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: December 31, 2006
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.
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FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY
INCOME FUND
ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2006
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[LOGO OMITTED]
FIRST TRUST
ADVISORS L.P.
[LOGO OMITTED]
ABERDEEN
ASSET MANAGEMENT
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TABLE OF CONTENTS
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FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
DECEMBER 31, 2006
Shareholder Letter ....................................................... 1
Portfolio Commentary ..................................................... 2
Portfolio Components ..................................................... 5
Portfolio of Investments ................................................. 6
Schedule of Forward Foreign Currency Contracts ........................... 11
Statement of Assets and Liabilities ...................................... 12
Statement of Operations .................................................. 13
Statements of Changes in Net Assets ...................................... 14
Statement of Cash Flows .................................................. 15
Financial Highlights ..................................................... 16
Notes to Financial Statements ............................................ 17
Report of Independent Registered Public Accounting Firm .................. 22
Additional Information ................................................... 23
Dividend Reinvestment Plan
Proxy Voting Policies and Procedures
Portfolio Holdings
NYSE Certification Information
Tax Information
By-Law Amendments
Change in Policy
Board of Trustees and Officers ........................................... 25
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933. Forward-looking statements
include statements regarding the goals, beliefs, plans or current expectations
of First Trust Advisors L.P. (the "Advisor") and/or Aberdeen Asset Management
Inc. (the "Sub-Advisor") and their respective representatives, taking into
account the information currently available to them. Forward-looking statements
include all statements that do not relate solely to current or historical fact.
For example, forward-looking statements include the use of words such as
"anticipate," "estimate," "intend," "expect," "believe," "plan," "may,"
"should," "would" or other words that convey uncertainty of future events or
outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the First Trust/Aberdeen Global Opportunity Income Fund (the "Fund") to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. When evaluating the
information included in this Annual Report, you are cautioned not to place undue
reliance on these forward-looking statements, which reflect the judgment of the
Advisor and 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.
HOW TO READ THIS REPORT
This report contains information that can 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 letter from the Fund's President, James A. Bowen, together with
the portfolio commentary by Brett Diment and Derek Fulton, Co-Portfolio Managers
of the Sub-Advisor, you may obtain an understanding of how the market
environment affected the Fund's performance. The statistical information that
follows can help you understand the Fund's performance.
It is important to keep in mind that the opinions expressed by Mr. Bowen and
personnel of the Sub-Advisor 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. Of course, the risks of
investing in the Fund are spelled out in the prospectus.
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SHAREHOLDER LETTER
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FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND (FAM)
ANNUAL REPORT
DECEMBER 31, 2006
Dear Shareholders:
We are pleased to present to you the annual report of the First Trust/Aberdeen
Global Opportunity Income Fund (the "Fund"). Over the 12 months ended December
31, 2006, both net asset value and market value total returns showed significant
increases. A complete overview of the portfolio returns and composition of the
Fund's portfolio are presented in this annual report for the fiscal year ended
December 31, 2006.
Generally, the global bond markets performed well over the period, which
contributed positively to the performance of the Fund. The Fund benefited from
the strong performance of emerging markets and high-yield bond markets. As you
know, the Fund's primary objective is to seek a high level of current income
and, as a secondary objective, capital appreciation. The Fund will pursue these
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.
I encourage you to read the portfolio commentary from the portfolio management
team at Aberdeen Asset Management Inc., the Fund's sub-advisor, which can be
found on the following pages. It includes more detailed information about the
Fund's performance and the portfolio managers' market outlook.
First Trust serves as investment advisor or portfolio supervisor to investment
portfolios with approximately $28 billion in assets which it managed or
supervised as of December 31, 2006. We value our relationship with our investors
and appreciate the opportunity to assist you in achieving your financial goals.
Sincerely,
/s/ James A. Bowen
James A. Bowen
President of the First Trust/Aberdeen Global Opportunity Income Fund
February 21, 2007
Page 1
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PORTFOLIO COMMENTARY
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PORTFOLIO MANAGEMENT TEAM
Investment decisions for the First Trust/Aberdeen Global Opportunity Income Fund
(the "Fund") are typically made by Aberdeen Asset Management Inc. ("Aberdeen" or
the "Sub-Advisor") 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
companies in which Aberdeen invests. Included below is additional information
about the members of the team with significant responsibility for the day-to-day
management of the Fund's portfolio.
FIXED-INCOME FUND MANAGER BIOGRAPHIES
DEREK FULTON
Head of Global and Asian Bonds
Mr. Fulton joined Murray Johnstone in 1996 as a graduate trainee in
Fixed-Income. In 1998, he qualified as an Associate of the Institute of
Investment Management & Research. Mr. Fulton has since become a senior member of
the fixed-income team with Aberdeen and is responsible for the day-to-day
management of global fixed-income and government portfolios. He is a member of
the Aberdeen's global economics team.
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.
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 9 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.
PERFORMANCE OVERVIEW
The Fund performed strongly on a net asset value basis with a total return of
10.7% for the year ended December 31, 2006. This compares to 9.1% for the Fund's
blended benchmark* total return over the same period. In addition to this
blended benchmark the Fund is currently using for comparative purposes, in the
past, the Fund has used other comparative indexes. The total returns over the 12
months ended December 31, 2006 for these indexes were as follows: the Lehman
Global Emerging Markets Index was up 11.1%; and the Lehman Global Aggregate
Index was up 6.6%. Positive contributions to performance came from both
developed market and emerging market fixed-income investments. Emerging market
debt had a bout of weakness from May to July 2006 as investors exhibited a brief
period of risk averse sentiment. These markets improved over the final five
months of the year as investors continued to search for investments supporting
attractive yields.
-------------------
* The Fund's blended benchmark consists of the following: 40% Citigroup World
Government Bond Index; 30% JPMorgan Emerging Markets Bonds Index; and 30%
JPMorgan Emerging Local Markets Index Plus.
Page 2
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PORTFOLIO COMMENTARY - (CONTINUED)
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After struggling at the end of 2005, market price total return for the Fund was
very strong at 27.3% for the year ended December 31, 2006. The Fund's market
price climbed steadily through April before pulling back during the correction
in emerging markets. As these markets recovered, the Fund experienced reasonably
steady market price appreciation into December. The monthly distribution rate
was consistent throughout the year at $0.13 per share for a total of $1.56 per
share for the year. The Fund also paid a special distribution of $0.47 per share
representing realized gains in December, resulting in total distributions for
2006 amounting to $2.03 per share.
REVIEW
The two major themes that influenced the fixed income markets in 2006 were the
Federal Reserve pause in its series of interest rate increases and the sharp
fall in energy and some industrial commodity prices in the second half of the
year. The combined effect of the two events led to a sharp fall in U.S.
government bond yields in the third quarter. This led to sustained rallies in
equities, emerging markets and high-yield corporate bonds.
As a result, most investment grade bond markets in which the Fund invests posted
small positive returns for the year as a whole, underperforming U.S. Treasuries
as central banks in Australia, New Zealand and the United Kingdom ("UK")
maintained a more hawkish stance toward inflation risks in the absence of U.S.
style fears over the economic effects of oversupply and falling prices in the
new homes sector. The widening of yield spreads in favor of non-U.S.
investment-grade markets and the continued tightening of interest rate policy
resulted in the U.S. Dollar falling against most major currencies except the
Canadian Dollar and the Japanese Yen in the second half of the year.
European economies continued to grow and Germany in particular began to show
signs that years of restructuring and wage restraint were bearing fruit as
exports boomed and domestic spending showed signs of picking up on the back of
stronger employment growth. Strong credit growth was cited by the European
central bank as a key factor in its decision to increase its key lending rate
from 2.2% to 3.5%.
The UK benefited from this better than expected growth in Europe and very strong
financial markets. The Pound gained across the board as central banks
diversified their reserves and private equity funds acquired UK assets. The Bank
of England surprised markets with two increases in the base lending rate in the
second half of the year, taking it to 5%, as signs of potential rising inflation
pressures became apparent. UK gilt yields rose substantially back above 5% in
the fourth quarter for the first time in six years.
Peripheral Dollar block markets had sharply divergent trends in 2006. The
slowdown in U.S. housing and auto manufacturing, coupled with the sharp fall in
oil prices, supported lower bond yields in Canada and led to some weakness in
the Canadian Dollar after four years of strong appreciation. In contrast,
Australia continued to see strong growth in employment and incomes in 2006 as
the resource boom in that market continued to be supported by Asian, in
particular Chinese, demand. The Reserve Bank of England reacted strongly to pro
cyclical tax cuts by the government and increased the policy rate three times to
6.25%, the highest level since 2000. Bond yields rose to a similar level and the
Australian Dollar flirted with the 80 cents level in the fourth quarter. In New
Zealand, the expected interest rate cuts failed to materialize as strong
property markets and stubbornly high inflation caused the central bank to
maintain policy rates at 7.25%. Fears that the current account deficit would
lead to continued cu rrency weakness proved misplaced as it posted a very strong
second half performance, resulting in the biggest developed market increase
versus the U.S. Dollar.
Emerging debt markets performed well over the year in review, with many
sovereign spreads tightening to near all-time tight levels and continued robust
performance in many domestic fixed-income markets. We maintained a generally
long-biased portfolio, with the Fund's holdings of Argentine external debt and
Brazilian domestic debt performing particularly well during the period in
review. We also invested selectively in emerging corporate debt securities to
take advantage of higher yields in comparison with sovereign securities. In
these cases, we have confined the Fund's exposure to well-performing companies
with robust balance sheets, and maintained modest position sizes to ensure
adequate market liquidity.
The strong performance of emerging markets over the period was driven by a
continuation of prudent macroeconomic policies within the major emerging
economies and a generally supportive external background. We have long
identified the prospect of a sharp rise in interest rates across developed
markets, notably the U.S., as a potential source of concern for the asset class.
Accordingly, the one significant period of prolonged market weakness occurred in
May-June, when a combination of elevated U.S. Treasury yields, weakness in
global equity markets and rising risk aversion created a sharp, yet transient,
market correction. However, spreads began to tighten again from late June as
favorable country fundamentals began to reassert themselves as the primary
market focus, supported by robust global economic growth and buoyant commodity
prices, which help the terms of trade for many commodity exporting emerging
economies.
The Fund maintained a core holding in Brazil external debt and domestic
Real-denominated bonds. Brazil remains supported by a current account surplus, a
healthy primary fiscal surplus and a declining inflation profile. In turn, the
latter has enabled the Central Bank to continue its interest rate cutting cycle,
improving the longer-term debt outlook. Presidential elections in October proved
a relative non-event, with the incumbent Lula da Silva comfortably securing a
second presidential term. Elsewhere in the region, the Fund initially held long
positions and subsequently took profit on external debt in Venezuela and
Ecuador, reflecting the initially high and subsequently declining oil prices
during the reporting period.
Page 3
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PORTFOLIO COMMENTARY - (CONTINUED)
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The Fund's core position in Argentina remains in place and we have added to the
Fund's holdings of external debt. Robust economic growth together with a modest
debt profile continues to support the near-term outlook for external debt. Over
a longer horizon, concerns do remain over some of the interventionist economic
policies implemented by the Kirchner administration, such as the imposition of
price controls to subdue inflation and the adoption of a heavily-managed
exchange rate policy.
