UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
| Investment Company Act file number: |
811-05770 |
| |
|
| Exact name of registrant as specified in charter: |
abrdn Emerging Markets Equity Income Fund, Inc. |
| |
|
| Address of principal executive offices: |
1900 Market Street, Suite 200
Philadelphia, PA 19103 |
| |
|
| Name and address of agent for service: |
Ms. Sharon Ferrari
abrdn Inc.
1900 Market Street, Suite 200
Philadelphia, PA 19103 |
| |
|
| Registrant’s telephone number, including area code: |
800-522-5465 |
| |
|
| Date of fiscal year end: |
December 31 |
| |
|
| Date of reporting period: |
June 30, 2023 |
Item 1 - Reports to Stockholders.
(a) A copy of the report transmitted
to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 (the “1940 Act”) is filed herewith.
abrdn Emerging Markets
Equity Income Fund, Inc. (AEF)
Semi-Annual Report
June 30, 2023
Letter to Shareholders (unaudited)
Dear Shareholder,
We present the Semi-Annual
Report, which covers the activities of abrdn Emerging Markets Equity Income Fund, Inc. (the “Fund”), for the six-month period ended June 30, 2023. The Fund’s investment objective is to seek to
provide both current income and long-term capital appreciation.
Total Investment Return1
For the six-month period
ended June 30, 2023, the total return to shareholders of the Fund based on the net asset value (“NAV”) and market price of the Fund, respectively, compared to the Fund’s benchmark is as follows:
| NAV2,3
| 7.78%
|
| Market Price2
| 4.64%
|
| MSCI Emerging Markets Index (Net Daily Total Return)4
| 4.89%
|
For more information about
Fund performance, please visit the Fund on the web at www.abrdnaef.com. Here, you can view quarterly commentary on the Fund's performance, monthly fact sheets, distribution and performance information, and other Fund
literature.
NAV, Market Price and
Premium(+)/Discount(-)
The below table represents
comparison from current six-month period end to prior fiscal year end of market price to NAV and associated Premium(+) and Discount(-).
|
|
|
|
| NAV
| Closing
Market
Price
| Premium(+)/
Discount(-)
|
| 6/30/2023
| $6.00
| $5.19
| -13.50%
|
| 12/31/2022
| $5.78
| $5.15
| -10.90%
|
During the six-month period
ended June 30, 2023, the Fund’s NAV was within a range of $5.72 to $6.61 and the Fund’s market price traded within a range of $4.90 to $5.78. During the six-month period ended June 30, 2023, the
Fund’s shares traded within a range of a premium(+)/discount(-) of -9.10% to -15.08%.
Distribution Policy
The Fund has a managed
distribution policy of paying quarterly distributions at an annual rate, set once a year, as a percentage of the rolling average of the Fund’s NAVs over the preceding three month period ending on the last day of
the month immediately preceding the distribution’s declaration date. In March 2023, the Board of Directors of the Fund (the “Board”) determined the rolling distribution rate to be 6.5% for the
12-month period commencing with the distribution payable in June 2023. This policy will be subject to regular review by the Board.
The policy is expected to
provide a steady and sustainable quarterly cash distribution to Fund shareholders that may help reduce any discount to NAV at which the Fund’s shares trade. There is no assurance that the Fund will achieve these
results.
The distributions will be
made from net investment income generated by dividends paid from the Fund’s underlying securities and return of capital. As net assets of the Fund may vary from quarter to quarter, the quarterly distribution may
represent more or less than one quarter of 6.5% of the Fund’s net assets at the time of distribution. Shareholders should not draw any conclusions about the Fund’s investment performance from the amount of
the distributions or the terms of the Fund’s policy.
Conditional Tender Offer
In May 2023 the Board adopted
a policy pursuant to which it will cause the Fund to conduct a one-time tender offer for twenty percent (20%) of its then issued and outstanding shares of common stock on or before December 31, 2025, if the Fund's
total return investment performance measured on a NAV basis does not equal or exceed the total return investment performance of the MSCI Emerging Markets Index (Net Daily Total Return) during the period commencing on
October 1, 2022 and ending on September 30, 2025.
Credit Facility
On June 20, 2023, the Fund
renewed its revolving credit facility for a 1-year period with The Bank of Nova Scotia with a committed facility of $40,000,000. The outstanding balance on the loan as of June 30,
{foots1}
| 1
| Past performance is no guarantee of future results. Investment returns and principal value will fluctuate and shares, when sold, may be worth more or less than original cost. Current performance may be
lower or higher than the performance quoted. Net asset value return data include investment management fees, custodial charges and administrative fees (such as Director and legal fees) and assumes the reinvestment of
all distributions.
|
{foots1}
| 2
| Assuming the reinvestment of all dividends and distributions.
|
{foots1}
| 3
| The Fund’s total return is based on the reported NAV for each financial reporting period end and may differ from what is reported on the Financial Highlights due to financial statement rounding or adjustments.
|
{foots1}
| 4
| The MSCI Emerging Markets Index (Net Daily Total Return) (the "Index") captures large and mid-cap representation across 24 Emerging Markets (EM) countries. With 1,377 constituents, the Index covers
approximately 85% of the free float-adjusted market capitalization in each country. EM countries in the Index are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea,
Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. The Index is calculated net of withholding taxes to which the Fund is
generally subject. The Index is unmanaged and has been provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index. Index performance is not an indication of the
performance of the Fund itself. For complete Fund performance, please visit http://www.abrdnaef.com.
|
Letter to Shareholders (unaudited) (concluded)
2023 was $35,000,000. Under the terms of the
loan facility and applicable regulations, the Fund is required to maintain certain asset coverage ratios for the amount of its outstanding borrowings. The Board regularly reviews the use of leverage by the Fund.
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.
Open Market Repurchase Program
The Fund’s Board
approved an open market repurchase and discount management policy (the “Program”). The Program allows the Fund to purchase, in the open market, its outstanding common shares, with the amount and timing of
any repurchase determined at the discretion of the Fund’s investment adviser. Such purchases may be made opportunistically at certain discounts to NAV per share in the reasonable judgment of management based on
historical discount levels and current market conditions. If shares are repurchased, the Fund reports repurchase activity on the Fund's website on a monthly basis. For the six-month period ended June 30, 2023,
the Fund did not repurchase any shares through the Program.
Portfolio Holdings Disclosure
The Fund’s complete
schedule of portfolio holdings for the second and fourth quarters of each fiscal year are 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 (the “SEC”) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. These reports are available on the
SEC’s website at http://www.sec.gov. The Fund makes the information available to shareholders 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 12 month
period ended June 30 is available by August 31 of the relevant year: (1) upon request without charge by calling Investor Relations toll-free at 1-800-522-5465; and (2) on the SEC’s website at
http://www.sec.gov.
Investor Relations Information
As part of abrdn’s
commitment to shareholders, we invite you to visit the Fund on the web at www.abrdnaef.com. There, you can view monthly fact sheets, quarterly commentary, distribution and performance information, and other Fund
literature.
Enroll in abrdn’s email
services and be among the first to receive the latest closed-end fund news, announcements, videos, and other information. In addition, you can receive electronic versions of important Fund documents, including annual
reports, semi-annual reports, prospectuses and proxy statements. Sign up today at https://www.abrdn.com/en-us/cefinvestorcenter/contact-us/preferences
Contact Us:
| •
| Visit: https://www.abrdn.com/en-us/cefinvestorcenter
|
| •
| Email: Investor.Relations@abrdn.com; or
|
| •
| Call: 1-800-522-5465 (toll free in the U.S.).
|
Yours sincerely,
/s/ Christian Pittard
Christian Pittard
President
{foots1}
All amounts are U.S.
Dollars unless otherwise stated.
Total Investment Return (unaudited)
The following table summarizes
the average annual Fund performance compared to the Fund’s primary benchmark and Custom Index (as defined below) for the six-month (not annualized), 1-year, 3-year, 5-year and 10-year periods ended
June 30, 2023.
|
| 6 Months
| 1 Year
| 3 Years
| 5 Years
| 10 Years
|
| Net Asset Value (NAV)
| 7.78%
| 4.31%
| 0.94%
| -0.27%
| -0.24%
|
| Market Price
| 4.64%
| 1.34%
| 1.54%
| -0.63%
| -0.84%
|
| MSCI Emerging Markets Index (Net Daily Total Return)
| 4.89%
| 1.75%
| 2.32%
| 0.93%
| 2.95%
|
| Custom AEF Emerging Markets Index1
| 4.89%
| 1.75%
| 2.32%
| 0.93%
| 0.44%
|
Performance of a $10,000
Investment (as of June 30, 2023)
This graph shows the change in
value of a hypothetical investment of $10,000 in the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.
All performance information
for the periods prior to April 30, 2018 are for the Aberdeen Latin American Equity Fund, Inc. (“LAQ”), the performance and accounting survivor of the reorganizations of seven closed-end funds into the
Fund. Performance information for periods prior to April 30, 2018 do not reflect the Fund’s current investment strategy. Returns prior to April 30, 2018 reflect the impact of any contractual waivers in effect
for LAQ, without which performance would be lower. Effective April 30, 2018, abrdn Investments Limited (formerly known as Aberdeen Asset Managers Limited) (the "Investment Adviser" or the "Adviser"), the Fund’s
Adviser, entered into an expense limitation agreement with the Fund that is effective through June 30, 2024. Without such waivers and limitation agreements, performance would be lower.
abrdn Inc. has entered into
an agreement with the Fund to limit investor relations services fees,without which performance would be lower if the Fund’s investor services fees exceeded such limit during the relevant period. This agreement
aligns with the term of the advisory agreement and may not be terminated prior to the end of the current term of the advisory agreement. See Note 3 in the Notes to Financial Statements.
{foots1}
| 1
| The Custom Index reflects the returns of the MSCI Emerging Markets Latin America Index (Net Daily Total Return) for periods prior to April 27, 2018 and the returns of
the MSCI Emerging Markets Index (Net Daily Total Return) for periods subsequent to April 30, 2018. The indices and time periods for the Custom Index align with the strategies utilized and benchmark for the
Fund during the same time periods.
|
Total Investment Return (unaudited) (concluded)
Returns represent past
performance. Total investment return at NAV is based on changes in the NAV of Fund shares and assumes reinvestment of dividends and distributions, if any, at market prices pursuant to the dividend reinvestment program
sponsored by the Fund’s transfer agent. All return data at NAV includes fees charged to the Fund, which are listed in the Fund’s Statement of Operations under “Expenses.” Total investment
return at market value is based on changes in the market price at which the Fund’s shares traded on the New York Stock Exchange ("NYSE") American during the period and assumes reinvestment of dividends and
distributions, if any, at market prices pursuant to the dividend reinvestment program sponsored by the Fund’s transfer agent. The Fund’s total investment return is based on the reported NAV during the
six-month period ended June 30, 2023. Because the Fund’s shares trade in the stock market based on investor demand, the Fund may trade at a price higher or lower than its NAV. Therefore, returns are
calculated based on both market price and NAV. Past performance is no guarantee of future results.The performance information provided does not reflect the deduction of taxes that a shareholder would pay on distributions
received from the Fund.The current performance of the Fund may be lower or higher than the figures shown. The Fund’s yield, return, market price and NAV will fluctuate. Performance information current to the
most recent month-end is available at www.abrdnaef.com or by calling 800-522-5465.
The annualized net operating
expense ratio excluding fee waivers based on the six-month period ended June 30, 2023 was 2.38%. The annualized net operating expense ratio net of fee waivers based on the six-month period ended June 30, 2023 was
2.26%. The annualized net operating expenses net of fee waivers and excluding interest expense based on the six-month period ended June 30, 2023 was 1.20%.
