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, 2014
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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, 2014
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, 2014
Shareholder Letter........................................................... 1
At a Glance.................................................................. 2
Portfolio Commentary......................................................... 3
Portfolio of Investments..................................................... 7
Statement of Assets and Liabilities.......................................... 11
Statement of Operations...................................................... 12
Statements of Changes in Net Assets.......................................... 13
Statement of Cash Flows...................................................... 14
Financial Highlights......................................................... 15
Notes to Financial Statements................................................ 16
Additional Information....................................................... 21
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, 2014
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").
As a shareholder, twice a year you receive a detailed report about your
investment, including portfolio commentary from the Fund's management team, a
performance analysis and a market and Fund outlook. Additionally, First Trust
Advisors L.P. ("First Trust") compiles the Fund's financial statements for you
to review. These reports are intended to keep you up-to-date on your investment,
and I encourage you to read this document and discuss it with your financial
advisor.
As you are probably aware, the six months covered by this report saw both
challenging economic and political issues in the U.S. However, the period was
still positive for the markets. In fact, the S&P 500(R) Index, as measured on a
total return basis, rose 7.62% during the six months ended May 31, 2014. Of
course, past performance can never be an indicator of future performance, but
First Trust believes that staying invested in quality products through up and
down markets and having a long-term horizon can help investors as they work
toward their financial goals.
First Trust continues to offer a variety of products that we believe could fit
the financial plans for many investors seeking long-term investment success.
Your advisor can tell you about the other investments First Trust offers that
might fit your financial goals. We encourage you to discuss those goals with
your advisor regularly so that he or she can help keep you on track and help you
choose investments that match your goals.
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.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 1
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
"AT A GLANCE"
AS OF MAY 31, 2014 (UNAUDITED)
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FUND STATISTICS
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Symbol on New York Stock Exchange MFD
Common Share Price $17.64
Common Share Net Asset Value ("NAV") $18.64
Premium (Discount) to NAV (5.36)%
Net Assets Applicable to Common Shares $159,025,165
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) 7.94%
Current Distribution Rate on NAV (2) 7.51%
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COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
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Common Share Price NAV
5/13 $15.75 $16.30
15.73 16.31
15.74 16.41
15.59 15.74
6/13 15.48 16.03
15.77 15.96
16.09 16.45
15.87 16.75
7/13 15.78 16.88
15.88 16.92
15.60 16.93
15.10 16.75
14.80 16.32
8/13 14.61 16.03
14.83 16.26
15.20 16.54
15.66 16.96
9/13 15.58 16.88
15.45 16.88
15.45 17.05
15.68 17.34
16.31 17.55
10/13 16.27 17.38
16.11 17.28
15.74 17.24
15.80 17.30
15.72 16.76
11/13 16.02 16.66
16.19 16.54
16.34 16.41
16.34 16.80
12/13 16.43 17.00
16.50 16.95
16.82 17.01
16.76 17.02
16.93 16.95
1/14 16.60 17.03
16.61 17.24
17.04 17.64
16.93 17.33
2/14 17.13 17.52
17.04 17.59
17.02 17.62
17.30 17.77
3/14 17.13 18.01
17.22 18.10
17.22 18.16
17.41 18.39
4/14 17.65 18.27
17.67 18.44
17.83 18.56
17.70 18.73
17.48 18.51
5/14 17.64 18.64
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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 10 Years Ended (3/25/2004)
5/31/2014 5/31/2014 5/31/2014 5/31/2014 to 5/31/2014
FUND PERFORMANCE (3)
NAV 16.43% 24.49% 17.62% 10.69% 10.56%
Market Value 14.58% 21.93% 21.79% 11.00% 9.47%
INDEX PERFORMANCE
S&P 500 Utilities Total Return Index 12.88% 21.98% 12.27% 9.53% 10.09%
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% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
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GDF Suez 6.3%
SSE plc 5.4
National Grid plc 4.9
Hutchison Port Holdings Trust 4.6
Buckeye Partners, L.P. 3.9
Corrections Corp. of America 3.9
Centrica plc 3.9
Transurban Group 3.9
Hopewell Highway Infrastructure, Ltd. 3.4
Inter Pipeline, Ltd. 2.9
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Total 43.1%
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% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
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Oil, Gas & Consumable Fuels 21.9%
Multi-Utilities 20.2
Transportation Infrastructure 14.3
Electric Utilities 11.8
Independent Power and Renewable Electricity
Producers 6.4
Media 6.4
Wireless Telecommunication Services 5.3
Real Estate Investment Trusts 3.9
Health Care Providers & Services 3.8
Diversified Telecommunication Services 3.8
Construction & Engineering 1.7
Energy Equipment & Services 0.5
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Total 100.0%
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% OF TOTAL
COUNTRY INVESTMENTS
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United States 44.2%
United Kingdom 14.2
Canada 12.7
France 11.0
Singapore 4.6
Australia 3.8
Cayman Islands 3.4
Brazil 1.9
Italy 1.2
Germany 1.2
Netherlands 0.9
Luxembourg 0.9
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Total 100.0%
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(1) Most recent distribution paid or declared through 5/31/2014. 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 5/31/2014. 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, 2014
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 $2.1 billion of assets as of May
31, 2014, in MFG's Infrastructure Securities portfolios, which includes 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 $2.1 billion of assets as of May 31, 2014, 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 $188 billion in
assets across all major asset classes as of May 31, 2014.
