As filed with the Securities and Exchange Commission on March 23, 2016.
===============================================================================
1940 Act File No. 811-22080
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement.
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
FIRST TRUST DIVIDEND AND INCOME FUND
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
FIRST TRUST DIVIDEND AND INCOME FUND
120 East Liberty Drive, Suite 400
Wheaton, Illinois 60187
March 21, 2016
Dear Shareholder:
The accompanying materials relate to the Annual Meeting of Shareholders
(the "Meeting") of First Trust Dividend and Income Fund (the "Fund"). The
Meeting will be held at the offices of First Trust Advisors L.P., 120 East
Liberty Drive, Suite 400, Wheaton, Illinois 60187, on Friday, April 22, 2016, at
4:45 p.m. Central Time.
At the Meeting, you will be asked to vote on a proposal to elect two of the
Trustees of the Fund (the "Proposal") and to transact such other business as may
properly come before the Meeting and any adjournments or postponements thereof.
The Proposal is described in the accompanying Notice of Annual Meeting of
Shareholders and Proxy Statement.
YOUR PARTICIPATION AT THE MEETING IS VERY IMPORTANT. If you cannot attend
the Meeting, you may participate by proxy. As a Shareholder, you cast one vote
for each full share of the Fund that you own and a proportionate fractional vote
for any fraction of a share that you own. Please take a few moments to read the
enclosed materials and then cast your vote on the enclosed proxy card.
VOTING TAKES ONLY A FEW MINUTES. EACH SHAREHOLDER'S VOTE IS IMPORTANT. YOUR
PROMPT RESPONSE WILL BE MUCH APPRECIATED.
After you have voted on the Proposal, please be sure to sign your proxy
card and return it in the enclosed postage-paid envelope.
We appreciate your participation in this important Meeting.
Thank you.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and will avoid the time and expense to the Fund involved in validating your
vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to the name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the proxy
should be indicated unless it is reflected in the form of registration. For
example:
REGISTRATION VALID SIGNATURE
CORPORATE ACCOUNTS
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 Jane B. Doe
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr., UGMA John B. Smith
(2) John B. Smith John B. Smith, Jr., Executor
FIRST TRUST DIVIDEND AND INCOME FUND
120 EAST LIBERTY DRIVE, SUITE 400
WHEATON, ILLINOIS 60187
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 2016
March 21, 2016
To the Shareholders of First Trust Dividend and Income Fund:
Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of First Trust Dividend and Income Fund (the "Fund"), a Massachusetts
business trust, will be held at the offices of First Trust Advisors L.P., 120
East Liberty Drive, Suite 400, Wheaton, Illinois 60187, on Friday, April 22,
2016, at 4:45 p.m. Central Time, for the following purposes:
1. To elect two Trustees (the Class III Trustees) of the Fund.
2. To transact such other business as may properly come before the Meeting
or any adjournments or postponements thereof.
The Board of Trustees has fixed the close of business on January 29, 2016
as the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting and any adjournments or postponements thereof.
By Order of the Board of Trustees,
/s/ W. Scott Jardine
W. Scott Jardine
Secretary
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SHAREHOLDERS ARE REQUESTED TO PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE PROXY
CARD IN THE ENCLOSED ENVELOPE WHICH DOES NOT REQUIRE POSTAGE IF MAILED IN THE
CONTINENTAL UNITED STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE
SET FORTH ON THE INSIDE COVER OF THIS PROXY STATEMENT.
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This page intentionally left blank.
FIRST TRUST DIVIDEND AND INCOME FUND
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 2016
120 East Liberty Drive, Suite 400
Wheaton, Illinois 60187
PROXY STATEMENT
MARCH 21, 2016
THIS PROXY STATEMENT AND THE ENCLOSED PROXY CARD WILL FIRST BE MAILED TO
SHAREHOLDERS ON OR ABOUT MARCH 28, 2016.
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of First Trust Dividend and Income Fund (the
"Fund"), a Massachusetts business trust, for use at the Annual Meeting of
Shareholders of the Fund to be held on Friday, April 22, 2016, at 4:45 p.m.
Central Time, at the offices of First Trust Advisors L.P., 120 East Liberty
Drive, Suite 400, Wheaton, Illinois 60187, and at any adjournments or
postponements thereof (collectively, the "Meeting"). A Notice of Annual Meeting
of Shareholders and a proxy card accompany this Proxy Statement.
The principal offices of the Fund are located at 120 East Liberty Drive,
Suite 400, Wheaton, Illinois 60187.
Proxy solicitations will be made primarily by mail. However, proxy
solicitations may also be made by telephone or personal interviews conducted by
officers and service providers of the Fund, including any agents or affiliates
of such service providers.
The costs incurred in connection with the preparation of this Proxy
Statement and its enclosures will be paid by the Fund. The Fund will also
reimburse brokerage firms and others for their expenses in forwarding
solicitation material to the beneficial owners of Fund shares.
The close of business on January 29, 2016 has been fixed as the record date
(the "Record Date") for the determination of shareholders entitled to notice of
and to vote at the Meeting and any adjournments or postponements thereof.
The Fund has one class of shares of beneficial interest, par value $0.01
per share, known as common shares ("Shares").
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON APRIL 22, 2016. THIS PROXY STATEMENT IS
AVAILABLE ON THE INTERNET AT
HTTP://WWW.FTPORTFOLIOS.COM/LOADCONTENT/GR3UYPB3GR3O. THE FUND'S MOST RECENT
ANNUAL AND SEMI-ANNUAL REPORTS ARE ALSO AVAILABLE ON THE INTERNET AT
HTTP://WWW.FTPORTFOLIOS.COM/RETAIL/CEF/CEFFUNDNEWS.ASPX?TICKER=FAV. IN ADDITION,
THE FUND WILL FURNISH, WITHOUT CHARGE, COPIES OF ITS MOST RECENT ANNUAL AND
SEMI-ANNUAL REPORTS TO ANY SHAREHOLDER UPON REQUEST. TO REQUEST A COPY, PLEASE
WRITE TO FIRST TRUST ADVISORS L.P. ("FIRST TRUST ADVISORS" OR THE "ADVISOR") AT
120 EAST LIBERTY DRIVE, SUITE 400, WHEATON, ILLINOIS 60187, OR CALL (800)
988-5891.
YOU MAY CALL (800) 988-5891 FOR INFORMATION ON HOW TO OBTAIN DIRECTIONS TO
BE ABLE TO ATTEND THE MEETING AND VOTE IN PERSON.
In order that your Shares may be represented at the Meeting, you are
requested to:
o indicate your instructions on the proxy card;
o date and sign the proxy card;
o mail the proxy card promptly in the enclosed envelope which requires no
postage if mailed in the continental United States; and
o allow sufficient time for the proxy card to be received BY 4:45 P.M.
CENTRAL TIME, on FRIDAY, APRIL 22, 2016. (However, proxies received
after this date may still be voted in the event the Meeting is adjourned
or postponed to a later date.)
-2-
VOTING
As described further in the proposal, the affirmative vote of a plurality
of the Shares present and entitled to vote at the Meeting will be required to
elect the specified nominees as the Class III Trustees of the Fund provided a
quorum is present. Abstentions and broker non-votes (i.e., Shares held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote and (ii) the broker or nominee
does not have discretionary voting power on a particular matter) will have no
effect on the approval of the proposal.
If the enclosed proxy card is properly executed and returned in time to be
voted at the Meeting, the Shares represented thereby will be voted in accordance
with the instructions marked thereon, or, if no instructions are marked thereon,
will be voted in the discretion of the persons named on the proxy card.
Accordingly, unless instructions to the contrary are marked thereon, a properly
executed and returned proxy will be voted FOR the election of the specified
nominees as the Class III Trustees and at the discretion of the named proxies on
any other matters that may properly come before the Meeting, as deemed
appropriate. Any shareholder who has given a proxy has the right to revoke it at
any time prior to its exercise either by attending the Meeting and voting his or
her Shares in person, or by timely submitting a letter of revocation or a
later-dated proxy to the Fund at its address above. A list of shareholders
entitled to notice of and to be present and to vote at the Meeting will be
available at 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187 for
inspection by any shareholder during regular business hours prior to the
Meeting. Shareholders will need to show valid identification and proof of Share
ownership to be admitted to the Meeting or to inspect the list of shareholders.
Under the Fund's By-Laws, a quorum is constituted by the presence in person
or by proxy of the holders of thirty-three and one-third percent (33-1/3%) of
the voting power of the outstanding Shares entitled to vote on a matter. For the
purposes of establishing whether a quorum is present, all Shares present and
entitled to vote, including abstentions and broker non-votes, shall be counted.
Any meeting of shareholders may be postponed prior to the meeting with notice to
the shareholders entitled to vote at that meeting. Any meeting of shareholders
may, by action of the chairman of the meeting, be adjourned to permit further
solicitation of proxies without further notice with respect to one or more
matters to be considered at such meeting to a designated time and place, whether
or not a quorum is present with respect to such matter. In addition, upon motion
of the chairman of the meeting, the question of adjournment may be submitted to
a vote of the shareholders, and in that case, any adjournment must be approved
by the vote of holders of a majority of the Shares present and entitled to vote
with respect to the matter or matters adjourned, and without further notice.
Unless a proxy is otherwise limited in this regard, any Shares present and
entitled to vote at a meeting, including broker non-votes, may, at the
discretion of the proxies named therein, be voted in favor of such an
adjournment.
-3-
OUTSTANDING SHARES
On the Record Date, the Fund had 8,259,517 Shares outstanding. Shares of
the Fund are listed on the New York Stock Exchange ("NYSE") under the ticker
symbol "FAV".
Shareholders of record on the Record Date are entitled to one vote for each
full Share the shareholder owns and a proportionate fractional vote for any
fraction of a Share the shareholder owns.
To the knowledge of the Board of Trustees, as of the Record Date, no single
shareholder or "group" (as that term is used in Section 13(d) of the Securities
Exchange Act of 1934 (the "1934 Act")) beneficially owned more than 5% of the
Fund's outstanding Shares, except as described in the following table. A control
person is one who owns, either directly or indirectly, more than 25% of the
voting securities of the Fund or acknowledges the existence of control. A party
that controls the Fund may be able to significantly affect the outcome of any
item presented to shareholders for approval. Information as to beneficial
ownership of Shares, including percentage of outstanding Shares beneficially
owned, is based on securities position listing reports as of the Record Date and
reports filed with the Securities and Exchange Commission ("SEC") by
shareholders. The Fund does not have any knowledge of the identity of the
ultimate beneficiaries of the Shares listed below.
