N-Q 1 a18-2439_4nq.htm N-Q

 

 

 

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UNITED STATES

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SECURITIES AND EXCHANGE COMMISSION

 

 

Washington, D.C. 20549

 

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number

811-23037

 

Tekla World Healthcare Fund

(Exact name of registrant as specified in charter)

 

100 Federal Street, 19th Floor, Boston, MA

 

02110

(Address of principal executive offices)

 

(Zip code)

 

 

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:

617-772-8500

 

 

Date of fiscal year end:

September 30

 

 

Date of reporting period:

12/31/17

 

 



 

Item 1.  Schedule of Investments.

 



 

TEKLA WORLD HEALTHCARE FUND

SCHEDULE OF INVESTMENTS

DECEMBER 31, 2017

(Unaudited)

 

PRINCIPAL
AMOUNT

 

 

 

VALUE

 

 

 

 

 

 

 

 

 

CONVERTIBLE AND NON-CONVERTIBLE NOTES - 17.5% of Net Assets

 

 

 

 

 

 

 

 

 

 

 

Convertible Notes (Restricted) (a) - 0.0% of Net Assets

 

 

 

 

 

 

 

 

 

 

 

United States — 0.0%

 

 

 

$

87,374

 

GenomeDx Biosciences, Inc. Promissory Note, 8.00% due 4/30/2019

 

$

87,374

 

23,533

 

IlluminOss Medical, Inc. Promissory Note, 8.00% due 12/31/2018

 

23,533

 

70,629

 

IlluminOss Medical, Inc. Promissory Note, 8.00% due 3/31/2018

 

70,629

 

 

 

TOTAL CONVERTIBLE NOTES

 

181,536

 

 

 

 

 

 

 

 

 

Non-Convertible Notes - 17.5% of Net Assets

 

 

 

 

 

 

 

 

 

 

 

Ireland — 0.5%

 

 

 

3,000,000

 

Endo Ltd/Endo Finance LLC/Endo Finco Inc., 6.00%, due 2/1/25 (b)

 

2,325,000

 

 

 

 

 

 

 

 

 

United Kingdom — 0.9%

 

 

 

4,000,000

 

Hikma Pharmaceuticals PLC, 4.25%, due 4/10/20

 

4,015,640

 

 

 

 

 

 

 

 

 

United States — 16.1%

 

 

 

3,200,000

 

AbbVie Inc., 4.50%, due 5/14/35

 

3,514,693

 

4,100,000

 

Actavis Funding SCS, 4.55%, due 3/15/35

 

4,338,482

 

2,000,000

 

Amgen Inc., 3.63%, due 5/22/24

 

2,077,978

 

4,475,000

 

Amgen Inc., 4.66%, due 6/15/51

 

5,005,309

 

2,790,000

 

Baxalta Inc., 4.00%, due 6/23/25

 

2,883,682

 

1,200,000

 

Becton Dickinson and Co., 3.73%, due 12/15/24

 

1,229,035

 

3,000,000

 

DaVita, Inc., 5.00%, due 5/1/25

 

2,999,100

 

4,000,000

 

EMD Finance LLC, 3.25%, due 3/19/25 (b)

 

4,022,759

 

3,000,000

 

Encompass Health Corporation, 5.75% due 11/1/24

 

3,071,250

 

2,890,000

 

Envision Healthcare Corporation, 5.63%, due 7/15/22

 

2,918,900

 

1,385,000

 

Express Scripts Holding Company, 3.50%, due 6/15/24

 

1,397,250

 

3,000,000

 

Gilead Sciences, Inc., 4.60%, due 9/1/35

 

3,380,322

 

2,000,000

 

GlaxoSmithKline Capital Inc., 2.80%, due 3/18/23

 

2,017,420

 

1,200,000

 

HCA Healthcare, Inc., 5.25%, due 4/15/25

 

1,269,000

 

2,500,000

 

HCA Healthcare, Inc., 5.38%, due 2/1/25

 

