As filed with the Securities and Exchange Commission on March 22, 2004
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1933 Act File No. 333-104680
1940 Act File No. 811-21336
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 theCommission 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 VALUE LINE(R) 100 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:
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FIRST TRUST VALUE LINE(R) 100 FUND
1001 Warrenville Road
Suite 300
Lisle, Illinois 60532
March 22, 2004
Dear Shareholder:
The accompanying materials relate to the Annual Meeting of Shareholders
(the "Meeting") of First Trust Value Line(R) 100 Fund (the "Fund"). The Meeting
will be held at the offices of First Trust Advisors L.P., 1001 Warrenville Road,
Suite 300, Lisle, Illinois 60532 on April 19, 2004 at 10:00 a.m. Central time.
At the Meeting, you will be asked to vote on a proposal to elect
Trustees of the Fund and to transact such other business as may properly come
before the Meeting and any adjournments thereof. The proposal is described in
the accompanying Notice and Proxy Statement.
Your participation at this Meeting is very important. If you cannot
attend the Meeting, you may participate by proxy. As a shareholder, you cast one
vote for each share 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,
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 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 VALUE LINE(R) 100 FUND
1001 Warrenville Road
Suite 300
Lisle, Illinois 60532
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on April 19, 2004
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March 22, 2004
To the Shareholders of FIRST TRUST VALUE LINE(R) 100 FUND:
Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of First Trust Value Line(R) 100 Fund (the "Fund"), a Massachusetts
business trust, will be held at the offices of First Trust Advisors L.P., 1001
Warrenville Road, Suite 300, Lisle, Illinois 60532 on April 19, 2004, at 10:00
a.m. Central time, for the following purposes:
1. The election of Trustees of the Fund.
2. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
The Board of Trustees has fixed the close of business on February 16,
2004 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting.
By order of the Board of Trustees,
W. Scott Jardine
Secretary
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SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE REQUESTED TO PROMPTLY
COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE WHICH
NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED STATES. INSTRUCTIONS FOR
THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON THE INSIDE COVER.
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This page is intentionally left blank.
FIRST TRUST VALUE LINE(R) 100 FUND
1001 Warrenville Road
Suite 300
Lisle, Illinois 60532
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ANNUAL MEETING OF SHAREHOLDERS
APRIL 19, 2004
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PROXY STATEMENT
MARCH 22, 2004
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees of First Trust Value Line(R) 100 Fund (the
"Fund"), a Massachusetts business trust, for use at the Annual Meeting of
Shareholders of the Fund to be held on April 19, 2004, at 10:00 a.m. Central
time, at the offices of First Trust Advisors L.P., 1001 Warrenville Road, Suite
300, Lisle, Illinois 60532, and at any adjournments thereof (collectively, the
"Meeting"). A Notice of Annual Meeting of Shareholders and a proxy card
accompany this Proxy Statement.
Proxy solicitations will be made, beginning on or about March 22, 2004,
primarily by mail, but such solicitations may also be made by telephone or
personal interviews conducted by officers or employees of the Fund; First Trust
Advisors L.P. ("First Trust Advisors" or the "Adviser"), the investment adviser
of the Fund; and PFPC Inc. ("PFPC"), the administrator, accounting agent and
transfer agent of the Fund and a subsidiary of The PNC Financial Services Group
Inc., or any of their affiliates. The costs of proxy solicitation and expenses
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 Fund's most recent annual and semi-annual reports are available
upon request, without charge, by writing to PFPC, 301 Bellevue Parkway, 2nd
Floor, Wilmington, Delaware 19809, or by calling 800-988-5891. This Proxy
Statement and the enclosed proxy card will first be mailed to shareholders on or
about March 22, 2004.
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. If no instructions are marked
on the enclosed proxy card, shares represented thereby will be voted in the
discretion of the persons named on the proxy card. Accordingly, unless
instructions to the contrary are marked thereon, a proxy will be voted FOR the
election of the nominees as Trustees, and FOR any other matters 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 submitting a letter of revocation or a later-dated
proxy to the Fund at the above address prior to the date of the Meeting.
Page 1
Under the By-Laws of the Fund, 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 of the Fund. In the
absence of a quorum, any lesser number of outstanding shares entitled to vote
present in person or by proxy may adjourn the meeting from time to time until a
quorum shall be present. For the purposes of establishing whether a quorum is
present, all shares present and entitled to vote, including abstentions and
broker non-votes (i.e., shares held by brokers or nominees as to which (i)
instructions have not been received from the beneficial owners or the persons
entitled to vote and (ii) the broker or nominee does not have discretionary
voting power on a particular matter), shall be counted.
The close of business on February 16, 2004 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 all adjournments thereof.
The Fund has one class of shares of beneficial interest, par value
$0.01 per share. On the Record Date there were 17,490,000 shares (the "Shares")
outstanding. Common Shares of the Fund are listed on the American Stock Exchange
under the ticker symbol "FVL". Shareholders of record on the Record Date are
entitled to one vote for each 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 February 16, 2004, 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. Information as to beneficial ownership is based on
reports filed with the Securities and Exchange Commission ("SEC") by such
holders.
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 to be received (by 5:00 p.m.,
on April 16, 2004).
Page 2
PROPOSAL 1: ELECTION OF TRUSTEES
Proposal 1 relates to the election of Trustees of the Fund. Management
proposes the election of the five Trustees: James A. Bowen, Richard E. Erickson,
Niel B. Nielson, Thomas A. Kadlec and David M. Oster. Each Trustee has indicated
his willingness to continue to serve if elected. If elected, each nominee will
hold office until the next annual meeting of shareholders or until his successor
is elected and qualified, or until he resigns, retires, or is otherwise removed.
Each of the nominees was elected to the Fund's Board by the Fund's initial
shareholder on June10, 2003.
Trustees, including those who are not "interested persons" of the Fund
("Independent Trustees") as that term is defined in the Investment Company Act
of 1940, as amended (the "1940 Act"), shall be elected by the affirmative vote
of the holders of a plurality of the shares of the Fund cast in person or by
proxy 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
nominees named.
