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
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Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
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(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Name and address of agent for service)
registrant's telephone number, including area code: 630-765-8000
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Date of fiscal year end: November 30
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Date of reporting period: May 31, 2013
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED
MAY 31, 2013
MACQUARIE/FIRST TRUST
GLOBAL INFRASTRUCTURE/
UTILITIES DIVIDEND &
INCOME FUND
MACQUARIE FOUR CORNERS FIRST TRUST
CAPITAL MANAGEMENT
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TABLE OF CONTENTS
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
SEMI-ANNUAL REPORT
MAY 31, 2013
Shareholder Letter........................................................... 1
At A Glance.................................................................. 2
Portfolio Commentary......................................................... 3
Portfolio of Investments..................................................... 8
Statement of Assets and Liabilities.......................................... 12
Statement of Operations...................................................... 13
Statements of Changes in Net Assets.......................................... 14
Statement of Cash Flows...................................................... 15
Financial Highlights......................................................... 16
Notes to Financial Statements................................................ 17
Additional Information....................................................... 23
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and/or Macquarie Capital Investment Management LLC
("MCIM") and/or Four Corners Capital Management, LLC ("Four Corners") (MCIM and
Four Corners collectively, the "Sub-Advisors"), 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
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
(the "Fund") to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. When
evaluating the information included in this report, you are cautioned not to
place undue reliance on these forward-looking statements, which reflect the
judgment of the Advisor and/or Sub-Advisors 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 by investing in the Fund. See "Risk Considerations" in the Additional
Information section of this report for a discussion of certain other risks of
investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, net asset value and common share price will fluctuate and Fund shares,
when sold, may be worth more or less than their original cost.
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 the portfolio management team of the
Fund, you may obtain an understanding of how the market environment affected the
Fund's performance. The statistical information that follows may help you
understand the Fund's performance compared to that of relevant market
benchmarks.
It is important to keep in mind that the opinions expressed by personnel of 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, the statement of additional information, 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.
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SHAREHOLDER LETTER
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
MAY 31, 2013
Dear Shareholders:
I am pleased to present you with the semi-annual report for your investment in
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
(the "Fund").
The report you hold contains detailed information about your investment, a
portfolio commentary from the Fund's management team that provides a recap of
the period, a performance analysis and a market and Fund outlook. Additionally,
you will find the Fund's financial statements for the period this report covers.
I encourage you to read this document and discuss it with your financial
advisor. A successful investor is also typically a knowledgeable one, as we have
found to be the case at First Trust Advisors L.P. ("First Trust").
The six months covered by this report have been more positive for the U.S.
markets. In fact, the S&P 500 Index, as measured on a total return basis, rose
16.43% during the period, and many economists and investors have felt positive
about the current market environment. Of course, past performance can never be
an indicator of future performance. As I have written many times, First Trust
believes that staying invested in quality products through up and down markets
and having a long-term horizon can help investors reach their financial goals.
As you know, First Trust offers a variety of products that we believe could fit
many financial plans to help investors seeking long-term investment success. We
encourage you to talk to your advisor about the other investments First Trust
offers that might also fit your financial goals and to discuss those goals with
your advisor regularly so that he or she can help keep you on track.
First Trust will continue to make available up-to-date information about your
investments so you and your financial advisor are current on any First Trust
investments you own. We value our relationship with you, and thank you for the
opportunity to assist you in achieving your financial goals. I look forward to
the remainder of 2013 and to the next edition of your Fund's report.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees and
Chief Executive Officer of First Trust Advisors L.P.
Page 1
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
"AT A GLANCE"
AS OF MAY 31, 2013 (UNAUDITED)
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FUND STATISTICS
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Symbol on New York Stock Exchange MFD
Common Share Price $15.75
Common Share Net Asset Value ("NAV") $16.30
Premium (Discount) to NAV (3.37)%
Net Assets Applicable to Common Shares $139,122,357
Current Quarterly Distribution per Common Share (1) $0.3500
Current Annualized Distribution per Common Share $1.4000
Current Distribution Rate on Closing Common Share Price (2) 8.89%
Current Distribution Rate on NAV (2) 8.59%
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COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
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Common Share Price NAV
5/12 13.80 14.36
13.60 14.20
13.89 14.58
14.30 14.76
6/12 14.67 14.77
14.73 15.34
15.27 15.16
15.40 15.43
15.45 15.54
7/12 15.62 15.74
15.56 15.82
15.90 15.75
15.80 16.10
15.39 15.81
8/12 15.81 15.83
15.81 16.16
16.08 16.53
16.08 16.47
9/12 15.82 16.20
16.00 16.50
15.67 16.26
15.64 16.35
10/12 15.54 16.20
15.48 16.12
14.96 15.76
14.08 15.53
14.92 15.75
11/12 14.84 15.91
14.59 15.84
14.78 16.01
15.20 16.14
12/12 15.01 15.99
15.35 16.43
15.76 16.50
15.98 16.48
1/13 16.20 16.70
16.05 16.82
16.02 16.56
16.28 16.44
2/13 15.98 16.17
16.05 16.04
16.23 16.22
16.11 16.30
16.33 16.58
3/13 16.12 16.65
16.10 16.64
16.48 17.01
16.47 16.76
4/13 16.49 17.13
17.30 17.40
16.78 17.29
17.19 17.31
16.21 16.78
5/13 15.75 16.30
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PERFORMANCE
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Average Annual Total Return
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Inception
6 Months Ended 1 Year Ended 5 Years Ended (3/25/2004)
5/31/2013 5/31/2013 5/31/2013 to 5/31/2013
FUND PERFORMANCE (3)
NAV 7.00% 24.02% 1.56% 9.15%
Market Value 10.84% 24.69% -0.02% 8.19%
INDEX PERFORMANCE
S&P 500 Utilities Total Return Index 8.94% 9.47% 2.50% 9.21%
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% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
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National Grid plc 5.6%
Transurban Group 5.6
GDF Suez 4.7
Scottish and Southern Energy plc 4.2
Centrica plc 3.7
El Paso Pipeline Partners, L.P. 3.1
Enbridge, Inc. 3.1
Fraport AG Frankfurt Airport Services
Worldwide 2.9
Enterprise Products Partners, L.P. 2.7
TransCanada Corp. 2.6
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Total 38.2%
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% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
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Oil, Gas & Consumable Fuels 20.1%
Multi-Utilities 17.2
Transportation Infrastructure 13.5
Electric Utilities 8.7
Independent Power Producers & Energy Traders 6.7
Health Care Providers & Services 6.4
Wireless Telecommunication Services 5.8
Media 5.8
Water Utilities 4.3
Road & Rail 3.3
Diversified Telecommunication Services 2.8
Construction & Engineering 2.6
Gas Utilities 2.4
Energy Equipment & Services 0.4
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Total 100.0%
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% OF TOTAL
COUNTRY INVESTMENTS
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United States 45.3%
United Kingdom 17.9
Canada 9.3
Australia 8.2
France 7.8
Germany 4.1
Italy 2.1
Japan 1.9
Spain 1.7
Switzerland 1.7
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Total 100.0%
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(1) Most recent distribution paid or declared through 5/31/2013. 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 5/31/2013. Subject to
change in the future.
(3) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan, and changes in NAV per share for NAV
returns and changes in Common Share price for market value returns. Total
returns do not reflect sales load and are not annualized for periods less
than one year. Past performance is not indicative of future results.
Page 2
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PORTFOLIO COMMENTARY
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
SEMI-ANNUAL REPORT
MAY 31, 2013
SUB-ADVISORS
Macquarie Capital Investment Management LLC ("MCIM") and Four Corners Capital
Management, LLC ("Four Corners") are the Sub-Advisors of the Macquarie/First
Trust Global Infrastructure/Utilities Dividend & Income Fund ("MFD" or the
"Fund"). Both MCIM and Four Corners operate within the Macquarie Funds Group
("MFG") and are wholly-owned, indirect subsidiaries of Macquarie Group Limited
("Macquarie").
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 affiliates manage approximately $2.2 billion of assets as of May
31, 2013, in MFG's Infrastructure Securities portfolios, which include the Fund.
The Fund's Senior Loan Component is managed by Four Corners. Four Corners was
founded in 2001 and became a wholly-owned subsidiary of Macquarie in 2008. Four
Corners managed over $1.7 billion of assets as of May 31, 2013, with an emphasis
on Senior Loans. Four Corners is a subsidiary of Delaware Asset Advisers, a
series of Delaware Management Business Trust ("Delaware"), which is also a
wholly-owned subsidiary of Macquarie. Delaware managed over $180 billion in
assets across all major asset classes as of May 31, 2013.
MFG is Macquarie's fund management business. MFG is Australia's largest asset
manager and a top 40 asset manager globally, with over USD $350 billion in
assets under management as of March 31, 2013. MFG is a full-service asset
manager, offering a diverse range of products including securities investment
management, infrastructure and real estate asset management, and fund and
equity-based structured products.
PORTFOLIO MANAGEMENT TEAM
ANTHONY FELTON, CFA
CO-PORTFOLIO MANAGER, MFD CORE COMPONENT
PORTFOLIO MANAGER, MACQUARIE CAPITAL INVESTMENT MANAGEMENT LLC
JONATHON ONG, CFA
CO-PORTFOLIO MANAGER, MFD CORE COMPONENT
PORTFOLIO MANAGER, MACQUARIE CAPITAL INVESTMENT MANAGEMENT LLC
ADAM H. BROWN, CFA
PORTFOLIO MANAGER, MFD SENIOR LOAN COMPONENT
VICE PRESIDENT, FOUR CORNERS CAPITAL MANAGEMENT, LLC
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.
