UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21636
First Trust/Aberdeen Global Opportunity Income Fund
(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Name and address of agent for service)
registrant's telephone number, including area code: (630) 765-8000
Date of fiscal year end: December 31
Date of reporting period: June 30, 2010
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
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("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. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
(FIRST TRUST LOGO)
SEMI-ANNUAL
REPORT
FOR THE SIX MONTHS ENDED
JUNE 30, 2010
(GRAPHIC)
FIRST TRUST/ABERDEEN
GLOBAL OPPORTUNITY
INCOME FUND
(ABERDEEN LOGO)
ASSET MANAGEMENT
TABLE OF CONTENTS
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
SEMI-ANNUAL REPORT
JUNE 30, 2010
Shareholder Letter ....................................................... 1
At A Glance .............................................................. 2
Portfolio Commentary ..................................................... 3
Portfolio of Investments ................................................. 6
Schedule of Forward Foreign Currency Contracts. .......................... 11
Statement of Assets and Liabilities ...................................... 12
Statement of Operations .................................................. 13
Statements of Changes in Net Assets. ..................................... 14
Statement of Cash Flows .................................................. 15
Financial Highlights ..................................................... 16
Notes to Financial Statements ............................................ 17
Additional Information. .................................................. 24
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and/or Aberdeen Asset Management Inc. ("Aberdeen" or
the "Sub-Advisor") and their respective representatives, taking into account the
information currently available to them. Forward-looking statements include all
statements that do not relate solely to current or historical fact. For example,
forward-looking statements include the use of words such as "anticipate,"
"estimate," "intend," "expect," "believe," "plan," "may," "should," "would" or
other words that convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
First Trust/Aberdeen Global Opportunity Income Fund (the "Fund") to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. When evaluating the
information included in this report, you are cautioned not to place undue
reliance on these forward-looking statements, which reflect the judgment of the
Advisor and/or Sub-Advisor and their respective representatives only as of the
date hereof. We undertake no obligation to publicly revise or update these
forward-looking statements to reflect events and circumstances that arise after
the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that the Fund will achieve its investment objectives. The
Fund is subject to market risk, which is the possibility that the market value
of securities owned by the Fund will decline and that the value of the Fund
shares may therefore be less than what you paid for them. Accordingly, you can
lose money investing in the Fund. See "Risk Considerations" in the Notes to
Financial Statements for a discussion of other risks of investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, net asset value and common share price will fluctuate and Fund shares,
when sold, may be worth more or less than their original cost.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment. It
includes details about the Fund and presents data and analysis that provide
insight into the Fund's performance and investment approach.
By reading the portfolio commentary by the portfolio management team of the
Fund, you may obtain an understanding of how the market environment affected the
Fund's performance. The statistical information that follows may help you
understand the Fund's performance compared to that of relevant market
benchmarks.
It is important to keep in mind that the opinions expressed by personnel of
Aberdeen are just that: informed opinions. They should not be considered to be
promises or advice. The opinions, like the statistics, cover the period through
the date on the cover of this report. The risks of investing in the Fund are
spelled out in the prospectus, the statement of additional information, this
report and other regulatory filings.
SHAREHOLDER LETTER
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
SEMI-ANNUAL REPORT
JUNE 30, 2010
Dear Shareholders:
I am pleased to present you with the semi-annual report for your investment in
First Trust/Aberdeen Global Opportunity Income Fund (the "Fund").
First Trust Advisors L.P. ("First Trust") has always believed that staying
invested in quality products and having a long-term horizon can help investors
reach their financial goals. The past eighteen months have been challenging, but
successful investors understand that the success they have achieved is typically
because of their long-term investment perspective through all kinds of markets.
The report you hold contains detailed information about your investment; a
portfolio commentary from the Fund's management team that provides a recap of
the period; a performance analysis and a market and Fund outlook. Additionally,
you will find the Fund's financial statements for the six months this report
covers. I encourage you to read this document and discuss it with your financial
advisor.
First Trust offers a variety of products that can fit many financial plans to
help those investors who are seeking long-term financial success. You may want
to talk to your advisor about the other investments we offer that might fit your
financial plan.
At First Trust we continue to be committed to making available up-to-date
information about your investments so you and your financial advisor have
current information on your portfolio. We value our relationship with you, and
we thank you for the opportunity to assist you in achieving your financial
goals.
Sincerely,
/s/ James A. Bowen
James A. Bowen
President of First Trust/Aberdeen Global Opportunity Income Fund
Page 1
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
"AT A GLANCE"
AS OF JUNE 30, 2010 (UNAUDITED)
FUND STATISTICS
Symbol on New York Stock Exchange FAM
Common Share Price $ 16.05
Common Share Net Asset Value ("NAV") $ 16.75
Premium (Discount) to NAV (4.18)%
Net Assets Applicable to Common Shares $290,784,371
Current Monthly Distribution per Common Share (1) $ 0.130
Current Annualized Distribution per Common Share $ 1.560
Current Distribution Rate on Closing Common Share Price (2) 9.72%
Current Distribution Rate on NAV (2) 9.31%
COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
(PERFORMANCE GRAPH)
Common Share
Price NAV
------------ -----
06/30/2009 13.32 14.97
07/02/2009 13.48 14.88
07/10/2009 13.25 14.89
07/17/2009 13.63 15.04
07/24/2009 13.8 15.25
07/31/2009 14 15.51
08/07/2009 14.02 15.64
08/14/2009 14.2 15.64
08/21/2009 14.31 15.8
08/28/2009 14.68 15.88
09/04/2009 14.6 15.85
09/11/2009 14.79 16.11
09/18/2009 15.25 16.35
09/25/2009 15.13 16.43
10/02/2009 15.1 16.41
10/09/2009 15.85 16.69
10/16/2009 15.64 16.74
10/23/2009 15.48 16.69
10/30/2009 14.96 16.55
11/06/2009 15.38 16.42
11/13/2009 15.54 16.64
11/20/2009 15.7 16.68
11/27/2009 16.07 16.71
12/04/2009 16.01 16.56
12/11/2009 15.93 16.53
12/18/2009 15.89 16.6
12/24/2009 16.14 16.57
12/31/2009 16.03 16.58
01/08/2010 16.16 16.77
01/15/2010 16.39 16.82
01/22/2010 16.42 16.72
01/29/2010 16.47 16.66
02/05/2010 15.16 16.44
02/12/2010 15.44 16.52
02/19/2010 15.69 16.58
02/26/2010 16 16.73
03/05/2010 16.06 16.85
03/12/2010 16.17 17.02
03/19/2010 15.92 17.14
03/26/2010 16.34 17.08
04/01/2010 16.32 17.08
04/09/2010 16.36 17.16
04/16/2010 16.54 17.3
04/23/2010 16.89 17.33
04/30/2010 16.89 17.27
05/07/2010 15 16.6
05/14/2010 15.71 16.82
05/21/2010 14.76 16.43
05/28/2010 15.66 16.56
06/04/2010 15.06 16.35
06/11/2010 15.62 16.47
06/18/2010 15.9 16.79
06/25/2010 16.05 16.85
06/30/2010 16.05 16.75
PERFORMANCE
Average Annual Total Return
--------------------------------------
6 Months Ended 1 Year Ended 5 Years Ended Inception (11/23/2004)
6/30/2010 6/30/2010 6/30/2010 to 6/30/2010
-------------- ------------ ------------- ----------------------
Fund Performance (3)
NAV 5.99% 23.61% 8.31% 8.02%
Market Value 5.11% 33.20% 8.48% 6.33%
Index Performance
Blended Benchmark (4) 1.66% 10.31% 7.50% 7.10%
Barclays Capital Global Emerging Markets Index 2.73% 17.80% 7.77% 7.95%
Barclays Capital Global Aggregate Index -0.31% 5.00% 5.03% 4.39%
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
--------------- ------------
Asian Development Bank, 5.50%, 02/15/16 4.2%
European Investment Bank, 6.50%, 09/2010/14 3.9
United Kingdom Treasury, 6.25%, 11/25/2010 3.5
Republic of Argentina, 7.00%, 10/03/15 3.1
Province of Manitoba, 6.38%, 09/01/15 3.1
Australian Government, 6.00%, 02/15/17 2.8
Instituto de Credito Oficial, 5.50%, 10/11/12 2.7
United Kingdom Treasury, 6.00%, 12/07/28 2.5
Province of Ontario, 6.25%, 06/16/15 2.3
Queensland Treasury, 6.00%, 10/14/15 2.0
----
Total 30.1%
====
% OF TOTAL
CREDIT QUALITY (6) INVESTMENTS
------------------ -----------
AAA 24.7%
AA+ 2.0
AA 6.6
AA- 2.3
A+ 0.9
A 0.6
A- 2.3
BBB+ 4.4
BBB 6.1
BBB- 8.6
BB+ 2.3
BB 10.0
BB- 9.3
B+ 3.0
B 11.0
B- 4.7
D 0.8
NR 0.4
-----
Total 100.0%
=====
% OF TOTAL
TOP 10 COUNTRIES (5) INVESTMENTS
-------------------- -----------
Canada 9.0%
Multinational 8.5
Mexico 8.4
United Kingdom 7.8
Australia 7.6
Russia 6.5
Indonesia 6.0
Brazil 5.7
Venzuela 4.2
Argentina 3.9
----
Total 67.6%
====
% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
----------------------- -----------
Government Bonds and Notes 51.0%
Supranational Banks 8.5
Regional Authority 7.4
Commercial Banks 4.8
Oil, Gas & Consumable Fuels 3.9
Diversified Financial Services 3.9
Special Purpose Banks 3.8
Electric Utilities 3.2
Real Estate Management & Development 2.0
Household Durables 1.7
Import/Export Bank 1.7
Diversified Telecommunication Services 1.4
Construction Materials 1.3
Metals & Mining 1.0
Road & Rail 0.7
Transportation Infrastructure 0.7
Food Products 0.7
Coal 0.6
Beverages 0.5
Hotels, Restaurants & Leisure 0.5
Multiline 0.5
Healthcare 0.2
-----
Total 100.0%
=====
(1) Most recent distribution paid or declared through 6/30/2010. Subject to
change in the future.
(2) Distribution rates are calculated by annualizing the most recent
distribution paid or declared through the report date and then dividing by
Common Share price or NAV, as applicable, as of 6/30/2010. 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 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 less
than one year. Past performance is not indicative of future results.
(4) Blended benchmark consists of the following: Citigroup World Government
Bond Index (40.0%); JPMorgan Emerging Markets Bond Index - Global
Diversified (30.0%); JPMorgan Global Bond Index - Emerging Markets
Diversified (30.0%).
(5) Portfolio securities are included in a country based upon their underlying
credit exposure as determined by Aberdeen Asset Management Inc., the
investment sub-advisor.
(6) The credit quality information represented reflects the ratings assigned by
one or more nationally recognized statistical rating organizations
(NRSROs). For situations in which a security is rated by more than one
NRSRO and ratings are not equivalent, the ratings are averaged.
Page 2
PORTFOLIO COMMENTARY
SUB-ADVISOR
Aberdeen Asset Management Inc. ("Aberdeen" or the "Sub-Advisor"), a Securities
and Exchange Commission registered investment advisor, is a wholly-owned
subsidiary of Aberdeen Asset Management PLC ("Aberdeen Group"). Aberdeen Group
is a publicly-traded international investment management group listed on the
London Stock Exchange, managing assets for both institutional and retail clients
from offices around the world.
