UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21496
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
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(Exact name of registrant as specified in charter)
1001 Warrenville Road
Suite 300
LISLE, IL 60532
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(Address of principal executive offices) (Zip code)
W. Scott Jardine
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: MAY 31
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Date of reporting period: NOVEMBER 30, 2005
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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.
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MACQUARIE/FIRST TRUST GLOBAL
INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME
FUND
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2005
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TABLE OF CONTENTS
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
SEMI-ANNUAL REPORT
NOVEMBER 30, 2005
Shareholder Letter ...................................................... 1
Portfolio Commentary .................................................... 2
Portfolio of Investments ................................................ 4
Statement of Assets and Liabilities ..................................... 8
Statement of Operations ................................................. 9
Statements of Changes in Net Assets ..................................... 10
Statement of Cash Flows ................................................. 11
Financial Highlights .................................................... 12
Notes to Financial Statements ........................................... 13
Additional Information .................................................. 17
Dividend Reinvestment Plan
Proxy Voting Policies and Procedures
Portfolio Holdings
Submission of Matters to a Vote of Shareholders
By-Law Amendment
Tax Information
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This Semi-Annual 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. and/or Macquarie Infrastructure Fund Adviser, LLC
("MIFA") 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 Macquarie/First Trust Global
Infrastructure/Utilities Dividend & Income Fund's (the "Fund") actual results,
performance or achievements 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 Semi-Annual Report,
you are cautioned not to place undue reliance on these forward-looking
statements, which reflect the judgment of First Trust Advisors L.P. and/or MIFA
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.
HOW TO READ THIS REPORT
This report contains information that can help you evaluate your investment. It
includes details about the Macquarie/First Trust Global Infrastructure/Utilities
Dividend & Income Fund (the "Fund") and presents data and analysis that provide
insight into the Fund's performance and investment approach.
By reading the letter from the Fund's President, James A. Bowen, together with
the portfolio commentary by Jon Fitch, Portfolio Manager of MIFA, one of the
Fund's Sub-Advisors, you will obtain an understanding of how the market
environment affected the Fund's performance. The statistical information that
follows can help you understand the Fund's performance compared to that of
relevant benchmarks.
It is important to keep in mind that the opinions expressed by Mr. Bowen, First
Trust Advisors L.P. personnel, MIFA and Four Corners Capital Management, LLC
personnel 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. Of course, 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
INFRASTRUCTURE 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)
SEMI-ANNUAL REPORT
NOVEMBER 30, 2005
Dear Shareholder:
It is our pleasure to inform you that your Fund has continued to provide
attractive dividend income for the six months ended November 30, 2005. As you
know, 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. While short-term interest rates have continued
to rise over the past six months, the Fund has maintained its regular quarterly
dividend distribution of $0.33 per share resulting in an annualized distribution
rate of 6.1% based on the November 30, 2005 market price of $21.49 per share. In
addition, the Fund achieved a total return of 4.4% and a market price total
return of 6.0%, both over the six months ended November 30, 2005.
The core component of the Fund, consisting primarily of equity and equity-like
securities issued by infrastructure issuers, is managed by Macquarie
Infrastructure Fund Adviser, LLC ("MIFA"), a member of the Macquarie group of
companies (collectively referred to as "Macquarie"). Macquarie is a global
leader in infrastructure acquisition, funding and management. Through its
Infrastructure and Specialized Funds Division, Macquarie manages in excess of
US$23 billion of equity invested in infrastructure assets and businesses in the
U.S., Canada, Australia, U.K., Portugal, Denmark, Belgium, The Netherlands,
Germany, Italy, South Africa, Korea, Sweden, Japan, New Zealand and Tanzania (as
of December 2005).
Four Corners Capital Management, LLC ("Four Corners") manages the Fund's assets
within the senior loan component of the portfolio. Four Corners is a leading
asset management firm that specializes in the sub-investment grade and
structured finance markets. The portfolio management team, including the credit
research analysts, collectively has over 100 years' experience in all aspects of
the senior loan market, including structuring, underwriting, researching,
trading, managing and investing in senior loans.
I encourage you to read the portfolio commentary found on the following pages.
It includes a review of the Fund's performance and the portfolio managers'
outlook for the markets. We thank you for your confidence in First Trust
Advisors, L.P., MIFA and Four Corners and will work diligently to keep earning
it.
Sincerely,
/S/ JAMES A. BOWEN
James A. Bowen
President of the Macquarie/First Trust Global Infrastructure/Utilities
Dividend & Income Fund
January 6, 2006
Page 1
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A COMMENTARY ON THE MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND
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OVERVIEW:
The Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
("MFD" or the "Fund") posted a market price total return of 6.0% for the six
months ended November 30, 2005. The Fund's net asset value ("NAV") total return
was 4.4% over the same period. During the six-month period ended November 30,
2005, the Fund declared distributions totaling $0.66 per share, representing an
annualized distribution rate of 6.1% based on the Fund's market price and 5.6%
based on the Fund's NAV, each as of November 30, 2005. Since November 30, 2005,
additional distributions consisting of a $0.33 per share regular quarterly
distribution, a $0.39 per share short-term capital gain distribution and a $0.24
per share long-term capital gain distribution have been paid. Following is a
review of the overall investment strategy, performance and portfolio composition
of MFD as of November 30, 2005.
INVESTMENT STRATEGY:
MFD'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 pursuing this objective, MFD's investments will focus
predominantly on securities of companies involved in the management, ownership
and/or operation of infrastructure and utility assets.
