UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-21905
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FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
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(Exact name of registrant as specified in charter)
1001 Warrenville Road, Suite 300
LISLE, IL 60532
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(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
1001 Warrenville Road, Suite 300
LISLE, IL 60532
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(Name and address of agent for service)
Registrant's telephone number, including area code: (630) 241-4141
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Date of fiscal year end: DECEMBER 31
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Date of reporting period: SEPTEMBER 30, 2007
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Form N-Q is to be used by management investment companies, other than small
business investment companies registered on Form N-5 (ss.ss. 239.24 and 274.5 of
this chapter), to file reports with the Commission, not later than 60 days after
the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under
the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use
the information provided on Form N-Q in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-Q, and
the Commission will make this information public. A registrant is not required
to respond to the collection of information contained in Form N-Q unless the
Form displays a currently valid Office of Management and Budget ("OMB") control
number. Please direct comments concerning the accuracy of the information
collection burden estimate and any suggestions for reducing the burden to the
Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC
20549. The OMB has reviewed this collection of information under the clearance
requirements of 44 U.S.C. ss. 3507.
ITEM 1. SCHEDULE OF INVESTMENTS.
The Schedule(s) of Investments is attached herewith.
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a)
SEPTEMBER 30, 2007 (UNAUDITED)
PRINCIPAL
VALUE MARKET
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
---------------- --------------------------------------------------------- -------- ---------- --------------
BONDS AND NOTES (b) - 58.7%
ARGENTINA - 4.8%
760,000 Banco Hipotecario SA (USD) .............................. 9.75% 04/27/16 $ 754,300
3,797,421 Republic of Argentina (ARS) (c) ......................... 2.00% 02/04/18 1,801,081
4,620,000 Republic of Argentina (USD) ............................. 7.00% 04/17/17 3,715,888
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6,271,269
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BRAZIL - 5.2%
3,420,000 Brazil NTN - B Note (BRL) ............................... 6.00% 08/15/10 3,043,173
1,000,000 Isa Capital do Brasil SA (USD) .......................... 7.88% 01/30/12 1,017,500
5,530,000 Nota do Tesouro Nacional (BRL) .......................... 10.00% 01/01/17 2,770,826
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6,831,499
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CHINA - 1.0%
670,000 Parkson Retail Group Ltd. (USD) ......................... 7.88% 11/14/11 711,081
540,000 Parkson Retail Group Ltd. (USD) ......................... 7.13% 05/30/12 535,275
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1,246,356
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COLOMBIA - 4.1%
5,275,000,000 Republic of Colombia (COP) .............................. 12.00% 10/22/15 2,948,476
2,130,000 Republic of Colombia (USD) .............................. 7.38% 09/18/37 2,345,343
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5,293,819
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DOMINICAN REPUBLIC - 1.4%
820,000 Cerveceria Nacional Dominica (USD) (c) .................. 16.00% 03/27/12 951,200
740,000 Dominican Republic (USD) ................................ 8.63% 04/20/27 836,200
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1,787,400
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ECUADOR - 1.6%
630,000 Republic of Ecuador (USD) ............................... 9.38% 12/15/15 617,400
1,610,000 Republic of Ecuador (USD) ............................... 10.00% 08/15/30 1,457,050
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2,074,450
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EGYPT - 2.7%
7,500,000 Arab Republic of Egypt (EGP) ............................ 8.75% 07/18/12 1,352,349
2,140,000 Egypt Government Bond (EGP) ............................. 9.10% 09/20/12 389,221
10,000,000 Egypt Treasury Bill (EGP) ............................... 0.00% 04/29/08 1,719,553
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3,461,123
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EL SALVADOR - 0.9%
1,090,000 Republic of El Salvador (USD) ........................... 7.65% 06/15/35 1,228,975
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GHANA - 1.3%
1,600,000 Republic of Ghana (USD) ................................. 8.50% 10/04/17 1,631,840
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INDIA - 1.8%
65,000,000 JPMorgan Chase Bank NA (INR) (c) ........................ 8.07% 01/15/17 1,638,560
28,000,000 JPMorgan International Derivatives (GBP) ................ 7.49% 09/08/08 682,792
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2,321,352
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See Notes to Quarterly Portfolio of Investments. Page 1