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
Global equities continued the positive trend in the six-month period covered by
this report, despite concerns over weak economic growth, ongoing U.S. fiscal
uncertainty and another flare-up in the Eurozone debt crisis.
Page 3
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PORTFOLIO COMMENTARY (CONTINUED)
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In the first half of the period, the developed equity markets were supported by
a decent fourth quarter earnings season and commitment from policymakers in the
major economies to rekindle growth in the global economy, thereby supporting the
fundamental recovery in investor risk appetite. The U.S. Federal Reserve Bank
remained supportive of the economy and investment markets, with quantitative
easing continuing at USD $85 billion a month. Similarly, in the UK and Japan the
respective central banks signaled their commitment to policies aimed at
meaningfully reflating economic activity. The Bank of Japan's announcement of a
2% inflation target and an open-ended quantitative easing (QE) program
represents a clear shift to a more aggressive reflationary path, with the
government looking for a fall in the yen. This policy change led to very strong
gains in Japanese asset markets over the period.
In the key emerging markets, both India and China also demonstrated a clear
policy priority in terms of the promotion of more robust and broadly-based
economic activity.
Despite the strong performance of the equity markets, continued volatility in
commodity prices and the sharp fall in precious metal prices have reinforced the
need for global policymakers to remain vigilant in terms of destabilizing
deflation episodes rather than being concerned about a "liquidity inspired"
inflationary surge. Persistently high output gaps in the Eurozone economies, the
gradual but ongoing drag on U.S. growth from the sequestration measures and
continuing consumer price deflation in Japan all highlight the need for ongoing
steps to bolster growth. Concerns also emerged at the end of the period about
the longevity and magnitude of the U.S. Federal Reserve's QE program, which saw
equity markets finish the period off their highs.
PERFORMANCE ANALYSIS - CORE COMPONENT
As shown on the performance table, MFD's net asset value ("NAV") total return1
for the period was 7.00%, trailing the 8.94% return of the S&P 500 Utilities
Total Return Index (the "Index"). 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 an
appropriate frame of reference.
In our view, there were a number of factors driving the Core Component's
contribution to the Fund's NAV total return during the period.
The positive contributors were:
o The strong performance of energy pipeline stocks, particularly in
the U.S. and Canada;
o The solid performance of the Toll Roads sector; and
o The good performance of the Water sector.
The negative contributors were:
o The strength of the U.S. dollar against major currencies; and
o The weakness of integrated electric utilities stocks, offset by the
strength of regulated electric utilities, electricity transmission
and electricity and gas distribution stocks.
These factors are discussed in further detail below.
Pipelines
Pipeline stocks contributed significantly to the Fund's total return, led in the
U.S. by several Master Limited Partnerships. The strong performance was driven
by a number of expansion projects being completed and new projects announced,
supporting continued earnings and distribution growth. Magellan Midstream
Partners was up strongly after announcing a distribution increase and
incremental organic growth projects. Enterprise Products Partners and El Paso
Pipeline Partners both performed well after reporting results that beat market
expectations, driven by recently completed expansion projects going into
service. Williams Co. announced an attractive expansion project connecting the
Marcellus and Utica shale plays in the Northeast U.S. with export markets on the
Gulf Coast. Enagas benefited from the fall in Spanish bond yields and a decrease
in concerns about regulatory risks.
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1 Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan and changes in NAV per share for NAV
returns and changes in Common Share price for market value returns. Total
returns do not reflect sales load and are not annualized for periods less
than one year. Past performance is not indicative of future results.
Page 4
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PORTFOLIO COMMENTARY (CONTINUED)
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The sector fell in May after a period of solid returns, as the rise in U.S. bond
yields led some yield-focused investors to rotate out of the sector. Our visits
to a large number of companies in the U.S. and Canada during May confirmed our
investment thesis for the North American energy sector and confirmed our belief
that the portfolio's infrastructure stock holdings are very well positioned. We
believe the developments in this sector are "game changing" in nature and will
require significant investment in energy infrastructure over many years, thereby
providing very attractive organic growth opportunities for incumbent
infrastructure owners.
Toll Roads
The Toll Roads sector performed strongly, led by Abertis Infraestructuras and
Vinci. Abertis benefited from a further reduction in Spanish bond yields and the
prospect of a successful resolution of the strategic review of its airport
assets, with the initial sale of Cardiff Airport. Vinci rallied after winning
the auction to acquire ANA, which holds a fifty-year concession for ten
Portuguese airports. It also reported 1Q revenue ahead of expectations.
One of the Fund's largest holdings, Transurban, announced a potential new
project which will see it have a 50% stake in a road that would connect a major
freeway to the north of Sydney with its existing road network. This potential
transaction is in-line with our expectations and highlights both the attractive
"option value" in Transurban's road portfolio, which sees it well-positioned to
be involved in attractive expansion opportunities and the board's commitment to
only undertake projects that are in the interests of shareholders. Atlantia,
however, underperformed due to ongoing weak traffic, political uncertainty after
elections held in February, and some uncertainty regarding the strategic
rationale for an announced merger with the operator of Rome's airport, Gemina.
Water
The Water sector performed well. In the UK, Severn Trent was up strongly after
receiving a preliminary takeover offer from a consortium of unlisted
infrastructure investors. A formal bid, if one was to be made, was required by
June 11. (A formal bid was not made and the stock fell back in mid-June, prior
to which the Fund had sold most of its position.) The sector also benefited from
increased inflation expectations in the UK. Inflation protection is one of the
attractive characteristics of the UK water companies and is provided by means of
an explicit linkage to inflation in the tariff setting mechanism.
The U.S. Dollar
As the Fund was not hedged for currency, the strength of the U.S. dollar
detracted from the Fund's return during the period. The U.S. dollar appreciated
by 9%, 5% and 4% against the Australian dollar, the British pound and the
Canadian dollar, respectively. Altogether, investments in these three currencies
comprised around 32% of the Core Component of the Fund (as at period end). The
U.S. dollar remains relatively unchanged against the Euro.
Utilities
GDF Suez, a French integrated utility, underperformed amidst the backdrop of an
unfavorable operating environment of weak demand and soft power prices in the
sluggish European economy. Southern Co. in the U.S. was weak as upcoming rate
cases, higher U.S. Treasury yields and higher than expected capital costs for a
new coal-to-gas generation plant dented sentiment.
By contrast, regulated utilities businesses such as Electricity and Gas
Distribution and Transmission entities outperformed the broader Infrastructure
sector. They continued to benefit from their defensive nature and, in some
cases, higher yield.
In the Electricity and Gas Distribution sector, Centrica in the UK performed
well due to its ongoing share repurchase program as well as the signing of a
significant LNG supply contract in North America towards the end of the period.
Tokyo Gas benefited from the strength of the broader Japanese equity market,
having reported earnings in line with expectations.
Electricity Transmission companies also performed well. National Grid in the UK
accepted the proposed terms under the RIIO (a new performance-based model to set
price controls) regulatory framework (to apply from the next financial year
2013/14) which are expected to be beneficial to the company. It also announced a
new policy targeting dividend growth of at least inflation for the foreseeable
future. Red Electrica benefited from lower Spanish bond yields and reported 1Q
results in-line with expectations.
PORTFOLIO COMPOSITION
As of May 31, 2013, the Fund's Core Component was well diversified across 33
positions in global infrastructure stocks, representing 10 countries and 14
sectors. During the period, the main increases in the Fund's weightings were in
Multi-Utilities and Oil Gas & Consumable Fuels, while the weightings in
Transportation Infrastructure and Electric Utilities were reduced. Sector
changes were driven by bottom-up stock selection.
Page 5
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PORTFOLIO COMMENTARY (CONTINUED)
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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. As
floating-rate debt instruments' 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 Senior Loan Component of the Fund invests in infrastructure businesses and
therefore the loans tend to have significant asset collateral and loan ratings
generally higher than the S&P LSTA Leveraged Loan Index ("Senior Loan Index").
The average rating in the Senior Loan Component is BB- vs. the average Senior
Loan Index rating of between B+ and BB-.
The Senior Loan Index posted a 3.7% return for the six months ended May 31,
2013. Lower-rated loans outperformed during that period, with BB-rated loans
returning 2.3%, single B-rated loans returning 3.6% and CCC-rated loans
outperforming, returning 12.1%. The Senior Loan Component returned 2.7% during
the six-month period, which is slightly higher than the BB-rated Senior Loan
Index return.
Index returns were strong and relatively evenly dispersed from December 2012
through May 2013. Loan market strength was seemingly driven by positive investor
sentiment across the capital markets, extremely low default rates, strong
technical conditions, and an absence of outside shocks. Loan market inflows were
strong, with approximately $44 billion of CLO issuance and $29 billion of retail
loan mutual fund inflows for the six-month period ended May 31, 2013.
We believe fundamentals continue to be strong. Among Senior Loan Index issuers
that file publicly, first quarter 2013 Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) grew 7% year over year, versus 8% EBITDA
growth in the fourth quarter 2012. Solid cash flow generation contributed to a
Senior Loan Index default rate of 1.4% for the twelve-month period ended May
2013.
While we believe bank loans are a good relative value investment given generally
conservative balance sheet management by the issuers in the loan market and
historically low default risk, spreads could widen because of broader capital
markets risk aversion impacting the bank loan and fixed-income markets.