In Mexico, the Fund's primary exposure remains in Peso-denominated Mbono
government bonds. Interest rates fell by over 100 basis points to around 7.9% at
the longer-end of the Mbono curve through the course of the year, though the
market still offers some value with real interest rates close to 4.5%. Politics
was the major source of concern for the market this year, with yields starting
to rise in March as investors became concerned over the prospect of populist
candidate Lopez Obrador winning in July's presidential elections. We used this
weakness as an opportunity to add to the Fund's position, and the market has
rallied since as the market-friendly candidate Felipe Calderon ultimately
prevailed in the elections, despite allegations of electoral fraud by Lopez
Obrador.
We retained a favorable outlook for Russian corporate debt and added
higher-yielding names such as Alfa Bank and Evraz, while maintaining the Fund's
core holdings in the telecommunications sector and banking sector. The Fund also
added some Rouble exposure by purchasing two Rouble-denominated bonds, Russian
rails and Vneshtorgbank. The Fund's positioning in Ukraine throughout the year
was more tactical. Despite the country's very limited indebtedness, the market
remained focused on ongoing difficulties in forming a parliamentary coalition
and the detrimental impact of gas price hikes through the first half of the
year. We viewed the resultant weakness in Ukrainian bonds as an opportunity to
add to the Fund's position, which have performed well since.
Turkish financial markets suffered a sharp correction in early May, as market
concerns grew over a widening current account deficit and stubbornly high
inflation. The initial response from the Central Bank was arguably lacklustre,
dismissing the weakness of the Lira as "temporary". As the financial turbulence
became more entrenched, the Central Bank finally delivered a decisive response
with a series of aggressive rate hikes, stabilizing the currency, which
subsequently began to rally from late June. We had reduced the Fund's holdings
in Turkish bonds ahead of the correction in May and used the subsequent weakness
to add both to the Fund's holding of external debt and Lira-denominated bonds.
In Asia, the Fund held limited positions in sovereign external debt, where the
extremely tight levels of spreads offers little yield benefits or upside in
terms of prospective spread compression. One exception to this was in the
Philippines, where we established and subsequently took profit on external debt
on the improving sovereign debt outlook. The Fund's main exposures in Asia
remained focused on local currency instruments, and the Fund continues to hold
Indonesian Rupiah-denominated government bonds.
OUTLOOK
We believe that the critical issue for developed fixed-income markets in 2007
will be the path of the U.S. economy and the Federal Reserve's policy response.
Other Anglo-Saxon markets have already seen short-term interest rates rise
higher than was expected as the economic cycle proves more durable than had been
expected. Should the U.S. economy in 2007 exhibit a similar pattern, we believe
global bond yields may rise further than currently expected. So far, short-term
yields have undertaken the bulk of the moves but evidence of strong nominal
Gross Domestic Product growth across the world coupled with continued
appreciation of equity markets could see longer-dated bond yields begin to rise
above the still historically low current levels.
Several currencies are trading at historically significant levels and, should
current trends in interest rate differentials and capital flows persist, could
move out of the ranges which have persisted over the past 20 years. The U.S.
Dollar index is near its all time lows, with the Euro, British Pound and
Australian Dollar all close to multi-year highs. Similarly, the Japanese Yen has
traded back toward its 1998 low levels versus most currencies and, unless
interest rates rise significantly, it has the potential to weaken further as
domestic investors seek higher-yielding offshore assets to provide much needed
income.
Although spreads in external debt markets have tightened significantly, this is
in large part justified by significant credit improvements within the asset
class. In our opinion, any significant sell-off is likely to be driven by
exogenous factors such as a sharp rise in interest rates across developed
markets or rising global risk aversion. Sustained strength in commodity prices
also remains a key pillar of support for the asset class, and in this regard
sustained economic growth in China remains a key factor. While we remain
constructive on the asset class as a whole, we continue to focus on credits
where we see room for medium-term outperformance, in some cases investing
selectively in blue chip corporate debt for yield and diversification benefits.
Investments in domestic fixed-income and foreign exchange instruments are also
likely to remain a core theme in the portfolio.
Page 4
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO COMPONENTS+*
DECEMBER 31, 2006
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
PORTFOLIO COMPONENTS - BY COUNTRY
Multinational 13.5%
Brazil 10.1%
Canada 7.7%
Russia 7.0%
Argentina 6.8%
Mexico 5.1%
Turkey 5.0%
Indonesia 4.3%
Colombia 4.2%
Australia 4.1%
Germany 3.9%
Norway 3.5%
Uruguay 3.0%
Ukraine 2.7%
Peru 2.5%
Dominican Republic 2.5%
Venezuela 2.3%
Spain 1.9%
Kazakhstan 1.8%
Netherlands 1.6%
France 1.5%
Philippines 1.4%
United Kingdom 1.3%
Pakistan 1.2%
El Salvador 1.1%
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
PORTFOLIO COMPONENTS - BY INDUSTRY
Foreign Government Bonds 52.92%
Supranational Bank 13.51%
Commercial Banks 8.72%
Regional Authority 7.15%
Special Purpose Banks 5.80%
Diversified Financial Services 4.22%
Electric Utilities 3.40%
Steel Producers 2.10%
Telecommunications 1.09%
Import/Export Bank 1.09%
+ Percentages are based on total investments. Please note that the percentages
on the Portfolio of Investments are based on net assets.
* Portfolio securities are included in a country based upon their underlying
credit exposure as determined by Aberdeen Asset Management Inc. - the
Sub-Advisor.
See Notes to Financial Statements. Page 5
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2006
PRINCIPAL MARKET
VALUE VALUE
(LOCAL CURRENCY) DESCRIPTION (US DOLLARS)
---------------- ---------------------------------------------- -------------
BONDS AND NOTES+ - 137.3%
ARGENTINA - 7.0%
4,000,000 Banco Hipotecario SA (USD), 9.75%,
11/16/10 $ 4,250,000
2,300,000 Banco Hipotecario SA (USD), 9.75%,
4/27/16 2,452,375
4,850,000 Province of Buenos Aires (USD), 9.38%,
9/14/18 5,016,840
10,455,515 Republic of Argentina (USD), 8.28%,
12/31/33 11,396,511
-------------
23,115,726
-------------
AUSTRALIA - 5.8%
11,000,000 Australian Government (AUD), 6.00%,
2/15/17 8,764,036
5,000,000 New South Wales Treasury Corp. (AUD),
8.00%, 3/01/08 4,016,340
8,100,000 Queensland Treasury (AUD), 6.00%, 10/14/15 6,344,319
-------------
19,124,695
-------------
BRAZIL - 14.2%
10,000,000 Banco Bradesco SA (BRL), 17.50%, 12/10/07 4,885,326
4,000,000 Banco do Brasil SA (USD), 7.95%, 10/23/09** 4,150,000
5,750,000 Brazil Citigroup (BRL), 15.00%, 7/02/10 3,010,077
5,000,000 Brazil NTN - B Note (BRL), 6.00%, 8/15/10 3,588,012
36,300,000 Brazil NTN - F Note (BRL), 10.00%, 1/01/12 15,488,519
29,603,000 Electropaulo Metropolitan (BRL), 19.13%,
6/28/10 15,761,017
-------------
46,882,951
-------------
CANADA - 10.8%
11,100,000 Canadian Government (CAD), 5.75%, 6/01/29 11,693,670
7,000,000 Canadian Government (CAD), 5.25%, 6/01/13 6,414,501
15,000,000 Province of Manitoba (NZD), 6.38%, 9/01/15 10,290,424
10,965,000 Province of Ontario (NZD), 6.25%, 6/16/15 7,425,478
-------------
35,824,073
-------------
COLOMBIA - 5.8%
14,113,000,000 Republic of Colombia (COP), 11.75%, 3/01/10 6,806,205
14,200,000,000 Republic of Colombia (COP), 12.00%,
10/22/15 7,525,968
4,600,000 Republic of Colombia (USD), 7.38%, 1/27/17 4,911,452
-------------
19,243,625
-------------
Page 6 See Notes to Financial Statements.
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
DECEMBER 31, 2006
PRINCIPAL MARKET
VALUE VALUE
(LOCAL CURRENCY) DESCRIPTION (US DOLLARS)
---------------- ---------------------------------------------- -------------
BONDS AND NOTES+ - CONTINUED
DOMINICAN REPUBLIC - 3.4%
2,513,847 Dominican Republic (USD), 9.04%,
1/23/18 $ 2,893,438
7,350,000 Dominican Republic (USD), 8.63%, 4/20/27 8,485,575
-------------
11,379,013
-------------
EL SALVADOR - 1.6%
4,620,000 Republic of El Salvador (USD), 7.65%,
6/15/35 5,266,800
-------------
FRANCE - 2.2%
4,300,000 France, Government (EUR), 5.75%, 10/25/32 7,117,083
-------------
GERMANY - 5.5%
5,000,000 Bundesrepublik Deutschland (EUR),
4.75%, 7/04/34 7,301,175
3,650,000 KfW International Finance (CAD), 4.95%,
10/14/14 3,251,153
11,000,000 KfW Kredit Wiederaufbau (NZD), 6.00%,
7/15/09 7,516,783
-------------
18,069,111
-------------
INDONESIA - 6.0%
63,300,000,000 Indonesian Government (IDR), 11.00%,
10/15/14 7,317,018
11,500,000,000 Indonesian Government (IDR), 11.00%,
12/15/12 1,359,165
90,400,000,000 Indonesian Government (IDR), 12.50%,
3/15/13 11,292,939
-------------
19,969,122
-------------
KAZAKHSTAN - 2.6%
6,000,000 Kazkommerts International BV (USD),
7.88%, 4/07/14 6,202,920
2,300,000 TuranAlem Finance BV (USD), 8.00%,
3/24/14 2,342,359
-------------
8,545,279
-------------
MEXICO - 7.1%
69,500,000 Mexican Fixed Rate Bonds (MXN), 9.00%,
12/22/11 6,887,274
94,000,000 Mexican Fixed Rate Bonds (MXN), 8.00%,
12/07/23 9,083,273
71,355,100 Mexican Fixed Rate Bonds (MXN), 9.50%,
12/18/14 7,430,759
-------------
23,401,306
-------------
See Notes to Financial Statements. Page 7
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
DECEMBER 31, 2006
PRINCIPAL MARKET
VALUE VALUE
(LOCAL CURRENCY) DESCRIPTION (US DOLLARS)
---------------- ---------------------------------------------- -------------
BONDS AND NOTES+ - CONTINUED
MULTINATIONAL - 18.9%
17,600,000 Asian Development Bank (AUD), 5.50%,
2/15/16 $ 13,205,773
8,540,000 Council of Europe (AUD), 5.50%, 8/15/08 6,649,332
5,400,000 European Investment Bank (EUR), 4.00%,
10/15/37 6,865,666
4,400,000 European Investment Bank (GBP), 7.63%,
12/07/07 8,784,434
18,800,000 European Investment Bank (NZD), 6.50%,
9/10/14 12,955,545
2,000,000 European Investment Bank (TRY), 14.50%,
2/21/07 1,398,940
12,000,000 International Bank Reconstruction &
Development (NZD), 6.38%, 7/15/09 8,252,072
2,240,000 Nordic Investment Bank (GBP), 5.75%,
11/06/08 4,414,818
-------------
62,526,580
-------------
NETHERLANDS - 2.2%
11,000,000 Bank Nederlandse Gemeenten NV (NZD),
5.25%, 6/17/09 7,379,081
-------------
NORWAY - 4.9%
11,000,000 Eksportsfinans (TRY), 14.63%, 3/15/07 7,670,081
4,500,000 Kommunalbanken AS (GBP), 4.75%, 1/28/10 8,654,957
-------------
16,325,038
-------------
PAKISTAN - 1.6%
5,000,000 Islamic Republic of Pakistan (USD), 7.88%,
3/31/36 5,449,825
-------------
PERU - 3.4%
13,900,000 Peru Bono Soberano (PEN), 7.84%, 8/12/20 4,915,848
16,750,000 Peru Bono Soberano (PEN), 9.91%, 5/05/15 6,495,369
-------------
11,411,217
-------------
PHILIPPINES - 1.9%
5,200,000 Republic of Philippines (USD), 9.38%,
1/18/17 6,405,469
-------------
RUSSIA - 9.7%
119,400,000 Dal Capital (Vneshtorgbank) (RUB), 7.00%,
4/13/09 4,599,024
9,400,000 Evraz Group SA (USD), 8.25%, 11/10/15 9,718,754
113,331,420 Red Arrow International Leasing PLC (RUB),
8.38%, 3/31/12 4,440,613
8,600,000 Russian Standard Bank (USD), 8.88%,
12/16/15 8,461,798
4,800,000 UBS (Vimpelcom) (USD), 8.25%, 5/23/16 5,045,280
-------------
32,265,469
-------------
Page 8 See Notes to Financial Statements.
