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 811-21496
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
(Exact name of registrant as specified in charter)
120 East Liberty Drive
Wheaton, IL 60187
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios, LP
120 East Liberty Drive
Wheaton, IL 60187
(Name and address of agent for service)
registrant's telephone number, including area code: 630-765-8000
Date of fiscal year end: November 30
Date of reporting period: November 30, 2008
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. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
ANNUAL REPORT
FOR THE YEAR ENDED
NOVEMBER 30, 2008
(GRAPHIC)
MACQUARIE/FIRST TRUST
GLOBAL INFRASTRUCTURE/
UTILITIES DIVIDEND &
INCOME FUND
Macquarie Capital Investment
Management LLC is a member of the
Macquarie Group
(FOUR CORNERS CAPITAL MANAGEMENT LOGO)
TABLE OF CONTENTS
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
ANNUAL REPORT
NOVEMBER 30, 2008
Shareholder Letter. ....................................................... 1
At A Glance ............................................................... 2
Portfolio Commentary ...................................................... 3
Portfolio of Investments .................................................. 8
Statement of Assets and Liabilities. ...................................... 12
Statement of Operations ................................................... 13
Statements of Changes in Net Assets ....................................... 14
Statement of Cash Flows ................................................... 15
Financial Highlights ...................................................... 16
Notes to Financial Statements ............................................. 17
Report of Independent Registered Public Accounting Firm. .................. 23
Additional Information .................................................... 24
Board of Trustees and Officers. ........................................... 26
Privacy Policy ............................................................ 30
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning
of Section 27A 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 Macquarie Capital
Investment Management LLC ("Macquarie" or "MCIM") and/or Four Corners Capital
Management, LLC ("Four Corners") 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 the Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income
Fund (the "Fund" or "MFD") 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 First Trust and/or MCIM and/or Four Corners 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.
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 investing in the Fund. See "Risk Considerations" in the Notes to
Financial Statements for a discussion of 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.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your
investment. 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 Jon Fitch and Justin Lannen,
Co-Portfolio Managers of the Core Component of the Fund, and Michael P. McAdams
and Robert I. Bernstein, Co-Portfolio Managers of the Senior Loan Component 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 MCIM and
Four Corners 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 risks of investing in the Fund
are spelled out in the prospectus, this report and other regulatory filings.
MCIM, FOUR CORNERS AND THE FUND ARE NOT DEPOSIT TAKING INSTITUTIONS FOR THE
PURPOSES OF THE BANKING ACT 1959 (COMMONWEALTH OF AUSTRALIA) AND THEIR
OBLIGATIONS DO NOT REPRESENT DEPOSITS OR OTHER LIABILITIES OF MACQUARIE BANK
LIMITED ABN 46 008 583 542. MACQUARIE BANK LIMITED DOES NOT GUARANTEE OR
OTHERWISE PROVIDE ASSURANCE IN RESPECT OF THE OBLIGATIONS OF MCIM, FOUR CORNERS
OR THE FUND.
SHAREHOLDER LETTER
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
ANNUAL REPORT
NOVEMBER 30, 2008
Dear Shareholders:
The year ended November 30, 2008 has been challenging for the financial markets
and for many investors. Yet, regardless of the market, First Trust Advisors L.P.
("First Trust") believes that in order to be successful in reaching your
financial goals, you should be invested for the long term. We also believe that
investors should seek professional help from a financial advisor who has been
through many types of markets, knows the range of investments available, and is
committed to bringing you investments suitable to your particular situation.
Our goal at First Trust has always been to offer a wide range of investment
products, including our family of closed-end funds, to help financial advisors
give you the opportunity to meet your financial objectives. We have continued to
expand our product line to ensure that you have many choices to fit your
investment needs.
The report you hold contains detailed information about your investment in
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
(the "Fund"). It contains a portfolio commentary from the Fund's portfolio
management team that provides a market recap for the period, a performance
analysis and a market and Fund outlook. Additionally, the report provides the
Fund's financial statements for the period covered by the report. I encourage
you to read this document and discuss it with your financial advisor.
First Trust has been through many types of markets and remains committed to
bringing you quality investment solutions regardless of the inevitable ups and
downs experienced in the market. We offer a variety of products that may fit
many financial plans to help those investors seeking long-term investment
success. As well, we are committed to making available up-to-date reports about
your investments so you and your financial advisor have current information on
your portfolio.
We continue to value our relationship with you, and we thank you for the
opportunity to assist you in achieving your financial goals.
Sincerely,
/s/ James A. Bowen
James A. Bowen
President of Macquarie/First Trust Global
Infrastructure/Utilities Dividend & Income Fund
Page 1
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
"AT A GLANCE" (UNAUDITED)
AS OF NOVEMBER 30, 2008
FUND STATISTICS
Symbol on New York Stock Exchange MFD
Common Share Price $8.60
Common Share Net Asset Value $11.43
Premium (Discount) to NAV -24.76%
Net Assets Applicable to Common Shares $103,779,909
Current Quarterly Distribution per Common Share (1) $0.425
Current Annualized Distribution per Common Share $1.7000
Current Distribution Rate on Closing Common Share Price (2) 19.77%
Current Distribution Rate on NAV (2) 14.87%
PERFORMANCE
Average Annual
Total Return
Year Ended Inception (3/25/2004)
11/30/2008 to 11/30/2008
---------- ---------------------
Fund Performance
NAV (3) -48.98% 2.26%
Market Value (4) -59.56% -4.68%
Index Performance
S&P 500 Utilities Total Return Index -27.26% 8.57%
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
--------------- -----------
Severn Trent plc 5.4%
SP AusNet 5.3
United Utilities plc 5.3
Spark Infrastructure Group 5.2
Red Electrica de Espana 4.5
Northland Power Income Fund 4.3
Terna SPA 3.7
Pembina Pipeline Income Fund 3.6
Snam Rete Gas SPA 3.5
Enagas SA 3.4
----
Total 44.2%
====
% OF TOTAL
INDUSTRY CLASSIFICATION(5) INVESTMENTS
-------------------------- -----------
Gas Utilities 24.9%
Electric Utilities 17.9
Transportation Infrastructure 11.6
Multi-Utilities 10.5
Water Utilities 8.4
Power Generation 4.3
Diversified Consumer Services 2.4
Energy Equipment & Services 1.9
----
Total 81.9%
====
COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
(PERFORMANCE GRAPH)
Market NAV
------ -----
11/30/07 23.78 25.03
12/7/07 25.44 25.06
12/14/07 23.67 24.62
12/21/07 23.31 24.44
12/28/07 24.15 24.78
1/4/08 24.62 24.26
1/11/08 25.2 24.15
1/18/08 25.26 23.26
1/25/08 24.04 23.13
2/1/08 26.18 23.8
2/8/08 23.57 22.89
2/15/08 22.9 23.01
2/22/08 22.85 22.72
2/29/08 23.45 22.71
3/7/08 22.23 21.37
3/14/08 21.19 21.68
3/20/08 21.15 21.18
3/28/08 20.78 21.97
4/4/08 22.13 22.81
4/11/08 21.5 22.25
4/18/08 22.42 23.01
4/25/08 23.97 23.17
5/2/08 23.93 23.35
5/9/08 23.6 23.45
5/16/08 24.37 23.7
5/23/08 24 22.94
5/30/08 23.94 22.91
6/6/08 23.96 22.63
6/13/08 22.9 21.75
6/20/08 22.03 21.22
6/27/08 20.63 20.82
7/3/08 20.41 20.81
7/11/08 18.68 20.66
7/18/08 18.73 20.74
7/25/08 19.62 21.1
8/1/08 19.35 20.9
8/8/08 19.36 20.65
8/15/08 18.8 20.27
8/22/08 17.48 19.63
8/29/08 17.31 19.61
9/5/08 17.06 18.29
9/12/08 15.42 18.37
9/19/08 14 18.15
9/26/08 14.5 17.73
10/3/08 13.02 16.27
10/10/08 7.92 12.05
10/17/08 10.96 13.44
10/24/08 9.86 12.49
10/31/08 11.21 13.67
11/7/08 10.8 13.6
11/14/08 10 12.7
11/21/08 7.57 11.12
11/30/08 8.6 11.42
% OF TOTAL
COUNTRY INVESTMENTS
------- -----------
United States(6) 29.3%
Australia 15.5
United Kingdom 13.7
Canada 12.5
Spain 9.2
Italy 8.8
Japan 3.7
France 2.6
New Zealand 2.2
Germany 1.5
Switzerland 1.0
-----
Total 100.0%
=====
(1) Most recent distribution paid or of record through 11/30/08. Subject to
change in the future.
(2) Distribution rates are calculated by annualizing the most recent
distribution paid or of record through the year ended 11/30/08 and then
dividing by Common Share price or NAV, as applicable, as of 11/30/08.
(3) Total return based on NAV is the combination of reinvested dividend
distributions and reinvested capital gain distributions, if any, at prices
obtained by the Dividend Reinvestment Plan and changes in NAV per share and
does not reflect sales load. Past performance is not indicative of future
results.
(4) Total return based on market value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan and changes in Common
Share price. Past performance is not indicative of future results.
(5) Represents the industry classification breakdown for the Core Component of
the Fund's portfolio, which includes Common Stock, Master Limited
Partnerships and Canadian Income Trust securities. It excludes the Senior
Loan Component of the Fund's portfolio, which industry classification is
disclosed in the Portfolio of Investments and makes up the remaining 18.1%
of the Fund's portfolio.
(6) The percentage of United States securities includes 18.1% in Senior
Floating-Rate Term Loan interests.
Page 2
PORTFOLIO COMMENTARY (UNAUDITED)
SUB-ADVISORS
Macquarie Capital Investment Management LLC ("MCIM") and Four Corners Capital
Management, LLC ("Four Corners") are the Sub-Advisors of the Macquarie/First
Trust Global Infrastructure/Utilities Dividend & Income Fund ("MFD" or the
"Fund"). Both MCIM and Four Corners are part of Macquarie Funds Group and are
wholly-owned, indirect subsidiaries of Macquarie Group Limited ("MGL").
Macquarie Group includes MGL, its worldwide affiliates and subsidiaries, and the
funds that they manage.
The Fund's Core Component, which consists primarily of equity securities and
equity-like securities issued by infrastructure issuers, is managed by MCIM,
which started operations in 2004 with the launch of the Fund. MCIM and its
Australia-based affiliate Macquarie Capital Investment Management (Australia)
Ltd. ("MCIMAL") manage approximately $1.6 billion of assets (as of November 30,
2008) in its Global Listed Infrastructure Strategy, which includes the Fund.
The Fund's Senior Loan Component is managed by Four Corners, which was founded
in 2001 and became a wholly-owned, indirect subsidiary of Macquarie Group in
2008. Four Corners manages approximately $3.2 billion of assets (as of November
30, 2008), with an emphasis on Senior Loans.
Macquarie Group is a global provider of banking, financial, advisory, investment
and funds management services. Macquarie Group acts on behalf of institutional,
corporate and retail clients and counterparties around the world.
Macquarie Funds Group, with over $49 billion in funds under management (as of
November 30, 2008), is the global asset management business of Macquarie Group.
Macquarie Funds Group offers a diverse range of products including managed
funds, funds-based structured products, hedge funds and fund of funds.
PORTFOLIO MANAGER BIOGRAPHIES
JON FITCH
CO-PORTFOLIO MANAGER, MFD CORE COMPONENT
CHIEF INVESTMENT OFFICER, MACQUARIE CAPITAL INVESTMENT MANAGEMENT LLC
Mr. Fitch has been active in the analysis of infrastructure and utilities stocks
since 1997 and has over 19 years of business experience encompassing business
management, equity analysis, strategic consulting and banking. In addition to
MFD, Mr. Fitch is also the portfolio manager for 13 additional infrastructure
funds: another U.S. closed-end fund and 12 global infrastructure funds with
similar strategies. From 1997 to 2000, Mr. Fitch led the equity research
coverage of the infrastructure and utilities sector in Australia for Macquarie
Securities Limited ("MSL"), a wholly-owned subsidiary of Macquarie Group. From
2001 to 2003, Mr. Fitch was located in Hong Kong, where he was responsible for
establishing a Hong Kong-based equity research team and research coverage for a
number of Asian infrastructure and utility companies. Mr. Fitch returned to
Australia in mid-2003, where he was responsible for coverage of Australian
utilities and energy stocks for MSL. In February 2004, Mr. Fitch was named Chief
Investment Officer for MCIM. Mr. Fitch has a Bachelor of Commerce in Marketing
from the University of NSW Sydney, a Masters of Business in Accounting and
Finance from the University of Technology Sydney and a Graduate Diploma in
Applied Finance and Investment from the Securities Institute of Australia. Mr.
