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Aberdeen
Commonwealth Income
Fund, Inc.
Quarterly Report
July 31, 2001
Stop Press
Dear Shareholder,
We are greatly saddened by the tragic events that took place on September 11,
2001 and our deepest sympathies go out to the families of all the victims. We
wish to acknowledge and thank the members of the emergency response teams whose
heroic efforts have been an inspiration to us all.
We would like to take the opportunity to reassure our shareholders of our
unwavering commitment to their investment needs during this difficult time.
Please let us know if we can be of any assistance as we move forward together in
the weeks and months ahead.
Sincerely,
/s/ Martin J. Gilbert
Martin J. Gilbert
Chairman
Highlights
o 9.5% cash distribution rate for the previous 12 months based on a share
price of $8.80 on July 31, 2001
o 89.6% invested in securities rated or deemed equivalent to AA/Aa or better
o 5.5% of total assets invested in Asian debt securities
All amounts in U.S. Dollars unless otherwise stated.
2 Aberdeen Commonwealth Income Fund, Inc.
Letter to Shareholders
September 7, 2001
Dear Shareholder,
We present this Quarterly Report which covers the activities of Aberdeen
Commonwealth Income Fund, Inc. (the "Fund") for the quarter ended July 31, 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: 89.6% of Securities Rated or Deemed Equivalent to AA/Aa or
Better
The Fund's high credit quality has been maintained. Over 89.6% of assets are
rated AA/Aa or better, or are considered of equivalent quality by the Investment
Manager. An additional 7.0% is held in A rated securities.
Distributions: 9.5% Annual Cash Distribution Rate
Distributions to common shareholders for the twelve months ended July 31, 2001
totaled 84.0 cents per share. Based on the share price of $8.80 on July 31,
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 September 3, 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 December 2001.
Net Asset Value Performance: 5.3% Per Annum Return Since Inception
The Fund's Net Asset Value ("NAV") returned 1.4% over the quarter to July 31,
2001. Since inception, the Fund's NAV has returned 5.3% per annum to July 31,
2001. On July 31, 2001, the Fund's share price was $8.80, which represented a
discount of 9.9% to the NAV of $9.77.
Aberdeen Commonwealth Income Fund, Inc. 3
Letter to Shareholders (concluded)
Asian Investments: 5.5% of Total Assets Invested in Asian Debt Securities
In March 1999, the Fund's shareholders approved amendments to 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. This strategy was proposed to be implemented in two phases. The
first phase involved the immediate investment of up to 20% of the Fund's assets
in Asian debt markets. On September 3, 2001, the Board of Directors authorized
the Investment Manager, in its discretion, to implement the second phase of the
global investment strategy. This will now allow the Fund to invest up to 35% of
its total assets in Global Debt Securities, with a view to enhancing yield.
As of July 31, 2001, 5.5% 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.
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 1-800-552-5465 or 1-212-968-8800 in the United States,
o email to InvestorRelations@aberdeen-asset.com, or
o visiting 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 J. Gilbert
Martin J. Gilbert
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 to be paid on September 14, 2001,
are comprised of 35% net investment income and 65% return of paid-in capital.
This estimated distribution composition may vary from month to month because it
may be materially impacted by future realized gains and losses on securities and
fluctuations in the value of the 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 call toll free on 1-800-451-6788.
6 Aberdeen Commonwealth Income Fund, Inc.
Report of the Investment Manager
Share Price Performance
On July 31, 2001, the Fund's share price was $8.80, which represented a discount
of 9.9% to the NAV of $9.77. At the date of this report, the share price was
$9.03 representing a discount of 9.7% to the NAV of $10.00.
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 4.13% over the quarter ended July 31, 2001,
compared with 3.93% for 30-day U.S. commercial paper over the same period. These
rates have decreased since the quarter ended April 30, 2001, due to the lowering
of interest rates by the U.S. Federal Reserve over the period.
On September 3, 2001 the Board of Directors resolved to amend the Fund's
policies with respect to derivatives to enable the Investment Manager to use
interest rate swaps to hedge up to one third of the Fund's liabilities. This
gives the Investment Manager the flexibility to lock in historically low U.S.
dollar interest rates with respect to up to one third of the Fund's outstanding
Auction Market Preferred Stock.
