UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-21496
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
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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, 2015
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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, 2015
MACQUARIE/FIRST TRUST
GLOBAL INFRASTRUCTURE/
UTILITIES DIVIDEND &
INCOME FUND (MFD)
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, 2015
Shareholder Letter.......................................................... 1
At a Glance................................................................. 2
Portfolio Commentary........................................................ 3
Portfolio of Investments.................................................... 8
Statement of Assets and Liabilities......................................... 12
Statement of Operations..................................................... 13
Statements of Changes in Net Assets......................................... 14
Statement of Cash Flows..................................................... 15
Financial Highlights........................................................ 16
Notes to Financial Statements............................................... 17
Additional Information...................................................... 23
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and/or Macquarie Capital Investment Management LLC
("MCIM") and/or Four Corners Capital Management, LLC ("Four Corners") (MCIM and
Four Corners collectively, the "Sub-Advisors"), and their respective
representatives, taking into account the information currently available to
them. Forward-looking statements include all statements that do not relate
solely to current or historical fact. For example, forward-looking statements
include the use of words such as "anticipate," "estimate," "intend," "expect,"
"believe," "plan," "may," "should," "would" or other words that convey
uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
(the "Fund") to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. When
evaluating the information included in this report, you are cautioned not to
place undue reliance on these forward-looking statements, which reflect the
judgment of the Advisor and/or Sub-Advisors and their respective representatives
only as of the date hereof. We undertake no obligation to publicly revise or
update these forward-looking statements to reflect events and circumstances that
arise after the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that the Fund will achieve its investment objective. The
Fund is subject to market risk, which is the possibility that the market values
of securities owned by the Fund will decline and that the value of the Fund
shares may therefore be less than what you paid for them. Accordingly, you can
lose money by investing in the Fund. See "Risk Considerations" in the Additional
Information section of this report for a discussion of certain other risks of
investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, net asset value and common share price will fluctuate and Fund shares,
when sold, may be worth more or less than their original cost.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment in
the Fund. 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 material 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, 2015
Dear Shareholders:
Thank you for your investment in Macquarie/First Trust Global
Infrastructure/Utilities Dividend & Income Fund (the "Fund").
First Trust Advisors L.P. ("First Trust") is pleased to provide you with this
semi-annual report which contains detailed information about your investment for
the six months ended May 31, 2015, including a portfolio commentary from the
Fund's management team, a performance analysis and a market and fund outlook.
Additionally, First Trust has compiled the Fund's financial statements for you
to review. We encourage you to read this report and discuss it with your
financial advisor.
U.S. markets, fueled by accelerating growth and an accommodating Federal
Reserve, enjoyed a prosperous year in 2014. However, for the six months covered
by this report, some economic and global factors, including the continued
conflict in the Middle East and a sharp decline in oil prices, created
volatility in the U.S. and global markets. Another factor that has impacted
markets is the fact that many economists are predicting the Federal Reserve will
begin to raise interest rates this year.
As I have written previously, First Trust believes investors should maintain
perspective about the markets and have realistic expectations about their
investments. Markets will always go up and down, but we believe that having a
long-term investment horizon and being invested in quality products can help you
reach your goals.
Thank you for giving First Trust the opportunity to be a part of your investment
plan. We value the relationship and will continue to focus on our disciplined
investment approach and long-term perspective to help investors reach their
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, 2015 (UNAUDITED)
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FUND STATISTICS
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Symbol on New York Stock Exchange MFD
Common Share Price $16.93
Common Share Net Asset Value ("NAV") $16.77
Premium (Discount) to NAV 0.95%
Net Assets Applicable to Common Shares $143,255,086
Current Quarterly Distribution per Common Share (1) $0.3500
Current Annualized Distribution per Common Share $1.4000
Current Distribution Rate on Closing Common Share Price (2) 8.27%
Current Distribution Rate on NAV (2) 8.35%
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COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
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Common Share Price NAV
5/14 $17.64 $18.64
17.73 18.79
17.89 18.86
18.03 19.00
6/14 18.05 19.09
17.99 19.11
17.73 18.92
17.87 19.02
7/14 18.03 19.09
17.60 18.44
17.54 18.48
18.11 18.83
17.97 18.58
8/14 18.04 18.77
17.93 18.85
17.58 18.39
17.70 18.44
9/14 16.79 18.01
16.65 17.87
16.09 17.37
15.95 17.51
16.72 17.89
10/14 16.89 18.14
16.58 18.01
16.63 17.88
16.83 17.79
11/14 16.97 17.66
16.56 17.69
15.80 16.77
16.21 17.09
12/14 16.25 17.44
15.88 17.28
15.63 16.95
15.65 16.98
15.88 17.17
1/15 16.11 17.18
16.40 17.32
16.95 17.39
16.64 16.99
2/15 16.65 16.99
16.42 16.47
15.77 16.07
16.09 16.89
3/15 16.11 16.80
16.36 16.87
16.87 17.12
16.75 17.30
4/15 17.03 17.63
16.96 17.49
16.55 17.43
17.44 17.57
16.93 17.03
5/15 16.93 16.77
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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 (3/25/04)
5/31/15 5/31/15 5/31/15 5/31/15 to 5/31/15
FUND PERFORMANCE (3)
NAV -1.03% -2.40% 14.68% 7.38% 9.34%
Market Value 3.98% 4.11% 19.37% 8.74% 8.98%
INDEX PERFORMANCE
S&P 500(R) Utilities Total Return Index -1.62% 6.80% 12.21% 8.10% 9.86%
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% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
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National Grid PLC 5.6%
Engie 5.0
Hutchison Port Holdings Trust 4.6
NiSource, Inc. 4.2
Hopewell Highway Infrastructure, Ltd. 4.0
Buckeye Partners, L.P. 3.7
Sempra Energy 3.3
Corrections Corp. of America 3.3
Veresen, Inc. 3.2
CHS/Community Health Systems, Inc. 3.2
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Total 40.1%
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% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
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Oil, Gas & Consumable Fuels 20.8%
Multi-Utilities 20.3
Transportation Infrastructure 18.9
Media 6.4
Independent Power and Renewable Electricity
Producers 6.1
Electric Utilities 5.8
Diversified Telecommunication Services 5.4
Health Care Providers & Services 5.3
Wireless Telecommunication Services 3.5
Real Estate Investment Trusts 3.3
Construction & Engineering 2.8
Energy Equipment & Services 1.4
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Total 100.0%
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% OF TOTAL
COUNTRY INVESTMENTS
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United States 44.4%
France 12.1
Canada 10.7
United Kingdom 7.1
Australia 4.9
Singapore 4.6
Cayman Islands 3.9
Spain 2.7
Italy 2.7
Netherlands 1.8
Luxembourg 1.7
Hong Kong 1.7
Germany 1.7
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Total 100.0%
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(1) Most recent distribution paid or declared through 5/31/2015. 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 5/31/2015. 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, 2015
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 Macquarie Asset Management
("MAM") and are wholly-owned, indirect subsidiaries of Macquarie Group Limited
("Macquarie").
