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:
First Trust
Energy
Infrastructure Fund (FIF)
Semi-Annual
Report
For the Six
Months Ended
May 31,
2018
Caution Regarding
Forward-Looking Statements
This report contains
certain forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. (“First Trust” or the “Advisor”) and/or Energy Income Partners, LLC (“EIP” or the “Sub-Advisor”) and
their respective representatives, taking into account the information currently available to them. Forward-looking statements include all statements that do not relate solely to current or historical fact. For
example, forward-looking statements include the use of words such as “anticipate,” “estimate,” “intend,” “expect,” “believe,” “plan,”
“may,” “should,” “would” or other words that convey uncertainty of future events or outcomes.
Forward-looking
statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of First Trust Energy Infrastructure Fund (the “Fund”) to be
materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. When evaluating the information included in this report, you are cautioned not to place
undue reliance on these forward-looking statements, which reflect the judgment of the Advisor and/or Sub-Advisor and their respective representatives only as of the date hereof. We undertake no obligation to publicly
revise or update these forward-looking statements to reflect events and circumstances that arise after the date hereof.
Managed Distribution
Policy
The Board of Trustees of
the Fund has approved a managed distribution policy for the Fund (the “Plan”) in reliance on exemptive relief received from the Securities and Exchange Commission that permits the Fund to make periodic
distributions of long-term capital gains as frequently as monthly each tax year. Under the Plan, the Fund currently intends to continue to pay a recurring monthly distribution in the amount of $0.11 per Common Share
that reflects the distributable cash flow of the Fund. A portion of this monthly distribution may include realized capital gains. This may result in a reduction of the long-term capital gain distribution necessary at
year end by distributing realized capital gains throughout the year. The annual distribution rate is independent of the Fund’s performance during any particular period. Accordingly, you should not draw any
conclusions about the Fund’s investment performance from the amount of any distribution or from the terms of the Plan. The Board of Trustees may amend or terminate the Plan at any time without prior notice to
shareholders.
Performance and Risk
Disclosure
There is no assurance
that the Fund will achieve its investment objective. The Fund is subject to market risk, which is the possibility that the market values of securities owned by the Fund will decline and that the value of the Fund
shares may therefore be less than what you paid for them. Accordingly, you can lose money by investing in the Fund. See “Risk Considerations” in the Additional Information section of this report for a
discussion of certain other risks of investing in the Fund.
Performance data quoted
represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, please visit www.ftportfolios.com or speak with your financial advisor. Investment returns, net asset value and common share price will fluctuate and Fund shares, when sold,
may be worth more or less than their original cost.
The Advisor may also
periodically provide additional information on Fund performance on the Fund’s web page at www.ftportfolios.com.
How to Read This
Report
This report contains
information that may help you evaluate your investment in the Fund. It includes details about the Fund and presents data and analysis that provide insight into the Fund’s performance and investment approach.
By reading the portfolio
commentary by the portfolio management team of the Fund, you may obtain an understanding of how the market environment affected the Fund’s performance. The statistical information that follows may help you
understand the Fund’s performance compared to that of relevant market benchmarks.
It is important to keep
in mind that the opinions expressed by personnel of First Trust and EIP are just that: informed opinions. They should not be considered to be promises or advice. The opinions, like the statistics, cover the period
through the date on the cover of this report. The material risks of investing in the Fund are spelled out in the prospectus, the statement of additional information, this report and other Fund regulatory filings.
Page 1
Shareholder Letter
First Trust Energy Infrastructure
Fund (FIF)
Semi-Annual Letter from the Chairman
and CEO
May 31, 2018
Dear Shareholders,
First Trust is pleased
to provide you with the semi-annual report for the First Trust Energy Infrastructure Fund which contains detailed information about your investment for the six-month period ended May 31, 2018, including a market
overview and a performance analysis for the period. We encourage you to read this report carefully and discuss it with your financial advisor.
As you are no doubt
aware, 2017 was a very strong year for both the U.S. and global markets. The three major U.S. indices – the S&P 500® Index, the Dow Jones Industrial Average and the Nasdaq Composite – posted their best performance since 2013. And
there was more good news for Wall Street as the year ended and analysts collected stock market data:
| • | 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. |
As 2017 ended, President
Trump signed the “Tax Cuts and Jobs Act of 2017” tax reform bill. As 2018 began, there was much enthusiasm for this tax reform package and the potential increase in take-home pay for many Americans, as
well as the reduction in the federal corporate tax rate from 35% to 21%. Early in the year, many investors were also watching the Federal Reserve (the “Fed”) and its signaled intent to continue raising
interest rates at a gradual pace. Based on strong job growth and the economic outlook in the U.S., the Fed did, in fact, raise interest rates on March 21, 2018. At the Fed’s May 2018 meeting, interest rates were
unchanged, but the statement the Fed released points to the possibility of two or more rate hikes in the latter part of 2018.
For the entire first
quarter of 2018, increased volatility was the norm. The S&P 500® Index was off to a strong start in January as it returned over 7.5% from January 2 to January 26. February, however,
was a different story. Early in the month, the Dow Jones Industrial Average plunged 567 points and sank into “correction” territory (defined as a drop of 10% from the index’s high) and in just two
weeks, was down more than 3,200 points. However, as February came to a close, the Dow Jones Industrial Average was back on track and up from the lows experienced earlier in the month. Volatility continued in March and
April with the Dow Jones Industrial Average ending April with a small gain, while May ended with a slight decline. Across the globe, the first quarter saw the Emerging Market and Developing Market countries, as well
as Europe, continue with the strong performances experienced in 2017.
The market volatility we
saw during the first quarter of 2018 has continued into the second quarter, both in the U.S. and abroad. Both the U.S. and international markets have been affected by talk of a so-called “trade war” and
tariffs on imports from China (and other countries), as well as geopolitical concerns around a possible war with Syria, continued concerns regarding North Korea and the potential effects of the political goals of
Italy’s new prime minister. This market volatility is why we believe that one should invest for the long term and be prepared for market movements, which can happen at any time. This can be accomplished by
keeping current on your portfolio and investing goals and by speaking regularly with your investment professional. As we’ve said before, markets go up and they also go down, but savvy investors are prepared for
either through careful attention to their portfolios and investment goals.
At First Trust, we
continue to be optimistic about the U.S. economy and we thank you for giving us the opportunity to be a part of your financial plan. We value our relationship with you and will report on your investment again in six
months.
Sincerely,
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust
Advisors L.P.
Page 2
First Trust Energy Infrastructure Fund
(FIF)
“AT A GLANCE”
As of May 31, 2018
(Unaudited)
| 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%). |
Page 3
Portfolio Commentary
First Trust Energy
Infrastructure Fund (FIF)
Semi-Annual Report
May 31, 2018
(Unaudited)
Advisor
First Trust Advisors L.P.
(“First Trust” or the “Advisor”) is the investment advisor to the First Trust Energy Infrastructure Fund (the “Fund”). First Trust is responsible for the ongoing monitoring of the
Fund’s investment portfolio, managing the Fund’s business affairs and providing certain administrative services necessary for the management of the Fund.
Sub-Advisor
Energy Income Partners,
LLC
Energy Income Partners,
LLC (“EIP” or the “Sub-Advisor”), located in Westport, CT, serves as the investment sub-advisor to the Fund. EIP was founded in 2003 to provide professional asset management services in the
area of energy-related master limited partnerships and other high-payout securities such as pipeline companies, power utilities, YieldCos, and energy infrastructure real estate investment trusts (“REITs”).