2,587,500

 

2,000,000

 

HCA Healthcare, Inc., 5.88%, due 5/1/23

 

2,135,000

 

2,630,000

 

HCP, Inc., 4.20%, due 3/1/24

 

2,751,468

 

8,000,000

 

Mallinckrodt International Finance SA/Mallinckrodt CB LLC, 5.50%, due 4/15/25 (b)

 

6,520,000

 

1,200,000

 

McKesson Corporation, 3.80%, due 3/15/24

 

1,242,952

 

1,200,000

 

Medtronic Inc., 4.38%, due 3/15/35

 

1,352,777

 

1,463,000

 

Merck & Co., Inc., 2.75%, due 2/10/25

 

1,457,077

 

2,115,000

 

Novartis Capital Corporation, 3.40%, due 5/6/24

 

2,199,527

 

3,500,000

 

Senior Housing Properties Trust, 4.75%, due 5/1/24

 

3,651,885

 

3,000,000

 

Tenet Healthcare Corporation, 6.75%, due 6/15/23

 

2,910,000

 

5,000,000

 

Zimmer Biomet Holdings, Inc., 4.25% due 8/15/35

 

4,928,576

 

 

 

 

 

71,861,942

 

 

 

TOTAL NON-CONVERTIBLE NOTES

 

78,202,582

 

 

 

TOTAL CONVERTIBLE AND NON-CONVERTIBLE NOTES
(Cost $77,383,150)

 

78,384,118

 

 

The accompanying notes are an integral part of this Schedule of Investments.

 



 

SHARES

 

 

 

VALUE

 

 

 

 

 

 

 

 

 

CONVERTIBLE PREFERRED AND WARRANTS (Restricted) (a) (c) - 0.7% of Net Assets

 

 

 

 

 

 

 

 

 

 

 

United States — 0.7%

 

 

 

1,307,690

 

BioClin Therapeutics, Inc. Series A

 

$

849,999

 

505,049

 

BioClin Therapeutics, Inc. Series B

 

377,777

 

1,333,333

 

GenomeDx Biosciences, Inc. Series C

 

1,626,666

 

14,562

 

GenomeDx Biosciences, Inc. Warrants (expiration 10/31/27)

 

0

 

219,196

 

IlluminOss Medical, Inc. Series AA

 

219,196

 

206,483

 

IlluminOss Medical, Inc. Junior Preferred

 

206,483

 

17,657

 

IlluminOss Medical, Inc. Warrants (expiration 3/31/27)

 

0

 

5,883

 

IlluminOss Medical, Inc. Warrants (expiration 11/20/27)

 

0

 

 

 

TOTAL CONVERTIBLE PREFERRED AND WARRANTS
(Cost $3,456,229)

 

3,280,121

 

 

 

 

 

 

 

 

 

MANDATORY CONVERTIBLE PREFERRED STOCK - 0.6% of Net Assets

 

 

 

 

 

Israel — 0.6%

 

 

 

7,000

 

Teva Pharmaceutical Industries Ltd., 7.00% due 12/15/18

 

2,483,740

 

 

 

TOTAL MANDATORY CONVERTIBLE PREFERRED STOCK
(Cost $7,000,000)

 

2,483,740

 

 

 

 

 

 

 

 

 

COMMON STOCKS AND WARRANTS - 103.3% of Net Assets

 

 

 

 

 

 

 

 

 

 

 

Australia — 0.6%

 

 

 

25,000

 

CSL Limited

 

2,756,234

 

 

 

 

 

 

 

 

 

Belgium — 3.9%

 

 

 

63,600

 

Galapagos NV (c)

 

6,026,997

 

142,500

 

UCB SA

 

11,315,359

 

 

 

 

 

17,342,356

 

 

 

Denmark — 2.3%

 

 

 

5,950

 

Genmab A/S (c)

 

986,760

 

171,200

 

Novo Nordisk A/S (d)

 

9,188,304

 

 

 

 

 

