N-CSR 1 tm2430035d5_ncsr.htm N-CSR

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:	811-04889

Exact name of registrant as specified in charter:	abrdn Healthcare Investors

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)

abrdn Healthcare Investors (HQH)

Annual Report

September 30, 2024

abrdn.com

Managed Distribution Policy (unaudited)

In February 2024, the Board of Trustees (the "Board") of the abrdn Healthcare Investors (the "Fund") approved the continuation of the managed distribution policy ("MDP") and determined to increase the rolling distribution rate from 8% to 10% based on the average daily net asset value of the previous three months as of the month-end prior to declaration for the 12-month period commencing with the distribution paid on March 28, 2024. In May 2024, the Board determined to increase the rolling distribution rate from 10% to 12% commencing with the distribution payable on June 28, 2024. The Fund intends to maintain the increased MDP for at least 12 months from the distribution payable date unless there is significant and unforeseen change in market conditions.

With each distribution, the Fund will issue a notice to shareholders and an accompanying press release which will provide detailed information regarding the estimated amount and composition of the distribution and other information required by the Fund’s MDP exemptive order. The Board may amend or terminate the MDP at any time without prior notice to shareholders; however, at this time, there are no reasonably foreseeable circumstances that might cause the termination of the MDP. You should not draw any conclusions about the Fund’s investment performance from the amount of distributions or from the terms of the Fund’s MDP.

Distribution Disclosure Classification (unaudited)

The Fund’s policy is to provide investors with a stable distribution rate. Each quarterly distribution will be paid out of current income, supplemented by realized capital gains and, to the extent necessary, paid-in capital.

The Fund is subject to U.S. corporate, tax and securities laws. Under U.S. tax rules, the amount applicable to the Fund and character of distributable income for each fiscal period depends on the actual exchange rates during the entire year between the U.S. Dollar and the currencies in which Fund assets are denominated and on the aggregate gains and losses realized by the Fund during the entire year.

Therefore, the exact amount of distributable income for each fiscal year can only be determined as of the end of the Fund’s fiscal year, September 30. Under Section 19 of the Investment Company Act of

1940, as amended (the “1940 Act”), the Fund is required to indicate the sources of certain distributions to shareholders. The estimated distribution composition may vary from quarter to quarter because it may be materially impacted by future income, expenses and realized gains and losses on securities and fluctuations in the value of the currencies in which the Fund assets are denominated.

The distributions for the fiscal year ended September 30, 2024 consisted of 27% net investment income, 44% net realized gains and 29% tax return of capital.

In January 2025, a Form 1099-DIV will be sent to shareholders, which will state the final amount and composition of distributions and provide information with respect to their appropriate tax treatment for the 2024 calendar year.

abrdn Healthcare Investors

Letter to Shareholders (unaudited)

Dear Shareholder,

We present the Annual Report, which covers the activities of abrdn Healthcare Investors (the “Fund”), for the fiscal year ended September 30, 2024. The Fund’s investment objective is to seek long-term capital appreciation by investing primarily in securities of healthcare companies. In addition, the Fund seeks to provide regular distribution of realized capital gains.

Effective close of regular business on October 27, 2023, abrdn Inc. assumed responsibility for the management of four former Tekla Capital Management LLC closed-end funds: abrdn Healthcare Investors (Ticker: HQH), formerly Tekla Healthcare Investors, abrdn Life Sciences Investors (Ticker: HQL), formerly Tekla Life Sciences Investors, abrdn Healthcare Opportunities Fund (Ticker: THQ), formerly Tekla Healthcare Opportunities Fund and abrdn World Healthcare Fund (Ticker: THW), formerly Tekla World Healthcare Fund.

Total Investment Return¹

For the fiscal year ended September 30, 2024, 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	21.22%
Market Price²	34.58%
80% Nasdaq Biotechnology Index, 20% S&P Composite 1500 Health Care Index⁴	21.72%

For more information about Fund performance, please visit the Fund on the web at www.abrdnhqh.com. Here, you can view quarterly commentary on the Fund's performance, monthly fact sheets, distribution and performance information, and other Fund literature.

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

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


	NAV	Closing Market Price	Premium(+)/ Discount(-)
9/30/2024	$20.32	$18.62	-8.37%
9/30/2023	$18.84	$15.55	-17.46%

During the fiscal year ended September 30, 2024, the Fund’s NAV was within a range of $17.76 to $21.30 and the Fund’s market price traded within a range of $14.32 to $19.67. During the fiscal year ended September 30, 2024, the Fund’s shares traded within a range of a premium(+)/discount(-) of -19.59% to -7.25%.

Managed Distribution Policy

The Fund has a managed distribution policy that provides for quarterly distributions at a rate set by the Board of Trustees (the "Board"). On February 9, 2024, the Board determined to increase the rolling distribution rate from 8% to 10% for the 12-month period commencing with the distribution payable in March 2024. On May 9, 2024, the Board determined to increase the rolling distribution rate from 10% to 12% based on the average daily net asset value of the

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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 NASDAQ Biotechnology Index is an unmanaged stock market index made up of securities of NASDAQ-listed companies classified according to the Industry Classification Benchmark as either the Biotechnology or the Pharmaceutical industry. The S&P Composite 1500^® Health Care Index is an unmanaged index that comprises those companies included in the S&P Composite 1500 that are classified as members of the GICS^® Health Care sector. Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index.

abrdn Healthcare Investors

Letter to Shareholders (unaudited) (continued)

previous three months as of the month-end prior to declaration for the remainder of the 12-month period commenced with the distribution paid on June 28, 2024. This policy will be subject to regular review by the Board. The distributions will be made from current income, supplemented by realized capital gains and, to the extent necessary, paid-in capital, which is a nontaxable return of capital.

