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
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First Trust Energy Infrastructure Fund
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(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(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
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(Name and address of agent for service)
registrant's telephone number, including area code: 630-765-8000
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Date of fiscal year end: November 30
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Date of reporting period: May 31, 2017
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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. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
FIRST TRUST
ENERGY INFRASTRUCTURE FUND (FIF)
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SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED
MAY 31, 2017
ENERGY INCOME PARTNERS, LLC FIRST TRUST
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TABLE OF CONTENTS
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FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
SEMI-ANNUAL REPORT
MAY 31, 2017
Shareholder Letter.......................................................... 1
At a Glance................................................................. 2
Portfolio Commentary........................................................ 3
Portfolio of Investments.................................................... 5
Statement of Assets and Liabilities......................................... 10
Statement of Operations..................................................... 11
Statements of Changes in Net Assets......................................... 12
Statement of Cash Flows..................................................... 13
Financial Highlights........................................................ 14
Notes to Financial Statements............................................... 15
Additional Information...................................................... 23
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
http://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 webpage at http://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 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.
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SHAREHOLDER LETTER
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FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
MAY 31, 2017
Dear Shareholders:
First Trust Advisors L.P. ("First Trust") is pleased to provide you with this
semi-annual report containing detailed information and the financial statements
for your investment in the First Trust Energy Infrastructure Fund. We encourage
you to read this report and discuss it with your financial advisor.
Five months into the new year and under a new U.S. President, the stock market
has continued to rise. President Donald Trump's pro-growth, pro-U.S. policy
ideas have, in our opinion, created optimism about the U.S. economy. Indeed,
from Trump's election date (November 8, 2016) through May 31, 2017, the S&P
500(R) Index (the "Index") posted a total return of over 14%, according to
Bloomberg. While we are optimistic about the U.S. economy, we are also well
aware that no one can predict the future or know how a new administration will
affect markets and the economy. This is why we always stress the importance of
maintaining a long-term perspective, as we have done since First Trust's
inception over 25 years ago.
As of May 31, 2017, the Index was up 8.66% (calendar year-to-date). While the
current bull market (measuring from March 9, 2009 through May 31, 2017) is the
second longest in history, it is still behind (by just over 4 years) the longest
bull market, according to Bespoke Investment Group.
Thank you for giving First Trust the opportunity to be a part of your investment
plan. We value our relationship with you and will continue our relentless focus
on bringing you the types of investments that we believe could help you reach
your financial goals.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 1
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
"AT A GLANCE"
AS OF MAY 31, 2017 (UNAUDITED)
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FUND STATISTICS
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Symbol on New York Stock Exchange FIF
Common Share Price $18.14
Common Share Net Asset Value ("NAV") $19.41
Premium (Discount) to NAV (6.54)%
Net Assets Applicable to Common Shares $340,607,944
Current Monthly Distribution per Common Share (1) $0.1100
Current Annualized Distribution per Common Share $1.3200
Current Distribution Rate on Common Share Price (2) 7.28%
Current Distribution Rate on NAV (2) 6.80%
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COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
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Common Share Price NAV
5/16 16.56 18.74
16.79 19.04
17.05 19.18
16.67 19.09
6/16 16.95 19.21
17.49 19.75
17.54 19.69
17.68 20.07
18.03 20.20
7/16 17.70 20.05
17.62 19.73
17.75 20.06
17.97 20.06
8/16 17.79 19.64
17.69 19.70
17.51 19.58
17.44 19.46
18.33 20.18
9/16 19.19 20.09
18.36 19.42
18.39 19.60
19.16 19.81
10/16 18.66 19.61
17.03 18.54
17.16 18.49
17.91 18.86
11/16 18.54 19.37
18.15 19.02
18.13 19.54
18.12 19.90
18.39 20.22
12/16 18.03 20.16
18.39 20.39
18.57 20.29
18.93 20.24
1/17 19.39 20.09
19.29 20.26
19.28 20.09
18.94 20.10
2/17 19.11 20.06
18.73 19.97
18.23 19.65
18.63 19.86
18.49 19.90
3/17 19.30 20.15
19.19 20.17
19.15 20.00
19.15 19.82
4/17 19.35 20.01
18.63 19.71
18.44 19.47
18.36 19.58
18.49 19.66
5/17 18.14 19.44
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PERFORMANCE
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Average Annual Total Return
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Inception
6 Months Ended 1 Year Ended 5 Years Ended (9/27/2011)
5/31/2017 5/31/2017 5/31/2017 to 5/31/2017
FUND PERFORMANCE (3)
NAV 4.06% 11.37% 8.74% 10.87%
Market Value -0.22% 17.79% 8.84% 8.67%
INDEX PERFORMANCE
PHLX Utility Sector Index 17.13% 14.41% 11.59% 11.65%
Alerian MLP Total Return Index 2.28% 6.24% 2.57% 3.93%
Blended Index (4) 9.61% 10.59% 7.54% 8.27%
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% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
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Electric Power & Transmission 35.3%
Natural Gas Transmission 24.2
Crude Oil Transmission 19.7
Petroleum Product Transmission 11.9
Propane 3.1
Coal 2.1
Natural Gas Gathering & Processing 1.9
Other 1.8
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Total 100.0%
=======
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% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
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Enbridge Energy Management, LLC 7.6%
TransCanada Corp. 4.6
Enterprise Products Partners, L.P. 4.5
Plains GP Holdings, L.P. 3.9
Enbridge Income Fund Holdings, Inc. (CAD) 3.3
NextEra Energy Partners, L.P. 3.3
Williams (The) Cos., Inc. 3.2
Spectra Energy Partners, L.P. 2.8
Public Service Enterprise Group, Inc. 2.7
Eversource Energy, L.P. 2.6
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Total 38.5%
=======
(1) Most recent distribution paid or declared through 5/31/2017. 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 5/31/2017. 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 2
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PORTFOLIO COMMENTARY
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FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
SEMI-ANNUAL REPORT
MAY 31, 2017 (UNAUDITED)
ADVISOR
First Trust Advisors L.P. ("First Trust") was established in 1991 and is located
in Wheaton, Illinois. First Trust is a registered investment advisor which
offers customized portfolio management using its structured, quantitative
approach to security selection. As of May 31, 2017, First Trust managed or
supervised $107.206 billion in assets.
