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: December 31, 2015
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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
ANNUAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2015
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)
ANNUAL REPORT
DECEMBER 31, 2015
Shareholder Letter.......................................................... 1
At a Glance................................................................. 2
Portfolio Commentary........................................................ 3
Portfolio of Investments.................................................... 8
Statement of Assets and Liabilities......................................... 16
Statement of Operations..................................................... 17
Statements of Changes in Net Assets......................................... 18
Statement of Cash Flows..................................................... 19
Financial Highlights........................................................ 20
Notes to Financial Statements............................................... 21
Report of Independent Registered Public Accounting Firm..................... 28
Additional Information...................................................... 29
Board of Trustees and Officers.............................................. 33
Privacy Policy.............................................................. 35
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.
The Advisor may also periodically provide additional information on Fund
performance on the Fund's webpage at http://www.ftportfolios.com.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment in
the Fund. 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 material 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)
ANNUAL LETTER FROM THE CHAIRMAN AND CEO
DECEMBER 31, 2015
Dear Shareholders:
Thank you for your investment in First Trust/Aberdeen Global Opportunity Income
Fund (the "Fund").
First Trust Advisors L.P. ("First Trust") is pleased to provide you with this
annual report which contains detailed information about your investment for the
12 months ended December 31, 2015, including a performance analysis and a market
outlook. Additionally, First Trust has compiled the Fund's financial statements
for you to review. We encourage you to read this report and discuss it with your
financial advisor.
While markets were up and down during 2015, we believe there are three important
things to remember: first, the U.S. economy grew, in spite of the massive
decline in oil prices; and second, the tapering that began in 2014 by the
Federal Reserve (the "Fed") did not stop growth in the U.S. economy either.
Finally, the long-anticipated rate hike by the Fed in December had little effect
on the money supply, and the stock market was not shocked by the hike. We remain
positive on U.S. markets, although we know that markets will always move up and
down.
First Trust believes that having a long-term investment horizon and being
invested in quality products can help you reach your goals, despite how the
market behaves. We have always maintained perspective about the markets and
believe investors should as well. We will continue to strive to provide quality
investments each and every day, which has been one of the hallmarks of our firm
since its inception nearly 25 years ago.
Thank you for giving First Trust the opportunity to be a part of your investment
plan. We value our relationship with you and will continue to focus on helping
investors like you reach 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 DECEMBER 31, 2015 (UNAUDITED)
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FUND STATISTICS
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Symbol on New York Stock Exchange FAM
Common Share Price $10.13
Common Share Net Asset Value ("NAV") $11.66
Premium (Discount) to NAV (13.12)%
Net Assets Applicable to Common Shares $201,262,173
Current Monthly Distribution per Common Share (1) $0.075
Current Annualized Distribution per Common Share $0.900
Current Distribution Rate on Closing Common Share Price (2) 8.88%
Current Distribution Rate on NAV (2) 7.72%
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COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
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Common Share Price NAV
12/31/14 $12.04 $13.77
11.98 13.65
11.98 13.60
11.99 13.60
12.02 13.73
1/30/15 12.05 13.58
11.94 13.54
11.85 13.54
11.89 13.54
2/27/15 12.00 13.63
11.65 13.27
11.45 13.02
11.49 13.28
3/27/15 11.66 13.37
11.55 13.41
11.63 13.59
11.67 13.60
4/24/15 11.71 13.64
11.73 13.51
11.59 13.51
11.67 13.61
11.67 13.46
5/29/15 11.59 13.31
11.20 12.94
11.03 12.97
11.03 12.97
6/26/15 10.94 13.01
10.80 12.83
10.78 12.82
10.84 12.85
10.67 12.70
7/31/15 10.75 12.68
10.34 12.47
10.37 12.43
10.07 12.25
8/28/15 10.17 12.19
9.77 11.91
9.78 11.93
9.89 12.05
9/25/15 9.81 11.84
9.64 11.85
10.18 12.15
10.38 12.25
10.41 12.18
10/30/15 10.33 12.15
10.26 11.96
10.10 11.92
10.20 12.14
11/27/15 10.21 12.05
10.21 11.88
9.82 11.66
9.92 11.67
10.11 11.69
12/31/15 10.13 11.66
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PERFORMANCE
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Average Annual Total Return
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1 Year Ended 5 Years Ended 10 Years Ended Inception (11/23/04)
12/31/15 12/31/15 12/31/15 to 12/31/15
FUND PERFORMANCE (3)
NAV -6.03% 1.20% 5.32% 5.53%
Market Value -6.63% -1.11% 5.27% 3.77%
INDEX PERFORMANCE
Blended Index (4) -4.99% 0.89% 4.80% 4.67%
Barclays Global Emerging Markets Index -0.18% 4.60% 6.38% 7.00%
Barclays Global Aggregate Index -3.15% 0.90% 3.74% 3.13%
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% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
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New Zealand Government Bond, 6.00%, 12/15/17 4.9%
Asian Development Bank, 5.50%, 2/15/16 4.6
Italy Buoni Poliennali Del Tesoro, 7.25%,
11/1/26 4.1
Portugal Obrigacoes do Tesouro OT, 5.65%,
2/15/24 3.8
Spain Government Bond, 5.90%, 7/30/26 3.2
Brazil Notas Do Tesouro Nacional,
Series F, 10.00%, 1/1/25 3.2
Treasury Corp. of Victoria, 6.00%, 10/17/22 3.1
Italy Buoni Poliennali Del Tesoro, 9.00%,
11/1/23 2.9
Spain Government Bond, 6.00%, 1/31/29 2.2
Russian Federal Bond - OFZ, 7.05%, 1/19/28 2.0
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Total 34.0%
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% OF TOTAL
CREDIT QUALITY(6) INVESTMENTS
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AAA 17.8%
AA+ 1.6
A 6.1
BBB+ 17.2
BBB 7.5
BBB- 16.0
BB+ 8.6
BB 1.4
BB- 6.0
B+ 7.7
B 5.5
B- 0.8
CCC 0.6
NR 3.2
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Total 100.0%
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% OF TOTAL
TOP 10 COUNTRIES(5) INVESTMENTS
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Italy 8.3%
Spain 7.3
Russia 6.0
New Zealand 6.0
Brazil 5.8
Mexico 5.6
Multinational 4.6
Turkey 4.1
Portugal 3.8
Kazakhstan 3.4
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Total 54.9%
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% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
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Sovereigns 72.2%
Supranationals 4.6
Banks 3.1
Government Regional 3.1
Exploration & Production 1.9
Real Estate 1.7
Integrated Oils 1.5
Railroad 1.4
Government Agencies 1.3
Financial Services 1.2
Metals & Mining 1.0
Construction Materials Manufacturing 0.8
Government Development Banks 0.7
Consumer Services 0.7
Food & Beverage 0.6
Wireless Telecommunications Services 0.6
Consumer Finance 0.6
Software & Services 0.6
Pipeline 0.5
Oil & Gas Services & Equipment 0.4
Wireline Telecommunications Services 0.4
Chemicals 0.4
Refining & Marketing 0.3
Home Improvement 0.2
Supermarkets & Pharmacies 0.2
Industrial Other 0.0*
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Total 100.0%
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* Amount is less than 0.1%.
(1) Most recent distribution paid or declared through 12/31/15. 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 12/31/15. 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 Common 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 index 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)
ANNUAL REPORT
DECEMBER 31, 2015 (UNAUDITED)
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
Head of Global Macro
BRETT DIMENT
Head of Emerging Market Debt
KEVIN DALY
Senior Investment Manager, Emerging Market Debt
EDWIN GUTIERREZ
Head of Emerging Market Sovereign Debt
MAX WOLMAN
Senior Investment Manager, Emerging Market Debt
JAMES ATHEY
Investment Manager, Global Macro
COMMENTARY
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND RECAP
The Fund had a net asset value ("NAV") total return(1) of -6.03% and a market
value total return of -6.63% for the year ended December 31, 2015, compared the
Fund's blended index(2) total return of -4.99% over the same period. In addition
to this blended index, the Fund currently uses other indexes for comparative
purposes. The total returns for the year ended December 31, 2015, for these
indexes were as follows: the Barclays Global Emerging Markets Index was -0.18%
and the Barclays Global Aggregate Index was -3.15%.
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, as the prices of securities held by the
Fund decline, the negative impact of the valuation 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
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(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 index 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%).
Page 3
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PORTFOLIO COMMENTARY (CONTINUED)
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FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
ANNUAL REPORT
DECEMBER 31, 2015 (UNAUDITED)
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 index are not leveraged. Leverage had a negative
impact on the performance of the Fund over this reporting period.
EMERGING MARKET FIXED COMMENTARY
MARKET RECAP
It has been a challenging 12 months for emerging markets ("EM") debt. A number
of geopolitical and macroeconomic events contributed to risk-adverse conditions,
causing retail fund outflows throughout the year except in October, when EM debt
rallied across the board, as risk-on sentiment took hold of the market. A
combination of the U.S. Federal Reserve (the "Fed") holding off on interest rate
hikes, better economic data from China and the possibility of further
policy-easing by the European Central Bank ("ECB") drove positive returns.
However, EM debt gave back some of its gains in November and December, in the
run up to the Fed finally raising rates.
Events in the U.S. were a strong driver of EM performance over the period, as a
strong U.S. dollar pushed EM currencies to all-time lows and the continuing
"will-they-won't-they" saga relating to the hiking of U.S. interest rates
spooked markets. Disappointing employment data quickly ruled out the possibility
of a June hike. Market conjecture then pointed to September but the Federal Open
Market Committee ("FOMC") meeting came and went with the announcement the Fed
would not yet be hiking rates. Following hawkish indications, the FOMC finally
confirmed in December that it would raise its target rate by 25 basis points,
seven years after cutting to the zero lower bound.
In Europe, the announcement and subsequent initiation of the ECB's quantitative
easing programme caused Eurozone bonds to outperform in the first quarter. The
positive performance in emerging Europe was short-lived, however, as financial
turmoil in Greece heightened risk-off sentiment. Greece finally reached an
agreement with its European creditors in July though problems still exist. At
the end of the year, the ECB, under-delivered with its expanded stimulus
package, as the pace of quantitative easing bond purchases was not increased nor
was the yield floor on purchases removed. Elsewhere, the People's Bank of China
(PBoC) eased policy yet again by cutting the Reserve Requirement Ratio by 50
basis points and its benchmark rates by 25 basis points. Oil prices were also a
key driver of returns, as the Organization of the Petroleum Exporting Countries
("OPEC") declined to cut production which caused both West Texas Intermediate
("WTI") and Brent crude to fall by over 16% to end the year at around U.S. $37
per barrel.
Elsewhere in Europe, Russia had a mixed year. The beginning of 2015 was
characterized by economic volatility within the country, as the Russian Central
Bank cut its policy interest rate by 300 basis points to 14%. This followed an
emergency meeting in December, where rates were raised by 650 basis points.
Russia's credit rating was cut to junk status by both Standard & Poor's and
Moody's, with both agencies keeping a negative outlook on the country. The
contraction of the country's economy - though softer than expected - accelerated
in the second quarter with poor industrial output and retail sales. Despite some
positive statements from the central bank and some encouraging data, Russia's
contraction appeared to continue in the third quarter.
News flow towards the end of the period was dominated by central bank activity
in China. With its economy showing continued signs of a slowdown, at the start
of the month, the Chinese government devalued the renminbi by a record 1.90%,
spurring investors to drive the currency to its lowest level in nearly three
years. This currency depreciation coupled with weak economic data brought chaos
to equity markets, in turn prompting policy makers to take action and cut
interest rates by 25 basis points, in a bid to calm the storm. In November, it
was announced that the renminbi will be included in the International Monetary
Fund's Special Drawing Rights basket of currencies from October 2016. While the
direct impact of inclusion will be minimal, it confirms China's ongoing
commitment to liberalizing its capital account and may result in some gradual
managed depreciation over the medium term.
Brazil has had a particularly difficult year, culminating with credit ratings
agency, Standard & Poor's, downgrading its sovereign rating and with it $56
billion of corporate debt, which dropped out of the investment grade index
causing a flurry of index-related forced selling. In response to the downgrade,
Brazil's central bank announced that it would "use all available instruments" to
arrest the continued depreciation of the Brazil real against the U.S. dollar.
