UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-21496
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Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
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(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Name and address of agent for service)
registrant's telephone number, including area code: 630-765-8000
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Date of fiscal year end: November 30
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Date of reporting period: November 30, 2014
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
ANNUAL REPORT
FOR THE YEAR ENDED
NOVEMBER 30, 2014
MACQUARIE/FIRST TRUST
GLOBAL INFRASTRUCTURE/
UTILITIES DIVIDEND &
INCOME FUND (MFD)
FOUR CORNERS
MACQUARIE CAPITAL MANAGEMENT FIRST TRUST
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TABLE OF CONTENTS
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
ANNUAL REPORT
NOVEMBER 30, 2014
Shareholder Letter........................................................... 1
At a Glance.................................................................. 2
Portfolio Commentary......................................................... 3
Portfolio of Investments..................................................... 8
Statement of Assets and Liabilities.......................................... 12
Statement of Operations...................................................... 13
Statements of Changes in Net Assets.......................................... 14
Statement of Cash Flows...................................................... 15
Financial Highlights......................................................... 16
Notes to Financial Statements................................................ 17
Report of Independent Registered Public Accounting Firm...................... 23
Additional Information....................................................... 24
Board of Trustees and Officers............................................... 30
Privacy Policy............................................................... 32
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and/or Macquarie Capital Investment Management LLC
("MCIM") and/or Four Corners Capital Management, LLC ("Four Corners") (MCIM and
Four Corners collectively, the "Sub-Advisors"), and their respective
representatives, taking into account the information currently available to
them. Forward-looking statements include all statements that do not relate
solely to current or historical fact. For example, forward-looking statements
include the use of words such as "anticipate," "estimate," "intend," "expect,"
"believe," "plan," "may," "should," "would" or other words that convey
uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
(the "Fund") to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. When
evaluating the information included in this report, you are cautioned not to
place undue reliance on these forward-looking statements, which reflect the
judgment of the Advisor and/or Sub-Advisors and their respective representatives
only as of the date hereof. We undertake no obligation to publicly revise or
update these forward-looking statements to reflect events and circumstances that
arise after the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that the Fund will achieve its investment objective. The
Fund is subject to market risk, which is the possibility that the market values
of securities owned by the Fund will decline and that the value of the Fund
shares may therefore be less than what you paid for them. Accordingly, you can
lose money by investing in the Fund. See "Risk Considerations" in the Additional
Information section of this report for a discussion of certain other risks of
investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, net asset value and common share price will fluctuate and Fund shares,
when sold, may be worth more or less than their original cost.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment. It
includes details about the Fund and presents data and analysis that provide
insight into the Fund's performance and investment approach.
By reading the portfolio commentary by the portfolio management team of the
Fund, you may obtain an understanding of how the market environment affected the
Fund's performance. The statistical information that follows may help you
understand the Fund's performance compared to that of relevant market
benchmarks.
It is important to keep in mind that the opinions expressed by personnel of MCIM
and Four Corners are just that: informed opinions. They should not be considered
to be promises or advice. The opinions, like the statistics, cover the period
through the date on the cover of this report. The risks of investing in the Fund
are spelled out in the prospectus, the statement of additional information, this
report and other Fund regulatory filings.
MCIM, FOUR CORNERS AND THE FUND ARE NOT DEPOSIT TAKING INSTITUTIONS FOR THE
PURPOSES OF THE BANKING ACT OF 1959 (COMMONWEALTH OF AUSTRALIA) AND THEIR
OBLIGATIONS DO NOT REPRESENT DEPOSITS OR OTHER LIABILITIES OF MACQUARIE BANK
LIMITED ABN 46 008 583 542. MACQUARIE BANK LIMITED DOES NOT GUARANTEE OR
OTHERWISE PROVIDE ASSURANCE IN RESPECT OF THE OBLIGATIONS OF MCIM, FOUR CORNERS
OR THE FUND.
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SHAREHOLDER LETTER
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
ANNUAL LETTER FROM THE CHAIRMAN AND CEO
NOVEMBER 30, 2014
Dear Shareholders:
I am pleased to present you with the annual report for your investment in
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
(the "Fund"). This report provides detailed information about the Fund,
including a performance review and the financial statements for the 12 months
ended November 30, 2014. I encourage you to read this document and discuss it
with your financial advisor.
Although markets have seemed choppy over the past 12 months, the U.S. has shown
sustained growth over the period. In fact, the S&P 500(R) Index, as measured on
a total return basis, rose 16.86% in the time covered by this report. First
Trust Advisors L.P. ("First Trust") believes that staying invested in quality
products through different types of markets can benefit investors over the long
term.
First Trust is pleased to offer a variety of products that we believe could fit
the financial plans for many investors seeking long-term investment success. We
invite you to look at our investment products with your financial advisor to
determine if any of them might fit your financial goals. We believe that
regularly discussing your financial objectives and investment options with your
financial advisor can help keep you on track.
First Trust will continue to make available up-to-date information about your
investments so you and your financial advisor are current on any First Trust
investments you own. We value our relationship with you, and thank you for the
opportunity to assist you in achieving your financial goals.
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 NOVEMBER 30, 2014 (UNAUDITED)
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FUND STATISTICS
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Symbol on New York Stock Exchange MFD
Common Share Price $16.97
Common Share Net Asset Value ("NAV") $17.66
Premium (Discount) to NAV (3.91)%
Net Assets Applicable to Common Shares $150,670,613
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) 8.25%
Current Distribution Rate on NAV (2) 7.93%
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COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
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Common Share Price NAV
11/13 $16.02 $16.66
16.19 16.54
16.34 16.41
16.34 16.80
12/13 16.43 17.00
16.50 16.95
16.82 17.01
16.76 17.02
16.93 16.95
1/14 16.60 17.03
16.61 17.24
17.04 17.64
16.93 17.33
2/14 17.13 17.52
17.04 17.59
17.02 17.62
17.30 17.77
3/14 17.13 18.01
17.22 18.10
17.22 18.16
17.41 18.39
4/14 17.65 18.27
17.67 18.44
17.83 18.56
17.70 18.73
17.48 18.51
5/14 17.64 18.64
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
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PERFORMANCE
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Average Annual Total Return
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Inception
1 Year Ended 5 Years Ended 10 Years Ended (3/25/2004)
11/30/2014 11/30/2014 11/30/2014 to 11/30/2014
Fund Performance (3)
NAV 14.81% 13.04% 8.22% 9.90%
Market Value 14.73% 16.78% 8.94% 9.02%
Index Performance
S&P 500(R) Utilities Total Return Index 25.75% 13.78% 9.54% 10.51%
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% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
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GDF Suez 5.7%
Corrections Corp. of America 5.3
SSE PLC 4.3
Centrica PLC 3.9
Buckeye Partners, L.P. 3.5
Hutchison Port Holdings Trust 3.1
Hopewell Highway Infrastructure, Ltd. 3.1
Atlantia S.p.A. 2.9
Sempra Energy 2.8
NiSource, Inc. 2.7
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Total 37.3%
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% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
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Multi-Utilities 21.0%
Transportation Infrastructure 15.5
Oil, Gas & Consumable Fuels 15.4
Electric Utilities 13.0
Media 7.9
Real Estate Investment Trusts 5.3
Diversified Telecommunication Services 4.8
Independent Power and Renewable Electricity
Producers 4.6
Wireless Telecommunication Services 4.0
Health Care Providers & Services 3.9
Energy Equipment & Services 2.7
Construction & Engineering 1.9
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Total 100.0%
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% OF TOTAL
COUNTRY INVESTMENTS
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United States 46.2%
France 12.3
United Kingdom 10.3
Canada 7.9
Australia 4.8
Singapore 3.1
Cayman Islands 3.1
Italy 2.9
Netherlands 2.2
Hong Kong 1.7
Brazil 1.6
Luxembourg 1.4
Germany 1.0
New Zealand 1.0
Spain 0.5
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Total 100.0%
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(1) Most recent distribution paid or declared through 11/30/2014. Subject to
change in the future.
(2) Distribution rates are calculated by annualizing the most recent
distribution paid or declared through the report date and then dividing by
Common Share price or NAV, as applicable, as of 11/30/2014. Subject to
change in the future.
(3) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan, and changes in NAV per share for NAV
returns and changes in Common Share price for market value returns. Total
returns do not reflect sales load and are not annualized for periods less
than one year. Past performance is not indicative of future results.
Page 2
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PORTFOLIO COMMENTARY
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
ANNUAL REPORT
NOVEMBER 30, 2014
SUB-ADVISORS
Macquarie Capital Investment Management LLC ("MCIM") and Four Corners Capital
Management, LLC ("Four Corners") are the sub-advisors of the Macquarie/First
Trust Global Infrastructure/Utilities Dividend & Income Fund ("MFD" or the
"Fund"). Both MCIM and Four Corners operate within the Macquarie Funds Group
("MFG") and are wholly owned, indirect subsidiaries of Macquarie Group Limited
("Macquarie").
The Fund's Core Component, which consists primarily of equity securities and
equity-like securities issued by infrastructure issuers, is managed by MCIM,
which started operations in 2004 with the launch of the Fund. MCIM and its
Australia-based affiliates manage approximately $2.0 billion of assets as of
November 30, 2014, in MFG's Infrastructure Securities portfolios, which include
the Fund.
The Fund's Senior Loan Component is managed by Four Corners. Four Corners was
founded in 2001 and became a wholly-owned subsidiary of Macquarie in 2008. Four
Corners managed over $1.8 billion of assets as of November 30, 2014, 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 infrastructure securities enjoyed strong performance in the 12-month
period ended November 30, 2014, well above the returns from global equities.
Stock markets in the major developed economies commenced 2014 in a choppy
fashion due to a combination of profit-taking after last year's strong gains,
reappraisal of lofty earnings growth expectations and concerns about the global
impact of U.S. Federal Reserve (the "Fed") tapering. The underlying nervousness
in risk asset markets was reinforced in January as concerns about the impact of
Page 3
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PORTFOLIO COMMENTARY (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
ANNUAL REPORT
NOVEMBER 30, 2014
the tapering of the Fed's Quantitative Easing ("QE") asset purchases on emerging
market economies were reignited. Investors subsequently focused on developments
in Ukraine and Russia, as well as slower growth and financial strains in China.
Policymakers in the major economies reaffirmed their commitment to growth and
prosperity as they continued to confront structural weaknesses in their
respective economies. This commitment was beneficial for risk assets, as global
equities enjoyed strong tailwinds in the second quarter. However, the impetus
for global growth continued to come from the major developed economies, while
emerging market economies continued to struggle with various macro stability
issues.
Global equities began the summer on a relatively stable note. Data released in
June indicated the recovery in developed economies remained on track, while
developing economies showed signs of stabilization. Markets remained focused on
central bank policy, in particular the European Central Bank and Fed policy
announcements. The CBOE Volatility Index(R), a measure of expected equity market
volatility, fell to its lowest level since early 2007.
In September, geopolitical and macro events contributed to some volatility as
investors watched continued developments in Ukraine and the Middle East, the
Argentine government's default and problems at Portugal's Banco Espirito Santo.
Economic data highlighted the widening gap between the strengthening economic
recovery in the U.S. and generally lackluster activity elsewhere. The challenges
of navigating a very uneven global landscape were further complicated by worries
about Chinese growth, concerns of encroaching Eurozone deflation, geopolitical
tension and uncertainties about the timeline for the Fed's interest rate
normalization.
Global equities finished the period in positive territory. Central banks
remained at the forefront in global markets in November, with Japan, Europe and
China all stepping up their accommodative monetary policies. The Fed began to
lay the groundwork for potential rate increases in 2015, having completed its
asset purchase program in October, which had provided significant support to
most markets.
PERFORMANCE ANALYSIS - CORE COMPONENT
As shown in the performance table, MFD's net asset value ("NAV") total return1
for the period was 14.81%, trailing the 25.75% return of the S&P 500(R)
Utilities Total Return Index (the "Index"), amid a very strong market for U.S.
energy-related utilities. 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 the Index offers some frame
of reference.
There were a number of factors driving the Fund's total return during the
reporting period:
o The strong performance of energy pipeline stocks, particularly in
the U.S. and Canada;
o The good performance in the Electric Utility sector; and
o The strength in the Toll Road and Electricity Transmission sectors.
It was a positive year for infrastructure securities, and there were no
significant detractors among the sectors in which the Fund invests.
Let's look at these reasons in further detail.
