TEKLA HEALTHCARE OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2023 (Unaudited)
| Convertible Preferreds (Restricted) (a)(b) - 0.8% | Shares | Value | ||||||
| Health Care Equipment & Supplies – 0.1% | ||||||||
| IO Light Holdings, Inc. Series A2 | 189,858 | $ | 540,716 | |||||
| Pharmaceuticals – 0.7% | ||||||||
| Aristea Therapeutics, Inc. Series B, 8.00% | 616,645 | 3,399,995 | ||||||
| Endeavor Biomedicines, Inc. Series B, 8.00% | 742,138 | 3,499,997 | ||||||
| 6,899,992 | ||||||||
| Total Convertible Preferreds (Cost $7,532,724) | 7,440,708 | |||||||
| Non-Convertible Notes - 17.3% | Principal Amount | |||||||
| Biotechnology – 2.8% | ||||||||
| AbbVie, Inc., 3.20% due 05/14/26 | $ | 3,245,000 | 3,074,228 | |||||
| AbbVie, Inc., 4.25% due 11/14/28 | 5,303,000 | 5,141,798 | ||||||
| AbbVie, Inc., 4.45% due 05/14/46 | 3,080,000 | 2,707,306 | ||||||
| Amgen, Inc., 3.20% due 11/02/27 | 2,200,000 | 2,053,760 | ||||||
| Amgen, Inc., 2.00% due 01/15/32 | 2,795,000 | 2,206,006 | ||||||
| Gilead Sciences, Inc., 2.95% due 03/01/27 | 10,000,000 | 9,388,689 | ||||||
| 24,571,787 | ||||||||
| Health Care Equipment & Supplies – 2.8% | ||||||||
| Abbott Laboratories, 3.40% due 11/30/23 | 2,100,000 | 2,081,363 | ||||||
| Abbott Laboratories, 4.75% due 11/30/36 | 10,498,000 | 10,516,007 | ||||||
| Becton, Dickinson and Co., 3.70% due 06/06/27 | 2,413,000 | 2,293,682 | ||||||
| DH Europe Finance II Sarl, 3.25% due 11/15/39 | 1,760,000 | 1,428,351 | ||||||
| Stryker Corp., 3.65% due 03/07/28 | 3,500,000 | 3,325,414 | ||||||
| Zimmer Biomet Holdings, Inc., 4.25% due 08/15/35 | 6,000,000 | 5,180,168 | ||||||
| 24,824,985 | ||||||||
| Health Care Providers & Services – 7.1% | ||||||||
| CVS Health Corp., 4.30% due 03/25/28 | 789,000 | 760,475 | ||||||
| CVS Health Corp., 1.88% due 02/28/31 | 4,400,000 | 3,491,981 | ||||||
| CVS Health Corp., 4.78% due 03/25/38 | 2,100,000 | 1,935,482 | ||||||
| CVS Health Corp., 5.05% due 03/25/48 | 3,700,000 | 3,404,769 | ||||||
| Elevance Health, Inc., 3.50% due 08/15/24 | 10,500,000 | 10,228,930 | ||||||
| Elevance Health, Inc., 4.10% due 03/01/28 | 2,975,000 | 2,854,732 | ||||||
| Elevance Health, Inc., 2.55% due 03/15/31 | 5,800,000 | 4,869,405 | ||||||
| Elevance Health, Inc., 4.65% due 08/15/44 | 2,325,000 | 2,084,157 | ||||||
| The Cigna Group, 3.50% due 06/15/24 | 2,100,000 | 2,057,114 | ||||||
| The Cigna Group, 4.38% due 10/15/28 | 1,504,000 | 1,453,794 | ||||||
| The Cigna Group, 2.38% due 03/15/31 | 5,800,000 | 4,867,409 | ||||||
| The Cigna Group, 6.13% due 11/15/41 | 8,250,000 | 8,759,385 | ||||||
| UnitedHealth Group, Inc., 3.85% due 06/15/28 | 1,460,000 | 1,399,206 | ||||||
| UnitedHealth Group, Inc., 3.88% due 12/15/28 | 4,970,000 | 4,759,220 | ||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS SCHEDULE OF INVESTMENTS.
