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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 811-22528
First Trust Energy Infrastructure
Fund
(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(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
(Name and address of agent for service)
Registrant’s telephone number, including
area code: 630-765-8000
Date of fiscal year end: November 30
Date of reporting period: May 31, 2023
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. § 3507.
Item 1. Reports to Stockholders.
| (a) | | The Report to Shareholders is attached herewith. |
First
Trust
Energy
Infrastructure Fund (FIF)
Semi-Annual
Report
For
the Six Months Ended
May
31, 2023
First
Trust Energy Infrastructure Fund (FIF)
Semi-Annual
Report
May
31, 2023
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2
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3
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5
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9
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13
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14
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15
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16
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17
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18
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27
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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 Energy Income Partners, LLC (“EIP”
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 First Trust Energy Infrastructure 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.
Managed
Distribution Policy
The
Board of Trustees of the Fund has approved a managed distribution policy for the Fund (the “Plan”) in reliance on exemptive
relief received from the Securities and Exchange Commission that permits the Fund to make periodic distributions of long-term capital
gains as frequently as monthly each tax year. Under the Plan, the Fund currently intends to continue to pay a monthly distribution that
reflects the distributable cash flow of the Fund. A portion of this monthly distribution may include realized capital gains. This may
result in a reduction of the long-term capital gain distribution necessary at year end by distributing realized capital gains throughout
the year. The annual distribution rate is independent of the Fund’s performance during any particular period. Accordingly, you should
not draw any conclusions about the Fund’s investment performance from the amount of any distribution or from the terms of the Plan.
The Board of Trustees may amend or terminate the Plan at any time without prior notice to shareholders.
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’s shares may therefore be less than
what you paid for them. Accordingly, you can lose money by investing in the Fund. See “Principal Risks” in the Additional
Information section of this report 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 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.
The
Advisor may also periodically provide additional information on Fund performance on the Fund’s web page at www.ftportfolios.com.
How
to Read This Report
This
report contains information that may help you evaluate your investment in the Fund. 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 First Trust and EIP 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 material risks of investing in the Fund are spelled out in the prospectus, the statement of additional information, this report
and other Fund regulatory filings.
First
Trust Energy Infrastructure Fund (FIF)
Semi-Annual
Letter from the Chairman and CEO
May
31, 2023
Dear
Shareholders,
First
Trust is pleased to provide you with the semi-annual report for the First Trust Energy Infrastructure Fund (the “Fund”), which
contains detailed information about the Fund for the six months ended May 31, 2023.
Between
developments at the Federal Reserve (the “Fed”), stock market returns, and the myriad of economic data that we have processed
here at First Trust over the past six months, I have no shortage of developments to share with you. Let’s begin with the Fed. In
a widely expected move, the Fed voted to keep the Federal Funds target rate unchanged at their meeting on June 14, 2023, ending a streak
of ten straight interest rate increases over the past 15 months. That said, the Fed also hinted that at least two more interest rate hikes
are likely if they are going to bring inflation down to their desired level of 2.0%. Inflation, as measured by the 12-month rate of change
in the Consumer Price Index, stood at 4.0% as of June 20, 2023, well below its most recent high of 9.1% in June 2022. Despite tighter
monetary policy, the U.S. added 1.57 million jobs this year, a 2.5% annualized growth rate, and real gross domestic product rose at a
1.3% annualized rate in the first quarter of 2023, according to Brian Wesbury, Chief Economist at First Trust.
Driven
by developments in Artificial Intelligence, the S&P 500®
Index has had an exceptional start to the year, posting a total return of 15.8% for the year-to-date period ended June 16, 2023. The tech-centric
Nasdaq-100 Index® has seen a staggering 38.5% total return
over the same period. When the stock market increases by 20% or more from its most recent low, it is often referred to as a “bull
market.” On June 8, 2023, the S&P 500® Index closed
at 4,293.93, 20.04% above its most recent low of 3,577.03 (which occurred on October 12, 2022). We’ll leave it to the pundits to
debate how long this bull market will last, but history shows that bull markets typically fare better when there are longer pauses between
interest rate hikes, according to Bloomberg.
Meanwhile,
the effects of higher inflation and the Fed’s restrictive monetary policy appear to be taking a toll on the U.S. consumer. U.S.
household debt reached a record $17.05 trillion in the first quarter of 2023. Furthermore, total balances for U.S. credit card holders
did not decline in the first quarter of the year, marking the first time that has happened since 2001. ATTOM, a property data analytics
company, reported that U.S. foreclosure activity (including default notices) for the month of May 2023 increased by 14%, to 35,195 properties,
from the same period a year ago, according to its own release. That said, not all the news is negative. The Fed reported that the net
worth of U.S. households stood at $148.8 trillion at the end of the first quarter of 2023, up $3 trillion from when it stood at $145.8
trillion at the end of the fourth quarter of 2022, according to MarketWatch. Most of the increase in household net worth can be attributed
to the rebound in the stock market. The value of equities held by U.S. households jumped by $2.4 trillion in the first quarter of 2023.
As the great economist Milton Friedman famously said, the effects of monetary policy are long and variable. In my opinion, time will reveal
the full impact of the tighter economic policies of the past 15 months on the consumer and the U.S. economy.
Thank
you for giving First Trust the opportunity to play a role in your financial future. We value our relationship with you and will report
on the Fund again in six months.
Sincerely,
James
A. Bowen
Chairman
of the Board of Trustees
Chief
Executive Officer of First Trust Advisors L.P.
First
Trust Energy Infrastructure Fund (FIF)
“AT
A GLANCE”
As
of May 31, 2023 (Unaudited)
| Fund
Statistics |
|
| Symbol
on New York Stock Exchange |
FIF
|
| Common
Share Price |
$13.92
|
| Common
Share Net Asset Value (“NAV”) |
$16.21
|
| Premium
(Discount) to NAV |
(14.13)%
|
| Net
Assets Applicable to Common Shares |
$253,903,297
|
| Current
Monthly Distribution per Common Share(1) |
$0.1000
|
| Current
Annualized Distribution per Common Share |
$1.2000
|
| Current
Distribution Rate on Common Share Price(2) |
8.62%
|
| Current
Distribution Rate on NAV(2) |
7.40%
|
Common
Share Price & NAV (weekly closing price)
| Performance
|
|
|
|
|
|
|
|
|
|
Average
Annual Total Returns |
|
|
6
Months Ended
5/31/23 |
1
Year Ended
5/31/23 |
5
Years Ended
5/31/23 |
10
Years Ended
5/31/23 |
Inception
(9/27/11)
to 5/31/23 |
| Fund
Performance(3) |
|
|
|
|
|
| NAV
|
-6.68%
|
-4.60%
|
6.60%
|
4.86%
|
7.41%
|
| Market
Value |
-5.77%
|
-5.04%
|
3.75%
|
3.62%
|
5.60%
|
| Index
Performance |
|
|
|
|
|
| PHLX
Utility Sector Index |
-8.10%
|
-10.44%
|
8.63%
|
9.23%
|
9.21%
|
| Alerian
MLP Total Return Index |
0.39%
|
7.84%
|
4.97%
|
0.80%
|
3.70%
|
| Blended
Index(4) |
-3.69%
|
-1.03%
|
8.79%
|
6.24%
|
7.60%
|
| (1)
|
Most
recent distribution paid through May 31, 2023. Subject to change in the future. |
| (2)
|
Distribution
rates are calculated by annualizing the most recent distribution paid through the report date and then dividing by Common Share Price
or NAV, as applicable, as of May 31, 2023. 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 NAV returns and changes in Common Share Price for market value returns.
Total returns do not reflect sales load and are not annualized for periods of less than one year. Past performance is not indicative of
future results. |
| (4)
|
The
Blended Index consists of the following: PHLX Utility Sector Index (50%) and Alerian MLP Total Return Index (50%). The Blended Index reflects
the diverse allocation of companies engaged in the energy infrastructure sector in the Fund’s portfolio. The indices do not charge
management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. Indexes are unmanaged and
an investor cannot invest directly in an index. The Blended Index returns are calculated by using the monthly return of the two indices
during each period shown above. At the beginning of each month the two indices are rebalanced to a 50-50 ratio to account for divergence
from that ratio that occurred during the course of each month. The monthly returns are then compounded for each period shown above, giving
the performance for the Blended Index for each period shown above. |
First
Trust Energy Infrastructure Fund (FIF)
“AT
A GLANCE” (Continued)
As
of May 31, 2023 (Unaudited)
| Industry
Classification |
%
of Total
Long-Term
Investments |
| Petroleum
Product Transmission |
27.3%
|
| Natural
Gas Transmission |
26.9
|
| Electric
Power & Transmission |
23.3
|
| Crude
Oil Transmission |
10.9
|
| Gathering
& Processing |
4.4
|
| Propane
|
0.1
|
| Other
|
7.1
|
| Total
|
100.0%
|
| Top
Ten Holdings |
%
of Total
Long-Term
Investments |
| Magellan
Midstream Partners, L.P. |
7.3%
|
| Enterprise
Products Partners, L.P. |
7.0
|
| Plains
GP Holdings, L.P., Class A |
6.7
|
| Energy
Transfer, L.P. |
6.6
|
| Kinder
Morgan, Inc. |
4.9
|
| DT
Midstream, Inc. |
4.9
|
| Sempra
Energy |
4.6
|
| Hess
Midstream, L.P., Class A |
4.1
|
| Williams
(The) Cos., Inc. |
3.6
|
| ONEOK,
Inc. |
3.4
|
| Total
|
53.1%
|
| Fund
Allocation |
%
of Net Assets |
| Common
Stocks |
69.6%
|
| Master
Limited Partnerships |
47.4
|
| Money
Market Funds |
9.2
|
| Call
Options Written |
(0.1)
|
| Outstanding
Loans |
(27.7)
|
| Net
Other Assets and Liabilities(5) |
1.6
|
| Total
|
100.0%
|
| (5)
|
Includes
swap contracts. |
Portfolio
Commentary
First
Trust Energy Infrastructure Fund (FIF)
Semi-Annual
Report
May
31, 2023 (Unaudited)
Advisor
First
Trust Advisors L.P. (“First Trust” or the “Advisor”) serves as the investment advisor to the First Trust Energy
Infrastructure Fund (the “Fund”). 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.
Sub-Advisor
Energy
Income Partners, LLC
Energy
Income Partners, LLC (“EIP”), located in Westport, CT, was founded in 2003 to provide professional asset management services
in publicly traded energy-related infrastructure companies with above average dividend payout ratios operating pipelines and related storage
and handling facilities, electric power transmission and distribution as well as long contracted or regulated power generation from renewables
and other sources. The corporate structure of the portfolio companies includes C-corporations, partnerships and energy infrastructure
real estate investment trusts. EIP mainly focuses on investments in assets that receive steady fee-based or regulated income from their
corporate and individual customers. EIP manages or supervises approximately $5.0 billion of assets as of May 31, 2023. EIP advises two
privately offered partnerships for U.S. high net worth individuals and an open-end mutual fund. EIP also manages separately managed accounts
and provides its model portfolio to unified managed accounts. Finally, EIP serves as a sub-advisor to three closed-end management investment
companies in addition to the Fund, three actively managed exchange-traded funds and a sleeve of a series of a variable insurance trust.
EIP is a registered investment advisor with the Securities and Exchange Commission.
Portfolio
Management Team
James
J. Murchie – Co-Portfolio Manager, Founder and CEO of Energy Income Partners, LLC
Eva
Pao – Co-Portfolio Manager, Principal of Energy Income Partners, LLC
John
Tysseland – Co-Portfolio Manager, Principal of Energy Income Partners, LLC
The
portfolio managers are primarily and jointly responsible for the day-to-day management of the Fund’s portfolio.
Commentary
First
Trust Energy Infrastructure Fund
The
investment objective of the Fund is to seek a high level of total return with an emphasis on current distributions paid to shareholders.
The Fund pursues its investment objective by investing primarily in securities of companies engaged in the energy infrastructure sector.
These companies principally include publicly-traded master limited partnerships (“MLPs”) and limited liability companies taxed
as partnerships, MLP affiliates, YieldCos, pipeline companies, utilities and other infrastructure-related companies that derive at least
50% of their revenues from operating, or providing services in support of, infrastructure assets such as pipelines, power transmission
and petroleum and natural gas storage in the petroleum, natural gas and power generation industries (collectively, “Energy Infrastructure
Companies”). For purposes of the Fund’s investment objective, total return includes capital appreciation of, and all distributions
received from, securities in which the Fund invests, taking into account the varying tax characteristics of such securities. Under normal
market conditions, the Fund invests at least 80% of its managed assets (total asset value of the Fund minus the sum of the Fund’s
liabilities other than the principal amount of borrowings) in securities of Energy Infrastructure Companies. There can be no assurance
that the Fund will achieve its investment objective. The Fund may not be appropriate for all investors.
Market
Recap
As
measured by the Alerian MLP Total Return Index (“AMZX”) and the PHLX Utility Sector Index (“UTY”), the total returns
for the six-month period ended May 31, 2023 were 0.39% and -8.10%, respectively. These figures are according to data collected from Bloomberg.
While in the short term, market share price appreciation can be volatile, we believe that over the long term, share price appreciation
will approximate growth in per share earnings and quarterly cash distributions paid by the companies in the portfolio.
Portfolio
Commentary (Continued)
First
Trust Energy Infrastructure Fund (FIF)
Semi-Annual
Report
May
31, 2023 (Unaudited)
Performance
Analysis
|
|
|
|
Average
Annual Total Returns |
|
|
6
Months Ended
5/31/23 |
1
Year Ended
5/31/23 |
5
Years Ended
5/31/23 |
10
Years Ended
5/31/23 |
Inception
(9/27/11)
to 5/31/23 |
| Fund
Performance(1) |
|
|
|
|
|
| NAV
|
-6.68%
|
-4.60%
|
6.60%
|
4.86%
|
7.41%
|
| Market
Value |
-5.77%
|
-5.04%
|
3.75%
|
3.62%
|
5.60%
|
| Index
Performance |
|
|
|
|
|
| PHLX
Utility Sector Index |
-8.10%
|
-10.44%
|
8.63%
|
9.23%
|
9.21%
|
| Alerian
MLP Total Return Index |
0.39%
|
7.84%
|
4.97%
|
0.80%
|
3.70%
|
| Blended
Index(2) |
-3.69%
|
-1.03%
|
8.79%
|
6.24%
|
7.60%
|
Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market
or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred
by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance.
On
a net asset value (“NAV”) basis, for the six-month period ended May 31, 2023, the Fund provided a total return(1)
of -6.68%, including the reinvestment of distributions. This compares, according to collected data, to a -3.69% return for a blended index
consisting of the UTY (50%) and the AMZX (50%) (the “Blended Index”). On a market value basis, the Fund had a total return(1),
including the reinvestment of distributions, of -5.77% for the same period. At the end of the period, the Fund was priced at $13.92 per
Common Share, while the NAV was $16.21 per Common Share, a discount of 14.13%. As of November 30, 2022, the Fund was priced at $15.24
per Common Share, while the NAV was $17.92 per Common Share, a discount of 14.96%.
In
April 2023, the Fund increased its regular monthly Common Share distribution to $0.10. The increase in the monthly distribution reflects
increases in dividends and distributions from portfolio companies as well as underlying appreciation in shares of the Fund’s portfolio
holdings.
| (1)
|
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 NAV returns and changes in Common Share Price for market value returns.
Total returns do not reflect sales load and are not annualized for periods of less than one year. Past performance is not indicative of
future results. |
| (2)
|
The
Blended Index consists of the following: PHLX Utility Sector Index (50%) and Alerian MLP Total Return Index (50%). The Blended Index reflects
the diverse allocation of companies engaged in the energy infrastructure sector in the Fund’s portfolio. The indexes do not charge
management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. Indexes are unmanaged and
an investor cannot invest directly in an index. The Blended Index returns are calculated by using the monthly return of the two indices
during each period shown above. At the beginning of each month the two indices are rebalanced to a 50-50 ratio to account for divergence
from that ratio that occurred during the course of each month. The monthly returns are then compounded for each period shown above, giving
the performance for the Blended Index for each period shown above. |
Portfolio
Commentary (Continued)
First
Trust Energy Infrastructure Fund (FIF)
Semi-Annual
Report
May
31, 2023 (Unaudited)
For
the six-month period ended May 31, 2023, the Fund’s NAV underperformed the -3.69% return of the Blended Index by about 299 basis
points (“bps”). Underperformance of the Fund over this period reflects our diversified approach to investing in non-cyclical
energy infrastructure and our overweight positions in utilities and renewable developers that underperformed relative to the Blended Index.
EIP has sought to consistently run a more conservative portfolio compared to the Blended Index. This conservatism, in EIP’s opinion,
is reflected in holding a more diversified set of higher quality companies that themselves have more conservative balance sheets, lower
dividend payout ratios, less exposure to commodity prices and more stable cash flows. While the Fund’s portfolio is dominated by
companies that own natural and legal monopolies operating transport infrastructure in both the pipeline and power sectors, the Fund selectively
owns more diversified energy companies where EIP believes valuations indicate the cyclical, non-infrastructure portion of their assets
are grossly mispriced. EIP believes integrated oil and gas companies (IOCs) possess those characteristics today and so EIP initiated positions
in some of these companies over the last year. At the end of the six-month period, IOCs represented about 4.8% of the Fund’s portfolio.
The
Fund uses leverage because its portfolio managers believe that, over time, leverage can enhance total return for common shareholders.
However, the use of leverage can also increase the volatility of the NAV and, therefore, the share price. For example, if the prices of
securities held by the Fund decline, the effect of changes in common share NAV and common share total return loss would be magnified by
the use of leverage. Conversely, leverage may enhance common share returns during periods when the prices of securities held by the Fund
generally are rising. Unlike the Fund, the Blended Index is not leveraged. Leverage had a negative impact on the performance of the Fund
over the period. Derivatives had a positive impact on the performance of the Fund over the reporting period.
The
Fund’s managed distribution policy (the “Plan”) permits the Fund to make periodic distributions of long-term capital
gains as frequently as monthly each tax year. The plan has no impact on the Fund’s investment strategy and may reduce the Fund’s
NAV. However, the Advisor believes the policy helps maintain the Fund’s competitiveness and may benefit the Fund’s market
price and premium/discount to the Fund’s NAV. Under the Plan, the Fund intends to continue to pay a monthly distribution that reflects
the distributable cash flow of the Fund. Based on the $0.10 per share monthly Common Share distribution, the annualized distribution rate
as of May 31, 2023 was 7.40% at NAV and 8.62% at market price. The final determination of the source and tax status of all 2023 distributions
will be made after the end of 2023 and will be provided on Form 1099-DIV. The foregoing is not to be construed as tax advice. Please consult
your tax advisor for further regarding tax matters.
