Clough Global Allocation Fund

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: 811-21583

Clough Global Allocation Fund

(exact name of registrant as specified in charter)

1290 Broadway, Suite 1100, Denver, Colorado 80203

(Address of principal executive offices) (Zip code)

Erin E. Douglas, Secretary

Clough Global Allocation Fund

1290 Broadway, Suite 1100

Denver, Colorado 80203

(Name and address of agent for service)

Registrant’s telephone number, including area code: 303-623-2577

Date of fiscal year end:     March 31

Date of reporting period:  September 30, 2012


Item 1.

   Reports to Stockholders.


LOGO


Clough Global Funds    Table of Contents

 

   

Shareholder Letter

     2   
 
   

Portfolio Allocation

  
   

Global Allocation Fund

     5   
   

Global Equity Fund

     6   
   

Global Opportunities Fund

     7   
 
   

Statement of Investments

  
   

Global Allocation Fund

     8   
   

Global Equity Fund

     13   
   

Global Opportunities Fund

     18   
 
   

Statements of Assets and Liabilities

     24   
 
   

Statements of Operations

     25   
 
   

Statements of Changes in Net Assets

     26   
 
   

Statements of Cash Flows

     27   
 
   

Financial Highlights

  
   

Global Allocation Fund

     28   
   

Global Equity Fund

     30   
   

Global Opportunities Fund

     32   
 
   

Notes to Financial Statements

     34   
 
   

Dividend Reinvestment Plan

     46   
 
   

Additional Information

  
   

Fund Proxy Voting Policies & Procedures

     47   
   

Portfolio Holdings

     47   
   

Notice

     47   
   

Shareholder Meeting

     47   
 
   

Investment Advisory Agreement Approval

     48   
 
      


Shareholder Letter

     Clough Global Funds   

September 30, 2012 (Unaudited)

  

 

To our Shareholders:

During the six months ended September 30, 2012, the Global Allocation Fund (GLV) total return, assuming reinvestment of all distributions, was 0.01% based on the net asset value and 1.48% based on the market price of the stock. That compares with 3.42% return for the S&P 500 for the same period. Since the Fund’s inception on July 28, 2004, the average annual total return assuming reinvestment of all distributions has been 6.41%, this compares to an average annual total return of 5.49% for the S&P 500 through September 30, 2012. Total distributions, based on the current dividend rate of $0.30 per share, offer a yield of 8.86% on a market price of $13.54 as of September 30, 2012.

During the six months ended September 30, 2012, the Global Equity Fund (GLQ) total return, assuming reinvestment of all distributions, was -0.41% based on the net asset value and 3.19% based on the market price of the stock. That compares with 3.42% return for the S&P 500 for the same period. Since the Fund’s inception on April 27, 2005, the average annual total return assuming reinvestment of all distributions has been 5.47%, this compares to an average annual total return of 3.66% for the S&P 500 through September 30, 2012. Total distributions, based on the current dividend rate of $0.29 per share, offer a yield of 8.99% on a market price of $12.90 as of September 30, 2012.

During the six months ended September 30, 2012, the Global Opportunities Fund (GLO) total return, assuming reinvestment of all distributions, was -0.33% based on the net asset value and 4.26% based on the market price of the stock. That compares with 3.42% return for the S&P 500 for the same period. Since the Fund’s inception on April 25, 2006, the average annual total return assuming reinvestment of all distributions has been 2.64%, this compares to an average annual total return of 3.74% for the S&P 500 through September 30, 2012. Total distributions, based on the current dividend rate of $0.27 per share, offer a yield of 9.23% on a market price of $11.70 as of September 30, 2012.

The Consumer Discretionary sector was the biggest contributor to performance, led by News Corp., Time Warner and H&R Block. Positions in US Financials and Energy shorts were also key contributors. Energy Longs, Index hedges and short positions in European Banks modestly detracted from performance.

Over the last six months investors continue to react to the known negatives. Low trading volume and high volatility testify to the lack of any interest in investing and a small amount of buying or selling can trigger big moves. Incomes are slowing, a “fiscal cliff” looming, savings rates are ratcheting upward and Europe threatens to disintegrate at any moment. The Investment Company Institute reported that investors sold $15 billion out of domestic equity mutual funds in August ($77 billion year to date; bond funds have seen inflows of $207 billion), yet equity prices are higher. Risk aversion has reached all sectors. Sovereign funds in Asia are selling stocks and bonds and building cash. If the flows out of equity funds simply slowed, stocks would likely find a bid. It would be impossible to redeploy those funds should sentiment become less pessimistic.

Many stocks have been moving higher even as the overall market remains weak, a positive divergence.

The Fund is exposed to five strategies:

1) Companies generating high free cash flow yields. Free cash flow continues to build in the corporate world even as the economy loses speed and it remains our largest strategy. Industries most represented include technology and media/content but in several instances we have made special situation investments. Since public market prices are now higher than private market values, we think of these positions as better than owning a private business. One is H&R Block, which dominates the tax preparation industry and whose growth seems assured as the tax code becomes more complex. The company boasts a 39% return on equity and a 5% yield.

We believe Business Development Companies (BDCs) are another way of capturing yield from healthy US corporate balance sheets. BDCs are a REIT like structure that provide senior and mezzanine financing to middle market companies that are too small to access the public high yield markets. The funds currently own six BDCs that yield between 8% and 11%. The yield from BDCs is roughly 2% to 3% greater than a BB rated index or high yield ETF. Priced at book value, we believe these names have potential for price appreciation in addition to the attractive yields. The fund’s largest position in BDCs is Ares Capital (ARCC).

2) We are invested in North American financial stocks, particularly the money center banks. The Funds are also short selected European financials with capital needs. Once again this strategy has been encumbered by a renewed “Do Not Short” rule in Europe, but we added to the trade a bit before this rule was reinstituted. Data points in the US housing sector continue to signal a bottom in the residential mortgage cycle, making severe price-to-book discounts in the banking sector less explainable. Meanwhile US money center banks and brokerage firms are apparently worth more dead than alive. Discounts to book values, tangible and otherwise, often signal they are bankrupt however they are not. The large discounts to tangible book will likely tighten in the months ahead. US Banks are increasingly over reserved as the credit structure improves in quality. Loss reserves at major banks are currently 2.5x actual current charge offs. Not only are they well above average but since charge offs are declining, they are even further above future needs. After several years of high underwriting standards, the higher quality new loan book is beginning to exceed the spotty loans written over the last decade.

The US Federal Reserve’s efforts to bolster markets by buying mortgage securities in unlimited amounts support the large US banks we own. Not only should bank revenues rise as asset values appreciate and lending picks up, but a positive yield curve will lead to higher net interest spreads. All of this is buttressed by a natural cyclical pickup in mortgage activity. We understand that there are structural and policy induced impediments to ROE performance, but from a valuation standpoint that is offset by much lower leverage. By contrast, Europe’s banks are far more leveraged and have accomplished little to no restructuring.

 

 

 

2

   www.cloughglobal.com


Clough Global Funds

   Shareholder Letter
   September 30, 2012 (Unaudited)

 

3) Emerging market consumer growth investments. Emerging market negatives are dissipating as equities reach historically low valuations and their central banks ease credit. Emerging market investing will not be as easy as it was in the first decade of the century and our analysts are focusing their efforts on discovering the companies they think will build the important brands in these developing consumer markets. Emerging market funds are beginning to experience inflows after two years of liquidation. They saw a modest $1.45 billion inflow, suggesting it may not be difficult to generate renewed interest in that asset class.

The China story has generated its fair share of controversy over the last couple of years. A popular target of Western economists and politicians, our view remains, that China’s ascendency from an insignificant economy to becoming the second largest in the world should continue, not at the double digit GDP growth rates that we saw in the past, but at a more sustainable level. Growth at these levels would be the envy of the West and still provide a fertile environment for not only earnings, but the development of world class operations and brands.

While US policies are directed toward inflating assets,Chinese officials are determined to prevent asset bubbles and liquidity remains constrained in the economy. Sentiment toward emerging markets and China in particular is about as negative as we have seen it. Since the peak in China equities in 2010, the Shanghai A share index is down 43% and continues to plumb new lows, while the S&P 500 is 40% higher. In the beginning of October, valuations of Chinese listed corporations hit those levels found during the Global Financial Crisis in 2008. Clearly the market feared an economic hard landing for the Chinese economy. Recent data points released from industrial production, monetary aggregates, and inflation reflect a more benign environment, which has resulted in a rally in the local equity markets. Given this improved sentiment, we have opportunistically increased our exposure to China.

