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)
1001 Warrenville Road, Suite 300
LISLE, IL 60532
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
1001 Warrenville Road, Suite 300
LISLE, IL 60532
(Name and address of agent for service)
registrant's telephone number, including area code: (630) 241-4141
Date of fiscal year end: DECEMBER 31
Date of reporting period: JUNE 30, 2008
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
(GRAPHIC)
(FIRST TRUST LOGO)
SEMI-ANNUAL
REPORT
FOR THE SIX MONTHS ENDED
JUNE 30, 2008
FIRST TRUST/ABERDEEN
GLOBAL OPPORTUNITY
INCOME FUND
(ABERDEEN ASSET MANAGEMENT LOGO)
TABLE OF CONTENTS
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
SEMI-ANNUAL REPORT
JUNE 30, 2008
Shareholder Letter ....................................................... 1
At A Glance .............................................................. 2
Portfolio Commentary ..................................................... 3
Portfolio of Investments ................................................. 7
Schedule of Forward Foreign Currency Contracts ........................... 12
Statement of Assets and Liabilities ...................................... 13
Statement of Operations .................................................. 14
Statements of Changes in Net Assets ...................................... 15
Statement of Cash Flows .................................................. 16
Financial Highlights ..................................................... 17
Notes to Financial Statements ............................................ 18
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, 2008
Dear Shareholders:
The first half of 2008 has been challenging for the financial markets and for
many investors. Yet, regardless of the market, First Trust Advisors L.P. ("First
Trust") believes that in order to be successful in reaching your financial
goals, you should be invested for the long term. We also believe that investors
should seek professional help from a financial advisor who has been through many
types of markets, knows the range of investments available, and is committed to
bringing you investments suitable to your particular situation.
Our goal at First Trust has always been to offer a wide range of investment
products, including our family of closed-end funds, to help financial advisors
give you the opportunity to meet your financial objectives. We have continued to
expand our product line to ensure that you have many choices to fit your
investment needs.
The report you hold contains detailed information about your investment in First
Trust/Aberdeen Global Opportunity Income Fund (the "Fund"). It contains a
portfolio commentary from the Fund's portfolio management team that provides a
market recap for the period, a performance analysis and a market and Fund
outlook. Additionally, the report provides the Fund's financial statements for
the period covered by this report. I encourage you to read this document and
discuss it with your financial advisor.
First Trust has been through many types of markets and remains committed to
bringing you quality investment solutions regardless of the inevitable ups and
downs experienced in the market. We offer a variety of products that may fit
many financial plans to help those investors seeking long-term investment
success. As well, we are committed to making available up-to-date information
about your investments so you and your financial advisor are always current on
your portfolio.
We continue to 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, 2008 (UNAUDITED)
FUND STATISTICS
Symbol on New York Stock Exchange FAM
Common Share Price $ 16.32
Common Share Net Asset Value ("NAV") $ 18.15
Premium (Discount) to NAV (10.08)%
Net Assets Applicable to Common Shares $315,170,379
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) 9.56%
Current Distribution Rate on NAV (2) 8.60%
COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
(PERFORMANCE CHART)
Mkt NAV
----- -----
6/29/07 18.67 19.23
7/6/07 18.49 19.22
7/13/07 18.43 19.42
7/20/07 18.15 19.54
7/27/07 17.97 18.89
8/3/07 17.42 18.89
8/10/07 17.25 18.68
8/17/07 16.98 18.11
8/24/07 17.15 18.21
8/31/07 16.99 18.3
9/7/07 16.9 18.17
9/14/07 16.97 18.4
9/21/07 17.2 18.68
9/28/07 17.5 18.96
10/5/07 17.32 18.98
10/12/07 17.34 19.08
10/19/07 17.41 19.15
10/26/07 17.63 19.34
11/2/07 17.76 19.35
11/9/07 17.45 19.15
11/16/07 17.03 18.9
11/23/07 16.73 18.74
11/30/07 16.79 18.74
12/7/07 16.61 18.71
12/14/07 16.52 18.57
12/21/07 16.02 18.43
12/28/07 16.5 18.56
1/4/08 16.7 18.64
1/11/08 17.44 18.9
1/18/08 16.85 18.45
1/25/08 17.01 18.45
2/1/08 17.09 18.61
2/8/08 17.15 18.42
2/15/08 16.58 18.49
2/22/08 16.67 18.6
2/29/08 17.07 18.71
3/7/08 16.46 18.54
3/14/08 16.33 18.58
3/20/08 16.3 18.46
3/28/08 16.45 18.44
4/4/08 16.5 18.42
4/11/08 16.63 18.53
4/18/08 16.65 18.55
4/25/08 16.82 18.41
5/2/08 16.72 18.44
5/9/08 16.7 18.38
5/16/08 16.68 18.44
5/23/08 16.91 18.39
5/30/08 17.14 18.43
6/6/08 16.73 18.31
6/13/08 16.5 18.14
6/20/08 16.55 18.23
6/27/08 16.46 18.15
6/30/08 16.33 18.16
PERFORMANCE
Average Annual
Total Return
6 Months Ended 1 Year Ended Inception (11/23/2004)
6/30/2008 6/30/2008 to 6/30/2008
-------------- ------------ ----------------------
Fund Performance
NAV (3) 2.62% 4.41% 7.91%
Market Value (4) 3.43% -3.29% 3.45%
Index Performance
Blended Benchmark (5) 3.10% 12.33% 7.41%
Lehman Global Emerging Markets Index 0.68% 5.47% 8.08%
Lehman Global Aggregate Index 3.53% 12.90% 4.67%
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
------------------------------------------------------------------ -----------
Electropaulo Metropolitan 4.5%
Asian Development Bank 3.4
European Investment Bank 3.1
Canadian Government 2.7
Province of Manitoba 2.4
Dominican Republic 2.3
Australian Government 2.3
Instituto de Credito Oficial 2.3
Republic of Finland 2.2
International Bank Reconstruction & Development 2.0
----
Total 27.2%
====
% OF TOTAL
CREDIT QUALITY (7) INVESTMENTS
------------------------------------------------------------------ -----------
AAA 35.5%
AA 4.2
A+ 1.3
BBB+ 1.6
BBB- 5.0
BB+ 5.8
BB- 16.1
BB 4.6
B+ 7.6
B 1.7
B- 2.5
NR 14.1
-----
Total 100.0%
=====
% OF TOTAL
TOP 10 COUNTRIES (6) INVESTMENTS
------------------------------------------------------------------ -----------
Multinational 14.4%
Canada 10.3
Brazil 7.9
Indonesia 5.5
Ukraine 4.1
Russia 4.0
Australia 3.9
Mexico 3.8
Norway 3.7
Venezuela 3.6
----
Total 61.2%
====
% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
------------------------------------------------------------------ -----------
Foreign Government Bonds 52.6%
Supranational Bank 14.4
Regional Authority 5.9
Diversified Financial Services 5.6
Electric Utilities 5.6
Commercial Banks 3.7
Special Purpose Banks 3.1
Oil, Gas & Consumable Fuels 2.0
Multiline Retail 1.6
Beverages 1.1
Export/Import Bank 1.0
Metals & Mining 1.0
Telecommunications 0.6
Capital Markets 0.6
Construction & Chemicals 0.5
Health Care 0.4
Thrift & Mortgage Finance 0.2
Household Durables 0.1
-----
Total 100.0%
=====
(1) Most recent distribution paid or of record through 6/30/08. Subject to
change in the future.
(2) Distribution rates are calculated by annualizing the most recent
distribution paid or of record through the report date and then dividing by
Common Share price or NAV, as applicable, as of 6/30/08.
(3) Total return based on NAV is the combination of reinvested dividend
distributions and reinvested capital gain distributions, if any, at prices
obtained by the Dividend Reinvestment Plan and changes in NAV per share and
does not reflect sales load. Past performance is not indicative of future
results.
(4) Total return based on market value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan and changes in Common
Share price. Past performance is not indicative of future results.
(5) 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%).
(6) Portfolio securities are included in a country based upon their underlying
credit exposure as determined by Aberdeen Asset Management Inc., the
investment sub-advisor.
(7) 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 one or more NRSROs
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 Asset Management PLC 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 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. Included below is
additional information about the members of the team with significant
responsibility for the day-today management of the Fund's portfolio.
JOHN MURPHY
PORTFOLIO MANAGER, GLOBAL BONDS
Mr. Murphy joined Aberdeen with the acquisition of Deutsche Asset Management's
fixed-income business in 2005. Mr. Murphy held a similar role at Deutsche Asset
Management, and previously at Morgan Grenfell Asset Management, which he joined
in 1984.
BRETT DIMENT
HEAD OF EMERGING MARKET DEBT
Mr. Diment joined Deutsche Asset Management Group Limited ("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 markets 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. 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 Manager, 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.