Market
and Fund Outlook
Energy
infrastructure companies in the portfolio have generally had stable earnings historically, but negative sentiment around energy stocks
in general weighed on valuations in the previous years. This negative sentiment began to fade with a sharp jump in the price of oil and
natural gas in the first quarter of 2022. Despite improved sentiment, the companies in the portfolio were still trading at a 31.5% discount
at the end of the period compared to the S&P 500® Index
(the “Index”) based on forward 12-month earnings expectations (12.6x vs 18.4x) (Source: Bloomberg as of May 31, 2023) with
arithmetic average yields that are 3.1x the yield of the Index (5.2% vs 1.7%). EIP’s view is optimistic regarding the portfolio
based on continued earnings growth among the energy infrastructure companies coupled with low valuations relative to the Index based on
forward 12-month earnings expectations. Equities that trade at lower yields and higher P/E multiples have longer durations than equities
that trade at higher yields and lower P/E multiples, so it makes sense to us that moderately higher inflation expectations and interest
rates should favor the stocks in the portfolio relative to the Index.
EIP
views the current level of capital discipline among conventional oil and gas producers as well as pipeline and midstream energy companies
as a bullish development for investors in the space. Global capital spending for upstream oil and gas has collapsed due to, in EIP’s
opinion, previous over-investment, poor historical returns and ESG (environmental, social, and corporate governance) pressures. Starting
in 2021, as oil and natural gas prices began to go up following the low price levels experienced in 2020, the resulting increased cash
flow was redirected to share repurchase, debt reduction, special dividends and in some cases renewable investments.(3)
EIP views these trends as positive for investors, but EIP does not view the current amount of capital spending as being sufficient to
meet natural production declines nor to grow capacity. Fossil fuels such as natural gas, oil, and coal still account for more than 82%
of global primary energy use.(4) Global real gross domestic product
(“GDP”) has a strong historical relationship to global primary energy use. Over the last fifty plus years there has never
been a five-year period where average global GDP or average global primary energy use has been negative.(4)(5)
In EIP’s opinion, the lack of conventional oil and gas supply growth and what appears to be inevitable demand growth over the next
five plus years provides solid fundamentals for conventional energy investors.
| (3)
|
Source:
FactSet, Bloomberg. |
| (4)
|
Source:
BP Statistical Review of World Energy – June 2022. |
| (5)
|
Source:
World Bank, EIP Estimates. |
Portfolio
Commentary (Continued)
First
Trust Energy Infrastructure Fund (FIF)
Semi-Annual
Report
May
31, 2023 (Unaudited)
EIP
also believes regulated pipeline and power utilities in the portfolio offer a measurable degree of inflation protection.(6)
Traditional businesses, like consumer staples, absorb increasing input costs then pass those costs onto customers by raising prices. In
EIP’s opinion, there is often a lag effect as this occurs leading to margin compression. On the other hand, regulated pipeline and
power utilities are cost-plus businesses that charge a price to customers equal to the sum-total of their costs, including the cost of
debt and an allowed return on equity.
In
EIP’s opinion, the long-term outlook for electricity and natural gas infrastructure is positive as the infrastructure is necessary
to connect increasingly diverse sources of energy supply to consumers. In EIP’s view, while spikes in natural gas prices may continue
to drive sporadic switching to coal-fired power generation over the near term, the longer-term trend away from coal-fired power generation
seems likely to continue. Publicly owned utilities’ five-year integrated resource plans and continued announcements of coal plant
retirements support this view. In most cases these retirements are being replaced with natural gas and/or renewables requiring new transport
infrastructure and driving further growth in earnings.
EIP
is optimistic about the technological breakthroughs in energy and invests in companies like renewable developers and network utilities
that, where renewable resources are abundant, benefit from the lower cost and higher performance of renewables, batteries, and other new
grid-related innovations. But EIP is not a venture capitalist; companies in the Fund’s portfolio must have a track record of profitability
and a willingness to share some portion of that profitability through distributions. While the names in the portfolio change over time,
the strategy and the sources of earnings stability and growth remain the same: investing in monopoly infrastructure that provides the
low-cost way of shipping the lowest cost form of energy.
| (6)
|
There
is no guarantee that any investment strategy will successfully protect against inflation or will even be profitable. |
First
Trust Energy Infrastructure Fund (FIF)
Portfolio
of Investments
May
31, 2023 (Unaudited)
| Shares
|
|
Description
|
|
Value
|
| COMMON
STOCKS (a) – 69.6% |
| |
|
Construction
& Engineering – 0.1% |
|
|
| 1,890
|
|
Quanta Services, Inc.
|
|
$335,626
|
|
|
|
Electric
Utilities – 12.3% |
|
|
| 104,690
|
|
Alliant Energy Corp. (b)
|
|
5,387,347
|
| 87,400
|
|
American Electric Power Co., Inc.
|
|
7,264,688
|
| 8,110
|
|
Duke Energy Corp.
|
|
724,142
|
| 18,930
|
|
Emera, Inc. (CAD)
|
|
780,488
|
| 79,420
|
|
Enel S.p.A., ADR
|
|
494,787
|
| 8,000
|
|
Entergy Corp.
|
|
785,600
|
| 26,240
|
|
Evergy, Inc.
|
|
1,517,984
|
| 25,130
|
|
Eversource Energy
|
|
1,739,750
|
| 62,300
|
|
Exelon Corp.
|
|
2,470,195
|
| 18,450
|
|
Fortis, Inc. (CAD)
|
|
776,055
|
| 7,230
|
|
IDACORP, Inc.
|
|
752,426
|
| 40,913
|
|
NextEra Energy, Inc.
|
|
3,005,469
|
| 11,600
|
|
Orsted A/S, ADR
|
|
339,532
|
| 112,890
|
|
PPL Corp.
|
|
2,957,718
|
| 35,650
|
|
Xcel Energy, Inc.
|
|
2,327,588
|
|
|
|
|
|
31,323,769
|
|
|
|
Energy
Equipment & Services – 0.3% |
|
|
| 80,600
|
|
Archrock, Inc.
|
|
725,400
|
|
|
|
Gas
Utilities – 5.2% |
|
|
| 18,700
|
|
AltaGas Ltd. (CAD)
|
|
317,108
|
| 27,900
|
|
Atmos Energy Corp.
|
|
3,216,312
|
| 136,200
|
|
National Fuel Gas Co.
|
|
6,933,942
|
| 14,800
|
|
New Jersey Resources Corp.
|
|
717,060
|
| 19,720
|
|
ONE Gas, Inc.
|
|
1,596,137
|
| 13,894
|
|
UGI Corp.
|
|
388,615
|
|
|
|
|
|
13,169,174
|
|
|
|
Independent
Power & Renewable Electricity Producers – 2.1% |
|
|
| 167,170
|
|
AES (The) Corp. (b)
|
|
3,299,936
|
| 51,970
|
|
Clearway Energy, Inc., Class A
|
|
1,428,136
|
| 14,170
|
|
EDP Renovaveis S.A. (EUR)
|
|
281,418
|
| 18,940
|
|
Northland Power, Inc. (CAD)
|
|
415,494
|
|
|
|
|
|
5,424,984
|
|
|
|
Multi-Utilities –
12.3% |
|
|
| 147,910
|
|
Atco Ltd., Class I (CAD)
|
|
4,546,802
|
| 17,020
|
|
Canadian Utilities Ltd., Class A (CAD)
|
|
457,001
|
| 10,619
|
|
CenterPoint Energy, Inc.
|
|
299,562
|
| 25,600
|
|
CMS Energy Corp.
|
|
1,484,288
|
| 28,810
|
|
DTE Energy Co.
|
|
3,099,956
|
| 89,000
|
|
Public Service Enterprise Group, Inc.
|
|
5,317,750
|
| 95,320
|
|
Sempra Energy
|
|
13,681,280
|
| 26,320
|
|
WEC Energy Group, Inc.
|
|
2,299,052
|
|
|
|
|
|
31,185,691
|
|
|
|
Oil,
Gas & Consumable Fuels – 37.0% |
|
|
| 165,090
|
|
BP PLC, ADR
|
|
5,565,184
|
| 45,178
|
|
Cheniere Energy, Inc.
|
|
6,314,529
|
| 318,590
|
|
DT Midstream, Inc.
|
|
14,483,101
|
| 123,800
|
|
Enbridge, Inc.
|
|
4,357,760
|
| 361,830
|
|
Keyera Corp. (CAD)
|
|
8,076,206
|
| 904,565
|
|
Kinder Morgan, Inc. (b)
|
|
14,572,542
|
See
Notes to Financial Statements
Page
9
First
Trust Energy Infrastructure Fund (FIF)
Portfolio
of Investments (Continued)
May
31, 2023 (Unaudited)
| Shares
|
|
Description
|
|
Value
|
| COMMON
STOCKS (a) (Continued) |
| |
|
Oil,
Gas & Consumable Fuels (Continued) |
|
|
| 176,123
|
|
ONEOK, Inc. (b)
|
|
$9,979,129
|
| 109,230
|
|
Shell PLC, ADR (b)
|
|
6,116,880
|
| 103,070
|
|
Targa Resources Corp. (b)
|
|
7,013,914
|
| 20,455
|
|
TC Energy Corp.
|
|
796,518
|
| 106,730
|
|
TotalEnergies SE, ADR
|
|
6,008,899
|
| 374,750
|
|
Williams (The) Cos., Inc. (b)
|
|
10,740,335
|
|
|
|
|
|
94,024,997
|
|
|
|
Semiconductors
& Semiconductor Equipment – 0.2% |
|
|
| 2,040
|
|
Enphase Energy, Inc. (c)
|
|
354,715
|
|
|
|
Water
Utilities – 0.1% |
|
|
| 2,170
|
|
American Water Works Co., Inc.
|
|
313,457
|
|
|
|
Total Common Stocks
|
|
176,857,813
|
| |
|
(Cost
$185,816,554) |
|
|
| Units
|
|
Description
|
|
Value
|
| MASTER
LIMITED PARTNERSHIPS (a) – 47.4% |
| |
|
Chemicals –
0.6% |
|
|
| 69,395
|
|
Westlake Chemical Partners, L.P.
|
|
1,491,298
|
|
|
|
Energy
Equipment & Services – 0.1% |
|
|
| 14,800
|
|
USA Compression Partners, L.P.
|
|
276,464
|
|
|
|
Independent
Power & Renewable Electricity Producers – 3.2% |
|
|
| 135,418
|
|
NextEra Energy Partners, L.P. (d)
|
|
8,114,247
|
|
|
|
Oil,
Gas & Consumable Fuels – 43.5% |
|
|
| 99,089
|
|
Cheniere Energy Partners, L.P.
|
|
4,404,506
|
| 1,572,880
|
|
Energy Transfer, L.P.
|
|
19,503,712
|
| 29,780
|
|
EnLink Midstream, LLC (d)
|
|
290,653
|
| 824,240
|
|
Enterprise Products Partners, L.P.
|
|
20,877,999
|
| 432,710
|
|
Hess Midstream, L.P., Class A (d)
|
|
12,068,282
|
| 176,346
|
|
Holly Energy Partners, L.P.
|
|
3,027,861
|
| 359,772
|
|
Magellan Midstream Partners, L.P.
|
|
21,661,872
|
| 240,770
|
|
MPLX, L.P.
|
|
8,027,272
|
| 1,455,078
|
|
Plains GP Holdings, L.P., Class A (d)
|
|
19,789,061
|
| 29,940
|
|
Western Midstream Partners, L.P.
|
|
755,685
|
|
|
|
|
|
110,406,903
|
|
|
|
Total Master Limited Partnerships
|
|
120,288,912
|
| |
|
(Cost
$98,108,517) |
|
|
| Shares
|
|
Description
|
|
Value
|
| MONEY
MARKET FUNDS (a) – 9.2% |
| 23,397,919
|
|
Morgan Stanley Institutional Liquidity Funds - Treasury Portfolio - Institutional Class - 4.96% (e)
|
|
23,397,919
|
| |
|
(Cost
$23,397,919) |
|
|
| |
|
Total Investments – 126.2%
|
|
320,544,644
|
| |
|
(Cost
$307,322,990) |
|
|
| Number
of Contracts |
|
Description
|
|
Notional
Amount |
|
Exercise
Price |
|
Expiration
Date |
|
Value
|
| CALL
OPTIONS WRITTEN – (0.1)% |
| (1,671)
|
|
AES (The) Corp. (f)
|
|
$(3,298,554)
|
|
$26.00
|
|
06/16/23
|
|
(16,710)
|
| (1,046)
|
|
Alliant Energy Corp. (f)
|
|
(5,382,716)
|
|
57.50
|
|
06/16/23
|
|
(13,598)
|
| (1,500)
|
|
Kinder Morgan, Inc.
|
|
(2,416,500)
|
|
17.00
|
|
07/21/23
|
|
(28,500)
|
Page
10
See
Notes to Financial Statements
First
Trust Energy Infrastructure Fund (FIF)
Portfolio
of Investments (Continued)
May
31, 2023 (Unaudited)
| Number
of Contracts |
|
Description
|
|
Notional
Amount |
|
Exercise
Price |
|
Expiration
Date |
|
Value
|
| CALL
OPTIONS WRITTEN (Continued) |
| (1,761)
|
|
ONEOK, Inc.
|
|
$(9,977,826)
|
|
$62.50
|
|
07/21/23
|
|
$(61,635)
|
| (1,092)
|
|
Shell PLC, ADR
|
|
(6,115,200)
|
|
63.00
|
|
06/16/23
|
|
(5,460)
|
| (1,030)
|
|
Targa Resources Corp. (f)
|
|
(7,009,150)
|
|
80.00
|
|
06/16/23
|
|
(6,180)
|
| (1,247)
|
|
Williams (The) Cos., Inc.
|
|
(3,573,902)
|
|
30.00
|
|
06/16/23
|
|
(9,976)
|
|
|
|
Total Call Options Written
|
|
(142,059)
|
| |
|
(Premiums
received $608,127) |
|
|
|
|
|
|
|
|
| |
Outstanding Loans – (27.7)%
|
|
(70,300,000)
|
|
|
Net Other Assets and Liabilities – 1.6%
|
|
3,800,712
|
|
|
Net Assets – 100.0%
|
|
$253,903,297
|
Interest
Rate Swap Agreements:
| Counterparty
|
|
Rate
Receivable |
|
Expiration
Date |
|
Notional
Amount |
|
Rate
Payable |
|
Unrealized
Appreciation
(Depreciation)/
Value |
| Bank of Nova Scotia(1)
|
|
(2)
|
|
09/03/24
|
|
$36,475,000
|
|
2.367%(3)
|
|
$1,202,670
|
| N/A(4)
(5) |
|
5.080%(6)
|
|
10/21/25
|
|
303,796
|
|
5.090%(7)
|
|
(168)
|
|
|
|
|
|
|
|
$36,778,796
|
|
|
|
$1,202,502
|
| (1) Payment
frequency is monthly |
| (2) 1
month LIBOR until 08/03/23 and then the rate is SOFR + 0.11448%. At 05/31/23, the rate accrued is 5.193%. |
| (3)
Fixed Rate |
|
|
|
|
|
|
|
|
|
|
| (4)
Centrally cleared on the Chicago Mercantile Exchange |
| (5)
No cash payments are made by either party prior to the expiration dates shown above |
| (6)
Federal Funds Rate |
|
|
|
|
|
|
|
|
|
|
| (7)
SOFR + 0.01036% |
|
|
|
|
|
|
|
|
|
|
| (a)
|
All
of these securities are available to serve as collateral for the outstanding loans. |
| (b)
|
All
or a portion of this security’s position represents cover for outstanding options written. |
| (c)
|
Non-income
producing security. |
| (d)
|
This
security is taxed as a “C” corporation for federal income tax purposes. |
| (e)
|
Rate
shown reflects yield as of May 31, 2023. |
| (f)
|
This
investment is fair valued by the Advisor’s Pricing Committee in accordance with procedures approved by the Fund’s Board of
Trustees, and in accordance with the provisions of the Investment Company Act of 1940 and rules thereunder, as amended. At May 31, 2023,
investments noted as such are valued at $(36,488) or (0.0)% of net assets. |
| ADR
|
American
Depositary Receipt |
| CAD
|
Canadian
Dollar |
| EUR
|
Euro
|
| LIBOR
|
London
Interbank Offered Rate |
| SOFR
|
Secured
Overnight Financing Rate |
See
Notes to Financial Statements
Page
11
First
Trust Energy Infrastructure Fund (FIF)
Portfolio
of Investments (Continued)
May
31, 2023 (Unaudited)
Valuation
Inputs
A
summary of the inputs used to value the Fund’s investments as of May 31, 2023 is as follows (see Note 3A - Portfolio Valuation in
the Notes to Financial Statements):
| ASSETS
TABLE |
|
|
Total
Value at
5/31/2023 |
Level
1
Quoted
Prices |
Level
2
Significant
Observable
Inputs |
Level
3
Significant
Unobservable
Inputs |
|
Common Stocks*
|
$ 176,857,813
|
$ 176,857,813
|
$ —
|
$ —
|
|
Master Limited Partnerships*
|
120,288,912
|
120,288,912
|
—
|
—
|
|
Money Market Funds
|
23,397,919
|
23,397,919
|
—
|
—
|
|
Total Investments
|
320,544,644
|
320,544,644
|
—
|
—
|
|
Interest Rate Swap Agreements
|
1,202,670
|
—
|
1,202,670
|
—
|
|
Total
|
$ 321,747,314
|
$ 320,544,644
|
$ 1,202,670
|
$—
|
|
|
| LIABILITIES
TABLE |
|
|
Total
Value at
5/31/2023 |
Level
1
Quoted
Prices |
Level
2
Significant
Observable
Inputs |
Level
3
Significant
Unobservable
Inputs |
|
Call Options Written
|
$ (142,059)
|
$ (105,571)
|
$ (36,488)
|
$ —
|
|
Interest Rate Swap Agreements
|
(168)
|
—
|
(168)
|
—
|
|
Total
|
$ (142,227)
|
$ (105,571)
|
$ (36,656)
|
$—
|
| *
|
See
Portfolio of Investments for industry breakout. |
Page
12
See
Notes to Financial Statements
First
Trust Energy Infrastructure Fund (FIF)
Statement
of Assets and Liabilities
May
31, 2023 (Unaudited)
| ASSETS:
|
|
|
Investments, at value
(Cost $307,322,990)
|
$ 320,544,644
|
|
Cash segregated as collateral for open swap contracts
|
1,458,874
|
|
Swap contracts, at value
|
1,202,670
|
| Receivables:
|
|
|
Investment securities sold
|
2,428,329
|
|
Dividends
|
484,933
|
|
Interest
|
81,015
|
|
Dividend reclaims
|
9,449
|
|
Prepaid expenses
|
17,217
|
|
Total Assets
|
326,227,131
|
| LIABILITIES:
|
|
|
Outstanding loans
|
70,300,000
|
|
Options written, at value (Premiums received $608,127)
|
142,059
|
|
Due to custodian
|
21,525
|
|
Swap contracts, at value
|
168
|
|
Due to custodian foreign currency (Proceeds $2)
|
2
|
| Payables:
|
|
|
Investment securities purchased
|
1,244,848
|
|
Investment advisory fees
|
281,503
|
|
Interest and fees on loans
|
253,538
|
|
Audit and tax fees
|
29,925
|
|
Administrative fees
|
15,757
|
|
Shareholder reporting fees
|
12,817
|
|
Trustees’ fees and expenses
|
7,666
|
|
Custodian fees
|
7,216
|
|
Legal fees
|
2,248
|
|
Transfer agent fees
|
1,505
|
|
Financial reporting fees
|
758
|
|
Other liabilities
|
2,299
|
|
Total Liabilities
|
72,323,834
|
|
NET ASSETS
|
$253,903,297
|
| NET
ASSETS consist of: |
|
|
Paid-in capital
|
$ 229,909,801
|
|
Par value
|
156,660
|
|
Accumulated distributable earnings (loss)
|
23,836,836
|
|
NET ASSETS
|
$253,903,297
|
|
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share)
|
$16.21
|
|
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized)
|
15,666,039
|
See
Notes to Financial Statements
Page
13
First
Trust Energy Infrastructure Fund (FIF)
Statement
of Operations
For
the Six Months Ended May 31, 2023 (Unaudited)
| INVESTMENT
INCOME: |
|
|
Dividends (net of foreign withholding tax of $156,312)
|
$ 3,572,615
|
|
Interest
|
418,623
|
|
Total investment income
|
3,991,238
|
| EXPENSES:
|
|
|
Interest and fees on loans
|
1,969,975
|
|
Investment advisory fees
|
1,678,778
|
|
Administrative fees
|
79,745
|
|
Shareholder reporting fees
|
71,049
|
|
Audit and tax fees
|
30,470
|
|
Legal fees
|
30,070
|
|
Custodian fees
|
14,538
|
|
Listing expense
|
10,554
|
|
Trustees’ fees and expenses
|
9,192
|
|
Transfer agent fees
|
9,167
|
|
Financial reporting fees
|
4,612
|
|
Other
|
21,526
|
|
Total expenses
|
3,929,676
|
|
NET INVESTMENT INCOME (LOSS)
|
61,562
|
| NET
REALIZED AND UNREALIZED GAIN (LOSS): |
|
| Net
realized gain (loss) on: |
|
|
Investments
|
11,905,161
|
|
Written options contracts
|
1,834,472
|
|
Swap contracts
|
390,281
|
|
Foreign currency transactions
|
(24,146)
|
|
Net realized gain (loss)
|
14,105,768
|
| Net
change in unrealized appreciation (depreciation) on: |
|
|
Investments
|
(34,625,194)
|
|
Written options contracts
|
877,800
|
|
Swap contracts
|
(199,583)
|
|
Foreign currency translation
|
507
|
|
Net change in unrealized appreciation (depreciation)
|
(33,946,470)
|
|
NET REALIZED AND UNREALIZED GAIN (LOSS)
|
(19,840,702)
|
|
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
|
$(19,779,140)
|
Page
14
See
Notes to Financial Statements
