0001445546-14-004499.txt : 20140908
0001445546-14-004499.hdr.sgml : 20140908
20140908110851
ACCESSION NUMBER: 0001445546-14-004499
CONFORMED SUBMISSION TYPE: N-CSRS
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20140630
FILED AS OF DATE: 20140908
DATE AS OF CHANGE: 20140908
EFFECTIVENESS DATE: 20140908
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
CENTRAL INDEX KEY: 0001302624
IRS NUMBER: 736357662
FILING VALUES:
FORM TYPE: N-CSRS
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-21636
FILM NUMBER: 141089600
BUSINESS ADDRESS:
STREET 1: 120 EAST LIBERTY DRIVE, SUITE 400
CITY: WHEATON
STATE: IL
ZIP: 60187
BUSINESS PHONE: 630-765-8000
MAIL ADDRESS:
STREET 1: 120 EAST LIBERTY DRIVE, SUITE 400
CITY: WHEATON
STATE: IL
ZIP: 60187
N-CSRS
1
fam_ncsr.txt
SEMI-ANNUAL REPORT TO SHAREHOLDERS
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 811-21636
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First Trust/Aberdeen Global Opportunity Income Fund
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(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Name and address of agent for service)
registrant's telephone number, including area code: (630) 765-8000
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2013
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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.
FIRST TRUST
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED
JUNE 30, 2014
First Trust/Aberdeen
Global Opportunity
Income Fund
(FAM)
ABERDEEN
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TABLE OF CONTENTS
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FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
SEMI-ANNUAL REPORT
JUNE 30, 2014
Shareholder Letter........................................................... 1
At a Glance.................................................................. 2
Portfolio Commentary......................................................... 3
Portfolio of Investments..................................................... 8
Schedule of Forward Foreign Currency Contracts............................... 16
Statement of Assets and Liabilities.......................................... 17
Statement of Operations...................................................... 18
Statements of Changes in Net Assets.......................................... 19
Statement of Cash Flows...................................................... 20
Financial Highlights......................................................... 21
Notes to Financial Statements................................................ 22
Additional Information....................................................... 28
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and/or Aberdeen Asset Management Inc. ("Aberdeen" or
the "Sub-Advisor") and their respective representatives, taking into account the
information currently available to them. Forward-looking statements include all
statements that do not relate solely to current or historical fact. For example,
forward-looking statements include the use of words such as "anticipate,"
"estimate," "intend," "expect," "believe," "plan," "may," "should," "would" or
other words that convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the First Trust/Aberdeen Global Opportunity Income Fund (the "Fund") to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. When evaluating the
information included in this report, you are cautioned not to place undue
reliance on these forward-looking statements, which reflect the judgment of the
Advisor and/or Sub-Advisor and their respective representatives only as of the
date hereof. We undertake no obligation to publicly revise or update these
forward-looking statements to reflect events and circumstances that arise after
the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that the Fund will achieve its investment objectives. The
Fund is subject to market risk, which is the possibility that the market values
of securities owned by the Fund will decline and that the value of the Fund
shares may therefore be less than what you paid for them. Accordingly, you can
lose money by investing in the Fund. See "Risk Considerations" in the Additional
Information section of this report for a discussion of certain other risks of
investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, net asset value and common share price will fluctuate and Fund shares,
when sold, may be worth more or less than their original cost.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment. It
includes details about the Fund and presents data and analysis that provide
insight into the Fund's performance and investment approach.
By reading the portfolio commentary by the portfolio management team of the
Fund, you may obtain an understanding of how the market environment affected the
Fund's performance. The statistical information that follows may help you
understand the Fund's performance compared to that of relevant market
benchmarks.
It is important to keep in mind that the opinions expressed by personnel of
Aberdeen are just that: informed opinions. They should not be considered to be
promises or advice. The opinions, like the statistics, cover the period through
the date on the cover of this report. The risks of investing in the Fund are
spelled out in the prospectus, the statement of additional information, this
report and other Fund regulatory filings.
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SHAREHOLDER LETTER
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FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
JUNE 30, 2014
Dear Shareholders:
I am pleased to present you with the semi-annual report for your investment in
First Trust/Aberdeen Global Opportunity Income Fund (the "Fund").
As a shareholder, twice a year you receive a detailed report about your
investment, including portfolio commentary from the Fund's management team, a
performance analysis and a market and Fund outlook. Additionally, First Trust
Advisors L.P. ("First Trust") compiles the Fund's financial statements for you
to review. These reports are intended to keep you up-to-date on your investment,
and I encourage you to read this document and discuss it with your financial
advisor.
As you are probably aware, the six months covered by this report saw both
challenging economic and political issues in the U.S. and world markets.
However, the period was still positive for the markets overall. In fact, the S&P
500 Index, as measured on a total return basis, rose 7.14% during the six months
ended June 30, 2014. Of course, past performance can never be an indicator of
future performance, but First Trust believes that staying invested in quality
products through up and down markets and having a long-term horizon can help
investors as they work toward their financial goals.
First Trust continues to offer a variety of products that we believe could fit
the financial plans for many investors seeking long-term investment success.
Your financial advisor can tell you about the other investments First Trust
offers that might fit your financial goals. We encourage you to discuss those
goals with your financial advisor regularly so that he or she can help keep you
on track and help you choose investments that match your goals.
First Trust will continue to make available up-to-date information about your
investments so you and your financial advisor are current on any First Trust
investments you own. We value our relationship with you, and thank you for the
opportunity to assist you in achieving your financial goals.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 1
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
"AT A GLANCE"
AS OF JUNE 30, 2014 (UNAUDITED)
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FUND STATISTICS
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Symbol on New York Stock Exchange FAM
Common Share Price $14.68
Common Share Net Asset Value ("NAV") $15.86
Premium (Discount) to NAV (7.44)%
Net Assets Applicable to Common Shares $276,075,403
Current Monthly Distribution per Common Share (1) $0.110
Current Annualized Distribution per Common Share $1.320
Current Distribution Rate on Closing Common Share Price (2) 8.99%
Current Distribution Rate on NAV (2) 8.32%
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COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
----------------------------------------------------
Common Share Price NAV
6/13 $15.43 $16.01
14.86 15.75
15.32 15.88
15.32 16.15
7/13 15.36 16.06
14.84 15.75
14.59 15.88
14.38 15.66
14.07 15.43
8/13 13.94 15.26
13.80 15.21
13.89 15.42
14.10 15.88
9/13 14.44 15.74
14.19 15.70
14.22 15.80
14.47 16.04
10/13 14.65 16.10
14.63 15.72
14.15 15.52
14.25 15.55
14.09 15.49
11/13 14.05 15.43
13.79 15.26
13.59 15.33
14.05 15.33
12/13 14.16 15.29
13.81 15.17
14.09 15.27
14.20 15.24
14.04 15.06
1/14 13.88 14.88
13.94 14.98
13.92 15.04
13.72 15.04
2/14 14.02 15.18
13.55 15.09
13.71 15.08
13.60 15.05
3/14 13.93 15.34
13.90 15.29
14.01 15.47
14.17 15.43
4/14 14.19 15.38
14.23 15.44
14.27 15.63
14.42 15.67
14.46 15.68
5/14 14.48 15.76
14.29 15.74
14.48 15.73
14.39 15.74
14.71 15.86
6/14 14.68 15.86
----------------------------------------------------
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PERFORMANCE
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Average Annual Total Return
-----------------------------------------
6 Months Ended 1 Year Ended 5 Years Ended Inception (11/23/2004)
6/30/2014 6/30/2014 6/30/2014 to 6/30/2014
FUND PERFORMANCE (3)
NAV 8.76% 9.88% 11.24% 8.16%
Market Value 9.77% 5.53% 12.12% 6.78%
INDEX PERFORMANCE
Blended Benchmark(4) 6.53% 8.70% 7.04% 6.75%
Barclays Global Emerging Markets Index 7.10% 10.95% 10.62% 8.59%
Barclays Global Aggregate Index 4.94% 7.39% 4.60% 4.43%
------------------------------------------------------------------------------------------------------------------------------------
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% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
--------------------------------------------------------------
Brazil Notas Do Tesouro Nacional, Series F, 10.00%,
01/01/17 6.9%
New Zealand Government Bond, 6.00%, 12/15/17 4.9
Asian Development Bank, 5.50%, 02/15/16 4.8
Province of Manitoba, Canada, 6.38%, 09/01/15 3.7
Treasury Corp. of Victoria, 6.00%, 10/17/22 3.0
Mexican Bonos, 8.50%, 11/18/38 2.9
Province of Ontario, Canada, 6.25%, 06/16/15 2.7
Italy Buoni Poliennali Del Tesoro, 9.00%, 11/01/23 2.7
Australia Government Bond, 6.00%, 02/15/17 2.7
South Africa Government Bond, 10.50%, 12/21/26 2.3
--------------------------------------------------------------
Total 36.6%
======
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% OF TOTAL
CREDIT QUALITY(6) INVESTMENTS
---------------------------------------------------------
AAA 20.4%
AA+ 4.9
AA 4.6
A 6.5
A- 2.8
BBB+ 16.8
BBB 9.3
BBB- 6.8
BB+ 3.0
BB 4.1
BB- 5.3
B+ 5.6
B 6.7
B- 1.3
CCC 0.4
NR 1.5
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Total 100.0%
======
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% OF TOTAL
TOP 10 COUNTRIES(5) INVESTMENTS
---------------------------------------------------------
Brazil 9.1%
Canada 9.0
Australia 7.8
Mexico 6.3
New Zealand 4.9
Multinational 4.8
Turkey 4.4
Italy 4.3
South Africa 4.0
Venezuela 3.1
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Total 57.7%
======
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% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
---------------------------------------------------------
Sovereigns 65.6%
Regional and Local Governments 11.6
Supranationals 4.8
Banking 3.1
Exploration & Production 2.5
Integrated Oils 2.2
Industrial Other 1.5
Government Development Banks 0.9
Real Estate 0.9
Government Agencies 0.9
Financial Services 0.8
Consumer Services 0.7
Wireless Telecom Services 0.7
Food & Beverage 0.7
Chemicals 0.5
Wireline Telecom Services 0.5
Construction Materials 0.4
Utilities 0.4
Pipeline 0.4
Railroad 0.3
Metals & Mining 0.2
Consumer Finance 0.2
Home Improvement 0.2
---------------------------------------------------------
Total 100.0%
======
(1) Most recent distribution paid or declared through 6/30/14. 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 6/30/14. Subject to change
in the future.
(3) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan and changes in NAV per share for NAV
returns and changes in Common Share price for market value returns. Total
returns do not reflect sales load and are not annualized for periods less
than one year. Past performance is not indicative of future results.
(4) Blended benchmark consists of the following: Citigroup World Government
Bond Index (40.0%); JPMorgan Emerging Markets Bond Index - Global
Diversified (30.0%); JPMorgan Global Bond Index - Emerging Markets
Diversified (30.0%).
(5) Portfolio securities are included in a country based upon their underlying
credit exposure as determined by Aberdeen Asset Management Inc., the
sub-advisor.
(6) The credit quality and ratings information presented above reflect 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. 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.
Page 2
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PORTFOLIO COMMENTARY
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FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
SEMI-ANNUAL REPORT
JUNE 30, 2014
SUB-ADVISOR
Aberdeen Asset Management Inc. ("Aberdeen" or the "Sub-Advisor"), an
SEC-registered investment advisor, is a wholly-owned subsidiary of Aberdeen
Asset Management PLC ("Aberdeen Group"). Aberdeen Group is a publicly-traded
international investment management group listed on the London Stock Exchange,
managing assets for both institutional and retail clients from offices around
the world.
PORTFOLIO MANAGEMENT TEAM
Investment decisions for the First Trust/Aberdeen Global Opportunity Income Fund
(the "Fund") are made by Aberdeen using a team approach and not by any one
individual. By making team decisions, Aberdeen seeks to ensure that the
investment process results in consistent returns across all portfolios with
similar objectives. Aberdeen does not employ separate research analysts.
Instead, Aberdeen's investment managers combine analysis with portfolio
management. Each member of the team has sector and portfolio responsibilities
such as day-to-day monitoring of liquidity. The overall result of this matrix
approach is a high degree of cross-coverage, leading to a deeper understanding
of the securities in which Aberdeen invests. Below are the members of the team
with significant responsibility for the day-to-day management of the Fund's
portfolio.
JOZSEF SZABO EDWIN GUTIERREZ
Head of Global Macro Senior Investment Manager, Emerging Market Debt
BRETT DIMENT MAX WOLMAN
Head of Emerging Market and Sovereign Debt Senior Investment Manager, Emerging Market Debt
KEVIN DALY JAMES ATHEY
Senior Investment Manager, Emerging Market Debt Investment Manager, Global Macro
COMMENTARY
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
The primary investment objective of the Fund is to seek a high level of current
income. As a secondary objective, the Fund seeks capital appreciation. The Fund
pursues its investment objectives by investing in the world bond markets through
a diversified portfolio of investment-grade and below-investment grade
government and corporate debt securities. There can be no assurance that the
Fund's investment objectives will be achieved, and the Fund may not be
appropriate for all investors.
FUND RECAP
The Fund had a net asset value ("NAV") total return(1) of 8.76% and a market
value total return of 9.77% for the six months ended June 30, 2014, compared to
the blended benchmark(2) total return of 6.53% over the same period. In addition
to this blended benchmark, the Fund currently uses other indexes for comparative
purposes. The total returns for the six months ended June 30, 2014, for these
indexes were as follows: the Barclays Global Emerging Markets Index was 7.10%
and the Barclays Global Aggregate Index was 4.94%.
-----------------------------
1 Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan, and changes in NAV per share for NAV
returns and changes in Common Share price for market value returns. Total
returns do not reflect sales load and are not annualized for periods less
than one year. Past performance is not indicative of future results.
2 Blended benchmark consists of the following: Citigroup World Government
Bond Index (40.0%); J.P. Morgan Emerging Markets Bond Index - Global
Diversified (30.0%); J.P. Morgan Global Bond Index - Emerging Markets
Diversified (30.0%).
Page 3
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PORTFOLIO COMMENTARY (CONTINUED)
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First Trust/Aberdeen Global Opportunity Income Fund (FAM)
Semi-Annual Report
June 30, 2014
EMERGING MARKET FIXED COMMENTARY
MARKET RECAP
Emerging market debt performance was strong over the six-month period with both
hard and local currency debt posting gains. Over the period, the J.P. Morgan
Emerging Markets Bond Index - Global Diversified Index gained 8.66% and its
spread narrowed 16 basis points to +269 over U.S. Treasuries. The J.P. Morgan
Global Bond Index - Emerging Markets Diversified Index increased by 6.31% over
the period.
