Edgar Filing: FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND

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 811-21905
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First Trust/Aberdeen Emerging Opportunity Fund
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(Exact name of registrant as specified in charter)

120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Address of principal executive offices) (Zip code)

W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Name and address of agent for service)

registrant's telephone number, including area code: (630) 765-8000
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2012
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.

ITEM 1. REPORTS TO STOCKHOLDERS.

The Report to Shareholders is attached herewith.

FIRST TRUST

ANNUAL
REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2012

FIRST TRUST/
ABERDEEN
EMERGING
OPPORTUNITY
FUND

ABERDEEN
ASSET MANAGEMENT

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TABLE OF CONTENTS
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FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND (FEO)
ANNUAL REPORT
DECEMBER 31, 2012

Shareholder Letter........................................................... 1
At A Glance.................................................................. 2
Portfolio Commentary......................................................... 3
Portfolio of Investments..................................................... 7
Schedule of Forward Foreign Currency Contracts............................... 16
Statement of Assets and Liabilities.......................................... 17
Statement of Operations...................................................... 18
Statements of Changes in Net Assets.......................................... 19
Statement of Cash Flows...................................................... 20
Financial Highlights......................................................... 21
Notes to Financial Statements................................................ 22
Report of Independent Registered Public Accounting Firm...................... 29
Additional Information....................................................... 30
Board of Trustees and Officers............................................... 32
Privacy Policy............................................................... 34

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and/or Aberdeen Asset Management Inc. ("Aberdeen" or
the "Sub-Advisor") and their respective representatives, taking into account the
information currently available to them. Forward-looking statements include all
statements that do not relate solely to current or historical fact. For example,
forward-looking statements include the use of words such as "anticipate,"
"estimate," "intend," "expect," "believe," "plan," "may," "should," "would" or
other words that convey uncertainty of future events or outcomes.

Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
First Trust/Aberdeen Emerging Opportunity Fund (the "Fund") to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. When evaluating the information
included in this report, you are cautioned not to place undue reliance on these
forward-looking statements, which reflect the judgment of the Advisor and/or
Sub-Advisor and their respective representatives only as of the date hereof. We
undertake no obligation to publicly revise or update these forward-looking
statements to reflect events and circumstances that arise after the date hereof.

PERFORMANCE AND RISK DISCLOSURE

There is no assurance that the Fund will achieve its investment objective. The
Fund is subject to market risk, which is the possibility that the market values
of securities owned by the Fund will decline and that the value of the Fund
shares may therefore be less than what you paid for them. Accordingly, you can
lose money by investing in the Fund. See "Risk Considerations" in the Notes to
Financial Statements for a discussion of certain other risks of investing in the
Fund.

Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, net asset value and common share price will fluctuate and Fund shares,
when sold, may be worth more or less than their original cost.

HOW TO READ THIS REPORT

This report contains information that may help you evaluate your investment. It
includes details about the Fund and presents data and analysis that provide
insight into the Fund's performance and investment approach.

By reading the portfolio commentary by the portfolio management team of the
Fund, you may obtain an understanding of how the market environment affected the
Fund's performance. The statistical information that follows may help you
understand the Fund's performance compared to that of relevant market
benchmarks.

It is important to keep in mind that the opinions expressed by personnel of
Aberdeen are just that: informed opinions. They should not be considered to be
promises or advice. The opinions, like the statistics, cover the period through
the date on the cover of this report. The risks of investing in the Fund are
spelled out in the prospectus, the statement of additional information, this
report and other Fund regulatory filings.

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SHAREHOLDER LETTER
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FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND (FEO)
ANNUAL LETTER FROM THE CHAIRMAN AND CEO
DECEMBER 31, 2012

Dear Shareholders:

I am pleased to present you with the annual report for your investment in First
Trust/Aberdeen Emerging Opportunity Fund (the "Fund").

The report you hold contains detailed information about the Fund over the twelve
months ended December 31, 2012. It contains a market overview and a performance
analysis for the period. I encourage you to read this document and discuss it
with your financial advisor. A successful investor is also typically a
knowledgeable one, as we have found to be the case at First Trust.

First Trust remains committed to being a long-term investor and investment
manager and to bringing you quality financial solutions regardless of market ups
and downs. We have always believed that there are two ways to attain success in
reaching your financial goals: staying invested in quality products and having a
long-term investment horizon. We are committed to this approach in the products
we manage or supervise and offer to investors.

First Trust offers a variety of products that we believe could fit many
financial plans to help investors seeking long-term investment success. We
encourage you to talk to your advisor about the other investments First Trust
offers that might also fit your financial goals and to discuss those goals with
your advisor regularly so that he or she can help keep you on track.

First Trust will continue to make available up-to-date information about your
investment so you and your financial advisor are current on what you own. We
value our relationship with you, and thank you for the opportunity to assist you
in achieving your financial goals. I look forward to 2013 and to the next
edition of your Fund's report.

Sincerely,

/s/ James A. Bowen

James A. Bowen
Chairman of the Board of Trustees of First Trust/Aberdeen Emerging Opportunity
Fund Chief Executive Officer of First Trust Advisors L.P.

Page 1

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
"AT A GLANCE"
AS OF DECEMBER 31, 2012 (UNAUDITED)

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FUND STATISTICS
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Symbol on New York Stock Exchange FEO
Common Share Price $22.05
Common Share Net Asset Value ("NAV") $23.67
Premium (Discount) to NAV (6.84)%
Net Assets Applicable to Common Shares $126,093,432
Current Quarterly Distribution per Common Share (1) $0.350
Current Annualized Distribution per Common Share $1.400
Current Distribution Rate on Closing Common Share Price (2) 6.35%
Current Distribution Rate on NAV (2) 5.91%
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COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
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Common Share Price NAV
12/11 17.82 20.30
18.28 20.43
18.51 20.71
19.17 21.40
1/12 19.74 21.82
20.18 22.29
20.40 22.11
20.60 22.50
2/12 20.68 22.55
20.98 22.80
20.88 22.63
21.06 22.77
20.43 22.27
3/12 20.78 22.32
21.35 22.20
20.90 22.08
20.50 22.21
4/12 20.79 22.42
21.20 22.26
20.49 21.79
19.03 20.94
5/12 18.95 20.78
18.39 20.47
19.20 20.99
19.24 21.26
18.99 21.01
6/12 19.24 21.52
19.65 21.64
19.95 21.69
20.58 21.89
7/12 20.37 22.03
20.65 22.26
20.80 22.40
21.03 22.20
21.08 22.23
8/12 21.03 22.12
21.25 22.57
21.99 23.11
21.70 22.68
9/12 22.15 22.67
21.85 22.83
21.83 22.75
22.33 22.91
10/12 21.39 22.83
21.52 22.88
21.11 22.79
20.52 22.55
21.17 22.91
11/12 21.17 23.08
21.40 23.44
22.09 23.69
22.08 23.41
22.00 23.55
12/12 22.05 23.67

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PERFORMANCE
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Average Annual Total Return
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1 Year Ended 5 Years Ended Inception (08/28/2006)
12/31/2012 12/31/2012 to 12/31/2012

FUND PERFORMANCE (3)

NAV 24.36% 10.44% 12.29%
Market Value 32.02% 11.23% 10.25%

INDEX PERFORMANCE

Blended Benchmark(4) 19.43% 6.42% 10.21%
Barclays Capital Global Emerging Markets Index 18.14% 9.50% 9.56%
FTSE All World Emerging Market Index 17.94% -0.30% 8.20%
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% OF TOTAL
TOP 10 COUNTRIES(5) INVESTMENTS
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Brazil 13.7%
Mexico 9.1
Russia 8.4
Turkey 6.9
South Africa 6.7
Hong Kong 5.0
India 4.9
Venezuela 3.8
Hungary 3.3
Thailand 2.9
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Total 64.7%
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% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
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Brazil Notas do Tesouro Nacional, Series F, 10.00%,
01/01/17 3.6%
Mexican Bonos Desarr Fixed Rate Bond, 7.50%, 06/03/27 3.1
Hungary Government Bond, 6.75%, 11/24/17 2.4
Republic of South Africa, 10.50%, 12/21/26 2.4
RZD Capital, Ltd., 8.30%, 04/02/19 2.3
Samsung Electronics Co., Ltd., Preference Shares 2.2
China Mobile, Ltd. 2.0
Republic of Nigeria, 0.00%, 06/27/13 1.7
Taiwan Semiconductor Manufacturing Co., Ltd. 1.7
Turkey Government Bond, 10.50%, 01/15/20 1.6
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Total 23.0%
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% OF TOTAL
CREDIT QUALITY(6) INVESTMENTS
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AA 1.2%
A 10.7
A- 7.3
BBB+ 11.1
BBB 15.3
BBB- 16.1
BB+ 1.1
BB 4.4
BB- 8.8
B+ 11.2
B 6.0
B- 1.5
CC 0.8
NR 4.5
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Total 100.0%
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% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
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Government Bonds and Notes 37.9%
Commercial Banks 14.0
Oil, Gas & Consumable Fuels 8.6
Wireless Telecommunication Services 4.9
Semiconductors & Semiconductor Equipment 3.9
Real Estate Management & Development 3.7
Metals & Mining 2.7
Beverages 2.1
Construction & Engineering 2.0
Food & Staples Retailing 1.9
Automobiles 1.8
Chemicals 1.3
Pharmaceuticals 1.3
Thrifts & Mortgage Finance 1.3
Construction Materials 1.3
Electric Utilities 1.2
Specialty Retail 1.2
Diversified Financial Services 1.2
Transportation Infrastructure 1.1
Household Durables 1.1
Energy Equipment & Services 1.0
IT Services 0.8
Tobacco 0.8
Insurance 0.8
Multiline Retail 0.7
Household Products 0.5
Consumer Finance 0.3
Food Products 0.3
Machinery 0.2
Diversified Telecommunication Services 0.1
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Total 100.0%
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(1) Most recent distribution paid or declared through 12/31/2012. Subject to
change in the future.

(2) Distribution rates are calculated by annualizing the most recent
distribution paid or declared through the report date and then dividing by
Common Share price or NAV, as applicable, as of 12/31/2012. Subject to
change in the future.

(3) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan and changes in NAV per share for NAV
returns and changes in Common Share price for market value returns. Total
returns do not reflect sales load and are not annualized for periods less
than one year. Past performance is not indicative of future results.

(4) Blended benchmark consists of the following: JPMorgan Emerging Markets
Bond Index - Global Diversified (32.5%); JPMorgan Government Bond Index -
Emerging Markets (32.5%); MSCI Global Emerging Markets Index (35.0%).

(5) Fixed-income portfolio securities are included in a country based upon
their underlying credit exposure as determined by Aberdeen Asset
Management Inc., the sub-advisor.

(6) The credit quality and ratings information presented above reflects the
ratings assigned by one or more nationally recognized statistical rating
organizations (NRSROs), including Standard & Poor's Ratings Group, a
division of the McGraw-Hill Companies, Inc., Moody's Investors Service,
Inc., Fitch Ratings or a comparably rated NRSRO. For situations in which a
security is rated by more than one NRSRO and the ratings are not
equivalent, the highest ratings are used.

Page 2

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PORTFOLIO COMMENTARY
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FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND (FEO)
ANNUAL REPORT
DECEMBER 31, 2012

SUB-ADVISOR

Aberdeen Asset Management Inc. ("Aberdeen" or the "Sub-Advisor"), a Securities
and Exchange Commission registered investment advisor, is a wholly-owned
subsidiary of Aberdeen Asset Management PLC ("Aberdeen Group"). Aberdeen Group
is a publicly-traded international investment management group listed on the
London Stock Exchange, managing assets for both institutional and retail clients
from offices around the world.

PORTFOLIO MANAGEMENT TEAM

Investment decisions for the First Trust/Aberdeen Emerging Opportunity Fund (the
"Fund") are made by Aberdeen using a team approach and not by any one
individual. By making team decisions, Aberdeen seeks to ensure that the
investment process results in consistent returns across all portfolios with
similar objectives. Aberdeen does not employ separate research analysts.
Instead, Aberdeen's investment managers combine the roles of analysis with
portfolio management. Each member of the team has sector and portfolio
responsibilities such as day-to-day monitoring of liquidity. The overall result
of this matrix approach is a high degree of cross-coverage, leading to a deeper
understanding of the securities in which Aberdeen invests. Included below is
additional information about the members of the team with significant
responsibility for the day-to-day management of the Fund's portfolio.

EQUITY MANAGEMENT TEAM

DEVAN KALOO
HEAD OF EMERGING MARKET EQUITY FOR THE ABERDEEN GROUP

Mr. Kaloo is responsible for the London-based Global Emerging Market ("GEM")
Equity Team, which manages Latin America, Europe, Middle East and Africa
equities, and also has oversight of global emerging market input from the Asia
research team based in Singapore, with which he works closely. Mr. Kaloo began
his career at Martin Currie in Edinburgh, Scotland, shortly after graduation,
working initially on the North American desk before transferring to the global
asset allocation team. Mr. Kaloo moved off the global asset allocation team in
1997, and for the next three years, he worked on Asian portfolios before joining
Murray Johnstone in Singapore in July 2000. Following the latter's acquisition,
he transferred to the Aberdeen Group where he was responsible for the Asian
ex-Japan region as well as regional portfolios within emerging market mandates
and technology stocks.

JOANNE IRVINE
HEAD OF GEM EQUITY TEAM EX-ASIA

Ms. Irvine is on the GEM Equity Team, where she specializes in the emerging
markets of Europe, Africa and the Middle East. After qualifying as a chartered
accountant in 1992, she worked in corporate finance, specializing in raising
development capital finance for private businesses. In January 1996, Ms. Irvine
joined the Aberdeen Group in a group development role. Since May 1997, Ms.
Irvine has been part of Aberdeen's emerging markets fund management group in
London.

MARK GORDON-JAMES
INVESTMENT MANAGER, GEM EQUITY TEAM

After graduating with a degree in Geography and Economics from the London School
of Economics in 2000, Mr. Gordon-James worked with the emerging markets team of
Merrill Lynch Investment Managers. Mr. Gordon-James joined the Aberdeen Group in
April 2004.

FIONA MANNING
INVESTMENT MANAGER, GEM EQUITY TEAM

Ms. Manning is an investment manager on the emerging markets ex-Asia team. Ms.
Manning joined Aberdeen in 2001 as an analyst.

ANDY BROWN
INVESTMENT MANAGER, GEM EQUITY TEAM

Mr. Brown is an investment manager on the emerging markets ex-Asia team. Prior
to joining Aberdeen in March 2005, Mr. Brown worked in the oil field consumables
industry in the United Arab Emirates.

PETER TAYLOR
SENIOR INVESTMENT MANAGER/HEAD OF CORPORATE GOVERNANCE

Mr. Taylor is an investment manager and head of corporate governance on the
Asian equities desk. Mr. Taylor joined Aberdeen in 2007 from the International
Finance Corporation, where he worked on corporate governance and capital markets
development for seven years from their Washington DC and Hong Kong offices.

Page 3

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PORTFOLIO COMMENTARY - (CONTINUED)
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FIXED-INCOME MANAGEMENT TEAM

BRETT DIMENT
HEAD OF EMERGING MARKET DEBT

Mr. Diment joined Deutsche Asset Management Group Limited ("Deutsche") in 1991
as a member of the fixed-income group and became head of the Emerging Market
Debt team at Deutsche in 1999. Mr. Diment joined Aberdeen following the Deutsche
acquisition in 2005 and is now responsible for the day-to-day management of the
Emerging Market Debt team and portfolios.

KEVIN DALY
PORTFOLIO MANAGER, EMERGING MARKET DEBT

Mr. Daly joined the Emerging Market Debt team at Aberdeen in April 2007 as a
portfolio manager, having spent the previous 10 years at Standard & Poor's in
London and Singapore as a credit market analyst covering global emerging market
debt, and was head of marketing for Global Sovereign Ratings. Mr. Daly was a
regular participant on the Global Sovereign Committee, served as a member of the
Sovereign Ratings Review Board, and was one of the initial members of the
Emerging Market Council, formed in 2006 to advise senior management on business
and market developments in emerging markets.

EDWIN GUTIERREZ
PORTFOLIO MANAGER, EMERGING MARKET DEBT

Mr. Gutierrez has served as an economist specializing in Latin America at LGT
Asset Management, and more recently as a portfolio manager specializing in
emerging market fixed-income at Invesco Asset Management. He joined Deutsche in
2000 and Aberdeen in 2005.

MAX WOLMAN
PORTFOLIO MANAGER, EMERGING MARKET DEBT

Mr. Wolman joined Aberdeen in January 2001 and is portfolio manager on the
Global Emerging Market Debt mandates. Mr. Wolman originally specialized in
currency and domestic debt analysis; however, he is now responsible for wider
emerging debt analysis, including external and corporate issuers. He is a member
of the Emerging Market Debt investment committee at Aberdeen and is also
responsible for the daily implementation of the investment process.

ESTHER CHAN
PORTFOLIO MANAGER, EMERGING MARKET DEBT

Ms. Chan joined Aberdeen in Singapore in 2005 where she started as a corporate
credit analyst and trader working across investment-grade and high-yield assets
in the region. She has 6 years of experience in the asset class, and now serves
as a portfolio manager in Aberdeen London with specialization in analysis,
management and trading of external Asian debt, and Emerging Market corporates.
Prior to joining Aberdeen, Ms. Chan worked as a corporate finance analyst at
John Moore, assisting in various deals focused on the debt restructuring in
Indonesian firms facing creditor holdout situations, post Asian crisis.

COMMENTARY

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND

The investment objective of the Fund is to provide a high level of total return.
The Fund pursues its investment objective by investing at least 80% of its
managed assets in a diversified portfolio of equity and fixed-income securities
of issuers in emerging market countries. There can be no assurance that the
Fund's investment objective will be achieved, and the Fund may not be
appropriate for all investors.

