SEC Form N-CSRS filed by abrdn National Municipal Income Fund

 

Dear Shareholder,

We present the Semi-Annual Report, which covers the activities of abrdn National Municipal Income Fund (the “Fund”), for the six-month period ended March 31, 2025. The Fund’s investment objective is to seek to provide current income exempt from regular federal income tax, consistent with the preservation of capital.

Total Investment Return¹

For the six-month period ended March 31, 2025, the total return to shareholders of the Fund based on the net asset value (“NAV”) and market price of the Fund, respectively, compared to the Fund’s benchmark,  is as follows:

NAV2,3	-4.70%
Market Price2	-6.60%
Bloomberg Municipal Bond Index4	-1.44%

For more information about Fund performance, please visit the Fund on the web at https://www.aberdeeninvestments.com/en-us/investor/investment-solutions/closed-end-funds. Here, you can view quarterly commentary on the Fund's performance, monthly fact sheets, distribution and performance information, and other Fund literature.

NAV, Market Price and Premium(+)/Discount(-)

The below table represents a comparison between the current six-month period end and the prior fiscal year end of the Fund's market price to NAV and associated Premium(+) and Discount(-).

	NAV	Closing Market Price	Premium(+)/ Discount(-)
3/31/2025	$11.42	$10.14	-11.21%
9/30/2024	$12.33	$11.17	-9.41%

During the six-month period ended March 31, 2025, the Fund’s NAV was within a range of $11.28 to $12.41 and the Fund’s market price traded within a range of $10.05 to $11.33. During the six-month period ended March 31, 2025, the Fund’s shares traded within a range of a premium(+)/discount(-) of -13.99% to -8.20%.

Aberdeen Name Change

On March 4, 2025, abrdn plc, the parent company of the Fund's adviser, announced that it would change its name, and from that date, will use `Aberdeen' as the principal trading identity for its Investments business. On March 12, 2025, abrdn plc completed the steps to legally change its name to Aberdeen Group plc. Aberdeen has retained `abrdn' as an operational abbreviation across its subsidiary legal entities (including the Fund's adviser, fund names and descriptors.

Distribution Policy

As announced on September 11, 2024, the Fund increased its monthly distribution by 10%, from $0.0450 per share to $0.0500 per share, commencing with the distribution payable on September 30, 2024.

Under abrdn Inc. ("Aberdeen'")'s management of the Fund, the weighting of below investment grade securities has been reduced while at the same time, the earnings yield of the portfolio has been increased, which has increased the Fund's monthly earnings and improved the credit quality of the portfolio. The Fund's last distribution change was announced in September 2024 when the Board approved an increase of 10%. Since Aberdeen assumed management of the Fund on July 7, 2023, the distribution has been cumulatively increased by approximately 54%.

Distributions to common shareholders for the six-month period ended March 31, 2025 totaled $0.30 per share. Based on the market price of $10.14 on March 31, 2025, the annualized distribution was 5.91%. Based on the NAV of $11.42 on March 31, 2025, the annualized distribution rate was 5.25%. Since all distributions are paid after deducting applicable withholding taxes, the effective distribution rate may be higher for those U.S. investors who are able to claim a tax credit.

On April 9, 2025 and May 9, 2025 the Fund announced that it will pay on April 30, 2025 and May 30, 2025, respectively a distribution of US $0.0500 per share to all shareholders of record as of April 23, 2025 and May 22, 2025, respectively.

The Fund's policy is to provide common shareholders with a stable monthly distribution out of current income. This policy is subject to an annual review as well as regular review at the Board of Trustees' (the "Board") quarterly meetings, unless market conditions require an earlier evaluation.

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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.

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2	Assuming the reinvestment of dividends and distributions.

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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.

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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.

Strategy Update - Swaps

The Fund may enter into swap transactions, including credit default, total return, index and interest rate swap agreements, as well as options thereon, and may purchase or sell interest rate caps, floors and collars. A swap is a derivative in the form of an agreement to exchange the return (or differentials in the rates of return) earned or realized on particular predetermined investments or instruments. The payment obligations are calculated by reference to an agreed upon notional amount or amounts. The Fund will usually enter into swaps for which obligations are calculated on a net basis, i.e., on each payment date under the swap the two payment streams are netted out in a cash settlement, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. The Fund may enter into over-the-counter derivatives transactions (swaps, caps, floors and puts).

The risk of investing in swaps or other derivatives instruments include leverage, liquidity, interest rate, market, counterparty (including credit), operational, legal and management risks, and valuation complexity. Changes in the value of a derivative may not correlate perfectly with, and may be more sensitive to market events than, the underlying asset, rate or index, and the Fund could lose more than the initial amount invested. Changes in the value of a derivative may also create margin delivery or settlement payment obligations for the Fund. The Fund’s use of derivatives or other similar investments may result in losses to the Fund, a reduction in the Fund’s returns and/or increased volatility. Swaps generally do not involve the delivery of securities, other underlying assets or principal. Accordingly, the risk of loss with respect to swaps is limited to the net amount of payments that the Fund is contractually obligated to make. However, because some swap agreements have a leverage component, adverse changes in the value or level of the underlying asset, reference rate, or index can result in a loss substantially greater than the amount invested in the swap itself. If the other party to a swap defaults, the Fund's risk of loss generally consists of the net amount of payments that the Fund is contractually entitled to receive.

The Fund may write (sell) and purchase put and call swap options. A swap option, or swaption, is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some designated future time on specified terms. The Fund may engage in swaptions for hedging purposes, to manage and mitigate credit and interest rate risks and to gain exposure to credit obligations. The use of swaptions involves risks, including, among others, (i) changes in the market value of securities held by the Fund, and of swaptions relating to those securities may not be proportionate, (ii) there may not be a liquid market to sell a swaption, which could result in difficulty closing a position, (iii) swaptions can magnify the extent of losses incurred due to changes in the market value of the securities to which they relate and (iv) counterparty risk.

It is possible that government regulation of various types of derivative instruments, including swap agreements, may limit or prevent the Fund from using such instruments as part of its investment strategy, which could negatively impact the Fund.

Open Market Repurchase Program

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. On a quarterly basis, the Fund's Board will receive information on any transactions made pursuant to this Program during the prior quarter.  If shares are repurchased, the Fund reports repurchase activity on the Fund's website on a monthly basis. For the six-month period ended March 31, 2025, the Fund did not repurchase any shares through the Program.

