As filed with the Securities and Exchange Commission on March 12,April 9, 2014.
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1933 Act File No. 333-116023
1940 Act File No. 811-21586
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 ENHANCED EQUITY 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:
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
FIRST TRUST ENERGY INCOME AND GROWTH FUND
FIRST TRUST ENHANCED EQUITY INCOME FUND
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
FIRST TRUST MORTGAGE INCOME FUND
FIRST TRUST STRATEGIC HIGH INCOME FUND II
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
FIRST TRUST SPECIALTY FINANCE AND FINANCIAL OPPORTUNITIES FUND
FIRST TRUST DIVIDEND AND INCOME FUND
FIRST TRUST HIGH INCOME LONG/SHORT FUND
FIRST TRUST ENERGY INFRASTRUCTURE FUND
FIRST TRUST MLP AND ENERGY INCOME FUND
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND
120 East Liberty Drive, SuiteEAST LIBERTY DRIVE, SUITE 400
Wheaton, IllinoisWHEATON, ILLINOIS 60187
March 7,April 9, 2014
Dear Shareholder:Shareholders:
The accompanying materials relate to the Joint AnnualSpecial Meetings of
Shareholders (collectively,(referred to as the "Meeting") of Macquarie/First Trust Global
Infrastructure/Utilities Dividend & Income Fund, First Trust Energy Income and
Growth Fund, First Trust Enhanced Equity
Income Fund First Trust/Aberdeen
Global Opportunity Income Fund, First Trust Mortgage Income Fund, First Trust
Strategic High Income Fund II, First Trust/Aberdeen Emerging Opportunity Fund,
First Trust Specialty Finance and Financial Opportunities Fund, First Trust Dividend and Income Fund, First Trust High Income Long/Short Fund, First Trust
Energy Infrastructure Fund, First Trust MLP and Energy Income Fund and First
Trust Intermediate Duration Preferred & Income Fund (each, a "Fund" and
collectively, the "Funds"). The Meeting will be held at the offices of First
Trust Advisors L.P., 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187,
on Wednesday, April 23,Monday, June 9, 2014, at 4:3000 p.m. Central Time.
At the Meeting, you will be asked (1) to consider and vote on a proposal
to elect one of
the Trustees ofapprove a new investment sub-advisory agreement ("New Sub-Advisory
Agreement") among your Fund, (the "Proposal"First Trust Advisors L.P. ("First Trust Advisors"),
each Fund's investment adviser, and Chartwell Investment Partners, Inc.
("Chartwell"), each Fund's investment sub-adviser; and (2) to transact such
other business as may properly come before the Meeting and any adjournments or
postponements thereof.
The Proposal isAs described in the accompanying Notice of Joint Annual
Meetings of Shareholders and Joint Proxy Statement.
YOUR PARTICIPATION AT THE MEETING IS VERY IMPORTANT. If you cannot attendStatement, on March 5, 2014,
TriState Capital Holdings, Inc. completed its acquisition of Chartwell
Investment Partners, L.P. (the "Transaction"). As a result, under applicable
law, the then-effective investment sub-advisory agreements among the Funds,
Chartwell Investment Partners, L.P. and First Trust Advisors automatically
terminated. Chartwell (which, in connection with the Transaction, is now
structured as a corporation rather than as a limited partnership) currently
provides investment sub-advisory services to each Fund on an interim basis, as
permitted by the Investment Company Act of 1940. In order for Chartwell to
continue to provide services to each Fund beyond the interim period, however, as
indicated above, shareholders of each Fund will be asked at the Meeting you may participate by proxy. As a Shareholder, you cast oneto vote
forto approve the applicable New Sub-Advisory Agreement. The Board of Trustees of
each shareFund is recommending that shareholders of aeach Fund that you own and a proportionate fractional vote for
any fraction of a share that you own.approve its New
Sub-Advisory Agreement.
YOUR VOTE IS IMPORTANT. Please take a few momentsmoment now to read the
enclosed materialsvote, either by
completing 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 signreturning your proxy card and return itcard(s) in the enclosed postage-paid envelope.return
envelope, by telephone or through the Internet. Your prompt response will be
much appreciated.
We appreciate your participation in this important Meeting.
Thank you.
Sincerely,
/s/ James A. Bowen
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James A. Bowen
Chairman of the BoardBoards
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IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING THE PROPOSAL OR HOW
TO VOTE YOUR SHARES, PLEASE CALL THE FUNDS' PROXY SOLICITOR, AST FUND SOLUTIONS,
LLC, AT (866) 530-8634 WEEKDAYS FROM 9:00 A.M. TO 10:00 P.M. EASTERN TIME.
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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 your 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
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
FIRST TRUST ENERGY INCOME AND GROWTH FUND
FIRST TRUST ENHANCED EQUITY INCOME FUND
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
FIRST TRUST MORTGAGE INCOME FUND
FIRST TRUST STRATEGIC HIGH INCOME FUND II
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
FIRST TRUST SPECIALTY FINANCE AND FINANCIAL OPPORTUNITIES FUND
FIRST TRUST DIVIDEND AND INCOME FUND
FIRST TRUST HIGH INCOME LONG/SHORT FUND
FIRST TRUST ENERGY INFRASTRUCTURE FUND
FIRST TRUST MLP AND ENERGY INCOME FUND
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND
120 EAST LIBERTY DRIVE, SUITE 400
WHEATON, ILLINOIS 60187
NOTICE OF JOINT ANNUALSPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD ON APRIL 23,JUNE 9, 2014
March 7,April 9, 2014
To the Shareholders of the above Funds:First Trust Enhanced Equity Income Fund and First Trust
Dividend and Income Fund:
Notice is hereby given that the Joint AnnualSpecial Meetings of Shareholders
(collectively,(referred to as the "Meeting") of Macquarie/First Trust Global Infrastructure/
Utilities Dividend & Income Fund, First Trust Energy Income and Growth Fund, First Trust Enhanced Equity Income Fund First Trust/Aberdeen Global Opportunity
Income Fund, First Trust Mortgage Income Fund, First Trust Strategic High Income
Fund II, First Trust/Aberdeen Emerging Opportunity Fund, First Trust Specialty
Finance and Financial Opportunities Fund,
First Trust Dividend and Income Fund,
First Trust High Income Long/Short Fund, First Trust Energy Infrastructure Fund,
First Trust MLP and Energy Income Fund and First Trust Intermediate Duration
Preferred & Income Fund (each, a "Fund" and collectively, the
"Funds"), each 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 Wednesday, April 23,Monday, June 9, 2014, at 4:3000 p.m. Central Time, for the following
purposes:
1. To elect one TrusteeFor each Fund, to approve a new investment sub-advisory agreement
among the Fund, First Trust Advisors L.P., as investment adviser, and
Chartwell Investment Partners, Inc., as investment sub-adviser (the
Class I Trustee) of"Proposal").
2. For each Fund.
2. ToFund, to transact such other business as may properly
come before the Meeting or(including any adjournments or postponements thereof.postponements).
The Board of Trustees has fixed the close of business on January 31,March 17, 2014 has been fixed 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 BoardBoards of Trustees,
/s/ W. Scott Jardine
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W. Scott Jardine
Secretary
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SHAREHOLDERSIT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. IN ORDER TO
AVOID DELAY AND TO ENSURE THAT YOUR SHARES ARE REQUESTEDREPRESENTED, PLEASE VOTE AS
PROMPTLY AS POSSIBLE. YOU MAY VOTE EASILY AND QUICKLY BY MAIL, TELEPHONE OR
THROUGH THE INTERNET. TO PROMPTLYVOTE BY MAIL, PLEASE COMPLETE SIGN, DATE AND RETURN THEMAIL YOUR PROXY CARD
IN THE ENCLOSED ENVELOPE WHICH DOES NOT REQUIRE POSTAGE IF MAILED INPOSTAGE-PAID RETURN ENVELOPE. ALTERNATIVELY, SHAREHOLDERS MAY
VOTE BY TELEPHONE OR THROUGH THE CONTINENTAL UNITED STATES.INTERNET BY FOLLOWING THE INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE
SET FORTH ON THE
INSIDE COVER OF THIS PROXY STATEMENT.CARD. IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING THE
PROPOSAL OR HOW TO VOTE YOUR SHARES, PLEASE CALL THE FUNDS' PROXY SOLICITOR, AST
FUND SOLUTIONS, LLC, AT (866) 530-8634 WEEKDAYS FROM 9:00 A.M. TO 10:00 P.M.
EASTERN TIME.
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
FIRST TRUST ENERGY INCOME AND GROWTH FUND
FIRST TRUST ENHANCED EQUITY INCOME FUND
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
FIRST TRUST MORTGAGE INCOME FUND
FIRST TRUST STRATEGIC HIGH INCOME FUND II
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
FIRST TRUST SPECIALTY FINANCE AND FINANCIAL OPPORTUNITIES FUND
FIRST TRUST DIVIDEND AND INCOME FUND
FIRST TRUST HIGH INCOME LONG/SHORT FUND
FIRST TRUST ENERGY INFRASTRUCTURE FUND
FIRST TRUST MLP AND ENERGY INCOME FUND
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND
JOINT ANNUALSPECIAL MEETINGS OF SHAREHOLDERS
APRIL 23,TO BE HELD ON JUNE 9, 2014
120 East Liberty Drive, SuiteEAST LIBERTY DRIVE, SUITE 400
Wheaton, IllinoisWHEATON, ILLINOIS 60187
JOINT PROXY STATEMENT
MARCH 7,APRIL 9, 2014
THIS JOINT PROXY STATEMENT AND THE ENCLOSED PROXY CARD WILL FIRST BE
MAILED TO SHAREHOLDERS ON OR ABOUT MARCH 14,APRIL 15, 2014.
This Joint Proxy Statement is furnished in connection with the
solicitation of proxies by the Boards of Trustees
(referred to collectively as the "Board") of Macquarie/First Trust
Global Infrastructure/Utilities Dividend & Income Fund, First Trust Energy
Income and Growth Fund, First Trust Enhanced Equity Income
Fund First
Trust/Aberdeen Global Opportunity(the "Equity Income Fund, First Trust Mortgage Income Fund,
First Trust Strategic High Income Fund II, First Trust/Aberdeen Emerging
Opportunity Fund, First Trust Specialty FinanceFund") and Financial Opportunities
Fund, First Trust Dividend and Income Fund First Trust High(the
"Dividend and Income Long/Short
Fund, First Trust Energy Infrastructure Fund, First Trust MLPFund" and, Energytogether with the Equity Income Fund, the
"Funds," and First Trust Intermediate Duration Preferred & Income Fund (eacheach, a "Fund" and collectively the "Funds"), each a Massachusetts business trust, for
usein connection
with the solicitation by the Board of proxies to be voted at the AnnualJoint Special
Meetings of Shareholders of the Funds to be held on Wednesday,
April 23,Monday, June 9, 2014, at 4:30 p.m. Central Time, at the
offices of First Trust Advisors L.P. ("First Trust Advisors" or the "Advisor"),
located at 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187, at 4:00
p.m. Central time and at any and all adjournments or postponements thereof
(collectively,(referred to collectively as the "Meeting"). A Notice of Joint AnnualSpecial Meetings
of Shareholders and a proxy card accompany this Joint Proxy Statement. The Boards of Trustees of the Funds haveBoard
has determined that the use of this Joint Proxy Statement is in the best
interests of each Fund in light of the same matter being considered and voted on
by shareholders.
The principal offices of First Trust Energy Income and Growth Fund and
First Trust MLP and Energy Income Fund are located at 187 Danbury Road, Wilton,
Connecticut 06897. The principal offices of each of the other Funds 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 Funds, including any agents or affiliates
of such service providers.
The costs incurred in connection with the preparation of this Joint Proxy
Statement and its enclosures will be paid by the Funds. The Funds 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 31,March 17, 2014 has been fixed as the record date
(the "Record Date") for the determination of shareholders of each Fund entitled
to notice of, and to vote at, the Meeting.
As discussed more fully below, shareholders of each Fund are being asked:
1. To approve a new investment sub-advisory agreement (a "New
Sub-Advisory Agreement"), among the Fund, First Trust Advisors, as
investment adviser, and Chartwell Investment Partners, Inc. ("New
Chartwell" or the "Sub-Adviser"), as investment sub-adviser.
2. To transact any other business as may properly come before the
Meeting (including any adjournments or postponements).
GENERAL INFORMATION
Each 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 23, 2014. This Joint Proxy Statement is
availableShareholders of record on the
Internet at http://www.ftportfolios.com/LoadContent/gh3dkp3ugc.
Each Fund's most recent annualRecord Date are entitled to one vote for each Share the shareholder owns and semi-annual reportsa
proportionate fractional vote for any fraction of a Share the shareholder owns.
On the Record Date, each Fund had the following number of Shares
outstanding:
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FUND AND TICKER SYMBOL SHARES OUTSTANDING
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Equity Income Fund (FFA) 19,973,164
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Dividend and Income Fund (FAV) 8,259,517
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Shares of each Fund are also availablelisted on the Internet at http://www.ftportfolios.com. To find a report, select your FundNew York Stock Exchange under the
"Closed-End Funds" tab, select the "News & Literature" link, and go to
the "Quarterly/Semi-Annual or Annual Reports" heading. In addition, the Funds
will furnish, without charge, copies of their 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;
oticker symbol shown above.
For shareholders voting by 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 4:30 P.M.
CENTRAL TIME, on WEDNESDAY, APRIL 23, 2014. (However, proxies
received after this date may still be voted in the event the Meeting
is adjourned or postponed to a later date.)
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VOTING
As described further in the proposal, for each Fund, the affirmative vote
of a plurality of the Shares present and entitled to vote at the Meeting will be
required to elect the specified nominee as the Class I Trustee of that Fund
provided a quorum is present. Abstentions and broker non-votes 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 Fund 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 ofproposal to approve the specified nominee as the Class I Trusteeapplicable New Sub-Advisory Agreement 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 applicable Fund
at its address above.the above address. A list of shareholders entitled to notice of and to be
present and to vote at the Meeting will be available at the offices of the
Funds, 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 By-Laws of each 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 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 (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. 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 with respect to one or more matters 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.adjournment or adjournments.
Broker-dealer firms holding Shares in "street name" for the benefit of
their customers and clients may request voting instructions from such customers
and clients. Because broker-dealers may be subject to rules which will not
permit them to vote your Shares without instructions, you are encouraged to
contact your broker-dealer and record your voting instructions.
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Proxy solicitations will be largely by mail, but may include telephonic,
electronic or oral communication by officers and service providers of the Funds,
as well as affiliates of such service providers. A proxy solicitation firm, AST
Fund Solutions, LLC, has also been engaged to solicit proxies at a cost which is
expected to be approximately $47,000 for the Equity Income Fund and $25,000 for
the Dividend and Income Fund. These costs, as well as the costs of preparing,
printing and mailing the enclosed proxy, accompanying notice and this Joint
Proxy Statement, and all other costs in connection with the solicitation of
proxies to be voted at the Meeting, will be borne by the Sub-Adviser. The
Sub-Adviser will also reimburse brokerage firms and others for their expenses in
forwarding proxy solicitation materials to the person(s) for whom they hold
Shares of each Fund.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON JUNE 9, 2014. THIS JOINT PROXY STATEMENT IS
AVAILABLE ON THE INTERNET AT:
HTTP://WWW.FTPORTFOLIOS.COM/LOADCONTENT/GH4D1PT38R.
THE FUNDS' MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS ARE ALSO AVAILABLE ON THE
INTERNET AT:
HTTP://WWW.FTPORTFOLIOS.COM/RETAIL/CEF/CEFFUNDNEWS.ASPX?TICKER=FFA
(FOR THE EQUITY INCOME FUND) AND
HTTP://WWW.FTPORTFOLIOS.COM/RETAIL/CEF/CEFFUNDNEWS.ASPX?TICKER=FAV
(FOR THE DIVIDEND AND INCOME FUND).
THE FUNDS WILL FURNISH, WITHOUT CHARGE, COPIES OF THEIR MOST RECENT ANNUAL AND
SEMI-ANNUAL REPORTS TO ANY SHAREHOLDER UPON REQUEST. TO REQUEST A COPY, PLEASE
WRITE TO 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, please vote
your proxy as soon as possible either by mail or by telephone or through
the Internet, as indicated on the enclosed proxy card. If voting by mail,
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 4:00 P.M.
CENTRAL TIME, on MONDAY, JUNE 9, 2014. (However, proxies received
after this date may still be voted in the event of an adjournment or
postponement of the Meeting to a later date.)
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OUTSTANDING SHARES
OnPROPOSAL: APPROVAL OF A NEW INVESTMENT SUB-ADVISORY
AGREEMENT FOR EACH FUND
BACKGROUND AND REASON FOR VOTE
At the Record Date,Meeting, shareholders of each Fund will be asked to approve a New
Sub-Advisory Agreement for their Fund with New Chartwell. Previously, Chartwell
Investment Partners, L.P. ("Old Chartwell"; Old Chartwell and New Chartwell are
referred to collectively as "Chartwell") served as the investment sub-adviser to
each Fund pursuant to an investment sub-advisory agreement among the Advisor,
Old Chartwell and the respective Fund (in each case, a "Prior Sub-Advisory
Agreement"). In January 2014, Old Chartwell entered into a definitive asset
purchase agreement with TriState Capital Holdings, Inc. ("TriState") and on
March 5, 2014 (the "Closing Date"), TriState completed its acquisition of
substantially all of Old Chartwell's assets (the "Transaction"). The
consummation of the Transaction resulted in an "assignment," as that term is
used in the Investment Company Act of 1940 (the "1940 Act"), of the Prior
Sub-Advisory Agreements. Section 15 of the 1940 Act requires, among other
things, that any investment advisory agreement, which includes an investment
sub-advisory agreement, provide for its automatic termination in the event of
its "assignment." Accordingly, the Prior Sub-Advisory Agreements automatically
terminated on the Closing Date in accordance with their terms and the
requirements of the 1940 Act. Since the Closing Date, New Chartwell has served
as investment sub-adviser to each Fund pursuant to an Interim Sub-Advisory
Agreement (as defined and described below).
In anticipation of the completion of the Transaction and the termination
of the Prior Sub-Advisory Agreements, the Board held a meeting on February 20,
2014 (the "Board Meeting"), at which, after careful consideration, including of
presentations from representatives of TriState and Chartwell at a special Board
meeting in January 2014 (see "BOARD CONSIDERATIONS" below), the Trustees
determined that, following the Transaction, it would be in the best interests of
each Fund for Chartwell to continue to act as sub-adviser to the respective
Fund. Accordingly, to ensure the continuation of portfolio management services
to the Funds after the Closing Date, as permitted under the 1940 Act and Rule
15a-4 thereunder ("Rule 15a-4"), for each Fund, the Board, including a majority
of the Trustees who are not "interested persons" (as defined in the 1940 Act)
(the "Independent Trustees"), approved an interim sub-advisory agreement among
the Fund, the Advisor and New Chartwell (each, an "Interim Sub-Advisory
Agreement"). The Interim Sub-Advisory Agreements have been in effect since the
Closing Date and, pursuant to Rule 15a-4 under the 1940 Act, will be in effect
no longer than through August 2, 2014 (i.e., 150 days after the termination of
the Prior Sub-Advisory Agreements (see "THE INTERIM SUB-ADVISORY AGREEMENTS"
below)). In addition, at the Board Meeting, for each Fund, the Board, including
a majority of the Independent Trustees, approved, subject to shareholder
approval, the applicable New Sub-Advisory Agreement. Most of the terms and
provisions of each New Sub-Advisory Agreement are the same as the corresponding
terms and provisions of the applicable Prior Sub-Advisory Agreement (as
described below under "COMPARISON OF CERTAIN TERMS OF THE NEW SUB-ADVISORY
AGREEMENTS AND PRIOR SUB-ADVISORY AGREEMENTS").