CHANGE IN CERTAIN INVESTMENT STRATEGIES

On December 10, 2012, the Fund's Board of Trustees approved a change to certain
of the Fund's investment strategies. The Fund's investment strategies are
non-fundamental policies of the Fund and require 60 days' prior written notice
to shareholders before they can be changed by the Board without receiving
shareholder approval. As such, on or about April 30, 2013, the following Fund
investment strategy will become effective:

o The Fund may invest up to 5% of its Managed Assets in
non-deliverable forward foreign exchange contracts for purposes of
hedging.

FUND RECAP

The Fund had a net asset value ("NAV") total return1 of 24.36% and a market
value total return1 of 32.02% for the twelve months ended December 31, 2012,
compared to the Fund's blended benchmark2 total return1 of 19.43% over the same
period. In addition to the benchmark, the Fund currently uses other indexes for
comparative purposes. The total returns for the twelve months ended December 31,
2012, for these indices were as follows: the Barclays Capital Global Emerging
Markets Index was 18.14% and the FTSE All World Emerging Market Index was
17.94%.

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1 Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan, and changes in NAV per share for NAV
returns and changes in Common Share price for market value returns. Total
returns do not reflect sales load and are not annualized for periods less
than one year. Past performance is not indicative of future results.

2 Blended benchmark consists of the following: JPMorgan Emerging Markets
Bond Index - Global Diversified (32.5%); JPMorgan Government Bond Index -
Emerging Markets (32.5%); MSCI Global Emerging Markets Index (35.0%).

Page 4

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PORTFOLIO COMMENTARY - (CONTINUED)
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MARKET RECAP - EQUITY

Emerging markets equities did well over the year ending 2012, despite persistent
global growth fears and lingering debt trouble in Europe. The rally was
attributed in large part to the extraordinary measures proposed by central banks
to tackle those issues. Besides keeping interest rates at historical lows, the
U.S. Federal Reserve ("Fed") and other major central banks pressed ahead with
various forms of quantitative easing. The European Central Bank's ("ECB") pledge
to do "whatever it takes to save the Euro" and its commitment to buying
sovereign bonds from countries seeking assistance were also instrumental in
shifting market sentiment. Towards the year-end, optimism that U.S. budget
negotiations could be resolved and better economic data from the U.S. and China
further bolstered equities.

MARKET RECAP - FIXED INCOME

Emerging market debt performed strongly in 2012. Over the year, the JPMorgan
Emerging Markets Bond Index-Global Diversified ("JPM EMBI") gained 17.42%, and
the benchmark spread narrowed 147 basis points from +404 over U.S. Treasuries.
The JPMorgan Government Bond Index-Emerging Markets ("JPM GBI-EM") increased
21.5% over the year.

In hard currency debt, all regions posted positive returns, but performance was
uneven. Emerging Europe was the strongest performer as the Balkans, Baltics and
the Commonwealth of Independent States, commonly referred to as CIS, all
excelled, while the Middle East underperformed as Jordan suffered from an energy
crisis. Ivory Coast was the top performer during 2012, increasing by 89.1% as it
sought to normalise relations with creditors while other high-yielding credits
in Venezuela, Pakistan and Belarus also performed strongly. Belize was the
worst-performing credit over the year, having defaulted on its "superbond" in
August, while highly-indebted countries Jamaica and Lebanon also struggled over
the year. In local currency debt, Asia was the only region to have a
single-digit return as Indonesia and Malaysia all lagged. Nigeria was the top
performer, benefitting from its inclusion into the benchmark index while Europe
was spurred on by strong performance by Hungary.

Global risk appetite improved at the start of 2012 due to the ECB injecting
liquidity via two Long-Term Refinancing Operations ("LTRO") in December and
February and the Fed providing a dovish interest rate outlook in January. In
addition, the People's Bank of China ("PBoC") announced its first 0.5% reserve
requirement ratio cut in 2012, appeasing slowing global growth indicators.

In response to the continuation of poor economic data trends, the PBoC cut the
benchmark lending rate by 0.25% to 6.31% in early June, while the Central Bank
of Brazil cut the Selic rate by 0.75% in April and 0.5% in May to 8.5%. The
announcement of an extension of 'Operation Twist' by the U.S. Fed and a
surprisingly positive outcome from the European Union summit helped to further
boost market sentiment in the second quarter.

PERFORMANCE ANALYSIS - EQUITY

The equity portion of the Fund outperformed the MSCI (Morgan Stanley Capital
International) Global Emerging Markets Index portion of the benchmark index by
10.12% in U.S. dollar terms, largely because of stock selection. Fund holdings
did better than their peers amid the volatile operating environment, especially
during the second quarter when the outperformance was most significant.

Several key stocks that contributed to relative return over the year were
Turkish companies including retailer BIM and lenders, Akbank and Garanti. In
Mexico, local bank Banorte, as well as bottler and convenience store operator
FEMSA, gained from healthy earnings and a positive domestic outlook. Philippine
property developer Ayala Land and the Bank of the Philippine Islands also helped
the Fund.

The gains, though, were pared by Indonesian conglomerate Astra International,
Indian software company Infosys and Brazilian oil giant Petrobras as they lagged
over the year. Concerns over Astra's consumer finance business, Infosys'
earnings visibility and state interference in Petrobras all weighed on their
share prices.

Asset allocation also aided performance. Markets such as Turkey, Mexico and
India, where the Fund has significant exposure, re-rated. The Fund's overweight
to the Philippines also helped as the stock market rallied sharply on the back
of increased optimism over its economic growth. On the flip side, the Fund's
underweight to China detracted from relative performance as Chinese equities
recovered following the largely smooth leadership transition and some evidence
of economic improvement.

PERFORMANCE ANALYSIS - FIXED INCOME

Over the year, the Fund outperformed in hard currency space benefitting from its
overweight position in Ivory Coast which was the top-performing country in the
JPM EMBI Index. The Fund also held tactical positions in several off benchmark
Emerging Market corporates which resulted in strong performance. Examples
include state-owned companies in Dubai and Russian telecom companies. The Fund's
underweight positions in high-grade sovereigns also benefitted performance as
these sovereigns underperformed the benchmark.

Page 5

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PORTFOLIO COMMENTARY - (CONTINUED)
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Local currency performance was more mixed, underperforming the blended
benchmark2 predominately because of the Fund's underweight positions in both
Hungary and Poland. The Fund's overweight holdings in the higher-yielding
sovereigns such as South Africa, Indonesia and Brazil also hurt performance as
these countries' currencies tended to underperform countries such as Poland,
Chile, and Peru and their lower-yielding currencies.

An important factor impacting the return of the Fund relative to its benchmarks
was the Fund's use of financial leverage through the use of bank borrowings. The
Fund uses leverage because its managers believe that, over time, leverage
provides opportunities for additional income and total return for common
shareholders. However, the use of leverage can also expose common shareholders
to additional volatility. For example, as the prices of securities held by the
Fund decline, the negative impact of the evaluation changes on Common Share NAV
and common shareholder total return is magnified by the use of leverage.
Conversely, leverage may enhance Common Share returns during periods when the
prices of securities held by the Fund generally are rising. Unlike the Fund, the
Barclays Capital Emerging Markets Index, the FTSE All World Emerging Market
Index and the components of the blended benchmark are not leveraged. Leverage
had a positive impact on the performance of the Fund over this reporting period.

MARKET OUTLOOK - EQUITY

We believe the U.S. and Europe will continue to drive investor sentiment in the
year ahead. In the U.S., market focus has shifted to the political impasse over
budget negotiations which could result in a recession. That would have major
implications for developing economies. In Europe, longer-term structural flaws
in economies remain, although recent measures have eased tensions temporarily.

Emerging markets face challenges, too. The results of various stimulus measures
and reforms implemented in countries such as Brazil and India have yet to be
seen. And while recent data out of China provides evidence of an economic
pick-up, the new leadership faces a challenging transition as it seeks more
balanced growth. Geopolitical tension in Asia and the Middle East further muddy
the outlook.

Yet amid the uncertainties, there are bright spots. We believe developed
countries' commitment to record low interest rates remains broadly supportive
for financial assets, even if other impacts of quantitative easing on emerging
markets are less appreciated. We believe the Fund's holdings are also in good
shape. Investor sentiment could turn positive if global concerns dissipate and
developing economies and corporate profits recover in the first half of 2013.
However, the recovery may be difficult to sustain in the second half of the
year, given the still anemic outlook for global growth. As a result we expect
equity markets to remain volatile, which could provide opportunities for
disciplined stock pickers.

MARKET OUTLOOK - FIXED INCOME

Our outlook for emerging market debt is constructive for 2013. However, we
envisage more modest returns in the coming year following the strong performance
of the asset class in 2012. We believe global growth will continue to be driven
by emerging markets and we see most scope for returns deriving from emerging
market currencies which have generally lagged the other parts of the asset
class. We believe the key risk to the Fund's return expectations is the
sensitivity of the asset class to rising U.S. Treasury yields, which could occur
if U.S. macroeconomic indicators show some signs of recovery. Having said that,
the prospects for stronger economic growth in the U.S. and China may also herald
a stronger outlook for emerging market exports given the interconnectivity of
global trade, which could have a positive effect on emerging market assets. We
believe the Eurozone sovereign debt crisis and the zero growth prospects will
continue to make headlines in 2013, although its effect on emerging markets will
most likely be limited to temporary episodes of risk-off sentiment given the
reduced Euro tail risk. China was at the forefront of investors' minds in 2012,
but having avoided a hard landing last year, going forward we expect a continued
moderation in long-term potential growth. More importantly, structural growth
remains strong, in our opinion.

Page 6

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2012

SHARES DESCRIPTION VALUE
----------- -------------------------------------------------------------------------------------------- ------------
COMMON STOCKS - 46.5%

BRAZIL - 8.0%
113,924 Banco Bradesco S.A., ADR ................................................................... $ 1,978,860
22,000 Lojas Renner S.A............................................................................ 856,899
27,000 Multiplan Empreendimentos Imobiliarios S.A.................................................. 793,846
93,000 Petroleo Brasileiro S.A., ADR .............................................................. 1,794,900
66,500 Souza Cruz S.A.............................................................................. 1,000,667
73,267 Ultrapar Participacoes S.A.................................................................. 1,656,424
99,100 Vale S.A., Preference Shares, ADR .......................................................... 2,011,730
------------
10,093,326
------------
CHILE - 0.7%
32,728 Banco Santander Chile S.A., ADR ............................................................ 932,421
------------
CHINA - 3.2%
216,500 China Mobile Ltd. (b) ...................................................................... 2,547,705
1,070,000 PetroChina Co., Ltd., Class H (b) .......................................................... 1,543,652
------------
4,091,357
------------
HONG KONG - 3.1%
245,600 AIA Group Ltd. (b) ......................................................................... 974,131
202,000 Hang Lung Group Ltd. (b) ................................................................... 1,162,110
640,000 Swire Pacific Ltd., B Shares (b) ........................................................... 1,485,178
89,600 Swire Properties Ltd. (b) .................................................................. 301,774
------------
3,923,193
------------
HUNGARY - 0.7%
5,500 Richter Gedeon Nyrt (b) .................................................................... 902,348
------------
INDIA - 5.0%
20,000 GlaxoSmithKline Pharmaceuticals Ltd. (b) ................................................... 796,164
13,000 Grasim Industries Ltd. (b) ................................................................. 756,673
23,000 Hero Honda Motors Ltd. (b) ................................................................. 804,909
62,000 Hindustan Unilever Ltd. (b) ................................................................ 597,268
110,500 Housing Development Finance Corp., Ltd. (b) ................................................ 1,688,087
20,000 ICICI Bank Ltd. (b) ........................................................................ 418,542
23,668 Infosys Technologies Ltd. (b) .............................................................. 1,002,467
7,428 UltraTech Cement Ltd. (b) .................................................................. 271,358
------------
6,335,468
------------
INDONESIA - 1.2%
1,955,000 PT Astra International Tbk (b) ............................................................. 1,548,649
------------
ITALY - 1.0%
30,600 Tenaris S.A., ADR .......................................................................... 1,282,752
------------
KAZAKHSTAN - 0.0% ..........................................................................
376 BTA Bank JSC (c) ........................................................................... 1
------------
MALAYSIA - 1.3%
220,000 CIMB Group Holdings Berhad (b) ............................................................. 550,687
202,000 Public Bank Berhad ......................................................................... 1,076,717
------------
1,627,404
------------

See Notes to Financial Statements Page 7

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2012

SHARES DESCRIPTION VALUE
----------- -------------------------------------------------------------------------------------------- ------------
COMMON STOCKS - (CONTINUED)

MEXICO - 3.7%
17,700 Fomento Economico Mexicano, S.A.B. de C.V., ADR ............................................ $ 1,782,390
40,000 Grupo Aeroportuario del Centro Norte, S.A.B. de C.V., ADR .................................. 870,000
302,200 Grupo Financiero Banorte, S.A.B. de C.V., O Shares ......................................... 1,951,420
------------
4,603,810
------------
PHILIPPINES - 1.7%
1,550,000 Ayala Land, Inc. (b) ....................................................................... 1,001,876
484,672 Bank of the Philippine Islands (b) ......................................................... 1,124,354
------------
2,126,230
------------
POLAND - 0.9%
20,000 Bank Pekao S.A. (b)......................................................................... 1,085,281
------------
RUSSIA - 1.4%
25,500 LUKOIL, ADR ................................................................................ 1,721,250
------------
SOUTH AFRICA - 2.8%
43,610 Massmart Holdings Ltd. (b) ................................................................. 988,754
20,978 SABMiller PLC (b) .......................................................................... 966,754
119,729 Truworths International Ltd. (b) ........................................................... 1,541,802
------------
3,497,310
------------
SOUTH KOREA - 2.6%
1,834 E-Mart Co., Ltd. (b) ....................................................................... 407,711
3,500 Samsung Electronics Co., Ltd., Preference Shares (b) ....................................... 2,812,444
------------
3,220,155
------------
TAIWAN - 2.3%
210,005 Taiwan Mobile Co., Ltd. (b) ................................................................ 776,085
643,954 Taiwan Semiconductor Manufacturing Co., Ltd. (b) ........................................... 2,153,904
------------
2,929,989
------------
THAILAND - 3.0%
190,000 PTT Exploration and Production Public Co., Ltd. (b) ........................................ 1,024,880
89,200 Siam Cement Public (The) Co., Ltd. (b) ..................................................... 1,366,078
230,600 Siam Commercial Bank Public Co., Ltd. (b) .................................................. 1,376,133
------------
3,767,091
------------
TURKEY - 2.5%
87,635 Akbank TAS (b) 434,840
20,222 Bim Birlesik Magazalar AS (b) .............................................................. 991,579
181,150 Haci Omer Sabanci Holding AS (b) ........................................................... 1,002,244
141,000 Turkiye Garanti Bankasi AS (b) ............................................................. 735,940
------------
3,164,603
------------
UNITED KINGDOM - 1.4%
9,000 BHP Billiton PLC (b) ....................................................................... 314,951
56,608 Standard Chartered PLC (b) ................................................................. 1,465,008
------------
1,779,959
------------
TOTAL COMMON STOCKS ........................................................................ 58,632,597
(Cost $36,571,373) ------------

Page 8 See Notes to Financial Statements

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2012

PRINCIPAL
VALUE
(LOCAL STATED STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
--------------- ------------------------------------------------------------ ---------- -------------- ------------
FOREIGN SOVEREIGN BONDS AND NOTES - 40.6%

ARGENTINA - 0.8%
470,000 Republic of Argentina (USD) ................................ 7.00% 09/12/13 $ 466,962
645,000 Republic of Argentina (USD) ................................ 8.75% 06/02/17 574,050
------------
1,041,012
------------
BRAZIL - 4.4%
738,000 Brazil Notas do Tesouro Nacional Series F (BRL) ............ 10.00% 01/01/15 376,014
8,955,000 Brazil Notas do Tesouro Nacional Series F (BRL) ............ 10.00% 01/01/17 4,615,772
400,000 Republic of Brazil (USD) ................................... 5.63% 01/07/41 526,000
------------
5,517,786
------------
COSTA RICA - 0.2%
300,000 Republic of Costa Rica (USD) ............................... 4.25% 01/26/23 304,200
------------
CROATIA - 0.5%
600,000 Croatia Government International Bond (USD) ................ 6.63% 07/14/20 688,500
------------
DOMINICAN REPUBLIC - 0.7%
200,000 Dominican Republic (USD) ................................... 7.50% 05/06/21 233,800
528,000 Dominican Republic (USD) ................................... 8.63% 04/20/27 639,672
------------
873,472
------------
EGYPT - 0.2%
240,000 Arab Republic of Egypt (USD) ............................... 6.88% 04/30/40 228,600
------------
EL SALVADOR - 0.1%
150,000 Republic of El Salvador (USD) (d) .......................... 5.88% 01/30/25 152,400
------------
GEORGIA - 0.3%
350,000 Georgian Oil and Gas Corp. (USD) (d) ....................... 6.88% 05/16/17 364,000
------------
HUNGARY - 2.6%
40,000,000 Hungary Government Bond (HUF) .............................. 6.75% 08/22/14 185,631
663,000,000 Hungary Government Bond (HUF) .............................. 6.75% 11/24/17 3,124,123
------------
3,309,754
------------
INDONESIA - 1.1%
4,000,000,000 Indonesian Government Bond (IDR) ........................... 10.00% 07/15/17 503,757
5,500,000,000 Indonesian Government Bond (IDR) ........................... 10.50% 08/15/30 842,568
------------
1,346,325
------------
IVORY COAST - 1.0%
1,300,000 Ivory Coast Government Bond (USD) .......................... 3.75% 12/31/32 1,222,000
------------
LATVIA - 0.6%
700,000 Republic of Latvia (USD) (d) ............................... 2.75% 01/12/20 695,800
------------
MALAYSIA - 1.7%
2,500,000 Malaysia Government Bond (MYR) ............................. 3.21% 05/31/13 818,055
3,900,000 Malaysia Government Bond (MYR) ............................. 4.01% 09/15/17 1,318,490
------------
2,136,545
------------
MEXICO - 3.2%
43,800,000 Mexican Bonos Desarr Fixed Rate Bond (MXN) ................. 7.50% 06/03/27 3,950,563
100,000 United Mexican States (USD) ................................ 6.05% 01/11/40 134,600
------------
4,085,163
------------