Unless you give contrary instructions on the enclosed proxy card, your
shares will be voted FOR the election of all five nominees if your proxy card
has been properly executed and timely received by the Fund. If any of the
nominees should withdraw or otherwise become unavailable for election, your
shares will be voted FOR such other nominee or nominees as management may
recommend.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
PROPOSAL 1.
Page 3
ADDITIONAL INFORMATION
MANAGEMENT OF THE FUND
The management of the Fund, including general supervision of the duties
performed for the Fund under the investment management agreement between Fund
and the Adviser, is the responsibility of the Board of Trustees. There are five
Trustees of the Fund, one of whom is an "interested person" (as the term
"interested person" is defined in the 1940 Act) and four of whom are Independent
Trustees. No Independent Trustee has ever been a trustee, director or employee
of, or consultant to the Adviser or any affiliate. The Trustees of the Fund set
broad polices for the Fund, choose the Fund's officers, and hire the Fund's
investment adviser. The officers of the Fund manage its day-to-day operations
and are responsible to the Fund's Board of Trustees. The following is a list of
Trustees and officers of the Fund and a statement of their present positions,
principal occupations during the past five years, the number of portfolios each
oversees and the other directorships they hold, if applicable.
BOARD NOMINEES
Interested Trustees
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NUMBER OF
PORTFOLIOS
TERM OF PRINCIPAL IN FUND
POSITION(S) OFFICE(2) AND OCCUPATION(S) COMPLEX OTHER
NAME, ADDRESS, AND HELD WITH LENGTH OF DURING PAST FIVE OVERSEEN BY DIRECTORSHIPS
DATE OF BIRTH THE FUND TIME SERVED YEARS TRUSTEE HELD BY TRUSTEE
James A. Bowen(1) President, 1 Year President, First Trust 14 NONE
415 West Union Chairman of Portfolios, L.P. and
Wheaton, IL 60187 the Board, Since 2003 First Trust Advisors;
DOB: 9/55 Chief Chairman of the
Executive Board of Directors,
Officer and Bond Wave, LLC
Trustee
Independent Trustees
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Richard E. Erickson Trustee 1 Year Physician, 14 NONE
327 Gunderson Drive Sportsmed/Wheaton
Carol Stream, IL 60188 Since 2003 Orthopedics
DOB: 4/51
Niel B. Nielson Trustee 1 Year President (2002 to 14 Director of Good
1117 Mountain Terrace Present), Covenant News Publishers-
Lookout Mountain, GA 30750 Since 2003 College; Pastor (1997 Crossway Books;
DOB: 3/54 to 2002), College Covenant
Church in Wheaton Transport Inc.
Page 4
Thomas R. Kadlec Trustee 1 Year Vice-President, Chief 14 NONE
26W110 Sandpiper Ct. Financial Officer
Wheaton, IL 60188 Since 2003 (1990 to Present),
DOB: 11/57 ADM Investor
Services, Inc.(Futures
Commission
Merchant; Registered
Representative (2000
to Present), Segerdahl
& Company, Inc., an
NASD member
(Broker-Dealer)
David M. Oster Trustee 1 Year Trader (Self- 3 NONE
3N550 Wildflower Lane Employed)(1987 to
West Chicago, IL 60185 Since 2003 Present)(Options
DOB: 3/64 Trading and Market
Making)
1 Mr. Bowen is deemed an "interested person" of the Fund due to his position
as President of First Trust Advisors, investment adviser of the Fund.
2 Trustees are elected each year by shareholders and serve a one-year term
until their successors are elected. Officers of the Fund have an
indefinite term.
Officers
--------
PRINCIPAL NUMBER OF
TERM OF OFFICE(2) OCCUPATION(S) PORTFOLIOS IN FUND
NAME, ADDRESS, AND POSITION(S) HELD AND LENGTH OF DURING PAST FIVE COMPLEX SERVED
DATE OF BIRTH WITH THE FUND TIME SERVED YEARS BY OFFICER
Mark R. Bradley Treasurer, Indefinite Chief Financial 14
318 West Lincoln Controller, Chief Officer, Managing
Wheaton, IL 60187 Financial Officer Since 2003 Director, First Trust
DOB: 11/57 and Chief Portfolios, L.P. and
Accounting Officer First Trust Advisors
Susan M. Brix Assistant Vice Indefinite Representative First 14
1632 Timber Trail President Trust Portfolios, L.P.;
Wheaton, IL 60187 Since 2003 Assistant Portfolio
DOB: 1/60 Manager, First Trust
Advisors
Robert F. Carey Vice President Indefinite Senior Vice President, 14
1218 Olesen Drive First Trust Portfolios,
Naperville, IL 60540 Since 2003 L.P. and First Trust
DOB: 7/63 Advisors
W. Scott Jardine Secretary Indefinite General Counsel, 14
740 Warwick Lane First Trust Portfolios,
Lake Zurich, IL 60047 Since 2003 L.P. and First Trust
DOB: 5/60 Advisors
Roger Testin Vice President Indefinite Vice President 14
5641 Elinor Avenue (August 2001-
Downers Grove, IL 60516 Since 2003 Present) First Trust
DOB: 6/66 Advisors; Analyst
(1998 to 2001), Dolan
Capital Management
Page 5
In addition to the Fund, the First Trust Fund Complex includes First
Defined Portfolio Fund, LLC, an open-end management investment company advised
by First Trust Advisors with 11 portfolios, First Trust Value Line(R) Dividend
Fund and First Trust/Four Corners Senior Floating Rate Income Fund, closed-end
funds also advised by First Trust Advisors.
