[LOGO]
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Aberdeen
Commonwealth Income
Fund, Inc.
[GRAPHIC OMITTED]
Invests primarily in fixed-income securities
denominated in the currencies of various
Commonwealth Countries
Semi-Annual Report
April 30, 2001
Highlights
o 9.5% cash distribution rate for the previous 12 months based on a share
price of $8.84 on April 30, 2001
o 88.3% invested in securities rated or deemed equivalent to AA/Aa or better
o 5.6% of total assets invested in Asian debt securities
All amounts are US dollars unless otherwise stated.
2 Aberdeen Commonwealth Income Fund, Inc.
Letter to Shareholders
June 15, 2001
Dear Shareholder,
We present this Semi-Annual Report which covers the activities of Aberdeen
Commonwealth Income Fund, Inc. (the "Fund") for the six months ended April 30,
2001. Included in this report is a review of the Australian, Canadian, New
Zealand, United Kingdom and selected Asian economies and investment markets,
together with an overview of the Fund's investments prepared by the Investment
Manager, Aberdeen Asset Managers (C.I.) Limited.
High Credit Quality: 88.3% of Securities Rated or Deemed Equivalent to AA/Aa or
Better
The Fund's high credit quality has been maintained. Over 88.3% of assets are
rated AA/Aa or better, or are considered of equivalent quality by the Investment
Manager. An additional 8.1% is held in A rated securities.
Distributions: 9.5% Annual Cash Distribution Rate
Distributions to common shareholders for the year ended April 30, 2001 totaled
84.0 cents per share. Based on the share price of $8.84 on April 30, 2001, the
cash distribution rate over the last 12 months was 9.5%. Since all distributions
are paid after deducting applicable withholding taxes, the effective
distribution rate may be higher for those US investors who are able to claim a
tax credit.
On June 13, 2001, the Board of Directors declared a 7.0 cent per share monthly
distribution. It is the Board's policy to provide investors with a stable
monthly distribution out of current income, supplemented by realized capital
gains and, to the extent necessary, paid-in capital. The Board intends to review
the distribution policy and current monthly distribution rate of 7.0 cents per
share on a quarterly basis, with the next scheduled review to take place in
September 2001.
Net Asset Value Performance: 5.3% Per Annum Return Since Inception
The Fund's Net Asset Value ("NAV") returned 1.1% over the six months to April
30, 2001. Since inception, the Fund's NAV has returned 5.3% per annum to April
30, 2001. On April 30, 2001, the Fund's share price was $8.84, which represented
a discount of 10.3% to the NAV of $9.86.
Aberdeen Commonwealth Income Fund, Inc. 3
Letter to Shareholders (concluded)
Asian Investments: 5.6% of Total Assets Invested in Asian Debt Securities
As of April 30, 2001, 5.6% of the Fund's total assets were held in Asian debt
securities, a sector that presents attractive opportunities. The Fund's ability
to increase its investment in Asian markets remains constrained by the potential
realization of foreign exchange losses.
Shareholders Elect Directors
At the Annual Meeting of Shareholders, Martin J. Gilbert, Neville J. Miles and
Warren C. Smith were elected by holders of the Fund's common stock as Class III
Directors to serve for a three-year term. Dr. Anton E. Shrafl and John T. Sheehy
were elected by holders of the Fund's preferred stock for a one-year term,
expiring at the next Annual Meeting of Shareholders.
For information about the Fund, including weekly updates of share price, NAV,
and details of recent distributions, contact Aberdeen Asset Management Investor
Relations, by:
o calling toll free on 1-800-522-5465 or 1-212-968-8800 in the United States,
o email to InvestorRelations@aberdeen-asset.com, or
o visit the website at www.aberdeen-asset.com/usa
For information about the Aberdeen group, visit the Aberdeen website at
www.aberdeen-asset.com
Yours sincerely,
/s/ Martin Gibert
Martin Gibert
Chairman
4 Aberdeen Commonwealth Income Fund, Inc.
Your Board's policy is to provide investors with a stable monthly distribution
out of current income, supplemented by realized capital gains and, to the extent
necessary, paid-in capital.
The Fund is subject to U.S. corporate, tax and securities laws. Under U.S. tax
accounting rules, the amount of distributable income for each fiscal period
depends on the actual exchange rates during the entire year between the U.S.
dollar and the currencies in which Fund assets are denominated and on the
aggregate gains and losses realized by the Fund during the entire year.
Therefore the exact amount of distributable income for each fiscal year can only
be determined as at the end of the Fund's fiscal year, October 31.
However, under the U.S. Investment Company Act of 1940, the Fund is required to
indicate the source of each distribution to shareholders.
The Fund estimates that the distributions for the fiscal year commencing
November 1, 2000, including the distribution paid on June 15, 2001, are
comprised of 56% net investment income and 44% return of paid-in capital.
This estimated distribution composition will vary from month to month because it
may be materially impacted by future realized capital gains and losses on
securities and fluctuations in the value of currencies in which Fund assets are
denominated.
In January 2002, a Form 1099 DIV will be sent to shareholders, which will state
the amount and composition of distributions and provide information with respect
to their appropriate tax treatment.
Aberdeen Commonwealth Income Fund, Inc. 5
Dividend Reinvestment and Cash Purchase Plan
We invite you to participate in the Fund's Dividend Reinvestment and Cash
Purchase Plan ("the Plan") which allows you to automatically reinvest your
distributions in shares of the Fund's common stock at favorable commission
rates. Distributions made under the Plan are taxable to the same extent as are
cash distributions. The Plan also enables you to make additional cash
investments in shares of at least $100 per month. Under this arrangement, the
Plan Agent will purchase shares for you on the stock exchange or otherwise on
the open market on or about the 15th of each month, unless shares of the Fund
are trading at a premium, in which case, the Fund will issue additional shares.
As a participant in the Plan, you will have the convenience of:
Automatic reinvestment--the Plan Agent will automatically reinvest your
distributions, allowing you to gradually grow your holdings in the Fund;
Lower costs--shares purchased on your behalf under the Plan will be at reduced
brokerage rates. Brokerage on share purchases is currently 2 cents per share;
Convenience--the Plan Agent will hold your shares in non-certificated form and
will provide a detailed record of your holdings at the end of each distribution
period.
To request a brochure containing information on the Plan, together with an
authorization form, please contact the Plan Agent, State Street Bank & Trust
Company, P.O. Box 8200 Boston, MA 02266 or toll free on 1-800-451-6788.
6 Aberdeen Commonwealth Income Fund, Inc.
Report of the Investment Manager
Share Price Performance
On April 30, 2001, the Fund's share price was $8.84, which represented a
discount of 10.3% to the NAV of $9.86. At the date of this report, the share
price was $8.80 representing a discount of 11.4% to the NAV of $9.93.
Auction Market Preferred Stock (AMPS)
The Fund's $30 million of AMPS continued to be well bid at the weekly auctions.
The average interest rate paid was 5.26% over the quarter ended April 30, 2001,
compared with 5.09% for 30-day U.S. commercial paper over the same period. These
rates have decreased since the quarter ended January 31, 2001, due to the
lowering of interest rates by the US Federal Reserve during the quarter.
The Fund is a leveraged Fund. Over the past year, the U.S. dollar has
strengthened against virtually all other currencies in the world. This has
resulted in a negative impact for common shareholders. However, in anticipation
of an appreciating Australian dollar, the Manager expects that in the medium
term this situation will rectify itself and that the AMPS process will be a
positive contribution to the Fund's performance.
Aberdeen Commonwealth Income Fund, Inc. 7
Portfolio Composition
Geographic Composition
The table below shows the geographic composition of the Fund's total investments
as of April 30, 2001, compared with the previous six and twelve months.
TABLE 1: ABERDEEN COMMONWEALTH INCOME FUND, INC.--
GEOGRAPHIC ASSET ALLOCATION
================================================================================
April 30, 2001 October 31, 2000 April 30, 2000
% % %
--------------------------------------------------------------------------------
Australia 23.6 24.0 24.2
Canada 32.8 35.8 33.3
New Zealand 3.7 3.3 3.6
United Kingdom 30.5 29.4 31.5
United States* 3.8 3.8 1.5
Asia 5.6 3.7 5.9
--------------------------------------------------------------------------------
Total Portfolio 100.0 100.0 100.0
================================================================================
* It is the policy of the Investment Manager to maintain a portion of the
Fund's investments in US short-term securities to cover distributions and
expenses.