Portfolio Summary (as a percentage of net assets) (unaudited)
As of June 30, 2023
The following table summarizes
the sector composition of the Fund’s portfolio, in S&P Global Inc.’s Global Industry Classification Standard (“GICS”) Sectors. Industry allocation is shown below for any sector
representing more than 25% of net assets.
| Sectors
|
|
| Information Technology
| 29.2%
|
| Semiconductors & Semiconductor Equipment
| 13.2%
|
| Technology Hardware, Storage & Peripherals
| 6.7%
|
| IT Services
| 4.4%
|
| Electronic Equipment, Instruments & Components
| 3.6%
|
| Software
| 1.3%
|
| Financials
| 24.8%
|
| Consumer Discretionary
| 14.0%
|
| Communication Services
| 9.2%
|
| Consumer Staples
| 8.8%
|
| Materials
| 8.5%
|
| Industrials
| 7.0%
|
| Energy
| 3.1%
|
| Health Care
| 2.2%
|
| Real Estate
| 2.1%
|
| Utilities
| 2.1%
|
| Private Equity
| 0.1%
|
| Short-Term Investment
| 0.9%
|
| Liabilities in Excess of Other Assets
| (12.0%)
|
|
| 100.0%
|
The following chart summarizes
the composition of the Fund’s portfolio by geographic classification.
| Countries
|
|
| China
| 26.4%
|
| India
| 16.6%
|
| Taiwan
| 14.8%
|
| South Korea
| 10.5%
|
| Brazil
| 7.8%
|
| Mexico
| 6.2%
|
| Indonesia
| 4.6%
|
| Hong Kong
| 3.7%
|
| Saudi Arabia
| 2.7%
|
| Netherlands
| 2.0%
|
| Other, less than 2% each
| 15.8%
|
| Short-Term Investment
| 0.9%
|
| Liabilities in Excess of Other Assets
| (12.0%)
|
|
| 100.0%
|
Portfolio Summary (as a percentage of net assets) (unaudited) (concluded)
As of June 30, 2023
| Currency Composition
|
|
| Hong Kong Dollar
| 20.7%
|
| Indian Rupee
| 16.6%
|
| New Taiwan Dollar
| 14.8%
|
| South Korean Won
| 10.5%
|
| U.S. Dollar
| 10.1%
|
| Chinese Yuan Renminbi
| 8.4%
|
| Brazilian Real
| 6.6%
|
| Euro Currency
| 5.0%
|
| Indonesian Rupiah
| 4.6%
|
| Saudi Arabia Riyal
| 4.2%
|
| South African Rand
| 3.7%
|
| Mexican Peso
| 2.0%
|
| Viet Nam Dong
| 1.9%
|
| Thai Baht
| 1.3%
|
| Polish Zloty
| 0.7%
|
| Russian Ruble
| -
|
| Short-Term Investment
| 0.9%
|
| Liabilities in Excess of Other Assets
| (12.0%)
|
|
| 100.0%
|
The following were the
Fund’s top ten holdings as of June 30, 2023:
| Top Ten Holdings
|
|
| Taiwan Semiconductor Manufacturing Co. Ltd., ADR
| 9.8%
|
| Samsung Electronics Co. Ltd.
| 6.7%
|
| Tencent Holdings Ltd.
| 6.4%
|
| Alibaba Group Holding Ltd.
| 4.0%
|
| Housing Development Finance Corp. Ltd.
| 3.4%
|
| SBI Life Insurance Co. Ltd.
| 2.3%
|
| LG Chem Ltd.
| 2.1%
|
| Bank Rakyat Indonesia Persero Tbk PT
| 2.1%
|
| Power Grid Corp. of India Ltd.
| 2.1%
|
| AIA Group Ltd.
| 2.0%
|
|
| Amounts listed as “–” are 0% or round to 0%.
|
Portfolio of Investments (unaudited)
As of June 30, 2023
|
| Shares
| Value
|
| COMMON STOCKS—102.2%
|
|
| AUSTRALIA—1.0%
|
| Materials—1.0%
|
|
|
|
| BHP Group Ltd.
|
| 103,781
| $ 3,102,046
|
| AUSTRIA—0.9%
|
| Materials—0.9%
|
|
|
|
| Mondi PLC
|
| 184,633
| 2,822,723
|
| BRAZIL—7.8%
|
| Consumer Discretionary—1.2%
|
|
|
|
| MercadoLibre, Inc.(a)
|
| 3,091
| 3,661,599
|
| Consumer Staples—1.6%
|
|
|
|
| Raia Drogasil SA
|
| 771,635
| 4,770,142
|
| Financials—2.9%
|
|
|
|
| B3 SA - Brasil Bolsa Balcao
|
| 1,719,064
| 5,245,296
|
| Banco Bradesco SA
|
| 1,138,401
| 3,480,680
|
|
|
|
| 8,725,976
|
| Industrials—1.5%
|
|
|
|
| Rumo SA
|
| 536,447
| 2,487,182
|
| WEG SA
|
| 262,089
| 2,066,300
|
|
|
|
| 4,553,482
|
| Information Technology—0.6%
|
|
|
|
| TOTVS SA
|
| 319,021
| 1,997,462
|
| Total Brazil
|
| 23,708,661
|
| CHILE—0.7%
|
| Materials—0.7%
|
|
|
|
| Sociedad Quimica y Minera de Chile SA, ADR
|
| 29,360
| 2,132,123
|
| CHINA—26.4%
|
| Communication Services—7.4%
|
|
|
|
| Autohome, Inc., ADR
|
| 106,485
| 3,105,103
|
| Tencent Holdings Ltd.
|
| 458,800
| 19,453,657
|
|
|
|
| 22,558,760
|
| Consumer Discretionary—9.6%
|
|
|
|
| Alibaba Group Holding Ltd.(a)
|
| 1,165,900
| 12,136,818
|
| China Tourism Group Duty Free Corp. Ltd., A Shares (Stock Connect)(b)
|
| 105,800
| 1,614,825
|
| China Tourism Group Duty Free Corp. Ltd., Shares H(a)(c)
|
| 102,200
| 1,386,644
|
| Li Auto, Inc., A Shares(a)(b)
|
| 181,000
| 3,133,830
|
| Meituan, Class B(a)(c)
|
| 222,050
| 3,481,948
|
| Midea Group Co. Ltd., A Shares (Stock Connect)(b)
|
| 579,286
| 4,708,841
|
| Tongcheng Travel Holdings Ltd.(a)
|
| 723,200
| 1,519,050
|
| Zhongsheng Group Holdings Ltd.
|
| 332,000
| 1,274,513
|
|
|
|
| 29,256,469
|
| Consumer Staples—2.5%
|
|
|
|
| Foshan Haitian Flavouring & Food Co. Ltd., A Shares(b)
|
| 390,733
| 2,524,533
|
| Kweichow Moutai Co. Ltd., A Shares (Stock Connect)(b)
|
| 22,297
| 5,197,521
|
|
|
|
| 7,722,054
|
| Financials—0.9%
|
|
|
|
| China International Capital Corp. Ltd., H Shares(a)(c)
|
| 1,638,400
| 2,888,359
|
| Health Care—2.2%
|
|
|
|
| Shenzhen Mindray Bio-Medical Electronics Co. Ltd., A Shares (Stock Connect)(b)
|
| 112,055
| 4,637,049
|
| Wuxi Biologics Cayman, Inc.(a)(c)
|
| 402,500
| 1,934,435
|
|
|
|
| 6,571,484
|
| Industrials—1.6%
|
|
|
|
| Centre Testing International Group Co. Ltd., A Shares(b)
|
| 545,000
| 1,463,811
|
| NARI Technology Co. Ltd., A Shares (Stock Connect)(b)
|
| 1,032,411
| 3,287,541
|
|
|
|
| 4,751,352
|
Portfolio of Investments (unaudited) (continued)
As of June 30, 2023
|
| Shares
| Value
|
| COMMON STOCKS (continued)
|
|
| CHINA (continued)
|
| Information Technology—0.7%
|
|
|
|
| Yonyou Network Technology Co. Ltd., A Shares(b)
|
| 815,828
| $ 2,304,904
|
| Real Estate—1.5%
|
|
|
|
| China Resources Land Ltd.
|
| 1,051,500
| 4,474,829
|
| Total China
|
| 80,528,211
|
| FRANCE—1.9%
|
| Energy—1.9%
|
|
|
|
| TotalEnergies SE
|
| 102,498
| 5,883,859
|
| HONG KONG—3.7%
|
| Consumer Staples—0.5%
|
|
|
|
| Budweiser Brewing Co. APAC Ltd.(c)
|
| 534,000
| 1,381,810
|
| Financials—3.2%
|
|
|
|
| AIA Group Ltd.
|
| 604,800
| 6,142,649
|
| Hong Kong Exchanges & Clearing Ltd.
|
| 94,832
| 3,593,091
|
|
|
|
| 9,735,740
|
| Total Hong Kong
|
| 11,117,550
|
| INDIA—16.6%
|
| Communication Services—0.7%
|
|
|
|
| Info Edge India Ltd.
|
| 36,435
| 1,996,359
|
| Consumer Discretionary—1.3%
|
|
|
|
| Maruti Suzuki India Ltd.
|
| 34,449
| 4,115,829
|
| Consumer Staples—1.9%
|
|
|
|
| Hindustan Unilever Ltd.
|
| 176,064
| 5,751,893
|
| Financials—7.1%
|
|
|
|
| Housing Development Finance Corp. Ltd.
|
| 297,395
| 10,254,751
|
| Kotak Mahindra Bank Ltd.
|
| 185,206
| 4,169,008
|
| SBI Life Insurance Co. Ltd.(c)
|
| 441,925
| 7,066,900
|
|
|
|
| 21,490,659
|
| Information Technology—1.4%
|
|
|
|
| Infosys Ltd.
|
| 263,942
| 4,306,622
|
| Materials—1.5%
|
|
|
|
| UltraTech Cement Ltd.
|
| 44,787
| 4,531,659
|
| Real Estate—0.6%
|
|
|
|
| Godrej Properties Ltd.(a)
|
| 96,996
| 1,860,948
|
| Utilities—2.1%
|
|
|
|
| Power Grid Corp. of India Ltd.
|
| 2,065,239
| 6,409,238
|
| Total India
|
| 50,463,207
|
| INDONESIA—4.6%
|
| Communication Services—1.1%
|
|
|
|
| Telkom Indonesia Persero Tbk PT
|
| 12,578,800
| 3,365,113
|
| Consumer Discretionary—0.4%
|
|
|
|
| Sepatu Bata Tbk PT(a)(d)
|
| 36,207,500
| 1,304,122
|
| Financials—3.1%
|
|
|
|
| Bank Central Asia Tbk PT
|
| 4,373,300
| 2,682,137
|
| Bank Rakyat Indonesia Persero Tbk PT
|
| 18,025,186
| 6,580,843
|
|
|
|
| 9,262,980
|
| Total Indonesia
|
| 13,932,215
|
| KAZAKHSTAN—1.2%
|
| Financials—1.2%
|
|
|
|
| Kaspi.KZ JSC, GDR(c)
|
| 35,766
| 2,853,106
|
| Kaspi.KZ JSC, GDR
|
| 8,417
| 669,993
|
|
|
|
| 3,523,099
|
Portfolio of Investments (unaudited) (continued)
As of June 30, 2023
|
| Shares
| Value
|
| COMMON STOCKS (continued)
|
|
| MEXICO—6.2%
|
| Consumer Staples—1.6%
|
|
|
|
| Fomento Economico Mexicano SAB de CV, ADR
|
| 45,406
| $ 5,032,801
|
| Financials—2.0%
|
|
|
|
| Grupo Financiero Banorte SAB de CV, Class O
|
| 725,234
| 5,966,434
|
| Industrials—1.1%
|
|
|
|
| Grupo Aeroportuario del Centro Norte SAB de CV, ADR
|
| 38,924
| 3,302,312
|
| Materials—1.5%
|
|
|
|
| Southern Copper Corp.
|
| 63,270
| 4,538,990
|
| Total Mexico
|
| 18,840,537
|
| NETHERLANDS—2.0%
|
| Information Technology—2.0%
|
|
|
|
| ASM International NV
|
| 7,966
| 3,382,397
|
| ASML Holding NV
|
| 3,759
| 2,726,511
|
|
|
|
| 6,108,908
|
| PERU—0.6%
|
| Financials—0.6%
|
|
|
|
| Credicorp Ltd.