BENEFICIAL OWNERSHIP OF SHARES
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NAME AND ADDRESS SHARES BENEFICIALLY % OF OUTSTANDING SHARES
OF BENEFICIAL OWNER OWNED BENEFICIALLY OWNED
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First Clearing, LLC 792,598 Shares 9.60%
2801 Market Street
St. Louis, MO 63103
----------------------------------------------------- ------------------------------- ----------------------------------
Morgan Stanley Smith Barney LLC
1300 Thames Street 1,238,684 Shares 15.00%
Baltimore, MD 21231
----------------------------------------------------- ------------------------------- ----------------------------------
National Financial Services, LLC
499 Washington Blvd. 644,073 Shares 7.80%
Jersey City, NJ 07310
----------------------------------------------------- ------------------------------- ----------------------------------
Raymond James & Associates, Inc.
880 Carillon Parkway 1,103,899 Shares 13.37%
St. Petersburg, FL 33716
----------------------------------------------------- ------------------------------- ----------------------------------
Wells Fargo Securities, LLC
1525 West W.T. Harris Blvd., 1B1 830,163 Shares 10.05%
Charlotte, NC 28262
----------------------------------------------------- ------------------------------- ----------------------------------
Bulldog Investors, LLC, Bulldog Investors Group of
Funds, Phillip Goldstein, Andrew Dakos and Steven
Samuels*
Park 80 West-Plaza Two
250 Pehle Ave. 1,558,262 Shares 18.87%
Suite 708
Saddle Brook, NJ 07663
----------------------------------------------------- ------------------------------- ----------------------------------
<FN>
* Information is according to Amendment #11 to Schedule 13D filed with the
SEC on March 21, 2016. According to such filing, Bulldog Investors, LLC
has the sole power to dispose of and vote 1,301,628 Shares and shared
power to dispose of and vote 256,634 Shares, and such 1,301,628 Shares
(representing 15.76% of the Fund's outstanding Shares) are owned by
certain entities over which Messrs. Goldstein, Dakos and Samuels exercise
control (collectively referred to as the "Bulldog Investors Group of
Funds"). In addition, according to such filing, Bulldog Investors Group of
Funds may be deemed to constitute a group. Further, according to such
filing, the aforementioned 256,634 Shares (with respect to which Bulldog
Investors, LLC has shared power to dispose of and vote, and representing
3.11% of the Fund's outstanding Shares) are also beneficially owned by
clients of Bulldog Investors, LLC who are not members of any group.
</FN>
-4-
PROPOSAL: ELECTION OF TWO (2) CLASS III TRUSTEES
TWO (2) CLASS III TRUSTEES ARE TO BE ELECTED BY HOLDERS OF SHARES OF THE FUND.
CURRENT TRUSTEES JAMES A. BOWEN AND NIEL B. NIELSON ARE THE NOMINEES FOR
ELECTION AS THE CLASS III TRUSTEES BY SHAREHOLDERS OF THE FUND FOR A THREE-YEAR
TERM.
The Fund has established a staggered Board of Trustees pursuant to its
By-Laws, and, accordingly, Trustees are divided into the following three (3)
classes: Class I, Class II and Class III. James A. Bowen and Niel B. Nielson are
currently the Class III Trustees of the Fund for a term expiring at the Meeting
or until their respective successors are elected and qualified. If elected, Mr.
Bowen and Mr. Nielson will hold office for a three-year term expiring at the
Fund's 2019 annual meeting of shareholders. Robert F. Keith, Richard E. Erickson
and Thomas R. Kadlec are current and continuing Trustees. Mr. Keith is the Class
I Trustee for a term expiring at the Fund's 2017 annual meeting of shareholders.
Dr. Erickson and Mr. Kadlec are Class II Trustees for a term expiring at the
Fund's 2018 annual meeting of shareholders. Each Trustee serves until his
successor is elected and qualified, or until he earlier resigns or is otherwise
removed.
REQUIRED VOTE: Each nominee for election as a Class III Trustee must be
elected by the affirmative vote of the holders of a plurality of the Shares of
the Fund, cast in person or by proxy at the Meeting and entitled to vote
thereon, provided a quorum is present. Abstentions and broker non-votes will
have no effect on the approval of the proposal. Proxies cannot be voted for a
greater number of persons than the number of seats open for election.
Unless you give contrary instructions on your proxy card, your Shares will
be voted FOR the election of each nominee listed if your proxy card has been
properly executed and timely received by the Fund. If either nominee should
withdraw or otherwise become unavailable for election prior to the Meeting, the
proxies named on your proxy card intend to vote FOR any substitute nominee
recommended by the Fund's Board of Trustees in accordance with the Fund's
procedures.
THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE ELECTION OF EACH NOMINEE.
-5-
MANAGEMENT
MANAGEMENT OF THE FUND
The general supervision of the duties performed for the Fund under its
investment management agreement with the Advisor is the responsibility of the
Fund's Board of Trustees. The Trustees set broad policies for the Fund and
choose the Fund's officers. The following is a list of the Trustees and
executive officers of the Fund and a statement of their present positions and
principal occupations during the past five years, the number of portfolios each
Trustee oversees and the other directorships each Trustee holds, if applicable.
As noted above, the Fund has established a staggered Board of Trustees
consisting of five (5) Trustees divided into three (3) classes: Class I, Class
II and Class III. The length of the term of office of each Trustee is generally
three years, and when each Trustee's term begins and ends depends on the
Trustee's designated class. The officers of the Fund serve indefinite terms.
James A. Bowen is deemed an "interested person" (as that term is defined in the
Investment Company Act of 1940, as amended ("1940 Act")) ("Interested Trustee")
of the Fund due to his position as Chief Executive Officer of the Advisor.
Except for Mr. Bowen, each Trustee is not an "interested person" (as that term
is defined in the 1940 Act) and is therefore referred to as an "Independent
Trustee."
The remainder of this page is intentionally left blank.
-6-
INTERESTED TRUSTEE
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NUMBER OF
PORTFOLIOS IN
POSITION(S) TERM OF OFFICE(2) PRINCIPAL OCCUPATION(S) FIRST TRUST FUND OTHER
NAME, ADDRESS, AND HELD WITH AND LENGTH OF DURING PAST FIVE COMPLEX OVERSEEN DIRECTORSHIPS
DATE OF BIRTH FUND TIME SERVED(3) YEARS BY TRUSTEE HELD BY TRUSTEE
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James A. Bowen (1) Chairman of Class III Chief Executive Officer, 125 Portfolios None
120 East Liberty Drive the Board Nominee First Trust Advisors L.P.
Suite 400 and Trustee and First Trust Portfolios
Wheaton, IL 60187 Since 2007 L.P.; Chairman of the Board
DOB: 9/55 of Directors, BondWave LLC
(Software Development
Company/Investment Advisor)
and Stonebridge Advisors
LLC (Investment Advisor)
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INDEPENDENT TRUSTEES
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NUMBER OF
PORTFOLIOS IN
POSITION(S) TERM OF OFFICE(2) PRINCIPAL OCCUPATION(S) FIRST TRUST FUND OTHER
NAME, ADDRESS, AND HELD WITH AND LENGTH OF DURING PAST FIVE COMPLEX OVERSEEN DIRECTORSHIPS
DATE OF BIRTH FUND TIME SERVED(3) YEARS BY TRUSTEE HELD BY TRUSTEE
------------------------------------------------------------------------------------------------------------------------------
Richard E. Erickson Trustee Class II Physician; President, 125 Portfolios None
c/o First Trust Wheaton Orthopedics;
Advisors L.P. Since 2007 Limited Partner, Gundersen
120 East Liberty Drive Real Estate Limited
Suite 400 Partnership; Member,
Wheaton, IL 60187 Sportsmed LLC
DOB: 4/51
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Thomas R. Kadlec Trustee Class II President, ADM Investor 125 Portfolios Director of ADM
c/o First Trust Services, Inc. (Futures Investor
Advisors L.P. Since 2007 Commission Merchant) Services, Inc.,
120 East Liberty Drive ADM Investor
Suite 400 Services
Wheaton, IL 60187 International and
DOB: 11/57 Futures Industry
Association
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Robert F. Keith Trustee Class I President, Hibs Enterprises 125 Portfolios Director of Trust
c/o First Trust (Financial and Management Company of
Advisors L.P. Since 2007 Consulting) Illinois
120 East Liberty Drive
Suite 400
Wheaton, IL 60187
DOB: 11/56
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Niel B. Nielson Trustee Class III Managing Director and Chief 125 Portfolios Director of
c/o First Trust Nominee Operating Officer (January Covenant
Advisors L.P. 2015 to present), Pelita Transport Inc.
120 East Liberty Drive Since 2007 Harapan Education Foundation (2003 - 2014)
Suite 400 (Educational Products and
Wheaton, IL 60187 Services); President and
DOB: 3/54 Chief Executive Officer
(June 2012 to
September 2014), Servant
Interactive LLC (Educational
Products and Services);
President and Chief
Executive Officer (June 2012
to September 2014), Dew
Learning LLC (Educational
Products and Services);
President (June 2002 to June
2012), Covenant College
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-7-
EXECUTIVE OFFICERS
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POSITION(S) TERM OF OFFICE(2) PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND HELD WITH AND LENGTH OF DURING PAST FIVE
DATE OF BIRTH FUND TIME SERVED(3) YEARS
------------------------------------------------------------------------------------------------------------------------------
James M. Dykas President and Indefinite Managing Director and Chief Financial Officer
120 East Liberty Drive, Suite 400 Chief Executive (January 2016 to present), Controller
Wheaton, IL 60187 Officer Since January (January 2012 to January 2016), Senior Vice
DOB: 1/66 2012 President (April 2007 to January 2016), First
Trust Advisors L.P. and First Trust Portfolios
L.P.
------------------------------------------------------------------------------------------------------------------------------
Donald Swade Treasurer, Chief Indefinite Vice President (April 2012 to present), First
120 East Liberty Drive, Suite 400 Financial Officer Trust Advisors L.P. and First Trust Portfolios
Wheaton, IL 60187 and Chief Since January L.P.; Vice President (September 2006 to
DOB: 8/72 Accounting Officer 2016 April 2012), Guggenheim Funds Investment
Advisors, LLC/Claymore Securities, Inc.
------------------------------------------------------------------------------------------------------------------------------
W. Scott Jardine Secretary and Indefinite General Counsel, First Trust Advisors L.P., First
120 East Liberty Drive, Suite 400 Chief Legal Trust Portfolios L.P. and BondWave LLC (August
Wheaton, IL 60187 Officer Since 2007 2009 to Present) (Software Development
DOB: 5/60 Company/Investment Advisor); Secretary of
Stonebridge Advisors LLC (Investment Advisor)
------------------------------------------------------------------------------------------------------------------------------
Daniel J. Lindquist Vice President Indefinite Managing Director (July 2012 to Present), Senior
120 East Liberty Drive, Suite 400 Vice President (September 2005 to July 2012),
Wheaton, IL 60187 Since 2007 First Trust Advisors L.P. and First Trust
DOB: 2/70 Portfolios L.P.
