7.11.2008 On June 2, 2008, Gallatin Asset Management, Inc. ("Gallatin"), notified First Trust/Gallatin Specialty Finance and Financial Opportunities Fund (the "Fund"), of its resignation as sub-adviser to the Fund. The resignation terminated the existing sub-advisory agreement between the Fund and Gallatin on July 31, 2008 (the "Effective Date"). The resignation was not foreseen by the Fund or First Trust Advisors L.P. (the "Adviser"). The Fund and the Adviser are currently seeking a successor sub-adviser.

Section 15(a) of the 1940 Act prohibits a person from serving as an investment adviser to a registered investment company except pursuant to a written contract that has been approved by the vote of a majority of the outstanding voting securities of the registered investment company. Rule 15a-4 under the 1940 Act provides a temporary exemption from the shareholder approval requirement in Section 15(a) in circumstances in which the previous advisory contract was terminated by the board of directors or by the vote of a majority of the outstanding voting securities of the registered investment company, by a failure to renew the previous advisory contract, or by an assignment of the previous advisory contract, as defined in Section 2(a)(4) of the 1940 Act ("Rule 15a-4 Events"). Rule 15a-4 permits a person to act as an investment adviser to a registered investment company under an interim advisory agreement that has not been approved by the company's shareholders for a period of 150 days following the date on which the previous contract terminated, subject to the requirements set forth in the Rule.

Under Section 15(a) of the 1940 Act, an investment advisory agreement with a successor sub-adviser ("New Sub-advisory Agreement") will require approval by a majority of the Fund's outstanding voting securities. The termination of the existing sub-advisory agreement due to the resignation of Gallatin was not a Rule 15a-4 Event and the Fund, the Adviser and successor sub-adviser could not rely on the temporary exemption provided by Rule 15a-4, once a successor sub-adviser was selected, pending shareholder approval of the New Sub-advisory Agreement.

The incoming letter stated that, to ensure continuity of portfolio management services to the Fund, once a successor sub-adviser is selected and pending shareholder approval of the New Sub-advisory Agreement, the Fund and the Adviser would like to enter into an interim sub-advisory agreement with the successor sub-adviser without a shareholder vote for a period of 150 days following the Effective Date (the period, "Interim Period," and the sub-advisory agreement, "Interim Sub-advisory Agreement"). Once the successor sub-adviser is selected, the Fund, the Adviser and the successor sub-adviser would determine whether the particular facts and circumstances of the resignation and the subsequent hiring of the successor sub-adviser involve a situation in which: (a) neither Gallatin nor a controlling person of Gallatin directly or indirectly receives any money or other benefit, and which therefore is analogous to a Rule 15a-4(b)(1) Event, or (b) Gallatin or a controlling person of Gallatin directly or indirectly receives money or other benefit and which therefore is analogous to a Rule 15a-4(b)(2) Event.

The staff stated that it would not recommend enforcement action to the SEC under Section 15(a) of the 1940 Act against the Fund, the Adviser or the successor sub-adviser if the successor sub-adviser serves as a sub-adviser to the Fund pursuant to an Interim Sub-advisory Agreement that has not been approved by the vote of a majority of the Fund's outstanding voting securities. The staff was persuaded by the incoming letter’s argument that the resignation was not foreseen by the Fund or the Adviser. In light of Gallatin's indication that, due to personnel changes, it no longer has the resources to continue to manage the Fund beyond July 31, 2008, the Adviser does not believe it would be feasible or in the best interests of the Fund to have Gallatin continue to act as sub-adviser to the Fund until shareholder approval for the new Sub-advisory Agreement is obtained. The incoming letter successfully argued that the Fund and the Adviser need a reasonable period of time to conduct an appropriate evaluation of candidates to become the successor sub-adviser and to negotiate the terms and conditions of a New Sub-advisory Agreement.

Click http://www.sec.gov/divisions/investment/noaction/2008/firsttrustgallatin071108-15a.pdf for a copy of the no-action letter.