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
SEPTEMBER 30, 2007 (UNAUDITED)
PRINCIPAL
VALUE MARKET
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
---------------- --------------------------------------------------------- -------- ---------- --------------
BONDS AND NOTES (b) - (CONTINUED)
INDONESIA - 5.5%
1,140,000 Adaro Finance BV (USD) .................................. 8.50% 12/08/10 $ 1,199,436
1,290,000 BLT Finance BV (USD) .................................... 7.50% 05/15/14 1,209,041
28,500,000,000 Indonesian Government (IDR) ............................. 12.50% 03/15/13 3,566,396
3,900,000,000 Indonesian Government (IDR) ............................. 10.25% 07/15/22 444,605
120,000 Majapahit Holding BV (USD) .............................. 7.75% 10/17/16 122,152
670,000 Majapahit Holding BV (USD) .............................. 7.25% 06/28/17 662,206
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7,203,836
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KAZAKHSTAN - 0.5%
700,000 Intergas Finance BV (USD) ............................... 6.38% 05/14/17 675,500
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MEXICO - 2.7%
330,000 Desarrolladora Homex SA (USD) ........................... 7.50% 09/28/15 330,000
15,580,000 Mexican Fixed Rate Bonds (MXN) .......................... 9.50% 12/18/14 1,554,667
17,300,000 Mexican Fixed Rate Bonds (MXN) .......................... 8.00% 12/07/23 1,591,693
-------------
3,476,360
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NIGERIA - 0.7%
1,000,000 GTB Finanace BV (USD) ................................... 8.50% 01/29/12 960,000
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PAKISTAN - 1.3%
1,020,000 Islamic Republic of Pakistan (USD) ...................... 6.88% 06/01/17 884,850
830,000 Pakistan Mobile Communication (USD) ..................... 8.63% 11/13/13 797,088
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1,681,938
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PERU - 2.3%
6,040,000 Peru Bono Soberano (PEN) ................................ 7.84% 08/12/20 2,203,479
790,000 Republic of Peru (USD) .................................. 6.55% 03/14/37 820,692
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3,024,171
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PHILIPPINES - 0.9%
1,000,000 Republic of Philippines (USD) ........................... 8.25% 01/15/14 1,117,550
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RUSSIA - 2.6%
830,000 Alfa Bond ISS (USD) (c) ................................. 8.64% 02/22/17 769,825
33,614,824 Red Arrow International Leasing PLC (RUB) ............... 8.38% 03/31/12 1,379,303
1,180,000 UBS (Vimpelcom) (USD) ................................... 8.25% 05/23/16 1,212,450
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3,361,578
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SERBIA - 1.0%
1,460,000 Republic of Serbia (USD) ................................ 3.75% 11/01/24 1,370,575
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TURKEY - 4.8%
730,000 Republic of Turkey (USD) ................................ 8.00% 02/14/34 796,138
330,000 Republic of Turkey (USD) ................................ 6.88% 03/17/36 315,529
1,380,000 Turkey Government Bond (TRY) ............................ 10.00% 02/15/12 1,202,412
4,780,000 Turkey Government Bond (TRY) ............................ 16.00% 03/07/12 4,005,287
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6,319,366
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Page 2 See Notes to Quarterly Portfolio of Investments.
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
SEPTEMBER 30, 2007 (UNAUDITED)
PRINCIPAL
VALUE MARKET
(LOCAL STATED VALUE
CURRENCY) DESCRIPTION COUPON MATURITY (US DOLLARS)
---------------- --------------------------------------------------------- -------- ---------- --------------
BONDS AND NOTES (b) - (CONTINUED)
UKRAINE - 3.0%
800,000 Alfa Bank Ukraine (USD) ................................. 9.75% 12/22/09 $ 793,092
1,070,000 EX-IM Bank of Ukraine (USD) ............................. 7.65% 09/07/11 1,073,751
500,000 UBS AG Jersey Branch (USD) .............................. 9.13% 06/21/10 496,250
910,000 Ukraine Government (USD) ................................ 6.39% 06/26/12 919,473
660,000 Ukraine Government (USD) ................................ 6.58% 11/21/16 670,684
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3,953,250
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URUGUAY - 2.9%
1,390,000 Republic Orient Uruguay (USD) ........................... 7.63% 03/21/36 1,500,991
37,710,000 Republic Orient Uruguay (UYU) ........................... 5.00% 09/14/18 1,830,464
8,560,000 Republic Orient Uruguay (UYU) ........................... 4.25% 04/05/27 392,372
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3,723,827
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VENEZUELA - 5.7%
1,370,000 Republic of Venezuela (USD) ............................. 5.75% 02/26/16 1,164,500
2,600,000 Republic of Venezuela (USD) ............................. 7.65% 04/21/25 2,333,500
3,820,000 Republic of Venezuela (USD) ............................. 9.25% 09/15/27 3,996,102
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7,494,102
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TOTAL BONDS AND NOTES .......................................................... 76,510,136