Currency Composition
The table below shows the currency composition of the Fund's total investments
as of April 30, 2001, compared with the previous six and twelve months.
TABLE 2: ABERDEEN COMMONWEALTH INCOME FUND, INC.--
CURRENCY ALLOCATION
================================================================================
April 30, 2001 October 31, 2000 April 30, 2000
% % %
--------------------------------------------------------------------------------
Australian Dollar 23.6 24.0 24.2
Canadian Dollar 32.8 35.8 33.3
New Zealand Dollar 3.7 3.3 3.6
British Pound 30.5 29.4 31.5
United States Dollar* 3.8 3.8 4.3
Asia Currencies 5.6 3.7 3.1
--------------------------------------------------------------------------------
Total Portfolio 100.0 100.0 100.0
================================================================================
* Includes Asian Yankee bond investments.
8 Aberdeen Commonwealth Income Fund, Inc.
Portfolio Composition (continued)
Maturity Composition
On April 30, 2001, the average maturity of the Fund's assets was 8.0 years,
compared with 8.3 years on October 31, 2001. The Fund's modified duration
remained at 4.9 years for the six months ended April 30, 2001. The table below
shows the maturity composition of the Fund's investments as of April 30, 2001:
TABLE 3: ABERDEEN COMMONWEALTH INCOME FUND, INC.--
MATURITY ANALYSIS
================================================================================
Less than 1 year 1--5 years 5--10 years Over 10 years
% % % %
--------------------------------------------------------------------------------
Australia 18.9 27.6 44.7 8.8
Canada 28.1 17.2 12.2 42.5
New Zealand 51.5 24.5 24.0 --
United Kingdom 10.9 24.9 27.1 37.1
United States 100.0 -- -- --
Asia 3.4 84.6 12.0 --
--------------------------------------------------------------------------------
Total Portfolio 23.2 24.8 24.4 27.6
================================================================================
Sectoral Composition
The table below shows the sectoral composition of the Fund's total investments
as at April 30, 2001:
TABLE 4: ABERDEEN COMMONWEALTH INCOME FUND, INC.--
SECTORAL COMPOSITION
================================================================================
Sovereign Provincial/ Utilities/
Gov't. State Supranational Corporate Cash or
Bonds Bonds Bonds Bonds Equivalent
% % % % %
--------------------------------------------------------------------------------
Australia 9.4 11.2 1.8 0.5 0.7
Canada 20.5 6.1 0.6 1.4 4.2
New Zealand 0.3 -- 1.3 0.8 1.3
United Kingdom 22.0 -- 3.2 4.4 0.9
United States -- -- -- -- 3.8
Asia 3.8 0.6 0.2 0.1 0.9
--------------------------------------------------------------------------------
Total Portfolio 56.0 17.9 7.1 7.2 11.8
================================================================================
Aberdeen Commonwealth Income Fund, Inc. 9
Portfolio Composition (concluded)
Quality of Investments
On April 30, 2001, 88.3% of the Fund's assets were invested in securities where
either the issue or the issuer was rated at least "AA" by Standard & Poor's
Corporation or "Aa" by Moody's Investors Service, Inc. or, if unrated, were
judged to be of equivalent quality by the Investment Manager. The table below
shows the asset quality of the Fund's portfolio as of April 30, 2001.
TABLE 5: ABERDEEN COMMONWEALTH INCOME FUND, INC.--
ASSET QUALITY
================================================================================
AAA/Aaa AA/Aa A BBB/Baa BB/Ba*
% % % % %
--------------------------------------------------------------------------------
Australia 76.7 23.3 -- -- --
Canada 12.9 76.0 11.1 -- --
New Zealand 35.3 49.8 14.9 -- --
United Kingdom 64.6 24.8 10.6 -- --
United States 100.0 -- -- -- --
Asia 20.3 -- 11.7 68.0 --
--------------------------------------------------------------------------------
Total Portfolio 48.4 39.9 8.1 3.6 --
================================================================================
* Below investment grade.
10 Aberdeen Commonwealth Income Fund, Inc.
Market Review and Outlook
AUSTRALIA
The benchmark 10-year bond yield fell from 6.19% to 5.78% over the six months
ended April 30, 2001, as US and domestic data suggested a deceleration in GDP.
Bank bill yields fell in line with official interest rates, closing at 4.89%.
Short-term interest rate differentials have now moved back in the Australian
dollar's favor, as a result of the US Federal Reserve having aggressively cut
the Fed Funds rate to 4.5%. As the market continues to anticipate a more
aggressive easing cycle in the US than domestically, the Investment Manager
expects that interest rate differentials should lend support to the currency in
2001. In addition, it is expected that the competitive level of the Australian
dollar during 2000 could see relative outperformance by the Australian economy
in 2001.
The Australian dollar weakened over the six months, closing at $0.51.
CANADA
As the US economy has slowed, Canadian leading indicators have lost considerable
momentum, and Canadian GDP growth is now expected to slow more dramatically
during 2001. The Bank of Canada has eased monetary policy by 100 basis points
since the start of the year, reflecting slower growth and weaker inflationary
pressures, with core inflation remaining benign at the center of the Bank of
Canada's 1-3% target band. It is expected that over the coming year more
aggressive central bank easings in Canada and globally will help stabilize the
recent weakness of the Canadian dollar.
The Canadian dollar depreciated slightly over the six months, closing at $0.65.
NEW ZEALAND
Business and consumer confidence in New Zealand have recovered sharply over
recent months, although the country's retail spending and the housing market
remain subdued. A combination of higher energy prices, sustained weakness in the
New Zealand dollar, and several one-off tax and policy changes generated price
pressures which saw the annual inflation rate reach 4% in the 4th quarter of
2000. The New Zealand economy has felt the impact of a global slowdown. However,
the country's current inflation rate is likely to see the Reserve Bank of New
Zealand's easing cycle lag the rest of the dollar bloc.
The New Zealand dollar weakened over the six months, closing at $0.41.
Aberdeen Commonwealth Income Fund, Inc. 11
Market Review and Outlook (concluded)
UNITED KINGDOM
Inflation pressures have continued to ease in the UK, allowing the Bank of
England to take swift policy action. Although subject to deteriorating global
economic conditions, the Investment Manager believes that the UK economy is well
placed to ride out the slowdown, with inflation firmly under control.
The pound depreciated against the US dollar over the six months, to close at
$1.43.
ASIA
Domestic and Yankee (US$ denominated) bonds
US$ denominated Asian bond yields (Yankees) fell over the six months ended April
30, 2001, in line with falling US interest rates. Signs of economic slowdown
have emerged in Asia over the six months, reflected in wider credit spreads
through late 2000. The easing of monetary policy by the US Federal Reserve
however, allowed a sharp contraction in credit spreads during January.
Currencies
Most Asian currencies depreciated against the US dollar over the six months. The
Malaysian ringgit remained pegged to the US dollar.
12 Aberdeen Commonwealth Income Fund, Inc.
Summary of Key Rates
The following table summarizes the movements of key interest rates and
currencies over the last six and twelve month periods.
================================================================================
April 30, 2001 October 31, 2000 April 30, 2000
--------------------------------------------------------------------------------
Australia
90 day bank bills 4.89% 6.43% 6.24%
10 year bonds 5.78% 6.19% 6.39%
Australian Dollar $ 0.51 $ 0.52 $ 0.58
Canada
90 day bank bills 4.44% 5.64% 5.50%
10 year bonds 5.79% 5.81% 6.17%
Canadian Dollar $ 0.65 $ 0.66 $ 0.68
New Zealand
90 day bank bills 5.84% 6.65% 6.66%
10 year bonds 6.59% 6.69% 7.03%
NZ Dollar $ 0.41 $ 0.39 $ 0.49
United Kingdom
90 day bank bills 5.58% 5.87% 6.01%
10 year bonds 5.12% 5.16% 5.21%
British Pound $ 1.43 $ 1.45 $ 1.57
South Korea
90 day bank bills 6.10% 7.11% 7.37%
5 year bonds 7.85% 7.95% 9.28%
South Korean Won* (Won)1315 (Won)1137 (Won)1108
Thailand
90 day bank bills 2.50% 3.00% 3.50%
10 year bonds 5.05% 5.31% 6.95%
Thai Baht* (Baht)45.6 (Baht)44 (Baht)38
Philippines
90 day bank bills 10.78% 18.79% 8.80%
10 year bonds 15.81% 19.27% 14.40%
Philippines Peso* (Peso)51.4 (Peso)52 (Peso)41
Malaysia
90 day bank bills 3.45% 3.50% 2.85%
10 year bonds 4.50% 5.68% 5.86%
Malaysian Ringgit* (Ringgit)3.8 (Ringgit)3.8 (Ringgit)3.8
Singapore
90 day bank bills 4.44% 2.38% 2.17%
10 year bonds 4.14% 4.33% 4.14%
Singapore Dollar* S$ 1.82 S$ 1.76 S$ 1.70
US$ Yankee Bonds**
South Korea 7.08% 8.13% 8.32%
Thailand 6.57% 7.40% 8.10%
Philippines 10.58% 12.11% 10.42%
================================================================================
* These currencies are quoted Asian currency per US dollar. The Australian,
Canadian and New Zealand dollars and the British pound are quoted US
dollars per currency.
