Edgar Filing: FIRST TRUST ENHANCED EQUITY INCOME FUND

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES

Investment Company Act file number 811-21586
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First Trust Enhanced Equity Income Fund
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(Exact name of registrant as specified in charter)

120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Address of principal executive offices) (Zip code)

W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Name and address of agent for service)

registrant's telephone number, including area code: (630) 765-8000
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2011
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.

ITEM 1. REPORTS TO STOCKHOLDERS.

The Report to Shareholders is attached herewith.

SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED
JUNE 30, 2011

FIRST TRUST
ENHANCED EQUITY
INCOME FUND

FIRST TRUST

CHARTWELL INVESTMENT PARTNERS
INSTITUTIONAL AND PRIVATE ASSET MANAGEMENT

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TABLE OF CONTENTS
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FIRST TRUST ENHANCED EQUITY INCOME FUND (FFA)
SEMI-ANNUAL REPORT
JUNE 30, 2011

Shareholder Letter........................................................... 1
At A Glance.................................................................. 2
Portfolio Commentary......................................................... 3
Portfolio of Investments..................................................... 5
Statement of Assets and Liabilities.......................................... 11
Statement of Operations...................................................... 12
Statements of Changes in Net Assets.......................................... 13
Financial Highlights......................................................... 14
Notes to Financial Statements................................................ 15
Additional Information....................................................... 21

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and/or Chartwell Investment Partners, L.P. ("Chartwell"
or the "Sub-Advisor") and their respective representatives, taking into account
the information currently available to them. Forward-looking statements include
all statements that do not relate solely to current or historical fact. For
example, forward-looking statements include the use of words such as
"anticipate," "estimate," "intend," "expect," "believe," "plan," "may,"
"should," "would" or other words that convey uncertainty of future events or
outcomes.

Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the First Trust Enhanced Equity Income Fund (the "Fund") to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements.When evaluating the information
included in this report, you are cautioned not to place undue reliance on these
forward-looking statements, which reflect the judgment of the Advisor and/or
Sub-Advisor and their respective representatives only as of the date hereof. We
undertake no obligation to publicly revise or update these forward-looking
statements to reflect events and circumstances that arise after the date hereof.

PERFORMANCE AND RISK DISCLOSURE

There is no assurance that the Fund will achieve its investment objective. The
Fund is subject to market risk, which is the possibility that the market values
of securities owned by the Fund will decline and that the value of the Fund
shares may therefore be less than what you paid for them. Accordingly, you can
lose money by investing in the Fund. See "Risk Considerations" in the Notes to
Financial Statements for a discussion of certain other risks of investing in the
Fund.

Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, net asset value and common share price will fluctuate and Fund shares,
when sold, may be worth more or less than their original cost.

HOW TO READ THIS REPORT

This report contains information that may help you evaluate your investment. It
includes details about the Fund and presents data and analysis that provide
insight into the Fund's performance and investment approach.

By reading the portfolio commentary by the portfolio management team of the
Fund, you may obtain an understanding of how the market environment affected the
Fund's performance. The statistical information that follows may help you
understand the Fund's performance compared to that of relevant market
benchmarks.

It is important to keep in mind that the opinions expressed by personnel of
Chartwell are just that: informed opinions. They should not be considered to be
promises or advice. The opinions, like the statistics, cover the period through
the date on the cover of this report. The risks of investing in the Fund are
spelled out in the prospectus, the statement of additional information, this
report and other Fund regulatory filings.

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SHAREHOLDER LETTER
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FIRST TRUST ENHANCED EQUITY INCOME FUND (FFA)
SEMI-ANNUAL LETTER FROM THE PRESIDENT
JUNE 30, 2011

Dear Shareholders:

I am pleased to present you with the semi-annual report for your investment in
First Trust Enhanced Equity Income Fund (the "Fund").

First Trust Advisors L.P. ("First Trust") has always believed that staying
invested in quality products and having a long-term horizon can help investors
reach their financial goals. Though the markets have been recovering from their
lows of 2008-2009, they have been somewhat choppy over the past several months.
However, successful investors understand that the success they have achieved is
typically because of their long-term investment perspective through all kinds of
markets.

The report you hold contains detailed information about your investment; a
portfolio commentary from the Fund's management team that provides a recap of
the period; a performance analysis and a market and Fund outlook. Additionally,
you will find the Fund's financial statements for the six months this report
covers. I encourage you to read this document and discuss it with your financial
advisor.

First Trust has been through many types of markets. That's why we remain
committed to being a long-term investor and investment manager and to bringing
you quality investment solutions regardless of the inevitable volatility the
market experiences. We offer a variety of products that may fit many financial
plans to help those investors seeking long-term investment success. You may want
to talk to your advisor about the other investments First Trust offers that
might also fit your financial goals.

At First Trust we continue to be committed to making available up-to-date
information about your investments so you and your financial advisor have
current information on your portfolio. We value our relationship with you, and
we thank you for the opportunity to assist you in achieving your financial
goals. I look forward to the remainder of 2011 and to the next edition of your
Fund's report.

Sincerely,

/s/ James A. Bowen

James A. Bowen
President of First Trust Enhanced Equity Income Fund

Page 1

FIRST TRUST ENHANCED EQUITY INCOME FUND
"AT A GLANCE"
AS OF JUNE 30, 2011 (UNAUDITED)

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FUND STATISTICS
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Symbol on New York Stock Exchange FFA
Common Share Price $12.33
Common Share Net Asset Value ("NAV") $13.46
Premium (Discount) to NAV (8.40)%
Net Assets Applicable to Common Shares $268,801,468
Current Quarterly Distribution per Common Share (1) $0.225
Current Annualized Distribution per Common Share $0.900
Current Distribution Rate on Closing Common Share Price (2) 7.30%
Current Distribution Rate on NAV (2) 6.69%
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COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
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Common Share Price NAV
6/30/2010 10.15 11.29
7/2/2010 9.92 11.22
7/9/2010 10.54 11.84
7/16/2010 10.44 11.72
7/23/2010 11.04 12.14
7/30/2010 11.17 12.18
8/6/2010 11.40 12.34
8/13/2010 11.23 11.93
8/20/2010 11.27 11.86
8/27/2010 11.16 11.81
9/3/2010 11.48 12.21
9/10/2010 11.65 12.22
9/17/2010 11.91 12.41
9/24/2010 11.64 12.38
10/1/2010 11.92 12.42
10/8/2010 11.76 12.64
10/15/2010 11.80 12.73
10/22/2010 11.83 12.74
10/29/2010 11.95 12.70
11/5/2010 12.26 13.04
11/12/2010 11.86 12.81
11/19/2010 11.79 12.89
11/26/2010 11.80 12.81
12/3/2010 12.06 13.09
12/10/2010 12.18 13.24
12/17/2010 11.80 13.26
12/23/2010 12.40 13.17
12/31/2010 12.63 13.20
1/7/2011 12.66 13.29
1/14/2011 12.49 13.41
1/21/2011 12.25 13.39
1/28/2011 12.33 13.37
2/4/2011 12.47 13.70
2/11/2011 12.57 13.86
2/18/2011 12.72 14.03
2/25/2011 12.55 13.79
3/4/2011 12.48 13.80
3/11/2011 12.39 13.62
3/18/2011 12.11 13.40
3/25/2011 12.28 13.50
4/1/2011 12.54 13.69
4/8/2011 12.48 13.75
4/15/2011 12.41 13.71
4/21/2011 12.60 13.83
4/29/2011 12.84 14.08
5/6/2011 12.66 13.90
5/13/2011 12.62 13.88
5/20/2011 12.56 13.83
5/27/2011 12.71 13.80
6/3/2011 12.40 13.45
6/10/2011 12.16 13.18
6/17/2011 12.09 13.19
6/24/2011 11.90 13.01
6/30/2011 12.33 13.46

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PERFORMANCE
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Average Annual Total Return
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6 Months Ended 1 Year Ended 5 Years Ended Inception (8/26/2004)
6/30/2011 6/30/2011 6/30/2011 to 6/30/2011

FUND PERFORMANCE (3)
NAV 5.66% 27.99% 3.56% 4.29%
Market Value 1.16% 30.41% 3.11% 2.27%

INDEX PERFORMANCE
S&P 500 Index 6.02% 30.69% 2.94% 4.77%
BXM Index 2.42% 19.52% 2.32% 3.73%
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% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
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Exxon Mobil Corp. 3.6%
International Business Machines Corp. 2.9
Bristol-Myers Squibb Co. 2.8
Pfizer, Inc. 2.7
Occidental Petroleum Corp. 2.6
SPDR KBW Bank ETF 2.4
JPMorgan Chase & Co. 2.2
Intel Corp. 2.2
Coca-Cola (The) Co. 2.0
Oracle Corp. 2.0
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Total 25.4%
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% OF TOTAL
SECTOR CLASSIFICATION INVESTMENTS
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Information Technology 16.3%
Financials 16.0
Energy 14.5
Industrial 13.0
Consumer Staples 9.2
Consumer Discretionary 8.8
Health Care 8.4
Materials 6.4
Telecommunication Services 4.1
Utilities 2.3
Other 1.0
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Total 100.0%
======

(1) Most recent distribution paid or declared through 6/30/2011. Subject to
change in the future.