|
| 12,526
| 1,849,339
|
| POLAND—1.8%
|
| Consumer Staples—0.7%
|
|
|
|
| Dino Polska SA(a)(c)
|
| 17,837
| 2,083,958
|
| Industrials—1.1%
|
|
|
|
| InPost SA(a)
|
| 314,504
| 3,413,205
|
| Total Poland
|
| 5,497,163
|
| RUSSIA—0.0%
|
| Energy—0.0%
|
|
|
|
| LUKOIL PJSC, ADR(d)(e)
|
| 106,851
| –
|
| Novatek PJSC(d)(e)
|
| 314,849
| –
|
|
|
|
| –
|
| Financials—0.0%
|
|
|
|
| Sberbank of Russia PJSC(d)(e)
|
| 730,234
| –
|
| Total Russia
|
| –
|
| SAUDI ARABIA—2.7%
|
| Energy—1.2%
|
|
|
|
| Saudi Arabian Oil Co.(c)
|
| 417,426
| 3,615,764
|
| Financials—1.5%
|
|
|
|
| Al Rajhi Bank
|
| 232,042
| 4,541,564
|
| Total Saudi Arabia
|
| 8,157,328
|
| SOUTH AFRICA—1.8%
|
| Financials—1.0%
|
|
|
|
| Sanlam Ltd.
|
| 959,001
| 2,973,113
|
| Materials—0.8%
|
|
|
|
| Anglo American Platinum Ltd.
|
| 57,333
| 2,591,652
|
| Total South Africa
|
| 5,564,765
|
| SOUTH KOREA—1.7%
|
| Industrials—1.7%
|
|
|
|
| Samsung Engineering Co. Ltd.
|
| 244,442
| 5,271,455
|
| TAIWAN—14.8%
|
| Information Technology—14.8%
|
|
|
|
| Chroma ATE, Inc.
|
| 531,000
| 4,285,295
|
| Delta Electronics, Inc.
|
| 190,000
| 2,105,642
|
| Hon Hai Precision Industry Co. Ltd.
|
| 1,268,000
| 4,610,115
|
Portfolio of Investments (unaudited) (continued)
As of June 30, 2023
|
| Shares
| Value
|
| COMMON STOCKS (continued)
|
|
| TAIWAN (continued)
|
| MediaTek, Inc.
|
| 193,000
| $ 4,272,218
|
| Taiwan Semiconductor Manufacturing Co. Ltd., ADR
|
| 1,615,000
| 29,834,406
|
|
|
|
| 45,107,676
|
| THAILAND—1.3%
|
| Financials—1.3%
|
|
|
|
| Kasikornbank PCL, Foreign Shares
|
| 1,051,700
| 3,849,350
|
| UNITED ARAB EMIRATES—1.5%
|
| Consumer Discretionary—1.5%
|
|
|
|
| Americana Restaurants International PLC
|
| 4,026,269
| 4,606,204
|
| UNITED STATES—1.1%
|
| Information Technology—1.1%
|
|
|
|
| Globant SA(a)
|
| 18,982
| 3,411,445
|
| VIETNAM—1.9%
|
| Information Technology—1.9%
|
|
|
|
| FPT Corp.
|
| 1,614,700
| 5,898,069
|
| Total Common Stocks
|
| 311,375,933
|
| PREFERRED STOCKS—8.8%
|
|
| SOUTH KOREA—8.8%
|
| Information Technology—6.7%
|
|
|
|
| Samsung Electronics Co. Ltd., Preferred Shares
|
| 449,040
| 20,377,105
|
| Materials—2.1%
|
|
|
|
| LG Chem Ltd.
|
| 24,603
| 6,609,491
|
| Total South Korea
|
| 26,986,596
|
| Total Preferred Stocks
|
| 26,986,596
|
| PRIVATE EQUITY—0.1%
|
|
| GLOBAL*—0.0%
|
| Private Equity —0.0%
|
|
|
|
| Emerging Markets Ventures I LP, H Shares(d)(f)(g)(h)(i)
|
| 11,723,413(j)
| 8,324
|
| ISRAEL—0.0%
|
| Private Equity —0.0%
|
|
|
|
| BPA Israel Ventures LLC(d)(f)(g)(h)(i)(k)
|
| 3,349,175(j)
| 38,382
|
| UNITED STATES—0.1%
|
| Private Equity —0.1%
|
|
|
|
| Neuron VC I LP(d)(f)(g)(i)(k)
|
| 1,522,368(j)
| 13,838
|
| Telesoft Partners II LP(d)(f)(i)(k)
|
| 2,400,000(j)
| 162,480
|
|
|
|
| 176,318
|
| Total Private Equity
|
| 223,024
|
| SHORT-TERM INVESTMENT—0.9%
|
|
| State Street Institutional U.S. Government Money Market Fund, Premier Class, 5.03%(l)
|
| 2,723,173
| 2,723,173
|
| Total Short-Term Investment
|
| 2,723,173
|
Total Investments
(Cost $366,213,633)—112.0%
| 341,308,726
|
| Liabilities in Excess of Other Assets—(12.0%)
| (36,562,154)
|
| Net Assets—100.0%
| $304,746,572
|
Portfolio of Investments (unaudited) (concluded)
As of June 30, 2023
| (a)
| Non-income producing security.
|
| (b)
| China A Shares. These shares are issued in local currency, traded in the local stock markets and are held through either a Qualified Foreign Institutional Investor (QFII) license or
the Shanghai or Shenzhen Hong-Kong Stock Connect program.
|
| (c)
| Denotes a security issued under Regulation S or Rule 144A.
|
| (d)
| Illiquid security.
|
| (e)
| Level 3 security. See Note 2(a) of the accompanying Notes to Financial Statements.
|
| (f)
| Fair Value is determined pursuant to procedures approved by the Fund’s Board of Directors. Unless otherwise noted, securities are valued by applying valuation factors to the
exchange traded price. See Note 2(a) of the accompanying Notes to Financial Statements for inputs used.
|
| (g)
| Considered in liquidation by the Fund's Adviser.
|
| (h)
| As of June 30, 2023, the aggregate amount of open commitments for the Fund is $2,806,782.
|
| (i)
| Restricted security, not readily marketable. See Note 2(b) of the accompanying Notes to Financial Statements.
|
| (j)
| Represents contributed capital.
|
| (k)
| Fund of Fund investment.
|
| (l)
| Registered investment company advised by State Street Global Advisors. The rate shown is the 7 day yield as of June 30, 2023.
|
| *
| “Global” is the percentage attributable to the Fund’s holdings in a private equity fund which invests globally and is not categorized under
a particular country.
|
| ADR
| American Depositary Receipt
|
| GDR
| Global Depositary Receipt
|
| PLC
| Public Limited Company
|
See Notes to Financial
Statements.
Statement of Assets and Liabilities (unaudited)
As of June 30, 2023
| Assets
|
|
| Investments, at value (cost $363,490,460)
| $338,585,553
|
| Short-term investments, at value (cost $2,723,173)
| 2,723,173
|
| Foreign currency, at value (cost $111,550)
| 111,437
|
| Receivable for investments sold
| 368,225
|
| Interest and dividends receivable
| 1,155,220
|
| Tax reclaim receivable
| 44,678
|
| Prepaid expenses in connection with revolving credit facility (Note 7)
| 11,061
|
| Prepaid expenses
| 81,736
|
| Total assets
| 343,081,083
|
| Liabilities
|
|
| Revolving credit facility payable (Note 7)
| 35,000,000
|
| Deferred foreign capital gains tax (Note 2h)
| 1,452,870
|
| Investment advisory fees payable (Note 3)
| 1,182,819
|
| Interest payable on revolving credit facility
| 69,693
|
| Director fees payable
| 61,903
|
| Administration fees payable (Note 3)
| 60,815
|
| Investor relations fees payable (Note 3)
| 56,813
|
| Other accrued expenses
| 449,598
|
| Total liabilities
| 38,334,511
|
|
|
| Net Assets
| $304,746,572
|
| Composition of Net Assets
|
|
| Common stock (par value $0.001 per share) (Note 5)
| $50,752
|
| Paid-in capital in excess of par
| 418,367,290
|
| Distributable accumulated loss
| (113,671,470)
|
| Net Assets
| $304,746,572
|
| Net asset value per share based on 50,751,778 shares issued and outstanding
| $6.00
|
See Notes to Financial
Statements.
Statement of Operations (unaudited)
For the Six-Month Period Ended June 30, 2023
| Net Investment Income
|
|
| Investment Income:
|
|
| Dividends and other income (net of foreign withholding taxes of $710,784)
| $6,939,601
|
| Total investment income
| 6,939,601
|
| Expenses:
|
|
| Investment management fee (Note 3)
| 1,344,614
|
| Custodian’s fees and expenses
| 150,231
|
| Administration fee (Note 3)
| 122,064
|
| Directors' fees and expenses
| 120,965
|
| Investor relations fees and expenses (Note 3)
| 51,351
|
| Legal fees and expenses
| 50,126
|
| Reports to shareholders and proxy solicitation
| 39,599
|
| Insurance expense
| 39,108
|
| Independent auditors’ fees and expenses
| 36,935
|
| Transfer agent’s fees and expenses
| 16,596
|
| Miscellaneous
| 37,323
|
| Total operating expenses, excluding interest expense
| 2,008,912
|
| Interest expense (Note 7)
| 1,622,875
|
| Total operating expenses before reimbursed/waived expenses
| 3,631,787
|
| Expenses waived (Note 3)
| (177,949)
|
| Net expenses
| 3,453,838
|
|
|
| Net Investment Income/(Loss)
| 3,485,763
|
| Net Realized/Unrealized Gain/(Loss) from Investments and Foreign Currency Related Transactions:
|
|
| Net realized gain/(loss) from:
|
|
| Investment transactions (including $276,731 capital gains tax)
| (5,412,799)
|
| Foreign currency transactions
| (65,931)
|
|
| (5,478,730)
|
| Net change in unrealized appreciation/(depreciation) on:
|
|
| Investments (including change in deferred capital gains tax of $143,171)
| 23,733,322
|
| Foreign currency translation
| (10,655)
|
|
| 23,722,667
|
| Net realized and unrealized gain from investments and foreign currencies
| 18,243,937
|
| Change in Net Assets Resulting from Operations
| $21,729,700
|
See Notes to Financial
Statements.
Statements of Changes in Net Assets
|
| For the
Six-Month
Period Ended
June 30, 2023
(unaudited)
| For the
Year Ended
December 31, 2022
|
| Increase/(Decrease) in Net Assets:
|
|
|
| Operations:
|
|
|
| Net investment income
| $3,485,763
| $6,144,846
|
| Net realized loss from investments and foreign currency transactions
| (5,478,730)
| (21,228,855)
|
| Net change in unrealized appreciation/(depreciation) on investments and foreign
currency translation
| 23,722,667
| (110,994,235)
|
| Net increase/(decrease) in net assets resulting from operations
| 21,729,700
| (126,078,244)
|
| Distributions to Shareholders From:
|
|
|
| Distributable earnings
| (10,150,356)
| (6,410,460)
|
| Return of capital
| –
| (15,920,323)
|
| Net decrease in net assets from distributions
| (10,150,356)
| (22,330,783)
|
| Change in net assets
| 11,579,344
| (148,409,027)
|
| Net Assets:
|
|
|
| Beginning of period
| 293,167,228
| 441,576,255
|
| End of period
| $304,746,572
| $293,167,228
|
Amounts listed as
“–” are $0 or round to $0.
See Notes to Financial
Statements.
Statement of Cash Flows (unaudited)
For the Six-Month Period Ended June 30,
2023
| Cash flows from operating activities:
|
|
| Net increase/(decrease) in net assets resulting from operations
| $21,729,700
|
Adjustments to reconcile net increase in net assets resulting
from operations to net cash provided by operating activities:
|
|
| Investments purchased
| (51,259,213)
|
| Investments sold and principal repayments
| 80,934,261
|
| Decrease in short-term investments, excluding foreign government
| 1,290,940
|
| Increase in interest and dividends receivable
| (999,038)
|
| Increase in prepaid expenses
| (10,161)
|
| Decrease in interest payable on bank loan
| (29,928)
|
| Increase in accrued investment management fees payable
| 681,161
|
| Increase in other accrued expenses
| 207,681
|
| Net change in unrealized appreciation of investments
| (23,733,322)
|
| Net change in unrealized depreciation on foreign currency translations
| 10,655
|
| Net realized loss on investments transactions
| 5,412,799
|
| Total Cash flows from operating activities
| 34,235,535
|
| Cash flows from financing activities:
|
|
| Repayment of revolving credit facility
| $(20,000,000)
|
| Distributions paid to shareholders
| (14,718,016)
|
| Net cash used in financing activities
| (34,718,016)
|
| Effect of exchange rate on cash
| (11,621)
|
| Net change in cash
| (494,102)
|
| Unrestricted and restricted cash and foreign currency, beginning of period
| 605,539
|
| Unrestricted and restricted cash and foreign currency, end of period
| $111,437
|
| Supplemental disclosure of cash flow information:
|
|
| Cash paid for interest and fees on borrowing
| 1,652,803
|
See Notes to Financial
Statements.
