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: | 811-07410 | |
| Exact name of registrant as specified in charter: | abrdn National Municipal Income Fund | |
| Address of principal executive offices: | 1900 Market Street, Suite 200 | |
| Philadelphia, PA 19103 | ||
| Name and address of agent for service: | Sharon Ferrari | |
| abrdn Inc. | ||
| 1900 Market Street Suite 200 | ||
| Philadelphia, PA 19103 | ||
| Registrant’s telephone number, including area code: | 1-800-522-5465 | |
| Date of fiscal year end: | September 30 | |
| Date of reporting period: | September 30, 2024 |
Item 1. Reports to Stockholders.
(a)
| 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. NAV return data include investment management fees, custodial charges and administrative fees (such as Trustee and legal fees) and assumes the reinvestment of all distributions. |
| 2 | Assuming the reinvestment of dividends and distributions. |
| 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. |
| 4 | The Bloomberg Municipal Bond Index consists of the long-term investment grade tax exempt bonds. Indexes are unmanaged and provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index. |
| abrdn National Municipal Income Fund | 1 |
| 2 | abrdn National Municipal Income Fund |
| 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 includes investment management fees, custodial charges and administrative fees (such as Director and legal fees) and assumes the reinvestment of all distributions. |
| 2 | Net asset value – measures the total value of the Fund’s assets less liabilities, divided by the number of shares issued and outstanding. |
| 3 | The Bloomberg Municipal Bond Index tracks the performance of investment-grade, tax-exempt bonds with a maturity of at least one year. Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index. |
| 4 | Source: U.S. Federal Reserve |
| 5 | Source: U.S. Federal Reserve (data as of September 30, 2024) |
| 6 | Source: Trading Economics (data as of September 30, 2024) |
| 7 | Source: Trading Economics (data as of September 30, 2024) |
| 8 | Leverage – usually refers to a fund being exposed by more than 100% of its net asset value to assets or markets; typically resulting from the use of debt or derivatives. |
| 9 | Source: Bloomberg (data as of September 30, 2024) |
| 10 | Coupon – The interest rate stated on a bond when it’s issued. Typically, coupons are paid semi-annually. |
| 11 | Volatility – If the price of a fund moves significantly over a short period of time it is said to be 'volatile' or has 'high volatility'. If the price remains relatively stable, it is said to have 'low volatility'. Volatility can be used as a measure of risk. |
| 12 | Yield – The profit investors generate after holding a security or an asset. |
| abrdn National Municipal Income Fund | 3 |
| 13 | S&P Global Ratings, Fitch Ratings and Moody’s Investors Service are independent, unaffiliated research companies that rate fixed income securities on the basis of risk and the borrower’s ability to make interest payments. S&P and Fitch assign ratings ranging from AAA (reliable and stable) to D (high risk) to communicate the agency’s opinion of relative level of credit risk. |
| 14 | Tailwinds – A condition that could support growth, revenue or profits. |
| 15 | Source: LSEG Lipper (data as of 30 September 2024) |
| 16 | Source: Bank of America Global Research (data as of 30 September 2024) |
| 17 | Duration – an estimate of bond price sensitivity to changes in interest rates. The higher the duration, the greater the change (i.e., higher risk) in relation to interest-rate movements. |
| 18 | S&P Global Ratings’ credit ratings express the agency’s opinion about the ability and willingness of an issuer, such as a corporation or state or city government, to meet its financial obligations in full and on time. Typically, ratings are expressed as letter grades that range, for example, from AAA to D to communicate the agency’s opinion of relative level of credit risk. Ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. |
| 4 | abrdn National Municipal Income Fund |
| abrdn National Municipal Income Fund | 5 |
| 1 Year | 3 Years | 5 Years | 10 Years | |
| Net Asset Value (NAV) | 26.04% | -2.00% | 0.88% | 3.25% |
| Market Price | 36.06% | -2.90% | 1.01% | 3.62% |
| Bloomberg Municipal Bond Index | 10.37% | 0.09% | 1.39% | 2.52% |
| 6 | abrdn National Municipal Income Fund |
| Credit Rating | As a percentage of total investments |
| AAA | 4.2% |
| AA | 41.2% |
| A | 18.2% |
| BBB | 19.7% |
| BB | 2.9% |
| B | 0.2% |
| Below B | 0.6% |
| Non-Rated | 13.0% |
| 100.0% |
| (1) | Generally, the credit ratings range from AAA (highest) to D (lowest). Where bonds held in the Fund are rated by multiple rating agencies (Moody’s, Fitch and S&P), the Higher of the ratings is used. This may not be consistent with data from the benchmark provider. Quality distribution represents ratings of the underlying securities held within the Fund, and not ratings of the Fund itself. |