(2) Distribution rates are calculated by annualizing the most recent
distribution paid or declared through the report date and then dividing by
Common Share price or NAV, as applicable, as of 6/30/2011. Subject to
change in the future.

(3) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan and changes in NAV per share for net asset
value returns and changes in Common Share price for market value returns.
Total returns do not reflect sales load and are not annualized for periods
less than one year. Past performance is not indicative of future results.

Page 2

PORTFOLIO COMMENTARY

FIRST TRUST ENHANCED EQUITY INCOME FUND (FFA)
SEMI-ANNUAL REPORT
JUNE 30, 2011

SUB-ADVISOR

Chartwell Investment Partners, L.P. ("Chartwell") is an employee-owned
investment advisory firm founded on April 1, 1997 by nine investment
professionals from Delaware Investment Advisers. The firm is 75% owned by the
partners and employees of Chartwell and 25% owned by a limited partnership
comprised of three passive investors in the Philadelphia area. There are no
affiliates at this time. The firm is a research-based equity and fixed-income
manager with a disciplined, team-oriented investment process.

Timothy J. Riddle, an executive with 31 years of investment industry experience,
is the Chief Executive Officer of Chartwell. Michael J. McCloskey, an executive
with 23 years of management experience, serves as President. G. Gregory Hagar is
Chartwell's Chief Financial Officer and Chief Compliance Officer. He has 22
years of related experience.

PORTFOLIO MANAGEMENT TEAM

BERNARD P. SCHAFFER
MANAGING PARTNER, SENIOR PORTFOLIO MANAGER

Mr. Schaffer is a founding partner of Chartwell and has 39 years of investment
industry experience. He serves as senior portfolio manager for Chartwell's
closed-end fund and hedged large-cap equity strategies. As the lead portfolio
manager for the Fund since 2007, he focuses on securities in the Energy,
Financials and Consumer Staples sectors. He was employed as a Senior Portfolio
Manager at Delaware Investment Advisers from 1990 to 1997, managing two
closed-end equity income funds that utilized option strategies to generate
portfolio gains. Mr. Schaffer earned a Bachelor's degree in Economics from
Villanova University and an MBA from the University of Pennsylvania's Wharton
School.

DOUGLAS W. KUGLER, CFA
PRINCIPAL, PORTFOLIO MANAGER

Mr. Kugler joined Chartwell in 2003 as a portfolio manager on the large-cap
equity portfolio management team and has 13 years of investment industry
experience. His areas of focus include the Transportation and Consumer
Discretionary sectors of the market. He has been a portfolio manager for the
Fund since 2007. 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, 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. Prior
to joining Morgan Stanley, he was an Assistant Vice President and Senior
Accounting Officer at Provident Financial Processing Corporation. 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.

KEVIN A. MELICH, CFA
MANAGING PARTNER, SENIOR PORTFOLIO MANAGER

Mr. Melich is a founding partner of Chartwell and has 46 years of investment
industry experience. He is a member of Chartwell's large-cap equity portfolio
management team and implements portfolio management decisions for high-yield
equity institutional portfolios, including the Fund. He has been a portfolio
manager for the Fund since 2007. His areas of focus are in the Automotive,
Machinery, Office Electronics and REITs sectors. He was employed as a Senior
Portfolio Manager at Delaware Investment Advisers from 1983 to 1997. There he
managed over $1.6 billion for institutional accounts in the value style. From
1979 to 1983, Mr. Melich was a Partner with the economics consulting firm, A.B.
Laffer Associates. From 1964 to 1979, he was the Senior Investment Officer and
Manager of the Trust and Investment Division of Security Trust Company. Mr.
Melich holds the Chartered Financial Analyst designation and is a member of the
CFA Institute and the CFA Society of Philadelphia. He earned a Bachelor of
Science degree in Economics from St. John Fisher College.

COMMENTARY

FIRST TRUST ENHANCED EQUITY INCOME FUND

The investment objective of First Trust Enhanced Equity Income Fund (the "Fund")
is to provide a high level of current income and gains and, to a lesser extent,
capital appreciation. The Fund pursues its investment objective by investing in
a diversified portfolio of equity securities. Under normal market conditions,
the Fund pursues an integrated investment strategy in which the Fund invests
substantially all of its managed assets in a diversified portfolio of common
stocks of U.S. corporations and U.S. dollar-denominated equity securities of
foreign issuers. These securities are traded on U.S. securities exchanges. In
addition, on an ongoing and consistent basis, the Fund will write (sell) covered
call options on a portion of the Fund's managed assets. There can be no
assurance that the Fund's investment objective will be achieved.

Page 3

PORTFOLIO COMMENTARY - (Continued)

FIRST TRUST ENHANCED EQUITY INCOME FUND (FFA)
SEMI-ANNUAL REPORT
JUNE 30, 2011

MARKET RECAP

As measured on a total return basis, the Standard & Poor's 500 Index ("S&P 500"
or "Index") rose 6.0% during the six-month period ended June 30, 2011. The Index
exhibited volatility during the period while trading within a fairly narrow
band. At the start of 2011 through mid-February the S&P 500 rose 7.1%, only to
give virtually the entire advance back by mid-March. Another rally saw the S&P
500 rise 9.1% by the end of April, but once again the market fell back and lost
the majority of those gains by mid-June to stand up only 1.5% for the year.
However, a quick and sharp advance of 4.5% over the last two weeks of the
semi-annual period brought the S&P 500 to its closing level of up 6.0% for the
six-month period. These swings in the market reflected the variations in
investor sentiment toward the direction of the U.S. and global economies.
Despite stronger-than-expected corporate earnings reports during the period,
there were a myriad of cross-currents buffeting sentiment regarding the economy
and the stock market. There were questions about the impact of the end of
Federal Reserve Board quantitative easing measures, the strength of China's
economy, the European debt crisis re-appearing at times, the U.S. debt limit
negotiations and the disasters that befell Japan.

PERFORMANCE ANALYSIS

The net asset value ("NAV") total return1 of the Fund for the six-month period
ending June 30, 2011 was 5.66% and the market value total return1 of the Fund
was 1.16%. Both these returns were inclusive of dividends paid during the
period. During this time period, the S&P 500 returned 6.02%. While measures of
the stock market's volatility have declined significantly over the last two
years, the Fund continued to take advantage of volatility in the market when it
could and sold call options on a significant percentage of the Fund's holdings.
This supplemented the portfolio's dividend stream and provided support to the
Fund's performance. We continue to believe the strategy of combining high
dividend-paying stocks and an option overwrite program is an excellent long-term
strategy. Similar to 2010, smaller-capitalization stocks outperformed
larger-capitalization stocks during the first half of this year. This can be
seen in a Bank of America Merrill Lynch report which showed that the equally
weighted S&P 500 outperformed the S&P 500 (which is capitalization weighted) by
2.12% (on a price only basis). In addition, growth outperformed value during the
period. The Fund's portfolio has been, and will continue to be, focused in
higher quality, large-capitalization dividend-paying stocks which will, in most
periods, tilt the portfolio towards a value orientation. Thus, a market favoring
small-cap and growth stocks will act as a headwind for relative performance.
These headwinds were overcome during the period due to positive contributions
from stock options transactions and stock selection in the Financials,
Technology and Materials groups. Stocks such as NYSE Euronext (up 26.4%),
Limited Brands (up 30.2%), Accenture PLC (up 25.6%) and Agilent Technologies (up
23.4%) are examples of the positive stock selection. Lagging stock selection in
the Energy and Consumer Discretionary groups, as well as an underweight in the
Healthcare group, which was the second best-performing group in the Index,
contributed negatively to relative performance.

