NAV Total Return Performance

The Fund’s total return, based on net asset value (“NAV”), net of fees, was 11.4% for the fiscal year ended October 31, 2016 and 8.2% per annum since inception, assuming the reinvestment of dividends and distributions. The Fund’s total return for the fiscal year ended October 31, 2016 and per annum since inception is based on the reported NAV on each financial reporting period end.

Share Price Total Return Performance & Discount

For the fiscal year ended October 31, 2016, based on market price, the Fund’s total return was 12.9%, assuming reinvestment of dividends and distributions. The Fund’s share price increased by 3.6% over the fiscal year, from $4.75 on October 31, 2015 to $4.92 on October 31, 2016. The Fund’s share price on October 31, 2016 represented a discount of 13.5% to the NAV per share of $5.69 on that date, compared with a discount of 14.7% to the NAV per share of $5.57 on October 31, 2015.

Portfolio Allocation

As of October 31, 2016, the Fund held 32.5% of its total investments in Australian debt securities, 62.8% in Asian debt securities, 4.4% in European debt securities and 0.3% in U.S. debt securities.

Of the Fund’s total investments, 40.6% were held in U.S. Dollar-denominated bonds issued by foreign issuers. The rest of the Fund’s currency exposure was 30.1% in the Australian Dollar and 29.3% in various Asian currencies.

Credit Quality

As of October 31, 2016, 48.7% of the Fund’s total investments were invested in securities where either the issue or the issuer was rated A or better by Standard & Poor’s¹ or Moody’s Investors Services, Inc. (“Moodys”).²

Portfolio Management

The Fund is managed by Aberdeen’s Asia-Pacific fixed income team. The Asia-Pacific fixed income team works in a truly collaborative fashion; all team members have both portfolio management and research responsibilities. The team is responsible for the day-to-day management of the Fund.

Effective January 31, 2016, David Choi replaces John Manning. Mr Choi is responsible for overseeing day-to-day management and overall supervision of Australian Fixed Income team. He joins the team of Victor Rodriguez, Nick Bishop, Adam McCabe and Kenneth Akintewe. David Choi is the Head of Australian Macro on the Australia Fixed Income desk. David joined Aberdeen in 2011 after spending five years at NSW Treasury Corporation, where he was responsible for portfolio management of both asset and debt portfolios, and specialised in interest rate positioning with responsibility for tactical overlay strategies. David graduated with a Bachelor of Law/Commerce (Finance) from the University of NSW.

Managed Distribution Policy

Distributions to common shareholders for the twelve months ended October 31, 2016 totaled $0.42 per share. Based on the share price of $4.92 on October 31, 2016, the distribution rate over the twelve-month period ended October 31, 2016 was 8.5%. Since all distributions are paid after deducting applicable withholding taxes, the effective distribution rate may be higher for those U.S. investors who are able to claim a tax credit.

On November 9, 2016 and December 9, 2016, the Fund announced that it will pay on November 25, 2016 and January 11, 2017, respectively a distribution of U.S. $0.035 per share to all shareholders of record as of November 18, 2016 and December 30, 2016, respectively.

The Fund’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, which is a non-taxable return of capital. This policy is subject to an annual review as well as regular review at the Board’s quarterly meetings, unless market conditions require an earlier evaluation.

Fund’s Leverage

The table below summarizes certain key terms of the Fund’s current leverage:

The Series A Mandatory Redeemable Preferred Shares, with a liquidation value of $50 million, are rated AA by Fitch Ratings³ and the combined $200 million 7- and 10-year Series A and B Senior Secured Notes are rated AAA by Fitch Ratings.

We believe the Fund has been able to lock in an attractive rate cost of borrowing and extend the maturity of the leverage facility while diversifying its borrowing structure during what we believe to be a favorable current interest rate environment. A more detailed description of the Fund’s leverage can be found in the Report of Investment Manager and the Notes to Financial Statements.

Open Market Repurchase Program

The Fund’s policy is generally to buy back Fund shares on the open market when the Fund trades at certain discounts to NAV and management believes such repurchases may enhance shareholder value. During the fiscal year ended October 31, 2016 and fiscal year ended October 31, 2015, the Fund repurchased 3,042,619 and 4,991,465 shares, respectively.