In hard currency debt, all regions posted positive returns with Latin America
performing particularly strongly. Venezuela was the strongest performing country
over the period, followed by Argentina and Honduras. No countries posted hard
currency losses over the period. In local currency debt, all regions posted
positive returns led by Latin America. Brazil was the strongest-performing
country followed by Turkey and Nigeria. Russia and Chile were the only countries
to post losses over the period.
The health of the U.S. economy and Federal Reserve (Fed) communications
dominated investor focus throughout much of the period. A decision was made by
the Federal Open Market Committee (FOMC) in December 2013 to start the much
anticipated tapering process in January 2014, via a $10 billion reduction in
total purchases. The asset purchase program was reduced further by U.S. $10
billion in February, March, April and June, leaving $35 billion of purchases per
month. Tapering initially weighed on emerging market sentiment in January;
however, sentiment rebounded in February thanks to some positive central bank
policy-making and the market realization that certain idiosyncratic events did
not imply wider negative contagion. It appeared that economic events from the
United States were not the key drivers of returns, but the market rewarded
pragmatic measures by the emerging market central banks.
Emerging market debt continued to post gains throughout the remainder of the
period as investors generally focused on the yield differential between emerging
markets and the developed world, rather than events in Russia and Ukraine. The
main themes which were the focus of investors last year, including the "Fragile
Five" (Brazil, Indonesia, India, Turkey and South Africa and their economies)
and external vulnerabilities, were no longer so important at the end of period
given the clear improvement that has been seen in many countries' external
fundamentals.
Mexico unveiled further reform measures in December 2013, as the Senate approved
political and electoral reform, while the Mexican Federal Congress passed its
energy reform bill. Standard & Poor's upgraded Mexico's credit rating by one
notch to BBB+, citing the energy reform bill as a "watershed moment" for the
country. Furthermore, it is hoped that the approval of a new financial reform
act will accelerate the pace of lending in the second half of the year.
Ukraine's failure to sign an Association Agreement or a Deep and Comprehensive
Free Trade Agreement with the European Union (and instead turn to Russia for
direct support) resulted in the resignation of Ukrainian Prime Minister Azarov
at the end of January. In February, after a violent weekend in which at least 21
protesters were killed, President Yanukovich was released from his position by
the parliament and an early election was called for May 25.
A referendum took place in March in which 96% of Crimea's voters chose to join
Russia rather than stay in Ukraine. In the same month, the Ukrainian government
was given vital breathing space as a two-year International Monetary Fund (IMF)
program worth up to $18 billion was agreed to as part of wider international
funding, with the potential to reach $27 billion. A $17 billion aid package was
approved by the IMF board for Ukraine at the end of May, while the Presidential
election was won by billionaire businessman Petro Poroshenko in the same month.
The de-escalation between Russia and Ukraine continued in June as ceasefires
were declared in the eastern Ukrainian cities of Donetsk and Luhansk. Ukraine
signed an Association Agreement and Deep and Comprehensive Free Trade Agreement
with the European Union in the same month. With this move, Ukraine has rejected
the opportunity to join the Russia-led Eurasian Union, which counts Kazakhstan
and Belarus as members.
News flow in Argentina was mixed in June, as the U.S. Supreme Court denied the
Argentine government a hearing in its case against holdout creditors. The
original judgment by the U.S. district court ruled that Argentina should pay
holdouts $1.33 billion in principal and interest payments. This move increased
the risk of a technical default solely on its bonds issued under New York law,
but further reports later in the month that the government was willing to
negotiate with those creditors who did not participate in the two debt exchanges
in 2005 and 2010 caused a significant rebound in asset prices. The Argentine
government has deposited more than $1 billion in an escrow account which
confirms its willingness to pay the next bond coupon of $900 million (which is
due June 30, 2014 and has a 30-day grace period). It is likely that the
Argentine government will continue to negotiate a settlement, however the
probability of a deal being done this year has been reduced.
Page 4
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PORTFOLIO COMMENTARY (CONTINUED)
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First Trust/Aberdeen Global Opportunity Income Fund (FAM)
Semi-Annual Report
June 30, 2014
PORTFOLIO ANALYSIS
The emerging market debt portion of the Fund outperformed the emerging market
debt portion of its blended benchmark in both hard currency and local bonds.
Currency and stock selection effects both negatively impacted performance, while
asset allocation effects were a positive contributor. In hard currency debt,
overweight exposure to Mexico, Brazil, Honduras and Venezuela were all positive
contributors, while underweights in Ukraine, Turkey and Hungary detracted from
the Fund, as did positioning in Argentina. In local currencies, an underweight
position in Poland was the key contributor over the period, while overweights in
Mexico and Brazil were also positive. On the other side, an underweight in
Russia detracted from the Fund, while off-benchmark positions in Serbia and
Uruguay also were negative contributors.
During the period, the Fund participated in the new 30-year U.S. dollar bond
from Romania and added some duration to the Fund by purchasing the long-end
bonds of Uruguay. Toward the end of the period, the Fund sold out of its Ukraine
position on fears that the bonds were not pricing in a potential escalation in
its Russian dispute. We also reduced the Fund's Russian holdings and initiated a
switch from Serbia to Croatia on valuation grounds. We increased the Fund's
positioning in Venezuela and initiated a position in Argentina local-law U.S.
dollar bonds. The Fund also participated in the new 10-year bonds from Zambia,
Kenya and Ecuador and a new 30-year bond from the Dominican Republic. In local
currencies, we introduced a position in Peru, while selling out of the Fund's
Russian local bond holdings. We also switched a portion of the Fund's Mexico
exposure to inflation-linked bonds. In currencies, we initiated a position in
Argentine peso, while adding to the Indian rupee exposure on weakness. We also
added a position in the South African rand and Indonesian rupiah and cut the
Fund's Polish zloty exposure. Over the first half of 2014, currency hedging had
a negative impact on the performance of the Fund.
An important factor impacting the return of the Fund relative to its benchmarks
was the Fund's use of financial leverage through the use of bank borrowings. The
Fund uses leverage because its managers believe that, over time, leverage
provides opportunities for additional income and total return for common
shareholders. However, the use of leverage can also expose common shareholders
to additional volatility. For example, if the prices of securities held by the
Fund decline, the negative impact of the evaluation changes on Common Share NAV
and common shareholder total return is magnified by the use of leverage.
Conversely, leverage may enhance Common Share returns during periods when the
prices of securities held by the Fund generally are rising. Unlike the Fund, the
Barclays Global Emerging Markets Index, Barclays Global Aggregate Index and the
components of the blended benchmark are not leveraged. Leverage had a positive
impact on the performance of the Fund over this reporting period.
MARKET AND FUND OUTLOOK
New and forthcoming issuance from the smaller countries in the emerging markets
universe (such as Kenya, Ecuador, Jamaica and The Democratic Republic of the
Congo) has shown the strength of demand for the asset class, which is not
expected to diminish in the short-term amid the on-going search for yield. While
the market has performed well in 2014, there is still significant interest in
credits with solid fundamentals but a good yield pickup compared to their peers.
Although changes to monetary policy in the U.S. will continue to have an impact
on emerging market spreads, the easing bias that other developed world central
banks have taken should mean, in our opinion, that the continued bid for
emerging market assets will continue.
DEVELOPED MARKET COMMENTARY
MARKET RECAP
Having reached a two-year high of 3% at the turn of the year, a combination of
disappointing data and continued dovishness from the Fed saw U.S. 10-year
Treasury yields fall over the course of the first half of 2014, finishing the
period at approximately 2.5%. While the weather was widely blamed for the
extremely disappointing suite of data from the first quarter, given the
consensus nature of many short positions in the market, this explanation was not
sufficient to prevent the market rallying and with the rise of geo-political
concerns out of the Middle East and Eastern Europe as well, it left a lot of
investors scrambling to cover long-held shorts as yields simply refused to rise
significantly.
New Fed Chair Janet Yellen, as widely anticipated, continued to espouse the
dovish message favored by her predecessor and the result was that solid jobs
growth alone is no longer seen as a sufficient condition for higher policy
rates. Ms. Yellen feels that the price stability half of the FOMC's mandate is
being missed and that monetary policy can (and will act to) correct this, and
thus, until inflation becomes a problem, she is prepared to keep the Fed's foot
on the accelerator.
Page 5
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PORTFOLIO COMMENTARY (CONTINUED)
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FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
SEMI-ANNUAL REPORT
JUNE 30, 2014
In the Eurozone, the monetary policy problems being faced were far more stark -
namely the spectre of deflation. With Eurozone price indices showing a worrying
trend of low and falling inflation, the European Central Bank (ECB) was forced
to act and to act decisively. After many months of attempting to manage
expectations and the currency through communication alone at the June meeting,
enough was enough and President Draghi announced a number of measures aimed at
providing sufficient stimulus to drive price inflation back toward the ECB
target of 2%. The ECB cut both main rates by 10bps, taking the deposit rate into
negative territory. It also announced the end of sterilization of bonds
purchased under the Securities and Markets Programme (SMP) and announced a
further four year targeted long-term refinancing operation (TLTRO). The
combination of the end of sterilisation (a monetary action designed to offset
the effect of foreign exchange intervention) and the new TLTRO could be worth
north of 1 trillion Euro of additional liquidity into the Eurosystem. However,
conditionality around the TLTRO does leave some room for banks to use the cash
for a further carry trade (sell core Eurozone sovereign bonds in favour of
peripheral sovereign bonds) rather than lend to the real economy as desired by
the ECB. The aggression of the move, however, was sufficient to see all
Euro-denominated assets perform in the aftermath with yields on 10-year German
sovereign bonds falling by around 80bps over the period.
The UK was most certainly the outlier among the G7 nations during the first half
of 2014, with incoming data showing a rapidly expanding economy and significant
addition of workers. While Bank of England (BoE) Governor Carney attempted to
talk down the recovery, at times the sheer volume of positive data and the
magnitude of that data caused him to change tack on numerous occasions and by
the end of the period rate rises were widely being anticipated within 6 months.
Communication from the Monetary Policy Committee (MPC) suggests that at least
several of the Committee members share a similar view. This had the result of
seeing shorter-maturity bonds in the UK underperforming the curve and cross
market and saw Sterling rise consistently against most major currencies,
returning around 3% versus both the Euro and the U.S. dollar.
In Japan the story continues to be focused on the actions and prospective
actions of the Bank of Japan (BoJ). It continues to buy bonds through a
Quantitative Easing program similar to the ones previously used by the Fed and
the BoE; however, expectations of further stimulus were ultimately dampened by
Governor Kuroda in spite of some less-than-convincing data during this period.
The result was that Japanese Government bond yields did fall slightly; however,
the Japanese Yen strengthened somewhat, reflecting lower expectations of future
policy easing.
In Australia and New Zealand, the stories were in stark contrast to one another.
In Australia jobs data showed a further decline in employment through the
period. This, coupled with an announcement of a tighter fiscal budget from the
new Conservative government, were taken as worrying signs by a market that had
been expecting strong growth and potential monetary tightening. The result was a
strong rally with 3-year yields falling around 40bp over the period, but 10-year
yields falling 70bps. Just over the Tasmin Sea, the on-going rebuilding of the
city of Christchurch following the devastating 2011 earthquake, has provided the
economic stimulus that was required and the economy has been able to reap the
rewards over the first half of 2014. GDP growth is running well above the
Reserve Bank of New Zealand's (RBNZ) estimation of its potential output (2.8%)
and as a result, it tightened its policy rate by 75bps between January and June.
This saw the New Zealand dollar become the best performing currency over the
period as it returned 6.84% versus the U.S. dollar. While this currency strength
is seen as a significant headwind for the New Zealand economy, the RBNZ does not
appear, for now, likely to change course.
PERFORMANCE ANALYSIS
The developed market portion of the Fund outperformed, with a return of 8.60%
versus 5.00% for the developed market portion of the blended benchmark. The
portfolio's investments continued to be concentrated in Australia, New Zealand,
Canada and the UK relative to underweight positions in Europe, the U.S. and
Japan.
The main positive contributions to performance came from the underweights in
U.S. and Euro assets and currency, as well as the overweight in Australia. The
underweight in Japanese government bonds also contributed positively; however,
this was tempered somewhat by the appreciation of the Japanese Yen, which was a
drag given its underweight position. The overweight in New Zealand produced a
positive currency return; however, given the rise in New Zealand yields, the
overweight in bonds was a drag on performance. Net of the two, however, the
allocation to New Zealand benefitted the Fund's performance.
Page 6
--------------------------------------------------------------------------------
PORTFOLIO COMMENTARY (CONTINUED)
--------------------------------------------------------------------------------
First Trust/Aberdeen Global Opportunity Income Fund (FAM)
Semi-Annual Report
June 30, 2014
MARKET AND FUND OUTLOOK
We believe it is increasingly likely that a material bond market sell off is
unlikely without the participation of the U.S. Treasury market and this is
increasingly unlikely, without the widespread expectation of imminent action
from the FOMC. Therefore, the importance of jobs data is waning relative to the
inflation data - this reflects the idea that the Fed is worried about killing a
nascent recovery and so would rather, given the depth of the economic
contraction, have to fight inflation when it appears rather than try to predict
when it might appear and thus set policy pre-emptively.
All of this means that the front-end of yield curves carry an increased
importance and for now, volatility remains very low. In our opinion, this makes
higher-yielding currencies and bond markets more desirable in the interim.
We continue to favor higher-yielding bonds and currencies and, where possible,
will concentrate those investments in economies we feel will underperform and/or
longer maturity bonds which are less sensitive to prospective monetary policy
tightening.