The Fund's Core Component, which consists primarily of equity securities and
equity-like securities issued by infrastructure issuers, is managed by MCIM,
which started operations in 2004 with the launch of the Fund. MCIM and its
Australia-based affiliates manage approximately $2.2 billion of assets as of May
31, 2015, in MAM's Infrastructure Securities portfolios, which include the Fund.
The Fund's Senior Loan Component is managed by Four Corners. Four Corners was
founded in 2001 and became a wholly-owned subsidiary of Macquarie in 2008. Four
Corners managed over $1.7 billion of assets as of May 31, 2015, with an emphasis
on Senior Loans.
PORTFOLIO MANAGEMENT TEAM
ANTHONY FELTON, CFA
CO-PORTFOLIO MANAGER, MFD CORE COMPONENT
PORTFOLIO MANAGER, MACQUARIE CAPITAL INVESTMENT MANAGEMENT LLC
JONATHON ONG, CFA
CO-PORTFOLIO MANAGER, MFD CORE COMPONENT
PORTFOLIO MANAGER, MACQUARIE CAPITAL INVESTMENT MANAGEMENT LLC
ADAM H. BROWN, CFA
PORTFOLIO MANAGER, MFD SENIOR LOAN COMPONENT
VICE PRESIDENT, FOUR CORNERS CAPITAL MANAGEMENT, LLC
COMMENTARY
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek a high level of current return
consisting of dividends, interest, and other similar income while attempting to
preserve capital. The Fund seeks to achieve its investment objective by
investing predominantly in the securities of companies that are involved in the
management, ownership, and/or operation of infrastructure and utility assets
and, are expected to offer reasonably predictable income and attractive yields.
A typical profile of an infrastructure business would be one whose assets
provide essential public services which are difficult to replace, have a
strategic competitive advantage, demonstrate inelastic demand, and have low
sensitivity to cyclical volatility, courtesy of their essential nature and high
margins.
There can be no assurance that the Fund's investment objective will be achieved.
The Fund may not be appropriate for all investors.
MARKET RECAP
Global equities were up for the six-month period ended May 31, 2015. Commodity
markets were the key focus for investors as 2014 drew to a close, with oil
prices in particular continuing their sharp fall which drove weakness in equity
and credit markets. While lower oil prices will help consumers, the U.S. economy
in particular has become significantly less energy-dependent over time.
Consequently, a fall in oil prices should have a less positive impact compared
to historical experiences.
Easing by central banks was a key theme moving into 2015, resulting in lower
yields in most developed nations. The European Central Bank (ECB) launched its
much anticipated Quantitative Easing program and was careful to not disappoint
market expectations, with a total size in excess of (euro)1.1 trillion. While
the bold monetary easing has boosted bond and risk assets, the
Page 3
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PORTFOLIO COMMENTARY (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
SEMI-ANNUAL REPORT
MAY 31, 2015
familiar question remains over its ability to make any meaningful impact on
either growth or inflation expectations. Similar large-scale easing in Japan has
yet to make any appreciable impact on growth expectations, though it has lowered
the currency which has boosted Japan's competitiveness.
In the U.S., a trend of softer data reversed in the first quarter of 2015, as a
strong payrolls report early in March led to a sharp repricing of the U.S.
Treasury curve. The Fed dropped its commitment to being "patient" in relation to
rate hikes (as generally expected) but at the same time lowered its forecast
future rate path, and lowered its growth and inflation expectations in 2016 and
2017. We continue to believe that the Fed will find it hard to meaningfully
raise rates, with any move likely to stifle growth through higher borrowing
costs and a stronger currency.
Late in the period, equity markets were varied across regions, as the U.S.
continued to trade at or near new highs while Europe generally underperformed,
with Greece weighing on sentiment in the Eurozone. In Asia, sentiment has also
been guarded, as the Chinese economy continues to be a background focus, with
data again disappointing.
PERFORMANCE ANALYSIS - CORE COMPONENT
As shown in the performance table, MFD's net asset value ("NAV") total return(1)
for the period was -1.03%, outpacing the -1.62% return of the S&P 500(R)
Utilities Total Return Index (the "Index"). Although the Fund is not managed
toward any benchmark and invests in a global portfolio of infrastructure stocks
in a range of currencies and senior secured loans, we believe that this Index
offers an appropriate frame of reference.
In our view, there were a number of factors driving the Core Component's
contribution to the Fund's NAV total return during the period.
The major positive contributors were:
o The strong performance of the 'user demand' sectors;
o The Toll Road, Seaport and Airport sectors; and
o The good performance from the Social Infrastructure sector.
The major negative contributors were:
o The strength of the U.S. Dollar against major currencies; and
o The weakness of utilities, specifically, underperformance from
Electric Utility, Electricity & Gas Distribution and Electricity
Generation stocks.
These factors are discussed in further detail below.
Toll Roads
Transurban was the top contributor within the sector. The company started the
year well after reporting strong traffic and revenue data for the quarter ended
December 2014. Proportional toll revenue increased 37% from the prior
corresponding period, reflecting the additional contribution from the Queensland
Motorways assets which were acquired in mid-2014, as well as solid underlying
growth across its other roads. In April, the market responded positively to
Transurban's proposal to build a new motorway in Melbourne which was accepted by
the state government. The proposed new 'Western Distributor' will include a
tunnel and elevated motorway that connects the key arterial West Gate Freeway
with the port, Transurban's existing Citylink road, and the central business
district. This proposal highlights the power of a road network, which has been a
core part of our Transurban investment thesis for many years.
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(1) Total return is based on the combination of reinvested dividends, capital
gains 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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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
SEMI-ANNUAL REPORT
MAY 31, 2015
Vinci also performed well, as the French motorways continued to benefit from
easing regulatory concerns as negotiations with the government progressed. In
April, the company confirmed an agreement in principle, settling the dispute on
tariffs and toll road profitability. Vinci also published its Q1 2015 trading
update with motorway traffic in line with expectations, and Portuguese airport
traffic continued to outperform the original business case. Along with the
trading update, Vinci reiterated FY 2015 earnings guidance.