Unclaimed Share Accounts

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

Portfolio Holdings Disclosure

The Fund's complete schedule of portfolio holdings for the second and fourth quarters of each fiscal year are included in the Fund's semi-annual and annual reports to shareholders. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. These reports are available on the SEC’s website at http://www.sec.gov. The Fund makes the information available to shareholders upon request

2	abrdn National Municipal Income Fund

	Principal Amount		Value
MUNICIPAL BONDS —170.1%
ALABAMA—8.7%
Black Belt Energy Gas District
VRDN, Series A, 4.00%, 12/01/2052	$	3,000,000	$ 2,979,737
VRDN, Series A, 5.25%, 05/01/2055		600,000	641,667
VRDN, Series D-1, 5.50%, 06/01/2049		570,000	600,906
Energy Southeast A Cooperative District, VRDN, Series B, 5.25%, 07/01/2054		1,000,000	1,063,497
Jacksonville Public Educational Building Authority, (AGM), Series A, 5.25%, 08/01/2053		3,000,000	3,104,173
Mobile County Industrial Development Authority, Series 2024B, 4.75%, 12/01/2054		1,000,000	944,555
Southeast Energy Authority A Cooperative District, Series A, 5.00%, 11/01/2035		2,750,000	2,837,908
Total Alabama			12,172,443
ARIZONA—2.8%
Arizona Industrial Development Authority
Series A, 7.75%, 07/01/2050(a)(b)		725,000	21,750
Series B, 5.13%, 01/01/2059		73,102	56,969
Series D, 0.00%, 01/01/2059(c)		58,051	10,280
Maricopa County Industrial Development Authority, Series A, 3.00%, 09/01/2051		1,000,000	708,513
Salt River Project Agricultural Improvement & Power District, Series A, 5.00%, 01/01/2047		3,000,000	3,099,421
Total Arizona			3,896,933
ARKANSAS—2.6%
City of Osceola, VRDN, 5.50%, 04/01/2036		1,165,000	1,166,145
Little Rock School District, (BAM-TCRS ST AID WITHHLDG), Series A, 3.00%, 02/01/2050		3,500,000	2,538,803
Total Arkansas			3,704,948
CALIFORNIA—16.1%
Burbank-Glendale-Pasadena Airport Authority Brick Campaign
(AGM), Series B, 4.38%, 07/01/2049		400,000	379,181
(AGM), Series B, 4.50%, 07/01/2054		500,000	473,841
California Community Choice Financing Authority, VRDN, Series C, 5.25%, 01/01/2054		2,000,000	2,089,868
California Infrastructure & Economic Development Bank, VRDN, Series A, 9.50%, 01/01/2065(a)		1,295,000	1,294,227
California Statewide Communities Development Authority, VRDN, Series Q, 6.50%, 05/01/2049		3,764,612	3,810,669
City & County of San Francisco Special Tax District No., Series B, 5.25%, 09/01/2049(a)		550,000	480,285
Golden State Tobacco Securitization Corp., Series B-2, 0.00%, 06/01/2066(c)		40,820,000	4,378,423
Inland Empire Tobacco Securitization Corp.
0.00%, 06/01/2057(a)(c)		3,900,000	284,213
0.00%, 06/01/2057(a)(c)		2,500,000	156,148
Irvine Facilities Financing Authority, Series A, 4.25%, 05/01/2053		5,000,000	4,940,445
Palomar Health, 5.00%, 11/01/2030		3,335,000	3,156,173

	Principal Amount		Value
Tobacco Securitization Authority of Southern California
0.00%, 06/01/2046(c)	$	3,015,000	$ 514,544
0.00%, 06/01/2046(c)		3,235,000	636,544
Total California			22,594,561
COLORADO—5.1%
Colorado Educational & Cultural Facilities Authority
5.00%, 12/15/2045(a)		500,000	482,791
5.25%, 07/01/2046(a)		500,000	500,122
Colorado Health Facilities Authority
8.00%, 08/01/2043		1,660,000	1,056,459
5.00%, 12/01/2054(a)		525,000	370,125
Series A, 5.00%, 11/01/2044		1,465,000	1,500,247
Series A, 6.25%, 12/01/2050(a)		505,000	324,250
Series A-1, 5.00%, 09/15/2048		750,000	705,273
Fountain Urban Renewal Authority, Series A, 5.50%, 11/01/2044		655,000	620,904
Public Authority for Colorado Energy
6.25%, 11/15/2028		720,000	754,342
6.50%, 11/15/2038		750,000	882,074
Total Colorado			7,196,587
DISTRICT OF COLUMBIA—4.1%
District of Columbia, 5.00%, 06/01/2050		760,000	705,061
Metropolitan Washington Airports Authority Aviation Revenue, Series A, 5.00%, 10/01/2049		5,000,000	5,034,441
Total District of Columbia			5,739,502
FLORIDA—8.3%
Capital Projects Finance Authority
Series 2024A-1, 5.00%, 06/01/2049(a)		105,000	103,720
Series A-1, 5.00%, 11/01/2058		1,000,000	925,879
Capital Trust Authority
Series A, 6.00%, 06/15/2054(a)		205,000	211,285
Series A, 6.13%, 06/15/2060(a)		325,000	335,259
City of Tampa
Series A, 0.00%, 09/01/2049(c)		3,000,000	867,257
Series A, 0.00%, 09/01/2053(c)		1,700,000	391,723
City of Venice, Series B-2, 4.50%, 01/01/2030(a)		305,000	304,045
Florida Development Finance Corp.
(AGM), 5.00%, 07/01/2044		1,000,000	1,003,330
(AGM), 5.25%, 07/01/2053		800,000	814,766
Series A, 4.00%, 12/15/2051(a)		1,680,000	1,406,441
Hillsborough County Industrial Development Authority, Series A, 3.50%, 08/01/2055		6,875,000	5,205,060
Total Florida			11,568,765
GEORGIA—8.6%
Georgia Housing & Finance Authority, Series A, 4.70%, 12/01/2055		1,000,000	987,907
Municipal Electric Authority of Georgia
(BAM), Series A, 5.00%, 01/01/2056		5,000,000	5,061,624
Series A, 4.00%, 01/01/2059		4,000,000	3,456,009
(BAM), Series A, 5.00%, 01/01/2063		2,500,000	2,529,307
Total Georgia			12,034,847
IDAHO—2.4%
Idaho Health Facilities Authority, Series A, 3.00%, 03/01/2051		4,630,000	3,319,348