INFORMATION ABOUT CHARTWELL INVESTMENT PARTNERS, INC. AND TRISTATE CAPITAL
HOLDINGS, INC.
Chartwell Investment Partners, Inc.
New Chartwell, located at 1235 Westlakes Drive, Berwyn, Pennsylvania
19312, is an investment adviser registered with the Securities and Exchange
Commission. Founded in 1997, the firm focuses on institutional, sub-advisory,
and private client relationships and is a quality-based equity and fixed-income
-4-
manager with a disciplined, team-oriented investment process. While Old
Chartwell was primarily employee-owned and structured as a Pennsylvania limited
partnership, New Chartwell is a wholly-owned subsidiary of TriState and
structured as a Pennsylvania corporation. As of March 31, 2014, New Chartwell
had approximately $7.7 billion of assets under management.
The names, positions with New Chartwell and principal occupations of the
following numberpersons who are principal executive officers and directors of Shares
outstanding:New Chartwell are
listed below:
------------------------------------------------------------------------------------------- -------------- ----------------
TICKER SHARES----------------------- -------------------------------------------------------------------------
NAME POSITION(S) WITH NEW CHARTWELL AND PRINCIPAL OCCUPATION
----------------------- -------------------------------------------------------------------------
Timothy J. Riddle Managing Partner, Director and Chief Executive Officer ("CEO") of
New Chartwell
----------------------- -------------------------------------------------------------------------
Michael J. McCloskey Managing Partner, Director of Client Services of New Chartwell
----------------------- -------------------------------------------------------------------------
G. Gregory Hagar Managing Partner, Chief Financial Officer and Chief Compliance Officer
of New Chartwell
----------------------- -------------------------------------------------------------------------
James F. Getz Director and Chairman of New Chartwell; Chairman of the Board, CEO
and President of TriState
----------------------- -------------------------------------------------------------------------
James Minnick Director of New Chartwell; President and Director of Lovell Minnick
Partners LLC, a Philadelphia private equity investment company
----------------------- -------------------------------------------------------------------------
Richard Seidel Director of New Chartwell; Chairman of Girard Partners, Ltd., a
registered investment advisory firm; Chairman of Girard Capital, LLC,
a registered broker-dealer
----------------------- -------------------------------------------------------------------------
James Dolan Director of New Chartwell; Managing Partner of Voyager Group L.P., a
diversified company that invests in businesses involving technology,
financial services, aviation and natural resources
----------------------- -------------------------------------------------------------------------
The business address for Messrs. Riddle, McCloskey and Hagar is 1235 Westlakes
Drive, Suite 400, Berwyn, Pennsylvania 19312. The business address for Messrs.
Getz, Minnick, Seidel and Dolan is 301 Grant Street, Suite 2700, Pittsburgh,
Pennsylvania 15219.
TriState Capital Holdings, Inc.
TriState is a bank holding company headquartered in Pittsburgh,
Pennsylvania that, in addition to its ownership of New Chartwell, provides
through its wholly-owned subsidiary, TriState Capital Bank, commercial banking,
private banking and investment management services to middle-market companies,
institutional clients and high-net-worth individuals. Its principal executive
offices are located at One Oxford Centre, 301 Grant Street, Suite 2700,
Pittsburgh, Pennsylvania 15219.
Similar Funds Sub-Advised by New Chartwell
The Funds have similar investment objectives. New Chartwell does not
advise or sub-advise any other funds with investment objectives similar to those
of either of the Funds. Information about the size of each Fund and annual rate
of compensation paid to New Chartwell for its services as investment sub-adviser
to each Fund is set forth below:
-5-
--------------------------- ---------------------------- ----------------------------------------
FUND SYMBOL (1) OUTSTANDING
------------------------------------------------------------------------------------------- -------------- ----------------TOTAL MANAGED ASSETS OF ANNUAL RATE OF COMPENSATION
FUND AS OF MARCH 31, 2014
--------------------------- ---------------------------- ----------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOMEEquity Income Fund Approximately $304.6 million 0.50% of managed assets*
--------------------------- ---------------------------- ----------------------------------------
Dividend and Income Fund Approximately $103.3 million 0.50% of managed assets allocated** to
the Sub-Adviser*
--------------------------- ---------------------------- ----------------------------------------
*Except to the extent offset by payments made under the applicable Related
Agreement (as defined below), the Sub-Adviser has not waived, reduced or
otherwise agreed to reduce its compensation for sub-advisory services.
**With respect to the Dividend and Income Fund, the Sub-Adviser manages
the equity component of such Fund's portfolio.
PORTFOLIO MANAGEMENT
The closing of the Transaction did not result in any changes to the
portfolio managers serving the Funds. The portfolio managers identified below
are currently responsible for providing day-to-day portfolio management services
to each Fund under the applicable Interim Sub-Advisory Agreement and were also
responsible for providing such services under the applicable Prior Sub-Advisory
Agreement. It is expected that they will continue to serve as portfolio managers
to each Fund if shareholders approve the applicable New Sub-Advisory Agreement.
DOUGLAS W. KUGLER, CFA
SENIOR PORTFOLIO MANAGER
Mr. Kugler is a portfolio manager on New Chartwell's large-cap equity
portfolio management team and has 17 years of investment industry experience.
His areas of focus include the Consumer Discretionary, Energy, Industrials,
Materials and Technology sectors of the market. From 1993 to 2003, he held
several positions at Morgan Stanley Investment Management (Miller Anderson &
Sherrerd) including Head of Mutual Fund Administration and Vice President and
Treasurer of the MAS Funds, and Junior Associate in the Equity Department, and
his last position held prior to joining Chartwell was Senior Associate and
Analyst for the Large Cap Value team. Mr. Kugler holds the Chartered Financial
Analyst designation and is a member of the CFA (Chartered Financial Analysts)
Institute and the CFA Society of Philadelphia. Mr. Kugler earned a Bachelor's
degree in Accounting from the University of Delaware.
PETER M. SCHOFIELD, CFA
SENIOR PORTFOLIO MANAGER
Mr. Schofield is a senior portfolio manager on New Chartwell's large-cap
equity portfolio management team and has 30 years of investment industry
experience. His areas of focus include the Consumer Staples, Financials, Health
Care, Industrials and Materials sectors of the market. From 2005 to 2010, he was
a Co-Chief Investment Officer at Knott Capital. From 1996 to 2005, he was a
Portfolio Manager at Sovereign Asset Management. Prior to Sovereign Asset
Management, he was a portfolio manager at Geewax, Terker & Company. Mr.
Schofield holds the Chartered Financial Analyst designation and is a member of
the CFA (Chartered Financial Analysts) Institute and the CFA Society of
Philadelphia. Mr. Schofield earned a Bachelor's degree in History from the
University of Pennsylvania.
-6-
THE PRIOR SUB-ADVISORY AGREEMENTS
Old Chartwell began serving as the investment sub-adviser to the Equity
Income Fund on September 14, 2007 and as the investment sub-adviser to the
Dividend and Income Fund on July 1, 2013. Set forth below is information
pertaining to the Prior Sub-Advisory Agreements.
------------------------- --------------------- ---------------------------------- -------------------------------------
FUND MFD 8,533,285
------------------------------------------------------------------------------------------- -------------- ----------------
FIRST TRUST ENERGY INCOME AND GROWTH FUND FEN 19,355,214
------------------------------------------------------------------------------------------- -------------- ----------------
FIRST TRUST ENHANCED EQUITY INCOME FUND FFA 19,973,164
------------------------------------------------------------------------------------------- -------------- ----------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND FAM 17,410,203
------------------------------------------------------------------------------------------- -------------- ----------------
FIRST TRUST MORTGAGE INCOME FUND FMY 4,213,115
------------------------------------------------------------------------------------------- -------------- ----------------
FIRST TRUST STRATEGIC HIGH INCOME FUND II FHY 8,458,869
------------------------------------------------------------------------------------------- -------------- ----------------
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND FEO 5,327,785
------------------------------------------------------------------------------------------- -------------- ----------------
FIRST TRUST SPECIALTY FINANCE AND FINANCIAL OPPORTUNITIES FUND FGB 14,290,840
------------------------------------------------------------------------------------------- -------------- ----------------
FIRST TRUST DIVIDEND AND INCOME FUND FAV 8,259,517
------------------------------------------------------------------------------------------- -------------- ----------------
FIRST TRUST HIGH INCOME LONG/SHORT FUND FSD 36,056,159
------------------------------------------------------------------------------------------- -------------- ----------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND FIF 17,550,236
------------------------------------------------------------------------------------------- -------------- ----------------
FIRST TRUST MLP AND ENERGY INCOME FUND FEI 45,439,454
------------------------------------------------------------------------------------------- -------------- ----------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND FPF 60,704,189
------------------------------------------------------------------------------------------- -------------- ----------------
1 The SharesDATE OF PRIOR DATE/PURPOSE OF LAST SUBMISSION DATE/PURPOSE OF ACTION(S) BY BOARD
SUB-ADVISORY TO SHAREHOLDERS SINCE BEGINNING OF LAST FISCAL YEAR
AGREEMENT
------------------------- --------------------- ---------------------------------- -------------------------------------
Equity Income Fund December 20, 2010 December 20, 2010; Purpose was to June 9-10, 2013; Continuation of
eachapprove a new sub-advisory Prior Sub-Advisory Agreement.
agreement with Old Chartwell in
connection with a change in
control of the Funds are listed onAdvisor that
resulted in the New York Stock Exchange
("NYSE") except fortermination of
the Sharesprevious sub-advisory
agreement with Old Chartwell.
------------------------- --------------------- ---------------------------------- -------------------------------------
Dividend and Income Fund September 16, 2013 September 16, 2013; Purpose was June 9-10, 2013; Initial approval of
First Trust Energy Incometo replace a former sub-adviser Prior Sub-Advisory Agreement.
and Growth
Fund, which are listed onadd Old Chartwell as a
sub-adviser in connection with a
repositioning of the NYSE MKT LLC.
Fund's
portfolio.
------------------------- --------------------- ---------------------------------- -------------------------------------
ShareholdersTHE INTERIM SUB-ADVISORY AGREEMENTS
New Chartwell currently provides sub-advisory services to each Fund under
the applicable Interim Sub-Advisory Agreement. Many of recordthe terms of each Interim
Sub-Advisory Agreement are substantially similar to those of the applicable
Prior Sub-Advisory Agreement; however, there are some differences, including
differences in provisions relating to effective date, termination and
compensation.
Each Interim Sub-Advisory Agreement is currently in effect and, unless
terminated sooner in accordance with its terms, will continue to be in effect
through August 2, 2014 (i.e., 150 days after the completion of the Transaction;
the "Interim Termination Date") or until shareholders of the Fund approve the
Fund's New Sub-Advisory Agreement, whichever occurs first. If shareholders of a
Fund do not approve the Fund's New Sub-Advisory Agreement, the Board will take
such action as it deems to be in the best interests of the Fund. In addition,
each Interim Sub-Advisory Agreement may be terminated by the Fund by action of
the Board or by a vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund upon 10 calendar days' written notice.
For each Fund, the rate of compensation paid to the Sub-Adviser is the
same under its Interim Sub-Advisory Agreement, Prior Sub-Advisory Agreement and
New Sub-Advisory Agreement. However, the compensation accrued under each Interim
Sub-Advisory Agreement is to be held in an interest-bearing escrow account with
the respective Fund's custodian or another bank designated by the Fund. If the
New Sub-Advisory Agreement is approved by shareholders on or before the Interim
Termination Date, the amount in the escrow account (including the interest
earned) will be paid to New Chartwell. However, if shareholders of a Fund do not
approve its New Sub-Advisory Agreement by such date, New Chartwell will be paid,
out of the escrow account, the lesser of: (i) any costs incurred by New
Chartwell in performing services under the Interim Sub-Advisory Agreement (plus
interest earned on that amount while in escrow); or (ii) the total amount in the
escrow account (plus interest earned).
-7-
COMPARISON OF CERTAIN TERMS OF THE NEW SUB-ADVISORY AGREEMENTS AND PRIOR
SUB-ADVISORY AGREEMENTS
Below is a brief comparison of certain terms of the Prior Sub-Advisory
Agreements to the corresponding terms of the New Sub-Advisory Agreements. Many
of the terms of the New Sub-Advisory Agreements and the Prior Sub-Advisory
Agreements are the same. However, the name of the Sub-Adviser has changed from
Chartwell Investment Partners, L.P. to Chartwell Investment Partners, Inc. as it
is now a Pennsylvania corporation rather than a Pennsylvania limited
partnership. In addition, the effective and termination dates have changed. If
approved by shareholders, the New Sub-Advisory Agreements will be effective as
of the date of such approval and will remain in effect through June 30, 2015
(unless sooner terminated in accordance with their terms); thereafter, they may
be continued for successive one-year periods as described below under
"Continuance." The form of New Sub-Advisory Agreement for each Fund is attached
to this Joint Proxy Statement as Exhibit A-1 (for the Equity Income Fund) and
Exhibit A-2 (for the Dividend and Income Fund) and the description of the New
Sub-Advisory Agreements is qualified in its entirety by reference to such
Exhibits.
Sub-Advisory Services. As was the case under the Prior Sub-Advisory
Agreement for the Equity Income Fund, under the New Sub-Advisory Agreement for
such Fund, the Sub-Adviser will furnish an investment program in respect of,
make investment decisions for, and place orders for the purchase and sale of
securities for the Fund's investment portfolio, all on behalf of the Fund and
subject to the supervision of the Fund's Board and the Advisor. Similarly, as
was the case under the Prior Sub-Advisory Agreement for the Dividend and Income
Fund, under the New Sub-Advisory Agreement for such Fund, the Sub-Adviser will
furnish an investment program in respect of, make investment decisions for, and
place orders for the purchase and sale of securities and other instruments for
the Fund's investment portfolio, all on behalf of the Fund and subject to the
supervision of the Fund's Board and the Advisor. As was the case under the Prior
Sub-Advisory Agreements, under the New Sub-Advisory Agreements, the Sub-Adviser
is required to monitor the applicable Fund's investments and to comply with the
provisions of such Fund's Declaration of Trust and By-Laws and the stated
investment objectives, policies and restrictions of the Fund.
Brokerage. As was the case under the Prior Sub-Advisory Agreements, the
New Sub-Advisory Agreements authorize the Sub-Adviser to select the brokers or
dealers that will execute the purchases and sales of portfolio investments for
the applicable Fund, and direct the Sub-Adviser to use its commercially
reasonable efforts to obtain best execution, which includes most favorable net
results and execution of the Fund's orders, taking into account all appropriate
factors, including price, dealer spread or commission, size and difficulty of
the transaction and research or other services provided.
Fees. The New Sub-Advisory Agreements will not result in changes to the
Funds' investment sub-advisory fees, nor will they result in changes to any of
the Funds' other fees. As was the case under the Prior Sub-Advisory Agreements,
under the New Sub-Advisory Agreements, the Advisor will pay the Sub-Adviser a
portfolio management fee on a monthly basis. Both the Prior Sub-Advisory
Agreement and the New Sub-Advisory Agreement for the Equity Income Fund provide
that for services provided and expenses assumed, the Advisor will pay the
Sub-Adviser a fee equal to the annual rate of 0.50% of such Fund's "Managed
Assets" (i.e., average daily gross assets of the Fund, minus the sum of the
Fund's accrued and unpaid dividends on any outstanding common shares and accrued
liabilities (including the value of call options written (sold))). For the
Dividend and Income Fund, both the Prior Sub-Advisory Agreement and the New
Sub-Advisory Agreement provide that for services provided and expenses assumed,
the Advisor will pay the Sub-Adviser a fee equal to the annual rate of 0.50% of
-8-
such Fund's "Managed Assets" allocated to the Sub-Adviser (to reflect that an
allocable portion of such Fund's Managed Assets (i.e., the equity component of
the Fund's portfolio) is managed by the Sub-Adviser); the term "Managed Assets"
means the average daily gross asset value of the Fund (including assets
attributable to the Fund's preferred shares, if any, and the principal amount of
borrowings, if any), minus the sum of the Fund's accrued and unpaid dividends on
any outstanding preferred shares and accrued liabilities (other than the
principal amount of any borrowings incurred, commercial paper or notes issued by
the Fund). For purposes of determining Managed Assets for the Dividend and
Income Fund, the liquidation preference of any outstanding preferred shares of
the Fund is not treated as a liability. (The Dividend and Income Fund has no
outstanding preferred shares.)
For each Fund's last fiscal year, the aggregate amount of the sub-advisory
fees paid by the Advisor to Chartwell was $1,422,374 (for the Equity Income
Fund) and $158,945.83 (for the Dividend and Income Fund). For the Dividend and
Income Fund, $77,565.40 was paid for the period from September 16, 2013 through
November 30, 2013 under the Prior Sub-Advisory Agreement, and $81,380.43 was
paid for the period from July 1, 2013 through September 15, 2013 under an
interim sub-advisory agreement that was in effect prior to shareholder approval
of the Prior Sub-Advisory Agreement.
Payment of Expenses. As was the case under the Prior Sub-Advisory
Agreements, under the New Sub-Advisory Agreements, the Sub-Adviser agrees to pay
all expenses it incurs in connection with its activities under such Agreement
other than (i) the cost of securities and other assets purchased for the Fund
and (ii) the costs directly associated with purchasing and selling securities
and other assets for the Fund, if any, including, but not limited to, brokerage
commissions, stamps, duties, taxes and custody fees related to transfers.
Limitation of Liability. As was the case under the Prior Sub-Advisory
Agreements, each New Sub-Advisory Agreement provides that the Sub-Adviser will
not be liable for, and the Fund and the Advisor will not take any action against
the Sub-Adviser to hold the Sub-Adviser liable for, any error of judgment or
mistake of law or for any loss suffered by the Fund or the Advisor in connection
with the performance of the Sub-Adviser's duties under the Agreement, except for
a loss resulting from willful misfeasance, bad faith or gross negligence on the
Record Datepart of the Sub-Adviser in the performance of its duties under such Agreement,
or by reason of its reckless disregard of its obligations and duties under such
Agreement.