Seaports
China Merchants was a particularly notable contributor. Early in the period, the
company benefitted from strong volume growth and market expectations of tariff
increases. The most significant development took place in April, when the
company rallied due to strong buying of the Hong Kong-listed shares by Chinese
mainland investors through Stock Connect, given the attractive valuation of Hong
Kong-listed stocks relative to the equivalent mainland-listed stocks. The
Chinese ports sector, as a whole, also performed strongly on market expectations
that government policy initiatives such as "One Belt One Road" and the "Maritime
Silk Road" will benefit Chinese ports. Dutch seaport, Vopak, also gained on
improving demand for crude oil and refined product storage capacity. With high
occupancy at key hubs, pricing has begun to improve.
Airports
The top contributor within the sector was Auckland International Airport which
experienced solid gains in both international and domestic passenger numbers.
The Spanish government successfully sold a minority stake in Aena, which owns a
network of over 40 domestic and international airports in Spain, including
Madrid and Barcelona - two of the ten largest airports in Europe. The Fund
participated in the initial public offering, which received strong demand, and
the stock performed well after listing.
The U.S. Dollar
As the Fund was not hedged for currency, the strength of the U.S. Dollar
detracted from the Fund's return during the period. The U.S. Dollar Index
appreciated by 9.7% in the period, causing a drag on non-USD denominated
positions within the portfolio.
Utilities
The Electric Utilities sector was the most significant underperformer. GDF Suez,
now known as Engie, was lower primarily due to weaker fundamentals in its Energy
Europe division. Electricite de France was weaker due to the perception of
higher regulatory and financial risk.
The Electricity and Gas Distribution sector was mixed but made only a small
positive contribution overall. The major detractor was Centrica, which fell amid
concerns of more stringent regulation from the U.K. government. By contrast,
NiSource performed strongly after providing guidance that beat expectations, as
the company continues to unlock value by separating pipeline operations from
their utilities business.
Within the Electricity Generation sector, our position in Enel Green Power was
also a slight detractor as the stock failed to keep pace with the broader
market.
PORTFOLIO COMPOSITION
As of May 31, 2015, the Fund's Core Component was well diversified across 29
positions in global infrastructure stocks, representing 11 countries and 7
industries. During the period, the main increases in the Fund's weightings were
in Pipelines and Electricity Transmission, while the weightings in Electric
Utilities and Social Infrastructure 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 LSTA Index
loan rating between B+ and BB-.
Page 5
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PORTFOLIO COMMENTARY (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
SEMI-ANNUAL REPORT
MAY 31, 2015
The LSTA Index posted a 2.0% return for the six months ended May 31, 2015.
Single B rated loans underperformed during the period, with BB rated loans
returning 2.6%, single B rated loans returning 2.0% and CCC rated loans
returning 3.0%. The Senior Loan Component underperformed the LSTA Index,
returning 1.7% during the six-month period. Underperformance was primarily
driven by exposure to certain issuers in the energy sector. Specifically, our
position in Expro Holdings declined almost 10% and our positions in Pacific
Drilling and Drillships Financing Holdings each declined by over 3%.
Loan market technicals strengthened during the six-month period. For the period,
approximately $55 billion of inflows from collateralized loan obligations (CLOs)
far exceeded over $12 billion of retail outflows.
We believe fundamentals continue to be generally positive for LSTA Index
issuers, although earnings growth appears to have slowed recently. Among LSTA
Index issuers that file publicly, first quarter 2015 Earnings Before Interest
Taxes Depreciation and Amortization (EBITDA) grew approximately 6% year over
year, which is a decline from 10% EBITDA growth in the fourth quarter of 2014.
The LSTA Index default rate was 1.3% for the twelve month period ended May 2015,
which is well inside the historical average of 3.2%.
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.
LEVERAGE
One of the factors impacting the return of the Fund relative to the Index was
the Fund's use of financial leverage through the bank borrowings. The Fund uses
leverage because we believe that, over time, leverage provides opportunities for
additional income and total return for shareholders. However, the use of
leverage can also expose common shareholders to additional volatility. For
example, if the prices of securities held by the Fund decline, the negative
impact of valuation changes on NAV and shareholder total return is magnified by
the use of leverage. Conversely, leverage may enhance share returns during
periods when the prices of securities held by the Fund generally are rising.
Leverage had a positive impact on the performance of the Fund over this
reporting period.
DISTRIBUTIONS
During the six-month period covered by this report, the Fund announced two
regularly scheduled quarterly distributions totaling $0.70 per share. In
accordance with the Fund's level distribution policy, distributions are expected
to be comprised of net investment income, realized short-term capital gains and
non-taxable return of capital distributions (which generally are expected to
represent unrealized capital appreciation ) in order to sustain a stable level
of distributions to shareholders. Net long-term capital gain distributions, if
any, are expected to be made annually.
MARKET AND FUND OUTLOOK
While the year began solidly, equity market strength has ebbed in the second
quarter since the U.S. Federal Reserve indicated that interest rates are likely
to stay 'lower for longer', partly reflecting some increased sensitivity about
the impact on domestic activity of the rise in the value of the U.S. Dollar.
Markets traded with a mixed tone late in the period. Greece continued to be a
background concern, with a default or even an exit from the euro currency bloc
still a possibility. While global economic growth remains subdued, markets in
the medium term continue to be driven by central banks, with investors generally
stretching to earn yield, increasing risk and sacrificing liquidity.
Page 6
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PORTFOLIO COMMENTARY (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
SEMI-ANNUAL REPORT
MAY 31, 2015
The infrastructure assets owned and operated by the well diversified range of
infrastructure companies in the portfolio continue to perform well. The
portfolio strategy is little changed overall. Given the current level of
monetary stimulus in the global economy, the portfolio remains positioned with a
moderate defensive bias.
We continue to identify what we believe are attractive listed infrastructure
opportunities and are looking for opportunities to selectively increase our
holdings or introduce to the portfolio stocks that we believe are oversold.
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.
