Edgar Filing: MACQUARIE/FIRST TRUST GLOBAL INFRASTR/UTIL DIV & INC FUND

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
------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)

1001 Warrenville Road, Suite 300
LISLE, IL 60532
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(Address of principal executive offices) (Zip code)

W. Scott Jardine, Esq.
First Trust Portfolios, LP
1001 Warrenville Road, Suite 300
LISLE, IL 60532
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(Name and address of agent for service)

registrant's telephone number, including area code: 630-241-4141
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Date of fiscal year end: NOVEMBER 30
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Date of reporting period: NOVEMBER 30, 2007
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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.

[GRAPHIC OMITTED]

ANNUAL REPORT

FOR THE YEAR ENDED
NOVEMBER 30, 2007

MACQUARIE/FIRST TRUST
GLOBAL INFRASTRUCTURE/
UTILITIES DIVIDEND &
INCOME FUND

[LOGO]
MACQUARIE
Macquarie Fund Adviser, LLC, [LOGO] FOUR CORNERS [LOGO] FIRST TRUST
is a member of the Macquarie Group CAPITAL MANAGEMENT ADVISORS L.P.

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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, 2007

Shareholder Letter ........................................................ 1
Portfolio Commentary ...................................................... 2
Portfolio of Investments .................................................. 6
Statement of Assets and Liabilities ....................................... 11
Statement of Operations ................................................... 12
Statements of Changes in Net Assets ....................................... 13
Statement of Cash Flows ................................................... 14
Financial Highlights ...................................................... 15
Notes to Financial Statements ............................................. 16
Report of Independent Registered Public Accounting Firm ................... 22
Additional Information .................................................... 23
Board of Trustees and Officers ............................................ 26

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933. 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 Fund
Adviser, LLC ("MFA" or the "Sub-Advisor") and/or Four Corners Capital
Management, LLC ("Four Corners" or the "Sub-Advisor") and their respective
representatives, taking into account the information currently available to
them. Forward-looking statements include all statements that do not relate
solely to current or historical fact. For example, forward-looking statements
include the use of words such as "anticipate," "estimate," "intend," "expect,"
"believe," "plan," "may," "should," "would" or other words that convey
uncertainty of future events or outcomes.

Forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of the Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income
Fund (the "Fund") to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
statements. When evaluating the information included in this report, you are
cautioned not to place undue reliance on these forward-looking statements, which
reflect the judgment of First Trust and/or MFA and/or Four Corners and their
respective representatives only as of the date hereof. We undertake no
obligation to publicly revise or update these forward-looking statements to
reflect events and circumstances that arise after the date hereof.

PERFORMANCE AND RISK DISCLOSURE

There is no assurance that the Fund will achieve its investment objective.
The Fund is subject to market risk, which is the possibility that the market
values of securities owned by the Fund will decline and that the value of the
Fund shares may therefore be less than what you paid for them. Accordingly, you
can lose money investing in the Fund.

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
may be worth more or less than their original cost.

HOW TO READ THIS REPORT

This report contains information that may help you evaluate your
investment. It includes details about the Fund and presents data and analysis
that provide insight into the Fund's performance and investment approach.

By reading the portfolio commentary by Jon Fitch, Co-Portfolio Manager of
the core component of the Fund and Michael P. McAdams and Robert I. Bernstein,
Co-Portfolio Managers of the Senior Loan component of the Fund, you may obtain
an understanding of how the market environment affected the Fund's performance.
The statistical information that follows may help you understand the Fund's
performance compared to that of relevant market benchmarks.

It is important to keep in mind that the opinions expressed by MFA 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.

INVESTMENTS IN THE FUND ARE NOT DEPOSITS WITH OR OTHER LIABILITIES OF
MACQUARIE BANK LIMITED ACN 008 583 542, OR ANY ENTITY IN THE MACQUARIE BANK
GROUP, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING POSSIBLE DELAYS IN
REPAYMENT AND LOSS OF INCOME AND CAPITAL INVESTED. NONE OF MACQUARIE BANK
LIMITED, MACQUARIE FUND ADVISER, LLC, FOUR CORNERS CAPITAL MANAGEMENT, LLC, AND
ANY MEMBER COMPANY OF THE MACQUARIE BANK GROUP GUARANTEES ANY PARTICULAR RATE OF
RETURN OR THE PERFORMANCE OF THE FUND, NOR DO THEY GUARANTEE THE REPAYMENT OF
CAPITAL FROM THE FUND OR ANY TAX TREATMENT OF ANY DISTRIBUTION BY THE FUND.

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SHAREHOLDER LETTER
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND (MFD)
ANNUAL REPORT
NOVEMBER 30, 2007

Dear Shareholders:

We believe investment opportunities abound, both here and abroad, affording the
potential for exceptional returns for investors. At First Trust Advisors L.P.
("First Trust"), we realize that we must be mindful of the complexities of the
global economy and at the same time address the needs of our customers through
the types of investments we bring to market.

We are single-minded about providing a range of investment products, including
our family of closed-end funds, to help First Trust meet the challenge of
maximizing our customers' financial opportunities. Translating investment ideas
into products which can deliver performance over the long term while continuing
to support our current product line remains a focus for First Trust as we head
into the future.

The report you hold will give you detailed information about your investment in
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
(the "Fund") for the 12-month period ended November 30, 2007. I encourage you to
read this report and discuss it with your financial advisor.

First Trust is pleased that the Fund is a part of your financial portfolio and
we will continue to offer you current information about your investment, as well
as new opportunities in the financial marketplace, through your financial
advisor. We value our relationship with you and appreciate the opportunity to
assist you in achieving your financial goals.

Sincerely,

/s/ James A. Bowen

James A. Bowen
President of Macquarie/First Trust Global Infrastructure/Utilities Dividend &
Income Fund
January 22, 2008

Page 1

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PORTFOLIO COMMENTARY
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND

The investment objective of the Macquarie/First Trust Global
Infrastructure/Utilities Dividend & Income Fund ("MFD" or 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 that should offer reasonably predictable
income and attractive yields. The Fund seeks to manage its investments and
expenses so that a significant portion of its distributions to the Fund's common
shareholders will qualify as tax-advantaged dividends, subject to the continued
availability of favorable tax treatment for such qualifying dividends.

Under normal market conditions, MFD will seek to invest more than 50% of the
Fund's total assets outside the United States. These investments will focus on
developed economies. Macquarie Fund Adviser, LLC (the "Sub-Advisor" or "MFA")
believes that international diversity has two major benefits for investors:

First, this diversity offers investors exposure to the fundamentals of different
economies thereby affording an alternative to U.S.-domiciled investments; and
second, by investing in carefully selected developed economies, MFD should be
able to provide investors with exposure to a much broader range of
infrastructure/utility businesses.

A typical profile of an infrastructure business would be one whose assets
provide essential public services which are difficult to replace, are
monopolistic or near-monopolistic in nature, 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.

MARKET RECAP:

The second half of fiscal 2007 saw higher than usual levels of market
volatility. The main concern for global investment markets was the difficulties
surrounding sub-prime mortgages in the United States. A significant result of
the sub-prime problem was the tightening of credit markets which fueled concerns
that the resulting higher corporate borrowing costs would reduce corporate
earnings. These concerns prompted the movement of capital from equity markets
into assets perceived to be more stable and resulted in a general decline across
equities markets which was further coupled with extreme volatility levels.

Currency markets were also volatile later in 2007 as the U.S. dollar weakened
against most major currencies following the U.S. Federal Reserve's decision to
cut interest rates by a total of 75 basis points during the period.

Despite the sub-prime fallout, we believe that the underlying fundamentals of
the global-listed infrastructure businesses in which the Fund invests have not
been materially impacted. Infrastructure entities are typically of
investment-grade credit quality and have long-dated debt programs. Both of these
factors, in our opinion, contribute to minimizing the impact of any widening
credit spreads.

REVIEW OF INVESTMENT STRATEGY:

The Fund is composed of two components: the Core Component, consisting primarily
of equity and equity-like securities issued by infrastructure issuers, and a
Senior Loan Component, composed of infrastructure senior-secured floating-rate
loans. The Core Component was funded by the Fund's issuance of common shares,
while the Senior Loan Component is funded by a commercial paper facility. This
provides a unique leverage structure for the Fund, whereby the floating-rate
nature of the commercial paper facility is intended to match to the
floating-rate nature of the senior-secured loans. This is intended to help
protect the Fund against rising interest rates.

PERFORMANCE ANALYSIS:

MFD generated a market value total return of 25.8% 1, for the twelve months
ended November 30, 2007. The Fund's net asset value ("NAV") total return was
21.9%2 over the same period. Utilizing data we collected from Standard & Poor's,
these returns compare favorably to the 16.8% gain posted by the S&P U.S.
Utilities Accumulation Index (in U.S. dollars). The Fund had ordinary income
distributions totaling $2.11 per share and a long-term capital gain distribution
of $4.43 per share that were ex-divided during the fiscal year, representing an
annualized distribution rate of 26.1%, based on the Fund's NAV and 27.5% based
on the Fund's market price, each as of November 30, 2007.

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1 Total return based on market value is the combination of reinvested
dividend distributions and reinvested capital gains distributions,
if any, at prices obtained by the Dividend Reinvestment Plan and
changes in Common Share market price per share.

2 Total return based on net asset value is the combination of
reinvested dividend distributions and reinvested capital gains
distributions, if any, at prices obtained by the Dividend
Reinvestment Plan and changes in net asset value per share and does
not reflect sales load.

Page 2

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PORTFOLIO COMMENTARY - (CONTINUED)
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FUND COMPONENT ANALYSIS:

Over the period, equity investments in the Core Component of MFD remained
focused on Australia, the U.K., and Canada (approximately 48% of the Fund's
total investments as of November 30, 2007). The Fund established new positions
in Austria (Flughafen Wien), Australia (Asciano and Challenger Infrastructure
Fund), Germany (Hamburger Hafen und Logistik), Japan (East Japan Railway),
Switzerland (Flughafen Zurich), and the United States (Duncan Energy Partners,
Energy Transfer Partners, Enterprise Products Partners and NuStar Energy). The
Fund's investments represent a diversified range of infrastructure assets,
including water utilities, oil and gas pipelines, electricity and gas
distribution and transportation infrastructure such as toll roads and airports.

TOP-PERFORMING INVESTMENTS:

The top-performing investments during the period covered by this report included
UE Waterheaters (Canada), Aeroports de Paris (France), Auckland Airport (New
Zealand) and Flughafen Zurich (Switzerland). The Fund exited its position in UE
Waterheaters, a Canadian water heater company, following the acquisition of
Alinda Capital Partners, LLC. The airport holdings were all beneficiaries of
continued strong passenger growth in global aviation travel. The weakest holding
over the period was Asciano. Asciano has been adversely affected by the ongoing
drought in Australia, which has impacted its grain haulage business.
Nevertheless, company fundamentals remain strong and the outlook for its
principal infrastructure assets (sea ports and rail) remain positive.

PERFORMANCE OF SENIOR LOANS:

The performance of the Senior Loan Component of the portfolio was disappointing
during the twelve months ended November 30, 2007 but comparable to the loan
market's performance. The Senior Loan Component of the Fund is invested in U.S.
dollar-denominated senior-secured floating-rate corporate loans, primarily in
the global utilities, infrastructure and related industries. Despite record low
default rates and minimal credit losses, the Senior Loan benchmark index, the
S&P/LSTA Leveraged Loan Index, registered two of its three worst months ever
during the twelve-month period ended November 30, 2007. This negative and
volatile performance was primarily caused by the spillover impact from the
sub-prime crisis on technical conditions in the Senior Loan market as opposed to
fundamental credit erosion. As a reminder, most Senior Loans have no direct
exposure to sub-prime assets.

The Senior Loan Component is intended to help provide the Fund with a stable
income stream from which to pay dividends. As floating-rate debt instruments
whose interest rates are set at a credit spread (the risk premium) over
short-term interest rates, senior loans tend to benefit from rising interest
rates, subject to approximately a 60 to 90 day lag, as their yields typically
increase in similar proportion. Additionally, because of the short lag between
when short-term rates increase and the interest rate on the loan resets, there
is typically a limited, if any, negative impact on loan prices from interest
rate increases.

MARKET REVIEW BY COUNTRY

AUSTRALIA

In Australia, the Fund has investments in a range of infrastructure companies,
including a toll road company, energy infrastructure companies, and also
diversified infrastructure companies. During the period covered by this report,
the Fund established a position in Challenger Infrastructure Fund, which owns a
diversified portfolio of global infrastructure and utility assets. Additionally
in Australia, the Fund established a position in sea port and rail
infrastructure company Asciano.

NEW ZEALAND

In New Zealand, the Fund continues to have a position in Auckland International
Airport Limited. In July 2007, Dubai Aerospace Enterprise (DAE) announced a
proposal to acquire a majority interest in Auckland International Airport. Later
in the year DAE withdrew this proposal; however, in November 2007 the CPP
Investment Board (CPPIB), investment manager of the Canada Pension Plan,
announced its intention to make an all-cash partial takeover offer of NZD $3.65
per share for 40% of Auckland International Airport.

JAPAN

The Fund's first investment in Japan took place during August 2007, in the form
of a holding in East Japan Railway. The railway operates both in the Greater
Tokyo metropolitan region and the eastern portion of Japan's main island of
Honshu and is the largest passenger railway company in the world, serving
approximately 16 million passengers each day.

Page 3

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PORTFOLIO COMMENTARY - (CONTINUED)
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UNITED KINGDOM/EUROPE

The Fund benefited from its holding in UK water company Kelda Group which
received a takeover bid from a consortium that included Citigroup and HSBC
Group. The bid was at a premium of 17% to the previous share price close. This
followed the acquisition of UK water business Southern Water in August. The UK
water companies have been favored for investment by the Fund due to their
defensive and predictable cashflows, along with relatively transparent
regulatory regime.

In November, the Fund participated in the initial public offering of Hamburger
Hafen und Logistik AG which owns and operates the seaport in Hamburg, Germany.
Shipping container volume growth is expected at Hamburg in the coming years
since Europe has a general container port capacity shortage while trade volumes
continue to grow.

UNITED STATES

In the United States, the Fund's main investments are in Master Limited
Partnerships (MLPs) such as Enbridge Energy Partners and Kinder Morgan Energy
Partners. While MLP fundamentals remained strong during the period, the Fund's
holdings in this asset class experienced some volatility as a result of the
sub-prime fallout discussed earlier. Nevertheless, we continue to believe that
these investments have predictable and defensive cashflows, attractive dividend
yields and a good dividend growth outlook.

PORTFOLIO COMPOSITION:

At the end of the period covered by this report, the Core Component represented
74.1% of the Fund's total investments, the Senior Loan Component 25.4%, and
cash/cash equivalents represented 0.5%. With respect to the Core Component, the
Fund had investments in 37 equity/equity-like securities, providing both
geographic and industry diversity. With respect to the Senior Loan Component,
the Fund had invested in 39 senior-secured loan facilities spread across a
number of infrastructure-related industries. A summary of the industry and
geographic diversification of the Fund as of November 30, 2007 is summarized in
the charts below.

INDUSTRY DIVERSIFICATION (a)

[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]

Senior Secured Loans 25.4%
Gas Utilities 16.9%
Electric Utilities 15.8%
Transportation Infrastructure 15.3%
Water Utilities 13.6%
Multi-Utilities 5.0%
Diversified Consumer Services 4.0%
Power Generation 3.5%
Cash/Cash Equivalents 0.5%

(a) Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net
assets.

Page 4

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PORTFOLIO COMMENTARY - (CONTINUED)
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COUNTRY DIVERSIFICATION (a)

[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]

Senior Secured Loans 25.4% (b)
Australia 24.9%
United Kingdom 13.6%
Canada 9.4%
United States 7.9%
Spain 6.9%
Italy 4.4%
New Zealand 2.4%
France 0.3%
Cash/Cash Equivalents 0.5%
Austria 1.0%
Switzerland 1.0%
Japan 1.1%
Germany 1.2%

(a) Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net
assets.

(b) The Senior Secured Loans are composed of 98.9% United States loans
and 1.1% Canadian Loans.

MANAGER Q & A

WHAT IS YOUR OVERALL MARKET OUTLOOK GOING FORWARD?

We remain positive about the global infrastructure sector and the attractive
opportunities it presents for the Fund.

Despite the volatility experienced during the period this report covers, we have
not altered our investment strategy. We will continue our policy of utilizing
detailed bottom-up fundamental analysis to select infrastructure businesses we
believe will deliver predictable cash-flows that are derived from essential
service assets with low levels of competition. We will continue to maintain the
Fund's diversified positions across both asset classes and geographic regions
and ensure that the securities in the Fund's portfolio businesses are
appropriately capitalized.

The attractive features of infrastructure assets such as high barriers to entry,
predictable earnings, and defensive long-term cashflows are likely to continue
to attract capital from investment groups, in our opinion.

WHAT IS YOUR OUTLOOK FOR THE INFRASTRUCTURE MARKET?

We expect to see further privatization of infrastructure assets around the world
in 2008 as governments seek to reduce their debt levels and improve essential
services to their populations. Particularly, airport, gas and electricity
infrastructure privatizations are likely to continue around the world. Private
capital is likely to continue to be sourced for new toll road projects
(particularly in the United States and Australia).

We remain optimistic about the growth potential for the sector as the demand for
infrastructure assets in the developed world continues to grow and private
investors are expected to continue to supply capital to support this growth.
Additionally, it is expected that further initial public offerings of
infrastructure assets will take place in 2008.

Page 5

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a)
NOVEMBER 30, 2007

SHARES DESCRIPTION VALUE
------------- ----------------------------------------------- -------------

COMMON STOCKS - 89.3%

AUSTRALIA - 39.2%
1,465,911 Asciano Group ..................................................................................... $ 9,619,021
330,015 Australian Pipeline Trust ......................................................................... 1,072,546
10,050,961 Babcock & Brown Infrastructure Group .............................................................. 14,202,410
1,527,422 Challenger Infrastructure Fund, Class A ........................................................... 4,964,109
11,502,554 Envestra Ltd. ..................................................................................... 9,955,311
588,148 Hastings Diversified Utilities Fund ............................................................... 1,766,038
13,555,101 SP AusNet ......................................................................................... 14,245,713
9,240,000 Spark Infrastructure Group ........................................................................ 16,116,604
2,594,887 Transurban Group .................................................................................. 16,477,141
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88,418,893
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AUSTRIA - 1.6%
32,798 Flughafen Wien AG ................................................................................. 3,699,401
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FRANCE - 0.5%
9,810 Aeroports de Paris ................................................................................ 1,119,421
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GERMANY - 1.9%
48,339 Hamburger Hafen Und Logistik AG ................................................................... 4,243,055
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ITALY - 6.9%
618,000 Enel SPA .......................................................................................... 7,404,608
113,728 Snam Rete Gas SPA ................................................................................. 722,083
1,900,000 Terna SPA ......................................................................................... 7,435,447
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15,562,138
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JAPAN - 1.6%
450 East Japan Railway Co. ............................................................................ 3,717,770
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NEW ZEALAND - 3.8%
3,949,299 Auckland International Airport, Ltd. .............................................................. 8,510,289
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SPAIN - 10.9%
225,540 Cintra Concesiones de Infraestructuras de Transporte SA ........................................... 3,601,211
277,000 Enagas SA ......................................................................................... 8,339,785
205,000 Red Electrica de Espana ........................................................................... 12,649,989
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24,590,985
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SWITZERLAND - 1.5%
8,558 Flughafen Zuerich AG .............................................................................. 3,400,379
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UNITED KINGDOM - 21.4%
442,308 Kelda Group plc ................................................................................... 9,802,790
570,329 Pennon Group plc .................................................................................. 7,914,719
489,899 Severn Trent plc .................................................................................. 15,782,735
951,994 United Utilities plc .............................................................................. 14,679,183
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48,179,427
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TOTAL COMMON STOCKS ............................................................................... 201,441,758
(Cost $161,205,193) -------------

Page 6 See Notes to Financial Statements

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007

SHARES DESCRIPTION VALUE
------------- ----------------------------------------------- -------------

MASTER LIMITED PARTNERSHIPS - 12.3%

UNITED STATES - 12.3%
151,190 Amerigas Partners, L.P. ........................................................................... $ 5,329,447
44,760 Duncan Energy Partners, L.P. ...................................................................... 1,019,633
61,200 Enbridge Energy Partners, L.P. .................................................................... 3,132,828
70,000 Energy Transfer Partners, L.P. .................................................................... 3,605,000
115,050 Enterprise Products Partners, L.P. ................................................................ 3,596,463
70,000 Kinder Morgan Energy Partners, L.P. ............................................................... 3,541,300
136,831 Magellan Midstream Partners, L.P. ................................................................. 5,990,461
28,608 NuStar L.P. ....................................................................................... 1,619,213
-------------
TOTAL MASTER LIMITED PARTNERSHIPS ................................................................. 27,834,345
(Cost $22,794,128) -------------

CANADIAN INCOME TRUSTS - 14.9%
943,300 Northland Power Income Fund ....................................................................... 12,263,513
680,200 Pembina Pipeline Income Fund ...................................................................... 12,101,363
589,600 The Consumers' Waterheater Income Fund ............................................................ 9,145,154
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TOTAL CANADIAN INCOME TRUSTS ...................................................................... 33,510,030
(Cost $19,285,784) -------------

PRINCIPAL RATINGS (b) STATED
VALUE DESCRIPTION MOODY'S S&P COUPON MATURITY (c) VALUE
------------- ----------------------------------------------- ---------------- --------------- ------------ -------------

SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - 40.0%

BROADCASTING & CABLE TV - 3.7%
$ 3,000,000 Charter Communications Operating, LLC ......... B1 B+ 6.99% 03/06/14 2,791,731
2,957,470 CSC Holdings, Inc. ............................ Ba2 BB 6.42% 03/29/13 2,799,297
3,000,000 UPC Distribution Holding B.V. ................. Ba3 B 7.13% 12/31/14 2,823,750
-------------
8,414,778
-------------
ELECTRIC UTILITIES - 6.7%
997,083 Astoria Generating Co. Acquisitions, LLC. ..... B1 BB- 7.21% 02/23/12 963,432
2,985,000 Calpine Corp. DIP (e) ......................... NR (f) NR (f) 7.45% 03/29/09 2,905,578
3,986,595 Covanta Energy Corp. .......................... Ba2 BB 6.44%-7.06% 02/09/14 3,810,522
2,788,807 Mirant North America, LLC ..................... Ba3 BB 6.57% 01/03/13 2,690,036
2,989,393 NRG Energy, Inc. .............................. Ba1 BB 6.85%-6.95% 02/01/13 2,842,165
1,041,457 Riverside Energy Center, LLC .................. B1 B 9.21% 06/24/11 1,034,513
724,558 Rocky Mountain Energy Center, LLC ............. B1 B 9.21% 06/24/11 719,727
-------------
14,965,973
-------------
ENVIRONMENTAL & FACILITIES SERVICES - 1.5%
444,733 EnergySolutions, LLC .......................... NR (f) NR (f) 6.94%-7.66% 06/07/13 431,392
1,641,509 EnergySolutions, LLC .......................... NR (f) NR (f) 6.94% 08/09/13 1,592,264
1,500,000 EnviroSolutions Real Property Holdings, Inc. .. B2 B 8.69%-9.28% 07/07/12 1,410,000
-------------
3,433,656
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See Notes to Financial Statements Page 7

