N-Q 1 a17-12281_3nq.htm N-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number:

811-06094

 

 

Exact name of registrant as specified in charter:

Aberdeen Latin America Equity Fund, Inc.

 

 

Address of principal executive offices:

1735 Market Street, 32nd Floor

Philadelphia, PA 19103

 

 

Name and address of agent for service:

Ms. Andrea Melia

Aberdeen Asset Management Inc.

1735 Market Street, 32nd Floor

Philadelphia, PA 19103

 

 

Registrant’s telephone number, including area code:

1-800-522-5465

 

 

Date of fiscal year end:

December 31

 

 

Date of reporting period:

March 31, 2017

 


 

Item 1. Schedule of Investments

 

The schedule of investments for the three-month period ended March 31, 2017 is filed herewith.

 


 

Portfolio of Investments (unaudited)

 

As of March 31, 2017

 

Shares

 

Description

 

Industry and Percentage
of Net Assets

 

Value
(US$)

 

 

 

 

 

 

 

 

 

LONG-TERM INVESTMENTS—98.7%

 

COMMON STOCKS—79.7%

 

ARGENTINA—2.2%

 

124,000

 

Tenaris SA, ADR

 

Energy Equipment & Services— 2.2%

 

$

4,233,360

 

 

 

 

 

 

 

 

 

BRAZIL—43.2%

1,618,941

 

AMBEV SA

 

Beverages— 4.8%

 

9,432,532

 

479,354

 

Arezzo Industria e Comercio SA

 

Textiles, Apparel & Luxury Goods— 2.5%

 

4,804,871

 

827,563

 

BM&F Bovespa SA

 

Capital Markets— 2.6%

 

5,099,243

 

388,868

 

BRF SA

 

Food Products— 2.4%

 

4,795,948

 

285,586

 

Cia Hering

 

Specialty Retail— 0.8%

 

1,639,296

 

255,000

 

Iguatemi Empresa de Shopping Centers SA

 

Real Estate Management & Development— 1.4%

 

2,671,692

 

20,900

 

Itau Unibanco Holding SA

 

Banks— 0.1%

 

225,450

 

405,000

 

Linx SA

 

Software— 1.1%

 

2,147,512

 

291,850

 

Localiza Rent a Car SA

 

Road & Rail— 2.0%

 

3,884,683

 

1,199,830

 

Lojas Renner SA

 

Multiline Retail— 5.4%

 

10,654,595

 

402,334

 

Multiplan Empreendimentos Imobiliarios SA

 

Real Estate Management & Development— 4.4%

 

8,520,649

 

268,300

 

Natura Cosmeticos SA

 

Personal Products— 1.3%

 

2,486,227

 

720,887

 

Odontoprev SA

 

Health Care Providers & Services— 1.3%

 

2,602,064

 

299,912

 

TOTVS SA

 

Software— 1.4%

 

2,658,455

 

311,000

 

Ultrapar Participacoes SA, ADR

 

Oil, Gas & Consumable Fuels— 3.6%

 

7,069,030

 

760,259

 

Vale SA, ADR

 

Metals & Mining— 3.7%

 

7,222,460

 

179,848

 

Valid Solucoes e Servicos de Seguranca em Meios de Pagamento e Identificacao SA

 

Commercial Services & Supplies— 0.7%

 

1,298,334

 

704,094

 

WEG SA

 

Machinery— 2.0%

 

3,913,383

 

289,400

 

Wilson Sons Ltd., BDR

 

Transportation Infrastructure— 1.7%

 

3,281,703

 

 

 

 

 

 

 

84,408,127

 

 

 

 

 

 

 

 

 

CHILE—9.7%

 

 

 

 

 

33,039,969

 

Banco Santander Chile

 

Banks— 1.0%

 

2,068,394

 

94,000

 

Banco Santander Chile, ADR

 

Banks— 1.2%

 

2,357,520

 

206,000

 

Embotelladora Andina SA, ADR, Class A (a)

 

Beverages— 2.4%

 

4,632,940

 

1,380,000

 

Parque Arauco SA

 

Real Estate Management & Development— 1.9%

 

3,680,697

 

740,000

 

S.A.C.I. Falabella

 

Multiline Retail— 3.2%

 

6,176,806

 

 

 

 

 

 

 

18,916,357

 

 

 

 

 

 

 

 

 

COLOMBIA—1.4%

 

 

 

 

 

290,000

 

Bancolombia SA

 

Banks— 1.4%

 

2,648,853

 

 

 

 

 

 

 

 

 

MEXICO—21.3%

 

 

 

 

 

581,500

 

Arca Continental SAB de CV

 

Beverages— 2.1%

 

4,037,709

 

92,502

 

Fomento Economico Mexicano SAB de CV, ADR

 

Beverages— 4.2%

 

8,188,277

 

