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:   811-22016
     
Exact name of registrant as specified in charter:   Aberdeen Global Premier Properties Fund
     
Address of principal executive offices:   1900 Market Street, Suite 200
    Philadelphia, PA 19103
     
Name and address of agent for service:   Andrea Melia
    abrdn Inc.
    1900 Market Street Suite 200
    Philadelphia, PA 19103
     
Registrant’s telephone number, including area code:   1-800-522-5465
     
Date of fiscal year end:   October 31
     
Date of reporting period:   October 31, 2021

 

 

 

 

Item 1. Reports to Stockholders.

  

 

 

 

 

 

Aberdeen Global Premier Properties Fund (AWP)

 

Annual Report

October 31, 2021

 

 

 

 

 

abrdn.com

 

 

 

  

Letter to Shareholders (unaudited)


 

 

 

Dear Shareholder,

 

We present this Annual Report which covers the activities of Aberdeen Global Premier Properties Fund (the "Fund") for the fiscal year ended October 31, 2021. The Fund's investment objective is to seek high current income and capital appreciation.

 

Total Investment Return1

 

For the fiscal year ended October 31, 2021, the total return to shareholders of the Fund based on the net asset value ("NAV") and market price of the Fund are as follows:

 

NAV2,3   41.6 %
Market Price2   62.9 %
FTSE EPRA/NAREIT Global Real Estate
Index (Net Dividends)4
  37.2 %

 

For more information about Fund performance, please visit the Fund on the web at www.aberdeenawp.com. Here, you can view quarterly commentary on the Fund's performance, monthly fact sheets, distribution and performance information, and other Fund literature.

 

NAV, Market Price and Premium/Discount

 

The below table represents comparison from current fiscal year end to prior fiscal year end of market price to NAV and associated premium(+)/discount(-).

 

  NAV   Closing
Market
Price
  Premium(+)/
Discount(-)
 
10/31/2021 $6.84   $6.56   -4.1%  
10/31/2020 $5.23   $4.36   -16.6%  

 

During the fiscal year ended October 31, 2021, the Fund's NAV was within a range of $5.33 to $7.15 and the Fund's market price traded within a range of $4.44 to $6.85. During the fiscal year ended October 31, 2021, the Fund's shares traded within a range of a premium(+)/discount(-) of -1.3% to -16.8%.

 

Loan Facility and Use of Leverage

 

The Fund is permitted to borrow for investment purposes as may be permitted by the 1940 Act or any rule, order or interpretation thereunder. This allows the Fund to borrow for investment purposes

in the amount up to 33 1/3% of the Fund's total assets. On October 8, 2020 the Fund entered into a revised lending agreement with BNP Paribas Prime Brokerage International Ltd. ("BNPP PB") which allows the Fund to borrow on an uncommitted and secured basis up to US$125 million. Previously the Fund had a lending agreement with BNPP PB which allowed the Fund to borrow on an uncommitted and secured basis. The Fund's outstanding balance as of October 31, 2021 was $106,847,537. See Notes to Financial Statements Note 6 and Note 12 for further information.

 

Distribution Policy

 

Distributions to common shareholders for the twelve months ended October 31, 2021 totaled $0.48 per share. Based on the market price of $6.56 on October 31, 2021, the distribution rate over the twelve-month period ended October 31, 2021 was 7.3%. Based on the NAV of $6.84 on October 31, 2021, the annualized distribution rate was 7.0%. Since all distributions are paid after deducting applicable withholding taxes, the effective distribution rate may be higher for those U.S. investors who are able to claim a tax credit.

 

On November 9, 2021 and December 9, 2021, the Fund announced that it will pay on November 30, 2021 and December 30, 2021, respectively, a distribution of U.S. $0.04 per share to all shareholders of record as of November 19, 2021 and January 11, 2022, respectively.

 

The Fund's policy is to provide investors with a stable monthly distribution out of current income, supplemented by realized capital gains and, to the extent necessary, paid-in capital, which is a non-taxable return of capital. This policy is subject to an annual review as well as regular review at the Board of Trustees of the Fund's (the "Board") quarterly meetings, unless market conditions require an earlier evaluation.

 

Portfolio Holdings Disclosure

 

The Fund's complete schedule of portfolio holdings for the second and fourth quarters of each fiscal year are included in the Fund's semi-annual and annual reports to shareholders. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (the "SEC") for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. These reports are available on the SEC's website at sec.gov. The Fund makes the

 

 

 

1 Past performance is no guarantee of future results. Investment returns and principal value will fluctuate and shares, when sold, may be worth more or less than original cost. Current performance may be lower or higher than the performance quoted. Net asset value return data include investment management fees, custodial charges and administrative fees (such as Director and legal fees) and assumes the reinvestment of all distributions.
2 Assuming the reinvestment of dividends and distributions.
3 The Fund's total return is based on the reported NAV for each financial reporting period end and may differ from what is reported on the Financial Highlights due to financial statement rounding or adjustments.
4 The FTSE EPRA/NAREIT Global Real Estate Index is a total return index that is designed to represent general trends in eligible real estate equities worldwide. Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index.

 

Aberdeen Global Premier Properties Fund 1

 

 

 

  

Letter to Shareholders (unaudited) (continued)


 

 

 

information available to shareholders upon request and without charge by calling Investor Relations toll-free at 1-800-522-5465.

 

Open Market Repurchase Program

 

On June 13, 2018, the Board approved a share repurchase program ("Program") for the Fund. The Program allows the Fund to purchase, in the open market, its outstanding common shares, with the amount and timing of any repurchase determined at the discretion of the Fund's investment adviser and subject to market conditions and investment considerations. During the fiscal year ended October 31, 2021 and fiscal year ended October 31, 2020, the Fund did not repurchase any shares through the Program.

 

Proxy Voting

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12 month period ended June 30 is available by August 31 of the relevant year: (1) upon request without charge by calling Investor Relations toll-free at 1-800-522-5465; and (2) on the SEC's website at sec.gov.

 

COVID-19

 

Beginning in the first quarter of 2020, the illness caused by a novel coronavirus, COVID-19, has resulted in a global pandemic and major disruption to economies and markets around the world, including the United States. Financial markets have experienced extreme volatility and severe losses. Some sectors of the economy and individual issuers have experienced particularly large losses. These circumstances may continue for an extended period of time, and as a result may affect adversely the value and liquidity of the Fund's investments. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions, and, as a result, present uncertainty and risk with respect to the Fund and the performance of its investments and ability to pay distributions. The full extent of the impact and effects of COVID-19 will depend on future developments, including, among other factors, the duration and spread of the outbreak, along with related travel advisories, quarantines and restrictions, the recovery time of the disrupted supply chains and industries, the impact of labor market interruptions, the impact of government interventions, and uncertainty with respect to the duration of the global economic slowdown.

 

LIBOR

 

Under the revolving credit facility, the Fund is charged interest on amounts borrowed at a variable rate, which may be based on the London Interbank Offered Rate ("LIBOR") plus a spread. Additionally,

the Fund may invest in certain derivatives or other financial instruments that utilize LIBOR as a "benchmark" or "reference rate" for various interest rate calculations. In July 2017, the United Kingdom Financial Conduct Authority ("FCA"), which regulates LIBOR, announced a desire to phase out the use of LIBOR by the end of 2021. However, subsequent announcements by the FCA, the LIBOR administrator and other regulators indicate that it is possible that the most widely used LIBOR rates may continue until mid-2023. It is anticipated that LIBOR ultimately will be discontinued or the regulator will announce that it is no longer sufficiently robust to be representative of its underlying market around that time. Although financial regulators and industry working groups have suggested alternative reference rates, such as European Interbank Offered Rate ("EURIBOR"), Sterling Overnight Interbank Average Rate ("SONIA") and Secured Overnight Financing Rate ("SOFR"), global consensus on alternative rates is lacking and the process for amending existing contracts or instruments to transition away from LIBOR remains unclear. The elimination of LIBOR or changes to other reference rates or any other changes or reforms to the determination or supervision of reference rates could have an adverse impact on the market for, or value of, any securities or payments linked to those reference rates, which may adversely affect the Fund's performance and/or net asset value. Uncertainty and risk also remain regarding the willingness and ability of issuers and lenders to include revised provisions in new and existing contracts or instruments. Consequently, the transition away from LIBOR to other reference rates may lead to increased volatility and illiquidity in markets that are tied to LIBOR, fluctuations in values of LIBOR-related investments or investments in issuers that utilize LIBOR, increased difficulty in borrowing or refinancing and diminished effectiveness of hedging strategies, adversely affecting the Fund's performance. Furthermore, the risks associated with the expected discontinuation of LIBOR and transition may be exacerbated if the work necessary to effect an orderly transition to an alternative reference rate is not completed in a timely manner. Because the usefulness of LIBOR as a benchmark could deteriorate during the transition period, these effects could occur prior to the end of 2021.

 

Unclaimed Share Accounts

 

Please be advised that abandoned or unclaimed property laws for certain states require financial organizations to transfer (escheat) unclaimed property (including Fund shares) to the state. Each state has its own definition of unclaimed property, and Fund shares could be considered "unclaimed property" due to account inactivity (e.g., no owner-generated activity for a certain period), returned mail (e.g., when mail sent to a shareholder is returned to the Fund's transfer agent as undeliverable), or a combination of both. If your Fund shares are categorized as unclaimed, your financial advisor or the Fund's

 

 

 

 

 

 

2 Aberdeen Global Premier Properties Fund

 

 

 

 

Letter to Shareholders (unaudited) (concluded)


 

 

 

transfer agent will follow the applicable state's statutory requirements to contact you, but if unsuccessful, laws may require that the shares be escheated to the appropriate state. If this happens, you will have to contact the state to recover your property, which may involve time and expense. For more information on unclaimed property and how to maintain an active account, please contact your financial adviser or the Fund's transfer agent.

 

abrdn

 

abrdn plc, formerly known as Standard Life Aberdeen plc, was renamed on September 27, 2021. In connection with this re-branding, the entities within abrdn plc group, including investment advisory entities, have been or will be renamed in the near future. In addition, the fund names are anticipated to be re-branded over the next year.

 

Investor Relations Information

 

As part of abrdn's commitment to shareholders, we invite you to visit the Fund on the web at www.aberdeenawp.com. Here, you can view monthly fact sheets, quarterly commentary, distribution and performance information, and other Fund literature.

Enroll in abrdn's email services and be among the first to receive the latest closed-end fund news, announcements, videos and other information. In addition, you can receive electronic versions of important Fund documents including annual reports, semi-annual reports, prospectuses, and proxy statements. Sign up today at https://www.abrdn.com/en-us/cefinvestorcenter/contact-us/preferences

 

Contact Us:

 

Visit: https://www.abrdn.com/en-us/cefinvestorcenter
Email: Investor.Relations@abrdn.com; or
Call: 1-800-522-5465 (toll free in the U.S.).

 

Yours sincerely,

 

/s/ Christian Pittard
Christian Pittard

President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All amounts are U.S. Dollars unless otherwise stated.

 

Aberdeen Global Premier Properties Fund 3

 

 

 

 

Report of the Investment Adviser (unaudited)


 

 

 

Market/economic review

The performance of global equity markets over the 12-month period ended October 31, 2021, was dominated by the introduction of COVID-19 vaccines and subsequent recovery in the global economy, as the world began to reopen following the initial stages of the pandemic. Global real estate equities saw a sharp rebound in performance starting in mid-November 2020 with the announcement of the successful introduction of the Pfizer and Moderna vaccines, led by those sectors that were hardest hit by the economic shutdowns, retail, and lodging, particularly in the Americas. These trends continued through much of the reporting period, as vaccine distribution accelerated, monetary policy and fiscal stimulus remained accommodative, consumer and business confidence improved, and tenants not only paid rents, but began to think about the need for additional space in the future, providing support for rental increases in select sectors. Therefore, despite some fluctuations in the pace of the reopenings in various regions as surges in variants of COVID-19 ebbed and flowed, the sector posted strong gains through mid-2021. Inflation fears, stemming from both supply chain disruptions and fiscal and monetary policy decisions, began to grip the broader market late in the period, but global real estate stocks, which should be more resilient to inflationary pressures due to the ability to raise rents during periods of higher inflation, offset the impact of rising interest rates.

 

The listed global property market outperformed the broader global equity universe over the reporting period by a large margin. We attribute this to the fact that the sector was particularly hard hit by the negative impacts of lockdowns and restrictions on movement, resulting in the sector trading at extremely discounted levels at the start of the period. What's more, the subsequent recovery in global economic activity as these measures were removed spurred greater demand for space from potential tenants, and improved cash flows as rent collections returned to normal, leading to positive earnings surprises and rising dividends.

 

Within the listed global real estate market, sectors that were hardest hit by the pandemic and therefore underperformed in 2020, were among the leaders in 2021. This occurred as investors rotated out of the "safe-haven" sectors into those more levered to the economic reopening. As such, countries that had outsized exposures to these sectors, Canada, Sweden, and France, outperformed significantly. Country specific risks, related to specific political climate issues and/or the pace of the COVID-19 vaccine response and recovery, were the key drivers of underperformance in the reporting period. As such, China, Chile, and Brazil were among the weakest performers. On a sector basis, sectors most exposed to the reopening, and those that could point to strong pricing power, retail, U.S. urban apartments, storage, and global industrial, saw the greatest levels of outperformance. By contrast, sectors that were "safe-havens" in 2020

and therefore traded at elevated relative valuations versus their underlying earnings growth rates, like data centers, underperformed as they were used as sources of funds by investors rotating into more value-oriented sectors during 2020.

 

Fund performance review

Aberdeen Global Premier Properties Fund returned 41.6% on a net asset value (NAV) basis for the 12-month reporting period ended October 31, 2021, versus the 37.2% return of its primary benchmark, the Financial Times Stock Exchange European Public Real Estate Association/National Association of Real Estate Investment Trusts (FTSE EPRA/NAREIT) Global Real Estate Index (net dividends).

 

At the country level, China, Austria, and Switzerland were the largest contributors to the Fund's performance relative to the benchmark index for the reporting period. The Fund's outperformance in China and Switzerland both stemmed from an underweight allocation to those countries. The Fund has long held an underweight position relative to the benchmark in China, reflecting our continuing concerns about the risk of government intervention. The underweight position in Switzerland reflects our view that valuations for relatively safe bond-like investments with limited potential for rental rate increases would lag during a global economic recovery. The Fund's outperformance relative to the benchmark in Austria was driven by stock selection, as the holding in CA Immobilien Anlagen AG was acquired by U.S.-based Starwood Capital Group in July 2021.

 

At an individual stock level, the Fund's performance relative to its benchmark for the reporting period was bolstered by an overweight position in U.S. shopping center REIT Brixmor Property Group Inc. The strong performance reflected the extremely discounted valuation that existed prior to the emergence of COVID-19 vaccines. Brixmore's shares experienced a strong rebound as the economy reopened and retail tenants indicated they were planning to open more stores to take advantage of the post-pandemic economic recovery. The Fund's holding in U.S.-based casino REIT MGM Growth Properties also was a notable contributor to performance, attributable in part to the company's receipt of a takeover offer at a significant premium to the then-current stock price.

 

Weak stock selection in the U.S., Japan and Sweden weighed on Fund performance for the reporting period. In the U.S., Fund performance was hampered by overweight positions in data center and cell tower REITs. In our view, both sectors should benefit from a structural shift in demand, driven by the emergence of cloud computing and 5G technology. However, the companies' shares declined over the reporting period as they were used as sources of funds by numerous investors as they rotated into more value-oriented sectors, particularly early in the reporting period. In Japan, the Fund had an underweight position in property developers, which performed well as investors

  

 

4 Aberdeen Global Premier Properties Fund

 

 

 

 

Report of the Investment Adviser (unaudited) (continued)

 

 

 

 

again rotated into companies that were more exposed to economic growth in the region. In Sweden, the Fund's overweight position in hotel owner Pandox detracted from performance, as the COVID-19 Delta variant had a negative impact on the company's business.

 

The Fund's exposure to Japanese infrastructure REIT Canadian Solar Inc., which is not a constituent of the benchmark index, also detracted from performance for the reporting period. Canadian Solar's earnings growth slowed in 2021 due to delays in capital deployments and risks of output curtailments in a key market for the company. The Fund's exposure to Chinese developers Shimao Group Holdings and Times China Holdings also hampered performance as the uncertainty surrounding regulation and government policy led to a sharp selloff in the region.

 

The monthly distribution reflects the Fund's current policy to provide shareholders with a relatively stable cash flow per share. This policy did not have a material effect on the Fund's investment strategy over the reporting period. During the 12-month period ended October 31, 2021, the distributions comprised dividend income and return of capital. Over the 12-month period ended October 31, 2021, the Fund issued total distributions of $0.48 per share.

 

During the reporting period, we employed the Fund's leverage tactically in an effort to enhance the total return and distribution yield. As we had anticipated, the use of leverage did not have any impact on the composition of the Fund's portfolio. We believe that the Fund is structured with an appropriate amount of leverage and we seek to maintain what we consider to be a comfortable amount of headroom above the credit facility* covenant requirements.

 

Outlook

 

The underlying economic fundamentals for global real estate continue to support earnings and performance momentum as the economies continue their recovery. In particular, the structural changes we are witnessing across the real estate sectors, including the rise of non-traditional and new real estate (digital infrastructure, single-family rentals), as well tailwinds supporting logistics and industrial properties continue to drive longer-term returns. At the same time, we are mindful of potential impacts increased inflation might have on the consumer behavior and broader business investment levels. While investors are likely to focus on potential interest rate increases, we expect REITs' growing dividends may appeal to investors in an environment of very low real rates. We believe that focusing on companies with strong balance sheets, high-quality portfolios and attractive sector exposures, along with those companies that trade at

attractive valuations, can weather the uncertainty and have a greater exposure to the early stages of an economic recovery, will serve investors best going forward.

 

We continue to pursue what we believe is sustainable income in our target markets, but we in tend to slowly increase the risk tolerance where we see value opportunities that could be quickly realized as fears from COVID-19 subside. To this extent, we maintain the Fund's focus on companies that in our view benefit from strong real estate fundamentals and long-term trends that appear likely to be reinforced in the current environment. In our opinion, rental resilience and balance-sheet strength are likely to remain important drivers of performance, positioning companies to preserve shareholder value, but also giving them the capacity to take advantage of opportunities that emerge. However, we also anticipate that the economic down-cycle should create opportunities to invest in fundamentally sound, high-quality businesses in more cyclical subsectors, and will seek to take advantage of these opportunities to benefit from the economic recovery.

 

The Fund's country positioning remains overweight relative to the benchmark to the Americas, where economic growth is supportive of property fundamentals in the U.S. and Canada. We have modestly increased the Fund's exposure to Continental Europe in anticipation of a recovery in the retail sector, partially funded by a reduction in exposure to the German residential sector. The Fund remains underweight to the U.K. given the lingering uncertainty in terms of trade with the rest of the world, as we believe that U.K. REIT valuations for many companies now look stretched. We have moved the Fund to an overweight position in Australia, as we believe that valuations in the market are improving. Elsewhere, we maintain the Fund's underweight position in Singapore relative to the benchmark due to our view that valuations of Singapore REITs are stretched.

 

The Fund has slightly underweight allocations relative to the benchmark to emerging markets after we reduced the Fund's exposure to China and Brazil. The Fund's Latin American exposure is now focused on Mexico, where we believe that high dividend yields are attractive in an environment of near-term monetary-policy easing.

 

Risk Considerations

 

Past performance is not an indication of future results.

 

Foreign securities may be more volatile, harder to price and less liquid than U.S. securities. They are subject to risks associated with less stringent accounting and regulatory standards, the impact of currency

 

 

 

* A credit facility is a type of loan that allows the borrowing business to take out money over an extended period of time rather than reapplying for a loan each time it needs money.