See Notes to Financial Statements Page 9

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (A) - (CONTINUED)
DECEMBER 31, 2012

MONGOLIA - 0.4%
300,000 Mongolia Government International Bond (USD) ............... 4.13% 01/05/18 $ 297,750
200,000 Mongolia Government International Bond (USD) ............... 5.13% 12/05/22 197,000
------------
494,750
------------
NIGERIA - 1.7%
357,000,000 Republic of Nigeria (NGN) .................................. (e) 06/27/13 2,163,285
------------
PAKISTAN - 0.4%
600,000 Islamic Republic of Pakistan (USD) ......................... 6.88% 06/01/17 552,000
------------
PERU - 1.1%
2,900,000 Peruvian Government Bond (PEN) ............................. 7.84% 08/12/20 1,434,719
------------
QATAR - 0.7%
690,000 State of Qatar (USD) ....................................... 5.25% 01/20/20 826,275
------------
ROMANIA - 1.0%
1,020,000 Romanian Government International Bond (USD) ............... 6.75% 02/07/22 1,243,125
------------
RUSSIA - 1.4%
50,000,000 Russian Foreign Bond (RUB) ................................. 7.85% 03/10/18 1,787,935
------------
SERBIA - 2.2%
200,000 Republic of Serbia (USD) ................................... 5.25% 11/21/17 208,500
850,000 Republic of Serbia (USD) ................................... 7.25% 09/28/21 980,687
650,000 Republic of Serbia (USD) (d) ............................... 7.25% 09/28/21 749,938
67,000,000 Serbia Treasury Bills (RSD) ................................ (e) 01/17/13 783,684
------------
2,722,809
------------
SOUTH AFRICA - 4.1%
5,300,000 Republic of South Africa (ZAR) ............................. 13.50% 09/15/15 752,306
5,350,000 Republic of South Africa (ZAR) ............................. 8.25% 09/15/17 694,735
20,170,000 Republic of South Africa (ZAR) ............................. 10.50% 12/21/26 3,052,454
6,000,000 Republic of South Africa (ZAR) ............................. 7.00% 02/28/31 656,981
------------
5,156,476
------------
TURKEY - 3.8%
550,000 Republic of Turkey (USD) ................................... 6.25% 09/26/22 686,950
3,400,000 Turkey Government Bond (TRY) ............................... 9.00% 01/27/16 2,059,307
3,000,000 Turkey Government Bond (TRY) ............................... 10.50% 01/15/20 2,061,044
------------
4,807,301
------------
UNITED ARAB EMIRATES - 1.3%
1,300,000 Dubai Government International Bond (USD) .................. 7.75% 10/05/20 1,644,500
------------
URUGUAY - 1.4%
22,395,481 Republica Orient Uruguay, Inflation Adjusted Bond
(UYU) (f) ............................................... 5.00% 09/14/18 1,348,983
5,730,719 Republica Orient Uruguay, Inflation Adjusted Bond
(UYU) (f) ............................................... 4.25% 04/05/27 350,745
------------
1,699,728
------------

Page 10 See Notes to Financial Statements

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2012

VENEZUELA - 3.5%
300,000 Republic of Venezuela (USD) ................................ 8.50% 10/08/14 $ 308,400
2,150,000 Republic of Venezuela (USD) ................................ 5.75% 02/26/16 2,058,625
1,820,000 Republic of Venezuela (USD) ................................ 7.75% 10/13/19 1,724,450
350,000 Republic of Venezuela (USD) ................................ 7.65% 04/21/25 309,750
------------
4,401,225
------------
VIETNAM - 0.2%
200,000 Socialist Republic of Vietnam (USD) ........................ 6.88% 01/15/16 219,500
------------
TOTAL FOREIGN SOVEREIGN BONDS AND NOTES .................... 51,119,185
(Cost $46,685,088) ------------

FOREIGN CORPORATE BONDS AND NOTES (g) - 15.1%

BRAZIL - 1.6%
200,000 Banco do Estado do Rio Grande do Sul (USD) (d) ............. 7.38% 02/02/22 220,000
200,000 OAS Investments GMBH (USD) (d) ............................. 8.25% 10/19/19 212,500
150,000 Odebrecht Finance Ltd. (USD) ............................... 7.50% 09/14/15 164,625
200,000 Odebrecht Finance Ltd. (USD) (d) ........................... 7.13% 06/26/42 233,000
550,000 OGX Petroleo e Gas Participacoes S.A. (USD) ................ 8.50% 06/01/18 497,750
300,000 OSX 3 Leasing B.V. (USD) (d) ............................... 9.25% 03/20/15 310,875
200,000 QGOG Constellation S.A. (USD) (d) .......................... 6.25% 11/09/19 209,000
220,000 Vale Overseas Ltd. (USD) ................................... 4.38% 01/11/22 235,631
------------
2,083,381
------------
CHINA - 0.3%
200,000 COSL Finance BVI Ltd. (USD) (d) ............................ 3.25% 09/06/22 196,000
200,000 Yancoal International Resources Development Co. Ltd.
(USD) (d) ............................................... 5.73% 05/16/22 206,588
------------
402,588
------------
CROATIA - 0.2%
230,000 Hrvatska Electroprivreda (USD) (d) ......................... 6.00% 11/09/17 243,800
------------
DOMINICAN REPUBLIC - 0.3%
350,000 AES Andres Dominicana/Itabo Dominicana (USD) ............... 9.50% 11/12/20 390,775
------------
EL SALVADOR - 0.4%
450,000 Telemovil Finance Co., Ltd. (USD) .......................... 8.00% 10/01/17 489,375
------------
GUATEMALA - 0.4%
400,000 Industrial Subordinated Trust (USD) ........................ 8.25% 07/27/21 447,000
------------
INDONESIA - 0.1%
150,000 PT Adaro Indonesia (USD) ................................... 7.63% 10/22/19 168,000
------------
KAZAKHSTAN - 0.6%
300,000 Kazakhstan Temir Zholy Finance B.V. (USD) (d) .............. 6.95% 07/10/42 378,000
400,000 Zhaikmunai International B.V. (USD) (d) .................... 7.13% 11/13/19 420,000
------------
798,000
------------

See Notes to Financial Statements Page 11

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2012

MEXICO - 2.4%
200,000 Alpek S.A. de C.V. (USD) (d) ............................... 4.50% 11/20/22 $ 209,000
350,000 BBVA Bancomer S.A. Texas (USD) (d) ......................... 6.75% 09/30/22 394,625
500,000 CEMEX Espana S.A. Luxembourg (USD) ......................... 9.88% 04/30/19 560,000
400,000 Corporacion GEO S.A. de C.V. (USD) (d) ..................... 8.88% 03/27/22 427,000
534,000 Desarrolladora Homex S.A. (USD) ............................ 9.50% 12/11/19 579,390
635,375 GEO Maquinaria S.A. de C.V. (USD) .......................... 9.63% 05/02/21 606,783
100,000 Petroleos Mexicanos (USD) .................................. 6.50% 06/02/41 126,000
125,000 Urbi Desarrollos Urbanos Sab de C.V. (USD) ................. 9.50% 01/21/20 119,375
------------
3,022,173
------------
NIGERIA - 0.3%
350,000 Access Finance B.V. (USD) (d) .............................. 7.25% 07/25/17 365,716
------------
RUSSIA - 5.8%
450,000 Alfa Bank (USD) ............................................ 7.88% 09/25/17 504,000
200,000 Alfa Bank OJSC Via Alfa Bond Issuance PLC (USD) ............ 7.75% 04/28/21 222,500
400,000 EuroChem Mineral & Chemical CO OJSC (USD) (d) .............. 5.13% 12/12/17 410,252
250,000 Gazprom Neft OAO via GPN Capital S.A. (USD) (d) ............ 4.38% 09/19/22 256,875
500,000 Home Credit & Finance Bank (USD) (d) ....................... 9.38% 04/24/20 526,250
400,000 Metalloinvest Finance Ltd. (USD) ........................... 6.50% 07/21/16 421,500
200,000 Rosneft Oil CO Via Rosneft International Finance Ltd.
(USD) (d) ............................................... 4.20% 03/06/22 204,000
21,000,000 RSHB Capital S.A. (RUB) .................................... 7.50% 03/25/13 686,927
86,400,000 RZD Capital Ltd. (RUB) ..................................... 8.30% 04/02/19 2,940,745
300,000 Sberbank of Russia via SB Capital S.A. (USD) (d) ........... 6.13% 02/07/22 343,500
350,000 Vimpelcom Holdings B.V. (USD) .............................. 7.50% 03/01/22 402,062
400,000 VTB Bank OJSC via VTB Capital S.A. (USD) ................... 6.88% 05/29/18 452,600
------------
7,371,211
------------
TURKEY - 0.8%
220,000 Turkiye Is Bankasi A.S. (USD) (d) .......................... 6.00% 10/24/22 232,925
200,000 Turkiye Vakiflar Bankasi (USD) (d) ......................... 6.00% 11/01/22 208,000
500,000 Yasar Holdings (USD) ....................................... 9.63% 10/07/15 526,875
------------
967,800
------------
UKRAINE - 0.6%
360,000 Metinvest B.V. (USD) ....................................... 10.25% 05/20/15 371,700
350,000 MHP S.A. (USD) ............................................. 10.25% 04/29/15 371,875
------------
743,575
------------
UNITED ARAB EMIRATES - 0.9%
200,000 Abu Dhabi National Energy Co. (USD) (d) .................... 3.63% 01/12/23 207,000
750,000 Dubai Electricity & Water Authority (USD) .................. 7.38% 10/21/20 926,250
------------
1,133,250
------------

Page 12 See Notes to Financial Statements

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2012

VENEZUELA - 0.4%
450,000 Petroleos de Venezuela S.A. (USD) .......................... 8.50% 11/02/17 $ 445,500
------------
TOTAL FOREIGN CORPORATE BONDS AND NOTES ................................................ 19,072,144
(Cost $17,748,744) ------------

TOTAL INVESTMENTS - 102.2% ............................................................. 128,823,926
(Cost $101,005,205) (h)

OUTSTANDING LOANS - (4.6%) ............................................................. (5,800,000)
NET OTHER ASSETS AND LIABILITIES - 2.4% ................................................ 3,069,506
------------
NET ASSETS - 100.0% .................................................................... $126,093,432
============

------------------------
(a) All of the securities within the Portfolio of Investments are available to
serve as collateral for the outstanding loans.

(b) This security is fair valued in accordance with procedures adopted by the
Fund's Board of Trustees and in accordance with provisions of the
Investment Company Act of 1940, as amended.

(d) This security, sold within the terms of a private placement memorandum, is
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended (the "1933 Act"), and may be resold in transactions exempt from
registration, normally to qualified institutional buyers. Pursuant to
procedures adopted by the Fund's Board of Trustees, this security has been
determined to be liquid by the Fund's investment advisor. At December 31,
2012, securities noted as such amounted to $8,377,044 or 6.64% of net
assets.

(e) Zero coupon bond.

(f) Security whose principal value is adjusted in accordance with changes to
the country's Consumer Price Index. Interest is calculated on the basis of
the current adjusted principal value.

(g) Portfolio securities are included in a country based upon their underlying
credit exposure as determined by Aberdeen Asset Management Inc., the
Fund's investment sub-advisor.

(h) Aggregate cost for federal income tax purposes is $101,507,044. As of
December 31, 2012, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$28,503,851 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$1,186,969.

ADR American Depositary Receipt

Currency Abbreviations
BRL Brazilian Real PEN Peruvian New Sol
GBP British Pound Sterling PHP Philippines Peso
HKD Hong Kong Dollar PLN Polish Zloty
HUF Hungarian Forint RSD Serbian Dinar
IDR Indonesian Rupiah RUB Russian Ruble
INR Indian Rupee THB Thailand Baht
KRW South Korean Won TRY Turkish Lira
KZT Kazakhstan Tenge TWD Taiwan New Dollar
MXN Mexican Peso USD United States Dollar
MYR Malaysian Ringgit UYU Uruguayan Peso
NGN Nigerian Naira ZAR South African Rand

See Notes to Financial Statements Page 13

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2012

VALUATION INPUTS

A summary of the inputs used to value the Fund's investments as of December 31,
2012 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):

ASSETS TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2012 PRICES INPUTS INPUTS
------------ ------------ -------------- ------------

Common Stocks:
Brazil......................................... $ 10,093,326 $ 10,093,326 $ -- $ --
Chile.......................................... 932,421 932,421 -- --
China.......................................... 4,091,357 -- 4,091,357 --
Hong Kong...................................... 3,923,193 -- 3,923,193 --
Hungary........................................ 902,348 -- 902,348 --
India.......................................... 6,335,468 -- 6,335,468 --
Indonesia...................................... 1,548,649 -- 1,548,649 --
Italy.......................................... 1,282,752 1,282,752 -- --
Kazakhstan..................................... 1 -- 1 --
Malaysia....................................... 1,627,404 1,076,717 550,687 --
Mexico......................................... 4,603,810 4,603,810 -- --
Philippines.................................... 2,126,230 -- 2,126,230 --
Poland......................................... 1,085,281 -- 1,085,281 --
Russia......................................... 1,721,250 1,721,250 -- --
South Africa................................... 3,497,310 -- 3,497,310 --
South Korea.................................... 3,220,155 -- 3,220,155 --
Taiwan......................................... 2,929,989 -- 2,929,989 --
Thailand....................................... 3,767,091 -- 3,767,091 --
Turkey......................................... 3,164,603 -- 3,164,603 --
United Kingdom................................. 1,779,959 -- 1,779,959 --
------------ ------------ -------------- ------------
Total Common Stocks............................ 58,632,597 19,710,276 38,922,321 --
------------ ------------ -------------- ------------
Foreign Sovereign Bonds and Notes*.................. 51,119,185 -- 51,119,185 --
Foreign Corporate Bonds and Notes*.................. 19,072,144 -- 19,072,144 --
------------ ------------ -------------- ------------
Total Investments................................... 128,823,926 19,710,276 109,113,650 --
Forward Foreign Currency Contracts**................ 127,375 -- 127,375 --
------------ ------------ -------------- ------------
Total............................................... $128,951,301 $ 19,710,276 $ 109,241,025 $ --
============ ============ ============== ============

LIABILITIES TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2012 PRICES INPUTS INPUTS
------------ ------------ -------------- ------------
Forward Foreign Currency Contracts**............ $ (32,313) $ -- $ (32,313) $ --
============ ============ ============== ============

* See the Portfolio of Investments for country breakout.

** See the Schedule of Forward Foreign Currency Contacts for contract and
currency detail.

Page 14 See Notes to Financial Statements

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2012

All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. As of December
31, 2012, the Fund transferred common stock valued at $34,608,108 from Level 1
to Level 2 of the fair value hierarchy. The common stocks that transferred from
Level 1 to Level 2 did so as a result of a lack of trading volume on the primary
exchange on December 31, 2012, the last business day of the month, and as a
result of foreign equities that were valued based on quoted prices at December
31, 2011 that are now being fair valued using a factor provided by a pricing
service due to the change in value between the foreign markets' close and the
New York Stock Exchange close on December 31, 2012 exceeding a certain
threshold.

CURRENCY EXPOSURE % OF TOTAL
DIVERSIFICATION INVESTMENTS +
USD 39.3%
BRL 7.2
ZAR 6.3
HKD 6.2
TRY 5.7
INR 4.9
MXN 4.2
RUB 4.2
THB 2.9
MYR 2.9
KRW 2.5
TWD 2.3
HUF 2.0
NGN 1.7
PHP 1.7
UYU 1.3
GBP 1.1
PEN 1.1
IDR 1.0
PLN 0.9
RSD 0.6
KZT 0.0 ++
------------------------------------
Total 100.0%
======

+ The weightings include the impact of currency forwards.

++ Amount is less than 0.1%.

See Notes to Financial Statements Page 15

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
DECEMBER 31, 2012

FORWARD FOREIGN CURRENCY CONTRACTS
------------------------------------------------------------
PURCHASE SALE
VALUE AS OF VALUE AS OF UNREALIZED
SETTLEMENT AMOUNT AMOUNT DECEMBER 31, DECEMBER 31, APPRECIATION
DATE COUNTERPARTY PURCHASED (a) SOLD (a) 2012 2012 (DEPRECIATION)
------------ ------------ --------------------- ------------------- ---------------- ---------------- -------------

01/24/13 JPM MXN 18,707,000 USD 1,426,147 $ 1,443,854 $ 1,426,147 $ 17,707
01/24/13 CIT ZAR 8,419,000 USD 943,591 989,597 943,591 46,006
01/24/13 CSFB USD 1,671,792 HUF 357,827,000 1,671,792 1,616,058 55,734
03/04/13 UBS USD 1,559,646 IDR 15,106,732,000 1,559,646 1,555,647 3,999
01/24/13 CSFB USD 1,907,790 MXN 24,667,000 1,907,790 1,903,861 3,929
01/24/13 CSFB USD 960,461 ZAR 8,419,000 960,461 989,597 (29,136)
01/24/13 JPM USD 857,946 ZAR 7,326,000 857,946 861,123 (3,177)
-------------
Net unrealized appreciation (depreciation)................................................................ $ 95,062
=============

(a) Please see Portfolio of Investments for currency descriptions.

