N-Q 1 d53462dnq.htm ABERDEEN GREATER CHINA FUND, INC. Aberdeen Greater China Fund, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS

OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number:    811-06674
Exact name of registrant as specified in charter:    Aberdeen Greater China Fund, Inc.
Address of principal executive offices:    1735 Market Street, 32nd Floor
   Philadelphia, PA 19103
Name and address of agent for service:    Ms. Andrea Melia
   Aberdeen Asset Management Inc.
   1735 Market Street, 32nd Floor
   Philadelphia, PA 19103
Registrant’s telephone number, including area code:    800-522-5465
Date of fiscal year end:    December 31
Date of reporting period:    September 30, 2015


Item 1. Schedule of Investments

The schedule of investments as of the close of the reporting period ended September 30, 2015 is filed herewith.


Portfolio of Investments (unaudited)

As of September 30, 2015

 

Shares

    

Description

   Value (US$)  
  LONG-TERM INVESTMENTS - 96.0%   
  COMMON STOCKS - 96.0%   
  CHINA - 22.9%   
  CONSUMER DISCRETIONARY - 1.9%   
  320,400       Fuyao Glass Industry Group Co. Ltd., H Shares(a)(b)    $ 607,535   
  14,200       Yum! Brands, Inc.      1,135,290   
     

 

 

 
     1,742,825   
     

 

 

 
  ENERGY - 4.7%   
  2,013,000       CNOOC Ltd.(b)      2,075,254   
  3,192,000       PetroChina Co. Ltd., H Shares(b)      2,218,778   
     

 

 

 
     4,294,032   
     

 

 

 
  FINANCIALS - 6.8%   
  985,000       China Merchants Bank Co. Ltd., A Shares(b)(c)      2,756,025   
  1,119,952       China Vanke Co. Ltd., A Shares(b)(c)      2,246,699   
  1,800,000       Yanlord Land Group Ltd.(b)      1,285,966   
     

 

 

 
     6,288,690   
     

 

 

 
  HEALTH CARE - 1.6%   
  1,085,000       Tong Ren Tang Technologies Co. Ltd., H Shares(b)      1,483,207   
     

 

 

 
  INDUSTRIALS - 1.8%   
  770,000       China Conch Venture Holdings Ltd.(b)      1,642,132   
     

 

 

 
  INFORMATION TECHNOLOGY - 1.3%   
  240,500       Hangzhou Hikvision Digital Technology Co. Ltd., A Shares(b)(c)      1,235,662   
     

 

 

 
  MATERIALS - 1.0%   
  2,350,000       Yingde Gases Group Co. Ltd.(b)      972,335   
     

 

 

 
  TELECOMMUNICATION SERVICES - 3.8%   
  291,000       China Mobile Ltd.(b)      3,471,816   
     

 

 

 
     21,130,699   
     

 

 

 
  HONG KONG - 60.0%   
  CONSUMER DISCRETIONARY - 10.6%   
  3,296,000       Giordano International Ltd.(b)      1,584,038   
  8,478,000       Global Brands Group Holding Ltd.(a)(b)      1,755,050   
  1,280,000       Hongkong & Shanghai Hotels Ltd. (The)      1,443,500   
  1,918,000       Li & Fung Ltd.(b)      1,471,738   
  746,700       Samsonite International SA(b)      2,435,291   
  1,210,000       Shangri-La Asia Ltd.(b)      1,048,929   
     

 

 

 
     9,738,546   
     

 

 

 
  CONSUMER STAPLES - 2.3%   
  940,000       Convenience Retail Asia Ltd.      483,945   
  270,900       Dairy Farm International Holdings Ltd.(b)      1,643,993   
     

 

 

 
     2,127,938   
     

 

 

 
  FINANCIALS - 25.9%   
  1,317,000       AIA Group Ltd.(b)      6,849,382   
  1,220,000       Hang Lung Properties Ltd.(b)      2,744,216   
  63,229       Hong Kong Exchanges and Clearing Ltd.(b)      1,449,715   
  773,907       HSBC Holdings PLC(b)      5,811,240   
  241,000       Swire Pacific Ltd., Class A(b)      2,705,944   
  400,000       Swire Pacific Ltd., Class B(b)      825,707   
  1,236,400       Swire Properties Ltd.(b)      3,450,946   
     

 

 

 
     23,837,150   
     

 

 

 

 

See Notes to Portfolio of Investments.

Aberdeen Greater China Fund, Inc.