Pipelines
The Pipelines sector was the largest contributor to the Fund's total return in
the period. Enbridge Inc. was a leading performer as the company's stock surged
following the first-quarter announcement of a C$7 billion project within its
Canadian mainline system. In late 2014, the company received regulatory approval
to proceed with the construction of its Flanagan South pipeline in the Midwest
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1 Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan and changes in NAV per share for NAV
returns and changes in Common Share price for market value returns. Total
returns do not reflect sales load and are not annualized for periods less
than one year. Past performance is not indicative of future results.
Page 4
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PORTFOLIO COMMENTARY (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
ANNUAL REPORT
NOVEMBER 30, 2014
United States. The line will connect with Enbridge's existing mainline system in
Chicago to allow the transportation of crude oil south to the U.S. Gulf Coast.
The pipeline, which should begin service in early 2015, is an example of the
attractive organic growth opportunities available to incumbent pipeline network
owners.
Energy Transfer Equity L.P. ("Energy Transfer") was another notable
outperformer. In mid-2014, the company secured sufficient customer commitments
to proceed with two large, long haul pipeline projects. The first pipeline will
transport crude oil from the Bakken region and connect with its existing
Trunkline pipeline to provide access to the Midwest, East Coast and Gulf Coast
markets. The second pipeline will connect Marcellus/Utica gas to various markets
in the U.S. and Canada, also using the existing Trunkline pipeline to access the
Gulf Coast market. These projects highlight the diversity of Energy Transfer's
business, as well as the value-adding options provided by its existing asset
footprint.
Williams Companies Inc. ("Williams") was another meaningful contributor after
announcing that it would acquire the remaining 50% interest in the general
partner of Access Midstream Partners L.P. ("ACMP") and common units from a
private equity firm for $6 billion (USD). Williams also proposed to merge ACMP
with Williams Partners L.P. As a result, the company raised dividend growth
guidance for the next 3 years to 36%, 26% and 15%, respectively from 20% per
annum previously.
Other notable contributors include Magellan Midstream Partners, L.P., Buckeye
Pipeline Partners, L.P. and Veresen Inc.
Buckeye Pipeline Partners, L.P. performed well during the period as the
integration of the terminal network acquired from Hess in October 2013 was
carried out ahead of management's expectations, resulting in strong earnings
during the first half of 2014.
Veresen Inc.'s shares performed well after its Jordan Cove Liquefied Natural Gas
("LNG") export project received a license from the Department of Energy to allow
the exportation of U.S. LNG to non-free trade agreement countries. This was an
important milestone for the project to move closer toward reaching a final
investment decision on whether or not the project will proceed. The decision is
expected to be made in 2015.
Magellan Midstream Partners, L.P. also performed well, after posting strong
first-quarter earnings and raising overall guidance for 2014. It also placed
into service the Bridgetex pipeline, providing a conduit for crude oil from the
prolific Permian Basin to reach the Houston Gulf Coast area.
Electric Utilities
Many U.S. and European utilities rebounded from earlier weakness as the period
began. American Electric Power performed strongly after it reported earnings
above consensus, raised full-year guidance and confirmed its long-term growth
outlook. In France, GDF Suez began the period very strongly after it increased
2014 earnings guidance, confirmed a dividend cut (which was already anticipated
by investors) and terminated its asset disposal program. It also reported
results above consensus.
SSE in the U.K. also performed well after receiving a better-than-expected
proposal by the U.K. energy regulator for its electricity distribution business.
The company closed the period strongly due to improving business fundamentals
and reduced risk after Scotland voted to remain in the United Kingdom. PG&E also
gained strongly after the uncertainty and potential downside, in relation to
penalties arising from the 2010 residential gas pipeline explosion in San
Francisco, were significantly reduced early in the period.
CMS Energy Corporation was another strong performer as the company posted
impressive results within a sector that enjoyed broad gains in the period.
Energias do Brasil performed strongly in the period after the Brazilian
government announced it would finance distributors for the extra cost of peak
power prices due to the drought.
Toll Roads
The Toll Road sector posted a strong return. Atlantia S.p.A benefited from a
decline in domestic bond yields as well as the improved investor sentiment
towards the macro outlook. Transurban performed well after announcing two major
Australian transactions in April - the acquisition of Queensland Motorways and
an upgrade to CityLink in Melbourne. In May, Transurban successfully completed
an $A 2.3 billion equity raising to help fund the acquisition. Transurban
finished the year more than 20% above the entitlement offer price. On the
negative side, VINCI traded lower late in the period as the market focused
heavily on the potential for a slowdown in the construction side of the company.
However, it should be noted that it is a relatively small component of its
valuation and its French motorways and Portuguese airports continued to perform
well over the period.
Page 5
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PORTFOLIO COMMENTARY (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
ANNUAL REPORT
NOVEMBER 30, 2014
Electricity Transmission
National Grid in the U.K. gained throughout the period, benefiting from lower
government bond yields in the U.K. and the U.S. ITC Ltd. in the U.S. posted a
strong return early in the period after reporting results in line with
expectations. Despite some concerns that the rate of return on the company's
regulated transmission assets may be lower in the future, the stock recovered
after the company terminated a proposed merger. The market had been skeptical
about the merger and the associated risks. The company continued its strong run
in the third quarter, after management announced a 14% dividend increase (above
expectations) and details of a stock buyback.
PORTFOLIO COMPOSITION
As of November 30, 2014, the Fund's Core Component was well diversified across
34 positions in global infrastructure stocks, representing 14 countries and 11
sectors. During the period, the main increases in the Fund's weightings were in
Social Infrastructure, Seaports and Electricity & Gas Distribution, while the
weightings in Electricity Transmission, Pipelines and Airports declined. Sector
changes were driven primarily 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
that are generally higher than the S&P LSTA Leveraged Loan Index (the "LSTA
Index"). The average rating in the Senior Loan Component is BB- vs. the average
Index loan rating between B+ and BB-.
The LSTA Index posted a 3.4% return for the 12 months ended November 30, 2014.
Lower rated loans outperformed during the period, with BB rated loans returning
2.7%, single B rated loans returning 3.4% and CCC rated loans significantly
outperforming, returning 7.5%. The Senior Loan Component returned 2.8% during
the 12-month period, which is essentially in-line with the BB rated loan LSTA
Index returns.
Loan market inflows were strong over the 12-month period, with approximately
$121 billion of collateralized loan obligation (CLO) issuance more than
offsetting $12 billion of retail loan mutual fund outflows.
We believe fundamentals continue to be generally strong for LSTA Index issuers.
Among LSTA Index issuers that file publicly, third quarter 2014 Earnings Before
Interest Taxes Depreciation and Amortization ("EBITDA") grew 9% year-over-year,
which is roughly on par with EBITDA growth in the second quarter of 2014. The
LSTA Index default rate was 3.3% for the 12-month period ended November 30,
2014. The April bankruptcy of Energy Future Holdings put $19.5 billion of LSTA
Index loans into default. The default was widely expected by participants in the
loans market and the loan was not held in the Fund. Excluding Energy Future
Holdings, the default rate would have been 0.4%.
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 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 are generally rising. The
Fund increased the leverage facility from $50.0 million to $60.0 million.
Leverage had a positive impact on the performance of the Fund over this
reporting period.
Page 6
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PORTFOLIO COMMENTARY (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
ANNUAL REPORT
NOVEMBER 30, 2014
DISTRIBUTIONS
During the 12-month period covered by this report, the Fund announced four
regularly scheduled quarterly distributions totaling $1.40 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 (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
Against the backdrop of increased financial market volatility, declining
commodity prices and downgrades to the International Monetary Fund's global
growth forecasts, concerns about the strength and durability of global demand
have emerged. Indeed, the recent disinflationary trends in commodity prices are
being driven in part by demand-side factors, alongside traditional supply-side
influences in global markets. On balance, continuing uneven activity, low levels
of nominal income growth and ongoing structural challenges are being interpreted
by investors as portending another year of sub-potential growth.
Given the weak economic outlook and ongoing debt pressures in Europe, we expect
to continue to see further asset sales either by companies or by governments,
which may provide investment opportunities. For example, in November, Italian
electric utility company Enel sold a further stake in its Spanish subsidiary
Endesa to reduce its debt, while German utility company E.ON sold its business
in Spain and Portugal - an integrated electric utility operating in electricity
distribution, electricity generation and electricity and gas supply.
While recent months have seen an increase in overall volatility, we believe this
has created some attractively valued opportunities. Given the current level of
monetary stimulus in the global economy, the portfolio remains positioned with a
defensive bias. While we maintain a cautious stance in Europe, we have reduced
exposure over the year. We continue to have a positive view on the Pipeline
sector where we believe low risk, value-enhancing investment opportunities exist
that should drive further earnings and dividend growth.
We continue to identify what we believe are attractive global listed
infrastructure companies and are looking for opportunities to selectively
increase our holding 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.
Page 7
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 2014
SHARES DESCRIPTION VALUE
------------- ----------------------------------------------------------------------------------------- --------------
COMMON STOCKS (a) - 86.2%
AUSTRALIA - 6.4%
2,136,194 DUET Group (b)........................................................................... $ 4,453,318
735,148 Transurban Group (b)..................................................................... 5,198,198
--------------
9,651,516
--------------
BRAZIL - 2.1%
830,300 EDP - Energias do Brasil S.A............................................................. 3,171,128
--------------
CANADA - 10.5%
164,400 Inter Pipeline, Ltd. (b)................................................................. 4,711,314
264,871 Northland Power, Inc. (b)................................................................ 3,865,935
73,542 Pembina Pipeline Corp. (b)............................................................... 2,551,943
302,600 Veresen, Inc. (b)........................................................................ 4,765,917
--------------
15,895,109
--------------
CAYMAN ISLANDS - 4.2%
12,924,000 Hopewell Highway Infrastructure, Ltd. (b)................................................ 6,265,984
--------------
FRANCE - 14.4%
144,114 Electricite de France S.A. (b)........................................................... 4,314,227
63,588 Eutelsat Communications S.A. (b)......................................................... 2,102,837
460,360 GDF Suez (b)............................................................................. 11,342,850
71,942 Vinci S.A. (b)........................................................................... 3,889,132
--------------
21,649,046
--------------
GERMANY - 1.4%
90,557 Hamburger Hafen Und Logistik AG (b)...................................................... 2,062,336
--------------
HONG KONG - 2.2%
972,735 China Merchants Holdings International Co., Ltd. (b)..................................... 3,330,148
--------------
ITALY - 3.9%
231,135 Atlantia S.p.A. (b)...................................................................... 5,828,599
--------------
NETHERLANDS - 0.7%
20,734 Koninklijke Vopak N.V. (b)............................................................... 1,041,586
--------------
NEW ZEALAND - 1.3%
665,291 Auckland International Airport Ltd. (b).................................................. 2,019,828
--------------
SINGAPORE - 4.2%
9,188,000 Hutchison Port Holdings Trust (b)........................................................ 6,293,780
--------------
SPAIN - 0.7%
55,479 Endesa S.A............................................................................... 1,072,383
--------------
UNITED KINGDOM - 13.6%
1,762,899 Centrica PLC (b)......................................................................... 7,836,943
273,829 National Grid PLC (b).................................................................... 3,977,835
339,813 SSE PLC (b).............................................................................. 8,704,989
--------------
20,519,767
--------------
UNITED STATES - 20.6%
39,700 American Electric Power Co., Inc. (b).................................................... 2,284,735
35,700 CMS Energy Corp. (b)..................................................................... 1,181,670
291,500 Corrections Corp. of America (b)......................................................... 10,566,875
129,500 NiSource, Inc. (b)....................................................................... 5,418,280
44,400 PG&E Corp. (b)........................................................................... 2,242,200
49,600 Sempra Energy (b)........................................................................ 5,541,808
Page 8 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2014
SHARES/
UNITS DESCRIPTION VALUE
------------- ----------------------------------------------------------------------------------------- --------------
COMMON STOCKS (a) (CONTINUED)
UNITED STATES (CONTINUED)
47,200 Spectra Energy Corp. (b)................................................................. $ 1,787,936
40,600 Williams (The) Cos., Inc. (b)............................................................ 2,101,050
--------------
31,124,554
--------------
TOTAL COMMON STOCKS...................................................................... 129,925,764
(Cost $122,975,545) --------------
MASTER LIMITED PARTNERSHIPS (a) - 9.2%
UNITED STATES - 9.2%
92,000 Buckeye Partners, L.P. (b)............................................................... 7,072,040
28,400 Enbridge Energy Partners, L.P. (b)....................................................... 1,065,000
42,376 Energy Transfer Equity, L.P. (b)......................................................... 2,516,711
87,154 Enterprise Products Partners, L.P. (b)................................................... 3,254,330
--------------
TOTAL MASTER LIMITED PARTNERSHIPS........................................................ 13,908,081
(Cost $9,119,425) --------------
PRINCIPAL STATED
VALUE DESCRIPTION RATE (c) MATURITY (d) VALUE
------------- ------------------------------------------------------------- --------- ------------- --------------
SENIOR FLOATING-RATE LOAN INTERESTS - 37.5%
FRANCE - 2.0%
$ 1,608,462 Numericable US LLC, Dollar Denominated Tranche B-1
Loan...................................................... 4.50% 05/21/20 1,609,073
1,391,538 Numericable US LLC, Dollar Denominated Tranche B-2
Loan...................................................... 4.50% 05/21/20 1,392,067
--------------
3,001,140
--------------
LUXEMBOURG - 1.8%