NIMA TAYEBI
PORTFOLIO MANAGER, EMERGING MARKET DEBT
Mr. Tayebi has 10 years of experience as executive director responsible for
emerging markets trading at Millennium Global Investments, vice president at
Salomon Brothers, focusing on emerging currency and debt trading and head of
fixed-income research at Renaissance Capital. He joined Deutsche as an emerging
currency portfolio manager in 2001 and Aberdeen in 2005.
MAX WOLMAN
PORTFOLIO MANAGER, EMERGING MARKET DEBT
Mr. Wolman joined Aberdeen in January 2001 and is portfolio manager on the
Global 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 Markets Debt investment committee at Aberdeen and is also
responsible for the daily implementation of the investment process.
Page 3
PORTFOLIO COMMENTARY - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
The primary investment objective of First Trust/Aberdeen Global Opportunity
Income Fund ("FAM" or 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
GLOBAL FINANCIAL MARKETS
------------------------
The main focus for fixed-income markets continued to be the health of the
financial system, events in credit markets and rising inflationary pressures.
Following the rescue of Bear Stearns early in the period, equity markets started
to rally, bond yields rose and credit spreads narrowed. This was reversed in
June 2008, however, as central banks focused on inflation rather than concerns
over future growth levels.
Economic data in the U.S. was weak, not only in the housing sector but was also
weaker in other areas of the economy and employment data started to fall. The
Federal Reserve cut rates by 2.25% over the first half of 2008, taking official
rates from 4.25% to 2%. Growth in the United Kingdom ("UK") also fell with a
weakening housing market, and the UK central bank cut rates twice over the
period to 5%; however, they also highlighted inflation risks. The Bank of Canada
also cut rates twice to 3.5%. Growth in continental Europe and Asia continued to
remain robust and both the Bank of Japan and the European Central Bank ("ECB")
kept rates on hold. However, as inflation rose towards 4% in Europe, strong
rhetoric from the ECB led the market to price in a number of rate hikes later in
2008. Strong Asian and emerging market growth was one of the reasons for the
large rise in oil prices. This, along with rises in other commodity and food
prices, led to concerns over future inflation.
THE BOND MARKETS
----------------
Over the period, U.S. Treasuries were the best-performing bond investment and
bond yields fell sharply, particularly at the short end, leading to a steeper
yield curve. The UK and Japanese markets also saw yields fall but the Euro bond
market, with its robust growth and hawkish central bank, saw yields rise
modestly.
Over the period, non-government bonds underperformed. Additionally, securitized
assets - asset-backed securities, mortgage-backed securities and commercial
mortgage-backed securities - underperformed corporate bonds and within the
corporate sector, financials underperformed other sub-sectors. There was some
recovery towards the end of the period as rate cuts and liquidity provisions
from central banks began to feed through; however, concerns over higher
inflation and the impact of the credit crunch began to come into play and
corporate spreads again began to widen.
In currency markets the Euro strengthened against most currencies, particularly
against the U.S. dollar, while the Yen managed to stay steady. The U.S. dollar
fell against many currencies.
MARKET RECAP - EMERGING MARKETS
Emerging fixed-income markets had a mixed performance over the period. Early
gains were erased by a bout of global risk aversion, but prices rebounded in the
aftermath of the takeover of Bear Stearns in mid-March 2008, only to falter
again in late June amid concerns about rising global inflation. Overall, the
spread on the JPMorgan Emerging Markets Bond Index-Global Diversified during the
six-month period ended June 30, 2008, increased 54 basis points ("bps") to +318,
having touched a near three-year high of +348 on March 17, 2008, which marked
the day when JPMorgan announced it would acquire Bear Stearns.
BRAZIL
The Fund's core holdings in Brazil performed strongly over the six-month period
ended June 30, 2008, though more recently we have taken advantage of market
strength following the move to investment-grade credits by taking profits on
some of our external debt position. Overall the news has been very positive in
Brazil, which joined Mexico and Chile as the only investment grade credits in
the region after the Standard & Poor's upgrade in April 2008. The fiscal and
external accounts remain robust, foreign direct investment climbed to a record
level, and the growth outlook has continued on a healthy path despite the
slowdown in global growth. The one downside to the strong domestic demand story,
however, has been inflation, with the annual rate exceeding the official target
of 4.5% by over 100 bps. Rising inflation has prompted the central bank to hike
the benchmark rate 50 bps on two occasions to 12.25%. With inflation continuing
to press higher and more rate hikes in the pipeline for 2008, local rates have
been notably weaker in recent weeks. The market is pricing in another 250 bps of
rate hikes this year, which we think provides sufficient cushion to remain long
local rates, with the 10-year rate now above 14%.
Page 4
PORTFOLIO COMMENTARY - (CONTINUED)
ARGENTINA
Our positions in Argentine debt have underperformed amid little change in
economic policy following the Presidential election that passed the torch from
Nestor Kirchner to his wife, Cristina Kirchner, in December 2007. Concerns about
the policy framework, combined with the ongoing dispute with farmers over
increased agriculture export taxes, have put a big dent in Cristina Kirchner's
popularity and investor sentiment. The export taxes are one of the key elements
of the government's economic policy, which due to rising soft commodity prices
have led to significant increases in the fiscal and trade surpluses in 2008.
After a brisk period of growth in the first quarter, the economy for the rest of
2008 is likely to move slowly due to rising inflation and the impact from the
lingering dispute with the farmers. Negative headlines aside, default risk
remains low in Argentina, which has completed most of its debt financing for
2008 and has ample local resources, plus the support of Venezuela, to meet its
2009 financing gap.
VENEZUELA
Venezuela country risk remains minimal, in our opinion, despite record-high oil
prices, as political risk and concerns about new supply have weighed on
performance over the past year. President Chavez has been involved in a verbal
battle with Colombia over the recent deaths of several leaders of the FARC
guerrilla group. There have been claims that Chavez was secretly funding the
FARC, which has prompted Chavez to go on the offensive and threaten to curb
trade ties with Colombia, which would be damaging for both economies. Thus far,
the trade channel remains open. The dispute between state-owned oil company
PDVSA and Exxon-Mobil over compensation from the expropriation of its oil assets
in the Orinoco Basin in 2007 has yet to be resolved, although tensions appear to
have eased recently. Likewise, concerns about new supply have eased after $4
billion of new bonds were issued in April 2008. The deal was split into two
issues, maturing in 2023 and 2028, and was placed with local investors to
fulfill the pent-up demand for dollar assets, which in turn should ease pressure
on the parallel exchange rate. While oil prices are at record highs, the market
seems to have drawn more comfort that Venezuela may be scaling back new issuance
in 2008 and using some of the proceeds to buy back debt.
TURKEY
Turkey's inflation outlook has deteriorated significantly in recent months,
primarily due to higher food and fuel prices. With annual inflation approaching
double digits, which is well above the Central Bank's original 4% inflation
target, the Central Bank initiated a rate hiking cycle by raising rates 50 bps
at its May 2008 meeting. The Central Bank of Turkey ("CBT") adopted a much more
cautious stance in its quarterly inflation report, increasing its forecast to
9.3% for 2008 from 5.5% previously, and to 6.7% for 2009 from 3.7%. A
deteriorating macro outlook and rising political risk, with the Constitutional
Court mulling the closure of the ruling AKP party due to anti-secular
activities, has provided a negative backdrop for Turkish assets. While the lira
has been fairly resilient recently, it has weakened on the year by 5% while the
yield on the benchmark March '12s has widened 600bps to around 22%. (The "March
'12s" refer to a bond that is one of the most liquid bonds on the yield curve
which investors buy and sell.) Despite the political issues and revised
inflation targets, Turkish domestic bonds potentially offer value from these
levels following the sell-off.
ASIA
The performance of external debt was mixed, with the Philippines posting a
positive gain while Indonesia lagged, as new supply from the latter weighed on
existing spreads. Rising inflation and dovish comments from Bank Indonesia
weighed on our local rates position, though sentiment has improved recently due
to a shift in monetary policy.
FUND RECAP
The Fund had a net asset value ("NAV") total return of 2.62%(1) and a market
value total return of 3.43%(2) for the six months ended June 30, 2008, compared
to the blended benchmark(3) total return of 3.10% over the same period. In
addition to this blended benchmark, the Fund currently uses other indexes for
comparative purposes. The total returns over the six-months ended June 30, 2008
for these indexes were as follows: The Lehman Global Emerging Markets Index was
0.68% and the Lehman Global Aggregate Index was 3.53%.
----------
(1) Total return based on the NAV is the combination of reinvested dividend
distributions and reinvested capital gains distributions, if any, at prices
obtained by the Dividend Reinvestment Plan and changes in NAV per share and
does not reflect sales load.
