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 811-22902
First Trust New Opportunities MLP & Energy Fund
(Exact name of registrant as specified in charter)
10 Westport Road, Suite C101a
Wilton, CT 06897
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Name and address of agent for service)
Registrant’s telephone number, including area code: 630-765-8000
Date of fiscal year end: October 31
Date of reporting period: October 31, 2023
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, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
(a) The Report to Shareholders is attached herewith.
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Fund Statistics | |
Symbol on New York Stock Exchange | FPL |
Common Share Price | $6.68 |
Common Share Net Asset Value (“NAV”) | $7.24 |
Premium (Discount) to NAV | (7.73)% |
Net Assets Applicable to Common Shares | $169,645,333 |
Current Distribution per Common Share(1) | $0.0375 |
Current Annualized Distribution per Common Share | $0.4500 |
Current Distribution Rate on Common Share Price(2) | 6.74% |
Current Distribution Rate on NAV(2) | 6.22% |
Performance | |||
Average Annual Total Returns | |||
1 Year Ended 10/31/23 | 5 Years Ended 10/31/23 | Inception (3/26/14) to 10/31/23 | |
Fund Performance(3) | |||
NAV | 9.57% | 3.89% | -0.98% |
Market Value | 18.22% | 4.01% | -2.28% |
Index Performance | |||
S&P 500® Index | 10.14% | 11.00% | 10.94% |
Alerian MLP Total Return Index | 16.60% | 8.69% | 1.50% |
Industry Classification | % of Total Long-Term Investments |
Natural Gas Transmission | 29.7% |
Petroleum Product Transmission | 21.9 |
Electric Power & Transmission | 20.9 |
Crude Oil Transmission | 12.0 |
Gathering & Processing | 4.0 |
Propane | 1.0 |
Other | 10.5 |
Total | 100.0% |
Top Ten Holdings | % of Total Long-Term Investments |
Enterprise Products Partners, L.P. | 9.7% |
Energy Transfer, L.P. | 8.8 |
Cheniere Energy Partners, L.P. | 6.6 |
Williams (The) Cos., Inc. | 6.0 |
MPLX, L.P. | 5.8 |
Plains All American Pipeline, L.P. | 4.4 |
Kinder Morgan, Inc. | 3.5 |
DT Midstream, Inc. | 3.4 |
Hess Midstream, L.P., Class A | 3.4 |
Sempra | 3.1 |
Total | 54.7% |
Fund Allocation | % of Net Assets |
Common Stocks | 60.3% |
Master Limited Partnerships | 48.8 |
Money Market Funds | 16.5 |
Call Options Written | (0.2) |
Outstanding Loan | (26.5) |
Net Other Assets and Liabilities | 1.1 |
Total | 100.0% |
(1) | Most recent distribution paid through October 31, 2023. Subject to change in the future. |
(2) | Distribution rates are calculated by annualizing the most recent distribution paid through the report date and then dividing by Common Share Price or NAV, as applicable, as of October 31, 2023. 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. |
Average Annual Total Returns | |||
1 Year Ended 10/31/23 | 5 Years Ended 10/31/23 | Inception (3/26/14) to 10/31/23 | |
Fund Performance(1) | |||
NAV | 9.57% | 3.89% | -0.98% |
Market Value | 18.22% | 4.01% | -2.28% |
Index Performance | |||
S&P 500® Index | 10.14% | 11.00% | 10.94% |
Alerian MLP Total Return Index | 16.60% | 8.69% | 1.50% |
Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance.
(1) | Total return is based on the combination of reinvested dividend, capital gain and return of capital distributions, if any, at prices obtained by the Dividend Reinvestment Plan and changes in NAV per 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. |
(2) | Wolfe Research Power Supply Outlook: Implications for Power, Rails, Natural Gas, Turbines September 15, 2023 |
(3) | Bloomberg |
(4) | Energy Institute Statistical Review of World Energy, 2023 |
(5) | World Bank, Energy Institute Statistical Review of World Energy – 2023, EIP Estimates. This information is based on assumptions made by EIP, changes to the assumptions will affect the information provided. |
Shares | Description | Value | ||
COMMON STOCKS (a) – 60.3% | ||||
Electric Utilities – 11.4% | ||||
52,400 | Alliant Energy Corp. | $2,556,596 | ||
35,270 | American Electric Power Co., Inc. (b) | 2,664,296 | ||
33 | Constellation Energy Corp. | 3,726 | ||
4,800 | Duke Energy Corp. | 426,672 | ||
7,300 | Emera, Inc. (CAD) (c) | 239,096 | ||
247,250 | Enel S.p.A., ADR (c) | 1,552,730 | ||
5,000 | Entergy Corp. | 477,950 | ||
23,700 | Eversource Energy (b) | 1,274,823 | ||
65,800 | Exelon Corp. | 2,562,252 | ||
4,400 | Fortis, Inc. (CAD) (c) | 174,699 | ||
6,200 | Iberdrola S.A., ADR | 275,342 | ||
10,200 | IDACORP, Inc. (c) | 966,042 | ||
13,480 | NextEra Energy, Inc. (b) | 785,884 | ||
6,490 | Orsted A/S, ADR | 104,359 | ||
83,520 | PPL Corp. | 2,052,087 | ||
35,780 | Southern (The) Co. | 2,407,994 | ||
14,800 | Xcel Energy, Inc. | 877,196 | ||
19,401,744 | ||||
Energy Equipment & Services – 1.0% | ||||
133,800 | Archrock, Inc. (c) | 1,695,246 | ||
Gas Utilities – 7.5% | ||||
54,620 | AltaGas Ltd. (CAD) (c) | 1,014,610 | ||
33,200 | Atmos Energy Corp. (c) | 3,574,312 | ||
101,900 | National Fuel Gas Co. (c) | 5,191,805 | ||
35,670 | New Jersey Resources Corp. (c) | 1,447,489 | ||
19,200 | ONE Gas, Inc. (c) | 1,159,680 | ||
12,840 | UGI Corp. (c) | 267,072 | ||
12,654,968 | ||||
Independent Power & Renewable Electricity Producers – 1.1% | ||||
37,300 | AES (The) Corp. (c) | 555,770 | ||
53,390 | Clearway Energy, Inc., Class A (c) | 1,087,554 | ||
8,000 | EDP Renovaveis S.A. (EUR) (d) | 128,696 | ||
1,772,020 | ||||
Multi-Utilities – 9.2% | ||||
60,000 | Atco Ltd., Class I (CAD) (c) | 1,538,129 | ||
7,170 | CenterPoint Energy, Inc. (c) | 192,730 | ||
16,450 | CMS Energy Corp. (c) | 893,893 | ||
17,380 | DTE Energy Co. (c) | 1,675,084 | ||
54,370 | Public Service Enterprise Group, Inc. | 3,351,910 | ||
80,800 | Sempra (b) | 5,658,424 | ||
28,130 | WEC Energy Group, Inc. | 2,289,501 | ||
15,599,671 | ||||
Oil, Gas & Consumable Fuels – 29.2% | ||||
50,000 | BP PLC, ADR (c) | 1,829,000 | ||
9,410 | Cheniere Energy, Inc. (b) | 1,566,012 | ||
117,040 | DT Midstream, Inc. (c) | 6,316,649 | ||
103,085 | Enbridge, Inc. (c) | 3,302,843 | ||
9,000 | Exxon Mobil Corp. | 952,650 | ||
130,664 | Keyera Corp. (CAD) (c) | 3,038,698 | ||
398,998 | Kinder Morgan, Inc. (c) | 6,463,768 | ||