2,720,263 Intelsat Jackson Holdings S.A., Term Loan B-2................ 3.75% 06/30/19 2,703,261
--------------
NETHERLANDS - 2.2%
1,324,144 UPC Broadband Holdings, B.V., Facility AH.................... 3.25% 06/30/21 1,304,282
739,574 Ziggo, B.V., Term Loan B-1................................... 3.25% 01/15/22 727,327
476,596 Ziggo, B.V., Term Loan B-2................................... 3.25%-3.50% 01/15/22 468,703
783,830 Ziggo, B.V., Term Loan B-3................................... 3.50% 01/15/22 770,850
--------------
3,271,162
--------------
UNITED STATES - 31.5%
1,580,000 Calpine Construction Finance Co., Term B-1 Loan.............. 3.00% 05/03/20 1,543,265
1,440,208 Calpine Corp., Term Loan (3/11).............................. 4.00% 04/01/18 1,437,961
483,750 Calpine Corp., Term Loan (6/11).............................. 4.00% 04/01/18 482,995
2,385,502 Cequel Communications Holdings I LLC, Term Loan.............. 3.50% 02/14/19 2,360,765
5,000,000 Charter Communications Operating LLC, Term G Loan............ 4.25% 09/12/21 5,032,400
774,317 CHS/Community Health Systems, Inc., 2017 Term E Loan......... 3.49% 01/25/17 772,575
3,063,811 CHS/Community Health Systems, Inc., 2021 Term D Loan......... 4.25% 01/27/21 3,068,591
3,210,066 Crown Castle Operating Co., Non-Extended Incremental
Tranche B Term Loan....................................... 3.00% 01/31/21 3,201,142
2,186,678 Drillships Financing Holding, Inc., Tranche B-1 Term Loan.... 6.00% 03/31/21 2,011,744
1,187,970 Dynegy, Inc., Tranche B-2 Term Loan.......................... 4.00% 04/23/20 1,183,325
1,100,000 ExGen Texas Power LLC, Term Loan............................. 5.75% 09/18/21 1,105,367
See Notes to Financial Statements Page 9
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2014
PRINCIPAL STATED
VALUE DESCRIPTION RATE (c) MATURITY (d) VALUE
------------- ------------------------------------------------------------- --------- ------------- --------------
SENIOR FLOATING-RATE LOAN INTERESTS (CONTINUED)
UNITED STATES (CONTINUED)
$ 2,000,000 Expro Holdings Ltd., Term Loan............................... 5.75% 09/02/21 $ 1,926,660
3,895,919 IASIS Healthcare Corp., Term Loan B-2........................ 4.50% 05/03/18 3,900,789
3,880,000 Level 3 Financing, Inc., Tranche B 2020 Term Loan............ 4.00% 01/15/20 3,874,180
1,500,000 Moxie Liberty LLC, Construction B-1 Advance.................. 6.75% 12/19/20 1,507,500
733,196 NRG Energy, Inc., Term Loan (2013)........................... 2.75% 07/01/18 725,498
574,500 Offshore Group Investment Ltd., Term Loan.................... 5.00% 10/25/17 508,432
1,000,000 Pacific Drilling S.A., Term Loan............................. 4.50% 06/03/18 924,580
1,450,000 Panda Liberty LLC, Construction B-1 Advance.................. 7.50% 08/21/20 1,457,250
760,000 Panda Stonewall, Term Loan B................................. 6.50% 11/12/21 767,600
1,690,000 Panda Temple Power II LLC, Construction Term Loan Advance.... 7.25% 04/03/19 1,702,675
3,055,577 Wide Open West Finance LLC, Term B Loan...................... 4.75% 04/01/19 3,046,288
2,456,250 Windstream Corp., Tranche B-4 Term Loan...................... 3.50% 01/23/20 2,439,154
2,459,921 Zayo Group LLC, Term Loan.................................... 4.00% 07/02/19 2,453,156
--------------
47,433,892
--------------
TOTAL SENIOR FLOATING-RATE LOAN INTERESTS................................................ 56,409,455
(Cost $56,863,157) --------------
TOTAL INVESTMENTS - 132.9%............................................................... 200,243,300
(Cost $188,958,127) (e)
OUTSTANDING LOAN - (38.2%)............................................................... (57,500,000)
NET OTHER ASSETS AND LIABILITIES - 5.3%.................................................. 7,927,313
--------------
NET ASSETS - 100.0%...................................................................... $ 150,670,613
==============
-----------------------------
(a) Portfolio securities are categorized based on their country of
incorporation.
(b) All or a portion of this security serves as collateral on the outstanding
loan.
(c) Senior Floating-Rate Loan Interests ("Senior Loans") in which the Fund
invests pay interest at rates which are periodically predetermined by
reference to a base lending rate plus a premium. These base lending rates
are generally (i) the lending rate offered by one or more major European
banks, such as the London Inter-Bank Offered Rate ("LIBOR"), (ii) the
prime rate offered by one or more United States banks or (iii) the
certificate of deposit rate. Certain Senior Loans are subject to a LIBOR
floor that establishes a minimum LIBOR rate. The interest rate shown
reflects the rate in effect at November 30, 2014. When a range of rates is
disclosed, the Fund holds more than one contract within the same tranche
at varying rates.
(d) Senior Loans generally are subject to mandatory and/or optional
prepayment. As a result, the actual remaining maturity of Senior Loans may
be substantially less than the stated maturities shown.
(e) Aggregate cost for federal income tax purposes is $190,937,604. As of
November 30, 2014, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$14,836,028 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$5,530,332.
Page 10 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
PORTFOLIO OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2014
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of November 30,
2014 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
INVESTMENTS 11/30/2014 PRICES INPUTS INPUTS
----------------------------------------------- ------------- ------------- ------------ ------------
Common Stocks*................................. $ 129,925,764 $ 129,925,764 $ -- $ --
Master Limited Partnerships*................... 13,908,081 13,908,081 -- --
Senior Floating-Rate Loan Interests*........... 56,409,455 -- 56,409,455 --
------------- ------------- ------------ ------------
Total Investments.............................. $ 200,243,300 $ 143,833,845 $ 56,409,455 $ --
============= ============= ============ ============
* 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 November 30, 2014.
See Notes to Financial Statements Page 11
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 2014
ASSETS:
Investments, at value
(Cost $188,958,127).......................................................................... $ 200,243,300
Cash............................................................................................ 12,075,283
Foreign currency (Cost $81,428)................................................................. 81,430
Receivables:
Dividends.................................................................................... 1,321,763
Investment securities sold................................................................... 1,008,125
Interest..................................................................................... 308,367
Prepaid expenses................................................................................ 4,939
--------------
Total Assets................................................................................. 215,043,207
--------------
LIABILITIES:
Outstanding loan................................................................................ 57,500,000
Payables:
Investment securities purchased.............................................................. 3,199,346
Distributions to Common Shareholders......................................................... 2,986,650
Investment advisory fees (includes Sub-Advisory fees of $309,267)............................ 515,445
Audit and tax fees........................................................................... 54,200
Administrative fees.......................................................................... 38,618
Custodian fees............................................................................... 31,862
Printing fees................................................................................ 17,696
Interest and fees on loan.................................................................... 13,774
Transfer agent fees.......................................................................... 5,736
Legal fees................................................................................... 3,894
Trustees' fees and expenses.................................................................. 3,057
Financial reporting fees..................................................................... 771
Other liabilities............................................................................... 1,545
--------------
Total Liabilities............................................................................ 64,372,594
--------------
NET ASSETS...................................................................................... $ 150,670,613
==============
NET ASSETS CONSIST OF:
Paid-in capital................................................................................. $ 162,040,711
Par value....................................................................................... 85,333
Accumulated net investment income (loss)........................................................ (1,079,082)
Accumulated net realized gain (loss) on investments and foreign currency transactions........... (21,578,579)
Net unrealized appreciation (depreciation) on investments and foreign currency translation...... 11,202,230
--------------
NET ASSETS...................................................................................... $ 150,670,613
==============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share)............................ $ 17.66
==============
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized)..... 8,533,285
==============
Page 12 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 2014
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $1,156,075)........................................ $ 11,409,811
Interest........................................................................................ 2,015,850
Other........................................................................................... 44,497
--------------
Total investment income...................................................................... 13,470,158
--------------
EXPENSES:
Investment advisory fees (includes Sub-Advisory fees of $1,215,496)............................. 2,025,827
Interest and fees on outstanding loan........................................................... 456,082
Administrative fees............................................................................. 200,884
Custodian fees.................................................................................. 88,718
Printing fees................................................................................... 59,055
Audit and tax fees.............................................................................. 54,868
Transfer agent fees............................................................................. 36,078
Trustees' fees and expenses..................................................................... 18,507
Legal fees...................................................................................... 10,325
Financial reporting fees........................................................................ 9,250
Other........................................................................................... 39,274
--------------
Total expenses............................................................................... 2,998,868
--------------
NET INVESTMENT INCOME (LOSS).................................................................... 10,471,290
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.................................................................................. 8,839,028
Foreign currency transactions................................................................ (466,609)
--------------
Net realized gain (loss)........................................................................ 8,372,419
--------------
Net change in unrealized appreciation (depreciation) on:
Investments.................................................................................. 1,831,367
Foreign currency translation................................................................. (116,320)
--------------
Net change in unrealized appreciation (depreciation)............................................ 1,715,047
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS)......................................................... 10,087,466
--------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $ 20,558,756
==============
See Notes to Financial Statements Page 13
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
STATEMENTS OF CHANGES IN NET ASSETS
YEAR YEAR
ENDED ENDED
11/30/2014 11/30/2013
------------ ------------
OPERATIONS:
Net investment income (loss)....................................................... $10,471,290 $ 11,032,773
Net realized gain (loss)........................................................... 8,372,419 9,804,001
Net change in unrealized appreciation (depreciation)............................... 1,715,047 (2,580,858)
------------ ------------
Net increase (decrease) in net assets resulting from operations.................... 20,558,756 18,255,916
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.............................................................. (11,946,599) (11,946,599)
------------ ------------
Total distributions to shareholders................................................ (11,946,599) (11,946,599)
------------ ------------
Total increase (decrease) in net assets............................................ 8,612,157 6,309,317
NET ASSETS:
Beginning of period................................................................ 142,058,456 135,749,139
------------ ------------
End of period...................................................................... $150,670,613 $142,058,456
============ ============
Accumulated net investment income (loss) at end of period.......................... $(1,079,082) $ 9,309
============ ============
COMMON SHARES:
Common Shares at end of period..................................................... 8,533,285 8,533,285
============ ============
Page 14 See Notes to Financial Statements
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED NOVEMBER 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations ......... $ 20,558,756
Adjustments to reconcile net increase (decrease) in net assets resulting
from operations to net cash provided by operating activities:
Purchases of investments............................................ (309,620,127)
Sales, maturities and paydowns of investments....................... 304,201,892
Return of capital received from investment in MLPs.................. 783,784
Net amortization/accretion of premiums/discounts on investments..... (25,037)
Net realized gain/loss on investments............................... (8,839,028)
Net change in unrealized appreciation/depreciation on investments... (1,831,367)
CHANGES IN ASSETS AND LIABILITIES:
Increase in interest receivable..................................... (70,543)
Increase in dividends receivable.................................... (250,029)
Decrease in prepaid expenses........................................ 845
Increase in interest and fees on loan payable....................... 8,978
Increase in investment advisory fees payable........................ 36,487
Decrease in legal fees payable...................................... (1,769)
Increase in printing fees payable................................... 95
Increase in administrative fees payable............................. 20,228
Decrease in custodian fees payable.................................. (37,951)
Increase in transfer agent fees payable............................. 2,856
Decrease in Trustees' fees and expenses payable..................... (229)
Increase in other liabilities payable............................... 1,016
---------------
CASH PROVIDED BY OPERATING ACTIVITIES.................................... $ 4,938,857
---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Common Shareholders from net investment income..... (11,946,599)
Proceeds from borrowing............................................. 10,000,000
---------------
CASH USED IN FINANCING ACTIVITIES........................................ (1,946,599)
---------------
Increase in cash and foreign currency (a)................................ 2,992,258
Cash and foreign currency at beginning of period......................... 9,164,455
---------------
CASH AND FOREIGN CURRENCY AT END OF PERIOD............................... $ 12,156,713
===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees........................ $ 447,104
===============
-----------------------------
(a) Includes net change in unrealized appreciation (depreciation) on foreign
currency of $(116,320).