Page 7
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2014 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
--------------- ------------------------------------------------------------ ------------ -------- --------------
FOREIGN SOVEREIGN BONDS AND NOTES - 105.2%
ARGENTINA - 1.6%
4,940,000 Argentina Bonar Bonds (USD)................................. 7.00% 04/17/17 $ 4,567,492
--------------
ARMENIA - 1.4%
3,450,000 Republic of Armenia (USD) (b)............................... 6.00% 09/30/20 3,657,000
250,000 Republic of Armenia (USD)................................... 6.00% 09/30/20 265,000
--------------
3,922,000
--------------
AUSTRALIA - 10.3%
9,400,000 Australia Government Bond (AUD)............................. 6.00% 02/15/17 9,621,545
8,100,000 Queensland Treasury Corp. (AUD)............................. 6.00% 10/14/15 7,969,044
9,800,000 Treasury Corp. of Victoria (AUD)............................ 6.00% 10/17/22 10,765,228
--------------
28,355,817
--------------
BELGIUM - 2.5%
4,135,000 Belgium Government Bond (EUR) (b)........................... 4.25% 09/28/21 6,916,774
--------------
BRAZIL - 9.9%
1,200,000 Banco Nacional de Desenvolvimento
Economico e Social (USD) (b)............................. 5.75% 09/26/23 1,291,140
56,734,000 Brazil Notas do Tesouro Nacional, Series F (BRL)............ 10.00% 01/01/17 24,881,435
3,200,000 Brazil Notas do Tesouro Nacional, Series F (BRL)............ 10.00% 01/01/23 1,299,762
--------------
27,472,337
--------------
CANADA - 10.9%
5,000,000 Canadian Government Bond (CAD).............................. 8.00% 06/01/23 6,939,928
15,000,000 Province of Manitoba, Canada (NZD).......................... 6.38% 09/01/15 13,387,809
10,965,000 Province of Ontario, Canada (NZD)........................... 6.25% 06/16/15 9,792,566
--------------
30,120,303
--------------
COLOMBIA - 3.5%
3,122,000,000 Colombia Government International Bond (COP)................ 7.75% 04/14/21 1,931,899
1,440,000,000 Colombia Government International Bond (COP)................ 4.38% 03/21/23 705,849
10,080,000,000 Colombia Government International Bond (COP)................ 9.85% 06/28/27 7,055,731
--------------
9,693,479
--------------
COSTA RICA - 0.4%
1,200,000 Costa Rica Government International Bond (USD).............. 4.25% 01/26/23 1,158,000
--------------
CROATIA - 3.1%
4,520,000 Croatia Government International Bond (USD)................. 6.63% 07/14/20 5,073,700
3,159,000 Croatia Government International Bond (USD)................. 6.00% 01/26/24 3,403,823
--------------
8,477,523
--------------
DOMINICAN REPUBLIC - 0.6%
700,000 Dominican Republic International Bond (USD)................. 7.50% 05/06/21 802,550
800,000 Dominican Republic International Bond (USD) (b)............. 7.45% 04/30/44 857,600
--------------
1,660,150
--------------
ECUADOR - 0.2%
595,000 Ecuador Government International Bond (USD) (b)............. 7.95% 06/20/24 614,933
--------------
GABON - 0.5%
1,250,000 Gabonese Republic (USD) (b)................................. 6.38% 12/12/24 1,371,675
--------------
Page 8 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
JUNE 30, 2014 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
--------------- ------------------------------------------------------------ ------------ -------- --------------
FOREIGN SOVEREIGN BONDS AND NOTES (CONTINUED)
GEORGIA - 0.5%
1,300,000 Georgian Oil and Gas Corp. JSC (USD) (b).................... 6.88% 05/16/17 $ 1,379,040
--------------
GERMANY - 1.2%
3,650,000 KfW (CAD)................................................... 4.95% 10/14/14 3,456,364
--------------
HONDURAS - 0.9%
2,360,000 Honduras Government International Bond (USD) (b)............ 7.50% 03/15/24 2,466,200
--------------
INDONESIA - 2.6%
1,750,000 Indonesia Government International Bond (USD) (b)........... 5.88% 01/15/24 1,935,937
17,100,000,000 Indonesia Treasury Bond (IDR)............................... 10.00% 07/15/17 1,540,196
16,000,000,000 Indonesia Treasury Bond (IDR)............................... 7.00% 05/15/27 1,194,394
8,500,000,000 Indonesia Treasury Bond (IDR)............................... 6.13% 05/15/28 568,615
18,670,000,000 Indonesia Treasury Bond (IDR)............................... 10.50% 08/15/30 1,825,200
--------------
7,064,342
--------------
IRAQ - 0.3%
1,060,000 Republic of Iraq (USD)...................................... 5.80% 01/15/28 961,950
--------------
ITALY - 5.6%
4,650,000 Italy Buoni Poliennali Del Tesoro (EUR)..................... 9.00% 11/01/23 9,747,617
2,900,000 Italy Buoni Poliennali Del Tesoro (EUR)..................... 7.25% 11/01/26 5,644,346
--------------
15,391,963
--------------
IVORY COAST - 0.3%
850,000 Ivory Coast Government International Bond (USD)............. 5.75% 12/31/32 829,813
--------------
KENYA - 0.4%
950,000 Kenya Government International Bond (USD) (b)............... 6.88% 06/24/24 989,900
--------------
MEXICO - 5.5%
13,850,000 Mexican Bonos (MXN)......................................... 10.00% 11/20/36 1,488,752
111,250,000 Mexican Bonos (MXN)......................................... 8.50% 11/18/38 10,494,193
1,745,100 Mexican Udibonos (MXN)...................................... 4.50% 11/22/35 836,131
1,890,000 Mexico Government International Bond (USD).................. 6.05% 01/11/40 2,300,130
--------------
15,119,206
--------------
MONGOLIA - 1.5%
3,040,000 Development Bank of Mongolia LLC (USD)...................... 5.75% 03/21/17 2,948,800
1,500,000 Mongolia Government International Bond (USD)................ 5.13% 12/05/22 1,320,000
--------------
4,268,800
--------------
NEW ZEALAND - 6.5%
19,150,000 New Zealand Government Bond (NZD)........................... 6.00% 12/15/17 17,853,652
--------------
NIGERIA - 1.7%
698,000,000 Nigeria Government Bond (NGN)............................... 15.10% 04/27/17 4,672,167
--------------
PERU - 2.7%
7,250,000 Peru Government Bond (PEN).................................. 7.84% 08/12/20 2,981,891
11,325,000 Peruvian Government International Bond (PEN)................ 6.95% 08/12/31 4,360,560
--------------
7,342,451
--------------
See Notes to Financial Statements Page 9
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
JUNE 30, 2014 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
--------------- ------------------------------------------------------------ ------------ -------- --------------
FOREIGN SOVEREIGN BONDS AND NOTES (CONTINUED)
POLAND - 3.9%
16,890,000 Poland Government Bond (PLN)................................ 4.00% 10/25/23 $ 5,805,223
12,590,000 Poland Government Bond (PLN)................................ 5.75% 04/25/29 5,104,155
--------------
10,909,378
--------------
ROMANIA - 2.6%
3,690,000 Romanian Government International Bond (USD)................ 6.75% 02/07/22 4,418,775
2,350,000 Romanian Government International Bond (USD) (b)............ 6.13% 01/22/44 2,676,298
--------------
7,095,073
--------------
RWANDA - 0.9%
510,000 Rwanda International Government Bond (USD) (b).............. 6.63% 05/02/23 532,848
1,900,000 Rwanda International Government Bond (USD).................. 6.63% 05/02/23 1,985,120
--------------
2,517,968
--------------
SERBIA - 2.7%
1,520,000 Republic of Serbia (USD).................................... 5.25% 11/21/17 1,592,200
122,500,000 Serbia Treasury Bills (RSD)................................. (c) 01/29/15 1,386,709
229,400,000 Serbia Treasury Bills (RSD)................................. (c) 02/26/15 2,581,888
160,000,000 Serbia Treasury Bonds (RSD)................................. 10.00% 01/10/15 1,914,872
--------------
7,475,669
--------------
SOUTH AFRICA - 5.2%
1,800,000 Eskom Holdings SOC Ltd. (USD) (b)........................... 6.75% 08/06/23 1,917,000
76,800,000 South Africa Government Bond (ZAR).......................... 10.50% 12/21/26 8,432,221
46,500,000 South Africa Government Bond (ZAR).......................... 8.00% 01/31/30 4,077,877
--------------
14,427,098
--------------
SPAIN - 2.0%
3,300,000 Spain Government Bond (EUR) (b)............................. 5.15% 10/31/44 5,454,602
--------------
TANZANIA - 1.0%
2,600,000 Tanzania Government International Bond (USD) (d)............ 6.33% 03/09/20 2,782,000
--------------
TURKEY - 5.0%
16,100,000 Turkey Government Bond (TRY)................................ 9.00% 01/27/16 7,713,348
6,600,000 Turkey Government Bond (TRY)................................ 6.30% 02/14/18 2,936,137
4,750,505 Turkey Government Bond,
Inflation Adjusted Bond (TRY) (e)........................ 3.00% 02/23/22 2,110,576
1,000,000 Turkey Government International Bond (USD).................. 6.25% 09/26/22 1,129,300
--------------
13,889,361
--------------
UNITED ARAB EMIRATES - 1.3%
2,840,000 Emirate of Dubai Government
International Bonds (USD)................................ 7.75% 10/05/20 3,574,140
--------------
UNITED KINGDOM - 1.6%
2,170,000 United Kingdom Gilt (GBP)................................... 4.25% 12/07/49 4,384,431
--------------
URUGUAY - 2.1%
655,000 Uruguay Government International Bond (USD)................. 7.63% 03/21/36 882,613
Page 10 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
JUNE 30, 2014 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
--------------- ------------------------------------------------------------ ------------ -------- --------------
FOREIGN SOVEREIGN BONDS AND NOTES (CONTINUED)
URUGUAY (CONTINUED)
95,733,472 Uruguay Government International Bond,
Inflation Adjusted Bond (UYU) (e)........................ 5.00% 09/14/18 $ 4,491,756
6,332,776 Uruguay Government International Bond,
Inflation Adjusted Bond (UYU) (e)........................ 4.25% 04/05/27 298,731
--------------
5,673,100
--------------
VENEZUELA - 1.9%
1,342,500 Venezuela Government International Bond (USD)............... 5.75% 02/26/16 1,274,704
3,750,000 Venezuela Government International Bond (USD)............... 12.75% 08/23/22 3,871,875
--------------
5,146,579
--------------
ZAMBIA - 0.4%
1,010,000 Zambia Government International Bond (USD) (b).............. 8.50% 04/14/24 1,120,519
--------------
TOTAL FOREIGN SOVEREIGN BONDS AND NOTES................................................. 290,576,249
(Cost $277,721,057) --------------
FOREIGN CORPORATE BONDS AND NOTES (f) - 25.9%
BANGLADESH - 0.4%
1,000,000 Banglalink Digital Communications Ltd. (USD) (b)............ 8.63% 05/06/19 1,065,000
--------------
BRAZIL - 1.9%
940,000 Caixa Economica Federal (USD) (b)........................... 4.50% 10/03/18 967,025
1,030,000 JBS Investments GmbH (USD) (b).............................. 7.75% 10/28/20 1,107,250
1,550,000 OAS Financial Ltd. (USD) (b) (g)............................ 8.88% (h) 1,541,785
460,000 OAS Investments GmbH (USD) (b).............................. 8.25% 10/19/19 477,250
1,200,000 Petrobras Global Finance B.V. (USD)......................... 4.88% 03/17/20 1,235,520
--------------
5,328,830
--------------
CANADA - 0.8%
2,350,000 Uranium One Investments, Inc. (USD) (b)..................... 6.25% 12/13/18 2,308,875
--------------
CHINA - 0.2%
550,000 CIFI Holdings Group Co., Ltd. (USD)......................... 12.25% 04/15/18 610,500
--------------
COLOMBIA - 0.4%
1,000,000 Pacific Rubiales Energy Corp. (USD) (b)..................... 5.38% 01/26/19 1,045,000
--------------
DOMINICAN REPUBLIC - 0.5%
1,350,000 AES Andres Dominicana, Ltd. / Itabo
Dominicana, Ltd. (USD)................................... 9.50% 11/12/20 1,468,125
--------------
EL SALVADOR - 0.4%
921,000 Telemovil Finance Co., Ltd. (USD)........................... 8.00% 10/01/17 971,655
--------------
GUATEMALA - 0.8%
580,000 Comcel Trust (USD) (b)...................................... 6.88% 02/06/24 627,850
1,550,000 Industrial Subordinated Trust (USD)......................... 8.25% 07/27/21 1,697,250
--------------
2,325,100
--------------
HONG KONG - 0.2%
500,000 MIE Holdings Corp. (USD) (b)................................ 7.50% 04/25/19 529,550
--------------
See Notes to Financial Statements Page 11
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
JUNE 30, 2014 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
--------------- ------------------------------------------------------------ ------------ -------- --------------
FOREIGN CORPORATE BONDS AND NOTES (f) (CONTINUED)
INDIA - 0.2%
600,000 Bharti Airtel International Netherlands B.V. (USD) (b)...... 5.13% 03/11/23 $ 617,670
INDONESIA - 0.8%
1,600,000 Pertamina Persero PT (USD) (b).............................. 4.30% 05/20/23 1,513,040
822,000 Pertamina Persero PT (USD).................................. 6.00% 05/03/42 770,625
--------------
2,283,665
--------------
KAZAKHSTAN - 1.5%
1,000,000 Kazakhstan Temir Zholy Finance B.V. (USD) (b)............... 6.95% 07/10/42 1,097,500
1,350,000 KazMunayGas National Co JSC (USD)........................... 5.75% 04/30/43 1,302,750
1,500,000 Zhaikmunai LLP (USD) (b).................................... 7.13% 11/13/19 1,638,750
--------------
4,039,000
--------------
MEXICO - 2.8%
600,000 Alfa SAB de CV (USD) (b).................................... 5.25% 03/25/24 627,600
1,400,000 BBVA Bancomer S.A. (USD) (b)................................ 6.75% 09/30/22 1,606,500
850,000 CEMEX Espana S.A. (USD)..................................... 9.88% 04/30/19 979,625
460,000 Cemex Finance, LLC (USD) (b)................................ 9.38% 10/12/22 543,375
770,000 Empresas ICA SAB de CV (USD) (b)............................ 8.88% 05/29/24 794,794
2,400,000 Offshore Drilling Holding S.A. (USD) (b).................... 8.38% 09/20/20 2,670,000
400,000 Petroleos Mexicanos (USD) (b)............................... 6.38% 01/23/45 465,500
--------------
7,687,394
--------------
MOZAMBIQUE - 0.9%
2,550,000 EMATUM Via Mozambique EMATUM
Finance 2020 B.V. (USD).................................. 6.31% 09/11/20 2,588,250
--------------
MULTINATIONAL - 6.3%
17,600,000 Asian Development Bank (AUD)................................ 5.50% 02/15/16 17,312,334
--------------
NIGERIA - 0.7%
1,200,000 Diamond Bank PLC (USD) (b).................................. 8.75% 05/21/19 1,185,000
650,000 Zenith Bank PLC (USD) (b)................................... 6.25% 04/22/19 649,220
--------------
1,834,220
--------------
PARAGUAY - 0.8%
1,900,000 Banco Regional SAECA (USD) (b).............................. 8.13% 01/24/19 2,099,500
--------------
RUSSIA - 1.6%
700,000 Alfa Bank OJSC Via Alfa Bond
Issuance PLC (USD)....................................... 7.75% 04/28/21 763,875
950,000 Evraz Group S.A. (USD) (b).................................. 6.50% 04/22/20 895,375
1,200,000 Gazprom Neft OAO Via GPN Capital S.A. (USD) (b)............. 6.00% 11/27/23 1,237,500
1,500,000 VimpelCom Holdings B.V. (USD) (b)........................... 5.95% 02/13/23 1,490,625
--------------
4,387,375
--------------
TURKEY - 0.7%
750,000 Arcelik AS (USD) (b)........................................ 5.00% 04/03/23 724,500
1,100,000 Yasar Holdings S.A. via Willow No. 2 (USD).................. 9.63% 10/07/15 1,138,500
--------------
1,863,000
--------------
Page 12 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
JUNE 30, 2014 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
--------------- ------------------------------------------------------------ ------------ -------- --------------
FOREIGN CORPORATE BONDS AND NOTES (f) (CONTINUED)
UKRAINE - 0.5%
1,400,000 MHP S.A. (USD).............................................. 8.25% 04/02/20 $ 1,302,280
--------------
UNITED ARAB EMIRATES - 1.0%
2,270,000 Jafz Sukuk Ltd. (USD)....................................... 7.00% 06/19/19 2,610,500
--------------
UNITED KINGDOM - 0.3%
900,000 Tullow Oil PLC (USD) (b).................................... 6.00% 11/01/20 938,250
--------------
VENEZUELA - 2.2%
3,870,000 Petroleos de Venezuela S.A. (USD)........................... 8.50% 11/02/17 3,629,286
2,500,000 Petroleos de Venezuela S.A. (USD)........................... 12.75% 02/17/22 2,534,375
--------------
6,163,661
--------------
TOTAL FOREIGN CORPORATE BONDS AND NOTES.............................................. 71,379,734
(Cost $64,674,028) --------------
TOTAL INVESTMENTS - 131.1%........................................................... 361,955,983
(Cost $342,395,085) (i)
OUTSTANDING LOANS - (35.8%).......................................................... (98,905,655)
NET OTHER ASSETS AND LIABILITIES - 4.7%.............................................. 13,025,075
--------------
NET ASSETS - 100.0%.................................................................. $ 276,075,403
--------------
(a) All of the securities within the Portfolio of Investments 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 regisunder Rule 144A under the Securities Act of 1933, as
amended, 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 Fund's investment
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, 2014, securities noted as such
amounted to $63,645,750 or 23.05% of net assets.
