As filed with the Securities and Exchange Commission on SeptemberMarch 24, 2010.2014.
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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:
[X] Preliminary proxy statement.
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2)).
[ ] 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:
Preliminary CopyPRELIMINARY - Draft of SeptemberDATED MARCH 24, 20102014
FIRST TRUST ENHANCED EQUITY INCOME FUND
FIRST TRUST DIVIDEND AND INCOME FUND
120 East Liberty Drive, SuiteEAST LIBERTY DRIVE, SUITE 400
Wheaton, IllinoisWHEATON, ILLINOIS 60187
October ___, 2010April __, 2014
Dear Shareholder:Shareholders:
The accompanying materials relate to the Joint Special MeetingMeetings of
Shareholders (referred to as the "Meeting") of First Trust Enhanced Equity
Income Fund (theand First Trust Dividend and 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 _______, December
___, 2010Monday, June 9, 2014, at _________4:00 p.m. Central time.Time.
At the Meeting, you will be asked (i) to consider and vote on a proposal
to approve a new investment management agreement (the "New Advisory Agreement")
between the Fund and its current investment advisor, First Trust Advisors L.P.
("First Trust Advisors" or the "Advisor"), (ii)(1) to consider and vote on a proposal
to approve a new investment sub-advisory agreement (the "New("New Sub-Advisory
Agreement") among theyour Fund, the AdvisorFirst Trust Advisors L.P. ("First Trust Advisors"),
each Fund's investment adviser, and its current investment
sub-advisor, Chartwell Investment Partners, L.P.Inc.
("Chartwell" or the
"Sub-Advisor"), each Fund's investment sub-adviser; and (iii)(2) to transact anysuch
other business as may properly come before the Meeting and any adjournments or
postponements thereof.
Upon the closing on October ___, 2010 of a transaction (the
"Transaction"), which, asAs described in the accompanying Joint Proxy Statement, resulted inon March 5, 2014,
TriState Capital Holdings, Inc. completed its acquisition of Chartwell
Investment Partners, L.P. (the "Transaction"). As a "change in control" ofresult, under applicable
law, the then-effective investment sub-advisory agreements among the Funds,
Chartwell Investment Partners, L.P. and First Trust Advisors the investment
management agreement between the Fund and the Advisor automatically
terminatedterminated. Chartwell (which, in accordanceconnection with its terms. Moreover, the closing of the Transaction, may have
also resulted in the automatic termination of the investment sub-advisory
agreement among the Fund, Chartwell and the Advisor. The Advisor and the
Sub-Advisor continueis now
structured as a corporation rather than as a limited partnership) continues to
provide investment advisory and sub-advisory services respectively, to theeach Fund on an interim basis, as
permitted by the Investment Company Act of 1940. However, inIn order for themChartwell to
continue to provide services to theeach Fund beyond the interim period, however, as
indicated above, shareholders of theeach Fund will be asked at the Meeting to vote
to approve the New Advisory Agreement
and theapplicable New Sub-Advisory Agreement. The Board of Trustees of
theeach Fund is recommending that shareholders of each Fund approve both of these agreements.
Some important facts to note about the Transaction are:
o The Transaction had no effect on the number of Fund shares you own
or the value of those Fund shares.
o Subject to shareholder approval, First Trust Advisors and Chartwell
will continue to provide investment advisory and sub-advisory
services, respectively, to the Fund.
o The contractual advisory and sub-advisory fee rates will not
increase.
o The Transaction is not expected to result in a change in the persons
responsible for the management of the Fund or in the operations of
the Fund, or in any changes in the investment approach of the Fund.its New
Sub-Advisory Agreement.
YOUR VOTE IS IMPORTANT. Please take a moment now to vote, either by
completing and returning your proxy card(s) in the enclosed postage-paid 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,
___________________________
James A. Bowen
Chairman of the Board of TrusteesBoards
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IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING THE PROPOSALSPROPOSAL OR HOW
TO VOTE YOUR SHARES, PLEASE CALL THE FUND'SFUNDS' PROXY SOLICITOR, THE ALTMAN GROUP,
INC.,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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FIRST TRUST ENHANCED EQUITY INCOME FUND
FIRST TRUST DIVIDEND AND INCOME FUND
120 East Liberty Drive, SuiteEAST LIBERTY DRIVE, SUITE 400
Wheaton, IllinoisWHEATON, ILLINOIS 60187
NOTICE OF JOINT SPECIAL MEETINGMEETINGS OF SHAREHOLDERS
to be held on December ___, 2010
October ___, 2010TO BE HELD ON JUNE 9, 2014
April __, 2014
To the Shareholders of First Trust Enhanced Equity Income Fund and First Trust
Dividend and Income Fund:
Notice is hereby given that the Joint Special MeetingMeetings of Shareholders
(referred to as the "Meeting") of First Trust Enhanced Equity Income Fund and
First Trust Dividend and Income Fund (each, a "Fund" and collectively, the
"Funds"), each a Massachusetts business trust, (the "Fund") will be held on ___________, December ___, 2010 at the offices of
First Trust Advisors L.P., 120 East Liberty Drive, Suite 400, Wheaton, Illinois
60187, on Monday, June 9, 2014, at ________,4:00 p.m. Central time,Time, for the following
purposes:
1. To approve a new investment management agreement between theFor each Fund, and First Trust Advisors L.P., as investment advisor.
2. Toto approve a new investment sub-advisory
agreement among the Fund, First Trust Advisors L.P., as investment
advisor,adviser, and Chartwell Investment Partners, L.P.Inc., as investment
sub-advisor.
3. Tosub-adviser (the "Proposal").
2. For each Fund, to transact anysuch other business as may properly
come before the Meeting (including any adjournments or postponements thereof)postponements).
The close of business on September ___, 2010March 17, 2014 has been fixed as the record date
for the determination of Shareholdersshareholders entitled to notice of and to vote at the
Meeting and any adjournments or postponements thereof.
By Order of the BoardBoards of Trustees,
__________________________________
W. Scott Jardine
Secretary
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IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. IN ORDER TO
AVOID DELAY AND ADDITIONAL EXPENSE, AND TO ENSURE THAT YOUR SHARES ARE REPRESENTED, PLEASE VOTE AS
PROMPTLY AS POSSIBLE, REGARDLESS OF WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING.POSSIBLE. YOU MAY VOTE EASILY AND QUICKLY BY MAIL, TELEPHONE OR
THROUGH THE INTERNET. TO VOTE BY MAIL, PLEASE COMPLETE AND MAIL YOUR PROXY CARD(S)CARD
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
PROPOSALSPROPOSAL OR HOW TO VOTE YOUR SHARES, PLEASE CALL THE FUND'SFUNDS' PROXY SOLICITOR, THE ALTMAN GROUP, INC.,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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-2-
FIRST TRUST ENHANCED EQUITY INCOME FUND
FIRST TRUST DIVIDEND AND INCOME FUND
JOINT SPECIAL MEETINGMEETINGS OF SHAREHOLDERS
TO BE HELD ON DECEMBER ___, 2010JUNE 9, 2014
120 East Liberty Drive, SuiteEAST LIBERTY DRIVE, SUITE 400
Wheaton, IllinoisWHEATON, ILLINOIS 60187
JOINT PROXY STATEMENT
October __, 2010APRIL ___, 2014
THIS JOINT PROXY STATEMENT AND THE ENCLOSED PROXY CARD WILL FIRST BE
MAILED TO SHAREHOLDERS ON OR ABOUT OCTOBER ___, 2010.APRIL __, 2014.
This Joint Proxy Statement is furnished by the BoardBoards of Trustees
(the(referred to collectively as the "Board") of First Trust Enhanced Equity Income
Fund (the "Equity Income Fund") and First Trust Dividend and Income Fund (the
"Dividend and Income Fund" and, together with the Equity Income Fund, the
"Funds," and each, a "Fund"), each a Massachusetts business trust, in connection
with the solicitation by the Board of proxies to be voted at the Joint Special
MeetingMeetings of Shareholders of the FundFunds to be held on __________, December ___, 2010Monday, June 9, 2014, 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
(referred to collectively as the "Meeting"). A Notice of Joint Special MeetingMeetings
of Shareholders and a proxy card accompany this Joint Proxy Statement. The Board
has fixeddetermined 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 close of business on September ___, 2010March 17, 2014 has been fixed as the record date
(the "Record Date") for the determination of shareholders of theeach Fund entitled
to notice of, and to vote at, the Meeting.
As discussed more fully below, shareholders of theeach Fund are being asked:
1. To approve a new investment management agreement (the "New
Advisory Agreement"), between the Fund and First Trust Advisors L.P.
("First Trust Advisors" or the "Advisor"), the investment advisor to the
Fund.
2. To approve a new investment sub-advisory agreement (the(a "New
Sub-Advisory Agreement"), among the Fund, First Trust Advisors, as
investment advisor,adviser, and Chartwell Investment Partners, L.P.Inc. ("New
Chartwell" or the "Sub-Advisor""Sub-Adviser"), theas investment sub-advisor to the Fund.
3.sub-adviser.
2. To transact any other business as may properly come before the
Meeting (including any adjournments or postponements).
TheGENERAL INFORMATION
Each Fund has one class of shares of beneficial interest, par value $0.01
per share, known as common shares ("Shares"). On the Record Date, the Fund had
_______ Shares outstanding. Shares of the Fund are listed on the New York Stock
Exchange under the ticker symbol "FFA." Shareholders of record on the
Record Date are entitled to one vote for each Share the shareholder owns and a
proportionate fractional vote for any fraction of a Share the shareholder owns.