20,602 | ONEOK, Inc. | 1,343,250 |
Shares | Description | Value | ||
COMMON STOCKS (a) (Continued) | ||||
Oil, Gas & Consumable Fuels (Continued) | ||||
53,000 | Shell PLC, ADR (b) | $3,452,420 | ||
45,500 | Targa Resources Corp. | 3,804,255 | ||
75,109 | TC Energy Corp. | 2,587,505 | ||
58,800 | TotalEnergies SE, ADR (b) | 3,916,080 | ||
320,178 | Williams (The) Cos., Inc. | 11,014,123 | ||
49,587,253 | ||||
Professional Services – 0.7% | ||||
8,500 | Jacobs Solutions, Inc. (b) | 1,133,050 | ||
Water Utilities – 0.2% | ||||
3,200 | American Water Works Co., Inc. (c) | 376,480 | ||
Total Common Stocks | 102,220,432 | |||
(Cost $108,855,490) | ||||
Units | Description | Value | ||
MASTER LIMITED PARTNERSHIPS – 48.8% | ||||
Chemicals – 2.7% | ||||
210,988 | Westlake Chemical Partners, L.P. (c) | 4,523,583 | ||
Energy Equipment & Services – 0.4% | ||||
31,000 | USA Compression Partners, L.P. (c) | 778,100 | ||
Gas Utilities – 0.9% | ||||
88,500 | Suburban Propane Partners, L.P. (c) | 1,556,715 | ||
Independent Power & Renewable Electricity Producers – 1.4% | ||||
88,919 | NextEra Energy Partners, L.P. (e) | 2,407,037 | ||
Oil, Gas & Consumable Fuels – 43.4% | ||||
220,269 | Cheniere Energy Partners, L.P. (c) | 12,282,199 | ||
1,232,960 | Energy Transfer, L.P. (c) | 16,213,424 | ||
16,000 | EnLink Midstream, LLC (c) (e) | 196,640 | ||
692,564 | Enterprise Products Partners, L.P. (c) | 18,034,367 | ||
208,716 | Hess Midstream, L.P., Class A (c) (e) | 6,261,480 | ||
300,000 | MPLX, L.P. (c) | 10,812,000 | ||
531,720 | Plains All American Pipeline, L.P. (c) | 8,055,558 | ||
41,070 | TXO Partners, L.P. (c) | 802,097 | ||
35,000 | Western Midstream Partners, L.P. | 939,050 | ||
73,596,815 | ||||
Total Master Limited Partnerships | 82,862,250 | |||
(Cost $54,755,184) | ||||
Shares | Description | Value | ||
MONEY MARKET FUNDS – 16.5% | ||||
27,934,754 | Morgan Stanley Institutional Liquidity Funds - Treasury Portfolio - Institutional Class - 5.22% (f) | 27,934,754 | ||
(Cost $27,934,754) | ||||
Total Investments – 125.6% | 213,017,436 | |||
(Cost $191,545,428) |
Number of Contracts | Description | Notional Amount | Exercise Price | Expiration Date | Value | |||||
WRITTEN OPTIONS – (0.2)% | ||||||||||
Call Options Written – (0.2)% | ||||||||||
(352) | American Electric Power Co., Inc. | $(2,659,008) | $80.00 | 11/17/23 | (7,392) |
Number of Contracts | Description | Notional Amount | Exercise Price | Expiration Date | Value | |||||
WRITTEN OPTIONS (Continued) | ||||||||||
Call Options Written (Continued) | ||||||||||
(94) | Cheniere Energy, Inc. | $(1,564,348) | $180.00 | 12/15/23 | $(19,270) | |||||
(237) | Eversource Energy | (1,274,823) | 55.00 | 11/17/23 | (26,070) | |||||
(85) | Jacobs Solutions, Inc. | (1,133,050) | 140.00 | 12/15/23 | (19,763) | |||||
(134) | NextEra Energy, Inc. | (781,220) | 56.00 | 11/17/23 | (41,272) | |||||
(808) | Sempra | (5,658,424) | 70.00 | 11/17/23 | (129,280) | |||||
(530) | Shell PLC, ADR | (3,452,420) | 70.00 | 11/17/23 | (7,950) | |||||
(588) | TotalEnergies SE, ADR | (3,916,080) | 70.00 | 11/17/23 | (17,640) | |||||
Total Written Options | (268,637) | |||||||||
(Premiums received $278,625) |
Outstanding Loan – (26.5)% | (44,900,000) | ||
Net Other Assets and Liabilities – 1.1% | 1,796,534 | ||
Net Assets – 100.0% | $169,645,333 |
(a) | Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
(b) | All or a portion of this security’s position represents cover for outstanding options written. |
(c) | All or a portion of this security serves as collateral on the outstanding loan. At October 31, 2023, the segregated value of these securities amounts to $96,845,568. |
(d) | This security is fair valued by the Advisor’s Pricing Committee in accordance with procedures approved by the Fund’s Board of Trustees and in accordance with provisions of the Investment Company Act of 1940 and rules thereunder, as amended. At October 31, 2023, securities noted as such are valued at $128,696 or 0.1% of net assets. Certain of these securities are fair valued using a factor provided by a third-party pricing service due to the change in value between the foreign markets’ close and the New York Stock Exchange close exceeding a certain threshold. On days when this threshold is not exceeded, these securities are typically valued at the last sale price on the exchange on which they are principally traded. |
(e) | This security is taxed as a “C” corporation for federal income tax purposes. |
(f) | Rate shown reflects yield as of October 31, 2023. |
Abbreviations throughout the Portfolio of Investments: | |
ADR | – American Depositary Receipt |
CAD | – Canadian Dollar |
EUR | – Euro |
ASSETS TABLE | ||||
Total Value at 10/31/2023 | Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |
Common Stocks: | ||||
Independent Power & Renewable Electricity Producers | $ 1,772,020 | $ 1,643,324 | $ 128,696 | $ — |
Other Industry Categories* | 100,448,412 | 100,448,412 | — | — |
Master Limited Partnerships* | 82,862,250 | 82,862,250 | — | — |
Money Market Funds | 27,934,754 | 27,934,754 | — | — |
Total Investments | $ 213,017,436 | $ 212,888,740 | $ 128,696 | $— |
LIABILITIES TABLE | ||||
Total Value at 10/31/2023 | Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |
Written Options | $ (268,637) | $ (248,874) | $ (19,763) | $ — |
* | See Portfolio of Investments for industry breakout. |
ASSETS: | |
Investments, at value | $ 213,017,436 |
Receivables: | |
Dividends | 1,111,145 |
Investment securities sold | 1,061,933 |
Income taxes | 83,828 |
Interest | 80,147 |
Dividend reclaims | 19,307 |
Prepaid expenses | 6,983 |
Total Assets | 215,380,779 |
LIABILITIES: | |
Outstanding loan | 44,900,000 |
Options written, at value | 268,637 |
Due to custodian | 9 |
Payables: | |
Interest and fees on loan | 184,859 |
Investment advisory fees | 181,914 |
Audit and tax fees | 138,866 |
Shareholder reporting fees | 20,365 |
Legal fees | 18,154 |
Administrative fees | 9,985 |
Custodian fees | 6,312 |
Transfer agent fees | 3,149 |
Trustees’ fees and expenses | 925 |
Financial reporting fees | 771 |