| Health Care Providers & Services – continued | Principal Amount | Value | ||||||
| UnitedHealth Group, Inc., 4.20% due 05/15/32 | $ | 10,940,000 | $ | 10,439,616 | ||||
| 63,365,675 | ||||||||
| Healthcare Services – 0.7% | ||||||||
| Laboratory Corporation of America Holdings, 3.60% due 02/01/25 | 2,100,000 | 2,028,972 | ||||||
| Syneos Health, Inc., 3.63% due 01/15/29(c) | 4,100,000 | 4,008,078 | ||||||
| 6,037,050 | ||||||||
| Pharmaceuticals – 3.9% | ||||||||
| AstraZeneca plc, 6.45% due 09/15/37 (d) | 4,750,000 | 5,440,858 | ||||||
| Bristol-Myers Squibb Co., 3.20% due 06/15/26 | 7,500,000 | 7,175,406 | ||||||
| Bristol-Myers Squibb Co., 3.40% due 07/26/29 | 2,100,000 | 1,949,858 | ||||||
| IQVIA, Inc., 5.00% due 05/15/27(c) | 1,290,000 | 1,240,900 | ||||||
| Johnson & Johnson, 2.90% due 01/15/28 | 2,200,000 | 2,069,170 | ||||||
| Merck & Co., Inc., 2.75% due 02/10/25 | 2,100,000 | 2,020,631 | ||||||
| Merck & Co., Inc., 3.40% due 03/07/29 | 4,000,000 | 3,741,929 | ||||||
| Pfizer, Inc., 3.45% due 03/15/29 | 8,100,000 | 7,621,076 | ||||||
| Pfizer, Inc., 4.00% due 12/15/36 | 3,200,000 | 2,979,917 | ||||||
| 34,239,745 | ||||||||
| Total Non-Convertible Notes (Cost $162,354,284) | 153,039,242 | |||||||
| Common Stocks - 102.4% | Shares | |||||||
| Biotechnology – 16.1% | ||||||||
| AbbVie, Inc. (e) | 297,919 | 40,138,627 | ||||||
| Amgen, Inc. (e) | 166,595 | 36,987,422 | ||||||
| argenx SE ADR (b) | 7,604 | 2,963,507 | ||||||
| Biogen, Inc. (b) | 33,464 | 9,532,220 | ||||||
| Fusion Pharmaceuticals, Inc. (b)(d) | 14,319 | 67,013 | ||||||
| Fusion Pharmaceuticals, Inc. (Restricted) (a)(b)(d) | 7,160 | 30,158 | ||||||
| Galera Therapeutics, Inc. (b) | 314,430 | 981,022 | ||||||
| Gilead Sciences, Inc. | 214,756 | 16,551,245 | ||||||
| I-Mab ADR (b) | 43,738 | 130,777 | ||||||
| Moderna, Inc. (b) | 38,588 | 4,688,442 | ||||||
| Rallybio Corp. (b)(f) | 594,616 | 3,365,526 | ||||||
| Regeneron Pharmaceuticals, Inc. (b) | 21,161 | 15,205,025 | ||||||
| Sarepta Therapeutics, Inc. (b) | 2,700 | 309,204 | ||||||
| Vertex Pharmaceuticals, Inc. (b) | 31,999 | 11,260,768 | ||||||
| 142,210,956 | ||||||||
| Equity Real Estate Investment Trusts – 3.4% | ||||||||
| Diversified Healthcare Trust REIT | 293,879 | 661,228 | ||||||
| Global Medical REIT, Inc. | 31,668 | 289,129 | ||||||
| Healthcare Realty Trust, Inc. | 25,119 | 473,744 | ||||||
| Healthpeak Properties, Inc. | 66,791 | 1,342,499 | ||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS SCHEDULE OF INVESTMENTS.