SUB-ADVISOR
Energy Income Partners, LLC ("EIP" or the "Sub-Advisor"), located in Westport,
Connecticut, serves as the investment subadvisor to the First Trust Energy
Infrastructure Fund (the "Fund"). EIP was founded in 2003 to provide
professional asset management services in the area of energy-related master
limited partnerships ("MLPs") and other high payout securities such as pipeline
companies, power utilities, yield corporations ("YieldCos")(1), 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 $5.7 billion of assets as of May 31, 2017.
Private funds advised by EIP include two partnerships for U.S. high net worth
individuals. EIP also serves as an advisor to separately managed accounts for
individuals and institutions, an open-end mutual fund 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 UCIT
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, CHIEF EXECUTIVE OFFICER AND
PRINCIPAL 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 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"). 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 borrowing) 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, 2017 was
2.28% and 17.13%, 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, the Sub-Advisor 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 MLP distributions and utility
dividends has averaged 1.4% and 3.2%, respectively. Over the last 12 months, the
cash distributions of MLPs represented by the AMZX decreased by about 6.4% and
utilities represented by the UTY increased by about 4.6%.(2)
(1) YieldCos are publicly-traded entities that own, operate and acquire
contracted renewable and conventional generation and thermal and other
infrastructure assets, which are generally not MLP-qualifying assets. Like
MLPs, YieldCos generally seek to position themselves as vehicles for
investors seeking stable and growing dividend income from a diversified
portfolio of lower-risk, hiqh-quality assets.
(2) Source: Alerian Capital Management, Bloomberg, EIP calculations.
Page 3
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PORTFOLIO COMMENTARY (CONTINUED)
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FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
SEMI-ANNUAL REPORT
MAY 31, 2017 (UNAUDITED)
PERFORMANCE ANALYSIS
On a net asset value ("NAV") basis, the Fund provided a total return(3) of
4.06%, including the reinvestment of distributions for the six months ended May
31, 2017. This compares, according to collected data, to a 9.61% return for a
blended index consisting of 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 -0.22% for the same period. As of May 31, 2017, the Fund's
market price per share was $18.14, while the NAV per Common Share was $19.41, a
discount of 6.54%. As of November 30, 2016, the Fund's market price per share
was $18.83, while the NAV per Common Share was $19.32, a discount of 2.54%.
The Fund maintained its regular monthly Common Share distribution of $0.11 per
share for the six months ended May 31, 2017.
For the six months ended May 31, 2017, the Fund's NAV underperformed the 9.61%
return of the Blended Index by 555 basis points. We believe the MLP structure
and a high payout ratio is 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. We believe this
approach leads to a portfolio of companies at the blue-chip end of the spectrum
with less volatility and higher growth. In our view, these types of companies
tend to lag in up markets and outperform in down markets.
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 has a committed
facility agreement with The Bank of Nova Scotia, with a maximum commitment
amount of $130,000,000. The Fund uses leverage because the Sub-Advisor believes
that, over time, leverage can enhance total return for common shareholders.
However, the use of leverage can also increase the volatility of the Fund's NAV
and therefore volatility of the Fund's Common Share price. For example, if the
prices of securities held by the Fund decline, the effect of changes in common
share NAV and common shareholder total return loss is 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 positive impact on the
performance of the Fund over this reporting period.
MARKET AND FUND OUTLOOK
Corporate simplification involving pipeline companies and their associated MLPs
began in late 2014 with Kinder Morgan and has continued with the ONEOK
transaction that was announced earlier in 2017. These transactions have raised
several questions about why they are occurring and what is driving them. Simply
put, these transactions are a way to reduce the cost of equity financing.
Normally a high payout entity like an MLP or a YieldCo is created because it
lowers the cost of equity financing. Unlike normal corporations, the MLP
structure can actually lead to a higher cost of equity financing over time if
the management team strings together multiple years of stable earnings and
consistent dividend growth. While typically this sort of long-term track record
would lead to a higher valuation (and therefore a lower cost of equity
financing), incentive payments paid by the MLP to its corporate parent that
holds the general partner interest have the opposite effect. These incentives
increase with per share dividend growth at the LP level and are due on newly
issued shares, as well as older shares that have experienced the growth. So, the
more successful the MLP is in growing its dividends, the closer it gets to
ultimately re-combining itself with the parent corporation or conducting some
other transaction that eliminates the incentive payments that ultimately
increase the cost of equity financing. In most cases, MLPs are merely a part of
the corporate finance structure of a company. MLPs are created when they lower
the cost of capital and rolled-up or acquired when they do not.
The Fund continues to seek to invest primarily in MLPs and other energy
infrastructure companies 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.
