Customisable watchlists with full streaming quotes from leading exchanges, such as LSE, NASDAQ, NYSE, AMEX, Bovespa, BIT and more.
| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| First Trust abrdn Emerging Opportunity Fund | NYSE:FEO | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 9.58 | 0 | 00:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21905
First Trust/Aberdeen Emerging Opportunity
Fund
(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Name and address of agent for service)
Registrant’s telephone number, including area code: (630) 765-8000
Date of fiscal year end: December 31
Date of reporting period: December 31, 2021
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
(a) The Report to Shareholders is attached herewith.
| 1 | |
| 2 | |
| 4 | |
| 9 | |
| 18 | |
| 19 | |
| 20 | |
| 21 | |
| 22 | |
| 23 | |
| 33 | |
| 34 | |
| 36 | |
| 45 | |
| 47 |
| Performance | ||||
| Average Annual Total Returns | ||||
| 1 Year Ended 12/31/21 | 5 Years Ended 12/31/21 | 10 Years Ended 12/31/21 | Inception (8/28/06) to 12/31/21 | |
| Fund Performance(3) | ||||
| NAV | -5.17% | 7.23% | 5.40% | 7.03% |
| Market Value | 1.27% | 9.32% | 6.21% | 6.34% |
| Index Performance | ||||
| Blended Index(4) | -4.47% | 5.85% | 4.23% | 5.71% |
| Bloomberg Global Emerging Markets Index | -2.57% | 4.46% | 4.84% | 5.94% |
| FTSE All World Emerging Market Index | 0.08% | 9.93% | 5.97% | 6.15% |
| Fund Allocation | % of Net Assets |
| Common Stocks | 45.1% |
| Foreign Sovereign Bonds and Notes | 40.7 |
| Foreign Corporate Bonds and Notes | 19.4 |
| Corporate Bonds and Notes | 0.6 |
| Outstanding Loan | (8.4) |
| Net Other Assets and Liabilities(5) | 2.6 |
| Total | 100.0% |
| (1) | Most recent distribution paid or declared through December 31, 2021. 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 December 31, 2021. Subject to change in the future. |
| (3) | Total return is based on the combination of reinvested dividend, capital gain, and return of capital distributions, if any, at prices obtained by the Dividend Reinvestment Plan and changes in NAV per share for NAV returns and changes in Common Share Price for market value returns. Total returns do not reflect sales load and are not annualized for periods of less than one year. Past performance is not indicative of future results. |
| (4) | Blended Index consists of the following: JPMorgan Emerging Markets Bond Index - Global Diversified (32.5%); JPMorgan Government Bond Index - Emerging Markets Diversified (32.5%); MSCI Emerging Markets Index (35.0%). The Blended Index returns are calculated by using the monthly return of the three indices during each period shown above. At the beginning of each month the three indices are rebalanced to a 32.5%, 32.5%, and 35.0% ratio, respectively, to account for divergence from that ratio that occurred during the course of each month. The monthly returns are then compounded for each period shown above, giving the performance for the Blended Index for each period shown above. |
| (5) | Includes forward foreign currency contracts. |
| (6) | The credit quality and ratings information presented above reflects the ratings assigned by one or more nationally recognized statistical rating organizations (NRSROs), including Standard & Poor’s Ratings Group, a division of the McGraw Hill Companies, Inc., Moody’s Investors Service, Inc., Fitch Ratings or a comparably rated NRSRO. For situations in which a security is rated by more than one NRSRO and the ratings are not equivalent, the highest ratings are used. Sub-investment grade ratings are those rated BB+/Ba1 or lower. Investment grade ratings are those rated BBB-/Baa3 or higher. The credit ratings shown relate to the creditworthiness of the issuers of the underlying securities in the Fund, and not to the Fund or its shares. Credit ratings are subject to change. |
| (7) | Fixed-income portfolio securities are included in a country based upon their underlying credit exposure as determined by abrdn Inc., the sub-advisor. |
| 1 | Total return is based on the combination of reinvested dividend, capital gain and return of capital distributions, if any, at prices obtained by the Dividend Reinvestment Plan and changes in NAV per share for NAV returns and changes in Common Share Price for market value returns. Total returns do not reflect sales load and are not annualized for periods of less than one year. Past performance is not indicative of future results. |
| 2 | Blended Index consists of the following: JPMorgan Emerging Markets Bond Index – Global Diversified (32.5%); JPMorgan Government Bond Index – Emerging Markets Diversified (32.5%); MSCI Emerging Markets Index (35.0%). The Blended Index returns are calculated by using the monthly return of the three indices during the period shown above. At the beginning of each month the three indices are rebalanced to a 32.5%, 32.5%, and 35.0% ratio, respectively, to account for divergence from that ratio that occurred during the course of each month. The monthly returns are then compounded for the period shown above, giving the performance for the Blended Index for the period shown above. |
| Average Annual Total Returns | ||||
| 1 Year Ended 12/31/21 | 5 Years Ended 12/31/21 | 10 Years Ended 12/31/21 | Inception (8/28/06) to 12/31/21 | |
| Fund Performance1 | ||||
| NAV | -5.17% | 7.23% | 5.40% | 7.03% |
| Market Value | 1.27% | 9.32% | 6.21% | 6.34% |
| Index Performance | ||||
| Blended Index2 | -4.47% | 5.85% | 4.23% | 5.71% |
| Bloomberg Global Emerging Markets Index | -2.57% | 4.46% | 4.84% | 5.94% |
| FTSE All World Emerging Market Index | 0.08% | 9.93% | 5.97% | 6.15% |
| Principal Value (Local Currency) | Description | Stated Coupon | Stated Maturity | Value (US Dollars) | ||||
| FOREIGN SOVEREIGN BONDS AND NOTES (a) – 40.7% | ||||||||
| Angola – 1.1% | ||||||||
| 766,000 | Angloan Government International Bond (USD) (b) | 9.13% | 11/26/49 | $737,296 | ||||
| Argentina – 1.7% | ||||||||
| 136,989 | Argentine Republic Government International Bond (USD) | 1.00% | 07/09/29 | 50,002 | ||||
| 3,139,328 | Argentine Republic Government International Bond (USD) (c) | 0.50% | 07/09/30 | 1,106,645 | ||||
| 1,156,647 | ||||||||
| Bahamas – 1.1% | ||||||||
| 860,000 | Bahamas Government International Bond (USD) (d) | 8.95% | 10/15/32 | 794,434 | ||||
| Bahrain – 1.0% | ||||||||
| 450,000 | Bahrain Government International Bond (USD) (d) | 4.25% | 01/25/28 | 439,438 | ||||
| 250,000 | Bahrain Government International Bond (USD) (b) | 6.25% | 01/25/51 | 229,692 | ||||
| 669,130 | ||||||||
| Belarus – 1.1% | ||||||||
| 420,000 | Republic of Belarus International Bond (USD) (b) | 5.88% | 02/24/26 | 372,078 | ||||
| 480,000 | Republic of Belarus International Bond (USD) (b) | 6.38% | 02/24/31 | 383,040 | ||||
| 755,118 | ||||||||
| Benin – 0.2% | ||||||||
| 100,000 | Benin Government International Bond (EUR) (d) | 6.88% | 01/19/52 | 113,956 | ||||
| Brazil – 3.9% | ||||||||
| 15,550,000 | Brazil Notas do Tesouro Nacional, Series F (BRL) | 10.00% | 01/01/27 | 2,730,538 | ||||
| Dominican Republic – 0.4% | ||||||||
| 270,000 | Dominican Republic International Bond (USD) (b) | 5.88% | 01/30/60 | 260,213 | ||||
| Ecuador – 0.7% | ||||||||
| 78,781 | Ecuador Government International Bond (USD) (d) | (e) | 07/31/30 | 44,708 | ||||
| 344,360 | Ecuador Government International Bond (USD) (c) (d) | 5.00% | 07/31/30 | 286,249 | ||||
| 251,480 | Ecuador Government International Bond (USD) (c) (d) | 0.50% | 07/31/40 | 147,902 | ||||
| 478,859 | ||||||||
| Egypt – 1.3% | ||||||||
| 11,200,000 | Egypt Government Bond (EGP) | 14.48% | 04/06/26 | 720,959 | ||||
| 211,000 | Egypt Government International Bond (USD) (d) | 7.63% | 05/29/32 | 200,470 | ||||
| 921,429 | ||||||||
| Georgia – 0.5% | ||||||||
| 334,000 | Georgia Government International Bond (USD) (d) | 2.75% | 04/22/26 | 333,081 | ||||
| Ghana – 1.3% | ||||||||
| 403,000 | Ghana Government International Bond (USD) (d) | 7.75% | 04/07/29 | 338,619 | ||||
| 710,000 | Ghana Government International Bond (USD) (d) | 7.63% | 05/16/29 | 593,933 | ||||
| 932,552 | ||||||||
| Indonesia – 1.8% | ||||||||
| 16,146,000,000 | Indonesia Treasury Bond (IDR) | 8.38% | 03/15/34 | 1,273,308 | ||||
| Iraq – 1.2% | ||||||||
| 650,000 | Iraq International Bond (USD) (b) | 6.75% | 03/09/23 | 659,444 | ||||
| 203,125 | Iraq International Bond (USD) (b) | 5.80% | 01/15/28 | 194,910 | ||||
| 854,354 | ||||||||
| Principal Value (Local Currency) | Description | Stated Coupon | Stated Maturity | Value (US Dollars) | ||||
| FOREIGN SOVEREIGN BONDS AND NOTES (a) (Continued) | ||||||||
| Kenya – 0.3% | ||||||||
| 200,000 | Republic of Kenya Government International Bond (USD) (b) | 6.88% | 06/24/24 | $211,797 | ||||
| Malaysia – 2.1% | ||||||||
| 6,010,000 | Malaysia Government Bond (MYR) | 3.89% | 03/15/27 | 1,485,813 | ||||
| Mexico – 2.6% | ||||||||
| 30,051,800 | Mexican Bonos (MXN) | 5.75% | 03/05/26 | 1,384,732 | ||||
| 8,250,000 | Mexican Bonos (MXN) | 7.75% | 11/13/42 | 391,405 | ||||
| 1,776,137 | ||||||||
| Nigeria – 0.3% | ||||||||
| 200,000 | Nigeria Government International Bond (USD) (d) | 7.63% | 11/28/47 | 179,566 | ||||
| Oman – 1.7% | ||||||||
| 1,100,000 | Oman Government International Bond (USD) (d) | 7.00% | 01/25/51 | 1,154,427 | ||||