Fitch is also a Fellow of the Financial Services Institute of Australasia.
JUSTIN LANNEN, CFA
CO-PORTFOLIO MANAGER, MFD CORE COMPONENT
PORTFOLIO MANAGER, MACQUARIE CAPITAL INVESTMENT MANAGEMENT LLC
Mr. Lannen joined the MCIM investment team in 2007 as a portfolio manager. In
addition to MFD, Mr. Lannen is also the portfolio manager for 7 additional
infrastructure funds: another U.S. closed-end fund and 6 global infrastructure
funds with similar strategies. Mr. Lannen has 12 years of experience in funds
management as an analyst and portfolio manager. Prior to joining MCIM, Mr.
Lannen was the portfolio manager for the $A1.4 billion Colonial First State
Industrial Share Fund. Mr. Lannen was at Colonial First State for 10 years,
which included seven years in the Australian Equities team. Mr. Lannen had
specific analyst responsibility for a number of industrial sectors, including
infrastructure and utilities, which he covered from 2000 until his departure in
2007. Prior to this, Mr. Lannen was a Japanese equities analyst and later a New
Zealand equities analyst. Mr. Lannen has a Bachelor of Engineering (Chemical)
from the University of Melbourne and a Bachelor of Commerce from the University
of Melbourne. Mr. Lannen has earned the Chartered Financial Analyst designation.
Page 3
PORTFOLIO COMMENTARY (UNAUDITED) - (CONTINUED)
MICHAEL P. MCADAMS
CO-PORTFOLIO MANAGER, MFD SENIOR LOAN COMPONENT
GENERAL MANAGER, NON-INVESTMENT GRADE PRODUCTS, FOUR CORNERS CAPITAL MANAGEMENT,
LLC
Mr. McAdams is responsible for overseeing the distribution activities of Four
Corners. He has more than 29 years of experience in investment management and
banking, all of which have been spent in leveraged finance. Prior to founding
Four Corners, Mr. McAdams was with ING Capital Advisors, LLC ("ICA") from 1995
to 2001. Mr. McAdams was a Founder of ICA and held the titles of President,
Chief Executive Officer and Chief Investment Officer. Under his leadership, ICA
completed over one dozen structured transactions and had over $7 billion in
assets under management. Prior to ICA, Mr. McAdams was founding portfolio
manager of the first retail senior secured floating rate loan fund, the Pilgrim
Prime Rate Trust (NYSE:PPR), which he managed from its inception in 1988 through
1995. Mr. McAdams was previously employed by National Bank of Canada, where he
was a member of one of the first teams to manage a non-originated U.S. corporate
loan portfolio. Mr. McAdams began his banking career at Manufacturers Hanover
Trust Company in New York. He received an MBA in Finance/Accounting from the
University of California Los Angeles and dual BAs in Finance/Accounting and
Eastern European Studies from California State University at Fullerton. Mr.
McAdams has been an active member of the Loan Syndication and Trading
Association and was its Chairman in 2001, Vice Chairman in 2002 and has been a
Board Member and/or served on committees reporting to the Board since 1998. Mr.
McAdams received the 2006 Credit Investment News Outstanding Contribution Award
in the U.S. Loan Market.
ROBERT I. BERNSTEIN, CFA
CO-PORTFOLIO MANAGER, MFD SENIOR LOAN COMPONENT
CHIEF INVESTMENT OFFICER, NON-INVESTMENT GRADE CREDIT, FOUR CORNERS CAPITAL
MANAGEMENT, LLC
Mr. Bernstein is responsible for managing Four Corners' investment activities
and has over 17 years of experience in leveraged finance including senior
secured loans, high-yield bonds and private equity investments. Mr. Bernstein
was most recently a partner of The Yucaipa Companies, a Los Angeles-based
private equity firm, where he completed M&A transactions and leveraged
financings valued in excess of $4 billion. Previously, Mr. Bernstein was a Vice
President in Bankers Trust's leveraged finance group, where he arranged senior
secured loan and high-yield bond financings for financial sponsors and corporate
issuers. Mr. Bernstein also worked in GE Capital's restructuring group, where he
focused primarily on asset-based loans to distressed borrowers. Mr. Bernstein
received an MBA in Finance from the University of Chicago and a BBA in Finance
magna cum laude from Hofstra University. He has earned the Chartered Financial
Analyst designation. Mr. Bernstein also served as an infantry officer in the
U.S. Marine Corps.
COMMENTARY
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek a high level of current return
consisting of dividends, interest and other similar income while attempting to
preserve capital. The Fund seeks to achieve its investment objective by
investing predominantly in the securities of companies that are involved in the
management, ownership and/or operation of infrastructure and utility assets and
are expected to offer reasonably predictable income and attractive yields. The
Fund seeks to manage its investments and expenses so that a significant portion
of its distributions to the Fund's common shareholders will qualify as
tax-advantaged dividends, subject to the continued availability of favorable tax
treatment for such qualifying dividends.
Under normal market conditions, MFD seeks to invest more than 50% of the Fund's
total assets outside the United States. These investments focus on developed
economies. MCIM believes that international diversity has two major benefits for
investors:
1. This diversity offers investors exposure to the fundamentals of
different economies, thereby affording an alternative to
U.S.-domiciled investments; and
2. By investing in carefully selected developed economies, MFD is
expected to provide investors with exposure to a much broader range of
infrastructure/utility businesses.
A typical profile of an infrastructure business would be one whose assets
provide essential public services which are difficult to replace, have a
strategic competitive advantage, demonstrate inelastic demand, and have low
sensitivity to cyclical volatility, courtesy of their essential nature and high
margins.
There can be no assurance that the Fund's investment objective will be achieved.
The Fund may not be appropriate for all investors.
Page 4
PORTFOLIO COMMENTARY (UNAUDITED) - (CONTINUED)
MARKET RECAP
The performance of the Fund for the fiscal year ended November 30, 2008
("Period") was set against the backdrop of volatile world equity markets,
significant credit market stress, a volatile oil price and the growing prospect
of significantly weaker economies globally. Equity market volatility intensified
towards the end of the Period amidst heightened dislocation in the global
financial system, including significant write-downs by financial institutions
and a sharp reduction in credit market liquidity.
As the Period progressed, the global economic outlook deteriorated and markets
began to price a sharp economic slowdown. Oil and other commodity prices fell
sharply on expectations of significantly lower demand. In addition to financial
sector support packages, governments announced fiscal stimulus programs in an
effort to restore confidence and assist economic growth.
PERFORMANCE ANALYSIS
We believe that the Fund experienced negative performance during the Period for
four main reasons:
1. The large decline in global equity markets due to credit market
dislocation, financial sector concerns and the global economic
slowdown. The global infrastructure sector was not immune from the
resulting weakness and historically high volatility in global equity
markets, and as a result, a significant disconnect developed for the
Fund's holdings between their share price performance and their
generally sound operational performance.
2. Transportation infrastructure holdings were negatively affected by the
spike in oil prices in the first six months of the Period, and
concerns about the impact of slower economic growth in the Period's
second half.
3. The rebound of the U.S. Dollar had a negative impact on performance
because the Fund is not currency hedged and has a majority of its
investments outside the U.S.
4. The Fund's Senior Secured Loans fell in value as credit market
conditions deteriorated markedly.
We look at these reasons in further detail below.
DISCONNECTION BETWEEN OPERATIONAL AND SHARE PRICE PERFORMANCE
One of the market's key and persistent concerns over the Period was the
deterioration in the pricing and availability of corporate debt. These concerns
intensified following the collapse of Lehman Brothers in September 2008, after
which credit market liquidity reduced significantly and credit spreads widened
sharply. Credit market issues throughout 2008 led stocks with above-average
levels of debt, including those in the infrastructure sector, to underperform
despite typically sound operational performance. This particularly affected some
of the Australian stocks held by the Fund with more complex capital structures
and the Fund's portfolio of Senior Secured Loans (discussed below).
Notwithstanding the credit-related concerns and the significant macroeconomic
headwinds, we believe that the operational performance of the underlying
infrastructure assets of MFD's holdings was generally sound and in line with our
expectations.
Recent examples of Fund holdings meeting or exceeding our expectations during
fiscal year 2008 include:
- Enbridge Inc., a Canadian oil and gas pipeline infrastructure company,
announced 2009 earnings guidance ahead of our expectations and that of
market consensus, as well as a 12% increase in its declared dividend,
reflecting continued strong performance from the company's
operations.(1)
- British water utility Severn Trent Plc reported first half growth in
revenues and net profit after tax, driven by higher regulated tariffs,
in line with our expectations.(2)
Despite this, MFD's performance was negative during the Period in part because
listed infrastructure securities were unable to decouple from the sell-off in
the broad equity markets resulting from the credit market dislocation and the
economic slowdown.
----------
(1) Source: Enbridge Inc.
(2) Source: Severn Trent Plc
Page 5
PORTFOLIO COMMENTARY (UNAUDITED) - (CONTINUED)
TRANSPORTATION INFRASTRUCTURE
The share prices of "user demand" assets (e.g., airports, railways, seaports and
tollroads) were negatively affected by the sharply higher oil price early in the
Period and by heightened economic growth concerns towards the end of 2008, as
investors reacted to the potential impact of these macroeconomic variables on
underlying usage levels.
As the economic outlook weakened, we tilted the Fund's portfolio away from user
demand assets and toward the "regulated/contracted" sectors, such as Electric,
Gas, Water, and Multi Utilities, because companies in these sectors generally
have assets with lower sensitivity to the economic cycle.
CURRENCY
As the Fund is not hedged for currency, an overlying contributor to the Fund's
negative return was the rebound of the U.S. Dollar during the fiscal year ended
November 30, 2008. Currencies have the potential for short-term volatility.
However, investors in a global equity portfolio may benefit over time from the
diversification to their overall portfolio provided by foreign currency
exposure.
While the Fund benefited from relative weakness in the U.S. Dollar during the
first half of the Period (as indeed it did in previous years), currency
movements in the second half ultimately meant that currency was a net detractor
from the return for the fiscal year. For example, against the U.S. Dollar over
the Period, the Australian Dollar depreciated by 26%, the Canadian Dollar by
19%, and the Euro by 13%.(3) These three currencies represented approximately
51% of the globally diversified Fund portfolio's security positions at November
30, 2008.
SENIOR LOAN COMPONENT
The Senior Loan Component is intended to help provide the Fund with a stable,
floating-rate income stream over the Fund's floating-rate leverage cost from
which to pay dividends. As floating-rate debt instruments whose interest rates
are set at a credit spread (the risk premium) over short-term interest rates,
senior loans provide income that tends to rise and fall as short-term rates
fluctuate, with an approximately 60- to 90-day lag.
As a result of the credit market dislocation that began in July 2007 and the
ensuing global financial crisis, loan prices have declined dramatically. This
decline has corresponded with a decline in the Fund's net asset value ("NAV")
and a resulting increase in the Fund's leverage. In order to stay within the
Fund's investment guidelines and leverage covenants, the Fund has reduced the
Senior Loan Component by selling Senior Secured Loans at a discount, using the
proceeds to reduce the Fund's leverage. This has impacted the Fund's ability to
generate interest income from the Senior Loan Component.
While the original supply/demand relationship in the Senior Secured Loan market
was disrupted in reaction to the sub-prime crisis, it has only worsened in 2008
from a combination of weak economic data and earnings, a spike in ratings
downgrades, rising default rates, and a surge of supply from forced
liquidations. In November 2008, the S&P/LSTA Leveraged Loan Index declined
-8.5%, bringing Index returns year-to-date to an unprecedented -27.0%.