| Sector Exposure(2) | As a percentage of total investments |
| Hospital | 14.8% |
| Airport | 10.3% |
| Higher Education | 5.8% |
| Charter School | 5.5% |
| Local Authorities | 5.2% |
| Appropriations | 5.1% |
| Nuclear Power | 4.7% |
| Tobacco Master Securities | 4.5% |
| Others | 44.1% |
| 100.0% |
| (2) | Top 8 sectors are broken out. All remaining sectors grouped into Others. |
| abrdn National Municipal Income Fund | 7 |
| States | As a percentage of net assets |
| New York | 26.7% |
| California | 19.7% |
| Texas | 15.4% |
| Illinois | 9.9% |
| Florida | 8.6% |
| Puerto Rico | 8.4% |
| Georgia | 7.6% |
| Pennsylvania | 7.5% |
| Colorado | 6.1% |
| Alabama | 5.7% |
| Minnesota | 4.7% |
| Wisconsin | 4.4% |
| New Hampshire | 4.4% |
| Washington | 4.1% |
| District of Columbia | 3.9% |
| Arizona | 3.7% |
| Idaho | 3.0% |
| Massachusetts | 2.7% |
| Ohio | 2.5% |
| Tennessee | 2.2% |
| Louisiana | 2.1% |
| Other, less than 2% each | 11.4% |
| Short-Term Investment | – |
| Liabilities in Excess of Other Assets | (64.7%) |
| 100.0% |
| Top Ten Holdings | As a percentage of net assets |
| Hillsborough County Industrial Development Authority, Series A 08/01/2055 | 3.7% |
| GDB Debt Recovery Authority of Puerto Rico 08/20/2040 | 3.7% |
| New York Liberty Development Corp., (BAM), Series A 11/15/2046 | 3.6% |
| Metropolitan Washington Airports Authority Aviation Revenue, Series A 10/01/2049 | 3.4% |
| Municipal Electric Authority of Georgia, (BAM), Series A 01/01/2056 | 3.4% |
| State of New York Mortgage Agency Homeowner Mortgage Revenue, (SONYMA), Series 261 10/01/2054 | 3.4% |
| Irvine Facilities Financing Authority, Series A 05/01/2053 | 3.3% |
| Golden State Tobacco Securitization Corp., Series B-2 06/01/2066 | 3.2% |
| Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue, Series A-1 07/01/2051 | 3.2% |
| Illinois Finance Authority, Series A 08/15/2051 | 3.1% |
| 8 | abrdn National Municipal Income Fund |
| abrdn National Municipal Income Fund | 9 |
| 10 | abrdn National Municipal Income Fund |
| abrdn National Municipal Income Fund | 11 |
| 12 | abrdn National Municipal Income Fund |
| Assets | |
| Investments, at value (cost $242,502,331) | $ 249,202,722 |
| Short-term investment, at value (cost $1) | 1 |
| Cash | 6,739 |
| Interest and dividends receivable | 2,900,227 |
| Prepaid expenses in connection with preferred shares (Note 6) | 40,489 |
| Prepaid expenses | 7,074 |
| Total assets | 252,157,252 |
| Liabilities | |
| Liquidation value of preferred shares | 99,000,000 |
| Payable for investments purchased | 1,646,451 |
| Trustee fees payable | 45,625 |
| Investment management fees payable (Note 3) | 40,769 |
| Investor relations fees payable (Note 3) | 18,646 |
| Administration fees payable (Note 3) | 16,380 |
| Other accrued expenses | 47,124 |
| Total liabilities | 100,814,995 |
| Net Assets | $151,342,257 |
| Composition of Net Assets | |
| Common stock (par value $0.001 per share) (Note 5) | $ 12,278 |
| Paid-in capital in excess of par | 180,134,984 |
| Accumulated loss | (28,805,005) |
| Net Assets | $151,342,257 |
| Net asset value per share based on 12,278,003 shares issued and outstanding | $12.33 |
| abrdn National Municipal Income Fund | 13 |
| Net Investment Income | |
| Investment Income: | |
| Interest and amortization of discount and premium and other income | $ 12,023,934 |
| Total investment income | 12,023,934 |
| Expenses: | |
| Investment management fee (Note 3) | 972,206 |
| Administration fee (Note 3) | 194,441 |
| Trustees' fees and expenses | 171,365 |
| Legal fees and expenses | 159,479 |
| Independent auditors’ fees and tax expenses | 103,683 |
| Investor relations fees and expenses (Note 3) | 59,609 |
| Insurance expense | 33,783 |
| Transfer agent’s fees and expenses | 21,149 |
| Reports to shareholders and proxy solicitation | 17,641 |
| Custodian’s fees and expenses | 1,978 |
| Miscellaneous | 27,897 |
| Total operating expenses, excluding dividend expense | 1,763,231 |
| Dividend and related expenses on preferred shares (Note 6) | 4,553,059 |
| Total operating expenses before reimbursed/waived expenses | 6,316,290 |
| Expenses waived (Note 3) | (181,437) |
| Net expenses | 6,134,853 |
| Net Investment Income | 5,889,081 |
| Net Realized/Unrealized Gain/(Loss): | |
| Net realized gain/(loss) from: | |
| Investments | (3,971,465) |
| (3,971,465) | |
| Net change in unrealized appreciation/depreciation on: | |
| Investments | 29,369,060 |
| 29,369,060 | |
| Net realized and unrealized gain from investments | 25,397,595 |
| Change in Net Assets Resulting from Operations | $31,286,676 |
| 14 | abrdn National Municipal Income Fund |
| For the Year Ended September 30, 2024 | For the Period From April 1, 2023 to September 30, 2023 | For the Year Ended March 31, 2023(a) | |
| Increase/(Decrease) in Net Assets: | |||
| Operations: | |||
| Net investment income | $5,889,081 | $2,958,343 | $8,659,677 |