Under normal market conditions, MFD will seek to invest more than 50% of the
Fund's total assets outside of the U.S. These investments will focus on
developed economies. The advisor and sub-advisors believe that international
diversity has two major benefits for investors. First, it gives investors
exposure to the fundamentals of different economies, providing diversity against
U.S. domiciled investments. Second, by investing in select developed economies,
MFD should be able to provide investors with exposure to a much broader range of
infrastructure/utility businesses.
The Fund is comprised of two components. The "core component," consisting
primarily of equity and equity-like securities issued by infrastructure issuers,
and the "senior loan component," comprised of infrastructure senior secured
floating rate loans. The "core component" is funded by the issuance of equity,
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 has been matched to the floating rate
nature of the senior secured loans. This is intended to protect the Fund against
rising interest rates.
PERFORMANCE:
The period from June 2005 through November 2005 was characterized by broad
market uncertainties with respect to the impact of interest rate movements on
stock fundamentals. Within this environment, MFD posted a market share price
total return of 6.0% for the six months ended November 30, 2005. MFD's NAV total
return was 4.4% over the same period. These returns compare to a 5.0% gain
posted by the S&P U.S. Utilities Accumulation Index (in U.S. Dollars).
During the period, equity investments in the core component of MFD were focused
on the U.K., Canada, Italy and Australia. In particular, MFD benefited from the
strong performance of its U.K. and Canadian investments. With respect to the
U.K., positions in U.K. water companies continued to benefit from improved
earnings certainty after the finalization of the U.K. water regulatory review
process. The share prices for a number of water companies returned 10% or more
(in local currency terms) during the period. MFD continues to retain a focus on
this sector, given good cash yields and the low risk nature of returns from this
asset category.
In Canada, investments within the core component of the portfolio represented a
diverse mix of infrastructure assets, including diversified consumer services,
contracted power generation and pipelines. Over the period, the strongest price
performer (in local currency terms) was Pembina Pipeline, which was up 13.3%.
Currency movements, on the whole, had a negative impact on NAV during the
period. As an indication, the U.S. Dollar was up 5% against the British Pound,
up 5% against the Euro, down 7% against the Canadian Dollar and up 2% against
the Australian Dollar. Additionally, the U.S. Dollar Index, an indicator of
movements against a basket of non-U.S. currencies, was up 4% over the same
period. A positive movement in the U.S. Dollar is a negative for NAV/yield, as
the value of the Fund's offshore holdings decreases, as foreign sourced income
streams become less valuable in U.S. Dollars. MFD's largest overseas weightings
were in the U.K. (27%) and Canada (20%).
SENIOR LOANS
The performance of the senior loan component of the portfolio met expectations
during the six-month period ended November 30, 2005. As you will recall, 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. In general, the senior loan market
performed well during the Fund's first six months of its fiscal year, as the
U.S. economy continued to gain strength and default rates in the senior loan
market remained at historically low levels.
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 reset at a fixed credit spread (the risk premium) over
short-term interest rates, senior loans,
Page 2
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A COMMENTARY ON THE MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND - (CONTINUED)
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subject to approximately a 90-day lag, tend to benefit from rising interest
rates, 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 limited, if any, negative impact on
loan prices from interest rate increases.
PORTFOLIO COMPOSITION:
As of November 30, 2005, the core component represented 67.4% of the Fund's
total investments, senior loans 29.2% and cash/cash equivalents 3.4%. With
respect to the core component, the Fund had investments in 16 equity/equity-like
securities as of November 30, 2005, providing both geographic and industry
diversity. With respect to the senior loan component, the Fund had invested in
50 senior secured loan facilities spread across a number of
infrastructure-related industries. The portfolio components of the Fund as of
November 30, 2005 are summarized in the charts below.
INDUSTRY DIVERSIFICATION+
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Water-Utilities 18.0%
Electric-Utilities 11.9%
Gas-Pipelines 11.6%
Gas-Utilities 4.8%
Multi-Utilities 8.8%
Diversified Consumer Services 6.4%
Senior Secured Loans 29.2%
Power Generation 5.9%
Cash/Cash Equivalents 3.4%
COUNTRY DIVERSIFICATION+
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Canada 19.7%
United Kingdom 26.8%
Italy 9.3%
United States 5.2%
Senior Secured Loans 29.2%
Cash/Cash Equivalents 3.4%
Australia 6.4%
+ Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net
assets.
OUTLOOK
While interest rate uncertainties are likely to prevail in the short term, there
are a number of interesting themes emerging within the sector globally,
providing additional investment opportunities for the Fund. These include:
industry consolidation and new investments in gas/electricity transmission
infrastructure resulting from legislative changes in the U.S.; new energy
infrastructure opportunities in Canada; regulatory reform, new asset
privatizations and capital management initiatives in Europe; and new listings in
Australia. The sub-advisor believes that MFD continues to be well positioned to
participate in the ongoing growth of this sector.