From a fundamental point of view, the assets underlying the Senior Loan
Component have largely performed well. There has been one default in the Senior
Loan Component versus 49 defaults in the broad market (represented by the
S&P/LSTA Leveraged Loan Index) year-to-date. The Fund's Senior Secured Loans
assets have outperformed this Index by 4.1% in the 12 months ended November 30,
2008. At the end of the Fund's fiscal year, the leverage as a percentage of
managed assets (net assets plus leverage) was 27.26%.
PERFORMANCE RELATIVE TO THE BENCHMARK
The S&P 500 Utilities Index ("Index") is a broad barometer of the performance of
utility stocks (not including infrastructure) solely in the U.S. By comparison,
the Fund is not managed towards any benchmark and invests in a global portfolio
of infrastructure stocks in a range of currencies and Senior Secured Loans.
The Fund underperformed the Index due to its large underweight position in
utilities, and holdings in transportation infrastructure and Senior Secured
Loans (which are not in the Index). The utility stocks performed better than the
wider equity markets, benefiting from higher energy prices, which flowed through
into higher electricity prices. The sector also benefited from rotation by broad
equity market investors into the liquid and traditionally defensive large
capitalization utilities toward the end of 2008 in response to concerns over an
economic slowdown.
----------
(3) Source: Bloomberg
Page 6
PORTFOLIO COMMENTARY (UNAUDITED) - (CONTINUED)
However, since the Fund is focused on relatively non-competitive and
non-commodity-sensitive types of infrastructure securities, the Fund lagged
behind the Index through the Period.
PORTFOLIO COMPOSITION
As of November 30, 2008, the Fund held positions in 33 global infrastructure
stocks representing 11 countries and 8 infrastructure sectors.
The largest reduction in country allocation during the Period was the exposure
to Australia, due to adjustments in portfolio tilts, some underperformance by
Australian holdings with more complex capital structures and the impact of the
weaker Australian Dollar (later in 2008). The largest regional increase was in
North America due to an increase in Gas Utilities ("Pipelines") investments.
U.S.-listed Master Limited Partnerships ("MLPs") that own pipeline and
associated energy infrastructure assets are the Fund's primary investment
vehicle in the Pipelines sector. Most of the Fund's U.S. Pipelines holdings
outperformed both the broader infrastructure sector and the Pipelines sector
over the Period, despite a sharp sell-off in November due to liquidity-related
selling in the sector.
The Pipelines sector's investment fundamentals remain sound, in our opinion.
They are typically conservatively managed and generate very predictable cash
flows. Company announcements through 2008, including as recently as November,
continued to suggest a favorable outlook. We continue to believe that the
Pipelines stocks within the Fund's portfolio have limited exposure to volume
risk and commodity price risk and offer relatively predictable and defensive
cash flows, attractive yields and good growth prospects, despite some capital
expansion programs being reviewed as a function of tighter equity and debt
capital market conditions.
MARKET AND FUND OUTLOOK
Further volatility can be expected in the near to medium term as macroeconomic
developments unfold, and companies across the broad equity markets downgrade
their guidance and/or report earnings that reflect the impact of the slowdown in
economic growth.
In this difficult economic and credit environment, where risk remains elevated,
it is particularly important to hold high quality stocks that are well
positioned in their respective businesses. The volatility and equity market
weakness has provided the opportunity to position the Fund in quality listed
infrastructure companies at what we believe are attractive prices. While we have
tilted the Fund in recent months toward the more defensive names in the
regulated/contracted sectors (e.g., Electric, Gas, Water, and Multi Utilities),
the Fund also retains exposure to quality user demand infrastructure assets that
we believe are well placed to perform when markets normalize.
The long-term prospects for infrastructure remain sound, with the United States,
China, and other developed countries expected to include the private sector in
implementing recently announced infrastructure spending packages. Given the
additional demands on governments' finances as a result of the economic
downturn, the emerging trend of governments selling and leasing infrastructure
assets to private operators may accelerate. It is possible that these spending
packages will create opportunities for companies in the listed infrastructure
sector.
We expect that the listed infrastructure sector will continue to grow in tandem
with the unlisted sector, where significant funds have already been raised and
where investors are seeking suitable investment opportunities. We believe that,
given the prices prevailing at the end of November 2008, many listed
infrastructure stocks were trading at a discount to both our valuations and the
valuations of comparable assets in the unlisted markets (based on recent
transaction data).
We believe the pricing of global listed infrastructure securities should revert
more closely, over time, to reflect the fundamentals of their respective
underlying infrastructure assets. It is our view that owning high quality listed
infrastructure securities at a time of significant listed equity market distress
may ultimately reward investors.
We continue to hold the view that MFD provides U.S. investors with an attractive
vehicle to access infrastructure securities in developed markets globally.
Page 7
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (j)
NOVEMBER 30, 2008
SHARES DESCRIPTION VALUE
------------ ------------------------------------------------------- -------------
COMMON STOCKS - 82.6%
AUSTRALIA - 20.6%
508,415 Challenger Infrastructure Fund, Class A ............... $ 550,139
8,118,872 Envestra Ltd. ......................................... 2,688,792
10,886,866 SP AusNet ............................................. 7,353,772
7,855,060 Spark Infrastructure Group ............................ 7,160,352
1,109,697 Transurban Group ...................................... 3,616,854
-------------
21,369,909
-------------
CANADA - 3.5%
88,020 Enbridge, Inc. ........................................ 2,599,010
38,200 TransCanada Corp. ..................................... 1,006,592
-------------
3,605,602
-------------
FRANCE - 3.4%
34,232 Aeroports de Paris .................................... 1,940,606
27,600 Electricte de France .................................. 1,597,075
-------------
3,537,681
-------------
GERMANY - 2.0%
70,624 Hamburger Hafen Und Logistik AG ....................... 2,100,532
-------------
ITALY - 11.7%
341,200 Enel SPA .............................................. 2,127,379
927,300 Snam Rete Gas SPA ..................................... 4,845,089
1,731,000 Terna SPA ............................................. 5,124,230
-------------
12,096,698
-------------
JAPAN - 4.9%
293 East Japan Railway Co. ................................ 2,253,374
639,155 Tokyo Gas Co. Ltd. .................................... 2,875,763
-------------
5,129,137
-------------
NEW ZEALAND - 2.9%
3,216,299 Auckland International Airport, Ltd. .................. 3,005,670
-------------
SPAIN - 12.1%
218,352 Cintra Concesiones de Infraestructuras de
Transporte SA ...................................... 1,733,856
250,861 Enagas SA ............................................. 4,640,557
141,000 Red Electrica Corp. SA ................................ 6,230,520
-------------
12,604,933
-------------
SWITZERLAND - 1.3%
5,953 Flughafen Zuerich AG .................................. 1,348,496
-------------
UNITED KINGDOM - 18.1%
583,329 Pennon Group plc ...................................... 4,072,949
425,899 Severn Trent plc ...................................... 7,480,192
776,195 United Utilities plc .................................. 7,234,081
-------------
18,787,222
-------------
See Notes to Financial Statements
Page 8
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (A) (J) - (CONTINUED)
NOVEMBER 30, 2008
SHARES DESCRIPTION VALUE
------------ ------------------------------------------------------- -------------
COMMON STOCKS - (CONTINUED)
UNITED STATES - 2.1%
38,630 Exelon Corp. .......................................... $ 2,171,392
-------------
TOTAL COMMON STOCKS
(Cost $118,354,032) ................................ 85,757,272
-------------
MASTER LIMITED PARTNERSHIPS - 12.7%
UNITED STATES - 12.7%
62,113 Amerigas Partners, L.P. ............................... 1,665,250
89,700 Enbridge Energy Partners, L.P. ........................ 2,534,025
73,700 Energy Transfer Partners, L.P. ........................ 2,441,681
80,050 Enterprise Products Partners, L.P. .................... 1,710,669
34,100 Kinder Morgan Energy Partners, L.P. ................... 1,653,509
106,831 Magellan Midstream Partners, L.P. ..................... 3,207,067
-------------
TOTAL MASTER LIMITED PARTNERSHIPS
(Cost $14,459,327) ................................. 13,212,201
-------------
CANADIAN INCOME TRUSTS - 13.2%
395,560 Consumers' Waterheater Income Fund .................... 2,790,800
692,967 Northland Power Income Fund ........................... 5,866,919
415,049 Pembina Pipeline Income Fund .......................... 4,973,092
-------------
TOTAL CANADIAN INCOME TRUSTS
(Cost $13,217,085) ................................. 13,630,811
-------------
RATINGS (b)
PRINCIPAL MOODY'S S&P STATED
VALUE DESCRIPTION (UNAUDITED) COUPON MATURITY (c) VALUE
------------ ----------------------------------------- ----------- ---------- ------------ ------------
SENIOR FLOATING-RATE TERM LOAN INTERESTS (D) - 24.0%
CABLE & SATELLITE - 0.7%
$ 1,000,000 UPC Distribution Holding B.V ............ Ba3 B+ 4.60% 12/31/14 706,000
------------
ELECTRIC UTILITIES - 3.4%
1,719,251 Astoria Generating Co.
Acquisitions, LLC. ................... B1 BB- 3.71%-4.96% 02/23/13 1,346,174
959,794 Covanta Energy Corp. (h) ................ Ba2 BB 3.75%-5.55% 02/09/14 774,235
1,677,330 NRG Energy, Inc. (i) .................... Ba1 BB 4.30% 02/01/13 1,390,506
------------
3,510,915
------------
ENVIRONMENTAL & FACILITIES SERVICES - 2.3%
2,040,639 EnergySolutions, LLC (h) ................ Ba2 NR(e) 3.65%-5.47% 06/07/13 1,428,449
1,505,417 EnviroSolutions Real Property
Holdings, Inc. ....................... Caa1 B- 12.04% 07/07/12 978,521
------------
2,406,970
------------
GAS UTILITIES - 1.0%
1,357,255 Atlas Pipeline Partners, L.P. ........... Ba2 BB- 3.94% 07/27/14 1,034,907
------------
See Notes to Financial Statements
Page 9
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (j) - (CONTINUED)
NOVEMBER 30, 2008
RATINGS (b)
PRINCIPAL MOODY'S S&P STATED
VALUE DESCRIPTION (UNAUDITED) COUPON MATURITY (c) VALUE
------------ ----------------------------------------- ----------- ---------- ------------ ------------
SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - (CONTINUED)
HEALTH CARE FACILITIES - 2.6%
$ 1,821,909 Health Management Associates, Inc,........ B1 BB- 5.51% 02/28/14 $ 1,219,161
964,965 Lifepoint Hospitals, Inc. ................ Ba1 BB 3.82% 04/15/12 796,096
896,578 Select Medical Corp. ..................... Ba2 BB- 3.40%-5.00% 02/24/12 666,455
------------
2,681,712
------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 3.4%
1,122,960 Bicent Power, LLC ........................ Ba3 BB- 5.77% 06/30/14 797,302
947,291 Coleto Creek Power, L.P. (h) ............. B1 BB- 6.51% 06/28/13 659,946
1,000,000 Dynegy Holdings, Inc. (i) ................ Ba1 BB- 2.94% 04/12/13 737,083
2,000,000 Longview Power, LLC (h) .................. Ba3 BB 5.13%-6.06% 02/28/14 1,313,334
------------
3,507,665
------------
MANAGED HEALTH CARE - 3.6%
2,968,533 IASIS Healthcare Corp. (h)................ Ba2 B+ 3.30%-5.12% 03/15/14 2,207,846
1,930,788 Vanguard Health Systems, Inc. ............ Ba3 B+ 3.69%-6.01% 09/23/11 1,576,006
------------
3,783,852
------------
MULTI-UTILITIES - 1.2%
2,000,000 KGEN, LLC (i) ............................ Ba3 BB 5.56% 02/08/14 1,280,000
------------
OIL & GAS EQUIPMENT & SERVICES - 1.1%
1,604,977 Targa Resources, Inc. (h) ................ Ba3 B+ 5.76%-5.98% 10/31/12 1,144,883
------------
OIL & GAS EXPLORATION & PRODUCTION - 0.9%
2,205,937 SemCrude, L.P. (f) ....................... NR NR 0.00% 03/16/11 882,375
------------
OIL & GAS REFINING, MARKETING
& TRANSPORTATION - 0.4%
500,000 Energy Transfer Equity, L.P. ............. Ba2 NR 4.14% 02/08/12 406,500
------------
PUBLISHING - 0.7%
972,500 Quebecor Media, Inc. ..................... B1 B 6.75% 01/17/13 778,000
------------
WIRELESS TELECOMMUNICATION SERVICES - 2.7%
1,462,500 Crown Castle Operating Co. ............... Ba3 BB 5.38% 03/06/14 1,050,806
2,073,750 Windstream Corp. ......................... Baa3 BBB 6.05% 07/17/13 1,717,756
------------
2,768,562
------------
TOTAL SENIOR FLOATING-RATE TERM LOAN INTERESTS
(Cost $34,555,418) ........................................................... 24,892,341
------------
TOTAL INVESTMENTS - 132.5%
(Cost $180,585,862) (g) ...................................................... 137,492,625
LOAN OUTSTANDING - (37.5)% ............... (38,900,000)
NET OTHER ASSETS AND LIABILITIES - 5.0% .. 5,187,284
------------
NET ASSETS - 100.0% ...................... $103,779,909
============
See Notes to Financial Statements
Page 10
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (j) - (CONTINUED)
NOVEMBER 30, 2008
----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Ratings below Baa3 by Moody's Investors Service, Inc. or BBB- by Standard &
Poor's Ratings Group are considered to be below investment grade.