Statement of Cash Flows (unaudited) (concluded)
For the Six-Month Period Ended June 30,
2023
| Reconciliation of unrestricted and restricted cash to the statements of assets and liabilities
|
|
|
|
| Six-Month
Period Ended
June 30, 2023
(unaudited)
| Year Ended
December 31, 2022
|
| Foreign currency, at value
| $111,437
| $346,873
|
| Due from broker
| –
| 258,666
|
|
| $111,437
| $605,539
|
Amounts listed as
“–” are $0 or round to $0.
See Notes to Financial
Statements.
|
| For the
Six-Month
Period Ended
June 30,
| For the Fiscal Years Ended December 31,
|
|
| 2023
(unaudited)
| 2022
| 2021
| 2020
| 2019
| 2018
(a)(b)
|
| PER SHARE OPERATING PERFORMANCE(c):
|
|
|
|
|
|
|
| Net asset value per common share, beginning of period
| $5.78
| $8.70
| $9.41
| $8.66
| $7.37
| $9.99
|
| Net investment income
| 0.07
| 0.12
| 0.16
| 0.23
| 0.23
| 0.19
|
Net realized and unrealized gains/(losses) on
investments and foreign currency transactions
| 0.35
| (2.60)
| (0.34)
| 0.79
| 1.21
| (1.36)
|
| Total from investment operations applicable to common shareholders
| 0.42
| (2.48)
| (0.18)
| 1.02
| 1.44
| (1.17)
|
| Distributions to common shareholders from:
|
|
|
|
|
|
|
| Net investment income
| (0.20)
| (0.13)
| (0.22)
| (0.27)
| (0.17)
| (0.13)
|
| Net realized gains
| –
| –
| –
| –
| –
| (1.36)
|
| Return of capital
| –
| (0.31)
| (0.31)
| –
| –
| (–)
|
| Total distributions
| (0.20)
| (0.44)
| (0.53)
| (0.27)
| (0.17)
| (1.49)
|
| Capital Share Transactions:
|
|
|
|
|
|
|
| Impact of open market repurchase program
| –
| –
| –
| –
| –
| 0.01
|
| Impact due to tender offer
| –
| –
| –
| –
| 0.02
| 0.03
|
| Total capital share transactions
| –
| –
| –
| –
| 0.02
| 0.04
|
| Net asset value per common share, end of period
| $6.00
| $5.78
| $8.70
| $9.41
| $8.66
| $7.37
|
| Market price, end of period
| $5.19
| $5.15
| $7.92
| $8.16
| $7.62
| $6.35
|
| Total Investment Return Based on(d):
|
|
|
|
|
|
|
| Market price
| 4.64%
| (29.76%)
| 3.27%
| 11.42%
| 22.80%
| (16.72%)
|
| Net asset value
| 7.78%
| (28.23%)
| (1.63%)
| 13.06%
| 20.25%
| (10.38%)
|
| Ratio to Average Net Assets/Supplementary Data:
|
|
|
|
|
|
|
| Net assets, end of period (000 omitted)
| $304,747
| $293,167
| $441,576
| $477,473
| $439,330
| $440,819
|
| Average net assets applicable to common shareholders (000 omitted)
| $307,689
| $335,898
| $492,593
| $390,881
| $442,354
| $445,001
|
| Total expenses, net of fee waivers(d)
| 2.26%(e)
| 1.65%
| 1.31%
| 1.44%
| 1.54%
| 1.55%(f)(g)
|
| Total expenses, excluding fee waivers(d)
| 2.38%(e)
| 1.74%
| 1.27%
| 1.44%
| 1.57%
| 1.56%(f)(g)
|
| Total expenses, excluding taxes net of fee waivers
| 2.26%(e)
| 1.65%
| 1.31%
| 1.44%
| 1.54%
| 1.45%(f)
|
| Total expenses, excluding taxes and interest and revolving credit facility expenses, net of fee
waivers
| 1.20%(e)
| 1.20%
| 1.21%
| 1.27%
| 1.19%
| 1.25%(f)
|
| Net Investment income(d)
| 2.28%(e)
| 1.83%
| 1.61%
| 2.96%
| 2.92%
| 2.24%(g)
|
| Portfolio turnover
| 14%(h)
| 32%
| 50%
| 21%
| 13%
| 145%(i)
|
| Senior securities (loan facility) outstanding (000 omitted)
| $35,000
| $55,000
| $55,000
| $40,900
| $40,900
| $49,000
|
| Asset coverage ratio on revolving credit facility at period end
| 971%
| 633%
| 903%
| 1,267%
| 1,174%
| 1,000%
|
See
Notes to Financial Statements.
Financial Highlights (concluded)
|
| For the
Six-Month
Period Ended
June 30,
| For the Fiscal Years Ended December 31,
|
|
| 2023
(unaudited)
| 2022
| 2021
| 2020
| 2019
| 2018
(a)(b)
|
| Asset coverage per $1,000 on revolving credit facility at period
end(j)
| $9,707
| $6,330
| $9,029
| $12,674
| $11,742
| $9,996
|
| (a)
| Historical net asset value and per share amounts for the accounting survivor of the reorganizations have been recasted to reflect the conversion ratio of 2.9187 in effect on the date of reorganization
of April 27, 2018. Ratios to Average Net Assets were not impacted.
|
| (b)
| Seven abrdn Funds reorganized into abrdn Emerging Markets Equity Income Fund on April 27, 2018.
|
| (c)
| Based on average shares outstanding.
|
| (d)
| Total investment return based on market value is calculated assuming that shares of the Fund’s common stock were purchased at the closing market price as of the beginning of the period, dividends,
capital gains and other distributions were reinvested as provided for in the Fund’s dividend reinvestment plan and then sold at the closing market price per share on the last day of the period. The computation
does not reflect any sales commission investors may incur in purchasing or selling shares of the Fund. The total investment return based on the net asset value is similarly computed except that the Fund’s net
asset value is substituted for the closing market value.
|
| (e)
| Annualized.
|
| (f)
| Effective April 30, 2018, the Fund entered into an expense limitation agreement to limit total ordinary operating expenses of the Fund (excluding any interest, taxes, brokerage fees, short sale dividend
and interest expenses and non-routine expenses) from exceeding 1.20% of the average daily Net Assets of the Fund on an annualized basis. (Note 3) Prior to this, there was no expense limitation agreement in
place.
|
| (g)
| Ratios include the effect of Chilean taxes.
|
| (h)
| Not annualized.
|
| (i)
| The variation in the Fund’s turnover rate in 2018 was primarily due to the reorganization of the Fund and change in investment strategy.
|
| (j)
| Asset coverage ratio is calculated by dividing net assets plus the amount of any borrowings, for investment purposes by the amount of the Revolving Credit Facility.
|
Amounts listed as
“–” are $0 or round to $0.
See Notes to Financial
Statements.
Notes to Financial Statements (unaudited)
June 30, 2023
1. Organization
abrdn Emerging Markets
Equity Income Fund, Inc. (the “Fund”) was incorporated in Maryland on January 30, 1989 and commenced investment operations on September 27, 1989. The Fund is registered under the Investment Company Act of
1940, as amended (the “1940 Act”), as a non-diversified closed-end, management investment company. The Fund trades on the NYSE American under the ticker symbol “AEF”.
2. Summary of Significant
Accounting Policies
The Fund is an investment
company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial
Services-Investment Companies. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies conform to generally accepted accounting
principles ("GAAP") in the United States of America. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. The accounting records of
the Fund are maintained in U.S. Dollars and the U.S. Dollar is used as both the functional and reporting currency.
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 transact at the measurement date. Pursuant to Rule 2a-5 under the 1940 Act, the Board of Directors
(the "Board") designated abrdn Investments Limited (the "Adviser") as the valuation designee ("Valuation Designee") for the Fund to perform the fair value determinations relating to Fund investments for which
market quotations are not readily available.
In accordance with the
authoritative guidance on fair value measurements and disclosures under 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, the highest level, 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 similar assets, and Level 3, the lowest level, measurements to valuations based upon unobservable inputs that are
significant to the valuation. Inputs refer broadly to the assumptions
that market participants would use in
pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including a pricing model and/or the risk inherent in the
inputs to the valuation technique. Inputs may be observable or unobservable. 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. Open-end mutual funds are valued at the respective net asset value (“NAV”) as reported by such company. The prospectuses for the registered open-end
management investment companies in which the Fund invests explain the circumstances under which those companies will use fair value pricing and the effects of using fair value pricing. Closed-end funds and
exchange-traded funds (“ETFs”) are valued at the market price of the security at the Valuation Time (as defined below). A security using any of these pricing methodologies is determined to be a Level 1
investment.
Equity securities that are
traded on an exchange are valued at the last quoted sale price or the official close 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. Under normal circumstances, the Valuation Time is as of the close of regular trading on the NYSE (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.
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
Notes to Financial Statements (unaudited) (continued)
June 30, 2023
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.
Short-term investments are
comprised of cash and cash equivalents invested in short-term investment funds which are redeemable daily. The Fund sweeps available cash into the State Street Institutional U.S. Government Money Market Fund,
which has elected to qualify as a “government money market fund” pursuant to Rule 2a-7 under the 1940 Act, and has an objective, which is not guaranteed, to maintain a $1.00 per share NAV. Registered
investment companies are valued at their NAV as reported by such company. Generally, these investment types are categorized as Level 1 investments.
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 it trades closes before the Valuation Time), the security is valued
at fair value as determined by the Valuation Designee, taking into account the relevant factors and surrounding circumstances using valuation policies and procedures approved by the Board. A security that has been
fair valued by the Valuation Designee may be classified as Level 2 or Level 3 depending on the nature of the inputs.
The three-level hierarchy of
inputs is summarized below:
Level 1 - quoted prices in
active markets for identical investments;
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 Fund may also invest in
private equity private placement securities, which represented 0.1% of the net assets of the Fund as of June 30, 2023. The private equity private placement securities in which the Fund is invested are deemed to be
restricted securities. In the absence of readily ascertainable market values, these securities are valued at fair value as determined in good faith by, or under the direction of the Board, pursuant to valuation
policies and procedures established by the Board. The Fund’s estimate of fair value assumes a willing buyer and a willing seller neither of whom are acting under the compulsion to buy or sell. Although these
securities may be resold in privately negotiated transactions, the prices realized on such sales could differ from the prices originally paid by the Fund or the current carrying values, and the difference could be
material. These securities are stated at fair value by utilizing the net asset valuations provided by the underlying funds as a practical expedient. In determining the fair value of these investments, management uses
the market approach which includes as the primary input the capital balance reported; however, adjustments to the reported capital balance may be made based on various factors, including, but not limited to, the
attributes of the interest held, including the rights and obligations, and any restrictions or illiquidity of such interests, and the fair value of these private equity investments. No such adjustments were made to
the NAVs provided by the underlying funds.
A summary of standard
inputs is listed below:
| Security Type
| Standard Inputs
|
| Foreign equities utilizing a fair value factor
| Depositary receipts, indices, futures, sector indices/ETFs, exchange rates, and local
exchange opening and closing prices of each security.
|
The following is a
summary of the inputs used as of June 30, 2023 in valuing the Fund's investments at fair value. The inputs or methodologies 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:
| Investments, at Value
| Level 1 – Quoted
Prices
| Level 2 – Other Significant
Observable Inputs
| Level 3 – Significant
Unobservable Inputs
| Total
|
| Assets
|
|
|
| Investments in Securities
|
|
|
|
| Common Stocks
| $57,994,436
| $253,381,497
| $–
| $311,375,933
|
| Preferred Stocks
| –
| 26,986,596
| –
| 26,986,596
|
| Short-Term Investment
| 2,723,173
| –
| –
| 2,723,173
|
| Total
| $60,717,609
| $280,368,093
| $–
| $341,085,702
|
| Private Equity(a)
|
|
|
| 223,024
|
| Total Investments in Securities
|
|
|
| $341,308,726
|
Amounts listed as
“–” are $0 or round to $0.
