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, 2018
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. Report to Stockholders.
The Report to Shareholders is attached herewith:
• | The S&P 500® Index did something it had never previously done, finishing 2017 with 12 months of gains; |
• | The Dow Jones Industrial Average achieved a milestone as well, closing above 24,000 for the first time ever on November 30; |
• | The Nasdaq Composite set a record by having 11 months of gains in 2017 (June was the only down month, and by just 0.86%); and |
• | The MSCI AC World Index (containing constituents from 47 countries) ended 2017 at an all-time high and was up 22% at year-end. |
Performance | ||||
Average Annual Total Returns | ||||
6 Months Ended 5/31/18 | 1 Year Ended 5/31/18 | 5 Years Ended 5/31/18 | Inception (9/27/11) to 5/31/18 | |
Fund Performance(3) | ||||
NAV | -6.88% | -6.95% | 3.15% | 8.02% |
Market Value | -3.06% | -1.95% | 3.49% | 7.01% |
Index Performance | ||||
PHLX Utility Sector Index | -8.09% | -1.18% | 9.84% | 9.64% |
Alerian MLP Total Return Index | 5.71% | -3.71% | -3.20% | 2.75% |
Blended Index(4) | -0.92% | -1.74% | 3.75% | 6.71% |
(1) | Most recent distribution paid or declared through 5/31/2018. Subject to change in the future. |
(2) | Distribution rates are calculated by annualizing the most recent distribution paid or declared through the report date and then dividing by Common Share Price or NAV, as applicable, as of 5/31/2018. 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%). |
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 | Source: Bloomberg L.P. and FactSet Research Systems Inc. |
3 | Source: Alerian Capital Management, Bloomberg |
Shares/ Units | Description | Value | ||
COMMON STOCKS (a) – 91.7% | ||||
Electric Utilities – 30.0% | ||||
75,900 | Alliant Energy Corp. | $3,143,778 | ||
161,500 | American Electric Power Co., Inc. (b) | 10,973,925 | ||
113,000 | Duke Energy Corp. (b) | 8,719,080 | ||
13,800 | Edison International (b) | 857,808 | ||
259,900 | Emera, Inc. (CAD) | 8,118,117 | ||
17,500 | Eversource Energy | 998,900 | ||
335,200 | Exelon Corp. (b) | 13,873,928 | ||
184,400 | Fortis, Inc. (CAD) | 5,892,096 | ||
213,300 | Hydro One Ltd. (CAD) (c) | 3,201,310 | ||
44,500 | IDACORP, Inc. | 4,110,020 | ||
59,200 | NextEra Energy, Inc. (b) | 9,815,952 | ||
138,700 | PPL Corp. | 3,789,284 | ||
201,300 | Southern (The) Co. (b) | 9,038,370 | ||
127,000 | Xcel Energy, Inc. | 5,781,040 | ||
88,313,608 | ||||
Gas Utilities – 6.2% | ||||
33,600 | Atmos Energy Corp. | 2,997,456 | ||
41,310 | Chesapeake Utilities Corp. | 3,298,604 | ||
102,000 | New Jersey Resources Corp. | 4,528,800 | ||
150,018 | UGI Corp. | 7,571,408 | ||
18,396,268 | ||||
Multi-Utilities – 18.9% | ||||
157,200 | ATCO, Ltd., Class I (CAD) | 4,778,075 | ||
236,700 | Canadian Utilities Ltd., Class A (CAD) | 5,744,986 | ||
135,800 | CMS Energy Corp. | 6,264,454 | ||
160,092 | National Grid PLC, ADR (b) | 8,934,735 | ||
170,000 | NiSource, Inc. (b) | 4,301,000 | ||
273,500 | Public Service Enterprise Group, Inc. (b) | 14,490,030 | ||
39,400 | Sempra Energy (b) | 4,197,282 | ||
107,700 | WEC Energy Group, Inc. | 6,801,255 | ||
55,511,817 | ||||
Oil, Gas & Consumable Fuels – 36.3% | ||||
2,472,354 | Enbridge Energy Management, LLC (d) | 23,487,363 | ||
540,200 | Enbridge Income Fund Holdings, Inc. (CAD) | 11,819,739 | ||
210,000 | Enbridge, Inc. (b) | 6,524,700 | ||
197,700 | Inter Pipeline, Ltd. (CAD) | 3,734,130 | ||
172,100 | Keyera Corp. (CAD) | 4,824,799 | ||
946,075 | Kinder Morgan, Inc. (b) | 15,780,531 | ||
151,053 | ONEOK, Inc. (b) | 10,295,773 | ||
40,600 | Targa Resources Corp. (b) | 1,974,378 | ||
450,170 | TransCanada Corp. (b) | 18,830,611 | ||
358,600 | Williams (The) Cos., Inc. (b) | 9,631,996 | ||
106,904,020 | ||||
Water Utilities – 0.3% | ||||
10,900 | American Water Works Co., Inc. | 906,226 | ||
Total Common Stocks | 270,031,939 | |||