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
------------------------------------------------ ------------------------------
Shares of each Fund are listed on the New York Stock Exchange under the
ticker symbol shown above.
For shareholders voting by mail, if the enclosed proxy card is properly
executed and returned in time to be voted at the Meeting, the Shares represented
thereby will be voted in accordance with the instructions marked thereon or, if
no instructions are marked thereon, will be voted in the discretion of the
persons named on the proxy card. Accordingly, unless instructions to the
contrary are marked thereon, a properly executed and returned proxy will be
voted FOR the proposal to approve the New Advisory Agreement, FOR the proposal
to approve theapplicable 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 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
Fund,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 theeach 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 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.
The expense-2-
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 Advisor.Sub-Adviser. The
AdvisorSub-Adviser will also reimburse brokerage firms and others for their expenses in
forwarding proxy solicitation materials to the person(s) for -2-
whom they hold
Shares of theeach Fund. The solicitation of proxies will begin on or
about October ___, 2010 and will be largely by mail, but may include telephonic,
electronic or oral communication by officers and service providers of the Fund,
as well as affiliates of such service providers. A proxy solicitation firm, The
Altman Group, Inc., has also been engaged to solicit proxies at a cost which is
expected to be approximately $_______. As indicated above, this cost will be
borne by the Advisor.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON DECEMBER __, 2010. THIS PROXY STATEMENT IS
AVAILABLE ON THE INTERNET AT: HTTP:_______________. THE FUND'S MOST RECENT
ANNUAL AND SEMI-ANNUAL REPORTS ARE ALSO AVAILABLE ON THE INTERNET AT:
HTTP:_____________________. THE FUND WILL FURNISH, WITHOUT CHARGE, COPIES OF ITS
MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS TO ANY SHAREHOLDER UPON REQUEST. TO
REQUEST A COPY, PLEASE WRITE TO THE ADVISOR ATJUNE 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, SUITEEast Liberty Drive, Suite 400, WHEATON, ILLINOISWheaton, Illinois
60187, OR CALLor 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 _____________,
DECEMBER ___, 2010.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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PROPOSAL: APPROVAL OF A NEW INVESTMENT SUB-ADVISORY AGREEMENT FOR EACH FUND
BACKGROUND AND REASON FOR VOTE
The Advisor has servedAt the 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 investment advisor to the Fund since its
inception, initially pursuant to an investment management agreement (the
"Original Advisory Agreement""Chartwell"), between the Advisor and the Fund, and currently,
as described below, pursuant to an interim investment management agreement (the
"Interim Advisory Agreement"), also between the Advisor and the Fund. Chartwell
has served as the Fund's sub-advisor since September 14, 2007, and, in this
capacity, is responsible for the selection and on-going monitoring of the
securities in the Fund's investment portfolio. Chartwell had served as the
Fund's sub-advisorsub-adviser to
each Fund pursuant to an investment sub-advisory agreement among the Advisor,
Old Chartwell and the respective Fund the Advisor and Chartwell (the "Original(in each case, a "Prior Sub-Advisory
Agreement"), and
since October ____, 2010,. In January 2014, Old Chartwell has been providing services to the Fund
pursuant to an interim sub-advisory agreement (the "Interim Sub-Advisory
Agreement"), also among the Fund, the Advisor and Chartwell
The Advisor is an Illinois limited partnership formed in 1991 and an
investment advisor registered with the Securities and Exchange Commission
("SEC") under the Investment Advisers Act of 1940. The Advisor has one limited
partner, Grace Partners of DuPage L.P. ("Grace Partners"), and one general
partner, The Charger Corporation, and is controlled by Grace Partners and The
Charger Corporation. Grace Partners is a limited partnership that is controlled
by its general partner, The Charger Corporation, and has a number of limited
partners. The Charger Corporation is an Illinois corporation that was previously
controlled by the Robert Donald Van Kampen family. Grace Partners and The
Charger Corporation are each located at 407 S. Third Street, Geneva, Illinois,
and have a primary business that consists of investment advisory and
broker/dealer services through their ownership interests in various entities. In
this regard, in addition to their interests in the Advisor, Grace Partners is
the sole limited partner, and The Charger Corporation is the sole general
partner, of First Trust Portfolios L.P. ("First Trust Portfolios"), a
broker-dealer registered under the Securities Exchange Act of 1934.
On August 24, 2010, members of the Robert Donald Van Kampen family entered into a stockdefinitive asset
purchase agreement with James A. Bowen, the PresidentTriState 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 Advisor, to sell 100% of the common stock of The Charger Corporation to Mr.
Bowen (who will hold the interest through a limited liability company of which
heTransaction resulted in an "assignment," as that term is
the sole member) (the "Transaction") for $3,000,000 payable at the
Transaction closing. The Transaction was completed in accordance with its terms
on October ___, 2010. The Transaction is not anticipated to result in any
changes in the personnel or operations of the Advisor. Mr. Bowen is a Trustee
who is an "interested person" (as definedused in the Investment Company Act of 1940 as amended (the "1940 Act")), of the Fund, the ChairmanPrior
Sub-Advisory Agreements. Section 15 of the Board and the
President of the Fund, the President of the Advisor and of First Trust
Portfolios and a limited partner of Grace Partners. In light of the Transaction
and his interest in and role with the Advisor, Mr. Bowen is deemed to have an
interest in this Proposal.
As required by the 1940 Act the Original Advisory Agreement and the
Original Sub-Advisory Agreement providedrequires, among other
things, that any investment advisory agreement, which includes an investment
sub-advisory agreement, provide for theirits automatic termination in the event of
its "assignment." Accordingly, the Prior Sub-Advisory Agreements automatically
terminated on the Closing Date in accordance with their assignment. The consummationterms and the
requirements of the Transaction resulted in a
change in control of1940 Act. Since the Advisor and constituted an "assignment," as that term
is defined in the 1940 Act, of the Original Advisory Agreement, thus having the
effect of automatically terminating the Original Advisory Agreement on October
___, 2010. In addition, the consummation of the Transaction may have constituted
an "assignment," as that term is defined in the 1940 Act, of the Original
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Sub-Advisory Agreement, thus having the effect of also automatically terminating
the Original Sub-Advisory Agreement on October ____, 2010. Since that date, the
Advisor and the Sub-Advisor haveClosing Date, New Chartwell has served
as investment advisor and investment
sub-advisorsub-adviser to theeach Fund pursuant to the Interim Advisory Agreement and thean Interim Sub-Advisory
Agreement respectively. Shareholders of the Fund are being
asked to approve the New Advisory Agreement(as defined and the New Sub-Advisory Agreement.
Shareholders should be aware of the following:
o The Transaction had no effect on the number of Shares you own or the
value of those Shares.
o Subject to shareholder approval, the Advisor and the Sub-Advisor
will continue to provide investment advisory and sub-advisory
services, respectively, to Fund.
o The contractual advisory and sub-advisory fee rates will not
increase.
o The Transaction is not expected to result in a change in the persons
responsible for the management of the Fund or in the operations of
the Fund, or in any changes in the investment approach of the Fund.described below).
In anticipation of the completion of the Transaction and the termination
of the Original Advisory Agreement andPrior Sub-Advisory Agreements, the Original Sub-Advisory Agreement, the
Board of the Fund held a meeting on SeptemberFebruary 20,
20102014 (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""BOARD CONSIDERATIONS" below), the Trustees
determined that, following the Transaction, it would be in the best interests of
theeach Fund for the Advisor to continue to act as investment advisor
to the Fund and for Chartwell to continue to act as investment sub-advisorsub-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, of Trustees of the Fund, including alla majority
of the Trustees who are not "interested persons" (as defined in the 1940 Act)
of the Fund (the "Independent Trustees"), approved an interim sub-advisory agreement among
the Interim Advisory AgreementFund, the Advisor and theNew Chartwell (each, an "Interim Sub-Advisory
Agreement"). The Interim Sub-Advisory Agreement to ensure the continuation of investment advisory and
investment sub-advisory services to the Fund. As indicated above, the Interim
Advisory Agreement and the Interim Sub-Advisory AgreementAgreements have been in effect since October ___, 2010the
Closing Date and, pursuant to Rule 15a-4 under the 1940 Act, will be in effect
no longer than through March ___, 2011 (the "Interim Termination Date")August 2, 2014 (i.e., which will occur 150 days after the termination of
the Original Advisory Agreement and the
OriginalPrior Sub-Advisory AgreementAgreements (see "The Interim Advisory Agreement" and "The
Interim Sub-Advisory Agreement""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 New Advisory Agreement and
theapplicable 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 19, 2014, New Chartwell
had approximately $7.7 billion of assets under management.
The names, positions with New Chartwell and principal occupations of the
persons who are principal executive officers and directors of New Chartwell are
listed below:
----------------------- -------------------------------------------------------------------------
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, President and 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 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, Pittsburgh, Pennsylvania
15219.
TriState Capital Holdings, Inc.
TriState is a bank holding company headquartered in Pittsburgh,
Pennsylvania that provides 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 and annual rate of
compensation paid to New Chartwell for its services as investment sub-adviser to
each Fund is set forth below:
--------------------------- --------------------------- ----------------------------------------
FUND ASSETS UNDER MANAGEMENT ANNUAL RATE OF COMPENSATION
AS OF MARCH 31, 2014
--------------------------- --------------------------- ----------------------------------------
Equity Income Fund 0.50% of managed assets*
--------------------------- --------------------------- ----------------------------------------
Dividend and Income Fund 0.50% of managed assets allocated to
the Sub-Adviser*
--------------------------- --------------------------- ----------------------------------------
* The Sub-Adviser has not waived, reduced or otherwise agreed to reduce its
compensation for sub-advisory services.