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
DECEMBER 31, 2006
PRINCIPAL MARKET
VALUE VALUE
(LOCAL CURRENCY) DESCRIPTION (US DOLLARS)
---------------- ---------------------------------------------- -------------
BONDS AND NOTES+ - CONTINUED
SPAIN - 2.6%
11,500,000 Instituto de Credito Oficial (AUD), 5.50%,
10/11/12 $ 8,697,452
-------------
TURKEY - 7.0%
3,800,000 Republic of Turkey (USD), 7.00%, 9/26/16 3,874,100
31,140,000 Turkey, Government of (TRY), 14.00%, 1/19/11 19,457,502
-------------
23,331,602
-------------
UKRAINE - 3.8%
7,300,000 Alfa Bank Ukraine (USD), 9.75%, 12/22/09 7,434,320
4,900,000 EX-IM Bank of Ukraine (USD), 7.65%, 9/07/11 5,031,320
-------------
12,465,640
-------------
UNITED KINGDOM - 1.8%
3,000,000 United Kingdom Treasury (GBP), 7.25%,
12/07/07 5,979,195
-------------
URUGUAY - 4.2%
4,200,000 Oriental Republic of Uruguay (USD), 7.63%,
3/21/36 4,641,000
138,620,000 Oriental Republic of Uruguay (UYU), 5.00%,
9/14/18 6,152,698
2,600,000 Republic of Uruguay (USD), 8.00%, 11/18/22 2,956,200
-------------
13,749,898
-------------
VENEZUELA - 3.3%
5,700,000 Republic of Venezuela (USD), 9.38%, 1/13/34 7,541,100
3,430,000 Republic of Venezuela (USD), 5.75%, 2/26/16 3,261,244
-------------
10,802,344
-------------
TOTAL BONDS AND NOTES+ 454,727,594
(Cost $432,135,119) -------------
WARRANTS - 2.5%
ARGENTINA - 2.5%
11,869,436 Republic of Argentina (EUR), 12/15/35 1,584,570
38,700,000 Republic of Argentina (USD), 12/15/35 6,666,688
-------------
TOTAL WARRANTS 8,251,258
(Cost $5,518,179) -------------
See Notes to Financial Statements. Page 9
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
DECEMBER 31, 2006
MARKET
VALUE
DESCRIPTION (US DOLLARS)
---------------------------------------------- -------------
TOTAL INVESTMENTS - 139.8% $ 462,978,852
(Cost $437,653,298)*
LOAN OUTSTANDING - (46.0)% (152,481,750)
NET OTHER ASSETS AND LIABILITIES - 6.2% 20,640,571
-------------
NET ASSETS - 100.0% $ 331,137,673
=============
* Aggregate cost for federal income tax purposes is $439,027,379.
** Securities are restricted and cannot be offered for public sale
without first being registered under the Securities Act of 1933, as
amended (Note 2F).
+ Portfolio securities are included in a country based upon their
underlying credit exposure as determined by Aberdeen Asset Management
Inc. - the Sub-Advisor.
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
COP Colombian Peso
EUR Euro Dollar
GBP British Pound Sterling
IDR Indonesian Rupiah
JPY Japanese Yen
KRW South Korean Won
MXN Mexican Peso
MYR Malaysian Ringgit
NZD New Zealand Dollar
PEN Peruvian New Sol
RUB Russian Ruble
SEK Swedish Krona
SGD Singapore Dollar
TRY Turkish Lira
TWD Taiwan Dollar
USD United States Dollar
UYU Uruguayan Peso
Page 10 See Notes to Financial Statements.
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
DECEMBER 31, 2006
FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
CONTRACTS TO RECEIVE
--------------------------------------------- NET NET
IN UNREALIZED UNREALIZED
EXPIRATION LOCAL VALUE IN EXCHANGE APPRECIATION DEPRECIATION
DATE CURRENCY* U.S. $ FOR U.S. $ OF CONTRACTS OF CONTRACTS
---------- ------------------ ---------- ----------- ------------ ------------
03/23/07 EUR 15,215,000 20,160,254 20,280,834 $ -- $ (120,580)
03/23/07 GBP 13,090,000 25,637,667 25,818,062 -- (180,395)
03/23/07 JPY 1,732,875,000 14,723,157 15,003,896 -- (280,739)
03/23/07 KRW 13,980,000,000 15,059,300 15,179,153 -- (119,853)
03/23/07 MYR 35,184,000 10,013,602 10,005,403 8,199 --
03/23/07 SEK 137,858,000 20,238,785 20,349,546 -- (110,761)
03/23/07 SGD 43,200,000 28,287,076 28,213,166 73,910 --
03/23/07 TWD 326,000,000 10,086,633 10,124,223 -- (37,590)
----------- ------------
$ 82,109 $ (849,918)
----------- ------------
FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER
--------------------------------------------- NET NET
IN UNREALIZED UNREALIZED
EXPIRATION LOCAL VALUE IN EXCHANGE APPRECIATION DEPRECIATION
DATE CURRENCY* U.S. $ FOR U.S. $ OF CONTRACTS OF CONTRACTS
---------- ------------------ ---------- ----------- ------------ ------------
03/23/07 AUD 30,258,000 23,829,019 23,794,891 $ -- $ (34,128)
03/23/07 BRL 41,000,000 18,938,519 18,764,302 -- (174,217)
03/23/07 CAD 25,000,000 21,490,979 21,773,210 282,231 --
03/23/07 COP 31,000,000,000 13,756,379 13,531,209 -- (225,170)
03/23/07 JPY 1,732,875,000 14,723,157 14,826,484 103,327 --
03/23/07 MXN 78,900,000 7,276,383 7,245,112 -- (31,271)
03/23/07 NZD 79,400,000 55,647,093 54,516,040 -- (1,131,053)
03/23/07 TRY 21,000,000 14,386,816 14,155,713 -- (231,103)
------------ ------------
$ 385,558 $ (1,826,942)
------------ ------------
Unrealized Appreciation (Depreciation) of Forward Currency
Contracts ............................................. 467,667 (2,676,860)
============ ============
Net Unrealized Depreciation of Forward Foreign Currency
Contracts ............................................. $ (2,209,193)
============
* Please see page 10 for currency descriptions.
See Notes to Financial Statements. Page 11
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
ASSETS
Investments, at value
Cost ($437,653,298) $ 462,978,852
Cash 6,839,595
Foreign currency (Cost $4,226,447) 4,237,559
Unrealized appreciation of forward foreign currency contracts 467,667
Prepaid expenses 136,906
Receivables:
Interest 12,942,452
Investment securities sold 2,176,523
-------------
Total Assets 489,779,554
-------------
LIABILITIES:
Unrealized depreciation of forward foreign currency contracts 2,676,860
Payables:
Outstanding loan 152,481,750
Interest and fees due on loan payable 2,588,162
Investment advisory fees 417,142
Investment securities purchased 220,561
Audit and legal fees 98,615
Printing fees 61,557
Custodian fees 49,919
Administrative fees 36,769
Transfer agent fees 3,758
Accrued expenses and other liabilities 6,788
-------------
Total Liabilities 158,641,881
-------------
NET ASSETS $ 331,137,673
=============
NET ASSETS consist of:
Accumulated net investment income (loss) $ (14,956,419)
Accumulated net realized gain (loss) on investments sold, forward foreign
currency contracts, swaps and foreign currency translation (2,233,435)
Net unrealized appreciation (depreciation) of investments, forward foreign
currency contracts and foreign currency translation 21,697,505
Par value 173,652
Paid-in capital 326,456,370
-------------
Total Net Assets $ 331,137,673
=============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) $ 19.07
=============
Number of Common Shares outstanding (unlimited number of
Common Shares has been authorized) 17,365,236
Page 12 See Notes to Financial Statements.
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
INVESTMENT INCOME:
Interest (net of foreign withholding tax of $527,842) $ 37,201,748
Dividends 255,481
------------
Total investment income 37,457,229
------------
EXPENSES:
Interest and fees on outstanding loan payable 7,479,964
Investment advisory fees 4,826,519
Administration fees 426,121
Custodian fees 266,244
Audit and legal fees 137,204
Printing fees 93,275
Trustees' fees and expenses 42,186
Transfer agent fees 38,786
Other 155,205
------------
Total expenses 13,465,504
------------
NET INVESTMENT INCOME 23,991,725
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments 13,874,916
Swap contracts (1,174,343)
Forward foreign currency contracts (14,999,733)
Foreign currency translation (701,133)
------------
Net realized gain (loss) (3,000,293)
Net change in unrealized appreciation (depreciation) on:
Investments 17,608,379
Swap contracts 512,544
Forward foreign currency contracts (4,523,098)
Foreign currency translation (2,240,294)
------------
Net change in unrealized appreciation (depreciation) 11,357,531
------------
Net realized and unrealized gain (loss) 8,357,238
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 32,348,963
============
See Notes to Financial Statements. Page 13
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2006 2005
------------ ------------
OPERATIONS:
Net investment income $ 23,991,725 $ 23,306,897
Net realized gain (loss) (3,000,293) (8,341,341)
Net change in unrealized appreciation (depreciation) 11,357,531 5,891,424
------------- -------------
Net increase (decrease) in net assets resulting from operations 32,348,963 20,856,980
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (22,774,330) (21,704,195)
Net realized gains (8,217,230) (870,612)
Return of capital (4,315,438) --
------------- -------------
Total distributions to shareholders (35,306,998) (22,574,807)
CAPITAL TRANSACTIONS:
Net proceeds from sale of 160,000 Common Shares -- 3,056,000
Offering costs -- (6,400)
------------- -------------
Total capital transactions -- 3,049,600
------------- -------------
Net increase (decrease) in net assets (2,958,035) 1,331,773
NET ASSETS:
Beginning of year 334,095,708 332,763,935
------------- -------------
End of year $ 331,137,673 $ 334,095,708
============= =============
Accumulated net investment loss at end of year $ (14,956,419) $ (6,619,201)
============= =============
Page 14 See Notes to Financial Statements.