The most significant type of risk associated with interest rate swaps is the
risk that the counterparty may default or go bankrupt, in which case the Fund
would bear the risk of loss of the amount expected to be received under the swap
agreement. There can be no assurance that the Fund will have an interest rate
swap in place at any given time nor can there be any assurance that, if an
interest rate swap is in place, it will be successful in hedging the Fund's
interest rate risk with respect to the AMPS.
The implementation of this strategy will be at the discretion of the Investment
Manager.
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 outstanding AMPS issue will
make 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 July 31, 2001, compared with the previous quarter and twelve months.
TABLE 1: ABERDEEN COMMONWEALTH INCOME FUND, INC.--
GEOGRAPHIC ASSET ALLOCATION
================================================================================
July 31, 2001 April 30, 2001 July 31, 2000
% % %
--------------------------------------------------------------------------------
Australia 22.1 23.6 23.8
Canada 34.7 32.8 35.1
New Zealand 4.8 3.7 3.3
United Kingdom 29.2 30.5 29.9
United States* 3.7 3.8 2.1
Asia 5.5 5.6 5.8
--------------------------------------------------------------------------------
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 U.S. 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 July 31, 2001, compared with the previous quarter and twelve months.
TABLE 2: ABERDEEN COMMONWEALTH INCOME FUND, INC.--
CURRENCY ALLOCATION
================================================================================
July 31, 2001 April 30, 2001 July 31, 2000
% % %
--------------------------------------------------------------------------------
Australian Dollar 22.1 23.6 23.8
Canadian Dollar 34.7 32.8 35.1
New Zealand Dollar 4.8 3.7 3.3
British Pound 29.2 30.5 29.9
United States Dollar* 3.7 3.8 4.7
Asia Currencies 5.5 5.6 3.2
--------------------------------------------------------------------------------
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 July 31, 2001, the average maturity of the Fund's assets was 7.4 years,
compared with 8.0 years on April 30, 2001. The Fund's modified duration remained
at 4.9 years for the quarter ended July 31, 2001. The table below shows the
maturity composition of the Fund's investments as of July 31, 2001:
TABLE 3: ABERDEEN COMMONWEALTH INCOME FUND, INC.--
MATURITY ANALYSIS
================================================================================
Less than 1 year 1--5 years 5--10 years Over 10 years
% % % %
--------------------------------------------------------------------------------
Australia 15.6 25.4 48.9 10.1
Canada 36.5 14.4 10.9 38.2
New Zealand 72.6 10.4 17.0 --
United Kingdom 13.7 21.9 25.4 39.0
United States 100.0 -- -- --
Asia 37.2 51.4 11.4 --
--------------------------------------------------------------------------------
Total Portfolio 29.3 20.0 23.5 27.2
================================================================================
Sectoral Composition
The table below shows the sectoral composition of the Fund's total investments
as of July 31, 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 8.6 9.6 1.7 2.0 0.2
Canada 19.6 5.7 0.3 0.8 8.3
New Zealand 0.3 -- 1.2 0.7 2.6
United Kingdom 20.5 -- 3.0 4.0 1.7
United States -- -- -- -- 3.7
Asia 3.6 0.6 0.2 0.1 1.0
----------------------------------------------------------------------------------------
Total Portfolio 52.6 15.9 6.4 7.6 17.5
========================================================================================
Aberdeen Commonwealth Income Fund, Inc. 9
Portfolio Composition (concluded)
Quality of Investments
On July 31, 2001, 89.6% 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 July 31, 2001.
TABLE 5: ABERDEEN COMMONWEALTH INCOME FUND, INC.--
ASSET QUALITY
================================================================================
AAA/Aaa AA/Aa A BBB/Baa BB/Ba*
% % % % %
--------------------------------------------------------------------------------
Australia 88.6 11.4 -- -- --
Canada 23.8 67.7 8.5 -- --
New Zealand 54.0 35.6 10.4 -- --
United Kingdom 66.1 23.7 10.2 -- --
United States 100.0 -- -- -- --
Asia 21.5 -- 11.6 66.9 --
--------------------------------------------------------------------------------
Total Portfolio 54.8 34.8 7.0 3.4 --
================================================================================
* Below investment grade.
10 Aberdeen Commonwealth Income Fund, Inc.
Market Review and Outlook
AUSTRALIA
The benchmark 10-year bond yield rose from 5.78% to 6.09% over the quarter ended
July 31, 2001. Bank bill yields rose slightly over the quarter, closing at
5.06%.