(2) Total return based on market value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan and changes in Common
Share price.
(3) 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 5
PORTFOLIO COMMENTARY - (CONTINUED)
PERFORMANCE ANALYSIS - EMERGING MARKET
For the six-month period ended June 30, 2008, the emerging fixed-income
component of the Fund returned 2.27%, compared to the return of 1.75% for the
emerging market components of the blended benchmark. The outperformance of the
benchmark was due to the Fund's local currency bond holdings which returned
6.33% compared to the local benchmark return of 3.80%. The countries with the
strongest local returns in the Fund were Brazil, Mexico and Uruguay. We believe
this is due to investor confidence that government officials from these
countries will be successful at containing inflationary pressures. The Fund had
a positive return for its Colombian local bonds compared to the benchmark as
investors predominately sold their longer duration Colombian bonds which the
Fund did not own. Turkish local bonds had a negative return for the period due
to rising inflation and the potential closure of the ruling AKP party. The Fund
had a zero weighting in South African local bonds which turned out to be a
prudent decision as the benchmark returned -17.54% due to inflation worries
caused by rising oil and food prices and a large negative current account
balance.
The Fund's external bond holdings underperformed the benchmark, returning -1%
compared to -0.28% for the benchmark. The main weakness was the Fund's
overweight in Argentina, which returned -13.02% as investors reducing their
holdings in Argentina due to the political situation and farmer strikes. Other
countries which had negative returns in external markets were Venezuela, Turkey
and Indonesia. The country which outperformed the benchmark was Russia. This was
due to the Fund's corporate bond holdings, which offered much higher yields than
the sovereign. Brazil external debt also had a strong return as investor
confidence grew after the upgrade by Standard & Poor's.
PERFORMANCE ANALYSIS - DEVELOPED MARKET
Over the second quarter of 2008, the Fund's developed market portfolio
outperformed its benchmark, the Citigroup World Government Bond Index. The
composition of the developed market portfolio is markedly different from the
index, with the portfolio's investments concentrated in the higher yielding and
highest quality developed markets, namely Australia, New Zealand, Canada and the
United Kingdom. Bond returns were strong in Australia and Canada contributing to
the outperformance. Underweight positions in Euro and Japanese denominated
issues also added value, with both markets producing negative returns over the
second quarter 2008.
MARKET AND FUND OUTLOOK - EMERGING MARKET
Looking ahead, concerns about global inflation that have been exacerbated by
rising commodity prices will at times weigh on emerging market debt, in our
opinion. With inflation picking up in a number of countries such as Brazil,
Mexico, Turkey, Indonesia, Egypt and Russia, policy credibility will be tested.
A failure to give an appropriate and timely policy response to a deteriorating
inflation outlook could exert pressure on local rates. In the absence of tighter
monetary policy, central bankers may be more open to responding to imported
inflation by allowing for some currency appreciation, which could bode well for
emerging markets' fixed-income exposure.
MARKET AND FUND OUTLOOK - DEVELOPED MARKET
In our opinion, inflation is likely to remain the key focus for developed
markets over the coming months. Higher food and energy prices have pushed up
headline inflation and are likely to leak into core inflation going forward.
Central banks are expected to tighten monetary policy; however, the U.S. is
likely to keep rates lower for longer as growth slows. The ECB, on the other
hand, is likely to be the laggard when it comes to cutting rates going forward.
The continued rise in energy prices is likely to force the Bank of England to
raise its inflation profile in the short term. But, the continued deterioration
in the demand outlook and the benign labor environment is likely to stay the
hand of all but the most hawkish members of the Monetary Policy Committee. Of
concern for the central bank in Japan is the decline in outlook for the Asian
economies. The U.S. and UK fall in demand is already well documented, and should
demand from the Asian economies fall, with little domestic demand, there is a
chance, we believe, that growth could fall to zero in the coming quarters. In
our opinion, Japan will not grow close to trend this year and this weaker growth
will widen the output gap and effectively cap any more inflation surprises. The
outlook for the credit market is weaker as high and rising input prices,
restrictive credit conditions and the threat of inflation all hang over the
market. We expect the impact from the deteriorating macro backdrop to be felt
first by retail and consumer companies and then industrials into 2009, as input
costs increase and lower orders feed fully into earnings.
Page 6
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2008 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
-------------- ------------------------------------------------------- ------ -------- ------------
BONDS AND NOTES (b) - 141.1%
ARGENTINA - 3.8%
1,380,000 Banco Hipotecario SA(USD) ............................. 9.75% 04/27/16 $ 1,028,100
5,642,724 Republic of Argentina (ARS) (c) ....................... 2.08% 01/03/10 3,690,936
5,910,000 Republic of Argentina (USD) (c) ....................... 0.00% 12/15/35 588,045
700,000 Republic of Argentina (USD) (c) ....................... 3.00% 04/30/13 531,513
8,190,000 Republic of Argentina (USD) ........................... 7.00% 04/17/17 5,646,233
629,998 Republic of Argentina (USD) ........................... 8.28% 12/31/33 482,893
-------------
11,967,720
-------------
AUSTRALIA - 5.6%
11,000,000 Australian Government (AUD) ........................... 6.00% 02/15/17 10,233,995
8,100,000 Queensland Treasury (AUD) ............................. 6.00% 10/14/15 7,331,549
-------------
17,565,544
-------------
BRAZIL - 11.1%
5,750,000 Brazil Citigroup (BRL) ................................ 15.00% 07/02/10 3,719,225
1,700,000 Dasa Finance Corp. (USD) .............................. 8.75% 05/29/18 1,710,625
29,603,000 Electropaulo Metropolitan (BRL) ....................... 19.13% 06/28/10 19,989,550
1,720,000 Independencia International Ltd. (USD) ................ 9.88% 05/15/15 1,667,865
1,650,000 Independencia International Ltd. (USD) ................ 9.88% 01/31/17 1,614,937
3,800,000 Isa Capital do Brasil SA(USD) ......................... 7.88% 01/30/12 3,942,500
2,400,000 Odebrecht Finance Ltd. (USD) .......................... 7.50% 10/18/17 2,434,560
-------------
35,079,262
-------------
CANADA - 14.6%
11,000,000 Canadian Government (CAD) ............................. 9.50% 06/01/10 12,031,176
7,000,000 Canadian Government (CAD) ............................. 5.25% 06/01/13 7,416,416
10,000,000 Export Development Canada (NZD) ....................... 8.13% 11/30/10 7,728,031
15,000,000 Province of Manitoba (NZD) ............................ 6.38% 09/01/15 10,893,811
10,965,000 Province of Ontario (NZD) ............................. 6.25% 06/16/15 7,883,784
-------------
45,953,218
-------------
CHINA - 2.2%
5,800,000 Parkson Retail Group Ltd. (USD) ....................... 7.88% 11/14/11 5,814,500
1,230,000 Parkson Retail Group Ltd. (USD) ....................... 7.13% 05/30/12 1,190,025
-------------
7,004,525
-------------
COLOMBIA - 4.6%
11,613,000,000 Republic of Colombia (COP) ............................ 11.75% 03/01/10 6,099,328
7,850,000 Republic of Colombia (USD) ............................ 7.38% 09/18/37 8,523,137
-------------
14,622,465
-------------
DOMINICAN REPUBLIC - 4.7%
4,550,000 Cerveceria Nacional Dominica (USD) (c) ................ 16.00% 03/27/12 4,709,250
9,940,000 Dominican Republic (USD) .............................. 8.63% 04/20/27 10,238,200
-------------
14,947,450
-------------
See Notes to Financial Statements
Page 7
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
-------------- ------------------------------------------------------- ------ -------- ------------
BONDS AND NOTES (b) - (CONTINUED)
ECUADOR - 3.5%
7,340,000 Republic of Ecuador (USD) ............................. 9.38% 12/15/15 $ 7,596,900
3,600,000 Republic of Ecuador (USD) ............................. 10.00% 08/15/30 3,528,000
-------------