PORTFOLIO MANAGEMENT TEAM
Investment decisions for the First Trust/Aberdeen Global Opportunity Income Fund
(the "Fund") are made by Aberdeen using a team approach and not by any one
individual. By making team decisions, Aberdeen seeks to ensure that the
investment process results in consistent returns across all portfolios with
similar objectives. Aberdeen does not employ separate research analysts.
Instead, Aberdeen's investment managers combine the roles of analysis with
portfolio management. Each member of the team has sector and portfolio
responsibilities such as day-to-day monitoring of liquidity. The overall result
of this matrix approach is a high degree of cross-coverage, leading to a deeper
understanding of the securities in which Aberdeen invests.
JOHN MURPHY
PORTFOLIO MANAGER, GLOBAL BONDS
Mr. Murphy joined Aberdeen with the acquisition of the Deutsche Asset Management
Group Limited ("Deutsche") fixed-income business in 2005. Mr. Murphy held a
similar role at Deutsche, and previously at Morgan Grenfell Asset Management,
which he joined in 1984.
BRETT DIMENT
HEAD OF EMERGING MARKET DEBT
Mr. Diment joined Deutsche in 1991 as a member of the fixed-income group and
became head of the Emerging Market Debt team at Deutsche in 1999. Mr. Diment
joined Aberdeen following the Deutsche acquisition in 2005 and is now
responsible for the day-to-day management of the Emerging Market Debt team and
portfolios.
KEVIN DALY
PORTFOLIO MANAGER, EMERGING MARKET DEBT
Mr. Daly joined the Emerging Market Debt team at Aberdeen in April 2007 as a
portfolio manager, having spent the previous 10 years at Standard & Poor's in
London and Singapore as a credit market analyst covering global emerging market
debt, and was head of marketing for Global Sovereign Ratings at Standard &
Poor's. Mr. Daly was a regular participant on the Global Sovereign Committee,
served as a member of the Sovereign Ratings Review Board, and was one of the
initial members of the Emerging Market Council, formed in 2006 to advise senior
management on business and market developments in emerging markets.
EDWIN GUTIERREZ
PORTFOLIO MANAGER, EMERGING MARKET DEBT
Mr. Gutierrez has served as an economist specializing in Latin America at LGT
Asset Management, and more recently as a portfolio manager specializing in
emerging market fixed-income at Invesco Asset Management. He joined Deutsche in
2000 and Aberdeen in 2005.
MAX WOLMAN
PORTFOLIO MANAGER, EMERGING MARKET DEBT
Mr. Wolman joined Aberdeen in January 2001 and is portfolio manager on the
Emerging Market Debt mandates. Mr. Wolman originally specialized in currency and
domestic debt analysis; however, he is now responsible for wider emerging debt
analysis, including external and corporate issuers. He is a member of the
Emerging Market Debt investment committee at Aberdeen and is also responsible
for the daily implementation of the investment process.
ESTHER CHAN
PORTFOLIO MANAGER, EMERGING MARKET DEBT
Ms. Chan joined Aberdeen in Singapore in 2005 where she started as a corporate
credit analyst and trader working across investment-grade and high-yield assets
in the region. She has 6 years of experience in the asset class, and now serves
as a portfolio manager in Aberdeen London with specialization in analysis,
management and trading of external Asian debt and Emerging Market corporates.
Prior to joining Aberdeen, Ms. Chan worked as a corporate finance analyst at
John Moore, assisting in various deals focused on the debt restructuring in
Indonesian firms facing creditor holdout situations, post-Asian crisis.
Page 3
PORTFOLIO COMMENTARY - (CONTINUED)
COMMENTARY
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
The primary investment objective of the Fund is to seek a high level of current
income. As a secondary objective, the Fund seeks capital appreciation. The Fund
pursues its investment objectives by investing in the world bond markets through
a diversified portfolio of investment-grade and below investment-grade
government and corporate debt securities. There can be no assurance that the
Fund's investment objectives will be achieved, and the Fund may not be
appropriate for all investors.
MARKET RECAP - DEVELOPED MARKETS
Despite the continued recovery in risk assets, returns on developed bond markets
were generally positive in the first quarter of 2010 following a poor fourth
quarter 2009 for global bonds, where we saw U.S. 10-year yields up around 50
basis points. There were no moves in official rates in the major economies. The
only exception was Australia where rates were increased three times to end the
period at 4.5%.
Over the period covered by this report, the focus remained on sovereign risk and
Greece in particular. Amidst unprecedented volatility in peripheral Eurozone
government bond markets, the European Union ("EU") approved a E110bn bailout
package for Greece, co-financed with the International Monetary Fund. The
European Central Bank ("ECB") also announced that it would accept Greek
government bonds as collateral for its refinancing operations regardless of
credit rating. In addition, given rising fears that a liquidity crisis could
turn into a major solvency problem, the EU announced a E750bn package to support
the liquidity and solvency of any Emerging Market Union ("EMU") member having
difficulty accessing the capital markets. On top of these measures, the ECB
announced that EMU central banks would be given the authority to purchase EMU
sovereign debt as a market support operation.
Against this backdrop, the yield on 10-year U.S. Treasuries fell to below 3% for
the first time since April 2009. Elsewhere, with prospects for Federal Reserve
tightening pushed even further into the future, the yield on 2-year bonds fell
to a record low of 0.60%. German government bonds and United Kingdom gilts also
performed well, as they continued to benefit from "safe haven status" with
further weakness and volatility in peripheral Eurozone sovereign bond markets.
MARKET RECAP - EMERGING MARKETS
The first half of 2010 can easily be distinguished between two periods of market
strength and one period of weakness. Investors continued to remain bullish at
the start of the year, adding exposure to emerging fixed-income securities,
moving the JPMorgan Emerging Markets Bond Index-Global Diversified ("JPM EMBI
Index") from 486 at the start of the year to a high of 512 in April. At the same
time, U.S. Treasuries went to 4% from 3.84% at the start of 2010. Towards the
end of April, concerns started to build about the ability of some European
countries' capability to service their debt, namely Greece, Portugal, Spain and
Ireland. Intervention by other more stable European countries, such as Germany
and France and the ECB, eventually helped to diffuse the market's concern, but
not until the Treasury yield declined to 3% and investors reduced their holdings
in emerging market debt. So although the JPM EMBI Index ended up by the end of
June at 512 from its low of 486, the spread over U.S. Treasuries continued to
widen to 355 as U.S. Treasuries continued to rally to below 3% as the growth
outlook faltered and inflation concerns abated. Markets began to price out the
chance of the Federal Reserve starting to increase interest rates as the chance
of a double-dip recession started to gather greater momentum. Towards the end of
the first half of 2010, investors began adding to their emerging market debt
exposure as yields and spreads over U.S. Treasuries became more attractive
again, causing the JPM EMBI Index to increase in value.
FUND RECAP
The Fund had a net asset value ("NAV") total return(1) of 5.99% and a market
value total return(1) of 5.11% for the six months ended June 30, 2010, compared
to the blended benchmark total return(2) of 1.66% over the same period. In
addition to this blended benchmark, the Fund currently uses other indexes for
comparative purposes. The total returns for the six months ended June 30, 2010
for these indexes were as follows: the Barclays Capital Global Emerging Markets
Index was 2.73% and the Barclays Capital Global Aggregate Index was -0.31%.
PERFORMANCE ANALYSIS - DEVELOPED MARKETS
Over the first half of 2010, the Fund's developed market portfolio
underperformed the Citigroup World Government Bond Index. The Fund's developed
markets portfolio returned -1.34% versus -1.04% for the Index. The portfolio's
investments were concentrated in markets such as Australia, New Zealand, Canada
and the United Kingdom relative to underweight positions in Europe and Japan.
The Fund's overweight position in the Australian dollar was the main contributor
to underperformance during the first half of 2010.
----------
(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 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. Past performance is not
indicative of future results.
(2) The Fund's blended benchmark consists of the following: 40% Citigroup World
Government Bond Index; 30% JPMorgan Emerging Markets Bond Index-Global
Diversified; and 30% JPMorgan Global Bond Index-Emerging Markets
Diversified.
Page 4
PORTFOLIO COMMENTARY - (CONTINUED)
PERFORMANCE ANALYSIS - EMERGING MARKETS
The Fund outperformed its blended benchmark of both hard currency and local
bonds and outperformed the individual components. The Fund's overweight position
in hard currency bonds and underweight position in local currency bonds
contributed positively to the outperformance. The U.S. dollar-denominated
currency bonds index (JPM EMBI) had a much higher return than the local currency
bond index (JPM GBI): 5.59% compared to 1.39% as the U.S. dollar was one of the
top-performing currencies over the period.
The Fund's overweight position in the higher beta credits, such as Ukraine,
Argentina and Venezuela, helped the Fund to outperform. In the case of Argentina
and Venezuela, although these credits underperformed in the JPMorgan Global Bond
Index-Emerging Markets Diversified, the Emerging Markets portion of the Fund's
blended benchmark, the Fund's short duration positions compared to its blended
benchmark were favorable to the Fund's performance. In other words, security
selection created the outperformance for the Fund's portfolio. The Fund also
remained overweight in corporate bonds which outperformed many of the sovereign
bonds. This was due to higher yields and therefore greater demand for these
assets. The Fund's underweight in higher quality Latin American countries (such
as Peru and Panama) was a mild detractor from performance.
The local currency component of the Fund outperformed the Fund's blended
benchmark index, predominately due to the Fund's underweight holdings in the
Eastern Europe countries (such as Hungary and Poland) which both did incredibly
poorly due to investors' concerns over the weaker European countries. The Fund
lost performance due to its underweight positions in Malaysia and Thailand which
were both strong performers for the first half of 2010, due to the decrease in
U.S. Treasury yields and the rallying U.S. dollar. Both Thailand and Malaysia
domestic yield curves tend to follow the U.S. Treasury yield curve moves, so as
U.S. Treasury yields dropped in the first half of 2010, so did Thailand and
Malaysia domestic rates. The THB and MYR currencies were also strong over the
period as investors had greater confidence in growth rates for these two
countries than other emerging countries.
MARKET AND FUND OUTLOOK - EMERGING MARKETS
As concerns shift from Greece and the Eurozone to the slowing growth data in the
U.S. and China, we would expect emerging market debt to remain choppy over the
short-term. At the same time, we would expect emerging market debt to be a
relative outperformer, reflecting the supportive macro outlook and more
favorable debt and fiscal outlook compared to the developed world. In this
respect, external debt will likely continue to attract investors as a result of
extremely low G3 yields. (The G3 is a free trade agreement originally between
Colombia, Mexico and Venezuela that has been in effect since January 1995. Since
that date, Venezuela has withdrawn from this trade bloc.)
MARKET AND FUND OUTLOOK - DEVELOPED MARKETS
Our general view is that the tightening of fiscal policy across Europe and the
decreasing influence of stimulus packages in the U.S., combined with the desire
of the Chinese to slow growth (albeit slightly), increases the risk of a
double-dip recession. We expect to see slower growth and inflation in the second
half of 2010; therefore, we can see no reason why the Federal Reserve, ECB or
Bank of England will need to raise rates for at least 12 months. We can also see
the possibility that quantitative easing (a monetary policy used by central
banks to increase the supply of money in an economy when the bank interest rate,
discount rate and/or interbank interest rate are either at, or close to, zero)
could be used again and there remains the chance that the ECB could cut rates.