Portfolio of Investments (unaudited) (concluded)

As of September 30, 2015

 

Shares

    

Description

   Value (US$)  
  LONG-TERM INVESTMENTS (continued)   
  COMMON STOCKS (continued)   
  INDUSTRIALS - 17.6%   
  156,800       Hong Kong Aircraft Engineering Co. Ltd.(b)    $ 1,189,784   
  232,000       Jardine Strategic Holdings Ltd.(b)      6,240,541   
  1,539,000       Kerry Logistics Network Ltd.(b)      2,201,088   
  1,205,000       MTR Corp. Ltd.(b)      5,231,552   
  4,205,000       Pacific Basin Shipping Ltd.(b)      1,284,822   
     

 

 

 
        16,147,787   
     

 

 

 
  INFORMATION TECHNOLOGY - 1.4%   
  195,000       ASM Pacific Technology Ltd.(b)      1,278,964   
     

 

 

 
  TELECOMMUNICATION SERVICES - 1.0%   
  593,000       Asia Satellite Telecommunications Holdings Ltd.(b)      923,720   
     

 

 

 
  UTILITIES - 1.2%   
  608,300       Hong Kong & China Gas Co. Ltd.(b)      1,140,667   
     

 

 

 
        55,194,772   
     

 

 

 
  TAIWAN - 13.1%   
  CONSUMER DISCRETIONARY - 1.1%   
  132,000       Giant Manufacturing Co. Ltd.(b)      962,497   
     

 

 

 
  INFORMATION TECHNOLOGY - 8.4%   
  133,602       MediaTek, Inc.(b)      994,215   
  1,686,000       Taiwan Semiconductor Manufacturing Co. Ltd.(b)      6,756,941   
     

 

 

 
        7,751,156   
     

 

 

 
  TELECOMMUNICATION SERVICES - 3.6%   
  1,090,000       Taiwan Mobile Co. Ltd.(b)      3,337,144   
     

 

 

 
        12,050,797   
     

 

 

 
  Total Common Stocks      88,376,268   
     

 

 

 
 
 
Total Long-Term Investments - 96.0%
(cost $107,561,342)
     88,376,268   
     

 

 

 
  SHORT-TERM INVESTMENT - 1.0%   
  $894,000       Repurchase Agreement, Fixed Income Clearing Corp., 0.00% dated 09/30/2015, due 10/01/2015 repurchase price $894,000 collateralized by a U.S. Treasury Note, maturing 06/30/2022; total market value of $915,588      894,000   
     

 

 

 
 
 
Total Short-Term Investment - 1.0%
(cost $894,000)
     894,000   
     

 

 

 
 
 
Total Investments - 97.0%
(cost $108,455,342)(d)
     89,270,268   
     

 

 

 
  Other Assets in Excess of Liabilities - 3.0%      2,767,029   
     

 

 

 
  Net Assets - 100.0%    $ 92,037,297   
     

 

 

 

 

(a) Non-income producing security.

 

(b) Fair Valued Security. Fair Values are determined pursuant to procedures approved by the Fund’s Board of Directors. See Note (a) of the accompanying Notes to Portfolio of Investments.

 

(c) China A-Shares. These shares are issued in local currency, traded in the local stock markets and are held through a qualified foreign institutional investor license.

 

(d) See accompanying Notes to Portfolio of Investments for tax unrealized appreciation/depreciation of securities.

 

PLC   -   Public Limited Company

 

See Notes to Portfolio of Investments.

Aberdeen Greater China Fund, Inc.


Notes to Portfolio of Investments (unaudited)

September 30, 2015

 

Summary of Significant Accounting Policies

 

a. Security Valuation:

The Fund values its securities at current market value or fair value, consistent with regulatory requirements. “Fair value” is defined in the Fund’s valuation and liquidity procedures as the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants without a compulsion to contract at the measurement date.

Equity securities that are traded on an exchange are valued at the last quoted sale price on the principal exchange on which the security is traded at the “Valuation Time” subject to application, when appropriate, of the valuation factors described in the paragraph below. The Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4:00 p.m. Eastern Time). In the absence of a sale price, the security is valued at the mean of the bid/ask price quoted at the close on the principal exchange on which the security is traded. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Closed-end funds and exchange-traded funds (“ETFs”) are valued at the market price of the security at the Valuation Time. A security using any of these pricing methodologies is determined to be a Level 1 investment.

Foreign equity securities that are traded on foreign exchanges that close prior to the Valuation Time are valued by applying valuation factors to the last sale price or the mean price as noted above. Valuation factors are provided by an independent pricing service provider. These valuation factors are used when pricing the Fund’s portfolio holdings to estimate market movements between the time foreign markets close and the time the Fund values such foreign securities. These valuation factors are based on inputs such as depositary receipts, indices, futures, sector indices/ETFs, exchange rates, and local exchange opening and closing prices of each security. When prices with the application of valuation factors are utilized, the value assigned to the foreign securities may not be the same as quoted or published prices of the securities on their primary markets. A security that applies a valuation factor is determined to be a Level 2 investment because the exchange-traded price has been adjusted. Valuation factors are not utilized if the independent pricing service provider is unable to provide a valuation factor or if the valuation factor falls below a predetermined threshold; in such case, the security is determined to be a Level 1 investment.

In the event that a security’s market quotations are not readily available or are deemed unreliable (for reasons other than because the foreign exchange on which they trade closed before the Valuation Time), the security is valued at fair value as determined by the Fund’s Pricing Committee, taking into account the relevant factors and surrounding circumstances using valuation policies and procedures approved and established by the Board. A security that has been fair valued by the Pricing Committee may be classified as Level 2 or 3 depending on the nature of the inputs.