First
Trust Energy Infrastructure Fund (FIF)
Statements
of Changes in Net Assets
|
|
Six
Months
Ended
5/31/2023
(Unaudited) |
|
Year
Ended
11/30/2022 |
| OPERATIONS:
|
|
|
|
|
Net investment income (loss)
|
$ 61,562
|
|
$ 965,487
|
|
Net realized gain (loss)
|
14,105,768
|
|
42,103,089
|
|
Net change in unrealized appreciation (depreciation)
|
(33,946,470)
|
|
20,570,411
|
|
Net increase (decrease) in net assets resulting from operations
|
(19,779,140)
|
|
63,638,987
|
| DISTRIBUTIONS
TO SHAREHOLDERS FROM: |
|
|
|
|
Investment operations
|
(7,192,130)
|
|
(8,831,837)
|
|
Return of capital
|
—
|
|
(3,385,574)
|
|
Total distributions to shareholders
|
(7,192,130)
|
|
(12,217,411)
|
| CAPITAL
TRANSACTIONS: |
|
|
|
|
Repurchase of Common Shares *
|
(333,089)
|
|
(14,078,800)
|
|
Net increase (decrease) in net assets resulting from capital transactions
|
(333,089)
|
|
(14,078,800)
|
|
Total increase (decrease) in net assets
|
(27,304,359)
|
|
37,342,776
|
| NET
ASSETS: |
|
|
|
|
Beginning of period
|
281,207,656
|
|
243,864,880
|
|
End of period
|
$ 253,903,297
|
|
$ 281,207,656
|
| CAPITAL
TRANSACTIONS were as follows: |
|
|
|
|
Common Shares at beginning of period
|
15,688,201
|
|
16,664,338
|
|
Common Shares repurchased *
|
(22,162)
|
|
(976,137)
|
|
Common Shares at end of period
|
15,666,039
|
|
15,688,201
|
| *
|
On
September 15, 2020, the Fund commenced a share repurchase program. For the six months ended May 31, 2023 and the fiscal year ended November
30, 2022, the Fund repurchased 22,162 and 976,137 Common Shares, respectively, at a weighted-average discount of 13.97% and 13.62%, respectively,
from net asset value per share. The Fund’s share repurchase program ended on March 15, 2023. |
See
Notes to Financial Statements
Page
15
First
Trust Energy Infrastructure Fund (FIF)
Statement
of Cash Flows
For
the Six Months Ended May 31, 2023 (Unaudited)
| Cash
flows from operating activities: |
|
|
|
Net increase (decrease) in net assets resulting from operations
|
$(19,779,140)
|
|
| Adjustments
to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities: |
|
|
|
Purchases of investments
|
(137,588,951)
|
|
|
Sales, maturities and paydown of investments
|
121,949,078
|
|
|
Proceeds from written options
|
2,476,171
|
|
|
Amount paid to close written options
|
(124,915)
|
|
|
Return of capital received from investment in MLPs
|
4,820,520
|
|
|
Net realized gain/loss on investments and written options
|
(13,739,633)
|
|
|
Net change in unrealized appreciation/depreciation on investments and written options
|
33,747,394
|
|
|
Net change in unrealized appreciation/depreciation on swap contracts
|
199,583
|
|
| Changes
in assets and liabilities: |
|
|
|
Increase in interest receivable
|
(81,015)
|
|
|
Increase in dividend reclaims receivable
|
(2,836)
|
|
|
Decrease in dividends receivable
|
24,109
|
|
|
Increase in prepaid expenses
|
(12,224)
|
|
|
Increase in due to custodian foreign currency
|
2
|
|
|
Increase in due to custodian
|
21,525
|
|
|
Increase in interest and fees payable on loans
|
96,572
|
|
|
Increase in investment advisory fees payable
|
923
|
|
|
Decrease in audit and tax fees payable
|
(30,363)
|
|
|
Increase in legal fees payable
|
82
|
|
|
Decrease in shareholder reporting fees payable
|
(12,952)
|
|
|
Increase in administrative fees payable
|
497
|
|
|
Increase in custodian fees payable
|
2,441
|
|
|
Decrease in transfer agent fees payable
|
(27)
|
|
|
Increase in trustees’ fees and expenses payable
|
4,583
|
|
|
Decrease in financial reporting fees payable
|
(13)
|
|
|
Decrease in other liabilities payable
|
(286)
|
|
|
Cash used in operating activities
|
|
$(8,028,875)
|
| Cash
flows from financing activities: |
|
|
|
Repurchase of Common Shares
|
(333,089)
|
|
|
Distributions to Common Shareholders from investment operations
|
(7,192,130)
|
|
|
Cash used in financing activities
|
|
(7,525,219)
|
|
Decrease in cash and cash segregated as collateral for open swap contracts (a)
|
|
(15,554,094)
|
|
Cash and cash segregated as collateral for open swap contracts at beginning of period
|
|
17,012,968
|
|
Cash and cash segregated as collateral for open swap contracts at end of period
|
|
$1,458,874
|
| Supplemental
disclosure of cash flow information: |
|
|
|
Cash paid during the period for interest and fees
|
|
$1,873,403
|
| Cash
and cash segregated as collateral for open swap contracts reconciliation: |
|
|
|
Cash
|
$0
|
|
|
Cash segregated as collateral for open swap contracts
|
1,458,874
|
|
|
Cash and cash segregated as collateral for open swap contracts at end of period
|
|
$1,458,874
|
| (a)
|
Includes
net change in unrealized appreciation (depreciation) on foreign currency of $507. |
Page
16
See
Notes to Financial Statements
First
Trust Energy Infrastructure Fund (FIF)
Financial
Highlights
For
a Common Share outstanding throughout each period
|
|
Six
Months
Ended
5/31/2023
(Unaudited) |
|
Year
Ended November 30, |
|
|
2022
|
|
2021
|
|
2020
|
|
2019
|
|
2018
|
|
|
Net asset value, beginning of period
|
$ 17.92
|
|
$ 14.63
|
|
$ 12.47
|
|
$ 16.84
|
|
$ 16.79
|
|
$ 18.73
|
| Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income (loss)
|
0.01
|
|
0.06
|
|
0.16
|
|
0.03
|
|
0.01
|
|
0.18
|
|
Net realized and unrealized gain (loss)
|
(1.26)
|
|
3.84
|
|
2.68
|
|
(3.43)
|
|
1.36
|
|
(0.80)
|
|
Total from investment operations
|
(1.25)
|
|
3.90
|
|
2.84
|
|
(3.40)
|
|
1.37
|
|
(0.62)
|
| Distributions
paid to shareholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
(0.46)
|
|
(0.17)
|
|
(0.18)
|
|
(0.46)
|
|
(0.25)
|
|
(0.63)
|
|
Net realized gain
|
—
|
|
(0.37)
|
|
—
|
|
—
|
|
(0.05)
|
|
—
|
|
Return of capital
|
—
|
|
(0.21)
|
|
(0.57)
|
|
(0.53)
|
|
(1.02)
|
|
(0.69)
|
|
Total distributions paid to Common Shareholders
|
(0.46)
|
|
(0.75)
|
|
(0.75)
|
|
(0.99)
|
|
(1.32)
|
|
(1.32)
|
|
Common Share repurchases
|
0.00 (a)
|
|
0.14
|
|
0.07
|
|
0.02
|
|
—
|
|
—
|
|
Net asset value, end of period
|
$16.21
|
|
$17.92
|
|
$14.63
|
|
$12.47
|
|
$16.84
|
|
$16.79
|
|
Market value, end of period
|
$13.92
|
|
$15.24
|
|
$13.23
|
|
$10.52
|
|
$15.45
|
|
$14.86
|
|
Total return based on net asset value (b)
|
(6.68)%
|
|
29.10%
|
|
24.46%
|
|
(19.31)%
|
|
9.14%
|
|
(2.83)%
|
|
Total return based on market value (b)
|
(5.77)%
|
|
21.34%
|
|
33.41%
|
|
(25.80)%
|
|
13.13%
|
|
(9.00)%
|
| Ratios
to average net assets/supplemental data: |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (in 000’s)
|
$ 253,903
|
|
$ 281,208
|
|
$ 243,865
|
|
$ 216,439
|
|
$ 295,623
|
|
$ 294,617
|
|
Ratio of total expenses to average net assets
|
2.96% (c)
|
|
2.03%
|
|
1.70%
|
|
2.04%
|
|
2.65%
|
|
2.50%
|
|
Ratio of total expenses to average net assets excluding interest expense and fees on loans
|
1.48% (c)
|
|
1.45%
|
|
1.45%
|
|
1.52%
|
|
1.55%
|
|
1.54%
|
|
Ratio of net investment income (loss) to average net assets
|
0.05% (c)
|
|
0.36%
|
|
0.99%
|
|
0.24%
|
|
0.05%
|
|
1.02%
|
|
Portfolio turnover rate
|
29%
|
|
60%
|
|
73%
|
|
80%
|
|
55%
|
|
58%
|
| Indebtedness:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans outstanding (in 000’s)
|
$ 70,300
|
|
$ 70,300
|
|
$ 62,800
|
|
$ 55,300
|
|
$ 107,500
|
|
$ 104,500
|
|
Asset coverage per $1,000 of indebtedness (d)
|
$ 4,612
|
|
$ 5,000
|
|
$ 4,883
|
|
$ 4,914
|
|
$ 3,750
|
|
$ 3,819
|
| (a)
|
Amount
represents less than $0.01 per share. |
| (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 of less than one year. Past performance
is not indicative of future results. |
| (c)
|
Annualized.
|
| (d)
|
Calculated
by subtracting the Fund’s total liabilities (not including the loans outstanding) from the Fund’s total assets, and dividing
by the outstanding loans balance in 000’s. |
See
Notes to Financial Statements
Page
17
Notes
to Financial Statements
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
1. Organization
First
Trust Energy Infrastructure Fund (the “Fund”) is a non-diversified, closed-end management investment company organized as
a Massachusetts business trust on February 22, 2011, 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 “FIF”
on the New York Stock Exchange (“NYSE”).
The
Fund’s investment objective is to seek a high level of total return with an emphasis on current distributions paid to shareholders.
The Fund pursues its investment objective by investing primarily in securities of companies engaged in the energy infrastructure sector.
These companies principally include publicly-traded master limited partnerships and limited liability companies taxed as partnerships
(“MLPs”), MLP affiliates, YieldCos, pipeline companies, utilities and other infrastructure-related companies that derive at
least 50% of their revenues from operating, or providing services in support of, infrastructure assets such as pipelines, power transmission
and petroleum and natural gas storage in the petroleum, natural gas and power generation industries (collectively, “Energy Infrastructure
Companies”). For purposes of the Fund’s investment objective, total return includes capital appreciation of, and all distributions
received from, securities in which the Fund invests, taking into account the varying tax characteristics of such securities. Under normal
market conditions, the Fund invests at least 80% of its managed assets (total asset value of the Fund minus the sum of the Fund’s
liabilities other than the principal amount of borrowings) in securities of Energy Infrastructure Companies. There can be no assurance
that the Fund will achieve its investment objective. The Fund may not be appropriate for all investors.
2. Managed
Distribution Policy
The
Board of Trustees of the Fund has approved a managed distribution policy for the Fund (the “Plan”) in reliance on exemptive
relief received from the SEC that permits the Fund to make periodic distributions of long-term capital gains as frequently as monthly
each tax year. Under the Plan, the Fund currently intends to continue to pay a monthly distribution that reflects the distributable cash
flow of the Fund. A portion of this monthly distribution may include realized capital gains. This may result in a reduction of the long-term
capital gain distribution necessary at year end by distributing realized capital gains throughout the year. The annual distribution rate
is independent of the Fund’s performance during any particular period. Accordingly, you should not draw any conclusions about the
Fund’s investment performance from the amount of any distribution or from the terms of the Plan. The Board of Trustees may amend
or terminate the Plan at any time without prior notice to shareholders.
3. Significant
Accounting Policies
The
Fund is considered an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board Accounting
Standards Codification Topic 946, “Financial Services-Investment Companies.” The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of the financial statements. The preparation of the financial statements
in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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. Foreign securities are priced using data reflecting the earlier closing of the principal markets for those securities.
The Fund’s 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), dividends declared but unpaid, and any borrowings
of the Fund) by the total number of Common Shares outstanding.
The
Fund’s investments are valued daily at market value or, in the absence of market value with respect to any portfolio securities,
at fair value. Market value prices represent readily available market quotations such as last sale or official closing prices from a national
or foreign exchange (i.e., a regulated market) and are primarily obtained from third-party pricing services. Fair value prices represent
any prices not considered market value prices and are either obtained from a third-party pricing service or are determined by the Pricing
Committee of the Fund’s investment advisor, First Trust Advisors L.P. (“First Trust” or the “Advisor”),
in accordance with valuation procedures approved by the Fund’s Board of Trustees, and in accordance with provisions of the 1940
Act and rules thereunder. Investments valued by the Advisor’s Pricing Committee, if any, are footnoted as such in the footnotes
to the Portfolio of Investments. The Fund’s investments are valued as follows:
Common
stocks, MLPs, and other equity securities listed on any national or foreign exchange (excluding The Nasdaq Stock Market LLC (“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 or, for Nasdaq and AIM securities, the official closing price.
Notes
to Financial Statements (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
Securities
traded on more than one securities exchange are valued at the last sale price or official closing price, as applicable, at the close of
the securities exchange representing the primary exchange for such securities.
Securities
trading on foreign exchanges or over-the-counter markets that close prior to the NYSE close may be valued using a systematic fair valuation
model provided by a third-party pricing service. If these foreign securities meet certain criteria in relation to the valuation model,
their valuation is systematically adjusted to reflect the impact of movement in the U.S. market after the close of the foreign markets.
Shares
of open-end funds are valued based on NAV per share.
Exchange-traded
options 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 contracts are valued at the mean of their most recent bid and ask price, if both are available. Over-the-counter
options contracts are valued as follows, depending on the market in which the instrument trades: (1) the mean of their most recent
bid and ask price, if available; or (2) a price based on the equivalent exchange-traded option.
Securities
traded in an over-the-counter market are valued at the close price or the last trade price.
Swaps
are fair valued utilizing quotations provided by a third-party pricing service or, if the third-party pricing service does not provide
a value, by quotes provided by the selling dealer or financial institution.
Certain
securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by the Advisor’s Pricing
Committee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be
publicly sold without registration under the Securities Act of 1933, as amended) for which a third-party pricing service is unable to
provide a market price; securities whose trading has been formally suspended; a security whose market or fair value price is not available
from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the
value of the security after the market has closed but before the calculation of the Fund’s NAV or make it difficult or impossible
to obtain a reliable market quotation; and a security whose price, as provided by the third-party pricing service, does not reflect the
security’s fair value. As a general principle, the current fair value of a security would appear to be the amount which the owner
might reasonably expect to receive for the security upon its current sale. When fair value prices are used, generally they will differ
from market quotations or official closing prices on the applicable exchanges. A variety of factors may be considered in determining the
fair value of such securities, including, but not limited to, the following:
| 1)
|
the
last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing price; |
| 2)
|
the
type of security; |
| 3)
|
the
size of the holding; |
| 4)
|
the
initial cost of the security; |
| 5)
|
transactions
in comparable securities; |
| 6)
|
price
quotes from dealers and/or third-party pricing services; |
| 7)
|
relationships
among various securities; |
| 8)
|
information
obtained by contacting the issuer, analysts, or the appropriate stock exchange; |
| 9)
|
an
analysis of the issuer’s financial statements; |
| 10)
|
the
existence of merger proposals or tender offers that might affect the value of the security; and |
| 11)
|
other
relevant factors. |
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 or exchange-traded 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; |
| 8)
|
whether
the effects of the event are isolated or whether they affect entire markets, countries or regions; and |
| 9)
|
other
relevant factors. |
Notes
to Financial Statements (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
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:
| •
|
Level
1 – Level 1 inputs are quoted prices in active markets for identical investments. An active market is a market in which transactions
for the investment occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
| •
|
Level
2 – Level 2 inputs are observable inputs, either directly or indirectly, and include the following: |
| o
|
Quoted
prices for similar investments in active markets. |
| o
|
Quoted
prices for identical or similar investments in markets that are non-active. A non-active market is a market where there are few transactions
for the investment, 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 investment (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. |
| •
|
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 investment. |
The
inputs or methodologies used for valuing investments are not necessarily an indication of the risk associated with investing in those
investments. A summary of the inputs used to value the Fund’s investments as of May 31, 2023, is included with the Fund’s
Portfolio of Investments.
