FTA Balanced Closed-End Fund Strategy. Emerging Markets Stumble; Corporate Actions Update

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1 MANAGED ACCOUNTS Managed Accounts Quarterly Recap FTA Balanced Closed-End Fund Strategy Emerging Markets Stumble; Corporate Actions Update June 29, 2018 Equity and Taxable Fixed-Income Closed-End Fund Market The ongoing concern about a potential trade war between the U.S. and China, along with other European allies, had a negative impact on the direction of equity based closed-end funds (CEFs) invested overseas. Hardest hit sectors were CEFs invested in Emerging Markets and Asia. CEFs invested in those sectors had shown strong returns in 2017 and in the early part of 2018 however fear of trade tariffs caused demand to slip and prices to fall. While the tariff talk had originally surfaced late in the first quarter, the topic became a more persistent story throughout the second quarter. The theme was the same in the taxable fixed-income CEF space, where Emerging Markets and Global sectors drew the most attention during the second quarter driven by the ongoing escalation of a potential trade war between the U.S., China and other trade partners. The rhetoric from both sides saw investors begin to walk away from a space which had turned in strong results during In addition, emerging market countries faced the maturity of nearly $250 billion in debt, according to Bloomberg, just as refinancing rates were beginning to rise. When combined, these events caused Global and Emerging Market CEFs to trail the other sectors during the second quarter in the taxable fixed-income space. Table 1 Second Quarter 2018 Returns Share Price Net Asset Value Covered Call 3.53% 1.00% Hybrid (Growth & Income) 2.62% -0.48% U.S. General Equity 1.15% 1.31% MLP 10.02% 11.69% Asia Equity -6.10% -7.10% U.S. Real Estate 5.59% 5.80% Utilities 2.34% 2.40% Emerging Market Equity % -8.41% Equity Dividend 2.52% 0.35% Equity Tax-Advantaged 2.88% 1.15% Commodities -4.44% -3.86% Energy/Resources 9.88% 8.62% Finance -1.45% 3.25% Source: Morningstar Past performance is no guarantee of future results. For the quarter ended June 29, 2018, Equity CEFs, as measured by the First Trust Equity Closed-End Fund Total Return Index, posted a gain of 4.47%. For the last 12 months ended June 29, 2018, the Index posted a total return of 6.49%. First Trust Equity Closed-End Fund Total Return Index (EPCEFT) June 30, 2017 June 29, 2018 Source: Bloomberg Past performance is no guarantee of future results. You cannot invest directly in the Index

2 MANAGED ACCOUNTS Managed Accounts Quarterly Recap Table 2 Second Quarter 2018 Returns Share Price Net Asset Value High-Yield Corporate 0.84% 0.60% U.S. Senior Loan -0.14% 1.02% U.S. Multi-Sector 3.39% 0.78% Global Income -2.79% -3.15% Convertibles 4.81% 4.18% Investment Grade 0.82% -0.82% Mortgages 0.58% 1.00% Preferreds 1.78% 0.04% Emerging Market Income -8.63% -9.69% Limited Duration -1.51% -0.55% Source: Morningstar. Past performance is no guarantee of future results. For the quarter ended June 29, 2018, the First Trust Taxable Fixed Income Closed-End Fund Total Return Index experienced a gain of 0.76%, with a 12-month total return of 2.63%. First Trust Taxable Fixed Income Closed-End Fund Total Return Index (TXCEFT) June 30, 2017 June 29, 2018 Source: Bloomberg Past performance is no guarantee of future results. You cannot invest directly in the Index. FTA Balanced Closed-End Fund Strategy For the quarter ended June 29, 2018, the FTA Balanced CEF Strategy (the Strategy ) posted a net total return of 2.52%, which underperformed its benchmark's total return of 3.13% by 61 basis points (bps). For the last 12 months, the Strategy trailed the benchmark by 32 bps (4.91% vs 5.23%) on a net total return basis. Overall allocations on the equity portion of the Strategy didn t change much during the second quarter. Slight increases were made in the areas of Energy, Health Care, Infrastructure, Asia Equity and Real Estate Investment Trusts (REITs) while exposure dipped in Emerging Market, Preferreds and Global Equity CEFs. Underperformance relative to the benchmark for the second quarter came partially as a result of the portfolio s underweight position in the Master Limited Partnership (MLP) and Energy/Infrastructure space (9.3% vs. benchmark 12.18%). These sectors led the charge on the equity side during the quarter, as seen in Table 1. On the fixed-income side of the Strategy, proceeds from the paring of Emerging Market and Limited Duration positions (5.2% combined end of Q2 weighting vs. 8.4% end of Q1) were reinvested into Multi-Sector (19.5% end of Q2 weighting vs. 17.2% end of Q1) and Senior Loans (4.9% end of Q2 weighting vs. 4.5% end of Q1). These two sectors represent the largest held sectors on the fixedincome side of the Strategy at the end of the second quarter. The cash position in the Strategy fell slightly during the quarter as we continued to look to take advantage of opportunities. Cash at quarter end stood at 6.8%, down from the first quarter cash position of 7.0%