(3) Total return is based on the combination of reinvested dividends, capital
gains and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan and changes in NAV per Common 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
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
PORTFOLIO OF INVESTMENTS
MAY 31, 2017 (UNAUDITED)
SHARES DESCRIPTION VALUE
------------ ----------------------------------------------------------------------------- --------------
COMMON STOCKS - 90.2%
ELECTRIC UTILITIES - 24.4%
90,900 Alliant Energy Corp. (a)..................................................... $ 3,769,623
134,500 American Electric Power Co., Inc............................................. 9,654,410
114,500 Duke Energy Corp............................................................. 9,810,360
15,900 Edison International (a)..................................................... 1,296,963
197,900 Emera, Inc. (CAD) (a)........................................................ 7,058,387
180,000 Eversource Energy (a)........................................................ 11,172,600
242,200 Exelon Corp.................................................................. 8,794,282
165,400 Fortis, Inc. (CAD) (a)....................................................... 5,444,970
265,300 Hydro One Ltd. (CAD) (a) (b)................................................. 4,662,414
64,000 IDACORP, Inc. (a)............................................................ 5,587,200
18,900 NextEra Energy, Inc.......................................................... 2,673,216
112,300 Southern (The) Co. (a)....................................................... 5,683,503
153,400 Xcel Energy, Inc. (a)........................................................ 7,349,394
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82,957,322
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GAS UTILITIES - 6.0%
45,600 Atmos Energy Corp. (a)....................................................... 3,798,936
60,310 Chesapeake Utilities Corp. (a)............................................... 4,478,018
110,500 New Jersey Resources Corp. (a)............................................... 4,629,950
150,018 UGI Corp. (a)................................................................ 7,677,921
--------------
20,584,825
--------------
MULTI-UTILITIES - 18.6%
127,200 ATCO, Ltd., Class I (CAD) (a)................................................ 4,797,601
211,700 Canadian Utilities Ltd., Class A (CAD) (a)................................... 6,406,556
163,800 CMS Energy Corp. (a)......................................................... 7,765,758
94,120 National Grid PLC, ADR....................................................... 6,342,552
179,800 NiSource, Inc................................................................ 4,687,386
257,000 Public Service Enterprise Group, Inc. (a).................................... 11,541,870
102,900 SCANA Corp................................................................... 7,017,780
92,900 Sempra Energy................................................................ 10,821,921
65,200 WEC Energy Group, Inc. (a)................................................... 4,091,952
--------------
63,473,376
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OIL, GAS & CONSUMABLE FUELS - 40.8%
2,051,714 Enbridge Energy Management, LLC (a) (c)...................................... 32,991,561
595,200 Enbridge Income Fund Holdings, Inc. (CAD) (a)................................ 14,293,436
167,400 Enbridge, Inc................................................................ 6,446,574
325,700 Inter Pipeline, Ltd. (CAD) (a)............................................... 6,449,624
172,100 Keyera Corp. (CAD) (a)....................................................... 5,121,531
576,175 Kinder Morgan, Inc........................................................... 10,809,043
144,900 ONEOK, Inc................................................................... 7,198,632
637,100 Plains GP Holdings, L.P. (a)................................................. 16,991,457
115,600 Targa Resources Corp......................................................... 5,309,508
423,170 TransCanada Corp............................................................. 19,656,247
480,600 Williams (The) Cos., Inc..................................................... 13,745,160
--------------
139,012,773
--------------
WATER UTILITIES - 0.4%
15,900 American Water Works Co., Inc. (a)........................................... 1,243,062
--------------
TOTAL COMMON STOCKS.......................................................... 307,271,358
(Cost $302,373,312) --------------
See Notes to Financial Statements Page 5
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2017 (UNAUDITED)
SHARES/
UNITS DESCRIPTION VALUE
------------ ----------------------------------------------------------------------------- --------------
MASTER LIMITED PARTNERSHIPS - 35.3%
CHEMICALS - 0.1%
22,000 Westlake Chemical Partners, L.P. (a)......................................... $ 534,600
--------------
GAS UTILITIES - 1.7%
122,152 AmeriGas Partners, L.P. (a).................................................. 5,416,220
12,500 Suburban Propane Partners, L.P............................................... 295,500
--------------
5,711,720
--------------
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS - 4.2%
410,555 NextEra Energy Partners, L.P. (a) (d)........................................ 14,180,570
--------------
OIL, GAS & CONSUMABLE FUELS - 29.3%
79,700 Alliance Holdings GP, L.P. (a)............................................... 2,256,307
317,030 Alliance Resource Partners, L.P. (a)......................................... 6,816,145
65,700 Buckeye Partners, L.P........................................................ 4,204,800
7,600 Dominion Energy Midstream Partners, L.P. (a)................................. 217,740
727,700 Enterprise Products Partners, L.P............................................ 19,509,637
112,200 EQT Midstream Partners, L.P. (a)............................................. 8,275,872
266,976 Holly Energy Partners, L.P. (a).............................................. 8,746,134
85,300 Magellan Midstream Partners, L.P............................................. 6,191,927
133,972 NGL Energy Partners, L.P. (a)................................................ 1,822,019
109,800 ONEOK Partners, L.P. (a)..................................................... 5,370,318
103,600 Phillips 66 Partners, L.P. (a)............................................... 5,130,272
65,000 Plains All American Pipeline, L.P............................................ 1,721,200
41,000 Shell Midstream Partners, L.P. (a)........................................... 1,223,030
280,300 Spectra Energy Partners, L.P. (a)............................................ 12,092,142
47,328 Tallgrass Energy Partners, L.P. (a).......................................... 2,347,469
151,495 TC PipeLines, L.P. (a)....................................................... 8,524,623
56,002 TransMontaigne Partners, L.P. (a)............................................ 2,326,883
75,000 Williams Partners, L.P....................................................... 2,937,750
--------------
99,714,268
--------------
TOTAL MASTER LIMITED PARTNERSHIPS............................................ 120,141,158
(Cost $99,706,739) --------------
REAL ESTATE INVESTMENT TRUSTS - 1.3%
EQUITY REAL ESTATE INVESTMENT TRUSTS - 1.3%
49,101 CorEnergy Infrastructure Trust, Inc.......................................... 1,727,373
142,050 InfraREIT, Inc. (a).......................................................... 2,740,145
--------------
TOTAL REAL ESTATE INVESTMENT TRUSTS.......................................... 4,467,518
(Cost $4,641,044) --------------
TOTAL INVESTMENTS - 126.8%................................................... 431,880,034
(Cost $406,721,095) (e) --------------
NUMBER OF
CONTRACTS DESCRIPTION VALUE
------------ ----------------------------------------------------------------------------- --------------
CALL OPTIONS WRITTEN - (0.3%)
AMERICAN ELECTRIC POWER CO., INC. CALL
1,250 @ $70.00 due August 2017..................................................... (337,500)