 

 

Aberdeen Global Premier Properties Fund 5

 

 

 

 

Report of the Investment Adviser (unaudited) (concluded)

 

 

 

 

exchange rate fluctuation, political and economic instability, reduced information about issuers, higher transaction costs and delayed settlement. Equity stocks of small- and mid-cap companies carry greater risk, and more volatility, than equity stocks of larger, more established companies. Dividends are not guaranteed and a company's future ability to pay dividends may be limited. The use of leverage will also increase market exposure and magnify risk. Because the Fund concentrates its investments in the real estate industry, the portfolio may experience more volatility and be exposed to greater risk than

the portfolios of many other mutual funds. Risks associated with investment in securities of companies in the real estate industry may include: declines in the value of real estate; overbuilding and increased competition; increases in property taxes and operating expenses; changes in zoning laws; casualty or condemnation losses; variations in rental income; neighborhood values; changes in interest rates; and changes in economic conditions.

 

Aberdeen Asset Managers Limited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6 Aberdeen Global Premier Properties Fund

 

 

 

 

Total Investment Return (unaudited)

 

 

 

The following table summarizes the average annual Fund performance compared to the Fund's benchmark, the Financial Times Stock Exchange European Public Real Estate Association/National Association of Real Estate Investment Trusts (FTSE EPRA/NAREIT) Global Real Estate Index for the 1-year, 3-year, 5-year and 10-year periods ended October 31, 2021.

 

      1 Year   3 Years   5 Years   10 Years  
  Net Asset Value ("NAV")   41.6%   13.4%   11.2%   9.5%  
  Market Price   62.9%   16.9%   14.6%   10.6%  
  FTSE EPRA/NAREIT Global Real Estate
Index (Net Dividends)
  37.2%   8.8%   6.6%   7.2%  

 

 

Performance of a $10,000 Investment (as of October 31, 2021)

 

This graph shows the change in value of a hypothetical investment of $10,000 in the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.

 

 

 

The Fund changed its investment objective effective May 27, 2020. Performance information for periods prior to May 27, 2020 does not reflect the current investment strategy.

 

Aberdeen Asset Managers Limited ("AAML" or the "Adviser") and Aberdeen Standard Investments Inc. ("ASII" or the "Sub-Adviser") assumed responsibility for the management of the Fund as investment adviser and sub-adviser, respectively, on May 4, 2018. Performance prior to this date reflects the performance of an unaffiliated investment adviser.

 

Effective May 4, 2018, AAML entered into a written contract with the Fund to waive fees or limit expenses. This contract may not be terminated before June 30, 2022. Absent such waivers and/or reimbursements, the Fund's returns would be lower. See Note 3 in the Notes to Financial Statements.

 

Returns represent past performance. Total investment return at NAV is based on changes in the NAV of Fund shares and assumes reinvestment of dividends and distributions, if any, at market prices pursuant to the dividend reinvestment program. All return data at NAV includes fees charged to the Fund, which are listed in the Fund's Statement of Operations under "Expenses." Total investment return at market value is based on changes in the market price at which the Fund's shares traded on the NYSE during the period and assumes reinvestment of dividends and distributions, if any, at market prices pursuant to the dividend reinvestment program. The Fund's total investment return is based on the reported NAV or market price, as applicable, at the financial reporting period end. Because the Fund's shares trade in the stock market based on investor demand, the Fund may trade at a price higher or lower than its NAV. Therefore, returns are calculated based on both market price and NAV. Past performance is no guarantee of future results. The performance information provided does not reflect the deduction of taxes that a shareholder would pay on distributions received from the Fund. The current performance of the Fund may be lower or higher than the figures shown. The Fund's yield, return, market price and NAV will fluctuate. Performance information current to the most recent month-end is available at www.aberdeenawp.com or by calling 800-522-5465.

 

The net operating expense ratio, excluding fee waivers, based on the fiscal year ended October 31, 2021 was 1.59%. The net operating expense ratio, net of fee waivers, based on the fiscal year ended October 31, 2021 was 1.40%. The net operating expenses, net of fee waivers and excluding interest expense, based on the fiscal year ended October 31, 2021 was 1.19%.

 

 

 

Aberdeen Global Premier Properties Fund 7

 

 

 

 

Portfolio Summary (unaudited)

 

 

 

The following table summarizes the sector composition of the Fund's portfolio, in S&P Global Inc.'s Global Industry Classification Standard ("GICS") Sectors, expressed as a percentage of net assets as of October 31, 2021.

 

  Sub-Industries   As a Percentage of Net Assets  
  Specialized REITs   19.0%  
  Residential REITs   18.2%  
  Industrial REITs   18.2%  
  Retail REITs   11.9%  
  Office REITs   11.4%  
  Real Estate Operating Companies   9.7%  
  Health Care REITs   7.4%  
  Diversified REITs   7.0%  
  Diversified Real Estate Activities   5.9%  
  Real Estate Development   4.2%  
  Hotel & Resort REITs   2.9%  
  Homebuilding   0.7%  
  Mortgage REITs   0.6%  
  Liabilities in Excess of Other Assets   (17.1)%  
      100.0%  

 

The following chart summarizes the composition of the Fund's portfolio by geographic classification expressed as a percentage of net assets as of October 31, 2021:

 

  Countries   As a Percentage of Net Assets  
  United States   69.3%  
  Japan   9.9%  
  Germany   5.5%  
  United Kingdom   5.0%  
  Canada   4.0%  
  Australia   3.9%  
  China   3.2%  
  Belgium   3.2%  
  Singapore   2.5%  
  Sweden   2.4%  
  Other   (8.9)%  
      100.0%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8 Aberdeen Global Premier Properties Fund

 

 

 

 

Top Ten Equity Holdings (unaudited)

 

 

 

 

The following were the Fund's top ten equity holdings as of October 31, 2021:

 

  Name of Security   As a Percentage of Net Assets  
  Prologis, Inc.   8.2%  
  Equinix, Inc.   4.1%  
  Public Storage   3.6%  
  AvalonBay Communities, Inc.   3.6%  
  Duke Realty Corp.   3.3%  
  Equity Residential   3.1%  
  Welltower, Inc.   2.8%  
  Invitation Homes, Inc.   2.7%  
  Alexandria Real Estate Equities, Inc.   2.6%  
  Simon Property Group, Inc.   2.5%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aberdeen Global Premier Properties Fund 9

 

 

 

 

Portfolio of Investments

 

 

As of October 31, 2021

 

 

      Shares   Value  
  COMMON STOCKS—117.1%          
  AUSTRALIA—3.9%          
  Diversified Real Estate Activities—0.2%          
  Lendlease Corp., Ltd.   128,440   $      1,017,528  
  Diversified REITs—2.5%          
  Charter Hall Group   533,118   6,994,463  
  GPT Group (The)   559,763   2,185,341  
  Mirvac Group   2,658,861   5,674,447  
          14,854,251  
  Industrial REITs—0.6%          
  Goodman Group   222,037   3,676,240  
  Office REITs—0.6%          
  Dexus   429,828   3,525,785  
  Total Australia       23,073,804  
  BELGIUM—3.2%          
  Diversified REITs—0.9%          
  Cofinimmo SA   32,354   5,219,797  
  Health Care REITs—1.3%          
  Aedifica SA   55,722   7,430,534  
  Industrial REITs—1.0%          
  Montea NV   11,652   1,729,511  
  Warehouses De Pauw CVA   97,601   4,444,409  
          6,173,920  
  Total Belgium       18,824,251  
  BRAZIL—0.3%          
  Homebuilding—0.1%          
  Cyrela Brazil Realty SA Empreendimentos e Participacoes   311,315   777,212  
  Real Estate Operating Companies—0.2%          
  Multiplan Empreendimentos Imobiliarios SA   278,893   915,181  
  Total Brazil       1,692,393  
  CANADA—4.0%          
  Office REITs—1.1%          
  Allied Properties Real Estate Investment Trust   193,674   6,693,145  
  Residential REITs—0.7%          
  Canadian Apartment Properties REIT   81,419   3,975,558  
  Retail REITs—2.2%          
  SmartCentres Real Estate Investment Trust   507,815   12,797,956  
  Total Canada       23,466,659  

 

 

 

 

 

 

 

 

 

 

10 Aberdeen Global Premier Properties Fund

 

 

 

 

Portfolio of Investments (continued)

 

 

As of October 31, 2021

 

 

      Shares   Value  
  COMMON STOCKS (continued)          
  CHINA—3.2%          
  Diversified Real Estate Activities—0.9%          
  ESR Cayman Ltd.(a)(b)   1,587,654   $     5,137,434  
  Real Estate Development—2.3%          
  China Overseas Land & Investment Ltd.   1,301,500   2,870,531  
  China Resources Land Ltd.   1,449,465   5,631,850  
  Logan Group Co., Ltd.   2,478,466   2,482,683  
  Shimao Group Holdings Ltd.   1,770,823   2,777,858  
          13,762,922  
  Total China       18,900,356  
  FINLAND—0.8%          
  Real Estate—0.8%          
  Kojamo OYJ   203,348   4,555,922  
  FRANCE—0.6%          
  Office REITs—0.3%          
  Covivio   20,217   1,751,073  
  Retail REITs—0.3%          
  Unibail-Rodamco-Westfield(b)   20,719   1,479,434  
  Total France       3,230,507  
  GERMANY—5.5%          
  Office REITs—0.6%          
  alstria office REIT-AG   202,690   3,788,647  
  Real Estate Development—1.8%          
  Instone Real Estate Group SE(a)   400,226   10,548,675  
  Real Estate Operating Companies—3.1%          
  LEG Immobilien SE   19,311   2,872,377  
  TAG Immobilien AG   124,222   3,773,998  
  Vonovia SE   186,609   11,320,223  
          17,966,598  
  Total Germany       32,303,920  
  HONG KONG—2.2%          
  Diversified Real Estate Activities—1.3%          
  Sun Hung Kai Properties Ltd.   576,500   7,643,423  
  Retail REITs—0.9%          
  Link REIT   611,000   5,413,117  
  Total Hong Kong       13,056,540  

 

 

 

 

 

 

 

 

 

 

 

Aberdeen Global Premier Properties Fund 11

 

 

 

 

Portfolio of Investments (continued)

 

 

As of October 31, 2021

 

 

      Shares   Value  
  COMMON STOCKS (continued)          
  JAPAN—9.9%          
  Diversified Real Estate Activities—2.4%          
  Mitsui Fudosan Co. Ltd.   511,300   $    11,690,280  
  Tokyu Fudosan Holdings Corp.   382,800   2,218,101  
          13,908,381  
  Diversified REITs—2.1%          
  Canadian Solar Infrastructure Fund, Inc.   9,945   10,880,820  
  United Urban Investment Corp.   1,081   1,347,530  
          12,228,350  
  Industrial REITs—1.7%          
  GLP J-REIT   2,839   4,630,578  
  Industrial & Infrastructure Fund Investment Corp.   1,395   2,557,798  
  LaSalle Logiport REIT   1,615   2,686,589  
          9,874,965  
  Office REITs—2.7%          
  Japan Excellent, Inc.   4,125   4,980,639  
  Mirai Corp.   2,847   1,314,404  
  Mori Hills REIT Investment Corp.   2,498   3,386,888  
  Nippon Building Fund, Inc.   913   5,931,709  
          15,613,640  
  Real Estate Operating Companies—0.3%          
  Hulic Co. Ltd.   179,000   1,721,173  
  Retail REITs—0.7%          
  Kenedix Retail REIT Corp.   1,729   4,411,627  
  Total Japan       57,758,136  
  MEXICO—1.1%          
  Industrial REITs—0.6%          
  PLA Administradora Industrial S de RL de CV   1,277,563   1,787,148  
  Prologis Property Mexico SA de CV   826,224   1,909,048  
          3,696,196  
  Real Estate Operating Companies—0.5%          
  Corp Inmobiliaria Vesta SAB de CV   1,661,533   2,892,430  
  Total Mexico       6,588,626  
  NETHERLANDS—1.8%          
  Real Estate Operating Companies—1.8%          
  CTP NV(a)   483,144   10,260,027  
  SINGAPORE—2.5%          
  Diversified Real Estate Activities—1.1%          
  Capitaland Investment Ltd.(b)   2,595,100   6,620,055  

 

 

 

 

 

 

 

 

 

 

 

 

12 Aberdeen Global Premier Properties Fund

 

 

 

 

Portfolio of Investments (continued)

 

 

As of October 31, 2021

 

 

      Shares   Value  
  COMMON STOCKS (continued)          
  SINGAPORE (continued)          
  Industrial REITs—0.6%          
  Mapletree Logistics Trust   2,335,600   $    3,502,310  
  Real Estate Operating Companies—0.8%          
  Ascendas India Trust, UNIT   4,333,000   4,476,624  
  Total Singapore       14,598,989  
  SOUTH KOREA—0.7%          
  Specialized REITs—0.7%          
  ESR Kendall Square REIT Co. Ltd.   672,754   3,927,144  
  SPAIN—0.7%          
  Office REITs—0.7%          
  Inmobiliaria Colonial Socimi SA   404,421   3,931,764  
  SWEDEN—2.4%          
  Real Estate Operating Companies—2.4%          
  Castellum AB   130,852   3,487,680  
  Catena AB   84,241   5,130,187  
  Fabege AB   307,183   5,199,539  
  Total Sweden       13,817,406  
  UNITED KINGDOM—5.0%          
  Diversified REITs—1.5%          
  Land Securities Group PLC   663,999   6,237,924  
  LondonMetric Property PLC   622,005   2,224,628  
          8,462,552  
  Health Care REITs—0.2%          
  Assura PLC   1,342,348   1,339,225  
  Homebuilding—0.6%          
  Bellway PLC   74,122   3,363,201  
  Industrial REITs—2.1%          
  Segro PLC   685,588   12,117,455  
  Specialized REITs—0.6%          
  Safestore Holdings PLC   222,638   3,662,391  
  Total United Kingdom       28,944,824  
  UNITED STATES—69.3%          
  Health Care REITs—5.9%          
  Medical Properties Trust, Inc.(c)   243,852   5,201,363  
  Omega Healthcare Investors, Inc.(c)   116,303   3,414,656  
  Sabra Health Care REIT, Inc.(c)   244,991   3,466,623  
  Ventas, Inc.(c)   110,487   5,896,691  
  Welltower, Inc.(c)   205,985   16,561,194  
          34,540,527  

 

 

 

 

 

 

 

Aberdeen Global Premier Properties Fund 13

 

 

 

 

Portfolio of Investments (continued)

 

 

As of October 31, 2021

 

 

      Shares   Value  
  COMMON STOCKS (continued)          
  UNITED STATES (continued)          
  Hotel & Resort REITs—2.9%          
  DiamondRock Hospitality Co.(b)(c)   224,781   $     2,032,020  
  Host Hotels & Resorts, Inc.(b)(c)   330,376   5,560,228  
  MGM Growth Properties LLC(c)   236,627   9,318,372  
          16,910,620  
  Industrial REITs—11.5%          
  Duke Realty Corp.(c)   342,012   19,234,755  
  Prologis, Inc.(c)   329,496   47,763,740  
          66,998,495  
  Mortgage REITs—0.6%          
  Blackstone Mortgage Trust, Inc., Class A(c)   113,240   3,725,596  
  Office REITs—5.4%          
  Alexandria Real Estate Equities, Inc.(c)   74,845   15,278,859  
  Boston Properties, Inc.(c)   79,569   9,042,221  
  Highwoods Properties, Inc.(c)   153,924   6,901,952  
          31,223,032  
  Residential REITs—17.5%          
  American Homes 4 Rent(c)   93,894   3,812,096  
  AvalonBay Communities, Inc.(c)   87,888   20,801,332  
  Camden Property Trust   82,814   13,506,963  
  Equity LifeStyle Properties, Inc.(c)   170,984   14,449,858  
  Equity Residential(c)   212,799   18,385,833  
  Essex Property Trust, Inc.(c)   9,476   3,221,177  
  Invitation Homes, Inc.(c)   381,139   15,721,984  
  Sun Communities, Inc.(c)   64,055   12,553,499  
          102,452,742  
  Retail REITs—7.8%          
  Brixmor Property Group, Inc.(c)   196,405   4,603,733  
  Kimco Realty Corp.(c)   179,990   4,067,774  
  Realty Income Corp.(c)   127,417   9,101,396  
  Regency Centers Corp.(c)   48,998   3,449,949  
  Simon Property Group, Inc.(c)   100,104   14,673,245  
  SITE Centers Corp.(c)   221,726   3,523,226  
  Spirit Realty Capital, Inc.   120,148   5,878,842  
          45,298,165  
  Specialized REITs—17.7%          
  American Tower Corp.(c)   47,808   13,480,422  
  Digital Realty Trust, Inc.(c)   63,438   10,011,151  
  Equinix, Inc.(c)   28,392   23,766,091  
  Extra Space Storage, Inc.(c)   48,653   9,602,643  
  Gaming and Leisure Properties, Inc.(c)   190,710   9,247,528  
  Public Storage(c)   63,447   21,075,824  

 

 

 

 

 

 

 

 

14 Aberdeen Global Premier Properties Fund

 

 

 

 

Portfolio of Investments (concluded)

 

 

As of October 31, 2021

 

 

    Shares     Value  
COMMON STOCKS (continued)              
UNITED STATES (continued)              
Specialized REITs (continued)              
SBA Communications Corp.(c)     12,150     $   4,195,759  
VICI Properties, Inc.(c)     408,116     11,978,205  
            103,357,623  
Total United States           404,506,800  
Total Common Stocks           683,438,068  
Total Investments—117.1% (cost $548,129,629)(d)           683,438,068  
Liabilities in Excess of Other Assets—(17.1)%           (99,555,484 )
Net Assets—100.0%           $583,882,584  

 

 

(a)  Denotes a security issued under Regulation S or Rule 144A.

(b)  Non-income producing security.

(c)  All or a portion of the security has been designated as collateral for the line of credit.

(d)  See accompanying Notes to Financial Statements for tax unrealized appreciation/(depreciation) of securities.