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(Cost $74,712,173)
MARKET
VALUE
SHARES DESCRIPTION (US DOLLARS)
---------------- -------------------------------------------------------------------------------- --------------
COMMON STOCKS - 45.6%
ARGENTINA - 0.9%
23,200 Tenaris SA, ADR ................................................................ 1,220,784
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BRAZIL - 7.4%
52,300 Banco Bradesco SA, ADR ......................................................... 1,536,051
78,000 Companhia Vale do Rio Doce, ADR ................................................ 2,219,100
47,000 Lojas Renner SA ................................................................ 938,974
30,300 Petroleo Brasileiro SA, ADR .................................................... 1,960,410
44,000 Souza Cruz SA .................................................................. 1,135,646
28,000 Telecomunicacoes de Sao Paulo SA ............................................... 860,011
24,600 Ultrapar Participacoes SA, Preference Shares ................................... 953,133
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9,603,325
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CHILE - 1.1%
29,000 Banco Santander Chile SA, ADR .................................................. 1,466,530
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CHINA - 7.4%
140,000 China Mobile Ltd. .............................................................. 2,292,551
170,000 CLP Holdings Ltd. .............................................................. 1,176,505
300,000 Dah Sing Banking Group Ltd. .................................................... 662,218
200,000 Hang Lung Group Ltd. ........................................................... 1,137,142
See Notes to Quarterly Portfolio of Investments. Page 3
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
SEPTEMBER 30, 2007 (UNAUDITED)
MARKET
VALUE
SHARES DESCRIPTION (US DOLLARS)
---------------- -------------------------------------------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
CHINA - (CONTINUED)
1,120,000 PetroChina Company Ltd., H Shares .............................................. $ 2,123,626
490,000 Swire Pacific Ltd., B Shares ................................................... 1,174,910
730,000 Zhejiang Expressway Company, Ltd., H Shares .................................... 1,036,703
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9,603,655
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CZECH REPUBLIC - 1.1%
9,000 Erste Bank der Oesterreichischen Sparkassen AG ................................. 694,144
3,000 Komercni Banka AS .............................................................. 698,182
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1,392,326
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HUNGARY - 0.9%
5,300 Richter Gedeon, Sponsored GDR .................................................. 1,128,179
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INDIA - 4.6%
90,000 Gail India Ltd. ................................................................ 856,014
20,000 Glaxosmithkline Pharmaceuticals Ltd. ........................................... 561,340
8,000 Grasim Industries Ltd. ......................................................... 704,898
40,000 Hero Honda Motors Ltd. ......................................................... 749,708
22,000 Housing Development Finance Corp. Ltd. ......................................... 1,395,666
33,000 ICICI Bank Ltd. ................................................................ 879,834
74,000 Satyam Computer Services Ltd. .................................................. 828,536
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5,975,996
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INDONESIA - 1.5%
300,000 PT Astra International Tbk ..................................................... 631,493
1,800,000 PT Unilever Indonesia Tbk ...................................................... 1,338,436
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1,969,929
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ISRAEL - 0.4%
22,400 Check Point Software Technologies Ltd. (d) ..................................... 564,032
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MALAYSIA - 1.6%
68,000 British American Tobacco Malaysia Berhad ....................................... 823,184
420,000 Public Bank Berhad ............................................................. 1,294,204
-------------
2,117,388
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MEXICO - 4.3%
38,900 Fomento Economico Mexicano, S.A.B. de C.V., Sponsored ADR ...................... 1,454,860
34,000 Grupo Aeroportuario del Centro Norte, S.A.B. de C.V., ADR ...................... 979,200
361,000 Grupo Continental, S.A.B. ...................................................... 759,138
297,000 Grupo Financiero Banorte, S.A.B. de C.V., O Shares ............................. 1,165,473
274,000 Kimberly-Clark de Mexico, S.A.B. de C.V., A Shares ............................. 1,247,573
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5,606,244
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PHILIPPINES - 1.1%
970,000 Bank of the Philippine Islands ................................................. 1,431,854
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Page 4 See Notes to Quarterly Portfolio of Investments.