PERFORMANCE RELATIVE TO THE INDEX
The Index is a broad barometer of the performance of U.S. utility stocks only
(but does not include a broad range of infrastructure sectors). By comparison,
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.
The Fund underperformed the Index mainly due to the appreciation of the U.S.
dollar, as the Fund does not hedge its currency exposures. All of the Index's
investments are in the U.S., while approximately 45% of the Fund's investments
are in the U.S. at period end. In addition, the Fund had exposure to a broad
range of Infrastructure sectors in the Core Component, a number of which
underperformed U.S. utilities. The Fund's Senior Loan Component also
underperformed the Index.
One of the factors impacting the return of the Fund relative to its benchmarks
was the Fund's use of financial leverage through the use of bank borrowings. The
Fund uses leverage because we believe that, over time, leverage provides
opportunities for additional income and total return for common shareholders.
However, the use of leverage can also expose common shareholders to additional
volatility. For example, as the prices of securities held by the Fund decline,
the negative impact of valuation changes on Common Share NAV and common
shareholder total return is magnified by the use of leverage. Conversely,
leverage may enhance Common Share returns during periods when the prices of
securities held by the Fund generally are rising. Leverage had a positive impact
on the performance of the Fund over this reporting period.
DISTRIBUTIONS
During the six-month period covered by this report, the Fund announced two
regularly scheduled quarterly distributions totaling $0.70 per share. In
accordance with the Fund's level distribution policy, distributions are expected
to be comprised of net investment income, realized short-term capital gains and
non-taxable return of capital distributions (which generally are expected to
represent unrealized capital appreciation) in order to sustain a stable level of
distributions to shareholders. Net long-term capital gain distributions, if any,
are expected to be made annually.
MARKET AND FUND OUTLOOK
Global equity markets have posted three consecutive quarters of strong positive
returns as they continued to focus on the positives and downplay a number of
negative economic and political issues. While we believe the global economic
outlook is improving, led by the U.S. and China, the developments in Cyprus
earlier this year were a reminder of the breadth and depth of
Page 6
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PORTFOLIO COMMENTARY (CONTINUED)
--------------------------------------------------------------------------------
the European debt problem, the response to which is likely to inhibit European
economic performance for some years. Concerns also exist around the longevity of
the QE programs, which are inherently unstable given the large amounts of
liquidity being pumped into financial systems.
We expect stock and bond markets will be closely influenced in the near term by
statements from the U.S. Federal Reserve Bank as policymakers refine their
preferred strategy for the eventual wind back of the QE program. From a
fundamental perspective, we believe the medium-term performance of asset markets
should be driven more by the durability of real economic activity in a post-QE
environment.
Investors continue to seek yield as interest rates remain low around the world.
We believe the Infrastructure sector is well positioned in this environment.
There are many infrastructure companies with both sustainable dividends and the
potential for dividend growth.
The news in relation to Transurban and Severn Trent highlights the quality
inherent in the Fund's portfolio. Severn Trent is a quality company trading at a
discount to its fundamental value which is seen as very attractive by unlisted
infrastructure investors. The takeover interest in Severn Trent supports our
view that if listed infrastructure is underpriced by the market, it will attract
unlisted investors who are willing to buy these valuable assets at higher
prices.
Transurban is a company with good management and a clear focus on shareholder
returns that is able to negotiate with the government to deliver a proposal for
a relatively low risk, attractive addition to its high quality Sydney road
network. These are two examples of the stocks in the portfolio that we expect
will be able to deliver the relatively stable and predictable cash flows that
are attractive for infrastructure investors.
The Core Component of the Fund holds what we believe are high quality
income-generating stocks, diversified primarily across the transportation,
utilities and pipelines sectors. We believe that the portfolio is well
positioned to benefit from several themes we have identified.
We believe that the Fund provides U.S. investors with an attractive vehicle to
access the broad global universe of listed infrastructure securities. We
continue to appreciate your investment in the Fund.
Page 7
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 2013 (UNAUDITED)
SHARES DESCRIPTION VALUE
------------ ------------------------------------------------------------------------------------------- -------------
COMMON STOCKS (a) - 79.2%
AUSTRALIA - 10.4%
961,414 Asciano Group (b) ......................................................................... $ 4,606,935
1,503,220 Transurban Group (b) ...................................................................... 9,915,490
-------------
14,522,425
-------------
CANADA - 11.8%
125,600 Enbridge, Inc.............................................................................. 5,448,017
195,571 Northland Power, Inc....................................................................... 3,497,358
91,033 Pembina Pipeline Corp...................................................................... 2,846,675
100,937 TransCanada Corp........................................................................... 4,630,397
-------------
16,422,447
-------------
FRANCE - 9.9%
29,929 Eutelsat Communications S.A. (b) .......................................................... 929,033
403,533 GDF Suez (b) .............................................................................. 8,229,721
89,578 Vinci S.A. (b) ............................................................................ 4,593,988
-------------
13,752,742
-------------
GERMANY - 5.2%
86,104 Fraport AG Frankfurt Airport Services Worldwide (b) ....................................... 5,067,068
90,557 Hamburger Hafen Und Logistik AG (b) ....................................................... 2,200,091
-------------
7,267,159
-------------
ITALY - 2.7%
224,294 Atlantia SpA (b) .......................................................................... 3,819,463
-------------
JAPAN - 2.5%
415,000 Tokyo Gas Co., Ltd. (b) ................................................................... 2,231,414
29,500 West Japan Railway Co. (b) ................................................................ 1,226,888
-------------
3,458,302
-------------
SPAIN - 2.2%
81,469 Enagas S.A. (b) ........................................................................... 2,036,592
18,795 Red Electrica Corp. S.A. (b) .............................................................. 999,326
-------------
3,035,918
-------------
SWITZERLAND - 2.1%
6,003 Flughafen Zuerich AG (b) .................................................................. 2,950,139
-------------
UNITED KINGDOM - 22.7%
1,148,209 Centrica plc (b) .......................................................................... 6,603,050
836,910 National Grid plc (b) ..................................................................... 9,951,276
305,994 Pennon Group plc (b) ...................................................................... 3,161,111
313,722 Scottish and Southern Energy plc (b) ...................................................... 7,363,971
145,734 Severn Trent plc (b) ...................................................................... 4,525,203
-------------
31,604,611
-------------
UNITED STATES - 9.7%
25,900 Duke Energy Corp........................................................................... 1,733,487
61,200 PG&E Corp.................................................................................. 2,748,492
35,500 Sempra Energy ............................................................................. 2,886,150
63,300 Southern Co................................................................................ 2,778,870
Page 8 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2013 (UNAUDITED)
SHARES/
UNITS DESCRIPTION VALUE
------------ ------------------------------------------------------------------------------------------- -------------
COMMON STOCKS (a) (CONTINUED)
UNITED STATES (CONTINUED)
36,300 Spectra Energy Corp........................................................................ $ 1,109,691
62,400 Williams Cos., Inc......................................................................... 2,195,232
-------------
13,451,922
-------------
TOTAL COMMON STOCKS ....................................................................... 110,285,128
(Cost $104,482,957) -------------
MASTER LIMITED PARTNERSHIPS (a) - 13.6%
UNITED STATES - 13.6%
133,594 El Paso Pipeline Partners, L.P............................................................. 5,489,378
94,500 Enbridge Energy Partners, L.P.............................................................. 2,788,695
24,788 Energy Transfer Equity, L.P................................................................ 1,416,882
81,777 Enterprise Products Partners, L.P.......................................................... 4,856,736
83,277 Magellan Midstream Partners, L.P........................................................... 4,329,571
-------------
TOTAL MASTER LIMITED PARTNERSHIPS ......................................................... 18,881,262
(Cost $14,941,994) -------------
PRINCIPAL STATED
VALUE DESCRIPTION RATE (c) MATURITY (d) VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
SENIOR FLOATING-RATE LOAN INTERESTS - 34.4%
UNITED STATES - 34.4%
$ 1,914,265 AES Corp., Term Loan B ......................................... 3.75% 05/27/18 1,931,972
2,809,303 Bresnan Communications, LLC, Term Loan B ....................... 4.50% 12/14/17 2,811,944
1,600,000 Calpine Construction Finance Co., Term Loan .................... 3.00% 05/01/20 1,588,400
1,462,594 Calpine Corp., Term Loan B1 .................................... 4.00% 04/01/18 1,474,222
491,250 Calpine Corp., Term Loan B2 .................................... 4.00% 04/01/18 495,155
2,496,196 Cequel Communications Holdings I, LLC, Term
Loan B ...................................................... 3.50% 02/14/19 2,505,033
2,859,575 CHS/Community Health Systems, Inc., Extended
Term Loan ................................................... 3.77%-3.78% 01/25/17 2,880,708
3,258,750 Crown Castle Operating Co., Term Loan B ........................ 3.25% 01/31/19 3,266,506
1,500,000 DigitalGlobe, Inc., Term Loan B ................................ 3.75% 01/31/20 1,508,250
405,000 Energy Transfer Equity, L.P., Term Loan B ...................... 3.75% 03/26/17 408,544
979,153 EquiPower Resources Holdings, LLC, Term
Loan B ...................................................... 5.50% 12/21/18 985,272
3,447,027 HCA, Inc., Term Loan B-5 ....................................... 3.03% 03/31/17 3,458,333
2,940,131 IASIS Healthcare Corp., Term Loan B2 ........................... 4.50% 05/03/18 2,948,393
1,784,980 Intelsat Jackson Holdings S.A., Term Loan B .................... 4.25% 04/02/18 1,795,583
1,500,000 La Frontera Generation, LLC, Term Loan ......................... 4.50% 09/30/20 1,511,250
2,900,000 Level 3 Financing, Inc., Term Loan B ........................... 4.75% 08/01/19 2,920,851
1,960,063 NRG Energy, Inc., Term Loan B .................................. 3.25% 07/01/18 1,947,146
731,250 Offshore Group Investment Limited .............................. 6.25% 10/25/17 738,109
1,000,000 Panda Temple Power II, LLC, Term Loan .......................... 7.25% 03/28/19 1,021,250
200,000 TW Telecom Holdings, Inc., Term Loan B ......................... 2.70% 04/05/20 200,700
1,324,144 UPC Broadband Holdings, B.V., Term Loan ........................ 3.25% 06/30/21 1,322,674
See Notes to Financial Statements Page 9
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2013 (UNAUDITED)
PRINCIPAL STATED
VALUE DESCRIPTION RATE (c) MATURITY (d) VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
SENIOR FLOATING-RATE LOAN INTERESTS (CONTINUED)
UNITED STATES (CONTINUED)
$ 1,945,682 Vanguard Health Systems, Inc., Term Loan B ..................... 3.75% 01/29/16 $ 1,963,680
2,594,494 Wide Open West Finance, LLC, Term Loan B ....................... 4.75% 03/27/19 2,612,344
992,500 Windstream Corp., Term Loan B-3 ................................ 4.00% 08/08/19 1,000,877
2,493,750 Windstream Corp., Term Loan B-4 ................................ 3.50% 01/08/20 2,501,555
1,989,975 Zayo Group, LLC, Term Loan ..................................... 4.50% 07/02/19 2,002,094
-------------
TOTAL SENIOR FLOATING-RATE LOAN INTERESTS ................................................. 47,800,845
(Cost $47,503,300) -------------
TOTAL INVESTMENTS - 127.2% ................................................................ 176,967,235
(Cost $166,928,251) (e)
OUTSTANDING LOAN - (34.1%) ................................................................ (47,500,000)
NET OTHER ASSETS AND LIABILITIES - 6.9% ................................................... 9,655,122
-------------
NET ASSETS - 100.0% ....................................................................... $ 139,122,357
=============
---------------------------------------
(a) All or a portion of each security is available to serve as collateral for
the outstanding loan.