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007

SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - (CONTINUED)

HEALTH CARE FACILITIES - 4.8%
$ 2,977,500 HCA, Inc. ..................................... Ba3 BB 7.45% 11/17/13 $ 2,847,467
2,985,000 Health Management Associates, Inc. ............ Ba2 BB- 6.57%-6.95% 02/28/14 2,794,292
2,464,965 Lifepoint Hospitals, Inc. ..................... Ba2 BB 6.72% 04/15/12 2,349,639
2,925,000 Select Medical Corp. .......................... Ba2 BB- 7.00%-7.20% 02/24/12 2,769,001
-------------
10,760,399
-------------
HEALTH CARE SERVICES - 1.5%
3,283,450 CHS/Community Health Systems, Inc. ............ Ba3 BB 7.07%-7.33% 07/25/14 3,136,814
216,551 CHS/Community Health Systems, Inc. (g) ........ Ba3 BB 0.50% (h) 07/25/14 206,880
-------------
3,343,694
-------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 6.4%
2,000,000 Bicent Power, LLC ............................. Ba3 BB- 7.25% 06/30/14 1,915,000
1,192,500 Broadway Gen Funding, LLC ..................... B1 BB- 7.19% 05/01/14 1,170,141
958,923 Coleto Creek Power, L.P. ...................... B1 BB- 7.95% 06/28/13 915,771
3,000,000 Dynegy Holdings, Inc. ......................... Ba1 BB- 6.31% 04/12/13 2,803,125
1,066,667 Longview Power, LLC ........................... Ba3 BB 7.50%-8.00% 02/28/14 1,029,333
933,333 Longview Power, LLC (g) ....................... Ba3 BB 1.00% (h)-7.06% 02/28/14 900,667
2,461,388 Northern Star Holdings II LLC and NSG Holdings
II LLC ..................................... Ba2 BB 7.21% 06/15/14 2,344,471
1,000,000 NRG Holdings, Inc. (g) ........................ B2 B- 0.50% (h) 06/08/14 959,643
2,500,000 Texas Competitive Electric Holdings ........... Ba3 B+ 7.49%-8.40% 10/10/14 2,454,601
-------------
14,492,752
-------------
MANAGED HEALTH CARE - 2.5%
2,084,545 IASIS Healthcare Corp. ........................ Ba2 B+ 7.07%-7.20% 03/15/14 1,975,106
715,838 IASIS Healthcare Corp. (g) .................... Ba2 B+ 1.00% (h)-7.72% 03/15/14 678,257
190,890 IASIS Healthcare Corp. ........................ Ba2 B+ 6.69% 03/15/14 180,869
2,957,755 Vanguard Health Systems, Inc. ................. Ba3 B+ 7.45% 09/23/11 2,854,233
-------------
5,688,465
-------------
MULTI-UTILITIES - 1.3%
3,000,000 KGEN, LLC ..................................... Ba3 BB 7.00% 02/08/14 2,850,000
-------------
OIL & GAS EQUIPMENT & SERVICES - 0.7%
1,045,870 Targa Resources, Inc. ......................... Ba3 B+ 6.91%-7.20% 10/31/12 1,022,338
583,416 Targa Resources, Inc. ......................... Ba3 B+ 7.20% 10/31/12 570,289
-------------
1,592,627
-------------
OIL & GAS EXPLORATION & PRODUCTION - 2.1%
1,804,085 Plains Resources, Inc. ........................ Ba2 BB 6.38% 08/12/11 1,758,983
3,115,107 SemCrude, L.P. ................................ Ba2 B+ 6.78% 03/16/11 3,006,078
-------------
4,765,061
-------------

Page 8 See Notes to Financial Statements

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007

SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - (CONTINUED)

OIL & GAS REFINING, MARKETING & TRANSPORTATION - 3.0%
$ 1,968,741 Eagle Rock Gas Gathering & Processing, Ltd. ... NR NR 9.25% 12/03/12 $ 1,919,522
3,000,000 Energy Transfer Equity, L.P. .................. Ba2 NR 6.65% 02/08/12 2,910,000
2,000,000 Enterprise GP Holdings, L.P. .................. Ba2 BB- 7.49% 11/08/14 1,985,000
-------------
6,814,522
-------------
OIL & GAS STORAGE & TRANSPORTATION - 2.1%
2,000,000 IFM Holdco (Colonial Pipeline) ................ Ba3 BBB 6.83%-7.09% 02/27/12 1,962,500
2,901,591 Kinder Morgan, Inc. ........................... Ba2 BB- 6.33% 05/30/14 2,753,793
-------------
4,716,293
-------------
PUBLISHING - 0.4%
982,500 Quebecor Media, Inc. .......................... B1 B 7.24% 01/17/13 955,481
-------------
RAILROADS - 1.3%
3,000,000 Railamerica Transportation Corp. .............. NR NR 7.12% 08/14/08 2,932,500
-------------
WIRELESS TELECOMMUNICATION SERVICES - 2.0%
2,487,500 Crown Castle Operating Co. .................... Ba3 BB+ 6.64%-6.73% 01/09/14 2,360,461
2,094,750 Windstream Corp. .............................. Baa3 BBB- 6.71% 07/17/13 2,050,892
-------------
4,411,353
-------------

TOTAL SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) ................................................ 90,137,554
(Cost $93,754,597) -------------

PRINCIPAL
VALUE DESCRIPTION VALUE
------------- ----------------------------------------------- -------------

REPURCHASE AGREEMENT - 0.8%
(Cost $1,800,000)

1,800,000 Agreement with Wachovia Capital Markets, LLC, 4.48% dated 11/30/07 to be repurchased at
$1,800,672 on 12/03/07, collateralized by $1,825,000 Federal Home Loan Bank, 4.25% due
09/26/08 (Value $1,836,000) .................................................................... 1,800,000
-------------
TOTAL INVESTMENTS - 157.3% ........................................................................ 354,723,687
(Cost $298,839,702) (i)

LOAN OUTSTANDING - (37.3)% ........................................................................ (84,000,000)
NET OTHER ASSETS AND LIABILITIES - (20.0)% ........................................................ (45,175,528)
-------------
NET ASSETS - 100.0% ............................................................................... $ 225,548,159
-------------

See Notes to Financial Statements Page 9

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007

----------
(a) All percentages shown in the Portfolio of Investments are based on
net assets.

(b) Ratings below Baa3 by Moody's Investors Service, Inc. or BBB- by
Standard & Poor's Ratings Group are considered to be below
investment grade. Ratings are unaudited.

(c) Senior Loans generally are subject to mandatory and/or optional
prepayment. Prepayment of Senior Loans may occur because of the
mandatory prepayment conditions and because there may be significant
economic incentives for a borrower to optionally prepay. As a
result, the actual remaining maturity of Senior Loans may be
substantially less than the stated maturities shown. Senior Loans
generally have maturities that range from five to eight years;
however, the Fund estimates that refinancing and prepayments result
in an average maturity of the Senior Loans held in its portfolio to
be approximately 18-30 months.

(d) Senior Loans in which the Fund invests generally pay interest at
rates which are periodically predetermined by reference to a base
lending rate plus a premium. These base lending rates are generally
(i) the lending rate offered by one or more major European banks,
such as the London Inter-Bank Offered Rate ("LIBOR"), (ii) the prime
rate offered by one or more major United States banks or (iii) the
certificate of deposit rate.

(e) This borrower has filed for protection in federal bankruptcy court.

(f) This Senior Loan Interest was privately rated upon issuance. The
rating agency does not provide ongoing surveillance on the rating.

(g) Delayed Draw Loan (Note 2D).

(h) Represents commitment fee rate on delayed draw loans.

(i) Aggregate cost for federal tax purposes is $300,761,442.

DIP Debtor in Possession
NR Not Rated

Page 10 See Notes to Financial Statements

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 2007

ASSETS:
Investments, at value
(Cost $298,839,702) ........................................................................ $ 354,723,687
Cash .......................................................................................... 1,329,574
Prepaid expenses .............................................................................. 1,081
Receivables:
Dividends ............................................................................... 2,237,062
Investment securities sold .............................................................. 1,236,220
Interest ................................................................................ 835,730
--------------
Total Assets ......................................................................... 360,363,354
--------------
LIABILITIES:
Payables:
Outstanding loan ........................................................................ 84,000,000
Capital gain distribution ............................................................... 39,873,297
Net investment income distribution ...................................................... 3,739,530
Investment securities purchased ......................................................... 5,744,252
Investment advisory fees ................................................................ 863,639
Interest and fees on outstanding loan ................................................... 423,422
Audit fees .............................................................................. 47,335
Printing fees ........................................................................... 32,152
Administrative fees ..................................................................... 25,208
Custodian fees .......................................................................... 21,312
Legal fees .............................................................................. 12,982
Trustees' fees and expenses ............................................................. 10,530
Transfer agent fees ..................................................................... 3,164
Accrued expenses and other liabilities ........................................................ 18,372
--------------
Total Liabilities .................................................................... 134,815,195
--------------
NET ASSETS .................................................................................... 225,548,159
==============
NET ASSETS CONSIST OF:
Paid-in capital ............................................................................... $ 171,588,103
Par value ..................................................................................... 90,109
Accumulated net investment income (loss) ...................................................... (4,736,564)
Accumulated net realized gain (loss) on investments sold and foreign currency transactions .... 2,630,553
Net unrealized appreciation (depreciation) of investments and foreign currency transactions ... 55,975,958
--------------
Net Assets ........................................................................... $ 225,548,159
==============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) .......................... $ 25.03
==============
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized) ... 9,010,915
==============

See Notes to Financial Statements Page 11

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 2007

INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $885,857) ........................................ $ 14,482,990
Interest ...................................................................................... 6,769,618
Other ......................................................................................... 33,377
--------------
Total investment income .................................................................... 21,285,985
--------------
EXPENSES:
Interest and fees on outstanding loan ......................................................... 4,883,855
Investment advisory fees ...................................................................... 3,388,411
Administration fees ........................................................................... 311,927
Custodian fees ................................................................................ 135,119
Audit fees .................................................................................... 61,071
Legal fees .................................................................................... 60,239
Printing fees ................................................................................. 51,975
Trustees' fees and expenses ................................................................... 41,248
Transfer agent fees ........................................................................... 37,494
Other ......................................................................................... 363,077
--------------
Total expenses ............................................................................. 9,334,416
--------------
NET INVESTMENT INCOME ......................................................................... 11,951,569
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ................................................................................ 43,020,816
Foreign currency transactions .............................................................. (13,614)
--------------
Net realized gain (loss) ...................................................................... 43,007,202
--------------
Net change in unrealized appreciation (depreciation) on:
Investments ................................................................................ (4,714,790)
Foreign currency transactions .............................................................. 19,105
--------------
Net change in unrealized appreciation (depreciation) .......................................... (4,695,685)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ....................................................... 38,311,517
--------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................... $ 50,263,086
==============

Page 12 See Notes to Financial Statements

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS

YEAR SIX MONTHS YEAR
ENDED ENDED ENDED
11/30/2007 11/30/2006 (a) 05/31/2006
-------------- -------------- --------------

OPERATIONS:
Net investment income ............................................. $ 11,951,569 $ 8,060,747 $ 14,428,145
Net realized gain (loss) .......................................... 43,007,202 1,291,630 17,756,825
Net change in unrealized appreciation (depreciation) .............. (4,695,685) 29,179,215 (6,236,726)
-------------- -------------- --------------
Net increase (decrease) in net assets resulting from operations ... 50,263,086 38,531,592 25,948,244
-------------- -------------- --------------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................................. (18,999,991) (5,926,956) (14,817,389)
Net realized gain ................................................. (39,918,352) (15,086,796) (5,657,549)
-------------- -------------- --------------
Total distributions to shareholders ............................... (58,918,343) (21,013,752) (20,474,938)
-------------- -------------- --------------

CAPITAL TRANSACTIONS:
Proceeds from 30,679 Common Shares reinvested ..................... 824,641 -- --
-------------- -------------- --------------
Total capital transactions ........................................ 824,641 -- --
-------------- -------------- --------------
Net increase (decrease) in net assets ............................. (7,830,616) 17,517,840 5,473,306

NET ASSETS:
Beginning of period ............................................... 233,378,775 215,860,935 210,387,629
-------------- -------------- --------------
End of period ..................................................... $ 225,548,159 $ 233,378,775 $ 215,860,935
============== ============== ==============
Accumulated net investment income (loss) at end of period ......... $ (4,736,564) $ 1,582,994 $ (1,162,035)
============== ============== ==============

----------
(a) The Fund's fiscal year-end was changed from May 31 to November 30.

See Notes to Financial Statements Page 13

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED NOVEMBER 30, 2007

CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations ............................. $ 50,263,086
Adjustments to reconcile net increase in net assets resulting
from operations to net cash provided by operating activities:
Purchases of investments ...................................................... (1,211,234,790)
Sales of investments .......................................................... 1,224,182,765
Net amortization/accretion of premium/discount on investments ................. (10,491)
Net realized gain on investments .............................................. (43,020,816)
Net change in unrealized appreciation (depreciation) on investments ........... 4,714,790
CHANGES IN ASSETS AND LIABILITIES:
Increase in dividends receivable (a) .......................................... (144,810)
Increase in interest receivable ............................................... (23,134)
Decrease in prepaid expenses .................................................. 19,938
Increase in receivable for investment securities sold ......................... (1,186,210)
Increase in payable for investment securities purchased ....................... 5,744,252
Decrease in interest and fees due on loan ..................................... (27,049)
Increase in investment advisory fees payable .................................. 47,976
Decrease in legal fees payable ................................................ (12,893)
Decrease in audit fees payable ................................................ (3,615)
Decrease in printing fees payable ............................................. (13,879)
Increase in transfer agent fees payable ....................................... 3,164
Increase in administrative fees payable ....................................... 821
Increase in custodian fees payable ............................................ 11,264
Increase in trustee's fees and expenses payable ............................... 7,760
Decrease in accrued expenses and other liabilities ............................ (11,409)
-----------------
CASH PROVIDED BY OPERATING ACTIVITIES ............................................ $ 29,306,720

CASH FLOWS FROM FINANCING ACTIVITIES:
Increase from shares reinvested .................................................. 824,641
Distributions to shareholders from net investment income and net realized gain ... (29,718,795)
Issuance of loan ................................................................. 84,000,000
Repayment of loan ................................................................ (83,500,000)
-----------------
CASH USED FOR FINANCING ACTIVITIES ............................................... (28,394,154)
--------------
Increase in cash ................................................................. 912,566
Cash at beginning of year ........................................................ 417,008
--------------
Cash at end of year .............................................................. $ 1,329,574
==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest and fees .................................. $ 4,910,904

----------
(a) Includes net change in unrealized appreciation (depreciation) on foreign
currency of $19,105.

Page 14 See Notes to Financial Statements

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD

YEAR SIX MONTHS YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
11/30/2007 11/30/2006 (a) 5/31/2006 5/31/2005 5/31/2004 (b)
---------- -------------- ---------- ---------- --------------

Net asset value, beginning of year ................. $ 25.99 $ 24.04 $ 23.43 $ 19.24 $ 19.10(c)
---------- -------------- ---------- ---------- --------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............................. 1.33 0.90 1.61 1.23 0.11
Net realized and unrealized gain/(loss)
on investments ................................... 4.25 3.39 1.28 4.65 0.07
---------- -------------- ---------- ---------- --------------
Total from investment operations ................... 5.58 4.29 2.89 5.88 0.18
---------- -------------- ---------- ---------- --------------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income .............................. (2.11) (0.66) (1.65) (1.69) --
Net realized gain .................................. (4.43) (1.68) (0.63) -- --
---------- -------------- ---------- ---------- --------------
Total from distributions ........................... (6.54) (2.34) (2.28) (1.69) --
---------- -------------- ---------- ---------- --------------
Common shares offering costs charged to
paid-in capital .................................. -- -- -- -- (0.04)
---------- -------------- ---------- ---------- --------------
Net asset value, end of period ..................... $ 25.03 $ 25.99 $ 24.04 $ 23.43 $ 19.24
========== ============== ========== ========== ==============
Market value, end of period ........................ $ 23.78 $ 23.93 $ 21.04 $ 20.87 $ 17.70
========== ============== ========== ========== ==============
TOTAL RETURN BASED ON NET ASSET VALUE (D)(E) ....... 21.87% 18.22% 13.50% 32.15% 0.73%
========== ============== ========== ========== ==============
TOTAL RETURN BASED ON MARKET VALUE (E)(F) .......... 25.75% 24.37% 11.52% 27.96% (11.50)%
========== ============== ========== ========== ==============

----------

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............... $ 225,548 $ 233,379 $ 215,861 $ 210,388 $ 172,799
Ratio of total expenses to average net assets ...... 3.63% 3.97%(g) 3.59% 2.78% 1.47%(g)
Ratio of total expenses to average net assets,
excluding interest expense and fees .............. 1.73% 1.73%(g) 1.79% 1.78% N/A
Ratio of net investment income to
average net assets ............................... 4.65% 6.94%(g) 6.73% 5.65% 3.14%(g)
Portfolio turnover rate ............................ 53% 14% 60% 43% 0%

DEBT:
Loan outstanding (in 000's) ........................ $ 84,000 $ 83,500 $ 83,000 $ 75,000 N/A
Asset coverage per $1,000 of indebtedness (h) ...... $ 3,685 $ 3,795 $ 3,601 $ 3,805 N/A

----------
(a) The Fund's fiscal year end was changed from May 31 to November 30.

(b) Initial seed date of March 16, 2004. The Fund commenced operations on
March 25, 2004.

(d) Total return based on net asset value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan, and changes in net
asset value per share and does not reflect sales load.

(e) Total return is not annualized for periods less than one year.

(f) Total return based on market value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan, and changes in
Common Share market price per share, all based on Common Share market
price per share.

(g) Annualized.

(h) Calculated by subtracting the Fund's total liabilities (not including the
loan outstanding) from the Fund's total assets, and dividing by the
outstanding loan balance.

N/A Not applicable.

See Notes to Financial Statements Page 15

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2007

1. FUND DESCRIPTION

Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
(the "Fund") is a non-diversified, closed-end management investment company
organized as a Massachusetts business trust on January 21, 2004 and is
registered with the Securities and Exchange Commission ("SEC") under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Fund trades
under the ticker symbol MFD on the New York Stock Exchange ("NYSE").

The Fund's primary investment objective is to seek a high level of current
return consisting of dividends, interest and other similar income while
attempting to preserve capital. In pursuit of this objective, the Fund seeks to
manage its investments and expenses so that a significant portion of its
distributions to the Fund's Common Shareholders will qualify as tax-advantaged
dividends, subject to the continued availability of favorable tax treatment for
such qualifying dividends. The Fund seeks to achieve its investment objective by
investing in a non-diversified portfolio of equity, debt, preferred or
convertible securities and other instruments (for instance, other instruments
could include Canadian income trusts and Australian stapled securities) issued
by U.S. and non-U.S. issuers that have as their primary focus (in terms of
income and/or assets) the management, ownership and/or operation of
infrastructure and utilities assets in a select group of countries.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.

A. PORTFOLIO VALUATION:

The net asset value ("NAV") of the Fund's Common Shares is determined daily as
of the close of regular trading on the NYSE, normally 4:00 p.m. Eastern time, on
each day the NYSE is open for trading. Domestic debt securities and foreign
securities are priced using data reflecting the earlier closing of the principal
markets for those securities. The NAV is computed by dividing the value of all
assets of the Fund (including accrued interest and dividends), less all
liabilities (including accrued expenses and dividends payable, and any
borrowings of the Fund), by the total number of Common Shares outstanding.

The Fund's investments are valued daily at market value or, in the absence of
market value with respect to any portfolio securities, at fair value in
accordance with valuation procedures adopted by the Fund's Board of Trustees. A
majority of the Fund's assets are valued using market information supplied by
third parties. In the event that market quotations are not readily available,
the pricing service does not provide a valuation for a particular asset, or the
valuations are deemed unreliable, or if events occurring after the close of the
principal markets for particular securities (e.g., domestic debt and foreign
securities), but before the Fund values its assets, would materially affect NAV,
First Trust Advisors L.P. ("First Trust") may use a fair value method to value
the Fund's securities and investments. The use of fair value pricing by the Fund
is governed by valuation procedures adopted by the Fund's Board of Trustees, and
in accordance with the provisions of the 1940 Act.

Foreign securities traded outside the United States are generally valued as of
the time their trading is complete, which is usually different from the close of
the NYSE. Occasionally, events affecting the value of such securities may occur
between such times and the close of the NYSE that will not always be reflected
in the computation of the value of such securities. If events materially
affecting the value of such securities occur during such period, these
securities will be valued at their fair value according to procedures adopted by
the Fund's Board of Trustees. All securities and other assets of the Fund
initially expressed in foreign currencies will be converted to U.S. dollars
using exchange rates in effect at the time of valuation.

The Senior Loans in which the Fund invests are not listed on any securities
exchange or board of trade. Senior Loans are typically bought and sold by
institutional investors in individually negotiated private transactions that
function in many respects like an over-the-counter secondary market, although
typically no formal market-makers exist. This market, while having grown
substantially in the past several years, generally has fewer trades and less
liquidity than the secondary market for other types of securities. Some Senior
Loans have few or no trades, or trade infrequently, and information regarding a
specific Senior Loan may not be widely available or may be incomplete.
Accordingly, determinations of the value of Senior Loans may be based on
infrequent and dated information. Because there is less

Page 16

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2007

reliable, objective data available, elements of judgment may play a greater role
in valuation of Senior Loans than for other types of securities. Typically,
Senior Loans are valued using information provided by an independent third party
pricing service. If the pricing service cannot or does not provide a valuation
for a particular Senior Loan or such valuation is deemed unreliable, First Trust
may value such Senior Loan at a fair value according to procedures adopted by
the Fund's Board of Trustees, and in accordance with the provisions of the 1940
Act.

Portfolio securities listed on any exchange other than the NASDAQ National
Market ("NASDAQ") are valued at the last sale price on the business day as of
which such value is being determined. If there has been no sale on such day, the
securities are valued at the mean of the most recent bid and asked prices on
such day. Securities traded on the NASDAQ are valued at the NASDAQ Official
Closing Price as determined by NASDAQ. Portfolio securities traded on more than
one securities exchange are valued at the last sale price on the business day as
of which such value is being determined at the close of the exchange
representing the principal market for such securities. Portfolio securities
traded in the over-the-counter market, but excluding securities traded on the
NASDAQ, are valued at the closing bid prices. Short-term investments that mature
in less than 60 days are valued at amortized cost.

B. REPURCHASE AGREEMENTS:

The Fund engages in repurchase agreement transactions. Under the terms of a
typical repurchase agreement, the Fund takes possession of an underlying debt
obligation subject to an obligation of the seller to repurchase, and the Fund to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Fund's holding period. This arrangement results in a fixed rate
of return that is not subject to market fluctuations during the Fund's holding
period. The value of the collateral is at all times at least equal to the total
amount of the repurchase obligation, including interest. In the event of
counterparty default, the Fund has the right to use the collateral to offset
losses incurred. There is potential loss to the Fund in the event the Fund is
delayed or prevented from exercising its rights to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert its
rights. The Fund reviews the value of the collateral and the creditworthiness of
those banks and dealers with which the Fund enters into repurchase agreements to
evaluate potential risks.