Continuance. Each Fund's Prior Sub-Advisory Agreement was originally in
effect for an initial term of two years and could be continued thereafter for
successive one-year periods if such continuance was specifically approved at
least annually in the manner required by the 1940 Act. If the shareholders of
the Funds approve the New Sub-Advisory Agreements, the New Sub-Advisory
Agreements will remain in effect through June 30, 2015 (unless sooner terminated
in accordance with such Agreements). Thereafter, each New Sub-Advisory Agreement
may be continued for successive one-year periods if such continuance is
specifically approved at least annually in the manner required by the 1940 Act
and the rules and regulations thereunder.
Termination. As was the case under each Prior Sub-Advisory Agreement, each
New Sub-Advisory Agreement provides for termination: (1) automatically in the
event of its assignment (as defined in the 1940 Act and rules and regulations
thereunder); (2) at any time without the payment of any penalty by the Advisor
or the Sub-Adviser upon 60 days' written notice to the other parties; and (3) by
action of the Board or by a vote of a majority of the outstanding voting
securities (as defined in the 1940 Act and rules and regulations thereunder) of
the Fund upon 60 days' written notice to the Sub-Adviser without the payment of
any penalty. In addition, each Prior Sub-Advisory Agreement was, and each New
Sub-Advisory Agreement is, terminable at any time without the payment of any
penalty by the Advisor, by the Board or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act and rules and regulations
-9-
thereunder) of the Fund in the event that it is established by a court of
competent jurisdiction that the Sub-Adviser or any of its officers or directors
have taken any action that results in a breach of the material covenants of the
Sub-Adviser set forth in the Agreement.
RELATED AGREEMENTS
Equity Income Fund
On September 14, 2007, Old Chartwell and the Advisor entered into an
agreement to address certain matters pertaining to the Equity Income Fund (such
agreement, the "Equity Income Fund Related Agreement"). Among other things,
under the Equity Income Fund Related Agreement, Chartwell is obligated to
reimburse the Advisor for a portion of certain "incentive fee" payments payable
by the Advisor to certain underwriters of the Equity Income Fund's initial
public offering up to specified limits.
Dividend and Income Fund
On July 1, 2013, Old Chartwell and the Advisor entered into an agreement
to address certain matters pertaining to the Dividend and Income Fund (such
agreement, the "Dividend and Income Fund Related Agreement" and, together with
the Equity Income Fund Related Agreement, the "Related Agreements"). Among other
things, under the Dividend and Income Fund Related Agreement, Chartwell is
obligated to reimburse the Advisor for a portion of certain "services fee"
payments payable by the Advisor to the lead underwriter of the Dividend and
Income Fund's initial public offering.
SECTION 15(F) OF THE 1940 ACT
Section 15(f) of the 1940 Act is a safe harbor that provides in substance
that, when a sale of a controlling interest in an investment adviser occurs, the
investment adviser or any of its affiliated persons may receive any amount or
benefit in connection with the sale as long as two conditions are met. The first
condition specifies that, during the three-year period immediately following
consummation of the transaction, at least 75% of the investment company's board
of directors/trustees must not be "interested persons" (as defined in the 1940
Act) of the investment adviser or predecessor adviser. The second condition
specifies that no "unfair burden" may be imposed on the investment company as a
result of the transaction relating to the sale of such interest, or any express
or implied terms, conditions or understandings applicable thereto. The term
"unfair burden," as defined in the 1940 Act, includes any arrangement, during
the two-year period after the transaction occurs, whereby the investment adviser
(or predecessor or successor adviser), or any interested person of any such
investment adviser, receives or is entitled to one votereceive any compensation,
directly or indirectly (i) from any person in connection with the purchase or
sale of securities or other property, to, from or on behalf of the investment
company (other than bona fide ordinary compensation as principal underwriter for
the investment company) or (ii) from the investment company or its security
holders for other than bona fide investment advisory or other services. If
either condition of Section 15(f) is not met, the safe harbor is not available.
The Board has not been advised of any circumstances arising under the
Transaction that might result in the imposition of an "unfair burden" being
imposed on either Fund.
-10-
BOARD CONSIDERATIONS
The Board, including a majority of the Independent Trustees, approved the
Interim Sub-Advisory Agreements and the New Sub-Advisory Agreements
(collectively, the "Agreements") at the Board Meeting. The Board determined that
the terms of the Agreements are fair and reasonable and in the best interests of
each Fund. Based on information provided by Old Chartwell, the predecessor
entity to New Chartwell and then-current sub-adviser to each Fund, the Board,
including a majority of the Independent Trustees, determined that the scope and
quality of services to be provided to each Fund under the applicable Agreements
would be at least equivalent to the scope and quality of services provided under
the Prior Sub-Advisory Agreements.
On January 8, 2014, the Board was informed that Old Chartwell and TriState
had entered into an asset purchase agreement, pursuant to which TriState,
through its wholly-owned subsidiary, New Chartwell, would acquire substantially
all of the assets of Old Chartwell (i.e., the Transaction). The Board also was
informed that the consummation of the Transaction, which was expected to occur
during the first quarter of 2014, would constitute a "change of control" of Old
Chartwell and result in the "assignment" and termination of each Prior
Sub-Advisory Agreement pursuant to its terms and the requirements of the 1940
Act. On January 8, 2014, counsel to the Independent Trustees provided Chartwell
with a request for information regarding the Transaction and the services to be
provided under the Agreements. In anticipation of the consummation of the
Transaction, the Board held special in-person meetings on January 22, 2014 and
February 20, 2014, to consider the information provided by Chartwell and to
consider the approval of the Agreements.
To reach its determination for each ShareFund, the Board considered its duties
under the 1940 Act, as well as under the general principles of state law in
reviewing and approving advisory contracts; the requirements of the 1940 Act in
such matters; the fiduciary duty of investment advisers with respect to advisory
agreements and compensation; the standards used by courts in determining whether
investment company boards have fulfilled their duties; and the factors to be
considered by the Board in voting on such agreements. In connection with its
deliberations regarding the Agreements, the Board noted the Advisor's
representation that apart from the change in the corporate structure of the
contracting Chartwell party, their effective and termination dates and any
provisions of the Interim Sub-Advisory Agreements required by Rule 15a-4 under
the 1940 Act, the Agreements were the same in all material respects as the Prior
Sub-Advisory Agreements. The Board considered that the information provided by
Chartwell and TriState in response to the Independent Trustees' request for
information included a discussion of the services provided by Chartwell to the
Funds (including the relevant personnel responsible for these services); the
sub-advisory fees charged by Chartwell to the Funds; the nature of expenses
incurred by Chartwell in providing services to the Funds and the potential for
economies of scale, if any; financial data on Chartwell and TriState; and any
fall-out benefits to Chartwell. In addition, Chartwell's CEO, Tim Riddle, Doug
Kugler, a portfolio manager of the Funds, and Jim Getz, Chairman, President and
CEO of TriState, were present at the January 22, 2014 Board meeting and
discussed the Transaction and the Agreements with the Board.
The Independent Trustees met separately with their independent legal
counsel at both the January 22, 2014 and February 20, 2014 Board meetings to
discuss the Agreements and the information provided by Chartwell and TriState.
In reviewing the Agreements, the Board considered the nature, quality and
extent of services to be provided by Chartwell under the Agreements. The Board
considered the background and experience of Chartwell's portfolio management
-11-
team, noting that it had previously been informed of the retirement of Bernard
Schaffer effective December 31, 2013, and that the Transaction was not expected
to result in any other changes to the portfolio management team. The Board also
considered the representations of Chartwell that there will be no diminution of
services provided under the Agreements. In light of the information presented
and the considerations made, the Board concluded that the nature, quality and
extent of services to be provided to each Fund by New Chartwell under the
Agreements were expected to be satisfactory.
The Board considered the sub-advisory fee rates to be paid by each Fund
under the Agreements, noting that they would be the same as the fee rate paid by
each Fund under the applicable Prior Sub-Advisory Agreement, and that fees
payable to New Chartwell under the Interim Sub-Advisory Agreements would be held
in escrow until shareholder ownsapproval of the applicable New Sub-Advisory
Agreement. The Board, including a majority of the Independent Trustees,
determined that apart from the provisions of the Interim Sub-Advisory Agreements
required by Rule 15a-4 under the 1940 Act, the differences between the Prior
Sub-Advisory Agreements and the applicable Agreements were immaterial. For each
Fund, the Board considered that the sub-advisory fee rate was negotiated at
arm's length between the Advisor and Old Chartwell, an unaffiliated third-party.
For each Fund, the Board concluded that the sub-advisory fee rate was reasonable
and appropriate in light of the nature, quality and extent of services expected
to be provided by New Chartwell under the Agreements.
The Board noted that Chartwell did not identify any economies of scale
realized in connection with providing services to the Funds. The Board also
noted that the Transaction would recapitalize Chartwell and was expected to
position Chartwell for future growth. The Board also considered fall-out
benefits realized by Chartwell from its relationship with the Funds, noting
Chartwell's representation that no changes were anticipated in its soft-dollar
policy.
Based on all of the information considered and the conclusions reached,
the Board, including a proportionate fractionalmajority of the Independent Trustees, determined that the
terms of the Agreements are fair and reasonable and that the approval of the
Agreements is in the best interests of the Funds. No single factor was
determinative in the Board's analysis.
SHAREHOLDER APPROVAL AND REQUIRED VOTE
To become effective for a Fund, the applicable New Sub-Advisory Agreement
must be approved by a vote for any
fraction of a Sharemajority of the shareholder owns.outstanding voting securities of
the Fund. The "vote of a majority of the outstanding voting securities" of a
Fund is defined in the 1940 Act as the vote of the lesser of (i) 67% or more of
the Shares of the Fund present at the Meeting if the holders of more than 50% of
the outstanding Shares of the Fund are present in person or represented by
proxy; or (ii) more than 50% of the outstanding Shares of the Fund. For purposes
of determining the approval of a New Sub-Advisory Agreement, abstentions and
broker non-votes will have the effect of a vote against the Proposal.
IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING THE PROPOSAL
OR HOW TO VOTE YOUR SHARES, PLEASE CALL THE FUNDS' PROXY SOLICITOR, AST FUND
SOLUTIONS, LLC AT (866) 530-8634 WEEKDAYS FROM 9:00 A.M. TO 10:00 P.M. EASTERN
TIME.
THE BOARD OF TRUSTEES OF EACH FUND RECOMMENDS THAT SHAREHOLDERS OF
EACH FUND VOTE TO APPROVE ITS NEW SUB-ADVISORY AGREEMENT.
-12-
ADDITIONAL INFORMATION
INFORMATION ABOUT THE ADVISOR
First Trust Advisors L.P., 120 East Liberty Drive, Suite 400, Wheaton,
Illinois 60187, serves as each Fund's investment adviser. Additionally, First
Trust Advisors is responsible for providing certain clerical, bookkeeping and
other administrative services to each Fund and also provides fund reporting
services to each Fund for an annual fee of $9,250. First Trust Advisors will
continue to serve in these capacities after the approval by shareholders of the
applicable New Sub-Advisory Agreement.
INFORMATION ABOUT THE ADMINISTRATOR, ACCOUNTING AGENT AND TRANSFER AGENT
BNY Mellon Investment Servicing (US) Inc., 301 Bellevue Parkway,
Wilmington, Delaware 19809, acts as the administrator, accounting agent and
transfer agent to each Fund.
BENEFICIAL OWNERSHIP
Control Persons and Principal Holders
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, as amended (the "1934 Act")) beneficially owned more than
5% of anythe Fund's outstanding Shares, except as describednoted in the following table. A
control person is one who owns, either directly or indirectly, more than 25% of
the voting securities of a Fund or acknowledges the existence of control. A
party that controls a 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.Date.
The Funds do not have any knowledge of the identity of the ultimate
beneficiaries of the Shares listed below.
-4-
BENEFICIAL OWNERSHIP OF----------------------------------------- ---------------------------------------- ------------------------------
SHARES ------------------------------------------------------------------------------------------------------------------------BENEFICIALLY % OUTSTANDING SHARES
NAME AND ADDRESS SHARES BENEFICIALLY % OF OUTSTANDING SHARES OF BENEFICIAL OWNER OWNED BENEFICIALLY OWNED
------------------------------------------------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND &----------------------------------------- ---------------------------------------- ------------------------------
EQUITY INCOME FUND:
------------------------------------------------------------------------------------------------------------------------
----------------------------------------- ---------------------------------------- ------------------------------
The Bank of New York Mellon 775,716 Shares 9.09%
525 William Penn Place
Pittsburgh, PA 15259 ----------------------------------------------------- ------------------------------- ----------------------------------1,290,014 Shares 6.46%
----------------------------------------- ---------------------------------------- ------------------------------
First Clearing, LLC
2801 Market Street
St. Louis, MO 63103 6,400,365 Shares 32.04%
----------------------------------------- ---------------------------------------- ------------------------------
Morgan Stanley Smith Barney LLC
1300 Thames Street
Baltimore, MD 21231 2,056,600 Shares 10.30%
----------------------------------------- ---------------------------------------- ------------------------------
National Financial Services, LLC
499 Washington Blvd.
Jersey City, NJ 07310 1,203,149 Shares 6.02%
----------------------------------------- ---------------------------------------- ------------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
St. Petersburg, FL 33716 2,079,311 Shares 10.41%
----------------------------------------- ---------------------------------------- ------------------------------
-13-
----------------------------------------- ---------------------------------------- ------------------------------
DIVIDEND AND INCOME FUND:
----------------------------------------- ---------------------------------------- ------------------------------
Charles Schwab & Co., Inc.
2423 E. Lincoln Drive
472,259 Shares 5.53%
Phoenix, AZ 85016 ----------------------------------------------------- ------------------------------- ----------------------------------558,536 Shares 6.76%
----------------------------------------- ---------------------------------------- ------------------------------
First Clearing, LLC
2801 Market Street
596,738 Shares 6.99%
St. Louis, MO 63103 ----------------------------------------------------- ------------------------------- ----------------------------------865,140 Shares 10.47%
----------------------------------------- ---------------------------------------- ------------------------------
Merrill Lynch, Pierce Fenner & Smith
Safekeeping
4804 Deer Lake Drive E.
904,787 Shares 10.60%
Jacksonville, FL 32246 ----------------------------------------------------- ------------------------------- ----------------------------------486,201 Shares 5.89%
----------------------------------------- ---------------------------------------- ------------------------------
Morgan Stanley Smith Barney LLC
1300 Thames Street
603,588 Shares 7.07%
Baltimore, MD 21231 ----------------------------------------------------- ------------------------------- ----------------------------------
National Financial Services, LLC
499 Washington Blvd. 605,5091,887,505 Shares 7.10%
Jersey City, NJ 07310
----------------------------------------------------- ------------------------------- ----------------------------------
Pershing LLC
1 Pershing Plaza 468,676 Shares 5.49%
Jersey City, NJ 07399
----------------------------------------------------- ------------------------------- ----------------------------------
Robert W. Baird & Co., Inc.
777 E. Wisconsin Avenue
19th Floor 533,154 Shares 6.25%
Milwaukee, WI 53202
----------------------------------------------------- ------------------------------- ----------------------------------
Raymond James & Associates, Inc.
P.O. Box 14407 667,106 Shares 7.82%
St. Petersburg, FL 33733
----------------------------------------------------- ------------------------------- ----------------------------------
RBC Capital Markets LLC
60 S. 6th Street - P09 637,606 Shares 7.47%
Minneapolis, MN 55402
----------------------------------------------------- ------------------------------- ----------------------------------
TD Ameritrade Clearing, Inc.
1005 N. Ameritrade Place 475,995 Shares 5.58%
Bellevue, NE 68005
----------------------------------------------------- ------------------------------- ----------------------------------
Guggenheim Capital, LLC(1)
Guggenheim Partners, LLC
Guggenheim Funds Services Holdings, LLC
Guggenheim Funds Services, LLC
227 West Monroe Street
Chicago, IL 60606
GI Holdco II, LLC
GI Holdco, LLC 441,706 Shares 5.14%
Guggenheim Partners Investment Management
Holdings, LLC
330 Madison Avenue
New York, NY 10017
Guggenheim Funds Distributors, LLC
2455 Corporate West Drive
Lisle, IL 60532
------------------------------------------------------------------------------------------------------------------------
(1) Information is according to Schedule 13G filed with the SEC on February
13, 2014. The entities listed filed the Schedule 13G jointly and indicated
that, with respect to the Shares held, they had (a) shared power to vote
or to direct the vote and (b) shared power to dispose or to direct the
disposition.
-5-
------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS SHARES BENEFICIALLY % OF OUTSTANDING SHARES
OF BENEFICIAL OWNER OWNED BENEFICIALLY OWNED
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST ENERGY INCOME AND GROWTH FUND:
------------------------------------------------------------------------------------------------------------------------
The Bank of New York Mellon 1,523,723 Shares 7.87%
525 William Penn Place
Pittsburgh, PA 15259
----------------------------------------------------- ------------------------------- ----------------------------------
Charles Schwab & Co., Inc.
2423 E. Lincoln Drive 1,164,059 Shares 6.01%
Phoenix, AZ 85016
----------------------------------------------------- ------------------------------- ----------------------------------
First Clearing, LLC
2801 Market Street 2,839,146 Shares 14.67%
St. Louis, MO 63103
----------------------------------------------------- ------------------------------- ----------------------------------
Morgan Stanley Smith Barney LLC
1300 Thames Street 2,482,291 Shares 12.82%
Baltimore, MD 21231
----------------------------------------------------- ------------------------------- ----------------------------------
National Financial Services, LLC
499 Washington Blvd. 1,205,616 Shares 6.23%
Jersey City, NJ 07310
----------------------------------------------------- ------------------------------- ----------------------------------
Robert W. Baird & Co., Inc.
777 E. Wisconsin Avenue
19th Floor 1,458,265 Shares 7.53%
Milwaukee, WI 53202
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST ENHANCED EQUITY INCOME FUND:
------------------------------------------------------------------------------------------------------------------------
The Bank of New York Mellon 1,198,543 Shares 6.00%
525 William Penn Place
Pittsburgh, PA 15259
----------------------------------------------------- ------------------------------- ----------------------------------
First Clearing, LLC
2801 Market Street 6,473,667 Shares 32.41%
St. Louis, MO 63103
----------------------------------------------------- ------------------------------- ----------------------------------
Morgan Stanley Smith Barney LLC
1300 Thames Street 2,065,833 Shares 10.34%
Baltimore, MD 21231
----------------------------------------------------- ------------------------------- ----------------------------------
National Financial Services, LLC
499 Washington Blvd. 1,242,155 Shares 6.22%
Jersey City, NJ 07310
----------------------------------------------------- ------------------------------- ----------------------------------22.85%
----------------------------------------- ---------------------------------------- ------------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
1,968,984 Shares 9.86%
St. Petersburg, FL 33716 ------------------------------------------------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND:
------------------------------------------------------------------------------------------------------------------------
Charles Schwab & Co., Inc. 1,100,6561,395,438 Shares 6.32%
2423 E. Lincoln Drive
Phoenix, AZ 85016
--------------------------------------------------- ------------------------------- ----------------------------------
First Clearing, LLC
2801 Market Street 1,674,590 Shares 9.62%
St. Louis, MO 63103
----------------------------------------------------- ------------------------------- ----------------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
4804 Deer Lake Drive E. 1,159,735 Shares 6.66%
Jacksonville, FL 32246
----------------------------------------------------- ------------------------------- ----------------------------------
Morgan Stanley Smith Barney LLC
1300 Thames Street 1,241,944 Shares 7.13%
Baltimore, MD 21231
----------------------------------------------------- ------------------------------- ----------------------------------
National Financial Services, LLC
499 Washington Blvd. 2,068,232 Shares 11.88%
Jersey City, NJ 07310
----------------------------------------------------- ------------------------------- ----------------------------------
Pershing LLC
1 Pershing Plaza 908,784 Shares 5.22%
Jersey City, NJ 07399
----------------------------------------------------- ------------------------------- ----------------------------------16.89%
----------------------------------------- ---------------------------------------- ------------------------------
-6-
------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS SHARES BENEFICIALLY % OF OUTSTANDING SHARES
OF BENEFICIAL OWNER OWNED BENEFICIALLY OWNED
------------------------------------------------------------------------------------------------------------------------
Robert W. Baird & Co., Inc.