| Equity Real Estate Investment Trusts – continued | Shares | Value | ||||||
| LTC Properties, Inc. | 135,390 | $ | 4,470,578 | |||||
| Medical Properties Trust, Inc. (f) | 266,557 | 2,468,318 | ||||||
| National Health Investors, Inc. | 5,596 | 293,342 | ||||||
| Omega Healthcare Investors, Inc. | 235,358 | 7,223,137 | ||||||
| Physicians Realty Trust | 582,346 | 8,147,021 | ||||||
| Sabra Health Care REIT, Inc. | 419,879 | 4,941,976 | ||||||
| Universal Health Realty Income Trust | 3,075 | 146,308 | ||||||
| 30,457,280 | ||||||||
| Health Care Equipment & Supplies – 16.5% | ||||||||
| Abbott Laboratories (e) | 307,502 | 33,523,868 | ||||||
| Baxter International, Inc. | 198,244 | 9,031,997 | ||||||
| DexCom, Inc. (b)(e) | 107,929 | 13,869,956 | ||||||
| Edwards Lifesciences Corp. (b) | 115,471 | 10,892,379 | ||||||
| Guardant Health, Inc. (b) | 74,536 | 2,668,389 | ||||||
| IDEXX Laboratories, Inc. (b) | 24,307 | 12,207,705 | ||||||
| Inspire Medical Systems, Inc. (b) | 11,690 | 3,795,042 | ||||||
| Insulet Corp. (b) | 22,211 | 6,404,320 | ||||||
| LivaNova plc (b) | 108,480 | 5,579,126 | ||||||
| Medtronic plc (e) | 212,554 | 18,726,007 | ||||||
| STERIS plc | 31,072 | 6,990,579 | ||||||
| Stryker Corp. (e) | 51,917 | 15,839,357 | ||||||
| Zimmer Biomet Holdings, Inc. (e) | 43,370 | 6,314,672 | ||||||
| 145,843,397 | ||||||||
| Health Care Providers & Services – 20.3% | ||||||||
| Acadia Healthcare Co., Inc. (b) | 74,939 | 5,968,142 | ||||||
| AmerisourceBergen Corp. | 20,417 | 3,928,843 | ||||||
| Charles River Laboratories International, Inc. (b)(e) | 41,069 | 8,634,757 | ||||||
| Community Health Systems, Inc. (b) | 79,635 | 350,394 | ||||||
| CVS Health Corp. | 93,621 | 6,472,020 | ||||||
| Elevance Health, Inc. | 64,880 | 28,825,535 | ||||||
| HCA Healthcare, Inc. | 41,863 | 12,704,583 | ||||||
| Humana, Inc. (e) | 22,522 | 10,070,262 | ||||||
| Molina Healthcare, Inc. (b)(e) | 29,112 | 8,769,699 | ||||||
| R1 RCM, Inc. (b) | 232,554 | 4,290,621 | ||||||
| Tenet Healthcare Corp. (b)(e) | 105,224 | 8,563,129 | ||||||
| The Cigna Group (e) | 52,243 | 14,659,386 | ||||||
| UnitedHealth Group, Inc. | 137,979 | 66,318,227 | ||||||
| 179,555,598 | ||||||||
| Health Care Technology – 0.5%(b) | ||||||||
| Veradigm, Inc. | 338,217 | 4,261,534 | ||||||
| Life Sciences Tools & Services – 6.4% | ||||||||
| Agilent Technologies, Inc. | 43,191 | 5,193,718 | ||||||
| Avantor, Inc. (b) | 317,100 | 6,513,234 | ||||||
| ICON plc (b) | 2,800 | 700,560 | ||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS SCHEDULE OF INVESTMENTS.