B. Option
Contracts
The
Fund is subject to equity price risk in the normal course of pursuing its investment objective and may write (sell) options to hedge against
changes in the value of equities. Also, the Fund seeks to generate additional income, in the form of premiums received, from writing (selling)
the options. The Fund may write (sell) covered call or put options (“options”) on all or a portion of the MLPs and common
stocks held in the Fund’s portfolio as determined to be appropriate by Energy Income Partners, LLC (“EIP” or the “Sub-Advisor”).
The number of options the Fund can write (sell) is limited by the amount of MLPs and common stocks the Fund holds in its portfolio. The
Fund will not write (sell) “naked” or uncovered options. 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
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.
The
options that the Fund writes (sells) will either be exercised, expire or be canceled 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 and is included in “Net realized gain (loss) on investments”
on the Statement of Operations. 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 options contracts” 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
Notes
to Financial Statements (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
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.
Over-the-counter
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. Swap
Agreements
The
Fund may enter into total return equity swap and interest rate swap agreements. A swap is a financial instrument that typically involves
the exchange of cash flows between two parties (“Counterparties”) on specified dates (settlement dates) where the cash flows
are based on agreed upon prices, rates, etc. Payment received or made by the Fund for interest rate swaps are recorded on the Statement
of Operations as “Net realized gain (loss) on swap contracts.” When an interest rate swap is terminated, the Fund will record
a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund’s basis
in the contract, if any. Generally, the basis of the contracts, if any, is the premium received or paid. Swap agreements are individually
negotiated and involve the risk of the potential inability of the Counterparties to meet the terms of the agreement. In connection with
these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to
provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap
agreement. In the event of a default by a Counterparty, the Fund will seek withdrawal of the collateral and may incur certain costs exercising
its rights with respect to the collateral. If a Counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial
difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding.
The Fund may obtain only limited recovery or may obtain no recovery in such circumstances.
Swap
agreements may increase or decrease the overall volatility of the investments of the Fund. The performance of swap agreements may be affected
by changes in the specific interest rate, security, currency, or other factors that determine the amounts of payments due to and from
the Fund. The Fund’s maximum interest rate risk to meet its future payments under swap agreements outstanding at May 31, 2023, is
equal to the total notional amount as shown on the Portfolio of Investments. The notional amount represents the U.S. dollar value of the
contract as of the day of the opening transaction or contract reset. When the Fund enters into a swap agreement, any premium paid is included
in “Swap contracts, at value” on the Statement of Assets and Liabilities.
The
Fund held interest rate swap agreements at May 31, 2023 to hedge against changes in borrowing rates under the Fund’s credit agreement.
An interest rate swap agreement involves the Fund’s agreement to exchange a stream of interest payments for another party’s
stream of cash flows. Interest rate swaps do not involve the delivery of securities or other underlying assets or principal. Accordingly,
the risk of loss with respect to interest rate swaps is limited to the net amount of interest payments that the Fund is contractually
obligated to make.
D. Restricted
Cash
Restricted
cash includes cash on deposit with other banks or brokers that is legally restricted as to the withdrawal and primarily serves as collateral
for open swap contracts. The Fund presents restricted cash activity within “Decrease in cash and cash segregated as collateral for
open swap contracts” and as part of “Cash and cash segregated as collateral for open swap contracts at beginning of period”
and “Cash and cash segregated as collateral for open swap contracts at end of period” in the Statement of Cash Flows, along
with a reconciliation of those balances in the Statement of Assets and Liabilities. At May 31, 2023, the Fund had $1,458,874 in restricted
cash associated with interest rate swap agreements as presented on the Statement of Assets and Liabilities as “Cash segregated as
collateral for open swap contracts.”
E. 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 is recorded daily on the accrual basis. The Fund will
rely to some extent on information provided by MLPs, which is not necessarily timely, to estimate taxable income allocable to the MLP
units held in the Fund’s portfolio.
Distributions
received from the Fund’s investments in MLPs generally are comprised of return of capital and investment income. The Fund records
estimated return of capital and investment income based on historical information available from each MLP. These estimates may subsequently
be revised based on information received from the MLPs after their tax reporting periods are concluded. For the six months ended May 31,
2023, distributions of $4,820,520 received from MLPs have been reclassified as return of capital. The cost basis of applicable MLPs has
been reduced accordingly.
Notes
to Financial Statements (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
The
United Kingdom’s Financial Conduct Authority (the “FCA”), which regulates the London Interbank Offered Rates (“LIBOR”),
announced on March 5, 2021 that it intended to phase-out all LIBOR reference rates, beginning December 31, 2021. Since that announcement,
the FCA has ceased publication of all non-USD LIBOR reference rates and the 1-week and 2-month USD LIBOR reference rates as of December
31, 2021. The remaining USD LIBOR settings will cease to be published or no longer be representative immediately after June 30, 2023.
The International Swaps and Derivatives Association, Inc. (“ISDA”) confirmed that the FCA’s March 5, 2021 announcement
of its intention to cease providing LIBOR reference rates, constituted an index cessation event under the Interbank Offered Rates (“IBOR”)
Fallbacks Supplement and the ISDA 2020 IBOR Fallbacks Protocol for all 35 LIBOR settings and confirmed that the spread adjustment to be
used in ISDA fallbacks was fixed as of the date of the announcement.
In
the United States, the Alternative Reference Rates Committee (the “ARRC”), a group of market participants convened by the
Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York in cooperation with other federal and state
government agencies, has since 2014 undertaken efforts to identify U.S. dollar reference interest rates as alternatives to LIBOR and to
facilitate the mitigation of LIBOR-related risks. In June 2017, the ARRC identified the Secured Overnight Financing Rate (“SOFR”),
a broad measure of the cost of cash overnight borrowing collateralized by U.S. Treasury securities, as the preferred alternative for U.S.
dollar LIBOR. The Federal Reserve Bank of New York began daily publishing of SOFR in April 2018. There is no assurance that any alternative
reference rate, including SOFR, will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using
an alternative rate will have the same volume or liquidity.
At
this time, it is not possible to predict the full impact of the elimination of LIBOR and the establishment of an alternative reference
rate on the Fund or its investments.
F. Foreign
Currency
The
books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments and other assets and liabilities are translated
into U.S. dollars at the exchange rates prevailing at the end of the period. Purchases and sales of investments and items of income and
expense are translated on the respective dates of such transactions. Unrealized gains and losses on assets and liabilities, other than
investments in securities, which result from changes in foreign currency exchange rates have been included in “Net change in unrealized
appreciation (depreciation) on foreign currency translation” on the Statement of Operations. Unrealized gains and losses on investments
in securities which result from changes in foreign exchange rates are included with fluctuations arising from changes in market price
and are included in “Net change in unrealized appreciation (depreciation) on investments” on the Statement of Operations.
Net realized foreign currency gains and losses include the effect of changes in exchange rates between trade date and settlement date
on investment security transactions, foreign currency transactions and interest and dividends received and are included in “Net
realized gain (loss) on foreign currency transactions” on the Statement of Operations. The portion of foreign currency gains and
losses related to fluctuations in exchange rates between the initial purchase settlement date and subsequent sale trade date is included
in “Net realized gain (loss) on investments” on the Statement of Operations.
G. Offsetting
on the Statement of Assets and Liabilities
Offsetting
assets and liabilities requires entities to disclose both gross and net information about instruments and transactions eligible for offset
on the Statement of Assets and Liabilities and disclose instruments and transactions subject to master netting or similar agreements.
These disclosure requirements are intended to help investors and other financial statement users better assess the effect or potential
effect of offsetting arrangements on the Fund’s financial position. The transactions subject to offsetting disclosures are derivative
instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions.
This
disclosure, if applicable, is included within each Fund’s Portfolio of Investments under the heading “Offsetting Assets and
Liabilities.” For financial reporting purposes, the Fund does not offset financial assets and financial liabilities that are subject
to master netting arrangements (“MNAs”) or similar agreements on the Statement of Assets and Liabilities. MNAs provide the
right, in the event of default (including bankruptcy and insolvency), for the non-defaulting counterparty to liquidate the collateral
and calculate the net exposure to the defaulting party or request additional collateral.
Notes
to Financial Statements (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
At
May 31, 2023, derivative assets and liabilities (by type) on a gross basis are as follows:
|
|
|
|
|
|
|
|
Gross
Amounts not Offset
in the Statement of
Assets and Liabilities |
|
|
|
|
Gross
Amounts of
Recognized
Assets |
|
Gross
Amounts
Offset in the
Statement of
Assets
and Liabilities |
|
Net
Amounts of
Assets
Presented
in the Statement
of Assets and
Liabilities |
|
Financial
Instruments |
|
Collateral
Amounts
Received |
|
Net
Amount |
Interest
Rate Swap
Agreements |
$ 1,202,670
|
|
$ —
|
|
$ 1,202,670
|
|
$ —
|
|
$ —
|
|
$ 1,202,670
|
|
|
|
|
|
|
|
|
Gross
Amounts not Offset
in the Statement of
Assets and Liabilities |
|
|
|
|
Gross
Amounts of
Recognized
Liabilities |
|
Gross
Amounts
Offset in the
Statement of
Assets
and Liabilities |
|
Net
Amounts of
Liabilities
Presented
in the Statement
of Assets and
Liabilities |
|
Financial
Instruments |
|
Collateral
Amounts
Pledged |
|
Net
Amount |
Interest
Rate Swap
Agreements |
$ (168)
|
|
$ —
|
|
$ (168)
|
|
$ —
|
|
$ 168
|
|
$ —
|
H. Dividends
and Distributions to Shareholders
The
Fund intends to pay holders of its Common Shares a recurring monthly distribution that reflects the distributable cash flow of the Fund.
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 net investment income and realized capital gains are determined in accordance with federal income tax regulations, which may differ
from U.S. GAAP. 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 NAV per Common Share. Temporary differences, which arise from recognizing certain
items of income, expense and gain/loss in different periods for financial statement and tax purposes, will reverse at some point in the
future.
The
tax character of distributions paid during the fiscal year ended November 30, 2022 is as follows:
| Distributions
paid from: |
|
|
Ordinary income
|
$8,831,837
|
|
Capital gains
|
—
|
|
Return of capital
|
3,385,574
|
Notes
to Financial Statements (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
As
of November 30, 2022, the components of 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
|
—
|
|
Net unrealized appreciation (depreciation)
|
56,890,204
|
|
Total accumulated earnings (losses)
|
56,890,204
|
|
Other
|
(6,082,098)
|
|
Paid-in capital
|
230,399,550
|
|
Total net assets
|
$281,207,656
|
I. 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 and state income taxes. However, due to the timing and amount of distributions,
the Fund may be subject to an excise tax of 4% of the amount by which approximately 98% of the Fund’s taxable income exceeds the
distributions from such taxable income for the calendar year.
The
Fund intends to utilize provisions of the federal income tax laws, which allow it to carry a realized capital loss forward indefinitely
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 November 30, 2022, for federal income tax purposes, the Fund had no non-expiring of capital loss carryforwards
available, to the extent provided by regulations, to offset future capital gains.
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 ended 2019, 2020, 2021, and 2022 remain open to federal and
state audit. As of May 31, 2023, 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.
As
of May 31, 2023, the aggregate cost, gross unrealized appreciation, gross unrealized depreciation, and net unrealized appreciation/(depreciation)
on investments (including short positions and derivatives, if any) for federal income tax purposes were as follows:
| Tax
Cost |
|
Gross
Unrealized
Appreciation |
|
Gross
Unrealized
(Depreciation) |
|
Net
Unrealized
Appreciation
(Depreciation) |
| $306,714,863
|
|
$29,545,099
|
|
$(14,654,875)
|
|
$14,890,224
|
J. Expenses
The
Fund will pay all expenses directly related to its operations.
4. 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. The Charger Corporation is an Illinois corporation controlled by James A. Bowen, Chief Executive Officer
of First Trust. 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 (the average
daily total asset value of the Fund minus the sum of the Fund’s liabilities other than the principal amount of borrowings). First
Trust also provides fund reporting services to the Fund for a flat annual fee in the amount of $9,250.
EIP
serves as the Fund’s sub-advisor and manages the Fund’s portfolio subject to First Trust’s supervision. The Sub-Advisor
receives a monthly sub-advisory fee calculated at an annual rate of 0.50% of the Fund’s Managed Assets that is paid by First Trust
from its investment advisory fee.
Notes
to Financial Statements (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
First
Trust Capital Partners, LLC (“FTCP”), an affiliate of First Trust, owns, through a wholly-owned subsidiary, a 15% ownership
interest in each of EIP and EIP Partners, LLC, an affiliate of EIP.
Computershare,
Inc. (“Computershare”) serves as the Fund’s transfer agent in accordance with certain fee arrangements. As transfer
agent, Computershare is responsible for maintaining shareholder records for the Fund.
The
Bank of New York Mellon (“BNYM”) serves as the Fund’s administrator, fund accountant, and custodian in accordance with
certain fee arrangements. As administrator and fund accountant, BNYM is responsible for providing certain administrative and accounting
services to the Fund, including maintaining the Fund’s books of account, records of the Fund’s securities transactions, and
certain other books and records. As custodian, BNYM is responsible for custody of the Fund’s assets. BNYM is a subsidiary of The
Bank of New York Mellon Corporation, a financial holding company.
Each
Trustee who is not an officer or employee of First Trust, any sub-advisor or any of their affiliates (“Independent Trustees”)
is paid a fixed annual retainer that is allocated equally among each fund in the First Trust Fund Complex. Each Independent Trustee is
also paid an annual per fund fee that varies based on whether the fund is a closed-end or other actively managed fund, a target outcome
fund or an index fund.
Additionally,
the Lead Independent Trustee and the Chairs of the Audit Committee, Nominating and Governance Committee and Valuation Committee are paid
annual fees to serve in such capacities, with such compensation allocated pro rata among each fund in the First Trust Fund Complex based
on net assets. Independent Trustees are reimbursed for travel and out-of-pocket expenses in connection with all meetings. The Lead Independent
Trustee and Committee Chairs rotate every three years. The officers and “Interested” Trustee receive no compensation from
the Fund for acting in such capacities.
5. Purchases
and Sales of Securities
The
cost of purchases and proceeds from sales of securities, excluding short-term investments, for the six months ended May 31, 2023, were
$90,478,321 and $87,956,716, respectively.
6. Derivative
Transactions
The
following table presents the types of derivatives held by the Fund at May 31, 2023, the primary underlying risk exposure and the location
of these instruments as presented on the Statement of Assets and Liabilities.
|
|
|
|
|
Asset
Derivatives |
|
Liability
Derivatives |
Derivative
Instrument |
|
Risk
Exposure |
|
Statement
of Assets and
Liabilities Location |
|
Value
|
|
Statement
of Assets and
Liabilities Location |
|
Value
|
| Written
Options |
|
Equity
Risk |
|
—
|
|
$ —
|
|
Options
written, at value |
|
$ 142,059
|
| Interest
Rate Swap Agreements |
|
Interest
Rate Risk |
|
Swap
contracts, at value |
|
1,202,670
|
|
Swap
contracts, at value |
|
168
|
The
following table presents the amount of net realized gain (loss) and change in net unrealized appreciation (depreciation) recognized for
the six months ended May 31, 2023, on derivative instruments, as well as the primary underlying risk exposure associated with each instrument.
| Statement
of Operations Location |
|
| Equity
Risk Exposure |
|
| Net
realized gain (loss) on written options contracts |
$1,834,472
|
| Net
change in unrealized appreciation (depreciation) on written options contracts |
877,800
|
| Interest
Rate Risk Exposure |
|
| Net
realized gain (loss) on swap contracts |
$390,281
|
| Net
change in unrealized appreciation (depreciation) on swap contracts |
(199,583)
|
During
the six months ended May 31, 2023, the premiums for written options opened were $2,476,171, and the premiums for written options closed,
exercised and expired were $2,193,116.
The
average notional value of interest rate swaps was $36,778,796 for the six months ended May 31, 2023.
The
Fund does not have the right to offset financial assets and liabilities related to option contracts on the Statement of Assets and Liabilities.
Notes
to Financial Statements (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
7. Borrowings
The
Fund has a credit agreement with The Bank of Nova Scotia (“Scotia”). The credit agreement provides a secured line of credit
for the Fund where Fund assets are pledged against advances made to the Fund. The maximum commitment amount is $88,000,000. Prior to February
8, 2023, the maximum commitment amount was $77,000,000. At the option of the Fund, the borrowing rate is either (i) the applicable Term
SOFR rate plus 95 basis points plus (a) 10 basis points for a loan with a one month interest period, (b) 25 basis points for a loan with
a three month interest period, and (c) 40 basis points for a loan with a six month interest period, (ii) Daily Simple SOFR Rate plus 95
basis points plus 11.448 basis points, or (iii) the greatest of (a) the Prime Rate in effect, (b) 2.00% plus the Federal Funds Effective
Rate, or (c) 2.00% plus the Daily Simple SOFR. Under the credit agreement, the Fund pays a commitment fee, charged on any undrawn amount
of the maximum commitment amount, of 0.25% when the loan balance is less than 75% of the maximum commitment or 0.15% in all other events.
As of May 31, 2023, the Fund had two Term SOFR loans under the revolving credit facility totaling $70,300,000, which approximates fair
value. The borrowings are categorized as Level 2 within the fair value hierarchy. For the six months ended May 31, 2023, the average amount
outstanding was $70,300,000, with a weighted average interest rate of 5.53%. The high and low annual interest rates for the six months
ended May 31, 2023, were 6.00% and 4.75%, respectively. The interest rate at May 31, 2023 was 6.00%. The interest and fees are included
in “Interest and fees on loans” on the Statement of Operations.
8. 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.
9. Industry
Concentration Risk
Under
normal market conditions, the Fund invests at least 80% of its Managed Assets in securities of Energy Infrastructure Companies. Given
this industry concentration, the Fund is more susceptible to adverse economic or regulatory occurrences affecting that industry than an
investment company that is not concentrated in a single industry. Energy Infrastructure Company issuers may be subject to a variety of
factors that may adversely affect their business or operations, including high interest costs in connection with capital construction
programs, high leverage costs associated with environmental and other regulations, the effects of economic slowdown, surplus capacity,
increased competition from other providers of services, uncertainties concerning the availability of fuel at reasonable prices, the effects
of energy conservation policies and other factors.
10. Subsequent
Events
Management
has evaluated the impact of all subsequent events on 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.
Additional
Information
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (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 Computershare
Trust Company N.A. (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 Computershare, Inc., P.O. Box 505000, Louisville,
KY 40233-5000.
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 at www.ftportfolios.com;
and (3) on the Securities and Exchange Commission’s (“SEC”) website at www.sec.gov.
Portfolio
Holdings
The
Fund files portfolio holdings information for each month in a fiscal quarter within 60 days after the end of the relevant fiscal quarter
on Form N-PORT. Portfolio holdings information for the third month of each fiscal quarter will be publicly available on the
Additional
Information (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
SEC’s
website at www.sec.gov. The Fund’s complete schedule of portfolio
holdings for the second and fourth quarters of each fiscal year is included in the semi-annual and annual reports to shareholders, respectively,
and is filed with the SEC on Form N-CSR. The semi-annual and annual report for the Fund is available to investors within 60 days after
the period to which it relates. The Fund’s Forms N-PORT and Forms N-CSR are available on the SEC’s website listed above.