MFG is Macquarie's fund management business. MFG is Australia's largest asset
manager and a top 50 asset manager globally, with over USD $395 billion in
assets under management as of March 31, 2014. 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.
Page 3
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PORTFOLIO COMMENTARY (CONTINUED)
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MARKET RECAP
Global equities continued in a positive trend in the six-month period.
Speculation as to when the Fed would start to taper its bond purchasing program
were finally put to rest in mid-December when the Federal Reserve confirmed its
intention to reduce the pace of its third quantitative easing (QE3) program from
USD $85 billion per month to USD $75 billion per month. There was a very
positive reaction in global markets as a large degree of policy uncertainty was
removed.
Stock markets in the major developed economies commenced 2014 in a choppy
fashion due to a combination of profit-taking after last year's strong gains,
reappraisal of lofty earnings growth expectations and concerns about the global
impact of U.S. Fed tapering. The underlying nervousness in risk asset markets
was reinforced in late January as concerns about the impact of the tapering of
the Fed's QE asset purchases spread to emerging markets. Later in the period,
investors focused on developments in Ukraine and Russia, as well as slower
growth and financial strains appearing in China.
Policymakers in the major economies reaffirmed their commitment to growth and
prosperity as they continued to confront structural weaknesses in their
respective economies. This saw ongoing support for risk assets, with global
equities finishing the period on a strong note. However, the impetus for global
growth continued to come from the major developed economies while emerging
market economies continued to struggle with various macro stability issues.
PERFORMANCE ANALYSIS - CORE COMPONENT
As shown on the performance table, MFD's net asset value ("NAV") total return(1)
for the period was 16.43%, outperforming the 12.88% 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 a 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 Electric Utilities sector; and
o The good performance of the Toll Roads sector
In what was a very strong period, the only sector to detract from the Fund's
return was the Social Infrastructure sector.
These factors are discussed in further detail below.
Pipelines
The Pipelines sector outperformed. Energy Transfer Equity was up strongly on the
back of a proposed LNG export project in Louisiana, filing an application with
the Federal Energy Regulatory Commission for authorization to construct, own and
operate the project. The company's underlying master limited partnerships (MLPs)
also posted solid 1Q results across the board.
Enterprise Products Partners reported results above consensus. It also announced
that it has signed sufficient long-term contracts to build an ethane export
facility on the Texas Gulf Coast, adding to its USD $8 billion project inventory
and highlighting its ability to leverage off its existing Natural Gas Liquids
infrastructure asset base.
Enbridge, Inc. also performed well after it announced a CAD $7 billion project
within its Canadian mainline system. Clients agreed to support the project
through adjusted tolls, ensuring that it will earn an appropriate return. The
company also obtained a licence from the U.S. government allowing it to
re-export limited quantities of Canadian oil from the U.S. Magellan Midstream
Partners raised its outlook for the remainder of 2014 on the back of strong 1Q
results. Williams Companies reiterated full year 2014 and 2015 guidance and
announced 2016 guidance ahead of market expectations.
Spectra Energy posted a solid return after reporting 2013 results ahead of
expectations and outlining several avenues for organic projects to support its
growth plans.
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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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Electric Utilities
The Electric Utilities sector performed well. In France, GDF Suez was up very
strongly after it increased 2014 earnings guidance, confirmed a dividend cut
(which was already anticipated by investors) and terminated its asset disposal
program. It also reported results above consensus. SSE in the UK performed well
after receiving a better than expected proposal by the UK energy regulator for
its electricity distribution business.
U.S. utilities generally posted positive returns in the stronger market.
American Electric Power reported results above consensus. Southern Co. and CMS
Energy Corp. also performed well. Energias do Brasil recovered some of its
weakness from earlier in the period after the Brazilian government announced it
would finance distributors for the extra cost of peak power prices due to the
drought.
Toll Roads
The Toll Roads sector outperformed, led by Atlantia and Vinci, which benefited
from the further decline in sovereign bond yields in Italy and Spain. Atlantia
also benefited from better than expected allowed toll increases related to
capital investments made in recent years and from the stronger investor
sentiment towards Italy. Passenger growth at its recently purchased airport in
Rome was also ahead of expectations.
Vinci in France rallied on press reports that the planned sale of its parking
business would proceed at an attractive price. Vinci also completed the
previously announced acquisition of the minority stake in its Cofiroute motorway
concession and reported results above consensus expectations. Motorway traffic
continued to improve in France and passenger volumes at the recently acquired
Portuguese airports were also solid.
Transurban in Australia performed well after announcing two major transactions
in April, being the acquisition of Queensland Motorways (QML) and an upgrade to
the CityLink toll road in Melbourne. In May, an entitlement offer associated
with the QML acquisition raised AUD $2.3 billion. Transurban's share price
finished the period 10% above the entitlement offer price.
Social Infrastructure
In the Social Infrastructure sector, Corrections Corp. disappointed the market
with its quarterly earnings. Some investors were also hopeful for some positive
news on a new state contract, which now seems unlikely in the short-term.