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $ 32,348,963
Adjustments to reconcile net increase in net assets resulting
from operations to net cash provided by operating activities:
Changes in assets and liabilities:
Increase in investments, at value* (563,290)
Decrease in net unrealized appreciation of forward foreign currency contracts 4,523,098
Decrease in interest receivable 1,688,102
Increase in receivable for investment securities sold (2,176,523)
Decrease in prepaid expenses 61,821
Decrease in net unrealized depreciation on swap contracts (512,544)
Decrease in interest payable on swap contracts (121,133)
Increase in payable for investment securities purchased 220,561
Increase in interest and fees due on loan payable 487,954
Increase in investment advisory fees payable 11,055
Increase in audit and legal fees payable 21,049
Increase in printing fees payable 6,789
Increase in transfer agent fees payable 1,258
Increase in administrative fees payable 885
Decrease in custodian fees payable (24,671)
Increase in accrued expenses and other liabilities 3,909
-------------
CASH PROVIDED BY OPERATING ACTIVITIES $ 35,977,283
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to shareholders from net investment income and net realized gains (30,991,560)
Distributions to shareholders from return of capital (4,315,438)
Repayment of loan (265,408,811)
Issuance of loan 272,167,000
-------------
CASH USED BY FINANCING ACTIVITIES (28,548,809)
-------------
Increase in cash ** 7,428,474
Cash and foreign currency at beginning of year 3,648,680
-------------
CASH AND FOREIGN CURRENCY AT END OF YEAr $ 11,077,154
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 6,992,010
---------------------
* Includes net change in unrealized appreciation (depreciation)
on investments of $17,608,379.
** Includes net change in unrealized appreciation (depreciation)
of foreign currency of $11,471.
See Notes to Financial Statements. Page 15
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Year Year Period
Ended Ended Ended
12/31/06 12/31/05 12/31/2004*
---------- ---------- -----------
Net asset value, beginning of period $ 19.24 $ 19.34 $ 19.10 (a)
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 1.38 1.34 0.05
Net realized and unrealized gain (loss) 0.48 (0.14) 0.23
---------- ---------- ----------
Total from investment operations 1.86 1.20 0.28
---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income (1.31) (1.25) --
Net realized gains (0.47) (0.05) --
Return of capital (0.25) -- --
---------- ---------- ----------
Total from distributions (2.03) (1.30) --
---------- ---------- ----------
Common Share offering costs charged to paid-in capital -- (0.00)# $ (0.04)
---------- ---------- ----------
Net asset value, end of period $ 19.07 $ 19.24 $ 19.34
========== ========== ==========
Market value, end of period $ 19.15 $ 16.80 $ 19.45
========== ========== ==========
TOTAL RETURN BASED ON NET ASSET VALUE (b) + 10.72% 6.94% 1.26%
========== ========== ==========
TOTAL RETURN BASED ON MARKET VALUE (c) + 27.33% (7.15)% (2.75)%
========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 331,138 $ 334,096 $ 332,764
Ratio of total expenses to average net assets excluding
interest expense 1.79% 1.80% 1.44% **
Ratio of total expenses to average net assets 4.04% 3.37% 1.44% **
Ratio of net investment income to average net assets 7.19% 7.03% 2.47% **
Portfolio turnover rate 99% 75% 0%
INDEBTEDNESS:
Loan outstanding (in 000's) $ 152,482 $ 145,724 N/A
Asset Coverage per $1,000 of indebtedness (d) $ 3,172 $ 3,293 N/A
-----------------------
* The Fund commenced operations on November 16, 2004.
** Annualized
(a) Net of sales load of $0.90 per Common Share on initial offering.
(b) 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.
(c) 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 market price per share, all based on Common Share market
price per share.
(d) Calculated by subtracting the Fund's total liabilities (not including the
loan outstanding) from the Fund's total assets, and dividing by the
outstanding loan balance.
+ Total return is not annualized for periods less than one year.
# Amount represents less than $0.01 per share.
N/A Not applicable.
Page 16 See Notes to Financial Statements.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
DECEMBER 31, 2006
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 computed based
upon the value of the Fund's portfolio and other assets less accrued
liabilities. The NAV is determined as of the close of regular session 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 Fund calculates NAV per Common Share by subtracting the Fund's liabilities
(including accrued expenses, dividends payable and any borrowings of the Fund)
and the liquidation value of any outstanding Preferred Shares, if any, from the
Fund's Managed Assets (the value of the securities and other investments the
Fund holds plus cash or other assets, including interest accrued but not yet
received ) and dividing the result 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, or if events occurring after the close of the
principal markets for particular securities (e.g., domestic debt and foreign
securities), but before the Fund values its assets, would materially affect NAV,
First Trust Advisors L.P. ("First Trust") may use a fair value method to value
the Fund's securities and 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.
B. 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 in 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 in the Schedule of
Forward Foreign Currency Contracts.
C. 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.
Page 17
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
DECEMBER 31, 2006
D. 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 translations" 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 translations" on the
Statement of Operations.
E. CREDIT DEFAULT SWAPS:
The Fund may enter into credit default swap contracts with the Fund being the
"buyer" and the counterparty the "seller" in these transactions. As a buyer of
the credit default swap contracts, the Fund is obligated to pay the counterparty
a periodic stream of payments over the term of the contract provided that no
event of default (e.g., grace period extension, obligation acceleration,
repudiation/moratorium, or restructuring) relating to the security occurs or
until the termination of the swap contract, whichever is first. If no event of
default occurs, the Fund will have made a series of periodic payments and
recover nothing of monetary value. If an event of default occurs, the
counterparty must pay the Fund the full notional value, or "par value," of the
specified security. The amount of the cash payment from the counterparty to the
Fund is based on the difference of the par value of the specified security that
may have, through default, lost some, most or all of its value. Credit default
swap transactions are entered into for hedging or investment purposes.
The Fund may purchase credit default swap contracts in order to hedge against
the risk of a fall in the capital price, or default, of debt securities it
holds. This involves the risk that the swap may expire worthless and the credit
risk that the seller may fail to satisfy its payment obligations to the Fund in
the event of a default. The Fund may only enter into such transactions with
counterparties rated A- or higher.
As of December 31, 2006, the Fund had no outstanding credit default swap
contracts.
F. RESTRICTED SECURITIES:
The Fund invests in restricted securities, which are securities that may not be
offered for public sale without first being registered under the Securities Act
of 1933, as amended. Prior to registration, restricted securities may only be
resold in transactions exempt from registration. As of December 31, 2006, the
Fund held restricted securities as shown in the following table. The Fund does
not have the right to demand that such securities be registered. These
securities are valued according to the valuation procedures as stated in the
Portfolio Valuation footnote (Note 2A) and are not expressed as a discount to
the carrying value of a comparable unrestricted security.
Carrying Value Per Unit at 12/31/06
Par Value Per Unit at Acquisition Market
Acquisition (Local 12/31/06 Date Value % of
Security Date Currency) (Restricted) (Restricted) (Restricted) Net Assets
------------------------------------------------------------------------------------------------------------------
Banco do Brasil SA (USD) 1/13/06 $4,000,000 $103.75 $100.00 $4,150,000 1.25%
G. 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 the 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. Permanent differences
incurred during the year ended December 31, 2006, resulting in book and tax
accounting differences, have been reclassified at year end to reflect an
increase to accumulated net investment loss by $9,554,613 and a decrease in
accumulated net realized losses on investments sold by $9,554,613. Net assets
were not affected by these reclassifications.
Page 18
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
DECEMBER 31, 2006
The tax character of distributions paid during the fiscal years ended December
31, 2006 and December 31, 2005 was as follows:
Distributions paid from:
2006 2005
---- ----
Ordinary Income $22,358,867 $22,574,807
Long-Term Capital Gains 8,632,693 --
Return of Capital 4,315,438 --
As of December 31, 2006, the components of distributable earnings on a tax basis
were as follows:
Net Unrealized Appreciation............................... $22,125,801
H. 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, and by 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.
Post-October Losses. Under current laws, certain capital losses realized after
October 31 may be deferred and treated as occurring on the first day of the
following fiscal year. For the fiscal year ended December 31, 2006, the Fund
intends to elect to defer net realized capital losses and net realized currency
losses incurred from November 1, 2006 through December 31, 2006 of $832,344 and
$8,184,818, respectively.
I. EXPENSES:
The Fund pays all expenses directly related to its operations.
J. ORGANIZATION AND OFFERING COSTS:
Organization costs consisted of costs incurred to establish the Fund and enable
it to legally conduct business. These costs included filing fees, listing fees,
legal services pertaining to the organization of the business and audit fees
relating to the initial registration and auditing the initial statement of
assets and liabilities, among other fees. Offering costs consisted of legal fees
pertaining to the Fund's shares offered for sale, registration fees,
underwriting fees, and printing of the initial prospectus, among other fees.
First Trust and Aberdeen Asset Management Inc. have paid all organization
expenses and all offering costs of the Fund (other than sales load) that
exceeded $0.04 per Common Share. The Fund's share of Common Share offering costs
of $688,210 and $6,400 in fiscal years 2004 and 2005, respectively, were
recorded as a reduction of the proceeds from the sale of Common Shares.
K. NEW ACCOUNTING PRONOUNCEMENTS:
In July 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes."
This pronouncement provides guidance on the recognition, measurement,
classification, and disclosures related to uncertain tax positions, along with
any related interest and penalties. FIN 48 is effective for fiscal years
beginning after December 15, 2006. At this time, management is evaluating the
implications of FIN 48 and its impact on the financial statements, which has not
yet been determined.
In addition, in September 2006, Statement of Financial Accounting Standards No.
157 Fair Value Measurements ("SFAS 157") was issued by the FASB and is effective
for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 could have on the Fund's financial statement disclosures.
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 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).
Page 19
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
DECEMBER 31, 2006
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 an annual portfolio management fee
calculated at an annual rate of 0.50% of Managed Assets that is paid monthly by
First Trust out of its investment advisory fee.
PFPC Inc. ("PFPC"), an indirect, majority-owned subsidiary of The PNC Financial
Services Group, Inc., serves as the Fund's Administrator and Transfer Agent 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.
The Fund paid each Trustee who is not an officer or employee of First Trust or
any of its affiliates ("Independent Trustees") an annual retainer of $10,000,
which includes compensation for all board and committee meetings. Trustees are
also reimbursed for travel and out-of-pocket expenses in connection with all
meetings.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, other than U.S.
government obligations and short-term obligations, for the year ended December
31, 2006, were $466,064,261 and $498,000,882, respectively.