EIP mainly focuses on investments in energy-related infrastructure assets such as pipelines, power transmission and distribution, petroleum storage and terminals that receive fee-based or regulated income from their
corporate and individual customers. EIP manages or supervises approximately $6.1 billion of assets as of May 31, 2018. EIP advises two privately offered partnerships for U.S. high net worth individuals and an open-end
mutual fund. EIP also manages separately managed accounts and provides its model portfolio to unified managed accounts. Finally, EIP serves as a sub-advisor to three closed-end management investment companies in
addition to the Fund, an actively managed exchange-traded fund (“ETF”), a sleeve of an actively managed ETF, a sleeve of a series of a variable insurance trust, and an open-end UCITS fund incorporated in
Ireland. EIP is a registered investment advisor with the Securities and Exchange Commission.
Portfolio Management
Team
James J. Murchie –
Co-Portfolio Manager, Founder and CEO of Energy Income Partners, LLC
Eva Pao –
Co-Portfolio Manager, Principal of Energy Income Partners, LLC
John Tysseland –
Co-Portfolio Manager, Principal of Energy Income Partners, LLC
Commentary
First Trust Energy
Infrastructure Fund
The investment objective
of the Fund is to seek a high level of total return with an emphasis on current distributions paid to shareholders. The Fund pursues its objective by investing primarily in securities of companies engaged in the
energy infrastructure sector. These companies principally include publicly-traded master limited partnerships (“MLPs”) and limited liability companies taxed as partnerships, MLP affiliates, YieldCos,
pipeline companies, utilities and other infrastructure-related companies that derive at least 50% of their revenues from operating, or providing services in support of, infrastructure assets such as pipelines, power
transmission and petroleum and natural gas storage in the petroleum, natural gas and power generation industries (collectively, “Energy Infrastructure Companies”). For purposes of the Fund’s
investment objective, total return includes capital appreciation of, and all distributions received from, securities in which the Fund invests, taking into account the varying tax characteristics of such securities.
Under normal market conditions, the Fund invests at least 80% of its managed assets (total asset value of the Fund minus the sum of the Fund’s liabilities other than the principal amount of borrowings) in
securities of Energy Infrastructure Companies. There can be no assurance that the Fund will achieve its investment objective. The Fund may not be appropriate for all investors.
Market Recap
As measured by the
Alerian MLP Total Return Index (“AMZX”) and the PHLX Utility Sector Index (“UTY”), the total return for the six months ended May 31, 2018 was 5.71% and -8.09%, respectively. These figures are
according to data collected from several sources, including Alerian Capital Management and Bloomberg. While in the short term, share appreciation of Energy Infrastructure Companies can be volatile, EIP believes that
over the longer term, such share appreciation will approximate growth in monthly cash distributions and dividends per share. Over the last 10 years, growth in per share MLP distributions and utility dividends has
averaged 0.3% and 3.1%, respectively. Over the last twelve months, growth in per share MLP distributions and utility dividends was -1.6% and 3.1%, respectively (source: Alerian Capital Management, Bloomberg, EIP
calculations).
Performance Analysis
On a net asset value
(“NAV”) basis, the Fund provided a total return1 of -6.88%, including the reinvestment of distributions for the six-month period ended May 31, 2018. This compares, according
to collected data, to a -0.92% return for a blended index consisting of
| 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. |
Page 4
Portfolio Commentary (Continued)
First Trust Energy
Infrastructure Fund (FIF)
Semi-Annual Report
May 31, 2018
(Unaudited)
the UTY (50%) and the
AMZX (50%) (the “Blended Index”). Unlike the Fund, the Blended Index does not incur fees and expenses. On a market value basis, the Fund had a total return, including the reinvestment of distributions, of
-3.06% for the same period. As of May 31, 2018, the Fund’s market price per share was $16.50, while the NAV per Common Share was $16.78, a discount of 1.67%. As of November 30, 2017, the Fund’s market
price per share was $17.70, while the NAV per Common Share was $18.73, a discount of 5.50%.
The Fund maintained its
regular monthly Common Share distribution of $0.11 per share for the six months ended May 31, 2018.
For the six months ended
May 31, 2018, the Fund’s NAV underperformed the -0.92% return of the Blended Index by 596 basis points (“bps”). We believe the MLP structure and a high payout ratio are only suitable for a narrow set
of long-lived assets that have stable non-cyclical cash flows, such as regulated pipelines or other infrastructure assets that are legal or natural monopolies. As a result, holdings of the Fund are much more weighted
toward regulated entities compared to the Blended Index. While we believe this approach leads to a portfolio of companies at the blue-chip end of the spectrum with less volatility and higher growth long-term,
regulated pipelines owned by MLPs underperformed during the period following a revised policy statement by the Federal Energy Regulatory Commission (FERC) on March 15, 2018. The FERC’s revised policy statement
puts regulated assets at a relative disadvantage if held in the MLP structure because it no longer allows MLPs to include a provision for income tax expense when calculating pipeline tariffs based on cost-of-service
rates. The ruling reverses nearly 20 years of FERC policy and judicial deference that ultimately treated taxes paid by MLP unitholders on MLP income as a cost that should be recovered in tariffs, just as a taxable
corporation can recover its tax expense. We believe it is unlikely that this policy statement will be overturned, and further believe that it adds to the growing list of factors that will drive many midstream MLPs to
convert to taxable C-Corporations ("C-Corp"). This is a trend that is already underway as a number of C-Corp parents have acquired their subsidiary MLPs, while other MLPs have recently chosen to simply convert to a
taxable corporation on their own.
An important factor that
affected the return of the Fund was its use of financial leverage through the use of a line of credit. The Fund established a credit agreement with The Bank of Nova Scotia with a current maximum commitment amount of
$130,000,000. The Fund uses leverage because its portfolio managers believe that, over time, leverage can enhance total return for common shareholders. However, the use of leverage can also increase the volatility of
the NAV and, therefore, the share price. For example, if the prices of securities held by the Fund decline, the effect of changes in common share NAV and common share total return loss would be magnified by the use of
leverage. Conversely, leverage may enhance common share returns during periods when the prices of securities held by the Fund generally are rising. Unlike the Fund, AMZX and UTY are not leveraged. Leverage had a
negative impact on the performance of the Fund over the reporting period.
Market and Fund Outlook
Many of the assets held
by MLPs were originally constructed decades ago by pipeline and power utilities. When the U.S. deregulated much of the energy industry, these utilities became cyclical commodity companies with too much debt and the
resulting financial stress caused divestment of their pipeline assets to the MLP space that was trading at higher valuations. We believe the reverse trend is happening today. Corporate consolidations and
simplifications are part of that trend. Corporate simplifications involving pipeline companies and their associated MLPs began late in 2014 and have continued in 2018. These simplifications involve the acquisition of
the subsidiary MLP by the C-Corp parent as well as MLPs choosing to become taxable corporations. In our opinion, this trend will likely continue following the revised policy statement by the FERC on March 15, 2018
that puts regulated assets at a relative disadvantage if held in the MLP structure.
While MLPs represented a
way for the industry to lower its cost of financing between 2004 through 2014, the severe correction in the price of crude oil in 2014 caused a collapse in MLP valuations as much of the AMZX had become exposed to
commodity prices between 2004 and 2014. MLP distribution cuts and even some bankruptcies followed. From the fourth quarter of 2014 to the first quarter of 2018, 42% of the MLPs in the AMZX have cut or eliminated their
dividends.2 Now, MLPs in the AMZX trade at valuations 40%-50% lower than at the peak in 2014, while the valuation multiples of non-MLP
energy infrastructure companies like utilities have risen.3 MLPs are now in many cases a higher-cost way of financing these industries; the reverse of the conditions that led to the
growth of the asset class in the early part of the last decade. As a result, we are now witnessing the consolidation or simplification of corporate structures where the MLP sleeve of capital is being eliminated when
it no longer reduces a company’s cost of equity financing.