Other liabilities | 1,500 |
Total Liabilities | 45,735,446 |
NET ASSETS | $169,645,333 |
NET ASSETS consist of: | |
Paid-in capital | $ 303,542,008 |
Par value | 234,477 |
Accumulated distributable earnings (loss) | (134,131,152) |
NET ASSETS | $169,645,333 |
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) | $7.24 |
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized) | |
Investments, at cost | $191,545,428 |
Premiums received on options written | $278,625 |
INVESTMENT INCOME: | ||
Dividends | $ 4,538,786 | |
Interest | 274,310 | |
Foreign withholding tax | (209,714) | |
Other | 5,366 | |
Total investment income | 4,608,748 | |
EXPENSES: | ||
Investment advisory fees | 2,112,202 | |
Interest and fees on loan | 1,995,088 | |
Audit and tax fees | 102,255 | |
Administrative fees | 97,768 | |
Shareholder reporting fees | 68,928 | |
Legal fees | 33,539 | |
Listing expense | 23,792 | |
Trustees’ fees and expenses | 18,784 | |
Transfer agent fees | 18,608 | |
Custodian fees | 13,534 | |
Financial reporting fees | 9,250 | |
Other | 21,718 | |
Total expenses | 4,515,466 | |
NET INVESTMENT INCOME (LOSS) BEFORE TAXES | 93,282 | |
Current federal income tax benefit (expense) | 3,410,202 | |
Current state income tax benefit (expense) | 220,531 | |
Deferred federal income tax benefit (expense) | (612,667) | |
Deferred state income tax benefit (expense) | (42,075) | |
Total income tax benefit (expense) | 2,975,991 | |
NET INVESTMENT INCOME (LOSS) | 3,069,273 | |
NET REALIZED AND UNREALIZED GAIN (LOSS): | ||
Net realized gain (loss) before taxes on: | ||
Investments | 14,105,374 | |
Written options contracts | 2,145,719 | |
Foreign currency transactions | (12,036) | |
Net realized gain (loss) before taxes | 16,239,057 | |
Current federal income tax benefit (expense) | (3,410,202) | |
Current state income tax benefit (expense) | (234,196) | |
Total income tax benefit (expense) | (3,644,398) | |
Net realized gain (loss) on investments, written options contracts and foreign currency transactions | 12,594,659 | |
Net change in unrealized appreciation (depreciation) before taxes on: | ||
Investments | (2,802,830) | |
Written options contracts | (121,460) | |
Foreign currency translation | (54) | |
Net change in unrealized appreciation (depreciation) before taxes | (2,924,344) | |
Deferred federal income tax benefit (expense) | 612,667 | |
Deferred state income tax benefit (expense) | 42,075 | |
Total income tax benefit (expense) | 654,742 | |
Net change in unrealized appreciation (depreciation) on investments, written options contracts and foreign currency translation | (2,269,602) | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | 10,325,057 | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ 13,394,330 |
Year Ended 10/31/2023 | Year Ended 10/31/2022 | ||
OPERATIONS: | |||
Net investment income (loss) | $ 3,069,273 | $ 6,444,372 | |
Net realized gain (loss) | 12,594,659 | 10,172,548 | |
Net change in unrealized appreciation (depreciation) | (2,269,602) | 9,665,186 | |
Net increase (decrease) in net assets resulting from operations | 13,394,330 | 26,282,106 | |
DISTRIBUTIONS TO SHAREHOLDERS FROM: | |||
Investment operations | (10,564,660) | (10,940,992) | |
CAPITAL TRANSACTIONS: | |||
Repurchase of Common Shares * | (1,310,482) | (6,372,428) | |
Net increase (decrease) in net assets resulting from capital transactions | (1,310,482) | (6,372,428) | |
Total increase (decrease) in net assets | 1,519,188 | 8,968,686 | |
NET ASSETS: | |||
Beginning of period | 168,126,145 | 159,157,459 | |
End of period | $ 169,645,333 | $ 168,126,145 | |
CAPITAL TRANSACTIONS were as follows: | |||
Common Shares at beginning of period | 23,662,968 | 24,720,592 | |
Common Shares repurchased * | (215,308) | (1,057,624) | |
Common Shares at end of period | 23,447,660 | 23,662,968 |
* | On September 15, 2020, the Fund commenced a share repurchase program. For the fiscal years ended October 31, 2023 and October 31, 2022, the Fund repurchased 215,308 and 1,057,624 Common Shares, respectively, at a weighted-average discount of 14.01% and 12.95%, respectively, from net asset value per share. The Fund’s share repurchase program ended on March 15, 2023. |
Cash flows from operating activities: | ||
Net increase (decrease) in net assets resulting from operations | $13,394,330 | |
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities: | ||
Purchases of investments | (158,120,369) | |
Sales of investments | 153,239,395 | |
Proceeds from written options | 2,707,844 | |
Return of capital received from investment in MLPs | 8,588,627 | |
Net realized gain/loss on investments and written options | (16,251,093) | |
Net change in unrealized appreciation/depreciation on investments and written options | 2,924,290 | |
Changes in assets and liabilities: | ||
Decrease in income taxes receivable | 1,703 | |
Increase in interest receivable | (80,147) | |
Increase in dividend reclaims receivable | (17,419) | |
Increase in dividends receivable | (300,328) | |
Decrease in prepaid expenses | 741 | |
Increase in due to custodian | 9 | |
Increase in interest and fees payable on loan | 50,681 | |
Increase in investment advisory fees payable | 11,954 | |
Increase in audit and tax fees payable | 9 | |
Increase in legal fees payable | 17,568 | |
Increase in shareholder reporting fees payable | 1,272 | |
Increase in administrative fees payable | 375 | |
Increase in custodian fees payable | 3,115 | |
Increase in transfer agent fees payable | 141 | |
Decrease in trustees’ fees and expenses payable | (610) | |
Increase in other liabilities payable | 1,099 | |
Cash provided by operating activities | $6,173,187 | |
Cash flows from financing activities: | ||
Repurchase of Common Shares | (1,310,482) | |
Distributions to Common Shareholders from investment operations | (10,564,660) | |
Proceeds from borrowing | 2,000,000 | |
Cash used in financing activities | (9,875,142) | |
Decrease in cash and foreign currency (a) | (3,701,955) | |
Cash at beginning of period | 3,701,955 | |
Cash at end of period | $— | |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest and fees | $2,024,554 | |