** Sovereign issues.
Aberdeen Asset Managers (C.I.) Limited
June 2001
Aberdeen Commonwealth Income Fund, Inc. 13
Portfolio of Investments (unaudited)
As of April 30, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--87.0%
AUSTRALIA--22.6%
Government Bonds--7.6%
A$
Commonwealth of Australia,
1,500 12.00%, 11/15/01 .......................................... 789,916
3,000 10.00%, 10/15/02 .......................................... 1,630,607
2,000 9.50%, 8/15/03 ............................................ 1,110,859
1,000 10.00%, 2/15/06 ........................................... 604,937
1,000 10.00%, 10/15/07 .......................................... 627,807
2,000 8.75%, 8/15/08 ............................................ 1,198,930
2,500 7.50%, 9/15/09 ............................................ 1,414,479
3,500 6.50%, 5/15/13 ............................................ 1,861,315
------------
Total Australian
government bonds
(cost US$12,316,858) ...................................... 9,238,850
------------
Semi-Government Bonds--11.1%
New South Wales--4.0%
New South Wales Treasury
Corporation,
2,000 8.00%, 12/01/01 ........................................... 1,033,268
1,500 7.00%, 4/01/04 ............................................ 793,971
4,200 7.00%, 12/01/10 ........................................... 2,255,072
First Australian National
Mortgage Acceptance
Corporation, Series 22,
1,421 11.40%, 12/15/01 .......................................... 745,344
------------
4,827,655
------------
Queensland--3.3%
Queensland Treasury Corporation,
3,000 8.00%, 8/14/01 ............................................ 1,535,447
2,000 8.00%, 5/14/03 (Global) ................................... 1,070,801
1,000 8.00%, 9/14/07 (Global) ................................... 565,883
500 6.00%, 7/14/09 ............................................ 253,088
1,250 6.00%, 6/14/21 ............................................ 608,241
------------
4,033,460
------------
South Australia--0.2%
A$
South Australia Finance Authority,
500 12.50%, 5/08/01 ........................................... 253,931
------------
Victoria--3.1%
State Electricity Commission
of Victoria,
535 10.50%, 5/27/03 ........................................... 298,623
Treasury Corporation of Victoria,
1,000 9.00%, 6/27/05 ............................................ 568,165
1,500 10.25%, 11/15/06 .......................................... 920,804
4,000 5.50%, 9/15/10 ............................................ 1,933,041
------------
3,720,633
------------
Western Australia--0.5%
Western Australia Treasury
Corporation,
1,000 10.00%, 7/15/05 ........................................... 589,498
------------
Total Australian semi-
government bonds
(cost US$16,921,850) ...................................... 13,425,177
------------
Supranational--2.6%
Eurofima,
3,500 9.875%, 1/17/07 ........................................... 2,108,405
Federal National Mortgage
Association, Series EMTN,
2,000 6.375%, 8/15/07 ........................................... 1,032,355
------------
Total Australian
supranational bonds
(cost US$3,220,638) ....................................... 3,140,760
------------
Utilities--0.9%
Telstra Corp.,
2,000 11.50%, 10/15/02 .......................................... 1,103,160
------------
Total Australian utility bonds
(cost US$1,745,314) ....................................... 1,103,160
------------
14 Aberdeen Commonwealth Income Fund, Inc. See Notes to Financial Statements.
Portfolio of Investments (unaudited) (continued)
As of April 30, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
Banking and Finance--0.2%
A$
ING Mercantile Mutual Bank Ltd.,
500 7.125%, 3/13/02 ........................................... 258,241
------------
Total Australian banking
and finance bonds
(cost US$379,513) ......................................... 258,241
------------
Corporate Non-Banks--0.2%
GE Capital Australia,
600 6.75%, 9/15/07 ............................................ 313,742
------------
Total Australian corporate
non-bank bonds
(cost US$337,145) ......................................... 313,742
------------
Total Australian long-term
investments
(cost US$34,921,318) ...................................... 27,479,930
------------
CANADA--28.3%
Government Bonds--20.4%
C$
Canadian Government,
6,000 8.50%, 4/01/02 ............................................ 4,036,821
5,000 5.25%, 9/01/03 ............................................ 3,267,286
2,500 7.25%, 6/01/07 ............................................ 1,763,907
2,000 5.50%, 6/01/09 ............................................ 1,281,492
1,000 10.75%, 10/01/09 .......................................... 862,126
3,000 10.25%, 3/15/14 ........................................... 2,702,223
4,000 8.00%, 6/01/23 ............................................ 3,208,968
8,000 9.00%, 6/01/25 ............................................ 7,079,543
Canada (Cayman),
750 7.25%, 6/01/08 ............................................ 518,099
------------
Total Canadian
government bonds
(cost US$27,425,206) ...................................... 24,720,465
------------
Semi-Government Bonds--6.0%
British Columbia--1.9%
C$
Province of British Columbia,
1,000 10.15%, 8/29/01 ........................................... 661,334
2,000 9.50%, 1/09/12 ............................................ 1,627,437
------------
2,288,771
------------
Ontario--0.9%
Ontario Hydro,
500 8.50%, 5/26/25 ............................................ 400,084
Province of Ontario,
1,000 8.75%, 4/22/03 ............................................ 695,178
------------
1,095,262
------------
Quebec--2.8%
Quebec Hydro,
1,500 7.00%, 6/01/04 ............................................ 1,008,708
1,000 4.61%, 1/28/05 (b) ........................................ 647,972
2,000 9.625%, 7/15/22 ........................................... 1,710,463
------------
3,367,143
------------
Toronto--0.4%
Metropolitan Municipality
of Toronto,
750 9.625%, 5/14/02 ........................................... 510,544
------------
Total Canadian semi-
government bonds
(cost US$7,998,769) ....................................... 7,261,720
------------
See Notes to Financial Statements. Aberdeen Commonwealth Income Fund, Inc. 15
Portfolio of Investments (unaudited) (continued)
