First Trust Energy Infrastructure Fund Issues Notice Regarding February 2024 Distribution

Rhea-AI Summary

First Trust Energy Infrastructure Fund (FIF) has announced a distribution payable on February 15, 2024, to shareholders of record as of February 2, 2024, under their Managed Distribution Plan.

Insights

Financial Analyst

The announcement from First Trust Energy Infrastructure Fund regarding its managed distribution policy is a significant piece of information for investors and analysts alike. Managed distribution policies are strategies employed by funds to provide shareholders with a consistent cash flow. This often involves the distribution of a combination of income, dividends, capital gains and return of capital. The key element to assess here is the sustainability of these distributions and the underlying performance of the fund's investments, particularly in the energy infrastructure sector.

Investors should consider the fund's ability to generate enough income and capital gains to support its distributions. A consistent distribution could be seen as a sign of stability, but if the distributions are largely funded by return of capital, it could imply that the fund is not generating enough income on its own. This could impact the fund's net asset value over time. Additionally, the frequency of the distribution, being as frequent as monthly, also indicates the fund's confidence in its operational cash flow.

Market Research Analyst

From a market perspective, the energy infrastructure sector can be quite volatile due to fluctuating commodity prices, regulatory changes and shifts in consumer demand. The Fund's focus on this sector requires a thorough analysis of these external factors. The sector's performance is closely tied to broader economic indicators such as energy prices, interest rates and infrastructure spending. A managed distribution plan in this context might appeal to income-focused investors, especially in a low-interest-rate environment.

However, it's crucial to evaluate whether the Fund's portfolio is diversified enough to withstand sector-specific downturns. An over-concentration in high-risk energy assets could expose shareholders to significant volatility. Understanding the composition of the Fund's assets and the management team's strategy for navigating market changes is essential for stakeholders to gauge the long-term viability of the distribution policy.

Economist

Examining the macroeconomic implications, the distribution policy reflects the Fund's response to the current economic climate. In a scenario where the economy is experiencing growth, energy infrastructure investments could see substantial gains, supporting frequent distributions. Conversely, in a downturn, these assets might be negatively affected, potentially leading to reduced distributions in the future.

Investors should also consider the potential tax implications of such frequent distributions, particularly the treatment of capital gains. The policy's impact on shareholder returns must be assessed in the context of after-tax income. Moreover, the Fund's strategy may also be indicative of broader trends in the investment fund industry, where there is an increasing focus on providing regular income streams to investors, possibly as a competitive measure to attract and retain capital.

WHEATON, Ill.--(BUSINESS WIRE)-- The Board of Trustees of First Trust Energy Infrastructure Fund (the "Fund") (NYSE: FIF), CUSIP 33738C103, previously approved a managed distribution policy for the Fund (the "Managed Distribution Plan") in reliance on exemptive relief received from the Securities and Exchange Commission which permits the Fund to make periodic distributions of long-term capital gains as frequently as monthly each tax year.

The Fund has declared a distribution payable on February 15, 2024, to shareholders of record as of February 2, 2024, with an ex-dividend date of February 1, 2024. 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, 2024, 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.

5 Yr. Avg.

Annualized Current

Annual Total

Fund

Fund

Fiscal

Total Current

Current Distribution ($)

Current Distribution (%)

Dist. Rate as a

Return

Ticker

Cusip

Year End

Distribution

NII

STCG

LTCG

ROC (2)

NII

STCG

LTCG

ROC(2)

% of NAV(3)

on NAV(4)

FIF(5)

33738C103

11/30/2024

$0.10000

$0.10000

-

-

-

100.00%

-

-

-

7.02%

7.43%

Total

Cumulative

Cumulative Fiscal

Fund

Fund

Fiscal

Cumulative Fiscal YTD

Cumulative Distributions Fiscal YTD ($)

Cumulative Distributions Fiscal YTD (%)

Fiscal YTD Distributions as

YTD Total Return

Ticker

Cusip

Year End

Distributions(1)

NII

STCG

LTCG

ROC (2)

NII

STCG

LTCG

ROC(2)

a % of NAV(3)

on NAV(4)

FIF(5)

33738C103

11/30/2024

$0.30000

$0.30000

-

-

-

100.00%

-

-

-

1.75%

-1.48%

(1) Includes the most recent monthly distribution paid on February 15, 2024. (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, 2024. (4) Total Returns are through January 31, 2024. (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. ("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 $211 billion as of January 31, 2024 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 January 31, 2024, EIP managed or supervised approximately $5.0 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.

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

Market risk is the risk that a particular investment, or shares of a fund in general may fall in value. Investments held by the Fund are subject to market fluctuations caused by real or perceived adverse economic conditions, political events, regulatory factors 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, market manipulation, government defaults, government shutdowns, regulatory actions, political changes, diplomatic developments, the imposition of sanctions and other similar measures, spread of infectious disease or other public health issues, recessions, natural disasters or other events could have significant negative impact on a fund and its investments.

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.

Because the Fund is concentrated in securities issued by energy infrastructure companies, it will be more susceptible to adverse economic or regulatory occurrences affecting that industry, 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. Investments in securities of MLPs involve certain risks different from or in addition to the risks of investing in common stocks. The number of energy-related MLPs has declined since 2014. The industry is witnessing the consolidation or simplification of corporate structures where the MLP sleeve of capital is being eliminated. As a result of the foregoing, the Fund's MLP investments could become less diverse and the Fund may increase its non-MLP investments consistent with its investment objective and policies. 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.

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.

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.

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 subject to LIBOR Risk. LIBOR has ceased to be made available as a reference rate and there is no assurance that any alternative reference rate, including the Secured Overnight Financing Rate ("SOFR"), will be similar to or produce the same value or economic equivalence as LIBOR. The unavailability or replacement of LIBOR may affect the value, liquidity or return on certain fund investments and may result in costs incurred in connection with closing out positions and entering into new trades. Any potential effects of the transition away from LIBOR on a fund or on certain instruments in which a fund invests is difficult to predict and could result in losses to the fund.

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 reports 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.

Forward-Looking Statements

Certain statements made in this press release that are not historical facts are referred to as "forward-looking statements" under the U.S. federal securities laws. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements due to numerous factors. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ from those anticipated in any forward-looking statements. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Fund undertakes no responsibility to update publicly or revise any forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240215011330/en/

Inquiries: Derek Moabite (630) 765-8499

Source: First Trust Energy Infrastructure Fund

FAQ

When is the distribution payable for First Trust Energy Infrastructure Fund (FIF)?

The distribution is payable on February 15, 2024.

What is the record date for shareholders of First Trust Energy Infrastructure Fund (FIF)?

Shareholders of record are as of February 2, 2024.

When is the ex-dividend date for First Trust Energy Infrastructure Fund (FIF)?

The ex-dividend date is February 1, 2024.

What is the ticker symbol for First Trust Energy Infrastructure Fund?

The ticker symbol is FIF.