| Life Sciences Tools & Services – continued | Shares | Value | ||||||
| Illumina, Inc. (b)(e) | 57,986 | $ | 10,871,795 | |||||
| Thermo Fisher Scientific, Inc. (e) | 59,825 | 31,213,694 | ||||||
| West Pharmaceutical Services, Inc. | 6,192 | 2,368,254 | ||||||
| 56,861,255 | ||||||||
| Medical Devices and Diagnostics – 6.6% | ||||||||
| Boston Scientific Corp. (b)(e) | 346,489 | 18,741,590 | ||||||
| Danaher Corp. | 87,564 | 21,015,360 | ||||||
| Intuitive Surgical, Inc. (b) | 39,948 | 13,659,819 | ||||||
| ResMed, Inc. | 24,600 | 5,375,100 | ||||||
| 58,791,869 | ||||||||
| Pharmaceuticals – 32.6% | ||||||||
| Assertio Holdings, Inc. (b)(f) | 410,575 | 2,225,317 | ||||||
| AstraZeneca plc ADR | 16,300 | 1,166,591 | ||||||
| Bristol-Myers Squibb Co. | 276,824 | 17,702,895 | ||||||
| Eli Lilly & Co. | 114,982 | 53,924,258 | ||||||
| IQVIA Holdings, Inc. (b)(e) | 61,434 | 13,808,520 | ||||||
| Jazz Pharmaceuticals plc (b) | 31,345 | 3,885,840 | ||||||
| Johnson & Johnson (e) | 445,417 | 73,725,422 | ||||||
| McKesson Corp. (e) | 31,638 | 13,519,234 | ||||||
| Merck & Co., Inc. | 423,628 | 48,882,435 | ||||||
| Oculis Holding AG (Restricted) (a)(d) | 591,759 | 6,588,053 | ||||||
| Perrigo Co. plc (d) | 28,292 | 960,513 | ||||||
| Pfizer, Inc. (e) | 971,961 | 35,651,529 | ||||||
| Teva Pharmaceutical Industries Ltd. ADR (b) | 77,704 | 585,111 | ||||||
| Zoetis, Inc. (e) | 89,682 | 15,444,137 | ||||||
| 288,069,855 | ||||||||
| Total Common Stocks (Cost $770,791,266) | 906,051,744 | |||||||
| Short-Term Investments - 5.9% | Principal Amount | |||||||
| MUFG Bank Ltd. Commercial Paper, 5.00%, due 07/06/23 | $ | 20,000,000 | 19,986,111 | |||||
| Repurchase Agreement, Fixed Income Clearing Corp., repurchase value $27,436,475, 1.52%, dated 06/30/23, due 07/03/23 (collateralized by U.S. Treasury Note 1.500%, due 01/31/27, market value $27,981,726) | 27,433,000 | 27,433,000 | ||||||
| SHARES | ||||||||
| State Street Institutional U.S. Government Money Market Fund, Institutional Class, 5.03% (g) | 4,612,350 | 4,612,350 | ||||||
| Total Short-Term Investments (Cost $52,031,461) | 52,031,461 | |||||||
| Total Investments Before Milestone Interest 126.5% (Cost $992,709,735) | 1,118,563,155 | |||||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS SCHEDULE OF INVESTMENTS.