 

CVA—Dutch Certificate

PLC—Public Limited Company

REIT—Real Estate Investment Trust

 

 

See Notes to Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aberdeen Global Premier Properties Fund 15

 

 

 

 

 

Statement of Assets and Liabilities

 

As of October 31, 2021

 

 

Assets        
Investments, at value (cost $548,129,629)   $ 683,438,068  
Foreign currency, at value (cost $4,880,510)     4,876,863  
Receivable for investments sold     3,357,284  
Interest and dividends receivable     703,665  
Tax reclaim receivable     179,115  
Prepaid expenses     21,451  
Total assets     692,576,446  
Liabilities        
Line of credit payable (Note 6)     106,847,537  
Payable for investments purchased     863,858  
Investment management fees payable (Note 3)     499,951  
Interest expense on line of credit     258,677  
Administration fees payable (Note 3)     38,985  
Investor relations fees payable (Note 3)     12,797  
Other accrued expenses     172,057  
Total liabilities     108,693,862  
         
Net Assets   $ 583,882,584  
Composition of Net Assets:        
Paid-in capital in excess of par   $ 484,469,499  
Distributable earnings     99,413,085  
Net Assets   $ 583,882,584  
Net asset value per share based on 85,407,951 shares issued and outstanding   $ 6.84  

 

 

See Notes to Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16 Aberdeen Global Premier Properties Fund

 

 

 

 

 

 

Statement of Operations

 

For the Year Ended October 31, 2021

 

 

Net Investment Income:        
Income        
Dividends and other income (net of foreign withholding taxes of $691,859)   $ 18,558,647  
Total Investment Income     18,558,647  
Expenses:        
Investment management fee (Note 3)     6,399,569  
Administration fee (Note 3)     438,113  
Investor relations fees and expenses (Note 3)     153,292  
Reports to shareholders and proxy solicitation     142,329  
Legal fees and expenses     72,220  
Custodian's fees and expenses     60,962  
Independent auditors' fees and expenses     59,421  
Trustee fees and expenses     55,051  
Transfer agent's fees and expenses     16,893  
Miscellaneous     176,634  
Total operating expenses, excluding interest expense     7,574,484  
Interest expense (Note 6)     1,123,074  
Total operating expenses before reimbursed/waived expenses     8,697,558  
Less: Expenses waived (Note 3)     (1,046,700 )
Net expenses     7,650,858  
         
Net Investment Income     10,907,789  
Net Realized/Unrealized Gain/(Loss) from Investments and Foreign Currency Related Transactions:        
Net realized gain/(loss) from:        
Investment transactions     18,467,369  
Forward foreign currency exchange contracts     (37,014 )
Foreign currency transactions     (13,743 )
      18,416,612  
Net change in unrealized appreciation/(depreciation) on:        
Investment transactions     148,994,434  
Foreign currency translation     26,598  
      149,021,032  
Net realized and unrealized gain from investments and foreign currency related transactions     167,437,644  
Net Increase in Net Assets Resulting from Operations   $ 178,345,433  

 

 

See Notes to Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aberdeen Global Premier Properties Fund 17

 

 

 

 

 

 

Statements of Changes in Net Assets

 

 

 

    For the   For the  
    Year Ended
October 31, 2021
  Year Ended
October 31, 2020
 
Increase/(Decrease) in Net Assets:                  
Operations:                  
Net investment income        $ 10,907,789       $ 11,000,892  
Net realized gain/(loss) from investments, forward foreign currency exchange contracts and foreign currency transactions       18,416,612       (24,114,513 )
Net change in unrealized appreciation/(depreciation) on investments, forward foreign currency exchange contracts and foreign currency transactions       149,021,032       (121,284,955 )
Net increase/(decrease) in net assets resulting from operations       178,345,433       (134,398,576 )
Distributions to Shareholders From:                  
Distributable earnings       (13,365,429 )     (4,072,815 )
Tax return of capital       (27,630,388 )     (36,923,001 )
Net decrease in net assets from distributions       (40,995,817 )     (40,995,816 )
Change in net assets resulting from operations       137,349,616       (175,394,392 )
Net Assets:                  
Beginning of year       446,532,968       621,927,360  
End of year     $ 583,882,584       $ 446,532,968  

 

Amounts listed as "–" are $0 or round to $0.

 

 

See Notes to Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18 Aberdeen Global Premier Properties Fund

 

 

 

 

 

 

Statement of Cash Flows

 

 

For the Year Ended October 31, 2021

 

 

Cash Flows from Operating Activities        
Net increase in net assets resulting from operations   $ 178,345,433  
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:        
Investments purchased     (281,470,553 )
Investments sold and principal repayments     230,634,691  
Decrease in interest and dividends receivable     169,556  
Increase in prepaid expenses     (4,115 )
Increase in interest payable on bank loan     236,615  
Increase in accrued investment management fees payable     253,370  
Increase in other accrued expenses     26,386  
Net change in unrealized appreciation from investments     (148,994,434 )
Net change in unrealized appreciation from foreign currency translations     (26,598 )
Net realized gain on investment transactions     (12,852,845 )
Net cash used in operating activities     (33,682,494 )
Cash Flows from Financing Activities        
Increase in bank loan payable     76,432,468  
Distributions paid to shareholders     (40,995,817 )
Net cash provided by financing activities   $ 35,436,651  
Effect of exchange rate on cash     43,576  
Net change in cash     1,797,733  
Unrestricted and restricted cash and foreign currency, beginning of year     3,079,130  
Unrestricted and restricted cash and foreign currency, end of year   $ 4,876,863  
Supplemental disclosure of cash flow information:        
Cash paid for interest and fees on credit facility:   $ 886,459  

 

 

See Notes to Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aberdeen Global Premier Properties Fund 19

 

 

 

 

 

 

Financial Highlights

 

 

  For the Fiscal Years Ended October 31,  
  2021   2020   2019   2018(a)   2017  
PER SHARE OPERATING PERFORMANCE:  
Net asset value per common share, beginning of year $5.23   $ 7.28   $6.14   $ 7.18   $ 6.38  
Net investment income 0.13 (b)  0.13 (b)  0.16 (b)  0.08 (b)  0.11  
Net realized and unrealized gains/(losses) on investments, forward foreign currency exchange contracts and foreign currency transactions 1.96   (1.70 ) 1.55   (0.52 )  1.29  
Total from investment operations applicable to common shareholders 2.09   (1.57 )  1.71   (0.44 )  1.40  
Distributions to common shareholders from:  
Net investment income (0.16 )  (0.05 )  (0.42 )  (0.22 )  (0.60 ) 
Tax return of capital (0.32 )  (0.43 )  (0.15 )  (0.38 )   
Total distributions (0.48 )  (0.48 )  (0.57 )  (0.60 )  (0.60 ) 
Capital Share Transactions:    
Net asset value per common share, end of year $6.84   $ 5.23   $7.28   $6.14   $ 7.18  
Market price, end of year $6.56   $ 4.36   $6.46   $5.38   $ 6.48  
                     
Total Investment Return Based on(c):  
Market price 62.89%   (25.81% )  32.04%   (8.73% )  35.59%  
Net asset value 41.59%   (21.03% )  30.38%   (5.99% )  24.34%  
Ratio to Average Net Assets Applicable to Common Shareholders/Supplementary Data:  
Net assets applicable to common shareholders, end of year (000 omitted) $583,883   $446,533   $621,927   $524,731   $613,129  
Net operating expenses 1.40%   1.27%   1.37%   1.19%   1.28%  
Net operating expenses, excluding fee waivers 1.59%   1.36%   1.42%   1.19%   (d) 
Net operating expenses, excluding interest expense 1.19%   1.19%   1.19%   1.17%   1.20%  
Net investment income 1.99%   2.12%   2.45%   1.14%   1.56%  
Portfolio turnover 36%   30%   45%   83%   61%  
Line of credit payable outstanding (000 omitted) $106,848   $30,415   $37,522   $16,248   $ –  
Asset coverage ratio on line of credit payable at year end(e) 646%   1,568%   1,757%   3,329%   (f) 
Asset coverage per $1,000 on line of credit payable at year end $6,465   $15,681   $17,575   $33,294   $ –  

 

(a) Beginning with the year ended October 31, 2018, the Fund has been audited by KPMG LLP. Previous years were audited by a different independent registered public accounting firm.

 

(b) Net investment income is based on average shares outstanding during the period.

 

(c) Total investment return is calculated assuming a purchase of common stock on the first day and a sale on the last day of each reporting period. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Total investment return does not reflect brokerage commissions.

 

(d) Effective on May 4, 2018, the Fund entered into an expense limitation agreement with Aberdeen Asset Managers Limited, the Fund's investment adviser. Prior to this, there was no such agreement in place.

 

(e) Asset coverage ratio is calculated by dividing net assets plus the amount of any borrowings, for investment purposes by the amount of the Revolving Credit Facility.

 

(f) The Fund did not disclose asset coverage ratio on line of credit payable in prior years.

 

 

Amounts listed as "–" are $0 or round to $0.

 

 

See Notes to Financial Statements.

 

 

20 Aberdeen Global Premier Properties Fund  

 

 

 

 

 

Notes to Financial Statements

 

October 31, 2021

 

 

1. Organization

Aberdeen Global Premier Properties Fund (the "Fund") is a diversified, closed-end management investment company. The Fund was organized as a Delaware statutory trust on February 13, 2007, and commenced operations on April 26, 2007. The Fund's investment objective is to seek high current income and capital appreciation. On May 27, 2020, shareholders of the Fund approved a new investment objective to seek high current income and capital appreciation. The Board of Trustees (the "Board") authorized an unlimited number of shares with no par value.

 

2. Summary of Significant Accounting Policies

The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board ("FASB") Accounting Standard Codification Topic 946 Financial Services-Investment Companies.

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies conform to generally accepted accounting principles ("GAAP") in the United States of America. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

a. Security Valuation:

The Fund values its securities at current market value or fair value, consistent with regulatory requirements. "Fair value" is defined in the Fund's Valuation and Liquidity Procedures as the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants without a compulsion to transact at the measurement date.

 

In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the Fund discloses the fair value of its investments using a three-level hierarchy that classifies the inputs to valuation techniques used to measure the fair value. The hierarchy assigns Level 1, the highest level, measurements to valuations based upon unadjusted quoted prices in active markets for identical assets, Level 2 measurements to valuations based upon other significant observable inputs, including adjusted quoted prices in active markets for similar assets, and Level 3 the lowest level, measurements to valuations based upon unobservable inputs that are significant to the valuation. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including a pricing

model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability, which are based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. A financial instrument's level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement.

 

Equity securities that are traded on an exchange are valued at the last quoted sale price on the principal exchange on which the security is traded at the "Valuation Time" subject to application, when appropriate, of the valuation factors described in the paragraph below. Under normal circumstances, the Valuation Time is as of the close of regular trading on the New York Stock Exchange ("NYSE") (usually 4:00 p.m. Eastern Time). In the absence of a sale price, the security is valued at the mean of the bid/ask price quoted at the close on the principal exchange on which the security is traded. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Closed-end funds and exchange-traded funds ("ETFs") are valued at the market price of the security at the Valuation Time. A security using any of these pricing methodologies is determined to be a Level 1 investment.

 

Foreign equity securities that are traded on foreign exchanges that close prior to Valuation Time are valued by applying valuation factors to the last sale price or the mean price as noted above. Valuation factors are provided by an independent pricing service provider approved by the Board. These valuation factors are used when pricing the Fund's portfolio holdings to estimate market movements between the time foreign markets close and the time the Fund values such foreign securities. These valuation factors are based on inputs such as depositary receipts, indices, futures, sector indices/ETFs, exchange rates, and local exchange opening and closing prices of each security. When prices with the application of valuation factors are utilized, the value assigned to the foreign securities may not be the same as quoted or published prices of the securities on their primary markets. A security that applies a valuation factor is determined to be a Level 2 investment because the exchange-traded price has been adjusted. Valuation factors are not utilized if the independent pricing service provider is unable to provide a valuation factor or if the valuation factor falls below a predetermined threshold; in such case, the security is determined to be a Level 1 investment.

 

Derivative instruments are valued at fair value. Exchange traded futures are generally Level 1 investments and centrally cleared swaps and forwards are generally Level 2 investments. Forward foreign currency contracts are generally valued based on the bid price of the forward

 

  Aberdeen Global Premier Properties Fund 21

 

 

 

 

 

 

Notes to Financial Statements (continued)

 

October 31, 2021

 

 

 

rates and the current spot rate. Forward exchange rate quotations are available for scheduled settlement dates, such as 1-, 3-, 6-, 9- and 12- month periods. An interpolated valuation is derived based on the actual settlement dates of the forward contracts held. Futures contracts are valued at the settlement price or at the last bid price if no settlement price is available. Swap agreements are generally valued by an approved pricing agent based on the terms of the swap agreement (including future cash flows). When market quotations or exchange rates are not readily available, or if the Adviser concludes that such market quotations do not accurately reflect fair value, the fair value of the Fund's assets are determined in good faith in accordance with the Valuation Procedures.

 

Short-term investments are comprised of cash and cash equivalents invested in short-term investment funds which are redeemable daily. The Fund sweeps available cash into the State Street Institutional U.S. Government Money Market Fund, which has elected to qualify as a "government money market fund" pursuant to Rule 2a-7 under the 1940 Act, and has an objective, which is not guaranteed, to maintain a

 

$1.00 per share net asset value ("NAV"). Generally, these investment types are categorized as Level 1 investments.

 

In the event that a security's market quotations are not readily available or are deemed unreliable (for reasons other than because the foreign exchange on which it trades closes before the Valuation Time), the security is valued at fair value as determined by the Fund's Pricing Committee, taking into account the relevant factors and surrounding circumstances using valuation policies and procedures approved by the Board. A security that has been fair valued by the Fund's Pricing Committee may be classified as Level 2 or Level 3 depending on the nature of the inputs.

 

The three-level hierarchy of inputs is summarized below:

 

Level 1 – quoted prices in active markets for identical investments;

 

Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, and credit risk); or

 

Level 3 – significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). 

 

A summary of standard inputs is listed below:

 

Security Type   Standard Inputs
Foreign equities utilizing a
fair value factor
  Depositary receipts, indices, futures, sector indices/ETFs, exchange rates, and local exchange opening and closing prices of each security.

 

The following is a summary of the inputs used as of October 31, 2021 in valuing the Fund's investments at fair value. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Please refer to the Portfolio of Investments for a detailed breakout of the security types:

 

Investments, at Value   Level 1 – Quoted
Prices ($)
  Level 2 – Other Significant
Observable Inputs ($)
  Level 3 – Significant
Unobservable Inputs ($)
  Total ($)  
Investments in Securities  
Common Stocks   $487,414,273   $196,023,795   $–   $683,438,068  

 

Amounts listed as "–" are $0 or round to $0.

 

During the fiscal year ended October 31, 2021, there were no significant changes to the fair valuation methodologies for the type of holdings in the Fund's portfolio.

 

b. Foreign Currency Translation:

Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. Dollars at the exchange rate of said currencies against the U.S. Dollar, as of the Valuation Time, as provided by an independent pricing service approved by the Board.

Foreign currency amounts are translated into U.S. Dollars on the following basis:

 

(i) market value of investment securities, other assets and liabilities – at the current daily rates of exchange at the Valuation Time; and

 

(ii) purchases and sales of investment securities, income and expenses – at the relevant rates of exchange prevailing on the respective dates of such transactions.

 

 

 

 

22 Aberdeen Global Premier Properties Fund

 

 

 

 

 

 

Notes to Financial Statements (continued)

 

October 31, 2021

 

 

 

The Fund does not isolate that portion of gains and losses on investments in equity securities due to changes in the foreign exchange rates from the portion due to changes in market prices of equity securities. Accordingly, realized and unrealized foreign currency gains and losses with respect to such securities are included in the reported net realized and unrealized gains and losses on investment transactions balances.

 

The Fund reports certain foreign currency related transactions and foreign taxes withheld on security transactions as components of realized gains for financial reporting purposes, whereas such foreign currency related transactions are treated as ordinary income for U.S. federal income tax purposes.

 

Net unrealized currency gains or losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation/depreciation in value of investments, and translation of other assets and liabilities denominated in foreign currencies.

 

Net realized foreign exchange gains or losses represent foreign exchange gains and losses from transactions in foreign currencies and forward foreign currency contracts, exchange gains or losses realized between the trade date and settlement date on security transactions, and the difference between the amounts of interest and dividends recorded on the Fund's books and the U.S. Dollar equivalent of the amounts actually received.

 

c. Security Transactions, Investment Income and Expenses:

Security transactions are recorded on the trade date. Realized and unrealized gains/(losses) from security and currency transactions are calculated on the identified cost basis. Dividend income and corporate actions are recorded generally on the ex-date, except for certain dividends and corporate actions which may be recorded after the ex-date, as soon as the Fund acquires information regarding such dividends or corporate actions. Interest income and expenses are recorded on an accrual basis.

 

d. Derivative Financial Instruments:

The Fund is authorized to use derivatives to manage currency risk, credit risk, and interest rate risk and to replicate, or use as a substitute for, physical securities. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract. The use of derivative instruments involves, to varying degrees, elements of market risk in excess of the amount recognized in the Statement of Assets and Liabilities.

Forward Foreign Currency Exchange Contracts:

 

A forward foreign currency exchange contract ("forward contract") involves an obligation to purchase and sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. Forward contracts are used to manage the Fund's currency exposure in an efficient manner. They are used to sell unwanted currency exposure that comes with holding securities in a market, or to buy currency exposure where the exposure from holding securities is insufficient to give the desired currency exposure either in absolute terms or relative to a particular benchmark or index. The use of forward contracts allows for the separation of investment decision-making between foreign securities holdings and their currencies.

 

The forward contract is marked-to-market daily and the change in market value is recorded by the Fund as unrealized appreciation or depreciation. Forward contracts' prices are received daily from an independent pricing provider. When the forward contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. These realized and unrealized gains and losses are reported on the Statement of Operations.

 

During the fiscal year ended October 31, 2021, the Fund used forward contracts to hedge its currency exposure.

 

While the Fund may enter into forward contracts to seek to reduce currency exchange rate risks, transactions in such contracts involve certain risks. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in exchange rates. Thus, while the Fund may benefit from such transactions, unanticipated changes in currency prices may result in a poorer overall performance for the Fund than if it had not engaged in any such transactions. Moreover, there may be imperfect correlation between the Fund's portfolio holdings or securities quoted or denominated in a particular currency and forward contracts entered into by the Fund. Such imperfect correlation may prevent the Fund from achieving a desired hedge, which will expose the Fund to the risk of foreign exchange loss.

 

Forward contracts are subject to the risk that a counterparty to a forward contract may default on its obligations. Since a forward foreign currency exchange contract is not guaranteed by an exchange or clearing house, a default on the contract would deprive the Fund of unrealized profits, transaction costs or the benefits of a currency hedge or force the Fund to cover its purchase or sale commitments, if any, at the market price at the time of default.

 

 

 

 

 

  Aberdeen Global Premier Properties Fund 23

 

 

 

 

 

 

Notes to Financial Statements (continued)

 

October 31, 2021

 

 

 

Summary of Derivative Instruments:

 

The Fund may use derivatives for various purposes as noted above.

 

The effect of derivative instruments on the Statement of Operations for the fiscal year ended October 31, 2021:

 

    Location of Gain or (Loss) on
Derivatives
  Realized Gain
or (Loss) on
Derivatives
  Change in
Unrealized
Appreciation/
(Depreciation)
on Derivatives
Forward foreign currency exchange contracts (foreign exchange risk)   Realized/Unrealized Gain/(Loss) from Investments and Foreign Currency Transactions   $(37,014 )  $–  
Total       $(37,014 )  $  

 

Information about derivatives reflected as of the date of this report is generally indicative of the type of activity for the fiscal year ended October 31, 2021. The table below summarizes the weighted average values of derivatives holdings for the Fund during the fiscal year ended October 31, 2021.

 

Derivative   Average Notional Value  
Purchase Forward Foreign Currency Contracts   $  
Sale Forward Foreign Currency Contracts   395,021  

 

Amounts listed as "–" are $0 or round to $0.

 

The Fund values derivatives at fair value, as described in the Statement of Operations. Accordingly, the Fund does not follow hedge accounting even for derivatives employed as economic hedges.

 

 

e. Distributions:

The Fund implemented a managed distribution policy to pay a stable monthly distribution out of current income, supplemented by realized short-term capital gains and long-term capital gains, and, to the extent necessary, paid-in capital, which is a nontaxable return of capital. The managed distribution policy is subject to regular review by the Board. The Fund expects to pay its common shareholders annually all or substantially all of its investment company taxable income. In addition, at least annually, the Fund intends to distribute all or substantially all of its net capital gains, if any.

 

Distributions from net realized gains for book purposes may include short-term capital gains which are ordinary income for tax purposes. Distributions to common shareholders are recorded on the ex-dividend date.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These "book-tax" differences are considered either temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal income tax treatment. Temporary differences

do not require reclassification. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes they are reported to shareholders as return of capital.

 

f. Federal Income Taxes:

The Fund intends to continue to qualify as a "regulated investment company" (RIC) by complying with the provisions available to certain investment companies, as defined in Subchapter M of the Internal Revenue Code of 1986, as amended, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all federal income taxes. Therefore, no federal income tax provision is required.

