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 811-21905
First Trust/Aberdeen Emerging Opportunity Fund | ||
(Exact name of registrant as specified in charter) |
120 East Liberty Drive, Suite 400 | ||
Wheaton, IL 60187 | ||
(Address of principal executive offices) (Zip code) |
W. Scott Jardine, Esq. | ||
First Trust Portfolios L.P. | ||
120 East Liberty Drive, Suite 400 | ||
Wheaton, IL 60187 | ||
(Name and address of agent for service) |
registrant’s telephone number, including area code: (630) 765-8000
Date of fiscal year end: December 31
Date of reporting period: June 30, 2018
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. § 3507.
Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
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30 |
Fund Statistics | |
Symbol on New York Stock Exchange | FEO |
Common Share Price | $13.60 |
Common Share Net Asset Value (“NAV”) | $15.44 |
Premium (Discount) to NAV | (11.92)% |
Net Assets Applicable to Common Shares | $79,793,409 |
Current Quarterly Distribution per Common Share(1) | $0.3500 |
Current Annualized Distribution per Common Share | $1.4000 |
Current Distribution Rate on Common Share Price(2) | 10.29% |
Current Distribution Rate on NAV(2) | 9.07% |
Performance | |||||
Average Annual Total Return | |||||
6 Months Ended 6/30/18 | 1 Year Ended 6/30/18 | 5 Years Ended 6/30/18 | 10 Years Ended 6/30/18 | Inception (8/28/06) to 6/30/18 | |
Fund Performance(3) | |||||
NAV | -9.55% | -4.02% | 2.58% | 5.72% | 6.83% |
Market Value | -12.62% | -7.40% | 2.25% | 6.08% | 5.28% |
Index Performance | |||||
Blended Index(4) | -6.41% | 1.30% | 3.34% | 4.25% | 6.04% |
Bloomberg Barclays Global Emerging Markets Index | -3.89% | -0.44% | 4.13% | 6.06% | 6.27% |
FTSE All World Emerging Market Index | -6.77% | 7.65% | 5.08% | 2.58% | 5.67% |
(1) | Most recent distribution paid or declared through 6/30/2018. Subject to change in the future. |
(2) | Distribution rates are calculated by annualizing the most recent distribution paid or declared through the report date and then dividing by Common Share Price or NAV, as applicable, as of 6/30/2018. Subject to change in the future. |
(3) | Total return is based on the combination of reinvested dividend, capital gain, and return of capital distributions, if any, at prices obtained by the Dividend Reinvestment Plan and changes in NAV per share for NAV returns and changes in Common Share Price for market value returns. Total returns do not reflect sales load and are not annualized for periods of less than one year. Past performance is not indicative of future results. |
(4) | Blended Index consists of the following: JPMorgan Emerging Markets Bond Index - Global Diversified (32.5%); JPMorgan Government Bond Index - Emerging Markets Diversified (32.5%); MSCI Global Emerging Markets Index (35.0%). |
Credit Quality(5) | % of Total Fixed-Income Investments |
A | 4.8% |
A- | 11.2 |
BBB | 10.6 |
BBB- | 18.7 |
BB+ | 5.0 |
BB | 4.2 |
BB- | 12.3 |
B+ | 10.7 |
B | 11.2 |
B- | 5.8 |
CCC+ | 0.2 |
Not Rated | 5.3 |
Total | 100.0% |
Top 10 Countries(6) | % of Total Investments |
Brazil | 10.6% |
India | 7.0 |
Russia | 6.9 |
Mexico | 6.2 |
South Africa | 5.7 |
Turkey | 5.6 |
Cayman Islands | 5.2 |
Indonesia | 4.5 |
China | 4.2 |
South Korea | 4.1 |
Total | 60.0% |
Top Ten Holdings | % of Total Investments |
Brazil Notas do Tesouro Nacional, Series F, 10.00%, 1/01/29 | 3.6% |
Russian Federal Bond - OFZ, 7.05%, 1/19/28 | 3.5 |
Tencent Holdings Ltd. | 3.3 |
Turkey Government Bond, 8.80%, 9/27/23 | 2.9 |
Samsung Electronics Co., Ltd. (Preference Shares) | 2.6 |
Republic of South Africa Government Bond, 10.50%, 12/21/26 | 2.4 |
Peruvian Government International Bond, 6.90%, 8/12/37 | 2.4 |
Taiwan Semiconductor Manufacturing Co., Ltd. | 2.1 |
Indonesia Treasury Bond, 8.38%, 3/15/34 | 1.9 |
Republic of Poland Government Bond, 4.00%, 10/25/23 | 1.5 |
Total | 26.2% |
Industry Classification | % of Total Investments |
Sovereigns | 39.7% |
Banks | 9.1 |
Internet Software & Services | 4.3 |
Real Estate Management & Development | 3.2 |
Construction Materials | 3.1 |
Metals & Mining | 2.8 |
Wireless Telecommunication Services | 2.6 |
Technology Hardware, Storage & Peripherals | 2.6 |
Insurance | 2.4 |
Utilities | 2.4 |
Semiconductors & Semiconductor Equipment | 2.1 |
Beverages | 1.6 |
Exploration & Production | 1.6 |
Thrifts & Mortgage Finance | 1.5 |
Transportation Infrastructure | 1.4 |
Food & Staples Retailing | 1.3 |
Automobiles | 1.3 |
Oil, Gas & Consumable Fuels | 1.2 |
Hotels, Restaurants & Leisure | 1.2 |
Integrated Oils | 1.1 |
Pipelines | 1.1 |
Multiline Retail | 1.0 |
Power Generation | 0.9 |
IT Services | 0.8 |
Capital Markets | 0.8 |
Tobacco | 0.7 |
Chemicals | 0.7 |
Food & Beverage | 0.7 |
Government Development Banks | 0.7 |
Household Products | 0.7 |
Oil & Gas Services & Equipment | 0.6 |
Central Bank | 0.6 |
Specialty Retail | 0.4 |
Personal Products | 0.4 |
Retail - Consumer Discretionary | 0.4 |
Pharmaceuticals | 0.3 |
Communications Equipment | 0.3 |
Life Insurance | 0.3 |
Real Estate | 0.3 |
Software & Services | 0.3 |
Wireline Telecommunication Services | 0.3 |
Commercial Finance | 0.3 |
Airlines | 0.3 |
Food Products | 0.2 |
Life Sciences Tools & Services | 0.2 |
Diversified Financial Services | 0.2 |
Industrial Other | 0.0* |
Electronic Equipment, Instruments & Components | 0.0* |
Total | 100.0% |
* | Amount is less than 0.05%. |
(5) | The credit quality and ratings information presented above reflects the ratings assigned by one or more nationally recognized statistical rating organizations (NRSROs), including Standard & Poor’s Ratings Group, a division of the McGraw Hill Companies, Inc., Moody’s Investors Service, Inc., Fitch Ratings or a comparably rated NRSRO. For situations in which a security is rated by more than one NRSRO and the ratings are not equivalent, the highest ratings are used. Sub-investment grade ratings are those rated BB+/Ba1 or lower. Investment grade ratings are those rated BBB-/Baa3 or higher. The credit ratings shown relate to the creditworthiness of the issuers of the underlying securities in the Fund, and not to the Fund or its shares. Credit ratings are subject to change. |