777 E. Wisconsin Avenue
19th Floor 1,047,520 Shares 6.02%
Milwaukee, WI 53202
----------------------------------------------------- ------------------------------- ----------------------------------
RBC Capital Markets LLC
60 S. 6th Street - P09 1,333,673 Shares 7.66%
Minneapolis, MN 55402
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST MORTGAGE INCOME FUND:
------------------------------------------------------------------------------------------------------------------------
First Clearing, LLC 265,180 Shares 6.29%
2801 Market Street
St. Louis, MO 63103
----------------------------------------------------- ------------------------------- ----------------------------------
National Financial Services, LLC
499 Washington Blvd. 508,070 Shares 12.06%
Jersey City, NJ 07310
----------------------------------------------------- ------------------------------- ----------------------------------
The Northern Trust Company
801 S. Canal Street 631,531 Shares 14.99%
Chicago, IL 60607
----------------------------------------------------- ------------------------------- ----------------------------------
Sit Investment Associates, Inc.(1)
3300 IDS Center
80 South Eighth Street
Minneapolis, MN 55402 919,522 Shares 21.83%
------------------------------------------------------------------------------------------------------------------------
1607 Capital Partners, LLC(2)
4991 Lake Brook Drive, Suite 125 468,923 Shares 11.13%
Glen Allen, VA 23060
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST STRATEGIC HIGH INCOME FUND II:
------------------------------------------------------------------------------------------------------------------------
The Bank of New York Mellon 493,062 Shares 5.83%
525 William Penn Place
Pittsburgh, PA 15259
----------------------------------------------------- ------------------------------- ----------------------------------
Charles Schwab & Co., Inc. 812,401 Shares 9.60%
2423 E. Lincoln Drive
Phoenix, AZ 85016
----------------------------------------------------- ------------------------------- ----------------------------------
First Clearing, LLC 816,941 Shares 9.66%
2801 Market Street
St. Louis, MO 63103
----------------------------------------------------- ------------------------------- ----------------------------------
National Financial Services, LLC
499 Washington Blvd. 949,838 Shares 11.23%
Jersey City, NJ 07310
----------------------------------------------------- ------------------------------- ----------------------------------
Pershing LLC
1 Pershing Plaza 558,165 Shares 6.60%
Jersey City, NJ 07399
----------------------------------------------------- ------------------------------- ----------------------------------
RBC Capital Markets LLC
60 S. 6th Street - P09 451,203 Shares 5.33%
Minneapolis, MN 55402
----------------------------------------------------- ------------------------------- ----------------------------------
TD Ameritrade Clearing, Inc.
1005 N. Ameritrade Place 559,410 Shares 6.61%
Bellevue, NE 68005
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND:
------------------------------------------------------------------------------------------------------------------------
The Bank of New York Mellon 291,609 Shares 5.47%
525 William Penn Place
Pittsburgh, PA 15259
----------------------------------------------------- ------------------------------- ----------------------------------
Charles Schwab & Co., Inc.
2423 E. Lincoln Drive 290,926 Shares 5.46%
Phoenix, AZ 85016
------------------------------------------------------------------------------------------------------------------------
(1) Information is according to Amendment No. 12 to Schedule 13G filed with
the SEC on January 27, 2014.
(2) Information is according to Schedule 13G/A filed with the SEC on February
10, 2014.
-7-
------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS SHARES BENEFICIALLY % OF OUTSTANDING SHARES
OF BENEFICIAL OWNER OWNED BENEFICIALLY OWNED
------------------------------------------------------------------------------------------------------------------------
First Clearing, LLC
2801 Market Street 873,756 Shares 16.40%
St. Louis, MO 63103
----------------------------------------------------- ------------------------------- ----------------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
4804 Deer Lake Drive E. 298,195 Shares 5.60%
Jacksonville, FL 32246
----------------------------------------------------- ------------------------------- ----------------------------------
Morgan Stanley Smith Barney LLC
1300 Thames Street 402,688 Shares 7.56%
Baltimore, MD 21231
----------------------------------------------------- ------------------------------- ----------------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway 360,517 Shares 6.77%
St. Petersburg, FL 33716
----------------------------------------------------- ------------------------------- ----------------------------------
State Street Bank and Trust Co. 413,859 Shares 7.77%
1776 Heritage Drive
North Quincy, MA 02171
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST SPECIALTY FINANCE AND FINANCIAL OPPORTUNITIES FUND:
------------------------------------------------------------------------------------------------------------------------
First Clearing, LLC 7,591,213 Shares 53.12%
2801 Market Street
St. Louis, MO 63103
----------------------------------------------------- ------------------------------- ----------------------------------
Stifel, Nicolaus & Company, Incorporated 914,463 Shares 6.40%
501 N. Broadway
St. Louis, MO 63102
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST DIVIDEND AND INCOME FUND:
------------------------------------------------------------------------------------------------------------------------
Charles Schwab & Co., Inc. 504,407 Shares 6.11%
2423 E. Lincoln Drive
Phoenix, AZ 85016
---------------------------------------------------- ------------------------------- ----------------------------------
First Clearing, LLC
2801 Market Street 825,009 Shares 9.99%
St. Louis, MO 63103
----------------------------------------------------- ------------------------------- ----------------------------------
Morgan Stanley Smith Barney LLC 1,912,002 Shares 23.15%
1300 Thames Street
Baltimore, MD 21231
----------------------------------------------------- ------------------------------- ----------------------------------
Raymond James & Associates, Inc. 1,449,479 Shares 17.55%
880 Carilion Parkway
St. Petersburg, FL 33716
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST HIGH INCOME LONG/SHORT FUND:
------------------------------------------------------------------------------------------------------------------------
First Clearing, LLC 5,674,265 Shares 15.74%
2801 Market Street
St. Louis, MO 63103
----------------------------------------------------- ------------------------------- ----------------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
4804 Deer Lake Drive E. 2,998,249 Shares 8.32%
Jacksonville, FL 32246
----------------------------------------------------- ------------------------------- ----------------------------------
Morgan Stanley Smith Barney LLC
1300 Thames Street 9,781,534 Shares 27.13%
Baltimore, MD 21231
----------------------------------------------------- ------------------------------- ----------------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway 2,511,835 Shares 6.97%
St. Petersburg, FL 33716
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND:
------------------------------------------------------------------------------------------------------------------------
First Clearing, LLC 2,505,676 Shares 14.28%
2801 Market Street
St. Louis, MO 63103
----------------------------------------------------- ------------------------------- ----------------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
4804 Deer Lake Drive E. 1,609,875 Shares 9.17%
Jacksonville, FL 32246
----------------------------------------------------- ------------------------------- ----------------------------------
Morgan Stanley Smith Barney LLC
1300 Thames Street 5,821,503 Shares 33.17%
Baltimore, MD 21231
------------------------------------------------------------------------------------------------------------------------
-8-
------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS SHARES BENEFICIALLY % OF OUTSTANDING SHARES
OF BENEFICIAL OWNER OWNED BENEFICIALLY OWNED
------------------------------------------------------------------------------------------------------------------------
RBC Capital Markets LLC
60 S. 6th Street - P09 1,092,458 Shares 6.22%
Minneapolis, MN 55402
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST MLP AND ENERGY INCOME FUND:
------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Smith Barney LLC 24,983,906 Shares 54.98%
1300 Thames Street
Baltimore, MD 21231
----------------------------------------------------- ------------------------------- ----------------------------------
Pershing LLC
1 Pershing Plaza 2,559,275 Shares 5.63%
Jersey City, NJ 07399
----------------------------------------------------- ------------------------------- ----------------------------------
RBC Capital Markets LLC
60 S. 6th Street - P09 3,611,076 Shares 7.95%
Minneapolis, MN 55402
------------------------------------------------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND:
------------------------------------------------------------------------------------------------------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping 6,521,791 Shares 10.74%
4804 Deer Lake Drive E.
Jacksonville, FL 32246
----------------------------------------------------- ------------------------------- ----------------------------------
Morgan Stanley Smith Barney LLC
1300 Thames Street 26,324,496 Shares 43.37%
Baltimore, MD 21231
----------------------------------------------------- ------------------------------- ----------------------------------
Pershing LLC
1 Pershing Plaza 4,116,429 Shares 6.78%
Jersey City, NJ 07399
----------------------------------------------------- ------------------------------- ----------------------------------
RBC Capital Markets LLC
60 S. 6th Street - P09 6,086,760 Shares 10.03%
Minneapolis, MN 55402
----------------------------------------------------- ------------------------------- ----------------------------------
-9-
PROPOSAL: ELECTION OF ONE (1) CLASS I TRUSTEE OF EACH FUND
ONE (1) CLASS I TRUSTEE IS TO BE ELECTED BY HOLDERS OF SHARES OF EACH FUND.
CURRENT TRUSTEE ROBERT F. KEITH IS THE NOMINEE FOR ELECTION AS THE CLASS I
TRUSTEE BY SHAREHOLDERS OF EACH FUND FOR A THREE-YEAR TERM.
Each 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. Robert F. Keith is currently the Class
I Trustee of each Fund, with a term expiring at the Meeting or until his
successor is elected and qualified. If elected, Mr. Keith will hold office for a
three-year term expiring at the Funds' annual meetings of shareholders in 2017.
Richard E. Erickson, Thomas R. Kadlec, James A. Bowen and Niel B. Nielson are
current and continuing Trustees. Dr. Erickson and Mr. Kadlec are Class II
Trustees for a term expiring at the Funds' annual meetings of shareholders in
2015. Mr. Bowen and Mr. Nielson are Class III Trustees for a term expiring at
the Funds' annual meetings of shareholders in 2016. Each Trustee serves until
his successor is elected and qualified, or until he earlier resigns, retires or
is otherwise removed.
REQUIRED VOTE: For each Fund, the nominee for election as the Class I
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 the nominee listed if your proxy card has been
properly executed and timely received by the applicable Fund. If the 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 Funds in accordance with the Funds' procedures.
THE BOARD OF TRUSTEES OF EACH FUND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE ELECTION OF THE NOMINEE.
-10-
MANAGEMENT
MANAGEMENT OF THE FUNDS
The general supervision of the duties performed for the Funds under their
respective investment management agreement with the Advisor is the
responsibility of the Board. The Trustees set broad policies for the Funds and
choose the Funds' officers. The following is a list of the
Trustees and executive officers of each 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, each Fund has established a staggered Board 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 Funds 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 Funds 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.
-11-
INTERESTED TRUSTEE
------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
FIRST TRUST OTHER
POSITION(S) TERM OF OFFICE(2) PRINCIPAL OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS, AND HELD WITH AND LENGTH OF DURING PAST FIVE OVERSEEN BY HELD BY
DATE OF BIRTH FUNDS TIME SERVED(3) YEARS BY TRUSTEE TRUSTEE
------------------------------------------------------------------------------------------------------------------------
James A. Bowen(1) Chairman of Class III Chief Executive Officer 109 Portfolios None
120 East Liberty Drive the Board (December 2010 to Present),
Suite 400 and Trustee Since 2004 President (until December
Wheaton, IL 60187 2010), First Trust Advisors
DOB: 9/55 L.P. and First Trust
Portfolios L.P.; Chairman
of the Board of Directors,
BondWave LLC (Software
Development
Company/Investment Advisor)
and Stonebridge Advisors
LLC (Investment Advisor)
------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
FIRST TRUST OTHER
POSITION(S) TERM OF OFFICE(2) PRINCIPAL OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS, AND HELD WITH AND LENGTH OF DURING PAST FIVE OVERSEEN BY HELD BY
DATE OF BIRTH FUNDS TIME SERVED(3) YEARS BY TRUSTEE TRUSTEE
------------------------------------------------------------------------------------------------------------------------
Richard E. Erickson Trustee Class II Physician; President, 109 Portfolios None
c/o First Trust Wheaton Orthopedics;
Advisors L.P. Since 2004 Co-owner and Co-Director
120 East Liberty Drive (January 1996 to May 2007),
Suite 400 Sports Med Center for
Wheaton, IL 60187 Fitness; Limited Partner,
DOB: 4/51 Gundersen Real Estate
Limited Partnership;
Member, Sportsmed LLC
------------------------------------------------------------------------------------------------------------------------
Thomas R. Kadlec Trustee Class II President (March 2010 to 109 Portfolios Director of ADM
c/o First Trust Present), Senior Vice Investor
Advisors L.P. Since 2004 President and Chief Services, Inc.
120 East Liberty Drive Financial Officer (May 2007 and ADM Investor
Suite 400 to March 2010), Vice Services
Wheaton, IL 60187 President and Chief International
DOB: 11/57 Financial Officer (1990 to
May 2007), ADM Investor
Services, Inc. (Futures Commission
Merchant)
------------------------------------------------------------------------------------------------------------------------
Robert F. Keith Trustee Class I Nominee President (2003 to Present), 109 Portfolios Director of Trust
c/o First Trust Hibs Enterprises (Financial Company of
Advisors L.P. Since 2006 and Management Consulting) Illinois
120 East Liberty Drive
Suite 400
Wheaton, IL 60187
DOB: 11/56
------------------------------------------------------------------------------------------------------------------------
Niel B. Nielson Trustee Class III President and Chief 109 Portfolios Director of
c/o First Trust Executive Officer (July 2012 Covenant
Advisors L.P. Since 2004 to Present), Dew Learning Transport Inc.
120 East Liberty Drive LLC (Educational Products
Suite 400 and Services); President
Wheaton, IL 60187 (June 2002 to June 2012),
DOB: 3/54 Covenant College
------------------------------------------------------------------------------------------------------------------------
-12-
EXECUTIVE OFFICERS
------------------------------------------------------------------------------------------------------------------------
TERM OF OFFICE(2) PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND POSITION(S) AND LENGTH OF DURING PAST FIVE
DATE OF BIRTH HELD WITH FUNDS TIME SERVED(3) YEARS
------------------------------------------------------------------------------------------------------------------------
Mark R. Bradley President and Indefinite Chief Financial Officer and Chief Operating
120 East Liberty Drive, Suite 400 Chief Executive Officer (December 2010 to Present), First
Wheaton, IL 60187 Officer Since 2004 Trust Advisors L.P. and First Trust
DOB: 11/57 Portfolios L.P.; Chief Financial Officer,
BondWave LLC (Software Development Company/
Investment Advisor) and Stonebridge Advisors
LLC (Investment Advisor)
------------------------------------------------------------------------------------------------------------------------
James M. Dykas Treasurer, Chief Indefinite Controller (January 2011 to Present), Senior
120 East Liberty Drive, Suite 400 Financial Officer Vice President (April 2007 to Present), First
Wheaton, IL 60187 and Chief Since 2005 Trust Advisors L.P. and First Trust
DOB: 1/66 Accounting Portfolios L.P.
Officer
------------------------------------------------------------------------------------------------------------------------
W. Scott Jardine Secretary and Indefinite General Counsel, First Trust Advisors L.P.,
120 East Liberty Drive, Suite 400 Chief Legal First Trust Portfolios L.P. and BondWave LLC
Wheaton, IL 60187 Officer Since 2004 (August 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),
120 East Liberty Drive, Suite 400 Senior Vice President (September 2005 to July
Wheaton, IL 60187 Since 2005 2012), First Trust Advisors L.P. and First
DOB: 2/70 Trust Portfolios L.P.
------------------------------------------------------------------------------------------------------------------------
Kristi A. Maher Assistant Indefinite Deputy General Counsel, First Trust Advisors
120 East Liberty Drive, Suite 400 Secretary and L.P. and First Trust Portfolios L.P.
Wheaton, IL 60187 Chief Compliance Assistant
DOB: 12/66 Officer Secretary
since July
2004 and Chief
Compliance
Officer since
January 2011
------------------------------------------------------------------------------------------------------------------------
1 Mr. Bowen is deemed an "interested person" of the Funds due to his position
as Chief Executive Officer of First Trust Advisors L.P., investment advisor
of the Funds.
2 Currently, Robert F. Keith, as the Class I Trustee, is serving a term for
each of the Funds until the Meeting 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 each of the Funds until the Funds' 2015 annual
meetings of shareholders or until their successors are elected and
qualified. James A. Bowen and Niel B. Nielson, as Class III Trustees, are
each serving a term for each of the Funds until the Funds' 2016 annual
meetings of shareholders or until their successors are elected and
qualified. Officers of the Funds have an indefinite term.
3 For officers, length of time served represents the month and year the person
first became an officer of a Fund. Except as otherwise provided below, all
Trustees and officers were elected or appointed (i) in 2004 for the
then-existing Funds, (ii) in 2005 for First Trust Mortgage Income Fund,
(iii) in 2006 for First Trust Strategic High Income Fund II and First
Trust/Aberdeen Emerging Opportunity Fund, (iv) in 2007 for First Trust
Specialty Finance and Financial Opportunities Fund and First Trust Dividend
and Income Fund, (v) in 2010 for First Trust High Income Long/Short Fund,
(vi) in 2011 for First Trust Energy Infrastructure Fund, (vii) in 2012 for
First Trust MLP and Energy Income Fund and (viii) in 2013 for First Trust
Intermediate Duration Preferred & Income Fund. Daniel J. Lindquist and James
M. Dykas were elected Vice President and Assistant Treasurer, respectively,
of all funds in the First Trust Fund Complex, including the then-existing
Funds, on December 12, 2005. Kristi A. Maher was elected Chief Compliance
Officer of all funds in the First Trust Fund Complex, including the
then-existing Funds, in December 2010, effective January 1, 2011. James A.
Bowen resigned as President and Chief Executive Officer of the funds in the
First Trust Fund Complex on January 23, 2012. Mark R. Bradley was elected
President and Chief Executive Officer, and James M. Dykas was elected
Treasurer, Chief Financial Officer and Chief Accounting Officer, of all
funds in the First Trust Fund Complex, including the then-existing Funds, in
January 2012, effective January 23, 2012. Before January 23, 2012, Mr.
Bradley served as Treasurer, Chief Financial Officer and Chief Accounting
Officer and Mr. Dykas served as Assistant Treasurer.