On November 11, 2024, the Fund announced that it will pay on January 10, 2025, a stock distribution of US $0.62 per share to all shareholders of record as of November 21, 2024. This stock distribution will automatically be paid in newly issued shares of the Fund unless otherwise instructed by the shareholder. Shares of common stock will be issued at the lower of the NAV per share or the market price per share with a floor for the NAV of not less than 95% of the market price. Fractional shares will generally be settled in cash, except for registered shareholders with book entry accounts at Computershare Investor Services who will have whole and fractional shares added to their account.

Shareholders may request to be paid their quarterly distributions in cash instead of shares of common stock by providing advance notice to the bank, brokerage or nominee who holds their shares if the shares are in “street name” or by filling out in advance an election card received from Computershare Investor Services if the shares are in registered form.

The Fund is covered under exemptive relief received by the Fund’s investment manager from the U.S. Securities and Exchange Commission (“SEC”) that allows the Fund to distribute long-term capital gains as frequently as quarterly in any one taxable year.

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.

Options Writing

In order to further support the increase in distribution rate for the Fund, the Fund employs a strategy of writing (selling) covered call options on a portion of the common stocks in its portfolio, writing (selling) put options on a portion of the common stocks in its portfolio and, to a lesser extent, writing (selling) covered call and writing (selling) put options on indices of securities and sectors of securities generally within the healthcare industry. This option strategy is intended to generate current income from option premiums as a means to enhance distributions payable to the Fund's shareholders. The Fund's investment team does not anticipate any adverse implications to the Fund's existing total return potential or risk profile as a result of the strategy; however, the investment adviser may choose to decrease or modify its use of the option writing strategy to the extent that it may negatively impact the Fund's ability to benefit from capital appreciation. The Fund currently expects that it will not write options on more than 10% of its assets.

Open Market Repurchase Program

The Board has approved an open market repurchase and discount management policy (the “Program”). The Program allows the Fund to purchase, in the open market, its outstanding common shares, with the amount and timing of any repurchase determined at the discretion of the Fund's investment adviser. Such purchases may be made opportunistically at certain discounts to NAV per share in the reasonable judgment of management based on historical discount levels and current market conditions. If shares are repurchased, the Fund reports repurchase activity on its website on a monthly basis. For the fiscal year ended September 30, 2024, the Fund did not repurchase any shares through the Program.

On a quarterly basis, the Board will receive information on any transactions made pursuant to this policy during the prior quarter and management will post the number of shares repurchased on the Fund's website on a monthly basis. Under the terms of the Program, the Fund is permitted to repurchase up to 12% of its outstanding shares of common stock in the open market during any 12-month period.

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 SEC for the first and

2	abrdn Healthcare Investors

Letter to Shareholders (unaudited) (concluded)

third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. These reports are available on the SEC’s website at http://www.sec.gov. The Fund makes the information available to shareholders upon request and without charge by calling Investor Relations toll-free at 1-800-522-5465.

Proxy Voting

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by August 31 of the relevant year: (1) upon request without charge by calling Investor Relations toll-free at 1-800-522-5465; and (2) on the SEC’s website at http://www.sec.gov.

Investor Relations Information

As part of abrdn’s commitment to shareholders, we invite you to visit the Fund on the web at www.abrdnhqh.com. Here, you can view monthly fact sheets, quarterly commentary, distribution and performance information, and other Fund literature.

Enroll in abrdn’s email services and be among the first to receive the latest closed-end fund news, announcements, videos, and other information. In addition, you can receive electronic versions of important Fund documents, including annual reports, semi-annual reports, prospectuses and proxy statements. Sign up today at https://www.abrdn.com/en-us/cefinvestorcenter/contact-us/preferences

•	Visit: https://www.abrdn.com/en-us/cefinvestorcenter

•	Email: Investor.Relations@abrdn.com; or

•	Call: 1-800-522-5465 (toll free in the U.S.).

Yours sincerely,

/s/ Alan Goodson
Alan Goodson
President

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All amounts are U.S. Dollars unless otherwise stated.

abrdn Healthcare Investors

Report of the Investment Adviser (unaudited)

Performance review

For the review period, the Fund returned 21.22%¹ net of expenses², on a net asset value basis versus a return of 21.72% of the Fund’s blended benchmark³.

Market review

Equity markets posted strong gains over the 12-month review period. After a prolonged period of monetary tightening and receding inflationary pressures, the U.S. Federal Reserve (Fed), European Central Bank (ECB), and other central banks started cutting interest rates in 2024. Moreover, investors were factoring in further interest rate reductions in most regions before the end of 2024. However, with some inflationary pressures still lingering, the world’s major central banks have maintained a cautious stance on further interest rate declines.

Economic data has generally been more robust than was feared. The U.S. economy, in particular, has remained resilient and robust, but the labor market has recently shown signs of slowing. Investors continued to be concerned about the outlook for the Chinese economy, especially the country’s real estate sector and resulting implications for global economic growth. The ongoing wars in Ukraine and the Middle East continue to be other key risks.

Despite having a robust positive performance over the last year of approximately 20%, the performance of the healthcare sector lagged that of the broader equity markets (S&P 500 Index total return was approximately 36% for the same period). The underperformance of healthcare equities relative to the S&P 500 can be attributed to several factors. By far the most relevant factor driving this differential in performance is the ongoing surge in interest towards technology stocks, especially those involved in artificial intelligence (AI) and other innovative technologies. These high growth sectors have diverted investor attention and capital away from more traditional sectors like healthcare. Companies like NVIDIA and Microsoft experienced substantial gains due to their advancements in AI, which eclipsed the steady, albeit slower, growth of companies in the healthcare sector.