(c) Senior Loans generally are subject to mandatory and/or optional prepayment.
As a result, the actual remaining maturity of Senior Loans may be
substantially less than the stated maturities shown.
(d) Senior Loans in which the Fund invests generally pay interest at rates
which are periodically predetermined by reference to a base lending rate
plus a premium. These base lending rates are generally (i) the lending rate
offered by one or more major European banks, such as the London Inter-Bank
Offered Rate ("LIBOR"), (ii) the prime rate offered by one or more major
United States banks or (iii) the certificate of deposit rate.
(e) This Senior Loan Interest was privately rated upon issuance. The rating
agency does not provide ongoing surveillance on the rating.
(f) The issuer is in default. Income is not being accrued.
(g) Aggregate cost for federal income tax purposes is $178,055,402. As of
November 30, 2008, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$3,802,053 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$44,364,830.
(h) A portion of this loan interest is a letter of credit which is backed by
the same underlying collateral as the term loan interest.
(i) All of this loan interest is a letter of credit which is backed by the same
underlying collateral as the term loan interest.
(j) All or a portion of the securities are available to serve as collateral on
loan outstanding.
NR Not Rated
SECURITY VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of November 30,
2008 is as follows (See Note 2A-Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS
---------------- ------------
Level 1 - Quoted Prices $112,600,284
Level 2 - Significant Observable Inputs 24,892,341
Level 3 - Significant Unobservable Inputs --
------------
TOTAL $137,492,625
============
See Notes to Financial Statements
Page 11
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 2008
ASSETS:
Investments, at value
(Cost $180,585,862) ......................................... $ 137,492,625
Cash ........................................................... 8,000,032
Prepaid expenses ............................................... 10,369
Receivables:
Dividends ................................................ 1,239,080
Investment securities sold ............................... 2,047,586
Interest ................................................. 236,536
-------------
Total Assets .......................................... 149,026,228
-------------
LIABILITIES:
Payables:
Outstanding loan ......................................... 38,900,000
Capital gain distributions ............................... 3,858,134
Investment securities purchased .......................... 1,652,761
Investment advisory fees ................................. 476,245
Interest and fees on outstanding loan .................... 199,178
Audit and tax fees ....................................... 61,200
Printing fees ............................................ 29,951
Legal fees ............................................... 25,181
Custodian fees ........................................... 18,801
Administrative fees ...................................... 12,087
Trustees' fees and expenses .............................. 7,379
Transfer agent fees ...................................... 2,747
Accrued expenses and other liabilities ................... 2,655
-------------
Total Liabilities ..................................... 45,246,319
-------------
NET ASSETS ..................................................... $ 103,779,909
=============
NET ASSETS CONSIST OF:
Paid-in capital ................................................ $ 172,581,660
Par value ...................................................... 90,780
Accumulated net investment income (loss) ....................... (1,332,247)
Accumulated net realized gain (loss) on investments sold
and foreign currency transactions ........................... (24,488,019)
Net unrealized appreciation (depreciation) on
investments and foreign currency translation ................ (43,072,265)
-------------
NET ASSETS ..................................................... $ 103,779,909
=============
NET ASSET VALUE, per Common Share (par value $0.01 per
Common Share) ............................................... $ 11.43
=============
Number of Common Shares outstanding (unlimited number of
Common Shares has been authorized) .......................... 9,077,963
=============
See Notes to Financial Statements
Page 12
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 2008
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $716,289) ......... $ 14,136,567
Interest ....................................................... 4,631,675
Other .......................................................... 169,437
-------------
Total investment income .................................. 18,937,679
-------------
EXPENSES:
Interest and fees on outstanding loan .......................... 3,583,425
Investment advisory fees ....................................... 2,621,539
Administration fees ............................................ 245,595
Custodian fees ................................................. 127,689
Printing fees .................................................. 80,209
Audit and tax fees ............................................. 65,865
Legal fees ..................................................... 65,747
Trustees' fees and expenses .................................... 36,298
Transfer agent fees ............................................ 35,496
Other .......................................................... 70,659
-------------
Total expenses ........................................... 6,932,522
-------------
NET INVESTMENT INCOME 12,005,157
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments .............................................. (20,279,161)
Foreign currency transactions ............................ (916,542)
-------------
Net realized gain (loss) ....................................... (21,195,703)
-------------
Net increase from payment by the investment sub-advisor
(See Note 3) ................................................ 332,025
-------------
Net change in unrealized appreciation (depreciation) on:
Investments .............................................. (98,977,222)
Foreign currency translation ............................. (71,001)
-------------
Net change in unrealized appreciation (depreciation) ........... (99,048,223)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ........................ (119,911,901)
-------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................................... $(107,906,744)
=============
See Notes to Financial Statements
Page 13
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
11/30/2008 11/30/2007
------------- ------------
OPERATIONS:
Net investment income ..................................... $ 12,005,157 $ 11,951,569
Net realized gain (loss) .................................. (21,195,703) 43,007,202
Net change in unrealized appreciation (depreciation) ...... (99,048,223) (4,695,685)
Net increase from payment by the investment sub-advisor ... 332,025 --
------------- ------------
Net increase (decrease) in net assets resulting from
operations ............................................. (107,906,744) 50,263,086
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ..................................... (8,393,486) (18,999,991)
Net realized gain ......................................... (6,620,847) (39,918,352)
Return of capital ......................................... (376,201) --
------------- ------------
Total distributions to shareholders ....................... (15,390,534) (58,918,343)
------------- ------------
CAPITAL TRANSACTIONS:
Proceeds from Common Shares reinvested .................... 1,529,028 824,641
------------- ------------
Net increase (decrease) in net assets resulting from
capital transactions ................................... 1,529,028 824,641
------------- ------------
Total increase (decrease) in net assets ................... (121,768,250) (7,830,616)
------------- ------------
NET ASSETS:
Beginning of period ....................................... 225,548,159 233,378,775
------------- ------------
End of period ............................................. $ 103,779,909 $225,548,159
============= ============
Accumulated net investment income (loss) at end of
period ................................................. $ (1,332,247) $ (4,736,564)
============= ============
CAPITAL TRANSACTIONS WERE AS FOLLOWS:
Common Shares beginning of period ......................... 9,010,915 8,980,236
Common Shares issued as reinvestment under the Dividend
Reinvestment Plan ...................................... 67,048 30,679
------------- ------------
Common Shares at end of period ............................ 9,077,963 9,010,915
============= ============
See Notes to Financial Statements
Page 14
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED NOVEMBER 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net decrease in net assets resulting from operations ........... $ (107,906,744)
Adjustments to reconcile net decrease in net assets resulting
from operations to net cash provided by operating activities:
Purchases of investments .................................... (1,752,160,944)
Sales of investments ........................................ 1,850,710,655
Net amortization/accretion of premiums/discount on
investments .............................................. (243,007)
Net realized gain/loss on investments ....................... 20,279,161
Net change in unrealized appreciation/depreciation on
investments .............................................. 98,977,222
Payment from investment sub-advisor (See Note 3) ............ (332,025)
CHANGES IN ASSETS AND LIABILITIES:
Decrease in dividends receivable (a) ........................ 997,982
Decrease in interest receivable ............................. 599,194
Increase in prepaid expenses ................................ (9,288)
Increase in receivable for investment securities sold ....... (811,366)
Decrease in payable for investment securities purchased ..... (4,091,491)
Decrease in interest and fees due on loan ................... (224,244)
Decrease in investment advisory fees payable ................ (387,394)
Increase in audit and tax fees payable ...................... 13,865
Increase in legal fees payable .............................. 12,199
Decrease in printing fees payable ........................... (2,201)
Decrease in transfer agent fees payable ..................... (417)
Decrease in administrative fees payable ..................... (13,121)
Decrease in custodian fees payable .......................... (2,511)
Decrease in trustees' fees and expenses payable ............. (3,151)
Decrease in accrued expenses and other liabilities .......... (15,717)
---------------
CASH PROVIDED BY OPERATING ACTIVITIES .......................... 105,386,657
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Common Shares reinvested ......................... 1,529,028
Distributions to Common Shareholders ........................... (55,145,227)
Issuances of loan .............................................. 3,000,000
Repayments of loan ............................................. (48,100,000)
---------------
CASH USED FOR FINANCING ACTIVITIES ............................. (98,716,199)
------------
Increase in cash ............................................... 6,670,458
Cash at beginning of period .................................... 1,329,574
------------
Cash at end of period .......................................... $ 8,000,032
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees .............. $ 3,807,669
------------
Taxes withheld during period ................................... 716,289
------------
----------
(a) Includes net change in unrealized appreciation (depreciation) on foreign
currency of $(71,001).
See Notes to Financial Statements
Page 15
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR SIX MONTHS YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
11/30/2008 11/30/2007 11/30/2006(a) 5/31/2006 5/31/2005 5/31/2004(b)
---------- ---------- ------------- --------- --------- ------------
Net asset value, beginning of
period. ....................... $ 25.03 $ 25.99 $ 24.04 $ 23.43 $ 19.24 $ 19.10(c)
-------- --------- ---------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............ 1.33 1.33 0.90 1.61 1.23 0.11
Net realized and unrealized gain
(loss) ........................ (13.23) 4.25 3.39 1.28 4.65 0.07
-------- --------- ---------- -------- -------- --------
Total from investment operations . (11.90) 5.58 4.29 2.89 5.88 0.18
-------- --------- ---------- -------- -------- --------
DISTRIBUTIONS PAID TO
SHAREHOLDERS FROM:
Net investment income ............ (0.93) (2.11) (0.66) (1.65) (1.69) --
Net realized gain ................ (0.73) (4.43) (1.68) (0.63) -- --
Return of capital ................ (0.04) -- -- -- -- --
-------- --------- ---------- -------- -------- --------
Total distributions .............. (1.70) (6.54) (2.34) (2.28) (1.69) --
-------- --------- ---------- -------- -------- --------
Common Share offering costs
charged to paid-in capital .... -- -- -- -- -- (0.04)
-------- --------- ---------- -------- -------- --------
Net asset value, end of period ... $ 11.43 $ 25.03 $ 25.99 $ 24.04 $ 23.43 $ 19.24
======== ========= ========== ======== ======== ========
Market value, end of period ...... $ 8.60 $ 23.78 $ 23.93 $ 21.04 $ 20.87 $ 17.70
======== ========= ========== ======== ======== ========
TOTAL RETURN BASED ON NET ASSET
VALUE (d) (e) (i) ............. (48.98)% 21.87% 18.22% 13.50% 32.15% 0.73%
======== ========= ========== ======== ======== ========
TOTAL RETURN BASED ON MARKET
VALUE (e) (f) ................. (59.56)% 25.75% 24.37% 11.52% 27.96% (11.50)%
======== ========= ========== ======== ======== ========
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in
000's) ........................ $103,780 $ 225,548 $ 233,379 $215,861 $210,388 $172,799
Ratio of total expenses to
average net assets ............ 3.72% 3.63% 3.97%(g) 3.59% 2.78% 1.47%(g)
Ratio of total expenses to
average net assets,
excluding interest expense and
fees. ......................... 1.80% 1.73% 1.73%(g) 1.79% 1.78% N/A
Ratio of net investment income to
average net assets ............ 6.44% 4.65% 6.94%(g) 6.73% 5.65% 3.14%(g)
Portfolio turnover rate .......... 23% 53% 14% 60% 43% 0%
DEBT:
Loan outstanding (in 000's) ...... $ 38,900 $ 84,000 $ 83,500 $ 83,000 $ 75,000 N/A
Asset coverage per $1,000
of indebtedness (h) ........... $ 3,668 $ 3,685 $ 3,795 $ 3,601 $ 3,805 N/A
----------
(a) The Fund's fiscal year end was changed from May 31 to November 30.