Messrs. Erickson, Nielson, Kadlec and Bowen are trustees of First
Defined Portfolio Fund, LLC. Messrs. Bowen, Erickson, Nielson, Kadlec and Oster
are Trustees of First Trust Value Line(R) Dividend Fund, First Trust/Four
Corners Senior Floating Rate Income Fund and the Fund.1 None of the Independent
Trustees, nor any of their immediate family members, has ever been a director,
officer or employee of, or consultant to, First Trust Advisors, First Trust
Portfolios, L.P. or their affiliates. In addition, Mr. Bowen, executive officer
of the Fund, and the other officers of the Fund hold the same positions with
First Defined Portfolio Fund, LLC, First Trust Value Line(R) Dividend Fund and
First Trust/Four Corners Senior Floating Rate Income Fund, as they hold with the
Fund.
BENEFICIAL OWNERSHIP OF SHARES HELD IN THE FUND BY
EACH NOMINEE FOR ELECTION AS TRUSTEE
The following table sets forth the dollar range and number of equity
securities beneficially owned by the Trustees in the Fund and in other funds in
the First Trust Fund Complex as of December 31, 2003:
AGGREGATE DOLLAR RANGE
OF EQUITY SECURITIES IN ALL
DOLLAR RANGE OF EQUITY REGISTERED INVESTMENT COMPANIES
SECURITIES IN THE FUND/ OVERSEEN BY TRUSTEE IN FUND
NAME OF TRUSTEE (NUMBER OF SHARES HELD) COMPLEX/(NUMBER OF SHARES HELD)
James A. Bowen $10,001-$50,000 (1,500 Shares) $10,001-$50,000 (1,500 Shares)
Richard E. Erickson $1-$10,000 (301 Shares) $1-$10,000 (301 Shares)
Thomas R. Kadlec $10,001-$50,000 (1,600 Shares) $50,001-$100,000 (3,900 Shares)
Niel B. Nielson $1-$10,000 (200 Shares) $1-$10,000 (200 Shares)
David M. Oster $10,001-$50,000 (1,000 Shares) $10,001-$50,000 (1,000 Shares)
As of December 31, 2003, the Independent Trustees of the Fund and
immediate family members do not own beneficially or of record any class of
securities of an investment adviser or principal underwriter of the Fund or any
person directly or indirectly controlling, controlled by, or under common
control with an investment adviser or principal underwriter of the Fund, nor did
any Independent Trustee purchase or sell securities of First Trust Advisors or
its parents, or subsidiaries.
As of December 31, 2003, the Fund knows of no person who owns
beneficially or of record 5% or more of the Fund's Shares. As of December 31,
2003, the Trustees and executive officer as a group beneficially owned 4,601 of
the Fund's Shares (less than 1% of the Shares outstanding). As of December 31,
2003, the Trustees and executive officer as a group beneficially owned 6,901
shares of funds in the First Trust Fund Complex (less than 1% of the shares
outstanding).
---------------------------------
(1) Messrs. Bowen, Erickson, Nielson, Kadlec and Oster are also Trustees of
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
and First Trust/Value Line(R) & Ibbotson Equity Allocation Fund, closed-end
funds advised by First Trust Advisors that have been organized but are not yet
operating.
Page 6
COMPENSATION
The Fund pays each Trustee not affiliated with First Trust Advisors or
its affiliates an annual fee of $10,000 plus $1,000 as compensation for each
board meeting (in-person or by electronic means) and $500 per committee meeting
(in-person or by electronic means) attended. Each Independent Trustee is
reimbursed for travel and out-of-pocket expenses associated with attending board
and committee meetings. The Board of Trustees held three meetings during the
fiscal year ended December 31, 2003, and each of the Trustees attended all of
the meetings. The aggregate fees and expenses paid to the Trustees by the Fund
for the fiscal year ended December 31, 2003 amounted to $34,445 (including
reimbursement for travel and out-of-pocket expenses).
The following table sets forth certain information regarding the
compensation of the Fund's Trustees for the fiscal year ended December 31, 2003.
The Fund has no retirement or pension plans.
ESTIMATED TOTAL COMPENSATION FROM
AGGREGATE COMPENSATION THE FUND AND THE FUND
NAME OF TRUSTEE FROM THE FUND COMPLEX
James A. Bowen 0 0
Richard E. Erickson $15,000 $58,500
Thomas R. Kadlec $15,000 $37,000
Niel B. Nielson $15,000 $58,500
David M. Oster $15,000 $37,000
The total compensation paid to Messrs. Erickson and Nielson,
Independent Trustees of the Fund and Fund Complex for the fiscal year ended
December 31, 2003 includes compensation for their services as Trustees to First
Defined Portfolio Fund, LLC, First Trust Value Line(R) Dividend Fund, First
Trust/Four Corners Senior Floating Rate Income Fund, and the Fund. For the
fiscal year ended December 31, 2003, Messrs. Kadlec and Oster were not Trustees
of First Defined Portfolio Fund, LLC. Accordingly, their total compensation was
based on compensation paid by First Trust Value Line(R) Dividend Fund, First
Trust/Four Corners Senior Floating Rate Income Fund and the Fund. Mr. Kadlec is
now a Trustee of First Defined Portfolio Fund, LLC. The compensation for the
Fund has been annualized to reflect compensation payable for a full fiscal year.
The officers and the interested Trustee of the Fund receive no
compensation from the Fund for serving in such capacity.
COMMITTEES
AUDIT COMMITTEE
The Board of Trustees has an Audit Committee, which consists of Messrs.
Erickson, Kadlec, Nielson and Oster, all of whom are independent as defined in
the listing standards of the American Stock Exchange. 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 met twice during the fiscal year ended December 31, 2003, with all
members present.
Page 7
In carrying out its responsibilities, the Audit Committee pre-approves
all audit services for the Fund and permitted non-audit services (including the
fees and terms thereof) to be performed for the Fund and the Adviser by its
independent auditors, subject to the de minimis exceptions for non-audit
services described in Section 10A of the 1934 Act and Rule 2-01 of Regulation
S-X that the Committee approves prior to the completion of the audit. The
Chairman of the Committee is authorized to give such pre-approvals on behalf of
the Committee. Any decisions by the Chairman to grant pre-approvals shall be
presented to the full Committee at the next regularly scheduled meeting.