Submission
of Matters to a Vote of Shareholders
The
Fund held its Annual Meeting of Shareholders (the “Annual Meeting”) on April 17, 2023. At the Annual Meeting, Denise M. Keefe
and Robert F. Keith were elected by the Common Shareholders of the First Trust Energy Infrastructure Fund as Class I Trustees for a three-year
term expiring at the Fund’s annual meeting of shareholders in 2026. The number of votes cast in favor of Ms. Keefe was 10,649,698
and the number of votes withheld was 1,080,130. The number of votes cast in favor of Mr. Keith was 10,383,526 and the number of votes
withheld was 1,346,302. Richard E. Erickson, Thomas R. Kaldec, James A. Bowen and Niel B. Nielson are the other current and continuing
Trustees.
Amended
and Restated By-Laws
On
June 22, 2023, the Board of Trustees of the Fund amended and restated the existing Amended and Restated By-Laws (and as so amended and
restated, the “By-Laws”), effective immediately. The By-Laws were revised to rescind Article XII and its accompanying control
share provisions, along with other conforming amendments.
The
foregoing description is qualified in its entirety by reference to the full text of the By-Laws, a copy of which can be found in the Current
Report on Form 8-K filed by the Fund with the Securities and Exchange Commission on June 23, 2023, which is available at www.sec.gov,
and may also be obtained by writing to the Secretary of the Fund at the Fund’s principal executive office.
Principal
Risks
The
Fund is a closed-end management investment company designed primarily as a long-term investment and not as a trading vehicle. The Fund
is not intended to be a complete investment program and, due to the uncertainty inherent in all investments, there can be no assurance
that the Fund will achieve its investment objective. The following discussion summarizes the principal risks associated with investing
in the Fund, which includes the risk that you could lose some or all of your investment in the Fund. The Fund is subject to the informational
requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940 and, in accordance therewith, files reports,
proxy statements and other information that is available for review.
Covered
Call Options Risk. As the writer (seller) of a call option, the Fund forgoes, during the life
of the option, the opportunity to profit from increases in the market value of the portfolio security covering the option above the sum
of the premium and the strike price of the call option but retains the risk of loss should the price of the underlying security decline.
The value of call options written by the Fund, which are priced daily, are determined by trading activity in the broad options market
and will be affected by, among other factors, changes in the value of the underlying security in relation to the strike price, changes
in dividend rates of the underlying security, changes in interest rates, changes in actual or perceived volatility of the stock market
and the underlying security, and the time remaining until the expiration date. The value of call options written by the Fund may be adversely
affected if the market for the option is reduced or becomes illiquid. There can be no assurance that a liquid market will exist when the
Fund seeks to close out an option position.
Cyber
Security Risk. The Fund is susceptible to potential operational risks through breaches in cyber security.
A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information,
suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized
access to the Fund’s digital information systems through “hacking” or malicious software coding, but may also result
from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition,
cyber security breaches of the Fund’s third-party service providers, such as its administrator, transfer agent, custodian, or sub-advisor,
as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber
security breaches. The Fund has established risk management systems designed to reduce the risks associated with cyber security. However,
there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems
of issuers or third party service providers. Substantial costs may be incurred by the Fund in order to resolve or prevent cyber incidents
in the future.
Energy
Infrastructure Companies Risk. The Fund primarily invests in MLPs, MLP affiliates, YieldCos, pipeline
companies, utilities, and other infrastructure-related companies that derive at least 50% of their revenues from operating, or providing
services in support of, infrastructure assets such as pipelines, power transmission and petroleum and natural gas storage in the petroleum,
natural
Additional
Information (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
gas
and power generation industries (“Energy Infrastructure Companies”). Energy Infrastructure Companies may be directly
affected by energy commodity prices, especially those Energy Infrastructure Companies which own the underlying energy commodity. A decrease
in the production or availability of natural gas, natural gas liquids, crude oil, coal or other energy commodities or a decrease in the
volume of such commodities available for transportation, processing, storage or distribution may adversely impact the financial performance
of Energy Infrastructure Companies. Energy Infrastructure Companies are subject to significant federal, state and local government regulation
in virtually every aspect of their operations, including how facilities are constructed, maintained and operated, environmental and safety
controls, and the prices they may charge for products and services. Various governmental authorities have the power to enforce compliance
with these regulations and the permits issued under them and violators are subject to administrative, civil and criminal penalties, including
civil fines, injunctions or both. Stricter laws, regulations or enforcement policies could be enacted in the future which would likely
increase compliance costs and may adversely affect the financial performance of Energy Infrastructure Companies. Natural disasters, such
as hurricanes in the Gulf of Mexico, also may impact Energy Infrastructure Companies.
Certain
Energy Infrastructure Companies are subject to the imposition of rate caps, increased competition due to deregulation, counterparties
to contracts defaulting or going bankrupt, the difficulty in obtaining an adequate return on invested capital or in financing large construction
projects, the limitations on operations and increased costs and delays attributable to environmental considerations, and the capital market’s
ability to absorb utility debt. In addition, taxes, government regulation, international politics, price and supply fluctuations, volatile
interest rates and energy conservation may cause difficulties for these companies.
Equity
Securities Risk. The value of the Fund’s shares will fluctuate with changes in the value of the
equity securities in which the Fund invests. Prices of equity securities 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, such as market volatility,
or when political or economic events affecting the issuers occur. Common stock prices may be particularly sensitive to rising interest
rates, as the cost of capital rises and borrowing costs increase. Equity securities may decline significantly in price over short or extended
periods of time, and such declines may occur in the equity market as a whole, or they may occur in only a particular country, company,
industry or sector of the market.
Interest
Rate Swaps Risk. If short-term interest rates are lower than the Fund’s fixed rate of payment
on an interest rate swap, the swap will reduce common share net earnings. In addition, a default by the counterparty to a swap transaction
could also negatively impact the performance of the common shares.
Investment
Concentration Risks. The Fund’s investments are concentrated in Energy Infrastructure Companies
(including investments in MLPs), which may present more risk than if the Fund were broadly diversified over multiple sectors of the economy.
A downturn in one or more industries within the energy infrastructure sector, material declines in commodity prices, adverse political,
legislative or regulatory developments or other events could have a larger impact on the Fund than on an investment company that does
not concentrate in the energy infrastructure sector. Certain risks inherent in investing in the business of the types of securities that
the Fund may invest (such as interests in MLPs) include: commodity pricing risk, commodity supply and demand risk, lack of diversification
of and reliance on customers and suppliers risk including risk of counterparty default, commodity depletion and exploration risk, energy
infrastructure sector and energy utility industry regulatory risk, including risks associated with the prices and methodology of determining
prices that energy companies may charge for their products and services, interest rate risk, risk of lack of acquisition or reinvestment
opportunities, risk of lacking of funding, dependency on MLP affiliate risk, weather risk, catastrophe risk, terrorism and MLP market
disruption risk, obsolescence risk and technology risk.
Companies
that own interstate pipelines are subject to regulation by the Federal Energy Regulatory Commission (FERC) with respect to the tariff
rates that they may charge customers and may change policies to no longer permit such companies to include certain costs in their costs
of services. This may lower the tariff rates charged to customers which will in turn negatively affect performance.
Other
factors which may reduce the amount of cash an MLP or other Energy Infrastructure Company has available to pay its debt and equity holders
include increased operating costs, maintenance capital expenditures, acquisition costs, expansion or construction costs and borrowing
costs (including increased borrowing costs as a result of additional collateral requirements as a result of ratings downgrades by credit
agencies).
Leverage
Risk. The use of leverage by the Fund can magnify the effect of any losses. If the income and gains
from the securities and investments purchased with leverage proceeds do not cover the cost of leverage, the return to the common shares
will be less than if leverage had not been used. Leverage involves risks and special considerations for common shareholders including:
(i) the likelihood of greater volatility of net asset value and market price of the common shares than a comparable portfolio without
leverage; (ii) the risk that fluctuations in interest rates on borrowings will reduce the return to the common shareholders or will result
in fluctuations in the dividends paid on the common shares; (iii) in a declining market, the use of leverage is likely to cause a greater
decline in the net asset value of the common shares than if the Fund were not leveraged, which may result in a greater decline in the
market price of the
Additional
Information (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
common
shares; and (iv) when the Fund uses certain types of leverage, the investment advisory fee payable to the Advisor and by the Advisor to
the Sub-Advisor will be higher than if the Fund did not use leverage.
Liquidity
Risk. Certain securities in which the Fund may invest may trade less frequently, particularly
those of issuers with smaller capitalizations. Securities with limited trading volumes may display volatile or erratic price movements.
The Fund may have difficulty selling these investments in a timely manner, be forced to sell them for less than it otherwise would have
been able to realize, or both.
Management
Risk and Reliance on Key Personnel. The implementation of the Fund’s investment strategy
depends upon the continued contributions of certain key employees of the Advisor and Sub-Advisor, some of whom have unique talents and
experience and would be difficult to replace. The loss or interruption of the services of a key member of the portfolio management team
could have a negative impact on the Fund.
Market
Discount from Net Asset Value. Shares of closed-end investment companies such as the Fund frequently
trade at a discount from their net asset value. The Fund cannot predict whether its common shares will trade at, below or above net asset
value.
Market
Risk. Securities held by a fund, as well as shares of a fund itself, are subject to market fluctuations
caused by factors such as general economic conditions, political events, regulatory or market developments, changes in interest rates
and perceived trends in securities prices. Shares of a fund could decline in value or underperform other investments as a result of the
risk of loss associated with these market fluctuations. In addition, local, regional or global events such as war, acts of terrorism,
spread of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on a
fund and its investments. For example, the coronavirus (COVID-19) global pandemic and the aggressive responses taken by many governments,
including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines or similar restrictions,
had negative impacts, and in many cases severe impacts, on markets worldwide. While the development of vaccines has slowed the spread
of the virus and allowed for the resumption of reasonably normal business activity in the United States, many countries continue to impose
lockdown measures in an attempt to slow the spread. Additionally, there is no guarantee that vaccines will be effective against emerging
variants of the disease. Also, in February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market
disruptions and volatility across markets globally, including the United States. The hostilities and sanctions resulting from those hostilities
could have a significant impact on certain Fund investments as well as Fund performance. As the global pandemic and conflict in Ukraine
have illustrated, such events may affect certain geographic regions, countries, sectors and industries more significantly than others.
Recent and potential future bank failures could result in disruption to the broader banking industry or markets generally and reduce confidence
in financial institutions and the economy as a whole, which may also heighten market volatility and reduce liquidity. These events also
may adversely affect the prices and liquidity of the Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets. Any of such circumstances could have a materially negative impact on the value of the Fund’s shares and
result in increased market volatility. During any such events, the Fund’s shares may trade at increased premiums or discounts to
their net asset value and the bid/ask spread on the Fund’s shares may widen.
MLP
Risk. Investments in securities of MLPs involve certain risks different from or in addition to
the risks of investing in common stocks. MLP common units can be affected by macro-economic factors and other factors unique to the partnership
or company and the industry or industries in which the MLP operates. Certain MLP securities may trade in relatively low volumes due to
their smaller capitalizations or other factors, which may cause them to have a high degree of price volatility and illiquidity. The structures
of MLPs create certain risks, including, for example, risks related to the limited ability of investors to control an MLP and to vote
on matters affecting the MLP, risks related to potential conflicts of interest between an MLP and the MLP’s general partner, the
risk that an MLP will generate insufficient cash flow to meet its current operating requirements, the risk that an MLP will issue additional
securities or engage in other transactions that will have the effect of diluting the interests of existing investors, and risks related
to the general partner’s right to require unit-holders to sell their common units at an undesirable time or price.
Non-Diversification
Risk. As a “non-diversified” fund, the Fund may hold a smaller number of portfolio securities
than many other funds. To the extent the Fund invests in a relatively small number of issuers, a decline in the market value of a particular
security held by the Fund may affect its value more than if it invested in a larger number of issuers. The value of the Fund’s shares
may be more volatile than the values of shares of more diversified funds.
Non-U.S.
Securities and Currency Risk. Investing in non-U.S. securities involves certain risks not involved in
domestic investments, including, but not limited to: fluctuations in currency exchange rates; future foreign economic, financial, political
and social developments; different legal systems; the possible imposition of exchange controls or other foreign governmental laws or restrictions;
lower trading volume; withholding taxes; greater price volatility and illiquidity; different trading and settlement practices; less governmental
supervision; high and volatile rates of inflation; fluctuating interest rates; less publicly available information; and different accounting,
auditing and financial recordkeeping standards and requirements. Because the Fund may invest in securities denominated or quoted in non-U.S.
currencies, changes in the non-U.S. currency/United States dollar exchange rate may affect the value of the Fund’s securities and
the unrealized appreciation or depreciation of investments.
Additional
Information (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
Operational
Risk. The Fund is subject to risks arising from various operational factors, including, but not limited
to, human error, processing and communication errors, errors of the Fund’s service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. The Fund relies on third parties for a range of services, including
custody. Any delay or failure relating to engaging or maintaining such service providers may affect the Fund’s ability to
meet its investment objective. Although the Fund and the Advisor seek to reduce these operational risks through controls and procedures,
there is no way to completely protect against such risks.
Potential
Conflicts of Interest Risk. First Trust, EIP and the portfolio managers have interests which may conflict
with the interests of the Fund. In particular, First Trust and EIP currently manage and may in the future manage and/or advise other investment
funds or accounts with the same or substantially similar investment objective and strategies as the Fund. In addition, while the Fund
is using leverage, the amount of the fees paid to First Trust (and by First Trust to EIP) for investment advisory and management services
are higher than if the Fund did not use leverage because the fees paid are calculated based on managed assets. Therefore, First Trust
and EIP have a financial incentive to leverage the Fund.
Qualified
Dividend Income Tax Risk. There can be no assurance as to what portion of the distributions paid to
the Fund’s common shareholders will consist of tax-advantaged qualified dividend income. Certain distributions designated by the
Fund as derived from qualified dividend income will be taxed in the hands of non-corporate common shareholders at the rates applicable
to long-term capital gains, provided certain holding period and other requirements are satisfied by both the Fund and the common shareholders.
Additional requirements apply in determining whether distributions by foreign issuers should be regarded as qualified dividend income.
Certain investment strategies of the Fund will limit the Fund’s ability to meet these requirements and consequently will limit the
amount of qualified dividend income received and distributed by the Fund. A change in the favorable provisions of the federal tax laws
with respect to qualified dividends may result in a widespread reduction in announced dividends and may adversely impact the valuation
of the shares of dividend-paying companies.
Recent
Market and Economic Developments. In recent years, prices of oil and other energy commodities have experienced
significant volatility. During such periods, such volatility has adversely impacted many of the MLPs, MLP-related entities and other companies
in the energy sector and energy utility industries in which the Fund has invested or may invest. For example, many MLPs, MLP-related entities
and other companies in the energy sector and energy utility industries have in recent years experienced eroding growth prospects, reduced
distribution levels or, in some cases, bankruptcy. These conditions have impacted, and may in the future impact, the NAV of the Fund and
its ability to pay distributions to shareholders at current or historic levels.
Renewable
Energy Company Risk. Renewable energy companies are a subset of Energy Infrastructure Companies
and, as such, are subject to many of the same risks as Energy Infrastructure Companies. In addition, the future growth of renewable energy
companies may be dependent upon government policies that support renewable power generation and enhance the economic viability of owning
renewable electric generation assets. Such policies can include renewable portfolio standard programs, which mandate that a specified
percentage of electricity sales come from eligible sources of renewable energy, accelerated cost-recovery systems of depreciation and
tax credits.
Tax
Risk. Changes in tax laws or regulations, or interpretations thereof in the future, could adversely
affect the Fund or the MLPs, MLP-related entities and other energy sector and energy utility companies in which the Fund invests. A change
in current tax law, a change in the business of a given MLP, or a change in the types of income earned by a given MLP could result in
an MLP being treated as a corporation for United States federal income tax purposes, which would result in such MLP being required to
pay United States federal income tax on its taxable income. In the past, certain events have caused some MLPs to be reclassified or restructured
as corporations. The classification of an MLP as a corporation for United States federal income tax purposes has the effect of reducing
the amount of cash available for distribution by the MLP and causing any such distributions received by the Fund to be taxed as dividend
income to the extent of the MLP’s current or accumulated earnings and profits.
A
reduction in the percentage of the income offset by tax deductions or an increase in sales of the Fund’s MLP holdings that result
in capital gains will reduce that portion of the Fund’s distribution from an MLP treated as a return of capital and increase that
portion treated as income, and may result in lower after-tax distributions to the Fund’s common shareholders. On the other hand,
to the extent a distribution received by the Fund from an MLP is treated as a return of capital, the Fund’s adjusted tax basis in
the interests of the MLP may be reduced, which will result in an increase in the amount of income or gain or decrease in the amount of
loss that will be recognized by the Fund for tax purposes upon the sale of any such interests.
Utilities
Risk. Utility companies include companies producing or providing gas, electricity or water. These
companies are subject to the risk of the imposition of rate caps, increased competition due to deregulation, the difficulty in obtaining
an adequate return on invested capital or in financing large construction projects, the limitations on operations and increased costs
and delays attributable to environmental considerations and the capital market’s ability to absorb utility debt. In addition, in
many regions, including the United States, the utility industry is experiencing increasing competitive pressures, primarily in wholesale
markets, as a result of
Additional
Information (Continued)
First
Trust Energy Infrastructure Fund (FIF)
May
31, 2023 (Unaudited)
consumer
demand, technological advances, greater availability of natural gas with respect to electric utility companies and other factors. Taxes,
government regulation, international politics, price and supply fluctuations, volatile interest rates and energy conservation also may
negatively affect utility companies.
Valuation
Risk. Market prices generally will not be available for certain investments in MLPs, and the value
of such investments will ordinarily be determined based on fair valuations determined pursuant to procedures adopted by the Board of Trustees.
The value of these securities typically requires more reliance on the judgment of the Sub-Advisor than that required for securities for
which there is an active trading market. In addition, the Fund relies on information provided by certain MLPs, which is usually not timely,
to calculate taxable income allocable to the MLP units held in the Fund’s portfolio and to determine the tax character of distributions
to common shareholders. From time to time the Fund will modify its estimates and/or assumptions as new information becomes available.
To the extent the Fund modifies its estimates and/or assumptions, the net asset value of the Fund would likely fluctuate.
INVESTMENT
ADVISOR
First
Trust Advisors L.P.
120
East Liberty Drive, Suite 400
Wheaton,
IL 60187
INVESTMENT
SUB-ADVISOR
Energy
Income Partners, LLC
10
Wright Street
Westport,
CT 06880
TRANSFER
AGENT
Computershare,
Inc.
P.O.