We believe the debt dynamics of many non-government bond issuers are more
favorable than for many governments.
Global bond yields have fallen significantly in the last couple of months, so
the risk of an increase in yields from these extremely low levels on good
economic news has increased. However, any back up in yields is likely to
encourage investors to buy bonds. We continue to believe that yield curves are
likely to flatten.
Page 5
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (b)
JUNE 30, 2010 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
-------------- ---------------------------------------------------- ------ -------- ------------
BONDS AND NOTES (c) - 119.4%
ARGENTINA - 4.6%
6,626,872 Republic of Argentina (ARS) (d) .................... 5.13% 02/04/18 $ 2,654,143
13,800,000 Republic of Argentina (USD) ........................ 7.00% 10/03/15 10,856,086
-----------
13,510,229
-----------
AUSTRALIA - 9.0%%
11,000,000 Australian Government (AUD) ........................ 6.00% 02/15/17 9,829,067
11,500,000 Instituto de Credito Oficial (AUD) ................. 5.50% 10/11/12 9,350,024
8,100,000 Queensland Treasury (AUD) .......................... 6.00% 10/14/15 7,076,919
-----------
26,256,010
-----------
BRAZIL - 6.8%
5,750,000 Brazil Citigroup (BRL) ............................. 15.00% 07/02/10 3,185,596
11,370,000 Brazil Notas do Tesouro Nacional Series F (BRL) .... 10.00% 01/01/17 5,693,101
8,380,000 Brazil Notas do Tesouro Nacional Series F (BRL) .... 10.00% 01/01/21 3,993,848
524,000 Dasa Finance Corp. (USD) ........................... 8.75% 05/29/18 569,850
1,020,000 Fibria Overseas Finance Ltd. (USD) ................. 7.50% 05/04/20 1,040,400
630,000 Petrobras International Finance Co. (USD) .......... 7.88% 03/15/19 721,980
2,280,000 Pontis Ltd. (USD) .................................. 6.25% 07/20/10 2,275,451
2,350,000 Rearden G Holdings Eins GmbH (USD) ................. 7.88% 03/30/20 2,384,192
-----------
19,864,418
-----------
CANADA - 10.7%
1,700,000 Canadian Government (CAD) .......................... 5.25% 06/01/13 1,751,277
10,000,000 Export Development Canada (NZD) .................... 8.13% 11/30/10 6,986,759
3,650,000 KfW International Finance (CAD) .................... 4.95% 10/14/14 3,742,087
15,000,000 Province of Manitoba (NZD) ......................... 6.38% 09/01/15 10,792,466
10,965,000 Province of Ontario (NZD) .......................... 6.25% 06/16/15 7,866,933
-----------
31,139,522
-----------
CHINA - 2.7%
1,650,000 Agile Property Holdings Ltd. (USD) ................. 10.00% 11/14/16 1,695,375
1,360,000 Agile Property Holdings Ltd. (USD) ................. 8.88% 04/28/17 1,271,600
2,290,000 CFG Investment S.A.C. (USD) ........................ 9.25% 12/19/13 2,370,150
2,510,000 Yanlord Land Group Ltd. (USD) ...................... 9.50% 05/04/17 2,378,225
-----------
7,715,350
-----------
COLOMBIA - 2.5%
930,000 EEB International Ltd. (USD) ....................... 8.75% 10/31/14 1,029,975
300,000 Republic of Colombia (USD) ......................... 7.38% 09/18/37 354,000
3,440,000 Republic of Colombia (USD) ......................... 6.13% 01/18/41 3,480,248
2,200,000 TGI International Ltd. (USD) ....................... 9.50% 10/03/17 2,453,000
-----------
7,317,223
-----------
DOMINICAN REPUBLIC - 2.5%
1,770,000 Cerveceria Nacional Dominica (USD) (d) ............. 16.00% 03/27/12 1,730,706
3,230,000 Dominican Republic (USD) ........................... 7.50% 05/06/21 3,343,050
2,066,000 Dominican Republic (USD) ........................... 8.63% 04/20/27 2,257,105
-----------
7,330,861
-----------
See Notes to Financial Statements
Page 6
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (b) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
-------------- ---------------------------------------------------- ------ -------- ------------
BONDS AND NOTES (c) - (CONTINUED)
EL SALVADOR - 1.2%
700,000 Republic of El Salvador (USD) ...................... 8.25% 04/10/32 $ 773,500
2,640,000 Republic of El Salvador (USD) ...................... 7.65% 06/15/35 2,811,600
-----------
3,585,100
-----------
HUNGARY - 3.5%
771,070,000 Hungary Government Bond (HUF) ...................... 6.00% 10/24/12 3,249,584
328,000,000 Hungary Government Bond (HUF) ...................... 5.50% 02/12/16 1,278,879
1,459,700,000 Hungary Government Bond (HUF) ...................... 6.50% 06/24/19 5,767,859
-----------
10,296,322
-----------
INDONESIA - 7.1%
1,950,000 Berau Capital Resources (USD) ...................... 12.50% 07/08/15 1,950,000
1,210,000 Indo Integrated Energy II B.V. (USD) ............... 9.75% 11/05/16 1,265,599
42,200,000,000 Indonesian Government Bond (IDR) ................... 10.75% 05/15/16 5,300,245
7,170,000,000 Indonesian Recapitalization Bond (IDR) ............. 13.40% 02/15/11 827,267
14,200,000,000 Indonesian Recapitalization Bond (IDR) ............. 13.45% 08/15/11 1,690,649
2,120,000 Majapahit Holding B.V. (USD) ....................... 7.75% 10/17/16 2,353,673
2,800,000 Majapahit Holding B.V. (USD) ....................... 7.25% 06/28/17 3,001,807
2,090,000 MGTI Finance Company, Ltd. (USD) ................... 8.38% 09/15/10 2,106,406
2,200,000 Star Energy Geothermal
(Wayang Windu) Ltd. (USD) ....................... 11.50% 02/12/15 2,288,000
-----------
20,783,646
-----------
KAZAKHSTAN - 2.7%
1,300,000 Halyk Savings Bank of Kazakhstan (USD) ............. 9.25% 10/16/13 1,359,020
1,220,000 KazakhGold Group Ltd. (USD) ........................ 9.38% 11/06/13 1,256,051
2,570,000 KazMunaiGaz Finance Sub B.V. (USD) ................. 7.00% 05/05/20 2,592,616
2,000,000 Turanalem Finance B.V. (USD) (e) ................... 8.00% 03/24/14 925,000
3,800,000 Turanalem Finance B.V. (USD) (e) ................... 8.25% 01/22/37 1,824,000
-----------
7,956,687
-----------
LITHUANIA - 1.6%
2,390,000 Republic of Lithuania (USD) ........................ 6.75% 01/15/15 2,512,487
1,980,000 Republic of Lithuania (USD) ........................ 7.38% 02/11/20 2,083,950
-----------
4,596,437
-----------
MALAYSIA - 1.0%
2,400,000 Petronas Capital Ltd. (USD) ........................ 7.88% 05/22/22 2,995,762
-----------
MEXICO - 10.0%
2,710,000 Axtel S.A.B. de C.V. (USD) ......................... 9.00% 09/22/19 2,425,450
2,510,000 BBVA Bancomer S.A./ Texas (USD) .................... 7.25% 04/22/20 2,482,603
2,320,000 Corp. Geo S.A. de C.V. (USD) ....................... 8.88% 09/25/14 2,424,400
1,150,000 Corp. Geo S.A. de C.V. (USD) ....................... 9.25% 06/30/20 1,152,185
1,800,000 Corporativo Javer S.A. de C.V. (USD) ............... 13.00% 08/04/14 1,998,000
2,400,000 Desarrolladora Homex S.A. (USD) .................... 9.50% 12/11/19 2,472,000
1,600,000 Grupo Posadas S.A.B. de C.V. (USD) ................. 9.25% 01/15/15 1,624,000
44,400,000 Mexican Bonos Desarr Fixed Rate Bond (MXN) ......... 8.00% 06/11/20 3,723,845
See Notes to Financial Statements
Page 7
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (b) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
-------------- ---------------------------------------------------- ------ -------- ------------
BONDS AND NOTES (c) - (CONTINUED)
MEXICO - (CONTINUED)
52,750,000 Mexican Bonos Desarr Fixed Rate Bond (MXN) ......... 10.00% 11/20/36 $ 5,175,867
25,910,000 Mexico Cetes (MXN) ................................. (f) 09/09/10 1,985,364
990,000 Pemex Project Funding Master Trust (USD) ........... 5.75% 03/01/18 1,042,895
1,420,000 Pemex Project Funding Master Trust (USD) ........... 6.63% 06/15/35 1,467,651
1,060,000 Pemex Project Funding Master Trust (USD) ........... 6.63% 06/15/38 1,086,779
-----------
29,061,039
-----------
MULTINATIONAL - 10.2%
17,600,000 Asian Development Bank (AUD) ....................... 5.50% 02/15/16 14,681,751
18,800,000 European Investment Bank (NZD) ..................... 6.50% 09/10/14 13,612,812
1,500,000 Nordic Investment Bank (AUD) ....................... 5.38% 01/18/11 1,264,729
-----------
29,559,292
-----------
NIGERIA - 0.8%
2,350,000 GTB Finance B.V. (USD) ............................. 8.50% 01/29/12 2,399,585
-----------
NORWAY - 2.4%
10,000,000 Kommunalbanken AS (NZD) ............................ 8.00% 10/19/10 6,945,125
-----------
PAKISTAN - 0.5%
850,000 Islamic Republic of Pakistan (USD) ................. 6.88% 06/01/17 772,480
990,000 Islamic Republic of Pakistan (USD) ................. 7.88% 03/31/36 761,636
-----------
1,534,116
-----------
PERU - 1.2%
8,500,000 Peru Bono Soberano (PEN) ........................... 8.20% 08/12/26 3,446,930
-----------
PHILIPPINES - 3.4%
3,140,000 Republic of Philippines (USD) ...................... 10.63% 03/16/25 4,551,477
1,550,000 Republic of Philippines (USD) ...................... 7.75% 01/14/31 1,803,890
1,770,000 Republic of Philippines (USD) ...................... 6.38% 10/23/34 1,790,959
1,550,000 SM Investments Corp. (USD) ......................... 6.00% 09/22/14 1,606,983
-----------
9,753,309
-----------
QATAR - 1.0%
2,630,000 State of Qatar (USD) ............................... 6.40% 01/20/40 2,807,525
-----------
RUSSIA - 7.8%
2,328,000 Evraz Group S.A. (USD) ............................. 8.25% 11/10/15 2,319,270
2,160,000 Gaz Capital S.A. (USD) ............................. 9.25% 04/23/19 2,494,800
2,400,000 LUKOIL International Finance B.V. (USD) ............ 7.25% 11/05/19 2,478,000
57,094,786 Red Arrow International Leasing PLC (RUB) . ........ 8.38% 06/30/12 1,882,953
145,000,000 RSHB Capital S.A. (RUB) ............................ 7.50% 03/25/13 4,609,284
1,306,400 Russia Government International Bond (USD) . ....... 7.50% 03/31/30 1,475,971
2,500,000 Russian Railways (USD) ............................. 5.74% 04/03/17 2,468,750
2,370,000 TNK-BP Finance S.A. (USD) .......................... 7.50% 07/18/16 2,473,688
2,300,000 VIP Finance Ireland Ltd. for OJSC
Vimpel Communications (USD) ..................... 9.13% 04/30/18 2,501,250
-----------
22,703,966
-----------
See Notes to Financial Statements
Page 8
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (b) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
-------------- ---------------------------------------------------- ------ -------- ------------
BONDS AND NOTES (c) - (CONTINUED)
SOUTH AFRICA - 1.7%
33,600,000 Republic of South Africa (ZAR) ..................... 10.50% 12/21/26 $ 4,916,194
------------
TURKEY - 2.5%
5,000,000 Turkey Government Bond (TRY) (f) ................... (f) 11/03/10 3,079,389
5,845,000 Turkey Government Bond (TRY) ....................... 16.00% 03/07/12 4,106,838
------------
7,186,227
------------
UKRAINE - 2.7%
1,350,000 Biz Finance PLC For UKreximbank (USD) .............. 8.38% 04/27/15 1,326,375
6,043,000 EX-IM Bank of Ukraine (USD) ........................ 7.65% 09/07/11 6,012,785
400,000 Ukraine Government Bond (USD) ...................... 6.39% 06/26/12 400,000
------------
7,739,160
------------
UNITED ARAB EMIRATES - 1.4%
1,420,000 Atlantic Finance Ltd. (USD) ........................ 9.75% 05/27/14 1,500,230
2,400,000 Dubai Electricity & Water Authority (USD) .......... 8.50% 04/22/15 2,447,477
------------
3,947,707
------------
UNITED KINGDOM - 9.3%
8,000,000 United Kingdom Treasury (GBP) ...................... 6.25% 11/25/10 12,231,535
1,200,000 United Kingdom Treasury (GBP) ...................... 8.00% 12/07/15 2,316,855
4,600,000 United Kingdom Treasury (GBP) ...................... 6.00% 12/07/28 8,643,655
2,520,000 United Kingdom Treasury (GBP) ...................... 4.25% 12/07/49 3,866,002
------------
27,058,047
------------
URUGUAY - 3.6%
4,130,000 Republic of Uruguay (USD) .......................... 7.88% 01/15/33 4,914,700
330,000 Republic Orient Uruguay (USD) ...................... 7.63% 03/21/36 384,450
73,930,000 Republic Orient Uruguay,
Inflation Adjusted Bond (UYU) (g) ............... 5.00% 09/14/18 5,036,635
------------
10,335,785
------------
VENEZUELA - 5.0%
5,730,000 Bolivarian Republic of Venezuela (USD) ............. 7.75% 10/13/19 3,452,325
6,300,000 Republic of Venezuela (USD) ........................ 8.50% 10/08/14 4,866,750
9,770,000 Republic of Venezuela (USD) ........................ 5.75% 02/26/16 6,155,100
------------
14,474,175
------------
TOTAL INVESTMENTS - 119.4% ......................... 347,215,749
(Cost $333,404,273) (h)
OUTSTANDING LOANS - (30.1)% (87,525,386)
NET OTHER ASSETS AND LIABILITIES - 10.7% ........... 31,094,008
------------
NET ASSETS - 100.0% ................................ $290,784,371
============
----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) All of these securities are available to serve as collateral for the
outstanding loans.