Counterparty Abbreviations:
CIT Citibank, NA
CSFB Credit Suisse First Boston
JPM JPMorgan Chase
UBS UBS

Page 16 See Notes to Financial Statements

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2012

ASSETS:

Investments , at value
(Cost $101,005,205)........................................................................ $128,823,926
Cash........................................................................................... 1,143,560
Foreign currency (Cost $1,135,352)............................................................. 1,145,918
Unrealized appreciation on forward foreign currency contracts.................................. 127,375
Prepaid expenses............................................................................... 3,647
Receivables:
Interest.................................................................................... 1,237,552
Dividends................................................................................... 51,151
------------
Total Assets............................................................................. 132,533,129
------------
LIABILITIES:
Outstanding loan............................................................................... 5,800,000
Unrealized depreciation on forward foreign currency contracts.................................. 32,313
Payables:
Deferred Thailand capital gains tax......................................................... 272,510
Investment advisory fees.................................................................... 111,026
Audit and tax fees.......................................................................... 58,243
Custodian fees.............................................................................. 51,594
Deferred Indonesian capital gains tax....................................................... 43,437
Indonesian capital gains tax................................................................ 20,130
Printing fees............................................................................... 13,260
Interest and fees on loan................................................................... 10,951
Administrative fees......................................................................... 9,714
Transfer agent fees......................................................................... 3,589
Legal fees.................................................................................. 2,722
Financial reporting fees.................................................................... 771
Trustees' fees and expenses................................................................. 8
Other liabilities.............................................................................. 9,429
------------
Total Liabilities........................................................................ 6,439,697
------------
NET ASSETS..................................................................................... $126,093,432
============
NET ASSETS CONSIST OF:
Paid-in capital................................................................................ $ 97,410,376
Par value...................................................................................... 53,278
Accumulated net investment income (loss)....................................................... (168,124)
Accumulated net realized gain (loss) on investments, forward foreign currency
contracts and foreign currency transactions.................................................. 1,184,399
Net unrealized appreciation (depreciation) on investments, forward foreign
currency contracts and foreign currency translation.......................................... 27,613,503
------------
NET ASSETS..................................................................................... $126,093,432
============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share)........................... $ 23.67
============
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized).... 5,327,785
============

See Notes to Financial Statements Page 17

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2012

INVESTMENT INCOME:

Interest (net of foreign withholding tax of $15,354)........................................... $ 5,344,068
Dividends (net of foreign withholding tax of $161,577)......................................... 1,524,641
Other.......................................................................................... 5,442
------------
Total investment income..................................................................... 6,874,151
------------
EXPENSES:
Investment advisory fees....................................................................... 1,239,804
Custodian fees................................................................................. 194,714
Administrative fees............................................................................ 107,781
Excise tax expense............................................................................. 101,035
Interest and fees on loan...................................................................... 92,594
Audit and tax fees............................................................................. 63,969
Printing fees.................................................................................. 43,476
Legal fees..................................................................................... 41,199
Transfer agent fees............................................................................ 36,265
Trustees' fees and expenses.................................................................... 21,724
Financial reporting fees....................................................................... 9,250
Other.......................................................................................... 147,396
------------
Total expenses.............................................................................. 2,099,207
------------
NET INVESTMENT INCOME (LOSS)................................................................... 4,774,944
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments................................................................................. 4,119,866
Forward foreign currency contracts.......................................................... (108,521)
Foreign currency transactions............................................................... (2,091,498)
------------
Net realized gain (loss)....................................................................... 1,919,847
------------
Net change in unrealized appreciation (depreciation) on:
Investments................................................................................. 18,842,029
Forward foreign currency contracts.......................................................... (105,370)
Foreign currency translation................................................................ 70,456
Net change in deferred Thailand capital gains tax.............................................. (79,686)
Net change in deferred Indonesian capital gains tax............................................ (43,437)
------------
Net change in unrealized appreciation (depreciation)........................................... 18,683,992
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)........................................................ 20,603,839
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................ $ 25,378,783
============

Page 18 See Notes to Financial Statements

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
STATEMENTS OF CHANGES IN NET ASSETS

YEAR YEAR
ENDED ENDED
12/31/2012 12/31/2011
------------- -------------
OPERATIONS:

Net investment income (loss)....................................................... $ 4,774,944 $ 5,240,364
Net realized gain (loss)........................................................... 1,919,847 4,356,376
Net change in unrealized appreciation (depreciation)............................... 18,683,992 (15,302,660)
------------- -------------
Net increase (decrease) in net assets resulting from operations.................... 25,378,783 (5,705,920)
------------- -------------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.............................................................. (4,677,795) (3,929,384)
Net realized gain.................................................................. (2,781,104) (3,529,515)
Return of capital.................................................................. -- --
------------- -------------
Total distributions to shareholders................................................ (7,458,899) (7,458,899)
------------- -------------

CAPITAL TRANSACTIONS:
Proceeds from Common Shares reinvested............................................. -- --
------------- -------------
Net increase (decrease) in net assets resulting from capital transactions.......... -- --
------------- -------------
Total increase (decrease) in net assets............................................ 17,919,884 (13,164,819)

NET ASSETS:
Beginning of period................................................................ 108,173,548 121,338,367
------------- -------------
End of period...................................................................... $ 126,093,432 $ 108,173,548
============= =============
Accumulated net investment income (loss) at end of period.......................... $ (168,124) $ 988,618
============= =============
CAPITAL TRANSACTIONS WERE AS FOLLOWS:
Common Shares at beginning of period............................................... 5,327,785 5,327,785
Common Shares issued as reinvestment under the Dividend Reinvestment Plan.......... -- --
------------- -------------
Common Shares at end of period..................................................... 5,327,785 5,327,785
============= =============

See Notes to Financial Statements Page 19

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2012

CASH FLOWS FROM OPERATING ACTIVITIES:

Net increase (decrease) in net assets resulting from operations................. $ 25,378,783
Adjustments to reconcile net increase (decrease) in net assets resulting from
operations to net cash provided by operating activities:
Purchases of investments.................................................. (58,951,192)
Sales, maturities and paydowns of investments............................. 63,489,661
Net realized gain/loss on foreign currency transactions................... 2,066,074
Net amortization/accretion of premiums/discounts on investments........... (416,099)
Net realized gain/loss on investments..................................... (4,119,866)
Net change in unrealized appreciation/depreciation on forward foreign
currency contracts..................................................... 105,370
Net change in unrealized appreciation/depreciation on investments......... (18,842,029)
CHANGES IN ASSETS AND LIABILITIES:
Decrease in interest receivable........................................... 204,282
Increase in dividends receivable.......................................... (863)
Increase in prepaid expenses.............................................. (220)
Increase in interest and fees on loan payable............................. 8,901
Increase in investment advisory fees payable.............................. 13,021
Increase in audit and tax fees payable.................................... 5,413
Decrease in legal fees payable............................................ (364)
Increase in printing fees payable......................................... 290
Increase in administrative fees payable................................... 1,237
Decrease in custodian fees payable........................................ (81,686)
Increase in transfer agent fees payable................................... 467
Increase in Trustees' fees and expenses payable........................... 8
Increase in deferred Thailand capital gains tax........................... 79,686
Increase in Indonesian capital gains tax.................................. 20,130
Increase in deferred Indonesian capital gains tax......................... 43,437
Increase in other liabilities payable..................................... 4,964
-------------
CASH PROVIDED BY OPERATING ACTIVITIES........................................... $ 9,009,405
-------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Common Shareholders from net realized gain............... (2,781,104)
Distributions to Common Shareholders from net investment income........... (4,677,795)
-------------
CASH USED IN FINANCING ACTIVITIES............................................... (7,458,899)
-------------
Increase in cash (a)............................................................ 1,550,506
Cash and foreign currency at beginning of period................................ 738,972
-------------
CASH AND FOREIGN CURRENCY AT END OF PERIOD...................................... $ 2,289,478
=============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees............................... $ 83,693
=============

(a) Includes net change in unrealized appreciation (depreciation) on foreign
currency of $70,456.

Page 20 See Notes to Financial Statements

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD

YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/2012 12/31/2011 12/31/2010 12/31/2009 12/31/2008
------------ ------------ ------------ ------------ ------------

Net asset value, beginning of period $ 20.30 $ 22.77 $ 19.76 $ 12.87 $ 21.69
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ................ 0.90 0.98 0.97 1.01 1.09 (a)
Net realized and unrealized gain (loss) ..... 3.87 (2.05) 3.41 7.16 (8.37)
---------- ---------- ---------- ---------- ----------
Total from investment operations ............ 4.77 (1.07) 4.38 8.17 (7.28)
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income ....................... (0.88) (0.74) (0.83) (0.81) (1.08)
Net realized gain ........................... (0.52) (0.66) (0.57) -- (0.10)
Return of capital ........................... -- -- -- (0.63) (0.38)
---------- ---------- ---------- ---------- ----------
Total distributions to Common Shareholders... (1.40) (1.40) (1.40) (1.44) (1.56)
---------- ---------- ---------- ---------- ----------
Capital share repurchases ................... -- -- 0.03 0.16 0.02
---------- ---------- ---------- ---------- ----------
Net asset value, end of period .............. $ 23.67 $ 20.30 $ 22.77 $ 19.76 $ 12.87
========== ========== ========== ========== ==========
Market value, end of period ................. $ 22.05 $ 17.82 $ 21.32 $ 18.04 $ 10.25
========== ========== ========== ========== ==========
TOTAL RETURN BASED ON NET ASSET VALUE (b) ... 24.36% (4.18)% 23.29% 69.25% (33.94)%
========== ========== ========== ========== ==========
TOTAL RETURN BASED ON MARKET VALUE (b) ...... 32.02% (10.17)% 26.45% 94.01% (41.48)%
========== ========== ========== ========== ==========

----------------------

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 126,093 $ 108,174 $ 121,338 $ 106,717 $ 75,365
Ratio of total expenses to average net assets 1.78% 1.68% 1.76% 2.11% 2.00%
Ratio of total expenses to average net assets
excluding interest expense 1.70% 1.61% 1.62% 1.80% 1.60%
Ratio of net investment income (loss) to
average net assets 4.04% 4.47% 4.55% 6.11% 5.73%
Portfolio turnover rate 49% 51% 87% 66% 64%
INDEBTEDNESS:
Total loan outstanding (in 000's) $ 5,800 $ 5,800 $ 5,800 $ 5,800 $ 13,500
Asset coverage per $1,000 of
indebtedness (c) $ 22,740 $ 19,651 $ 21,920 $ 19,399 $ 6,583

-----------------------

(a) Based on average shares outstanding.

(b) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan, and changes in net asset value ("NAV") per
share for NAV returns and changes in Common Share price for market value
returns. Total returns do not reflect sales load and are not annualized
for periods less than one year. Past performance is not indicative of
future results.

(c) Calculated by subtracting the Fund's total liabilities (not including the
loan outstanding) from the Fund's total assets, and dividing by the
outstanding loan balance in 000's.

See Notes to Financial Statements Page 21

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
DECEMBER 31, 2012

1. FUND DESCRIPTION

First Trust/Aberdeen Emerging Opportunity Fund (the "Fund") is a diversified,
closed-end management investment company organized as a Massachusetts business
trust on May 16, 2006 and is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Fund trades under the ticker symbol FEO on the New York Stock
Exchange ("NYSE").

The Fund's investment objective is to seek a high level of total return. The
Fund pursues its objective by investing at least 80% of its Managed Assets in a
diversified portfolio of equity and fixed-income securities of issuers in
emerging market countries. "Managed Assets" means the total asset value of the
Fund minus the sum of the Fund's liabilities other than the principal amount of
borrowings, if any. There can be no assurance that the Fund will achieve its
investment objective. The Fund may not be appropriate for all investors.

o The Fund may invest up to 5% of its Managed Assets in
non-deliverable forward foreign exchange contracts for purposes of
hedging.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP") requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.

A. PORTFOLIO VALUATION:

The net asset value ("NAV") of the Fund's Common Shares is determined daily as
of the close of regular trading on the NYSE, normally 4:00 p.m. Eastern time, on
each day the NYSE is open for trading. If the NYSE closes early on a valuation
day, the NAV is determined as of that time. Domestic debt securities and foreign
securities are priced using data reflecting the earlier closing of the principal
markets for those securities. The NAV per Common Share is calculated by dividing
the value of all assets of the Fund (including accrued interest and dividends),
less all liabilities (including accrued expenses, dividends declared but unpaid
and any borrowings of the Fund), by the total number of Common Shares
outstanding.

The Fund's investments are valued daily in accordance with valuation procedures
adopted by the Fund's Board of Trustees, and in accordance with provisions of
the 1940 Act. The Fund's securities will be valued as follows:

Bonds, notes and other debt securities are valued on the basis of
valuations provided by dealers who make markets in such securities or by
an independent pricing service approved by the Fund's Board of Trustees,
which may use the following valuation inputs when available:

1) benchmark yields;

2) reported trades;

3) broker/dealer quotes;

4) issuer spreads;

5) benchmark securities;

6) bids and offers; and

7) reference data including market research publications.

Common stocks and other securities listed on any national or foreign
exchange (excluding the NASDAQ(R) Stock Market LLC ("NASDAQ") and the
London Stock Exchange Alternative Investment Market ("AIM")) are valued at
the last sale price on the exchange on which they are principally traded
or, for NASDAQ and AIM securities, the official closing price. Securities
traded on more than one securities exchange are valued at the last sale
price or official closing price, as applicable, at the close of the
securities exchange representing the principal market for such securities.

Securities traded in the over-the-counter market are valued at their
closing bid prices.

Forward foreign currency contracts are valued at the current day's
interpolated foreign exchange rate, as calculated using the current day's
spot rate, and the thirty, sixty, ninety and one-hundred eighty day
forward rates provided by an independent pricing service.

Debt securities having a remaining maturity of sixty days or less when
purchased are valued at cost adjusted for amortization of premiums and
accretions of discounts.

Page 22

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
DECEMBER 31, 2012

In the event that market quotations are not readily available, the pricing
service does not provide a valuation for a particular asset, or the valuations
are deemed unreliable, the Fund's Board of Trustees has designated First Trust
Advisors L.P. ("First Trust" or the "Advisor") to use a fair value method to
value the Fund's securities and other investments. Additionally, if events occur
after the close of the principal market for particular securities (e.g.,
domestic debt and foreign securities), but before the Fund values its assets,
that could materially affect NAV, First Trust may use a fair value method to
value the Fund's securities and other investments. The use of fair value pricing
by the Fund is governed by valuation procedures adopted by the Fund's Board of
Trustees, and in accordance with the provisions of the 1940 Act. As a general
principle, the fair value of a security is the amount which the Fund might
reasonably expect to receive for the security upon its current sale. In light of
the judgment involved in fair valuations, there can be no assurance that a fair
value assigned to a particular security will be the amount which the Fund might
be able to receive upon its current sale. Fair valuation of a debt security will
be based on the consideration of all available information, including, but not
limited to, the following:

1) the fundamental business data relating to the issuer, or economic data
relating to the country of issue;

2) an evaluation of the forces which influence the market in which these
securities are purchased and sold;

3) the type, size and cost of security;

4) the financial statements of the issuer, or the financial condition of
the country of issue;

5) the credit quality and cash flow of the issuer, or country of issue,
based on the Sub-Advisor's or external analysis;

6) the information as to any transactions in or offers for the security;

7) the price and extent of public trading in similar securities (or equity
securities) of the issuer/borrower, or comparable companies;

8) the coupon payments;

9) the quality, value and salability of collateral, if any, securing the
security;

10) the business prospects of the issuer, including any ability to obtain
money or resources from a parent or affiliate and an assessment of the
issuer's management (for corporate debt only);

11) the economic, political and social prospects/developments of the
country of issue and the assessment of the country's governmental
leaders/officials (for sovereign debt only);

12) the prospects for the issuer's industry, and multiples (of earnings
and/or cash flows) being paid for similar businesses in that industry
(for corporate debt only); and

13) other relevant factors.

Fair valuation of an equity security will be based on the consideration of all
available information, including, but not limited to the following:

1) the type of security;

2) the size of the holding;

3) the initial cost of the security;

4) transactions in comparable securities;

5) price quotes from dealers and/or pricing services;

6) relationships among various securities;

7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;

8) an analysis of the issuer's financial statements; and

9) the existence of merger proposals or tender offers that might affect
the value of the security.

If the equity securities in question are foreign securities, the following
additional information may be considered:

1) the value of similar foreign securities traded on other foreign
markets;

2) ADR trading of similar securities;

3) closed-end fund trading of similar securities;

4) foreign currency exchange activity;

5) the trading prices of financial products that are tied to baskets of
foreign securities;

6) factors relating to the event that precipitated the pricing problem;

7) whether the event is likely to recur; and

8) whether the effects of the event are isolated or whether they affect
entire markets, countries or regions.

The Fund is subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:

o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.

o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:

o Quoted prices for similar investments in active markets.

o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.

Page 23

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
DECEMBER 31, 2012

o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).

o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.

o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.

The inputs or methodology used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value the Fund's investments as of December 31, 2012, is
included with the Fund's Portfolio of Investments.

B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME:

Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
daily on the accrual basis. Amortization of premiums and accretion of discounts
are recorded by using the effective interest method.

Securities purchased on a when-issued, delayed-delivery or forward commitment
basis may have extended settlement periods. The value of the security so
purchased is subject to market fluctuations during this period. The Fund
maintains liquid assets with a current value at least equal to the amount of its
when-issued, delayed-delivery or forward purchase commitments until payment is
made. At December 31, 2012, the Fund had no when-issued, delayed-delivery or
forward purchase commitments.