11,124,900
-------------
EGYPT - 3.9%
6,620,000 Egypt Government Bond (EGP) ........................... 9.10% 07/12/10 1,287,710
4,285,000 Egypt Government Bond (EGP) ........................... 9.35% 08/16/10 830,780
12,360,000 Egypt Government Bond (EGP) ........................... 9.10% 09/20/12 2,239,889
15,000,000 Egypt Treasury Bill (EGP) ............................. 0.00% 03/31/09 2,596,730
30,250,000 Egypt Treasury Bill (EGP) ............................. 0.00% 05/05/09 5,182,596
-------------
12,137,705
-------------
EL SALVADOR - 1.2%
1,640,000 Republic of El Salvador (USD) ......................... 8.25% 04/10/32 1,812,200
1,970,000 Republic of El Salvador (USD) ......................... 7.65% 06/15/35 2,048,800
-------------
3,861,000
-------------
FINLAND - 3.1%
4,581,000 Republic of Finland (GBP) ............................. 9.38% 02/03/10 9,631,439
-------------
GABON - 1.9%
5,670,000 Gabonese Republic (USD) ............................... 8.20% 12/12/17 5,925,150
-------------
GEORGIA - 1.9%
5,900,000 Republic of Georgia (USD) ............................. 7.50% 04/15/13 5,891,415
-------------
GERMANY - 1.2%
3,650,000 KfW International Finance (CAD) ....................... 4.95% 10/14/14 3,748,815
-------------
GHANA - 1.6%
4,760,000 Republic of Ghana (USD) ............................... 8.50% 10/04/17 4,886,211
-------------
INDONESIA - 7.7%
1,410,000 Empire Capital Resources Pte. Ltd. (USD) .............. 9.38% 12/15/11 1,493,881
28,000,000,000 Indonesian Government (IDR) ........................... 11.00% 12/15/12 2,830,709
2,550,000,000 Indonesian Government (IDR) ........................... 12.50% 03/15/13 270,655
29,800,000,000 Indonesian Government (IDR) ........................... 9.00% 09/15/13 2,737,473
7,170,000,000 Indonesian Recapitalization Bond (IDR) ................ 13.40% 02/15/11 792,642
33,100,000,000 Indonesian Recapitalization Bond (IDR) ................ 13.45% 08/15/11 3,657,751
9,000,000,000 Indonesian Recapitalization Bond (IDR) ................ 13.18% 07/15/12 982,056
970,000 Majapahit Holding BV (USD) ............................ 7.75% 10/17/16 911,517
4,260,000 Majapahit Holding BV (USD) ............................ 7.25% 06/28/17 3,802,387
1,140,000 MGTI Finance Company, Ltd. (USD) ...................... 8.38% 09/15/10 1,141,312
1,520,000 Republic of Indonesia (USD) ........................... 6.88% 03/09/17 1,457,102
3,080,000 Republic of Indonesia (USD) ........................... 6.88% 01/17/18 2,945,250
1,240,000 Republic of Indonesia (USD) ........................... 8.50% 10/12/35 1,303,596
-------------
24,326,331
-------------
See Notes to Financial Statements
Page 8
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
-------------- ------------------------------------------------------- ------ -------- -------------
BONDS AND NOTES (b) - (CONTINUED)
IRELAND - 0.9%
2,970,000 Vimpelcom Finance (USD) ............................... 8.38% 04/30/13 $ 2,936,885
-------------
KAZAKHSTAN - 0.9%
2,900,000 KazMunaiGaz Finance (USD) ............................. 9.13% 07/02/18 2,923,925
-------------
MEXICO - 5.3%
240,000 Desarrolladora Homex SA(USD) .......................... 7.50% 09/28/15 242,400
66,200,000 Mexican Bonos Desarr Fixed Rate Bond (MXN) ............ 7.25% 12/15/16 5,693,286
33,441,420 Mexico Cetes (MXN) .................................... 0.00% 10/23/08 3,158,762
62,300,000 Mexico Cetes (MXN) .................................... 0.00% 11/06/08 5,865,797
850,000 Mexico Government International Bond (GBP) ............ 16.50% 09/01/08 1,718,285
-------------
16,678,530
-------------
MULTINATIONAL - 20.3%
17,600,000 Asian Development Bank (AUD) .......................... 5.50% 02/15/16 15,084,775
8,540,000 Council of Europe (AUD) ............................... 5.50% 08/15/08 8,161,771
18,800,000 European Investment Bank (NZD) ........................ 6.50% 09/10/14 13,802,377
11,000,000 European Investment Bank (TRY) ........................ 18.50% 03/20/09 8,911,825
12,000,000 International Bank Reconstruction &
Development (NZD) .................................. 6.38% 07/15/09 9,006,168
5,000,000 Nordic Investment Bank (AUD) .......................... 5.38% 01/18/11 4,536,475
2,240,000 Nordic Investment Bank (GBP) .......................... 5.75% 11/06/08 4,454,531
-------------
63,957,922
-------------
NIGERIA - 3.0%
3,750,000 GTB Finance BV (USD) .................................. 8.50% 01/29/12 3,637,500
678,500,000 KfW International Finance (NGN) ....................... 8.50% 01/18/11 5,658,707
-------------
9,296,207
-------------
NORWAY - 5.2%
4,500,000 Kommunalbanken AS (GBP) ............................... 4.75% 01/28/10 8,805,074
10,000,000 Kommunalbanken AS (NZD) ............................... 8.00% 10/19/10 7,680,747
-------------
16,485,821
-------------
PAKISTAN - 0.9%
1,040,000 Islamic Republic of Pakistan (USD) .................... 6.75% 02/19/09 1,018,368
2,480,000 Islamic Republic of Pakistan (USD) .................... 6.88% 06/01/17 1,841,400
-------------
2,859,768
-------------
PANAMA - 1.4%
3,400,000 Republic of Panama (USD) .............................. 8.88% 09/30/27 4,300,660
-------------
PERU - 2.6%
13,900,000 Peru Bono Soberano (PEN) .............................. 7.84% 08/12/20 4,986,915
8,600,000 Peru Bono Soberano (PEN) .............................. 8.20% 08/12/26 3,216,687
-------------
8,203,602
-------------
See Notes to Financial Statements
Page 9
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
-------------- ------------------------------------------------------- ------ -------- -------------
PHILIPPINES - 3.9%
2,675,000 Republic of Philippines (USD) ......................... 8.25% 01/15/14 $ 2,897,426
3,140,000 Republic of Philippines (USD) ......................... 10.63% 03/16/25 4,214,294
4,280,000 Republic of Philippines (USD) ......................... 9.50% 02/02/30 5,232,300
-------------
12,344,020
-------------
RUSSIA - 5.6%
1,450,000 Evraz Group SA(USD) ................................... 8.88% 04/24/13 1,446,810
3,030,000 Evraz Group SA(USD) ................................... 8.25% 11/10/15 2,980,763
56,400,000 GPB Eurobond Finance PLC (RUB) ........................ 7.25% 02/22/10 2,397,453
130,331,883 Red Arrow International Leasing PLC (RUB) ............. 8.38% 06/30/12 5,542,869
3,230,000 RS Finance (RSB) (USD) ................................ 7.50% 10/07/10 3,016,465
2,430,000 RSHB Capital SA(USD) .................................. 7.75% 05/29/18 2,389,784
-------------
17,774,144
-------------
SPAIN - 3.2%
11,500,000 Instituto de Credito Oficial (AUD) .................... 5.50% 10/11/12 10,194,761
-------------
UKRAINE - 5.7%
7,300,000 Alfa Bank Ukraine (USD) ............................... 9.75% 12/22/09 7,178,820
4,700,000 EX-IM Bank of Ukraine (USD) ........................... 7.65% 09/07/11 4,556,659
16,000,000 JSCB Ukrsotsbank, Credit Linked Note (USD) ............ 12.00% 10/15/12 3,523,942
3,000,000 UBS AG Jersey Branch (USD) ............................ 9.13% 06/21/10 2,820,000
-------------
18,079,421
-------------
UNITED KINGDOM - 1.1%
1,500,000 United Kingdom CNVR (GBP) ............................. 9.00% 07/12/11 3,298,825
-------------
URUGUAY - 3.4%
138,620,000 Republic Orient Uruguay,
Inflation Adjusted Bond (UYU) (d) .................. 5.00% 09/14/18 8,004,048
52,400,000 Republic Orient Uruguay,
Inflation Adjusted Bond (UYU) (d) .................. 4.25% 04/05/27 2,841,818
-------------
10,845,866
-------------
VENEZUELA - 5.1%
3,622,000 Republic of Venezuela (USD) ........................... 8.50% 10/08/14 3,438,546
4,520,000 Republic of Venezuela (USD) ........................... 5.75% 02/26/16 3,573,060
1,410,000 Republic of Venezuela (USD) ........................... 10.75% 09/19/13 1,471,547
8,460,000 Petroleos de Venezuela SA(USD) ........................ 5.25% 04/12/17 5,900,850
1,720,000 Bolivarian Republic of Venezuela (USD) ................ 9.00% 05/07/23 1,512,568
-------------
15,896,571
-------------
TOTAL INVESTMENTS - 141.1%
(Cost $419,366,793) (e) ............................... 444,750,078
LOAN OUTSTANDING - (46.4)% ............................ (146,392,066)
NET OTHER ASSETS AND LIABILITIES - 5.3% ............... 16,812,367
-------------
NET ASSETS - 100.0% ................................... $ 315,170,379
=============
See Notes to Financial Statements
Page 10
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Portfolio securities are included in a country based upon their underlying
credit exposure as determined by Aberdeen Asset Management Inc., the
investment sub-advisor.