Cash paid during the period for taxes | $11,961 |
(a) | Includes net change in unrealized appreciation (depreciation) on foreign currency of $(54). |
Year Ended October 31, | |||||||||
2023 | 2022 | 2021 | 2020 | 2019 | |||||
Net asset value, beginning of period | $ 7.11 | $ 6.44 | $ 4.73 | $ 9.41 | $ 9.43 | ||||
Income from investment operations: | |||||||||
Net investment income (loss) | 0.13 (a) | 0.26 | 0.48 | (1.07) | 0.12 | ||||
Net realized and unrealized gain (loss) | 0.44 | 0.82 | 1.65 | (2.93) | 0.76 (b) | ||||
Total from investment operations | 0.57 | 1.08 | 2.13 | (4.00) | 0.88 | ||||
Distributions paid to shareholders from: | |||||||||
Net investment income | — | (0.03) | (0.03) | — | — | ||||
Net realized gain | (0.45) | (0.42) | (0.42) | — | (0.25) | ||||
Return of capital | — | — | — | (0.68) | (0.65) | ||||
Total distributions paid to Common Shareholders | (0.45) | (0.45) | (0.45) | (0.68) | (0.90) | ||||
Common Share repurchases | 0.01 | 0.04 | 0.03 | 0.00 (c) | — | ||||
Net asset value, end of period | $ | $7.11 | $6.44 | $4.73 | $9.41 | ||||
Market value, end of period | $ | $6.08 | $5.80 | $3.66 | $8.66 | ||||
Total return based on net asset value (d) | 9.57% | 19.00% | 48.22% | (43.24)% | 10.34% (b) | ||||
Total return based on market value (d) | 18.22% | 12.99% | 72.51% | (52.28)% | 10.70% | ||||
Net assets, end of period (in 000’s) | $ 169,645 | $ 168,126 | $ 159,157 | $ 121,183 | $ 241,815 | ||||
Portfolio turnover rate | 33% | 57% | 126% | 113% | 74% | ||||
Ratios of expenses to average net assets: | |||||||||
Including current and deferred income taxes (e) | 2.70% | 2.15% | 2.34% | 5.51% (f) | 2.89% | ||||
Excluding current and deferred income taxes | 2.69% | 2.22% | 2.14% | 5.34% (f) | 2.86% | ||||
Excluding current and deferred income taxes and interest expense | 1.50% | 1.49% | 1.50% | 1.58% | 1.58% | ||||
Ratios of net investment income (loss) to average net assets: | |||||||||
Net investment income (loss) ratio before tax expenses | 0.06% | 0.17% | (0.13)% | (3.40)% (f) | (0.90)% | ||||
Net investment income (loss) ratio including tax expenses (e) | 0.05% | 0.24% | (0.32)% | (3.57)% (f) | (0.93)% | ||||
Indebtedness: | |||||||||
Total loan outstanding (in 000’s) | $ 44,900 | $ 42,900 | $ 40,400 | $ 33,400 | $ 89,000 | ||||
Asset coverage per $1,000 of indebtedness (g) | $ 4,778 | $ 4,919 | $ 4,940 | $ 4,628 | $ 3,717 |
(a) | Based on average shares outstanding. |
(b) | During the fiscal year ended October 31, 2019, the Fund received a reimbursement from the sub-advisor in the amount of $228 in connection with a trade error, which represents less than $0.01 per share. Since the sub-advisor reimbursed the Fund, there was no effect on the Fund’s total return. |
(c) | Amount represents less than $0.01 per share. |
(d) | 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. |
(e) | Includes current and deferred income taxes associated with each component of the Statement of Operations. |
(f) | This ratio includes breakage fees. If breakage fees had not been included, these expense ratios would have been 2.81% lower and the net investment income ratios would have been 2.81% higher. |
(g) | Calculated by subtracting the Fund’s total liabilities (not including the loan outstanding) from the Fund’s total assets, and dividing by the outstanding loan balance in 000’s. |
1) | the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing price; |
2) | the type of security; |
3) | the size of the holding; |
4) | the initial cost of the security; |
5) | transactions in comparable securities; |
6) | price quotes from dealers and/or third-party pricing services; |
7) | relationships among various securities; |
8) | information obtained by contacting the issuer, analysts, or the appropriate stock exchange; |
9) | an analysis of the issuer’s financial statements; |
10) | the existence of merger proposals or tender offers that might affect the value of the security; and |
11) | other relevant factors. |
1) | the last sale price on the exchange on which they are principally traded; |
2) | the value of similar foreign securities traded on other foreign markets; |
3) | ADR trading of similar securities; |
4) | closed-end fund or exchange-traded fund trading of similar securities; |
5) | foreign currency exchange activity; |
6) | the trading prices of financial products that are tied to baskets of foreign securities; |
7) | factors relating to the event that precipitated the pricing problem; |
8) | whether the event is likely to recur; |
9) | whether the effects of the event are isolated or whether they affect entire markets, countries or regions; and |
10) | other relevant factors. |
• | Level 1 – Level 1 inputs are quoted prices in active markets for identical investments. An active market is a market in which transactions for the investment occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
• | Level 2 – Level 2 inputs are observable inputs, either directly or indirectly, and include the following: |
o | Quoted prices for similar investments in active markets. |
o | Quoted prices for identical or similar investments in markets that are non-active. A non-active market is a market where there are few transactions for the investment, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly. |
o | Inputs other than quoted prices that are observable for the investment (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates). |
o | Inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
• | Level 3 – Level 3 inputs are unobservable inputs. Unobservable inputs may reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the investment. |
Current federal income tax benefit (expense) | $ — |
Current state income tax benefit (expense) | (13,665) |
Current foreign income tax benefit (expense) | — |
Deferred federal income tax benefit (expense) | — |
Deferred state income tax benefit (expense) | — |
Total income tax benefit (expense) | $(13,665) |
Federal net operating loss | $1,172,107 |
State net operating loss | 2,159,029 |
State income taxes | — |