(6) | Fixed-income portfolio securities are included in a country based upon their underlying credit exposure as determined by Aberdeen Asset Management Inc., the sub-advisor. |
1 | Total return is based on the combination of reinvested dividend, capital gain and return of capital distributions, if any, at prices obtained by the Dividend Reinvestment Plan and changes in NAV per share for NAV returns and changes in Common Share Price for market value returns. Total returns do not reflect sales load and are not annualized for periods of less than one year. Past performance is not indicative of future results. |
2 | Blended Index consists of the following: JP Morgan Emerging Markets Bond Index - Global Diversified (32.5%); JP Morgan Government Bond Index - Emerging Markets Diversified (32.5%); MSCI Global Emerging Markets Index (35.0%). |
Principal Value (Local Currency) | Description | Stated Coupon | Stated Maturity | Value (US Dollars) | ||||
FOREIGN SOVEREIGN BONDS AND NOTES (a) – 41.8% | ||||||||
Angola – 0.4% | ||||||||
297,000 | Angolan Government International Bond (USD) (b) | 9.38% | 05/08/48 | $300,682 | ||||
Argentina – 2.0% | ||||||||
21,110,000 | Argentina POM Politica Monetaria, Argentina Central Bank 7 day repurchase reference rate (ARS) (c) | 40.00% | 06/21/20 | 755,832 | ||||
266,387 | Argentine Republic Government International Bond (USD) | 8.28% | 12/31/33 | 240,415 | ||||
350,000 | Argentine Republic Government International Bond (USD) | 7.13% | 07/06/36 | 282,188 | ||||
420,000 | Argentine Republic Government International Bond (USD) | 6.88% | 01/11/48 | 316,474 | ||||
1,594,909 | ||||||||
Bahrain – 0.6% | ||||||||
270,000 | Bahrain Government International Bond (USD) | 7.00% | 01/26/26 | 253,592 | ||||
278,000 | Bahrain Government International Bond (USD) (b) | 7.00% | 10/12/28 | 249,919 | ||||
503,511 | ||||||||
Belarus – 0.4% | ||||||||
307,000 | Republic of Belarus International Bond (USD) (b) | 6.20% | 02/28/30 | 291,147 | ||||
Brazil – 3.8% | ||||||||
13,050,000 | Brazil Notas do Tesouro Nacional, Series F (BRL) | 10.00% | 01/01/29 | 3,042,838 | ||||
Ecuador – 0.3% | ||||||||
230,000 | Ecuador Government International Bond (USD) (b) | 8.75% | 06/02/23 | 216,303 | ||||
Egypt – 0.6% | ||||||||
246,000 | Egypt Government International Bond (USD) (b) | 6.13% | 01/31/22 | 242,543 | ||||
280,000 | Egypt Government International Bond (USD) (b) | 7.90% | 02/21/48 | 255,729 | ||||
498,272 | ||||||||
El Salvador – 0.4% | ||||||||
300,000 | El Salvador Government International Bond (USD) | 7.65% | 06/15/35 | 294,804 | ||||
Ethiopia – 0.7% | ||||||||
540,000 | Ethiopia International Bond (USD) (b) | 6.63% | 12/11/24 | 530,013 | ||||
Ghana – 1.6% | ||||||||
560,000 | Ghana Government International Bond (USD) | 8.13% | 01/18/26 | 575,377 | ||||
270,000 | Ghana Government International Bond (USD) (b) | 7.63% | 05/16/29 | 264,179 | ||||
2,150,000 | Republic of Ghana Government Bond (GHS) | 21.50% | 03/09/20 | 473,603 | ||||
1,313,159 | ||||||||
Honduras – 0.5% | ||||||||
410,000 | Honduras Government International Bond (USD) (b) | 7.50% | 03/15/24 | 439,110 | ||||
Indonesia – 2.0% | ||||||||
23,200,000,000 | Indonesia Treasury Bond (IDR) | 8.38% | 03/15/34 | 1,623,029 | ||||
Iraq – 0.9% | ||||||||
200,000 | Iraq International Bond (USD) (b) | 6.75% | 03/09/23 | 192,674 | ||||
610,000 | Iraq International Bond (USD) | 5.80% | 01/15/28 | 549,071 | ||||
741,745 | ||||||||
Kenya – 0.2% | ||||||||
200,000 | Kenya Government International Bond (USD) | 6.88% | 06/24/24 | 197,984 | ||||
Malaysia – 1.4% | ||||||||
4,700,000 | Malaysia Government Bond (MYR) | 3.89% | 03/15/27 | 1,122,086 |
Principal Value (Local Currency) | Description | Stated Coupon | Stated Maturity | Value (US Dollars) | ||||
FOREIGN SOVEREIGN BONDS AND NOTES (a) (Continued) | ||||||||
Mexico – 2.6% | ||||||||
4,000,000 | Mexican Bonos (MXN) | 6.50% | 06/09/22 | $193,396 | ||||
16,000,000 | Mexican Bonos (MXN) | 5.75% | 03/05/26 | 720,160 | ||||
23,200,000 | Mexican Bonos (MXN) | 7.75% | 11/13/42 | 1,178,115 | ||||
2,091,671 | ||||||||
Nigeria – 1.8% | ||||||||
414,000,000 | Nigeria Government Bond (NGN) | 12.50% | 01/22/26 | 1,074,110 | ||||
200,000 | Nigeria Government International Bond (USD) (b) | 7.88% | 02/16/32 | 196,712 | ||||
200,000 | Nigeria Government International Bond (USD) (b) | 7.63% | 11/28/47 | 182,829 | ||||
1,453,651 | ||||||||
Oman – 0.3% | ||||||||
270,000 | Oman Government International Bond (USD) (b) | 6.75% | 01/17/48 | 245,349 | ||||
Pakistan – 0.3% | ||||||||
280,000 | Pakistan Government International Bond (USD) (b) | 6.88% | 12/05/27 | 243,968 | ||||
Peru – 2.5% | ||||||||
6,010,000 | Peruvian Government International Bond (PEN) | 6.90% | 08/12/37 | 1,975,407 | ||||
Poland – 2.9% | ||||||||
4,450,000 | Republic of Poland Government Bond (PLN) | 4.00% | 10/25/23 | 1,273,643 | ||||
4,100,000 | Republic of Poland Government Bond (PLN) | 2.50% | 07/25/27 | 1,036,469 | ||||
2,310,112 | ||||||||
Russia – 4.6% | ||||||||
189,000,000 | Russian Federal Bond - OFZ (RUB) | 7.05% | 01/19/28 | 2,911,535 | ||||
33,000,000 | Russian Federal Bond - OFZ (RUB) | 7.70% | 03/23/33 | 527,800 | ||||
200,000 | Russian Foreign Bond - Eurobond (USD) | 5.88% | 09/16/43 | 215,438 | ||||
3,654,773 | ||||||||
Rwanda – 0.6% | ||||||||
200,000 | Rwanda International Government Bond (USD) (b) | 6.63% | 05/02/23 | 199,478 | ||||
300,000 | Rwanda International Government Bond (USD) | 6.63% | 05/02/23 | 299,216 | ||||
498,694 | ||||||||
South Africa – 3.5% | ||||||||
24,800,000 | Republic of South Africa Government Bond (ZAR) | 10.50% | 12/21/26 | 1,981,990 | ||||
820,000 | Republic of South Africa Government International Bond (USD) | 4.88% | 04/14/26 | 790,511 | ||||
2,772,501 | ||||||||
Sri Lanka – 0.7% | ||||||||
550,000 | Sri Lanka Government International Bond (USD) (b) | 6.75% | 04/18/28 | 520,383 | ||||
Suriname – 0.3% | ||||||||
270,000 | Republic of Suriname (USD) (b) | 9.25% | 10/26/26 | 260,550 | ||||
Tanzania – 0.2% | ||||||||
133,335 | Tanzania Government International Bond, 6 Mo. LIBOR + 6.00% (USD) (c) | 8.24% | 03/09/20 | 136,201 | ||||
Tunisia – 0.7% | ||||||||
600,000 | Banque Centrale de Tunisie International Bond (USD) | 5.75% | 01/30/25 | 530,427 | ||||