| Peru – 0.9% | ||||||||
| 3,048,000 | Peruvian Government International Bond (PEN) (b) | 5.35% | 08/12/40 | 651,601 | ||||
| Poland – 1.2% | ||||||||
| 3,500,000 | Republic of Poland Government Bond (PLN) | 2.50% | 07/25/27 | 806,473 | ||||
| Qatar – 1.9% | ||||||||
| 1,080,000 | Qatar Government International Bond (USD) (b) | 4.40% | 04/16/50 | 1,343,991 | ||||
| Russia – 6.4% | ||||||||
| 122,000,000 | Russian Federal Bond - OFZ (RUB) | 7.60% | 07/20/22 | 1,623,753 | ||||
| 186,844,000 | Russian Federal Bond - OFZ (RUB) | 7.65% | 04/10/30 | 2,402,711 | ||||
| 33,000,000 | Russian Federal Bond - OFZ (RUB) | 7.70% | 03/23/33 | 423,391 | ||||
| 4,449,855 | ||||||||
| Rwanda – 0.4% | ||||||||
| 266,000 | Rwanda International Government Bond (USD) (d) | 5.50% | 08/09/31 | 269,258 | ||||
| Saudi Arabia – 0.8% | ||||||||
| 490,000 | Saudi Government International Bond (USD) (d) | 4.38% | 04/16/29 | 563,353 | ||||
| South Africa – 3.3% | ||||||||
| 41,870,000 | Republic of South Africa Government Bond (ZAR) | 9.00% | 01/31/40 | 2,278,071 | ||||
| Ukraine – 1.1% | ||||||||
| 240,000 | Ukraine Government International Bond (EUR) (d) | 6.75% | 06/20/26 | 260,860 | ||||
| 400,000 | Ukraine Government International Bond (USD) (b) | 7.38% | 09/25/32 | 358,052 | ||||
| 188,000 | Ukraine Government International Bond (USD) (d) | 1.26% | 05/31/40 | 171,827 | ||||
| 790,739 | ||||||||
| Uzbekistan – 0.4% | ||||||||
| 299,000 | Republic of Uzbekistan Bond (USD) (d) | 3.70% | 11/25/30 | 287,691 | ||||
Total Foreign Sovereign Bonds and Notes | 28,259,687 | |||||||
| (Cost $29,569,898) | ||||||||
| FOREIGN CORPORATE BONDS AND NOTES (a) (f) – 19.4% | ||||||||
| Barbados – 0.4% | ||||||||
| 250,000 | Sagicor Financial Co., Ltd. (USD) (d) | 5.30% | 05/13/28 | 256,624 | ||||
| Brazil – 2.4% | ||||||||
| 240,000 | Banco do Brasil S.A. (USD) (b) (g) | 6.25% | (h) | 238,735 | ||||
| Principal Value (Local Currency) | Description | Stated Coupon | Stated Maturity | Value (US Dollars) | ||||
| FOREIGN CORPORATE BONDS AND NOTES (a) (f) (Continued) | ||||||||
| Brazil (Continued) | ||||||||
| 200,000 | BRF S.A. (USD) (d) | 5.75% | 09/21/50 | $199,282 | ||||
| 191,908 | Guara Norte Sarl (USD) (d) | 5.20% | 06/15/34 | 188,828 | ||||
| 260,000 | Itau Unibanco Holding S.A. (USD) (b) (g) | 4.63% | (h) | 244,016 | ||||
| 350,000 | OAS Finance Ltd. (USD) (g) (i) (j) (k) | 8.88% | (h) | 2,625 | ||||
| 200,000 | OAS Investments GmbH (USD) (i) (j) (k) | 8.25% | 10/19/19 | 1,500 | ||||
| 722,000 | Petrobras Global Finance BV (USD) | 5.60% | 01/03/31 | 765,869 | ||||
| 1,640,855 | ||||||||
| Chile – 0.3% | ||||||||
| 236,000 | Empresa Nacional del Petroleo (USD) (d) | 3.45% | 09/16/31 | 225,235 | ||||
| China – 1.3% | ||||||||
| 648,000 | Huarong Finance II Co., Ltd. (USD) (b) | 5.50% | 01/16/25 | 681,210 | ||||
| 420,000 | Kaisa Group Holdings Ltd. (USD) (b) | 11.25% | 04/16/25 | 111,300 | ||||
| 200,000 | Zhenro Properties Group Ltd. (USD) (b) | 9.15% | 05/06/23 | 136,500 | ||||
| 929,010 | ||||||||
| Dominican Republic – 0.4% | ||||||||
| 270,000 | AES Andres BV (USD) (d) | 5.70% | 05/04/28 | 275,783 | ||||
| Ecuador – 0.3% | ||||||||
| 197,681 | International Airport Finance S.A. (USD) (d) | 12.00% | 03/15/33 | 212,787 | ||||
| Georgia – 0.3% | ||||||||
| 200,000 | Bank of Georgia JSC (USD) (d) | 6.00% | 07/26/23 | 213,400 | ||||
| Honduras – 0.4% | ||||||||
| 240,000 | Inversiones Atlantida S.A. (USD) (d) | 7.50% | 05/19/26 | 243,970 | ||||
| India – 1.8% | ||||||||
| 250,000 | Adani Green Energy UP Ltd. / Prayatna Developers Pvt. Ltd. / Parampujya Solar Energy (USD) (d) | 6.25% | 12/10/24 | 272,025 | ||||
| 70,000,000 | HDFC Bank Ltd. (INR) (b) | 8.10% | 03/22/25 | 975,250 | ||||
| 1,247,275 | ||||||||
| Indonesia – 0.3% | ||||||||
| 200,000 | Medco Platinum Road Pte Ltd. (USD) (d) | 6.75% | 01/30/25 | 204,492 | ||||
| Israel – 0.3% | ||||||||
| 211,000 | Energean Israel Finance Ltd. (USD) (b) (d) | 4.88% | 03/30/26 | 209,945 | ||||
| Mexico – 2.1% | ||||||||
| 270,000 | BBVA Bancomer S.A. (USD) (b) (g) | 5.13% | 01/18/33 | 277,523 | ||||
| 200,000 | Braskem Idesa S.A.P.I. (USD) (d) | 6.99% | 02/20/32 | 201,078 | ||||
| 9,600,000 | Petroleos Mexicanos (MXN) (b) | 7.19% | 09/12/24 | 445,901 | ||||
| 280,000 | Petroleos Mexicanos (USD) | 7.69% | 01/23/50 | 270,753 | ||||
| 270,000 | Sixsigma Networks Mexico SA de CV (USD) (d) | 7.50% | 05/02/25 | 259,924 | ||||
| 1,455,179 | ||||||||
| Nigeria – 1.2% | ||||||||
| 264,000 | Access Bank PLC (USD) (d) | 6.13% | 09/21/26 | 263,670 | ||||
| 230,000 | IHS Netherlands Holdco BV (USD) (d) | 8.00% | 09/18/27 | 244,147 | ||||
| 320,000 | SEPLAT Energy PLC (USD) (d) | 7.75% | 04/01/26 | 320,320 | ||||
| 828,137 | ||||||||
| Principal Value (Local Currency) | Description | Stated Coupon | Stated Maturity | Value (US Dollars) | ||||
| FOREIGN CORPORATE BONDS AND NOTES (a) (f) (Continued) | ||||||||
| Oman – 0.8% | ||||||||
| 200,000 | Oryx Funding Ltd. (USD) (d) | 5.80% | 02/03/31 | $212,103 | ||||
| 325,000 | Oztel Holdings SPC Ltd. (USD) (d) | 6.63% | 04/24/28 | 354,847 | ||||
| 566,950 | ||||||||
| Peru – 0.3% | ||||||||
| 200,000 | Petroleos del Peru S.A. (USD) (d) | 5.63% | 06/19/47 | 198,356 | ||||
| Russia – 0.7% | ||||||||
| 217,000 | Home Credit & Finance Bank OOO Via Eurasia Capital S.A. (USD) (b) (g) | 8.80% | (h) | 219,713 | ||||
| 250,000 | Sovcombank Via SovCom Capital DAC (USD) (d) (g) | 7.75% | (h) | 251,150 | ||||
| 470,863 | ||||||||
| Saudi Arabia – 0.3% | ||||||||
| 200,000 | Saudi Arabian Oil Co. (USD) (d) | 4.25% | 04/16/39 | 225,968 | ||||
| Singapore – 0.4% | ||||||||
| 260,000 | Puma International Financing S.A. (USD) (b) | 5.00% | 01/24/26 | 260,503 | ||||
| South Africa – 1.2% | ||||||||
| 270,000 | Eskom Holdings SOC Ltd. (USD) (b) | 7.13% | 02/11/25 | 279,774 | ||||
| 287,000 | Liquid Telecommunications Financing Plc (USD) (d) | 5.50% | 09/04/26 | 296,327 | ||||
| 230,000 | Sasol Financing USA LLC (USD) | 6.50% | 09/27/28 | 249,541 | ||||
| 825,642 | ||||||||
| Tanzania – 0.3% | ||||||||
| 200,000 | HTA Group Ltd. (USD) (d) | 7.00% | 12/18/25 | 209,100 | ||||
| Trinidad And Tobago – 0.7% | ||||||||
| 500,000 | Trinidad Generation UnLtd. (USD) (b) | 5.25% | 11/04/27 | 508,815 | ||||
| Turkey – 1.1% | ||||||||
| 220,000 | Akbank T.A.S. (USD) (b) (g) | 7.20% | 03/16/27 | 218,051 | ||||
| 250,000 | Hazine Mustesarligi Varlik Kiralama AS (USD) (d) | 5.13% | 06/22/26 | 239,675 | ||||
| 340,000 | TC Ziraat Bankasi AS (USD) (d) | 5.38% | 03/02/26 | 308,498 | ||||
| 766,224 | ||||||||
| Ukraine – 1.4% | ||||||||
| 239,000 | Kernel Holding S.A. (USD) (d) | 6.75% | 10/27/27 | 238,188 | ||||
| 280,000 | Metinvest BV (USD) (d) | 8.50% | 04/23/26 | 292,567 | ||||
| 224,000 | NPC Ukrenergo (USD) (d) | 6.88% | 11/09/26 | 196,856 | ||||
| 230,000 | Ukraine Railways Via Rail Capital Markets PLC (USD) (b) | 8.25% | 07/09/24 | 226,550 | ||||
| 954,161 | ||||||||
| United Arab Emirates – 0.3% | ||||||||
| 240,000 | MAF Global Securities Ltd. (USD) (b) (g) | 5.50% | (h) | 243,746 | ||||
| Zambia – 0.4% | ||||||||
| 260,000 | First Quantum Minerals Ltd. (USD) (b) | 7.50% | 04/01/25 | 267,794 | ||||
Total Foreign Corporate Bonds and Notes | 13,440,814 | |||||||
| (Cost $13,976,709) | ||||||||
| Principal Value | Description | Stated Coupon | Stated Maturity | Value | ||||
| CORPORATE BONDS AND NOTES (a) (f) – 0.6% | ||||||||
| United States – 0.6% | ||||||||
| 11,488,000 | JPMorgan Chase Bank, N.A. (d) | 11.67% | 11/27/23 | $410,866 | ||||
| (Cost $447,473) | ||||||||
| Shares | Description | Value | ||
| COMMON STOCKS (a) – 45.1% | ||||
| Argentina – 0.4% | ||||
| 841 | Globant S.A. (l) | 264,150 | ||
| Austria – 0.7% | ||||
| 18,479 | Mondi PLC | 458,235 | ||
| Brazil – 2.3% | ||||
| 75,796 | B3 S.A. - Brasil Bolsa Balcao | 151,592 | ||
| 120,098 | Banco Bradesco S.A., ADR | 410,735 | ||
| 227 | MercadoLibre, Inc. (l) | 306,087 | ||
| 65,371 | Rumo S.A. (l) | 208,436 | ||
| 26,489 | Vale S.A., ADR | 371,376 | ||
| 26,058 | WEG S.A. | 154,289 | ||
| 1,602,515 | ||||
| China – 14.2% | ||||
| 72,100 | Alibaba Group Holding Ltd. (l) | 1,099,408 | ||
| 10,500 | China Conch Venture Holdings Ltd. | 51,305 | ||
| 81,000 | China Merchants Bank Co., Ltd., Class H | 628,986 | ||
| 56,000 | China Resources Gas Group Ltd. | 316,356 | ||
| 68,000 | China Resources Land Ltd. | 286,038 | ||
| 13,093 | China Tourism Group Duty Free Corp., Ltd., Class A | 451,865 | ||
| 36,900 | GDS Holdings Ltd., Class A (l) | 214,371 | ||
| 7,500 | Hangzhou Tigermed Consulting Co., Ltd., Class A | 150,767 | ||
| 3,600 | Hangzhou Tigermed Consulting Co., Ltd., Class H (b) (d) | 45,707 | ||
| 784 | Kweichow Moutai Co., Ltd., Class A | 252,804 | ||
| 28,500 | Li Ning Co., Ltd. | 311,954 | ||
| 40,792 | LONGi Green Energy Technology Co., Ltd., Class A | 553,090 | ||
| 9,800 | Meituan, Class B (b) (d) (l) | 283,284 | ||
| 32,302 | Midea Group Co., Ltd., Class A | 375,023 | ||
| 84,560 | NARI Technology Co., Ltd., Class A | 532,432 | ||
| 5,353 | Prosus N.V. | 448,120 | ||
| 84,000 | Sands China Ltd. (l) | 195,631 | ||
| 24,500 | Shenzhou International Group Holdings Ltd. | 470,988 | ||
| 22,200 | Sungrow Power Supply Co., Ltd., Class A | 509,125 | ||
| 27,500 | Tencent Holdings Ltd. | 1,611,019 | ||
| 39,500 | WuXi Biologics Cayman, Inc. (b) (d) (l) | 468,830 | ||