PORTFOLIO COMPOSITION
As of May 31, 2014, the Fund's Core Component was well diversified across 31
positions in global infrastructure stocks, representing 10 countries and 8
sectors. During the period, the main increases in the Fund's weightings were in
Real Estate Investment Trusts, Oil Gas & Consumable Fuels, and Independent Power
and Renewable Electricity Producers, while the weightings in Transportation
Infrastructure, Electric Utilities and Multi-Utilities were reduced. Sector
changes were driven by bottom-up stock selection.
PERFORMANCE ANALYSIS - SENIOR LOAN COMPONENT
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 (the "LSTA Index"). The
average rating in the Senior Loan Component is BB- vs. the average Index loan
rating between B+ and BB-.
The LTSA Index posted a 2.5% return for the six months ended May 31, 2014.
Lower-rated loans outperformed during that period, with BB-rated loans returning
1.5%, single B-rated loans returning 2.3% and CCC-rated loans significantly
outperforming, returning 6.3%. The Senior Loan Component returned 1.6% during
the six-month period noted above, which is essentially in-line with the BB-rated
loan LTSA Index returns.
Loan market strength was seemingly driven by positive investor sentiment across
the capital markets, a low number of unexpected defaults, strong technical
conditions, and an absence of outside shocks. Loan market inflows were strong
over the six-month period, with approximately $53 billion of collateralized loan
obligation ("CLO") issuance and $10.4 billion of retail loan mutual fund inflows
for the six-month period ended May 31, 2014. Although the period finished with
$1.8 billion of retail outflows in May, this was more than offset by $11.4
billion of inflows from CLOs.
We believe fundamentals continue to be strong, although earnings growth appears
to be slowing. Among LSTA Index issuers that file publicly, first quarter 2014
Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) grew 7%
year over year, versus 9% EBITDA growth in the fourth quarter of 2013. The LSTA
Index default rate was 4.6% for the six-month period ended May 31, 2014.
Page 5
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PORTFOLIO COMMENTARY (CONTINUED)
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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 utility stocks only (but
does not include a broad range of infrastructure sectors) solely in the U.S. 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 outperformed the Index during this period, primarily due to the Fund's
exposure to a broad range of infrastructure sectors in the Core Component, a
number of which outperformed U.S. utilities.
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 strong 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
Recent political developments which span from India's general election to
European Union parliamentary elections suggest that voters are demanding
decisive growth-oriented policies from their elected representatives. Central
banks in the major developed economies continue to puzzle over the persistence
of low inflation and whether it poses a danger to their broader price stability
objectives. U.S. Federal Reserve policymakers have adopted a much more sensitive
approach to policy guidance, possibly aimed at assuaging concerns about an early
hike in the Fed funds rate. Meanwhile the European Central Bank introduced
further monetary stimulus measures in June as policymakers act to quell concerns
about continual undershooting of the ECB's price stability target zone. All of
this suggests the current liberal liquidity conditions will remain firmly in
place for the foreseeable future.
One of the reasons behind our positive view of the infrastructure sector over
the long term is our belief that global investment opportunities are substantial
due to historic underinvestment, and there is a lack of public sector resources
to fund this much needed investment. The recent transactions by Transurban are a
timely reminder that this thesis remains very much intact. Transurban, which is
one of the largest positions in the Fund, announced its intention to deploy over
AUD $7.8 billion in two significant toll road opportunities in Australia. We are
positive on both, and continue to expect the overall portfolio to benefit from
earnings and dividend growth driven by investment in much needed global
infrastructure.
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.
DISCLOSURES
Bond ratings are determined by a nationally recognized statistical rating
agency.
The S&P/ LSTA Leveraged Loan Index reflects the market-weighted performance of
institutional leveraged loans in the U.S. loan market, based upon real-time
market weightings, spreads and interest payments.
An index is unmanaged and one cannot invest directly in an index.
