UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-21905
First Trust/Aberdeen Emerging Opportunity Fund
(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Name and address of agent for service)
Registrant's telephone number, including area code: (630) 765-8000
Date of fiscal year end: December 31
Date of reporting period: March 31, 2009
Form N-Q is to be used by management investment companies, other than small
business investment companies registered on Form N-5 (Sections 239.24 and 274.5
of this chapter), to file reports with the Commission, not later than 60 days
after the close of the first and third fiscal quarters, pursuant to rule 30b1-5
under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may
use the information provided on Form N-Q in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-Q, and
the Commission will make this information public. A registrant is not required
to respond to the collection of information contained in Form N-Q 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 the
Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC
20549. The OMB has reviewed this collection of information under the clearance
requirements of 44 U.S.C. Section 3507.
ITEM 1. SCHEDULE OF INVESTMENTS.
The Schedule(s) of Investments is attached herewith.
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a)
MARCH 31, 2009 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
-------------- --------------------------------------------- ------ -------- -----------
BONDS AND NOTES (b) - 70.2%
ARGENTINA - 2.2%
1,810,000 Republic of Argentina (USD) ................. 7.00% 03/28/11 $ 752,035
2,230,000 Republic of Argentina (USD) ................. 7.00% 04/17/17 845,899
173,270 Republic of Argentina (USD) ................. 8.28% 12/31/33 47,216
-----------
1,645,150
-----------
BRAZIL - 6.8%
650,000 Banco Nacional de Desenvolvimento
Economico e Social (USD) ................. 6.37% 06/16/18 621,563
3,420,000 Brazil NTN - B Note (BRL) ................... 6.00% 08/15/10 2,677,931
730,000 Dasa Finance Corp. (USD) .................... 8.75% 05/29/18 591,300
1,000,000 Isa Capital do Brasil S.A. (USD) ............ 7.88% 01/30/12 957,500
580,000 Nota do Tesouro Nacional (BRL) .............. 10.00% 01/01/14 233,312
-----------
5,081,606
-----------
CHINA - 0.3%
210,000 Parkson Retail Group Ltd. (USD) ............. 7.88% 11/14/11 194,250
-----------
COLOMBIA - 1.9%
300,000 EEB International Ltd. (USD) ................ 8.75% 10/31/14 280,500
2,610,000,000 Republic of Colombia (COP) .................. 12.00% 10/22/15 1,155,395
-----------
1,435,895
-----------
DOMINICAN REPUBLIC - 2.3%
820,000 Cerveceria Nacional Dominica (USD) (c) ...... 16.00% 03/27/12 557,600
480,910 Dominican Republic (USD) .................... 9.04% 01/23/18 375,110
1,310,000 Dominican Republic (USD) .................... 8.63% 04/20/27 818,750
-----------
1,751,460
-----------
EL SALVADOR - 2.6%
450,000 Republic of El Salvador (USD) ............... 8.25% 04/10/32 353,250
2,220,000 Republic of El Salvador (USD) ............... 7.65% 06/15/35 1,631,700
-----------
1,984,950
-----------
GABON - 1.5%
1,480,000 Gabonese Republic (USD) ..................... 8.20% 12/12/17 1,102,600
-----------
GEORGIA - 1.4%
1,510,000 Republic of Georgia (USD) ................... 7.50% 04/15/13 1,080,027
-----------
GHANA - 0.9%
150,000 Republic of Ghana (USD) ..................... 8.50% 10/04/17 93,750
920,000 Republic of Ghana (USD) ..................... 8.50% 10/04/27 575,000
-----------
668,750
-----------
INDONESIA - 6.8%
1,740,000 Indonesian Government (IDR) ................. 6.75% 03/10/14 1,601,687
1,850,000,000 Indonesian Recapitalization Bond (IDR) ...... 13.40% 02/15/11 168,479
4,350,000,000 Indonesian Recapitalization Bond (IDR) ...... 13.45% 08/15/11 399,063
700,000 Majapahit Holding B.V. (USD) ................ 7.75% 10/17/16 507,373
See Notes to Quarterly Portfolio of Investments
Page 1
