{00013108.DOC;3}
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, Suite 400
WHEATON, IL 60187
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
WHEATON, IL 60187
(Name and address of agent for service)
registrant's telephone number, including area code: 630-765-8000
Date of fiscal year end: NOVEMBER 30
Date of reporting period: MAY 31, 2009
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
SEMI-ANNUAL
REPORT
FOR THE PERIOD ENDED
MAY 31, 2009
(GRAPHIC)
MACQUARIE/FIRST TRUST
GLOBAL INFRASTRUCTURE/
UTILITIES DIVIDEND &
INCOME FUND
(MACQUARIE LOGO) (FOUR COURNERS CAPITAL MANAGEMENT LOGO) (FIRST TRUST LOGO)
TABLE OF CONTENTS
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
SEMI-ANNUAL REPORT
MAY 31, 2009
Shareholder Letter ....................................................... 1
At A Glance .............................................................. 2
Portfolio Commentary ..................................................... 3
Portfolio of Investments ................................................. 10
Statement of Assets and Liabilities ...................................... 15
Statement of Operations .................................................. 16
Statements of Changes in Net Assets ...................................... 17
Statement of Cash Flows .................................................. 18
Financial Highlights ..................................................... 19
Notes to Financial Statements ............................................ 20
Additional Information ................................................... 27
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning
of the Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended. Forward-looking statements include statements regarding the
goals, beliefs, plans or current expectations of First Trust Advisors L.P.
("First Trust" or the "Advisor") and/or 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 certain other risks of investing in the
Fund.
Performance data quoted represents past performance, which is no guarantee
of future results, and current performance may be lower or higher than the
figures shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, net asset value and common share price will fluctuate and Fund shares,
when sold, may be worth more or less than their original cost.
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 Robert I. Bernstein
and Drew R. Sweeney, 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 Fund regulatory
filings.
MCIM, FOUR CORNERS AND THE FUND ARE NOT DEPOSIT TAKING INSTITUTIONS FOR THE
PURPOSES OF THE BANKING ACT OF 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)
SEMI-ANNUAL REPORT
MAY 31, 2009
Dear Shareholders:
2008 brought all sorts of challenges to investors. Throughout the year, the
financial sector was plagued with failures in banking, insurance and brokerage
firms. By year's end, after a meltdown in the credit markets, historically high
levels of volatility in the stock market, and the resulting turmoil to the
overall economy, the Dow Jones Industrial Average's total return was -31.92% (as
of 12/31/08). In fact, 2008 was the Dow's third worst calendar year since its
inception in 1896. For the year, the negative total return performance of the
Dow was surpassed only by 1931 and 1907, two years in which the U.S. was also
enduring a major banking crisis. Of the thirty stocks in the Dow, only two were
up in 2008. However, many economists believe the recession that began in
December, 2007 ended in March, 2009. In fact, the Dow's total return from March
9 (the statistical end of the bear market) to May 31, 2009, was 30.83%. Of
course, no one can predict that this trend will continue.
Yet, regardless of the market, First Trust Advisors L.P. ("First Trust") has
always believed that in order to be successful in reaching your financial goals,
you should be invested for the long term. A long-term investor understands that
the market, from a historical perspective, has always experienced ups and downs.
But history has shown that the patient investor is typically rewarded over the
long term. While no one has the ability to predict when the markets will
recover, we believe that staying invested in quality products and having a
long-term perspective can help investors reach their financial goals.
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 information
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 MAY 31, 2009
FUND STATISTICS
Symbol on New York Stock Exchange MFD
Common Share Price $ 9.75
Common Share Net Asset Value ("NAV") $ 12.26
Premium (Discount) to NAV (20.47)%
Net Assets Applicable to Common Shares $111,299,716
Current Quarterly Distribution per Common Share (1) $ 0.150
Current Annualized Distribution per Common Share $ 0.6000
Current Distribution Rate on Closing Common Share Price (2) 6.15%
Current Distribution Rate on NAV (2) 4.89%
COMMON SHARE PRICE & NAV FUND STATISTICS (WEEKLY CLOSING PRICE)
(PERFORMANCE GRAPH)
Market NAV
------ -----
5/30/2008 23.94 22.91
6/6/2008 23.96 22.63
6/13/2008 22.9 21.75
6/20/2008 22.03 21.22
6/27/2008 20.63 20.82
7/3/2008 20.41 20.81
7/11/2008 18.68 20.66
7/18/2008 18.73 20.74
7/25/2008 19.62 21.1
8/1/2008 19.35 20.9
8/8/2008 19.36 20.65
8/15/2008 18.8 20.27
8/22/2008 17.48 19.63
8/29/2008 17.31 19.61
9/5/2008 17.06 18.29
9/12/2008 15.42 18.37
9/19/2008 14 18.15
9/26/2008 14.5 17.73
10/3/2008 13.02 16.27
10/10/2008 7.92 12.05
10/17/2008 10.96 13.44
10/24/2008 9.86 12.49
10/31/2008 11.21 13.67
11/7/2008 10.8 13.6
11/14/2008 10 12.7
11/21/2008 7.57 11.12
11/28/2008 8.6 11.42
12/5/2008 8.12 10.7
12/12/2008 8.89 11.09
12/19/2008 9.03 11.46
12/26/2008 9.28 11.39
1/2/2009 10.41 12.11
1/9/2009 10.7 11.95
1/16/2009 9.96 11.52
1/23/2009 10.05 11.13
1/30/2009 10.56 11.09
2/6/2009 11.82 11.51
2/13/2009 9.57 11.16
2/20/2009 8.4 10.56
2/27/2009 8.16 10.18
3/6/2009 6.7 9.22
3/13/2009 6.7 9.36
3/20/2009 7.55 10.22
3/27/2009 7.95 10.26
4/3/2009 8.17 10.39
4/9/2009 8.24 10.67
4/17/2009 8.52 10.8
4/24/2009 8.46 10.89
5/1/2009 9 11.28
5/8/2009 9.47 11.83
5/15/2009 8.97 11.52
5/22/2009 9.32 11.89
5/31/2009 9.75 12.26
PERFORMANCE
Average Annual
Total Return
6 Months Ended 1 Year Ended Inception (3/25/2004)
5/31/2009 5/31/2009 to 5/31/2009
-------------- ------------ --------------------
Fund Performance
NAV (3) 11.22% -40.26% 4.16%
Market Value (4) 17.45% -54.53% -1.23%
Index Performance
S&P 500 Utilities Total Return Index -8.84% -32.52% 5.80%
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
--------------- -----------
Severn Trent plc 5.4%
United Utilities plc 5.3
SP AusNet 4.8
Red Electrica Corp. SA 4.8
Atlantia SPA 3.9
Spark Infrastructure Group 3.9
Enagas SA 3.4
Northland Power Income Fund 3.3
Pembina Pipeline Income Fund 3.0
Pennon Group plc 2.8
----
Total 40.6%
====
% OF TOTAL
COUNTRY INVESTMENTS
------- -----------
United States (6) 32.5%
United Kingdom 13.5
Australia 12.5
Spain 10.4
Canada 10.3
Italy 10.2
France 4.0
Japan 2.6
New Zealand 1.6
Germany 1.4
Switzerland 1.0
-----
Total 100.0%
=====
% OF TOTAL
INDUSTRY CLASSIFICATION(5) INVESTMENTS
-------------------------- -----------
Electric Utilities 21.9%
Gas Utilities 19.9
Transportation Infrastructure 16.5
Multi-Utilities 9.2
Water Utilities 8.2
Power Generation 3.3
Diversified Consumer Services 1.7
Communications 1.1
Energy Equipment & Services 1.1
----
Total 82.9%
====
(1) Most recent distribution paid or declared through 5/31/2009. Subject to
change in the future.
(2) Distribution rates are calculated by annualizing the most recent
distribution paid or declared through the report date and then dividing by
Common Share Price or NAV, as applicable, as of 5/31/2009.
(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 17.1%
of the Fund's portfolio.
(6) The percentage of United States securities includes 17.1% of Senior
Floating-Rate Loan interests.
Page 2
PORTFOLIO COMMENTARY
SUB-ADVISOR
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 $1.7 billion of assets as of May 31, 2009,
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 $2.5 billion of assets as of May 31,
2009, with an emphasis on Senior Loans.
Macquarie Group, which includes MGL, its worldwide affiliates and subsidiaries,
and the funds they manage, is a global provider of banking, financial, advisory,
investment and funds management services. Macquarie Funds Group, with over $54
billion in funds under management as of May 31, 2009, is the global investment
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 MANAGEMENT TEAM
There will be a change in one of the Co-Portfolio Managers of MFD's Core
Component effective August 1, 2009.
Justin Lannen will return in August 2009 to Sydney, Australia, where he will
remain a Portfolio Manager on the MCIM investment team and will assume direct
responsibilities for the management of the team's Australian and Asian based
portfolios. As a result of the relocation, he will relinquish Co-Portfolio
Manager responsibilities for MFD on July 31, 2009.
Coincident with Mr. Lannen relocating back to Sydney, Andrew Maple-Brown,
currently Portfolio Manager on the MCIM investment team in Sydney, will relocate
to New York effective August 1, 2009. MCIM has appointed Mr. Maple-Brown as
Co-Portfolio Manager of MFD as of August 1, 2009 to succeed Mr. Lannen. Mr.