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 that was most recently reviewed
and approved by the Board of Trustees on March 8, 2004, a copy of which is
attached as Exhibit A hereto. 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 and reviews 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, at a meeting held on February 19,
2004, the Audit Committee reviewed and discussed with management and the
independent auditors, Deloitte & Touche LLP ("Deloitte & Touche"), the audited
financial statements of the Fund as of and for the fiscal period from June 12,
2003 (commencement of operations) through December 31, 2003, 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
required by Statement of Auditing Standards No. 61, Communications with Audit
Committees, as currently modified or supplemented. The Audit Committee also
received from the independent auditors the written disclosures and letter
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, 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.
Members of the Fund's Audit Committee are not professionally engaged in
the practice of auditing or accounting and are not employed by the Fund for
purposes of accounting, financial management or internal control functions.
Moreover, the Audit Committee relies on, and makes no independent verification
of, the facts presented and the representations made to it by Fund management
and Deloitte & Touche. Accordingly, the Audit Committee's oversight does not
provide an independent basis to determine that management has maintained
appropriate accounting and/or financial reporting principles and policies, or
internal controls and procedures, designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the Audit
Committee's considerations and discussions referred to above do not provide
assurance that the audit of the Fund's financial statements has been carried out
in accordance with generally accepted auditing standards or that the financial
statements are presented in accordance with generally accepted accounting
principles.
At a meeting held on May 23, 2003, the Fund's Audit Committee selected
Deloitte & Touche as independent auditors for the Fund for the fiscal period
Page 8
ending December 31, 2003. Such selection was ratified by the Fund's sole
shareholder. Deloitte & Touche has advised the Fund that, to the best of its
knowledge and belief, as of February 16, 2004, Deloitte & Touche professionals
did not have any direct or material indirect ownership interest in the Fund
inconsistent with independent professional standards pertaining to auditors. It
is expected that representatives of Deloitte & Touche will be present at the
Meeting to answer any questions that may arise. The Fund's Audit Committee has
selected Deloitte & Touche as independent auditors for the Fund for the fiscal
period ending December 31, 2004. 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.
Based on its consideration of the Fund's audited financial statements
and the discussions referred to above with Fund management and Deloitte &
Touche, 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 the inclusion of the Fund's audited financial statements
for the period ended December 31, 2003 in the Fund's Annual Report dated
December 31, 2003.
Submitted by the Audit Committee of the Fund:
Richard E. Erickson
Thomas R. Kadlec
Niel B. Nielson
David M. Oster
INDEPENDENT AUDITORS' FEES
Set forth in the table below are fees billed by Deloitte & Touche to
the Fund and the Adviser for the Fund's fiscal period ended December 31, 2003:
Audit Fees Audit-Related Fees Tax Fees All Other Fees
--------------------------------------------------------------------
Fund $42,177 $0 $5,000 $0
Adviser $42,500 $20,400 $6,000 $0
All of the services in the table above were pre-approved by the Audit
Committee.
OTHER COMMITTEES
The Board of Trustees of the Fund has three other standing committees:
the Executive Committee (and Dividend and Pricing Committee), the Nominating and
Governance Committee and the Valuation 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 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 declaration and setting of dividends and 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 and approval of the final terms of the
underwriting agreement, including approval of the members of the underwriting
syndicate. Messrs. Bowen and Kadlec are members of the Executive Committee. The
Executive Committee serving as the Pricing Committee met once during the fiscal
year ended December 31, 2003.
Page 9
The Fund's Nominating and Governance Committee (formerly the Nominating
Committee) (the "Committee") is composed entirely of Trustees who are not
"interested persons" (as that term is defined in the 1940 Act) of the Fund and
who are "Independent Trustees" within the meaning of the listing standards of
the American Stock Exchange. Messrs. Erickson, Kadlec, Nielson and Oster are
members of the Committee. The purpose of the Committee is to oversee matters
related to the nomination of trustees and as necessary, the corporate governance
of the Fund. The Committee is responsible for, among other things, seeking,
identifying and nominating qualified candidates for election or appointment as
trustees in the event of a vacancy, consistent with criteria approved by the
Board, for the next annual meeting of shareholders; evaluating Board performance
and processes; reviewing Board committee assignments; and, to the extent
necessary or desirable, establishing corporate governance guidelines and
procedures. The committee operates under a written charter adopted and approved
by the Board, a copy of which is attached hereto as Exhibit B and is available
on the Fund's website at www.ftportfolios.com. The Committee did not meet during
the fiscal year ended December 31, 2003.
If there is no vacancy on the Board, the Board will not actively seek
recommendations from other parties, including shareholders. When a vacancy on
the Board occurs, the committee may seek recommendations for candidates from
those sources it deems appropriate in its discretion, including shareholders of
the Fund. The Committee may retain a search firm to identify candidates.
Shareholders of the Fund who wish to recommend a person for nomination as a
candidate for a position on the Fund's Board should mail such recommendation to
the Fund, attention W. Scott Jardine, 1001 Warrenville Road, Suite 300, Lisle,
Illinois 60532. Recommendations must include (a)evidence of Fund ownership of
the person or entity recommending the candidate (if a Fund shareholder); (b)a
full description of the proposed candidate's background, including their
education, experience, current employment and date of birth; (c)names and
addresses of at least three professional references for the candidate;
(d)information as to whether the candidate is an "interested person" (as such
term is defined in the 1940 Act) and such other information that may be
considered to impair the candidate's independence and (e)any other information
that may be helpful to the Committee in evaluating the candidate. 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 Committee is accepting recommendations, the recommendation will be
forwarded to the Chairperson of the Committee and outside counsel to the
Independent Trustees. Recommendations received at any other time will be kept on
file until such time as the Committee is accepting recommendations at which
point they may be considered for nomination.