(c) Variable rate security. The interest rate shown reflects the rate in effect
at June 30, 2008.
(d) 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.
(e) Aggregate cost for federal income tax and financial reporting purposes.
RSB Russian Standard Bank
Currency
ARS Argentine Peso
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
COP Colombian Peso
EGP Egyptian Pound
GBP British Pound Sterling
IDR Indonesian Rupiah
MXN Mexican Peso
MYR Malaysian Ringgit
NGN Nigerian Naira
NZD New Zealand Dollar
PEN Peruvian New Sol
RUB Russian Ruble
SGD Singapore Dollar
TRY Turkish Lira
TWD Taiwan Dollar
USD United States Dollar
UYU Uruguayan Peso
ZAR South African Rand
See Notes to Financial Statements
Page 11
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
SCHEDULE OF FOWARD FOREIGN CURRENCY CONTRACTS
JUNE 30, 2008 (UNAUDITED)
FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
CONTRACTS TO RECEIVE NET NET
---------------------------------------------- UNREALIZED UNREALIZED
IN APPRECIATION DEPRECIATION
EXPIRATION LOCAL VALUE IN EXCHANGE OF CONTRACTS OF CONTRACTS
DATE CURRENCY (a) U.S. $ FOR U.S. $ U.S. $ U.S. $
---------- ------------------ ----------- ----------- ------------ ------------
07/16/08 BRL 12,996,000 $ 8,072,819 $ 7,618,386 $ 454,433 $ --
07/16/08 MYR 78,802,000 24,118,285 25,081,800 -- (963,515)
07/16/08 RUB 190,404,000 8,115,657 8,022,077 93,580 --
07/16/08 SGD 32,112,000 23,620,735 23,733,924 -- (113,189)
07/16/08 TRY 16,207,000 13,155,588 12,649,119 506,469 --
07/16/08 TWD 776,000,000 25,596,200 26,127,946 -- (531,746)
07/16/08 ZAR 38,702,000 4,919,662 5,090,493 -- (170,831)
---------- -----------
$1,054,482 $(1,779,281)
---------- -----------
FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER NET NET
---------------------------------------------- UNREALIZED UNREALIZED
IN APPRECIATION DEPRECIATION
EXPIRATION LOCAL VALUE IN EXCHANGE OF CONTRACTS OF CONTRACTS
DATE CURRENCY (a) U.S. $ FOR U.S. $ U.S. $ U.S. $
---------- ------------------ ----------- ----------- ------------ ------------
08/08/08 ARS 9,401,000 $ 3,069,263 $ 3,066,710 $ -- $ (2,553)
07/16/08 BRL 28,732,000 17,847,664 16,702,709 -- (1,144,955)
07/16/08 CAD 22,778,000 22,332,231 22,250,442 -- (81,789)
07/16/08 COP 11,026,052,000 5,735,705 6,018,587 282,882 --
07/16/08 GBP 15,132,000 30,101,139 29,758,894 -- (342,245)
07/16/08 MXN 4,385,000 424,142 422,691 -- (1,451)
07/16/08 NZD 70,122,000 53,287,931 55,119,398 1,831,467 --
07/16/08 RUB 190,404,000 8,115,657 8,081,664 -- (33,993)
07/16/08 TRY 16,207,000 13,155,588 12,129,028 -- (1,026,560)
07/16/08 ZAR 38,702,000 4,919,662 4,831,831 -- (87,831)
----------- -----------
$ 2,114,349 $(2,721,377)
----------- -----------
Unrealized Appreciation (Depreciation) .................... $ 3,168,831 $(4,500,658)
=========== ===========
Net Unrealized Appreciation (Depreciation) ................ $(1,331,827)
===========
(a) Please see page 11 for currency descriptions.
See Notes to Financial Statements
Page 12
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2008 (UNAUDITED)
ASSETS:
Investments, at value
(Cost $419,366,793) .......................................... $444,750,078
Cash ............................................................ 4,396,261
Foreign currency (Cost $3,903,972) .............................. 3,839,181
Unrealized appreciation on forward foreign currency contracts ... 3,168,831
Prepaid expenses ................................................ 8,097
Receivables:
Interest ..................................................... 11,431,117
Investment securities sold ................................... 3,308,628
Dividends .................................................... 4,795
------------
Total Assets .............................................. 470,906,988
------------
LIABILITIES:
Unrealized depreciation on forward foreign currency contracts ... 4,500,658
Payables:
Outstanding loans ............................................ 146,392,066
Investment securities purchased .............................. 3,450,018
Interest and fees due on loans ............................... 836,349
Investment advisory fees ..................................... 379,533
Custodian fees ............................................... 68,823
Audit and tax fees ........................................... 37,992
Administrative fees .......................................... 31,790
Printing fees ................................................ 20,390
Legal fees ................................................... 11,301
Transfer agent fees .......................................... 3,016
Trustees' fees and expenses .................................. 906
Accrued expenses and other liabilities .......................... 3,767
------------
Total Liabilities ......................................... 155,736,609
------------
NET ASSETS ...................................................... $315,170,379
============
NET ASSETS CONSIST OF:
Paid-in capital ................................................. $320,203,708
Par value ....................................................... 173,652
Accumulated net investment income (loss) ........................ (22,058,880)
Accumulated net realized gain (loss) on investments sold, forward
foreign currency contracts and foreign currency
transactions ................................................. (5,770,470)
Net unrealized appreciation (depreciation) on investments,
forward foreign currency contracts and foreign currency
translation .................................................. 22,622,369
------------
NET ASSETS ...................................................... $315,170,379
============
NET ASSET VALUE, per Common Share (par value $0.01
per Common Share) ............................................ $ 18.15
============
Number of Common Shares outstanding (unlimited number of
Common Shares has been authorized) ........................... 17,365,236
============
See Notes to Financial Statements
Page 13
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 (UNAUDITED)
INVESTMENT INCOME:
Interest (net of foreign withholding tax of $68,904) ............ $ 18,774,588
Dividends ....................................................... 83,684
------------
Total investment income ................................... 18,858,272
------------
EXPENSES:
Interest and fees on loans ...................................... 2,927,690
Investment advisory fees ........................................ 2,319,749
Administrative fees ............................................. 203,574
Custodian fees .................................................. 164,796
Printing fees ................................................... 35,413
Legal fees ...................................................... 33,409
Audit and tax fees .............................................. 20,728
Trustees' fees and expenses ..................................... 19,996
Transfer agent fees ............................................. 19,856
Other ........................................................... 108,076
------------
Total expenses ............................................ 5,853,287
------------
NET INVESTMENT INCOME ........................................... 13,004,985
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments .................................................. (4,965,847)
Forward foreign currency contracts ........................... 144,600
Foreign currency transactions ................................ (772,419)
------------
Net realized gain (loss) ........................................ (5,593,666)
------------
Net change in unrealized appreciation (depreciation) on:
Investments .................................................. 421,966
Forward foreign currency contracts ........................... 372,475
Foreign currency translation ................................. (1,506,611)
------------
Net change in unrealized appreciation (depreciation) ............ (712,170)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ......................... (6,305,836)
------------
NET INCREASE (DECREASE) IN NETASSETS RESULTING FROM OPERATIONS .. $ 6,699,149
============
See Notes to Financial Statements
Page 14
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
06/30/2008 ENDED
(UNAUDITED) 12/31/2007
------------- ------------
OPERATIONS:
Net investment income (loss) .......... $ 13,004,985 $ 23,356,876
Net realized gain (loss) .............. (5,593,666) (4,594,568)
Net change in unrealized appreciation
(depreciation) ..................... (712,170) 1,637,034
------------- ------------
Net increase (decrease) in net assets
resulting from operations .......... 6,699,149 20,399,342
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................. (13,544,884) (13,634,190)
Net realized gain ..................... -- (9,634,049)
Return of capital ..................... -- (6,252,662)
------------- ------------
Total distributions to shareholders ... (13,544,884) (29,520,901)
------------- ------------
Total increase (decrease) in net
assets ............................. (6,845,735) (9,121,559)
NET ASSETS:
Beginning of period ................... 322,016,114 331,137,673
------------- ------------
End of period ......................... $ 315,170,379 $322,016,114
============= ============
Accumulated net investment income
(loss) at end of period ............ $ (22,058,880) $(21,518,981)
============= ============
See Notes to Financial Statements
Page 15
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting
from operations .................... $ 6,699,149
Adjustments to reconcile net increase
(decrease) in net assets resulting
from operations to net cash provided
by operating activities:
Purchases of investments ........... (180,145,559)
Sales and maturities of
investments ..................... 170,709,420
Net amortization/accretion of
premium/discount on
investments ..................... (420,834)
Net realized gain/loss on
investments ..................... 4,965,847
Net change in unrealized
appreciation/depreciation on
investments ..................... (421,966)
CHANGES IN ASSETS AND LIABILITIES:
Decrease in net unrealized
appreciation/depreciation on
forward foreign currency
contracts ....................... (372,475)
Decrease in dividends receivable ... 18,011
Decrease in interest receivable .... 1,480,871
Decrease in prepaid expenses ....... 35,921
Increase in receivable for
investment securities sold ...... (2,882,301)
Increase in payable for investment
securities purchased ............ 3,450,018
Increase in interest and fees due on
loans payable ................... 378,738
Decrease in investment advisory fees
payable ......................... (17,719)
Decrease in audit and tax fees
payable ......................... (25,523)
Increase in legal fees payable ..... 3,311
Decrease in printing fees payable .. (27,212)
Decrease in transfer agent fees
payable ......................... (1,901)
Decrease in administrative fees
payable ......................... (3,432)
Increase in custodian fees
payable ......................... 13,830
Increase in Trustees'fees and
expenses payable ................ 31
Decrease in accrued expenses and
other liabilities ............... (2,694)
-------------
CASH PROVIDED BY OPERATING
ACTIVITIES ......................... $ 3,433,531
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Common
Shareholders .................... (13,544,884)
Issuances of loans ................. 166,392,066
Repayments of loans ................ (164,624,000)
-------------
CASH USED BY FINANCING ACTIVITIES ..... (11,776,818)
------------
Decrease in cash and foreign
currency (a) ....................... (8,343,287)
Cash and foreign currency at beginning
of period .......................... 16,578,729
------------
Cash and foreign currency at end of
period ............................. $ 8,235,442
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for
interest and fees .................. $ 2,548,952
============
----------
(a) Includes net change in unrealized appreciation (depreciation) on foreign
currency of $21,057.
