Pursuant to the Registrant's Proxy Voting Policy
and Procedures, the Registrant has delegated responsibility for its proxy voting to its Adviser, provided that the Registrant's Board
of Directors has the opportunity to periodically review the Adviser's proxy voting policies and material amendments thereto.
The proxy voting policies of the Registrant are
included herewith as Exhibit (c) and policies of the Adviser are included as Exhibit (d).
The Fund
is managed by abrdn’s Asia-Pacific fixed income team which also draws on the expertise of abrdn’s fixed income team globally.
The Asia-Pacific fixed income team works in a collaborative fashion; all team members have both portfolio management and research responsibilities.
The team is responsible for the day-to-day management of the Fund. As of the date of filing this report, the following individuals have
primary responsibility for the day-to-day management of the Fund’s portfolio:
| Individual &
Position |
Past
Business Experience |
Kenneth
Akintewe
Head of Asian Sovereign Debt |
Kenneth
Akintewe is the Head of Asian Sovereign Debt on the Asia-Pacific fixed income team. Kenneth is responsible for coordinating Asian interest
rate and foreign exchange strategy. He is also a Vice President and Officer for the abrdn Asia-Pacific Income Fund, abrdn Global Income
Fund and abrdn Asia-Pacific Income Investment Company Limited. Following a graduate traineeship in 2002 with the Global Equities team
in Glasgow, Kenneth joined the Global Fixed Income team in London in 2003. In his role as assistant fund manager he transferred to abrdn's
Singapore office in 2004, in order to facilitate the incorporation of Asian fixed income into global bond portfolios, before joining the
Asia-Pacific fixed income team in 2005 to focus on Asian local currency interest rate and foreign exchange strategy. Kenneth graduated
with an MA in Economics and an MSc in International Banking and Financial Studies from Heriot-Watt University, Edinburgh, UK. |
Adam
McCabe
Head of Fixed Income Asia Pacific |
Adam
McCabe is the Head of Fixed Income - Asia Pacific at abrdn. Adam joined abrdn via the acquisition of certain asset management businesses
from Credit Suisse in 2009. Adam worked for Credit Suisse since 2001, where he was a director/investment manager responsible for the development
and implementation of its Asian currency and interest rate strategies. Before that, he was a member of Credit Suisse's Australian fixed
income team, where he was responsible for interest rate and currency strategies. Adam was also Head of Fixed Income for Woori Credit Suisse
Asset Management, Korea, where he was responsible for the fixed income and money market portfolio management, investment strategy and
processes. Adam graduated with a BComm (First Class Honours and University Medal) from the University of Sydney, Australia and a Diploma
in Global Finance from the Chinese University of Hong Kong. |
|
Max Wolman
Investment Director – Fixed Income – Emerging Markets
Debt |
Max
Wolman is an Investment Director on the Emerging Markets Debt team at abrdn. Max joined abrdn in 2001, from Liontrust Asset Management,
initially covering FX dealing at abrdn. In 2003 he joined the Emerging Markets Debt team bringing his knowledge of currencies to help
analyze local emerging markets. He has since covered emerging market corporates and helped launch abrdn’s emerging markets corporate
strategy, offering a top down view when investing in the asset class. He graduated with a BA (Hons) in Hospitality Business Management
from Leeds Metropolitan University and he has a Graduate Diploma in Finance from the University of London. He is a CFA charterholder. |
(a)(2) OTHER ACCOUNTS MANAGED
BY PORTFOLIO MANAGERS.
The following chart summarizes information regarding
other accounts for which each portfolio manager has day-to-day management responsibilities. Accounts are grouped into the following three
categories: (1) registered investment companies; (2) other pooled investment vehicles; and (3) other accounts. To the extent that any
of these accounts pay advisory fees that are based on account performance (“performance-based fees”), information on those
accounts is provided separately. The figures in the chart below for the category of “registered investment companies” include
the Fund. The “Other Accounts Managed” represents the accounts managed by the teams of which the portfolio manager is a
member. The information in the table below is as of October 31, 2022.