MARKET AND FUND OUTLOOK

As we have stated in the past, the stock market is a forward-looking indicator.
Given the choppiness of the market over the last six months, we believe that the
market is struggling to decide how the economy and corporate profits will
perform over the next six to twelve months. While corporate profits have
continued to climb and surprise on the upside, the rate of that growth has
slowed and profit margins have risen to near all-time highs. The question is
where are profits headed? Measures of economic activity released in late spring
and early summer declined, indicating that the economy had hit a "soft patch". A
question the market has been wrestling with is if this "soft patch" is just a
temporary slowdown brought about by discreet events such as the Japanese
disasters and higher gasoline prices or is it the harbinger of a double-dip
recession? We are inclined to take the positive view and we believe that
corporate profits will continue to rise and thereby drive continued reinvestment
by businesses which will lead to modest employment growth. However, it is likely
that any such economic growth will continue to be muted when compared to
previous cycles. With the stock market up substantially from its March 2009 lows
and the number of unresolved issues that the market is wrestling with, we are
prepared to react as the markets change. We will continue to manage the Fund
with the dual objectives of earning dividend income and options gains while
seeking capital appreciation opportunities over the market cycle.

1 Total return is based on the combination of reinvested dividends, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan and changes in NAV per share for net asset
value returns and changes in Common Share price for market value returns.
Total returns do not reflect sales load and are not annualized for periods
less than one year. Past performance is not indicative of future results.

Page 4

FIRST TRUST ENHANCED EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2011 (UNAUDITED)

SHARES DESCRIPTION VALUE
----------- ---------------------------------------------------- -------------
COMMON STOCKS - 89.6%

AEROSPACE & DEFENSE - 4.1%
75,900 Honeywell International, Inc. ...................... $ 4,522,881
40,000 Raytheon Co. (b).................................... 1,994,000
50,000 United Technologies Corp. .......................... 4,425,500
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10,942,381
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AIR FREIGHT & LOGISTICS - 1.4%
50,000 United Parcel Service, Inc., Class B................ 3,646,500
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BEVERAGES - 3.8%
80,000 Coca-Cola (The) Co. (b)............................. 5,383,200
70,000 PepsiCo, Inc. ...................................... 4,930,100
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10,313,300
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CAPITAL MARKETS - 3.1%
26,300 Ameriprise Financial, Inc. ......................... 1,516,984
40,000 Bank of New York Mellon (The) Corp. ................ 1,024,800
24,000 BlackRock, Inc. .................................... 4,603,440
70,000 Horizon Technology Finance Corp. ................... 1,108,100
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8,253,324
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CHEMICALS - 4.0%
75,000 Dow Chemical (The) Co. (b).......................... 2,700,000
80,000 E.I. Du Pont de Nemours & Co. ...................... 4,324,000
40,000 PPG Industries, Inc. (b)............................ 3,631,600
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10,655,600
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COMMERCIAL BANKS - 0.8%
35,000 PNC Financial Services Group, Inc. (b).............. 2,086,350
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COMMERCIAL SERVICES & SUPPLIES - 0.8%
55,000 Waste Management, Inc. (b).......................... 2,049,850
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COMMUNICATIONS EQUIPMENT - 2.9%
245,200 Cisco Systems, Inc. ................................ 3,827,572
70,000 QUALCOMM, Inc. ..................................... 3,975,300
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7,802,872
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COMPUTERS & PERIPHERALS - 1.2%
90,000 Hewlett-Packard Co. ................................ 3,276,000
-------------
DIVERSIFIED FINANCIAL SERVICES - 2.2%
147,000 JPMorgan Chase & Co. ............................... 6,018,180
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DIVERSIFIED TELECOMMUNICATION SERVICES - 3.2%
62,100 AT&T, Inc. ......................................... 1,950,561
240,005 Frontier Communications Corp. ...................... 1,936,840
130,000 Verizon Communications, Inc. ....................... 4,839,900
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8,727,301
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ELECTRIC UTILITIES - 1.5%
100,000 Southern Co. ....................................... 4,038,000
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See Notes to Financial Statements Page 5

FIRST TRUST ENHANCED EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (Continued)
JUNE 30, 2011 (UNAUDITED)

SHARES DESCRIPTION VALUE
----------- ---------------------------------------------------- -------------
COMMON STOCKS - (Continued)

ELECTRICAL EQUIPMENT - 1.4%
69,100 Emerson Electric Co. ............................... $ 3,886,875
-------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 0.8%
60,000 TE Connectivity, Ltd. .............................. 2,205,600
-------------
ENERGY EQUIPMENT & SERVICES - 1.0%
30,000 Schlumberger, Ltd. ................................. 2,592,000
-------------
FOOD PRODUCTS - 0.8%
40,000 Kellogg Co. ........................................ 2,212,800
-------------
HOTELS, RESTAURANTS & LEISURE - 2.9%
65,000 Carnival Corp. ..................................... 2,445,950
35,000 McDonald's Corp. ................................... 2,951,200
43,000 Starwood Hotels & Resorts Worldwide, Inc. .......... 2,409,720
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7,806,870
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INDUSTRIAL CONGLOMERATES - 2.5%
40,000 3M Co. (b).......................................... 3,794,000
150,000 General Electric Co. ............................... 2,829,000
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6,623,000
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INSURANCE - 3.9%
120,000 Lincoln National Corp. (b).......................... 3,418,800
96,795 MetLife, Inc. ...................................... 4,246,397
45,000 Prudential Financial, Inc. ......................... 2,861,550
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10,526,747
-------------
IT SERVICES - 4.7%
44,000 Accenture PLC (b)................................... 2,658,480
42,000 Automatic Data Processing, Inc. (b)................. 2,212,560
45,000 International Business Machines Corp. .............. 7,719,750
-------------
12,590,790
-------------
LEISURE EQUIPMENT & PRODUCTS - 1.1%
110,000 Mattel, Inc. (b).................................... 3,023,900
-------------
LIFE SCIENCES TOOLS & SERVICES - 0.9%
48,600 Agilent Technologies, Inc. (b) (c).................. 2,483,946
-------------
MACHINERY - 2.1%
40,000 Caterpillar, Inc. .................................. 4,258,400
14,000 Cummins, Inc. (b)................................... 1,448,860
-------------
5,707,260
-------------
MARINE - 0.8%
150,000 Seaspan Corp. ...................................... 2,191,500
-------------
MEDIA - 1.2%
250,000 Regal Entertainment Group, Class A (b).............. 3,087,500
-------------
METALS & MINING - 1.3%
65,000 Freeport-McMoRan Copper & Gold, Inc. (b)............ 3,438,500
-------------
MULTILINE RETAIL - 1.0%
60,000 Target Corp. ....................................... 2,814,600
-------------

Page 6 See Notes to Financial Statements

FIRST TRUST ENHANCED EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (Continued)
JUNE 30, 2011 (UNAUDITED)

SHARES DESCRIPTION VALUE
----------- ---------------------------------------------------- -------------
COMMON STOCKS - (Continued)

OIL, GAS & CONSUMABLE FUELS - 9.0%
40,000 Chevron Corp. (b)................................... $ 4,113,600
45,000 ConocoPhillips...................................... 3,383,550
120,000 Exxon Mobil Corp. .................................. 9,765,600
66,000 Occidental Petroleum Corp. ......................... 6,866,640
-------------
24,129,390
-------------
PAPER & FOREST PRODUCTS - 1.1%
100,000 International Paper Co. (b)......................... 2,982,000
-------------
PERSONAL PRODUCTS - 1.3%
120,000 Avon Products, Inc. ................................ 3,360,000
-------------
PHARMACEUTICALS - 7.4%
260,000 Bristol-Myers Squibb Co. (b)........................ 7,529,600
63,000 Merck & Co., Inc. .................................. 2,223,270
50,000 Novartis AG, ADR.................................... 3,055,500
350,000 Pfizer, Inc. ....................................... 7,210,000
-------------
20,018,370
-------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 1.4%
100,900 Annaly Capital Management, Inc. .................... 1,820,236
250,000 MFA Mortgage Investments, Inc. ..................... 2,010,000
-------------
3,830,236
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.8%
270,000 Intel Corp. ........................................ 5,983,200
110,000 Microchip Technology, Inc. ......................... 4,170,100
-------------
10,153,300
-------------
SOFTWARE - 2.9%
100,000 Microsoft Corp. .................................... 2,600,000
160,000 Oracle Corp. ....................................... 5,265,600
-------------
7,865,600
-------------
SPECIALTY RETAIL - 2.4%
70,000 Home Depot (The), Inc. ............................. 2,535,400
100,000 Limited Brands, Inc. (b)............................ 3,845,000
-------------
6,380,400
-------------
TOBACCO - 3.3%
160,000 Altria Group, Inc. (b).............................. 4,225,600
70,000 Philip Morris International, Inc. .................. 4,673,900
-------------
8,899,500
-------------
WATER UTILITIES - 0.8%
74,200 American Water Works Co., Inc. ..................... 2,185,190
-------------
WIRELESS TELECOMMUNICATION SERVICES - 0.8%
80,000 Vodafone Group PLC, ADR............................. 2,137,600
-------------
TOTAL COMMON STOCKS................................. 240,943,132
(Cost $223,457,068) -------------