abrdn National Municipal Income Fund

7

	Principal Amount		Value
MUNICIPAL BONDS (continued)
ILLINOIS—10.8%
Chicago Board of Education Dedicated Capital Improvement Tax
5.00%, 04/01/2046	$	905,000	$ 905,844
(BAM), 5.75%, 04/01/2048		4,000,000	4,284,659
Chicago O'Hare International Airport, Series A, 5.00%, 01/01/2048		2,500,000	2,505,861
Illinois Finance Authority, Series A, 5.00%, 08/15/2051		4,355,000	4,473,883
Metropolitan Pier & Exposition Authority, (BAM), Series A, 0.00%, 12/15/2056(c)		10,000,000	2,041,258
St. Clair County Community Unit School District No. 187 Cahokia
(AGM), Series A, 5.00%, 01/01/2049		320,000	326,360
(AGM), Series A, 5.00%, 01/01/2054		600,000	609,441
Total Illinois			15,147,306
INDIANA—0.6%
Indiana Finance Authority
Series A, 5.00%, 07/01/2059		350,000	337,469
Series A, 5.25%, 07/01/2064		500,000	497,885
Total Indiana			835,354
IOWA—1.0%
Iowa Finance Authority, Series A, 5.13%, 05/15/2059		1,500,000	1,453,833
LOUISIANA—2.2%
Greater Ouachita Water Co., (BAM), 4.50%, 09/01/2053		1,000,000	941,490
Louisiana Public Facilities Authority, 5.75%, 09/01/2064		2,000,000	2,104,545
Total Louisiana			3,046,035
MARYLAND—0.7%
Maryland Economic Development Corp.
Series A-1, 5.00%, 06/01/2038		460,000	473,370
Series A-1, 5.00%, 06/01/2039		500,000	510,519
Total Maryland			983,889
MASSACHUSETTS—1.6%
Massachusetts Port Authority, Series B, 4.00%, 07/01/2046		2,500,000	2,257,816
MINNESOTA—3.9%
City of Apple Valley
Series B, 5.00%, 01/01/2047		715,000	412,300
Series D, 7.00%, 01/01/2037		685,000	369,262
Series D, 7.25%, 01/01/2052		1,035,000	483,431
City of Bethel Housing & Health Care Facilities Revenue, Series A, 5.50%, 12/01/2048		500,000	486,580
City of Hayward, 5.75%, 02/01/2044		500,000	361,905
City of Minneapolis
5.00%, 11/01/2035		220,000	205,970
5.25%, 11/01/2045		850,000	775,892
City of Rochester, Series A, 6.88%, 12/01/2048		1,220,000	1,220,870
City of St. Cloud, Series A, 5.00%, 04/01/2046		375,000	310,844

	Principal Amount		Value
Housing & Redevelopment Authority of The City of St. Paul Minnesota
Series A, 5.50%, 07/01/2038(a)	$	240,000	$ 242,069
Series A, 5.30%, 07/01/2045		630,000	629,968
Total Minnesota			5,499,091
MISSISSIPPI—2.0%
Mississippi Business Finance Corp., VRDN, Series A, 4.00%, 11/01/2032		2,805,000	2,805,000
NEVADA—1.2%
State of Nevada Department of Business & Industry, VRDN, Series 2025A, 9.50%, 01/01/2065(a)		1,755,000	1,748,357
NEW HAMPSHIRE—2.9%
New Hampshire Business Finance Authority
Series 2, 4.16%, 10/20/2041		1,991,979	1,872,198
Series 2, 3.63%, 08/20/2039		994,910	914,747
Series A, 5.25%, 07/01/2048		1,250,000	1,280,972
Total New Hampshire			4,067,917
NEW JERSEY—0.3%
New Jersey Housing & Mortgage Finance Agency, (FHA), (GNMA), Series B, 5.25%, 12/20/2065		425,000	431,242
NEW MEXICO—0.4%
New Mexico Finance Authority, 8.25%, 12/01/2045(a)		600,000	599,873
NEW YORK—27.7%
City of New York, Series B-1, 5.25%, 10/01/2047		1,500,000	1,577,737
Metropolitan Transportation Authority, Series 2025A, 4.63%, 11/15/2050		1,500,000	1,446,298
New York City Housing Development Corp.
Series A, 4.85%, 11/01/2053		500,000	501,172
Series A, 5.00%, 05/01/2063		2,000,000	2,032,193
New York Liberty Development Corp., (BAM), Series A, 2.88%, 11/15/2046		7,000,000	5,003,585
New York State Dormitory Authority
5.25%, 10/01/2049		100,000	101,912
(AGM), Series A, 3.00%, 09/01/2050		5,600,000	4,028,124
New York State Thruway Authority, Series C, 5.00%, 03/15/2053		4,000,000	4,132,430
New York Transportation Development Corp.
6.00%, 04/01/2035		500,000	549,240
6.00%, 06/30/2054		500,000	531,579
5.00%, 06/30/2060		4,000,000	3,937,686
(AGM), 5.13%, 06/30/2060		2,950,000	2,966,967
(AGM), 5.25%, 06/30/2060		2,250,000	2,289,719
5.38%, 06/30/2060		500,000	508,435
(AGC), Series B, 0.00%, 12/31/2054		750,000	467,772
State of New York Mortgage Agency Homeowner Mortgage Revenue
(SONYMA), Series 250, 4.90%, 10/01/2053		3,475,000	3,490,502
(SONYMA), Series 261, 4.65%, 10/01/2054		5,000,000	4,912,988
Suffolk Regional Off-Track Betting Co., 6.00%, 12/01/2053		200,000	205,446
Westchester County Local Development Corp., (AGM), 5.75%, 11/01/2048		200,000	218,140
Total New York			38,901,925

8	abrdn National Municipal Income Fund

	Principal Amount		Value
MUNICIPAL BONDS (continued)
NORTH CAROLINA—0.6%
North Carolina Medical Care Commission, Series A, 5.13%, 10/01/2054	$	790,000	$     797,762
OHIO—5.2%
Buckeye Tobacco Settlement Financing Authority, Series A-2, 4.00%, 06/01/2048		3,000,000	2,598,364
Columbus Regional Airport Authority, Series A, 5.50%, 01/01/2055		2,500,000	2,623,842
County of Cuyahoga, 5.50%, 02/15/2057		1,000,000	1,004,265
County of Warren, 5.00%, 07/01/2054		1,000,000	1,006,431
Total Ohio			7,232,902
OREGON—1.9%
Union County Hospital Facility Authority, 5.00%, 07/01/2047		500,000	487,361
Washington County School District No. 13 Banks, (SCH BD GTY), Series A, 0.00%, 06/15/2051(c)		8,505,000	2,214,564
Total Oregon			2,701,925
PENNSYLVANIA—9.8%
Huntingdon County General Authority, Series T, 5.00%, 10/01/2051		2,500,000	2,305,231
Montgomery County Higher Education & Health Authority
Series A, 5.00%, 09/01/2043		3,515,000	3,571,754
(AGC), Series B, 4.00%, 05/01/2056		3,500,000	3,103,748
Pennsylvania Housing Finance Agency, Series 148A, 4.80%, 10/01/2055		3,000,000	2,978,549
Pennsylvania Turnpike Commission Oil Franchise Tax Revenue, Series A, 3.00%, 12/01/2051		2,500,000	1,807,427
Total Pennsylvania			13,766,709
PUERTO RICO—8.8%
Commonwealth of Puerto Rico, Series A1, 4.00%, 07/01/2046		2,340,000	2,039,890
GDB Debt Recovery Authority of Puerto Rico, 7.50%, 08/20/2040		5,743,373	5,615,612
Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue, Series A-1, 0.00%, 07/01/2051(c)		19,613,000	4,736,838
Total Puerto Rico			12,392,340
SOUTH CAROLINA—1.8%
South Carolina Jobs-Economic Development Authority
5.75%, 11/15/2054		150,000	156,144
Series A, 4.50%, 11/01/2054		2,500,000	2,411,926
Total South Carolina			2,568,070
TENNESSEE—2.4%
Knox County Health Educational & Housing Facility Board, (BAM), Series A-1, 5.00%, 07/01/2064		450,000	451,925
Metropolitan Nashville Airport Authority, Series B, 5.00%, 07/01/2040		2,500,000	2,501,994
Shelby County Health & Educational Facilities Board, Series A1, 5.25%, 06/01/2056(a)		375,000	373,766
Total Tennessee			3,327,685