Box 505000
Louisville,
KY 40233
ADMINISTRATOR,
FUND ACCOUNTANT, AND
CUSTODIAN
The
Bank of New York Mellon
240
Greenwich Street
New
York, NY 10286
INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte
& Touche LLP
111
South Wacker Drive
Chicago,
IL 60606
LEGAL
COUNSEL
Chapman
and Cutler LLP
320
South Canal Street
Chicago,
IL 60606
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. |
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.
| (b) | | There have been no changes, as of the date of this 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.
| Period |
(a) Total Number of Shares (or Units) Purchased |
(b) Average Price Paid per Share (or Unit) |
(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |
(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
Month #1
(12/01/2022 – 12/31/2022) |
22,162 |
15.03 |
1,884,197 |
4,825 |
Month #2
(01/01/2023 – 01/31/2023) |
0 |
0 |
0 |
0 |
Month #3
(02/01/2023 – 02/28/2023) |
0 |
0 |
0 |
0 |
Month #4
(03/01/2023 – 03/31/2023) |
0 |
0 |
0 |
0 |
Month #5
(04/01/2023 – 04/30/2023) |
0 |
0 |
0 |
0 |
Month #6
(05/01/2023 – 05/31/2023) |
0 |
0 |
0 |
0 |
| Total |
22,162 |
$15.03 |
1,884,197 |
|
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 period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End
Management Investment Companies.
Item 13. Exhibits.
| (c) | | Notices to the registrant’s common shareholders in accordance with the order under
Section 6(c) of the 1940 Act granting an exemption from Section 19(b) of the 1940 Act and Rule 19a-1 under the 1940 Act. (1) |
| (1) | | The Fund received exemptive relief from the Securities and Exchange Commission which permits
the Fund to make periodic distributions of long-term capital gains as frequently as monthly each taxable year. The relief is conditioned,
in part, on an undertaking by the Fund to make the disclosures to the holders of the Fund’s common shares, in addition to the information
required by Section 19(a) of the 1940 Act and Rule 19a-1 thereunder. The Fund is likewise obligated to file with the SEC the information
contained in any such notice to shareholders. In that regard, attached as an exhibit to this filing is a copy of such notice made during
the period. |
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 Energy Infrastructure Fund |
| By (Signature and Title)* |
|
/s/ James M. Dykas |
| |
|
James M. Dykas, President and Chief Executive Officer
(principal executive
officer)
|
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.
| By (Signature and Title)* |
|
/s/ James M. Dykas |
| |
|
James M. Dykas, President and Chief Executive Officer
(principal executive
officer)
|
| By (Signature and Title)* |
|
/s/ Donald P. Swade |
| |
|
Donald P. Swade, Treasurer, Chief Financial Officer
and Chief Accounting Officer
(principal financial officer)
|
* Print the name and title of each signing officer under
his or her signature.
Certification Pursuant to Rule 30a-2(a) under
the 1940 Act and Section 302
of the Sarbanes-Oxley Act
I, James M. Dykas, certify that:
| 1. | I have reviewed this report on Form N-CSR of First Trust Energy Infrastructure Fund; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the
financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this
report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to
the filing date of this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during 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; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors
and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and
report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting. |
| Date: |
|
August 4, 2023 |
|
/s/ James M. Dykas |
|
| |
|
|
|
James M. Dykas, President and Chief Executive Officer
(principal executive officer) |
|
Certification Pursuant to Rule 30a-2(a) under
the 1940 Act and Section 302
of the Sarbanes-Oxley Act
I, Donald P. Swade, certify that:
| 1. | I have reviewed this report on Form N-CSR of First Trust Energy Infrastructure Fund; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the
financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this
report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to
the filing date of this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during 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; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors
and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and
report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting. |
| Date: |
|
August 4, 2023 |
|
/s/ Donald P. Swade |
|
| |
|
|
|
Donald P. Swade, Treasurer, Chief Financial Officer
and
Chief Accounting Officer
(principal financial officer) |
|
Certification Pursuant to Rule 30a-2(b) under the
1940 Act and Section 906
of the Sarbanes-Oxley Act
I, James M. Dykas, President and Chief Executive Officer
of First Trust Energy Infrastructure Fund (the “Registrant”), certify that:
| 1. | The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Registrant. |
| Date: |
|
August 4, 2023 |
|
/s/ James M. Dykas |
|
| |
|
|
|
James M. Dykas, President and Chief Executive Officer
(principal executive officer) |
|
I, Donald P. Swade, Treasurer, Chief Financial Officer
and Chief Accounting Officer of First Trust Energy Infrastructure Fund (the “Registrant”), certify that:
| 1. | The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Registrant. |
| Date: |
|
August 4, 2023 |
|
/s/ Donald P. Swade |
|
| |
|
|
|
Donald P. Swade, Treasurer, Chief Financial Officer
and
Chief Accounting Officer
(principal financial officer) |
|
Notice Regarding Your Monthly Distribution
First Trust Energy Infrastructure Fund (FIF)
The closed-end fund listed above (the
“Fund”) has declared a distribution payable on December 15, 2022, to shareholders of record as of December 2, 2022, with an
ex-dividend date of December 1, 2022. This Notice is meant to provide you information about the sources of your Fund's distributions.
You should not draw any conclusions about the Fund’s investment performance from the amount of its distribution or from the
terms of its Managed Distribution Plan.
The following tables set forth the estimated
amounts of the current distribution and the cumulative distributions paid this fiscal year to date for the Fund from the following
sources: net investment income (“NII”); net realized short-term capital gains (“STCG”); net realized
long-term capital gains (“LTCG”); and return of capital (“ROC”). These estimates are based upon information
as of November 30, 2022, are calculated based on a generally accepted accounting principles (“GAAP”) basis and include the
prior fiscal year-end undistributed net investment income. The amounts and sources of distributions are expressed per common
share.
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Annualized | |
5 Year Avg. |
| | |
| |
| |
Total | |
Current Distribution ($) | |
Current Distribution (%) | |
Current Dist. Rate | |
Annual Total |
| Fund Ticker | |
Fund
Cusip | |
Fiscal Year End | |
Current Distribution | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
as a % of NAV (3) | |
Return on NAV (4) |
| FIF (5) | |
33738C103 | |
11/30/2023 | |
$0.06400 | |
$0.06400 | |
— | |
— | |
— | |
100.00% | |
— | |
— | |
— | |
4.28% | |
6.56% |
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Cumulative | |
Cumulative |
| |
| |
| |
Total Cumulative | |
Cumulative Distributions Fiscal YTD ($) | |
Cumulative Distributions Fiscal YTD (%) | |
Fiscal YTD Distributions | |
Fiscal YTD Total |
| Fund Ticker | |
Fund
Cusip | |
Fiscal Year End | |
Fiscal YTD Distributions (1) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
as a % of NAV (3) | |
Return on NAV (4) |
| FIF (5) | |
33738C103 | |
11/30/2023 | |
$0.06400 | |
$0.06400 | |
— | |
— | |
— | |
100.00% | |
— | |
— | |
— | |
0.36% | |
29.10% |
| (1) | | Includes the most recent monthly distribution paid on December 15, 2022. |
| (2) | | The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with "yield" or "income."
|
| (3) | | Based on Net Asset Value (“NAV”) as of November 30, 2022. |
| (4) | | Total Returns are through November 30, 2022. |
| (5) | | The Fund anticipates that, due to the tax treatment of cash distributions made by Master Limited Partnerships in which the Fund invests, a portion of distributions the Fund makes to Common Shareholders may consist of a tax-deferred return of capital. |
The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. You should not use this Notice as a substitute for your Form 1099-DIV.
_____________________________________
First Trust Advisors L.P. Contact:
Don Swade (630) 765-8661
Notice Regarding Your Monthly Distribution
First Trust Energy Infrastructure Fund (FIF)
The closed-end fund listed above (the “Fund”) has declared a distribution payable on January 17, 2023, to shareholders of record as of January 4, 2023, with an ex-dividend date of January 3, 2023. This Notice is meant to provide you information about the sources of your Fund's distributions. You should not draw any conclusions about the Fund’s investment performance from the amount of its distribution or from the terms of its Managed Distribution Plan.
The following tables set forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date for the Fund from the following sources: net investment income (“NII”); net realized short-term capital gains (“STCG”); net realized long-term capital gains (“LTCG”); and return of capital (“ROC”). These estimates are based upon information as of December 31, 2022, are calculated based on a generally accepted accounting principles (“GAAP”) basis and include the prior fiscal year-end undistributed net investment income. The amounts and sources of distributions are expressed per common share.
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Annualized | |
5 Year Avg. |
| | |
| |
| |
Total | |
Current Distribution ($) | |
Current Distribution (%) | |
Current Dist. Rate | |
Annual Total |
| Fund Ticker | |
Fund
Cusip | |
Fiscal Year End | |
Current Distribution | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
as a % of NAV (3) | |
Return on NAV (4) |
| FIF (5) | |
33738C103 | |
11/30/2023 | |
$0.06450 | |
$0.06450 | |
— | |
— | |
— | |
100.00% | |
— | |
— | |
— | |
4.55% | |
5.33% |
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Cumulative | |
Cumulative |
| |
| |
| |
Total Cumulative | |
Cumulative Distributions Fiscal YTD ($) | |
Cumulative Distributions Fiscal YTD (%) | |
Fiscal YTD Distributions | |
Fiscal YTD Total |
| Fund Ticker | |
Fund
Cusip | |
Fiscal Year End | |
Fiscal YTD Distributions (1) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
as a % of NAV (3) | |
Return on NAV (4) |
| FIF (5) | |
33738C103 | |
11/30/2023 | |
$0.12850 | |
$0.12850 | |
— | |
— | |
— | |
100.00% | |
— | |
— | |
— | |
0.76% | |
-4.71% |
| (1) | | Includes the most recent monthly distribution paid on January 17, 2023. |
| (2) | | The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with "yield" or "income."
|
| (3) | | Based on Net Asset Value (“NAV”) as of December 31, 2022. |
| (4) | | Total Returns are through December 31, 2022. |
| (5) | | The Fund anticipates that, due to the tax treatment of cash distributions made by Master Limited Partnerships in which the Fund invests, a portion of distributions the Fund makes to Common Shareholders may consist of a tax-deferred return of capital. |
The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. You should not use this Notice as a substitute for your Form 1099-DIV.
_____________________________________
First Trust Advisors L.P. Contact:
Don Swade (630) 765-8661
Notice Regarding Your Monthly Distribution
First Trust Energy Infrastructure Fund (FIF)
The closed-end fund listed above (the
“Fund”) has declared a distribution payable on February 15, 2023, to shareholders of record as of February 2, 2023, with
an ex-dividend date of February 1, 2023. This Notice is meant to provide you information about the sources of your Fund's
distributions. You should not draw any conclusions about the Fund’s investment performance from the amount of its distribution
or from the terms of its Managed Distribution Plan.
The following tables set forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date for the Fund from the following sources: net investment income (“NII”); net realized short-term capital gains (“STCG”); net realized long-term capital gains (“LTCG”); and return of capital (“ROC”). These estimates are based upon information as of January 31, 2023, are calculated based on a generally accepted accounting principles (“GAAP”) basis and include the prior fiscal year-end undistributed net investment income. The amounts and sources of distributions are expressed per common share.
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Annualized | |
5 Year Avg. |
| | |
| |
| |
Total | |
Current Distribution ($) | |
Current Distribution (%) | |
Current Dist. Rate | |
Annual Total |
| Fund Ticker | |
Fund
Cusip | |
Fiscal Year End | |
Current Distribution | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
as a % of NAV (3) | |
Return on NAV (4) |
| FIF (5) | |
33738C103 | |
11/30/2023 | |
$0.06500 | |
$0.06500 | |
— | |
— | |
— | |
100.00% | |
— | |
— | |
— | |
4.44% | |
6.12% |
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Cumulative | |
Cumulative |
| |
| |
| |
Total Cumulative | |
Cumulative Distributions Fiscal YTD ($) | |
Cumulative Distributions Fiscal YTD (%) | |
Fiscal YTD Distributions | |
Fiscal YTD Total |
| Fund Ticker | |
Fund
Cusip | |
Fiscal Year End | |
Fiscal YTD Distributions (1) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
as a % of NAV (3) | |
Return on NAV (4) |
| FIF (5) | |
33738C103 | |
11/30/2023 | |
$0.19350 | |
$0.19350 | |
— | |
— | |
— | |
100.00% | |
— | |
— | |
— | |
1.10% | |
-1.21% |
| (1) | | Includes the most recent monthly distribution paid on February 15, 2023. |
| (2) | | The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with "yield" or "income."
|
| (3) | | Based on Net Asset Value (“NAV”) as of January 31, 2023. |
| (4) | | Total Returns are through January 31, 2023. |
| (5) | | The Fund anticipates that, due to the tax treatment of cash distributions made by Master Limited Partnerships in which the Fund invests, a portion of distributions the Fund makes to Common Shareholders may consist of a tax-deferred return of capital. |
The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. You should not use this Notice as a substitute for your Form 1099-DIV.
_____________________________________
First Trust Advisors L.P. Contact:
Don Swade (630) 765-8661
Notice Regarding Your Monthly Distribution
First Trust Energy Infrastructure Fund (FIF)
The closed-end fund listed above (the
“Fund”) has declared a distribution payable on March 15, 2023, to shareholders of record as of March 3, 2023, with
an ex-dividend date of March 2, 2023. This Notice is meant to provide you information about the sources of your Fund's
distributions. You should not draw any conclusions about the Fund’s investment performance from the amount of its distribution
or from the terms of its Managed Distribution Plan.
The following tables set forth the estimated
amounts of the current distribution and the cumulative distributions paid this fiscal year to date for the Fund from the following
sources: net investment income (“NII”); net realized short-term capital gains (“STCG”); net realized
long-term capital gains (“LTCG”); and return of capital (“ROC”). These estimates are based upon information
as of February 28, 2023, are calculated based on a generally accepted accounting principles (“GAAP”) basis and include the
prior fiscal year-end undistributed net investment income. The amounts and sources of distributions are expressed per common
share.
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Annualized | |
5 Year Avg. |
| | |
| |
| |
Total | |
Current Distribution ($) | |
Current Distribution (%) | |
Current Dist. Rate | |
Annual Total |
| Fund Ticker | |
Fund
Cusip | |
Fiscal Year End | |
Current Distribution | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
as a % of NAV (3) | |
Return on NAV (4) |
| FIF (5) | |
33738C103 | |
11/30/2023 | |
$0.06550 | |
$0.06550 | |
— | |
— | |
— | |
100.00% | |
— | |
— | |
— | |
4.67% | |
7.56% |
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Cumulative | |
Cumulative |
| |
| |
| |
Total Cumulative | |
Cumulative Distributions Fiscal YTD ($) | |
Cumulative Distributions Fiscal YTD (%) | |
Fiscal YTD Distributions | |
Fiscal YTD Total |
| Fund Ticker | |
Fund
Cusip | |
Fiscal Year End | |
Fiscal YTD Distributions (1) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
as a % of NAV (3) | |
Return on NAV (4) |
| FIF (5) | |
33738C103 | |
11/30/2023 | |
$0.25900 | |
$0.25900 | |
— | |
— | |
— | |
100.00% | |
— | |
— | |
— | |
1.54% | |
-4.96% |
| (1) | | Includes the most recent monthly distribution paid on March 15, 2023. |
| (2) | | The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with "yield" or "income."
|
| (3) | | Based on Net Asset Value (“NAV”) as of February 28, 2023. |
| (4) | | Total Returns are through February 28, 2023. |
| (5) | | The Fund anticipates that, due to the tax treatment of cash distributions made by Master Limited Partnerships in which the Fund invests, a portion of distributions the Fund makes to Common Shareholders may consist of a tax-deferred return of capital. |
The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. You should not use this Notice as a substitute for your Form 1099-DIV.
_____________________________________
First Trust Advisors L.P. Contact:
Don Swade (630) 765-8661
Notice Regarding Your Monthly Distribution
First Trust Energy Infrastructure Fund (FIF)
The closed-end fund listed above (the
“Fund”) has declared a distribution payable on April 17, 2023, to shareholders of record as of April 4, 2023, with
an ex-dividend date of April 3, 2023. This Notice is meant to provide you information about the sources of your Fund's
distributions. You should not draw any conclusions about the Fund’s investment performance from the amount of its distribution
or from the terms of its Managed Distribution Plan.
The following tables set forth the estimated
amounts of the current distribution and the cumulative distributions paid this fiscal year to date for the Fund from the following
sources: net investment income (“NII”); net realized short-term capital gains (“STCG”); net realized
long-term capital gains (“LTCG”); and return of capital (“ROC”). These estimates are based upon information
as of March 31, 2023, are calculated based on a generally accepted accounting principles (“GAAP”) basis and include the
prior fiscal year-end undistributed net investment income. The amounts and sources of distributions are expressed per common
share.
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Annualized | |
5 Year Avg. |
| | |
| |
| |
Total | |
Current Distribution ($) | |
Current Distribution (%) | |
Current Dist. Rate | |
Annual Total |
| Fund Ticker | |
Fund
Cusip | |
Fiscal Year End | |
Current Distribution | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
as a % of NAV (3) | |
Return on NAV (4) |
| FIF (5) | |
33738C103 | |
11/30/2023 | |
$0.10000 | |
$0.10000 | |
— | |
— | |
— | |
100.00% | |
— | |
— | |
— | |
7.12% | |
8.50% |
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Cumulative | |
Cumulative |
| |
| |
| |
Total Cumulative | |
Cumulative Distributions Fiscal YTD ($) | |
Cumulative Distributions Fiscal YTD (%) | |
Fiscal YTD Distributions | |
Fiscal YTD Total |
| Fund Ticker | |
Fund
Cusip | |
Fiscal Year End | |
Fiscal YTD Distributions (1) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
as a % of NAV (3) | |
Return on NAV (4) |
| FIF (5) | |
33738C103 | |
11/30/2023 | |
$0.35900 | |
$0.35900 | |
— | |
— | |
— | |
100.00% | |
— | |
— | |
— | |
2.13% | |
-4.28% |
| (1) | | Includes the most recent monthly distribution paid on April 17, 2023. |
| (2) | | The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with "yield" or "income."
|
| (3) | | Based on Net Asset Value (“NAV”) as of March 31, 2023. |
| (4) | | Total Returns are through March 31, 2023. |
| (5) | | The Fund anticipates that, due to the tax treatment of cash distributions made by Master Limited Partnerships in which the Fund invests, a portion of distributions the Fund makes to Common Shareholders may consist of a tax-deferred return of capital. |
The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. You should not use this Notice as a substitute for your Form 1099-DIV.
_____________________________________
First Trust Advisors L.P. Contact:
Don Swade (630) 765-8661
Notice Regarding Your Monthly Distribution
First Trust Energy Infrastructure Fund (FIF)
The closed-end fund listed above (the
“Fund”) has declared a distribution payable on May 15, 2023, to shareholders of record as of May 2, 2023, with
an ex-dividend date of May 1, 2023. This Notice is meant to provide you information about the sources of your Fund's
distributions. You should not draw any conclusions about the Fund’s investment performance from the amount of its distribution
or from the terms of its Managed Distribution Plan.
The following tables set forth the estimated
amounts of the current distribution and the cumulative distributions paid this fiscal year to date for the Fund from the following
sources: net investment income (“NII”); net realized short-term capital gains (“STCG”); net realized
long-term capital gains (“LTCG”); and return of capital (“ROC”). These estimates are based upon information
as of April 30, 2023, are calculated based on a generally accepted accounting principles (“GAAP”) basis and include the
prior fiscal year-end undistributed net investment income. The amounts and sources of distributions are expressed per common
share.
