First Trust Energy Infrastructure Fund Issues Notice Regarding January 2024 Distribution

Rhea-AI Summary

First Trust Energy Infrastructure Fund (FIF) has announced a distribution payable on January 16, 2024, to shareholders of record as of January 3, 2024, with an ex-dividend date of January 2, 2024. The Fund has previously approved a managed distribution policy in reliance on exemptive relief received from the SEC, allowing periodic distributions of long-term capital gains as frequently as monthly each tax year.

Financial Analyst

The declaration of a distribution by First Trust Energy Infrastructure Fund under its Managed Distribution Plan is a significant event for shareholders. It directly impacts their investment returns, as distributions are a form of shareholder yield. The frequency of these distributions, especially being as frequent as monthly, could make the fund more attractive to income-focused investors who prefer regular income streams.

From a financial perspective, it's essential to assess the sustainability of these distributions. A fund that pays out too much may be eroding its capital base, which could affect long-term performance. Investors should examine the source of these distributions, whether they stem from actual income, capital gains, or return of capital. The latter may not be as favorable as it effectively reduces the investor's original investment in the fund.

Tax Expert

The Managed Distribution Plan's compliance with SEC regulations has tax implications for shareholders. Distributions that include long-term capital gains are taxed at lower rates than ordinary income, which can be advantageous for shareholders. However, the tax impact will vary depending on individual circumstances, including the shareholder's income level and tax bracket.

Investors should be aware of the timing of these distributions, as they can affect tax planning strategies. For instance, distributions received near the end of the fiscal year could potentially alter an investor's tax liabilities for that year. It is advisable for shareholders to consult with a tax professional to understand the specific implications of these periodic distributions on their personal tax situation.

Market Research Analyst

Looking at the broader market, the fund's Managed Distribution Plan must be analyzed in the context of the energy infrastructure sector's performance. The sector's health, influenced by factors such as energy prices, regulatory changes and demand for infrastructure, will ultimately drive the fund's ability to maintain its distributions. A fund's distribution policy, especially one that offers frequent payouts, can be a double-edged sword. While it may attract income-seeking investors, it also puts pressure on the fund managers to maintain a certain level of performance.

Investors should compare this fund's distribution yield and frequency with its peers to gauge competitiveness. A higher-than-average yield could signal an aggressive distribution strategy or superior management performance. Conversely, it might also indicate potential risk if the yield is unsustainable. Monitoring sector trends and the fund's performance relative to its peers can provide investors with critical insights into the fund's long-term viability.

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 January 16, 2024, to shareholders of record as of January 3, 2024, with an ex-dividend date of January 2, 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 December 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.

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%

-

-

-

6.88%

10.41%

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

$0.20000

$0.20000

-

-

-

100.00%

-

-

-

1.15%

-0.08%

(1) Includes the most recent monthly distribution paid on January 16, 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 December 31, 2023.

(4) Total Returns are through December 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. ("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.

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 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.

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.

The London Interbank Offered Rate ("LIBOR") has ceased to be made available as a reference rate. Any potential effects of the transition away from LIBOR on the fund or on certain instruments in which the fund invests is difficult to predict and could result in losses to the fund. 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.

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/20240116742486/en/

Inquiries: Derek Maltbie, (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 January 16, 2024.

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

The ex-dividend date is January 2, 2024.

What is the managed distribution policy of First Trust Energy Infrastructure Fund (FIF)?

The Fund has a managed distribution policy allowing periodic distributions of long-term capital gains as frequently as monthly each tax year.

What relief did First Trust Energy Infrastructure Fund (FIF) receive from the SEC?

The Fund received exemptive relief from the Securities and Exchange Commission.

Who is eligible for the distribution from First Trust Energy Infrastructure Fund (FIF)?

Shareholders of record as of January 3, 2024, are eligible for the distribution.