In recruiting new trustees, the Committee seeks to recruit and retain
qualified independent trustees of high integrity, whose skills and experience
will enhance the Board's ability to effectively represent the interests of the
Fund's shareholders and oversee the wide range of regulatory and business issues
affecting the Fund. A candidate for trustee must meet certain basic
requirements, including relevant skills and experience, time availability and if
qualifying as a non- "interested person" candidate, independence from the Fund,
investment adviser or other service providers. The qualifications of a
particular candidate, however, may vary depending on the current composition of
the Board and the mix of skills and backgrounds of the incumbent trustees since
the Committee seeks to establish an effective Board with an appropriate range of
skills and experience, in the aggregate. In addition to relevant skills and
experience, all candidates must possess high standards of personal integrity
that are assessed on the basis of personal interviews, recommendations, or
direct knowledge by Committee members. The review process may include, without
limitation, personal interviews, background checks, written submissions by the
candidates and third party references. Under no circumstances shall the
Committee evaluate persons recommended by a shareholder of the Fund on a basis
substantially different than that used for other persons recommended for the
Page 10
same election or appointment of trustees. The Committee reserves the right to
make the final selection regarding the nomination of any trustees.
The Valuation Committee is responsible for the oversight of the pricing
procedures of the Fund. Messrs. Erickson, Kadlec and Oster are members of the
Valuation Committee. The Valuation Committee did not meet during the fiscal year
ended December 31, 2003.
ATTENDANCE AT ANNUAL SHAREHOLDER MEETINGS
The policy of the Board relating to attendance by Trustees at annual
meetings of the Fund is contained in the Fund's Nominating and Governance
Committee Charter, which is attached as Exhibit B and is posted on the Fund's
website at www.ftportfolios.com.
INVESTMENT ADVISER AND ADMINISTRATOR
First Trust Advisors L.P., 1001 Warrenville Road, Suite 300, Lisle,
Illinois 60532, serves as the Fund's investment adviser. PFPC acts as the Fund's
administrator and is located at 101 Federal Street, 6th Floor, Boston,
Massachusetts 02110. PFPC is a leading provider of full service mutual fund
shareholder and record keeping services. In addition to its mutual fund transfer
agent and record keeping service, PFPC provides complimentary services through
its own subsidiary business units.
SECTION 30(h) AND SECTION 16(a) BENEFICIAL INTEREST 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 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 American
Stock Exchange, Inc. and to furnish the Fund with copies of all Section 16(a)
forms they file. Based solely upon its review of the copies of such forms
received by it and written representations from certain of such persons, the
Fund believes that during its fiscal year ended December 31, 2003, all such
filing requirements applicable to such persons were met.
SHAREHOLDER PROPOSALS
To be considered for presentation at the annual meeting of shareholders
of the Fund to be held in 2005, a shareholder proposal submitted pursuant to
Rule 14a-8 of the 1934 Act must be received at the offices of the Fund at 1001
Warrenville Road, Suite 300, Lisle, Illinois 60532, not later than December 1,
2004. A shareholder wishing to provide notice in the manner prescribed by Rule
14a-4(c)(1) of a proposal submitted outside of the process of Rule 14a-8 must
submit such written notice to the Fund not later than January 31, 2005. Timely
submission of a proposal does not mean that such proposal will be included in a
proxy statement.
SHAREHOLDER COMMUNICATIONS
Fund shareholders who want to communicate with the Board or any
individual Trustee should write the Fund to the attention of 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 chair of the Nominating and Governance Committee
and the outside counsel to the Independent Trustees for further distribution as
deemed appropriate by such persons.
Page 11
FISCAL YEAR
The Fund's first fiscal year end was December 31, 2003.
ANNUAL REPORT DELIVERY
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 directed to the Fund at 1001 Warrenville
Road, Suite 300, Lisle, Illinois 60532 or by calling 1-800-988-5891.
Please note that only one 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 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
Fund at the address and phone number set forth above.
GENERAL
A list of shareholders entitled to be present and to vote at the
Meeting will be available at the offices of the Fund, 1001 Warrenville Road,
Suite 300, Lisle, Illinois 60532, for inspection by any shareholder during
regular business hours beginning ten days prior to the date of the Meeting.
Failure of a quorum to be present at the Meeting will necessitate
adjournment and will subject the Fund to additional expense. The persons named
in the enclosed proxy may also move for an adjournment of the Meeting to permit
further solicitation of proxies with respect to the proposal if they determine
that adjournment and further solicitation is reasonable and in the best
interests of the shareholders. Under the Fund's By-Laws, an adjournment of a
meeting requires the affirmative vote of a majority of the shares present in
person or represented by proxy at the Meeting.
OTHER MATTERS TO COME BEFORE THE MEETING
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote thereon
according to their best judgment in the interests of the Fund.
March 22, 2004
Page 12
EXHIBIT A
AUDIT COMMITTEE CHARTER
I. PURPOSE.
The Audit Committee (the "Committee") is appointed by the Boards of
Trustees (the "Boards") of investment companies (the "Funds") advised by First
Trust Advisors L.P. ("Fund Management") for the following purposes:
A. to oversee the accounting and financial reporting processes of the
Fund and its internal controls and, as the Audit Committee deems appropriate, to
inquire into the internal controls of certain third-party service providers;
B. to oversee the quality and integrity of the Fund's financial
statements and the independent audit thereof;
C. to oversee, or, as appropriate, assist Board oversight of, the
Fund's compliance with legal and regulatory requirements that relate to the
Fund's accounting and financial reporting, internal controls and independent
audits; and
D. to approve, prior to the appointment, the engagement of the 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 (applicable to closed-end funds
advised by First Trust Advisors L.P.).
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 Fund 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. In
particular, each member must meet the independence and experience requirements
of the New York Stock Exchange, the American Stock Exchange, 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 Fund within the
meaning of Section 2(a)(19) of the Investment Company Act of 1940, as amended
(the "1940 Act").
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. 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. In addition, at least one member of the
Committee shall have been determined by the Board, exercising its business
judgment, to have "accounting or financial management expertise," as required by
the New York Stock Exchange. Such member may, but need not be, the same person
as the Committee's "audit committee financial expert."