Despite the relative underperformance of healthcare as a whole compared to broader equity benchmarks, there were many pockets of strength within the sector. The strong growth of the GLP-1 class of drugs continued to drive the market for obesity and diabetes treatments. Advancements in gene therapy and cell-based therapies have shown significant potential. Companies focusing on these

innovative treatments have made notable strides, offering new hope for treating genetic disorders and certain types of cancer.

The managed-care health insurance sector showed signs of recovery later in the review period but has continued to have mixed results after facing challenges due to increased healthcare utilization. The life science tools and contract research organizations subsectors also have experienced a mixed year. While demand for their services remained strong, particularly in the areas of clinical trials and drug development, the life sciences tools and contract research organizations sector face continued headwinds in contrast to the previous tailwinds during the pandemic. Healthcare facilities, including hospitals and outpatient centers, continued to adapt to the post-COVID landscape. Many institutions focused on improving operational efficiencies and expanding their service offerings to include more outpatient and telehealth services. In contrast to the managed care space, these types of companies have benefited from the increase in healthcare utilization.

Overall, the healthcare sector’s performance was shaped by a combination of innovation, regulatory changes, and shifting investor preferences. While some subsectors faced challenges, others benefited from the ongoing advancements in medical technology and the growing emphasis on personalized and value-based care.

Portfolio review

The abrdn Healthcare Investors Fund invests broadly in healthcare equities. The Fund emphasizes biotechnology and venture capital opportunities. While the Fund invests across the biotechnology spectrum, it expresses a preference for later-stage biotechnology opportunities. By focusing on innovative biotech companies and leveraging venture capital investments, the Fund aims to capture significant growth potential.

Within the equity portion of the portfolio, Regeneron Pharmaceuticals, a commercial-stage biotechnology company, contributed positively to performance. Better-than-expected quarterly financial results, continued research and development execution, and investor excitement about its drug pipeline underpinned the stock’s strong performance. Meanwhile, Amgen also contributed positively to performance after its CEO provided an upbeat statement on the early results of the company’s experimental obesity drug, MariTide, an antibody-based approach to obesity that has the potential for once-a-month dosing. Vertex Pharmaceuticals also contributed favorably on the back of clinical data presented in late 2023,

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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 Trustee and legal fees) and assumes the reinvestment of all distributions.

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2	Net of expenses – after expenses are deducted.

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3	The blended performance target of the fund consists of 80% NASDAQ Biotechnology Index, and 20% S&P Composite 1500 Health Care Index.

4	abrdn Healthcare Investors

Report of the Investment Adviser (unaudited) (continued)

demonstrating the potential for a first-in-class non-opioid pain therapeutic.

In contrast, the share price of Biogen, a biotechnology company, focused on neurodegenerative diseases, share price underperformed for various reasons. However, the company’s main challenge was the lackluster uptake of its Alzheimer’s drug, Leqembi. Additionally, the ramp-up of Skyclarys, a drug used to treat Friedrich’s ataxia (a neurodegenerative disorder), appears to have moderated over the last several months. Humana also weighed on performance. It is a managed care organization providing healthcare coverage to seniors in the Medicare Advantage⁴ (MA) market.

After several years of robust growth, the company slashed its 2024 and 2025 outlooks in January 2024 due to an MA rate headwind, weakening MA enrollment growth, and elevated MA medical utilization trends. Meanwhile, Rallybio, a clinical-stage biotechnology company focused on preventing fetal and neonatal alloimmune thrombocytopenia through its lead candidate drug, RLYB212 underperformed. The company’s share price declined over the period due to concerns about the lack of near-term clinical catalysts and its cash burn, which have been addressed through a reduced workforce.

The Fund also engaged in a modest degree of call-option⁵ writing⁶ and overwriting⁷, which were additive to performance.

During the review period, the venture capital investment portion of the portfolio added to the Fund’s performance. AstraZeneca purchased Fund holding, Amolyt Pharmaceuticals for a total consideration of $1.05 billion on a cash and debt-free basis. The Fund also benefited when its venture holding Invetx, a pioneer in protein-based therapeutics for animal health, was sold to Dechra Pharmaceuticals Limited for up to $520 million in total consideration on a cash basis.

The Fund’s quarterly distribution⁸ reflects the Fund's current policy of providing shareholders with a relatively stable cash flow per share. This policy did not have a material effect on the Fund's investment strategy over the reporting period. During the 12-month period ended September 30, 2024, the distributions were comprised of ordinary income, long-term capital gains, and a return of capital.

Outlook and Strategy

Macroeconomic factors remain as unpredictable as ever, with intense scrutiny of data and predictions about when a pivot in interest rate direction will occur. Geopolitical pressures remain elevated

throughout the world. Recessionary concerns are all too present, as global growth stagnates while inflationary pressures remain.

The outlook after the November elections, with Republicans potentially gaining control of the federal government next year, including the House of Representatives, adds to some additional uncertainties. Despite these political shifts, the fundamental, long-term drivers for healthcare investments remain robust.

Our primary focus for the portfolio is at the stock level, ensuring the portfolio is well diversified on both a regional and sector basis and robust enough to preserve capital in periods of market weakness. We aim to have exposure to higher-quality businesses within the healthcare sector with the financial strength to withstand volatility and with exposure to strong structural drivers for long-term growth.

In general, healthcare companies' near- and long-term outlooks remain favorable. Long-term demographic trends of an aging population should continue to support the growing demand for new healthcare products and therapies. Innovation within the sector should also help to contribute to the long-term growth of the sector. Due to the healthcare sector’s generally defensive characteristics, we believe its relative underperformance in the short term should position it favorably, especially if the U.S. and global economies slow down.

abrdn Inc.