There were two pieces of favorable news at the end of September, as Petrobras,
the state-controlled oil company, increased its petrol and diesel prices by 6%
and 4%, respectively, which will help it reclaim some losses from the recent
Brazilian real depreciation.
Page 4
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PORTFOLIO COMMENTARY (CONTINUED)
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FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
ANNUAL REPORT
DECEMBER 31, 2015 (UNAUDITED)
PERFORMANCE ANALYSIS
For the year, the EM debt portion of the Fund outperformed the EM debt portion
of its blended index in hard currency but not in local currency bonds.
Within the hard currency space, the Fund's overweight positions in Russia,
Kazakhstan and Argentina were the key positive contributors to performance, as
were off-index holdings in the United Arab Emirates and selection effects in
Venezuela. On the other side, an underweight position in Colombia detracted from
performance as did underweight positions in China, Hungary and the Philippines,
while an underweight for most of the year in Ukraine also detracted from the
Fund's performance.
Within the local currency holdings, underweight positions in South Africa and
Malaysia benefited the Fund as did bond selection in Russia and an underweight
in Peru. Overweight positioning in Brazil was the main detractor from
performance as was currency exposure in Colombia and an underweight in Turkey
MARKET AND FUND OUTLOOK
EM have had another tough year as external factors - most notably when U.S.
monetary policy would be tightened - guided sentiment against the asset class.
It should be noted though that aggregate hard currency sovereign and corporate
bonds had positive returns, while local currency rates all avoided losses over
2015 - it was in EM currencies where the most pain was felt. The key is that
many more EM countries have free-floating exchange rates compared to the U.S.
dollar pegs of the past, which have allowed currencies to become the favored
"venting mechanism" for the markets to express a negative view. We believe there
are some benefits to this: it contains volatility in hard currency spreads and
local currency yields, and on a fundamental level improves balance of payments
positions by boosting export competitiveness and increasing imports costs.
Ultimately, EM currencies will stabilize, which means that local currency bonds
in U.S. dollar terms could become a better performing asset class in the coming
years.
Looking ahead, we believe the key risks for emerging markets in the coming year
will be the pace of U.S. rate hikes and concerns about Chinese growth that could
prompt renewed fears of currency weakness. In the absence of any inflation
surprises, we would expect a more moderate pace of U.S. rate hikes to be
generally supportive for higher yielding assets. Concerns about China are likely
to persist at times, but we believe further stimulus will help prevent a sharp
slowdown in growth, and that officials will seek to stem currency volatility in
what is still a tightly managed exchange rate.
DEVELOPED MARKET COMMENTARY
MARKET RECAP
2015 was a decidedly mixed year for developed market government bonds. While
hedged returns in most developed markets were marginally positive, the
underperformance of most currencies versus the U.S. dollar meant that U.S.
investors still suffered losses on their global indices.
Demand for the safety of government bonds ebbed and flowed through the year but
was largely supportive as economic malaise, increased financial market
volatility, risk asset weakness and the odd misstep by policy makers all
conspired to keep investors in need of high quality assets.
In the U.S. it was a case of deja vu as once again, early-year economic optimism
was dashed by extreme weather across much of the region. With 2015 earmarked as
the year when the Fed would finally raise rates, the resultant short positioning
in the market became fuel for the rally and thus 10-year Treasury yields fell
precipitously through the early weeks reaching a low of 1.64% at the end of
January.
While the weak data continued throughout Q1, it became evident as the first half
wore on that this weakness was heavily impacted by temporary factors, such as
the weather and disruption at west coast ports and as such, yields headed back
towards 2%, where they were to spend much of the year.
With the bad weather a thing of the past, economic data returned to the previous
trend, with strong jobs addition of around 200,000 jobs per month again a key
feature for the year. This saw the unemployment rate fall from 5.7% to 5%, with
the broader U6 unemployment measure (the "underemployment rate") also showing
significant signs of improvement, as it fell from 11.3% to 9.9%. With the
improvement of the labor market, having been specified by the Fed as a key
milestone towards rate rises, the market consistently saw this as heralding the
first change in policy for seven years. However, the thorn in the Fed's side was
consistently one of prices and wages. Wages showed some sign of improvement but
Page 5
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PORTFOLIO COMMENTARY (CONTINUED)
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FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
ANNUAL REPORT
DECEMBER 31, 2015 (UNAUDITED)
for each step forward in this department, there was a step back. Average hourly
earnings data showed that the evolution of the year-on-year data was merely from
2.2% to 2.5% over the year, underwhelming expectations. More specifically for
the Fed, their chosen inflation measure of personal consumption expenditures
("PCE") showed precious few signs of returning to the 2% target. Headline
inflation measures in the U.S. were constantly being held down by transitory
factors, as oil prices declined steadily from the middle of the year onwards.
The circa 50% decline in oil prices from the spring onwards were oft quoted by
the Fed as a cause for concern. As well as depressing headline inflation, these
price declines saw intense pressure on the U.S.'s burgeoning energy sector with
large hits to capex and employment but also leading to increasing turmoil in
high-yield bond and equity markets.
The Fed also became the victim of its own success as the U.S.'s position as the
number one performing economy was solidified but with it brought unwanted
currency strength, which pinched U.S. exporters and manufacturers and also
served to hold down inflation via lower imported prices. This conflict between
largely solid domestic data and a weak external sector and transitory influences
on inflation became the main story of the year, culminating in a fairly large
communication error at the Fed's September meeting. This meeting was the first
meeting deemed by investors to be genuinely "live" with respect to a tightening
of policy. What transpired in the end was that volatility emanating from China
and elsewhere was sufficient to postpone the Fed's intended tightening. The
communication around this however was excessively dovish and intimated a Fed
very much afraid with respect to many factors outside of their control. Rather
than reacting to the extension of easy policy risk markets focused on the
perceived fear of policy makers and fell aggressively. This was the opposite of
what Fed chair Janet Yellen would have wanted or expected and as such required
some clearing up in the aftermath.
As markets calmed down and the U.S. data largely continued to show consistent
progress towards the Fed's dual mandate, Yellen was ultimately able to give a
strong signal at the October meeting and followed this up with the first
tightening of policy since 2006 at their December meeting. Having been well
signalled and well communicated, this hike passed without major incident, as
bond and equity markets alike took it in their stride, especially comforting
given the end of year illiquidity which tends to prevail in December. As a
result 10-year Treasury yields closed the year at 2.27% around 10 basis points
higher than where they had started the year. The U.S. dollar performed better,
outperforming most currencies globally. Its performance was particularly strong
against currencies heavily affected by the decline in oil prices, with the
Greenback returning 15% against both the Canadian dollar and Norwegian krone.
The Eurozone benefited perceptibly from the renewed activism of the ECB under
President Draghi. At their January meeting, they announced a broad based asset
purchase program, including sovereign bonds ("QE") as had been signaled at the
end of 2014. The announcement communicated their intention to buy 60 billion of
assets per month until at least September 2016. While this saw yields and the
euro continue to fall in the aftermath of the meeting, as Q1 drew to a close, it
became apparent that investor expectations around the scarcity of bonds, and
thus positioning, had somewhat run ahead of the policy. This led to a sharp
correction higher in bond yields, periphery spreads and the euro at the
beginning of the second quarter. Having reached a low of 0.05% in mid-April, the
benchmark 10-year German bund proceeded to sell-off aggressively in some
extremely volatile trading session, reaching a high of 1.05% by mid-June.
It was during this period that Greece also returned to the headlines. The ruling
Syriza party elected in January on an anti-austerity ticket was required to
negotiate with the European creditors and this public and messy process led to
heightened fears of a Greek exit (Grexit) from the monetary union. It was this,
as well as the value seemingly offered by higher European yields, which led to
support for safe assets in the region returning. Ultimately Syriza were forced
to back down as they were split by the united front presented by the European
institutional creditors in refusing to negotiate on debt relief until certain
policy actions had been under taken by the Greek government. When push came to
shove, Prime Minister Tsipras, when faced between a stark choice of austerity in
the euro or a future outside, chose the former and in new elections was given a
mandate by the Greek people to do so. Once stability had returned to Greek
assets, and buoyed by ongoing ECB purchases, support for all European assets
returned and volatility once again declined.
Economic data during the year was actually rather solid, as the benefit of
previous policy easing coupled with the consumer boost via lower oil prices
helped the region grow above potential and make small inroads into the high
unemployment levels across the region. Spain and Ireland were the greatest
beneficiaries with France, having undertaken precious little structural reform,
lagging behind somewhat.
Much of the second half of the year was less exciting, as receding Grexit fears,
stable economic growth and the ongoing asset purchases from the ECB sought to
keep bond yields well supported in a fairly narrow range. It was only towards
the end of the year that financial markets began to move in a more adverse
Page 6
--------------------------------------------------------------------------------
PORTFOLIO COMMENTARY (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
ANNUAL REPORT
DECEMBER 31, 2015 (UNAUDITED)
direction, as expectations of Fed tightening and volatility emanating from China
saw risk assets wobble and saw an unwind of euro shorts, which both served to
tighten financial conditions in the region. The ECB moved to prevent these moves
from getting out of hand by first changing their communication and finally at
the December meeting acting to cut rates by 0.1% and also extending the maturity
of their purchase program by six months. Although this was a disappointment to
markets in terms of magnitude, it served to reinforce the message that the ECB
stands ready to act again if required.
The UK economy spent much of the year being buffeted by the global economic
crosswinds. For most of the period the economic data, particularly the
employment data, suggested that the UK would follow in the footsteps of the U.S.
economy by heading for the monetary policy exit door. Jobs were consistently
added throughout, with unemployment reaching the levels around 5% that are
generally associated with full employment. While wage growth was far from out of
control, it was positive and hinted at the early signs of labor market tightness
which would normally elicit a policy response. However the Monetary Policy
Committee ("MPC"), comforted by low headline inflation driven by the stronger
currency and lower oil prices, continued to espouse a patience which saw markets
constantly pushing back expectations for the first hike. This saw yields fall
towards the end of the year although not able to reach the lows which had been
seen in January and then March, leading to a small rise on the year from around
1.75% to around 2%.
The biggest non-economic event for the UK during the year was the May general
election. Market expectations, strongly supported by the polls, suggested
another close vote with the high possibility of another hung parliament and thus
coalition government. In the end, the slide in support for the Liberal Democrats
and the wiping out of Labour in Scotland conspired to give the Conservative
party their first overall majority since the early 1990s. While this
significantly reduced the potential for political instability and policy
paralysis, it certainly paved the way for resumption of fiscal austerity but
also meant that a Tory party manifesto pledge on a Brexit referendum was all but
guaranteed. This is likely to provide a narrative throughout 2016.
Antipodean markets experienced more of the same, as their terms of trade shock
caused by plummeting commodity prices, combined with lower demand for the
commodities they produce as a result of the economic slowdown in China, to keep
their domestic economies under pressure. As a result, both central banks eased
policy through the year, with the intention of supporting domestic demand but
also allowing the external adjustment via weakening exchange rates, which would
minimize the income shock coming from the lower demand and lower prices for
their key commodity exports. This meant that their bond markets were largely
well supported but non-domestic investors had to contend with major currency
adjustments, as both the Aussie and Kiwi dollar's declined by around 9% versus
the Greenback for the year.
PERFORMANCE ANALYSIS
The Fund's developed market bond portfolio underperformed during the year, with
a return of -8.67% versus -3.59% for the developed market portion of the blended
index. The portfolio's investments continued to be concentrated in Australia,
New Zealand, and the Eurozone relative to underweight positions in the U.S. and
Japan.
The biggest drags to performance came from the exposure to non-dollar assets.
The U.S. dollar was by far the strongest performing currency of the year and as
a result all non-USD exposure was a drag. This means that investments in
Eurozone, Australian and New Zealand bonds while adding performance from the
rates exposure, were a drag to performance given the slide in their respective
currencies. Underweights in the U.S. and Japanese bond markets were both
positive contributors to performance. Currency hedging decisions taken in total
over the year added 2.5% to performance.
MARKET AND FUND OUTLOOK
While we anticipate country allocations remaining largely consistent, we feel
that there may be opportunities presented by the commencement of the U.S.
interest rate tightening cycle. While the need for the cycle is obvious from a
domestic perspective, global matters may complicate the picture and as such U.S.
yields may quickly offer value as they move higher.