93,981

 

Grupo Aeroportuario del Centro Norte SAB de CV, ADR

 

Transportation Infrastructure— 2.1%

 

4,058,100

 

27,034

 

Grupo Aeroportuario del Sureste SAB de CV, ADR, B Shares

 

Transportation Infrastructure— 2.4%

 

4,683,370

 

1,360,797

 

Grupo Financiero Banorte SAB de CV

 

Banks— 4.0%

 

7,830,911

 

937,000

 

Grupo Financiero Santander Mexico SAB de CV

 

Banks— 0.9%

 

1,690,601

 

1,020,095

 

Grupo Lala SAB de CV

 

Food Products— 0.9%

 

1,851,424

 

 

See Notes to Portfolio of Investments.

 

Aberdeen Latin America Equity Fund, Inc.

 


 

Portfolio of Investments (unaudited) (concluded)

 

As of March 31, 2017

 

968,900

 

Kimberly-Clark de Mexico SAB de CV

 

Household Products— 1.1%

 

$

2,103,689

 

446,600

 

Organizacion Soriana SAB de CV (b)

 

Food & Staples Retailing— 0.5%

 

1,048,382

 

2,678,200

 

Wal-Mart de Mexico SAB de CV

 

Food & Staples Retailing— 3.1%

 

6,179,719

 

 

 

 

 

 

 

41,672,182

 

 

 

 

 

 

 

 

 

PERU—1.9%

 

 

 

 

 

1,255,674

 

Cementos Pacasmayo SAA

 

Construction Materials— 1.5%

 

2,821,739

 

272,283

 

Fossal SAA (b)

 

Metals & Mining— —%

 

33,527

 

243,511

 

Grana y Montero SA, ADR

 

Construction & Engineering— 0.4%

 

762,190

 

 

 

 

 

 

 

3,617,456

 

 

 

Total Common Stocks

 

 

 

155,496,335

 

 

 

 

 

 

 

 

 

PREFERRED STOCKS—19.0%

 

 

 

 

 

BRAZIL—18.3%

 

 

 

 

 

1,548,350

 

Banco Bradesco SA, Preferred Shares

 

Banks— 8.2%

 

16,014,685

 

391,800

 

Bradespar SA, Preferred Shares

 

Metals & Mining— 1.4%

 

2,739,571

 

1,271,744

 

Itau Unibanco Holding SA, ADR, Preferred Shares

 

Banks— 7.9%

 

15,349,950

 

185,117

 

Vale SA, ADR, Preferred Shares

 

Metals & Mining— 0.8%

 

1,662,351

 

 

 

 

 

 

 

35,766,557

 

 

 

 

 

 

 

 

 

CHILE—0.7%

 

 

 

 

 

318,000

 

Embotelladora Andina SA, Class B, Preferred Shares

 

Beverages— 0.7%

 

1,234,074

 

 

 

Total Preferred Stocks

 

 

 

37,000,631

 

 

 

 

 

 

 

 

 

PRIVATE EQUITY—0.0%

 

 

 

 

 

GLOBAL—0.0%*

 

 

 

 

 

2,237,292

(c)

Emerging Markets Ventures I, L.P. (b)(d)(e)(f)(g)(h)

 

Private Equity— 0.0%

 

46,580

 

 

 

Total Private Equity—(cost $762,816)

 

46,580

 

 

 

Total Long-Term Investments—98.7% (cost $160,649,278)

 

192,543,546

 

 

 

 

 

 

 

 

 

Shares

 

Description

 

Value
(US$)

 

SHORT-TERM INVESTMENT—1.0%

 

 

 

 

 

UNITED STATES—1.0%

 

 

 

 

 

2,010,455

 

State Street Institutional U.S. Government Money Market Fund(i)

 

2,010,455

 

 

 

Total Short-Term Investment—1.0% (cost $2,010,455)

 

2,010,455

 

 

 

Total Investments—99.7% (cost $162,659,733) (j)

 

194,554,001

 

 

 

Other Assets in Excess of Liabilities—0.3%

 

649,926

 

 

 

Net Assets—100.0%

 

 

 

$

195,203,927

 

 

(a)                                 This share class contains full voting rights and no preference on dividends. The two share classes of this company are formally labeled as preferred.

(b)                                 Non-income producing security.

(c)                                  Represents contributed capital.

(d)                                 Fair Values are determined pursuant to procedures approved by the Fund’s Board of Directors. Unless otherwise noted, securities are valued by applying valuation factors to the exchange traded price. See Note (a) of the accompanying Notes to Portfolio of Investments.

(e)                                  Illiquid security.

(f)                                   In liquidation.

(g)                                  As of March 31, 2017, the aggregate amount of open commitments for the Fund is $262,708.

(h)                                 Restricted security, not readily marketable. See Note (b) of the accompanying Notes to Portfolio of Investments.