Portfolio Holdings Disclosure

The Fund’s complete schedule of portfolio holdings for the second and fourth quarters of each fiscal year is included in the Fund’s semi-annual and annual reports to shareholders. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q filings are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information about the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund makes the

information on Form N-Q available to shareholders on the Fund’s website or upon request and without charge by calling Investor Relations toll-free at 1-800-522-5465.

Proxy Voting

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve months ended June 30 is available by August 31 of the relevant year: (i) upon request and without charge by calling Investor Relations toll-free at 1-800-522-5465; and (ii) on the SEC’s website at http://www.sec.gov.

Unclaimed Share Accounts

Please be advised that abandoned or unclaimed property laws for certain states require financial organizations to transfer (escheat) unclaimed property (including Fund shares) to the state. Each state has its own definition of unclaimed property, and Fund shares could be considered “unclaimed property” due to account inactivity (e.g., no owner-generated activity for a certain period), returned mail (e.g., when mail sent to a shareholder is returned to the Fund’s transfer agent as undeliverable), or a combination of both. If your Fund shares are categorized as unclaimed, your financial advisor or the Fund’s transfer agent will follow the applicable state’s statutory requirements to contact you, but if unsuccessful, laws may require that the shares be escheated to the appropriate state. If this happens, you will have to contact the state to recover your property, which may involve time and expense. For more information on unclaimed property and how to maintain an active account, please contact your financial adviser or the Fund’s transfer agent.

Investor Relations Information

As part of Aberdeen’s commitment to shareholders, we invite you to visit the Fund on the web at www.aberdeenfax.com. Here, you can

view monthly fact sheets, quarterly commentary, distribution and performance information, updated daily data courtesy of Morningstar^®, portfolio charting and other Fund literature.

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Contact Us:

Yours sincerely,

/s/ Christian Pittard

Christian Pittard

President

Market/economic review

Asian fixed-income assets rallied over the 12-month period ended October 31, 2016, despite a volatile start attributable to an interest-rate hike by the U.S. Federal Reserve (Fed) in December 2015, sharp declines in Chinese equities, and the decline in commodity prices. Just when investor sentiment appeared to stabilize going into the second half of the reporting period, risk aversion spiked again, this time caused by the UK’s unexpected Brexit¹ vote in June 2016. After a brief sell-off, Asian bonds rebounded as record-low interest rates in developed markets drove global fund flows in search of higher yields. Towards the end of the reporting period, caution rose ahead of the U.S. presidential election in early November. Republican Donald Trump subsequently won the election on November 8. Regional currencies ended the reporting period mixed against the U.S. dollar; the Indonesian rupiah, Malaysian ringgit and Thai baht led gains, but the Chinese yuan, Philippine peso and Indian rupee weakened.

In Australia, government bond yields fell as the central bank remained on a monetary policy easing path, cutting interest rates in attempts to boost growth amid deflationary pressures. Second-quarter 2016 gross domestic product (GDP) growth slowed as business investments remained a drag, but this was mitigated by good household spending and public investments in infrastructure. Although Standard & Poor’s² downgraded the country’s credit rating outlook to negative, its impact was negligible.

In Asian bond markets, Indonesia and India were the strongest performers over the reporting period as their respective central banks continued to cut interest rates. The Indonesian market was further boosted by fiscal stimulus measures and the tax amnesty bill that investors hoped would encourage overseas asset repatriation. In India, reform momentum accelerated with the ratification of the bankruptcy code and the upper house’s approval of the goods and services tax (GST) bill. The market also reacted positively to the appointment of Urjit Patel as the new central bank governor and formation of the monetary policy committee. Chinese bonds were buttressed by ample liquidity and Beijing’s assurance that its economic growth targets would be met. In Malaysia, investor sentiment was lifted by the central bank’s interest-rate cut and

J.P. Morgan’s decision to include Islamic bonds in its emerging-market indices. Thai bond yields fell on hopes of easier monetary policy, which gained credence after King Bhumibol’s death in October.