--------------
BUCKEYE PARTNERS, L.P. CALL
600 @ 70.00 due June 2017 (f)................................................... (7,800)
--------------
Page 6 See Notes to Financial Statements
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2017 (UNAUDITED)
NUMBER OF
CONTRACTS DESCRIPTION VALUE
------------ ----------------------------------------------------------------------------- --------------
CALL OPTIONS WRITTEN (CONTINUED)
CMS ENERGY CORP. CALL
800 @ $50.00 due September 2017.................................................. $ (28,000)
--------------
DUKE ENERGY CORP. CALLS
100 @ 85.00 due July 2017....................................................... (19,900)
1,000 @ 87.50 due July 2017....................................................... (76,000)
--------------
(95,900)
--------------
ENBRIDGE, INC. CALLS
1,400 @ 45.00 due July 2017....................................................... (7,000)
200 @ 47.50 due July 2017 (f)................................................... (800)
--------------
(7,800)
--------------
ENTERPRISE PRODUCTS PARTNERS, L.P. CALLS
5,000 @ 29.00 due June 2017 (f)................................................... (10,000)
1,700 @ 28.00 due July 2017....................................................... (25,500)
--------------
(35,500)
--------------
EXELON CORP. CALLS
1,000 @ 36.00 due July 2017....................................................... (104,000)
500 @ 37.00 due July 2017....................................................... (27,000)
900 @ 38.00 due October 2017.................................................... (68,400)
--------------
(199,400)
--------------
KINDER MORGAN, INC. CALLS
500 @ 24.00 due June 2017....................................................... (1,000)
2,000 @ 22.00 due July 2017....................................................... (4,000)
500 @ 20.00 due September 2017.................................................. (22,000)
2,700 @ 21.00 due September 2017.................................................. (64,800)
--------------
(91,800)
--------------
MAGELLAN MIDSTREAM PARTNERS, L.P. CALLS
200 @ 77.50 due June 2017 (f)................................................... (1,000)
600 @ 80.00 due July 2017....................................................... (3,000)
--------------
(4,000)
--------------
NEXTERA ENERGY, INC. CALL
68 @ 135.00 due June 2017...................................................... (45,560)
--------------
NISOURCE, INC. CALL
1,000 @ 25.00 due July 2017....................................................... (132,500)
--------------
ONEOK, INC. CALLS
700 @ 52.50 due June 2017....................................................... (10,500)
700 @ 55.00 due June 2017 (f)................................................... (3,500)
--------------
(14,000)
--------------
PLAINS ALL AMERICAN PIPELINE, L.P. CALLS
100 @ 29.00 due July 2017....................................................... (1,500)
500 @ 31.00 due August 2017..................................................... (5,000)
--------------
(6,500)
--------------
SCANA CORP. CALLS
700 @ 70.00 due July 2017....................................................... (56,000)
100 @ 70.00 due August 2017..................................................... (11,750)
--------------
(67,750)
--------------
See Notes to Financial Statements Page 7
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2017 (UNAUDITED)
NUMBER OF
CONTRACTS DESCRIPTION VALUE
------------ ----------------------------------------------------------------------------- --------------
CALL OPTIONS WRITTEN (CONTINUED)
TARGA RESOURCES CORP. CALLS
1,000 @ $60.00 due June 2017 (f)................................................... $ (10,000)
100 @ 60.00 due July 2017....................................................... (500)
--------------
(10,500)
--------------
TRANSCANADA CORP. CALLS
3,400 @ 50.00 due August 2017..................................................... (85,000)
800 @ 50.00 due November 2017................................................... (44,000)
--------------
(129,000)
--------------
WILLIAMS (THE) COS., INC. CALLS
2,100 @ 31.00 due July 2017....................................................... (39,900)
2,700 @ 33.00 due July 2017....................................................... (10,800)
--------------
(50,700)
--------------
WILLIAMS PARTNERS, L.P. CALLS
600 @ 42.50 due June 2017....................................................... (3,000)
100 @ 42.50 due July 2017....................................................... (1,600)
--------------
(4,600)
--------------
TOTAL CALL OPTIONS WRITTEN................................................... (1,268,810)
(Premiums received $1,583,954) --------------
OUTSTANDING LOAN - (36.6%)................................................... (124,500,000)
NET OTHER ASSETS AND LIABILITIES - 10.1%..................................... 34,496,720
--------------
NET ASSETS - 100.0%.......................................................... $ 340,607,944
==============
-----------------------------
(a) All or a portion of this security serves as collateral on the outstanding
loan.
(b) 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.
(c) Non-income producing security that makes payment-in-kind ("PIK")
distributions. For the fiscal year-to-date period (December 1, 2016
through May 31, 2017), the Fund received 88,032 PIK shares of Enbridge
Energy Management, LLC.
(d) NextEra Energy Partners, L.P. is taxed as a "C" corporation for federal
income tax purposes.
(e) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of May 31, 2017, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $42,318,977 and the aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over value was $17,160,038.
(f) This security is fair valued by the First Trust Advisors L.P.'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, 2017, securities noted as such are
valued at $(33,100) or (0.0)% of net assets.
ADR American Depository Receipt
CAD Canadian Dollar - Security is denominated in Canadian Dollars and is
translated into U.S. Dollars based upon the current exchange rate.
Page 8 See Notes to Financial Statements
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2017 (UNAUDITED)
-----------------------------
INTEREST RATE SWAP AGREEMENTS:
NOTIONAL
COUNTERPARTY FLOATING RATE (1) EXPIRATION DATE AMOUNT FIXED RATE(1) VALUE
-----------------------------------------------------------------------------------------------------------
Bank of Nova Scotia 1 month LIBOR 10/08/20 $ 36,475,000 2.121% $ (681,142)
Bank of Nova Scotia 1 month LIBOR 09/03/24 36,475,000 2.367% (1,218,211)
-------------- --------------
$ 72,950,000 $ (1,899,353)
============== ==============
(1) The Fund pays the fixed rate and receives the floating rate. The floating
rate on May 31, 2017 was 0.993% and 0.995%, respectively.
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of May 31, 2017
is as follows (see Note 3A - Portfolio Valuation in the Notes to Financial
Statements):
ASSETS TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
5/31/2017 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Common Stocks*..................................... $307,271,358 $307,271,358 $ -- $ --
Master Limited Partnerships*....................... 120,141,158 120,141,158 -- --
Real Estate Investment Trusts*..................... 4,467,518 4,467,518 -- --
------------ ------------ ------------ ------------
Total Investments.................................. $431,880,034 $431,880,034 $ -- $ --
============ ============ ============ ============
LIABILITIES TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
5/31/2017 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Call Options Written............................... $ (1,268,810) $ (1,051,160) $ (217,650) $ --
Interest Rate Swaps**.............................. (1,899,353) -- (1,899,353) --
------------ ------------ ------------ ------------
Total.............................................. $ (3,168,163) $ (1,051,160) $ (2,117,003) $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
** See Interest Rate Swap Agreements for contract detail.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between Levels at May 31, 2017.