Notes to Financial Statements (unaudited) (continued)
June 30, 2023
| (a)
| Private Equity investments are measured at the net asset valuations provided by the underlying funds as a practical expedient and have not been classified in the
fair value levels. The fair value amounts presented are intended to permit reconciliation to the total investment amount presented in the Portfolio of Investments.
|
During the six-month period ended June 30,
2023, there have been no transfers between levels and no significant changes to the fair valuation methodologies. Level 3 investments held during and at the end of the six-month period in relation to net assets
were not significant (0.0% of total net assets) and accordingly, a reconciliation of Level 3 assets for the six-month period ended June 30, 2023 is not presented. The valuation technique used at June 30, 2023 was fair
valuation at zero pursuant to procedures approved by the Board.
b. Restricted
Securities:
Restricted securities are
privately-placed securities whose resale is restricted under U.S. securities laws. The Fund may invest in restricted securities, including unregistered securities eligible for resale without registration pursuant to
Rule 144A and privately-placed securities of U.S. and non-U.S. issuers offered outside the U.S. without registration pursuant to Regulation S under the Securities Act of 1933, as amended (the "1933 Act"). Rule 144A
securities may be freely traded among certain qualified institutional investors, such as the Fund, but resale of such securities in the U.S. is permitted only in limited circumstances.
c. Foreign Currency
Translation:
Foreign securities,
currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. Dollars at the exchange rate of said currencies against the U.S. Dollar, as of the Valuation Time, as provided by
an independent pricing service approved by the Board.
Foreign currency amounts are
translated into U.S. Dollars on the following basis:
(i) market value of investment
securities, other assets and liabilities – at the current daily rates of exchange at the Valuation Time; and
(ii) purchases and sales of
investment securities, income and expenses – at the relevant rates of exchange prevailing on the respective dates of such transactions.
The Fund does not isolate
that portion of gains and losses on investments in equity securities due to changes in the foreign exchange rates from the portion due to changes in market prices of equity securities. Accordingly, realized and
unrealized foreign currency gains and losses with respect to such securities are included in the reported net realized and unrealized gains and losses on investment transactions balances.
The Fund reports certain
foreign currency related transactions and foreign taxes withheld on security transactions as components of realized gains for financial reporting purposes, whereas such foreign
currency related transactions are treated as
ordinary income for U.S. federal income tax purposes.
Net unrealized currency gains
or losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation/depreciation in value of investments, and translation
of other assets and liabilities denominated in foreign currencies.
Net realized foreign exchange
gains or losses represent foreign exchange gains and losses from transactions in foreign currencies and forward foreign currency contracts, exchange gains or losses realized between the trade date and settlement date
on security transactions, and the difference between the amounts of interest and dividends recorded on the Fund’s books and the U.S. Dollar equivalent of the amounts actually received.
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 U.S. Dollar.
Generally, when the U.S. Dollar rises in value against foreign currency, the Fund’s investments denominated in that foreign currency will lose value because the foreign currency is worth fewer U.S. Dollars; the
opposite effect occurs if the U.S. Dollar falls in relative value.
d. Rights Issues and
Warrants:
Rights issues give the
right, normally to existing shareholders, to buy a proportional number of additional securities at a given price (generally at a discount) within a fixed period (generally a short-term period) and are offered at the
company’s discretion. Warrants are securities that give the holder the right to buy common stock at a specified price for a specified period of time. Rights issues and warrants are speculative and have no value
if they are not exercised before the expiration date. Rights issues and warrants are valued at the last sale price on the exchange on which they are traded.
e. Security Transactions,
Investment Income and Expenses:
Security transactions are
recorded on the trade date. Realized and unrealized gains/(losses) from security and currency transactions are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date except for
certain dividends on foreign securities, which are recorded as soon as the Fund is informed after the ex-dividend date. Interest income and expenses are recorded on an accrual basis.
Certain distributions
received by the Fund could represent a return of capital or capital gain. The Fund determines the components of these
Notes to Financial Statements (unaudited) (continued)
June 30, 2023
distributions subsequent to the ex-dividend
date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain.
f. Distributions:
The Fund records dividends
and distributions payable to its shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal
income tax regulations, which may differ from GAAP. These book basis/tax basis differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net
realized capital gains for tax purposes are reported as return of capital.
g. Federal Income Taxes:
The Fund intends to
continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in Subchapter M of the Internal Revenue Code of 1986, as
amended the ("Code"), and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all federal income taxes. Therefore, no federal income tax provision is
required.
The Fund recognizes the tax
benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management of the Fund has concluded that there are no
significant uncertain tax positions that would require recognition in the financial statements. Since tax authorities can examine previously filed tax returns, the Fund’s U.S. federal and state tax returns for
each of the most recent four fiscal years up to the most recent fiscal year ended December 31, 2022 are subject to such review.
h. Foreign Withholding
Tax:
Dividend and interest
income from non-U.S. sources received by the Fund are generally subject to non-U.S. withholding taxes and are recorded on the Statement of Operations. The Fund files for tax reclaims for the refund of such
withholdings taxes according to tax treaties. Tax reclaims that are deemed collectible are booked as tax reclaim receivable on the Statement of Assets and Liabilities. In addition, the Fund may be subject to capital
gains tax in certain countries in which it invests. The above taxes may be reduced or eliminated under the terms of applicable U.S. income tax treaties with some of these countries. The Fund accrues such taxes when
the related income is earned.
In addition, when the Fund sells securities
within certain countries in which it invests, the capital gains realized may be subject to tax. Based on these market requirements and as required under GAAP, the Fund accrues deferred capital gains tax on securities
currently held that have unrealized appreciation within these countries. The amount of deferred capital gains tax accrued is reported on the Statement of Assets and Liabilities.
i. Partnership Accounting
Policy:
The Fund records its
pro-rata share of the income/(loss) and capital gains/(losses) allocated from the private equity investments, which are classified as partnerships, and adjusts the cost of the underlying partnerships accordingly.
These amounts are included in the appropriate line items on the Fund’s Statement of Operations.
3. Agreements and Transactions
with Affiliates
a. Investment Adviser:
abrdn Investments Limited
serves as the Fund’s investment adviser with respect to all investments. The Adviser is an indirect wholly-owned subsidiary of abrdn plc. The Adviser receives an annual fee, calculated weekly and paid quarterly,
equal to 0.90% of the first $250 million, 0.80% of amounts $250-$500 million and 0.75% of amounts over $500 million. For the six-month period ended June 30, 2023, the Adviser earned $1,344,614 for advisory
services.
The Adviser entered into a
written contract (the “Expense Limitation Agreement”) with the Fund that is effective through June 30, 2024. The Expense Limitation Agreement limits the total ordinary operating expenses of the Fund
(excluding any interest, taxes, brokerage fees, short sale dividend and interest expenses and non-routine expenses) from exceeding 1.20% of the average daily Net Assets of the Fund on an annualized basis. Through
June 30, 2023, the Adviser waived a total of $177,949 pursuant to the Expense Limitation Agreement. The Adviser may request and receive reimbursement of the advisory fees waived and other expenses reimbursed
pursuant to the Expense Limitation Agreement as of a date not more than three years after the date when the Adviser limited the fees or reimbursed the expenses; provided that the following requirements are met: the
reimbursements do not cause the Fund to exceed the lesser of the applicable expense limitation in the contract at the time the fees were limited or expenses are paid or the applicable expense limitation in effect at
the time the expenses are being recouped by the Adviser (the “Reimbursement Requirements”).
As of June 30, 2023, to the
extent the Reimbursement Requirements are met, the cumulative potential reimbursements to the Adviser for the Fund, based on expenses reimbursed by the Adviser, including adjustments described above, would be:
Notes to Financial Statements (unaudited) (continued)
June 30, 2023
| Amount Fiscal Year 2022 (Expires 12/31/25)
|
| $309,304
|
| Amount Fiscal Year 2023 (Expires 12/31/26)
|
| $177,949
|
| Total*
|
| $487,253
|
| *
| Amounts reported are due to expire throughout the respective 3-year expiration period presented above.
|
b. Fund Administration:
abrdn Inc., an affiliate of
the Adviser, is the Fund’s Administrator, pursuant to an agreement under which abrdn Inc. receives a fee paid by the Fund, at an annual fee rate of 0.08% of the Fund’s average monthly net assets. For the
six-month period ended June 30, 2023, abrdn Inc. earned $122,064 from the Fund for administration services.
c. Investor Relations:
Under the terms of the
Investor Relations Services Agreement, abrdn Inc. provides and/or engages third parties to provide investor relations services to the Fund and certain other funds advised by the Adviser or its affiliates as part of an
Investor Relations Program. Under the Investor Relations Services Agreement, the Fund owes a portion of the fees related to the Investor Relations Program (the “Fund’s Portion”). However, investor
relations services fees are limited by abrdn Inc. so that the Fund will only pay up to an annual rate of 0.05% of the Fund’s average weekly net assets. Any difference between the capped rate of 0.05% of the
Fund’s average weekly net assets and the Fund’s Portion is paid for by abrdn Inc.
Pursuant to the terms of the
Investor Relations Services Agreement, abrdn Inc. (or third parties hired by abrdn Inc.), among other things, provides objective and timely information to shareholders based on publicly-available information; provides
information efficiently through the use of technology while offering shareholders immediate access to knowledgeable investor relations representatives; develops and maintains effective communications with investment
professionals from a wide variety of firms; creates and maintains investor relations communication materials such as fund manager interviews, films and webcasts, publishes white papers, magazine articles and other
relevant materials discussing the Fund’s investment results, portfolio positioning and outlook; develops and maintains effective communications with large institutional shareholders; responds to specific
shareholder questions; and reports activities and results to the Board and management detailing insight into general shareholder sentiment.
During the six-month period
ended June 30, 2023, the Fund incurred investor relations fees of approximately $51,351. For the six-month period ended June 30, 2023, abrdn Inc. did not contribute to the investor relations fees for the Fund because
the Fund’s contribution was below 0.05% of the Fund’s average weekly net assets on an annual basis.
4. Investment Transactions
Purchases and sales of
investment securities (excluding short-term securities) for the six-month period ended June 30, 2023, were $50,095,027 and $81,538,699, respectively.
5. Capital
The authorized capital of
the Fund is 100 million shares of $0.001 par value per share of common stock. As of June 30, 2023, there were 50,751,778 shares of common stock issued and outstanding.
6. Open Market Repurchase
Program
The Board approved an open
market repurchase and discount management policy (the “Program”). The Program allows the Fund to purchase, in the open market, its outstanding common shares, with the amount and timing of any repurchase
determined at the discretion of the Fund’s investment adviser. Such purchases may be made opportunistically at certain discounts to NAV per share in the reasonable judgment of management based on historical
discount levels and current market conditions.
On a quarterly basis, the
Fund’s Board will receive information on any transactions made pursuant to this policy during the prior quarter and management will post the number of shares repurchased on the Fund’s website on a monthly
basis. Under the terms of the Program, the Fund is permitted to repurchase up to 10% of its outstanding shares of common stock in the open market during any 12 month period.
For the six-month period ended
June 30, 2023, the Fund did not repurchase any shares through this program.
7. Credit Facility
On June 20, 2023, the Fund
renewed its revolving credit facility for a 1-year period with The Bank of Nova Scotia with a committed facility of $40,000,000. Previously the committed facility amount was $65,000,000. The outstanding balance
on the loan as of June 30, 2023 was $35,000,000. During the current fiscal period ended June 30, 2023 the average daily balance outstanding and the average interest rate on the loan facility was $53,784,530 and 5.96%,
respectively. During the fiscal year ended December 31, 2022, the average daily balance outstanding and the average interest rate on the loan facility was $55,000,000 and 2.64%, respectively. The interest
expense is accrued on a daily basis and is payable to The Bank of Nova Scotia on a monthly basis. The Fund uses leverage for investment purposes. In the event of a general market decrease 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. Non-recurring expenses in connection with the
implementation of the loan facility will reduce the Fund’s performance.