Interest rate differentials between U.S. and Australian interest rates have
continued to widen, reaching levels not seen since the mid 1990's. As the market
continues to anticipate more easing initiatives in the U.S., interest rate
differentials should be a key source of support to the Australian dollar in the
near term, as will the likelihood of stronger growth momentum in the domestic
economy relative to the U.S.
The Australian dollar fluctuated marginally during the quarter to July 31, 2001
closing at US$0.51.
CANADA
The Bank of Canada ("BoC") expects GDP growth to be between 2%-3% this year,
which is above the expected 1.9% growth in the U.S. BoC Governor Dodge has
stressed that the main risk to Canada's economic outlook is that the U.S.
recovery may be delayed. If external demand remains sluggish, both the inventory
build-up and the slowdown in household asset accumulation, which have sustained
growth in the face of a deteriorating global economic environment, will become
significant liabilities. In such an environment the Investment Manager believes
the BoC will have to cut rates more aggressively.
The Canadian dollar remained stable over the quarter, closing at $0.65.
NEW ZEALAND
With consumer and business confidence strengthening and the outlook for New
Zealand's major trading partner, Australia, improving, the Investment Manager
expects that a rebound in New Zealand's growth is likely in the medium term. The
Reserve Bank of New Zealand ("RBNZ") has seen New Zealand's easing cycle lag the
rest of the dollar bloc. Headline inflation pressures appear to be peaking which
should provide the RBNZ with greater room to move in coming months, while
slowing global growth is also likely to remain a key concern.
The New Zealand dollar remained stable over the quarter, closing at $0.41.
Aberdeen Commonwealth Income Fund, Inc. 11
Market Review and Outlook (concluded)
UNITED KINGDOM
The quarter ended July 31, 2001 saw signs of developing weakness within the UK's
consumer related sectors, and the manufacturing sector continued to remain weak.
The Investment Manager believes that the Bank of England will continue to ease
monetary policy against a background of slow world growth in the second half of
the year.
The pound remained stable against the U.S. dollar over the quarter, to close at
$1.43.
ASIA
Domestic and Yankee (U.S.$ denominated) bonds
Asian domestic bond yields gave a mixed performance over the quarter ended July
31, 2001. While 10-year bond yields rose in Thailand and the Phillipines, those
in Malaysia and South Korea fell over the period. U.S.$ denominated Asian bond
yields (Yankees) fell over the quarter ended July 31, 2001, in line with falling
U.S. interest rates.
As Asian currencies came under pressure from fears of a harder global landing,
Asian credit spreads widened through late 2000. However, the easing of monetary
policy by the U.S. Federal Reserve has had a positive influence on riskier
investment markets globally, benefiting Asian markets in particular.
Currencies
Asian currencies were lackluster against the U.S. dollar over the quarter. The
Malaysian ringgit remained pegged to the U.S. 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 three and twelve month periods.
================================================================================
July 31, 2001 April 30, 2001 July 31, 2000
--------------------------------------------------------------------------------
Australia
90 day bank bills 5.06% 4.89% 6.35%
10 year bonds 6.09% 5.78% 6.24%
Australian Dollar $ 0.51 $ 0.51 $ 0.58
Canada
90 day bank bills 4.03% 4.44% 5.65%
10 year bonds 5.66% 5.79% 5.89%
Canadian Dollar $ 0.65 $ 0.65 $ 0.67
New Zealand
90 day bank bills 5.81% 5.84% 6.87%
10 year bonds 6.69% 6.59% 6.71%
NZ Dollar $ 0.41 $ 0.41 $ 0.45
United Kingdom
90 day bank bills 4.95% 5.58% 5.90%
10 year bonds 5.01% 5.12% 5.22%
British Pound $ 1.43 $ 1.43 $ 1.50
South Korea
90 day bank bills 5.23% 6.10% 7.38%
5 year bonds 6.78% 7.85% 8.28%
South Korean Won* (won) 1298 (won) 1315 (won) 1117
Thailand
90 day bank bills 3.38% 2.50% 3.38%
10 year bonds 6.30% 5.05% 5.65%
Thai Baht* (baht) 45.7 (baht) 45.6 (baht) 41
Philippines
90 day bank bills 9.78% 10.78% 9.21%
10 year bonds 15.99% 15.81% 14.57%
Philippines Peso* (peso) 53.55 (peso) 51.4 (peso) 45
Malaysia
90 day bank bills 3.45% 3.45% 3.25%
10 year bonds 4.17% 4.50% 5.77%
Malaysian Ringgit* (ringgit) 3.8 (ringgit) 3.8 (ringgit) 3.8
Singapore
90 day bank bills 4.03% 4.44% 2.26%
10 year bonds 4.14% 4.14% 4.53%
Singapore Dollar* S$ 1.80 S$ 1.82 S$ 1.73
US$ Yankee Bonds**
South Korea 6.40% 7.04% 8.20%
Malaysia 7.19% 7.47% 8.07%
Philippines 10.15% 10.58% 11.14%
Hong Kong 6.28% 6.66% 7.76%
================================================================================
* These currencies are quoted Asian currency per U.S. dollar. The
Australian, Canadian and New Zealand dollars and the British pound are
quoted U.S. dollars per currency.