 

See Notes to Portfolio of Investments.

 


 

Portfolio of Investments (unaudited) (concluded)

 

As of March 31, 2017

 

(i)                                     Registered investment company advised by State Street Global Advisors.

(j)                                    See accompanying Notes to Portfolio of Investments for tax unrealized appreciation/(depreciation) of securities.

*                                         “Global” is the percentage attributable to the Fund’s holdings in a private equity fund which invests globally and is not categorized under a particular country.

 

ADR                     American Depositary Receipt

BDR                     Brazilian Depositary Receipt

 

See Notes to Portfolio of Investments.

 


 

Notes to Portfolio of Investments (unaudited) (concluded)

 

March 31, 2017

 

Summary of Significant Accounting Policies

 

a. Security Valuation:

 

The Fund values its securities at current market value or fair value, consistent with regulatory requirements. “Fair Value” is defined in the Fund’s Valuation and Liquidity Procedures as the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants without a compulsion to contract at the measurement date.

 

Equity securities that are traded on an exchange are valued at the last quoted sale price on the principal exchange on which the security is traded at the “Valuation Time” subject to application, when appropriate, of the valuation factors described in the paragraph below. Under normal circumstances, the Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4:00 p.m. Eastern Time). In the absence of a sale price, the security is valued at the mean of the bid/ask price quoted at the close on the principal exchange on which the security is traded. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Closed-end funds and exchange-traded funds (“ETFs”) are valued at the market price of the security at the Valuation Time. A security using any of these pricing methodologies is determined to be a Level 1 investment.

 

Foreign equity securities that are traded on foreign exchanges that close prior to the Valuation Time are valued by applying valuation factors to the last sale price or the mean price as noted above. Valuation factors are provided by an independent pricing service provider approved by the Fund’s Board of Directors (the “Board”). These valuation factors are used when pricing the Fund’s portfolio holdings to estimate market movements between the time foreign markets close and the time the Fund values such foreign securities. These valuation factors are based on inputs such as depositary receipts, indices, futures, sector indices/ETFs, exchange rates, and local exchange opening and closing prices of each security. When prices with the application of valuation factors are utilized, the value assigned to the foreign securities may not be the same as quoted or published prices of the securities on their primary markets. A security that applies a valuation factor is determined to be a Level 2 investment because the exchange-traded price has been adjusted. Valuation factors are not utilized if the independent pricing service provider is unable to provide a valuation factor or if the valuation factor falls below a predetermined threshold; in such case, the security is determined to be a Level 1 investment.

 

Short-term investments are comprised of cash and cash equivalents invested in short-term investment funds which are redeemable daily. The Fund sweeps available cash into the State Street Institutional U.S. Government Money Market Fund; which has elected to qualify as a “government money market fund” pursuant to Rule 2a-7 under the 1940 Act, and has an objective to maintain a $1.00 per share net asset value (“NAV”), and which is not guaranteed.  Generally, these investment types are categorized as Level 1 investments.

 

In the event that a security’s market quotations are not readily available or are deemed unreliable (for reasons other than because the foreign exchange on which it trades closes before the Valuation Time), the security is valued at fair value as determined by the Fund’s Pricing Committee, taking into account the relevant factors and surrounding circumstances using valuation policies and procedures approved and established by the Board. A security that has been fair valued by the Fund’s Pricing Committee may be classified as Level 2 or Level 3 depending on the nature of the inputs.

 

The Fund may also invest in private equity private placement securities, which represented 0.02% of the net assets of the Fund as of March 31, 2017. The private equity private placement security in which the Fund is invested is deemed to be a restricted security. In the absence of a readily ascertainable market value, this security is valued at fair value as determined in good faith by, or under the direction of the Board, pursuant to valuation policies and procedures established by the Board. The Fund’s estimate of fair value assumes a willing buyer and a willing seller neither of whom are acting under the compulsion to buy or sell. Although this security may be resold in privately negotiated transactions, the price realized on such sale could differ from the price originally paid by the Fund or the current carrying values, and the difference could be material. This security is stated at fair value as determined by the Fund’s Pricing Committee by utilizing the net asset valuations provided by the underlying fund as a practical expedient. In determining the fair value of this investment, management uses the market approach which includes as the primary input the capital balance reported; however, adjustments to the reported capital balance may be made based on various factors, including, but not limited to,

 


 

Notes to Portfolio of Investments (unaudited) (concluded)

 

March 31, 2017

 

the attributes of the interest held, including the rights and obligations, and any restrictions or illiquidity of such interests, and the fair value of this private equity investment.

