DEF: First Trust Funds Set Annual Meeting for Trustee Elections

First Trust Enhanced Equity Income Fund, First Trust Mortgage Income Fund, and First Trust Intermediate Duration Preferred & Income Fund will hold a joint annual meeting on April 14, 2026, to elect two Class I Trustees.

Summary

• Joint Annual Meetings of Shareholders are scheduled for First Trust Enhanced Equity Income Fund (FFA), First Trust Intermediate Duration Preferred & Income Fund (FPF), and First Trust Mortgage Income Fund (FMY) on Tuesday, April 14, 2026, at 11:30 a.m. Central Time in Wheaton, Illinois.
• Shareholders will vote on the election of two Class I Trustees, Denise M. Keefe and Robert F. Keith, for a three-year term expiring at the 2029 annual meeting of shareholders.
• The Board of Trustees of each Fund unanimously recommends that shareholders vote FOR the election of each nominee.
• The record date for determining shareholders entitled to notice of and to vote at the Meeting is February 24, 2026.
• Proxy materials, including the Joint Proxy Statement and proxy card, will be mailed to shareholders on or about March 13, 2026.
• A quorum for a matter is constituted by the presence in person or by proxy of the holders of 33-1/3% of the outstanding Shares entitled to vote on the matter.
• Shares outstanding on the Record Date were: First Trust Enhanced Equity Income Fund: 19,988,085; First Trust Intermediate Duration Preferred & Income Fund: 60,847,827; First Trust Mortgage Income Fund: 4,213,115.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a neutral to slightly positive filing, primarily a routine governance update. The re-election of experienced trustees and the robust governance structure are positive, but the late Section 16(a) filings and the Audit Committee's lack of review for certain non-audit services introduce minor concerns.

Positives

• The Board of Trustees unanimously recommends the re-election of experienced Class I Trustees, Denise M. Keefe and Robert F. Keith, ensuring continuity in leadership.
• The unitary board leadership structure is designed to promote efficiency and consistency in governance and oversight across the entire First Trust Fund Complex.
• The Board's composition emphasizes appropriate skills, diversity, independence, and experience, with seven Independent Trustees and one Interested Trustee.
• Independent Trustees have adopted a policy requiring them to invest an amount in the funds they oversee, aligning their interests with those of shareholders.
• The Audit Committee actively oversees the Funds' accounting and financial reporting processes, internal controls, and the independent audit process.

Negatives

• Several Section 16(a) reports were filed late for officers of Chartwell (sub-advisor to FFA) and for Independent Trustee Thomas J. Driscoll across all three Funds.
• The Audit Committee has not considered whether the provision of non-audit services rendered to the Advisor and its affiliates, which were not pre-approved, is compatible with maintaining the principal accountants' independence, as they were not informed of such services.

Risks

• Cybersecurity risks pose a potential operational threat, as the Funds and their service providers are susceptible to breaches, and there is no guarantee that risk management systems will succeed.
• The Funds cannot control risk management systems implemented by service providers, issuers, or other third parties whose operations may affect the Funds and/or their shareholders.
• The ability to manage risk is subject to substantial limitations, as not all risks can be identified or mitigated, and some risks are beyond reasonable control or are necessary to achieve fund goals.
• A control person, defined as owning more than 25% of voting securities, could significantly affect the outcome of any item presented to shareholders for approval; Morgan Stanley Smith Barney LLC holds 36.06% of FPF, and Sit Investment Associates, Inc. and Sit Fixed Income Advisors II, LLC jointly hold 54.5% of FMY.

Future Outlook

The filing primarily concerns a routine annual meeting for trustee elections and does not provide specific forward-looking statements or guidance on fund performance or strategic initiatives.

Management Comments

• "Your participation at the Meeting is very important. If you cannot attend the Meeting, you may participate by proxy. Please take a few moments to read the enclosed materials and then cast your vote on the enclosed proxy card. Voting takes only a few minutes. Each Shareholders vote is important. Your prompt response will be much appreciated." James A. Bowen, Chairman of the Boards
• "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."
• "The Board of Trustees of Each Fund Unanimously Recommends that Shareholders Vote FOR the Election of Each Nominee."