See Notes to Financial Statements Page 9
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2017 (UNAUDITED)
ASSETS:
Investments, at value
(Cost $406,721,095)............................................................................. $ 431,880,034
Cash............................................................................................ 26,907,302
Cash segregated as collateral for open swap contracts........................................... 4,121,988
Receivables:
Investment securities sold................................................................. 4,214,196
Dividends.................................................................................. 1,845,821
Prepaid expenses................................................................................ 19,417
--------------
Total Assets............................................................................... 468,988,758
--------------
LIABILITIES:
Outstanding loan................................................................................ 124,500,000
Options written, at value (Premiums received $1,583,954)........................................ 1,268,810
Swap contracts, at value ($569)................................................................. 1,899,353
Payables:
Investment advisory fees................................................................... 397,488
Interest and fees on loan.................................................................. 196,489
Audit and tax fees......................................................................... 30,730
Printing fees.............................................................................. 29,963
Administrative fees........................................................................ 21,103
Transfer agent fees........................................................................ 17,527
Custodian fees............................................................................. 12,964
Trustees' fees and expenses................................................................ 3,088
Legal fees................................................................................. 2,177
Financial reporting fees................................................................... 771
Other liabilities............................................................................... 351
--------------
Total Liabilities.......................................................................... 128,380,814
--------------
NET ASSETS...................................................................................... $ 340,607,944
==============
NET ASSETS CONSIST OF:
Paid-in capital................................................................................. $ 312,305,171
Par value....................................................................................... 175,502
Accumulated net investment income (loss)........................................................ 991,530
Accumulated net realized gain (loss) on investments, written options, swap contracts and
foreign currency transactions................................................................ 3,559,840
Net unrealized appreciation (depreciation) on investments, written options, swap contracts and
foreign currency translation................................................................. 23,575,901
--------------
NET ASSETS...................................................................................... $ 340,607,944
==============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share)............................ $ 19.41
==============
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized)..... 17,550,236
==============
Page 10 See Notes to Financial Statements
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2017 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $268,435).......................................... $ 6,709,659
Interest........................................................................................ 797
Other........................................................................................... 23
--------------
Total investment income.................................................................... 6,710,479
--------------
EXPENSES:
Investment advisory fees........................................................................ 2,358,567
Interest and fees on loan....................................................................... 1,053,827
Administrative fees............................................................................. 116,654
Printing fees................................................................................... 86,745
Custodian fees.................................................................................. 27,533
Audit and tax fees.............................................................................. 24,418
Transfer agent fees............................................................................. 14,655
Trustees' fees and expenses..................................................................... 8,816
Legal fees...................................................................................... 5,574
Financial reporting fees........................................................................ 4,625
Other........................................................................................... 22,881
--------------
Total expenses............................................................................. 3,724,295
--------------
NET INVESTMENT INCOME (LOSS).................................................................... 2,986,184
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments................................................................................ 13,371,913
Written options............................................................................ 2,692,946
Swap contracts............................................................................. (542,071)
Foreign currency transactions.............................................................. (11,313)
--------------
Net realized gain (loss)........................................................................ 15,511,475
--------------
Net change in unrealized appreciation (depreciation) on:
Investments................................................................................ (6,022,256)
Written options............................................................................ 433,809
Swap contracts............................................................................. 251,530
Foreign currency translation............................................................... 1,042
--------------
Net change in unrealized appreciation (depreciation)............................................ (5,335,875)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS)......................................................... 10,175,600
--------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................ $ 13,161,784
==============
See Notes to Financial Statements Page 11
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
5/31/2017 ENDED
(UNAUDITED) 11/30/2016
-------------- --------------
OPERATIONS:
Net investment income (loss)......................................................... $ 2,986,184 $ 3,620,773
Net realized gain (loss)............................................................. 15,511,475 (13,617,401)
Net increase from payment by the sub-advisor......................................... -- 1,600
Net change in unrealized appreciation (depreciation)................................. (5,335,875) 58,876,024
-------------- --------------
Net increase (decrease) in net assets resulting from operations...................... 13,161,784 48,880,996
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................................................ (11,583,156) (3,981,810)
Net realized gain.................................................................... -- (5,326,861)
Return of capital.................................................................... -- (19,824,721)
-------------- --------------
Total distributions to shareholders.................................................. (11,583,156) (29,133,392)
-------------- --------------
Total increase (decrease) in net assets.............................................. 1,578,628 19,747,604
NET ASSETS:
Beginning of period.................................................................. 339,029,316 319,281,712
-------------- --------------
End of period........................................................................ $ 340,607,944 $ 339,029,316
============== ==============
Accumulated net investment income (loss) at end of period............................ $ 991,530 $ 9,588,502
============== ==============
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.
Page 12 See Notes to Financial Statements
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31, 2017 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations...................... $ 13,161,784
Adjustments to reconcile net increase (decrease) in net assets resulting from
operations to net cash provided by operating activities:
Purchases of investments........................................................ (107,375,880)
Sales of investments............................................................ 114,095,447
Proceeds from written options................................................... 4,223,762
Amount paid to close written options............................................ (637,315)
Return of capital distributions received from investment in MLPs and REITs...... 3,501,441
Net realized gain/loss on investments and written options....................... (16,064,859)
Net change in unrealized appreciation/depreciation on investments and
written options.............................................................. 5,588,447
Net change in unrealized appreciation/depreciation on swap contracts............ (251,530)
Decrease in cash segregated as collateral for open swap contracts............... 1,542,071
CHANGES IN ASSETS AND LIABILITIES:
Decrease in interest receivable................................................. 152
Increase in dividends receivable................................................ (878,826)
Increase in prepaid expenses.................................................... (17,339)
Increase in interest and fees on loan payable................................... 37,560
Increase in investment advisory fees payable.................................... 24,876
Decrease in audit and tax fees payable.......................................... (20,760)
Decrease in legal fees payable.................................................. (2,338)
Decrease in printing fees payable............................................... (15,462)
Increase in administrative fees payable......................................... 1,653
Decrease in custodian fees payable.............................................. (7,424)
Increase in transfer agent fees payable......................................... 12,122
Increase in Trustees' fees and expenses payable................................. 150
Decrease in other liabilities payable........................................... (2,833)
--------------
CASH PROVIDED BY OPERATING ACTIVITIES................................................ $ 16,914,899
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Common Shareholders from net investment income................. (11,583,156)
Proceeds from borrowing......................................................... 3,000,000
--------------
CASH USED IN FINANCING ACTIVITIES.................................................... (8,583,156)
--------------
Increase in cash and foreign currency (a)............................................ 8,331,743
Cash and foreign currency at beginning of period..................................... 18,575,559
--------------
CASH AND FOREIGN CURRENCY AT END OF PERIOD........................................... $ 26,907,302
==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees.................................... $ 1,016,267
==============
-----------------------------
(a) Includes net change in unrealized appreciation (depreciation) on foreign
currency of $1,042.