C. SECURITIES TRANSACTIONS AND INVESTMENT INCOME:

Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on the accrual basis. Market premiums and discounts are amortized over the
expected life of each respective borrowing.

Distributions received from the Fund's investments in Master Limited
Partnerships ("MLP") generally are comprised of return of capital from the MLP
to the extent of the cost basis of such MLP investments. Cumulative
distributions received in excess of the Fund's cost basis in a MLP generally are
recorded as dividend income.

Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income on such securities
is not accrued until settlement date. The Fund maintains liquid assets with a
current value at least equal to the amount of its when-issued or
delayed-delivery purchase commitments. At November 30, 2007, the Fund had no
when-issued or delayed-delivery purchase commitments.

D. UNFUNDED LOAN COMMITMENTS:

The Fund may enter into certain credit agreements, all or a portion of which may
be unfunded. The Fund had unfunded delayed draw loan commitments of
approximately $1,734,016 as of November 30, 2007. The Fund is obligated to fund
these loan commitments at the borrower's discretion. Net unrealized appreciation
of $71,870 from these commitments is included in "Investments, at value" on the
Statement of Assets and Liabilities.

E. FOREIGN CURRENCY:

The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period.
Purchases and sales of investment securities and items of income and expense are
translated on the respective dates of such transactions. Unrealized gains and
losses which result from changes in foreign currency exchange rates have been
included in "Net change in unrealized appreciation (depreciation) on foreign
currency

Page 17

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2007

transactions" on the Statement of Operations. Net realized foreign currency
gains and losses include the effect of changes in exchange rates between trade
date and settlement date on investment security transactions, foreign currency
transactions and interest and dividends received. The portion of foreign
currency gains and losses related to fluctuation in exchange rates between the
initial purchase trade date and subsequent sale trade date is included in "Net
realized gain (loss) on foreign currency transactions" on the Statement of
Operations. Unrealized appreciation of $91,973 from dividends receivable in
foreign currencies are included in "Dividends receivable" on the Statement of
Assets and Liabilities.

F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:

Dividends from net investment income of the Fund are declared and paid quarterly
or as the Board of Trustees may determine from time to time. On December 11,
2006, the Fund's Board of Trustees adopted a level distribution plan for the
Fund. Distributions of any net capital gains earned by the Fund are distributed
at least annually. Distributions will automatically be reinvested into
additional Common Shares pursuant to the Fund's Dividend Reinvestment Plan
unless cash distributions are elected by the shareholder.

Distributions from income and capital gains are determined in accordance with
income tax regulations, which may differ from accounting principles generally
accepted in the United States of America. These differences are primarily due to
differing treatments of income and gains on various investment securities held
by the Fund, timing differences and differing characterization of distributions
made by the Fund. Permanent differences incurred during the tax year ended
November 30, 2007 resulting in book and tax accounting differences, have been
reclassified at period end to reflect an increase in undistributed income by
$728,864, a decrease in accumulated net realized gain (loss) on investments sold
by $490,380 and a decrease to paid-in capital of $238,484. Net assets were not
affected by this reclassification.

The tax character of distributions paid during the fiscal years ended November
30, 2007 and November 30, 2006 is as follows:

NOVEMBER 30, 2007 NOVEMBER 30, 2006
----------------- -----------------
Distributions paid from:
Ordinary Income ........................ $ 18,999,991 $ 18,319,681
Long-Term Capital Gain ................. 39,918,352 17,242,053

As of November 30, 2007, the components of distributable earnings on a tax basis
were as follows:

Undistributed Ordinary Income .......... $ 1,082,220
Undistributed Long-Term Capital Gains .. 42,393,449
Net Unrealized Appreciation ............ 54,054,217

G. 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, and by 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.

Page 18

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2007

POST-OCTOBER LOSSES. Under current laws, certain capital losses realized after
October 31 may be deferred and treated as occurring on the first day of the
following fiscal year. For the fiscal year ended November 30, 2007, the Fund
intends to elect to defer net realized currency losses incurred from November 1,
2007 through December 31, 2007 of $41,060.

In June 2006, Financial Accounting Standards Board Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement
109 ("FIN 48"), was issued and is effective for fiscal years beginning after
December 15, 2006. This Interpretation prescribes a minimum threshold for
financial statement recognition of the benefit of a tax position taken or
expected to be taken in a tax return. As of November 30, 2007, management has
evaluated the application of FIN 48 to the Fund, and has determined that there
is no material impact resulting from the adoption of this Interpretation on the
Fund's financial statements.

H. EXPENSES:

The Fund will pay all expenses directly related to its operations.

I. ACCOUNTING PRONOUNCEMENTS:

In September 2006, Statement of Financial Accounting Standards No. 157 Fair
Value Measurements ("SFAS 157") was issued by the FASB and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. At this time, management is evaluating the implications
of SFAS 157 and its impact on the Fund's financial statements, if any, has not
been determined.

3. INVESTMENT ADVISORY FEE AND OTHER AFFILIATED TRANSACTIONS

First Trust is a limited partnership with one limited partner, Grace Partners of
DuPage L.P., and one general partner, The Charger Corporation. First Trust
serves as investment advisor to the Fund pursuant to an Investment Management
Agreement. First Trust is responsible for the ongoing monitoring of the Fund's
investment portfolio, managing the Fund's business affairs and certain
administrative services necessary for the management of the Fund. For these
services, First Trust is entitled to a quarterly fee calculated at an annual
rate of 0.40% of the Fund's Total Assets up to and including $250 million and
0.35% of the Fund's Total Assets over $250 million. Total Assets are generally
defined as average daily total assets (including any principal amount of any
borrowings) minus the Fund's accrued liabilities (excluding the principal amount
of any borrowings or indebtedness incurred).

Macquarie Fund Adviser, LLC ("MFA") 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. MFA manages the Core Component
and, for its portfolio management services, MFA 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 MFA. If the Fund's Total Assets are greater than $250
million, MFA receives an annual portfolio management fee of 0.65% for that
portion of the Fund's Total Assets over $250 million. In addition, to the extent
that MFA invests a portion of the Core Component in unlisted securities ("Core
Unlisted Instruments"), MFA is entitled to receive a supplemental fee of 0.60%
of that portion of the Fund's Total Assets invested in Core Unlisted
Instruments. Four Corners manages the Senior Loan Component and, for its
portfolio management services, Four Corners is entitled to a quarterly fee
calculated at an annual rate of 0.60% for that portion of the Fund's Total
Assets allocated to Four Corners.

PFPC Inc. ("PFPC"), an indirect, majority-owned subsidiary of The PNC Financial
Services Group, Inc., serves as the Fund's Administrator and Transfer Agent in
accordance with certain fee arrangements. PFPC Trust Company, an indirect,
majority-owned subsidiary of The PNC Financial Services Group, Inc., serves as
the Fund's Custodian in accordance with certain fee arrangements.

Effective January 1, 2007, each Trustee who is not an officer or employee of
First Trust Advisors, any sub-advisor or any of their affiliates, ("Independent
Trustees") is paid an annual retainer of $10,000 per trust for the first 14
trusts of the First Trust Fund Complex and an annual retainer of $7,500 per
trust of each subsequent trust added to the First Trust Fund Complex. The annual
retainer is allocated equally among each of the trusts. No additional meeting
fees are paid in connection with board or committee meetings.

Additionally, Thomas R. Kadlec is paid $10,000 annually to serve as the Lead
Trustee and Niel B. Nielson is paid $5,000 annually to serve as the chairman of
the Audit Committee, with such compensation paid by the trusts in the First
Trust Fund Complex and divided among those trusts. Independent Trustees are also
reimbursed by the trusts in the First Trust Fund Complex for travel and
out-of-pocket expenses in connection with all meetings. Effective January 1,
2008, each of the chairmen of the Nominating and Governance Committee

Page 19

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2007

and the Valuation Committee will be paid $2,500 to serve in such capacities with
such compensation paid by the trusts in First Trust Fund Complex and divided
among these trusts. Also effective January 1, 2008, each committee chairman will
serve two years before rotating to serve as a chairman of another committee.

For the fiscal year ended November 20, 2007, the Fund paid brokerage commissions
to Macquarie Securities (USA) Inc., an affiliate of the Sub-Advisor, totaling
$7,553.

4. PURCHASES AND SALES OF SECURITIES

Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments, for the year ended November 30, 2007, were $179,326,531,
and $191,505,082, respectively.

As of November 30, 2007, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $59,482,417
and the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $5,520,172.

5. COMMON SHARES

As of November 30, 2007, 9,010,915 of $0.01 par value Common Shares were issued
and outstanding. An unlimited number of Common Shares has been authorized under
the Fund's Dividend Reinvestment Plan.

COMMON SHARE TRANSACTIONS WERE AS FOLLOWS:

YEAR ENDED SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 2007 NOVEMBER 30, 2006 MAY 31, 2006
------------------ ----------------- ---------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------ --------- ------ -------- ------ ------

Issued as reinvestment of dividends under the
Dividend Reinvestment Plan ....................... 30,679 $ 824,641 -- $ -- -- $ --
------ --------- ------ -------- ------ ------

30,679 $ 824,641 -- $ -- -- $ --
====== ========= ====== ======== ====== ======

6. REVOLVING CREDIT AND SECURITY AGREEMENT

The Fund entered into a Revolving Credit and Security Agreement with CRC
Funding, LLC, as conduit lender, and Citigroup North America, Inc., as secondary
lender, which provides for a revolving credit facility to be used as leverage
for the Fund. The credit facility provides for a secured 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 an "asset coverage" of at least 300% (33-1/3% of the Fund's total
assets after borrowings). The total commitment under the Revolving Credit and
Security Agreement is $95,000,000. For the year ended November 30, 2007, the
average amount outstanding was $82,790,411. The high and low annual interest
rates during the year ended November 30, 2007, were 5.75% and 5.13%,
respectively, and the weighted average interest rate was 5.33%. The annual
interest rate in effect at November 30, 2007 was 5.19%. Until May 21, 2007, the
Fund paid additional borrowing costs, which included an administration fee of
0.02%, a program fee of 0.35% and a liquidity fee of 0.14% per year. Effective
May 21, 2007, the Fund pays no administration fee, the program fee is 0.23% and
the liquidity fee is 0.10% per year. Such expenses are included in "Interest and
fees on outstanding loan" on the Statement of Operations.

7. 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.

8.RISK CONSIDERATIONS

INDUSTRY CONCENTRATION RISK: The Fund intends to invest up to 100% of its Total
Assets in the securities and instruments of Infrastructure Issuers. Given this
industry concentration, the Fund will be more susceptible to adverse economic or
regulatory occurrences affecting that industry than an investment company that
is not concentrated in a single industry. Infrastructure Issuers, including
utilities and companies involved in infrastructure projects, may be subject to a
variety of factors that may adversely affect their business or

Page 20

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2007

operations, including high interest costs in connection with capital
construction programs, high leverage, costs associated with environmental and
other regulations, the effects of economic slowdown, surplus capacity, increased
competition from other providers of services, uncertainties concerning the
availability of fuel at reasonable prices, the effects of energy conservation
policies and other factors.

LEVERAGE RISK: The use of leverage results in additional risks and can magnify
the effect of any losses. The funds borrowed pursuant to a leverage borrowing
program, or obtained through the issuance of Preferred Shares, 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 and the holders of Preferred Shares, with
respect to the payment of dividends or upon liquidation. The Fund may not be
permitted to declare dividends or other distributions, including dividends and
distributions with respect to Common Shares or Preferred Shares or purchase
Common Shares or Preferred Shares.

NON-U.S. RISK: Investments in the securities and instruments of non-U.S. issuers
involve certain considerations and risks not ordinarily associated with
investments in securities and instruments of U.S. issuers. Non-U.S. companies
are not generally subject to uniform accounting, auditing and financial
standards and requirements comparable to those applicable to U.S. companies.
Non-U.S. securities exchanges, brokers and listed companies may be subject to
less government supervision and regulation than exists in the United States.
Dividend and interest income may be subject to withholding and other non-U.S.
taxes, which may adversely affect the net return on such investments. There may
be difficulty in obtaining or enforcing a court judgment abroad.

CURRENCY RISK: Currency risk is the risk that the value of a non-U.S.
investment, measured in U.S. dollars, will decrease because of unfavorable
changes in currency exchange rates. The Fund does not currently intend to reduce
or hedge its exposure to non-U.S. currencies other than in connection with the
Fund's exposure to dividends received or receivable in non-U.S. currencies and
to hedge forward commitments.

SENIOR LOAN RISK: In the event a Borrower fails to pay scheduled interest or
principal payments on a Senior Loan held by the Fund, the Fund will experience a
reduction in its income and a decline in the market value of the Senior Loan,
which will likely reduce dividends and lead to a decline in the net asset value
of the Fund's Common Shares. If the Fund acquires a Senior Loan from another
Lender, for example, by acquiring a participation, the Fund may also be subject
to credit risks with respect to that lender. The value of the collateral may not
equal the Fund's investment when the Senior Loan is acquired or may decline
below the principal amount of the Senior Loan subsequent to the Fund's
investment. Also, to the extent that collateral consists of stock of the
borrower or its subsidiaries or affiliates, the Fund bears the risk that the
stock may decline in value, be relatively illiquid, and/ or may lose all or
substantially all of its value, causing the Senior Loan to be
undercollateralized. Therefore, the liquidation of the collateral underlying a
Senior Loan may not satisfy the issuer's obligation to the Fund in the event of
non-payment of scheduled interest or principal, and the collateral may not be
readily liquidated.

NON-DIVERSIFICATION RISK: Because the Fund is non-diversified, it is only
limited as to the percentage of its assets which may be invested in the
securities of any one issuer by the diversification requirements imposed by the
Internal Revenue Code of 1986, as amended. Because the Fund may invest a
relatively high percentage of its assets in a limited number of issuers, the
Fund may be more susceptible to any single economic, political or regulatory
occurrence and to the financial conditions of the issuers in which it invests.

INTEREST RATE RISK: The Fund is also subject to interest rate risk. Interest
rate risk is the risk that fixed-income securities will decline in value because
of changes in market interest rates. Investments in debt securities with
long-term maturities may experience significant price declines if long-term
interest rates increase.

Page 21

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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, 2007,
the related statements of operations and cash flows for the year then ended, and
the statements of changes in net assets and financial highlights for 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 audit 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 audit 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, 2007, by correspondence with the Fund's
custodian and brokers. We believe that our audits provided 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
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund as
of November 30, 2007, the results of its operations, changes in its net assets,
and the financial highlights for the periods presented in conformity with
accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP

January 22, 2008

Page 22

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ADDITIONAL INFORMATION
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2007 (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 PFPC
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 PFPC Inc., 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 1-800-331-1710 in
accordance with such reasonable requirements as the Plan Agent and 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 PFPC 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 1-800-988-5891; (2) on
the Fund's website located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's website located at http://www.sec.gov.

Page 23

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ADDITIONAL INFORMATION - (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2007 (UNAUDITED)

PORTFOLIO HOLDINGS

The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Form N-Qs are available (1) by calling
1-800-988-5891; (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 1-800-SEC-0330.

BY-LAW AMENDMENT

On December 11, 2006, the Board of Trustees approved certain changes to the
By-Laws of the Fund which may have the effect of delaying or preventing a change
in control of the Fund, including the implementation of a staggered Board of
Trustees. The changes were not required to be, and were not, approved by the
Fund's shareholders. To receive a copy of the amended By-Laws, investors may
call the Fund at 1-800-988-5891.

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 May 10, 2007, 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 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 the Rule 30a-2 under the 1940
Act.

TAX INFORMATION

Of the ordinary income distributions made by the Fund during the year ended
November 30, 2007, .225% qualifies for the corporate dividends received
deduction available to corporate shareholders.

The Fund hereby designates as qualified dividend income distributions 100% of
the ordinary income, for the year ended November 30, 2007.

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 $1.70 (representing a
total of $15,305,893). The total amount of taxes paid to such countries is $0.10
per share (representing a total of $884,016).

For the year ended November 30, 2007, the amount of long-term capital gain
distributions designated by the Fund was $14,458,334, which is taxable at a
maximum rate of 15% for federal income tax purposes.

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, Energy Income and
Growth Fund, First Trust/Fiduciary Asset Management Covered Call Fund, First
Trust/Aberdeen Global Opportunity Income Fund, First Trust/FIDAC Mortgage Income
Fund, First Trust Strategic High Income Fund, First Trust Strategic High Income
Fund II, First Trust Tax-Advantaged Preferred Income Fund and First
Trust/Aberdeen Emerging Opportunity Fund was held on April 16, 2007. At the
Annual Meeting, Trustee Keith was elected for a one-year term; Trustees Erickson
and Kadlec were elected for two-year terms; and Trustees Bowen and Nielson were
elected for three-year terms. The number of votes cast in favor of James A.
Bowen was 6,225,052, the number of votes withheld was 46,270 and the number of
abstentions was 2,708,914. The number of votes cast in favor of Niel B. Nielson
was 6,217,170, the number of votes withheld was 54,152 and the number of
abstentions was 2,708,914. The number of votes cast in favor of Richard E.
Erickson was 6,219,657, the number of votes withheld was 51,665 and the number
of abstentions was 2,708,914. The number of votes cast in favor of Thomas R.
Kadlec was 6,220,130, the number of votes withheld was 51,192 and the number of
abstentions was 2,708,914. The number of votes cast in favor of Robert F. Keith
was 6,217,874, the number of votes withheld was 53,448 and the number of
abstentions was 2,708,914.

Page 24

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ADDITIONAL INFORMATION - (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2007 (UNAUDITED)

The open-end and closed-end funds advised by First Trust Advisors, L.P. (each a
"Fund") consider your privacy an important priority in maintaining our
relationship. We are committed to protecting the security and confidentiality of
your personal information.

SOURCES OF INFORMATION

We may collect nonpublic personal information about you from the following
sources:

o Information we receive from you or 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. The permitted uses
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 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 with affiliates of the Fund. Please note,
however, that the California Financial Information Privacy Act contains an "opt
out" mechanism that California consumers may use to prevent us from sharing
nonpublic personal information with affiliates.

CONFIDENTIALITY AND SECURITY

With regard to our internal security procedures, the Fund restricts access to
your nonpublic personal information to those individuals 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
contact us at 1-800-621-1675.

Page 25

--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS (UNAUDITED)
--------------------------------------------------------------------------------

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2007

NUMBER OF
PORTFOLIOS IN OTHER
NAME, ADDRESS, THE FIRST TRUST TRUSTEESHIPS OR
DATE OF BIRTH AND TERM OF OFFICE AND PRINCIPAL OCCUPATIONS FUND COMPLEX DIRECTORSHIPS
POSITION WITH THE FUND LENGTH OF SERVICE DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
----------------------------------------------------------------------------------------------------------------------------------

INDEPENDENT TRUSTEES
----------------------------------------------------------------------------------------------------------------------------------

Richard E. Erickson, Trustee o Two Year Term Physician; President, 58 None
c/o First Trust Advisors L.P. Wheaton Orthopedics;
1001 Warrenville Road, o Since Fund Inception Co-owner and Co-
Suite 300 Director (January 1996
Lisle, IL 60532 to May 2007), Sports
D.O.B: 04/51 Med Center for Fitness;
Limited Partner,
Gundersen Real Estate
Partnership; Limited
Partner, Sportsmed LLC

Thomas R. Kadlec, Trustee o Two Year Term Senior Vice President and 58 None
c/o First Trust Advisors L.P. Chief Financial Officer
1001 Warrenville Road, o Since Fund Inception (May 2007 to Present),
Suite 300 Vice President and Chief
Lisle, IL 60532 Financial Officer (1990 to
D.O.B: 11/57 May 2007), ADM
Investor Services, Inc.
(Futures Commission
Merchant); Vice President
(May 2005 to Present),
ADM Derivatives, Inc.;
Registered Representative
(2000 to Present),
Segerdahl & Company,
Inc., a FINRA member
(Broker-Dealer)

Robert F. Keith, Trustee o One Year Term President (2003 to 58 None
c/o First Trust Advisors L.P. Present), Hibs Enterprises
1001 Warrenville Road, o Since June 2006 (Financial and
Suite 300 Management Consulting);
Lisle, IL 60532 President (2001 to 2003),
D.O.B: 11/56 Aramark Service Master
Management; President
and Chief Operating
Officer (1998 to 2003),
Service Master
Management Services

Niel B. Nielson, Trustee o Three Year Term President (June 2002 to 58 Director of Covenant
c/o First Trust Advisors L.P. Present), Covenant Transport Inc.
1001 Warrenville Road, o Since Fund Inception College
Suite 300
Lisle, IL 60532
D.O.B: 03/54

Page 26

--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS (UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2007

INTERESTED TRUSTEE
----------------------------------------------------------------------------------------------------------------------------------

James A. Bowen 1, Trustee, o Three Year Trustee President, First Trust 58 Trustee of Wheaton
President, Chairman of the Term and Indefinite Advisors L.P. and First College
Board and CEO Officer Term Trust Portfolios L.P.;
1001 Warrenville Road, Chairman of the Board
Suite 300 o Since Fund Inception of Directors, BondWave
Lisle, IL 60532 LLC (Software
D.O.B: 09/55 Development
Company/Broker-
Dealer) and Stonebridge
Advisors LLC
(Investment Adviser)

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 WHO ARE NOT TRUSTEES
----------------------------------------------------------------------------------------------------------------------------------

Mark R. Bradley Treasurer, Controller, o Indefinite Term Chief Financial Officer, First Trust Advisors L.P.
1001 Warrenville Road, Chief Financial and First Trust Portfolios L.P.; Chief Financial
Suite 300 Officer and Chief o Since Fund Inception Officer, BondWave LLC (Software Development
Lisle, IL 60532 Accounting Officer Company/Broker-Dealer) and Stonebridge Advisors
D.O.B: 11/57 LLC (Investment Adviser)

Kelley Christensen Vice President o Indefinite Term Assistant Vice President, First Trust Advisors L.P.
1001 Warrenville Road, and First Trust Portfolios L.P.
Suite 300 o Since Fund Inception
Lisle, IL 60532
D.O.B: 09/70

James M. Dykas Assistant Treasurer o Indefinite Term Senior Vice President (April 2007 to Present), Vice
1001 Warrenville Road, President (January 2005 to April 2007), First Trust
Suite 300 o Since Fund Inception Advisors L.P. and First Trust Portfolios L.P.;
Lisle, IL 60532 Executive Director (December 2002 to January 2005),
D.O.B: 01/66 Vice President (December 2000 to December 2002), Van
Kampen Asset Management and Morgan Stanley Investment
Management

----------
1 Mr. Bowen is deemed an "interested person" of the Fund due to his
position as President of First Trust Advisors L.P., investment advisor
of the Fund.