See Notes to Financial Statements
Page 9
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) (b) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
(c) Portfolio securities are included in a country based upon their underlying
credit exposure as determined by Aberdeen Asset Management Inc., the
investment sub-advisor.
(d) Variable rate security. The interest rate shown reflects the rate in effect
at June 30, 2010.
(e) The issuer is in default and interest is not being accrued by the Fund nor
paid by the issuer.
(f) Zero coupon bond.
(g) Credit linked to the KSC State Export-Import Bank of Ukrane.
(h) Security whose principal value is adjusted in accordance with changes to
the country's Consumer Price Index. Interest is calculated on the basis of
the current adjusted principal value.
(i) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2010, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $18,384,383 and the aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over value was $4,572,907.
Currency Abbreviations:
ARS Argentine Peso
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
GBP British Pound Sterling
HUF Hungarian Forint
IDR Indonesian Rupiah
MXN Mexican Peso
NZD New Zealand Dollar
PEN Peruvian New Sol
RUB Russian Ruble
TRY Turkish Lira
USD United States Dollar
UYU Uruguayan Peso
ZAR South African Rand
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2010
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
ASSETS TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2010 PRICES INPUTS INPUTS
------------ ---------- ------------ ------------
Bonds and Notes*...................... $347,215,749 $ -- $347,215,749 $--
------------ ---------- ------------ ---
Total Investments..................... 347,215,749 -- 347,215,749 --
------------ ---------- ------------ ---
Other Financial Instruments:
Forward Foreign Currency Contracts**.. 3,093,968 3,093,968 -- --
------------ ---------- ------------ ---
Total................................. $350,309,717 $3,093,968 $347,215,749 $--
============ ========== ============ ===
LIABILITIES TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2010 PRICES INPUTS INPUTS
------------ ---------- ------------ ------------
Forward Foreign Currency Contracts**.. $ (353,533) $ (353,533) $ -- $--
============ ========== ============ ===
* See the Portfolio of Investments for country breakout.
** See the Schedule of Forward Foreign Currency Contracts for contract and
currency detail.
See Notes to Financial Statements
Page 10
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
JUNE 30, 2010 (UNAUDITED)
FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER
------------------------------------------ NET NET
LOCAL UNREALIZED UNREALIZED
CURRENCY IN APPRECIATION DEPRECIATION
SETTLEMENT LOCAL VALUE IN EXCHANGE OF CONTRACTS OF CONTRACTS
DATE COUNTERPARTY CURRENCY (a) U.S. $ FOR U.S. $ U.S. $ U.S. $
---------- ------------ -------------- ----------- ----------- ------------ ------------
09/03/10 JPM BRL 29,643,000 $16,180,015 $15,826,482 $ -- $ (353,533)
07/23/10 MSC CAD 11,197,000 10,516,582 11,026,736 510,154 --
07/23/10 DUB GBP 18,514,000 27,661,267 28,333,233 671,966 --
07/23/10 JPM HUF478,549,000 2,044,568 2,194,049 149,481 --
07/23/10 RBS HUF463,995,000 1,982,387 2,331,747 349,360 --
07/23/10 JPM MXN 32,370,000 2,496,969 2,607,324 110,355 --
07/23/10 FBC NZD 68,463,000 46,881,607 48,184,259 1,302,652 --
---------- ----------
$3,093,968 $ (353,533)
---------- ----------
Unrealized Appreciation (Depreciation)................................ $3,093,968 $ (353,533)
========== ==========
Net Unrealized Appreciation (Depreciation)............................ $2,740,435
==========
(a) Please see page 10 for currency descriptions.
Counterparty Abbreviations:
DUB Deutsche Bank
FBC First Boston Corp.
JPM JPMorgan Chase
MSC Morgan Stanley
RBS Royal Bank of Scotland
See Notes to Financial Statements
Page 11
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2010 (UNAUDITED)
ASSETS:
Investments, at value
(Cost $333,404,273) ............................................................................. $ 347,215,749
Cash ............................................................................................... 6,398,690
Foreign currency (Cost $6,472,335) ................................................................. 6,343,614
Unrealized appreciation on forward foreign currency contracts ...................................... 3,093,968
Prepaid expenses ................................................................................... 43,339
Receivables:
Investment securities sold ...................................................................... 10,655,162
Interest ........................................................................................ 7,391,276
-------------
Total Assets ................................................................................. 381,141,798
-------------
LIABILITIES:
Outstanding loans .................................................................................. 87,525,386
Unrealized depreciation on forward foreign currency contracts ...................................... 353,533
Payables:
Investment securities purchased ................................................................. 1,950,000
Investment advisory fees ........................................................................ 308,758
Interest and fees on loans ...................................................................... 90,480
Legal fees ...................................................................................... 32,903
Audit and tax fees .............................................................................. 30,957
Administrative fees ............................................................................. 26,445
Custodian fees .................................................................................. 22,797
Printing fees ................................................................................... 8,117
Transfer agent fees ............................................................................. 3,908
Other liabilities .................................................................................. 4,143
-------------
Total Liabilities ............................................................................ 90,357,427
-------------
NET ASSETS ......................................................................................... $ 290,784,371
=============
NET ASSETS CONSISTS OF:
Paid-in capital .................................................................................... $ 305,663,465
Par value .......................................................................................... 173,652
Accumulated net investment income (loss) ........................................................... (15,478,233)
Accumulated net realized gain (loss) on investments, forward foreign currency contracts and
foreign currency transactions ................................................................... (18,142,706)
Net unrealized appreciation (depreciation) on investments, forward foreign currency contracts and
foreign currency translation .................................................................... 18,568,193
-------------
NET ASSETS ......................................................................................... $ 290,784,371
=============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) ............................... $ 16.75
=============
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized) ........ 17,365,236
=============
See Notes to Financial Statements
Page 12
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2010 (UNAUDITED)
INVESTMENT INCOME:
Interest (net of foreign withholding tax of $70,586) ............. $ 14,432,610
------------
Total investment income ....................................... 14,432,610
------------
EXPENSES:
Investment advisory fees ......................................... 1,885,988
Interest and fees on loans ....................................... 700,103
Administrative fees .............................................. 161,285
Custodian fees ................................................... 96,426
Legal fees ....................................................... 85,110
Printing fees .................................................... 57,401
Audit and tax fees ............................................... 25,757
Trustees' fees and expenses ...................................... 19,520
Transfer agent fees .............................................. 18,652
Other ............................................................ 56,231
------------
Total expenses ............................................. 3,106,473
------------
NET INVESTMENT INCOME ............................................ 11,326,137
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ................................................... 13,232,588
Forward foreign currency contracts ............................ 3,455,981
Foreign currency transactions ................................. (3,454,810)
------------
Net realized gain (loss) ......................................... 13,233,759
------------
Net change in unrealized appreciation (depreciation) on:
Investments ................................................... (11,467,984)
Forward foreign currency contracts ............................ 1,697,769
Foreign currency translation .................................. 1,578,193
------------
Net change in unrealized appreciation (depreciation) ............. (8,192,022)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) .......................... 5,041,737
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .. $ 16,367,874
============
See Notes to Financial Statements
Page 13
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
6/30/2010 ENDED
(UNAUDITED) 12/31/2009
------------ ------------
OPERATIONS:
Net investment income (loss) ............................................... $ 11,326,137 $ 25,417,705
Net realized gain (loss) ................................................... 13,233,759 (22,871,032)
Net change in unrealized appreciation (depreciation) ....................... (8,192,022) 92,218,536
------------ ------------
Net increase (decrease) in net assets resulting from operations ............ 16,367,874 94,765,209
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ...................................................... (13,544,884) (11,723,220)
Return of capital .......................................................... -- (15,366,548)
------------ ------------
Total distributions to shareholders ........................................ (13,544,884) (27,089,768)
------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from Common Shares reinvested ..................................... -- --
------------ ------------
Net increase (decrease) in net assets resulting from capital transactions .. -- --
------------ ------------
Total increase (decrease) in net assets .................................... 2,822,990 67,675,441
NET ASSETS:
Beginning of period ........................................................ 287,961,381 220,285,940
------------ ------------
End of period .............................................................. $290,784,371 $287,961,381
============ ============
Accumulated net investment income (loss) at end of period .................. $(15,478,233) $(13,259,486)
============ ============
CAPITAL SHARE TRANSACTIONS WERE AS FOLLOWS:
Common Shares at beginning of period ....................................... 17,365,236 17,365,236
Common Shares issued as reinvestment under the Dividend Reinvestment Plan .. -- --
------------ ------------
Common Shares at end of period ............................................. 17,365,236 17,365,236
============ ============
See Notes to Financial Statements
Page 14
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2010 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations ........... $ 16,367,874
Adjustments to reconcile net increase (decrease) in net assets resulting
from operations to net cash provided by operating activities:
Purchases of investments ............................................... (163,869,293)
Sales and maturities of investments .................................... 176,581,645
Net amortization/accretion of premium/discount on investments .......... (1,411,601)
Net realized gain/loss on investments .................................. (13,232,588)
Net change in unrealized appreciation/depreciation on investments ...... 11,467,984
Increase in net unrealized appreciation/depreciation on forward
foreign currency contracts .......................................... (1,697,769)
CHANGES IN ASSETS AND LIABILITIES:
Decrease in interest receivable ........................................ 832,254
Decrease in prepaid expenses ........................................... 22,015
Decrease in interest and fees on loans payable ......................... (22,370)
Decrease in investment advisory fees payable ........................... (11,679)
Decrease in audit fees and tax fees payable ............................ (21,043)
Decrease in legal fees payable ......................................... (30,810)
Decrease in printing fees payable ...................................... (23,338)
Increase in transfer agent fees payable ................................ 913
Decrease in administrative fees payable ................................ (985)
Decrease in custodian fees payable ..................................... (13,142)
Increase in other liabilities .......................................... 2,246
-------------
CASH PROVIDED BY OPERATING ACTIVITIES ..................................... $ 24,940,313
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Common Shareholders from net investment income ........ (13,544,884)
Unrealized appreciation/depreciation on Euro Loan ...................... (1,985,803)
-------------
CASH USED BY FINANCING ACTIVITIES ......................................... (15,530,687)
------------
Increase in cash and foreign currency (a) ................................. 9,409,626
Cash and foreign currency at beginning of period .......................... 3,332,678
------------
Cash and foreign currency at end of period ................................ $ 12,742,304
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees ......................... $ 722,473
============
----------
(a) Includes net change in unrealized appreciation (depreciation) on foreign
currency of $129,110.