** Sovereign issues.
Aberdeen Asset Managers (C.I.) Limited
September 2001
Aberdeen Commonwealth Income Fund, Inc. 13
Portfolio of Investments (unaudited)
As of July 31, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--87.3%
AUSTRALIA--23.1%
Government Bonds--7.4%
A$
Commonwealth of Australia,
1,500 12.00%, 11/15/01 ........................................ 776,374
3,000 10.00%, 10/15/02 ........................................ 1,608,437
2,000 9.50%, 8/15/03 .......................................... 1,092,151
1,000 10.00%, 2/15/06 ......................................... 590,323
1,000 10.00%, 10/15/07 ........................................ 613,021
3,000 8.75%, 8/15/08 .......................................... 1,758,371
2,500 7.50%, 9/15/09 .......................................... 1,384,595
1,500 6.75%, 11/15/06 ......................................... 791,370
500 6.50%, 5/15/13 .......................................... 260,231
----------
Total Australian
government bonds
(cost US$11,921,696) .................................... 8,874,873
----------
Semi-Government Bonds--10.1%
New South Wales--3.9%
New South Wales Treasury
Corporation,
2,000 8.00%, 12/01/01 ......................................... 1,024,387
1,500 7.00%, 4/01/04 .......................................... 782,511
4,200 12.00%,12/01/10 ......................................... 2,229,949
First Australian National
Mortgage Acceptance
Corporation, Series 22
1,288 11.40%, 12/15/01 ........................................ 668,208
----------
4,705,055
----------
Queensland--3.1%
Queensland Treasury
Corporation,
3,000 8.00%, 8/14/01 .......................................... 1,522,859
2,000 8.00%, 5/14/03 (Global) ................................. 1,058,329
1,000 8.00%, 9/14/07 (Global) ................................. 553,577
1,250 6.00%, 6/14/21 .......................................... 598,303
----------
3,733,068
----------
Victoria--1.5%
State Electricity Commission
of Victoria,
535 10.50%, 5/27/03 ......................................... 293,258
Treasury Corporation of Victoria,
1,000 9.00%, 6/27/05 .......................................... 553,350
1,500 10.25%, 11/15/06 ........................................ 916,161
----------
1,762,769
----------
Western Australia--1.6%
Western Australia Treasury
Corporation,
3,500 8.00%, 6/15/13 .......................................... 2,003,104
----------
Total Australian semi-
government bonds
(cost US$15,092,518) .................................... 12,203,996
----------
14 Aberdeen Commonwealth Income Fund, Inc.
Portfolio of Investments (unaudited) (continued)
As of July 31, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
Supranational--2.5%
A$
Eurofima,
3,500 9.875%, 1/17/07 ........................................ 2,055,554
Federal National Mortgage
Association, Series EMTN,
2,000 6.375%, 8/15/07 ........................................ 1,020,746
----------
Total Australian
supranational bonds
(cost US$3,221,165) .................................... 3,076,300
----------
Utilities--0.9%
Telstra Corp.,
2,000 11.50%, 10/15/02 ....................................... 1,081,941
----------
Total Australian utility bonds
(cost US$1,745,314) .................................... 1,081,941
----------
Banking and Finance--0.2%
ING Mercantile Mutual Bank Ltd.,
500 7.125%, 3/13/02 ........................................ 256,065
----------
Total Australian banking
and finance bonds
(cost US$379,513) ...................................... 256,065
----------
Corporate Non-Banks--2.0%
Brisbane Airport Corporation, Ltd.