See Notes to Financial Statements Page 13
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, 2017 ------------------------------------------------------------------
(UNAUDITED) 2016 2015 2014 2013 2012
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period........ $ 19.32 $ 18.19 $ 25.97 $ 22.30 $ 22.74 $ 21.38
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................ 0.17 0.21 0.34 0.22 0.22 0.27
Net realized and unrealized gain (loss)..... 0.58 2.58 (a) (6.80) 6.20 3.47 (a) 2.38 (a)
-------- -------- -------- -------- -------- --------
Total from investment operations............ 0.75 2.79 (6.46) 6.42 3.69 2.65
-------- -------- -------- -------- -------- --------
Common Shares offering costs charged to
paid-in capital.......................... -- -- -- -- -- 0.01
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income....................... (0.66) (0.23) (0.36) (0.45) (0.83) (1.01)
Net realized gain........................... -- (0.30) (0.96) (2.21) (3.25) (0.29)
Return of capital........................... -- (1.13) -- (0.09) (0.05) --
-------- -------- -------- -------- -------- --------
Total distributions to Common
Shareholders............................. (0.66) (1.66) (1.32) (2.75) (4.13) (1.30)
-------- -------- -------- -------- -------- --------
Net asset value, end of period.............. $ 19.41 $ 19.32 $ 18.19 $ 25.97 $ 22.30 $ 22.74
======== ======== ======== ======== ======== ========
Market value, end of period................. $ 18.14 $ 18.83 $ 16.16 $ 23.00 $ 21.71 $ 21.34
======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON NET ASSET VALUE (b)... 4.06% 18.35% (a) (25.29)% 31.02% 17.76% (a) 13.08% (a)
======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON MARKET VALUE (b)...... (0.22)% 29.84% (25.05)% 19.18% 22.11% 14.47%
======== ======== ======== ======== ======== ========
-----------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........ $340,608 $339,029 $319,282 $455,849 $391,336 $399,092
Ratio of net expenses to average net
assets.................................... 2.14% (c) 1.95% 1.83% 1.80% 1.84% 1.82%
Ratio of total expenses to average net
assets excluding interest expense and
fees on loan............................. 1.53% (c) 1.54% 1.49% 1.53% 1.55% 1.52%
Ratio of net investment income (loss) to
average net assets....................... 1.71% (c) 1.14% 1.47% 0.88% 0.95% 1.21%
Portfolio turnover rate..................... 21% 72% 42% 42% 54% 46%
INDEBTEDNESS:
Total loan outstanding (in 000's)........... $124,500 $121,500 $110,500 $158,000 $145,900 $141,900
Asset coverage per $1,000 of
indebtedness (d)......................... $ 3,736 $ 3,790 $ 3,889 $ 3,885 $ 3,682 $ 3,812
-----------------------------
(a) During the years ended November 30, 2016, 2013 and 2012, the Fund received
a reimbursement from the sub-advisor in the amounts of $1,600, $5,421 and
$104, respectively, in connection with trade errors, which represent 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 taking the Fund's total assets less the Fund's total
liabilities, not including the loan outstanding, and dividing by the
outstanding loan balance in 000's.
Page 14 See Notes to Financial Statements
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
MAY 31, 2017 (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 seeks to
achieve its objective by investing primarily in securities of companies engaged
in the energy infrastructure sector. Energy infrastructure 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 will invest,
taking into account the varying tax characteristics of such securities. 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
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.
3. SIGNIFICANT ACCOUNTING POLICIES
The Fund is considered an investment company and follows accounting and
reporting guidance under Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") Topic 946, "Financial
Services-Investment Companies." The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its
financial statements. The preparation of 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, 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 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 their closing bid price.
Page 15
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
MAY 31, 2017 (UNAUDITED)
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 (the "1933 Act")) 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:
o 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.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
o 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, 2017, is
included with the Fund's Portfolio of Investments.
Page 16
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
MAY 31, 2017 (UNAUDITED)
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
common stock and MLPs 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 common
stock and MLPs 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.
Options the Fund writes (sells) will either be exercised, expire or be cancelled
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.
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
equity price risk to meet its future payments under swap agreements outstanding
at May 31, 2017 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.
Page 17
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
MAY 31, 2017 (UNAUDITED)
The Fund held interest rate swap agreements at May 31, 2017 to hedge against
changes in borrowing rates under the Fund's committed facility 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 $4,121,988 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. For the six months ended May 31, 2017, distributions of $3,501,441
received from MLPs have been reclassified as return of capital. The cost basis
of applicable MLPs has been reduced accordingly.
The Fund holds shares of REITs. Distributions from such investments may be
comprised of return of capital, capital gains and income. The actual character
of amounts received during the year is not known until after the REIT's fiscal
year end. The Fund records the character of distributions received from 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. 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, 2016 is as follows:
Distributions paid from:
Ordinary income................................... $ 3,981,810
Capital gain...................................... 5,326,861
Return of capital................................. 19,824,721
As of November 30, 2016, 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.............. (7,301,850)
Net unrealized appreciation (depreciation)........ 33,903,845
------------
Total accumulated earnings (losses)............... 26,601,995
Other............................................. (53,352)
Paid-in capital................................... 312,480,673
------------
Net assets........................................ $339,029,316
============
Page 18
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
MAY 31, 2017 (UNAUDITED)
F. 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, 2016, the
Fund had capital loss carryforwards for federal income tax purposes of
$7,301,850.
Certain losses realized during the current fiscal year may be deferred and
treated as occurring on the first day of the following fiscal year for federal
income tax purposes. For the fiscal year ended November 30, 2016, the Fund had
no qualified late year losses.
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 ending 2013, 2014,
2015 and 2016 remain open to federal and state audit. As of May 31, 2017,
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.
G. EXPENSES
The Fund will pay all expenses directly related to its operations.
H. 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
shown 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 shown in "Net realized
gain (loss) on foreign currency transactions" on the Statement of Operations.