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
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
11/30/2014 11/30/2013 11/30/2012 11/30/2011 11/30/2010
------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period ........... $ 16.65 $ 15.91 $ 15.12 $ 15.29 $ 14.36
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ................... 1.23 1.29 1.15 1.43 (a) 0.55
Net realized and unrealized gain (loss) ........ 1.18 0.85 1.04 (0.27) 1.06
---------- ---------- ---------- ---------- ----------
Total from investment operations ............... 2.41 2.14 2.19 1.16 1.61
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income .......................... (1.40) (1.40) (1.31) (1.40) (0.68)
Return of capital .............................. -- -- (0.09) -- --
---------- ---------- ---------- ---------- ----------
Total distributions ............................ (1.40) (1.40) (1.40) (1.40) (0.68)
---------- ---------- ---------- ---------- ----------
Capital share repurchases ...................... -- -- -- 0.07 --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ................. $ 17.66 $ 16.65 $ 15.91 $ 15.12 $ 15.29
========== ========== ========== ========== ==========
Market value, end of period .................... $ 16.97 $ 16.02 $ 14.84 $ 14.07 $ 13.82
========== ========== ========== ========== ==========
TOTAL RETURN BASED ON NET ASSET VALUE (b) ...... 14.81% 14.41% 15.35% 8.49% 12.31%
========== ========== ========== ========== ==========
TOTAL RETURN BASED ON MARKET VALUE (b) ......... 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) ........... $ 150,671 $ 142,058 $ 135,749 $ 129,056 $ 138,786
Ratio of total expenses to average net assets... 1.95% 2.08% 2.24% 2.24% 2.36%
Ratio of total expenses to average net assets...
excluding interest expense .................. 1.65% 1.70% 1.78% 1.81% 1.77%
Ratio of net investment income (loss) to
average net assets .......................... 6.81% 7.78% 7.35% 8.92% 3.68%
Portfolio turnover rate ........................ 158% 177% 144% 91% 87%
INDEBTEDNESS:
Total loan outstanding (in 000's) .............. $ 57,500 $ 47,500 $ 47,500 $ 47,500 $ 44,500
Asset coverage per $1,000 of indebtedness (c)... $ 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) 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)
NOVEMBER 30, 2014
1. ORGANIZATION
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
(the "Fund") is a non-diversified, closed-end management investment company
organized as a Massachusetts business trust on January 21, 2004 and is
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Fund trades under the
ticker symbol MFD on the New York Stock Exchange ("NYSE").
The Fund's investment objective is to seek a high level of current return
consisting of dividends, interest and other similar income while attempting to
preserve capital. In pursuit of this objective, the Fund seeks to manage its
investments and expenses so that a portion of its distributions to the Fund's
Common Shareholders will qualify as tax-advantaged dividends, subject to the
continued availability of favorable tax treatment for such qualifying dividends.
The Fund seeks to achieve its investment objective by investing in a
non-diversified portfolio of equity, debt, preferred or convertible securities
and other instruments (for instance, other instruments could include Canadian
income trusts and Australian stapled securities) issued by U.S. and non-U.S.
issuers that have as their primary focus (in terms of income and/or assets) the
management, ownership and/or operation of infrastructure and utilities assets in
a select group of countries. There can be no assurance that the Fund will
achieve its investment objective. The Fund may not be appropriate for all
investors.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP") requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
A. PORTFOLIO VALUATION:
The net asset value ("NAV") of the Common Shares of the Fund is determined daily
as of the close of regular trading on the NYSE, normally 4:00 p.m. Eastern time,
on each day the NYSE is open for trading. If the NYSE closes early on a
valuation day, the NAV is determined as of that time. Domestic debt securities
and foreign securities are priced using data reflecting the earlier closing of
the principal markets for those securities. The NAV per Common Share is
calculated by dividing the value of all assets of the Fund (including accrued
interest and dividends), less all liabilities (including accrued expenses,
dividends declared but unpaid and any borrowings of the Fund) by the total
number of Common Shares outstanding.
The Fund's investments are valued daily at market value or, in 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.
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
Page 17
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014
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;
2) an evaluation of the forces which influence the market in which
these securities are purchased and sold;
3) the type, size and cost of the security;
4) the financial statements of the issuer;
5) the credit quality and cash flow of the issuer, based on the
sub-advisor's or external analysis;
6) the information as to any transactions in or offers for the
security;
7) the price and extent of public trading in similar securities (or
equity securities) of the issuer/borrower, or comparable companies;
8) the coupon payments;
9) the quality, value and salability of collateral, if any, securing
the security;
10) the business prospects of the issuer, including any ability to
obtain money or resources from a parent or affiliate and an
assessment of the issuer's management;
-------------------
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)
NOVEMBER 30, 2014
11) the prospects for the issuer's industry, and multiples (of earnings
and/or cash flows) being paid for similar businesses in that
industry;
12) borrower's/issuer's competitive position within the industry;
13) borrower's/issuer's ability to access additional liquidity through
public and/or private markets; and
14) other relevant factors.
The Fund is subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or methodology used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value the Fund's investments as of November 30, 2014, is
included with the Fund's Portfolio of Investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
daily on the accrual basis. Market premiums and discounts are amortized over the
expected life of each respective borrowing.
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 year ended November 30, 2014, distributions of $783,784 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 November 30,
2014, the Fund had no when-issued, delayed-delivery or forward purchase
commitments.
C. UNFUNDED LOAN COMMITMENTS:
The Fund may enter into certain credit agreements, all or a portion of which may
be unfunded. The Fund is obligated to fund these loan commitments at the
borrower's discretion. The Fund did not have any unfunded delayed draw loan
commitments as of November 30, 2014.
D. FOREIGN CURRENCY:
The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period.
Purchases and sales of investments and items of income and expense are
translated on the respective dates of such transactions. Unrealized gains and
losses on assets and liabilities, other than investments in securities, which
result from changes in foreign currency exchange rates have been included in
"Net change in unrealized appreciation (depreciation) on foreign currency
translation" on the Statement of Operations. Unrealized gains and losses on
investments in securities which result from changes in foreign exchange rates
are included with fluctuations arising from changes in market price and are
shown in "Net change in unrealized appreciation (depreciation) on investments"
on the Statement of Operations. Net realized foreign currency gains and losses
include the effect of changes in exchange rates between trade date and
settlement date on investment security transactions, foreign currency
Page 19
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014
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. Permanent differences
incurred during the tax year ended November 30, 2014, primarily as a result of
distributions in excess of current year taxable income, have been reclassified
at year end to reflect an increase in accumulated net investment income (loss)
of $386,918, an increase in accumulated net realized gain (loss) on investments
and foreign currency transactions of $927,988 and a decrease to paid-in capital
of $1,314,906. Net assets were not affected by this reclassification.
The tax character of distributions paid during the fiscal year ended November
30, 2014 and November 30, 2013 was as follows:
Distributions paid from: 2014 2013
Ordinary income................................... $ 11,946,599 $ 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 as follows:
EXPIRATION DATE AMOUNT
December 31, 2017 $ 17,691,534
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.
Page 20
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014
The Fund is subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ended 2011, 2012,
2013 and 2014 remain open to federal and state audit. As of November 30, 2014,
management has evaluated the application of these standards to the Fund and has
determined that no provision for income tax is required in the Fund's financial
statements for uncertain tax positions.
G. EXPENSES:
The Fund will pay all expenses directly related to its operations.
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust, the investment advisor to the Fund, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. The Charger Corporation is an Illinois corporation
controlled by James A. Bowen, Chief Executive Officer of First Trust. First
Trust is responsible for the ongoing monitoring of the Fund's investment
portfolio, managing the Fund's business affairs and providing certain
administrative services necessary for the management of the Fund. For these
investment management services, First Trust is entitled to a quarterly fee
calculated at an annual rate of 0.40% of the Fund's Total Assets up to and
including $250 million and 0.35% of the Fund's Total Assets over $250 million.
Total Assets are generally defined as average daily total asset value of the
Fund minus the sum of the Fund's liabilities other than the principal amount of
borrowings. First Trust also provides fund reporting services to the Fund for a
flat annual fee in the amount of $9,250.
Macquarie Capital Investment Management LLC ("MCIM") and Four Corners Capital
Management, LLC ("Four Corners") serve as the Fund's sub-advisors and manage the
Fund's portfolio subject to First Trust's supervision. MCIM manages the Core
Component which consists primarily of equity securities and equity-like
securities issued by infrastructure issuers and, for its portfolio management
services, MCIM is entitled to a quarterly fee calculated at an annual rate of
0.60% for that portion of the Fund's Total Assets allocated to MCIM. If the
Fund's Total Assets are greater than $250 million, MCIM receives an annual
portfolio management fee of 0.65% for that portion of the Fund's Total Assets
over $250 million. Four Corners manages the Senior Loan Component and, for its
portfolio management services, Four Corners is entitled to a quarterly fee
calculated at an annual rate of 0.60% for that portion of the Fund's Total
Assets allocated to Four Corners.
BNY Mellon Investment Servicing (US) Inc. ("BNYM IS") serves as the Fund's
administrator, fund accountant and transfer agent in accordance with certain fee
arrangements. As administrator and fund accountant, BNYM IS is responsible for
providing certain administrative and accounting services to the Fund, including
maintaining the Fund's books of account, records of the Fund's securities
transactions, and certain other books and records. As transfer agent, BNYM IS is
responsible for maintaining shareholder records for the Fund. The Bank of New
York Mellon ("BNYM") serves as the Fund's custodian in accordance with certain
fee arrangements. As custodian, BNYM is responsible for custody of the Fund's
assets.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated pro rata among each fund in the First Trust Fund
Complex based on net assets. Each Independent Trustee is also paid an annual per
fund fee that varies based on whether the fund is a closed-end or other actively
managed fund, or is an index fund.
Additionally, the Lead Independent Trustee and the Chairmen of the Audit
Committee, Nominating and Governance Committee and Valuation Committee are paid
annual fees to serve in such capacities, with such compensation allocated pro
rata among each fund in the First Trust Fund Complex based on net assets.
Trustees are reimbursed for travel and out-of-pocket expenses in connection with
all meetings. The Lead Independent Trustee and Committee Chairmen rotate every
three years. The officers and "Interested" Trustee receive no compensation from
the Fund for acting in such capacities.
For the year ended November 30, 2014, the Fund paid brokerage commissions to
Macquarie Capital (USA) Inc., an affiliate of MCIM and Four Corners, totaling
$79,866.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investments, excluding short-term
investments, for the year ended November 30, 2014, were $311,610,473 and
$304,235,727, respectively.
5. BORROWINGS
The Fund entered into a Committed Facility Agreement with BNP Paribas Prime
Brokerage Inc. (the "BNP Paribas Facility"), which provides for a committed
credit facility to be used as leverage for the Fund. The BNP Paribas Facility
provides for a secured, committed, line of credit for the Fund, where Fund
assets are pledged against advances made to the Fund. Under the requirements of
the 1940 Act, the Fund, immediately after any such borrowings, must have "asset
coverage" of at least 300% (33-1/3% of the Fund's total assets after
borrowings). Absent certain events of default or failure to maintain certain
collateral requirements, BNP Paribas Prime Brokerage Inc. ("BNP") may not
terminate the BNP Paribas Facility except upon 180 calendar days' prior notice.
The interest rate under the BNP Paribas Facility is equal to 1-month LIBOR plus
70 basis points. Prior to September 25, 2014, the Fund paid a commitment fee of
0.85% on the undrawn amount of the BNP Paribas Facility. Effective September 25,
2014, the BNP Paribas Facility was amended so that (i) the total amount of loans
that may be outstanding at any one time under the BNP Paribas Facility is
$60,000,000 and (ii) the Fund only pays a commitment fee when the outstanding
debt is less than 80% of the maximum commitment amount.