Page 27

MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2007

OFFICERS WHO ARE NOT TRUSTEES - (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------

Christopher Fallow Assistant Vice o Indefinite Term Assistant Vice President (August 2006 to Present),
1001 Warrenville Road, President Associate (January 2005 to August 2006), First Trust
Suite 300 o Since Fund Inception Advisors L.P. and First Trust Portfolios L.P.;
Lisle, IL 60532 Municipal Bond Trader (July 2001 to January 2005),
D.O.B: 04/79 BondWave LLC (Software Development
Company/Broker-Dealer)

W. Scott Jardine Secretary and Chief o Indefinite Term General Counsel, First Trust Advisors L.P. and First
1001 Warrenville Road, Compliance Officer Trust Portfolios L.P.; Secretary, BondWave LLC
Suite 300 o Since Fund Inception (Software Development Company/Broker-Dealer) and
Lisle, IL 60532 Stonebridge Advisors LLC (Investment Adviser)
D.O.B: 05/60

Daniel J. Lindquist Vice President o Indefinite Term Senior Vice President (September 2005 to Present),
1001 Warrenville Road, Vice President (April 2004 to September 2005), First
Suite 300 o Since Fund Inception Trust Advisors L.P. and First Trust Portfolios L.P.;
Lisle, IL 60532 Chief Operating Officer (January 2004 to April 2004),
D.O.B: 02/70 Mina Capital Management, LLC; Chief Operating Officer
(April 2000 to January 2004), Samaritan Asset
Management Services, Inc.

Kristi A. Maher Assistant Secretary o Indefinite Term Deputy General Counsel (May 2007 to Present),
1001 Warrenville Road, Assistant General Counsel (March 2004 to May 2007),
Suite 300 o Since Fund Inception First Trust Advisors L.P. and First Trust Portfolios
Lisle, IL 60532 L.P.; Associate (December 1995 to March 2004),
D.O.B: 12/66 Chapman and Cutler LLP

Page 28

This Page Left Blank Intentionally.

[LOGO] FIRST TRUST
ADVISORS L.P.

INVESTMENT ADVISOR
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, IL 60532

INVESTMENT SUB-ADVISORS
Macquarie Fund Adviser, LLC
125 West 55th Street
New York, NY 10019

Four Corners Capital Management LLC
515 South Flower Street, Suite 1600
Los Angeles, CA 90071

ADMINISTRATOR, CUSTODIAN,
FUND ACCOUNTANT,
TRANSFER AGENT &
BOARD ADMINISTRATOR
PFPC Inc.
301 Bellevue Parkway
Wilmington, DE 19809

INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606

LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603

ITEM 2. CODE OF ETHICS.

(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.

(c) There have been no amendments, during the period covered by this
report, to 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, and that relates to any element of
the code of ethics definition enumerated in paragraph (b) of this
item's instructions.

(d) The Registrant has not, during the period covered by this report,
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 Registrant changed its fiscal year end from
May 31 to November 30 effective May 31, 2006. 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 were $45,000 for the fiscal
period ended November 30, 2006 and $89,700 for the fiscal year ended November
30, 2007.

(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 period ended November 30, 2006 and $0
for the fiscal year ended November 30, 2007.

AUDIT-RELATED FEES (INVESTMENT ADVISER) -- The aggregate fees
billed 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 period ended November 30, 2006 and $2,700 for the fiscal year ended
November 30, 2007. These fees were for additional audit work for the Registrant.

(c) TAX FEES (REGISTRANT) -- The aggregate fees billed for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning to the Registrant were $0 for the fiscal period ended November
30, 2006 and $4,350 for the fiscal year ended November 30, 2007. These fees were
for tax consultation and tax preparation.

TAX FEES (INVESTMENT ADVISER) -- The aggregate fees billed 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
period ended November 30, 2006 and $0 for the fiscal year ended November 30,
2007.

(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 $1,636.38 for the fiscal period ended November 30,
2006 and $1,184.62 for the fiscal year ended November 30, 2007. These fees were
for compliance consulting services.

ALL OTHER FEES (INVESTMENT ADVISER) -- The aggregate fees billed
for products and services provided by the principal accountant to the
Registrant's investment adviser, other than services reported in paragraphs (a)
through (c) of this Item were $23,303 for the fiscal period ended November 30,
2006 and $16,769 for the fiscal year ended November 30, 2007. These fees were
for compliance consulting services and AIMR-PPS Verification Services.

(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 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 pre-approval 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%

(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 period ended November 30, 2006 were
$1,636.38 and $48,305 for the Registrant and the Registrant's
investment adviser, respectively and for the fiscal year ended November
30, 2007 were $5,534.62 and $26,469.00 for the Registrant and the
Registrant's investment adviser, respectively.

(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. SCHEDULE OF INVESTMENTS.

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.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

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
Fund Adviser, LLC ("MFA") 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 MFA has full
responsibility for proxy voting and related duties with respect to the Senior
Loan 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 MFA for review. First Trust generally will vote the proxies in
accordance with ISS recommendations. MFA 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. Not withstanding the foregoing, First Trust may
not vote in accordance with 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, the 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.

--------------------------------------------------------------------------------
ISS 2007 PROXY VOTING GUIDELINES
SUMMARY
--------------------------------------------------------------------------------

[GRAPHIC OMITTED]
LOGO
2099 GAITHER ROAD
SUITE 501
ROCKVILLE, MD o
20850-4045
(301) 556-0500
FAX (301)
556-0486
WWW.ISSPROXY.COM

All rights reserved. No part of this publication may be reproduced or
transmitted in any form or by any means, electronic or mechanical, including
photocopy, recording, or any information storage and retrieval system, without
permission in writing from the publisher.

Requests for permission to make copies of any part of this work should be sent
to: Institutional Shareholder Services Marketing Department 2099 Gaither Road
Rockville, MD 20850 ISS is a trademark used herein under license.

ISS 2007 PROXY VOTING GUIDELINES SUMMARY
EFFECTIVE FOR MEETINGS FEB 1, 2007

UPDATED DECEMBER 15, 2006

The following is a condensed version of the proxy voting recommendations
contained in the ISS Proxy Voting Manual.

1. OPERATIONAL ITEMS........................................................6
Adjourn Meeting...................................................... 6
Amend Quorum Requirements.............................................6
Amend Minor Bylaws ...................................................6
Auditor Indemnification and Limitation of Liability.................. 6
Auditor Ratification................................................. 6
Change Company Name ................................................. 7
Change Date, Time, or Location of Annual Meeting..................... 7
Transact Other Business ............................................. 7

2. BOARD OF DIRECTORS...................................................... 8
Voting on Director Nominees in Uncontested Elections ................ 8
2007 Classification of Directors ................................... 10
Age Limits ......................................................... 11
Board Size ......................................................... 11
Classification/Declassification of the Board........................ 11
Cumulative Voting................................................... 11
Director and Officer Indemnification and Liability Protection....... 12
Establish/Amend Nominee Qualifications.............................. 12
Filling Vacancies/Removal of Directors ............................. 12
Independent Chair (Separate Chair/CEO............................... 13
Majority of Independent Directors/Establishment of Committees....... 13
Majority Vote Shareholder Proposals ................................ 13
Office of the Board................................................. 14
Open Access......................................................... 14
Performance Test for Directors...................................... 14
Stock Ownership Requirements ....................................... 15
Term Limits ........................................................ 15

3. PROXY CONTESTS ........................................................ 16
Voting for Director Nominees in Contested Elections................. 16
Reimbursing Proxy Solicitation Expenses ............................ 16
Confidential Voting................................................. 16

4. ANTITAKEOVER DEFENSES AND VOTING RELATED ISSUES........................ 17
Advance Notice Requirements for Shareholder Proposals/Nominations .. 17
Amend Bylaws without Shareholder Consent ........................... 17
Poison Pills ....................................................... 17
Shareholder Ability to Act by Written Consent....................... 17
Shareholder Ability to Call Special Meetings........................ 17
Supermajority Vote Requirements..................................... 17

5. MERGERS AND CORPORATE RESTRUCTURINGS ....................................... 18
Overall Approach......................................................... 18
Appraisal Rights......................................................... 18
Asset Purchases ......................................................... 18
Asset Sales ............................................................. 19
Bundled Proposals........................................................ 19
Conversion of Securities................................................. 19
Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy
Plans/Reverse
Leveraged Buyouts/Wrap Plans ............................................ 19
Formation of Holding Company ............................................ 19
Going Private Transactions (LBOs, Minority Squeezeouts, and Going Dark.. 20
Joint Ventures .......................................................... 20
Liquidations............................................................. 20
Mergers and Acquisitions/ Issuance of Shares to Facilitate Merger or
Acquisition.............................................................. 20
Private Placements/Warrants/Convertible Debentures ...................... 20
Spinoffs ................................................................ 21
Value Maximization Proposals............................................. 21

6. STATE OF INCORPORATION ..................................................... 22
Control Share Acquisition Provisions..................................... 22
Control Share Cash-out Provisions ....................................... 22
Disgorgement Provisions.................................................. 22
Fair Price Provisions.................................................... 22
Freeze-out Provisions.....................................................22
Greenmail ............................................................... 22
Reincorporation Proposals................................................ 23
Stakeholder Provisions .................................................. 23
State Antitakeover Statutes ............................................. 23

7. CAPITAL STRUCTURE........................................................... 24
Adjustments to Par Value of Common Stock................................. 24
Common Stock Authorization .............................................. 24
Dual-Class Stock ........................................................ 24
Issue Stock for Use with Rights Plan..................................... 24
Preemptive Rights........................................................ 24
Preferred Stock ......................................................... 24
Recapitalization......................................................... 25
Reverse Stock Splits..................................................... 25
Share Repurchase Programs ............................................... 25
Stock Distributions: Splits and Dividends ............................... 25
Tracking Stock .......................................................... 25

8. EXECUTIVE AND DIRECTOR COMPENSATION ........................................ 26
Equity Compensation Plans ..................................................26
Cost of Equity Plans..................................................... 26
Repricing Provisions .................................................... 26
Pay-for Performance Disconnect........................................... 26
Three-Year Burn Rate/Burn Rate Commitment................................ 28
Poor Pay Practices ...................................................... 29
Specific Treatment of Certain Award Types in Equity Plan Evaluations........30
Dividend Equivalent Rights............................................... 30
Liberal Share Recycling Provisions ...................................... 30
Other Compensation Proposals and Policies ..................................30

401(k) Employee Benefit Plans ........................................... 30
Director Compensation ................................................... 30
Director Retirement Plans................................................ 31
Employee Stock Ownership Plans (ESOPs) .................................. 31
Employee Stock Purchase Plans-- Qualified Plans.......................... 31
Employee Stock Purchase Plans-- Non-Qualified Plans...................... 31
Incentive Bonus Plans and Tax Deductibility Proposals (OBRA-Related ..... 32
Compensation Proposals................................................... 32
Options Backdating....................................................... 32
Option Exchange Programs/Repricing Options............................... 32
Stock Plans in Lieu of Cash.............................................. 33
Transfer Programs of Stock Options ...................................... 33
Shareholder Proposals on Compensation ..................................... 33
Advisory Vote on Executive Compensation (Say-on-Pay) .................... 33
Compensation Consultants- Disclosure of Board or Company's Utilization... 33
Disclosure/Setting Levels or Types of Compensation for Executives and
Directors................................................................ 34
Option Repricing ........................................................ 34
Pay for Superior Performance ............................................ 34
Pension Plan Income Accounting .......................................... 34
Performance-Based Awards................................................. 35
Severance Agreements for Executives/Golden Parachutes.................... 35
Supplemental Executive Retirement Plans (SERPs) ......................... 35

9. CORPORATE RESPONSIBILITY.................................................... 36
Consumer Issues and Public Safety ......................................... 36
Animal Rights............................................................ 36
Drug Pricing ............................................................ 36
Drug Reimportation....................................................... 36
Genetically Modified Foods .............................................. 36
Handguns................................................................. 37
HIV/AIDS................................................................. 37
Predatory Lending........................................................ 37
Tobacco ................................................................. 38
Toxic Chemicals.......................................................... 38
Environment and Energy..................................................... 38
Arctic National Wildlife Refuge ......................................... 38
CERES Principles......................................................... 39
Climate Change .......................................................... 39
Concentrated Area Feeding Operations (CAFOs.............................. 39
Environmental-Economic Risk Report....................................... 39
Environmental Reports ................................................... 39
Global Warming .......................................................... 40
Kyoto Protocol Compliance................................................ 40
Land Use................................................................. 40
Nuclear Safety .......................................................... 40
Operations in Protected Areas............................................ 40
Recycling................................................................ 40
Renewable Energy......................................................... 41
Sustainability Report.................................................... 41
General Corporate Issues .................................................. 41
Charitable/Political Contributions....................................... 41
Disclosure of Lobbying Expenditures/Initiatives ......................... 42
Link Executive Compensation to Social Performance........................ 42
Outsourcing/Offshoring................................................... 42
Labor Standards and Human Rights........................................... 42
China Principles ........................................................ 42
Country-specific Human Rights Reports.................................... 42

International Codes of Conduct/Vendor Standards ......................... 42
MacBride Principles ..................................................... 43
Military Business ......................................................... 43
Foreign Military Sales/Offsets........................................... 43
Landmines and Cluster Bombs.............................................. 43
Nuclear Weapons ......................................................... 44
Operations in Nations Sponsoring Terrorism (e.g., Iran).................. 44
Spaced-Based Weaponization .............................................. 44

Workplace Diversity...................................................... 44
Board Diversity......................................................... 44
Equal Employment Opportunity (EEO....................................... 44
Glass Ceiling........................................................... 45
Sexual Orientation ..................................................... 45

10. MUTUAL FUND PROXIES ....................................................... 46
Election of Directors.................................................... 46
Converting Closed-end Fund to Open-end Fund ............................. 46
Proxy Contests........................................................... 46
Investment Advisory Agreements .......................................... 46
Approving New Classes or Series of Shares................................ 46
Preferred Stock Proposals................................................ 46
1940 Act Policies ....................................................... 46
Changing a Fundamental Restriction to a Nonfundamental Restriction....... 47
Change Fundamental Investment Objective to Nonfundamental................ 47
Name Change Proposals.................................................... 47
Change in Fund's Subclassification....................................... 47
Disposition of Assets/Termination/Liquidation............................ 47
Changes to the Charter Document ......................................... 47
Changing the Domicile of a Fund ......................................... 48
Authorizing the Board to Hire and Terminate Subadvisors Without
Shareholder Approval..................................................... 48
Distribution Agreements.................................................. 48
Master-Feeder Structure.................................................. 48
Mergers.................................................................. 48
Shareholder Proposals for Mutual Funds..................................... 48
Establish Director Ownership Requirement................................. 48
Reimburse Shareholder for Expenses Incurred.............................. 48
Terminate the Investment Advisor ........................................ 48

1. OPERATIONAL ITEMS
ADJOURN MEETING

Generally vote AGAINST proposals to provide management with the authority to
adjourn an annual or special meeting absent compelling reasons to support the
proposal.

Vote FOR proposals that relate specifically to soliciting votes for a merger or
transaction if supporting that merger or transaction. Vote AGAINST proposals if
the wording is too vague or if the proposal includes "other business."

AMEND QUORUM REQUIREMENTS

Vote AGAINST proposals to reduce quorum requirements for shareholder meetings
below a majority of the shares outstanding unless there are compelling reasons
to support the proposal.

AMEND MINOR BYLAWS

Vote FOR bylaw or charter changes that are of a housekeeping nature (updates or
corrections).

AUDITOR INDEMNIFICATION AND LIMITATION OF LIABILITY

Consider the issue of auditor indemnification and limitation of liability on a
CASE-BY-CASE basis. Factors to be assessed include, but are not limited to:

The terms of the auditor agreement- the degree to which these
agreements impact shareholders' rights;

Motivation and rationale for establishing the agreements; Quality of
disclosure; and Historical practices in the audit area.

WTHHOLD against members of an audit committee in situations where there is
persuasive evidence that the audit committee entered into an inappropriate
indemnification agreement with its auditor that limits the ability of the
company, or its shareholders, to pursue legitimate legal recourse against the
audit firm.

AUDITOR RATIFICATION

Vote FOR proposals to ratify auditors, unless any of the following apply:

An auditor has a financial interest in or association with the company,
and is therefore not independent,

There is reason to believe that the independent auditor has rendered an
opinion which is neither accurate nor indicative of the company's financial
position, or

Fees for non-audit services ("Other" fees) are excessive.

Non-audit fees are excessive if:

Non-audit ("other") fees >audit fees + audit-related fees + tax compliance/
preparation fees

Tax compliance and preparation include the preparation of original and amended
tax returns, refund claims and tax payment planning. All other services in the
tax category, such as tax advice, planning or consulting should be added to
"Other" fees. If the breakout of tax fees cannot be determined, add all tax fees
to "Other" fees.

Vote CASE-BY-CASE on shareholder proposals asking companies to prohibit or limit
their auditors from engaging in non-audit services.

Vote CASE-BY-CASE on shareholder proposals asking for audit firm rotation,
taking into account: The tenure of the audit firm; The length of rotation
specified in the proposal; Any significant audit-related issues at the company;
The number of Audit Committee meetings held each year; The number of financial
experts serving on the committee; and Whether the company has a periodic renewal
process where the auditor is evaluated for both
audit quality and competitive price.

CHANGE COMPANY NAME

Vote FOR proposals to change the corporate name.

CHANGE DATE, TIME, OR LOCATION OF ANNUAL MEETING

Vote FOR management proposals to change the date, time, and/or location of the
annual meeting unless the proposed change is unreasonable.

Vote AGAINST shareholder proposals to change the date, time, and/or location of
the annual meeting unless the current scheduling or location is unreasonable.

TRANSACT OTHER BUSINESS

Vote AGAINST proposals to approve other business when it appears as voting item.

2. BOARD OF DIRECTORS:

VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS

Vote CASE-BY-CASE on director nominees, examining, but not limited to, the
following factors:

o Composition of the board and key board committees;
o Attendance at board and committee meetings;
o Corporate governance provisions and takeover activity;
o Disclosures under Section 404 of Sarbanes-Oxley Act;
o Long-term company performance relative to a market and peer index;
o Extent of the director's investment in the company;
o Existence of related party transactions;
o Whether the chairman is also serving as CEO; o Whether a retired CEO sits on
the board;
o Number of outside boards at which a director serves;
o Majority vote standard for director elections without a provision to allow for
plurality voting when

there are more nominees than seats.

WITHHOLD from individual directors who:

o Attend less than 75 percent of the board and committee meetings without
a valid excuse (such as illness, service to the nation, work on behalf
of the company);
o Sit on more than six public company boards;
o Are CEOs of public companies who sit on the boards of more than two
public companies besides their own-- withhold only at their outside
boards.

WITHHOLD from the entire board of directors, (except from new nominees, who
should be considered on a CASE-BY-CASE basis) if:

o The company's proxy indicates that not all directors attended 75% of
the aggregate of their board and committee meetings, but fails to
provide the required disclosure of the names of the directors involved.
If this information cannot be obtained, withhold from all incumbent
directors;
o The company's poison pill has a dead-hand or modified dead-hand
feature. Withhold every year until this feature is removed;
o The board adopts or renews a poison pill without shareholder approval
since the beginning of 2005, does not commit to putting it to
shareholder vote within 12 months of adoption, or reneges on a
commitment to put the pill to a vote, and has not yet received a
withhold recommendation for this issue;
o The board failed to act on a shareholder proposal that received
approval by a majority of the shares outstanding the previous year;
o The board failed to act on a shareholder proposal that received
approval of the majority of shares cast for the previous two
consecutive years;
o The board failed to act on takeover offers where the majority of the
shareholders tendered their shares;
o At the previous board election, any director received more than 50
percent withhold votes of the shares cast and the company has failed to
address the issue(s) that caused the high withhold rate;
o The company is a Russell 3000 company that underperformed its industry
group (GICS group) under the criteria discussed in the section
"Performance Test for Directors".
o WITHHOLD from Inside Directors and Affiliated Outside Directors (per
the Classification of Directors below) when:
o The inside or affiliated outside director serves on any of the three
key committees: audit, compensation, or nominating;
o The company lacks an audit, compensation, or nominating committee so
that the full board functions as that committee;
o The company lacks a formal nominating committee, even if board attests
that the independent directors fulfill the functions of such a
committee;

o The full board is less than majority independent.

WITHHOLD from the members of the Audit Committee if:

o The non - audit fees paid to the auditor are excessive (see discussion
under Auditor Ratification);
o A material weakness identified in the Section 404 Sarbanes-Oxley Act
disclosures rises to a level of serious concern; there are chronic
internal control issues and an absence of established effective control
mechanisms;
o There is persuasive evidence that the audit committee entered into an
inappropriate indemnification agreement with its auditor that limits
the ability of the company, or its shareholders, to pursue legitimate
legal recourse against the audit firm.

WITHHOLD from the members of the Compensation Committee if:

o There is a negative correlation between the chief executive's pay and
company performance (see discussion under Equity Compensation Plans);
o The company reprices underwater options for stock, cash or other
consideration without prior shareholder approval, even if allowed in
their equity plan;
o The company fails to submit one-time transfers of stock options to a
shareholder vote;
o The company fails to fulfill the terms of a burn rate commitment they
made to shareholders;
o The company has backdated options (see "Options Backdating" policy);
o The company has poor compensation practices (see "Poor Pay Practices"
policy). Poor pay practices may warrant withholding votes from the CEO
and potentially the entire board as well.

WITHHOLD from directors, individually or the entire board, for egregious actions
or failure to replace management as appropriate.

2007 CLASSIFICATION OF DIRECTORS
INSIDE DIRECTOR (I)

o Employee of the company or one of its affiliates(1);
o Non-employee officer of the company if among the five most highly paid
individuals (excluding interim CEO);
o Listed as a Section 16 officer(2);
o Current interim CEO;
o Beneficial owner of more than 50 percent of the company's voting power
(this may be aggregated if voting power is distributed among more than
one member of a defined group).

AFFILIATED OUTSIDE DIRECTOR (AO)

o Board attestation that an outside director is not independent;
o Former CEO of the company;
o Former CEO of an acquired company within the past five years;
o Former interim CEO if the service was longer than 18 months. If the
service was between twelve and eighteen months an assessment of the
interim CEO's employment agreement will be made;(3)
o Former executive(2) of the company, an affiliate or an acquired firm
within the past five years;
o Executive(2) of a former parent or predecessor firm at the time the
company was sold or split off from the parent/predecessor within the
past five years;
o Executive, former executive, general or limited partner of a joint
venture or partnership with the company;
o Relative(4) of a current Section 16 officer of company or its
affiliates;
o Relative(4) of a current employee of company or its affiliates where
additional factors raise concern (which may include, but are not
limited to, the following: a director related to numerous employees;
the company or its affiliates employ relatives of numerous board
members; or a non-Section 16 officer in a key strategic role);
o Relative(4) of former Section 16 officer, of company or its affiliate
within the last five years;
o Currently provides (or a relative(4) provides) professional services(5)
to the company, to an affiliate of the company or an individual officer
of the company or one of its affiliates in excess of $10,000 per year;
o Employed by (or a relative(4) is employed by) a significant customer or
supplier(6);
o Has (or a relative(4) has) any transactional relationship with the
company or its affiliates excluding investments in the company through
a private placement; (6)
o Any material financial tie or other related party transactional
relationship to the company;
o Party to a voting agreement to vote in line with management on
proposals being brought to shareholder vote;
o Has (or a relative(4) has) an interlocking relationship as defined by
the SEC involving members of the board of directors or its Compensation
and Stock Option Committee; (7)

o Founder(8) of the company but not currently an employee;
o Is (or a relative(4) is) a trustee, director or employee of a
charitable or non-profit organization that receives grants or
endowments6 from the company or its affiliates(1).

INDEPENDENT OUTSIDE DIRECTOR (IO)

o No material9 connection to the company other than a board seat.