A bullish event for Chinese equities would occur if the financial sector was reformed and a strong private capital market developed. Data from the Bank for International Settlements show that in two years the volume of non-financial corporate debt issued by Chinese companies nearly doubled to almost $700 billion. We hold two of the largest investment banks in China who should be at the forefront in taking advantage of financial sector reform. Unlike investment houses based in the West, these institutions have very little leverage.

4) Our investments in the Energy sector. We have inaugurated a position in US based coal companies, particularly low cost producers leveraged to steam coal used in power generation. We will explain our thinking on coal more thoroughly in subsequent letters but suffice it to point out equities of the major North American producers in some instances have lost 85-90% of their value, and we find tremendous value. Coal will likely lose share to natural gas in coming years, high cost mines throughout Appalachia are being closed or legislated out of existence and many of the remaining mines are more than competitive with gas at $3.50 per MMBtu, a price we think will be comfortably exceeded in coming years. Even as coal usage declines these properties could be highly profitable. Many inefficient producers are bankrupt, supply has been cut back

sharply and the industry’s remaining market capitalization for the listed companies is $341 billion, down from $403 billion in 2007. Demand for steam coal could recover strongly in 2013. Given how depressed they are that could send them sharply higher. Meanwhile, natural gas inventories have narrowed from 700 bcf over the five year average in March to 270 bcf due to flat production, a very warm summer and coal to gas switching. Normal winter weather should increase demand for gas and derivatively, coal.

5) Short positions in over-valued commodities. Among commodities we are short iron ore mining, other industrial metals stocks, and the capital equipment companies that supply them but have initial long positions in both gold mining companies and North American coal producers.

Metal stocks rallied on the basis of QE3 and the announcement of China’s infrastructure spending. Yet supply/demand fundamentals remain weak and capacity remains overbuilt. BHP Billiton, the world’s largest mining company, cancelled more than $30 billion of planned development in Australia. And trading was temporarily halted in another Australian mining company’s stock as a debt restructuring was forced upon it. We think these are just the first salvos in the metal sector’s secular problems. In the recent rally our short positions did not lose much value.

In conclusion, we have observed that The Funds continue to sell at discounts to net asset value, but we feel that our efforts to support the current distributions make the dividend yields very attractive and, we think, sustainable. One consideration regarding the nearly 9% dividend yields of the three Funds, is this yield is calculated on market price, which has been magnified by the discount to NAV. Since the Funds trade at discounts over 13%, the distribution levels that we can sustain on net asset values are amplified to investors. Further, the Funds employ leverage within the portfolios, which also augments the income generation capabilities of the underlying investments. We feel this dynamic is worth mentioning given a fair amount of attention that has been recently placed on the sustainability of dividends within the universe of closed end mutual funds. For our portfolios we feel the investment opportunities that exist in the marketplace today with a now steeper yield curve (at low funding costs), combined with the investments we have made in high dividend paying equities, give us confidence that our portfolios invested with modest leverage, while trading at a near 13% discounts to net asset value, are capable of sustaining their attractive dividend yield to investors.

We appreciate your confidence in us and endeavor to do the best job we can of investing our clients’ assets. We sincerely appreciate your interest in our funds. If you have any questions about your investment, please call 1-877-256-8445.

 

Sincerely,

LOGO

Charles I. Clough, Jr.

 

 

 

Semi-Annual Report  |  September 30, 2012

  

 

3


Shareholder Letter

   Clough Global Funds

September 30, 2012 (Unaudited)

  

 

Past performance is no guarantee of future results.

The information in this letter represents the opinions of the individual Portfolio Managers and is not intended to be a forecast of future events, a guarantee of future results, or investment advice.

MSCI World Index - A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The index includes reinvestment of dividends, net of foreign withholding taxes.

The S&P 500 Index - Standard & Poor’s composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices.

It is not possible to invest directly in an Index.

Fiscal Cliff – refers to a large predicted reduction in the budget deficit and a corresponding projected slowdown of the economy if specific laws are allowed to automatically expire or go into effect at the beginning of 2013.

BB rated index – An index tracks the performance of BB rated high yield bonds.

Price to book – A financial ratio used to compare a company’s book value to its current market price.

Charge-offs – is the declaration by a creditor that an amount of debt is unlikely to be collected

Shanghai A Share Index- index tracks the daily price performance of all A-shares listed on the Shanghai Stock Exchange.

Free Cash Flow – A measure of financial performance calculated as operating cash flow minus capital expenditures.

QE3 – third round of quantitative easing

REIT – Real Estate Investment Trust

ETF – Exchange Traded Funds

ROE – Return on Equity

GDP – Gross Domestic Product

MMBtu – One million British thermal units

Bcf – Billion Cubic Feet

GLV         
Top 10 Equity Holdings*    % of Total Portfolio  

1. Bank of America Corp.

     3.22%   

2. Google, Inc. - Class A

     3.22%   

3. Citigroup, Inc.

     2.87%   

4. Apple, Inc.

     2.78%   

5. H&R Block, Inc.

     2.19%   

6. EMC Corp.

     2.00%   

7. Golar LNG, Ltd.

     1.83%   

8. QUALCOMM, Inc.

     1.79%   

9. Ares Capital Corp.

     1.71%   

10. Ford Motor Co.

     1.68%   
GLQ         
Top 10 Equity Holdings*    % of Total Portfolio  

1. Bank of America Corp.

     3.23%   

2. Google, Inc. - Class A

     3.22%   

3. Citigroup, Inc.

     2.87%   

4. Apple, Inc.

     2.77%   

5. H&R Block, Inc.

     2.19%   

6. EMC Corp.

     2.00%   

7. Golar LNG, Ltd.

     1.90%   

8. QUALCOMM, Inc.

     1.79%   

9. Ares Capital Corp.

     1.75%   

10. Ford Motor Co.

     1.68%   
GLO         
Top 10 Equity Holdings*    % of Total Portfolio  

1. Bank of America Corp.

     3.23%   

2. Google, Inc. - Class A

     3.22%   

3. Citigroup, Inc.

     2.88%   

4. Apple, Inc.

     2.77%   

5. H&R Block, Inc.

     2.20%   

6. EMC Corp.

     2.00%   

7. Golar LNG, Ltd.

     1.83%   

8. QUALCOMM, Inc.

     1.78%   

9. Ares Capital Corp.

     1.70%   

10. Ford Motor Co.

     1.68%   

Holdings are subject to change.

*Only long positions are listed.

 

 

 

4

   www.cloughglobal.com


Clough Global Allocation Fund

   Portfolio Allocation
   September 30, 2012 (Unaudited)

 

Asset Allocation*         

Common Stocks - US

     70.22

Common Stocks - Foreign

     6.97

Exchange Traded Funds

     -4.08
   

Total Equities

     73.11
          

Government L/T

     16.69

Preferred Stock

     0.36

Corporate Debt

     0.29

Asset/Mortgage Backed Securities

     0.26
   

Total Fixed Income

     17.60
          

Short-Term Investments

     9.23

Rights

     0.08

Foreign Cash

     0.01

Options

     -0.03
   

Total Other

     9.29
          
  
   

TOTAL INVESTMENTS

     100.00
          
Global Securities Holdings^         

United States

     93.44

China

     2.70

Norway

     2.32

Malaysia

     1.45

Great Britain

     1.42

Singapore

     1.06

Brazil

     0.47

Philippines

     0.42

Netherlands

     0.32

Belgium

     0.30

Hong Kong

     0.28

Israel

     0.24

Mexico

     0.18

South Korea

     0.17

France

     -0.10

Italy

     -0.68

Germany

     -0.71

Spain

     -0.79

Sweden

     -0.80

Australia

     -1.69
   

TOTAL INVESTMENTS

     100.00
          
 

 

*

Percentages are based on total investments, including options written and securities sold short. Holdings are subject to change.

^

Includes securities sold short and foreign cash balances.

 

 

 

Semi-Annual Report  |  September 30, 2012

  

 

5


Portfolio Allocation

   Clough Global Equity Fund

September 30, 2012 (Unaudited)

  

 

Asset Allocation*         

Common Stocks - US

     74.48

Common Stocks - Foreign

     8.66

Exchange Traded Funds

     -4.08
   

Total Equities

     79.06
          

Government L/T

     8.89

Preferred Stock

     0.36

Corporate Debt

     0.27

Asset/Mortgage Backed Securities

     0.11
   

Total Fixed Income

     9.63
          

Short-Term Investments

     11.25

Rights

     0.08

Foreign Cash

     0.01

Options

     -0.03
   

Total Other

     11.31
          
  
   

TOTAL INVESTMENTS

     100.00
          
Global Securities Holdings^         

United States

     91.78

China

     3.01

Norway

     2.39

Great Britain

     1.72

Malaysia

     1.46

Hong Kong

     1.25

Singapore

     1.07

Brazil

     0.45

Philippines

     0.43

Netherlands

     0.32

Belgium

     0.30

Israel

     0.24

Mexico

     0.18

South Korea

     0.17

France

     -0.09

Italy

     -0.68

Germany

     -0.71

Spain

     -0.79

Sweden

     -0.80

Australia

     -1.70
   

TOTAL INVESTMENTS

     100.00
          
 

 

*

Percentages are based on total investments, including options written and securities sold short. Holdings are subject to change.