Federal and state capital loss carryforward | 15,163,402 |
Other | — |
Total deferred tax assets | 18,494,538 |
Less: federal valuation allowance | (7,048,043) |
Less: state valuation allowance | (2,817,352) |
Net deferred tax assets | $8,629,143 |
Deferred tax liabilities: | |
Unrealized gains on investment securities | $(8,629,143) |
Total deferred tax liabilities | (8,629,143) |
Total net deferred tax liabilities | $— |
Application of statutory income tax rate | $ 2,815,679 |
State income taxes, net | 67,525 |
Change in valuation allowance | (2,609,379) |
Current year change in tax rate | — |
Other | (260,160) |
Total | $ 13,665 |
Fiscal Year | Amount Generated | Prior Year Amount Utilized | Current Year Amount Utilized | Amount Expired | Remaining | Expiration | ||||||
2018 | $ 7,227,948 | $ (2,435,437) | $ (4,792,511) | $ — | $ — | 10/31/2023 | ||||||
2020 | 76,657,602 | — | (10,226,391) | — | 66,431,211 | 10/31/2025 | ||||||
$ 83,885,550 | $ (2,435,437) | $ (15,018,902) | $ — | $ 66,431,211 |
Tax Cost | Gross Unrealized Appreciation | Gross Unrealized (Depreciation) | Net Unrealized Appreciation (Depreciation) | |||
$174,623,153 | $50,391,496 | $(12,265,850) | $38,125,646 |
Asset Derivatives | Liability Derivatives | |||||||||
Derivative Instrument | Risk Exposure | Statement of Assets and Liabilities Location | Value | Statement of Assets and Liabilities Location | Value | |||||
Written Options | Equity Risk | — | $ — | Options written, at value | $ 268,637 |
Statement of Operations Location | |
Equity Risk Exposure | |
Net realized gain (loss) before taxes on written options contracts | $2,145,719 |
Net change in unrealized appreciation (depreciation) before taxes on written options contracts | (121,460) |
(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. |
• | The Fund invests at least 85% of its Managed Assets in equity and debt securities of MLPs, MLP related entities and other energy sector and energy utility companies that the Fund’s Sub-Advisor believes offer opportunities for growth and income. |
• | The Fund may invest up to 20% of its Managed Assets in unregistered or otherwise restricted securities, including MLP common units, MLP subordinated units and securities of public and private energy sector and energy utilities companies. |
• | The Fund may invest up to 20% of its Managed Assets in debt securities of MLPs, MLP-related entities and other energy sector and energy utilities companies, including certain below investment grade securities. |
• | The Fund will not invest more than 15% of its Managed Assets in any single issuer. |
• | The Fund will not engage in short sales, except in connection with the execution of its covered call options strategy and except to the extent the Fund engages in derivative investments to seek to hedge against interest rate risk in connection with the Fund’s use of leverage or market risks associated with the Fund’s portfolio. |
• | The Fund may invest up to 30% of its Managed Assets in non-U.S. securities and may hedge the currency risk of such non-U.S. securities. |
• | The Fund may write (or sell) covered call options on up to 35% of its Managed Assets. |
NOT FDIC INSURED | NOT BANK GUARANTEED | MAY LOSE VALUE |
Assumed Portfolio Total Return (Net of Expenses) | -10% | -5% | 0% | 5% | 10% |
Common Share Total Return | -13.91% | -7.59% | -1.27% | 5.06% | 11.38% |
Name, Year of Birth and Position with the Fund | Term of Office and Year First Elected or Appointed(1) | Principal Occupations During Past 5 Years | Number of Portfolios in the First Trust Fund Complex Overseen by Trustee | Other Trusteeships or Directorships Held by Trustee During Past 5 Years |
INDEPENDENT TRUSTEES | ||||
Richard E. Erickson, Trustee (1951) | • Three Year Term• Since Fund Inception | Retired; Physician, Edward-Elmhurst Medical Group (2021 to September 2023); Physician and Officer, Wheaton Orthopedics (1990 to 2021) | 254 | None |
Thomas R. Kadlec, Trustee (1957) | • Three Year Term• Since Fund Inception | Retired; President, ADM Investor Services, Inc. (Futures Commission Merchant) (2010 to July 2022) | 254 | Director, National Futures Association and ADMIS Singapore Ltd.; Formerly, Director of ADM Investor Services, Inc., ADM Investor Services International, ADMIS Hong Kong Ltd., and Futures Industry Association |
Denise M. Keefe, Trustee (1964) | • Three Year Term• Since 2021 | Executive Vice President, Advocate Aurora Health and President, Advocate Aurora Continuing Health Division (Integrated Healthcare System) | 254 | Director and Board Chair of Advocate Home Health Services, Advocate Home Care Products and Advocate Hospice; Director and Board Chair of Aurora At Home (since 2018); Director of Advocate Physician Partners Accountable Care Organization; Director of RML Long Term Acute Care Hospitals; Director of Senior Helpers (since 2021); and Director of MobileHelp (since 2022) |
Robert F. Keith, Trustee (1956) | • Three Year Term• Since Fund Inception | President, Hibs Enterprises (Financial and Management Consulting) | 254 | Formerly, Director of Trust Company of Illinois |
Niel B. Nielson, Trustee (1954) | • Three Year Term• Since Fund Inception | Senior Advisor (2018 to Present), Managing Director and Chief Operating Officer (2015 to 2018), Pelita Harapan Educational Foundation (Educational Products and Services) | 254 | None |
(1) | Currently, Richard E. Erickson and Thomas R. Kadlec, as Class II Trustees, are serving as trustees until the Fund’s 2024 annual meeting of shareholders. James A. Bowen, Niel B. Nielson and Bronwyn Wright, as Class III Trustees, are serving as trustees until the Fund’s 2025 annual meeting of shareholders. Denise M. Keefe and Robert F. Keith, as Class I Trustees, are serving as trustees until the Fund’s 2026 annual meeting of shareholders. |
Name, Year of Birth and Position with the Fund | Term of Office and Year First Elected or Appointed(1) | Principal Occupations During Past 5 Years | Number of Portfolios in the First Trust Fund Complex Overseen by Trustee | Other Trusteeships or Directorships Held by Trustee During Past 5 Years |