	Principal Amount		Value
TEXAS—11.6%
Arlington Higher Education Finance Corp.
(PSF-GTD), 4.25%, 06/15/2059	$	850,000	$ 780,204
Series A, 5.00%, 08/15/2049		420,000	401,061
Series A, 5.00%, 08/15/2054		1,200,000	1,124,590
Clifton Higher Education Finance Corp.
(PSF-GTD), 4.25%, 04/01/2048		2,000,000	1,909,417
Series A, 6.00%, 06/15/2054(a)		200,000	194,936
New Hope Cultural Education Facilities Finance Corp.
Series A-1, 5.00%, 07/01/2051		135,000	121,838
Series B, 4.75%, 07/01/2051		160,000	127,600
Series C, 5.50%, 07/01/2046(b)		1,250,000	625,000
Series C, 5.75%, 07/01/2051(b)		1,000,000	500,000
Series D, 7.00%, 07/01/2051(b)		1,350,000	189,000
Newark Higher Education Finance Corp., (PSF-GTD), Series A, 4.38%, 08/15/2059		4,000,000	3,853,953
Texas Municipal Gas Acquisition & Supply Corp. IV, VRDN, Series B, 5.50%, 01/01/2054		2,250,000	2,469,175
Texas Private Activity Bond Surface Transportation Corp., 5.00%, 06/30/2058		3,985,000	3,949,500
Total Texas			16,246,274
UTAH—1.3%
City of Salt Lake City Airport Revenue, (AGM), Series A, 4.00%, 07/01/2051		2,000,000	1,764,894
VIRGINIA—1.7%
Virginia Housing Development Authority, Series A, 4.75%, 09/01/2060		2,500,000	2,430,957
WASHINGTON—2.0%
Skagit County Public Hospital District No. 1, 5.50%, 12/01/2054		900,000	929,815
Washington State Housing Finance Commission, 6.38%, 07/01/2063(a)		1,760,000	1,905,175
Total Washington			2,834,990
WEST VIRGINIA—0.2%
West Virginia Economic Development Authority, VRDN, 5.45%, 01/01/2055(a)		230,000	235,377

abrdn National Municipal Income Fund

9

	Principal Amount		Value
MUNICIPAL BONDS (continued)
WISCONSIN—8.8%
Public Finance Authority
5.00%, 12/15/2036(a)	$	750,000	$ 751,520
6.25%, 02/01/2039(a)		3,040,000	3,087,628
5.00%, 06/15/2049		500,000	482,129
7.00%, 12/01/2050(a)		380,000	385,075
5.00%, 02/01/2054		315,000	308,847
5.50%, 06/15/2055		400,000	402,561
5.25%, 11/15/2061		1,000,000	1,026,453
5.00%, 02/01/2064		935,000	900,926
5.25%, 06/15/2065		400,000	383,243
5.40%, 06/15/2065		665,000	653,209
Series 2025A, 5.25%, 06/15/2045		235,000	242,491
Series 2025A, 5.25%, 06/15/2050		250,000	255,516
Series A, 5.50%, 09/01/2030(a)		100,000	102,535
Series A, 5.00%, 06/01/2044		365,000	363,482
Series A, 5.25%, 06/01/2054		485,000	485,466
Series A, 5.25%, 06/15/2054		700,000	692,716
Series A, 5.00%, 12/15/2054(a)		385,000	365,449
Series A, 5.00%, 02/01/2062		1,475,000	1,437,320
Total Wisconsin			12,326,566
Total Municipal Bonds			238,632,023
Total Investments (Cost $242,115,898)—170.1%			238,632,023
Liabilities in Excess of Other Assets—(70.1%)			(98,365,372)
Net Assets—100.0%			$140,266,651

    

(a)	Denotes a security issued under Regulation S or Rule 144A.
(b)	Security is in default.
(c)	Zero coupon bond. Rate represents yield to maturity.

    

AGC	Assured Guaranty Corp.
AGM	Assured Guaranty Municipal Corp.
BAM	Build America Mutual Assurance Company
PSF-GTD	Permanent School Fund Guarantee Program
VRDN	Variable Rate Demand Note

 

See accompanying Notes to Financial Statements.

10	abrdn National Municipal Income Fund

1.  Organization

abrdn National Municipal Income Fund (the “Fund”) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a closed-end management investment company. The Fund is diversified for purposes of the 1940 Act. The Fund’s investment objective is to seek to provide current income exempt from regular federal income tax, consistent with the preservation of capital.

2.  Summary of Significant Accounting Policies

The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 946 Financial Services-Investment Companies. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies conform to generally accepted accounting principles in the United States of America ("U.S. GAAP"). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. The accounting records of the Fund are maintained in U.S. Dollars and the U.S. Dollar is used as both the functional and reporting currency.

a.  Security Valuation:

The Fund values its securities at fair value, consistent with regulatory requirements. "Fair value" is defined in the Fund's Valuation and Liquidity Procedures as the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants without a compulsion to transact at the measurement date, also referred to as market value. Pursuant to Rule 2a-5 under the 1940 Act, the Board of Trustees (the "Board") designated Aberdeen, the Fund's Investment Manager, as the valuation designee ("Valuation Designee") for the Fund to perform the fair value determinations relating to Fund investments for which market quotations are not readily available or deemed unreliable.

In accordance with the authoritative guidance on fair value measurements and disclosures under U.S. GAAP, the Fund discloses the fair value of its investments using a three-level hierarchy that classifies the inputs to valuation techniques used to measure the fair value. The hierarchy assigns Level 1, the highest level, measurements to valuations based upon unadjusted quoted prices in active markets for identical assets, Level 2 measurements to valuations based upon other significant observable inputs, including adjusted quoted prices in active markets for similar assets, and Level 3, the lowest level, measurements to valuations based upon unobservable inputs that are significant to the valuation. Inputs refer broadly to the assumptions

that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability, which are based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement.

Long-term debt and other fixed-income securities are valued at the last quoted or evaluated bid price on the valuation date provided by an independent pricing service provider. If there are no current day bids, the security is valued at the previously applied bid. Pricing services generally price debt securities assuming orderly transactions of an institutional “round lot” size and the strategies employed by the Valuation Designee generally trade in round lot sizes. In certain circumstances, some trades may occur in smaller “odd lot” sizes which may be effected at lower, or higher, prices than institutional round lot trades. Short-term debt securities (such as commercial paper and U.S. treasury bills) having a remaining maturity of 60 days or less are valued at the last quoted or evaluated bid price on the valuation date provided by an independent pricing service, or on the basis of amortized cost, if it represents the best approximation of fair value. Debt and other fixed-income securities are generally determined to be Level 2 investments.

Short-term investments are comprised of cash and cash equivalents invested in short-term investment funds which are redeemable daily. Generally, these investment types are categorized as Level 1 investments.

In the event that a security’s market quotations are not readily available or are deemed unreliable (for reasons other than because the foreign exchange on which it trades closes before the Valuation Time), the security is valued at fair value as determined by the Valuation Designee, taking into account the relevant factors and surrounding circumstances using valuation policies and procedures approved by the Board. A security that has been fair valued by the Investment Manager may be classified as Level 2 or Level 3 depending on the nature of the inputs.