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
MARCH 31, 2009 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
-------------- --------------------------------------------- ------ -------- -----------
BONDS AND NOTES (b) - (CONTINUED)
INDONESIA - (CONTINUED)
150,000 Majapahit Holding B.V. (USD) ................ 7.25% 06/28/17 $ 104,390
350,000 MGTI Finance Company, Ltd. (USD) ............ 8.38% 09/15/10 335,863
1,890,000 Republic of Indonesia (USD) ................. 10.38% 05/04/14 2,004,218
-----------
5,121,073
-----------
KAZAKHSTAN - 1.9%
1,000,000 Halyk Savings Bank of Kazakhstan (USD) ...... 8.13% 10/07/09 937,334
620,000 KazMunaiGaz Finance Sub B.V. (USD) .......... 8.38% 07/02/13 529,889
-----------
1,467,223
-----------
MEXICO - 3.1%
140,000 Desarrolladora Homex S.A. (USD) ............. 7.50% 09/28/15 95,200
8,200,000 Mexican Bonos Desarr Fixed Rate Bond (MXN) .. 7.25% 12/15/16 564,529
12,340,000 Mexican Bonos Desarr Fixed Rate Bond (MXN) .. 10.00% 11/20/36 1,022,918
600,000 Mexician Republic (USD) ..................... 8.30% 08/15/31 669,510
-----------
2,352,157
-----------
NIGERIA - 1.7%
790,000 GTB Finance B.V. (USD) ...................... 8.50% 01/29/12 495,725
174,000,000 KfW International Finance (NGN) ............. 8.50% 01/18/11 781,390
-----------
1,277,115
-----------
PAKISTAN - 0.8%
550,000 Islamic Republic of Pakistan (USD) .......... 6.88% 06/01/17 270,875
710,000 Islamic Republic of Pakistan (USD) .......... 7.88% 03/31/36 301,245
-----------
572,120
-----------
PANAMA - 1.5%
1,080,000 Republic of Panama (USD) .................... 8.88% 09/30/27 1,144,800
-----------
PERU - 2.6%
1,450,000 Republic of Peru International Bond (EUR) ... 7.50% 10/14/14 1,923,585
-----------
PHILIPPINES - 3.2%
100,000 Republic of Philippines (USD) ............... 8.00% 01/15/16 110,625
330,000 Republic of Philippines (USD) ............... 9.38% 01/18/17 383,986
620,000 Republic of Philippines (USD) ............... 10.63% 03/16/25 789,104
970,000 Republic of Philippines (USD) ............... 9.50% 02/02/30 1,151,924
-----------
2,435,639
-----------
RUSSIA - 9.4%
17,000,000 GPB Eurobond Finance PLC (RUB) .............. 7.25% 02/22/10 436,182
1,000,000 Mobile Telesystems Finance (USD) ............ 8.38% 10/14/10 997,500
30,678,432 Red Arrow International Leasing PLC (RUB) ... 8.38% 06/30/12 651,443
350,000 RS Finance (RSB) (USD) ...................... 7.50% 10/07/10 190,401
1,050,000 RSHB Capital S.A. (USD) ..................... 7.18% 05/16/13 885,203
1,725,000 RSHB Capital S.A. (USD) ..................... 7.75% 05/29/18 1,293,750
560,000 Transcapitalinvest Ltd. (USD) ............... 8.70% 08/07/18 493,707
1,000,000 UBS Luxembourg (USD) ........................ 8.00% 02/11/10 957,836
See Notes to Quarterly Portfolio of Investments
Page 2
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
MARCH 31, 2009 (UNAUDITED)
PRINCIPAL
VALUE
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
-------------- --------------------------------------------- ------ -------- -----------
BONDS AND NOTES (b) - (CONTINUED)
RUSSIA - (CONTINUED)
780,000 UBS Luxembourg S.A. (USD) (c) ............... 6.23% 02/11/15 $ 567,450
750,000 VTB Capital S.A. (USD) ...................... 6.88% 05/29/18 584,858
-----------
7,058,330
-----------
SERBIA - 0.8%
840,000 Republic of Serbia (USD) (d) ................ 3.75% 11/01/24 596,736
-----------
SOUTH AFRICA - 2.5%
1,260,000 Republic of South Africa (USD) .............. 7.38% 04/25/12 1,316,196
540,000 Republic of South Africa (USD) .............. 6.50% 06/02/14 543,701
-----------
1,859,897
-----------
SOUTH KOREA - 1.2%
860,000 Korea Development Bank (USD) ................ 8.00% 01/23/14 882,016
-----------
TURKEY - 2.9%
980,000 Republic of Turkey (USD) .................... 9.50% 01/15/14 1,058,126
320,000 Turkey Government Bond (TRY) ................ 16.00% 03/07/12 196,590
1,380,000 Turkey Government Bond,
Inflation Adjusted Bond (TRY) (e) ........ 10.00% 02/15/12 925,934