Page 3
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 2005 (UNAUDITED)
MARKET
SHARES DESCRIPTION~ VALUE
---------- -------------------------------------------------- --------------
COMMON STOCKS - 59.4%
AUSTRALIA - 8.0%
330,015 Australian Pipeline Trust ........................ $ 947,864
14,906,607 Envestra Ltd. .................................... 12,696,483
1,717,775 GasNet Australia Group ........................... 3,355,452
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16,999,799
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ITALY - 11.5%
1,425,000 Enel SPA ......................................... 11,223,153
1,613,728 Snam Rete Gas SPA ................................ 6,806,299
2,700,000 Terna SPA ........................................ 6,543,093
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24,572,545
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UNITED KINGDOM - 33.4%
1,097,662 AWG plc .......................................... 18,982,300
1,115,096 Kelda Group plc .................................. 14,095,752
701,246 National Grid Transco plc ........................ 6,476,013
855,149 Severn Trent plc ................................. 14,810,181
1,517,999 United Utilities plc ............................. 16,927,023
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71,291,269
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UNITED STATES - 6.5%
265,000 Ameren Corp. ..................................... 13,901,900
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TOTAL COMMON STOCKS .............................. 126,765,513
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(Cost $113,719,459)
CANADIAN INCOME TRUSTS - 24.6%
1,223,300 Northland Power Income Fund ...................... 15,675,940
1,473,300 Pembina Pipeline Income Fund ..................... 19,826,692
691,800 The Consumer's Waterheater Income Fund ........... 9,428,380
629,200 UE Waterheater Income Fund ....................... 7,512,755
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TOTAL CANADIAN INCOME TRUSTS ..................... 52,443,767
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(Cost $33,916,661)
BANK LOAN
PRINCIPAL RATINGS+ STATED MARKET
VALUE DESCRIPTION~ MOODY'S S&P COUPON MATURITY* VALUE
------------ ------------------------------------------------ -------------- ----------- --------- -------------
SENIOR FLOATING RATE TERM LOAN INTERESTS** - 36.4%
COMMERCIAL SERVICES & SUPPLIES - 2.3%
ENVIRONMENTAL SERVICES - 2.3%
1,467,062 Duratek, Inc. .................................. B1 BB- 6.75%-7.19% 12/16/09 1,468,896
1,827,273 Envirocare of Utah, LLC ........................ NR(a) NR(a) 6.95% 4/13/10 1,847,829
1,500,000 EnviroSolutions Holdings, Inc. ................. B2 B- 7.33%-7.62% 7/12/12 1,522,500
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TOTAL COMMERCIAL SERVICES & SUPPLIES 4,839,225
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Page 4 See Notes to Financial Statements.
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 2005 (UNAUDITED)
BANK LOAN
PRINCIPAL RATINGS+ STATED MARKET
VALUE DESCRIPTION~ MOODY'S S&P COUPON MATURITY* VALUE
------------ ------------------------------------------------ -------------- ----------- --------- -------------
SENIOR FLOATING RATE TERM LOAN INTERESTS** - CONTINUED
DIVERSIFIED TELECOMMUNICATION SERVICES - 2.8%
INTEGRATED TELECOMMUNICATION SERVICES - 2.8%
$ 1,000,000 Hawaiian Telecom
Communications, Inc. ........................ B1 B+ 6.28% 10/31/12 $ 1,009,000
1,000,000 Iowa Telecommunications
Services, Inc. .............................. Ba3 BB- 5.29%-5.77% 11/23/11 1,008,125
1,000,000 Madison River Capital, LLC ..................... B1 B+ 6.59% 7/29/12 1,012,500
2,000,000 NTL Investment Holdings Ltd. ................... B1 BB- 7.14% 5/10/12 2,004,500
966,667 Valor Telecommunications
Enterprises, LLC ............................ Ba3 BB- 5.77%-5.97% 2/14/12 976,032
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TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES 6,010,157
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ELECTRIC UTILITIES - 8.0%
ELECTRIC UTILITIES - 8.0%
1,591,027 Allegheny Energy Supply Inc. ................... Ba2 BB 5.64%-5.92% 3/08/11 1,606,938
1,553,431 Cogentrix Delaware
Holdings, Inc. .............................. Ba2 BB+ 5.78% 4/14/12 1,567,994
2,000,000 Coleto Creek WLE, L.P. (c) ..................... B1 BB- 7.49% 6/30/12 2,038,750
2,996,647 Covanta Energy Corp. ........................... B1 B+ 6.85%-6.96% 6/24/12 3,032,232
1,000,000 Lsp-Kendall Energy, LLC ........................ B1 B 6.09% 10/07/13 991,875
926,080 Midwest Generation, LLC ........................ Ba3 BB- 6.05%-6.22% 4/27/11 934,183
1,991,563 NRG Energy, Inc. ............................... Ba3 BB 5.09% 12/24/11 1,998,200
919,167 NSG Holdings II, LLC ........................... B1 B+ 7.02% 12/13/11 929,507
743,377 Riverside Energy Center, LLC ................... Ba3 B 8.49% 6/24/11 765,678
1,159,162 Rocky Mountain Energy
Center, LLC ................................. Ba3 B 8.49% 6/24/11 1,193,937
1,986,461 Texas Genco, LLC ............................... Ba2 BB 5.87%-6.11% 12/14/11 1,988,325
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TOTAL ELECTRIC UTILITIES 17,047,619
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ENERGY EQUIPMENT & SERVICES - 0.9%
OIL & GAS EQUIPMENT & SERVICES - 0.9%
2,000,000 Targa Resources, Inc. .......................... Ba3 B+ 6.47%-6.66% 10/31/12 2,010,000
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TOTAL ENERGY EQUIPMENT & SERVICES 2,010,000
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HEALTH CARE PROVIDERS & SERVICES - 6.8%