Page A-1
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 twice 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 Auditor's evaluation of the
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 Auditor's
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 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
the Fund by its External Auditors. 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.
5. The Committee shall approve the External Auditor's engagements for
non-audit services with the Fund Management (not including a sub-adviser whose
role is primarily portfolio management and is sub-contracted or overseen by
another investment adviser) and any entity controlling, controlled by or under
common control with the investment adviser that provides ongoing services to the
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.
6. If the External Auditor has provided non-audit services to Fund
Management (other than any sub-adviser whose role is primarily portfolio
management and is sub-contracted with or overseen by another investment adviser)
and any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the Fund 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
Auditor's independence.
7. The Committee shall obtain and review a report from the External
Auditors at least annually (including a formal written statement delineating all
Page A-2
relationships between the auditors and the Fund consistent with Independent
Standards Board Standard 1 as may be amended, restated, modified or replaced)
regarding (a) the External Auditor's 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 Auditor's independence, including all
relationships between the External Auditors and the Fund and its affiliates; and
evaluating the qualifications, performance and independence of the External
Auditor, 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 Auditor
to the Board.
8. The Committee shall review reports and other information provided to
it by the External Auditors regarding any illegal acts that they should discover
(whether or not perceived to have a material effect on the Fund's financial
statements), in accordance with and as required by Section 10A(b) 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 considering
the rotation of the independent auditor firm itself.
10. The Committee shall establish and recommend to the Board for
ratification a policy of the Fund the hiring of employees or former employees of
the External Auditor who participated in the audits of the Funds' financial
statements by the Fund or Fund Management.
11. The Committee shall take (and, where appropriate, recommend that
the Board take) appropriate action to oversee the independence of the External
Auditor.
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 review and discuss with Fund Management and the
External Auditors the annual audited financial statements and periodic financial
statements of the Fund, major issues regarding accounting and auditing
principles and practices, and the Fund's disclosures in its periodic reports
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 for
policies and practices that have been discussed with 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 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
Fund's principal executive officer and principal financial officer during their
certification process for the Fund's periodic reports about any significant
deficiencies in the design or operation of internal controls or material
Page A-3
weaknesses therein and any fraud involving management or other employees who
have a significant role in the Fund's internal controls.
4. The Committee shall discuss with the External Auditors the matters
required to be discussed by Statement of Auditing Standards (SAS) No. 90, Audit
Committee Communications (which amended SAS 61, Communication with Audit
Committees), that arise during the auditor's review of the Fund's financial
statements.
5. The Committee shall review and discuss with 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 Auditor 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 management and the
External Auditors the effect of regulatory and accounting initiatives on the
Funds' financial statements.
7. The Committee shall receive and review periodic reports (including a
formal written statement delineating all relationships between the auditors and
the Funds, consistent with the Independence Standards Board Standard 1) from the
firms of External Auditors regarding their independence, their membership in the
SEC practice section of the AICPA and their compliance with all applicable
requirements for independence and peer review.
8. The Committee shall discuss with Fund Management the Fund's 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 shall be authorized to have these discussions with
management on behalf of the Committee.
9. 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 Fund's "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 the 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, at the address of the principal offices of the
Funds, which currently is 1001 Warrenville Road, Suite 300, Lisle, Illinois
60532.
ii. Upon receipt of a report 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.
Page A-4
iii. After considering the Report of a Material Violation, the
Committee shall do the following if it deems an investigation necessary:
o Notify the full Board;
o 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
o Retain such additional expert personnel as the Committee
deem necessary.
iv. At the conclusion of any such investigation, the Committee shall:
o Recommend, by majority vote, that the Fund implement an
appropriate response to evidence of a material violation;
and
o 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 Fund regarding accounting, internal accounting controls, or auditing
matters from any person, whether or not an employee of the Fund or Fund
Management, and shall receive submissions of concerns regarding questionable
accounting or auditing matters by employees of the Fund and Fund Management,
administrator, 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
counsel to the Board, any legal matters that could have significant impact on
the Fund's financial statements or compliance policies and the findings of any
examination by a regulatory agency as they relate to financial statement
matters.
3. The Committee shall review and reassess the adequacy of this charter
on an annual basis, if necessary, 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 Fund's internal accounting and
financial controls.
6. The Committee shall discuss with Fund Management and the External
Auditor 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.
Page A-5
8. The Committee shall prepare any report of the Committee required to
be included in a proxy statement for the Fund.
9. The Committee may request any officer or employee of the Fund or
Fund Management, counsel to the independent trustees, the Fund's outside counsel
and External Auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
10. The Committee shall perform such other functions and to have such
powers as may be necessary or appropriate in the efficient and lawful discharge
of the powers.
IV. AUTHORITY TO ENGAGE ADVISERS.
The Committee may engage independent counsel and other advisers, as it
determines necessary to carry out its duties. The Committee may request any
officer or employee of the Fund, First Trust Advisors, the Fund's External
Auditors or outside counsel to attend a meeting of the Committee or to meet with
any members of, or, consultants to, the Committee. The Fund's External Auditors
and internal auditors shall have unrestricted accessibility at any time to
Committee members.
V. FUNDING PROVISIONS.
A. The Committee shall determine the:
1. Compensation to any registered public accounting firm engaged for
the purpose of preparing or issuing an audit report or performing other audit,
review or attest services for the Fund; and
2. Compensation to any advisers employed by the Committee.
B. The expenses enumerated in this Article V and all necessary and
appropriate administrative expenses of the Committee shall be paid by the Fund
or Fund Management.
VI. MANAGEMENT AND EXTERNAL AUDITOR'S RESPONSIBILITIES.
A. Fund Management has the primary responsibility for establishing and
maintaining systems for accounting, reporting, disclosure and internal controls.