^

Includes securities sold short and foreign cash balances.

 

 

 

6

   www.cloughglobal.com


Clough Global Opportunities Fund

   Portfolio Allocation
   September 30, 2012 (Unaudited)

 

Asset Allocation*         

Common Stocks - US

     69.97

Common Stocks - Foreign

     7.04

Exchange Traded Funds

     -4.08
   

Total Equities

     72.93
          

Government L/T

     15.56

Preferred Stock

     0.36

Corporate Debt

     0.29

Asset/Mortgage Backed Securities

     0.02
   

Total Fixed Income

     16.23
          

Short-Term Investments

     10.65

Options

     0.10

Rights

     0.08

Foreign Cash

     0.01
   

Total Other

     10.84
          
  
   

TOTAL INVESTMENTS

     100.00
          
Global Securities Holdings^         

United States

     93.35

China

     2.71

Norway

     2.32

Malaysia

     1.46

Great Britain

     1.46

Singapore

     1.07

Brazil

     0.48

Philippines

     0.43

Netherlands

     0.32

Belgium

     0.30

Hong Kong

     0.28

Israel

     0.24

Mexico

     0.18

South Korea

     0.17

France

     -0.09

Italy

     -0.68

Germany

     -0.71

Spain

     -0.79

Sweden

     -0.80

Australia

     -1.70
   

TOTAL INVESTMENTS

     100.00
          
 

 

*

Percentages are based on total investments, including options written and securities sold short. Holdings are subject to change.

^

Includes securities sold short and foreign cash balances.

 

 

 

Semi-Annual Report  |  September 30, 2012

  

 

7


Statement of Investments

   Clough Global Allocation Fund

September 30, 2012 (Unaudited)

  

 

     Shares     Value  

COMMON STOCKS 116.27%

  

 

Consumer Discretionary 22.98%

  

 

Allison Transmission Holdings, Inc.(a)(b)(c)

    52,500        $1,056,300   

AMC Networks, Inc. -
Class A
(a)(d)

    22,000        957,440   

Arcos Dorados Holdings,Inc. -
Class A
(a)

    26,600        410,438   

Arezzo Industria e Comercio S.A.

    21,638        390,226   

AutoZone, Inc.(a)(b)(d)

    3,700        1,367,779   

BorgWarner, Inc.(d)

    14,800        1,022,828   

Bosideng International Holdings, Ltd.

    5,330,000        1,498,494   

CBS Corp. - Class B(a)

    36,110        1,311,876   

China Lilang, Ltd.

    449,078        236,294   

Cia Hering

    20,499        458,162   

Cinemark Holdings,
Inc.
(a)(b)

    78,263        1,755,439   

Ford Motor Co.(a)(b)

    332,509        3,278,539   

The Goodyear Tire & Rubber Co.(a)(b)(d)

    29,732        362,433   

H&R Block, Inc.(a)(b)

    246,786        4,276,801   

International Meal Co. Holdings S.A.

    38,400        355,540   

Lamar Advertising Co. - Class A(a)(b)(d)

    22,287        825,956   

Liberty Global, Inc. - Class A(a)(b)(d)

    27,234        1,654,466   

Liberty Interactive Corp. - Class A(a)(b)(d)

    71,012        1,313,722   

Liberty Media Corp. - Liberty Capital(a)(b)(d)

    20,170        2,101,109   

Liberty Ventures - Series A(a)(b)(d)

    12,694        630,130   

Man Wah Holdings, Ltd.

    1,498,600        817,518   

News Corp. - Class A(a)

    53,396        1,309,804   

Orient-Express Hotels, Ltd. - Class A(a)(d)

    69,764        620,900   

priceline.com, Inc.(a)(b)(d)

    4,336        2,682,813   

Sally Beauty Holdings, Inc.(a)(b)(d)

    56,061        1,406,571   

Time Warner, Inc.(a)

    42,055        1,906,353   

UNICASA Industria de Moveis S.A.(c)(d)

    64,300        341,284   

Viacom, Inc. -
Class B
(a)(b)

    39,600        2,122,164   

The Walt Disney
Co.
(a)(b)

    20,670        1,080,628   
   

 

 

 
      37,552,007   
   

 

 

 

Consumer Staples 6.61%

  

 

Altria Group, Inc.(a)

    13,800        460,782   

Anheuser-Busch InBev NV - ADR(a)

    6,754        580,236   

Brazil Pharma S.A.(c)

    183,320        1,105,029   

China Mengniu Dairy Co., Ltd.

    183,000        547,533   
     Shares     Value  

Consumer Staples (continued)

  

 

Cia de Bebidas das Americas -
ADR
(a)

    11,930        $456,561   

Green Mountain Coffee Roasters, Inc.(d)

    25,600        608,000   

Heineken NV

    22,300        1,329,380   

M Dias Branco
S.A.
(d)

    12,300        403,053   

Molson Coors Brewing Co. - Class B(a)(b)

    35,910        1,617,745   

Raia Drogasil S.A.

    13,488        153,360   

Reynolds American,
Inc.
(a)(b)

    29,000        1,256,860   

SABMiller PLC

    27,800        1,221,051   

Vinda International Holdings, Ltd.

    772,498        1,063,996   
   

 

 

 
      10,803,586   
   

 

 

 

Energy 12.58%

   

Coal 2.46%

   

Alpha Natural Resources,
Inc.
(a)(d)

    64,692        425,026   

Arch Coal, Inc.(a)(b)

    352,305        2,230,091   

CONSOL Energy, Inc.(a)

    24,811        745,571   

Peabody Energy Corp.(a)

    27,581        614,780   
   

 

 

 
      4,015,468   
   

 

 

 

Natural Gas Leveraged Exploration & Production 1.67%

   

Cabot Oil & Gas Corp.(a)

    25,000        1,122,500   

EQT Corp.(a)

    19,200        1,132,800   

Range Resources Corp.

    6,700        468,129   
   

 

 

 
      2,723,429   
   

 

 

 

Non-North American Producers 0.44%

   

InterOil Corp.(a)(b)(d)

    9,359        723,076   
   

 

 

 

Oil Leveraged Exploration & Production 2.24%

   

Anadarko Petroleum
Corp.
(a)(b)

    13,115        917,001   

EOG Resources,
Inc.
(a)(b)

    6,000        672,300   

Kodiak Oil & Gas
Corp.
(a)(b)(d)

    61,664        577,175   

Noble Energy,
Inc.
(a)(b)

    9,100        843,661   

Pioneer Natural ResourcesCo.(a)

    6,254        652,918   
   

 

 

 
      3,663,055   
   

 

 

 

Oil Services &
Drillers 3.11%

   

National Oilwell Varco,
Inc.
(a)

    11,050        885,216   

Noble Corp.(a)(b)(d)

    20,300        726,334   

Oil States International,
Inc.
(a)(d)

    11,637        924,676   

Schlumberger,
Ltd.
(a)

    10,800        781,164   

Seadrill, Ltd.(a)(b)

    24,173        948,065   
 

 

 

8

   www.cloughglobal.com


Clough Global Allocation Fund    Statement of Investments
   September 30, 2012 (Unaudited)

 

     Shares     Value  

Energy (continued)

   

Weatherford International,
Ltd.
(a)(d)

    64,000      $ 811,520   
   

 

 

 
      5,076,975   
   

 

 

 

Tankers 2.66%

   

Golar LNG Partners
LP
(a)(b)

    24,171        774,439   

Golar LNG, Ltd.(a)(b)

    92,606        3,573,665   
   

 

 

 
      4,348,104   
   

 

 

 

TOTAL ENERGY

      20,550,107   
   

 

 

 

Energy Infrastructure & Capital Equipment 0.49%

  

Fluor Corp.(a)

    13,600        765,408   

KBR, Inc.(a)

    1,347        40,168   
   

 

 

 
      805,576   
   

 

 

 

Financials 27.60%

   

Business Development Corporations 6.00%

   

 

Ares Capital Corp.(a)