Bronwyn Wright, Trustee (1971) | • Three Year Term• Since 2023 | Independent Director to a number of Irish collective investment funds (2009 to Present); Various roles at international affiliates of Citibank (1994 to 2009), including Managing Director, Citibank Europe plc and Head of Securities and Fund Services, Citi Ireland (2007 to 2009) | 229 | None |
INTERESTED TRUSTEE | ||||
James A. Bowen(2), Trustee and Chairman of the Board (1955) | • Three Year Term• Since Fund Inception | Chief Executive Officer, First Trust Advisors L.P. and First Trust Portfolios L.P.; Chairman of the Board of Directors, BondWave LLC (Software Development Company) and Stonebridge Advisors LLC (Investment Advisor) | 254 | None |
Name and Year of Birth | Position and Offices with Fund | Term of Office and Length of Service | Principal Occupations During Past 5 Years |
OFFICERS(3) | |||
James M. Dykas (1966) | President and Chief Executive Officer | • Indefinite Term • Since 2016 | Managing Director and Chief Financial Officer, First Trust Advisors L.P. and First Trust Portfolios L.P.; Chief Financial Officer, BondWave LLC (Software Development Company) and Stonebridge Advisors LLC (Investment Advisor) |
Derek D. Maltbie (1972) | Treasurer, Chief Financial Officer and Chief Accounting Officer | • Indefinite Term • Since 2023 | Senior Vice President, First Trust Advisors L.P. and First Trust Portfolios L.P., July 2021 to Present. Previously, Vice President, First Trust Advisors L.P. and First Trust Portfolios L.P., 2014 to 2021. |
W. Scott Jardine (1960) | Secretary and Chief Legal Officer | • Indefinite Term • Since Fund Inception | General Counsel, First Trust Advisors L.P. and First Trust Portfolios L.P.; Secretary and General Counsel, BondWave LLC; Secretary, Stonebridge Advisors LLC |
Daniel J. Lindquist (1970) | Vice President | • Indefinite Term • Since Fund Inception | Managing Director, First Trust Advisors L.P. and First Trust Portfolios L.P. |
Kristi A. Maher (1966) | Chief Compliance Officer and Assistant Secretary | • Indefinite Term • Since Fund Inception | Deputy General Counsel, First Trust Advisors L.P. and First Trust Portfolios L.P. |
(1) | Currently, Richard E. Erickson and Thomas R. Kadlec, as Class II Trustees, are serving as trustees until the Fund’s 2024 annual meeting of shareholders. James A. Bowen, Niel B. Nielson and Bronwyn Wright, as Class III Trustees, are serving as trustees until the Fund’s 2025 annual meeting of shareholders. Denise M. Keefe and Robert F. Keith, as Class I Trustees, are serving as trustees until the Fund’s 2026 annual meeting of shareholders. |
(2) | Mr. Bowen is deemed an “interested person” of the Fund due to his position as CEO of First Trust Advisors L.P., investment advisor of the Fund. |
(3) | The term “officer” means the president, vice president, secretary, treasurer, controller or any other officer who performs a policy making function. |
• | Information we receive from you and your broker-dealer, investment professional or financial representative through interviews, applications, agreements or other forms; |
• | Information about your transactions with us, our affiliates or others; |
• | Information we receive from your inquiries by mail, e-mail or telephone; and |
• | Information we collect on our website through the use of “cookies.” For example, we may identify the pages on our website that your browser requests or visits. |
• | In order to provide you with products and services and to effect transactions that you request or authorize, we may disclose your personal information as described above to unaffiliated financial service providers and other companies that perform administrative or other services on our behalf, such as transfer agents, custodians and trustees, or that assist us in the distribution of investor materials such as trustees, banks, financial representatives, proxy services, solicitors and printers. |
• | We may release information we have about you if you direct us to do so, if we are compelled by law to do so, or in other legally limited circumstances (for example to protect your account from fraud). |
FUND ACCOUNTANT,
AND CUSTODIAN
PUBLIC ACCOUNTING FIRM
(b) Not applicable.
Item 2. Code of Ethics.
(a) | The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. |
(c) | There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. |
(d) | The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions. |
(e) Not applicable.
(f) A copy of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller is filed as an exhibit pursuant to Item 13(a)(1).
Item 3. Audit Committee Financial Expert.
As of the end of the period covered by the report, the registrant’s board of trustees has determined that Thomas R. Kadlec, Robert F. Keith and Bronwyn Wright are qualified to serve as audit committee financial experts serving on its audit committee and that each of them is “independent,” as defined by Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) | Audit Fees (Registrant) -- The aggregate fees billed for the last fiscal year for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal year was $59,000 for the fiscal year ended October 31, 2022 and $59,000 for the fiscal year ended October 31, 2023. |
(b) | Audit-Related Fees (Registrant) -- The aggregate fees billed in the last fiscal year for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023. |
Audit-Related Fees (Investment Advisor) -- The aggregate fees billed in the last fiscal year for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023.
(c) | Tax Fees (Registrant) -- The aggregate fees billed in the last fiscal year for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $47,000 for the fiscal year ended October 31, 2022 and $42,187 for the fiscal year ended October 31, 2023. These fees were for tax consultation and/or tax return preparation and professional services rendered for PFIC (Passive Foreign Investment Company) Identification Services. |
Tax Fees (Investment Advisor) -- The aggregate fees billed in the last fiscal year for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023.