| Milestone Interests (Restricted) (a)(b) – 0.0% | Interests | Value | ||||||
| Biotechnology – 0.0% | ||||||||
| Rainier Therapeutics Milestone Interest | 1 | $ | 0 | |||||
| Total Milestone Interests (Cost $277,782) | 0 | |||||||
| Option Contracts Written- (0.1)% | Number
Of Contracts (100 Shares Each)/ Notional Amount ($) |
|||||||
| Call Option Contracts Written - (0.1)% | ||||||||
| Abbott Laboratories Aug23 115 Call | 451/(5,186,500) | (35,178 | ) | |||||
| Abbott Laboratories Jul23 112 Call | 460/(5,152,000) | (37,720 | ) | |||||
| AbbVie, Inc. Aug23 140 Call | 292/(4,088,000) | (52,268 | ) | |||||
| AbbVie, Inc. Jul23 135 Call | 297/(4,009,500) | (50,787 | ) | |||||
| Amgen, Inc. Aug23 235 Call | 246/(5,781,000) | (46,986 | ) | |||||
| Amgen, Inc. Jul23 230 Call | 246/(5,658,000) | (23,124 | ) | |||||
| Boston Scientific Corp. Aug23 57.5 Call | 337/(1,937,750) | (13,143 | ) | |||||
| Charles River Laboratories International, Inc. Aug23 230 Call | 39/(897,000) | (15,210 | ) | |||||
| DexCom, Inc. Aug23 140 Call | 106/(1,484,000) | (28,620 | ) | |||||
| DexCom, Inc. Jul23 135 Call | 106/(1,431,000) | (13,250 | ) | |||||
| Humana, Inc. Aug23 470 Call | 33/(1,551,000) | (21,780 | ) | |||||
| Humana, Inc. Jul23 460 Call | 33/(1,518,000) | (12,870 | ) | |||||
| Illumina, Inc. Aug23 200 Call | 57/(1,140,000) | (37,620 | ) | |||||
| IQVIA Holdings, Inc. Aug23 230 Call | 59/(1,357,000) | (37,996 | ) | |||||
| Johnson & Johnson Aug23 170 Call | 440/(7,480,000) | (72,600 | ) | |||||
| Johnson & Johnson Jul23 165 Call | 440/(7,260,000) | (127,160 | ) | |||||
| McKesson Corp. Aug23 440 Call | 31/(1,364,000) | (27,900 | ) | |||||
| McKesson Corp. Jul23 430 Call | 31/(1,333,000) | (16,771 | ) | |||||
| Medtronic plc Aug23 90 Call | 129/(1,161,000) | (20,769 | ) | |||||
| Molina Healthcare, Inc. Aug23 310 Call | 28/(868,000) | (25,900 | ) | |||||
| Pfizer, Inc. Aug23 37.5 Call | 1,413/(5,298,750) | (100,323 | ) | |||||
| Pfizer, Inc. Jul23 37.5 Call | 1,452/(5,445,000) | (47,916 | ) | |||||
| Stryker Corp. Aug23 320 Call | 37/(1,184,000) | (11,840 | ) | |||||
| Tenet Healthcare Corp. Aug23 85 Call | 104/(884,000) | (31,200 | ) | |||||
| The Cigna Group Aug23 290 Call | 77/(2,233,000) | (52,360 | ) | |||||
| The Cigna Group Jul23 290 Call | 77/(2,233,000) | (15,015 | ) | |||||
| Thermo Fisher Scientific, Inc. Aug23 540 Call | 80/(4,320,000) | (85,440 | ) | |||||
| Thermo Fisher Scientific, Inc. Jul23 530 Call | 80/(4,240,000) | (53,920 | ) | |||||
| Zimmer Biomet Holdings, Inc. Aug23 155 Call | 43/(666,500) | (6,880 | ) | |||||
| Zoetis, Inc. Aug23 180 Call | 87/(1,566,000) | (24,360 | ) | |||||
| Total Call Option Contracts Written (Premiums received $(784,445)) | (1,146,906 | ) | ||||||
| Total Investments - 126.4% (Cost $992,203,072) | 1,117,416,249 | |||||||
| Other Liabilities In Excess Of Assets - (26.4)% | (233,148,884 | ) | ||||||
| Net Assets - 100% | $ | 884,267,365 | ||||||
The percentage shown for each investment category in the Schedule of Investments is based on net assets.
| (a) | Security fair valued using significant unobservable inputs. See Investment Valuation and Fair Value Measurements. |
| (b) | Non-income producing security. |
| (c) | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS SCHEDULE OF INVESTMENTS.
| (d) | Foreign security. |
| (e) | A portion of security is pledged as collateral for call options written. |
| (f) | All or a portion of this security is on loan as of June 30, 2023. |
| (g) | This security represents the investment of cash collateral received for securities lending and is a registered investment company advised by State Street Global Advisors. The rate shown is the annualized seven-day yield as of June 30, 2023. |
ADR American Depository Receipt
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS SCHEDULE OF INVESTMENTS.