| 29,100 | Yonyou Network Technology Co., Ltd., Class A | 164,232 | ||
| 6,200 | Yunnan Energy New Material Co., Ltd., Class A | 244,197 | ||
| 28,000 | Zhongsheng Group Holdings Ltd. | 218,325 | ||
| 9,883,857 | ||||
| Hong Kong – 1.9% | ||||
| 51,400 | AIA Group Ltd. | 518,117 | ||
| 125,200 | Budweiser Brewing Co., APAC Ltd. (b) (d) | 328,352 | ||
| 8,535 | Hong Kong Exchanges & Clearing Ltd. | 498,469 | ||
| 1,344,938 | ||||
| Shares | Description | Value | ||
| COMMON STOCKS (a) (Continued) | ||||
| India – 5.7% | ||||
| 12,515 | Hindustan Unilever Ltd. | $397,350 | ||
| 24,818 | Housing Development Finance Corp., Ltd. | 863,523 | ||
| 22,781 | Kotak Mahindra Bank Ltd. | 550,435 | ||
| 3,396 | Maruti Suzuki India Ltd. | 339,275 | ||
| 111,015 | Power Grid Corp. of India Ltd. | 305,257 | ||
| 31,827 | SBI Life Insurance Co., Ltd. (b) (d) | 512,070 | ||
| 10,211 | Tata Consultancy Services Ltd. | 513,512 | ||
| 4,644 | UltraTech Cement Ltd. | 474,239 | ||
| 3,955,661 | ||||
| Indonesia – 1.1% | ||||
| 809,000 | Bank Central Asia Tbk PT | 414,363 | ||
| 1,309,324 | Bank Rakyat Indonesia Persero Tbk PT | 377,570 | ||
| 791,933 | ||||
| Mexico – 2.2% | ||||
| 4,969 | Fomento Economico Mexicano, S.A.B. de C.V., ADR | 386,141 | ||
| 3,385 | Grupo Aeroportuario del Centro Norte, S.A.B. de C.V., ADR | 181,740 | ||
| 83,019 | Grupo Financiero Banorte S.A.B. de C.V., Class O | 539,945 | ||
| 102,344 | Grupo Mexico S.A.B. de C.V., Series B | 446,154 | ||
| 1,553,980 | ||||
| Netherlands – 1.3% | ||||
| 688 | ASM International N.V. | 304,464 | ||
| 706 | ASML Holding N.V. | 568,032 | ||
| 872,496 | ||||
| Philippines – 0.2% | ||||
| 83,499 | Bank of the Philippine Islands | 150,893 | ||
| Poland – 0.3% | ||||
| 23,745 | Allegro.eu S.A. (b) (d) (l) | 229,014 | ||
| Russia – 3.0% | ||||
| 6,934 | Lukoil PJSC, ADR | 622,673 | ||
| 27,281 | Novatek PJSC | 624,905 | ||
| 94,082 | Sberbank of Russia PJSC | 367,889 | ||
| 2,922 | TCS Group Holding PLC, GDR (b) | 246,383 | ||
| 3,657 | Yandex N.V., Class A (l) | 221,249 | ||
| 2,083,099 | ||||
| South Africa – 0.7% | ||||
| 4,102 | Anglo American Platinum Ltd. | 467,674 | ||
| South Korea – 5.3% | ||||
| 1,374 | Kakao Corp. | 130,032 | ||
| 1,040 | LG Chem Ltd. | 538,044 | ||
| 44,282 | Samsung Electronics Co., Ltd. (Preference Shares) | 2,652,264 | ||
| 655 | Samsung SDI Co., Ltd. | 360,904 | ||
| 3,681,244 | ||||
| Taiwan – 5.8% | ||||
| 37,000 | Delta Electronics, Inc. | 367,767 | ||
| 112,000 | Hon Hai Precision Industry Co., Ltd. | 421,007 | ||
| 1,297 | Sea Ltd., ADR (l) | 290,152 | ||
| Shares | Description | Value | ||
| COMMON STOCKS (a) (Continued) | ||||
| Taiwan (Continued) | ||||
| 131,954 | Taiwan Semiconductor Manufacturing Co., Ltd. | $2,933,159 | ||
| 4,012,085 | ||||
Total Common Stocks | 31,351,774 | |||
| (Cost $23,885,362) | ||||
Total Investments – 105.8% | 73,463,141 | |||
| (Cost $67,879,442) (m) | ||||
Outstanding Loan – (8.4)% | (5,800,000) | |||
Net Other Assets and Liabilities – 2.6% | 1,753,558 | |||
Net Assets – 100.0% | $69,416,699 | |||
| Forward Foreign Currency Contracts | ||||||||||||||
| Settlement Date | Counterparty | Amount Purchased | Amount Sold | Purchase Value as of 12/31/2021 | Sale Value as of 12/31/2021 | Unrealized Appreciation/ (Depreciation) | ||||||||
| 01/13/22 | DB | BRL | 7,611,000 | USD | 1,362,840 | $ 1,362,232 | $ 1,362,840 | $ (608) | ||||||
| 02/24/22 | DB | CNY | 12,907,000 | USD | 2,007,466 | 2,016,240 | 2,007,466 | 8,774 | ||||||
| 02/24/22 | DB | USD | 1,367,409 | BRL | 7,611,000 | 1,367,409 | 1,348,576 | 18,833 | ||||||
| 02/24/22 | DB | USD | 994,782 | IDR | 14,312,724,000 | 994,782 | 999,666 | (4,884) | ||||||
| 02/24/22 | DB | USD | 381,545 | RUB | 28,358,000 | 381,545 | 372,972 | 8,573 | ||||||
| 01/13/22 | CIT | USD | 920,166 | ZAR | 14,071,000 | 920,166 | 881,385 | 38,781 | ||||||
Net Unrealized Appreciation / (Depreciation) | $69,469 | |||||||||||||
| Counterparty Abbreviations | |
| CIT | Citibank, NA |
| DB | Deutsche Bank |
| (a) | All of these securities are available to serve as collateral for the outstanding loans. |
| (b) | This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933, as amended (the “1933 Act”). |
| (c) | Step-up security. A security where the coupon increases or steps up at a predetermined date. Interest rate shown reflects the rate in effect at December 31, 2021. |
| (d) | This security, sold within the terms of a private placement memorandum, is exempt from registration upon resale under Rule 144A of the 1933 Act, and may be resold in transactions exempt from registration, normally to qualified institutional buyers. Pursuant to procedures adopted by the Fund’s Board of Trustees, this security has been determined to be liquid by abrdn Inc. (“abrdn”), the Fund’s 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, 2021, securities noted as such amounted to $15,273,040 or 22.0% of net assets. |
| (e) | Zero coupon bond. |
| (f) | Portfolio securities are included in a country based upon their underlying credit exposure as determined by abrdn. |
| (g) | Fixed-to-floating or fixed-to-variable rate security. The interest rate shown reflects the fixed rate in effect at December 31, 2021. At a predetermined date, the fixed rate will change to a floating rate or a variable rate. |
| (h) | Perpetual maturity. |
| (i) | This security, sold within the terms of a private placement memorandum, is exempt from registration upon resale under Rule 144A of the 1933 Act, and may be resold in transactions exempt from registration, normally to qualified institutional buyers (see Note 2C - Restricted Securities in the Notes to Financial Statements). |
| (j) | This issuer is in default and interest is not being accrued by the Fund, nor paid by the issuer. |
| (k) | This issuer has filed for bankruptcy protection in a São Paulo state court. |
| (l) | Non-income producing security. |
| (m) | Aggregate cost for federal income tax purposes was $68,100,745. As of December 31, 2021, the aggregate gross unrealized appreciation for all investments in which there was an excess of value over tax cost was $11,382,132 and the aggregate gross unrealized depreciation for all investments in which there was an excess of tax cost over value was $5,950,267. The net unrealized appreciation was $5,431,865. The amounts presented are inclusive of derivative contracts. |
| ADR | American Depositary Receipt |
| GDR | Global Depositary Receipt |
| ASSETS TABLE | ||||
| Total Value at 12/31/2021 | Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |
Foreign Sovereign Bonds and Notes* | $ 28,259,687 | $ — | $ 28,259,687 | $ — |
Foreign Corporate Bonds and Notes* | 13,440,814 | — | 13,440,814 | — |
Corporate Bonds and Notes* | 410,866 | — | 410,866 | — |
Common Stocks* | 31,351,774 | 31,351,774 | — | — |
Total Investments | 73,463,141 | 31,351,774 | 42,111,367 | — |
Forward Foreign Currency Contracts | 74,961 | — | 74,961 | — |
Total | $ 73,538,102 | $ 31,351,774 | $ 42,186,328 | $— |
| LIABILITIES TABLE | ||||
| Total Value at 12/31/2021 | Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |
Forward Foreign Currency Contracts | $ (5,492) | $ — | $ (5,492) | $ — |
| * | See Portfolio of Investments for country breakout. |
| Currency Exposure Diversification | % of Total Investments† |
| USD | 37.2% |
| HKD | 10.3 |
| RUB | 6.8 |
| INR | 6.7 |
| TWD | 5.1 |
| KRW | 5.0 |
| BRL | 4.4 |
| CNH | 4.4 |
| MXN | 4.4 |
| ZAR | 3.2 |
| CNY | 2.7 |
| EUR | 2.3 |
| MYR | 2.0 |
| IDR | 1.4 |
| PLN | 1.4 |
| EGP | 1.0 |
| PEN | 0.9 |
| UAH | 0.6 |
| PHP | 0.2 |
| Total | 100.0% |
| † | The weightings include the impact of currency forwards. |
| Currency Abbreviations | |
| BRL | Brazilian Real |
| CNH | Chinese Yuan Renminbi (Offshore) |
| CNY | Chinese Yuan Renminbi |
| EGP | Egyptian Pound |
| EUR | Euro |
| HKD | Hong Kong Dollar |
| IDR | Indonesian Rupiah |
| INR | Indian Rupee |
| KRW | South Korean Won |
| MXN | Mexican Peso |
| MYR | Malaysian Ringgit |
| PEN | Peruvian Nuevo Sol |
| PHP | Philippine Peso |
| PLN | Polish Zloty |
| RUB | Russian Ruble |
| TWD | New Taiwan Dollar |
| UAH | Ukrainian Hryvnia |
| USD | United States Dollar |
| ZAR | South African Rand |
| ASSETS: | |
Investments, at value (Cost $67,879,442) | $ 73,463,141 |
Cash | 807,744 |
Foreign currency (Cost $75,171) | 75,270 |
Unrealized appreciation on forward foreign currency contracts | 74,961 |
| Receivables: | |
Interest | 945,699 |
Interest reclaims | 85,449 |
Dividends | 67,344 |
Miscellaneous | 40,381 |
Investment securities sold | 29,276 |
Dividend reclaims | 3,974 |
Prepaid expenses | 562 |
Total Assets | 75,593,801 |
| LIABILITIES: | |
Outstanding loan | 5,800,000 |
Due to broker | 20,000 |
Unrealized depreciation on forward foreign currency contracts | 5,492 |
| Payables: | |
Deferred foreign capital gains tax | 142,781 |
Audit and tax fees | 75,184 |
Investment advisory fees | 64,634 |
Investment securities purchased | 25,223 |
Administrative fees | 11,756 |
Shareholder reporting fees | 11,048 |
Custodian fees | 9,194 |
Transfer agent fees | 5,566 |
Interest and fees on loan | 4,793 |
Financial reporting fees | 771 |
Legal fees | 235 |
Trustees’ fees and expenses | 46 |
Other liabilities | 379 |
Total Liabilities | 6,177,102 |
NET ASSETS | $69,416,699 |