As of December 31, 2006, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $27,519,897
and the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $3,568,424.
5. COMMON SHARES
As of December 31, 2006, 17,365,236 of $0.01 par value Common Shares were
issued. An unlimited number of Common Shares has been authorized for the Fund's
Dividend Reinvestment Plan.
Year Ended Year Ended
December 31, 2006 December 31, 2005
Shares Amount Shares Amount
Proceeds from shares sold -- $ -- 160,000 $3,056,000
Offering Costs -- -- -- (6,400)
------- -------- ------- ----------
-- $ -- 160,000 $3,049,600
======= ======== ======= ==========
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
December 31, 2006, no Preferred Shares had been issued.
7. REVOLVING LOAN AGREEMENT
The Fund has entered into a revolving loan agreement among the Fund and certain
primary and secondary 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 year ended December 31, 2006, the average amount
outstanding was $149,040,429. The high and low annual interest rates during the
year ended December 31, 2006, were 5.503% and 4.357%, respectively, and the
weighted average interest rate was 5.226%. The Fund also pays a commitment fee
of 0.325% per year, which is included in "Interest and fees on outstanding loan
payable" on the Statement of Operations.
Page 20
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
DECEMBER 31, 2006
8. CONCENTRATION OF 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.
9. SUBSEQUENT EVENTS
On December 18, 2006, the Fund declared a dividend of $0.13 per share to Common
Shareholders of record January 10, 2007, payable January 16, 2007.
On January 22, 2007, the Fund declared a dividend of $0.13 per share to Common
Shareholders of record February 5, 2007, payable February 15, 2007.
The Board of Trustees of the Fund adopted a compensation policy pursuant to
which, effective January 1, 2007, the Independent Trustees are paid an annual
retainer of $10,000 for each investment company in the First Trust Fund Complex
up to a total of 14 investment companies (the "Trustees Compensation I") and an
annual retainer of $7,500 for each subsequent investment company added to the
First Trust Fund Complex (the "Trustees Compensation II" and together with
Trustees Compensation I, the "Aggregate Trustee Compensation"). The Aggregate
Trustee Compensation is divided equally among each of the investment companies
in the First Trust Fund Complex. No additional meeting fees are paid in
connection with board or committee meetings. Trustees are also reimbursed for
travel and out-of-pocket expenses in connection with all meetings.
Additionally, Thomas R. Kadlec is paid annual compensation of $10,000 to serve
as the Lead Trustee and Niel B. Nielson is paid annual compensation of $5,000 to
serve as the chairman of the Audit Committee of each of the investment companies
in the First Trust Fund Complex. Such additional compensation to Messrs. Kadlec
and Nielson is paid by the investment companies in the First Trust Fund Complex
and the fees are divided equally among those investment companies.
Page 21
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FIRST TRUST/ABERDEEN GLOBAL
OPPORTUNITY INCOME FUND:
We have audited the accompanying statement of assets and liabilities of First
Trust/Aberdeen Global Opportunity Income Fund (the "Fund"), including the
portfolio of investments, as of December 31, 2006, the related statements of
operations and cash flows for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended and the financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of December 31, 2006, by correspondence with the Fund's
custodian; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of December 31, 2006, the results of its operations and its cash flows,
the changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with accounting principles generally accepted in
the United States of America.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
February 27, 2007
Page 22
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION - UNAUDITED
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
DECEMBER 31, 2006
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 PFPC
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 PFPC Inc., 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 net asset value ("NAV") at
the time of valuation, the Fund will issue new shares at a price equal to
the greater of (i) NAV per Common Share on that date or (ii) 95% of the
market price on that date.
(2) If Common Shares are trading below NAV at the time of valuation, the
Plan Agent will receive the dividend or distribution in cash and will
purchase Common Shares in the open market, on the NYSE or elsewhere, for
the participants' accounts. It is possible that the market price for the
Common Shares may increase before the Plan Agent has completed its
purchases. Therefore, the average purchase price per share paid by the
Plan Agent may exceed the market price at the time of valuation, resulting
in the purchase of fewer shares than if the dividend or distribution had
been paid in Common Shares issued by the Fund. The Plan Agent will use all
dividends and distributions received in cash to purchase Common Shares in
the open market within 30 days of the valuation date except where
temporary curtailment or suspension of purchases is necessary to comply
with federal securities laws. Interest will not be paid on any uninvested
cash payments.
You may elect to opt-out of or withdraw from the Plan at any time by giving
written notice to the Plan Agent, or by telephone at (800) 331-1710, in
accordance with such reasonable requirements as the Plan Agent and 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 PFPC 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 23
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION - UNAUDITED - (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
DECEMBER 31, 2006
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 1-800-SEC-0330.
NYSE CERTIFICATION INFORMATION
In accordance with Section 303A-12 of the New York Stock Exchange ("NYSE")
Listed Company Manual, the Fund's President has certified to the NYSE that, as
of May 15, 2006, he was not aware of any violation by the Fund of NYSE corporate
governance listing standards. In addition, the Fund's reports to the SEC on
Forms N-CSR and N-Q contain certifications by the Fund's principal executive
officer and principal financial officer that relate to the Fund's public
disclosure in such reports and are required by Rule 30a-2 under the 1940 Act.
TAX INFORMATION
For the year ended December 31, 2006, the amount of long-term capital gain
distributions designated by the Fund was $8,577,844, which is taxable at a 15%
rate gain for federal income tax purposes.
If the Fund meets the requirements of Section 853 of the Code, the Fund may
elect to pass through to its shareholders credits for foreign taxes paid. The
total amount of income received by the Fund from sources within foreign
countries and possessions of the United States is $31,985,981 (representing a
total of $1.84). The total amount of taxes paid to such countries is $527,842
per share (representing a total of $0.03).
BY-LAW AMENDMENTS
On June 12, 2006 and December 11, 2006, the Board of Trustees of the Fund
approved certain changes to the By-Laws of the Fund which may have the effect of
delaying or preventing a change in control of the Fund, including the
implementation of a staggered Board of Trustees. These changes were not required
to be, and were not, approved by the Fund's shareholders. To receive a copy of
the revised By-Laws, investors may call the Fund at (800) 988-5891.
CHANGE IN POLICY
The Fund is currently permitted to engage in currency hedging transactions only
for portfolio hedging transactions involving portfolio positions. At a meeting
held on February 21, 2007, the Board of Trustees of the Fund adopted a policy to
permit the Fund to engage in currency transactions to hedge interest rate and
currency risks associated with the Fund's borrowings. This change in policy was
not required to be, and was not, approved by the shareholders of the Fund. The
new policy may also be changed by the Board of Trustees without shareholder
approval. The new policy will be effective on April 29, 2007.
Page 24
--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS - (UNAUDITED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
DECEMBER 31, 2006
Information pertaining to the Trustees and Officers* of the fund is set forth
below.
NUMBER OF OTHER
PORTFOLIOS TRUSTEESHIPS/
NAME, D.O.B., ADDRESS AND TERM OF OFFICE AND PRINCIPAL OCCUPATION(S) IN FUND COMPLEX DIRECTORSHIPS
POSITION(S) WITH THE FUND LENGTH OF TIME SERVED DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
------------------------------------------------------------------------------------------------------------------------------------
Richard E. Erickson, Trustee o One year term Physician; President, 34 portfolios None
D.O.B. 04/51 o 27 months served Wheaton Orthopedics; Co-
c/o First Trust Advisors L.P. owner and Co-Director,
1001 Warrenville Road Sports Med Center for
Suite 300 Fitness; Limited Partner,
Lisle, IL 60532 Gundersen Real Estate
Partnership
Thomas R. Kadlec, Trustee o One year term Vice President and Chief 34 portfolios None
D.O.B. 11/57 o 27 months served Financial Officer (1990 to
c/o First Trust Advisors L.P. present), ADM Investor
1001 Warrenville Road Services, Inc. (Futures
Suite 300 Commission Merchant);
Lisle, IL 60532 Registered Representative
(2000 to present),
Segerdahl & Company,
Inc., an NASD member
(Broker-Dealer).
President,
ADM Derivatives, Inc.
(May 2005 to present)
Robert F. Keith, Trustee o One year term President, Hibs Enterprises 22 portfolios None
D.O.B. 11/56 o 7 months served (Financial and Management
c/o First Trust Advisors L.P. Consulting) (2003 to present);
1001 Warrenville Road Aramark Service Master
Suite 300 Management (2001 to 2003);
Lisle, IL 60532 President and Chief Operating
Officer, Service Master
Management Services (1998
to 2003)
Niel B. Nielson, Trustee o One year term President, Covenant 34 portfolios Director of Good News
D.O.B. 03/54 o 27 months served College (June 2002 to Publisher-Crossway
c/o First Trust Advisors L.P. present); Pastor, College Books; Covenant
1001 Warrenville Road Church in Wheaton (1997 Transport Inc.
Suite 300 to June 2002)
Lisle, IL 60532
Page 25
--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS - (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
DECEMBER 31, 2006
NUMBER OF OTHER
PORTFOLIOS TRUSTEESHIPS/
NAME, D.O.B., ADDRESS AND TERM OF OFFICE AND PRINCIPAL OCCUPATION(S) IN FUND COMPLEX DIRECTORSHIPS
POSITION(S) WITH THE FUND LENGTH OF TIME SERVED DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
James A. Bowen, Trustee o One year Trustee President, First Trust 34 portfolios Trustee of
President, Chairman of the term and indefinite Advisors L.P. and First Wheaton College
Board and CEO officer term Trust Portfolios L.P.;
D.O.B. 09/55 o 27 months served Chairman of the Board,
1001 Warrenville Road BondWave LLC and
Suite 300 Stonebridge Advisors LLC
Lisle, IL 60532
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT TRUSTEES
------------------------------------------------------------------------------------------------------------------------------------
Mark R. Bradley, Treasurer, o Indefinite term Chief Financial Officer, N/A N/A
Controller, Chief Financial o 27 months served Managing Director, First
Officer, Chief Accounting Trust Advisors L.P. and
Officer First Trust Portfolios L.P.;
D.O.B. 11/57 Chief Financial Officer,
1001 Warrenville Road BondWave LLC and
Suite 300 Stonebridge Advisors LLC
Lisle, IL 60532
Kelley Christensen o Indefinite term Assistant Vice President of N/A N/A
Vice President o Since December First Trust Portfolios L.P.
D.O.B. 09/70 10, 2006 and First Trust Advisors
1001 Warrenville Road L.P.
Suite 300
Lisle, IL 60532
James M. Dykas o Indefinite term Vice President, First Trust N/A N/A
Assistant Treasurer o 13 months served Advisors L.P. and First
D.O.B. 01/66 Trust Portfolios L.P.
1001 Warrenville Road (January 2005 to present);
Suite 300 Executive Director, Van
Lisle, IL 60532 Kampen Asset
Management and Morgan
Stanley Investment
Management (1999-2005)
Christopher R. Fallow o Indefinite term Assistant Vice President of N/A N/A
Assistant Vice President o Since December First Trust Portfolios L.P.