-5-
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.
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.
-6-
------------------------- --------------------- ---------------------------------- -------------------------------------
FUND DATE 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
approve a new sub-advisory Prior Sub-Advisory Agreement.
agreement with Old Chartwell in
connection with a change in
control of the Advisor that
resulted in the termination of
the previous 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
to replace a former sub-adviser Prior Sub-Advisory Agreement.
and add Old Chartwell as a
sub-adviser in connection with a
repositioning of the Fund's
portfolio.
------------------------- --------------------- ---------------------------------- -------------------------------------
THE INTERIM SUB-ADVISORY AGREEMENTS
New Chartwell currently provides sub-advisory services to each Fund under
the applicable Interim Sub-Advisory Agreement. Many of the 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 thea
Fund do not approve the New Advisory Agreement and/or theFund's New Sub-Advisory Agreement, the Board will take
such action as it deems to be in the best interests of the Fund. BOARD CONSIDERATIONS
The Board, including the Independent Trustees, approved the Interim
Advisory Agreement and the New Advisory Agreement (collectively, the "Advisory
Agreements") and the Interim Sub-Advisory Agreement and New Sub-Advisory
-5-
Agreement (collectively, the "Sub-Advisory Agreements" and together with the
Advisory Agreements, the "Agreements") at the Board Meeting. The Board
determined that the terms of the Agreements are fair and reasonable and that the
Agreements are in the best interests of the Fund. The Board also determined that
it believes that the scope and quality of services to be provided to the Fund
under the Agreements will be at least equivalent to the scope and quality of
services provided under the Original Advisory Agreement and the Original
Sub-Advisory Agreement (collectively, the "Original Agreements").
On August 25, 2010, the Independent Trustees were informed about the
Transaction, including that the consummation of the Transaction would constitute
a change of control of the Advisor and would result in the "assignment" and
termination of the Original Advisory Agreement and may also result in the
"assignment" and termination of the Original Sub-Advisory Agreement pursuant to
their terms and in accordance with Section 15 of the 1940 Act. On August 31,
2010, counsel to the Independent Trustees forwarded to Mr. Bowen and the Advisor
a request for information regarding the Transaction. At the Board Meeting, the
Board considered the information provided by Mr. Bowen and the Advisor in
response to the Independent Trustees' request for information and considered the
approval of the Agreements.
To reach its determination, the Board considered its duties under 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 advisors 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 their effective and termination dates and any provisions of the
Interim Advisory Agreement and Interim Sub-Advisory Agreement required by Rule
15a-4, the Advisory Agreements and Sub-Advisory Agreements were the same in all
material respects as the Original Agreements. The Board noted that it had
recently considered the Advisor's and Sub-Advisor's capabilities and the terms
of the Original Agreements at a meeting held on March 20-21, 2010 and had
determined to renew the Original Agreements for an additional one-year term (the
"2010 Renewal"). The Board considered that in connection with the 2010 Renewal,
it had received a report from each of the Advisor and the Sub-Advisor that,
among other things, outlined the services provided by the Advisor and the
Sub-Advisor (including the relevant personnel responsible for these services and
their experience); the advisory and sub-advisory fees for the Fund as compared
to fees charged to other clients of the Advisor and the Sub-Advisor and as
compared to fees charged by investment advisors and sub-advisors to comparable
funds; expenses of the Fund as compared to expense ratios of comparable funds;
the nature of expenses incurred in providing services to the Fund and the
potential for economies of scale, if any; financial data on the Advisor and the
Sub-Advisor; any fall-out benefits to the Advisor and the Sub-Advisor; and
information on the Advisor's and the Sub-Advisor's compliance programs. Prior to
the Board Meeting, the Advisor represented to the Board that there had been no
material changes to the information provided in March 2010 and that the Board
could continue to rely on such information. In addition,
the Sub-Advisor
represented to the Board that, except for updates to its Form ADV and financial
statements, there had been no material changes to the information provided in
March 2010 and that the Board could continue to rely on such information.
-6-
Because the Board determined that any differences between the Original
Agreements and the Agreements were immaterial, the Board determined that much of
its previous analysis in connection with the 2010 Renewal applied to its review
and consideration of the Agreements. Accordingly, the Board took note of such
prior analysis and supplemented it with the additional considerations noted
below. The Independent Trustees also met separately with their independent legal
counsel to discuss the Transaction and their consideration of the Agreements.
In reviewing the Agreements, the Board considered the nature, quality and
extent of services to be provided by the Advisor and the Sub-Advisor under the
Agreements. The Board noted that the Transaction was not expected to result in
any changes to the personnel of the Advisor and Sub-Advisor responsible for
providing services to the Fund. The Board also considered the representations of
both the Advisor and the Sub-Advisor that there will be no diminution in
services provided under the Agreements. In light of the information presented
and the considerations made at the Board Meeting, including the considerations
made in connection with the 2010 Renewal, the Board concluded that the nature,
quality and extent of services to be provided to the Fund by the Advisor and the
Sub-Advisor under the Agreements are expected to be satisfactory.
The Board considered the advisory and sub-advisory fees payable under the
Agreements, noting that they would be the same as the fees payable under the
Original Agreements. The Board considered that in connection with the 2010
Renewal it had reviewed the advisory fees charged by the Advisor to similar
funds and other non-fund clients, and had noted that the Advisor does not
provide advisory services to other clients with investment objectives and
policies similar to the Fund's. The Board also considered that it had reviewed
information provided by the Sub-Advisor as to the fees it charges to other
similar clients, noting that the sub-advisory fee is lower than the fees charged
by the Sub-Advisor to another closed-end fund with similar investment strategies
to which it provides advisory services. The Board also considered performance
information for the Fund, including the Fund's quarterly performance report,
which is part of the process that the Board has established for monitoring the
Fund's performance and portfolio risk on an ongoing basis. In light of the
information presented on the fees and performance of the Fund and the
considerations made at the Board Meeting, including the considerations made in
connection with the 2010 Renewal, the Board concluded that the advisory and
sub-advisory fees were reasonable and appropriate in light of the nature,
quality and extent of services expected to be provided by the Advisor and
Sub-Advisor under the Agreements.
The Board noted that the Advisor has continued to invest in personnel and
infrastructure and considered whether fee levels reflect any economies of scale
for the benefit of shareholders. The Board concluded that the advisory fee
continues to reflect an appropriate level of sharing of any economies of scale
at current asset levels. The Board noted that in connection with the 2010
Renewal it had reviewed the costs of the services provided and profits realized
by the Advisor from serving as investment manager to the Fund for the twelve
months ended December 31, 2009. The Board considered its prior conclusion that
the Advisor's profitability appeared to be not excessive in light of the
services provided to the Fund. The Board considered whether the Advisor derives
-7-
any ancillary benefits from its relationship with the Fund and noted that the
typical fall-out benefits to the Advisor such as soft dollars are not present.
The Board noted that the Advisor will receive compensation from the Fund for
providing fund reporting services. The Board concluded that any other fall-out
benefits received by the Advisor or its affiliates would appear to be limited.
The Board considered the Sub-Advisor's representation in connection with
the 2010 Renewal that the Sub-Advisor had continually reinvested its capital to
build a large, experienced group of professionals to serve its clients,
including the Fund. The Board considered that the sub-advisory fee rate was
negotiated at arm's length between the Advisor and the Sub-Advisor, an
unaffiliated third party. The Board considered the fall-out benefits realized by
the Sub-Advisor from its relationship with the Fund, including soft-dollar
arrangements.
Based on all of the information considered and the conclusions reached, the
Board, including 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 Fund. No single factor was determinative in the
Board's analysis.
Accordingly, the Board recommends that shareholders vote to approve the New
Advisory Agreement and the Neweach Interim Sub-Advisory Agreement.
PROPOSAL 1: APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT FOR THE FUND
THE ORIGINAL ADVISORY AGREEMENT
The Original Advisory Agreement was dated August 26, 2004 and was approved
by the Fund's initial shareholder on August 17, 2004. Since the beginning of the
Fund's last fiscal year, the continuation of the Original Advisory Agreement was
approved by the Board at meetings held on March 1-2, 2009 and March 21-22, 2010.
THE INTERIM ADVISORY AGREEMENT
Many of the terms of the Interim Advisory Agreement are the same as those
of the Original Advisory Agreement; however, in addition to various updates,
there are differences in provisions relating to the effective date and,
consistent with the requirements of Rule 15a-4, termination and compensation.
Unless terminated sooner in accordance with its terms, the Interim Advisory
Agreement will continue to be in effect through the Interim Termination Date or
until shareholders of the Fund approve the New Advisory Agreement, whichever
occurs first. In addition, the Interim Advisory Agreement may be terminated by action of the Board or by a vote of a majority of the outstanding voting
securities (as defined in the 1940 Act and the rules and regulations thereunder)
of the Fund upon 10 calendar days' written notice to the Advisor, without
payment of any penalty.