Turkey – 3.8% | ||||||||
1,900,000 | Turkey Government Bond (TRY) | 10.40% | 03/27/19 | 393,330 | ||||
15,200,000 | Turkey Government Bond (TRY) | 8.80% | 09/27/23 | 2,422,021 |
Principal Value (Local Currency) | Description | Stated Coupon | Stated Maturity | Value (US Dollars) | ||||
FOREIGN SOVEREIGN BONDS AND NOTES (a) (Continued) | ||||||||
Turkey (Continued) | ||||||||
1,140,000 | Turkey Government Bond (TRY) | 10.40% | 03/20/24 | $194,059 | ||||
3,009,410 | ||||||||
Ukraine – 1.2% | ||||||||
865,000 | Ukraine Government International Bond (USD) (b) | 7.75% | 09/01/24 | 822,701 | ||||
188,000 | Ukraine Government International Bond (USD) (b) (d) | (e) | 05/31/40 | 119,603 | ||||
942,304 | ||||||||
Total Foreign Sovereign Bonds and Notes | 33,354,993 | |||||||
(Cost $34,776,358) | ||||||||
FOREIGN CORPORATE BONDS AND NOTES (a) (f) – 18.7% | ||||||||
Argentina – 0.2% | ||||||||
200,000 | Genneia S.A. (USD) (b) | 8.75% | 01/20/22 | 193,432 | ||||
Azerbaijan – 0.7% | ||||||||
495,000 | Southern Gas Corridor CJSC (USD) (b) | 6.88% | 03/24/26 | 534,818 | ||||
Barbados – 0.3% | ||||||||
250,000 | Sagicor Finance 2015 Ltd. (USD) (b) | 8.88% | 08/11/22 | 276,875 | ||||
Brazil – 2.7% | ||||||||
277,000 | Azul Investments LLP (USD) (b) | 5.88% | 10/26/24 | 235,799 | ||||
270,000 | Braskem Netherlands Finance BV (USD) | 4.50% | 01/10/28 | 248,738 | ||||
280,000 | CSN Resources S.A. (USD) (b) | 7.63% | 02/13/23 | 253,053 | ||||
330,000 | GTL Trade Finance, Inc. (USD) | 7.25% | 04/16/44 | 335,775 | ||||
350,000 | OAS Finance Ltd. (USD) (d) (g) (h) (i) | 8.88% | (j) | 21,000 | ||||
200,000 | OAS Investments GmbH (USD) (g) (h) (i) | 8.25% | 10/19/19 | 12,000 | ||||
262,800 | Odebrecht Drilling Norbe VIII/IX Ltd. (USD) | 6.35% | 12/01/21 | 248,346 | ||||
650,000 | Petrobras Global Finance BV (USD) | 8.75% | 05/23/26 | 704,925 | ||||
102,052 | QGOG Atlantic/Alaskan Rigs Ltd. (USD) | 5.25% | 07/30/18 | 98,735 | ||||
2,158,371 | ||||||||
China – 0.6% | ||||||||
260,000 | Shimao Property Holdings Ltd. (USD) | 8.38% | 02/10/22 | 273,962 | ||||
200,000 | Yingde Gases Investment Ltd. (USD) (b) | 6.25% | 01/19/23 | 189,238 | ||||
463,200 | ||||||||
Colombia – 0.3% | ||||||||
207,000 | Banco GNB Sudameris S.A. (USD) (b) (d) | 6.50% | 04/03/27 | 211,918 | ||||
Dominican Republic – 0.9% | ||||||||
720,000 | AES Andres BV / Dominican Power Partners / Empresa Generadora de Electricidad Itabo (USD) (b) | 7.95% | 05/11/26 | 745,200 | ||||
El Salvador – 0.4% | ||||||||
310,000 | Grupo Unicomer Co., Ltd. (USD) (b) | 7.88% | 04/01/24 | 327,050 | ||||
Georgia – 0.7% | ||||||||
200,000 | Bank of Georgia JSC (USD) (b) | 6.00% | 07/26/23 | 199,928 | ||||
350,000 | Georgian Oil and Gas Corp. JSC (USD) (b) | 6.75% | 04/26/21 | 353,442 | ||||
553,370 | ||||||||
Ghana – 0.3% | ||||||||
278,000 | Tullow Oil PLC (USD) (b) | 7.00% | 03/01/25 | 263,405 |
Principal Value (Local Currency) | Description | Stated Coupon | Stated Maturity | Value (US Dollars) | ||||
FOREIGN CORPORATE BONDS AND NOTES (a) (f) (Continued) | ||||||||
Guatemala – 0.5% | ||||||||
400,000 | Comunicaciones Celulares S.A. Via Comcel Trust (USD) (b) | 6.88% | 02/06/24 | $411,170 | ||||
Honduras – 0.4% | ||||||||
280,000 | Inversiones Atlantida S.A. (USD) (b) | 8.25% | 07/28/22 | 289,075 | ||||
India – 1.0% | ||||||||
40,000,000 | NTPC Ltd. (INR) | 7.25% | 05/03/22 | 568,916 | ||||
275,000 | Vedanta Resources PLC (USD) (b) | 6.13% | 08/09/24 | 242,391 | ||||
811,307 | ||||||||
Indonesia – 0.6% | ||||||||
200,000 | Medco Platinum Road Pte Ltd. (USD) (b) | 6.75% | 01/30/25 | 176,380 | ||||
278,000 | Perusahaan Listrik Negara PT (USD) (b) | 5.45% | 05/21/28 | 283,462 | ||||
459,842 | ||||||||
Kazakhstan – 0.4% | ||||||||
308,000 | Tengizchevroil Finance Co. International Ltd. (USD) (b) | 4.00% | 08/15/26 | 289,422 | ||||
Mexico – 1.2% | ||||||||
270,000 | Axtel SAB de CV (USD) (b) | 6.38% | 11/14/24 | 256,838 | ||||
4,800,000 | Petroleos Mexicanos (MXN) | 7.19% | 09/12/24 | 212,721 | ||||
270,000 | Sixsigma Networks Mexico SA de CV (USD) (b) | 7.50% | 05/02/25 | 260,415 | ||||
279,000 | Unifin Financiera SAB de CV SOFOM ENR (USD) (b) (d) | 8.88% | (j) | 250,545 | ||||
980,519 | ||||||||
Nigeria – 1.7% | ||||||||
290,000 | Access Bank PLC (USD) (b) | 10.50% | 10/19/21 | 303,317 | ||||
290,000 | IHS Netherlands Holdco BV (USD) (b) | 9.50% | 10/27/21 | 279,082 | ||||
290,000 | SEPLAT Petroleum Development Co., PLC (USD) (b) | 9.25% | 04/01/23 | 284,200 | ||||
520,000 | United Bank for Africa PLC (USD) (b) | 7.75% | 06/08/22 | 507,335 | ||||
1,373,934 | ||||||||
Oman – 0.4% | ||||||||
325,000 | Oztel Holdings SPC Ltd. (USD) (b) | 6.63% | 04/24/28 | 309,631 | ||||
Russia – 1.4% | ||||||||
290,000 | Credit Bank of Moscow Via CBOM Finance PLC (USD) (d) | 7.50% | 10/05/27 | 237,002 | ||||
394,000 | Evraz Group S.A. (USD) (b) | 5.38% | 03/20/23 | 387,696 | ||||
290,000 | Gazprom OAO Via Gaz Capital S.A. (USD) | 4.95% | 03/23/27 | 280,307 | ||||
200,000 | GTH Finance BV (USD) (b) | 7.25% | 04/26/23 | 207,521 | ||||
1,112,526 | ||||||||
South Africa – 1.2% | ||||||||
17,000,000 | Eskom Holdings SOC Ltd. (ZAR) | 7.50% | 09/15/33 | 929,457 | ||||
Turkey – 1.4% | ||||||||
339,000 | Hazine Mustesarligi Varlik Kiralama AS (USD) (b) | 5.00% | 04/06/23 | 321,016 | ||||
280,000 | Turkiye Garanti Bankasi AS (USD) | 5.88% | 03/16/23 | 266,490 | ||||
288,000 | Turkiye Vakiflar Bankasi TAO (USD) | 6.00% | 11/01/22 | 249,905 | ||||
300,000 | Yasar Holdings AS (USD) (b) | 8.88% | 05/06/20 | 271,975 | ||||
1,109,386 | ||||||||
Ukraine – 1.4% | ||||||||
280,000 | Metinvest BV (USD) (b) | 8.50% | 04/23/26 | 262,349 | ||||
322,000 | MHP LUX S.A. (USD) (b) | 6.95% | 04/03/26 | 302,186 | ||||
7,250,000 | Ukreximbank Via Biz Finance PLC (UAH) | 16.50% | 03/02/21 | 266,554 |
Principal Value (Local Currency) | Description | Stated Coupon | Stated Maturity | Value (US Dollars) | ||||
FOREIGN CORPORATE BONDS AND NOTES (a) (f) (Continued) | ||||||||
Ukraine (Continued) | ||||||||
280,000 | Ukreximbank Via Biz Finance PLC (USD) | 9.63% | 04/27/22 | $281,428 | ||||
1,112,517 | ||||||||
Total Foreign Corporate Bonds and Notes | 14,916,425 | |||||||
(Cost $15,965,325) |
Shares | Description | Value | ||