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 7
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
PORTFOLIO OF INVESTMENTS
MAY 31, 2015 (UNAUDITED)
SHARES DESCRIPTION VALUE
------------- ----------------------------------------------------------------------------------------- --------------
COMMON STOCKS (a) (b) - 80.3%
AUSTRALIA - 6.3%
2,030,868 DUET Group............................................................................... $ 3,959,382
646,273 Transurban Group......................................................................... 5,025,075
--------------
8,984,457
--------------
CANADA - 13.7%
201,200 Inter Pipeline, Ltd...................................................................... 5,005,732
283,771 Northland Power, Inc..................................................................... 3,822,101
88,011 Pembina Pipeline Corp.................................................................... 2,837,215
46,800 TransCanada Corp......................................................................... 2,028,401
399,200 Veresen, Inc............................................................................. 5,961,036
--------------
19,654,485
--------------
CAYMAN ISLANDS - 5.1%
14,612,000 Hopewell Highway Infrastructure, Ltd..................................................... 7,255,447
--------------
FRANCE - 13.5%
34,707 Eiffage S.A.............................................................................. 2,026,386
206,143 Electricite de France S.A................................................................ 5,066,974
453,341 Engie.................................................................................... 9,148,974
51,377 Vinci S.A................................................................................ 3,051,585
--------------
19,293,919
--------------
GERMANY - 2.1%
140,783 Hamburger Hafen Und Logistik AG.......................................................... 3,039,861
--------------
HONG KONG - 2.1%
700,734 China Merchants Holdings International Co., Ltd.......................................... 3,090,816
--------------
ITALY - 3.4%
113,431 Atlantia S.p.A........................................................................... 2,917,687
1,058,013 Enel Green Power S.p.A................................................................... 2,002,149
--------------
4,919,836
--------------
SINGAPORE - 5.9%
12,725,200 Hutchison Port Holdings Trust............................................................ 8,398,632
--------------
SPAIN - 3.5%
282,508 Abertis Infraestructuras S.A............................................................. 4,962,894
--------------
UNITED KINGDOM - 7.2%
725,827 National Grid PLC........................................................................ 10,361,350
--------------
UNITED STATES - 17.5%
170,500 Corrections Corp. of America............................................................. 5,994,780
164,600 NiSource, Inc............................................................................ 7,765,828
56,300 Sempra Energy............................................................................ 6,050,561
60,100 Spectra Energy Corp...................................................................... 2,113,717
40,600 Williams (The) Cos., Inc................................................................. 2,074,660
30,900 Xcel Energy, Inc......................................................................... 1,052,145
--------------
25,051,691
--------------
TOTAL COMMON STOCKS...................................................................... 115,013,388
(Cost $108,353,710) --------------
Page 8 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2015 (UNAUDITED)
UNITS DESCRIPTION VALUE
------------- ----------------------------------------------------------------------------------------- --------------
MASTER LIMITED PARTNERSHIPS (a) (b) - 10.4%
UNITED STATES - 10.4%
86,900 Buckeye Partners, L.P.................................................................... $ 6,719,977
28,400 Enbridge Energy Partners, L.P............................................................ 1,053,356
30,976 Energy Transfer Equity, L.P.............................................................. 2,127,122
155,554 Enterprise Products Partners, L.P........................................................ 5,043,061
--------------
TOTAL MASTER LIMITED PARTNERSHIPS........................................................ 14,943,516
(Cost $10,468,716) --------------
PRINCIPAL STATED
VALUE DESCRIPTION RATE (c) MATURITY (d) VALUE
------------- ------------------------------------------------------------- ----------- ------------ --------------
SENIOR FLOATING-RATE LOAN INTERESTS - 37.4%
FRANCE - 2.1%
$ 1,604,440 Numericable US LLC, Dollar Denominated
Tranche B-1 Loan.......................................... 4.50% 04/23/20 1,608,451
1,388,060 Numericable US LLC, Dollar Denominated
Tranche B-2 Loan.......................................... 4.50% 04/23/20 1,391,530
--------------
2,999,981
--------------
LUXEMBOURG - 2.1%
3,120,263 Intelsat Jackson Holdings S.A., Term Loan B-2................ 3.75% 06/30/19 3,107,439
--------------
NETHERLANDS - 2.3%
1,324,144 UPC Broadband Holdings, B.V., Facility AH.................... 3.25% 06/30/21 1,318,358
739,574 Ziggo, B.V., Term Loan B-1................................... 3.50% 01/15/22 736,187
476,596 Ziggo, B.V., Term Loan B-2................................... 3.50% 01/15/22 474,413
783,830 Ziggo, B.V., Term Loan B-3................................... 3.50% 01/15/22 780,240
--------------
3,309,198
--------------
UNITED KINGDOM - 1.9%
1,695,652 Cable & Wireless Communications PLC, Term Loan............... 5.50% 11/06/16 1,695,652
1,000,000 Virgin Media Investment Holdings Ltd., Term Loan............. 3.50% 06/30/23 997,000
--------------
2,692,652
--------------
UNITED STATES - 29.0%
1,572,000 Calpine Construction Finance Co., L.P., Term B-1 Loan........ 3.00% 05/03/20 1,549,080
2,318,135 Cequel Communications Holdings I LLC, Term Loan.............. 3.50% 02/14/19 2,321,357
2,025,000 Charter Communications Operating LLC, Term E Loan............ 3.00% 07/01/20 2,015,199
772,367 CHS/Community Health Systems, Inc., 3/15 Term Loan F......... 3.53% 12/31/18 774,988
3,073,383 Community Health Systems, Inc., 5/15 Term Loan G............. 3.75% 12/31/19 3,076,266
1,974,995 Community Health Systems, Inc., CHS/Community Health
System TE................................................. 4.00% 01/27/21 1,981,080
3,000,000 Communications Sales & Leasing, Inc., Term Loan.............. 5.00% 10/24/22 2,988,750
1,806,811 Crown Castle Operating Co., Non-Extended Incremental
Tranche B Term Loan....................................... 3.00% 01/31/21 1,806,558
1,613,606 Drillships Financing Holding, Inc., Tranche B-1 Term Loan.... 6.00% 03/31/21 1,382,151
1,181,955 Dynegy, Inc., Tranche B-2 Term Loan.......................... 4.00% 04/23/20 1,186,978
1,400,000 Energy Transfer Equity L.P., Term Loan (2013)................ 3.25% 12/02/19 1,393,196
1,487,059 Energy Transfer Equity L.P., Term Loan (2015)................ 4.00% 12/02/19 1,479,832
3,876,092 IASIS Healthcare Corp., Term Loan B-2........................ 4.50% 05/03/18 3,886,596
3,880,000 Level 3 Financing, Inc., Tranche B 2020 Term Loan............ 4.00% 01/15/20 3,877,594
1,500,000 Moxie Liberty LLC, Construction B-1 Term Loan................ 6.75% 12/19/20 1,492,500
2,729,474 NRG Energy, Inc., Term Loan (2013)........................... 2.75% 07/01/18 2,712,197
See Notes to Financial Statements Page 9
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2015 (UNAUDITED)
PRINCIPAL STATED
VALUE DESCRIPTION RATE (c) MATURITY (d) VALUE
------------- ------------------------------------------------------------- ----------- ------------ --------------
SENIOR FLOATING-RATE LOAN INTERESTS (CONTINUED)
UNITED STATES (CONTINUED)
$ 428,000 Offshore Group Investment Ltd., Term Loan.................... 5.00% 10/25/17 $ 354,705
941,937 Pacific Drilling S.A., Term Loan............................. 4.50% 06/03/18 815,953
1,450,000 Panda Liberty LLC, Construction B-1 Advance.................. 7.50% 08/21/20 1,446,375
1,510,000 Panda Stonewall, Term B-1 Conversion Advances................ 6.50% 11/12/21 1,525,734
422,093 Targa Resources Corp., Term Loan B........................... 5.75% 02/27/22 425,525
3,040,066 Wide Open West Finance LLC, Term B Loan...................... 4.50% 04/01/19 3,037,117
--------------
41,529,732
--------------
TOTAL SENIOR FLOATING-RATE LOAN INTERESTS................................................ 53,639,002
(Cost $53,989,159) --------------
TOTAL INVESTMENTS - 128.1%............................................................... 183,595,906
(Cost $172,811,585) (e)
OUTSTANDING LOAN - (40.1%)............................................................... (57,500,000)
NET OTHER ASSETS AND LIABILITIES - 12.0%................................................. 17,159,180
--------------
NET ASSETS - 100.0%...................................................................... $ 143,255,086
==============
-----------------------------
(a) Portfolio securities are categorized based on their country of
incorporation.