3 MANAGED ACCOUNTS Managed Accounts Quarterly Recap Overall, the Strategy tilted the equity component of the Strategy a bit higher during the first quarter while reducing the fixed-income side. Equity fund holdings once again pushed back above 55% at quarter end, as shown in the table below. Equity Taxable Fixed-Income Fourth Quarter % 33.4% First Quarter % 36.9% Second Quarter % 38.5% Third Quarter % 38.2% Fourth Quarter % 36.9% First Quarter % 39.7% Second Quarter % 38.1% Corporate Actions Update With very few IPOs taking place in the CEF space, we continue to see sponsors actively raising proceeds in existing funds through several different methods. Rights offerings have been the most prolific action used by funds to raise proceeds, but as of late we have begun to see At The Markets (ATMs) start to emerge from a long hibernation. ATMs and their close cousin overnights were used frequently a few years back when the MLP space traded at consistent premiums to net asset value (NAV). Since the pull back in this space, we have seen very little of the ATMs. More recently a few CEF sponsors have filed to once again go the route of the ATM as funds in their complex traded at significant premiums to the underlying NAV. Premiums are important in the use of ATMs since most CEFs only allow new fund shares to be issued at or above the current NAV. A CEF trading at a premium share price that is greater than NAV, allows the sponsors to begin to drip new shares into the market daily through a broker. While the process to raise significant assets can be slow versus that of a right s offering, it has not traditionally resulted in pressure on the outstanding share price. Recently, however, these filings seem to have caused some CEF prices to drop precipitously. This has happened in equity-based CEFs, whose portfolios may be easier to hedge than fixed-income CEFs. We suspect that short sellers, who may be looking to reduce premiums ahead of the sponsor offering additional shares, have become more aggressive in their attempt to push prices down. By pushing prices down, the short seller can then cover their short (buy back shares) at a lower price. If this is indeed happening, the use of ATMs in equity-based CEFs may be short lived for sponsors looking to increase fund size. We will continue to monitor ways in which CEF sponsors look to raise additional dollars and report back on it periodically. As always, we will remain diligent in our approach. Ken Fincher Senior Vice President June 29, 2018 Unless otherwise indicated, the source for all data shown herein is Morningstar as of 6/29/18. Past performance is no guarantee of future results. Strategy Benchmark: Morningstar U.S. All Equity Closed-End Funds Index (60%) a weighted average of the market price of closedend funds which invest in U.S. equity securities. Morningstar U.S. All Taxable Fixed-Income Index (40%) a weighted average of the market price of closed-end funds which invest in taxable fixed-income securities. There can be no assurance that a purchase of the closed-end funds in this strategy will be profitable, either individually or in the aggregate, or that such purchase will be more profitable than other investments. All opinions constitute judgments as of the date of release and are subject to change without notice. There can be no assurance that any forecasts will be achieved. Data is taken from sources we believe to be accurate and reliable but we do not guarantee its accuracy or completeness. See attached fact sheet for additional information about the strategy, including the performance history of the composite. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA and the Internal Revenue Code. First Trust has no knowledge of and has not been provided any information regarding any investor. Financial advisors must determine whether particular investments are appropriate for their clients. First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks independently and is responsible for exercising independent judgment with respect to its retirement plan clients