UNITARY BOARD LEADERSHIP STRUCTURE
The same five persons serve as Trustees on each Fund's Board 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 First Trust Intermediate Duration Preferred &
Income Fund, 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
-13-
facing the First Trust Funds, including among the First Trust Closed-end Funds,
the Board of the First Trust Funds 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 Funds' 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 each 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 Funds' 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 Funds'
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 Funds, the First Trust Fund Complex includes: one
closed-end fund advised by First Trust Advisors; First Defined Portfolio Fund,
LLC, an open-end management investment company with eight portfolios advised by
First Trust Advisors; First Trust Series Fund, an open-end management investment
company with three portfolios advised by First Trust Advisors; First Trust
Variable Insurance Trust, an open-end management investment company with one
portfolio 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)
-14-
Fund II, each an exchange-traded fund with 19, 12, 1, 3, 1, 7, 1, 21, and 18
operating portfolios (each such portfolio, an "ETF" and each 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 each 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 issuance and sale, through an underwritten public
offering, of the Shares of each 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 number of meetings of the Executive
Committee held by each Fund during its last fiscal year is shown on Schedule 1
hereto.
The Nominating and Governance Committee is responsible for appointing and
nominating non-interested 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 or NYSE MKT
LLC, as applicable. The Nominating and Governance Committee operates under a
written charter adopted and approved by the Board, a copy of which is available
on the Funds' 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 2005, the Board of Trustees adopted a
mandatory retirement age of 72 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 applicable
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 of the applicable Fund
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
-15-
evaluation of candidates, 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 Nominating and
Governance Committee evaluate nominees recommended by a shareholder of a Fund on
a basis substantially different than that used for other nominees for the same
election or appointment of Trustees. The number of meetings of the Nominating
and Governance Committee held by each Fund during its last fiscal year is shown
on Schedule 1 hereto.
The Valuation Committee is responsible for the oversight of the pricing
procedures of each Fund. Messrs. Erickson, Kadlec, Keith and Nielson are members
of the Valuation Committee. The number of meetings of the Valuation Committee
held by each Fund during its last fiscal year is shown on Schedule 1 hereto.
The Audit Committee is responsible for overseeing each 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). Messrs. Erickson, Kadlec, Keith and Nielson, all of whom are
"independent" as defined in the listing standards of the NYSE or NYSE MKT LLC,
as applicable, 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 number of meetings of the Audit Committee held by
each Fund during its last fiscal year is shown in Schedule 1 hereto.
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 each Fund (including the
fees and terms thereof) and non-audit services to be performed for the Advisor
by Deloitte & Touche LLP ("Deloitte & Touche"), the Funds' independent
registered public accounting firm ("independent auditors"), if the engagement
relates directly to the operations and financial reporting of the Funds.
RISK OVERSIGHT
As part of the general oversight of each Fund, the Board is involved in
the risk oversight of the Funds. The Board has adopted and periodically reviews
policies and procedures designed to address the Funds' 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 Funds' 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 Funds' 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 Funds' 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 Funds' major financial risk exposures and the steps the Advisor has
taken to monitor and control these exposures, including the Funds' 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
corporate governance of the Funds. The Valuation Committee monitors valuation
risk and compliance with the Funds' Valuation Procedures and oversees the
pricing services and actions by the Advisor's Pricing Committee with respect to
the valuation of portfolio securities.
-16-
Not all risks that may affect the Funds 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
Funds or the Advisor or other service providers. Moreover, it is necessary to
bear certain risks (such as investment related risks) to achieve a Fund's goals.
As a result of the foregoing and other factors, the Funds' 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 nominee are the experiences,
qualifications and attributes that led to the conclusion, as of the date of this
Joint Proxy Statement, that each current Trustee and the nominee 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 each 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
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. Mr. Kadlec has served as a Trustee of each 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,
-17-
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 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 Commitee (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 the President and Chief Executive
Officer of Dew Learning LLC (a global provider of digital and on-line
educational products and services) since 2012. Mr. Nielson formerly 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 each 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.
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.
and, until January 23, 2012, also served as President and Chief Executive
Officer of the First Trust Funds. Mr. Bowen also serves on the Executive
Committee. He has over 30 years of experience in the investment company business
in sales, sales management and executive management. Mr. Bowen has served as a
Trustee of each 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.
-18-
Executive Officers
The executive officers of each Fund hold the same positions with each fund
in the First Trust Fund Complex (representing 109 portfolios) as they hold with
the Funds.
-19-
BENEFICIAL OWNERSHIP OF SHARES HELD IN THE FUNDS BY TRUSTEES AND EXECUTIVE
OFFICERS
The following table sets forth the dollar range and number of equity
securities beneficially owned by the Trustees in each Fund and all funds in the
First Trust Fund Complex, including the Funds, as of December 31, 2013:
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUNDS 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
-------------------------- ------------------ ------------------- -------------------- -------------------- ----------------
MACQUARIE/FIRST TRUST
GLOBAL INFRASTRUCTURE/ $0 $10,001-$50,000 $10,001-$50,000 $10,001-$50,000 $10,001-$50,000
UTILITIES DIVIDEND & (0 Shares) (847 Shares) (800 Shares) (1,817 Shares) (982 Shares)
INCOME FUND
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
FIRST TRUST ENERGY INCOME $0 $10,001-$50,000 $10,001-$50,000 $0 $10,001-$50,000
AND GROWTH FUND (0 Shares) (408 Shares) (700 Shares) (0 Shares) (475 Shares)
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
FIRST TRUST ENHANCED $0 $1-$10,000 $10,001-$50,000 $0 $1-$10,000
EQUITY INCOME FUND (0 Shares) (340 Shares) (850 Shares) (0 Shares) (418 Shares)
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
FIRST TRUST/ABERDEEN $0 $10,001-$50,000 $10,001-$50,000 $10,001-$50,000 $10,001-$50,000
GLOBAL OPPORTUNITY INCOME (0 Shares) (1,269 Shares) (850 Shares) (2,495 Shares) (781 Shares)
FUND
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
FIRST TRUST MORTGAGE $0 $0 $10,001-$50,000 $0 $1-$10,000
INCOME FUND (0 Shares) (0 Shares) (650 Shares) (0 Shares) (488 Shares)
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
FIRST TRUST STRATEGIC $10,001-$50,000 $0 $0 $0 $1-$10,000
HIGH INCOME FUND II (1,498 Shares) (0 Shares) (0 Shares) (0 Shares) (335 Shares)
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
FIRST TRUST/ABERDEEN $0 $0 $10,001-$50,000 $10,001-$50,000 $1-$10,000
EMERGING OPPORTUNITY FUND (0 Shares) (0 Shares) (1,000 Shares) (600 Shares) (454 Shares)
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
FIRST TRUST SPECIALTY $0 $0 $0 $0 $0
FINANCE AND FINANCIAL (0 Shares) (0 Shares) (0 Shares) (0 Shares) (0 Shares)
OPPORTUNITIES FUND
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
FIRST TRUST DIVIDEND AND $0 $0 $0 $0 $0
INCOME FUND (0 Shares) (0 Shares) (0 Shares) (0 Shares) (0 Shares)
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
FIRST TRUST HIGH INCOME $0 $0 $10,001-$50,000 $0 $0
LONG/SHORT FUND (0 Shares) (0 Shares) (1,000 Shares) (0 Shares) (0 Shares)
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
FIRST TRUST ENERGY $0 $0 $0 $0 $0
INFRASTRUCTURE FUND (0 Shares) (0 Shares) (0 Shares) (0 Shares) (0 Shares)
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
FIRST TRUST MLP AND $0 $0 $0 $0 $0
ENERGY INCOME FUND (0 Shares) (0 Shares) (0 Shares) (0 Shares) (0 Shares)
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
FIRST TRUST INTERMEDIATE $0 $0 $0 $0 $0
DURATION PREFERRED & (0 Shares) (0 Shares) (0 Shares) (0 Shares) (0 Shares)
INCOME FUND
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES IN ALL
REGISTERED INVESTMENT $10,001-$50,000 Over $100,000 Over $100,000 Over $100,000 Over $100,000
COMPANIES IN THE FIRST (2,498 Shares) (9,756 Shares) (10,677 Shares) (14,612 Shares) (6,554 Shares)
TRUST FUND COMPLEX
OVERSEEN BY TRUSTEE
-------------------------- ------------------ ------------------ -------------------- -------------------- ----------------
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 total
Trustee fees, with investments allocated among the First Trust Funds depending
on what is suitable for the Trustee's personal investment needs.
-20-
As of December 31, 2013, 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 any Fund
or any person, other than a registered investment company, directly or
indirectly controlling, controlled by, or under common control with First Trust
Advisors or any sub-advisor or principal underwriter of any 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, 2013, the Trustees and executive officers of the Funds
as a group beneficially owned approximately 47,997 shares of the funds in the
First Trust Fund Complex (less than 1% of the shares outstanding). As of
December 31, 2013, the Trustees and executive officers of each Fund as a group beneficially owned the
following number of Shares of each Fund as set forth below:
TRUSTEE EQUITY INCOME FUND DIVIDEND AND INCOME FUND
----------------------- ------------------ ------------------------
INTERESTED TRUSTEE
James A. Bowen 0 0
INDEPENDENT TRUSTEES
Richard E. Erickson 340 0
Thomas R. Kadlec 850 0
Robert F. Keith 0 0
Niel B. Nielson 418 0
As of December 31, 2013, (1) each Trustee beneficially owned less than 1%
of the outstanding Shares of each Fund and (2) the Trustees and executive
officers as a group beneficially owned 1,608 Shares of the Equity Income Fund
and 0 Shares of the Dividend and Income Fund, which in each case is less than 1%
of each Fund's Shares outstanding:
--------------------------------------------------------------------------------------------------- -----------------------
FUND SHARES OWNED
--------------------------------------------------------------------------------------------------- -----------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND 4,446
--------------------------------------------------------------------------------------------------- -----------------------
FIRST TRUST ENERGY INCOME AND GROWTH FUND 1,583
--------------------------------------------------------------------------------------------------- -----------------------
FIRST TRUST ENHANCED EQUITY INCOME FUND 1,608
--------------------------------------------------------------------------------------------------- -----------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND 5,395
--------------------------------------------------------------------------------------------------- -----------------------
FIRST TRUST MORTGAGE INCOME FUND 1,138
--------------------------------------------------------------------------------------------------- -----------------------
FIRST TRUST STRATEGIC HIGH INCOME FUND II 1,833
--------------------------------------------------------------------------------------------------- -----------------------
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND 2,054
--------------------------------------------------------------------------------------------------- -----------------------
FIRST TRUST SPECIALTY FINANCE AND FINANCIAL OPPORTUNITIES FUND 0
--------------------------------------------------------------------------------------------------- -----------------------
FIRST TRUST DIVIDEND AND INCOME FUND 0
--------------------------------------------------------------------------------------------------- -----------------------
FIRST TRUST HIGH INCOME LONG/SHORT FUND 1,200
--------------------------------------------------------------------------------------------------- -----------------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND 0
--------------------------------------------------------------------------------------------------- -----------------------
FIRST TRUST MLP AND ENERGY INCOME FUND 0
--------------------------------------------------------------------------------------------------- -----------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND 0
--------------------------------------------------------------------------------------------------- -----------------------
COMPENSATION
Each Independent Trustee is 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 is allocated pro rata among each fund in the
First Trust Fund Complex based on net assets. Additionally, the Lead Independent
Trustee is paid $15,000 annually, the Chairman of the Audit Committee is paid
$10,000 annually, and each of the Chairmen of the Nominating and Governance
Committee and the Valuation Committee is paid $5,000 annually to serve in such
capacities, with such compensation allocated pro rata among each fund in the
First Trust Fund Complex based on net assets. Trustees 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 served a two-year term expiring
December 31, 2013 before rotating to serve as a Chairman of another Committee or
-21-
as Lead Independent Trustee. Effective January 1, 2014, each Committee Chairman
and the Lead Independent Trustee rotate every three years.
The number of Board meetings held by each Fund during its last fiscal year
is shown in Schedule 1 hereto.
The aggregate fees and expenses paid to all Trustees by each Fund for its
last fiscal year (including reimbursement for travel and out-of-pocket expenses)
amounted to the following:
---------------------------------------------------------------------------------------------------------------------------
AGGREGATE FEES AND
FUND EXPENSES PAID
---------------------------------------------------------------------------------------------- ----------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND $20,753
---------------------------------------------------------------------------------------------- ----------------------------
FIRST TRUST ENERGY INCOME AND GROWTH FUND $35,088
---------------------------------------------------------------------------------------------- ----------------------------
FIRST TRUST ENHANCED EQUITY INCOME FUND $24,385
---------------------------------------------------------------------------------------------- ----------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND $24,468
---------------------------------------------------------------------------------------------- ----------------------------
FIRST TRUST MORTGAGE INCOME FUND $18,594
---------------------------------------------------------------------------------------------- ----------------------------
FIRST TRUST STRATEGIC HIGH INCOME FUND II $20,185
---------------------------------------------------------------------------------------------- ----------------------------
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND $25,857
---------------------------------------------------------------------------------------------- ----------------------------
FIRST TRUST SPECIALTY FINANCE AND FINANCIAL OPPORTUNITIES FUND $20,015
---------------------------------------------------------------------------------------------- ----------------------------
FIRST TRUST DIVIDEND AND INCOME FUND $23,004
---------------------------------------------------------------------------------------------- ----------------------------
FIRST TRUST HIGH INCOME LONG/SHORT FUND $48,036
---------------------------------------------------------------------------------------------- ----------------------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND $36,347
---------------------------------------------------------------------------------------------- ----------------------------
FIRST TRUST MLP AND ENERGY INCOME FUND(1) $35,368
---------------------------------------------------------------------------------------------- ----------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND(2) $45,477
---------------------------------------------------------------------------------------------- ----------------------------
1 Since the Fund commenced operations on November 27, 2012 and, therefore, has
not completed its first full fiscal year, the aggregate fees and expenses
paid to the Trustees have been estimated based on payments expected to be
made by the Fund during the fiscal year ending October 31, 2014.
2 Since the Fund commenced operations on May 23, 2013 and, therefore, has not
completed its first full fiscal year, the aggregate fees and expenses paid
to the Trustees have been estimated based on payments expected to be made by
the Fund during the fiscal year ending October 31, 2014.
The following table sets forth certain information regarding the
compensation of each Fund's Trustees (including reimbursement for travel and
out-of-pocket expenses) for each Fund's most recently completed fiscal year. The
Funds have no retirement or pension plans. The executive officers and the
Interested Trustee of each Fund receive no compensation from the Funds for
serving in such capacities.
-22-
AGGREGATE COMPENSATION FOR EACH FUND'S FISCAL YEAR
---------------------------------------------------------------------------------------------------------------------------
INTERESTED INDEPENDENT
TRUSTEE TRUSTEES
------------------------------------------------------- ------------- -----------------------------------------------------
James A. Richard E. Thomas R. Robert F. Niel B.
FUND Bowen Erickson Kadlec Keith Nielson
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (1) $0 $5,196 $5,141 $5,235 $5,180
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
FIRST TRUST ENERGY INCOME AND GROWTH FUND (1) $0 $8,808 $8,583 $8,960 $8,737
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
FIRST TRUST ENHANCED EQUITY INCOME FUND (2) $0 $6,111 $6,011 $6,177 $6,086
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
FIRST TRUST/ABERDEEN GLOBAL
OPPORTUNITY INCOME FUND (2) $0 $6,131 $6,032 $6,198 $6,107
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
FIRST TRUST MORTGAGE INCOME FUND (3) $0 $4,653 $4,623 $4,674 $4,644
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
FIRST TRUST STRATEGIC HIGH INCOME FUND II (3) $0 $5,053 $5,003 $5,085 $5,044
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND (2) $0 $6,476 $6,413 $6,525 $6,443
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
FIRST TRUST SPECIALTY FINANCE AND FINANCIAL
OPPORTUNITIES FUND (1) $0 $5,011 $4,964 $5,043 $4,997
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
FIRST TRUST DIVIDEND AND INCOME FUND (1) $0 $5,757 $5,723 $5,781 $5,743
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
FIRST TRUST HIGH INCOME LONG/SHORT FUND (3) $0 $12,059 $11,746 $12,292 $11,939
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND (1) $0 $9,116 $8,933 $9,251 $9,047
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
FIRST TRUST MLP AND ENERGY INCOME FUND (4) $0 $8,753 $8,893 $8,766 $8,955
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME
FUND (5) $0 $11,233 $11,448 $11,251 $11,545
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
TOTAL COMPENSATION FOR SERVING THE FIRST TRUST $0 $306,162 $299,500 $310,300 $304,334
FUND COMPLEX(6)
------------------------------------------------------- ------------- ------------ ------------ ------------- -------------
1 For fiscal year ended November 30, 2013.
2 For fiscal year ended December 31, 2013.
3 For fiscal year ended October 31, 2013.
4 Since the Fund commenced operations on November 27, 2012 and, therefore, has
not completed its first full fiscal year, compensation has been estimated
based on compensation expected to be paid by the Fund during the fiscal year
ending October 31, 2014.
5 Since the Fund commenced operations on May 23, 2013 and, therefore, has
not completed its first full fiscal year, compensation has been estimated
based on compensation expected to be paid by the Fund during the fiscal
year ending October 31, 2014.
6 For the calendar year ended December 31, 2013. 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.
-23-
ATTENDANCE AT ANNUAL MEETINGS OF SHAREHOLDERS
The policy of the Board is 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 Funds' Nominating and Governance Committee
Charter, which is available on each 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 each Fund's website located at
http://www.ftportfolios.com. To find the Board's attendance, select your 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 Funds' accounting and financial reporting process. The Audit
Committee operates pursuant to a charter (the "Charter") that was most recently
reviewed and approved by the Board of Trustees on December 9, 2013, a copy of
which is attached as Exhibit A hereto, and is available on the Funds' website
located at http://www.ftportfolios.com. As set forth in the Charter, management
of the Funds is responsible for maintaining appropriate systems for accounting
and internal controls and the audit process. The Funds' independent auditors are
responsible for planning and carrying out proper audits of each 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 First Trust Mortgage Income Fund, the
First Trust Strategic High Income Fund II, the First Trust High Income
Long/Short Fund, the First Trust MLP and Energy Income Fund and the First Trust
Intermediate Duration Preferred & Income Fund for the fiscal year ended October
31, 2013 at a meeting held on December 18, 2013; the Macquarie/First Trust
Global Infrastructure/Utilities Dividend & Income Fund, the First Trust Energy
Income and Growth Fund, the First Trust Specialty Finance and Financial
Opportunities Fund, the First Trust Dividend and Income Fund and the First Trust
Energy Infrastructure Fund for the fiscal year ended November 30, 2013 at a
meeting held on January 22, 2014; and the First Trust Enhanced Equity Income
Fund, the First Trust/Aberdeen Global Opportunity Income Fund and the First
Trust/Aberdeen Emerging Opportunity Fund for the fiscal year ended December 31,
2013 at a meeting held on February 20, 2014, and discussed the audits 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 each 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") AU 380, Communication
with Audit Committees or PCAOB Auditing Standard No. 16, Communications with
Audit Committees, as applicable. The Audit Committee also received from 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
Funds and discussed the impact that any such relationships may have on the
objectivity and independence of the independent auditors.