-----------
2,180,650
-----------
UKRAINE - 2.6%
800,000 Alfa Bank Ukraine (USD) ..................... 9.75% 12/22/09 449,424
1,070,000 EX-IM Bank of Ukraine (USD) ................. 7.65% 09/07/11 412,155
500,000 UBS AG Jersey Branch, Credit Linked Note
(USD) .................................... 9.13% 06/21/10 111,900
120,000 Ukraine Government (USD) .................... 6.39% 06/26/12 57,810
230,000 Ukraine Government (USD) .................... 6.58% 11/21/16 105,388
1,800,000 Ukraine Government (USD) .................... 6.75% 11/14/17 819,000
-----------
1,955,677
-----------
URUGUAY - 3.4%
570,000 Republic of Uraguay, PIK (USD) .............. 7.88% 01/15/33 481,793
1,010,000 Republic Orient Uruguay (USD) ............... 7.63% 03/21/36 826,231
37,710,000 Republic Orient Uruguay,
Inflation Adjusted Bond (UYU) (e) ........ 5.00% 09/14/18 1,079,664
8,560,000 Republic Orient Uruguay,
Inflation Adjusted Bond (UYU) (e) ........ 4.25% 04/05/27 181,145
-----------
2,568,833
-----------
VENEZUELA - 5.9%
1,700,000 Bolivarian Republic of Venezuela (USD) (c) .. 2.12% 04/20/11 1,235,475
240,000 Bolivarian Republic of Venezuela (USD) ...... 9.00% 05/07/23 123,600
2,360,000 Petroleos de Venezuela S.A. (USD) ........... 5.25% 04/12/17 991,200
191,000 Republic of Venezuela (USD) ................. 10.75% 09/19/13 136,584
1,045,000 Republic of Venezuela (USD) ................. 8.50% 10/08/14 647,900
2,680,000 Republic of Venezuela (USD) ................. 5.75% 02/26/16 1,314,540
-----------
4,449,299
-----------
TOTAL BONDS AND NOTES
(Cost $65,780,333) .......................... 52,789,838
-----------
See Notes to Quarterly Portfolio of Investments
Page 3
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
MARCH 31, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------- ------------------------------------------------------- -----------
COMMON STOCKS - 39.5%
ARGENTINA - 0.8%
31,000 Tenaris S.A., ADR ..................................... $ 625,270
-----------
BRAZIL - 7.0%
78,450 Banco Bradesco S.A., ADR .............................. 776,655
86,000 Companhia Vale do Rio Doce, ADR, Preferance Shares .... 970,080
90,000 Lojas Renner S.A. ..................................... 557,129
39,000 Petroleo Brasileiro S.A., ADR ......................... 955,500
32,000 Souza Cruz S.A. ....................................... 611,928
28,000 Telecomunicacoes de Sao Paulo S.A. .................... 463,257
38,000 Ultrapar Participacoes S.A., Preference Shares ........ 907,512
-----------
5,242,061
-----------
CHILE - 1.1%
23,000 Banco Santander Chile S.A., ADR ....................... 790,050
-----------
CHINA - 4.5%
90,000 China Mobile Ltd. (f) ................................. 783,981
350,000 Dah Sing Banking Group Ltd. (f) ....................... 192,186
200,000 Hang Lung Group Ltd. (f) .............................. 609,175
20,000 Hong Kong Exchanges & Clearing Ltd. (f) ............... 188,749
920,000 PetroChina Company Ltd., H Shares (f) ................. 733,969
700,000 Swire Pacific Ltd., B Shares (f) ...................... 900,617
-----------
3,408,677
-----------
CZECH REPUBLIC - 0.4%
3,000 Komercni Banka AS (f) ................................. 302,161
-----------
HUNGARY - 0.8%
5,300 Richter Gedeon, GDR ................................... 575,946
-----------
INDIA - 2.8%
20,000 GlaxoSmithKline Pharmaceuticals Ltd. (f) .............. 431,252
13,000 Grasim Industries Ltd. (f) ............................ 404,263
40,000 Hero Honda Motors Ltd. (f) ............................ 847,706
11,500 Housing Development Finance Corp. Ltd. (f) ............ 320,912
20,000 ICICI Bank Ltd. (f) ................................... 131,438
-----------
2,135,571
-----------
INDONESIA - 1.3%
773,500 PT Astra International Tbk (f) ........................ 957,473
-----------
MALAYSIA - 2.1%
80,300 British American Tobacco Malaysia Berhad (f) .......... 1,002,844