See Notes to Financial Statements
Page 15
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
6/30/2010 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/2009 12/31/2008 12/31/2007 12/31/2006 12/31/2005
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period ............. $ 16.58 $ 12.69 $ 18.54 $ 19.07 $ 19.24 $ 19.34
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ..................... 0.65 1.47 1.46 1.34 1.38 1.34
Net realized and unrealized gain (loss) .......... 0.30 3.98 (5.75) (0.17) 0.48 (0.14)
-------- -------- -------- -------- -------- --------
Total from investment operations ................. 0.95 5.45 (4.29) 1.17 1.86 1.20
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income ............................ (0.78) (0.68) (1.56) (0.79) (1.31) (1.25)
Net realized gain ................................ -- -- -- (0.55) (0.47) (0.05)
Return of capital ................................ -- (0.88) -- (0.36) (0.25) --
-------- -------- -------- -------- -------- --------
Total distributions .............................. (0.78) (1.56) (1.56) (1.70) (2.03) (1.30)
-------- -------- -------- -------- -------- --------
Common Shares offering costs charged to
paid-in capital ............................... -- -- -- -- -- (0.00)(a)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................... $ 16.75 $ 16.58 $ 12.69 $ 18.54 $ 19.07 $ 19.24
======== ======== ======== ======== ======== ========
Market value, end of period ...................... $ 16.05 $ 16.03 $ 10.40 $ 16.54 $ 19.15 $ 16.80
======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON NET ASSET VALUE (b) ........ 5.99% 47.48% (23.14)% 6.92% 10.72% 6.94%
======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON MARKET VALUE (b) ........... 5.11% 73.98% (29.39)% (5.01)% 27.33% (7.15)%
======== ======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) ............... $290,784 $287,961 $220,286 $322,016 $331,138 $334,096
Ratio of total expenses to average net assets .... 2.15%(c) 2.57% 3.55% 4.45% 4.04% 3.37%
Ratio of total expenses to average net assets
excluding interest expense and fees on loans .. 1.66%(c) 1.77% 1.83% 1.82% 1.79% 1.80%
Ratio of net investment income to average
net assets .................................... 7.83%(c) 9.90% 8.72% 7.10% 7.19% 7.03%
Portfolio turnover rate .......................... 46% 72% 66% 97% 99% 75%
INDEBTEDNESS:
Loans outstanding (in 000's) ..................... $ 87,525 $ 89,511 $ 89,101 $144,624 $152,482 $145,724
Asset coverage per $1,000 of indebtedness(d) ..... $ 4,322 $ 4,217 $ 3,472 $ 3,227 $ 3,172 $ 3,293
----------
(a) Amount represents less than $0.01 per share.
(b) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by the
Dividend Reinvestment Plan, and changes in net asset value per share for
net asset value returns and changes in Common Share price for market value
returns. Total returns do not reflect sales load and are not annualized for
periods less than one year. Past performance is not indicative of future
results.
(c) Annualized.
(d) Calculated by taking the Fund's total assets less the Fund's total
liabilities (not including the loans outstanding), and dividing by the
outstanding loan balance in 000's.
See Notes to Financial Statements
Page 16
NOTES TO FINANCIAL STATEMENTS
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2010 (UNAUDITED)
1. FUND DESCRIPTION
First Trust/Aberdeen Global Opportunity Income Fund (the "Fund") is a
diversified, closed-end management investment company organized as a
Massachusetts business trust on September 7, 2004 and is registered with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended (the "1940 Act"). The Fund trades under the ticker symbol FAM
on the New York Stock Exchange ("NYSE").
The Fund's primary investment objective is to seek a high level of current
income. As a secondary objective, the Fund seeks capital appreciation. The Fund
pursues these objectives by investing its Managed Assets in the world bond
markets through a diversified portfolio of investment grade and below-investment
grade government and corporate debt securities. "Managed Assets" means the
average daily gross asset value of the Fund (which includes the principal amount
of any borrowings, minus accrued liabilities). There can be no assurance that
the Fund's investment objectives will be achieved.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
A. PORTFOLIO VALUATION:
The net asset value ("NAV") of the Common Shares of the Fund is determined daily
as of the close of regular trading on the NYSE, normally 4:00 p.m. Eastern time,
on each day the NYSE is open for trading. Domestic debt securities and foreign
securities are priced using data reflecting the earlier closing of the principal
markets for those securities. The NAV per Common Share is calculated by dividing
the value of all assets of the Fund (including accrued interest and dividends),
less all liabilities (including accrued expenses, dividends declared but unpaid
and any borrowings of the Fund), by the total number of Common Shares
outstanding.
The Fund's investments are valued daily at market value or, in the absence of
market value with respect to any portfolio securities, at fair value according
to procedures adopted by the Fund's Board of Trustees. A majority of the Fund's
assets are valued using market information supplied by third parties. In
addition, structured products, including currency linked notes and credit linked
notes, as well as interest rate swaps and credit default swaps, are valued using
a pricing service or quotes provided by the selling dealer or financial
institution. In the event that market quotations are not readily available, the
pricing service does not provide a valuation for a particular asset, or the
valuations are deemed unreliable, the Fund's Board of Trustees has designated
First Trust Advisors L.P. ("First Trust") to use a fair value method to value
the Fund's securities and other investments. Additionally, if events occur after
the close of the principal market for particular securities (e.g., domestic debt
and foreign securities), but before the Fund values its assets, that could
materially affect NAV, First Trust may use a fair value method to value the
Fund's securities and other investments. The use of fair value pricing by the
Fund is governed by valuation procedures adopted by the Fund's Board of
Trustees, and in accordance with the provisions of the 1940 Act. Fixed-income
securities with a remaining maturity of 60 days or more will be valued by the
Fund using a pricing service. Short-term investments that mature in less than 60
days are valued at amortized cost.
The Fund is subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
- Level 1 - Level 1 inputs are quoted prices in active markets for
identical securities. An active market is a market in which
transactions for the security 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:
- Quoted prices for similar securities in active markets.
- Quoted prices for identical or similar securities in markets that
are non-active. A non-active market is a market where there are
few transactions for the security, 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.
- Inputs other than quoted prices that are observable for the
security (for example, interest rates and yield curves observable
at commonly quoted intervals, volatilities, prepayment speeds,
loss severities, credit risks, and default rates).
- 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
reflect the reporting entity's own assumptions about the assumptions
that market participants would use in pricing the security.
Page 17
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2010 (UNAUDITED)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. A summary
of the inputs used to value the Fund's investments as of June 30, 2010 is
included with the Fund's Portfolio of Investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Interest income is recorded on the accrual basis, including amortization of
premiums and accretion of discounts.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income on such securities
is not accrued until settlement date. The Fund maintains liquid assets with a
current value at least equal to the amount of its when-issued or
delayed-delivery purchase commitments. At June 30, 2010, the Fund had no
when-issued or delayed-delivery purchase commitments.
C. CREDIT LINKED NOTES:
The Fund may invest in credit linked notes. Credit linked notes are securities
that are collateralized by one or more designated securities that are referred
to as "reference securities". Through the purchase of a credit linked note, the
buyer assumes the risk of the default or, in some cases, other declines in
credit quality of the reference securities. The buyer also takes on exposure to
the issuer of the credit linked note in the full amount of the purchase price of
the note. The issuer of a credit linked note normally will have hedged its risk
on the reference securities without acquiring any additional credit exposure.
The Fund has the right to receive periodic interest payments from the issuer of
the credit linked note at an agreed-upon interest rate, and, if there has been
no default or, if applicable, other declines in credit quality, a return of
principal at the maturity date.
Credit linked notes are subject to credit risk of the reference securities
underlying the credit linked notes. If one of the underlying reference
securities defaults, or suffers certain other declines in credit quality, the
Fund may, instead of receiving repayment of principal in whole or in part,
receive the security that has defaulted.
Credit linked notes typically are privately negotiated transactions between two
or more parties. The Fund bears the risk that the issuer of the credit linked
note will default or become bankrupt. The Fund bears the risk of loss of the
principal amount it invested, and the periodic interest payments expected to be
received for the duration of its investment in the credit linked note.
The market for credit linked notes may suddenly become illiquid. The other
parties to the transaction may be the only investors with sufficient
understanding of the derivative to be interested in bidding for it. Changes in
liquidity may result in significant, rapid and unpredictable changes in the
prices for credit linked notes. In certain cases, a market price for a credit
linked note may not be available.
D. FORWARD FOREIGN CURRENCY CONTRACTS:
The Fund is subject to foreign currency risk in the normal course of pursuing
its investment objectives. Forward foreign currency contracts are agreements to
exchange one currency for another at a future date and at a specified price. The
Fund may use forward foreign currency contracts to facilitate transactions in
foreign securities and to manage the Fund's foreign currency exposure. These
contracts are valued daily, and the Fund's net equity therein, representing
unrealized gain or loss on the contracts as measured by the difference between
the forward foreign exchange rates at the dates of entry into the contracts and
the forward rates at the reporting date, is included on the Statement of Assets
and Liabilities and the Schedule of Forward Foreign Currency Contracts. Realized
and unrealized gains and loss are included on the Statement of Operations. Risks
arise from the possible inability of counterparties to meet the terms of their
contracts and from movement in currency and securities values and interest
rates. Due to the risks, the Fund could incur losses up to the entire contract
amount, which would exceed the net unrealized value shown on the Schedule of
Forward Foreign Currency Contracts.