While some stand-alone
pipeline companies are now seeking a lower cost of financing outside of the MLP structure, some cyclical companies continue to use the MLP structure to finance non-cyclical assets through sponsored entities. In most
cases, these sponsored entities formed as MLPs still trade at higher multiples compared to companies in cyclical industries such as refining, oil and gas
| 2 | Source: Bloomberg L.P. and FactSet Research Systems Inc. |
| 3 | Source: Alerian Capital Management, Bloomberg |
Page 5
Portfolio Commentary (Continued)
First Trust Energy
Infrastructure Fund (FIF)
Semi-Annual Report
May 31, 2018
(Unaudited)
production, and
petrochemicals. Therefore, some of these cyclical energy companies still have an opportunity to lower their financing costs by divesting stable assets, such as pipelines and related storage facilities, to an MLP
subsidiary as a method to reduce the overall company’s cost of equity financing. The number and size of these sponsored entities continued to grow with initial public offerings in 2017, while the number of
stand-alone MLPs declined. Whether from the perspective of a diversified energy company seeking to lower its overall financing costs or the energy industry in its entirety, we believe it is fair to say that generally
MLPs are created when they lower the cost of equity financing and eliminated when they don’t.
Historically, the
pipeline utility industry has moved in very long cycles and the cycle that saw most of U.S. pipeline assets move to the MLP space due to the MLP being a superior financing tool is reversing. In our view, the
investment merits of owning these assets (stable, slow-growing earnings with a high dividend payout ratio) have not changed. The Fund continues to seek to invest primarily in energy infrastructure companies, including
MLPs, with mostly non-cyclical cash flows, investment-grade ratings, conservative balance sheets, modest and/or flexible organic growth commitments and liquidity on their revolving lines of credit. Non-cyclical cash
flows are, in our opinion, a good fit with a steady anticipated dividend distribution that is meant to be most or all of an energy infrastructure company’s free cash flow.
Page 6
First Trust Energy Infrastructure Fund
(FIF)
Portfolio of Investments
May 31, 2018 (Unaudited)
| 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 | ||
See Notes to Financial Statements
Page 7
First Trust Energy Infrastructure Fund
(FIF)
Portfolio of Investments
(Continued)
May 31, 2018 (Unaudited)
| 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) | |||||
Page 8
See Notes to Financial Statements
First Trust Energy Infrastructure Fund
(FIF)
Portfolio of Investments
(Continued)
May 31, 2018 (Unaudited)
| 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 |
Interest Rate Swap Agreements:
| 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. |
See Notes to Financial Statements
Page 9
First Trust Energy Infrastructure Fund
(FIF)
Portfolio of Investments
(Continued)
May 31, 2018 (Unaudited)
Valuation Inputs
A summary of the inputs
used to value the Fund’s investments as of May 31, 2018 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| 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. |
All transfers in and out
of the Levels during the period are assumed to occur on the last day of the period at their current value. There were no transfers between Levels at May 31, 2018.
Page 10
See Notes to Financial Statements
First Trust Energy Infrastructure Fund
(FIF)
Statement of Assets and
Liabilities
May 31, 2018 (Unaudited)
| 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 |
See Notes to Financial Statements
Page 11
First Trust Energy Infrastructure Fund
(FIF)
Statement of Operations
For the Six Months Ended
May 31, 2018 (Unaudited)
| 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) | |
Page 12
See Notes to Financial Statements
First Trust Energy Infrastructure Fund
(FIF)
Statements of Changes in
Net Assets
| 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. |
See Notes to Financial Statements
Page 13
First Trust Energy Infrastructure Fund
(FIF)
Statement of Cash Flows
For the Six Months Ended
May 31, 2018 (Unaudited)
| 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. |
Page 14
See Notes to Financial Statements
First Trust Energy Infrastructure Fund
(FIF)
Financial Highlights
For a Common Share
outstanding throughout each period
| 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. |
See Notes to Financial Statements
Page 15
Notes to Financial Statements
First Trust Energy
Infrastructure Fund (FIF)
May 31, 2018
(Unaudited)
1. Organization
First Trust Energy
Infrastructure Fund (the “Fund”) is a non-diversified, closed-end management investment company organized as a Massachusetts business trust on February 22, 2011, and is registered with the Securities and
Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund trades under the ticker symbol FIF on the New York Stock Exchange
(“NYSE”).
The Fund’s
investment objective is to seek a high level of total return with an emphasis on current distributions paid to shareholders. The Fund pursues its objective by investing primarily in securities of companies engaged in
the energy infrastructure sector. These companies principally include publicly-traded master limited partnerships and limited liability companies taxed as partnerships (“MLPs”), MLP affiliates, YieldCos,
pipeline companies, utilities, and other infrastructure-related companies that derive at least 50% of their revenues from operating, or providing services in support of, infrastructure assets such as pipelines, power
transmission and petroleum and natural gas storage in the petroleum, natural gas and power generation industries (collectively, “Energy Infrastructure Companies”). For purposes of the Fund’s
investment objective, total return includes capital appreciation of, and all distributions received from, securities in which the Fund invests, taking into account the varying tax characteristics of such securities.
Under normal market conditions, the Fund invests at least 80% of its managed assets (total asset value of the Fund minus the sum of the Fund’s liabilities other than the principal amount of borrowings) in
securities of Energy Infrastructure Companies. There can be no assurance that the Fund will achieve its investment objective. The Fund may not be appropriate for all investors.
2. Managed
Distribution Policy
The Board of Trustees of
the Fund has approved a managed distribution policy for the Fund (the “Plan”) in reliance on exemptive relief received from the SEC that permits the Fund to make periodic distributions of long-term capital
gains as frequently as monthly each tax year. Under the Plan, the Fund currently intends to continue to pay a recurring monthly distribution in the amount of $0.11 per Common Share that reflects the distributable cash
flow of the Fund. A portion of this monthly distribution may include realized capital gains. This may result in a reduction of the long-term capital gain distribution necessary at year end by distributing realized
capital gains throughout the year. The annual distribution rate is independent of the Fund’s performance during any particular period. Accordingly, you should not draw any conclusions about the Fund’s
investment performance from the amount of any distribution or from the terms of the Plan. The Board of Trustees may amend or terminate the Plan at any time without prior notice to shareholders.
3. Significant
Accounting Policies
The Fund is considered an
investment company and follows accounting and reporting guidance under Financial Accounting Standards Board Accounting Standards Codification Topic 946, “Financial Services-Investment Companies.” The
following is a summary of significant accounting policies consistently followed by the Fund in the preparation of the financial statements. The preparation of the financial statements in accordance with accounting
principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
A. Portfolio
Valuation
The net asset value
(“NAV”) of the Common Shares of the Fund is determined daily as of the close of regular trading on the NYSE, normally 4:00 p.m. Eastern time, on each day the NYSE is open for trading. If the NYSE closes
early on a valuation day, the NAV is determined as of that time. Foreign securities are priced using data reflecting the earlier closing of the principal markets for those securities. The Fund’s NAV per Common
Share is calculated by dividing the value of all assets of the Fund (including accrued interest and dividends), less all liabilities (including accrued expenses, the value of call options written (sold), dividends
declared but unpaid, and any borrowings of the Fund) by the total number of Common Shares outstanding.