Name of
Portfolio
Manager |
|
Type of Accounts |
|
Other
Accounts
Managed |
|
|
Total
Assets ($M) |
|
|
Number
of
Accounts
Managed for
Which
Advisory
Fee is Based
on
Performance |
|
|
Total Assets for
Which
Advisory Fee is
Based on
Performance ($M) |
|
| Kenneth
Akintewe1 |
|
Registered
Investment Companies |
|
6 |
|
|
$ |
1,431.72 |
|
|
0 |
|
|
$ |
0 |
|
| |
|
Pooled Investment
Vehicles |
|
41 |
|
|
$ |
4,733.25 |
|
|
0 |
|
|
$ |
0 |
|
| |
|
Other Accounts |
|
34 |
|
|
$ |
9,631.29 |
|
|
0 |
|
|
$ |
0 |
|
| Adam
McCabe1 |
|
Registered Investment
Companies |
|
6 |
|
|
$ |
1,431.72 |
|
|
0 |
|
|
$ |
0 |
|
| |
|
Pooled Investment
Vehicles |
|
41 |
|
|
$ |
4,733.25 |
|
|
0 |
|
|
$ |
0 |
|
| |
|
Other Accounts |
|
34 |
|
|
$ |
9,631.29 |
|
|
0 |
|
|
$ |
0 |
|
| Max
Wolman1 |
|
Registered Investment
Companies |
|
6 |
|
|
$ |
1,431.72 |
|
|
0 |
|
|
$ |
0 |
|
| |
|
Pooled Investment
Vehicles |
|
41 |
|
|
$ |
4,733.25 |
|
|
0 |
|
|
$ |
0 |
|
| |
|
Other Accounts |
|
34 |
|
|
$ |
9,631.29 |
|
|
0 |
|
|
$ |
0 |
|
1 Includes
accounts managed by the Global Emerging Markets Debt, Asian Fixed Income and Australian Fixed Income teams, of which the portfolio manager
is a member.
POTENTIAL CONFLICTS OF INTEREST
The Adviser and its affiliates (collectively referred
to herein as “abrdn”) serve as investment advisers for multiple clients, including the Registrant and other investment companies
registered under the 1940 Act and private funds (such clients are also referred to below as “accounts”). The portfolio managers’
management of “other accounts” may give rise to potential conflicts of interest in connection with their management of the
Registrant’s investments, on the one hand, and the investments of the other accounts, on the other. The other accounts may have
the same investment objective as the Registrant. Therefore, a potential conflict of interest may arise as a result of the identical investment
objectives, whereby the portfolio manager could favor one account over another. However, the Adviser believes that these risks are mitigated
by the fact that: (i) accounts with like investment strategies managed by a particular portfolio manager are generally managed in a similar
fashion, subject to exceptions to account for particular investment restrictions or policies applicable only to certain accounts, differences
in cash flows and account sizes, and similar factors; and (ii) portfolio manager personal trading is monitored to avoid potential conflicts.
In addition, the Adviser has adopted trade allocation procedures that require equitable allocation of trade orders for a particular security
among participating accounts.
In some cases, another account managed by the
same portfolio manager may compensate Aberdeen based on the performance-based fees with qualified clients. The existence of such a performance-based
fee may create additional conflicts of interest for the portfolio manager in the allocation of management time, resources and investment
opportunities.
Another potential conflict could include instances
in which securities considered as investments for the Registrant also may be appropriate for other investment accounts managed by the
Adviser or its affiliates. Whenever decisions are made to buy or sell securities for the Registrant and one or more of the other accounts
simultaneously, the Adviser may aggregate the purchases and sales of the securities and will allocate the securities transactions in a
manner that it believes to be equitable under the circumstances. As a result of the allocations, there may be instances where the Registrant
will not participate in a transaction that is allocated among other accounts. While these aggregation and allocation policies could have
a detrimental effect on the price or amount of the securities available to the Registrant from time to time, it is the opinion of the
Adviser that the benefits from the policies outweigh any disadvantage that may arise from exposure to simultaneous transactions. The Registrant
has adopted policies that are designed to eliminate or minimize conflicts of interest, although there is no guarantee that procedures
adopted under such policies will detect each and every situation in which a conflict arises.