| Net realized loss from investments | (3,971,465) | (4,724,472) | (24,543,349) |
| Net change in unrealized appreciation/depreciation on investments | 29,369,060 | (14,222,498) | (10,657,292) |
| Net increase/(decrease) in net assets resulting from operations | 31,286,676 | (15,988,627) | (26,540,964) |
| Distributions to Shareholders From: | |||
| Distributable earnings | (5,954,833) | (2,701,161) | (8,622,394) |
| Return of capital | – | – | (1,132,057) |
| Net decrease in net assets from distributions | (5,954,833) | (2,701,161) | (9,754,451) |
| Cost of Shares Redeemed | – | – | (103,710,362) |
| Change in net assets | 25,331,843 | (18,689,788) | (140,005,777) |
| Net Assets: | |||
| Beginning of year | 126,010,414 | 144,700,202 | 284,705,979 |
| End of year | $151,342,257 | $126,010,414 | $144,700,202 |
| (a) | Audited by a different independent registered public accounting firm. |
| abrdn National Municipal Income Fund | 15 |
| Cash flows from operating activities: | |
| Net increase/(decrease) in net assets resulting from operations | $ 31,286,676 |
| Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities: | |
| Investments purchased | (183,713,606) |
| Investments sold and principal repayments | 184,868,076 |
| Net change in short-term investments, excluding foreign government | (1) |
| Net amortization/accretion of premium/(discount) | (931,019) |
| Decrease in interest, dividends and other receivables | 66,361 |
| (Increase) decrease in due from Investment Manager | 248,995 |
| Increase in prepaid expenses | (37,383) |
| Increase in accrued investment management fees payable | 40,769 |
| Decrease in other accrued expenses | (181,168) |
| Net change in unrealized appreciation of investments | (29,369,060) |
| Net realized loss on investments transactions | 3,971,465 |
| Net cash provided by operating activities | 6,250,105 |
| Cash flows from financing activities: | |
| Decrease in payable to custodian | $ (288,533) |
| Distributions paid to shareholders | (5,954,833) |
| Net cash used in financing activities | (6,243,366) |
| Net change in cash | 6,739 |
| Unrestricted and restricted cash and foreign currency, beginning of year | – |
| Unrestricted and restricted cash and foreign currency, end of year | $6,739 |
| Supplemental disclosure of cash flow information: | |
| Cash paid for dividend and related expenses on preferred shares | $4,553,059 |
| 16 | abrdn National Municipal Income Fund |
| For the Year Ended September 30, | For the Period From April 1, 2023 to September 30, | For the Fiscal Years Ended March 31, | ||||
| 2024 | 2023 (a) | 2023 (b) | 2022 (b) | 2021 (b) | 2020 (b) | |
| PER SHARE OPERATING PERFORMANCE: | ||||||
| Net asset value per common share, beginning of year | $10.26 | $11.79 | $13.59 | $14.84 | $13.71 | $14.44 |
| Net investment income(c)(d) | 0.48 | 0.24 | 0.47 | 0.51 | 0.58 | 0.54 |
| Net realized and unrealized gains/(losses) on investments | 2.08 | (1.55) | (1.73) | (1.12) | 1.12 | (0.57) |
| Total from investment operations applicable to common shareholders | 2.56 | (1.31) | (1.26) | (0.61) | 1.70 | (0.03) |
| Distributions to common shareholders from: | ||||||
| Net investment income | (0.49) | (0.22) | (0.48) | (0.54) | (0.51) | (0.55) |
| Net realized gains | – | – | – | (0.10) | (0.06) | (0.15) |
| Return of capital | – | – | (0.06) | – | – | – |
| Total distributions | (0.49) | (0.22) | (0.54) | (0.64) | (0.57) | (0.70) |
| Net asset value per common share, end of year | $12.33 | $10.26 | $11.79 | $13.59 | $14.84 | $13.71 |
| Market price, end of year | $11.17 | $8.61 | $10.67 | $12.65 | $13.12 | $12.24 |
| Total Investment Return Based on(e): | ||||||
| Market price | 36.06% | (17.48%) | (11.51%) | 0.92% | 12.11% | 1.35% |
| Net asset value | 26.04% | (11.01%) | (9.25%) | (4.15%) | 13.20% | (0.24%) |
| Ratio to Average Net Assets Applicable to Common Shareholders/Supplementary Data: | ||||||
| Net assets applicable to common shareholders, end of year (000 omitted) | $151,342 | $126,010 | $144,700 | $284,706 | $67,182 | $62,085 |
| Average net assets applicable to common shareholders (000 omitted)(f) | $144,052 | $141,600 | $– | $– | $– | $– |
| Net operating expenses, net of fee waivers | 4.26% | 4.11%(g) | 2.89% | 1.57% | 1.66% | 2.27% |
| Gross operating expenses, excluding fee waivers | 4.38% | 4.58%(g) | 2.89% | 1.57% | 1.66% | 2.27% |
| Net operating expenses, net of fee waivers, excluding dividend expense | 1.10% | 1.01%(g) | 1.39% | 1.04% | 1.02% | 1.11% |
| Net Investment income(h) | 4.09% | 4.17%(g) | 3.83% | 3.45% | 4.03% | 3.69% |
| Portfolio turnover | 72% | 65% | 94% | 75% | 19% | 33% |
| Total leverage (preferred stock) outstanding (000 omitted)(i) | $99,000 | $99,000 | $99,000 | $135,000 | $30,000 | $30,000 |
| Net asset coverage per share of preferred shares, end of period(i) | $252,871 | $227,283 | $246,162 | $310,893 | $323,942 | $306,949 See Accompanying Notes to Financial Statements.