--------------------------------------------------------------------------------
FOOTNOTES:

(1) "Affiliate" includes a subsidiary, sibling company, or parent company. ISS
uses 50 percent control ownership by the parent company as the standard for
applying its affiliate designation.

(2) "Executives" (officers subject to Section 16 of the Securities and Exchange
Act of 1934) include the chief executive, operating, financial, legal,
technology, and accounting officers of a company (including the president,
treasurer, secretary, controller, or any vice president in charge of a principal
business unit, division or policy function).

--------------------------------------------------------------------------------
3 ISS will look at the terms of the interim CEO's employment contract to
determine if it contains severance pay, long-term health and pension benefits or
other such standard provisions typically contained in contracts of permanent,
non-temporary CEOs. ISS will also consider if a formal search process was
underway for a full-time CEO at the time.

4 "Relative" follows the SEC's new definition of "immediate family members"
which covers spouses, parents, children, step-parents, step-children, siblings,
in-laws, and any person (other than a tenant or employee) sharing the household
of any director, nominee for director, executive officer, or significant
shareholder of the company.

5 Professional services can be characterized as advisory in nature and
generally include the following: investment banking/financial advisory services;
commercial banking (beyond deposit services); investment services; insurance
services; accounting/audit services; consulting services; marketing services;
and legal services. The case of participation in a banking syndicate by a
non-lead bank should be considered a transaction (and hence subject to the
associated materiality test) rather than a professional relationship.

6 If the company makes or receives annual payments exceeding the greater of
$200,000 or five percent of the recipient's gross revenues. (The recipient is
the party receiving the financial proceeds from the transaction).

7 Interlocks include: (a) executive officers serving as directors on each
other's compensation or similar committees (or, in the absence of such a
committee, on the board) or (b) executive officers sitting on each other's
boards and at least one serves on the other's compensation or similar committees
(or, in the absence of such a committee, on the board).

8 The operating involvement of the Founder with the company will be
considered. Little to no operating involvement may cause ISS to deem the Founder
as an independent outsider.

9 For purposes of ISS' director independence classification, "material" will be
defined as a standard of relationship (financial, personal or otherwise) that a
reasonable person might conclude could potentially influence one's objectivity
in the boardroom in a manner that would have a meaningful impact on an
individual's ability to satisfy requisite fiduciary standards on behalf of
shareholders.
--------------------------------------------------------------------------------

AGE LIMITS

Vote AGAINST shareholder or management proposals to limit the tenure of outside
directors through mandatory retirement ages.

BOARD SIZE

Vote FOR proposals seeking to fix the board size or designate a range for the
board size.

Vote AGAINST proposals that give management the ability to alter the size of the
board outside of a specified range without shareholder approval.

CLASSIFICATION/DECLASSIFICATION OF THE BOARD Vote AGAINST proposals to classify
the board.

Vote FOR proposals to repeal classified boards and to elect all directors
annually.

CUMULATIVE VOTING

Generally vote AGAINST proposals to eliminate cumulative voting.

Generally vote FOR proposals to restore or provide for cumulative voting unless
the company meets ALL of the following criteria:

o Majority vote standard in director elections, including a carve-out for
plurality voting in contested situations;
o Annually elected board;
o Two-thirds of the board composed of independent directors;
o Nominating committee composed solely of independent directors;
o Confidential voting; however, there may be a provision for suspending
confidential voting during proxy contests;

o Ability of shareholders to call special meetings or act by written
consent with 90 days' notice;
o Absence of superior voting rights for one or more classes of stock;
o Board does not have the right to change the size of the board beyond a
stated range that has been approved by shareholders;
o The company has not under-performed its both industry peers and index
on both a one-year and three-year total shareholder returns basis*,
unless there has been a change in the CEO position within the last
three years; and
o No director received a WITHHOLD vote level of 35% or more of the votes
cast in the previous election.

* Starting in 2007, the industry peer group used for this evaluation will change
from the 4-digit GICS group to the average of the 12 companies in the same
6-digit GICS group that are closest in revenue to the company. To fail, the
company must under-perform its index and industry group on all 4 measures (1 and
3 year on industry peers and index).

DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY PROTECTION

Vote CASE-BY-CASE on proposals on director and officer indemnification and
liability protection using Delaware law as the standard.

Vote AGAINST proposals to eliminate entirely directors' and officers' liability
for monetary damages for violating the duty of care.

Vote AGAINST indemnification proposals that would expand coverage beyond just
legal expenses to liability for acts, such as negligence, that are more serious
violations of fiduciary obligation than mere carelessness.

Vote AGAINST proposals that would expand the scope of indemnification to provide
for mandatory indemnification of company officials in connection with acts that
previously the company was permitted to provide indemnification for at the
discretion of the company's board (i.e. "permissive indemnification") but that
previously the company was not required to indemnify.

Vote FOR only those proposals providing such expanded coverage in cases when a
director's or officer's legal defense was unsuccessful if both of the following
apply:

If the director was found to have acted in good faith and in a manner
that he reasonably believed was in the best interests of the company; and

If only the director's legal expenses would be covered.

ESTABLISH/AMEND NOMINEE QUALIFICATIONS

Vote CASE-BY-CASE on proposals that establish or amend director qualifications.
Votes should be based on how reasonable the criteria are and to what degree they
may preclude dissident nominees from joining the board.

Vote AGAINST shareholder proposals requiring two candidates per board seat.

FILLING VACANCIES/REMOVAL OF DIRECTORS

Vote AGAINST proposals that provide that directors may be removed only for
cause.

Vote FOR proposals to restore shareholders' ability to remove directors with or
without cause.

Vote AGAINST proposals that provide that only continuing directors may elect
replacements to fill board vacancies.

Vote FOR proposals that permit shareholders to elect directors to fill board
vacancies.

INDEPENDENT CHAIR (SEPARATE CHAIR/CEO)

Generally vote FOR shareholder proposals requiring the position of chair be
filled by an independent director unless there are compelling reasons to
recommend against the proposal, such as a counterbalancing governance structure.
This should include all of the following:

o Designated lead director, elected by and from the independent board
members with clearly delineated and comprehensive duties. (The role may
alternatively reside with a presiding director, vice chairman, or
rotating lead director; however the director must serve a minimum of
one year in order to qualify as a lead director.) At a minimum these
should include:

- Presides at all meetings of the board at which the chairman is not
present, including executive sessions of the independent directors,
- Serves as liaison between the chairman and the independent directors,
- Approves information sent to the board,
- Approves meeting agendas for the board,
- Approves meetings schedules to assure that there is
sufficient time for discussion of all agenda items,
- Has the authority to call meetings of the independent directors,
- If requested by major shareholders, ensures that he is available for
consultation and direct communication;

Two-thirds independent board;

o All-independent key committees;
o Established governance guidelines;
o The company should not have underperformed both its industry peers and
index on both a one-year and three-year total shareholder returns
basis*, unless there has been a change in the Chairman/CEO position
within that time;
o The company does not have any problematic governance issues.

MAJORI

TY OF INDEPENDENT DIRECTORS/ESTABLISHMENT OF COMMITTEES

Vote FOR shareholder proposals asking that a majority or more of directors be
independent unless the board composition already meets the proposed threshold by
ISS' definition of independent outsider. (See Classification of Directors.)

Vote FOR shareholder proposals asking that board audit, compensation, and/or
nominating committees be composed exclusively of independent directors if they
currently do not meet that standard.

MAJORITY VOTE SHAREHOLDER PROPOSALS

Generally vote FOR precatory and binding resolutions requesting that the board
change the company's bylaws to stipulate that directors need to be elected with
an affirmative majority of votes cast, provided it does not conflict with the
state law where the company is incorporated. Binding resolutions need to allow
for a carve-out for a plurality vote standard when there are more nominees than
board seats.

Companies are strongly encouraged to also adopt a post-election policy (also
know as a director resignation policy) that will provide guidelines so that the
company will promptly address the situation of a holdover director.

OFFICE OF THE BOARD

Generally vote FOR shareholders proposals requesting that the board establish an
Office of the Board of Directors in order to facilitate direct communications
between shareholders and non-management directors, unless the company has all of
the following:

o Established a communication structure that goes beyond the exchange
requirements to facilitate the exchange of information between
shareholders and members of the board;
o Effectively disclosed information with respect to this structure to its
shareholders;
o Company has not ignored majority-supported shareholder proposals or a
majority withhold vote on a director nominee; and
o The company has an independent chairman or a lead/presiding director,
according to ISS' definition. This individual must be made available
for periodic consultation and direct communication with major
shareholders.

OPEN ACCESS

Generally vote FOR reasonably crafted shareholder proposals providing
shareholders with the ability to nominate director candidates to be included on
management's proxy card, provided the proposal substantially mirrors the SEC's
proposed two-trigger formulation (see the proposed "Security Holder Director
Nominations" rule (HTTP://WWW.SEC.GOV/RULES/PROPOSED/34-48626.HTM) or ISS'
comment letter to the SEC dated 6/13/2003, available on ISS website under
Governance Center- ISS Position Papers).

PERFORMANCE TEST FOR DIRECTORS

WITHHOLD from directors of Russell 3000 companies that underperformed relative
to their industry peers. The criterion used to evaluate such underperformance is
a combination of four performance measures:

One measurement will be a market-based performance metric and three measurements
will be tied to the company's operational performance. The market performance
metric in the methodology is five-year Total Shareholder Return (TSR) on a
relative basis within each four-digit GICS group. The three operational
performance metrics are sales growth, EBITDA growth, and pre-tax operating
Return on Invested Capital (ROIC) on a relative basis within each four-digit
GICS group. All four metrics will be time-weighted as follows: 40 percent on the
trailing 12 month period and 60 percent on the 48 month period prior to the
trailing 12 months. This methodology emphasizes the company's historical
performance over a five-year period yet also accounts for near-term changes in a
company's performance.

The table below summarizes the new framework: Adopt a two-phased approach. In
2007 (YEAR 1), the worst performers (bottom five percent) within each of the 24
GICS groups will automatically receive CAUTIONARY LANGUAGE, except for companies
that have already received cautionary language or withhold votes in 2006 under
the current policy. The latter may be subject to withhold votes in 2007. For
2008 (YEAR 2), WITHHOLD votes from director nominees if a company continues to
be in the bottom five percent within its GICS group for that respective year
and/or shows no improvement in its most recent trailing 12 months operating and
market performance relative to its peers in its GICS group. This policy would be
applied on a rolling basis going forward.

---------------------------------------------------------------------------------------------------------------------------------
Metrics Basis of Evaluation Weighting 2nd Weighting
---------------------------------------------------------------------------------------------------------------------------------
OPERATIONAL PERFORMANCE 50%
---------------------------------------------------------------------------------------------------------------------------------
5-YEAR AVERAGE PRE-TAX MANAGEMENT EFFICIENCY 33.3%
OPERATING ROIC IN DEPLOYING ASSETS
---------------------------------------------------------------------------------------------------------------------------------
5-YEAR SALES GROWTH TOP-LINE 33.3%
---------------------------------------------------------------------------------------------------------------------------------
5-YEAR EBITDA GROWTH CORE-EARNINGS 33.3%
---------------------------------------------------------------------------------------------------------------------------------
SUB TOTAL 100%
---------------------------------------------------------------------------------------------------------------------------------

STOCK 50%
PERFORMANCE
----------------------------------------------------------------
5-YEAR TSR MARKET
----------------------------------------------------------------
TOTAL 100%
----------------------------------------------------------------

STOCK OWNERSHIP REQUIREMENTS

Generally vote AGAINST shareholder proposals that mandate a minimum amount of
stock that directors must own in order to qualify as a director or to remain on
the board. While stock ownership on the part of directors is desired, the
company should determine the appropriate ownership requirement.

Vote CASE-BY-CASE on shareholder proposals asking that the company adopt a
holding or retention period for its executives (for holding stock after the
vesting or exercise of equity awards), taking into account any stock ownership
requirements or holding period/retention ratio already in place and the actual
ownership level of executives.

TERM LIMITS

Vote AGAINST shareholder or management proposals to limit the tenure of outside
directors through term limits. However, scrutinize boards where the average
tenure of all directors exceeds 15 years for independence from management and
for sufficient turnover to ensure that new perspectives are being added to the
board.

3. PROXY CONTESTS

VOTING FOR DIRECTOR NOMINEES IN CONTESTED ELECTIONS

Vote CASE-BY-CASE on the election of directors in contested elections,
considering the following factors:
Long-term financial performance of the target company relative to its industry;
Management's track record; Background to the proxy contest;
Qualifications of director nominees (both slates);
Strategic plan of dissident slate and quality of critique against
management; Likelihood that the proposed goals and objectives can be
achieved (both slates); Stock ownership positions.

REIMBURSING PROXY SOLICITATION EXPENSES

Vote CASE-BY-CASE on proposals to reimburse proxy solicitation expenses. When
voting in conjunction with support of a dissident slate, vote FOR the
reimbursement of all appropriate proxy solicitation expenses associated with the
election.

CONFIDENTIAL VOTING

Vote FOR shareholder proposals requesting that corporations adopt confidential
voting, use independent vote tabulators, and use independent inspectors of
election, as long as the proposal includes a provision for proxy contests as
follows: In the case of a contested election, management should be permitted to
request that the dissident group honor its confidential voting policy. If the
dissidents agree, the policy remains in place. If the dissidents will not agree,
the confidential voting policy is waived.

Vote FOR management proposals to adopt confidential voting.

4. ANTITAKEOVER DEFENSES AND VOTING RELATED ISSUES
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS/NOMINATIONS

Vote CASE-BY-CASE on advance notice proposals, supporting those proposals which
allow shareholders to submit proposals as close to the meeting date as
reasonably possible and within the broadest window possible.

AMEND BYLAWS WITHOUT SHAREHOLDER CONSENT

Vote AGAINST proposals giving the board exclusive authority to amend the bylaws.
Vote FOR proposals giving the board the ability to amend the bylaws in addition
to shareholders.

POISON PILLS

Vote FOR shareholder proposals requesting that the company submit its poison
pill to a shareholder vote or redeem it UNLESS the company has: (1) A
shareholder approved poison pill in place; or (2) The company has adopted a
policy concerning the adoption of a pill in the future specifying that the board
will only adopt a shareholder rights plan if either:

o Shareholders have approved the adoption of the plan; or
o The board, in its exercise of its fiduciary responsibilities,
determines that it is in the best interest of shareholders under the
circumstances to adopt a pill without the delay in adoption that would
result from seeking stockholder approval (i.e. the "fiduciary out"
provision). A poison pill adopted under this fiduciary out will be put
to a shareholder ratification vote within twelve months of adoption or
expire. If the pill is not approved by a majority of the votes cast on
this issue, the plan will immediately terminate.

Vote FOR shareholder proposals calling for poison pills to be put to a vote
within a time period of less than one year after adoption. If the company has no
non-shareholder approved poison pill in place and has adopted a policy with the
provisions outlined above, vote AGAINST the proposal. If these conditions are
not met, vote FOR the proposal, but with the caveat that a vote within twelve
months would be considered sufficient.

Vote CASE-by-CASE on management proposals on poison pill ratification, focusing
on the features of the shareholder rights plan. Rights plans should contain the
following attributes:

o No lower than a 20% trigger, flip-in or flip-over;
o A term of no more than three years;
o No dead-hand, slow-hand, no-hand or similar feature that limits the
ability of a future board to redeem the pill;
o Shareholder redemption feature (qualifying offer clause); if the board
refuses to redeem the pill 90 days after a qualifying offer is
announced, ten percent of the shares may call a special meeting or seek
a written consent to vote on rescinding the pill.

SHAREHOLDER ABILITY TO ACT BY WRITTEN CONSENT

Vote AGAINST proposals to restrict or prohibit shareholder ability to take
action by written consent. Vote FOR proposals to allow or make easier
shareholder action by written consent.

SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS

Vote AGAINST proposals to restrict or prohibit shareholder ability to call
special meetings. Vote FOR proposals that remove restrictions on the right of
shareholders to act independently of management.

SUPERMAJORITY VOTE REQUIREMENTS

Vote AGAINST proposals to require a supermajority shareholder vote. Vote FOR
proposals to lower supermajority vote requirements.

5. MERGERS AND CORPORATE RESTRUCTURINGS OVERALL APPROACH

For mergers and acquisitions, review and evaluate the merits and drawbacks of
the proposed transaction, balancing various and sometimes countervailing factors
including:

o VALUATION - Is the value to be received by the target shareholders (or
paid by the acquirer) reasonable? While the fairness opinion may
provide an initial starting point for assessing valuation
reasonableness, emphasis is placed on the offer premium, market
reaction and strategic rationale.

o MARKET REACTION - How has the market responded to the proposed deal? A
negative market reaction should cause closer scrutiny of a deal.

o STRATEGIC RATIONALE - Does the deal make sense strategically? From
where is the value derived? Cost and revenue synergies should not be
overly aggressive or optimistic, but reasonably achievable. Management
should also have a favorable track record of successful integration of
historical acquisitions.

o NEGOTIATIONS AND PROCESS - Were the terms of the transaction negotiated
at arm's-length? Was the process fair and equitable? A fair process
helps to ensure the best price for shareholders. Significant
negotiation "wins" can also signify the deal makers' competency. The
comprehensiveness of the sales process (e.g., full auction, partial
auction, no auction) can also affect shareholder value.

o CONFLICTS OF INTEREST - Are insiders benefiting from the transaction
disproportionately and inappropriately as compared to non-insider
shareholders? As the result of potential conflicts, the directors and
officers of the company may be more likely to vote to approve a merger
than if they did not hold these interests. Consider whether these
interests may have influenced these directors and officers to support
or recommend the merger. The CIC figure presented in the "ISS
Transaction Summary" section of this report is an aggregate figure that
can in certain cases be a misleading indicator of the true value
transfer from shareholders to insiders. Where such figure appears to be
excessive, analyze the underlying assumptions to determine whether a
potential conflict exists.

o GOVERNANCE - Will the combined company have a better or worse
governance profile than the current governance profiles of the
respective parties to the transaction? If the governance profile is to
change for the worse, the burden is on the company to prove that other
issues (such as valuation) outweigh any deterioration in governance.

APPRAISAL RIGHTS

Vote FOR proposals to restore, or provide shareholders with, rights of
appraisal.

ASSET PURCHASES

Vote CASE-BY-CASE on asset purchase proposals, considering the following
factors:
o Purchase price;
o Fairness opinion;
o Financial and strategic benefits;
o How the deal was negotiated;
o Conflicts of interest;
o Other alternatives for the business;
o Non-completion risk.

ASSET SALES

Vote CASE-BY-CASE on asset sales, considering the following factors:

o Impact on the balance sheet/working capital;
o Potential elimination of diseconomies;
o Anticipated financial and operating benefits;
o Anticipated use of funds;
o Value received for the asset;
o Fairness opinion;
o How the deal was negotiated;
o Conflicts of interest.

BUNDLED PROPOSALS

Vote CASE-BY-CASE on bundled or "conditional" proxy proposals. In the case of
items that are conditioned upon each other, examine the benefits and costs of
the packaged items. In instances when the joint effect of the conditioned items
is not in shareholders' best interests, vote AGAINST the proposals. If the
combined effect is positive, support such proposals.

CONVERSION OF SECURITIES

Vote CASE-BY-CASE on proposals regarding conversion of securities. When
evaluating these proposals the investor should review the dilution to existing
shareholders, the conversion price relative to market value, financial issues,
control issues, termination penalties, and conflicts of interest.

Vote FOR the conversion if it is expected that the company will be subject to
onerous penalties or will be forced to file for bankruptcy if the transaction is
not approved.

CORPORATE REORGANIZATION/DEBT RESTRUCTURING/PREPACKAGED BANKRUPTCY PLANS/REVERSE
LEVERAGED BUYOUTS/WRAP PLANS

Vote CASE-BY-CASE on proposals to increase common and/or preferred shares and to
issue shares as part of a debt restructuring plan, taking into consideration the
following:

o Dilution to existing shareholders' position;
o Terms of the offer;
o Financial issues;
o Management's efforts to pursue other alternatives;
o Control issues;
o Conflicts of interest.

Vote FOR the debt restructuring if it is expected that the company will file for
bankruptcy if the transaction is not approved.

FORMATION OF HOLDING COMPANY

Vote CASE-BY-CASE on proposals regarding the formation of a holding company,
taking into consideration the following:

o The reasons for the change;
o Any financial or tax benefits;
o Regulatory benefits;
o Increases in capital structure;
o Changes to the articles of incorporation or bylaws of the company.

Absent compelling financial reasons to recommend the transaction, vote
AGAINST the formation of a holding company if the transaction would include
either of the following:

o Increases in common or preferred stock in excess of the allowable
maximum (see discussion under "Capital Structure");
o Adverse changes in shareholder rights.

GOING PRIVATE TRANSACTIONS (LBOS, MINORITY SQUEEZEOUTS, AND GOING DARK) Vote
CASE-BY-CASE on going private transactions, taking into account the following:

o Offer price/premium;
o Fairness opinion;
o How the deal was negotiated;
o Conflicts of interest;
o Other alternatives/offers considered; and
o Non-completion risk.

Vote CASE-BY-CASE on "going dark" transactions, determining whether the
transaction enhances shareholder value by taking into consideration:

o Whether the company has attained benefits from being publicly-traded
(examination of trading volume, liquidity, and market research of the
stock);
o Cash-out value;
o Whether the interests of continuing and cashed-out shareholders are
balanced; and
o The market reaction to public announcement of transaction.

JOINT VENTURES

Vote CASE-BY-CASE on proposals to form joint ventures, taking into account the
following:

o Percentage of assets/business contributed;
o Percentage ownership;
o Financial and strategic benefits;
o Governance structure;
o Conflicts of interest;
o Other alternatives;
o Noncompletion risk.

LIQUIDATIONS

Vote CASE-BY-CASE on liquidations, taking into account the following:

o Management's efforts to pursue other alternatives;
o Appraisal value of assets; and
o The compensation plan for executives managing the liquidation.

Vote FOR the liquidation if the company will file for bankruptcy if the proposal
is not approved.

MERGERS AND ACQUISITIONS/ ISSUANCE OF SHARES TO FACILITATE MERGER OR ACQUISITION

Vote CASE-BY-CASE on mergers and acquisitions, determining whether the
transaction enhances shareholder value by giving consideration to items listed
under "Mergers and Corporate Restructurings: Overall Approach."

PRIVATE PLACEMENTS/WARRANTS/CONVERTIBLE DEBENTURES

Vote CASE-BY-CASE on proposals regarding private placements, taking into
consideration:

o Dilution to existing shareholders' position;
o Terms of the offer;
o Financial issues;
o Management's efforts to pursue other alternatives;
o Control issues;
o Conflicts of interest.

Vote FOR the private placement if it is expected that the company will file for
bankruptcy if the transaction is not approved.

SPINOFFS

Vote CASE-BY-CASE on spin-offs, considering:

o Tax and regulatory advantages;
o Planned use of the sale proceeds;
o Valuation of spinoff;
o Fairness opinion;
o Benefits to the parent company;
o Conflicts of interest;
o Managerial incentives;
o Corporate governance changes;
o Changes in the capital structure.
o

VALUE MAXIMIZATION PROPOSALS
Vote CASE-BY-CASE on shareholder proposals seeking to maximize shareholder value
by hiring a financial advisor to explore strategic alternatives, selling the
company or liquidating the company and distributing the proceeds to
shareholders. These proposals should be evaluated based on the following
factors:

o Prolonged poor performance with no turnaround in sight;
o Signs of entrenched board and management;
o Strategic plan in place for improving value;
o Likelihood of receiving reasonable value in a sale or dissolution; and
o Whether company is actively exploring its strategic options, including
retaining a financial advisor.