(b) Initial seed date of March 16, 2004. The Fund commenced operations on March
25, 2004.
(c) Net of sales load of $0.90 per Common Share on initial offering.
(d) Total return based on net asset value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan, and changes in net
asset value per share and does not reflect sales load.
(e) Total return is not annualized for periods less than one year.
(f) Total return based on market value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan, and changes in Common
Share price.
(g) Annualized.
(h) 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.
(i) In 2008, the Fund received reimbursements from the investment sub-advisor
in the amount of $332,025. If this reimbursement was not received, the NAV
total return for the year ended November 30, 2008 would have been (49.16)%.
N/A Not applicable.
See Notes to Financial Statements
Page 16
NOTES TO FINANCIAL STATEMENTS
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008
1. FUND DESCRIPTION
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
(the "Fund") is a non-diversified, closed-end management investment company
organized as a Massachusetts business trust on January 21, 2004 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 MFD on the New York Stock Exchange ("NYSE").
The Fund's primary investment objective is to seek a high level of current
return consisting of dividends, interest and other similar income while
attempting to preserve capital. In pursuit of this objective, the Fund seeks to
manage its investments and expenses so that a significant portion of its
distributions to the Fund's Common Shareholders will qualify as tax-advantaged
dividends, subject to the continued availability of favorable tax treatment for
such qualifying dividends. The Fund seeks to achieve its investment objective by
investing in a non-diversified portfolio of equity, debt, preferred or
convertible securities and other instruments (for instance, other instruments
could include Canadian income trusts and Australian stapled securities) issued
by U.S. and non-U.S. issuers that have as their primary focus (in terms of
income and/or assets) the management, ownership and/or operation of
infrastructure and utilities assets in a select group of countries.
2. SIGNIFICANT ACCOUNTING POLICIES
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 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. Domestic debt securities and foreign
securities are priced using data reflecting the earlier closing of the principal
markets for those securities. The 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 in
accordance with valuation procedures adopted by the Fund's Board of Trustees. A
majority of the Fund's assets are valued using market information supplied by
third parties. In the event that market quotations are not readily available,
the pricing service does not provide a valuation for a particular asset, or the
valuations are deemed unreliable, the Fund's Board of Trustees has designated
First Trust Advisors L.P. ("First Trust") to use a fair value method to value
the Fund's securities and other investments. Additionally, if events occur after
the close of the principal markets for particular securities (e.g., domestic
debt and foreign securities), but before the Fund values its assets, that could
materially affect NAV, First Trust may use a fair value method to value the
Fund's securities and other investments. The use of fair value pricing by the
Fund is governed by valuation procedures adopted by the Fund's Board of
Trustees, and in accordance with the provisions of the 1940 Act.
In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 157 Fair Value Measurements
("FAS 157") effective for fiscal years beginning after November 15, 2007. This
standard clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value and requires additional
disclosures about the use of fair value measurements. FAS 157 became effective
for the Fund as of December 1, 2007, the beginning of its current fiscal year.
The three levels of the fair value hierarchy under FAS 157 are described as
follows:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds,
credit risk, etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. A summary
of the inputs used to value the Fund's investments as of November 30, 2008 is
included with the Fund's Portfolio of Investments.
Page 17
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008
Foreign securities traded outside the United States are generally valued as of
the time their trading is complete, which is usually different from the close of
the NYSE. Occasionally, events affecting the value of such securities may occur
between such times and the close of the NYSE that will not always be reflected
in the computation of the value of such securities. If events materially
affecting the value of such securities occur during such period, these
securities will be valued at their fair value according to procedures adopted by
the Fund's Board of Trustees. All securities and other assets of the Fund
initially expressed in foreign currencies will be converted to U.S. dollars
using exchange rates in effect at the time of valuation.
The Senior Loans in which the Fund invests are not listed on any securities
exchange or board of trade. Senior Loans are typically bought and sold by
institutional investors in individually negotiated private transactions that
function in many respects like an over-the-counter secondary market, although
typically no formal market-makers exist. This market, while having grown
substantially in the past several years, generally has fewer trades and less
liquidity than the secondary market for other types of securities. Some Senior
Loans have few or no trades, or trade infrequently, and information regarding a
specific Senior Loan may not be widely available or may be incomplete.
Accordingly, determinations of the value of Senior Loans may be based on
infrequent and dated information. Because there is less reliable, objective data
available, elements of judgment may play a greater role in valuation of Senior
Loans than for other types of securities. Typically, Senior Loans are valued
using information provided by a third party pricing service. If the pricing
service cannot or does not provide a valuation for a particular Senior Loan or
such valuation is deemed unreliable, First Trust may value such Senior Loan at a
fair value according to procedures adopted by the Fund's Board of Trustees, and
in accordance with the provisions of the 1940 Act.
Portfolio securities listed on any exchange other than the NASDAQ National
Market ("NASDAQ") are valued at the last sale price on the business day as of
which such value is being determined. If there has been no sale on such day, the
securities are valued at the mean of the most recent bid and asked prices on
such day. Securities traded on the NASDAQ are valued at the NASDAQ Official
Closing Price as determined by NASDAQ. Portfolio securities traded on more than
one securities exchange are valued at the last sale price on the business day as
of which such value is being determined at the close of the exchange
representing the principal market for such securities. Portfolio securities
traded in the over-the-counter market, but excluding securities traded on the
NASDAQ, are valued at the closing bid prices. Short-term investments that mature
in less than 60 days are valued at amortized cost.
B. REPURCHASE AGREEMENTS:
The Fund engages in repurchase agreement transactions. Under the terms of a
typical repurchase agreement, the Fund takes possession of an underlying debt
obligation subject to an obligation of the seller to repurchase, and the Fund to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Fund's holding period. This arrangement results in a fixed rate
of return that is not subject to market fluctuations during the Fund's holding
period. The value of the collateral is at all times at least equal to the total
amount of the repurchase obligation, including interest. In the event of
counterparty default, the Fund has the right to use the collateral to offset
losses incurred. There is potential loss to the Fund in the event the Fund is
delayed or prevented from exercising its rights to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert its
rights. The Fund reviews the value of the collateral and the creditworthiness of
those banks and dealers with which the Fund enters into repurchase agreements to
evaluate potential risks. As of November 30, 2008, the Fund had no open
repurchase agreements.
C. 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
on the accrual basis. Market premiums and discounts are amortized over the
expected life of each respective borrowing.
Distributions received from the Fund's investments in Master Limited
Partnerships ("MLP") generally are comprised of return of capital from the MLP
to the extent of the cost basis of such MLP investments. Cumulative
distributions received in excess of the Fund's cost basis in an MLP generally
are recorded as dividend income.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income on such securities
is not accrued until settlement date. The Fund maintains liquid assets with a
current value at least equal to the amount of its when-issued or
delayed-delivery purchase commitments. At November 30, 2008, the Fund had no
when-issued or delayed-delivery purchase commitments.
Page 18
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008
D. UNFUNDED LOAN COMMITMENTS:
The Fund may enter into certain credit agreements, all or a portion of which may
be unfunded. As of November 30, 2008, the Fund had no unfunded loan commitments.
E. FOREIGN CURRENCY:
The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period.
Purchases and sales of investment securities and items of income and expense are
translated on the respective dates of such transactions. Unrealized gains and
losses 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. 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. The portion
of foreign currency gains and losses related to fluctuation in exchange rates
between the initial purchase trade date and subsequent sale trade date is
included in "Net realized gain (loss) on foreign currency transactions" on the
Statement of Operations. Unrealized appreciation of $20,972 from dividends
receivable in foreign currencies are included in "Dividends receivable" on the
Statement of Assets and Liabilities.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income of the Fund are declared and paid quarterly
or as the Board of Trustees may determine from time to time. On December 11,
2006, the Fund's Board of Trustees adopted a level distribution plan for the
Fund. Distributions of any net capital gains earned by the Fund are distributed
at least annually. 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
income tax regulations, which may differ from accounting principles generally
accepted in the United States of America. These differences are primarily due to
differing treatments of income and gains on various investment securities held
by the Fund, timing differences and differing characterization of distributions
made by the Fund. Permanent differences incurred during the tax year ended
November 30, 2008 resulting in book and tax accounting differences have been
reclassified at period end to reflect a decrease in accumulated net investment
income (loss) of $207,354, an increase in accumulated net realized gain (loss)
on investments of $365,953 and a decrease to paid-in capital of $158,599. Net
assets were not affected by this reclassification.
The tax character of distributions paid during the fiscal years ended November
30, 2008 and November 30, 2007 is as follows:
NOVEMBER 30, 2008 NOVEMBER 30, 2007
----------------- ------------------
Distributions paid from:
Ordinary Income ......... $8,503,887 $18,999,991
Long-Term Capital Gain .. 6,510,446 39,918,352
Return of Capital ....... 376,201 --
As of November 30, 2008, the components of distributable earnings on a tax basis
were as follows:
Net Unrealized Appreciation (Depreciation) .... $(40,541,805)
Accumulated Capital and Other Losses .......... (24,492,592)
G. INCOME TAXES:
The Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no
provision has been made for federal or state income taxes on uncertain tax
positions.
POST-OCTOBER LOSSES. Under current laws, certain capital losses realized after
October 31 may be deferred and treated as occurring on the first day of the
following fiscal year. For the fiscal year ended November 30, 2008, the Fund
intends to elect to defer net realized capital losses of $24,452,289 and foreign
currency losses of $40,303 incurred from November 1, 2008 through November 30,
2008.
Page 19
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008
In June 2006, FASB issued Interpretation No. 48 ("FIN 48"), "Accounting for
Uncertainty in Income Taxes." FIN 48 establishes the minimum threshold for
recognizing, and a system for measuring, the benefits of a tax position taken or
expected to be taken on a tax return, and is effective for the Fund's current
fiscal year. As of November 30, 2008, management has evaluated the application
of FIN 48 to the Fund, and has determined that no provision for income tax is
required in the Fund's financial statements.
H. EXPENSES:
The Fund will pay all expenses directly related to its operations.
I. ACCOUNTING PRONOUNCEMENT
In March 2008, FASB released Statement of Financial Accounting Standards No.
161, "Disclosures about Derivative Instruments and Hedging Activities" ("FAS
161"). FAS 161 requires qualitative disclosures about objectives and strategies
for using derivatives, quantitative disclosures about fair value amounts of and
gains and losses on derivative instruments, and disclosures about credit
risk-related contingent features in derivative agreements. The application of
FAS 161 is required for fiscal years beginning after November 15, 2008 and
interim periods within those fiscal years. Management is currently evaluating
the impact the adoption of FAS 161 will have on the Fund's financial statement
disclosures, if any.
3. INVESTMENT ADVISORY FEE AND OTHER AFFILIATED TRANSACTIONS
First Trust is a limited partnership with one limited partner, Grace Partners of
DuPage L.P., and one general partner, The Charger Corporation. First Trust
serves as investment advisor to the Fund pursuant to an Investment Management
Agreement. 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
services, First Trust is entitled to a quarterly fee calculated at an annual
rate of 0.40% of the Fund's Total Assets up to and including $250 million and
0.35% of the Fund's Total Assets over $250 million. Total Assets are generally
defined as average daily total assets (including the principal amount of any
borrowings) minus the Fund's accrued liabilities (excluding the principal amount
of any borrowings or indebtedness incurred).
During the year ended November 30, 2008, one of the Fund's investment
sub-advisors, MCIM, reimbursed the Fund for $332,025 in connection with an
investment transaction loss.