(d) | All Other Fees (Registrant) -- The aggregate fees billed in the last fiscal year for products and services provided by the principal accountant to the registrant, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023. |
All Other Fees (Investment Advisor) The aggregate fees billed in the last fiscal year for products and services provided by the principal accountant to the registrant, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023.
(e)(1) | Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. |
Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval Policy, the Audit Committee (the “Committee”) is responsible for the pre-approval of all audit services and permitted non-audit services (including the fees and terms thereof) to be performed for the registrant by its independent auditors. The Chairman of the Committee is authorized to give such pre-approvals on behalf of the Committee up to $25,000 and report any such pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the independent auditor’s engagements for non-audit services with the registrant’s advisor (not including a sub-advisor whose role is primarily portfolio management and is sub-contracted or overseen by another investment advisor) and any entity controlling, controlled by or under common control with the investment advisor that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant, subject to the de minimis exceptions for non-audit services described in Rule 2-01 of Regulation S-X. If the independent auditor has provided non-audit services to the registrant’s advisor (other than any sub-advisor whose role is primarily portfolio management and is sub-contracted with or overseen by another investment advisor) and any entity controlling, controlled by or under common control with the investment advisor that provides ongoing services to the registrant that were not pre-approved pursuant to its policies, the Committee will consider whether the provision of such non-audit services is compatible with the auditor’s independence.
(e)(2) | The percentage of services described in each of paragraphs (b) through (d) for the registrant and the registrant’s investment advisor of this Item that were approved by the audit committee pursuant to the pre-approval exceptions included in paragraph (c)(7)(i)(c) or paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X are as follows: |
Registrant: | Advisor and Distributor: |
(b) 0% | (b) 0% |
(c) 0% | (c) 0% |
(d) 0% | (d) 0% |
(f) | The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was less than fifty percent. |
(g) | The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the advisor that provides ongoing services to the registrant for the registrant’s fiscal year ended October 31, 2022 were $47,000 for the registrant and $0 for the registrant’s investment advisor and for the fiscal year ended October 31, 2023 were $44,000 for the registrant and $31,000 for the registrant’s investment advisor. |
(h) | The registrant’s audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the investment advisor that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. |
(i) | Not applicable. |
(j) | Not applicable. |
Item 5. Audit Committee of Listed Registrants.
(a) | The registrant has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 consisting of all the independent directors of the registrant. The audit committee of the registrant is comprised of: Richard E. Erickson, Thomas R. Kadlec, Denise M. Keefe, Robert F. Keith, Niel B. Nielson and Bronwyn Wright. |
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.
A description of the policies and procedures used to vote proxies on behalf of the Fund is attached as an exhibit.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a)(1) Identification of Portfolio Managers or Management Team Members and Description of Role of Portfolio Managers or Management Team Members
Information provided as of November 14, 2023.
Energy Income Partners, LLC
Energy Income Partners, LLC (“EIP”), located in Westport, CT, was founded in 2003 to provide professional asset management services in publicly traded energy-related infrastructure companies with above average dividend payout ratios operating pipelines and related storage and handling facilities, electric power transmission and distribution as well as long contracted or regulated power generation from renewables and other sources. The corporate structure of the portfolio companies includes C-corporations, partnerships and energy infrastructure real estate investment trusts. EIP mainly focuses on investments in assets that receive steady fee-based or regulated income from their corporate and individual customers. EIP manages or supervises approximately $5.2 billion of assets as of October 31, 2023. EIP advises two privately offered partnerships for U.S. high net worth individuals and an open-end mutual fund. EIP also manages separately managed accounts and provides its model portfolio to unified managed accounts. Finally, EIP serves as a sub-advisor to three closed-end management investment companies in addition to the Fund, two actively managed exchange-traded funds, a sleeve of an actively managed exchange-traded fund and a sleeve of a series of variable insurance trust. EIP is a registered investment advisor with the Securities and Exchange Commission.
James J. Murchie, Co-Portfolio Manager
James J. Murchie is the Founder, Chief Executive Officer, co-portfolio manager and a Principal of Energy Income Partners. After founding Energy Income Partners in October 2003, Mr. Murchie and the Energy Income Partners investment team joined Pequot Capital Management Inc. (“Pequot Capital”) in December 2004. In August 2006, Mr. Murchie and the Energy Income Partners investment team left Pequot Capital and re-established Energy Income Partners. Prior to founding Energy Income Partners, Mr. Murchie was a Portfolio Manager at Lawhill Capital Partners, LLC (“Lawhill Capital”), a long/short equity hedge fund investing in commodities and equities in the energy and basic industry sectors. Before Lawhill Capital, Mr. Murchie was a Managing Director at Tiger Management, LLC, where his primary responsibility was managing a portfolio of investments in commodities and related equities. Mr. Murchie was also a Principal at Sanford C. Bernstein. He began his career at British Petroleum, PLC. Mr. Murchie holds a BA from Rice University and an MA from Harvard University.
Eva Pao, Co-Portfolio Manager
Eva Pao is a Principal of Energy Income Partners and is co-portfolio manager. She has been with EIP since inception in 2003. From 2005 to mid-2006, Ms. Pao joined Pequot Capital Management during EIP’s affiliation with Pequot. Prior to Harvard Business School, Ms. Pao was a Manager at Enron Corp where she managed a portfolio in Canadian oil and gas equities for Enron’s internal hedge fund that specialized in energy-related equities and managed a natural gas trading book. Ms. Pao holds degrees from Rice University and Harvard Business School.
John K. Tysseland, Co-Portfolio Manager
John Tysseland is a Principal and co-portfolio manager. From 2005 to 2014, he worked at Citi Research most currently serving as a Managing Director where he covered midstream energy companies and MLPs. From 1998 to 2005, he worked at Raymond James & Associates as a Vice President who covered the oilfield service industry and established the firm’s initial coverage of MLPs in 2001. Prior to that, he was an Equity Trader at Momentum Securities from 1997 to 1998 and an Assistant Executive Director at Sumar Enterprises from 1996 to 1997. He graduated from The University of Texas at Austin in 1996 with a BA in economics.
(a)(2) | Other Accounts Managed by Portfolio Managers or Management Team Member and Potential Conflicts of Interest |
Information provided as of November 14, 2023.