| NET ASSETS consist of: | |
Paid-in capital | $ 63,893,278 |
Par value | 49,918 |
Accumulated distributable earnings (loss) | 5,473,503 |
NET ASSETS | $69,416,699 |
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) | $13.91 |
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized) | 4,991,802 |
| INVESTMENT INCOME: | ||
Interest (net of foreign withholding tax of $63,085) | $ 3,055,302 | |
Dividends (net of foreign withholding tax of $98,819) | 716,064 | |
Total investment income | 3,771,366 | |
| EXPENSES: | ||
Investment advisory fees | 831,655 | |
Audit and tax fees | 82,037 | |
Administrative fees | 72,261 | |
Interest and fees on loan | 63,879 | |
Shareholder reporting fees | 41,424 | |
Transfer agent fees | 32,728 | |
Listing expense | 23,750 | |
Trustees’ fees and expenses | 16,003 | |
Legal fees | 11,210 | |
Financial reporting fees | 9,250 | |
Custodian fees | (51,567) | |
Other | 11,784 | |
Total expenses | 1,144,414 | |
NET INVESTMENT INCOME (LOSS) | 2,626,952 | |
| NET REALIZED AND UNREALIZED GAIN (LOSS): | ||
| Net realized gain (loss) on: | ||
Investments | 4,737,769 | |
Forward foreign currency contracts | (119,665) | |
Foreign currency transactions | (22,845) | |
Foreign capital gains tax | (73,389) | |
Net realized gain (loss) | 4,521,870 | |
Net increase from payment by the sub-advisor | 1,502 | |
| Net change in unrealized appreciation (depreciation) on: | ||
Investments | (11,494,068) | |
Forward foreign currency contracts | 134,037 | |
Foreign currency translation | (28,712) | |
Deferred foreign capital gains tax | 49,656 | |
Net change in unrealized appreciation (depreciation) | (11,339,087) | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | (6,815,715) | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $(4,188,763) | |
| Year Ended 12/31/2021 | Year Ended 12/31/2020 | ||
| OPERATIONS: | |||
Net investment income (loss) | $ 2,626,952 | $ 2,005,853 | |
Net realized gain (loss) | 4,521,870 | 414,270 | |
Net increase from payment by the sub-advisor | 1,502 | — | |
Net change in unrealized appreciation (depreciation) | (11,339,087) | 6,536,769 | |
Net increase (decrease) in net assets resulting from operations | (4,188,763) | 8,956,892 | |
| DISTRIBUTIONS TO SHAREHOLDERS FROM: | |||
Investment operations | (6,988,523) | (2,377,639) | |
Return of capital | — | (4,654,164) | |
Total distributions to shareholders | (6,988,523) | (7,031,803) | |
| CAPITAL TRANSACTIONS: | |||
Repurchase of Common Shares (a) | (74,635) | (702,798) | |
Net increase (decrease) in net assets resulting from capital transactions | (74,635) | (702,798) | |
Total increase (decrease) in net assets | (11,251,921) | 1,222,291 | |
| NET ASSETS: | |||
Beginning of period | 80,668,620 | 79,446,329 | |
End of period | $ 69,416,699 | $ 80,668,620 | |
| CAPITAL TRANSACTIONS were as follows: | |||
Common Shares at beginning of period | 4,997,028 | 5,056,575 | |
Common Shares repurchased (a) | (5,226) | (59,547) | |
Common Shares at end of period | 4,991,802 | 4,997,028 |
| (a) | On September 15, 2015, the Fund commenced a share repurchase program. The program expired on March 15, 2021. For the fiscal years ended December 31, 2021 and 2020, the Fund repurchased 5,226 and 59,547 Common Shares, respectively, at a weighted-average discount of 12.95% and 13.59%, respectively, from net asset value per share. |
| Cash flows from operating activities: | ||
Net increase (decrease) in net assets resulting from operations | $(4,188,763) | |
| Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities: | ||
Purchases of investments | (44,395,213) | |
Sales, maturities and paydown of investments | 49,264,620 | |
Net amortization/accretion of premiums/discounts on investments | (136,412) | |
Net realized gain/loss on investments | (4,737,769) | |
Net change in unrealized appreciation/depreciation on investments | 11,494,068 | |
Net change in unrealized appreciation/depreciation on forward foreign currency contracts | (134,037) | |
Net increase from payment by the sub-advisor | (1,502) | |
| Changes in assets and liabilities: | ||
Increase in interest receivable | (69,948) | |
Increase in interest reclaims receivable | (62,459) | |
Increase in dividend reclaims receivable | (12) | |
Increase in dividends receivable | (23,189) | |
Decrease in prepaid expenses | 62 | |
Increase in interest and fees payable on loan | 304 | |
Increase in due to broker | 10,000 | |
Decrease in investment advisory fees payable | (7,942) | |
Increase in audit and tax fees payable | 11,744 | |
Decrease in legal fees payable | (5,955) | |
Increase in shareholder reporting fees payable | 946 | |
Increase in administrative fees payable | 321 | |
Decrease in custodian fees payable | (85,875) | |
Increase in transfer agent fees payable | 253 | |
Increase in trustees’ fees and expenses payable | 46 | |
Decrease in deferred foreign capital gains tax | (49,656) | |
Decrease in other liabilities payable | (3,204) | |
Cash provided by operating activities | $6,880,428 | |
| Cash flows from financing activities: | ||
Repurchase of Common Shares | (74,635) | |
Distributions to Common Shareholders from investment operations | (6,988,523) | |
Cash used in financing activities | (7,063,158) | |
Decrease in cash and foreign currency (a) | (182,730) | |
Cash and foreign currency at beginning of period | 1,065,744 | |
Cash and foreign currency at end of period | $883,014 | |
| Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest and fees | $63,575 |
| (a) | Includes net change in unrealized appreciation (depreciation) on foreign currency of $(28,712). |
| Year Ended December 31, | |||||||||
| 2021 | 2020 | 2019 | 2018 | 2017 | |||||
Net asset value, beginning of period | $ 16.14 | $ 15.71 | $ 14.44 | $ 17.89 | $ 16.16 | ||||
| Income from investment operations: | |||||||||
Net investment income (loss) | 0.52 | 0.39 | 0.70 | 0.68 | 0.76 | ||||
Net realized and unrealized gain (loss) | (1.35) (a) | 1.42 | 1.97 | (2.77) | 2.36 (b) | ||||
Total from investment operations | (0.83) | 1.81 | 2.67 | (2.09) | 3.12 | ||||
| Distributions paid to shareholders from: | |||||||||
Net investment income | (0.20) | (0.36) | (0.42) | (0.48) | (0.54) | ||||
Net realized gain | (1.20) | (0.11) | (0.25) | (0.35) | (0.50) | ||||
Return of capital | — | (0.93) | (0.73) | (0.57) | (0.36) | ||||
Total distributions paid to Common Shareholders | (1.40) | (1.40) | (1.40) | (1.40) | (1.40) | ||||
Common Share repurchases | 0.00 (c) | 0.02 | 0.00 (c) | 0.04 | 0.01 | ||||
Net asset value, end of period | $13.91 | $16.14 | $15.71 | $14.44 | $17.89 | ||||
Market value, end of period | $13.18 | $14.32 | $14.27 | $12.17 | $16.32 | ||||
Total return based on net asset value (d) | (5.17)% (a) | 15.39% | 20.16% | (10.64)% | 20.65% | ||||
Total return based on market value (d) | 1.27% | 12.71% | 29.51% | (17.45)% | 27.96% | ||||
| Ratios to average net assets/supplemental data: | |||||||||
Net assets, end of period (in 000’s) | $ 69,417 | $ 80,669 | $ 79,446 | $ 73,067 | $ 92,442 | ||||
Ratio of total expenses to average net assets | 1.48% | 1.95% | 1.98% | 1.90% | 1.81% | ||||
Ratio of total expenses to average net assets excluding interest expense | 1.40% | 1.82% | 1.73% | 1.69% | 1.67% | ||||
Ratio of net investment income (loss) to average net assets | 3.40% | 2.78% | 4.58% | 4.20% | 4.30% | ||||
Portfolio turnover rate | 53% | 45% | 40% | 48% | 46% | ||||
| Indebtedness: | |||||||||
Total loan outstanding (in 000’s) | $ 5,800 | $ 5,800 | $ 5,800 | $ 5,800 | $ 5,800 | ||||
Asset coverage per $1,000 of indebtedness (e) | $ 12,968 | $ 14,908 | $ 14,698 | $ 13,598 | $ 16,938 | ||||
| (a) | The Fund received a reimbursement from the sub-advisor in the amount of $1,502 in connection with a trade error, which represents less than $0.01 per share. Since the sub-advisor reimbursed the Fund, there was no effect on the total return. |
| (b) | The Fund received a reimbursement from the sub-advisor in the amount of $5,000 in connection with a trade error, which represents less than $0.01 per share. Since the sub-advisor reimbursed the Fund, there was no effect on the total return. |
| (c) | Amount is less than $0.01. |
| (d) | Total return is based on the combination of reinvested dividend, capital gain and return of capital distributions, if any, at prices obtained by the Dividend Reinvestment Plan, and changes in net asset value per share for net asset value returns and changes in Common Share Price for market value returns. Total returns do not reflect sales load and are not annualized for periods of less than one year. Past performance is not indicative of future results. |
| (e) | Calculated by subtracting the Fund’s total liabilities (not including the loan outstanding) from the Fund’s total assets, and dividing by the outstanding loan balance in 000’s. |
| 1) | benchmark yields; |
| 2) | reported trades; |
| 3) | broker/dealer quotes; |
| 4) | issuer spreads; |
| 5) | benchmark securities; |
| 6) | bids and offers; and |
| 7) | reference data including market research publications. |
| 1) | the credit conditions in the relevant market and changes thereto; |
| 2) | the liquidity conditions in the relevant market and changes thereto; |
| 3) | the interest rate conditions in the relevant market and changes thereto (such as significant changes in interest rates); |