Risk Considerations

Past performance is not an indication of future results.

The healthcare industries can be volatile and a concentration of investments in any healthcare industry or in healthcare companies generally may increase the risk and volatility of an investment company’s portfolio. No assurance can be given that future declines in the market prices of securities of companies in the industries in which the Fund may invest will not occur, or that such declines will not adversely affect the Fund.

Healthcare-related issuers are likely to be more sensitive to, and possibly more adversely affected by, regulatory, economic or political factors or trends relating to the healthcare, agricultural and environmental technology industries. Healthcare companies have, in the past, been characterized by limited product focus, rapidly changing technology and extensive government regulation. In particular, technological advances can render an existing product, which may account for a disproportionate share of a company’s

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4	Medicare Advantage – Health insurance plans offered by private insurance providers approved under the U.S. government’s Medicare program.

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5	Call option – A contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a set period.

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6	Call-option writing – Selling a call option, which obligates the seller to sell the asset at the strike price if the option is exercised.

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7	Overwriting – Selling a call option on an asset the seller does not expect to reach the strike price before expiration, aiming to collect the premium without exercise.

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8	Distribution – A payment made to its shareholders.

abrdn Healthcare Investors

Report of the Investment Adviser (unaudited) (concluded)

revenue, obsolete. Obtaining governmental approval from U.S. governmental agencies and from non-U.S. governmental agencies for new products can be lengthy, expensive and uncertain as to the outcome. Such delays in product development may result in the need to seek additional capital, potentially diluting the interests of existing investors such as the Fund.

Intense competition exists within and among certain healthcare industries, including competition to obtain and sustain proprietary technology protection upon which healthcare companies can be highly dependent for maintenance of profit margins and market

exclusivity. The complex nature of the technologies involved can lead to patent disputes, including litigation, that may be costly and that could result in a company losing an exclusive right to a patent. Additionally, certain healthcare companies may be exposed to potential product liability risks that are inherent to the healthcare industries. A product liability claim may have a material adverse effect on a company in which the Fund has invested.

All of these factors, as well as others may cause the value of the Fund’s shares to fluctuate significantly over relatively short periods of time.

6	abrdn Healthcare Investors

Total Investment Return (unaudited)

The following table summarizes the average annual Fund performance compared to the Fund’s primary benchmark for the 1-year, 3-year, 5-year and 10-year periods ended September 30, 2024.

	1 Year	3 Years	5 Years	10 Years
Net Asset Value (NAV)	21.22%	2.52%	9.97%	5.77%
Market Price	34.58%	-0.56%	10.31%	5.22%
80% Nasdaq Biotechnology Index, 20% S&P Composite 1500 Health Care Index	21.72%	0.57%	10.48%	6.20%
Nasdaq Biotechnology Index	21.59%	-1.30%	9.61%	5.87%

Performance of a $10,000 Investment (as of September 30, 2024)

This graph shows the change in value of a hypothetical investment of $10,000 in the Fund for the periods indicated. For comparison, the same investment is shown in the indicated index.

Returns represent past performance. Total investment return at NAV is based on changes in the NAV of Fund shares and assumes reinvestment of dividends and distributions, if any, at market prices pursuant to the dividend reinvestment program sponsored by the Fund’s transfer agent. All return data at NAV includes fees charged to the Fund, which are listed in the Fund’s Statement of Operations under “Expenses.” Total investment return at market value is based on changes in the market price at which the Fund’s shares traded on the NYSE during the period and assumes reinvestment of dividends and distributions, if any, at market prices pursuant to the dividend reinvestment program sponsored by the Fund’s transfer agent. The Fund’s total investment return is based on the reported NAV as of the financial reporting period end date of September 30, 2024. Because the Fund’s shares trade in the stock market based on investor demand, the Fund may trade at a price higher or lower than its NAV. Therefore, returns are calculated based on both market price and NAV. Past performance is no guarantee of future results. The performance information provided does not reflect the deduction of taxes that a shareholder would pay on distributions received from the Fund. The current performance of the Fund may be lower or higher than the figures shown. The Fund’s yield, return, market price and NAV will fluctuate. Performance information current to the most recent month-end is available at www.abrdnhqh.com or by calling 800-522-5465.

The gross operating expense ratio based on the fiscal year ended September 30, 2024 was 1.12%.

abrdn Healthcare Investors

Portfolio Summary (as a percentage of net assets) (unaudited)

As of September 30, 2024

Asset Allocation
Common Stocks	88.7%
Convertible Preferred Stocks	5.8%
Milestone Interests	2.0%
Convertible Notes	0.3%
Warrants	0.0%
Short-Term Investments	3.3%
Call Options Written	0.0%
Liabilities in Excess of Other Assets	(0.1%)
	100.0%

Industries
Biotechnology	61.2%
Pharmaceuticals	18.1%
Health Care Equipment & Supplies	7.1%
Life Sciences Tools & Services	5.6%
Health Care Providers & Services	4.8%
Short-Term Investments	3.3%
Liabilities in Excess of Other Assets	(0.1%)
	100.0%

Top Ten Holdings
Amgen, Inc.	7.1%
Regeneron Pharmaceuticals, Inc.	6.8%
Gilead Sciences, Inc.	6.3%
Vertex Pharmaceuticals, Inc.	5.4%
AstraZeneca PLC, ADR	3.5%
Biogen, Inc.	3.4%
Alnylam Pharmaceuticals, Inc.	2.6%
Eli Lilly & Co.	2.4%
Sarepta Therapeutics, Inc.	2.3%
Illumina, Inc.	2.1%