Yields in Singapore also trended lower over the reporting period, even though the central bank removed the appreciation bias from its currency policy. Korean bonds benefited from the central banks’ policy rate cut and the government’s 20 trillion-won (about US$17 billion) stimulus package. However, gains were pared in the last few months of the period by protests calling for President Park Geun-hye’s resignation for allowing a friend to gain inappropriate access to government documents. Philippine bonds underperformed versus the overall market during the reporting period. Investors initially welcomed President Rodrigo Duterte’s election win, but his more strident invectives against the U.S. later reignited market jitters.

Asian credit markets strengthened over the reporting period, with spreads versus comparable-duration³ U.S. Treasuries narrowing substantially, led by the high-yield sector. As commodity prices rebounded and fears over Chinese economic growth subsided, investors’ risk appetite improved. Nevertheless, some headwinds emerged later, particularly rising concerns over overheating Chinese property prices and corporate bond defaults in the hard-hit oil and gas sector. Towards the end of the reporting period, gains were capped by increasingly stretched valuations.

Fund performance review

Fund performance for the reporting period was hindered by our strategies in Asian local-currency bonds and Asian U.S.-dollar credit. On a positive note, the Fund’s allocations to Australian and New Zealand bonds enhanced performance.

Within the Australia and New Zealand portfolio, our yield-curve and duration strategies bolstered Fund performance. In Asian local currency bonds, the Fund’s overweight exposure to India was the biggest positive contributor to performance. Conversely, the underweight to Thai, Singapore and Hong Kong bonds weighed on Fund performance for the reporting period. In currency management, the Fund’s overweight position in the Indian rupee detracted from performance, but was mitigated by the overweight to the rupiah and the positions in the Korean won and Singapore dollar.

In the Asian U.S.-dollar credit segment, security selection in high-yield industrial bonds and investment-grade sovereign issues detracted from Fund performance; however, the overweight to the investment-grade oil and gas sector curbed the losses.

The Fund’s use of derivatives was an overall detractor from performance during the reporting period. The impact of currency management in the Asian local currency bond segment via forwards⁴ was relatively flat. In the currency overlay,⁵ derivatives used for interest-rate management and currency management weighed on performance, particularly because of the long U.S. dollar-short Australian dollar position, given the Australian dollar’s strength for much of 2016.

As part of the liberalization of the domestic bond market, in February 2016, the People’s Republic of China (PRC) announced a new path for international investors to access onshore bonds through the China Interbank Bond Market (CIBM). Because more than 90% of current PRC bond trading activity is transacted in the CIBM, the Fund’s new ability to access PRC bonds (and other products) through CIBM provides greater flexibility and liquidity, while subjecting the Fund to similar risks associated with other methods of investing directly in China.

Outlook

Market reaction in the immediate aftermath of the U.S. presidential election reflected not only surprise over Donald Trump’s win but also elevated uncertainty that we believe could prevail going into 2017. U.S. Treasuries and some Asian bond markets initially rallied, but subsequently sold off, with current yields generally higher than their pre-election levels. The U.S. dollar weakened against its G10⁶ peers but later reversed course, and recently was stronger against most G10 and emerging-market currencies. Credit spreads narrowed after initially widening immediately after the election. We believe that investors will need to wait for President-elect Trump to set policy direction when he takes office in January. Early assumptions are that the U.S. may embark on fiscal stimulus, which could prove inflationary and cause U.S. Treasury yields to rise further. The Fed is also expected to continue on its path of monetary policy normalization in December 2016, provided that market sentiment and financial conditions are stable. For Asia, we think that a key risk stems from a potential increase in U.S. protectionism and its impact on global trade. The Italian referendum on constitutional reform in

early December 2016, along with the Supreme Court ruling in the UK on the need for parliamentary approval to invoke Article 50,⁷ also present further headwinds, in our view. On a positive note, we think that central banks still have some room to cut interest rates if they choose. In Australia, however, we do not believe that low inflation alone will spur the central bank to ease monetary policy further, given the risks posed by the burgeoning residential housing supply.