------------------------------------------------------------------------------------------------------------------------------
Kristi A. Maher Assistant Indefinite Deputy General Counsel, First Trust Advisors L.P.
120 East Liberty Drive, Suite 400 Secretary and and First Trust Portfolios L.P.
Wheaton, IL 60187 Chief Compliance Assistant
DOB: 12/66 Officer Secretary
since 2007 and
Chief
Compliance
Officer since
January 2011
------------------------------------------------------------------------------------------------------------------------------
<FN>
(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, James A. Bowen and Niel B. Nielson, as Class III Trustees, are
each serving a term for the Fund until the Meeting or until their
successors are elected and qualified. Robert F. Keith, as the Class I
Trustee, is serving a term for the Fund until the Fund's 2017 annual
meeting of shareholders or until his successor is elected and qualified.
Richard E. Erickson and Thomas R. Kadlec, as Class II Trustees, are each
serving a term for the Fund until the Fund's 2018 annual meeting of
shareholders or until their successors are elected and qualified.
Executive officers of the Fund have an indefinite term.
(3) For executive officers, unless otherwise specified, length of time served
represents the year the person first became an executive officer of the
Fund. Except as otherwise provided below, all Trustees and executive
officers were elected or appointed in 2007. James M. Dykas was elected (a)
Treasurer, Chief Financial Officer and Chief Accounting Officer of all
then-existing funds in the First Trust Fund Complex, including the Fund,
in January 2012, effective January 23, 2012 and (b) President and Chief
Executive Officer of all then-existing funds in the First Trust Fund
Complex, including the Fund, in December 2015, effective January 2016.
Donald Swade was elected Treasurer, Chief Financial Officer and Chief
Accounting Officer of all then-existing funds in the First Trust Fund
Complex, including the Fund, in December 2015, effective January 2016.
Kristi A. Maher was elected Chief Compliance Officer of all then-existing
funds in the First Trust Fund Complex, including the Fund, in December
2010, effective January 1, 2011; before January 1, 2011, W. Scott Jardine
served as Chief Compliance Officer.
</FN>
UNITARY BOARD LEADERSHIP STRUCTURE
The same five persons serve as Trustees on the Fund's Board of Trustees and
on the boards of all other funds in the First Trust Fund Complex (the "First
Trust Funds"), which is known as a "unitary" board leadership structure. The
unitary board structure was adopted for the First Trust Funds because of the
efficiencies it achieves with respect to the governance and oversight of the
First Trust Funds. Each First Trust Fund is subject to the rules and regulations
of the 1940 Act (and other applicable securities laws), which means that many of
the First Trust Funds face similar issues with respect to certain of their
fundamental activities, including risk management, portfolio liquidity,
portfolio valuation and financial reporting. In addition, all of the First Trust
Funds that are closed-end funds (the "First Trust Closed-end Funds") are managed
by the Advisor and, except for two First Trust Closed-end Funds, they employ
common service providers for custody, fund accounting, administration and
transfer agency that provide substantially similar services to the First Trust
Closed-end Funds pursuant to substantially similar contractual arrangements.
Because of the similar and often overlapping issues facing the First Trust
Funds, including among the First Trust Closed-end Funds, the Board of Trustees
of each of the First Trust Funds (such Boards of Trustees referred to herein
-8-
collectively as the "Board") believes that maintaining a unitary board structure
promotes efficiency and consistency in the governance and oversight of all First
Trust Funds and reduces the costs, administrative burdens and possible conflicts
that may result from having multiple boards. In adopting a unitary board
structure, the Trustees seek to provide effective governance through
establishing a board the overall composition of which will, as a body, possess
the appropriate skills, diversity, independence and experience to oversee the
business of the First Trust Funds.
Annually, the Board reviews its governance structure and the committee
structures, their performance and functions and reviews any processes that would
enhance Board governance over the Fund's business. The Board has determined that
its leadership structure, including the unitary board and committee structure,
is appropriate based on the characteristics of the funds it serves and the
characteristics of the First Trust Fund Complex as a whole. The Board is
composed of four Independent Trustees and one Interested Trustee. The Interested
Trustee serves as the Chairman of the Board of the Fund. An individual who is
not a Trustee serves as President and Chief Executive Officer of the Fund.
In order to streamline communication between the Advisor and the
Independent Trustees and create certain efficiencies, the Board has a Lead
Independent Trustee who is responsible for: (i) coordinating activities of the
Independent Trustees; (ii) working with the Advisor, Fund counsel and the
independent legal counsel to the Independent Trustees to determine the agenda
for Board meetings; (iii) serving as the principal contact for and facilitating
communication between the Independent Trustees and the Fund's service providers,
particularly the Advisor; and (iv) any other duties that the Independent
Trustees may delegate to the Lead Independent Trustee. The Lead Independent
Trustee is selected by the Independent Trustees and serves a three-year term or
until his successor is selected. Thomas R. Kadlec currently serves as the Lead
Independent Trustee.
The Board has established four standing committees (as described below) and
has delegated certain of its responsibilities to those committees. The Board and
its committees meet frequently throughout the year to oversee the Fund's
activities, review contractual arrangements with and performance of service
providers, oversee compliance with regulatory requirements, and review Fund
performance. The Independent Trustees are represented by independent legal
counsel at all Board and committee meetings other than meetings of the Executive
Committee. Generally, the Board acts by majority vote of all the Trustees,
except where a different vote is required by applicable law.
The three committee chairmen and the Lead Independent Trustee currently
rotate every three years in serving as Chairman of the Audit Committee, the
Nominating and Governance Committee or the Valuation Committee, or as Lead
Independent Trustee. The Lead Independent Trustee and the immediate past Lead
Independent Trustee also serve on the Executive Committee with the Interested
Trustee.
In addition to the Fund, the First Trust Fund Complex includes: 15
closed-end funds advised by First Trust Advisors; First Trust Series Fund, an
open-end management investment company with four portfolios advised by First
Trust Advisors; First Trust Variable Insurance Trust, an open-end management
investment company with three portfolios advised by First Trust Advisors; and
First Trust Exchange-Traded Fund, First Trust Exchange-Traded Fund II, First
Trust Exchange-Traded Fund III, First Trust Exchange-Traded Fund IV, First Trust
Exchange-Traded Fund V, First Trust Exchange-Traded Fund VI, First Trust
Exchange-Traded Fund VII, First Trust Exchange-Traded AlphaDEX(R) Fund and First
Trust Exchange-Traded AlphaDEX(R) Fund II, each an exchange-traded fund with 19,
-9-
14, 8, 8, 1, 11, 1, 21, and 19 portfolios (each such portfolio, an "ETF" and
each such exchange-traded fund, an "ETF Trust"), respectively, advised by First
Trust Advisors.
The four standing committees of the Board are: the Executive Committee (and
Dividend and Pricing Committee), the Nominating and Governance Committee, the
Valuation Committee and the Audit Committee. The Executive Committee, which
meets between Board meetings, is authorized to exercise all powers of and to act
in the place of the Board of Trustees to the extent permitted by the Fund's
Declaration of Trust and By-Laws. The members of the Executive Committee of the
Fund also serve as a special committee of the Board known as the Dividend and
Pricing Committee which is authorized to exercise all of the powers and
authority of the Board in respect of the issuance and sale, through an
underwritten public offering, of the Shares of the Fund and all other such
matters relating to such financing, including determining the price at which
such Shares are to be sold, approval of the final terms of the underwriting
agreement, and approval of the members of the underwriting syndicate. Such
Committee is also responsible for the declaration and setting of dividends. Mr.
Kadlec, Mr. Keith and Mr. Bowen are members of the Executive Committee. The
Executive Committee held four meetings during the Fund's last fiscal year.
The Nominating and Governance Committee is responsible for appointing and
nominating persons to the Board of Trustees. Messrs. Erickson, Kadlec, Keith and
Nielson are members of the Nominating and Governance Committee, and each is an
Independent Trustee who is also an "independent director" within the meaning of
the listing standards of the NYSE. The Nominating and Governance Committee
operates under a written charter adopted and approved by the Board, a copy of
which is available on the Fund's website at http://www.ftportfolios.com. If
there is no vacancy on the Board of Trustees, the Board will not actively seek
recommendations from other parties, including shareholders. In 2014, the Board
of Trustees adopted a mandatory retirement age of 75 for Trustees, beyond which
age Trustees are ineligible to serve. The Nominating and Governance Committee
Charter provides that the Committee will not consider new trustee candidates who
are 72 years of age or older or will turn 72 years old during the initial term.
When a vacancy on the Board of Trustees occurs and nominations are sought to
fill such vacancy, the Nominating and Governance Committee may seek nominations
from those sources it deems appropriate in its discretion, including
shareholders of the Fund. The Nominating and Governance Committee may retain a
search firm to identify candidates. To submit a recommendation for nomination as
a candidate for a position on the Board of Trustees, shareholders shall mail
such recommendation to W. Scott Jardine, Secretary, at 120 East Liberty Drive,
Suite 400, Wheaton, Illinois 60187. Such recommendation shall include the
following information: (i) evidence of Fund ownership of the person or entity
recommending the candidate (if a Fund shareholder); (ii) a full description of
the proposed candidate's background, including their education, experience,
current employment and date of birth; (iii) names and addresses of at least
three professional references for the candidate; (iv) information as to whether
the candidate is an "interested person" in relation to the Fund, as such term is
defined in the 1940 Act, and such other information that may be considered to
impair the candidate's independence; and (v) any other information that may be
helpful to the Committee in evaluating the candidate (see also "ADDITIONAL
INFORMATION - SHAREHOLDER PROPOSALS" below). If a recommendation is received
with satisfactorily completed information regarding a candidate during a time
when a vacancy exists on the Board or during such other time as the Nominating
and Governance Committee is accepting recommendations, the recommendation will
be forwarded to the Chairman of the Nominating and Governance Committee and the
counsel to the Independent Trustees. Recommendations received at any other time
will be kept on file until such time as the Nominating and Governance Committee
is accepting recommendations, at which point they may be considered for
nomination. In connection with the evaluation of candidates, the review process
may include, without limitation, personal interviews, background checks, written
-10-
submissions by the candidates and third party references. Under no circumstances
shall the Nominating and Governance Committee evaluate nominees recommended by a
shareholder of the Fund on a basis substantially different than that used for
other nominees for the same election or appointment of Trustees. The Nominating
and Governance Committee held four meetings during the Fund's last fiscal year.
The Valuation Committee is responsible for the oversight of the valuation
procedures of that Fund (the "Valuation Procedures"), for determining the fair
value of the Fund's securities or other assets under certain circumstances as
described in the Valuation Procedures, and for evaluating the performance of any
pricing service for the Fund. Messrs. Erickson, Kadlec, Keith and Nielson are
members of the Valuation Committee. The Valuation Committee held four meetings
during the Fund's last fiscal year.