Elsewhere we continue to favor bond markets at a less advanced stage of the
economic cycle such as Eurozone, Australia and New Zealand where monetary policy
remains supportive.
We believe the bigger concerns on the horizon with respect to global bond
markets emanate from the connected issues of the Chinese economic rebalance and
commodity markets. Both have the potential to be sources of positive and
negative sentiment in 2016 and thus we believe the success with which Chinese
policy makers can manage their economic problems will be key in driving bond and
currency market returns over the next 12 months.
Page 7
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2015
PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
---------------- --------------------------------------------------------- --------- ------------ -------------
FOREIGN SOVEREIGN BONDS AND NOTES - 108.3%
ANGOLA - 0.4%
881,000 Angolan Government International Bond (USD) (b).......... 9.50% 11/12/25 $ 821,533
-------------
ARGENTINA - 3.9%
3,000,000 Argentina Bonar Bonds (USD).............................. 7.00% 04/17/17 3,042,334
2,425,526 Argentine Republic Government International
Bond (USD) (c)........................................ 8.28% 12/31/33 2,801,482
1,822,649 Argentine Republic Government International
Bond (USD) (c)........................................ 8.28% 12/31/33 2,055,037
-------------
7,898,853
-------------
ARMENIA - 0.7%
1,477,000 Armenia International Bond (USD) (b)..................... 6.00% 09/30/20 1,438,938
-------------
AUSTRALIA - 4.3%
9,800,000 Treasury Corp. of Victoria (AUD)......................... 6.00% 10/17/22 8,562,672
-------------
BRAZIL - 5.3%
6,800,000 Brazil Notas do Tesouro Nacional, Series F (BRL)......... 10.00% 01/01/17 1,637,277
49,410,000 Brazil Notas do Tesouro Nacional, Series F (BRL)......... 10.00% 01/01/25 8,943,245
-------------
10,580,522
-------------
CANADA - 2.7%
5,000,000 Canadian Government Bond (CAD)........................... 8.00% 06/01/23 5,369,914
-------------
CHILE - 0.5%
950,000 Empresa Nacional del Petroleo (USD) (b).................. 4.38% 10/30/24 914,360
-------------
COLOMBIA - 0.7%
3,122,000,000 Colombia Government International Bond (COP)............. 7.75% 04/14/21 1,008,049
937,000,000 Colombia Government International Bond (COP)............. 9.85% 06/28/27 338,406
-------------
1,346,455
-------------
COSTA RICA - 0.4%
990,000 Costa Rica Government International Bond (USD)........... 4.25% 01/26/23 871,200
-------------
DOMINICAN REPUBLIC - 1.7%
700,000 Dominican Republic International Bond (USD).............. 7.50% 05/06/21 752,500
651,000 Dominican Republic International Bond (USD).............. 5.88% 04/18/24 651,000
1,720,000 Dominican Republic International Bond (USD).............. 8.63% 04/20/27 2,008,100
-------------
3,411,600
-------------
EGYPT - 0.6%
1,470,000 Egypt Government International Bond (USD) (b)............ 5.88% 06/11/25 1,279,562
-------------
ETHIOPIA - 1.3%
2,370,000 Ethiopia International Bond (USD) (b).................... 6.63% 12/11/24 2,110,248
650,000 Ethiopia International Bond (USD)........................ 6.63% 12/11/24 578,760
-------------
2,689,008
-------------
GABON - 0.2%
470,000 Gabon Government International Bond (USD) (b)............ 6.95% 06/16/25 375,478
-------------
GEORGIA - 0.7%
1,300,000 Georgian Oil and Gas Corp. JSC (USD) (b)................. 6.88% 05/16/17 1,322,620
-------------
GHANA - 0.9%
1,400,000 Ghana Government International Bond (USD)................ 8.13% 01/18/26 1,099,000
900,000 Ghana Government International Bond (USD) (b)............ 8.13% 01/18/26 706,500
-------------
1,805,500
-------------
Page 8 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
DECEMBER 31, 2015
PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
---------------- --------------------------------------------------------- --------- ------------ -------------
FOREIGN SOVEREIGN BONDS AND NOTES (CONTINUED)
HONDURAS - 1.2%
2,360,000 Honduras Government International Bond (USD) (b)......... 7.50% 03/15/24 $ 2,495,700
-------------
HUNGARY - 1.9%
924,350,000 Hungary Government Bond (HUF)............................ 5.50% 06/24/25 3,736,693
-------------
INDONESIA - 3.5%
1,750,000 Indonesia Government International Bond (USD) (b)........ 5.88% 01/15/24 1,879,175
27,000,000,000 Indonesia Treasury Bond (IDR)............................ 5.25% 05/15/18 1,813,456
27,200,000,000 Indonesia Treasury Bond (IDR)............................ 8.38% 03/15/34 1,856,015
1,600,000 Pertamina Persero PT (USD) (b)........................... 4.30% 05/20/23 1,458,526
-------------
7,007,172
-------------
IRAQ - 1.1%
3,360,000 Iraq International Bond (USD) ........................... 5.80% 01/15/28 2,276,434
-------------
ITALY - 11.5%
4,650,000 Italy Buoni Poliennali Del Tesoro (EUR).................. 9.00% 11/01/23 7,964,337
6,800,000 Italy Buoni Poliennali Del Tesoro (EUR).................. 7.25% 11/01/26 11,447,902
2,970,000 Italy Government International Bond (USD)................ 6.88% 09/27/23 3,659,940
-------------
23,072,179
-------------
IVORY COAST - 1.4%
900,000 Ivory Coast Government International Bond (USD) (b)...... 6.38% 03/03/28 823,464
2,230,000 Ivory Coast Government International Bond (USD).......... 5.75% 12/31/32 1,994,668
-------------
2,818,132
-------------
JAMAICA - 0.9%
1,851,000 Jamaica Government International Bond (USD).............. 7.88% 07/28/45 1,804,725
-------------
KAZAKHSTAN - 3.3%
2,490,000 Kazakhstan Government International Bond (USD) (b)....... 3.88% 10/14/24 2,346,825
1,870,000 KazMunaiGas National Co., JSC (USD)...................... 9.13% 07/02/18 2,063,470
2,064,000 KazMunaiGas National Co., JSC (USD)...................... 7.00% 05/05/20 2,191,295
-------------
6,601,590
-------------
KENYA - 0.5%
1,180,000 Kenya Government International Bond (USD)................ 6.88% 06/24/24 1,038,400
-------------
MEXICO - 5.1%
29,400,000 Mexican Bonos (MXN)...................................... 6.50% 06/09/22 1,759,580
20,000,000 Mexican Bonos (MXN)...................................... 0.00% 12/05/24 1,463,744
29,050,000 Mexican Bonos (MXN)...................................... 7.50% 06/03/27 1,833,928
74,570,000 Mexican Bonos (MXN)...................................... 8.50% 11/18/38 5,104,981
-------------
10,162,233
-------------
MONGOLIA - 1.6%
2,130,000 Development Bank of Mongolia LLC (USD)................... 5.75% 03/21/17 2,042,089
1,500,000 Mongolia Government International Bond (USD)............. 5.13% 12/05/22 1,198,675
-------------
3,240,764
-------------
NEW ZEALAND - 8.3%
18,630,000 New Zealand Government Bond (NZD)........................ 6.00% 12/15/17 13,543,772
4,100,000 New Zealand Government Bond (NZD)........................ 6.00% 05/15/21 3,218,162
-------------
16,761,934
-------------
See Notes to Financial Statements Page 9
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
DECEMBER 31, 2015
PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
---------------- --------------------------------------------------------- --------- ------------ -------------
FOREIGN SOVEREIGN BONDS AND NOTES (CONTINUED)
POLAND - 2.9%
16,250,000 Poland Government Bond (PLN)............................. 4.75% 04/25/17 $ 4,314,733
5,650,000 Poland Government Bond (PLN)............................. 4.00% 10/25/23 1,562,279
-------------
5,877,012
-------------
PORTUGAL - 5.3%
7,830,000 Portugal Obrigacoes do Tesouro OT (EUR) (b).............. 5.65% 02/15/24 10,567,254
-------------
ROMANIA - 3.3%
12,900,000 Romania Government Bond (RON)............................ 5.80% 07/26/27 3,567,883
2,680,000 Romanian Government International Bond (USD)............. 6.75% 02/07/22 3,154,172
-------------
6,722,055
-------------
RUSSIA - 5.1%
134,800,000 Russian Federal Bond - OFZ (RUB)......................... 7.50% 03/15/18 1,774,559
478,935,000 Russian Federal Bond - OFZ (RUB)......................... 7.05% 01/19/28 5,496,927
600,000 Russian Foreign Bond - Eurobond (USD).................... 4.88% 09/16/23 610,875
400,000 Russian Foreign Bond - Eurobond (USD).................... 5.88% 09/16/43 390,940
2,000,000 Vnesheconombank Via VEB Finance PLC (USD)................ 6.90% 07/09/20 2,029,990
-------------
10,303,291
-------------
RWANDA - 0.9%
1,440,000 Rwanda International Government Bond (USD)............... 6.63% 05/02/23 1,379,526
510,000 Rwanda International Government Bond (USD) (b)........... 6.63% 05/02/23 488,582
-------------
1,868,108
-------------
SENEGAL - 0.8%
1,440,000 Senegal Government International Bond (USD).............. 8.75% 05/13/21 1,515,600
-------------
SERBIA - 0.3%
480,000 Serbia International Bond (USD).......................... 5.25% 11/21/17 499,414
-------------
SOUTH AFRICA - 2.8%
680,000 Eskom Holdings SOC Ltd. (USD) (b)........................ 6.75% 08/06/23 593,300
1,800,000 Eskom Holdings SOC Ltd. (USD)............................ 6.75% 08/06/23 1,570,500
26,917,865 South Africa Government Bond (ZAR)....................... 10.50% 12/21/26 1,841,868
29,220,000 South Africa Government Bond (ZAR)....................... 8.00% 01/31/30 1,604,233
-------------
5,609,901
-------------
SPAIN - 10.1%
6,000,000 Spain Government Bond (EUR) (b).......................... 5.90% 07/30/26 9,033,470
4,000,000 Spain Government Bond (EUR).............................. 6.00% 01/31/29 6,233,318
3,300,000 Spain Government Bond (EUR) (b).......................... 5.15% 10/31/44 5,094,864
-------------
20,361,652
-------------
TANZANIA - 0.5%
1,150,000 Tanzania Government International Bond (USD) (d)......... 6.54% 03/09/20 1,089,510
-------------
TURKEY - 4.7%
6,600,000 Turkey Government Bond (TRY)............................. 6.30% 02/14/18 2,085,413
10,200,000 Turkey Government Bond (TRY)............................. 10.40% 03/20/24 3,450,247
3,650,000 Turkey Government International Bond (USD)............... 6.25% 09/26/22 3,974,485
-------------
9,510,145
-------------
UKRAINE - 1.1%
500,000 Ukraine Government International Bond (USD) (b).......... 7.75% 09/01/20 462,500
404,000 Ukraine Government International Bond (USD) (b).......... 7.75% 09/01/21 369,078
154,000 Ukraine Government International Bond (USD) (b).......... 7.75% 09/01/23 137,861
Page 10 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
DECEMBER 31, 2015
PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
---------------- --------------------------------------------------------- --------- ------------ -------------
FOREIGN SOVEREIGN BONDS AND NOTES (CONTINUED)
UKRAINE (CONTINUED)
297,000 Ukraine Government International Bond (USD) (b).......... 7.75% 09/01/24 $ 264,303
297,000 Ukraine Government International Bond (USD) (b).......... 7.75% 09/01/25 262,720
297,000 Ukraine Government International Bond (USD) (b).......... 7.75% 09/01/26 259,862
297,000 Ukraine Government International Bond (USD) (b).......... 7.75% 09/01/27 259,875
716,000 Ukraine Government International Bond (USD) (b).......... (e) 05/31/40 289,085
-------------
2,305,284
-------------
UNITED ARAB EMIRATES - 0.9%
1,440,000 Emirate of Dubai Government International Bonds (USD).... 7.75% 10/05/20 1,747,534
-------------
UNITED KINGDOM - 2.2%
2,230,000 United Kingdom Gilt (GBP)................................ 4.25% 12/07/49 4,520,269
-------------
URUGUAY - 1.3%