MCIM and Four Corners serve as the Fund's sub-advisors and manage the Fund's
portfolio subject to First Trust's supervision. MCIM manages the Core Component
and, for its portfolio management services, MCIM is entitled to a quarterly fee
calculated at an annual rate of 0.60% for that portion of the Fund's Total
Assets allocated to MCIM. If the Fund's Total Assets are greater than $250
million, MCIM receives an annual portfolio management fee of 0.65% for that
portion of the Fund's Total Assets over $250 million. In addition, to the extent
that MCIM invests a portion of the Core Component in unlisted securities ("Core
Unlisted Instruments"), MCIM is entitled to receive a supplemental fee of 0.60%
of that portion of the Fund's Total Assets invested in Core Unlisted
Instruments. Four Corners manages the Senior Loan Component and, for its
portfolio management services, Four Corners is entitled to a quarterly fee
calculated at an annual rate of 0.60% for that portion of the Fund's Total
Assets allocated to Four Corners.
PNC Global Investment Servicing (U.S.) Inc., formerly known as PFPC Inc., an
indirect, majority-owned subsidiary of The PNC Financial Services Group, Inc.,
serves as the Fund's Administrator and Transfer Agent in accordance with certain
fee arrangements. PFPC Trust Company, also an indirect, majority-owned
subsidiary of The PNC Financial Services Group, Inc., serves as the Fund's
Custodian in accordance with certain fee arrangements.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustee") is paid an annual retainer of
$10,000 per trust for the first 14 trusts of the First Trust Fund Complex and an
annual retainer of $7,500 per trust for each subsequent trust in the First Trust
Fund Complex. The annual retainer is allocated equally among each of the trusts.
No additional meeting fees are paid in connection with board or committee
meetings.
Additionally, the Lead Independent Trustee is paid $10,000 annually and the
Audit Committee Chairman is paid $5,000 annually, with such compensation paid by
the trusts in the First Trust Fund Complex and divided among those trusts.
Trustees are also reimbursed by the
Page 20
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008
trusts in the First Trust Fund Complex for travel and out-of-pocket expenses in
connection with all meetings. Effective January 1, 2008, each of the chairmen of
the Nominating and Governance Committee and the Valuation Committee is paid
$2,500 annually to serve in such capacities with such compensation paid by the
trusts in First Trust Fund Complex and divided among these trusts. Also,
effective January 1, 2008, the Lead Independent Trustee and each committee
chairman will serve two-year terms. The officers and interested trustee receive
no compensation from the trusts for serving in such capacities.
For the year ended November 30, 2008, the Fund paid brokerage commissions to
Macquarie Capital (USA) Inc. (formerly Macquarie Securities (USA) Inc.), an
affiliate of MCIM, and Four Corners, totaling $4,252.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments, for the year ended November 30, 2008, were $58,801,115,
and $157,564,036, respectively.
5. REVOLVING CREDIT AND SECURITY AGREEMENT
The Fund entered into a Revolving Credit and Security Agreement with CRC
Funding, LLC, as conduit lender, and Citigroup North America, Inc., as secondary
lender, which provides for a revolving credit facility to be used as leverage
for the Fund and is scheduled to terminate on May 15, 2009 and may be renewed
annually. The credit facility 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). The total commitment under the Revolving Credit and
Security Agreement is $95,000,000. For the year ended November 30, 2008, the
average amount outstanding was $78,268,033. The high and low annual interest
rates during the year ended November 30, 2008, were 5.23% and 2.66%,
respectively, and the weighted average interest rate was 3.51%. The annual
interest rate in effect at November 30, 2008 was 3.24%. The Fund pays a program
fee of 0.75% and a liquidity fee of 0.50% per year. Such expenses are included
in "Interest and fees on outstanding loan" on the Statement of Operations.
6. 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.
7. RISK CONSIDERATIONS
Risks are inherent in all investing. The following summarizes some 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.
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-Advisors 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.
In 2008, securities markets have been significantly negatively affected by the
financial crisis that initially resulted from the downturn in the subprime
mortgage market in the United States. The potential impact of the financial
crisis on securities markets may prove to be significant and long-lasting and
may have substantial impact on the value of the Fund.
INDUSTRY CONCENTRATION RISK: The Fund intends to invest up to 100% of its Total
Assets in the securities and instruments of Infrastructure Issuers. Given this
industry concentration, the Fund will be more susceptible to adverse economic or
regulatory occurrences affecting that industry than an investment company that
is not concentrated in a single industry. Infrastructure Issuers, including
utilities
Page 21
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008
and companies involved in infrastructure projects, 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.
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. The rights of lenders to receive payments of interest on and
repayments of principal on any borrowings made by the Fund under a leverage
borrowing program are senior to the rights of holders of Common Shares upon
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, including dividends and distributions with respect to Common
Shares or purchase Common Shares.
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: 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.
CURRENCY RISK: Currency risk is the risk that the value of a non-U.S.
investment, measured in U.S. dollars, will decrease because of unfavorable
changes in currency exchange rates. The Fund does not currently intend to reduce
or hedge its exposure to non-U.S. currencies other than in connection with the
Fund's exposure to dividends received or receivable in non-U.S. currencies and
to hedge forward commitments.
SENIOR LOAN RISK: In the event a Borrower fails to pay scheduled interest or
principal payments on a Senior Loan held by the Fund, the Fund will experience a
reduction in its income and a decline in the market value of the Senior Loan,
which will likely reduce dividends and lead to a decline in the net asset value
of the Fund's Common Shares. If the Fund acquires a Senior Loan from another
Lender, for example, by acquiring a participation, the Fund may also be subject
to credit risks with respect to that lender. The value of the collateral may not
equal the Fund's investment when the Senior Loan is acquired or may decline
below the principal amount of the Senior Loan subsequent to the Fund's
investment. Also, to the extent that collateral consists of stock of the
borrower or its subsidiaries or affiliates, the Fund bears the risk that the
stock may decline in value, be relatively illiquid, and/ or may lose all or
substantially all of its value, causing the Senior Loan to be
undercollateralized. Therefore, the liquidation of the collateral underlying a
Senior Loan may not satisfy the issuer's obligation to the Fund in the event of
non-payment of scheduled interest or principal, and the collateral may not be
readily liquidated.
LOWER GRADE DEBT INSTRUMENTS: The Senior Loans in which the Fund invests are
generally lower grade. These lower grade debt instruments may become the subject
of bankruptcy proceedings or otherwise subsequently default as to the repayment
of principal and/or payment of interest or be downgraded to ratings in the lower
rating categories. Lower grade debt instruments tend to be less liquid than
higher grade debt instruments.
NON-DIVERSIFICATION RISK: Because the Fund is non-diversified, it is only
limited as to the percentage of its assets which may be invested in the
securities of any one issuer by the diversification requirements imposed by the
Internal Revenue Code of 1986, as amended (the "Code"). Because the Fund may
invest a relatively high percentage of its assets in a limited number of
issuers, the Fund may be more susceptible to any single economic, political or
regulatory occurrence and to the financial conditions of the issuers in which it
invests.
INTEREST RATE RISK: The Fund is also subject to interest rate risk. Interest
rate risk is the risk that fixed-income securities will decline in value because
of changes in market interest rates. Investments in debt securities with
long-term maturities may experience significant price declines if long-term
interest rates increase.
Page 22
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF MACQUARIE/FIRST TRUST GLOBAL
INFRASTRUCTURE/UTILITIES DIVIDEND AND INCOME FUND:
We have audited the accompanying statement of assets and liabilities of
Macquarie/First Trust Global Infrastructure/Utilities Dividend and Income Fund
(the "Fund"), including the portfolio of investments, as of November 30, 2008,
the related statements of operations and cash flows for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of November 30, 2008, by correspondence with the Fund's
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Macquarie/First Trust Global Infrastructure/Utilities Dividend and Income Fund
as of November 30, 2008, the results of its operations and cash flows for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented, in
conformity with accounting principles generally accepted in the United States of
America.
(Deloitte & Touche LLP)
Chicago, Illinois
January 23, 2009
Page 23
ADDITIONAL INFORMATION
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008 (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 PNC
Global Investment Servicing (U.S.) 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 (800) 331-1710 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 PNC Global Investment
Servicing (U.S.) 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 securities 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 website located at http://www.sec.gov.
Page 24
ADDITIONAL INFORMATION - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008 (UNAUDITED)
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("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.
NYSE CERTIFICATION INFORMATION
In accordance with Section 303A-12 of the NYSE Listed Company Manual, the Fund's
President has certified to the NYSE that, as of May 14, 2008, he was not aware
of any violation by the Fund of NYSE corporate governance listing standards. In
addition, the Fund's reports to the SEC on forms N-CSR and N-Q contain
certifications by the Fund's principal executive officer and principal financial
officer that relate to the Fund's public disclosure in such reports and are
required by Rule 30a-2 under the 1940 Act.
TAX INFORMATION
Of the ordinary income distributions made by the Fund during the year ended
November 30, 2008, 0.247% qualifies for the corporate dividends received
deduction available to corporate shareholders.
The Fund hereby designates as qualified dividend income 100% of the ordinary
income distributions for the year ended November 30, 2008.
Since the Fund met the requirements of Section 853 of the Code, the Fund hereby
elects to pass through to its shareholders credits for foreign taxes paid. The
total per share amount of income received by the Fund from sources within
foreign countries and possessions of the United States is $1.66 (representing a
total of $15,030,412). The total amount of taxes paid to such countries is $0.08
per share (representing a total of $710,458) for the year ended November 30,
2008.
For the year ended November 30, 2008, the amount of long-term capital gain
distributions designated by the Fund was $46,383,743, which is taxable at a
maximum rate of 15% for federal income tax purposes.
SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The Joint Annual Meeting of Shareholders of the Common Shares of Macquarie/First
Trust Global Infrastructure/Utilities Dividend & Income Fund, Energy Income and
Growth Fund, First Trust Enhanced Equity Income Fund, First Trust/Aberdeen
Global Opportunity Income Fund, First Trust/FIDAC Mortgage Income Fund, First
Trust Strategic High Income Fund, First Trust Strategic High Income Fund II,
First Trust/Aberdeen Emerging Opportunity Fund, First Trust Specialty Finance
and Financial Opportunities Fund (formerly known as First Trust/Gallatin
Specialty Finance and Financial Opportunities Fund) and First Trust Active
Dividend Income Fund and shareholders of the Preferred Shares of First Trust
Tax-Advantaged Preferred Income Fund was held on April 14, 2008. At the Annual
Meeting, Trustee Robert F. Keith was elected for a three-year term. The number
of votes cast in favor of Mr. Keith was 8,296,460, the number of votes against
was 103,005 and the number of abstentions was 611,450. James A. Bowen, Richard
E. Erickson, Thomas R. Kadlec and Niel B. Nielson are the current and continuing
Trustees.
Page 25
BOARD OF TRUSTEES AND OFFICERS
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008 (UNAUDITED)
NUMBER OF
PORTFOLIOS IN OTHER
THE FIRST TRUST TRUSTEESHIPS OR
NAME, ADDRESS, DATE OF BIRTH TERM OF OFFICE AND PRINCIPAL OCCUPATIONS FUND COMPLEX DIRECTORSHIPS
AND POSITION WITH THE FUND LENGTH OF SERVICE(1) DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
----------------------------- -------------------- -------------------------- ------------------- ------------------------
INDEPENDENT TRUSTEES
Richard E. Erickson, Trustee - Two Year Term Physician; President, 60 None
c/o First Trust Advisors L.P. Wheaton Orthopedics;
120 E. Liberty Drive, - Since Fund Co-owner and Co-
Suite 400 Inception Director (January 1996
Wheaton, IL 60187 to May 2007), Sports
D.O.B.: 04/51 Med Center for Fitness;
Limited Partner,
Gundersen Real Estate
Partnership; Limited
Partner, Sportsmed LLC
Thomas R. Kadlec, Trustee - Two Year Term Senior Vice President and 60 Director of ADM
c/o First Trust Advisors L.P. Chief Financial Officer Investor Services, Inc.
120 E. Liberty Drive, - Since Fund (May 2007 to Present), and Director of Archer
Suite 400 Inception Vice President and Chief Financial Services, Inc.