Maple-Brown, along with Mr. Fitch and Mr. Lannen, serves on the MCIM Investment
Committee.
MFD's investment objective, philosophy, and portfolio construction process will
remain as they have been since the Fund's inception. Furthermore, Jon Fitch, who
is the MCIM investment team's Chief Investment Officer, will remain as
Co-Portfolio Manager of the Fund as he has since the Fund's inception.
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 20 years of business experience encompassing business
management, equity analysis, strategic consulting and banking. In addition to
MFD, Mr. Fitch is also the portfolio manager of 13 other global-listed
infrastructure funds (including another U.S. closed-end fund) with similar
portfolios and investment objectives. 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 New South Wales, 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.
Page 3
PORTFOLIO COMMENTARY - (CONTINUED)
JUSTIN LANNEN, CFA
CO-PORTFOLIO MANAGER, MFD CORE COMPONENT, (THROUGH JULY 31, 2009)
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 other
global-listed infrastructure funds (including another U.S. closed-end fund) with
similar portfolios and investment objectives. 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 $1.1 billion Colonial
First State Industrial Share Fund. Mr. Lannen was at Colonial First State for 10
years, which included seven years on 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.
ANDREW MAPLE-BROWN
CO-PORTFOLIO MANAGER, MFD CORE COMPONENT (EFFECTIVE AUGUST 1, 2009)
PORTFOLIO MANAGER, MACQUARIE CAPITAL INVESTMENT MANAGEMENT LLC
Mr. Maple-Brown joined the MCIM investment team in 2007 as a Portfolio Manager
with direct responsibilities for the management of the team's Australian and
Asian based portfolios. These funds have the same investment objective,
philosophy, and portfolio construction process as MFD, subject to minor
differences due to local compliance regulations. Mr. Maple-Brown joined
Macquarie Group in August 2001 in the Debt Markets area, where his focus was
primarily on infrastructure transactions, and particularly Public Private
Partnerships (PPP). He also worked extensively on structured securitization
transactions, including executing whole of business securitizations for water
and other public assets as well as commercial mortgage-backed securities. Prior
to Macquarie, Mr. Maple-Brown spent over four years at Lend Lease in its Project
Finance group. In his roles at Lend Lease and Macquarie Debt Markets, Mr.
Maple-Brown has had in excess of ten years experience in financing
infrastructure and structured property transactions. Mr. Maple-Brown has a
Bachelor of Engineering (1st Class Hons, Mechanical) and a Bachelor of Commerce
from the University of Sydney and a Masters of Applied Finance from Macquarie
University.
ROBERT I. BERNSTEIN, CFA
CO-PORTFOLIO MANAGER, MFD SENIOR LOAN COMPONENT
CHIEF INVESTMENT OFFICER, 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
has been Managing Director and Chief Investment Officer of Four Corners since
2001. He 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 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.
DREW R. SWEENEY
CO-PORTFOLIO MANAGER, MFD SENIOR LOAN COMPONENT
SENIOR VICE PRESIDENT, FOUR CORNERS CAPITAL MANAGEMENT, LLC
Mr. Sweeney was designated Co-Portfolio Manager of the Fund upon the
announcement of resignation of Michael P. McAdams from Four Corners on February
6, 2009. In addition to portfolio management, Mr. Sweeney's responsibilities
include covering the media and entertainment, cable and satellite industries.
Mr. Sweeney has 14 years of experience in leveraged finance including
investments in senior secured loans and high yield bonds. Mr. Sweeney joined
Four Corners in 2005 from American Express Asset Management Group, Inc. where he
was primarily responsible for managing investments of senior secured loans and
high yield bonds in the gaming, lodging, leisure, homebuilding, and building
product sectors. Prior to joining American Express, Mr. Sweeney worked at Four
Corners and ING Capital Advisors, LLC managing investments of senior secured
loans in the media sector. Previously, Mr. Sweeney was an Associate at First
Union Securities in the Financial Sponsors and Diversified Industries Groups.
Mr. Sweeney received an MBA from the Kenan-Flagler Business School at the
University of North Carolina at Chapel Hill and a BS from Rutgers University.
Page 4
PORTFOLIO COMMENTARY - (CONTINUED)
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. It 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.
MARKET RECAP
The performance of the Fund for the six months ended May 31, 2009 was set
against the backdrop of continued volatility in world equity markets, lingering
credit market stress, and realized weakness in economies globally. Listed
infrastructure securities generally performed in line with broader global
equities as measured by the MSCI World Index1. However, as we will discuss
below, the electric utilities sector lagged in particular.
PERFORMANCE ANALYSIS- CORE COMPONENT
As shown on the performance table of this report, MFD's Net Asset Value ("NAV")
total return for the period was positive and outperformed the S&P 500 Utilities
Total Return Index ("Index"). This was largely driven by the Fund's Core
Component. Although the Fund is not managed toward any benchmark and invests in
a global portfolio of infrastructure stocks in a range of currencies and senior
secured loans, we believe that this Index offers a helpful frame of reference.
There were a number of factors driving the Core Component's positive
contribution to the Fund's positive NAV total return during the period:
- From the start of the period until the global equity markets' nadir in
early March 2009, the Fund was helped by its increased exposure to
"regulated/contracted" infrastructure industries (e.g., gas,
utilities, electric utilities, and water utilities) that are generally
less exposed to prevailing economic conditions than other segments of
the infrastructure universe. This defensive positioning, which we
initiated largely in the second half of 2008, was funded by a
reduction in "user demand" transportation infrastructure
sub-industries (e.g., airports, railroads, seaports and tollroads)
that may be more exposed to the economic downturn.
- We began to progressively unwind this defensive positioning starting
at the end of 2008 through selective investments in user demand stocks
that ranked very attractively in our infrastructure investment
universe, and that we believed had more than fully priced in the
economic downturn. As a result, MFD was well positioned to participate
in the market rally that started in early March 2009 and, for
infrastructure securities, was primarily led by user demand stocks
being oversold.
----------
(1) The MSCI World Index is a stock market index of 1500 "world" stocks
maintained by MSCI Inc. ("MSCI"). The index includes a collection of stocks
of all the developed markets in the world, as defined by MSCI.
Page 5
PORTFOLIO COMMENTARY - (CONTINUED)
- Throughout the period, the Fund benefited from the positive
contribution of its exposure to pipeline companies within the gas
utilities industry, mainly through holdings in U.S.-domiciled Master
Limited Partnerships ("MLPs").
- The fall of the U.S. dollar against several major currencies had a
positive impact on performance because the Fund is not currency hedged
and has a large majority of its investments outside the U.S.
Each of the factors is discussed in further detail below.
DECEMBER 2008 THROUGH FEBRUARY 2009: DEFENSIVELY POSITIONED FOR ECONOMIC
AFTERSHOCKS
As the global economic outlook rapidly weakened in the latter half of 2008, we
temporarily tilted the Fund away from investing in user demand assets and
towards the more regulated/contracted industries because companies in these
industries have assets with lower sensitivity to the economic cycle. Despite
this tilt, MFD's performance was negative through early March 2009, which was
partially due to the fact that listed infrastructure securities were generally
unable to decouple from the sell-off in the broad equity markets that resulted
from the severe credit market dislocation and sharp economic slowdown. However,
the Fund's regulated/contracted holdings were among the Fund's better performing
positions relative to other Fund holdings during this three-month period.
The electric utilities sector, which is largely comprised of relatively
competitive integrated utilities, benefited during this time from the industry's
perceived "safe haven" status among broader equity market investors. MCIM
believes that the fundamentals for the industry were broadly turning downward as
many of the integrated utilities that dominate the industry were exposed to
competitive electricity prices correlated to lower oil and gas prices, and lower
demand due to the economic downturn. Therefore, while many integrated electric
utilities are perceived as "safe havens," we believe they may be particularly
vulnerable to any negative news, as well as to the sector rotation into the more
cyclical and economically sensitive stocks that began in March. The Fund has
always been very underweight in these relatively competitive utilities that form
a large part of the Index, because they tend not to have the stable and
predictable cash flows that we seek in our infrastructure investments. The Fund
did benefit to some degree from the flight to this traditionally liquid,
defensive infrastructure industry through its holdings of regulated utilities
(and other regulated businesses).
MARCH THROUGH MAY 2009: PARTICIPATION IN THE MARKET "SPRING AWAKENING"
A number of factors contributed to the change in market sentiment and strong
rally in global equity markets that began in March 2009. Such factors included
executives of several global financial firms expressing cautious optimism,
governments widening measures designed to ease the financial and economic
situation, the release of more positive economic data, and an injection into the
markets of some of the large investor cash balances that we believe was sitting
on the sidelines during the prior months, together with some short covering. The
rally was initially viewed as a "beta recovery" (a lessening of market
volatility) as it was largely led by the more cyclical sectors of the equity
markets that had sold off the most in recent months (most notably financials)
and some of the lower quality, higher risk stocks. Within the infrastructure
space, the rally was led by the user demand stocks.
The share prices of infrastructure companies that own and/or operate user demand
assets were negatively affected in 2008 initially by the sharply higher price of
oil. Heading into the start of the period and through early March 2009, these
stocks remained under pressure as investors expected lower usage levels and thus
lower profitability as a result of the sharp deterioration in the global and
local economies. The market focused on the mostly weaker tollroad, air traffic
and seaport volume data during the period, which overshadowed the benefit of
lower oil prices following the market's July 2008 peak.