The portion of foreign currency gains and losses related to fluctuation 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
Statement of 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
Statements 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 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, 2017, derivative assets and liabilities (by type) on a gross basis
are as follows:
GROSS AMOUNTS NOT OFFSET
IN THE STATEMENT OF
NET AMOUNTS OF ASSETS AND LIABILITIES
GROSS GROSS AMOUNTS LIABILITIES PRESENTED --------------------------
AMOUNTS OF OFFSET IN THE IN THE STATEMENT CASH
RECOGNIZED STATEMENT OF ASSETS OF ASSETS AND FINANCIAL SEGREGATED AS NET
LIABILITIES AND LIABILITIES LIABILITIES INSTRUMENTS COLLATERAL AMOUNT
-------------------------------------------------------------------------------------------------------------------------------
Interest Rate Swap Contracts $(1,899,353) $ -- $ (1,899,353) $ -- $ 1,899,353 $ --
Page 19
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
MAY 31, 2017 (UNAUDITED)
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. The new and
amended rules and forms 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 and amended rules and forms to determine the impact to the
Fund.
K. NEW ACCOUNTING PRONOUNCEMENT
In December 2016, FASB released Accounting Standards Update ("ASU") 2016-19 that
makes technical changes to various sections of the ASC, including Topic 820,
Fair Value Measurement. The changes to Topic 820 are intended to clarify the
difference between a valuation approach and a valuation technique. The changes
to ASC 820-10-50-2 require a reporting entity to disclose, for Level 2 and Level
3 fair value measurements, a change in either or both a valuation approach and a
valuation technique and the reason(s) for the change. The changes to Topic 820
are effective for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2016. At this time, management is evaluating the
implications of the ASU and has not yet determined its impact on the financial
statements and disclosures.
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 out of its investment advisory fee.
During the year ended November 30, 2016, the Fund received a payment from the
sub-advisor of $1,600 in connection with a trade error.
First Trust Capital Partners, LLC, 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 the 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.
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 investments, excluding
short-term investments, for the six months ended May 31, 2017, were $94,771,629
and $112,531,396, respectively.
Page 20
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
MAY 31, 2017 (UNAUDITED)
6. DERIVATIVE TRANSACTIONS
Written option activity for the Fund was as follows:
NUMBER OF
WRITTEN OPTIONS CONTRACTS PREMIUMS
-----------------------------------------------------------------------------
Options outstanding at November 30, 2016......... 23,800 $ 1,367,185
Options Written.................................. 78,110 4,223,762
Options Expired.................................. (52,760) (3,130,184)
Options Exercised................................ (9,882) (676,732)
Options Closed................................... (3,650) (200,077)
--------- ------------
Options outstanding at May 31, 2017.............. 35,618 $ 1,583,954
========= ============
The following table presents the types of derivatives held by the Fund at May
31, 2017, 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 RISK STATEMENT OF ASSETS AND STATEMENT OF ASSETS AND
INSTRUMENTS EXPOSURE LIABILITIES LOCATION VALUE LIABILITIES LOCATION VALUE
------------------ ------------------ ------------------------- ------------ ------------------------- ------------
Written Options Equity Risk -- -- Options written, at value $ 1,268,810
Interest Rate Swap
Agreement Interest Rate Risk -- -- Swap contracts, at value 1,899,353
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, 2017, 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 $ 2,692,946
Net change in unrealized appreciation
(depreciation) on written options 433,809
INTEREST RATE RISK EXPOSURE
Net realized gain (loss) on swap contracts (542,071)
Net change in unrealized appreciation
(depreciation) on swap contracts 251,530
The average volume of interest rate swaps was $72,950,000 for the six months
ended May 31, 2017.
The Fund does not have the right to offset financial assets and financial
liabilities related to option contracts on the Statement of Assets and
Liabilities.
7. BORROWINGS
The Fund has a committed facility agreement with The Bank of Nova Scotia
("Scotia"). The maximum commitment amount is $130,000,000. The borrowing rate is
the 1-month LIBOR plus 85 basis points. Under the facility, the Fund pays a
commitment fee of 0.15% when the undrawn amount of such facility is greater than
50% of the maximum commitment. The average amount outstanding under the facility
for the six months ended May 31, 2017 was $123,576,923, with a weighted average
interest rate of 1.72%. As of May 31, 2017, the Fund had outstanding borrowings
of $124,500,000 under this committed facility agreement. The high and low annual
interest rates for the six months ended May 31, 2017, were 1.91% and 1.48%,
respectively. The interest rate at May 31, 2017 was 1.91%.
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.
Page 21
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
MAY 31, 2017 (UNAUDITED)
9. INDUSTRY CONCENTRATION RISK
The Fund invests at least 80% of its Managed Assets in securities issued by
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 was
the following subsequent event:
On June 20, 2017, the Fund declared a distribution of $0.11 per share to Common
Shareholders of record on July 6, 2017, payable July 17, 2017.
Effective June 26, 2017, the Fund transferred its committed facility agreement
with Scotia to a credit agreement with Scotia. The credit agreement provides for
a secured line of credit for the Fund where Fund assets are pledged against
advances made to the Fund. Under the requirements of the 1940 Act, the Fund,
immediately after any such borrowings, must have an "asset coverage" of at least
300% (33-1/3% of the Fund's total assets after borrowings). Under the credit
agreement, the maximum commitment amount remains $130,000,000, and the borrowing
rate remains at the 1-month LIBOR 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. As of June 26, 2017, the Fund's loan balance
was $118,500,000.
Page 22
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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
MAY 31, 2017 (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 located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's ("SEC") website located at
http://www.sec.gov.
Page 23
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
MAY 31, 2017 (UNAUDITED)
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 located
at http://www.ftportfolios.com; (3) on the SEC's website at http://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
24, 2017. At the Annual Meeting, Robert F. Keith was elected by the Common
Shareholders of the First Trust Energy Infrastructure Fund as a Class I Trustee
for a three-year term expiring at the Fund's Annual Meeting of Shareholders in
2020. The number of votes cast for Mr. Keith was 15,503,908, the number of votes
against was 282,146 and the number of broker non-votes was 1,764,182. James A.
Bowen, Richard E. Erickson, Thomas R. Kadlec, 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.
