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, 2024.
| | 6 Months | 1 Year | 3 Years | 5 Years | 10 Years |
| Net Asset Value (NAV) | 6.46% | 9.95% | -8.70% | 0.03% | 0.09% |
| Market Price | 7.13% | 9.66% | -9.87% | -0.43% | -0.61% |
| MSCI Emerging Markets Index (Net Daily Total Return) | 7.49% | 12.55% | -5.07% | 3.10% | 2.79% |
| Custom AEF Emerging Markets Index1 | 7.49% | 12.55% | -5.07% | 3.10% | 0.77% |
Performance of a $10,000 Investment (as of June 30, 2024)
This graph shows the change in value of a hypothetical investment of $10,000 in the Fund for the periods 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, 2025. 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 by and benchmark for the Fund during the same time periods. |
Supplemental Information (Unaudited)
Results of Annual Meeting of Shareholders
The Annual Meeting of Shareholders was held on May 16, 2024. The description of each proposal and number of shares voted at the meeting are as follows:
To re-elect two Class I Directors to the Board of Directors:
| Nominee | Votes For | Votes Against | Votes Abstained |
| Nancy Yao | 22,829,887 | 21,737,898 | 142,258 |
| Rahn K. Porter | 22,849,446 | 21,709,363 | 151,234 |
To approve the continuation of the term for one Director under the Corporate Governance Policies:
| Nominee | Votes For | Votes Against | Votes Abstained |
| Steven N. Rappaport | 22,762,740 | 21,739,665 | 207,637 |
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 of the Fund (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 11, 2024 (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 (collectively, the “15(c) Materials”). In addition, the Directors of the Fund held a separate telephonic meeting in advance of the Quarterly Meeting (the “Contract Review Meeting”) to review the materials provided and the relevant legal considerations and met in executive session outside the presence of Fund management at the Contract Review Meeting and Quarterly Meeting with their independent legal counsel to discuss the Advisory Agreement. The Independent Directors also, together with the independent board members of other registered investment companies advised by the Adviser and its affiliates (collectively, the “abrdn Funds complex”), met in advance of the Quarterly Meeting with the Chief Investment Officer (the “CIO”) of abrdn plc, the ultimate parent of the Adviser. During the meeting with the CIO, the Independent Directors received information on, and responses to their questions concerning, among other items, abrdn plc’s and the Adviser’s investment decision-making framework, monitoring of investment theses and responses to underperformance, key personnel and investment team consistency, and investment product developments at abrdn plc, including with respect to the abrdn Funds complex. In addition to the 15(c) Materials, the Board received and reviewed materials in advance of each regular quarterly meeting that contained information about the Fund and its investment performance and information relating to the services provided by the Adviser.
The 15(c) Materials provided to the Board generally included, among other items: (i) information on the investment performance of the Fund and the performance of funds in 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; (ii) 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; (iii) information regarding the profitability of the Advisory Agreement to the Adviser; (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 and the Adviser’s record of compliance with the Fund’s investment policies and restrictions, (v) the Adviser’s and its affiliates’ compliance program, (vi) possible conflicts of interest, and (vii) the allocation of the Fund’s brokerage. Throughout the process, including at the meeting with the CIO, the Contract Review
Supplemental Information (Unaudited) (continued)
Meeting and the Quarterly Meeting, the Board members had and availed themselves of the opportunity to ask questions of and request additional information from 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 considering 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 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. 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 Fund’s advisory fee structure, including that management fees for the Fund were based on the Fund’s average weekly net assets rather than total managed assets. Management noted that due to the unique strategy and structure of the Fund, the Adviser and its affiliates (together, “abrdn”) did not have any Securities and Exchange Commission (“SEC”)-registered 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-advised 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 regulatory regimes, 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. The Board also reviewed the profitability of the investment advisory relationship with the Fund to the Adviser, and received information on the profitability of the Fund’s other contractual relationships with the Adviser’s affiliates.
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 over various time periods to those of comparable investment companies and discussed this information and other related performance data with management. The Board also received and considered information on performance compiled by ISS as compared with the funds in the Fund’s Morningstar category (the “Morningstar Category”).
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 Category 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 the other funds. Additionally, the Board considered information about the Fund’s discount/premium ranking relative to its Morningstar Category and the Adviser’s discussion of the Fund’s performance. The Directors noted that, while the Fund’s performance trailed the Morningstar Category average for the time periods presented, the Fund’s returns ranked it ahead of a majority of peers in the Morningstar Category. The Board also considered the Adviser’s performance and reputation generally and the willingness of the Adviser to take steps intended to improve performance. The Board also considered the responsiveness of the Adviser to Director and shareholder concerns about performance. The Board considered the Fund’s overall performance, including the Adviser’s explanation for the performance and the actions taken and to be taken by the Adviser, in determining to continue the Advisory Agreement.
