Wyton, Ill. –(Business Wire–First Trust Energy Infrastructure Fund (the “Fund”) (NYSE: FIF ) increased its regularly scheduled monthly common share distribution to $0.0645 per share from $0.064. The distribution will be paid on January 17, 2023 to shareholders effective January 4, 2023. The ex-dividend date is expected to be January 3, 2023. The fund’s monthly distribution data is shown below.
First Trust Energy Infrastructure Fund (FIF)::
Distribution per share:
Distribution rate based on December 19, 2022 NAV of $16.65:
Distribution rate based on market price of $14.47 on December 19, 2022:
Increase from previous distribution of $0.064:
The Fund’s Board of Trustees has adopted a managed distribution policy for the Fund (the “Plan”) based on an exemption from the Securities and Exchange Commission, which allows the Fund to distribute long-term capital gains periodically on a monthly basis. each tax year. Under the plan, the fund intends to continue paying a recurring monthly distribution of $0.0645 per share, which reflects distributable cash flow. A portion of this monthly distribution may include long-term capital gains. This may reduce the required long term capital gains distribution at the end of the year by distributing long term capital gains throughout the year. The annual distribution rate is independent of the fund’s performance over any period. Accordingly, you should not draw any conclusions about the Fund’s investment performance from any distribution rate or plan terms.
Distributions may be net investment income earned by the Fund, net short-term and long-term capital gains and/or tax-deferred returns of capital. Tax-deferred return of capital, if any, is primarily the tax treatment of cash distributions from master limited partnerships (“MLPs”) in which the Fund invests. A final determination of the source tax status of all 2023 distributions will be made after the end of 2023 and filed on Form 1099-DIV.
The Fund is an undivided, closed-end management investment company that seeks to provide high levels of total income with a focus on periodic distributions to shareholders. The fund seeks to achieve its investment objective by investing primarily in securities of companies engaged in the energy infrastructure sector. These companies primarily include publicly traded MLPs and limited liability companies such as partnerships, MLP affiliates, YieldCos, pipeline companies, utilities, and other companies that derive at least 50% of their revenue from operating or financing infrastructure assets. Pipelines, power transmission and storage of oil and natural gas in the petroleum, natural gas and power generation industries (collectively “Energy Infrastructure Companies”). The Fund expects to write (or sell) covered call options on up to 35% of the managed assets in the Fund’s portfolio to generate additional income.
First Trust Advisors LP (“FTA”) is a federally registered investment advisor and serves as the Fund’s investment advisor. FTA and its affiliate First Trust Portfolios LP (“FTP”), a FINRA-registered broker-dealer, are privately held companies that provide a variety of investment services. In the year As of November 30, 2022, FTA has a total of $199 billion in mutual assets under management or supervision in unit investments, exchange-traded funds, closed-end funds, mutual funds and managed accounts. FTA is the regulator of FirstTrust Unit Investment Trust and FTP is the sponsor. FTP is also a distributor of mutual fund shares and innovative units of exchange-traded funds. FTA and FTP are based in Wheaton, Illinois.
Energy Income Partners, LLC (“EIP”) serves as the Fund’s investment sub-adviser and provides advisory services to a number of investment companies and partnerships in investing in MLPs and other energy infrastructure securities. EIP was one of the earliest investment advisors to specialize in this area. As of November 30, 2022, EIP manages or controls approximately $5.5 billion in client assets.
Major risk factors are: Risks are inherent in all investments. Certain risks applicable to the Fund are identified below, including the risk that you may lose some or all of your holdings in the Fund. The main risks of investing in the Fund are outlined in the Fund’s annual shareholder reports. The order of risk factors below does not indicate the importance of any particular risk factor. The Fund provides reports, proxy statements and other information available for review.
Past performance is no guarantee of future results. Investment returns and the market value of investments in the Fund will fluctuate. Shares may be worth more or less than the original price when they are sold. There can be no assurance that the Fund’s investment objectives will be achieved. The Fund may not be suitable for all investors.