As of April 30, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
Utilities--0.5%
C$
Bell Telephone Company
of Canada,
500 10.50%, 7/15/09 ........................................... 347,755
Tokyo Electric Power Company,
500 10.50%, 6/14/01 ........................................... 326,808
------------
Total Canadian utility bonds
(cost US$879,374) ......................................... 674,563
------------
Banking and Finance--1.1%
Bank of Nova Scotia,
1,000 10.35%, 7/19/01 ........................................... 657,682
Credit Local de France,
1,000 6.75%, 3/21/06 ............................................ 676,501
------------
Total Canadian banking
and finance bonds
(cost US$1,582,837) ....................................... 1,334,183
------------
Corporate Non-Banks--0.3%
Procter & Gamble Company,
500 10.875%, 8/15/01 .......................................... 330,062
------------
Total Canadian corporate
non-bank bonds
(cost US$453,347) ......................................... 330,062
------------
Total Canadian
long-term investments
(cost US$38,339,533) ...................................... 34,320,993
------------
MALAYSIA--0.6%
Semi-Government Bonds--0.6%
MYR
Danamodal Nasional Berhad,
3,100 0.00%, 10/21/03 ........................................... 747,671
------------
Total Malaysia
long term investments
(cost US$722,239) ......................................... 747,671
------------
NEW ZEALAND--2.4%
Government Bonds--0.3%
NZ$
Canadian Government,
1,000 6.625%, 10/03/07 .......................................... 408,698
------------
Total New Zealand
government bonds
(cost US$557,544) ......................................... 408,698
------------
Utilities--1.3%
Electricity Corporation of
New Zealand Ltd.,
1,750 10.00%, 10/15/01 .......................................... 732,789
1,000 8.00%, 2/15/03 ............................................ 424,487
TCNZ Finance Limited,
1,000 9.25%, 7/01/02 ............................................ 423,823
------------
Total New Zealand
utility bonds
(cost US$2,335,352) ....................................... 1,581,099
------------
Banking and Finance--0.2%
Transpower Finance Ltd.,
500 8.00%, 6/15/05 ............................................ 214,803
------------
Total New Zealand banking
and finance bonds
(cost US$348,382) ......................................... 214,803
------------
Corporate Non-Banks--0.6%
Housing New Zealand,
1,500 8.00%, 11/15/06 ........................................... 654,476
------------
Total New Zealand
corporate non-bank bonds
(cost US$806,899) ......................................... 654,476
------------
Total New Zealand
long-term investments
(cost US$4,048,177) ....................................... 2,859,076
------------
16 Aberdeen Commonwealth Income Fund, Inc. See Notes to Financial Statements.
Portfolio of Investments (unaudited) (continued)
As of April 30, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
PHILIPPINES--0.2%
Government Bonds--0.2%
PHP
Philippine Government,
4,000 11.875%, 6/10/01 .......................................... 78,049
7,000 16.50%, 2/25/09 ........................................... 144,730
------------
Total Philippine
long-term investments
(cost US$310,182) ......................................... 222,779
------------
SINGAPORE--0.5%
Government Bonds--0.4%
SGD
Singapore Government,
100 3.00%, 11/01/02 ........................................... 55,492
540 4.00%, 2/01/05 ............................................ 307,385
50 4.00%, 3/01/07 ............................................ 28,406
70 4.625%, 7/01/10 ........................................... 41,455
------------
Total Singapore
government bonds
(cost US$444,929) ......................................... 432,738
------------
Utilities--0.1%
Singapore Power,
250 4.60%, 9/21/07 ............................................ 145,124
------------
Total Singapore corporate
non-bank bonds
(cost US$144,046) ......................................... 145,124
------------
Total Singapore
long-term investments
(cost US$588,975) ......................................... 577,862
------------
SOUTH KOREA--2.9%
Government Bonds--1.3%
US$
EMBARC Ltd. Linked Note
Series 1-9,
2,000 5.828%, 8/18/03 (b)(c) .................................... 1,527,547
------------
Government Banks--1.6%
US$
EMBARC Ltd. Linked Note
Series 1-7,
2,600 5.013%, 6/28/02 (b)(d) .................................... 1,966,777
------------
Total Korean
long term investments
(cost US$4,119,013) ....................................... 3,494,324
------------
THAILAND--0.5%
Government Bonds--0.3%
THB
Thailand Government,
5,000 6.125%, 4/12/02 (e) ....................................... 113,719
550 8.25%, 10/14/03 ........................................... 13,644
12,000 8.00%, 12/08/06 (e) ....................................... 316,761
------------
Total Thailand
government bonds
(cost US$491,869) ......................................... 444,124
------------
Utilities--0.1%
Eastern Water Resources
Development and Management
Company Limited,
4,000 9.00%, 7/22/04 (e) ........................................ 96,046
------------
Total Thailand utility bonds
(cost US$102,863) ......................................... 96,046
------------
Corporate Non-Banks--0.1%
Advanced Info Service Public
Company Limited,
5,200 6.50%, 3/20/03 (e) ........................................ 118,931
------------
Total Thailand corporate
non-bank bonds
(cost US$137,822) ......................................... 118,931
------------
Total Thailand
long-term investments
(cost US$732,554) ......................................... 659,101
------------
See Notes to Financial Statements. Aberdeen Commonwealth Income Fund, Inc. 17
Portfolio of Investments (unaudited) (continued)
As of April 30, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
UNITED KINGDOM--29.0%
Government Bonds--21.7%
(pound)
United Kingdom Treasury,
1,000 7.00%, 11/06/01 ........................................... 1,444,090
1,500 8.00%, 6/10/03 ............................................ 2,267,629
500 5.00%, 6/07/04 ............................................ 712,604
1,250 8.50%, 12/07/05 ........................................... 2,029,164
1,100 7.50%, 12/07/06 ........................................... 1,747,742
500 5.75%, 12/07/09 ........................................... 744,861
1,500 8.00%, 9/27/13 ............................................ 2,697,208
600 8.00%, 12/07/15 ........................................... 1,110,125
3,000 8.00%, 6/07/21 ............................................ 5,896,950
2,350 6.00%, 12/07/28 ........................................... 3,909,964
Republic of Finland,
1,000 8.00%, 4/07/03 ............................................ 1,494,901
1,250 10.125%, 6/22/08 .......................................... 2,220,976
-----------
Total United Kingdom
government bonds
(cost US$29,693,653) ...................................... 26,276,214
-----------
Utilities--3.1%
British Gas PLC,
1,400 8.875%, 7/08/08 ........................................... 2,293,572
Thames Water Utilities
Finance PLC,
1,000 10.50%, 11/21/01 .......................................... 1,466,120
-----------
Total United Kingdom
utility bonds
(cost US$4,037,772) ....................................... 3,759,692
-----------
Banking and Finance--4.2%
(pound)
Abbey National Treasury
Services PLC,
1,250 8.00%, 4/02/03 ............................................ 1,864,996
Barclays Bank PLC,
1,000 9.875%, 5/29/49 ........................................... 1,698,805
Lloyds Bank PLC,
500 7.375%, 3/11/04 ........................................... 744,926
Prudential Finance B.V.,
500 9.375%, 6/04/07 ........................................... 833,860
-----------
Total United Kingdom
banking and finance bonds
(cost US$5,050,153) ....................................... 5,142,587
-----------
Total United Kingdom
long-term investments
(cost US$38,781,578) ...................................... 35,178,493
-----------
Total long-term investments
(cost US$122,563,569) ..................................... 105,540,229
-----------
SHORT-TERM INVESTMENTS--10.9%
Australia--0.5%
A$
Banque Nationale de Paris
Fixed Deposit,
1,252 5.75%, 5/01/01
(cost US$635,073) ......................................... 635,073
-----------
Canada--4.3%
C$
State Street Bank and
Trust Company Time Deposit,
8,001 4.50%, 5/02/01
(cost US$5,163,674) ....................................... 5,199,580
-----------
18 Aberdeen Commonwealth Income Fund, Inc. See Notes to Financial Statements.
Portfolio of Investments (unaudited) (concluded)
As of April 30, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
New Zealand--1.3%
NZ$
State Street Bank and
Trust Company Time Deposit,
3,891 5.85%, 5/02/01
(cost US$1,587,568) ....................................... 1,599,241
------------
United Kingdom--0.9%
(pound)
State Street Bank and
Trust Company Fixed Deposit,
745 5.125%, 5/02/01
(cost US$1,073,376) ....................................... 1,066,295
------------
United States--3.9%
US$
4,732 Repurchase Agreement,
State Street Bank and Trust
Company, 4.42% dated 4/30/01, due
05/01/01 in the amount
of $4,732,581 (collateralized
by $4,175,000 U.S. Treasury
Bonds, 7.125% due 2/15/23;
value $4,831,398)
(cost US$4,732,000) ....................................... 4,732,000
------------
Total short-term investments
(cost US$13,191,691) ...................................... 13,232,189
------------
--------------------------------------------------------------------------------
Total Investments--97.9% (cost US$135,755,260) 118,772,418
Unrealized appreciation on forward foreign currency
exchange contracts--0.0% (f) 10,511
Other assets in excess of liabilities--2.1% 2,574,847
--------------------------------------------------------------------------------
Total Net Assets--100.0% $121,357,776
================================================================================
(a) A$--Australian dollar
C$--Canadian dollar
KRW--South Korean Won
MYR--Malaysian Ringgit
NZ$--New Zealand dollar
PHP--Philippine peso
SGD--Singapore dollar
THB--Thailand Baht
(pound)--British pound
US$--United States dollar
(b) Coupon changes periodically upon a predetermined schedule. Stated interest
rate in effect at April 30, 2001.
(c) Value of security is linked to the value of Government of Korea 7.70%,
8/16/03 and the movement of the South Korean Won.
(d) Value of security is linked to the value of Korea Development Bank 7.01%,
6/26/02 and the movement of the South Korean Won.
(e) Securities, or a portion thereof, pledged as collateral for the forward
currency exchange contracts.