The nature, extent and quality of the services provided to the Fund under the Advisory Agreement. The Directors considered the nature, extent and quality of the services provided by the Adviser to the Fund. They reviewed information about the resources dedicated to the Fund by the Adviser and its affiliates. Among other things, the Board reviewed and discussed the background and experience of the Adviser’s senior management personnel who serviced the Fund and the qualifications, background and responsibilities of the portfolio managers primarily responsible for providing 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 representatives reported to the Board and responded to questions on, among other things, the Adviser’s business plans and any current or proposed organizational changes. The Directors also took into account the Adviser’s experience as an asset manager and considered information regarding the Adviser’s compliance with applicable laws and SEC and other regulatory agency inquiries or audits of the Fund, the Adviser and/or the Adviser’s affiliates. The Board considered reports from the Adviser on its risk management processes. The Board noted that they received information on a regular basis from the Fund’s Chief Compliance Officer regarding the Adviser’s compliance policies and procedures and information concerning the Adviser’s brokerage policies and practices. The Directors also noted that the Adviser had provided information and periodic reporting, including updates on its management of the Fund and the quality of its performance and had discussed these matter with the Directors at meetings held regularly throughout the preceding year.
The Independent Directors also took into account their recent meetings, together with the independent board members of other registered investment companies in the abrdn Funds complex, with the chair of abrdn plc and abrdn plc’s interim Chief Executive Officer. During those
Supplemental Information (Unaudited) (concluded)
meetings, the abrdn plc representatives responded to questions from the Independent Directors and affirmed abrdn’s long-term commitment to the investments business and the abrdn Funds complex in particular.
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 the sharing of economies of scale between the Fund and the Adviser as the Fund’s assets increased. 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 breakpoints in the Fund’s Advisory Agreement would adjust the advisory fee rate downward to reflect anticipated economies of scale 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.
Other factors. The Board also considered other factors, which included: (i) the nature, quality, cost and extent of administrative services and investor relations services performed by abrdn Inc., an affiliate of the Adviser, under separate agreements covering administrative services and investor relations services; (ii) 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; (iii) the compliance-related resources the Adviser and its affiliates were providing to the Fund; (iv) the effect of any market and economic volatility on the performance, asset levels and expense ratios of the Fund; and (v) so-called “fallout benefits” to the Adviser or abrdn Inc., such as 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.
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. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
Not applicable.
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Not applicable.
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
Not applicable.
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies.
Not applicable.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
The statement regarding the basis for approval of investment advisory contracts is included in the response to Item 1, above.
Item 12. 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 13. 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 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
| Period | | | (a) Total
Number of
Shares
Purchased | | | (b) Average Price
Paid per Share | | | (c) Total Number
of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs (1) | | | (d) Maximum
Number of Shares
That May Yet Be
Purchased Under
the Plans or
Programs (1) | |
| January 1, 2024 through January 31, 2024 | | | | — | | | | — | | | | — | | | | 8,105,861 | |
| February 1, 2024 through February 28, 2024 | | | | — | | | | — | | | | — | | | | 8,105,861 | |
| March 1, 2024 through March 31, 2024 | | | | — | | | | — | | | | — | | | | 8,105,861 | |
| April 1, 2024 through April 30, 2024 | | | | — | | | | — | | | | — | | | | 8,105,861 | |
| May 1, 2024 through May 31, 2024 | | | | — | | | | — | | | | — | | | | 8,105,861 | |
| June 1, 2024 through June 30, 2024 | | | | — | | | | — | | | | — | | | | 8,105,861 | |
| Total | | | | — | | | | — | | | | — | | | | — | |
(1) On June 12, 2018, the Board approved an open market share repurchase program (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, 2024, the Fund did not repurchase any shares through this Program.
Item 15. Submission of Matters to a Vote of Security Holders.
During the period ended June 30, 2024, there were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Directors.
Item 16. 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 period covered by report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
Not applicable.
Item 18. Recovery of Erroneously Awarded Compensation.
Not applicable.
Item 19. 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 6, 2024 | |
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 6, 2024 | |
| | | |
| By: | /s/ Sharon Ferrari | |
| | Sharon Ferrari, | |
| | Principal Financial Officer of | |
| | abrdn Emerging Markets Equity Income Fund, Inc. | |
| | | |
| Date: | September 6, 2024 | |