|
| abrdn National Municipal Income Fund | 17 |
| For the Year Ended September 30, | For the Period From April 1, 2023 to September 30, | For the Fiscal Years Ended March 31, | ||||
| 2024 | 2023 (a) | 2023 (b) | 2022 (b) | 2021 (b) | 2020 (b) | |
| Liquidation value per share of preferred shares(i) | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 |
| (a) | Effective as of the close of business on July 7, 2023, abrdn assumed responsibility for the management of the Fund from Delaware Management Company, a series of Macquarie Investment Management Business Trust. |
| (b) | Beginning with the period ended September 30, 2023, the Fund’s financial statements were audited by KPMG LLP. Previous years were audited by a different independent registered public accounting firm. |
| (c) | Net investment income is reduced by dividends paid to preferred shareholders from net investment income of $0.37, $0.18, $0.28, $0.08, $0.08, $0.17, and $0.18 per share for the fiscal year ended September 30, 2024, period ended September 30, 2023 and for the years ended March 31, 2023, 2022, 2021, 2020, and 2019, respectively. |
| (d) | Based on average shares outstanding. |
| (e) | 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. |
| (f) | Average net assets applicable to common shareholders were not shown for the fiscal years ended March 31, 2023, 2022, 2021, 2020, and 2019. |
| (g) | Annualized. |
| (h) | The ratio of net investment income excluding dividend expense to average net assets for the fiscal year ended September 30, 2024 was 7.12%. The annualized ratio of net investment income excluding dividend expense to average net assets for the period ended September 30, 2023 was 6.80%. The ratio of net investment income excluding dividend expense to average net assets for the years ended March 31, 2023, 2022, 2021, 2020, and 2019 were 5.33%, 3.98%, 4.67%, 4.84%, and 5.45%, respectively. |
| (i) | In March 2012, the Fund issued a series of 300 variable rate preferred shares, with a liquidation preference of $100,000 per share (Series 2017 Shares). The Series 2017 Shares were redeemed on February 2, 2016 and replaced with Series 2021 Shares, which were the same amount and value as the Fund’s Series 2017 Shares. On April 25, 2019, the Fund redeemed the Series 2021 Shares, and replaced them with Series 2049 Muni-MultiMode Preferred Shares (Series 2049), which have the same amount and value as the Series 2021 Shares. When the Fund acquired Delaware Investments Colorado Municipal Income Fund, Inc. and Delaware Investments Minnesota Municipal Income Fund II, Inc. on February 11, 2022, it also acquired the Series 2049 preferred shares used as leverage by those funds, which are reflected in the value of preferred shares outstanding in the table above. 36,000,000 were redeemed to fund the tender offer on December 16, 2022. |
| 18 | abrdn National Municipal Income Fund |
September 30, 2024
| abrdn National Municipal Income Fund | 19 |
September 30, 2024
| Security Type | Standard Inputs |
| Debt and other fixed-income securities | Reported trade data, broker-dealer price quotations, benchmark yields, issuer spreads on comparable securities, credit quality, yield, and maturity. |
| Investments, at Value | Level 1 – Quoted Prices | Level 2 – Other Significant Observable Inputs | Level 3 – Significant Unobservable Inputs | Total |
| Assets | ||||
| Investments in Securities | ||||
| Municipal Bonds | $– | $249,202,722 | $– | $249,202,722 |
| Short-Term Investment | 1 | – | – | 1 |
| Total Investments | $1 | $249,202,722 | $– | $249,202,723 |
| Total Investment Assets | $1 | $249,202,722 | $– | $249,202,723 |
| 20 | abrdn National Municipal Income Fund |
September 30, 2024
| abrdn National Municipal Income Fund | 21 |
September 30, 2024
| 22 | abrdn National Municipal Income Fund |
September 30, 2024
| abrdn National Municipal Income Fund | 23 |
September 30, 2024
| Tax Cost of Securities | Unrealized Appreciation | Unrealized Depreciation | Net Unrealized Appreciation/ (Depreciation) |
| $242,153,024 | $10,223,968 | $(3,174,269) | $7,049,699 |
| 24 | abrdn National Municipal Income Fund |
September 30, 2024
| September 30, 2024 | September 30, 2023 | March 31, 2023 | |
| Distributions paid from: | |||
| Ordinary Income | $- | $- | $53,547 |
| Tax Exempt Distributions | 5,954,833 | 2,701,161 | 8,568,847 |
| Return of Capital | - | - | 1,132,057 |
| Total tax character of distributions | $5,954,833 | $2,701,161 | $9,754,451 |
| Undistributed Ordinary Income | $- |
| Undistributed Long-Term Capital Gains | - |
| Total undistributed earnings | $- |
| Accumulated Capital and Other Losses | $- |
| Capital loss carryforward | $(35,699,649)* |
| Other currency gains | - |
| Other Temporary Differences | (155,053) |
| Unrealized Appreciation/(Depreciation) | 7,049,697** |
| Total accumulated earnings/(losses) – net | $(28,805,005) |
| * | On September 30, 2024, the Fund had a net capital loss carryforward of $(35,699,649) which will be available to offset like amounts of any future taxable gains. . The Fund is permitted to carry forward capital losses for an unlimited period, and capital losses that are carried forward will retain their character as either short-term or long-term capital losses. The breakdown of capital loss carryforwards are as follows: |
| Amounts | Expires |
| $18,920,528 | Unlimited (Short—Term) |
| 16,779,121 | Unlimited (Long—Term) |
| abrdn National Municipal Income Fund | 25 |
abrdn National Municipal Income Fund:
November 29, 2024
| 26 | abrdn National Municipal Income Fund |
| abrdn National Municipal Income Fund | 27 |
| Votes For | Votes Against/ Withheld | |
| Christian Pittard (common & preferred) | 9,823,801 | 346,551 |
| Todd Reit (common & preferred) | 9,843,574 | 326,778 |
| Nancy Yao (preferred only) | 990 | - |
| C. William Maher (preferred only) | 990 | - |
| 28 | abrdn National Municipal Income Fund |
| abrdn National Municipal Income Fund | 29 |