C. FORWARD FOREIGN CURRENCY CONTRACTS:

The Fund is subject to foreign currency risk in the normal course of pursuing
its investment objectives. Forward foreign currency contracts are agreements to
exchange one currency for another at a future date and at a specified price. The
Fund uses forward foreign currency contracts to facilitate transactions in
foreign securities and to manage the Fund's foreign currency exposure. These
contracts are valued daily, and the Fund's net equity therein, representing
unrealized gain or loss on the contracts as measured by the difference between
the forward foreign exchange rates at the dates of entry into the contracts and
the forward rates at the reporting date, is included in "Unrealized
appreciation/(depreciation) on forward foreign currency contracts" on the
Statement of Assets and Liabilities. When the forward contract is closed, the
Fund records a realized gain or loss equal to the difference between the
proceeds from (or the cost of) the closing transaction and the Fund's basis in
the contract. This realized gain or loss is included in "Net realized gain
(loss) on forward foreign currency contracts" on the Statement of Operations.
Risks arise from the possible inability of counterparties to meet the terms of
their contracts and from movement in currency and securities values and interest
rates. Due to the risks, the Fund could incur losses in excess of the net
unrealized value shown on the Schedule of Forward Foreign Currency Contracts.

During the year ended December 31, 2012, the amount of notional values of
forward foreign currency contracts opened and closed were $70,465,341 and
$68,370,092, respectively.

D. FOREIGN CURRENCY:

The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period.
Purchases and sales of investments and items of income and expense are
translated on the respective dates of such transactions. Unrealized gains and
losses on assets and liabilities, other than investments in securities, which
result from changes in foreign currency exchange rates have been included in
"Net change in unrealized appreciation (depreciation) on foreign currency
translation" on the Statement of Operations. Unrealized gains and losses on
investments in securities which result from changes in foreign exchange rates
are included with fluctuations arising from changes in market price and are
shown in "Net change in unrealized appreciation (depreciation) on investments"
on the Statement of Operations. Net realized foreign currency gains and losses
include the effect of changes in exchange rates between trade date and
settlement date on investment security transactions, foreign currency
transactions and interest and dividends received. The portion of foreign
currency gains and losses related to fluctuation in exchange rates between the
initial purchase trade date and subsequent sale trade date is included in "Net
realized gain (loss) on foreign currency transactions" on the Statement of
Operations.

E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:

Level dividend distributions are declared and paid quarterly to Common
Shareholders after the payment of interest and/or dividends in connection with
leverage. The level dividend rate may be modified by the Board of Trustees from
time to time. If, for any quarterly distribution, net investment company taxable
income, if any (which term includes net short-term capital gain), is less than
the amount of the distribution, the difference will generally be a tax-free
return of capital distributed from the Fund's assets. Distributions of any net
long-term capital gains earned by the Fund are distributed at least annually.
Distributions will automatically be reinvested into additional Common Shares
pursuant to the Fund's Dividend Reinvestment Plan unless cash distributions are
elected by the shareholder.

Page 24

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
DECEMBER 31, 2012

Distributions from income and capital gains are determined in accordance with
income tax regulations, which may differ from U.S. GAAP. Certain capital
accounts in the financial statements are periodically adjusted for permanent
differences in order to reflect their tax character. These permanent differences
are primarily due to the varying treatment of income and gain/loss on portfolio
securities held by the Fund and have no impact on net assets or NAV per share.
Temporary differences, which arise from recognizing certain items of income,
expense and gain/loss in different periods for financial statement and tax
purposes, will reverse at some point in the future. Permanent differences
incurred during the year ended December 31, 2012, primarily a result of
differing book and tax treatment on realization of foreign currency gains
(losses), have been reclassified at year end to reflect a decrease to
accumulated net investment income (loss) of $1,253,891, and an increase to
accumulated net realized gain (loss) of $1,354,926 and a decrease to paid-in
capital of $101,035.

The tax character of distributions paid during the fiscal years ended December
31, 2012, and 2011 was as follows:

Distributions paid from: 2012 2011
Ordinary income................................. $ 4,885,579 $ 4,338,566
Long-term capital gains......................... 2,573,320 3,120,333

As of December 31, 2012, the distributable earnings and net assets on a tax
basis were as follows:

Undistributed ordinary income................... $ 1,191,872
Undistributed capital gains..................... 750,397
-------------
Total undistributed earnings.................... 1,942,269
Accumulated capital and other losses............ (266,715)
Net unrealized appreciation (depreciation) ..... 27,336,548
-------------
Total accumulated earnings (losses)............. 29,012,102
Other........................................... (382,324)
Paid-in capital................................. 97,463,654
-------------
Net assets...................................... $ 126,093,432
=============

F. INCOME AND OTHER TAXES:

The Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no
provision has been made for federal or state income taxes. However, due to the
timing and amount of distributions, the Fund may be subject to an excise tax of
4% of the amount by which approximately 98% of the Fund's taxable income exceeds
the distributions from such taxable income for the calendar year.

Certain countries assess a capital gains tax on securities sold in their local
markets. This tax is accrued as the securities in these foreign markets
appreciate in value and is paid at the time of sale to the extent a capital gain
is realized. Taxes accrued on securities in an unrealized appreciation position
are included in "Net change in unrealized appreciation (depreciation)" on the
Statement of Operations. The capital gains tax paid on securities sold is
included in "Other" expenses on the Statement of Operations.

At December 31, 2012, the Fund had no capital loss carryforward for federal
income tax purposes.

Certain losses realized after October 31 may be deferred and treated as
occurring on the first day of the following fiscal year. For the fiscal year
ended December 31, 2012, the Fund intends to elect to defer net realized
ordinary losses of $266,715 incurred from November 1, 2012 through December 31,
2012.

The Fund is subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ended 2009, 2010,
2011 and 2012 remain open to federal and state audit. As of December 31, 2012,
management has evaluated the application of these standards to the Fund and has
determined that no provision for income tax is required in the Fund's financial
statements for uncertain tax positions.

G. EXPENSES:

The Fund will pay all expenses directly related to its operations.

3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS

First Trust, the investment advisor to the Fund, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. The Charger Corporation is an Illinois corporation
controlled by James A. Bowen, Chief Executive Officer of First Trust. First
Trust is responsible for the ongoing monitoring of the Fund's investment
portfolio, managing the Fund's business affairs and providing certain
administrative services necessary for the management of the Fund. For these
services, First Trust is entitled to a monthly fee calculated at an annual rate
of 1.00% of the Fund's Managed Assets. First Trust also provides fund reporting
services to the Fund for a flat annual fee in the amount of $9,250.

Page 25

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
DECEMBER 31, 2012

Aberdeen Asset Management Inc. ("Aberdeen" or the "Sub-Advisor") serves as the
Fund's sub-advisor and manages the Fund's portfolio subject to First Trust's
supervision. The Sub-Advisor receives a monthly portfolio management fee
calculated at an annual rate of 0.50% of the Fund's Managed Assets that is paid
by First Trust out of its investment advisory fee.

BNY Mellon Investment Servicing (US) Inc. serves as the Fund's Administrator,
Fund Accountant and Transfer Agent in accordance with certain fee arrangements.
The Bank of New York Mellon serves as the Fund's Custodian in accordance with
certain fee arrangements.

Effective January 23, 2012, James A. Bowen resigned from his position as the
President and Chief Executive Officer of the Fund. He will continue as a
Trustee, the Chairman of the Board of Trustees and a member of the Executive
Committee. The Board elected Mark R. Bradley to serve as the President and Chief
Executive Officer of the Fund and James M. Dykas to serve as the Treasurer,
Chief Financial Officer and Chief Accounting Officer of the Fund.

Effective January 1, 2012, each Trustee who is not an officer or employee of
First Trust, any sub-advisor or any of their affiliates ("Independent Trustees")
is paid a fixed annual retainer of $125,000 per year and an annual per fund fee
of $4,000 for each closed-end fund or other actively managed fund and $1,000 for
each index fund in the First Trust Fund Complex. The fixed annual retainer is
allocated pro rata among each fund in the First Trust Fund Complex based on net
assets.

Additionally, the Lead Independent Trustee is paid $15,000 annually, the
Chairman of the Audit Committee is paid $10,000 annually, and each of the
Chairmen of the Nominating and Governance Committee and the Valuation Committee
is paid $5,000 annually to serve in such capacities, with such compensation
allocated pro rata among each fund in the First Trust Fund Complex based on net
assets. Trustees are reimbursed for travel and out-of-pocket expenses in
connection with all meetings. The Lead Independent Trustee and each Committee
chairman will serve two-year terms until December 31, 2013 before rotating to
serve as chairman of another committee or as Lead Independent Trustee. After
December 31, 2013, the Lead Independent Trustee and Committee chairmen will
rotate every three years. The officers and "Interested" Trustee receive no
compensation from the funds for serving in such capacities.

4. PURCHASES AND SALES OF SECURITIES

Cost of purchases and proceeds from sales of investments, excluding short-term
investments, for the year ended December 31, 2012, were $58,891,275 and
$63,416,367, respectively.

5. BORROWINGS

The Fund has entered into a credit agreement with The Bank of Nova Scotia, which
provides for a revolving credit facility to be used as leverage for the Fund.
The revolving credit facility provides for a secured line of credit for the Fund
where Fund assets are pledged against advances made to the Fund. Under the
requirements of the 1940 Act, the Fund, immediately after any such borrowings,
must have an "asset coverage" of at least 300% (33-1/3% of the Fund's total
assets after borrowings). The total commitment under the facility is up to
$20,000,000. As of December 31, 2012, the Fund had one loan outstanding under
the revolving credit facility totaling $5,800,000. For the year ended December
31, 2012, the average amount outstanding was $5,800,000. The high and low annual
interest rates during the year ended December 31, 2012 were 1.24% and 1.10%,
respectively, and the weighted average interest rate was 1.19%. The interest
rate at December 31, 2012 was 1.16%. The Fund pays a commitment fee of 0.15% (or
0.30% if loan balance drops below 40% of total commitment) per year, which is
included in "Interest and fees on loan" on the Statement of Operations. The
revolving credit facility expires November 8, 2013.

6. INDEMNIFICATION

The Fund has a variety of indemnification obligations under contracts with its
service providers. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.

7. RISK CONSIDERATIONS

Risks are inherent in all investing. The following summarizes some, but not all,
of the risks that should be considered for the Fund. For additional information
about the risks associated with investing in the Fund, please see the Fund's
prospectus and statement of additional information, as well as other Fund
regulatory filings.

INVESTMENT AND MARKET RISK: An investment in the Fund's Common Shares is subject
to investment risk, including the possible loss of the entire principal
invested. An investment in Common Shares represents an indirect investment in
the securities owned by the Fund, which include a global bond and equity
portfolio of investment grade and below-investment grade government and
corporate debt securities. The value of these securities, like other market
investments, may move up or down, sometimes rapidly and unpredictably. Common
Shares at any point in time may be worth less than the original investment, even
after taking into account the reinvestment of Fund dividends and distributions.
Security prices can fluctuate for several reasons including the general
condition of the bond market, or

Page 26

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
DECEMBER 31, 2012

when political or economic events affecting the issuers occur. When the Advisor
or Sub-Advisor determines that it is temporarily unable to follow the Fund's
investment strategy or that it is impractical to do so (such as when a market
disruption event has occurred and trading in the securities is extremely limited
or absent), the Fund may take temporary defensive positions.

NON-INVESTMENT GRADE SECURITIES RISK: The Fund may invest up to 80% of its
Managed Assets in non-investment grade securities. Non-investment grade
securities are rated below "Baa3" by Moody's Investors Service, Inc., below
"BBB-" by Standard & Poor's, or comparably rated by another nationally
recognized statistical rating organization or, if unrated, determined by the
Sub-Advisor to be of comparable credit quality. Non-investment grade debt
instruments are commonly referred to as "high-yield" or "junk" bonds and are
considered speculative with respect to the issuer's capacity to pay interest and
repay principal and are susceptible to default or decline in market value due to
adverse economic and business developments. The market values for high-yield
securities tend to be very volatile, and these securities are less liquid than
investment grade debt securities.

EMERGING MARKETS RISK: Under normal market conditions, the Fund will invest at
least 80% of its Managed Assets in equity or fixed-income securities of issuers
located in countries considered to be emerging markets. Investments in such
securities are considered speculative. In addition to the general risks of
investing in non-U.S. securities, heightened risks of investing in emerging
markets securities include: smaller market capitalization of securities markets,
which may suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; and possible restrictions on repatriation of
investment income and capital. Furthermore, foreign investors may be required to
register the proceeds of sales, and future economic or political crises could
lead to price controls, forced mergers, expropriation or confiscatory taxation,
seizure, nationalization or creation of government monopolies. The currencies of
emerging market countries may experience significant declines against the U.S.
dollar, and devaluation may occur subsequent to investments in these currencies
by the Fund. Inflation and rapid fluctuations in inflation rates have had, and
may continue to have, negative effects on the economies and securities markets
of certain emerging market countries.

FIXED-INCOME SECURITIES RISK: Debt securities, including high-yield securities,
are subject to certain risks, including: (i) issuer risk, which is the risk that
the value of fixed-income securities may decline for a number of reasons which
directly relate to the issuer, such as management performance, financial
leverage and reduced demand for the issuer's goods and services or; (ii)
reinvestment risk, which is the risk that income from the Fund's portfolio will
decline if the Fund invests the proceeds from matured, traded or called bonds at
market interest rates that are below the Fund portfolio's current earnings rate;
(iii) prepayment risk, which is the risk that during periods of declining
interest rates, the issuer of a security may exercise its option to prepay
principal earlier than scheduled, forcing the reinvestment in lower yielding
securities; and (iv) credit risk, which is the risk that a security in the
Fund's portfolio will decline in price or the issuer fails to make interest
payments when due because the issuer of the security experiences a decline in
its financial status.

INTEREST RATE RISK: The Fund's portfolio is also subject to interest rate risk.
Interest rate risk is the risk that fixed-income securities will decline in
value because of changes in market interest rates. Investments in debt
securities with long-term maturities may experience significant price declines
if long-term interest rates increase.

NON-U.S. ISSUER RISK: Investments in the securities and instruments of non-U.S.
issuers involve certain considerations and risks not ordinarily associated with
investments in securities and instruments of U.S. issuers. Non-U.S. companies
are not generally subject to uniform accounting, auditing and financial
standards and requirements comparable to those applicable to U.S. companies.
Non-U.S. securities exchanges, brokers and listed companies may be subject to
less government supervision and regulation than exists in the United States.
Dividend and interest income may be subject to withholding and other non-U.S.
taxes, which may adversely affect the net return on such investments. There may
be difficulty in obtaining or enforcing a court judgment abroad.

CURRENCY RISK: The value of securities denominated or quoted in foreign
currencies may be adversely affected by fluctuations in the relative currency
exchange rates and by exchange control regulations. The Fund's investment
performance may be negatively affected by a devaluation of a currency in which
the Fund's investments are denominated or quoted. Further, the Fund's investment
performance may be significantly affected, either positively or negatively, by
currency exchange rates because the U.S. dollar value of securities denominated
or quoted in another currency will increase or decrease in response to changes
in the value of such currency in relation to the U.S. dollar. While certain of
the Fund's non-U.S. dollar-denominated securities may be hedged into U.S.
dollars, hedging may not alleviate all currency risks.

LEVERAGE RISK: The use of leverage results in additional risks and can magnify
the effect of any losses. The funds borrowed pursuant to a leverage borrowing
program constitute a substantial lien and burden by reason of their prior claim
against the income of the Fund and against the net assets of the Fund in
liquidation. The rights of lenders to receive payments of interest on and
repayments of principal on any borrowings made by the Fund under a leverage
borrowing program are senior to the rights of holders of Common Shares with
respect to payment of dividends or upon liquidation. If the Fund is not in
compliance with certain credit facility provisions, the Fund may not be
permitted to declare dividends or other distributions, including dividends and
distributions with respect to Common Shares or purchase Common Shares.

Page 27

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
DECEMBER 31, 2012

GOVERNMENT SECURITIES RISK: The ability of a government issuer, especially in an
emerging market country, to make timely and complete payments on its debt
obligations will be strongly influenced by the government issuer's balance of
payments, including export performance, its access to international credits and
investments, fluctuations of interest rates and the extent of its foreign
reserves. A country whose exports are concentrated in a few commodities or whose
economy depends on certain strategic imports could be vulnerable to fluctuations
in international prices of these commodities or imports. To the extent that a
country receives payment for its exports in currencies other than U.S. dollars,
its ability to make debt payments denominated in U.S. dollars could be adversely
affected. If a government issuer cannot generate sufficient earnings from
foreign trade to service its external debt, it may need to depend on continuing
loans and aid from foreign governments, commercial banks, and multinational
organizations. There are no bankruptcy proceedings similar to those in the
United States by which defaulted government debt may be collected. Additional
factors that may influence a government issuer's ability or willingness to
service debt include, but are not limited to, a country's cash flow situation,
the availability of sufficient foreign exchange on the date a payment is due,
the relative size of its debt service burden to the economy as a whole, and the
issuer's policy towards the International Monetary Fund, the International Bank
for Reconstruction and Development and other international agencies to which a
government debtor may be subject.

NON-U.S. GOVERNMENT SECURITIES RISK: Economies and social and political climates
in individual countries may differ unfavorably from the United States. Non-U.S.
economies may have less favorable rates of growth of gross domestic product,
rates of inflation, currency valuation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many countries have
experienced extremely high rates of inflation for many years. Unanticipated
economic, political and social developments may also affect the values of the
Fund's investments and limit the availability of additional investments in such
countries. Furthermore, such developments may significantly disrupt the
financial markets or interfere with the Fund's ability to enforce its rights
against non-U.S. government issuers.