While there has been some reduction in the usage of user demand assets, it is
important to keep it in context relative to most of the other sectors in global
equity markets. We believe, for example, that infrastructure remains far less
cyclical than many other sectors such as basic materials or retail. We believe
that, around their lows, the prices of some transportation infrastructure stocks
assumed a more severe downturn with only a very weak recovery forecast. As a
result, many of these stocks appeared to us to be oversold by the end of 2008.
Subsequently, we began to increase exposure to user demand stocks, particularly
to tollroad stocks where there is greater earnings visibility.
As an example of our investment process, Atlantia SpA is a user demand stock
that was new to the Fund and in which we initiated and built a position during
the period covered by this report. Atlantia controls approximately 60% of
Italy's tollroad network - over 3,500 kilometers of roads and 4 million users
per day. The company has a dividend yield of approximately 5%, based on what we
believe to be a sustainable payout of approximately 80% of cash flow. During the
period, a new concession was agreed upon with the Italian government, resulting
in the implementation of a capital expenditure program of up to EUR 15 billion
of opportunities. We believe that Atlantia has a conservative capital structure
for a tollroad
Page 6
PORTFOLIO COMMENTARY - (CONTINUED)
company, with a debt to Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA") ratio of only five times. The operational performance of
Atlantia's tollroad assets has been resilient. In the company's 2008 fiscal
year, traffic volume was only marginally lower, while revenue and EBITDA were
up.
[ATLANTIA GRAPHIC OMITTED]
Despite all this, the Atlantia share price had declined (as illustrated in the
chart above) through the start of 2009 for the same reasons discussed earlier
that affected nearly all user demand stocks. We began to build a position in
Atlantia at the end of December 2008. By the period's end, the stock was the
Fund's fifth largest position.
PIPELINES: DELIVERING CONSISTENTLY IN UNCERTAIN TIMES
U.S.-listed MLPs that own pipeline and associated energy infrastructure assets
are the Fund's largest investment in the gas utilities industry. Most of the
Fund's U.S. pipeline holdings outperformed both the broader infrastructure
sector and the pipeline sub-industry over the period covered by this report,
after a sharp sell-off prior to the start of the period due to liquidity-related
selling in the sub-industry.
We believe that the pipeline sub-industry's investment fundamentals remain
sound. They are typically conservatively managed and have generated very
predictable cash flows. Company announcements throughout the period continued to
reflect sound operational performance and a favorable outlook. We believe that
the pipeline MLPs within the Fund continue to have limited exposure to volume
and commodity price risk and offer relatively predictable earnings, sound
balance sheets, defensive cash flows, attractive yields and good growth
prospects.
CURRENCY: THE U.S. DOLLAR'S LOSS WAS THE FUND'S GAIN
As the Fund is not hedged for currency, an overlaying contributor to the Fund's
positive return was the decline of the U.S. dollar during the period. Currencies
have the potential to be exposed to short-term volatility, and the Fund was
adversely affected in prior periods by the strength of the U.S. dollar. However,
we believe that investors in a global equity portfolio may benefit over time
from the diversification to their overall portfolio provided by foreign currency
exposure.
When compared against the U.S. dollar over the period, the Australian dollar
appreciated by 22%, the Canadian dollar by 14%, the Euro by 16% and the British
Pound by 5%2. These four currencies represented approximately 63% of the Fund's
positions at the end of the period.
----------
(2) Source: Bloomberg L.P.
Page 7
PORTFOLIO COMMENTARY - (CONTINUED)
PORTFOLIO COMPOSITION
As of May 31, 2009, the Fund's Core Component held positions in 38 global
infrastructure companies, representing 11 countries and 9 infrastructure
industries.
During the period, we decreased the Fund's weightings in gas utilities and
electric utilities, reduced our cash holdings, and increased the weightings in
transportation infrastructure to unwind the defensive tilt that was discussed
earlier.
PERFORMANCE ANALYSIS - 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 approximate 60-to-90-day lag.
The supply/demand imbalance that has existed in the market since mid-2007
continued to drive prices lower in 2008, and the collapse of Lehman Brothers in
September 2008 led to a global decline in many asset prices, including loan
prices. These price declines caused many loan funds, which had invested in loans
using leverage, to sell loans to satisfy their leverage tests. This type of
forced selling exacerbated the imbalance of an already imbalanced market, and
resulted in an S&P/LSTA Leveraged Loan Index return of a staggering -28% for the
fourth quarter of 2008.(3)
The technical imbalance which dominated the market in late 2007 and 2008
reversed itself in the first half of 2009. This reversal was caused by a number
of factors, including increased prepayments of loans, inflows into loan and high
yield mutual funds, no/limited forced selling/deleveraging, and some optimism
amidst so-called "green shoots," defined as any sign of growth or recovery.
Through May 31, 2009, the S&P/LSTA Leveraged Loan Index was up 27% YTD, erasing
most of the losses that occurred after the Lehman collapse.(3)
Despite the significant rally in the first half of 2009, we believe that senior
loan investments remain attractive. The volatility of senior loans has increased
dramatically in the last two years, and we are of the view that this asset class
will remain volatile in the foreseeable future. As a result of this increased
volatility and increased borrowing costs, we decreased the Fund's leverage
during the period. While this could cause the Fund's returns to lag in market
rallies, we believe that it is a prudent course of action.
PERFORMANCE RELATIVE TO THE INDEX
The Index is a broad barometer of the performance of utility stocks (not
including all infrastructure industries) 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 outperformed the Index due to (1) the underweight position in electric
utilities, (2) the weaker U.S. dollar, and (3) stock selection and overweight
positions relative to the Index in gas utilities and transportation
infrastructure securities, due to the focus of the Fund on these types of
assets. The Fund's Senior Loan Component also contributed to this
outperformance.
DISTRIBUTIONS
During the period covered by this report, the Fund announced two regularly
scheduled quarterly distributions totaling $0.30 per share. As previously
disclosed, MFD decreased its distribution from previous levels to better match
the operational cash flow income generated by the Fund's holdings, which had
declined due to the downturn in the global equities markets in the second half
of 2008. The reduction in distributions enabled the Fund to potentially benefit
from the long-term valuation opportunities in global infrastructure securities
that have been created, in our view, by the equity market dislocation.
----------
(3) Source: Standard & Poor's
Page 8
PORTFOLIO COMMENTARY - (CONTINUED)
MARKET AND FUND OUTLOOK
We believe that economic conditions will remain difficult for some time, with
signs of "green shoots" tempered by more downbeat economic indicators. Investors
will likely remain cautious about company earnings in a weaker economic (and
thus lower demand) environment. However, it is expected that many infrastructure
companies held by the Fund will continue to deliver generally sound operational
performance in keeping with their essential service nature and past resilience
to weak economic conditions.
The Fund aims to balance attractive long-term opportunities with shorter-term
drivers of return (for example, the impact on transportation infrastructure
assets of the economic downturn). As governments have demonstrated a willingness
to act to stabilize the financial system and increase spending to stimulate
their economies, we believe the most difficult economic period is likely to have
passed.
We believe that the attractive investment characteristics of the underlying
infrastructure assets in the Fund remain in place. It remains our view that the
pricing of global listed infrastructure securities should revert more closely
over time to reflect the fundamentals of their respective underlying
infrastructure assets, and that the Fund will ultimately benefit from owning
high quality listed infrastructure securities. We believe that the Fund provides
investors with an attractive vehicle to access a global portfolio of such stocks
and that it can play a diversifying role in a wider portfolio.
While we are pleased with the positive 6-month return of the Fund, we
acknowledge that the last 18 months through to the end of the period have been
difficult for long-term shareholders. Looking forward, we believe that MFD will
provide U.S. investors with an attractive vehicle to access the broad global
universe of listed infrastructure securities. We continue to appreciate your
investment in MFD.