The securities held by the Fund, as well as the Fund’s shares, are subject to market fluctuations caused by factors such as general economic conditions, political events, regulatory or market developments, changes in interest rates and changes in securities prices. Because of the risk of loss associated with these market fluctuations, a Fund’s shares may decline in value or other investments may be made. In addition, local, regional or global events such as war, acts of terrorism, outbreaks of infectious diseases or other public health issues, economic recessions or other events may have a material adverse effect on the Fund and its investments. Such events may affect certain geographic regions, countries, sectors and industries more than others. In the year Conflicts and sanctions arising out of those conflicts could have a significant impact on certain Fund investments as well as Fund performance. The global pandemic of Covid-19 and the policies enacted by governments and central banks have caused, and may continue to cause, significant volatility and uncertainty in global financial markets. While the US has “reasonably” resumed normal business operations, many countries have continued to impose lockdown measures. Also, there is no guarantee that vaccines will be effective against the types of disease that occur.
The Fund is subject to risks, including that it is a non-diversified closed-end management investment company.
Because the Fund is focused on securities issued by energy infrastructure companies, it will be more exposed to adverse economic or regulatory conditions in that industry, including higher interest costs, higher operating costs, the effects of an economic slowdown, excess capacity, increased competition, and uncertainty. Regarding fuel supply at affordable prices, energy conservation policies and other factors. Investments in the securities of MLPs involve certain risks that are different from, or in addition to, the risks involved in investing in common stocks. The number of energy-related MLPs has declined since 2014. The industry is seeing consolidation or simplification of corporate structures where MLP capital sleeves are disappearing. As noted above, the Fund’s MLP investments may vary substantially and the Fund may include investments outside of MLPs consistent with its investment objectives and policies. Changes in tax laws or regulations or their future interpretations could adversely affect the Fund or its MLPs, MLP-related entities and other energy sector and energy service companies in which the Fund invests.
The Fund invests in securities of non-US issuers that are more volatile than securities of US issuers. Because the Fund invests in non-US securities, you may lose money if the local currency of non-US markets depreciates against the US dollar.
There can be no assurance that the portion of distributions paid to the Fund’s common shareholders will constitute tax-adjusted qualified dividend income.
To the extent a Fund invests in floating or variable rate obligations that use the London Interbank Offered Rate (“LIBOR”) as a reference interest rate, it is exposed to LIBOR risk. The UK’s Financial Conduct Authority, which regulates LIBOR, has ceased to use LIBOR as a reference rate for a period ending on 31 December 2021. Any Alternative Reference Rate (“SOFR”), including the Secured Overnight Financing Rate, creates the same value or economic equivalent to LIBOR or that instruments using the Alternative Rate have the same amount or liquidity. The unavailability or replacement of LIBOR may affect the value, liquidity or return on certain of the Fund’s investments and may result in costs associated with closing out positions and entering into new transactions. Any effect that a departure from LIBOR may have on the Fund or on certain instruments in which the Fund invests may be difficult to determine, and may vary from case to case, and may result in losses to the Fund.
As a writer (seller) of a call option, the Fund forgoes the opportunity to profit from an increase in the market value of the portfolio security covering the option over the premium amount during the life of the option. The call option, however, carries the risk of loss if the price of the underlying security declines. If the options market declines or deteriorates, the value of call options written by the Fund may be adversely affected. There can be no assurance that a liquid market will exist when the Fund seeks to close an option position.
If short-term interest rates are lower than the Fund’s fixed rate of interest on an interest rate swap, the swap will reduce collective net income. In addition, the default of the counterparty to the swap transaction may adversely affect the performance of the common shares.
Exercising may result in additional risk and expense and may magnify the effect of any loss.
The risks of investing in the Fund are described in the shareholder reports and other regulatory filings.
The information provided is not intended to provide investment advice or counsel to any person. By providing this information, First Trust is not acting to provide any fiduciary advice under ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for independently evaluating investment risks and making independent decisions to determine whether investments are appropriate for their clients.
The fund’s daily closing New York Stock Exchange price and net asset value per share, as well as other information, are available at https://www.ftportfolios.com or by calling 1-800-988-5891.