The Fund’s
investments are valued daily at market value or, in the absence of market value with respect to any portfolio securities, at fair value. Market value prices represent last sale or official closing prices from a
national or foreign exchange (i.e., a regulated market) and are primarily obtained from third-party pricing services. Fair value prices represent any prices not considered market value prices and are either obtained
from a third-party pricing service or are determined by the Pricing Committee of the Fund’s investment advisor, First Trust Advisors L.P. (“First Trust” or the “Advisor”), in accordance
with valuation procedures adopted by the Fund’s Board of Trustees, and in accordance with provisions of the 1940 Act. Investments valued by the Advisor’s Pricing Committee, if any, are footnoted as such in
the footnotes to the Portfolio of Investments. The Fund’s investments are valued as follows:
Common
stocks, MLPs, real estate investment trusts (“REITs”), and other equity securities listed on any national or foreign exchange (excluding The Nasdaq Stock Market LLC (“Nasdaq”) and the London
Stock Exchange Alternative Investment Market (“AIM”)) are valued at the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM
Page 16
Notes to Financial Statements (Continued)
First Trust Energy
Infrastructure Fund (FIF)
May 31, 2018
(Unaudited)
securities, the
official closing price. Securities traded on more than one securities exchange are valued at the last sale price or official closing price, as applicable, at the close of the securities exchange representing the
principal market for such securities.
Exchange-traded options contracts are valued at the closing price in the market where such contracts are principally traded. If no closing price is available, exchange-traded options contracts are fair valued at the
mean of their most recent bid and asked price, if available, and otherwise at their closing bid price. Over-the-counter options contracts are fair valued at the mean of their most recent bid and asked price, if
available, and otherwise at their closing bid price.
Securities traded in an over-the-counter market are fair valued at the mean of their most recent bid and asked price, if available, and otherwise at their closing bid price.
Swaps
are fair valued utilizing quotations provided by a third-party pricing service or, if the pricing service does not provide a value, by quotes provided by the selling dealer or financial institution.
Certain securities may
not be able to be priced by pre-established pricing methods. Such securities may be valued by the Fund’s Board of Trustees or its delegate, the Advisor’s Pricing Committee, at fair value. These securities
generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended) for which a third-party pricing service is
unable to provide a market price; securities whose trading has been formally suspended; a security whose market or fair value price is not available from a pre-established pricing source; a security with respect to
which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of the Fund’s NAV or make it difficult or impossible to obtain a
reliable market quotation; and a security whose price, as provided by the third-party pricing service, does not reflect the security’s fair value. As a general principle, the current fair value of a security
would appear to be the amount which the owner might reasonably expect to receive for the security upon its current sale. When fair value prices are used, generally they will differ from market quotations or official
closing prices on the applicable exchanges. A variety of factors may be considered in determining the fair value of such securities, including, but not limited to, the following:
| 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. |
If the securities in
question are foreign securities, the following additional information may be considered:
| 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. |
The Fund is subject to
fair value accounting standards that define fair value, establish the framework for measuring fair value and provide a three-level hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
| • | 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. |
Page 17
Notes to Financial Statements (Continued)
First Trust Energy
Infrastructure Fund (FIF)
May 31, 2018
(Unaudited)
| 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. |
The inputs or
methodologies used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. A summary of the inputs used to value the Fund’s investments as of May 31,
2018, is included with the Fund’s Portfolio of Investments.
B. Option
Contracts
The Fund is subject to
equity price risk in the normal course of pursuing its investment objective and may write (sell) options to hedge against changes in the value of equities. Also, the Fund seeks to generate additional income, in the
form of premiums received, from writing (selling) the options. The Fund may write (sell) covered call or put options (“options”) on all or a portion of the MLPs and common stocks held in the Fund’s
portfolio as determined to be appropriate by Energy Income Partners, LLC ("EIP" or the "Sub-Advisor"). The number of options the Fund can write (sell) is limited by the amount of MLPs and common stocks the Fund holds
in its portfolio. The Fund will not write (sell) “naked” or uncovered options. When the Fund writes (sells) an option, an amount equal to the premium received by the Fund is included in “Options
written, at value” on the Fund’s Statement of Assets and Liabilities. Options are marked-to-market daily and their value will be affected by changes in the value and dividend rates of the underlying equity
securities, changes in interest rates, changes in the actual or perceived volatility of the securities markets and the underlying equity securities and the remaining time to the options’ expiration. The value of
options may also be adversely affected if the market for the options becomes less liquid or trading volume diminishes.
The options that the Fund
writes (sells) will either be exercised, expire or be canceled pursuant to a closing transaction. If the price of the underlying equity security exceeds the option’s exercise price, it is likely that the option
holder will exercise the option. If an option written (sold) by the Fund is exercised, the Fund would be obligated to deliver the underlying equity security to the option holder upon payment of the strike price. In
this case, the option premium received by the Fund will be added to the amount realized on the sale of the underlying security for purposes of determining gain or loss and is included in “Net realized gain
(loss) on investments” on the Statement of Operations. If the price of the underlying equity security is less than the option’s strike price, the option will likely expire without being exercised. The
option premium received by the Fund will, in this case, be treated as short-term capital gain on the expiration date of the option. The Fund may also elect to close out its position in an option prior to its
expiration by purchasing an option of the same series as the option written (sold) by the Fund. Gain or loss on options is presented separately as “Net realized gain (loss) on written options” on the
Statement of Operations.
The options that the Fund
writes (sells) give the option holder the right, but not the obligation, to purchase a security from the Fund at the strike price on or prior to the option’s expiration date. The ability to successfully
implement the writing (selling) of covered call options depends on the ability of the Sub-Advisor to predict pertinent market movements, which cannot be assured. Thus, the use of options may require the Fund to sell
portfolio securities at inopportune times or for prices other than current market value, which may limit the amount of appreciation the Fund can realize on an investment, or may cause the Fund to hold a security that
it might otherwise sell. As the writer (seller) of a covered option, the Fund foregoes, during the option’s life, the opportunity to profit from increases in the market value of the security covering the option
above the sum of the premium and the strike price of the option, but has retained the risk of loss should the price of the underlying security decline. The writer (seller) of an option has no control over the time
when it may be required to fulfill its obligation as a writer (seller) of the option. Once an option writer (seller) has received an exercise notice, it cannot effect a closing purchase transaction in order to
terminate its obligation under the option and must deliver the underlying security to the option holder at the exercise price.
Over-the-counter options
have the risk of the potential inability of counterparties to meet the terms of their contracts. The Fund’s maximum equity price risk for purchased options is limited to the premium initially paid. In addition,
certain risks may arise upon entering into option contracts including the risk that an illiquid secondary market will limit the Fund’s ability to close out an option contract prior to the expiration date and
that a change in the value of the option contract may not correlate exactly with changes in the value of the securities hedged.
Page 18
Notes to Financial Statements (Continued)
First Trust Energy
Infrastructure Fund (FIF)
May 31, 2018
(Unaudited)
C. Swap
Agreements
The Fund may enter into
total return equity swap and interest rate swap agreements. A swap is a financial instrument that typically involves the exchange of cash flows between two parties (“Counterparties”) on specified dates
(settlement dates) where the cash flows are based on agreed upon prices, rates, etc. Payment received or made by the Fund for interest rate swaps are recorded on the Statement of Operations as “Net realized gain
(loss) on swap contracts.” When an interest rate swap is terminated, the Fund will record a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the
Fund’s basis in the contract, if any. Generally, the basis of the contracts, if any, is the premium received or paid. Swap agreements are individually negotiated and involve the risk of the potential inability
of the Counterparties to meet the terms of the agreement. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to
provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. In the event of a default by a Counterparty, the Fund will seek
withdrawal of the collateral and may incur certain costs exercising its rights with respect to the collateral. If a Counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial
difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such
circumstances.