6. STATE OF INCORPORATION
CONTROL SHARE ACQUISITION PROVISIONS

Control share acquisition statutes function by denying shares their voting
rights when they contribute to ownership in excess of certain thresholds. Voting
rights for those shares exceeding ownership limits may only be restored by
approval of either a majority or supermajority of disinterested shares. Thus,
control share acquisition statutes effectively require a hostile bidder to put
its offer to a shareholder vote or risk voting disenfranchisement if the bidder
continues buying up a large block of shares.

Vote FOR proposals to opt out of control share acquisition statutes unless doing
so would enable the completion of a takeover that would be detrimental to
shareholders.

Vote AGAINST proposals to amend the charter to include control share acquisition
provisions.

Vote FOR proposals to restore voting rights to the control shares.

CONTROL SHARE CASH-OUT PROVISIONS

Control share cash-out statutes give dissident shareholders the right to
"cash-out" of their position in a company at the expense of the shareholder who
has taken a control position. In other words, when an investor crosses a preset
threshold level, remaining shareholders are given the right to sell their shares
to the acquirer, who must buy them at the highest acquiring price.

Vote FOR proposals to opt out of control share cash-out statutes.

DISGORGEMENT PROVISIONS

Disgorgement provisions require an acquirer or potential acquirer of more than a
certain percentage of a company's stock to disgorge, or pay back, to the company
any profits realized from the sale of that company's stock purchased 24 months
before achieving control status. All sales of company stock by the acquirer
occurring within a certain period of time (between 18 months and 24 months)
prior to the investor's gaining control status are subject to these
recapture-of-profits provisions.

Vote FOR proposals to opt out of state disgorgement provisions.

FAIR PRICE PROVISIONS

Vote CASE-BY-CASE on proposals to adopt fair price provisions (provisions that
stipulate that an acquirer must pay the same price to acquire all shares as it
paid to acquire the control shares), evaluating factors such as the vote
required to approve the proposed acquisition, the vote required to repeal the
fair price provision, and the mechanism for determining the fair price.

Generally, vote AGAINST fair price provisions with shareholder vote requirements
greater than a majority of disinterested shares.

FREEZE-OUT PROVISIONS

Vote FOR proposals to opt out of state freeze-out provisions. Freeze-out
provisions force an investor who surpasses a certain ownership threshold in a
company to wait a specified period of time before gaining control of the
company.

GREENMAIL

Greenmail payments are targeted share repurchases by management of company stock
from individuals or groups seeking control of the company. Since only the
hostile party receives payment, usually at a substantial premium over the market
value of its shares, the practice discriminates against all other shareholders.

Vote FOR proposals to adopt anti-greenmail charter or bylaw amendments or
otherwise restrict a company's ability to make greenmail payments.

Vote CASE-BY-CASE on anti-greenmail proposals when they are bundled with other
charter or bylaw amendments.

REINCORPORATION PROPOSALS

Vote CASE-BY-CASE on proposals to change a company's state of incorporation,
taking into consideration both financial and corporate governance concerns,
including:
The reasons for reincorporating;
A comparison of the governance provisions;
Comparative economic benefits; and
A comparison of the jurisdictional laws.

Vote FOR re-incorporation when the economic factors outweigh any neutral or
negative governance changes.

STAKEHOLDER PROVISIONS

Vote AGAINST proposals that ask the board to consider non-shareholder
constituencies or other non-financial effects when evaluating a merger or
business combination.

STATE ANTITAKEOVER STATUTES

Vote CASE-BY-CASE on proposals to opt in or out of state takeover statutes
(including control share acquisition statutes, control share cash-out statutes,
freezeout provisions, fair price provisions, stakeholder laws, poison pill
endorsements, severance pay and labor contract provisions, anti-greenmail
provisions, and disgorgement provisions).

7. CAPITAL STRUCTURE

ADJUSTMENTS TO PAR VALUE OF COMMON STOCK

Vote FOR management proposals to reduce the par value of common stock.

COMMON STOCK AUTHORIZATION

Vote CASE-BY-CASE on proposals to increase the number of shares of common stock
authorized for issuance using a model developed by ISS.

Vote FOR proposals to approve increases beyond the allowable increase when a
company's shares are in danger of being delisted or if a company's ability to
continue to operate as a going concern is uncertain.

In addition, for capital requests less than or equal to 300 percent of the
current authorized shares that marginally fail the calculated allowable cap
(i.e., exceed the allowable cap by no more than 5 percent), on a CASE-BY-CASE
basis, vote FOR the increase based on the company's performance and whether the
company's ongoing use of shares has shown prudence. Factors should include, at a
minimum, the following:

o Rationale;
o Good performance with respect to peers and index on a five-year total
shareholder return basis;
o Absence of non-shareholder approved poison pill;
o Reasonable equity compensation burn rate;
o No non-shareholder approved pay plans; and
o Absence of egregious equity compensation practices.

DUAL-CLASS STOCK

Vote AGAINST proposals to create a new class of common stock with superior
voting rights.

Vote AGAINST proposals at companies with dual-class capital structures to
increase the number of authorized shares of the class of stock that has superior
voting rights.

Vote FOR proposals to create a new class of nonvoting or sub-voting common stock
if:

o It is intended for financing purposes with minimal or no dilution to
current shareholders;
o It is not designed to preserve the voting power of an insider or
significant shareholder.

ISSUE STOCK FOR USE WITH RIGHTS PLAN

Vote AGAINST proposals that increase authorized common stock for the explicit
purpose of implementing a non-shareholder approved shareholder rights plan
(poison pill).

PREEMPTIVE RIGHTS

Vote CASE-BY-CASE on shareholder proposals that seek preemptive rights, taking
into consideration: the size of a company, the characteristics of its
shareholder base, and the liquidity of the stock.

PREFERRED STOCK

Vote AGAINST proposals authorizing the creation of new classes of preferred
stock with unspecified voting, conversion, dividend distribution, and other
rights ("blank check" preferred stock).

Vote FOR proposals to create "declawed" blank check preferred stock (stock that
cannot be used as a takeover defense).

Vote FOR proposals to authorize preferred stock in cases where the company
specifies the voting, dividend, conversion, and other rights of such stock and
the terms of the preferred stock appear reasonable.

Vote AGAINST proposals to increase the number of blank check preferred stock
authorized for issuance when no shares have been issued or reserved for a
specific purpose.

Vote CASE-BY-CASE on proposals to increase the number of blank check preferred
shares after analyzing the number of preferred shares available for issue given
a company's industry and performance in terms of shareholder returns.

RECAPITALIZATION

Vote CASE-BY-CASE on recapitalizations (reclassifications of securities), taking
into account the following:

o More simplified capital structure;
o Enhanced liquidity;
o Fairness of conversion terms;
o Impact on voting power and dividends;
o Reasons for the reclassification;
o Conflicts of interest; and
o Other alternatives considered.

REVERSE STOCK SPLITS

Vote FOR management proposals to implement a reverse stock split when the number
of authorized shares will be proportionately reduced.

Vote FOR management proposals to implement a reverse stock split to avoid
delisting.

Vote CASE-BY-CASE on proposals to implement a reverse stock split that do not
proportionately reduce the number of shares authorized for issue based on the
allowable increased calculated using the Capital Structure model.

SHARE REPURCHASE PROGRAMS

Vote FOR management proposals to institute open-market share repurchase plans in
which all shareholders may participate on equal terms.

STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS

Vote FOR management proposals to increase the common share authorization for a
stock split or share dividend, provided that the increase in authorized shares
would not result in an excessive number of shares available for issuance as
determined using a model developed by ISS.

TRACKING STOCK

Vote CASE-BY-CASE on the creation of tracking stock, weighing the strategic
value of the transaction against such factors as:

o Adverse governance changes;
o Excessive increases in authorized capital stock;
o Unfair method of distribution;
o Diminution of voting rights;
o Adverse conversion features;
o Negative impact on stock option plans; and
o Alternatives such as spin-off.

8. EXECUTIVE AND DIRECTOR COMPENSATION EQUITY COMPENSATION PLANS

Vote CASE-BY-CASE on equity-based compensation plans. Vote AGAINST the equity
plan if any of the following factors apply:

o The total cost of the company's equity plans is unreasonable;
o The plan expressly permits the repricing of stock options without prior
shareholder approval;
o There is a disconnect between CEO pay and the company's performance;
o The company's three year burn rate exceeds the greater of 2% and the
mean plus 1 standard deviation of its industry group; or
o The plan is a vehicle for poor pay practices.

Each of these factors is further described below:

COST OF EQUITY PLANS

Generally, vote AGAINST equity plans if the cost is unreasonable. For
non-employee director plans, vote FOR the plan if certain factors are met (see
Director Compensation section).

The cost of the equity plans is expressed as Shareholder Value Transfer (SVT),
which is measured using a binomial option pricing model that assesses the amount
of shareholders' equity flowing out of the company to employees and directors.
SVT is expressed as both a dollar amount and as a percentage of market value,
and includes the new shares proposed, shares available under existing plans, and
shares granted but unexercised. All award types are valued. For omnibus plans,
unless limitations are placed on the most expensive types of awards (for
example, full value awards), the assumption is made that all awards to be
granted will be the most expensive types. See discussion of specific types of
awards.

The Shareholder Value Transfer is reasonable if it falls below the
company-specific allowable cap. The allowable cap is determined as follows: The
top quartile performers in each industry group (using the Global Industry
Classification Standard GICS) are identified. Benchmark SVT levels for each
industry are established based on these top performers' historic SVT. Regression
analyses are run on each industry group to identify the variables most strongly
correlated to SVT. The benchmark industry SVT level is then adjusted upwards or
downwards for the specific company by plugging the company-specific performance
measures, size and cash compensation into the industry cap equations to arrive
at the company's allowable cap.

REPRICING PROVISIONS

Vote AGAINST plans that expressly permit the repricing of underwater stock
options without prior shareholder approval, even if the cost of the plan is
reasonable. Also, WITHHOLD from members of the Compensation Committee who
approved and/or implemented an option exchange program by repricing and buying
out underwater options for stock, cash or other consideration or canceling
underwater options and regranting options with a lower exercise price without
prior shareholder approval, even if such repricings are allowed in their equity
plan.

Vote AGAINST plans if the company has a history of repricing options without
shareholder approval, and the applicable listing standards would not preclude
them from doing so.

PAY-FOR PERFORMANCE DISCONNECT Generally vote AGAINST plans in which:

o there is a disconnect between the CEO's pay and company performance (an
increase in pay and a decrease in performance);
o the main source of the pay increase (over half) is equity-based, and
o the CEO is a participant of the equity proposal.

Performance decreases are based on negative one- and three-year total
shareholder returns. CEO pay increases are based on the CEO's total direct
compensation (salary, cash bonus, present value of stock options, face value of
restricted stock, value of non-equity incentive payouts, change in pension value
and nonqualified deferred compensation earnings, and all other compensation)
increasing over the previous year.

WITHHOLD votes from the Compensation Committee members when the company has a
pay for performance disconnect.

On a CASE-BY-CASE basis, vote for equity plans and FOR compensation committee
members with a pay-for-performance disconnect if compensation committee members
can present strong and compelling evidence of improved committee performance.
This evidence must go beyond the usual compensation committee report disclosure.
This additional evidence necessary includes all of the following:

o The compensation committee has reviewed all components of the CEO's
compensation, including the following:

- Base salary, bonus, long-term incentives;
- Accumulative realized and unrealized stock option and restricted
stock gains;
- Dollar value of perquisites and other personal benefits to the CEO
and the total cost to the company;
- Earnings and accumulated payment obligations under the company's
nonqualified deferred compensation program;
- Actual projected payment obligations under the company's supplemental
executive retirement plan (SERPs).

o A tally sheet with all the above components should be disclosed for the
following termination scenarios:

- Payment if termination occurs within 12 months: $_____;
- Payment if "not for cause" termination occurs within 12 months:
$_____;
- Payment if "change of control" termination occurs within 12 months:
$_____.

o The compensation committee is committed to providing additional
information on the named executives' annual cash bonus program and/or
long-term incentive cash plan for the current fiscal year. The
compensation committee will provide full disclosure of the qualitative
and quantitative performance criteria and hurdle rates used to
determine the payouts of the cash program. From this disclosure,
shareholders will know the minimum level of performance required for
any cash bonus to be delivered, as well as the maximum cash bonus
payable for superior performance.

The repetition of the compensation committee report does not meet ISS'
requirement of compelling and strong evidence of improved disclosure. The level
of transparency and disclosure is at the highest level where shareholders can
understand the mechanics of the annual cash bonus and/or long-term incentive
cash plan based on the additional disclosure.

o The compensation committee is committed to granting a substantial
portion of performance-based equity awards to the named executive
officers. A substantial portion of performance-based awards would be at
least 50 percent of the shares awarded to each of the named executive
officers. Performance-based equity awards are earned or paid out based
on the achievement of company performance targets. The company will
disclose the details of the performance criteria (e.g., return on
equity) and the hurdle rates (e.g., 15 percent) associated with the
performance targets. From this disclosure, shareholders will know the
minimum level of performance required for any equity grants to be made.
The performance-based equity awards do not refer to non-qualified stock
options(1) or performance-accelerated grants.(2) Instead,
performance-based equity awards are performance-contingent grants where
the individual will not receive the equity grant by not meeting the
target performance and vice versa.

The level of transparency and disclosure is at the highest level where
shareholders can understand the mechanics of the performance-based equity awards
based on the additional disclosure.

o The compensation committee has the sole authority to hire and fire
outside compensation consultants. The role of the outside compensation
consultant is to assist the compensation committee to analyze executive
pay packages or contracts and understand the company's financial
measures.

THREE-YEAR BURN RATE/BURN RATE COMMITMENT

Generally vote AGAINST plans if the company's most recent three-year burn rate
exceeds one standard deviation in excess of the industry mean (per the following
Burn Rate Table) and is over two percent of common shares outstanding. The
three-year burn rate policy does not apply to non-employee director plans unless
outside directors receive a significant portion of shares each year.

However, vote FOR equity plans if the company fails this burn rate test but the
company commits in a public filing to a three-year average burn rate equal to
its GICS group burn rate mean plus one standard deviation (or 2%, whichever is
greater), assuming all other conditions for voting FOR the plan have been met.

If a company fails to fulfill its burn rate commitment, vote to WITHHOLD from
the compensation committee.

(1) Non-qualified stock options are not performance-based awards unless the
grant or the vesting of the stock options is tied to the achievement of a
pre-determined and disclosed performance measure. A rising stock market will
generally increase share prices of all companies, despite of the company's
underlying performance. (2) Performance-accelerated grants are awards that vest
earlier based on the achievement of a specified measure. However, these grants
will ultimately vest over time even without the attainment of the goal(s).

2007 BURN RATE TABLE

RUSSELL 3000 NON-RUSSELL 3000
Standard Mean +
GICS Description Mean Deviation STDEV
-----------------------------------------------------------------------------------------------------------------
1010 Energy 1.37% 0.92% 2.29%
-----------------------------------------------------------------------------------------------------------------
1510 Materials 1.23% 0.62% 1.85%
-----------------------------------------------------------------------------------------------------------------
2010 Capital Goods 1.60% 0.98% 2.57%
-----------------------------------------------------------------------------------------------------------------
2020 Commercial Services & Supplies 2.39% 1.42% 3.81%
-----------------------------------------------------------------------------------------------------------------
2030 Transportation 1.30% 1.01% 2.31%
-----------------------------------------------------------------------------------------------------------------
2510 Automobiles & Components 1.93% 0.98% 2.90%
-----------------------------------------------------------------------------------------------------------------
2520 Consumer Durables & Apparel 1.97% 1.12% 3.09%
-----------------------------------------------------------------------------------------------------------------
2530 Hotels Restaurants & Leisure 2.22% 1.19% 3.41%
-----------------------------------------------------------------------------------------------------------------
2540 Media 1.78% 0.92% 2.70%
-----------------------------------------------------------------------------------------------------------------
2550 Retailing 1.95% 1.10% 3.05%
-----------------------------------------------------------------------------------------------------------------
3010,
3020, Food & Staples Retailing 1.66% 1.25% 2.91%
3030
-----------------------------------------------------------------------------------------------------------------
3510 Health Care Equipment & Services 2.87% 1.32% 4.19%
-----------------------------------------------------------------------------------------------------------------
3520 Pharmaceuticals & Biotechnology 3.12% 1.38% 4.50%
-----------------------------------------------------------------------------------------------------------------
4010 Banks 1.31% 0.89% 2.20%
-----------------------------------------------------------------------------------------------------------------
4020 Diversified Financials 2.13% 1.64% 3.76%
4030 Insurance 1.34% 0.88% 2.22%
------------------------------------------------------------------------------------------------------------------
4040 Real Estate 1.21% 1.02% 2.23%
-----------------------------------------------------------------------------------------------------------------
4510 Software & Services 3.77% 2.05% 5.82%
-----------------------------------------------------------------------------------------------------------------
4520 Technology Hardware & Equipment 3.05% 1.65% 4.70%
-----------------------------------------------------------------------------------------------------------------
4530 Semiconductors & Semiconductor 3.76% 1.64% 5.40%
Equip.
-----------------------------------------------------------------------------------------------------------------
5010 Telecommunication Services 1.71% 0.99% 2.70%
-----------------------------------------------------------------------------------------------------------------
5510 Utilities 0.84% 0.51% 1.35%
-----------------------------------------------------------------------------------------------------------------

Standard Mean +
Mean Deviation STDEV
------------------------------------------------------------
1.76% 2.01% 3.77%
------------------------------------------------------------
2.21% 2.15% 4.36%
------------------------------------------------------------
2.34% 1.98% 4.32%
------------------------------------------------------------
2.25% 1.93% 4.18%
------------------------------------------------------------
1.92% 1.95% 3.86%
------------------------------------------------------------
2.37% 2.32% 4.69%
------------------------------------------------------------
2.02% 1.68% 3.70%
------------------------------------------------------------
2.29% 1.88% 4.17%
------------------------------------------------------------
3.26% 2.36% 5.62%
------------------------------------------------------------
2.92% 2.21% 5.14%
------------------------------------------------------------
1.90% 2.00% 3.90%
------------------------------------------------------------
3.51% 2.31% 5.81%
------------------------------------------------------------
3.96% 2.89% 6.85%
------------------------------------------------------------
1.15% 1.10% 2.25%
------------------------------------------------------------
4.84% 5.03% 9.87%
------------------------------------------------------------
1.60% 1.96% 3.56%
------------------------------------------------------------
1.21% 1.02% 2.23%
------------------------------------------------------------
5.33% 3.13% 8.46%
------------------------------------------------------------
3.58% 2.34% 5.92%
------------------------------------------------------------
4.48% 2.46% 6.94%
------------------------------------------------------------
2.98% 2.94% 5.92%
------------------------------------------------------------
0.84% 0.51% 1.35%
------------------------------------------------------------

For companies that grant both full value awards and stock options to their
employees, ISS shall apply a premium on full value awards for the past three
fiscal years. The guideline for applying the premium is as follows:

-----------------------------------------------------------------------------------------------------------------------
CHARACTERISTICS ANNUAL STOCK PRICE VOLATILITY PREMIUM
-----------------------------------------------------------------------------------------------------------------------
High annual volatility 53% and higher 1 full-value award will count as 1.5 option shares
-----------------------------------------------------------------------------------------------------------------------
Moderate annual volatility 25% - 52% 1 full-value award will count as 2.0 option shares
-----------------------------------------------------------------------------------------------------------------------
Low annual volatility Less than 25% 1 full-value award will count as 4.0 option shares
-----------------------------------------------------------------------------------------------------------------------

POOR PAY PRACTICES

Vote AGAINST equity plans if the plan is a vehicle for poor compensation
practices.

WITHHOLD from compensation committee members, CEO, and potentially the entire
board, if the company has poor compensation practices. The following practices,
while not exhaustive, are examples of poor compensation practices that may
warrant withholding votes:

Egregious employment contracts (e.g., those containing multi-year guarantees for
bonuses and grants);
Excessive perks that dominate compensation (e.g., tax gross-ups for personal use
of corporate aircraft);
Huge bonus payouts without justifiable performance linkage or proper disclosure;
Performance metrics that are changed (e.g., canceled or replaced during the
performance period
without adequate explanation of the action and the link to performance);
Egregious pension/SERP (supplemental executive retirement plan) payouts
(e.g., the inclusion of additional years of service not worked or inclusion of
performance-based equity awards in the pension calculation);
New CEO awarded an overly generous new hire package (e.g., including excessive
"make whole" provisions or any of the poor pay practices listed in this policy);
Excessive severance provisions (e.g., including excessive change in control
payments);

Change in control payouts without loss of job or substantial diminution of job
duties; Internal pay disparity;
Options backdating (covered in a separate policy);
and Other excessive compensation payouts or poor pay practices at the company.

SPECIFIC TREATMENT OF CERTAIN AWARD TYPES IN EQUITY PLAN EVALUATIONS:

DIVIDEND EQUIVALENT RIGHTS

Options that have Dividend Equivalent Rights (DERs) associated with them will
have a higher calculated award value than those without DERs under the binomial
model, based on the value of these dividend streams. The higher value will be
applied to new shares, shares available under existing plans, and shares awarded
but not exercised per the plan specifications. DERS transfer more shareholder
equity to employees and non-employee directors and this cost should be captured.

LIBERAL SHARE RECYCLING PROVISIONS

Under net share counting provisions, shares tendered by an option holder to pay
for the exercise of an option, shares withheld for taxes or shares repurchased
by the company on the open market can be recycled back into the equity plan for
awarding again. All awards with such provisions should be valued as full-value
awards. Stock-settled stock appreciation rights (SSARs) will also be considered
as full-value awards if a company counts only the net shares issued to employees
towards their plan reserve.

OTHER COMPENSATION PROPOSALS AND POLICIES

401(K) EMPLOYEE BENEFIT PLANS

Vote FOR proposals to implement a 401(k) savings plan for employees.

DIRECTOR COMPENSATION

Vote CASE-BY-CASE on compensation plans for non-employee directors, based on the
cost of the plans against the company's allowable cap.

On occasion, director stock plans that set aside a relatively small number of
shares when combined with employee or executive stock compensation plans exceed
the allowable cap. Vote for the plan if ALL of the following qualitative factors
in the board's compensation are met and disclosed in the proxy statement:

Director stock ownership guidelines with a minimum of three times the annual
cash retainer.

o Vesting schedule or mandatory holding/deferral period:
- A minimum vesting of three years for stock options or restricted
stock; or
- Deferred stock payable at the end of a three-year deferral
period.
o Mix between cash and equity:
- A balanced mix of cash and equity, for example 40% cash/60%
equity or 50% cash/50% equity;

- If the mix is heavier on the equity component, the vesting
schedule or deferral period should be more stringent, with the
lesser of five years or the term of directorship.

No retirement/benefits and perquisites provided to non-employee directors; and
Detailed disclosure provided on cash and equity compensation delivered to each
non-employee director for the most recent fiscal year in a table. The column
headers for the table may include the following: name of each non-employee
director, annual retainer, board meeting fees, committee retainer,
committee-meeting fees, and equity grants.