-8-
The rate of compensation paid to the Advisor is the same under the
applicable Interim Advisory Agreement, Original Advisory Agreement and New
Advisory Agreement. The compensation accrued under the Interim Advisory
Agreement, however, is to be held in an interest-bearing escrow account with the
Fund's custodian or another bank designated by the Fund. If the New Advisory
Agreement is approved by shareholders of the Fund by the Interim Termination
Date, the amount in the escrow account (including the interest earned) will be
paid to the Advisor. However, if shareholders of the Fund do not approve the New
Advisory Agreement by such date, the Advisor will be paid, out of the escrow
account, the lesser of: (i) any costs incurred by the Advisor in performing
services under the Interim Advisory Agreement (plus interest earned on that
amount while in escrow); or (ii) the total amount in the escrow account (plus
interest earned).
COMPARISON OF CERTAIN TERMS OF THE NEW ADVISORY AGREEMENT AND ORIGINAL ADVISORY
AGREEMENT
Below is a brief comparison of certain terms of the Original Advisory
Agreement to the corresponding terms of the New Advisory Agreement. Many of the
terms of the New Advisory Agreement, including fees payable to the Advisor by
the Fund thereunder, are substantially the same in all material respects to the
terms of the corresponding Original Advisory Agreement; however the New Advisory
Agreement includes a new effective date and has been updated in certain other
respects (including, among other things, the elimination of certain provisions
that were in effect for a limited time or are otherwise no longer relevant). The
form of the New Advisory Agreement is attached to this Proxy Statement as
Exhibit A and the description of the New Advisory Agreement is qualified in its
entirety by reference to such Exhibit.
Advisory Services. As was the case under the Original Advisory Agreement,
under the New Advisory Agreement, the Advisor will agree to act as the
investment advisor for, and to manage the investment and reinvestment of the
assets of, the Fund in accordance with the Fund's investment objective and
policies and limitations, and will administer the Fund's affairs to the extent
requested by and subject to the supervision of the Fund's Board. Moreover, the
New Advisory Agreement provides, and the Original Advisory Agreement also
provided, that the investment of the Fund's assets will be subject to the Fund's
policies, restrictions and limitations with respect to securities investments as
set forth in the Fund's then current registration statement under the 1940 Act,
and all applicable laws and the regulations of the SEC relating to the
management of registered closed-end management investment companies. In
addition, the Advisor agreed under the Original Advisory Agreement, and will
agree under the New Advisory Agreement, to furnish office facilities and
equipment as well as certain clerical, bookkeeping and administrative services.
Finally, as was the case under the Original Agreement, under the New Advisory
Agreement, subject to the applicable requirements of the 1940 Act, the Advisor
may, at its own cost and expense, retain one or more sub-advisors to serve the
Fund.
Fees. As was the case under the Original Advisory Agreement, as
compensation for its services and facilities furnished to the Fund under the New
Advisory Agreement, the Advisor will be entitled to receive, on a monthly basis,
an investment management fee equal to the annual rate of 1.00% of the Fund's
"Managed Assets." The term "Managed Assets" means the average daily gross asset
value of the Fund (including assets attributable to the Fund's preferred shares,
-9-
if any, and the principal amount of borrowings), 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 and the liquidation preference of
any outstanding preferred shares). During the Fund's last fiscal year, the
aggregate amount of the advisory fees paid by the Fund to the Advisor under the
Original Advisory Agreement was $2,211,615.
Limitation of Liability. As was the case under the Original Advisory
Agreement, the New Advisory Agreement provides that the Advisor will not be
liable for any loss sustained by reason of the purchase, sale or retention of
any security, whether or not such purchase, sale or retention has been based
upon the investigation and research made by any other individual, firm or
corporation, if such recommendation has been selected with due care and in good
faith, except loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of the Advisor in the performance of its obligations and
duties, or by reason of its reckless disregard of its obligations and duties
under the Agreement.
Continuance. The Original 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. Similarly, if the New Advisory
Agreement is approved by shareholders, it will expire on the two-year
anniversary of the date of its effectiveness unless continued and, thereafter,
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.
Termination. As was the case under the Original Advisory Agreement, the
New Advisory Agreement provides that it (a) will automatically terminate in the
event of its assignment (as defined in the 1940 Act and the rules and
regulations thereunder), (b) may be terminated at any time without the payment
of any penalty by the Fund or by the Advisor upon 60 days' written notice to the
other party, and (c) may be terminated by action of the Board or by a vote of a
majority of the outstanding voting securities (as defined in the 1940 Act and
the rules and regulations thereunder) of the Fund, accompanied by appropriate
notice. In addition, the Original Advisory Agreement was, and the New Advisory
Agreement is, terminable at any time without the payment of any penalty, by the
Board or by a vote of a majority of the outstanding voting securities (as
defined in the 1940 Act and the rules and regulations thereunder) of the Fund,
in the event that it is established by a court of competent jurisdiction that
the Advisor or any of its officers or directors has taken any action that
results in a breach of the covenants of the Advisor set forth in the Agreement.
SECTION 15(F) OF THE 1940 ACT
Section 15(f) of the 1940 Act is a safe harbor that provides that, when a
change in control of an investment advisor occurs, the investment advisor or any
of its affiliated persons may receive any amount or benefit in connection with
the change in control as long as two conditions are met. The first condition
specifies that no "unfair burden" may be imposed on the investment company as a
result of a transaction relating to the change in control, or any express or
implied terms, conditions or understandings. The term "unfair burden" as defined
-10-
in the 1940 Act, includes any arrangement during the two-year period after the
change in control transaction whereby the investment advisor (or predecessor or
successor advisor), or any interested person of any such investment advisor,
receives or is entitled to receive any compensation, directly or indirectly,
from the investment company or its security holders (other than fees for bona
fide investment advisory or other services) or 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 fees for bona fide principal underwriting
services). The second condition specifies that, during the three-year period
immediately following consummation of the change in control 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 advisor or
predecessor advisor. 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 the Fund. In addition, the Fund has adopted procedures which include
steps intended to cause the conditions of Section 15(f) to be met.
ADDITIONAL INFORMATION ABOUT THE FUND AND THE ADVISOR
A list of the officers of the Fund and the managing directors and
principal officers of the Advisor, their positions with the Fund and/or the
Advisor, and their principal occupations are set forth below. Certain officers
of the Fund have an equity interest in the limited partner of the Advisor.
POSITION WITH POSITION WITH
NAME THE FUND THE ADVISOR PRINCIPAL OCCUPATION
James A. Bowen President, President President, First Trust Advisors L.P.
Chairman of the and First Trust Portfolios L.P.;
Board, Chief Chairman of the Board of Directors,
Executive BondWave LLC and Stonebridge Advisors
Officer and LLC
Trustee
Mark R. Treasurer, Managing Chief Financial Officer, First Trust
Bradley Controller, Director and Advisors L.P. and First Trust
Chief Financial Chief Financial Portfolios L.P.; Chief Financial
Officer and Officer Officer, BondWave LLC and Stonebridge
Chief Accounting Advisors LLC
Officer
Kathleen W. None Chief Compliance Chief Compliance Officer, First Trust
Brown Officer Advisors L.P. and First Trust
Portfolios L.P.
Robert F. None Chief Investment Chief Investment Officer, First Trust
Carey Officer Advisors L.P. and First Trust
Portfolios L.P.
-11-
POSITION WITH POSITION WITH
NAME THE FUND THE ADVISOR PRINCIPAL OCCUPATION
Erin E. Assistant Assistant Assistant General Counsel, First
Chapman Secretary General Counsel Trust Advisors L.P. and First Trust
Portfolios L.P.
James M. Dykas Assistant Senior Vice Senior Vice President, First Trust
Treasurer President Advisors L.P. and First Trust
Portfolios L.P.
Christopher R. Assistant Vice Assistant Vice Assistant Vice President, First Trust
Fallow President President Advisors L.P. and First Trust
Portfolios L.P.
R. Scott Hall None Managing Managing Director, First Trust
Director Advisors L.P. and First Trust
Portfolios L.P.
W. Scott Secretary and General Counsel General Counsel, First Trust Advisors
Jardine Chief Compliance L.P. and First Trust Portfolios L.P.
Officer and BondWave LLC; Secretary of
Stonebridge Advisors LLC
Daniel J. Vice President Senior Vice Senior Vice President, First Trust
Lindquist President Advisors L.P. and First Trust
Portfolios L.P.
Coleen D. Assistant Vice Assistant Vice Assistant Vice President, First Trust
Lynch President President Advisors L.P. and First Trust
Portfolios L.P.
Kristi A. Assistant Deputy General Deputy General Counsel, First Trust
Maher Secretary and Counsel Advisors L.P. and First Trust
Deputy Chief Portfolios L.P.
Compliance
Officer
Ronald D. None Managing Managing Director, First Trust
McAlister Director Advisors L.P. and First Trust
Portfolios L.P.
The business address of the Advisor and each officer and managing director
of the Advisor is 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187.
SHAREHOLDER APPROVAL AND REQUIRED VOTE
To become effective, the New Advisory Agreement must be approved by a vote
of a majority of the outstanding voting securities of the Fund. The "vote of a
majority of the outstanding voting securities" of the Fund for this purpose, as
-12-
defined in the 1940 Act, means 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 the New Advisory Agreement, abstentions and broker
non-votes will have the effect of a vote against this Proposal.
IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING PROPOSAL 1 OR
HOW TO VOTE YOUR SHARES, CALL THE FUND'S PROXY SOLICITOR, THE ALTMAN GROUP,
INC., AT ____________ WEEKDAYS FROM 9:00 A.M. TO 10:00 P.M. EASTERN TIME.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE THE
NEW ADVISORY AGREEMENT.
