
1,418,400
-------------
CONSUMER FINANCE - 0.8%
50,000 SLM Corp......................................... 644,000
-------------
DISTRIBUTORS - 0.4%
5,000 Genuine Parts Co................................. 292,500
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 6.7%
30,000 AT&T, Inc........................................ 869,400
35,000 BCE, Inc......................................... 1,371,650
130,000 Telecom Corp. of New Zealand Ltd., ADR........... 1,043,900
45,000 Telefonica S.A., ADR............................. 843,750
25,000 Verizon Communications, Inc...................... 943,250
-------------
5,071,950
-------------
ELECTRIC UTILITIES - 5.3%
20,000 NextEra Energy, Inc.............................. 1,108,800
35,000 Pepco Holdings, Inc.............................. 692,300
5,000 Portland General Electric Co..................... 125,250
70,000 PPL Corp......................................... 2,101,400
-------------
4,027,750
-------------
FOOD & STAPLES RETAILING - 3.8%
8,000 PriceSmart, Inc.................................. 542,800
40,000 Wal-Mart Stores, Inc............................. 2,356,000
-------------
2,898,800
-------------
FOOD PRODUCTS - 0.8%
11,000 H.J. Heinz Co.................................... 579,150
-------------
HEALTH CARE EQUIPMENT & SUPPLIES - 2.5%
25,000 Baxter International, Inc........................ 1,291,500
8,000 Becton, Dickinson & Co........................... 590,240
-------------
1,881,740
-------------

See Notes to Financial Statements Page 7

FIRST TRUST ACTIVE DIVIDEND INCOME FUND (FAV)
PORTFOLIO OF INVESTMENTS (a) - (Continued)
NOVEMBER 30, 2011

SHARES DESCRIPTION VALUE
------------ ------------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)

HOTELS, RESTAURANTS & LEISURE - 2.5%
15,000 Arcos Dorados Holdings, Inc...................... $ 328,800
10,000 McDonald's Corp.................................. 955,200
5,000 Wynn Resorts Ltd................................. 602,800
-------------
1,886,800
-------------
HOUSEHOLD PRODUCTS - 2.4%
25,000 Kimberly-Clark Corp.............................. 1,786,750
-------------
INSURANCE - 3.2%
50,000 American Equity Investment Life Holding Co....... 553,000
7,500 MetLife, Inc..................................... 236,100
5,000 Principal Financial Group, Inc................... 120,650
30,000 Prudential Financial, Inc........................ 1,519,200
-------------
2,428,950
-------------
MACHINERY - 2.8%
12,000 Cummins, Inc..................................... 1,155,960
17,000 Dover Corp....................................... 934,490
-------------
2,090,450
-------------
MEDIA - 2.2%
10,000 Digital Domain Media Group, Inc. (b)............. 60,800
45,000 Walt Disney (The) Co............................. 1,613,250
-------------
1,674,050
-------------
METALS & MINING - 0.7%
2,000 Franco-Nevada Corp............................... 84,740
15,000 Southern Copper Corp............................. 466,950
-------------
551,690
-------------
MULTI-UTILITIES - 12.6%
50,000 Ameren Corp...................................... 1,690,500
10,000 Consolidated Edison, Inc......................... 594,200
35,000 Dominion Resources, Inc.......................... 1,806,700
45,000 DTE Energy Co.................................... 2,369,250
60,000 National Grid PLC, ADR........................... 2,965,200
7,500 TECO Energy, Inc................................. 140,850
-------------
9,566,700
-------------
OIL, GAS & CONSUMABLE FUELS - 5.3%
48,000 Enduro Royalty Trust............................. 897,120
15,000 Kodiak Oil & Gas Corp. (b)....................... 133,200
12,000 Occidental Petroleum Corp........................ 1,186,800
35,000 Total S.A., ADR.................................. 1,810,900
-------------
4,028,020
-------------
PHARMACEUTICALS - 4.9%
10,000 Abbott Laboratories.............................. 545,500
15,000 Bristol-Myers Squibb Co.......................... 490,800
75,000 Merck & Co., Inc................................. 2,681,250
-------------
3,717,550
-------------

Page 8 See Notes to Financial Statements

FIRST TRUST ACTIVE DIVIDEND INCOME FUND (FAV)
PORTFOLIO OF INVESTMENTS (a) - (Continued)
NOVEMBER 30, 2011

SHARES DESCRIPTION VALUE
------------ ------------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)

REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.8%
5,000 Hospitality Properties Trust..................... $ 110,150
20,000 National Retail Properties, Inc.................. 529,200
-------------
639,350
-------------
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.1%
11,000 Preferred Apartment Communities, Inc............. 67,540
-------------
ROAD & RAIL - 2.0%
7,000 Canadian National Railway Co..................... 542,920
20,000 CSX Corp......................................... 434,200
5,000 Union Pacific Corp............................... 517,050
-------------
1,494,170
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.8%
30,000 Analog Devices, Inc.............................. 1,045,800
10,000 Microchip Technology, Inc........................ 349,100
-------------
1,394,900
-------------
SPECIALTY RETAIL - 0.6%
10,000 Men's Wearhouse (The), Inc....................... 278,300
2,500 Tiffany & Co..................................... 167,600
-------------
445,900
-------------
TEXTILES, APPAREL & LUXURY GOODS - 1.1%
9,000 NIKE, Inc., Class B.............................. 865,620
-------------
TOBACCO - 8.6%
60,000 Altria Group, Inc................................ 1,721,400
10,000 Lorillard, Inc................................... 1,116,200
10,000 Philip Morris International, Inc................. 762,400
70,000 Reynolds American, Inc........................... 2,930,200
-------------
6,530,200
-------------
WIRELESS TELECOMMUNICATION SERVICES - 1.1%
30,000 Vodafone Group PLC, ADR.......................... 814,500
-------------
TOTAL COMMON STOCKS.............................. 61,337,980
(Cost $61,105,753) -------------

INVESTMENT COMPANIES - 5.3%

CAPITAL MARKETS - 5.3%
10,000 iShares iBoxx & High Yield Corporate Bond Fund... 866,000
10,000 Proshares Ultra Dow30............................ 581,700
10,000 Proshares Ultra QQQ (b).......................... 828,100
10,000 Proshares Ultra S&P500........................... 458,100

See Notes to Financial Statements Page 9

FIRST TRUST ACTIVE DIVIDEND INCOME FUND (FAV)
PORTFOLIO OF INVESTMENTS (a) - (Continued)
NOVEMBER 30, 2011

SHARES/
UNITS DESCRIPTION VALUE
------------ ------------------------------------------------- --------------
INVESTMENT COMPANIES - (CONTINUED)

CAPITAL MARKETS - (CONTINUED)
25,000 SPDR Barclays Capital High Yield Bond ETF........ $ 947,000
10,000 Utilities Select Sector SPDR Fund................ 352,100
-------------
TOTAL INVESTMENT COMPANIES....................... 4,033,000
(Cost $4,064,934) -------------

MASTER LIMITTED PARTNERSHIPS - 7.2%

ELECTRIC UTILITIES - 0.1%
3,500 Brookfield Infrastructure Partners L.P........... 89,775
-------------
OIL, GAS & CONSUMABLE FUELS - 7.1%
10,000 Calumet Specialty Products Partners, L.P......... 193,400
5,000 Chesapeake Midstream Partners, L.P............... 131,050
5,000 Energy Transfer Partners, L.P.................... 218,800
2,000 Genesis Energy, L.P.............................. 52,180
20,000 Kinder Morgan Energy Partners, L.P............... 1,564,000
11,000 Legacy Reserves, L.P............................. 295,020
22,000 Linn Energy LLC.................................. 801,020
30,000 LRR Energy, L.P. (b)............................. 567,000
1,000 Markwest Energy Partners, L.P.................... 53,640
9,000 Penn Virginia Resource Partners, L.P............. 219,060
10,000 Plains All American Pipeline, L.P................ 648,600
34,500 SandRidge Permian Trust.......................... 659,295
-------------
5,403,065
-------------
TOTAL MASTER LIMITED PARTNERSHIPS................ 5,492,840
(Cost $5,470,440) -------------

TOTAL INVESTMENTS (C) - 93.3%.................... 70,863,820
(Cost $70,641,127)

NET OTHER ASSETS AND LIABILITIES - 6.7%.......... 5,116,350
-------------
NET ASSETS - 100.0%.............................. $ 75,980,170
=============

-----------------------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.

(b) Non-income producing security.

(c) Aggregate cost for federal income tax purposes is $72,268,592. As of
November 30, 2011, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$856,993 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$2,261,765.