D.O.B. 04/79 10, 2006 and First Trust Advisors L.P.
1001 Warrenville Road
Suite 300
Lisle, IL 60532
Page 26
--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS - (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN GLOBAL OPPORTUNITY INCOME FUND
DECEMBER 31, 2006
NUMBER OF OTHER
PORTFOLIOS TRUSTEESHIPS/
NAME, D.O.B., ADDRESS AND TERM OF OFFICE AND PRINCIPAL OCCUPATION(S) IN FUND COMPLEX DIRECTORSHIPS
POSITION(S) WITH THE FUND LENGTH OF TIME SERVED DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT TRUSTEES - (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
W. Scott Jardine, Secretary o Indefinite term General Counsel, First Trust N/A N/A
and Chief Compliance o 27 months served Advisors L.P. and First
Officer Trust Portfolios L.P.;
D.O.B. 05/60 Secretary, BondWave LLC
1001 Warrenville Road and Stonebridge Advisors
Suite 300 LLC
Lisle, IL 60532
Daniel J. Lindquist o Indefinite term Senior Vice President, N/A N/A
Vice President o 13 months served First Trust Advisors L.P.
D.O.B. 02/70 and First Trust Portfolios
1001 Warrenville Road L.P. (April 2004 to
Suite 300 present); Chief Operating
Lisle, IL 60532 Officer, Mina Capital
Management, LLC (January
2004-April 2004); Chief
Operating Officer,
Samaritan Asset Management
Services, Inc. (April
2000-January 2004)
Kristi A. Maher o Indefinite term Assistant General Counsel, N/A N/A
Assistant Secretary o 27 months served First Trust Advisors L.P. and
D.O.B. 12/66 First Trust Portfolios L.P.
1001 Warrenville Road (March 2004 to present);
Suite 300 Associate, Chapman and
Lisle, IL 60532 Cutler LLP (1995-2004)
----------
* The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
Page 27
This Page Left Blank Intentionally.
This Page Left Blank Intentionally.
[BLANK BACK COVER]
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics definition enumerated in paragraph (b) of this
item's instructions.
(d) The registrant has not, during the period covered by this report,
granted any waivers, including an implicit waiver, from a provision of
the code of ethics that applies to the registrant's principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third
party, that relates to one or more of the items set forth in paragraph
(b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the Registrant's board of
trustees has determined that Thomas R. Kadlec and Robert F. Keith are
qualified to serve as audit committee financial experts serving on its audit
committee and that each of them is "independent," as defined by Item 3 of Form
N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees (Registrant) -- The aggregate fees billed for each of
the last two fiscal years for professional services rendered by the principal
accountant for the audit of the Registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements were $43,000 for 2005 and
$40,000 for 2006.
(b) Audit-Related Fees (Registrant) -- The aggregate fees billed in
each of the last two fiscal years, for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the Registrant's financial statements and are not reported under paragraph
(a) of this Item were $0.
Audit-Related Fees (Investment Adviser) -- The aggregate fees
billed in each of the last two fiscal years of the Registrant for assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit of the Registrant's financial statements and are not
reported under paragraph (a) of this Item were $0.
(c) Tax Fees (Registrant) -- The aggregate fees billed in each of the
last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning to the Registrant
were $4,000 in 2005 and $4,200 in 2006. These fees were for tax preparation.
Tax Fees (Investment Adviser) -- The aggregate fees billed in
each of the last two fiscal years of the Registrant for professional services
rendered by the principal accountant for tax compliance, tax advice, and tax
planning to the Registrant's adviser were $6000 for 2005 and $0 for 2006.
(d) All Other Fees (Registrant) -- The aggregate fees billed in each of
the last two fiscal years for products and services provided by the principal
accountant to the Registrant, other than the services reported in paragraphs (a)
through (c) of this Item were $8443.05 for 2005 and $1,055.92 for 2006. These
fees were for compliance consulting services.
All Other Fees (Investment Adviser) -- The aggregate fees billed
in each of the last two fiscal years for products and services provided by the
principal accountant to the Registrant's investment adviser, other than services
reported in paragraphs (a) through (c) of this Item were $130,569 for 2005 and
$9,308 for 2006. These fees were for Canadian tax consultation, compliance
consulting and AIMR-PPS Verification Services.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter and its Audit and Non-Audit Services
Pre-Approval Policy both amended as of December 10, 2006, the Audit Committee
(the "Committee") is responsible for the pre-approval of all audit services and
permitted non-audit services (including the fees and terms thereof) to be
performed for the Registrant by its independent auditors. The Chairman of the
Committee authorized to give such pre-approvals on behalf of the Committee up to
$25,000 and report any such pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the
independent auditor's engagements for non-audit services with the Registrant's
adviser (not including a sub-adviser whose role is primarily portfolio
management and is sub-contracted or overseen by another investment adviser) and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the Registrant, if the
engagement relates directly to the operations and financial reporting of the
Registrant, subject to the de minimis exceptions for non-audit services
described in Rule 2-01 of Regulation S-X. If the independent auditor has
provided non-audit services to the Registrant's adviser (other than any
sub-adviser whose role is primarily portfolio management and is sub-contracted
with or overseen by another investment adviser) and any entity controlling,
controlled by or under common control with the investment adviser that provides
ongoing services to the Registrant that were not pre-approved pursuant to its
policies, the Committee will consider whether the provision of such non-audit
services is compatible with the auditor's independence.
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) for the Registrant and the Registrant's investment adviser of this
Item that were approved by the audit committee pursuant to the
pre-approval exceptions included in paragraph (c)(7)(i)(c) or paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X are as follows:
(b) 0%
(c) 0%
(d) 0%
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was less than fifty percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the Registrant for 2005 were $12,443.05 and $136,569 for the
Registrant and the Registrant's investment adviser, respectively and
for 2006 were $5255.92 and $34,308 for the Registrant and the
Registrant's investment adviser, respectively.
(h) On December 10, 2006, the Registrant's audit committee of its Board of
Trustees determined that the provision of non-audit services that were
rendered to the Registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the Registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) The Registrant has a separately designated audit committee consisting of
all the independent trustees of the Registrant. The members of the audit
committee are: Thomas R. Kadlec, Niel B. Nielson, Richard E. Erickson
and Robert F. Keith.
ITEM 6. SCHEDULE OF INVESTMENTS.
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.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are attached herewith.
Aberdeen U.S. Registered Advisers
Proxy Voting Policies and Procedures
As of February 8, 2006
The following are proxy voting policies and procedures ("Policies and
Procedures") adopted by affiliated investment advisers registered with
the U.S. Securities and Exchange Commission ("SEC") under the Investment
Advisers Act of 1940, as amended ("Advisers Act"), that are subsidiaries
of Aberdeen Asset Management PLC ("AAM"); including, specifically,
Aberdeen Asset Management Inc., a Delaware Corporation, ("Aberdeen US"),
Aberdeen Asset Management Asia Limited, a Singapore Corporation
("Aberdeen Singapore"), Aberdeen Asset Management Limited, an Australian
Corporation ("Aberdeen AU"), and Aberdeen Asset Management Investment
Services Limited ("AAMISL"), (collectively referred to herein as
"Aberdeen Advisers" and each an "Aberdeen Adviser") (collectively with
AAM, "Aberdeen"). These Policies and Procedures address proxy voting
considerations under U.S. law and regulation and under Canadian
securities laws. These Policies and Procedures do not address the laws
or requirements of other jurisdictions.
Pursuant to a Memorandum of Understanding ("MOU"), Aberdeen Asset
Managers Limited ("Aberdeen UK"), a non-US registered adviser, provides
advisory resources to certain U.S. clients of Aberdeen Singapore and
Aberdeen AU. In addition, Aberdeen UK provides advisory resources to
certain U.S. clients of Aberdeen US pursuant to another MOU. Under these
MOUs, the affiliates of the Aberdeen Advisers may provide various
portfolio management resources, including substantive advice on voting
proxies for certain equity securities. To the extent that Aberdeen UK
provides advisory services to any clients of Aberdeen US or to U.S.
clients of Aberdeen Singapore or Aberdeen AU, Aberdeen UK will be
subject to the control and supervision of the registered adviser and
will follow these Policies and Procedures as part of providing such
advisory services. These Policies and Procedures are adopted to ensure
compliance by the Aberdeen Advisers with Rule 206(4)-6 under the
Advisers Act and other applicable fiduciary obligations under rules and
regulations of the SEC and interpretations of its staff with respect to
proxies for voting securities held by client portfolios.
Clients may consist of investment companies registered under the
Investment Company Act of 1940, as amended ("1940 Act") ("Funds" and
each a "Fund"), and other U.S. residents as well as non-U.S. registered
funds or clients. Any Aberdeen Adviser located in the United States
follows these Policies and Procedures for each of its respective clients
as required under the Advisers Act and other applicable law, unless
expressly directed by a client in writing to refrain from voting that
client's proxies or to vote in accordance with the client's proxy voting
policies and procedures. Aberdeen Advisers who advise or subadvise the
Funds follow both these Policies and Procedures and the proxy voting
policies and procedures adopted by the Funds and their respective Boards
of Directors. Aberdeen Advisers located outside the U.S. may provide
proxy voting services to their non-U.S. based clients in accordance with
the jurisdiction in which the client is located. Aberdeen US, Aberdeen
Singapore and Aberdeen AU will provide proxy voting services to Canadian
investment funds in accordance with National Instrument 81-106 -
Investment Fund Continuous Disclosure.
I. Definitions
A. "Best interest of clients". Clients' best economic interests over the
long term that is, the common interest that all clients share in seeing
the value of a common investment increase over time. Clients may have
differing political or social interests, but their best economic
interest is generally uniform.
B. "Material conflict of interest". Circumstances when an Aberdeen
Adviser or any member of senior management, portfolio manager or
portfolio analyst knowingly does business with a particular proxy issuer
or closely affiliated entity, which may appear to create a material
conflict between the interests of the Aberdeen Adviser and the interests
of its clients in how proxies of that issuer are voted. A material
conflict of interest might also exist in unusual circumstances when
Aberdeen has actual knowledge of a material business arrangement between
a particular proxy issuer or closely affiliated entity and an affiliate
of an Aberdeen Adviser.
II. General Voting Policies
A. Client's Best Interest. These Policies and Procedures are designed
and implemented in a way that is reasonably expected to ensure that
proxies are voted in the best interests of clients. Proxies are voted
with the aim of furthering the best economic interests of clients,
promoting high levels of corporate governance and adequate disclosure of
company policies, activities and returns, including fair and equal
treatment of stockholders.
B. Shareholder Activism. Aberdeen Advisers seek to develop relationships
with the management of portfolio companies to encourage transparency and
improvements in the treatment of employees, owners and stakeholders.
Thus, Aberdeen Advisers may engage in dialogue with the management of
portfolio companies with respect to pending proxy voting issues.