Notes to Financial Statements (unaudited) (continued)
June 30, 2023
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 loan facility 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 not permitted to declare dividends or other distributions in the event of default under the loan
facility. In the event of a default under the 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. A liquidation of the Fund’s collateral assets in an event of default, or a voluntary paydown of the loan facility in order to avoid an
event of default, would typically involve administrative expenses and sometimes penalties. Additionally, such liquidations often involve selling off of portions of the Fund’s assets at inopportune times which
can result in losses when markets are unfavorable. The loan facility has a one year term and is not a perpetual form of leverage; there can be no assurance that the loan facility will be available for renewal on
acceptable terms, if at all. Bank loan fees and expenses included in the Statement of Operations include fees for the loan facility as well as
commitment fees for any portion of the loan
facility not drawn upon at any time during the period. During the six-month period ended June 30, 2023, the Fund incurred fees of approximately $1,622,875.
The credit agreement
governing the loan facility includes usual and customary covenants for this 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 Investment 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 the loan
facility.
8. Private Equity
Investments
Certain of the Fund’s
investments, listed in the chart below, are restricted as to resale and are valued at NAV as determined in good faith by, or under the direction of, the Board under procedures established by the Board in the absence
of readily ascertainable market values.
| Security(a)
| Acquisition
Date(s)
| Commitment
| Cost
| Fair
Value at
June 30, 2023
| Percent
of Net
Assets
| Cumulative
Distributions
Received(b)
|
| BPA Israel Ventures LLC(c)
| 10/05/00 - 12/09/05
| $4,600,000
| $1,696,650
| $38,382
| 0.01
| $818,946
|
| Emerging Markets Ventures I LP(c)
| 01/22/98 - 01/10/06
| 13,100,000
| 3,935,952
| 8,324
| 0.00
| 12,787,187
|
| Neuron VC I LP
| 11/24/00 - 12/21/10
| 1,500,000
| 5,407
| 13,838
| 0.01
| 1,616,842
|
| Telesoft Partners II LP
| 07/14/00 - 03/01/10
| 2,400,000
| 871,987
| 162,480
| 0.05
| 1,694,311
|
Amounts listed as
“–” are $0 or round to $0.
| (a)
| Telesoft Partners II QP, L.P. is still considered an active investment by the Fund’s Adviser. Neurone Ventures II, L.P., BPA Israel Ventures, LLC, and Emerging Markets
Ventures I, L.P. are in liquidation.
|
| (b)
| Cumulative Distributions include distributions received from Income, realized gains or return of capital. Distributions from return of capital will reduce the cost basis of the
security.
|
| (c)
| BPA Israel Ventures LLC has open commitments of $1,250,825. Emerging Markets Ventures I, L.P. has open commitments of $1,555,957. These investments are in
liquidation status, as indicated on the Portfolio of Investments. As such, future contributions are expected to be limited.
|
The Fund may incur certain costs in connection
with the disposition of the above securities.
9. Portfolio Investment
Risks
a. China Risk:
The economy of China
differs from the U.S. and other more established economies in such respects as structure, general development, government involvement, wealth distribution, rate of inflation, growth rate, allocation of resources and
capital reinvestment, and some of
these differences are unfavorable to
investors. Therefore, investing in China involves a high degree of risk and special considerations not typically associated with investing in other more established economies or securities markets. Exposure to China
may be gained through investments in securities that are economically tied to China or, in some cases, through direct investment in China securities. The Fund invests in China A shares. China A shares are shares
in mainland China-based companies that trade on Chinese stock exchanges and are usually only available to foreign investors through a quota license or by purchasing Shanghai and Shenzhen Stock Exchange-listed
Notes to Financial Statements (unaudited) (continued)
June 30, 2023
securities via brokers in Hong Kong through
the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect programs (collectively, "Stock Connect”). Investing in China A shares may involve special risk considerations such as volatility in the
China A share market and uncertainty regarding taxation.
The Fund’s ability to
freely trade in China A shares as a foreign investor through the quota license or Stock Connect may be limited by quota and repatriation restrictions, and utilizing Stock Connect is subject to trading, clearance and
settlement procedures in China that are relatively new and untested.
The Fund may also gain
exposure to companies based or operated in China by investing through legal structures known as variable interest entities (VIEs). Instead of directly owning the equity securities of a Chinese company, a VIE enters
into service and other contracts with the Chinese company. Although the VIE has no equity ownership of the Chinese company, the contractual arrangements permit the VIE to consolidate the Chinese company into its
financial statements. The Chinese government could intervene with respect to VIEs, which could significantly affect the Chinese company's performance and the enforceability of the VIE's contractual arrangement with
the Chinese company.
b. Equity Securities
Risk:
The stock or other security
of a company may not perform as well as expected, and may decrease in value, because of factors related to the company (such as poorer than expected earnings or certain management decisions) or to the industry in
which the company is engaged (such as a reduction in the demand for products or services in a particular industry). Holders of common stock generally are subject to more risks than holders of preferred stock or debt
securities because the right to repayment of common shareholders' claims is subordinated to that of preferred stock and debt securities upon the bankruptcy of the issuer.
c. Illiquid Securities
Risk:
Illiquid securities are
assets that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the asset.
An inability to sell a portfolio position can adversely affect the Fund’s value or prevent the Fund from being able to take advantage of other investment opportunities. Illiquid securities are relatively less
liquid securities may also be difficult to value.
d. Issuer Risk:
The value of a security may
decline for reasons directly related to the issuer, such as management performance, financial leverage and reduced demand for the issuer's goods or services.
e. Leverage Risk:
The Fund may use leverage
to purchase securities. Increases and decreases in the value of the Fund's portfolio will be magnified when the Fund uses leverage.
f. Management Risk:
The Fund is subject to the
risk that the Adviser may make poor security selections. The Adviser, and its portfolio managers apply their own investment techniques and risk analyses in making investment decisions for the Fund and there can be no
guarantee that these decisions will achieve the desired results for the Fund. In addition, the Adviser may select securities that underperform the relevant market or other funds with similar investment objectives and
strategies.
g. Market Events Risk:
Markets are affected by
numerous factors, including interest rates, the outlook for corporate profits, the health of the national and world economies, the fluctuation of other stock markets around the world, and financial, economic and other
global market developments and disruptions, such as those arising from war, terrorism, market manipulation, government interventions, defaults and shutdowns, political changes or diplomatic developments, public health
emergencies and natural/environmental disasters. Such events can negatively impact the securities markets and cause the Fund to lose value.
Policy and legislative
changes in countries around the world are affecting many aspects of financial regulation, and governmental and quasi-governmental authorities and regulators throughout the world have previously responded to serious
economic disruptions with a variety of significant fiscal and monetary policy changes.
The impact of these changes
on the markets, and the practical implications for market participants, may not be fully known for some time. In addition, economies and financial markets throughout the world are becoming increasingly interconnected.
As a result, whether or not the Fund invests in securities of issuers located in or with significant exposure to countries or sectors experiencing economic and financial difficulties, the value and liquidity of the
Fund’s investments may be negatively affected by such events.
For example, whether or not
the Fund invests in securities of issuers located in Europe (whether the EU, Eurozone or UK) or with significant exposure to European, EU, Eurozone or UK issuers or countries, the unavoidable uncertainties and events
related to the UK’s departure from the EU (“Brexit”) could negatively affect the value and liquidity of the Fund’s investments, increase taxes and costs of business and cause volatility in
currency exchange rates and interest rates. Brexit could adversely affect the performance of contracts in existence at the date of Brexit and European, UK or worldwide political, regulatory, economic or market
conditions and could contribute to instability in
Notes to Financial Statements (unaudited) (continued)
June 30, 2023
political institutions, regulatory agencies
and financial markets. Brexit could also lead to legal uncertainty and politically divergent national laws and regulations as a new relationship between the UK and EU is defined and as the UK determines which EU laws
to replace or replicate. Any of these effects of Brexit, and others that cannot be anticipated, could adversely affect the Fund’s business, results of operations and financial condition.
h. Mid-Cap Securities
Risk:
Securities of medium-sized
companies tend to be more volatile and less liquid than securities of larger companies.
i. Non-U.S. Taxation
Risk:
Income, proceeds and gains
received by the Fund from sources within foreign countries may be subject to withholding and other taxes imposed by such countries, which will reduce the return on those investments. Tax treaties between certain
countries and the United States may reduce or eliminate such taxes.
If, at the close of its
taxable year, more than 50% of the value of the Fund’s total assets consists of securities of foreign corporations, including for this purpose foreign governments, the Fund will be permitted to make an election
under the Code that will allow shareholders a deduction or credit for foreign taxes paid by the Fund. In such a case, shareholders will include in gross income from foreign sources their pro rata shares of such taxes.
A shareholder’s ability to claim an offsetting foreign tax credit or deduction in respect of such foreign taxes is subject to certain limitations imposed by the Code, which may result in the shareholder’s
not receiving a full credit or deduction (if any) for the amount of such taxes. Shareholders who do not itemize on their U.S. federal income tax returns may claim a credit (but not a deduction) for such foreign taxes.
If the Fund does not qualify for or chooses not to make such an election, shareholders will not be entitled separately to claim a credit or deduction for U.S. federal income tax purposes with respect to foreign taxes
paid by the Fund; in that case the foreign tax will nonetheless reduce the Fund’s taxable income. Even if the Fund elects to pass through to its shareholders foreign tax credits or deductions, tax-exempt
shareholders and those who invest in the Fund through tax-advantaged accounts such as IRAs will not benefit from any such tax credit or deduction.
j. Risks Associated with
Foreign Securities and Currencies:
Investments in securities
of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange
controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, and political or social
instability or diplomatic
developments, which could adversely affect
investments in those countries. Foreign securities may also be harder to price than U.S. securities.
Certain countries also may
impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These
factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.
The value of foreign
currencies relative to the U.S. Dollar fluctuates in response to market, economic, political, regulatory, geopolitical or other conditions. A decline in the value of a foreign currency versus the U.S. Dollar reduces
the value in U.S. Dollars of investments denominated in that foreign currency. This risk may impact the Fund more greatly to the extent the Fund does not hedge its currency risk, or hedging techniques used by the
Adviser are unsuccessful.
k. Risks Associated with
Emerging Markets:
The emerging countries'
securities markets are substantially smaller, less liquid and more volatile than the major securities markets in the United States. A high proportion of the securities of many companies in emerging countries may be
held by a limited number of persons, which may limit the number of securities available for investment by the Fund. The limited liquidity of emerging country securities markets may also affect the Fund's ability to
acquire or dispose of securities at the price and time it wishes to do so.
l. Risks Associated with
Restricted Securities:
The Fund, subject to local
investment limitations, may invest up to 30% of its assets (at the time of commitment) in illiquid equity securities, including securities of private equity funds (whether in corporate or partnership form) that invest
primarily in emerging markets. When investing through another investment fund, the Fund will bear its proportionate share of the expenses incurred by that underlying fund, including management fees. Such securities
are expected to be illiquid and may involve a high degree of business and financial risk and may result in substantial losses. Because of the current absence of any liquid trading market for these investments, the
private equity funds may take longer to liquidate than would be the case for publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized on such sales
could be substantially less than those originally paid by the Fund or the current carrying values and these differences could be material. Further, companies whose securities are not publicly traded may not be subject
to the disclosures and other investor protection requirements applicable to companies whose securities are publicly traded.
Notes to Financial Statements (unaudited) (continued)
June 30, 2023
m. Russia/Ukraine Risk:
In February 2022, Russia
commenced a military attack on Ukraine. The outbreak of hostilities between the two countries and the threat of wider spread hostilities could have a severe adverse effect on the region and global economies, including
significant negative impacts on the markets for certain securities and commodities, such as oil and natural gas. In addition, sanctions imposed on Russia by the United States and other countries, and any sanctions
imposed in the future, could have a significant adverse impact on the Russian economy and related markets. The price and liquidity of investments may fluctuate widely as a result of the conflict and related events.
How long the armed conflict and related events will last cannot be predicted. These tensions and any related events could have a significant impact on Fund performance and the value of the Fund's investments.
n. Sector Risk:
To the extent that the Fund
has a significant portion of its assets invested in securities of companies conducting business in a broadly related group of industries within an economic sector, the Fund may be more vulnerable to unfavorable
developments in that economic sector than funds that invest more broadly.