Swap agreements may
increase or decrease the overall volatility of the investments of the Fund. The performance of swap agreements may be affected by changes in the specific interest rate, security, currency, or other factors that
determine the amounts of payments due to and from the Fund. The Fund’s maximum interest rate risk to meet its future payments under swap agreements outstanding at May 31, 2018, is equal to the total notional
amount as shown on the Portfolio of Investments. The notional amount represents the U.S. dollar value of the contract as of the day of the opening transaction or contract reset. When the Fund enters into a swap
agreement, any premium paid is included in “Swap contracts, at value” on the Statement of Assets and Liabilities.
The Fund held interest
rate swap agreements at May 31, 2018 to hedge against changes in borrowing rates under the Fund’s credit agreement. An interest rate swap agreement involves the Fund’s agreement to exchange a stream of
interest payments for another party’s stream of cash flows. Interest rate swaps do not involve the delivery of securities or other underlying assets or principal. Accordingly, the risk of loss with respect to
interest rate swaps is limited to the net amount of interest payments that the Fund is contractually obligated to make. Cash segregated as collateral for open swap contracts in the amount of $185,752 is shown on the
Statement of Assets and Liabilities.
D. Securities
Transactions and Investment Income
Securities transactions
are recorded as of the trade date. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income is recorded
daily on the accrual basis. The Fund will rely to some extent on information provided by MLPs, which is not necessarily timely, to estimate taxable income allocable to the MLP units held in the Fund’s
portfolio.
Distributions received
from the Fund’s investments in MLPs generally are comprised of return of capital and investment income. The Fund records estimated return of capital and investment income based on historical information
available from each MLP. These estimates may subsequently be revised based on information received from the MLPs after their tax reporting periods are concluded.
Distributions received
from the Fund’s investments in REITs may be comprised of return of capital, capital gains, and income. The actual character of the amounts received during the year are not known until after the REIT’s
fiscal year end. The Fund records the character of distributions received from the REITs during the year based on estimates available. The characterization of distributions received by the Fund may be subsequently
revised based on information received from the REITs after their tax reporting periods conclude.
E. Foreign
Currency
The books and records of
the Fund are maintained in U.S. dollars. Foreign currencies, investments and other assets and liabilities are translated into U.S. dollars at the exchange rates prevailing at the end of the period. Purchases and sales
of investments and items of income and expense are translated on the respective dates of such transactions. Unrealized gains and losses on assets and liabilities, other than investments in securities, which result
from changes in foreign currency exchange rates have been included in “Net change in unrealized appreciation (depreciation) on foreign currency translation” on the Statement of Operations. Unrealized gains
and losses on investments in securities which result from changes in foreign exchange rates are included with fluctuations arising from changes in market price and are included in “Net change in unrealized
appreciation (depreciation) on investments” on the Statement of Operations. Net realized foreign currency gains and losses include the effect of changes in exchange rates between trade date and settlement date
on investment security transactions, foreign currency transactions and interest and dividends received and are included in “Net realized gain (loss) on foreign currency transactions” on the Statement of
Operations. The portion of foreign currency gains and losses related to fluctuations in exchange rates between the initial purchase settlement date and subsequent sale trade date is included in “Net realized
gain (loss) on investments” on the Statements of Operations.
Page 19
Notes to Financial Statements (Continued)
First Trust Energy
Infrastructure Fund (FIF)
May 31, 2018
(Unaudited)
F. Dividends and
Distributions to Shareholders
The Fund intends to pay
holders of its Common Shares a recurring monthly distribution that reflects the distributable cash flow of the Fund. Distributions will automatically be reinvested into additional Common Shares pursuant to the
Fund’s Dividend Reinvestment Plan unless cash distributions are elected by the shareholder.
Distributions from income
and capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. Certain capital accounts in the financial statements are periodically adjusted for permanent
differences in order to reflect their tax character. These permanent differences are primarily due to the varying treatment of income and gain/loss on portfolio securities held by the Fund and have no impact on net
assets or NAV per Common Share. Temporary differences, which arise from recognizing certain items of income, expense and gain/loss in different periods for financial statement and tax purposes, will reverse at some
point in the future.
The tax character of
distributions paid during the fiscal year ended November 30, 2017 is as follows:
| Distributions paid from: | |
Ordinary income | $3,846,395 |
Capital gains | 4,211,673 |
Return of capital | 15,108,243 |
As of November 30, 2017,
the components of distributable earnings and net assets on a tax basis were as follows:
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 |
G. Income Taxes
The Fund intends to
continue to qualify as a regulated investment company by complying with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no provision has been made for federal and state income taxes. However, due to the timing and amount of distributions, the Fund may be subject to
an excise tax of 4% of the amount by which approximately 98% of the Fund’s taxable income exceeds the distributions from such taxable income for the calendar year.
The Fund intends to
utilize provisions of the federal income tax laws, which allow it to carry a realized capital loss forward indefinitely following the year of the loss and offset such loss against any future realized capital gains.
The Fund is subject to certain limitations under U.S. tax rules on the use of capital loss carryforwards and net unrealized built-in losses. These limitations apply when there has been a 50% change in ownership. At
November 30, 2017, the Fund had no non-expiring capital loss carryforwards for federal income tax purposes.
The Fund is subject to
accounting standards that establish a minimum threshold for recognizing, and a system for measuring, the benefits of a tax position taken or expected to be taken in a tax return. Taxable years ended 2014, 2015, 2016,
and 2017 remain open to federal and state audit. As of May 31, 2018, management has evaluated the application of these standards to the Fund, and has determined that no provision for income tax is required in the
Fund’s financial statements for uncertain tax positions.
H. Expenses
The Fund will pay all
expenses directly related to its operations.
I. Offsetting on the
Statement of Assets and Liabilities
Offsetting assets and
liabilities require entities to disclose both gross and net information about instruments and transactions eligible for offset on the Statement of Assets and Liabilities, and disclose instruments and transactions
subject to master netting or similar agreements. These disclosure requirements are intended to help investors and other financial statement users better assess the effect or
Page 20
Notes to Financial Statements (Continued)
First Trust Energy
Infrastructure Fund (FIF)
May 31, 2018
(Unaudited)
potential effect of offsetting
arrangements on a fund’s financial position. The transactions subject to offsetting disclosures are derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and
securities lending transactions.
For financial reporting
purposes, the Fund does not offset financial assets and financial liabilities that are subject to master netting arrangements (“MNAs”) or similar agreements on the Statement of Assets and Liabilities. MNAs
provide the right, in the event of default (including bankruptcy and insolvency), for the non-defaulting counterparty to liquidate the collateral and calculate the net exposure to the defaulting party or request
additional collateral.
At May 31, 2018,
derivative assets and liabilities (by type) on a gross basis are as follows:
| 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 | |||||
J. New and Amended
Financial Reporting Rules and Forms
On October 13, 2016, the
SEC adopted new rules and forms, and amended existing rules and forms. The new and amended rules and forms are intended to modernize the reporting of information provided by funds and to improve the quality and type
of information that funds provide to the SEC and investors. In part, the new and amended rules and forms amend Regulation S-X and require standardized, enhanced disclosures about derivatives in a fund’s
financial statements, as well as other amendments. The compliance date for the amendments of Regulation S-X was August 1, 2017, which resulted in additional disclosure for derivative instruments within the Portfolio
of Investments. The new form types and other rule amendments will be effective for the First Trust funds, including the Fund, for reporting periods beginning on and after June 1, 2018. Management is evaluating the new
form types and other rule amendments that are effective on and after June 1, 2018 to determine the impact to the Fund.