During the six months ended June 30, 2010, the open and close values of forward
foreign currency contracts were $21,197,725 and $3,455,981, respectively.
E. FOREIGN CURRENCY:
The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period.
Purchases and sales of investment securities and items of income and expense are
translated on the respective dates of such transactions. Unrealized gains and
losses on assets and liabilities, other than investments in securities, which
result from changes in foreign currency exchange rates have been included in
"Net change in unrealized appreciation (depreciation) on foreign currency
translation" on the Statement of Operations. Unrealized gains and losses on
investments in securities which result from changes in foreign exchange rates
are included with fluctuations arising from changes in market price and are
shown in "Net change in unrealized appreciation (depreciation) on investments"
on the Statement of Operations.
Page 18
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2010 (UNAUDITED)
Net realized foreign currency gains and losses include the effect of changes in
exchange rates between trade date and settlement date on investment security
transactions, foreign currency transactions and interest and dividends received.
The portion of foreign currency gains and losses related to fluctuations in
exchange rates between the initial purchase trade date and subsequent sale trade
date is included in "Net realized gain (loss) on foreign currency transactions"
on the Statement of Operations.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
The Fund will distribute to holders of its Common Shares monthly dividends of
all or a portion of its net income after the payment of interest and dividends
in connection with leverage. Distributions will automatically be reinvested into
additional Common Shares pursuant to the Fund's Dividend Reinvestment Plan
unless cash distributions are elected by the shareholder.
Distributions from income and realized capital gains are determined in
accordance with income tax regulations, which may differ from accounting
principles generally accepted in the United States of America. These differences
are primarily due to differing treatments of income and gains on various
investment securities held by the Fund, timing differences and differing
characterization of distributions made by the Fund. The character of
distributions for tax reporting purposes will depend on the Fund's investment
experience during the remainder of its fiscal year; however, based on
information for the fiscal year through June 30, 2010, it is likely that the
Fund's distributions will include a return of capital component for the fiscal
year ending on December 31, 2010.
The tax character of distributions paid during the year ended December 31, 2009
was as follows:
Distributions paid from:
Ordinary Income ................................................ $11,723,220
Return of Capital .............................................. 15,366,548
As of December 31, 2009, the components of distributable earnings on a tax basis
were as follows:
Undistributed Ordinary Income .................................. $ --
Net Unrealized Appreciation (Depreciation) ..................... 11,089,337
Accumulated Capital and Other Losses ........................... (28,965,073)
G. INCOME TAXES:
The Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), which includes distributing substantially all
of its net investment income and net realized gains to shareholders.
Accordingly, no provision has been made for federal or state income taxes.
The Fund intends to utilize provisions of the federal income tax laws, which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such loss against any future realized capital gains.
The Fund is subject to certain limitations under U.S. tax rules on the use of
capital loss carryforwards and net unrealized built-in losses. These limitations
apply when there has been a 50% change in ownership. At December 31, 2009, the
Fund had a capital loss carryforward for federal income tax purposes of
$28,738,751, with $14,087,878 and $14,650,873 expiring on December 31, 2016 and
2017, respectively.
Certain capital losses realized after October 31 may be deferred and treated as
occurring on the first day of the following fiscal year. For the fiscal year
ended December 31, 2009, the Fund intends to elect to defer net realized capital
losses of $226,322 incurred between November 1, 2009 and December 31, 2009.
The Fund is subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ending 2006, 2007,
2008 and 2009 remain open to federal and state audit. As of June 30, 2010,
management has evaluated the application of these standards to the Fund, and has
determined that no provision for income tax is required in the Fund's financial
statements for uncertain tax positions.
H. EXPENSES:
The Fund pays all expenses directly related to its operations.
Page 19
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2010 (UNAUDITED)
I. NEW ACCOUNTING PRONOUNCEMENT:
In January 2010, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about
Fair Value Measurements". ASU 2010-06 amends FASB Accounting Standards
Codification Topic 820, Fair Value Measurements and Disclosures, to require
additional disclosures regarding fair value measurements. Certain disclosures
required by ASU No. 2010-06 are currently effective for interim and annual
reporting periods beginning after December 15, 2009, and other required
disclosures are effective for fiscal years beginning after December 15, 2010,
and for interim periods within those fiscal years. Management is currently
evaluating the impact ASU No. 2010-06 will have on the Fund's financial
statement disclosures, if any.
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust is a limited partnership with one limited partner, Grace Partners of
DuPage L.P., and one general partner, The Charger Corporation. First Trust
serves as investment advisor to the Fund pursuant to an Investment Management
Agreement. First Trust is responsible for the ongoing monitoring of the Fund's
investment portfolio, managing the Fund's business affairs and providing certain
administrative services necessary for the management of the Fund. For these
services, First Trust is entitled to a monthly fee calculated at an annual rate
of 1.00% of the Fund's Managed Assets.
Aberdeen Asset Management Inc. (the "Sub-Advisor") serves as the Fund's
sub-advisor and manages the Fund's portfolio subject to First Trust's
supervision. The Sub-Advisor receives a monthly portfolio management fee
calculated at an annual rate of 0.50% of Managed Assets that is paid by First
Trust out of its investment advisory fee.
PNC Global Investment Servicing (U.S.) Inc., formerly an indirect, wholly-owned
subsidiary of The PNC Financial Services Group, Inc. ("PNC"), serves as the
Fund's Administrator, Fund Accountant and Transfer Agent in accordance with
certain fee arrangements. PFPC Trust Company, also an indirect, majority-owned
subsidiary of PNC, serves as the Fund's Custodian in accordance with certain fee
arrangements.
On July 1, 2010, PNC sold the outstanding stock of PNC Global Investment
Servicing Inc. to The Bank of New York Mellon Corporation. At the closing of the
sale, PNC Global Investment Servicing (U.S.) Inc. changed its name to BNY Mellon
Investment Servicing (US) Inc. PFPC Trust Company will not change its name until
a later date to be announced.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid an annual retainer
of $10,000 per trust for the first 14 trusts of the First Trust Fund Complex and
an annual retainer of $7,500 per trust for each subsequent trust in the First
Trust Fund Complex. The annual retainer is allocated equally among each of the
trusts. No additional meeting fees are paid in connection with board or
committee meetings.
Additionally, the Lead Independent Trustee is paid $10,000 annually, the
Chairman of the Audit Committee is paid $5,000 annually, and each of the
Chairmen of the Nominating and Governance Committee and the Valuation Committee
are paid $2,500 annually to serve in such capacities, with such compensation
paid by the trusts in the First Trust Fund Complex and divided among those
trusts. Trustees are also reimbursed by the trusts in the First Trust Fund
Complex for travel and out-of-pocket expenses in connection with all meetings.
The Lead Independent Trustee and each Committee chairman will serve two-year
terms ending December 31, 2011, before rotating to serve as a chairman of
another Committee or as Lead Independent Trustee. The officers and "Interested"
Trustee receive no compensation from the Fund for serving in such capacities.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, other than U.S.
government obligations and short-term obligations, for the six months ended June
30, 2010, were $165,819,293 and $187,236,807, respectively.
5. BORROWINGS
The Fund has entered into a credit agreement with The Bank of Nova Scotia, which
provides for a revolving credit facility to be used as leverage for the Fund.
The revolving credit facility provides for a secured line of credit for the Fund
where Fund assets are pledged against advances made to the Fund. Under the
requirements of the 1940 Act, the Fund, immediately after any such borrowings,
must have an "asset coverage" of at least 300% (33-1/3% of the Fund's total
assets after borrowings). The total commitment under the facility is up to
$100,000,000. As of June 30, 2010, the Fund had three loans outstanding under
the revolving credit facility totaling $87,525,386. The three loans, which are
all LIBOR loans, bear interest based on the adjusted LIBOR rate and are in the
amounts of $46,000,000, $30,000,000 and $11,525,386 (the U.S. Dollar equivalent
of a (euro)9,425,000 loan). For the six months ended June 30, 2010, the average
amount outstanding was $88,524,782. The high and low annual interest rates
during the six months ended June 30, 2010 were 2.08% and 1.48%, respectively,
and the weighted average interest rate was 1.54%. The weighted average interest
rate at June 30, 2010 was 1.61%.
Page 20
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2010 (UNAUDITED)
The revolving credit facility was originally scheduled to expire on January 6,
2010 but was extended through January 5, 2011. The Fund pays a commitment fee of
0.30% on any day that the loan balances exceed 50% of the total commitment and
0.50% at all other times which is included in "Interest and fees on loans" on
the Statement of Operations. Prior to January 6, 2010, the Fund paid a
commitment fee of 0.35% per year, an administration fee of $50,000 and an
upfront fee of $100,000.
6. INDEMNIFICATION
The Fund has a variety of indemnification obligations under contracts with its
service providers. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
7. RISK CONSIDERATIONS
Risks are inherent in all investing. The following summarizes some of the risks
that should be considered for the Fund. For additional information about the
risks associated with investing in the Fund, please see the Fund's prospectus
and statement of additional information, as well as other Fund regulatory
filings.
INVESTMENT AND MARKET RISK: An investment in the Fund's Common Shares is subject
to investment risk, including the possible loss of the entire principal
invested. An investment in Common Shares represents an indirect investment in
the securities owned by the Fund, which include a global bond portfolio of
investment grade and below-investment grade government and corporate debt
securities. The value of these securities, like other market investments, may
move up or down, sometimes rapidly and unpredictably. Common Shares, at any
point in time, may be worth less than the original investment, even after taking
into account the reinvestment of Fund dividends and distributions. Security
prices can fluctuate for several reasons including the general condition of the
bond market, or when political or economic events affecting the issuers occur.
When the Advisor or Sub-Advisor determines that it is temporarily unable to
follow the Fund's investment strategy or that it is impractical to do so (such
as when a market disruption event has occurred and trading in the securities is
extremely limited or absent), the Fund may take temporary defensive positions.
NON-INVESTMENT GRADE SECURITIES RISK: The Fund may invest up to 60% of its
Managed Assets in non-investment grade securities. Non-investment grade
securities are rated below "Baa3" by Moody's Investors Service, Inc., below
"BBB-" by Standard & Poor's, or comparably rated by another nationally
recognized statistical rating organization or, if unrated, determined by the
Sub-Advisor to be of comparable credit quality. Non-investment grade debt
instruments are commonly referred to as "high yield" or "junk" bonds, are
considered speculative with respect to the issuer's capacity to pay interest and
repay principal and are susceptible to default or decline in market value due to
adverse economic and business developments. The market values for high yield
securities tend to be very volatile, and these securities are less liquid than
investment grade debt securities.
EMERGING MARKETS RISK: The Fund may invest in fixed-income securities of issuers
located in countries considered to be emerging markets. Investments in such
securities are considered speculative. In addition to the general risks of
investing in non-U.S. securities, heightened risks of investing in emerging
markets securities include: smaller market capitalization of securities markets,
which may suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; and possible restrictions on repatriation of
investment income and capital. Furthermore, foreign investors may be required to
register the proceeds of sales, and future economic or political crises could
lead to price controls, forced mergers, expropriation or confiscatory taxation,
seizure, nationalization or creation of government monopolies. The currencies of
emerging market countries may experience significant declines against the U.S.
dollar, and devaluation may occur subsequent to investments in these currencies
by the Fund. Inflation and rapid fluctuations in inflation rates have had, and
may continue to have, negative effects on the economies and securities markets
of certain emerging market countries.