Page 21
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014
For the year ended November 30, 2014, the daily average amount outstanding under
the BNP Paribas Facility was $48,863,014. As of November 30, 2014, the Fund had
outstanding borrowings of $57,500,000. The high and low annual interest rates
for the year ended November 30, 2014, were 0.87% and 0.85%, respectively, and
the weighted average interest rate was 0.86%. The interest rate at November 30,
2014, was 0.86%.
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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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF MACQUARIE/FIRST TRUST GLOBAL
INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND:
We have audited the accompanying statement of assets and liabilities of
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
(the "Fund"), including the portfolio of investments, as of November 30, 2014,
and the related statements of operations and cash flows for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods presented.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of November 30, 2014 by correspondence with the Fund's
custodian, brokers, and agent banks; where replies were not received, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund as
of November 30, 2014, and the results of its operations and its cash flows for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States of America.
/s/ Deloitte & Touche LLP
Chicago, Illinois
January 22, 2015
Page 23
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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014 (UNAUDITED)
DIVIDEND REINVESTMENT PLAN
If your Common Shares are registered directly with the Fund or if you hold your
Common Shares with a brokerage firm that participates in the Fund's Dividend
Reinvestment Plan (the "Plan"), unless you elect, by written notice to the Fund,
to receive cash distributions, all dividends, including any capital gain
distributions, on your Common Shares will be automatically reinvested by BNY
Mellon Investment Servicing (US) Inc. (the "Plan Agent"), in additional Common
Shares under the Plan. If you elect to receive cash distributions, you will
receive all distributions in cash paid by check mailed directly to you by the
Plan Agent, as the dividend paying agent.
If you decide to participate in the Plan, the number of Common Shares you will
receive will be determined as follows:
(1) If Common Shares are trading at or above net asset value ("NAV") at
the time of valuation, the Fund will issue new shares at a price
equal to the greater of (i) NAV per Common Share on that date or
(ii) 95% of the market price on that date.
(2) If Common Shares are trading below NAV at the time of valuation, the
Plan Agent will receive the dividend or distribution in cash and
will purchase Common Shares in the open market, on the NYSE or
elsewhere, for the participants' accounts. It is possible that the
market price for the Common Shares may increase before the Plan
Agent has completed its purchases. Therefore, the average purchase
price per share paid by the Plan Agent may exceed the market price
at the time of valuation, resulting in the purchase of fewer shares
than if the dividend or distribution had been paid in Common Shares
issued by the Fund. The Plan Agent will use all dividends and
distributions received in cash to purchase Common Shares in the open
market within 30 days of the valuation date except where temporary
curtailment or suspension of purchases is necessary to comply with
federal securities laws. Interest will not be paid on any uninvested
cash payments.
You may elect to opt-out of or withdraw from the Plan at any time by giving
written notice to the Plan Agent, or by telephone at (866) 340-1104, in
accordance with such reasonable requirements as the Plan Agent and the Fund may
agree upon. If you withdraw or the Plan is terminated, you will receive a
certificate for each whole share in your account under the Plan, and you will
receive a cash payment for any fraction of a share in your account. If you wish,
the Plan Agent will sell your shares and send you the proceeds, minus brokerage
commissions.
The Plan Agent maintains all Common Shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. Common Shares in your account will be held by the
Plan Agent in non-certificated form. The Plan Agent will forward to each
participant any proxy solicitation material and will vote any shares so held
only in accordance with proxies returned to the Fund. Any proxy you receive will
include all Common Shares you have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or distributions
in Common Shares. However, all participants will pay a pro rata share of
brokerage commissions incurred by the Plan Agent when it makes open market
purchases.
Automatically reinvesting dividends and distributions does not mean that you do
not have to pay income taxes due upon receiving dividends and distributions.
Capital gains and income are realized although cash is not received by you.
Consult your financial advisor for more information.
If you hold your Common Shares with a brokerage firm that does not participate
in the Plan, you will not be able to participate in the Plan and any dividend
reinvestment may be effected on different terms than those described above.
The Fund reserves the right to amend or terminate the Plan if in the judgment of
the Board of Trustees the change is warranted. There is no direct service charge
to participants in the Plan; however, the Fund reserves the right to amend the
Plan to include a service charge payable by the participants. Additional
information about the Plan may be obtained by writing BNY Mellon Investment
Servicing (US) Inc., 301 Bellevue Parkway, Wilmington, Delaware 19809.
--------------------------------------------------------------------------------
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Fund uses to determine how
to vote proxies and information on how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
the Fund's website located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's ("SEC") website at http://www.sec.gov.
Page 24
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014 (UNAUDITED)
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available (1) by calling (800) 988-5891; (2) on the Fund's website located
at http://www.ftportfolios.com; (3) on the SEC's website at http://www.sec.gov;
and (4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling (800) SEC-0330.
NYSE CERTIFICATION INFORMATION
In accordance with Section 303A-12 of the New York Stock Exchange ("NYSE")
Listed Company Manual, the Fund's President has certified to the NYSE that, as
of April 28, 2014, he was not aware of any violation by the Fund of NYSE
corporate governance listing standards. In addition, the Fund's reports to the
SEC on Forms N-CSR, N-CSRS and N-Q contain certifications by the Fund's
principal executive officer and principal financial officer that relate to the
Fund's public disclosure in such reports and are required by Rule 30a-2 under
the 1940 Act.
TAX INFORMATION
Of the ordinary income (including short-term capital gain) distributions made by
the Fund during the year ended November 30, 2014, 5.17% qualify for the
corporate dividends received deduction available to corporate shareholders.
The Fund hereby designates as qualified dividend income 42.69% of the ordinary
income distributions for the year ended November 30, 2014.
Since the Fund met the requirements of Section 853 of the Code, the fund hereby
elects to pass through to its shareholders credits for foreign taxes paid. The
total per share amount of income received by the Fund from sources within
foreign countries and possessions of the United States is $1.17 (representing a
total of $9,971,230). The total amount of taxes paid to such countries is $0.11
per share (representing a total of $978,645) for the year ended November 30,
2014.
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 (formerly First Trust Active Dividend
Income Fund), First Trust High Income Long/Short Fund, First Trust Energy
Infrastructure Fund, First Trust MLP and Energy Income Fund and First Trust
Intermediate Duration Preferred & Income Fund was held on April 23, 2014 (the
"Annual Meeting"). At the Annual Meeting, Trustee Robert Keith was elected by
the Common Shareholders of the Macquarie/First Trust Global
Infrastructure/Utilities Dividend & Income Fund as a Class I Trustee for a
three-year term expiring at the Fund's annual meeting of shareholders in 2017.
The number of votes cast in favor of Mr. Keith was 7,096,804, the number of
votes against was 258,127 and the number of broker non-votes was 1,178,354.
James A. Bowen, Richard E. Erickson, Thomas R. Kadlec and Niel B. Nielson are
the other current and continuing Trustees.
RISK CONSIDERATIONS
Risks are inherent in all investing. The following summarizes some, but not all,
of the risks that should be considered for the Fund. For additional information
about the risks associated with investing in the Fund, please see the Fund's
prospectus and statement of additional information, as well as other Fund
regulatory filings.
INVESTMENT AND MARKET RISK: An investment in the Fund's Common Shares is subject
to investment risk, including the possible loss of the entire principal
invested. An investment in Common Shares represents an indirect investment in
the securities owned by the Fund. The value of these securities, like other
market investments, may move up or down, sometimes rapidly and unpredictably.
Common Shares at any point in time may be worth less than the original
investment, even after taking into account the reinvestment of Fund dividends
and distributions. Security prices can fluctuate for several reasons including
the general condition of the securities markets, or when political or economic
events affecting the issuers occur. When the Advisor or Sub-Advisor determines
that it is temporarily unable to follow the Fund's investment strategy or that
it is impractical to do so (such as when a market disruption event has occurred
and trading in the securities is extremely limited or absent), the Fund may take
temporary defensive positions.
Page 25
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ADDITIONAL INFORMATION (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014 (UNAUDITED)
LEVERAGE RISK: The use of leverage results in additional risks and can magnify
the effect of any losses. If the income and gains from the securities and
investments purchased with such proceeds do not cover the cost of leverage, the
Common Shares' return will be less than if leverage had not been used. The funds
borrowed pursuant to a leverage borrowing program constitute a substantial lien
and burden by reason of their prior claim against the income of the Fund and
against the net assets of the Fund in liquidation. The rights of lenders to
receive payments of interest on and repayments of principal on any borrowings
made by the Fund under a leverage borrowing program are senior to the rights of
holders of Common Shares upon liquidation. If the Fund is not in compliance with
certain credit facility provisions, the Fund may not be permitted to declare
dividends or other distributions, including dividends and distributions with
respect to Common Shares or purchase Common Shares. The use of leverage by the
Fund increases the likelihood of greater volatility of NAV and market price of
the Common Shares. Leverage also increases the risk that fluctuations in
interest rates on borrowings and short-term debt that the Fund may pay will
reduce the return to the Common Shareholders or will result in fluctuations in
the dividends paid on the Common Shares.
MLP RISK: An investment in MLP units involves risks which differ from an
investment in common stock of a corporation. Holders of MLP units have limited
control and voting rights on matters affecting the partnership. In addition,
there are certain tax risks associated with an investment in MLP units and
conflicts of interest exist between common unit holders and the general partner,
including those arising from incentive distribution payments.
NON-U.S. RISK: The Fund may invest a portion of its assets in the equity
securities of issuers domiciled in jurisdictions other than the U.S. Investments
in the securities and instruments of non-U.S. issuers involve certain
considerations and risks not ordinarily associated with investments in
securities and instruments of U.S. issuers. Non-U.S. companies are not generally
subject to uniform accounting, auditing and financial standards and requirements
comparable to those applicable to U.S. companies. Non-U.S. securities exchanges,
brokers and listed companies may be subject to less government supervision and
regulation than exists in the United States. Dividend and interest income may be
subject to withholding and other non-U.S. taxes, which may adversely affect the
net return on such investments. A related risk is that there may be difficulty
in obtaining or enforcing a court judgment abroad.
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.
Page 26
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014 (UNAUDITED)
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.
BOARD CONSIDERATIONS REGARDING APPROVAL OF INVESTMENT MANAGEMENT AND
INVESTMENT SUB-ADVISORY AGREEMENTS
The Board of Trustees of Macquarie/First Trust Global Infrastructure/Utilities
Dividend & Income Fund (the "Fund"), including the Independent Trustees,
unanimously approved the continuation of the Investment Management Agreement
(the "Advisory Agreement") between the Fund and First Trust Advisors L.P. (the
"Advisor"), the Investment Sub-Advisory Agreement (the "Macquarie Sub-Advisory
Agreement") among the Fund, the Advisor and Macquarie Capital Investment
Management LLC ("Macquarie") and the Investment Sub-Advisory Agreement (the
"Four Corners Sub-Advisory Agreement" and together with the Macquarie
Sub-Advisory Agreement, the "Sub-Advisory Agreements") among the Fund, the
Advisor and Four Corners Capital Management, LLC ("Four Corners"), at a meeting
held on June 8-9, 2014. Macquarie and Four Corners are each referred to herein
as a "Sub-Advisor" and collectively as the "Sub-Advisors." The Sub-Advisory
Agreements are referred to herein together with the Advisory Agreement as the
"Agreements." The Board of Trustees determined that the continuation of the
Agreements is in the best interests of the Fund in light of the extent and
quality of the services provided and such other matters as the Board considered
to be relevant in the exercise of its reasonable business judgment.
To reach this determination, the Board considered its duties under the
Investment Company Act of 1940, as amended (the "1940 Act"), as well as under
the general principles of state law in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. To assist the Board in its evaluation of the Agreements, the
Independent Trustees received a separate report from the Advisor and each of the
Sub-Advisors in advance of the Board meeting responding to a request for
information from counsel to the Independent Trustees. The reports, among other
things, outlined the services provided by the Advisor and the Sub-Advisors
(including the relevant personnel responsible for these services and their
experience); the advisory and sub-advisory fees for the Fund as compared to fees
charged to other clients of the Advisor and the Sub-Advisors and as compared to
fees charged by investment advisors and sub-advisors to comparable funds;
expenses of the Fund as compared to expense ratios of comparable funds; the
nature of expenses incurred in providing services to the Fund and the potential
for economies of scale, if any; financial data on the Advisor and the
Sub-Advisors; any fall-out benefits to the Advisor and the Sub-Advisors; and
information on the Advisor's and the Sub-Advisors' compliance programs.