See Notes to Financial Statements Page 7

FIRST TRUST ENHANCED EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (Continued)
JUNE 30, 2011 (UNAUDITED)

SHARES/
UNITS DESCRIPTION VALUE
----------- ---------------------------------------------------- -------------
COMMON STOCKS - BUSINESS DEVELOPMENT COMPANIES - 2.2%

CAPITAL MARKETS - 2.2%
320,000 Apollo Investment Corp. ............................ $ 3,267,200
110,000 Solar Capital, Ltd. ................................ 2,715,900
-------------
TOTAL COMMON STOCKS - BUSINESS DEVELOPMENT COMPANIES 5,983,100
(Cost $6,122,850) -------------

MASTER LIMITED PARTNERSHIPS - 4.6%

OIL, GAS & CONSUMABLE FUELS - 4.6%
60,000 Copano Energy, LLC.................................. 2,053,200
77,000 Energy Transfer Partners, L.P. ..................... 3,762,990
40,000 Enterprise Products Partners, L.P. ................. 1,728,400
60,000 Magellan Midstream Partners, L.P. .................. 3,583,800
25,000 TC Pipelines, L.P. ................................. 1,194,250
-------------
TOTAL MASTER LIMITED PARTNERSHIPS................... 12,322,640
(Cost $7,070,362) -------------

EXCHANGE-TRADED FUNDS - 3.3%

CAPITAL MARKETS - 3.3%
264,200 SPDR KBW Bank ETF................................... 6,338,158
20,000 SPDR S&P 500 ETF Trust.............................. 2,639,400
-------------
TOTAL EXCHANGE-TRADED FUNDS......................... 8,977,558
(Cost $6,491,608) -------------

CONVERTIBLE PREFERRED SECURITIES - 0.2%

AUTOMOBILES - 0.2%
10,000 General Motors Co., Ser B 4.75%..................... 487,400
-------------
TOTAL CONVERTIBLE PREFERRED SECURITIES.............. 487,400
(Cost $496,012) -------------

TOTAL INVESTMENTS - 99.9%........................... 268,713,830
(Cost $243,637,900) (d) -------------

NUMBER OF
CONTRACTS DESCRIPTION VALUE
----------- ---------------------------------------------------- -------------
CALL OPTIONS WRITTEN - (0.4%)

3M Co. Call
200 @ 95 due July 11.................................... (20,000)
-------------
Accenture PLC Call
220 @ 62.5 due July 11.................................. (6,600)
-------------
Agilent Technologies, Inc. Call
200 @ 50 due July 11.................................... (35,800)
-------------
Altria Group, Inc. Call
800 @ 28 due July 11.................................... (1,600)
-------------
Automatic Data Processing, Inc. Call
120 @ 52.5 due July 11.................................. (7,800)
-------------

Page 8 See Notes to Financial Statements

FIRST TRUST ENHANCED EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (Continued)
JUNE 30, 2011 (UNAUDITED)

NUMBER OF
CONTRACTS DESCRIPTION VALUE
----------- ---------------------------------------------------- -------------
CALL OPTIONS WRITTEN - (Continued)

Bristol-Myers Squibb Co. Call
1,000 @ 29 due July 11.................................... $ (33,000)
-------------
Chevron Corp. Call
200 @ 105 due July 11................................... (11,000)
-------------
Coca-Cola (The) Co. Call
200 @ 67.5 due July 11.................................. (12,200)
-------------
Cummins, Inc. Call
70 @ 100 due July 11................................... (32,900)
-------------
Dow Chemical (The) Co. Call
250 @ 37 due July 11.................................... (6,750)
-------------
Freeport-McMoRan Copper & Gold, Inc. Call
250 @ 52.5 due July 11.................................. (38,500)
-------------
International Paper Co. Call
250 @ 29 due July 11.................................... (31,750)
-------------
Limited Brands, Inc. Call
250 @ 38 due July 11.................................... (31,250)
-------------
Lincoln National Corp. Call
250 @ 29 due July 11.................................... (10,750)
-------------
Mattel, Inc. Call
600 @ 28 due July 11.................................... (30,000)
-------------
PNC Financial Services Group, Inc. Calls
100 @ 57.5 due July 11.................................. (23,300)
150 @ 60 due July 11.................................... (10,050)
-------------
(33,350)
-------------
PPG Industries, Inc. Call
200 @ 90 due July 11.................................... (35,800)
-------------
Raytheon Co. Call
200 @ 50 due July 11.................................... (6,600)
-------------
Regal Entertainment Group, Class A Call
500 @ 12.5 due July 11.................................. (10,000)
-------------
S&P 500 Index Call (e)
900 @ 1330 due July 11.................................. (749,700)
-------------
Waste Management, Inc. Call
300 @ 38 due July 11.................................... (6,000)
-------------
TOTAL CALL OPTIONS WRITTEN.......................... (1,151,350)
(Premiums received $572,630) -------------

NET OTHER ASSETS AND LIABILITIES - 0.5%............. 1,238,988
-------------
NET ASSETS - 100.0%................................. $268,801,468
-------------

See Notes to Financial Statements Page 9

FIRST TRUST ENHANCED EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (Continued)
JUNE 30, 2011 (UNAUDITED)

(a) All percentages shown in the Portfolio of Investments are based on net
assets.

(b) Call options were written on a portion of the common stock position and
are fully covered by the common stock position.

(d) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2011, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $38,503,556 and the aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over value was $13,427,626.

(e) Call options on securities indices were written on a portion of the common
stock positions that were not used to cover call options on individual
equity securities held in the Fund's portfolio.

ADR American Depositary Receipt

VALUATION INPUTS

A summary of the inputs used to value the Fund's investments as of June 30, 2011
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):

ASSETS TABLE

LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2011 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------

Common Stocks*..................................... $240,943,132 $240,943,132 $ -- $ --
Common Stocks - Business Development Companies*.... 5,983,100 5,983,100 -- --
Master Limited Partnerships*....................... 12,322,640 12,322,640 -- --
Exchange-Traded Funds*............................. 8,977,558 8,977,558 -- --
Convertible Preferred Securities*.................. 487,400 487,400 -- --
------------ ------------ ------------ ------------
Total Investments.................................. $268,713,830 $268,713,830 $ -- $ --
============ ============ ============ ============

LIABILITIES TABLE

LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2011 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Call Options Written............................... $ (1,151,350) $ (1,151,350) $ -- $ --
============ ============ ============ ============

*See the Portfolio of Investments for industry breakdown.

Page 10 See Notes to Financial Statements

FIRST TRUST ENHANCED EQUITY INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2011 (UNAUDITED)

ASSETS:

Investments, at value
(Cost $243,637,900)......................................................................... $268,713,830
Cash........................................................................................... 764,344
Prepaid expenses............................................................................... 18,123
Receivables:
Dividends................................................................................... 763,824
Interest.................................................................................... 161
------------
Total Assets................................................................................ 270,260,282
------------
LIABILITIES:
Options written, at value (Premiums received $572,630)......................................... 1,151,350
Payables:
Investment advisory fees.................................................................... 218,323
Audit and tax fees.......................................................................... 27,307
Administrative fees......................................................................... 19,599
Custodian fees.............................................................................. 15,462
Printing fees............................................................................... 11,692
Legal fees.................................................................................. 8,868
Transfer agent fees......................................................................... 3,097
Trustees' fees and expenses................................................................. 159
Other liabilities.............................................................................. 2,957
------------
Total Liabilities........................................................................... 1,458,814
------------
NET ASSETS..................................................................................... $268,801,468
============
NET ASSETS CONSIST OF:
Paid-in capital................................................................................ $331,404,201
Par value...................................................................................... 199,732
Accumulated net investment income (loss)....................................................... (5,973,384)
Accumulated net realized gain (loss) on investments and written options transactions........... (81,326,291)
Net unrealized appreciation (depreciation) on investments and written options.................. 24,497,210
------------
NET ASSETS..................................................................................... $268,801,468
============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share)........................... $ 13.46
============
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized).... 19,973,164
============

See Notes to Financial Statements Page 11

FIRST TRUST ENHANCED EQUITY INCOME FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2011 (UNAUDITED)

INVESTMENT INCOME:

Dividends (net of foreign withholding tax of $17,725).......................................... $ 4,139,687
Interest....................................................................................... 529
------------
Total investment income..................................................................... 4,140,216
------------
EXPENSES:
Investment advisory fees....................................................................... 1,347,426
Administrative fees............................................................................ 120,518
Printing fees.................................................................................. 40,442
Custodian fees................................................................................. 24,981
Audit and tax fees............................................................................. 22,106
Trustees' fees and expenses.................................................................... 19,533
Transfer agent fees............................................................................ 17,808
Legal fees..................................................................................... 4,433
Other.......................................................................................... 27,502
------------
Total expenses.............................................................................. 1,624,749
------------
NET INVESTMENT INCOME (LOSS)................................................................... 2,515,467
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments................................................................................. 3,746,574
Written option transactions (a)............................................................. 1,316,986
------------
Net realized gain (loss)....................................................................... 5,063,560
------------
Net change in unrealized appreciation (depreciation) on:
Investments................................................................................. 6,967,625
Written options held (a).................................................................... (371,708)
------------
Net change in unrealized appreciation (depreciation)........................................... 6,595,917
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)........................................................ 11,659,477
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................... $ 14,174,944
============

(a) Primary risk exposure is equity option contracts.

