EXHIBIT (K)(4)

                                  July __, 2003

First Trust Portfolios L.P.
1001 Warrenville Road
Lisle, IL 60532

To First Trust Portfolios L.P.:

This letter agreement ("Letter Agreement") is between Lehman Brothers Asset
Management Inc., a Delaware corporation ("Investment Adviser") and First Trust
Portfolios L.P., a Illinois limited partnership ("First Trust"). Pursuant to
Section 10 of the underwriter participation agreement (the "Participation
Agreement") entered into by Investment Adviser, First Trust and Lehman
Brothers/First Trust Income Opportunity Fund (the "Fund"), the Investment
Adviser and First Trust hereby agree that the Investment Adviser, from its own
resources, shall compensate First Trust for the services described in Section 2
of the Participation Agreement, as follows:

Investment Adviser shall pay First Trust a monthly fee (the "Fee") computed at
the annual rate of 0.15% of the Fund's Managed Assets (as defined in the Fund's
prospectus); provided that the total amount of:

      1) the Fee hereunder,

      2) the fee paid to First Trust pursuant to the servicing agreement, dated
      July ___, 2003, between First Trust and the Fund (the "Servicing
      Agreement"), and

      3) the compensation paid to the underwriters pursuant to underwriting
      agreement, dated July __, 2003, by and among the Fund, Investment Adviser
      and each of the Underwriters named therein, the "Underwriting Agreement"),


shall not exceed 9% of the total price (including all Firm Shares and Option
Shares as such terms are described in the Underwriting Agreement) to the public
of the Fund's common shares offered by the prospectus dated July ___, 2003.


The Fee shall be accrued daily and paid monthly, in arrears, by the 5th day of
each calendar month. The daily Fee accrual shall be computed by multiplying the
fraction of one divided by the number of days in the calendar year by the Fee,
and multiplying this product by the Managed Assets of the Fund, as of the close
of business on the last preceding business day on which the Fund's Managed
Assets were determined.

This Letter Agreement will terminate automatically in the event that either: the
Servicing Agreement or the Participation Agreement is terminated.



If the foregoing is in accordance with your understanding of the agreement
between us, please indicate your approval by signing and returning a copy of
this letter to us.

Very truly yours,

Lehman Brothers Asset Management Inc.

By: ________________________________
    Name:
    Title:

                                                 Approved and acknowledged as of
                                                 July _____, 2003.

                                                 First Trust Portfolios L.P.

                                                 By:____________________________
                                                    Name:
                                                    Title:

                   [Signature Page to Additional Compensation
                                   Agreement]