Investments in debt instruments of issuers located in emerging market countries
are considered speculative. Heightened risks of investing in emerging markets
government debt include: smaller market capitalization of securities markets,
which may suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; and possible repatriation of investment
income and capital. Furthermore, foreign investors may be required to register
the proceeds of sales and future economic or political crises could lead to
price controls, forced mergers, expropriation or confiscatory taxation, seizure,
nationalization or creation of government monopolies. The currencies of emerging
market countries may experience significant declines against the U.S. dollar,
and devaluation may occur subsequent to investments in these currencies by the
Fund. Inflation and rapid fluctuations in inflation rates have had, and may
continue to have, negative effects on the economies and securities markets of
certain emerging market countries.

8. SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events to the Fund through
the date the financial statements were issued, and has determined that there
were no subsequent events requiring recognition or disclosure in the financial
statements that have not already been disclosed.

Page 28

--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FIRST TRUST/ABERDEEN EMERGING
OPPORTUNITY FUND:

We have audited the accompanying statement of assets and liabilities of First
Trust/Aberdeen Emerging Opportunity Fund ("the Fund"), including the portfolio
of investments, as of December 31, 2012, and the related statements of
operations and cash flows for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of December 31, 2012 by correspondence with the Fund's
custodian. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
First Trust/Aberdeen Emerging Opportunity Fund as of December 31, 2012, the
results of its operations and its cash flows for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with accounting principles generally accepted in the United
States of America.

/s/ Deloitte & Touche LLP

Chicago, Illinois
February 25, 2013

Page 29

--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
DECEMBER 31, 2012 (UNAUDITED)

DIVIDEND REINVESTMENT PLAN

If your Common Shares are registered directly with the Fund or if you hold your
Common Shares with a brokerage firm that participates in the Fund's Dividend
Reinvestment Plan (the "Plan"), unless you elect, by written notice to the Fund,
to receive cash distributions, all dividends, including any capital gain
distributions, on your Common Shares will be automatically reinvested by BNY
Mellon Investment Servicing (US) Inc. (the "Plan Agent"), in additional Common
Shares under the Plan. If you elect to receive cash distributions, you will
receive all distributions in cash paid by check mailed directly to you by the
Plan Agent, as the dividend paying agent.

If you decide to participate in the Plan, the number of Common Shares you will
receive will be determined as follows:

(1) If Common Shares are trading at or above net asset value ("NAV") at
the time of valuation, the Fund will issue new shares at a price
equal to the greater of (i) NAV per Common Share on that date or
(ii) 95% of the market price on that date.

(2) If Common Shares are trading below NAV at the time of valuation, the
Plan Agent will receive the dividend or distribution in cash and
will purchase Common Shares in the open market, on the NYSE or
elsewhere, for the participants' accounts. It is possible that the
market price for the Common Shares may increase before the Plan
Agent has completed its purchases. Therefore, the average purchase
price per share paid by the Plan Agent may exceed the market price
at the time of valuation, resulting in the purchase of fewer shares
than if the dividend or distribution had been paid in Common Shares
issued by the Fund. The Plan Agent will use all dividends and
distributions received in cash to purchase Common Shares in the open
market within 30 days of the valuation date except where temporary
curtailment or suspension of purchases is necessary to comply with
federal securities laws. Interest will not be paid on any uninvested
cash payments.

You may elect to opt-out of or withdraw from the Plan at any time by giving
written notice to the Plan Agent, or by telephone at (866) 340-1104, in
accordance with such reasonable requirements as the Plan Agent and the Fund may
agree upon. If you withdraw or the Plan is terminated, you will receive a
certificate for each whole share in your account under the Plan, and you will
receive a cash payment for any fraction of a share in your account. If you wish,
the Plan Agent will sell your shares and send you the proceeds, minus brokerage
commissions.

The Plan Agent maintains all Common Shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. Common Shares in your account will be held by the
Plan Agent in non-certificated form. The Plan Agent will forward to each
participant any proxy solicitation material and will vote any shares so held
only in accordance with proxies returned to the Fund. Any proxy you receive will
include all Common Shares you have received under the Plan.

There is no brokerage charge for reinvestment of your dividends or distributions
in Common Shares. However, all participants will pay a pro rata share of
brokerage commissions incurred by the Plan Agent when it makes open market
purchases.

Automatically reinvesting dividends and distributions does not mean that you do
not have to pay income taxes due upon receiving dividends and distributions.
Capital gains and income are realized although cash is not received by you.
Consult your financial advisor for more information.

If you hold your Common Shares with a brokerage firm that does not participate
in the Plan, you will not be able to participate in the Plan and any dividend
reinvestment may be effected on different terms than those described above.

The Fund reserves the right to amend or terminate the Plan if in the judgment of
the Board of Trustees the change is warranted. There is no direct service charge
to participants in the Plan; however, the Fund reserves the right to amend the
Plan to include a service charge payable by the participants. Additional
information about the Plan may be obtained by writing BNY Mellon Investment
Servicing (US) Inc., 301 Bellevue Parkway, Wilmington, Delaware 19809.

PROXY VOTING POLICIES AND PROCEDURES

A description of the policies and procedures that the Fund uses to determine how
to vote proxies and information on how the Fund voted proxies relating to
portfolio investments during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
the Fund's website located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's ("SEC") website located at
http://www.sec.gov.

Page 30

--------------------------------------------------------------------------------
ADDITIONAL INFORMATION - (CONTINUED)
--------------------------------------------------------------------------------

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
DECEMBER 31, 2012 (UNAUDITED)

PORTFOLIO HOLDINGS

The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available (1) by calling (800) 988-5891; (2) on the Fund's website located
at http://www.ftportfolios.com; (3) on the SEC's website at http://www.sec.gov;
and (4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling (800) SEC-0330.

TAX INFORMATION

The Fund hereby designates as qualified dividend income 21.21% of its ordinary
income distributions (including short-term capital gains, if applicable) for the
year ended December 31, 2012. None of the ordinary income (including short-term
capital gain, if applicable) distributions made by the Fund during the year
ended December 31, 2012, qualify for corporate dividends received deduction
available to corporate shareholders.

The Fund meets the requirements of Section 853 of the Code, and elects to pass
through to its shareholders credit for foreign taxes paid. The net amount of
income received by the Fund from sources within foreign countries and
possessions of the United States is $5,944,665 (representing a total of $1.12
per share). The total amount of taxes paid to such countries is $141,978
(representing a total of $0.03 per share).

For the year ended December 31, 2012, the amount of long-term capital gain
distributions designated by the Fund was $2,573,320 which is taxable at a
maximum rate of 15% for federal income tax purposes.

NYSE CERTIFICATION INFORMATION

In accordance with Section 303A-12 of the New York Stock Exchange ("NYSE")
Listed Company Manual, the Fund's President has certified to the NYSE that, as
of May 8, 2012, he was not aware of any violation by the Fund of NYSE corporate
governance listing standards. In addition, the Fund's reports to the SEC on
Forms N-CSR, N-CSRS and N-Q contain certifications by the Fund's principal
executive officer and principal financial officer that relate to the Fund's
public disclosure in such reports and are required by Rule 30a-2 under the 1940
Act.

SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

The Joint Annual Meeting of Shareholders of the Common Shares of First Trust
Energy Infrastructure Fund, Macquarie/First Trust Global
Infrastructure/Utilities Dividend & Income Fund, First Trust Energy Income and
Growth Fund, First Trust Enhanced Equity Income Fund, First Trust/Aberdeen
Global Opportunity Income Fund, First Trust Mortgage Income Fund, First Trust
Strategic High Income Fund II, First Trust/Aberdeen Emerging Opportunity Fund,
First Trust Specialty Finance and Financial Opportunities Fund and First Trust
Active Dividend Income Fund was held on April 18, 2012 (the "Annual Meeting").
At the Annual Meeting, Richard E. Erickson and Thomas R. Kadlec were elected by
the Common Shareholders of the Fund as Class II Trustees for a three-year term
expiring at the Fund's annual meeting of shareholders in 2015. The number of
votes cast in favor of Mr. Erickson was 5,037,020, the number of votes against
was 82,820 and the number of abstentions was 207,945. The number of votes cast
in favor of Mr. Kadlec was 5,036,548, the number of votes against was 83,292 and
the number of abstentions was 207,945. James A. Bowen, Niel B. Nielson and
Robert F. Keith are the other current and continuing Trustees.

Page 31

--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS
--------------------------------------------------------------------------------

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
DECEMBER 31, 2012 (UNAUDITED)

NUMBER OF
PORTFOLIOS IN
THE FIRST TRUST OTHER
NAME, ADDRESS, TERM OF OFFICE FUND COMPLEX TRUSTEESHIPS OR
DATE OF BIRTH AND AND LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY DIRECTORSHIPS
POSITION WITH THE FUND SERVICE (2) DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE

------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
------------------------------------------------------------------------------------------------------------------------------------

Richard E. Erickson, Trustee o Three-Year Term Physician; President, Wheaton Orthopedics; 98 None
c/o First Trust Advisors L.P. Co-Owner and Co-Director (January 1996
120 East Liberty Drive, o Since Fund to May 2007), Sports Med Center for
Suite 400 Inception Fitness; Limited Partner, Gundersen Real
Wheaton, IL 60187 Estate Limited Partnership; Member,
D.O.B.: 04/51 Sportsmed LLC

Thomas R. Kadlec, Trustee o Three-Year Term President (March 2010 to Present), Senior 98 Director of ADM
c/o First Trust Advisors L.P. Vice President and Chief Financial Officer Investor Services,
120 East Liberty Drive, o Since Fund (May 2007 to March 2010), Vice President Inc. and ADM
Suite 400 Inception and Chief Financial Officer (1990 to May Investor Services
Wheaton, IL 60187 2007), ADM Investor Services, Inc. (Futures International
D.O.B.: 11/57 Commission Merchant)

Robert F. Keith, Trustee o Three-Year Term President (2003 to Present), Hibs 98 Director of
c/o First Trust Advisors L.P. Enterprises (Financial and Management Trust Company
120 East Liberty Drive, o Since Fund Consulting) of Illinois
Suite 400 Inception
Wheaton, IL 60187
D.O.B.: 11/56

Niel B. Nielson, Trustee o Three-Year Term President and Chief Executive Officer (June 98 Director of
c/o First Trust Advisors L.P. 2012 to Present), Dew Learning LLC Covenant
120 East Liberty Drive, o Since Fund (Educational Products and Services); President Transport Inc.
Suite 400 Inception (June 2002 to June 2012), Covenant College
Wheaton, IL 60187
D.O.B.: 03/54

------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------

James A. Bowen(1), Trustee and o Three-Year Term Chief Executive Officer (December 2010 98 None
Chairman of the Board to Present), President (until December
120 East Liberty Drive, o Since Fund 2010), First Trust Advisors L.P. and First
Suite 400 Inception Trust Portfolios L.P.; Chairman of the
Wheaton, IL 60187 Board of Directors, BondWave LLC
D.O.B.: 09/55 (Software Development Company/
Investment Advisor) and Stonebridge
Advisors LLC (Investment Advisor)

(1) Mr. Bowen is deemed an "interested person" of the Fund due to his position
as Chief Executive Officer of First Trust Advisors L.P., investment
advisor of the Fund.

(2) Currently, Robert F. Keith, as a Class I Trustee, is serving as a trustee
until the Fund's 2014 annual meeting of shareholders. Richard E. Erickson
and Thomas R. Kadlec, as Class II Trustees, are serving as trustees until
the Fund's 2015 annual meeting of shareholders. James A. Bowen and Niel B.
Nielson, as Class III Trustees, are serving as trustees until the Fund's
2013 annual meeting of shareholders.

Page 32

--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS - (CONTINUED)
--------------------------------------------------------------------------------

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
DECEMBER 31, 2012 (UNAUDITED)

NAME, ADDRESS POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS

------------------------------------------------------------------------------------------------------------------------------------
OFFICERS(3)
------------------------------------------------------------------------------------------------------------------------------------

Mark R. Bradley President and Chief o Indefinite Term Chief Operating Officer (December 2010 to Present)
120 E. Liberty Drive, Executive Officer o President and Chief and Chief Financial Officer, First Trust Advisors
Suite 400 Executive Officer L.P. and First Trust Portfolios L.P.; Chief Financial
Wheaton, IL 60187 Since January 2012 Officer, BondWave LLC (Software Development
D.O.B.: 11/57 o Treasurer, Chief Company/Investment Advisor) and Stonebridge
Financial Officer and Advisors LLC (Investment Advisor)
Chief Accounting Officer
from Fund Inception to
January 2012

James M. Dykas Treasurer, Chief Financial o Indefinite Term Controller (January 2011 to Present), Senior Vice
120 E. Liberty Drive, Officer and Chief o Treasurer, Chief President (April 2007 to Present), Vice President
Suite 400 Accounting Officer Financial Officer and (January 2005 to April 2007), First Trust Advisors
Wheaton, IL 60187 Chief Accounting Officer L.P. and First Trust Portfolios L.P.
D.O.B.: 01/66 Since January 2012
o Assistant Treasurer from
December 2005 to January
2012

W. Scott Jardine Secretary and Chief o Indefinite Term General Counsel, First Trust Advisors L.P., First
120 E. Liberty Drive, Legal Officer Trust Portfolios L.P. and BondWave LLC
Suite 400 o Since Fund Inception (Software Development Company/Investment
Wheaton, IL 60187 Advisor); Secretary of Stonebridge Advisors LLC
D.O.B.: 05/60 (Investment Advisor)

Daniel J. Lindquist Vice President o Indefinite Term Senior Vice President (September 2005 to
120 E. Liberty Drive, Present), First Trust Advisors L.P. and First Trust
Suite 400 o Since Fund Inception Portfolios L.P.
Wheaton, IL 60187
D.O.B.: 02/70

Kristi A. Maher Assistant Secretary and o Indefinite Term Deputy General Counsel (May 2007 to Present),
120 E. Liberty Drive, Chief Compliance Officer o Assistant Secretary First Trust Advisors L.P. and First Trust
Suite 400 since Fund Inception Portfolios L.P.
Wheaton, IL 60187 o Chief Compliance Officer
D.O.B.: 12/66 since January 2011

(3) Officers of the Fund have an indefinite term. The term "officer" means the
president, vice president, secretary, treasurer, controller or any other
officer who performs a policy making function.

Page 33

--------------------------------------------------------------------------------
PRIVACY POLICY
--------------------------------------------------------------------------------

FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
DECEMBER 31, 2012

First Trust values our relationship with you and considers your privacy an
important priority in maintaining that relationship. We are committed to
protecting the security and confidentiality of your personal information.

SOURCES OF INFORMATION

We collect nonpublic personal information about you from the following sources:

o Information we receive from you and your broker-dealer, investment
advisor or financial representative through interviews,
applications, agreements or other forms;

o Information about your transactions with us, our affiliates or
others;

o Information we receive from your inquiries by mail, e-mail or
telephone; and

o Information we collect on our website through the use of "cookies".
For example, we may identify the pages on our website that your
browser requests or visits.

INFORMATION COLLECTED

The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.

DISCLOSURE OF INFORMATION

We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. In addition to using
this information to verify your identity (as required under law), the permitted
uses may also include the disclosure of such information to unaffiliated
companies for the following reasons:

o In order to provide you with products and services and to effect
transactions that you request or authorize, we may disclose your
personal information as described above to unaffiliated financial
service providers and other companies that perform administrative or
other services on our behalf, such as transfer agents, custodians
and trustees, or that assist us in the distribution of investor
materials such as trustees, banks, financial representatives, proxy
services, solicitors and printers.

o We may release information we have about you if you direct us to do
so, if we are compelled by law to do so, or in other legally limited
circumstances (for example to protect your account from fraud).

In addition, in order to alert you to our other financial products and services,
we may share your personal information with affiliates of the Fund.

PRIVACY ONLINE

We allow third-party companies, including AddThis (a social media sharing
service), to collect certain anonymous information when you visit our website.
These companies may use non-personally identifiable information during your
visits to this and other websites in order to provide advertisements about goods
and services likely to be of greater interest to you. These companies typically
use a cookie, third party web beacon or pixel tags, to collect this information.
To learn more about this behavioral advertising practice, you can visit
www.networkadvertising.org.

CONFIDENTIALITY AND SECURITY

With regard to our internal security procedures, First Trust restricts access to
your nonpublic personal information to those First Trust employees who need to
know that information to provide products or services to you. We maintain
physical, electronic and procedural safeguards to protect your nonpublic
personal information.

POLICY UPDATES AND INQUIRIES

As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time, however, if we do change
it, we will tell you promptly. For questions about our policy, or for additional
copies of this notice, please go to www.ftportfolios.com, or contact us at
1-800-621-1675 (First Trust Portfolios) or 1-800-222-6822 (First Trust
Advisors).

Page 34

This Page Left Blank Intentionally.

FIRST TRUST

INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187

INVESTMENT SUB-ADVISOR
Aberdeen Asset Management Inc.
1735 Market Street, 32nd Floor
Philadelphia, PA 19103

ADMINISTRATOR,
FUND ACCOUNTANT &
TRANSFER AGENT
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809

CUSTODIAN
The Bank of New York Mellon
101 Barclay Street, 20th Floor
New York, NY 10286

INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606

LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603

[BLANK BACK COVER]

ITEM 2. CODE OF ETHICS.

(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by
the registrant or a third party.

(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, and
that relates to any element of the code of ethics description.

(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, that
relates to one or more of the items set forth in paragraph (b) of
this item's instructions.

(e) Not applicable.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

As of the end of the period covered by the report, the registrant's board of
trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified
to serve as audit committee financial experts serving on its audit committee and
that each of them is "independent," as defined by Item 3 of Form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a) Audit Fees (Registrant) -- The aggregate fees billed for each of the
last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements were $49,000 for 2011 and
$53,000 for 2012.

(b) Audit-Related Fees (Registrant) -- The aggregate fees billed in each
of the last two fiscal years, for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under paragraph
(a) of this Item were $0 for 2011 and $0 for 2012.