The three-level hierarchy of inputs is summarized below:

Level 1 - quoted prices (unadjusted) in active markets for identical investments;

18	abrdn National Municipal Income Fund

Level 2 - other significant observable inputs (including valuation factors, quoted prices for similar securities, interest rates, prepayment speeds, and credit risk, etc.); or

Level 3 - significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).

A summary of standard inputs is listed below:

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.

The following is a summary of the inputs used as of March 31, 2025 in valuing the Fund's investments and other financial instruments at fair value. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Please refer to the Portfolio of Investments for a detailed breakout of the security types:

Investments, at Value	Level 1 – Quoted Prices	Level 2 – Other Significant Observable Inputs	Level 3 – Significant Unobservable Inputs	Total
Assets
Investments in Securities
Municipal Bonds	$–	$238,632,023	$–	$238,632,023
Total Investments	$–	$238,632,023	$–	$238,632,023
Total Investment Assets	$–	$238,632,023	$–	$238,632,023

Amounts listed as “–” are $0 or round to $0.

b.  Restricted Securities:

Restricted securities are privately-placed securities whose resale is restricted under U.S. securities laws. The Fund may invest in restricted securities, including unregistered securities eligible for resale without registration pursuant to Rule 144A and privately-placed securities of U.S. and non-U.S. issuers offered outside the U.S. without registration pursuant to Regulation S under the Securities Act of 1933, as amended (the "1933 Act"). Rule 144A securities may be freely traded among certain qualified institutional investors, such as the Fund, but resale of such securities in the U.S. is permitted only in limited circumstances.

c.  Security Transactions, Investment Income and Expenses:

Security transactions are recorded on the trade date. Realized and unrealized gains/(losses) from security and foreign currency transactions are calculated on the identified cost basis.

Discounts and premiums on securities purchased are accreted or amortized on an effective yield basis over the estimated lives of the respective securities.

d.  Distributions:

The Fund intends to make regular monthly distributions of net investment income to holders of common shares. The Fund expects to pay its common shareholders annually all or substantially all of its investment company taxable income. In addition, at least annually, the Fund intends to distribute all or substantially all of its net capital gains, if any.

Distributions from net realized gains for book purposes may include short-term capital gains which are ordinary income for tax purposes. Distributions to common shareholders are recorded on the ex-dividend date.

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. These “book-tax” differences are considered either temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal income tax treatment. Temporary differences do not require reclassification. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes they are reported to shareholders as return of capital.

e.  Federal Income Taxes:

The Fund intends to continue to qualify as a “regulated investment company” ("RIC") by complying with the provisions available to certain investment companies, as defined in Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all federal income taxes. Therefore, no federal income tax provision is required.

The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming

abrdn National Municipal Income Fund

19

examination by tax authorities. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Since tax authorities can examine previously filed tax returns, the Fund's U.S. federal and state tax returns for each of the most recent four fiscal years up to the most recent fiscal year ended September 30, 2024 are subject to such review.

3.  Agreements and Transactions with Affiliates

a.  Investment Manager:

abrdn Inc. serves as the Fund’s Investment Manager pursuant to an investment management agreement (the “Management Agreement”) with the Fund. The Investment Manager is a wholly-owned indirect subsidiary of Aberdeen Group plc. In rendering management services, the Investment Manager may use the resources of investment advisor subsidiaries of Aberdeen Group plc. These affiliates have entered into procedures pursuant to which investment professionals from affiliates may render portfolio management and research services as associated persons of the Investment Manager.

As compensation for its services to the Fund, the Investment Manager receives an annual investment management fee at an annual rate of 0.40% of the average daily "Managed Assets" of the Fund during the month. "Managed Assets" are the total assets of the Fund (including any assets attributable to money borrowed for investment purposes, including proceeds from (and assets subject to) reverse repurchase agreements, any credit facility and any issuance of preferred shares or notes) minus the sum of the Fund's accrued liabilities (other than Fund liabilities incurred for the purpose of leverage). For the six-month period ended March 31, 2025, the Fund paid the Investment Manager $488,327.

The Investment Manager entered into a written contract (the “Expense Limitation Agreement”) with the Fund that is effective through July 10, 2025. The Expense Limitation Agreement limits the total ordinary operating expenses of the Fund (excluding any leverage costs, taxes, interest, brokerage commissions, and any non-routine expenses) from exceeding 1.07% of the average daily net assets of the Fund on an annualized basis. The total amount of the waiver for the six-month period ended March 31, 2025 pursuant to the Expense Limitation Agreement was $78,873.

The Investment Manager may request and receive reimbursement from the Fund of the management fees waived and other expenses reimbursed pursuant to the Expense Limitation Agreement as of a date not more than three years after the date when the Investment Manager limited the fees or reimbursed the expenses; provided that the following requirements are met: the reimbursements do not cause the Fund to exceed the lesser of the applicable expense limitation in the contract at the time the fees were limited or expenses are paid or

the applicable expense limitation in effect at the time the expenses are being recouped by the Investment Manager, and the payment of such reimbursement is approved by the Board on a quarterly basis (the “Reimbursement Requirements”).

As of March 31, 2025, to the extent the Reimbursement Requirements are met, the cumulative potential reimbursements to the Investment Manager from the Fund, based on expenses reimbursed by the Investment Manager, including adjustments described above, would be:

Amount Fiscal Year 2023 (Expires 09/30/26)		$325,793
Amount Fiscal Period 2024 (Expires 09/30/27)		$181,437
Amount Fiscal Year 2025 (Expires 09/30/28)		$78,873
Total*		$586,103

    

*	Amounts reported are due to expire throughout the respective 3-year expiration period presented above.

b.  Fund Administrator:

abrdn Inc. is the Fund’s Administrator. Pursuant to the Administration Agreement, Aberdeen receives a fee paid by the Fund, at an annual fee rate of 0.08% of the Fund’s average daily net assets. State Street Bank and Trust Company serves as the Fund's Sub-Administrator. For the six-month period ended March 31, 2025 pursuant to the Administration Agreement, Aberdeen earned $97,665 from the Fund for administration services.

c.  Investor Relations:

Under the terms of the Investor Relations Services Agreement, abrdn Inc. provides and/or engages third parties to provide investor relations services to the Fund and certain other funds advised by the Investment Manager or its affiliates as part of an Investor Relations Program. Under the Investor Relations Services Agreement, the Fund owes a portion of the fees related to the Investor Relations Program (the “Fund’s Portion”). However, Investor Relations Services fees are limited by abrdn so that the Fund will only pay up to an annual rate of 0.05% of the Fund’s average weekly net assets. Any difference between the capped rate of 0.05% of the Fund’s average weekly net assets and the Fund’s Portion is paid for by abrdn.