The members of the Funds' Audit Committee are not full-time employees of
the Funds 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
-24-
procedures or to set auditor independence standards. Members of the Funds' 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 audits
of the Funds' financial statements have 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 each 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 each Fund's audited
financial statements in each Fund's Annual Report to Shareholders for the year
ended October 31, November 30 and December 31, 2013, respectively.
Submitted by the Audit Committee of the Funds:
Richard E.Erickson
Thomas R. Kadlec
Robert F. Keith
Niel B. Nielson
INDEPENDENT AUDITORS' FEES
Deloitte & Touche has been selected to serve as the independent auditors
for each Fund for its current fiscal year, and acted as the independent auditors
for each Fund for its most recently completed fiscal year. Deloitte & Touche has
advised the Funds that, to the best of its knowledge and belief, Deloitte &
Touche professionals did not have any direct or material indirect ownership
interest in the Funds 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, each Fund is not seeking shareholder ratification of
the selection of Deloitte & Touche as independent auditors.
-25-
Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees
During each of the last two fiscal years of the Funds, Deloitte & Touche
has billed each Fund and the Advisor for the following fees:
----------------------------------------------------------------------------------------------------------------------
AUDIT-RELATED TAX ALL OTHER
AUDIT FEES(1),(2) FEES FEES(3) FEES
-------------------------------- --------------------- ---------------------- --------------------- ------------------
FEES BILLED TO: 2012 2013 2012 2013(2) 2012 2013 2012 2013
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
MACQUARIE/FIRST TRUST GLOBAL
INFRASTRUCTURE/ UTILITIES
DIVIDEND & INCOME FUND(4)
Fund $49,000 $49,000 $0 $0 $5,200 $5,200 $0 $0
Advisor N/A N/A $0 $0 $0 $0 $0 $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
FIRST TRUST ENERGY INCOME AND
GROWTH FUND(4)
Fund $91,500 $122,000 $0 $0 $38,400 $72,000 $0 $0
Advisor N/A N/A $0 $0 $0 $0 $0 $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
FIRST TRUST ENHANCED EQUITY
INCOME FUND(5)
Fund $38,000 $38,000 $0 $0 $5,200 $5,200 $0 $0
Advisor N/A N/A $0 $0 $0 $0 $0 $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
FIRST TRUST/ABERDEEN GLOBAL
OPPORTUNITY INCOME FUND(5)
Fund $53,000 $53,000 $0 $0 $5,200 $5,200 $0 $0
Advisor N/A N/A $0 $0 $0 $0 $0 $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
FIRST TRUST MORTGAGE INCOME
FUND(6)
Fund $67,000 $45,000 $0 $0 $5,200 $5,200 $0 $0
Advisor N/A N/A $0 $0 $0 $0 $0 $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
FIRST TRUST STRATEGIC HIGH
INCOME FUND II(6)
Fund $90,500 $65,000 $0 $0 $5,200 $5,200 $0 $0
Advisor N/A N/A $0 $0 $0 $0 $0 $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
FIRST TRUST/ABERDEEN EMERGING
OPPORTUNITY FUND(5)
Fund $53,000 $53,000 $0 $0 $9,290 $8,290 $0 $0
Advisor N/A N/A $0 $0 $0 $0 $0 $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
FIRST TRUST SPECIALTY FINANCE
AND FINANCIAL OPPORTUNITIES
FUND(4)
Fund $42,000 $42,000 $0 $0 $5,200 $5,200 $0 $0
Advisor N/A N/A $0 $0 $0 $0 $0 $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
FIRST TRUST DIVIDEND AND INCOME
FUND(4)
Fund $28,000 $28,000 $0 $0 $4,500 $4,500 $0 $0
Advisor N/A N/A $0 $0 $0 $0 $0 $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
FIRST TRUST HIGH INCOME
LONG/SHORT FUND(6)
Fund $52,000 $52,000 $0 $0 $5,200 $5,200 $0 $0
Advisor N/A N/A $0 $0 $0 $0 $0 $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
FIRST TRUST ENERGY
INFRASTRUCTURE FUND(4)
Fund $44,000 $44,000 $0 $0 $6,300 $6,300 $0 $0
Advisor N/A N/A $0 $0 $0 $0 $0 $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
FIRST TRUST MLP AND ENERGY
INCOME FUND(7)
Fund N/A $78,000 N/A $0 N/A $0 N/A $0
Advisor N/A N/A N/A $7,000 N/A $0 N/A $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
-26-
----------------------------------------------------------------------------------------------------------------------
AUDIT-RELATED TAX ALL OTHER
AUDIT FEES(1),(2) FEES FEES(3) FEES
-------------------------------- --------------------- ---------------------- --------------------- ------------------
FEES BILLED TO: 2012 2013 2012 2013(2) 2012 2013 2012 2013
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
FIRST TRUST INTERMEDIATE
DURATION PREFERRED &
INCOME FUND(8)
Fund N/A $47,250 N/A $0 N/A $0 N/A $0
Advisor N/A N/A N/A $7,000 N/A $0 N/A $0
-------------------------------- ---------- ---------- ---------- ----------- ----------- --------- -------- ---------
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 With respect to First Trust MLP and Energy Income Fund and First Trust
Intermediate Duration Preferred & Income Fund, these fees were for audits
and issuance of consents related to the organization and initial offering of
such Funds.
3 These fees were for tax consultation or tax return preparation.
4 These fees were for the fiscal years ended November 30.
5 These fees were for the fiscal years ended December 31.
6 These fees were for the fiscal years ended October 31.
7 These fees were for the period from inception on November 27, 2012 through
October 31, 2013.
8 These fees were for the period from inception on May 23, 2013 through
October 31, 2013.
Non-Audit Fees
During each of the last two fiscal years of the Funds, 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 2012 2013
------------------------------------------------------------------------------- ------------------ -----------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND(1)
Fund $5,200 $5,200
Advisor $4,120(6) $3,000(7)
------------------------------------------------------------------------------- -------------- --------------
FIRST TRUST ENERGY INCOME AND GROWTH FUND(1)
Fund $38,400 $72,000
Advisor $4,120(6) $3,000(7)
------------------------------------------------------------------------------- -------------- --------------
FIRST TRUST ENHANCED EQUITY INCOME FUND(2)
Fund $5,200 $5,200
Advisor $4,120(6) $38,000(8)
------------------------------------------------------------------------------- -------------- --------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND(2)
Fund $5,200 $5,200
Advisor $4,120(6) $38,000(8)
------------------------------------------------------------------------------- -------------- --------------
FIRST TRUST MORTGAGE INCOME FUND(3)
Fund $5,200 $5,200
Advisor $6,600(6) $3,000(7)
------------------------------------------------------------------------------- -------------- --------------
FIRST TRUST STRATEGIC HIGH INCOME FUND II(3)
Fund $5,200 $5,200
Advisor $6,600(6) $3,000(7)
------------------------------------------------------------------------------- -------------- --------------
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND(2)
Fund $9,290 $8,290
Advisor $4,120(6) $38,000(8)
------------------------------------------------------------------------------- -------------- --------------
FIRST TRUST SPECIALTY FINANCE AND FINANCIAL OPPORTUNITIES FUND(1)
Fund $5,200 $5,200
Advisor $4,120(6) $3,000(7)
------------------------------------------------------------------------------- -------------- --------------
FIRST TRUST DIVIDEND AND INCOME FUND(1)
Fund $4,500 $4,500
Advisor $4,120(6) $3,000(7)
------------------------------------------------------------------------------- -------------- --------------
FIRST TRUST HIGH INCOME LONG/SHORT FUND(3)
Fund $5,200 $5,200
Advisor $6,600(6) $3,000(7)
------------------------------------------------------------------------------- -------------- --------------
-26-
------------------------------------------------------------------------------------------------------------------------
FUND 2012 2013
------------------------------------------------------------------------------- ------------------ -----------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND(1)
Fund $6,300 $6,300
Advisor $4,120(6) $3,000(7)
------------------------------------------------------------------------------- -------------- --------------
FIRST TRUST MLP AND ENERGY INCOME FUND(4)
Fund N/A $0
Advisor N/A $3,000(7)
------------------------------------------------------------------------------- -------------- --------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND(5)
Fund N/A $0
Advisor N/A $0
------------------------------------------------------------------------------- -------------- --------------
1 These fees were for the fiscal years ended November 30.
2 These fees were for the fiscal years ended December 31.
3 These fees were for the fiscal years ended October 31.
4 These fees were for the period from inception on November 27, 2012 through
October 31, 2013.
5 These fees were for the period from inception on May 23, 2013 through
October 31, 2013.
6 These fees relate to partnership tax compliance matters and 2011 federal and
state tax matters.
7 These fees relate to 2012 federal and state tax matters.
8 These fees relate to partnership tax compliance matters and 2012 federal and
state tax matters.
Pre-Approval
Pursuant to its Charter and its Audit and Non-Audit Services Pre-Approval
Policy, the Audit Committee of each Fund 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 each 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 respective Fund, 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. 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 respective 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.
Because the Audit Committee has not been informed of any such services,
the Audit Committee of each 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 respective 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 INFORMATIONFund's outstanding Shares.
SHAREHOLDER PROPOSALS
Shareholder Proposals for Inclusion in the Funds' Proxy Statement. To be
considered for presentation at the Joint Annual MeetingsMeeting of Shareholders of the Funds
to be held in 2015 and included in a Fund's proxy statement relating to such
meeting, a shareholder proposal submitted pursuant to Rule 14a-8 of the 1934 Act
must be received at the principal executive offices of the applicable Fund, located at 120 East
Liberty Drive, Suite 400, Wheaton, Illinois 60187, not later than November 14,
2014. 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 a Fund's proxy statement.
Other Shareholder Proposals. Under the Funds'each 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 a Fund
if timely written notice (the "Shareholder Notice") is provided to the Secretary
of the Fund and the other applicable conditions summarized below are met. In accordance with the
-14-
advance notice provisions included in the Funds' By-Laws, unless a
-28-
greater or
lesser period is required under applicable law, to be timely, the Shareholder
Notice must be delivered to or mailed to and received at the Fund's
principal executive
offices Attn: W. Scott Jardine, Secretary,of a Fund 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 ofShareholder Notices should be sent to a 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
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.
-29-
120 East Liberty
Drive, Suite 400, Wheaton, Illinois 60187, Attention: W. Scott Jardine,
Secretary.
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 aeach Fund who want to communicate with the Board of
Trustees or any individual Trustee should write the respective 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
Chairmanchairman 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-ADVISORS, ADMINISTRATORS AND TRANSFER AGENTS
First Trust Advisors L.P., 120 East Liberty Drive, Suite 400, Wheaton,
Illinois 60187, serves as the Funds' investment advisor. First Trust Advisors is
also responsible for providing certain clerical, bookkeeping and other
administrative services to each Fund and also provides fund reporting services
to each Fund for a flat annual fee. Four Corners Capital Management, LLC, 2005
Market Street, Philadelphia, Pennsylvania 19103, and Macquarie Capital
Investment Management LLC, 125 West 55th Street, New York, New York 10019, serve
as the investment sub-advisors to Macquarie/First Trust Global
Infrastructure/Utilities Dividend & Income Fund. Energy Income Partners, LLC, 49
Riverside Avenue, Westport, Connecticut 06880, serves as the investment
sub-advisor to First Trust Energy Income and Growth Fund, First Trust Energy
Infrastructure Fund and First Trust MLP and Energy Income Fund. An affiliate of
the Advisor owns an interest in Energy Income Partners, LLC. Chartwell
Investment Partners, L.P., 1235 Westlakes Drive, Berwyn, Pennsylvania 19312,
serves as the investment sub-advisor to First Trust Enhanced Equity Income Fund
and First Trust Dividend and Income Fund. Aberdeen Asset Management Inc., 1735
Market Street, 32nd Floor, Philadelphia, Pennsylvania 19103, serves as the
investment sub-advisor to First Trust/Aberdeen Global Opportunity Income Fund
and First Trust/Aberdeen Emerging Opportunity Fund. Brookfield Investment
Management Inc., Three World Financial Center, 200 Vesey Street, 10th Floor, New
York, New York 10281, serves as the investment sub-advisor to First Trust
Strategic High Income Fund II and First Trust Mortgage Income Fund. Confluence
Investment Management LLC, 20 Allen Avenue, Suite 300, St. Louis, Missouri
63119, serves as the investment sub-advisor to First Trust Specialty Finance and
Financial Opportunities Fund. MacKay Shields LLC, 1345 Avenue of the Americas,
43rd Floor, New York, New York 10105, serves as the investment sub-advisor to
First Trust High Income Long/Short Fund. Stonebridge Advisors LLC, 187 Danbury
Road, Wilton, Connecticut 06897, serves as the investment sub-advisor to First
Trust Intermediate Duration Preferred & Income Fund. An affiliate of the Advisor
owns a majority interest in Stonebridge Advisors LLC.
BNY Mellon Investment Servicing (US) Inc., 301 Bellevue Parkway,
Wilmington, Delaware 19809, acts as the administrator, accounting agent and
transfer agent to each Fund except for First Trust Intermediate Duration
Preferred & Income Fund. Brown Brothers Harriman & Co., 50 Milk Street, Boston,
Massachusetts 02109, acts as the administrator and accounting agent, and
Computershare Inc., P.O. Box 30170, College Station, Texas 77842-3170, acts as
the transfer agent, to First Trust Intermediate Duration Preferred & Income
Fund.
-30-
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 Funds' officers and Trustees, certain persons affiliated with First Trust
Advisors and any sub-advisor and persons who beneficially own more than 10% of a
Fund's Shares to file reports of ownership and changes of ownership with the SEC
and the NYSE or NYSE MKT LLC, as applicable, and to furnish the Funds with
copies of all Section 16(a) forms they file. Based solely upon a review of
copies of such forms received by the Funds and certain written representations,
the Funds believe that during the fiscal years ended October 31, 2013, November
30, 2013 and December 31, 2013, all such filing requirements applicable to such
persons were met.
FISCAL YEAR
The fiscal year end for First Trust Mortgagethe Equity Income Fund First Trust
Strategic High Income Fund II, First Trust High Income Long/Short Fund, First
Trust MLPis December 31 and Energy Income Fund and First Trust Intermediate Duration Preferred
& Income Fund was October 31, 2013. Thethe
fiscal year end for Macquarie/First
Trust Global Infrastructure/Utilities Dividend & Income Fund, First Trust Energy
Income and Growth Fund, First Trust Specialty Finance and Financial
Opportunities Fund, First Trustthe Dividend and Income Fund and First Trust Energy
Infrastructure Fund wasis November 30, 2013. The fiscal year end for First Trust
Enhanced Equity Income Fund, First Trust/Aberdeen Global Opportunity Income Fund
and First Trust/Aberdeen Emerging Opportunity Fund was December 31, 2013.30.
DELIVERY OF CERTAIN DOCUMENTS
Annual reports will be sent to shareholders of record of each Fund
following the Fund's fiscal year end. Each 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 writingdirected to the AdvisorFund 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, proxy statement or
Notice of Internet Availability of Proxy Materials, (as applicable)as applicable, may be delivered to
two or more shareholders of a 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, proxy statement or Notice of Internet Availability of Proxy
Materials, (as applicable),as applicable, 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
-15-
of such documents are received, shareholders should contact the Advisorapplicable Fund
at the address and phone number set forth above. Pursuant to a request, a
separate copy will be delivered promptly.
OTHER MATTERS TO COME BEFORE THE MEETING
No business other than the matter 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 Funds.
March 7,April 9, 2014
--------------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIESYOUR SHARES BE RETURNED PROMPTLY. SHAREHOLDERSREPRESENTED AT THE MEETING. IN ORDER TO
AVOID DELAY AND TO ENSURE THAT YOUR SHARES ARE THEREFORE
URGEDREPRESENTED, PLEASE VOTE AS
PROMPTLY AS POSSIBLE. YOU MAY VOTE EASILY AND QUICKLY BY MAIL, TELEPHONE OR
THROUGH THE INTERNET. TO VOTE BY MAIL, PLEASE COMPLETE SIGN, DATE AND RETURN THEMAIL YOUR PROXY CARD AS SOON AS POSSIBLE
IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. ALTERNATIVELY, SHAREHOLDERS MAY
VOTE BY TELEPHONE OR THROUGH THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE
PROXY CARD. IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING THE
PROPOSAL OR HOW TO VOTE YOUR SHARES, PLEASE CALL THE FUNDS' PROXY SOLICITOR, AST
FUND SOLUTIONS, LLC, AT (866) 530-8634 WEEKDAYS FROM 9:00 A.M. TO 10:00 P.M.
EASTERN TIME.
--------------------------------------------------------------------------------
-31-
SCHEDULE 1
NUMBER OF BOARD AND COMMITTEE MEETINGS
HELD DURING EACH FUND'S LAST FISCAL YEAR
---------------------------------------------------------------------------------------------------------------------------
NOMINATING AND
AUDIT EXECUTIVE GOVERNANCE VALUATION
BOARD COMMITTEE COMMITTEE COMMITTEE COMMITTEE
FUND MEETINGS MEETINGS MEETINGS MEETINGS MEETINGS
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
MACQUARIE/FIRST TRUST GLOBAL 7 9 4 4 4
INFRASTRUCTURE/ UTILITIES
DIVIDEND & INCOME FUND (1)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
FIRST TRUST ENERGY INCOME AND 8 9 6 4 4
GROWTH FUND (1)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
FIRST TRUST ENHANCED EQUITY 5 10 4 4 4
INCOME FUND (2)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
FIRST TRUST/ABERDEEN GLOBAL 5 10 12 4 4
OPPORTUNITY INCOME FUND (2)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
FIRST TRUST MORTGAGE INCOME FUND 6 11 12 4 4
(3)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
FIRST TRUST STRATEGIC HIGH 6 11 14 4 4
INCOME FUND II (3)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
FIRST TRUST/ABERDEEN EMERGING 5 10 4 4 4
OPPORTUNITY FUND (2)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
FIRST TRUST SPECIALTY FINANCE
AND FINANCIAL OPPORTUNITIES FUND 6 9 4 4 4
(1)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
FIRST TRUST DIVIDEND AND INCOME 7 9 4 4 4
FUND (1)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
FIRST TRUST HIGH INCOME 6 10 12 4 4
LONG/SHORT FUND (3)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
FIRST TRUST ENERGY 6 9 14 4 4
INFRASTRUCTURE FUND (1)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
FIRST TRUST MLP AND ENERGY 7 10 12 4 4
INCOME FUND (3), (4)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
FIRST TRUST INTERMEDIATE
DURATION PREFERRED & INCOME FUND 5 5 5 2 2
(3), (5)
--------------------------------- --------------- ---------------- ---------------- ---------------- -----------------
1 For fiscal year ended November 30, 2013.
2 For fiscal year ended December 31, 2013.
3 For fiscal year ended October 31, 2013.
4 The inception date of this Fund was November 27, 2012.
5 The inception date of this Fund was May 23, 2013.
-16-
EXHIBIT A
AUDIT COMMITTEE CHARTER
I. PURPOSE
The Audit CommitteeA-1
FORM OF NEW INVESTMENT SUB-ADVISORY AGREEMENT
FOR
FIRST TRUST ENHANCED EQUITY INCOME FUND
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this [ ] day of [ ], 2014 by and among First Trust
Enhanced Equity Income Fund, a Massachusetts business trust (the "Committee""Fund") 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:
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,, an Illinois limited partnership 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 interfereregistered investment
adviser 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") (the "Manager"), and
Chartwell Investment Partners, Inc., a Pennsylvania corporation and a registered
investment adviser with the SEC (the "Sub-Adviser").