 

The Fund recognizes the tax benefits of uncertain tax positions only where the position is "more likely than not" to be sustained assuming examination by tax authorities. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Since tax authorities can examine previously filed tax returns, the Fund's U.S. federal and state tax returns for each of the most recent four fiscal years up to the most recent fiscal year ended October 31, 2021 are subject to such review.

 

 

 

 

 

24 Aberdeen Global Premier Properties Fund

 

 

 

 

 

 

Notes to Financial Statements (continued)

 

October 31, 2021

 

 

g. Foreign Withholding Tax:

 

Dividend and interest income from non-U.S. sources received by the Fund are generally subject to non-U.S. withholding taxes and are recorded on the Statement of Operations. The Fund files for tax reclaims for the refund of such withholding taxes according to tax treaties. Tax reclaims that are deemed collectible are booked as tax reclaim receivable on the Statement of Assets and Liabilities. In addition, the Fund may be subject to capital gains tax in certain countries in which it invests. The above taxes may be reduced or eliminated under the terms of applicable U.S. income tax treaties with some of these countries. The Fund accrues such taxes when the related income is earned.

 

In addition, when the Fund sells securities within certain countries in which it invests, the capital gains realized may be subject to tax. Based on these market requirements and as required under GAAP, the Fund accrues deferred capital gains tax on securities currently held that have unrealized appreciation within these countries. The amount of deferred capital gains tax accrued, if any, is reported on the Statement of Assets and Liabilities.

 

h. Restricted Securities:

 

Restricted securities are privately-placed securities whose resale is restricted under U.S. securities laws. The Fund may invest in restricted securities, including unregistered securities eligible for resale without registration pursuant to Rule 144A and privately-placed securities of U.S. and non-U.S. issuers offered outside the U.S. without registration pursuant to Regulation S under the Securities Act of 1933, as amended (the "1933 Act"). Rule 144A securities may be freely traded among certain qualified institutional investors, such as the Fund, but resale of such securities in the U.S. is permitted only in limited circumstances.

 

3. Agreements and Transactions with Affiliates

 

a. Investment Adviser and Investment Sub-Adviser:

 

Aberdeen Asset Managers Limited ("AAML" or the "Adviser") and Aberdeen Standard Investments Inc. ("ASII" or the "Sub-Adviser") (to be known as abrdn Inc. effective January 1, 2022) serve as the Fund's investment adviser and sub-adviser, respectively, pursuant to an investment advisory agreement (the "Advisory Agreement") and sub-advisory agreement (the "Sub-Advisory Agreement") with the Fund. AAML and ASII (collectively, the "Advisers") are wholly-owned indirect subsidiaries of abrdn plc (formerly known as "Standard Life Aberdeen plc"). In rendering advisory services, the Advisers may use the resources

of investment advisor subsidiaries of abrdn. These affiliates have entered into procedures pursuant to which investment professionals from affiliates may render portfolio management and research services as associated persons of the Advisers.

 

As compensation for its services to the Fund, AAML receives an annual investment advisory fee of 1.00% based on the Fund's average daily Managed Assets, computed daily and payable monthly. During the fiscal year ended October 31, 2021, the Fund paid AAML $6,399,569. "Managed Assets" means total assets of the Fund, including any form of investment leverage, minus all accrued expenses incurred in the normal course of operations, but not excluding any liabilities or obligations attributable to investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit facility or the issuance of debt securities), (ii) the issuance of preferred stock or other similar preference securities, (iii) the reinvestment of collateral received for securities loaned in accordance with the Fund's investment objectives and policies, and/or (iv) any other means. Under the Sub-Advisory Agreement, AAML is responsible for the payment of fees to ASII.

 

Effective May 4, 2018, AAML entered into a written contract (the "Expense Limitation Agreement") with the Fund that is effective through June 30, 2022. The Expense Limitation Agreement limits the total ordinary operating expenses of the Fund (excluding any leverage costs, taxes, interest, brokerage commissions and any non-routine expenses) from exceeding 1.19% of the average daily net assets of the Fund on an annualized basis. The total amount of the waiver for the fiscal year ended October 31, 2021 pursuant to the Expense Limitation Agreement was $1,046,700.

 

AAML may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed pursuant to the Expense Limitation Agreement as of a date not more than three years after the date when the Adviser limited the fees or reimbursed the expenses; provided that the following requirements are met: the reimbursements do not cause the Fund to exceed the lesser of the applicable expense limitation in the contract at the time the fees were limited or expenses are paid or the applicable expense limitation in effect at the time the expenses are being recouped by the Adviser, and the payment of such reimbursement is approved by the Board on a quarterly basis (the "Reimbursement Requirements"). Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by AAML is not permitted.

 

 

 

 

 

 

 

Aberdeen Global Premier Properties Fund 25

 

 

 

 

 

 

Notes to Financial Statements (continued)

 

October 31, 2021

 

 

As of October 31, 2021, to the extent the Reimbursement Requirements are met, the cumulative potential reimbursements to AAML from the Fund, based on expenses reimbursed by AAML, including adjustments described above, would be:

 

Amount Fiscal Year 2019 (Expires 10/31/22) $250,705  
Amount Fiscal Year 2020 (Expires 10/31/23) $481,002  
Amount Fiscal Year 2021 (Expires 10/31/24) $1,046,700  
Total* $1,778,407  

 

* Amounts reported are due to expire throughout the respective 3-year expiration period presented above.

 

b. Fund Administrator:

 

Effective June 1, 2020, ASII became the Fund's Administrator. Pursuant to the Administration Agreement, ASII receives a fee paid by the Fund, at an annual fee rate of 0.08% of the Fund's average monthly net assets. Prior to June 1, 2020, State Street Bank and Trust Company ("SSBT") served as the Fund's Administrator. SSBT became the Fund's Sub-Administrator effective June 1, 2020. For the fiscal year ended October 31, 2021, ASII earned $438,113 from the Fund for administration services.

 

c. Investor Relations:

 

Under the terms of the Investor Relations Services Agreement, ASII provides and/or engages third parties to provide investor relations services to the Fund and certain other funds advised by AAML or its affiliates as part of an Investor Relations Program. Under the Investor Relations Services Agreement, the Fund owes a portion of the fees related to the Investor Relations Program (the "Fund's Portion"). However, Investor Relations Services fees are limited by ASII so that the Fund will only pay up to an annual rate of 0.05% of the Fund's average weekly net assets. Any difference between the capped rate of 0.05% of the Fund's average weekly net assets and the Fund's Portion is paid for by ASII.

 

Pursuant to the terms of the Investor Relations Services Agreement, ASII (or third parties engaged by ASII), among other things, provides objective and timely information to shareholders based on publicly available information; provides information efficiently through the use of technology while offering shareholders immediate access to knowledgeable investor relations representatives; develops and maintains effective communications with investment professionals from a wide variety of firms; creates and maintains investor relations communication materials such as fund manager interviews, films and webcasts, publishes white papers, magazine articles and other relevant materials discussing the Fund's investment results, portfolio positioning and outlook; develops and maintains effective communications with large institutional shareholders; responds to specific shareholder

questions; and reports activities and results to the Board and management detailing insight into general shareholder sentiment.

 

During the fiscal year ended October 31, 2021, the Fund incurred investor relations fees of approximately $153,292. For the fiscal year ended October 31, 2021, ASII did not contribute to the investor relations fees for the Fund because the Fund's contribution was below 0.05% of the Fund's average weekly net assets on an annual basis.

 

4. Investment Transactions

 

Purchases and sales of investment securities (excluding short-term securities) for the fiscal year ended October 31, 2021, were $271,188,896 and $224,192,527, respectively.

 

5. Capital

 

The Fund is authorized to issue an unlimited number of common shares with no par value. As of October 31, 2021, there were 85,407,951 shares of common stock issued and outstanding.

 

6. Line of Credit

 

On October 8, 2020 the Fund entered into a revised lending agreement with BNP Paribas Prime Brokerage International Ltd. ("BNPP PB") which allows the Fund to borrow on a uncommitted and secured basis up to US$125 million. The terms of the lending agreement indicate the rate to be the London Interbank Offered Rate ("LIBOR") plus 0.85% per annum on amounts borrowed. The BNPP PB facility provides a secured, uncommitted line of credit for the Fund where selected Fund assets are pledged against advances made to the Fund. The Fund has granted a security interest in all pledged assets used as collateral to BNPP PB. The maximum amount of the line of credit available is the lesser of 33.33% of its total assets of the Fund or the amount disclosed above, including the amount borrowed. Either BNPP PB or the Fund may terminate this agreement upon delivery of written notice. During the fiscal year ended October 31, 2021, the average borrowing by the Fund was $92,742,000 with an average weighted interest rate on borrowings of 1.01%. During the fiscal year ended October 31, 2021, the maximum borrowing by the Fund was $124,050,073. Interest expense related to the line of credit for the fiscal year ended October 31, 2021 was $1,123,074. As of October 31, 2021, the outstanding balance on the loan was $106,847,537. See Note 12 (Subsequent Events) regarding the amendment to the lending agreement entered into following the reporting period.

 

7. Open Market Repurchase Program

 

On June 13, 2018, the Board approved a share repurchase program ("Program") for the Fund. The Program allows the Fund to purchase, in the open market, its outstanding common shares, with the amount and timing of any repurchase determined at the discretion of the Fund's investment adviser and subject to market conditions and investment considerations. The Fund reports repurchase activity on the Fund's

 

 

26 Aberdeen Global Premier Properties Fund  

 

 

 

 

 

 

Notes to Financial Statements (continued)

 

October 31, 2021

 

 

website on a monthly basis. For the fiscal year ended October 31, 2021, the Fund did not repurchase any shares through the Program.

 

8. Portfolio Investment Risks

 

a. Concentration Risk:

 

The Fund invests a substantial amount of its assets in the equity securities of issuers engaged in the real estate industry, including real estate investment trusts (REITs). As a result, the Fund may be more affected by economic developments in the real estate industry than would a general equity fund.

 

b. Emerging Markets Risk:

 

The Fund is subject to emerging market risk. This is a magnification of the risks that apply to foreign investments. These risks are greater for securities of companies in emerging market countries because the countries may have less stable governments, more volatile currencies and less established markets (see "Foreign Securities Risk" below).

 

c. Equity Securities Risk:

 

The stock or other security of a company may not perform as well as expected, and may decrease in value, because of factors related to the company (such as poorer than expected earnings or certain management decisions) or to the industry in which the company is engaged (such as a reduction in the demand for products or services in a particular industry). Holders of common stock generally are subject to more risks than holders of preferred stock or debt securities because the right to repayment of common stockholders' claims is subordinated to that of preferred stock and debt securities upon the bankruptcy of the issuer.

 

d. Foreign Currency Exposure Risk:

 

The value of foreign currencies relative to the U.S. Dollar fluctuates in response to market, economic, political, regulatory, geopolitical or other conditions. A decline in the value of a foreign currency versus the U.S. Dollar reduces the value in U.S. Dollars of investments denominated in that foreign currency. This risk may impact the Fund more greatly to the extent the Fund does not hedge its currency risk, or hedging techniques used by the Adviser are unsuccessful.

 

e. Foreign Securities Risk:

 

Foreign countries in which the Fund may invest may have markets that are less liquid, less regulated and more volatile than U.S. markets. The value of the Fund's investments may decline because of factors such as unfavorable or unsuccessful government actions, reduction of government or central bank support and political or financial instability. To the extent the Fund focuses its investments in a single country or only a few countries in a particular geographic region, economic, political, regulatory or other conditions affecting such country or region

may have a greater impact on Fund performance relative to a more geographically diversified fund.

 

f. Issuer Risk:

 

The value of a security may decline for reasons directly related to the issuer, such as management performance, financial leverage and reduced demand for the issuer's goods or services.

 

g. Leverage Risk:

 

The Fund may use leverage to purchase securities. Increases and decreases in the value of the Fund's portfolio will be magnified when the Fund uses leverage.

 

h. LIBOR Risk:

 

Under the revolving credit facility, the Fund is charged interest on amounts borrowed at a variable rate, which may be based on the London Interbank Offered Rate ("LIBOR") plus a spread. Additionally, the Fund may invest in certain debt securities, derivatives or other financial instruments that utilize LIBOR as a "benchmark" or "reference rate" for various interest rate calculations. In July 2017, the United Kingdom Financial Conduct Authority ("FCA"), which regulates LIBOR, announced a desire to phase out the use of LIBOR by the end of 2021. However, subsequent announcements by the FCA, the LIBOR administrator and other regulators indicate that it is possible that the most widely used LIBOR rates may continue until mid-2023. It is anticipated that LIBOR ultimately will be discontinued or the regulator will announce that it is no longer sufficiently robust to be representative of its underlying market around that time. Although financial regulators and industry working groups have suggested alternative reference rates, such as European Interbank Offered Rate ("EURIBOR"), Sterling Overnight Interbank Average Rate ("SONIA") and Secured Overnight Financing Rate ("SOFR"), global consensus on alternative rates is lacking and the process for amending existing contracts or instruments to transition away from LIBOR remains unclear. The elimination of LIBOR or changes to other reference rates or any other changes or reforms to the determination or supervision of reference rates could have an adverse impact on the market for, or value of, any securities or payments linked to those reference rates, which may adversely affect the Fund's performance and/or net asset value. Uncertainty and risk also remain regarding the willingness and ability of issuers and lenders to include revised provisions in new and existing contracts or instruments. Consequently, the transition away from LIBOR to other reference rates may lead to increased volatility and illiquidity in markets that are tied to LIBOR, fluctuations in values of LIBOR-related investments or investments in issuers that utilize LIBOR, increased difficulty in borrowing or refinancing and diminished effectiveness of hedging strategies, adversely affecting the Fund's performance. Furthermore, the risks associated with the expected

 

 

Aberdeen Global Premier Properties Fund 27

 

 

 

 

 

 

Notes to Financial Statements (continued)

 

October 31, 2021

 

 

discontinuation of LIBOR and transition may be exacerbated if the work necessary to effect an orderly transition to an alternative reference rate is not completed in a timely manner. Because the usefulness of LIBOR as a benchmark could deteriorate during the transition period, these effects could occur prior to the end of 2021.

 

i. Management Risk:

 

The Fund is subject to the risk that the Adviser may make poor security selections. The Adviser, and its portfolio managers apply their own investment techniques and risk analyses in making investment decisions for the Fund and there can be no guarantee that these decisions will achieve the desired results for the Fund. In addition, the Adviser may select securities that underperform the relevant market or other funds with similar investment objectives and strategies.

 

j. Market Risk:

 

Markets are affected by numerous factors, including interest rates, the outlook for corporate profits, the health of the national and world economies, the fluctuation of other stock markets around the world, and financial, economic and other global market developments and disruptions, such as those arising from war, terrorism, market manipulation, government interventions, defaults and shutdowns, political changes or diplomatic developments, public health emergencies and natural/environmental disasters. Such events can negatively impact the securities markets and cause the Fund to lose value.

 

One such event is the COVID-19 pandemic, which has caused major disruptions to economies and markets around the world, including the markets in which the Fund invests, and which has and may continue to negatively impact the value of certain of the Fund's investments. Although vaccines for COVID-19 and variants thereof are becoming more widely available, the COVID-19 pandemic and impacts thereof may continue for an extended period of time and may vary from market to market. To the extent the impacts of COVID-19 continue, the Fund may experience negative impacts to its business that could exacerbate other risks to which the Fund is subject. Policy and legislative changes in countries around the world are affecting many aspects of financial regulation, and governmental and quasi-governmental authorities and regulators throughout the world have previously responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes.

 

In addition, economies and financial markets throughout the world are becoming increasingly interconnected. As a result, whether or not the Fund invests in securities of issuers located in or with significant exposure to countries experiencing economic and financial difficulties, the value and liquidity of the Fund's investments may be negatively affected by such events.

For example, whether or not the Fund invests in securities of issuers located in Europe (whether the EU, Eurozone or UK) or with significant exposure to European, EU, Eurozone or UK issuers or countries, the unavoidable uncertainties and events related to the UK's departure from the EU ("Brexit") could negatively affect the value and liquidity of the Fund's investments, increase taxes and costs of business and cause volatility in currency exchange rates and interest rates. Brexit could adversely affect the performance of contracts in existence at the date of Brexit and European, UK or worldwide political, regulatory, economic or market conditions and could contribute to instability in political institutions, regulatory agencies and financial markets. Brexit could also lead to legal uncertainty and politically divergent national laws and regulations as a new relationship between the UK and EU is defined and as the UK determines which EU laws to replace or replicate. Any of these effects of Brexit, and others that cannot be anticipated, could adversely affect the Fund's business, results of operations and financial condition.

 

The impact of these changes on the markets, and the practical implications for market participants, may not be fully known for some time.

 

k. Mid-Cap Securities Risk:

 

Securities of medium-sized companies tend to be more volatile and less liquid than securities of larger companies.

 

l. Non-U.S. Taxation Risk:

 

Income, proceeds and gains received by the Fund from sources within foreign countries may be subject to withholding and other taxes imposed by such countries, which will reduce the return on those investments. Tax treaties between certain countries and the United States may reduce or eliminate such taxes.

 

If, at the close of its taxable year, more than 50% of the value of the Fund's total assets consists of securities of foreign corporations, including for this purpose foreign governments, the Fund will be permitted to make an election under the Code that will allow shareholders a deduction or credit for foreign taxes paid by the Fund. In such a case, shareholders will include in gross income from foreign sources their pro rata shares of such taxes. A shareholder's ability to claim an offsetting foreign tax credit or deduction in respect of such foreign taxes is subject to certain limitations imposed by the Code, which may result in the shareholder's not receiving a full credit or deduction (if any) for the amount of such taxes. Shareholders who do not itemize on their U.S. federal income tax returns may claim a credit (but not a deduction) for such foreign taxes. If the Fund does not qualify for or chooses not to make such an election, shareholders will not be entitled separately to claim a credit or deduction for U.S. federal income tax purposes with respect to foreign taxes paid by the Fund; in

 

 

28 Aberdeen Global Premier Properties Fund  

 

 

 

 

 

 

Notes to Financial Statements (continued)

 

October 31, 2021

 

 

that case the foreign tax will nonetheless reduce the Fund's taxable income. Even if the Fund elects to pass through to its shareholders foreign tax credits or deductions, tax-exempt shareholders and those who invest in the Fund through tax-advantaged accounts such as IRAs will not benefit from any such tax credit or deduction.

 

m. Passive Foreign Investment Company Tax Risk:

 

Equity investments by the Fund in certain "passive foreign investment companies" ("PFICs") could subject the Fund to a U.S. federal income tax (including interest charges) on distributions received from the PFIC or on proceeds received from the disposition of shares in the PFIC. The Fund may be able to elect to treat a PFIC as a "qualified electing fund" (i.e., make a "QEF election"), in which case the Fund will be required to include its share of the company's income and net capital gains annually. The Fund may make an election to mark the gains (and to a limited extent losses) in such holdings "to the market" as though it had sold and repurchased its holdings in those PFICs on the last day of the Fund's taxable year. Such gains and losses are treated as ordinary income and loss. Because it is not always possible to identify a foreign corporation as a PFIC, the Fund may incur the tax and interest charges described above in some instances.

 

n. Portfolio Turnover Risk:

 

The Fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. High portfolio turnover necessarily results in greater transaction costs which may reduce Fund performance. It may also result in greater realization of gains, which may include short-term gains taxable at ordinary income tax rates.

 

o. Qualified Dividend Income Tax Risk:

 

Favorable U.S. federal tax treatment of Fund distributions may be adversely affected, changed or repealed by future changes in tax laws.