    194,992        3,342,163   

Golub Capital BDC, Inc.(a)

    53,100        844,290   

Medley Capital Corp.(a)

    34,088        479,618   

PennantPark Floating Rate Capital, Ltd.(a)

    12,750        161,415   

PennantPark Investment
Corp.
(a)

    151,816        1,610,768   

Solar Capital, Ltd.(a)

    115,394        2,644,830   

Solar Senior Capital,
Ltd.
(a)

    39,147        701,123   

THL Credit, Inc.(a)

    1,120        15,714   
   

 

 

 
      9,799,921   
   

 

 

 

Capital Markets 1.48%

   

Ameriprise Financial,
Inc.
(a)

    9,600        544,224   

CITIC Securities Co., Ltd. -
Class H

    235,184        414,921   

The Goldman Sachs Group, Inc.(a)

    8,192        931,266   

Indochina Capital Vietnam Holdings,
Ltd.
(c)(d)(e)

    7,331        9,384   

LPL Financial Holdings, Inc.(a)

    18,100        516,574   
   

 

 

 
      2,416,369   
   

 

 

 

Commercial Banks 2.01%

   

Fifth Third Bancorp(a)

    62,800        974,028   

Grupo Financiero Santander Mexico SAB de CV - ADR(d)

    25,700        352,090   

 

Wells Fargo & Co.(a)(b)

     56,700         1,957,851   
     

 

 

 
        3,283,969   
     

 

 

 

Consumer Finance 1.00%

     

Mastercard, Inc. -
Class A
(a)

     2,742         1,237,958   
     Shares     Value  

Financials (continued)

  

 

Visa, Inc. -
Class A
(a)

    2,944      $ 395,320   
   

 

 

 
      1,633,278   
   

 

 

 

Diversified Financials 7.62%

  

 

Bank of America Corp.(a)(b)

    711,555        6,283,031   

Citigroup, Inc.(a)(b)

    170,967        5,594,040   

JPMorgan Chase & Co.(a)

    14,100        570,768   
   

 

 

 
      12,447,839   
   

 

 

 

Insurance 1.54%

   

ACE, Ltd.(a)

    18,695        1,413,342   

Hartford Financial Services Group,
Inc.
(a)(b)

    56,906        1,106,253   
   

 

 

 
      2,519,595   
   

 

 

 

Mortgage-Backed Securities Real Estate Investment Trusts 4.81%

   

 

American Capital Agency
Corp.
(a)

    70,109        2,425,070   

American Capital Mortgage Investment
Corp.
(a)

    28,310        711,430   

Capstead Mortgage Corp.(a)

    156,119        2,106,045   

CYS Investments, Inc.(a)

    58,710        827,224   

Dynex Capital,
Inc.
(a)

    94,894        1,020,111   

Hatteras Financial Corp.(a)

    27,466        774,267   
   

 

 

 
      7,864,147   
   

 

 

 

Real Estate Investment Trusts 1.97%

  

 

American Residential Properties,
Inc.
(a)(c)(d)(e)

    34,000        688,500   

Ascendas Real Estate Investment Trust

    838,000        1,645,681   

Ascott Residence Trust

    416,874        426,318   

Select Income REIT(a)(c)

    18,300        450,546   
   

 

 

 
      3,211,045   
   

 

 

 

Real Estate Management & Development 1.17%

   

 

BHG S.A. - Brazil Hospitality
Group
(d)

    26,103        251,083   

BR Malls Participacoes S.A.

    53,957        742,849   

Iguatemi Empresa de Shopping Centers S.A.

    16,000        409,777   

Sonae Sierra Brasil S.A.

    32,181        509,403   
   

 

 

 
      1,913,112   
   

 

 

 

TOTAL FINANCIALS

      45,089,275   
   

 

 

 

Health Care 1.59%

   

Aetna, Inc.(a)

    15,700        621,720   
 

 

 

 

Semi-Annual Report  

 

 

  September 30, 2012

  

 

9


Statement of Investments

   Clough Global Allocation Fund

September 30, 2012 (Unaudited)

  

 

      Shares      Value  

Health Care (continued)

     

Sanofi - ADR(a)(b)

     45,947         $1,978,478   
     

 

 

 
        2,600,198   
     

 

 

 

Industrials 5.46%

     

Brenntag AG

     6,410         820,422   

Cia de Locacao das Americas(c)(d)

     207,700         862,663   

Covanta Holding
Corp.
(a)

     38,100         653,796   

Delta Air Lines,
Inc.
(a)(b)(d)

     159,740         1,463,219   

Sensata Technologies Holding NV(a)(b)(d)

     37,212         1,107,801   

TransDigm Group,
Inc.
(a)(b)(d)

     6,993         992,097   

United Continental Holdings, Inc.(a)(b)(d)

     68,020         1,326,390   

US Airways Group,
Inc.
(a)(b)(d)

     123,194         1,288,609   

WABCO Holdings,
Inc.
(a)(d)

     6,900         397,923   
     

 

 

 
        8,912,920   
     

 

 

 

Information Technology 21.42%

  

  

Apple, Inc.(a)(b)

     8,119         5,417,484   

Baidu, Inc. -
ADR
(a)(d)

     5,250         613,305   

Broadcom Corp. -
Class A
(a)

     73,300         2,534,714   

Check Point Software Technologies,
Ltd.
(a)(d)

     9,813         472,594   

EMC Corp.(a)(b)(d)

     143,214         3,905,446   

Equinix, Inc.(a)(d)

     3,957         815,340   

Fortinet, Inc.(a)(d)

     19,597         473,072   

Google, Inc. -
Class A
(a)(b)(d)

     8,325         6,281,212   

Informatica Corp.(a)(d)

     20,300         706,643   

Lenovo Group, Ltd.

     745,819         617,504   

Micron Technology,
Inc.
(a)(b)(d)

     375,833         2,249,360   

OCZ Technology Group, Inc.(a)(b)(d)

     58,078         201,531   

OmniVision Technologies,
Inc.
(a)(d)

     20,515         286,287   

QUALCOMM, Inc.(a)(b)

     55,753         3,484,005   

Responsys, Inc.(a)(d)

     37,500         383,625   

Seagate Technology

     48,989         1,518,659   

Sourcefire, Inc.(a)(b)(d)

     18,600         911,958   

Telecity Group PLC

     43,624         630,828   

ViaSat, Inc.(a)(b)(d)

     29,720         1,110,934   

VMware, Inc. -
Class A
(a)(d)

     9,600         928,704   

Western Digital Corp.

     37,598         1,456,170   
     

 

 

 
        34,999,375   
     

 

 

 

Materials 1.57%

     

Westlake Chemical Corp.(a)(b)

     7,857         574,032   

WR Grace &
Co.
(a)(b)(d)

     33,700         1,990,996   
     

 

 

 
        2,565,028   
     

 

 

 
      Shares      Value  

Telecommunication Services 4.69%

     

AT&T, Inc.(a)(b)

     34,800         $1,311,960   

DiGi.Com Bhd

     338,000         583,884   

KT Corp.

     10,372         328,492   

Maxis Bhd

     771,900         1,747,603   

Philippine Long Distance Telephone Co.

     12,415         828,559   

Telekom Malaysia Bhd

     240,900         487,869   

Verizon Communications, Inc.(a)(b)

     32,264         1,470,270   

Vodafone Group PLC - ADR

     31,600         900,442   
     

 

 

 
        7,659,079   
     

 

 

 

Utilities 11.28%

     

Alliant Energy Corp.(a)

     17,300         750,647   

Ameren Corp.(a)(b)

     71,400         2,332,638   

American Electric Power
Co., Inc.
(a)(b)

     20,900         918,346   

CMS Energy
Corp.
(a)

     52,100         1,226,955   

Duke Energy
Corp.
(a)

     10,000         648,000   

Edison
International
(a)(b)

     25,328         1,157,236   

Entergy Corp.(a)

     11,300         783,090   

FirstEnergy Corp.(a)

     29,509         1,301,347   

National Fuel Gas
Co.
(a)

     16,000         864,640   

National Grid PLC - ADR(a)(b)

     41,542         2,299,765   

NiSource, Inc.(a)(b)

     56,112         1,429,734   

Northeast
Utilities
(a)(b)

     35,421         1,354,145   

OGE Energy Corp.(a)(b)

     32,377         1,795,628   

Public Service Enterprise Group, Inc.(a)

     24,400         785,192   

Westar Energy,
Inc.
(a)

     26,357         781,749   
     

 

 

 
        18,429,112   
     

 

 

 

TOTAL COMMON
STOCKS

(Cost $174,074,438)

        189,966,263   
     

 

 