Information Technology Sector
Risk. To the extent that the information technology sector represents a significant portion of the Fund, the Fund will be sensitive to changes in, and its performance may depend to a greater
extent on, factors impacting this sector. Information technology companies face intense competition, both domestically and internationally, which may have an adverse effect on their profit margins. Like other
technology companies, information technology companies may have limited product lines, markets, financial resources or personnel. The products of information technology companies may face obsolescence due to rapid
technological developments, frequent new product introduction, unpredictable changes in growth rates and competition for the services of qualified personnel. Companies in the information technology sector are heavily
dependent on patent and intellectual property rights. The loss or impairment of these rights may adversely affect the profitability of these companies.
Financial Sector Risk. To the extent that the financial sector represents a significant portion of the Fund's investments, the Fund will be
sensitive to changes in, and its performance
may depend to a greater extent on, factors impacting this sector. Performance of companies in the financials sector may be adversely impacted by many factors, including, among others, government regulations, economic
conditions, credit rating downgrades, changes in interest rates, and decreased liquidity in credit markets. The impact of more stringent capital requirements, recent or future regulation of any individual financial
company, or recent or future regulation of the financials sector as a whole cannot be predicted. In recent years, cyber attacks and technology malfunctions and failures have become increasingly frequent in this sector
and have caused significant losses.
o. Small-Cap Securities
Risk:
Securities of smaller
companies are usually less stable in price and less liquid than those of larger, more established companies. Therefore, they generally involve greater risk.
p. Valuation Risk:
The price that the Fund
could receive upon the sale of any particular portfolio investment may differ from the Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued
using a fair valuation methodology or a price provided by an independent pricing service. As a result, the price received upon the sale of an investment may be less than the value ascribed by the Fund, and the Fund
could realize a greater than expected loss or lower than expected gain upon the sale of the investment. The Fund’s ability to value its investments may also be impacted by technological issues and/or errors by
pricing services or other third-party service providers.
10. Contingencies
In the normal course of
business, the Fund may provide general indemnifications pursuant to certain contracts and organizational documents. The Fund's maximum exposure under these arrangements is dependent on future claims that may be made
against the Fund, and therefore, cannot be estimated; however, the Fund expects the risk of loss from such claims to be remote.
Notes to Financial Statements (unaudited) (concluded)
June 30, 2023
11. Tax Information
The U.S. federal income tax
basis of the Fund’s investments (including derivatives, if applicable) and the net unrealized depreciation as of June 30, 2023, were as follows:
Tax Cost of
Securities
| Unrealized
Appreciation
| Unrealized
Depreciation
| Net
Unrealized
Appreciation/
(Depreciation)
|
| $361,821,496
| $52,809,238
| $(73,322,008)
| $(20,512,770)
|
12. Subsequent Events
Management has evaluated the need for
disclosures and/or adjustments resulting from subsequent events through the date the financial statements were issued.
Based on this evaluation, no disclosures and/or
adjustments were required to the financial statements as of June 30, 2023.
Supplemental Information (Unaudited)
Results of Annual Meeting of
Shareholders
The Annual Meeting of
Shareholders was held on April 17, 2023. The description of the proposal and number of shares voted at the meeting are as follows:
To re-elect one Class III
Director to the Board of Directors:
|
| Votes For
| Votes Against
| Votes Abstained
|
| Steven N. Rappaport
| 23,207,835
| 19,727,371
| 223,055
|
Board of Directors’
Consideration of Investment Advisory Agreement
The Investment Company Act of
1940, as amended (the “1940 Act”) and the terms of the investment advisory agreement (the “Advisory Agreement”) between the abrdn Emerging Markets Equity Income Fund, Inc. (the
“Fund”) and abrdn Investments Limited (the “Adviser” or “aIL”) require that the Advisory Agreement be approved annually at an in-person meeting by the Board of Directors (the
“Board” or “Directors”), all of whom have no direct or indirect interest in the Advisory Agreement and are not “interested persons” of the Fund, as defined in the 1940 Act (the
“Independent Directors”).
At a regularly scheduled
quarterly meeting held on June 13, 2023 (the “Quarterly Meeting”), the Board voted unanimously to renew the Advisory Agreement between the Fund and the Adviser for an additional one-year period. In
considering whether to approve the continuation of the Fund’s Advisory Agreement, the Board members received and considered a variety of information provided by the Adviser relating to the Fund, the Advisory
Agreement and the Adviser, including information regarding the nature, extent and quality of services provided by the Adviser under the Advisory Agreement, comparative investment performance, fee and expense
information of a peer group of funds (the “Peer Group”) selected by Institutional Shareholder Services Inc. (“ISS”), an independent third-party provider of investment company data and other
performance information for relevant benchmark indices. In addition, the Directors of the Fund held a separate telephonic meeting on June 6, 2023 and a separate in-person meeting with their independent legal
counsel on June 12, 2023 (together with the Quarterly Meeting held on June 13, 2023, the “Meetings”) to review the materials provided and the relevant legal considerations.
The materials provided to the
Board generally included, among other items: (i) information regarding the Fund’s expenses and advisory fees, including information comparing the Fund’s expenses to the Peer Group and information about
applicable fee “breakpoints” and expense limitations; (ii) information regarding the profitability of the Advisory Agreement to the Adviser; (iii) information on the investment performance of the Fund and
the performance of the Peer Group and the Fund’s performance benchmark, including, with respect to the Fund’s performance and accounting predecessor (the “Predecessor Fund”), information for
the Predecessor Fund for periods prior to the reorganization of seven closed-end funds with and into the Fund (the “Reorganization”) and the renaming of the Fund that took effect on April 30, 2018; (iv) a
report prepared by the Adviser in response to a request submitted by the Independent Directors’ independent legal counsel on behalf of the Independent Directors; and (v) a memorandum from the Independent
Directors’ independent legal counsel on the responsibilities of the Board in considering the approval of the investment advisory arrangement under the 1940 Act and Maryland law.
The Board also considered
other matters such as: (i) the Adviser’s investment personnel and operations, (ii) the Adviser’s financial condition and stability, (iii) the resources devoted by the Adviser to the Fund, (iv) the
Fund’s investment objective and strategy, (v) the Adviser’s record of compliance with the Fund’s investment policies and restrictions, policies on personal securities transactions and other
compliance policies, (vi) possible conflicts of interest, and (vii) the allocation of the Fund’s brokerage, and the use, if any, of “soft” commission dollars to pay the Fund’s expenses and to
pay for research and other similar services. Throughout the process, the Board members had and availed themselves of the opportunity to ask questions of and request additional information from the Adviser.
The Board also noted that in
addition to the materials provided by the Adviser in connection with the Board’s consideration of the renewal of the Advisory Agreement at the Meetings, the Board received and reviewed materials in advance of
each regular quarterly meeting that contained information about the Fund’s investment performance and information relating to the services provided by the Adviser.
The Independent Directors
were advised by separate independent legal counsel throughout the process and also consulted in executive sessions with their counsel regarding consideration of the renewal of the Advisory Agreement. In determining
whether to approve the continuation of the Advisory Agreement, the Board did not identify any single factor as determinative. Individual Directors may have evaluated the information presented differently from one
another and given different weights to various factors. Matters considered by the Board in connection with its approval of the continuation of the Advisory Agreement include the factors listed below.
The costs of the services
provided and profits realized by the Adviser and its affiliates from their relationships with the Fund. The Board reviewed with management the effective annual management fee rate paid by the Fund to the Adviser for investment management services. The Board considered the management fee
structure, including that management fees for the Fund were based on the Fund’s average weekly net assets
Supplemental Information (Unaudited) (continued)
rather than total managed assets. The Board
received and took into account information compiled at the request of the Fund by ISS that compared the Fund’s effective annual management fee rate with the fees paid by its Peer Group. Management noted that due
to the unique strategy and structure of the Fund, the Adviser and its affiliates (together, “abrdn”) did not have any closed-end funds that were directly comparable to the Fund. Although there were no
other substantially similar abrdn-advised investment vehicles against which to compare the Fund’s advisory fees, the Adviser provided information for other abrdn products with similar investment strategies,
including separately managed accounts, to those of the Fund where available. In evaluating the Fund’s advisory fees, the Board took into account the demands, complexity and quality of the investment
management of the Fund.
In addition to the foregoing,
the Board considered the Fund’s fees and expenses as compared to its Peer Group, consisting of closed-end funds in the Fund’s Morningstar expense category as compiled by ISS.
Investment performance of the
Fund and the Adviser. The Board received and reviewed with the Fund’s management, among other performance data, information that compared the Fund’s return to comparable investment companies. The
Board also received and considered performance information compiled by ISS as compared with the funds in the Fund’s Morningstar category (the “Morningstar Group”).
In addition, the Board
received and reviewed information regarding the Fund’s total return on a net and gross basis and relative to the Fund’s benchmark and the Fund’s and Predecessor Fund’s share performance and
premium/discount information. The Board also received and considered information about the Fund’s and Predecessor Fund’s total return against the respective Morningstar Group average and against other
comparable abrdn-managed funds. The Directors considered management’s discussion of the factors contributing to differences in performance, including differences in the investment strategies, restrictions and
risks of each of these other funds. Additionally, the Board took into account information about the Fund’s discount/premium ranking relative to its Morningstar Group and the Adviser’s discussion of the
Fund’s performance. The Board also considered the Adviser’s performance and reputation generally, the responsiveness of the Adviser to Director concerns about performance and the willingness of the Adviser
to take steps intended to improve performance. The Board concluded that overall Fund performance supported continuation of the Advisory Agreement.
The nature, extent and
quality of the services provided to the Fund under the Advisory Agreement. The Directors also considered the nature, extent and quality of the services provided by the Adviser to the Fund and the resources dedicated to the Fund by the Adviser and its affiliates.
Among other things, the Board reviewed the background and experience of the Adviser’s senior management personnel and the qualifications, background and responsibilities of the portfolio managers primarily
responsible for the day-to-day portfolio management services for the Fund. The Directors also considered the financial condition of the Adviser and the Adviser’s ability to provide quality service to the Fund.
Management reported to the Board on, among other things, its business plans and organizational structures. The Board considered the Adviser’s risk management processes. The Board noted that they received
information on a regular basis from the Adviser's Chief Compliance Officer regarding the Adviser’s compliance policies and procedures and considered the Adviser’s brokerage policies and
practices. The Directors also took into account the Adviser’s investment experience and considered information regarding the Adviser’s compliance with applicable laws and Securities and Exchange Commission
and other regulatory inquiries or audits of the Fund and/or the Adviser. The Directors took into account their knowledge of management and the quality of the performance of management’s duties through Board
meetings, discussion and reports during the preceding year.
Economies of Scale. The Board considered management’s discussion of the Fund’s management fee structure and determined that the management fee structure was reasonable and reflected economies of
scale being shared between the Fund and the Adviser. The Board based its determination on various factors, including how the Fund’s management fees compared relative to the Peer Group at higher asset levels and
that the Fund’s management fee schedule provided breakpoints at higher asset levels to adjust for anticipated economies in the event of asset increases, as applicable. The Board also considered that the
Adviser had agreed to extend its expense limitation agreement with the Fund, pursuant to which the Adviser agreed to waive a portion of its advisory fee and/or reimburse certain expenses as a means of limiting the
Fund’s total annual operating expenses for a period of time.
The Board also considered other
factors, which included but were not limited to the following:
| •
| the nature, quality, cost and extent of administrative services and investor relations services performed by abrdn Inc. (“AI”), an affiliate of the Adviser, under separate agreements covering
administrative services and investor relations services.
|
| •
| whether the Fund has operated in accordance with its investment objective, the Fund’s record of compliance with its investment restrictions, and the compliance programs of the Adviser.
|
| •
| the effect of any market and economic volatility on the performance, asset levels and expense ratios of the Fund.
|
Supplemental Information (Unaudited) (concluded)
| •
| so-called “fallout benefits” to the Adviser or AI, such as the benefits of research made available to the Adviser or AI by reason of brokerage commissions generated by the Fund’s
securities transactions or reputational and other indirect benefits. The Board considered any possible conflicts of interest associated with these fallout and other benefits, and the reporting, disclosure and other
processes in place to disclose and monitor such possible conflicts of interest.
|
***
Based on their evaluation of
all factors that they deemed to be material, including those factors described above, and assisted by the advice of independent counsel, the Directors concluded that renewal of the Advisory Agreements would be in the
best interest of the Fund and its shareholders. Accordingly, the Board approved the Fund’s Advisory Agreement for an additional one-year period.