4,000 7.30%, 6/30/10 ......................................... 2,073,944
GE Capital Australia,
600 6.75%, 9/15/07 ......................................... 308,066
----------
Total Australian corporate
non-bank bonds
(cost US$2,507,020) .................................... 2,382,010
----------
Total Australian long-
term investments
(cost US$34,867,226) ................................... 27,875,185
----------
CANADA--28.0%
Government Bonds--20.7%
C$
Canadian Government,
6,000 8.50%, 4/01/02 ......................................... 4,036,574
5,000 5.25%, 9/01/03 ......................................... 3,304,534
2,500 7.25%, 6/01/07 ......................................... 1,783,074
2,000 5.50%, 6/01/09 ......................................... 1,300,445
1,000 10.75%, 10/01/09 ....................................... 868,562
3,000 10.25%, 3/15/14 ........................................ 2,739,885
4,000 8.00%, 6/01/23 ......................................... 3,257,289
8,000 9.00%, 6/01/25 ......................................... 7,185,606
Canada (Cayman),
750 7.25%, 6/01/08 ......................................... 526,386
----------
Total Canadian
Government Bonds
(cost US$27,430,622) ................................... 25,002,355
----------
Aberdeen Commonwealth Income Fund, Inc. 15
Portfolio of Investments (unaudited) (continued)