655,000 Uruguay Government International Bond (USD).............. 7.63% 03/21/36 812,200
56,816,279 Uruguay Government International Bond,
Inflation Adjusted Bond (UYU) (f)..................... 5.00% 09/14/18 1,900,207
-------------
2,712,407
-------------
VENEZUELA - 0.6%
3,130,000 Venezuela Government International Bond (USD)............ 7.75% 10/13/19 1,259,825
-------------
ZAMBIA - 0.9%
2,200,000 Zambia Government International Bond (USD) (b)........... 8.97% 07/30/27 1,751,640
-------------
TOTAL FOREIGN SOVEREIGN BONDS AND NOTES............................................. 217,925,072
(Cost $246,675,270) -------------
FOREIGN CORPORATE BONDS AND NOTES (g) - 27.2%
BANGLADESH - 0.5%
1,000,000 Banglalink Digital Communications Ltd. (USD) (b)......... 8.63% 05/06/19 1,037,500
-------------
BARBADOS - 0.5%
1,000,000 Sagicor Finance 2015 Ltd. (USD) (b)...................... 8.88% 08/11/22 1,092,500
-------------
BRAZIL - 2.8%
1,750,000 Marfrig Overseas Ltd. (USD).............................. 9.50% 05/04/20 1,723,750
1,550,000 OAS Finance Ltd. (USD) (b) (c) (i) (j)................... 8.88% (h) 85,250
460,000 OAS Investments GmbH (USD) (b) (c) (j)................... 8.25% 10/19/19 25,300
1,050,000 Petrobras Global Finance BV (USD)........................ 5.75% 01/20/20 826,875
2,360,000 Petrobras Global Finance BV (USD)........................ 5.38% 01/27/21 1,764,100
1,767,805 QGOG Atlantic/Alaskan Rigs Ltd. (USD).................... 5.25% 07/30/18 1,219,785
-------------
5,645,060
-------------
CHINA - 0.5%
1,000,000 Future Land Development Holdings Ltd. (USD).............. 10.25% 07/21/19 1,083,994
-------------
GEORGIA - 1.0%
1,900,000 Georgian Railway JSC (USD)............................... 7.75% 07/11/22 1,932,756
-------------
GUATEMALA - 1.2%
980,000 Comcel Trust via Comunicaciones Celulares SA (USD) (b)... 6.88% 02/06/24 759,500
1,550,000 Industrial Subordinated Trust (USD)...................... 8.25% 07/27/21 1,635,250
-------------
2,394,750
-------------
HONG KONG - 0.5%
1,020,000 Shimao Property Holdings Ltd. (USD)...................... 8.38% 02/10/22 1,097,332
-------------
See Notes to Financial Statements Page 11
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
DECEMBER 31, 2015
PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
---------------- --------------------------------------------------------- --------- ------------ -------------
FOREIGN CORPORATE BONDS AND NOTES (g) (CONTINUED)
INDIA - 0.9%
1,040,000 ABJA Investment Co. Pte Ltd. (USD)....................... 5.95% 07/31/24 $ 872,346
1,000,000 ICICI Bank Ltd. (USD) (i)................................ 6.38% 04/30/22 1,028,239
-------------
1,900,585
-------------
KAZAKHSTAN - 1.5%
1,850,000 Kazakhstan Temir Zholy Finance BV (USD).................. 6.38% 10/06/20 1,828,170
1,500,000 Zhaikmunai LLP (USD) (b)................................. 7.13% 11/13/19 1,173,750
-------------
3,001,920
-------------
MEXICO - 2.5%
1,050,000 Alfa SAB de CV (USD)..................................... 6.88% 03/25/44 979,125
850,000 CEMEX Espana S.A. (USD).................................. 9.88% 04/30/19 903,125
460,000 Cemex Finance, LLC (USD) (b)............................. 9.38% 10/12/22 486,450
1,640,000 Sixsigma Networks Mexico S.A. de CV (USD) (b)............ 8.25% 11/07/21 1,574,400
1,130,000 Unifin Financiera SAPI de CV SOFOM ENR (USD)............. 6.25% 07/22/19 1,045,250
-------------
4,988,350
-------------
MOZAMBIQUE - 1.0%
2,320,500 EMATUM Via Mozambique EMATUM
Finance 2020 BV (USD)................................. 6.31% 09/11/20 1,942,955
-------------
NIGERIA - 0.7%
1,520,000 Zenith Bank PLC (USD) (b)................................ 6.25% 04/22/19 1,379,491
-------------
PARAGUAY - 0.7%
1,360,000 Banco Regional SAECA (USD) (b)........................... 8.13% 01/24/19 1,390,600
-------------
PERU - 0.9%
625,000 InRetail Consumer (USD) (b).............................. 5.25% 10/10/21 631,250
405,000 Southern Copper Corp. (USD).............................. 3.88% 04/23/25 364,566
730,000 Union Andina de Cementos SAA (USD)....................... 5.88% 10/30/21 706,275
-------------
1,702,091
-------------
RUSSIA - 3.2%
1,560,000 Alfa Bank OJSC Via Alfa Bond Issuance PLC (USD).......... 7.75% 04/28/21 1,634,100
1,640,000 Evraz Group S.A. (USD) (b)............................... 6.50% 04/22/20 1,541,600
1,350,000 Lukoil International Finance BV (USD).................... 4.56% 04/24/23 1,216,013
1,170,000 Sberbank of Russia Via SB Capital S.A. (USD)............. 6.13% 02/07/22 1,178,073
890,000 Vimpel Communications Via VIP Finance
Ireland Ltd., OJSC (USD).............................. 7.75% 02/02/21 912,888
-------------
6,482,674
-------------
SUPRANATIONALS - 6.4%
17,600,000 Asian Development Bank (AUD)............................. 5.50% 02/15/16 12,876,045
-------------
TURKEY - 0.9%
750,000 Arcelik AS (USD) (b)..................................... 5.00% 04/03/23 686,125
1,150,000 Yasar Holdings AS (USD) (b).............................. 8.88% 05/06/20 1,183,120
-------------
1,869,245
-------------
UNITED ARAB EMIRATES - 1.3%
2,270,000 Jafz Sukuk Ltd. (USD).................................... 7.00% 06/19/19 2,540,584
-------------
VENEZUELA - 0.2%
733,333 Petroleos de Venezuela S.A. (USD)........................ 8.50% 11/02/17 392,333
-------------
TOTAL FOREIGN CORPORATE BONDS AND NOTES............................................. 54,750,765
(Cost $59,103,771) -------------
Page 12 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
DECEMBER 31, 2015
PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
---------------- --------------------------------------------------------- --------- ------------ -------------
U.S. GOVERNMENT BONDS AND NOTES - 3.0%
UNITED STATES - 3.0%
$ 4,900,000 United States Treasury Note (USD)........................ 1.00% 06/30/19 $ 4,819,802
1,000,000 United States Treasury Note (USD)........................ 3.75% 11/15/43 1,152,129
-------------
TOTAL U.S. GOVERNMENT BONDS AND NOTES............................................... 5,971,931
(Cost $6,015,683) -------------
TOTAL INVESTMENTS - 138.5%.......................................................... 278,647,768
(Cost $311,794,724) (k)
OUTSTANDING LOANS - (42.9%)......................................................... (86,242,673)
NET OTHER ASSETS AND LIABILITIES - 4.4%............................................. 8,857,078
-------------
NET ASSETS - 100.0%................................................................. $ 201,262,173
=============
-----------------------------
(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 registration under 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 December 31, 2015, securities noted as
such amounted to $60,854,159 or 30.24% of net assets.
(c) This security is in default and interest is not being accrued by the Fund.
(d) Floating rate security. The interest rate shown reflects the rate in
effect at December 31, 2015.
(e) Zero coupon bond.
(f) 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.
(g) Portfolio securities are included in a country based upon their underlying
credit exposure as determined by the Fund's investment sub-advisor.
(h) Perpetual maturity.
(i) Fixed-to-floating or fixed-to-variable rate security. The interest rate
shown reflects the fixed rate in effect at December 31, 2015. At a
predetermined date, the fixed rate will change to a floating rate or a
variable rate.
(j) This company has filed for bankruptcy protection in a Sao Paulo state
court.
(k) Aggregate cost for federal income tax purposes is $317,024,143. As of
December 31, 2015, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$2,764,848 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$41,141,223.
Currency Abbreviations:
ARS Argentine Peso MXN Mexican Peso
AUD Australian Dollar NZD New Zealand Dollar
BRL Brazilian Real PLN Polish Zloty
CAD Canadian Dollar RON Romanian Leu
COP Colombian Peso RUB Russian Ruble
EUR Euro TRY Turkish Lira
GBP British Pound Sterling USD United States Dollar
HUF Hungarian Forint UYU Uruguayan Peso
IDR Indonesian Rupiah ZAR South African Rand
INR Indian Rupee
See Notes to Financial Statements Page 13
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2015
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of December 31,
2015 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
12/31/2015 PRICES INPUTS INPUTS
------------- -------------- -------------- -------------
Foreign Sovereign Bonds and Notes*................. $ 217,925,072 $ -- $ 217,925,072 $ --
Foreign Corporate Bonds and Notes*................. 54,750,765 -- 54,750,765 --
U.S. Government Bonds and Notes*................... 5,971,931 -- 5,971,931 --
------------- -------------- -------------- -------------
Total Investments.................................. 278,647,768 -- 278,647,768 --
Forward Foreign Currency Contracts**............... 1,255,761 -- 1,255,761 --
------------- -------------- -------------- -------------
Total.............................................. $ 279,903,529 $ -- $ 279,903,529 $ --
============= ============== ============== =============
LIABILITIES TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2015 PRICES INPUTS INPUTS
------------- -------------- -------------- -------------
Forward Foreign Currency Contracts**............... $ (393,528) $ -- $ (393,528) $ --
============= ============== ============== =============
* See the Portfolio of Investments for country breakout.
** See the 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 December 31, 2015.
-------------------------------------------
CURRENCY EXPOSURE % OF TOTAL
DIVERSIFICATION INVESTMENTS+
-------------------------------------------
USD 60.0%
EUR 9.6
BRL 3.8
AUD 3.3
MXN 3.1
RUB 2.6
PLN 2.1
TRY 2.0
CAD 2.0
NZD 1.8
GBP 1.6
HUF 1.4
IDR 1.3
INR 1.3
RON 1.3
ZAR 1.2
UYU 0.7
COP 0.5
ARS 0.4
-------------------------------------------
Total 100.0%
======
+ The weightings include the impact of currency forwards.
Page 14 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2015
FORWARD FOREIGN CURRENCY CONTRACTS (see Note 2C - Forward Foreign Currency
Contracts in the Notes to Financial Statements).
FORWARD FOREIGN CURRENCY CONTRACTS
------------------------------------------------------------
PURCHASE SALE UNREALIZED
SETTLEMENT AMOUNT AMOUNT VALUE AS OF VALUE AS OF APPRECIATION
DATE COUNTERPARTY PURCHASED (a) SOLD (a) 12/31/2015 12/31/2015 (DEPRECIATION)
------------ -------------- --------------------- ------------------- ---------------- ---------------- --------------
02/22/16 CIT ARS 17,875,000 USD 1,191,667 $ 1,309,272 $ 1,191,667 $ 117,605
01/14/16 BAR AUD 294,000 USD 209,027 214,090 209,027 5,063
01/14/16 RBC CAD 200,000 USD 153,136 144,544 153,136 (8,592)
02/22/16 CIT INR 241,634,000 USD 3,604,326 3,620,647 3,604,326 16,321
01/14/16 RBC USD 12,388,959 AUD 17,064,000 12,388,959 12,425,962 (37,003)
01/14/16 DB USD 23,512,948 EUR 20,647,000 23,512,948 22,445,956 1,066,992
01/14/16 RBC USD 1,564,279 MXN 26,128,000 1,564,279 1,514,499 49,780
01/14/16 UBS USD 11,842,856 NZD 17,841,000 11,842,856 12,190,789 (347,933)
--------------
Net Unrealized Appreciation (Depreciation).................................................................... $ 862,233
==============
(a) Please see Portfolio of Investments for currency descriptions.