Investment Valuation
Shares of publicly traded companies listed on national securities exchanges or trading in the over-the-counter market are typically valued at the last sale price, as of the close of trading, generally 4 p.m., Eastern Time. The Board of Trustees of the Fund (the Trustees) has established and approved fair valuation policies and procedures with respect to securities for which quoted prices may not be available or which do not reflect fair value. Convertible, corporate and government bonds are valued using a third-party pricing service. Convertible bonds are valued using this pricing service only on days when there is no sale reported. Puts and calls generally are valued at the close of regular trading on the securities or commodities exchange on which they are primarily traded. Options on securities generally are valued at their last bid price in the case of exchange traded options or, in the case of OTC-traded options, the average of the last bid price as obtained from two or more dealers unless there is only one dealer, in which case that dealer’s price is used. Forward foreign currency contracts are valued on the basis of the value of the underlying currencies at the prevailing currency exchange rate. Restricted securities of companies that are publicly traded are typically valued based on the closing market quote on the valuation date adjusted for the impact of the restriction as determined in good faith by Tekla Capital Management LLC (the Adviser) also using fair valuation policies and procedures approved by the Trustees described below. Non-exchange traded warrants of publicly traded companies are generally valued using the Black-Scholes model, which incorporates both observable and unobservable inputs. Short-term investments with a maturity of 60 days or less are generally valued at amortized cost, which approximates fair value.
Convertible preferred shares, warrants or convertible note interests in private companies, milestone interests and other restricted securities, as well as shares of publicly traded companies for which market quotations are not readily available, such as stocks for which trading has been halted or for which there are no current day sales, or which do not reflect fair value, are typically valued in good faith, based upon the recommendations made by the Adviser pursuant to fair valuation policies and procedures approved by the Trustees.
The Adviser has a Valuation Sub-Committee comprised of senior management which reports to the Valuation Committee of the Board at least quarterly. Each fair value determination is based on a consideration of relevant factors, including both observable and unobservable inputs. Observable and unobservable inputs may include (i) the existence of any contractual restrictions on the disposition of securities; (ii) information obtained from the company, which may include an analysis of the company’s financial statements, products, intended markets or technologies; (iii) the price of the same or similar security negotiated at arm’s length in an issuer’s completed subsequent round of financing; (iv) the price and extent of public trading in similar securities of the issuer or of comparable companies; or (v) a probability and time value adjusted analysis of contractual terms. Where available and appropriate, multiple valuation methodologies are applied to confirm fair value. Significant unobservable inputs identified by the Adviser are often used in the fair value determination. A significant change in any of these inputs may result in a significant change in the fair value measurement. Due to the uncertainty inherent in the valuation process, such estimates of fair value may differ significantly from the values that would have been used had a ready market for the investments existed, and differences could be material. Additionally, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different from the valuations used at the date of this schedule of investments.
Federal Income Tax Cost
At June 30, 2023, the cost of securities for Federal income tax purposes was $993,834,181. The net unrealized gain on securities held by the Fund was $123,582,068, including gross unrealized gain of $198,657,548 and gross unrealized loss of $75,075,480.