4. Investment
Advisory Fee, Affiliated Transactions and Other Fee Arrangements
First Trust, the
investment advisor to the Fund, is a limited partnership with one limited partner, Grace Partners of DuPage L.P., and one general partner, The Charger Corporation. The Charger Corporation is an Illinois corporation
controlled by James A. Bowen, Chief Executive Officer of First Trust. First Trust is responsible for the ongoing monitoring of the Fund’s investment portfolio, managing the Fund’s business affairs and
providing certain administrative services necessary for the management of the Fund. For these investment management services, First Trust is entitled to a monthly fee calculated at an annual rate of 1.00% of the
Fund’s Managed Assets (the average daily total asset value of the Fund minus the sum of the Fund’s liabilities other than the principal amount of borrowings). First Trust also provides fund reporting
services to the Fund for a flat annual fee in the amount of $9,250.
EIP serves as the
Fund’s sub-advisor and manages the Fund’s portfolio subject to First Trust’s supervision. The Sub-Advisor receives a monthly sub-advisory fee calculated at an annual rate of 0.50% of the Fund’s
Managed Assets that is paid by First Trust from its investment advisory fee.
First Trust Capital
Partners, LLC (“FTCP”), an affiliate of First Trust, owns, through a wholly-owned subsidiary, a 15% ownership interest in each of EIP and EIP Partners, LLC, an affiliate of EIP.
BNY Mellon Investment
Servicing (US) Inc. (“BNYM IS”) serves as the Fund’s transfer agent in accordance with certain fee arrangements. As transfer agent, BNYM IS is responsible for maintaining shareholder records for the
Fund. The Bank of New York Mellon (“BNYM”) serves as the Fund’s administrator, fund accountant, and custodian in accordance with certain fee arrangements. As administrator and fund accountant, BNYM
is responsible for providing certain administrative and accounting services to the Fund, including maintaining the Fund’s books of account, records of the Fund’s securities transactions, and certain other
books and records. As custodian, BNYM is responsible for custody of the Fund’s assets. BNYM IS and BNYM are subsidiaries of The Bank of New York Mellon Corporation, a financial holding company.
Page 21
Notes to Financial Statements (Continued)
First Trust Energy
Infrastructure Fund (FIF)
May 31, 2018
(Unaudited)
Each Trustee who is not
an officer or employee of First Trust, any sub-advisor or any of their affiliates (“Independent Trustees”) is paid a fixed annual retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that varies based on whether the fund is a closed-end or other actively managed fund, or is an index fund.
Additionally, the Lead
Independent Trustee and the Chairmen of the Audit Committee, Nominating and Governance Committee and Valuation Committee are paid annual fees to serve in such capacities, with such compensation allocated pro rata
among each fund in the First Trust Fund Complex based on net assets. Independent Trustees are reimbursed for travel and out-of-pocket expenses in connection with all meetings. The Lead Independent Trustee and
Committee Chairmen rotate every three years. The officers and “Interested” Trustee receive no compensation from the Fund for acting in such capacities.
5. Purchases and
Sales of Securities
The cost of purchases and
proceeds from sales of securities, excluding short-term investments, for the six months ended May 31, 2018, were $75,179,483 and $86,939,371, respectively.
6. Derivative
Transactions
The following table
presents the types of derivatives held by the Fund at May 31, 2018, the primary underlying risk exposure and the location of these instruments as presented on the Statement of Assets and Liabilities.
| 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 | — | — | |||||
The following table
presents the amount of net realized gain (loss) and change in net unrealized appreciation (depreciation) recognized for the six months ended May 31, 2018, on derivative instruments, as well as the primary underlying
risk exposure associated with each instrument.
| 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 |
During the six months
ended May 31, 2018, the premiums for written options opened were $3,396,486, and the premiums for written options closed, exercised and expired were $3,968,487.
The average notional
value of interest rate swaps was $72,950,000 for the six months ended May 31, 2018.
The Fund does not have
the right to offset financial assets and liabilities related to option contracts on the Statement of Assets and Liabilities.
7. Borrowings
The Fund has a credit
agreement with The Bank of Nova Scotia. The credit agreement provides a secure line of credit for the Fund where Fund assets are pledged against advances made to the Fund. The maximum commitment amount is
$130,000,000. The borrowing rate is the applicable LIBOR rate plus 85 basis points. Under the credit agreement, the Fund pays a commitment fee of 0.25% when the loan balance is less than 75% of the maximum commitment.
The borrowings are categorized as Level 2 within the fair value hierarchy. The average amount outstanding for the six months ended May 31, 2018 was $105,280,220, with a weighted average interest rate of 2.50%. As of
May 31, 2018, the Fund had outstanding borrowings of $98,000,000 under this credit agreement. The high and low annual interest rates for the six months ended May 31, 2018, were 4.75% and 2.20%, respectively. The
interest rate at May 31, 2018 was 2.76%. The interest and fees are included in "Interest and fees on loans" on the Statement of Operations.
Page 22
Notes to Financial Statements (Continued)
First Trust Energy
Infrastructure Fund (FIF)
May 31, 2018
(Unaudited)
8. Indemnification
The Fund has a variety of
indemnification obligations under contracts with its service providers. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
9. Industry
Concentration Risk
Under normal market
conditions, the Fund invests at least 80% of its Managed Assets in securities of Energy Infrastructure Companies. Given this industry concentration, the Fund is more susceptible to adverse economic or regulatory
occurrences affecting that industry than an investment company that is not concentrated in a single industry. Energy Infrastructure Company issuers may be subject to a variety of factors that may adversely affect
their business or operations, including high interest costs in connection with capital construction programs, high leverage costs associated with environmental and other regulations, the effects of economic slowdown,
surplus capacity, increased competition from other providers of services, uncertainties concerning the availability of fuel at reasonable prices, the effects of energy conservation policies and other factors.
10. Subsequent
Events
Management has evaluated
the impact of all subsequent events to the Fund through the date the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial
statements that have not already been disclosed.
Page 23
Additional Information
First Trust Energy
Infrastructure Fund (FIF)
May 31, 2018
(Unaudited)
Dividend Reinvestment
Plan
If your Common Shares are
registered directly with the Fund or if you hold your Common Shares with a brokerage firm that participates in the Fund’s Dividend Reinvestment Plan (the “Plan”), unless you elect, by written notice
to the Fund, to receive cash distributions, all dividends, including any capital gain distributions, on your Common Shares will be automatically reinvested by BNY Mellon Investment Servicing (US) Inc. (the “Plan
Agent”), in additional Common Shares under the Plan. If you elect to receive cash distributions, you will receive all distributions in cash paid by check mailed directly to you by the Plan Agent, as the dividend
paying agent.
If you decide to
participate in the Plan, the number of Common Shares you will receive will be determined as follows:
| (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. |
You may elect to opt-out
of or withdraw from the Plan at any time by giving written notice to the Plan Agent, or by telephone at (866) 340-1104, in accordance with such reasonable requirements as the Plan Agent and the Fund may agree upon. If
you withdraw or the Plan is terminated, you will receive a certificate for each whole share in your account under the Plan, and you will receive a cash payment for any fraction of a share in your account. If you wish,
the Plan Agent will sell your shares and send you the proceeds, minus brokerage commissions.