With respect to non-discretionary model delivery
accounts (including UMA accounts) and discretionary SMA accounts, abrdn Inc. will utilize a third party service provider to deliver model
portfolio recommendations and model changes to the Sponsors. abrdn Inc. seeks to treat clients fairly and equitably over time, by delivering
model changes to our service provider and investment instructions for our other discretionary accounts to our trading desk, simultaneously
or approximately at the same time. The service provider will then deliver the model changes to each Sponsor on a when-traded, randomized
full rotation schedule. All Sponsors will be included in the rotation schedule, including SMA and UMA.
UMA Sponsors will be responsible for determining
how and whether to implement the model portfolio or model changes and implementation of any client specific investment restrictions. The
Sponsors are solely responsible for determining the suitability of the model portfolio for each model delivery client, executing trades
and seeking best execution for such clients.
As it relates to SMA accounts, abrdn Inc. will
be responsible for managing the account on the basis of each client’s financial situation and objectives, the day to day investment
decisions, best execution, accepting or rejecting client specific investment restrictions and performance. The SMA Sponsors will collect
suitability information and will provide a summary questionnaire for our review and approval or rejection. For dual contract SMAs, abrdn
Inc. will collect a suitability assessment from the client, along with the Sponsor suitability assessment. Our third party service provider
will monitor client specific investment restrictions on a day to day basis. For SMA accounts, model trades will be traded by the Sponsor
or may be executed through a “step-out transaction,”- or traded away- from the client’s Sponsor if doing so is consistent
with abrdn’s obligation to obtain best execution. When placing trades through Sponsor Firms (instead of stepping them out), we
will generally aggregate orders where it is possible and in the client’s best interests. In the event we are not comfortable that
a Sponsor can obtain best execution for a specific security and trading away is infeasible, we may exclude the security from the model.
Trading costs are not covered by the Wrap Program
fee and may result in additional costs to the client. In some instances, step-out trades are executed without any additional commission,
mark-up, or mark-down, but in many instances, the executing broker-dealer may impose a commission or a mark-up or mark-down on the trade.
Typically, the executing broker will embed the added costs into the price of the trade execution, making it difficult to determine and
disclose the exact added cost to clients. In this instance, these additional trading costs will be reflected in the price received for
the security, not as a separate commission, on trade confirmations or on account statements. In determining best execution for SMA accounts,
abrdn Inc. takes into consideration that the client will not pay additional trading costs or commission if executing with the Sponsor.
While UMA accounts are invested in the same strategies
as and may perform similarly to SMA accounts, there are expected to be performance differences between them. There will be performance
dispersions between UMAs and other types of accounts because abrdn does not have discretion over trading and there may be client specific
restrictions for SMA accounts.
abrdn may have already commenced trading for its
discretionary client accounts before the model delivery accounts have executed abrdn's recommendations. In this event, trades placed by
the model delivery clients may be subject to price movements, particularly with large orders or where securities are thinly traded, that
may result in model delivery clients receiving less favorable prices than our discretionary clients. abrdn has no discretion over transactions
executed by model delivery clients and is unable to control the market impact of those transactions.
Timing delays or other operational factors associated
with the implementation of trades may result in non-discretionary and model delivery clients receiving materially different prices relative
to other client accounts. In addition, the constitution and weights of stocks within model portfolios may not always be exactly aligned
with similar discretionary accounts. This may create performance dispersions within accounts with the same or similar investment mandate.
(a)(3)
DESCRIPTION
OF COMPENSATION STRUCTURE
abrdn’s remuneration
policies are designed to support its business strategy as a leading international asset manager. The objective is to attract, retain
and reward talented individuals for the delivery of sustained, superior returns for abrdn’s clients and shareholders. abrdn
operates in a highly competitive international employment market, and aims to maintain its strong track record of success in developing
and retaining talent.
abrdn’s policy is
to recognize corporate and individual achievements each year through an appropriate annual bonus scheme. The bonus is a single, fully
discretionary variable pay award. The aggregate value of awards in any year is dependent on the group’s overall performance and
profitability. Consideration is also given to the levels of bonuses paid in the market. Individual awards, which are payable
to all members of staff, are determined by a rigorous assessment of achievement against defined objectives.