Securities Lending
The Fund may lend its securities to approved borrowers to earn additional income. The Fund receives cash collateral from the borrower and the initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities traded on U.S. exchanges, and a value of at least 105% for all other securities. The Fund will invest its cash collateral in State Street Institutional U.S. Government Money Market Fund (SAHXX), which is registered with the Securities and Exchange Commission (SEC) as an investment company. SAHXX invests substantially all of its assets in the State Street U.S. Government Money
Market Portfolio. The Fund will receive the benefit of any gains and bear any losses generated by SAHXX with respect to the cash collateral.
The Fund has the right to recall loaned securities on demand. If a borrower fails to return loaned securities when due, then the lending agent is responsible and indemnifies the Fund for the lent securities. The lending agent uses the collateral received from the borrower to purchase replacement securities of the same issue, type, class and series of the loaned securities. If the value of the collateral is less than the purchase cost of replacement securities, the lending agent is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any decrease in the value of SAHXX.
Although the risk of loss on securities lent is mitigated by receiving collateral from the borrower and through lending agent indemnification, the Fund could experience a delay in recovering securities or could experience a lower than expected return if the borrower fails to return the securities on a timely basis. The Fund receives compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities. Securities lending income received by the Fund is net of fees retained by the securities lending agent. Net income received from SAHXX is a component of securities lending income as recorded by the Fund.
As of June 30, 2023, the Fund loaned securities valued at $4,517,568 and received $4,612,350 of cash collateral.
Fair Value Measurements
The Fund uses a three-tier hierarchy to prioritize the assumptions, referred to as inputs, used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels. Level 1 includes quoted prices in active markets for identical investments. Level 2 includes prices determined using other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.). The independent pricing vendor may value bank loans and debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, and/or other methodologies designed to identify the market value for such securities and such securities are considered Level 2 in the fair value hierarchy. Level 3 includes prices determined using significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). These inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
For the period ended June 30, 2023, there were no transfers between levels.
The following is a summary of the levels used as of June 30, 2023 to value the Fund’s investments.
| Assets at Value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Convertible Preferreds | ||||||||||||||||
| Health Care Equipment & Supplies | $ | - | $ | - | $ | 540,716 | $ | 540,716 | ||||||||
| Pharmaceuticals | - | - | 6,899,992 | 6,899,992 | ||||||||||||
| Non-convertible Notes | ||||||||||||||||
| Biotechnology | - | 24,571,787 | - | 24,571,787 | ||||||||||||
| Health Care Equipment & Supplies | - | 24,824,985 | - | 24,824,985 | ||||||||||||
| Health Care Providers & Services | - | 63,365,675 | - | 63,365,675 | ||||||||||||
| Healthcare Services | - | 6,037,050 | - | 6,037,050 | ||||||||||||
| Pharmaceuticals | - | 34,239,745 | - | 34,239,745 | ||||||||||||
| Common Stocks | ||||||||||||||||
| Biotechnology | 142,180,798 | 30,158 | - | 142,210,956 | ||||||||||||
| Equity Real Estate Investment Trusts | 30,457,280 | - | - | 30,457,280 | ||||||||||||
| Health Care Equipment & Supplies | 145,843,397 | - | - | 145,843,397 | ||||||||||||
| Health Care Providers & Services | 179,555,598 | - | - | 179,555,598 | ||||||||||||
| Health Care Technology | 4,261,534 | - | - | 4,261,534 | ||||||||||||
| Life Sciences Tools & Services | 56,861,255 | - | - | 56,861,255 | ||||||||||||
| Medical Devices and Diagnostics | 58,791,869 | - | - | 58,791,869 | ||||||||||||
| Pharmaceuticals | 281,481,802 | 6,588,053 | - | 288,069,855 | ||||||||||||
| Short-term Investments | 4,612,350 | 47,419,111 | 52,031,461 | |||||||||||||
| Milestone Interest | ||||||||||||||||
| Biotechnology | - | - | 0 | * | 0 | * | ||||||||||
| Total | $ | 904,045,883 | $ | 207,076,564 | $ | 7,440,708 | $ | 1,118,563,155 | ||||||||
| Other Financial Instruments | ||||||||||||||||
| Options Contracts Written | $ | (1,146,906 | ) | $ | - | $ | - | $ | (1,146,906 | ) | ||||||
| Total | $ | (1,146,906 | ) | $ | - | $ | - | $ | (1,146,906 | ) | ||||||
*Represents security valued at zero.