HEALTH CARE FACILITIES - 3.0%
2,796,576 Lifepoint Hospitals, Inc. ...................... Ba3 BB 6.19% 4/15/12 2,810,123
615,385 Psychiatric Solutions, Inc. .................... B1 B+ 6.04%-6.26% 7/01/12 621,538
2,985,000 Select Medical Corp. ........................... B1 BB- 5.78%-7.75% 2/24/12 2,984,170
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6,415,831
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See Notes to Financial Statements. Page 5
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 2005 (UNAUDITED)
BANK LOAN
PRINCIPAL RATINGS+ STATED MARKET
VALUE DESCRIPTION~ MOODY'S S&P COUPON MATURITY* VALUE
------------ ------------------------------------------------ -------------- ----------- --------- -------------
SENIOR FLOATING RATE TERM LOAN INTERESTS** - CONTINUED
HEALTH CARE PROVIDERS & SERVICES - (CONTINUED)
HEALTH CARE SERVICES - 1.0%
$ 1,980,000 CHS/Community Health
Systems, Inc. ............................... Ba3 BB- 5.97%-6.16% 8/19/11 $ 2,001,863
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MANAGED HEALTH CARE - 2.8%
1,975,000 IASIS Healthcare Corp. ......................... B1 B+ 6.30% 6/22/11 2,000,099
1,975,000 Medcath Holdings Corp. ......................... B2 B+ 6.77%-8.25% 6/30/11 1,984,875
1,985,000 Vanguard Health Systems, Inc. .................. B2 B 6.21% 9/23/11 2,007,331
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5,992,305
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TOTAL HEALTH CARE PROVIDERS & SERVICES 14,409,999
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MEDIA - 5.4%
BROADCASTING & CABLE TV - 5.4%
987,500 Bragg Communications, Inc. ..................... NR(a) NR 6.24% 8/31/11 999,844
4,000,000 Century Cable Holdings, LLC .................... NR NR 9.00% 6/30/09 3,924,284
2,996,275 Charter Communications
Operating, LLC .............................. B2 B 7.25% 4/27/10 2,988,784
2,000,000 Mediacom Illinois, LLC,
(Revolving Credit) .......................... Ba3 BB- 0.63%-7.50% 9/30/11 581,881
2,000,000 UPC Distribution Holding B.V. .................. B1 B 7.19% 12/31/11 2,020,500
1,000,000 UPC Distribution Holding B.V. .................. B1 B 6.55% 9/30/12 1,007,500
-------------
TOTAL MEDIA 11,522,793
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MULTI-UTILITIES & UNREGULATED POWER - 1.4%
MULTI-UTILITIES & UNREGULATED POWER - 1.4%
2,064,072 KGEN, LLC (c) .................................. B3 B- 13.02% 8/05/11 2,043,431
1,000,000 Thermal North America, Inc.,
(Letter of Credit) .......................... Ba3 BB- 5.84% 10/12/13 1,008,750
-------------
TOTAL MULTI-UTILITIES & UNREGULATED POWER 3,052,181
-------------
OIL & GAS - 5.6%
OIL & GAS EXPLORATION & PRODUCTION - 2.5%
1,922,744 Mainline, L.P. ................................. Ba3 NR(a) 6.30% 12/17/11 1,941,972
1,893,597 Plains Resources Inc. .......................... Ba2 BB 6.40% 8/12/11 1,910,166
1,527,484 SemCrude, L.P. ................................. Ba3 B 5.87%-7.75% 3/16/11 1,542,759
-------------
5,394,897
-------------
OIL & GAS REFINING, MARKETING & TRANSPORTATION - 3.1%
1,000,000 Cheniere LNG Holdings, LLC ..................... NR BB 6.77%-6.95% 8/31/12 1,004,688
2,506,890 El Paso Corp. .................................. B3 B 6.61% 11/23/09 2,514,203
1,000,000 EPCO Holdings, Inc. ............................ Ba3 B+ 6.41%-6.60% 8/18/10 1,013,438
995,000 LB Pacific, L.P. ............................... B1 B- 6.95%-6.96% 3/03/12 1,007,437
997,500 Regency Gas Service, LLC ....................... B1 B+ 6.72%-6.78% 6/01/10 1,002,487
-------------
6,542,253
-------------
TOTAL OIL & GAS 11,937,150
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Page 6 See Notes to Financial Statements.
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 2005 (UNAUDITED)
BANK LOAN
PRINCIPAL RATINGS+ STATED MARKET
VALUE DESCRIPTION~ MOODY'S S&P COUPON MATURITY* VALUE
------------ ------------------------------------------------ -------------- ----------- --------- -------------
SENIOR FLOATING RATE TERM LOAN INTERESTS** - CONTINUED
ROAD & RAIL - 2.2%
RAILROADS - 2.2%
$ 3,092,313 Kansas City Southern
Railway Company ............................. Ba3 BB+ 5.72%-5.80% 3/31/08 $ 3,107,132
1,618,768 Railamerica Transportation Corp. ............... Ba3 BB 6.69% 9/29/11 1,641,026
-------------
TOTAL ROAD & RAIL 4,748,158
-------------
WIRELESS TELECOMMUNICATION SERVICES - 1.0%
WIRELESS TELECOMMUNICATION SERVICES - 1.0%
2,000,000 AAT Communications Corp. ....................... B1 BB+ 6.16% 7/27/12 2,023,750
-------------
TOTAL WIRELESS TELECOMMUNICATION SERVICES 2,023,750
-------------
TOTAL SENIOR FLOATING RATE TERM LOAN INTERESTS ................................................. 77,601,032
-------------
(Cost $77,123,613)
REPURCHASE AGREEMENT - 4.2%
(Cost $9,000,000)
9,000,000 Agreement with Wachovia Capital Markets, LLC, 3.96% dated 11/30/05 to be
repurchased at $9,000,990 on 12/1/05, collateralized by $9,165,000
Federal Home Loan Bank, 4.14% due 4/13/07 (Value $9,182,888) 9,000,000
-------------
TOTAL INVESTMENTS - 124.6% ..................................................................... 265,810,312
(Cost $233,759,733) (b)
NET OTHER ASSETS AND LIABILITIES - 13.4% ....................................................... 28,534,173
-------------
LOAN OUTSTANDING - (38.0)% ..................................................................... (81,000,000)
-------------
NET ASSETS - 100.0% ............................................................................ $ 213,344,485
=============
--------------------------------------------------------------------------------
~ All percentages shown in the Portfolio of Investments are based on
net assets.