Audit-Related Fees (Investment Adviser) -- The aggregate fees billed in
each of the last two fiscal years of the registrant for assurance and related
services by the principal accountant that are reasonably related to the
performance of the audit of the registrant's financial statements and are not
reported under paragraph (a) of this Item were $0 for 2011 and $0 for 2012.

(c) Tax Fees (Registrant) -- The aggregate fees billed in each of the last
two fiscal years for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning to the registrant were $6,570
for 2011 and $4090 for 2012. These fees were for tax preparation.

Tax Fees (Investment Adviser) -- The aggregate fees billed in each of the
last two fiscal years of the registrant for professional services rendered by
the principal accountant for tax compliance, tax advice, and tax planning to the
registrant's adviser were $0 for 2011 and $0 for 2012.

(d) All Other Fees (Registrant) -- The aggregate fees billed in each of
the last two fiscal years for products and services provided by the principal
accountant to the registrant, other than the services reported in paragraphs (a)
through (c) of this Item were $0 for 2011 and $0 for 2012.

All Other Fees (Investment Adviser) -- The aggregate fees billed in each
of the last two fiscal years for products and services provided by the principal
accountant to the registrant's investment adviser, other than services reported
in paragraphs (a) through (c) of this Item were $0 for 2011 and $0 for 2012.

(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval
Policy, the Audit Committee (the "Committee") is responsible for the
pre-approval of all audit services and permitted non-audit services (including
the fees and terms thereof) to be performed for the registrant by its
independent auditors. The Chairman of the Committee is authorized to give such
pre-approvals on behalf of the Committee up to $25,000 and report any such
pre-approval to the full Committee.

The Committee is also responsible for the pre-approval of the independent
auditor's engagements for non-audit services with the registrant's adviser (not
including a sub-adviser whose role is primarily portfolio management and is
sub-contracted or overseen by another investment adviser) and any entity
controlling, controlled by or under common control with the investment adviser
that provides ongoing services to the registrant, if the engagement relates
directly to the operations and financial reporting of the registrant, subject to
the de minimis exceptions for non-audit services described in Rule 2-01 of
Regulation S-X. If the independent auditor has provided non-audit services to
the registrant's adviser (other than any sub-adviser whose role is primarily
portfolio management and is sub-contracted with or overseen by another
investment adviser) and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to its policies, the Committee
will consider whether the provision of such non-audit services is compatible
with the auditor's independence.

(e)(2) The percentage of services described in each of paragraphs (b) through
(d) for the registrant and the registrant's investment adviser of this
Item that were approved by the audit committee pursuant to the
pre-approval exceptions included in paragraph (c)(7)(i)(c) or paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X are as follows:

(b) 0%

(d) 0%

(f) The percentage of hours expended on the principal accountant's engagement
to audit the registrant's financial statements for the most recent fiscal
year that were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees was less than fifty
percent.

(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under
common control with the adviser that provides ongoing services to the
Registrant for 2011 were $6,570 and $6,200 for the Registrant and the
Registrant's investment adviser, respectively and for 2012 were $4,090
and $4,120 for the Registrant and the Registrant's investment adviser,
respectively ..

(h) The Registrant's audit committee of its Board of Trustees determined that
the provision of non-audit services that were rendered to the
Registrant's investment adviser (not including any sub-adviser whose role
is primarily portfolio management and is subcontracted with or overseen
by another investment adviser), and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the Registrant that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

(a) The registrant has a separately designated audit committee consisting of all
the independent trustees of the Registrant. The members of the audit committee
are: Thomas R. Kadlec, Niel B. Nielson, Richard E. Erickson and Robert F. Keith.

ITEM 6. INVESTMENTS.

(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.

(b) Not applicable.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

The Proxy Voting Policies are attached herewith.

ABERDEEN U.S. REGISTERED ADVISERS
PROXY VOTING POLICIES AND PROCEDURES
AS OF FEBRUARY 8, 2010

The following are proxy voting policies and procedures ("Policies and
Procedures") adopted by affiliated investment advisers registered with the U.S.
Securities and Exchange Commission ("SEC") under the Investment Advisers Act of
1940, as amended ("Advisers Act"), that are subsidiaries of Aberdeen Asset
Management PLC ("AAM"); including, specifically, Aberdeen Asset Management Inc.,
a Delaware Corporation, ("Aberdeen US"), Aberdeen Asset Management Asia Limited,
a Singapore Corporation ("Aberdeen Singapore"), Aberdeen Asset Management
Limited, an Australian Corporation ("Aberdeen AU"), and Aberdeen Asset
Management Investment Services Limited, a UK Corporation ("AAMISL"),
(collectively referred to herein as "Aberdeen Advisers" and each an "Aberdeen
Adviser") (collectively with AAM, "Aberdeen"). These Policies and Procedures
address proxy voting considerations under U.S. law and regulation and under
Canadian securities laws. These Policies and Procedures do not address the laws
or requirements of other jurisdictions.

Each of the Aberdeen Advisers provides advisory resources to certain U.S.
clients, including substantive advice on voting proxies for certain equity
securities. These Policies and Procedures are adopted to ensure compliance by
the Aberdeen Advisers with Rule 206(4)-6 under the Advisers Act and other
applicable fiduciary obligations under rules and regulations of the SEC and
interpretations of its staff with respect to proxies for voting securities held
by client portfolios.

Clients may consist of investment companies registered under the Investment
Company Act of 1940, as amended ("1940 Act") ("Funds" and each a "Fund"), and
other U.S. residents as well as non-U.S. registered funds or clients. Each
Aberdeen Adviser follows these Policies and Procedures for each of its
respective U.S. clients as required under the Advisers Act and other applicable
law, unless expressly directed by a client in writing to refrain from voting
that client IS proxies or to vote in accordance with the client's proxy voting
policies and procedures. Aberdeen Advisers who advise or subadvise the Funds
follow both these Policies and Procedures and the proxy voting policies and
procedures adopted by the Funds and their respective Boards of Directors or
Trustees. Aberdeen Advisers located outside the U.S. may provide proxy voting
services to their non-U.S. based clients in accordance with the jurisdiction in
which the client is located. Aberdeen US, Aberdeen Singapore and Aberdeen AU
will provide proxy voting services to Canadian investment funds in accordance
with National Instrument 81-106 - Investment Fund Continuous Disclosure.

I. DEFINITIONS

A. "Best interest of clients". Clients' best economic interests over the long
term that is, the common interest that all clients share in seeing the value of
a common investment increase over time. Clients may have differing political or
social interests, but their best economic interest is generally uniform.

B. "Material conflict of interest". Circumstances when an Aberdeen Adviser or
any member of senior management, portfolio manager or portfolio analyst
knowingly does business with a particular proxy issuer or closely affiliated
entity, which may appear to create a material conflict between the interests of
the Aberdeen Adviser and the interests of its clients in how proxies of that
issuer are voted. A material conflict of interest might also exist in unusual
circumstances when Aberdeen has actual knowledge of a material business
arrangement between a particular proxy issuer or closely affiliated entity and
an affiliate of an Aberdeen Adviser.

II. GENERAL VOTING POLICIES

A. Client's Best Interest. These Policies and Procedures are designed and
implemented in a way that is reasonably expected to ensure that proxies are
voted in the best interests of clients. Proxies are voted with the aim of
furthering the best economic interests of clients, promoting high levels of
corporate governance and adequate disclosure of company policies, activities and
returns, including fair and equal treatment of stockholders.

B. Shareholder Activism. Aberdeen Advisers seek to develop relationships with
the management of portfolio companies to encourage transparency and improvements
in the treatment of employees, owners and stakeholders. Thus, Aberdeen Advisers
may engage in dialogue with the management of portfolio companies with respect
to pending proxy voting issues.

C. Case-by-Case Basis. These Policies and Procedures are guidelines. Each vote
is ultimately cast on a case-by-case basis, taking into consideration the
contractual obligations under the advisory agreement or comparable document, and
all other relevant facts and circumstances at the time of the vote. Aberdeen
Advisers may cast proxy votes in favor of management proposals or seek to change
the views of management, considering specific issues as they arise on their
merits. Aberdeen Advisers may also join with other investment managers in
seeking to submit a shareholder proposal to a company or to oppose a proposal
submitted by the company. Such action may be based on fundamental, social,
environmental or human rights grounds.

D. Individualized. These Policies and Procedures are tailored to suit Aberdeen's
advisory business and the types of securities portfolios Aberdeen Advisers
manage. To the extent that clients (e.g., investment companies, corporations,
pension plans) have adopted their own procedures, Aberdeen Advisers may vote the
same securities differently depending upon clients' directions.

E. Material Conflicts of Interest. Material conflicts are resolved in the best
interest of clients. When a material conflict of interest between an Aberdeen
Adviser and its respective client(s) is identified, the Aberdeen Adviser will
choose among the procedures set forth in Section IV.B.2. below to resolve such
conflict.

F. Limitations. The circumstances under which Aberdeen may take a limited role
in voting proxies, include the following:

1. No Responsibility. Aberdeen Advisers will not vote proxies for client
accounts in which the client contract specifies that Aberdeen will not vote.
Under such circumstances, the clients' custodians are instructed to mail proxy
material directly to such clients or the clients' designees.

2. Limited Value. An Aberdeen Adviser may abstain from voting a client proxy if
the Aberdeen Adviser determines that the effect on shareholders' economic
interests or the value of the portfolio holding is indeterminable or
insignificant. Aberdeen Advisers may also abstain from voting the proxies of
portfolio companies held in their passively managed funds. Proxies with respect
to securities that have been sold before the date of the shareholders meeting
and are no longer held by a client generally will not be voted.

3. Unjustifiable Costs. An Aberdeen Adviser may abstain from voting a client
proxy for cost reasons (e.g., non-U.S. securities).

4. Securities Lending Arrangements. If voting securities are part of a
securities lending program, Aberdeen may be unable to vote while the securities
are on loan.

5. Share Blocking. Certain jurisdictions may impose share blocking restrictions
at various times which may prevent Aberdeen from exercising its voting
authority.

6. Special Considerations. Aberdeen's responsibilities for voting proxies are
determined generally by its obligations under each advisory contract or similar
document. If a client requests in writing that an Aberdeen Adviser vote its
proxy in a manner inconsistent with these Policies and Procedures, the Aberdeen
Adviser may follow the client's direction or may request that the client vote
the proxy directly.

G. Sources of Information. The Aberdeen Advisers may conduct research internally
and/or use the resources of an independent research consultant. The Aberdeen
Advisers may consider legislative materials, studies of corporate governance and
other proxy voting issues, and/or analyses of shareholder and management
proposals by a certain sector of companies, e.g., Fortune 500 companies.

H. Subadvisers. To the extent that an Aberdeen Adviser may rely on subadvisers,
whether affiliated or unaffiliated, to manage any client portfolio on a
discretionary basis, the Aberdeen Adviser may delegate responsibility for voting
proxies to the subadviser. However, such subadvisers will be required either to
follow these Policies and Procedures or to demonstrate that their proxy voting
policies and procedures are consistent with these Policies and Procedures or
otherwise implemented in the best interests of the Aberdeen Advisers' clients.

I. Availability of Policies and Procedures. Aberdeen Advisers will provide
clients with a copy of these Policies and Procedures, as revised from time to
time, upon request.

J. Disclosure of Vote. As disclosed in Part II of each Aberdeen Adviser's Form
ADV, a client may obtain information on how its proxies were voted by requesting
such information from its Aberdeen Adviser. Aberdeen Advisers do not generally
disclose client proxy votes to third parties, other than as required for Funds,
unless specifically requested, in writing, by the client.

III. SPECIFIC VOTING POLICIES

A. General Philosophy.

o Support existing management on votes on the financial statements of
a company and the election of the Board of Directors;

o Vote for the acceptance of the accounts unless there are grounds to
suspect that either the accounts as presented or audit procedures
used, do not present an accurate picture of company results; and

o Support routine issues such as the appointment of independent
auditors, allocation of income and the declaration of stock (scrip)
dividend proposals provided there is a cash alternative.

B. Anti-takeover Measures. Aberdeen Advisers vote on anti-takeover measures on a
case-by-case basis taking into consideration such factors as the long-term
financial performance of the target company relative to its industry
competition. Key measures of performance will include the growth rates for
sales, operating income, net income and total shareholder returns. Other factors
which will be considered include margin analysis, cash flow and debt levels.

C. Proxy Contests for Control. Aberdeen Advisers vote on proxy contests for
control on a case-bycase basis taking into consideration such factors as
long-term financial performance of the target company relative to its industry,
management's track record, background to the proxy contest, qualifications of
director nominees, evaluation of what each side is offering shareholders as well
as the likelihood that the proposed objectives and goals can be met, and stock
ownership positions.

D. Contested Elections. Aberdeen Advisers vote on contested elections on a
case-by-case basis taking into consideration such factors as the qualifications
of all director nominees. Aberdeen Advisers also consider the independence of
board and key committee members and the corporate governance practices of the
company.

E. Executive compensation proposals. Aberdeen Advisers consider such proposals
on a case-by-case basis taking into consideration such factors as executive pay
and spending perquisites, particularly in conjunction with sub-par performance
and employee layoffs.

F. Shareholder Proposals. Aberdeen Advisers consider such proposals on a
case-by-case basis. Aberdeen Advisers support those proposals which will improve
the company's corporate governance or business profile at a reasonable cost, but
may oppose proposals which result in significant cost being incurred with little
or no benefit to the company or its shareholders.

IV. PROXY VOTING PROCEDURES

This section applies to each Aberdeen Adviser except to the extent that certain
procedures are identified as applicable only to a specific Aberdeen Adviser.

A. Obtain Proxy. Registered owners of record, e.g., trustees or custodian banks,
that receive proxy materials from the issuer or its information agent, are
instructed to sign physical proxy cards in blank and forward directly to the
Global Voting Team based in Scotland ("PA-UK"). Proxies may also be delivered
electronically by custodians using proxy services such as ProxyEdge and
Institutional Shareholder Services ("ISS"). Each proxy received is matched to
the securities to be voted.

B. Material Conflicts of Interest.

1. Identify the existence of any material conflicts of interest relating to the
securities to be voted or the issue at hand. Portfolio managers and research
analysts ("Analysts") and senior management of each Aberdeen Adviser have an
affirmative duty to disclose any personal conflicts such as officer or director
positions held by them, their spouses or close relatives in the portfolio
company or attempts by the portfolio company to exert influence over such person
with respect to their vote. Conflicts based on business relationships or
dealings of affiliates of any Aberdeen Adviser will only be considered to the
extent that the Aberdeen Adviser has actual knowledge of such business
relationships.

2. When a material conflict of interest between an Aberdeen Adviser's interests
and its clients' interests appears to exist, the Aberdeen Adviser may choose
among the following options to eliminate such conflict: (1) vote in accordance
with these Policies and Procedures if it involves little or no discretion; (2)
vote as recommended by a third party service if the Aberdeen Adviser utilizes
such a service; (3) "echo vote" or "mirror vote" the proxies in the same
proportion as the votes of other proxy holders that are not Aberdeen clients;
(4) if possible, erect information barriers around the person or persons making
voting decisions sufficient to insulate the decision from the conflict; (5) if
practical, notify affected clients of the conflict of interest and seek a waiver
of the conflict; or (6) if agreed upon in writing with the client, forward the
proxies to affected clients allowing them to vote their own proxies.

C. Analysts. The proxy administration process is carried out by the PA-UK. The
PA-UK ensures that each proxy statement is directed to the appropriate Analyst.
If a third party recommendation service has been retained, the PA-UK will
forward the proxy statement to the Analyst with the recommendation highlighted.
The Analyst will determine whether to vote as recommended by the service
provider or to recommend an alternative and shall advise the PA-UK. The Analyst
may consult with the PA-UK as necessary. If the Analyst recommends voting
against the third party recommendation, he or she is responsible for documenting
the reasons for such recommendation and that no conflict of interest influenced
such recommendation. If no third party recommendation service is utilized or if
no recommendation is provided, the Analyst is responsible for documenting the
rationale for his or her vote recommendation.

D. Vote. The following describes the breakdown of responsibilities between the
PA-UK and the Corporate Governance Group ("CGG") in voting portfolio securities
and the extent to which the Aberdeen Advisers rely on third party service
providers.

The PA-UK is responsible for ensuring that votes for Aberdeen Advisers'
clients are cast in a timely fashion and in accordance with these Policies and
Procedures. In addition, the PA-UK is primarily responsible for administering
proxy votes for the US and Canadian Funds which are advised or sub-advised by
the Aberdeen Advisers.

Responsibility for considering the substantive issues relating to any vote
and for deciding how shares will be voted resides with the relevant Analyst.

In the event that a material conflict of interest is identified by an
Analyst, decisions on how to vote will be referred to the Corporate Governance
Group ("CGG"). The CGG includes the Chief Investment Officer, the head of the
Socially Responsible Research, and representatives from portfolio management
teams. The CGG meets as needed to consider material conflicts of interest or any
other items raising unique issues. If the CGG determines that there is no
material conflict of interest, the vote recommendation will be forwarded to the
PA-UK. If a material conflict of interest is identified, the CGG will follow the
conflict of interest procedures set forth in Section IV.B.2., above.

The PA-UK helps facilitate and coordinate proxy voting for U.S. clients of
the Aberdeen Advisers. The Aberdeen Advisers have engaged Proxy Edge, a third
party service provider, to cast votes electronically for certain clients and to
maintain records of such votes electronically. Aberdeen has also engaged ISS, a
third party service provider, to provide (I) notification of impending votes;
(2) research into non-routine votes, including shareholder resolutions; (3)
voting recommendations which may be viewed on-line; and (4) web-based voting. In
the absence of any material conflict of interest, the Aberdeen Advisers may
either vote in accordance with the ISS recommendation or decline to follow the
ISS recommendation based on its own view of the agenda item provided that
decisions to vote contrary to the ISS recommendation are documented as set forth
in Section IV.C., above. In the event of a material conflict of interest, the
Aberdeen Advisers will follow the procedures outlined in Section IV.B.2, above.