Page 12 See Notes to Financial Statements

FIRST TRUST ENHANCED EQUITY INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS

SIX MONTHS
ENDED YEAR
6/30/2011 ENDED
(UNAUDITED) 12/31/2010
------------ ------------
OPERATIONS:

Net investment income (loss)....................................................... $ 2,515,467 $ 4,718,809
Net realized gain (loss)........................................................... 5,063,560 5,262,366
Net change in unrealized appreciation (depreciation)............................... 6,595,917 25,161,649
------------ ------------
Net increase (decrease) in net assets resulting from operations.................... 14,174,944 35,142,824
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.............................................................. (8,987,924) (11,824,976)
Net realized gain.................................................................. -- --
Return of capital.................................................................. -- (5,751,408)
------------ ------------
Total distributions to shareholders................................................ (8,987,924) (17,576,384)
------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from Common Shares reinvested............................................. -- --
------------ ------------
Net increase (decrease) in net assets resulting from capital transactions.......... -- --
------------ ------------
Total increase (decrease) in net assets............................................ 5,187,020 17,566,440
NET ASSETS:
Beginning of period................................................................ 263,614,448 246,048,008
------------ ------------
End of period...................................................................... $268,801,468 $263,614,448
============ ============
Accumulated net investment income (loss) at end of period.......................... $ (5,973,384) $ 499,073
============ ============
CAPITAL TRANSACTIONS WERE AS FOLLOWS:
Common Shares at beginning of period............................................... 19,973,164 19,973,164
Common Shares issued as reinvestment under the Dividend Reinvestment Plan.......... -- --
------------ ------------
Common Shares at end of period..................................................... 19,973,164 19,973,164
============ ============

See Notes to Financial Statements Page 13

FIRST TRUST ENHANCED EQUITY INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD

SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
6/30/2011 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/2010 12/31/2009 12/31/2008 12/31/2007 (a) 12/31/2006
----------- ---------- ---------- ---------- -------------- ----------

Net asset value, beginning of period.... $ 13.20 $ 12.32 $ 11.15 $ 18.38 $ 18.65 $ 18.99
--------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............ 0.13 0.24 0.20 0.42 0.14 0.02
Net realized and unrealized gain (loss). 0.58 1.52 1.93 (6.05) 1.24 1.24
--------- -------- -------- -------- -------- --------
Total from investment operations........ 0.71 1.76 2.13 (5.63) 1.38 1.26
--------- -------- -------- -------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income................... (0.45) (0.59) (0.19) (0.43) (0.14) (0.02)
Net realized gain....................... -- -- -- (0.10) (1.51) (1.58)
Return of capital....................... -- (0.29) (0.77) (1.07) -- --

--------- -------- -------- -------- -------- --------
Total from distributions................ (0.45) (0.88) (0.96) (1.60) (1.65) (1.60)
--------- -------- -------- -------- -------- --------
Net asset value, end of period.......... $ 13.46 $ 13.20 $ 12.32 $ 11.15 $ 18.38 $ 18.65
========= ======== ======== ======== ======== ========
Market value, end of period............. $ 12.33 $ 12.63 $ 11.70 $ 8.85 $ 16.14 $ 18.41
========= ======== ======== ======== ======== ========
Total return based on net asset value (b) 5.66% 15.50% 22.24% (30.54)% 8.19% 7.09%
========= ======== ======== ======== ======== ========
Total return based on market value (b).. 1.16% 16.37% 46.26% (37.22)% (3.76)% 17.26%
========= ======== ======== ======== ======== ========

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's).... $ 268,801 $263,614 $246,048 $222,675 $367,009 $372,576
Ratio of total expenses to average net
assets............................... 1.21% (c) 1.25% 1.34% 1.31% 1.21% 1.24%
Ratio of net investment income (loss) to
average net assets................... 1.87% (c) 1.90% 1.80% 2.80% 0.76% 0.13%
Portfolio turnover rate................. 24% 41% 74% 121% 174% 131%

-----------------------
(a) On September 14, 2007, Chartwell Investment Partners, L.P. became the
sub-advisor to the Fund.

(b) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan, and changes in net asset value per share
for net asset value returns and changes in Common Share price for market
value returns. Total returns do not reflect sales load and are not
annualized for periods less than one year. Past performance is not
indicative of future results.

Page 14 See Notes to Financial Statements

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

FIRST TRUST ENHANCED EQUITY INCOME FUND
JUNE 30, 2011 (UNAUDITED)

1. FUND DESCRIPTION

First Trust Enhanced Equity Income Fund (the "Fund") is a diversified,
closed-end management investment company organized as a Massachusetts business
trust on May 20, 2004, and is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Fund trades under the ticker symbol FFA on the New York Stock
Exchange ("NYSE").

The Fund's investment objective is to provide a high level of current income and
gains and, to a lesser extent, capital appreciation. The Fund pursues its
investment objective by investing in a diversified portfolio of equity
securities. Under normal market conditions, the Fund pursues an integrated
investment strategy in which the Fund invests substantially all of its managed
assets in a diversified portfolio of common stocks of U.S. corporations and U.S.
dollar-denominated equity securities of non-U.S. issuers, in each case that are
traded on U.S. securities exchanges, and on an ongoing and consistent basis
writes (sells) covered call options on a portion of the Fund's managed assets.
Managed assets means the average daily total asset value of the Fund minus the
sum of the Fund's liabilities, including the value of call options written
(sold). There can be no assurance that the Fund will achieve its investment
objective. The Fund may not be appropriate for all investors.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.

A. PORTFOLIO VALUATION:

The net asset value ("NAV") of the Common Shares of the Fund is determined daily
as of the close of regular trading on the NYSE, normally 4:00 p.m. Eastern time,
on each day the NYSE is open for trading. If the NYSE closes early on a
valuation day, the NAV is determined as of that time. Domestic debt securities
and foreign securities are priced using data reflecting the earlier closing of
the principal markets for those securities. The NAV per Common Share is
calculated by dividing the value of all assets of the Fund (including accrued
interest and dividends), less all liabilities (including accrued expenses, the
value of call options written (sold) and dividends declared but unpaid) by the
total number of Common Shares outstanding.

The Fund's investments are valued daily in accordance with valuation procedures
adopted by the Fund's Board of Trustees, and in accordance with provisions of
the 1940 Act. The following securities, for which accurate and reliable market
quotations are readily available, will be valued as follows:

Common stocks, master limited partnerships ("MLPs"), exchanged-traded
funds and other securities listed on any national or foreign exchange
(excluding the NASDAQ National Market ("NASDAQ") and the London Stock
Exchange Alternative Investment Market ("AIM")) are valued at the last
sale price on the exchange on which they are principally traded. If there
are no transactions on the valuation day, the securities are valued at the
mean between the most recent bid and asked prices.

Securities listed on the NASDAQ or the AIM are valued at the official
closing price. If there is no official closing price on the valuation day,
the securities are valued at the mean between the most recent bid and
asked prices.

Securities traded in the over-the-counter market are valued at their
closing bid prices.

Exchange-traded options and futures contracts are valued at the closing
price in the market where such contracts are principally traded. If no
closing price is available, exchange-traded options and futures contracts
are valued at the mean between the most recent bid and asked prices.
Over-the-counter options and futures contracts are valued at their closing
bid prices.