(a) This Senior Loan Interest was privately rated upon issuance. The
rating agency does not provide ongoing surveillance on the rating.
(b) Aggregate cost for federal income tax purposes is $236,634,974.
(c) This issue is secured by a second lien on the issuer's assets.
+ Ratings below Baa3 by Moody's Investors Service, Inc. or BBB- by
Standard & Poor's Ratings Group are considered to be below
investment grade.
NR Not Rated
* Senior Loans generally are subject to mandatory and/or optional
prepayment. Because of the mandatory prepayment conditions and
because there may be significant economic incentives for a borrower
to optionally prepay, prepayments of Senior Loans may occur. 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.
** 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 generallly
(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.
See Notes to Financial Statements. Page 7
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 2005 (UNAUDITED)
ASSETS:
Investments, at value
(Cost $233,759,733) ........................................ $ 265,810,312
Cash .......................................................... 462,410
Prepaid expenses .............................................. 20,205
Receivables:
Investment securities sold ............................... 27,401,081
Dividends ................................................ 1,211,530
Interest ................................................. 696,134
-------------
Total Assets ............................................... 295,601,672
-------------
LIABILITIES:
Payables:
Outstanding loan ......................................... 81,000,000
Investment advisory fees ................................. 736,763
Interest and fees due on loan ............................ 323,488
Investment securities purchased .......................... 67,973
Administrative fees ...................................... 22,337
Accrued expenses and other liabilities ........................ 106,626
-------------
Total Liabilities .......................................... 82,257,187
-------------
NET ASSETS .................................................... $ 213,344,485
=============
NET ASSETS CONSIST OF:
Undistributed net investment income ........................... $ 3,325,961
Accumulated net realized gain on investments sold
and foreign currencies and net other assets ................ 6,906,554
Net unrealized appreciation of investments and
foreign currencies and net other assets .................... 32,019,915
Par value ..................................................... 89,802
Paid-in capital ............................................... 171,002,253
-------------
Net Assets ................................................. $ 213,344,485
=============
NET ASSET VALUE, per Common Share (par value $0.01 per
Common Share) .............................................. $ 23.76
=============
Number of Common Shares outstanding (unlimited number of
Common Shares has been authorized) ......................... 8,980,236
=============
Page 8 See Notes to Financial Statements.
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2005 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $715,409) ........ $ 10,820,049
Interest ...................................................... 2,717,984
Other ......................................................... 9,148
-------------
Total investment income .................................... 13,547,181
-------------
EXPENSES:
Interest and fees on outstanding loan payable ................. 1,719,843
Investment advisory fees ...................................... 1,468,730
Administration fees ........................................... 137,553
Custodian fees ................................................ 54,844
Audit and legal fees .......................................... 44,936
Printing fees ................................................. 36,623
Trustees' fees and expenses ................................... 20,757
Other ......................................................... 38,187
-------------
Total expenses ............................................. 3,521,473
-------------
NET INVESTMENT INCOME ......................................... 10,025,708
-------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gain/(loss) on:
Securities transactions .................................... 4,583,967
Foreign currencies and net other assets .................... (16,624)
-------------
Net realized gain on investments and foreign
currency during the period ................................. 4,567,343
-------------
Net change in unrealized appreciation/(depreciation) of:
Investments ................................................ (5,679,433)
Foreign currencies and net other assets .................... (29,806)
-------------
Net change in unrealized appreciation/(depreciation) of
investments and foreign currency during the period ......... (5,709,239)
-------------
Net realized and unrealized loss on investments
and foreign currency ....................................... (1,141,896)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .......... $ 8,883,812
=============
See Notes to Financial Statements. Page 9
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
11/30/2005 ENDED
(UNAUDITED) 5/31/2005
------------- -------------
OPERATIONS:
Net investment income ......................................... $ 10,025,708 $ 11,078,633
Net realized gain on investments and foreign currency
during the period .......................................... 4,567,343 4,673,822
Net change in unrealized appreciation/(depreciation) of
investments and foreign currency during the period ......... (5,709,239) 37,012,678
------------- -------------
Net increase in net assets resulting from operations .......... 8,883,812 52,765,133
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ......................................... (5,926,956) (15,176,599)
------------- -------------
Total distributions to shareholders ........................... (5,926,956) (15,176,599)
------------- -------------
Net increase in net assets .................................... 2,956,856 37,588,534
NET ASSETS:
Beginning of period ........................................... 210,387,629 172,799,095
------------- -------------
End of period ................................................. $ 213,344,485 $ 210,387,629
============= =============
Undistributed net investment income/(accumulated net
investment loss) at end of period .......................... $ 3,325,961 $ (1,789,965)
============= =============
Page 10 See Notes to Financial Statements.