Page 6
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
PORTFOLIO OF INVESTMENTS
MAY 31, 2014 (UNAUDITED)
SHARES DESCRIPTION VALUE
------------- ----------------------------------------------------------------------------------------- --------------
COMMON STOCKS (a) - 80.2%
AUSTRALIA - 4.6%
1,057,117 Transurban Group (b)..................................................................... $ 7,309,662
--------------
BRAZIL - 2.2%
868,700 EDP - Energias do Brasil S.A............................................................. 3,551,887
--------------
CANADA - 15.1%
66,499 Enbridge, Inc. (b)....................................................................... 3,160,282
185,500 Inter Pipeline, Ltd. (b)................................................................. 5,435,152
264,871 Northland Power, Inc. (b)................................................................ 4,343,269
72,354 Pembina Pipeline Corp. (b)............................................................... 2,856,658
64,937 TransCanada Corp. (b).................................................................... 3,023,167
332,100 Veresen, Inc. (b)........................................................................ 5,209,832
--------------
24,028,360
--------------
CAYMAN ISLANDS - 4.0%
12,924,000 Hopewell Highway Infrastructure, Ltd. (b)................................................ 6,401,189
--------------
FRANCE - 12.8%
150,900 Eutelsat Communications S.A. (b)......................................................... 5,283,423
428,129 GDF Suez (b)............................................................................. 11,955,210
42,441 Vinci S.A. (b)........................................................................... 3,141,464
--------------
20,380,097
--------------
GERMANY - 1.4%
90,557 Hamburger Hafen Und Logistik AG (b)...................................................... 2,283,707
--------------
ITALY - 1.5%
82,740 Atlantia S.p.A. (b)...................................................................... 2,298,615
--------------
SINGAPORE - 5.5%
11,651,000 Hutchison Port Holdings Trust (b)........................................................ 8,738,250
--------------
UNITED KINGDOM - 16.9%
1,313,024 Centrica plc (b)......................................................................... 7,386,159
620,351 National Grid plc (b).................................................................... 9,254,469
391,512 SSE plc (b).............................................................................. 10,211,245
--------------
26,851,873
--------------
UNITED STATES - 16.2%
39,700 American Electric Power Co., Inc. (b).................................................... 2,117,995
35,700 CMS Energy Corp. (b)..................................................................... 1,062,075
230,000 Corrections Corp. of America (b)......................................................... 7,481,900
61,200 ITC Holdings Corp. (b)................................................................... 2,239,920
71,000 PG&E Corp. (b)........................................................................... 3,256,770
53,600 Sempra Energy (b)........................................................................ 5,378,760
47,200 Spectra Energy Corp. (b)................................................................. 1,915,376
49,100 Williams (The) Cos., Inc. (b)............................................................ 2,305,736
--------------
25,758,532
--------------
TOTAL COMMON STOCKS...................................................................... 127,602,172
(Cost $112,198,513) --------------
See Notes to Financial Statements Page 7
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2014 (UNAUDITED)
SHARES DESCRIPTION VALUE
------------- ----------------------------------------------------------------------------------------- --------------
MASTER LIMITED PARTNERSHIPS (a) - 10.9%
UNITED STATES - 10.9%
95,400 Buckeye Partners, L.P. (b)............................................................... $ 7,485,084
28,400 Enbridge Energy Partners, L.P. (b)....................................................... 880,400
49,576 Energy Transfer Equity, L.P. (b)......................................................... 2,526,393
43,577 Enterprise Products Partners, L.P. (b)................................................... 3,260,431
38,377 Magellan Midstream Partners, L.P. (b).................................................... 3,142,309
--------------
TOTAL MASTER LIMITED PARTNERSHIPS........................................................ 17,294,617
(Cost $11,496,630) --------------
PRINCIPAL STATED
VALUE DESCRIPTION RATE (c) MATURITY (d) VALUE
------------- ------------------------------------------------------------- ----------- ------------ --------------
SENIOR FLOATING-RATE LOAN INTERESTS - 28.1%
FRANCE - 0.3%
$ 463,846 Numericable US LLC, Dollar Denominated Tranche B-2 Loan...... 4.50% 04/23/20 464,602
--------------
LUXEMBOURG - 1.1%
1,720,263 Intelsat Jackson Holdings S.A., Term Loan B-2................ 3.75% 06/30/19 1,721,553
--------------
NETHERLANDS - 1.1%
1,324,144 UPC Broadband Holdings B.V., Facility AH..................... 3.25% 06/30/21 1,313,736
184,894 Ziggo, B.V., Term Loan B-1................................... 3.50% 01/15/22 182,120
119,149 Ziggo, B.V., Term Loan B-2................................... 3.50% 01/15/22 117,362
195,957 Ziggo, B.V., Term Loan B-3................................... 3.50% 01/15/22 193,018
--------------
1,806,236
--------------
UNITED STATES - 25.6%
70,285 AES Corp., 2013 Term Loan.................................... 3.75% 06/01/18 70,245
1,588,000 Calpine Construction Finance Co., Term B-1 Loan.............. 3.00% 05/01/20 1,558,225
1,447,670 Calpine Corp., Term Loan (3/11).............................. 4.00% 04/01/18 1,449,928
486,250 Calpine Corp., Term Loan (6/11).............................. 4.00% 04/01/18 487,009
2,397,742 Cequel Communications Holdings I LLC,
Term Loan................................................. 3.50% 02/14/19 2,393,258
778,218 CHS/Community Health Systems, Inc., 2017
Term E Loan............................................... 3.40%-3.48% 01/25/17 778,630
2,074,208 CHS/Community Health Systems, Inc., 2021
Term D Loan............................................... 4.25% 01/27/21 2,085,223
3,226,237 Crown Castle Operating Co., Non-Extended
Incremental Tranche B Term Loan........................... 3.00% 01/31/21 3,219,849
1,485,000 DigitalGlobe, Inc., Term Loan................................ 3.75% 01/31/20 1,486,856
297,750 Drillships Financing Holding, Inc., Tranche B-1 Term Loan.... 6.00% 02/17/21 298,402
1,193,985 Dynegy, Inc., Tranche B-2 Term Loan.......................... 4.00% 04/23/20 1,195,048
405,000 Energy Transfer Equity L.P., Term Loan....................... 3.25% 12/02/19 400,484
975,340 EquiPower Resources Holdings LLC, Term Loan B Advance
(First Lien).............................................. 4.25% 12/21/18 977,779
1,429,791 HCA, Inc., Tranche B-5 Term Loan............................. 2.90% 03/31/17 1,430,778