(b) This security is fair valued in accordance with procedures adopted by the
Fund's Board of Trustees and in accordance with the provisions of the
Investment Company Act of 1940, as amended.
(c) Senior Loans in which the Fund invests 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 United
States banks or (iii) the certificate of deposit rate. Certain Senior
Loans are subject to a LIBOR floor that establishes a minimum LIBOR rate.
The interest rate shown reflects the rate in effect at May 31, 2013.
(d) 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.
(e) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of May 31, 2013, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $12,911,654 and the aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over value was $2,872,670.
Page 10 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2013 (UNAUDITED)
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of May 31, 2013,
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
5/31/2013 PRICES INPUTS INPUTS
------------- ------------- ------------- -------------
Common Stocks:
Australia................................. $ 14,522,425 $ -- $ 14,522,425 $ --
Canada.................................... 16,422,447 16,422,447 -- --
France.................................... 13,752,742 -- 13,752,742 --
Germany................................... 7,267,159 -- 7,267,159 --
Italy..................................... 3,819,463 -- 3,819,463 --
Japan..................................... 3,458,302 -- 3,458,302 --
Spain..................................... 3,035,918 -- 3,035,918 --
Switzerland............................... 2,950,139 -- 2,950,139 --
United Kingdom............................ 31,604,611 -- 31,604,611 --
United States............................. 13,451,922 13,451,922 -- --
------------- ------------- ------------- -------------
Total Common Stocks................... 110,285,128 29,874,369 80,410,759 --
------------- ------------- ------------- -------------
Master Limited Partnerships*................... 18,881,262 18,881,262 -- --
Senior Floating-Rate Loan Interests*........... 47,800,845 -- 47,800,845 --
------------- ------------- ------------- -------------
TOTAL INVESTMENTS.............................. $ 176,967,235 $ 48,755,631 $ 128,211,604 $ --
============= ============= ============= =============
* See the Portfolio of Investments for country breakout.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. As of May 31,
2013, the Fund transferred common stocks valued at $61,553,876 from Level 1 to
Level 2 of the fair value hierarchy. The common stocks that transferred from
Level 1 to Level 2 did so as a result of foreign equities that were valued based
on quoted prices at November 30, 2012, that are now being fair valued using a
factor provided by a price service due to the change in value between the
foreign markets' close and the New York Stock Exchange close on May 31, 2013,
exceeding a certain threshold. See Note 2A - Portfolio Valuation in the Notes to
Financial Statements.
See Notes to Financial Statements Page 11
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2013 (UNAUDITED)
ASSETS:
Investments, at value
(Cost $166,928,251) ......................................................................... $176,967,235
Cash........................................................................................... 5,964,247
Foreign currency (Cost $382,810) .............................................................. 380,839
Receivables:
Investment securities sold................................................................. 8,585,953
Dividends.................................................................................. 2,761,850
Interest................................................................................... 220,871
Prepaid expenses .............................................................................. 18,529
Other assets .................................................................................. 573
------------
Total Assets............................................................................... 194,900,097
------------
LIABILITIES:
Outstanding loan .............................................................................. 47,500,000
Payables:
Investment securities purchased............................................................ 7,646,344
Investment advisory fees (includes Sub-Advisory fees of $288,413).......................... 480,688
Custodian fees............................................................................. 73,717
Audit and tax fees......................................................................... 32,556
Administrative fees........................................................................ 18,556
Printing fees.............................................................................. 7,694
Legal fees................................................................................. 5,521
Transfer agent fees........................................................................ 4,646
Trustees' fees and expenses................................................................ 4,288
Interest and fees on loan.................................................................. 2,959
Financial reporting fees................................................................... 771
------------
Total Liabilities........................................................................ 55,777,740
------------
NET ASSETS $139,122,357
============
NET ASSETS CONSIST OF:
Paid-in capital ............................................................................... $162,955,663
Par value ..................................................................................... 85,333
Accumulated net investment income (loss) ...................................................... 1,519,103
Accumulated net realized gain (loss) on investments ........................................... (35,554,395)
Net unrealized appreciation (depreciation) on investments ..................................... 10,116,653
------------
NET ASSETS .................................................................................... $139,122,357
============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) .......................... $ 16.30
============
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized).... 8,533,285
============
Page 12 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2013 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $866,575)......................................... $ 8,279,801
Interest....................................................................................... 1,036,771
Other.......................................................................................... 127,727
------------
Total investment income..................................................................... 9,444,299
------------
EXPENSES:
Investment advisory fees (includes Sub-Advisory fees of $564,564).............................. 940,940
Interest and fees on outstanding loan.......................................................... 272,365
Administrative fees............................................................................ 95,538
Custodian fees................................................................................. 60,094
Printing fees.................................................................................. 29,976
Audit and tax fees............................................................................. 27,355
Transfer agent fees............................................................................ 15,253
Trustees' fees and expenses.................................................................... 11,318
Legal fees..................................................................................... 6,228
Financial reporting fees....................................................................... 4,625
Other.......................................................................................... 11,278
------------
Total expenses.............................................................................. 1,474,970
------------
NET INVESTMENT INCOME (LOSS)................................................................... 7,969,329
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments................................................................................. 3,436,291
Foreign currency transactions............................................................... (107,714)
------------
Net realized gain (loss)....................................................................... 3,328,577
------------
Net change in unrealized appreciation (depreciation) on:
Investments................................................................................. (1,991,357)
Foreign currency translation................................................................ 39,969
------------
Net change in unrealized appreciation (depreciation)........................................... (1,951,388)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)........................................................ 1,377,189
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................ $ 9,346,518
============
See Notes to Financial Statements Page 13
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
5/31/2013 ENDED
(UNAUDITED) 11/30/2012
------------ ------------
OPERATIONS:
Net investment income (loss)....................................................... $ 7,969,329 $ 9,817,611
Net realized gain (loss)........................................................... 3,328,577 (1,184,140)
Net change in unrealized appreciation (depreciation)............................... (1,951,388) 10,006,307
------------ ------------
Net increase (decrease) in net assets resulting from operations.................... 9,346,518 18,639,778
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.............................................................. (5,973,300) (11,212,484)
Net realized gain.................................................................. -- --
Return of capital.................................................................. -- (734,115)
------------ ------------
Total distributions to shareholders................................................ (5,973,300) (11,946,599)
------------ ------------
Total increase (decrease) in net assets............................................ 3,373,218 6,693,179
NET ASSETS:
Beginning of period................................................................ 135,749,139 129,055,960
------------ ------------
End of period...................................................................... $139,122,357 $135,749,139
============ ============
Accumulated net investment income (loss) at end of period.......................... $ 1,519,103 $ (476,926)
============ ============
COMMON SHARES:
Common Shares at end of period..................................................... 8,533,285 8,533,285
============ ============
Page 14 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31, 2013 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations................. $ 9,346,518
Adjustments to reconcile net increase (decrease) in net assets resulting from
operations to net cash provided by operating activities:
Purchases of investments..................................................... (238,390,318)
Sales, maturities and paydowns of investments................................ 238,724,415
Return of capital received from investment in MLPs........................... 516,880
Net amortization/accretion of premiums/discounts on investments.............. (27,838)
Net realized gain/loss on investments........................................ (3,436,291)
Net change in unrealized appreciation/depreciation on investments............ 1,991,357
CHANGES IN ASSETS AND LIABILITIES:
Decrease in interest receivable.............................................. 18,425
Increase in dividends receivable............................................. (1,005,142)
Increase in prepaid expenses................................................. (11,635)
Increase in other assets..................................................... (573)
Decrease in interest and fees on loan payable................................ (90)
Increase in investment advisory fees payable................................. 20,565
Decrease in audit and tax fees payable....................................... (21,644)
Decrease in legal fees payable............................................... (369)
Decrease in printing fees payable............................................ (10,686)
Increase in administrative fees payable...................................... 5,184
Increase in custodian fees payable........................................... 60,095
Decrease in transfer agent fees payable...................................... (1,237)
Increase in Trustees' fees and expenses payable.............................. 539
Decrease in other liabilities................................................ (7,197)
--------------
CASH PROVIDED BY OPERATING ACTIVITIES........................................... $ 7,770,958
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Common Shareholders from net investment income............... (8,959,950)
--------------
CASH USED BY FINANCING ACTIVITIES............................................... (8,959,950)
--------------
Decrease in cash and foreign currency (a)....................................... (1,188,992)
Cash and foreign currency at beginning of period................................ 7,534,078
--------------
CASH AND FOREIGN CURRENCY AT END OF PERIOD...................................... $ 6,345,086
==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees............................... $ 272,455
==============
---------------------------------------
(a) Includes net change in unrealized appreciation (depreciation) on foreign
currency of $39,969.