8	abrdn Healthcare Investors

Portfolio of Investments

As of September 30, 2024

	Shares or Principal Amount		Value
Convertible Preferred Stocks^(a)^,(b)^,(c)—5.8%
Biotechnology—3.2%
Abcuro, Inc. Series B		532,816	$ 2,925,000
Arbor Biotechnologies, Inc. Series B, 8.00%		82,076	1,359,999
Arbor Biotechnologies, Inc. Series C		827,250	3,399,998
Arkuda Therapeutics, Inc. Series A, 6.00%^(d)		2,353,932	235
Arkuda Therapeutics, Inc. Series B, 6.00%^(d)		1,044,322	1,196,584
Flamingo Therapeutics, Inc. Series A3		243,458	1,655,841
Glycomine, Inc. Series C		2,600,000	1,560,000
Hotspot Therapeutics, Inc. Series B, 6.00%		2,875,000	5,947,513
Hotspot Therapeutics, Inc. Series C, 6.00%		632,394	1,842,733
Incendia Therapeutics, Inc. Series A		1,769,383	3,399,993
Priothera Co. Ltd. Series A, 6.00%^(d)		346,666	39
Quell Therapeutics Ltd. Series B^(e)		1,553,631	3,229,999
Recode Therapeutics, Inc. Series B, 5.00%		331,413	3,060,003
Seismic Therapeutics, Inc. Series B		647,722	2,924,983
Third Arc Bio, Inc. Series A, 8.00%		926,718	1,950,000
			34,452,920
Health Care Equipment & Supplies—0.0%
IO Light Holdings, Inc. Series A2		421,634	42
Pharmaceuticals—2.6%
Biotheryx, Inc. Series E, 8.00%		1,295,238	736,213
Curasen Therapeutics, Inc. Series A Prime^(d)		21,114,774	10,124,534
Curasen Therapeutics, Inc. Series B^(d)		1,664,794	798,269
Endeavor Biomedicines, Inc. Series B, 8.00%		657,322	4,288,763
Endeavor Biomedicines, Inc. Series C		121,377	791,936
Engrail Therapeutics, Inc. Series B		4,768,649	5,049,999
HiberCell, Inc. Series B		2,773,472	1,220,327
HiberCell, Inc. Series C		1,529,261	708,966
Qlaris Bio, Inc. Series B		4,394,904	3,450,000
			27,169,007
Total Convertible Preferred Stocks			61,621,969
Convertible Notes^(a)^,(b)^,(c)—0.3%
Biotechnology—0.2%
Hotspot Therapeutics, Inc., 6.00%, 04/10/26	$	720,872	720,872
Incendia Therapeutics, Inc., 8.00%, 04/18/25		1,569,230	1,569,230
			2,290,102
Pharmaceuticals—0.1%
HiberCell, Inc., 10.00%, 12/31/25		439,002	439,002
Total Convertible Notes			2,729,104
Common Stocks—88.7%
Biotechnology—57.5%
89bio, Inc.^(b)		263,893	1,952,808
AbbVie, Inc.^(f)		91,044	17,979,369
Akero Therapeutics, Inc.^(b)		57,180	1,640,494
Alkermes PLC^(b)^,(e)^,(f)		245,593	6,874,148
Alnylam Pharmaceuticals, Inc.^(b)^,(f)		99,548	27,378,686
Amgen, Inc.^(f)		233,872	75,355,897
Apellis Pharmaceuticals, Inc.^(b)		156,037	4,500,107
Arcellx, Inc.^(b)		31,923	2,665,890
Arcutis Biotherapeutics, Inc.^(b)		321,390	2,988,927