10,175,064

 

 

 

France — 3.9%

 

 

 

270,250

 

Cellectis S.A. (c) (d)

 

7,877,787

 

300,000

 

Innate Pharma SA (c)

 

1,709,785

 

179,900

 

Sanofi (d)

 

7,735,700

 

 

 

 

 

17,323,272

 

 

 

Germany — 3.7%

 

 

 

131,750

 

Bayer AG

 

16,440,335

 

 

 

 

 

 

 

 

 

Ireland — 11.1%

 

 

 

97,810

 

Allergan plc

 

15,999,760

 

391,288

 

Avadel Pharmaceuticals plc (c) (d)

 

3,208,562

 

248,248

 

Endo International plc (c)

 

1,923,922

 

162,900

 

Horizon Pharma plc (c)

 

2,378,340

 

61,900

 

Mallinckrodt plc (c)

 

1,396,464

 

 

The accompanying notes are an integral part of this Schedule of Investments.

 



 

SHARES

 

 

 

VALUE

 

 

 

 

 

 

 

 

 

Ireland — continued

 

 

 

147,896

 

Medtronic plc

 

$

11,942,602

 

37,300

 

Perrigo Company plc

 

3,251,068

 

60,513

 

Shire plc (d)

 

9,386,777

 

 

 

 

 

49,487,495

 

 

 

Israel — 3.4%

 

 

 

516,598

 

Foamix Pharmaceuticals Ltd. (c)

 

3,104,754

 

632,150

 

Teva Pharmaceutical Industries Ltd. (d)

 

11,979,242

 

 

 

 

 

15,083,996

 

 

 

Japan — 1.2%

 

 

 

88,000

 

Ono Pharmaceutical Co. Ltd.

 

2,050,925

 

35,100

 

Sosei Group Corporation (c)

 

3,407,979

 

 

 

 

 

5,458,904

 

 

 

Netherlands — 4.5%

 

 

 

1,405,324

 

Affimed N.V. (c)

 

1,826,921

 

232,352

 

Mylan N.V. (c)

 

9,830,813

 

260,221

 

uniQure N.V. (c)

 

5,097,729

 

144,800

 

Wright Medical Group N.V. (c)

 

3,214,560

 

 

 

 

 

19,970,023

 

 

 

Switzerland — 10.6%

 

 

 

381,882

 

Novartis AG (d)

 

32,062,813

 

484,000

 

Roche Holding AG (d)

 

15,284,720

 

 

 

 

 

47,347,533

 

 

 

United Kingdom — 9.1%

 

 

 

538,868

 

Adaptimmune Therapeutics plc (c) (d)

 

3,599,638

 

442,600

 

AstraZeneca PLC (d)

 

15,358,220

 

6,300

 

Cardinal Health, Inc.

 

386,001

 

359,000

 

GlaxoSmithKline plc (d)

 

12,733,730

 

215,000

 

Hikma Pharmaceuticals PLC

 

3,291,803

 

40,183

 

Smith & Nephew plc (d)

 

1,406,807

 

159,500

 

Verona Pharma plc (c) (d)

 

1,901,240

 

1,282,978

 

Verona Pharma plc (c)

 

1,810,163

 

513,192

 

Verona Pharma plc Warrants (expiration 4/27/22) (a) (c)

 

86,403

 

 

 

 

 

40,574,005

 

 

 

United States — 49.0%

 

 

 

25,600

 

Abbott Laboratories

 

1,460,992

 

68,521

 

AbbVie Inc.

 

6,626,666

 

64,100

 

Acadia Healthcare Company, Inc. (c)

 

2,091,583

 

13,485

 

Aetna Inc.

 

2,432,559

 

18,200

 

Alexion Pharmaceuticals, Inc. (c)

 

2,176,538

 

33,300

 

AmerisourceBergen Corporation

 

3,057,606

 

16,700

 

Amgen Inc.

 

2,904,130

 

15,965

 

Anthem, Inc.