All market quotations used in valuing the Fund's securities are obtained from a
third party pricing service. If no quotation is received from a pricing service,
attempts will be made to obtain one or more broker quotes for the security. In
the event the pricing service does not provide a valuation, broker quotations
are not readily available, or the valuations received are deemed unreliable, the
Fund's Board of Trustees has designated First Trust Advisors L.P. ("First
Trust") to use a fair value method to value the Fund's securities. Additionally,
if events occur after the close of the principal markets for certain securities
(e.g., domestic debt and foreign securities) that could materially affect the
Fund's NAV, First Trust will use a fair value method to value the Fund's
securities. The use of fair value pricing is governed by valuation procedures
adopted by the Fund's Board of Trustees, and in accordance with the provisions
of the 1940 Act. As a general principle, the fair value of a security is the
amount which the Fund might reasonably expect to receive for the security upon
its current sale. However, in light of the judgment involved in fair valuations,
there can be no assurance that a fair value assigned to a particular security
will be the amount which the Fund might be able to receive upon its current
sale. Fair valuation of a security will be based on the consideration of all
available information, including, but not limited to, the following:

Page 15

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (Continued)
--------------------------------------------------------------------------------

FIRST TRUST ENHANCED EQUITY INCOME FUND
JUNE 30, 2011 (UNAUDITED)

1) the type of security;

2) the size of the holding;

3) the initial cost of the security;

4) transactions in comparable securities;

5) price quotes from dealers and/or pricing services;

6) relationships among various securities;

7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;

8) an analysis of the issuer's financial statements; and

9) the existence of merger proposals or tender offers that might affect the
value of the security.

If the securities in question are foreign securities, the following additional
information may be considered:

1) the value of similar foreign securities traded on other foreign markets;

2) ADR trading of similar securities;

3) closed-end fund trading of similar securities;

4) foreign currency exchange activity;

5) the trading prices of financial products that are tied to baskets of
foreign securities;

6) factors relating to the event that precipitated the pricing problem;

7) whether the event is likely to recur; and

8) whether the effects of the event are isolated or whether they affect
entire markets, countries or regions.

Short-term investments that mature in less than 60 days when purchased are
valued at amortized cost.

The Fund is subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:

o Level 1 - Level 1 inputs are quoted prices in active markets for
identical securities. An active market is a market in which
transactions for the security occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.

o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:

o Quoted prices for similar securities in active markets.

o Quoted prices for identical or similar securities in markets
that are non-active. A non-active market is a market where
there are few transactions for the security, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.

o Inputs other than quoted prices that are observable for the
security (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).

o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.

o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
security.

The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. A summary
of the inputs used to value the Fund's investments as of June 30, 2011, is
included with the Fund's Portfolio of Investments.

B. OPTION CONTRACTS:

The Fund may write (sell) covered call options ("options") on all or a portion
of the equity securities held in the Fund's portfolio and on securities indices
as determined to be appropriate by Chartwell Investment Partners, L.P.
("Chartwell" or the "Sub-Advisor"), consistent with the Fund's investment
objective. The number of options the Fund can write (sell) is limited by the
amount of equity securities the Fund holds in its portfolio. Options on
securities indices are designed to reflect price fluctuations in a group of
securities or segment of the securities market rather than price fluctuations in
a single security and are similar to options on single securities, except that
the exercise of securities index options requires cash settlement payments and
does not involve the actual purchase or sale of securities. The Fund will not
write (sell) "naked" or uncovered options. If certain equity securities held in
the Fund's portfolio are not covered by a related call option on the individual
equity security, securities index options may be written on all or a portion of
such uncovered securities. By writing (selling) options, the Fund seeks to
generate additional income, in the form of premiums received, for writing
(selling) the options, and to provide a partial hedge against a market decline
in the underlying equity security. When the Fund writes (sells) an option, an
amount equal to the premium received by the Fund is included in "Options
written, at value" on the Fund's Statement of Assets and Liabilities. Options

Page 16

FIRST TRUST ENHANCED EQUITY INCOME FUND
JUNE 30, 2011 (UNAUDITED)

are marked-to-market daily and their value will be affected by changes in the
value and dividend rates of the underlying equity securities, changes in
interest rates, changes in the actual or perceived volatility of the securities
markets and the underlying equity securities and the remaining time to the
options' expiration. The value of options may also be adversely affected if the
market for the options becomes less liquid or trading volume diminishes.

Options the Fund writes (sells) will either be exercised, expire or be cancelled
pursuant to a closing transaction. If the price of the underlying equity
security exceeds the option's exercise price, it is likely that the option
holder will exercise the option. If an option written (sold) by the Fund is
exercised, the Fund would be obligated to deliver the underlying equity security
to the option holder upon payment of the strike price. In this case, the option
premium received by the Fund will be added to the amount realized on the sale of
the underlying security for purposes of determining gain or loss. If the price
of the underlying equity security is less than the option's strike price, the
option will likely expire without being exercised. The option premium received
by the Fund will, in this case, be treated as short-term capital gain on the
expiration date of the option. The Fund may also elect to close out its position
in an option prior to its expiration by purchasing an option of the same series
as the option written (sold) by the Fund. Gain or loss on options is presented
separately as "Net realized gain (loss) on written option transactions" on the
Statement of Operations.

The options that the Fund writes (sells) give the option holder the right, but
not the obligation, to purchase a security from the Fund at the strike price on
or prior to the option's expiration date. The ability to successfully implement
the writing (selling) of covered call options depends on the ability of the
Sub-Advisor to predict pertinent market movements, which cannot be assured.
Thus, the use of options may require the Fund to sell portfolio securities at
inopportune times or for prices other than current market value, which may limit
the amount of appreciation the Fund can realize on an investment, or may cause
the Fund to hold a security that it might otherwise sell. As the writer (seller)
of a covered option, the Fund foregoes, during the option's life, the
opportunity to profit from increases in the market value of the security
covering the option above the sum of the premium and the strike price of the
option, but has retained the risk of loss should the price of the underlying
security decline. The writer (seller) of an option has no control over the time
when it may be required to fulfill its obligation as a writer (seller) of the
option. Once an option writer (seller) has received an exercise notice, it
cannot effect a closing purchase transaction in order to terminate its
obligation under the option and must deliver the underlying security to the
option holder at the exercise price.

The Fund is subject to equity price risk in the normal course of pursuing its
investment objective. Over-the-counter ("OTC") options have the risk of the
potential inability of counterparties to meet the terms of their contracts. The
Fund's maximum equity price risk for purchased options is limited to the premium
initially paid. In addition, certain risks may arise upon entering into option
contracts including the risk that an illiquid secondary market will limit the
Fund's ability to close out an option contract prior to the expiration date and
that a change in the value of the option contract may not correlate exactly with
changes in the value of the securities hedged.

C. SECURITIES TRANSACTIONS AND INVESTMENT INCOME:

Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income, if any, is
recorded daily on the accrual basis, including amortization of premiums and
accretion of discounts.

The Fund may hold publicly-traded MLPs and real estate investment trusts
("REITs"). Distributions from such investments may include a return of capital
component from the MLP or REIT to the extent of the cost basis of such MLP or
REIT investments. The actual character of amounts received during the year is
not known until after the fiscal year end. The Fund records the character of
distributions received from the MLPs or REITs during the year based on estimates
available. The Fund's characterization may be subsequently revised based on
information received from the MLPs or REITs after their tax reporting periods
conclude.

D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:

Dividends from net investment income of the Fund are declared and paid quarterly
or as the Board of Trustees may determine from time to time. Distributions of
any net realized capital gains earned by the Fund are distributed at least
annually. Distributions will automatically be reinvested into additional Common
Shares pursuant to the Fund's Dividend Reinvestment Plan unless cash
distributions are elected by the shareholder.

Distributions from income and realized capital gains are determined in
accordance with income tax regulations, which may differ from accounting
principles generally accepted in the United States of America. Certain capital
accounts in the financial statements are periodically adjusted for permanent
differences in order to reflect their tax character. These permanent differences
are primarily due to the varying treatment of income and gain/loss on portfolio
securities held by the Fund and have no impact on net assets or net asset value
per share. Temporary differences, which arise from recognizing certain items of
income, expense and gain/loss in different periods for financial statement and

Page 17

FIRST TRUST ENHANCED EQUITY INCOME FUND
JUNE 30, 2011 (UNAUDITED)

tax purposes, will reverse at some point in the future. The character of
distributions for tax reporting purposes will depend on the Fund's investment
experience during the remainder of its fiscal year, however, based on
information for the fiscal year through June 30, 2011, it is likely that the
Fund's distributions will include a return of capital component for the fiscal
year ending on December 31, 2011.

The tax character of distributions paid during the fiscal year ended Decmber 31,
2010 was as follows:

Distributions paid from:
Ordinary income................................. $ 11,824,976
Long-term capital gain.......................... --
Return of capital............................... 5,751,408

As of December 31, 2010, the distributable earnings and net assets on a tax
basis were as follows:

Undistributed ordinary income................... $ --
Undistributed capital gains..................... --
-------------
Total undistributed earnings.................... --
Accumulated capital and other losses............ (77,633,872)
Net unrealized appreciation (depreciation)...... 16,236,329
-------------
Total accumulated earnings (losses)............. (61,397,543)
Other........................................... (6,591,942)
Paid-in capital................................. 331,603,933
-------------
Net assets...................................... $ 263,614,448
=============

E. INCOME TAXES:

The Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no
provision has been made for federal or state income taxes.