DIRECTOR RETIREMENT PLANS

Vote AGAINST retirement plans for non-employee directors.

Vote FOR shareholder proposals to eliminate retirement plans for non-employee
directors.

EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS)

Vote FOR proposals to implement an ESOP or increase authorized shares for
existing ESOPs, unless the number of shares allocated to the ESOP is excessive
(more than five percent of outstanding shares).

EMPLOYEE STOCK PURCHASE PLANS-- QUALIFIED PLANS

Vote CASE-BY-CASE on qualified employee stock purchase plans. Vote FOR employee
stock purchase plans where all of the following apply:
Purchase price is at least 85 percent of fair market value;
Offering period is 27 months or less; and
The number of shares allocated to the plan is ten percent or less of the
outstanding shares.

Vote AGAINST qualified employee stock purchase plans where any of the following
apply:
Purchase price is less than 85 percent of fair market value; or
Offering period is greater than 27 months; or
The number of shares allocated to the plan is more than ten percent of the
outstanding shares.

EMPLOYEE STOCK PURCHASE PLANS-- NON-QUALIFIED PLANS

Vote CASE-by-CASE on nonqualified employee stock purchase plans. Vote FOR
nonqualified employee stock purchase plans with all the following features:
Broad-based participation (i.e., all employees of the company with the exclusion
of individuals with 5 percent or more of beneficial ownership of the company);
Limits on employee contribution, which may be a fixed dollar amount or expressed
as a percent of base salary;
Company matching contribution up to 25 percent of employee's contribution, which
is effectively a discount of 20 percent from market value;
No discount on the stock price on the date of purchase since there is a company
matching contribution.

Vote AGAINST nonqualified employee stock purchase plans when any of the plan
features do not meet the above criteria. If the company matching contribution
exceeds 25 percent of employee's contribution, evaluate the cost of the plan
against its allowable cap.

INCENTIVE BONUS PLANS AND TAX DEDUCTIBILITY PROPOSALS (OBRA-RELATED COMPENSATION
PROPOSALS) Vote FOR proposals that simply amend shareholder-approved
compensation plans to include administrative features or place a cap on the
annual grants any one participant may receive to comply with the provisions of
Section 162(m).

Vote FOR proposals to add performance goals to existing compensation plans to
comply with the provisions of Section 162(m) unless they are clearly
inappropriate.

Vote CASE-BY-CASE on amendments to existing plans to increase shares reserved
and to qualify for favorable tax treatment under the provisions of Section
162(m) as long as the plan does not exceed the allowable cap and the plan does
not violate any of the supplemental policies.

Generally vote FOR cash or cash and stock bonus plans that are submitted to
shareholders for the purpose of exempting compensation from taxes under the
provisions of Section 162(m) if no increase in shares is requested.

OPTIONS BACKDATING

In cases where a company has practiced options backdating, WITHHOLD on a
CASE-BY-CASE basis from the members of the compensation committee, depending on
the severity of the practices and the subsequent corrective actions on the part
of the board. WITHHOLD from the compensation committee members who oversaw the
questionable options grant practices or from current compensation committee
members who fail to respond to the issue proactively, depending on several
factors, including, but not limited to:

Reason and motive for the options backdating issue, such as inadvertent vs.
deliberate grant date changes;

Length of time of options backdating;
Size of restatement due to options backdating;
Corrective actions taken by the board or compensation committee,
such as canceling or repricing backdated options,
or recoupment of option gains on backdated grants;
Adoption of a grant policy that prohibits backdating, and creation of a fixed
grant schedule or window period for equity grants going forward.

OPTION EXCHANGE PROGRAMS/REPRICING OPTIONS

Vote CASE-by-CASE on management proposals seeking approval to exchange/reprice
options taking into consideration:

Historic trading patterns--the stock price should not be so volatile that the
options are likely to be back "in-the-money" over the near term;
Rationale for the re-pricing--was the stock price decline beyond management's
control? Is this a value-for-value exchange?
Are surrendered stock options added back to the plan reserve?
Option vesting--does the new option vest immediately or is there a black-out
period?
Term of the option--the term should remain the same as that of the replaced
option;
Exercise price--should be set at fair market or a premium to market;
Participants--executive officers and directors should be excluded.

If the surrendered options are added back to the equity plans for re-issuance,
then also take into consideration the company's three-year average burn rate. In
addition to the above considerations, evaluate the intent, rationale, and timing
of the repricing proposal. The proposal should clearly articulate why the board
is choosing to conduct an exchange program at this point in time. Repricing
underwater options after a recent precipitous drop in the company's stock price
demonstrates poor timing. Repricing after a recent decline in stock price
triggers additional scrutiny and a potential AGAINST vote on the proposal. At a
minimum, the decline should not have happened within the past year. Also,
consider the terms of the surrendered options, such as the grant date, exercise
price and vesting schedule. Grant dates of surrendered options should be far
enough back (two to three years) so as not to suggest that repricings are being
done to take advantage of short-term downward price movements. Similarly, the
exercise price of surrendered options should be above the 52-week high for the
stock price.

Vote FOR shareholder proposals to put option repricings to a shareholder vote.

STOCK PLANS IN LIEU OF CASH

Vote CASE-by-CASE on plans which provide participants with the option of taking
all or a portion of their cash compensation in the form of stock.

Vote FOR non-employee director only equity plans which provide a
dollar-for-dollar cash for stock exchange.

Vote CASE-by-CASE on plans which do not provide a dollar-for-dollar cash for
stock exchange. In cases where the exchange is not dollar-for-dollar, the
request for new or additional shares for such equity program will be considered
using the binomial option pricing model. In an effort to capture the total cost
of total compensation, ISS will not make any adjustments to carve out the
in-lieu-of cash compensation.

TRANSFER PROGRAMS OF STOCK OPTIONS One-time Transfers: WITHHOLD votes from
compensation committee members if they fail to submit one-time transfers for to
shareholders for approval.

Vote CASE-BY-CASE on one-time transfers. Vote FOR if:
Executive officers and non-employee directors are excluded from participating;
Stock options are purchased by third-party financial institutions at a discount
to their fair value using option pricing models such as Black-Scholes or a
Binomial Option Valuation or other appropriate financial models;
There is a two-year minimum holding period for sale proceeds (cash or stock) for
all participants.

Additionally, management should provide a clear explanation of why options are
being transferred and whether the events leading up to the decline in stock
price were beyond management's control. A review of the company's historic stock
price volatility should indicate if the options are likely to be back
"in-the-money" over the near term.

SHAREHOLDER PROPOSALS ON COMPENSATION

ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY)

Generally, vote FOR shareholder proposals that call for non-binding shareholder
ratification of the compensation of the named Executive Officers and the
accompanying narrative disclosure of material factors provided to understand the
Summary Compensation Table.

COMPENSATION CONSULTANTS- DISCLOSURE OF BOARD OR COMPANY'S UTILIZATION

Generally vote FOR shareholder proposals seeking disclosure regarding the
Company, Board, or Board committee's use of compensation consultants, such as
company name, business relationship(s) and fees paid.

DISCLOSURE/SETTING LEVELS OR TYPES OF COMPENSATION FOR EXECUTIVES AND DIRECTORS

Generally, vote FOR shareholder proposals seeking additional disclosure of
executive and director pay information, provided the information requested is
relevant to shareholders' needs, would not put the company at a competitive
disadvantage relative to its industry, and is not unduly burdensome to the
company.

Vote AGAINST shareholder proposals seeking to set absolute levels on
compensation or otherwise dictate the amount or form of compensation.

Vote AGAINST shareholder proposals requiring director fees be paid in stock
only.

Vote CASE-BY-CASE on all other shareholder proposals regarding executive and
director pay, taking into account company performance, pay level versus peers,
pay level versus industry, and long term corporate outlook.

OPTION REPRICING

Vote FOR shareholder proposals to put option repricings to a shareholder vote.

PAY FOR SUPERIOR PERFORMANCE

Generally vote FOR shareholder proposals based on a case-by-case analysis that
requests the board establish a pay-for-superior performance standard in the
company's executive compensation plan for senior executives. The proposals call
for:
the annual incentive component of the plan should utilize financial performance
criteria that can be benchmarked against peer group performance, and provide
that no annual bonus be awarded based on financial performance criteria unless
the company exceeds the median or mean performance of a disclosed group of peer
companies on the selected financial criteria;
the long-term equity compensation component of the plan should utilize financial
and/or stock price performance criteria that can be benchmarked against peer
group performance, and any options, restricted shares, or other equity
compensation used should be structured so that compensation is received only
when company performance exceeds the median or mean performance of the peer
group companies on the selected financial and stock price performance criteria;
and
the plan disclosure should allow shareholders to monitor the correlation between
pay and performance.

Consider the following factors in evaluating this proposal:
What aspects of the company's annual and long -term equity incentive programs
are performance driven?
If the annual and long-term equity incentive programs are performance driven,
are the performance criteria and hurdle rates disclosed to shareholders or are
they benchmarked against a disclosed peer group?
Can shareholders assess the correlation between pay and performance based on the
current disclosure?
What type of industry and stage of business cycle does the company belong to?

PENSION PLAN INCOME ACCOUNTING

Generally vote FOR shareholder proposals to exclude pension plan income in the
calculation of earnings used in determining executive bonuses/compensation.

PERFORMANCE-BASED AWARDS

Vote CASE-BY-CASE on shareholder proposal requesting that a significant amount
of future long-term incentive compensation awarded to senior executives shall be
performance-based and requesting that the board adopt and disclose challenging
performance metrics to shareholders, based on the following analytical steps:

First, vote FOR shareholder proposals advocating the use of performance-based
equity awards, such as performance contingent options or restricted stock,
indexed options or premium-priced options, unless the proposal is overly
restrictive or if the company has demonstrated that it is using a "substantial"
portion of performance-based awards for its top executives. Standard stock
options and performance-accelerated awards do not meet the criteria to be
considered as performance-based awards. Further, premium-priced options should
have a premium of at least 25 percent and higher to be considered
performance-based awards.
Second, assess the rigor of the company's performance-based equity program. If
the bar set for the performance-based program is too low based on the company's
historical or peer group comparison, generally vote FOR the proposal.
Furthermore, if target performance results in an above target payout, vote FOR
the shareholder proposal due to program's poor design. If the company does not
disclose the performance metric of the performance-based equity program, vote
FOR the shareholder proposal regardless of the outcome of the first step to the
test.

In general, vote FOR the shareholder proposal if the company does not meet both
of the above two steps.

SEVERANCE AGREEMENTS FOR EXECUTIVES/GOLDEN PARACHUTES

Vote FOR shareholder proposals to require golden parachutes or executive
severance agreements to be submitted for shareholder ratification, unless the
proposal requires shareholder approval prior to entering into employment
contracts.

Vote on a CASE-BY-CASE basis on proposals to ratify or cancel golden parachutes.
An acceptable parachute should include, but is not limited to, the following:

The triggering mechanism should be beyond the control of management; The amount
should not exceed three times base amount (defined as the average annual taxable
W-2 compensation during the five years prior to the year in which the change of
control occurs;
Change-in-control payments should be double-triggered, i.e., (1) after a change
in control has taken place, and (2) termination of the executive as a result of
the change in control. Change in control is defined as a change in the company
ownership structure.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS (SERPS)

Generally vote FOR shareholder proposals requesting to put extraordinary
benefits contained in SERP agreements to a shareholder vote unless the company's
executive pension plans do not contain excessive benefits beyond what is offered
under employee-wide plans.

Generally vote FOR shareholder proposals requesting to limit the executive
benefits provided under the company's supplemental executive retirement plan
(SERP) by limiting covered compensation to a senior executive's annual salary
and excluding of all incentive or bonus pay from the plan's definition of
covered compensation used to establish such benefits.

9. CORPORATE RESPONSIBILITY CONSUMER ISSUES AND PUBLIC SAFETY

ANIMAL RIGHTS

Generally vote AGAINST proposals to phase out the use of animals in product
testing unless:
The company is conducting animal testing programs that are
unnecessary or not required by regulation;
The company is conducting animal testing when suitable alternatives are accepted
and used at peer firms;
The company has been the subject of recent, significant controversy related to
its testing programs.

Generally vote FOR proposals seeking a report on the company's animal welfare
standards unless:
The company has already published a set of animal welfare standards and monitors
compliance;
The company's standards are comparable to or better than those of peer firms;
and
There are no serious controversies surrounding the company's treatment of
animals.

DRUG PRICING

Generally vote AGAINST proposals requesting that companies implement specific
price restraints on pharmaceutical products unless the company fails to adhere
to legislative guidelines or industry norms in its product pricing.

Vote CASE-BY-CASE on proposals requesting that the company evaluate their
product pricing considering: The existing level of disclosure on pricing
policies;

Deviation from established industry pricing norms;
The company's existing initiatives to provide its products to needy consumers;
Whether the proposal focuses on specific products or geographic regions.

DRUG REIMPORTATION

Generally vote FOR proposals requesting that companies report on the financial
and legal impact of their policies regarding prescription drug reimportation
unless such information is already publicly disclosed.

Generally vote AGAINST proposals requesting that companies adopt specific
policies to encourage or constrain prescription drug reimportation.

GENETICALLY MODIFIED FOODS

Vote AGAINST proposals asking companies to voluntarily label genetically
engineered (GE) ingredients in their products or alternatively to provide
interim labeling and eventually eliminate GE ingredients due to the costs and
feasibility of labeling and/or phasing out the use of GE ingredients.

Vote CASE-BY-CASE on proposals asking for a report on the feasibility of
labeling products containing GE ingredients taking into account:
The relevance of the proposal in terms of the company's business and the
proportion of it affected by the resolution;
The quality of the company's disclosure on GE product labeling and related
voluntary initiatives and how this disclosure compares with peer company
disclosure;
Company's current disclosure on the feasibility of GE product labeling,
including information on the related costs;

Any voluntary labeling initiatives undertaken or considered by the company.

Vote CASE-BY-CASE on proposals asking for the preparation of a report on the
financial, legal, and environmental impact of continued use of GE
ingredients/seeds. Evaluate the following:
The relevance of the proposal in terms of the company's business and the
proportion of it affected by the resolution;
The quality of the company's disclosure on risks related to GE product use and
how this disclosure compares with peer company disclosure;
The percentage of revenue derived from international operations, particularly in
Europe, where GE products are more regulated and consumer backlash is more
pronounced.

Vote AGAINST proposals seeking a report on the health and environmental effects
of genetically modified organisms (GMOs). Health studies of this sort are better
undertaken by regulators and the scientific community.

Vote AGAINST proposals to completely phase out GE ingredients from the company's
products or proposals asking for reports outlining the steps necessary to
eliminate GE ingredients from the company's products. Such resolutions
presuppose that there are proven health risks to GE ingredients (an issue better
left to federal regulators) that outweigh the economic benefits derived from
biotechnology.

HANDGUNS

Generally vote AGAINST requests for reports on a company's policies aimed at
curtailing gun violence in the United States unless the report is confined to
product safety information. Criminal misuse of firearms is beyond company
control and instead falls within the purview of law enforcement agencies.

HIV/AIDS

Vote CASE-BY-CASE on requests for reports outlining the impact of the health
pandemic (HIV/AIDS, malaria and tuberculosis) on the company's Sub-Saharan
operations and how the company is responding to it, taking into account:
The nature and size of the company's operations in Sub-Saharan Africa and the
number of local employees;
The company's existing healthcare policies, including benefits and healthcare
access for local workers;
Company donations to healthcare providers operating in the region.

Vote AGAINST proposals asking companies to establish, implement, and report on a
standard of response to the HIV/AIDS, TB, and malaria health pandemic in Africa
and other developing countries, unless the company has significant operations in
these markets and has failed to adopt policies and/or procedures to address
these issues comparable to those of industry peers.

PREDATORY LENDING

Vote CASE-BY CASE on requests for reports on the company's procedures for
preventing predatory lending, including the establishment of a board committee
for oversight, taking into account:
Whether the company has adequately disclosed mechanisms in place to prevent
abusive lending practices;
Whether the company has adequately disclosed the financial risks of its subprime
business;
Whether the company has been subject to violations of lending laws or
serious lending controversies;
Peer companies' policies to prevent abusive lending practices.

TOBACCO

Most tobacco-related proposals should be evaluated on a CASE-BY-CASE basis,
taking into account the following factors:

Second-hand smoke:
Whether the company complies with all local ordinances and regulations;
The degree that voluntary restrictions beyond those mandated by law might hurt
the company's competitiveness;
The risk of any health-related liabilities.

Advertising to youth:
Whether the company complies with federal, state, and local laws on the
marketing of tobacco or if it has been fined for violations;
Whether the company has gone as far as peers in restricting advertising;
Whether the company entered into the Master Settlement Agreement, which
restricts marketing of tobacco to youth;
Whether restrictions on marketing to youth extend to foreign countries.

Cease production of tobacco-related products or avoid selling products to
tobacco companies:
The percentage of the company's business affected; The economic loss of
eliminating the business versus any potential tobacco-related liabilities.

Spin-off tobacco-related businesses:
The percentage of the company's business affected;
The feasibility of a spin-off; Potential future liabilities related to
the company's tobacco business.

Stronger product warnings:
Vote AGAINST proposals seeking stronger product warnings. Such decisions are
better left to public health authorities.

Investment in tobacco stocks:
Vote AGAINST proposals prohibiting investment in tobacco equities. Such
decisions are better left to portfolio managers.

TOXIC CHEMICALS

Generally vote FOR resolutions requesting that a company discloses its policies
related to toxic chemicals.

Vote CASE-BY-CASE on resolutions requesting that companies evaluate and disclose
the potential financial and legal risks associated with utilizing certain
chemicals, considering:

Current regulations in the markets in which the company operates;
Recent significant controversy, litigation, or fines stemming from toxic
chemicals or ingredients at the company;
and
The current level of disclosure on this topic.

Generally vote AGAINST resolutions requiring that a company reformulate its
products within a certain timeframe unless such actions are required by law in
specific markets.

ENVIRONMENT AND ENERGY

ARCTIC NATIONAL WILDLIFE REFUGE

Generally vote AGAINST request for reports outlining potential environmental
damage from drilling in the Arctic National Wildlife Refuge (ANWR) unless:

New legislation is adopted allowing development and drilling in the ANWR region;
The company intends to pursue operations in the ANWR; and The company does not
currently disclose an environmental risk report for their operations in

the ANWR.

CERES PRINCIPLES

Vote CASE-BY-CASE on proposals to adopt the CERES Principles, taking into
account:
The company's current environmental disclosure beyond legal requirements,
including environmental health and safety (EHS) audits and reports that may
duplicate CERES;
The company's environmental performance record, including violations of federal
and state regulations, level of toxic emissions, and accidental spills;
Environmentally conscious practices of peer companies, including endorsement of
CERES; Costs of membership and implementation.

CLIMATE CHANGE

In general, vote FOR resolutions requesting that a company disclose information
on the impact of climate change on the company's operations unless:
The company already provides current, publicly-available information on the
perceived impact that climate change may have on the company as well as
associated policies and procedures to address such risks and/or opportunities;
The company's level of disclosure is comparable to or better than information
provided by industry peers; and
There are no significant fines, penalties, or litigation associated with the
company's environmental performance.

CONCENTRATED AREA FEEDING OPERATIONS (CAFOS)

Vote FOR resolutions requesting that companies report to shareholders on the
risks and liabilities associated with CAFOs unless:

The company has publicly disclosed guidelines for its corporate and contract
farming operations, including

compliance monitoring; or
The company does not directly source from CAFOs.

ENVIRONMENTAL-ECONOMIC RISK REPORT

Vote CASE-BY-CASE on proposals requesting an economic risk assessment of
environmental performance considering:

The feasibility of financially quantifying environmental risk factors;
The company's compliance with applicable legislation and/or regulations
regarding environmental performance;
The costs associated with implementing improved standards;
The potential costs associated with remediation resulting from poor
environmental performance; and
The current level of disclosure on environmental policies and initiatives.

ENVIRONMENTAL REPORTS

Generally vote FOR requests for reports disclosing the company's environmental
policies unless it already has well-documented environmental management systems
that are available to the public.

GLOBAL WARMING

Generally vote FOR proposals requesting a report on greenhouse gas emissions
from company operations and/or products unless this information is already
publicly disclosed or such factors are not integral to the company's line of
business.

Generally vote AGAINST proposals that call for reduction in greenhouse gas
emissions by specified amounts or within a restrictive time frame unless the
company lags industry standards and has been the subject of recent, significant
fines or litigation resulting from greenhouse gas emissions.

KYOTO PROTOCOL COMPLIANCE

Generally vote FOR resolutions requesting that companies outline their
preparations to comply with standards established by Kyoto Protocol signatory
markets unless:
The company does not maintain operations in Kyoto signatory markets;
The company already evaluates and substantially discloses such
information; or, Greenhouse gas emissions do not significantly impact
the company's core businesses.

LAND USE

Generally vote AGAINST resolutions that request the disclosure of detailed
information on a company's policies related to land use or development unless
the company has been the subject of recent, significant fines or litigation
stemming from its land use.

NUCLEAR SAFETY

Generally vote AGAINST resolutions requesting that companies report on risks
associated with their nuclear reactor designs and/or the production and interim
storage of irradiated fuel rods unless:
The company does not have publicly disclosed guidelines describing its policies
and procedures for addressing risks associated with its operations;
The company is non-compliant with Nuclear Regulatory Commission (NRC)
requirements; or

The company stands out amongst its peers or competitors as having significant
problems with safety or

environmental performance related to its nuclear operations.

OPERATIONS IN PROTECTED AREAS

Generally vote FOR requests for reports outlining potential environmental damage
from operations in protected regions, including wildlife refuges unless:
The company does not currently have operations or plans to develop operations in
these protected regions; or,
The company provides disclosure on its operations and environmental policies in
these regions comparable to industry peers.

RECYCLING

Vote CASE-BY-CASE on proposals to adopt a comprehensive recycling strategy,
taking into account:
The nature of the company's business and the percentage affected;
The extent that peer companies are recycling;
The timetable prescribed by the proposal;
The costs and methods of implementation;
Whether the company has a poor environmental track record, such as violations of
federal and

state regulations.

RENEWABLE ENERGY

In general, vote FOR requests for reports on the feasibility of developing
renewable energy sources unless the report is duplicative of existing disclosure
or irrelevant to the company's line of business.

Generally vote AGAINST proposals requesting that the company invest in renewable
energy sources. Such decisions are best left to management's evaluation of the
feasibility and financial impact that such programs may have on the company.

SUSTAINABILITY REPORT

Generally vote FOR proposals requesting the company to report on policies and
initiatives related to social, economic, and environmental sustainability,
unless:
The company already discloses similar information through existing reports or
policies such as an Environment, Health, and Safety (EHS) report; a
comprehensive Code of Corporate Conduct; and/or a Diversity Report; or
The company has formally committed to the implementation of a reporting program
based on Global Reporting Initiative (GRI) guidelines or a similar standard
within a specified time frame.

GENERAL CORPORATE ISSUES

CHARITABLE/POLITICAL CONTRIBUTIONS

Generally vote AGAINST proposals asking the company to affirm political
nonpartisanship in the workplace so long as:

The company is in compliance with laws governing corporate political activities;
and The company has procedures in place to ensure that employee contributions to
company-sponsored political action committees (PACs) are strictly voluntary and
not coercive.