 

3,592,285

 

319,235

 

Ardelyx, Inc. (c)

 

2,106,951

 

31,700

 

Biogen Inc. (c)

 

10,098,669

 

 

The accompanying notes are an integral part of this Schedule of Investments.

 



 

SHARES

 

 

 

VALUE

 

 

 

 

 

 

 

 

 

United States — continued

 

 

 

55,500

 

Boston Scientific Corporation (c)

 

$

1,375,845

 

92,545

 

Bristol-Myers Squibb Company

 

5,671,158

 

71,400

 

Celgene Corporation (c)

 

7,451,304

 

105,800

 

Celldex Therapeutics, Inc. (c)

 

300,472

 

60,800

 

Centene Corporation (c)

 

6,133,504

 

16,102

 

Cigna Corporation

 

3,270,155

 

94,900

 

Community Health Systems, Inc. (c)

 

404,274

 

117,552

 

CVS Health Corporation

 

8,522,520

 

15,203

 

Danaher Corporation

 

1,411,142

 

231,261

 

Diplomat Pharmacy, Inc. (c)

 

4,641,408

 

117,154

 

Eli Lilly & Company

 

9,894,827

 

298,100

 

Gilead Sciences, Inc.

 

21,355,884

 

73,400

 

Global Medical REIT Inc.

 

601,880

 

9,455

 

HCA Healthcare, Inc. (c)

 

830,527

 

45,500

 

HCP, Inc.

 

1,186,640

 

68,000

 

Healthcare Realty Trust Incorporated

 

2,184,160

 

46,000

 

Healthcare Trust of America, Inc.

 

1,381,840

 

22,561

 

Humana Inc.

 

5,596,707

 

64,000

 

Incyte Corporation (c)

 

6,061,440

 

3,850

 

Intuitive Surgical, Inc. (c)

 

1,405,019

 

101,200

 

Johnson & Johnson

 

14,139,664

 

70,000

 

Koninklijke Philips N.V. (d)

 

2,646,000

 

50,349

 

LTC Properties, Inc.

 

2,192,699

 

18,850

 

McKesson Corporation

 

2,939,658

 

149,131

 

Medical Properties Trust, Inc.

 

2,055,025

 

288,114

 

Merck & Co., Inc.

 

16,212,175

 

62,898

 

Nevro Corp. (c)

 

4,342,478

 

567,997

 

New Senior Investment Group Inc.

 

4,294,057

 

213,000

 

Novavax, Inc. (c)

 

264,120

 

79,064

 

Omega Healthcare Investors, Inc.

 

2,177,423

 

164,050

 

Pfizer Inc.

 

5,941,891

 

23,725

 

Quorum Health Corporation (c)

 

148,044

 

142,892

 

Sabra Health Care REIT, Inc.

 

2,682,083

 

55,400

 

Sarepta Therapeutics, Inc. (c)

 

3,082,456

 

166,950

 

Senior Housing Properties Trust

 

3,197,093

 

2,118

 

The RMR Group Inc., Class A

 

125,597

 

63,831

 

UnitedHealth Group Inc.

 

14,072,182

 

192,000

 

Valeant Pharmaceuticals International, Inc. (c)

 

3,989,760

 

11,750

 

Ventas, Inc.

 

705,118

 

26,879

 

Vertex Pharmaceuticals Incorporated (c)

 

4,028,087

 

21,400

 

Welltower Inc.

 

1,364,678

 

116,669

 

Xenon Pharmaceuticals Inc. (c)

 

329,590

 

12,500

 

Zimmer Biomet Holdings, Inc.

 

1,508,375

 

 

 

 

 

218,666,938

 

 

 

TOTAL COMMON STOCKS AND WARRANTS
(Cost $576,624,858)

 

460,626,155

 

 

The accompanying notes are an integral part of this Schedule of Investments.