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Annualized | |
5 Year Avg. |
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Total | |
Current Distribution ($) | |
Current Distribution (%) | |
Current Dist. Rate | |
Annual Total |
| Fund Ticker | |
Fund
Cusip | |
Fiscal Year End | |
Current Distribution | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
as a % of NAV (3) | |
Return on NAV (4) |
| FIF (5) | |
33738C103 | |
11/30/2023 | |
$0.10000 | |
$0.10000 | |
— | |
— | |
— | |
100.00% | |
— | |
— | |
— | |
6.99% | |
8.00% |
| | |
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|
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Cumulative | |
Cumulative |
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Total Cumulative | |
Cumulative Distributions Fiscal YTD ($) | |
Cumulative Distributions Fiscal YTD (%) | |
Fiscal YTD Distributions | |
Fiscal YTD Total |
| Fund Ticker | |
Fund
Cusip | |
Fiscal Year End | |
Fiscal YTD Distributions (1) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
NII | |
STCG | |
LTCG | |
ROC (2) | |
as a % of NAV (3) | |
Return on NAV (4) |
| FIF (5) | |
33738C103 | |
11/30/2023 | |
$0.45900 | |
$0.45900 | |
— | |
— | |
— | |
100.00% | |
— | |
— | |
— | |
2.67% | |
-1.88% |
| (1) | | Includes the most recent monthly distribution paid on May 15, 2023. |
| (2) | | The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with "yield" or "income."
|
| (3) | | Based on Net Asset Value (“NAV”) as of April 30, 2023. |
| (4) | | Total Returns are through April 30, 2023. |
| (5) | | The Fund anticipates that, due to the tax treatment of cash distributions made by Master Limited Partnerships in which the Fund invests, a portion of distributions the Fund makes to Common Shareholders may consist of a tax-deferred return of capital. |
The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. You should not use this Notice as a substitute for your Form 1099-DIV.
_____________________________________
First Trust Advisors L.P. Contact:
Don Swade (630) 765-8661
v3.23.2
N-2
|
6 Months Ended |
|
May 31, 2023
$ / shares
shares
|
|---|
| Cover [Abstract] |
|
| Entity Central Index Key |
0001513789
|
| Amendment Flag |
false
|
| Entity Inv Company Type |
N-2
|
| Document Type |
N-CSRS
|
| Entity Registrant Name |
First Trust Energy Infrastructure
Fund
|
| General Description of Registrant [Abstract] |
|
| Investment Objectives and Practices [Text Block] |
The
Fund’s investment objective is to seek a high level of total return with an emphasis on current distributions paid to shareholders.
The Fund pursues its investment objective by investing primarily in securities of companies engaged in the energy infrastructure sector.
These companies principally include publicly-traded master limited partnerships and limited liability companies taxed as partnerships
(“MLPs”), MLP affiliates, YieldCos, pipeline companies, utilities and other infrastructure-related companies that derive at
least 50% of their revenues from operating, or providing services in support of, infrastructure assets such as pipelines, power transmission
and petroleum and natural gas storage in the petroleum, natural gas and power generation industries (collectively, “Energy Infrastructure
Companies”). For purposes of the Fund’s investment objective, total return includes capital appreciation of, and all distributions
received from, securities in which the Fund invests, taking into account the varying tax characteristics of such securities. Under normal
market conditions, the Fund invests at least 80% of its managed assets (total asset value of the Fund minus the sum of the Fund’s
liabilities other than the principal amount of borrowings) in securities of Energy Infrastructure Companies. There can be no assurance
that the Fund will achieve its investment objective. The Fund may not be appropriate for all investors.
|
| Risk [Text Block] |
Principal
Risks
The
Fund is a closed-end management investment company designed primarily as a long-term investment and not as a trading vehicle. The Fund
is not intended to be a complete investment program and, due to the uncertainty inherent in all investments, there can be no assurance
that the Fund will achieve its investment objective. The following discussion summarizes the principal risks associated with investing
in the Fund, which includes the risk that you could lose some or all of your investment in the Fund. The Fund is subject to the informational
requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940 and, in accordance therewith, files reports,
proxy statements and other information that is available for review.
Covered
Call Options Risk. As the writer (seller) of a call option, the Fund forgoes, during the life
of the option, the opportunity to profit from increases in the market value of the portfolio security covering the option above the sum
of the premium and the strike price of the call option but retains the risk of loss should the price of the underlying security decline.
The value of call options written by the Fund, which are priced daily, are determined by trading activity in the broad options market
and will be affected by, among other factors, changes in the value of the underlying security in relation to the strike price, changes
in dividend rates of the underlying security, changes in interest rates, changes in actual or perceived volatility of the stock market
and the underlying security, and the time remaining until the expiration date. The value of call options written by the Fund may be adversely
affected if the market for the option is reduced or becomes illiquid. There can be no assurance that a liquid market will exist when the
Fund seeks to close out an option position.
Cyber
Security Risk. The Fund is susceptible to potential operational risks through breaches in cyber security.
A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information,
suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized
access to the Fund’s digital information systems through “hacking” or malicious software coding, but may also result
from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition,
cyber security breaches of the Fund’s third-party service providers, such as its administrator, transfer agent, custodian, or sub-advisor,
as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber
security breaches. The Fund has established risk management systems designed to reduce the risks associated with cyber security. However,
there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems
of issuers or third party service providers. Substantial costs may be incurred by the Fund in order to resolve or prevent cyber incidents
in the future.
Energy
Infrastructure Companies Risk. The Fund primarily invests in MLPs, MLP affiliates, YieldCos, pipeline
companies, utilities, and other infrastructure-related companies that derive at least 50% of their revenues from operating, or providing
services in support of, infrastructure assets such as pipelines, power transmission and petroleum and natural gas storage in the petroleum,
natural
gas
and power generation industries (“Energy Infrastructure Companies”). Energy Infrastructure Companies may be directly
affected by energy commodity prices, especially those Energy Infrastructure Companies which own the underlying energy commodity. A decrease
in the production or availability of natural gas, natural gas liquids, crude oil, coal or other energy commodities or a decrease in the
volume of such commodities available for transportation, processing, storage or distribution may adversely impact the financial performance
of Energy Infrastructure Companies. Energy Infrastructure Companies are subject to significant federal, state and local government regulation
in virtually every aspect of their operations, including how facilities are constructed, maintained and operated, environmental and safety
controls, and the prices they may charge for products and services. Various governmental authorities have the power to enforce compliance
with these regulations and the permits issued under them and violators are subject to administrative, civil and criminal penalties, including
civil fines, injunctions or both. Stricter laws, regulations or enforcement policies could be enacted in the future which would likely
increase compliance costs and may adversely affect the financial performance of Energy Infrastructure Companies. Natural disasters, such
as hurricanes in the Gulf of Mexico, also may impact Energy Infrastructure Companies.
Certain
Energy Infrastructure Companies are subject to the imposition of rate caps, increased competition due to deregulation, counterparties
to contracts defaulting or going bankrupt, the difficulty in obtaining an adequate return on invested capital or in financing large construction
projects, the limitations on operations and increased costs and delays attributable to environmental considerations, and the capital market’s
ability to absorb utility debt. In addition, taxes, government regulation, international politics, price and supply fluctuations, volatile
interest rates and energy conservation may cause difficulties for these companies.
Equity
Securities Risk. The value of the Fund’s shares will fluctuate with changes in the value of the
equity securities in which the Fund invests. Prices of equity securities 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, such as market volatility,
or when political or economic events affecting the issuers occur. Common stock prices may be particularly sensitive to rising interest
rates, as the cost of capital rises and borrowing costs increase. Equity securities may decline significantly in price over short or extended
periods of time, and such declines may occur in the equity market as a whole, or they may occur in only a particular country, company,
industry or sector of the market.
Interest
Rate Swaps Risk. If short-term interest rates are lower than the Fund’s fixed rate of payment
on an interest rate swap, the swap will reduce common share net earnings. In addition, a default by the counterparty to a swap transaction
could also negatively impact the performance of the common shares.
Investment
Concentration Risks. The Fund’s investments are concentrated in Energy Infrastructure Companies
(including investments in MLPs), which may present more risk than if the Fund were broadly diversified over multiple sectors of the economy.
A downturn in one or more industries within the energy infrastructure sector, material declines in commodity prices, adverse political,
legislative or regulatory developments or other events could have a larger impact on the Fund than on an investment company that does
not concentrate in the energy infrastructure sector. Certain risks inherent in investing in the business of the types of securities that
the Fund may invest (such as interests in MLPs) include: commodity pricing risk, commodity supply and demand risk, lack of diversification
of and reliance on customers and suppliers risk including risk of counterparty default, commodity depletion and exploration risk, energy
infrastructure sector and energy utility industry regulatory risk, including risks associated with the prices and methodology of determining
prices that energy companies may charge for their products and services, interest rate risk, risk of lack of acquisition or reinvestment
opportunities, risk of lacking of funding, dependency on MLP affiliate risk, weather risk, catastrophe risk, terrorism and MLP market
disruption risk, obsolescence risk and technology risk.
Companies
that own interstate pipelines are subject to regulation by the Federal Energy Regulatory Commission (FERC) with respect to the tariff
rates that they may charge customers and may change policies to no longer permit such companies to include certain costs in their costs
of services. This may lower the tariff rates charged to customers which will in turn negatively affect performance.
Other
factors which may reduce the amount of cash an MLP or other Energy Infrastructure Company has available to pay its debt and equity holders
include increased operating costs, maintenance capital expenditures, acquisition costs, expansion or construction costs and borrowing
costs (including increased borrowing costs as a result of additional collateral requirements as a result of ratings downgrades by credit
agencies).
Leverage
Risk. The use of leverage by the Fund can magnify the effect of any losses. If the income and gains
from the securities and investments purchased with leverage proceeds do not cover the cost of leverage, the return to the common shares
will be less than if leverage had not been used. Leverage involves risks and special considerations for common shareholders including:
(i) the likelihood of greater volatility of net asset value and market price of the common shares than a comparable portfolio without
leverage; (ii) the risk that fluctuations in interest rates on borrowings will reduce the return to the common shareholders or will result
in fluctuations in the dividends paid on the common shares; (iii) in a declining market, the use of leverage is likely to cause a greater
decline in the net asset value of the common shares than if the Fund were not leveraged, which may result in a greater decline in the
market price of the
common
shares; and (iv) when the Fund uses certain types of leverage, the investment advisory fee payable to the Advisor and by the Advisor to
the Sub-Advisor will be higher than if the Fund did not use leverage.
Liquidity
Risk. Certain securities in which the Fund may invest may trade less frequently, particularly
those of issuers with smaller capitalizations. Securities with limited trading volumes may display volatile or erratic price movements.
The Fund may have difficulty selling these investments in a timely manner, be forced to sell them for less than it otherwise would have
been able to realize, or both.
Management
Risk and Reliance on Key Personnel. The implementation of the Fund’s investment strategy
depends upon the continued contributions of certain key employees of the Advisor and Sub-Advisor, some of whom have unique talents and
experience and would be difficult to replace. The loss or interruption of the services of a key member of the portfolio management team
could have a negative impact on the Fund.
Market
Discount from Net Asset Value. Shares of closed-end investment companies such as the Fund frequently
trade at a discount from their net asset value. The Fund cannot predict whether its common shares will trade at, below or above net asset
value.
Market
Risk. Securities held by a fund, as well as shares of a fund itself, are subject to market fluctuations
caused by factors such as general economic conditions, political events, regulatory or market developments, changes in interest rates
and perceived trends in securities prices. Shares of a fund could decline in value or underperform other investments as a result of the
risk of loss associated with these market fluctuations. In addition, local, regional or global events such as war, acts of terrorism,
spread of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on a
fund and its investments. For example, the coronavirus (COVID-19) global pandemic and the aggressive responses taken by many governments,
including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines or similar restrictions,
had negative impacts, and in many cases severe impacts, on markets worldwide. While the development of vaccines has slowed the spread
of the virus and allowed for the resumption of reasonably normal business activity in the United States, many countries continue to impose
lockdown measures in an attempt to slow the spread. Additionally, there is no guarantee that vaccines will be effective against emerging
variants of the disease. Also, in February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market
disruptions and volatility across markets globally, including the United States. The hostilities and sanctions resulting from those hostilities
could have a significant impact on certain Fund investments as well as Fund performance. As the global pandemic and conflict in Ukraine
have illustrated, such events may affect certain geographic regions, countries, sectors and industries more significantly than others.
Recent and potential future bank failures could result in disruption to the broader banking industry or markets generally and reduce confidence
in financial institutions and the economy as a whole, which may also heighten market volatility and reduce liquidity. These events also
may adversely affect the prices and liquidity of the Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets. Any of such circumstances could have a materially negative impact on the value of the Fund’s shares and
result in increased market volatility. During any such events, the Fund’s shares may trade at increased premiums or discounts to
their net asset value and the bid/ask spread on the Fund’s shares may widen.
MLP
Risk. Investments in securities of MLPs involve certain risks different from or in addition to
the risks of investing in common stocks. MLP common units can be affected by macro-economic factors and other factors unique to the partnership
or company and the industry or industries in which the MLP operates. Certain MLP securities may trade in relatively low volumes due to
their smaller capitalizations or other factors, which may cause them to have a high degree of price volatility and illiquidity. The structures
of MLPs create certain risks, including, for example, risks related to the limited ability of investors to control an MLP and to vote
on matters affecting the MLP, risks related to potential conflicts of interest between an MLP and the MLP’s general partner, the
risk that an MLP will generate insufficient cash flow to meet its current operating requirements, the risk that an MLP will issue additional
securities or engage in other transactions that will have the effect of diluting the interests of existing investors, and risks related
to the general partner’s right to require unit-holders to sell their common units at an undesirable time or price.
Non-Diversification
Risk. As a “non-diversified” fund, the Fund may hold a smaller number of portfolio securities
than many other funds. To the extent the Fund invests in a relatively small number of issuers, a decline in the market value of a particular
security held by the Fund may affect its value more than if it invested in a larger number of issuers. The value of the Fund’s shares
may be more volatile than the values of shares of more diversified funds.
Non-U.S.
Securities and Currency Risk. Investing in non-U.S. securities involves certain risks not involved in
domestic investments, including, but not limited to: fluctuations in currency exchange rates; future foreign economic, financial, political
and social developments; different legal systems; the possible imposition of exchange controls or other foreign governmental laws or restrictions;
lower trading volume; withholding taxes; greater price volatility and illiquidity; different trading and settlement practices; less governmental
supervision; high and volatile rates of inflation; fluctuating interest rates; less publicly available information; and different accounting,
auditing and financial recordkeeping standards and requirements. Because the Fund may invest in securities denominated or quoted in non-U.S.
currencies, changes in the non-U.S. currency/United States dollar exchange rate may affect the value of the Fund’s securities and
the unrealized appreciation or depreciation of investments.
Operational
Risk. The Fund is subject to risks arising from various operational factors, including, but not limited
to, human error, processing and communication errors, errors of the Fund’s service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. The Fund relies on third parties for a range of services, including
custody. Any delay or failure relating to engaging or maintaining such service providers may affect the Fund’s ability to
meet its investment objective. Although the Fund and the Advisor seek to reduce these operational risks through controls and procedures,
there is no way to completely protect against such risks.
Potential
Conflicts of Interest Risk. First Trust, EIP and the portfolio managers have interests which may conflict
with the interests of the Fund. In particular, First Trust and EIP currently manage and may in the future manage and/or advise other investment
funds or accounts with the same or substantially similar investment objective and strategies as the Fund. In addition, while the Fund
is using leverage, the amount of the fees paid to First Trust (and by First Trust to EIP) for investment advisory and management services
are higher than if the Fund did not use leverage because the fees paid are calculated based on managed assets. Therefore, First Trust
and EIP have a financial incentive to leverage the Fund.
Qualified
Dividend Income Tax Risk. There can be no assurance as to what portion of the distributions paid to
the Fund’s common shareholders will consist of tax-advantaged qualified dividend income. Certain distributions designated by the
Fund as derived from qualified dividend income will be taxed in the hands of non-corporate common shareholders at the rates applicable
to long-term capital gains, provided certain holding period and other requirements are satisfied by both the Fund and the common shareholders.
Additional requirements apply in determining whether distributions by foreign issuers should be regarded as qualified dividend income.
Certain investment strategies of the Fund will limit the Fund’s ability to meet these requirements and consequently will limit the
amount of qualified dividend income received and distributed by the Fund. A change in the favorable provisions of the federal tax laws
with respect to qualified dividends may result in a widespread reduction in announced dividends and may adversely impact the valuation
of the shares of dividend-paying companies.
Recent
Market and Economic Developments. In recent years, prices of oil and other energy commodities have experienced
significant volatility. During such periods, such volatility has adversely impacted many of the MLPs, MLP-related entities and other companies
in the energy sector and energy utility industries in which the Fund has invested or may invest. For example, many MLPs, MLP-related entities
and other companies in the energy sector and energy utility industries have in recent years experienced eroding growth prospects, reduced
distribution levels or, in some cases, bankruptcy. These conditions have impacted, and may in the future impact, the NAV of the Fund and
its ability to pay distributions to shareholders at current or historic levels.
Renewable
Energy Company Risk. Renewable energy companies are a subset of Energy Infrastructure Companies
and, as such, are subject to many of the same risks as Energy Infrastructure Companies. In addition, the future growth of renewable energy
companies may be dependent upon government policies that support renewable power generation and enhance the economic viability of owning
renewable electric generation assets. Such policies can include renewable portfolio standard programs, which mandate that a specified
percentage of electricity sales come from eligible sources of renewable energy, accelerated cost-recovery systems of depreciation and
tax credits.
Tax
Risk. Changes in tax laws or regulations, or interpretations thereof in the future, could adversely
affect the Fund or the MLPs, MLP-related entities and other energy sector and energy utility companies in which the Fund invests. A change
in current tax law, a change in the business of a given MLP, or a change in the types of income earned by a given MLP could result in
an MLP being treated as a corporation for United States federal income tax purposes, which would result in such MLP being required to
pay United States federal income tax on its taxable income. In the past, certain events have caused some MLPs to be reclassified or restructured
as corporations. The classification of an MLP as a corporation for United States federal income tax purposes has the effect of reducing
the amount of cash available for distribution by the MLP and causing any such distributions received by the Fund to be taxed as dividend
income to the extent of the MLP’s current or accumulated earnings and profits.
A
reduction in the percentage of the income offset by tax deductions or an increase in sales of the Fund’s MLP holdings that result
in capital gains will reduce that portion of the Fund’s distribution from an MLP treated as a return of capital and increase that
portion treated as income, and may result in lower after-tax distributions to the Fund’s common shareholders. On the other hand,
to the extent a distribution received by the Fund from an MLP is treated as a return of capital, the Fund’s adjusted tax basis in
the interests of the MLP may be reduced, which will result in an increase in the amount of income or gain or decrease in the amount of
loss that will be recognized by the Fund for tax purposes upon the sale of any such interests.