ADR American Depositary Receipt

Page 10 See Notes to Financial Statements

FIRST TRUST ACTIVE DIVIDEND INCOME FUND (FAV)
PORTFOLIO OF INVESTMENTS (a) - (Continued)
NOVEMBER 30, 2011

VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of November 30,
2011 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):

LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
11/30/2011 PRICES INPUTS INPUTS
------------ ------------- ------------- ------------

Common Stocks*...........................$ 61,337,980 $ 61,337,980 $ -- $ --
Investment Companies*.................... 4,033,000 4,033,000 -- --
Master Limited Partnerships*............. 5,492,840 5,492,840 -- --
------------ ------------- ------------- ------------
TOTAL INVESTMENTS........................$ 70,863,820 $ 70,863,820 $ -- $ --
============ ============= ============= ============

* See Portfolio of Investments for industry breakout.

See Notes to Financial Statements Page 11

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 2011

ASSETS:

Investments, at value
(Cost $70,641,127)................................................................... $ 70,863,820
Cash.................................................................................. 1,116,008
Prepaid expenses 5,014
Receivables:
Investment securities sold......................................................... 29,865,210
Dividends.......................................................................... 1,392,010
Dividend reclaims.................................................................. 20,579
Interest........................................................................... 209
-------------
Total Assets..................................................................... 103,262,850
-------------
LIABILITIES:
Payables:
Investment securities purchased.................................................... 27,131,095
Investment advisory fees........................................................... 61,690
Audit and tax fees................................................................. 34,300
Custodian fees..................................................................... 18,989
Printing fees...................................................................... 16,078
Administrative fees................................................................ 7,500
Trustees' fees and expenses........................................................ 6,453
Transfer agent fees................................................................ 2,327
Legal fees......................................................................... 1,934
Financial reporting fees........................................................... 770
Other liabilities..................................................................... 1,544
-------------
Total Liabilities................................................................ 27,282,680
-------------
NET ASSETS ........................................................................... $ 75,980,170
=============
NET ASSETS consist of:
Paid-in capital ...................................................................... $ 146,321,042
Par value............................................................................. 82,595
Accumulated net investment income (loss).............................................. (118,967)
Accumulated net realized gain (loss) on investments................................... (70,527,193)
Net unrealized appreciation (depreciation) on investments............................. 222,693
-------------
NET ASSETS............................................................................ $ 75,980,170
=============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share).................. $ 9.20
=============
Number of Common Shares outstanding (unlimited number of Common Shares has
been authorized)..................................................................... 8,259,517
=============

Page 12 See Notes to Financial Statements

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 2011

INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $238,098)................................ $ 8,223,524
Interest.............................................................................. 1,757
Other................................................................................. 160
------------
Total investment income............................................................ 8,225,441
------------
EXPENSES:
Investment advisory fees.............................................................. 821,202
Administrative fees................................................................... 89,997
Custodian fees........................................................................ 78,248
Legal fees............................................................................ 54,934
At the market offering costs.......................................................... 46,437
Printing fees......................................................................... 46,309
Trustees' fees and expenses........................................................... 38,922
Audit and tax fees.................................................................... 34,997
Transfer agent fees................................................................... 26,735
Financial reporting fees.............................................................. 9,250
Other................................................................................. 64,556
------------
Total expenses..................................................................... 1,311,587
------------
NET INVESTMENT INCOME (LOSS).......................................................... 6,913,854
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments............................................... (3,260,414)
Net change in unrealized appreciation (depreciation) on investments................... (1,411,564)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)............................................... (4,671,978)
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ 2,241,876
============

See Notes to Financial Statements Page 13

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS

YEAR YEAR
ENDED ENDED
11/30/2011 11/30/2010
------------ ------------

OPERATIONS:
Net investment income (loss)......................................................... $ 6,913,854 $ 8,863,945
Net realized gain (loss)............................................................. (3,260,414) (4,395,680)
Net change in unrealized appreciation (depreciation)................................. (1,411,564) 884,123
------------ ------------
Net increase (decrease) in net assets resulting from operations...................... 2,241,876 5,352,388
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................................................ (6,465,000) (9,398,415)
Net realized gain.................................................................... -- --
Return of capital.................................................................... (1,945,904) (1,622,430)
------------ ------------
Total distributions to shareholders.................................................. (8,410,904) (11,020,845)
------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from Common Shares sold through shelf offerings............................. 1,581,799 9,298,335
Proceeds from Common Shares reinvested............................................... 265,412 475,819
------------ ------------
Net increase (decrease) in net assets resulting from capital transactions............ 1,847,211 9,774,154
------------ ------------
Total increase (decrease) in net assets.............................................. (4,321,817) 4,105,697

NET ASSETS:
Beginning of period.................................................................. 80,301,987 76,196,290
------------ ------------
End of period........................................................................ $ 75,980,170 $ 80,301,987
============ ============
Accumulated net investment income (loss) at end of period............................ $ (118,967) $ 151,062
============ ============
CAPITAL TRANSACTIONS were as follows:
Common Shares at beginning of period................................................. 8,088,610 7,267,804
Common Shares sold through shelf offerings........................................... 145,676 776,261
Common Shares issued as reinvestment under the Dividend Reinvestment Plan............ 25,231 44,545
------------ ------------
Common Shares at end of period....................................................... 8,259,517 8,088,610
============ ============

Page 14 See Notes to Financial Statements

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD

YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
11/30/2011 11/30/2010 11/30/2009 11/30/2008 11/30/2007 (a)
------------ ------------ ------------ ------------ ---------------

Net asset value, beginning of period ......... $ 9.93 $ 10.48 $ 10.61 $ 19.03 $ 19.10 (b)
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (c).............. 0.84 1.15 1.90 1.78 0.52
Net realized and unrealized gain (loss) (0.56) (0.45) (0.20) (7.99) (0.55)
----------- ----------- ----------- ----------- -----------
Total from investment operations ............. 0.28 0.70 1.70 (6.21) (0.03)
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income ........................ (0.78) (1.21) (1.84) (1.97) --
Net realized gain ............................ -- -- -- (0.24) --
Return of capital ............................ (0.24) (0.21) -- -- --
----------- ----------- ----------- ----------- -----------
Total from distributions ..................... (1.02) (1.42) (1.84) (2.21) --
----------- ----------- ----------- ----------- -----------
Common Shares offering costs charged to
paid-in capital ............................ -- -- -- -- (0.04)
----------- ----------- ----------- ----------- -----------
Premiums from shares sold in at the
market offering ............................ 0.01 0.17 0.01 -- --
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ............... $ 9.20 $ 9.93 $ 10.48 $ 10.61 $ 19.03
=========== =========== =========== =========== ===========
Market value, end of period .................. $ 8.41 $ 10.47 $ 12.10 $ 8.03 $ 17.78
=========== =========== =========== =========== ===========
TOTAL RETURN BASED ON NET ASSET VALUE (e)..... 2.81% 7.59% 18.44% (34.64)% (0.37)%(d)
=========== =========== =========== =========== ===========
TOTAL RETURN BASED ON MARKET VALUE (e)........ (10.96)% (1.56)% 80.51% (47.00)% (11.10)%
=========== =========== =========== =========== ===========

----------------------------------------

Ratios of expenses to average net assets:
Net assets, end of period (in 000's) ......... $ 75,980 $ 80,302 $ 76,196 $ 76,456 $ 137,117
Ratio of total expenses to average net assets 1.60% 1.66% 1.89% 1.31% 1.44%(f)
Ratio of net investment income (loss) to
average net assets ......................... 8.42% 11.34% 19.31% 11.34% 13.87%(f)
Portfolio turnover rate ...................... 1,297% 1,516% 2,030% 1,722% 178%

----------------------------------------
(a) Initial seed date of July 19, 2007. The Fund commenced operations on
September 20, 2007.

(b) Net of sales load of $0.90 per share on initial offering.

(d) In 2007, the Fund received a reimbursement from the investment
sub-advisor in the amount of $3,067. This reimbursement from the
sub-advisor represents less than $0.01 and had no effect on the Fund's
total return.

(e) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan, and changes in net asset value per share
for net asset value returns and changes in Common Share price for market
value returns. Total returns do not reflect sales load and are not
annualized for periods less than one year. Past performance is not
indicative of future results.

(f) Annualized.

See Notes to Financial Statements Page 15

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
NOVEMBER 30, 2011

1. FUND DESCRIPTION

First Trust Active Dividend Income Fund (the "Fund") is a diversified,
closed-end management investment company organized as a Massachusetts business
trust on June 14, 2007 and is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Fund trades under the ticker symbol FAV on the New York Stock
Exchange ("NYSE").