(c) Zero coupon bond.
(d) Floating rate security. The interest rate shown reflects the rate in
effect at June 30, 2014.
(e) Security whose principal value is adjusted in accordance with changes to
the country's Consumer Price Index. Interest is calculated on the basis of
the current adjusted principal value.
(f) Portfolio securities are included in a country based upon their underlying
credit exposure as determined by the Fund's investment Sub-Advisor.
(g) Fixed-to-floating or fixed-to-variable rate security. The interest rate
shown reflects the fixed rate in effect at June 30, 2014. At a
predetermined date, the fixed rate will change to a floating rate or a
variable rate.
(h) Perpetual maturity.
(i) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2014, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $31,465,986 and the aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over value was $11,905,088.
See Notes to Financial Statements Page 13
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2014 (UNAUDITED)
Currency Abbreviations:
ARS Argentine Peso
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
COP Colombian Peso
EUR Euro
GBP British Pound Sterling
IDR Indonesian Rupiah
INR Indian Rupee
MXN Mexican Peso
NGN Nigerian Naira
NZD New Zealand Dollar
PEN Peruvian New Sol
PLN Polish Zloty
RSD Serbian Dinar
TRY Turkish Lira
USD United States Dollar
UYU Uruguayan Peso
ZAR South African Rand
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2014
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
ASSETS TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
INVESTMENTS 6/30/2014 PRICES INPUTS INPUTS
------------------------------------------------- ------------ ------------ ------------ ------------
Foreign Sovereign Bonds and Notes*............... $290,576,249 $ -- $290,576,249 $ --
Foreign Corporate Bonds and Notes*............... 71,379,734 -- 71,379,734 --
------------ ------------ ------------ ------------
Total Investments................................ 361,955,983 -- 361,955,983 --
Forward Foreign Currency Contracts**............. 192,269 -- 192,269 --
------------ ------------ ------------ ------------
Total............................................ $362,148,252 $ -- $362,148,252 $ --
============ ============ ============ ============
LIABILITIES TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2014 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Forward Foreign Currency Contracts**............. $ (1,271,753) $ -- $ (1,271,753) $ --
============ ============ ============ ============
* See the Portfolio of Investments for country breakout.
** See the Schedule of Forward Foreign Currency Contracts for contract and
currency detail.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between Levels at June 30, 2014.
Page 14 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2014 (UNAUDITED)
--------------------------------------------------------
CURRENCY EXPOSURE % OF TOTAL
DIVERSIFICATION INVESTMENTS +
--------------------------------------------------------
USD 49.4%
EUR 7.0
NZD 5.8
AUD 5.7
BRL 3.7
MXN 3.6
ZAR 3.5
PLN 3.0
COP 2.7
CAD 2.2
TRY 2.0
PEN 2.0
INR 2.0
RSD 1.6
IDR 1.4
UYU 1.3
NGN 1.3
GBP 1.2
ARS 0.6
--------------------------------------------------------
Total 100.0%
======
+ The weightings include the impact of currency forwards.
See Notes to Financial Statements Page 15
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
JUNE 30, 2014 (UNAUDITED)
FORWARD FOREIGN CURRENCY CONTRACTS
------------------------------------------------------------
PURCHASE SALE UNREALIZED
SETTLEMENT AMOUNT AMOUNT VALUE AS OF VALUE AS OF APPRECIATION/
DATE COUNTERPARTY PURCHASED (a) SOLD (a) 6/30/2014 6/30/2014 (DEPRECIATION)
---------- ------------ ------------------- ------------------- ------------- ------------- --------------
08/05/14 CIT ARS 19,232,000 USD 2,289,524 $ 2,276,380 $ 2,289,524 $ (13,144)
07/16/14 UBS EUR 453,000 USD 612,945 620,331 612,945 7,386
07/16/14 GS GBP 1,818,000 USD 3,044,041 3,110,897 3,044,041 66,856
08/28/14 CIT IDR 58,211,933,000 USD 4,926,952 4,854,764 4,926,952 (72,188)
08/28/14 CIT INR 142,000,000 USD 2,337,449 2,327,532 2,337,449 (9,917)
08/28/14 JPM INR 290,480,000 USD 4,908,830 4,761,278 4,908,830 (147,552)
07/16/14 CIT PLN 2,943,000 USD 964,975 967,972 964,975 2,997
07/16/14 CIT TRY 992,000 USD 458,474 466,619 458,474 8,145
07/16/14 CIT ZAR 35,451,000 USD 3,411,190 3,323,710 3,411,190 (87,480)
07/16/14 BAR USD 12,580,183 AUD 13,464,000 12,580,183 12,679,504 (99,321)
07/16/14 GS USD 12,581,166 AUD 13,464,000 12,581,166 12,679,504 (98,338)
08/28/14 JPM USD 12,861,690 BRL 29,297,000 12,861,690 13,032,797 (171,107)
07/16/14 CIT USD 2,594,622 CAD 2,850,000 2,594,622 2,669,748 (75,126)
07/16/14 GS USD 2,955,879 EUR 2,170,000 2,955,879 2,971,564 (15,685)
07/16/14 CIT USD 3,039,660 GBP 1,818,000 3,039,660 3,110,897 (71,237)
08/28/14 CIT USD 4,949,995 IDR 58,211,933,000 4,949,995 4,854,764 95,231
07/16/14 JPM USD 10,064,667 NZD 11,675,000 10,064,667 10,205,814 (141,147)
07/16/14 UBS USD 10,066,942 NZD 11,676,000 10,066,942 10,206,689 (139,747)
07/16/14 JPM USD 957,291 PLN 2,943,000 957,291 967,972 (10,681)
07/16/14 JPM USD 5,854,254 TRY 12,682,000 5,854,254 5,965,388 (111,134)
07/16/14 JPM USD 2,359,093 ZAR 25,038,000 2,359,093 2,347,439 11,654
07/16/14 JPM USD 968,323 ZAR 10,413,000 968,323 976,272 (7,949)
-----------
Net Unrealized Appreciation (Depreciation)............................................................... $(1,079,484)
===========
(a) See Portfolio of Investments for currency descriptions.
See Note 2D - Offsetting on the Statement of Assets and Liabilities for a table
that presents the forward foreign currency contracts' asset and liability
amounts on a gross basis.
Counterparty Abbreviations:
BAR Barclays PLC
CIT Citibank, NA
GS Goldman Sachs
JPM JPMorgan Chase
UBS UBS
Page 16 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2014 (UNAUDITED)
ASSETS:
Investments, at value
(Cost $342,395,085)......................................................................... $361,955,983
Cash........................................................................................... 7,176,765
Foreign currency (Cost $1,473,410)............................................................. 1,484,869
Unrealized appreciation on forward foreign currency contracts.................................. 192,269
Receivables:
Interest.................................................................................. 7,045,693
Investment securities sold................................................................ 1,011,605
Prepaid expenses............................................................................... 18,049
------------
Total Assets.............................................................................. 378,885,233
------------
LIABILITIES:
Outstanding loans.............................................................................. 98,905,655
Unrealized depreciation on forward foreign currency contracts.................................. 1,271,753
Payables:
Investment securities purchased........................................................... 2,086,234
Investment advisory fees.................................................................. 306,122
Custodian fees............................................................................ 119,575
Audit and tax fees........................................................................ 33,599
Interest and fees on loan................................................................. 32,156
Administrative fees....................................................................... 31,911
Printing fees............................................................................. 9,817
Legal fees................................................................................ 4,297
Transfer agent fees....................................................................... 3,696
Deferred Indonesian capital gains tax..................................................... 3,674
Financial reporting fees.................................................................. 771
Trustees' fees and expenses............................................................... 570
------------
Total Liabilities......................................................................... 102,809,830
------------
NET ASSETS..................................................................................... $276,075,403
============
NET ASSETS CONSIST OF:
Paid-in capital................................................................................ $278,512,152
Par value...................................................................................... 174,102
Accumulated net investment income (loss)....................................................... (16,684,529)
Accumulated net realized gain (loss) on investments, forward foreign currency contracts and
foreign currency transactions................................................................ (5,460,085)
Net unrealized appreciation (depreciation) on investments, forward foreign currency contracts
and foreign currency translation............................................................. 19,533,763
------------
NET ASSETS..................................................................................... $276,075,403
============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share)........................... $ 15.86
============
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized).... 17,410,203
============
See Notes to Financial Statements Page 17
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2014 (UNAUDITED)
INVESTMENT INCOME:
Interest (net of foreign withholding tax of $31,331)........................................... $ 11,996,286
Other.......................................................................................... 78,824
------------
Total investment income................................................................... 12,075,110
------------
EXPENSES:
Investment advisory fees....................................................................... 1,814,309
Interest and fees on outstanding loans......................................................... 544,173
Custodian fees................................................................................. 213,292
Administrative fees............................................................................ 167,131
Printing fees.................................................................................. 41,207
Audit and tax fees............................................................................. 28,860
Transfer agent fees............................................................................ 20,719
Legal fees..................................................................................... 11,226
Trustees' fees and expenses.................................................................... 10,896
Financial reporting fees....................................................................... 4,625
Other.......................................................................................... 19,874
------------
Total expenses............................................................................ 2,876,312
------------
NET INVESTMENT INCOME (LOSS)................................................................... 9,198,798
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.................................................................................. 3,534,079
Forward foreign currency contracts........................................................... (5,426,604)
Foreign currency transactions................................................................ (322,500)
------------
Net realized gain (loss)....................................................................... (2,215,025)
------------
Net change in unrealized appreciation (depreciation) on:
Investments.................................................................................. 16,929,928
Forward foreign currency contracts........................................................... (2,612,595)
Foreign currency translation................................................................. 280,467
Net change in deferred Indonesian capital gains tax............................................ (1,410)
------------
Net change in unrealized appreciation (depreciation)........................................... 14,596,390
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)........................................................ 12,381,365
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................ $ 21,580,163
============
Page 18 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
6/30/2014 ENDED
(UNAUDITED) 12/31/2013
-------------- -------------
OPERATIONS:
Net investment income (loss)....................................................... $ 9,198,798 $ 18,643,434
Net realized gain (loss)........................................................... (2,215,025) 7,139,198
Net change in unrealized appreciation (depreciation)............................... 14,596,390 (51,686,833)
-------------- -------------
Net increase (decrease) in net assets resulting from operations.................... 21,580,163 (25,904,201)
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.............................................................. (12,187,142) (18,786,928)
Net realized gain.................................................................. -- (2,263,326)
Return of capital.................................................................. -- (6,105,269)
-------------- -------------
Total distributions to shareholders................................................ (12,187,142) (27,155,523)
-------------- -------------
CAPITAL TRANSACTIONS:
Proceeds from Common Shares reinvested............................................. -- 171,859
-------------- -------------
Net increase (decrease) in net assets resulting from capital transactions.......... -- 171,859
-------------- -------------
Total increase (decrease) in net assets............................................ 9,393,021 (52,887,865)
NET ASSETS:
Beginning of period................................................................ 266,682,382 319,570,247
-------------- -------------
End of period...................................................................... $ 276,075,403 $ 266,682,382
============== =============
Accumulated net investment income (loss) at end of period.......................... $ (16,684,529) $ (13,696,185)
============== =============
CAPITAL TRANSACTIONS WERE AS FOLLOWS:
Common Shares at beginning of period............................................... 17,410,203 17,400,622
Common Shares issued as reinvestment under the Dividend Reinvestment Plan.......... -- 9,581
-------------- -------------
Common Shares at end of period..................................................... 17,410,203 17,410,203
============== =============
See Notes to Financial Statements Page 19
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2014 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations................ $ 21,580,163
Adjustments to reconcile net increase (decrease) in net assets resulting from
operations to net cash provided by operating activities:
Purchases of investments.................................................. (111,663,990)
Sales, maturities and paydowns of investments............................. 123,301,370
Net amortization/accretion of premiums/discounts on investments........... (38,373)
Net realized gain/loss on investments..................................... (3,534,079)
Net realized gain/loss on foreign currency transactions (a)............... 3,742,350
Net change in unrealized appreciation/depreciation on forward foreign
currency contracts..................................................... 2,612,595
Net change in unrealized appreciation/depreciation on investments......... (16,929,928)
CHANGES IN ASSETS AND LIABILITIES:
Increase in interest receivable........................................... (769,565)
Increase in prepaid expenses.............................................. (11,987)
Increase in interest and fees on loans payable............................ 23,770
Decrease in investment advisory fees payable.............................. (4,175)
Decrease in audit and tax fees payable.................................... (24,601)
Decrease in legal fees payable............................................ (302)
Decrease in printing fees payable......................................... (13,315)
Decrease in administrative fees payable................................... (1,690)
Decrease in custodian fees payable........................................ (175,248)
Decrease in transfer agent fees payable................................... (2,544)
Increase in Trustees' fees and expenses payable........................... 570
Increase in deferred Indonesian capital gains tax......................... 1,410
Decrease in other liabilities............................................. (220)
--------------
CASH PROVIDED BY OPERATING ACTIVITIES.......................................... $ 18,092,211
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Common Shareholders from net investment income........... (12,187,142)
--------------
CASH USED IN FINANCING ACTIVITIES.............................................. (12,187,142)
Effect of exchange rate changes on Euro Loan (b)............................... (60,365)
--------------
Increase in cash and foreign currency (c)...................................... 5,844,704
Cash and foreign currency at beginning of period............................... 2,816,930
--------------
Cash and foreign currency at end of period..................................... $ 8,661,634
==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees.............................. $ 520,403
==============
-----------------------------
(a) This amount is a component of net realized gain (loss) on foreign currency
transactions as shown on the Statement of Operations.