Included inWHEREAS, the foregoingFund is the requirement that no member of the Committee be an "interested person"
of the Funds within the meaning of Section 2(a)(19) ofa closed-end management investment company registered
under 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;
WHEREAS, the Fund has retained the Manager to serve as the investment
manager for the Fund pursuant to an Investment Management Agreement between the
Manager and the Fund (as such agreement may be modified from time to time, the
Funds (except in"Management Agreement");
WHEREAS, the capacity as a Board or
committee member).
3. At least one memberManagement Agreement provides that the Manager may, subject
to the initial and periodic approvals required under Section 15 of the Committee shall have been determined
by the Board, exercising1940 Act,
appoint a sub-adviser at 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 readown cost 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). A
member whom the Board determines to be the Funds' "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 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)expense for the purpose of preparing or issuing an audit report or
performing other audit, review or attestfurnishing
certain services required under the Management Agreement;
WHEREAS, the Fund and the Manager desire to retain the Sub-Adviser to
furnish investment advisory services for the Funds ("External
Auditors").Fund's investment portfolio, upon
the terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Appointment. The External Auditors shall report directlyFund and the Manager hereby appoint the Sub-Adviser to
provide certain sub-investment advisory services to the Committee.
2.Fund for the period and
on the terms set forth in this Agreement. The CommitteeSub-Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided. The Sub-Adviser shall, meet withfor all purposes herein
provided, be deemed an independent contractor and, unless otherwise expressly
provided or authorized, shall have no authority to act for nor represent the
External Auditors and Fund Management to review the scope, fees, audit plans and staffingor Manager in any way, nor otherwise be deemed an agent of the proposed audits for each fiscal year. AtFund or the
conclusion ofManager.
2. Services to Be Performed. Subject always to the audit, the
Committee shall review such audit results, including the External
Auditor's evaluationsupervision of the
Fund's financialBoard of Trustees and internal controls, any
comments or recommendationsthe Manager, the Sub-Adviser will act as
sub-adviser for, and manage on a discretionary basis the investment and
reinvestment of the External Auditors, any audit problems
or difficulties and Fund Management's response, including any restrictions
on the scopeassets of the External Auditor's activities or on access to
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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 teamfurnish an investment program in respect
of, make investment decisions for, 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-approveplace all audit services and permitted
non-audit services (including the fees and terms thereof) to be performedorders for the Fund by its External Auditors in accordance withpurchase and
sale of securities for the Audit and
Non-Audit Services Pre-Approval Policy. The Chairman of the Committee is
authorized to give such pre-approvalsFund's investment portfolio, all on behalf of the
Committee where the
fee for such engagement does not exceed the amount specifiedFund and as described in the AuditFund's most recent registration statement on Form
N-2 as declared effective by the SEC, and Non-Audit Services Pre-Approval Policy, and shall reportas the same may thereafter be amended
from time to time. In the performance of its duties, the Sub-Adviser will in all
material respects (a) satisfy any such
pre-approval to the full Committee.
5. The Committee shall pre-approve the External Auditor's
engagements for non-audit services to Fund Management and any entity
controlling, controlled by or under common control with Fund Management
that provides ongoing servicesapplicable fiduciary duties it may have to the
Fund, if(b) monitor the engagement relates
directlyFund's investments, and (c) comply with the provisions of
the Fund's Declaration of Trust and By-laws, as amended from time to time and
A-1-1
communicated by the Fund or the Manager to the operationsSub-Adviser in writing, and financial reportingthe
stated investment objectives, policies and restrictions of the Fund subjectas such
objectives, policies and restrictions may subsequently be changed by the Fund's
Board of Trustees and communicated by the Fund or the Manager to the de minimis exceptions for non-audit services describedSub-Adviser
in Rule 2-01 of
Regulation S-X.writing. The ChairmanFund or the Manager has provided the Sub-Adviser with current
copies of the CommitteeFund's Declaration of Trust, By-laws, prospectus, statement of
additional information and any amendments thereto, and any objectives, policies
or limitations not appearing therein as they may be relevant to the
Sub-Adviser's performance under this Agreement.
The Sub-Adviser is authorized to give such
pre-approvals on behalfselect the brokers or dealers that will
execute the purchases and sales of portfolio investments for the Fund, and is
directed to use its commercially reasonable efforts to obtain best execution,
which includes most favorable net results and execution of the Committee,Fund's orders,
taking into account all appropriate factors, including price, dealer spread or
commission, size and shall report any such
pre-approvaldifficulty of the transaction and research or other
services provided. Subject to approval by the Fund's Board of Trustees and
compliance with the policies and procedures adopted by the Board of Trustees for
the Fund and to the full Committee.
6. Ifextent permitted by and in conformance with applicable law
(including Rule 17e-1 of the External Auditors1940 Act), the Sub-Adviser may select brokers or
dealers affiliated with the Sub-Adviser. It is understood that the Sub-Adviser
will not be deemed to have provided non-audit servicesacted unlawfully, or to Fund Management and any entity controlling, controlled by or under common
control with Fund Management that provides ongoing serviceshave breached a fiduciary
duty to the Fund, or be in breach of any obligation owing to the Fund under this
Agreement, or otherwise, solely by reason of its having caused the Fund to pay a
member of a securities exchange, a broker or a dealer a commission for effecting
a securities transaction for the Fund in excess of the amount of commission
another member of an exchange, broker or dealer would have charged if the
Sub-Adviser determined in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Sub-Adviser's
overall responsibilities with respect to its accounts, including the Fund, as to
which it exercises investment discretion.
In addition, the Sub-Adviser may, to the extent permitted by applicable
law, aggregate purchase and sale orders of securities placed with respect to the
assets of the Fund with similar orders being made simultaneously for other
accounts managed by the Sub-Adviser or its affiliates, if in the Sub-Adviser's
reasonable judgment such aggregation shall result in an overall economic benefit
to the Fund, taking into consideration the selling or purchase price, brokerage
commissions and other expenses. In the event that a purchase or sale of an asset
of the Fund occurs as part of any aggregate sale or purchase orders, the
objective of the Sub-Adviser and any of its affiliates involved in such
transaction shall be to allocate the securities so purchased or sold, as well as
expenses incurred in the transaction, among the Fund and other accounts in a
fair and equitable manner. Nevertheless, the Fund and the Manager acknowledge
that under some circumstances, such allocation may adversely affect the Fund
with respect to the price or size of the securities positions obtainable or
salable. Whenever the Fund and one or more other investment advisory clients of
the Sub-Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in a manner believed by the Sub-Adviser
to be equitable to each, although such allocation may result in a delay in one
or more client accounts being fully invested that would not occur if such an
allocation were not pre-approved pursuantmade. Moreover, it is possible that due to differing
investment objectives or for other reasons, the Sub-Adviser and its affiliates
may purchase securities of an issuer for one client and at approximately the
same time recommend selling or sell the same or similar types of securities for
another client.
The Sub-Adviser will not arrange purchases or sales of securities between
the Fund and other accounts advised by the Sub-Adviser or its affiliates unless
(a) such purchases or sales are in accordance with applicable law (including
A-1-2
Rule 17a-7 of the 1940 Act) and the Fund's policies and procedures, (b) the
Sub-Adviser determines the purchase or sale is in the best interests of the
Fund, and (c) the Fund's Board of Trustees has approved these types of
transactions.
The Fund may adopt policies and procedures that modify or restrict the
Sub-Adviser's authority regarding the execution of the Fund's portfolio
transactions provided herein. Such policies and procedures and any amendments
thereto will be communicated by the Manager to the de minimis exception,Sub-Adviser.
The Sub-Adviser will communicate to the Committee shall consider whetherofficers and Trustees of the provisionFund
such information relating to transactions for the Fund as they may reasonably
request. In no instance will the Fund's portfolio securities be purchased from
or sold to the Manager, the Sub-Adviser or any affiliated person of either the
Fund, the Manager, or the Sub-Adviser, except as may be permitted under the 1940
Act.
The Sub-Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such
non-audit services is compatibleas it uses in providing services to other fiduciary accounts for
which it has investment responsibilities;
(b) will (i) conform in all material respects to all applicable
rules and regulations of the SEC, (ii) comply in all material respects
with all policies and procedures adopted by the External Auditor's independence.
7. The Committee shall obtainBoard of Trustees for the
Fund and reviewcommunicated to the Sub-Adviser in writing and, (iii) conduct its
activities under this Agreement in all material respects in accordance
with any applicable law and regulations of any governmental authority
pertaining to its investment advisory activities;
(c) will report to the Manager and to the Board of Trustees of the
Fund on a report fromquarterly basis and will make appropriate persons available for
the External
Auditors at least annually (including a formal written statement
delineating all relationships betweenpurpose of reviewing with representatives of the auditorsManager and the Board
of Trustees on a regular basis at such times as the Manager or the Board
of Trustees may reasonably request in writing regarding the management of
the Fund, consistent
with PCAOB Ethics and Independence Rule 3526) regarding (a) the External
Auditor's internal quality-control procedures; (b) any material issues
raised by the most recent internal quality-control review, or peerincluding, without limitation, review of the firm,general investment
strategies of the Fund, the performance of the Fund's investment portfolio
in relation to relevant standard industry indices and general conditions
affecting the marketplace and will provide various other reports from time
to time as reasonably requested by the Manager or the Board of Trustees of
the Fund; and
(d) will prepare and maintain such books and records with respect to
the Fund's securities and other transactions for the Fund's investment
portfolio as required for registered investment advisers under applicable
law or as otherwise requested by the Manager and will prepare and furnish
the Manager and Fund's Board of Trustees such periodic and special reports
as the Board or the Manager may reasonably request. The Sub-Adviser
further agrees that all records that it maintains for the Fund are the
property of the Fund and the Sub-Adviser will surrender promptly to the
Fund any such records upon the request of the Manager or the Fund
(provided, however, that the Sub-Adviser shall be permitted to retain
copies thereof); and shall be permitted to retain originals (with copies
to the Fund) to the extent required under Rule 204-2 of the Investment
Advisers Act of 1940 or other applicable law.
3. Expenses. During the term of this Agreement, the Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than (i) the cost of securities and other assets purchased for
A-1-3
the Fund, and (ii) the costs directly associated with purchasing and selling
securities and other assets for the Fund, if any, including, but not limited to,
brokerage commissions, stamps, duties, taxes and custody fees related to
transfers.
4. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Manager will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a portfolio
management fee (the "Management Fee") equal to the annual rate of 0.50% of the
Fund's Managed Assets (as defined below). For purposes of calculating the
Management Fee, Managed Assets means the average daily gross assets of the Fund,
minus the sum of the Fund's accrued and unpaid dividends on any outstanding
common shares and accrued liabilities (including the value of call options
written (sold)). The Management Fee shall be payable in arrears on or about the
first day of each month during the term of this Agreement.
For the month and year in which this Agreement becomes effective or
terminates, there shall be an inquiryappropriate proration on the basis of the number
of days that the Agreement is in effect during the month and year, respectively.
5. Services to Others. The Fund and the Manager acknowledge that the
Sub-Adviser now acts, or investigation by governmentalmay in the future act, as an investment adviser to
other managed accounts and as investment adviser or professional authorities within the preceding five years, respectinginvestment sub-adviser to
one or more independent audits carried outother investment companies. In addition, the Fund and the Manager
acknowledge that the persons employed by the firm; (c)Sub-Adviser to assist in the
Sub-Adviser's duties under this Agreement will not devote their full time to
such efforts. It is also agreed that the Sub-Adviser may use any steps takensupplemental
research obtained for the benefit of the Fund in providing investment advice to
deal with any such issues;its other investment advisory accounts and (d) the External Auditor's independence,
including all relationships between the External Auditorsfor managing its own accounts.
6. Limitation of Liability. The Sub-Adviser shall not be liable for, and
the Fund and its affiliates; and evaluating the qualifications, performance and
independenceManager will not take any action against the Sub-Adviser to
hold the Sub-Adviser liable for, any error of judgment or mistake of law or for
any loss suffered by the Fund or the Manager (including, without limitation, by
reason of the External Auditors, including their membershippurchase, sale or retention of any security) in connection with
the performance of the Sub-Adviser's duties under this Agreement, except for a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Sub-Adviser in the SEC practice sectionperformance of the AICPAits duties under this Agreement,
or by reason of its reckless disregard of its obligations 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 Committeeduties under this
Agreement.
7. Term; Termination. This Agreement shall present its conclusionsbecome effective with respect
to the External AuditorsFund on the date provided above (the "Effective Date") provided that it
has been approved in the manner required by the 1940 Act, and shall remain in
full force through June 30, 2015, unless sooner terminated as hereinafter
provided. This Agreement, however, shall continue in force from year to year
thereafter, but only as long as such continuance is specifically approved for
the Fund at least annually in the manner required by the 1940 Act and the rules
and regulations thereunder; provided, however, that if the continuation of this
Agreement is not approved for the Fund, the Sub-Adviser may continue to serve in
such capacity for the Fund in the manner and to the Board.
A-3
8. The Committee shall review reports and other information
provided to itextent permitted by the External Auditors regarding any illegal acts that
the External Auditors 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 audit1940
Act and the audit partner responsible for reviewingrules and regulations thereunder.
This Agreement shall automatically terminate in the audit as requiredevent of its
assignment and may be terminated at any time without the payment of any penalty
by law,
and further considering the rotation ofManager or the independent auditor firm
itself.
10. The Committee shall establish and recommendSub-Adviser upon sixty (60) days' written notice to the
Board for
ratification a policyother parties. This Agreement may also be terminated by the Fund by action 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 thatA-1-4
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 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 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
controls or material weaknesses therein and any fraud involving management
or other employees who have a significant role in the Funds' internal
controls.
A-4
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 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 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 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, at the address of the principal
offices of the Funds, which currently is 120 East Liberty Drive,
Wheaton, Illinois 60187, who shall forward the Report of Material
Violation to the Committee.
A-5
(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 a Material Violation,
the Committee shall do the following if it deems an investigation
necessary:
(1) Notify the full Board;
(2) Initiate an investigation, which may be conducted
either by the chief legal officer (or the equivalent thereof)Trustees of the Fund or by outside attorneys;a vote of a majority of the outstanding
voting securities of the Fund upon sixty (60) days' written notice to the
Sub-Adviser by the Fund without payment of any penalty.
This Agreement may be terminated at any time without the payment of any
penalty by the Manager, the Board of Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Fund in the event that it
shall have been established by a court of competent jurisdiction that the
Sub-Adviser or any officer or director of the Sub-Adviser has taken any action
that results in a breach of the material covenants of the Sub-Adviser set forth
herein.
The terms "assignment" and (3) Retain"vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Section 4 earned prior to such termination and for any additional
expert personnelperiod during which Sub-Adviser serves as such for the Fund, subject to
applicable law.
8. Compliance Certification. From time to time the Sub-Adviser shall
provide such certifications with respect to Rule 38a-1 under the 1940 Act as are
reasonably requested by the Fund or the Manager. In addition, the Sub-Adviser
will, from time to time, provide a written assessment of its compliance program
in conformity with current industry standards that is reasonably acceptable to
the Fund to enable the Fund to fulfill its obligations under Rule 38a-1 under
the 1940 Act.
9. Notice. Any notice under this Agreement shall be sufficient in all
respects if given in writing and delivered by commercial courier providing proof
of delivery and addressed as follows or addressed to such other person or
address as such party may designate for receipt of such notice.
If to the Manager or the Fund: If to the Sub-Adviser:
First Trust Enhanced Equity Income Fund Chartwell Investment Partners, Inc.
First Trust Advisors L.P. 1235 Westlakes Drive, Suite 400
120 E. Liberty Drive, Suite 400 Berwyn, Pennsylvania 19312
Wheaton, Illinois 60187 Attention: Maria E. Pollack
Attention: Secretary
If by Facsimile: (610) 722-5644
If by Facsimile: (630) 517-7437
10. Limitations on Liability. All parties hereto are expressly put on
notice of the Fund's Declaration of Trust and all amendments thereto, a copy of
which is on file with the Secretary of the Commonwealth of Massachusetts, and
the limitation of shareholder and trustee liability contained therein and a copy
of which has been provided to the Sub-Adviser prior to the date hereof. This
Agreement is executed on behalf of the Fund by the Fund's officers in their
capacity as officers and not individually and is not binding upon any of the
Trustees, officers or shareholders of the Fund individually but the obligations
imposed upon the Fund by this Agreement are binding only upon the assets and
property of the Fund, and persons dealing with the Fund must look solely to the
assets of the Fund for the enforcement of any claims.
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11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement will be binding upon and shall inure to the benefit of the parties
hereto and their respective successors.
12. Applicable Law. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 10 hereof, which shall be
construed in accordance with the laws of Massachusetts) the laws of the State of
Illinois.
13. Amendment, Etc. This Agreement may only be amended, or its provisions
modified or waived, in a writing signed by the party against which such
amendment, modification or waiver is sought to be enforced.
14. Authority. Each party represents to the others that it is duly
authorized and fully empowered to execute, deliver and perform this Agreement.
The Fund represents that engagement of the Sub-Adviser has been duly authorized
by the Fund and is in accordance with the Fund's Declaration of Trust and other
governing documents of the Fund.
15. Severability. Each provision of this Agreement is intended to be
severable from the others so that if any provision or term hereof is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity of the remaining provisions and terms hereof; provided,
however, that the provisions governing payment of the Management Fee described
in Section 4 are not severable.
16. Entire Agreement. This Agreement constitutes the sole and entire
agreement of the parties hereto with respect to the subject matter expressly set
forth herein.
A-1-6
IN WITNESS WHEREOF, the Fund, the Manager and the Sub-Adviser have caused
this Agreement to be executed as of the day and year first above written.
FIRST TRUST ADVISORS L.P. CHARTWELL INVESTMENT PARTNERS, INC.
By: _________________________________ By: ____________________________
Title: ___________________________ Title: _____________________
FIRST TRUST ENHANCED EQUITY INCOME FUND
By: __________________________________
Title: ____________________________
A-1-7
EXHIBIT A-2
FORM OF NEW INVESTMENT SUB-ADVISORY AGREEMENT
FOR
FIRST TRUST DIVIDEND AND INCOME FUND
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this [ ] day of [ ], 2014, by and among First Trust
Dividend and Income Fund, a Massachusetts business trust (the "Fund"), First
Trust Advisors L.P., an Illinois limited partnership (the "Manager") and a
registered investment adviser with the Securities and Exchange Commission
("SEC"), and Chartwell Investment Partners, Inc., a Pennsylvania corporation and
a registered investment adviser with the SEC (the "Sub-Adviser").