The Fund's primary investment objective is to seek a high level of current
income. It has a secondary objective of capital appreciation. The Fund seeks to
achieve its objectives by investing at least 80% of its Managed Assets (as
defined below) in a diversified portfolio of dividend-paying, multi-cap equity
securities of both U.S. and non-U.S. issuers that Aviance Capital Management,
LLC ("Aviance" or the "Sub-Advisor") believes offer the potential for attractive
income and/or capital appreciation. Managed Assets are defined as the total
asset value of the Fund minus the sum of the Fund's liabilities other than the
principal amount of borrowings. There can be no assurance that the Fund's
investment objectives will be achieved. The Fund may not be appropriate for all
investors.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.

A. PORTFOLIO VALUATION:

The net asset value ("NAV") of the Common Shares of the Fund is determined daily
as of the close of regular trading on the New York Stock Exchange ("NYSE"),
normally 4:00 p.m. Eastern time, on each day the NYSE is open for trading. If
the NYSE closes early on a valuation day, the NAV is determined as of that time.
Domestic debt securities and foreign securities are priced using data reflecting
the earlier closing of the principal markets for those securities. The NAV per
Common Share is calculated by dividing the value of all assets of the Fund
(including accrued interest and dividends), less all liabilities (including
accrued expenses, dividends declared but unpaid, and any borrowings of the Fund)
by the total number of Common Shares outstanding.

The Fund's investments are valued daily in accordance with valuation procedures
adopted by the Fund's Board of Trustees, and in accordance with provisions of
the 1940 Act. The following securities, for which accurate and reliable market
quotations are readily available, will be valued as follows:

Common stocks, Master Limited Partnerships ("MLPs") and other securities
listed on any national or foreign exchange (excluding the NASDAQ National
Market ("NASDAQ") and the London Stock Exchange Alternative Investment
Market ("AIM")) are valued at the last sale price on the exchange on
which they are principally traded. If there are no transactions on the
valuation day, the securities are valued at the mean between the most
recent bid and asked prices.

Securities listed on the NASDAQ or the AIM are valued at the official
closing price. If there is no official closing price on the valuation
day, the securities are valued at the mean between the most recent bid
and asked prices.

Securities traded in the over-the-counter market are valued at their
closing bid prices.

Short-term investments that mature in less than 60 days when purchased
are valued at amortized cost.

All market quotations used in valuing the Fund's securities will be obtained
from a third party pricing service. If no quotation is received from a pricing
service, attempts will be made to obtain one or more broker quotes for the
security. In the event the pricing service does not provide a valuation, broker
quotations are not readily available, or the valuations received are deemed
unreliable, the Fund's Board of Trustees has designated First Trust Advisors
L.P. ("First Trust") to use a fair value method to value the Fund's securities.
Additionally, if events occur after the close of the principal markets for
certain securities (e.g., domestic debt and foreign securities) that could
materially affect the Fund's NAV, First Trust will use a fair value method to
value the Fund's securities. The use of fair value pricing is governed by
valuation procedures adopted by the Fund's Board of Trustees, and in accordance
with the provisions of the 1940 Act. As a general principle, the fair value of a
security is the amount which the Fund might reasonably expect to receive for the
security upon its current sale. However, in light of the judgment involved in
fair valuations, there can be no assurance that a fair value assigned to a
particular security will be the amount which the Fund might be able to receive
upon its current sale. Fair valuation of a security will be based on the
consideration of all available information, including, but not limited to the
following:

1) the type of security;

2) the size of the holding;

3) the initial cost of the security;

4) transactions in comparable securities;

5) price quotes from dealers and/or pricing services;

6) relationships among various securities;

7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;

8) an analysis of the issuer's financial statements; and

9) the existence of merger proposals or tender offers that might affect
the value of the security.

Page 16

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (Continued)
--------------------------------------------------------------------------------

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
NOVEMBER 30, 2011

If the securities in question are foreign securities, the following additional
information may be considered:

1) the value of similar foreign securities traded on other foreign markets;

2) ADR trading of similar securities;

3) closed-end fund trading of similar securities;

4) foreign currency exchange activity;

5) the trading prices of financial products that are tied to baskets of
foreign securities;

6) factors relating to the event that precipitated the pricing problem;

7) whether the event is likely to recur; and

8) whether the effects of the event are isolated or whether they affect
entire markets, countries or regions.

The Fund is subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:

o Level 1 - Level 1 inputs are quoted prices in active markets for
identical securities. An active market is a market in which
transactions for the security occur with sufficient frequency
and volume to provide pricing information on an ongoing basis.

o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:

o Quoted prices for similar securities in active markets.

o Quoted prices for identical or similar securities in markets
that are non-active. A non-active market is a market where
there are few transactions for the security, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.

o Inputs other than quoted prices that are observable for the
security (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and
default rates).

o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.

o Level 3 - Level 3 inputs are unobservable inputs. Unobservable inputs
may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
security.

The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. A summary
of the inputs used to value the Fund's investments as of November 30, 2011, is
included with the Fund's Portfolio of Investments.

B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME:

Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income, if any, is
recorded on the accrual basis, including amortization of premiums and accretion
of discounts.

Distributions received from the Fund's investments in MLPs generally are
comprised of return of capital from the MLP to the extent of the cost basis of
such MLP investments. Cumulative distributions received in excess of the Fund's
cost basis in an MLP generally are recorded as capital gain. For the fiscal year
ended November 30, 2011, distributions of $788,245 received from MLPs have been
reclassified as return of capital. The cost basis of applicable MLPs has been
reduced accordingly.

C. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:

Level dividend distributions are declared and paid quarterly or as the Board of
Trustees may determine from time to time. If, for any quarterly distribution,
net investment company taxable income, if any (which term includes net
short-term capital gain), as determined as of the close of the Fund's taxable
year, is less than the amount of the distribution, the difference will generally
be a tax-free return of capital distributed from the Fund's assets.
Distributions of any net long-term capital gains earned by the Fund are
distributed at least annually. Distributions will automatically be reinvested
into additional Common Shares pursuant to the Fund's Dividend Reinvestment Plan
unless cash distributions are elected by the shareholder.

Distributions from income and capital gains are determined in accordance with
income tax regulations, which may differ from accounting principles generally
accepted in the United States of America. Certain capital accounts in the
financial statements are periodically adjusted for permanent differences in
order to reflect their tax character. These permanent differences are primarily
due to the varying treatment of income and gain/loss on portfolio securities
held by the Fund and have no impact on net assets or net asset value per share.
Temporary differences, which arise from recognizing certain items of income,
expense and gain/loss in different periods for financial statement and tax
purposes, will reverse at some point in the future. Permanent differences
incurred during the fiscal year ended November 30, 2011, primarily as a result
of book/tax treatment of sale of MLP investments, have been reclassified at year
end to reflect a decrease in accumulated net investment income (loss) by
$718,883, an increase in accumulated net realized gain (loss) on investments by
$198,702 and an increase to paid-in capital of $520,181.

Page 17

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
NOVEMBER 30, 2011

The tax character of distributions paid during the fiscal years ended November
30, 2011 and 2010 was as follows:

Distributions paid from: 2011 2010

Ordinary income....................... $ 6,465,000 $ 9,398,415
Return of capital..................... 1,945,904 1,622,430

As of November 30, 2011, the distributable earnings and net assets on a tax
basis were as follows:

Undistributed ordinary income.................... $ --
Undistributed capital gains...................... --
-------------
Total undistributed earnings..................... --
Accumulated capital and other losses............. (69,018,695)
Net unrealized appreciation (depreciation)....... (1,404,772)
-------------
Total accumulated earnings (losses).............. (70,423,467)
Other ......................................... --
Paid-in capital.................................. 146,403,637
-------------
Net assets....................................... $ 75,980,170
=============

D. INCOME TAXES:

The Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no
provision has been made for federal or state income taxes. However, due to the
timing and amount of distributions, the Fund may be subject to an excise tax of
4% of the amount by which approximately 98.2% of the Fund's taxable income
exceeds the distributions from such taxable income for the calendar year.

Certain capital losses realized after October 31 may be deferred and treated as
occurring on the first day of the following fiscal year. For the fiscal year
ended November 30, 2011, the Fund elected to defer capital losses occurring
between November 1, 2011, and November 30, 2011, in the amount of $1,357,544.

The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry realized capital losses forward for eight years following the
year of the loss and offset such loss against any future realized capital gains.
The Fund is subject to certain limitations under U.S. tax rules on the use of
capital loss carryforwards and net unrealized built-in losses. These limitations
apply when there has been a 50% change in ownership. At November 30, 2011, the
Fund had a capital loss carryforward for federal income tax purposes of
$67,661,151 expiring as follows:

EXPIRATION DATE AMOUNT

November 30, 2016 $44,083,569
November 30, 2017 17,263,318
November 30, 2018 5,877,626
November 30, 2019 436,638

The Fund is subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ending 2008, 2009,
2010 and 2011 remain open to federal and state audit. As of November 30, 2011,
management has evaluated the application of these standards to the Fund and has
determined that no provision for income tax is required in the Fund's financial
statements for uncertain tax positions.