	Shares or Principal Amount		Value


Argenx SE, ADR^(b)		32,495	$ 17,614,890
Arrowhead Pharmaceuticals, Inc.^(b)		215,592	4,176,017
Ascendis Pharma AS, ADR^(b)^,(f)		106,298	15,871,354
Biogen, Inc.^(b)		187,733	36,390,165
BioMarin Pharmaceutical, Inc.^(b)		292,103	20,531,920
BioNTech SE, ADR^(b)		131,911	15,667,069
Chinook Therapeutics, Inc. CVR^(a)^,(b)^,(c)		91,800	207,468
Cytokinetics, Inc.^(b)^,(f)		179,731	9,489,797
Denali Therapeutics, Inc.^(b)		215,883	6,288,672
Exelixis, Inc.^(b)		201,462	5,227,939
Galera Therapeutics, Inc.^(b)		296,462	21,345
Geron Corp.^(b)		781,459	3,547,824
Gilead Sciences, Inc.		802,108	67,248,735
GRAIL, Inc.^(b)		145,938	2,008,107
Ideaya Biosciences, Inc.^(b)		156,629	4,962,007
I-Mab, ADR^(b)		53,885	66,817
Immunovant, Inc.^(b)		317,954	9,064,868
Insmed, Inc.^(b)		54,607	3,986,311
Ionis Pharmaceuticals, Inc.^(b)		162,851	6,523,811
Krystal Biotech, Inc.^(b)		28,733	5,230,268
Merus NV^(b)		56,166	2,806,053
Moderna, Inc.^(b)		88,935	5,943,526
Mural Oncology PLC^(b)^,(e)		17,390	54,431
Natera, Inc.^(b)		9,368	1,189,268
Neurocrine Biosciences, Inc.^(b)		89,226	10,280,620
Novavax, Inc.^(b)		37,188	469,684
Nuvalent, Inc., Class A^(b)		29,204	2,987,569
Praxis Precision Medicines, Inc.^(b)		3,427	197,190
Pyxis Oncology, Inc.^(b)		626,637	2,299,758
Rallybio Corp.^(b)		755,076	883,439
Regeneron Pharmaceuticals, Inc.^(b)^,(f)		68,690	72,209,676
Rhythm Pharmaceuticals, Inc.^(b)		74,675	3,912,223
Sarepta Therapeutics, Inc.^(b)		198,030	24,731,967
Scholar Rock Holding Corp.^(b)		413,504	3,312,167
Summit Therapeutics, Inc.^(b)		745,354	16,323,253
Sutro Biopharma, Inc.^(b)		69,389	240,086
TScan Therapeutics, Inc.^(b)		138,057	687,524
Ultragenyx Pharmaceutical, Inc.^(b)^,(f)		171,104	9,504,827
uniQure NV^(b)^,(e)		1,039,270	5,123,601
Vaxcyte, Inc.^(b)		50,202	5,736,582
Vertex Pharmaceuticals, Inc.^(b)^,(f)		122,159	56,813,708
Xencor, Inc.^(b)		78,135	1,571,295
Xenon Pharmaceuticals, Inc.^(b)		137,703	5,421,367
Zenas Biopharma, Inc.^(b)		51,589	872,886
			609,034,410
Health Care Equipment & Supplies—7.1%
Abbott Laboratories^(f)		111,424	12,703,450
Becton Dickinson & Co.		33,002	7,956,782
Boston Scientific Corp.^(b)^,(f)		82,062	6,876,796
Dexcom, Inc.^(b)^,(f)		48,712	3,265,652
Edwards Lifesciences Corp.^(b)		41,369	2,729,940
IDEXX Laboratories, Inc.^(b)^,(f)		7,128	3,601,208
Inspire Medical Systems, Inc.^(b)^,(f)		45,501	9,602,986
Insulet Corp.^(b)^,(f)		13,968	3,251,052
Intuitive Surgical, Inc.^(b)^,(f)		32,271	15,853,774
Medtronic PLC^(e)		52,381	4,715,862
Stryker Corp.		5,969	2,156,361
Tandem Diabetes Care, Inc.^(b)^,(f)		69,286	2,938,419
Willow Laboratories, Inc.^(a)^,(b)^,(c)		160,000	16
			75,652,298

abrdn Healthcare Investors

Portfolio of Investments (continued)

As of September 30, 2024

	Shares or Principal Amount		Value
Common Stocks (continued)
Health Care Providers & Services—4.8%
Elevance Health, Inc.		15,833	$ 8,233,160
Guardant Health, Inc.^(b)		232,790	5,340,203
HCA Healthcare, Inc.		15,196	6,176,110
McKesson Corp.^(f)		6,842	3,382,822
Molina Healthcare, Inc.^(b)^,(f)		14,994	5,166,333
Tenet Healthcare Corp.^(b)^,(f)		28,770	4,781,574
UnitedHealth Group, Inc.		30,505	17,835,663
			50,915,865
Life Sciences Tools & Services—5.6%
Adaptive Biotechnologies Corp.^(b)		647,787	3,316,669
Avantor, Inc.^(b)		109,660	2,836,904
Danaher Corp.		23,779	6,611,038
Illumina, Inc.^(b)		175,353	22,867,785
Medpace Holdings, Inc.^(b)		22,111	7,380,652
Thermo Fisher Scientific, Inc.^(f)		26,994	16,697,678
			59,710,726
Pharmaceuticals—13.7%
Amylyx Pharmaceuticals, Inc.^(b)		1,368,491	4,433,911
AstraZeneca PLC, ADR		479,072	37,324,499
Axsome Therapeutics, Inc.^(b)		230	20,670
Bristol-Myers Squibb Co.		95,356	4,933,719
Edgewise Therapeutics, Inc.^(b)		139,947	3,735,185
Eli Lilly & Co.^(f)		28,630	25,364,462
Fusion Pharmaceuticals, Inc. CVR^(a)^,(b)^,(c)^,(e)		7,593	10,478
Intra-Cellular Therapies, Inc.^(b)^,(f)		159,304	11,656,274
Johnson & Johnson^(f)		83,099	13,467,024
Marinus Pharmaceuticals, Inc.^(b)		1,532,400	2,697,024
Merck & Co., Inc.		113,017	12,834,211
Oculis Holding AG^(b)^,(e)		352,768	4,326,700
Pfizer, Inc.^(f)		221,442	6,408,531
Spectrum Pharmaceuticals, Inc. CVR^(a)^,(b)^,(c)		79,790	0
Structure Therapeutics, Inc., ADR^(b)		147,086	6,455,605
Tetraphase Pharmaceuticals, Inc. CVR^(a)^,(b)^,(c)		28,747	1,725
Teva Pharmaceutical Industries Ltd., ADR^(b)^,(f)		291,666	5,255,821
Zoetis, Inc.^(f)		29,733	5,809,234
			144,735,073
Total Common Stocks			940,048,372
Warrants^(a)^,(b)^,(c)—0.0%
Pharmaceuticals—0.0%
HiberCell, Inc.(expiration date 09/15/28, exercise price $0.46)		1,529,261	2
HiberCell, Inc.(expiration date 09/13/34, exercise price $0.08)		5,487,525	5
			7