(Cost $288,874,208) | ||||
MASTER LIMITED PARTNERSHIPS (a) – 37.6% | ||||
Chemicals – 0.2% | ||||
27,000 | Westlake Chemical Partners, L.P. | 627,750 |
Shares/ Units | Description | Value | ||
MASTER LIMITED PARTNERSHIPS (a) (Continued) | ||||
Gas Utilities – 1.8% | ||||
127,152 | AmeriGas Partners, L.P. | $5,260,278 | ||
Independent Power and Renewable Electricity Producers – 4.8% | ||||
311,555 | NextEra Energy Partners, L.P. (e) | 14,007,513 | ||
Oil, Gas & Consumable Fuels – 30.8% | ||||
79,700 | Alliance Holdings GP, L.P. | 2,261,089 | ||
275,830 | Alliance Resource Partners, L.P. | 5,309,728 | ||
124,444 | BP Midstream Partners, L.P. | 2,659,368 | ||
50,000 | Buckeye Partners, L.P. (b) | 1,802,500 | ||
190,000 | Energy Transfer Equity, L.P. | 3,283,200 | ||
135,000 | Energy Transfer Partners, L.P. (b) | 2,563,650 | ||
618,800 | Enterprise Products Partners, L.P. (b) | 17,883,320 | ||
190,900 | EQT Midstream Partners, L.P. | 10,657,947 | ||
205,976 | Holly Energy Partners, L.P. | 6,051,575 | ||
160,300 | Magellan Midstream Partners, L.P. | 11,204,970 | ||
33,333 | MPLX, L.P. | 1,196,988 | ||
103,600 | Phillips 66 Partners, L.P. | 5,418,280 | ||
90,000 | Plains All American Pipeline, L.P. (b) | 2,115,000 | ||
79,000 | Shell Midstream Partners, L.P. | 1,768,810 | ||
102,221 | Spectra Energy Partners, L.P. | 3,080,941 | ||
322,613 | TC PipeLines, L.P. | 7,845,948 | ||
56,002 | TransMontaigne Partners, L.P. | 2,168,397 | ||
25,000 | Western Gas Equity Partners, L.P. | 917,500 | ||
11,700 | Western Gas Partners, L.P. | 604,539 | ||
50,000 | Williams Partners, L.P. (b) | 1,990,000 | ||
90,783,750 | ||||
Total Master Limited Partnerships | 110,679,291 | |||
(Cost $104,271,623) | ||||
REAL ESTATE INVESTMENT TRUSTS (a) – 1.1% | ||||
Equity Real Estate Investment Trusts – 1.1% | ||||
39,101 | CorEnergy Infrastructure Trust, Inc. | 1,415,065 | ||
78,450 | InfraREIT, Inc. | 1,675,692 | ||
Total Real Estate Investment Trusts | 3,090,757 | |||
(Cost $2,600,188) | ||||
Total Investments – 130.4% | 383,801,987 | |||
(Cost $395,746,019) (f) |
Number of Contracts | Description | Notional Amount | Exercise Price | Expiration Date | Value | |||||
CALL OPTIONS WRITTEN – (0.7)% | ||||||||||
1,600 | American Electric Power Co., Inc. (g) | $10,872,000 | $72.50 | Jun 2018 | (6,400) | |||||
500 | Buckeye Partners, L.P. | 1,802,500 | 40.00 | Aug 2018 | (25,000) | |||||
1,130 | Duke Energy Corp. | 8,719,080 | 82.50 | Jul 2018 | (19,210) | |||||
138 | Edison International | 857,808 | 65.00 | Jul 2018 | (8,970) | |||||
2,100 | Enbridge, Inc. (g) | 6,524,700 | 37.50 | Jul 2018 | (6,300) | |||||
1,000 | Energy Transfer Partners, L.P. | 1,899,000 | 20.00 | Aug 2018 | (50,000) | |||||
2,498 | Enterprise Products Partners, L.P. (g) | 7,219,220 | 31.00 | Jun 2018 | (7,494) | |||||
3,000 | Exelon Corp. | 12,417,000 | 43.00 | Jul 2018 | (99,000) | |||||
5,000 | Kinder Morgan, Inc. | 8,340,000 | 18.00 | Sep 2018 | (155,000) | |||||
1,600 | National Grid PLC (g) | 8,929,600 | 65.00 | Jun 2018 | (8,000) | |||||
300 | NextEra Energy, Inc. | 4,974,300 | 170.00 | Jun 2018 | (10,500) | |||||
1,700 | NiSource, Inc. | 4,301,000 | 26.00 | Jul 2018 | (59,500) | |||||
700 | ONEOK, Inc. | 4,771,200 | 62.50 | Jun 2018 | (408,100) |
Number of Contracts | Description | Notional Amount | Exercise Price | Expiration Date | Value | |||||
CALL OPTIONS WRITTEN (Continued) | ||||||||||
800 | ONEOK, Inc. | $5,452,800 | $62.50 | Jul 2018 | $(504,000) | |||||
10 | ONEOK, Inc. | 68,160 | 70.00 | Jul 2018 | (1,200) | |||||
150 | Plains All American Pipeline, L.P. | 352,500 | 25.00 | Aug 2018 | (11,250) | |||||
2,185 | Public Service Enterprise Group, Inc. | 11,576,130 | 55.00 | Sep 2018 | (170,430) | |||||
300 | Sempra Energy | 3,195,900 | 115.00 | Jul 2018 | (9,000) | |||||
13 | Southern (The) Co. | 58,370 | 48.00 | Jun 2018 | (52) | |||||
406 | Targa Resources Corp. | 1,974,378 | 49.00 | Jul 2018 | (71,050) | |||||