(b) This amount is a component of net change in unrealized appreciation
(depreciation) on foreign currency translation as shown on the Statement
of Operations.
(c) Includes net change in unrealized appreciation (depreciation) on foreign
currency of $(19,250).
Page 20 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
6/30/2014 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2008
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period... $ 15.32 $ 18.37 $ 16.94 $ 17.80 $ 16.58 $ 12.69
--------- -------- --------- -------- --------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)........... 0.53 1.07 1.18 1.22 1.28 1.47
Net realized and unrealized gain (loss) 0.71 (2.56) 1.81 (0.52) 1.50 3.98
--------- -------- --------- -------- --------- --------
Total from investment operations....... 1.24 (1.49) 2.99 0.70 2.78 5.45
--------- -------- --------- -------- --------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................. (0.70) (1.08) (1.32) (1.55) (1.56) (0.68)
Net realized gain...................... -- (0.13) -- -- -- --
Return of capital...................... -- (0.35) (0.24) (0.01) -- (0.88)
--------- -------- --------- -------- --------- --------
Total distributions.................... (0.70) (1.56) (1.56) (1.56) (1.56) (1.56)
--------- -------- --------- -------- --------- --------
Net asset value, end of period......... $ 15.86 $ 15.32 $ 18.37 $ 16.94 $ 17.80 $ 16.58
========= ======== ========= ======== ========= ========
Market value, end of period............ $ 14.68 $ 14.05 $ 17.85 $ 15.76 $ 17.36 $ 16.03
========= ======== ========= ======== ========= ========
Total return based on net asset
value (a)........................... 8.76% (7.91)% 18.51% 4.37% 17.90% 47.48%
========= ======== ========= ======== ========= ========
Total return based on market
value (a)........................... 9.77% (13.13)% 23.85% (0.44)% 18.93% 73.98%
========= ======== ========= ======== ========= ========
-----------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)... $ 276,075 $266,682 $ 319,570 $294,520 $ 309,342 $287,961
Ratio of total expenses to average
net assets.......................... 2.17% (b) 2.10% 2.09% 2.02% 2.13% 2.57%
Ratio of total expenses to average net
assets excluding interest expense and
fees on loans....................... 1.76% (b) 1.72% 1.71% 1.63% 1.65% 1.77%
Ratio of net investment income (loss)
to average net assets............... 6.95% (b) 6.41% 6.72% 6.94% 7.41% 9.90%
Portfolio turnover rate................ 32% 56% 56% 52% 101% 72%
INDEBTEDNESS:
Total loans outstanding (in 000's)..... $ 98,906 $ 98,966 $ 98,441 $ 98,198 $ 88,595 $ 89,511
Asset coverage per $1,000 of
indebtedness (c).................... $ 3,791 $ 3,695 $ 4,246 $ 3,999 $ 4,492 $ 4,217
-----------------------
(a) 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 ("NAV") per
share for NAV returns and changes in Common Share price for market value
returns. Total returns do not reflect sales load and are not annualized
for periods less than one year. Past performance is not indicative of
future results.
(b) Annualized.
(c) Calculated by subtracting the Fund's total liabilities (not including the
loans outstanding) from the Fund's total assets, and dividing by the
outstanding loan balance in 000's.
See Notes to Financial Statements Page 21
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
JUNE 30, 2014 (UNAUDITED)
1. ORGANIZATION
First Trust/Aberdeen Global Opportunity Income Fund (the "Fund") is a
diversified, closed-end management investment company organized as a
Massachusetts business trust on September 2, 2004, and is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Fund trades under the ticker symbol FAM on the New
York Stock Exchange ("NYSE").
The Fund's primary investment objective is to seek a high level of current
income. As a secondary objective, the Fund seeks capital appreciation. The Fund
pursues these objectives by investing its Managed Assets in the world bond
markets through a diversified portfolio of investment grade and below-investment
grade government and corporate debt securities. "Managed Assets" means the total
asset value of the Fund minus the sum of the Fund's liabilities other than the
principal amount of borrowings, if any. There can be no assurance that the Fund
will achieve its investment objectives. The Fund may not be appropriate for all
investors.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP") requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
A. PORTFOLIO VALUATION:
The net asset value ("NAV") of the Common Shares of the Fund is determined daily
as of the close of regular trading on the NYSE, normally 4:00 p.m. Eastern time,
on each day the NYSE is open for trading. If the NYSE closes early on a
valuation day, the NAV is determined as of that time. Domestic debt securities
and foreign securities are priced using data reflecting the earlier closing of
the principal markets for those securities. The NAV per Common Share is
calculated by dividing the value of all assets of the Fund (including accrued
interest and dividends), less all liabilities (including accrued expenses,
dividends declared but unpaid and any borrowings of the Fund), by the total
number of Common Shares outstanding.
The Fund's investments are valued daily at market value or, in absence of market
value with respect to any portfolio securities, at fair value in accordance with
valuation procedures adopted by the Fund's Board of Trustees and in accordance
with provisions of the 1940 Act. Market quotations and prices used to value the
Fund's investments are primarily obtained from third party pricing services. The
Fund's investments are valued as follows:
Bonds, notes and other debt securities are valued on the basis of
valuations provided by dealers who make markets in such securities or by an
independent pricing service approved by the Fund's Board of Trustees, which
may use the following valuation inputs when available:
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.
Debt securities having a remaining maturity of sixty days or less when
purchased are valued at cost adjusted for amortization of premiums and
accretion of discounts.
Common stocks and other equity securities listed on any national or foreign
exchange (excluding The NASDAQ(R) Stock Market LLC ("NASDAQ") and the
London Stock Exchange Alternative Investment Market ("AIM")) are valued at
the last sale price on the exchange on which they are principally traded
or, for NASDAQ and AIM securities, the official closing price. Securities
traded on more than one securities exchange are valued at the last sale
price or official closing price, as applicable, at the close of the
securities exchange representing the principal market for such securities.
Securities traded in an over-the counter market are valued at the mean of
their most recent bid and asked price, if available, and otherwise at their
closing bid price.
Forward foreign currency contracts are valued at the current day's
interpolated foreign exchange rate, as calculated using the current day's
spot rate, and the thirty, sixty, ninety, and one-hundred eighty day
forward rates provided by an independent pricing service.
Page 22
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
JUNE 30, 2014 (UNAUDITED)
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Fund's Board of Trustees or its
delegate at fair value. These securities generally include, but are not limited
to, restricted securities (securities which may not be publicly sold without
registration under the Securities Act of 1933, as amended) for which a pricing
service is unable to provide a market price; securities whose trading has been
formally suspended; a security whose market price is not available from a
pre-established pricing source; a security with respect to which an event has
occurred that is likely to materially affect the value of the security after the
market has closed but before the calculation of the Fund's NAV or make it
difficult or impossible to obtain a reliable market quotation; and a security
whose price, as provided by the pricing service, does not reflect the security's
"fair value." As a general principle, the current "fair value" of a security
would appear to be the amount which the owner might reasonably expect to receive
for the security upon its current sale. The use of fair value prices by the Fund
generally results in prices used by the Fund that may differ from current market
quotations or official closing prices on the applicable exchange. A variety of
factors may be considered in determining the fair value of such securities,
including, but not limited to, the following:
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 the Sub-Advisor's or external analysis;
6) the information as to any transactions in or offers for the
security;
7) the price and extent of public trading in similar securities (or
equity securities) of the issuer/borrower, or comparable companies;
8) the coupon payments;
9) the quality, value and salability of collateral, if any, securing
the security;
10) the business prospects of the issuer, including any ability to
obtain money or resources from a parent or affiliate and an
assessment of the issuer's management (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.
The Fund is subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in
markets that are non-active. A non-active market is a
market where there are few transactions for the
investment, the prices are not current, or price
quotations vary substantially either over time or among
market makers, or in which little information is
released publicly.
o Inputs other than quoted prices that are observable for
the investment (for example, interest rates and yield
curves observable at commonly quoted intervals,
volatilities, prepayment speeds, loss severities, credit
risks, and default rates).
o Inputs that are derived principally from or corroborated
by observable market data by correlation or other means.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or methodology used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value the Fund's investments as of June 30, 2014, is
included with the Fund's Portfolio of Investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Interest income is recorded daily on the accrual basis. Amortization of premiums
and accretion of discounts are recorded by using the effective interest method.
Securities purchased or sold on a when-issued, delayed-delivery or forward
purchase commitment basis may have extended settlement periods. The value of the
security so purchased is subject to market fluctuations during this period. The
Fund maintains liquid assets with a current value at least equal to the amount
of its when-issued, delayed-delivery or forward purchase commitments until
payment is made. At June 30, 2014, the Fund had no when-issued, delayed-delivery
or forward purchase commitments.
Page 23
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
JUNE 30, 2014 (UNAUDITED)
C. FORWARD FOREIGN CURRENCY CONTRACTS:
The Fund is subject to foreign currency risk in the normal course of pursuing
its investment objectives. Forward foreign currency contracts are agreements to
exchange one currency for another at a future date and at a specified price. The
Fund uses forward foreign currency contracts to facilitate transactions in
foreign securities and to manage the Fund's foreign currency exposure. These
contracts are valued daily, and the Fund's net equity therein, representing
unrealized gain or loss on the contracts as measured by the difference between
the forward foreign exchange rates at the dates of entry into the contracts and
the forward rates at the reporting date, is included in "Unrealized appreciation
(depreciation) on forward foreign currency contracts" on the Statement of Assets
and Liabilities. The change in unrealized appreciation (depreciation) is
included in "Net change in unrealized appreciation (depreciation) on forward
foreign currency contracts" on the Statement of Operations.When the forward
contract is closed, the Fund records a realized gain or loss equal to the
difference between the proceeds from (or the cost of) the closing transaction
and the Fund's basis in the contract. This realized gain or loss is included in
"Net realized gain (loss) on forward foreign currency contracts" on the
Statement of Operations. Risks arise from the possible inability of
counterparties to meet the terms of their contracts and from movement in
currency, securities values and interest rates. Due to the risks, the Fund could
incur losses in excess of the net unrealized value shown on the Schedule of
Forward Foreign Currency Contracts.
During the six months ended June 30, 2014, the amount of notional values of
forward foreign currency contracts opened and closed were $423,539,664 and
$482,842,816, respectively.
D. OFFSETTING ON THE STATEMENT OF ASSETS AND LIABILITIES:
Accounting Standards Update No. 2011-11 "Disclosures about Offsetting Assets and
Liabilities" ("ASU 2011-11") requires entities to disclose both gross and net
information about instruments and transactions eligible for offset on the
Statement of Assets and Liabilities, and disclose instruments and transactions
subject to master netting or similar agreements. These disclosure requirements
are intended to help investors and other financial statement users better assess
the effect or potential effect of offsetting arrangements on a fund's financial
position. In addition, Accounting Standards Update No. 2013-1 "Clarifying the
Scope of Offsetting Assets and Liabilities" ("ASU 2013-1"), specifies exactly
which transactions are subject to offsetting disclosures. The scope of the
disclosure requirements is limited to derivative instruments, repurchase
agreements and reverse repurchase agreements, and securities borrowing and
securities lending transactions.
For financial reporting purposes, the Fund does not offset financial assets and
financial liabilities that are subject to master netting arrangements or similar
agreements on the Statement of Assets and Liabilities.
At June 30, 2014, derivative assets and liabilities (by type) on a gross basis
are as follows:
Gross Amounts
not Offset in the
Statement of
Net Amounts of Assets and Liabilities
Gross Amounts Assets Presented -----------------------
Gross Amounts of Offset in the in the Statement Collateral
Recognized Statement of Assets of Assets and Financial Amounts
Assets and Liabilities Liabilities Instruments Received Net Amount
----------------- ------------------- --------------------- ----------- ---------- -----------
Forward Foreign
Currency Contracts* $ 192,269 $ -- $ 192,269 $ (192,269) $ -- $ --
Gross Amounts
not Offset in the
Statement of
Net Amounts of Assets and Liabilities
Gross Amounts Liabilities Presented -----------------------
Gross Amounts of Offset in the in the Statement Collateral
Recognized Statement of Assets of Assets and Financial Amounts
Liabilities and Liabilities Liabilities Instruments Pledged Net Amount
----------------- ------------------- --------------------- ----------- ---------- -----------
Forward Foreign
Currency Contracts* $ (1,271,753) $ -- $ (1,271,753) $ 192,269 $ -- $(1,079,484)
* The respective counterparties for each contract are disclosed in the Schedule
of Forward Foreign Currency Contracts.
Page 24
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
JUNE 30, 2014 (UNAUDITED)
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 investments and items of income and expense are
translated on the respective dates of such transactions. Unrealized gains and
losses on assets and liabilities, other than investments in securities, which
result from changes in foreign currency exchange rates have been included in
"Net change in unrealized appreciation (depreciation) on foreign currency
translation" on the Statement of Operations. Unrealized gains and losses on
investments in securities which result from changes in foreign exchange rates
are included with fluctuations arising from changes in market price and are
shown in "Net change in unrealized appreciation (depreciation) on investments"
on the Statement of Operations. Net realized foreign currency gains and losses
include the effect of changes in exchange rates between trade date and
settlement date on investment security transactions, foreign currency
transactions and interest and dividends received. The portion of foreign
currency gains and losses related to fluctuation in exchange rates between the
initial purchase trade date and subsequent sale trade date is included in "Net
realized gain (loss) on foreign currency transactions" on the Statement of
Operations.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
The Fund will distribute to holders of its Common Shares monthly dividends of
all or a portion of its net income after the payment of interest and dividends
in connection with leverage, if any. 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 net investment income and realized capital gains are
determined in accordance with income tax regulations, which may differ from U.S.