PROPOSAL 2: APPROVAL OF A NEW INVESTMENT SUB-ADVISORY AGREEMENT FOR THE FUND
CHARTWELL INVESTMENT PARTNERS, L.P.
General Information
Chartwell, located at 1235 Westlakes Drive, Berwyn, Pennsylvania 19312, is
an SEC-registered investment advisor. Founded in 1997, Chartwell is a primarily
employee-owned investment firm focusing on institutional, sub-advisory, and
private client relationships. The firm is a research-based equity and
fixed-income manager with a disciplined, team-oriented investment process. As of
August 31, 2010, Chartwell had 43 employees and approximately $4.4 billion of
assets under management.
Organizational Information
Chartwell is a Pennsylvania limited partnership. The general partner of
Chartwell is Chartwell GP, Inc. ("Chartwell GP"), a Pennsylvania corporation
that has elected to be treated as an "S corporation" for federal tax purposes.
The address of Chartwell GP is 1235 Westlakes Drive, Berwyn, Pennsylvania 19312.
Chartwell GP owns 1% of Chartwell and currently has 11 equal shareholders, eight
of whom are employees or retired employees of Chartwell, and three of whom are
limited partners of Maverick Partners, L.P. ("Maverick"). Maverick, a
Pennsylvania limited partnership whose general partner is Bobcat Partners, L.P.,
a Pennsylvania limited partnership, was formed in 1997 for the sole purpose of
investing seed capital to fund the start of Chartwell's operations. Limited
partnership interests in Maverick are currently held by various individuals.
Maverick currently holds a minority ownership interest in Chartwell and is not
actively involved in the operations of Chartwell. The remainder of the ownership
interests in Chartwell (approximately 75%) are held by approximately 30
employees and retired employees of Chartwell.
The operations of Chartwell and Chartwell GP are governed by the board of
directors of Chartwell GP (the "Chartwell GP Board"). The names and principal
-13-
occupations of the persons who are principal executive officers of Chartwell
and/or Chartwell GP and/or members of the Chartwell GP Board are set forth
below:
------------------------------ ----------------------------------------------------------------------------------
POSITION(S) WITH CHARTWELL AND CHARTWELL GP AND
NAME PRINCIPAL OCCUPATION
------------------------------ ----------------------------------------------------------------------------------
Board Member and Vice President (Chartwell GP); Managing
Edward N. Antoian Partner and Senior Portfolio Manager (Chartwell)
------------------------------ ----------------------------------------------------------------------------------
Treasurer and Secretary (Chartwell GP); Managing Partner,
G. Gregory Hagar Chief Financial Officer and Chief Compliance Officer (Chartwell)
------------------------------ ----------------------------------------------------------------------------------
Michael T. Kennedy Board Member (Chartwell GP); Private Investor
------------------------------ ----------------------------------------------------------------------------------
Vice President (Chartwell GP); Managing Partner, President
Michael J. McCloskey and Director of Client Services and Marketing (Chartwell)
------------------------------ ----------------------------------------------------------------------------------
Board Member and President (Chartwell GP); Managing
Timothy J. Riddle Partner and Chief Executive Officer (Chartwell)
------------------------------ ----------------------------------------------------------------------------------
Board Member and Vice President (Chartwell GP); Managing
Bernard P. Schaffer Partner and Senior Portfolio Manager (Chartwell)
------------------------------ ----------------------------------------------------------------------------------
The business address for each is 1235 Westlakes Drive, Suite 400, Berwyn,
Pennsylvania 19312.
Other Funds Advised and Sub-Advised by Chartwell
Chartwell acts as investment adviser or investment sub-adviser for six
registered investment companies, for which Chartwell manages a total of
approximately $1.5 billion in assets as of August 31, 2010. One of these
registered investment companies is the Chartwell Dividend and Income Fund, Inc.
(the "Chartwell Fund"), a balanced fund with equity and fixed income securities
portions. The investment objective of the Chartwell Fund with respect to its
equity portion is similar to that of the Fund. Information about the size of the
Chartwell Fund and the annual rate of compensation paid to Chartwell for its
services as investment adviser to the Chartwell Fund is set forth below:
--------------------------------------- ------------------------------------ -------------------------------------
FUND NAME ASSETS UNDER MANAGEMENT AS OF ANNUAL RATE OF COMPENSATION
AUGUST 31, 2010
--------------------------------------- ------------------------------------ -------------------------------------
Chartwell Dividend and
Income Fund, Inc. Approximately $88.5 million 0.85% of managed assets
managed assets (contractual fee of 0.95% with
(approximately $68.5 million fee waiver of 0.10%)
net assets taking into account
leverage)
--------------------------------------- ------------------------------------ -------------------------------------
Related Agreement
On September 14, 2007, Chartwell and the Adviser entered into an agreement
separate from the Interim Sub-Advisory Agreement to address certain matters
pertaining to the Fund (such agreement, the "Related Agreement"). Among other
things, under the Related Agreement, Chartwell is obligated to reimburse the
-14-
Adviser for a portion of certain "incentive fee" payments payable by the Adviser
to certain underwriters of the Fund's initial public offering up to specified
limits.
THE ORIGINAL SUB-ADVISORY AGREEMENT
The Original Sub-Advisory Agreement was dated January 8, 2008 and was
approved by the shareholders of the Fund at a special meeting held on such date;
in that regard, Chartwell succeeded Fiduciary Asset Management, LLC as
sub-advisor to the Fund. Since the beginning of the Fund's last fiscal year, the
continuation of the Original Sub-Advisory Agreement was approved by the Board at
meetings held on March 1-2, 2009 and March 21-22, 2010.
THE INTERIM SUB-ADVISORY AGREEMENT
Many of the terms of the Interim Sub-Advisory Agreement are substantially
the same as those of the Original Sub-Advisory Agreement; however, in addition
to various updates, there are differences in provisions relating to the
effective date and, consistent with the requirements of Rule 15a-4, termination
and compensation. Unless terminated sooner in accordance with its terms, the
Interim Sub-Advisory Agreement will continue to be in effect through the Interim
Termination Date or until shareholders of the Fund approve the New Sub-Advisory
Agreement, whichever occurs first. In addition, the Interim Sub-Advisory
Agreement may be terminated 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 tonotice.
For each Fund, the Sub-Advisor, without payment of any
penalty.
The rate of compensation paid to the Sub-AdvisorSub-Adviser is the
same under the
applicableits Interim Sub-Advisory Agreement, OriginalPrior Sub-Advisory Agreement and
New Sub-Advisory Agreement. TheHowever, the compensation accrued under theeach Interim
Sub-Advisory Agreement however, 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 of the Fund byon or before the Interim
Termination Date, the amount in the escrow account (including the interest
earned) will be paid to the Sub-Advisor.New Chartwell. However, if shareholders of thea Fund do not
approve theits New Sub-Advisory Agreement by such date, the
Sub-AdvisorNew Chartwell will be paid,
out of the escrow account, the lesser of: (i) any costs incurred by the Sub-AdvisorNew
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).
COMPARISON OF CERTAIN TERMS OF THE NEW SUB-ADVISORY AGREEMENTAGREEMENTS AND ORIGINALPRIOR
SUB-ADVISORY AGREEMENTAGREEMENTS
Below is a brief comparison of certain terms of the OriginalPrior Sub-Advisory
AgreementAgreements to the corresponding terms of the New Sub-Advisory Agreement.Agreements. Many
of the terms of the New Sub-Advisory Agreement, including fees payable toAgreements and the Sub-Advisor byPrior Sub-Advisory
Agreements are the Advisor thereunder,same; however, there are substantiallydifferences in effective and
-7-
termination dates, and the same in all
material respects to the termsname of the corresponding Original Sub-Advisory
Agreement; however theSub-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. The
form of New Sub-Advisory Agreement includes a new effective date
and has been updated in certain other respects. The form of the New Sub-Advisory
-15-
Agreementfor each Fund is attached to this Joint Proxy
Statement as Exhibit BA-1 (for the Equity Income Fund) and Exhibit A-2 (for the
Dividend and Income Fund) and the description of the New Sub-Advisory AgreementAgreements
is qualified in its entirety by reference to such Exhibit.Exhibits.
Sub-Advisory Services. As wasBoth the case under the OriginalPrior Sub-Advisory Agreement underand the New
Sub-Advisory Agreement for the Sub-AdvisorEquity Income Fund provide that the Sub-Adviser
will furnish an investment program in respect of, make investment decisions for,
and place all 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. In addition, asSimilarly, both the Prior Sub-Advisory
Agreement and the New Sub-Advisory Agreement for the Dividend and Income Fund
provide that the Sub-Adviser will 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 subject to the supervision of the Fund's Board and the
Advisor. As was the case under the OriginalPrior Sub-Advisory Agreement,Agreements, under the New
Sub-Advisory Agreement,Agreements, the Sub-AdvisorSub-Adviser is required to monitor the applicable
Fund's investments and to comply with the provisions of thesuch 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 OriginalPrior Sub-Advisory Agreement,Agreements, the
New Sub-Advisory Agreement authorizesAgreements authorize the Sub-AdvisorSub-Adviser to select the brokers or
dealers that will execute the purchases and sales of portfolio investments for
the applicable Fund, and directsdirect the Sub-AdvisorSub-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. As was the case under the OriginalPrior Sub-Advisory Agreement,Agreements, under the
New Sub-Advisory Agreement,Agreements, the Advisor will pay the Sub-AdvisorSub-Adviser a portfolio
management fee on a monthly basis. Both the OriginalPrior 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-AdvisorSub-Adviser a fee equal to the annual rate of 0.50% of thesuch Fund's "Managed
Assets." TheAssets" allocated to the Sub-Adviser (to reflect that the Sub-Adviser does not
manage all of such Fund's Managed Assets); 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)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 or other forms of indebtedness
issued by the
Fund). For purposes of determining Managed Assets for the Dividend and Income
Fund, and the liquidation preference of any outstanding preferred shares). Duringshares of the Fund
is not treated as a liability. (The Dividend and Income Fund has no outstanding
preferred shares.)