289,000 Public Bank Berhad (f) ................................ 598,927
-----------
1,601,771
-----------
MEXICO - 4.3%
36,900 Fomento Economico Mexicano, S.A.B. de C.V., ADR ....... 930,249
40,000 Grupo Aeroportuario del Centro Norte, S.A.B. de
C.V., ADR .......................................... 290,400
361,000 Grupo Continental, S.A.B. ............................. 583,360
See Notes to Quarterly Portfolio of Investments
Page 4
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
MARCH 31, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
---------- ------------------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
MEXICO - (CONTINUED)
474,939 Grupo Financiero Banorte, S.A.B. de C.V., O Shares .... $ 628,334
256,000 Kimberly-Clark de Mexico, S.A.B. de C.V., A Shares .... 830,983
-----------
3,263,326
-----------
PHILIPPINES - 1.1%
1,164,000 Bank of the Philippine Islands (f) .................... 818,255
-----------
QATAR - 0.4%
28,000 Qatar Insurance Company (f) ........................... 292,459
-----------
RUSSIA - 0.7%
14,500 LUKOIL, ADR ........................................... 546,650
-----------
SOUTH AFRICA - 1.9%
130,000 Massmart Holdings Ltd. (f) ............................ 955,757
142,729 Truworths International Ltd. (f) ...................... 484,167
-----------
1,439,924
-----------
SOUTH KOREA - 2.5%
66,998 Pusan Bank (f) ........................................ 288,828
5,700 Samsung Electronics Company Ltd., Preference
Shares (f) ......................................... 1,306,737
850 Shinsegae Company Ltd. (f) ............................ 266,960
-----------
1,862,525
-----------
TAIWAN - 3.3%
900,450 Taiwan Mobile Company, Ltd. (f) ....................... 1,307,097
764,750 Taiwan Semiconductor Manufacturing Company, Ltd. (f) .. 1,151,600
-----------
2,458,697
-----------
THAILAND - 1.9%
250,000 PTT Exploration and Production Public Company Ltd. .... 685,535
275,000 Siam Cement Public (The) Company Ltd. (f) ............. 760,778
-----------
1,446,313
-----------
TURKEY - 1.8%
344,000 Aksigorta AS (f) ...................................... 538,009
22,610 Bim Birlesik Magazalar AS (f) ......................... 479,597
156,000 Cimsa Cimento Sanayi ve Ticaret AS (f) ................ 312,424
-----------
1,330,030
-----------
UNITED KINGDOM - 0.8%
50,696 Standard Chartered PLC (f) ............................ 629,506
-----------
TOTAL COMMON STOCKS
(Cost $41,332,326) .................................... 29,726,665
-----------
TOTAL INVESTMENTS - 109.7%
(Cost $107,112,659) (g) ............................... 82,516,503
LOAN OUTSTANDING - (11.3)% ............................ (8,500,000)
NET OTHER ASSETS AND LIABILITIES - 1.6% ............... 1,206,419
-----------
NET ASSETS - 100.0% ................................... $75,222,922
===========
See Notes to Quarterly Portfolio of Investments
Page 5
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
MARCH 31, 2009 (UNAUDITED)
----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Fixed-income portfolio securities are included in a country based upon
their underlying credit exposure as determined by Aberdeen Asset Management
Inc., the investment sub-advisor.
(c) Variable rate security. The interest rate shown reflects the rate in effect
at March 31, 2009.
(d) Step-up security. A security where the coupon increases or steps up at a
predetermined date. Interest rate shown reflects the rate in effect at
March 31, 2009.
(e) Security whose principal value is adjusted in accordance with changes to
the country's Consumer Price Index. Interest is calculated on the basis of
the current adjusted principal value.
(f) Security is fair valued in accordance with procedures adopted by the Fund's
Board of Trustees.
(g) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of March 31, 2009, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $1,958,647 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $26,554,803.