(b) All of these securities are available to serve as collateral for 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, 2015. 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, 2015, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $14,091,359 and the aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over value was $3,307,038.
Page 10 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2015 (UNAUDITED)
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of May 31, 2015
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 5/31/2015 PRICES INPUTS INPUTS
-------------------------------------------------- ------------- ------------- ------------- -------------
Common Stocks*.................................... $ 115,013,388 $ 115,013,388 $ -- $ --
Master Limited Partnerships*...................... 14,943,516 14,943,516 -- --
Senior Floating-Rate Loan Interests*.............. 53,639,002 -- 53,639,002 --
------------- ------------- ------------- -------------
Total Investments................................. $ 183,595,906 $ 129,956,904 $ 53,639,002 $ --
============= ============= ============= =============
*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, 2015.
See Notes to Financial Statements Page 11
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2015 (UNAUDITED)
ASSETS:
Investments, at value
(Cost $172,811,585).......................................................................... $ 183,595,906
Cash............................................................................................ 20,727,035
Receivables:
Dividends.................................................................................... 3,335,871
Investment securities sold................................................................... 1,806,328
Interest..................................................................................... 329,819
Common Shares issued under the Dividend Reinvestment Plan.................................... 164,262
Prepaid expenses................................................................................ 17,845
-------------
Total Assets................................................................................. 209,977,066
-------------
LIABILITIES:
Outstanding loan................................................................................ 57,500,000
Payables:
Investment securities purchased.............................................................. 8,606,688
Investment advisory fees (includes Sub-Advisory fees of $306,728)............................ 511,213
Audit and tax fees........................................................................... 30,303
Custodian fees............................................................................... 29,753
Administrative fees.......................................................................... 12,903
Printing fees................................................................................ 7,786
Interest and fees on loan.................................................................... 7,416
Transfer agent fees.......................................................................... 5,728
Legal fees................................................................................... 5,241
Trustees' fees and expenses.................................................................. 3,188
Financial reporting fees..................................................................... 771
Other liabilities............................................................................... 990
-------------
Total Liabilities............................................................................ 66,721,980
-------------
NET ASSETS...................................................................................... $ 143,255,086
=============
NET ASSETS CONSIST OF:
Paid-in capital................................................................................. $ 162,204,875
Par value....................................................................................... 85,431
Accumulated net investment income (loss)........................................................ (825,752)
Accumulated net realized gain (loss) on investments and foreign currency transactions........... (28,828,905)
Net unrealized appreciation (depreciation) on investments and foreign currency translation...... 10,619,437
-------------
NET ASSETS...................................................................................... $ 143,255,086
=============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share)............................ $ 16.77
=============
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized)..... 8,543,080
=============
Page 12 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2015 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $839,164).......................................... $ 6,445,723
Interest........................................................................................ 1,202,943
Other........................................................................................... 27,377
-------------
Total investment income...................................................................... 7,676,043
-------------
EXPENSES:
Investment advisory fees (includes Sub-Advisory fees of $609,001)............................... 1,015,001
Interest and fees on outstanding loan........................................................... 248,714
Custodian fees.................................................................................. 44,576
Administrative fees............................................................................. 33,470
Printing fees................................................................................... 28,889
Audit and tax fees.............................................................................. 27,025
Transfer agent fees............................................................................. 16,822
Trustees' fees and expenses..................................................................... 9,110
Financial reporting fees........................................................................ 4,625
Legal fees...................................................................................... 4,187
Other........................................................................................... 16,995
-------------
Total expenses............................................................................... 1,449,414
-------------
NET INVESTMENT INCOME (LOSS).................................................................... 6,226,629
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.................................................................................. (6,603,679)
Foreign currency transactions................................................................ (646,647)
-------------
Net realized gain (loss)........................................................................ (7,250,326)
-------------
Net change in unrealized appreciation (depreciation) on:
Investments.................................................................................. (500,852)
Foreign currency translation................................................................. (81,941)
-------------
Net change in unrealized appreciation (depreciation)............................................ (582,793)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS)......................................................... (7,833,119)
-------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $ (1,606,490)
=============
See Notes to Financial Statements Page 13
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS
ENDED FOR THE YEAR
5/31/2015 ENDED
(UNAUDITED) 11/30/2014
------------- -------------
OPERATIONS:
Net investment income (loss)...................................................... $ 6,226,629 $ 10,471,290
Net realized gain (loss).......................................................... (7,250,326) 8,372,419
Net change in unrealized appreciation (depreciation).............................. (582,793) 1,715,047
------------- -------------
Net increase (decrease) in net assets resulting from operations................... (1,606,490) 20,558,756
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................................................. (5,973,299) (11,946,599)
------------- -------------
Total distributions to shareholders............................................... (5,973,299) (11,946,599)
------------- -------------
CAPITAL TRANSACTIONS:
Proceeds from Common Shares reinvested............................................ 164,262 --
------------- -------------
Net increase (decrease) in net assets resulting from capital transactions......... 164,262 --
------------- -------------
Total increase (decrease) in net assets........................................... (7,415,527) 8,612,157
NET ASSETS:
Beginning of period............................................................... 150,670,613 142,058,456
------------- -------------
End of period..................................................................... $ 143,255,086 $ 150,670,613
============= =============
Accumulated net investment income (loss) at end of period......................... $ (825,752) $ (1,079,082)
============= =============
CAPITAL TRANSACTIONS WERE AS FOLLOWS:
Common Shares at beginning of period.............................................. 8,533,285 8,533,285
Common Shares issued as reinvestment under the Dividend Reinvestment Plan......... 9,795 --
------------- -------------
Common Shares at end of period.................................................... 8,543,080 8,533,285
============= =============
Page 14 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND (MFD)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31, 2015 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations ........ $ (1,606,490)
Adjustments to reconcile net increase (decrease) in net assets resulting
from operations to net cash provided by operating activities:
Purchases of investments........................................... (188,793,234)
Sales, maturities and paydowns of investments...................... 202,583,853
Return of capital received from investment in MLPs................. 367,653
Net amortization/accretion of premiums/discounts on investments.... (6,270)
Net realized gain/loss on investments.............................. 6,603,679
Net change in unrealized appreciation/depreciation on investments.. 500,852
CHANGES IN ASSETS AND LIABILITIES:
Increase in interest receivable.................................... (21,452)
Increase in dividends receivable................................... (2,014,108)
Increase in prepaid expenses....................................... (12,906)
Increase in Common Shares issued receivable........................ (164,262)
Decrease in interest and fees on loan payable...................... (6,358)
Decrease in investment advisory fees payable....................... (4,232)
Decrease in audit and tax fees payable............................. (23,897)
Increase in legal fees payable..................................... 1,347
Decrease in printing fees payable.................................. (9,910)
Decrease in administrative fees payable............................ (25,715)
Decrease in custodian fees payable................................. (2,109)
Decrease in transfer agent fees payable............................ (8)
Increase in Trustees' fees and expenses payable.................... 131
Decrease in other liabilities...................................... (555)
--------------
CASH PROVIDED BY OPERATING ACTIVITIES................................... $ 17,366,009
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of Common Shares reinvested................................. 164,262
Distributions to Common Shareholders from net investment income...... (8,959,949)
--------------
CASH USED IN FINANCING ACTIVITIES....................................... (8,795,687)
--------------
Increase in cash and foreign currency (a)............................... 8,570,322
Cash and foreign currency at beginning of period........................ 12,156,713
--------------
Cash and foreign currency at end of period.............................. $ 20,727,035
==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees....................... $ 255,072
==============
-----------------------------
(a) Includes net change in unrealized appreciation (depreciation) on foreign
currency of $(81,941).
See Notes to Financial Statements Page 15
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
5/31/2015 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 11/30/2014 11/30/2013 11/30/2012 11/30/2011 11/30/2010
------------ ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period..... $ 17.66 $ 16.65 $ 15.91 $ 15.12 $ 15.29 $ 14.36
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.73 1.23 1.29 1.15 1.43 (a) 0.55
Net realized and unrealized gain (loss).. (0.92) 1.18 0.85 1.04 (0.27) 1.06
-------- -------- -------- -------- -------- --------
Total from investment operations......... (0.19) 2.41 2.14 2.19 1.16 1.61
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.70) (1.40) (1.40) (1.31) (1.40) (0.68)
Return of capital........................ -- -- -- (0.09) -- --
-------- -------- -------- -------- -------- --------
Total distributions...................... (0.70) (1.40) (1.40) (1.40) (1.40) (0.68)
-------- -------- -------- -------- -------- --------
Capital share repurchases................ -- -- -- -- 0.07 --
-------- -------- -------- -------- -------- --------
Net asset value, end of period........... $ 16.77 $ 17.66 $ 16.65 $ 15.91 $ 15.12 $ 15.29
======== ======== ======== ======== ======== ========
Market value, end of period.............. $ 16.93 $ 16.97 $ 16.02 $ 14.84 $ 14.07 $ 13.82
======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON NET ASSET
VALUE (b)............................. (1.03)% 14.81% 14.41% 15.35% 8.49% 12.31%
======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON MARKET VALUE (b)... 3.98% 14.73% 17.94% 15.62% 11.70% 24.27%
======== ======== ======== ======== ======== ========
-----------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $143,255 $150,671 $142,058 $135,749 $129,056 $138,786
Ratio of total expenses to average net
assets................................ 1.99% (c) 1.95% 2.08% 2.24% 2.24% 2.36%
Ratio of total expenses to average net
assets excluding interest expense..... 1.65% (c) 1.65% 1.70% 1.78% 1.81% 1.77%
Ratio of net investment income (loss) to
average net assets.................... 8.55% (c) 6.81% 7.78% 7.35% 8.92% 3.68%
Portfolio turnover rate.................. 103% 158% 177% 144% 91% 87%
INDEBTEDNESS:
Total loan outstanding (in 000's)........ $ 57,500 $ 57,500 $ 47,500 $ 47,500 $ 47,500 $ 44,500
Asset coverage per $1,000 of
indebtedness (d)...................... $ 3,491 $ 3,620 $ 3,991 $ 3,858 $ 3,717 $ 4,119
-----------------------------
(a) Per share amounts have been calculated using the average share method.
(b) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions if any, at prices obtained by the
Dividend Reinvestment Plan, and changes in net asset value per share for
net asset value returns and changes in Common Share Price for market value
returns. Total returns do not reflect sales load and are not annualized
for periods less than one year. Past performance is not indicative of
future results.
(c) Annualized.
(d) Calculated by taking the Fund's total assets less the Fund's total
liabilities (not including the loan outstanding), and dividing by the
outstanding loan balance in 000's.