-8-
For each Fund's last fiscal year, the aggregate amount of the sub-advisory
fees paid by the Advisor to the Sub-AdvisorSub-Adviser 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 OriginalPrior Sub-Advisory Agreement, and
$81,380.43 was $1,105,808.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 OriginalPrior Sub-Advisory
Agreement,Agreements, under the New Sub-Advisory Agreement,Agreements, the Sub-Advisor will agreeSub-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 onof Liability. As was the case under the OriginalPrior Sub-Advisory
Agreement, theAgreements, each New Sub-Advisory Agreement provides that the Sub-AdvisorSub-Adviser will
not be liable for, and the Fund and the Advisor will not take any action against
the Sub-AdvisorSub-Adviser to hold the Sub-AdvisorSub-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-Advisor'sSub-Adviser's duties under the Agreement, except for
a loss resulting from willful misfeasance, bad faith or gross negligence on the
-16-
part of the Sub-AdvisorSub-Adviser in the performance of its duties under thesuch Agreement,
or by reason of its reckless disregard of its obligations and duties under thesuch
Agreement.
Continuance. The OriginalEach Fund's Prior Sub-Advisory Agreement was initiallyoriginally in
effect until June 30, 2009for 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 is approved
by shareholders, it will expire on the two-year anniversary of the date of its
effectiveness unless continued and, thereafter,
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.Act
and the rules and regulations thereunder.
Termination. As was the case under the Original Advisoryeach Prior Sub-Advisory Agreement, theeach
New Sub-Advisory Agreement provides that it (a) willfor termination: (1) automatically terminate in the
event of its assignment (as defined in the 1940 Act and the rules and regulations
thereunder), (b) may be terminated; (2) at any time without the payment of any penalty by the Advisor
or the Sub-AdvisorSub-Adviser upon 60 days' written notice to the other parties,parties; and (c) may be terminated(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 the rules and regulations thereunder) of
the Fund upon 60 days' written notice to the Sub-Advisor by the FundSub-Adviser without the payment of
any penalty. In addition, the Originaleach Prior Sub-Advisory Agreement was, and theeach 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 the rules and regulations
thereunder) of the Fund in the event that it is established by a court of
competent jurisdiction that the Sub-AdvisorSub-Adviser or any of its officers or directors
hashave taken any action that results in a breach of the material covenants of the
Sub-AdvisorSub-Adviser set forth in the Agreement.
-9-
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 June 10, 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"). 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 receive 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.
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.
-10-
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 Fund, 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
team, noting that it had previously been informed of the retirement of Bernard
Shaffer 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
-11-
in escrow until shareholder approval 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 majority 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 of a majority of the outstanding voting securities of
the Fund. The "vote of a majority of the outstanding voting securities" of thea
Fund for this
purpose, asis defined in the 1940 Act meansas 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 thea New Sub-Advisory Agreement, abstentions and
broker non-votes will have the effect of a vote against thisthe Proposal.
IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING THE PROPOSAL 2
OR HOW TO VOTE YOUR SHARES, PLEASE CALL THE FUND'SFUNDS' PROXY SOLICITOR, THE ALTMAN GROUP,
INC.,AST
FINANCIAL 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 THEITS NEW SUB-ADVISORY AGREEMENT.
-17--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 a flat annual fee. 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 the Fund and its principal U.S. office is
located at 4400 Computer Drive, Westborough, Massachusetts 01581.each Fund.
BENEFICIAL OWNERSHIP OF SHARES
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, Act)as amended (the "1934 Act")) beneficially owned more than
5% of the Fund's outstanding Shares, except as describednoted in the following table. Information as to beneficial ownership of
Shares, including percentage of Shares beneficially owned, is based on reports
filed with the SEC by such holders and a securities position listing report from
The Depository Trust & Clearing Corporation as of the Record Date. The Fund does
not have any knowledge of the identity of the ultimate beneficiaries of the
Shares listed below. A
control person is one who owns, either directly or indirectly, more than 25% of
the voting securities of the Funda 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.
The Funds do not have any knowledge of the identity of the ultimate
beneficiaries of the Shares listed below.
----------------------------------------- ---------------------------------------- ------------------------------
-----------------SHARES BENEFICIALLY % OUTSTANDING SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED BENEFICIALLY OWNED
----------------------------------------- ---------------------------------------- ------------------------------ ----------------------------------
SHAREHOLDER ADDRESS PERCENT OWNERSHIP NUMBER OF SHARES HELD
EQUITY INCOME FUND:
----------------------------------------- ---------------------------------------- ------------------------------
-----------------The Bank of New York Mellon
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
Phoenix, AZ 85016 558,536 Shares 6.76%
----------------------------------------- ---------------------------------------- ------------------------------
First Clearing, LLC
2801 Market Street
St. Louis, MO 63103 865,140 Shares 10.47%
----------------------------------------- ---------------------------------------- ------------------------------
Merrill Lynch, Pierce Fenner & Smith
Safekeeping
4804 Deer Lake Drive E.
Jacksonville, FL 32246 486,201 Shares 5.89%
----------------------------------------- ---------------------------------------- ------------------------------
Morgan Stanley Smith Barney LLC
1300 Thames Street
Baltimore, MD 21231 1,887,505 Shares 22.85%
----------------------------------------- ---------------------------------------- ------------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
St. Petersburg, FL 33716 1,395,438 Shares 16.89%
----------------------------------------- ---------------------------------------- ------------------------------
TRUSTEES AND OFFICERSTrustees and Executive Officers
As of ___________, 2010,December 31, 2013, the Trustees of the FundFunds beneficially owned the
following number of Shares of the Fund:
------------------------------------- ----------------------------------------each
Fund as set forth below:
TRUSTEE SHARES OWNED
------------------------------------- ----------------------------------------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 ___________, 2010,December 31, 2013, (1) each Trustee beneficially owned less than 1%
of the outstanding Shares of theeach 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 the respective Fund's outstanding Shares.
-18-
SHAREHOLDER PROPOSALS
To be considered for presentation at the Annual Meeting of Shareholders of
the FundFunds to be held in 2011,2015, a shareholder proposal submitted pursuant to Rule
14a-8 of the 1934 Act must be received at the offices of the applicable Fund,
located at 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187, not later
than November 22,
2010.
Any14, 2014.
Under each Fund's By-Laws, any proposals by shareholders may only be
brought before an annual meeting of thea Fund if timely written notice (the
"Shareholder Notice") is provided to the Secretary of the Fund. In accordance
with the advance notice provisions included in the Fund'sFunds' By-Laws, unless a
greater or lesser period is required under applicable law, to be timely, the
Shareholder Notice must be delivered to or mailed to and received at the
Fund's address, 120 East Liberty Drive, Suite 400,
Wheaton, Illinois 60187, Attn: W. Scott Jardine,principal executive offices 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
-14-
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. Shareholder Notices should be sent to
a Fund at 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187, Attention:
W. Scott Jardine, Secretary.
Timely submission of a proposal does not mean that such proposal will be
included in a proxy statement.
FISCAL YEAR
The fiscal year end for the Fund is December 31.
SHAREHOLDER COMMUNICATIONS
Shareholders of theeach 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
chairman of the Nominating and Governance Committee of the Board and the
independent legal counsel to the Independent Trustees for further distribution
as deemed appropriate by such persons.
FISCAL YEAR
The fiscal year end for the Equity Income Fund is December 31 and the
fiscal year end for the Dividend and Income Fund is November 30.
DELIVERY OF CERTAIN DOCUMENTS
Annual reports will be sent to shareholders of record of theeach Fund
following the Fund's fiscal year end. TheEach Fund will furnish, without charge, a
copy of its annual report and/or semi-annual report as available upon request.
-19-
Such written or oral requests should be directed to the Fund 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, may be delivered to
two or more shareholders of thea 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, or for instructions as to how to request a separate
copy of such documents or as to how to request a single copy if multiple copies
of such documents are received, shareholders should contact the applicable Fund
at the address and phone number set forth above. Pursuant to a request, a
separate copy will be delivered promptly.
-15-
OTHER MATTERS TO COME BEFORE THE MEETING
No business other than the mattersmatter described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote thereon
according to their best judgment in the interests of the Fund.
Dated:Funds.
April __, 2014
--------------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIESYOUR SHARES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECTREPRESENTED AT THE MEETING. IN ORDER TO
ATTENDAVOID DELAY AND TO ENSURE THAT YOUR SHARES ARE REPRESENTED, PLEASE VOTE AS
PROMPTLY AS POSSIBLE. YOU MAY VOTE EASILY AND QUICKLY BY MAIL, TELEPHONE OR
THROUGH THE MEETING ARE THEREFORE URGEDINTERNET. TO VOTE BY MAIL, PLEASE COMPLETE SIGN, DATE AND RETURN THEMAIL YOUR PROXY CARD AS SOON AS POSSIBLE
IN THE ENCLOSED POSTAGE-PAID ENVELOPE
ORRETURN ENVELOPE. ALTERNATIVELY, TOSHAREHOLDERS 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
PROPOSALSPROPOSAL OR HOW TO VOTE YOUR SHARES, PLEASE CALL THE FUND'SFUNDS' PROXY SOLICITOR, THE ALTMAN GROUP, INC.,AST
FUND SOLUTIONS, LLC, AT __________________(866) 530-8634 WEEKDAYS FROM 9:00 A.M. TO 10:00 P.M.