ADR American Depositary Receipt
GDR Global Depositary Receipt
RSB Russian Standard Bank
Currency
BRL Brazilian Real
COP Colombian Peso
EUR Euro Dollar
IDR Indonesian Rupiah
MXN Mexican Peso
NGN Nigerian Naira
RUB Russian Ruble
TRY Turkish Lira
USD United States Dollar
UYU Uruguayan Peso
ZAR South African Rand
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of March 31,
2009 is as follows (see Note 1A - Portfolio Valuation in the Notes to Quarterly
Portfolio of Investments):
OTHER FINANCIAL
VALUATION INPUTS INVESTMENTS INSTRUMENTS (a)
---------------- ----------- ---------------
Level 1 - Quoted Prices ......................... $11,728,838 $(163,463)
Level 2 - Other Significant Observable Inputs ... 70,787,665 --
Level 3 - Significant Unobservable Inputs ....... -- --
----------- ---------
TOTAL ........................................... $82,516,503 $(163,463)
=========== =========
(a) Other financial instruments are forward foreign currency contracts not
reflected in the Portfolio of Investments, which are valued at the
unrealized appreciation (depreciation) on the contracts (see Schedule of
Forward Foreign Currency Contracts).
See Notes to Quarterly Portfolio of Investments
Page 6
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
MARCH 31, 2009 (UNAUDITED)
% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
----------------------- -----------
Government Bonds and Notes 44.3%
Commercial Banks 10.1
Diversified Financial Services 6.4
Oil, Gas & Consumable Fuels 5.4
Wireless Telecommunication Services 3.7
Semiconductors & Semiconductor Equipment 3.0
Beverages 2.5
Automobiles 2.2
Food & Staples Retailing 2.1
Special Purpose Banks 2.0
Tobacco 1.9
Real Estate Management & Development 1.8
Construction Materials 1.8
Diversified Telecommunication Services 1.7
Specialty Retail 1.7
Pharmaceuticals 1.2
Metals & Mining 1.2
Electric Utilities 1.1
Household Products 1.0
Insurance 1.0
Multiline Retail 0.9
Energy Equipment & Services 0.8
Health Care 0.7
Export/Import Bank 0.5
Thrifts & Mortgage Finance 0.4
Transportation Infrastructure 0.4
Capital Markets 0.1
Household Durables 0.1
-----
Total 100.0%
=====
See Notes to Quarterly Portfolio of Investments
Page 7
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
MARCH 31, 2009 (UNAUDITED)
FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
CONTRACTS TO RECEIVE
------------------------------------------ NET NET
LOCAL UNREALIZED UNREALIZED
CURRENCY IN APPRECIATION DEPRECIATION
EXPIRATION LOCAL VALUE IN EXCHANGE OF CONTRACTS OF CONTRACTS
DATE CURRENCY (a) U.S. $ FOR U.S. $ U.S. $ U.S. $
---------- ------------------ ---------- ---------- ------------ ------------
04/24/09 EUR 239,000 $ 317,518 $ 316,281 $ 1,237 $--
05/15/09 IDR 13,058,591,000 1,116,357 1,064,719 51,638 --
05/15/09 RUB 18,599,000 539,782 516,639 23,143 --
04/24/09 TRY 136,000 81,276 73,971 7,305 --
04/24/09 ZAR 3,965,000 415,942 382,187 33,755 --
-------- ---
$117,078 $--
-------- ---
FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER
------------------------------------------ NET NET
LOCAL UNREALIZED UNREALIZED
CURRENCY IN APPRECIATION DEPRECIATION
EXPIRATION LOCAL VALUE IN EXCHANGE OF CONTRACTS OF CONTRACTS
DATE CURRENCY (A) U.S. $ FOR U.S. $ U.S. $ U.S. $
---------- ------------------ ---------- ---------- ------------ ------------
05/15/09 BRL 4,217,000 $1,797,700 $1,787,065 $ -- $ (10,635)
05/15/09 COP 2,645,434,000 1,033,797 1,055,219 21,422 --
04/24/09 EUR 1,417,000 1,882,523 1,832,202 -- (50,321)
05/15/09 IDR 13,058,591,000 1,116,357 1,046,361 -- (69,996)
04/24/09 MXN 19,149,000 1,345,356 1,302,701 -- (42,655)
05/15/09 RUB 18,599,000 539,782 476,287 -- (63,495)
04/24/09 TRY 1,744,000 1,042,238 1,004,877 -- (37,361)
04/24/09 ZAR 3,965,000 415,942 388,442 -- (27,500)
-------- ---------
$ 21,422 $(301,963)
-------- ---------
Unrealized Appreciation (Depreciation) ................ $138,500 $(301,963)
======== =========
Net Unrealized Appreciation (Depreciation) ............ $(163,463)
=========
(a) Please see page 6 for currency descriptions.