Vote AGAINST proposals to publish in newspapers and public media the company's
political contributions as such publications could present significant cost to
the company without providing commensurate value to shareholders.

Vote CASE-BY-CASE on proposals to improve the disclosure of a company's
political contributions considering:

Recent significant controversy or litigation related to the company's political
contributions or governmental affairs; and
The public availability of a policy on political contributions.

Vote AGAINST proposals barring the company from making political contributions.
Businesses are affected by legislation at the federal, state, and local level
and barring contributions can put the company at a competitive disadvantage.

Vote AGAINST proposals restricting the company from making charitable
contributions. Charitable contributions are generally useful for assisting
worthwhile causes and for creating goodwill in the community. In the absence of
bad faith, self-dealing, or gross negligence, management should determine which
contributions are in the best interests of the company.

Vote AGAINST proposals asking for a list of company executives, directors,
consultants, legal counsels, lobbyists, or investment bankers that have prior
government service and whether such service had a bearing on the business of the
company. Such a list would be burdensome to prepare without providing any
meaningful information to shareholders.

DISCLOSURE OF LOBBYING EXPENDITURES/INITIATIVES

Vote CASE-BY-CASE on proposals requesting information on a company's lobbying
initiatives, considering any significant controversy or litigation surrounding a
company's public policy activities, the current level of disclosure on lobbying
strategy, and the impact that the policy issue may have on the company's
business operations.

LINK EXECUTIVE COMPENSATION TO SOCIAL PERFORMANCE

Vote CASE-BY-CASE on proposals to review ways of linking executive compensation
to social factors, such as corporate downsizings, customer or employee
satisfaction, community involvement, human rights, environmental performance,
predatory lending, and executive/employee pay disparities. Such resolutions
should be evaluated in the context of:

The relevance of the issue to be linked to pay;
The degree that social performance is already included in the company's pay
structure and disclosed;
The degree that social performance is used by peer companies in setting pay;
Violations or complaints filed against the company relating to the particular
social performance measure;
Artificial limits sought by the proposal, such as freezing or capping executive
pay Independence of the compensation committee; Current company pay levels.

OUTSOURCING/OFFSHORING

Vote CASE-BY-CASE on proposals calling for companies to report on the risks
associated with outsourcing, considering:

Risks associated with certain international markets;
The utility of such a report to shareholders;
The existence of a publicly available code of corporate conduct that
applies to international operations.

LABOR STANDARDS AND HUMAN RIGHTS

CHINA PRINCIPLES

Vote AGAINST proposals to implement the China Principles unless:

There are serious controversies surrounding the company's China
operations; and
The company does not have a code of conduct with standards similar to those
promulgated by the International Labor Organization (ILO).

COUNTRY-SPECIFIC HUMAN RIGHTS REPORTS

Vote CASE-BY-CASE on requests for reports detailing the company's operations in
a particular country and steps to protect human rights, based on:

The nature and amount of company business in that country; The
company's workplace code of conduct; Proprietary and confidential
information involved; Company compliance with U.S. regulations on
investing in the country; Level of peer company involvement in the
country.

INTERNATIONAL CODES OF CONDUCT/VENDOR STANDARDS

Vote CASE-BY-CASE on proposals to implement certain human rights standards at
company facilities or those of its suppliers and to commit to outside,
independent monitoring. In evaluating these proposals, the following should be
considered:
The company's current workplace code of conduct or adherence to other global
standards and the degree they meet the standards promulgated by the proponent;
Agreements with foreign suppliers to meet certain workplace standards;
Whether company and vendor facilities are monitored and how;
Company participation in fair labor organizations;
Type of business;
Proportion of business conducted overseas;
Countries of operation with known human rights abuses;
Whether the company has been recently involved in significant labor and human
rights controversies or violations;
Peer company standards and practices; Union presence in company's international
factories.

Generally vote FOR reports outlining vendor standards compliance unless any of
the following apply:
The company does not operate in countries with significant human rights
violations;
The company has no recent human rights controversies or violations; or
The company already publicly discloses information on its vendor standards
compliance.

MACBRIDE PRINCIPLES

Vote CASE-BY-CASE on proposals to endorse or increase activity on the MacBride
Principles, taking into account:

Company compliance with or violations of the Fair Employment Act of 1989;
Company antidiscrimination policies that already exceed the legal requirements;
The cost and feasibility of adopting all nine principles;
The cost of duplicating efforts to follow two sets of standards (Fair Employment
and the MacBride Principles);
The potential for charges of reverse discrimination;
The potential that any company sales or contracts in the rest of the United
Kingdom could be negatively impacted;
The level of the company's investment in Northern Ireland; The number of company
employees in Northern Ireland;
The degree that industry peers have adopted the MacBride Principles;
Applicable state and municipal laws that limit contracts with companies that
have not adopted the MacBride Principles.

MILITARY BUSINESS

FOREIGN MILITARY SALES/OFFSETS

Vote AGAINST reports on foreign military sales or offsets. Such disclosures may
involve sensitive and confidential information. Moreover, companies must comply
with government controls and reporting on foreign military sales.

LANDMINES AND CLUSTER BOMBS

Vote CASE-BY-CASE on proposals asking a company to renounce future involvement
in antipersonnel landmine production, taking into account:
Whether the company has in the past manufactured landmine components;
Whether the company's peers have renounced future production.

Vote CASE-BY-CASE on proposals asking a company to renounce future involvement
in cluster bomb production, taking into account:
What weapons classifications the proponent views as cluster bombs;
Whether the company currently or in the past has manufactured cluster
bombs or their components;
The percentage of revenue derived from cluster bomb manufacture;
Whether the company's peers have renounced future production.

NUCLEAR WEAPONS

Vote AGAINST proposals asking a company to cease production of nuclear weapons
components and delivery systems, including disengaging from current and proposed
contracts. Components and delivery systems serve multiple military and
non-military uses, and withdrawal from these contracts could have a negative
impact on the company's business.

OPERATIONS IN NATIONS SPONSORING TERRORISM (E.G., IRAN)

Vote CASE-BY-CASE on requests for a board committee review and report outlining
the company's financial and reputational risks from its operations in a
terrorism-sponsoring state, taking into account current disclosure on:

The nature and purpose of the operations and the amount of business involved
(direct and indirect revenues and expenses) that could be affected by political
disruption;
Compliance with U.S. sanctions and laws.

SPACED-BASED WEAPONIZATION

Generally vote FOR reports on a company's involvement in spaced-based
weaponization unless:
The information is already publicly available; or
The disclosures sought could compromise proprietary information.

WORKPLACE DIVERSITY
BOARD DIVERSITY

Generally vote FOR reports on the company's efforts to diversify the board,
unless:
The board composition is reasonably inclusive in relation to companies of
similar size and business; or
The board already reports on its nominating procedures and diversity
initiatives.

Generally vote AGAINST proposals that would call for the adoption of specific
committee charter language regarding diversity initiatives unless the company
fails to publicly disclose existing equal opportunity or non-discrimination
policies.

Vote CASE-BY-CASE on proposals asking the company to increase the representation
of women and minorities on the board, taking into account:

The degree of board diversity;
Comparison with peer companies;
Established process for improving board diversity; Existence of
independent nominating committee; Use of outside search firm; History
of EEO violations.

EQUAL EMPLOYMENT OPPORTUNITY (EEO)

Generally vote FOR reports outlining the company's affirmative action
initiatives unless all of the following apply:

The company has well-documented equal opportunity programs;
The company already publicly reports on its company-wide affirmative initiatives
and provides data on its workforce diversity;
and The company has no recent EEO-related violations or litigation.

Vote AGAINST proposals seeking information on the diversity efforts of suppliers
and service providers, which can pose a significant cost and administration
burden on the company.

GLASS CEILING

Generally vote FOR reports outlining the company's progress towards the Glass
Ceiling Commission's business recommendations, unless:

The composition of senior management and the board is fairly inclusive;
The company has well-documented programs addressing diversity
initiatives and leadership development;
The company already issues public reports on its company-wide affirmative
initiatives and provides data on its workforce diversity; and
The company has had no recent, significant EEO-related violations or litigation.

SEXUAL ORIENTATION

Vote FOR proposals seeking to amend a company's EEO statement in order to
prohibit discrimination based on sexual orientation, unless the change would
result in excessive costs for the company.

Vote AGAINST proposals to extend company benefits to or eliminate benefits from
domestic partners. Benefits decisions should be left to the discretion of the
company.

10. MUTUAL FUND PROXIES
ELECTION OF DIRECTORS

Vote CASE-BY-CASE on the election of directors and trustees, following the same
guidelines for uncontested directors for public company shareholder meetings.
However, mutual fund boards do not usually have compensation committees, so do
not withhold for the lack of this committee.

CONVERTING CLOSED-END FUND TO OPEN-END FUND

Vote CASE-BY-CASE on conversion proposals, considering the following factors:
Past performance as a closed-end fund;
Market in which the fund invests;
Measures taken by the board to address the discount; and
Past shareholder activism, board activity, and votes on related
proposals.

PROXY CONTESTS

Vote CASE-BY-CASE on proxy contests, considering the following factors:

Past performance relative to its peers;
Market in which fund invests;
Measures taken by the board to address the issues;
Past shareholder activism, board activity, and votes on related proposals;
Strategy of the incumbents versus the dissidents;
Independence of directors; Experience and skills of director candidates;
Governance profile of the company;
Evidence of management entrenchment.

INVESTMENT ADVISORY AGREEMENTS

Vote CASE-BY-CASE on investment advisory agreements, considering the following
factors:
Proposed and current fee schedules;
Fund category/investment objective;
Performance benchmarks; Share price performance as compared with peers;
Resulting fees relative to peers;
Assignments (where the advisor undergoes a change of control).

APPROVING NEW CLASSES OR SERIES OF SHARES

Vote FOR the establishment of new classes or series of shares.

PREFERRED STOCK PROPOSALS

Vote CASE-BY-CASE on the authorization for or increase in preferred shares,
considering the following factors:
Stated specific financing purpose;
Possible dilution for common shares;
Whether the shares can be used for antitakeover purposes.

1940 ACT POLICIES

Vote CASE-BY-CASE on policies under the Investment Advisor Act of 1940,
considering the following factors:
Potential competitiveness; Regulatory developments; Current and
potential returns; and Current and potential risk.

Generally vote FOR these amendments as long as the proposed changes do not
fundamentally alter the investment focus of the fund and do comply with the
current SEC interpretation.

CHANGING A FUNDAMENTAL RESTRICTION TO A NONFUNDAMENTAL RESTRICTION

Vote CASE-BY-CASE on proposals to change a fundamental restriction to a
non-fundamental restriction, considering the following factors:
The fund's target investments;
The reasons given by the fund for the change; and
The projected impact of the change on the portfolio.

CHANGE FUNDAMENTAL INVESTMENT OBJECTIVE TO NONFUNDAMENTAL

Vote AGAINST proposals to change a fund's fundamental investment objective to
non-fundamental.

NAME CHANGE PROPOSALS

Vote CASE-BY-CASE on name change proposals, considering the following factors:
Political/economic changes in the target market;
Consolidation in the target market; and
Current asset composition.

CHANGE IN FUND'S SUBCLASSIFICATION

Vote CASE-BY-CASE on changes in a fund's sub-classification, considering the
following factors:
Potential competitiveness;
Current and potential returns;
Risk of concentration;
Consolidation in target industry.

DISPOSITION OF ASSETS/TERMINATION/LIQUIDATION

Vote CASE-BY-CASE on proposals to dispose of assets, to terminate or liquidate,
considering the following factors:
Strategies employed to salvage the company;
The fund's past performance;
The terms of the liquidation.

CHANGES TO THE CHARTER DOCUMENT

Vote CASE-BY-CASE on changes to the charter document, considering the following
factors:
The degree of change implied by the proposal;
The efficiencies that could result;
The state of incorporation;
Regulatory standards and implications.

Vote AGAINST any of the following changes:
Removal of shareholder approval requirement to reorganize or terminate the trust
or any of its series;
Removal of shareholder approval requirement for amendments to the new
declaration of trust;
Removal of shareholder approval requirement to amend the fund's management
contract, allowing the contract to be modified by the investment manager and the
trust management, as permitted by the 1940 Act;
Allow the trustees to impose other fees in addition to sales charges on
investment in a fund, such as deferred sales charges and redemption fees that
may be imposed upon redemption of a fund's shares;
Removal of shareholder approval requirement to engage in and terminate
subadvisory arrangements;
Removal of shareholder approval requirement to change the domicile of the fund.

CHANGING THE DOMICILE OF A FUND

Vote CASE-BY-CASE on re-incorporations, considering the following factors:

Regulations of both states;
Required fundamental policies of both states;
The increased flexibility available.

AUTHORIZING THE BOARD TO HIRE AND TERMINATE SUBADVISORS WITHOUT SHAREHOLDER
APPROVAL

Vote AGAINST proposals authorizing the board to hire/terminate subadvisors
without shareholder approval.

DISTRIBUTION AGREEMENTS

Vote CASE-BY-CASE on distribution agreement proposals, considering the following
factors:
Fees charged to comparably sized funds with similar objectives;
The proposed distributor's reputation and past performance;
The competitiveness of the fund in the industry;
The terms of the agreement.

MASTER-FEEDER STRUCTURE

Vote FOR the establishment of a master-feeder structure.

MERGERS

Vote CASE-BY-CASE on merger proposals, considering the following factors:
Resulting fee structure;
Performance of both funds;
Continuity of management personnel;
Changes in corporate governance and their impact on shareholder rights.

SHAREHOLDER PROPOSALS FOR MUTUAL FUNDS

ESTABLISH DIRECTOR OWNERSHIP REQUIREMENT

Generally vote AGAINST shareholder proposals that mandate a specific minimum
amount of stock that directors must own in order to qualify as a director or to
remain on the board.

REIMBURSE SHAREHOLDER FOR EXPENSES INCURRED

Vote CASE-BY-CASE on shareholder proposals to reimburse proxy solicitation
expenses. When supporting the dissidents, vote FOR the reimbursement of the
proxy solicitation expenses.

TERMINATE THE INVESTMENT ADVISOR

Vote CASE-BY-CASE on proposals to terminate the investment advisor, considering
the following factors:
Performance of the fund's Net Asset Value (NAV);
The fund's history of shareholder relations;
The performance of other funds under the advisor's management.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Macquarie Fund Adviser, LLC ("MFA") and Four Corners Capital Management, LLC
("FOUR CORNERS") serve as the registrant's sub-advisers. MFA manages the Core
Component of the Registrant, while Four Corners manages the Senior Loan
Component of the Registrant.

MACQUARIE FUND ADVISER, LLC

(A)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS

Jon Fitch and Justin Lannen are 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
---- ----- ------- --------------------------------

1. Jon Fitch Chief Executive Officer for 3 years Employed by Macquarie Group for the last 12
MFA and 10 years: Responsible for business, operational and
months investment activities of MFA for the past 3
with MFA years and 10 months. Prior to that, Jon was a
Research Analyst for Macquarie Group covering the
infrastructure sector in Australia and Asia.

2. Justin Lannen Portfolio Manager for MFA 8 months Employed by MFA for the last 8 months. Prior to
with MCIM that, Justin was employed by Colonial First
State (Australia) where he was a Senior Analyst
and Portfolio Manager for the Australian Equities team.

Macquarie Fund Adviser, LLC (MFA) changed its name to Macquarie Capital
Investment Management LLC (MCIM), effective January 17, 2008.

(A)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM
MEMBER AND POTENTIAL CONFLICTS OF INTEREST

OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER

---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
TOTAL ASSETS IN
TOTAL NO. OF ACCOUNTS ACCOUNTS WHERE
NAME OF PORTFOLIO NO. OF WHERE ADVISORY FEE ADVISORY FEE IS
MANAGER OR ACCOUNTS IS BASED ON BASED ON
TEAM MEMBER TYPE OF ACCOUNTS MANAGED TOTAL ASSETS PERFORMANCE PERFORMANCE
----------- ---------------- ------- ------------ ----------- -----------
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------

1. John Fitch Registered Investment 2 $973,132,791 0 $0
Companies:
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
Other Pooled 12 $2,528,797,183 3 $663,453,037 (1)
Investment Vehicles:
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
Other Accounts: 1 $12,715,072 0 $0
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
2. Justin Lannen Registered Investment 0 $0 0 $0
Companies:
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
Other Pooled 2 $973,132,791 0 $0
Investment Vehicles:
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
Other Accounts: 6 $307,310,680 1 $47,506,375 (1)
---------------------- ------------------------ ------------ -------------------- -------------------- -------------------
Information provided as of November 30, 2007

(1) The Advisory fees for these accounts include a base management fee
and a performance fee over a specified hurdle rate.

POTENTIAL CONFLICTS OF INTERESTS

MFA has adopted policies designed to prevent such conflicts, including policies
regarding best execution, daily monitoring of trading and allocation.

(A)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS

Compensation consists of fixed remuneration in the form of a base salary,
variable (at risk) performance pay in the form of an annual profit share
allocation and a long term incentive in the form of options (applies to Director
level employees only). Fixed remuneration takes into consideration the role of
individuals and market conditions. Remuneration is reviewed on a yearly basis in
March/April and takes effect from 1 July of that year. The discretionary profit
sharing pool is allocated to business areas based primarily on relative
contribution to profits taking into account capital usage, and then to
individuals with the business areas. Allocations to individuals are based on
their performance contribution over the year to March 31. As part of the annual
remuneration review cycle, Directors are entitled to receive an allocation of
options based on their performance over the year. The Bank uses options to
provide a long term equity incentive for senior staff and ensures significant
alignment with shareholder interests over the long term.

(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP

The information below is as of November 30, 2007

------------------------------------ ---------------------------------
Dollar ($) Range of Fund
NAME SHARES BENEFICIALLY OWNED
------------------------------------ ---------------------------------
John Fitch $0
------------------------------------ ---------------------------------
Justin Lannen $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

Four Corners' manages multiple portfolios comprised principally of U.S. dollar
denominated, floating-rate, senior secured, commercial and industrial loans and
notes, loan-based swaps, and other debt instruments, and may manage portfolios
that include high yield bonds and/or credit derivatives. Michael P. McAdams,
President and Chief Executive Officer of Four Corners, and Robert I. Bernstein,
Managing Director and Chief Investment Officer of Four Corners, are co-portfolio
managers. Mr. McAdams' involvement in the investment process primarily relates
to oversight and strategic direction and he shares investment decision-making
authority, while Mr. Bernstein has primary responsibility for the day-to-day
investment decisions. Mr. Bernstein is assisted on a day-to-day basis by Drew
Sweeney. The co-portfolio managers are supported in their portfolio management
activities by the Four Corners investment staff. Four Corners' investment
analysts are assigned loans within specific industries and report to the Chief
Investment Officer. Messrs McAdams and Bernstein have both been with Four
Corners for more than 5 years.

(A)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM
MEMBER AND POTENTIAL CONFLICTS OF INTEREST

OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER

---------------------------- ------------------------------------ -------------- ------------- ---------------- -----------------
# of ACCOUNTS Total Assets
Managed for for which
which Advisory Fee
Name of Total Advisory Fee is Based on
Portfolio Manager Total Assets is Based ON PERFORMANCE
TEAM MEMBER Type of ACCOUNTS # of ($millions) PERFORMANCE ($millions)
------------- -------- Accounts ----------- --------------- ------------
MANAGED
---------------------------- ------------------------------------ -------------- ------------- ---------------- ---------------

1. Michael P. McAdams Registered Investment Companies: 4 $1,054.62 0 $0

Other Pooled Investment Vehicles: 4 $1,040.55 4 $1,040.55
Other Accounts: 4 $1,844.95 1 $761.06
---------------------------- ------------------------------------ -------------- ------------- ---------------- -----------------
Registered Investment Companies: 4 $1,054.62 0 $0
Other Pooled Investment Vehicles: 4 $1,040.55 4 $1.040.55
2. Robert I. Bernstein Other Accounts: 4 $1,844.95 1 $761.06
---------------------------- ------------------------------------ -------------- ------------- ---------------- -----------------
Information provided as of November 30, 2007

POTENTIAL CONFLICTS OF INTERESTS

In general, Four Corners seeks to allocate the purchase and sale of corporate
loans to clients in a fair and equitable manner to quickly and prudently create
a well-constructed, fully invested portfolio of corporate loans. Since Four
Corners' clients have varying investment restrictions, and because of the
constraining mechanics of the corporate loan market, allocation of trades
through methods such as pro-rata allocation are not feasible. Therefore, the
allocation of corporate loan purchases and sales to various accounts is
generally based on factors such as the client's investment restrictions and
objectives, including expected liquidity and/or third party credit ratings, the
client's acceptance or rejection of prospective investments, if applicable, and
the relative percentage of invested assets of a client's portfolio, among
others. Assets may be disproportionately allocated to accounts during their
initial investment (ramp up) period, notwithstanding that other accounts may
also have assets available for investment. Such disproportionate allocation to
accounts during the ramp-up process may have a detrimental effect on other
accounts. Subject to the foregoing, whenever Four Corners' clients have
available funds for investment, investments suitable and appropriate for each
will be allocated in a manner Four Corners believes to be equitable to each,
although such allocation may result in a delay in one or more client accounts
being fully invested that would not occur if an allocation to other client
accounts were not made. Moreover, it is possible that due to differing
investment objectives or for other reasons, Four Corners and its affiliates may
purchase securities or loans of an issuer for one client and at approximately
the same time recommend selling or sell the same or similar types of securities
or loans for another client. For these and other reasons, not all portfolios
will participate in the gains or losses experienced by other portfolios with
similar investment objectives.

(A)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS

Portfolio Manager and Management Team compensation is typically comprised of a
base salary and a bonus. Currently, the Funds' Co-Portfolio Managers, (i.e.,
Michael McAdams and Robert Bernstein), are also Principals of Four Corners
Capital Management, and thus also maintain a percentage equity ownership of the
firm. From time to time, individuals on the Management Team may also be offered
equity ownership in the firm. In general, there are no pre-determined formulas
to determine base salaries or bonus amounts. However, bonuses for the Principals
of the firm are formulaic and are based on the profitability of the firm. The
Portfolio Managers' and Management Team's compensation (e.g., base salary and
bonus) is determined by the profitability of Four Corners Capital Management as
a firm without regard to the performance of any one particular fund. The
Portfolio Managers and the Management Team have no direct incentive to take
undue risks when individual fund performance is lagging.

(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP

The information below is as of November 30, 2007:

---------------------------------------- ---- --------------------------
Name of Portfolio Manager or Dollar ($) Range of Fund
TEAM MEMBER Shares BENEFICIALLY OWNED
---------------------------------------- ---- --------------------------
Michael P. McAdams $0
---------------------------------------- ---- --------------------------
---------------------------------------- ---- --------------------------
Robert I. Bernstein $0
---------------------------------------- ---- --------------------------

(B) Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

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/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)

Date JANUARY 24, 2008
----------------------------------------------------------------------------

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.

Date JANUARY 24, 2008
----------------------------------------------------------------------------

By (Signature and Title)* /S/ MARK R. BRADLEY
--------------------------------------------
Mark R. Bradley, Treasurer, Controller, Chief Financial
Officer and Chief Accounting Officer
(principal financial officer)

Date JANUARY 24, 2008
----------------------------------------------------------------------------

* Print the name and title of each signing officer under his or her signature.