First Trust MLP and Energy Income Fund Declares Monthly Common Share Distributions of $0.05 Per Share for February, March and April

Rhea-AI Summary

First Trust MLP and Energy Income Fund (FEI) has declared monthly common share distributions for February, March, and April of $0.05 per share for each month. The Fund seeks to provide a high level of total return with an emphasis on current distributions paid to common shareholders. The Fund invests at least 85% of its managed assets in equity and debt securities of MLPs, MLP-related entities, and other energy sector and energy utilities companies. It is treated as a regular corporation for United States federal income tax purposes and is subject to corporate income tax to the extent the Fund recognizes taxable income. The Fund is subject to risks, including concentration in securities issued by MLPs, MLP-related entities, and other energy and utilities companies, as well as non-U.S. securities and the use of leverage.

Positive

• None.

Negative

• The Fund is subject to risks, including concentration in securities issued by MLPs, MLP-related entities, and other energy and utilities companies, as well as non-U.S. securities and the use of leverage.

Insights

Financial Analyst

The announcement by First Trust MLP and Energy Income Fund (FEI) regarding its monthly common share distributions is a significant piece of information for current and potential investors. The declared distribution rate based on the net asset value (NAV) and closing market price provides insight into the fund's yield, which is a key determinant of investment attractiveness in income-focused financial products. The yield of 6.51% based on the NAV and 7.00% based on the closing market price as of January 19, 2024, appears competitive when compared to average dividend yields in the energy sector and broader market indices.

Investors may also evaluate the sustainability of these distributions, considering the fund's strategy of investing in MLPs and energy utilities, which are typically known for stable cash flows. However, the mention of writing covered call options to generate additional income indicates an active strategy that could introduce additional risk and reward dynamics. The tax implications, due to the fund's C corporation status, are also noteworthy as they can affect the net return to investors. It's crucial for investors to understand the tax treatment of distributions, especially the portion that may constitute a tax-deferred return of capital.

Energy Sector Analyst

The focus of First Trust MLP and Energy Income Fund on MLPs and MLP-related entities in the energy sector and energy utilities industries is a strategic decision that aligns with the current demand for infrastructure development and energy transportation. MLPs are typically involved in the storage and transportation of energy commodities and they are known for offering high distribution yields, which can be attractive to income-oriented investors. However, the energy sector's performance is closely tied to commodity prices and regulatory changes, which can introduce volatility to the fund's returns.

The fund's concentration in the energy sector also exposes it to sector-specific risks, such as fluctuations in commodity prices, changes in energy policies and shifts in supply and demand dynamics. The fund's non-diversified status amplifies this risk, as it limits the spread of investment across different sectors that could potentially mitigate these risks. The geopolitical tensions and the ongoing impact of the COVID-19 pandemic mentioned in the risk factors are real concerns that could affect the energy sector's stability and, by extension, the fund's performance.

Tax Expert

The tax treatment of cash distributions from MLPs is a complex area that requires careful consideration by investors. The fact that a portion of the Fund's distributions may consist of a tax-deferred return of capital can be beneficial to investors in the short term, as it reduces the taxable income in the year of receipt. However, it also reduces the cost basis of the investment, which could result in a higher capital gains tax when the shares are eventually sold.

Investors should also be aware of the corporate income tax implications due to the Fund's status as a C corporation. This status can lead to double taxation of earnings, once at the corporate level and again at the shareholder level when distributions are made. This differs from the typical tax treatment of MLPs themselves, which are usually structured to avoid corporate taxes altogether. The final determination of the source and tax status of all distributions, which will be provided on Form 1099-DIV after the end of the year, is a critical piece of information that investors will need to accurately assess the after-tax return on their investment.

WHEATON, Ill.--(BUSINESS WIRE)-- First Trust MLP and Energy Income Fund (the "Fund") (NYSE: FEI) has declared the Fund’s monthly common share distributions for February, March and April of $0.05 per share for each month.

The payable, record and expected ex-dividend dates, as well as the distribution per share amount for these distributions are as follows:

	February	March	April
Payable Date:	02/15/24	03/15/24	04/15/24
Record Date:	02/02/24	03/04/24	04/02/24
Expected Ex-Dividend Date:	02/01/24	03/01/24	04/01/24
Distribution Per Share:	$0.05	$0.05	$0.05

The monthly distribution information for the Fund appears below.

First Trust MLP and Energy Income Fund (FEI):
Distribution per share:	$0.05
Distribution Rate based on the January 19, 2024 NAV of $9.21:	6.51%
Distribution Rate based on the January 19, 2024 closing market price of $8.57:	7.00%

It is anticipated that, due to the tax treatment of cash distributions made by master limited partnerships ("MLPs") in which the Fund invests, a portion of the distributions the Fund makes to Common Shareholders may consist of a tax-deferred return of capital. The final determination of the source and tax status of all distributions paid in 2024 will be made after the end of 2024 and will be provided on Form 1099-DIV.