C. Case-by-Case Basis. These Policies and Procedures are guidelines.
Each vote is ultimately cast on a case-by-case basis, taking into
consideration the contractual obligations under the advisory agreement
or comparable document, and all other relevant facts and circumstances
at the time of the vote. Aberdeen Advisers may cast proxy votes in favor
of management proposals or seek to change the views of management,
considering specific issues as they arise on their merits. Aberdeen
Advisers may also join with other investment managers in seeking to
submit a shareholder proposal to a company or to oppose a proposal
submitted by the company. Such action may be based on fundamental,
social, environmental or human rights grounds.
D. Individualized. These Policies and Procedures are tailored to suit
Aberdeen's advisory business and the types of securities portfolios
Aberdeen Advisers manage. To the extent that clients (e.g., investment
companies, corporations, pension plans) have adopted their own
procedures, Aberdeen Advisers may vote the same securities differently
depending upon clients' directions.
E. Material Conflicts of Interest. Material conflicts are resolved in
the best interest of clients. When a material conflict of interest
between an Aberdeen Adviser and its respective client(s) is identified,
the Aberdeen Adviser will choose among the procedures set forth in
Section IV.B.2. below, to resolve such conflict.
F. Limitations. The circumstances under which Aberdeen may take a
limited role in voting proxies, include the following:
1. No Responsibility. Aberdeen Advisers will not vote proxies for client
accounts in which the client contract specifies that Aberdeen will not
vote. Under such circumstances, the clients' custodians are instructed
to mail proxy material directly to such clients.
2. Limited Value. Aberdeen Advisers may abstain from voting a client
proxy if the effect on shareholders' economic interests or the value of
the portfolio holding is indeterminable or insignificant. Aberdeen
Advisers may also abstain from voting the proxies of portfolio companies
held in their passively managed funds. Proxies with respect to
securities that have been sold before the date of the shareholders
meeting and are no longer held by a client generally will not be voted.
3. Unjustifiable Costs. Aberdeen may abstain from voting a client proxy
for cost reasons (e.g., non-U.S. securities).
4. Securities Lending Arrangements. If voting securities are part of a
securities lending program, Aberdeen may be unable to vote while the
securities are on loan.
5. Share Blocking. Certain jurisdictions may impose share blocking
restrictions at various times which may prevent Aberdeen from exercising
its voting authority.
6. Special Considerations. Aberdeen's responsibilities for voting
proxies are determined generally by its obligations under each advisory
contract or similar document. If a client requests in writing that an
Aberdeen Adviser vote its proxy in a manner inconsistent with these
Policies and Procedures, Aberdeen may follow the client's direction or
may request that the client vote the proxy directly.
G. Sources of Information. Aberdeen may conduct research internally
and/or use the resources of an independent research consultant. Aberdeen
may consider legislative materials, studies of corporate governance and
other proxy voting issues, and/or analyses of shareholder and management
proposals by a certain sector of companies, e.g., Fortune 500 companies.
H. Subadvisers. To the extent that an Aberdeen Adviser may rely on
subadvisers, whether affiliated or unaffiliated, to manage any client
portfolio on a discretionary basis, the Aberdeen Adviser will delegate
responsibility for voting proxies to the subadviser. However, such
subadvisers will be required either to follow these Policies and
Procedures or to demonstrate that their proxy voting policies and
procedures are consistent with these Policies and Procedures or
otherwise implemented in the best interests of Aberdeen clients.
I. Availability of Policies and Procedures. Aberdeen Advisers will
provide clients with a copy of these Policies and Procedures, as revised
from time to time, upon request.
J. Disclosure of Vote. As disclosed in Part II of each Aberdeen
Adviser's Form ADV, a client may obtain information on how its proxies
were voted by requesting such information from its Aberdeen Adviser.
Aberdeen Advisers do not generally disclose client proxy votes to third
parties, other than as required for Funds, unless specifically
requested, in writing, by the client.
III. Specific Voting Policies
A. General Philosophy.
o Support existing management on votes on the financial statements of a
company and the election of the Board of Directors; o Vote for the
acceptance of the accounts unless there are grounds to suspect that
either the accounts as presented or audit procedures used, do not
present an accurate picture of company results; and o Support routine
issues such as the appointment of independent auditors, allocation of
income and the declaration of stock (scrip) dividend proposals provided
there is a cash alternative.
B. Anti-takeover Measures. Aberdeen Advisers vote on anti-takeover
measures on a case-by-case basis taking into consideration such factors
as the long-term financial performance of the target company relative to
its industry competition. Key measures of performance will include the
growth rates for sales, operating income, net income and total
shareholder returns. Other factors which will be considered include
margin analysis, cash flow and debt levels.
C. Proxy Contests for Control. Aberdeen Advisers vote on proxy contests
for control on a case-by-case basis taking into consideration such
factors as long-term financial performance of the target company
relative to its industry, management's track record, background to the
proxy contest, qualifications of director nominees, evaluation of what
each side is offering shareholders as well as the likelihood that the
proposed objectives and goals can be met, and stock ownership positions.
D. Contested Elections. Aberdeen Advisers vote on contested elections on
a case-by-case basis taking into consideration such factors as the
qualifications of all director nominees. Aberdeen Advisers also consider
the independence of board and key committee members and the corporate
governance practices of the company.
E. Executive compensation proposals. Aberdeen Advisers consider such
proposals on a case-by-case basis taking into consideration such factors
as executive pay and spending perquisites, particularly in conjunction
with sub-par performance and employee layoffs.
F. Shareholder Proposals. Aberdeen Advisers consider such proposals on a
case-by-case basis. Aberdeen Advisers support those proposals which will
improve the company's corporate governance or business profile at a
reasonable cost, but may oppose proposals which result in significant
cost being incurred with little or no benefit to the company or its
shareholders.
IV. Proxy Voting Procedures
This section applies to each Aberdeen Adviser except to the extent that
certain procedures are identified as applicable only to a specific
Aberdeen Adviser.
A. Obtain Proxy. Registered owners of record, e.g., trustees or
custodian banks, that receive proxy materials from the issuer or its
information agent, are instructed to sign physical proxy cards in blank
and forward directly to the relevant Aberdeen Adviser's designated proxy
administrator ("PA"). Proxies may also be delivered electronically by
custodians using proxy services such as ProxyEdge. Each proxy received
is matched to the securities to be voted.
B. Material Conflicts of Interest.
1. Identify the existence of any material conflicts of interest relating
to the securities to be voted or the issue at hand. Portfolio managers
and research analysts ("Analysts") and senior management of each
Aberdeen Adviser have an affirmative duty to disclose to the relevant
proxy committees any personal conflicts such as officer or director
positions held by them, their spouses or close relatives in the
portfolio company or attempts by the portfolio company to exert
influence over such person with respect to their vote. Conflicts based
on business relationships or dealings of affiliates of any Aberdeen
Adviser will only be considered to the extent that the Aberdeen Adviser
has actual knowledge of such business relationships.
2. When a material conflict of interest between an Aberdeen Adviser's
interests and its clients' interests appears to exist, the Aberdeen
Adviser may choose among the following options to eliminate such
conflict: (1) vote in accordance with these Policies and Procedures if
it involves little or no discretion; (2) vote as recommended by a third
party service if the Aberdeen Adviser utilizes such a service; (3) "echo
vote" or "mirror vote" the proxies in the same proportion as the votes
of other proxy holders that are not Aberdeen clients; (4) if possible,
erect information barriers around the person or persons making voting
decisions sufficient to insulate the decision from the conflict; (5) if
practical, notify affected clients of the conflict of interest and seek
a waiver of the conflict; or (6) if agreed upon in writing with the
client, forward the proxies to affected clients allowing them to vote
their own proxies.
C. Analysts. The PA for each Aberdeen Adviser will ensure that each
proxy statement is directed to the appropriate Analyst. If a third party
recommendation service has been retained, the relevant PA will forward
the proxy statement to the Analyst with the recommendation highlighted.
The Analyst will determine whether to vote as recommended by the service
provider or to recommend an alternative and shall advise the PA. The
Analyst may consult with the PA as necessary. If the Analyst recommends
voting against the third party recommendation, he or she is responsible
for documenting the reasons for such recommendation and that no conflict
of interest influenced such recommendation. If no third party
recommendation service is utilized or if no recommendation is provided,
the Analyst is responsible for documenting the rationale for his or her
vote recommendation.
D. Vote. The following describes the breakdown of responsibilities
between the designated PA and the Proxy Committee ("PC") of each
Aberdeen Adviser in voting portfolio securities and the extent to which
the Aberdeen Advisers rely on third party service providers.
1. Aberdeen US Clients
The designated PA for Aberdeen US ("PA-US"), and the designated
PA for Aberdeen UK ("PA-UK"), are responsible for ensuring that votes
for Aberdeen US clients are cast and cast in accordance with these
Policies and Procedures. The PA-US is primarily responsible for
administering proxy votes for the funds which are sub-advised by Aberdeen US,
the US closed-end Funds for which Aberdeen Singapore is the Manager, and the
Canadian investment funds.
Responsibility for considering the substantive issues relating
to any vote and for deciding how shares will be voted resides with the
relevant Analyst whether located in Aberdeen US, Aberdeen UK, Aberdeen
AU or Aberdeen Singapore. Under Aberdeen-US's MOU with Aberdeen
Singapore, the relevant Analyst for Far East equity securities will
generally reside in Aberdeen Singapore.
In the event that a material conflict of interest is identified
by any Analyst, whether in Aberdeen US, Aberdeen UK, Aberdeen AU,
Aberdeen Singapore, or AAMISL, decisions on how to vote will be referred
to the Aberdeen US proxy committee ("PC-US/UK"). Under Aberdeen US's MOU
with Aberdeen UK, the PC-US/UK is headquartered in Scotland, and
includes the Chief Investment Officer or Deputy Chief Investment
Officer, the head of the Socially Responsible Investing ("SRI") Team and
a member of the Compliance team.,. The PC-US/UK meets as needed to
consider material conflicts of interest or any other items raising
unique issues. If the PC-US/UK determines that there is no material
conflict of interest, the vote recommendation will be forwarded to the
appropriate proxy administrator, either the PA-US or PA-UK. If a
material conflict of interest is identified, the PC-US/UK will follow
the conflict of interest procedures set forth in Section IV.B.2., above.
Aberdeen US has engaged ProxyEdge, a third party service
provider, to cast votes electronically for certain clients and to
maintain records of such votes electronically. The Phoenix Funds,
sub-advised by Aberdeen US, require electronic voting through ProxyEdge.
Custodians for certain other clients also provide the PA-US with access
to ProxyEdge. Pursuant to the MOU, Aberdeen UK votes proxies for certain
U.S. clients of Aberdeen US. Aberdeen UK has engaged Institutional
Shareholder Services ("ISS"), a third party service provider, to provide
(1) notification of impending votes; (2) research into non-routine
votes, including shareholder resolutions; (3) voting recommendations
which may be viewed on-line; and (4) web-based voting. In the absence of
any material conflict of interest, Aberdeen US may either vote in
accordance with the ISS recommendation or decline to follow the ISS
recommendation based on its own view of the agenda item provided that
decisions to vote contrary to the ISS recommendation are documented as
set forth in Section IV.C., above. For clients on the ISS system, votes
are automatically entered in accordance with ISS recommendations unless
the PA-UK expressly changes the vote prior to the voting deadline with
appropriate analyst documentation. In the event of a material conflict
of interest, Aberdeen US will follow the procedures outlined in Section
IV.B.2, above.