Page 9
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (b)
MAY 31, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
------------ --------------------------------------------------------------- -----------
COMMON STOCKS - 83.0%
AUSTRALIA - 15.5%
4,110,953 Envestra Ltd. (c) ............................................. $ 1,556,828
10,293,033 SP AusNet (c) ................................................. 6,648,214
6,194,144 Spark Infrastructure Group (c) ................................ 5,339,941
1,147,842 Transurban Group (c) .......................................... 3,741,555
-----------
17,286,538
-----------
CANADA - 2.8%
42,241 Enbridge, Inc. ................................................ 1,497,345
54,500 TransCanada Corp. ............................................. 1,616,405
-----------
3,113,750
-----------
FRANCE - 5.0%
40,021 Aeroports de Paris (c) ........................................ 2,928,123
21,382 Electricte de France (c) ...................................... 1,125,548
58,893 Eutelsat Communications (c) ................................... 1,499,245
-----------
5,552,916
-----------
GERMANY - 1.7%
45,419 Hamburger Hafen Und Logistik AG (c) ........................... 1,904,423
-----------
ITALY - 12.7%
255,333 Atlantia SPA (c) .............................................. 5,408,346
308,172 Enel SPA (c) .................................................. 1,835,342
727,939 Snam Rete Gas SPA (c) ......................................... 3,155,153
1,003,362 Terna SPA (c) ................................................. 3,698,872
-----------
14,097,713
-----------
JAPAN - 3.2%
35,657 East Japan Railway Co. (c) .................................... 2,128,889
382,155 Tokyo Gas Co. Ltd. (c) ........................................ 1,406,559
-----------
3,535,448
-----------
NEW ZEALAND - 1.9%
2,098,999 Auckland International Airport, Ltd. (c) ...................... 2,134,572
-----------
SPAIN - 12.9%
94,521 Abertis Infraestructuras S.A. (c) ............................. 1,787,304
206,488 Cintra Concesiones de Infraestructuras de Transporte SA (c) ... 1,353,162
250,861 Enagas SA (c) ................................................. 4,652,221
141,000 Red Electrica Corp. SA (c) .................................... 6,620,407
-----------
14,413,094
-----------
SWITZERLAND - 1.2%
5,705 Flughafen Zuerich AG (c) ...................................... 1,335,775
-----------
UNITED KINGDOM - 16.8%
507,213 Pennon Group plc (c) .......................................... 3,874,539
411,124 Severn Trent plc (c) .......................................... 7,488,348
841,195 United Utilities plc (c) ...................................... 7,325,577
-----------
18,688,464
-----------
See Notes to Financial Statements
Page 10
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (b) - (CONTINUED)
MAY 31, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
------------ --------------------------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
UNITED STATES - 9.3%
59,730 Exelon Corp. .................................................. $ 2,867,637
39,732 ITC Holdings Corp. ............................................ 1,704,105
174,229 Northeast Utilities ........................................... 3,622,221
127,400 Xcel Energy, Inc. ............................................. 2,184,910
-----------
10,378,873
-----------
TOTAL COMMON STOCKS
(Cost $113,905,341) ........................................... 92,441,566
-----------
MASTER LIMITED PARTNERSHIPS - 9.8%
UNITED STATES - 9.8%
46,813 Amerigas Partners, L.P. ....................................... 1,497,080
35,941 Enbridge Energy Partners, L.P. ................................ 1,450,219
50,300 Energy Transfer Partners, L.P. ................................ 2,128,193
54,450 Enterprise Products Partners, L.P. ............................ 1,415,700
28,900 Kinder Morgan Energy Partners, L.P. ........................... 1,477,946
83,781 Magellan Midstream Partners, L.P. ............................. 2,928,146
-----------
TOTAL MASTER LIMITED PARTNERSHIPS
(Cost $9,224,236) ............................................. 10,897,284
-----------
CANADIAN INCOME TRUSTS - 10.0%
395,560 Consumers' Waterheater Income Fund ............................ 2,318,831
524,074 Northland Power Income Fund ................................... 4,565,096
321,849 Pembina Pipeline Income Fund .................................. 4,130,162
9,300 Pembina Pipeline Income Trust (d) ............................. 119,343
-----------
TOTAL CANADIAN INCOME TRUSTS
(Cost $11,043,255) ............................................ 11,133,432
-----------
PRINCIPAL RATINGS (E) STATED
VALUE DESCRIPTION MOODY'S S&P COUPON MATURITY (F) VALUE
---------- ----------------------------------------- ------------- ------------ ------------ ------------
SENIOR FLOATING-RATE TERM LOAN INTERESTS (G) - 21.2%
CABLE & SATELLITE - 0.4%
$ 500,000 UPC Distribution Holding B.V.,
Term Loan N .......................... Ba3 B+ 2.16% 12/31/14 462,813
------------
ELECTRIC UTILITIES - 3.5%
1,579,114 Astoria Generating Co.
Acquisitions, LLC, Term Loan B ....... B1 BB- 2.06% - 2.14% 02/23/12 1,448,838
319,848 Covanta Energy Corp.,
Synthetic Letter of Credit ........... Ba1 BB 2.69% 02/09/14 294,900
636,697 Covanta Energy Corp.,
Term Loan B .......................... Ba1 BB 1.88% 02/09/14 587,035
1,677,330 NRG Energy, Inc., Synthetic
Letter of Credit ..................... Ba1 BB+ 2.97% 02/01/13 1,551,356
------------
3,882,129
------------
See Notes to Financial Statements
Page 11
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (b) - (CONTINUED)
MAY 31, 2009 (UNAUDITED)
PRINCIPAL RATINGS (e) STATED
VALUE DESCRIPTION MOODY'S S&P COUPON MATURITY (f) VALUE
---------- ------------------------------------------------------ ------------- ------------ ------------ ------------
SENIOR FLOATING-RATE TERM LOAN INTERESTS (g) - (CONTINUED)
ENVIRONMENTAL & FACILITIES SERVICES - 2.4%
$ 18,020 EnergySolutions, LLC,
Synthetic Letter of Credit ........................ Ba2 NR (h) 2.57% 06/07/13 $ 16,759
1,641,509 EnergySolutions, LLC,
Synthetic Letter of Credit ........................ Ba2 NR (h) 2.57% 08/19/13 1,526,604
129,706 EnergySolutions, LLC,
Term Loan (Duratek) ............................... Ba2 NR (h) 4.15% 06/07/13 120,626
243,508 EnergySolutions, LLC,
Term Loan (EnergySolutions) ....................... Ba2 NR (h) 4.15% 06/07/13 226,462
1,512,985 EnviroSolutions Real Property
Holdings, Inc., Initial Term Loan ................. Caa1 B- 10.50% 07/07/12 771,622
------------
2,662,073
------------
GAS UTILITIES - 0.7%
887,999 Atlas Pipeline Partners, L.P.,
Term Loan. ........................................ B1 B 5.07% - 7.00% 07/27/14 772,559
------------
HEALTH CARE FACILITIES - 2.2%
811,681 Health Management
Associates, Inc., Term Loan B ..................... B1 BB- 2.97% 02/28/14 700,886
945,840 Lifepoint Hospitals, Inc.,
Term Loan B ....................................... Ba1 BB 2.89% 04/15/12 892,129
891,933 Select Medical Corp.,
Term Loan B ....................................... Ba2 B+ 2.31% - 4.25% 02/24/12 797,388
------------
2,390,403
------------
HEALTH CARE SERVICES - 1.2%
71,494 CHS/Community Health Systems,
Inc., Delayed Draw Term Loan ...................... Ba3 BB 2.57% 07/25/14 63,435
1,401,423 CHS/Community Health
Systems, Inc., Term Loan .......................... Ba3 BB 2.57% - 2.92% 07/25/14 1,243,445
------------
1,306,880
------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 3.6%
1,112,960 Bicent Power, LLC,
Term Loan First Lien .............................. Ba3 BB- 3.22% 06/30/14 957,146
879,375 Coleto Creek Power, L.P.,
Term Loan First Lien .............................. B1 BB- 3.07% - 3.97% 06/28/13 677,118
63,395 Coleto Creek Power, L.P.,
Synthetic Letter of Credit ........................ B1 BB- 3.97% 06/28/13 48,814
1,000,000 Dynegy Holdings, Inc.,
Synthetic Letter of Credit ........................ Ba2 BB- 1.82% 04/12/13 897,500
933,333 Longview Power, LLC,
Delayed Draw Term Loan ............................ Ba3 BB 3.63% 02/28/14 662,667
266,667 Longview Power, LLC,
Synthetic Letter of Credit ........................ Ba3 BB 3.50% 02/28/14 189,333
800,000 Longview Power, LLC,
Term Loan B ....................................... Ba3 BB 3.63% 02/28/14 568,000
------------
4,000,578
------------
See Notes to Financial Statements
Page 12
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (b) - (CONTINUED)
MAY 31, 2009 (UNAUDITED)
PRINCIPAL RATINGS (e) STATED
VALUE DESCRIPTION MOODY'S S&P COUPON MATURITY (f) VALUE
---------- ------------------------------------------------------ ------------- ------------ ------------ ------------
SENIOR FLOATING-RATE TERM LOAN INTERESTS (g) - (CONTINUED)
MANAGED HEALTH CARE - 2.4%
$ 710,469 IASIS Healthcare Corp.,
Delayed Draw Term Loan ............................ Ba2 B+ 2.32% 03/15/14 $ 636,580
190,890 IASIS Healthcare Corp.,
Synthetic Letter of Credit ........................ Ba2 B+ 2.22% 03/15/14 171,038
2,053,120 IASIS Healthcare Corp.,
Term Loan. ........................................ Ba2 B+ 2.32% 03/15/14 1,839,595
------------
2,647,213
------------
MULTI-UTILITIES - 1.5%
2,000,000 KGEN, LLC, Synthetic
Letter of Credit (i) .............................. B1 BB 3.00% 02/08/14 1,700,000
------------
OIL & GAS EQUIPMENT & SERVICES - 1.3%
583,416 Targa Resources, Inc.,
Synthetic Letter of Credit ........................ Ba3 B+ 3.22% 10/31/12 539,243
1,009,406 Targa Resources, Inc., Term Loan ..................... Ba3 B+ 2.32% - 3.22% 10/31/12 932,979
------------
1,472,222
------------
OIL & GAS EXPLORATION & PRODUCTION - 0.7%
2,205,937 SemCrude, L.P., Term Loan (j) (k) .................... NR NR 5.75% 03/16/11 805,167
------------
OIL & GAS STORAGE & TRANSPORTATION - 0.4%
500,000 Energy Transfer Equity, L.P.,
Term Loan B ....................................... Ba2 NR 2.71% 02/08/12 472,917
------------
WIRELESS TELECOMMUNICATION SERVICES - 0.9%
1,068,312 Windstream Corp., Term Loan B1 ....................... Baa3 BBB 1.84% - 2.62% 07/17/13 996,202
------------
TOTAL SENIOR FLOATING-RATE TERM LOAN INTERESTS
(Cost $28,325,982) ................................... 23,571,156
------------
TOTAL INVESTMENTS - 124.0%
(Cost $162,498,814) (l) .............................. 138,043,438
LOAN OUTSTANDING - (27.7)% ........................... (30,900,000)
NET OTHER ASSETS AND LIABILITIES - 3.7% .............. 4,156,278
------------
NET ASSETS - 100.0% $111,299,716
------------
See Notes to Financial Statements
Page 13
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (b) - (CONTINUED)
MAY 31, 2009 (UNAUDITED)
----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) All or a portion of the securities are available to serve as collateral on
loan outstanding.