Utilities
Risk. Utility companies include companies producing or providing gas, electricity or water. These
companies are subject to the risk of the imposition of rate caps, increased competition due to deregulation, the difficulty in obtaining
an adequate return on invested capital or in financing large construction projects, the limitations on operations and increased costs
and delays attributable to environmental considerations and the capital market’s ability to absorb utility debt. In addition, in
many regions, including the United States, the utility industry is experiencing increasing competitive pressures, primarily in wholesale
markets, as a result of
consumer
demand, technological advances, greater availability of natural gas with respect to electric utility companies and other factors. Taxes,
government regulation, international politics, price and supply fluctuations, volatile interest rates and energy conservation also may
negatively affect utility companies.
Valuation
Risk. Market prices generally will not be available for certain investments in MLPs, and the value
of such investments will ordinarily be determined based on fair valuations determined pursuant to procedures adopted by the Board of Trustees.
The value of these securities typically requires more reliance on the judgment of the Sub-Advisor than that required for securities for
which there is an active trading market. In addition, the Fund relies on information provided by certain MLPs, which is usually not timely,
to calculate taxable income allocable to the MLP units held in the Fund’s portfolio and to determine the tax character of distributions
to common shareholders. From time to time the Fund will modify its estimates and/or assumptions as new information becomes available.
To the extent the Fund modifies its estimates and/or assumptions, the net asset value of the Fund would likely fluctuate.
|
| Share Price |
$ 13.92
|
| NAV Per Share |
$ 16.21
|
| Capital Stock, Long-Term Debt, and Other Securities [Abstract] |
|
| Outstanding Security, Title [Text Block] |
Common Shares outstanding (unlimited number of Common Shares has been authorized)
|
| Outstanding Security, Held [Shares] | shares |
15,666,039
|
| Covered Call Options Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Covered
Call Options Risk. As the writer (seller) of a call option, the Fund forgoes, during the life
of the option, the opportunity to profit from increases in the market value of the portfolio security covering the option above the sum
of the premium and the strike price of the call option but retains the risk of loss should the price of the underlying security decline.
The value of call options written by the Fund, which are priced daily, are determined by trading activity in the broad options market
and will be affected by, among other factors, changes in the value of the underlying security in relation to the strike price, changes
in dividend rates of the underlying security, changes in interest rates, changes in actual or perceived volatility of the stock market
and the underlying security, and the time remaining until the expiration date. The value of call options written by the Fund may be adversely
affected if the market for the option is reduced or becomes illiquid. There can be no assurance that a liquid market will exist when the
Fund seeks to close out an option position.
|
| Cyber Security Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Cyber
Security Risk. The Fund is susceptible to potential operational risks through breaches in cyber security.
A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information,
suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized
access to the Fund’s digital information systems through “hacking” or malicious software coding, but may also result
from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition,
cyber security breaches of the Fund’s third-party service providers, such as its administrator, transfer agent, custodian, or sub-advisor,
as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber
security breaches. The Fund has established risk management systems designed to reduce the risks associated with cyber security. However,
there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems
of issuers or third party service providers. Substantial costs may be incurred by the Fund in order to resolve or prevent cyber incidents
in the future.
|
| Energy Infrastructure Companies Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Energy
Infrastructure Companies Risk. The Fund primarily invests in MLPs, MLP affiliates, YieldCos, pipeline
companies, utilities, and other infrastructure-related companies that derive at least 50% of their revenues from operating, or providing
services in support of, infrastructure assets such as pipelines, power transmission and petroleum and natural gas storage in the petroleum,
natural
gas
and power generation industries (“Energy Infrastructure Companies”). Energy Infrastructure Companies may be directly
affected by energy commodity prices, especially those Energy Infrastructure Companies which own the underlying energy commodity. A decrease
in the production or availability of natural gas, natural gas liquids, crude oil, coal or other energy commodities or a decrease in the
volume of such commodities available for transportation, processing, storage or distribution may adversely impact the financial performance
of Energy Infrastructure Companies. Energy Infrastructure Companies are subject to significant federal, state and local government regulation
in virtually every aspect of their operations, including how facilities are constructed, maintained and operated, environmental and safety
controls, and the prices they may charge for products and services. Various governmental authorities have the power to enforce compliance
with these regulations and the permits issued under them and violators are subject to administrative, civil and criminal penalties, including
civil fines, injunctions or both. Stricter laws, regulations or enforcement policies could be enacted in the future which would likely
increase compliance costs and may adversely affect the financial performance of Energy Infrastructure Companies. Natural disasters, such
as hurricanes in the Gulf of Mexico, also may impact Energy Infrastructure Companies.
Certain
Energy Infrastructure Companies are subject to the imposition of rate caps, increased competition due to deregulation, counterparties
to contracts defaulting or going bankrupt, the difficulty in obtaining an adequate return on invested capital or in financing large construction
projects, the limitations on operations and increased costs and delays attributable to environmental considerations, and the capital market’s
ability to absorb utility debt. In addition, taxes, government regulation, international politics, price and supply fluctuations, volatile
interest rates and energy conservation may cause difficulties for these companies.
|
| Equity Securities Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Equity
Securities Risk. The value of the Fund’s shares will fluctuate with changes in the value of the
equity securities in which the Fund invests. Prices of equity securities 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, such as market volatility,
or when political or economic events affecting the issuers occur. Common stock prices may be particularly sensitive to rising interest
rates, as the cost of capital rises and borrowing costs increase. Equity securities may decline significantly in price over short or extended
periods of time, and such declines may occur in the equity market as a whole, or they may occur in only a particular country, company,
industry or sector of the market.
|
| Interest Rate Swaps Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Interest
Rate Swaps Risk. If short-term interest rates are lower than the Fund’s fixed rate of payment
on an interest rate swap, the swap will reduce common share net earnings. In addition, a default by the counterparty to a swap transaction
could also negatively impact the performance of the common shares.
|
| Investment Concentration Risks [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Investment
Concentration Risks. The Fund’s investments are concentrated in Energy Infrastructure Companies
(including investments in MLPs), which may present more risk than if the Fund were broadly diversified over multiple sectors of the economy.
A downturn in one or more industries within the energy infrastructure sector, material declines in commodity prices, adverse political,
legislative or regulatory developments or other events could have a larger impact on the Fund than on an investment company that does
not concentrate in the energy infrastructure sector. Certain risks inherent in investing in the business of the types of securities that
the Fund may invest (such as interests in MLPs) include: commodity pricing risk, commodity supply and demand risk, lack of diversification
of and reliance on customers and suppliers risk including risk of counterparty default, commodity depletion and exploration risk, energy
infrastructure sector and energy utility industry regulatory risk, including risks associated with the prices and methodology of determining
prices that energy companies may charge for their products and services, interest rate risk, risk of lack of acquisition or reinvestment
opportunities, risk of lacking of funding, dependency on MLP affiliate risk, weather risk, catastrophe risk, terrorism and MLP market
disruption risk, obsolescence risk and technology risk.
Companies
that own interstate pipelines are subject to regulation by the Federal Energy Regulatory Commission (FERC) with respect to the tariff
rates that they may charge customers and may change policies to no longer permit such companies to include certain costs in their costs
of services. This may lower the tariff rates charged to customers which will in turn negatively affect performance.
Other
factors which may reduce the amount of cash an MLP or other Energy Infrastructure Company has available to pay its debt and equity holders
include increased operating costs, maintenance capital expenditures, acquisition costs, expansion or construction costs and borrowing
costs (including increased borrowing costs as a result of additional collateral requirements as a result of ratings downgrades by credit
agencies).
|
| Leverage Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Leverage
Risk. The use of leverage by the Fund can magnify the effect of any losses. If the income and gains
from the securities and investments purchased with leverage proceeds do not cover the cost of leverage, the return to the common shares
will be less than if leverage had not been used. Leverage involves risks and special considerations for common shareholders including:
(i) the likelihood of greater volatility of net asset value and market price of the common shares than a comparable portfolio without
leverage; (ii) the risk that fluctuations in interest rates on borrowings will reduce the return to the common shareholders or will result
in fluctuations in the dividends paid on the common shares; (iii) in a declining market, the use of leverage is likely to cause a greater
decline in the net asset value of the common shares than if the Fund were not leveraged, which may result in a greater decline in the
market price of the
common
shares; and (iv) when the Fund uses certain types of leverage, the investment advisory fee payable to the Advisor and by the Advisor to
the Sub-Advisor will be higher than if the Fund did not use leverage.
|
| Liquidity Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Liquidity
Risk. Certain securities in which the Fund may invest may trade less frequently, particularly
those of issuers with smaller capitalizations. Securities with limited trading volumes may display volatile or erratic price movements.
The Fund may have difficulty selling these investments in a timely manner, be forced to sell them for less than it otherwise would have
been able to realize, or both.
|
| Management Risk And Reliance On Key Personnel [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Management
Risk and Reliance on Key Personnel. The implementation of the Fund’s investment strategy
depends upon the continued contributions of certain key employees of the Advisor and Sub-Advisor, some of whom have unique talents and
experience and would be difficult to replace. The loss or interruption of the services of a key member of the portfolio management team
could have a negative impact on the Fund.
|
| Market Discount From Net Asset Value [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Market
Discount from Net Asset Value. Shares of closed-end investment companies such as the Fund frequently
trade at a discount from their net asset value. The Fund cannot predict whether its common shares will trade at, below or above net asset
value.
|
| Market Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Market
Risk. Securities held by a fund, as well as shares of a fund itself, are subject to market fluctuations
caused by factors such as general economic conditions, political events, regulatory or market developments, changes in interest rates
and perceived trends in securities prices. Shares of a fund could decline in value or underperform other investments as a result of the
risk of loss associated with these market fluctuations. In addition, local, regional or global events such as war, acts of terrorism,
spread of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on a
fund and its investments. For example, the coronavirus (COVID-19) global pandemic and the aggressive responses taken by many governments,
including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines or similar restrictions,
had negative impacts, and in many cases severe impacts, on markets worldwide. While the development of vaccines has slowed the spread
of the virus and allowed for the resumption of reasonably normal business activity in the United States, many countries continue to impose
lockdown measures in an attempt to slow the spread. Additionally, there is no guarantee that vaccines will be effective against emerging
variants of the disease. Also, in February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market
disruptions and volatility across markets globally, including the United States. The hostilities and sanctions resulting from those hostilities
could have a significant impact on certain Fund investments as well as Fund performance. As the global pandemic and conflict in Ukraine
have illustrated, such events may affect certain geographic regions, countries, sectors and industries more significantly than others.
Recent and potential future bank failures could result in disruption to the broader banking industry or markets generally and reduce confidence
in financial institutions and the economy as a whole, which may also heighten market volatility and reduce liquidity. These events also
may adversely affect the prices and liquidity of the Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets. Any of such circumstances could have a materially negative impact on the value of the Fund’s shares and
result in increased market volatility. During any such events, the Fund’s shares may trade at increased premiums or discounts to
their net asset value and the bid/ask spread on the Fund’s shares may widen.
|
| M L P Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
MLP
Risk. Investments in securities of MLPs involve certain risks different from or in addition to
the risks of investing in common stocks. MLP common units can be affected by macro-economic factors and other factors unique to the partnership
or company and the industry or industries in which the MLP operates. Certain MLP securities may trade in relatively low volumes due to
their smaller capitalizations or other factors, which may cause them to have a high degree of price volatility and illiquidity. The structures
of MLPs create certain risks, including, for example, risks related to the limited ability of investors to control an MLP and to vote
on matters affecting the MLP, risks related to potential conflicts of interest between an MLP and the MLP’s general partner, the
risk that an MLP will generate insufficient cash flow to meet its current operating requirements, the risk that an MLP will issue additional
securities or engage in other transactions that will have the effect of diluting the interests of existing investors, and risks related
to the general partner’s right to require unit-holders to sell their common units at an undesirable time or price.
|
| Non Diversification Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Non-Diversification
Risk. As a “non-diversified” fund, the Fund may hold a smaller number of portfolio securities
than many other funds. To the extent the Fund invests in a relatively small number of issuers, a decline in the market value of a particular
security held by the Fund may affect its value more than if it invested in a larger number of issuers. The value of the Fund’s shares
may be more volatile than the values of shares of more diversified funds.
|
| Non U S Securities And Currency Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Non-U.S.
Securities and Currency Risk. Investing in non-U.S. securities involves certain risks not involved in
domestic investments, including, but not limited to: fluctuations in currency exchange rates; future foreign economic, financial, political
and social developments; different legal systems; the possible imposition of exchange controls or other foreign governmental laws or restrictions;
lower trading volume; withholding taxes; greater price volatility and illiquidity; different trading and settlement practices; less governmental
supervision; high and volatile rates of inflation; fluctuating interest rates; less publicly available information; and different accounting,
auditing and financial recordkeeping standards and requirements. Because the Fund may invest in securities denominated or quoted in non-U.S.
currencies, changes in the non-U.S. currency/United States dollar exchange rate may affect the value of the Fund’s securities and
the unrealized appreciation or depreciation of investments.
|
| Operational Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Operational
Risk. The Fund is subject to risks arising from various operational factors, including, but not limited
to, human error, processing and communication errors, errors of the Fund’s service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. The Fund relies on third parties for a range of services, including
custody. Any delay or failure relating to engaging or maintaining such service providers may affect the Fund’s ability to
meet its investment objective. Although the Fund and the Advisor seek to reduce these operational risks through controls and procedures,
there is no way to completely protect against such risks.
|
| Potential Conflicts Of Interest Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Potential
Conflicts of Interest Risk. First Trust, EIP and the portfolio managers have interests which may conflict
with the interests of the Fund. In particular, First Trust and EIP currently manage and may in the future manage and/or advise other investment
funds or accounts with the same or substantially similar investment objective and strategies as the Fund. In addition, while the Fund
is using leverage, the amount of the fees paid to First Trust (and by First Trust to EIP) for investment advisory and management services
are higher than if the Fund did not use leverage because the fees paid are calculated based on managed assets. Therefore, First Trust
and EIP have a financial incentive to leverage the Fund.
|
| Qualified Dividend Income Tax Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Qualified
Dividend Income Tax Risk. There can be no assurance as to what portion of the distributions paid to
the Fund’s common shareholders will consist of tax-advantaged qualified dividend income. Certain distributions designated by the
Fund as derived from qualified dividend income will be taxed in the hands of non-corporate common shareholders at the rates applicable
to long-term capital gains, provided certain holding period and other requirements are satisfied by both the Fund and the common shareholders.
Additional requirements apply in determining whether distributions by foreign issuers should be regarded as qualified dividend income.
Certain investment strategies of the Fund will limit the Fund’s ability to meet these requirements and consequently will limit the
amount of qualified dividend income received and distributed by the Fund. A change in the favorable provisions of the federal tax laws
with respect to qualified dividends may result in a widespread reduction in announced dividends and may adversely impact the valuation
of the shares of dividend-paying companies.
|
| Recent Market And Economic Developments [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Recent
Market and Economic Developments. In recent years, prices of oil and other energy commodities have experienced
significant volatility. During such periods, such volatility has adversely impacted many of the MLPs, MLP-related entities and other companies
in the energy sector and energy utility industries in which the Fund has invested or may invest. For example, many MLPs, MLP-related entities
and other companies in the energy sector and energy utility industries have in recent years experienced eroding growth prospects, reduced
distribution levels or, in some cases, bankruptcy. These conditions have impacted, and may in the future impact, the NAV of the Fund and
its ability to pay distributions to shareholders at current or historic levels.
|
| Renewable Energy Company Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Renewable
Energy Company Risk. Renewable energy companies are a subset of Energy Infrastructure Companies
and, as such, are subject to many of the same risks as Energy Infrastructure Companies. In addition, the future growth of renewable energy
companies may be dependent upon government policies that support renewable power generation and enhance the economic viability of owning
renewable electric generation assets. Such policies can include renewable portfolio standard programs, which mandate that a specified
percentage of electricity sales come from eligible sources of renewable energy, accelerated cost-recovery systems of depreciation and
tax credits.
|
| Tax Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Tax
Risk. Changes in tax laws or regulations, or interpretations thereof in the future, could adversely
affect the Fund or the MLPs, MLP-related entities and other energy sector and energy utility companies in which the Fund invests. A change
in current tax law, a change in the business of a given MLP, or a change in the types of income earned by a given MLP could result in
an MLP being treated as a corporation for United States federal income tax purposes, which would result in such MLP being required to
pay United States federal income tax on its taxable income. In the past, certain events have caused some MLPs to be reclassified or restructured
as corporations. The classification of an MLP as a corporation for United States federal income tax purposes has the effect of reducing
the amount of cash available for distribution by the MLP and causing any such distributions received by the Fund to be taxed as dividend
income to the extent of the MLP’s current or accumulated earnings and profits.
A
reduction in the percentage of the income offset by tax deductions or an increase in sales of the Fund’s MLP holdings that result
in capital gains will reduce that portion of the Fund’s distribution from an MLP treated as a return of capital and increase that
portion treated as income, and may result in lower after-tax distributions to the Fund’s common shareholders. On the other hand,
to the extent a distribution received by the Fund from an MLP is treated as a return of capital, the Fund’s adjusted tax basis in
the interests of the MLP may be reduced, which will result in an increase in the amount of income or gain or decrease in the amount of
loss that will be recognized by the Fund for tax purposes upon the sale of any such interests.
|
| Utilities Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Utilities
Risk. Utility companies include companies producing or providing gas, electricity or water. These
companies are subject to the risk of the imposition of rate caps, increased competition due to deregulation, the difficulty in obtaining
an adequate return on invested capital or in financing large construction projects, the limitations on operations and increased costs
and delays attributable to environmental considerations and the capital market’s ability to absorb utility debt. In addition, in
many regions, including the United States, the utility industry is experiencing increasing competitive pressures, primarily in wholesale
markets, as a result of
consumer
demand, technological advances, greater availability of natural gas with respect to electric utility companies and other factors. Taxes,
government regulation, international politics, price and supply fluctuations, volatile interest rates and energy conservation also may
negatively affect utility companies.
|
| Valuation Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Valuation
Risk. Market prices generally will not be available for certain investments in MLPs, and the value
of such investments will ordinarily be determined based on fair valuations determined pursuant to procedures adopted by the Board of Trustees.
The value of these securities typically requires more reliance on the judgment of the Sub-Advisor than that required for securities for
which there is an active trading market. In addition, the Fund relies on information provided by certain MLPs, which is usually not timely,
to calculate taxable income allocable to the MLP units held in the Fund’s portfolio and to determine the tax character of distributions
to common shareholders. From time to time the Fund will modify its estimates and/or assumptions as new information becomes available.
To the extent the Fund modifies its estimates and/or assumptions, the net asset value of the Fund would likely fluctuate.
|
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| Namespace Prefix: |
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| Namespace Prefix: |
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| X |
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| Namespace Prefix: |
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| Balance Type: |
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| X |
- Details
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| Namespace Prefix: |
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| Balance Type: |
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| X |
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| Namespace Prefix: |
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| X |
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| X |
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| X |
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First Trust Energy Infra... (NYSE:FIF)
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From Apr 2024 to May 2024
First Trust Energy Infra... (NYSE:FIF)
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From May 2023 to May 2024