WHEREAS, the Fund is a closed-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Fund has retained the Manager to serve as the Committee deems necessary.
(iv) Atinvestment
manager for the conclusionFund pursuant to an Investment Management Agreement between the
Manager and the Fund (as such agreement may be modified from time to time, the
"Management Agreement");
WHEREAS, the Management Agreement provides that the Manager may, subject
to the initial and periodic approvals required under Section 15 of the 1940 Act,
appoint a sub-adviser at its own cost and expense for the purpose of furnishing
certain services required under the Management Agreement;
WHEREAS, the Fund and the Manager desire to retain the Sub-Adviser to
furnish investment advisory services for the Fund's investment portfolio, upon
the terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Appointment. The Fund and the Manager hereby appoint the Sub-Adviser to
provide certain sub-investment advisory services to the Fund for the period and
on the terms set forth in this Agreement. The Sub-Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided. The Sub-Adviser shall, for all purposes herein
provided, be deemed an independent contractor and, unless otherwise expressly
provided or authorized, shall have no authority to act for nor represent the
Fund or the Manager in any way, nor otherwise be deemed an agent of the Fund or
the Manager.
2. Services to Be Performed. Subject always to the supervision of the
Fund's Board of Trustees (the "Board of Trustees" or the "Board") and the
Manager, the Sub-Adviser will act as sub-adviser for, and manage on a
discretionary basis the investment and reinvestment of the assets of the Fund,
furnish an investment program in respect of, make investment decisions for, and
place all orders for the purchase and sale of securities and other instruments
for the Fund's investment portfolio, all on behalf of the Fund and as described
in the Fund's most recent effective registration statement on Form N-2, as the
same may thereafter be amended from time to time. In the performance of its
duties, the Sub-Adviser will in all material respects (a) satisfy any applicable
A-2-1
fiduciary duties it may have to the Fund, (b) monitor the Fund's investments,
and (c) comply with the provisions of the Fund's Declaration of Trust and
By-laws, as amended from time to time and communicated by the Fund or the
Manager to the Sub-Adviser in writing, and the stated investment objectives,
policies and restrictions of the Fund as such objectives, policies and
restrictions may subsequently be changed by the Fund's Board of Trustees and
communicated by the Fund or the Manager to the Sub-Adviser in writing. The Fund
or the Manager has provided the Sub-Adviser with current copies of the Fund's
Declaration of Trust, By-laws, prospectus, statement of additional information
and any amendments thereto, and any objectives, policies or limitations not
appearing therein as they may be relevant to the Sub-Adviser's performance under
this Agreement.
The Sub-Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio investments for the Fund, and is
directed to use its commercially reasonable efforts to obtain best execution,
which includes most favorable net results and execution of the Fund's orders,
taking into account all appropriate factors, including price, dealer spread or
commission, size and difficulty of the transaction and research or other
services provided. Subject to approval by the Fund's Board of Trustees and
compliance with the policies and procedures adopted by the Board of Trustees for
the Fund and to the extent permitted by and in conformance with applicable law
(including Rule 17e-1 under the 1940 Act), the Sub-Adviser may select brokers or
dealers affiliated with the Sub-Adviser. It is understood that the Sub-Adviser
will not be deemed to have acted unlawfully, or to have breached a fiduciary
duty to the Fund, or be in breach of any such investigation,obligation owing to the Committee shall:
(1) Recommend,Fund under this
Agreement, or otherwise, solely by majority vote,reason of its having caused the Fund to pay a
member of a securities exchange, a broker or a dealer a commission for effecting
a securities transaction for the Fund in excess of the amount of commission
another member of an exchange, broker or dealer would have charged if the
Sub-Adviser determined in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Sub-Adviser's
overall responsibilities with respect to its accounts, including the Fund, implementas to
which it exercises investment discretion.
In addition, the Sub-Adviser may, to the extent permitted by applicable
law, aggregate purchase and sale orders of securities placed with respect to the
assets of the Fund with similar orders being made simultaneously for other
accounts managed by the Sub-Adviser or its affiliates, if in the Sub-Adviser's
reasonable judgment such aggregation shall result in an overall economic benefit
to the Fund, taking into consideration the selling or purchase price, brokerage
commissions and other expenses. In the event that a purchase or sale of an asset
of the Fund occurs as part of any aggregate sale or purchase orders, the
objective of the Sub-Adviser and any of its affiliates involved in such
transaction shall be to allocate the securities so purchased or sold, as well as
expenses incurred in the transaction, among the Fund and other accounts in a
fair and equitable manner. Nevertheless, the Fund and Manager acknowledge that
under some circumstances, such allocation may adversely affect the Fund with
respect to the price or size of the securities positions obtainable or salable.
Whenever the Fund and one or more other investment advisory clients of the
Sub-Adviser have available funds for investment, investments suitable and
appropriate responsefor each will be allocated in a manner believed by the Sub-Adviser
to evidencebe equitable to each, although such allocation may result in a delay in one
or more client accounts being fully invested that would not occur if such an
allocation were not made. Moreover, it is possible that due to differing
investment objectives or for other reasons, the Sub-Adviser and its affiliates
may purchase securities of a material violation;an issuer for one client and (2) Informat approximately the
chief legal officersame time recommend selling or sell the same or similar types of securities for
another client.
A-2-2
The Sub-Adviser will not arrange purchases or sales of securities between
the Fund and other accounts advised by the Sub-Adviser or its affiliates unless
(a) such purchases or sales are in accordance with applicable law (including
Rule 17a-7 of the 1940 Act) and the chief
executive officer (orFund's policies and procedures, (b) the
equivalents thereof)Sub-Adviser determines the purchase or sale is in the best interests of the
Fund, and (c) the Fund's Board of Trustees has approved these types of
transactions.
The Fund may adopt policies and procedures that modify or restrict the
Sub-Adviser's authority regarding the execution of the Fund's portfolio
transactions provided herein. Such policies and procedures and any amendment
thereto will be communicated by the Manager to the Sub-Adviser.
The Sub-Adviser will communicate to the officers and Trustees of the Fund
such information relating to transactions for the Fund as they may reasonably
request. In no instance will the Fund's portfolio securities be purchased from
or sold to the Manager, the Sub-Adviser or any affiliated person of either the
Fund, the Manager, or the Sub-Adviser, except as may be permitted under the 1940
Act.
The Sub-Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such
services as it uses in providing services to other fiduciary accounts for
which it has investment responsibilities;
(b) will (i) conform in all material respects to all applicable
rules and regulations of the SEC, (ii) comply in all material respects
with all policies and procedures adopted by the Board of Trustees for the
Fund and communicated to the Sub-Adviser in writing and (iii) conduct its
activities under this Agreement in all material respects in accordance
with any applicable law and regulations of any governmental authority
pertaining to its investment advisory activities;
(c) will report to the Manager and to the Board of Trustees of the
Fund on a quarterly basis and will make appropriate persons available for
the purpose of reviewing with representatives of the Manager and the Board
of Trustees on a regular basis at such times as the resultsManager or the Board
of Trustees may reasonably request in writing regarding the management of
the Fund, including, without limitation, review of the general investment
strategies of the Fund, the performance of the Fund's investment portfolio
in relation to relevant standard industry indices and general conditions
affecting the marketplace and will provide various other reports from time
to time as reasonably requested by the Manager or the Board of Trustees of
the Fund; and
(d) will prepare and maintain such books and records with respect to
the Fund's securities and other transactions for the Fund's investment
portfolio as required for registered investment advisers under applicable
law or as otherwise requested by the Manager or the Board and will prepare
and furnish the Manager and the Fund's Board of Trustees such periodic and
special reports as the Board or the Manager may reasonably request. The
Sub-Adviser further agrees that all records that it maintains for the Fund
are the property of the Fund and the Sub-Adviser will surrender promptly
to the Fund any such records upon the request of the Manager or the Fund
(provided, however, that the Sub-Adviser shall be permitted to retain
copies thereof); and shall be permitted to retain originals (with copies
to the Fund) to the extent required under Rule 204-2 of the Investment
Advisers Act of 1940 or other applicable law.
A-2-3
3. Expenses. During the term of this Agreement, the Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than (i) the cost of securities and other assets purchased for
the Fund, and (ii) the costs directly associated with purchasing and selling
securities and other assets for the Fund, if any, including, but not limited to,
brokerage commissions, stamps, duties, taxes and custody fees related to
transfers.
4. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Manager will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a portfolio
management fee (the "Management Fee") equal to the annual rate of 0.50% of the
Fund's Managed Assets (as defined below) allocated to the Sub-Adviser. For
purposes of calculating the Management Fee, Managed Assets means the average
daily gross asset value of the Fund (including assets attributable to the Fund's
Preferred Shares (as such term is defined in the Fund's prospectus), if any, and
the principal amount of borrowings, if any), minus the sum of the Fund's accrued
and unpaid dividends on any outstanding Preferred Shares and accrued liabilities
(other than the principal amount of any such investigationborrowings incurred, commercial paper or
notes issued by the Fund). For purposes of determining Managed Assets, the
liquidation preference of any outstanding Preferred Shares of the Fund is not
treated as a liability. The Management Fee shall be payable in arrears on or
about the first day of each month during the term of this Agreement.
For the month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement is in effect during the month and year, respectively.
5. Services to Others. The Fund and the appropriate
remedial measuresManager acknowledge that the
Sub-Adviser now acts, or may in the future act, as an investment adviser to
other managed accounts and as investment adviser or investment sub-adviser to
one or more other investment companies. In addition, the Fund and the Manager
acknowledge that the persons employed by the Sub-Adviser to assist in the
Sub-Adviser's duties under this Agreement will not devote their full time to
such efforts. It is also agreed that the Sub-Adviser may use any supplemental
research obtained for the benefit of the Fund in providing investment advice to
its other investment advisory accounts and for managing its own accounts.
6. Limitation of Liability. The Sub-Adviser shall not be adopted.
2. The Committeeliable for, and
the Fund and the Manager will not take any action against the Sub-Adviser to
hold the Sub-Adviser liable for, any error of judgment or mistake of law or for
any loss suffered by the Fund or the Manager (including, without limitation, by
reason of the purchase, sale or retention of any security) in connection with
the performance of the Sub-Adviser's duties under this Agreement, except for a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Sub-Adviser in the performance of its duties under this Agreement,
or by reason of its reckless disregard of its obligations and duties under this
Agreement.
7. Term; Termination. This Agreement shall take all other actionbecome effective with respect
to the Fund on the date provided above (the "Effective Date"), provided that it
deems
appropriatehas been approved in the manner required by the 1940 Act, and shall remain in
full force through June 30, 2015 unless sooner terminated as hereinafter
provided. This Agreement, however, shall continue in force from year to year
thereafter, but only as long as such continuance is specifically approved for
the Fund at least annually in the manner required by the 1940 Act and the rules
and regulations thereunder; provided, however, that if the continuation of this
Agreement is not approved for the Fund, the Sub-Adviser may continue to serve in
A-2-4
such capacity for the Fund in the manner and to the extent permitted by the 1940
Act and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Manager or the Sub-Adviser upon sixty (60) days' written notice to the
other parties. This Agreement may also be terminated by the Fund by action of
the Board of Trustees of the Fund or by a vote of a majority of the outstanding
voting securities of the Fund upon sixty (60) days' written notice to the
Sub-Adviser by the Fund without payment of any penalty.
This Agreement may be terminated at any time without the payment of any
penalty by the Manager, the Board of Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Fund in the event that it
shall have been established by a court of competent jurisdiction that the
Sub-Adviser or any officer or director of the Sub-Adviser has taken any action
that results in a breach of the material covenants of the Sub-Adviser set forth
herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Section 4 earned prior to such termination and for any additional
period during which the Sub-Adviser serves as such for the Fund, fails in any materialsubject to
applicable law.
8. Compliance Certification. From time to time the Sub-Adviser shall
provide such certifications with respect to implement an appropriate response thatRule 38a-1 under the Committee,1940 Act, as
the QLCC, has
recommendedare reasonably requested by the Fund take.
D. Other Responsibilities:
1. The Committeeor the Manager. In addition, the
Sub-Adviser will, from time to time, provide a written assessment of its
compliance program in conformity with current industry standards that is
reasonably acceptable to the Fund to enable the Fund to fulfill its obligations
under Rule 38a-1 under the 1940 Act.
9. Notice. Any notice under this Agreement shall receive, retainbe sufficient in all
respects if given in writing and handle complaints
receiveddelivered by commercial courier providing proof
of delivery and addressed as follows or addressed to such other person or
address as such party may designate for receipt of such notice.
If to the Funds regarding accounting, internal accounting controls,Manager or auditing matters from any person, whether or not an employeethe Fund: If to the Sub-Adviser:
First Trust Dividend and Income Fund Chartwell Investment Partners, Inc.
First Trust Advisors L.P. 1235 Westlakes Drive, Suite 400
120 E. Liberty Drive, Suite 400 Berwyn, Pennsylvania 19312
Wheaton, Illinois 60187 Attention: Maria E. Pollack
Attention: Secretary
If by Facsimile: (610) 722-5644
If by Facsimile: (630) 517-7437
10. Limitations on Shareholder and Trustee Liability. All parties hereto
are expressly put on notice of the FundsFund's Declaration of Trust and all
amendments thereto, a copy of which is on file with the Secretary of the
Commonwealth of Massachusetts, and the limitation of shareholder and trustee
liability contained therein and a copy of which has been provided to the
Sub-Adviser prior to the date hereof. This Agreement is executed on behalf of
the Fund by an officer of the Fund in his or her capacity as an officer and not
A-2-5
individually and is not binding upon any of the Trustees, officers, or
shareholders of the Fund Management,individually but the obligations imposed upon the Fund
by this Agreement are binding only upon the assets and property of the Fund, and
persons dealing with the Fund must look solely to the assets of the Fund for the
enforcement of any claims.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement will be binding upon and shall receive submissions of concerns
regarding questionable accounting or auditing matters by employeesinure to the benefit of the Fundsparties
hereto and Fund Management, administrator, principal underwriter, or any
other provider of accounting-related services for the Funds. All such
complaints and concernstheir respective successors.
12. Applicable Law. This Agreement shall be handledconstrued in accordance with
applicable federal law and (except as to Section 10 hereof which shall be
construed in accordance with the Committee's procedures for operating aslaws of Massachusetts) the laws of the State of
Illinois.
13. Amendment, Etc. This Agreement may only be amended, or its provisions
modified or waived, in a QLCC, outlinedwriting signed by the party against which such
amendment, modification or waiver is sought to be enforced.
14. Authority. Each party represents to the others that it is duly
authorized and fully empowered to execute, deliver and perform this Agreement.
The Fund represents that engagement of the Sub-Adviser has been duly authorized
by the Fund and is in III.C above.
2. The Committee shall review,accordance with fund counsel and independent
legal counsel, any legal matters that could have significant impact on the Fund's financial statements or compliance policiesDeclaration of Trust and other
governing documents of the findings of any
examination by a regulatory agency as they relate to financial statement
matters.
3. The Committee shall review and reassess the adequacyFund.
15. Severability. Each provision of this charter on an annual basis and provide a recommendationAgreement is intended to be
severable from the Boardothers so that if any provision or term hereof is illegal or
invalid for approval of any proposed changes deemed necessaryreason whatsoever, such illegality or advisable byinvalidity shall not
affect the Committee.
A-6
4. The Committee shall evaluate on an annual basis the performancevalidity of the Committee.
5. The Committee shall review withremaining provisions and terms hereof; provided,
however, that the External Auditors and with
Fund Management the adequacy and effectivenessprovisions governing payment of the Funds' internal
accountingManagement Fee described
in Section 4 are not severable.
16. Entire Agreement. This Agreement constitutes the sole and financial controls.
6. The Committee shall discuss with Fund Management andentire
agreement of 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 Managementparties hereto with respect to the Funds' policiessubject matter expressly set
forth herein.
A-2-6
IN WITNESS WHEREOF, the Fund, the Manager and procedures regarding compliance with
applicable laws and regulations. The Committee shall perform other special
reviews, investigations or oversight functionsthe Sub-Adviser have caused
this Agreement to be executed 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 counselday 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.
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.
A-7
VI. MANAGEMENTyear first above written.
FIRST TRUST ADVISORS L.P. FIRST TRUST DIVIDEND 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 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: March 11, 2013
A-8INCOME FUND
By: ______________________________ By: ______________________________
Title: ___________________________ Title:___________________________
CHARTWELL INVESTMENT PARTNERS, INC.
By: ______________________________
Title: ___________________________
A-2-7
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[BLANK BACK COVER]
FORM OF PROXY CARD
------------------
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
EASY VOTING OPTIONS:
VOTE ON THE INTERNET
Log on to:
www.proxy-direct.com
Or scan the QR code
Follow the on-screen instructions
available 24 hours
VOTE BY PHONE
call 1-800-337-3503
follow the recorded instructions
available 24 hours
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 23,June 9, 2014
Please detach at perforation before mailing.
PROXY [ FUND NAME ] PROXY
ANNUALSPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 23,JUNE 9, 2014
PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned holder of shares of the [ FUND NAME ], a Massachusetts business
trust (the "Fund"), hereby appoints W. Scott Jardine, Mark R. Bradley, 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 AnnualSpecial 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 4:3000 p.m. Central
time on the date indicated above, and any adjournments or postponements thereof.
The undersigned hereby acknowledges receipt of the Notice of Joint AnnualSpecial
Meetings of Shareholders and Joint Proxy Statement dated March 7,April 9, 2014, 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 OFPROPOSAL SET FORTH.
VOTE VIA THE NOMINEE SET FORTH.INTERNET:
www.proxy-direct.com
VOTE VIA THE TELEPHONE:
1-800-337-3503
----------------------- -------------------
----------------------- -------------------
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
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUALSPECIAL SHAREHOLDERS MEETING TO BE HELD ON APRIL 23,JUNE 9, 2014
THE PROXY STATEMENT AND PROXY CARD FOR THIS MEETING ARE AVAILABLE AT:
https://www.proxy-direct.com/fir-25361fir-25545
IF YOU VOTE ON THE INTERNET OR BY TELEPHONE,
YOU NEED NOT RETURN THIS PROXY CARD
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 NOMINEE SET FORTH.PROPOSAL.
TO VOTE, MARK ONE BLOCK BELOW IN BLUE OR BLACK INK. Example: [solid box][X]
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PROPOSAL: FOR AGAINST ABSTAIN
1. ElectionApproval of One Class I Trustee.
The Board of Trustees recommends that you vote FOR the election of one
Class I Nominee for a three-year term.
FOR WITHHOLD
01. Robert F. KeithNew Investment Sub-Advisory [ ] [ ] [ ]
Agreement with Chartwell Investment Partners,
Inc. for the Fund.
MEETING ATTENDANCE -
Mark the box to the right if you plan to attend the Special Meeting. [ ]
CHANGE OF ADDRESS - Please print COMMENTS - Please print your
new address below. comments below.
------------------------------------ ------------------------------------
------------------------------------ ------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.