The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value.
| Investments in Securities | Balance as of September 30, 2022 | Net realized gain (loss) and change in unrealized appreciation (depreciation) | Cost of purchases and conversions | Proceeds from sales and conversions | Net transfers into (out of) Level 3 | Balance as of June 30, 2023 | ||||||||||||||||||
| Convertible Preferreds | ||||||||||||||||||||||||
| Biotechnology | $ | 3,981,414 | $ | (653,670 | ) | $ | - | $ | (3,327,744 | ) | $ | - | $ | - | ||||||||||
| Health Care Equipment & Supplies | 640,771 | (100,394 | ) | 339 | - | - | 540,716 | |||||||||||||||||
| Pharmaceuticals | 6,899,992 | - | - | - | - | 6,899,992 | ||||||||||||||||||
| Milestone Interest | ||||||||||||||||||||||||
| Biotechnology | 268,893 | (268,893 | ) | - | - | - | 0 | * | ||||||||||||||||
| Total | $ | 11,791,070 | $ | (1,022,957 | ) | $ | 339 | $ | (3,327,744 | ) | $ | - | $ | 7,440,708 | ||||||||||
| Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2023 | $ | 369,287 | ||||||||||||||||||||||
*Represents security valued at zero.
The following is a quantitative disclosure about significant unobservable inputs used in the determination of the fair value of Level 3 assets.
| Fair Value
at June 30, 2023 |
Valuation Technique | Unobservable Input | Range (Weighted Average) | |||||||
| Convertible Preferreds | $ | 7,440,708 | Transaction price | (a) | N/A | |||||
| Milestone Interest | 0 | Probability of events Timing of events |
90.00%-100.00% (N/A) 1.25-12.25 years (N/A) | |||||||
| $ | 7,440,708 | |||||||||
(a) The valuation technique used as a basis to approximate fair value of these investments is based on a transaction price or subsequent financing rounds.
Private Companies and Other Restricted Securities
The Fund may invest in private companies and other restricted securities if these securities would currently comprise 10% or less of Managed Assets. The value of these securities represented 1% of the Fund’s Managed Assets at June 30, 2023.
The following table details the acquisition date, cost, carrying value per unit, and value of the Fund’s private companies and other restricted securities at June 30, 2023. The Fund on its own does not have the right to demand that such securities be registered.
| Security (#) | Acquisition Date | Cost | Carrying
Value per Unit | Value | ||||||||||
| Aristea Therapeutics, Inc. Series B, Cvt. Pfd | 07/27/21 | $ | 3,399,996 | $ | 5.51 | $ | 3,399,995 | |||||||
| Endeavor Biomedicines, Inc. Series B, Cvt. Pfd | 01/21/22 | 3,504,343 | 4.72 | 3,499,997 | ||||||||||
| Fusion Pharmaceuticals, Inc. Common | 09/20/22 | 0 | 4.21 | 30,158 | ||||||||||
| IO Light Holdings, Inc. Series A2 Cvt. Pfd | 04/30/20,05/17/21,09/15/21 | † | 628,386 | 2.85 | 540,716 | |||||||||
| Oculis Holding AG | 03/06/23 | 4,975,839 | 11.13 | 6,588,053 | ||||||||||
| Rainier Therapeutics Milestone Interest | 09/28/21 | 277,782 | 0.00 | 0 | ||||||||||
| $ | 12,786,345 | $ | 14,058,919 | |||||||||||
| (#) | See Schedule of Investments and corresponding footnotes for more information on each issuer. |
| † | Interest received as part of a corporate action for a previously owned security. |