The Plan Agent maintains
all Common Shareholders’ accounts in the Plan and gives written confirmation of all transactions in the accounts, including information you may need for tax records. Common Shares in your account will be held by
the Plan Agent in non-certificated form. The Plan Agent will forward to each participant any proxy solicitation material and will vote any shares so held only in accordance with proxies returned to the Fund. Any proxy
you receive will include all Common Shares you have received under the Plan.
There is no brokerage
charge for reinvestment of your dividends or distributions in Common Shares. However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Agent when it makes open market
purchases.
Automatically reinvesting
dividends and distributions does not mean that you do not have to pay income taxes due upon receiving dividends and distributions. Capital gains and income are realized although cash is not received by you. Consult
your financial advisor for more information.
If you hold your Common
Shares with a brokerage firm that does not participate in the Plan, you will not be able to participate in the Plan and any dividend reinvestment may be effected on different terms than those described above.
The Fund reserves the
right to amend or terminate the Plan if in the judgment of the Board of Trustees the change is warranted. There is no direct service charge to participants in the Plan; however, the Fund reserves the right to amend
the Plan to include a service charge payable by the participants. Additional information about the Plan may be obtained by writing BNY Mellon Investment Servicing (US) Inc., 301 Bellevue Parkway, Wilmington, Delaware
19809.
Proxy Voting Policies
and Procedures
A description of the
policies and procedures that the Fund uses to determine how to vote proxies and information on how the Fund voted proxies relating to portfolio investments during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on the Fund’s website at www.ftportfolios.com; and (3) on the Securities and Exchange Commission’s (“SEC”) website at www.sec.gov.
Portfolio Holdings
The Fund files its
complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Qs are available (1) by calling (800) 988-5891; (2) on the Fund’s
website at www.ftportfolios.com;
Page 24
Additional Information (Continued)
First Trust Energy
Infrastructure Fund (FIF)
May 31, 2018
(Unaudited)
(3) on the SEC’s website at www.sec.gov; and (4) for review and copying at the SEC’s Public Reference Room (“PRR”) in Washington, DC. Information regarding the operation
of the PRR may be obtained by calling (800) SEC-0330.
Submission of Matters to
a Vote of Shareholders
The Fund held its Annual
Meeting of Shareholders (the “Annual Meeting”) on April 23, 2018. At the Annual Meeting, Richard E. Erickson and Thomas R. Kadlec were elected by the Common Shareholders of the First Trust Energy
Infrastructure Fund as Class II Trustees for a three-year term expiring at the Fund’s annual meeting of shareholders in 2021. The number of votes cast in favor of Mr. Erickson was 15,547,407, the number of votes
against was 619,953 and the number of broker non-votes was 1,382,876. The number of votes cast in favor of Mr. Kadlec was 15,548,827, the number of votes against was 618,533 and the number of broker non-votes was
1,382,876. James A. Bowen, Robert F. Keith and Niel B. Nielson are the other current and continuing Trustees.
Risk Considerations
Risks are inherent in all
investing. The following summarizes some, but not all, of the risks that should be considered for the Fund. For additional information about the risks associated with investing in the Fund, please see the Fund’s
prospectus and statement of additional information, as well as other Fund regulatory filings.
Covered Call Options
Risk. As the writer (seller) of a call option, the Fund forgoes, during the life of the option, the opportunity to profit from increases in the market value of the portfolio security covering
the option above the sum of the premium and the strike price of the call option but retains the risk of loss should the price of the underlying security decline. The value of call options written by the Fund, which
are priced daily, are determined by trading activity in the broad options market and will be affected by, among other factors, changes in the value of the underlying security in relation to the strike price, changes
in dividend rates of the underlying security, changes in interest rates, changes in actual or perceived volatility of the stock market and the underlying security, and the time remaining until the expiration date. The
value of call options written by the Fund may be adversely affected if the market for the option is reduced or becomes illiquid. There can be no assurance that a liquid market will exist when the Fund seeks to close
out an option position.
Cyber Security Risk. As the use of Internet technology has become more prevalent in the course of business, the Fund has become more susceptible to potential operational risks through breaches in cyber
security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information, suffer data corruption or lose operational capacity. Such events could
cause the Fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized access to the
Fund’s digital information systems through “hacking” or malicious software coding, but may also result from outside attacks such as denial-of-service attacks through efforts to make network services
unavailable to intended users. In addition, cyber security breaches of the Fund’s third-party service providers, such as its administrator, transfer agent, custodian, or sub-advisor, as applicable, or issuers in
which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber security breaches. The Fund has established risk management systems designed to reduce the risks associated with
cyber security. However, there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems of issuers or third party service providers.
Energy Infrastructure
Companies Risk. The Fund primarily invests in MLPs, pipeline companies, utilities, and other companies that derive at least 50% of their revenues from operating or providing services in support of
infrastructure assets such as pipelines, power transmission and petroleum and natural gas storage in the petroleum, natural gas and power generation industries (“Energy Infrastructure Companies”). Energy
Infrastructure Companies may be directly affected by energy commodity prices, especially those Energy Infrastructure Companies which own the underlying energy commodity. A decrease in the production or availability of
natural gas, natural gas liquids, crude oil, coal or other energy commodities or a decrease in the volume of such commodities available for transportation, processing, storage or distribution may adversely impact the
financial performance of Energy Infrastructure Companies. Energy Infrastructure Companies are subject to significant federal, state and local government regulation in virtually every aspect of their operations,
including how facilities are constructed, maintained and operated, environmental and safety controls, and the prices they may charge for products and services. Various governmental authorities have the power to
enforce compliance with these regulations and the permits issued under them and violators are subject to administrative, civil and criminal penalties, including civil fines, injunctions or both. Stricter laws,
regulations or enforcement policies could be enacted in the future which would likely increase compliance costs and may adversely affect the financial performance of Energy Infrastructure Companies. Natural disasters,
such as hurricanes in the Gulf of Mexico, also may impact Energy Infrastructure Companies.
Certain Energy
Infrastructure Companies are subject to the imposition of rate caps, increased competition due to deregulation, the difficulty in obtaining an adequate return on invested capital or in financing large construction
projects, the limitations on operations and increased costs and delays attributable to environmental considerations, and the capital market’s ability to absorb utility debt. In
Page 25
Additional Information (Continued)
First Trust Energy
Infrastructure Fund (FIF)
May 31, 2018
(Unaudited)
addition, taxes, government regulation,
international politics, price and supply fluctuations, volatile interest rates and energy conservation may cause difficulties for these companies.
Equity Securities
Risk. The value of the Fund’s shares will fluctuate with changes in the value of the equity securities in which the Fund invests. Prices of equity securities fluctuate for several reasons,
including changes in investors’ perceptions of the financial condition of an issuer or the general condition of the relevant stock market, such as market volatility, or when political or economic events
affecting the issuers occur. In addition, common stock prices may be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase.
Interest Rate Swaps
Risk. If short-term interest rates are lower than the Fund’s fixed rate of payment on an interest rate swap, the swap will reduce common share net earnings. In addition, a default by the
counterparty to a swap transaction could also negatively impact the performance of the common shares.
