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 |
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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
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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
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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
|
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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
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|
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.
|
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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. |