See Note 2D - Offsetting on the Statement of Assets and Liabilities in the Notes
to Financial Statements for a table that presents the forward foreign currency
contracts' assets and liabilities on a gross basis.
Counterparty Abbreviations:
BAR Barclays Bank
CIT Citibank, NA
DB Deutsche Bank
RBC Royal Bank of Canada
UBS UBS
See Notes to Financial Statements Page 15
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2015
ASSETS:
Investments, at value
(Cost $311,794,724)............................................................................... $278,647,768
Cash.............................................................................................. 2,650,562
Foreign currency (Cost $493,374).................................................................. 491,378
Unrealized appreciation on forward foreign currency contracts..................................... 1,255,761
Receivables:
Interest....................................................................................... 5,350,926
Prepaid expenses.................................................................................. 2,993
------------
Total Assets................................................................................... 288,399,388
------------
LIABILITIES:
Outstanding loans................................................................................. 86,242,673
Unrealized depreciation on forward foreign currency contracts..................................... 393,528
Payables:
Investment advisory fees....................................................................... 246,894
Interest and fees on loans..................................................................... 87,984
Audit and tax fees............................................................................. 58,200
Custodian fees................................................................................. 55,883
Printing fees.................................................................................. 22,710
Administrative fees............................................................................ 18,227
Transfer agent fees............................................................................ 6,340
Legal fees..................................................................................... 2,228
Financial reporting fees....................................................................... 771
Trustees' fees and expenses.................................................................... 62
Other liabilities................................................................................. 1,715
------------
Total Liabilities.............................................................................. 87,137,215
------------
NET ASSETS........................................................................................ $201,262,173
============
NET ASSETS CONSIST OF:
Paid-in capital................................................................................... $243,938,121
Par value......................................................................................... 172,671
Accumulated net investment income (loss).......................................................... (2,210,182)
Accumulated net realized gain (loss) on investments, forward foreign currency
contracts and foreign currency transactions.................................................... (11,882,120)
Net unrealized appreciation (depreciation) on investments, forward foreign
currency contracts and foreign currency translation............................................ (28,756,317)
------------
NET ASSETS........................................................................................ $201,262,173
============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share).............................. $ 11.66
============
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized)....... 17,267,115
============
Page 16 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2015
INVESTMENT INCOME:
Interest (net of foreign withholding tax of $34,533).............................................. $ 18,960,988
------------
Total investment income........................................................................ 18,960,988
------------
EXPENSES:
Investment advisory fees.......................................................................... 3,160,369
Interest and fees on outstanding loans............................................................ 876,895
Custodian fees.................................................................................... 227,614
Administrative fees............................................................................... 134,038
Printing fees..................................................................................... 73,954
Audit and tax fees................................................................................ 61,454
Transfer agent fees............................................................................... 37,581
Trustees' fees and expenses....................................................................... 18,576
Legal fees........................................................................................ 15,677
Financial reporting fees.......................................................................... 9,250
Other............................................................................................. 63,920
------------
Total expenses.................................................................................... 4,679,328
------------
NET INVESTMENT INCOME (LOSS)...................................................................... 14,281,660
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.................................................................................... (5,028,452)
Forward foreign currency contracts............................................................. 9,391,535
Foreign currency transactions.................................................................. (24,606,493)
------------
Net realized gain (loss)....................................................................... (20,243,410)
------------
Net change in unrealized appreciation (depreciation) on:
Investments.................................................................................... (11,743,286)
Forward foreign currency contracts............................................................. (1,045,816)
Foreign currency translation................................................................... 1,480,947
Net change in deferred Indonesian capital gains tax............................................... 16,653
------------
Net change in unrealized appreciation (depreciation).............................................. (11,291,502)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)........................................................... (31,534,912)
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................... $(17,253,252)
============
See Notes to Financial Statements Page 17
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE FOR THE
YEAR YEAR
ENDED ENDED
12/31/2015 12/31/2014
-------------- --------------
OPERATIONS:
Net investment income (loss)......................................................... $ 14,281,660 $ 17,900,207
Net realized gain (loss)............................................................. (20,243,410) 1,304,874
Net change in unrealized appreciation (depreciation)................................. (11,291,502) (22,402,188)
-------------- --------------
Net increase (decrease) in net assets resulting from operations...................... (17,253,252) (3,197,107)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................................................ -- (12,302,883)
Net realized gain.................................................................... -- (2,263,326)
Return of capital.................................................................... (19,833,603) (9,111,667)
-------------- --------------
Total distributions to shareholders.................................................. (19,833,603) (23,677,876)
-------------- --------------
CAPITAL TRANSACTIONS:
Repurchase of Common Shares*......................................................... (1,458,371) --
-------------- --------------
Net increase (decrease) in net assets resulting from capital transactions............ (1,458,371) --
-------------- --------------
Total increase (decrease) in net assets.............................................. (38,545,226) (26,874,983)
NET ASSETS:
Beginning of period.................................................................. 239,807,399 266,682,382
-------------- --------------
End of period........................................................................ $ 201,262,173 $ 239,807,399
============== ==============
Accumulated net investment income (loss) at end of period............................ $ (2,210,182) $ (8,406,951)
============== ==============
CAPITAL TRANSACTIONS WERE AS FOLLOWS:
Common Shares at beginning of period................................................. 17,410,203 17,410,203
Common Shares repurchased*........................................................... (143,088) --
-------------- --------------
Common Shares at end of period....................................................... 17,267,115 17,410,203
============== ==============
-----------------------------
* On September 15, 2015, the Fund commenced a Share Repurchase Program. The
program will continue until the earlier of (i) the repurchase of 870,510
common shares, or (ii) six months from implementation of the Fund's Share
Repurchase Program. Since September 15, 2015, the Fund repurchased 143,088
of its shares at a weighted-average discount of 15.05% from net asset
value per share. The Fund expects to continue to repurchase its
outstanding shares until the earlier of (i) the repurchase of an
additional 727,422 common shares (for an aggregate of 870,510), or (ii)
March 15, 2016.
Page 18 See Notes to Financial Statements
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations................. $ (17,253,252)
Adjustments to reconcile net increase (decrease) in net assets resulting from
operations to net cash provided by operating activities:
Purchases of investments.................................................. (183,463,101)
Sales, maturities and paydowns of investments............................. 184,217,311
Net amortization/accretion of premiums/discounts on investments........... 348,058
Net realized gain/loss on investments..................................... 5,028,452
Net realized gain/loss on foreign currency transactions (a)............... 23,101,712
Net change in unrealized appreciation/depreciation on forward foreign
currency contracts.................................................... 1,045,816
Net change in unrealized appreciation/depreciation on investments......... 11,743,286
CHANGES IN ASSETS AND LIABILITIES:
Decrease in interest receivable........................................... 830,193
Decrease in prepaid expenses.............................................. 945
Increase in interest and fees on loans payable............................ 77,720
Decrease in investment advisory fees payable.............................. (41,235)
Decrease in legal fees payable............................................ (1,546)
Decrease in printing fees payable......................................... (188)
Decrease in administrative fees payable................................... (64,687)
Decrease in custodian fees payable........................................ (48,645)
Decrease in transfer agent fees payable................................... (370)
Increase in Trustees' fees and expenses payable........................... 54
Decrease in deferred Indonesian capital gains tax......................... (16,653)
Increase in other liabilities payable..................................... 3
-------------
CASH PROVIDED BY OPERATING ACTIVITIES........................................... $ 25,503,873
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of Common Shares............................................... (1,458,371)
Distributions to Common Shareholders from return of capital............... (19,833,603)
Repayment of borrowing.................................................... (10,000,000)
Effect of exchange rate changes on Euro borrowing (b)..................... (1,162,078)
-------------
CASH USED IN FINANCING ACTIVITIES............................................... (32,454,052)
--------------
Decrease in cash and foreign currency (c)....................................... (6,950,179)
Cash and foreign currency at beginning of period................................ 10,092,119
--------------
CASH AND FOREIGN CURRENCY AT END OF PERIOD...................................... $ 3,141,940
==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees............................... $ 799,175
==============
-----------------------------
(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 $318,869, which does not include the effect of exchange rate
changes on Euro borrowings.
See Notes to Financial Statements Page 19
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
2015 2014 2013 2012 2011
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period........ $ 13.77 $ 15.32 $ 18.37 $ 16.94 $ 17.80
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................ 0.82 1.03 1.07 1.18 1.22
Net realized and unrealized gain (loss)..... (1.80) (1.22) (2.56) 1.81 (0.52)
--------- --------- --------- --------- ---------
Total from investment operations............ (0.98) (0.19) (1.49) 2.99 0.70
--------- --------- --------- --------- ---------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income....................... -- (0.71) (1.08) (1.32) (1.55)
Net realized gain........................... -- (0.13) (0.13) -- --
Return of capital........................... (1.14) (0.52) (0.35) (0.24) (0.01)
--------- --------- --------- --------- ---------
Total distributions......................... (1.14) (1.36) (1.56) (1.56) (1.56)
--------- --------- --------- --------- ---------
Common share repurchase..................... 0.01 -- -- -- --
--------- --------- --------- --------- ---------
Net asset value, end of period.............. $ 11.66 $ 13.77 $ 15.32 $ 18.37 $ 16.94
========= ========= ========= ========= =========
Market value, end of period................. $ 10.13 $ 12.04 $ 14.05 $ 17.85 $ 15.76
========= ========= ========= ========= =========
TOTAL RETURN BASED ON NET ASSET VALUE (a)... (6.03)% (0.84)% (7.91)% 18.51% 4.37%
========= ========= ========= ========= =========
TOTAL RETURN BASED ON MARKET VALUE (a)...... (6.63)% (5.46)% (13.13)% 23.85% (0.44)%
========= ========= ========= ========= =========
-----------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........ $ 201,262 $ 239,807 $ 266,682 $ 319,570 $ 294,520
Ratio of total expenses to average net
assets................................... 2.10% 2.16% 2.10% 2.09% 2.02%
Ratio of total expenses to average net
assets excluding interest expense........ 1.71% 1.76% 1.72% 1.71% 1.63%
Ratio of net investment income (loss) to
average net assets....................... 6.42% 6.79% 6.41% 6.72% 6.94%
Portfolio turnover rate..................... 61% 61% 56% 56% 52%
INDEBTEDNESS:
Total loan outstanding (in 000's)........... $ 86,243 $ 97,405 $ 98,966 $ 98,441 $ 98,198
Asset coverage per $1,000 of indebtedness
(b)...................................... $ 3,334 $ 3,462 $ 3,695 $ 4,246 $ 3,999
------------------------------
(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) Calculated by subtracting the Fund's total liabilities (not including the
loan outstanding) from the Fund's total assets, and dividing by the
outstanding loan balance in 000's.
Page 20 See Notes to Financial Statements
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015
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 Fund, which is an investment company within the scope of Financial
Accounting Standards Board ("FASB") Accounting Standards Update 2013-08, follows
accounting and reporting guidance under FASB Accounting Standards Codification
Topic 946, "Financial Services-Investment Companies." 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 Fund's 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 the absence of
market value with respect to any portfolio securities, at fair value. Market
value prices represent last sale or official closing prices from a national or
foreign exchange (i.e., a regulated market) and are primarily obtained from
third-party pricing services. Fair value prices represent any prices not
considered market value prices and are either obtained from a third-party
pricing service or are determined by the Pricing Committee of the Fund's
investment advisor, First Trust Advisors L.P. ("First Trust" or the "Advisor"),
in accordance with valuation procedures adopted by the Fund's Board of Trustees,
and in accordance with provisions of the 1940 Act. Investments valued by the
Advisor's Pricing Committee, if any, are footnoted as such in the footnotes to
the Portfolio of Investments. The Fund's investments are valued as follows:
Bonds, notes and other debt securities are fair 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.
Fixed income and other debt securities having a remaining maturity of 60
days or less when purchased are fair valued at cost adjusted for
amortization of premiums and accretion of discounts (amortized cost),
provided the Advisor's Pricing Committee has determined that the use of
amortized cost is an appropriate reflection of fair value given market and
issuer specific conditions existing at the time of the determination.