2,910,656 IASIS Healthcare Corp., Term Loan B-2........................ 4.50% 05/03/18 2,911,879
2,880,000 Level 3 Financing, Inc., Tranche B 2020 Term Loan............ 4.00% 01/15/20 2,884,320
950,000 Moxie Liberty LLC, Construction B-1 Advance.................. 7.50% 08/21/20 971,375
1,000,000 Moxie Patriot LLC, Construction B-1 Term Loan................ 6.75% 12/19/20 1,020,000
2,140,462 NRG Energy, Inc., Term Loan (2013)........................... 2.75% 07/01/18 2,125,650
Page 8 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2014 (UNAUDITED)
PRINCIPAL STATED
VALUE DESCRIPTION RATE (c) MATURITY (d) VALUE
------------- ------------------------------------------------------------- ----------- ------------ --------------
SENIOR FLOATING-RATE LOAN INTERESTS (CONTINUED)
UNITED STATES (CONTINUED)
$ 2,036,154 Numericable US LLC, Dollar Denominated Tranche B-1
Loan...................................................... 4.50% 04/23/20 $ 2,039,473
675,000 Offshore Group Investment Ltd., Term Loan.................... 5.00% 10/25/17 671,119
2,190,000 Panda Temple Power II LLC, Construction Term Loan
Advance................................................... 7.25% 04/03/19 2,233,800
2,568,549 Wide Open West Finance LLC, Term B Loan...................... 4.75% 03/27/19 2,580,852
2,468,750 Windstream Corp., Tranche B-4 Term Loan...................... 3.50% 01/08/20 2,456,406
985,031 Windstream Corp., Tranche B-5 Term Loan...................... 3.50% 08/08/19 987,080
1,969,936 Zayo Group LLC, Term Loan.................................... 4.00% 07/02/19 1,965,464
--------------
40,679,132
--------------
TOTAL SENIOR FLOATING-RATE LOAN INTERESTS................................................ 44,671,523
(Cost $44,692,413) --------------
TOTAL INVESTMENTS - 119.2%............................................................... 189,568,312
(Cost $168,387,556) (e)
OUTSTANDING LOAN - (29.9%)............................................................... (47,500,000)
NET OTHER ASSETS AND LIABILITIES - 10.7%................................................. 16,956,853
--------------
NET ASSETS - 100.0%...................................................................... $ 159,025,165
==============
-----------------------------
(a) Portfolio securities are categorized based on their country of
incorporation.
(b) All or a portion of this security serves as collateral on the outstanding
loan.
(c) Senior Floating-Rate Loan Interests ("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, 2014. When a range of rates is
disclosed, the Fund holds more than one contract within the same tranche
at varying rates.
(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, 2014, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $22,458,739 and the aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over value was $1,277,983.
See Notes to Financial Statements Page 9
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2014 (UNAUDITED)
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of May 31, 2014
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
INVESTMENTS 5/31/2014 PRICES INPUTS INPUTS
-------------------------------------------------- ------------- ------------- ------------- -------------
Common Stocks*.................................... $ 127,602,172 $ 127,602,172 $ -- $ --
Master Limited Partnerships*...................... 17,294,617 17,294,617 -- --
Senior Floating-Rate Loan Interests*.............. 44,671,523 -- 44,671,523 --
------------- ------------- ------------- -------------
Total Investments................................. $ 189,568,312 $ 144,896,789 $ 44,671,523 $ --
============= ============= ============= =============
*See 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. There were no
transfers between Levels at May 31, 2014.
Page 10 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2014 (UNAUDITED)
ASSETS:
Investments, at value
(Cost $168,387,556)......................................................................... $ 189,568,312
Cash........................................................................................... 18,835,413
Receivables:
Dividends.................................................................................. 3,216,718
Investment securities sold................................................................. 2,395,442
Interest................................................................................... 304,493
Prepaid expenses............................................................................... 18,269
-------------
Total Assets............................................................................... 214,338,647
-------------
LIABILITIES:
Outstanding loan............................................................................... 47,500,000
Due to custodian foreign currency.............................................................. 102
Payables:
Investment securities purchased............................................................ 7,196,554
Investment advisory fees (includes Sub-Advisory fees of $306,354).......................... 510,590
Audit and tax fees......................................................................... 31,768
Custodian fees............................................................................. 20,852
Administrative fees........................................................................ 19,006
Printing fees.............................................................................. 10,522
Transfer agent fees........................................................................ 6,589
Interest and fees on loan.................................................................. 6,425
Legal fees................................................................................. 6,074
Trustees' fees and expenses................................................................ 3,538
Financial reporting fees................................................................... 771
Other liabilities.............................................................................. 691
-------------
Total Liabilities.......................................................................... 55,313,482
-------------
NET ASSETS $ 159,025,165
=============
NET ASSETS CONSIST OF:
Paid-in capital................................................................................ $ 163,355,617
Par value...................................................................................... 85,333
Accumulated net investment income (loss)....................................................... (1,363,188)
Accumulated net realized gain (loss) on investments and foreign currency transactions.......... (24,270,902)
Net unrealized appreciation (depreciation) on investments and foreign currency translation..... 21,218,305
-------------
NET ASSETS..................................................................................... $ 159,025,165
=============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share)........................... $ 18.64
=============
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized).... 8,533,285
=============
See Notes to Financial Statements Page 11