 

p. REIT and Real Estate Risk:

 

Investment in real estate investment trusts ("REITs") and real estate involves the risks that are associated with direct ownership of real estate and with the real estate industry in general. These risks include: declines in the value of real estate; risks related to local economic conditions, overbuilding and increased competition; increases in

property taxes and operating expenses; changes in zoning laws; casualty or condemnation losses; variations in rental income, neighborhood values or the appeal of properties to tenants; changes in interest rates and changes in general economic and market conditions. REITs' share prices may decline because of adverse developments affecting the real estate industry including changes in interest rates. The returns from REITs may trail returns from the overall market. Additionally, there is always a risk that a given REIT will fail to qualify for favorable tax treatment. REITs may be leveraged, which increases risk. Certain REITs charge management fees, which may result in layering the management fee paid by the fund.

 

q. Small-Cap Securities Risk:

 

Securities of smaller companies are usually less stable in price and less liquid than those of larger, more established companies. Therefore, they generally involve greater risk.

 

r. Valuation Risk:

 

The price that the Fund could receive upon the sale of any particular portfolio investment may differ from the Fund's valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation methodology or a price provided by an independent pricing service. As a result, the price received upon the sale of an investment may be less than the value ascribed by the Fund, and the Fund could realize a greater than expected loss or lesser than expected gain upon the sale of the investment. The Fund's ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third-party service providers.

 

9. Contingencies

 

In the normal course of business, the Fund may provide general indemnifications pursuant to certain contracts and organizational documents. The Fund's maximum exposure under these arrangements is dependent on future claims that may be made against the Fund, and therefore, cannot be estimated; however, the Fund expects the risk of loss from such claims to be remote.

 

10. Tax Information

 

The U.S. federal income tax basis of the Fund's investments (including derivatives, if applicable) and the net unrealized appreciation as of October 31, 2021, were as follows:

 

Tax Basis of Investments   Appreciation   Depreciation   Net Unrealized
Appreciation/
(Depreciation)
 
$554,081,491     $145,894,786   $(16,538,209 )  $129,356,577  

 

 

 

 

Aberdeen Global Premier Properties Fund 29

 

 

 

 

 

 

Notes to Financial Statements (continued)

October 31, 2021

 

 

The tax character of distributions paid during the fiscal years ended October 31, 2021 and October 31, 2020 was as follows:

 

    October 31, 2021     October 31, 2020  
Distributions paid from:            
Ordinary Income   $13,365,429     $4,072,815  
Net long-term capital gains          
Tax return of capital   27,630,388     36,923,001  
Total tax character of distributions   $40,995,817     $40,995,816  

 

As of October 31, 2021, the components of accumulated earnings on a tax basis were as follows:

 

Undistributed ordinary income – net   $–  
Undistributed long-term capital gains – net    
Total undistributed earnings   $–  
Capital loss carryforward   (29,922,519 )*
Other currency gains    
Other temporary differences    
Unrealized appreciation/(depreciation)   129,335,604 **
Total accumulated earnings/(losses) – net   $99,413,085  

 

* On October 31, 2021, the Fund had a net capital loss carryforward of $(29,922,519) which will be available to offset like amounts of any future taxable gains. The Fund is permitted to carry forward capital losses for an unlimited period, and capital losses that are carried forward will retain their character as either short-term or long-term capital losses. The breakdown of capital loss carryforwards are as follows:

 

Amounts     Expires
$23,840,518     Unlimited (Short-Term)
6,082,001     Unlimited (Long-Term)

 

** The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable to the realization for tax purposes of unrealized gains on investments in passive foreign investment companies and the tax deferral of wash sales.

 

GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. Accordingly, the table below details the necessary reclassifications, which are a result of permanent differences primarily attributable to foreign currency gains and losses, passive foreign investment company gains and losses and REIT Investments. These reclassifications have no effect on net assets or NAVs per share.

 

  Paid-in
Capital
Distributable
Earnings/
(Accumulated
Loss)
  $(561,272) $561,272  

11. Recent Rulemaking

 

In October 2020, the SEC adopted new regulations governing the use of derivatives by registered investment companies. Rule 18f-4 will impose limits on the amount of derivatives a fund could enter into, eliminate the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, and require funds whose use of derivatives is more than a limited specified exposure to establish and maintain a derivatives risk management program and appoint a derivatives risk manager. While the new rule became effective February 19, 2021, funds will not be required to fully comply with the new rule until August 19, 2022. It is not currently clear what impact, if any, the new rule will have on the availability, liquidity or performance of derivatives. Management is assessing the impact of Rule 18f-4 on the Fund.

 

 

 

 

 

 

 

 

 

30 Aberdeen Global Premier Properties Fund

 

 

 

 

 

Notes to Financial Statements (concluded)

October 31, 2021

 

 

In December 2020, the Securities and Exchange Commission ("SEC") adopted Rule 2a-5 under the 1940 Act, which establishes requirements for determining fair value in good faith for purposes of the 1940 Act, including related oversight and reporting requirements. The rule also defines when market quotations are "readily available" for purposes of the 1940 Act, the threshold for determining whether a fund must fair value a security. The SEC also adopted new Rule 31a-4 under the 1940 Act, which sets forth the recordkeeping requirements associated with fair value determinations. Finally, the SEC is rescinding previously issued guidance on related issues, including the role of a board in determining fair value and the accounting and auditing of fund investments. Rule 2a-5 and Rule 31a-4 became effective on March 8, 2021, with a compliance date of September 8, 2022. Management is currently evaluating this guidance.

 

12. Subsequent Events

Management has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the

financial statements were issued. Based on this evaluation, no disclosures and/or adjustments were required to the financial statements as of October 31, 2021, other than as noted below.

 

On November 9, 2021 and December 9, 2021, the Fund announced that it will pay on November 30, 2021 and December 30, 2021 a distribution of $0.04 per share to all shareholders of record as of November 19, 2021 and January 11, 2022, respectively.

 

On December 14, 2021, the Board approved an amendment to its Prime Brokerage Agreement with BNP Paribas Prime Brokerage International to increase the maximum commitment from $125 to $175 million. The amendment would also adjust the charged interest on amounts borrowed at a variable rate, which may be based on the Secured Overnight Financing Rate plus a spread.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aberdeen Global Premier Properties Fund 31

 

 

 

 

 

Report of Independent Registered Public Accounting Firm

 

 

 

 

To the Shareholders and Board of Trustees
Aberdeen Global Premier Properties Fund:

 

Opinion on the Financial Statements

 

We have audited the accompanying statement of assets and liabilities of Aberdeen Global Premier Properties Fund (the Fund), including the portfolio of investments, as of October 31, 2021, the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years in the four-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of October 31, 2021, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the four-year period then ended, in conformity with U.S. generally accepted accounting principles. The financial highlights for the year ended October 31, 2017 were audited by other independent registered public accountants whose report, dated December 22, 2017, expressed an unqualified opinion on those financial highlights.

 

Basis for Opinion

 

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 are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of October 31, 2021, by correspondence with the custodian, brokers, or by other appropriate auditing procedures when replies from brokers were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.

 

 

We have served as the auditor of one or more Aberdeen investment companies since 2009.

 

Philadelphia, Pennsylvania
December 28, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

32 Aberdeen Global Premier Properties Fund

 

 

 

 

 

Federal Tax Information: Dividends and Distributions (unaudited)

 

 

 

 

The following information is provided with respect to the distributions paid by the Fund during the fiscal year ended October 31, 2021:

 

Payable Date   Total Cash
Distribution
    Long-Term
Capital
Gain
    Return of
Capital
    Net
Ordinary
Dividend
    Foreign
Taxes
Paid(1)
    Gross
Ordinary
Dividend
    Qualified
Dividends(2)
    Foreign
Source
Income
 
11/30/2020     0.040000       0.000000       0.000000       0.040000       0.000000       0.040000       0.024026       0.000000  
1/8/2021     0.040000       0.000000       0.000000       0.040000       0.000000       0.040000       0.024026       0.000000  
1/29/2021     0.040000       0.000000       0.032351       0.007649       0.000000       0.007649       0.000630       0.000000  
2/26/2021     0.040000       0.000000       0.032351       0.007649       0.000000       0.007649       0.000630       0.000000  
3/31/2021     0.040000       0.000000       0.032351       0.007649       0.000000       0.007649       0.000630       0.000000  
4/30/2021     0.040000       0.000000       0.032351       0.007649       0.000000       0.007649       0.000630       0.000000  
5/28/2021     0.040000       0.000000       0.032351       0.007649       0.000000       0.007649       0.000630       0.000000  
6/30/2021     0.040000       0.000000       0.032351       0.007649       0.000000       0.007649       0.000630       0.000000  
7/30/2021     0.040000       0.000000       0.032351       0.007649       0.000000       0.007649       0.000630       0.000000  
8/31/2021     0.040000       0.000000       0.032351       0.007649       0.000000       0.007649       0.000630       0.000000  
9/30/2021     0.040000       0.000000       0.032351       0.007649       0.000000       0.007649       0.000630       0.000000  
10/29/2021     0.040000       0.000000       0.032351       0.007649       0.000000       0.007649       0.000630       0.000000  
TOTAL     0.480000       0.000000       0.323510       0.156490       0.000000       0.156490       0.054352       0.000000  

 

(1) The foreign taxes paid represent taxes incurred by the Fund on interest received from foreign sources. Foreign taxes paid may be included in taxable income with an offsetting deduction from gross income or may be taken as a credit for taxes paid to foreign governments. You should consult your tax advisor regarding the appropriate treatment of foreign taxes paid.
(2) The Fund hereby designates the amount indicated above or the maximum amount allowable by law.

 

Designation Requirements

 

Of the distributions paid by the Fund from ordinary income for the year ended October 31, 2021, the following percentages met the requirements to be treated as qualifying for the corporate dividends received deduction and qualified dividend income, respectively.

 

Dividends Received Deduction 0.00%

Qualified Dividend Income 34.73%

 

The above amounts are based on the best available information at this time. In early 2022, the Fund will notify applicable shareholders of final amounts for use in preparing 2021 U.S. federal income tax forms.

 

 

Supplemental Information (unaudited)

 

 

 

 

Results of Annual Meeting of Shareholders

 

The Fund held its Annual Meeting of Shareholders on April 29, 2021 (the "Shareholders Meeting"). At the Shareholders Meeting, shareholders of the Fund voted to elect one Class I Trustee.

 

As of the record date, March 15, 2021, the Fund had outstanding 85,407,951 shares of common stock. 75.98% of outstanding common stock were voted representing a quorum. The description of the proposals and number of shares voted at the Shareholders Meeting are as follows:

 

To elect one Class I Trustee to the Board of Trustees:

 

    Votes For     Votes Against  
John Sievwright     54,635,426       10,256,004  

 

 

 

 

Aberdeen Global Premier Properties Fund 33

 

 

 

 

 

Supplemental Information (unaudited) (continued)

 

 

 

 

Board of Trustees' Consideration of Advisory and Sub-Advisory Agreements

 

At a regularly scheduled quarterly meeting (the "Quarterly Meeting") of the Board of Trustees (the "Board") of Aberdeen Global Premier Properties Fund ("AWP" or the "Fund") held on June 15, 2021, the Board, including a majority of the Trustees who are not considered to be "interested persons" of the Fund (the "Independent Trustees") under the Investment Company Act of 1940, as amended (the "1940 Act"), approved for an annual period the continuation of the Fund's investment advisory agreement with Aberdeen Asset Managers Limited (the "Investment Adviser") and the investment sub-advisory agreement among the Fund, the Investment Adviser and Aberdeen Standard Investments, Inc. (the "Sub-Adviser" or "ASII"). In addition, the Independent Trustees of the Fund held a separate meeting via videoconference on June 9, 2021 to review the materials provided and the relevant legal considerations (together with the in-person Quarterly Meeting held on June 15, 2021, the "Meetings"). The Investment Adviser and the Sub-Adviser are referred to collectively herein as the "Advisers" and the aforementioned agreements with the Advisers are referred to as the "Advisory Agreements." The Sub-Adviser is an affiliate of the Investment Adviser.

 

In connection with their consideration of whether to approve the continuation of the Fund's Advisory Agreements, the Board members received and reviewed a variety of information provided by the Advisers relating to the Fund, the Advisory Agreements and the Advisers, including comparative performance, fee and expense information, and other information regarding the nature, extent and quality of services provided by the Advisers under their respective Advisory Agreements. The materials provided to the Board generally included, among other items: (i) information on the Fund's advisory fees and other expenses, including information comparing the Fund's expenses to those of a peer group of funds and information about any applicable expense limitations and fee "breakpoints"; (ii) a report prepared by the Advisers in response to a request submitted by the Independent Trustees' independent legal counsel on behalf of the Independent Trustees; (iii) information on the investment performance of the Fund and the performance of peer groups of funds and the Fund's performance benchmark; (iv) information about the profitability of the Advisory Agreements to the Advisers; and (v) a memorandum from the Independent Trustees' independent legal counsel on the responsibilities of the Board in considering for approval the investment advisory and investment sub-advisory arrangements under the 1940 Act and Delaware law. The Board, including the Fund's Independent Trustees, also considered other matters such as: (i) the Fund's investment objective and strategies; (ii) the Advisers' financial results and financial condition; (iii) the Advisers' investment personnel and operations; (iv) the procedures employed to value the Fund's assets; (v) the resources devoted to, and the record of compliance with, the Fund's investment policies and restrictions, policies on personal securities transactions and other compliance policies; (vi) the allocation of the Fund's brokerage, if any, including, if applicable, allocations to brokers affiliated with the Advisers and the use, if any, of "soft" commission dollars to pay Fund expenses and to pay for research and other similar services; and (vii) possible conflicts of interest. Throughout the process, the Board had the opportunity to ask questions of and request additional information from the Advisers.

 

The Independent Trustees were advised by separate independent legal counsel throughout the process and consulted in executive sessions with their independent legal counsel regarding their consideration of the renewal of the Advisory Agreements. In considering whether to approve the continuation of the Advisory Agreements, the Board, including the Independent Trustees, did not identify any single factor as determinative. Individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. Matters considered by the Board, including the Independent Trustees, in connection with its approval of the continuation of the Advisory Agreements included the factors listed below.

 

In addition to the materials requested by the Trustees in connection with their annual consideration of the continuation of the Advisory Agreements, the Trustees received and reviewed materials in advance of each regular quarterly meeting of the Board that contained information about the Fund's investment performance and information relating to the services provided by the Advisers.

 

The nature, extent and quality of the services provided to the Fund under the Advisory Agreements. The Board considered, among other things, the nature, extent and quality of the services provided by the Advisers to the Fund and the resources dedicated to the Fund by the Advisers. The Trustees took into account the Advisers' investment experience and considered the allocation of responsibilities between the Advisers. The Board also considered the Advisers' risk management processes. The Board considered the background and experience of the Advisers' senior management personnel and the qualifications, background and responsibilities of the portfolio managers primarily responsible for the day-to-day portfolio management services for the Fund. The Board also considered information regarding the Advisers' compliance with applicable laws and Securities and Exchange Commission ("SEC") and other regulatory inquiries or audits of the Fund and the Advisers. The Board considered that they received information on a regular basis from the Fund's Chief Compliance Officer regarding the Advisers' compliance policies and procedures and considered the Advisers' brokerage policies and practices. Management reported to the Board on, among other things, its business plans and organizational changes. The Trustees took into account their knowledge of management and the quality of the performance of management's duties through Board meetings, discussion and reports during the preceding year.

 

 

34 Aberdeen Global Premier Properties Fund

 

 

 

 

 

 

Supplemental Information (unaudited) (concluded)

 

 

 

 

After reviewing these and related factors, the Board concluded that the nature, extent and quality of the services provided supported the renewal of the Advisory Agreements.

 

Investment performance of the Fund and the Advisers. The Board received and reviewed with management, among other performance data, information that compared the Fund's return to comparable investment companies. The Board also received and considered performance information compiled by Strategic Insight Mutual Fund Research and Consulting, LLC ("SI"), an independent third-party provider of investment company data as to the Fund's total return, as compared with the funds in the Fund's Morningstar category (the "Morningstar Group").

 

In addition, the Board received and reviewed information regarding the Fund's total return on a gross and net basis and relative to the Fund's benchmark, the impact of foreign currency movements on the Fund's performance and the Fund's share performance and premium/discount information. The Board also received and reviewed information on the Fund's total return for the period since the Advisers assumed responsibility for management of the Fund effective May 4, 2018, as compared with the total returns of its Morningstar Group average, and other comparable Aberdeen-managed funds. The Board took into account information about the Fund's discount/premium ranking relative to its Morningstar Group and considered management's discussion of the Fund's performance. Additionally, the Trustees considered management's discussion of the factors contributing to differences in performance, including differences in the investment strategies of each of these other funds and accounts. The Board also considered the Advisers' performance and reputation generally, the historical responsiveness of the Investment Adviser to Trustee concerns about performance, and the willingness of the Advisers to take steps intended to improve performance.

 

Fees and expenses. The Board reviewed with management the effective annual fee rate paid by the Fund to the Investment Adviser for investment management services. The Board also received and considered information compiled at the request of the Fund by SI that compared the Fund's effective annual management fee rate with the fees paid by a peer group consisting of other comparable closed-end funds (each such group, a "Peer Group"). The Trustees took into account the management fee structure, including that advisory fees for the Fund were based on the Fund's total managed assets, whether attributable to common stock or borrowings, if any. The Trustees also considered information from management about the fees charged by the Advisers to other U.S. clients investing primarily in an asset class similar to that of the Fund. The Board reviewed and considered additional information about the Investment Adviser's fees, including the amount of the management fees retained by the Investment Adviser after payment of the advisory fees. The Board considered that the compensation paid to the Sub-Adviser was paid by the Investment Adviser, and, accordingly that the retention of the Sub-Adviser did not increase the fees or expenses otherwise incurred by the Fund's shareholders. The Board considered the fee comparisons in light of the differences in resources and costs required to manage the different types of accounts.

 

The Board also took into account management's discussion of the Fund's expenses, including the factors that impacted the Fund's expenses.

 

Economies of Scale. The Board considered management's discussion of the Fund's management fee structure and determined that the management fee structure was reasonable. The Board based this determination on various factors, including how the Fund's management fee compared to its Peer Group at higher asset levels.

 

The Trustees also considered other factors, which included but were not limited to the following:

 

whether the Fund has operated in accordance with its investment objective and the Fund's record of compliance with its investment restrictions, and the compliance programs of the Advisers. The Trustees also considered the compliance-related resources the Advisers and their affiliates were providing to the Fund.

 

the effect of any market and economic volatility on the performance, asset levels and expense ratios of the Fund.

 

the nature, quality, cost and extent of administrative services provided by ASII under a separate agreement covering administrative services.

 

so-called "fallout benefits" to the Advisers and their affiliates, including indirect benefits. The Trustees considered any possible conflicts of interest associated with these fallout and other benefits, and the reporting, disclosure and other processes in place to disclose and monitor such possible conflicts of interest.

 

* * *

 

Based on their evaluation of all factors that they deemed to be material, including those factors described above, and assisted by the advice of independent counsel, the Trustees, including the Independent Trustees, concluded that renewal of the Advisory Agreements would be in the best interest of the Fund and its shareholders.

 

 

Aberdeen Global Premier Properties Fund 35

 

 

 

 

 

 

Additional Information Regarding the Fund (unaudited)

 

 

 

 

Recent Changes

 

The following information is a summary of certain changes during the fiscal year ended October 31, 2021. This information may not reflect all of the changes that have occurred since you purchased the Fund.