COMMON STOCKS (a) – 44.1% | ||||
Brazil – 4.5% | ||||
103,750 | Ambev S.A. | 481,307 | ||
126,967 | Banco Bradesco S.A., ADR | 870,994 | ||
42,377 | BRF S.A. (k) | 196,701 | ||
66,401 | Lojas Renner S.A. | 495,812 | ||
21,354 | Multiplan Empreendimentos Imobiliarios S.A., Preference Shares | 311,901 | ||
33,831 | Ultrapar Participacoes S.A. | 400,656 | ||
68,053 | Vale S.A., ADR | 872,439 | ||
3,629,810 | ||||
Cayman Islands – 5.4% | ||||
2,602 | Autohome, Inc., ADR | 262,802 | ||
278,000 | China Resources Land Ltd. | 937,226 | ||
3,878 | Huazhu Group Ltd., ADR | 162,837 | ||
800 | Sunny Optical Technology Group Co., Ltd. | 14,887 | ||
55,200 | Tencent Holdings Ltd. | 2,770,695 | ||
17,000 | Wuxi Biologics Cayman, Inc. (b) (k) | 189,272 | ||
4,337,719 | ||||
Chile – 0.9% | ||||
11,959 | Banco Santander Chile S.A., ADR | 375,871 | ||
40,482 | SACI Falabella | 370,995 | ||
746,866 | ||||
China – 3.8% | ||||
120,500 | Anhui Conch Cement Co., Ltd., Class H | 691,152 | ||
564,000 | Beijing Capital International Airport Co., Ltd., Class H | 594,509 | ||
103,000 | Ping An Insurance Group Co. of China Ltd., Class H | 947,869 | ||
20,879 | YUM China Holdings, Inc. | 803,006 | ||
3,036,536 | ||||
Hong Kong – 4.0% | ||||
116,400 | AIA Group Ltd. | 1,017,773 | ||
97,500 | China Mobile Ltd. | 866,186 | ||
226,000 | Hang Lung Group Ltd. | 633,731 | ||
21,135 | Hong Kong Exchanges and Clearing Ltd. | 635,736 | ||
3,153,426 | ||||
Hungary – 0.4% | ||||
15,300 | Richter Gedeon Nyrt | 279,415 | ||
India – 6.3% | ||||
71,414 | Aditya Birla Capital Ltd. (k) | 138,836 | ||
42,998 | Grasim Industries Ltd. | 631,869 | ||
7,537 | Hero MotoCorp Ltd. | 382,103 | ||
22,600 | Hindustan Unilever Ltd. | 541,341 |
Shares | Description | Value | ||
COMMON STOCKS (a) (Continued) | ||||
India (Continued) | ||||
43,383 | Housing Development Finance Corp., Ltd. | $1,208,189 | ||
155,121 | ITC Ltd. | 602,689 | ||
29,889 | Kotak Mahindra Bank Ltd. | 585,849 | ||
23,904 | Tata Consultancy Services Ltd. | 644,656 | ||
5,428 | UltraTech Cement Ltd. | 302,523 | ||
5,038,055 | ||||
Indonesia – 2.1% | ||||
1,517,700 | Astra International Tbk PT | 699,011 | ||
433,200 | Bank Central Asia Tbk PT | 649,195 | ||
317,600 | Indocement Tunggal Prakarsa Tbk PT | 302,529 | ||
1,650,735 | ||||
Malaysia – 0.6% | ||||
86,200 | Public Bank Bhd | 498,485 | ||
Mexico – 2.6% | ||||
9,500 | Fomento Economico Mexicano, S.A.B. de C.V., ADR | 834,005 | ||
14,000 | Grupo Aeroportuario del Centro Norte, S.A.B. de C.V., ADR | 583,100 | ||
113,838 | Grupo Financiero Banorte, S.A.B. de C.V., O Shares | 669,377 | ||
2,086,482 | ||||
Philippines – 1.7% | ||||
1,134,100 | Ayala Land, Inc. | 805,404 | ||
316,130 | Bank of the Philippine Islands | 524,242 | ||
1,329,646 | ||||
Poland – 0.4% | ||||
10,396 | Bank Polska Kasa Opieki S.A. | 313,630 | ||
Portugal – 0.0% | ||||
1,473 | Jeronimo Martins SGPS S.A. | 21,279 | ||
Russia – 1.3% | ||||
8,093 | Lukoil PJSC, ADR | 557,850 | ||
820 | Lukoil PJSC, ADR | 56,072 | ||
5,496 | Magnit PJSC | 402,565 | ||
1,016,487 | ||||
South Africa – 1.3% | ||||
33,910 | Massmart Holdings Ltd. | 275,927 | ||
52,100 | MTN Group Ltd. | 409,812 | ||
65,263 | Truworths International Ltd. | 367,528 | ||
1,053,267 | ||||
South Korea – 4.3% | ||||
1,020 | Amorepacific Corp. | 141,857 | ||
1,941 | Amorepacific Group | 215,086 | ||
1,166 | LG Chem Ltd. | 348,911 | ||
833 | NAVER Corp. | 570,282 | ||
63,300 | Samsung Electronics Co., Ltd. (Preference Shares) | 2,138,398 | ||
3,414,534 | ||||
Taiwan – 2.2% | ||||
243,954 | Taiwan Semiconductor Manufacturing Co., Ltd. | 1,732,327 | ||
Thailand – 1.3% | ||||
51,300 | Siam Cement (The) PCL | 637,960 |
Shares | Description | Value | ||
COMMON STOCKS (a) (Continued) | ||||
Thailand (Continued) | ||||
112,200 | Siam Commercial Bank Public Co., Ltd. (l) | $401,319 | ||
1,039,279 | ||||
Turkey – 0.7% | ||||
26,944 | BIM Birlesik Magazalar A.S. | 393,851 | ||
103,000 | Turkiye Garanti Bankasi A.S. | 187,890 | ||
581,741 | ||||
United Kingdom – 0.3% | ||||
27,439 | Standard Chartered PLC | 250,808 | ||
Total Common Stocks | 35,210,527 | |||
(Cost $30,267,005) | ||||
Total Investments – 104.6% | 83,481,945 | |||
(Cost $81,008,688) (m) | ||||
Outstanding Loan – (7.3)% | (5,800,000) | |||
Net Other Assets and Liabilities – 2.7% | 2,111,464 | |||
Net Assets – 100.0% | $79,793,409 |
Forward Foreign Currency Contracts | ||||||||||||||
Settlement Date | Counterparty | Amount Purchased | Amount Sold | Purchase Value as of 6/30/2018 | Sale Value as of 6/30/2018 | Unrealized Appreciation/ (Depreciation) | ||||||||
07/10/18 | UBS | ZAR | 16,892,000 | USD | 1,336,412 | $ 1,229,643 | $ 1,336,412 | $ (106,769) | ||||||
08/24/18 | BAR | USD | 505,850 | BRL | 1,989,000 | 505,850 | 510,019 | (4,169) | ||||||
08/24/18 | BAR | USD | 1,036,733 | BRL | 3,796,000 | 1,036,733 | 973,369 | 63,364 | ||||||
07/10/18 | GS | USD | 1,340,171 | ZAR | 16,892,000 | 1,340,171 | 1,229,643 | 110,528 | ||||||
07/10/18 | BAR | USD | 1,519,966 | ZAR | 20,552,000 | 1,519,966 | 1,496,071 | 23,895 | ||||||
Net Unrealized Appreciation (Depreciation) | $86,849 |
Counterparty Abbreviations | |
BAR | Barclays Bank |
GS | Goldman Sachs |
UBS | UBS |
(a) | All of these securities are available to serve as collateral for the outstanding loans. |
(b) | This security, sold within the terms of a private placement memorandum, is exempt from registration upon resale under Rule 144A under the Securities Act of 1933, as amended (the “1933 Act”), and may be resold in transactions exempt from registration, normally to qualified institutional buyers. Pursuant to procedures adopted by the Fund’s Board of Trustees, this security has been determined to be liquid by Aberdeen Asset Management Inc. (the “Sub-Advisor”). Although market instability can result in periods of increased overall market illiquidity, liquidity for each security is determined based on security specific factors and assumptions, which require subjective judgment. At June 30, 2018, securities noted as such amounted to $15,643,308 or 19.6% of net assets. |
(c) | Floating rate security. |
(d) | Fixed-to-floating or fixed-to-variable rate security. The interest rate shown reflects the fixed rate in effect at June 30, 2018. At a predetermined date, the fixed rate will change to a floating rate or a variable rate. |