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2005 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations .......................... $ 8,883,812
Adjustments to reconcile net increase in net assets resulting from operations
to net cash used by operating activities:
Changes in assets and liabilities:
Decrease in investments, at value* ......................................... 19,928,917
Increase in interest receivable ............................................ (154,676)
Increase in dividends receivable ........................................... (420,713)
Increase in prepaid expenses ............................................... (1,593)
Increase in receivable for investment securities sold ...................... (26,399,831)
Decrease in payable for investment securities purchased .................... (3,004,988)
Increase in interest and fees due on loan .................................. 73,707
Increase in investment advisory fees payable ............................... 21,822
Decrease in administrative fees payable .................................... (442)
Decrease in accrued expenses and other liabilities ......................... (29,491)
-------------
CASH USED BY OPERATING ACTIVITIES ............................................. $ (1,103,476)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to shareholders from net investment income ................... (5,926,956)
Increase in loan outstanding ............................................... 6,000,000
-------------
CASH PROVIDED BY FINANCING ACTIVITIES ......................................... 73,044
------------
Decrease in cash .............................................................. (1,030,432)
CASH AT BEGINNING OF PERIOD ................................................... 1,492,842
------------
CASH AT END OF PERIOD ......................................................... $ 462,410
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest ................................... $ 1,646,136
--------------------------------------------------------------------------------
* Includes net change in unrealized depreciation on investments of
$(5,679,433).
See Notes to Financial Statements. Page 11
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR PERIOD
11/30/2005 ENDED ENDED
(UNAUDITED) 5/31/2005 5/31/2004*
----------- --------- ----------
Net asset value, beginning of period ........................................... $ 23.43 $ 19.24 $ 19.10
----------- --------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .......................................................... 1.12 1.23 0.11
Net realized and unrealized gain/(loss) on investments and foreign currency..... (0.13) 4.65 0.07
----------- --------- ----------
Total from investment operations ............................................... 0.99 5.88 0.18
----------- --------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income .......................................................... (0.66) (1.69) --
----------- --------- ----------
Total from distributions ....................................................... (0.66) (1.69) --
----------- --------- ----------
Common shares offering costs charged to paid-in capital ........................ -- -- (0.04)
----------- --------- ----------
Net asset value, end of period ................................................. $ 23.76 $ 23.43 $ 19.24
=========== ========= ==========
Market value, end of period .................................................... $ 21.49 $ 20.87 $ 17.70
=========== ========= ==========
TOTAL RETURN BASED ON NET ASSET VALUE (A)+ .................................... 4.36% 32.15% 0.73%
=========== ========= ==========
TOTAL RETURN BASED ON MARKET VALUE (B)+ ........................................ 5.97% 27.96% (11.50)%
=========== ========= ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........................................... $ 213,344 $ 210,388 $ 172,799
Ratio of total expenses to average net assets excluding interest expense ....... 1.70%** 1.78% 1.47%**
Ratio of total expenses to average net assets .................................. 3.32%** 2.78% N/A
Ratio of net investment income to average net assets ........................... 9.45%** 5.65% 3.14%**
Portfolio turnover rate ........................................................ 15.94% 42.96% 0.00%
DEBT:
Loan outstanding (in 000's) ................................................... $ 81,000 $ 75,000 N/A
Asset coverage per $1,000 of indebtedness (c) .................................. $ 3,634 $ 3,805 N/A
--------------------------------------------------------------------------------
* The Fund commenced operations on March 16, 2004.
** Annualized.
(a) 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.
(b) 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.
(c) Calculated by subtracting the Fund's total liabilities (not including the
loan outstanding) from the Fund's total assets, and dividing by the amount
of senior indebtedness.
+ Total return is not annualized for periods less than one year.
N/A Not applicable.
Page 12 See Notes to Financial Statements.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2005 (UNAUDITED)
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.
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 ("Infrastructure 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 ("Infrastructure
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 Common Shares of the Fund is computed based
upon the value of the Fund's portfolio and other assets. The NAV is determined
as of the close of regular trading on the New York Stock Exchange ("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 declared but unpaid), 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 market value of Senior Loans may be based on
infrequent and dated information. Because there is less reliable, objective data
available, elements of judgment may play a greater role in valuation of Senior
Loans than for other types of
Page 13
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2005 (UNAUDITED)
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 as determined
in accordance with 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.
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 instructs the custodian to
segregate assets of the Fund with a current value at least equal to the amount
of its when-issued 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 loan commitments of approximately $1,351,869
as of November 30, 2005. The Fund is obligated to fund these loan commitments at
the borrower's discretion. Net unrealized depreciation of $30,157 from these
commitments is included in "Accrued expenses and other liabilities" 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) of foreign
currencies and net other assets" 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 gains on foreign currencies and net other
assets" on the Statement of Operations. Unrealized depreciation of $30,664 from
dividends receivable in foreign currencies are included in "Dividends
receivable" on the Statement of Assets and Liabilities.
Page 14
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2005 (UNAUDITED)
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. 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 six months ended
November 30, 2005, resulting in book and tax accounting differences, have been
reclassified at period end to reflect an increase in undistributed net
investment income by $1,017,174, and a decrease in accumulated net realized gain
on investments sold by $1,017,174. Net assets were not affected by this
reclassification.
The tax character of distributions paid during the six months ended November 30,
2005 and the fiscal year ended May 31, 2005 is as follows:
NOVEMBER 30, 2005 MAY 31, 2005
----------------- ------------
Distributions paid from:
Ordinary Income ............................ $ 5,926,956 $ 15,176,599
As of November 30, 2005, the components of distributable earnings on a tax basis
were as follows:
Undistributed Ordinary Income .............. $ 10,291,879
Undistributed Long-Term Capital Gains ...... 2,824,081
Net Unrealized Appreciation ................ 29,144,674
As of May 31, 2005, the components of distributable earnings on a tax basis were
as follows:
Undistributed Ordinary Income .............. $ 4,731,226
Net Unrealized Appreciation ................ 34,607,801
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 all of its net investment income and
net realized gains to shareholders. Accordingly, no provision has been made for
federal or state income taxes.