3,500 | TransCanada Corp. (g) | 14,640,500 | 45.00 | Jun 2018 | (17,500) | |||||
3,000 | Williams (The) Cos., Inc. | 8,058,000 | 28.00 | Aug 2018 | (180,000) | |||||
500 | Williams Partners, L.P. | 1,990,000 | 37.50 | Jun 2018 | (121,250) | |||||
Total Call Options Written | (1,949,206) | |||||||||
(Premiums received $1,468,888) |
Outstanding Loans – (33.3)% |
(98,000,000) | ||
Net Other Assets and Liabilities – 3.6% |
10,559,319 | ||
Net Assets – 100.0% |
$294,412,100 |
Counterparty | Floating Rate (1) | Expiration Date | Notional Amount | Fixed Rate (1) | Unrealized Appreciation (Depreciation)/ Value | |||||
Bank of Nova Scotia | 1 month LIBOR | 10/08/20 | $36,475,000 | 2.121% | $322,792 | |||||
Bank of Nova Scotia | 1 month LIBOR | 09/03/24 | 36,475,000 | 2.367% | 664,523 | |||||
$72,950,000 | $987,315 |
(1) | The Fund pays the fixed rate and receives the floating rate, however, no cash payments are made by either party prior the expiration dates shown above. The floating rate on May 31, 2018 was 1.928% and 1.909%, respectively. |
(a) | All or a portion of these securities are available to serve as collateral for the outstanding loans. |
(b) | All or a portion of these securities’ positions represent covers for outstanding options written. |
(c) | This security is restricted in the U.S. and cannot be offered for public sale without first being registered under the Securities Act of 1933, as amended. This security is not restricted on the foreign exchange where it trades freely without any additional registration. As such, it does not require the additional disclosure required of restricted securities. |
(d) | Non-income producing security that makes payment-in-kind (“PIK”) distributions. For the six months ended May 31, 2018, the Fund received 146,875 PIK shares of Enbridge Energy Management, LLC. |
(e) | NextEra Energy Partners, L.P. is taxed as a “C” corporation for federal income tax purposes. |
(f) | Aggregate cost for financial reporting purposes approximates the aggregate cost for federal income tax purposes. As of May 31, 2018, the aggregate gross unrealized appreciation for all investments in which there was an excess of value over tax cost was $31,892,530 and the aggregate gross unrealized depreciation for all investments in which there was an excess of tax cost over value was $43,329,565. The net unrealized depreciation was $11,437,035. The amounts presented are inclusive of derivative contracts. |
(g) | This investment is fair valued by the Advisor’s Pricing Committee in accordance with procedures adopted by the Fund’s Board of Trustees, and in accordance with the provisions of the Investment Company Act of 1940, as amended. At May 31, 2018, investments noted as such are valued at $(45,694) or (0.0)% of net assets. |
ADR | American Depositary Receipt |
CAD | Canadian Dollar - Security is denominated in Canadian Dollars and is translated into U.S. Dollars based upon the current exchange rate. |
ASSETS TABLE | ||||
Total Value at 5/31/2018 | Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |
Common Stocks* | $ 270,031,939 | $ 270,031,939 | $ — | $ — |
Master Limited Partnerships* | 110,679,291 | 110,679,291 | — | — |
Real Estate Investment Trusts* | 3,090,757 | 3,090,757 | — | — |
Total Investments | 383,801,987 | 383,801,987 | — | — |
Interest Rate Swap Agreements | 987,315 | — | 987,315 | — |
Total | $ 384,789,302 | $ 383,801,987 | $ 987,315 | $— |
LIABILITIES TABLE | ||||
Total Value at 5/31/2018 | Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |
Call Options Written | $ (1,949,206) | $ (1,713,762) | $ (235,444) | $ — |
* | See Portfolio of Investments for industry breakout. |
ASSETS: | |
Investments, at value (Cost $395,746,019) | $ 383,801,987 |
Cash | 9,029,952 |
Cash segregated as collateral for open swap contracts | 185,752 |
Swap contracts, at value | 987,315 |
Receivables: | |
Investment securities sold | 1,309,194 |
Dividends | 1,166,798 |