Factors that may be considered in determining the appropriateness of the
use of amortized cost include, but are not limited to, the following:
1) the credit conditions in the relevant market and changes
thereto;
2) the liquidity conditions in the relevant market and changes
thereto;
3) the interest rate conditions in the relevant market and
changes thereto (such as significant changes in interest
rates);
Page 21
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015
4) issuer-specific conditions (such as significant credit
deterioration); and
5) any other market-based data the Advisor's Pricing Committee
considers relevant. In this regard, the Advisor's Pricing
Committee may use last-obtained market-based data to assist it
when valuing portfolio securities using amortized cost.
Forward foreign currency contracts are fair 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.
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, the Advisor's Pricing Committee, 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 or fair value 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. When fair value prices are used, generally they will differ from
market quotations or official closing prices on the applicable exchanges. 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.
Page 22
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015
The inputs or methodologies 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 December 31, 2015, 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 December 31, 2015, the Fund had no when-issued,
delayed-delivery or forward purchase commitments.
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
between two parties ("Counterparties") 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 Forward Foreign Currency Contracts table in the Portfolio of Investments.
In the event of default by the Counterparty, the Fund will provide notice to the
Counterparty of the Fund's intent to convert the currency held by the Fund into
the currency that the Counterparty agreed to exchange with the Fund. If a
Counterparty becomes bankrupt or otherwise fails to perform its obligations due
to financial difficulties, the Fund may experience significant delays in
obtaining any recovery in a bankruptcy or other reorganization proceeding. The
Fund may obtain only limited recovery or may obtain no recovery in such
circumstances.
D. OFFSETTING ON THE STATEMENT OF ASSETS AND LIABILITIES
Offsetting Assets and Liabilities require entities to disclose both gross and
net information about instruments and transactions eligible for offset on the
Statements 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. The transactions subject to offsetting disclosures are 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 ("MNAs")
or similar agreements on the Statement of Assets and Liabilities. MNAs provide
the right, in the event of default (including bankruptcy and insolvency), for
the non-defaulting Counterparty to liquidate the collateral and calculate the
net exposure to the defaulting party or request additional collateral.
At December 31, 2015, 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 Pledged Net Amount
-----------------------------------------------------------------------------------------------------------------------
Forward Foreign
Currency Contracts* $ 1,255,761 $ -- $ 1,255,761 $ (45,595) $ -- $ 1,210,166
Page 23
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015
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
Liabilities and Liabilities Liabilities Instruments Pledged Net Amount
-----------------------------------------------------------------------------------------------------------------------
Forward Foreign
Currency Contracts* $ (393,528) $ -- $ (393,528) $ 45,595 $ -- $ (347,933)
* The respective Counterparties for each contract are disclosed in the
Forward Foreign Currency Contracts table in the Portfolio of Investments.
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 and are shown in "Net realized
gain (loss) on foreign currency transactions" on the Statement of Operations.
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 of any long-term capital
gains earned by the Fund are distributed at least annually. Distributions will
automatically be reinvested into additional Common Shares pursuant to the Fund's
Dividend Reinvestment Plan unless cash distributions are elected by the
shareholder.
Distributions from net investment income and realized capital gains are
determined in accordance with federal 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 Common 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. Permanent differences incurred during the year ended
December 31, 2015, primarily as a result of differing book and tax treatment on
realization of foreign currency gains (losses), have been reclassified at year
end to reflect a decrease in accumulated net investment income (loss) by
$8,084,891, an increase in accumulated net realized gain (loss) on investments
by $12,268,058 and an decrease to paid-in capital of $4,183,167. Net assets were
not affected by this reclassification.
The tax character of distributions paid during the fiscal years ended December
31, 2015 and December 31, 2014 was as follows:
Distributions paid from: 2015 2014
Ordinary income................................. $ -- $ 12,497,422
Capital gain.................................... -- 2,068,787
Return of capital............................... 19,833,603 9,111,667
Page 24
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015
As of December 31, 2015, 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............ (8,013,375)
Net unrealized appreciation (depreciation)...... (34,730,363)
-------------
Total accumulated earnings (losses)............. (42,743,738)
Other........................................... (104,881)
Paid-in capital................................. 244,110,792
-------------
Net assets...................................... $ 201,262,173
=============
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.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward indefinitely following the
year of the loss and offset such loss against any future realized capital gains.
The Fund is subject to certain limitations under 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. At December 31, 2015, the
Fund had $7,433,908 non-expiring capital loss carryforwards for federal income
tax purposes.
Certain losses realized during the current fiscal year may be deferred and
treated as occurring on the first day of the following fiscal year for federal
income tax purposes. For the fiscal year ended December 31, 2015, the Fund
incurred and elected to defer capital losses of $579,467.
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 2012, 2013,
2014 and 2015 remain open to federal and state audit. As of December 31, 2015,
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, 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
Page 25
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015
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. BNYM IS and BNYM are subsidiaries of The Bank of New York Mellon
Corporation, a financial holding company.
At a meeting on December 7, 2015, the Board accepted Mr. Bradley's resignation
from his position as President and Chief Executive Officer of the Fund,
effective December 31, 2015. At the same meeting, the Board elected Mr. Dykas,
formerly Chief Financial Officer and Treasurer of the Fund, to serve as the
President and Chief Executive Officer and Mr. Swade, formerly an Assistant
Treasurer of the Fund, to serve as Treasurer, Chief Financial Officer and Chief
Accounting Officer of the Fund.
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 Fund 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 year ended December
31, 2015, were $174,233,745 and $181,645,342, respectively. Cost of purchases
and proceeds from sales of U.S. government obligations, for the year ended
December 31, 2015, were $8,580,489 and $2,571,987, respectively.
5. DERIVATIVE TRANSACTIONS
The following table presents the type of derivative held by the Fund at December
31, 2015, the primary underlying risk exposure and location of these instruments
as presented on the Statement of Assets and Liabilities.
ASSET DERIVATIVES LIABILITY DERIVATIVES
--------------------------------------- ----------------------------------------
DERIVATIVE STATEMENT OF ASSETS AND STATEMENT OF ASSETS AND
INSTRUMENT RISK EXPOSURE LIABILITIES LOCATION VALUE LIABILITIES LOCATION VALUE
------------------ --------------- ----------------------- -------------- ----------------------- ---------------
Unrealized appreciation Unrealized depreciation
Forward foreign on forward foreign on forward foreign
currency contracts Currency Risk currency contracts $ 1,255,761 currency contracts $ 393,528
The following table presents the amount of net realized gain (loss) and change
in net unrealized appreciation (depreciation) recognized for the year ended
December 31, 2015, 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 $ 9,391,535
Net change in unrealized appreciation (depreciation) on forward
foreign currency contracts (1,045,816)
During the year ended December 31, 2015, the amount of notional values of
forward foreign currency contracts opened and closed were $832,083,049 and
$902,874,397, respectively.
6. BORROWINGS
The Fund has 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 $110,000,000.
Page 26
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015
Prior to December 29, 2015, the total commitment amount was $120,000,000. As of
December 31, 2015, the Fund had three loans outstanding under the revolving
credit facility totaling $86,242,673. The three loans, which are all LIBOR
loans, bear interest based on the adjusted LIBOR rate and are in the amounts of
$51,500,000, $24,500,000 and $10,242,673 (the U.S. Dollar equivalent of a
(euro)9,425,000 loan). For the year ended December 31, 2015, the average amount
outstanding was $93,664,377. The high and low annual interest rates during the
year ended December 31, 2015 were 1.07% and 0.75%, respectively, and the
weighted average interest rate was 0.92%. The weighted average interest rate at
December 31, 2015 was 1.03%. The interest rate under the credit facility is
equal to the 1-month LIBOR plus 0.75%. The Fund pays a commitment fee of 0.25%
on any day that the loan balances are less than 75% of the total commitment or
0.15% in all other events. Prior to December 29, 2015, the Fund paid a
commitment fee of 0.15% on any day that the loan balances were less than 60% of
the total commitment or no commitment fee in all other events. These fees are
included in "Interest and fees on outstanding loans" on the Statement of
Operations. The revolving credit facility is scheduled to expire on December 27,
2016, but may 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:
Effective January 1, 2016, the fixed annual retainer paid to the Independent
Trustees will be allocated equally among each fund in the First Trust Fund
Complex and will no longer be allocated pro rata based on each fund's net
assets.
On January 20, 2016, the Fund declared a distribution of $0.075 per share to
Common Shareholders of record on February 3, 2016, payable February 16, 2016.
Page 27
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FIRST TRUST/ABERDEEN GLOBAL
OPPORTUNITY INCOME FUND:
We have audited the accompanying statement of assets and liabilities of First
Trust/Aberdeen Global Opportunity Income Fund (the "Fund"), including the
portfolio of investments, as of December 31, 2015, and the related statements of
operations and cash flows for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of December 31, 2015 by correspondence with the Fund's
custodian and brokers; when replies were not received from brokers, we performed
other auditing procedures. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of First
Trust/Aberdeen Global Opportunity Income Fund, as of December 31, 2015, and the
results of its operations and its cash flows for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with accounting principles generally accepted in the United
States of America.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 23, 2016
Page 28
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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015 (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 http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's ("SEC") website located at
http://www.sec.gov.
Page 29
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015 (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 Form N-Qs
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.
NYSE CERTIFICATION INFORMATION
In accordance with Section 303A-12 of the NYSE Listed Company Manual, the Fund's
President has certified to the NYSE that, as of April 29, 2015, he was not aware
of any violation by the Fund of NYSE corporate governance listing standards. In
addition, the Fund's reports to the SEC on Form N-CSR and N-Q contain
certifications by the Fund's principal executive officer and principal financial
officer to the Fund's public disclosure in such reports and that are required by
Rule 30a-2 under the 1940 Act.
TAX INFORMATION
Of the ordinary income (including short-term capital gain) distributions made by
the Fund during the year ended December 31, 2015, none qualified for the
corporate dividends received deduction available to corporate shareholders or as
qualified dividend income.
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, First Trust Intermediate Duration Preferred & Income Fund and First Trust
New Opportunities MLP and Energy Fund was held on April 20, 2015 (the "Annual
Meeting"). At the Annual Meeting, Richard E. Erickson and Thomas R. Kadlec were
elected by the Common Shareholders of the First rust/Aberdeen Global Opportunity
Income Fund as Class II Trustees for a three-year term expiring at the Fund's
Annual Meeting of Shareholders in 2018. The number of votes cast for Mr.
Erickson was 13,584,026, the number of votes against was 812,111 and the number
of broker non-votes was 3,014,066. The number of votes cast for Mr. Kadlec was
13,591,973, the number of votes against was 804,164 and the number of broker
nonvotes was 3,014,066. James A. Bowen, Robert F. Keith and Niel B. Nielson are
the other current and continuing Trustees.
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. High yield securities are generally not listed
on a national securities exchange but trade in the over-the-counter markets. Due
to the smaller, less liquid market for high yield securities, the bid-offer
spread on such securities is generally greater than it is for investment grade
securities and the purchase or sale of such securities may take longer to
complete. As of the fourth quarter of 2015, the market for high yield debt has
experienced decreased liquidity, and investor perception of increased risk has
caused yield spreads to widen.
Page 30
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015 (UNAUDITED)
LIQUIDITY RISK: The Fund may invest up to 10% of its Managed Assets in
securities that, at the time of investment, are illiquid (determined using the
Securities and Exchange Commission's standard applicable to investment
companies, i.e., securities that cannot be disposed of within seven days in the
ordinary course of business at approximately the value at which the Fund has
valued the securities). If the economy experiences a sudden downturn, or if the
debt markets for such companies become distressed, the Fund may have particular
difficulty selling its assets in sufficient amounts, at reasonable prices and in
a sufficiently timely manner.
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 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.