H. EXPENSES:
The Fund will pay all expenses directly related to its operations.
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 $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 incurred).
Macquarie Infrastructure Fund Adviser, LLC ("MIFA") 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. MIFA manages the Core
Component and, for its portfolio management services, MIFA 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 MIFA. If the Fund's Total Assets are greater
than $250 million, MIFA receives an annual portfolio management
Page 15
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2005 (UNAUDITED)
fee of 0.65% for that portion of the Fund's Total Assets over $250 million. In
addition, to the extent that MIFA invests a portion of the Core Component in
unlisted securities ("Core Unlisted Instruments"), MIFA 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.
The Fund pays each Trustee who is not an officer or employee of First Trust or
any of its affiliates an annual retainer of $10,000, which includes compensation
for all regular quarterly board meetings and regular committee meetings. No
additional meeting fees are paid in connection with regular quarterly board
meetings or regular committee meetings. Additional fees of $1,000 and $500 are
paid to non-interested Trustees for special board meetings and non-regular
committee meetings, respectively. These additional fees are shared by the funds
in the First Trust fund complex that participate in the particular meeting and
are not per fund fees. Trustees are also reimbursed for travel and out-of-pocket
expenses in connection with all meetings.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments, for the six months ended November 30, 2005, were
$43,407,813 and $70,395,944, respectively.
As of November 30, 2005, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $33,005,763
and the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $3,830,425.
5. REVOLVING CREDIT AND SECURITY AGREEMENT
On May 24, 2004, the Fund entered into a Revolving Credit and Security Agreement
among the Fund, 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 six
months ended November 30, 2005, the average amount outstanding was $81,234,973,
with a weighted average interest rate of 3.55%. The Fund also pays additional
borrowing costs, which includes an administration fee of 0.02%, a program fee of
0.35% and a liquidity fee of 0.14% per year. Such expenses are included in
"Interest and fees on outstanding loan payable" on the Statement of Operations.
6. CONCENTRATION OF 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 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.
7. POST-OCTOBER LOSS
Certain losses incurred after October 31 within the Fund's taxable year are
deemed to arise on the first business day of the Fund's following fiscal year.
For the tax year ended November 30, 2005, the Fund incurred and elected to defer
$8,209 in currency losses.
8. SUBSEQUENT EVENT
On December 9, 2005, the Fund declared distributions totaling $0.96 per share,
which represents a dividend from net investment income of $0.33, realized
short-term capital gains of $0.39 and realized long-term capital gains of $0.24
to Common Shareholders of record December 21, 2005, payable December 30, 2005.
Page 16
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ADDITIONAL INFORMATION
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2005 (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
dividends, 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 the 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 the 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 (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 (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 17
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ADDITIONAL INFORMATION (CONTINUED)
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MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND & INCOME FUND
NOVEMBER 30, 2005 (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 Forms N-Q. The Fund's Forms N-Q are available (1) by calling (800)
988-5891; (2) on the Fund's website located at http://www.ftportfolios.com; (3)
on the SEC's website at http://www.sec.gov; and (4) for review and copying at
the SEC's Public Reference Room ("PRR") in Washington, DC. Information regarding
the operation of the PRR may be obtained by calling 1-800-SEC-0330.
SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The Joint Annual Meeting of Shareholders of First Trust Value Line(R) Dividend
Fund, First Trust/Four Corners Senior Floating Rate Income Fund, Macquarie/First
Trust Global Infrastructure/Utilities Dividend & Income Fund, First Trust/Value
Line(R) & Ibbotson Equity Allocation Fund, and First Trust/Four Corners Senior
Floating Rate Income Fund II was held on September 12, 2005. At the Annual
Meeting, the Fund's Board of Trustees, consisting of James A. Bowen, Niel B.
Nielson, Thomas R. Kadlec, Richard E. Erickson and David M. Oster, was elected
to serve an additional one-year term. The number of votes cast for James A.
Bowen was 5,952,268, the number of votes withheld was 88,344 and the number of
abstentions was 2,939,624. The number of votes cast for Niel B. Nielson was
5,947,001, the number of votes withheld was 93,611 and the number of abstentions
was 2,939,624. The number of votes cast for Richard E. Erickson was 5,947,496,
the number of votes withheld was 93,116 and the number of abstentions was
2,939,624. The number of votes cast for Thomas R. Kadlec was 5,955,942, the
number of votes withheld was 84,670 and the number of abstentions was 2,939,624.
The number of votes cast for David M. Oster was 5,953,609, the number of votes
withheld was 87,003 and the number of abstentions was 2,939,624.
BY-LAW AMENDMENT
On December 12, 2005, the Board of Trustees of the Fund approved certain changes
to the By-Laws of the Fund that may have the effect of delaying or preventing a
change of control of the Fund. To receive a copy of the revised By-Laws,
investors may call the Fund at (800) 988-5891.
TAX INFORMATION
Of the ordinary income (including short-term capital gain) distributions made by
the Fund during the six months ended November 30, 2005, 8.42% qualify for the
corporate dividend received deduction available to corporate shareholders.
The Fund hereby designates as qualified dividend income distributions 91.83% of
the ordinary income (including short-term capital gain), for the six months
ended November 30, 2005.