 



 

PRINCIPAL
AMOUNT

 

 

 

VALUE

 

 

 

 

 

 

 

 

 

SHORT-TERM INVESTMENT - 5.2% of Net Assets

 

 

 

$

23,179,000

 

Repurchase Agreement, Fixed Income Clearing Corp., repurchase value $23,179,000, 0.20%, dated 12/29/17, due 01/02/18 (collateralized by U.S. Treasury Note 3.63%, due 08/15/43, market value $23,647,758)

 

23,179,000

 

 

 

TOTAL SHORT-TERM INVESTMENT
(Cost $23,179,000)

 

23,179,000

 

 

 

TOTAL INVESTMENTS - 127.3%
(Cost $687,643,237)

 

567,953,134

 

 

 

OTHER LIABILITIES IN EXCESS OF ASSETS - (27.3)%

 

(121,792,762

)

 

 

NET ASSETS - 100%

 

$

446,160,372

 

 


(a)

Security fair valued. See Investment Valuation and Fair Value Measurements.

(b)

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.

(c)

Non-income producing security.

(d)

American Depository Receipt

 

The following forward contracts were held as of December 31, 2017:

 

Description

 

Counterparty

 

Settlement
Date

 

Currency

 

Settlement
Value in USD

 

Current
Value

 

Unrealized
Loss

 

Contracts Sold:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Swiss Franc

 

Goldman Sachs Bank

 

01/31/18

 

23,880,572

 

CHF

 

$

24,237,617

 

$

24,552,829

 

$

(315,212

)

British Pound

 

Goldman Sachs Bank

 

01/31/18

 

15,160,227

 

GBP

 

20,331,835

 

20,487,068

 

(155,233

)

Danish Krone

 

Goldman Sachs Bank

 

01/31/18

 

29,148,574

 

DKK

 

4,660,809

 

4,705,744

 

(44,935

)

Euro

 

Goldman Sachs Bank

 

01/31/18

 

25,857,513

 

EUR

 

30,783,886

 

31,075,212

 

(291,326

)

Japanese Yen

 

Goldman Sachs Bank

 

01/31/18

 

437,550,349

 

JPY

 

3,881,188

 

3,888,241

 

(7,053

)

Israeli Sheqel

 

Goldman Sachs Bank

 

01/31/18

 

24,522,248

 

ILS

 

7,030,260

 

7,054,503

 

(24,243

)

 

 

 

 

 

 

 

 

 

 

 

 

$

91,763,597

 

$

(838,002

)

 

The accompanying notes are an integral part of this Schedule of Investments.

 



 

TEKLA WORLD HEALTHCARE FUND

NOTES TO SCHEDULE OF INVESTMENTS

DECEMBER 31, 2017

(Unaudited)

 

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 Fund holds securities or other assets that are denominated in a foreign currency. The Fund will normally use the currency exchange rates as of 4:00 p.m. (Eastern Time) when valuing such assets. 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 bonds, 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 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 sale price in the case of exchange traded options or, in the case of OTC-traded options, the average of the last sale 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 forward exchange rates. 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) using fair valuation policies and procedures approved by the Trustees described below. 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, and other restricted securities, as well as shares of publicly traded companies for which market quotations are not available or which do not reflect fair value, are typically valued in good faith, based upon the determination 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 the Adviser considers 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, the company’s products or intended markets or the company’s 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 December 31, 2017, the cost of securities for Federal income tax purposes was $687,785,457. The net unrealized loss on securities held by the Fund was $119,832,323, including gross unrealized gain of $16,262,076 and gross unrealized loss of $136,094,399.

 

Forward Contracts

 

Forward contracts involve the purchase or sale of a specific quantity of a commodity, government security, foreign currency, or other asset at a specified price, with delivery and settlement at a specified future date. Because it is a completed contract, a purchase forward contract can be a cover for the sale of a futures contract. The Fund may enter into forward contracts for hedging purposes and non-hedging purposes (i.e., to increase returns). Forward contracts may be used by the Fund for hedging purposes to  protect against uncertainty in the level of future foreign currency exchange rates, such as when the Fund anticipates purchasing or selling a foreign security. Forward contracts may also be used to attempt to protect the value of the Fund’s existing holdings of foreign securities. Forward contracts may also be used for non-hedging purposes to pursue the Fund’s investment objective. There is no requirement that the Fund hedge all or any portion of its exposure to foreign currency risks.