(e) | Zero coupon bond. |
(f) | Portfolio securities are included in a country based upon their underlying credit exposure as determined by the Sub-Advisor. |
(g) | This security, sold within the terms of a private placement memorandum, is exempt from registration upon resale under Rule 144A under the 1933 Act, and may be resold in transactions exempt from registration, normally to qualified institutional buyers (see Note 2C - Restricted Securities in the Notes to Financial Statements). |
(h) | This issuer is in default and interest is not being accrued by the Fund, nor paid by the issuer. |
(i) | This issuer has filed for bankruptcy protection in a São Paulo state court. |
(j) | Perpetual maturity. |
(k) | Non-income producing security. |
(l) | This security is fair valued by the Advisor’s Pricing Committee in accordance with procedures adopted by the Fund’s Board of Trustees, and in accordance with the provisions of the Investment Company Act of 1940, as amended. At June 30, 2018, securities noted as such are valued at $401,319 or 0.5% of net assets. |
(m) | Aggregate cost for financial reporting purposes approximates the aggregate cost for federal income tax purposes. As of June 30, 2018, the aggregate gross unrealized appreciation for all investments in which there was an excess of value over tax cost was $9,928,748 and the aggregate gross unrealized depreciation for all investments in which there was an excess of tax cost over value was $7,368,642. The net unrealized appreciation was $2,560,106. The amounts presented are inclusive of derivative contracts. |
ADR | American Depositary Receipt |
LIBOR | London Interbank Offered Rate |
ASSETS TABLE | ||||
Total Value at 6/30/2018 | Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |
Foreign Sovereign Bonds and Notes* | $ 33,354,993 | $ — | $ 33,354,993 | $ — |
Foreign Corporate Bonds and Notes* | 14,916,425 | — | 14,916,425 | — |
Common Stocks: | ||||
Thailand | 1,039,279 | 637,960 | 401,319 | — |
Other Country Categories* | 34,171,248 | 34,171,248 | — | — |
Total Investments | $ 83,481,945 | $ 34,809,208 | $ 48,672,737 | $— |
Forward Foreign Currency Contracts | 197,787 | — | 197,787 | — |
Total | $ 83,679,732 | $ 34,809,208 | $ 48,870,524 | $— |
LIABILITIES TABLE | ||||
Total Value at 6/30/2018 | Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |
Forward Foreign Currency Contracts | $ (110,938) | $ — | $ (110,938) | $ — |
* | See Portfolio of Investments for country breakout. |
Currency Exposure Diversification | % of Total Investments† |
USD | 38.1% |
HKD | 11.1 |
INR | 6.7 |
RUB | 4.6 |
TRY | 4.3 |
BRL | 4.1 |
KRW | 4.1 |
IDR | 3.9 |
MXN | 3.6 |
PLN | 3.1 |
ZAR | 3.0 |
PEN | 2.4 |
TWD | 2.1 |
MYR | 2.0 |
PHP | 1.6 |
NGN | 1.3 |
THB | 1.2 |
ARS | 0.9 |
GHS | 0.6 |
CLP | 0.4 |
HUF | 0.3 |
UAH | 0.3 |
GBP | 0.3 |
EUR | 0.0* |
Total | 100.0% |
† | The weightings include the impact of currency forwards. |
* | Amount is less than 0.05%. |
Currency Abbreviations | |
ARS | Argentine Peso |
BRL | Brazilian Real |
CLP | Chilean Peso |
EUR | Euro |
GBP | British Pound Sterling |
GHS | Ghanaian Cedis |
HKD | Hong Kong Dollar |
HUF | Hungarian Forint |
IDR | Indonesian Rupiah |
INR | Indian Rupee |
KRW | South Korean Won |
MXN | Mexican Peso |
MYR | Malaysian Ringgit |
NGN | Nigerian Naira |
PEN | Peruvian Nuevo Sol |
PHP | Philippine Peso |
PLN | Polish Zloty |
RUB | Russian Ruble |
THB | Thai Baht |
TRY | Turkish Lira |
TWD | New Taiwan Dollar |
UAH | Ukrainian Hryvnia |
USD | United States Dollar |
ZAR | South African Rand |
ASSETS: | |
Investments, at value (Cost $81,008,688) | $ 83,481,945 |
Cash | 364,553 |
Foreign currency (Cost $244,534) | 244,248 |
Unrealized appreciation on forward foreign currency contracts | 197,787 |
Receivables: | |
Interest | 1,194,064 |
Investment securities sold | 582,864 |
Dividends | 146,387 |
Miscellaneous | 40,381 |
Dividend reclaims | 14,083 |
Prepaid expenses | 14,505 |
Total Assets | 86,280,817 |
LIABILITIES: | |
Outstanding loan | 5,800,000 |
Unrealized depreciation on forward foreign currency contracts | 110,938 |
Payables: | |
Investment securities purchased | 333,374 |
Investment advisory fees | 72,986 |
Deferred foreign capital gains tax | 57,488 |
Audit and tax fees | 36,483 |
Custodian fees | 32,645 |
Administrative fees | 16,905 |
Printing fees | 12,729 |
Interest and fees on loan | 4,401 |
Transfer agent fees | 2,646 |
Financial reporting fees | 771 |
Trustees’ fees and expenses | 41 |
Other liabilities | 6,001 |
Total Liabilities | 6,487,408 |
NET ASSETS | $79,793,409 |
NET ASSETS consist of: | |
Paid-in capital | $ 77,299,086 |
Par value | 51,670 |
Accumulated net investment income (loss) | (2,220,146) |
Accumulated net realized gain (loss) on investments, forward foreign currency contracts and foreign currency transactions | 2,184,400 |
Net unrealized appreciation (depreciation) on investments, forward foreign currency contracts and foreign currency translation | 2,478,399 |
NET ASSETS | $79,793,409 |
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) | $15.44 |
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized) | 5,167,040 |
INVESTMENT INCOME: | ||
Interest (net of foreign withholding tax of $7,160) | $ 2,138,822 | |
Dividends (net of foreign withholding tax of $67,457) | 530,892 | |
Total investment income | 2,669,714 | |
EXPENSES: | ||
Investment advisory fees | 477,015 | |
Custodian fees | 108,878 | |
Interest and fees on loan | 79,578 | |
Administrative fees | 43,786 | |
Audit and tax fees | 32,172 | |
Printing fees | 22,350 | |
Transfer agent fees | 15,769 | |
Trustees’ fees and expenses | 8,065 | |
Listing expense | 7,103 | |
Legal fees | 4,904 | |
Financial reporting fees | 4,625 | |
Other | 7,940 | |
Total expenses | 812,185 | |
NET INVESTMENT INCOME (LOSS) | 1,857,529 | |
NET REALIZED AND UNREALIZED GAIN (LOSS): | ||
Net realized gain (loss) on: | ||
Investments | 2,516,839 | |
Forward foreign currency contracts | (107,453) | |
Foreign currency transactions | (65,197) | |
Foreign capital gains tax | (49,366) | |
Net realized gain (loss) | 2,294,823 | |