Pursuant to the terms of the Investor Relations Services Agreement, Aberdeen (or third parties engaged by Aberdeen), among other things, provides objective and timely information to shareholders based on publicly-available information; provides information efficiently through the use of technology while offering shareholders immediate access to knowledgeable investor relations representatives; develops and maintains effective communications with investment professionals from a wide variety of firms; creates and maintains investor relations communication materials such as fund manager interviews, films and webcasts, publishes white papers, magazine articles and other relevant materials discussing the Fund’s investment

20	abrdn National Municipal Income Fund

results, portfolio positioning and outlook; develops and maintains effective communications with large institutional shareholders; responds to specific shareholder questions; and reports activities and results to the Board and management detailing insight into general shareholder sentiment.

During the six-month period ended March 31, 2025, the Fund incurred investor relations fees of approximately $29,103. For the six-month period ended March 31, 2025, Aberdeen did not contribute to the investor relations fees for the Fund because the Fund's contribution was below 0.05% of the Fund's average weekly net assets on an annual basis.

d.  Purchase/Sale Transactions Between Affiliates

The Fund is permitted to buy or sell securities with funds that have a common investment manager (or investment advisers which are affiliates) under specific procedures which have been approved by the Board. The procedures are designed to satisfy the requirements of Rule 17a-7 of the 1940 Act (“Rule 17a-7”). During the six-month period ended March 31, 2025, the Fund did not engage in any purchases of securities pursuant to Rule 17a-7.

4.  Investment Transactions

Purchases and sales of investment securities (excluding short-term securities) for the six-month period ended March 31, 2025, were $58,801,041 and $56,898,115, respectively.

5.  Capital

The Fund is authorized to issue an unlimited number of common shares of beneficial interest at par value $0.001 per common share. As of March 31, 2025, there were 12,278,003 shares of common stock issued and outstanding. Shares issuable under the Fund’s dividend reinvestment plan are purchased by the Fund’s transfer agent, Computershare, Inc., in the open market. During the six-month period ended March 31, 2025, the Fund did not issue any shares under its dividend reinvestment plan.

6.  Muni-MultiMode Preferred Shares

On April 25, 2019, the Fund priced private offerings to a qualified institutional buyer, as defined pursuant to Rule 144A under the 1933 Act, of approximately $30 million of Muni-MultiMode Preferred Shares, Series 2049 ("MMP"), with a $100,000 liquidation value per share. The Fund used the net proceeds from each offering to redeem its outstanding Variable Rate MuniFund Term Preferred Shares, Series 2021 ("VMTP"). The Fund issued MMP shares in the same amount and value as its previously outstanding  VMTP shares. On February 11, 2022, the Fund acquired the assets of Delaware Investments Colorado Municipal Income Fund, Inc. (“VCF”) and Delaware Investments Minnesota Municipal Income Fund II, Inc. (“VMM”), which included Series 2049 MMP preferred shares issued by each of VCF and VMM

used as leverage (the “Reorganization”). The Reorganization caused the Fund’s total preferred shares outstanding to equal $135 million, with VCF’s Series 2049 MMP preferred shares becoming Series 2 and VMM’s Series 2049 MMP preferred shares becoming Series 3 of the MMP shares issued by the Fund. The Fund’s original tranche of Series 2049 MMP preferred shares is Series 1. The terms of the Series 2 and Series 3 MMP shares are substantially similar to those of the Series 1. In connection with the  2022 tender offer the Fund accordingly reduced its outstanding MMP Preferred Shares by redeeming 360 Preferred Shares at the $100,000 liquidation preference per share, plus an additional amount representing the final accumulated dividend amounts owed to be paid to preferred shareholders. The redemption occurred on December 20, 2022. After this the total preferred shares outstanding was $99,000,000.

The MMP shares are a floating rate form of preferred stock with a mandatory term redemption. The mandatory term redemption date for these offerings is April 1, 2049. MMP shares have the option at either the request of the purchaser or issuer to be converted to a variable rate demand preferred (“VRDP”) structure. The converted VRDP shares could then be offered for sale to certain institutional investors. The VRDP could continue to remain outstanding for the remainder of the MMP shares’ 30-year term. MMP dividends are set weekly at a spread to the Securities Industry and Financial Markets Association Municipal Swap Index. MMP shares represent the preferred stock of the Fund and are senior, with priority in all respects, to the Fund’s common shares as to payments of dividends. MMP shares are redeemable at par. The Fund may be obligated to redeem certain of the MMP shares if the Fund fails to maintain certain asset coverage and leverage ratio requirements and such failures are not cured by the applicable cure date. The redemption price per share is equal to the sum of the liquidation value per share plus any accumulated but unpaid dividends. Dividends on MMP shares are set weekly, and are based on a short-term index rate plus an additional spread that is subject to adjustment in certain circumstances, including a change in the credit rating assigned to the MMP shares by Fitch Ratings (“Fitch”).

The weighted average dividend rate for all of the Fund’s MMP shares for the six-month period ended March 31, 2025 is 3.97%. The average balance for the six-month period ended March 31, 2025 was $99,000,000.

The Fund uses leverage because its managers believe that, over time, leveraging may provide opportunities for additional income and total return for common shareholders. However, the use of leverage also can expose common shareholders to additional volatility. For example, as the prices of securities held by the Fund decline, the negative impact of these valuation changes on common share NAV and common shareholder total return is magnified by the use of leverage; accordingly, the use of structural leverage may hurt the

abrdn National Municipal Income Fund

21

Fund’s overall performance. Leverage may also cause the Fund to incur certain costs. In the event that the Fund is unable to meet certain criteria (including, but not limited to, maintaining certain ratings with Fitch, funding dividend payments, or funding redemptions), the Fund will pay additional fees with respect to the leverage.

For financial reporting purposes, the MMP shares are considered debt of the issuer; therefore, the liquidation value which approximates fair value of the MMP shares is recorded as a liability in the "Statement of assets and liabilities". Dividends accrued and paid on the MMP shares are included as a component of dividend expense on preferred shares in the "Statement of operations". The MMP shares are treated as equity for legal and tax purposes. Dividends paid to holders of the MMP shares are generally classified as tax-exempt income for tax-reporting purposes.

7.  Portfolio Investment Risks

a.  Credit and Market Risk:

A debt instrument’s price depends, in part, on the credit quality of the issuer, borrower, counterparty, or underlying collateral and can decline in response to changes in the actual or perceived financial condition of the issuer, borrower, counterparty, or underlying collateral, or changes in specific or general market, economic, industry, political, regulatory, geopolitical, or other conditions. Funds that invest in high yield and emerging market instruments are subject to certain additional credit and market risks. The yields of high yield and emerging market debt obligations reflect, among other things, perceived credit risk. The Fund's investments in securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk of not receiving timely and/or ultimate payment of interest and principal, greater market price volatility, and less liquid secondary market trading.

b.  Geographic Focus Risk:

The Fund's performance could be more volatile than that of a more geographically diversified fund and could be significantly impacted as a result of the Fund investing a large percentage of its assets in issuers located in a single state,  small number of states, or a particular geographic region. Also, the Fund's performance may be more closely tied to the market, economic, or regulatory conditions in those states, regions, or municipalities.

c.  High-Yield Bonds and Other Lower-Rated Securities Risk:

The Fund’s investments in high-yield bonds (commonly referred to as “junk bonds”) and other lower-rated securities will subject the Fund to substantial risk of loss. Investments in high-yield bonds are speculative and issuers of these securities are generally considered to be less financially secure and less able to repay interest and principal than issuers of investment-grade securities. Prices of high-yield bonds tend

to be very volatile. These securities are less liquid than investment-grade debt securities and may be difficult to price or sell, particularly in times of negative sentiment toward high-yield securities.

d.  Interest Rate Risk:

The prices of fixed income securities respond to economic developments, particularly interest rate changes, as well as to perceptions about the creditworthiness of individual issuers, including governments. Generally, the Fund’s fixed income securities will decrease in value if interest rates rise and vice versa, and the volatility of lower-rated securities is even greater than that of higher-rated securities. Also, longer-term securities are generally more volatile, so the average maturity or duration of these securities affects risk. The Fund may be subject to a greater interest rate risk due to a changing interest rate environment and the effect of potential government monetary and fiscal policy initiatives and resulting market reaction to those initiatives.