 



 

TEKLA WORLD HEALTHCARE FUND

NOTES TO SCHEDULE OF INVESTMENTS

DECEMBER 31, 2017

(Unaudited)

(continued)

 

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 December 31, 2017, there was a transfer between Level 2 and 1 and no other transfers between Levels. The amount of transfers between Level 2 and Level 1 was $2,166,179. The investment was transferred from Level 2 to Level 1 due to a removal of a trading restriction and the value is being supported by quoted prices. The Fund accounts for transfers between Levels at the beginning of the period.

 

The following is a summary of the levels used as of December 31, 2017 to value the Fund’s net assets.

 

Assets at Value

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Convertible Notes

 

 

 

 

 

 

 

 

 

United States

 

 

 

 

 

$

181,536

 

$

181,536

 

Non-Convertible Notes

 

 

 

 

 

 

 

 

 

Ireland

 

 

 

$

2,325,000

 

 

2,325,000

 

United Kingdom

 

 

 

4,015,640

 

 

4,015,640

 

United States

 

 

 

71,861,942

 

 

71,861,942

 

Convertible Preferred

 

 

 

 

 

 

 

 

 

United States

 

 

 

 

3,280,121

 

3,280,121

 

Mandatory Convertible Preferred Stock

 

 

 

 

 

 

 

 

 

Israel

 

$

2,483,740

 

 

 

2,483,740

 

Common Stocks and Warrants

 

 

 

 

 

 

 

 

 

Australia

 

2,756,234

 

 

 

2,756,234

 

Belgium

 

17,342,356

 

 

 

17,342,356

 

Denmark

 

10,175,064

 

 

 

10,175,064

 

France

 

17,323,272

 

 

 

17,323,272

 

Germany

 

16,440,335

 

 

 

16,440,335

 

Ireland

 

49,487,495

 

 

 

49,487,495

 

Israel

 

15,083,996

 

 

 

15,083,996

 

Japan

 

5,458,904

 

 

 

5,458,904

 

Netherlands

 

19,970,023

 

 

 

19,970,023

 

Switzerland

 

47,347,533

 

 

 

47,347,533

 

United Kingdom

 

40,487,602

 

 

86,403

 

40,574,005

 

United States

 

218,666,938

 

 

 

218,666,938

 

Short-Term Investment

 

 

23,179,000

 

 

23,179,000

 

Total

 

$

463,023,492

 

$

101,381,582

 

$

3,548,060

 

$

567,953,134

 

 

 

 

 

 

 

 

 

 

 

Other Financial Instruments

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Forward Currency Contracts

 

 

 

$

(838,002

)

 

 

$

(838,002

)

Total

 

$

 

$

(838,002

)

$

 

$

(838,002

)

 



 

TEKLA WORLD HEALTHCARE FUND

NOTES TO SCHEDULE OF INVESTMENTS

DECEMBER 31, 2017

(Unaudited)

(continued)

 

The following is a reconciliation of level 3 assets for which significant unobservable inputs were used to determine fair value.

 

Level 3 Assets

 

Balance as
of
September
30, 2017

 

Change in
unrealized
appreciation
(depreciation)

 

Cost of
purchases
and

conversions

 

Proceeds
from sales
and
conversions

 

Net
transfers
in (out of)
Level 3

 

Balance as
of
December
31, 2017

 

Convertible Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

35,315

 

$

34,945

 

$

111,276

 

 

 

 

 

$

181,536

 

Convertible Preferred

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

3,227,776

 

49,602

 

2,743

 

 

 

 

 

3,280,121

 

Common Stocks and Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

United Kingdom

 

191,449

 