See Notes to Financial Statements Page 15
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
5/31/2013 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 11/30/2012 11/30/2011 11/30/2010 11/30/2009 11/30/2008
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period .... $ 15.91 $ 15.12 $ 15.29 $ 14.36 $ 11.43 $ 25.03
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS: ......
Net investment income (loss) ............ 0.93 1.15 1.43 (a) 0.55 0.46 1.33
Net realized and unrealized gain (loss).. 0.16 1.04 (0.27) 1.06 3.07 (13.23)
-------- -------- -------- -------- -------- --------
Total from investment operations ........ 1.09 2.19 1.16 1.61 3.53 (11.90)
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income ................... (0.70) (1.31) (1.40) (0.68) (0.11) (0.93)
Net realized gain ....................... -- -- -- -- -- (0.73)
Return of capital ....................... -- (0.09) -- -- (0.49) (0.04)
-------- -------- -------- -------- -------- --------
Total distributions ..................... (0.70) (1.40) (1.40) (0.68) (0.60) (1.70)
-------- -------- -------- -------- -------- --------
Capital share repurchases ............... -- -- 0.07 -- -- --
-------- -------- -------- -------- -------- --------
Net asset value, end of period .......... $ 16.30 $ 15.91 $ 15.12 $ 15.29 $ 14.36 $ 11.43
======== ======== ======== ======== ======== ========
Market value, end of period ............. $ 15.75 $ 14.84 $ 14.07 $ 13.82 $ 11.73 $ 8.60
======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON NET ASSET
VALUE (b) (c) ........................ 7.00% 15.35% 8.49% 12.31% 33.75% (48.98)%
======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON MARKET VALUE (b) .. 10.84% 15.62% 11.70% 24.27% 45.08% (59.56)%
======== ======== ======== ======== ======== ========
--------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $139,122 $135,749 $129,056 $138,786 $130,335 $103,780
Ratio of total expenses to average net
assets 2.09% (d) 2.24% 2.24% 2.36% 2.86% 3.72%
Ratio of total expenses to average net
assets excluding interest expense 1.71% (d) 1.78% 1.81% 1.77% 1.92% 1.80%
Ratio of net investment income (loss) to
average net assets 11.32% (d) 7.35% 8.92% 3.68% 3.76% 6.44%
Portfolio turnover rate 136% 144% 91% 87% 80% 23%
INDEBTEDNESS:
Total loan outstanding (in 000's) $ 47,500 $ 47,500 $ 47,500 $ 44,500 $ 35,900 $ 38,900
Asset coverage per $1,000 of
indebtedness (e) $ 3,929 $ 3,858 $ 3,717 $ 4,119 $ 4,630 $ 3,668
--------------------
(a) Per share amounts have been calculated using the average share method.
(b) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan, and changes in net asset value per share
for net asset value returns and changes in Common Share price for market
value returns. Total returns do not reflect sales load and are not
annualized for periods less than one year. Past performance is not
indicative of future results.
(c) 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)%.
(d) Annualized.
(e) Calculated by taking the Fund's total assets less the Fund's total
liabilities (not including the loan outstanding), and dividing by the
outstanding loan balance in 000's.
Page 16 See Notes to Financial Statements
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND
MAY 31, 2013 (UNAUDITED)
1. ORGANIZATION
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 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. There can be no assurance that the Fund will
achieve its investment objective. The Fund may not be appropriate for all
investors.
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 ("U.S. GAAP") requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
A. PORTFOLIO VALUATION:
The net asset value ("NAV") of the Common Shares of the Fund is determined daily
as of the close of regular trading on the NYSE, normally 4:00 p.m. Eastern time,
on each day the NYSE is open for trading. If the NYSE closes early on a
valuation day, the NAV is determined as of that time. 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 in accordance with valuation procedures
adopted by the Fund's Board of Trustees, and in accordance with provisions of
the 1940 Act. The Fund's securities will be valued as follows:
Common stocks, master limited partnerships ("MLPs") and other equity
securities listed on any national or foreign exchange (excluding the
NASDAQ(R) Stock Market LLC ("NASDAQ") and the London Stock Exchange
Alternative Investment Market ("AIM")) are valued at the last sale price
on the exchange on which they are principally traded or, for NASDAQ and
AIM securities, the official closing price. Securities traded on more than
one securities exchange are valued at the last sale price or official
closing price, as applicable, at the close of the securities exchange
representing the principal market for such securities.
Securities traded in an over-the-counter market are valued at their
closing bid prices.
Short-term investments that mature in less than 60 days when purchased are
valued at amortized cost.
All market quotations used in valuing the Fund's securities will be obtained
from a third party pricing service. If no quotation is received from a pricing
service, attempts will be made to obtain one or more broker quotes for the
security. In the event the pricing service does not provide a valuation, broker
quotations are not readily available, or the valuations received 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.
Additionally, if events occur after the close of the principal markets for
certain securities (e.g., domestic debt and foreign securities) that could
materially affect the Fund's NAV, First Trust will use a fair value method to
value the Fund's securities. The use of fair value pricing is governed by
valuation procedures adopted by the Fund's Board of Trustees, and in accordance
with the provisions of the 1940 Act. As a general principle, the fair value of a
security is the amount which the Fund might reasonably expect to receive for the
security upon its current sale. In light of the judgment involved in fair
valuations, there can be no assurance that a fair value assigned to a particular
security will be the amount which the Fund might be able to receive upon its
current sale. Fair valuation of common stocks and other equity securities will
be based on the consideration of all available information, including, but not
limited to, the following:
1) the type of security;
2) the size of the holding;
3) the initial cost of the security;
4) transactions in comparable securities;
5) price quotes from dealers and/or pricing services;
6) relationships among various securities;
7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;
8) an analysis of the issuer's financial statements; and
9) the existence of merger proposals or tender offers that might affect
the value of the security.
Page 17
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND
MAY 31, 2013 (UNAUDITED)
If the securities in question are foreign securities, the following additional
information may be considered:
1) the value of similar foreign securities traded on other foreign
markets;
2) ADR trading of similar securities;
3) closed-end fund trading of similar securities;
4) foreign currency exchange activity;
5) the trading prices of financial products that are tied to baskets of
foreign securities;
6) factors relating to the event that precipitated the pricing problem;
7) whether the event is likely to recur; and
8) whether the effects of the event are isolated or whether they affect
entire markets, countries or regions.
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 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 (see above). For certain foreign equity securities a third party
pricing service may be utilized to determine fair value. 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 Floating-Rate Loan interests ("Senior Loans")1 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 since its inception,
generally has fewer trades and less liquidity than the secondary market for
other types of securities. Some Senior Loans have few or no trades, or trade
infrequently, and information regarding a specific Senior Loan may not be widely
available or may be incomplete. Accordingly, determinations of the value of
Senior Loans may be based on infrequent and dated information. Because there is
less reliable, objective data available, elements of judgment may play a greater
role in valuation of Senior Loans than for other types of securities. Typically,
Senior Loans are valued using information provided by a third party pricing
service. The third party pricing service primarily uses over-the-counter pricing
from dealer runs and broker quotes from indicative sheets to value the Senior
Loans. 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.
Fair valuation of a Senior Loan is based on the consideration of all available
information, including, but not limited to the following:
1) the fundamental business data relating to the issuer;
2) an evaluation of the forces which influence the market in which
these securities are purchased and sold;
3) the type, size and cost of the security;
4) the financial statements of the issuer;
5) the credit quality and cash flow of the issuer, based on the
Sub-Advisor's or external analysis;
6) the information as to any transactions in or offers for the
security;
7) the price and extent of public trading in similar securities (or
equity securities) of the issuer/borrower, or comparable companies;
8) the coupon payments;
9) the quality, value and salability of collateral, if any, securing
the security;
10) the business prospects of the issuer, including any ability to
obtain money or resources from a parent or affiliate and an
assessment of the issuer's management;
11) the prospects for the issuer's industry, and multiples (of earnings
and/or cash flows) being paid for similar businesses in that
industry;
12) issuer's competitive position within the industry;
13) issuer's ability to access additional liquidity through public
and/or private markets; and
14) other relevant factors.