Following receipt of this information, counsel to the Independent Trustees posed
follow-up questions to the Advisor, and the Independent Trustees and their
counsel met separately to discuss the information provided by the Advisor and
the Sub-Advisors, including the supplemental responses. The Board applied its
business judgment to determine whether the arrangements between the Fund and the
Advisor and among the Fund, the Advisor and each Sub-Advisor are reasonable
business arrangements from the Fund's perspective as well as from the
perspective of shareholders. The Board considered that shareholders chose to
invest or remain invested in the Fund knowing that the Advisor and the
Sub-Advisors manage the Fund.
In reviewing the Agreements, the Board considered the nature, extent and quality
of services provided by the Advisor and the Sub-Advisors under the Agreements.
The Board considered the Advisor's statements regarding the incremental benefits
associated with the Fund's advisor/sub-advisor management structure. With
respect to the Advisory Agreement, the Board considered that the Advisor is
responsible for the overall management and administration of the Fund and
reviewed the services provided by the Advisor to the Fund, including the
oversight of the Sub-Advisors. The Board noted the compliance program that had
been developed by the Advisor and considered that it includes a robust program
for monitoring the Sub-Advisors' compliance with the 1940 Act and the Fund's
investment objective and policies. With respect to the Sub-Advisory Agreements,
the Board noted the background and experience of each of Macquarie's and Four
Corners' portfolio management teams. The Board reviewed materials provided by
Page 27
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ADDITIONAL INFORMATION (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014 (UNAUDITED)
Macquarie and Four Corners and considered the services that Macquarie and Four
Corners provide to the Fund, including each Sub-Advisor's day to day management
of the portion of the Fund's assets allocated to it. In light of the information
presented and the considerations made, the Board concluded that the nature,
extent and quality of services provided to the Fund by the Advisor and the
Sub-Advisors under the Agreements have been and are expected to remain
satisfactory and that each Sub-Advisor, under the oversight of the Advisor, has
managed the Fund consistent with its investment objective and policies.
The Board considered the advisory and sub-advisory fees paid under the
Agreements. The Board considered the advisory fees charged by the Advisor to
similar funds and other non fund clients, noting that the Advisor does not
provide advisory services to other funds with investment objectives and policies
similar to the Fund's, but does provide services to certain separately managed
accounts that may have investment objectives and policies similar to the Fund's.
The Board noted that the Fund's advisory fee rate is different than the advisory
fee rate charged to the separately managed accounts, as well as the Advisor's
statement that the nature of the services provided to the separately managed
accounts is not comparable to those provided to the Fund. The Board considered
the sub-advisory fees and how they relate to the Fund's overall advisory fee
structure. The Board also considered information provided by the Sub-Advisors as
to the fees they charge to other clients, noting that Four Corners does not
charge a lower fee to any other client for which it provides comparable services
and that Macquarie provides advisory services to a similar closed end fund and a
similar open end fund at higher fee rates than are charged to the Fund. In
addition, the Board reviewed data prepared by Lipper Inc. ("Lipper"), an
independent source, showing the advisory fees and expense ratios of the Fund as
compared to the advisory fees and expense ratios of an expense peer group
selected by Lipper and similar data from the Advisor for a separate peer group
selected by the Advisor. The Board noted that the Lipper and Advisor peer groups
included only one overlapping peer fund. The Board discussed with
representatives of the Advisor the limitations in creating a relevant peer group
for the Fund, including that (i) the Fund is unique in its composition, which
makes assembling peers with similar strategies and asset mix difficult; (ii)
peer funds may use different amounts and types of leverage which have different
costs associated with them or may use no leverage; (iii) most peer funds do not
employ an advisor/sub-advisor management structure; and (iv) many of the peer
funds are larger than the Fund, which causes the Fund's fixed expenses to be
higher on a percentage basis as compared to the larger peer funds. The Board
took these limitations into account in considering the peer data. The Board
noted that Lipper changed the category in which it classified the Fund from
Global Funds to Utility Funds between 2013 and 2014. In reviewing the peer data,
the Board noted that the Fund's contractual advisory fee was equal to the median
of the Lipper peer group.
The Board also considered performance information for the Fund, noting that the
performance information included the Fund's quarterly performance report, which
is part of the process that the Board has established for monitoring the Fund's
performance and portfolio risk on an ongoing basis. The Board determined that
this process continues to be effective for reviewing the Fund's performance. In
addition to the Board's ongoing review of performance, the Board also received
data prepared by Lipper comparing the Fund's performance to a performance peer
universe selected by Lipper and to a blended benchmark. In reviewing the Fund's
performance as compared to the performance of the Lipper performance peer
universe, the Board took into account the limitations described above with
respect to creating a relevant peer group for the Fund. The Board also
considered the Fund's dividend yield as of March 31, 2014 and information
provided by the Advisor on the Fund's leverage, including that leverage was
accretive to the Fund's total return in 2013. In addition, the Board compared
the Fund's premium/discount over the past eight quarters to the average and
median premium/discount of the Advisor peer group over the same period and
considered factors that may impact a fund's premium/discount.
On the basis of all the information provided on the fees, expenses and
performance of the Fund, the Board concluded that the advisory and sub-advisory
fees were reasonable and appropriate in light of the nature, extent and quality
of services provided by the Advisor and Sub-Advisors under the Agreements.
The Board noted that the Advisor has continued to invest in personnel and
infrastructure and considered whether fee levels reflect any economies of scale
for the benefit of shareholders. The Board determined that due to the Fund's
closed end structure, the potential for realization of economies of scale as
Fund assets grow was not a material factor to be considered. The Board also
considered the costs of the services provided and profits realized by the
Advisor from serving as investment advisor to the Fund for the 12 months ended
December 31, 2013, as well as product-line profitability data for the same
period, as set forth in the materials provided to the Board. The Board noted the
inherent limitations in the profitability analysis, and concluded that the
Advisor's estimated profitability appeared to be not excessive in light of the
services provided to the Fund. In addition, the Board considered fall-out
benefits described by the Advisor that may be realized from its relationship
with the Fund, including the Advisor's compensation for fund reporting services
pursuant to a separate Fund Reporting Services Agreement.
The Board considered that Macquarie's investment services expenses are generally
fixed. The Board considered Macquarie's statement that no economies of scale
were realized in 2013 in providing services to the Fund. The Board considered
that the sub-advisory fee rate was negotiated at arm's length between the
Advisor and Macquarie, an unaffiliated third party. The Board also considered
data provided by Macquarie as to its profitability with respect to the Fund. The
Board noted the inherent limitations in the profitability analysis and concluded
that the profitability analysis for the Advisor was more relevant, although the
profitability to Macquarie of the Macquarie Sub-Advisory Agreement appeared to
Page 28
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014 (UNAUDITED)
be not excessive in light of the services provided to the Fund. The Board
considered the fall-out benefits realized by Macquarie from its relationship
with the Fund, including soft dollar arrangements, and considered a summary of
such arrangements, noting that the soft dollar payments were in line with
Macquarie's other clients.
The Board considered that Four Corners' investment services expenses are both
fixed and variable. The Board considered that the sub-advisory fee rate was
negotiated at arm's length between the Advisor and Four Corners, an unaffiliated
third party. The Board also considered data provided by Four Corners with
respect to the profitability of the Sub-Advisory Agreement to Four Corners and
concluded that the profitability analysis for the Advisor was more relevant,
although the profitability to Four Corners of the Four Corners Sub-Advisory
Agreement appeared to be not unreasonable. The Board noted that Four Corners
does not maintain any soft dollar arrangements and that Four Corners did not
indicate any material fall-out benefits from its relationship to the Fund.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, unanimously determined that the terms
of the Agreements continue to be fair and reasonable and that the continuation
of the Agreements is in the best interests of the Fund. No single factor was
determinative in the Board's analysis.
Page 29
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BOARD OF TRUSTEES AND OFFICERS
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014 (UNAUDITED)
NUMBER OF OTHER
PORTFOLIOS IN TRUSTEESHIPS OR
THE FIRST TRUST DIRECTORSHIPS
NAME, ADDRESS, TERM OF OFFICE FUND COMPLEX HELD BY TRUSTEE
DATE OF BIRTH AND AND LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY DURING PAST
POSITION WITH THE FUND SERVICE (1) DURING PAST 5 YEARS TRUSTEE 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
------------------------------------------------------------------------------------------------------------------------------------
Richard E. Erickson, Trustee o Three-Year Term Physician; President, Wheaton Orthopedics; 114 None
c/o First Trust Advisors L.P. Limited Partner, Gundersen Real Estate
120 East Liberty Drive, o Since Fund Limited Partnership; Member Sportsmed
Suite 400 Inception LLC
Wheaton, IL 60187
D.O.B.: 04/51
Thomas R. Kadlec, Trustee o Three-Year Term President (March 2010 to Present), Senior 114 Director of ADM
c/o First Trust Advisors L.P. Vice President and Chief Financial Officer Investor Services,
120 East Liberty Drive, o Since Fund (May 2007 to March 2010), ADM Investor Inc., ADM
Suite 400 Inception Services, Inc. (Futures Commission Investor Services
Wheaton, IL 60187 Merchant International, and
D.O.B.: 11/57 Futures Industry
Association
Robert F. Keith, Trustee o Three-Year Term President (2003 to Present), Hibs 114 Director of Trust
c/o First Trust Advisors L.P. Enterprises (Financial and Management Company of
120 East Liberty Drive, o Since June 2006 Consulting) Illinois
Suite 400
Wheaton, IL 60187
D.O.B.: 11/56
Niel B. Nielson, Trustee o Three-Year Term Managing Director and Chief Operating 114 Director of
c/o First Trust Advisors L.P. Officer (January 2015 to Present), Pelita Covenant
120 East Liberty Drive, o Since Fund Harapan Educational Foundation (Educational Transport, Inc.
Suite 400 Inception Products and Services); President and Chief (May 2003 to
Wheaton, IL 60187 Executive Officer (June 2012 to September May 2014)
D.O.B.: 03/54 2014), Servant Interactive LLC (Educational
Products and Services); President and Chief
Executive Officer (June 2012 to September
2014), Dew Learning LLC (Educational
Products and Services); President (June 2002
to June 2012), Covenant College
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
James A. Bowen(2), Trustee and o Three-Year Term Chief Executive Officer (December 2010 114 None
Chairman of the Board to Present), President (until December
120 East Liberty Drive, o Since Fund 2010), First Trust Advisors L.P. and First
Suite 400 Inception Trust Portfolios L.P.; Chairman of the
Wheaton, IL 60187 Board of Directors, BondWave LLC
D.O.B.: 09/55 (Software Development Company/
Investment Advisor) and Stonebridge
Advisors LLC (Investment Advisor)
-------------------
(1) Currently, Richard E. Erickson and Thomas R. Kadlec, as Class II Trustees,
are serving as trustees until the Fund's 2015 annual meeting of
shareholders. James A. Bowen and Niel B. Nielson, as Class III Trustees,
are serving as trustees until the Fund's 2016 annual meeting of
shareholders. Robert F. Keith, as a Class I Trustee, is serving as a
trustee until the Fund's 2017 annual meeting of shareholders.
(2) Mr. Bowen is deemed an "interested person" of the Fund due to his position
as Chief Executive Officer of First Trust Advisors L.P., investment
advisor of the Fund.
Page 30
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BOARD OF TRUSTEES AND OFFICERS (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014 (UNAUDITED)
NAME, ADDRESS POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS(3)
------------------------------------------------------------------------------------------------------------------------------------
Mark R. Bradley President and Chief o Indefinite Term Chief Operating Officer (December 2010 to Present)
120 E. Liberty Drive, Executive Officer and Chief Financial Officer, First Trust Advisors
Suite 400 o Since January 2012 L.P. and First Trust Portfolios L.P.; Chief Financial
Wheaton, IL 60187 Officer, BondWave LLC (Software Development
D.O.B.: 11/57 Company/Investment Advisor) and Stonebridge
Advisors LLC (Investment Advisor)
James M. Dykas Treasurer, Chief Financial o Indefinite Term Controller (January 2011 to Present), Senior Vice
120 E. Liberty Drive, Officer and Chief President (April 2007 to Present), First Trust
Suite 400 Accounting Officer o Since January 2012 Advisors L.P. and First Trust Portfolios L.P.
Wheaton, IL 60187
D.O.B.: 01/66
W. Scott Jardine Secretary and Chief Legal o Indefinite Term General Counsel, First Trust Advisors L.P. and
120 E. Liberty Drive, Officer First Trust Portfolios L.P.; Secretary and
Suite 400 o Since Fund Inception General Counsel, BondWave LLC (Software
Wheaton, IL 60187 Development Company/Investment Advisor);
D.O.B.: 05/60 Secretary of Stonebridge Advisors LLC
(Investment Advisor)
Daniel J. Lindquist Vice President o Indefinite Term Managing Director (July 2012 to Present),
120 E. Liberty Drive, Senior Vice President (September 2005 to July
Suite 400 o Since Fund Inception 2012), First Trust Advisors L.P. and First Trust
Wheaton, IL 60187 Portfolios L.P.