Page 31
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015 (UNAUDITED)
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
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BOARD OF TRUSTEES AND OFFICERS
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015 (UNAUDITED)
NUMBER OF OTHER
PORTFOLIOS IN TRUSTEESHIPS OR
THE FIRST TRUST DIRECTORSHIPS
NAME, ADDRESS, TERM OF OFFICE FUND COMPLEX HELD BY TRUSTEE
DATE OF BIRTH AND AND LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY DURING PAST
POSITION WITH THE FUND SERVICE(1) DURING PAST 5 YEARS TRUSTEE 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
------------------------------------------------------------------------------------------------------------------------------------
Richard E. Erickson, Trustee o Three-Year Term Physician; President, Wheaton Orthopedics; 120 None
c/o First Trust Advisors L.P. Limited Partner, Gundersen Real Estate
120 East Liberty Drive, o Since Fund Limited Partnership; Member Sportsmed LLC
Suite 400 Inception
Wheaton, IL 60187
D.O.B.: 04/51
Thomas R. Kadlec, Trustee o Three-Year Term President, ADM Investor Services, Inc. 120 Director of ADM
c/o First Trust Advisors L.P. (Futures Commission Merchant) Investor Services,
120 East Liberty Drive, o Since Fund Inc., ADM
Suite 400 Inception Investor Services
Wheaton, IL 60187 International, and
D.O.B.: 11/57 Futures Industry
Association
Robert F. Keith, Trustee o Three-Year Term President, Hibs Enterprises (Financial 120 Director of Trust
c/o First Trust Advisors L.P. and Management Consulting) Company of
120 East Liberty Drive, o Since Fund Illinois
Suite 400 Inception
Wheaton, IL 60187
D.O.B.: 11/56
Niel B. Nielson, Trustee o Three-Year Term Managing Director and Chief Operating 120 Director of
c/o First Trust Advisors L.P. Officer (January 2015 to Present), Pelita Covenant
120 East Liberty Drive, o Since Fund Harapan Education Foundation (Education Transport, Inc.
Suite 400 Inception Products and Services); President and Chief (May 2003 to
Wheaton, IL 60187 Executive Officer (June 2012 to September May 2014)
D.O.B.: 03/54 2014), Servant Interactive LLC (Educational
Products and Services); President and Chief
Executive Officer (June 2012 to September
2014), Dew Learning LLC (Educational
Products and Services); President
(June 2002 to June 2012), Covenant College
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
James A. Bowen(2), Trustee o Three-Year Term Chief Executive Officer, First Trust 120 None
and Chairman of the Board Advisors L.P. and First Trust Portfolios
120 East Liberty Drive, o Since Fund L.P.; Chairman of the Board of Directors,
Suite 400 Inception BondWave LLC (Software Development
Wheaton, IL 60187 Company/Investment Advisor) and
D.O.B.: 09/55 Stonebridge Advisors LLC (Investment
Advisor)
-----------------------------
(1) Currently, James A. Bowen and Niel B. Nielson, as Class III Trustees, are
serving as trustees until the Fund's 2016 annual meeting of shareholders.
Robert F. Keith, as a Class I Trustee, is serving as a trustee until the
Fund's 2017 annual meeting of shareholders. Richard E. Erickson and Thomas
R. Kadlec, as Class II Trustees, are serving as trustees until the Fund's
2018 annual meeting of shareholders.
(2) Mr. Bowen is deemed an "interested person" of the Fund due to his position
as Chief Executive Officer of First Trust Advisors L.P., investment
advisor of the Fund.
Page 33
--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015 (UNAUDITED)
NAME, ADDRESS POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS(3)
------------------------------------------------------------------------------------------------------------------------------------
James M. Dykas President and Chief o Indefinite Term Managing Director and Chief Financial Officer
120 E. Liberty Drive, Executive Officer (January 2016 to Present), Controller (January 2011
Suite 400 o Since January 2016 to January 2016), Senior Vice President (April 2007
Wheaton, IL 60187 to January 2016), First Trust Advisors L.P. and First
D.O.B.: 01/66 Trust Portfolios L.P.
Donald P. Swade Treasurer, Chief Financial o Indefinite Term Vice President (April 2012 to Present), First Trust
120 E. Liberty Drive, Officer and Chief Advisors L.P. and First Trust Portfolios L.P.,
Suite 400 Accounting Officer o Since January 2016 Vice President (September 2006 to April 2012),
Wheaton, IL 60187 Guggenheim Funds Investment Advisors, LLC/
D.O.B.: 08/72 Claymore Securities, Inc.
W. Scott Jardine Secretary and Chief o Indefinite Term General Counsel, First Trust Advisors L.P. and
120 E. Liberty Drive, Legal Officer First Trust Portfolios L.P.; Secretary and
Suite 400 o Since Fund Inception General Counsel, BondWave LLC (Software
Wheaton, IL 60187 Development Company/Investment Advisor);
D.O.B.: 05/60 Secretary of Stonebridge Advisors LLC
(Investment Advisor)
Daniel J. Lindquist Vice President o Indefinite Term Managing Director (July 2012 to Present),
120 E. Liberty Drive, Senior Vice President (September 2005 to Present),
Suite 400 o Since September 2005 First Trust Advisors L.P. and First Trust
Wheaton, IL 60187 Portfolios L.P.
D.O.B.: 02/70
Kristi A. Maher Chief Compliance Officer o Indefinite Term Deputy General Counsel, First Trust Advisors L.P.
120 E. Liberty Drive, and Assistant Secretary and First Trust Portfolios L.P.
Suite 400 o Chief Compliance
Wheaton, IL 60187 Officer Since
D.O.B.: 12/66 January 2011
o Assistant Secretary
Since Fund Inception
-----------------------------
(3) Officers of the Fund have an indefinite term. The term "officer" means the
president, vice president, secretary, treasurer, controller or any other
officer who performs a policy making function.
Page 34
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PRIVACY POLICY
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
DECEMBER 31, 2015 (UNAUDITED)
PRIVACY POLICY
First Trust values our relationship with you and considers your privacy an
important priority in maintaining that relationship. We are committed to
protecting the security and confidentiality of your personal information.
SOURCES OF INFORMATION
We collect nonpublic personal information about you from the following sources:
o Information we receive from you and your broker-dealer, investment
advisor or financial representative through interviews,
applications, agreements or other forms;
o Information about your transactions with us, our affiliates or
others;
o Information we receive from your inquiries by mail, e-mail or
telephone; and
o Information we collect on our website through the use of "cookies".
For example, we may identify the pages on our website that your
browser requests or visits.
INFORMATION COLLECTED
The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.
DISCLOSURE OF INFORMATION
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. In addition to using
this information to verify your identity (as required under law), the permitted
uses may also include the disclosure of such information to unaffiliated
companies for the following reasons:
o In order to provide you with products and services and to effect
transactions that you request or authorize, we may disclose your
personal information as described above to unaffiliated financial
service providers and other companies that perform administrative or
other services on our behalf, such as transfer agents, custodians
and trustees, or that assist us in the distribution of investor
materials such as trustees, banks, financial representatives, proxy
services, solicitors and printers.
o We may release information we have about you if you direct us to do
so, if we are compelled by law to do so, or in other legally limited
circumstances (for example to protect your account from fraud).
In addition, in order to alert you to our other financial products and services,
we may share your personal information within First Trust.
PRIVACY ONLINE
We allow third-party companies, including AddThis (a social media sharing
service), to collect certain anonymous information when you visit our website.
These companies may use non-personally identifiable information during your
visits to this and other websites in order to provide advertisements about goods
and services likely to be of greater interest to you. These companies typically
use a cookie, third party web beacon or pixel tags, to collect this information.
To learn more about this behavioral advertising practice, you can visit
www.networkadvertising.org.
CONFIDENTIALITY AND SECURITY
With regard to our internal security procedures, First Trust restricts access to
your nonpublic personal information to those First Trust employees who need to
know that information to provide products or services to you. We maintain
physical, electronic and procedural safeguards to protect your nonpublic
personal information.
POLICY UPDATES AND INQUIRIES
As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time, however, if we do change
it, we will tell you promptly. For questions about our policy, or for additional
copies of this notice, please go to www.ftportfolios.com, or contact us at
1-800-621-1675 (First Trust Portfolios) or 1-800-222-6822 (First Trust
Advisors).
Page 35
This Page Left Blank Intentionally.
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.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless
of whether these individuals are employed by the registrant or a third
party.
(c) There have been no amendments, during the period covered by this report,
to a provision of the code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or
a third party, and that relates to any element of the code of ethics
description.
(d) The registrant has not granted any waivers, including an implicit waiver,
from a provision of the code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or
a third party, that relates to one or more of the items set forth in
paragraph (b) of this item's instructions.
(e) Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's board of
trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified
to serve as audit committee financial experts serving on its audit committee and
that each of them is "independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees (Registrant) -- The aggregate fees billed for each of the
last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements were $53,000 for 2014 and
$53,000 for 2015.
(b) Audit-Related Fees (Registrant) -- The aggregate fees billed in each
of the last two fiscal years, for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under paragraph
(a) of this Item were $0 for 2014 and $0 for 2015.
Audit-Related Fees (Investment Adviser) -- The aggregate fees billed in
each of the last two fiscal years of the registrant for assurance and related
services by the principal accountant that are reasonably related to the
performance of the audit of the registrant's financial statements and are not
reported under paragraph (a) of this Item were $0 for 2014 and $0 for 2015.
(c) Tax Fees (Registrant) -- The aggregate fees billed in each of the last
two fiscal years for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning to the registrant were $5,200
for 2014 and $5,200 for 2015.
Tax Fees (Investment Adviser) -- The aggregate fees billed in each of the
last two fiscal years of the registrant for professional services rendered by
the principal accountant for tax compliance, tax advice, and tax planning to the
registrant's adviser were $0 for 2014 and $0 for 2015.
(d) All Other Fees (Registrant) -- The aggregate fees billed in each of
the last two fiscal years for products and services provided by the principal
accountant to the registrant, other than the services reported in paragraphs (a)
through (c) of this Item were $0 for 2014 and $3,0000 for 2015. These were for
fund accounting system conversions.
All Other Fees (Investment Adviser) -- The aggregate fees billed in each
of the last two fiscal years for products and services provided by the principal
accountant to the registrant's investment adviser, other than services reported
in paragraphs (a) through (c) of this Item were $0 for 2014 and $0 for 2015.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval
Policy, the Audit Committee (the "Committee") is responsible for the
pre-approval of all audit services and permitted non-audit services (including
the fees and terms thereof) to be performed for the registrant by its
independent auditors. The Chairman of the Committee is authorized to give such
pre-approvals on behalf of the Committee up to $25,000 and report any such
pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the independent
auditor's engagements for non-audit services with the registrant's adviser (not
including a sub-adviser whose role is primarily portfolio management and is
sub-contracted or overseen by another investment adviser) and any entity
controlling, controlled by or under common control with the investment adviser
that provides ongoing services to the registrant, if the engagement relates
directly to the operations and financial reporting of the registrant, subject to
the de minimis exceptions for non-audit services described in Rule 2-01 of
Regulation S-X. If the independent auditor has provided non-audit services to
the registrant's adviser (other than any sub-adviser whose role is primarily
portfolio management and is sub-contracted with or overseen by another
investment adviser) and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to its policies, the Committee
will consider whether the provision of such non-audit services is compatible
with the auditor's independence.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) for the registrant and the registrant's investment adviser of this
Item that were approved by the audit committee pursuant to the pre-approval
exceptions included in paragraph (c)(7)(i)(c) or paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X are as follows:
(b) 0%
(c) 0%
(d) 0%
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year that were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees was less than fifty
percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's investment
adviser (not including any sub-adviser whose role is primarily portfolio
management and is subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the Registrant for 2014 were $5,200
and $1,800 for the Registrant and the Registrant's investment adviser,
respectively and for 2015 were $8,200 and $12,500 for the Registrant and the
Registrant's investment adviser, respectively.
(h) The Registrant's audit committee of its Board of Trustees determined
that the provision of non-audit services that were rendered to the Registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the Registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) The registrant has a separately designated audit committee consisting of
all the independent trustees of the Registrant. The members of the audit
committee are: Thomas R. Kadlec, Niel B. Nielson, Richard E. Erickson and
Robert F. Keith.
ITEM 6. 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.
The Proxy Voting Policies are attached herewith.
ABERDEEN U.S. REGISTERED ADVISERS (THE "ABERDEEN ADVISERS")
PROXY VOTING POLICIES AND PROCEDURES
Effective as of March 2, 2016
Policy Statement
Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended (the
"Advisers Act") requires the Aberdeen Advisers to vote proxies in a manner
consistent with clients' best interest and must not place its interests above
those of its clients when doing so. It requires the Aberdeen Advisers to: (i)
adopt and implement written policies and procedures that are reasonably designed
to ensure that the Aberdeen Advisers vote proxies in the best interest of the
clients, and (ii) to disclose to the clients how they may obtain information on
how the Aberdeen Advisers voted proxies. In addition, Rule 204-2 requires the
Aberdeen Advisers to keep records of proxy voting and client requests for
information.