(c) This security is fair valued in accordance with procedures adopted by the
Fund's Board of Trustees.
(d) This security is restricted and cannot be offered for public sale without
first being registered under the Securities Act of 1933, as amended. Prior
to registration, restricted securities may only be resold in transactions
exempt from registration. (See Note 2F - Restricted Securities in the Notes
to Financial Statements).
(e) Ratings below Baa3 by Moody's Investors Service, Inc. or BBB- by Standard &
Poor's Ratings Group are considered to be below investment grade.
(f) 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.
(g) 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.
(h) This Senior Loan Interest was privately-rated upon issuance. The rating
agency does not provide ongoing surveillance on the rating.
(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) The issuer is in default. Income is not being accrued.
(k) This borrower has filed for protection in federal bankruptcy court.
(l) Aggregate cost for federal income tax and financial reporting purposes. As
of May 31, 2009, the aggregate gross unrealized appreciation for all
securities in which there as an excess of value over tax cost was
$7,164,876 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$31,620,252.
NR Not Rated
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of May 31, 2009
is as follows (See Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS
---------------- ------------
Level 1 - Quoted Prices $ 35,595,736
Level 2 - Significant Observable Inputs 102,447,702
Level 3 - Significant Unobservable Inputs --
------------
TOTAL $138,043,438
============
See Notes to Financial Statements
Page 14
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2009 (UNAUDITED)
ASSETS:
Investments, at value
(Cost $162,498,814) ................................. $138,043,438
Cash ................................................... 2,957,089
Prepaid expenses ....................................... 220,734
Receivables:
Dividends ........................................... 1,844,860
Investment securities sold .......................... 1,072,231
Interest ............................................ 120,049
------------
Total Assets ..................................... 144,258,401
------------
LIABILITIES:
Outstanding loan ....................................... 30,900,000
Payables:
Investment securities purchased ..................... 1,599,480
Investment advisory fees ............................ 322,544
Audit and tax fees .................................. 46,667
Legal fees .......................................... 28,783
Printing fees ....................................... 20,406
Custodian fees ...................................... 12,449
Administrative fees ................................. 11,033
Interest and fees on outstanding loan ............... 8,151
Transfer agent fees ................................. 4,057
Accrued expenses and other liabilities ................. 5,115
------------
Total Liabilities ................................. 32,958,685
------------
NET ASSETS ............................................. $111,299,716
============
NET ASSETS CONSIST OF:
Paid-in capital ........................................ $172,581,660
Par value .............................................. 90,780
Accumulated net investment income (loss) ............... (2,234,177)
Accumulated net realized gain (loss) on investments sold
and foreign currency transactions ................... (34,834,428)
Net unrealized appreciation (depreciation) on
investments and foreign currency translation ........ (24,304,119)
------------
NET ASSETS ............................................. $111,299,716
============
NET ASSET VALUE, per Common Share (par value $0.01 per
Common Share) ....................................... $ 12.26
============
Number of Common Shares outstanding (unlimited number of
Common Shares has been authorized) .................. 9,077,963
============
See Notes to Financial Statements
Page 15
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2009 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax
of $251,231) ........................................ $ 2,755,810
Interest ............................................... 626,284
Other .................................................. 12,453
------------
Total investment income ............................. 3,394,547
------------
EXPENSES:
Investment advisory fees ............................... 658,288
Interest and fees on outstanding loan .................. 588,226
Administrative fees .................................... 62,537
Printing fees .......................................... 49,044
Legal fees ............................................. 48,327
Custodian fees ......................................... 41,335
Audit and tax fees ..................................... 35,429
Trustees' fees and expenses ............................ 19,284
Transfer agent fees .................................... 17,286
Other .................................................. 53,332
------------
Total expenses ...................................... 1,573,088
------------
NET INVESTMENT INCOME (LOSS) ........................... 1,821,459
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ......................................... (10,291,155)
Foreign currency transactions ....................... (55,254)
------------
Net realized gain (loss) ............................... (10,346,409)
------------
Net change in unrealized appreciation (depreciation) on:
Investments ......................................... 18,637,861
Foreign currency translation ........................ 130,285
------------
Net change in unrealized appreciation (depreciation) ... 18,768,146
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ................ 8,421,737
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS .......................................... $ 10,243,196
============
See Notes to Financial Statements
Page 16
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED
05/31/09 YEAR ENDED
(UNAUDITED) 11/30/2008
------------ -------------
OPERATIONS:
Net investment income ....................................................... $ 1,821,459 $ 12,005,157
Net realized gain (loss) .................................................... (10,346,409) (21,195,703)
Net change in unrealized appreciation (depreciation) ........................ 18,768,146 (99,048,223)
Net increase from payment by the investment sub-advisor ..................... -- 332,025
------------ -------------
Net increase (decrease) in net assets resulting from operations ............. 10,243,196 (107,906,744)
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ....................................................... (2,723,389) (8,393,486)
Net realized gain ........................................................... -- (6,620,847)
Return of capital ........................................................... -- (376,201)
------------ -------------
Total distributions to shareholders ......................................... (2,723,389) (15,390,534)
------------ -------------
CAPITAL TRANSACTIONS:
Proceeds from Common Shares reinvested ...................................... -- 1,529,028
------------ -------------
Total capital transactions .................................................. -- 1,529,028
------------ -------------
Net increase (decrease) in net assets ....................................... 7,519,807 (121,768,250)
------------ -------------
NET ASSETS:
Beginning of period ......................................................... 103,779,909 225,548,159
------------ -------------
End of period ............................................................... $111,299,716 $ 103,779,909
============ =============
Accumulated net investment income (loss) at end of period ................... $ (2,234,177) $ (1,332,247)
============ =============
CAPITAL TRANSACTIONS WERE AS FOLLOWS:
Common Shares at beginning of period ........................................ 9,077,963 9,010,915
Common Shares issued as reinvestment under the Dividend Reinvestment Plan ... -- 67,048
------------ -------------
Common Shares at end of period .............................................. 9,077,963 9,077,963
------------ -------------
See Notes to Financial Statements
Page 17
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31, 2009 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations ......... $ 10,243,196
Adjustments to reconcile net increase (decrease) in net assets resulting
from operations to net cash provided by operating activities:
Purchases of investments ............................................. (26,322,138)
Sales, maturities and paydowns of investments ........................ 34,200,862
Net amortization/accretion of premiums/discount on investments ....... (82,831)
Realized gain/loss on investments .................................... 10,291,155
Net change in unrealized appreciation (depreciation) on investments .. (18,637,861)
CHANGES IN ASSETS AND LIABILITIES:
Increase in dividends receivable (a) ................................. (605,780)
Decrease in interest receivable ...................................... 116,487
Decrease in receivable for investment securities sold ................ 975,355
Increase in prepaid expenses ......................................... (210,365)
Decrease in payable for investment securities purchased .............. (53,281)
Decrease in interest and fees due on loan ............................ (191,027)
Decrease in investment advisory fees payable ......................... (153,701)
Decrease in audit and tax fees payable ............................... (19,533)
Increase in legal fees payable ....................................... 3,602
Decrease in printing fees payable .................................... (9,545)
Increase in transfer agent fees payable .............................. 1,310
Decrease in administrative fees payable .............................. (1,054)
Decrease in custodian fees payable ................................... (1,352)
Decrease in Trustees' fees and expenses payable ...................... (7,379)
Increase in accrued expenses and other liabilities ................... 2,460
------------
CASH PROVIDED BY OPERATING ACTIVITIES ................................... $ 9,538,580
------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Distributions to Common Shareholders .................................... (6,581,523)
Issuances of loan ....................................................... 30,900,000
Repayments of loan ...................................................... (38,900,000)
------------
CASH USED IN FINANCING ACTIVITIES ....................................... (14,581,523)
------------
Decrease in cash ........................................................ (5,042,943)
Cash at beginning of period ............................................. 8,000,032
------------
CASH AT END OF PERIOD ................................................... $ 2,957,089
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees ....................... $ 779,253
------------
Taxes withheld during the period ........................................ 251,231
------------
----------
(a) Includes net change in unrealized appreciation (depreciation) on foreign
currency of $130,285.