E. EXPENSES:

The Fund will pay all expenses directly related to its operations.

F. ACCOUNTING PRONOUNCEMENTS:

In January 2010, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about
Fair Value Measurements." ASU No. 2010-06 amends FASB Accounting Standards
Codification Topic 820, Fair Value Measurements and Disclosures, to require
additional disclosures regarding fair value measurements. Certain disclosures
required by ASU No. 2010-06 are effective for fiscal years beginning after
December 15, 2010, and for interim periods within those fiscal years. Management
is currently evaluating the impact ASU No. 2010-06 will have on the Fund's
financial statement disclosures, if any.

Page 18

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
NOVEMBER 30, 2011

In May 2011, the FASB issued ASU 2011-04 "Amendments to Achieve Common Fair
Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs", modifying
Topic 820, Fair Value Measurements and Disclosures. At the same time, the
International Accounting Standards Board ("IASB") issued International Financial
Reporting Standard ("IFRS") 13, Fair Value Measurement. The objective of the
FASB and IASB is convergence of their guidance on fair value measurements and
disclosures. Specifically, the ASU requires reporting entities to disclose (i)
the amounts of any transfers between Level 1 and Level 2, and the reasons for
the transfers, (ii) for Level 3 fair value measurements, quantitative
information about significant unobservable inputs used, (iii) a description of
the valuation processes used by the reporting entity, and (iv) a narrative
description of the sensitivity of the fair value measurement to changes in
unobservable inputs if a change in those inputs might result in a significantly
higher or lower fair value measurement. The effective date of the ASU is for
interim and annual periods beginning after December 15, 2011, and it is
therefore not effective for the current fiscal year. Management is in the
process of assessing the impact of the updated standards on the Fund's financial
statements, if any.

3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS

First Trust, the investment advisor to the Fund, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. First Trust is responsible for the ongoing monitoring of
the Fund's investment portfolio, managing the Fund's business affairs and
providing certain administrative services necessary for the management of the
Fund. For these investment management services, First Trust is entitled to a
monthly fee calculated at an annual rate of 1.00% of the Fund's Managed Assets.
First Trust also provides fund reporting services to the Fund for a flat annual
fee in the amount of $9,250.

Aviance serves as the Fund's sub-advisor and manages the Fund's portfolio
subject to First Trust's supervision. The Sub-Advisor receives a monthly
sub-advisory fee calculated at an annual rate of 0.50% of the Funds Managed
Assets that is paid by First Trust out of its investment advisory fee.

James A. Bowen, the President of First Trust, on October 12, 2010, acquired 100%
of the voting stock of The Charger Corporation, the general partner of First
Trust (the "Transaction"). The consummation of the Transaction was deemed to be
an "assignment" (as defined in the 1940 Act) of the Fund's investment management
agreement and investment sub-advisory agreement and resulted in the automatic
termination of the agreements.

The Board of Trustees of the Fund approved an interim investment management
agreement with First Trust and an interim investment sub-advisory agreement,
which were entered into effective upon the closing of the Transaction and would
be in effect for a maximum period of 150 days. A new investment management
agreement with First Trust and a new investment sub-advisory agreement was
approved by the Board of Trustees of the Fund and were submitted to shareholders
of the Fund as of the record date (September 30, 2010) for approval to take
effect upon such shareholder approval. A special shareholder meeting of the Fund
to vote on a proposal to approve the new investment management agreement and the
new investment sub-advisory agreement was held on January 3, 2011, at which time
the new investment management agreement and new investment sub-advisory
agreement were approved by the Fund's shareholders. Until January 3, 2011,
advisory fees payable to First Trust and Aviance were held in escrow. See
Submission of Matters to a Vote of Shareholders, in the Additional Information
section of this report, for the results.

BNY Mellon Investment Servicing (US) Inc. serves as the Fund's Administrator,
Fund Accountant and Transfer Agent in accordance with certain fee arrangements.
Effective September 30, 2011, The Bank of New York Mellon serves as the Fund's
Custodian in accordance with certain fee arrangements. Prior to September 30,
2011, BNY Mellon Investment Servicing Trust Company (formerly known as PFPC
Trust Company), served as the Fund's Custodian in accordance with certain fee
arrangements.

Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustee") is paid an annual retainer of
$10,000 per trust for the first 14 trusts of the First Trust Fund Complex and an
annual retainer of $7,500 per trust for each subsequent trust in the First Trust
Fund Complex. The annual retainer is allocated equally among each of the trusts.
No additional meeting fees are paid in connection with board or committee
meetings.

Additionally, the Lead Independent Trustee is paid $10,000 annually, the
Chairman of the Audit Committee is paid $5,000 annually, and each of the
Chairmen of the Nominating and Governance Committee and the Valuation Committee
is paid $2,500 annually to serve in such capacities, with such compensation paid
by the trusts in the First Trust Fund Complex and divided among those trusts.
Trustees are also reimbursed by the trusts in the First Trust Fund Complex for
travel and out-of-pocket expenses in connection with all meetings. The Lead
Independent Trustee and each Committee chairman will serve two-year terms ending
before rotating to serve as chairman of another committee or as Lead Independent
Trustee. The officers and "Interested" Trustee receive no compensation from the
Fund for serving in such capacities.

4. PURCHASES AND SALES OF SECURITIES

Cost of purchases and proceeds from sales of securities, other than U.S.
government obligations and short-term obligations, for the year ended November
30, 2011 were $1,018,226,127 and $1,017,419,739, respectively.

Page 19

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
NOVEMBER 30, 2011

5. AT THE MARKET OFFERINGS

On July 14, 2010, the Fund, Advisor and Sub-Advisor entered into a sales
agreement with JonesTrading whereby the Fund may offer and sell up to 1,000,000
Common Shares from time to time through JonesTrading as agent for the offer and
sale of the Common Shares. This sales agreement terminated and replaced the
previous sales agreement that was entered into on November 13, 2009. Sales of
Common Shares pursuant to the sales agreement may be made in negotiated
transactions or transactions that are deemed to be "at the market" as defined in
Rule 415 under the Securities Act of 1933, as amended, including sales made
directly on the NYSE or sales made through a market maker other than on an
exchange, at an offering price equal to or in excess of the net asset value per
share of the Fund's Common Shares at the time such Common Shares are initially
sold. The Fund intends to use the net proceeds from the sale of the Common
Shares in accordance with its investment objective and policies. The Fund has
not offered Common Shares pursuant to the sales agreement with Jones Trading
since February 1, 2011. Transactions for the years ended November 30, 2011 and
2010 related to offerings under the previous and current sales agreements are as
follows:

Net Proceeds
Common Net Proceeds Net Asset Value Received in Excess
Shares Sold Received of Shares Sold of Net Asset Value

Year Ended 11/30/2011* 145,676 $1,581,799 $1,512,325 $ 69,474
Year Ended 11/30/2010 776,261 $9,298,335 $8,027,005 $ 1,271,330

* Additionally, estimated offering costs of $46,437 related to this offering
for this reporting period have been expensed by the Fund and are disclosed as
"At the market offering costs" on the Statement of Operations.

6. INDEMNIFICATION

The Fund has a variety of indemnification obligations under contracts with its
service providers. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.

7. RISK CONSIDERATIONS

Risks are inherent in all investing. The following summarizes some, but not all,
of the risks that should be considered for the Fund. For additional information
about the risks associated with investing in the Fund, please see the Fund's
prospectus and statement of additional information, as well as other Fund
regulatory filings.

INVESTMENT AND MARKET RISK: An investment in the Fund's Common Shares is subject
to investment risk, including the possible loss of the entire principal
invested. An investment in Common Shares represents an indirect investment in
the securities owned by the Fund. The value of these securities, like other
market investments, may move up or down, sometimes rapidly and unpredictably.
Common Shares at any point in time may be worth less than the original
investment, even after taking into account the reinvestment of Fund dividends
and distributions. Security prices can fluctuate for several reasons including
the general condition of the securities markets, or when political or economic
events affecting the issuers occur. When the Advisor or Sub-Advisor determines
that it is temporarily unable to follow the Fund's investment strategy or that
it is impractical to do so (such as when a market disruption event has occurred
and trading in the securities is extremely limited or absent), the Fund may take
temporary defensive positions.

DIVIDEND STRATEGY RISK: The Sub-Advisor may not be able to anticipate the level
of dividends that companies will pay in any given timeframe. The Fund's
strategies require the Sub-Advisor to identify and exploit opportunities such as
the announcement of major corporate actions that may lead to high current
dividend income. These situations are typically not recurring in nature or the
frequency may be difficult to predict and may not result in an opportunity that
allows the Sub-Advisor to fulfill the Fund's investment objectives. In addition,
the dividend policies of the Fund's target companies are heavily influenced by
the current economic climate.