 

In accordance with the authoritative guidance on fair value measurements and disclosures under accounting principles generally accepted in the United States of America (“GAAP”), the Fund discloses the fair value of its investments using a three-level hierarchy that classifies the inputs to valuation techniques used to measure the fair value. The hierarchy assigns Level 1 measurements to valuations based upon unadjusted quoted prices in active markets for identical assets, Level 2 measurements to valuations based upon other significant observable inputs, including adjusted quoted prices in active markets for similar assets, and Level 3 measurements to valuations based upon unobservable inputs that are significant to the valuation. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability, which are based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The three-level hierarchy of inputs is summarized below:

 

Level 1 — quoted prices in active markets for identical investments;

Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, and credit risk); or

Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).

 

The following is a summary of the inputs used as of March 31, 2017 in valuing the Fund’s investments and other financial instruments at fair value. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Please refer to the Portfolio of Investments for a detailed breakout of the security types:

 

Investments, at Value 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Long-Term Investments

 

 

 

 

 

 

 

 

 

Other

 

$

192,496,966

 

$

—

 

$

—

 

$

192,496,966

 

Short-Term Investment

 

2,010,455

 

—

 

—

 

2,010,455

 

Total

 

$

194,507,421

 

$

—

 

$

—

 

$

194,507,421

 

Private Equity (a)

 

 

 

 

 

 

 

46,580

 

Total Investments

 

 

 

 

 

 

 

$

194,554,001

 

 

Amounts listed as “-” are $0 or round to $0.

 

(a)         Private Equity investments are measured at the net asset valuations, as a practical expedient for fair value, and are not required to be classified in the fair value hierarchy as per Accounting Standards Update 2015-07. The fair value amounts presented are intended to permit reconciliation to the total investment amount presented in the Portfolio of Investments.

 

For movements between the Levels within the fair value hierarchy, the Fund has adopted a policy of recognizing transfers at the end of each period. The utilization of valuation factors may result in transfers between Level 1 and Level 2. For the period ended March 31, 2017, there were no transfers between Levels 1, 2 or 3. For the period ended March 31, 2017, there were no significant changes to the fair valuation methodology.

 

b. Private Equity Investments:

 

Certain of the Fund’s investments, listed in the chart below, are restricted as to resale and are valued at fair value as determined in good faith by, or under the direction of, the Board under procedures established by the Board in the absence of readily ascertainable market values.

 


 

Notes to Portfolio of Investments (unaudited) (concluded)

 

March 31, 2017

 

Security (1)

 

Acquisition Date(s)

 

Total
Commitments

 

Cost

 

Fair Value
At 3/31/17

 

Percent
of
Net
Assets

 

Cumulative
Distributions
Received(3)

 

Emerging Markets Ventures I, L.P.(2)

 

01/22/98 – 01/10/06

 

$

2,500,000

 

$

762,816

 

$

46,580

 

0.02

 

$

2,581,622

 

Total

 

 

 

$

2,500,000

 

$

762,816

 

$

46,580

 

0.02

 

$

2,581,622

 

 

(1) Emerging Markets Ventures I, L.P. is in liquidation.

(2) Emerging Markets Ventures I, L.P. has open commitments of $262,708.

(3) Cumulative Distributions include distributions received from Income, realized gains or return of capital. Distributions from return of capital will reduce the cost basis of the security.

 

The Fund may incur certain costs in connection with the disposition of the above securities.

 

c. Federal Income Taxes:

 

The U.S. federal income tax basis of the Fund’s investments and the net unrealized appreciation as of March 31, 2017 were as follows:

 

Cost

 

Appreciation

 

Depreciation

 

Net
Unrealized
Appreciation

 

$

 162,659,733

 

$

52,461,771

 

$

(20,567,503

)

$

31,894,268

 

 


 

Item 2. 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 (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 the evaluation of these controls and procedures required by Rule 30a-3(b) under the Investment Company Act of 1940 (17 CFR 270.30a3(b)) and Rule 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (17 CFR 240.13a-15(b) or 240.15d-15(b)).

 

(b)         There was no change in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 3. Exhibits

 

(a)         Certification of Principal Executive Officer and Principal Financial Officer of the Registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is attached hereto as Exhibit 99.302CERT.

 


 

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.

 

Aberdeen Latin America Equity Fund, Inc.

 

 

By:

/s/ Christian Pittard

 

 

Christian Pittard,

 

 

Principal Executive Officer of

 

 

Aberdeen Latin America Equity Fund, Inc.

 

 

 

 

 

Date: May 24, 2017

 

 

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:

/s/ Christian Pittard

 

 

Christian Pittard,

 

 

Principal Executive Officer of

 

 

Aberdeen Latin America Equity Fund, Inc.

 

 

 

 

 

Date: May 24, 2017

 

 

 

 

 

 

 

By:

/s/ Andrea Melia

 

 

Andrea Melia,

 

 

Principal Financial Officer of

 

 

Aberdeen Latin America Equity Fund, Inc.

 

 

 

 

 

Date: May 24, 2017