See Notes to Financial Statements
Page 16
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR PERIOD
06/30/2008 ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/2007 12/31/2006 12/31/2005 12/31/2004(a)
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period .......... $ 18.54 $ 19.07 $ 19.24 $ 19.34 $ 19.10(b)
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................. 0.75 1.34 1.38 1.34 0.05
Net realized and unrealized gain (loss) ....... (0.36) (0.17) 0.48 (0.14) 0.23
-------- -------- -------- -------- --------
Total from investment operations .............. 0.39 1.17 1.86 1.20 0.28
-------- -------- -------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income ......................... (0.78) (0.79) (1.31) (1.25) --
Net realized gain ............................. -- (0.55) (0.47) (0.05) --
Return of capital ............................. -- (0.36) (0.25) -- --
-------- -------- -------- -------- --------
Total distributions ........................... (0.78) (1.70) (2.03) (1.30) --
-------- -------- -------- -------- --------
Common Shares offering costs charged to
paid-in capital ............................ -- -- -- (0.00)(c) (0.04)
-------- -------- -------- -------- --------
Net asset value, end of period ................ $ 18.15 $ 18.54 $ 19.07 $ 19.24 $ 19.34
======== ======== ======== ======== ========
Market value, end of period ................... $ 16.32 $ 16.54 $ 19.15 $ 16.80 $ 19.45
======== ======== ======== ======== ========
TOTAL RETURN BASED ON NET ASSET
VALUE (d) (e) .............................. 2.62% 6.92% 10.72% 6.94% 1.26%
======== ======== ======== ======== ========
TOTAL RETURN BASED ON MARKET VALUE (e) (f) .... 3.43% (5.01)% 27.33% (7.15)% (2.75)%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $315,170 $322,016 $331,138 $334,096 $332,764
Ratio of total expenses to average net
assets ..................................... 3.67%(g) 4.45% 4.04% 3.37% 1.44%(g)
Ratio of total expenses to average net assets
excluding interest expense ................. 1.83%(g) 1.82% 1.79% 1.80% 1.44%(g)
Ratio of net investment income to average net
assets ..................................... 8.15%(g) 7.10% 7.19% 7.03% 2.47%(g)
Portfolio turnover rate ....................... 38% 97% 99% 75% 0%
INDEBTEDNESS:
Loan outstanding (in 000's) ................... $146,392 $144,624 $152,482 $145,724 N/A
Asset coverage per $1,000 of
indebtedness (h) ........................... $ 3,153 $ 3,227 $ 3,172 $ 3,293 N/A
----------
(a) Initial seed date of November 16, 2004. The Fund commenced operations on
November 23, 2004.
(b) Net sales load of $0.90 per Common Share on initial offering.
(c) Amount represents less than $0.01 per share.
(d) Total return based on net asset value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan, and changes in net
asset value per share and does not reflect sales load.
(e) Total return is not annualized for periods less than one year.
(f) Total return based on market value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan, and changes in Common
Share price.
(g) Annualized.
(h) Calculated by taking the Fund's total assets less the Fund's total
liabilities (not including the loan outstanding), and dividing by the
outstanding loan balance in 000's.
N/A Not applicable.
See Notes to Financial Statements
Page 17
NOTES TO FINANCIAL STATEMENTS
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2008 (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 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.
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, First Trust Advisors L.P. ("First Trust") may
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.
In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 157, Fair Value Measurements
("FAS 157"), effective for fiscal years beginning after November 15, 2007. This
standard clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value and requires additional
disclosures about the use of fair value measurements. FAS 157 became effective
for the Fund as of January 1, 2008, the beginning of its current fiscal year.
The three levels of the fair value hierarchy under FAS 157 are described below:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds,
credit risk, etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
Page 18
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2008 (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 net assets as of June 30, 2008 is as
follows:
INVESTMENTS OTHER FINANCIAL
VALUATION INPUTS IN SECURITIES INSTRUMENTS (a)
---------------- ------------- ---------------
Level 1 - Quoted Prices - Investments .......... $ -- $(1,331,827)
Level 2 - Other Significant Observable Inputs .. 444,750,078 --
Level 3 - Significant Unobservable Inputs ...... -- --
------------ -----------
TOTAL .......................................... $444,750,078 $(1,331,827)
============ ===========
(a) Other financial instruments are forward foreign currency contracts not
reflected in the Portfolio of Investments, which are valued at the
unrealized appreciation (depreciation) on the contracts.
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.
Dividend income is recorded on the ex-dividend date. 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, 2008, the Fund had no
when-issued or delayed-delivery purchase commitments.
C. CREDIT LINKED NOTES:
The Fund invests 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:
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.
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 may exceed the net unrealized value shown on the Schedule of
Forward Foreign Currency Contracts.
Page 19
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2008 (UNAUDITED)
E. FOREIGN CURRENCY:
The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period.
Purchases and sales of investment securities and items of income and expense are
translated on the respective dates of such transactions. Unrealized gains and
losses 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. 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. If the Fund recognizes a long-term capital gain, it
will be required to allocate such gain between the Common Shares and Preferred
Shares, if any, issued by the Fund in proportion to the total dividends paid for
the year. 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 ultimate determination
of the character of distributions will be made after the 2008 calendar year-end.
The tax character of distributions paid during the fiscal year ended December
31, 2007 was as follows:
Distributions paid from:
Ordinary Income ................................ $18,049,443
Long-Term Capital Gains ........................ 5,178,796
Return of Capital .............................. 6,252,662
As of December 31, 2007, the components of distributable earnings on a tax basis
were as follows:
Accumulated Capital and Other Losses ........... $ 3,947,604
Net Unrealized Appreciation (Depreciation) ..... $ 5,586,359
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, 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.
In June 2006, FASB issued Interpretation No. 48 ("FIN 48"), "Accounting for
Uncertainty in Income Taxes." FIN 48 establishes the minimum threshold for
recognizing, and a system for measuring, the benefits of tax-return positions in
financial statements, effective for the Fund's current fiscal year. Management
has analyzed the Fund's tax positions taken on federal income tax returns for
all open tax years (tax years ended December 31, 2004-2007) for purposes of
implementing FIN 48, and has concluded that no provision for income tax is
required in the Fund's financial statements.
Post-October Losses: Under current laws, certain 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, 2007, the Fund elected to
defer net realized foreign currency losses incurred from November 1, 2007
through December 31, 2007 of $3,947,604.
H. EXPENSES:
The Fund pays all expenses directly related to its operations.
Page 20
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2008 (UNAUDITED)
I.ACCOUNTING PRONOUNCEMENT:
In March 2008, FASB released Statement of Financial Accounting Standards No.