Net change in unrealized appreciation (depreciation) on: | ||
Investments | (13,390,879) | |
Forward foreign currency contracts | 157,014 | |
Foreign currency translation | (24,776) | |
Deferred foreign capital gains tax | 74,294 | |
Net change in unrealized appreciation (depreciation) | (13,184,347) | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | (10,889,524) | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $(9,031,995) |
Six Months Ended 6/30/2018 (Unaudited) | Year Ended 12/31/2017 | ||
OPERATIONS: | |||
Net investment income (loss) | $ 1,857,529 | $ 3,914,578 | |
Net realized gain (loss) | 2,294,823 | 1,454,579 | |
Net increase from payment by the sub-advisor | — | 5,000 | |
Net change in unrealized appreciation (depreciation) | (13,184,347) | 10,800,690 | |
Net increase (decrease) in net assets resulting from operations | (9,031,995) | 16,174,847 | |
DISTRIBUTIONS TO SHAREHOLDERS FROM: | |||
Net investment income | (3,616,928) | (2,757,027) | |
Net realized gain | — | (2,593,843) | |
Return of capital | — | (1,882,986) | |
Total distributions to shareholders | (3,616,928) | (7,233,856) | |
CAPITAL TRANSACTIONS: | |||
Repurchase of Common Shares | — | (177,758) | |
Net increase (decrease) in net assets resulting from capital transactions | — | (177,758) | |
Total increase (decrease) in net assets | (12,648,923) | 8,763,233 | |
NET ASSETS: | |||
Beginning of period | 92,442,332 | 83,679,099 | |
End of period | $ 79,793,409 | $ 92,442,332 | |
Accumulated net investment income (loss) at end of period | $(2,220,146) | $(460,747) | |
CAPITAL TRANSACTIONS were as follows: | |||
Common Shares at beginning of period | 5,167,040 | 5,179,247 | |
Common Shares repurchased (a) | — | (12,207) | |
Common Shares at end of period | 5,167,040 | 5,167,040 |
(a) | On September 15, 2015, the Fund commenced a share repurchase program. The program originally expired on March 15, 2016, but the Board of Trustees of the Fund has subsequently authorized the continuation of the Fund’s share repurchase program until March 15, 2019. For the six months ended June 30, 2018, the Fund did not repurchase any of its shares. For the year ended December 31, 2017, the Fund repurchased 12,207 of its shares at a weighted-average discount of 13.52% from net asset value per share. The Fund expects to continue the share repurchase program until the earlier of (i) the repurchase of an additional 105,644 common shares (for an aggregate of 266,389), or (ii) March 15, 2019. |
Cash flows from operating activities: | ||
Net increase (decrease) in net assets resulting from operations | $(9,031,995) | |
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities: | ||
Purchases of investments | (27,528,158) | |
Sales, maturities and paydown of investments | 30,148,950 | |
Net amortization/accretion of premiums/discounts on investments | (132,470) | |
Net realized gain/loss on investments | (2,516,839) | |
Net change in unrealized appreciation/depreciation on investments | 13,390,879 | |
Net change in unrealized appreciation/depreciation on forward foreign currency contracts | (157,014) | |
Net decrease from payment by the sub-advisor | 5,000 | |
Net decrease in restricted cash | 20,000 | |
Changes in assets and liabilities: | ||
Increase in interest receivable | (58,207) | |
Increase in dividend reclaims receivable | (3,140) | |
Increase in dividends receivable | (72,502) | |
Decrease in miscellaneous receivable | 37 | |
Increase in prepaid expenses | (13,620) | |
Decrease in interest and fees payable on loan | (49) | |
Decrease in due to broker | (17,975) | |
Decrease in investment advisory fees payable | (10,022) | |
Decrease in audit and tax fees payable | (22,506) | |
Decrease in legal fees payable | (1,633) | |
Decrease in printing fees payable | (5,635) | |
Decrease in administrative fees payable | (2,583) | |
Decrease in custodian fees payable | (22,398) | |
Decrease in transfer agent fees payable | (2,645) | |
Increase in Trustees’ fees and expenses payable | 17 | |
Decrease in deferred foreign capital gains tax | (74,294) | |
Increase in other liabilities payable | 1,280 | |
Cash provided by operating activities | $3,892,478 | |
Cash flows from financing activities: | ||
Distributions to Common Shareholders from net investment income | (3,616,928) | |
Cash used in financing activities | (3,616,928) | |
Increase in cash and foreign currency (a) | 275,550 | |
Cash and foreign currency at beginning of period | 333,251 | |
Cash and foreign currency at end of period | $608,801 | |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest and fees | $79,627 |
(a) | Includes net change in unrealized appreciation (depreciation) on foreign currency of $(24,776). |
Six Months Ended 6/30/2018 (Unaudited) | Year Ended December 31, | ||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||
Net asset value, beginning of period | $ 17.89 | $ 16.16 | $ 15.34 | $ 18.59 | $ 20.61 | $ 23.67 | |||||
Income from investment operations: | |||||||||||
Net investment income (loss) | 0.36 | 0.76 | 0.64 | 0.65 | 0.77 | 0.79 | |||||
Net realized and unrealized gain (loss) | (2.11) | 2.36 (a) | 1.53 | (2.52) | (1.39) | (2.45) | |||||
Total from investment operations | (1.75) | 3.12 | 2.17 | (1.87) | (0.62) | (1.66) | |||||
Distributions paid to shareholders from: | |||||||||||
Net investment income | (0.70) | (0.54) | (0.30) | — | (0.32) | (0.76) | |||||
Net realized gain | — | (0.50) | (0.35) | — | (0.44) | (0.64) | |||||
Return of capital | — | (0.36) | (0.75) | (1.40) | (0.64) | — | |||||
Total distributions paid to Common Shareholders | (0.70) | (1.40) | (1.40) | (1.40) | (1.40) | (1.40) | |||||
Common Share repurchases | — | 0.01 | 0.05 | 0.02 | — | — | |||||
Net asset value, end of period | $15.44 | $17.89 | $16.16 | $15.34 | $18.59 | $20.61 | |||||
Market value, end of period | $13.60 | $16.32 | $13.90 | $13.06 | $16.45 | $18.05 | |||||
Total return based on net asset value (b) | (9.55)% | 20.65% | 15.93% | (9.16)% | (2.49)% | (6.49)% | |||||
Total return based on market value (b) | (12.62)% | 27.96% | 17.12% | (12.61)% | (1.47)% | (12.13)% | |||||
Ratios to average net assets/supplemental data: | |||||||||||
Net assets, end of period (in 000’s) | $ 79,793 | $ 92,442 | $ 83,679 | $ 81,145 | $ 99,053 | $ 109,813 | |||||