See Notes to Financial Statements
Page 18
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR SIX MONTHS YEAR YEAR PERIOD
5/31/09 ENDED ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 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 ............ $ 11.43 $ 25.03 $ 25.99 $ 24.04 $ 23.43 $ 19.24 $ 19.10(c)
-------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............. 0.20 1.33 1.33 0.90 1.61 1.23 0.11
Net realized and unrealized
gain (loss) .................... 0.93 (13.23) 4.25 3.39 1.28 4.65 0.07
-------- -------- -------- -------- -------- -------- --------
Total from investment operations .. 1.13 (11.90) 5.58 4.29 2.89 5.88 0.18
-------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS
FROM:
Net investment income ............. (0.30) (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 ............... (0.30) (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 .... $ 12.26 $ 11.43 $ 25.03 $ 25.99 $ 24.04 $ 23.43 $ 19.24
======== ======== ======== ======== ======== ======== ========
Market value, end of period ....... $ 9.75 $ 8.60 $ 23.78 $ 23.93 $ 21.04 $ 20.87 $ 17.70
======== ======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON NET
ASSET VALUE (d) (e) (f) ........ 11.22% (48.98)% 21.87% 18.22% 13.50% 32.15% 0.73%
======== ======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON
MARKET VALUE (e) (g) ........... 17.45% (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) ..................... $111,300 $103,780 $225,548 $233,379 $215,861 $210,388 $172,799
Ratio of total expenses
to average net assets .......... 3.17%(h) 3.72% 3.63% 3.97%(h) 3.59% 2.78% 1.47%(h)
Ratio of total expenses
to average net assets,
excluding interest expense
and fees ....................... 1.98%(h) 1.80% 1.73% 1.73%(h) 1.79% 1.78% N/A
Ratio of net investment income
to average net assets .......... 3.67%(h) 6.44% 4.65% 6.94%(h) 6.73% 5.65% 3.14%(h)
Portfolio turnover rate ........... 20% 23% 53% 14% 60% 43% 0%
DEBT:
Loan outstanding (in 000's) ....... $ 30,900 $ 38,900 $ 84,000 $ 83,500 $ 83,000 $ 75,000 N/A
Asset coverage per $1,000
of indebtedness (i) ............ $ 4,602 $ 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) 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)%.
(g) 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.
(h) Annualized.
(i) 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.
N/A Not applicable.
See Notes to Financial Statements
Page 19
NOTES TO FINANCIAL STATEMENTS
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
MAY 31, 2009 (UNAUDITED)
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.
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
Page 20
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
MAY 31, 2009 (UNAUDITED)
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.
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. 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 May 31, 2009 is
included with the Fund's Portfolio of Investments.
In April 2009, FASB issued FASB Staff Position No. 157-4, "Determining Fair
Value when the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly" ("FSP
157-4"). FSP 157-4 is effective for fiscal years and interim periods ending
after June 15, 2009. FSP 157-4 provides additional guidance for estimating fair
value in accordance with FAS 157, when the volume and level of activity for the
asset or liability have significantly decreased. FSP 157-4 also includes
guidance on identifying circumstances that indicate a transaction is not
orderly. Management is currently evaluating the impact the implementation of FSP
157-4 will have on the Fund's financial statement disclosures, if any.
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 May 31, 2009, 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.
Page 21
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
MAY 31, 2009 (UNAUDITED)
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 May 31, 2009, the Fund had no
when-issued or delayed-delivery purchase commitments.
D. UNFUNDED LOAN COMMITMENTS:
The Fund may enter into certain credit agreements, all or a portion of which may
be unfunded. As of May 31, 2009, 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. RESTRICTED SECURITIES:
The Fund invests in restricted securities, which are securities that cannot be
offered for public sale without first being registered under the Securities Act
of 1933, as amended. Prior to registration, restricted securities may only be
resold in transactions exempt from registration. The Fund held restricted
securities at May 31, 2009 as shown in the following table. The Fund does not
have the right to demand that such securities be registered. These securities
are valued using market quotations according to the valuation procedures as
stated in the Portfolio Valuation footnote (Note 2A) and are not expressed as a
discount to the carrying value of a comparable unrestricted security. There are
no unrestricted securities with the same maturity dates and yields for these
issuers.
ACQUISITION VALUE % OF
SECURITY DATE SHARES PER SHARE CARRYING COST VALUE NET ASSETS
-------- ----------- ------ --------- ------------- -------- ----------
Pembina Pipeline Income Trust 4/30/09 9,300 $12.83 $101,759 $119,343 0.11%
======== ======== ====
G. 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.
Page 22
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
MAY 31, 2009 (UNAUDITED)
The tax character of distributions paid during the fiscal year ended November
30, 2008 was as follows:
Distributions paid from:
Ordinary Income .......... $8,503,887
Long-Term Capital Gain ... 6,510,446
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)
H. 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.
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 May 31, 2009, 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.
I. EXPENSES:
The Fund pays all expenses directly related to its operations.
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
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).
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., an indirect, majority-owned
subsidiary of The PNC Financial Services Group, Inc., serves as the Fund's
Administrator, Fund Accountant 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.
Page 23
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
MAY 31, 2009 (UNAUDITED)
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 and 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 equally allocated among these trusts. Trustees
are also reimbursed by the trusts in the First Trust Fund Complex for travel and
out-of-pocket expenses in connection with all meetings. The Lead Independent
Trustee and each Committee chairman will serve two-year terms ending December
31, 2009 before rotating to serve as chairman of another committee or as Lead
Independent Trustee. The officers and "Interested" Trustee receive no
compensation from the trusts for serving in such capacities.
For the six months ended May 31, 2009, the Fund paid brokerage commissions to
Macquarie Capital (USA) Inc. (formerly Macquarie Securities (USA) Inc.), an
affiliate of MCIM and Four Corners, totaling $563.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments, for the six months ended May 31, 2009, were $26,322,138,
and $34,200,862, respectively.
5. REVOLVING CREDIT AND SECURITY AGREEMENT
On May 12, 2009, the Fund entered into a Committed Facility Agreement with BNP
Paribas Prime Brokerage Inc. (the "BNP Paribas Facility"), which provides for a
committed credit facility to be used as leverage for the Fund. The proceeds of
the first borrowing under the BNP Paribas Facility were used to repay all
amounts outstanding under the Revolving Credit and Security Agreement dated as
of May 24, 2004 with CRC Funding LLC, as conduit lender, Citibank, N.A., as
Secondary Lender and Citibank North America, Inc., as Agent (the "Terminated
Facility"). The BNP Paribas Facility provides for a secured, committed 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 "asset coverage" of at least 300% (33-1/3% of the
Fund's total assets after borrowings). The total amount of loans that may be
outstanding at any one time under the BNP Paribas Facility is $40,000,000. The
BNP Paribas Facility required an up front payment from the Fund equal to
$200,000, which will be amortized over a one year period. Absent certain events
of default or failure to maintain certain collateral requirements, BNP Paribas
Prime Brokerage Inc. may not terminate the BNP Paribas Facility except upon 180
calendar days prior notice. The interest rate under the facility will be equal
to the 3-month LIBOR plus 145 basis points. In addition, under the BNP Paribas
Facility the Fund pays a commitment fee of 0.85% on the undrawn amount of the
BNP Paribas Facility.
For the six months ended May 31, 2009, the daily average amount outstanding
under the Terminated Facility and the BNP Paribas Facility was $32,314,835. The
high and low annual interest rates during the six months ended May 31, 2009 were
3.49% and 0.60%, respectively, and the weighted average interest rate was 1.64%.
The interest rate at May 31, 2009 was 2.12%
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
Page 24
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
MAY 31, 2009 (UNAUDITED)
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.
The Fund's performance was adversely impacted by the weakness in the credit
markets and broad stock market that occurred beginning in late 2008, and may
continue to be adversely affected if the weakness in the credit and stock
markets continue. In response to the financial crises affecting the banking
system and financial markets, the U.S. and foreign governments have intervened
to an unprecedented degree in the financial and credit markets. Among other
things, U.S. government regulators have encouraged, and in some cases structured
and provided financial assistance for, banks, securities firms, insurers and
other financial companies. Additional intervention programs have been adopted
and proposed which will have a further impact on the securities markets. Many of
the recently enacted or proposed government measures are far-reaching and
without historical precedent. Furthermore, the U.S. government has stated its
willingness to implement additional measures as it may see fit to address
changes in market conditions. There can be no assurance that any or all of these
measures will succeed in stabilizing and providing liquidity to the U.S.
financial markets, including the extreme levels of volatility currently being
experienced. Such continued volatility could materially and adversely affect the
financial condition 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 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
Page 25
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
MAY 31, 2009 (UNAUDITED)
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. 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 26
ADDITIONAL INFORMATION
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
MAY 31, 2009 (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 27
ADDITIONAL INFORMATION - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
MAY 31, 2009 (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.
SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The Joint Annual Meeting of Shareholders 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
Tax-Advantaged Preferred Income Fund, First Trust Specialty Finance and
Financial Opportunities Fund and First Trust Active Dividend Income Fund was
held on April 16, 2009. At the Annual Meeting, Independent Trustees Richard E.
Erickson and Thomas R. Kadlec were elected by the Common Shareholders of the
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund as
Class II Trustees for three-year terms expiring at the Fund's annual meeting of
shareholders in 2012. The number of votes cast in favor of both Dr. Erickson and
Mr. Kadlec was 7,733,095, the number of votes against was 618,420 and the number
of abstentions was 726,448. James A. Bowen, Robert F. Keith and Niel B. Nielson
are the current and continuing Trustees.
INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
BOARD CONSIDERATIONS REGARDING CONTINUATION OF INVESTMENT MANAGEMENT AND
SUB-ADVISORY AGREEMENTS
The Board of Trustees of Macquarie/First Trust Global Infrastructure/Utilities
Dividend & Income Fund (the "Fund"), including the Independent Trustees,
unanimously approved the continuation of the Investment Management Agreement
(the "Advisory Agreement") between the Fund and First Trust Advisors L.P. (the
"Advisor"), the Investment Sub-Advisory Agreement (the "Macquarie Sub-Advisory
Agreement") among the Fund, the Advisor and Macquarie Capital Investment
Management LLC ("Macquarie") and the Investment Sub-Advisory Agreement (the
"Four Corners Sub-Advisory Agreement" and together with the Macquarie
Sub-Advisory Agreement, the "Sub-Advisory Agreements") among the Fund, the
Advisor and Four Corners Capital Management, LLC ("Four Corners"), at a meeting
held on March 1-2, 2009. Macquarie and Four Corners are each referred to herein
as a "Sub-Advisor" and collectively as the "Sub-Advisors." The Sub-Advisory
Agreements are referred to herein together with the Advisory Agreement as the
"Agreements." The Board determined that the terms of the Agreements are fair and
reasonable and that the Agreements continue to be in the best interests of the
Fund.
To reach this determination, the Board considered its duties under the
Investment Company Act of 1940, as amended (the "1940 Act"), as well as under
the general principles of state law in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. To assist the Board in its evaluation of the Agreements, the
Independent Trustees received a separate report from the Advisor and each of the
Sub-Advisors in advance of the Board meeting responding to a request for
information from counsel to the Independent Trustees. The reports, among other
things, outlined the services provided by the Advisor and the Sub-Advisors
(including the relevant personnel responsible for these services and their
experience); the advisory and sub-advisory fees for the Fund as compared to fees
charged to other clients of the Advisor and the Sub-Advisors and as compared to
fees charged by investment advisors and sub-advisors to comparable funds;
expenses of the Fund as compared to expense ratios of comparable funds; the
nature of expenses incurred in providing services to the Fund and the potential
for economies of scale, if any; financial data on the Advisor and the
Sub-Advisors; any fall out benefits to the Advisor and the Sub-Advisors; and
information on the Advisor's and the Sub-Advisors' compliance programs. The
Independent Trustees also met separately with their independent legal counsel to
discuss the information provided by the Advisor and the Sub-Advisors. The Board
applied its business judgment to determine whether the arrangements between the
Fund and the Advisor and among the Fund, the Advisor and each Sub-Advisor are
reasonable business arrangements from the Fund's perspective as well as from the
perspective of shareholders.
Page 28
ADDITIONAL INFORMATION - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
MAY 31, 2009 (UNAUDITED)
In reviewing the Agreements, the Board considered the nature, quality and extent
of services provided by the Advisor and the Sub-Advisors under the Agreements.
The Board considered the Advisor's statements regarding the incremental benefits
associated with the Fund's advisor/sub-advisor management structure. With
respect to the Advisory Agreement, the Board considered that the Advisor is
responsible for the overall management and administration of the Fund, including
the oversight of the Sub-Advisors. The Board noted the compliance program that
had been developed by the Advisor and considered that the compliance program
includes policies and procedures for monitoring the Sub-Advisors' compliance
with the 1940 Act and the Fund's investment objective and policies. The Board
also noted the enhancements made by the Advisor to the compliance program in
2008. With respect to the Sub-Advisory Agreements, the Board received a
presentation from representatives of both Macquarie and Four Corners discussing
the services that each Sub-Advisor provides to the Fund and how the Sub-Advisor
manages the Fund's investments. The Board noted that Macquarie Group Limited
increased its ownership stake in Four Corners to 100% in October 2008 and
considered that Four Corners' access to a greater breadth of resources should
benefit the Fund. In light of the information presented and the considerations
made, the Board concluded that the nature, quality and extent of services
provided to the Fund by the Advisor and the Sub-Advisors under the Agreements
have been and are expected to remain satisfactory and that each Sub-Advisor,
under the oversight of the Advisor, has managed the Fund consistent with its
investment objective and policies.
The Board considered the advisory and sub-advisory fees paid under the
Agreements. The Board considered the advisory fees paid to the Advisor by
similar funds, and noted that the Advisor does not provide advisory services to
clients with investment objectives and policies similar to the Fund's other than
to two closed-end senior loan funds. The Board also considered information
provided by the Sub-Advisors as to the fees they charge to other clients. In
addition, the Board received data prepared by Lipper Inc. ("Lipper"), an
independent source, showing the management fees and expense ratios of the Fund
as compared to the management fees and expense ratios of a combined peer group
selected by Lipper and the Advisor. The Board discussed with representatives of
the Advisor the limitations in creating a relevant peer group for the Fund,
including that (i) the peer funds may use different types of leverage which have
different costs associated with them; (ii) most peer funds do not employ an
advisor/sub-advisor management structure; (iii) the peer funds may not have the
same fiscal year as the Fund, which may cause the expense data used by Lipper to
be measured over different time periods; (iv) many of the peer funds are larger
than the Fund; and (v) many of the peer funds have an inception date prior to
the Fund's inception date and their fee and expense structures may not reflect
newer pricing practices in the market. The Board reviewed the Lipper materials,
but based on its discussions with the Advisor, the Board determined that the
Lipper data was of limited value for purposes of its consideration of the
renewal of the Agreements.
The Board also considered performance information for the Fund, noting that,
similar to almost all other funds, the Fund's performance was impacted by the
severe market downturn in 2008. The Board noted that the performance information
included the Fund's quarterly performance report, which is part of the process
that the Board has established for monitoring the Fund's performance on an
ongoing basis. The Board determined that this process continues to be effective
for reviewing the Fund's performance. In addition to the Board's ongoing review
of performance, the Board also received data prepared by Lipper comparing the
Fund's performance to the combined peer group selected by Lipper and the
Advisor, as well as to a larger group and to a benchmark. The Board reviewed the
Lipper materials, but for similar reasons to those described above, the Board
determined that the performance data provided by Lipper was of limited value.
The Board considered changes made to the Fund's leverage arrangements in 2008 as
a result of market events and considered an analysis prepared by the Advisor on
the continued benefits provided by the Fund's leverage. In addition, the Board
considered the market price and net asset value performance of the Fund since
inception, and compared the Fund's premium/discount to the average and median
premium/discount of the combined peer group, noting that the Fund's
premium/discount was generally indicative of the asset class and market events.
Based on the information provided and the Board's ongoing review of the Fund's
performance, and taking into account the historic market events of 2008, the
Board concluded that the Fund's performance was reasonable.
On the basis of all the information provided on the fees, expenses and
performance of the Fund, the Board concluded that the advisory and sub-advisory
fees were reasonable and appropriate in light of the nature, quality and extent
of services provided by the Advisor and Sub-Advisors under the Agreements.
Page 29
ADDITIONAL INFORMATION - (CONTINUED)
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
MAY 31, 2009 (UNAUDITED)
The Board noted that the Advisor has continued to invest in personnel and
infrastructure and had noted that the advisory fee is not structured to pass the
benefits of any economies of scale on to the shareholders as the Fund's assets
grow. The Board concluded that the management fee reflects an appropriate level
of sharing of any economies of scale. The Board also considered the costs of the
services provided and profits realized by the Advisor from serving as investment
manager to closed-end funds for the twelve months ended December 31, 2008, as
set forth in the materials provided to the Board. The Board noted the inherent
limitations in the profitability analysis, and concluded that the Advisor's
profitability appeared to be not excessive in light of the services provided to
the Fund. In addition, the Board considered and discussed any ancillary benefits
derived by the Advisor from its relationship with the Fund and noted that the
typical fall out benefits to the Advisor such as soft dollars are not present.
The Board concluded that any other fall out benefits received by the Advisor or
its affiliates would appear to be limited.
The Board considered that Macquarie's investment services expenses are generally
fixed. The Board noted that Macquarie had added various management systems in
2008 that Macquarie believes will help it better manage the Fund. The Board
considered that the sub-advisory fee rate was negotiated at arm's length between
the Advisor and Macquarie, an unaffiliated third party. The Board also
considered data provided by Macquarie as to its overall profitability, noting
that Macquarie does not calculate its profitability with respect to the Fund
separately. The Board noted the inherent limitations in this profitability
analysis and concluded that the profitability analysis for the Advisor was more
relevant, although the profitability of Macquarie appeared to be not excessive
in light of the services provided to the Fund. The Board considered the fall-out
benefits realized by Macquarie from its relationship with the Fund, including
soft-dollar arrangements, and considered a summary of such arrangements.
The Board considered that Four Corners' investment services expenses are
primarily fixed, and that Four Corners had previously invested in personnel and
systems and anticipated continued maintenance of efficient personnel and systems
in support of the Fund. The Board considered that the sub-advisory fee rate was
negotiated at arm's length between the Advisor and Four Corners, an unaffiliated
third party. The Board also considered data provided by Four Corners as to the
profitability of the Four Corners Sub-Advisory Agreement to Four Corners, noting
that the method used to allocate expenses was not a typical practice of Four
Corners. The Board noted the inherent limitations in this profitability analysis
and concluded that the profitability analysis for the Advisor was more relevant,
although the profitability of the Four Corners Sub-Advisory Agreement appeared
to be not excessive in light of the services provided to the Fund. The Board
noted that Four Corners does not maintain any soft-dollar arrangements and that
Four Corners indicated that it does not receive any material fall out benefits
from its relationship to the Fund.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, determined that the terms of the
Agreements continue to be fair and reasonable and that the continuation of the
Agreements is in the best interests of the Fund. No single factor was
determinative in the Board's analysis.