The External Auditor has the primary responsibility to plan and implement an
audit, with proper consideration given to the accounting, reporting and internal
controls. Each External Auditor 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 Auditor's 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 generally accepted accounting principles. 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 the Fund; (2)legal counsel, public accountants, or
other persons as to matters the trustee reasonably believes are within the
person's professional or expert competence; or (3) a Board committee of which
the trustee is not a member.
Page A-6
EXHIBIT B
NOMINATING AND GOVERNANCE COMMITTEE CHARTER
I. NOMINATING AND GOVERNANCE COMMITTEE.
There shall be a committee of each Board of Trustees ("Board") of
investment companies advised by First Trust Advisors L.P. (the "Funds" or
individually, a "Fund") to be known as the Nominating and Governance Committee
(the "Committee"). Members of the Committee shall be appointed and removed by
the Board from time to time in its discretion.
A. Composition and Qualifications.
The Committee shall be composed entirely of independent trustees of the
Board. The term "independent trustee" as used in this Charter means any director
or trustee who is not an "interested person" of the Funds as such term is
defined in the Investment Company Act of 1940, as amended, and any rules or
regulations adopted thereunder (the "1940 Act"), and who is an "independent
director" within the meaning of the Listed Company Manual of the New York Stock
Exchange, Inc. or the Amex Company Guide of the American Stock Exchange LLC, as
applicable. One independent trustee shall be elected as chair of the Committee.
To serve on the Committee, a trustee must be independent and must have
sufficient time available to competently manage the duties associated with
membership on the Committee in addition to the other duties associated with
being a trustee and in addition to any other commitments. Committee members
shall be appointed by the full Board and shall serve an unlimited number of
one-year terms on the Committee.
B. Statement of Purpose.
The purpose of the Committee shall be to oversee matters related to the
nomination of trustees and, as necessary, the corporate governance of the Funds.
The Committee's duties shall include, but not be limited to, seeking,
identifying, and nominating qualified candidates for election or appointment as
trustees in the event of a vacancy, consistent with criteria approved by the
Board, for the next annual meeting of shareholders; the evaluation of Board
performance and processes; review of Committee assignments; and, to the extent
necessary or desirable, the establishment of corporate governance guidelines and
procedures.
II. THE COMPOSITION AND OPERATION OF THE BOARD.
A. The Committee shall review the composition of the Board as
it deems necessary. In its review, the Committee shall consider, among
other things, the size of the Board, the skills, experience and
background of the Trustees, and the strengths and weaknesses of the
skills or knowledge base of the Board.
B. In the event of a vacancy on the Board, the Committee shall
seek and accept recommendations of qualified individuals for a position
as a trustee. Once it has identified one or more candidates, the
Committee will nominate one individual to fill each vacancy on the
Board. In performing this function, the Committee shall consider, among
other things, legal and fiduciary duties associated with Board
membership; expectations regarding preparation, attendance, and
participation at meetings; Fund ownership; limitations on investments;
and independence from the Funds' investment adviser (including
sub-advisers) and other principal service providers, including any
affiliates of such persons, if applicable. The Committee shall consider
the effect of any relationships that the Committee may consider to
impair the candidate's independence including, but not limited to,
relationships delineated in the 1940 Act and any other applicable
federal securities laws and regulations and rules and regulations of
Page B-1
self-regulatory organizations that might impair their independence, and
business, financial or family relationships with the Funds' investment
adviser (including sub-advisers) and service providers, including any
affiliates of such persons. The Committee may, but shall not be
required to, establish minimum qualifications to be possessed by all
nominees. The Committee may also establish specific qualities or skills
to be possessed by one or more trustees.
C. If there is no vacancy on the Board, the Board will not
actively seek recommendations from other parties, including
shareholders. When a vacancy on the Board occurs and nominations are
sought to fill such vacancy, the Committee may seek nominations from
those sources it deems appropriate in its discretion, including
shareholders of the Fund. The Committee may retain a search firm to
identify candidates. The Committee shall have sole authority to retain
and terminate any such search firm, including the sole authority to
approve the fees and other terms of such retention.
D. The Committee may review at its discretion and make
recommendations with regard to the tenure of the trustees, including
term limits and/or age limits.
E. At least annually, the Committee shall evaluate (or cause
an evaluation to be performed of) (i) the performance of the Board and
the organization and effectiveness of Board meetings, and (ii) the
performance of the Committee and the organization and effectiveness of
Committee meetings.
F. The Board seeks to have as many trustees as possible in
attendance at annual meetings of shareholders of the Fund (each an
"Annual Meeting"). Accordingly, the Committee hereby establishes a
policy regarding attendance at Annual Meetings that the trustees shall
make reasonable efforts to attend the Annual Meeting of each of the
Funds, while also recognizing that each trustee has other
responsibilities and duties and that it may not be possible or
practical to attend all of the Annual Meetings of the Funds.
The Fund's Secretary or another designee shall compile
information relating to trustee attendance at each Annual Meeting.
This policy and the attendance information relating to the
most recent Annual Meeting shall be posted to the website for the Funds
and the website address for such information shall be set forth in the
Funds' annual proxy statement.
G. The Committee shall review committee assignments
periodically and make nominations for trustee membership on all
committees. The Committee shall also recommend to the full Board the
chair of each committee. The full Board shall act on such
recommendations and nominations as it sees fit.
H. The Committee shall periodically review and make
recommendations to the full Board regarding the responsibilities of any
committee, and any charter thereof (other than the audit committee), of
the Board. Such review may include, among other things, the continuing
need for each committee, the need for additional committees, and the
need or desire to combine or reorganize committees.
I. The Committee shall periodically review and make
recommendations regarding trustee compensation to the full Board.
J. The Committee shall perform such other functions and have
such powers as may be necessary or appropriate in the efficient and
lawful discharge of the powers provided in this Charter.
Page B-2
K. The Committee shall report its activities to the full Board
and make recommendations with respect to the above and other matters as
the Committee may deem necessary or appropriate.