The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry realized capital losses forward for eight years following the
year of the loss and offset such loss against any future realized capital gains.
The Fund is subject to certain limitations under U.S. tax rules on the use of
capital loss carryforwards and net unrealized built-in losses. These limitations
apply when there has been a 50% change in ownership. At December 31, 2010, the
Fund had a capital loss carryforward for federal income tax purposes of
$77,633,872, expiring as follows:

EXPIRATION DATE AMOUNT
December 31, 2016 $ 8,032,997
December 31, 2017 $ 69,600,875

During the taxable year ended December 31, 2010, the Fund utilized capital loss
carryforwards in the amount of $6,992,065.

The Fund is subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ending 2007, 2008,
2009 and 2010 remain open to federal and state audit. As of June 30, 2011,
management has evaluated the application of these standards to the Fund and has
determined that no provision for income tax is required in the Fund's financial
statements for uncertain tax positions.

F. EXPENSES:

The Fund will pay all expenses directly related to its operations.

G. ACCOUNTING PRONOUNCEMENT:

In May 2011, the Financial Accounting Standards Board ("FASB") issued ASU
2011-04 Amendments to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs, modifying Topic 820, Fair Value
Measurements and Disclosures. At the same time, the International Accounting
Standards Board ("IASB") issued International Financial Reporting Standard
("IFRS") 13, Fair Value Measurement. The objective by the FASB and IASB is
convergence of their guidance on fair value measurements and disclosures.
Specifically, the ASU requires reporting entities to disclose (i) the amounts of
any transfers between Level 1 and Level 2, and the reasons for the transfers,
(ii) for Level 3 fair value measurements, quantitative information about
significant unobservable inputs used, (iii) a description of the valuation
processes used by the reporting entity and, (iv) a narrative description of the
sensitivity of the fair value measurement to changes in unobservable inputs if a
change in those inputs might result in a significantly higher or lower fair
value measurement. The effective date of the ASU is for interim and annual
periods beginning after December 15, 2011, and is therefore not effective for
the current fiscal year. The Adviser is in the process of assessing the impact
of the updated standards on the Funds' financial statements, if any.

Page 18

FIRST TRUST ENHANCED EQUITY INCOME FUND
JUNE 30, 2011 (UNAUDITED)

3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS

First Trust, the investment advisor to the Fund, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. First Trust is responsible for the ongoing monitoring of
the Fund's investment portfolio, managing the Fund's business affairs and
providing certain administrative services necessary for the management of the
Fund. For these investment management services, First Trust is entitled to a
monthly fee calculated at an annual rate of 1.00% of the Fund's Managed Assets.
First Trust also provides fund reporting services to the Fund for a flat annual
fee in the amount of $9,250.

Chartwell manages the Fund's portfolio subject to First Trust's supervision.
Chartwell receives a monthly portfolio management fee calculated at an annual
rate of 0.50% of the Fund's Managed Assets that is paid monthly by First Trust
out of its investment advisory fee.

BNY Mellon Investment Servicing (US) Inc. serves as the Fund's Administrator,
Fund Accountant and Transfer Agent in accordance with certain fee arrangements.
PFPC Trust Company, which will be renamed BNY Mellon Investment Servicing Trust
Company effective July 1, 2011, serves as the Fund's Custodian in accordance
with certain fee arrangements.

Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustee") is paid an annual retainer of
$10,000 per trust for the first 14 trusts of the First Trust Fund Complex and an
annual retainer of $7,500 per trust for each subsequent trust in the First Trust
Fund Complex. The annual retainer is allocated equally among each of the trusts.
No additional meeting fees are paid in connection with Board or Committee
meetings.

Additionally, the Lead Independent Trustee is paid $10,000 annually, the
Chairman of the Audit Committee is paid $5,000 annually, and each of the
Chairmen of the Nominating and Governance Committee and the Valuation Committee
is paid $2,500 annually to serve in such capacities, with such compensation paid
by the trusts in the First Trust Fund Complex and divided among those trusts.
Trustees are also reimbursed by the trusts in the First Trust Fund Complex for
travel and out-of-pocket expenses in connection with all meetings. The Lead
Independent Trustee and each Committee chairman will serve two-year terms before
rotating to serve as chairman of another committee or as Lead Independent
Trustee. The officers and "Interested" Trustee receive no compensation from the
Fund for serving in such capacities.

4. PURCHASES AND SALES OF SECURITIES

Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments, for the six months ended June 30, 2011, were $65,416,652
and $69,969,595, respectively.

Written option activity for the Fund was as follows:

NUMBER
OF
WRITTEN OPTIONS CONTRACTS PREMIUMS
------------------------------------------------------------------------
Options outstanding at December 31, 2010 6,463 $ 1,054,558
Options written 66,438 7,828,883
Options expired (36,372) (4,348,901)
Options exercised (2,239) (124,083)
Options closed (27,080) (3,837,827)
------- -----------
Options outstanding at June 30, 2011 7,210 $ 572,630
======= ===========

5. INDEMNIFICATION

The Fund has a variety of indemnification obligations under contracts with its
service providers. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.

6. RISK CONSIDERATIONS

Risks are inherent in all investing. The following summarizes some, but not all,
of the risks that should be considered for the Fund. For additional information
about the risks associated with investing in the Fund, please see the Fund's
prospectus and statement of additional information, as well as other Fund
regulatory filings.

INVESTMENT AND MARKET RISK: An investment in the Fund's Common Shares is subject
to investment risk, including the possible loss of the entire principal
invested. An investment in Common Shares represents an indirect investment in
the securities owned by the Fund. The value of these securities, like other
market investments, may move up or down, sometimes rapidly and unpredictably.
Common Shares at any point in time may be worth less than the original
investment, even after taking into account the reinvestment of Fund dividends

Page 19

FIRST TRUST ENHANCED EQUITY INCOME FUND
JUNE 30, 2011 (UNAUDITED)

and distributions. Security prices can fluctuate for several reasons including
the general condition of the securities markets, or when political or economic
events affecting the issuers occur. When the Advisor or Sub-Advisor determines
that it is temporarily unable to follow the Fund's investment strategy or that
it is impractical to do so (such as when a market disruption event has occurred
and trading in the securities is extremely limited or absent), the Fund may take
temporary defensive positions.

EQUITY SECURITIES RISK: The Fund invests in equity securities. An adverse event
affecting an issuer, such as an unfavorable earnings report, may depress the
value of a particular equity security held by the Fund. Also, the prices of
equity securities are sensitive to general movements in the stock market and a
drop in the stock market may depress the prices of equity securities to which
the Fund has exposure. Equity securities prices fluctuate for several reasons,
including changes in investors' perceptions of the financial condition of an
issuer or the general condition of the relevant stock market, or when political
or economic events affecting the issuers or their industries occur.

OPTION RISK: The Fund may write (sell) covered call options on all or a portion
of the equity securities held in the Fund's portfolio as determined to be
appropriate by the Fund's Sub-Advisor, consistent with the Fund's investment
objective. The ability to successfully implement the Fund's investment strategy
depends on the Sub-Advisor's ability to predict pertinent market movements,
which can not be assured. Thus, the use of options may require the Fund to sell
portfolio securities at inopportune times or for prices other than current
market values, may limit the amount of appreciation the Fund can realize on an
investment, or may cause the Fund to hold an equity security that it might
otherwise sell. There can be no assurance that a liquid market for the options
will exist when the Fund seeks to close out an option position. Additionally, to
the extent that the Fund purchases options pursuant to a hedging strategy, the
Fund will be subject to additional risks.

INDUSTRY RISK: The Fund may not invest 25% or more of its total assets in
securities of issuers in any single industry. If the Fund is focused in an
industry, it may present more risks than if it were broadly diversified over
numerous industries of the economy. Individual industries may be subject to
unique risks which may include, among others, governmental regulation,
inflation, technological innovations that may render existing products and
equipment obsolete, competition from new entrants, high research and development
costs, and rising interest rates.

INCOME RISK: Net investment income paid by the Fund to its Common Shareholders
is derived from the premiums it receives from writing (selling) call options and
from the dividends and interest it receives from the equity securities and other
investments held in the Fund's portfolio and short-term gains thereon. Premiums
from writing (selling) call options and dividends and interest payments made by
the securities in the Fund's portfolio can vary widely over time. Dividends on
equity securities are not fixed but are declared at the discretion of an
issuer's board of directors. There is no guarantee that the issuers of the
equity securities in which the Fund invests will declare dividends in the future
or that if declared they will remain at current levels. The Fund cannot assure
as to what percentage of the distributions paid on the Common Shares, if any,
will consist of qualified dividend income or long-term capital gains, both of
which are taxed at lower rates for individuals than are ordinary income and
short-term capital gains.