In accordance with the authoritative guidance on fair value measurements and disclosures under accounting principles generally accepted in the United States of America (“GAAP”), the Fund discloses the fair value of its investments using a three-level hierarchy that classifies the inputs to valuation techniques used to measure the fair value. The hierarchy assigns Level 1 measurements to valuations based upon unadjusted quoted prices in active markets for identical assets, Level 2 measurements to valuations based upon other significant observable inputs, including adjusted quoted prices in active markets for identical assets, and Level 3 measurements to valuations based upon unobservable inputs that are significant to the valuation. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability, which are based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement.

The three-level hierarchy of inputs is summarized below:

Level 1 – quoted prices in active markets for identical investments;

 

Aberdeen Greater China Fund, Inc.


Notes to Portfolio of Investments (unaudited) (continued)

September 30, 2015

 

Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, and credit risk); or

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).

The following is a summary of the inputs used as of September 30, 2015 in valuing the Fund’s investments and other financial instruments at fair value. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Please refer to the Portfolio of Investments for a detailed breakout of the security types:

 

     Level 1      Level 2      Level 3      Total  
Investments, at Value            

Equities

           
China    $ 1,135,290       $ 19,995,409       $   —       $ 21,130,699   
Hong Kong      1,927,445         53,267,327                 55,194,772   
Taiwan              12,050,797                 12,050,797   
Repurchase Agreement              894,000                 894,000   
  

 

 

    

 

 

    

 

 

    

 

 

 
Total    $ 3,062,735       $ 86,207,533       $       $ 89,270,268   
  

 

 

    

 

 

    

 

 

    

 

 

 

Amounts listed as “—” are $0 or round to $0.

           

The Fund held no Level 3 securities at September 30, 2015.

For movements between the Levels within the fair value hierarchy, the Fund has adopted a policy of recognizing transfers at the end of each period. The utilization of valuation factors may result in transfers between Level 1 and Level 2.

During the period ended September 30, 2015, securities issued by China Merchants Bank Co. Ltd., China Vanke Co. Ltd., Dairy Farm International Holdings Ltd., Li & Fung Ltd., Taiwan Mobile Co. Ltd. and Tong Ren Tang Technologies Co. Ltd., in the amounts of $2,756,025, $2,246,699, $1,643,993, $1,471,738, $3,337,144 and $1,483,207 transferred from Level 1 to Level 2 because there was a valuation factor applied at September 30, 2015. Also, a security issued by Hongkong & Shanghai Hotels Ltd. in the amount of $1,443,500 transferred from Level 2 to Level 1 because there was not a valuation factor applied at September 30, 2015.

For the period ended September 30, 2015, there were no significant changes to the fair valuation methodologies.

 

b. Repurchase Agreements:

The Fund may enter into repurchase agreements under the terms of a Master Repurchase Agreement. It is the Fund’s policy that its custodian/counterparty segregate the underlying collateral securities, the value of which exceeds the principal amount of the repurchase transaction, including accrued interest. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates. To the extent that any repurchase transaction exceeds one business day, the collateral is valued on a daily basis to determine its adequacy. Under the Master Repurchase Agreement, if the counterparty defaults and the value of the collateral declines, or if bankruptcy proceedings are commenced with respect to the counterparty of the repurchase agreement, realization of the collateral by the Fund may be delayed or limited. Repurchase agreements are subject to contractual netting arrangements with the counterparty, Fixed Income Clearing Corp. For additional information on the Fund’s repurchase agreement, see the Portfolio of Investments. The Fund held a repurchase agreement of $894,000 as of September 30, 2015. The value of the related collateral exceeded the value of the repurchase agreement at September 30, 2015.

 

Aberdeen Greater China Fund, Inc.


Notes to Portfolio of Investments (unaudited) (concluded)

September 30, 2015

 

c. Federal Income Taxes:

The U.S. federal income tax basis of the Fund’s investments and the net unrealized depreciation as of September 30, 2015 were as follows:

 

Cost   Appreciation   Depreciation     Net Unrealized Depreciation
$108,455,342   $8,035,356   $ (27,220,430   $(19,185,074)

 

Aberdeen Greater China Fund, Inc.


Item 2. Controls and Procedures

 

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

 

  b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 (17 CFR 270.30a-3(d)) that occurred during the Registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 3. Exhibits

 

  a) Certification of Principal Executive Officer and Principal Financial Officer of the Registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is attached hereto as Exhibit 99.302CERT.


SIGNATURES

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

 

  Aberdeen Greater China Fund, Inc.
  By:       /s/ Alan Goodson
   

Alan Goodson,

Principal Executive Officer of

Aberdeen Greater China Fund, Inc.

  Date: November 24, 2015

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

 

  By:       /s/ Alan Goodson
   

Alan Goodson,

Principal Executive Officer of

Aberdeen Greater China Fund, Inc.

  Date: November 24, 2015

 

  By:       /s/ Andrea Melia
   

Andrea Melia,

Principal Financial Officer of

Aberdeen Greater China Fund, Inc.

  Date: November 24, 2015