MLP RISK: An investment in MLP units involves risks which differ from an
investment in common stock of a corporation. Holders of MLP units have limited
control and voting rights on matters affecting the partnership. In addition,
there are certain tax risks associated with an investment in MLP units and
conflicts of interest exist between common unit holders and the general partner,
including those arising from incentive distribution payments.

QUALIFIED DIVIDEND INCOME TAX RISK: There can be no assurance as to what portion
of the distributions paid to the Fund's Common Shareholders will consist of
tax-advantaged qualified dividend income. For taxable years beginning before
January 1, 2013, certain distributions designated by the Fund as derived from
qualified dividend income will be taxed in the hands of non-corporate Common
Shareholders at the rates applicable to long-term capital gains, provided
certain holding period and other requirements are satisfied by both the Fund and
the Common Shareholders. Additional requirements apply in determining whether
distributions by foreign issuers should be regarded as qualified dividend
income. Certain investment strategies of the Fund will limit the Fund's ability
to meet these requirements and consequently will limit the amount of qualified
dividend income received and distributed by the Fund. A change in the favorable
provisions of the federal tax laws with respect to qualified dividends may
result in a widespread reduction in announced dividends and may adversely impact
the valuation of the shares of dividend-paying companies.

Page 20

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
NOVEMBER 30, 2011

8. SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events to the Fund through
the date the financial statements were issued, and has determined that there
were the following subsequent events:

Effective January 1, 2012, each Independent Trustee will be paid a fixed annual
retainer of $125,000 per year and an annual per fund fee of $4,000 for each
closed-end fund or other actively managed fund and $1,000 for each index fund in
the First Trust Fund Complex. The fixed annual retainer will be allocated pro
rata among each fund in the First Trust Fund Complex based on net assets.

Additionally, the Lead Independent Trustee will be paid $15,000 annually, the
Chairman of the Audit Committee will be paid $10,000 annually, and each of the
Chairmen of the Nominating and Governance Committee and the Valuation Committee
will be paid $5,000 annually to serve in such capacities, with such compensation
allocated pro rata among each fund in the First Trust Fund Complex based on net
assets. Trustees continue to be reimbursed for travel and out-of-pocket expenses
in connection with all meetings. The Lead Independent Trustee and each Committee
chairman will serve two-year terms before rotating to serve as chairman of
another committee or as Lead Independent Trustee. The officers and "Interested"
Trustee receive no compensation from the Fund for acting in such capacities.

On January 12, 2012, the Fund declared a dividend of $0.18 per share to Common
Shareholders of record on January 24, 2012, payable January 31, 2012.

Effective January 23, 2012, Mr. Bowen resigned from his position as the
President and Chief Executive Officer of the Fund. He will continue as a
Trustee, the Chairman of the Board and member of the Executive Committee. The
Board elected Mr. Bradley to serve as the President and Chief Executive Officer
and Mr. Dykas to serve as the Treasurer, Chief Financial Officer and Chief
Accounting Officer of the Fund.

Page 21

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FIRST TRUST ACTIVE DIVIDEND
INCOME FUND:

We have audited the accompanying statement of assets and liabilities of First
Trust Active Dividend Income Fund (the "Fund"), including the portfolio of
investments, as of November 30, 2011, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of November 30, 2011, by correspondence with the Fund's
custodian and brokers; where replies were not received, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of First
Trust Active Dividend Income Fund as of November 30, 2011, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the periods presented, in conformity with accounting principles generally
accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP

Chicago, Illinois
January 24, 2012

Page 22

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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
NOVEMBER 30, 2011 (UNAUDITED)

DIVIDEND REINVESTMENT PLAN

If your Common Shares are registered directly with the Fund or if you hold your
Common Shares with a brokerage firm that participates in the Fund's Dividend
Reinvestment Plan (the "Plan"), unless you elect, by written notice to the Fund,
to receive cash distributions, all dividends, including any capital gain
distributions, on your Common Shares will be automatically reinvested by BNY
Mellon Investment Servicing (US) Inc. (the "Plan Agent"), in additional Common
Shares under the Plan. If you elect to receive cash distributions, you will
receive all distributions in cash paid by check mailed directly to you by the
Plan Agent, as the dividend paying agent.

If you decide to participate in the Plan, the number of Common Shares you will
receive will be determined as follows:

(1) If Common Shares are trading at or above net asset value
("NAV") at the time of valuation, the Fund will issue new
shares at a price equal to the greater of (i) NAV per Common
Share on that date or (ii) 95% of the market price on that
date.

(2) If Common Shares are trading below NAV at the time of
valuation, the Plan Agent will receive the dividend or
distribution in cash and will purchase Common Shares in the
open market, on the NYSE or elsewhere, for the participants'
accounts. It is possible that the market price for the Common
Shares may increase before the Plan Agent has completed its
purchases. Therefore, the average purchase price per share paid
by the Plan Agent may exceed the market price at the time of
valuation, resulting in the purchase of fewer shares than if
the dividend or distribution had been paid in Common Shares
issued by the Fund. The Plan Agent will use all dividends and
distributions received in cash to purchase Common Shares in the
open market within 30 days of the valuation date except where
temporary curtailment or suspension of purchases is necessary
to comply with federal securities laws. Interest will not be
paid on any uninvested cash payments.

You may elect to opt-out of or withdraw from the Plan at any time by giving
written notice to the Plan Agent, or by telephone at (866) 340-1104, in
accordance with such reasonable requirements as the Plan Agent and the Fund may
agree upon. If you withdraw or the Plan is terminated, you will receive a
certificate for each whole share in your account under the Plan, and you will
receive a cash payment for any fraction of a share in your account. If you wish,
the Plan Agent will sell your shares and send you the proceeds, minus brokerage
commissions.

The Plan Agent maintains all Common Shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. Common Shares in your account will be held by the
Plan Agent in non-certificated form. The Plan Agent will forward to each
participant any proxy solicitation material and will vote any shares so held
only in accordance with proxies returned to the Fund. Any proxy you receive will
include all Common Shares you have received under the Plan.

There is no brokerage charge for reinvestment of your dividends or distributions
in Common Shares. However, all participants will pay a pro rata share of
brokerage commissions incurred by the Plan Agent when it makes open market
purchases.

Automatically reinvesting dividends and distributions does not mean that you do
not have to pay income taxes due upon receiving dividends and distributions.
Capital gains and income are realized although cash is not received by you.
Consult your financial advisor for more information.

If you hold your Common Shares with a brokerage firm that does not participate
in the Plan, you will not be able to participate in the Plan and any dividend
reinvestment may be effected on different terms than those described above.

The Fund reserves the right to amend or terminate the Plan if in the judgment of
the Board of Trustees the change is warranted. There is no direct service charge
to participants in the Plan; however, the Fund reserves the right to amend the
Plan to include a service charge payable by the participants. Additional
information about the Plan may be obtained by writing BNY Mellon Investment
Servicing (US) Inc., 301 Bellevue Parkway, Wilmington, Delaware 19809.

--------------------------------------------------------------------------------

PROXY VOTING POLICIES AND PROCEDURES

A description of the policies and procedures that the Fund uses to determine how
to vote proxies and information on how the Fund voted proxies relating to
portfolio investments during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
the Fund's website located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's ("SEC") website located at
http://www.sec.gov.

Page 23

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ADDITIONAL INFORMATION - (Continued)
--------------------------------------------------------------------------------

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
NOVEMBER 30, 2011 (UNAUDITED)

PORTFOLIO HOLDINGS

The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available (1) by calling (800) 988-5891; (2) on the Fund's website located
at http://www.ftportfolios.com; (3) on the SEC's website at http://www.sec.gov;
and (4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling (800) SEC-0330.

TAX INFORMATION

Of the ordinary income (including short-term capital gain) distributions made by
the Fund during the year ended November 30, 2011, 9.93% qualified for the
corporate dividends received deduction available to corporate shareholders.

The Fund hereby designates as qualified dividend income 15.45% of the ordinary
income distributions for the year ended November 30, 2011.

NYSE CERTIFICATION INFORMATION

In accordance with Section 303A-12 of the New York Stock Exchange ("NYSE")
Listed Company Manual, the Fund's President has certified to the NYSE that, as
of May 31, 2011, he was not aware of any violation by the Fund of NYSE corporate
governance listing standards. In addition, the Fund's reports to the SEC on
Forms N-CSR, N-CSRS and N-Q contain certifications by the Fund's principal
executive officer and principal financial officer that relate to the Fund's
public disclosure in such reports and are required by Rule 30a-2 under the 1940
Act.

SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

A special meeting of shareholders of the Fund was held on January 3, 2011. At
the meeting, shareholders approved a new investment management agreement between
the Fund and First Trust and a new investment sub-advisory agreement between the
Fund, First Trust and Aviance. 4,052,274 (51.32%) of the outstanding voting
securities were voted at the meeting. The number of votes cast in favor of the
new investment management agreement was 3,536,966, the number of votes against
was 147,844, and the number of abstentions was 367,464. The number of votes cast
in favor of the new investment sub-advisory agreement was 3,510,842, the number
of votes against was 148,486, and the number of abstentions was 392,946. The
terms of the new investment management agreement and new investment sub-advisory
agreement are substantially similar to the terms of the previous agreements.

The Joint Annual Meeting of Shareholders of the Common Shares of Energy Income
and Growth Fund, First Trust Enhanced Equity Income Fund, First Trust/Aberdeen
Global Opportunity Income Fund, First Trust/FIDAC Mortgage Income Fund, First
Trust Strategic High Income Fund, First Trust Strategic High Income Fund II,
First Trust/Aberdeen Emerging Opportunity Fund, First Trust Strategic High
Income Fund III, First Trust Specialty Finance and Financial Opportunities Fund,
First Trust Active Dividend Income Fund and First Trust High Income Long/Short
Fund was held on April 18, 2011. At the Meeting, Robert F. Keith was elected by
the Common Shareholders of the First Trust Active Dividend Income Fund as a
Class I Trustee for a three-year term expiring at the Fund's annual meeting of
shareholders in 2014. The number of votes cast in favor of Mr. Keith was
7,437,469, the number of votes against was 117,453 and the number of abstentions
was 684,262. James A. Bowen, Niel B. Nielson, Richard E. Erickson and Thomas R.
Kadlec are the other current and continuing Trustees.

Page 24

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BOARD OF TRUSTEES AND OFFICERS
--------------------------------------------------------------------------------

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
NOVEMBER 30, 2011 (UNAUDITED)

NUMBER OF
PORTFOLIOS IN
THE FIRST TRUST OTHER
NAME, ADDRESS, TERM OF OFFICE FUND COMPLEX TRUSTEESHIPS OR
DATE OF BIRTH AND AND LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY DIRECTORSHIPS
POSITION WITH THE FUND SERVICE (2) DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE

INDEPENDENT TRUSTEES

Richard E. Erickson, Trustee o Three-Year Term Physician; President, Wheaton 82 None
c/o First Trust Advisors L.P. Orthopedics; Co-Owner and Co-Director
120 East Liberty Drive, o Since Fund (January 1996 to May 2007), Sports
Suite 400 Inception Med Center for Fitness; Limited Partner,
Wheaton, IL 60187 Gundersen Real Estate Limited Partnership;
D.O.B.: 04/51 Member, Sportsmed LLC

Thomas R. Kadlec, Trustee o Three-Year Term President (March 2010 to Present), 82 Director of ADM
c/o First Trust Advisors L.P. Senior Vice President and Chief Investor Services,
120 East Liberty Drive, o Since Fund Financial Officer (May 2007 to Inc. and ADM
Suite 400 Inception March 2010), Vice President and Investor Services
Wheaton, IL 60187 Chief Financial Officer (1990 to May 2007), International
D.O.B.: 11/57 ADM Investor Services, Inc. (Futures
Commission Merchant)

Robert F. Keith, Trustee o Three-Year Term President (2003 to Present), Hibs 82 Director of Trust
c/o First Trust Advisors L.P. Enterprises (Financial and Management Company of
120 East Liberty Drive, o Since Fund Consulting) Illinois
Suite 400 Inception
Wheaton, IL 60187
D.O.B.: 11/56

Niel B. Nielson, Trustee o Three-Year Term President (June 2002 to Present), 82 Director of
c/o First Trust Advisors L.P. Covenant College Covenant
120 East Liberty Drive, o Since Fund Transport Inc.
Suite 400 Inception
Wheaton, IL 60187
D.O.B.: 03/54

INTERESTED TRUSTEE

James A. Bowen, Trustee, o Three-Year Trustee Chief Executive Officer (December 2010 82 None
President, Chairman of the Term and Indefinite to Present), President, (until December
Board and CEO(1) Officer Term 2010), First Trust Advisors L.P. and
120 East Liberty Drive, First Trust Portfolios L.P.; Chairman
Suite 400 o Since Fund of the Board of Directors, BondWave LLC
Wheaton, IL 60187 Inception (Software Development Company/
D.O.B.: 09/55 Investment Advisor) and Stonebridge
Advisors LLC (Investment Advisor)

---------------------------
(1) Mr. Bowen is deemed an "interested person" of the Fund due to his
position as Chief Executive Officer of First Trust Advisors L.P.,
investment advisor of the Fund.

(2) Currently, Robert F. Keith, as a Class I Trustee, is serving as a
trustee until the Fund's 2014 annual meeting of shareholders. Richard
E. Erickson and Thomas R. Kadlec, as Class II Trustees, are serving as
trustees until the Fund's 2012 annual meeting of shareholders. James
A. Bowen and Niel B. Nielson, as Class III Trustees, are serving as
trustees until the Fund's 2013 annual meeting of shareholders.
Officers of the Fund have an indefinite term. The term "officer" means
the president, vice president, secretary, treasurer, controller or any
other officer who performs a policy making function.

Page 25

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BOARD OF TRUSTEES AND OFFICERS - (Continued)
--------------------------------------------------------------------------------

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
NOVEMBER 30, 2011 (UNAUDITED)

NAME, ADDRESS POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS

OFFICERS WHO ARE NOT TRUSTEES(3)

Mark R. Bradley Treasurer, Chief Financial o Indefinite Term Chief Operating Officer (December 2010 to Present)
120 E. Liberty Drive, Officer and Chief and Chief Financial Officer, First
Suite 400 Accounting Officer o Since Fund Inception Trust Advisors Suite 400
Wheaton, IL 60187 L.P. and First Trust Portfolios L.P.; Chief Financial
D.O.B.: 11/57 Officer, BondWave LLC (Software Development
Company/Investment Advisor) and Stonebridge
Advisors LLC (Investment Advisor)

Erin E. Chapman Assistant Secretary o Indefinite Term Assistant General Counsel (October 2007 to
120 E. Liberty Drive, Present), Associate Counsel (March 2006 to October
Suite 400 o Since June 2009 2007), First Trust Advisors L.P. and First
Wheaton, IL 60187 Trust Portfolios L.P.; Associate Attorney (November
D.O.B.: 08/76 2003 to March 2006), Doyle & Bolotin, Ltd.

James M. Dykas Assistant Treasurer o Indefinite Term Controller (January 2011 to Present), Senior Vice
120 E. Liberty Drive, President (April 2007 to January 2011), Vice
Suite 400 o Since Fund Inception President (January 2005 to April 2007),
Wheaton, IL 60187 First Trust Advisors L.P. and First Trust Portfolios
D.O.B.: 01/66 L.P.

Roseanne Gatta Assistant Secretary o Indefinite Term Board Liaison Associate (July 2010 to Present), First
120 E. Liberty Drive, Trust Advisors L.P. and First Trust Portfolios L.P.;
Suite 400 o Since March 2011 Assistant Vice President (February 2001 to July 2010),
Wheaton, IL 60187 PNC Global Investment Services
D.O.B.: 07/55

Christopher R. Fallow Assistant Vice President o Indefinite Term Assistant Vice President (August 2006 to Present),
120 E. Liberty Drive, Associate (January 2005 to August 2006), First Trust
Suite 400 o Since Fund Inception Advisors L.P. and First Trust Portfolios L.P.
Wheaton, IL 60187
D.O.B.: 04/79

W. Scott Jardine Secretary o Indefinite Term General Counsel, First Trust Advisors L.P., First
120 E. Liberty Drive, Trust Portfolios L.P. and BondWave LLC
Suite 400 o Since Fund Inception (Software Development Company/Investment
Wheaton, IL 60187 Advisor): Secretary of Stonebridge Advisors LLC
D.O.B.: 05/60 (Investment Advisor)

Daniel J. Lindquist Vice President o Indefinite Term Senior Vice President (September 2005 to
120 E. Liberty Drive, Present), First Trust Advisors L.P. and First Trust
Suite 400 o Since Fund Inception Portfolios L.P. Wheaton, IL 60187
D.O.B.: 02/70

Coleen D. Lynch Assistant Vice President o Indefinite Term Assistant Vice President (January 2008 to Present),
120 E. Liberty Drive, First Trust Advisors L.P. and First Trust Portfolios
Suite 400 o Since July 2008 L.P.; Vice President (May 1998 to January 2008),
Wheaton, IL 60187 Van Kampen Asset Management and Morgan
D.O.B.: 07/58 Stanley Investment Management

Kristi A. Maher Assistant Secretary and o Indefinite Term Deputy General Counsel (May 2007 to Present),
120 E. Liberty Drive, Chief Compliance Officer o Assistant Secretary Assistant General Counsel (March 2004 to May
Suite 400 Since Fund Inception 2007), First Trust Advisors L.P. and
Wheaton, IL 60187 o Chief Compliance First Trust Portfolios L.P.
D.O.B.: 12/66 Officer Since
January 2011

----------------------
(3) The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy
making function.