EASTERN TIME.
--------------------------------------------------------------------------------
-20--16-
EXHIBIT AA-1
FORM OF NEW INVESTMENT MANAGEMENTSUB-ADVISORY AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT made this [ ] day of [ ], by and betweenFOR
FIRST TRUST ENHANCED EQUITY INCOME FUND (formerly named, the FIRST
TRUST/FIDUCIARY ASSET MANAGEMENT COVERED CALL FUND), a Massachusetts business
trust (the "Fund"), and FIRST TRUST ADVISORS L.P., an Illinois limited
partnership (the "Adviser").
WITNESSETH:
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund hereby engages the Adviser to act as the investment adviser
for, and to manage the investment and reinvestment of the assets of the Fund in
accordance with the Fund's investment objective and policies and limitations,
and to administer the Fund's affairs to the extent requested by and subject to
the supervision of the Board of Trustees of the Fund for the period and upon the
terms herein set forth. The investment of the Fund's assets shall be subject to
the Fund's policies, restrictions and limitations with respect to securities
investments as set forth in the Fund's most recent effective registration
statement under the Investment Company Act of l940 (the "1940 Act"), and all
applicable laws and the regulations of the Securities and Exchange Commission
relating to the management of registered closed-end management investment
companies.
The Adviser accepts such employment and agrees during such period to
render such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services (other than such services, if any,
provided by the Fund's transfer agent, administrator or other service providers)
for the Fund, to permit any of its officers or employees to serve without
compensation as trustees or officers of the Fund if elected to such positions,
and to assume the obligations herein set forth for the compensation herein
provided. The Adviser shall at its own expense furnish all executive and other
personnel, office space, and office facilities required to render the investment
management and administrative services set forth in this Agreement. In the event
that the Adviser pays or assumes any expenses of the Fund not required to be
paid or assumed by the Adviser under this Agreement, the Adviser shall not be
obligated hereby to pay or assume the same or similar expense in the future;
provided that nothing contained herein shall be deemed to relieve the Adviser of
any obligation to the Fund under any separate agreement or arrangement between
the parties.
2. The Adviser shall, for all purposes herein provided, be deemed to be
an independent contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for nor represent the Fund in any
way, nor otherwise be deemed an agent of the Fund.
3. For the services and facilities described in Section 1, the Fund will
pay to the Adviser, at the end of each calendar month, and the Adviser agrees to
accept as full compensation therefore, an investment management fee equal to the
annual rate of 1.00% of the Fund's Managed Assets, as such term is defined
herein. "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)).
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 shall have been in effect during the month and year,
respectively. The services of the Adviser to the Fund under this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar
services or other services to others so long as its services hereunder are not
impaired thereby.
4. The Adviser shall arrange for suitably qualified officers or employees
of the Adviser to serve, without compensation from the Fund, as trustees,
officers or agents of the Fund, if duly elected or appointed to such positions,
and subject to their individual consent and to any limitations imposed by law.
5. For purposes of this Agreement, brokerage commissions paid by the Fund
upon the purchase or sale of the Fund's portfolio securities shall be considered
a cost of securities of the Fund and shall be paid by the Fund.
6. Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of the Fund's securities on behalf of 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
to the extent permitted by and in conformance with applicable law (including
Rule 17e-1 of the 1940 Act), Adviser may select brokers or dealers affiliated
with Adviser. It is understood that 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 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 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 Adviser's overall responsibilities with respect to its accounts,
including the Fund, as to which it exercises investment discretion.
In addition, Adviser may, to the extent permitted by applicable law,
aggregate purchase and sale orders of securities with similar orders being made
simultaneously for other accounts managed by Adviser or its affiliates, if in
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 Adviser and any of its affiliates involved in such
transaction shall be to allocate the securities so purchased or sold, as well as
-2-
expenses incurred in the transaction, among the Fund and other accounts in an
equitable manner. Nevertheless, the Fund acknowledges 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 Adviser have available
funds for investment, investments suitable and appropriate for each will be
allocated in a manner believed by 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 made. Moreover, it
is possible that due to differing investment objectives or for other reasons,
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.
Adviser will not arrange purchases or sales of securities between the Fund
and other accounts advised by 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 Fund's policies and procedures, (b) Adviser determines
the purchase or sale is in the best interests of the Fund, and (c) the Fund's
Board of Trustees have approved these types of transactions.
To the extent the Fund seeks to adopt, amend or eliminate any objectives,
policies, restrictions or procedures in a manner that modifies or restricts
Adviser's authority regarding the execution of the Fund's portfolio
transactions, the Fund agrees to use reasonable commercial efforts to consult
with the Adviser regarding the modifications or restrictions prior to such
adoption, amendment or elimination.
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 portfolio securities be purchased by or sold to
Adviser or any affiliated person of either the Fund or Adviser, except as may be
permitted under the 1940 Act.
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 fiduciary accounts for which
it has investment responsibilities;
(b) will conform in all material respects to all applicable Rules
and Regulations of the Securities and Exchange Commission and comply in
all material respects with all policies and procedures adopted by the
Board of Trustees for the Fund and communicated to Adviser and, in
addition, will conduct its activities under this Agreement in all material
respects in accordance with any applicable regulations of any governmental
authority pertaining to its investment advisory activities;
(c) will report regularly to the Board of Trustees of the Fund
(generally on a quarterly basis) and will make appropriate persons
available for the purpose of reviewing with representatives of the Board
of Trustees on a regular basis at reasonable times the management of the
Fund, including, without limitation, review of the general investment
-3-
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 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 as required under applicable law
and will prepare and furnish the Fund's Board of Trustees such periodic
and special reports as the Board of Trustees may reasonably request.
Adviser further agrees that all records which it maintains for the Fund
are the property of the Fund and Adviser will surrender promptly to the
Fund any such records upon the request of the Fund (provided, however,
that 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.
7. Subject to applicable statutes and regulations, it is understood that
officers, trustees, or agents of the Fund are, or may be, interested persons (as
such term is defined in the 1940 Act and rules and regulations thereunder) of
the Adviser as officers, directors, agents, shareholders or otherwise, and that
the officers, directors, shareholders and agents of the Adviser may be
interested persons of the Fund otherwise than as trustees, officers or agents.
8. The Adviser shall not be liable for any loss sustained by reason of
the purchase, sale or retention of any security, whether or not such purchase,
sale or retention shall have been based upon the investigation and research made
by any other individual, firm or corporation, if such recommendation shall have
been selected with due care and in good faith, except loss resulting from
willful misfeasance, bad faith, or gross negligence on the part of the Adviser
in the performance of its obligations and duties, or by reason of its reckless
disregard of its material obligations and duties under this Agreement.
9. Subject to obtaining the initial and periodic approvals required under
Section 15 of the 1940 Act, the Adviser may retain one or more sub-advisers at
the Adviser's own cost and expense for the purpose of furnishing one or more of
the services described in Section 1 hereof with respect to the Fund. Retention
of a sub-adviser shall in no way reduce the responsibilities or obligations of
the Adviser under this Agreement and the Adviser shall be responsible to the
Fund for all acts or omissions of any sub-adviser in connection with the
performance of the Adviser's duties hereunder.
10. The Fund acknowledges that Adviser now acts, and intends in the future
to 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 acknowledges that the persons employed by Adviser to assist
in Adviser's duties under this Agreement will not devote their full time to such
efforts. It is also agreed that 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.
11. This Agreement shall be effective on the date provided above, provided
it has been approved by a vote of a majority of the outstanding voting
-4-
securities of the Fund in accordance with the requirements of the 1940 Act. This
Agreement shall continue in effect until the two-year anniversary of the date of
its effectiveness, unless and until terminated by either party as hereinafter
provided, and shall continue in force from year to year thereafter, but only as
long as such continuance is specifically approved, at least annually, in the
manner required by the 1940 Act.
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 Fund or by the Adviser upon sixty (60) days' written notice to the other
party. The Fund may effect termination by action of the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, accompanied
by appropriate notice. This Agreement may be terminated, at any time, without
the payment of any penalty, by 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
Adviser, or any officer or director of the Adviser, has taken any action which
results in a breach of the material covenants of the Adviser set forth herein.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation, described in Section
3, earned prior to such termination and for any additional period during which
Adviser serves as such for the Fund, subject to applicable law. The terms
"assignment" and "vote of the majority of outstanding voting securities" shall
have the same meanings set forth in the 1940 Act and the rules and regulations
thereunder.
12. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder shall not be thereby
affected.
13. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for receipt of such notice.
14. 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. This Agreement is executed
on behalf of the Fund by the Fund's officers as officers and not individually
and the obligations imposed upon the Fund by this Agreement are not binding upon
any of the Fund's Trustees, officers or shareholders individually but 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.
15. This Agreement shall be construed in accordance with applicable
federal law and (except as to Section 14 hereof which shall be construed in
accordance with the laws of Massachusetts) the laws of the State of Illinois.