| 4) | issuer-specific conditions (such as significant credit deterioration); and |
| 5) | any other market-based data the Advisor’s Pricing Committee considers relevant. In this regard, the Advisor’s Pricing Committee may use last-obtained market-based data to assist it when valuing portfolio securities using amortized cost. |
| 1) | the fundamental business data relating to the issuer, or economic data relating to the country of issue; |
| 2) | an evaluation of the forces which influence the market in which these securities are purchased and sold; |
| 3) | the type, size and cost of the 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 abrdn Inc.’s (“abrdn” or the “Sub-Advisor”) or external analysis; |
| 6) | the information as to any transactions in or offers for the security; |
| 7) | the price and extent of public trading in similar securities (or equity securities) of the issuer/borrower, or comparable companies; |
| 8) | the coupon payments; |
| 9) | the quality, value and salability of collateral, if any, securing the security; |
| 10) | the business prospects of the issuer, including any ability to obtain money or resources from a parent or affiliate and an assessment of the issuer’s management (for corporate debt only); |
| 11) | the economic, political and social prospects/developments of the country of issue and the assessment of the country’s governmental leaders/officials (for sovereign debt only); |
| 12) | the prospects for the issuer’s industry, and multiples (of earnings and/or cash flows) being paid for similar businesses in that industry (for corporate debt only); and |
| 13) | other relevant factors. |
| 1) | the type of security; |
| 2) | the size of the holding; |
| 3) | the initial cost of the security; |
| 4) | transactions in comparable securities; |
| 5) | price quotes from dealers and/or third-party pricing services; |
| 6) | relationships among various securities; |
| 7) | information obtained by contacting the issuer, analysts, or the appropriate stock exchange; |
| 8) | an analysis of the issuer’s financial statements; and |
| 9) | the existence of merger proposals or tender offers that might affect the value of the security. |
| 1) | the value of similar foreign securities traded on other foreign markets; |
| 2) | ADR trading of similar securities; |
| 3) | closed-end fund or exchange-traded fund trading of similar securities; |
| 4) | foreign currency exchange activity; |
| 5) | the trading prices of financial products that are tied to baskets of foreign securities; |
| 6) | factors relating to the event that precipitated the pricing problem; |
| 7) | whether the event is likely to recur; and |
| 8) | whether the effects of the event are isolated or whether they affect entire markets, countries or regions. |
| • | Level 1 – Level 1 inputs are quoted prices in active markets for identical investments. An active market is a market in which transactions for the investment occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
| • | Level 2 – Level 2 inputs are observable inputs, either directly or indirectly, and include the following: |
| o | Quoted prices for similar investments in active markets. |
| o | Quoted prices for identical or similar investments in markets that are non-active. A non-active market is a market where there are few transactions for the investment, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly. |
| o | Inputs other than quoted prices that are observable for the investment (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates). |
| o | Inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
| • | Level 3 – Level 3 inputs are unobservable inputs. Unobservable inputs may reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the investment. |
| Gross Amounts not Offset in the Statement of Assets and Liabilities | |||||||||||
| Gross Amounts of Recognized Assets | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts of Assets Presented in the Statement of Assets and Liabilities | Financial Instruments | Collateral Amounts Received | Net Amount | ||||||
| Forward Foreign Currency Contracts* | $ 74,961 | $ — | $ 74,961 | $ (5,492) | $ — | $ 69,469 | |||||
| Gross Amounts not Offset in the Statement of Assets and Liabilities | |||||||||||
| Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities | Financial Instruments | Collateral Amounts Pledged | Net Amount | ||||||
| Forward Foreign Currency Contracts* | $ (5,492) | $ — | $ (5,492) | $ 5,492 | $ — | $ — | |||||
| Distributions paid from: | 2021 | 2020 |
Ordinary income | $1,184,492 | $1,899,516 |
Capital gains | 5,804,031 | 478,123 |
Return of capital | — | 4,654,164 |
Undistributed ordinary income | $221,197 |
Undistributed capital gains | — |
Total undistributed earnings | 221,197 |
Accumulated capital and other losses | — |
Net unrealized appreciation (depreciation) | 5,273,201 |
Total accumulated earnings (losses) | 5,494,398 |
Other | (20,895) |
Paid-in capital | 63,943,196 |
Total net assets | $69,416,699 |
| Asset Derivatives | Liability Derivatives | |||||||||
| Derivative Instrument | Risk Exposure | Statement of Assets and Liabilities Location | Value | Statement of Assets and Liabilities Location | Value | |||||
| Forward foreign currency contracts | Currency Risk | Unrealized appreciation on forward foreign currency contracts | $ 74,961 | Unrealized depreciation on forward foreign currency contracts | $ 5,492 | |||||
| Statement of Operations Location | |
| Currency Risk Exposure | |
| Net realized gain (loss) on forward foreign currency contracts | $(119,665) |
| Net change in unrealized appreciation (depreciation) on forward foreign currency contracts | 134,037 |
| (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. |
| • | The Fund invests at least 80% of its Managed Assets in equity and fixed-income securities of issuers in emerging market countries. |
| o | Equity securities in which the Fund may invest include common stocks, preferred stocks, convertible securities, depositary receipts and warrants. |
| o | Fixed income securities in which the Fund may invest include securities issued by government, government-related and supranational issuers (“government debt”), corporate debt, asset-backed securities, credit-linked notes and credit default swaps. |
| • | The Fund may invest up to 80% of its Managed Assets in non-investment grade debt issues. |
| o | Non-investment grade debt issues are rated below “Baa3” by Moody’s Investors Service, Inc., below “BBB-” by S&P Global Inc., 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 securities 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. |
| • | The Fund invests in securities diversified among several countries. |
| • | The Fund may invest up to 15% of its Managed Assets in asset-backed securities. |
| • | The Fund may invest up to 35% of its Managed Assets in credit linked notes. |
| • | The Fund may invest up to 15% of its Managed Assets in securities that, at the time of investment, are illiquid (as determined using the SEC’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. The Fund may invest, without limit, in restricted securities. If such restricted securities are determined to be illiquid by the Sub-Advisor, such securities are subject to the limitation detailed above. |
| • | The Fund may invest up to 5% of its Managed Assets in non-deliverable forward foreign exchange contracts for purposes of hedging. |
| • | The Fund may invest up to 10% of its Managed Assets in forward foreign exchange contracts (both deliverable and non-deliverable). |
| • | The Fund may lend portfolio securities in an amount up to 33-1/3% of Managed Assets to broker-dealers, major banks or other recognized domestic institutional borrowers of securities. |
| (1) | With respect to 75% of its total assets, purchase any securities if, as a result, more than 5% of the Fund’s total assets would then be invested in securities of any single issuer or if, as a result, the Fund would hold more than 10% of the outstanding voting securities of any single issuer; provided, that government securities (as defined in the 1940 Act), securities issued by other investment companies and cash items (including receivables) shall not be counted for purposes of this limitation; |
| (2) | Purchase any security if, as a result of the purchase, 25% or more of the Fund’s total assets (taken at current value) would be invested in the securities of borrowers and other issuers having their principal business activities in the same industry; provided, that this limitation shall not apply with respect to obligations issued or guaranteed by the U.S. Government or by its agencies or instrumentalities; |
| (3) | Borrow money, except as permitted by the 1940 Act, the rules thereunder and interpretations thereof or pursuant to a Securities and Exchange Commission exemptive order; |
| (4) | Issue senior securities, as defined in the 1940 Act, other than: (i) Preferred Shares which immediately after issuance will have asset coverage of at least 200%; (ii) indebtedness which immediately after issuance will have asset coverage of at least 300%; (iii) the borrowings permitted by investment restriction 3 above; or (iv) pursuant to a Securities and Exchange Commission exemptive order; |