Page 26

--------------------------------------------------------------------------------
PRIVACY POLICY
--------------------------------------------------------------------------------

FIRST TRUST ACTIVE DIVIDEND INCOME FUND
NOVEMBER 30, 2011 (UNAUDITED)

The open-end and closed-end funds advised by First Trust Advisors L.P. (each a
"Fund") value our relationship with you and consider your privacy an important
priority in maintaining that relationship. We are committed to protecting the
security and confidentiality of your personal information.

SOURCES OF INFORMATION

We collect nonpublic personal information about you from the following sources:

o Information we receive from you and your broker-dealer, investment
advisor or financial representative through interviews, applications,
agreements or other forms;

o Information about your transactions with us, our affiliates or others;

o Information we receive from your inquiries by mail, e-mail or
telephone; and

o Information we collect on our website through the use of "cookies".
For example, we may identify the pages on our website that your
browser requests or visits.

INFORMATION COLLECTED

The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.

DISCLOSURE OF INFORMATION

We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. In addition to using
this information to verify your identity (as required under law), the permitted
uses may also include the disclosure of such information to unaffiliated
companies for the following reasons:

o In order to provide you with products and services and to effect
transactions that you request or authorize, we may disclose your
personal information as described above to unaffiliated financial
service providers and other companies that perform administrative or
other services on our behalf, such as transfer agents, custodians and
trustees, or that assist us in the distribution of investor materials
such as trustees, banks, financial representatives, proxy services,
solicitors and printers.

o We may release information we have about you if you direct us to do
so, if we are compelled by law to do so, or in other legally limited
circumstances (for example to protect your account from fraud).

In addition, in order to alert you to our other financial products and services,
we may share your personal information with affiliates of the Fund.

PRIVACY ONLINE

We allow third-party companies, including AddThis, to collect certain anonymous
information when you visit our website. These companies may use non-personally
identifiable information during your visits to this and other websites in order
to provide advertisements about goods and services likely to be of greater
interest to you. These companies typically use a cookie, third party web beacon
or pixel tags, to collect this information. To learn more about this behavioral
advertising practice, you can visit www.networkadvertising.org.

CONFIDENTIALITY AND SECURITY

With regard to our internal security procedures, we restrict access to your
nonpublic personal information to those individuals who need to know that
information to provide products or services to you. We maintain physical,
electronic and procedural safeguards to protect your nonpublic personal
information.

POLICY UPDATES AND INQUIRIES

As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time, however, if we do change
it, we will tell you promptly. For questions about our policy, or for additional
copies of this notice, please go to www.ftportfolios.com, or contact us at
1-800-621-1675 (First Trust Portfolios) or 1-800-222-6822 (First Trust
Advisors).

Page 27

This Page Left Blank Intentionally.

FIRST TRUST

INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187

INVESTMENT SUB-ADVISOR
Aviance Capital Management, LLC
2080 Ringling Boulevard
Sarasota, FL 34237

ADMINISTRATOR,
FUND ACCOUNTANT &
TRANSFER AGENT
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809

CUSTODIAN
The Bank of New York Mellon
1 Wall Street
New York, NY 10286

INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606

LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603

[Blank Back Cover]

ITEM 2. CODE OF ETHICS.

(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or
a third party.

(c) There have been no amendments, during the period covered by this report,
to a provision of the code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code
of ethics description.

(d) The registrant has not granted any waivers, including an implicit waiver,
from a provision of the code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set
forth in paragraph (b) of this item's instructions.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

As of the end of the period covered by the report, the Registrant's board of
trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified
to serve as audit committee financial experts serving on its audit committee and
that each of them is "independent," as defined by Item 3 of Form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a) Audit Fees (Registrant) -- The aggregate fees billed for each of the
last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years were
$54,800 for the fiscal year ended November 30, 2010 and $29,800 for the fiscal
year ended November 30, 2011.

(b) Audit-Related Fees (Registrant) -- The aggregate fees billed in each
of the last two fiscal years for assurance and related services by the principal
accountant that are reasonably related to the performance of the audit of the
registrant's financial statements and are not reported under paragraph (a) of
this Item were $0 for the fiscal year ended November 30, 2010 and $0 for the
fiscal year ended November 30, 2011.

Audit-Related Fees (Investment Adviser) -- The aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under paragraph
(a) of this Item were $0 for the fiscal year ended November 30, 2010 and $0 for
the fiscal year ended November 30, 2011.

(c) Tax Fees (Registrant) -- The aggregate fees billed in each of the last
two fiscal years for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning to the registrant were
$4,515.18 for the fiscal year ended November 30, 2010 and $4,500 for the fiscal
year ended November 30, 2011. These fees were for tax consultation.

Tax Fees (Investment Adviser) -- The aggregate fees billed in each of the
last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning to the registrant's
adviser were $0 for the fiscal year ended November 30, 2010 and $0 for the
fiscal year ended November 30, 2011.

(d) All Other Fees (Registrant) -- The aggregate fees billed in each of
the last two fiscal years for products and services provided by the principal
accountant to the registrant, other than the services reported in paragraphs (a)
through (c) of this Item were $0 for the fiscal year ended November 30, 2010 and
$0 for the fiscal year ended November 30, 2011.

All Other Fees (Investment Adviser) -- The aggregate fees billed in each
of the last two fiscal years for products and services provided by the principal
accountant to the registrant's investment adviser, other than the services
reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year
ended November 30, 2010 and $0 for the fiscal year ended November 30, 2011.

(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c) (7) of Rule 2-01 of Regulation S-X.

Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval
Policy, the Audit Committee (the "Committee") is responsible for the
pre-approval of all audit services and permitted non-audit services (including
the fees and terms thereof) to be performed for the registrant by its
independent auditors. The Chairman of the Committee is authorized to give such
pre-approvals on behalf of the Committee up to $25,000 and report any such
pre-approval to the full Committee.

The Committee is also responsible for the pre-approval of the independent
auditor's engagements for non-audit services with the registrant's adviser (not
including a sub-adviser whose role is primarily portfolio management and is
sub-contracted or overseen by another investment adviser) and any entity
controlling, controlled by or under common control with the investment adviser
that provides ongoing services to the registrant, if the engagement relates
directly to the operations and financial reporting of the registrant, subject to
the de minimis exceptions for non-audit services described in Rule 2-01 of
Regulation S-X. If the independent auditor has provided non-audit services to
the registrant's adviser (other than any sub-adviser whose role is primarily
portfolio management and is sub-contracted with or overseen by another
investment adviser) and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to its policies, the Committee
will consider whether the provision of such non-audit services is compatible
with the auditor's independence.

(e)(2) The percentage of services described in each of paragraphs (b)
through (d) for the registrant and the registrant's investment adviser of this
Item that were approved by the audit committee pursuant to the pre-approval
exceptions included in paragraph (c)(7)(i)(c) or paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X are as follows:

(b) 0%

(d) 0%

(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year that were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees was less than fifty
percent.

(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's investment
adviser (not including any sub-adviser whose role is primarily portfolio
management and is subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant for the fiscal year
ended November 30, 2010, were $4,515.18 for the registrant and $6,000 for the
registrant's investment adviser, and for the fiscal year ended November 30,
2011, were $4,500 for the registrant and $6,200 for the registrant's investment
adviser.

(h) The registrant's audit committee of its Board of Trustees has
determined that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal accountant's
independence.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

(a) The Registrant has a separately designated audit committee consisting of
all the independent directors of the Registrant. The members of the audit
committee are: Thomas R. Kadlec, Niel B. Nielson, Richard E. Erickson and
Robert F. Keith.

ITEM 6. SCHEDULE OF INVESTMENTS.

Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

The Proxy Voting Policies are set forth below.

Aviance Capital Management, LLC. (the "Sub-Adviser") serves as investment
adviser providing discretionary investment advisory services for a closed-end
investment company (the "Fund"). As part of these services, the Sub-Adviser has
full responsibility for proxy voting and related duties. In fulfilling these
duties, the Sub-Adviser has adopted the following policies and procedures:

1. It is the Sub-Adviser's policy to seek to ensure that proxies for
securities held by the Fund are voted consistently and solely in the best
economic interests of the Fund.

2. The Sub-Adviser shall be responsible for the oversight of the Fund's
proxy voting process and shall assign a senior member of its staff to be
responsible for this oversight.