4 FTA BALANCED CLOSED-END FUND STRATEGY OVERVIEW Investment Selection Process Identify Universe Breakdown funds by sector/strategy/size Allocation Fundamental and Performance Elements Scoring Fundamental Elements: Leverage Duration Credit Quality Volume Call Exposure Premium/Discount Z Statistics Performance Elements: NAV Returns SP Returns Earnings UNII Portfolio Team Analysis Review Model Results Economic Assessment External Research Review Portfolio Allocation Review Corp. Actions, Calendar Events, and Identify Tactical Opportunities Portfolio Z-Statistics - A statistical measure designed to see whether a current observation is close to the mean for a given period. A positive Z-statistic indicates the current value is higher than the mean and a negative that it is lower. UNII - Undistributed net income investment per share, given in U.S. dollars. Strategy Objective The FTA Balanced Closed-End Fund is a strategy which seeks to provide total return, with the potential for income as a secondary objective. Under normal conditions, at least 80% of the strategy will invest in a blend of equity and taxable fixed-income based closed-end funds. The strategy may also invest in Business Development Companies (BDC), as well as equity and fixed-income exchange-traded funds (ETFs), which may include inverse equity and taxable fixed-income ETFs. Equity Statistics Number of Holdings 25 Percent of Assets 55% Weighted Average Premium/(Discount) -6.40% Market Cap Mega 31.3% Large 35.3% Mid 24.7% Small 7.4% Micro 1.4% World Regions Americas 74.4% Greater Europe 13.4% Greater Asia 12.3% Developed Markets 93.0% Emerging Markets 7.0% Largest Holdings Fixed-Income Statistics Number of Holdings 20 Percent of Assets 38% Weighted Average Premium/(Discount) -7.06% Weighted Average Effective Maturity 2.25 years Weighted Average Option Adj Portfolio Duration 2.86 years Weighted Average Leverage Option Adj Portfolio Duration 4.24 years Weighted Average Credit Quality Breakdown AAA 3.6% AA 0.6% A 2.9% BBB 14.7% BB 24.7% B 24.2% Other 29.3% Weighted Average Credit Quality BB- Equity BST BlackRock Science & Technology Trust 3.9% ETG Eaton Vance Tax-Advantaged Global Dividend Income 3.7% EVT Eaton Vance Tax-Advantaged Dividend Income Fund 3.5% UTF Cohen & Steers Infrastructure Fund Inc. 3.4% HTD John Hancock Tax-Advantaged Dividend Income 3.2% Fixed-Income PCI PIMCO Dynamic Credit Income Fund 4.1% KIO KKR Income Opportunities 4.1% DSL Doubleline Income Solutions Fund 3.9% ARDC Ares Dynamic Credit Allocation Fund 3.2% GHY Prudential Global Short Duration High Yield Fund 2.9% The listing of Largest Holdings is not a complete list of all funds in the strategy or which First Trust Advisors L.P. may be currently recommending. Furthermore, application of the investment strategy as of a later date will likely result in changes to the listing. Fund Sector Breakdown Convertible 3% Cash 7% Equity Asia 1% Equity Global 4% Corporate High Yield 5% Emerging Market Bond 3% Multi-Sector 18% Equity Energy 1% REITs 7% Equity Global Hybrid 3% Strategy Characteristics Weighted Average Distribution Rate 6.72% Weighted Average Premium/(Discount) -6.22% Weighted Average Fund Leverage 23.2% Number of Holdings 45 Top Ten Holdings 36% Annual Turnover 25% Portfolio Breakdown Closed-End Funds 90% Term Closed-End Funds 3% Closed-End Funds-Listed Traded Preferred 0% ETFs 0% Cash 7% Key Investment Personnel Ken Fincher Jordan Ramsland Investment Committee Oversight Equity U.S. 6% Equity Health Care 5% Equity Tax-Advantage 18% Senior Loan 5% Equity Infrastructure 9% Limited Duration 2% Preferred 2% Emerging Market Equity 1% There can be no assurance that a purchase of the securities in this strategy will be profitable, either individually or in the aggregate, or that such purchase will be more profitable than alternative investments. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA and the Internal Revenue Code. First Trust has no knowledge of and has not been provided any information regarding any investor. Financial advisors must determine whether particular investments are appropriate for their clients. First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks independently and is responsible for exercising independent judgment with respect to its retirement plan clients. As of 6/30/18 First Trust Advisors L.P NL2033