Wheaton, IL 60187 Financial Officer (1990 to
D.O.B.: 11/57 May 2007), ADM
Investor Services, Inc.
(Futures Commission
Merchant); President
(May 2005 to Present),
ADM Derivatives, Inc.;
Registered Representative
(2000 to Present),
Segerdahl & Company,
Inc., a FINRA member
(Broker-Dealer)
Robert F. Keith, Trustee - Three Year Term President (2003 to 60 None
c/o First Trust Advisors L.P. Present), Hibs Enterprises
120 E. Liberty Drive, - Since June 2006 (Financial and
Suite 400 Management Consulting);
Wheaton, IL 60187 President (2001 to 2003),
D.O.B.: 11/56 Aramark Management
Services; President and
Chief Operating Officer
(1998 to 2003),
ServiceMaster
Management Services
----------
(1) Currently, Robert F. Keith, as a Class I Trustee, is serving as a trustee
until the Fund's 2011 annual meeting of shareholders. Richard E. Erickson
and Thomas R. Kadlec, as Class II Trustees, are each serving as trustees
until the Fund's 2009 annual meeting of shareholders. James A. Bowen and
Niel B. Nielson, as Class III Trustees, are each serving as trustees until
the Fund's 2010 annual meeting. Officers of the Fund have an indefinite
term.
Page 26
BOARD OF TRUSTEES AND OFFICERS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008 (UNAUDITED)
NUMBER OF
PORTFOLIOS IN OTHER
THE FIRST TRUST TRUSTEESHIPS OR
NAME, ADDRESS, DATE OF BIRTH TERM OF OFFICE AND PRINCIPAL OCCUPATIONS FUND COMPLEX DIRECTORSHIPS
AND POSITION WITH THE FUND LENGTH OF SERVICE(1) DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
----------------------------- -------------------- -------------------------- ------------------- ------------------------
INDEPENDENT TRUSTEES - (CONTINUED)
Niel B. Nielson, Trustee - Three Year Term President (June 2002 to 60 Director of Covenant
c/o First Trust Advisors L.P. Present), Covenant Transport Inc.
120 E. Liberty Drive, - Since Fund College
Suite 400 Inception
Wheaton, IL 60187
D.O.B.: 03/54
INTERESTED TRUSTEE
James A. Bowen(2), Trustee, - Three Year President, First Trust 60 Trustee of Wheaton
President, Chairman of the Trustee Term and Advisors L.P. and First College
Board and CEO Indefinite Trust Portfolios L.P.;
120 E. Liberty Drive, Officer Term Chairman of the Board
Suite 400 of Directors, BondWave
Wheaton, IL 60187 - Since Fund LLC (Software
D.O.B.: 09/55 Inception Development
Company/Broker-
Dealer/Investment
Advisor) and
Stonebridge Advisors
LLC (Investment
Advisor)
NAME, ADDRESS POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
----------------------------- -------------------- -------------------------- ----------------------------------------------
OFFICERS WHO ARE NOT TRUSTEES(3)
Mark R. Bradley Treasurer, - Indefinite Term Chief Financial Officer, First Trust
120 E. Liberty Drive, Controller, Chief Advisors L.P. and First Trust
Suite 400 Financial Officer - Since Fund Portfolios L.P.; Chief Financial
Wheaton, IL 60187 and Chief Inception Officer, BondWave LLC (Software
D.O.B.: 11/57 Accounting Officer Development Company/Broker-
Dealer/Investment Advisor) and
Stonebridge Advisors LLC
(Investment Advisor)
----------
(1) Currently, Robert F. Keith, as a Class I Trustee, is serving as a trustee
until the Fund's 2011 annual meeting of shareholders. Richard E. Erickson
and Thomas R. Kadlec, as Class II Trustees, are each serving as trustees
until the Fund's 2009 annual meeting of shareholders. James A. Bowen and
Niel B. Nielson, as Class III Trustees, are each serving as trustees until
the Fund's 2010 annual meeting. Officers of the Fund have an indefinite
term.
(2) Mr. Bowen is deemed an "interested person" of the Fund due to his position
as President 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.
Page 27
BOARD OF TRUSTEES AND OFFICERS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008 (UNAUDITED)
NAME, ADDRESS POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
----------------------------- -------------------- -------------------------- ----------------------------------------------
OFFICERS WHO ARE NOT TRUSTEES(3) - (CONTINUED)
James M. Dykas Assistant Treasurer - Indefinite Term Senior Vice President (April 2007 to
120 E. Liberty Drive, - Since December 2005 Present), Vice President (January
Suite 400 2005 to April 2007), First Trust
Wheaton, IL 60187 Advisors L.P. and First Trust
D.O.B.: 01/66 Portfolios L.P.; Executive Director
(December 2002 to January 2005),
Vice President (December 2000 to
December 2002), Van Kampen Asset
Management and Morgan Stanley
Investment Management
Christopher R. Fallow Assistant Vice - Indefinite Term Assistant Vice President (August
120 E. Liberty Drive, President - Since December 2006 2006 to Present), Associate (January
Suite 400 2005 to August 2006), First Trust
Wheaton, IL 60187 Advisors L.P. and First Trust
D.O.B.: 04/79 Portfolios L.P.; Municipal Bond
Trader (July 2001 to January 2005),
BondWave LLC (Software
Development Company/Broker-
Dealer/Investment Advisor)
W. Scott Jardine Secretary and Chief - Indefinite Term General Counsel, First Trust Advisors
120 E. Liberty Drive, Compliance Officer - Since Fund First Trust Portfolios L.P.;
Suite 400 Inception Secretary, BondWave LLC (Software
Wheaton, IL 60187 Development Company/Broker-
D.O.B.: 05/60 Dealer/Investment Advisor) and
Stonebridge Advisors LLC
(Investment Advisor)
Daniel J. Lindquist Vice President - Indefinite Term Senior Vice President (September
120 E. Liberty Drive, - Since December 2005 2005 to Present), Vice President
Suite 400 (April 2004 to September 2005), First
Wheaton, IL 60187 Trust Advisors L.P. and First Trust
D.O.B.: 02/70 Portfolios L.P.; Chief Operating
Officer (January 2004 to April 2004),
Mina Capital Management, LLC;
Chief Operating Officer (April 2000
to January 2004), Samaritan Asset
Management Services, Inc.
----------
(3) The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
Page 28
BOARD OF TRUSTEES AND OFFICERS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008 (UNAUDITED)
NAME, ADDRESS POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
----------------------------- -------------------- -------------------------- ----------------------------------------------
OFFICERS WHO ARE NOT TRUSTEES(3) - (CONTINUED)
Coleen D. Lynch Assistant Vice - Indefinite Term Assistant Vice President (January
120 E. Liberty Drive, President - Since July 2008 2008 to Present), First Trust Advisors
Suite 400 L.P. and First Trust Portfolios L.P.;
Wheaton, IL 60187 Vice President (May 1998 to January
D.O.B.: 07/58 2008), Van Kampen Asset
Management and Morgan Stanley
Investment Management
Kristi A. Maher Assistant Secretary - Indefinite Term Deputy General Counsel (May 2007
120 E. Liberty Drive, - Since July 2004 to Present), Assistant General
Suite 400 Counsel (March 2004 to May 2007),
Wheaton, IL 60187 First Trust Advisors L.P. and First
D.O.B.: 12/66 Trust Portfolios L.P.; Associate
(December 1995 to March 2004),
Chapman and Cutler LLP
----------
(3) The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
Page 29
PRIVACY POLICY
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2008 (UNAUDITED)
PRIVACY POLICY
The open-end and closed-end funds advised by First Trust Advisors L.P. (each a
"Fund") consider your privacy an important priority in maintaining our
relationship. We are committed to protecting the security and confidentiality of
your personal information.
SOURCES OF INFORMATION
We may collect nonpublic personal information about you from the following
sources:
- Information we receive from you or your broker-dealer, investment
advisor 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.
INFORMATION COLLECTED
The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.
DISCLOSURE OF INFORMATION
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. The permitted uses
include the disclosure of such information to unaffiliated companies for the
following reasons:
- 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 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).
In addition, in order to alert you to our other financial products and services,
we may share your personal information with affiliates of the Fund. Please note,
however, that the California Financial Information Privacy Act contains an "opt
out" mechanism that California consumers may use to prevent us from sharing
nonpublic personal information with affiliates.
CONFIDENTIALITY AND SECURITY
With regard to our internal security procedures, the Fund restricts access to
your nonpublic personal information to those individuals who need to know that
information to provide products or services to you. We maintain physical,
electronic and procedural safeguards to protect your nonpublic personal
information.
POLICY UPDATES AND INQUIRIES
As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time; however, if we do change
it, we will tell you promptly.
For questions about our policy, or for additional copies of this notice, please
contact us at (800) 621-1675.
Page 30
This Page Left Blank Intentionally.
This Page Left Blank Intentionally.
(FIRST TRUST LOGO)
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187
INVESTMENT SUB-ADVISORS
Macquarie Capital Investment Management LLC
125 West 55th Street
New York, NY 10019
Four Corners Capital Management, LLC
555 South Flower Street, Suite 3300,
Los Angeles, CA 90071
ADMINISTRATOR
FUND ACCOUNTANT,
TRANSFER AGENT &
BOARD ADMINISTRATOR
PNC Global Investment Servicing (U.S.) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
PFPC Trust Company
8800 Tinicom Boulevard
Philadelphia, PA 19153
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
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 definition enumerated in paragraph (b)
of this item's instructions.
(d) The Registrant has not, during the period covered by this report,
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.
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 and Robert F. Keith 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 each of the
last two fiscal years 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 those fiscal years were
$99,000 for the fiscal year ended November 30, 2007 and $0 for the fiscal year
ended November 30, 2008.
(b) Audit-Related Fees (Registrant) -- The aggregate fees billed in each of
the last two fiscal years 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 $2,700 for the fiscal year ended November 30, 2007 and $0 for
the fiscal year ended November 30, 2008. These fees were for additional audit
work.
Audit-Related Fees (Investment Adviser) -- The aggregate fees billed
in each of the last two fiscal years 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 $2,700 for the fiscal year ended November 30, 2007 and $0
for the fiscal year ended November 30, 2008. These fees were for additional
audit work.
(c) Tax Fees (Registrant) -- The aggregate fees billed in each of the last
two fiscal years for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning to the registrant were $4,350
for the fiscal year ended November 30, 2007 and $4,250 for the fiscal year ended
November 30, 2008. These fees were for tax consultation.
Tax Fees (Investment Adviser) -- The aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning to the registrant's
adviser were $0 for the fiscal year ended November 30, 2007 and $0 for the
fiscal year ended November 30, 2008.
(d) All Other Fees (Registrant) -- The aggregate fees billed in each of the
last two fiscal years 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 November 30, 2007 and
$0 for the fiscal year ended November 30, 2008.
All Other Fees (Investment Adviser) -- The aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant to the registrant's investment adviser, other than the
services reported in paragraphs (a) through (c) of this Item were $0 for the
fiscal year ended November 30, 2007 and $0 for the fiscal year ended November
30, 2008.
(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 adviser (not
including a sub-adviser whose role is primarily portfolio management and is
sub-contracted or overseen by another investment adviser) and any entity
controlling, controlled by or under common control with the investment adviser
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 adviser (other than any sub-adviser whose role is primarily
portfolio management and is sub-contracted with or overseen by another
investment adviser) and any entity controlling, controlled by or under common
control with the investment adviser 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 adviser 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:
(b) 0%
(c) 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
adviser (not including any sub-adviser whose role is primarily portfolio
management and is subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant for the fiscal year
ended November 30, 2007, were $4,350 for the registrant and $7,000 for the
registrant's investment adviser, and for the fiscal year ended November 30,
2008, were $4,250 for the registrant and $12,143 for the registrant's investment
adviser.
(h) The registrant's audit committee of its Board of Trustees has
determined that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser 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.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) The Registrant has a separately designated audit committee consisting
of all the independent directors of the Registrant. The members of the
audit committee are: Thomas R. Kadlec, Niel B. Nielson, Richard E.
Erickson and Robert F. Keith.
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.
The Proxy Voting Policies are attached herewith.
FIRST TRUST ADVISORS, L.P.