As of July 31, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
Semi-Government Bonds--6.1%
British Columbia--1.9%
C$
Province of British Columbia,
1,000 10.15%, 8/29/01 ........................................ 656,621
2,000 9.50%, 1/09/12 ......................................... 1,642,044
----------
2,298,665
----------
Ontario--0.9%
Ontario Hydro,
500 8.50%, 5/26/25 ......................................... 406,778
Province of Ontario,
1,000 8.75%, 4/22/03 ......................................... 697,507
----------
1,104,285
----------
Quebec--2.9%
Quebec Hydro,
1,500 7.00%, 6/01/04 ......................................... 1,028,138
1,000 4.24%, 1/28/05 (b) ..................................... 654,734
2,000 9.625%, 7/15/22 ........................................ 1,740,618
----------
3,423,490
----------
Toronto--0.4%
Metropolitan Municipality
of Toronto,
750 9.625%, 5/14/02 ........................................ 509,949
----------
Total Canadian semi-
government bonds
(cost US$8,000,142) .................................... 7,336,389
----------
Utilities--0.3%
Bell Telephone Company
of Canada,
500 10.50%, 7/15/09 ........................................ 347,173
----------
Total Canadian utility bonds
(cost US$433,599) ...................................... 347,173
----------
Banking and Finance--0.6%
Credit Local de France,
1,000 6.75%, 3/21/06 ......................................... 680,345
----------
Total Canadian banking
and finance bonds
(cost US$708,294) ...................................... 680,345
----------
Corporate Non-Banks--0.3%
Procter & Gamble Company,
500 10.875%, 8/15/01 ....................................... 327,806
----------
Total Canadian corporate
non-bank bonds
(cost US$453,347) ...................................... 327,806
----------
Total Canadian long-
term investments
(cost US$37,026,004) ................................... 33,694,068
----------
16 Aberdeen Commonwealth Income Fund, Inc.
Portfolio of Investments (unaudited) (continued)
As of July 31, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
MALAYSIA--0.6%
Semi-Government Bonds--0.6%
MYR
Danamodal Nasional Berhad,
3,100 0.00%, 10/21/03 ......................................... 756,827
---------
Total Malaysia
long-term investments
(cost US$731,228) ....................................... 756,827
---------
NEW ZEALAND--2.4%
Government Bonds--0.4%
NZ$
Canadian Government,
1,000 6.625%, 10/03/07 ........................................ 402,758
---------
Total New Zealand
government bonds
(cost US$557,544) ....................................... 402,758
---------
Utilities--1.3%
Electricity Corporation of
New Zealand Ltd.,
1,750 10.00%, 10/15/01 ........................................ 725,371
1,000 8.00%, 2/15/03 .......................................... 422,171
TCNZ Finance Limited,
1,000 9.25%, 7/01/02 .......................................... 420,720
---------
Total New Zealand
utility bonds
(cost US$2,335,406) ..................................... 1,568,262
---------
Banking and Finance--0.2%
Transpower Finance Ltd.,
500 8.00%, 6/15/05 .......................................... 212,643
---------
Total New Zealand
banking and finance bonds
(cost US$348,382) ....................................... 212,643
---------
Corporate Non-Banks--0.5%
Housing New Zealand,
1,500 8.00%, 11/15/06 ......................................... 645,494
---------
Total New Zealand
corporate non-bank bonds
(cost US$806,899) ....................................... 645,494
---------
Total New Zealand
long-term investments
(cost US$4,048,231) ..................................... 2,829,157
---------
PHILIPPINES--0.1%
Government Bonds--0.1%
PHP
Philippine Government,
7,000 16.50%, 2/25/09 ......................................... 136,612
---------
Total Philippine
long-term investments
(cost US$204,198) ....................................... 136,612
---------
Aberdeen Commonwealth Income Fund, Inc. 17
Portfolio of Investments (unaudited) (continued)
As of July 31, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
SINGAPORE--0.5%
Government Bonds--0.4%
SGD
Singapore Government,
100 3.00%, 11/01/02 ......................................... 56,043
540 4.00%, 2/01/05 .......................................... 312,085
50 4.00%, 3/01/07 .......................................... 28,924
70 4.625%, 7/01/10 ......................................... 42,031
---------
Total Singapore
government bonds
(cost US$444,965) ....................................... 439,083
---------
Utilities--0.1%
Singapore Power,
250 4.60%, 9/21/07 .......................................... 147,315
---------
Total Singapore corporate
non-bank bonds
(cost US$144,047) ....................................... 147,315
---------
Total Singapore
long-term investments
(cost US$589,012) ....................................... 586,398
---------
SOUTH KOREA--3.0%
Government Bonds--1.3%
US$
EMBARC Ltd. Linked Note
Series 1-9,
2,000 5.605%, 8/18/03 (b)(c) .................................. 1,603,380
---------
Government Banks--1.7%
EMBARC Ltd. Linked Note
Series 1-7,
2,600 5.065%, 6/28/02 (b)(d) .................................. 2,032,732
---------
Total Korean long-
term investments
(cost US$4,187,285) ..................................... 3,636,112
---------
THAILAND--0.5%
Government Bonds--0.3%
THB
Thailand Government,
5,000 6.125%, 4/12/02 (e) ..................................... 111,692
550 8.25%, 10/14/03 (e) ..................................... 13,133
12,000 8.00%, 12/08/06 (e) ..................................... 295,300
---------
Total Thailand
government bonds
(cost US$491,869) ....................................... 420,125
---------
Utilities--0.1%
Eastern Water Resources
Development and Management
Company Limited,
4,000 9.00%, 7/22/04 (e) ...................................... 95,793
---------
Total Thailand utility bonds
(cost US$102,863) ....................................... 95,793
---------
18 Aberdeen Commonwealth Income Fund, Inc.
Portfolio of Investments (unaudited) (continued)
As of July 31, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
Corporate Non-Banks--0.1%
THB