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
SEPTEMBER 30, 2007 (UNAUDITED)
MARKET
VALUE
SHARES DESCRIPTION (US DOLLARS)
---------------- -------------------------------------------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
RUSSIA - 0.9%
15,000 LUKOIL, ADR .................................................................... $ 1,249,500
-------------
SOUTH AFRICA - 1.9%
138,000 Massmart Holdings Ltd. ......................................................... 1,670,190
167,000 Truworths International Ltd. ................................................... 766,242
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2,436,432
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SOUTH KOREA - 3.1%
65,000 Pusan Bank ..................................................................... 1,193,182
4,800 Samsung Electronics Company Ltd., Preference Shares ............................ 2,234,266
850 Shinsegae Company Ltd. ......................................................... 591,619
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4,019,067
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TAIWAN - 3.2%
1,000,000 Fubon Financial Holdings Company, Ltd. ......................................... 853,378
1,140,000 Taiwan Mobile Company, Ltd. .................................................... 1,550,973
923,599 Taiwan Semiconductor Manufacturing Company, Ltd. ............................... 1,799,936
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4,204,287
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THAILAND - 1.8%
220,000 PTT Exploration and Production Public Company Ltd. ............................. 872,939
200,000 Siam Cement Public (The) Company Ltd. .......................................... 1,517,141
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2,390,080
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TURKEY - 2.4%
249,000 Aksigorta AS ................................................................... 1,722,577
9,000 Bim Birlesik Magazalar AS ...................................................... 745,650
35,000 Migros Turk TAS ................................................................ 608,948
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3,077,175
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TOTAL COMMON STOCKS ............................................................ 59,456,783
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(Cost $43,682,160)
MARKET
PRINCIPAL STATED VALUE
VALUE DESCRIPTION COUPON MATURITY (US DOLLARS)
---------------- --------------------------------------------------------- -------- ---------- --------------
U.S. TREASURY OBLIGATION - 1.1%
$ 1,480,000 U.S. Treasury Note ...................................... 4.50% 4/30/12 1,498,617
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TOTAL U.S. TREASURY OBLIGATION ................................................. 1,498,617
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(Cost $1,488,885)
See Notes to Quarterly Portfolio of Investments. Page 5
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
SEPTEMBER 30, 2007 (UNAUDITED)
MARKET
VALUE
DESCRIPTION (US DOLLARS)
-------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS - 105.4% ..................................................... $ 137,465,536
(Cost $119,883,218) (e)
LOAN OUTSTANDING - (6.1)% ...................................................... (8,000,000)
NET OTHER ASSETS AND LIABILITIES - 0.7% ........................................ 983,111
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NET ASSETS - 100.0% ............................................................ $ 130,448,647
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(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Fixed-income portfolio securities are included in a country based upon
their underlying credit exposure as determined by Aberdeen Asset
Management Inc., the Sub-Advisor.
(c) Variable rate security. The interest rate shown reflects the rate in
effect at September 30, 2007.
(d) Non-income producing security.
(e) Aggregate cost for federal income tax and financial reporting purposes.
ADR American Depositary Receipt
ARS Argentine Peso
BRL Brazilian Real
COP Colombian Peso
EGP Egyptian Pound
GBP British Pound Sterling
GDR Global Depositary Receipt
IDR Indonesian Rupiah
INR Indian Rupee
MXN Mexican Peso
PEN Peruvian New Sol
RUB Russian Ruble
TRY Turkish Lira
USD United States Dollar
UYU Uruguayan Peso
Page 6 See Notes to Quarterly Portfolio of Investments.