The Fund is subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
-------------------
1 The terms "security" and "securities" used throughout the Notes to
Financial Statements include Senior Loans.
Page 18
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND
MAY 31, 2013 (UNAUDITED)
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or methodology used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value the Fund's investments as of May 31, 2013, is
included with the Fund's Portfolio of Investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
daily on the accrual basis. Market premiums and discounts are amortized over the
expected life of each respective borrowing.
For the six months ended May 31, 2013, distributions of $516,880 received from
MLPs have been reclassified as return of capital. The cost basis of applicable
MLPs has been reduced accordingly.
Securities purchased or sold on a when-issued, delayed-delivery or forward
purchase commitment basis may have extended settlement periods. The value of the
security so purchased is subject to market fluctuations during this period. Due
to the nature of the Senior Loan market, the actual settlement date may not be
certain at the time of purchase or sale for some of the Senior Loans. Interest
income on such Senior Loans 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, delayed-delivery or forward purchase commitments. At May 31, 2013,
the Fund had no when-issued, delayed-delivery or forward purchase commitments.
C. UNFUNDED LOAN COMMITMENTS:
The Fund may enter into certain credit agreements, all or a portion of which may
be unfunded. The Fund is obligated to fund these loan commitments at the
borrower's discretion. The Fund did not have unfunded delayed draw loan
commitments as of May 31, 2013.
D. FOREIGN CURRENCY:
The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period.
Purchases and sales of investments and items of income and expense are
translated on the respective dates of such transactions. Unrealized gains and
losses on assets and liabilities, other than investments in securities, which
result from changes in foreign currency exchange rates have been included in
"Net change in unrealized appreciation (depreciation) on foreign currency
translation" on the Statement of Operations. Unrealized gains and losses on
investments in securities which result from changes in foreign exchange rates
are included with fluctuations arising from changes in market price and are
shown in "Net change in unrealized appreciation (depreciation) on investments"
on the Statement of Operations. Net realized foreign currency gains and losses
include the effect of changes in exchange rates between trade date and
settlement date on investment security transactions, foreign currency
transactions and interest and dividends received. 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.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Level distributions are declared and paid quarterly or as the Board of Trustees
may determine from time to time. If, for any quarterly distribution, net
investment company taxable income, if any (which term includes net short-term
capital gain), as determined as of the close of the Fund's taxable year, is less
than the amount of the distribution, the distribution will generally be a
tax-free return of capital distributed from the Fund's assets. 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 realized capital gains are determined in
accordance with income tax regulations, which may differ from U.S. GAAP. Certain
capital accounts in the financial statements are periodically adjusted for
permanent differences in order to reflect their tax character. These permanent
differences are primarily due to the varying treatment of income and gain/loss
on portfolio securities held by the Fund and have no impact on net assets or NAV
per share. Temporary differences, which arise from recognizing certain items of
income, expense and gain/loss in different periods for financial statement and
tax purposes, will reverse at some point in the future.
The tax character of distributions paid during the fiscal year ended November
30, 2012, was as follows:
Distributions paid from:
Ordinary income................................... $ 11,212,484
Long-term capital gain............................ --
Return of capital................................. 734,115
Page 19
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND
MAY 31, 2013 (UNAUDITED)
As of November 30, 2012, the distributable earnings and net assets on a tax
basis were as follows:
Undistributed ordinary income..................... $ --
Undistributed capital gains....................... --
-------------
Total undistributed earnings...................... --
Accumulated capital and other losses.............. (36,082,216)
Net unrealized appreciation (depreciation)........ 11,777,009
-------------
Total accumulated earnings (losses)............... (24,305,207)
Other ............................................ (2,986,650)
Paid-in capital................................... 163,040,996
-------------
Net assets........................................ $ 135,749,139
=============
F. INCOME TAXES:
The Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no
provision has been made for federal or state income taxes. However, due to the
timing and amount of distributions, the Fund may be subject to an excise tax of
4% of the amount by which approximately 98% of the Fund's taxable income exceeds
the distributions from such taxable income for the calendar year.
Under the Regulated Investment Company Modernization Act of 2010 (the "Act"),
net capital losses arising in taxable years after December 22, 2010, may be
carried forward indefinitely, and their character is retained as short-term
and/or long-term losses. Previously, net capital losses were carried forward
eight years and treated as short-term losses. As a transition rule, the Act
requires that post-enactment net capital losses be used before pre-enactment net
capital losses. At November 30, 2012, the Fund had pre-enactment net capital
losses for federal income tax purposes of $35,890,793 expiring as follows:
EXPIRATION DATE AMOUNT
December 31, 2017 $ 34,520,118
Non-expiring 1,370,675
The Fund is subject to certain limitations under the U.S. tax rules on the use
of capital loss carryforwards and net unrealized built-in losses. These
limitations apply when there has been a 50% change in ownership.
Certain losses realized during the current fiscal year may be deferred and
treated as occurring on the first day of the following fiscal year for federal
income tax purposes. For the fiscal year ended November 30, 2012, the Fund
intends to elect to defer net realized capital losses of $191,423 incurred
between November 1, 2012, and November 30, 2012.
The Fund is subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ending 2009, 2010,
2011 and 2012 remain open to federal and state audit. As of May 31, 2013,
management has evaluated the application of these standards to the Fund and has
determined that no provision for income tax is required in the Fund's financial
statements for uncertain tax positions.
G. EXPENSES:
The Fund will pay all expenses directly related to its operations.
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust, the investment advisor to the Fund, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. The Charger Corporation is an Illinois corporation
controlled by James A. Bowen, Chief Executive Officer of First Trust. First
Trust is responsible for the ongoing monitoring of the Fund's investment
portfolio, managing the Fund's business affairs and providing certain
administrative services necessary for the management of the Fund. For these
investment management services, First Trust is entitled to a 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 asset value of the
Fund minus the sum of the Fund's liabilities other than the principal amount of
borrowings. First Trust also provides fund reporting services to the Fund for a
flat annual fee in the amount of $9,250.
Macquarie Capital Investment Management LLC ("MCIM") and Four Corners Capital
Management, LLC ("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 which consists primarily of equity securities and equity-like
securities issued by infrastructure issuers 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
Page 20
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND
MAY 31, 2013 (UNAUDITED)
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. 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.
BNY Mellon Investment Servicing (US) Inc. ("BNYM IS") serves as the Fund's
administrator, fund accountant and transfer agent in accordance with certain fee
arrangements. As administrator and fund accountant, BNYM IS is responsible for
providing certain administrative and accounting services to the Fund, including
maintaining the Fund's books of account, records of the Fund's securities
transactions, and certain other books and records. As transfer agent, BNYM IS is
responsible for maintaining shareholder records for the Fund. The Bank of New
York Mellon ("BNYM") serves as the Fund's custodian in accordance with certain
fee arrangements. As custodian, BNYM is responsible for custody of the Fund's
assets.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer of $125,000 per year and an annual per fund fee of $4,000 for each
closed-end fund or other actively managed fund and $1,000 for each index fund in
the First Trust Fund Complex. The fixed annual retainer is allocated pro rata
among each fund in the First Trust Fund Complex based on net assets.
Additionally, the Lead Independent Trustee is paid $15,000 annually, the
Chairman of the Audit Committee is paid $10,000 annually, and each of the
Chairmen of the Nominating and Governance Committee and the Valuation Committee
is paid $5,000 annually to serve in such capacities, with such compensation
allocated pro rata among each fund in the First Trust Fund Complex based on net
assets. Trustees are reimbursed 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 until December 31, 2013, before rotating to
serve as Chairman of another Committee or as Lead Independent Trustee. After
December 31, 2013, the Lead Independent Trustee and Committee Chairmen will
rotate every three years. The officers and "Interested" Trustee receive no
compensation from the funds for acting in such capacities.
For the six months ended May 31, 2013, the Fund paid brokerage commissions to
Macquarie Capital (USA) Inc., an affiliate of MCIM and Four Corners, totaling
$47,476.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investments, excluding short-term
investments, for the six months ended May 31, 2013, were $243,271,972 and
$244,590,680, respectively.
5. BORROWINGS
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 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 $50,000,000. Absent certain events of default
or failure to maintain certain collateral requirements, BNP Paribas Prime
Brokerage Inc. ("BNP") may not terminate the BNP Paribas Facility except under
180 calendar days' prior notice. The interest rate under the BNP Paribas
Facility is equal to 3-month LIBOR plus 80 basis points. In addition, 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, 2013, the daily average amount outstanding
under the BNP Paribas Facility was $47,500,000. The high and low annual interest
rates during the six months ended May 31, 2013, were 1.11% and 1.07%,
respectively, and the weighted average interest rate was 1.09%. The interest
rate at May 31, 2013, was 1.08%.
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. 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 is 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.