As registered investment advisers, the Aberdeen Advisers have an obligation to
vote proxies with respect to securities held in its client portfolios in the
best economic interests of the clients for which it has proxy voting authority.
The Aberdeen Advisers invest for the clients' portfolios in companies globally
and actively target investment in those companies with sound corporate
governance practices. The Aberdeen Advisers are committed to exercising
responsible ownership with a conviction that companies adopting best practices
in corporate governance will be more successful in their core activities and
deliver enhanced returns to shareholders.
Aberdeen's Corporate Governance Policy and Principles are published on our
website:
HTTP://WWW.ABERDEEN-
ASSET.COM/DOC.NSF/LIT/LEGALDOCUMENTATIONGROUPCORPORATEGOVERNANCEPRINCIPLES
Our proxy voting records are available per request, or on the SEC's website at
SEC.gov.
Policy
Each of the Aberdeen Advisers provides advisory resources to certain U.S.
clients, including substantive advice on voting proxies for certain equity
securities. These Policies and Procedures are adopted to ensure compliance by
the Aberdeen Advisers with Rule 206(4)-6 under the Advisers Act and other
applicable fiduciary obligations under rules and regulations of the SEC and
interpretations of its staff with respect to proxies for voting securities held
by client portfolios.
Clients may consist of investment companies registered under the Investment
Company Act of 1940, as amended ("1940 Act") (the "Funds" and each, a "Fund"),
and other U.S. residents as well as non-U.S. registered funds or clients. Each
Aberdeen Adviser follows these Policies and Procedures for each of its
respective U.S. clients as required under the Advisers Act and other applicable
law, unless expressly directed by a client in writing to refrain from voting
that client's proxies or to vote in accordance with the client's proxy voting
policies and procedures. The Aberdeen Advisers who advise or sub-advise the
Funds follow both these Policies and Procedures and the proxy voting policies
and procedures adopted by the Funds and their respective Boards of Directors or
Trustees. The Aberdeen Advisers located outside the U.S. may provide proxy
voting services to their non-U.S. based clients in accordance with the
regulatory requirements of the jurisdiction in which the client is located.
Aberdeen's Corporate Governance Policy and Principles are published on our
website:
HTTP://WWW.ABERDEEN-
ASSET.COM/DOC.NSF/LIT/LEGALDOCUMENTATIONGROUPCORPORATEGOVERNANCEPRINCIPLES
To the extent that an Aberdeen Adviser may rely on sub-advisers, whether
affiliated or unaffiliated, to manage any client portfolio on a discretionary
basis, the Aberdeen Adviser may delegate responsibility for voting proxies to
the sub-adviser. However, such sub-advisers will be required either to follow
these Policies and Procedures or to demonstrate that their proxy voting policies
and procedures are consistent with these Policies and Procedures or otherwise
implemented in the best interests of the Aberdeen Advisers' clients.
Upon request, the Aberdeen Advisers will provide clients with a copy of these
Policies and Procedures, as revised from time to time.
As disclosed in Part 2A of each Aberdeen Adviser's Form ADV, a client may obtain
information on how its proxies were voted by requesting such information from
its Aberdeen Adviser. Unless specifically requested by a client in writing, and
other than as required for the Funds, the Aberdeen Advisers do not generally
disclose client-specific proxy votes to third parties.
Our proxy voting records are available per request, or on the SEC's website at
SEC.gov.
ERISA
The U.S. Department of Labor ("DOL") has indicated that an investment adviser
with a duty to vote proxies has an obligation to take reasonable steps under the
circumstances to ensure that it receives the proxies. Failure to take any action
to reconcile proxies would cause Aberdeen to fail to satisfy ERISA's fiduciary
responsibility provisions. Appropriate steps include informing the Plan sponsor
and its trustees, bank custodian or broker/dealer custodian of the requirement
that all proxies be forwarded to the adviser and making periodic reviews during
the proxy season, including follow-up letters and phone calls if necessary. When
voting proxies, an investment manager must consider proxies as a Plan asset and
vote only in the best economic interests of the Plan participants, vote
consistently among clients, and avoid specific client voting instructions about
voting proxies.
DOL has provided investment managers with the following guidance about their
ERISA responsibilities, including proxy voting, compliance with written
statements of investment policy, and active monitoring of corporate management
by Plan fiduciaries:
i. Where the authority to manage Plan assets has been delegated to an
investment manager, only the investment manager has authority to vote
proxies, except when the named fiduciary has reserved to itself or to
another named fiduciary (as authorized by the plan document) the right to
direct a Plan trustee regarding the voting of proxies.
ii. Investment managers, as Plan fiduciaries, have a responsibility to vote
proxies on foreign issues that may affect the value of the shares in the
Plan's portfolio and will vote such proxies unless the cost of doing so
cannot be justified.
iii. An investment manager is required to comply with statements of investment
policy, unless compliance with the guidelines in a given instance would be
imprudent and therefore failure to follow the guidelines would not violate
ERISA. ERISA does not shield the investment manager from liability for
imprudent actions taken in compliance with a statement of investment
policy.
On occasions when it is deemed to be a fiduciary for an ERISA client's assets,
Aberdeen will vote the Plan assets in accordance with Aberdeen's Proxy Voting
Policy. Aberdeen will provide each ERISA client (upon request) with proxy voting
records to demonstrate how proxies for securities held in the portfolio were
voted.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(A)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
INFORMATION PROVIDED AS OF MARCH 8, 2016
Aberdeen Asset Management Inc. ("Aberdeen" or the "Sub-Advisor"), a Securities
and Exchange Commission registered investment advisor, is a wholly-owned
subsidiary of Aberdeen Asset Management PLC ("Aberdeen Group") and serves as the
investment sub-advisor to the registrant. 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.
Investment decisions for the registrant 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 the roles of 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.
JoZSEF SZABo
Head of Global Macro
Jozsef Szabo joined Aberdeen in 2011 from the central bank of Hungary where for
the last six years he had managed fixed income portfolios as a part of the
official FX reserves management operations. Previously, Mr. Szabo worked in
monetary analysis within the central bank and served as secretary to the
Monetary Council. Prior to that, Mr. Szabo worked for the Hungarian Government
Debt Management Agency.
BRETT DIMENT
Head of Emerging Market Debt
Mr. Diment is Head of Emerging Market and joined Aberdeen following the
acquisition of Deutsche Asset Management ("Deutsche") in 2005. He is responsible
for the day-to-day management of the Emerging Market Debt Team and portfolios.
Mr. Diment had been at Deutsche since 1991 as a member of the Fixed Income group
and served as Head of the Emerging Debt Team there from 1999 until its
acquisition by Aberdeen.
EDWIN GUTIERREZ
Head of Emerging Market Sovereign Debt
Mr. Gutierrez is the Head of Emerging Market Sovereign Debt. Edwin joined
Aberdeen via the acquisition of Deutsche Asset Management's London and
Philadelphia fixed income businesses in 2005, where he held the same role since
joining Deutsche in 2000.
MAX WOLMAN
Senior Investment Manager, Emerging Market Debt
Mr. Wolman is a Senior Investment Manager on the Emerging Market Debt Team and
has been with Aberdeen since January 2001. Mr. Wolman originally specialized in
currency and domestic debt analysis but is now responsible for a wide range of
emerging debt analysis including external and corporate issuers. Mr. Wolman is a
member of the Emerging Markets Debt Investment Committee at Aberdeen and is also
responsible for the daily implementation of the investment process.
JAMES ATHEY
Investment manager, Global Macro
Mr. Athey is an Investment Manager on the Global Macro Team. James joined
Aberdeen in 2001 through the Graduate Recruitment Program.
(A)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
AND POTENTIAL CONFLICTS OF INTEREST
OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
INFORMATION PROVIDED AS OF DECEMBER 31, 2015
(assets in millions).
# of Accounts
--------------
Managed for Total Assets
------------ -------------
Total which for which
------ ------ ----------
# of Advisory Fee Advisory Fee
----- ------------- -------------
Name of Portfolio Manager Accounts Total is Based on is Based on
------------------------- -------- ------ ------------ ------------
or Team Member Type of Accounts*** Managed Assets Performance Performance
-------------- ------------------- ------- ------ ----------- -----------
1. Jozsef Szabo Registered Investment Companies: 5 $1,148.99 0 $0
Other Pooled Investment Vehicles: 95 $24,978.21 0 $0
Other Accounts: 184 $50,507.95 2 $308.77
2. Brett Diment Registered Investment Companies: 5 $1,148.99 0 $0
Other Pooled Investment Vehicles: 95 $24,978.21 0 $0
Other Accounts: 184 $50,507.95 2 $308.77
3. Edwin Gutierrez Registered Investment Companies: 5 $1,148.99 0 $0
Other Pooled Investment Vehicles: 95 $24,978.21 0 $0
Other Accounts: 184 $50,507.95 2 $308.77
4. Max Wolman Registered Investment Companies: 5 $1,148.99 0 $0
Other Pooled Investment Vehicles: 95 $24,978.21 0 $0
Other Accounts: 184 $50,507.95 2 $308.77
5. James Athey Registered Investment Companies: 5 $1,148.99 0 $0
Other Pooled Investment Vehicles: 95 $24,978.21 0 $0
Other Accounts: 184 $50,507.95 2 $308.77
POTENTIAL CONFLICTS OF INTERESTS
AS OF DECEMBER 31, 2015
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.
(A)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
INFORMATION PROVIDED AS OF DECEMBER 31, 2015
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 Aberdeen's 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 generally 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 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, 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 the team manages.
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, 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.
(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP
THE INFORMATION BELOW IS AS OF DECEMBER 31, 2015
Name of Portfolio Manager Dollar ($) Range of
or Fund Shares
Team Member Beneficially Owned
Jozsef Szabo $0
Brett Diment $0
Edwin Guiterrez $0
Max Wolman $0
James Athey $0
(B) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
---------------------------------------------------------------------------------------------------
(A) TOTAL (C) TOTAL NUMBER OF (D) MAXIMUM NUMBER (OR
NUMBER OF (B) AVERAGE SHARES (OR UNITS) APPROXIMATE DOLLAR VALUE) OF
SHARES (OR PRICE PAID PER PURCHASED AS PART OF SHARES (OR UNITS) THAT MAY YET
UNITS) SHARE (OR PUBLICLY ANNOUNCED BE PURCHASED UNDER THE PLANS
PERIOD PURCHASED UNIT) PLANS OR PROGRAMS OR PROGRAMS
Month #1
(09/01/2015 -
09/30/2015) 0 0 0 870,510
---------------------------------------------------------------------------------------------------
Month #2
(10/01/2015 - 52,810 $10.3285 52,810 817,700
10/31/2015)
---------------------------------------------------------------------------------------------------
Month #3
(11/01/2015 - 51,289 $10.2027 104,099 766,411
11/30/2015)
---------------------------------------------------------------------------------------------------
Month #4
(12/01/2015 - 38,989 $9.9936 143,088 727,422
12/31/2015)
Total 143,088 $10.1921 143,088 727,422
---------------------------------------------------------------------------------------------------
On September 15, 2015, the Registrant commenced a share repurchase
program. The program will continue until the earlier of (i) the repurchase of
870,510 common shares, or (ii) six months from implementation of the
registrant's share repurchase program. For the reporting period, the Registrant
repurchased 143,088 of its shares at a weighted average discount of 15.05% from
net asset value per share. The Registrant expects to continue to repurchase its
outstanding shares until the earlier of (the repurchase of an additional 727,422
common shares (for an aggregate of 870,510), or (ii) March 15, 2016.
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) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section
906 of the Sarbanes- Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) First Trust/Aberdeen Global Opportunity Income Fund
-----------------------------------------------------
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, President and
Chief Executive Officer
(principal executive officer)
Date: February 23, 2016
-------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, President and
Chief Executive Officer
(principal executive officer)
Date: February 23, 2016
-------------------
By (Signature and Title)* /s/ Donald P. Swade
----------------------------------------
Donald P. Swade, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: February 23, 2016
-------------------
* Print the name and title of each signing officer under his or her signature.