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
SEPTEMBER 30, 2007 (UNAUDITED)
FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
CONTRACTS TO RECEIVE
---------------------------------------------------
NET NET
UNREALIZED UNREALIZED
IN APPRECIATION DEPRECIATION
EXPIRATION LOCAL VALUE IN EXCHANGE OF CONTRACTS OF CONTRACTS
DATE CURRENCY (a) U.S. $ FOR U.S. $ U.S. $ U.S. $
---------- --------------------- ------------ ------------ ------------ ------------
10/24/07 BRL 10,285,000 $ 5,594,619 $ 5,326,056 $ 268,563 $ --
10/24/07 COP 1,564,825,000 771,194 795,135 -- (23,941)
10/24/07 IDR 23,353,160,000 2,547,015 2,481,738 65,277 --
10/24/07 INR 59,442,000 1,491,089 1,451,044 40,045 --
10/24/07 MXN 10,947,000 999,018 988,943 10,075 --
10/24/07 TRY 4,399,000 3,612,088 3,311,067 301,021 --
------------ ------------
$ 684,981 $ (23,941)
------------ ------------
FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER
---------------------------------------------------
NET NET
UNREALIZED UNREALIZED
IN APPRECIATION DEPRECIATION
EXPIRATION LOCAL VALUE IN EXCHANGE OF CONTRACTS OF CONTRACTS
DATE CURRENCY (a) U.S. $ FOR U.S. $ U.S. $ U.S. $
---------- --------------------- ------------ ------------ ------------ ------------
10/24/07 BRL 18,398,000 $ 10,007,759 $ 9,529,398 $ -- $ (478,361)
10/24/07 COP 5,996,738,000 2,955,378 2,946,800 -- (8,578)
10/24/07 IDR 23,353,160,000 2,547,015 2,486,665 -- (60,350)
10/24/07 INR 59,442,000 1,491,089 1,408,578 -- (82,511)
10/24/07 MXN 43,016,000 3,929,029 3,954,650 25,621 --
10/24/07 TRY 8,932,000 7,334,206 6,789,933 -- (544,273)
------------ ------------
$ 25,621 $ (1,174,073)
------------ ------------
Unrealized Appreciation (Depreciation) ......................... $ 710,602 $ (1,198,014)
============ ============
Net Unrealized Appreciation (Depreciation) ..................... $ (487,412)
============
(a) Please see page 6 for currency descriptions.
See Notes to Quarterly Portfolio of Investments. Page 7
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO COMPONENTS (a)
SEPTEMBER 30, 2007 (UNAUDITED)
PORTFOLIO COMPONENTS -- BY INDUSTRY
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Government Bonds and Notes 43.7%
Commercial Banks Non-US 8.9%
Diversified Financial Services 6.9%
Oil & Gas 4.5%
Retail 4.3%
Cellular Telecommunications 3.7%
Semiconductors 2.9%
Beverages 2.3%
Building Products-Cement/Aggregates 1.6%
Diversified Minerals 1.6%
Electric Utilities 1.4%
Tobacco 1.4%
Insurance 1.3%
Medical-Drugs 1.2%
Telecommunications 1.2%
Gas Utilities 1.1%
Food-Retail 1.0%
Household Products 1.0%
Paper & Related Products 0.9%
Steel Producers 0.9%
Transportation 0.9%
Coal 0.9%
Diversified Operations 0.9%
Real Estate 0.8%
Export/Import Bank 0.8%
Commercial Services 0.8%
Airport Development/Maintenance 0.7%
Chemicals 0.7%
Applications Software 0.6%
Leisure Time 0.5%
Internet Security 0.4%
Building-Residential/Commercial 0.2%
(a) Percentages are based on total investments. Please note that the
percentages on the Portfolio of Investments are based on net assets.
Page 8 See Notes to Quarterly Portfolio of Investments.
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
PORTFOLIO COMPONENTS (a) (b) - (CONTINUED)
SEPTEMBER 30, 2007 (UNAUDITED)
PORTFOLIO COMPONENTS -- BY COUNTRY
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Brazil 12.0%
China 7.9%
Turkey 6.8%
Indonesia 6.7%
Mexico 6.6%
India 6.0%
Venezuela 5.5%
Argentina 5.5%
Colombia 3.9%
Russia 3.3%
Taiwan 3.1%
South Korea 2.9%
Ukraine 2.9%
Uruguay 2.7%
Egypt 2.5%
Peru 2.2%
Philippines 1.8%
South Africa 1.8%
Thailand 1.7%
Malaysia 1.5%
Ecuador 1.5%
Dominican Republic 1.3%
Pakistan 1.2%
Ghana 1.2%
United States 1.1%
Chile 1.1%
Czech Republic 1.0%
Serbia 1.0%
El Salvador 0.9%
Hungary 0.8%
Nigeria 0.7%
Kazakhstan 0.5%
Israel 0.4%
(a) Percentages are based on total investments. Please note that the
percentages on the Portfolio of Investments are based on net assets.
(b) Fixed-income portfolio securities are included in a country based upon
their underlying credit exposure as determined by Aberdeen Asset
Management Inc., the Sub-Advisor.
See Notes to Quarterly Portfolio of Investments. Page 9
--------------------------------------------------------------------------------
NOTES TO QUARTERLY PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
SEPTEMBER 30, 2007 (UNAUDITED)
1. VALUATION AND INVESTMENT PRACTICES
A. PORTFOLIO VALUATION:
The net asset value ("NAV") of the Common Shares of First Trust/Aberdeen
Emerging Opportunity Fund (the "Fund") is determined daily as of the close of
regular trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m.