| 30 | abrdn National Municipal Income Fund |
| abrdn National Municipal Income Fund | 31 |
| 32 | abrdn National Municipal Income Fund |
| abrdn National Municipal Income Fund | 33 |
| 34 | abrdn National Municipal Income Fund |
| abrdn National Municipal Income Fund | 35 |
| 36 | abrdn National Municipal Income Fund |
| abrdn National Municipal Income Fund | 37 |
| 38 | abrdn National Municipal Income Fund |
| abrdn National Municipal Income Fund | 39 |
| Name, Address and Year of Birth | Position(s) Held with the Fund | Term of Office and Length of Time Served | Principal Occupation(s) During at Least the Past Five Years | Number of Registered Investment Companies ("Registrants") consisting of Investment Portfolios ("Portfolios") in Fund Complex* Overseen by Board Members | Other Directorships Held by Board Member** |
| Interested Board Member | |||||
| Christian Pittard*** c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1973 | Trustee and Vice President | Since 2023 | Mr. Pittard is Head of Closed End Funds for abrdn responsible for the US and UK businesses. He is also Managing Director of Corporate Finance having done a significant number of closed end fund transactions in the US and UK since joining abrdn in 1999. Previously, he was Head of the Americas and the North American Funds business based in the US. | 12 Registrants consisting of 12 Portfolios | None. |
| Independent Board Members | |||||
| C. William Maher c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1961 | Preferred Share Trustee | Since 2023 | Mr. Maher is a Co-founder of Asymmetric Capital Management LLC from May 2018 to September 2020. Formerly Chief Executive Officer of Santa Barbara Tax Products Group from October 2014 to April 2016. | 7 Registrants consisting of 7 Portfolios | None. |
| Todd Reit c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1968 | Chair of the Board; Trustee | Since 2023 | Mr. Reit is a a Managing Member of Cross Brook Partners LLC, a real estate investment and management company since 2017. Mr. Reit is also Director and Financial Officer of Shelter Our Soldiers, a charity to support military veterans, since 2016. Mr. Reit was formerly a Managing Director and Global Head of Asset Management Investment Banking for UBS AG, where he was responsible for overseeing all the bank’s asset management client relationships globally, including all corporate security transactions, mergers and acquisitions. Mr. Reit retired from UBS in 2017 after an over 25-year career at the company and its predecessor company, PaineWebber Incorporated (merged with UBS AG in 2000). | 9 Registrants consisting of 9 Portfolios | None. |
| 40 | abrdn National Municipal Income Fund |
| Name, Address and Year of Birth | Position(s) Held with the Fund | Term of Office and Length of Time Served | Principal Occupation(s) During at Least the Past Five Years | Number of Registered Investment Companies ("Registrants") consisting of Investment Portfolios ("Portfolios") in Fund Complex* Overseen by Board Members | Other Directorships Held by Board Member** |
| Nancy Yao c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1972 | Preferred Share Trustee | Since 2023 | Ms. Yao is an assistant professor adjunct and assistant dean at the David Geffen School of Drama at Yale University where she teachings financial accounting and governance to graduate students. Ms. Yao has over 25 years of Asia, finance, and governance experience in for profit and non-profit places like Goldman Sachs, Yale-China Association, and CFRA. She is a board member of the National Committee on U.S.-China Relations and a member of the Council on Foreign Relations. She received her MBA from the Yale School of Management and her AB in Diplomacy and World Affairs at Occidental College. | 8 Registrants consisting of 8 Portfolios | None. |
| * | As of the most recent fiscal year end, the Fund Complex has a total of 18 Registrants with each Board member serving on the Boards of the number of Registrants listed. Each Registrant in the Fund Complex has one Portfolio except for two Registrants that are open-end funds, abrdn Funds and abrdn ETFs, which each have multiple Portfolios. The Registrants in the Fund Complex are as follows: abrdn Asia-Pacific Income Fund, Inc., abrdn Global Income Fund, Inc., abrdn Australia Equity Fund, Inc., abrdn Emerging Markets Equity Income Fund, Inc., The India Fund, Inc., abrdn Japan Equity Fund, Inc., abrdn Income Credit Strategies Fund, abrdn Global Dynamic Dividend Fund, abrdn Global Premier Properties Fund, abrdn Total Dynamic Dividend Fund, abrdn Global Infrastructure Income Fund, abrdn National Municipal Income Fund, abrdn Healthcare Investors, abrdn Life Sciences Investors, abrdn Healthcare Opportunities Fund, abrdn World Healthcare Fund, abrdn Funds (20 Portfolios), and abrdn ETFs (3 Portfolios). |
| ** | Current directorships (excluding Fund Complex) as of September 30, 2024 held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “1934 Act”) or (3) any company subject to the requirements of Section 15(d) of the Exchange Act. |
| *** | Mr. Pittard is deemed to be an interested person because of his affiliation with the Fund’s investment adviser. |
| abrdn National Municipal Income Fund | 41 |
| Name, Address and Year of Birth | Position(s) Held with the Fund | Term of Office* and Length of Time Served | Principal Occupation(s) During at Least the Past Five Years |
| Joseph Andolina** c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1978 | Chief Compliance Officer; Vice President | Since 2023 | Currently, Chief Risk Officer – Americas for abrdn Inc. and serves as the Chief Compliance Officer for abrdn Inc. Prior to joining the Risk and Compliance Department, he was a member of abrdn Inc.'s Legal Department, where he served as US Counsel since 2012. |