 

During the applicable period, there have been: (i) no material changes to the Fund's investment objectives and policies that constitute its principal portfolio emphasis that have not been approved by shareholders, (ii) no material changes to the Fund's principal risks, (iii) no changes to the persons primarily responsible for day-to-day management of the Fund; and (iv) no changes to the Fund's charter or by-laws that would delay or prevent a change of control that have not been approved by shareholders.

 

Investment Objectives and Policies

 

Investment Objectives

 The Fund seeks high current income and capital appreciation. The Fund's investment objective and some of its investment policies, including its policy of concentrating at least 80% of its managed assets in issuers principally engaged in the real estate industry or real estate financing or which control significant real estate assets are fundamental and may not be changed without shareholder approval.

 

Investment Strategies

 The Fund will pursue its investment objectives by investing at least 80% of its managed assets in the equity and, to a lesser extent, debt securities of domestic and foreign issuers which are principally engaged in the real estate industry, real estate financing or control significant real estate assets. The Fund's investment objectives and some of its investment policies, including its policy of concentrating at least 80% of its managed assets in issuers principally engaged in the real estate industry or real estate financing or which control significant real estate assets are fundamental and may not be changed without shareholder approval.

 

The Advisers categorize the issuers of securities in which the Fund intends to invest as "Premier Property Owners," "Premier Property Developers" and "Premier Property Financiers and Investors." The Advisers consider these three pillars of real estate value.

 

Premier Property Owners. The Advisers believes Premier Property Owners typically benefit from sustained demand from both buyers and tenants. As a result, investing in Premier Property Owners can provide a foundation of value. Premier Properties typically would possess superior locations, characterized by a high degree of visibility and accessibility. If also historically or architecturally prominent, they may attain "Landmark" status. The Advisers believe modern amenities, quality construction and professional building

management also typically help such buildings command superior rents and prices at above average occupancies, even during a real estate downturn.

 

Premier Property Developers. The Advisers believe that Premier Property Developers build relationships and stature in their marketplace, which enhances their ability to locate, build and offer desirable developments to potential tenants or buyers. In this way, Premier Property Developers provide real estate investors the creation of value. Premier Property Developers of office, industrial, retail or residential property can add value to land through careful site selection, enhanced entitlement, superior design, controlled construction and professional marketing of new buildings. The production of desirable real estate often increases perceived value for the renter or buyer and thus enhances both demand and potential profitability for the Developers' projects.

 

Premier Property Financiers and Investors. The Advisers perceive that Premier Property Financiers and Investors are able over time to generate superior returns on invested capital and mitigate excessive risk. Premier Property Financiers and Investors include REITs, financial institutions and real estate operating companies. Through their strong market presence and/or entrepreneurial deal-making capacity, Premier Property Financiers and Investors can produce meaningful interest or dividend income and thus provide investors with the distribution of value. Premier Property Financiers and Investors often are able to identify unique or opportunistic situations, negotiate from strength, structure attractive terms, and stay ahead of the pack as they source property investments. Success, over time, provides the opportunity to access competitively low-cost capital to finance new investments on an accretive basis which in turn enables such companies to grow dividends for shareholders.

 

The Fund's research-driven investment strategy will seek to identify issuers globally from all three of these pillars of real estate value with the potential for capital appreciation through the different phases of the real estate cycle. Such securities may, in the Adviser's opinion, be undervalued or otherwise poised for growth. It is expected that such investments may be heavily weighted in foreign issuers, including those in emerging markets, because demographic and economic growth trends in less developed countries can strengthen demand for new development.

 

The Advisers' will tactically allocate the Fund's managed assets globally among the three pillars, Premier Property Owners, Premier Property Developers and Premier Property Financiers and Investors, in accordance with real estate market cycles. Such allocations will vary over time in accordance with the Advisers' determination of where the greatest opportunities exist in the global real estate market to achieve the Fund's investment objectives.

 

 

 

 

36 Aberdeen Global Premier Properties Fund  

 

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

 

Allocation of the Fund's managed assets to domestic and foreign issuers and among countries is dependent on several criteria, including each country's economic outlook and the outlook of its real estate market, the dividend yields of issuers in a country and the existing opportunities for investing in premier real estate securities. Under normal circumstances, the Fund pursues a flexible strategy of investing in companies throughout the world. It is anticipated that the Fund will give particular consideration to investments in relatively mature economies, including the United Kingdom, Western Europe, Australia, Canada, Japan, Hong Kong and Singapore. The Fund may also give particular consideration to investments in Brazil, India, China and Eastern Europe, particularly with respect to Premier Property Developers. These are markets where the Advisers currently perceive the greatest number of opportunities for Developers.

 

The Fund uses a multi-cap approach to invest in the securities of issuers of almost any capitalization level (small, mid or large), providing a current potential investment universe of more than 1,500 issuers. This universe of potential investments compares with most global real estate indices, which range from 250 to 450 stocks. The Fund screens the U.S. and non-U.S. issuers in which it invests using the same criteria, including the Advisers' determination that the issuer may offer reasonable value, high dividend yield and have good prospects for earnings growth and rising valuations. The Advisers will utilize a top-down, bottom-up investment methodology which analyzes economic and demographic demand drivers in light of historical and prospective patterns of real estate supply. The Advisers will evaluate issuers in terms of market fundamentals, track record, strategic plan and management capability. In addition, the Advisers will analyze property specific performance parameters, including valuation in light of replacement costs, operating ratios and cash flow generation.

 

To maximize the amount of the Fund's current income, the Fund may buy and hold dividend paying securities of domestic and foreign issuers from any or all three pillars, Premier Property Owners, Premier Property Developers and Premier Property Financiers and Investors.

 

Although high current income is part of the Fund's investment objective, certain of the Fund's investment strategies may limit the amount of dividend income the Fund receives from qualifying for the reduced U.S. federal income tax rates applicable to qualified dividends under the Internal Revenue Code of 1986, as amended (the "Code"). For example, REITs, MLPs and preferred shares generally do not produce qualified dividend income ("QDI"). As a result, there can be no assurance as to what portion of the Fund's distributions will be designated as QDI.

 

The Fund may invest without limitation in foreign securities, including direct investments in securities of foreign issuers and investments in

depositary receipts (such as ADRs) that represent indirect interests in securities of foreign issuers. Although it is not the Fund's current intent, the Fund may invest up to 100% of its managed assets in the securities of non-U.S. issuers and is not restricted on how much may be invested in the issuers of any single country, provided the Fund limits its investments in countries that are considered emerging markets to no more than 35% of the Fund's managed assets at any one time. Under normal circumstances, the Fund expects to invest between 20% and 50% of its managed assets in the securities of non-U.S. issuers and among the securities of issuers located in approximately 10 to 30 countries. However, during any period when the Advisers believe the non-U.S. market is unattractive, as a defensive measure, the Fund may temporarily invest up to 80% of its managed assets in the securities of U.S. issuers.

 

The Fund may from time to time engage in short sales of securities for investment or for hedging purposes. Short sales are transactions in which the Fund sells a security it does not own. To complete the transaction, the Fund must borrow the security to make delivery to the buyer. The Fund is then obligated to replace the security borrowed by purchasing the security at the market price at the time of replacement. The Fund may sell short individual stocks, baskets of individual stocks and exchange-traded funds ("ETFs") that the Fund expects to underperform other stocks which the Fund holds. For hedging purposes, the Fund may purchase or sell short future contracts on global equity indexes. See " – Investment Techniques – Short Sales."

 

The Advisers believes that the use of leverage may provide positive absolute return in the long term and potentially increased income and may thereby be beneficial to shareholders. The portfolio management team anticipates using leverage in the amount of approximately 20% of the Fund's total assets, under normal market conditions. The Fund's portfolio management team currently intends to use leverage opportunistically and to seek to reduce the Fund's leverage usage during times of heightened market volatility. Depending on market conditions, the portfolio management team may choose not to use any leverage or may instead borrow more than 20% of the Fund's total assets (but not to exceed 33 1/3%).

 

The Fund intends to use leverage through borrowing from a credit facility. The Fund is permitted to engage in other transactions, such as reverse repurchase agreements and issuance of debt securities or preferred securities, which have the effect of leverage, but currently has no intention to do so. See "Leverage."

 

Generally, securities will be purchased or sold by the Fund on national securities exchanges and in the over-the-counter market. From time to time, securities may be purchased or sold in private transactions, including securities that are not publicly traded or that are otherwise

 

 

 

 

Aberdeen Global Premier Properties Fund 37

 

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

 

illiquid. The Fund does not have a limit on investments in illiquid securities.

 

The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Fund's principal investment strategies in attempting to respond to adverse market, economic, political or other conditions. During such times, the Fund may temporarily invest up to 100% of its managed assets in cash or cash equivalents, including money market instruments, prime commercial paper, repurchase agreements, Treasury bills and other short-term obligations of the U.S. Government, its agencies or instrumentalities. In these and in other cases, the Fund may not achieve its investment objectives.

 

The Advisers may invest the Fund's cash balances in any investments it deems appropriate, including, without limitation and as permitted under the 1940 Act, money market funds, repurchase agreements, U.S. Treasury and U.S. agency securities, municipal bonds and bank accounts. Any income earned from such investments is ordinarily reinvested by the Fund in accordance with its investment program. Many of the considerations entering into the Advisers' recommendations and the portfolio managers' decisions are subjective.

 

Portfolio Investments

 

Real Estate Securities

Under normal market conditions, the Fund intends to invest substantially all but not less than 80% of its managed assets in common stocks, preferred securities, warrants and convertible securities issued by domestic and foreign issuers, including REITs, which are principally engaged in the real estate industry or real estate financing or which control significant real estate assets. For purposes of the Fund's investment policies, the Fund considers an issuer to be principally engaged in the real estate industry, real estate financing or control significant real estate assets if it: (i) derives at least 50% of its revenues from the ownership, construction, financing, management or sale of commercial, industrial or residential real estate; or (ii) has at least 50% of its assets invested in such real estate.

 

Common Stocks

The Fund will invest in common stocks. Common stocks represent an ownership interest in an issuer. While offering greater potential for long-term growth, common stocks are more volatile and more risky than some other forms of investment. Common stock prices fluctuate for many reasons, including adverse events, such as an unfavorable earnings report, changes in investors' perceptions of the financial condition of an issuer or the general condition of the relevant stock market, or when political or economic events affecting the issuers occur. In addition, common stock prices may be sensitive to rising interest rates as the costs of capital rise and borrowing costs increase.

Real Estate Investment Trusts

The Fund will invest in REITs. REITs are financial vehicles that pool investors' capital to purchase or finance real estate. The market value of REIT shares and the ability of REITs to distribute income may be adversely affected by numerous factors, including rising interest rates, changes in the national, state and local economic climate and real estate conditions, perceptions of prospective tenants of the safety, convenience and attractiveness of the properties, the ability of the owners to provide adequate management, maintenance and insurance, the cost of complying with the Americans with Disabilities Act (with respect to U.S. real estate), increasing competition and compliance with environmental laws, changes in real estate taxes and other operating expenses, adverse changes in governmental rules and fiscal policies, adverse changes in zoning laws, and other factors beyond the control of the issuers. In addition, distributions received by the Fund from REITs may consist of dividends, capital gains and/or return of capital. As REITs generally pay a higher rate of dividends than most other operating companies, to the extent application of the Fund's investment strategy results in the Fund investing in REIT shares, the percentage of the Fund's dividend income received from REIT shares will likely exceed the percentage of the Fund's portfolio that is comprised of REIT shares.

 

Dividends paid by REITs will generally not qualify for the reduced U.S. federal income tax rates applicable to qualified dividends under the Code.

 

Preferred Stocks

Preferred stock, like common stock, represents an equity ownership in an issuer. Generally, preferred stock has a priority of claim over common stock in dividend payments and upon liquidation of the issuer. Unlike common stock, preferred stock does not usually have voting rights. Preferred stock in some instances is convertible into common stock. Although they are equity securities, preferred stocks have characteristics of both debt and common stock. Like debt, their promised income is contractually fixed. Like common stock, they do not have rights to precipitate bankruptcy proceedings or collection activities in the event of missed payments. Other equity characteristics are their subordinated position in an issuer's capital structure and that their quality and value are heavily dependent on the profitability of the issuer rather than on any legal claims to specific assets or cash flows.

 

Distributions on preferred stock must be declared by the board of directors of the issuer and may be subject to deferral, and thus they may not be automatically payable. Income payments on preferred stock may be cumulative, causing dividends and distributions to accrue even if not declared by the company's board or otherwise made payable, or they may be non-cumulative, so that skipped dividends

 

 

 

 

38 Aberdeen Global Premier Properties Fund  

 

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

 

and distributions do not continue to accrue. There is no assurance that dividends on preferred stocks in which the Fund invests will be declared or otherwise made payable. The Fund may invest in non-cumulative preferred stock, although the Advisers would consider, among other factors, their non-cumulative nature in making any decision to purchase or sell such securities.

 

Shares of preferred stock have a liquidation value that generally equals the original purchase price at the date of issuance. The market values of preferred stock may be affected by favorable and unfavorable changes impacting the issuers' industries or sectors, including companies in the utilities and financial services sectors, which are prominent issuers of preferred stock. They may also be affected by actual and anticipated changes or ambiguities in the tax status of the security and by actual and anticipated changes or ambiguities in tax laws, such as changes in corporate and individual U.S. income tax rates, and in the dividends received deduction for corporate taxpayers or the lower rates applicable to certain dividends.

 

Because the claim on an issuer's earnings represented by preferred stock may become onerous when interest rates fall below the rate payable on the stock or for other reasons, the issuer may redeem preferred stock, generally after an initial period of call protection in which the stock is not redeemable. Thus, in declining interest rate environments in particular, the Fund's holdings of higher dividend paying preferred stocks may be reduced and the Fund may be unable to acquire securities paying comparable rates with the redemption proceeds.

 

Foreign Securities

Under normal circumstances, the Fund expects to invest between 20% and 50% of its managed assets in securities of issuers located in foreign countries, concentrating on those which are principally engaged in the real estate industry, real estate financing or which control significant real estate assets. The Fund will invest in foreign securities, including direct investments in securities of foreign issuers and investments in depository receipts (such as American Depositary Receipts ("ADRs")) that represent indirect interests in securities of foreign issuers. The Fund is not limited in the amount of assets it may invest in such foreign securities. These investments involve risks not associated with investments in the United States, including the risk of fluctuations in foreign currency exchange rates, unreliable and untimely information about the issuers and political and economic instability. These risks could result in the Advisers' misjudging the value of certain securities or in a significant loss in the value of those securities.

 

The value of foreign securities is affected by changes in currency rates, foreign tax laws (including withholding tax), government policies (in the

United States or abroad), relations between nations and trading, settlement, custodial and other operational risks. In addition, the costs of investing abroad are generally higher than in the United States, and foreign securities markets may be less liquid, more volatile and less subject to governmental supervision than markets in the United States. As an alternative to holding foreign-traded securities, the Fund may invest in dollar-denominated securities of foreign companies that trade on U.S. exchanges or in the U.S. over-the-counter market (including depositary receipts as described below, which evidence ownership in underlying foreign securities, and ETFs as described below).

 

Because foreign companies are not subject to uniform accounting, auditing and financial reporting standards, practices and requirements comparable to those applicable to U.S. companies, there may be less publicly available information about a foreign company than about a domestic company. Volume and liquidity in most foreign debt markets are less than in the United States and securities of some foreign companies are less liquid and more volatile than securities of comparable U.S. companies. There is generally less government supervision and regulation of securities exchanges, broker-dealers and listed companies than in the United States. Mail service between the United States and foreign countries may be slower or less reliable than within the United States, thus increasing the risk of delayed settlements of portfolio transactions or loss of certificates for portfolio securities. Payment for securities before delivery may be required. In addition, with respect to certain foreign countries, there is the possibility of expropriation or confiscatory taxation, political or social instability, or diplomatic developments which could affect investments in those countries. Moreover, individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. Foreign securities markets, while growing in volume and sophistication, are generally not as developed as those in the United States, and securities of some foreign issuers (particularly those located in developing countries) may be less liquid and more volatile than securities of comparable U.S. companies.

 

The Fund may purchase ADRs, European Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs"), which are certificates evidencing ownership of shares of foreign issuers and are alternatives to purchasing directly the underlying foreign securities in their national markets and currencies. However, such depository receipts continue to be subject to many of the risks associated with investing directly in foreign securities. These risks include foreign exchange risk as well as the political and economic risks associated with the underlying issuer's country. ADRs, EDRs and GDRs may be sponsored or unsponsored.

 

 

Aberdeen Global Premier Properties Fund 39

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

Unsponsored receipts are established without the participation of the issuer. Unsponsored receipts may involve higher expenses, they may not pass-through voting or other shareholder rights, and they may be less liquid. Less information is normally available on unsponsored receipts.

 

Dividends paid on foreign securities may not qualify for the reduced U.S. federal income tax rates applicable to qualified dividends under the Code. As a result, there can be no assurance as to what portion of the Fund's distributions attributable to foreign securities will be designated as qualified dividend income.

 

Emerging Market Securities

 

The Fund may invest up to 35% of its managed assets in securities of issuers located in emerging markets. The risks of foreign investments described above apply to an even greater extent to investments in emerging markets. The Fund uses the MSCI Emerging Markets Index methodology to determine which countries are considered emerging markets. The securities markets of emerging countries are generally smaller, less developed, less liquid, and more volatile than the securities markets of the United States and developed foreign markets. Disclosure and regulatory standards in many respects are less stringent than in the United States and developed foreign markets. There also may be a lower level of monitoring and regulation of securities markets in emerging market countries and the activities of investors in such markets and enforcement of existing regulations has been extremely limited. Many emerging countries have experienced substantial, and in some periods extremely high, rates of inflation for many years.

 

Inflation and rapid fluctuations in inflation rates have had and may continue to have very negative effects on the economies and securities markets of certain emerging countries. Economies in emerging markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values, and other protectionist measures imposed or negotiated by the countries with which they trade. The economies of these countries also have been and may continue to be adversely affected by economic conditions in the countries in which they trade. The economies of countries with emerging markets may also be predominantly based on only a few industries or dependent on revenues from particular commodities. In addition, custodial services and other costs relating to investment in foreign markets may be more expensive in emerging markets than in many developed foreign markets, which could reduce the Fund's income from such securities.

 

In many cases, governments of emerging countries continue to exercise significant control over their economies, and government actions

relative to the economy, as well as economic developments generally, may affect the Fund's investments in those countries. In addition, there is a heightened possibility of expropriation or confiscatory taxation, imposition of withholding taxes on interest payments, or other similar developments that could affect investments in those countries. There can be no assurance that adverse political changes will not cause the Fund to suffer a loss of any or all of its investments.

 

Dividends paid by issuers in emerging market countries will generally not qualify for the reduced U.S. federal income tax rates applicable to qualified dividends under the Code.

 

Master Limited Partnerships

 

A master limited partnership ("MLP") is a publicly traded company organized as a limited partnership or limited liability company and treated as a partnership for U.S. federal income tax purposes. MLPs may derive income and gains from the exploration, development, mining or production, processing, refining, transportation (including pipelines transporting gas, oil, or products thereof) or the marketing of any mineral or natural resources. MLPs generally have two classes of owners, the general partner and limited partners. When investing in an MLP, the Fund intends to purchase publicly traded common units issued to limited partners of the MLP. The general partner of an MLP is typically owned by one or more of the following: a major energy company, an investment fund or the direct management of the MLP. The general partner may be structured as a private or publicly traded corporation or other entity. The general partner typically controls the operations and management of the MLP through an up to 2% equity interest in the MLP plus, in many cases, ownership of common units and subordinated units. Limited partners own the remainder of the partnership, through ownership of common units, and have a limited role in the partnership's operations and management.

