DEF 14A: First Trust Funds Announce Joint Annual Meetings of Shareholders to Elect Trustees

First Trust Enhanced Equity Income Fund, First Trust Mortgage Income Fund, and First Trust Intermediate Duration Preferred & Income Fund are holding joint annual meetings on April 30, 2024, to elect two Class II Trustees for each fund.

Summary

• First Trust Enhanced Equity Income Fund, First Trust Mortgage Income Fund, and First Trust Intermediate Duration Preferred & Income Fund will hold Joint Annual Meetings of Shareholders on April 30, 2024.
• The primary purpose of the meetings is to elect two Class II Trustees for each fund, with nominees Richard E. Erickson and Thomas R. Kadlec standing for election for a three-year term.
• Shareholders of record as of March 4, 2024, for First Trust Enhanced Equity Income Fund and First Trust Intermediate Duration Preferred & Income Fund, and March 8, 2024, for First Trust Mortgage Income Fund, are entitled to vote.
• The Board of Trustees recommends that shareholders vote FOR the election of each nominee.
• The proxy statement provides details on the meeting agenda, voting procedures, information about the Trustees and executive officers, and other relevant information for shareholders.
• As of the applicable record date, no single shareholder or group owned more than 5% of the Funds outstanding Shares, except as described in the document.
• The document also details the compensation of the Trustees and executive officers.
• The Audit Committee recommended to the Board the inclusion of each Funds audited financial statements in each Funds Annual Report to Shareholders for the years ended October 31, 2023 and December 31, 2023, respectively.

Sentiment

Score: 7

Explanation: The document is a standard proxy statement, which is generally neutral in tone. The Board's recommendation to vote FOR the nominees suggests a positive outlook on the current leadership.

Positives

• The Board of Trustees has a Nominating and Governance Committee that oversees the selection and nomination of Trustees, seeking an effective Board with a range of skills and diversity.
• The Board has established five standing committees to oversee the Funds activities, review contractual arrangements, oversee compliance, and review Fund performance.
• The Audit Committee is responsible for overseeing the Funds accounting and financial reporting process, the system of internal controls, and the audit process.
• The document provides detailed information about the Trustees and executive officers, including their qualifications and experience.
• Shareholders have the right to communicate with the Board of Trustees or any individual Trustee by writing to the Fund Secretary.

Negatives

• The document notes that the Funds and their service providers have become more susceptible to potential operational risks through breaches in cyber security.
• The Funds ability to manage risk is subject to substantial limitations.
• The document mentions that there were some late filings of Form 3 by officers of Stonebridge, the Funds investment sub-advisor, and a portfolio manager to the Fund.

Risks

• Cyber security breaches pose a potential operational risk to the Funds and their service providers.
• The Funds ability to manage risk is subject to substantial limitations, and there is no guarantee that risk management systems will succeed.
• The document notes that not all risks that may affect the Funds can be identified, nor can controls be developed to eliminate or mitigate their occurrence or effects.

Future Outlook

The document outlines the process for shareholder proposals for the 2025 annual meeting, indicating a continuation of corporate governance procedures.

Management Comments

• James A. Bowen, Chairman of the Boards, emphasizes the importance of shareholder participation and encourages shareholders to vote on the enclosed proxy card.
• The Board of Trustees of each Fund has determined that the use of this Joint Proxy Statement is in the best interests of the Fund in light of the same matter being considered and voted on by shareholders.

Industry Context

The document reflects standard corporate governance practices for registered investment companies, including the election of trustees, risk oversight, and audit committee responsibilities. The unitary board leadership structure is a governance model used by First Trust to promote efficiency and consistency in the governance and oversight of all First Trust Funds and reduces the costs, administrative burdens and possible conflicts that may result from having multiple boards.

Comparison to Industry Standards

• The structure of the Board of Trustees, with a mix of Independent and Interested Trustees, is a common practice in the investment management industry.
• The establishment of various committees, such as the Audit Committee, Nominating and Governance Committee, and Valuation Committee, aligns with industry best practices for corporate governance.
• The compensation structure for Independent Trustees, including a fixed annual retainer and per-fund fees, is consistent with industry standards for compensating board members of investment companies.
• The Funds' risk oversight framework, including the involvement of the Board and various committees, is in line with industry expectations for managing risks associated with investment management activities.
• The Funds' policies and procedures for shareholder communications and proposal submissions are consistent with regulatory requirements and industry norms.

Corporate Governance

Stakeholder Impact

• Shareholders have the opportunity to vote on the election of Trustees, influencing the governance and oversight of the Funds.
• The document provides transparency regarding the compensation of Trustees and executive officers.
• The Funds risk oversight framework aims to protect shareholder investments.
• The Funds compliance with regulatory requirements ensures the integrity of the Funds operations.

Next Steps

• Shareholders are requested to complete, sign, date, and return the proxy card in the enclosed envelope.
• Shareholders will vote on the election of two Class II Trustees at the Joint Annual Meetings of Shareholders on April 30, 2024.
• The Board of Trustees will continue to oversee the Funds activities and manage risks.
• The Audit Committee will continue to oversee the Funds accounting and financial reporting process.

Key Dates

Keywords

Trustees, Shareholders, First Trust, Election, Funds, Meeting, Proxy