Leverage Risk. The use of leverage by the Fund can magnify the effect of any losses. If the income and gains from the securities and investments purchased with leverage proceeds do not cover the cost of
leverage, the return to the common shares will be less than if leverage had not been used. Leverage involves risks and special considerations for common shareholders including: the likelihood of greater volatility of
net asset value and market price of the common shares than a comparable portfolio without leverage; the risk that fluctuations in interest rates on borrowings will reduce the return to the common shareholders or will
result in fluctuations in the dividends paid on the common shares; in a declining market, the use of leverage is likely to cause a greater decline in the net asset value of the common shares than if the Fund were not
leveraged, which may result in a greater decline in the market price of the common shares; and when the Fund uses certain types of leverage, the investment advisory fee payable to the Advisor and by the Advisor to the
Sub-Advisor will be higher than if the Fund did not use leverage.
Liquidity Risk. Certain securities in which the Fund may invest may trade less frequently, particularly those of issuers with smaller capitalizations. Securities with limited trading volumes may display
volatile or erratic price movements. The Fund may have difficulty selling these investments in a timely manner, be forced to sell them for less than it otherwise would have been able to realize, or both.
Management Risk and
Reliance on Key Personnel. The implementation of the Fund’s investment strategy depends upon the continued contributions of certain key employees of the Advisor and Sub-Advisor, some of whom have unique
talents and experience and would be difficult to replace. The loss or interruption of the services of a key member of the portfolio management team could have a negative impact on the Fund.
Market Discount from Net
Asset Value. Shares of closed-end investment companies such as the Fund frequently trade at a discount from their net asset value. The Fund cannot predict whether its common shares will trade at, below
or above net asset value.
MLP and Investment
Concentration Risks. The Fund’s investments are concentrated in Energy Infrastructure Companies (including investments in MLPs), which may present more risk than if the Fund were broadly diversified over
multiple sectors of the economy. A downturn in one or more industries within the energy infrastructure sector, material declines in commodity prices, adverse political, legislative or regulatory developments or other
events could have a larger impact on the Fund than on an investment company that does not concentrate in the energy infrastructure sector. Certain risks inherent in investing in the business of the types of securities
that the Fund may invest (such as interests in MLPs) include: commodity pricing risk, commodity supply and demand risk, lack of diversification of and reliance on MLP customers and suppliers risk, commodity depletion
and exploration risk, energy infrastructure sector and energy utility industry regulatory risk, including risks associated with the prices and methodology of determining prices that energy companies may charge for
their products and services, interest rate risk, risk of lack of acquisition or reinvestment opportunities for MLPs, risk of lacking of funding for MLPs, dependency on MLP affiliate risk, weather risk, catastrophe
risk, terrorism and MLP market disruption risk, and technology risk.
Other factors which may
reduce the amount of cash an MLP or other Energy Infrastructure Company has available to pay its debt and equity holders include increased operating costs, maintenance capital expenditures, acquisition costs,
expansion or construction costs and borrowing costs (including increased borrowing costs as a result of additional collateral requirements as a result of ratings downgrades by credit agencies).
Non-Diversification
Risk. The Fund is a non-diversified investment company under the 1940 Act and will not be treated as a regulated investment company under the Internal Revenue Code of 1986. Accordingly, the
diversification-specific regulatory requirements under the 1940 Act and the Internal Revenue Code of 1986 regarding the minimum number or size of portfolio securities do not apply to the Fund.
Non-U.S. Securities and
Currency Risk. Investing in non-U.S. securities involves certain risks not involved in domestic investments, including, but not limited to: fluctuations in currency exchange rates; future foreign
economic, financial, political and social developments; different legal systems; the possible imposition of exchange controls or other foreign governmental laws or restrictions;
Page 26
Additional Information (Continued)
First Trust Energy
Infrastructure Fund (FIF)
May 31, 2018
(Unaudited)
lower trading volume; withholding taxes;
greater price volatility and illiquidity; different trading and settlement practices; less governmental supervision; high and volatile rates of inflation; fluctuating interest rates; less publicly available information;
and different accounting, auditing and financial recordkeeping standards and requirements. Because the Fund may invest in securities denominated or quoted in non-U.S. currencies, changes in the non-U.S.
currency/United States dollar exchange rate may affect the value of the Fund’s securities and the unrealized appreciation or depreciation of investments.
Potential Conflicts of
Interest Risk. First Trust, EIP and the portfolio managers have interests which may conflict with the interests of the Fund. In particular, First Trust and EIP currently manage and may in the future
manage and/or advise other investment funds or accounts with the same or substantially similar investment objective and strategies as the Fund. In addition, while the Fund is using leverage, the amount of the fees
paid to First Trust (and by First Trust to EIP) for investment advisory and management services are higher than if the Fund did not use leverage because the fees paid are calculated based on managed assets. Therefore,
First Trust and EIP have a financial incentive to leverage the Fund.
Qualified Dividend Income
Tax Risk. 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. Certain
distributions designated by the Fund as derived from qualified dividend income will be taxed in the hands of non-corporate common shareholders at the rates applicable to long-term capital gains, provided certain
holding period and other requirements are satisfied by both the Fund and the common shareholders. Additional requirements apply in determining whether distributions by foreign issuers should be regarded as qualified
dividend income. Certain investment strategies of the Fund will limit the Fund’s ability to meet these requirements and consequently will limit the amount of qualified dividend income received and distributed by
the Fund. A change in the favorable provisions of the federal tax laws with respect to qualified dividends may result in a widespread reduction in announced dividends and may adversely impact the valuation of the
shares of dividend-paying companies.
Recent Market and Economic
Developments. On March 15, 2018, the Federal Energy Regulatory Commission ("FERC") changed its long-standing tax allowance policy which no longer permits MLPs to include in their cost of service an
income tax allowance. This has had a negative impact on the performance of some MLPs affected by this decision. This policy change and any similar policy changes in the future could adversely impact an MLP’s
business, financial condition, results of operations and cash flows and ability to pay cash distributions or dividends.
Tax Risk. A change in current tax law, a change in the business of a given MLP, or a change in the types of income earned by a given MLP could result in an MLP being treated as a corporation for
United States federal income tax purposes, which would result in such MLP being required to pay United States federal income tax on its taxable income. The classification of an MLP as a corporation for United States
federal income tax purposes could have the effect of reducing the amount of cash available for distribution by the MLP and causing any such distributions received by the Fund to be taxed as dividend income to the
extent of the MLP’s current or accumulated earnings and profits.
A reduction in the
percentage of the income offset by tax deductions or an increase in sales of the Fund’s MLP holdings that result in capital gains will reduce that portion of the Fund’s distribution from an MLP treated as
a return of capital and increase that portion treated as income and may result in lower after-tax distributions to the Fund’s common shareholders.
Valuation Risk. Market prices generally will not be available for certain investments in MLPs, and the value of such investments will ordinarily be determined based on fair valuations determined pursuant
to procedures adopted by the Board of Trustees. The value of these securities typically requires more reliance on the judgment of the Sub-Advisor than that required for securities for which there is an active trading
market. In addition, the Fund relies on information provided by certain MLPs, which is usually not timely, to calculate taxable income allocable to the MLP units held in the Fund’s portfolio and to determine the
tax character of distributions to common shareholders. From time to time the Fund will modify its estimates and/or assumptions as new information becomes available. To the extent the Fund modifies its estimates and/or
assumptions, the net asset value of the Fund would likely fluctuate.
Page 27
This page intentionally left blank
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187
INVESTMENT SUB-ADVISOR
Energy Income Partners, LLC
10 Wright Street
Westport, CT 06880
TRANSFER AGENT
BNY Mellon Investment Servicing
(US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
ADMINISTRATOR,
FUND ACCOUNTANT, AND
CUSTODIAN
FUND ACCOUNTANT, AND
CUSTODIAN
The Bank of New York Mellon
101 Barclay Street, 20th Floor
New York, NY 10286
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
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.