GAAP. Certain capital accounts in the financial statements are periodically
adjusted for permanent differences in order to reflect their tax character.
These permanent differences are primarily due to the varying treatment of income
and gain/loss on portfolio securities held by the Fund and have no impact on net
assets or NAV per share. Temporary differences, which arise from recognizing
certain items of income, expense and gain/loss in different periods for
financial statement and tax purposes, will reverse at some time in the future.
The tax character of distributions paid during the fiscal year ended December
31, 2013, was as follows:
Distributions paid from:
Ordinary income................................. $ 18,786,928
Capital gain.................................... 2,263,326
Return of capital............................... 6,105,269
As of December 31, 2013, the distributable earnings and net assets on a tax
basis were as follows:
Undistributed ordinary income................... $ --
Undistributed capital gains..................... --
---------------
Total undistributed earnings.................... --
Accumulated capital and other losses............ --
Net unrealized appreciation (depreciation)...... (12,001,608)
---------------
Total accumulated earnings (losses)............. (12,001,608)
Other........................................... (2,264)
Paid-in capital................................. 278,686,254
---------------
Net assets...................................... $ 266,682,382
===============
G. INCOME AND OTHER 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 (the "Code"), which includes distributing substantially all
of its net investment income and net realized gains to shareholders.
Accordingly, no provision has been made for federal or state income taxes.
However, due to the timing and amount of distributions, the Fund may be subject
to an excise tax of 4% of the amount by which approximately 98% of the Fund's
taxable income exceeds the distributions from such taxable income for the
calendar year.
Certain countries assess a capital gains tax on securities sold in their local
markets. This tax is accrued as the securities in these foreign markets
appreciate in value and is paid at the time of sale to the extent a capital gain
is realized. Taxes accrued on securities in an unrealized appreciation position
are included in "Net change in unrealized appreciation (depreciation)" on the
Statement of Operations. The capital gains tax paid on securities sold is
included in "Other" expenses on the Statement of Operations.
Page 25
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
JUNE 30, 2014 (UNAUDITED)
Under the Regulated Investment Company Modernization Act of 2010 (the "Act"),
net capital losses arising in tax years after December 22, 2010, may be carried
forward indefinitely, and their character is retained as short-term and/or
long-term losses. Previously, net capital losses were carried forward for eight
years and treated as short-term losses. As a transition rule, the Act requires
that post-enactment net capital losses be used before pre-enactment net capital
losses. At December 31, 2013, the Fund had no pre- or post-enactment capital
loss carryforwards outstanding for federal income tax purposes.
During the year ended December 31, 2013, the Fund utilized pre-enactment capital
loss carryforward in the amount of $2,142,594.
The Fund is subject to certain limitations under the U.S. tax rules on the use
of capital loss carryforwards and net unrealized built-in losses. These
limitations apply when there has been a 50% change in ownership.
The Fund is subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ended 2010, 2011,
2012 and 2013 remain open to federal and state audit. As of June 30, 2014,
management has evaluated the application of these standards to the Fund and has
determined that no provision for income tax is required in the Fund's financial
statements for uncertain tax positions.
H. EXPENSES:
The Fund will pay all expenses directly related to its operations.
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust Advisors L.P. ("First Trust"), the investment advisor to the Fund,
is a limited partnership with one limited partner, Grace Partners of DuPage
L.P., and one general partner, The Charger Corporation. The Charger Corporation
is an Illinois corporation controlled by James A. Bowen, Chief Executive Officer
of First Trust. First Trust is responsible for the ongoing monitoring of the
Fund's investment portfolio, managing the Fund's business affairs and providing
certain administrative services necessary for the management of the Fund. For
these services, First Trust is entitled to a monthly fee calculated at an annual
rate of 1.00% of the Fund's Managed Assets. First Trust also provides fund
reporting services to the Fund for a flat annual fee in the amount of $9,250.
Aberdeen Asset Management Inc. ("Aberdeen" or the "Sub-Advisor") serves as the
Fund's Sub-Advisor and manages the Fund's portfolio subject to First Trust's
supervision. The Sub-Advisor receives a monthly portfolio management fee
calculated at an annual rate of 0.50% of the Fund's Managed Assets that is paid
by First Trust out of its investment advisory fee.
BNY Mellon Investment Servicing (US) Inc. ("BNYM IS") serves as the Fund's
administrator, fund accountant and transfer agent in accordance with certain fee
arrangements. As administrator and fund accountant, BNYM IS is responsible for
providing certain administrative and accounting services to the Fund, including
maintaining the Fund's books of account, records of the Fund's securities
transactions, and certain other books and records. As transfer agent, BNYM IS is
responsible for maintaining shareholder records for the Fund. The Bank of New
York Mellon ("BNYM") serves as the Fund's Custodian in accordance with certain
fee arrangements. As custodian, BNYM is responsible for custody of the Fund's
assets.
Each Trustee who is not an officer or employee of First Trust, any Sub-Advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated pro rata among each fund in the First Trust Fund
Complex based on net assets. Each Independent Trustee is also paid an annual per
fund fee that varies based on whether the fund is a closed-end or other actively
managed fund, or is an index fund.
Additionally, the Lead Independent Trustee and the Chairmen of the Audit
Committee, Nominating and Governance Committee and Valuation Committee are paid
annual fees to serve in such capacities, with such compensation allocated pro
rata among each fund in the First Trust Fund Complex based on net assets.
Trustees are reimbursed for travel and out-of-pocket expenses in connection with
all meetings. The Lead Independent Trustee and Committee Chairmen rotate every
three years. The officers and "Interested" Trustee receive no compensation from
the Trust for acting in such capacities.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, other than U.S.
government obligations and short-term obligations, for the six months ended June
30, 2014, were $113,028,473 and $124,312,975, respectively.
Page 26
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
JUNE 30, 2014 (UNAUDITED)
5. DERIVATIVES TRANSACTIONS
The following table presents the type of derivative held by the Fund at June 30,
2014, the primary underlying risk exposure and location of these instruments as
presented on the Statement of Assets and Liabilities.
ASSET DERIVATIVES LIABILITY DERIVATIVES
-------------------------------------- -------------------------------------
DERIVATIVE RISK STATEMENT OF ASSETS STATEMENT OF ASSETS
INSTRUMENT EXPOSURE AND LIABILITIES LOCATION FAIR VALUE AND LIABILITIES LOCATION FAIR VALUE
------------------ ------------- ------------------------ ----------- ------------------------ ----------
Unrealized appreciation Unrealized depreciation
Forward foreign Currency on forward foreign on forward foreign
currency contracts Risk currency contracts $192,269 currency contracts $1,271,753
The following table presents the amount of net realized gain (loss) and change
in net unrealized appreciation (depreciation) recognized for the six months
ended June 30, 2014, on derivative instruments, as well as the primary
underlying risk exposure associated with each instrument.
STATEMENT OF OPERATIONS LOCATION
--------------------------------------------------------------------------------------------------------
CURRENCY RISK EXPOSURE
Net realized gain (loss) on forward foreign currency contracts $ (5,426,604)
Net change in unrealized appreciation (depreciation) on forward foreign currency contracts (2,612,595)
6. BORROWINGS
The Fund has entered into a credit agreement with The Bank of Nova Scotia, which
provides for a revolving credit facility to be used as leverage for the Fund.
The revolving 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 facility is up to
$120,000,000. As of June 30, 2014, the Fund had three loans outstanding under
the revolving credit facility totaling $98,905,655. The three loans, which are
all LIBOR loans, bear interest based on the adjusted LIBOR rate and are in the
amounts of $60,000,000, $26,000,000 and $12,905,655 (the U.S. Dollar equivalent
of a (euro)9,425,000 loan). For the six months ended June 30, 2014, the average
amount outstanding was $98,921,930. The high and low annual interest rates
during the six months ended June 30, 2014 were 1.22% and 1.05%, respectively,
and the weighted average interest rate was 1.07%. The weighted average interest
rate at June 30, 2014 was 1.11%. The interest rate under the credit facility is
equal to the 1-month LIBOR plus 0.85%. The Fund pays a commitment fee of 0.10%
on any day that the loan balances exceed 50% of the total commitment and 0.15%
at all other times, which is included in "Interest and fees on outstanding
loans" on the Statement of Operations. The revolving credit facility is
scheduled to expire on December 31, 2014, but can be renewed annually.
7. INDEMNIFICATION
The Fund has a variety of indemnification obligations under contracts with its
service providers. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
8. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events to the Fund through
the date the financial statements were issued, and has determined that there
were the following subsequent events:
On July 21, 2014, the Fund declared a dividend of $0.11 per share to Common
Shareholders of record on August 5, 2014, payable August 15, 2014.
On August 20, 2014, the Fund declared a dividend of $0.11 per share to Common
Shareholders of record on September 4, 2014, payable September 15, 2014.
Page 27
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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
JUNE 30, 2014 (UNAUDITED)
DIVIDEND REINVESTMENT PLAN
If your Common Shares are registered directly with the Fund or if you hold your
Common Shares with a brokerage firm that participates in the Fund's Dividend
Reinvestment Plan (the "Plan"), unless you elect, by written notice to the Fund,
to receive cash distributions, all dividends, including any capital gain
distributions, on your Common Shares will be automatically reinvested by BNY
Mellon Investment Servicing (US) Inc. (the "Plan Agent"), in additional Common
Shares under the Plan. If you elect to receive cash distributions, you will
receive all distributions in cash paid by check mailed directly to you by the
Plan Agent, as the dividend paying agent.
If you decide to participate in the Plan, the number of Common Shares you will
receive will be determined as follows:
(1) If Common Shares are trading at or above net asset value ("NAV") at
the time of valuation, the Fund will issue new shares at a price
equal to the greater of (i) NAV per Common Share on that date or
(ii) 95% of the market price on that date.
(2) If Common Shares are trading below NAV at the time of valuation, the
Plan Agent will receive the dividend or distribution in cash and
will purchase Common Shares in the open market, on the NYSE or
elsewhere, for the participants' accounts. It is possible that the
market price for the Common Shares may increase before the Plan
Agent has completed its purchases. Therefore, the average purchase
price per share paid by the Plan Agent may exceed the market price
at the time of valuation, resulting in the purchase of fewer shares
than if the dividend or distribution had been paid in Common Shares
issued by the Fund. The Plan Agent will use all dividends and
distributions received in cash to purchase Common Shares in the open
market within 30 days of the valuation date except where temporary
curtailment or suspension of purchases is necessary to comply with
federal securities laws. Interest will not be paid on any uninvested
cash payments.
You may elect to opt-out of or withdraw from the Plan at any time by giving
written notice to the Plan Agent, or by telephone at (866) 340-1104, in
accordance with such reasonable requirements as the Plan Agent and the Fund may
agree upon. If you withdraw or the Plan is terminated, you will receive a
certificate for each whole share in your account under the Plan, and you will
receive a cash payment for any fraction of a share in your account. If you wish,
the Plan Agent will sell your shares and send you the proceeds, minus brokerage
commissions.
The Plan Agent maintains all Common Shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. Common Shares in your account will be held by the
Plan Agent in non-certificated form. The Plan Agent will forward to each
participant any proxy solicitation material and will vote any shares so held
only in accordance with proxies returned to the Fund. Any proxy you receive will
include all Common Shares you have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or distributions
in Common Shares. However, all participants will pay a pro rata share of
brokerage commissions incurred by the Plan Agent when it makes open market
purchases.
Automatically reinvesting dividends and distributions does not mean that you do
not have to pay income taxes due upon receiving dividends and distributions.
Capital gains and income are realized although cash is not received by you.
Consult your financial advisor for more information.
If you hold your Common Shares with a brokerage firm that does not participate
in the Plan, you will not be able to participate in the Plan and any dividend
reinvestment may be effected on different terms than those described above.
The Fund reserves the right to amend or terminate the Plan if in the judgment of
the Board of Trustees the change is warranted. There is no direct service charge
to participants in the Plan; however, the Fund reserves the right to amend the
Plan to include a service charge payable by the participants. Additional
information about the Plan may be obtained by writing BNY Mellon Investment
Servicing (US) Inc., 301 Bellevue Parkway, Wilmington, Delaware 19809.
--------------------------------------------------------------------------------
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Fund uses to determine how
to vote proxies and information on how the Fund voted proxies relating to
portfolio investments 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 ttp://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's ("SEC") website located at
http://www.sec.gov.
Page 28
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
JUNE 30, 2014 (UNAUDITED)
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available (1) by calling (800) 988-5891; (2) on the Fund's website located
at http://www.ftportfolios.com; (3) on the SEC's website at http://www.sec.gov;
and (4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling (800) SEC-0330.
SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The Joint Annual Meeting of Shareholders of the Common Shares of Macquarie/First
Trust Global Infrastructure/Utilities Dividend & Income Fund, First Trust Energy
Income and Growth Fund, First Trust Enhanced Equity Income Fund, First
Trust/Aberdeen Global Opportunity Income Fund, First Trust Mortgage Income Fund,
First Trust Strategic High Income Fund II, First Trust/Aberdeen Emerging
Opportunity Fund, First Trust Specialty Finance and Financial Opportunities
Fund, First Trust Dividend and Income Fund, First Trust High Income Long/Short
Fund, First Trust Energy Infrastructure Fund, First Trust MLP and Energy Income
Fund and First Trust Intermediate Duration Preferred & Income Fund was held on
April 23, 2014 (the "Annual Meeting"). At the Anunual Meeting, Robert F. Keith
was elected by the Common Shareholders of the First Trust/Aberdeen Global
Opportunity Income Fund as a Class I Trustee for a three-year term expiring at
the Fund's annual meeting of shareholders in 2017. The number of votes cast for
Mr. Keith was 14,327,622, the number of votes against was 426,857 and the number
of broker non-votes was 2,655,724. James A. Bowen, Richard E. Erickson, Thomas
R. Kadlec and Niel B. Nielson are the other current and continuing Trustees.
ADVISORY AND SUB-ADVISORY AGREEMENTS
Board Considerations Regarding Continuation of Investment Management and
Sub-Advisory Agreements
The Board of Trustees of First Trust/Aberdeen Global Opportunity Income Fund
(the "Fund"), including the Independent Trustees, unanimously approved the
continuation of the Investment Management Agreement (the "Advisory Agreement")
between the Fund and First Trust Advisors L.P. (the "Advisor") and the
Investment Sub-Advisory Agreement (the "Sub-Advisory Agreement" and together
with the Advisory Agreement, the "Agreements") among the Fund, the Advisor and
Aberdeen Asset Management Inc. (the "Sub-Advisor"), at a meeting held on June
8-9, 2014. The Board of Trustees determined that the continuation of the
Agreements is in the best interests of the Fund in light of the extent and
quality of the services provided and such other matters as the Board considered
to be relevant in the exercise of its reasonable business judgment.