Eastern time, on each day the NYSE is open for trading. Domestic debt securities
and foreign securities are priced using data reflecting the earlier closing of
the principal markets for those securities. The NAV per Common Share is
calculated by subtracting the Fund's liabilities (including accrued expenses,
dividends payable and any borrowings of the Fund) from the Fund's Total Assets
(the value of the securities and other investments the Fund holds plus cash or
other assets, including interest accrued but not yet received) and dividing the
result by the total number of Common Shares outstanding.
The Fund's investments are valued daily at market value or, in the absence of
market value with respect to any portfolio securities, at fair value according
to procedures adopted by the Fund's Board of Trustees. A majority of the Fund's
assets are valued using market information supplied by third parties. In
addition, structured products, including currency-linked notes and credit-linked
notes, as well as interest rate swaps and credit default swaps, are valued using
a pricing service or quotes provided by the selling dealer or financial
institution. In the event that market quotations are not readily available, the
pricing service does not provide a valuation for a particular asset, or the
valuations are deemed unreliable, First Trust Advisors L.P. ("First Trust") may
use a fair value method to value the Fund's securities and 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 investments. The use
of fair value pricing by the Fund is governed by valuation procedures adopted by
the Fund's Board of Trustees and in accordance with the provisions of the
Investment Company Act of 1940, as amended.
Portfolio securities listed on any exchange other than the NASDAQ National
Market ("NASDAQ") are valued at the last sale price on the business day as of
which such value is being determined. If there has been no sale on such day, the
securities are valued at the mean of the most recent bid and asked prices on
such day. Securities traded on the NASDAQ are valued at the NASDAQ Official
Closing Price as determined by NASDAQ. Portfolio securities traded on more than
one securities exchange are valued at the last sale price on the business day as
of which such value is being determined at the close of the exchange
representing the principal market for such securities. Portfolio securities
traded in the over-the-counter market, but excluding securities traded on the
NASDAQ, are valued at the closing bid prices. Short-term investments that mature
in less than 60 days are valued at amortized cost.
B. SECURITIES TRANSACTIONS:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income on such securities
is not accrued until settlement date. The Fund maintains liquid assets with a
current value at least equal to the amount of its when-issued or
delayed-delivery purchase commitments. At September 30, 2007, the Fund had no
when-issued or delayed-delivery purchase commitments.
C. FORWARD FOREIGN CURRENCY CONTRACTS:
Forward foreign currency contracts are agreements to exchange one currency for
another at a future date and at a specified price. The Fund may use forward
foreign currency contracts to facilitate transactions in foreign securities and
to manage the Fund's foreign currency exposure. These contracts are valued
daily, and the Fund's net equity therein, representing unrealized gain or loss
on the contracts as measured by the difference between the forward foreign
exchange rates at the dates of entry into the contracts and the forward rates at
the reporting date, is included in Net Other Assets and Liabilities on the
Portfolio of Investments. Risks arise from the possible inability of
counterparties to meet the terms of their contracts and from movement in
currency and securities values and interest rates. Due to the risks, the Fund
could incur losses up to the entire contract amount, which may exceed the net
unrealized value shown in the Schedule of Forward Foreign Currency Contracts.
D. FOREIGN CURRENCY:
The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period.
Purchases and sales of investment securities are translated on the respective
dates of such transactions. Net realized foreign currency gains and losses
include the effect of changes in exchange rates between trade date and
settlement date on investment security and foreign currency transactions.
Page 10
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NOTES TO QUARTERLY PORTFOLIO OF INVESTMENTS - (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
SEPTEMBER 30, 2007 (UNAUDITED)
2. UNREALIZED APPRECIATION (DEPRECIATION)
As of September 30, 2007, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $19,281,559
and the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $1,699,241.
Page 11
ITEM 2. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's last
fiscal quarter that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 3. EXHIBITS.
Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of
the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) FIRST TRUST/ABERDEEN EMERGING OPPORTUNITY FUND
--------------------------------------------------------------
By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, Chairman of the Board, President
and Chief Executive Officer
(principal executive officer)
Date NOVEMBER 5, 2007
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, Chairman of the Board, President
and Chief Executive Officer
(principal executive officer)
Date NOVEMBER 5, 2007
----------------------------------------------------------------------------
By (Signature and Title)* /S/ MARK R. BRADLEY
-------------------------------------------------------
Mark R. Bradley, Treasurer, Controller, Chief
Financial Officer and Chief Accounting Officer
(principal financial officer)
Date NOVEMBER 5, 2007
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.