| Sharon Ferrari** c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1977 | Vice President; Treasurer and Chief Financial Officer | Since 2023 | Currently, Director, Product Management for abrdn Inc. Ms. Ferrari joined abrdn Inc. as a Senior Fund Administrator in 2008. |
| Katie Gebauer** c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1986 | Vice President | Since 2023 | Currently, Chief Compliance Officer—ETFs and serves as the Chief Compliance Officer for abrdn ETFs Advisors LLC. Ms. Gebauer joined abrdn Inc. in 2014. |
| Alan Goodson** c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1974 | President | President Since 2024; Fund Officer Since 2023 | Currently, Executive Director and Head of Product & Client Solutions – Americas for abrdn Inc., overseeing Product Management & Governance, Product Development and Client Solutions for registered and unregistered investment companies in the U.S., Brazil and Canada. Mr. Goodson is Director and Vice President of abrdn Inc. and joined abrdn Inc. in 2000. |
| Heather Hasson** c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1982 | Vice President | Since 2023 | Currently, Senior Product Solutions and Implementation Manager, Product Governance US for abrdn Inc. Ms. Hasson joined the company in November 2006. |
| Robert Hepp** c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1986 | Vice President | Since 2023 | Currently, Senior Product Governance Manager – US for abrdn Inc. Mr. Hepp joined abrdn Inc. as a Senior Paralegal in 2016. |
| Megan Kennedy** c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1974 | Vice President, Secretary | Since 2023 | Currently, Senior Director, Product Governance for abrdn Inc. Ms. Kennedy joined abrdn Inc. in 2005. |
| Andrew Kim** c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1983 | Vice President | Since 2023 | Currently, Senior Product Governance Manager – US for abrdn Inc. Mr. Kim joined abrdn Inc. as a Product Manager in 2013. |
| Miguel Laranjeiro abrdn Inc. 875 Third Ave 4th Floor, Suite 403 New York, NY 10022 Year of Birth: 1983 | Vice President | Since 2023 | Currently, Investment Director, Municipals for abrdn. Mr. Laranjeiro joined abrdn in 2018. |
| 42 | abrdn National Municipal Income Fund |
| Name, Address and Year of Birth | Position(s) Held with the Fund | Term of Office* and Length of Time Served | Principal Occupation(s) During at Least the Past Five Years |
| Michael Marsico** c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1980 | Vice President | Since 2023 | Currently, Senior Product Manager – US for abrdn Inc. Mr. Marsico joined abrdn Inc. as a Fund Administrator in 2014. |
| Jonathan Mondillo** abrdn Inc. 875 Third Ave 4th Floor, Suite 403 New York, NY 10022 Year of Birth: 1983 | Vice President | Since 2023 | Currently, Head of U.S. Fixed Income. He joined the firm in 2018. Previously he managed mutual funds at Alpine Woods Capital Investors, LLC. |
| Lucia Sitar** c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1971 | Vice President | Since 2023 | Currently, Vice President and Head of Product Management and Governance for abrdn Inc. since 2020. Previously, Ms. Sitar was Managing U.S. Counsel for abrdn Inc. She joined abrdn Inc. as U.S. Counsel in 2007. |
| Michael Taggart** c\o abrdn Inc. 1900 Market Street Suite 200 Philadelphia, PA 19103 Year of Birth: 1970 | Vice President | Since 2023 | Currently, Closed End Fund Specialist at abrdn Inc since 2023. Prior to that, he was Vice President of Investment Research and Operations at Relative Value Partners, LLC from June 2022. Prior to that, he was self-employed after having left Nuveen in November 2020, where he had served as Vice President of Closed-End Fund Product Strategy since November 2013. |
| * | Officers hold their positions with the Fund until a successor has been duly elected and qualifies. Officers are elected annually at a meeting of the Fund Board. |
| ** | Each officer may hold officer position(s) in one or more other funds which are part of the Fund Complex. |
| abrdn National Municipal Income Fund | 43 |
(b) Not applicable.
Item 2. Code of Ethics.
| (a) | As of September 30, 2024, abrdn National Municipal Income Fund (the “Fund” or the “Registrant”) had adopted a Code of Ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party (the “Code of Ethics”). |
| (b) | Definitional. |
| (c) | There have been no amendments, during the period covered by this report, to a provision of the Code of Ethics. |
| (d) | During the period covered by this report, there were no waivers to the provisions of the Code of Ethics. |
| (e) | Not applicable |
| (f) | A copy of the Code of Ethics has been filed as an exhibit to this Form N-CSR. |
Item 3. Audit Committee Financial Expert.
The Registrant's Board of Trustees has determined that C. William Maher, a member of the Board of Trustees’ Audit Committee, possesses the attributes, and has acquired such attributes through means, identified in instruction 2 of Item 3 to Form N-CSR to qualify as an “audit committee financial expert,” and has designated Mr. Maher as the Audit Committee’s financial expert. Mr. Maher is considered to be an “independent” trustee, as such term is defined in paragraph (a)(2) of Item 3 to Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) – (d) Below is a table reflecting the fee information requested in Items 4(a) through (d):
| Fiscal Year Ended | (a) Audit Fees1 | (b) Audit-Related Fees2 | (c) Tax Fees3 | (d) All Other Fees4 | ||||||||||||
| September 30, 2024 | $ | 85,400 | $ | 0 | $ | 0 | $ | 0 | ||||||||
| Percentage approved pursuant to pre-approval exception5 | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
| September 30, 2023 | $ | 80,000 | $ | 0 | $ | 0 | $ | 0 | ||||||||
| Percentage approved pursuant to pre-approval exception5 | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
1 “Audit Fees” are the aggregate fees billed for professional services for the audit of the Fund’s annual financial statements and services provided in connection with statutory and regulatory filings or engagements.