Dividend Reinvestment and Optional Cash Purchase
Plan (Unaudited)
The Fund intends to distribute to
shareholders substantially all of its net investment income and to distribute any net realized capital gains at least annually. Net investment income for this purpose is income other than net realized long-term and
short-term capital gains net of expenses. Pursuant to the Dividend Reinvestment and Optional Cash Purchase Plan (the “Plan”), shareholders whose shares of common stock are registered in their own names
will be deemed to have elected to have all distributions automatically reinvested by Computershare Trust Company N.A. (the “Plan Agent”) in the Fund shares pursuant to the Plan, unless such shareholders
elect to receive distributions in cash. Shareholders who elect to receive distributions in cash will receive such distributions paid by check in U.S. Dollars mailed directly to the shareholder by the Plan Agent, as
dividend paying agent. In the case of shareholders such as banks, brokers or nominees that hold shares for others who are beneficial owners, the Plan Agent will administer the Plan on the basis of the number of shares
certified from time to time by the shareholders as representing the total amount registered in such shareholders’ names and held for the account of beneficial owners that have not elected to receive
distributions in cash. Investors that own shares registered in the name of a bank, broker or other nominee should consult with such nominee as to participation in the Plan through such nominee and may be required to
have their shares registered in their own names in order to participate in the Plan. Please note that the Fund does not issue certificates so all shares will be registered in book entry form. The Plan Agent serves as
agent for the shareholders in administering the Plan. If the Directors of the Fund declare an income dividend or a capital gains distribution payable either in the Fund’s common stock or in cash, nonparticipants
in the Plan will receive cash and participants in the Plan will receive common stock, to be issued by the Fund or purchased by the Plan Agent in the open market, as provided below. If the market price per share (plus
expected per share fees) on the valuation date equals or exceeds NAV per share on that date, the Fund will issue new shares to participants at NAV; provided, however, that if the NAV is less than 95% of the market
price on the valuation date, then such shares will be issued at 95% of the market price. The valuation date will be the payable date for such distribution or dividend or, if that date is not a trading day on the NYSE
American, the immediately preceding trading date. If NAV exceeds the market price of Fund shares at such time, or if the Fund should declare an income dividend or capital gains distribution payable only in cash, the
Plan Agent will, as agent for the participants, buy Fund shares in the open market, on the NYSE American or elsewhere, for the participants’ accounts on, or shortly after, the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the NAV of a Fund share, the average per share purchase price paid by the Plan Agent may exceed the NAV of the Fund’s shares, resulting in the
acquisition of fewer shares than if the distribution had been paid in shares issued by the Fund on the dividend payment date. Because of
the foregoing difficulty with respect to
open-market purchases, the Plan provides that if the Plan Agent is unable to invest the full dividend amount in open-market purchases during the purchase period or if the market discount shifts to a market premium
during the purchase period, the Plan Agent will cease making open-market purchases and will receive the uninvested portion of the dividend amount in newly issued shares at the close of business on the last purchase
date.
Participants have the option
of making additional cash payments of a minimum of $50 per investment (by check, one-time online bank debit or recurring automatic monthly ACH debit) to the Plan Agent for investment in the Fund’s common stock,
with an annual maximum contribution of $250,000. The Plan Agent will wait up to three business days after receipt of a check or electronic funds transfer to ensure it receives good funds. Following confirmation of
receipt of good funds, the Plan Agent will use all such funds received from participants to purchase Fund shares in the open market on the 25th day of each month or the next trading day if the 25th is not a trading
day.
If the participant sets up
recurring automatic monthly ACH debits, funds will be withdrawn from his or her U.S. bank account on the 20th of each month or the next business day if the 20th is not a banking business day and invested on the next
investment date. The Plan Agent maintains all shareholder accounts in the Plan and furnishes written confirmations of all transactions in an account, including information needed by shareholders for personal and tax
records. Shares in the account of each Plan participant will be held by the Plan Agent in the name of the participant, and each shareholder’s proxy will include those shares purchased pursuant to the Plan. There
will be no brokerage charges with respect to common shares issued directly by the Fund. However, each participant will pay a per share fee of $0.02 incurred with respect to the Plan Agent’s open market purchases
in connection with the reinvestment of dividends, capital gains distributions and voluntary cash payments made by the participant. Per share fees include any applicable brokerage commissions the Plan Agent is required
to pay.
Participants also have the
option of selling their shares through the Plan. The Plan supports two types of sales orders. Batch order sales are submitted on each market day and will be grouped with other sale requests to be sold. The price will
be the average sale price obtained by Computershare’s broker, net of fees, for each batch order and will be sold generally within 2 business days of the request during regular open market hours. Please note that
all written sales requests are always processed by Batch Order. ($10 and $0.12 per share). Market Order sales will sell at the next available trade. The shares are sold real time when they hit the market, however an
available trade must be presented to complete this transaction. Market Order sales may only
Dividend Reinvestment and Optional Cash Purchase
Plan (Unaudited) (concluded)
be requested by phone at 1-800-647-0584 or
using Investor Center through www.computershare.com/buyaberdeen. ($25 and $0.12 per share).
The receipt of dividends and
distributions under the Plan will not relieve participants of any income tax that may be payable on such dividends or distributions. The Fund or the Plan Agent may terminate the Plan as applied to any voluntary cash
payments made and any dividend or distribution paid subsequent to notice of the termination sent to members of the Plan at least 30 days prior to the record date for such dividend or distribution. The Plan also may be
amended by
the Fund or the Plan Agent, but (except when
necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority) only by mailing a written notice at least 30 days prior to
the effective date to the participants in the Plan. All correspondence concerning the Plan should be directed to the Plan Agent by phone at 1-800-647-0584, using Investor Center through www.computershare.com/buyaberdeen or in writing to Computershare Trust Company N.A., P.O. Box 43006, Providence, RI 02940-3078.
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Directors
Steven N. Rappaport, Chair
Nancy Yao Maasbach
C. William Maher
Rahn Porter
Investment Adviser
abrdn Investments Limited
10 Queen's Terrace
Aberdeen, AB10 1XL
Scotland, United Kingdom
Administrator
abrdn Inc.
1900 Market Street, Suite 200
Philadelphia, PA 19103
Custodian
State Street Bank and Trust Company
One Congress Street, Suite 1
Boston, MA 02114-2016
Transfer Agent
Computershare Trust Company, N.A.
P.O. Box 43006
Providence, RI 02940-3078
Independent Registered Public
Accounting Firm
KPMG LLP
1601 Market Street
Philadelphia, PA 19103
Legal Counsel
Dechert LLP
1900 K Street N.W.
Washington D.C. 20006
Investor Relations
abrdn Inc.
1900 Market Street, Suite 200
Philadelphia, PA 19103
1-800-522-5465
Investor.Relations@abrdn.com
The Financial Statements
as of June 30, 2023, included in this report, were not audited and accordingly, no opinion is expressed thereon.
Notice is hereby given in
accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that the Fund may purchase, from time to time, shares of its common stock in the open market.
Shares of abrdn Emerging
Markets Equity Income Fund, Inc. are traded on the NYSE American under the symbol “AEF”. Information about the Fund’s net asset value and market price is available at www.abrdnaef.com.
This report, including
the financial information herein, is transmitted to the shareholders of abrdn Emerging Markets Equity 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 results.
(b) Not applicable.
Item 2 - Code of Ethics.
This item is inapplicable to semi-annual report
on Form N-CSR.
Item 3 - Audit Committee Financial Expert.
This item is inapplicable to semi-annual report
on Form N-CSR.
Item 4 - Principal Accountant Fees and Services.
This item is inapplicable to semi-annual report
on Form N-CSR.
Item 5 – Audit Committee of Listed Registrants.
This item is inapplicable to semi-annual report
on Form N-CSR.
Item 6 - Schedule
of Investments.
(a) Schedule of Investments in
securities of unaffiliated issuers as of close of the reporting period are included as part of the Report to Shareholders filed under
Item 1 of this Form N-CSR.
(b) Not applicable.
Item 7 - Disclosure of Proxy Voting Policies
and Procedures for Closed-End Management Investment Companies.
This item is inapplicable to semi-annual report
on Form N-CSR.
Item 8 - Portfolio Managers of Closed-End Management Investment
Companies.
(a) Not applicable to semi-annual report
on Form N-CSR.
(b) There has been no change, as of the date
of this filing, in any of the portfolio managers identified in response to paragraph (a)(1) of this Item in the registrant’s
most recently filed annual report on Form N-CSR.
Item 9 - Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
No such purchases were made by or on behalf of the Registrant during
the period covered by the report.
Item 10 - Submission of Matters to a Vote of Security Holders.
During the period ended June 30, 2023, there were no material
changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Directors.
Item 11 - Controls and Procedures.
| (a) | The Registrant’s principal executive and principal financial officers, or persons performing similar
functions, have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under
the Investment Company Act of 1940 (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 270.30a3(b)) and Rule 13a-15(b) or 15d-15(b) under the Securities Exchange
Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d15(b)). |
| (b) | There were no changes in the Registrant’s internal control over financial reporting (as defined
in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d))) that occurred during the Registrant’s second fiscal half-year covered
buy this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over
financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End
Management Investment Companies
Not applicable.
Item 13. Exhibits.
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.
abrdn Emerging Markets Equity Income Fund, Inc.
| By: |
/s/
Christian Pittard |
|
| |
Christian
Pittard, |
|
| |
Principal
Executive Officer of |
|
| |
abrdn
Emerging Markets Equity Income Fund, Inc. |
|
| |
|
|
| Date: |
September 8,
2023 |
|
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/ Christian Pittard |
|
| |
Christian
Pittard, |
|
| |
Principal
Executive Officer of |
|
| |
abrdn
Emerging Markets Equity Income Fund, Inc. |
|
| |
|
|
| Date: |
September 8,
2023 |
|
| |
|
|
| By: |
/s/ Sharon Ferrari |
|
| |
Sharon
Ferrari, |
|
| |
Principal
Financial Officer of |
|
| |
abrdn
Emerging Markets Equity Income Fund, Inc. |
|
| |
|
|
| Date: |
September 8,
2023 |
|
Exhibit 99.CERT
Certification
Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act
I, Sharon Ferrari, certify that:
| 1. | I have reviewed this report on Form N-CSR of abrdn Emerging
Markets Equity Income Fund, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the
financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this
report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control
over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to
the filing date of this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s first fiscal half-year covered by this report that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and
report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting. |
Date:
September 8, 2023
| /s/ Sharon Ferrari |
|
| Sharon Ferrari |
|
| Principal Financial Officer |
|
Certification
Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act
I, Christian Pittard, certify that:
| 1. | I have reviewed this report on Form N-CSR of abrdn
Emerging Markets Equity Income Fund, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the
financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this
report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control
over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to
the filing date of this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s first fiscal half-year covered by this report that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and
report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting. |
Date:
September 8, 2023
| /s/ Christian Pittard |
|
| Christian Pittard |
|
| Principal Executive Officer |
|
Exhibit 99.906CERT
Certification
Pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act
Christian Pittard, Principal Executive Officer,
and Sharon Ferrari, Principal Financial Officer, of abrdn Emerging Markets Equity Income Fund, Inc. (the “Registrant”),
each certify that:
| 1. | The Registrant’s periodic report on Form N-CSR for the period ended June 30, 2023 (the
“Form N-CSR”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934, as amended, as applicable; and |
| 2. | The information contained in the Form N-CSR fairly presents, in all material respects, the financial
condition and results of operations of the Registrant. |
PRINCIPAL EXECUTIVE OFFICER
abrdn Emerging Markets Equity Income Fund, Inc.
| /s/ Christian Pittard |
|
| Christian Pittard |
|
| Date: September 8, 2023 |
|
PRINCIPAL FINANCIAL OFFICER
abrdn Emerging Markets Equity Income Fund, Inc.
| /s/ Sharon Ferrari |
|
| Sharon Ferrari |
|
| Date: September 8, 2023 |
|
This certification is being furnished solely pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of Form N-CSR or as a separate disclosure document.
A signed original of this written statement, or other document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Registrant
and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.
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