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PROXY VOTING GUIDELINES
First Trust Advisors, L.P. ("First Trust") serves as investment adviser
providing discretionary investment advisory services for Macquarie/First Trust
Global Infrastructure/Utilities Dividend & Income Fund (the "Fund"). Macquarie
Fund Adviser, LLC ("MFA") serves as sub-adviser for the portion of the Fund's
investment portfolio invested, or to be invested, in equity securities as well
as other securities and instruments issued by U.S. and non-U.S. issuers that
manage, own and/or operate infrastructure and utility assets in a select group
of countries (the "Core Component"). Four Corners Capital Management, LLC serves
as sub-adviser for the portion of the Fund's investment portfolio invested, or
to be invested, in U.S. dollar denominated senior secured floating-rate loans
issued by U.S. and non-U.S. issuers that manage, own and/or operate
infrastructure and utility assets (the "Senior Loan Component"). As part of
these services, First Trust has full responsibility for proxy voting and related
duties with respect to the Senior Loan Component, and MFA has full
responsibility for proxy voting and related duties with respect to the Senior
Loan Component. In fulfilling these duties, First Trust and the Fund have
adopted the following policies and procedures:
1. It is First Trust's policy to seek to ensure that proxies for
securities held by the Fund are voted consistently and solely in the
best economic interests of the Fund.
2. First Trust shall be responsible for the oversight of the Fund's proxy
voting process and shall assign a senior member of its staff to be
responsible for this oversight.
3. First Trust has engaged the services of Institutional Shareholder
Services, Inc. ("ISS") to make recommendations to First Trust on the
voting of proxies related to securities held by the Fund. ISS provides
voting recommendations based on established guidelines and practices.
First Trust has adopted these ISS Proxy Voting Guidelines.
4. With respect to proxies received for the Core Component, First Trust
shall review the ISS recommendations and forward such recommendations
to MFA for review. First Trust generally will vote the proxies in
accordance with ISS recommendations. MFA may request that First Trust
not vote in accordance with the ISS guidelines and First Trust may
review and follow such request, unless First Trust determines that it
is unable to follow such request. With respect to proxies received for
the Senior Loan Component, First Trust shall review the ISS
recommendations and generally will vote the proxies in accordance with
ISS recommendations. Not withstanding the foregoing, First Trust may
not vote in accordance with ISS recommendations if First Trust
believes that the specific ISS recommendation is not in the best
interests of the Fund.
5. If First Trust manages the assets or pension fund of a company and any
of First Trust's clients hold any securities in that company, the
First Trust will vote proxies relating to such company's securities in
accordance with the ISS recommendations to avoid any conflict of
interest. In addition, if First Trust has actual knowledge of any
other type of material conflict of interest between itself and the
Fund with respect to the voting of a proxy, First Trust shall vote the
applicable proxy in accordance with the ISS recommendations to avoid
such conflict of interest.
6. If the Fund requests First Trust to follow specific voting guidelines
or additional guidelines, First Trust shall review the request and
follow such guidelines, unless First Trust determines that it is
unable to follow such guidelines. In such case, First Trust shall
inform the Fund that it is not able to follow the Fund's request.
7. First Trust may have clients in addition to the Fund which have
provided First Trust with discretionary authority to vote proxies on
their behalf. In such cases, First Trust shall follow the same
policies and procedures.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Macquarie Capital Investment Management LLC ("MCIM") and Four Corners Capital
Management, LLC ("Four Corners") serve as the registrant's sub-advisers. MCIM
manages the Core Component of the registrant, while Four Corners manages the
Senior Loan Component of the registrant.
MACQUARIE CAPITAL INVESTMENT MANAGEMENT LLC
(A)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
Jon Fitch and Justin Lannen are co-portfolio managers responsible for the
day-to-day management of the Core Component of the registrant.
Length of
Name Title Service Business Experience Past 5 Years
---------------- -------------------------------- -------- ----------------------------------------
1. Jon Fitch Chief Executive Officer for MCIM 14 years Jon has been CIO of MFG Infrastructure
Securities* and portfolio manager of the
Fund and the 14 other funds in the MFG
Global Listed Infrastructure Strategy
since inception of the Fund in 2004.
Jon joined Macquarie in 1995.
2. Justin Lannen Portfolio Manager for MCIM 2 years Justin has been a portfolio manager of
the Fund as well as 8 other funds in the
MFG Global Listed Infrastructure
Strategy since joining Macquarie in 2007.
Prior to joining Macquarie, Justin was
the portfolio manager for the $A1.4
billion Colonial First State Industrial
Share Fund.
* MFG Infrastructure Securities is the marketing name of a separate asset
management business unit that is part of Macquarie Funds Group ("MFG") and
is within Macquarie Group Limited. MFG Infrastructure Securities includes
Macquarie Capital Investment Management (Australia) Limited ("MCIMAL") and
Macquarie Capital Investment Management LLC ("MCIM").
(A)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
AND POTENTIAL CONFLICTS OF INTEREST
OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
No. of Accounts Total Assets in
Total where Advisory Accounts where
Name of Portfolio No. of Accounts Fee is Based on Advisory Fee is
Manager or Team Member Type of Accounts Managed Total Assets Performance Based on Performance
---------------------- --------------------------------- --------------- ------------ --------------- --------------------
1. John Fitch Registered Investment Companies: 1 $ 337.7M 0 $ 0
Other Pooled Investment Vehicles: 10 $1,024.8M 3 $378.3M
Other Accounts: 3 $ 80.6M 0 $ 0
2. Justin Lannen Registered Investment Companies: 1 $ 337.7M 0 $ 0
Other Pooled Investment Vehicles: 4 $ 163.6M 1 $ 52.6M
Other Accounts: 3 $ 80.6M 0 $ 0
Information provided as of November 30, 2008
The Advisory fees for these accounts where the advisory fee is based on
performance include a base management fee and a performance fee over a specified
hurdle rate.
POTENTIAL CONFLICTS OF INTERESTS
MCIM adopted policies designed to prevent such conflicts, including policies
regarding best execution, daily monitoring of trading and allocation.
(A)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
Compensation consists of fixed remuneration in the form of a base salary,
variable (at risk) performance pay in the form of an annual profit share
allocation and a long term incentive in the form of options (applies to Director
level employees only). Fixed remuneration takes into consideration the role of
individuals and market conditions. Remuneration is reviewed on a yearly basis in
March/April and takes effect from 1 July of that year. The discretionary profit
sharing pool is allocated to business areas based primarily on relative
contribution to profits taking into account capital usage, and then to
individuals with the business areas. Allocations to individuals are based on
their performance contribution over the year to 31 March. As part of the annual
remuneration review cycle, Directors are entitled to receive an allocation of
options based on their performance over the year. The Group uses
options to provide a long term equity incentive for senior staff and ensures
significant alignment with shareholder interests over the long term.
(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP
The information below is as of November 30, 2008
Dollar ($) Range of Fund
Name Shares Beneficially Owned
------------- -------------------------
John Fitch $0
Justin Lannen $0
FOUR CORNERS CAPITAL MANAGEMENT, LLC:
(A)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
Four Corners manages multiple portfolios comprised principally of U.S. dollar
denominated, floating-rate, senior secured, commercial and industrial loans and
notes, loan-based swaps, and other debt instruments, and may manage portfolios
that include high yield bonds and/or credit derivatives. Robert I. Bernstein,
Managing Director and Chief Investment Officer of Four Corners, and Drew R.
Sweeney, Senior Vice President of Four Corners, are co-portfolio managers. Drew
R. Sweeney was designated a co-portfolio manager of the registrant upon the
announcement of resignation of Michael P. McAdams from Four Corners on February
6, 2009. The co-portfolio managers are supported in their portfolio management
activities by the Four Corners investment staff. Four Corners' investment
analysts are assigned loans within specific industries and report to the Chief
Investment Officer. Mr. Bernstein has been Managing Director and Chief
Investment Officer of Four Corners since 2001. Mr. Sweeney has been Senior Vice
President of Four Corners since 2005. Prior to that, Mr. Sweeney was a Vice
President and Analyst at American Express Asset Management Group.
(A)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
AND POTENTIAL CONFLICTS OF INTEREST
OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
Total Assets for
# of Accounts which Advisory
Total Managed for Fee is Based on
Name of Portfolio # of Accounts Total Assets which Advisory Fee is Performance
Manager or Team Member Type of Accounts Managed ($millions) Based on Performance ($millions)
---------------------- --------------------------------- ------------- ------------ --------------------- -----------------
1. Robert I. Bernstein Registered Investment Companies: 2 $ 481.27M 0 $ 0
Other Pooled Investment Vehicles: 4 $1,134.97M 4 $1,134.97M
Other Accounts: 8 $1,395.45M 0 $ 0
2. Drew R. Sweeney Registered Investment Companies: 2 $ 481.27M 0 $ 0
Other Pooled Investment Vehicles: 0 $ 0 0 $ 0
Other Accounts: 1 $ 83.84M 0 $ 0
Information provided as of November 30, 2008
POTENTIAL CONFLICTS OF INTERESTS
In general, Four Corners seeks to allocate the purchase and sale of corporate
loans to clients in a fair and equitable manner to quickly and prudently create
a well-constructed, fully invested portfolio of corporate loans. Since Four
Corners' clients have varying investment restrictions, and because of the
constraining mechanics of the corporate loan market, allocation of trades
through methods such as pro-rata allocation are not feasible. Therefore, the
allocation of corporate loan purchases and sales to various accounts is
generally based on factors such as the client's investment restrictions and
objectives, including expected liquidity and/or third party credit ratings, the
client's acceptance or rejection of prospective investments, if applicable, and
the relative percentage of invested assets of a client's portfolio, among
others. Assets may be disproportionately allocated to accounts during their
initial investment (ramp up) period, notwithstanding that other accounts may
also have assets available for investment. Such disproportionate allocation to
accounts during the ramp-up process may have a detrimental effect on other
accounts. Subject to the foregoing, whenever Four Corners' clients have
available funds for investment, investments suitable and appropriate for each
will be allocated in a manner Four Corners believes to be equitable to each,
although such allocation may result in a delay in one or more client accounts
being fully invested that would not occur if an allocation to other client
accounts were not made. Moreover, it is possible that due to differing
investment objectives or for other reasons, Four Corners and its affiliates may
purchase securities or loans of an issuer for one client and at approximately
the same time recommend selling or sell the same or similar types of securities
or loans for another client. For these and other reasons, not all portfolios
will participate in the gains or losses experienced by other portfolios with
similar investment objectives.
(A)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
Portfolio Manager and Management Team compensation is typically comprised of a
base salary and a bonus. There are no pre-determined formulas to determine base
salaries or bonus amounts. Bonuses for all employees, including the Portfolio
Managers, are discretionary. In addition, the Portfolio Managers have stock
options of Macquarie Group Limited. These options are in varying amounts and are
subject to certain vesting and other provisions of the Macquarie option plan.
Finally, the Portfolio Managers are Members of the entity recently purchased by
Macquarie Group Limited, and there are certain payments associated with that
purchase which will be paid over time. A portion of those payments is based on
achieving certain revenue targets.
The Portfolio Managers' salaries are set at certain levels and may be raised at
the discretion of Macquarie Group Limited. Bonuses are entirely discretionary,
and are likely to be related to, among
other things, business unit profitability and personal performance. Compensation
is determined without regard to the performance of any one particular fund. The
Portfolio Managers have no direct incentive to take undue risks when individual
fund performance is lagging.
(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP
The information below is as of November 30, 2008:
Name of Portfolio Manager or Dollar ($) Range of Fund Shares
Team Member Beneficially Owned
---------------------------- -------------------------------
Robert I. Bernstein $0
Drew R. Sweeney $0
(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) 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.
(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.
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) Macquarie/First Trust Global Infrastructure/Utilities Dividend &
Income Fund
By (Signature and Title)* /s/ James A. Bowen
------------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date January 26, 2009
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 A. Bowen
------------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date January 26, 2009
By (Signature and Title)* /s/ Mark R. Bradley
------------------------------------------------------
Mark R. Bradley, Treasurer, Controller,
Chief Financial Officer and Chief Accounting Officer
(principal financial officer)
Date January 26, 2009
* Print the name and title of each signing officer under his or her
signature.