Industry Context

StockSavvy.ai notes that the unitary board structure is a common approach in large fund complexes to achieve governance efficiencies and consistency across multiple funds, especially when facing similar regulatory and operational issues. The increased compensation for independent trustees and committee chairs reflects an industry trend towards enhancing board oversight and attracting experienced professionals, particularly in areas like audit, risk, and governance. The disclosure of significant institutional ownership (e.g., Morgan Stanley, Wells Fargo, Sit Investment Associates) is typical for publicly traded funds, highlighting the influence of large financial intermediaries and asset managers.

Comparison to Industry Standards

• The unitary board structure is a recognized model for fund complexes, aiming for efficiency and consistency, comparable to practices seen in other large investment management groups like Vanguard or BlackRock, which also manage extensive families of funds under unified governance frameworks.
• The stated mandatory retirement age of 75 for Independent Trustees aligns with best practices in corporate governance, similar to policies adopted by many S&P 500 companies and other investment funds to ensure board refreshment and active participation.
• The policy requiring Independent Trustees to invest at least one year's annual retainer in the funds they oversee within three years is a strong practice for aligning trustee interests with shareholders, a standard that exceeds minimum regulatory requirements and is often seen in highly regarded governance models.
• The detailed disclosure of fees paid to Deloitte, including audit and non-audit services, is standard for SEC filings, allowing for transparency in auditor independence, a critical aspect of financial reporting oversight benchmarked against PCAOB and SEC rules.

Management Changes

Corporate Governance

Related Party Transactions

• First Trust Advisors L.P. serves as the investment advisor, administrator, and provides fund reporting services to each Fund.
• The Charger Corporation, controlled by James A. Bowen (CEO of First Trust Advisors and the sole Interested Trustee), is the general partner of Grace Partners, which is the limited partner of First Trust Advisors.
• Stonebridge Advisors LLC, the investment sub-advisor to First Trust Intermediate Duration Preferred & Income Fund, has an affiliate of the Advisor owning a majority interest.
• Deloitte & Touche and Deloitte Tax LLP serve as independent auditors and tax services provider for the First Trust Funds, First Trust Advisors, and certain other affiliated entities. Thomas J. Driscoll, a Trustee, was previously a Partner at Deloitte and served as Lead Client Service Partner on matters involving First Trust, but has severed all relationships in accordance with SEC auditor independence rules.
• Deloitte provides tax services to The Bank of New York Mellon in connection with unit investment trusts sponsored by First Trust Portfolios, an affiliate of First Trust Advisors.

Stakeholder Impact

• Shareholders will participate in the governance of the funds by voting on the re-election of trustees, which influences the future direction and oversight of the funds.
• The increase in trustee compensation, while a cost to the funds, is intended to attract and retain highly qualified individuals, potentially benefiting shareholders through improved governance.
• The disclosure of late Section 16(a) reports may raise minor concerns among shareholders regarding compliance and transparency.
• Management and employees of First Trust Advisors and its affiliates will continue their roles, with the re-election of trustees providing continuity in board oversight.
• Service providers like Deloitte will continue their engagements, with their fees and independence subject to ongoing review by the Audit Committee.

Next Steps

• Shareholders are requested to promptly complete, sign, date, and return their proxy cards.
• The Joint Annual Meetings of Shareholders will be held on April 14, 2026, to vote on the election of Class I Trustees.
• The Meetings will also transact any other business that may properly come before them, including any adjournments or postponements.

Key Dates

Recommendation

This filing is a routine proxy statement for the re-election of trustees and provides an overview of corporate governance. It does not contain information that would fundamentally alter the investment thesis for the funds. While there are minor governance issues noted (late Section 16(a) filings, unreviewed non-audit services), the overall structure and re-election of experienced trustees suggest continuity. Therefore, a 'hold' recommendation is appropriate as there's no new information to warrant a change in investment stance.

Keywords

First Trust, SEC Filing, Proxy Statement, Trustee Election, Corporate Governance, Closed-End Funds, Investment Funds, Shareholder Meeting, Fund Management, Risk Oversight, Audit Committee, Financial Reporting, NYSE