D.O.B.: 02/70
Kristi A. Maher Chief Compliance Officer o Indefinite Term Deputy General Counsel, First Trust Advisors L.P.
120 E. Liberty Drive, and Assistant Secretary and First Trust Portfolios L.P.
Suite 400 o Chief Compliance
Wheaton, IL 60187 Officer Since
D.O.B.: 12/66 January 2011
o Assistant Secretary
Since Fund Inception
-------------------
(3) Officers of the Fund have an indefinite term. The term "officer" means the
president, vice president, secretary, treasurer, controller or any other
officer who performs a policy making function.
Page 31
--------------------------------------------------------------------------------
PRIVACY POLICY
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
(MFD)
NOVEMBER 30, 2014 (UNAUDITED)
PRIVACY POLICY
First Trust values our relationship with you and considers your privacy an
important priority in maintaining that relationship. We are committed to
protecting the security and confidentiality of your personal information.
SOURCES OF INFORMATION
We collect nonpublic personal information about you from the following sources:
o Information we receive from you and your broker-dealer, investment
advisor or financial representative through interviews,
applications, agreements or other forms;
o Information about your transactions with us, our affiliates or
others;
o Information we receive from your inquiries by mail, e-mail or
telephone; and
o Information we collect on our website through the use of "cookies".
For example, we may identify the pages on our website that your
browser requests or visits.
INFORMATION COLLECTED
The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.
DISCLOSURE OF INFORMATION
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. In addition to using
this information to verify your identity (as required under law), the permitted
uses may also include the disclosure of such information to unaffiliated
companies for the following reasons:
o In order to provide you with products and services and to effect
transactions that you request or authorize, we may disclose your
personal information as described above to unaffiliated financial
service providers and other companies that perform administrative or
other services on our behalf, such as transfer agents, custodians
and trustees, or that assist us in the distribution of investor
materials such as trustees, banks, financial representatives, proxy
services, solicitors and printers.
o We may release information we have about you if you direct us to do
so, if we are compelled by law to do so, or in other legally limited
circumstances (for example to protect your account from fraud).
In addition, in order to alert you to our other financial products and services,
we may share your personal information within First Trust.
PRIVACY ONLINE
We allow third-party companies, including AddThis (a social media sharing
service), to collect certain anonymous information when you visit our website.
These companies may use non-personally identifiable information during your
visits to this and other websites in order to provide advertisements about goods
and services likely to be of greater interest to you. These companies typically
use a cookie, third party web beacon or pixel tags, to collect this information.
To learn more about this behavioral advertising practice, you can visit
www.networkadvertising.org.
CONFIDENTIALITY AND SECURITY
With regard to our internal security procedures, First Trust restricts access to
your nonpublic personal information to those First Trust employees who need to
know that information to provide products or services to you. We maintain
physical, electronic and procedural safeguards to protect your nonpublic
personal information.
POLICY UPDATES AND INQUIRIES
As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time, however, if we do change
it, we will tell you promptly. For questions about our policy, or for additional
copies of this notice, please go to www.ftportfolios.com, or contact us at
1-800-621-1675 (First Trust Portfolios) or 1-800-222-6822 (First Trust
Advisors).
Page 32
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.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless
of whether these individuals are employed by the registrant or a third
party.
(d) The registrant has not granted any waivers, including an implicit waiver,
from a provision of the code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or
a third party, that relates to one or more of the items set forth in
paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the Registrant's board of
trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified
to serve as audit committee financial experts serving on its audit committee and
that each of them is "independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees (Registrant) -- The aggregate fees billed for each of the
last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years were
$49,000 for the fiscal year ended November 30, 2013 and $49,000 for the fiscal
year ended November 30, 2014.
(b) Audit-Related Fees (Registrant) -- The aggregate fees billed in each
of the last two fiscal years for assurance and related services by the principal
accountant that are reasonably related to the performance of the audit of the
registrant's financial statements and are not reported under paragraph (a) of
this Item were $0 for the fiscal year ended November 30, 2013 and $0 for the
fiscal year ended November 30, 2014.
Audit-Related Fees (Investment Adviser) -- The aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under paragraph
(a) of this Item were $0 for the fiscal year ended November 30, 2013 and $0 for
the fiscal year ended November 30, 2014.
(c) Tax Fees (Registrant) -- The aggregate fees billed in each of the last
two fiscal years for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning to the registrant were $5,200
for the fiscal year ended November 30, 2013 and $5,200 for the fiscal year ended
November 30, 2014.
Tax Fees (Investment Adviser) -- The aggregate fees billed in each of the
last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning to the registrant's
adviser were $0 for the fiscal year ended November 30, 2013 and $0 for the
fiscal year ended November 30, 2014.
(d) All Other Fees (Registrant) -- The aggregate fees billed in each of
the last two fiscal years for products and services provided by the principal
accountant to the registrant, other than the services reported in paragraphs (a)
through (c) of this Item were $0 for the fiscal year ended November 30, 2013 and
$0 for the fiscal year ended November 30, 2014.
All Other Fees (Investment Adviser) -- The aggregate fees billed in each
of the last two fiscal years for products and services provided by the principal
accountant to the registrant's investment adviser, other than the services
reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year
ended November 30, 2013 and $0 for the fiscal year ended November 30, 2014.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c) (7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval
Policy, the Audit Committee (the "Committee") is responsible for the
pre-approval of all audit services and permitted non-audit services (including
the fees and terms thereof) to be performed for the registrant by its
independent auditors. The Chairman of the Committee is authorized to give such
pre-approvals on behalf of the Committee up to $25,000 and report any such
pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the independent
auditor's engagements for non-audit services with the registrant's adviser (not
including a sub-adviser whose role is primarily portfolio management and is
sub-contracted or overseen by another investment adviser) and any entity
controlling, controlled by or under common control with the investment adviser
that provides ongoing services to the registrant, if the engagement relates
directly to the operations and financial reporting of the registrant, subject to
the de minimis exceptions for non-audit services described in Rule 2-01 of
Regulation S-X. If the independent auditor has provided non-audit services to
the registrant's adviser (other than any sub-adviser whose role is primarily
portfolio management and is sub-contracted with or overseen by another
investment adviser) and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to its policies, the Committee
will consider whether the provision of such non-audit services is compatible
with the auditor's independence.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) for the registrant and the registrant's investment adviser of this
Item that were approved by the audit committee pursuant to the pre-approval
exceptions included in paragraph (c)(7)(i)(c) or paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X are as follows:
(b) 0%
(c) 0%
(d) 0%
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year that were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees was less than fifty
percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's investment
adviser (not including any sub-adviser whose role is primarily portfolio
management and is subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant for the fiscal year
ended November 30, 2013, were $5,200 for the registrant and $3,000 for the
registrant's investment adviser, and for the fiscal year ended November 30, 2014
were $5,200 for the registrant and $43,500 for the registrant's investment
adviser.
(h) The registrant's audit committee of its Board of Trustees has
determined that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) The Registrant has a separately designated audit committee consisting of
all the independent directors of the Registrant. The members of the audit
committee are: Thomas R. Kadlec, Niel B. Nielson, Richard E. Erickson and
Robert F. Keith.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are included below.
FIRST TRUST ADVISORS L.P.
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PROXY VOTING GUIDELINES
First Trust Advisors L.P. ("First Trust") serves as investment adviser
providing discretionary investment advisory services for Macquarie/First Trust
Global Infrastructure/Utilities Dividend & Income Fund (the "Fund"). Macquarie
Capital Investment Management LLC ("MCIM") serves as sub-adviser for the portion
of the Fund's investment portfolio invested, or to be invested, in equity
securities as well as other securities and instruments issued by U.S. and
non-U.S. issuers that manage, own and/or operate infrastructure and utility
assets in a select group of countries (the "Core Component"). Four Corners
Capital Management, LLC serves as sub-adviser for the portion of the Fund's
investment portfolio invested, or to be invested, in U.S. dollar denominated
senior secured floating-rate loans issued by U.S. and non-U.S. issuers that
manage, own and/or operate infrastructure and utility assets (the "Senior Loan
Component"). As part of these services, First Trust has full responsibility for
proxy voting and related duties with respect to the Senior Loan Component and
the Core Component. In fulfilling these duties, First Trust and the Fund have
adopted the following policies and procedures:
1. It is First Trust's policy to seek to ensure that proxies for
securities held by the Fund are voted consistently and solely in the best
economic interests of the Fund.
2. First Trust shall be responsible for the oversight of the Fund's proxy
voting process and shall assign a senior member of its staff to be responsible
for this oversight.
3. First Trust has engaged the services of Institutional Shareholder
Services, Inc. ("ISS") to make recommendations to First Trust on the voting of
proxies related to securities held by the Fund. ISS provides voting
recommendations based on established guidelines and practices. First Trust has
adopted these ISS Proxy Voting Guidelines.
4. With respect to proxies received for the Core Component, First Trust
shall review the ISS recommendations and forward such recommendations to MCIM
for review. First Trust generally will vote the proxies in accordance with ISS
recommendations. MCIM may request that First Trust not vote in accordance with
the ISS guidelines and First Trust may review and follow such request, unless
First Trust determines that it is unable to follow such request. With respect to
proxies received for the Senior Loan Component, First Trust shall review the ISS
recommendations and generally will vote the proxies in accordance with ISS
recommendations. Notwithstanding the foregoing, First Trust may not vote in
accordance with the ISS recommendations if First Trust believes that the
specific ISS recommendation is not in the best interests of the Fund.
5. If First Trust manages the assets or pension fund of a company and any
of First Trust's clients hold any securities in that company, First Trust will
vote proxies relating to such company's securities in accordance with the ISS
recommendations to avoid any conflict of interest. In addition, if First Trust
has actual knowledge of any other type of material conflict of interest between
itself and the Fund with respect to the voting of a proxy, First Trust shall
vote the applicable proxy in accordance with the ISS recommendations to avoid
such conflict of interest.
6. If the Fund requests First Trust to follow specific voting guidelines
or additional guidelines, First Trust shall review the request and follow such
guidelines, unless First Trust determines that it is unable to follow such
guidelines. In such case, First Trust shall inform the Fund that it is not able
to follow the Fund's request.
7. First Trust may have clients in addition to the Fund which have
provided First Trust with discretionary authority to vote proxies on their
behalf. In such cases, First Trust shall follow the same policies and
procedures.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(A)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
INFORMATION PROVIDED AS OF NOVEMBER 30, 2014
Macquarie Capital Investment Management LLC ("MCIM") and Four Corners Capital
Management, LLC ("Four Corners") serve as the registrant's sub-advisers. MCIM
manages the Core Component of the registrant, while Four Corners manages the
Senior Loan Component of the registrant.
MACQUARIE CAPITAL INVESTMENT MANAGEMENT LLC
Anthony Felton and Jonathon Ong are the co- portfolio managers responsible for
the day-to-day management of the Core Component of the registrant.
Length of
----------
Name Title Service Business Experience Past 5 Years
---- ----- ------- --------------------------------
Anthony Felton Fund Co-Portfolio Manager as of 15 years Mr. Felton joined Macquarie Group in February 2004 and
June 29, 2012 the MFG Infrastructure Securities team in June 2004.
He was responsible for the analysis of European stocks
before becoming a Portfolio Manager. Mr. Felton has
significant experience in the analysis of both
regulated infrastructure companies, such as water and
electricity/gas transmission/distribution and
utilities as well as user demand infrastructure
companies such as airports, toll roads and seaports.
Prior to joining Macquarie, Mr. Felton had broad based
financial market experience with Westpac Banking
Corporation in Sydney, and West LB and JP Morgan in London
between 1999 and 2003. Mr. Felton holds a Bachelor of
Commerce - University of NSW, and is a CFA charter holder.
Jonathon Ong Fund Co-Portfolio Manager as of 21 years Mr. Ong joined the MFG Infrastructure Securities team
November 9, 2012. in Sydney as a Portfolio Manager in January 2008. He
has been a member of the team's Investment Committee
since then. He has 17 years of investment experience
including 11 years as a Portfolio Manager. Prior to
joining Macquarie, Mr. Ong held analyst and PM roles
at Credit Suisse Asset Management (CSAM), where he
worked for 8 years in Sydney and Tokyo. His portfolio
management and analytical responsibilities were
primarily focused on infrastructure and related
stocks. Prior to CSAM, he spent 3 years as an
Asia-Pacific telecom analyst for Bankers Trust, having
started his career as a sell-side analyst in Hong Kong
for Kim Eng Securities. Mr. Ong earned a Bachelor of
Science degree from the University of Melbourne and a
Bachelor of Business (Banking and Finance) from Monash
University. Mr. Ong is a CFA charter holder.