3. The Sub-Adviser has engaged the services of Institutional Shareholder
Services, Inc. ("ISS") to make recommendations to the Sub-Adviser on the voting
of proxies related to securities held by the Fund. ISS provides voting
recommendations based on established guidelines and practices. The Sub-Adviser
has adopted these ISS Proxy Voting Guidelines.

4. The Sub-Adviser shall review the ISS recommendations and generally will
vote the proxies in accordance with such recommendations. Notwithstanding the
foregoing, the Sub-Adviser may not vote in accordance with the ISS
recommendations if the Sub-Adviser believes that the specific ISS recommendation
is not in the best interests of the Fund.

5. If the Sub-Adviser manages the assets or pension fund of a company and
any of the Sub-Adviser's clients hold any securities in that company, the
Sub-Adviser will vote proxies relating to such company's securities in
accordance with the ISS recommendations to avoid any conflict of interest. In
addition, if the Sub-Adviser has actual knowledge of any other type of material
conflict of interest between itself and the Fund with respect to the voting of a
proxy, the Sub-Adviser shall vote the applicable proxy in accordance with the
ISS recommendations to avoid such conflict of interest.

6. If the Fund requests the Sub-Adviser to follow specific voting
guidelines or additional guidelines, the Sub-Adviser shall review the request
and follow such guidelines, unless the Sub-Adviser determines that it is unable
to follow such guidelines. In such case, the Sub-Adviser shall inform the Fund
that it is not able to follow the Fund's request.

7. The Sub-Adviser may have clients in addition to the Fund which have
provided the Sub-Adviser with discretionary authority to vote proxies on their
behalf. In such cases, the Sub-Adviser shall follow the same policies and
procedures.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

(a)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS

INFORMATION PROVIDED AS OF JANUARY 19, 2012

Aviance Capital Management, LLC, ("Aviance") a registered investment advisor, is
the Sub-Advisor to the Registrant. Aviance is an asset management firm focused
on managing multi-cap value and growth portfolios and is currently managed by
Christian C. Bertelsen, Michael J. Dixon, and Edward C. Bertelsen, who are all
Founding Members of the firm. Aviance is responsible for the day-to-day
management of the Registrant's portfolio utilizing a team consisting of
Christian C. Bertelsen, James R. Neel, Edward Bertelsen and Mark Belanian.

CHRISTIAN C. BERTELSEN, Chief Investment Officer and Senior Portfolio Manager

Christian C. Bertelsen has over 41 years of investment experience. In November
2004, he became Chief Investment Officer at Global Financial Private Capital
("GFPC"), the incubator company of Aviance. From July 1997 to December 2003, Mr.
Bertelsen was director of the value equity group for Phoenix Investment Counsel,
during which time he was responsible for developing strategies that focused on
the analysis of dividends as a means of identifying undervalued companies and
generating income. He served as Chief Investment Officer at Dreman Value
Advisors between January 1996 and July 1997, and was a Senior Vice President
with Eagle Asset Management between April 1993 and January 1996. From June 1986
to April 1993, Mr. Bertelsen headed the equity investment department at Colonial
Advisory Services, Inc., and managed the Colonial Fund. Prior to 1986, he held
positions with Batterymarch Financial Management and State Street Bank & Trust
Company. Mr. Bertelsen holds an M.B.A. and a B.A. in Economics and History from
Boston University.

JAMES R. NEEL, CFA, Portfolio Manager

James R. Neel, CFA, has over 30 years of experience in investment management.
Mr. Neel joined Aviance as a portfolio manager in January 2009. He has also been
a portfolio manager for Aviance Capital Partners, a registered investment
advisor, since January 2009. From September 2006 to December 2008, Mr. Neel was
a portfolio manager for YHB Investment Advisors, Inc. From June 2005 to
September 2006 he was a portfolio manager for Gibraltar Private Bank, and from
December 2004 to June 2005 he served in the same role at Thomas Partners, Inc.
While managing equity mutual funds for Kemper in the 1990s, Mr. Neel won a
Lipper Award in the Growth and Income category. Mr. Neel also served as the
portfolio strategist for Kemper Financial Services; CEO of Dreman Value
Advisors, where he worked with Christian Bertelsen; and Partner at Loomis
Sayles. Mr. Neel is a graduate of Michigan State University, where he received a
B.A. in 1965. He received an M.B.A. from Michigan State University in 1966. Mr.
Neel earned the Chartered Financial Analyst designation in 1976 and also served
four years as a U.S. Navy officer.

EDWARD C. BERTELSEN, Portfolio Manager - Research

Edward C. Bertelsen has over 14 years of experience in supporting and managing
portfolios. He is also responsible for a limited number of selected client
relationships. He joined GFPC/Aviance in April 2004 and was instrumental in
creating its trading environment. Between March 2001 and April 2004, Mr.
Bertelsen was a Senior Portfolio Manager with Salomon Smith Barney. Between
November 1996 and March 2001, Mr. Bertelsen was employed by Legg Mason Wood
Walker as a Portfolio Manager. He graduated with Honors from Albion College in
1993 with a B.A. in Economics and History and started his financial career with
Raymond James in July 1993.

MARK BELANIAN, Portfolio Analyst

(a)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER AND POTENTIAL CONFLICTS OF
INTEREST

INFORMATION PROVIDED AS OF NOVEMBER 30, 2011

# of Accounts Total Assets
Managed for for which
Total # of which Advisory Advisory Fee is
Name of Portfolio Manager Accounts Total Fee is Based on Based on
or Team Member Type of Accounts Managed Assets Performance Performance

Christian C. Bertelsen Registered Investment
Companies: 0 $0 0 $0
Other Pooled Investment
Vehicles: 0 $0 0 $0
Other Accounts: 67 $728 Million 0 $0

James R. Neel Registered Investment
Companies: 0 $0 0 $0
Other Pooled Investment
Vehicles: 0 $0 0 $0
Other Accounts: 20 $31 Million 0 $0

Edward C. Bertelsen Registered Investment
Companies: 0 $0 0 $0
Other Pooled Investment
Vehicles: 0 $0 0 $0
Other Accounts: 17 $46 Million 0 $0

Mark Belanian Registered Investment
Companies: 0 $0 0 $0
Other Pooled Investment
Vehicles: 0 $0 0 $0
Other Accounts: 0 $0 0 $0

POTENTIAL CONFLICTS OF INTERESTS

Aviance believes there are not any material conflicts of interest that may arise
in connection with the Portfolio Manager's management of the Registrant's
investments.

(a)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM
MEMBERS

INFORMATION PROVIDED AS OF JANUARY 19, 2012.

As Members of Aviance, Christian Bertelsen and Edward Bertelsen receive
compensation which is capped at a certain level that can rise annually with
inflation. Additional bonuses are based on the overall profitability of the
firm. At this time, the cash flow of the company does not support the full
amount of the capped draw, therefore Christian Bertelsen and Edward Bertelsen
are paid at a discounted level, as cash flow allows. Mark Belanian is paid a
monthly salary and is eligible for bonuses based on his performance and the
company's profitability. James Neel's compensation is tied to the performance
and profitability of the company. As of this date, the performance trigger for
compensation to be paid to Mr. Neel has not been met. Aviance employees are
offered health/dental insurance through the firm's group policy.

(a)(4) DISCLOSURE OF SECURITIES OWNERSHIP

INFORMATION PROVIDED AS OF NOVEMBER 30, 2011.

Dollar Range of Registrant
Name Shares Beneficially Owned

Christian C. Bertelsen $0
James R. Neel $0
Edward C. Bertelsen $0
Mark Belanian $0

(b) Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.

ITEM 11. CONTROLS AND PROCEDURES.

(a) The registrant's principal executive and principal financial officers, or
persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the "1940
Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days
of the filing date of the report that includes the disclosure required by
this paragraph, based on their evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the registrant's second fiscal quarter
of the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control
over financial reporting.

ITEM 12. EXHIBITS.

(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.

(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

(a)(3) Not applicable.

(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

(registrant) First Trust Active Dividend Income Fund
-----------------------------------------------------------------

By (Signature and Title)* /s/ Mark R. Bradley
--------------------------------------------------
Mark R. Bradley, President and Chief Executive
Officer
(principal executive officer)

Date January 24, 2012
--------------------

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

By (Signature and Title)* /s/ Mark R. Bradley
--------------------------------------------------
Mark R. Bradley, President and Chief Executive
Officer
(principal executive officer)

Date January 24, 2012
--------------------

By (Signature and Title)* /s/ James M. Dykas
--------------------------------------------------
James M. Dykas, Treasurer, Chief Financial Officer
and Chief Accounting Officer
(principal financial officer)

Date January 24, 2012
--------------------

* Print the name and title of each signing officer under his or her signature.