(f) Forward foreign currency exchange contracts entered into as of April 30,
2001 were as follows:
--------------------------------------------------------------------------------
Purchases Net Unrealized
Appreciation
Contracts to Receive In exchange for Settlement Date Value (Depreciation)
--------------------------------------------------------------------------------
PHP 18,637,500 US$350,000 05/24/01 US$360,291 $10,291
THB 3,499,200 US$ 80,000 05/15/01 US$ 76,842 (3,158)
-------
$ 7,133
-------
--------------------------------------------------------------------------------
Sales
Net Unrealized
Contracts to Deliver In exchange for Settlement Date Value Appreciation
--------------------------------------------------------------------------------
THB 3,489,200 US$ 80,000 05/15/01 US$ 76,622 $ 3,378
-------
Total $10,511
=======
See Notes to Financial Statements. Aberdeen Commonwealth Income Fund, Inc. 19
Statement of Assets and Liabilities (unaudited)
April 30, 2001
Assets
Investments, at value (cost $135,755,260) .................................. $ 118,772,418
Foreign currency, at value (cost $939,651) ................................. 920,155
Cash ....................................................................... 622
Interest receivable ........................................................ 2,573,747
Net unrealized appreciation on forward foreign exchange contracts .......... 10,511
Prepaid expenses and other assets .......................................... 62,063
-------------
Total assets ............................................................ 122,339,516
-------------
Liabilities
Dividends payable--common stock ............................................ 648,634
Investment management fee payable .......................................... 67,625
Administration fee payable ................................................. 20,808
Accrued expenses and other liabilities ..................................... 244,673
-------------
Total liabilities ....................................................... 981,740
-------------
Total Net Assets ........................................................... $ 121,357,776
=============
Total net assets were composed of:
Common stock:
Par value ($.001 per share, applicable to 9,266,209 shares issued) ...... $ 9,266
Paid-in capital in excess of par ........................................ 127,653,616
Preferred stock ($.001 par value per share and $25,000 liquidation value per
share applicable to 1,200 shares; Note 5) ............................... 30,000,000
-------------
157,662,882
Distributions in excess of investment income ............................... (1,987,516)
Undistributed net realized gains on investment transactions ................ 292,421
Net unrealized depreciation on investments ................................. (2,849,219)
Accumulated net realized foreign exchange losses ........................... (17,574,680)
Net unrealized foreign exchange losses ..................................... (14,186,112)
-------------
Total Net Assets ........................................................... $ 121,357,776
=============
Net assets applicable to common shareholders ............................... $ 91,357,776
=============
Net asset value per common share ($91,357,776/9,266,209 shares of
common stock issued and outstanding) .................................... $ 9.86
=============
20 Aberdeen Commonwealth Income Fund, Inc. See Notes to Financial Statements.
Statement of Operations (unaudited)
For the Six Months Ended April 30, 2001
Net Investment Income
Income
Interest and discount earned (net of foreign withholding taxes of $91,310) $ 4,384,960
-----------
Expenses
Investment management fee ................................................ 408,512
Administration fee ....................................................... 125,696
Independent accountant's fees and expenses ............................... 76,094
Directors' fees and expenses ............................................. 55,842
Custodian's fees and expenses ............................................ 51,612
Reports to shareholders .................................................. 49,598
Insurance expense ........................................................ 40,558
Auction agent's fees and expenses ........................................ 39,331
Investor Relations fees and expenses ..................................... 36,581
Legal fees and expenses .................................................. 35,299
Registration fees ........................................................ 11,667
Transfer agent's fees and expenses ....................................... 9,775
Miscellaneous ............................................................ 13,904
-----------
Total operating expenses ............................................... 954,469
-----------
Net investment income ....................................................... 3,430,491
-----------
Realized and Unrealized Gains (Losses) on Investments and
Foreign Currencies
Net realized losses on investment transactions ........................... (21,463)
Net realized foreign exchange losses ..................................... (2,425,703)
-----------
(2,447,166)
-----------
Net change in unrealized depreciation of investments ..................... (479,504)
Net change in unrealized foreign exchange losses ......................... 1,093,674
-----------
614,170
-----------
Net Loss on investments and foreign currencies .............................. (1,832,996)
-----------
Net Increase in Net Assets Resulting from Operations ........................ $ 1,597,495
===========
See Notes to Financial Statements. Aberdeen Commonwealth Income Fund, Inc. 21
Statement of Cash Flows (unaudited)
For the Six Months Ended April 30, 2001
Increase (Decrease) in Cash (Including Foreign Currency)
Cash flows provided from operating activities
Interest received ........................................ $ 4,387,303
Operating expenses paid .................................. (942,665)
Sales of short-term portfolio investments, net ........... (1,430,114)
Purchases of long-term portfolio investments ............. (16,843,906)
Proceeds from sales of long-term portfolio investments ... 20,181,649
Losses from forward foreign exchange contracts ........... (2,982)
Other .................................................... 416
------------
Net cash provided from operating activities ............ 5,349,701
------------
Cash flows used for financing activities
Dividends paid to common shareholders .................... (3,891,429)
Dividends paid to preferred shareholders ................. (842,556)
------------
Net cash used for financing activities ................. (4,733,985)
------------
Effect of exchange rate on cash ............................. (78,888)
------------
Net increase in cash ........................................ 536,828
Cash at beginning of period .............................. 383,949
------------
Cash at end of period .................................... $ 920,777
============
Reconciliation of Net Increase in Net Assets from
Operations to Net Cash (Including Foreign Currency)
Provided from Operating Activities
Net increase in total net assets resulting from operations $ 1,597,495
------------
Decrease in investments .................................. 1,606,902
Net realized losses on investment ........................ 21,463
Net realized foreign exchange losses ..................... 2,425,703
Net realized loss on forward foreign exchange contracts .. (2,982)
Net change in unrealized depreciation on investments ..... 479,504
Net change in unrealized foreign exchange losses ......... (1,093,674)
Decrease in interest receivable .......................... 191,539
Increase in receivable for investments sold .............. 5,068,180
Net increase in other assets ............................. 416
Increase in payable for investments purchased ............ (4,956,649)
Decrease in accrued expenses and other liabilities ....... 11,804
------------
Total adjustments ........................................ 3,752,206
------------
Net cash provided from operating activities ................. $ 5,349,701
============
22 Aberdeen Commonwealth Income Fund, Inc. See Notes to Financial Statements.
Statements of Changes in Net Assets
For the Six
Months Ended For the Year
April 30, 2001 Ended
(unaudited) Oct. 31, 2000
---------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations
Net investment income ......................................... $ 3,430,491 $ 7,522,827
Net realized gains (losses) on investment transactions ........ (21,463) 2,020,497
Net realized gains on futures transactions .................... -- 28,352
Net realized foreign exchange losses .......................... (2,425,703) (5,683,079)
Net change in unrealized appreciation/depreciation
of investments .............................................. (479,504) (2,122,298)
Net change in unrealized foreign exchange losses .............. 1,093,674 (9,888,532)
------------- -------------
Net increase (decrease) in net assets resulting from operations .. 1,597,495 (8,122,233)
------------- -------------
Dividends and distributions to shareholders
Dividends to common shareholders from net
investment income ........................................... (1,903,913) (6,591,924)
Dividends to preferred shareholders from net
investment income ........................................... (842,556) (1,514,672)
Distributions to common shareholders in excess of net
investment income ........................................... (1,987,516) --
Distributions to common shareholders from net realized gains
on investment transactions .................................. -- (1,468,931)
Distributions to preferred shareholders from net realized gains
on investment transactions .................................. -- (312,268)
------------- -------------
Net decrease in net assets resulting from dividends and
distributions to shareholders ................................. (4,733,985) (9,887,795)
------------- -------------
Total decrease in net assets ..................................... (3,136,490) (18,010,028)
Total Net Assets
Beginning of period .............................................. 124,494,266 142,504,294
------------- -------------
End of period (including distributions in excess of net
investment income of ($1,987,516) and ($684,022),
respectively) ................................................. $ 121,357,776 $ 124,494,266
============= =============
See Notes to Financial Statements. Aberdeen Commonwealth Income Fund, Inc. 23
Financial Highlights
For the Six
Months Ended For the Year Ended October 31,
April 30, 2001 ------------------------------
(unaudited) 2000 1999
-------------------------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value per common share,
beginning of period ............................. $ 10.20 $ 12.14 $ 13.07
-------- -------- --------
Net investment income ............................. 0.37 0.81 0.87
Net realized and unrealized gains (losses)
on investments and foreign currencies ........... (0.20) (1.68) (0.70)
-------- -------- --------
Total from investment operations ................ 0.17 (0.87) 0.17
-------- -------- --------
Dividends from net investment income to
common shareholders ............................. (0.42) (0.71) (0.62)
Dividends from net investment income to
preferred shareholders .......................... (0.09) (0.16) (0.11)
Distributions from net realized gains on investment
transactions to common shareholders ............. -- (0.16) (0.33)
Distributions from net realized gains on investment
transactions to preferred shareholders .......... -- (0.04) (0.04)
-------- -------- --------
Total dividends and distributions ............... (0.51) (1.07) (1.10)
-------- -------- --------
Net asset value per common share, end of period ... $ 9.86 $ 10.20 $ 12.14
======== ======== ========
Market value, end of period ....................... $ 8.84 $ 8.875 $ 10.375
======== ======== ========
Number of shares of common stock
outstanding (000 omitted) ....................... 9,266 9,266 9,266
Total investment return based on:(1)
Market value .................................... 4.26% (6.11)% 4.89%
Net asset value ................................. 1.10% (7.88)% 1.53%
Ratio to Average Net Assets of Common
Shareholders(2)/Supplementary Data:
Net assets of common shareholders, end of
period (000 omitted) ............................ $ 91,358 $ 94,494 $112,504
Average net assets of common shareholders
(000 omitted) ................................... 96,427 105,657 119,257
Operating expenses ................................ 2.00% 2.02% 1.95%
Net investment income available to
common shareholders(2) .......................... 5.42% 5.39% 5.53%
Portfolio turnover ................................ 11% 29% 40%
Senior securities (preferred stock)
outstanding (000 omitted) ....................... $ 30,000 $ 30,000 $ 30,000
Asset coverage on preferred stock at period end ... 405% 415% 475%
--------------------------------------------------------------------------------
(1) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of each period reported. Dividends and distributions, if any, are assumed
for the purposes of this calculation to be reinvested at prices obtained
under the Fund's dividend reinvestment plan. Total investment return does
not reflect brokerage commissions. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in years where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from
the beginning to the end of such years. Conversely, total investment
return based on net asset value will be lower than total investment return
based on market value in periods where there is a decrease in the discount
or an increase in the premium of the market value to the net asset value
from the beginning to the end of such years.