161, "Disclosures about Derivative Instruments and Hedging Activities" ("FAS
161"). FAS 161 requires qualitative disclosures about objectives and strategies
for using derivatives, quantitative disclosures about fair value amounts of and
gains and losses on derivative instruments, and disclosures about credit
risk-related contingent features in derivative agreements. The application of
FAS 161 is required for fiscal years beginning after November 15, 2008 and
interim periods within those fiscal years. Management is currently evaluating
the impact the adoption of FAS 161 will have on the Fund's financial statement
disclosures, if any.
3. INVESTMENT ADVISORY FEE AND OTHER AFFILIATED TRANSACTIONS
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, the average daily gross asset value of
the Fund (which includes the principal amount of borrowings, minus accrued
liabilities).
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 known as PFPC Inc., an
indirect, majority-owned subsidiary of The PNC Financial Services Group, Inc.,
serves as the Fund's Administrator, Fund Accountant, Transfer Agent and Board
Administrator in accordance with certain fee arrangements. PFPC Trust Company,
also an indirect, majority-owned subsidiary of The PNC Financial Services Group,
Inc., serves as the Fund's Custodian in accordance with certain fee
arrangements.
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 added to 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 and the
Chairman of the Audit Committee is paid $5,000 annually, 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.
Effective January 1, 2008, each of the chairmen of the Nominating and Governance
Committee and the Valuation Committee is 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. Also effective January 1, 2008, the Lead
Independent Trustee and each Committee chairman will serve two-year terms.
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, 2008, were $180,145,559 and $170,709,420, respectively.
As of June 30, 2008, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $33,281,095
and the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $7,356,811.
5. COMMON SHARES
As of June 30, 2008, 17,365,236 of $0.01 par value Common Shares were issued and
outstanding. An unlimited number of Common Shares has been authorized for the
Fund's Dividend Reinvestment Plan.
6. PREFERRED SHARES OF BENEFICIAL INTEREST
The Fund's Declaration of Trust authorizes the issuance of an unlimited number
of preferred shares of beneficial interest, par value $0.01 per share (the
"Preferred Shares"), in one or more classes or series, with rights as determined
by the Board of Trustees without the approval of Common Shareholders. As of June
30, 2008, no Preferred Shares had been issued.
Page 21
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2008 (UNAUDITED)
7. REVOLVING LOAN AGREEMENT
The Fund has entered into a revolving loan agreement among the Fund and certain
lenders, which provides for a credit facility to be used as leverage for the
Fund. The 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
$165,000,000. For the six months ended June 30, 2008, the average amount
outstanding was $145,801,800. The high and low annual interest rates during the
six months ended June 30, 2008, were 5.69% and 3.03%, respectively, and the
weighted average interest rate was 3.93%. The weighted average interest rate at
June 30, 2008 was 3.43%. As of January 9, 2008, the Fund also pays a commitment
fee of 0.10% per year, which is included in "Interest and fees on loans" on the
Statement of Operations. The revolving loan agreement expires on January 7,
2009. Prior to January 9, 2008, the Fund had in place a revolving loan agreement
with a commitment fee of 0.325% per year and a total commitment of up to
$165,000,000.
8. 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.
9.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.
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.
Page 22
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2008 (UNAUDITED)
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.
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.
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, or obtained through the issuance of Preferred Shares, 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 and the holders of Preferred 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 Preferred Shares or purchase
Common Shares or Preferred Shares.
10. SUBSEQUENT EVENTS
On July 21, 2008, the Fund declared a dividend of $0.13 per share to Common
Shareholders of record on August 5, 2008, payable on August 15, 2008.
On August 20, 2008, the Fund declared a dividend of $0.13 per share to Common
Shareholders of record on September 4, 2008, payable on September 15, 2008.
Page 23
ADDITIONAL INFORMATION
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2008 (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 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 PNC Global Investment
Servicing (U.S.) 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, 2008 (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 Specialty Finance
and Financial Opportunities Fund (formerly known as First Trust/Gallatin
Specialty Finance and Financial Opportunities Fund) and First Trust Active
Dividend Income Fund and Shareholders of the Preferred Shares of First Trust
Tax-Advantaged Preferred Income Fund, was held on April 14, 2008. At the Annual
Meeting, Trustee Robert F. Keith was elected for a three-year term. The number
of votes cast in favor of Mr. Keith was 12,846,400, the number of votes against
was 829,234 and the number of abstentions was 3,689,602. James A. Bowen, Richard
E. Erickson, Thomas R. Kadlec and Niel B. Nielson are the current and continuing
Trustees.
ADVISORY AND SUB-ADVISORY AGREEMENTS
BOARD CONSIDERATION 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
3, 2008. 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 by investment advisors and sub-advisors to comparable funds and as
compared to fees charged to other clients of the Advisor and the Sub-Advisor;
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.
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. 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 meets the Fund's investment
objectives. In light of the information presented and the considerations made,
the Board 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 has managed the
Fund consistent with its investment objectives and policies.
Page 25
ADDITIONAL INFORMATION - (CONTINUED)
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
JUNE 30, 2008 (UNAUDITED)
The Board considered the advisory and sub-advisory fees paid under the
Agreements. The Board reviewed 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 one peer group selected
by Lipper and a second peer group selected by the Advisor. The Board discussed
with representatives of the Advisor the differences between the two peer groups,
noting that the Lipper peer group contained only two peer funds, and also
discussed the limitations in creating a relevant peer group for the Fund given
the Fund's unique composition. The Board also considered the difficulties in
comparing funds using different types of leverage. Based on the information
provided, the Board noted that the Fund's management fees were the highest in
the Lipper peer group (of three funds) and in the fourth quintile of the Advisor
peer group and that the Fund's expense ratio was the second highest in the
Lipper peer group and in the fifth quintile of the Advisor peer group. The Board
also considered the sub-advisory fee rate and how it related to the overall
management fee structure of the Fund and noted that the Advisor pays the
Sub-Advisor out of the advisory fees it receives from the Fund. Finally, the
Board considered the advisory fees paid to the Advisor by similar funds, 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. The Board also considered information provided by the
Sub-Advisor as to the fees it charges to other clients.
The Board also considered the Fund's performance for the one- and two-year
periods, as applicable, ended September 30, 2007 as compared to the performance
of a relevant blend of benchmark indices and to a performance group selected by
Lipper. The Board considered the difficulty in creating a relevant performance
group for the Fund given its unique strategy and asset mix. The Board noted that
the Fund's performance was the best in the performance group for both periods,
and that the Fund had slightly underperformed its benchmark for the one-year
period. The Board also considered performance data provided by the Advisor for
the one-year and since-inception periods ended December 31, 2007, and considered
an analysis prepared by the Advisor on 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 Lipper peer
group, noting that the Fund's premium/discount was generally indicative of the
asset class and market events. The Board concluded that the Fund's performance
was satisfactory.
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 had noted that the advisory fee is not structured to pass the
benefits of any economies of scale on to the shareholders as the Fund's assets
grow. The Board concluded that the management fee reflects an appropriate level
of sharing of any economies of scale. The Board also considered the costs of the
services provided and profits realized by the Advisor from serving as investment
manager to closed-end funds for the twelve months ended December 31, 2007, 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 attenuated.
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
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This Page Left Blank Intentionally.
(FIRST TRUST LOGO)
INVESTMENT ADVISOR
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, IL 60532
INVESTMENT SUB-ADVISOR
Aberdeen Asset Management Inc.
1735 Market Street
Philadelphia, PA 19103
ADMINISTRATOR,
FUND ACCOUNTANT,
TRANSFER AGENT &
BOARD ADMINISTRATOR
PNC Global Investment Servicing (U.S.) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
PFPC Trust Company
8800 Tinicum Boulevard
Philadelphia, PA 19153
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) Identification of additional Portfolio Manager or Management Team Member and
Description of Role of Portfolio Managers or Management Team Members as of
June 30, 2008.
Since the Registrant's most recent annual report filed on Form N-CSR, at which
time the Portfolio Management Team consisted of Derek Fulton, Brett Diment,
Edwin Gutierrez, Nima Tayebi and Max Wolman, John Murphy has been added to the
Portfolio Management Team and Derek Fulton has been removed from the Portfolio
Management Team.
Mr. Murphy serves as a Portfolio Manager on the Global Bond Team and joined
Aberdeen with the acquisition of Deutsche Asset Management's fixed income
business in 2005. Mr. Murphy held a similar role at Deutsche Asset Management,
and previously at Morgan Grenfell Asset Management, which he joined in 1984.
OTHER ACCOUNTS MANAGED BY ADDITIONAL PORTFOLIO MANAGEMENT TEAM MEMBER AS OF JUNE
30, 2008.