See Notes to Quarterly Portfolio of Investments
Page 8
NOTES TO QUARTERLY PORTFOLIO OF INVESTMENTS
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
MARCH 31, 2009 (UNAUDITED)
1.VALUATION AND INVESTMENT PRACTICES
A. PORTFOLIO VALUATION:
The net asset value ("NAV") of the Common Shares of First Trust/Aberdeen
Emerging Opportunity Fund (the "Fund") is determined daily as of the close of
regular trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m.
Eastern time, on each day the NYSE is open for trading. Domestic debt securities
and foreign securities are priced using data reflecting the earlier closing of
the principal markets for those securities. The NAV per Common Share is
calculated by dividing the value of all assets of the Fund (including accrued
interest and dividends), less all liabilities (including accrued expenses,
dividends declared but unpaid and any borrowings of the Fund), by the total
number of Common Shares outstanding.
The Fund's investments are valued daily at market value or, in the absence of
market value with respect to any portfolio securities, at fair value according
to procedures adopted by the Fund's Board of Trustees. A majority of the Fund's
assets are valued using market information supplied by third parties. In
addition, structured products, including currency linked notes and credit linked
notes, as well as interest rate swaps and credit default swaps, are valued using
a pricing service or quotes provided by the selling dealer or financial
institution. In the event that market quotations are not readily available, the
pricing service does not provide a valuation for a particular asset, or the
valuations are deemed unreliable, the Fund's Board of Trustees has designated
First Trust Advisors L.P. ("First Trust") to use a fair value method to value
the Fund's securities and other investments. Additionally, if events occur after
the close of the principal market for particular securities (e.g., domestic debt
and foreign securities), but before the Fund values its assets, that could
materially affect NAV, First Trust may use a fair value method to value the
Fund's securities and other investments. The use of fair value pricing by the
Fund is governed by valuation procedures adopted by the Fund's Board of Trustees
and in accordance with the provisions of the Investment Company Act of 1940, as
amended. Fixed-income securities with a remaining maturity of 60 days or more
will be valued by the Fund using a pricing service. Short-term investments that
mature in less than 60 days when purchased are valued at amortized cost.
Portfolio securities listed on any exchange other than the NASDAQ National
Market ("NASDAQ") and the London Stock Exchange Alternative Investment Market
("AIM") are valued at the last sale price on the business day as of which such
value is being determined. Securities listed on the NASDAQ or the AIM are valued
at the official closing price on the business day as of which such value is
being determined. If there has been no sale on such day, or no official closing
price in the case of securities traded on the NASDAQ or the AIM, the securities
are valued at the mean of the most recent bid and ask prices on such day.
Portfolio securities traded on more than one securities exchange are valued at
the last sale price or official closing price, as applicable, on the business
day as of which such value is being determined at the close of the exchange
representing the principal market for such securities. Portfolio securities
traded in the over-the-counter market, but excluding securities trading on the
NASDAQ and the AIM, are valued at the closing bid prices.
Foreign securities traded outside the United States are generally valued as of
the time their trading is complete, which is usually different from the close of
the NYSE. Occasionally, events affecting the value of such securities may occur
between such times and the close of the NYSE that will not always be reflected
in the computation of the value of such securities. If events materially
affecting the value of such securities occur during such period, these
securities will be valued at their fair value according to procedures adopted by
the Fund's Board of Trustees. All securities and other assets of the Fund
initially expressed in foreign currencies will be converted to U.S. dollars
using exchange rates in effect at the time of valuation.
In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 157, Fair Value Measurements
("FAS 157"), effective for fiscal years beginning after November 15, 2007. This
standard clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value and requires additional
disclosures about the use of fair value measurements. The three levels of the
fair value hierarchy under FAS 157 are described below:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit
risk, etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
Page 9
NOTES TO QUARTERLY PORTFOLIO OF INVESTMENTS - (CONTINUED)
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
MARCH 31, 2009 (UNAUDITED)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. A summary
of the inputs used to value the Fund's investments as of March 31, 2009 is
included in the Fund's Portfolio of Investments.