(2) Ratios are calculated on the basis of income and expenses applicable to
both the common and preferred shares relative to the average net assets of
common shareholders. Ratio of net investment income before preferred stock
dividends to average net assets of common shareholders is 7.17%, 7.12%,
6.76%, 7.50%, 8.10% and 8.73%, respectively.
24 Aberdeen Commonwealth Income Fund, Inc. See Notes to Financial Statements.
Financial Highlights (concluded)
For the Year Ended October 31,
----------------------------------
1998 1997 1996
----------------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value per common share,
beginning of period ............................. $ 13.94 $ 14.32 $ 13.13
-------- -------- --------
Net investment income ............................. 0.99 1.14 1.16
Net realized and unrealized gains (losses)
on investments and foreign currencies ........... (0.73) (0.34) 1.21
-------- -------- --------
Total from investment operations ................ 0.26 0.80 2.37
-------- -------- --------
Dividends from net investment income to
common shareholders ............................. (0.87) (0.99) (1.00)
Dividends from net investment income to
preferred shareholders .......................... (0.14) (0.17) (0.16)
Distributions from net realized gains on investment
transactions to common shareholders ............. (0.08) (0.02) (0.01)
Distributions from net realized gains on investment
transactions to preferred shareholders .......... (0.04) -- (0.01)
-------- -------- --------
Total dividends and distributions ............... (1.13) (1.18) (1.18)
-------- -------- --------
Net asset value per common share, end of period ... $ 13.07 $ 13.94 $ 14.32
======== ======== ========
Market value, end of period ....................... $10.8125 $12.4375 $ 11.875
======== ======== ========
Number of shares of common stock
outstanding (000 omitted) ....................... 9,266 9,266 9,266
Total investment return based on:(1)
Market value .................................... (5.59)% 13.78% 13.89%
Net asset value ................................. 1.82% 5.76% 18.99%
Ratio to Average Net Assets of Common
Shareholders(2)/Supplementary Data:
Net assets of common shareholders, end of
period (000 omitted) ............................ $121,096 $129,158 $132,660
Average net assets of common shareholders
(000 omitted) ................................... 122,266 130,125 122,887
Operating expenses ................................ 1.70% 1.63% 1.70%
Net investment income available to
common shareholders(2) .......................... 6.17% 6.88% 7.47%
Portfolio turnover ................................ 36% 24% 30%
Senior securities (preferred stock)
outstanding (000 omitted) ....................... $ 30,000 $ 30,000 $ 30,000
Asset coverage on preferred stock at period end ... 504% 530% 542%
--------------------------------------------------------------------------------
(1) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of each period reported. Dividends and distributions, if any, are assumed
for the purposes of this calculation to be reinvested at prices obtained
under the Fund's dividend reinvestment plan. Total investment return does
not reflect brokerage commissions. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in years where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from
the beginning to the end of such years. Conversely, total investment
return based on net asset value will be lower than total investment return
based on market value in periods where there is a decrease in the discount
or an increase in the premium of the market value to the net asset value
from the beginning to the end of such years.
(2) Ratios are calculated on the basis of income and expenses applicable to
both the common and preferred shares relative to the average net assets of
common shareholders. Ratio of net investment income before preferred stock
dividends to average net assets of common shareholders is 7.17%, 7.12%,
6.76%, 7.50%, 8.10% and 8.73%, respectively.
See Notes to Financial Statements. Aberdeen Commonwealth Income Fund, Inc. 25
Notes to Financial Statements
Note 1. Investment Objectives
Aberdeen Commonwealth Income Fund, Inc. (the "Fund") was incorporated in
Maryland on June 28, 1991, as a closed-end, non-diversified investment company.
From the Fund's inception to April 7, 1999 the Fund's investment objective was
to provide high current income by investing in high-grade fixed-income
securities denominated in the currencies of Australia, Canada, New Zealand and
the United Kingdom (the "Commonwealth Currencies"). On April 7, 1999,
shareholders approved an expansion of the Fund's principal investment objective,
investment policies and investment restrictions to enable the Fund to invest up
to 35% of its total assets in Global Debt Securities. Global Debt Securities
include securities of issuers located in, or securities denominated in the
currency of, countries other than Australia, Canada, New Zealand or the United
Kingdom.
As modified, (a) the market value weighted average credit quality of the Fund's
investments must be A or better at all times, (b) the Fund may invest up to 15%
of its total assets in debt securities rated below investment grade at the time
of investment, but not less than B- or if not rated, judged by the Investment
Manager to be of comparable quality, (c) the Fund may invest a portion of its
assets in equity securities of other investment companies that are registered
under the Investment Company Act of 1940 and that are themselves invested
primarily in fixed-income securities, and (d) the Fund, with respect to the
portion of the portfolio not denominated in a Commonwealth Currency, may use
derivatives to manage both currency and interest rate risk and to replicate, or
substitute for, physical securities in order to achieve transactional
efficiencies. The Fund may also seek capital appreciation only as a secondary
investment objective.
The Fund's assets have generally been invested in a portfolio of securities
issued or guaranteed by the governments, territories, provinces and states of
Australia, Canada, New Zealand and the United Kingdom as well as securities
issued by corporations domiciled in those countries. The Fund will, under normal
circumstances, invest in debt securities in at least three of these currencies
and will not hold more than 50% of its assets in securities denominated in any
one Commonwealth Currency. The ability of issuers of debt securities held by the
Fund to meet their obligations may be affected by economic developments in a
specific industry, country or region.
26 Aberdeen Commonwealth Income Fund, Inc.
Notes to Financial Statements (continued)
Note 2. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Basis of Presentation: The financial statements of the Fund are prepared in
accordance with accounting principles generally accepted in the United States
using the United States dollar as both the functional and reporting currency.
However, the Commonwealth Currencies (excluding New Zealand) are the functional
currencies for Federal tax purposes (see Taxes below).
Foreign Currency Translation: Foreign currency amounts are translated into
United States dollars on the following basis:
(i) market value of investment securities, other assets and liabilities--at
the closing rates of exchange as reported by a major bank;
(ii) purchases and sales of investment securities, income and expenses--at the
rates of exchange prevailing on the respective dates of such transactions.
The Fund isolates that portion of the results of operations arising as a result
of changes in the foreign exchange rates from the fluctuations arising from
changes in the market prices of the securities held at fiscal period end.
Similarly, the Fund isolates the effect of changes in foreign exchange rates
from the fluctuations arising from changes in the market prices of portfolio
securities sold during the fiscal year.