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
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.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) Not Applicable.
(B)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
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. There have been changes in the
portfolio management team for each of MCIM and Four Corners.
MACQUARIE CAPITAL INVESTMENT MANAGEMENT LLC
During the period covered by the report, Jon Fitch and Justin Lannen were
co-portfolio managers responsible for the day-to-day management of the Core
Component of the registrant. Justin Lannen will return to Sydney, Australia in
August 2009, where he will remain a Portfolio Manager on the MCIM investment
team and will assume direct responsibilities for the management of the team's
Australian and Asian based portfolios. As a result of the relocation, he will
relinquish Co-Portfolio Manager responsibilities for MFD on July 31, 2009.
Coincident with Mr. Lannen relocating back to Sydney, Andrew Maple-Brown,
currently Portfolio Manager on the MCIM investment team in Sydney, will relocate
to New York effective August 1, 2009. MCIM has appointed Mr. Maple-Brown as
Co-Portfolio Manager of MFD as of August 1, 2009 to succeed Mr. Lannen. Mr.
Maple-Brown, along with Mr. Fitch and Mr. Lannen, serves on the MCIM Investment
Committee.
LENGTH
OF
NAME TITLE SERVICE BUSINESS EXPERIENCE PAST 5 YEARS
---- ----- ------- --------------------------------
1 Jon Fitch Chief Executive Officer for 14 years Jon has been CIO of MFG Infrastructure
MCIM 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 2 years Justin has been a portfolio manager of the Fund
MCIM 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.
3 Andrew Maple- Fund Co-Portfolio Manager 8 years Andrew has been a New York-based portfolio
Brown as of August 1, 2009 manager of the Fund and other North American
domiciled portfolios in the MFG Global Infrastructure
Securities Strategy ("Strategy") since August 1, 2009.
He joined the investment team in 2007 in Sydney,
Australia, where he was previously a portfolio manager
for the Australian and Asian domiciled portfolios in the
Strategy. Andrew joined Macquarie Group in 2001 in the
Debt Markets division, where his focus was primarily
on infrastructure transactions, particularly
public-private partnerships (PPP).
* 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").
(B)(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 IN
TOTAL NO. OF ACCOUNTS ACCOUNTS WHERE
NAME OF PORTFOLIO NO. OF WHERE ADVISORY FEE ADVISORY FEE IS
MANAGER OR ACCOUNTS IS BASED ON BASED ON
TEAM MEMBER TYPE OF ACCOUNTS MANAGED TOTAL ASSETS PERFORMANCE PERFORMANCE
----------- ---------------- ------- ------------ ----------- -----------
----------------------- ------------------------- ------------- ---------------- --------------------- -------------------
1. John Fitch Registered Investment 1 $344.8M 0 $0
Companies:
----------------------- ------------------------- ------------- ---------------- --------------------- -------------------
Other Pooled Investment 9 $1142.3M 3 $456.7M
Vehicles:
----------------------- ------------------------- ------------- ---------------- --------------------- -------------------
Other Accounts: 3 $87.0M 0 $0
----------------------- ------------------------- ------------- ---------------- --------------------- -------------------
2. Justin Lannen Registered Investment 1 $337.7M 0 $0
Companies:
----------------------- ------------------------- ------------- ---------------- --------------------- -------------------
Other Pooled Investment 3 $163.6M 1 $75.4M
Vehicles:
----------------------- ------------------------- ------------- ---------------- --------------------- -------------------
Other Accounts: 3 $80.6M 0 $0
----------------------- ------------------------- ------------- ---------------- --------------------- -------------------
3. Andrew Maple-Brown Registered Investment 0 $0 0 $0
Companies:
----------------------- ------------------------- ------------- ---------------- --------------------- -------------------
Other Pooled Investment 6 $948.1M 2 $381.3M
Vehicles:
----------------------- ------------------------- ------------- ---------------- --------------------- -------------------
Other Accounts: 0 $0 0 $0
----------------------- ------------------------- ------------- ---------------- --------------------- -------------------
Information provided as of May 31, 2009
The Advisory fees for these accounts where the advisory fee is based on
performance include a base management fee and a performance fee over a
specified hurdle rate.
POTENTIAL CONFLICTS OF INTERESTS
MCIM adopted policies designed to prevent such conflicts, including policies
regarding best execution, daily monitoring of trading and allocation.
(B)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
Compensation consists of fixed remuneration in the form of a base salary,
variable (at risk) performance pay in the form of an annual profit share
allocation and a long term incentive in the form of options (applies to Director
level employees only). Fixed remuneration takes into consideration the role of
individuals and market conditions. Remuneration is reviewed on a yearly basis in
March/April and takes effect from 1 July of that year. The discretionary profit
sharing pool is allocated to business areas based primarily on relative
contribution to profits taking into account capital usage, and then to
individuals with the business areas. Allocations to individuals are based on
their performance contribution over the year to 31 March. As part of the annual
remuneration review cycle, Directors are entitled to receive an allocation of
options based on their performance over the year. The Group uses options to
provide a long term equity incentive for senior staff and ensures significant
alignment with shareholder interests over the long term.
(B)(4) DISCLOSURE OF SECURITIES OWNERSHIP
The information below is as of May 31, 2009
------------------------------------- ---------------------------------
Dollar ($) Range of Fund
NAME SHARES BENEFICIALLY OWNED
------------------------------------- ---------------------------------
------------------------------------- ---------------------------------
------------------------------------- ---------------------------------
------------------------------------- ---------------------------------
John Fitch $0
------------------------------------- ---------------------------------
------------------------------------- ---------------------------------
Justin Lannen $0
------------------------------------- ---------------------------------
------------------------------------- ---------------------------------
Andrew Maple-Brown $0
------------------------------------- ---------------------------------
FOUR CORNERS CAPITAL MANAGEMENT, LLC:
(B)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
Four Corners manages multiple portfolios comprised principally of U.S. dollar
denominated, floating-rate, senior secured, commercial and industrial loans and
notes, loan-based swaps, and other debt instruments, and may manage portfolios
that include high yield bonds and/or credit derivatives. Robert I. Bernstein,
Managing Director and Chief Investment Officer of Four Corners, and Drew R.
Sweeney, Senior Vice President of Four Corners, are co-portfolio managers. Drew
R. Sweeney was designated a co-portfolio manager of the registrant upon the
resignation of Michael P. McAdams from Four Corners on February 6, 2009. The
co-portfolio managers are supported in their portfolio management activities by
the Four Corners investment staff. Four Corners' investment analysts are
assigned loans within specific industries and report to the Chief Investment
Officer. Mr. Bernstein has been Managing Director and Chief Investment Officer
of Four Corners since 2001. Mr. Sweeney has been Senior Vice President of Four
Corners since 2005. Prior to that, Mr. Sweeney was a Vice President and Analyst
at American Express Asset Management Group.
(B)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM
MEMBER AND POTENTIAL CONFLICTS OF INTEREST
OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
------------------------- ---------------------------------- ------------ ------------- ---------------- -----------------
# OF ACCOUNTS
MANAGED FOR TOTAL ASSETS
TOTAL WHICH FOR WHICH
NAME OF PORTFOLIO # OF TOTAL ADVISORY FEE ADVISORY FEE
MANAGER OR ACCOUNTS ASSETS IS BASED ON IS BASED ON
TEAM MEMBER TYPE OF ACCOUNTS MANAGED ($MILLIONS) PERFORMANCE PERFORMANCE
----------- -------- --------- ----------- -----------
($MILLIONS)
------------------------- ---------------------------------- ------------ ------------- ---------------- -----------------
1. Robert I. Bernstein Registered Investment Companies: 2 $612.3M 0 $0
Other Pooled Investment Vehicles: 3 $877.4M 3 $877.4M
Other Accounts: 7 $1003.4M 0 $0
------------------------- ---------------------------------- ------------ ------------- ---------------- -----------------
Registered Investment Companies: 2 $612.3M 0 $0
Other Pooled Investment Vehicles: 0 $0 0 $0
2. Drew R. Sweeney Other Accounts: 1 $53.6M 0 $0
------------------------- ---------------------------------- ------------ ------------- ---------------- -----------------
Information provided as of May 31, 2009
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.
(B)(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.
(B)(4) DISCLOSURE OF SECURITIES OWNERSHIP
The information below is as of May 31, 2009:
---------------------------------------- ---- --------------------------
Name of Portfolio Manager or Dollar ($) Range of Fund
TEAM MEMBER Shares BENEFICIALLY OWNED
---------------------------------------- ---- --------------------------
---------------------------------------- ---- --------------------------
Robert I. Bernstein $0
---------------------------------------- ---- --------------------------
Drew R. Sweeney $0
---------------------------------------- ---- --------------------------
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial
officers, or persons performing similar functions, have concluded
that the registrant's disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940, as
amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of
a date within 90 days of the filing date of the report that includes
the disclosure required by this paragraph, based on their evaluation
of these controls and procedures required by Rule 30a-3(b) under the
1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b)
under the Securities Exchange Act of 1934, as amended (17 CFR
240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
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 JULY 23, 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 JULY 23, 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 JULY 23, 2009
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.