FIXED-INCOME SECURITIES RISK: Debt securities, including high yield securities,
are subject to certain risks, including: (i) issuer risk, which is the risk that
the value of fixed-income securities may decline for a number of reasons which
directly relate to the issuer, such as management performance, financial
leverage and reduced demand for the issuer's goods and services; (ii)
reinvestment risk, which is the risk that income from the Fund's portfolio will
decline if the Fund invests the proceeds from matured, traded or called bonds at
market interest rates that are below the Fund portfolio's current earnings rate;
(iii) prepayment risk, which is the risk that during periods of declining
interest rates, the issuer of a security may exercise its option to prepay
principal earlier than scheduled, forcing the Fund to reinvest in lower yielding
securities; and (iv) credit risk, which is the risk that a security in the
Fund's portfolio will decline in price or the issuer fails to make interest
payments when due because the issuer of the security experiences a decline in
its financial status.
INTEREST RATE RISK: The Fund is also subject to interest rate risk. Interest
rate risk is the risk that fixed-income securities will decline in value because
of changes in market interest rates. Investments in debt securities with
long-term maturities may experience significant price declines if long-term
interest rates increase.
Page 21
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2010 (UNAUDITED)
NON-U.S. RISK: Investments in the securities and instruments of non-U.S. issuers
involve certain considerations and risks not ordinarily associated with
investments in securities and instruments of U.S. issuers. Non-U.S. companies
are not generally subject to uniform accounting, auditing and financial
standards and requirements comparable to those applicable to U.S. companies.
Non-U.S. securities exchanges, brokers and listed companies may be subject to
less government supervision and regulation than exists in the United States.
Dividend and interest income may be subject to withholding and other non-U.S.
taxes, which may adversely affect the net return on such investments. There may
be difficulty in obtaining or enforcing a court judgment abroad.
CURRENCY RISK: The value of securities denominated or quoted in foreign
currencies may be adversely affected by fluctuations in the relative currency
exchange rates and by exchange control regulations. The Fund's investment
performance may be negatively affected by a devaluation of a currency in which
the Fund's investments are denominated or quoted. Further, the Fund's investment
performance may be significantly affected, either positively or negatively, by
currency exchange rates because the U.S. dollar value of securities denominated
or quoted in another currency will increase or decrease in response to changes
in the value of such currency in relation to the U.S. dollar. While certain of
the Fund's non-U.S. dollar-denominated securities may be hedged into U.S.
dollars, hedging may not alleviate all currency risks.
CREDIT LINKED NOTES RISK: The Fund may invest up to 35% of its Managed Assets in
credit linked notes. Credit linked notes are subject to credit risk of the
reference securities underlying the credit linked notes. If one of the
underlying reference securities defaults or suffers certain other declines in
credit quality, the Fund may, instead of receiving repayment of principal in
whole or in part, receive the security that has defaulted. The Fund also bears
the risk that the issuer of the credit linked note will default or become
bankrupt. The Fund bears the risk of loss of the principal amount it invested
and the periodic interest payments expected to be received for the duration of
its investment in the credit linked note.
LEVERAGE RISK: The use of leverage results in additional risks and can magnify
the effect of any losses. The funds borrowed pursuant to a leverage borrowing
program constitute a substantial lien and burden by reason of their prior claim
against the income of the Fund and against the net assets of the Fund in
liquidation. The rights of lenders to receive payments of interest on and
repayments of principal on any borrowings made by the Fund under a leverage
borrowing program are senior to the rights of holders of Common Shares with
respect to payment of dividends or upon liquidation. If the Fund is not in
compliance with certain credit facility provisions, the Fund may not be
permitted to declare dividends or other distributions, including dividends and
distributions with respect to Common Shares or purchase Common Shares.
GOVERNMENT SECURITIES RISK: The ability of a government issuer, especially in an
emerging market country, to make timely and complete payments on its debt
obligations will be strongly influenced by the government issuer's balance of
payments, including export performance, its access to international credits and
investments, fluctuations of interest rates and the extent of its foreign
reserves. A country whose exports are concentrated in a few commodities or whose
economy depends on certain strategic imports could be vulnerable to fluctuations
in international prices of these commodities or imports. To the extent that a
country receives payment for its exports in currencies other than U.S. dollars,
its ability to make debt payments denominated in U.S. dollars could be adversely
affected. If a government issuer cannot generate sufficient earnings from
foreign trade to service its external debt, it may need to depend on continuing
loans and aid from foreign governments, commercial banks, and multinational
organizations. There are no bankruptcy proceedings similar to those in the
United States by which defaulted government debt may be collected. Additional
factors that may influence a government issuer's ability or willingness to
service debt include, but are not limited to, a country's cash flow situation,
the availability of sufficient foreign exchange on the date a payment is due,
the relative size of its debt service burden to the economy as a whole, and the
issuer's policy towards the International Monetary Fund, the International Bank
for Reconstruction and Development and other international agencies to which a
government debtor may be subject.
NON-U.S. GOVERNMENT SECURITIES RISK: Economies and social and political climates
in individual countries may differ unfavorably from the United States. Non-U.S.
economies may have less favorable rates of growth of gross domestic product,
rates of inflation, currency valuation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many countries have
experienced extremely high rates of inflation for many years. Unanticipated
economic, political and social developments may also affect the values of the
Fund's investments and limit the availability of additional investments in such
countries. Furthermore, such developments may significantly disrupt the
financial markets or interfere with the Fund's ability to enforce its rights
against non-U.S. government issuers.
Investments in debt instruments of issuers located in emerging market countries
are considered speculative. Heightened risks of investing in emerging markets
government debt include: smaller market capitalization of securities markets,
which may suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; and possible repatriation of investment
income and capital. Furthermore, foreign investors may be required to register
the proceeds of sales and future economic or political crises could lead to
price controls, forced mergers, expropriation or confiscatory taxation, seizure,
nationalization or creation of government monopolies. The
Page 22
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2010 (UNAUDITED)
currencies of emerging market countries may experience significant declines
against the U.S. dollar, and devaluation may occur subsequent to investments in
these currencies by the Fund. Inflation and rapid fluctuations in inflation
rates have had, and may continue to have, negative effects on the economies and
securities markets of certain emerging market countries.
8. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events on the Fund through
the date the financial statements were issued, and has determined that besides
those subsequent events already disclosed there were the following subsequent
events:
On June 21, 2010, the Fund declared a dividend of $0.13 per share to Common
Shareholders of record on July 6, 2010, payable July 15, 2010.
On July 20, 2010, the Fund declared a dividend of $0.13 per share to Common
Shareholders of record on August 4, 2010, payable August 16, 2010.
On August 20, 2010, the Fund declared a dividend of $0.13 per share to Common
Shareholders of record on September 3, 2010, payable September 15, 2010.
On August 24, 2010, members of the Robert Donald Van Kampen family entered into
a Stock Purchase Agreement to sell 100% of the common stock of The Charger
Corporation to James A. Bowen, the President of First Trust. The transaction is
expected to be completed by September 21, 2010 and is subject to normal closing
conditions. The consummation of the transaction will be deemed to be "an
assignment" (as defined in the 1940 Act) of the Investment Management Agreement
between the Fund and First Trust, and will result in the automatic termination
of the agreement. Prior to consummation of the transaction, it is anticipated
that the Board of Trustees of the Fund will consider an interim investment
management agreement and a new ongoing investment management agreement with
First Trust, which will contain terms substantially identical to the existing
Investment Management Agreement. If approved by the Board of Trustees of the
Fund, the new ongoing investment management agreement will be presented for
shareholder approval.
Page 23
ADDITIONAL INFORMATION
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2010 (UNAUDITED)
DIVIDEND REINVESTMENT PLAN
If your Common Shares are registered directly with the Fund or if you hold your
Common Shares with a brokerage firm that participates in the Fund's Dividend
Reinvestment Plan (the "Plan"), unless you elect, by written notice to the Fund,
to receive cash distributions, all dividends, including any capital gain
distributions, on your Common Shares will be automatically reinvested by BNY
Mellon Investment Servicing (US) Inc. (formerly PNC Global Investment Servicing
(U.S.) Inc.) (the "Plan Agent"), in additional Common Shares under the Plan. If
you elect to receive cash distributions, you will receive all distributions in
cash paid by check mailed directly to you by the Plan Agent, as dividend paying
agent.
If you decide to participate in the Plan, the number of Common Shares you will
receive will be determined as follows:
(1) If Common Shares are trading at or above NAV at the time of valuation,
the Fund will issue new shares at a price equal to the greater of (i)
NAV per Common Share on that date or (ii) 95% of the market price on
that date.
(2) If Common Shares are trading below NAV at the time of valuation, the
Plan Agent will receive the dividend or distribution in cash and will
purchase Common Shares in the open market, on the NYSE or elsewhere,
for the participants' accounts. It is possible that the market price
for the Common Shares may increase before the Plan Agent has completed
its purchases. Therefore, the average purchase price per share paid by
the Plan Agent may exceed the market price at the time of valuation,
resulting in the purchase of fewer shares than if the dividend or
distribution had been paid in Common Shares issued by the Fund. The
Plan Agent will use all dividends and distributions received in cash
to purchase Common Shares in the open market within 30 days of the
valuation date except where temporary curtailment or suspension of
purchases is necessary to comply with federal securities laws.
Interest will not be paid on any uninvested cash payments.
You may elect to opt-out of or withdraw from the Plan at any time by giving
written notice to the Plan Agent, or by telephone at (800) 331-1710, in
accordance with such reasonable requirements as the Plan Agent and the Fund may
agree upon. If you withdraw or the Plan is terminated, you will receive a
certificate for each whole share in your account under the Plan, and you will
receive a cash payment for any fraction of a share in your account. If you wish,
the Plan Agent will sell your shares and send you the proceeds, minus brokerage
commissions.
The Plan Agent maintains all Common Shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. Common Shares in your account will be held by the
Plan Agent in non-certificated form. The Plan Agent will forward to each
participant any proxy solicitation material and will vote any shares so held
only in accordance with proxies returned to the Fund. Any proxy you receive will
include all Common Shares you have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or distributions
in Common Shares. However, all participants will pay a pro rata share of
brokerage commissions incurred by the Plan Agent when it makes open market
purchases.
Automatically reinvesting dividends and distributions does not mean that you do
not have to pay income taxes due upon receiving dividends and distributions.
Capital gains and income are realized, although cash is not received by you.
Consult your financial advisor for more information.
If you hold your Common Shares with a brokerage firm that does not participate
in the Plan, you will not be able to participate in the Plan and any dividend
reinvestment may be effected on different terms than those described above.
The Fund reserves the right to amend or terminate the Plan if in the judgment of
the Board of Trustees the change is warranted. There is no direct service charge
to participants in the Plan; however, the Fund reserves the right to amend the
Plan to include a service charge payable by the participants. Additional
information about the Plan may be obtained by writing BNY Mellon Investment
Servicing (US) Inc., 301 Bellevue Parkway, Wilmington, Delaware 19809.