	Shares or Principal Amount		Value
Short-Term Investment—3.3%
State Street Institutional U.S. Government Money Market Fund, Premier Class, 4.94%^(g)		34,431,537	$ 34,431,537
Total Short-Term Investment			34,431,537
Total Investments Before Milestone Interests—98.1% (Cost $899,844,018)			1,038,830,989
		Interests	Value
Milestone Interests^(a)^,(b)^,(c)—2.0%
Biotechnology—0.3%
Amphivena Milestone Interest		1	$ 0
Invetx, Inc. Milestone Interest		1	3,119,480
			3,119,480
Pharmaceuticals—1.7%
Afferent Milestone Interest		1	0
Amolyt Milestone Interest		1	1,687,388
Ethismos Research Milestone Interest		1	0
Neurovance Milestone Interest		1	16,749,312
			18,436,700
Total Milestone Interests			21,556,180
Total Investments (Cost $906,785,717)—100.1%			1,060,387,169
Liabilities in Excess of Other Assets (0.1%)			(791,217)
Net Assets—100.0%			$1,059,595,952

(a)	Level 3 security. See Note 2(a) of the accompanying Notes to Financial Statements.
(b)	Non-income producing security.
(c)	Restricted security.
(d)	Affiliated issuers in which the Fund holds 5% or more of the voting securities (total market value of $12,119,661).
(e)	Foreign security.
(f)	A portion of security is pledged as collateral for call options written.
(g)	Registered investment company advised by State Street Global Advisors. The rate shown is the 7 day yield as of September 30, 2024.

ADR	American Depositary Receipt
CVR	Contingent Value Right
PLC	Public Limited Company

10	abrdn Healthcare Investors

Portfolio of Investments (concluded)

As of September 30, 2024

	Number of Contracts (100 shares each)	Notional Amount ($)	Value ($)
Option Contracts Written—0.0%
Call Options Written—0.0%
Abbott Laboratories Oct24 120 Call	88	(1,056,000)	(5,280)
AbbVie, Inc. Oct24 200 Call	53	(1,060,000)	(11,448)
Alkermes PLC Oct24 30 Call	357	(1,071,000)	(9,817)
Alnylam Pharmaceuticals, Inc. Oct24 290 Call	37	(1,073,000)	(14,245)
Amgen, Inc. Oct24 350 Call	30	(1,050,000)	(1,620)
Ascendis Pharma AS Oct24 150 Call	107	(1,605,000)	(48,150)
Boston Scientific Corp. Oct24 87.5 Call	121	(1,058,750)	(2,723)
Cytokinetics, Inc. Oct24 65 Call	165	(1,072,500)	(6,187)
Dexcom, Inc. Oct24 75 Call	142	(1,065,000)	(5,680)
Eli Lilly & Co. Oct24 940 Call	17	(1,598,000)	(9,860)
IDEXX Laboratories, Inc. Oct24 550 Call	19	(1,045,000)	(3,420)
Inspire Medical Systems, Inc. Oct24 230 Call	47	(1,081,000)	(18,330)
Insulet Corp. Oct24 260 Call	41	(1,066,000)	(10,455)
Intra-Cellular Therapies, Inc. Oct24 80 Call	134	(1,072,000)	(5,360)
Intuitive Surgical, Inc. Oct24 510 Call	21	(1,071,000)	(18,900)
Johnson & Johnson Oct24 170 Call	62	(1,054,000)	(3,534)
McKesson Corp. Oct24 530 Call	20	(1,060,000)	(1,250)
Molina Healthcare, Inc. Oct24 370 Call	29	(1,073,000)	(5,583)
Pfizer, Inc. Oct24 31 Call	342	(1,060,200)	(1,710)
Regeneron Pharmaceuticals, Inc. Oct24 1200 Call	9	(1,080,000)	(1,125)
Tandem Diabetes Care, Inc. Oct24 50 Call	214	(1,070,000)	(5,992)
Tenet Healthcare Corp. Oct24 175 Call	61	(1,067,500)	(7,686)
Teva Pharmaceutical Industries Ltd. Oct24 19 Call	559	(1,062,100)	(11,180)
Thermo Fisher Scientific, Inc. Oct24 630 Call	17	(1,071,000)	(11,560)
Ultragenyx Pharmaceutical, Inc. Oct24 65 Call	165	(1,072,500)	(18,975)
Vertex Pharmaceuticals, Inc. Oct24 500 Call	21	(1,050,000)	(1,575)
Zoetis, Inc. Oct24 195 Call	55	(1,072,500)	(22,000)
Total Call Options Written (Premiums received $(464,649))			(263,645)

See Accompanying Notes to Financial Statements.

abrdn Healthcare Investors

Statement of Assets and Liabilities

As of September 30, 2024

Assets
Investments in unaffiliated issuers, at value(cost $842,947,054)	$ 992,279,791
Investments in affiliated issuers, at value (cost $22,465,427)	12,119,661
Short-term investment, at value (cost $34,431,537)	34,431,537
Milestone interests, at value(cost $6,941,699)	21,556,180
Foreign currency, at value (cost $56)	56
Interest and dividends receivable	495,366
Tax reclaim receivable	13,787
Prepaid expenses	94,401
Other assets (Note 2j)	272
Total assets	1,060,991,051
Liabilities
Investment advisory fees payable (Note 3)	861,481
Written options, at value (premiums received$464,649)	263,645
Investor relations fees payable (Note 3)	42,577
Trustee fees payable	34,250
Administration fees payable	10,711
Other accrued expenses	182,435
Total liabilities	1,395,099
Commitments and Contingencies (Notes 8 & 10)

Net Assets	$1,059,595,952
Composition of Net Assets
Common stock (par value $0.010 per share) (Note 5)	$ 521,299
Paid-in capital in excess of par	941,128,656
Distributable earnings	117,945,997
Net Assets	$1,059,595,952
Net asset value per share based on 52,129,892 shares issued and outstanding	$20.33^(a)

(a)	The NAV shown above differs from the traded NAV on September 30, 2024 due to financial statement rounding and/or financial statement adjustments.