NON-U.S. RISK: The Fund may invest a portion of its assets in the equity
securities of issuers domiciled in jurisdictions other than the U.S. Investments
in the securities and instruments of non-U.S. issuers involve certain
considerations and risks not ordinarily associated with investments in
securities and instruments of U.S. issuers. Non-U.S. companies are not generally
subject to uniform accounting, auditing and financial standards and requirements
comparable to those applicable to U.S. companies. Non-U.S. securities exchanges,
brokers and listed companies may be subject to less government supervision and
regulation than exists in the United States. Dividend and interest income may be
subject to withholding and other non-U.S. taxes, which may adversely affect the
net return on such investments. A related risk is that there may be difficulty
in obtaining or enforcing a court judgment abroad.

7. SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events to the Fund through
the date the financial statements were issued, and has determined that there
were no subsequent events requiring recognition or disclosure in the financial
statements that have not already been disclosed.

Page 20

--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------

FIRST TRUST ENHANCED EQUITY INCOME FUND
JUNE 30, 2011 (UNAUDITED)

DIVIDEND REINVESTMENT PLAN

If your Common Shares are registered directly with the Fund or if you hold your
Common Shares with a brokerage firm that participates in the Fund's Dividend
Reinvestment Plan (the "Plan"), unless you elect, by written notice to the Fund,
to receive cash distributions, all dividends, including any capital gain
distributions, on your Common Shares will be automatically reinvested by BNY
Mellon Investment Servicing (US) Inc. (the "Plan Agent"), in additional Common
Shares under the Plan. If you elect to receive cash distributions, you will
receive all distributions in cash paid by check mailed directly to you by the
Plan Agent, as the dividend paying agent.

If you decide to participate in the Plan, the number of Common Shares you will
receive will be determined as follows:

(1) If Common Shares are trading at or above net asset value ("NAV") at
the time of valuation, the Fund will issue new shares at a price
equal to the greater of (i) NAV per Common Share on that date or
(ii) 95% of the market price on that date.

(2) If Common Shares are trading below NAV at the time of valuation, the
Plan Agent will receive the dividend or distribution in cash and
will purchase Common Shares in the open market, on the NYSE or
elsewhere, for the participants' accounts. It is possible that the
market price for the Common Shares may increase before the Plan
Agent has completed its purchases. Therefore, the average purchase
price per share paid by the Plan Agent may exceed the market price
at the time of valuation, resulting in the purchase of fewer shares
than if the dividend or distribution had been paid in Common Shares
issued by the Fund. The Plan Agent will use all dividends and
distributions received in cash to purchase Common Shares in the open
market within 30 days of the valuation date except where temporary
curtailment or suspension of purchases is necessary to comply with
federal securities laws. Interest will not be paid on any uninvested
cash payments.

You may elect to opt-out of or withdraw from the Plan at any time by giving
written notice to the Plan Agent, or by telephone at (866) 340-1104, in
accordance with such reasonable requirements as the Plan Agent and the Fund may
agree upon. If you withdraw or the Plan is terminated, you will receive a
certificate for each whole share in your account under the Plan, and you will
receive a cash payment for any fraction of a share in your account. If you wish,
the Plan Agent will sell your shares and send you the proceeds, minus brokerage
commissions.

The Plan Agent maintains all Common Shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. Common Shares in your account will be held by the
Plan Agent in non-certificated form. The Plan Agent will forward to each
participant any proxy solicitation material and will vote any shares so held
only in accordance with proxies returned to the Fund. Any proxy you receive will
include all Common Shares you have received under the Plan.

There is no brokerage charge for reinvestment of your dividends or distributions
in Common Shares. However, all participants will pay a pro rata share of
brokerage commissions incurred by the Plan Agent when it makes open market
purchases.

Automatically reinvesting dividends and distributions does not mean that you do
not have to pay income taxes due upon receiving dividends and distributions.
Capital gains and income are realized although cash is not received by you.
Consult your financial advisor for more information.

If you hold your Common Shares with a brokerage firm that does not participate
in the Plan, you will not be able to participate in the Plan and any dividend
reinvestment may be effected on different terms than those described above.

The Fund reserves the right to amend or terminate the Plan if in the judgment of
the Board of Trustees the change is warranted. There is no direct service charge
to participants in the Plan; however, the Fund reserves the right to amend the
Plan to include a service charge payable by the participants. Additional
information about the Plan may be obtained by writing BNY Mellon Investment
Servicing (US) Inc., 301 Bellevue Parkway, Wilmington, Delaware 19809.

--------------------------------------------------------------------------------
PROXY VOTING POLICIES AND PROCEDURES

A description of the policies and procedures that the Fund uses to determine how
to vote proxies and information on how the Fund voted proxies relating to
portfolio investments during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
the Fund's website located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's ("SEC") website located at
http://www.sec.gov.

Page 21

--------------------------------------------------------------------------------
ADDITIONAL INFORMATION - (Continued)
--------------------------------------------------------------------------------

FIRST TRUST ENHANCED EQUITY INCOME FUND
JUNE 30, 2011 (UNAUDITED)

PORTFOLIO HOLDINGS

The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available (1) by calling (800) 988-5891; (2) on the Fund's website located
at http://www.ftportfolios.com; (3) on the SEC's website at http://www.sec.gov;
and (4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling (800) SEC-0330.

SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

The Joint Annual Meeting of Shareholders of the Common Shares of Energy Income
and Growth Fund, First Trust Enhanced Equity Income Fund, First Trust/Aberdeen
Global Opportunity Income Fund, First Trust/FIDAC Mortgage Income Fund, First
Trust Strategic High Income Fund, First Trust Strategic High Income Fund II,
First Trust/Aberdeen Emerging Opportunity Fund, First Trust Strategic High
Income Fund III, First Trust Specialty Finance and Financial Opportunities Fund,
First Trust Active Dividend Income Fund and First Trust High Income Long/Short
Fund was held on April 18, 2011. At the Meeting, Robert F. Keith was elected by
the Common Shareholders of the First Trust Enhanced Equity Income Fund as a
Class I Trustee for a three-year term expiring at the Fund's annual meeting of
shareholders in 2014. The number of votes cast in favor of Mr. Keith was
18,459,605 the number of votes against was 325,756 and the number of abstentions
was 1,187,803. James A. Bowen, Neil B. Nielson, Richard E. Erickson and Thomas
R. Kadlec are the other current and continuing Trustees.

Page 22

This Page Left Blank Intentionally.

FIRST TRUST

INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187

INVESTMENT SUB-ADVISOR
Chartwell Investment Partners, L.P.
1235 Westlakes Drive, Suite 400
Berwyn, PA 19312

ADMINISTRATOR,
FUND ACCOUNTANT &
TRANSFER AGENT
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809

CUSTODIAN
BNY Mellon Investment Servicing Trust Company
Formerly PFPC Trust Company
8800 Tinicum Boulevard
Philadelphia, PA 19153

INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606

LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603

[Blank Back Cover]

ITEM 2. CODE OF ETHICS.

Not applicable.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

Not applicable.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Not applicable.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

ITEM 6. INVESTMENTS.

(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.

(b) Not applicable.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

(a) Not applicable.

(b) There have been no changes, as of the date of filing, in any of the
Portfolio Managers identified in response to paragraph (a)(1) of this item
in the Registrant's most recent annual report on Form N-CSR.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.

ITEM 11. CONTROLS AND PROCEDURES.

(a) The registrant's principal executive and principal financial officers, or
persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3(c))) are effective, as of a date within 90 days of the filing
date of the report that includes the disclosure required by this
paragraph, based on their evaluation of these controls and procedures
required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and
Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as
amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the registrant's second fiscal quarter
of the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control
over financial reporting.

ITEM 12. EXHIBITS.

(a)(1) Not applicable.

(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

(a)(3) Not applicable.

(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section
906 of the Sarbanes- Oxley Act of 2002 are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

(registrant) First Trust Enhanced Equity Income Fund
-------------------------------------------------------------------

By (Signature and Title)* /s/ James A. Bowen
-----------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)

Date August 22, 2011
-----------------------------------

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Date August 22, 2011
-----------------------------------

By (Signature and Title)* /s/ Mark R. Bradley
-----------------------------------------------------
Mark R. Bradley, Treasurer, Chief Financial Officer
and Chief Accounting Officer
(principal financial officer)

Date August 22, 2011
-----------------------------------

* Print the name and title of each signing officer under his or her signature.