E. Review. PA-UK are responsible for ensuring that proxy materials are received
in a timely manner and reconciled against holdings on the record date of client
accounts over which the Aberdeen Adviser has voting authority to ensure that all
shares held on the record date, and for which a voting obligation exists, are
voted.

V. DOCUMENTATION, RECORDKEEPING AND REPORTING REQUIREMENTS

A. Documentation.

Each Adviser's Chief Compliance Officer is responsible for implementing
and updating these Policies and Procedures;

The PA-UK is responsible for:

1. Overseeing the proxy voting process;
2. Consulting with portfolio managers/analysts for the relevant portfolio
security; and
3. Maintaining manual proxy voting records, if any, and overseeing and reviewing
voting execution and recordkeeping by third party providers such as ISS and
ProxyEdge.

B. Record Keeping.

1. Each Aberdeen Adviser maintains or procures the maintenance of records of all
proxies it has voted. As permitted by Rule 204-2(c), electronic proxy statements
and the record of each vote cast by each client account will be maintained by
either ISS or Proxy Edge, depending on the client account.

A US Fund's proxy voting record must be filed with the SEC on Form N-PX.
Form N-PX must be completed and signed in the manner required, containing a
fund's proxy voting record for the most recent twelve-month period ended June
30th (beginning August) I, 2004). If an Aberdeen Adviser delegates this
reporting responsibility to a third party service provider such as ISS or Proxy
Edge, it will ensure that the third party service provider files Form N-PX
accordingly. Aberdeen Advisers shall obtain and maintain undertakings from both
ISS and Proxy Edge to provide it with copies of proxy voting records and other
documents relating to its clients' votes promptly upon request. Aberdeen
Advisers, ISS and Proxy Edge may rely on the SEC's EDGAR system to keep records
of certain proxy statements if the proxy statements are maintained by issuers on
that system (e.g., large U.S.-based issuers).

2. As required by Rule 204-2(c), such records will also include: (a) a copy of
the Policies and Procedures; (b) a copy of any document created by the Aberdeen
Adviser that was material to making a decision on how to vote proxies on behalf
of a client or that memorializes the basis for that decision; and (c) each
written client request for proxy voting records and the Aberdeen Adviser's
written response to any (written or oral) client request for such records .

3. Duration. Proxy voting books and records will be maintained in an easily
accessible place for a period of five years, the first two in an appropriate
office of the Aberdeen Adviser.

C. Reporting. The Aberdeen Advisers will initially inform clients of these
Policies and Procedures by summary disclosure in Part II of their respective
Forms ADV. Upon receipt of a client's request for more information, the Aberdeen
Advisers will provide to the client a copy of these Policies and Procedures
and/or, in accordance with the client's stated requirements, how the client's
proxies were voted during the period requested subsequent to the adoption of
these Policies and Procedures. Such periodic reports, other than those required
for Funds, will not be made available to third parties absent the express
written request of the client. However, to the extent that any Aberdeen Adviser
may serve as a subadviser to another adviser to a Client, such Aberdeen Adviser
will be deemed to be authorized to provide proxy voting records on such Client
accounts to such other adviser.

For Canadian investment funds, Aberdeen US, Aberdeen AU and Aberdeen
Singapore will assist in preparing annual proxy voting records for the period
ending June 30 of each year and will post an annual proxy voting record on each
Canadian investment fund's website no later than August 31 of each year. Upon
receipt of a client or securityholder's request, Aberdeen US, Aberdeen AU or
Aberdeen Singapore will make available a copy of these Policies and Procedures
and the Canadian investment fund's proxy voting record, without charge, to any
client or securityholder upon a request made by the client Or securityholder
after August 31.

D. Review of Policies and Procedures. These Policies and Procedures will be
subject to review on a periodic basis as deemed appropriate by the Aberdeen
Advisers. Any questions regarding the Policies and Procedures should be directed
to the Compliance Department of the respective Aberdeen Adviser.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

(A)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS

INFORMATION PROVIDED AS OF FEBRUARY 13, 2013

Aberdeen Asset Management Inc. ("Aberdeen" or the "Sub-Advisor"), a Securities
and Exchange Commission registered investment advisor, is a wholly-owned
subsidiary of Aberdeen Asset Management PLC ("Aberdeen Group") and serves as the
investment sub-advisor to the registrant. Aberdeen Group is a publicly-traded
international investment management group listed on the London Stock Exchange,
managing assets for both institutional and retail clients from offices around
the world.

Investment decisions for the registrant are made by Aberdeen using a team
approach and not by any one individual. By making team decisions, Aberdeen seeks
to ensure that the investment process results in consistent returns across all
portfolios with similar objectives. Aberdeen does not employ separate research
analysts. Instead, Aberdeen's investment managers combine the roles of analysis
with portfolio management. Each member of the team has sector and portfolio
responsibilities such as day-to-day monitoring of liquidity. The overall result
of this matrix approach is a high degree of cross-coverage, leading to a deeper
understanding of the securities in which Aberdeen invests.

DEVAN KALOO

Head of Emerging Market Equity for the Aberdeen Group

Mr. Kaloo is responsible for the London based Global Emerging Market ("GEM")
Equity Team, which manages Latin America, Europe, Middle East and Africa
equities, and also has oversight of global emerging market input from the Asia
research team based in Singapore, with which he works closely. Mr. Kaloo began
his career at Martin Currie in Edinburgh, Scotland, shortly after graduation,
working initially on the North American desk before transferring to the global
asset allocation team. Mr. Kaloo moved off the global asset allocation team in
1997, and for the next three years worked on Asian portfolios before joining
Murray Johnstone in Singapore in July 2000. Following the latter's acquisition,
he transferred to the Aberdeen Group where he was responsible for the Asian ex
Japan region as well as regional portfolios within emerging market mandates and
technology stocks.

JOANNE IRVINE
Head of GEM Equity Team ex Asia

Ms. Irvine is on the GEM Equity Team, where she specializes in the emerging
markets of Europe, Africa and the Middle East. In January 1996, Ms. Irvine
joined the Aberdeen Group in a group development role. Since May 1997, Ms.
Irvine has been part of Aberdeen's emerging markets fund management group in
London.

MARK GORDON-JAMES
Investment Manager, GEM Equity Team

Mr. Gordon-James is a senior investment manager on the Global Emerging Markets
team. He joined Aberdeen in 2004 from Merrill Lynch Investment Managers.

BRETT DIMENT
Head of Emerging Market Debt

Mr. Diment is Head of Emerging Market Debt and joined Aberdeen following the
acquisition of Deutsche Asset Management ("Deutsche") in 2005. He is responsible
for the day-to-day management of the Emerging Market Debt Team and portfolios.
Mr. Diment had been at Deutsche since 1991 as a member of the Fixed Income group
and served as Head of the Emerging Debt Team there from 1999 until its
acquisition by Aberdeen.

MAX WOLMAN
Portfolio Manager, Emerging Market Debt

Mr. Wolman is a Portfolio Manager on the Global Emerging Market Debt Team and
has been with Aberdeen since January 2001. Mr. Wolman originally specialized in
currency and domestic debt analysis but is now responsible for a wide range of
emerging debt analysis including external and corporate issuers. Mr. Wolman is a
member of the Emerging Markets Debt Investment Committee at Aberdeen and is also
responsible for the daily implementation of the investment process.

(A)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
AND POTENTIAL CONFLICTS OF INTEREST

OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER

INFORMATION PROVIDED AS OF DECEMBER 31, 2012

(assets in millions).

# of Accounts Total Assets
Managed for which for which
Total Advisory Fee is Advisory Fee
Name of Portfolio Manager or # of Accounts Total Based on is Based on
Team Member Type of Accounts Managed Assets Performance Performance
----------------

1. Devan Kaloo Registered Investment Companies: 8 $10,613.03 0 $0
Other Pooled Investment Vehicles: 24 $35,627.72 0 $0
Other Accounts: 56 $19,795.26 4 $905.47
2. Joanne Irvine Registered Investment Companies: 8 $10,613.03 0 $0
Other Pooled Investment Vehicles: 24 $35,627.72 0 $0
Other Accounts: 56 $19,795.26 4 $905.47
3. Mark Gordon-James Registered Investment Companies: 8 $10,613.03 0 $0
Other Pooled Investment Vehicles: 24 $35,627.72 0 $0
Other Accounts: 56 $19,795.26 4 $905.47
4. Brett Diment Registered Investment Companies: 9 $846.90 0 $0
Other Pooled Investment Vehicles: 88 $18,227.70 0 $0
Other Accounts: 173 $30,295.22 2 $296.26
5. Max Wolman Registered Investment Companies: 9 $846.90 0 $0
Other Pooled Investment Vehicles: 88 $18,227.70 0 $0
Other Accounts: 173 $30,295.22 2 $296.26

POTENTIAL CONFLICTS OF INTERESTS

The Sub-Adviser believes that there are no material conflicts of interest in
connection with any Portfolio Manager's management of the registrant's
investments and investments of other accounts. The Sub-Adviser has adopted the
CFA Institute Code of Ethics and Standards of Professional Conduct and adherence
by all employees is mandatory. All employees are expected to avoid any
employment, associations or business activities, including personal investments,
that interfere with their duties to Aberdeen, divide their loyalty or create or
appear to create a conflict of interest. Employees must promptly report any
situation or transaction involving an actual or potential conflict of interest
to the Compliance Officer.

With regards to allocation, the Sub-Adviser has adopted Best Execution, Soft
Dollar, Order Aggregation, and Trade Allocation Policies & Procedures designed
among other things to ensure fair treatment of all accounts.

Aberdeen aggregates orders so as to realize the benefits of larger block orders.
When executing aggregated orders, it seeks to allocate opportunities to all
clients in a consistent manner. Most portfolios are managed to a model based on
common attributes to a benchmark with low dispersion between accounts and
benchmarks. This is accomplished through the calculation of a 'median account'
with this median account becoming the model portfolio. Certain situations such
as new portfolio fundings, unique guideline restrictions and the fundability of
certain security types may cause us to adjust our weightings. However over time,
we expect to minimize the dispersion of account holdings around the model
portfolio.

New Issue Allocation
--------------------

Aberdeen Asset Management Inc. seeks to allocate new issue opportunities to all
clients in a consistent manner.

New issue opportunities are allocated according to the following factors:

1. All portfolios are ranked based on their account composition versus their
benchmark. The portfolio management team will set a minimum acceptable position
size (in terms of percent of market value) for the security.

2. Next, we define the target percentage for our Barclay's Capital Aggregate
Bond Index ("BCAB") portfolios, depending on the characteristics of the security
or the percentage of the account based on that securities' contribution to
duration and the current composition of each account.

3. For portfolios with a benchmark other than BCAB, we may adjust the target
allocation to reflect the characteristics of the non-BCAB benchmark.

4. We then determine our desired total par value and give our indication of
interest.

5. If our order is completely filled, we will allocate according to the steps
outlined above. If we are allotted a significant percentage of our order
(typically 70% or more), we will allocate pro-rata based on the initial
allocation developed from the steps outlined above. If we are not allotted a
significant percentage of our order, we will remove the non-BCAB benchmark
adjustments and allocate pro-rata based on market value of participating
accounts. If this continues to result in accounts receiving less than the
minimum target position size, the least deserving accounts (defined as those
accounts that are closest to the model account) will be eliminated from the
allocation.

Batch Transaction and Allocation Policy - Equity
------------------------------------------------

Where practicable, all client portfolio orders for the same security should be
combined or "batched" and executed as block transactions in order to facilitate
best execution as well as for the purpose of negotiating more favorable
brokerage commissions. Where a block trade is executed for a number of client
accounts, the average execution price on all of the purchases and sales that are
aggregated to this purpose should be used for all accounts.

If an entire block is not fully executed on the same day, an allocation method
should be administered that is fair and reasonable to all clients. If it is not
practicable to allocate the executed portion of the block on a pro rata basis,
allocation may be done on a random account basis (alphabetically, numerically,
or otherwise), but any procedure administered should not operate to consistently
favor or disfavor the same client accounts. If any method is to be used other
than a pro rata method, the manner in which the shares are to be allocated
should be documented, disclosed and signed off by the Chief Compliance Officer.

(A)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS

INFORMATION PROVIDED AS OF DECEMBER 31, 2012

Aberdeen Asset Management PLC's ("Aberdeen") remuneration policies are designed
to support its business strategy, as a leading international asset manager. The
objective is to attract, retain and reward talented individuals for the delivery
of sustained, superior returns for its clients and shareholders. Aberdeen
operates in a highly competitive international employment market, and aims to
maintain its strong track record of success in developing and retaining talent.

Aberdeen's policy is to recognize corporate and individual achievements each
year through an appropriate annual bonus scheme. The aggregate value of awards
in any year is dependent on the group's overall performance and profitability.
Consideration is also given to the levels of bonuses paid in the market.
Individual awards which are payable to all members of staff are non-pensionable,
are determined by a rigorous assessment of achievement against defined
objectives.

A long-term incentive plan for key staff and senior employees comprises of a
mixture of cash and deferred shares in Aberdeen PLC or select Aberdeen funds
(where applicable). Overall compensation packages are designed to be competitive
relative to the investment management industry.

Base Salary

Aberdeen's policy is to pay a fair salary commensurate with the individual's
role, responsibilities and experience, and having regard to the market rates
being offered for similar roles in the asset management sector and other
comparable companies. Any increase is to reflect inflation and is applied in a
manner consistent with other Aberdeen employees; any other increases must be
justified by reference to promotion or changes in responsibilities.

Annual Bonus

Aberdeen's policy is to recognize corporate and individual achievements each
year through an appropriate annual bonus scheme. The Remuneration Committee of
Aberdeen determines the key performance indicators that will be applied in
considering the overall size of the bonus pool. In line with practice amongst
other asset management companies, individual bonuses are not subject to an
absolute cap. However, the aggregate size of the bonus pool is dependent on the
group's overall performance and profitability. Consideration is also given to
the levels of bonuses paid in the market. Individual awards are determined by a
rigorous assessment of achievement against defined objectives, and are reviewed
and approved by the Remuneration Committee.

Aberdeen has a deferral policy which is intended to assist in the retention of
talent and to create additional alignment of executives' interests with
Aberdeen's sustained performance and, in respect of the deferral into funds,
managed by Aberdeen, to align the interest of asset managers with our clients.

Staff performance is reviewed formally at least once a year. The review process
evaluates the various aspects that the individual has contributed to the
Aberdeen, and specifically, in the case of portfolio managers, to the relevant
investment team. Discretionary bonuses are based on client service, asset growth
and the performance of the respective portfolio manager. Overall participation
in team meetings, generation of original research ideas and contribution to
presenting the team externally are also evaluated.

In the calculation of a portfolio management team's bonus, the Aberdeen takes
into consideration investment matters (which include the performance of funds,
adherence to the company investment process, and quality of company meetings) as
well as more subjective issues such as team participation and effectiveness at
client presentations. To the extent performance is factored in, such performance
is not judged against any specific benchmark and is evaluated over the period of
a year - January to December. The pre- or after-tax performance of an individual
account is not considered in the determination of a portfolio manager's
discretionary bonus; rather the review process evaluates the overall performance
of the team for all of the accounts they manage.

Portfolio manager performance on investment matters is judged over all of the
accounts the portfolio manager contributes to and is documented in the appraisal
process. A combination of the team's and individual's performance is considered
and evaluated.

Although performance is not a substantial portion of a portfolio manager's
compensation, the Aberdeen also recognizes that fund performance can often be
driven by factors outside one's control, such as (irrational) markets, and as
such pays attention to the effort by portfolio managers to ensure integrity of
our core process by sticking to disciplines and processes set, regardless of
momentum and 'hot' themes. Short-terming is thus discouraged and
trading-oriented managers will thus find it difficult to thrive in the Aberdeen
environment. Additionally, if any of the aforementioned undue risks were to be
taken by a portfolio manager, such trend would be identified via Aberdeen's
dynamic compliance monitoring system.

Long-Term Incentives

As part of an effective remuneration package, a long-term incentive plan is used
to structure the package so as to retain, motivate, and reward key staff members
with a view to improving their performance and thereby increasing the value of
the Aberdeen PLC for the benefit of shareholders. Long-term incentive plans can
be either fund or share based and typically vest over one, two and three year
periods.

(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP

INFORMATION PROVIDED AS OF DECEMBER 31, 2012

Name of Portfolio Manager Dollar ($) Range of
or Fund Shares
Team Member Beneficially Owned
------------------------- -------------------
Devan Kaloo $0
Joanne Irvine $0
Mark Gordon-James $0
Brett Diment $0
Max Wolman $0

(B) Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.

None.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.

ITEM 11. CONTROLS AND PROCEDURES.

(a) The registrant's principal executive and principal financial
officers, or persons performing similar functions, have concluded
that the registrant's disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940, as
amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of
a date within 90 days of the filing date of the report that includes
the disclosure required by this paragraph, based on their evaluation
of these controls and procedures required by Rule 30a-3(b) under the
1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b)
under the Securities Exchange Act of 1934, as amended (17 CFR
240.13a-15(b) or 240.15d-15(b)).

(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting.

ITEM 12. EXHIBITS.

(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.

(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

(a)(3) Not applicable.

(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

(registrant) First Trust/Aberdeen Emerging Opportunity Fund
----------------------------------------------------

By (Signature and Title)* /s/ Mark R. Bradley
----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)

Date February 25, 2013
---------------------

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

By (Signature and Title)* /s/ Mark R. Bradley
----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)

Date February 25, 2013
---------------------

By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, Treasurer,
Chief Financial Officer
and Chief Accounting Officer
(principal financial officer)

Date February 25, 2013
---------------------

* Print the name and title of each signing officer under his or her signature.