-5-
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed on the day and year above written.
FIRST TRUST ENHANCED EQUITY INCOME FUND
By: ___________________________
Name: James A. Bowen
Title: President
ATTEST: _________________________
Name: Mark R. Bradley
Title: Chief Financial Officer
FIRST TRUST ADVISORS L.P.
By: _________________________
Name: James A. Bowen
Title: President
ATTEST: _________________________
Name: Mark R. Bradley
Title: Chief Financial Officer
-6-
EXHIBIT B
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this [ ] day of [ ]], 2014 by and among First Trust
Enhanced Equity Income Fund, (formerly known as First Trust/Fiduciary Asset Management
Covered Call Fund), a Massachusetts business trust (the "Fund"), First
Trust Advisors L.P., an Illinois limited partnership and a registered investment
adviser with the Securities and Exchange Commission ("SEC") (the "Manager"), and
Chartwell Investment Partners, L.P.Inc., a Pennsylvania limited partnershipcorporation 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 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
"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 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 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 for the Fund's investment portfolio, all on behalf of the
Fund and as described in the Fund's most recent registration statement on Form
N-2 as declared effective by the SEC, and 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 fiduciary duties it may have to the
Fund, (b) monitor the Fund's investments, and (c) comply with the provisions of
A-1-1
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 of 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 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 made. Moreover, it is possible that due to differing
investment objectives or for other reasons, the Sub-Adviser and its affiliates
-2-
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 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 Manager 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
-3-
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 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 Manager 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 liable 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.
-4-
7. Term; Termination. This Agreement shall become effective with respect
to the Fund 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 until the two-year anniversary of the date of its effectiveness,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 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
A-1-4
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 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.
-5-
If to the Manager or the Fund: If to the Sub-Adviser:
First Trust Enhanced Equity Income Fund Chartwell Investment Partners, L.P.Inc.
First Trust Advisors L.P. 12341235 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) 241-8650517-7437
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.
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
A-1-5
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 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
"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 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 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 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 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.
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 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 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 Manager 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 borrowings 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 Manager 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 liable 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 become effective with respect
to the Fund 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
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, 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 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 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 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 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 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.
-6-A-2-6
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. FIRST TRUST DIVIDEND AND INCOME FUND
By: ______________________________ By: ______________________________
Title: ___________________________ Title:___________________________
CHARTWELL INVESTMENT PARTNERS, L.P.INC.
By: ________________________________ By: _____________________________________________________________
Title: __________________________ Title: _________________________
FIRST TRUST ENHANCED EQUITY INCOME FUND
By: ___________________________________
Title: ______________________________
-7-___________________________
A-2-7
FORM OF PROXY CARD
------------------
FIRST TRUST ENHANCED EQUITY INCOME FUNDIF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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Proxy Ballot-- [NAME OF FUND]
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Proxy Card for the Special Meeting of Shareholders - _____________, 2010June 9, 2014
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned holder of Common Shares of the First Trust Enhanced Equity
Income Fund (the "Fund")[Name of Fund], a Massachusetts
business trust (the "Fund"), hereby appoints W. Scott Jardine, Mark R. Bradley,
Kristi A. Maher, James M. Dykas and Erin E. ChapmanKlassman 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 Special 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 ________4:00 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 Special MeetingMeetings of Shareholders and Joint Proxy Statement dated ___________, 2010,April
__, 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
adjournment or postponement 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.
THE PROXY CARD MUST BE SIGNED AND DATED FOR YOUR INSTRUCTIONS TO BE COUNTED AND
WILL BE VOTED IN THE MANNER INDICATED. IF NO INSTRUCTIONS HAVE BEEN INDICATED
HEREON, A VOTE WILL BE CAST "FOR" THE PROPOSAL. PLEASE COMPLETE AND RETURN THIS
PROXY CARD PROMPTLY.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
Registration dynamically UNDERSIGNED SHAREHOLDER. IF NO DIRECTION
printed here IS MADE, THIS PROXY WILL BE VOTED FOR
THE PROPOSAL SET FORTH.
PLEASE VOTE, DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
PLEASE
FORM OF PROXY CARD
==================
[NAME OF FUND]
-------------------------------------
IMPORTANT SPECIAL MEETING INFORMATION
-------------------------------------
[ADDRESS LINES]
ELECTRONIC VOTING INSTRUCTIONS
AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK!
Instead of mailing your proxy, you may choose one of the voting methods outlined
below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
PROXIES SUBMITTED BY THE INTERNET OR TELEPHONE MUST BE RECEIVED BY [__________],
CENTRAL TIME, ON JUNE 9, 2014.
VOTE BY INTERNET
[QR code o Go to [_________________]
graphic
omitted] o Or scan the QR code with your smartphone
o Follow the steps outlined on the secure website
VOTE BY TELEPHONE
o Call toll free [_______________] within the USA, US territories & Canada
on a touch tone telephone
o Follow the instructions provided by the recorded message
YOU MAY VOTE BY MAIL, BY INTERNET OR BY TELEPHONE. IF YOU CHOOSE TO VOTE BY
INTERNET OR BY TELEPHONE, YOU SHOULD NOT MAIL YOUR PROXY CARD.
Using a BLACK INK pen, mark your votes with an
X as shown in this example. Please do not write
outside the designated areas. [X]
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SPECIAL MEETING PROXY CARD 1234 5678 9012 345
--------------------------------------------------------------------------------
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD HEREALONG THE PERFORATION,
DETACH AND RETURN ENTIRE BALLOT - DO NOT DETACH
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FIRST TRUST ENHANCED EQUITY INCOME FUND
Proxy Ballot for Special Meeting of Shareholders - __________, 2010
VOTE BY PHONE OR BY MAIL!
CALL: TO VOTE YOUR PROXY BY PHONE, CALL OUR TOLL-FREE PROXY HOTLINE AT
1-__________. REPRESENTATIVES ARE AVAILABLE TO RECORD YOUR VOTE MONDAY
THROUGH FRIDAY 9:00 A.M. TO 10:00 P.M. EASTERN TIME.
MAIL: TO VOTE YOUR PROXY BY MAIL, MARK THE APPROPRIATE VOTING BOX ON THE REVERSE
SIDE OF THIS PROXY BALLOT, SIGN AND DATE THE BALLOT AND RETURN ITBOTTOM PORTION IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR MAIL TO:ENVELOPE.
--------------------------------------------------------------------------------
A PROPOSAL -- THE ALTMAN GROUP, P.O. BOX ___,
LYNDHURST, NJ 07071.
Please be sure to sign and date this proxy. Please sign exactly as your name
appears on this proxy. When shares are held by joint tenants, either may sign.
When signing as attorney, executor, administrator, trustee, guardian or
corporate officer, please give full title as such.
PLEASE MARK YOUR VOTE ON THE REVERSEBOARD OF THIS PROXY BALLOT.
__________________________________________________________
Shareholder sign here
__________________________________________________________
Joint owner sign here
__________________________________________________________
Date:
FIRST TRUST ENHANCED EQUITY INCOME FUND
CONTROL NUMBER
-----------------------------
123456789123
-----------------------------
WE NEED YOUR PROXY VOTE AS SOON AS POSSIBLE. YOUR PROMPT ATTENTION TO
THIS MATTER WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
THE PROXY BALLOT MUST BE SIGNED AND DATED ON THE REVERSE SIDE FOR YOUR
INSTRUCTIONS TO BE COUNTED AND WILL BE VOTED IN THE MANNER INDICATED. IF NO
INSTRUCTION HAS BEEN INDICATED BELOW,TRUSTEES RECOMMENDS A VOTE WILL BE CAST "FOR"FOR THE PROPOSAL.
PLEASE COMPLETE AND RETURN THIS PROXY BALLOT PROMPTLY.
PLEASE MARK YOUR VOTE AS INDICATED IN THIS EXAMPLE [ ]PROPOSAL TO
APPROVE A NEW INVESTMENT SUB-ADVISORY AGREEMENT WITH CHARTWELL
INVESTMENT PARTNERS, INC. FOR THE FUND.
FOR AGAINST ABSTAIN
Proposal - The Board of Trustees recommends
a vote FOR the Proposal to approve a
new Investment Advisory Agreement for the
Fund with First Trust Advisors L.P.
Approval of New Investment Advisory Agreement [ ] [ ] [ ]
Proposal - The Board of Trustees recommends
a vote FOR the Proposal to approve a
new Investment Sub-Advisory Agreement for the
Fund with Chartwell Investment Partners, L.P.1. Approval of New Investment Sub-Advisory
Agreement [ ] [ ] [ ]
B NON-VOTING ITEMS
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CHANGE OF ADDRESS - Please print new address below.
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COMMENTS - Please print your comments below.
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MEETING ATTENDANCE - Mark the box to the right if you plan to
attend the Special Meeting [ ]
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CHANGE OF ADDRESS -C AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE
COUNTED. -- DATE AND SIGN BELOW
Please be sure to sign and date this Proxy Card. Please sign exactly as your
name(s) appear(s) on this Proxy Card. When shares are held by joint tenants,
both 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 an authorized officer. If a partnership, please sign in
partnership name by an authorized person.
Date (mm/dd/yyyy) -- Please print new addressdate below.
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COMMENTS -----------------------------------------------------------------
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Signature 1 -- Please print your comments below.
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(BARCODE HERE) (TAGID HERE) (CUSIP HERE)keep signature within the box.
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Signature 2 -- Please keep signature within the box.
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