The Audit Committee is responsible for overseeing the Fund's accounting and
financial reporting process, the system of internal controls, audit process and
evaluating and appointing independent auditors (subject also to Board approval).
The Audit Committee operates under a written charter adopted and approved by the
Board, a copy of which is attached as Exhibit A hereto, and is available on the
Fund's website at http://www.ftportfolios.com. Messrs. Erickson, Kadlec, Keith
and Nielson, all of whom are "independent directors" within the meaning of the
listing standards of the NYSE serve on the Audit Committee. Messrs. Kadlec and
Keith have each been determined to qualify as an "Audit Committee Financial
Expert" as such term is defined in Form N-CSR. The Audit Committee held seven
meetings during the Fund's last fiscal year.
In carrying out its responsibilities, as described below under "INDEPENDENT
AUDITORS' FEES--Pre-Approval," the Audit Committee pre-approves all audit
services and permitted non-audit services for the Fund (including the fees and
terms thereof) and non-audit services to be performed for the Advisor by
Deloitte & Touche LLP ("Deloitte & Touche"), the Fund's independent registered
public accounting firm ("independent auditors"), if the engagement relates
directly to the operations and financial reporting of the Fund.
RISK OVERSIGHT
As part of the general oversight of the Fund, the Board is involved in the
risk oversight of the Fund. The Board has adopted and periodically reviews
policies and procedures designed to address the Fund's risks. Oversight of
investment and compliance risk, including oversight of sub-advisors, is
performed primarily at the Board level in conjunction with the Advisor's
investment oversight group and the Fund's Chief Compliance Officer ("CCO").
Oversight of other risks also occurs at the Committee level. The Advisor's
investment oversight group reports to the Board at quarterly meetings regarding,
among other things, Fund performance and the various drivers of such performance
as well as information related to sub-advisors and their operations and
processes. The Board reviews reports on the Fund's and the service providers'
compliance policies and procedures at each quarterly Board meeting and receives
an annual report from the CCO regarding the operations of the Fund's and the
service providers' compliance program. In addition, the Independent Trustees
meet privately each quarter with the CCO. The Audit Committee reviews with the
Advisor the Fund's major financial risk exposures and the steps the Advisor has
taken to monitor and control these exposures, including the Fund's risk
assessment and risk management policies and guidelines. The Audit Committee
also, as appropriate, reviews in a general manner the processes other Board
committees have in place with respect to risk assessment and risk management.
The Nominating and Governance Committee monitors all matters related to the
-11-
corporate governance of the Fund. The Valuation Committee monitors valuation
risk and compliance with the Fund's Valuation Procedures and oversees the
pricing services and actions by the Advisor's Pricing Committee with respect to
the valuation of portfolio securities.
Not all risks that may affect the Fund can be identified nor can controls
be developed to eliminate or mitigate their occurrence or effects. It may not be
practical or cost-effective to eliminate or mitigate certain risks, the
processes and controls employed to address certain risks may be limited in their
effectiveness, and some risks are simply beyond the reasonable control of the
Fund or the Advisor or other service providers. For instance, as the use of
Internet technology has become more prevalent, the Fund and its service
providers have become more susceptible to potential operational risks through
breaches in cyber security (generally, intentional and unintentional events that
may cause the Fund or a service provider to lose proprietary information, suffer
data corruption or lose operational capacity). There can be no guarantee that
any risk management systems established by the Fund, its service providers, or
issuers of the securities in which the Fund invests to reduce cyber security
risks will succeed, and the Fund cannot control such systems put in place by
service providers, issuers or other third parties whose operations may affect
the Fund and/or its shareholders. Moreover, it is necessary to bear certain
risks (such as investment related risks) to achieve the Fund's goals. As a
result of the foregoing and other factors, the Fund's ability to manage risk is
subject to substantial limitations.
BOARD DIVERSIFICATION AND TRUSTEE QUALIFICATIONS
As described above, the Nominating and Governance Committee of the Board
oversees matters related to the nomination of Trustees. The Nominating and
Governance Committee seeks to establish an effective Board with an appropriate
range of skills and diversity, including, as appropriate, differences in
background, professional experience, education, vocations, and other individual
characteristics and traits in the aggregate. Each Trustee must meet certain
basic requirements, including relevant skills and experience, time availability,
and if qualifying as an Independent Trustee, independence from the Advisor,
sub-advisors, underwriters or other service providers, including any affiliates
of these entities.
Listed below for each current Trustee and the nominees are the experiences,
qualifications and attributes that led to the conclusion, as of the date of this
Proxy Statement, that each current Trustee and the nominees should serve as a
trustee.
Independent Trustees
Richard E. Erickson, M.D., is an orthopedic surgeon and President of
Wheaton Orthopedics. He also has been a co-owner and director of a fitness
center and a limited partner of two real estate companies. Dr. Erickson has
served as a Trustee of the Fund since its inception and of the First Trust Funds
since 1999. Dr. Erickson has also served as the Lead Independent Trustee (2008 -
2009), Chairman of the Nominating and Governance Committee (2003 - 2007),
Chairman of the Valuation Committee (June 2006 - 2007 and 2010 - 2011) and
Chairman of the Audit Committee (2012 - 2013) of the First Trust Funds. He
currently serves as Chairman of the Nominating and Governance Committee (since
January 1, 2014) of the First Trust Funds.
Thomas R. Kadlec is President of ADM Investor Services Inc. ("ADMIS"), a
futures commission merchant and wholly-owned subsidiary of the Archer Daniels
Midland Company ("ADM"). Mr. Kadlec has been employed by ADMIS and its
affiliates since 1990 in various accounting, financial, operations and risk
management capacities. Mr. Kadlec serves on the boards of several international
-12-
affiliates of ADMIS and is a member of ADM's Integrated Risk Committee, which is
tasked with the duty of implementing and communicating enterprise-wide risk
management. In 2014, Mr. Kadlec was elected to the board of the Futures Industry
Association. Mr. Kadlec has served as a Trustee of the Fund since its inception.
Mr. Kadlec also served on the Executive Committee from the organization of the
first First Trust Closed-end Fund in 2003 until he was elected as the first Lead
Independent Trustee in December 2005, serving as such through 2007. He also
served as Chairman of the Valuation Committee (2008 - 2009), Chairman of the
Audit Committee (2010 - 2011) and Chairman of the Nominating and Governance
Committee (2012 - 2013) of the First Trust Funds. He currently serves as Lead
Independent Trustee and as a member of the Executive Committee and the Dividend
and Pricing Committee (since January 1, 2014) of the First Trust Funds.
Robert F. Keith is President of Hibs Enterprises, a financial and
management consulting firm. Mr. Keith has been with Hibs Enterprises since 2003.
Prior thereto, Mr. Keith spent 18 years with ServiceMaster and Aramark,
including three years as President and COO of ServiceMaster Consumer Services,
where he led the initial expansion of certain products overseas, five years as
President and COO of ServiceMaster Management Services Company and two years as
President of Aramark ServiceMaster Management Services. Mr. Keith is a certified
public accountant and also has held the positions of Treasurer and Chief
Financial Officer of ServiceMaster, at which time he oversaw the financial
aspects of ServiceMaster's expansion of its Management Services division into
Europe, the Middle East and Asia. Mr. Keith has served as a Trustee of the Fund
since its inception and of the First Trust Funds since June 2006. Mr. Keith has
also served as Chairman of the Audit Committee (2008 - 2009), Chairman of the
Nominating and Governance Committee (2010 - 2011) and Lead Independent Trustee
(2012 - 2013) of the First Trust Funds. He currently serves as Chairman of the
Valuation Committee (since January 1, 2014) and as a member of the Executive
Committee and the Dividend and Pricing Committee (since January 22, 2014) of the
First Trust Funds.
Niel B. Nielson, Ph.D., has served as Managing Director and Chief Operating
Officer of Pelita Harapan Education Foundation (providing educational products
and services) since January 2015. Mr. Nielson formerly served as President and
Chief Executive Officer of Servant Interactive LLC (providing education products
and services) from June 2012 to September 2014, and he served as President and
Chief Executive Officer of Dew Learning LLC (a global provider of digital and
on-line educational products and services) from June 2012 to September 2014. Mr.
Nielson served as President of Covenant College (2002 - 2012), and as a partner
and trader (of options and futures contracts for hedging options) for Ritchie
Capital Markets Group (1996 - 1997), where he held an administrative management
position at this proprietary derivatives trading company. He also held prior
positions in new business development for ServiceMaster Management Services
Company, and in personnel and human resources for NationsBank of North Carolina,
N.A. and Chicago Research and Trading Group, Ltd. ("CRT"). His international
experience includes serving as a director of CRT Europe, Inc. for two years,
directing out of London all aspects of business conducted by the U.K. and
European subsidiary of CRT. Prior to that, Mr. Nielson was a trader and manager
at CRT in Chicago. Mr. Nielson has served as a Trustee of the Fund since its
inception and of the First Trust Funds since 1999. Mr. Nielson has also served
as Chairman of the Audit Committee (2003 - 2007), Chairman of the Nominating and
Governance Committee (2008 - 2009), Lead Independent Trustee (2010 - 2011) and
Chairman of the Valuation Committee (2012 - 2013) of the First Trust Funds. He
currently serves as Chairman of the Audit Committee (since January 1, 2014) of
the First Trust Funds.
-13-
Interested Trustee
James A. Bowen is the Chairman of the Board of the First Trust Funds and
Chief Executive Officer of First Trust Advisors and First Trust Portfolios L.P.
Until January 23, 2012, he served as President and Chief Executive Officer of
the First Trust Funds. Mr. Bowen also serves on the Executive Committee. He has
over 32 years of experience in the investment company business in sales, sales
management and executive management. Mr. Bowen has served as a Trustee of the
Fund since its inception and of the First Trust Funds since 1999.
OTHER INFORMATION
Independent Trustees
During the past five years, none of the Independent Trustees, nor any of
their immediate family members, has been a director, trustee, officer, general
partner or employee of, or consultant to, First Trust Advisors, First Trust
Portfolios L.P. (an affiliate of First Trust Advisors), any sub-advisor to any
fund in the First Trust Fund Complex, or any of their affiliates.
Executive Officers
The executive officers of the Fund hold the same positions with each fund
in the First Trust Fund Complex (representing 125 portfolios) as they hold with
the Fund.