| (5) | Make loans of funds or other assets, other than by entering into repurchase agreements, lending portfolio securities and through the purchase of debt securities in accordance with its investment objective, policies and limitations; |
| (6) | Act as underwriter of another issuer’s securities, except to the extent that the Fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933, as amended (the “Securities Act”) in connection with the purchase and sale of portfolio securities; |
| (7) | Purchase or sell real estate, but this shall not prevent the Fund from investing in securities of companies that deal in real estate or are engaged in the real estate business, including real estate investment trusts, and securities secured by real estate or interests therein and the Fund may hold and sell real estate or mortgages on real estate acquired through default, liquidation, or other distributions of an interest in real estate as a result of the Fund’s ownership of such securities; and |
| (8) | Purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from purchasing or selling options, futures contracts, derivative instruments or from investing in securities or other instruments backed by physical commodities). |
| • | Interest Rate Risk. Interest rate risk is the risk that securities will decline in value because of changes in market interest rates. For fixed rate securities, when market interest rates rise, the market value of such securities generally will fall. Investments in fixed rate securities with long-term maturities may experience significant price declines if long-term interest rates increase. During periods of rising interest rates, the average life of certain types of securities may be extended because of slower than expected prepayments. This may lock in a below-market yield, increase the security’s duration and further reduce the value of the security. Fixed rate securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. |
| • | Issuer Risk. The value of fixed income securities may decline for a number of reasons which directly relate to the issuer, such as management performance, leverage and reduced demand for the issuer’s goods and services. In addition, an issuer of fixed-income securities may default on its obligation to pay interest and repay principal. |
| • | Prepayment Risk. During periods of declining interest rates, the issuer of a security may exercise its option to prepay principal earlier than scheduled, forcing the Fund to reinvest the proceeds from such prepayment in lower yielding securities, which may result in a decline in the Fund’s income and distributions to common shareholders. |
| • | Reinvestment Risk. Reinvestment risk is the risk that income from the Fund’s portfolio will decline if the Fund invests the proceeds from matured, traded or called securities at market interest rates that are below the Fund portfolio’s current earnings rate. Similarly, the |
Assumed Portfolio Total Return (Net of Expenses) | -10% | -5% | 0% | 5% | 10% |
Common Share Total Return | -10.93% | -5.51% | -0.09% | 5.33% | 10.74% |
| Name, Year of Birth and Position with the Fund | Term of Office and Year First Elected or Appointed(1) | Principal Occupations During Past 5 Years | Number of Portfolios in the First Trust Fund Complex Overseen by Trustee | Other Trusteeships or Directorships Held by Trustee During Past 5 Years |
| INDEPENDENT TRUSTEES | ||||
| Richard E. Erickson, Trustee (1951) | • Three Year Term • Since Fund Inception | Physician; Officer, Wheaton Orthopedics; Limited Partner, Gundersen Real Estate Limited Partnership (June 1992 to December 2016) | 216 | None |
| Thomas R. Kadlec, Trustee (1957) | • Three Year Term • Since Fund Inception | President, ADM Investor Services, Inc. (Futures Commission Merchant) | 216 | Director of ADM Investor Services, Inc., ADM Investor Services International, Futures Industry Association, and National Futures Association |
| Denise M. Keefe, Trustee (1964) | • Three Year Term • Since 2021 | Executive Vice President, Advocate Aurora Health and President, Advocate Aurora Continuing Health Division (Integrated Healthcare System) | 216 | Director and Board Chair of Advocate Home Health Services, Advocate Home Care Products and Advocate Hospice; Director and Board Chair of Aurora At Home (since 2018); Director of Advocate Physician Partners Accountable Care Organization; Director and Board Chair of RML Long Term Acute Care Hospitals; and Director of Senior Helpers (since 2021) |
| Robert F. Keith, Trustee (1956) | • Three Year Term • Since Fund Inception | President, Hibs Enterprises (Financial and Management Consulting) | 216 | Director of Trust Company of Illinois |
| Niel B. Nielson, Trustee (1954) | • Three Year Term • Since Fund Inception | Senior Advisor (August 2018 to Present), Managing Director and Chief Operating Officer (January 2015 to August 2018), Pelita Harapan Educational Foundation (Educational Products and Services) | 216 | None |
| (1) | Currently, James A. Bowen and Niel B. Nielson, as Class III Trustees, are serving as trustees until the Fund’s 2022 annual meeting of shareholders. Denise M. Keefe and Robert F. Keith, as Class I Trustees, are serving as trustees until the Fund’s 2023 annual meeting of shareholders. Richard E. Erickson and Thomas R. Kadlec, as Class II Trustees, are serving as trustees until the Fund’s 2024 annual meeting of shareholders. |
| (1) | Currently, James A. Bowen and Niel B. Nielson, as Class III Trustees, are serving as trustees until the Fund’s 2022 annual meeting of shareholders. Denise M. Keefe and Robert F. Keith, as Class I Trustees, are serving as trustees until the Fund’s 2023 annual meeting of shareholders. Richard E. Erickson and Thomas R. Kadlec, as Class II Trustees, are serving as trustees until the Fund’s 2024 annual meeting of shareholders. |
| (2) | Mr. Bowen is deemed an “interested person” of the Fund due to his position as CEO of First Trust Advisors L.P., investment advisor of the Fund. |
| (3) | The term “officer” means the president, vice president, secretary, treasurer, controller or any other officer who performs a policy making function. |
| • | Information we receive from you and your broker-dealer, investment professional or financial representative through interviews, applications, agreements or other forms; |
| • | Information about your transactions with us, our affiliates or others; |
| • | Information we receive from your inquiries by mail, e-mail or telephone; and |
| • | 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. |
| • | 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. |
| • | 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). |
| (b) | Not applicable. |
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. |
| (f) | A copy of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller is filed as an exhibit pursuant to Item 13(a)(1). |
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 2020 and $53,000 for 2021.
(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 2020 and $0 for 2021.
Audit-Related Fees (Investment Advisor) — 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 2020 and $0 for 2021.
(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 $5,725 for 2020 and $6,050 for 2021. These fees were for tax consultation and/or tax return preparation and professional services rendered for PFIC (Passive Foreign Investment Company) Identification Services.
Tax Fees (Investment Advisor) — 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 advisor were $0 for 2020 and $0 for 2021.
(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 2020 and $0 for 2021.
All Other Fees (Investment Advisor) — 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 advisor, other than services reported in paragraphs (a) through (c) of this Item were $0 for 2020 and $0 for 2021.
| (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 advisor (not including a sub-advisor whose role is primarily portfolio management and is sub-contracted or overseen by another investment advisor) and any entity controlling, controlled by or under common control with the investment advisor 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 advisor (other than any sub-advisor whose role is primarily portfolio management and is sub-contracted with or overseen by another investment advisor) and any entity controlling, controlled by or under common control with the investment advisor 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 advisor 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 advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the advisor that provides ongoing services to the registrant for 2020 were $5,725 and $23,200 for the registrant and the registrant’s investment advisor, respectively, and for 2021, were $6,050 and $16,500 for the registrant and the registrant’s investment advisor, 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 advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the investment advisor 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: Richard E. Erickson, Thomas R. Kadlec, Denise M. Keefe, Robert F. Keith, and Niel B. Nielson. |
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.