(105,046

)

 

 

 

 

 

86,403

 

United States

 

 

(31

)

31

 

 

 

 

 

 

Total

 

$

3,454,540

 

$

(20,530

)

$

114,050

 

$

 

$

 

$

3,548,060

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized appreciation (depreciation) from investments still held as of December 31, 2017

 

$

(20,530

)

 

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
December 31,
2017

 

Valuation Technique

 

Unobservable Input

 

Range
(Weighted Average)

 

Private Companies and Other Restricted Securities

 

$

86,403

 

Income approach, Black-Scholes

 

Discount for lack of marketability

 

20% (20%)

 

 

 

2,941,816

 

Probability - weighted expected return model

 

Discount rate

 

Price to sales multiple

 

16.65% -79.93% (76.42%)

 

3.53%-9.05% (8.74%)

 

 

 

519,841

 

Market approach, recent transaction

 

(a)

 

N/A

 

 

 

$

3,548,060

 

 

 

 

 

 

 

 


(a) The valuation technique used as a basis to approximate fair value of these investments is based upon    subsequent financing rounds. There is no quantitative information to provide as these methods of measure are investment specific.

 

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 less than 1% of the Fund’s Managed Assets at December 31, 2017.

 

At December 31, 2017 the Fund had commitments of $594,098 relating to additional investments in three private companies.

 

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 December 31, 2017. The Fund on its own does not have the right to demand that such securities be registered.

 



 

TEKLA WORLD HEALTHCARE FUND

NOTES TO SCHEDULE OF INVESTMENTS

DECEMBER 31, 2017

(Unaudited)

(continued)

 

Security (#)

 

Acquisition
Date

 

Cost

 

Carrying Value
per Unit

 

Value

 

BioClin Therapeutics, Inc.

 

 

 

 

 

 

 

 

 

Series A Cvt. Pfd

 

1/19/16, 10/24/16

 

$

850,559

 

$

0.65

 

$

849,999

 

Series B Cvt. Pfd

 

3/3/17

 

377,776

 

0.75

 

377,777

 

GenomeDx Biosciences, Inc.

 

 

 

 

 

 

 

 

 

Series C Cvt. Pfd

 

2/22/16

 

2,003,665

 

1.22

 

1,626,666

 

Cvt. Promissory Note

 

10/30/17

 

87,455

 

100.00

 

87,374

 

Warrants (expiration 10/31/27)

 

10/30/17

 

15

 

0.00

 

0

 

IlluminOss Medical, Inc.

 

 

 

 

 

 

 

 

 

Series AA Cvt. Pfd

 

1/21/16

 

153,083

 

1.00

 

219,196

 

Junior Preferred Cvt. Pfd

 

1/21/16

 

71,050

 

1.00

 

206,483

 

Cvt. Promissory Note

 

11/21/17

 

23,591

 

100.00

 

23,533

 

Cvt. Promissory Note

 

3/28/17

 

70,694

 

100.00

 

70,629

 

Warrants (expiration 3/31/27)

 

3/28/17

 

65

 

0.00

 

0

 

Warrants (expiration 11/20/27)

 

11/21/17

 

16

 

0.00

 

0

 

 

 

 

 

$

3,637,969

 

 

 

$

3,461,657

 

 


(#)  See Schedule of Investments and corresponding footnotes for more information on each issuer.

 



 

Item 2.  Controls and Procedures.

 

(a.)          The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-Q is (i) accumulated and communicated to the investment company’s management, including its certifying officers, to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

 

(b.)          There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 3.  Exhibits.

 

Separate certifications for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)).  Filed herewith.

 



 

SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant)

Tekla World Healthcare Fund

 

 

 

 

By (Signature and Title)

/s/ Daniel R. Omstead

 

 

Daniel R. Omstead, President

 

 

 

 

Date

2/23/18

 

 

Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)

/s/ Laura Woodward

 

 

Laura Woodward, Treasurer

 

 

 

 

Date

2/23/18