Page 16 See Notes to Financial Statements
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2015 (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 Fund, which is an investment company within the scope of Financial
Accounting Standards Board ("FASB") Accounting Standards Update 2013-08, follows
accounting and reporting guidance under FASB Accounting Standards Codification
Topic 946, "Financial Services -Investment Companies." 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 Fund's 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. Market
value prices represent last sale or official closing prices from a national or
foreign exchange (i.e., a regulated market) and are primarily obtained from
third-party pricing services. Fair value prices represent any prices not
considered market value prices and are either obtained from a third-party
pricing service or are determined by the Pricing Committee of the Fund's
investment advisor, First Trust Advisors L.P. ("First Trust" or the "Advisor"),
in accordance with valuation procedures adopted by the Fund's Board of Trustees,
and in accordance with provisions of the 1940 Act. Investments valued by the
Advisor's Pricing Committee, if any, are footnoted as such in the footnotes to
the Portfolio of Investments. 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 fair valued at the
mean of their most recent bid and asked price, if available, and otherwise
at their closing bid price.
Fixed income and other debt securities having a remaining maturity of 60
days or less when purchased are fair valued at cost adjusted for
amortization of premiums and accretion of discounts (amortized cost),
provided the Advisor's Pricing Committee has determined that the use of
amortized cost is an appropriate reflection of fair value given market and
issuer-specific conditions existing at the time of the determination.
Factors that may be considered in determining the appropriateness of the
use of amortized cost include, but are not limited to, the following:
1) the credit conditions in the relevant market and changes
thereto;
2) the liquidity conditions in the relevant market and changes
thereto;
3) the interest rate conditions in the relevant market and
changes thereto (such as significant changes in interest
rates);
4) issuer-specific conditions (such as significant credit
deterioration); and
5) any other market-based data the Advisor's Pricing Committee
considers relevant. In this regard, the Advisor's Pricing
Committee may use last-obtained market-based data to assist it
when valuing portfolio securities using amortized cost.
Page 17
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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, 2015 (UNAUDITED)
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, the Advisor's Pricing Committee, 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 or fair value 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. When fair value prices are used, generally they will differ from
market quotations or official closing prices on the applicable exchanges. 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;
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 fair valued using information provided by a third-party pricing
service. The third-party pricing service primarily uses over-the-counter pricing
from dealer runs and broker quotes from indicative sheets to value the Senior
Loans. If the pricing service cannot or does not provide a valuation for a
particular Senior Loan or such valuation is deemed unreliable, First Trust may
value such Senior Loan at a fair value according to procedures adopted by the
Fund's Board of Trustees, and in accordance with the provisions of the 1940 Act.
Fair valuation of a Senior Loan is based on the consideration of all available
information, including, but not limited to the following:
1) the fundamental business data relating to the issuer or borrower;
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 borrower;
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;
-----------------------------
(1) The terms "security" and "securities" used throughout the Notes to
Financial Statements include Senior Loans.
Page 18
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2015 (UNAUDITED)
9) the quality, value and salability of collateral, if any, securing
the security;
10) the business prospects of the issuer/borrower, including any ability
to obtain money or resources from a parent or affiliate and an
assessment of the borrower's management;
11) the prospects for the borrower's industry, and multiples (of
earnings and/or cash flows) being paid for similar businesses in
that industry;
12) borrower's competitive position within the industry;
13) borrower's ability to access additional liquidity through public
and/or private markets; and
14) other relevant factors.
The Fund is subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
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 methodologies 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, 2015, 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.
The Fund may hold the securities of real estate investment trusts ("REITs").
Distributions from such investments may be comprised of return of capital,
capital gains and income. The actual character of amounts received during the
year is not known until after the REIT's fiscal year end. The Fund records the
character of distributions received from REITs during the year based on
estimates available. The characterization of distributions received by the Fund
may be subsequently revised based on information received from the REITs after
their tax reporting periods conclude.
For the six months ended May 31, 2015, distributions of $367,653 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, 2015,
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, 2015.
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
Page 19
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2015 (UNAUDITED)
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.
The tax character of distributions paid during the fiscal year ended November
30, 2014 was as follows:
Distributions paid from:
Ordinary income................................... $ 11,946,599
Long-term capital gain............................ --
Return of capital................................. --
As of November 30, 2014, the distributable earnings and net assets on a tax
basis were as follows:
Undistributed ordinary income..................... $ --
Undistributed capital gains....................... --
-------------
Total undistributed earnings...................... --
Accumulated capital and other losses.............. (17,691,534)
Net unrealized appreciation (depreciation)........ 9,222,753
-------------
Total accumulated earnings (losses)............... (8,468,781)
Other............................................. (2,986,650)
Paid-in capital................................... 162,126,044
-------------
Net assets........................................ $ 150,670,613
=============
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, 2014, the Fund
utilized pre-enactment capital loss carryforwards in the amount of $10,725,367.
At November 30, 2014, the Fund had pre-enactment net capital losses for federal
income tax purposes of $17,691,534 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.
The Fund is subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ending 2011, 2012,
2013 and 2014 remain open to federal and state audit. As of May 31, 2015,
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.
Page 20
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2015 (UNAUDITED)
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 the average daily total asset value of the
Fund minus the sum of the Fund's liabilities other than the principal amount of
borrowings. First Trust also provides fund reporting services to the Fund for a
flat annual fee in the amount of $9,250.
Macquarie Capital Investment Management LLC ("MCIM") and Four Corners Capital
Management, LLC ("Four Corners") serve as the Fund's sub-advisors and manage the
Fund's portfolio subject to First Trust's supervision. MCIM manages the Core
Component which consists primarily of equity securities and equity-like
securities issued by infrastructure issuers and, for its portfolio management
services, MCIM is entitled to a quarterly fee calculated at an annual rate of
0.60% for that portion of the Fund's Total Assets allocated to MCIM. If the
Fund's 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.
On April 1, 2015, Macquarie Capital (USA) Inc. ("MCUSA"), an affiliate of MCIM
and Four Corners, was enjoined from violating Sections 17(a)(2) and 17(a)(3) of
the Securities Act of 1933 ("Injunction") in an order issued by the United
States District Court for the Southern District of New York (the "Order"). The
Order was issued in connection with MCUSA's underwriting of a public offering of
a China-based company, Puda Coal. In an SEC Complaint, Puda Coal was said to
have made false claims as to its ownership of a coal company in the People's
Republic of China. The Injunction resulted in the disqualification of MCUSA and
its affiliates MCIM and Four Corners from acting in the capacity of investment
adviser of investment companies registered under the 1940 Act, as provided for
in Section 9(a) of the 1940 Act. MCIM and Four Corners are currently pursuing
permanent exemptive relief from the disqualification provisions of Section 9(a)
that were triggered by the Injunction. The SEC staff issued a temporary
exemptive order on May 15, 2015. On July 6, 2015, the SEC issued a Notice of
Intent to Issue a Permanent Order ("Notice"), subject to the standard notice
period, as well as new Commission-level temporary exemptive relief to replace
the staff-level relief issued on May 15, 2015. Following issuance of the Notice,
each of MCIM and Four Corners agreed to settle a related administrative action
brought by the SEC and pay a $20,000 fine.