To reach this determination, the Board considered its duties under the
Investment Company Act of 1940, as amended (the "1940 Act"), as well as under
the general principles of state law in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. To assist the Board in its evaluation of the Agreements, the
Independent Trustees received a separate report from each of the Advisor and the
Sub-Advisor in advance of the Board meeting responding to a request for
information from counsel to the Independent Trustees. The reports, among other
things, outlined the services provided by the Advisor and the Sub-Advisor
(including the relevant personnel responsible for these services and their
experience); the advisory and sub-advisory fees for the Fund as compared to fees
charged to other clients of the Advisor and the Sub-Advisor and as compared to
fees charged by investment advisors and sub-advisors to comparable funds;
expenses of the Fund as compared to expense ratios of comparable funds; the
nature of expenses incurred in providing services to the Fund and the potential
for economies of scale, if any; financial data on the Advisor and the
Sub-Advisor; any fall-out benefits to the Advisor and the Sub-Advisor; and
information on the Advisor's and the Sub-Advisor's compliance programs.
Following receipt of this information, counsel to the Independent Trustees posed
follow-up questions to the Advisor, and the Independent Trustees and their
counsel met separately to discuss the information provided by the Advisor and
the Sub-Advisor, including the supplemental responses. The Board applied its
business judgment to determine whether the arrangements between the Fund and the
Advisor and among the Fund, the Advisor and the Sub-Advisor are reasonable
business arrangements from the Fund's perspective as well as from the
perspective of shareholders. The Board considered that shareholders chose to
invest or remain invested in the Fund knowing that the Advisor and the
Sub-Advisor manage the Fund.
In reviewing the Agreements, the Board considered the nature, extent and quality
of services provided by the Advisor and the Sub-Advisor under the Agreements.
The Board considered the Advisor's statements regarding the incremental benefits
associated with the Fund's advisor/Sub-Advisor management structure. With
respect to the Advisory Agreement, the Board considered that the Advisor is
responsible for the overall management and administration of the Fund and
reviewed the services provided by the Advisor to the Fund, including the
oversight of the Sub-Advisor. The Board noted the compliance program that had
been developed by the Advisor and considered that it includes a robust program
for monitoring the Sub-Advisor's compliance with the 1940 Act and the Fund's
investment objectives and policies. With respect to the Sub-Advisory Agreement,
the Board noted the background and experience of the Sub-Advisor's portfolio
management team. At the meeting, the Board received a presentation from
representatives of the Sub-Advisor discussing the services that the Sub-Advisor
provides to the Fund and how the Sub-Advisor manages the Fund's investments. In
light of the information presented and
Page 29
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
JUNE 30, 2014 (UNAUDITED)
the considerations made, the Board concluded that the nature, extent and quality
of services provided to the Fund by the Advisor and the Sub-Advisor under the
Agreements have been and are expected to remain satisfactory and that the
Sub-Advisor, under the oversight of the Advisor, has managed the Fund consistent
with its investment objectives and policies.
The Board considered the advisory and sub-advisory fees paid under the
Agreements. The Board considered the advisory fees charged by the Advisor to
similar funds and other non-fund clients, noting that the Advisor provides
services to one other closed end fund sub advised by the Sub-Advisor and certain
separately managed accounts that may have investment objectives and policies
similar to the Fund's. The Board noted that the Advisor charges the same
advisory fee rate to the Fund and the other closed end fund sub advised by the
Sub-Advisor and a lower advisory fee rate to the separately managed accounts.
The Board noted the Advisor's statement that the nature of the services provided
to the separately managed accounts is not comparable to those provided to the
Fund. The Board considered the sub-advisory fee and how it relates to the Fund's
overall advisory fee structure and noted that the sub-advisory fee is paid by
the Advisor from its advisory fee. The Board also considered information
provided by the Sub-Advisor as to the fees it charges to other clients, noting
that the Sub-Advisor does not manage any other funds directly comparable to the
Fund, but that the sub-advisory fee rate is the same as that received from the
Advisor for the other closed-end fund for which it serves as sub-advisor, and is
generally lower than or equal to the fees the Sub-Advisor charges to the other
North American closed-end fixed-income funds and a separate account with a
global bond mandate that it manages. In addition, the Board reviewed data
prepared by Lipper Inc. ("Lipper"), an independent source, showing the advisory
fees and expense ratios of the Fund as compared to the advisory fees and expense
ratios of an expense peer group selected by Lipper and similar data from the
Advisor for a separate peer group selected by the Advisor. The Board noted that
the Lipper and Advisor peer groups did not include any overlapping peer funds.
The Board discussed with representatives of the Advisor the limitations in
creating a relevant peer group for the Fund, including that (i) the Fund is
unique in its composition, which makes assembling peers with similar strategies
and asset mix difficult; (ii) peer funds may use different amounts and types of
leverage which have different costs associated with them or may use no leverage;
(iii) some peer funds do not employ an advisor/Sub-Advisor management structure;
(iv) some of the peer funds are larger than the Fund, which causes the Fund's
fixed expenses to be higher on a percentage basis as compared to the larger peer
funds; and (v) peer funds may have fewer investments in foreign assets as
compared to the Fund, which typically have higher custody costs. The Board took
these limitations into account in considering the peer data. In reviewing the
peer data, the Board noted that the Fund's contractual advisory fee was below
the median of the Lipper peer group.
The Board also considered performance information for the Fund, noting that the
performance information included the Fund's quarterly performance report, which
is part of the process that the Board has established for monitoring the Fund's
performance and portfolio risk on an ongoing basis. The Board determined that
this process continues to be effective for reviewing the Fund's performance. In
addition to the Board's ongoing review of performance, the Board also received
data prepared by Lipper comparing the Fund's performance to a performance peer
universe selected by Lipper and to a blended benchmark. In reviewing the Fund's
performance as compared to the performance of the Lipper performance peer
universe, the Board took into account the limitations described above with
respect to creating a relevant peer group for the Fund. The Board also
considered the Fund's dividend yield as of March 31, 2014 and information
provided by the Advisor on the impact of leverage on the Fund's returns. In
addition, the Board compared the Fund's premium/discount to the average and
median premium/discount over the past eight quarters of the Advisor peer group
over the same period and considered factors that may impact a fund's
premium/discount.
On the basis of all the information provided on the fees, expenses and
performance of the Fund, the Board concluded that the advisory and sub-advisory
fees were reasonable and appropriate in light of the nature, extent and quality
of services provided by the Advisor and Sub-Advisor under the Agreements.
The Board noted that the Advisor has continued to invest in personnel and
infrastructure and considered whether fee levels reflect any economies of scale
for the benefit of shareholders. The Board determined that due to the Fund's
closed-end structure, the potential for realization of economies of scale as
Fund assets grow was not a material factor to be considered. The Board also
considered the costs of the services provided and profits realized by the
Advisor from serving as investment advisor to the Fund for the twelve months
ended December 31, 2013, as well as product-line profitability data for the same
period, as set forth in the materials provided to the Board. The Board noted the
inherent limitations in the profitability analysis, and concluded that the
Advisor's estimated profitability appeared to be not excessive in light of the
services provided to the Fund. In addition, the Board considered fall-out
benefits described by the Advisor that may be realized from its relationship
with the Fund, including the Advisor's compensation for fund reporting services
pursuant to a separate Fund Reporting Services Agreement.
The Board considered the Sub-Advisor's representation that because it manages
the Fund in a similar fashion to other accounts it is able to achieve economies
of scale through relationships with brokers, administrative systems and other
operational efficiencies and that while it expects operating costs in general to
continue to rise, it continues to expect to experience the benefits of economies
of scale. The Board considered that the sub-advisory fee rate was negotiated at
arm's length between the Advisor and the Sub-Advisor, an unaffiliated third
party. The Board also considered data provided by the Sub-Advisor as to the
profitability of the Sub-Advisory Agreement to the Sub-Advisor. The Board noted
the inherent limitations in the profitability analysis and concluded that the
profitability analysis for the Advisor was more relevant, although the
profitability of the Sub-Advisory Agreement appeared to be not excessive in
light of the services provided
Page 30
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
JUNE 30, 2014 (UNAUDITED)
to the Fund. The Board considered fall-out benefits realized by the Sub-Advisor
from its relationship with the Fund, and noted that while the Sub-Advisor may
enter into soft-dollar arrangements, the Fund invests mainly in fixed-income
securities, and there were no credits generated by the Fund from any commission
sharing arrangements.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, unanimously determined that the terms
of the Agreements continue to be fair and reasonable and that the continuation
of the Agreements is in the best interests of the Fund. No single factor was
determinative in the Board's analysis.
RISK CONSIDERATIONS
Risks are inherent in all investing. The following summarizes some, but not all,
of the risks that should be considered for the Fund. For additional information
about the risks associated with investing in the Fund, please see the Fund's
prospectus and statement of additional information, as well as other Fund
regulatory filings.
INVESTMENT AND MARKET RISK: An investment in the Fund's Common Shares is subject
to investment risk, including the possible loss of the entire principal
invested. An investment in Common Shares represents an indirect investment in
the securities owned by the Fund, which include a global bond portfolio of
investment grade and below-investment grade government and corporate debt
securities. The value of these securities, like other market investments, may
move up or down, sometimes rapidly and unpredictably. Common Shares at any point
in time may be worth less than the original investment, even after taking into
account the reinvestment of Fund dividends and distributions. Security prices
can fluctuate for several reasons including the general condition of the bond
market, or when political or economic events affecting the issuers occur. When
the Advisor or Sub-Advisor determines that it is temporarily unable to follow
the Fund's investment strategy or that it is impractical to do so (such as when
a market disruption event has occurred and trading in the securities is
extremely limited or absent), the Fund may take temporary defensive positions.
NON-INVESTMENT GRADE SECURITIES RISK: The Fund may invest up to 60% of its
Managed Assets in non-investment grade securities. Noninvestment grade
securities are rated below "Baa3" by Moody's Investors Service, Inc., below
"BBB-" by Standard & Poor's, or comparably rated by another nationally
recognized statistical rating organization or, if unrated, determined by the
Sub-Advisor to be of comparable credit quality. Non-investment grade debt
instruments are commonly referred to as "high-yield" or "junk" bonds and are
considered speculative with respect to the issuer's capacity to pay interest and
repay principal and are susceptible to default or decline in market value due to
adverse economic and business developments. The market values for high-yield
securities tend to be very volatile, and these securities are less liquid than
investment grade debt securities.
EMERGING MARKETS RISK: The Fund may invest in fixed-income securities of issuers
located in countries considered to be emerging markets. Investments in such
securities are considered speculative. In addition to the general risks of
investing in non-U.S. securities, heightened risks of investing in emerging
markets securities include: smaller market capitalization of securities markets,
which may suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; and possible restrictions on repatriation of
investment income and capital. Furthermore, foreign investors may be required to
register the proceeds of sales, and future economic or political crises could
lead to price controls, forced mergers, expropriation or confiscatory taxation,
seizure, nationalization or creation of government monopolies. The currencies of
emerging market countries may experience significant declines against the U.S.
dollar, and devaluation may occur subsequent to investments in these currencies
by the Fund. Inflation and rapid fluctuations in inflation rates have had, and
may continue to have, negative effects on the economies and securities markets
of certain emerging market countries. The risks associated with investing in
emerging market securities also include: greater political uncertainties,
dependence on international trade or development assistance, overburdened
infrastructures and environmental problems.
FIXED-INCOME SECURITIES RISK: Debt securities, including high yield securities,
are subject to certain risks, including: (i) issuer risk, which is the risk that
the value of fixed-income securities may decline for a number of reasons which
directly relate to the issuer, such as management performance, financial
leverage and reduced demand for the issuer's goods and services; (ii)
reinvestment risk, which is the risk that income from the Fund's portfolio will
decline if the Fund invests the proceeds from matured, traded or called bonds at
market interest rates that are below the Fund portfolio's current earnings rate;
(iii) prepayment risk, which is the risk that 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 in lower yielding
securities; and (iv) credit risk, which is the risk that a security in the
Fund's portfolio will decline in price or the issuer fails to make interest
payments when due because the issuer of the security experiences a decline in
its financial status.
INTEREST RATE RISK: The Fund's portfolio is also subject to interest rate risk.
Interest rate risk is the risk that fixed-income securities will decline in
value because of changes in market interest rates. Investments in debt
securities with long-term maturities may experience significant price declines
if long-term interest rates increase.
NON-U.S. ISSUER RISK: Investments in the securities and instruments of non-U.S.
issuers involve certain considerations and risks not ordinarily associated with
investments in securities and instruments of U.S. issuers. Non-U.S. companies
are not generally subject to uniform accounting, auditing and financial
standards and requirements comparable to those applicable to U.S. companies.
Non-U.S. securities exchanges, brokers and listed companies may be subject to
less government supervision and regulation than exists in the United States.
Dividend and interest income may be subject to withholding and other non-U.S.
taxes, which may adversely affect the net return on
Page 31
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
JUNE 30, 2014 (UNAUDITED)
such investments. There may be difficulty in obtaining or enforcing a court
judgment abroad. Non-U.S. investments may also involve risks associated with the
level of currency exchange rates, less complete financial information about the
issuers, less market liquidity, more market volatility and political
instability. Future political and economic developments, the possible seizure or
nationalization of non-U.S. holdings, the possible establishment of exchange
controls or freezes on the convertibility of currency, or the adoption of other
governmental restrictions might adversely affect an investment in non-U.S.
securities.
EUROPE RISK: The Fund invests in securities issued by companies operating in
Europe. The Fund is therefore subject to certain risks associated specifically
with Europe. A significant number of countries in Europe are member states in
the European Union (the "EU"), and the member states no longer control their own
monetary policies by directing independent interest rates for their currencies.
In these member states, the authority to direct monetary policies, including
money supply and official interest rates for the Euro, is exercised by the
European Central Bank. In addition, the continued implementation of the EU
provisions and recent rapid political and social change throughout Europe make
the extent and nature of future economic development in the region and their
effect on securities issued by European companies impossible to predict. The
European sovereign debt crisis has resulted in a weakened Euro and has put into
question the future financial prospects of the European region as a whole.