Page 21
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND
MAY 31, 2013 (UNAUDITED)
8. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events to the Fund through
the date the financial statements were issued, and has determined that there
were the following subsequent events:
CHANGE IN CERTAIN INVESTMENT STRATEGIES
On April 30, 2013, the Fund's Board of Trustees approved changes to certain of
the Fund's investment strategies. The Fund's investment strategies are
non-fundamental policies of the Fund and require 60 days' prior written notice
to shareholders before they can be changed by the Board without receiving
shareholder approval. As such, on or about October 14, 2013, the following Fund
investment strategies will become effective:
o The Fund may invest up to 15% of its Total Assets (as defined in the
Fund's Prospectus) in infrastructure securities in countries which
are not members of the Organization for Economic Cooperation and
Development (OECD);
o Under normal market conditions, the Fund will seek to invest a
minimum of 40% (previously 50%) of the Fund's Total Assets in the
securities and instruments of non-U.S. Infrastructure Issuers (as
defined in the Fund's Prospectus) located in Australia, New Zealand,
Canada, the United Kingdom and other European Union member countries
as of the date of the Prospectus, Switzerland, Japan, Hong Kong and
Singapore;
o Across both the Fund's Core Component and Senior Loan Component
(both as defined in the Fund's Prospectus), no more than 60%
(previously no more than 50%) of the Fund's Total Assets may be
invested in securities and instruments of U.S. infrastructure
issuers at any one time;
o Within the Core Component, no more than 45% (previously 30%) of the
Core Infrastructure Securities (defined as equity securities and
securities and instruments with equity characteristics, and other
securities and instruments issued by Infrastructure Issuers) may, at
any time, consist of securities and instruments of U.S.
Infrastructure Issuers; and
o The Fund will no longer seek to deliver at least 50% of its income
attributable to the Core Infrastructure Securities (as defined in
the Fund's Prospectus) as tax-advantaged dividends under the United
States Internal Revenue Code of 1986, as amended.
Page 22
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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND
MAY 31, 2013 (UNAUDITED)
DIVIDEND REINVESTMENT PLAN
If your Common Shares are registered directly with the Fund or if you hold your
Common Shares with a brokerage firm that participates in the Fund's Dividend
Reinvestment Plan (the "Plan"), unless you elect, by written notice to the Fund,
to receive cash distributions, all dividends, including any capital gain
distributions, on your Common Shares will be automatically reinvested by BNY
Mellon Investment Servicing (US) Inc. (the "Plan Agent"), in additional Common
Shares under the Plan. If you elect to receive cash distributions, you will
receive all distributions in cash paid by check mailed directly to you by the
Plan Agent, as the dividend paying agent.
If you decide to participate in the Plan, the number of Common Shares you will
receive will be determined as follows:
(1) If Common Shares are trading at or above net asset value ("NAV") at
the time of valuation, the Fund will issue new shares at a price
equal to the greater of (i) NAV per Common Share on that date or
(ii) 95% of the market price on that date.
(2) If Common Shares are trading below NAV at the time of valuation, the
Plan Agent will receive the dividend or distribution in cash and
will purchase Common Shares in the open market, on the NYSE or
elsewhere, for the participants' accounts. It is possible that the
market price for the Common Shares may increase before the Plan
Agent has completed its purchases. Therefore, the average purchase
price per share paid by the Plan Agent may exceed the market price
at the time of valuation, resulting in the purchase of fewer shares
than if the dividend or distribution had been paid in Common Shares
issued by the Fund. The Plan Agent will use all dividends and
distributions received in cash to purchase Common Shares in the open
market within 30 days of the valuation date except where temporary
curtailment or suspension of purchases is necessary to comply with
federal securities laws. Interest will not be paid on any uninvested
cash payments.
You may elect to opt-out of or withdraw from the Plan at any time by giving
written notice to the Plan Agent, or by telephone at (866) 340-1104, in
accordance with such reasonable requirements as the Plan Agent and the Fund may
agree upon. If you withdraw or the Plan is terminated, you will receive a
certificate for each whole share in your account under the Plan, and you will
receive a cash payment for any fraction of a share in your account. If you wish,
the Plan Agent will sell your shares and send you the proceeds, minus brokerage
commissions.
The Plan Agent maintains all Common Shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. Common Shares in your account will be held by the
Plan Agent in non-certificated form. The Plan Agent will forward to each
participant any proxy solicitation material and will vote any shares so held
only in accordance with proxies returned to the Fund. Any proxy you receive will
include all Common Shares you have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or distributions
in Common Shares. However, all participants will pay a pro rata share of
brokerage commissions incurred by the Plan Agent when it makes open market
purchases.
Automatically reinvesting dividends and distributions does not mean that you do
not have to pay income taxes due upon receiving dividends and distributions.
Capital gains and income are realized although cash is not received by you.
Consult your financial advisor for more information.
If you hold your Common Shares with a brokerage firm that does not participate
in the Plan, you will not be able to participate in the Plan and any dividend
reinvestment may be effected on different terms than those described above.
The Fund reserves the right to amend or terminate the Plan if in the judgment of
the Board of Trustees the change is warranted. There is no direct service charge
to participants in the Plan; however, the Fund reserves the right to amend the
Plan to include a service charge payable by the participants. Additional
information about the Plan may be obtained by writing BNY Mellon Investment
Servicing (US) Inc., 301 Bellevue Parkway, Wilmington, Delaware 19809.
--------------------------------------------------------------------------------
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Fund uses to determine how
to vote proxies and information on how the Fund voted proxies relating to
portfolio 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 at http://www.sec.gov.
Page 23
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ADDITIONAL INFORMATION (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND
MAY 31, 2013 (UNAUDITED)
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
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 the Common Shares of Macquarie/First
Trust Global Infrastructure/Utilities Dividend & Income Fund, First Trust Energy
Income and Growth Fund, First Trust Enhanced Equity Income Fund, First
Trust/Aberdeen Global Opportunity Income Fund, First Trust Mortgage Income Fund,
First Trust Strategic High Income Fund II, First Trust/Aberdeen Emerging
Opportunity Fund, First Trust Specialty Finance and Financial Opportunities
Fund, First Trust Active Dividend Income Fund, First Trust High Income
Long/Short Fund and First Trust Energy Infrastructure Fund was held on April 17,
2013 (the "Annual Meeting"). At the Annual Meeting, Trustees James A. Bowen and
Niel B. Nielson were elected by the Common Shareholders of the Macquarie/First
Trust Global Infrastructure/Utilities Dividend & Income Fund as Class III
Trustees for three-year terms expiring at the Fund's annual meeting of
shareholders in 2016. The number of votes cast in favor of Mr. Bowen was
7,106,916, the number of votes against was 199,514 and the number of abstentions
was 1,226,855. The number of votes cast in favor of Mr. Nielson was 7,104,015,
the number of votes against was 202,415, and the number of abstentions was
1,226,855. Richard E. Erickson, Thomas R. Kadlec and Robert F. Keith are the
other current and continuing Trustees.
RISK CONSIDERATIONS
Risks are inherent in all investing. The following summarizes some, but not all,
of the risks that should be considered for the Fund. For additional information
about the risks associated with investing in the Fund, please see the Fund's
prospectus and statement of additional information, as well as other Fund
regulatory filings.
INVESTMENT AND MARKET RISK: An investment in the Fund's Common Shares is subject
to investment risk, including the possible loss of the entire principal
invested. An investment in Common Shares represents an indirect investment in
the securities owned by the Fund. The value of these securities, like other
market investments, may move up or down, sometimes rapidly and unpredictably.
Common Shares at any point in time may be worth less than the original
investment, even after taking into account the reinvestment of Fund dividends
and distributions. Security prices can fluctuate for several reasons including
the general condition of the securities markets, or when political or economic
events affecting the issuers occur. When the Advisor or Sub-Advisor determines
that it is temporarily unable to follow the Fund's investment strategy or that
it is impractical to do so (such as when a market disruption event has occurred
and trading in the securities is extremely limited or absent), the Fund may take
temporary defensive positions.
LEVERAGE RISK: The use of leverage results in additional risks and can magnify
the effect of any losses. If the income and gains from the securities and
investments purchased with such proceeds do not cover the cost of leverage, the
Common Shares' return will be less than if leverage had not been used. 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. The use of leverage by the
Fund increases the likelihood of greater volatility of NAV and market price of
the Common Shares. Leverage also increases the risk that fluctuations in
interest rates on borrowings and short-term debt that the Fund may pay will
reduce the return to the Common Shareholders or will result in fluctuations in
the dividends paid on the 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: The Fund may invest a portion of its assets in the equity
securities of issuers domiciled in jurisdictions other than the U.S. Investments
in the securities and instruments of non-U.S. issuers involve certain
considerations and risks not ordinarily associated with investments in
securities and instruments of U.S. issuers. Non-U.S. companies are not generally
subject to uniform accounting, auditing and financial standards and requirements
comparable to those applicable to U.S. companies. Non-U.S. securities exchanges,
brokers and listed companies may be subject to less government supervision and
regulation than exists in the United States. Dividend and interest income may be
subject to withholding and other non-U.S. taxes, which may adversely affect the
net return on such investments. A related risk is that there may be difficulty
in obtaining or enforcing a court judgment abroad.
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ADDITIONAL INFORMATION (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND
MAY 31, 2013 (UNAUDITED)
CURRENCY RISK: The value of securities denominated or quoted in foreign
currencies may be adversely affected by fluctuations in the relative currency
exchange rates and by exchange control regulations. The Fund's investment
performance may be negatively affected by a devaluation of a currency in which
the Fund's investments are denominated or quoted. Further, the Fund's investment
performance may be significantly affected, either positively or negatively, by
currency exchange rates because the U.S. dollar value of securities denominated
or quoted in another currency will increase or decrease in response to changes
in the value of such currency in relation to the U.S. dollar. While certain of
the Fund's non-U.S. dollar-denominated securities may be hedged into U.S.
dollars, hedging may not alleviate all currency risks.