BENEFICIAL OWNERSHIP OF SHARES HELD IN THE FUND BY TRUSTEES AND EXECUTIVE
OFFICERS
The following table sets forth the dollar range and number of equity
securities beneficially owned by the Trustees in the Fund and all funds in the
First Trust Fund Complex, including the Fund, as of December 31, 2015:
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND AND FIRST TRUST FUND COMPLEX (NUMBER OF SHARES HELD)
---------------------------------------------------------------------------------------------------------------------------------
INTERESTED INDEPENDENT
TRUSTEE TRUSTEES
------------------------- ------------------ ----------------------------------------------------------------------------------
FUND James A. Bowen Richard E. Erickson Thomas R. Kadlec Robert F. Keith Niel B. Nielson
------------------------- ------------------ ------------------- ------------------- ------------------- -------------------
$0 $0 $10,001-$50,000 $0 $0
THE FUND (0 Shares) (0 Shares) (2,000 Shares) (0 Shares) (0 Shares)
------------------------- ------------------ ------------------- ------------------- ------------------- -------------------
AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES IN THE FIRST
TRUST FUND COMPLEX Over $100,000 Over $100,000 Over $100,000 Over $100,000 Over $100,000
OVERSEEN BY TRUSTEE (47,356 Shares) (10,339 Shares) (12,677 Shares) (12,838 Shares) (7,079 Shares)
------------------------- ------------------ ------------------- ------------------- ------------------- -------------------
The Independent Trustees have adopted a policy that establishes the
expectation that each Independent Trustee will have invested an amount in the
First Trust Funds he oversees in the aggregate of at least one year's annual
retainer for Board service, with investments allocated among the First Trust
Funds depending on what is suitable for the Trustee's personal investment needs.
As of December 31, 2015, the Independent Trustees and their immediate
family members did not own, beneficially or of record, any class of securities
of First Trust Advisors or any sub-advisor or principal underwriter of the Fund
or any person, other than a registered investment company, directly or
-14-
indirectly controlling, controlled by, or under common control with First Trust
Advisors or any sub-advisor or principal underwriter of the Fund, nor, since the
beginning of the most recently completed fiscal year of any Fund, did any
Independent Trustee purchase or sell securities of First Trust Advisors, or any
sub-advisor to any fund in the First Trust Fund Complex, their parents or any
subsidiaries of any of the foregoing.
As of December 31, 2015, the Trustees and executive officers of the Fund as
a group beneficially owned approximately 120,794 shares of the funds in the
First Trust Fund Complex (less than 1% of the shares outstanding). As of
December 31, 2015, the Trustees and executive officers of the Fund as a group
beneficially owned 2,000 Shares of the Fund, which is less than 1% of the
outstanding Shares of the Fund.
COMPENSATION
During 2015, each Independent Trustee was 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 was allocated pro rata among each fund
in the First Trust Fund Complex based on net assets. Additionally, the Lead
Independent Trustee was paid $15,000 annually, the Chairman of the Audit
Committee was paid $10,000 annually, the Chairman of the Valuation Committee was
paid $10,000 annually and the Chairman of the Nominating and Governance
Committee was 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. Effective January 1, 2016, the fixed annual retainer paid
to the Independent Trustees is $230,000 per year and an annual per fund fee is
$2,500 for each closed-end fund and actively managed fund and $250 for each
index fund. The fixed annual retainer is allocated equally among each fund in
the First Trust Fund Complex rather than being allocated pro rata based on each
fund's net assets. Additionally, the Lead Independent Trustee is paid $30,000
annually, the Chairman of the Audit Committee is paid $20,000 annually and the
Chairman of the Nominating and Governance Committee is paid $10,000 annually to
serve in such capacities with compensation allocated pro rata among each fund in
the First Trust Complex based on its net assets. Trustees are also reimbursed by
the investment companies in the First Trust Fund Complex for travel and
out-of-pocket expenses incurred in connection with all meetings. Each Committee
Chairman and the Lead Independent Trustee rotate every three years.
The Board held six meetings during the Fund's last fiscal year.
The aggregate fees and expenses paid to all Trustees by the Fund for its
last fiscal year (including reimbursement for travel and out-of-pocket expenses)
amounted to $16,997.
The following table sets forth certain information regarding the
compensation of the Fund's Trustees (including reimbursement for travel and
out-of-pocket expenses) for the Fund's most recently completed fiscal year. The
Fund has no retirement or pension plans. The executive officers and the
Interested Trustee of the Fund receive no compensation from the Fund for serving
in such capacities.
-15-
AGGREGATE COMPENSATION
---------------------------------------------------------------------------------------------------------------------------------
INTERESTED INDEPENDENT
TRUSTEE TRUSTEES
------------------------- ------------------ ----------------------------------------------------------------------------------
James A. Bowen Richard E. Erickson Thomas R. Kadlec Robert F. Keith Niel B. Nielson
------------------------- ------------------ ------------------- ------------------- ------------------- -------------------
THE FUND $0 $4,241 $4,258 $4,250 $4,248
------------------------- ------------------ ------------------- ------------------- ------------------- -------------------
TOTAL COMPENSATION FOR
SERVING THE FIRST TRUST
FUND COMPLEX(1) $0 $352,350 $361,500 $351,535 $356,500
------------------------- ------------------ ------------------- ------------------- ------------------- -------------------
<FN>
(1) For the calendar year ended December 31, 2015 for services to four
portfolios of First Trust Series Fund and three portfolios of First Trust
Variable Insurance Trust, open-end funds; 16 closed-end funds (including
the Fund); and 97 series of the ETF Trusts. Compensation includes, with
respect to certain ETFs, compensation paid by the Advisor rather than by
the ETF directly pursuant to the terms of the advisory agreement between
the applicable ETF Trust and the Advisor.
</FN>
ATTENDANCE AT ANNUAL MEETINGS OF SHAREHOLDERS
The Board seeks to have as many Trustees as possible in attendance at
annual meetings of shareholders. The policy of the Nominating and Governance
Committee relating to attendance by Trustees at annual meetings of shareholders
is contained in the Fund's Nominating and Governance Committee Charter, which is
available on the Fund's website located at http://www.ftportfolios.com. In
addition, the Board's attendance at last year's annual shareholder meeting is
available on the Fund's website located at http://www.ftportfolios.com. To find
the Board's attendance, select the Fund under the "Closed-End Funds" tab, select
the "News & Literature" link, and go to the "Shareholder Updates and
Information" heading.
AUDIT COMMITTEE REPORT
The role of the Audit Committee is to assist the Board of Trustees in its
oversight of the Fund's accounting and financial reporting process. The Audit
Committee operates pursuant to a charter (the "Charter") that was most recently
reviewed by the Board of Trustees on December 7, 2015, a copy of which is
attached as Exhibit A hereto, and is available on the Fund's website located at
http://www.ftportfolios.com. As set forth in the Charter, management of the Fund
is responsible for maintaining appropriate systems for accounting and internal
controls and the audit process. The Fund's independent auditors are responsible
for planning and carrying out proper audits of the Fund's financial statements
and expressing an opinion as to their conformity with accounting principles
generally accepted in the United States of America.
In performing its oversight function, the Audit Committee reviewed and
discussed with management and the independent auditors, Deloitte & Touche LLP,
the audited financial statements of the Fund for the fiscal year ended November
30, 2015 at a meeting held on January 21, 2016, and discussed the audit of such
financial statements with the independent auditors and management.
In addition, the Audit Committee discussed with the independent auditors
the accounting principles applied by the Fund and such other matters brought to
the attention of the Audit Committee by the independent auditors as required by
the Public Company Accounting Oversight Board ("PCAOB") Auditing Standard No.
16, Communications with Audit Committees. The Audit Committee also received from
-16-
the independent auditors the written disclosures and letter required by PCAOB
Ethics and Independence Rule 3526, Communication with Audit Committees
Concerning Independence, delineating relationships between the independent
auditors and the Fund and discussed the impact that any such relationships may
have on the objectivity and independence of the independent auditors.
The members of the Fund's Audit Committee are not full-time employees of
the Fund and are not performing the functions of auditors or accountants. As
such, it is not the duty or responsibility of the Audit Committee or its members
to conduct "field work" or other types of auditing or accounting reviews or
procedures or to set auditor independence standards. Members of the Fund's Audit
Committee necessarily rely on the information provided to them by Fund
management and the independent auditors. Accordingly, the Audit Committee's
considerations and discussions referred to above do not assure that the audit of
the Fund's financial statements has been carried out in accordance with
generally accepted auditing standards, that the financial statements are
presented in accordance with generally accepted accounting principles or that
the independent auditors are in fact "independent."
Based on its consideration of the Fund's audited financial statements and
the discussions referred to above with Fund management and Deloitte & Touche
LLP, and subject to the limitations on the responsibilities and role of the
Audit Committee as set forth in the Charter and discussed above, the Audit
Committee recommended to the Board the inclusion of the Fund's audited financial
statements in the Fund's Annual Report to Shareholders for the year ended
November 30, 2015.
Submitted by the Audit Committee of the Fund:
Niel B. Nielson
Richard E. Erickson
Thomas R. Kadlec
Robert F. Keith
INDEPENDENT AUDITORS' FEES
Deloitte & Touche has been selected to serve as the independent auditors
for the Fund for its current fiscal year, and acted as the independent auditors
for the Fund for its most recently completed fiscal year. Deloitte & Touche has
advised the Fund that, to the best of its knowledge and belief, Deloitte &
Touche professionals did not have any direct or material indirect ownership
interest in the Fund inconsistent with independent professional standards
pertaining to independent registered public accounting firms. Representatives of
Deloitte & Touche are not expected to be present at the Meeting, but will have
the opportunity to make a statement if they desire to do so and will be
available should any matter arise requiring their presence. In reliance on Rule
32a-4 under the 1940 Act, the Fund is not seeking shareholder ratification of
the selection of Deloitte & Touche as independent auditors.
-17-
Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees
During each of the last two fiscal years of the Fund, Deloitte & Touche
has billed the Fund and the Advisor for the fees set forth below.
------------------------------- --------------------- ----------------------- --------------------- ------------------
AUDIT FEES(1) AUDIT-RELATED TAX ALL OTHER
FEES FEES(2) FEES
------------------------------- --------------------- ----------------------- --------------------- ------------------
FEES BILLED TO: 2014 2015 2014 2015 2014 2015 2014 2015
------------------------------- ----------- --------- ----------- ----------- ----------- --------- -------- ---------
Fund $49,000 $49,000 $0 $0 $4,500 $4,500 $0 $3,000(3)
Advisor N/A N/A $0 $0 $0 $0 $0 $0
------------------------------- ----------- --------- ----------- ----------- ----------- --------- -------- ---------
<FN>
(1) These fees were the aggregate fees billed for professional services for
the audit of the Fund's annual financial statements and services that are
normally provided in connection with statutory and regulatory filings or
engagements.
(2) These fees were for tax consultation or tax return preparation.
(3) These fees were for Fund accounting system conversion.
</FN>
Non-Audit Fees
During each of the last two fiscal years of the Fund, Deloitte & Touche has
billed the Fund and the Advisor for the non-audit fees listed below for services
provided to the entities indicated.
AGGREGATE NON-AUDIT FEES
-------------------------------------------------- --------------- ------------
FUND 2014 2015
-------------------------------------------------- --------------- ------------
Fund $4,500 $7,500
Advisor $43,500(1) $12,500(2)
-------------------------------------------------- --------------- ------------
(1) These fees relate to 2013 federal and state tax matters, and Global
Investment Performance Standards (GIPS(R)) matters for the period July
2011 through June 2013.