 

EXCHANGE TRADED
FUNDS 2.26%

     

Market Vectors Gold Miners ETF(a)

     19,463         1,045,358   

SPDR® Gold
Shares
(a)(d)

     15,400         2,649,108   
     

 

 

 
        3,694,466   
     

 

 

 

TOTAL EXCHANGE
TRADED FUNDS

(Cost $3,343,697)

        3,694,466   
     

 

 

 
 

 

 

 

10

   www.cloughglobal.com


Clough Global Allocation Fund    Statement of Investments
   September 30, 2012 (Unaudited)

 

     Shares     Value  

PREFERRED STOCKS 0.43%

  

 

The Goodyear Tire & Rubber
Co., 5.875%
(a)

    15,900        $702,303   
   

 

 

 

TOTAL PREFERRED STOCKS

(Cost $795,994)

  

  

    702,303   
   

 

 

 

RIGHTS 0.10%

   

Liberty Ventures Rights, strike price $14.00(a)(b)(d)

    11,902        161,153   
   

 

 

 

TOTAL RIGHTS

(Cost $142,677)

      161,153   
   

 

 

 
Description and
Maturity Date
  Principal
Amount
    Value  

CORPORATE BONDS 0.35%

  

 

TAM Capital 2, Inc.
01/29/2020, 9.500%
(a)(f)

    $520,000        570,700   

TOTAL CORPORATE BONDS

(Cost $511,817)

  

  

    570,700   
   

 

 

 

ASSET/MORTGAGE BACKED
SECURITIES 0.32%

   

 

Government National Mortgage
Association (GNMA)

   

Series 2007-37, Class SA,
03/20/2037, 21.280%
(a)(g)

    6,413        6,520   

Series 2007-37, Class SB,
03/20/2037, 21.280%
(a)(g)

    23,838        24,863   

Small Business Administration
Participation Certificates

   

Series 2008-20L, Class 1,
12/01/2028,
6.220%
(a)

    409,435        480,629   
   

 

 

 

TOTAL ASSET/MORTGAGE BACKED
SECURITIES

(Cost $436,700)

   

  

    512,012   
 
   

 

 

 

GOVERNMENT & AGENCY OBLIGATIONS 19.91%

   

 

U.S. Treasury Bonds

   

02/15/2031, 5.375%(a)

    1,875,000        2,714,355   

02/15/2036, 4.500%

    1,200,000        1,603,313   

U.S. Treasury Notes

   

01/31/2019, 1.250%(a)

    3,145,000        3,214,042   

11/15/2019, 3.375%(a)

    2,820,000        3,271,420   

05/15/2020, 3.500%

    1,590,000        1,862,661   

11/15/2021, 2.000%(a)

    10,875,000        11,358,426   

02/15/2022, 2.000%(a)

    8,175,000        8,507,110   
   

 

 

 

TOTAL GOVERNMENT & AGENCY

OBLIGATIONS

(Cost $32,443,057)

  

  

  

    32,531,327   
   

 

 

 
     Number of
Contracts
    Value  

CALL OPTIONS
PURCHASED 0.00%(h)

   

 

Market Vectors Oil Service ETF, Expires January, 2013, Exercise
Price $53.33

    624        $1,560   
   

 

 

 

TOTAL CALL OPTIONS

PURCHASED

(Cost $106,501)

      1,560   
   

 

 

 
    

Shares/

Principal
Amount

    Value  

SHORT-TERM
INVESTMENTS 11.01%

   

 

Money Market Fund

   

Dreyfus Treasury Prime Money
Market Fund
(0.000%
7-day yield)
(i )

    7,398,135        7,398,135   
   

 

 

 

U.S. Treasury Bills

   

U.S. Treasury Bill Discount Notes

   

11/15/2012, 0.156%(a)(j)

  $ 5,100,000        5,099,109   

02/07/2013, 0.190%(a)(j)

    4,000,000        3,998,532   

04/04/2013, 0.181%(a)(j)

    1,500,000        1,498,941   
   

 

 

 
      10,596,582   
   

 

 

 

TOTAL SHORT-TERM

INVESTMENTS

(Cost $17,993,382)

  

  

  

    17,994,717   
   

 

 

 

Total

Investments - 150.65%

(Cost $229,848,263)

      246,134,501   

Liabilities in Excess of Other Assets - (50.65%)

      (82,756,470)   
   

 

 

 

NET ASSETS - 100.00%

      $163,378,031   
   

 

 

 
SCHEDULE OF WRITTEN
OPTIONS
  Number of
Contracts
    Value  

CALL OPTIONS WRITTEN

  

 

CBS Corp., Expires December, 2012,
Exercise Price $40.00

    180        $(10,800)   

News Corp., Expires January, 2013,
Exercise Price $27.00

    263        (9,205)   

Time Warner, Inc., Expires December, 2012,
Exercise Price $50.00

    213        (5,112)   
 

 

 

Semi-Annual Report  |  September 30, 2012

  

 

11


Statement of Investments

   Clough Global Allocation Fund

September 30, 2012 (Unaudited)

  

 

SCHEDULE OF WRITTEN

OPTIONS

  Number of
Contracts
    Value  

CALL OPTIONS WRITTEN (continued)

  

 

Viacom, Inc., Expires December, 2012, Exercise Price $57.50

    390        $(35,100)   

Walt Disney Co., Expires January, 2013, Exercise Price $57.50

    200        (8,200)   
   

 

 

 

TOTAL CALL OPTIONS WRITTEN

(Premiums received $83,951)

  

  

    $(68,417)   
   

 

 

 

SCHEDULE OF SECURITIES

SOLD SHORT (d)

  Shares     Value  

COMMON STOCK

   

Applied Materials, Inc.

    (63,800)        $(712,327)   

ASML Holding NV

    (13,100)        (703,208)   

Atlas Copco AB - A Shares

    (16,314)        (380,729)   

B/E Aerospace, Inc.

    (32,500)        (1,368,250)   

Banco Santander S.A.

    (207,680)        (1,546,565)   

Barclays PLC - ADR

    (67,729)        (939,401)   

BHP Billiton, Ltd. - ADR

    (28,306)        (1,942,075)   

BNP Paribas S.A.

    (18,304)        (869,827)   

The Boeing Co.

    (22,100)        (1,538,602)   

Caterpillar, Inc.

    (39,471)        (3,396,085)   

Core Laboratories NV

    (4,600)        (558,808)   

Credit Agricole S.A.

    (107,144)        (739,370)   

Cummins, Inc.

    (12,200)        (1,124,962)   

Deutsche Bank AG

    (38,327)        (1,519,666)   

F5 Networks, Inc.

    (4,100)        (429,270)   

Fiat SpA

    (135,487)        (722,894)   

Hexcel Corp.

    (15,100)        (362,702)   

Intel Corp.

    (48,500)        (1,099,980)   

Intesa Sanpaolo SpA

    (392,970)        (597,398)   

KLA-Tencor Corp.

    (14,300)        (682,181)   

Marathon Petroleum Corp.

    (11,400)        (622,326)   

Nabors Industries, Ltd.

    (39,700)        (556,991)   

Oracle Corp.

    (97,300)        (3,063,977)   

Petroleo Brasileiro S.A.-ADR

    (191,053)        (4,382,756)   

Phillips 66

    (13,100)        (607,447)   

Precision Castparts Corp.

    (10,600)        (1,731,404)   

Rio Tinto PLC - ADR

    (29,114)        (1,361,371)   

Sandvik AB

    (87,019)        (1,180,999)   

Siemens AG - ADR

    (6,800)        (681,020)   

Societe Generale S.A.

    (19,913)        (565,521)   

Tesoro Corp.

    (14,800)        (620,120)   

United States Steel Corp.

    (40,954)        (780,993)   

Vale SA - ADR

    (95,900)        (1,716,610)   

Valero Energy Corp.

    (19,500)        (617,760)   
   

 

 

 
      (39,723,595)   
   

 

 

 

EXCHANGE TRADED FUNDS

   

iShares® Russell 2000® Index Fund

    (52,900)        (4,415,034)   

Market Vectors Semiconductor ETF

    (75,000)        (2,372,250)   

SCHEDULE OF SECURITIES

SOLD SHORT (d) (continued)

  Shares     Value  

United States Oil Fund LP

    (134,468)        $(4,589,393)   
   

 

 

 
      (11,376,677)   
   

 

 

 

TOTAL SECURITIES SOLD SHORT (Proceeds $51,487,141)

   

    $(51,100,272)   
 

 

 

 

 

(a)

Pledged security; a portion or all of the security is pledged as collateral for securities sold short or borrowings as of September 30, 2012. (See Note 1 and Note 6)

 
(b)

Loaned security; a portion or all of the security is on loan at September 30, 2012.