The Fund is a non-diversified, closed-end management investment company that seeks to provide a high level of total return with an emphasis on current distributions paid to common shareholders. The Fund seeks to provide its common shareholders with a vehicle to invest in a portfolio of cash-generating securities, with a focus on investing in publicly-traded MLPs and MLP-related entities in the energy sector and energy utilities industries. Under normal market conditions, the Fund invests at least 85% of its managed assets in equity and debt securities of MLPs, MLP-related entities and other energy sector and energy utilities companies. To generate additional income, the Fund expects to write (or sell) covered call options on up to 35% of its managed assets. The Fund is treated as a regular corporation, or a "C" corporation, for United States federal income tax purposes and, as a result, is subject to corporate income tax to the extent the Fund recognizes taxable income.

First Trust Advisors L.P. ("FTA") is a federally registered investment advisor and serves as the Fund's investment advisor. FTA and its affiliate First Trust Portfolios L.P. ("FTP"), a FINRA registered broker-dealer, are privately-held companies that provide a variety of investment services. FTA has collective assets under management or supervision of approximately $210 billion as of December 31, 2023 through unit investment trusts, exchange-traded funds, closed-end funds, mutual funds and separate managed accounts. FTA is the supervisor of the First Trust unit investment trusts, while FTP is the sponsor. FTP is also a distributor of mutual fund shares and exchange-traded fund creation units. FTA and FTP are based in Wheaton, Illinois.

Energy Income Partners, LLC ("EIP") serves as the Fund's investment sub-advisor and provides advisory services to a number of investment companies and partnerships for the purpose of investing in MLPs and other energy infrastructure securities. EIP is one of the early investment advisors specializing in this area. As of December 31, 2023, EIP managed or supervised approximately $5.1 billion in client assets.

Principal Risk Factors: Risks are inherent in all investing. Certain risks applicable to the Fund are identified below, which includes the risk that you could lose some or all of your investment in the Fund. The principal risks of investing in the Fund are spelled out in the Fund's annual shareholder reports. The order of the below risk factors does not indicate the significance of any particular risk factor. The Fund also files reports, proxy statements and other information that is available for review.

Past performance is no assurance of future results. Investment return and market value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. There can be no assurance that the Fund's investment objectives will be achieved. The Fund may not be appropriate for all investors.

Market risk is the risk that a particular security, or shares of a fund in general may fall in value. Securities are subject to market fluctuations caused by such factors 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. In addition, local, regional or global events such as war, acts of terrorism, spread of infectious disease or other public health issues, recessions, natural disasters or other events could have significant negative impact on a fund.

Current market conditions risk is the risk that a particular investment, or shares of the fund in general, may fall in value due to current market conditions. As a means to fight inflation, the Federal Reserve and certain foreign central banks have raised interest rates and expect to continue to do so, and the Federal Reserve has announced that it intends to reverse previously implemented quantitative easing. 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. Ongoing armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant groups in the Middle East, have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, the Middle East and the United States. The hostilities and sanctions resulting from those hostilities have and could continue to have a significant impact on certain fund investments as well as fund performance and liquidity. The COVID-19 global pandemic, or any future public health crisis, and the ensuing policies enacted by governments and central banks have caused and may continue to cause significant volatility and uncertainty in global financial markets, negatively impacting global growth prospects.

The Fund is subject to risks, including the fact that it is a non-diversified closed-end management investment company.

Because the Fund is concentrated in securities issued by MLPs, MLP-related entities, and other energy and utilities companies, it will be more susceptible to adverse economic or regulatory occurrences affecting those industries, including high interest costs, high leverage costs, the effects of economic slowdown, surplus capacity, increased competition, uncertainties concerning the availability of fuel at reasonable prices, the effects of energy conservation policies and other factors.

The Fund invests in securities of non-U.S. issuers which are subject to higher volatility than securities of U.S. issuers. Because the Fund invests in non-U.S. securities, you may lose money if the local currency of a non-U.S. market depreciates against the U.S. dollar.

Use of leverage can result in additional risk and cost, and can magnify the effect of any losses.

The risks of investing in the fund are spelled out in the shareholder report and other regulatory filings.

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining 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 can be found at https://www.ftportfolios.com or by calling 1-800-988-5891.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240122224192/en/

Press Inquiries: Ryan Issakainen, 630-765-8689

Analyst Inquiries: Jeff Margolin, 630-915-6784

Broker Inquiries: Sales Team, 866-848-9727

Source: First Trust MLP and Energy Income Fund

FAQ

What is the ticker symbol for First Trust MLP and Energy Income Fund?

The ticker symbol for First Trust MLP and Energy Income Fund is 'FEI'.

What are the monthly common share distributions declared for February, March, and April?

The monthly common share distributions declared for February, March, and April are $0.05 per share for each month.

What percentage of the managed assets does the Fund invest in equity and debt securities of MLPs, MLP-related entities, and other energy sector and energy utilities companies?

The Fund invests at least 85% of its managed assets in equity and debt securities of MLPs, MLP-related entities, and other energy sector and energy utilities companies.

What is the tax treatment of cash distributions made by MLPs in which the Fund invests?

Due to the tax treatment of cash distributions made by MLPs in which the Fund invests, a portion of the distributions the Fund makes to Common Shareholders may consist of a tax-deferred return of capital.

What are the principal risk factors associated with investing in the Fund?

The principal risk factors of investing in the Fund are spelled out in the Fund's annual shareholder reports and include concentration in securities issued by MLPs, MLP-related entities, and other energy and utilities companies, as well as non-U.S. securities and the use of leverage.