See Accompanying Notes to Financial Statements.

12	abrdn Healthcare Investors

Statement of Operations

For the Year Ended September 30, 2024

Net Investment Income
Investment Income:
Dividends	$ 8,750,656
Interest and other income	2,018,602
Total investment income	10,769,258
Expenses:
Investment advisory fee (Note 3)	9,609,341
Legal fees and expenses	304,201
Investor relations fees and expenses (Note 3)	294,853
Reports to shareholders and proxy solicitation	212,649
Trustees' fees and expenses	171,881
Independent auditors’ fees and tax expenses	134,088
Custodian’s fees and expenses	87,238
Administration fee	60,207
Transfer agent’s fees and expenses	58,677
Insurance expense	56,394
Miscellaneous	129,691
Total expenses	11,119,220

Net Investment Loss	(349,962)
Net Realized/Unrealized Gain/(Loss):
Net realized gain/(loss) from:
Investment in affiliated issuers	19,854,215
Investments in unaffiliated issuers	26,373,379
Written options	1,535,842
	47,763,436
Net change in unrealized appreciation/depreciation on:
Investments in unaffiliated issuers	132,082,409
Investments in affiliated issuers	(3,296,003)
Milestone interests	8,545,744
Written options	201,004
Foreign currency translation	3
	137,533,157
Net realized and unrealized gain from investments, milestone interests, written options and foreign currencies	185,296,593
Change in Net Assets Resulting from Operations	$184,946,631

See Accompanying Notes to Financial Statements.

abrdn Healthcare Investors

Statements of Changes in Net Assets

	For the Year Ended September 30, 2024	For the Year Ended September 30, 2023
Increase/(Decrease) in Net Assets:
Operations:
Net investment loss	$(349,962)	$(1,185,481)
Net realized gain from investments and written options	47,763,436	90,148,865
Net change in unrealized appreciation/depreciation investments, milestone interests, written options and foreign currency translations	137,533,157	(32,628,556)
Net increase in net assets resulting from operations	184,946,631	56,334,828
Distributions to Shareholders From:
Distributable earnings	(72,972,514)	(77,428,664)
Return of capital	(30,002,831)	–
Net decrease in net assets from distributions	(102,975,345)	(77,428,664)
Reinvestment of dividends resulting in the issuance of 2,687,876 and 2,098,290 shares of common stock, respectively	46,281,675	35,872,239
Change in net assets	128,252,961	14,778,403
Net Assets:
Beginning of year	931,342,991	916,564,588
End of year	$1,059,595,952	$931,342,991

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

See Accompanying Notes to Financial Statements.

14	abrdn Healthcare Investors

Financial Highlights

	For the Fiscal Years Ended September 30,
	2024 ^(a)	2023	2022 ^(b)	2021 ^(b)	2020 ^(b)
PER SHARE OPERATING PERFORMANCE:
Net asset value per common share, beginning of year	$18.84	$19.36	$25.47	$24.04	$20.33
Net investment loss^(c)	(0.01)	(0.02)	(0.08)	(0.14)	(0.05)
Net realized and unrealized gains/(losses) on investments, written options and foreign currency transactions	3.54	1.11	(4.20)	3.63	5.50
Total from investment operations applicable to common shareholders	3.53	1.09	(4.28)	3.49	5.45
Distributions to common shareholders from:
Net investment income	(0.56)	–	(0.11)	(0.61)	(0.01)
Net realized gains	(0.89)	(1.61)	(1.72)	(1.45)	(1.77)
Return of capital	(0.59)	–	–	–	–
Total distributions	(2.04)	(1.61)	(1.83)	(2.06)	(1.78)
Effect of Fund shares repurchased	–	–	–	–	0.04
Net asset value per common share, end of year	$20.33	$18.84	$19.36	$25.47	$24.04
Market price, end of year	$18.62	$15.55	$17.28	$25.57	$20.62
Total Investment Return Based on^(d):
Market price	34.58%	(1.24%)	(26.01%)	34.64%	23.38%
Net asset value	21.28%^(e)	6.80%	(16.78%)	15.03%	29.77%
Ratio to Average Net Assets Applicable to Common Shareholders/Supplementary Data:
Net assets applicable to common shareholders, end of year (000 omitted)	$1,059,596	$931,343	$916,565	$1,156,902	$1,054,696
Average net assets applicable to common shareholders (000 omitted)	$989,149	$976,134	$1,007,052	$1,143,870	$991,235
Gross operating expenses	1.12%	1.18%	1.19%	1.11%	1.10%
Net Investment loss	(0.04%)	(0.12%)	(0.36%)	(0.54%)	(0.20%)
Portfolio turnover	44%	43%	41%	69%	52%

(a)	Effective October 27, 2023, abrdn Inc. became the investment adviser of the Fund. Prior to October 27, 2023, the Fund was managed by Tekla Capital Management, LLC.
(b)	Beginning with the year 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)	Based on average shares outstanding.
(d)	Total investment return based on market value is calculated assuming that shares of the Fund’s common stock were purchased at the closing market price as of the beginning of the period, dividends, capital gains and other distributions were reinvested as provided for in the Fund’s dividend reinvestment plan and then sold at the closing market price per share on the last day of the period. The computation does not reflect any sales commission investors may incur in purchasing or selling shares of the Fund. The total investment return based on the net asset value is similarly computed except that the Fund’s net asset value is substituted for the closing market value.
(e)	The total return shown above includes the impact of financial statement rounding of the NAV per share and/or financial statement adjustments.

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

See Accompanying Notes to Financial Statements.

abrdn Healthcare Investors

SEC Form N-CSR filed by abrdn Healthcare Investors Shares of Beneficial Interest