(2) These fees relate to 2014 federal and state tax returns.
Pre-Approval
Pursuant to its Charter and its Audit and Non-Audit Services Pre-Approval
Policy, the Fund's Audit 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 Fund by its independent auditors. The Chairman
of the Audit Committee is authorized to give such pre-approvals on behalf of the
Audit Committee up to $25,000 and report any such pre-approval to the full Audit
Committee.
The Audit Committee is also responsible for the pre-approval of the
independent auditors' engagements for non-audit services with the Advisor and
any entity controlling, controlled by or under common control with the Advisor
that provides ongoing services to the Fund, if the engagement relates directly
to the operations and financial reporting of the Fund, subject to the de minimis
exceptions for non-audit services described in Rule 2-01 of Regulation S-X. If
the independent auditors have provided non-audit services to the Advisor or any
entity controlling, controlled by or under common control with the Advisor that
provides ongoing services to the Fund that were not pre-approved pursuant to its
policies, the Audit Committee will consider whether the provision of such
non-audit services is compatible with the auditors' independence.
None of the Audit Fees, Audit-Related Fees, Tax Fees, or All Other Fees, if
any, or the Aggregate Non-Audit Fees disclosed above that were required to be
pre-approved by the Audit Committee pursuant to its Pre-Approval Policy were
pre-approved by the Audit Committee pursuant to the pre-approval exceptions
included in Regulation S-X.
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Because the Audit Committee has not been informed of any such services, the
Audit Committee of the Fund has not considered whether the provision of
non-audit services that were rendered to the Advisor and any entity controlling,
controlled by, or under common control with the Advisor that provides ongoing
services to the Fund 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.
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
Shareholder Proposals for Inclusion in the Fund's Proxy Statement. To be
considered for presentation at the 2017 annual meeting of shareholders of the
Fund and included in the Fund's proxy statement relating to such meeting, a
shareholder proposal submitted pursuant to Rule 14a-8 under the 1934 Act must be
received at the principal executive offices of the Fund not later than November
29, 2016. Such a proposal will be included in the Fund's proxy statement if it
meets the requirements of Rule 14a-8. Timely submission of a proposal does not
mean that such proposal will be included in the Fund's proxy statement.
Other Shareholder Proposals. In addition to any requirements of law,
including the proxy rules under the 1934 Act, under the Fund's By-Laws, any
proposal to elect any person nominated by shareholders for election as Trustee
and any other proposals by shareholders may only be brought before an annual
meeting of the Fund if timely written notice (the "Shareholder Notice") is
provided to the Secretary of the Fund and the other conditions summarized below
are met. In accordance with the advance notice provisions included in the Fund's
By-Laws, unless a greater or lesser period is required under applicable law, to
be timely, the Shareholder Notice must be delivered to or mailed and received at
the Fund's principal executive offices, Attn: W. Scott Jardine, Secretary, not
less than forty-five (45) days nor more than sixty (60) days prior to the first
anniversary date of the date of the proxy statement released to shareholders for
the preceding year's annual meeting. However, if and only if the annual meeting
is not scheduled to be held within a period that commences thirty (30) days
before the first anniversary date of the annual meeting for the preceding year
and ends thirty (30) days after such anniversary date (an annual meeting date
outside such period being referred to herein as an "Other Annual Meeting Date"),
such Shareholder Notice must be given as described above by the later of the
close of business on (i) the date forty-five (45) days prior to such Other
Annual Meeting Date or (ii) the tenth (10th) business day following the date
such Other Annual Meeting Date is first publicly announced or disclosed.
Any shareholder submitting a nomination of any person or persons (as the
case may be) for election as a Trustee or Trustees of the Fund is required to
deliver, as part of such Shareholder Notice: (i) a statement in writing setting
forth: (A) the name, age, date of birth, business address, residence address and
nationality of the person or persons to be nominated; (B) the class or series
and number of all Shares of the Fund owned of record or beneficially by each
such person or persons, as reported to such shareholder by such nominee(s); (C)
any other information regarding each such person required by paragraphs (a),
(d), (e) and (f) of Item 401 of Regulation S-K or paragraph (b) of Item 22 of
Rule 14a-101 (Schedule 14A) under the 1934 Act (or any successor provision
thereto); (D) any other information regarding the person or persons to be
nominated that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitation of proxies for
election of trustees or directors pursuant to Section 14 of the 1934 Act and the
rules and regulations promulgated thereunder; and (E) whether such shareholder
believes any nominee is or will be an "interested person" of the Fund (as
defined in the 1940 Act) and, if not an "interested person," information
regarding each nominee that will be sufficient for the Fund to make such
determination; and (ii) the written and signed consent of any person nominated
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to be named as a nominee and to serve as a Trustee if elected. In addition, the
Trustees may require any proposed nominee to furnish such other information as
they may reasonably require or deem necessary to determine the eligibility of
such proposed nominee to serve as a Trustee.
Without limiting the foregoing, any shareholder who gives a Shareholder
Notice of any matter proposed to be brought before a shareholder meeting
(whether or not involving nominees for Trustees) is required to deliver, as part
of such Shareholder Notice: (i) the description of and text of the proposal to
be presented; (ii) a brief written statement of the reasons why such shareholder
favors the proposal; (iii) such shareholder's name and address as they appear on
the Fund's books; (iv) any other information relating to the shareholder that
would be required to be disclosed in a proxy statement or other filings required
to be made in connection with the solicitation of proxies with respect to the
matter(s) proposed pursuant to Section 14 of the 1934 Act and the rules and
regulations promulgated thereunder; (v) the class or series and number of all
Shares of the Fund owned beneficially and of record by such shareholder; (vi)
any material interest of such shareholder in the matter proposed (other than as
a shareholder); (vii) a representation that the shareholder intends to appear in
person or by proxy at the shareholder meeting to act on the matter(s) proposed;
(viii) if the proposal involves nominee(s) for Trustees, a description of all
arrangements or understandings between the shareholder and each proposed nominee
and any other person or persons (including their names) pursuant to which the
nomination(s) are to be made by the shareholder; and (ix) in the case of a
shareholder (a "Beneficial Owner") that holds Shares entitled to vote at the
meeting through a nominee or "street name" holder of record, evidence
establishing such Beneficial Owner's indirect ownership of, and entitlement to
vote, Shares at the meeting of shareholders. Shares "beneficially owned" means
all Shares which such person is deemed to beneficially own pursuant to Rules
13d-3 and 13d-5 under the 1934 Act.
In addition, the By-Laws provide that, unless required by federal law, no
matters shall be considered at or brought before any annual or special meeting
unless such matter has been deemed a proper matter for shareholder action by at
least sixty-six and two-thirds percent (66-2/3%) of the Trustees. Timely
submission of a proposal does not mean that such proposal will be brought before
the meeting.
SHAREHOLDER COMMUNICATIONS
Shareholders of the Fund who want to communicate with the Board of Trustees
or any individual Trustee should write the Fund to the attention of the Fund
Secretary, W. Scott Jardine. The letter should indicate that you are a Fund
shareholder. If the communication is intended for a specific Trustee and so
indicates, it will be sent only to that Trustee. If a communication does not
indicate a specific Trustee, it will be sent to the Chairman of the Nominating
and Governance Committee of the Board and the independent legal counsel to the
Independent Trustees for further distribution as deemed appropriate by such
persons.
INVESTMENT ADVISOR, SUB-ADVISOR, ADMINISTRATOR AND TRANSFER AGENT
First Trust Advisors L.P., 120 East Liberty Drive, Suite 400, Wheaton,
Illinois 60187, serves as the Fund's investment advisor. First Trust Advisors is
also responsible for providing certain clerical, bookkeeping and other
administrative services to the Fund and also provides fund reporting services to
the Fund for a flat annual fee. Chartwell Investment Partners, Inc., 1235
Westlakes Drive, Berwyn, Pennsylvania 19312, serves as the investment
sub-advisor to the Fund.
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BNY Mellon Investment Servicing (US) Inc., 301 Bellevue Parkway,
Wilmington, Delaware 19809, acts as the administrator, accounting agent and
transfer agent to the Fund.
SECTION 30(h) AND SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 30(h) of the 1940 Act and Section 16(a) of the 1934 Act require the
Fund's officers and Trustees, certain persons affiliated with First Trust
Advisors and any sub-advisor and persons who beneficially own more than 10% of
the Fund's Shares to file reports of ownership and changes of ownership with the
SEC and the NYSE and to furnish the Fund with copies of all Section 16(a) forms
they file. Based solely upon a review of copies of such forms received by the
Fund and certain written representations, the Fund believes that during the
fiscal year ended November 30, 2015, all such filing requirements applicable to
such persons were met, except as follows: On May 1, 2015, one late Form 3 was
filed for LuAnn Molino, an officer of Chartwell Investment Partners, Inc.
(investment sub-advisor).
FISCAL YEAR
The Fund's fiscal year end was November 30, 2015.
DELIVERY OF CERTAIN DOCUMENTS
Annual reports will be sent to shareholders of record of the Fund following
the Fund's fiscal year end. The Fund will furnish, without charge, a copy of its
annual report and/or semi-annual report as available upon request. Such written
or oral requests should be made by writing to the Advisor at 120 East Liberty
Drive, Suite 400, Wheaton, Illinois 60187 or by calling (800) 988-5891.
Please note that only one annual or semi-annual report or proxy statement
may be delivered to two or more shareholders of the Fund who share an address,
unless the Fund has received instructions to the contrary. To request a separate
copy of an annual or semi-annual report or proxy statement, or for instructions
as to how to request a separate copy of such documents or as to how to request a
single copy if multiple copies of such documents are received, shareholders
should contact the Advisor at the address and phone number set forth above.
Pursuant to a request, a separate copy will be delivered promptly.