 

MLPs combine the tax advantages of a partnership with the liquidity of a publicly traded stock. MLP income is generally not subject to entity-level tax. Instead, an MLP's income, gain, loss, deductions and other tax items pass through to common unitholders.

 

MLPs are typically structured such that common units and general partner interests have first priority to receive quarterly cash distributions up to an established minimum amount ("minimum quarterly distributions" or "MQD"). Common and general partner interests also accrue arrearages in distributions to the extent the MQD is not paid. Once common and general partner interests have been paid, subordinated units receive distributions of up to the MQD; however, subordinated units do not accrue arrearages. Distributable cash in excess of the MQD paid to both common and subordinated units is distributed to both common and subordinated units generally

 

 

 

 

40 Aberdeen Global Premier Properties Fund

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

on a pro rata basis. The general partner is also eligible to receive incentive distributions if the general partner operates the business in a manner which results in distributions paid per common unit surpassing specified target levels. As the general partner increases cash distributions to the limited partners, the general partner receives an increasingly higher percentage of the incremental cash distributions. A common arrangement provides that the general partner can reach a tier where it receives 50% of every incremental dollar paid to common and subordinated unit holders. These incentive distributions encourage the general partner to streamline costs, increase capital expenditures and acquire assets in order to increase the partnership's cash flow and raise the quarterly cash distribution in order to reach higher tiers. Such results benefit all security holders of the MLP.

 

MLP common units represent limited partnership interests in the MLP. Common units are listed and traded on U.S. securities exchanges, with their value fluctuating predominantly based on prevailing market conditions and the success of the MLP. The Fund intends to purchase common units in market transactions. Unlike owners of common stock of a corporation, owners of common units have limited voting rights and have no ability annually to elect directors. In the event of liquidation, common units have preference over subordinated units, but not debt or preferred units, to the remaining assets of the MLP. The Fund intends to invest in MLPs only to an extent and in a manner consistent with the Fund's qualification as a regulated investment company under the Code.

 

ETFs

The Fund may invest in ETFs, which are investment companies that seek to track or replicate a desired index, such as a sector, market or global segment. Many ETFs are passively managed. ETFs' shares are traded on a national exchange. ETFs do not sell individual shares directly to investors and only issue their shares in large blocks known as "creation units." The investor purchasing a creation unit may sell the individual shares on a secondary market. Therefore, the liquidity of ETFs depends on the adequacy of the secondary market. There can be no assurance that an ETF's investment objective will be achieved, as ETFs may not replicate and maintain exactly the composition and relative weightings of securities in the index. ETFs are subject to the risks of investing in the underlying securities. The Fund, as a holder of the securities of the ETF, will bear its pro rata portion of the ETF's expenses, including advisory fees. These expenses are in addition to the direct expenses of the Fund's own operations.

 

Convertible Securities

The Fund may invest in convertible securities. Convertible securities include fixed income securities that may be exchanged or converted

into a predetermined number of shares of the issuer's underlying common stock at the option of the holder during a specified period. Convertible securities may take the form of convertible preferred stock, convertible bonds or debentures, units consisting of "usable" bonds and warrants or a combination of the features of several of these securities. The investment characteristics of each convertible security vary widely, which allows convertible securities to be employed for a variety of investment strategies.

 

The Fund will exchange or convert convertible securities into shares of underlying common stock when, in the opinion of the Advisers, the investment characteristics of the underlying common shares will assist the Fund in achieving its investment objectives. The Fund may also elect to hold or trade convertible securities. In selecting convertible securities, the Adviser evaluates the investment characteristics of the convertible security as a fixed income instrument, and the investment potential of the underlying equity security for capital appreciation. In evaluating these matters with respect to a particular convertible security, the Advisers consider numerous factors, including the economic and political outlook, the value of the security relative to other investment alternatives, trends in the determinants of the issuer's profits, and the issuer's management capability and practices.

 

Corporate Bonds, Government Debt Securities and Other Debt Securities

The Fund may invest in corporate bonds, debentures and other debt securities. Debt securities in which the Fund may invest may pay fixed or variable rates of interest. Bonds and other debt securities generally are issued by corporations and other issuers to borrow money from investors. The issuer pays the investor a fixed or variable rate of interest and normally must repay the amount borrowed on or before maturity. Certain debt securities are "perpetual" in that they have no maturity date.

 

The Fund will invest in government debt securities, including those of U.S. issuers, emerging market issuers and of other non-U.S. issuers. These securities may be U.S. dollar-denominated or non-U.S. dollar-denominated and include: (i) debt obligations issued or guaranteed by foreign national, provincial, state, municipal or other governments with taxing authority or by their agencies or instrumentalities; and (ii) debt obligations of supranational entities. Government debt securities include: debt securities issued or guaranteed by governments, government agencies or instrumentalities and political subdivisions; debt securities issued by government owned, controlled or sponsored entities; interests in entities organized and operated for the purpose of restructuring the investment characteristics issued by the above-noted issuers; or debt securities issued by supranational entities such as the World Bank or the European Union. The Fund may also invest in

 

 

 

 

Aberdeen Global Premier Properties Fund 41

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

securities denominated in currencies of emerging market countries. Emerging market debt securities generally are rated in the lower rating categories of recognized credit rating agencies or are unrated and considered to be of comparable quality to lower rated debt securities. A non-U.S. issuer of debt or the non-U.S. governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due, and the Fund may have limited resources in the event of a default. Some of these risks do not apply to issuers in large, more developed countries. These risks are more pronounced in investments in issuers in emerging markets or if the Fund invests significantly in one country.

 

The Fund will not invest more than 10% of its managed assets in debt securities rated below investment grade (i.e., securities rated lower than Baa by Moody's Investors Service, Inc. or lower than BBB by Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc.), or their equivalent as determined by the Advisers. These securities are commonly referred to as "junk bonds." The foregoing credit quality policy applies only at the time a security is purchased, and the Fund is not required to dispose of securities already owned by the Fund in the event of a change in assessment of credit quality or the removal of a rating.

 

Illiquid Securities

Illiquid securities are securities that are not readily marketable. Illiquid securities include securities that have legal or contractual restrictions on resale, and repurchase agreements maturing in more than seven days. Illiquid securities involve the risk that the securities will not be able to be sold at the time desired or at prices approximating the value at which the Fund is carrying the securities. Where registration is required to sell a security, the Fund may be obligated to pay all or part of the registration expenses, and a considerable period may elapse between the decision to sell and the time the Fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund might obtain a less favorable price than prevailed when it decided to sell. The Fund does not have a limit on investments in illiquid securities.

 

Restricted securities for which no market exists and other illiquid investments are valued at fair value as determined in accordance with procedures approved and periodically reviewed by the Board of Trustees.

 

Rule 144A Securities

The Fund may invest in restricted securities that are eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as amended (the "1933 Act"). Generally, Rule 144A establishes a safe harbor from

the registration requirements of the 1933 Act for resale by large institutional investors of securities that are not publicly traded. The Advisers determine the liquidity of the Rule 144A securities according to guidelines adopted by the Board of Trustees. The Board of Trustees monitors the application of those guidelines and procedures.

 

Warrants

The Fund may invest in equity and index warrants of domestic and international issuers. Equity warrants are securities that give the holder the right, but not the obligation, to subscribe for equity issues of the issuing company or a related company at a fixed price either on a certain date or during a set period. Changes in the value of a warrant do not necessarily correspond to changes in the value of its underlying security. The price of a warrant may be more volatile than the price of its underlying security, and a warrant may offer greater potential for capital appreciation as well as capital loss.

 

Warrants do not entitle a holder to dividends or voting rights with respect to the underlying security and do not represent any rights in the assets of the issuing company. A warrant ceases to have value if it is not exercised prior to its expiration date. These factors can make warrants more speculative than other types of investments. The sale of a warrant results in a long- or short-term capital gain or loss depending on the period for which the warrant is held.

 

Other Investments

The Fund may use a variety of other investment instruments in pursuing its investment objectives. The investments of the Fund may include fixed income securities, sovereign debt, options on foreign currencies and forward foreign currency contracts.

 

Investment Techniques

The Fund may, but is under no obligation to, from time to time employ a variety of investment techniques, including those described below, to hedge against fluctuations in the price of portfolio securities, to enhance total return or to provide a substitute for the purchase or sale of securities. Some of these techniques, such as purchases of put and call options, options on stock indices and stock index futures and entry into certain credit derivative transactions, may be used as hedges against or substitutes for investments in equity securities. Other techniques such as the purchase of interest rate futures and entry into transactions involving interest rate swaps, options on interest rate swaps and certain credit derivatives are hedges against or substitutes for investments in debt securities. The Fund's ability to utilize any of the techniques described below may be limited by restrictions imposed on its operations in connection with obtaining and maintaining its qualification as a regulated investment company under the Code. Additionally, other

 

 

 

 

42 Aberdeen Global Premier Properties Fund

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

factors (such as cost) may make it impractical or undesirable to use any of these investment techniques from time to time.

 

Short Sales

The Fund may from time to time engage in short sales of securities for investment or for hedging purposes. Short sales are transactions in which the Fund sells a security it does not own. To complete the transaction, the Fund must borrow the security to make delivery to the buyer. The Fund is then obligated to replace the security borrowed by purchasing the security at the market price at the time of replacement. The Fund may be required to pay a fee to borrow particular securities and is often obligated to pay over any payments received on such borrowed securities.

 

The Fund may sell short individual stocks, baskets of stocks or ETFs, which the Fund expects to underperform other stocks which the Fund holds. For hedging purposes, the Fund may purchase or sell short future contracts on global equity indices. The Fund anticipates that its short positions, if any, would be in non-dividend paying securities or would be closed out before the underlying security's ex-dividend date. Based on these anticipated trading practices, the Fund expects not to have expenses associated with its short sales of securities, if any. When a cash dividend is declared on a security for which the Fund holds a short position, the Fund incurs the obligation to pay an amount equal to that dividend to the lender of the shorted security. By closing out the short position prior to the ex-dividend date, such dividend expenses are avoided. The Fund's actual dividend expenses paid on securities sold short may be significantly higher than 0% of its managed assets due to, among other factors, the actual extent of the Fund's short positions (which may range from 0% to 20% of managed assets), the actual dividends paid with respect to the securities the Fund sells short, and the actual timing of the Fund's short sale transactions, each of which may vary over time and from time to time.

 

The Fund's obligation to replace the borrowed security will be secured by collateral deposited with the broker-dealer, usually cash, U.S. government securities or other liquid securities. The Fund will also be required to designate on its books and records similar collateral with its custodian to the extent, if any, necessary so that the aggregate collateral value is at all times at least equal to the current market value of the security sold short. Depending on arrangements made with the broker-dealer from which it borrowed the security regarding payment over of any payments received by the Fund on such security, the Fund may not receive any payments (including interest) on its collateral deposited with such broker-dealer.

 

If the price of the security sold short increases between the time of the short sale and the time the Fund replaces the borrowed security, the Fund will incur a loss; conversely, if the price declines, the Fund

will realize a gain. Any gain will be decreased, and any loss increased, by the transaction costs described above. Although the Fund's gain is limited to the price at which it sold the security short, its potential loss is unlimited.

 

Purchasing securities to close out the short position can itself cause the price of the securities to rise further, thereby exacerbating the loss. Short selling exposes the Fund to unlimited risk with respect to that security due to the lack of an upper limit on the price to which an instrument can rise. Although the Fund reserves the right to utilize short sales, the Advisers are under no obligation to utilize short sales at all.

 

The requirements of the 1940 Act and the Code provide that the Fund not make a short sale if, after giving effect to such sale, the market value of all securities sold short by the Fund exceeds 30% of the value of its managed assets; however, the Fund anticipates that it will generally not make a short sale if, after giving effect to such sale, the market value of all securities sold short by the Fund exceeds 20% of the value of its managed assets.

 

Options on Securities

In order to hedge against adverse market shifts, the Fund may utilize up to 10% of its managed assets (in addition to the 10% limit applicable to options on stock indices described below) to purchase put and call options on securities. The Fund will also, in certain situations, augment its investment positions by purchasing call options, both on specific equity securities, as well as securities representing exposure to equity sectors or indices and fixed income indices. In addition, the Fund may seek to increase its income or may hedge a portion of its portfolio investments through writing (i.e., selling) covered put and call options. A put option embodies the right of its purchaser to compel the writer of the option to purchase from the option holder an underlying security or its equivalent at a specified price at any time during the option period. In contrast, a call option gives the purchaser the right to buy the underlying security or its equivalent covered by the option or its equivalent from the writer of the option at the stated exercise price. Under interpretations of the SEC currently in effect, which may change from time to time, a "covered" call option means that so long as the Fund is obligated as the writer of the option, it will own (i) the underlying instruments subject to the option, (ii) instruments convertible or exchangeable into the instruments subject to the option or (iii) a call option on the relevant instruments with an exercise price no higher than the exercise price on the call option written.

 

Similarly, the SEC currently requires that to "cover" or support its obligation to purchase the underlying instruments if a put option is written by the Fund, the Fund must (i) deposit with its custodian in a

 

 

 

 

Aberdeen Global Premier Properties Fund 43

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

segregated account liquid securities having a value at least equal to the exercise price of the underlying securities, (ii) continue to own an equivalent number of puts of the same "series" (that is, puts on the same underlying security having the same exercise prices and expiration dates as those written by the Fund), or an equivalent number of puts of the same "class" (that is, puts on the same underlying security) with exercise prices greater than those it has written (or, if the exercise prices of the puts it holds are less than the exercise prices of those it has written, it will deposit the difference with its custodian in a segregated account) or (iii) sell short the securities underlying the put option at the same or a higher price than the exercise price on the put option written.

 

The Fund will receive a premium when it writes put and call options, which increases the Fund's return on the underlying security in the event the option expires unexercised or is closed out at a profit. By writing a call, the Fund will limit its opportunity to profit from an increase in the market value of the underlying security above the exercise price of the option for as long as the Fund's obligation as the writer of the option continues. Upon the exercise of a put option written by the Fund, the Fund may suffer an economic loss equal to the difference between the price at which the Fund is required to purchase the underlying security and its market value at the time of the option exercise, less the premium received for writing the option. Upon the exercise of a call option written by the Fund, the Fund may suffer an economic loss equal to the excess of the security's market value at the time of the option exercise over the price at which the Fund is required to sell the underlying security less the premium received for writing the option. Thus, in some periods the Fund might receive less total return and in other periods greater total return from its hedged positions than it would have received from leaving its underlying securities unhedged.

 

The Fund may purchase and write options on securities that are listed on national securities exchanges or are traded over-the-counter, although it expects, under normal circumstances, to effect such transactions on national securities exchanges.

 

As a holder of a put option, the Fund will have the right to sell the securities underlying the option and as the holder of a call option, the Fund will have the right to purchase the securities underlying the option, in each case at their exercise price at any time prior to the option's expiration date. The Fund may choose to exercise the options it holds, permit them to expire or terminate them prior to their expiration by entering into closing sale transactions. In entering into a closing sale transaction, the Fund would sell an option of the same series as the one it has purchased. The ability of the Fund to enter into a closing sale transaction with respect to options purchased and to

enter into a closing purchase transaction with respect to options sold depends on the existence of a liquid secondary market. There can be no assurance that a closing purchase or sale transaction can be effected when the Fund so desires. The Fund's ability to terminate option positions established in the over-the-counter market may be more limited than in the case of exchange-traded options and may also involve the risk that securities dealers participating in such transactions would fail to meet their obligations to the Fund.

 

In purchasing a put option, the Fund will seek to benefit from a decline in the market price of the underlying security, while in purchasing a call option, the Fund will seek to benefit from an increase in the market price of the underlying security. If an option purchased is not sold or exercised when it has remaining value, or if the market price of the underlying security remains equal to or greater than the exercise price, in the case of a put, or remains equal to or below the exercise price, in the case of a call, during the life of the option, the option will expire worthless. For the purchase of an option to be profitable, the market price of the underlying security must decline sufficiently below the exercise price, in the case of a put, and must increase sufficiently above the exercise price, in the case of a call, to cover the premium and transaction costs. Because option premiums paid by the Fund are small in relation to the market value of the instruments underlying the options, buying options can result in large amounts of leverage. The leverage offered by trading in options could cause the Fund's net asset value to be subject to more frequent and wider fluctuation than would be the case if the Fund did not invest in options.

 

Options on Stock Indices

The Fund may utilize up to 10% of its managed assets (in addition to the 10% limit applicable to options on securities) to purchase put and call options on domestic stock indices to hedge against risks of market-wide price movements affecting its managed assets. The Fund will also, in certain situations, augment its investment positions by purchasing call options, both on specific equity securities, as well as securities representing exposure to equity sectors or indices and fixed income indices. In addition, the Fund may write covered put and call options on stock indices. A stock index measures the movement of a certain group of stocks by assigning relative values to the common stocks included in the index. Options on stock indices are similar to options on securities. Because no underlying security can be delivered, however, the option represents the holder's right to obtain from the writer, in cash, a fixed multiple of the amount by which the exercise price exceeds (in the case of a put) or is less than (in the case of a call) the closing value of the underlying index on the exercise date. The advisability of using stock index options to hedge against the risk of market-wide movements will depend on the extent of diversification of the Fund's

 

 

 

 

44 Aberdeen Global Premier Properties Fund

 

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

investments and the sensitivity of its investments to factors influencing the underlying index. The effectiveness of purchasing or writing stock index options as a hedging technique will depend upon the extent to which price movements in the Fund's securities investments correlate with price movements in the stock index selected. In addition, successful use by the Fund of options on stock indices will be subject to the ability of the Advisers to predict correctly changes in the relationship of the underlying index to the Fund's portfolio holdings. No assurance can be given that the Advisers' judgment in this respect will be correct.

 

When the Fund writes an option on a stock index, it will establish a segregated account with its custodian in which the Fund will deposit liquid securities in an amount equal to the market value of the option, and will maintain the account while the option is open.

 

Portfolio Turnover

 

The Fund may engage in short-term trading strategies, and securities may be sold without regard to the length of time held when, in the opinion of the Advisers, investment considerations warrant such action. These policies, together with the ability of the Fund to effect short sales of securities and to engage in transactions in options and futures, may have the effect of increasing the Fund's annual rate of portfolio turnover. A high turnover rate (100% or more) necessarily involves greater trading costs to the Fund and may result in the realization of net short term capital gains. If securities are not held for the applicable holding periods, dividends paid on them will not qualify for the advantageous U.S. federal tax rates.

 

Foreign Currency Transactions

 

The Fund may engage in foreign currency exchange transactions in connection with its investments in foreign securities. The Fund will conduct its foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market or through forward contracts to purchase or sell foreign currencies, including the payment of dividends and the settlement of securities transactions which otherwise might require untimely dispositions of Fund securities.

 

Forward Foreign Currency Exchange Contracts

 

The Fund may enter into forward foreign currency exchange contracts in order to protect against possible losses on foreign investments resulting from adverse changes in the relationship between the U.S. dollar and foreign currencies. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days (usually less than one year) from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded in

the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. A forward contract generally has a deposit requirement, and no commissions are charged at any stage for trades. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (the spread) between the price at which they are buying and selling various currencies. However, forward foreign currency exchange contracts may limit potential gains which could result from a positive change in such currency relationships. The Fund does not speculate in foreign currency.

 

Except for cross-hedges, the Fund will not enter into forward foreign currency exchange contracts or maintain a net exposure in such contracts when it would be obligated to deliver an amount of foreign currency in excess of the value of its portfolio securities or other assets denominated in that currency or, in the case of a "cross-hedge," denominated in a currency or currencies that the Advisers believe will tend to be closely correlated with that currency with regard to price movements. At the consummation of a forward contract, the Fund may either make delivery of the foreign currency or terminate its contractual obligation to deliver the foreign currency by purchasing an offsetting contract obligating it to purchase, at the same maturity date, the same amount of such foreign currency. If the Fund chooses to make delivery of the foreign currency, it may be required to obtain such currency through the sale of portfolio securities denominated in such currency or through conversion of other assets of the Fund into such currency. If the Fund engages in an offsetting transaction, the Fund will incur a gain or loss to the extent that there has been a change in forward contract prices.