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2014 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $435,425)......................................... $ 5,077,760
Interest....................................................................................... 944,835
Other.......................................................................................... 41,298
-------------
Total investment income.................................................................... 6,063,893
-------------
EXPENSES:
Investment advisory fees (includes Sub-Advisory fees of $590,958).............................. 984,930
Interest and fees on outstanding loan.......................................................... 219,365
Administrative fees............................................................................ 98,404
Custodian fees................................................................................. 45,765
Printing fees.................................................................................. 29,815
Audit and tax fees............................................................................. 27,236
Transfer agent fees............................................................................ 18,264
Trustees' fees and expenses.................................................................... 9,728
Legal fees..................................................................................... 6,916
Financial reporting fees....................................................................... 4,625
Other.......................................................................................... 18,042
-------------
Total expenses............................................................................. 1,463,090
-------------
NET INVESTMENT INCOME (LOSS)................................................................... 4,600,803
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments................................................................................ 6,762,497
Foreign currency transactions.............................................................. (154,413)
-------------
Net realized gain (loss)....................................................................... 6,608,084
-------------
Net change in unrealized appreciation (depreciation) on:
Investments................................................................................ 11,726,950
Foreign currency translation............................................................... 4,172
-------------
Net change in unrealized appreciation (depreciation)........................................... 11,731,122
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS)........................................................ 18,339,206
-------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................ $ 22,940,009
=============
Page 12 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
5/31/2014 ENDED
(UNAUDITED) 11/30/2013
------------- -------------
OPERATIONS:
Net investment income (loss)....................................................... $ 4,600,803 $ 11,032,773
Net realized gain (loss)........................................................... 6,608,084 9,804,001
Net change in unrealized appreciation (depreciation)............................... 11,731,122 (2,580,858)
------------- -------------
Net increase (decrease) in net assets resulting from operations.................... 22,940,009 18,255,916
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.............................................................. (5,973,300) (11,946,599)
------------- -------------
Total distributions to shareholders................................................ (5,973,300) (11,946,599)
------------- -------------
Total increase (decrease) in net assets............................................ 16,966,709 6,309,317
NET ASSETS:
Beginning of period................................................................ 142,058,456 135,749,139
------------- -------------
End of period...................................................................... $ 159,025,165 $ 142,058,456
============= =============
Accumulated net investment income (loss) at end of period.......................... $ (1,363,188) $ 9,309
============= =============
COMMON SHARES:
Common Shares at end of period..................................................... 8,533,285 8,533,285
============= =============
See Notes to Financial Statements Page 13
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31, 2014 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations......... $ 22,940,009
Adjustments to reconcile net increase (decrease) in net assets resulting
from operations to net cash provided by operating activities:
Purchases of investments............................................ (108,051,552)
Sales, maturities and paydowns of investments....................... 124,081,217
Return of capital received from investment in MLPs.................. 422,407
Net amortization/accretion of premiums/discounts on investments..... (7,629)
Net realized gain/loss on investments............................... (6,762,497)
Net change in unrealized appreciation/depreciation on investments... (11,726,950)
CHANGES IN ASSETS AND LIABILITIES:
Increase in interest receivable..................................... (66,669)
Increase in dividends receivable.................................... (2,144,984)
Increase in prepaid expenses........................................ (12,485)
Increase in interest and fees on loan payable....................... 1,629
Increase in investment advisory fees payable........................ 31,632
Decrease in audit and tax fees payable.............................. (22,432)
Increase in legal fees payable...................................... 411
Decrease in printing fees payable................................... (7,079)
Increase in administrative fees payable............................. 616
Decrease in custodian fees payable.................................. (48,961)
Increase in transfer agent fees payable............................. 3,709
Increase in Trustees' fees and expenses payable..................... 252
Increase in due to custodian foreign currency....................... 102
Increase in other liabilities....................................... 162
--------------
CASH PROVIDED BY OPERATING ACTIVITIES................................... $ 18,630,908
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Common Shareholders from net investment income..... (8,959,950)
--------------
CASH USED BY FINANCING ACTIVITIES....................................... (8,959,950)
--------------
Increase in cash and foreign currency (a)............................... 9,670,958
Cash and foreign currency at beginning of period........................ 9,164,455
--------------
CASH AND FOREIGN CURRENCY AT END OF PERIOD.............................. $ 18,835,413
==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees....................... $ 217,736
==============
-----------------------------
(a) Includes net change in unrealized appreciation (depreciation) on foreign
currency of $4,172.