III. SHAREHOLDER COMMUNICATIONS.
Shareholders may communicate in writing with members of the Board via
regular mail. Written communications to trustees should be addressed to the
Funds, attention W. Scott Jardine, at the address of the principal offices of
the Funds, which currently is 1001 Warrenville Road, Suite 300, Lisle, Illinois
60532. If the communication is intended for a specific trustee and so indicated
it will be sent only to that trustee. If a communication does not indicate a
specific trustee it will be sent to the Chair of the Committee and the outside
counsel to the independent trustees for further distribution as deemed
appropriate by such persons.
Persons or entities, including shareholders of the Funds, who wish to
recommend a person for nomination as a candidate for a position on the Board,
shall mail such recommendation to W. Scott Jardine at the Funds' address above.
To submit a recommendation, such person shall include: (a) evidence of Fund
ownership of the person or entity recommending the candidate (if a Fund
shareholder), (b) a full description of the proposed candidate's background,
including their education, experience, current employment, and date of birth,
(c) names and addresses of at least three professional references for the
candidate, (d) information as to whether the candidate is an "interested person"
in relation to such Fund, as such term is defined in the Investment Company Act
of 1940, as amended, and such other information that may be considered to impair
the candidate's independence and (e) any other information that may be helpful
to the Committee in evaluating the candidate.
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 Committee is accepting recommendations,
the recommendation will be forwarded to the Chair of the Committee and the
outside counsel to the independent trustees. Recommendations received at any
other time will be kept on file until such time as the Committee is accepting
recommendations, at which point they may be considered for nomination.
IV. CANDIDATE QUALIFICATIONS.
The Committee seeks to recruit and retain qualified independent
trustees of high integrity, whose skills and experience will enhance the Board's
ability to effectively represent the interests of the Funds' shareholders and
oversee the wide range of regulatory and business issues affecting the Funds.
The Committee seeks to consider a number of candidates when a vacancy on the
Board of Trustees occurs. Each candidate must meet certain basic requirements,
including relevant skills and experience, time availability and independence
from the management company, the adviser or service providers if qualifying as
an independent trustee. In addition, depending on the current composition of the
Board of Trustees and the mix of skills and backgrounds of the incumbent
trustees, the qualifications sought of a particular candidate may vary in
seeking to establish an effective Board with an appropriate range of skills and
experience, in the aggregate. In addition to relevant skills and experience, all
candidates must possess high standards of personal integrity that are assessed
on the basis of personal interviews, recommendations, or direct knowledge by
Committee members.
V. REVIEW PROCESS.
Recommendations for candidates to the Board of Trustees will be
evaluated in light of the current size and composition of the Board of Trustees
and expected changes thereto. The review process may include, without
limitation, personal interviews, background checks, written submissions by the
candidates and third party references. Background information on a potential
candidate initially will be forwarded to the Chair of the Committee and the
Page B-3
outside counsel to the independent directors. Under no circumstances shall the
Committee evaluate nominees recommended by a shareholder of the Funds on a basis
substantially different than that used for other nominees for the same election
or appointment of trustees.
VI. SOURCE OF RECOMMENDATIONS.
When seeking qualified candidates, the Committee and the Secretary (or
other person designated by the Committee), shall identify and organize the
recommendations received by the Committee (other than recommendations of persons
who are executive officers or who are directors standing for re-election) in
accordance with one or more of the following categories of persons or entities
that made such recommendation:
(1) a shareholder, independent director, chief executive
officer, or other executive officer of the Fund;
(2) a third-party search firm used by or on behalf of the
Fund;
(3) a shareholder, director, chief executive officer, other
executive officer, or employee of the investment company's (a)
investment advisor, (b) principal underwriter, or (c) affiliated person
of the investment adviser or principal underwriter; and
(4) any other specified source.
If it is determined that a nominee was initially recommended by a
shareholder or group of shareholders owning 5% or more of the Fund's voting
common securities, the Committee and Secretary or other person designated by the
Committee shall identify such candidate and the shareholder making such
recommendation in the Fund's proxy statement, as required under Item
7(d)(2)(ii)(L) of Schedule 14A under the Securities Exchange Act of 1934.
VII. DISCLOSURE OF CHANGES TO NOMINATION PROCEDURES.
For proposes of facilitating disclosure required in Form N-CSR, the
Committee and the Secretary (or other person designated by the Committee) shall
identify any material changes to the procedures for shareholder nominations for
the reporting period in which such material changes occur.
VIII. DISCLOSURE OF CHARTERS.
The Charter of the Committee shall be posted to the website for the
Funds.
Page B-4
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DETACH HERE ZFTVL2
PROXY
FIRST TRUST VALUE LINE(R) 100 FUND
PRROXY SOLICITED BY THE BOARD OF TRUSTEES
ANNUAL MEETING ON APRIL 19, 2004
The undersigned holder of shares of the First Trust Value Line(R) 100 Fund (the
"Fund"), a Massachusetts business trust, hereby appoints W. Scott Jardine, Mark
R. Bradley and James A. Bowen 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., 1001
Warrenville Road, Suite 300, Lisle, IL 60532, at 10:00 a.m. Central time on the
date indicated above, and any adjournment or adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated March 19, 2004, 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. 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.
----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
----------- -----------
FIRST TRUST VALUE LINE(R) 100 FUND
C/O PFPC INC.
P.O. BOX 8586
EDISON, NJ 08818-8586
DETACH HERE ZFTVL1
[X] Please mark | 3496
votes as in |
this example. --------
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 EACH NOMINEE SET FORTH.
1. Election of Trustees.
(01) James A. Bowen (04) Thomas R. Kadlec
(02) Richard E. Erickson (05) David M. Oster
(03) Neil B. Nielson
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ] _______________________________________
For all nominees except as noted above
Mark box at right if an address change or comment
has been noted on the reverse side of this card. [ ]
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears on this
Proxy. If joint owners, EITHER may sign this Proxy. When
signing as attorney, executor, administrator, trustee,
guardian or corporate officer, please give full title.
Signature:_______________ Date:_______ Signature:_______________ Date:_______