ASI U.S. Registered Advisers (the “ASI Advisers”)
Proxy Voting Guidelines
Effective as of January 1, 2021
Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) requires the ASI 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 ASI Advisers to: (i) adopt and implement written policies and procedures that are reasonably designed to ensure that the ASI 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 ASI Advisers voted proxies. In addition, Rule 204-2 requires the ASI Advisers to keep records of proxy voting and client requests for information.
As registered investment advisers, the ASI Advisers have an obligation to vote proxies with respect to securities held in its client portfolios in the best interests of the clients for which it has proxy voting authority.
The ASI 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.
The ASI Advisers have adopted a proxy voting policy. The proxy voting policy is designed and implemented in a way that is reasonably expected to ensure that proxies are voted in the best interests of clients.
Voting decisions are made by the ASI Advisers’ investment teams, and are based on their knowledge of the company and discussions with management – ASI Advisers’ investment managers consider explanations from companies about their compliance with relevant corporate governance codes and may refer to independent research from voting advisory services in reaching a voting decision. However, voting decisions for exchange traded funds are made strictly in accordance with ISS’s proxy voting guidelines which are reviewed and approved on an annual basis.
Where contentious issues arise in relation to motions put before a shareholders’ meeting, ASI Advisers will usually contact the management of the company to exchange views and give management the opportunity to articulate its position. The long-term nature of the relationships that we develop with investee company boards should enable us to deal with any concerns that we may have over strategy, the management of risk or governance practices directly with the chairman or senior independent director. In circumstances where this approach is unsuccessful, ASI Advisers are prepared to escalate their intervention by expressing their concerns through the company’s advisers, through interaction with other shareholders or attending and speaking at General Meetings.
In managing third party money on behalf of clients, there are a limited number of situations where potential conflicts of interest could arise in the context of proxy voting. One case is where funds are invested in companies that are either clients or related parties of clients. Another case is where one fund managed by ASI invests in other funds managed by ASI.
For cases involving potential conflicts of interest, ASI Advisers have implemented procedures to ensure the appropriate handling of proxy voting decisions. The guiding principle of ASI Advisers’ conflicts of interest policy is simple – to exercise our right to vote in the best interests of the clients on whose behalf we are managing funds.
We employ ISS as a service provider to deliver our voting decisions efficiently to companies. We require ISS to provide recommendations based on our own set of parameters to tailored ASI’s assessment and approach but remain conscious always that all voting decisions are our own on behalf of our clients. We consider ISS’s recommendations and those based on our custom parameters as input to our voting decisions.
An ASI analyst will assess the resolutions at general meetings in our active investment portfolios. This analysis will be based on our knowledge of the company but will also make use of the custom and standard recommendations provided by ISS as described above. The product of this analysis will be final voting decision instructed through ISS applied to all funds for which ASI have been appointed to vote. For funds managed by a sub-adviser, we may delegate to the sub-adviser the authority to vote proxies; however, the sub-adviser will be required to either follow our policies and procedures or to demonstrate that their policies and procedures are consistent with ours, or otherwise implemented in the best interest of clients.
There may be certain circumstances where ASI may take a more limited role in voting proxies. We will not vote proxies for client accounts in which the client contract specifies that ASI will not vote. We may abstain from voting a client proxy if the voting is uneconomic or otherwise not in clients’ best interests. For companies held only in passively managed portfolios the ASI custom recommendations provided by ISS will be used to automatically apply our voting approach; we have scope to intervene to test that this delivers appropriate results and will on occasions intrude to apply a vote more fully in clients’ best interests. If voting securities are part of a securities lending program, we may be unable to vote while the securities are on loan. However, we have the ability to recall shares on loan or to restrict lending when required, in order to ensure all shares have voted. In addition, certain jurisdictions may impose share-blocking restrictions at various times which may prevent ASI from exercising our voting authority.
We recognize that there may be situations in which we vote at a company meeting where we encounter a conflict of interest. Such situations include:
| • | where a portfolio manager owns the holding in a personal account |
| • | An investee company that is also a segregated client |
| • | An investee company where an executive director or officer of our company is also a director of that company |
| • | An investee company where an employee of ASI is a director of that company |
| • | A significant distributor of our products |
| • | Any other companies which may be relevant from time to time |
In order to manage such conflicts of interests, we have established procedures to escalate decision-making so as to ensure that our voting decisions are based on our clients’ best interests and are not impacted by any conflict.
This policy has been developed by the ASI corporate governance working group. The implementation of this policy, along with the conflicts of interest database, will be reviewed periodically by the group. ASI’s Stewardship Policy is published on our website.
To the extent that an ASI Adviser may rely on sub-advisers, whether affiliated or unaffiliated, to manage any client portfolio on a discretionary basis, the ASI 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 ASI Advisers’ clients. Clients that have not granted ASI voting authority over securities held in their accounts will receive their proxies in accordance with the arrangements they have made with their service providers.
As disclosed in Part 2A of each ASI Adviser’s Form ADV, a client may obtain information on how its proxies were voted by requesting such information from its ASI Adviser. Unless specifically requested by a client in writing, and other than as required for the Funds, the ASI Advisers do not generally disclose client-specific proxy votes to third parties.
Our proxy voting records are available per request and on the SEC’s website at SEC.gov.
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 11, 2022.
abrdn Inc. (“abrdn” or the “Sub-Advisor”), a Securities and Exchange Commission registered investment advisor, is an indirect wholly owned subsidiary of abrdn plc. abrdn plc is a publicly-traded global provider of long-term savings and investments listed on the London Stock Exchange, managing assets for institutional and retail clients from offices around the world. Investment decisions for the Fund are made by abrdn using a team approach and not by any one individual. By making team decisions, abrdn seeks to ensure that the investment process results in consistent returns across all portfolios with similar objectives. abrdn does not employ separate research analysts. Instead, abrdn’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 abrdn invests. Below are the members of the team with significant responsibility for the day-to-day management of the Fund’s portfolio.
Devan Kaloo
Global Head of Equities/Global Head of Public Markets
Mr. Kaloo is responsible for Equities globally and the London based Global Emerging Market (“GEM”) Equities Team, which manages Latin America, Europe, Middle East and Africa equities, and also has oversight of global emerging market input from the Asia research team based in Singapore, with which he works closely.
Joanne Irvine
Deputy Head of Global Emerging Markets Equities
Ms. Irvine is Deputy Head of the Global Emerging Markets Team in London. Joanne was previously Head of Emerging Markets (ex-Asia). Joanne joined abrdn in 1996 in a group development role, and moved to the Global Emerging Markets Equity Team in 1997.
Brett Diment
Head of Global Emerging Market Debt
Mr. Diment is Head of Global Emerging Market Debt and joined abrdn 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 Market Debt Team at Deutsche from 1999 until its acquisition by abrdn.
Nick Robinson
Senior Investment Director, Global Emerging Markets Equities
Mr. Robinson is Senior Investment Director on the Global Emerging Markets Equities Team at abrdn. Nick joined the company in 2000 and spent eight years on the North America Equities Team, including three years based in abrdn’s US offices. In 2008, he joined the Global Emerging Markets Equities Team.
Max Wolman
Investment Director, Global Emerging Market Debt
Mr. Wolman is an Investment Director on the Emerging Market Debt Team and has been with abrdn 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 Market Debt Investment Committee at abrdn and is also responsible for the daily implementation of the investment process.
Kevin Daly
Investment Director, Emerging Markets Debt
Mr. Daly is an Investment Director on the Emerging Markets Debt team. Kevin joined abrdn in 2007.
Edwin Gutierrez
Head of Emerging Market Sovereign Debt
Mr. Gutierrez is the Head of Emerging Market Sovereign Debt. Edwin joined abrdn via the acquisition of Deutshe Asset Management’s London and Philadelphia fixed income businesses in 2005, where he held the same role since joining Deutsche in 2000.
Stephen Parr
Investment Director, Emerging Markets Equity
Mr. Parr is an Investment Director on the Global Emerging Markets Equity Team. Stephen joined abrdn in July 2009 following the acquisition of certain asset management businesses from Credit Suisse Asset Management.
| (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, 2021
Name of Portfolio Manager or Team Member |
Type of Accounts |
# of Accounts Managed |
Assets |
# of Accounts Managed for which Advisory Fee is Based on Performance |
Total Assets for which Advisory Fee is Based on Performance |
| 1. Devan Kaloo | Registered Investment Companies: | 2 | $4,804,857,200 | 0 | $0 |
| Other Pooled Investment Vehicles: | 22 | $14,079,873,500 | 0 | $0 | |
| Other Accounts: | 23 | $7,581,137,020 | 2 | $1,044,595,180 | |
| 2. Joanne Irvine | Registered Investment Companies: | 2 | $4,804,857,200 | 0 | $0 |
| Other Pooled Investment Vehicles: | 22 | $14,079,873,500 | 2 | $1,044,595,180 | |
| Other Accounts: | 23 | $7,581,137,020 | 3 | $771,730,000 | |
| 3. Nick Robinson | Registered Investment Companies: | 3 | $4,804,857,200 | 0 | $0 |
| Other Pooled Investment Vehicles: | 22 | $14,079,873,500 | 0 | $0 | |
| Other Accounts: | 23 | $7,581,137,020 | 2 | $1,044,595,180 | |
| 4. Brett Diment | Registered Investment Companies: | 3 | $1,938,732,000 | 0 | $0 |
| Other Pooled Investment Vehicles: | 33 | $7,939,596,280 | 0 | $0 | |
| Other Accounts: | 41 | $7,015,440,140 | 1 | $364,496,040 | |
| 5. Max Wolman | Registered Investment Companies: | 3 | $1,938,732,000 | 0 | $0 |
| Other Pooled Investment Vehicles: | 33 | $7,939,596,280 | 0 | $0 | |
| Other Accounts: | 41 | $7,015,440,140 | 1 | $364,496,040 | |
| 6. Kevin Daly | Registered Investment Companies: | 3 | $1,938,732,000 | 0 | $0 |
| Other Pooled Investment Vehicles: | 33 | $7,939,596,280 | 0 | $0 | |
| Other Accounts: | 41 | $7,015,440,140 | 1 | $364,496,040 | |
| 7. Edwin Gutierrez | Registered Investment Companies: | 3 | $1,938,732,000 | 0 | $0 |
| Other Pooled Investment Vehicles: | 33 | $7,939,596,280 | 1 | $364,496,040 | |
| Other Accounts: | 41 | $7,015,440,140 | 1 | $0 | |
| 8. Stephen Parr | Registered Investment Companies: | 2 | $4,804,857,200 | 0 | $0 |
| Other Pooled Investment Vehicles: | 22 | $14,079,873,500 | 0 | $0 | |
| Other Accounts: | 23 | $7,581,137,020 | 2 | $771,730,000 |
Potential Conflicts of Interests
As of December 31, 2021
Conflicts of Interest may arise, in the course of providing a service, where there may be a risk of damage to the interests of a client. In accordance with legal requirements in the various jurisdictions in which we operate, abrdn 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 abrdn 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.