Page 14 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
5/31/2014 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 11/30/2013 11/30/2012 11/30/2011 11/30/2010 11/30/2009
------------ ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period..... $ 16.65 $ 15.91 $ 15.12 $ 15.29 $ 14.36 $ 11.43
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.54 1.29 1.15 1.43 (a) 0.55 0.46
Net realized and unrealized gain (loss).. 2.15 0.85 1.04 (0.27) 1.06 3.07
-------- -------- -------- -------- -------- --------
Total from investment operations........ 2.69 2.14 2.19 1.16 1.61 3.53
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.70) (1.40) (1.31) (1.40) (0.68) (0.11)
Return of capital........................ -- -- (0.09) -- -- (0.49)
-------- -------- -------- -------- -------- --------
Total distributions...................... (0.70) (1.40) (1.40) (1.40) (0.68) (0.60)
-------- -------- -------- -------- -------- --------
Capital share repurchases................ -- -- -- 0.07 -- --
-------- -------- -------- -------- -------- --------
Net asset value, end of period........... $ 18.64 $ 16.65 $ 15.91 $ 15.12 $ 15.29 $ 14.36
======== ======== ======== ======== ======== ========
Market value, end of period............. $ 17.64 $ 16.02 $ 14.84 $ 14.07 $ 13.82 $ 11.73
======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON NET ASSET
VALUE (b.............................. 16.43% 14.41% 15.35% 8.49% 12.31% 33.75%
======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON MARKET VALUE (b)... 14.58% 17.94% 15.62% 11.70% 24.27% 45.08%
======== ======== ======== ======== ======== ========
-----------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $159,025 $142,058 $135,749 $129,056 $138,786 $130,335
Ratio of total expenses to average net
assets................................ 1.96%(d) 2.08% 2.24% 2.24% 2.36% 2.86%
Ratio of total expenses to average net
assets excluding interest expense..... 1.66%(d) 1.70% 1.78% 1.81% 1.77% 1.92%
Ratio of net investment income (loss) to
average net assets.................... 6.15%(d) 7.78% 7.35% 8.92% 3.68% 3.76%
Portfolio turnover rate.................. 60% 177% 144% 91% 87% 80%
INDEBTEDNESS:
Total loan outstanding (in 000's)........ $ 47,500 $ 47,500 $47,500 $47,500 $44,500 $35,900
Asset coverage per $1,000 of
indebtedness (c)...................... $ 4,348 $ 3,991 $ 3,858 $ 3,717 $ 4,119 $ 4,630
-----------------------------
(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 capidistributions, 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) 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.
(d) Annualized.
See Notes to Financial Statements Page 15
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2014 (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 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 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 at market value or, in the absence of
market value with respect to any portfolio securities, at fair value in
accordance with valuation procedures adopted by the Fund's Board of Trustees,
and in accordance with provisions of the 1940 Act. Market quotations and prices
used to value the Fund's investments are primarily obtained from third party
pricing services. The Fund's investments are 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 the mean of
their most recent bid and asked price, if available, and otherwise at
their closing bid price.
Short-term investments that mature in less than 60 days when purchased
are valued at amortized cost.
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Fund's Board of Trustees or its
delegate at fair value. These securities generally include, but are not limited
to, restricted securities (securities which may not be publicly sold without
registration under the Securities Act of 1933, as amended) for which a pricing
service is unable to provide a market price; securities whose trading has been
formally suspended; a security whose market price is not available from a
pre-established pricing source; a security with respect to which an event has
occurred that is likely to materially affect the value of the security after the
market has closed but before the calculation of the Fund's NAV or make it
difficult or impossible to obtain a reliable market quotation; and a security
whose price, as provided by the pricing service, does not reflect the security's
"fair value." As a general principle, the current "fair value" of a security
would appear to be the amount which the owner might reasonably expect to receive
for the security upon its current sale. The use of fair value prices by the Fund
generally results in prices used by the Fund that may differ from current market
quotations or official closing prices on the applicable exchange. A variety of
factors may be considered in determining the fair value of such securities,
including, but not limited to, the following:
1) the type of security;
2) the size of the holding;
3) the initial cost of the security;
4) transactions in comparable securities;
5) price quotes from dealers and/or pricing services;
6) relationships among various securities;
7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;
Page 16
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2014 (UNAUDITED)
8) an analysis of the issuer's financial statements; and
9) the existence of merger proposals or tender offers that might affect
the value of the security.
If the securities in question are foreign securities, the following additional
information may be considered:
1) the value of similar foreign securities traded on other foreign
markets;
2) ADR trading of similar securities;
3) closed-end fund trading of similar securities;
4) foreign currency exchange activity;
5) the trading prices of financial products that are tied to baskets of
foreign securities;
6) factors relating to the event that precipitated the pricing problem;
7) whether the event is likely to recur; and
8) whether the effects of the event are isolated or whether they affect
entire markets, countries or regions.
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
Advisors L.P. ("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 - inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets
-----------------------------
1 The terms "security" and "securities" used throughout the Notes to
Financial Statements include Senior Loans.
Page 17
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2014 (UNAUDITED)
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or 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, 2014, 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, 2014, distributions of $422,407 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, 2014,
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 any unfunded delayed draw loan
commitments as of May 31, 2014.
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 settlement date and subsequent sale trade date is included in
"Net realized gain (loss) on investments" 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.