CURRENCY RISK: The value of securities denominated or quoted in foreign
currencies may be adversely affected by fluctuations in the relative currency
exchange rates and by exchange control regulations. The Fund's investment
performance may be negatively affected by a devaluation of a currency in which
the Fund's investments are denominated or quoted. Further, the Fund's investment
performance may be significantly affected, either positively or negatively, by
currency exchange rates because the U.S. dollar value of securities denominated
or quoted in another currency will increase or decrease in response to changes
in the value of such currency in relation to the U.S. dollar. While certain of
the Fund's non-U.S. dollar-denominated securities may be hedged into U.S.
dollars, hedging may not alleviate all currency risks.
LEVERAGE RISK: The use of leverage results in additional risks and can magnify
the effect of any losses. The funds borrowed pursuant to a leverage borrowing
program constitute a substantial lien and burden by reason of their prior claim
against the income of the Fund and against the net assets of the Fund in
liquidation. The rights of lenders to receive payments of interest on and
repayments of principal on any borrowings made by the Fund under a leverage
borrowing program are senior to the rights of holders of Common Shares with
respect to payment of dividends or upon liquidation. If the Fund is not in
compliance with certain credit facility provisions, the Fund may not be
permitted to declare dividends or other distributions, including dividends and
distributions with respect to Common Shares or purchase Common Shares.
GOVERNMENT SECURITIES RISK: The ability of a government issuer, especially in an
emerging market country, to make timely and complete payments on its debt
obligations will be strongly influenced by the government issuer's balance of
payments, including export performance, its access to international credits and
investments, fluctuations of interest rates and the extent of its foreign
reserves. A country whose exports are concentrated in a few commodities or whose
economy depends on certain strategic imports could be vulnerable to fluctuations
in international prices of these commodities or imports. To the extent that a
country receives payment for its exports in currencies other than U.S. dollars,
its ability to make debt payments denominated in U.S. dollars could be adversely
affected. If a government issuer cannot generate sufficient earnings from
foreign trade to service its external debt, it may need to depend on continuing
loans and aid from foreign governments, commercial banks, and multinational
organizations. There are no bankruptcy proceedings similar to those in the
United States by which defaulted government debt may be collected. Additional
factors that may influence a government issuer's ability or willingness to
service debt include, but are not limited to, a country's cash flow situation,
the availability of sufficient foreign exchange on the date a payment is due,
the relative size of its debt service burden to the economy as a whole, and the
issuer's policy towards the International Monetary Fund, the International Bank
for Reconstruction and Development and other international agencies to which a
government debtor may be subject.
NON-U.S. GOVERNMENT SECURITIES RISK: Economies and social and political climates
in individual countries may differ unfavorably from the United States. Non-U.S.
economies may have less favorable rates of growth of gross domestic product,
rates of inflation, currency valuation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many countries have
experienced extremely high rates of inflation for many years. Unanticipated
economic, political and social developments may also affect the values of the
Fund's investments and limit the availability of additional investments in such
countries. Furthermore, such developments may significantly disrupt the
financial markets or interfere with the Fund's ability to enforce its rights
against non-U.S. government issuers. Investments in debt instruments of issuers
located in emerging market countries are considered speculative. Heightened
risks of investing in emerging markets government debt include: smaller market
capitalization of securities markets, which may suffer periods of relative
illiquidity; significant price volatility; restrictions on foreign investment;
and possible repatriation of investment income and capital. Furthermore, foreign
investors may be required to register the proceeds of sales and future economic
or political crises could lead to price controls, forced mergers, expropriation
or confiscatory taxation, seizure, nationalization or creation of government
monopolies. The currencies of emerging market countries may experience
significant declines against the U.S. dollar, and devaluation may occur
subsequent to investments in these currencies by the Fund. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, negative
effects on the economies and securities markets of certain emerging market
countries.
Page 32
FIRST TRUST
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187
INVESTMENT SUB-ADVISOR
Aberdeen Asset Management Inc.
1735 Market Street, 32nd Floor
Philadelphia, PA 19103
ADMINISTRATOR,
FUND ACCOUNTANT &
TRANSFER AGENT
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
The Bank of New York Mellon
101 Barclay Street, 20th Floor
New York, NY 10286
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
[BLANK BACK COVER]
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) Not applicable.
(b) Esther Chan is no longer a Portfolio Manager of Emerging Market Debt for
the Registrant. James Athey was added as Investment Manager of Global
Macro. The rest of the portfolio managers remain the same.
(b)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
JAMES ATHEY is an Investment Manager on the Global Macro Team. James joined
Aberdeen in 2001 through the Graduate Recruitment Program.
(b)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
AND POTENTIAL CONFLICTS OF INTEREST
OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
INFORMATION PROVIDED AS OF JUNE 30, 2014
(assets in millions).
# of Accounts
-------------
Managed for Total Assets
------------ ------------
Total which for which
----- ------ ----------
Name of Portfolio Manager # of Advisory Fee Advisory Fee
-------------------------- ----- ------------- ------------
or Team Member Accounts Total is Based on is Based on
-------------- ---------- ------ ------------ -----------
Type of Accounts*** Managed Assets Performance Performance
------------------- ------- ------ ----------- -----------
1. James Athey Registered Investment Companies: 8 $369.96 0 $0
Other Pooled Investment Vehicles: 103 $28,498.65 0 $0
Other Accounts: 226 $63,444.80 2 $327.04
POTENTIAL CONFLICTS OF INTERESTS
AS OF JUNE 30, 2014
In accordance with legal requirements in the various jurisdictions in which they
operate, and their own Conflicts of Interest policies, all subsidiaries of
Aberdeen Asset Management PLC, (together Aberdeen), have in place arrangements
to identify and manage Conflicts of Interest that may arise between them and
their clients or between their different clients. Where Aberdeen does not
consider that these arrangements are sufficient to manage a particular conflict,
it will inform the relevant client(s) of the nature of the conflict so that the
client(s) may decide how to proceed.
The portfolio managers' management of "other accounts", including (1) mutual
funds; (2) other pooled investment vehicles; and (3) other accounts that may pay
advisory fees that are based on account performance ("performance-based fees"),
may give rise to potential conflicts of interest in connection with their
management of a Fund's investments, on the one hand, and the investments of the
other accounts, on the other. The other accounts may have the same investment
objective as a Fund. Therefore, a potential conflict of interest may arise as a
result of the identical investment objectives, whereby the portfolio manager
could favor one account over another. However, Aberdeen believes that these
risks are mitigated by the fact that: (i) accounts with like investment
strategies managed by a particular portfolio manager are generally managed in a
similar fashion, subject to exceptions to account for particular investment
restrictions or policies applicable only to certain accounts, differences in
cash flows and account sizes, and similar factors; and (ii) portfolio manager
personal trading is monitored to avoid potential conflicts. In addition,
Aberdeen has adopted trade allocation procedures that require equitable
allocation of trade orders for a particular security among participating
accounts.
In some cases, another account managed by the same portfolio manager may
compensate Aberdeen based on the performance of the portfolio held by that
account. The existence of such performance-based fees may create additional
conflicts of interest for the portfolio manager in the allocation of management
time, resources and investment opportunities.
Another potential conflict could include instances in which securities
considered as investments for a Fund also may be appropriate for other
investment accounts managed by Aberdeen or its affiliates. Whenever decisions
are made to buy or sell securities by the Fund and one or more of the other
accounts simultaneously, Aberdeen may aggregate the purchases and sales of the
securities and will allocate the securities transactions in a manner that it
believes to be equitable under the circumstances. As a result of the
allocations, there may be instances where the Fund will not participate in a
transaction that is allocated among other accounts. While these aggregation and
allocation policies could have a detrimental effect on the price or amount of
the securities available to a Fund from time to time, it is the opinion of
Aberdeen that the benefits from the Aberdeen organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions. Aberdeen
has adopted policies that are designed to eliminate or minimize conflicts of
interest, although there is no guarantee that procedures adopted under such
policies will detect each and every situation in which a conflict arises.
(b)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
INFORMATION PROVIDED AS OF JUNE 30, 2014
Aberdeen Asset Management PLC's ("Aberdeen") remuneration policies are designed
to support its business strategy, as a leading international asset manager. The
objective is to attract, retain and reward talented individuals for the delivery
of sustained, superior returns for its clients and shareholders. Aberdeen
operates in a highly competitive international employment market, and aims to
maintain its strong track record of success in developing and retaining talent.
Aberdeen's policy is to recognize corporate and individual achievements each
year through an appropriate annual bonus scheme. The aggregate value of awards
in any year is dependent on the group's overall performance and profitability.
Consideration is also given to the levels of bonuses paid in the market.
Individual awards which are payable to all members of staff are determined by a
rigorous assessment of achievement against defined objectives.
A long-term incentive plan for key staff and senior employees comprises of a
mixture of cash and deferred shares in Aberdeen PLC or select Aberdeen funds
(where applicable). Overall compensation packages are designed to be competitive
relative to the investment management industry.
Base Salary
Aberdeen's policy is to pay a fair salary commensurate with the individual's
role, responsibilities and experience, and having regard to the market rates
being offered for similar roles in the asset management sector and other
comparable companies. Any increase is to reflect inflation and is applied in a
manner consistent with other Aberdeen employees; any other increases must be
justified by reference to promotion or changes in responsibilities.
Annual Bonus
Aberdeen's policy is to recognize corporate and individual achievements each
year through an appropriate annual bonus scheme. The Remuneration Committee of
Aberdeen determines the key performance indicators that will be applied in
considering the overall size of the bonus pool. In line with practice amongst
other asset management companies, individual bonuses are not subject to an
absolute cap. However, the aggregate size of the bonus pool is dependent on the
group's overall performance and profitability. Consideration is also given to
the levels of bonuses paid in the market. Individual awards are determined by a
rigorous assessment of achievement against defined objectives, and are reviewed
and approved by the Remuneration Committee.
Aberdeen has a deferral policy which is intended to assist in the retention of
talent and to create additional alignment of executives' interests with
Aberdeen's sustained performance and, in respect of the deferral into funds,
managed by Aberdeen, to align the interest of asset managers with our clients.
Staff performance is reviewed formally at least once a year. The review process
evaluates the various aspects that the individual has contributed to the
Aberdeen, and specifically, in the case of portfolio managers, to the relevant
investment team. Discretionary bonuses are based on client service, asset growth
and the performance of the respective portfolio manager. Overall participation
in team meetings, generation of original research ideas and contribution to
presenting the team externally are also evaluated.
In the calculation of a portfolio management team's bonus, the Aberdeen takes
into consideration investment matters (which include the performance of funds,
adherence to the company investment process, and quality of company meetings) as
well as more subjective issues such as team participation and effectiveness at
client presentations. To the extent performance is factored in, such performance
is not judged against any specific benchmark and is evaluated over the period of
a year - January to December. The pre- or after-tax performance of an individual
account is not considered in the determination of a portfolio manager's
discretionary bonus; rather the review process evaluates the overall performance
of the team for all of the accounts they manage.
Portfolio manager performance on investment matters is judged over all of the
accounts the portfolio manager contributes to and is documented in the appraisal
process. A combination of the team's and individual's performance is considered
and evaluated.
Although performance is not a substantial portion of a portfolio manager's
compensation, the Aberdeen also recognizes that fund performance can often be
driven by factors outside one's control, such as (irrational) markets, and as
such pays attention to the effort by portfolio managers to ensure integrity of
our core process by sticking to disciplines and processes set, regardless of
momentum and 'hot' themes. Short-terming is thus discouraged and
trading-oriented managers will thus find it difficult to thrive in the Aberdeen
environment. Additionally, if any of the aforementioned undue risks were to be
taken by a portfolio manager, such trend would be identified via Aberdeen's
dynamic compliance monitoring system.
(b)(4) DISCLOSURE OF SECURITIES OWNERSHIP
THE INFORMATION BELOW IS AS OF JUNE 30, 2014
Name of Portfolio Manager Dollar ($) Range of
------------------------- -------------------
or Fund Shares
-- -----------
Team Member Beneficially Owned
----------- ------------------
James Athey $0
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of 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 Global Opportunity Income Fund
-----------------------------------------------------
By (Signature and Title)* /s/ Mark R. Bradley
----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
Date: August 21, 2014
------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Mark R. Bradley
----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
Date: August 21, 2014
------------------
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: August 21, 2014
------------------
* Print the name and title of each signing officer under his or her signature.
EX-99.CERT
2
certs_302.txt
SECTION 302 CERTIFICATION
CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302
OF THE SARBANES-OXLEY ACT
I, Mark R. Bradley, certify that:
1. I have reviewed this report on Form N-CSR of First Trust/Aberdeen Global
Opportunity Income Fund;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations, changes in net
assets, and cash flows (if the financial statements are required to
include a statement of cash flows) of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940) and
internal control over financial reporting (as defined in Rule 30a-3(d)
under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of a
date within 90 days prior to the filing date of this report based on
such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the 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; and
5. The registrant's other certifying officer(s) and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 21, 2014 /s/ Mark R. Bradley
-------------------- ----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302
OF THE SARBANES-OXLEY ACT
I, James M. Dykas, certify that:
1. I have reviewed this report on Form N-CSR of First Trust/Aberdeen Global
Opportunity Income Fund;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations, changes in net
assets, and cash flows (if the financial statements are required to
include a statement of cash flows) of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940) and
internal control over financial reporting (as defined in Rule 30a-3(d)
under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of a
date within 90 days prior to the filing date of this report based on
such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the 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; and
5. The registrant's other certifying officer(s) and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 21, 2014 /s/ James M. Dykas
-------------------- ----------------------------------------
James M. Dykas, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
EX-99.906 CERT
3
certs_906.txt
SECTION 906 CERTIFICATION
CERTIFICATION PURSUANT TO RULE 30A-2(B) UNDER THE 1940 ACT AND SECTION 906
OF THE SARBANES-OXLEY ACT
I, Mark R. Bradley, Chairman of the Board, President and Chief Executive Officer
of First Trust/Aberdeen Global Opportunity Income Fund (the "Registrant"),
certify that:
1. The Form N-CSR of the Registrant (the "Report") fully complies with
the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Registrant.
Date: August 21, 2014 /s/ Mark R. Bradley
---------------------- ----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
I, James M. Dykas, Treasurer, Chief Financial Officer and Chief Accounting
Officer of First Trust/Aberdeen Global Opportunity Income Fund (the
"Registrant"), certify that:
1. The Form N-CSR of the Registrant (the "Report") fully complies with
the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Registrant.
Date: August 21, 2014 /s/ James M. Dykas
---------------------- ----------------------------------------
James M. Dykas, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)