# of Accounts Total Assets
Managed for which for which
Total # of Advisory Fee is Advisory Fee is
Name of Portfolio Manager Accounts Total Based on Based on
or TEAM MEMBER TYPE OF ACCOUNTS MANAGED ASSETS PERFORMANCE PERFORMANCE
----------- ---------------- ------- ------ ----------- -----------
John Murphy Registered Investment Companies: 2 $614.0 0 $0
Other Pooled Investment Vehicles: 3 $904.3 0 $0
Other Accounts: 7 $1,838.4 0 $0
POTENTIAL CONFLICTS OF INTERESTS
The Sub-Adviser believes that there are no material conflicts of
interest in connection with any Portfolio Manager's management of Fund
investments and investments of other accounts. The Sub-Adviser has adopted the
CFA Institute Code of Ethics and Standards of Professional Conduct and adherence
by all employees is mandatory. All employees are expected to avoid any
employment, associations or business activities, including personal investments,
that interfere with their duties to Aberdeen, divide their loyalty or create or
appear to create a conflict of interest. Employees must promptly report any
situation or transaction involving an actual or potential conflict of interest
to the Compliance Officer.
With regards to allocation, the Sub-Adviser has adopted Best Execution,
Soft Dollar, Order Aggregation, and Trade Allocation Policies & Procedures
designed among other things to ensure fair treatment of all accounts.
Aberdeen Asset Management Inc. aggregates orders so as to realize the
benefits of larger block orders. When executing aggregated orders, it seeks to
allocate opportunities to all clients in a consistent manner. Most portfolios
are managed to a model based on common attributes to a benchmark with low
dispersion between accounts and benchmarks. This is accomplished through the
calculation of a 'median account' with this median account becoming the model
portfolio. Certain situations such as new portfolio fundings, unique guideline
restrictions and the fundability of certain security types may cause us to
adjust our weightings. However over time, we expect to minimize the dispersion
of account holdings around the model portfolio.
NEW ISSUE ALLOCATION
Aberdeen Asset Management Inc. seeks to allocate new issue opportunities
to all clients in a consistent manner.
New issue opportunities are allocated according to the following factors:
1. All portfolios are ranked based on their account composition versus
their benchmark. The portfolio management team will set a minimum acceptable
position size (in terms of percent of market value) for the security.
2. Next, we define the target percentage for our LAB portfolios,
depending on the characteristics of the security or the percentage of the
account based on that securities' contribution to duration and the current
composition of each account.
3. For portfolios with a benchmark other than LAB, we may adjust the
target allocation to reflect the characteristics of the non-LAB benchmark.
4. We then determine our desired total par value and give our
indication of interest.
5. If our order is completely filled, we will allocate according to the
steps outlined above. If we are allotted a significant percentage of our order
(typically 70% or more), we will allocate pro-rata based on the initial
allocation developed from the steps outlined above. If we are not allotted a
significant percentage of our order, we will remove the non-LAB benchmark
adjustments and allocate pro-rata based on market value of participating
accounts. If this continues to result in accounts receiving less than the
minimum target position size, the least deserving accounts (defined as those
accounts that are closest to the model account) will be eliminated from the
allocation.
BATCH TRANSACTION AND ALLOCATION POLICY - EQUITY
Where practicable, all client portfolio orders for the same security
should be combined or "batched" and executed as block transactions in order to
facilitate best execution as well as for the purpose of negotiating more
favorable brokerage commissions. Where a block trade is executed for a number of
client accounts, the average execution price on all of the purchases and sales
that are aggregated to this purpose should be used for all accounts.
If an entire block is not fully executed on the same day, an allocation
method should be administered that is fair and reasonable to all clients. If it
is not practicable to allocate the executed portion of the block on a pro rata
basis, allocation may be done on a random account basis (alphabetically,
numerically, or otherwise), but any procedure administered should not operate to
consistently favor or disfavor the same client accounts. If any method is to be
used other than a pro rata method, the manner in which the shares are to be
allocated should be documented, disclosed and signed off by the Chief Compliance
Officer.
COMPENSATION STRUCTURE OF PORTFOLIO MANAGERS OR MANAGEMENT TEAM MEMBERS
Each Aberdeen Group member recognizes the importance of compensation in
attracting and retaining talent and has structured remuneration to include an
attractive base salary, a discretionary bonus that is directly linked to one's
contribution to the overall success of the Aberdeen Group member and a long term
incentive plan for key staff members comprised of a mixture of cash, options,
and shares. Overall compensation packages are designed to be competitive
relative to investment management industry standards.
The compensation policy has been designed to deliver additional rewards
through appropriate incentive schemes, both annual and long term. These are
directly linked to performance at both a corporate and an individual level. The
policy seeks to reward performance in a manner which aligns the interests of
clients, shareholders and executives.
Each Aberdeen Group member recognizes that any remuneration policy must
be sufficiently flexible to take account of any changes in the business
environment. In accordance with this need for flexibility, the Aberdeen Group
takes into account the overall competitiveness of the total remuneration package
of all senior executives including some portfolio managers. When justified by
performance, the `at risk' performance elements will form the most significant
element of total remuneration for executive directors and senior employees.
BASE SALARY
The base salary is determined by prevailing market conditions and the
compensation for similar positions across the industry. The Aberdeen Group uses
industry compensation surveys as a tool in determining each portfolio manager's
base salary.
ANNUAL BONUS
The Aberdeen Group's policy is to recognize corporate and individual
achievements each year through an appropriate bonus scheme. The aggregate
incentive compensation pool each year is determined by the Board of the parent
company, Aberdeen, and is dependent on each member of the Aberdeen Group's
overall performance and profitability. The pool is comprised of a base level
plus an agreed proportion of each member of the Aberdeen Group's profitability.
Staff performance is reviewed formally once a year, with mid-term
reviews. The review process looks at all of the ways in which an individual has
contributed to the Aberdeen Group, and specifically, in the case of portfolio
managers, to the investment team. Discretionary bonuses are based on a
combination of both the team and the individual's performance. Overall
participation in team meetings, generation of original research ideas and
contribution to presenting the team externally are also evaluated. Discretionary
bonuses are not formally laid down and generally range from 10% to 50% of annual
salary for portfolio managers.
In the calculation of a portfolio manager's bonus, the Aberdeen Group
takes into consideration investment matters (which include the performance of
funds, adherence to the company investment process, and quality of company
meetings) as well as more subjective issues such as team participation and
effectiveness at client presentations. The split between the two will vary but
generally around 80% of bonus will be determined by investment related matters,
the remaining 20% by more subjective issues. Performance for each fund is judged
against the benchmark as established in the prospectus. Portfolio manager
performance on investment matters is judged over all of the accounts the
portfolio manager contributes to and is documented in the appraisal process. A
combination of the team's and individual's performance is considered.
Although performance is not a substantial portion of a portfolio
managers compensation, the Aberdeen Group also recognizes that fund performance
can often be driven by factors outside one's control, such as (irrational)
markets, and as such pays attention to the effort by portfolio managers to
ensure integrity of our core process by sticking to disciplines and processes
set, regardless of momentum and `hot' themes. Short-terming is thus discouraged
and trading-oriented managers will thus find it difficult to thrive in the
Aberdeen Group member's environment. Additionally, if any of the aforementioned
undue risks were to be taken by a portfolio manager, not only would the
portfolio manager be in breach of the Aberdeen Group Code of Ethics, but any
such trend would be identified via its dynamic compliance monitoring system.
LONG TERM INCENTIVES
As part of the effective remuneration package, a long term incentive
plan is used to structure the package so as to retain, motivate, and reward key
staff members with a view to improving performance and thereby increasing the
value of the Aberdeen Group for the benefit of shareholders. Long-term incentive
plans can be either cash or share based and typically vest over a three year
period.
The Aberdeen Group offers a meritocracy and a very flat management
structure. The culture of the company is entrepreneurial, and enthusiastic,
hard-working and talented employees are given plenty of opportunity to prove
themselves and obtain a high level of job satisfaction.
The Aberdeen Group does not "tie in" portfolio managers with long-term
and restrictive contractual obligations, however. The Aberdeen Group aims to
retain key individuals primarily through the provision of competitive
compensation and other benefits. It is the policy of the Aberdeen Group to
mitigate the effects of any individual leaving the company by ensuring that
portfolios are managed on a team basis.
DISCLOSURE OF SECURITIES OWNERSHIP
Information provided as of June 30, 2008
Dollar Range of Fund
Name Shares Beneficially Owned
John Murphy $ 0
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date AUGUST 20, 2008
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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 20, 2008
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By (Signature and Title)* /S/ MARK R. BRADLEY
-------------------------------------------------------
Mark R. Bradley, Treasurer, Controller,
Chief Financial Officer and Chief Accounting Officer
(principal financial officer)
Date AUGUST 20, 2008
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* Print the name and title of each signing officer under his or her signature.