Page 18
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2014 (UNAUDITED)
The tax character of distributions paid during the fiscal year ended November
30, 2013 was as follows:
Distributions paid from:
Ordinary income................................... $ 11,946,599
Long-term capital gain............................ --
Return of capital................................. --
As of November 30, 2013, the distributable earnings and net assets on a tax
basis were as follows:
Undistributed ordinary income..................... $ 462,391
Undistributed capital gains....................... --
-------------
Total undistributed earnings...................... 462,391
Accumulated capital and other losses.............. (28,438,852)
Net unrealized appreciation (depreciation)........ 9,580,617
-------------
Total accumulated earnings (losses)............... (18,395,844)
Other............................................. (2,986,650)
Paid-in capital................................... 163,440,950
-------------
Net assets........................................ $ 142,058,456
=============
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 for
up to 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. During the taxable year ended November 30, 2013, the Fund
utilized pre-enactment capital loss carryforwards of $6,193,320 and
post-enactment capital loss carryforwards of $1,026,441. At November 30, 2013,
the Fund had pre-enactment net capital losses for federal income tax purposes of
$28,326,798 expiring on December 31, 2017.
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 capital losses realized during the current fiscal year may be deferred
and treated as occurring on the first day of the following fiscal year. For the
fiscal year ended November 30, 2013, the Fund incurred and elected to defer net
realized capital losses of $112,054 incurred between November 1, 2013 and
November 30, 2013.
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 ended 2010, 2011,
2012 and 2013 remain open to federal and state audit. As of May 31, 2014,
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
Page 19
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2014 (UNAUDITED)
entitled to a quarterly fee calculated at an annual rate of 0.60% for that
portion of the Fund's Total Assets allocated to MCIM. If the Fund's Total Assets
are greater than $250 million, MCIM receives an annual portfolio management fee
of 0.65% for that portion of the Fund's Total Assets over $250 million. 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 that is allocated pro rata among each fund in the First Trust Fund
Complex based on net assets. Each Independent Trustee is also paid an annual per
fund fee that varies based on whether the fund is a closed-end or other actively
managed fund, or is an index fund.
Additionally, the Lead Independent Trustee and the Chairmen of the Audit
Committee, Nominating and Governance Committee and Valuation Committee are paid
annual fees to serve in such capacities, with such compensation allocated pro
rata among each fund in the First Trust Fund Complex based on net assets.
Trustees are reimbursed for travel and out-of-pocket expenses in connection with
all meetings. The Lead Independent Trustee and Committee Chairmen rotate every
three years. The officers and "Interested" Trustee receive no compensation from
the Fund for acting in such capacities.
For the sixth months ended May 31, 2014, the Fund paid brokerage commissions to
Macquarie Capital (USA) Inc., an affiliate of MCIM and Four Corners, totaling
$20,365.
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, 2014, were $114,039,106 and
$125,639,463, 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 upon
180 calendar days' prior notice. The interest rate under the BNP Paribas
Facility is equal to 1-month LIBOR plus 70 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, 2014, 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, 2014, were 0.87% and 0.85%,
respectively, and the weighted average interest rate was 0.86%. The interest
rate at May 31, 2014, was 0.85%.
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.
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 no subsequent events requiring recognition or disclosure in the financial
statements that have not already been disclosed.
Page 20
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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2014 (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 ("SEC") website at http://www.sec.gov.
Page 21
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2014 (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 Dividend and Income Fund, First Trust High Income Long/Short
Fund, First Trust Energy Infrastructure Fund, First Trust MLP and Energy Income
Fund and First Trust Intermediate Duration Preferred & Income Fund was held on
April 23, 2014 (the "Annual Meeting"). At the Annual Meeting, Trustee Robert F.
Keith was elected by the Common Shareholders of the Macquarie/First Trust Global
Infrastructure/Utilities Dividend & Income Fund as a Class I Trustee for a
three-year term expiring at the Fund's annual meeting of shareholders in 2017.
The number of votes cast for Mr. Keith was 7,096,804, the number of votes
against was 258,127 and the number of broker non-votes was 1,178,354. James A.
Bowen, Richard E. Erickson, Thomas R. Kadlec and Niel B. Nielson are the other
current and continuing Trustees.
RISK CONSIDERATIONS
Risks are inherent in all investing. The following summarizes some, but not all,
of the risks that should be considered for the Fund. For additional information
about the risks associated with investing in the Fund, please see the Fund's
prospectus and statement of additional information, as well as other Fund
regulatory filings.
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.
Page 22
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ADDITIONAL INFORMATION (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2014 (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 a non-diversified investment company under
the 1940 Act and will not be treated as a regulated investment company under the
Internal Revenue Code. Accordingly, there are no regulatory requirements under
the 1940 Act or the Internal Revenue Code on the minimum number or size of
securities held by the Fund.
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.
Page 23
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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
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.
MACQUARIE CAPITAL INVESTMENT MANAGEMENT LLC
(a) Not applicable
(b) There have been no changes, as of the date of this filing, in any of the
portfolio managers identified in response to paragraph (a)(1) of this Item
in the Registrant's most recent annual report on Form N-CSR.
FOUR CORNERS CAPITAL MANAGEMENT, LLC:
(a) Not applicable
(b) There have been no changes, as of the date of this filing, in any of the
portfolio managers identified in response to paragraph (a)(1) of this Item
in the Registrant's most recent annual report on Form N-CSR.
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 21, 2014
----------------
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 21, 2014
----------------
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: July 21, 2014
----------------
* Print the name and title of each signing officer under his or her signature.