STANDSTILL AGREEMENT
In January 2016, the Fund received a letter dated January 15, 2016 from a
fund controlled by Bulldog Investors, LLC (Bulldog Investors, LLC and all funds
and accounts controlled by Bulldog Investors, LLC are collectively referred to
herein as "Bulldog Investors") purporting to nominate two individuals for
election at the Meeting and informing the Fund of its intent to appear at the
Meeting and submit the following proposal for a vote by stockholders: "The board
of trustees should consider adopting a plan to afford stockholders an
opportunity to realize net asset value." The Bulldog nominations and proposal
are collectively referred to as the "Bulldog Proposals". On March 18, 2016, the
Fund, the Advisor, and Bulldog Investors entered into a standstill agreement
(the "Standstill Agreement"). Under the Standstill Agreement, Bulldog Investors
has agreed to withdraw the Bulldog Proposals and, subject to limited exceptions
for Fund Shares held by certain closed-end funds managed by Bulldog Investors,
Bulldog Investors has agreed to vote or cause to be voted all Shares of the Fund
for which it has the power to vote or to direct the vote, or shares the power to
vote, in accordance with the recommendation of the Board of Trustees of the Fund
regarding the proposal set forth above to elect Mr. Bowen and Mr. Nielson as
Class III Trustees. On March 18, 2016, it was announced that the Fund's Board of
Trustees had approved the combination of the Fund with First Trust High Income
ETF ("FTHI"), a series of First Trust Exchange-Traded Fund VI, with FTHI as the
surviving fund (the "Proposed Merger"). Bulldog Investors has, subject to the
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exception noted above, agreed to vote or cause to be voted all Shares of the
Fund for which it has the power to vote or to direct the vote, or shares the
power to vote, in favor of the Proposed Merger. The Proposed Merger is expected
to be submitted to shareholders for approval later this year, and will be
subject to the satisfaction of applicable regulatory requirements and approvals
and customary closing conditions. Further, through December 31, 2017, Bulldog
Investors has agreed to be bound by certain "standstill" covenants including,
among other things, to generally refrain from certain activist activities with
respect to the Fund, FTHI, or other closed-end investment companies currently
advised by the Advisor, subject to the closing of the Proposed Merger on or
prior to October 31, 2016.
OTHER MATTERS TO COME BEFORE THE MEETING
No business other than the proposal to elect Mr. Bowen and Mr. Nielson as
Class III Trustees of the Fund's Board of Trustees, as described above, is
expected to come before the Meeting, but should any other matter requiring a
vote of shareholders arise, including any question as to an adjournment or
postponement of the Meeting, the persons named on the enclosed proxy card will
vote thereon according to their best judgment in the interests of the Fund.
March 21, 2016
--------------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS ARE THEREFORE
URGED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS POSSIBLE IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
--------------------------------------------------------------------------------
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EXHIBIT A
AUDIT COMMITTEE CHARTER
I. PURPOSE
The Audit Committee (the "Committee") is appointed by the Boards of
Trustees (the "Boards") of the investment companies (the "Funds") advised by
First Trust Advisors L.P. ("Fund Management") for the following purposes:
1. to oversee the accounting and financial reporting processes of
each Fund and its internal controls and, as the Audit Committee deems
appropriate, to inquire into the internal controls of certain third-party
service providers;
2. to oversee the quality and integrity of each Fund's financial
statements and the independent audit thereof;
3. to oversee, or, as appropriate, assist Board oversight of, each
Fund's compliance with legal and regulatory requirements that relate to the
Fund's accounting and financial reporting, internal controls and
independent audits; and
4. to approve, prior to the appointment, the engagement of each
Fund's independent auditor and, in connection therewith, to review and
evaluate the qualifications, independence and performance of the Fund's
independent auditor.
II. COMMITTEE ORGANIZATION AND COMPOSITION
A. Size and Membership Requirements.
1. The Committee shall be composed of at least three members, all of
whom shall be trustees of the Funds. Each member of the Committee, and a
Committee chairperson, shall be appointed by the Board on the
recommendation of the Nominating and Governance Committee.
2. Each member of the Committee shall be independent of the Funds
and must be free of any relationship that, in the opinion of the Board,
would interfere with the exercise of independent judgment as a Committee
member. With respect to the Funds which are closed-end funds or open-end
exchange-traded funds ("ETFs"), each member must meet the independence and
experience requirements of the New York Stock Exchange, NYSE Arca, NYSE MKT
LLC or the NASDAQ Stock Market (as applicable), and Section 10A of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule
10A-3 thereunder, and other applicable rules and regulations of the
Securities and Exchange Commission ("SEC"). Included in the foregoing is
the requirement that no member of the Committee be an "interested person"
of the Funds within the meaning of Section 2(a)(19) of the Investment
Company Act of 1940, as amended (the "1940 Act"), nor shall any Committee
member accept, directly or indirectly, any consulting, advisory or other
compensatory fee from the Funds (except in the capacity as a Board or
committee member).
3. At least one member of the Committee shall have been determined
by the Board, exercising its business judgment, to qualify as an "audit
committee financial expert" as defined by the SEC.
4. With respect to Funds whose shares are listed on NYSE Arca or on
the New York Stock Exchange, each member of the Committee shall have been
determined by the Board, exercising its business judgment, to be
"financially literate" as required by the New York Stock Exchange or NYSE
Arca (as applicable). In addition, at least one member of the Committee
shall have been determined by the Board, exercising its business judgment,
to have "accounting or related financial management expertise," as required
by the New York Stock Exchange or NYSE Arca (as applicable). Such member
may, but need not be, the same person as the Funds' "audit committee
financial expert." With respect to Funds that are closed-end funds or ETFs
whose shares are listed on the NYSE MKT LLC or the NASDAQ Stock Market,
each member of the Committee shall be able to read and understand
fundamental financial statements, including a Fund's balance sheet, income
statement and cash flow statement. In addition, at least one member of the
Committee shall have been determined by the Board, exercising its business
judgment, to be "financially sophisticated," as required by the NYSE MKT
LLC or the NASDAQ Stock Market (as applicable). Any member whom the Board
determines to be an "audit committee financial expert" shall be presumed to
qualify as financially sophisticated.
5. With respect to Funds that are closed-end funds or ETFs,
Committee members shall not serve simultaneously on the audit committee of
more than two public companies, in addition to their service on the
Committee.
B. Frequency of Meetings.
The Committee will ordinarily meet once for every regular meeting of the
Board. The Committee may meet more or less frequently as appropriate, but no
less than four times per year.
C. Term of Office.
Committee members shall serve until they resign or are removed or replaced
by the Board.
III. RESPONSIBILITIES
A. With respect to Independent Auditors:
1. The Committee shall be responsible for the appointment or
replacement (subject, if applicable, to Board and/or shareholder
ratification), compensation, retention and oversight of the work of any
registered public accounting firm engaged (including resolution of
disagreements between management and the auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Funds ("External
Auditors"). The External Auditors shall report directly to the Committee.
2. The Committee shall meet with the External Auditors and Fund
Management to review the scope, fees, audit plans and staffing of the
proposed audits for each fiscal year. At the conclusion of the audit, the
Committee shall review such audit results, including the External Auditors'
A-2
evaluation of each Fund's financial and internal controls, any comments or
recommendations of the External Auditors, any audit problems or
difficulties and Fund Management's response, including any restrictions on
the scope of the External Auditors' activities or on access to requested
information, any significant disagreements with Fund Management, any
accounting adjustments noted or proposed by the auditor but not made by the
Fund, any communications between the audit team and the audit firm's
national office regarding auditing or accounting issues presented by the
engagement, any significant changes required from the originally planned
audit programs and any adjustments to the financial statements recommended
by the External Auditors.
3. The Committee shall meet with the External Auditors in the
absence of Fund Management, as necessary.
4. The Committee shall pre-approve all audit services and permitted
non-audit services (including the fees and terms thereof) to be performed
for each Fund by its External Auditors in accordance with the Audit and
Non-Audit Services Pre-Approval Policy. The Chairman of the Committee is
authorized to give such pre-approvals on behalf of the Committee where the
fee for such engagement does not exceed the amount specified in the Audit
and Non-Audit Services Pre-Approval Policy, and shall report any such
pre-approval to the full Committee.
5. The Committee shall pre-approve the External Auditors'
engagements for non-audit services to Fund Management and any entity
controlling, controlled by or under common control with Fund Management
that provides ongoing services to the Funds, if the engagement relates
directly to the operations and financial reporting of the Funds, subject to
the de minimis exceptions for non-audit services described in Rule 2-01 of
Regulation S-X. The Chairman of the Committee is authorized to give such
pre-approvals on behalf of the Committee, and shall report any such
pre-approval to the full Committee.
6. If the External Auditors have provided non-audit services to Fund
Management and any entity controlling, controlled by or under common
control with Fund Management that provides ongoing services to the Funds
that were not pre-approved pursuant to the de minimis exception, the
Committee shall consider whether the provision of such non-audit services
is compatible with the External Auditors' independence.
7. The Committee shall obtain and review a report from the External
Auditors at least annually (including a formal written statement
delineating all relationships between the auditors and the Funds consistent
with PCAOB Ethics and Independence Rule 3526) regarding (a) the External
Auditors' internal quality-control procedures; (b) any material issues
raised by the most recent internal quality-control review, or peer review,
of the firm, or by an inquiry or investigation by governmental or
professional authorities within the preceding five years, respecting one or
more independent audits carried out by the firm; (c) any steps taken to
deal with any such issues; and (d) the External Auditors' independence,
including all relationships between the External Auditors and the Funds and
their affiliates; and evaluating the qualifications, performance and
independence of the External Auditors, including their membership in the
SEC practice section of the AICPA and their compliance with all applicable
requirements for independence and peer review, and a review and evaluation
of the lead partner, taking into account the opinions of management and
discussing such reports with the External Auditors. The Committee shall
present its conclusions with respect to the External Auditors to the Board.
A-3
8. The Committee shall review reports and other information provided
to it by the External Auditors regarding any illegal acts that the External
Auditors should discover (whether or not perceived to have a material
effect on a Fund's financial statements), in accordance with and as
required by Section 10A(b)(1) of the Exchange Act.
9. The Committee shall ensure the rotation of the lead (or
concurring) audit partner having primary responsibility for the audit and
the audit partner responsible for reviewing the audit as required by law,
and further consider the rotation of the independent auditor firm itself.
10. The Committee shall establish and recommend to the Board for
ratification a policy of the Funds with respect to the hiring of employees
or former employees of the External Auditors who participated in the audits
of the Funds' financial statements.
11. The Committee shall take (and, where appropriate, recommend that
the Board take) appropriate action to oversee the independence of the
External Auditors.
12. The Committee shall report regularly to the Board on the results
of the activities of the Committee, including any issues that arise with
respect to the quality or integrity of the Funds' financial statements, the
Funds' compliance with legal or regulatory requirements, the performance
and independence of the Funds' External Auditors, or the performance of the
internal audit function, if any.
B. With respect to Fund Financial Statements:
1. The Committee shall meet to review and discuss with Fund
Management and the External Auditors the annual audited financial
statements of the Funds, major issues regarding accounting and auditing
principles and practices, and the Funds' disclosures under "Management's
Discussion and Analysis," and shall meet to review and discuss with Fund
Management the semi-annual financial statements of the Funds and the Funds'
disclosures under "Management's Discussion and Analysis."
2. The Committee shall review and discuss reports, both written and
oral, from the External Auditors or Fund Management regarding (a) all
critical accounting policies and practices to be used; (b) all alternative
treatments of financial information within generally accepted accounting
principles ("GAAP") for policies and practices that have been discussed
with Fund Management, including the ramifications of the use of such
alternative treatments and disclosures and the treatment preferred by the
External Auditors; (c) other material written communications between the
External Auditors and Fund Management, such as any management letter or
schedule of unadjusted differences; and (d) all non-audit services provided
to any entity in the investment company complex (as defined in Rule 2-01 of
Regulation S-X) that were not pre-approved by the Committee.