Net realized foreign exchange losses of $2,425,703 for the six months ended
April 30, 2001 includes realized foreign exchange gains and losses from sales
and maturities of portfolio securities, sales of foreign currencies, currency
gains or losses realized between the trade and settlement dates on securities
transactions and the difference between the amounts of interest, discount and
foreign withholding taxes recorded on the Fund's books and the US dollar
equivalent amounts actually received or paid. Net unrealized foreign exchange
gains of $14,186,112 for the six months ended April 30, 2001 include changes in
the value of portfolio securities and other assets and liabilities arising as a
result of changes in the exchange rate.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin, including
unanticipated movements in the value of the foreign currency relative to the US
dollar.
Aberdeen Commonwealth Income Fund, Inc. 27
Notes to Financial Statements (continued)
The exchange rates of the Commonwealth Currencies utilized by the Fund at April
30, 2001 were US$0.5072 to A$1.00, US$0.6499 to C$1.00, US$0.4110 to NZ$1.00,
US$1.4305 to (pound)1.00.
Security Valuation: Investments are stated at value. Investments for which
market quotations are readily available are valued at the last trade price on or
within one local business day of the date of determination as obtained from a
pricing source. If no such trade price is available, such investments are valued
at the quoted bid price or the mean between the quoted bid and asked price on
the date of determination as obtained from a pricing source. Securities for
which market quotations are not readily available are valued at fair value in
good faith using methods determined by or under the direction of the Fund's
Board of Directors.
Securities purchased with a maturity of less than 60 days are valued at
amortized cost. Securities purchased with a maturity of greater than 60 days are
valued at current market quotations until the 60th day prior to maturity. At
that time, the value of the security on the 61st day prior to maturity is
amortized on a straight-line basis to value the security for the remaining 60
days.
In connection with transactions in repurchase agreements with US financial
institutions, it is the Fund's policy that its custodian/counterparty segregates
the underlying collateral securities, the value of which exceeds the principal
amount of the repurchase transaction, including accrued interest. To the extent
that any repurchase transaction exceeds one business day, the collateral is
valued on a daily basis to determine its adequacy. If the seller defaults and
the value of the collateral declines or if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of the collateral by the
Fund may be delayed or limited.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses from
security and currency transactions are calculated on the identified cost basis.
Interest income is recorded on an accrual basis. Discounts on securities
purchased are accreted on an effective yield basis over the estimated lives of
the respective securities. Expenses are accrued on a daily basis.
In November 2000, a revised AICPA Audit and Accounting Guide, Audits of
Investment Companies, was issued, and is effective for fiscal years beginning
after December 15, 2000. The revised Guide will require the Fund to amortize
premium on all fixed-income securities. Upon initial adoption, the Fund will be
28 Aberdeen Commonwealth Income Fund, Inc.
Notes to Financial Statements (continued)
required to adjust the cost of its fixed-income securities by the cumulative
amount of amortization that would have been recognized had amortization been in
effect from the purchase date of each holding. Adopting this accounting
principle will not affect the Fund's net asset value, but will change the
classification of certain amounts between interest income and realized and
unrealized gain/loss in the Statement of Operations. The Fund estimates that the
initial adjustment required upon adoption of premium and discount amortization
will decrease the recorded cost of its investments (but not their market value)
by approximately $4,179,000. Additionally, had this principle been in effect
during the six months ended April 30, 2001, the Fund estimates that net
investment income would have decreased by approximately $0.07 per share (0.7% of
net assets) and realized and unrealized gain (loss) per share would have
increased (decreased) by the same amount. Because the Fund determines its
required distributions under Federal income tax laws, adoption of this principle
will not affect the amount or composition of distributions paid to shareholders.
Derivative Financial Instruments: The Fund is authorized to use derivatives to
manage both currency and interest rate risk for global debt securities. With
respect to investments denominated in Commonwealth currencies, derivatives can
only be used to manage interest rate risk. Losses may arise due to changes in
the value of the contract or if the counterparty does not perform under the
contract.
Forward Currency Contracts: A forward currency contract involves an obligation
to purchase and sell a specific currency at a future date, which may be any
fixed number of days from the date of the contract agreed upon by the parties,
at a price set at the time of the contract. The foreign currency contract is
marked-to-market daily and the change in market value is recorded by the Fund as
an unrealized gain or loss. When the forward currency contract is closed, the
Fund records a realized gain or loss equal to the difference between the value
at the time it was opened and the value at the time it was closed.
Financial futures contracts: A futures contract is an agreement between two
parties to buy and sell a security for a set price on a future date. Upon
entering into a contract, the Fund deposits and maintains as collateral such
initial margin as required by the exchange on which the transaction is effected.
Pursuant to the contract, the Fund agrees to receive from or pay to the broker
an amount of cash
Aberdeen Commonwealth Income Fund, Inc. 29
Notes to Financial Statements (continued)
equal to the daily fluctuation in the value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. As of April
30, 2001, there were no open futures contracts.
Options: When the fund writes an option, an amount equal to the premium received
by the Fund is reflected as an asset and an equivalent liability. The amount of
the liability is subsequently marked to market to reflect the current market
value of the option written. When a security is purchased or sold through an
exercise of an option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from (or added to)
the proceeds of the security sold. When an option expires (or the Fund enters
into a closing transaction), the Fund realizes a gain or loss on the option to
the extent of the premiums received or paid (or gain or loss to the extent the
cost of the closing transaction exceeds the premium paid or received). As of
April 30, 2001, there were no open option contracts.
Dividends: Dividends and distributions to common shareholders are recorded on
the ex-dividend date and are based upon net investment income and capital and
currency gains determined in accordance with income tax regulations which may
differ from accounting principles generally accepted in the United States. These
differences are primarily due to differing treatments for foreign currencies and
loss deferrals. Dividends and distributions to preferred shareholders are
accrued on a daily basis and are determined as described in Note 5.
Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with AICPA Statement of Position
93-2 Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. For
the year ended October 31, 2000, the Fund increased undistributed net investment
income by $483,732, increased accumulated net realized gains on investments by
$45,817 and increased accumulated net realized foreign exchange losses by
$530,506, resulting in a increase to paid-in capital in excess of par by $957.
Net investment income, net realized losses on investments and net assets were
not
30 Aberdeen Commonwealth Income Fund, Inc.
Notes to Financial Statements (continued)
affected by this change. Accumulated realized and unrealized foreign exchange
losses shown in the composition of net assets represent foreign exchange losses
for book purposes that have not yet been recognized for tax purposes.
Taxes: For Federal income and excise tax purposes, substantially all of the
Fund's transactions are accounted for using the functional currencies.
Accordingly, only realized currency gains and losses resulting from the
repatriation of any of the Commonwealth Currencies into US dollars or another
Commonwealth Currency and realized currency gains and losses on non-Commonwealth
currencies are recognized for tax purposes.
No provision has been made for United States Federal income taxes because it is
the Fund's policy to meet the requirements of the United States Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to shareholders. Under the applicable
foreign tax law, a withholding tax may be imposed on interest and discounts
earned at various rates.
Cash Flow Information: The Fund invests in securities and distributes dividends
from net investment income and net realized gains on investment and currency
transactions which are paid in cash or are reinvested at the discretion of
shareholders. These activities are reported in the Statements of Changes in Net
Assets and additional information on cash receipts and cash payments is
presented in the Statement of Cash Flows. Cash includes domestic and foreign
currency.
Use of Estimates: The preparation of financial statements in accordance with
accounting principles generally accepted in the United states 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.
Note 3. Agreements
The Fund has agreements with Aberdeen Asset Managers (C.I.) Limited (the
"Investment Manager"), Aberdeen Asset Management Limited (the "Investment
Adviser"), and Princeton Administrators, L.P. (the "Administrator"). The
Investment Manager and the Investment Adviser are wholly-owned subsidiaries of
Aberdeen Asset Management Plc. The Investment Manager has entered into an
agreement with CIBC World Markets, Inc. (the "Consultant").
The Investment Manager makes investment decisions on behalf of the Fund on
Aberdeen Commonwealth Income Fund, Inc. 31
Notes to Financial Statements (continued)
the basis of recommendations and information furnished to it by the Investment
Adviser and the Consultant, including the selection of and the placement of
orders with brokers and dealers to execute portfolio transactions on behalf of
the Fund.