Loan Facilities and the Use of Leverage

The amounts borrowed under the Revolving Credit Facility, the Term Loan Facility, the Notes and the Series A MRPS (each as defined below) may be invested to seek to return higher rates than the rates pursuant to which interests or dividends are paid under such forms of leverage. However, the cost of leverage could exceed the income earned by the Fund on the proceeds of such leverage. To the extent that the Fund is unable to invest the proceeds from the use of leverage in assets which pay interest at a rate which exceeds the rate paid on the leverage, the yield on the Fund’s common stock will decrease. In addition, in the event of a general market decline in the value of assets in which the Fund invests, the effect of that decline will be magnified in the Fund because of the additional assets purchased with the proceeds of the leverage.

The Fund employed leverage obtained via bank borrowing and other forms of leverage during the reporting period. On April 9, 2014, the Fund renewed its $150 million revolving credit facility for a 3-year period with a syndicate of banks (the “Revolving Credit Facility”). On June 12, 2013, the Fund entered into a note purchase agreement (the “Note Purchase Agreement”) with institutional investors relating to the private placement of $200 million of senior secured notes rated `AAA’ by Fitch Ratings, $100 million due June 12, 2020 and $100 million due June 12, 2023 (the “Notes”). On the same day, the Fund also entered into a term loan agreement providing for $200 million in secured term loans from Bank of America, N.A., $100 million due June 12, 2016 (on December 14, 2015, the maturity of this loan was extended to December 14, 2019) and $100 million due June 12, 2018 (the “Term Loan Facility”). On June 27, 2013, the Fund issued a private offering of 2 million shares of Series A Mandatory Redeemable Preferred Shares due June 25, 2023 (the “Series A MRPS”). The Series A MRPS have a liquidation value of $50 million and are rated ‘AA’ by Fitch Ratings. The Fund’s outstanding balance as of October 31, 2016 was $125 million on the Revolving Credit Facility.

The Fund’s leveraged capital structure creates special risks not associated with unleveraged funds having similar investment objectives and policies. The funds borrowed pursuant to the Revolving Credit Facility, the Term Loan Facility and the Notes may constitute a substantial lien and burden by reason of their prior claim against the income of the Fund and against the net assets of the Fund in liquidation. The Fund is limited in its ability to declare dividends or other distributions under the terms of the various forms of leverage. In the event of an event of default under either the Revolving Credit Facility or Term Loan Facility, the lenders have the right to cause a liquidation of the collateral (i.e., sell portfolio securities and other assets of the Fund) and, if any such default is not cured, the lenders may be able to control the liquidation as well. In the event of an event of default under the Note Purchase Agreement, the holders of the Notes have the right to cause a liquidation of the collateral (i.e., cause the sale of portfolio securities and other assets of the Fund).

Each of the Revolving Credit Facility Agreement, the Term Loan Agreement, the Note Purchase Agreement, and the Securities Purchase Agreement relating to the Series A MRPS includes usual and customary covenants for the applicable type of transaction. These covenants impose on the Fund asset coverage requirements, Fund composition requirements and limits on certain investments, such as illiquid investments, which are more stringent than those imposed on the Fund by the 1940 Act. The covenants or guidelines could impede the Fund’s investment manager, investment adviser, or sub-adviser from fully managing the Fund’s portfolio in accordance with the Fund’s investment objective and policies. Furthermore, non-compliance with such covenants or the occurrence of other events could lead to the cancellation of any and/or all of the forms of leverage. As of October 31, 2016, the Fund was in compliance with all covenants under the agreements relating to the various forms of leverage.

Interest Rate Swaps

The Fund may enter into interest rate swaps to efficiently gain interest rate exposure and hedge interest rate risk. On October 24, 2016, the Fund terminated a swap agreement with a notional value of $59 million maturing on October 24, 2016 and entered into a swap agreement with a notional value of $59 million maturing on October 28, 2026. As of October 31, 2016, the Fund held interest rate swap agreements with an aggregate notional amount of $125 million, which represented 100% of the Fund’s Revolving Credit Facility. Under the terms of the agreements currently in effect, the Fund receives a floating rate of interest (three-month USD-LIBOR BBA rate) and pays fixed rates of interest for the terms and based upon the notional amounts set forth below:

A significant risk associated with interest rate swaps is the risk that the counterparty may default or file for bankruptcy, in which case the Fund would bear the risk of loss of the amount expected to be received under the swap agreements. 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 loan facility. The implementation of this strategy is at the discretion of the Leverage Committee of the Board.

Aberdeen Asset Management Asia Limited