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 six months ended May 31, 2015, the Fund paid brokerage commissions to
Macquarie Capital (USA) Inc., an affiliate of MCIM and Four Corners, totaling
$14,573.
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, 2015, were $194,200,576 and
$203,382,056, respectively.
Page 21
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2015 (UNAUDITED)
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). 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 total amount of loans that may be outstanding at any one time under the BNP
Paribas Facility is $60,000,000. The interest rate under the BNP Paribas
Facility is equal to 1-month LIBOR plus 70 basis points. The Fund only pays a
commitment fee of 0.85% on the undrawn amount when the outstanding debt is less
than 80% of the maximum commitment amount.
For the six months ended May 31, 2015, the daily average amount outstanding
under the BNP Paribas Facility was $57,500,000. The high and low annual interest
rates for the six months ended May 31, 2015, were 0.89% and 0.86%, respectively,
and the weighted average interest rate was 0.87%. The interest rate at May 31,
2015, was 0.89%.
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 22
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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2015 (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 23
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2015 (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 Income Fund, First Trust High Income Long/Short Fund,
First Trust Energy Infrastructure Fund, First Trust MLP and Energy Income Fund,
First Trust Intermediate Duration Preferred & Income Fund and First Trust New
Opportunities MLP & Energy Fund was held on April 20, 2015 (the "Annual
Meeting"). At the Annual Meeting, Trustees Richard E. Erickson and Thomas R.
Kadlec were elected by the Common Shareholders of the Macquarie/First Trust
Global Infrastructure/Utilities Dividend & Income Fund as Class II Trustees for
three-year terms expiring at the Fund's annual meeting of shareholders in 2018.
The number of votes cast in favor of Mr. Erickson was 6,974,429, the number of
votes against was 204,241 and the number of broker non-votes was 1,354,615. The
number of votes cast in favor of Mr. Kadlec was 6,978,242, the number of votes
against was 200,428 and the number of broker non-votes was 1,354,615. James A.
Bowen, Niel B. Nielson and Robert F. Keith are the other current and continuing
Trustees.
RISK CONSIDERATIONS
Risks are inherent in all investing. The following summarizes some, but not all,
of the risks that should be considered for the Fund. For additional information
about the risks associated with investing in the Fund, please see the Fund's
prospectus and statement of additional information, as well as other Fund
regulatory filings.
INVESTMENT AND MARKET RISK: An investment in the Fund's Common Shares is subject
to investment risk, including the possible loss of the entire principal
invested. An investment in Common Shares represents an indirect investment in
the securities owned by the Fund. The value of these securities, like other
market investments, may move up or down, sometimes rapidly and unpredictably.
Common Shares at any point in time may be worth less than the original
investment, even after taking into account the reinvestment of Fund dividends
and distributions. Security prices can fluctuate for several reasons including
the general condition of the securities markets, or when political or economic
events affecting the issuers occur. When the Advisor or Sub-Advisor determines
that it is temporarily unable to follow the Fund's investment strategy or that
it is impractical to do so (such as when a market disruption event has occurred
and trading in the securities is extremely limited or absent), the Fund may take
temporary defensive positions.
LEVERAGE RISK: The use of leverage results in additional risks and can magnify
the effect of any losses. If the income and gains from the securities and
investments purchased with such proceeds do not cover the cost of leverage, the
Common Shares' return will be less than if leverage had not been used. The funds
borrowed pursuant to a leverage borrowing program constitute a substantial lien
and burden by reason of their prior claim against the income of the Fund and
against the net assets of the Fund in liquidation. The rights of lenders to
receive payments of interest on and repayments of principal on any borrowings
made by the Fund under a leverage borrowing program are senior to the rights of
holders of Common Shares upon liquidation. If the Fund is not in compliance with
certain credit facility provisions, the Fund may not be permitted to declare
dividends or other distributions, including dividends and distributions with
respect to Common Shares or purchase Common Shares. The use of leverage by the
Fund increases the likelihood of greater volatility of NAV and market price of
the Common Shares. Leverage also increases the risk that fluctuations in
interest rates on borrowings and short-term debt that the Fund may pay will
reduce the return to the Common Shareholders or will result in fluctuations in
the dividends paid on the Common Shares.
MLP RISK: An investment in MLP units involves risks which differ from an
investment in common stock of a corporation. Holders of MLP units have limited
control and voting rights on matters affecting the partnership. In addition,
there are certain tax risks associated with an investment in MLP units and
conflicts of interest exist between common unit holders and the general partner,
including those arising from incentive distribution payments.
NON-U.S. RISK: The Fund may invest a portion of its assets in the equity
securities of issuers domiciled in jurisdictions other than the U.S. Investments
in the securities and instruments of non-U.S. issuers involve certain
considerations and risks not ordinarily associated with investments in
securities and instruments of U.S. issuers. Non-U.S. companies are not generally
subject to uniform accounting, auditing and financial standards and requirements
comparable to those applicable to U.S. companies. Non-U.S. securities exchanges,
brokers and listed
Page 24
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ADDITIONAL INFORMATION (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
MAY 31, 2015 (UNAUDITED)
companies may be subject to less government supervision and regulation than
exists in the United States. Dividend and interest income may be subject to
withholding and other non-U.S. taxes, which may adversely affect the net return
on such investments. A related risk is that there may be difficulty in obtaining
or enforcing a court judgment abroad.
CURRENCY RISK: 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.
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FIRST TRUST
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187
INVESTMENT SUB-ADVISORS
Macquarie Capital Investment Management LLC
125 West 55th Street
New York, NY 10019
Four Corners Capital Management, LLC
2005 Market Street
Philadelphia, PA 19103
ADMINISTRATOR,
FUND ACCOUNTANT &
TRANSFER AGENT
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
The Bank of New York Mellon
101 Barclay Street, 20th Floor
New York, NY 10286
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
[BLANK BACK COVER]
ITEM 2. CODE OF ETHICS.
Not applicable
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
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 15, 2015
-----------------
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 15, 2015
-----------------
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: July 15, 2015
-----------------
* Print the name and title of each signing officer under his or her signature.