* MFG Infrastructure Securities is the marketing name of a separate asset
management business unit that is part of Macquarie Funds Group ("MFG") and is
within Macquarie Group Limited. MFG Infrastructure Securities includes Macquarie
Capital Investment Management (Australia) Limited ("MCIMAL") and Macquarie
Capital Investment Management LLC ("MCIML").
(A)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
AND POTENTIAL CONFLICTS OF INTEREST
INFORMATION PROVIDED AS OF NOVEMBER 30, 2014
OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Total Assets in
Total No. of Accounts Accounts where
Name of Portfolio No. of where Advisory Fee Advisory Fee is
Manager or Accounts is Based on Based on
- - - - -
Team Member Type of Accounts Managed Total Assets Performance Performance
----------- ---------------- ------- ------------ ----------- -----------
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Anthony Felton Registered Investment 0 0 0 $0
Companies:
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Other Pooled Investment 3 $190.0M 0 $0
Vehicles:
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Other Accounts: 0 0 0 $0
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Jonathon Ong Registered Investment 1 $490.0M 0 $0
Companies:
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Other Pooled Investment 3 $634.0M 0 $0
Vehicles:
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
Other Accounts: 3 $322.0M 0 $0
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
---------------------- ------------------------ ------------ ---------------- --------------------- -----------------
POTENTIAL CONFLICTS OF INTERESTS
MCIM has policies and procedures in place that govern the manner in which
allocations of trades will be handled should MCIM effect purchases or sales of
the same security for different clients. These procedures address circumstances
in which separate purchase or sale orders for the same security are placed for
two or more clients, and additionally when purchase or sale orders for the same
security are aggregated. MCIM policies detail specific conditions that must be
met when aggregating purchase or sale orders for the same security for two or
more clients. The Portfolio Manager is responsible for allocating investment
opportunities and aggregating orders consistently with the procedures and a
periodic, but at least quarterly, review by the Chief Compliance Officer of MCIM
(or designee) is required.
(A)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
INFORMATION PROVIDED AS OF NOVEMBER 30, 2014
Compensation consists of fixed remuneration in the form of a base salary,
variable (at risk) performance pay in the form of an annual profit share
allocation and a long term incentive in the form of stock (applies to Director
level employees only). Fixed remuneration takes into consideration the role of
individuals and market conditions. Remuneration is reviewed on a yearly basis in
March/April and takes effect from July 1st of that year.
Aggregate staff profit share is linked to Macquarie Group's profitability and
return on ordinary equity, with the allocation of individual profit share being
based on factors including contribution to profit, use of capital, funding and
risk. Macquarie Group operates profit share retention arrangements for employees
meeting certain pay thresholds, to ensure an appropriate balance between short
and longer-term incentives. Retained profit share is invested in the Macquarie
Employee Retained Equity Plan (MEREP) to further align employee and shareholder
interests as well as enhance Macquarie Group's ability to attract and retain
high caliber talent.
Compensation consists of a base salary amount plus discretionary profit share.
The base salary is fixed a year in advance, while the discretionary profit share
varies according to the performance of the individual, the division and
Macquarie Group. Discretionary profit share is allocated annually. Compensation
is not directly based on the pre- or post-tax performance of the Fund over a
certain period. However, performance of the Fund may be one factor taken into
account in determining compensation. Compensation is not directly based on the
value of assets held in the Fund's portfolio. However the value of assets may be
one factor taken into account in determining compensation.
If the Portfolio Manager's or the Management Team's bonus is over a certain
amount, a portion of the bonus may be deferred and may be paid out in the future
in up to four equal installments.
Compensation consists of a base salary amount plus discretionary profit share.
The base salary is fixed a year in advance, while the discretionary profit share
varies according to the performance of the individual, the division and
Macquarie Group. Discretionary profit share is allocated annually.
(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP
THE INFORMATION BELOW IS AS OF NOVEMBER 30, 2014
----------------------------------- --------------------------------
Dollar ($) Range of Fund Shares
Name Beneficially Owned
----------------------------------- --------------------------------
Anthony Felton $0
----------------------------------- --------------------------------
Jonathan Ong $0
----------------------------------- --------------------------------
FOUR CORNERS CAPITAL MANAGEMENT, LLC:
(A)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
INFORMATION PROVIDED AS OF NOVEMBER 30, 2014
Adam H. Brown
Portfolio Manager, Senior Loan Component
Vice President, Portfolio Manager, Four Corners Capital Management, LLC
Mr. Brown is a portfolio manager on Four Corners' taxable fixed-income team,
with specific responsibilities for the bank loan portfolio. Mr. Brown previously
worked with Wachovia Securities, where he worked in the leveraged finance group
arranging senior secured bank loans and high-yield bond financings for financial
sponsors and corporate issuers. Mr. Brown has been part of the Four Corners team
for ten years and more recently has had a dual role with Four Corners'
affiliated investment adviser, Delaware Investments. Since 2007, Mr. Brown has
co-managed the Four Corners' collateralized loan obligations and bank loan
portfolios with Bob Bernstein and Drew Sweeney. Mr. Brown earned a bachelor's
degree from the University of Florida and an MBA from the A.B. Freeman School of
Business at Tulane University. Mr. Brown is also a Chartered Financial Analyst.
(A)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGERS OR MANAGEMENT TEAM MEMBER
AND POTENTIAL CONFLICTS OF INTEREST
INFORMATION PROVIDED AS OF NOVEMBER 30, 2014.
# of Accounts Total Assets
Managed for which for which
Total Advisory Fee is Advisory Fee
Name of Portfolio Manager # of Accounts Total Based on is Based on
or Team Member Type of Accounts Managed Assets Performance Performance
------------------------------ ----------------------------------- -------------- ---------- ------------------- -------------
1. Adam H. Brown Registered Investment Companies: 7 $3.46B 0 $ 0
--------------------------------
Other Pooled Investment Vehicles: 5 $970.28M 2 $513.78M
---------------------------------
Other Accounts(1): 12 $110.04M 0 $0
------------------
1 The chart lists certain information about types of other accounts for
which the portfolio manager is primarily responsible as of November 30,
2014 unless otherwise noted. Any accounts managed in a personal capacity
appear under "Other Accounts" along with the other accounts managed on a
professional basis. The personal account information is current as of June
30, 2014.
POTENTIAL CONFLICTS OF INTERESTS
Four Corners has a fiduciary duty to provide unbiased advice and to disclose any
material conflicts of interest to its clients, as mandated under the Investment
Advisers Act of 1940. Furthermore, it is Four Corners' goal to act in good faith
and to treat all client accounts in a fair and equitable manner over time,
regardless of the client's strategy, fee arrangements, or the influence of a
client or client's beneficiaries.
Four Corners employs various controls to assist in the disclosure and management
of potential conflicts of interest and maintains policies (including Four
Corners' Code of Ethics and a trade allocation policy) that are designed to
mitigate any such conflicts. In instances where unique requirements or
restrictions are required due to the identification of different conflicts, Four
Corners will typically establish additional policies and controls or develop
alternate processing requirements to assist in the mitigation of these
conflicts.
(A)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGERS OR MANAGEMENT TEAM MEMBERS
PORTFOLIO MANAGER COMPENSATION
Information provided as of November 30, 2014.
Each named portfolio manager receives a fixed base salary and is also eligible
to receive an annual cash bonus which is fully discretionary and based on
quantitative and qualitative factors. Portfolio managers participate in
retention programs, including the Delaware Investments Incentive Unit Plan, the
Delaware Investments Notional Investment Plan, and the Macquarie Group Employee
Retained Equity Plan, for alignment of interest purposes. Portfolio managers may
also participate in benefit plans and programs available generally to all
employees. Portfolio manager and management team compensation is determined
without regard to the performance of any individual account (or Fund)
performance.
Base Salaries are determined by a comparison to industry data prepared by third
parties to ensure that portfolio manager salaries are in line with salaries paid
at peer investment advisory firms.
Each portfolio manager is also eligible to receive an annual cash bonus, which
is fully discretionary and based on quantitative and qualitative factors. An
objective component is added to the bonus for each manager that is reflective of
account performance relative to an appropriate peer group or database.
For the non-guaranteed bonus, the portfolio manager is eligible to receive
annual cash bonus, which is based on quantitative and qualitative factors. There
is one pool for bonus payments for the fixed income department. The pool is
allotted based on subjective factors (50%) and objective factors (50%). The
amount of the pool for bonus payments is determined by assets managed (including
investment companies, insurance product-related accounts and other separate
accounts), management fees and related expenses (including fund waiver expenses)
for registered investment companies, pooled vehicles, and managed separate
accounts. For investment companies, each manager is compensated according to the
Fund's Lipper or Morningstar peer group percentile ranking on a one-year,
three-year, and five-year basis, with longer-term performance more heavily
weighted. For managed separate accounts the portfolio managers are compensated
according to the composite percentile ranking against the eVestment Alliance and
Callan Associates databases (or similar sources of relative performance data) on
a one-year, three-year and five-year basis, with longer term performance more
heavily weighted. There is no objective award for a fund that falls below the
50th percentile, but incentives reach maximum potential at the top 25th-30th
percentile. There is a sliding scale for investment companies that are ranked
above the 50th percentile. The remaining portion of the bonus is discretionary
as determined by Delaware Investments and takes into account subjective factors.
For new and recently transitioned portfolio managers, the compensation may be
weighted more heavily towards a portfolio manager's actual contribution and
ability to influence performance, rather than longer-term performance.
Management intends to move the compensation structure towards longer-term
performance for these portfolio managers over time.
Portfolio managers may be awarded incentive units awards ("Awards") relating to
the underlying shares of common stock of Delaware Management Holdings, Inc.
issuable pursuant to the terms of the Delaware Investments Incentive Unit Plan
(the "Plan") adopted on November 30, 2010.
The Plan was adopted in order to: assist the Manager in attracting, retaining,
and rewarding key employees of the company; enable such employees to acquire or
increase an equity interest in the company in order to align the interest of
such employees and the Manager; and provide such employees with incentives to
expend their maximum efforts. Subject to the terms of the Plan and applicable
award agreements, Awards typically vest in 25% increments on a four-year
schedule, and shares of common stock underlying the Awards are issued after
vesting. The fair market value of the shares of Delaware Management Holdings,
Inc., is normally determined as of each March 31, June 30, September 30 and
December 31 by an independent appraiser. Generally, a stockholder may put shares
back to the company during the put period communicated in connection with the
applicable valuation.
DELAWARE INVESTMENTS NOTIONAL INVESTMENT PLAN - A portion of a portfolio
manager's retained profit share may be notionally exposed to the return of a
portfolio of Delaware Investments Family of Funds-managed funds pursuant to the
terms of the Delaware Investments Notional Investment Plan. The retained amount
will vest in three equal tranches in each of the first, second and third years
following the date upon which the investment is made.
MACQUARIE GROUP EMPLOYEE RETAINED EQUITY PLAN - A portion of a portfolio
manager's retained profit share may be invested in the Macquarie Group Employee
Retained Equity Plan ("MEREP"), which is used to deliver remuneration in the
form of Macquarie Group Limited ("Macquarie") equity. The main type of award
currently being offered under the MEREP is units comprising a beneficial
interest in a Macquarie share held in a trust for the employee, subject to the
vesting and forfeiture provisions of the MEREP. Subject to vesting conditions,
vesting and release of the shares occurs in equal tranches two, three, and four
years after the date of investment.
(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP
Information provided as of November 30, 201
Dollar Range of Fund
Shares Beneficially
Name Owned
Adam H. Brown $ 0
(B) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers, or
persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3(c))) are effective, as of a date within 90 days of the filing
date of the report that includes the disclosure required by this
paragraph, based on their evaluation of these controls and procedures
required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and
Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as
amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the registrant's second fiscal quarter
of the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control
over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section
906 of the Sarbanes- Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Macquarie/First Trust Global Infrastructure/Utilities
Dividend & Income Fund
--------------------------------------------------------
By (Signature and Title)* /s/ Mark R. Bradley
----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
Date: January 22, 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: January 22, 2015
-------------------
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: January 22, 2015
-------------------
* Print the name and title of each signing officer under his or her signature.