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 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. Although Senior Loans may be secured
by specific collateral, the value of the collateral may not equal the Fund's
investment when the Senior Loan is acquired or may decline below the principal
amount of the Senior Loan subsequent to the Fund's investment. Also, to the
extent that collateral consists of stock of the borrower or its subsidiaries or
affiliates, the Fund bears the risk that the stock may decline in value, be
relatively illiquid, and/or may lose all or substantially all of its value,
causing the Senior Loan to be under collateralized. 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.
HIGH-YIELD SECURITIES RISK: The Senior Loans in which the Fund invests are
generally considered to be "high-yield" securities. High yield securities or
"junk" bonds, the generic name for securities rated below "BBB-" by one or more
ratings agencies, should be considered speculative as their low ratings indicate
a quality of less than investment grade, and therefore carry an increased risk
of default as compared to investment grade issues. Because high-yield securities
are generally subordinated obligations and are perceived by investors to be
riskier than higher rated securities, their prices tend to fluctuate more than
higher rated securities and are affected by short-term credit developments to a
greater degree.
High-yield securities are subject to greater market fluctuations and risk of
loss than securities with higher investment ratings. A reduction in an issuer's
creditworthiness may result in the bankruptcy of an issuer or the default by an
issuer on the interest and principal payments. The market for high-yield
securities is smaller and less liquid than that for investment grade securities.
NON-DIVERSIFICATION RISK: The Fund is non-diversified under the 1940 Act, but is
still limited as to the percentage of its assets which may be invested in the
securities of any issuer by the diversification requirements imposed by the
Code. Because the Fund may invest a relatively high percentage of its assets in
a limited number of issuers, the Fund may be more susceptible to any single
economic, political or regulatory occurrence and to the financial conditions of
the issuers in which it invests.
INTEREST RATE RISK: The Fund's portfolio 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.
CREDIT RISK: The Senior Loans in which the Fund invests are also subject to
credit risk. Credit risk is the risk of nonpayment of scheduled contractual
repayments whether interest and/or principal payments or payments for services.
Credit risk also is the risk that one or more investments in the Fund's
portfolio will decline in price, or fail to pay interest or principal when due,
because the issuer of the security or contractual counterparty experiences a
decline in its financial status.
QUALIFIED DIVIDEND INCOME TAX RISK: There can be no assurance as to what portion
of the distributions paid to the Fund's Common Shareholders will consist of
tax-advantaged qualified dividend income. Certain distributions designated by
the Fund as derived from qualified dividend income will be taxed in the hands of
non-corporate Common Shareholders at the rates applicable to long-term capital
gains, provided certain holding period and other requirements are satisfied by
both the Fund and the Common Shareholders. Additional requirements apply in
determining whether distributions by foreign issuers should be regarded as
qualified dividend income. Certain investment strategies of the Fund will limit
the Fund's ability to meet these requirements and consequently will limit the
amount of qualified dividend income received and distributed by the Fund. A
change in the favorable provisions of the federal tax laws with respect to
qualified dividends may result in a widespread reduction in announced dividends
and may adversely impact the valuation of the shares of dividend-paying
companies.
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FIRST TRUST
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
2005 Market Street
Philadelphia, PA 19103
ADMINISTRATOR,
FUND ACCOUNTANT &
TRANSFER AGENT
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
The Bank of New York Mellon
101 Barclay Street, 20th Floor
New York, NY 10286
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
[BLANK BACK COVER]
ITEM 2. CODE OF ETHICS.
Not applicable
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of
the close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) Not applicable
(b)(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.
MACQUARIE CAPITAL INVESTMENT MANAGEMENT LLC
Mr. Jonathon Ong has replaced Mr. Andrew Maple-Brown as the Co-Portfolio Manager
with Mr. Anthony Felton of MFD's Core Component as of November 2012. Mr. Anthony
Felton became Co-Portfolio Manager as of June 2012. They are supported by
Macquarie Funds Group's Infrastructure Securities team, which is one of the
largest and most experienced investment teams specializing in the listed
infrastructure sector.
Length of
Name Title Service Business Experience Past 5 Years
---- ----- ------- --------------------------------
Anthony Felton Fund Co-Portfolio Manager 14 years Mr. Felton joined Macquarie Group in February 2004 and
as of June 29, 2012. the MFG Infrastructure Securities team in June 2004.
He was responsible for the analysis of European stocks
before becoming a Portfolio Manager. Mr. Felton has
significant experience in the analysis of both regulated
infrastructure companies, such as water and
electricity/gas transmission/distribution and utilities
as well as user demand infrastructure companies such as
airports, toll roads and seaports. Prior to joining
Macquarie, Mr. Felton had broad based financial market
experience with Westpac Banking Corporation in Sydney,
and West LB and JP Morgan in London between 1999 and
2003. Mr. Felton holds a Bachelor of Commerce -
University of NSW, and is a CFA charter holder.
Jonathon Ong Fund Co-Portfolio Manager 20 years Mr. Ong joined the MFG Infrastructure Securities team
as of November 9, 2012. in Sydney as a Portfolio Manager in January 2008. He
has been a member of the team's Investment Committee
since then. He has 17 years of investment experience
including 11 years as a Portfolio Manager. Prior to
joining Macquarie, Mr. Ong held analyst and PM roles at
Credit Suisse Asset Management, where he worked for 8
years in Sydney and Tokyo. His portfolio management and
analytical responsibilities were primarily focused on
infrastructure and related stocks. Prior to CSAM, he
spent 3 years as an Asia-Pacific telecom analyst for
Bankers Trust, having started his career as a sell-side
analyst in Hong Kong for Kim Eng Securities. Mr Ong
earned a Bachelor of Science degree from the University
of Melbourne and a Bachelor of Business (Banking and
Finance) from Monash University. Mr Ong is a CFA charter
holder.
* 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 ("MCIML").
(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM
MEMBER AND POTENTIAL CONFLICTS OF INTEREST
INFORMATION PROVIDED AS OF MAY 31, 2013
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
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Anthony Felton Registered Investment 0 0 0 $0
Companies:
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Other Pooled Investment 2 $144.0 M 0 $0
Vehicles:
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Other Accounts: 0 0 0 $0
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Jonathon Ong Registered Investment 1 $422.0 M 0 $0
Companies:
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Other Pooled Investment 4 $552.0 M 0 $0
Vehicles:
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Other Accounts: 4 $449.0 0 $0
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
* Core Component MFD: $129.7 M
Senior Loan Component MFD: $ 47.8 M
POTENTIAL CONFLICTS OF INTERESTS
MCIM has policies and procedures in place that govern the manner in which
allocations of trades will be handled should MCIM effect purchases or sales of
the same security for different clients. These procedures address circumstances
in which separate purchase or sale orders for the same security are placed for
two or more clients, and additionally when purchase or sale orders for the same
security are aggregated. MCIM policies detail specific conditions that must be
met when aggregating purchase or sale orders for the same security for two or
more clients. The Portfolio Manager is responsible for allocating investment
opportunities and aggregating orders consistently with the procedures and
monthly review by the Chief Compliance Officer of MCIM (or designee) is
required.
(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM
MEMBERS
INFORMATION PROVIDED AS OF MAY 31, 2013
Compensation consists of three components: (1) fixed remuneration in the form of
a base salary, (ii) variable (at risk) performance pay in the form of an annual
profit share allocation and (iii) a long term incentive in the form of stock
(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 July 1st of that
year.
Aggregate staff profit share is linked to Macquarie Group's profitability and
return on ordinary equity, with the allocation of individual profit share being
based on factors including contribution to profit, use of capital, funding and
risk. Macquarie Group operates profit share retention arrangements for employees
meeting certain pay thresholds, to ensure an appropriate balance between short
and longer-term incentives. Retained profit share is invested in the Macquarie
Employee Retained Equity Plan ("MEREP") to further align employee and
shareholder interests as well as enhance Macquarie Group's ability to attract
and retain high caliber talent.
Compensation consists of a base salary amount plus discretionary profit share.
The base salary is fixed a year in advance, while the discretionary profit share
varies according to the performance of the individual, the division and
Macquarie Group. Discretionary profit share is allocated annually. Compensation
is not directly based on the pre- or post-tax performance of the Fund over a
certain period. However, performance of the Fund may be one factor taken into
account in determining compensation. Compensation is not directly based on the
value of assets held in the Fund's portfolio. However the value of assets may be
one factor taken into account in determining compensation.
If the Portfolio Manager's or the Management Team's bonus is over a certain
amount, a portion of that bonus may be deferred and may be paid out in the
future in up to four equal installments.
(4) DISCLOSURE OF SECURITIES OWNERSHIP
THE INFORMATION BELOW IS AS OF MAY 31, 2013
----------------------------------- --------------------------------
Name Dollar ($) Range of Fund Shares
Beneficially Owned
----------------------------------- --------------------------------
Anthony Felton $0
----------------------------------- --------------------------------
Jonathon Ong $0
----------------------------------- --------------------------------
FOUR CORNERS CAPITAL MANAGEMENT, LLC:
(a) Not applicable
(b) Kevin P. Loome, Co-Portfolio Manager of the Fund, left Four Corners
Capital Management, LLC in January 2013. Adam H. Brown continues as the
Portfolio Manager of the Fund.
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/ Mark R. Bradley
------------------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
Date July 23, 2013
-------------------------
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/ Mark R. Bradley
------------------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
Date July 23, 2013
-------------------------
By (Signature and Title)* /s/ James M. Dykas
------------------------------------------------
James M. Dykas, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date July 23, 2013
-------------------------
* Print the name and title of each signing officer under his or her signature.