Ratio of total expenses to average net assets | 1.81% (c) | 1.81% | 1.76% | 1.69% | 1.71% | 1.75% | |||||
Ratio of total expenses to average net assets excluding interest expense | 1.63% (c) | 1.67% | 1.66% | 1.62% | 1.64% | 1.68% | |||||
Ratio of net investment income (loss) to average net assets | 4.14% (c) | 4.30% | 3.99% | 3.66% | 3.73% | 3.57% | |||||
Portfolio turnover rate | 27% | 46% | 53% | 44% | 48% | 50% | |||||
Indebtedness: | |||||||||||
Total loan outstanding (in 000’s) | $ 5,800 | $ 5,800 | $ 5,800 | $ 5,800 | $ 5,800 | $ 5,800 | |||||
Asset coverage per $1,000 of indebtedness (d) | $ 14,757 | $ 16,938 | $ 15,427 | $ 14,990 | $ 18,078 | $ 19,933 |
(a) | The Fund received a reimbursement from the sub-advisor in the amount of $5,000 in connection with a trade error, which represents less than $0.01 per share. Since the sub-advisor reimbursed the Fund, there was no effect on the total return. |
(b) | Total return is based on the combination of reinvested dividend, capital gain and return of capital distributions, if any, at prices obtained by the Dividend Reinvestment Plan, and changes in net asset value per share for net asset value returns and changes in Common Share Price for market value returns. Total returns do not reflect sales load and are not annualized for periods of less than one year. Past performance is not indicative of future results. |
(c) | Annualized. |
(d) | 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 in 000’s. |
1) | benchmark yields; |
2) | reported trades; |
3) | broker/dealer quotes; |
4) | issuer spreads; |
5) | benchmark securities; |
6) | bids and offers; and |
7) | reference data including market research publications. |
1) | the credit conditions in the relevant market and changes thereto; |
2) | the liquidity conditions in the relevant market and changes thereto; |
3) | the interest rate conditions in the relevant market and changes thereto (such as significant changes in interest rates); |
4) | issuer-specific conditions (such as significant credit deterioration); and |
5) | any other market-based data the Advisor’s Pricing Committee considers relevant. In this regard, the Advisor’s Pricing Committee may use last-obtained market-based data to assist it when valuing portfolio securities using amortized cost. |
1) | the fundamental business data relating to the issuer, or economic data relating to the country of issue; |
2) | an evaluation of the forces which influence the market in which these securities are purchased and sold; |
3) | the type, size and cost of security; |
4) | the financial statements of the issuer, or the financial condition of the country of issue; |
5) | the credit quality and cash flow of the issuer, or country of issue, based on Aberdeen Asset Management Inc.’s (“Aberdeen” or the “Sub-Advisor”) or external analysis; |
6) | the information as to any transactions in or offers for the security; |
7) | the price and extent of public trading in similar securities (or equity securities) of the issuer/borrower, or comparable companies; |
8) | the coupon payments; |
9) | the quality, value and salability of collateral, if any, securing the security; |
10) | the business prospects of the issuer, including any ability to obtain money or resources from a parent or affiliate and an assessment of the issuer’s management (for corporate debt only); |
11) | the economic, political and social prospects/developments of the country of issue and the assessment of the country’s governmental leaders/officials (for sovereign debt only); |
12) | the prospects for the issuer’s industry, and multiples (of earnings and/or cash flows) being paid for similar businesses in that industry (for corporate debt only); and |
13) | other relevant factors. |
1) | the type of security; |
2) | the size of the holding; |
3) | the initial cost of the security; |
4) | transactions in comparable securities; |
5) | price quotes from dealers and/or third-party pricing services; |
6) | relationships among various securities; |
7) | information obtained by contacting the issuer, analysts, or the appropriate stock exchange; |
8) | an analysis of the issuer’s financial statements; and |
9) | the existence of merger proposals or tender offers that might affect the value of the security. |
1) | the value of similar foreign securities traded on other foreign markets; |
2) | ADR trading of similar securities; |
3) | closed-end fund trading of similar securities; |
4) | foreign currency exchange activity; |
5) | the trading prices of financial products that are tied to baskets of foreign securities; |
6) | factors relating to the event that precipitated the pricing problem; |
7) | whether the event is likely to recur; and |
8) | whether the effects of the event are isolated or whether they affect entire markets, countries or regions. |
• | Level 1 – Level 1 inputs are quoted prices in active markets for identical investments. An active market is a market in which transactions for the investment occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
• | Level 2 – Level 2 inputs are observable inputs, either directly or indirectly, and include the following: |
o | Quoted prices for similar investments in active markets. |
o | Quoted prices for identical or similar investments in markets that are non-active. A non-active market is a market where there are few transactions for the investment, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly. |
o | Inputs other than quoted prices that are observable for the investment (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates). |
o | Inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
• | Level 3 – Level 3 inputs are unobservable inputs. Unobservable inputs may reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the investment. |
Security | Acquisition Date | Principal Values/Shares | Current Price | Carrying Cost | Value | % of Net Assets | ||
OAS Finance Ltd., 8.88% | 4/18/2013 | $350,000 | $6.00 | $350,000 | $21,000 | 0.03% | ||
OAS Investments GmbH, 8.25%, 10/19/19 | 10/15/2012 | 200,000 | 6.00 | 200,000 | 12,000 | 0.01 | ||
$550,000 | $33,000 | 0.04% |