The management agreement provides the Investment Manager with a fee, computed
weekly and payable monthly, at the following annual rates: 0.65% of the Fund's
average weekly net assets up to $200 million, 0.60% of such assets between $200
million and $500 million and 0.55% of such assets in excess of $500 million. The
administration agreement provides the Administrator with a fee computed and
payable monthly at the annual rate of 0.20% of the Fund's average weekly net
assets, subject to a minimum annual payment of $150,000 ($12,500 per month). The
Investment Manager pays fees to the Investment Adviser and the Consultant for
their services rendered.
Effective March 1, 2000, the Fund entered into an agreement with EquitiLink USA,
Inc. (doing business under the name Aberdeen Asset Management ("AAM")), an
affiliate, to provide investor relation services. This agreement provides AAM
with a monthly retainer of $4,000 plus out of pocket expenses up to $3,000 per
year.
The Investment Manager informed the Fund that it paid $154,453 to the Investment
Adviser and $6,000 to the Consultant during the six months ended April 30, 2001.
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended April 30, 2001 aggregated $11,887,257 and $15,113,469,
respectively.
The United States federal income tax basis of the Fund's investments at April
30, 2001 was $121,639,698 and accordingly, net unrealized depreciation for
United States federal income tax purposes was $2,867,279 (gross unrealized
appreciation--$1,483,601, gross unrealized depreciation--$4,350,880.)
Note 5. Capital
There are 300 million shares of $.001 par value common stock authorized and
9,266,209 shares outstanding at April 30, 2001.
On March 1, 2001, the Board of Directors approved a stock repurchase program.
The stock repurchase program allows the Fund to repurchase up to 10% of its
common stock in the open market over a 12-month period if and when its discount
to
32 Aberdeen Commonwealth Income Fund, Inc.
Notes to Financial Statements (continued)
net asset value exceeds 10%. Through April 30, 2001, there have been no share
repurchases through this program.
There are 100 million shares of $.001 par value of Auction Market Preferred
Stock ("Preferred Stock") authorized. The preferred shares have rights as
determined by the Board of Directors. The 1,200 shares of Preferred Stock
outstanding consist of one series, W-7. The Preferred Stock has a liquidation
value of $25,000 per share plus any accumulated but unpaid dividends whether or
not declared.
Dividends on the Preferred Stock are cumulative at a rate typically reset every
seven days based on the results of an auction. Dividend rates ranged from 4.73%
to 6.634% during the six months ended April 30, 2001. Under the Investment
Company Act of 1940, the Fund may not declare dividends or make other
distributions on shares of common stock or purchase any such shares if, at the
time of the declaration, distribution or purchase, asset coverage with respect
to the outstanding Preferred Stock would be less than 200%.
The Preferred Stock is redeemable at the option of the Fund, in whole or in
part, on any dividend payment date at $25,000 per share plus any accumulated but
unpaid dividends. The Preferred Stock is also subject to mandatory redemption at
$25,000 per share plus any accumulated but unpaid dividends, whether or not
declared, if certain requirements relating to the composition of the assets and
liabilities of the Fund as set forth in the Articles of Incorporation are not
satisfied.
The holders of Preferred Stock have voting rights equal to the holders of common
stock (one vote per share) and will vote together with holders of shares of
common stock as a single class. However, holders of Preferred Stock are also
entitled to elect two of the Fund's directors.
Note 6. Subsequent Dividends
Subsequent to April 30, 2001, the Board of Directors of the Fund declared
dividends from undistributed net investment income of $0.07 per common share
payable on June 15, 2001 to common shareholders of record on May 31, 2001.
Subsequent to April 30, 2001, dividends and distributions declared and paid on
preferred shares totaled approximately $176,268 for the outstanding preferred
share series through June 15, 2001.
Aberdeen Commonwealth Income Fund, Inc. 33
Supplemental Proxy Information (unaudited)
The Annual Meeting of Shareholders of Aberdeen Commonwealth Income Fund, Inc.
was held on April 19, 2001 at the offices of Prudential Securities Incorporated,
One Seaport Plaza, New York, New York. The description of each proposal and
number of shares voted at the meeting are as follows:
--------------------------------------------------------------------------------
Votes For Votes Withheld
--------------------------------------------------------------------------------
1. To elect three directors to serve as Class III
directors for a three-year term expiring in 2004:
Martin J. Gilbert 7,159,413 5,879
Neville J. Miles 7,159,413 5,879
Warren C. Smith 7,159,413 5,879
--------------------------------------------------------------------------------
Votes For Votes Withheld
--------------------------------------------------------------------------------
2. To elect two directors to represent the interests
of the holders of the preferred stock for the
ensuing year:
Dr. Anton E. Schrafl 1,158 --
John T. Sheehy 1,158 --
--------------------------------------------------------------------------------
Directors whose term of office continued beyond this meeting are as follows:
David Lindsay Elsum, Laurence S. Freedman, William J. Potter, Sir David
Rowe-Ham, Peter D. Sacks, E. Duff Scott and Hugh Young.
A Special Meeting of Shareholders of the Fund was held on November 30, 2000, at
the Hilton Newark Gateway, Raymond Boulevard, Newark, New Jersey. The meeting
was held for the purpose of obtaining shareholder approval of a new management
agreement with the Fund's Investment Manager and a new investment advisory
agreement with the Fund's Investment Adviser. Shareholder approval of these
agreements was sought in order to permit the Investment Manager and Investment
Adviser to continue to provide services to the Fund following the acquisition of
the Investment Manager and Investment Adviser by Aberdeen Asset Management plc.
The result of the proxy solicitation on this matter was as follows:
--------------------------------------------------------------------------------
Votes For Votes Against Abstentions
--------------------------------------------------------------------------------
8,736,540 147,305 81,088
--------------------------------------------------------------------------------
34 Aberdeen Commonwealth Income Fund, Inc.
Directors
Martin J. Gilbert, Chairman
David Lindsay Elsum
Laurence S. Freedman
Neville J. Miles
William J. Potter
Sir David Rowe-Ham
Peter D. Sacks
Anton E. Schrafl
E. Duff Scott
John T. Sheehy
Warren C. Smith
Hugh Young
Officers
Hugh Young, President
Ouma Sananikone,
Vice President and
Chief Investment Officer
David Manor, Treasurer
Roy M. Randall, Secretary
Michael Karagianis, Assistant
Vice President
Beverley Hendry, Assistant Treasurer
Timothy Sullivan, Assistant Treasurer
Allan S. Mostoff, Assistant Secretary
Margaret A. Bancroft, Assistant Secretary
Sander M. Bieber, Assistant Secretary
Christian Pittard, Assistant Secretary
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase, from time to time, shares of its
common stock in the open market.
[RECYCLE LOGO] Printed on post-consumer recycled paper
Aberdeen Commonwealth Income Fund, Inc. 35
Corporate Information
Investment Manager Aberdeen Asset Managers (C.I.) Limited
P.O. Box 578, 17 Bond Street
St. Helier, Jersey JE45XB
Channel Islands
Investment Advisor Aberdeen Asset Management Limited
Level 6, 201 Kent Street
Sydney, NSW 2000, Australia
Consultant CIBC World Markets, Inc.
BCE Place, Canada Trust Tower
P.O. Box 500
Toronto, Ontario, M5J 2S8
Canada
Administrator Princeton Administrators, L.P.
Box 9095
Princeton, New Jersey 08543-9095
Custodian & Transfer Agent State Street Bank and Trust Company
1 Heritage Drive
North Quincy, Massachusetts 02171
Auction Agent Deutsche Bank
Four Albany Street
New York, New York 10006
Independent Accountants PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
Legal Counsel Dechert
1775 Eye Street, N.W.
Washington, DC 20006
Stikeman, Elliott
Level 40 Chifley Tower
2 Chifley Square
Sydney, NSW 2000, Australia
Investor Relations Aberdeen Asset Management
45 Broadway, 31st Floor
New York, New York 10006
1-800-522-5454 or 1-212-968-8800
InvestorRelations@aberdeen-asset.com
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Aberdeen
ASSET MANAGERS
Aberdeen Asset Managers (C.I.) Limited
The common shares of Aberdeen Commonwealth Income Fund, Inc. are traded on the
New York Stock Exchange under the symbol "FCO." Information about the Fund's net
asset value and market price is published weekly in Barron's and in the Monday
edition of The Wall Street Journal.
This report, including the financial information herein, is transmitted to the
shareholders of Aberdeen Commonwealth Income Fund, Inc. for their general
information only. It does not have regard to the specific investment objectives,
financial situation and the particular needs of any specific person. Past
performance is no guarantee of future returns.