The variable pay award is
composed of a mixture of cash and a deferred award, the portion of which varies based on the size of the award. Deferred awards
are by default abrdn plc shares, with an option to put up to 50% of the deferred award into funds managed by abrdn. Overall compensation
packages are designed to be competitive relative to the investment management industry.
Base
Salary
abrdn’s policy is
to pay a fair salary commensurate with the individual’s role, responsibilities and experience, and having regard to the market
rates being offered for similar roles in the asset management sector and other comparable companies. Any increase is generally to reflect
inflation and is applied in a manner consistent with other abrdn employees; any other increases must be justified by reference to promotion
or changes in responsibilities.
Annual
Bonus
The Remuneration Committee
determines the key performance indicators that will be applied in considering the overall size of the bonus pool. In line with practices
amongst other asset management companies, individual bonuses are not subject to an absolute cap. However, the aggregate size of
the bonus pool is dependent on the group’s overall performance and profitability. Consideration is also given to the levels
of bonuses paid in the market. Individual awards are determined by a rigorous assessment of achievement against defined objectives,
and are reviewed and approved by the Remuneration Committee.
abrdn has a deferral policy
which is intended to assist in the retention of talent and to create additional alignment of executives’ interests with abrdn’s
sustained performance and, in respect of the deferral into funds managed by abrdn, to align the interest of portfolio managers with our
clients.
Staff performance is reviewed
formally at least once a year. The review process evaluates the various aspects that the individual has contributed to abrdn, and specifically,
in the case of portfolio managers, to the relevant investment team. Discretionary bonuses are based on client service, asset growth and
the performance of the respective portfolio manager. Overall participation in team meetings, generation of original research ideas and
contribution to presenting the team externally are also evaluated.
In the calculation of a portfolio
management team’s bonus, abrdn takes into consideration investment matters (which include the performance of funds, adherence to
the company investment process, and quality of company meetings) as well as more subjective issues such as team participation and effectiveness
at client presentations through key performance indicator scorecards. To the extent performance is factored in, such performance
is not judged against any specific benchmark and is evaluated over the period of a year - January to December. The pre- or after-tax
performance of an individual account is not considered in the determination of a portfolio manager’s discretionary bonus; rather
the review process evaluates the overall performance of the team for all of the accounts the team manages.
Portfolio manager performance
on investment matters is judged over all of the accounts the portfolio manager contributes to and is documented in the appraisal process.
A combination of the team’s and individual’s performance is considered and evaluated.
Although performance is not
a substantial portion of a portfolio manager’s compensation, abrdn also recognizes that fund performance can often be driven by
factors outside one’s control, such as (irrational) markets, and as such pays attention to the effort by portfolio managers to
ensure integrity of our core process by sticking to disciplines and processes set, regardless of momentum and ‘hot’ themes.
Short-terming is thus discouraged and trading-oriented managers will thus find it difficult to thrive in the abrdn environment.
Additionally, if any of the aforementioned undue risks were to be taken by a portfolio manager, such trend would be identified via abrdn’s
dynamic compliance monitoring system.
In rendering investment management
services, the Adviser may use the resources of additional investment adviser subsidiaries of abrdn plc. These affiliates have entered
into a memorandum of understanding (“MOU”) pursuant to which investment professionals from each affiliate may render portfolio
management, research or trading services to abrdn clients. Each investment professional who renders portfolio management, research or
trading services under a MOU or personnel sharing arrangement (“Participating Affiliate”) must comply with the provisions
of the Advisers Act, the 1940 Act, the Securities Act of 1933, the Exchange Act, and the Employee Retirement Income Security Act of 1974,
and the laws of states or countries in which the Adviser does business or has clients. No remuneration is paid by the Fund with respect
to the MOU/personnel sharing arrangements.
(a)(4)
Dollar
Range of Equity Securities in the
Registrant Beneficially Owned by the Portfolio
Manager as of October 31, 2022 |
|
|
|
|
| Kenneth Akintewe |
|
|
None |
|
| Adam McCabe |
|
|
None |
|
| Max Wolman |
|
|
None |
|
(b) Not applicable.
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 October 31, 2022, there
were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Directors.