 
(c) 

Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. As of September 30, 2012, these securities had a total value of $4,513,706 or 2.76% of net assets.

 
(d)

Non-income producing security.

 
(e) 

Fair valued security; valued by management in accordance with procedures approved by the Fund’s Board of Trustees. As of September 30, 2012, these securities had a total value of $697,884 or 0.43% of total net assets.

 
(f) 

Securities were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts securities offered and sold outside of the United States from registration. Such securities cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. As of September 30, 2012, the aggregate market value of those securities was $570,700, representing 0.35% of net assets.

 
(g) 

Floating or variable rate security - rate disclosed as

 

of September 30, 2012.

(h) 

Less than 0.005% of net assets.

 
(i) 

Less than 0.0005%.

 
(j) 

Rate shown represents the bond equivalent yield to maturity at date of purchase.

 

See Notes to the Financial Statements.

 

 

 

 

12

   www.cloughglobal.com


Clough Global Equity Fund

   Statement of Investments
   September 30, 2012 (Unaudited)

 

     Shares     Value  

COMMON STOCKS 123.99%

  

 

Consumer Discretionary 25.03%

  

 

Allison Transmission Holdings, Inc.(a)(b)(c)

    85,600        $1,722,272   

AMC Networks, Inc. - Class A(a)(d)

    35,800        1,558,016   

Arcos Dorados Holdings,Inc. - Class A(a)

    43,300        668,119   

Arezzo Industria e Comercio S.A.(a)

    35,505        640,307   

AutoZone, Inc.(a)(b)(d)

    5,900        2,181,053   

BorgWarner, Inc.(d)

    24,100        1,665,551   

Bosideng International Holdings, Ltd.

    8,708,000        2,448,197   

CBS Corp. - Class B(a)

    56,148        2,039,857   

China Lilang, Ltd.

    732,354        385,348   

Cia Hering(a)

    33,399        746,484   

Cinemark Holdings, Inc.(a)(b)

    127,732        2,865,029   

Ford Motor Co.(a)(b)

    540,423        5,328,571   

The Goodyear Tire & Rubber Co.(a)(b)(d)

    48,204        587,607   

H&R Block, Inc.(a)(b)

    401,792        6,963,055   

International Meal Co. Holdings S.A.(a)

    62,600        579,604   

Lamar Advertising Co.
- Class A
(a)(b)(d)

    36,207        1,341,831   

Liberty Global, Inc.
- Class A
(a)(b)(d)

    52,708        3,202,011   

Liberty Interactive Corp.
- Class A
(a)(b)(d)

    175,986        3,255,741   

Liberty Media Corp. - Liberty Capital(a)(b)(d)

    42,387        4,415,454   

Liberty Ventures
- Series A
(a)(b)(d)

    23,999        1,191,310   

Man Wah Holdings, Ltd.

    2,456,000        1,339,800   

News Corp. - Class A(a)

    87,151        2,137,814   

Orient - Express Hotels, Ltd. - Class A(a)(d)

    156,104        1,389,326   

priceline.com, Inc.(a)(b)(d)

    7,002        4,332,347   

Sally Beauty Holdings,
Inc.
(a)(b)(d)

    91,171        2,287,480   

Samsonite International S.A.

    1,077,000        2,066,760   

Time Warner, Inc.(a)

    68,608        3,110,001   

UNICASA Industria de Moveis S.A.(a)(c)(d)

    104,600        555,184   

Viacom, Inc. - Class B(a)(b)

    64,500        3,456,555   

The Walt Disney Co.(a)(b)

    33,673        1,760,424   
   

 

 

 
      66,221,108   
   

 

 

 

Consumer Staples 7.40%

   

Altria Group, Inc.(a)

    22,300        744,597   

Anheuser - Busch InBev NV - ADR(a)

    10,968        942,261   

Brazil Pharma S.A.(a)(c)

    300,666        1,812,376   
     Shares     Value  

Consumer Staples (continued)

  

 

China Mengniu Dairy Co., Ltd.

    637,000        $1,905,894   

Cia de Bebidas das Americas -

ADR
(a)

    19,449        744,313   

Green Mountain Coffee Roasters, Inc.(d)

    41,700        990,375   

Heineken NV

    36,300        2,163,969   

M Dias Branco
S.A.
(a)(d)

    20,100        658,647   

Molson Coors Brewing Co.
- Class B
(a)

    58,321        2,627,361   

Raia Drogasil

S.A.
(a)

    21,907        249,084   

Reynolds American,
Inc.
(a)(b)

    47,100        2,041,314   

SABMiller PLC

    45,200        1,985,305   

Vinda International Holdings, Ltd.

    1,963,222        2,704,034   
   

 

 

 
      19,569,530   
   

 

 

 

Energy 13.39%

   

Coal 2.47%

   

Alpha Natural Resources,

Inc.
(a)(d)

    105,482        693,016   

Arch Coal, Inc.(a)(b)

    573,306        3,629,027   

CONSOL Energy, Inc.(a)

    40,496        1,216,905   

Peabody Energy Corp.(a)

    44,869        1,000,130   
   

 

 

 
      6,539,078   
   

 

 

 

Commodities 0.66%

  

 

Pacific Coast Oil
Trust
(a)(c)

    95,800        1,738,770   
   

 

 

 

Natural Gas Leveraged Exploration & Production 1.67%

   

 

Cabot Oil & Gas Corp.(a)

    40,800        1,831,920   

EQT Corp.(a)

    31,200        1,840,800   

Range Resources Corp.

    10,900        761,583   
   

 

 

 
      4,434,303   
   

 

 

 

Non-North American Producers 0.45%

  

 

InterOil Corp.(a)(b)(d)

    15,334        1,184,705   
   

 

 

 

Oil Leveraged Exploration & Production 2.25%

   

Anadarko Petroleum

Corp.
(a)

    21,040        1,471,117   

EOG Resources,
Inc.
(a)(b)

    9,800        1,098,090   

Kodiak Oil & Gas Corp.(a)(d)

    100,690        942,459   

Noble Energy,
Inc.
(a)(b)

    14,900        1,381,379   

Pioneer Natural Resources

Co.
(a)(b)

    10,206        1,065,506   
   

 

 

 
      5,958,551   
   

 

 

 

Oil Services & Drillers 3.13%

  

 

National Oilwell Varco, Inc.(a)(b)

    18,282        1,464,571   

Noble Corp.(a)(b)(d)

    33,100        1,184,318   

Oil States International, Inc.(a)(d)

    18,944        1,505,290   
 

 

 

Semi-Annual Report  |  September 30, 2012

  

 

13


Statement of Investments

   Clough Global Equity Fund

September 30, 2012 (Unaudited)

  

 

     Shares     Value  

Energy (continued)

   

Schlumberger,
Ltd.
(a)

    17,400      $ 1,258,542   

Seadrill, Ltd.(a)(b)

    39,536        1,550,602   

Weatherford International,
Ltd.
(a)(d)

    104,200        1,321,256   
   

 

 

 
      8,284,579   
   

 

 

 

Tankers 2.76%

   

Golar LNG Partners LP(a)

    39,524        1,266,349   

Golar LNG, Ltd.(a)(b)

    156,334        6,032,929   
   

 

 

 
      7,299,278   
   

 

 

 

TOTAL ENERGY

      35,439,264   
   

 

 

 

Energy Infrastructure & Capital Equipment 0.49%

   

 

Fluor Corp.(a)

    21,900        1,232,532   

KBR, Inc.(a)

    2,168        64,650   
   

 

 

 
      1,297,182   
   

 

 

 

Financials 27.88%

   

Business Development Corporations 6.15%

   

 

Ares Capital
Corp.
(a)

    323,980        5,553,017   

Golub Capital BDC, Inc.(a)

    87,100        1,384,890   

Medley Capital Corp.(a)

    55,928        786,907   

PennantPark Floating Rate Capital, Ltd.(a)

    20,878        264,316   

PennantPark Investment
Corp.
(a)

    262,402        2,784,085   

Solar Capital,
Ltd.
(a)

    188,119        4,311,687   

Solar Senior Capital,
Ltd.
(a)

    64,139        1,148,730   

THL Credit, Inc.(a)

    1,821        25,549   
   

 

 

 
      16,259,181   
   

 

 

 

Capital Markets 1.48%

  

 

Ameriprise Financial, Inc.(a)

    15,600        884,364   

CITIC Securities Co.,
Ltd. - Class H

    382,381        674,612   

The Goldman Sachs Group, Inc.(a)