Name of Portfolio Manager or Team Member | Type of Accounts* | Total # of Accounts Managed | Total Assets | # of Accounts Managed for which Advisory Fee is Based on Performance | Total Assets for which Advisory Fee is Based on Performance |
1. James Murchie | Registered Investment Companies: | 8 | 3,820,000,000 | 0 | $0 |
Other Pooled Investment Vehicles: | 2 | 151,000,000 | 2 | 151,000,000 | |
Other Accounts: | 138 | 756,000,000 | 0 | $0 | |
2. Eva Pao | Registered Investment Companies: | 8 | 3,820,000,000 | 0 | $0 |
Other Pooled Investment Vehicles: | 2 | 151,000,000 | 2 | 151,000,000 | |
Other Accounts: | 138 | 756,000,000 | 0 | $0 | |
3. John Tysseland | Registered Investment Companies: | 8 | 3,820,000,000 | 0 | $0 |
Other Pooled Investment Vehicles: | 2 | 151,000,000 | 2 | 151,000,000 | |
Other Accounts: | 138 | 756,000,000 | 0 | $0 |
*Information excludes the registrant
Portfolio Manager Potential Conflicts of Interests
Potential conflicts of interest may arise when a fund’s portfolio manager has day-to-day management responsibilities with respect to one or more other funds or other accounts, as is the case for the portfolio managers of the Fund. These potential conflicts may include:
Besides the Fund, Energy Income Partners, LLC (“EIP”) portfolio managers serves as portfolio managers to separately managed accounts and provides its model portfolio to unified managed accounts and serve as portfolio managers to three closed-end management investment companies other than the Fund, three actively managed exchange-traded funds (ETFs), a sleeve of an ETF, and a sleeve of a series of a variable insurance trust. The portfolio managers also serve as portfolio managers two private investment funds (the “Private Funds”), both of which have a performance fee and an open end registered mutual fund.
EIP has written policies and procedures regarding order aggregation and allocation that seek to ensure that all accounts are treated fairly and equitably and that no account is at a disadvantage. EIP will generally execute client transactions on an aggregated basis when EIP believes that to do so will allow it to obtain best execution and to negotiate more favorable commission rates or avoid certain transaction costs that might have otherwise been paid had such orders been placed independently. EIP’s ability to implement this may be limited by an account’s custodian, directed brokerage arrangements or other constraints limiting EIP’s use of a common executing broker.
An aggregated order may be allocated on a basis different from that specified herein provided that all clients receive fair and equitable treatment and there is a legitimate reason for the different allocation. Reasons for deviation may include (but are not limited to): a client’s investment guidelines and restrictions, available cash, liquidity or legal reasons, and to avoid odd-lots or in cases when an allocation would result in a de minimis allocation to one or more clients.
Notwithstanding the above, due to differing tax ramifications and compliance ratios, as well as dissimilar risk constraints and tolerances, accounts with similar investment mandates may trade the same securities at differing points in time. Additionally, for the reasons noted above, certain accounts, including funds in which EIP, its affiliates and/or employees (“EIP Funds”) have a financial interest including proprietary accounts, may trade separately from other accounts and participate in transactions which are deemed to be inappropriate for other accounts with similar investment mandates. Further, during periods in which EIP intends to trade the same securities across multiple accounts, transactions for those accounts that must be traded through specific brokers and/or platforms will often be executed after those for accounts over which EIP exercises full brokerage discretion, including the EIP Funds.
(a)(3) Compensation Structure of Portfolio Managers or Management Team Members
Portfolio Manager Compensation
Information provided as of November 14, 2023.
The Fund’s portfolio managers are compensated by a competitive minimum base salary and share in the profits of EIP in relation to their ownership of EIP. The profits of EIP are influenced by the assets under management and the performance of the Funds (i.e. all Funds managed or sub-advised by EIP) as described above. Therefore, their success is based on the growth and success for all the funds, not just the funds that charge an incentive fee. The Fund’s portfolio managers understand that you cannot have asset growth without the trust and confidence of investors, therefore, they do not engage in taking undue risk to generate performance.
The compensation of the EIP team members is determined according to prevailing rates within the industry for similar positions. EIP wishes to attract, retain and reward high quality personnel through a competitive compensation package.
(a)(4) Disclosure of Securities Ownership
Information provided as of November 14, 2023.
Name | Dollar Range of Fund Shares Beneficially Owned |
James J. Murchie | $100,001-$500,000 |
John Tysseland | $10,001-$50,000 |
(b) Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
REGISTRANT PURCHASES OF EQUITY SECURITIES
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
Month #1 (11/01/2022– 11/30/2022) | 78,261 | 6.04 | 2,130,674 | 181,828
|
Month #2 (12/01/2022– 12/31/2022) | 137,047 | 6.11 | 2,267,721 | 44,781 |
Month #3 (01/01/2023– 01/31/2023) | 0 | 0 | 0 | 0 |
Month #4 (02/01/2023– 02/28/2023) | 0 | 0 | 0 | 0 |
Month #5 (03/01/2023– 03/31/2023) | 0 | 0 | 0 | 0 |
Month #6 (04/01/2023– 04/30/2023) | 0 | 0 | 0 | 0 |
Month #7 (05/01/2023– 05/31/2023) | 0 | 0 | 0 | 0 |
Month #8 (06/01/2023– 06/30/2023) | 0 | 0 | 0 | 0 |
Month #9 (07/01/2023– 07/31/2023) | 0 | 0 | 0 | 0 |
Month #10 (08/01/2023– 08/31/2023) | 0 | 0 | 0 | 0 |
Month #11 (09/01/2023– 09/30/2023) | 0 | 0 | 0 | 0 |
Month #12 (10/01/2023– 10/31/2023) | 0 | 0 | 0 | 0 |
Total | 215,308 | $6.09 | 2,267,721 | 44,781 |
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 directors, 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 period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
(a) | Not applicable. |
(b) | Not applicable. |
Item 13. Exhibits.
(a)(1) | Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(3) | Not applicable. |
(a)(4) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(c) | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies as required by Item 7 is attached hereto. |
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 New Opportunities MLP & Energy Fund |
By (Signature and Title)* | /s/ James M. Dykas | |
James M. Dykas, President and Chief Executive Officer (principal executive officer) |
Date: | January 8, 2024 |
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: | January 8, 2024 |
By (Signature and Title)* | /s/ Derek D. Maltbie | |
Derek D. Maltbie, Treasurer, Chief Financial Officer and Chief Accounting Officer (principal financial officer) |
Date: | January 8, 2024 |
* Print the name and title of each signing officer under his or her signature.