5 FTA BALANCED CLOSED-END FUND COMPOSITE PERFORMANCE Pure Gross-of-Fees Return*% Net-of-Fees Return % Blended Benchmark Return % YTD Year Year Annualized Year Annualized Since Inception (7/1/09) Annualized First Trust Advisors L.P. (FTA) claims compliance with the Global Investment Performance Standards (GIPS ) and has prepared and presented this report in compliance with the GIPS standards. FTA has been independently verified for the periods August 1, 1999 through June 30, Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. The FTA Balanced Closed-End Fund Composite has been examined for periods July 1, 2009 through June 30, The verification and performance examination reports are available upon request. Pure Gross-of-Fees Blended Blended Composite Market Value Total Firm Assets Year Return* Net-of-Fees Return Benchmark Return Composite 3-Year St. Dev. Benchmark 3-Year St. Dev. Number of Portfolios Composite Dispersion (in millions) (in millions) 2009 (7/1/09 thru 12/31/09) 24.35% 23.61% 25.41% N/A N/A 9 N/A $ 1.4 $ 9, % 16.81% 15.48% N/A N/A % , % -1.58% -1.65% N/A N/A % , % 14.66% 16.02% 12.57% 12.25% % , % 14.74% 10.09% 10.87% 10.51% % , % 6.30% 6.01% 8.70% 8.72% % , % -6.46% -9.73% 9.20% 9.69% % , % 10.26% 14.42% 9.54% 10.62% % , % 15.05% 16.94% 8.98% 10.34% % , (1/1/18 thru 6/30/18) 0.86% 0.12% 0.09% N/A N/A 244 N/A ,977.8 * Pure gross-of-fees returns are presented as supplemental information to the disclosures required by GIPS. Notes: 1. First Trust Advisors L.P. (FTA) was founded in 1991 and is a registered investment advisor with the Securities and Exchange Commission (SEC). FTA provides investment advisory services using equity, fixed-income and balanced strategies for individuals, organizations and institutions. The firm consists of all portfolios managed by FTA. Since 2011, the Total Firm Assets are presented net and have been reduced for the effects of leverage. Prior to 2011, the Total Firm Assets are presented gross and have not been reduced for the effects of leverage. 2. The FTA Balanced Closed-End Fund Composite consists principally of closed-end equity and fixed-income funds. The composite creation date was July A complete list of composites and descriptions is available upon request. 3. The composite includes 100% wrap portfolios since inception for which FTA has full discretionary investment authority and are fee-paying portfolios. The composite does not utilize a material level of leverage. 4. Composite net-of-fees returns are presented net of actual fees, but in instances where actual fees are not identifiable, a maximum model fee of 3% is applied. Net-of-fees returns include investment management fees, custodian fees, trading costs and all other administrative fees. Pure gross-of-fees returns do not reflect the deduction of any expenses, including investment management fees, custodian fees, trading costs and other administrative fees. Prior to 12/31/11, quarterly and annual composite returns were calculated by linking monthly returns. Each portfolio in the composite was valued at least on a monthly basis. If cash flows exceed 10% of the composite s value, the composite was revalued on the day prior to the cash flow and the return was calculated for the interim period. Starting 1/1/12, composite returns are calculated on a daily basis. 5. Valuations and returns are computed and stated in U.S. Dollars. Returns are calculated net of foreign taxes recorded on a cash basis and dividend accruals do not include pending withholding tax reclaims. Additional information regarding policies for valuing portfolios, calculating performance and preparing compliant presentations is available upon request. 6. The three-year annualized standard deviation measures the variability of the composite and the benchmark returns over the preceding 36-month period. The three-year annualized standard deviation is not presented because 36 monthly composite and benchmark returns were not available prior to Composite dispersion is measured by standard deviation, which is an asset-weighted calculation that measures the consistency of composite performance with respect to the individual portfolio returns within the composite. Dispersion of portfolios in the composite is not applicable if the period presented is less than a full year or if there were fewer than five portfolios in the composite for the entire year. 8. The benchmark return is a blend of the following indices; Morningstar U.S. All Equity Closed-End Funds Index (60%) - a weighted average of the market price of closed-end funds which invest in U.S. equity securities, and Morningstar U.S. All Taxable Fixed-Income Index (40%) - a weighted average of the market price of closed-end funds which invest in Taxable Fixed-Income securities. 9. The securities comprising the benchmark are not identical to those in any portfolio in the composite, but FTA believes they may be useful in evaluating performance. Unlike the composite, the benchmark is not actively managed and does not reflect the deduction of advisory fees. Differences in composite performance versus benchmark performance may also result due to high concentrations of individual securities holdings in certain portfolios, timing of security transactions and tax considerations. Such factors may contribute to higher standard deviation of portfolio returns within the composite. The benchmark is rebalanced daily. Benchmark returns have not been examined by the verifier. 