    13,258        1,507,169   

Indochina Capital Vietnam Holdings,
Ltd.
(c)(d)(e)

    10,996        14,075   

LPL Financial Holdings, Inc.(a)

    29,400        839,076   
   

 

 

 
      3,919,296   
   

 

 

 

Commercial Banks 2.01%

  

 

Fifth Third
Bancorp
(a)(b)

    101,900        1,580,469   

Grupo Financiero Santander Mexico SAB de CV - ADR(d)

    41,600        569,920   

Wells Fargo & Co.(a)

    91,999        3,176,726   
   

 

 

 
      5,327,115   
   

 

 

 
     Shares     Value  

Financials (continued)

  

 

Consumer Finance 0.98%

  

 

Mastercard, Inc. - Class A(a)(b)

    4,315      $ 1,948,136   

Visa, Inc. -
Class A
(a)

    4,892        656,898   
   

 

 

 
      2,605,034   
   

 

 

 

Diversified Financials 7.67%

  

 

Bank of America Corp.(a)(b)

    1,160,019        10,242,968   

Citigroup, Inc.(a)(b)

    278,723        9,119,816   

JPMorgan Chase & Co.(a)

    22,900        926,992   
   

 

 

 
      20,289,776   
   

 

 

 

Insurance 1.55%

  

 

ACE, Ltd.(a)(b)

    30,317        2,291,965   

Hartford Financial Services Group, Inc.(a)

    92,548        1,799,133   
   

 

 

 
      4,091,098   
   

 

 

 

Mortgage-Backed Securities Real Estate Investment Trusts 4.87%

   

 

American Capital Agency Corp.(a)

    114,446        3,958,687   

American Capital Mortgage Investment Corp.(a)

    46,037        1,156,910   

Capstead Mortgage
Corp.
(a)

    255,885        3,451,889   

CYS Investments, Inc.(a)

    96,183        1,355,218   

Dynex Capital, Inc.(a)

    155,613        1,672,840   

Hatteras Financial Corp.(a)

    45,528        1,283,434   
   

 

 

 
      12,878,978   
   

 

 

 

Real Estate Investment Trusts 1.99%

  

 

American Residential Properties,
Inc.
(a)(c)(d)(e)

    56,000        1,134,000   

Ascendas Real Estate Investment Trust

    1,370,000        2,690,434   

Ascott Residence Trust

    682,302        697,758   

Select Income REIT(a)(c)

    29,700        731,214   
   

 

 

 
      5,253,406   
   

 

 

 

Real Estate Management & Development 1.18%

   

 

BHG S.A. - Brazil Hospitality Group(a)(d)

    42,939        413,028   

BR Malls Participacoes S.A.(a)

    88,128        1,213,295   

Iguatemi Empresa de Shopping Centers S.A.(a)

    26,100        668,448   

Sonae Sierra Brasil S.A.(a)

    52,627        833,050   
   

 

 

 
      3,127,821   
   

 

 

 

TOTAL FINANCIALS

  

    73,751,705   
   

 

 

 

Health Care 1.61%

   

Aetna, Inc.(a)

    25,600        1,013,760   
 

 

 

14

     www.cloughglobal.com   


Clough Global Equity Fund

   Statement of Investments
   September 30, 2012 (Unaudited)

 

     Shares     Value  

Health Care (continued)

   

Sanofi - ADR(a)(b)

    75,162        $3,236,476   
   

 

 

 
      4,250,236   
   

 

 

 

Industrials 5.74%

  

 

Brenntag AG

    10,430        1,334,946   

Cia de Locacao das Americas(a)(c)(d)

    337,400        1,401,360   

Covanta Holding Corp.(a)

    61,700        1,058,772   

Delta Air Lines,
Inc.
(a)(b)(d)

    259,284        2,375,041   

Edwards Group Ltd. - ADR (a)(d)

    104,400        690,084   

Sensata Technologies Holding NV(a)(b)(d)

    60,417        1,798,614   

TransDigm Group,
Inc.
(a)(b)(d)

    11,576        1,642,287   

United Continental Holdings, Inc.(a)(b)(d)

    110,461        2,153,990   

US Airways Group,
Inc.
(a)(b)(d)

    199,645        2,088,287   

WABCO Holdings,
Inc.
(a)(d)

    11,100        640,137   
   

 

 

 
      15,183,518   
   

 

 

 

Information Technology 22.38%

  

 

Acme Packet, Inc.(a)(d)

    27,459        469,549   

Apple, Inc.(a)(b)

    13,165        8,784,478   

Baidu, Inc. - ADR(a)(d)

    8,550        998,811   

Broadcom Corp. -
Class A
(a)

    119,100        4,118,478   

Check Point Software Technologies, Ltd.(a)(d)

    16,006        770,849   

EMC Corp.(a)(b)(d)

    232,627        6,343,738   

Equinix, Inc.(a)(b)(d)

    6,416        1,322,017   

FleetCor Technologies, Inc.(a)(d)

    8,328        373,094   

Fortinet, Inc.(a)(d)

    31,803        767,724   

Google, Inc. -
Class A
(a)(b)(d)

    13,543        10,218,194   

Informatica Corp.(a)(d)

    33,100        1,152,211   

Lenovo Group, Ltd.

    1,216,869        1,007,512   

Micron Technology,
Inc.
(a)(b)(d)

    610,963        3,656,614   

OCZ Technology Group, Inc.(a)(b)(d)

    94,313        327,266   

OmniVision Technologies, Inc.(a)(d)

    33,404        466,153   

QLIK Technologies,
Inc.
(a)(d)

    53,600        1,201,176   

QUALCOMM, Inc.(a)(b)

    90,682        5,666,718   

Responsys, Inc.(a)(d)

    61,000        624,030   

Seagate Technology

    79,719        2,471,289   

Sourcefire, Inc.(a)(d)

    30,200        1,480,706   

Telecity Group PLC

    71,029        1,027,120   

ViaSat, Inc.(a)(b)(d)

    56,252        2,102,700   

VMware, Inc. -
Class A
(a)(d)

    15,533        1,502,662   

Western Digital Corp.

    61,264        2,372,755   
   

 

 

 
      59,225,844   
   

 

 

 
     Shares     Value  

Materials 1.57%

   

Westlake Chemical Corp.(a)

    12,725        $929,688   

WR Grace & Co.(a)(b)(d)

    54,700        3,231,676   
   

 

 

 
      4,161,364   
   

 

 

 

Telecommunication Services 4.72%

  

 

AT&T, Inc.(a)(b)

    56,500        2,130,050   

DiGi.Com Bhd

    555,000        958,744   

KT Corp.

    16,836        533,214   

Maxis Bhd

    1,262,900        2,859,240   

Philippine Long Distance Telephone Co.

    20,310        1,355,461   

Telekom Malaysia Bhd

    395,200        800,356   

Verizon Communications, Inc.(a)(b)

    52,360        2,386,045   

Vodafone Group PLC - ADR

    51,500        1,467,492   
   

 

 

 
      12,490,602   
   

 

 

 

Utilities 13.78%

   

Alliant Energy
Corp.
(a)(b)

    43,800        1,900,482   

Ameren Corp.(a)(b)

    115,800        3,783,186   

American Electric
Power Co., Inc.
(a)(b)

    48,200        2,117,908   

CMS Energy Corp.(a)

    88,300        2,079,465   

Duke Energy Corp.(a)(b)

    62,733        4,065,098   

Edison
International
(a)(b)

    44,213        2,020,092   

Entergy Corp.(a)(b)

    32,100        2,224,530   

FirstEnergy Corp.(a)(b)

    61,251        2,701,169   

National Fuel Gas
Co.
(a)

    26,000        1,405,040   

National Grid PLC - ADR(a)(b)

    72,470        4,011,939   

NiSource, Inc.(a)(b)

    96,654        2,462,744   

Northeast Utilities(a)(b)

    60,835        2,325,722   

OGE Energy Corp.(a)(b)

    50,905        2,823,191   

Public Service Enterprise Group, Inc.(a)

    39,600        1,274,328   

Westar Energy, Inc.(a)

    42,781        1,268,885   
   

 

 

 
      36,463,779   
   

 

 

 

TOTAL COMMON STOCKS

(Cost $301,577,227)

  

  

    328,054,132   
   

 

 

 

EXCHANGE TRADED FUNDS 2.27%

  

 

Market Vectors Gold Miners ETF(a)

    31,616        1,698,096   

SPDR® Gold
Shares
(a)(d)

    25,100        4,317,702   
   

 

 

 
      6,015,798   
   

 

 

 

TOTAL EXCHANGE TRADED FUNDS

(Cost $5,445,139)

  

  

    6,015,798   
   

 

 

 
 

 

 

Semi-Annual Report  |  September 30, 2012

  

 

15


Statement of Investments

   Clough Global Equity Fund

September 30, 2012 (Unaudited)

  

 

 

     Shares     Value  

PREFERRED STOCKS 0.43%

   

The Goodyear Tire & Rubber Co.,

5.875%(a)

    26,000        $1,148,420   
   

 

 

 

TOTAL PREFERRED STOCKS

(Cost $1,301,625)

      1,148,420   
   

 

 

 

RIGHTS 0.10%

   

Liberty Ventures Rights, strike price $14.00(a)(b)(d)

    19,369        262,256   
   

 

 

 

TOTAL RIGHTS

(Cost $217,115)

      262,256   
   

 

 

 

Description and

Maturity Date

  Principal
Amount
    Value  

CORPORATE BONDS 0.32%

   

TAM Capital 2, Inc.