Advanced Info Service
Public Company Limited,
5,200 6.50%, 3/20/03 (e) .................................... 116,671
-----------
Total Thailand corporate
non-bank bonds
(cost US$137,821) ..................................... 116,671
-----------
Total Thailand
long-term investments
(cost US$732,553) ..................................... 632,589
-----------
UNITED KINGDOM--29.1%
Government Bonds--21.8%
(pound)
United Kingdom Treasury,
1,000 7.00%, 11/06/01 ....................................... 1,432,119
1,500 8.00%, 6/10/03 ........................................ 2,245,477
500 5.00%, 6/07/04 ........................................ 709,328
1,250 8.50%, 12/07/05 ....................................... 2,006,682
1,100 7.50%, 12/07/06 ....................................... 1,730,987
500 5.75%, 12/07/09 ....................................... 742,672
1,500 8.00%, 9/27/13 ........................................ 2,704,727
600 8.00%, 12/07/15 ....................................... 1,113,201
3,000 8.00%, 6/07/21 ........................................ 5,930,561
2,350 6.00%, 12/07/28 ....................................... 3,960,918
Republic of Finland,
1,000 8.00%, 4/07/03 ........................................ 1,477,327
1,250 10.125%, 6/22/08 ...................................... 2,208,561
-----------
Total United Kingdom
government bonds
(cost US$29,695,584) .................................. 26,262,560
-----------
Utilities--3.1%
British Gas PLC,
1,400 8.875%, 7/08/08 ....................................... 2,289,865
Thames Water Utilities
Finance PLC,
1,000 10.50%, 11/21/01 ...................................... 1,443,902
-----------
Total United Kingdom
utility bonds
(cost US$4,037,849) ................................... 3,733,767
-----------
Banking and Finance--4.2%
Abbey National Treasury
Services PLC,
1,250 8.00%, 4/02/03 ........................................ 1,843,879
Barclays Bank PLC,
1,000 9.875%, 5/29/49 ....................................... 1,711,879
Lloyds Bank PLC,
500 7.375%, 3/11/04 ....................................... 740,257
Prudential Finance B.V.,
500 9.375%, 6/04/07 ....................................... 826,133
-----------
Total United Kingdom
banking and finance bonds
(cost US$5,055,633) ................................... 5,122,148
-----------
Total United Kingdom
long-term investments
(cost US$38,789,066) .................................. 35,118,475
-----------
Total long-term investments
(cost US$121,174,803) ................................. 105,265,423
-----------
Aberdeen Commonwealth Income Fund, Inc. 19
Portfolio of Investments (unaudited) (continued)
As of July 31, 2001
Principal
Amount
Local
Currency (a) Value
(000) Description (US$)
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--17.6%
Australia--0.1%
A$
Banque Nationale de Paris
Fixed Deposit,
170 5.75%, 8/01/01
(cost US$86,489) ..................................... 86,489
------------
Canada--8.9%
C$
State Street Bank and
Trust Company Time Deposit,
8,180 4.20%, 8/01/01 ....................................... 5,352,002
8,200 4.20%, 8/08/01 ....................................... 5,365,088
------------
(cost US$10,678,847) ................................. 10,717,090
------------
New Zealand--2.8%
NZ$
State Street Bank and
Trust Company Time Deposit,
4,115 5.15%, 8/01/01 ....................................... 1,692,088
4,119 5.15%, 8/08/01 ....................................... 1,693,733
------------
(cost US$3,382,117) .................................. 3,385,821
------------
United Kingdom--1.8%
(pound)
State Street Bank and
Trust Company Fixed Deposit
1,544 5.125%, 8/01/01
(cost US$2,204,215) .................................. 2,200,509
------------
United States--4.0%
US$
4,786 Repurchase Agreement,
State Street Bank and Trust
Company, 3.80% dated 7/31/01,
due 08/01/01 in the amount
of $4,786,505 (collateralized
by $4,455,000 U.S. Treasury
Bonds, 6.125% due 8/15/29;
value $4,886,409)
(cost US$4,786,000) .................................. 4,786,000
------------
Total short-term
investments
(cost US$21,137,668) 21,175,909
------------
-------------------------------------------------------------------------------
Total Investments--104.9% (cost US$142,312,471) 126,441,332
Unrealized appreciation on forward foreign currency exchange
contracts--0.0% (f) (15,426)
Liabilities in excess of other assets--(4.9%) (5,861,905)
-------------------------------------------------------------------------------
Total Net Assets--100.0% $120,564,001
===============================================================================
20 Aberdeen Commonwealth Income Fund, Inc.
Portfolio of Investments (unaudited) (concluded)
As of July 31, 2001
(a) A$--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 July 31, 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 July 31,
2001 were as follows:
----------------------------------------------------------------------------------------
Purchases Net Unrealized
Appreciation
Contracts to Receive In exchange for Settlement Date Value (Depreciation)
----------------------------------------------------------------------------------------
PHP 17,972,500 US$350,000 08/24/01 US$334,356 $(15,644)
THB 1,836,800 US$ 40,000 08/16/01 US$ 40,146 146
--------
$(15,498)
--------
----------------------------------------------------------------------------------------
Sales
Net Unrealized
Contracts to Deliver In exchange for Settlement Date Value Appreciation
----------------------------------------------------------------------------------------
THB 1,826,800 US$ 40,000 08/16/01 US$ 39,928 $ 72
--------
Total $(15,426)
========
Aberdeen Commonwealth Income Fund, Inc. 21
[THIS PAGE INTENTIONALLY LEFT BLANK]
Directors
Martin J. Gilbert, Chairman
David L. 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. 23
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
1-800-522-5465 or 1-212-968-8800
InvestorRelations@aberdeen-asset.com
[LOGO]
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.
[GRAPHIC OMITTED]
Invests primarily in fixed-income securities
denominated in the currencies of various
Commonwealth Countries