abrdn or any other party to whom it may have delegated its functions, may in its absolute discretion, effect transactions in which it or any of its affiliated companies has, directly or indirectly, a material interest, or a relationship of any description with another party which may involve a potential conflict with abrdn’s duty to its client. abrdn ensures that such transactions are effected on terms which are not materially less favorable to the client than if the potential conflict had not existed.
Such potential conflicting interests or duties may, inter alia, arise because:
| · | abrdn or an affiliated company undertakes an activity that is regulated by a relevant regulator for other clients including its affiliated companies (and the clients of affiliated companies) |
| · | a Director or Employee of abrdn, or of an affiliated company, is a director of, holds or deals in securities of, or is otherwise interested in, any company whose securities are held or dealt in on behalf of a client |
| · | a transaction is effected in securities issued by an affiliated company or the client of an affiliated company |
| · | a transaction is effected in securities in respect of which abrdn or an affiliated company may benefit from a commission, fee, mark-up or mark-down payable otherwise than by the client, and abrdn may be remunerated by the counterparty to any such transaction |
| · | abrdn deals on behalf of the client with, or in the securities of, an affiliated company |
| · | abrdn acts as agent for the client in relation to transactions in which it is also acting as agent for the account of other clients and/or affiliated companies |
| · | abrdn, acting as principal, sells to or purchases currency from the client and, in exceptional circumstances, deals in securities as principal with the client |
| · | a transaction is effected in units or shares of connected investment trusts, unit trusts, open ended investment companies or of any company of which abrdn or an affiliated company is the manager, authorized corporate director, operator, banker, adviser, custodian, administrator, trustee or depositary |
| · | abrdn effects transactions involving placings and/or new issues with an affiliated company who may be acting as principal or receiving agent’s commission |
| · | a transaction is effected in securities of a company for which abrdn or an affiliated company has underwritten, or managed or arranged an issue or offer for sale within the previous 12 months |
| · | abrdn or an affiliated company receives remuneration or other benefits by reason of acting in corporate finance or similar transactions involving a company whose securities are held by the client |
| · | a transaction is effected in securities in respect of which abrdn or an affiliated company, or a Director or Employee of abrdn or an affiliated company, is contemporaneously trading or has traded on its own account or has either a long or short position |
| · | abrdn acting as agent for the client, matches an order of the client with an order of another client for whom it is acting as agent |
| · | abrdn effects transactions in investments, the prices of which are being or have been, stabilized by transactions involving an affiliated company. |
At abrdn, existing and potential conflicts of interest are recorded and reviewed by Risk & Compliance to ensure that internal procedures are sufficient to manage a particular conflict.
Please also refer to our Form ADV Part II for additional information regarding Conflict of Interest.
(a)(3) Compensation Structure of Portfolio Manager(s) or Management Team Members
Information provided as of December 31, 2021
abrdn Remuneration Language
abrdn’s 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 abrdn’s clients and shareholders. abrdn operates in a highly competitive international employment market and aims to maintain its strong track record of success in developing and retaining talent.
abrdn’s policy is to recognize corporate and individual achievements each year through an appropriate annual bonus scheme. The bonus is a single, fully discretionary variable pay award. 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.
The variable pay award comprises a mixture of cash and a deferred award based on the size of the award. Deferred awards are by default abrdn plc shares, with an option to put up to 50% of deferral into funds. Overall compensation packages are designed to be competitive relative to the investment management industry.
Base Salary
abrdn’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 abrdn employees; any other increases must be justified by reference to promotion or changes in responsibilities.
Annual Bonus
The Remuneration Committee determines the key performance indicators that will be applied in considering the overall size of the bonus pool. In line with practices 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.
abrdn has a deferral policy which is intended to assist in the retention of talent and to create additional alignment of executives’ interests with abrdn’s sustained performance and, in respect of the deferral into funds, managed by abrdn, 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 abrdn, 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, abrdn 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 through KPI scorecards. 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, abrdn also recognizes that fund performance can often be driven by factors outside one’s control, such as (irrational) markets, and as such pay’s 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 abrdn environment. Additionally, if any of the aforementioned undue risks were to be taken by a portfolio manager, such trend would be identified via abrdn’s dynamic compliance monitoring system.
In rendering investment management services, the Adviser may use the resources of additional investment adviser subsidiaries of abrdn plc. These affiliates have entered into a memorandum of understanding (MOU) pursuant to which investment professionals from each affiliate may render portfolio management, research or trading services to abrdn clients. Each investment professional who renders portfolio management, research or trading services under MOU or personnel sharing arrangement (“Participating Affiliate”) must comply with the provisions of the Advisers Act, the 1940 Act, the Securities Act of 1933, as amended, (the “Securities Act”), the Exchange Act, and the Employee Retirement Income Security Act of 1974, and the laws of states or countries in which the Adviser does business or has clients. No remuneration is paid by the Fund with respect to the MOU/personnel sharing arrangements.
Equities-specific Remuneration
We have implemented a clear performance measurement framework to help drive consistency and transparency across the equity division and also clearly link individual’s performance and contribution to the success of their relevant strategies, desk and key stakeholders. The framework covers four key areas:
| • | Investment excellence – quantitative and qualitative assessment of research, strategy performance and information ratio (from a team and individual perspective) |
| • | Collaboration – contribution to peer review within the team and insight sharing across asset classes |
| • | Client engagement – information and support |
| • | Commerciality – primarily for team leaders; stewardship of team assets, profitability and stakeholder alignment. |
| • | ESG - qualitative informed by various inputs including peer and stakeholder feedback. |
The framework is heavily skewed to investment excellence and team collaboration for the majority of investment personnel, which reinforces our organizational structure and objective of delivering positive outcomes for our clients and stakeholders.
Annual remuneration over a set threshold include a significant deferral into shares of our parent company or into internally-run funds in order to align our portfolio managers with the objectives of their clients and the organization.
More information of the firm’s remuneration policy can be found via the following link:
https://www.abrdn.com/corporate/about-us/our-leadership-team/remuneration-disclosure
(a)(4) Disclosure of Securities Ownership
Information provided as of December 31, 2021
|
Name of Portfolio Manager or Team Member |
Dollar ($) Range of Fund Shares Beneficially Owned | |
| Devan Kaloo | None | |
| Joanne Irvine | None | |
| Nick Robinson | None | |
| Brett Diment | None | |
| Max Wolman | None | |
| Kevin Daly | None | |
| Edwin Gutierrez | None | |
| Stephen Parr | None |
| (b) | Not applicable. |
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
REGISTRANT PURCHASES OF EQUITY SECURITIES
| Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
| Month #1 (01/01/2021– 01/31/2021) |
5,226 | 14.28 | 335,983 | 183,467 |
| Month #2 (02/01/2021– 02/28/2021) |
0 | 0 | 335,983 | 183,467 |
| Month #3 (03/01/2021– 03/31/2021) |
0 | 0 | 335,983 | 0* |
| Month #4 (04/01/2021– 04/30/2021) |
0 | 0 | 335,983 | 0 |
| Month #5 (05/01/2021– 05/31/2021) |
0 | 0 | 335,983 | 0 |
| Month #6 (06/01/2021– 06/30/2021) |
0 | 0 | 335,983 | 0 |
| Month #7 (07/01/2021– 07/31/2021) |
0 | 0 | 335,983 | 0 |
| Month #8 (08/01/2021– 08/31/2021) |
0 | 0 | 335,983 | 0 |
| Month #9 (09/01/2021– 09/30/2021) |
0 | 0 | 335,983 | 0 |
| Month #10 (10/01/2021– 10/31/2021) |
0 | 0 | 335,983 | 0 |
| Month #11 (11/01/2021– 11/30/2021) |
0 | 0 | 335,983 | 0 |
| Month #12 (12/01/2021– 12/31/2021) |
0 | 0 | 335,983 | 0 |
| Total | 5,226 | 14.28 | 335,983 | 0* |
*On September 15, 2015, the Fund commenced a share repurchase program. The program expired on March 15, 2021. For the fiscal years ended December 31, 2021 and 2020, the Fund repurchased 5,226 and 59,547 Common Shares, respectively, at a weighted-average discount of 12.95% and 13.59%, respectively, from net asset value per share.
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 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. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
| (a) | Not applicable. |
| (b) | Not applicable. |
Item 13. 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 Emerging Opportunity Fund |
| By (Signature and Title)* | /s/ James M. Dykas | |
| James M. Dykas, President and Chief Executive Officer (principal executive officer) |
| Date: | March 11, 2022 |
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: | March 11, 2022 |
| By (Signature and Title)* | /s/ Donald P. Swade | |
| Donald P. Swade, Treasurer, Chief Financial Officer and Chief Accounting Officer (principal financial officer) |
| Date: | March 11, 2022 |
* Print the name and title of each signing officer under his or her signature.
1 Year First Trust abrdn Emergi... Chart |
1 Month First Trust abrdn Emergi... Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
Hot Features
Premium