Changes in interest rates or a lack of market participants may lead to decreased liquidity and increased volatility in the fixed-income or debt markets, making it more difficult for the Fund to sell its holdings.

e.  Issuer Risk:

The value of a security may decline for reasons directly related to the issuer, such as management performance, financial leverage and reduced demand for the issuer's goods or services. In an increasingly interconnected financial market, the adverse changes in the financial conditions of one issuer may negatively affect other issuers.

f.  Municipal Securities Risk

The Fund is subjected to municipal securities risk. Municipal bonds can be significantly affected by political and economic changes, including inflation, as well as uncertainties in the municipal market related to taxation, legislative changes, or the rights of municipal security holders. Municipal bonds have varying levels of sensitivity to changes in interest rates. Interest rate risk is generally lower for shorter-term municipal bonds and higher for long term municipal bonds.

Municipal Bond Tax Risk. A municipal bond that is issued as tax-exempt may later be declared to be taxable. In addition, if the federal income tax rate is reduced, the value of the tax exemption may be less valuable, causing the value of a municipal bond to decline.

Municipal Market Volatility and Illiquidity Risk. The municipal bond market can be volatile, particularly for lower-rated and unrated securities. Liquidity can be reduced unpredictably in response to overall economic conditions or credit tightening. During times of reduced market liquidity, the Fund may not be able to readily sell bonds without the sale significantly changing the market value of the bond. If the Fund needed to sell large blocks of bonds to meet

22	abrdn National Municipal Income Fund

shareholder redemption requests or to raise cash, those sales could further reduce the bonds’ prices.

Municipal Sector Risk. From time to time the Fund may invest a substantial amount of its assets in municipal securities whose interest is paid solely from revenues of similar projects. If the Fund concentrates its investments in this manner, it assumes the economic risks relating to such projects and any adverse changes to such projects may have a significant negative impact on the Fund’s investment performance.

g.  Sector Risk

To the extent that the Fund has a significant portion of its assets invested in securities of companies conducting business in a broadly related group of industries within an economic sector, the Fund may be more vulnerable to unfavorable developments in that economic sector than funds that invest more broadly.

h.  Tobacco Related Bonds Risk

The Fund is subject to Tobacco Related Bonds Risk. In 1998, the largest U.S. tobacco manufacturers reached an out of court agreement, the Master Settlement Agreement (“MSA”), to settle claims against them by 46 states and six other U.S. jurisdictions. The tobacco manufacturers agreed to make annual payments to the government entities in exchange for the release of all litigation claims. A number of the states have sold bonds that are backed by those future payments. The Fund may invest in two types of those bonds: (i) bonds that make payments only from a state’s interest in the MSA and (ii) bonds that make payments from both the MSA revenue and from an “appropriation pledge” by the state. An “appropriation pledge”

requires the state to pass a specific periodic appropriation to make the payments and is generally not an unconditional guarantee of payment by a state. 

The MSA settlement payments are based on factors, including, but not limited to, annual domestic cigarette shipments, cigarette consumption, inflation and the financial capability of participating tobacco companies. Payments could be reduced if consumption decreases, if market share is lost to non-MSA manufacturers, or if there is a negative outcome in litigation regarding the MSA.

The MSA and tobacco manufacturers have been and continue to be subject to various legal claims, including, among others, claims that the MSA violates federal antitrust law. In addition, the United States Department of Justice has alleged in a civil lawsuit that the major tobacco companies defrauded and misled the American public about the health risks associated with smoking cigarettes. An adverse outcome to this lawsuit or to any other litigation matters or regulatory actions relating to the MSA or affecting tobacco manufacturers could adversely affect the payment streams associated with the MSA or cause delays or reductions in bond payments by tobacco manufacturers.

8.  Contingencies

In the normal course of business, the Fund may provide general indemnifications pursuant to certain contracts and organizational documents. The Fund's maximum exposure under these arrangements is dependent on future claims that may be made against the Fund, and therefore, cannot be estimated; however, the Fund expects the risk of loss from such claims to be remote.

9.  Tax Information

The U.S. federal income tax basis of the Fund's investments (including derivatives, if applicable) and the net unrealized depreciation as of March 31, 2025, were as follows:

Tax Cost of Securities	Unrealized Appreciation	Unrealized Depreciation	Net Unrealized Appreciation/ (Depreciation)
$241,766,591	$4,502,945	$(7,637,513)	$(3,134,568)

10.  Segment Reporting

In this reporting period, the Fund adopted FASB Accounting Standards Update 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures (“ASU 2023-07”). Adoption of the new standard impacted disclosures only and did not affect the Fund’s financial position nor the results of its operations. Operating segments are components of a public entity that engage in business activities from which it may recognize revenues and incur expenses, have discrete financial information available, and have their operating results regularly reviewed by the public entity’s chief

operating decision maker (“CODM”) when assessing segment performance and making decisions about segment resources. The Chief Financial Officer of the Fund acts as the Fund’s CODM. The CODM monitors the operating results of the Fund as a whole, and the Fund’s asset allocation is managed in accordance with its Prospectus. The Fund operates as a single operating and reporting segment pursuant to its investment objective and principal investment strategy. The Fund’s portfolio composition, total returns, expense ratios and changes in net assets used by the CODM to assess segment

abrdn National Municipal Income Fund

23

performance and make resource allocations are consistent with the information presented within the Fund's financial statements. Segment assets are reflected on the Fund’s Statement of Assets and Liabilities as “Total Assets” and significant segment expenses are listed on the Statement of Operations.

11.  Subsequent Events

Management has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the financial statements were issued. Based on this evaluation, no disclosures and/or adjustments were required to the financial statements as of March 31, 2025, other than as noted below.

On April 9, 2025 and May 9, 2025 the Fund announced that it will pay on April 30, 2025 and May 30, 2025, respectively, a distribution of US $0.0500 per share to all shareholders of record as of April 23, 2025 and May 22, 2025, respectively. 