Prepaid expenses | 18,708 |
Total Assets | 396,499,706 |
LIABILITIES: | |
Outstanding loans | 98,000,000 |
Options written, at value (Premiums received $1,468,888) | 1,949,206 |
Payables: | |
Investment securities purchased | 1,489,995 |
Investment advisory fees | 328,988 |
Interest and fees on loans | 220,538 |
Audit and tax fees | 31,728 |
Printing fees | 23,203 |
Administrative fees | 19,711 |
Custodian fees | 11,142 |
Legal fees | 6,420 |
Transfer agent fees | 2,975 |
Trustees’ fees and expenses | 2,929 |
Financial reporting fees | 771 |
Total Liabilities | 102,087,606 |
NET ASSETS | $294,412,100 |
NET ASSETS consist of: | |
Paid-in capital | $ 298,303,452 |
Par value | 175,502 |
Accumulated net investment income (loss) | 5,801,409 |
Accumulated net realized gain (loss) on investments, written options, swap contracts and foreign currency transactions | 1,570,466 |
Net unrealized appreciation (depreciation) on investments, written options, swap contracts and foreign currency translation | (11,438,729) |
NET ASSETS | $294,412,100 |
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) | $16.78 |
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized) | 17,550,236 |
INVESTMENT INCOME: | ||
Dividends (net of foreign withholding tax of $321,114) | $ 5,587,458 | |
Interest | 11,730 | |
Total investment income | 5,599,188 | |
EXPENSES: | ||
Investment advisory fees | 2,041,665 | |
Interest and fees on loans | 1,333,532 | |
Administrative fees | 101,391 | |
Printing fees | 84,973 | |
Custodian fees | 29,348 | |
Audit and tax fees | 25,372 | |
Transfer agent fees | 12,885 | |
Legal fees | 8,816 | |
Trustees’ fees and expenses | 8,386 | |
Listing expense | 7,360 | |
Financial reporting fees | 4,625 | |
Other | 16,769 | |
Total expenses | 3,675,122 | |
NET INVESTMENT INCOME (LOSS) | 1,924,066 | |
NET REALIZED AND UNREALIZED GAIN (LOSS): | ||
Net realized gain (loss) on: | ||
Investments | 5,668,521 | |
Written options | 2,035,643 | |
Swap contracts | (246,348) | |
Foreign currency transactions | (15,586) | |
Net realized gain (loss) | 7,442,230 | |
Net change in unrealized appreciation (depreciation) on: | ||
Investments | (34,648,503) | |
Written options | 883,393 | |
Swap contracts | 1,674,249 | |
Foreign currency translation | 159 | |
Net change in unrealized appreciation (depreciation) | (32,090,702) | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | (24,648,472) | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $(22,724,406) |
Six Months Ended 5/31/2018 (Unaudited) | Year Ended 11/30/2017 | ||
OPERATIONS: | |||
Net investment income (loss) | $ 1,924,066 | $ 4,583,581 | |
Net realized gain (loss) | 7,442,230 | 16,532,879 | |
Net change in unrealized appreciation (depreciation) | (32,090,702) | (8,259,803) | |
Net increase (decrease) in net assets resulting from operations | (22,724,406) | 12,856,657 | |
DISTRIBUTIONS TO SHAREHOLDERS FROM: | |||
Net investment income | (11,583,156) | (3,193,583) | |
Net realized gain | — | (4,864,485) | |
Return of capital | — | (15,108,243) | |
Total distributions to shareholders | (11,583,156) | (23,166,311) | |
Total increase (decrease) in net assets | (34,307,562) | (10,309,654) | |
NET ASSETS: | |||
Beginning of period | 328,719,662 | 339,029,316 | |
End of period | $ 294,412,100 | $ 328,719,662 | |
Accumulated net investment income (loss) at end of period | $5,801,409 | $15,460,499 | |
COMMON SHARES: | |||
Common Shares at end of period * | 17,550,236 | 17,550,236 |
* | On September 15, 2016, the Fund commenced a share repurchase program. The program continued until March 15, 2017. The Fund did not repurchase any common shares while the program was in effect. |
Cash flows from operating activities: | ||
Net increase (decrease) in net assets resulting from operations | $(22,724,406) | |
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities: | ||
Purchases of investments | (74,152,504) | |