2 “Audit Related Fees” are the aggregate fees billed for assurance and related services reasonably related to the performance of the audit or review of financial statements that are not reported under “Audit Fees”. These fees include offerings related to the Fund’s common shares.
3 “Tax Fees” are the aggregate fees billed for professional services for tax advice, tax compliance, and tax planning. These fees include: federal and state income tax returns, review of excise tax distribution calculations and federal excise tax return.
4 “All Other Fees” are the aggregate fees billed for products and services other than “Audit Fees”, “Audit-Related Fees” and “Tax Fees”.
5 Pre-approval exception under Rule 2-01 of Regulation S-X. The pre-approval exception for services provided directly to the Fund waives the pre-approval requirement for services other than audit, review or attest services if: (A) the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid by the Fund to its accountant during the fiscal year in which the services are provided; (B) the Fund did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee’s attention, and the Committee (or its delegate) approves the services before the audit is completed.
| (e)(1) | The Registrant’s Audit Committee (the “Committee”) has adopted a Charter that provides that the Committee shall annually select, retain or terminate, and recommend to the Independent Trustees for their ratification, the selection, retention or termination, the Registrant’s independent auditor and, in connection therewith, to evaluate the terms of the engagement (including compensation of the independent auditor) and the qualifications and independence of the independent auditor, including whether the independent auditor provides any consulting, auditing or tax services to the Registrant’s investment adviser (the “Adviser”) or any sub-adviser, and to receive the independent auditor’s specific representations as to their independence, delineating all relationships between the independent auditor and the Registrant, consistent with the PCAOB Rule 3526 or any other applicable auditing standard. PCAOB Rule 3526 requires that, at least annually, the auditor: (1) disclose to the Committee in writing all relationships between the auditor and its related entities and the Registrant and its related entities that in the auditor’s professional judgment may reasonably be thought to bear on independence; (2) confirm in the letter that, in its professional judgment, it is independent of the Registrant within the meaning of the Securities Acts administered by the SEC; and (3) discuss the auditor’s independence with the audit committee. The Committee is responsible for actively engaging in a dialogue with the independent auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditor and for taking, or recommending that the full Board take, appropriate action to oversee the independence of the independent auditor. The Committee Charter also provides that the Committee shall review in advance, and consider approval of, any and all proposals by Management or the Adviser that the Registrant, the Adviser or their affiliated persons, employ the independent auditor to render “permissible non-audit services” to the Registrant and to consider whether such services are consistent with the independent auditor’s independence. The Committee may delegate to one or more of its members (“Delegates”) authority to pre-approve permissible non-audit services to be provided to the Registrant. Any pre-approval determination of a Delegate shall be presented to the full Committee at its next meeting. The Committee shall communicate any pre-approval made by it or a Delegate to the Adviser, who will ensure that the appropriate disclosure is made in the Registrant’s periodic reports required by Section 30 of the Investment Company Act of 1940, as amended, and other documents as required under the federal securities laws. |
| (e)(2) | None of the services described in each of paragraphs (b) through (d) of this Item involved a waiver of the pre-approval requirement by the Audit Committee pursuant to Rule 2-01 (c)(7)(i)(C) of Regulation S-X. |
| (f) | Not applicable. |
| (g) | Non-Audit Fees |
The following table shows the amount of fees that KPMG LLP billed during the Fund’s last two fiscal years for non-audit services to the Registrant, and to the Adviser, and any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund (“Affiliated Fund Service Provider”):
| Fiscal Year Ended | Total Non-Audit Fees Billed to Fund | Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (engagements related directly to the operations and financial reporting of the Fund) | Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (all other engagements) | Total | |||||||||||||
| September 30, 2024 | $ | 0 | $ | 0 | $ | 629,124 | $ | 629,124 | |||||||||
| September 30, 2023 | $ | 0 | $ | 0 | $ | 1,171,994 | $ | 1,171,994 | |||||||||
“Non-Audit Fees billed to Fund” for both fiscal years represent “Tax Fees” and “All Other Fees” billed to Fund in their respective amounts from the previous table.
| (h) | Not applicable. |
(i) Not applicable.
(j) Not applicable.
Item 5. Audit Committee of Listed Registrants.
| (a) | The Registrant has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)). |
As of the fiscal year ended September 30, 2024, the Audit Committee members were:
C. Willam Maher
Nancy Yao
Todd Reit
| (b) | Not applicable. |
Item 6. Schedule of Investments.
(a) 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.
Not applicable.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
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 Trustees 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).