 

It should be realized that this method of protecting the value of the Fund's portfolio securities against a decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange which can be achieved at some future point in time. Additionally, although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, at the same time they tend to limit any potential gain which might result should the value of such currency increase. Generally, the Fund will not enter into a forward foreign currency exchange contract with a term longer than one year.

 

Foreign Currency Options

 

The Fund may purchase and write options on foreign currencies to protect against declines in the U.S. dollar value of foreign securities or in the U.S. dollar value of dividends or interest expected to be received on these securities. These transactions may also be used to protect against increases in the U.S. dollar cost of foreign securities to be acquired by the Fund. Writing an option on foreign currency is only a

 

  Aberdeen Global Premier Properties Fund 45

 

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

partial hedge, up to the amount of the premium received, and the Fund could be required to purchase or sell foreign currencies at disadvantageous exchange rates, thereby incurring losses. The Fund may not purchase a foreign currency option if, as a result, premiums paid on foreign currency options then held by the Fund would represent more than 10% of the Fund's managed assets.

 

A foreign currency option provides the option buyer with the right to buy or sell a stated amount of foreign currency at the exercise price on a specified date or during the option period. The owner of a call option has the right, but not the obligation, to buy the currency. Conversely, the owner of a put option has the right, but not the obligation, to sell the currency. When the option is exercised, the seller (i.e., writer) of the option is obligated to fulfill the terms of the sold option. However, either the seller or the buyer may, in the secondary market, close its position during the option period at any time prior to expiration.

 

A call option on a foreign currency generally rises in value if the underlying currency appreciates in value, and a put option on a foreign currency generally rises in value if the underlying currency depreciates in value. Although purchasing a foreign currency option can protect the Fund against an adverse movement in the value of a foreign currency, the option will not limit the movement in the value of such currency. For example, if the Fund was holding securities denominated in a foreign currency that was appreciating and had purchased a foreign currency put to hedge against a decline in the value of the currency, the Fund would not have to exercise its put option. Likewise, if the Fund were to enter into a contract to purchase a security denominated in foreign currency and, in conjunction with that purchase, were to purchase a foreign currency call option to hedge against a rise in value of the currency, and if the value of the currency instead depreciated between the date of purchase and the settlement date, the Fund would not have to exercise its call. Instead, the Fund could acquire in the spot market the amount of foreign currency needed for settlement.

 

Futures Contracts and Options on Futures Contracts

 

Futures contracts are standardized, exchange-traded contracts that provide for the sale or purchase of a specified financial instrument or currency at a future time at a specified price. An option on a futures contract gives the purchaser the right (and the writer of the option the obligation) to assume a position in a futures contract at a specified exercise price within a specified period of time. A futures contract may be based on particular securities, foreign currencies, securities indices and other financial instruments and indices. By using foreign currency futures contracts and options on such contracts, the Fund may be able to achieve many of the same objectives as it would through the use of forward foreign currency exchange contracts and may be able to achieve these objectives more effectively and at a lower cost by using

futures transactions instead of forward foreign currency exchange contracts. The Fund may engage in futures transactions on U.S. and foreign exchanges.

 

The Fund may purchase and sell futures contracts, and purchase and write call and put options on futures contracts, to increase total return or to hedge against changes in interest rates, securities prices, currency exchange rates, or to otherwise manage its term structure, sector selection and duration in accordance with its investment objectives and policies. The Fund may also enter into closing purchase and sale transactions with respect to such contracts and options. The Fund has claimed an exclusion from the definition of the term "commodity pool operator" under the Commodity Exchange Act (the "CEA") and, therefore, is not subject to registration or regulation as a commodity pool operator under the CEA.

 

The Fund must segregate liquid assets, or engage in other appropriate measures to "cover" open positions with respect to its transactions in futures contracts and options on futures contracts. In the case of futures contracts that do not cash settle, for example, the Fund must segregate liquid assets equal to the full notional value of the futures contracts while the positions are open. With respect to futures contracts that do cash settle, however, the Fund is permitted to segregate liquid assets in an amount equal to the Fund's daily marked-to-market net obligations (i.e., the Fund's daily net liability) under the futures contracts, if any, rather than their full notional value. The Fund reserves the right to modify its asset segregation policies in the future to comply with any changes in the positions from time to time articulated by the Securities and Exchange Commission or its staff regarding asset segregation. By segregating assets equal to only its net obligations under cash-settled futures contracts, the Fund will have the ability to employ leverage to a greater extent than if the Fund were required to segregate assets equal to the full notional amount of the futures contracts.

 

Defensive Positions

 

During periods of adverse market or economic conditions, the Fund may temporarily invest all or a substantial portion of its managed assets in cash or cash equivalents. The Fund will not be pursuing its investment objectives in these circumstances. Cash equivalents are highly liquid, short-term securities such as commercial paper, time deposits, certificates of deposit, short-term notes and short-term U.S. government obligations.

 

Equity-Linked Securities

 

The Fund may invest in equity-linked securities, including, but not limited to, participation notes, certificates, and equity swaps. Equity-linked securities are privately issued securities whose investment

 

 

 

 

46 Aberdeen Global Premier Properties Fund

 

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

results are designed to correspond generally to the performance of a specified stock index or "basket" of stocks, or a single stock. To the extent that the Fund invests in equity-linked securities whose return corresponds to the performance of a foreign security index or one or more foreign stocks, investing in equity-linked securities will involve risks similar to the risks of investing in foreign securities. See "Investment Objectives & Policies – Portfolio Investments – Foreign Securities" and "Risk Factors – Foreign Securities Risk." In addition, the Fund bears the risk that the counterparty of an equity-linked security may default on its obligations under the security. If the underlying security is determined to be illiquid, the equity-linked security would also be considered illiquid.

 

Participation notes, also known as participation certificates, are issued by banks or broker-dealers and are designed to replicate the performance of foreign companies or foreign securities markets and can be used by the Fund as an alternative means to access the securities market of a country. The performance results of participation notes will not replicate exactly the performance of the foreign companies or foreign securities markets that they seek to replicate due to transaction and other expenses. Investments in participation notes involve the same risks associated with a direct investment in the underlying foreign companies or foreign securities markets that they seek to replicate. There can be no assurance that the trading price of participation notes will equal the underlying value of the foreign companies or foreign securities markets that they seek to replicate. Participation notes are generally traded over-the-counter. Participation notes are subject to counterparty risk, which is the risk that the broker-dealer or bank that issues them will not fulfill its contractual obligation to complete the transaction with the Fund. Participation notes constitute general unsecured contractual obligations of the banks or broker-dealers that issue them, the counterparty, and the Fund is relying on the creditworthiness of such counterparty and has no rights under a participation note against the issuer of the underlying security. Participation notes involve transaction cost. If the underlying security is determined to be illiquid, participation notes may be illiquid. Participation notes offer a return linked to a particular underlying equity, debt or currency.

 

Equity swaps allow the parties to a swap agreement to exchange the dividend income or other components of return on an equity investment (for example, a group of equity securities or an index) for a component of return on another non-equity or equity investment. An equity swap may be used by the Fund to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment may be restricted for legal reasons or is otherwise deemed impractical or disadvantageous. Equity swaps may also be used for hedging purposes or to seek to increase total return.

The Fund's ability to enter into certain swap transactions may be limited by tax considerations. The counterparty to an equity swap contract will typically be a bank, investment banking firm or broker/dealer.

 

Equity swap contracts may be structured in different ways. For example, a counterparty may agree to pay the Fund the amount, if any, by which the notional amount of the equity swap contract would have increased in value had it been invested in particular stocks (or an index of stocks), plus the dividends that would have been received on those stocks. In these cases, the Fund may agree to pay to the counterparty a floating rate of interest on the notional amount of the equity swap contract plus the amount, if any, by which that notional amount would have decreased in value had it been invested in such stocks. Therefore, the return to the Fund on the equity swap contract should be the gain or loss on the notional amount plus dividends on the stocks less the interest paid by the Fund on the notional amount. In other cases, the counterparty and the Fund may each agree to pay the other the difference between the relative investment performances that would have been achieved if the notional amount of the equity swap contract had been invested in different stocks (or indices of stocks). The Fund will generally enter into equity swaps on a net basis, which means that the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Payments may be made at the conclusion of an equity swap contract or periodically during its term.

 

Equity swaps are derivatives and their value can be very volatile. Equity swaps normally do not involve the delivery of securities or other underlying assets. Accordingly, the risk of loss with respect to equity swaps is normally limited to the net amount of payments that the Fund is contractually obligated to make. If the counterparty to an equity swap defaults, the Fund's risk of loss consists of the net amount of payments that the Fund is contractually entitled to receive. Because some swap agreements have a leverage component, adverse changes in the value or level of the underlying asset, reference rate, or index can result in a loss substantially greater than the amount invested in the underlying asset without the use of leverage. In addition, the value of some components of an equity swap (such as the dividends on a common stock) may also be sensitive to changes in interest rates. To the extent that the Advisers do not accurately analyze and predict the potential relative fluctuation of the components swapped with another party, the Fund may suffer a loss. Because equity swaps are normally illiquid, the Fund may be unable to terminate its obligations when desired. When entering into swap contracts, the Fund must "set aside" liquid assets, or engage in other appropriate measures to "cover" its obligation under the swap contract.

 

 

 

  Aberdeen Global Premier Properties Fund 47

  

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

In as much as these transactions are entered into for hedging purposes or are offset by segregated cash or liquid assets to cover the Fund's exposure, the Fund and the Advisers believe that transactions do not constitute senior securities under the 1940 Act and, accordingly, will not treat them as being subject to the Fund's borrowing restrictions.

 

Leverage

 

The Advisers believe that the use of leverage may provide positive absolute return in the long term and potentially increased income and would thereby be beneficial to shareholders. The portfolio management team anticipates using leverage in the amount of approximately 20% of the Fund's total assets, under normal market conditions. The Fund's portfolio management team currently intends to use leverage opportunistically and to seek to reduce the Fund's leverage usage during times of heightened market volatility. Depending on market conditions, the portfolio management team may choose not to use any leverage or may instead borrow more than 20% of the Fund's total assets (but not to exceed 33 1/3%).

 

The Fund intends to use leverage through borrowing from a credit facility. The Fund is permitted to engage in other transactions, such as reverse repurchase agreements and issuance of debt securities or preferred securities, which have the effect of leverage, but currently has no intention to do so.

 

The Fund also may borrow money as a temporary measure for extraordinary or emergency purposes, including the payment of dividends and the settlement of securities transactions, which otherwise might require untimely dispositions of Fund securities. The Fund also may incur leverage through the use of investment management techniques (e.g., selling short, "uncovered" sales of put and call options, futures contracts and options on futures contracts).

 

Changes in the value of the Fund's portfolio (including investments bought with amounts borrowed) will be borne entirely by the shareholders. If leverage is used and there is a net decrease (or increase) in the value of the Fund's investment portfolio, the leverage will decrease (or increase) the net asset value per share to a greater extent than if the Fund were not leveraged. During periods in which the Fund uses leverage, the fees paid to the Adviser for investment advisory services (which are effectively borne by the common shareholders and not holders of the Fund's leverage) will be higher than if the Fund did not use leverage because the fees paid will be calculated on the basis of the Fund's managed assets, including the amount obtained from leverage, which may create an incentive to leverage the Fund.

 

The 1940 Act generally prohibits the Fund from engaging in most forms of leverage representing indebtedness other than preferred shares unless immediately after such incurrence the Fund's total assets less

all liabilities and indebtedness not represented by senior securities (for these purposes, "total net assets") is at least 300% of the aggregate senior securities representing indebtedness (i.e., the use of leverage through senior securities representing indebtedness may not exceed 33 1/3% of the Fund's total net assets (including the proceeds from leverage)). Additionally, under the 1940 Act, the Fund generally may not declare any dividend or other distribution upon any class of its capital shares, or purchase any such capital shares, unless at the time of such declaration or purchase, this asset coverage test is satisfied. If the Fund borrows, the Fund intends, to the extent possible, to prepay all or a portion of the principal amount of the borrowing to the extent necessary in order to maintain the required asset coverage. Failure to maintain certain asset coverage requirements could result in an event of default and entitle the debt holders to elect a majority of the board of trustees. The Fund may be subject to certain restrictions imposed by either guidelines of one or more rating agencies which may issue ratings for borrowings or, if the Fund borrows from a lender, by the lender. These restrictions may impose asset coverage or portfolio composition requirements that are more stringent than those currently imposed on the Fund by the 1940 Act. It is not anticipated that these restrictions will impede the Advisers from managing the Fund's portfolio in accordance with the Fund's investment objectives and policies. In addition to other considerations, to the extent that the Fund believes that the guidelines required by the rating agencies would impede its ability to meet its investment objectives, or if the Fund is unable to obtain the expected rating on the borrowings, the Fund will not use borrowings.

 

With respect to asset coverage for preferred shares, under the 1940 Act, the Fund is not permitted to issue preferred shares unless immediately after such issuance the value of the Fund's total net assets (as defined above) is at least 200% of the liquidation value of the outstanding preferred shares and the newly issued preferred shares plus the aggregate amount of any senior securities of the Fund representing indebtedness (i.e., such liquidation value plus the aggregate amount of senior securities representing indebtedness may not exceed 50% of the Fund's total net assets). In addition, the Fund is not permitted to declare any cash dividend or other distribution on its Common Shares unless, at the time of such declaration, the value of the Fund's total net assets (determined after deducting the amount of such dividend or other distribution) satisfies the above-referenced 200% coverage requirement.

 

The Fund will pay, and common shareholders will effectively bear, any costs and expenses related to any borrowings and to any issuance and ongoing maintenance of preferred shares or commercial paper. Such costs and expenses would include the higher investment advisory fee resulting from the use of such leverage. See "Risk Factors – Leverage Risk."

 

 

 

 

48 Aberdeen Global Premier Properties Fund

 

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

The terms of any preferred shares, including their dividend rate, voting rights, liquidation preference and redemption provisions, would be determined by the Board of Trustees (subject to applicable law and the Fund's Declaration of Trust) if and when it authorizes the preferred shares.

 

Capital, if any, raised through leverage will be subject to dividend or interest payments, which may exceed the income and appreciation on the assets purchased. The issuance of preferred shares or entering into a borrowing program involves expenses and other costs and may limit the Fund's freedom to pay dividends on common shares or to engage in other activities. The issuance of a class of preferred shares or the incurrence of other borrowings creates an opportunity for greater return per common share, but at the same time such leveraging is a speculative technique in that it will increase the Fund's exposure to capital risk. Unless the income and appreciation, if any, on assets acquired with leverage proceeds exceed the associated costs of such borrowings (and other Fund expenses), the use of leverage would diminish the investment performance of the Fund's common shares compared with what it would have been without leverage. See "Risk Factors – Leverage Risk."

 

If utilized, successful use of a leveraging strategy may depend on the Advisers' ability to predict correctly interest rates and market movements, and there is no assurance that a leveraging strategy would be successful during any period in which it is employed.

 

In addition to borrowing, the Fund may use a variety of additional strategies that would be viewed as potentially adding leverage to the portfolio, subject to rating agency limitations. These include the sale of credit default swap contracts and the use of other derivative instruments and reverse repurchase agreements. By adding additional leverage, these strategies have the potential to increase returns to shareholders, but also involve additional risks. Additional leverage will increase the volatility of the Fund's investment portfolio and could result in larger losses than if the strategies were not used. However, to the extent that the Fund enters into offsetting transactions or owns positions covering its obligations, the leveraging effect is expected to be minimized or eliminated.

 

During any time in which the Fund is utilizing leverage, the fees paid to the Adviser for services will be higher than if the Fund did not utilize leverage because the fees paid will be calculated based on the Fund's managed assets which includes amounts borrowed for leverage purposes.

 

RISK FACTORS

 

An investment in the Fund's common shares is subject to risks. The value of the Fund's investments will increase or decrease based on changes in the prices of the investments it holds. This will cause the

value of the Fund's shares to increase or decrease. You could lose money by investing in the Fund. By itself, the Fund does not constitute a balanced investment program. You should consider carefully the following risks before investing in the Fund. There may be additional risks that the Fund does not currently foresee or consider material. You may wish to consult with your legal or tax advisors, before deciding whether to invest in the Fund.

 

Investment and Market Risk. An investment in common shares is subject to investment risk, including the possible loss of the entire principal amount invested. An investment in common shares represents an indirect investment in the securities owned by the Fund, which are generally traded on a securities exchange or in the over-the-counter markets. The value of these securities, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of your common shares at any point in time may be worth less than the value of your original investment, even after taking into account any reinvestment of dividends and distributions.

 

Issuer Risk. The value of an issuer's securities that are held in the Fund's portfolio may decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer's goods and services.

 

Real Estate Securities Risks. Because the Fund will concentrate its investments in the securities of issuers linked to the real estate market, its portfolio may experience more volatility and be exposed to greater risk than a more well diversified portfolio. The value of the Fund's common shares will be affected by factors affecting the value of real estate and the earnings of companies engaged in the real estate industry. These factors include, among others, (i) changes in general economic and market conditions; (ii) changes in the value of real estate properties; (ii) risks related to local economic conditions, overbuilding and increased competition; (iii) increases in property taxes and operating expenses; (iv) changes in zoning laws; (v) casualty and condemnation losses; (vi) variations in rental income, neighborhood values or the appeal of property to tenants; and (vii) changes in interest rates. Many real estate companies utilize leverage, which increases investment risk and could adversely affect a company's operations and market value in periods of rising interest rates. The value of securities of companies in the real estate industry may go through cycles of relative under performance and out performance in comparison to equity securities markets in general.

 

There are also special risks associated with particular sectors of real estate investments:

 

Retail Properties. Retail properties are affected by the overall health of the economy and may be adversely affected by, among other things, the growth of alternative forms of retailing, bankruptcy,

 

 

 

 

  Aberdeen Global Premier Properties Fund 49

 

 

 

 

 

Additional Information Regarding the Fund (unaudited) (continued)

 

 

 

departure or cessation of operations of a tenant, a shift in consumer demand due to demographic changes, changes in spending patterns and lease terminations.

 

Office Properties. Office properties are affected by the overall health of the economy, and other factors such as a downturn in the businesses operated by their tenants, obsolescence and non-competitiveness.

 

Hotel Properties. The risks of hotel properties include, among other things, the necessity of a high level of continuing capital expenditures, competition, increases in operating costs which may not be offset by increases in revenues, dependence on business and commercial travelers and tourism, increases in fuel costs and other expenses of travel, and adverse effects of general and local economic conditions. Hotel properties tend to be more sensitive to adverse economic conditions and competition than many other commercial properties.

 

Healthcare Properties. Healthcare properties and healthcare providers are affected by several significant factors, including federal, state and local laws governing licenses, certification, adequacy of care, pharmaceutical distribution, rates, equipment, personnel and other factors regarding operations, continued availability of revenue from government reimbursement programs and competition on a local and regional basis. The failure of any healthcare operator to comply with governmental laws and regulations may affect its ability to operate its facility or receive government reimbursements.

 

Multifamily Properties. The value and successful operation of a multifamily property may be affected by a number of factors such as the location of the property, the ability of the management team, the level of mortgage rates, the presence of competing properties, adverse economic conditions in the locale, oversupply and rent control laws or other laws affecting such properties.