Sales, maturities and paydown of investments | 86,212,018 | |
Proceeds from written options | 3,396,486 | |
Amount paid to close written options | (1,539,061) | |
Return of capital received from investment in MLPs | 3,481,870 | |
Net realized gain/loss on investments and written options | (7,704,164) | |
Net change in unrealized appreciation/depreciation on investments and written options | 33,765,110 | |
Net change in unrealized appreciation/depreciation on swap contracts | (1,674,249) | |
Decrease in cash segregated as collateral for open swap contracts | 3,546,348 | |
Changes in assets and liabilities: | ||
Increase in dividends receivable | (388,841) | |
Increase in prepaid expenses | (11,954) | |
Increase in interest and fees payable on loans | 214,034 | |
Decrease in investment advisory fees payable | (31,202) | |
Decrease in audit and tax fees payable | (19,750) | |
Increase in legal fees payable | 3,067 | |
Decrease in printing fees payable | (14,759) | |
Decrease in administrative fees payable | (383) | |
Increase in custodian fees payable | 1,260 | |
Decrease in transfer agent fees payable | (1,197) | |
Increase in Trustees’ fees and expenses payable | 135 | |
Decrease in other liabilities payable | (368) | |
Cash provided by operating activities | $22,357,490 | |
Cash flows from financing activities: | ||
Distributions to Common Shareholders from net investment income | (11,583,156) | |
Repayment of borrowings | (19,000,000) | |
Proceeds from borrowings | 5,500,000 | |
Cash used in financing activities | (25,083,156) | |
Decrease in cash (a) | (2,725,666) | |
Cash at beginning of period | 11,755,618 | |
Cash at end of period | $9,029,952 | |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest and fees | $1,119,498 |
(a) | Includes net change in unrealized appreciation (depreciation) on foreign currency of $159. |
Six Months Ended 5/31/2018 (Unaudited) | Year Ended November 30, | ||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||
Net asset value, beginning of period | $ 18.73 | $ 19.32 | $ 18.19 | $ 25.97 | $ 22.30 | $ 22.74 | |||||
Income from investment operations: | |||||||||||
Net investment income (loss) | 0.11 | 0.26 | 0.21 | 0.34 | 0.22 | 0.22 | |||||
Net realized and unrealized gain (loss) | (1.40) | 0.47 | 2.58 (a) | (6.80) | 6.20 | 3.47 (a) | |||||
Total from investment operations | (1.29) | 0.73 | 2.79 | (6.46) | 6.42 | 3.69 | |||||
Distributions paid to shareholders from: | |||||||||||
Net investment income | (0.66) | (0.18) | (0.23) | (0.36) | (0.45) | (0.83) | |||||
Net realized gain | — | (0.28) | (0.30) | (0.96) | (2.21) | (3.25) | |||||
Return of capital | — | (0.86) | (1.13) | — | (0.09) | (0.05) | |||||
Total distributions paid to Common Shareholders | (0.66) | (1.32) | (1.66) | (1.32) | (2.75) | (4.13) | |||||
Net asset value, end of period | $16.78 | $18.73 | $19.32 | $18.19 | $25.97 | $22.30 | |||||
Market value, end of period | $16.50 | $17.70 | $18.83 | $16.16 | $23.00 | $21.71 | |||||
Total return based on net asset value (b) | (6.88)% | 4.09% | 18.35% (a) | (25.29)% | 31.02% | 17.76% (a) | |||||
Total return based on market value (b) | (3.06)% | 0.93% | 29.84% | (25.05)% | 19.18% | 22.11% | |||||
Ratios to average net assets/supplemental data: | |||||||||||
Net assets, end of period (in 000’s) | $ 294,412 | $ 328,720 | $ 339,029 | $ 319,282 | $ 455,849 | $ 391,336 | |||||
Ratio of total expenses to average net assets | 2.42% (c) | 2.20% | 1.95% | 1.83% | 1.80% | 1.84% | |||||
Ratio of total expenses to average net assets excluding interest expense and fees on loans | 1.54% (c) | 1.53% | 1.54% | 1.49% | 1.53% | 1.55% | |||||
Ratio of net investment income (loss) to average net assets | 1.27% (c) | 1.34% | 1.14% | 1.47% | 0.88% | 0.95% | |||||
Portfolio turnover rate | 19% | 42% | 72% | 42% | 42% | 54% | |||||
Indebtedness: | |||||||||||
Total loans outstanding (in 000’s) | $ 98,000 | $ 111,500 | $ 121,500 | $ 110,500 | $ 158,000 | $ 145,900 | |||||