2. Aberdeen Singapore Clients
Aberdeen AU and Aberdeen Singapore are responsible for
deciding how to vote for the US closed-end Funds and the Canadian
investment funds and will instruct the PA-US Aberdeen US accordingly.
The PA-US shall ensure that the votes are cast and cast in accordance
with the relevant Proxy Voting Policy and Procedure of the relevant
Fund. The PA-US uses ProxyEdge to electronically cast votes for the
Funds and to maintain electronic records of the votes cast.
Responsibility for considering the substantive issues relating
to any Fund vote and for deciding how the shares will be voted resides
with relevant equity and/or fixed income Analyst. The relevant analyst
may be a member of the Fund portfolio management team in Aberdeen
Singapore, Aberdeen AU, Aberdeen UK, or AAMISL In the event that a
material conflict of interest is identified, decisions on how to vote
will be referred to the proxy committee ("PC-Asia") located in Singapore
and Australia, comprised of a representative from each of equity fund
management, fixed income fund management and compliance teams
respectively. The PC-Asia meets as needed to consider a material
conflict of interest or any other items raising unique issues. If the
PC-Asia determines there is no material conflict of interest, the vote
recommendation will be forwarded to the PA-US to be cast. If a material
conflict of interest is identified, the PC-Asia will follow the conflict
of interest procedures set forth in Section IV.B.2., above, and in the
Aberdeen Funds Proxy Voting Policy and Procedures.
E. Review. Each designated PA is responsible for ensuring that proxy
materials are received in a timely manner and reconciled against
holdings on the record date of client accounts over which the Aberdeen
Adviser has voting authority to ensure that all shares held on the
record date, and for which a voting obligation exists, are voted.
V. Documentation, Recordkeeping and Reporting Requirements
A. Documentation. The Aberdeen PAs are responsible for:
1. Implementing and updating these Policies and Procedures;
2. Overseeing the proxy voting process;
3. Consulting with portfolio managers/analysts for the relevant
portfolio security; and 4. Maintaining manual proxy voting records, if
any, and overseeing and reviewing voting execution and recordkeeping
by third party providers such as ISS and ProxyEdge.
B. Record Keeping.
1. Each Aberdeen Adviser maintains or procures the maintenance of
records of all proxies it has voted. As permitted by Rule 204-2(c),
electronic proxy statements and the record of each vote cast by each
client account of Aberdeen US will be maintained by either ISS and Proxy
Edge, depending on the client account. Similarly, electronic proxy
statements and the record of each vote cast by each U.S. client account
of Aberdeen Singapore will be maintained by Proxy Edge.
A US Fund's proxy voting record must be filed with the SEC on
Form N-PX. Form N-PX must be completed and signed in the manner
required, containing a fund's proxy voting record for the most recent
twelve-month period ended June 30th (beginning August 31, 2004). If an
Aberdeen Adviser delegates this reporting responsibility to a third
party service provider such as ISS or Proxy Edge, it will ensure that
the third party service provider files Form N-PX accordingly. Aberdeen
US shall obtain and maintain undertakings from both ISS and Proxy Edge
to provide it with copies of proxy voting records and other documents
relating to its clients' votes promptly upon request. Aberdeen Advisers,
ISS and Proxy Edge may rely on the SEC's EDGAR system to keep records of
certain proxy statements if the proxy statements are maintained by
issuers on that system (e.g., large U.S.-based issuers).
2. As required by Rule 204-2(c), such records will also include: (a) a
copy of the Policies and Procedures; (b) a copy of any document created
by the Aberdeen Adviser that was material to making a decision on how to
vote proxies on behalf of a client or that memorializes the basis for
that decision; and (c) each written client request for proxy voting
records and the Aberdeen Adviser's written response to any (written or
oral) client request for such records.
3. Duration. Proxy voting books and records will be maintained in an
easily accessible place for a period of five years, the first two in an
appropriate office of the Aberdeen Adviser.
C. Reporting. For US Funds, Aberdeen US, Aberdeen AU, Aberdeen
Singapore, and AAMISL will initially inform clients of these Policies
and Procedures by summary disclosure in Part II of their respective
Forms ADV. Upon receipt of a client's request for more information,
Aberdeen US, Aberdeen AU, Aberdeen Singapore, and AAMISL will provide to
the client a copy of these Policies and Procedures and/or, in accordance
with the client's stated requirements, how the client's proxies were
voted during the period requested subsequent to the adoption of these
Policies and Procedures. Such periodic reports, other than those
required for the US closed-end Funds, will not be made available to
third parties absent the express written request of the client. However,
to the extent that any Aberdeen Adviser may serve as a subadviser to
another adviser to a Client, such Aberdeen Adviser will be deemed to be
authorized to provide proxy-voting records on such Client accounts to
such other adviser.
For Canadian investment funds, Aberdeen US, Aberdeen AU and
Aberdeen Singapore will assist in preparing annual proxy voting records
for the period ending June 30 of each year and will post an annual proxy
voting record on each Canadian investment fund's website no later than
August 31 of each year. Upon receipt of a client or securityholder's
request, Aberdeen US, Aberdeen AU or Aberdeen Singapore will make
available a copy of these Policies and Procedures and the Canadian
investment fund's proxy voting record, without charge, to any client or
securityholder upon a request made by the client or securityholder after
August 31.
D. Review of Policies and Procedures. These Policies and Procedures will
be subject to review on a periodic basis as deemed appropriate by the
Aberdeen Advisers. Any questions regarding the Policies and Procedures
should be directed to the Compliance Department of the respective
Aberdeen Adviser. Each Compliance Department maintains information
regarding the PA and the PC for the respective Aberdeen Adviser.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a)(1) Identification of Portfolio Manager(s) or Management Team Members and
Description of Role of Portfolio Manager(s) or Management Team Members
Aberdeen Asset Management Inc. ("Aberdeen") is the sub-adviser
for the Registrant. In addition to the description in the duties listed in the
table below, Derek Fulton is responsible for the day-to-day management of the
global fixed-income and government portfolios, and Brett Diment is responsible
for the day-to-day management of the emerging market debt team and portfolios.
Name Title Length of Business Experience Past 5 Years
Service
1. Derek Fulton Head of Global & Asian Bonds 7 years Joining Aberdeen via the acquisition of Murray Johnstone
in 2000, Mr. Fulton began as a graduate trainee analyst
on the fixed income desk. Mr. Fulton has since become a
senior member of the fixed-income team of Aberdeen as the
Head of Global & Asian Bonds and is a member of
Aberdeen's global economics team.
2. Brett Diment Head of Emerging Market Debt 2 years Since joining Aberdeen via the acquisition of Deutsche
Asset Management's London and Philadelphia fixed income
business in 2005, Mr. Diment has held the role of Head of
Emerging Markets. Previously, Mr. Diment was the Head of
the Deutsche Bank global emerging markets debt team since
1999.
3. Edwin Gutierrez Portfolio Manager, Emerging 2 years Since joining Aberdeen via the acquisition of Deutsche
Market Debt Asset Management's London and Philadelphia fixed income
business in 2005, Mr. Gutierrez has held the role of Fund
Manager. Previously, Mr. Gutierrez was an emerging
markets fixed-income portfolio manager at Deutsche.
4. Nima Tayebi Portfolio Manager, Emerging 2 years Since joining Aberdeen via the acquisition of Deutsche
Market Debt Asset Management's London and Philadelphia fixed income
business in 2005, Mr. Tayebi has held the role of Fund
Manager. Previously, Mr. Tayebi held the same role since
2001 at Deutsche.
5. Max Wolman Portfolio Manager, Emerging 6 years Joining Aberdeen in 2001, Mr. Wolman initially
Market Debt specialized in currency and domestic debt analysis, but
is now responsible for wider emerging market debt
analysis including external and corporate issuers. Mr.
Wolman is also a member of Aberdeen's EM Debt investment
committee.
(a)(2) Other Accounts Managed by Portfolio Manager(s) or Management Team
Member and Potential Conflicts of Interest
Other Accounts Managed by Portfolio Manager(s) or Management Team Member
The information in the table below is as of December 31, 2006.
# of
Accounts Total Assets
Total Managed for for which
Name of Portfolio Manager # of which Advisory Fee
or Team Member Accounts Total Advisory Fee is Based on
Type of Accounts*** Managed Assets is Based on Performance
Performance
------------------------- ------------------- ------- ------ ------------ -----------
1. Derek Fulton Registered Investment Companies: 4 $3,440m 0 $0
Other Pooled Investment Vehicles: 2 $120m 0 $0
Other Accounts: 0 $0 0 $0
2. Brett Diment Registered Investment Companies: 4 $609.1m 0 $0
Other Pooled Investment Vehicles: 4 $1,139.3m 0 $0
Other Accounts: 11 $946.5m 0 $0
3. Edwin Gutierrez Registered Investment Companies: 4 $609.1m 0 $0
Other Pooled Investment Vehicles: 4 $1,139.3m 0 $0
Other Accounts: 11 $946.5m 0 $0
4. Nima Tayebi Registered Investment Companies: 4 $609.1m 0 $0
Other Pooled Investment Vehicles: 4 $1,139.3m 0 $0
Other Accounts: 11 $946.5m 0 $0
5. Max Wolman Registered Investment Companies: 4 $609.1m 0 $0
Other Pooled Investment Vehicles: 4 $1,139.3m 0 $0
Other Accounts: 11 $946.5m 0 $0
Potential Conflicts of Interests
To date, Aberdeen has identified the following as potential
conflicts: fair investment allocations, proxy voting and employee trading -
Aberdeen currently has processes and procedures in place to mitigate
these conflicts and does not feel that there are any material conflicts. Any
conflicts are identified by Compliance via Aberdeen's dynamic Monitoring
Program and addressed in the compliance program appropriately prior to a client
being accepted by Aberdeen.
(a)(3) Compensation Structure of Portfolio Manager(s) or Management Team
Members
The Aberdeen Group 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.
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.
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 Asset Management PLC, 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 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 member's Code of Ethics, but any such
trend would be identified via its dynamic compliance monitoring system.
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 each Aberdeen Group member
to mitigate the effects of any individual leaving the company by ensuring that
portfolios are managed on a team basis.
(a)(4) Disclosure of Securities Ownership
The information below is as of December 31, 2006:
Dollar ($)
Name of Portfolio Manager Range of
or Fund Shares
Team Member Beneficially Owned
Derek Fulton $0
Brett Diment $0
Edwin Guiterrez $0
Nima Tayebi $0
Max Wolman $0
(b) Not applicable.
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) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached
hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached
hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) First Trust/Aberdeen Global Opportunity Income Fund
By (Signature and Title)* /s/ James A. Bowen
----------------------------------------------------
James A. Bowen, Chairman of the Board, President
and Chief Executive Officer
(principal executive officer)
Date February 22, 2007
------------------
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 February 22, 2007
------------------
By (Signature and Title)* /s/ Mark R. Bradley
-----------------------------------------------------
Mark R. Bradley, Treasurer, Controller,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date February 22, 2007
-----------------
* Print the name and title of each signing officer under his or her signature.