If the Fund meets the requirements of Section 853 of the Code, the Fund may
elect to pass through to its shareholders credits for foreign taxes paid. The
total amount of income received by the Fund from sources within foreign
countries and possessions of the United States is $1.00 (representing a total of
$9,021,891). The total amount of taxes paid to such countries is $0.08 per share
(representing a total of $715,409).
For the six months ended November 30, 2005, the amount of long-term capital
gains designated by the Fund was $2,824,081, which is taxable at a 15% rate or
federal income tax purposes.
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ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issures 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.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On December 12, 2005, the Registrant's Board of Trustees adopted an
Amended Nominating and Governance Committee Charter which included some material
changes to the procedures by which shareholders may recommend nominees to the
Registrant's board of trustees as described below:
Any proposal to elect any person nominated by shareholders for election
as trustee may only be brought before an annual meeting of the Registrant if
timely written notice (the "Shareholder Notice") is provided to the secretary of
the Registrant. Unless a greater or lesser period is required under applicable
law, to be timely, the Shareholder Notice must be delivered to or mailed and
received at Registrant's address, 1001 Warrenville Road, Suite 300, Lisle,
Illinois 60532, Attn: W. Scott Jardine, not less than forty-five (45) days nor
more than sixty (60) days prior to the first anniversary date of the date of the
Registrant's proxy statement released to shareholders for the prior year's
annual meeting; provided, however, if and only if the annual meeting is not
scheduled to be held within a period that commences thirty (30) days before the
first anniversary date of the annual meeting for the preceding year and ends
thirty (30) days after such anniversary date (an annual meeting date outside
such period being referred to herein as an "Other Annual Meeting Date"), such
Shareholder Notice must be given in the manner provided herein by the later of
the close of business on (i) the date forty-five (45) days prior to such Other
Annual Meeting Date or (ii) the tenth (10th) business day following the date
such Other Annual Meeting Date is first publicly announced or disclosed.
Any shareholder submitting a nomination of any person or persons (as
the case may be) for election as a trustee or trustees of the Registrant shall
deliver, as part of such Shareholder Notice: (i) a statement in writing setting
forth (A) the name, age, date of birth, business address, residence address and
nationality of the person or persons to be nominated; (B) the class or series
and number of all shares of the Registrant owned of record or beneficially by
each such person or persons, as reported to such shareholder by such nominee(s);
(C) any other information regarding each such person required by paragraphs (a),
(d), (e) and (f) of Item 401 of Regulation S-K or paragraph (b) of Item 22 of
Rule 14a-101 (Schedule 14A) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (or any successor provision
thereto); (D) any other information regarding the person or persons to be
nominated that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitation of proxies for
election of trustees or directors pursuant to Section 14 of the Exchange Act and
the rules and regulations promulgated thereunder; and (E) whether such
shareholder believes any nominee is or will be an "interested person" of the
Registrant (as defined in the Investment Company Act of 1940) and, if not an
"interested person," information regarding each nominee that will be sufficient
for the Registrant to make such determination; and (ii) the written and signed
consent of any person to be nominated to be named as a nominee and to serve as a
trustee if elected. In addition, the trustees may require any proposed nominee
to furnish such other information as they may reasonably require or deem
necessary to determine the eligibility of such proposed nominee to serve as a
trustee.
Without limiting the foregoing, any shareholder who gives a Shareholder
Notice of any matter proposed to be brought before a shareholder meeting
(whether or not involving nominees for trustees) shall deliver, as part of such
Shareholder Notice: (i) the description of and text of the proposal to be
presented; (ii) a brief written statement of the reasons why such shareholder
favors the proposal; (iii) such shareholder's name and address as they appear on
the Registrant's books; (iv) any other information relating to the shareholder
that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with the solicitation of proxies with respect
to the matter(s) proposed pursuant to Section 14 of the Exchange Act; (v) the
class or series and number of all shares of the Registrant owned beneficially
and of record by such shareholder; (vi) any material interest of such
shareholder in the matter proposed (other than as a shareholder); (vii) a
representation that the shareholder intends to appear in person or by proxy at
the shareholder meeting to act on the matter(s) proposed; (viii) if the proposal
involves nominee(s) for trustees, a description of all arrangements or
understandings between the shareholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the nomination(s)
are to be made by the shareholder; and (ix) in the case of a shareholder (a
"BENEFICIAL OWNER") that holds shares entitled to vote at the meeting through a
nominee or "street name" holder of record, evidence establishing such Beneficial
Owner's indirect ownership of, and entitlement to vote, shares at the meeting of
shareholders. As used herein, shares "beneficially owned" shall mean all shares
which such person is deemed to beneficially own pursuant to Rules 13d-3 and
13d-5 under the Exchange Act.
A copy of the amended Nominating and Governance Committee Charter is
available on the Registrant's website at www.ftportfolios.com.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as
amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of
a date within 90 days of the filing date of the report that includes
the disclosure required by this paragraph, based on their evaluation of
these controls and procedures required by Rule 30a-3(b) under the 1940
Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b)
or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) MACQUARIE/FIRST TRUST GLOBAL INFRASTRUCTURE/UTILITIES DIVIDEND &
INCOME FUND
By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date FEBRUARY 1, 2006
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date FEBRUARY 1, 2006
----------------------------------------------------------------------------
By (Signature and Title)* /S/ MARK R. BRADLEY
-------------------------------------------------------
Mark R. Bradley, Treasurer, Controller, Chief
Financial Officer and Chief Accounting Officer
(principal financial officer)
Date FEBRUARY 1, 2006
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.