In April 2009, FASB issued FASB Staff Position No. 157-4, Determining Fair Value
when the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly, ("FSP
157-4"). FSP 157-4 is effective for fiscal years and interim periods ending
after June 15, 2009. FSP 157-4 provides additional guidance for estimating fair
value in accordance with FAS 157, when the volume and level of activity for the
asset or liability have significantly decreased. FSP 157-4 also includes
guidance on identifying circumstances that indicate a transaction is not
orderly. Management is currently evaluating the impact the implementation of FSP
157-4 will have on the Fund's financial statement disclosures, if any.
B. SECURITIES TRANSACTIONS:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income on such securities
is not accrued until settlement date. The Fund maintains liquid assets with a
current value at least equal to the amount of its when-issued or
delayed-delivery purchase commitments. At March 31, 2009, the Fund had no
when-issued or delayed-delivery purchase commitments.
C. CREDIT LINKED NOTES:
The Fund invests in credit linked notes. Credit linked notes are securities that
are collateralized by one or more designated securities that are referred to as
"reference securities". Through the purchase of a credit linked note, the buyer
assumes the risk of the default or, in some cases, other declines in credit
quality of the reference securities. The buyer also takes on exposure to the
issuer of the credit linked note in the full amount of the purchase price of the
note. The issuer of a credit linked note normally will have hedged its risk on
the reference securities without acquiring any additional credit exposure. The
Fund has the right to receive periodic interest payments from the issuer of the
credit linked note at an agreed-upon interest rate and, if there has been no
default or, if applicable, other declines in credit quality, a return of
principal at the maturity date.
Credit linked notes are subject to credit risk of the reference securities
underlying the credit linked notes. If one of the underlying reference
securities defaults or suffers certain other declines in credit quality, the
Fund may, instead of receiving repayment of principal in whole or in part,
receive the security that has defaulted.
Credit linked notes typically are privately negotiated transactions between two
or more parties. The Fund bears the risk that the issuer of the credit linked
note will default or become bankrupt. The Fund bears the risk of loss of the
principal amount it invested, and the periodic interest payments expected to be
received for the duration of its investment in the credit linked note.
The market for credit linked notes may suddenly become illiquid. The other
parties to the transaction may be the only investors with sufficient
understanding of the derivative to be interested in bidding for it. Changes in
liquidity may result in significant, rapid and unpredictable changes in the
prices for credit linked notes. In certain cases, a market price for a credit
linked note may not be available.
D. FORWARD FOREIGN CURRENCY CONTRACTS:
Forward foreign currency contracts are agreements to exchange one currency for
another at a future date and at a specified price. The Fund may use forward
foreign currency contracts to facilitate transactions in foreign securities and
to manage the Fund's foreign currency exposure. These contracts are valued
daily, and the Fund's net equity therein, representing unrealized gain or loss
on the contracts as measured by the difference between the forward foreign
exchange rates at the dates of entry into the contracts and the forward rates at
the reporting date, is included in Net Other Assets and Liabilities on the
Portfolio of Investments. Risks arise from the possible inability of
counterparties to meet the terms of their contracts and from movement in
currency and securities values and interest rates. Due to the risks, the Fund
could incur losses up to the entire contract amount, which may exceed the net
unrealized value shown on the Schedule of Forward Foreign Currency Contracts.
E. FOREIGN CURRENCY:
The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period.
Purchases and sales of investment securities are translated on the respective
dates of such transactions. Net realized foreign currency gains and losses
include the effect of changes in exchange rates between trade date and
settlement date on investment security and foreign currency transactions.
Page 10
ITEM 2. 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 last
fiscal quarter that have materially affected, or are reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
ITEM 3. EXHIBITS.
Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of
the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) First Trust/Aberdeen Emerging Opportunity Fund
By (Signature and Title)* /s/ James A. Bowen
---------------------------------------
James A. Bowen, Chairman of the Board,
President and Chief Executive Officer
(principal executive officer)
Date 5/28/09
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 5/28/09
By (Signature and Title)* /s/ Mark R. Bradley
---------------------------------------
Mark R. Bradley, Treasurer, Controller,
Chief Financial Officer and Chief
Accounting Officer
(principal financial officer)
Date 5/28/09
* Print the name and title of each signing officer under his or her
signature.