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Fund uses to determine how
to vote proxies and information on how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
the Fund's website located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's website at http://www.sec.gov.
Page 24
ADDITIONAL INFORMATION - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2010 (UNAUDITED)
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available (1) by calling (800)
988-5891; (2) on the Fund's website located at http://www.ftportfolios.com; (3)
on the SEC's website at http://www.sec.gov; and (4) for review and copying at
the SEC's Public Reference Room ("PRR") in Washington, DC. Information regarding
the operation of the PRR may be obtained by calling (800) SEC-0330.
SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The Joint Annual Meeting of Shareholders of the Common Shares of Macquarie/First
Trust Global Infrastructure/Utilities Dividend & Income Fund, Energy Income and
Growth Fund, First Trust Enhanced Equity Income Fund, First Trust/Aberdeen
Global Opportunity Income Fund, First Trust/FIDAC Mortgage Income Fund, First
Trust Strategic High Income Fund, First Trust Strategic High Income Fund II,
First Trust/Aberdeen Emerging Opportunity Fund, First Trust Strategic High
Income Fund III, First Trust Specialty Finance and Financial Opportunities Fund
and First Trust Active Dividend Income Fund was held on April 14, 2010. At the
Annual Meeting, Trustees James A. Bowen and Niel B. Nielson were elected by the
Common Shareholders of the First Trust/Aberdeen Global Opportunity Income Fund
as Class III Trustees for a three-year term expiring at the Fund's annual
meeting of shareholders in 2013. The number of votes cast in favor of Mr. Bowen
was 14,823,647, the number of votes against was 296,565 and the number of
abstentions was 2,245,024. The number of votes cast in favor of Mr. Nielson was
14,807,221, the number of votes against was 312,991 and the number of
abstentions was 2,245,024. Richard E. Erickson, Thomas R. Kadlec and Robert F.
Keith are the other current and continuing Trustees.
ADVISORY AND SUB-ADVISORY AGREEMENTS
BOARD CONSIDERATIONS REGARDING CONTINUATION OF INVESTMENT
MANAGEMENT AND SUB-ADVISORY AGREEMENTS
The Board of Trustees of First Trust/Aberdeen Global Opportunity Income Fund
(the "Fund"), including the Independent Trustees, unanimously approved the
continuation of the Investment Management Agreement (the "Advisory Agreement")
between the Fund and First Trust Advisors L.P. (the "Advisor") and the
Investment Sub-Advisory Agreement (the "Sub-Advisory Agreement" and together
with the Advisory Agreement, the "Agreements") among the Fund, the Advisor and
Aberdeen Asset Management Inc. (the "Sub-Advisor"), at a meeting held on March
21-22, 2010. The Board determined that the terms of the Agreements are fair and
reasonable and that the Agreements continue to be in the best interests of the
Fund.
To reach this determination, the Board considered its duties under the
Investment Company Act of 1940, as amended (the "1940 Act"), as well as under
the general principles of state law in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. To assist the Board in its evaluation of the Agreements, the
Independent Trustees received a separate report from each of the Advisor and the
Sub-Advisor in advance of the Board meeting responding to a request for
information from counsel to the Independent Trustees. The reports, among other
things, outlined the services provided by the Advisor and the Sub-Advisor
(including the relevant personnel responsible for these services and their
experience); the advisory and sub-advisory fees for the Fund as compared to fees
charged to other clients of the Advisor and the Sub-Advisor and as compared to
fees charged by investment advisors and sub-advisors to comparable funds;
expenses of the Fund as compared to expense ratios of comparable funds; the
nature of expenses incurred in providing services to the Fund and the potential
for economies of scale, if any; financial data on the Advisor and the
Sub-Advisor; any fall out benefits to the Advisor and the Sub-Advisor; and
information on the Advisor's and the Sub-Advisor's compliance programs. The
Independent Trustees also met separately with their independent legal counsel to
discuss the information provided by the Advisor and the Sub-Advisor. The Board
applied its business judgment to determine whether the arrangements between the
Fund and the Advisor and among the Fund, the Advisor and the Sub-Advisor are
reasonable business arrangements from the Fund's perspective as well as from the
perspective of shareholders.
In reviewing the Agreements, the Board considered the nature, quality and extent
of services provided by the Advisor and the Sub-Advisor under the Agreements.
The Board considered the Advisor's statements regarding the incremental benefits
associated with the Fund's advisor/sub-advisor management structure. With
respect to the Advisory Agreement, the Board considered that the Advisor is
responsible for the overall management and administration of the Fund, including
the oversight of the Sub-Advisor. The Board noted the compliance program that
had been developed by the Advisor and considered that the compliance program
includes policies and procedures for monitoring the Sub-Advisor's compliance
with the 1940 Act and the Fund's investment objectives and policies. The Board
also noted the enhancements made by the Advisor to the compliance program in
2009. With respect to the Sub-Advisory Agreement, the Board received a
presentation from representatives of the Sub-Advisor discussing the services
that the Sub-Advisor provides to the Fund and how the Sub-Advisor manages the
Fund's investments. In light of the information presented and the considerations
made, the Board
Page 25
ADDITIONAL INFORMATION - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2010 (UNAUDITED)
concluded that the nature, quality and extent of services provided to the Fund
by the Advisor and the Sub-Advisor under the Agreements have been and are
expected to remain satisfactory and that the Sub-Advisor, under the oversight of
the Advisor, has managed the Fund consistent with its investment objectives and
policies.
The Board considered the advisory and sub-advisory fees paid under the
Agreements. The Board considered the advisory fees charged by the Advisor to
similar funds and other non-fund clients, and noted that the Advisor does not
provide advisory services to clients with investment objectives and policies
similar to the Fund's other than to another closed-end fund to which an
identical advisory fee rate was charged. The Board also considered information
provided by the Sub-Advisor as to the fees it charges to other clients, noting
that the Sub-Advisor does not manage any other closed-end funds directly
comparable to the Fund, but that the sub-advisory fee is generally lower than
the fees the Sub-Advisor charges to the other North American closed-end fixed
income and equity funds that it manages. In addition, the Board received data
prepared by Lipper Inc. ("Lipper"), an independent source, showing the
management fees and expense ratios of the Fund as compared to the management
fees and expense ratios of a combined peer group selected by Lipper and the
Advisor. The Board discussed with representatives of the Advisor the limitations
in creating a relevant peer group for the Fund, including that (i) the peer
funds may use different types of leverage which have different costs associated
with them; (ii) most peer funds do not employ an advisor/sub-advisor management
structure; (iii) the peer funds may not have the same fiscal year as the Fund,
which may cause the expense data used by Lipper to be measured over different
time periods; and (iv) many of the peer funds are larger than the Fund. The
Board reviewed the Lipper materials, but based on its discussions with the
Advisor, the Board determined that the Lipper data was of limited value for
purposes of its consideration of the renewal of the Agreements.
The Board also considered performance information for the Fund, noting that the
performance information included the Fund's quarterly performance report, which
is part of the process that the Board has established for monitoring the Fund's
performance on an ongoing basis, and had been enhanced to assess portfolio risk
as well. The Board determined that this process continues to be effective for
reviewing the Fund's performance. In addition to the Board's ongoing review of
performance, the Board also received data prepared by Lipper comparing the
Fund's performance to the combined peer group selected by Lipper and the
Advisor, as well as to a larger group and to a blended benchmark. The Board
reviewed the Lipper materials, but for similar reasons to those described above,
the Board determined that the performance data provided by Lipper was of limited
value. The Board considered an analysis prepared by the Advisor on the continued
benefits provided by the Fund's leverage. In addition, the Board considered the
market price and net asset value performance of the Fund since inception, and
compared the Fund's premium/discount to the average and median premium/discount
of the combined peer group, noting that the Fund's premium/discount was
generally indicative of the asset class and market events. Based on the
information provided and the Board's ongoing review of the Fund's performance,
the Board concluded that the Fund's performance was reasonable.
On the basis of all the information provided on the fees, expenses and
performance of the Fund, the Board concluded that the advisory and sub-advisory
fees were reasonable and appropriate in light of the nature, quality and extent
of services provided by the Advisor and Sub-Advisor under the Agreements.
The Board noted that the Advisor has continued to invest in personnel and
infrastructure and considered whether fee levels reflect any economies of scale
for the benefit of shareholders. The Board concluded that the advisory fee
reflects an appropriate level of sharing of any economies of scale at current
asset levels. The Board also considered the costs of the services provided and
profits realized by the Advisor from serving as investment manager to the Fund
for the twelve months ended December 31, 2009, as set forth in the materials
provided to the Board. The Board noted the inherent limitations in the
profitability analysis, and concluded that the Advisor's profitability appeared
to be not excessive in light of the services provided to the Fund. In addition,
the Board considered and discussed any ancillary benefits derived by the Advisor
from its relationship with the Fund and noted that the typical fall out benefits
to the Advisor such as soft dollars are not present. The Board concluded that
any other fall out benefits received by the Advisor or its affiliates would
appear to be limited.
The Board considered the Sub-Advisor's representation that because it manages
the Fund in a similar fashion to other accounts it is able to achieve economies
of scale through relationships with brokers, administrative systems and other
efficiencies and that while it expects operating costs in general to continue to
rise, it continues to expect to experience the benefits of economies of scale.
The Board considered that the sub-advisory fee rate was negotiated at arm's
length between the Advisor and the Sub-Advisor, an unaffiliated third party. The
Board also considered data provided by the Sub-Advisor as to the profitability
of the Sub-Advisory Agreement to the Sub-Advisor. The Board noted the inherent
limitations in this profitability analysis and concluded that the profitability
analysis for the Advisor was more relevant, although the profitability of the
Sub-Advisory Agreement appeared to be not excessive in light of the services
provided to the Fund. The Board noted that the Sub-Advisor does not maintain any
soft-dollar arrangements and that the Sub-Advisor indicated that it does not
receive any material fall out benefits from its relationship to the Fund.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, determined that the terms of the
Agreements continue to be fair and reasonable and that the continuation of the
Agreements is in the best interests of the Fund. No single factor was
determinative in the Board's analysis.
Page 26
This Page Left Blank Intentionally.
This Page Left Blank Intentionally.
(FIRST TRUST LOGO)
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187
INVESTMENT SUB-ADVISOR
Aberdeen Asset Management Inc.
1735 Market Street, 32nd Floor
Philadelphia, PA 19103
ADMINISTRATOR, FUND ACCOUNTANT & TRANSFER AGENT
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
PFPC Trust Company
301 Bellevue Parkway
Wilmington, DE 19809
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) Not applicable.
(b) There have been no changes, as of the date of filing, in any of the
Portfolio Managers identified in response to paragraph (a)(1) of this item
in the Registrant's most recent annual report on Form N-CSR.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) First Trust/Aberdeen Global Opportunity Income Fund
By (Signature and Title)* /s/ James A. Bowen
----------------------------------------
James A. Bowen, Chairman of the Board,
President and Chief Executive Officer
(principal executive officer)
Date August 19, 2010
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 A. Bowen
----------------------------------------
James A. Bowen, Chairman of the Board,
President and Chief Executive Officer
(principal executive officer)
Date August 19, 2010
By (Signature and Title)* /s/ Mark R. Bradley
----------------------------------------
Mark R. Bradley, Treasurer,
Chief Financial Officer
and Chief Accounting Officer
(principal financial officer)
Date August 19, 2010
* Print the name and title of each signing officer under his or her
signature.