10. The FTA management fee schedule is an annual fee of 0.50%. FTA, at its discretion, may negotiate a management fee which is different from the standard fee schedule listed here. The overall wrap fee expense for accounts in the composite will typically range from 1.00% to 3.00%. 11. Past performance is not indicative of future results. Other methods may produce different results, and the results for individual portfolios and for different periods may vary depending on market conditions and the composition of the portfolio. Care should be used when comparing these results to those published by other investment advisers, other investment vehicles and unmanaged indices due to possible differences in calculation methods. Requests for further information may be made by calling (800) or ing SMAOperations@FTAdvisors.com. As of 6/30/18 First Trust Advisors L.P

6 FTA BALANCED CLOSED-END FUND STRATEGY STATISTICS Performance Based Statistics: (Since Inception) Strategy Benchmark - Blend of the following indices: Pure Gross-of-Fees Net-of-Fees Blended Benchmark Standard Deviation % Morningstar U.S. All Equity Closed-End Funds Index (60%); Morningstar U.S. All Taxable Fixed-Income Index (40%) Risk/Reward Scatterplot Since inception Upside/Downside Scatterplot Since inception Beta Alpha R-Squared Sharpe Ratio Annualized Returns % 10 Upside % 100 Upside Capture Ratio Downside Capture Ratio Annualized Standard Deviation % Downside % Pure Gross-of-Fees Net-of-Fees Blended Benchmark Financial Terms Standard Deviation a measure of price variability (risk) over a period of time. A higher deviation indicates more variability in returns from month to month. Beta a measure of a portfolio's volatility (systematic risk) compared to an appropriate benchmark index. Alpha measure of performance of a portfolio after adjusting for risk. R-Squared indicates whether the comparison index is an appropriate benchmark based on correlation. Generally an R-Squared above 70 is desirable. Sharpe Ratio quantifies risk-adjusted performance by measuring the excess return per unit of risk. A higher Sharpe Ratio suggests better risk-adjusted performance. Upside Capture Ratio indicates a portfolio's performance in up-markets. For example, a ratio of 120 indicates that a portfolio performed 20% better than the benchmark in up-markets for a specified period. Downside Capture Ratio indicates a portfolio's performance in down-markets. For example, a ratio of 80 indicates that a portfolio declined only 80% as much as the benchmark in down-markets for a specified period. Weighted Average Distribution Rate The average distribution rate, weighted in proportion to the dollar amount that is invested in the portfolio. Weighted Average Premium/(Discount) The average premium/discount, weighted in proportion to the dollar amount that is invested in the portfolio. Weighted Average Credit Quality The average credit quality, weighted in proportion to the dollar amount that is invested in the portfolio. Weighted Average Effective Maturity Is a weighted average of all the maturities of the bonds in a portfolio, computed by weighting each bond s effective maturity by the market value of the security. Average effective maturity takes into consideration all mortgage prepayments, puts and adjustable coupons. Weighted Average Option Adj. Portfolio Duration The duration is a time measure of a bond's interest-rate sensitivity, based on the weighted average of the time periods over which a bond's cash flows accrue to the bondholder. Weighted Average Leverage Option Adj. Portfolio Duration The duration is a time measure of a bond's interest-rate sensitivity, based on the weighted average of the time periods over which a bond's cash flows, including leverage, accrue to the bondholder. Weighted Average Fund Leverage The average Fund Leverage, weighted in proportion to the dollar amount that is invested in the portfolio. Credit ratings are by Standard & Poor s and are unaudited. A credit rating is an assessment of the creditworthiness of an issuer with respect to debt obligations. Standard & Poor s ratings are measured on a scale ranging from AAA (highest) to D (lowest). Sub investment-grade ratings are those rated BB+ and lower. Investment-grade ratings are those rated BBB- or higher. As of 6/30/18 First Trust Advisors L.P