24	abrdn National Municipal Income Fund

The Fund intends to distribute to shareholders substantially all of its net investment income and to distribute any net realized capital gains at least annually. Net investment income for this purpose is income other than net realized long-term and short-term capital gains net of expenses. Pursuant to the Dividend Reinvestment and Optional Cash Purchase Plan (the “Plan”), shareholders whose shares of common stock are registered in their own names will be deemed to have elected to have all distributions automatically reinvested by Computershare Trust Company N.A. (the “Plan Agent”) in the Fund shares pursuant to the Plan, unless such shareholders elect to receive distributions in cash. Shareholders who elect to receive distributions in cash will receive such distributions paid by check in U.S. Dollars mailed directly to the shareholder by the Plan Agent, as dividend paying agent. In the case of shareholders such as banks, brokers or nominees that hold shares for others who are beneficial owners, the Plan Agent will administer the Plan on the basis of the number of shares certified from time to time by the shareholders as representing the total amount registered in such shareholders’ names and held for the account of beneficial owners that have not elected to receive distributions in cash. Investors that own shares registered in the name of a bank, broker or other nominee should consult with such nominee as to participation in the Plan through such nominee and may be required to have their shares registered in their own names in order to participate in the Plan. Please note that the Fund does not issue certificates so all shares will be registered in book entry form. The Plan Agent serves as agent for the shareholders in administering the Plan. If the Trustees of the Fund declare an income dividend or a capital gains distribution payable either in the Fund’s common stock or in cash, nonparticipants in the Plan will receive cash and participants in the Plan will receive common stock, to be issued by the Fund or purchased by the Plan Agent in the open market, as provided below. If the market price per share (plus expected per share fees) on the valuation date equals or exceeds NAV per share on that date, the Fund will issue new shares to participants at NAV; provided, however, that if the NAV is less than 95% of the market price on the valuation date, then such shares will be issued at 95% of the market price. The valuation date will be the payable date for such distribution or dividend or, if that date is not a trading day on the NYSE American, the immediately preceding trading date. If NAV exceeds the market price of Fund shares at such time, or if the Fund should declare an income dividend or capital gains distribution payable only in cash, the Plan Agent will, as agent for the participants, buy Fund shares in the open market, on the NYSE American or elsewhere, for the participants’ accounts on, or shortly after, the payment date. If, before the Plan Agent has completed its purchases, the market price exceeds the NAV of the Fund's share, the average per share purchase price paid by the Plan Agent may exceed the NAV of the Fund’s shares, resulting in the acquisition of fewer shares than if the distribution had been paid in shares issued by the Fund on the dividend payment date. Because of

the foregoing difficulty with respect to open-market purchases, the Plan provides that if the Plan Agent is unable to invest the full dividend amount in open-market purchases during the purchase period or if the market discount shifts to a market premium during the purchase period, the Plan Agent will cease making open-market purchases and will receive the uninvested portion of the dividend amount in newly issued shares at the close of business on the last purchase date.

Participants have the option of making additional cash payments of a minimum of $50 per investment (by check, one-time online bank debit or recurring automatic monthly ACH debit) to the Plan Agent for investment in the Fund’s common stock, with an annual maximum contribution of $250,000. The Plan Agent will wait up to three business days after receipt of a check or electronic funds transfer to ensure it receives good funds. Following confirmation of receipt of good funds, the Plan Agent will use all such funds received from participants to purchase Fund shares in the open market on the 25th day of each month or the next trading day if the 25th is not a trading day.

If the participant sets up recurring automatic monthly ACH debits, funds will be withdrawn from his or her U.S. bank account on the 20th of each month or the next business day if the 20th is not a banking business day and invested on the next investment date. The Plan Agent maintains all shareholder accounts in the Plan and furnishes written confirmations of all transactions in an account, including information needed by shareholders for personal and tax records. Shares in the account of each Plan participant will be held by the Plan Agent in the name of the participant, and each shareholder’s proxy will include those shares purchased pursuant to the Plan. There will be no brokerage charges with respect to common shares issued directly by the Fund. However, each participant will pay a per share fee of $0.02 incurred with respect to the Plan Agent’s open market purchases in connection with the reinvestment of dividends, capital gains distributions and voluntary cash payments made by the participant. Per share fees include any applicable brokerage commissions the Plan Agent is required to pay.

Participants also have the option of selling their shares through the Plan. The Plan supports two types of sales orders. Batch order sales are submitted on each market day and will be grouped with other sale requests to be sold. The price will be the average sale price obtained by Computershare’s broker, net of fees, for each batch order and will be sold generally within 2 business days of the request during regular open market hours. Please note that all written sales requests are always processed by Batch Order. ($10 and $0.12 per share). Market Order sales will sell at the next available trade. The shares are sold real time when they hit the market, however an available trade must be presented to complete this transaction. Market Order sales may only

abrdn National Municipal Income Fund

25

be requested by phone at 1-800-647-0584 or using Investor Center through www.computershare.com/buyaberdeen. ($25 and $0.12 per share).

The receipt of dividends and distributions under the Plan will not relieve participants of any income tax that may be payable on such dividends or distributions. The Fund or the Plan Agent may terminate the Plan as applied to any voluntary cash payments made and any dividend or distribution paid subsequent to notice of the termination sent to members of the Plan at least 30 days prior to the record date for such dividend or distribution. The Plan also may be amended by

the Fund or the Plan Agent, but (except when necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority) only by mailing a written notice at least 30 days prior to the effective date to the participants in the Plan. All correspondence concerning the Plan should be directed to the Plan Agent by phone at 1-800-647-0584, using Investor Center through www.computershare.com/buyaberdeen or in writing to Computershare Trust Company N.A., P.O. Box 43006, Providence, RI 02940-3078. 

26	abrdn National Municipal Income Fund

Trustees

Todd Reit, Chair
C. William Maher
Christian Pittard
Nancy Yao

Investment Manager

abrdn Inc.
1900 Market Street, Suite 200
Philadelphia, PA 19103

Administrator

abrdn Inc.
1900 Market Street, Suite 200
Philadelphia, PA 19103

Custodian

State Street Bank and Trust Company
One Congress Street, Suite 1
Boston, MA 02114-2016

Transfer Agent

Computershare Trust Company, N.A.
P.O. Box 43006
Providence, RI 02940-3078

Independent Registered Public Accounting Firm

KPMG LLP
191 West Nationwide Blvd., Suite 500
Columbus, OH 43215

Legal Counsel

Dechert LLP
1900 K Street N.W.
Washington, D.C. 20006

Investor Relations

abrdn Inc.
1900 Market Street, Suite 200
Philadelphia, PA 19103
1-800-522-5465
[email protected]

The Financial Statements as of March 31, 2025, included in this report, were not audited and accordingly, no opinion is expressed thereon.

Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that the Fund may purchase, from time to time, shares of its common stock in the open market.

Shares of abrdn National Municipal Income Fund are traded on the NYSE American under the symbol “VFL.” Information about the Fund’s net asset value and market price is available at https://www.aberdeeninvestments.com/en-us/investor/investment-solutions/closed-end-funds.

This report, including the financial information herein, is transmitted to the shareholders of abrdn National Municipal Income Fund for their general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person. Past performance is no guarantee of future results.