Asset coverage per $1,000 of indebtedness (d) | $ 4,004 | $ 3,948 | $ 3,790 | $ 3,889 | $ 3,885 | $ 3,682 |
(a) | During the years ended November 30, 2016 and 2013, the Fund received a reimbursement from the sub-advisor in the amount of $1,600 and $5,421, respectively, in connection with trade errors, which represents less than $0.01 per share. Since the sub-advisor reimbursed the Fund, there was no effect on the total return. |
(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 loan outstanding) from the Fund’s total assets, and dividing by the outstanding loan balance in 000’s. |
1) | the type of security; |
2) | the size of the holding; |
3) | the initial cost of the security; |
4) | transactions in comparable securities; |
5) | price quotes from dealers and/or third-party pricing services; |
6) | relationships among various securities; |
7) | information obtained by contacting the issuer, analysts, or the appropriate stock exchange; |
8) | an analysis of the issuer’s financial statements; and |
9) | the existence of merger proposals or tender offers that might affect the value of the security. |
1) | the value of similar foreign securities traded on other foreign markets; |
2) | ADR trading of similar securities; |
3) | closed-end 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; and |
8) | whether the effects of the event are isolated or whether they affect entire markets, countries or regions. |
• | 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. |
Distributions paid from: | |
Ordinary income | $3,846,395 |
Capital gains | 4,211,673 |
Return of capital | 15,108,243 |
Undistributed ordinary income | $— |
Undistributed capital gains | — |
Total undistributed earnings | — |
Accumulated capital and other losses | — |
Net unrealized appreciation (depreciation) | 30,254,074 |
Total accumulated earnings (losses) | 30,254,074 |
Other | (13,366) |
Paid-in capital | 298,478,954 |
Total net assets | $328,719,662 |
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 | Cash Received as Collateral | Net Amount | ||||||
Interest Rate Swap Contracts | $ 987,315 | $ — | $ 987,315 | $ — | $ — | $ 987,315 |
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 | $ 1,949,206 | |||||
Interest Rate Swap Agreements | Interest Rate Risk | Swap contracts, at value | 987,315 | — | — |
Statement of Operations Location | |
Equity Risk Exposure | |
Net realized gain (loss) on written options | $2,035,643 |
Net change in unrealized appreciation (depreciation) on written options | 883,393 |
Interest Rate Risk Exposure | |
Net realized gain (loss) on swap contracts | $(246,348) |
Net change in unrealized appreciation (depreciation) on swap contracts | 1,674,249 |
(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. |
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. |
(b) | Not applicable. |
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.
(a) | Not applicable. |
(b) | Not applicable. |
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
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 trustees, 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 Registrant’s second fiscal quarter of 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. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
(a) | Not applicable. |
(b) | Not applicable. |
Item 13. Exhibits.
(a)(1) | Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(3) | Not applicable. |
(a)(4) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto. |
(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) |
Date: | August 9, 2018 |
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) |
Date: | August 9, 2018 |
By (Signature and Title)* | /s/ Donald P. Swade | |
Donald P. Swade, Treasurer, Chief Financial Officer and Chief Accounting Officer (principal financial officer) |
Date: | August 9, 2018 |
* Print the name and title of each signing officer under his or her signature.