3. The Committee shall review disclosures made to the Committee by
the Funds' principal executive officer and principal financial officer
during their certification process for the Funds' periodic reports about
any significant deficiencies in the design or operation of internal
A-4
controls or material weaknesses therein and any fraud involving management
or other employees who have a significant role in the Funds' internal
controls.
4. The Committee shall discuss with the External Auditors the
matters required to be discussed by the applicable PCAOB Auditing Standard
that arise during the External Auditor's review of the Funds' financial
statements.
5. The Committee shall review and discuss with Fund Management and
the External Auditors (a) significant financial reporting issues and
judgments made in connection with the preparation and presentation of the
Funds' financial statements, including any significant changes in the
Funds' selection or application of accounting principles and any major
issues as to the adequacy of the Funds' internal controls and any special
audit steps adopted in light of material control deficiencies, and (b)
analyses prepared by Fund Management or the External Auditors setting forth
significant financial reporting issues and judgments made in connection
with the preparation of the financial statements, including analyses of the
effects of alternative GAAP methods on the financial statements.
6. The Committee shall review and discuss with Fund Management and
the External Auditors the effect of regulatory and accounting initiatives
on the Funds' financial statements.
7. The Committee shall discuss with Fund Management the Funds' press
releases regarding financial results and dividends, as well as financial
information and earnings guidance provided to analysts and rating agencies.
This discussion may be done generally, consisting of discussing the types
of information to be disclosed and the types of presentations to be made.
The Chairman of the Committee or any member of the Committee also serving
on the Dividend and Pricing Committee shall be authorized to have these
discussions with Fund Management on behalf of the Committee, and shall
report to the Committee regarding any such discussions.
8. The Committee shall discuss with Fund Management the Funds' major
financial risk exposures and the steps Fund Management has taken to monitor
and control these exposures, including the Funds' risk assessment and risk
management policies and guidelines. In fulfilling its obligations under
this paragraph, the Committee may, as applicable, review in a general
manner the processes other Board committees have in place with respect to
risk assessment and risk management.
C. With respect to serving as a Qualified Legal Compliance Committee:
1. The Committee shall serve as the Funds' "qualified legal
compliance committee" ("QLCC") within the meaning of the rules of the SEC
and, in that regard, the following shall apply:
(i) The Committee shall receive and retain, in confidence,
reports of evidence of (a) a material violation of any federal or
state securities laws, (b) a material breach of a fiduciary duty
arising under any federal or state laws or (c) a similar material
violation of any federal or state law by a Fund or any of its
officers, trustees, employees or agents (a "Report of Material
Violation"). Reports of Material Violation may be addressed to the
Funds, attention W. Scott Jardine, by e-mail at
sjardine@ftportfolios.com or at the address of the principal office of
the Funds, which currently is 120 East Liberty Drive, Wheaton,
A-5
Illinois 60187, who shall forward the Report of Material Violation to
the Committee.
(ii) Upon receipt of a Report of Material Violation, the
Committee shall (a) inform the Fund's chief legal officer and chief
executive officer (or the equivalents thereof) of the report (unless
the Committee determines it would be futile to do so), and (b)
determine whether an investigation is necessary.
(iii) After considering the Report of Material Violation, the
Committee shall do the following if it deems an investigation
necessary:
(1) Notify the Board;
(2) Initiate an investigation, which may be conducted
either by the chief legal officer (or the equivalent thereof) of
the Fund or by outside attorneys; and
(3) Retain such additional expert personnel as the
Committee deems necessary.
(iv) At the conclusion of any such investigation, the Committee
shall:
(4) Recommend, by majority vote, that the Fund implement
an appropriate response to evidence of a material violation; and
(5) Inform the chief legal officer and the chief
executive officer (or the equivalents thereof) and the Board of
the results of any such investigation and the appropriate
remedial measures to be adopted.
2. The Committee shall take all other action that it deems
appropriate in the event that the Fund fails in any material respect to
implement an appropriate response that the Committee, as the QLCC, has
recommended the Fund take.
D. Other Responsibilities:
1. The Committee shall receive, retain and handle complaints
received by the Funds regarding accounting, internal accounting controls,
or auditing matters from any person, whether or not an employee of the
Funds or Fund Management, and shall receive submissions of concerns
regarding questionable accounting or auditing matters by officers of the
Funds and employees of Fund Management, any administrator, fund accountant,
principal underwriter, or any other provider of accounting-related services
for the Funds. All such complaints and concerns shall be handled in
accordance with the Committee's procedures for operating as a QLCC,
outlined in III.C above.
2. The Committee shall review, with fund counsel and independent
legal counsel, any legal matters that could have significant impact on a
Fund's financial statements or compliance policies and the findings of any
examination by a regulatory agency as they relate to financial statement
matters.
A-6
3. The Committee shall review and reassess the adequacy of this
charter on an annual basis and provide a recommendation to the Board for
approval of any proposed changes deemed necessary or advisable by the
Committee.
4. The Committee shall evaluate on an annual basis the performance
of the Committee.
5. The Committee shall review with the External Auditors and with
Fund Management the adequacy and effectiveness of the Funds' internal
accounting and financial controls.
6. The Committee shall discuss with Fund Management and the External
Auditors any correspondence with regulators or governmental agencies that
raise material issues regarding the Funds' financial statements or
accounting policies.
7. The Committee shall obtain any reports from Fund Management with
respect to the Funds' policies and procedures regarding compliance with
applicable laws and regulations. The Committee shall perform other special
reviews, investigations or oversight functions as requested by the Board
and shall receive and review periodic or special reports issued on
exposure/controls, irregularities and control failures related to the
Funds.
8. The Committee shall prepare any report of the Committee required
to be included in a proxy statement for a Fund.
9. The Committee may request any officer or employee of a Fund or
Fund Management, independent legal counsel, fund counsel and the External
Auditors to attend a meeting of the Committee or to meet with any members
of, or consultants to, the Committee.
10. The Committee shall maintain minutes of its meetings.
11. The Committee shall perform such other functions and have such
powers as may be necessary or appropriate in the efficient and lawful
discharge of its responsibilities.
IV. AUTHORITY TO ENGAGE ADVISERS
The Committee may engage independent counsel and other advisers, as it
determines necessary to carry out its duties. The Funds' External Auditors shall
have unrestricted accessibility at any time to Committee members.
V. FUNDING PROVISIONS
A. The Committee shall determine the:
1. Compensation to any independent registered public accounting firm
engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for a Fund; and
2. Compensation to any advisers employed by the Committee.
A-7
B. The expenses enumerated in this Article V and all necessary and
appropriate administrative expenses of the Committee shall be paid by the
applicable Fund or Fund Management.
VI. MANAGEMENT AND EXTERNAL AUDITORS' RESPONSIBILITIES
A. Fund Management has the primary responsibility for establishing and
maintaining systems for accounting, reporting, disclosure and internal controls.
The External Auditors have the primary responsibility to plan and implement an
audit, with proper consideration given to the accounting, reporting and internal
controls. All External Auditors engaged for the purpose of preparing or issuing
an audit report or performing other audit, review or attest services for the
Funds shall report directly to the Committee. The External Auditors' ultimate
accountability is to the Board and the Committee, as representatives of
shareholders.
B. While the Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Committee to plan or conduct audits or
to determine that the Funds' financial statements are complete and accurate and
are in accordance with GAAP, nor is it the duty of the Committee to assure
compliance with laws and regulations and/or the Funds' Code of Ethics.
C. In discharging its responsibilities, the Committee and its members
are entitled to rely on information, opinions, reports, or statements, including
financial statements and other financial data, if prepared or presented by: (1)
one or more officers of a Fund; (2) legal counsel, public accountants, or other
persons as to matters the Committee member reasonably believes are within the
person's professional or expert competence; or (3) a Board committee of which
the Committee member is not a member.
Amended: December 8, 2014
A-8
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PROXY CARD
----------
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
EASY VOTING OPTIONS:
VOTE BY MAIL
VOTE, SIGN AND DATE THIS PROXY
CARD AND RETURN IN THE
POSTAGE-PAID ENVELOPE
VOTE IN PERSON
ATTEND SHAREHOLDER MEETING
120 EAST LIBERTY DRIVE, SUITE 400
WHEATON, ILLINOIS 60187
ON APRIL 22, 2016
PLEASE DETACH AT PERFORATION BEFORE MAILING.
PROXY FIRST TRUST DIVIDEND AND INCOME FUND PROXY
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 2016
PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned holder of shares of the First Trust Dividend and Income Fund, a
Massachusetts business trust, hereby appoints W. Scott Jardine, Kristi A. Maher,
James M. Dykas and Erin E. Klassman as attorneys and proxies for the
undersigned, with full powers of substitution and revocation, to represent the
undersigned and to vote on behalf of the undersigned all shares of the Fund that
the undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Fund (the "Meeting") to be held at the offices of First Trust Advisors L.P., 120
East Liberty Drive, Suite 400, Wheaton, Illinois 60187, at 4:45 p.m. Central
Time on the date indicated above, and any adjournments or postponements thereof.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated March 21, 2016, and hereby instructs said
attorneys and proxies to vote said shares as indicated hereon. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting and any adjournments or postponements thereof
(including, but not limited to, any questions as to adjournments or
postponements of the Meeting). A majority of the proxies present and acting at
the Meeting in person or by substitute (or, if only one shall be so present,
then that one) shall have and may exercise all of the power and authority of
said proxies hereunder. The undersigned hereby revokes any proxy previously
given. This proxy, if properly executed, will be voted in the manner directed by
the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES SET FORTH.
----------------------- -------------------
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Please sign exactly as your name appears at left.
Joint owners each should sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such. If a
corporation, please sign in full corporate name by
president or authorized officer. If a partnership,
please sign in partnership name by authorized person.
Please sign, date and return.
____________________________________________________
Signature
____________________________________________________
Signature (if held jointly)
____________________________________________________
Date FAVF_27468_021916
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 22, 2016
THE PROXY STATEMENT AND PROXY CARD FOR THIS MEETING ARE
AVAILABLE AT: HTTPS://WWW.PROXY-DIRECT.COM/FIR-27468
PLEASE DETACH AT PERFORATION BEFORE MAILING.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED "FOR" THE ELECTION OF THE NOMINEES SET FORTH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK. EXAMPLE:
1. ELECTION OF TWO CLASS III TRUSTEES.
The Board of Trustees recommends that you vote FOR the election of two Class
III Nominees for a three-year term.
FOR WITHHOLD
01. JAMES A. BOWEN [ ] [ ]
02. NIEL B. NIELSON [ ] [ ]
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
27468_021916