CURRENCY RISK: The value of securities denominated or quoted in foreign
currencies may be adversely affected by fluctuations in the relative currency
exchange rates and by exchange control regulations. The Fund's investment
performance may be negatively affected by a devaluation of a currency in which
the Fund's investments are denominated or quoted. Further, the Fund's investment
performance may be significantly affected, either positively or negatively, by
currency exchange rates because the U.S. dollar value of securities denominated
or quoted in another currency will increase or decrease in response to changes
in the value of such currency in relation to the U.S. dollar. While certain of
the Fund's non-U.S. dollar-denominated securities may be hedged into U.S.
dollars, hedging may not alleviate all currency risks.
DERIVATIVES RISK: The Fund may enter into total return swaps, credit default
swaps or other types of swaps, options, forwards and combinations thereof and
related derivatives. These transactions generally provide for the transfer from
one counterparty to another of certain risks inherent in the ownership of a
financial asset such as a common stock or debt instrument. Such risks include,
among other things, the risk of default and insolvency of the obligor of such
asset, the risk that the credit of the obligor or the underlying collateral will
decline or the risk that the common stock of the underlying issuer will decline
in value. The Fund's ability to successfully use hedging and interest rate
derivative transactions depends on the Sub-Advisor's ability to predict
pertinent market movements, which cannot be assured. Thus, the use of
derivatives for hedging and interest rate management purposes may result in
losses greater than if they had not been used, may require the Fund to sell or
purchase portfolio securities at inopportune times or for prices other than
current market values, 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. Additionally, amounts paid by the Fund as premiums and cash or
other assets held in margin accounts with respect to hedging and strategic
transactions are not otherwise available to the Fund for investment purposes. As
the writer (seller) of a covered call option, the Fund forgoes, during the
option's life, the opportunity to profit from increases in the market value of
the security covering the call option above the sum of the premium and the
strike price of the call, 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 at the
exercise price.
ENERGY INFRASTRUCTURE COMPANIES RISK: The Fund invests in Energy Infrastructure
Companies and is subject to certain risks inherent in investing in these types
of securities. 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 ("NGLs"), 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.
Page 24
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
MAY 31, 2017 (UNAUDITED)
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 addition, taxes, government regulation, international politics, price
and supply fluctuations, volatile interest rates and energy conservation may
cause difficulties for these companies. Such issuers have been experiencing
certain of these problems to varying degrees.
EQUITY SECURITIES RISK: Because the Fund invests in equity securities, the value
of the Fund's shares will fluctuate with changes in the value of these equity
securities. Equity securities prices 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 the capital rises and borrowing costs increase.
INDUSTRY CONCENTRATION RISK: The Fund invests at least 80% of its Managed Assets
in securities issued by 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.
INVESTMENT AND MARKET RISK: An investment in the Fund's Common Shares is subject
to investment risk, including the possible loss of the entire principal
invested. An investment in Common Shares represents an indirect investment in
the securities owned by the Fund. The value of these securities, like other
market investments, may move up or down, sometimes rapidly and unpredictably.
Common Shares at any point in time may be worth less than the original
investment, even after taking into account the reinvestment of Fund dividends
and distributions. Security prices can fluctuate for several reasons including
the general condition of the securities markets, or when political or economic
events affecting the issuers occur. When the Advisor or Sub-Advisor determines
that it is temporarily unable to follow the Fund's investment strategy or that
it is impractical to do so (such as when a market disruption event has occurred
and trading in the securities is extremely limited or absent), the Fund may take
temporary defensive positions.
LEVERAGE RISK: The use of leverage results in additional risks and can magnify
the effect of any losses. The funds borrowed pursuant to a leverage borrowing
program constitute a substantial lien and burden by reason of their prior claim
against the income of the Fund and against the net assets of the Fund in
liquidation. If the Fund is not in compliance with certain credit facility
provisions, the Fund may not be permitted to declare dividends or other
distributions.
MLP RISK: An investment in MLP units involves risks which differ from an
investment in common stock of a corporation. Holders of MLP units have limited
control and voting rights on matters affecting the partnership. In addition,
there are certain tax risks associated with an investment in MLP units and
conflicts of interest exist between common unit holders and the general partner,
including those arising from incentive distribution payments.
NON-U.S. RISK: The Fund may invest a portion of its assets in the equity
securities of issuers domiciled in jurisdictions other than the U.S. Investments
in the securities and instruments of non-U.S. issuers involve certain
considerations and risks not ordinarily associated with investments in
securities and instruments of U.S. issuers. Non-U.S. companies are not generally
subject to uniform accounting, auditing and financial standards and requirements
comparable to those applicable to U.S. companies. Non-U.S. securities exchanges,
brokers and listed companies may be subject to less government supervision and
regulation than exists in the United States. Dividend and interest income may be
subject to withholding and other non-U.S. taxes, which may adversely affect the
net return on such investments. A related risk is that there may be difficulty
in obtaining or enforcing a court judgment abroad.
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.
Page 25
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST ENERGY INFRASTRUCTURE FUND (FIF)
MAY 31, 2017 (UNAUDITED)
RESTRICTED SECURITIES RISK: The Fund may invest in unregistered or otherwise
restricted securities. The term "restricted securities" refers to securities
that are unregistered or are held by control persons of the issuer and
securities that are subject to contractual restrictions on their resale. As a
result, restricted securities may be more difficult to value and the Fund may
have difficulty disposing of such assets either in a timely manner or for a
reasonable price. In order to dispose of an unregistered security, the Fund,
where it has contractual rights to do so, may have to cause such security to be
registered. A considerable period may elapse between the time the decision is
made to sell the security and the time the security is registered so that the
Fund could sell it. Contractual restrictions on the resale of securities vary in
length and scope and are generally the result of a negotiation between the
issuer and acquirer of the securities. The Fund would, in either case, bear
market risks during that period.
Page 26
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This Page Left Blank Intentionally.
FIRST TRUST
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
The Bank of New York Mellon
101 Barclay Street, 20th Floor
New York, NY 10286
INDEPENDENT REGISTERED
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
[BLANK BACK COVER]
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. EXHIBITS.
(a)(1) Not applicable.
(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.
(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, dated
March 24, 2010. (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: July 11, 2017
------------------
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: July 11, 2017
------------------
By (Signature and Title)* /s/ Donald P. Swade
----------------------------------------
Donald P. Swade, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: July 11, 2017
------------------
* Print the name and title of each signing officer under his or her signature.