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
(a)(1) PORTFOLIO MANAGER BIOGRAPHIES
As of the date of filing this report, the individuals listed below have primary responsibility for the day-to-day management of their respective sleeves of the Fund’s portfolio.
| Individual & Position | Past Business Experience | Served on the Fund Since |
|
Miguel Laranjeiro Investment Director |
Miguel Laranjeiro is an Investment Director within the Municipals team at abrdn where he is responsible for asset allocation and investment managment decisions for the abrdn Ultra Short Municipal Income Fund, abrdn Short Duration High Yield Municipal Fund and abrdn Intermediate Municipal Income Fund at abrdn. Miguel experience includes municipal credit analysis in the high yield sector as well as high grade tax backed sectors. Miguel joined the company in 2018 from Alpine Woods Capital Investors where he was focused on credit analysis in the Public Finance sector for Alpine's two municipal funds, Alpine Ultra Short Municipal Income Fund (ATOIX) and Alpine High Yield Managed Duration Fund (AHYMX). Previously, Miguel worked for Thomson Reuters as an analyst focused primarily on Fundamentals Analysis in the Emerging Markets sectors. | 2023 |
|
Jonathan Mondillo Head of US Fixed Income |
Jonathan Mondillo is Head of US Fixed Income at abrdn. He is responsible for overseeing all public and private markets fixed income teams in the region, which include IG Credit, HY Credit, Municipals, and USPP. He is further responsible for five municipal bond and infrastructure debt funds that invest in both investment grade and high yield credits. Jonathan joined the firm in 2018 from Alpine Woods Capital Investors, LLC, when two mutual funds he managed were acquired by abrdn. Prior to that, Jonathan worked for Fidelity Capital Markets. Jonathan graduated with a B.S. in Finance from Bentley University. | 2023 |
(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 September 30, 2024.
| 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) | ||||||||
| Jonathan Mondillo1 | Registered Investment Companies | 5 | $ | 1,137.82 | 0 | $ | 0 | ||||||
| Pooled Investment Vehicles | 1 | $ | 75.75 | 0 | $ | 0 | |||||||
| Other Accounts | 8 | $ | 1,930.82 | 0 | $ | 0 | |||||||
| Miguel Laranjeiro 1 | Registered Investment Companies | 5 | $ | 1,137.82 | 0 | $ | 0 | ||||||
| Pooled Investment Vehicles | 1 | $ | 75.75 | 0 | $ | 0 | |||||||
| Other Accounts | 8 | $ | 1,930.82 | 0 | $ | 0 | |||||||
1 Includes accounts managed by the US Municipals Team and US Investment Grade Fixed Income Team, 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 September 30, 2024 | ||||
| Miguel Laranjeiro | None | |||
| Jonathan Mondillo | None |
(b) Not applicable.
Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
|
Period
|
(a) Total No. (1) |
(b) Average |
(c) Total No. of Shares Purchased as Part of Publicly Announced Plans or Programs |
(d) Maximum No. of Shares that May Yet Be Purchased Under the Plans or Programs |
| Month #1 (Oct. 1, 2023-Oct. 31, 2023) | — | — | — | — |
| Month #2 (Nov. 1, 2023 – Nov. 30, 2023) | — | — | — | — |
| Month #3 (Dec. 1, 2023– Dec. 31, 2023) | — | — | — | — |
| Month #4 (Jan. 1, 2024 – Jan. 31, 2024) | — | — | — | — |
| Month #5 (Feb. 1, 2024 – Feb. 28, 2024) | — | — | — | — |
| Month #6 (Mar. 1, 2024 – Mar. 31, 2024) | — | — | — | — |
| Month #7 (Apr. 1, 2024 – Apr. 30, 2024) | — | — | — | — |
| Month #8 (May 1, 2024 – May 31, 2024) | — | — | — | — |
| Month #9 (June 1, 2024 – June 30, 2024) | — | — | — | — |
| Month #10 (Jul. 1, 2024 – Jul. 31, 2024) | — | — | — | — |
| Month #11 (Aug. 1, 2024 – Aug. 31, 2024) | — | — | — | — |
| Month #12 (Sep. 1, 2024– Sep. 30, 2024) | — | — | — | 1,227,800 |
| Total |
| (1) | On September 11, 2024, the Fund publicly announced that the Board of Trustees had approved an open market share repurchase program (the “Program”). 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 as of September 30 of the prior year. 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. |
Item 15. Submission of Matters to a Vote of Security Holders.
During the period ended September 30, 2024, there were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees.
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 this 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.
| (a)(1) | Code of Ethics of the Registrant for the period covered by this report as required pursuant to Item 2 of this Form N-CSR. |
| (a)(2) | Any policy required by the listing standards adopted pursuant to Rule 10D-1 under the Exchange Act (17 CFR 240.10D-1) by the registered national securities exchange or registered national securities association upon which the registrant’s securities are listed. Not applicable. |
| (a)(3) | The certifications of the registrant as required by Rule 30a-2(a) under the Act are exhibits to this Form N-CSR. |
| (a)(4) | Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable. |
| (a)(5) | Change in Registrant’s independent public accountant. Not applicable. |
| (b) | The certifications of the registrant as required by Rule 30a-2(b) under the Act are exhibits to this Form N-CSR. |
| (c) | Proxy Voting Policy of Registrant |
| (d) | Proxy Voting Policies and Procedures of Adviser. |
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 National Municipal Income Fund
| By: | /s/ Alan Goodson | ||
| Alan Goodson, | |||
| Principal Executive Officer of | |||
| abrdn National Municipal Income Fund | |||
| Date: December 9, 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/ Alan Goodson | ||
| Alan Goodson, | |||
| Principal Executive Officer of | |||
| abrdn National Municipal Income Fund | |||
| Date: December 9, 2024 | |||
| By: | /s/ Sharon Ferrari | ||
| Sharon Ferrari, | |||
| Principal Financial Officer of | |||
| abrdn National Municipal Income Fund | |||
| Date: December 9, 2024 | |||