Distributions paid from: | |
Ordinary income | $2,757,027 |
Capital gains | 2,593,843 |
Return of capital | 1,882,986 |
Undistributed ordinary income | $— |
Undistributed capital gains | — |
Total undistributed earnings | — |
Accumulated capital and other losses | — |
Net unrealized appreciation (depreciation) | 15,165,938 |
Total accumulated earnings (losses) | 15,165,938 |
Other | (74,362) |
Paid-in capital | 77,350,756 |
Total net assets | $92,442,332 |
Gross Amounts not Offset in the Statement of Assets and Liabilities | |||||||||||
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts of Assets Presented in the Statement of Assets and Liabilities | Financial Instruments | Collateral Amounts Received | Net Amount | ||||||
Forward Foreign Currency Contracts* | $ 197,787 | $ — | $ 197,787 | $ — | $ — | $ 197,787 |
Gross Amounts not Offset in the Statement of Assets and Liabilities | |||||||||||
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities | Financial Instruments | Collateral Amounts Pledged | Net Amount | ||||||
Forward Foreign Currency Contracts* | $ (110,938) | $ — | $ (110,938) | $ — | $ — | $ (110,938) |
Asset Derivatives | Liability Derivatives | |||||||||
Derivative Instrument | Risk Exposure | Statement of Assets and Liabilities Location | Value | Statement of Assets and Liabilities Location | Value | |||||
Forward foreign currency contracts | Currency Risk | Unrealized appreciation on forward foreign currency contracts | $ 197,787 | Unrealized depreciation on forward foreign currency contracts | $ 110,938 |
Statement of Operations Location | |
Currency Risk Exposure | |
Net realized gain (loss) on forward foreign currency contracts | $(107,453) |
Net change in unrealized appreciation (depreciation) on forward foreign currency contracts | 157,014 |
(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. |
• | Issuer Risk. The value of fixed income securities may decline for a number of reasons which directly relate to the issuer, such as management performance, leverage and reduced demand for the issuer’s goods and services. |
• | Interest Rate Risk. Interest rate risk is the risk that fixed income securities will decline in value because of changes in market interest rates. When market interest rates rise, the market value of fixed rate securities generally will fall. Market value generally falls further for fixed rate securities with longer duration. During periods of rising interest rates, the average life of certain types of securities may be extended because of slower than expected prepayments. This may lock in a below-market yield, increase the security’s duration and further reduce the value of the security. Investments in fixed rate securities with long-term maturities may experience significant price declines if long-term interest rates increase. |
• | Prepayment Risk. During periods of declining interest rates, the issuer of a security may exercise its option to prepay principal earlier than scheduled, forcing the Fund to reinvest the proceeds from such prepayment in lower yielding securities, which may result in a decline in the Fund’s income and distributions to common shareholders. |
• | Reinvestment Risk. Reinvestment risk is the risk that income from the Fund’s portfolio will decline if the Fund invests the proceeds from matured, traded or called securities at market interest rates that are below the Fund portfolio’s current earnings rate. Similarly, the yield-to-maturity of a security assumes that all coupons are reinvested at the prevailing rate. If rates fall, the actual yield realized on the security may be lower as the security’s coupons are reinvested at lower yields. |
FUND ACCOUNTANT, AND
CUSTODIAN
PUBLIC ACCOUNTING FIRM
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed registrants.
Not applicable.
Item 6. Investments.
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
(b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a) | Not applicable. |
(b) | There have been no changes, as of the date of this filing, in any of the portfolio managers identified in response to paragraph (a)(1) of this Item in the Registrant’s most recent annual report on Form N-CSR. |
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
Month #1 (01/01/2018 – 01/31/2018) | 0 | 0 | 160,745 | 105,644 |
Month #2 (02/01/2018 – 02/28/2018) | 0 | 0 | 160,745 | 105,644 |
Month #3 (03/01/2018 – 03/31/2018) | 0 | 0 | 160,745 | 105,644 |
Month #4 (04/01/2018 – 04/30/2018) | 0 | 0 | 160,745 | 105,644 |
Month #5 (05/01/2018 – 05/31/2018) | 0 | 0 | 160,745 | 105,644 |
Month #6 (06/01/2018 – 06/30/2018 | 0 | 0 | 160,745 | 105,644 |
Total | 0 | 0 | 160,745 | 105,644 |
On September 15, 2015, the Fund commenced a share repurchase program. The program originally expired on March 15, 2016, but the Board of Trustees of the Fund has subsequently authorized the continuation of the Fund’s share repurchase program until March 15, 2019. For the six months ended June 30, 2018, the Fund did not repurchase any of its shares. For the year ended December 31, 2017, the Fund repurchased 12,207 of its shares at a weighted-average discount of 13.52% from net asset value per share. The Fund expects to continue the share repurchase program until the earlier of (i) the repurchase of an additional 105,644 common shares (for an aggregate of 266,389), or (ii) March 15, 2019.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Exhibits.
(a)(1) | Not applicable. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(3) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) | First Trust/Aberdeen Emerging Opportunity Fund |
By (Signature and Title)* | /s/ James M. Dykas | |
James M. Dykas, President and Chief Executive Officer (principal executive officer) |
Date: | September 7, 2018 |
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 M. Dykas | |
James M. Dykas, President and Chief Executive Officer (principal executive officer) |
Date: | September 7, 2018 |
By (Signature and Title)* | /s/ Donald P. Swade | |
Donald P. Swade, Treasurer, Chief Financial Officer and Chief Accounting Officer (principal financial officer) |
Date: | September 7, 2018 |
* Print the name and title of each signing officer under his or her signature.