   

01/29/2020,
9.500%
(a)(f)

    $775,000        850,562   

TOTAL CORPORATE BONDS

(Cost $762,673)

      850,562   
   

 

 

 

ASSET/MORTGAGE BACKED SECURITIES 0.14%

   

Freddie Mac REMICS

   

Series 2007-3271, Class AS,

   

02/15/2037, 37.495%(a)(g)

    270,358        302,172   

Government National Mortgage Association (GNMA)

   

Series 2007-37, Class SA,

   

03/20/2037, 21.280%(a)(g)

    10,907        11,088   

Series 2007-37, Class SB,

   

03/20/2037, 21.280%(a)(g)

    40,543        42,288   
   

 

 

 

TOTAL ASSET/MORTGAGE BACKED SECURITIES (Cost $313,505)

   

    355,548   
   

 

 

 

GOVERNMENT & AGENCY OBLIGATIONS 10.66%

   

U.S. Treasury Bonds

02/15/2031, 5.375% (a)

    2,175,000        3,148,652   

02/15/2036, 4.500%

    1,900,000        2,538,579   

U.S. Treasury Notes

01/31/2019, 1.250% (a)

    4,055,000        4,144,019   

11/15/2019, 3.375% (a)

    4,570,000        5,301,557   

05/15/2020, 3.500%

    2,110,000        2,471,833   

11/15/2021, 2.000% (a)

    10,150,000        10,601,198   
   

 

 

 

TOTAL GOVERNMENT & AGENCY OBLIGATIONS (Cost $28,093,370)

   

    28,205,838   
   

 

 

 

 

    

Number

of

Contracts

    Value  

CALL OPTIONS PURCHASED 0.00%(h)

   

Market Vectors Oil Service ETF, Expires January, 2013, Exercise Price $53.33

    939        $2,347   
   

 

 

 

TOTAL CALL OPTIONS PURCHASED

(Cost $160,263)

  

  

    2,347   
   

 

 

 
    

Shares/

Principal
Amount

    Value  

SHORT-TERM INVESTMENTS 13.51%

   

Money Market Fund

   

Dreyfus Treasury Prime Money Market Fund (0.000% 7-day yield)(i )

    13,048,858        13,048,858   
   

 

 

 

U.S. Treasury Bills

   

U.S. Treasury Bill Discount Notes

   

11/15/2012, 0.156%(a)(j)

    $8,200,000        8,198,651   

02/07/2013, 0.190%(a)(j)

    13,000,000        12,995,229   

04/04/2013, 0.181%(a)(j)

    1,500,000        1,498,941   
   

 

 

 
      22,692,821   
   

 

 

 

TOTAL SHORT-TERM INVESTMENTS

(Cost $35,738,196)

  

  

    35,741,679   
   

 

 

 

Total Investments - 151.42%

(Cost $373,609,113)

      400,636,580   

Liabilities in Excess of Other Assets - (51.42%)

(136,053,959)

   
   

 

 

 

NET ASSETS - 100.00%

      $264,582,621   
   

 

 

 

SCHEDULE OF WRITTEN

OPTIONS

 

Number

of

Contracts

    Value  

CALL OPTIONS WRITTEN

   

CBS Corp., Expires December, 2012, Exercise Price $40.00

    280        $(16,800)   

News Corp., Expires January, 2013, Exercise Price $27.00

    432        (15,120)   

Time Warner, Inc., Expires December, 2012, Exercise Price $50.00

    345        (8,280)   
 

 

 

16

   www.cloughglobal.com


Clough Global Equity Fund

   Statement of Investments
   September 30, 2012 (Unaudited)

 

SCHEDULE OF

WRITTEN OPTIONS

 

Number

of

Contracts

    Value  

CALL OPTIONS WRITTEN (continued)

  

 

Viacom, Inc., Expires December, 2012, Exercise Price $57.50

    640      $ (57,600

Walt Disney Co., Expires January, 2013, Exercise Price $57.50

    330        (13,530
   

 

 

 

TOTAL CALL OPTIONS WRITTEN (Premiums received $136,178)

   

    $(111,330)   
   

 

 

 

SCHEDULE OF

SECURITIES

SOLD SHORT (d)

  Shares     Value  

COMMON STOCK

   

Applied Materials, Inc.

    (103,900)        $(1,160,043)   

ASML Holding NV

    (21,300)        (1,143,384)   

Atlas Copco AB - A Shares

    (26,522)        (618,960)   

B/E Aerospace, Inc.

    (53,000)        (2,231,300)   

Banco Santander S.A.

    (337,393)        (2,512,520)   

Barclays PLC - ADR

    (110,056)        (1,526,477)   

BHP Billiton, Ltd. - ADR

    (46,172)        (3,167,861)   

BNP Paribas S.A.

    (29,806)        (1,416,415)   

The Boeing Co.

    (35,800)        (2,492,396)   

Caterpillar, Inc.

    (64,222)        (5,525,661)   

Core Laboratories NV

    (7,500)        (911,100)   

Credit Agricole S.A.

    (174,070)        (1,201,208)   

Cummins, Inc.

    (20,000)        (1,844,200)   

Deutsche Bank AG

    (62,226)        (2,467,261)   

F5 Networks, Inc.

    (6,600)        (691,020)   

Fiat SpA

    (220,305)        (1,175,443)   

Hexcel Corp.

    (24,500)        (588,490)   

Intel Corp.

    (79,000)        (1,791,720)   

Intesa Sanpaolo SpA

    (638,415)        (970,527)   

KLA-Tencor Corp.

    (23,300)        (1,111,526)   

Marathon Petroleum Corp.

    (18,600)        (1,015,374)   

Nabors Industries, Ltd.

    (64,700)        (907,741)   

Oracle Corp.

    (158,200)        (4,981,718)   

Petroleo Brasileiro S.A.
- ADR

    (311,097)        (7,136,565)   

Phillips 66

    (21,300)        (987,681)   

Precision Castparts Corp.

    (17,300)        (2,825,782)   

Rio Tinto PLC - ADR

    (47,477)        (2,220,025)   

Sandvik AB

    (141,748)        (1,923,766)   

Siemens AG - ADR

    (11,100)        (1,111,665)   

Societe Generale S.A.

    (32,352)        (918,784)   

Tesoro Corp.

    (24,100)        (1,009,790)   

United States Steel Corp.

    (66,570)        (1,269,490)   

Vale SA - ADR

    (155,996)        (2,792,328)   

Valero Energy Corp.

    (31,700)        (1,004,256)   
   

 

 

 
      (64,652,477)   
   

 

 

 

EXCHANGE TRADED FUNDS

   

iShares® Russell 2000® Index Fund

    (86,200)        (7,194,252)   

Market Vectors Semiconductor ETF

    (122,100)        (3,862,023)   

SCHEDULE OF

SECURITIES SOLD SHORT (d)
(continued)

  Shares     Value  

United States Oil Fund LP

    (218,733)        $(7,465,357)   
   

 

 

 
      (18,521,632)   
   

 

 

 

TOTAL SECURITIES SOLD SHORT

(Proceeds $83,813,260)

  

  

    $(83,174,109)   
   

 

 

 

 

(a) 

Pledged security; a portion or all of the security is pledged as collateral for securities sold short or borrowings as of September 30, 2012. (See Note 1 and Note 6)

(b)

Loaned security; a portion or all of the security is on loan at September 30, 2012.

(c) 

Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. As of September 30, 2012, these securities had a total value of $9,109,251 or 3.44% of net assets.

(d) 

Non-income producing security.

(e) 

Fair valued security; valued by management in accordance with procedures approved by the Fund’s Board of Trustees. As of September 30, 2012, these securities had a total value of $1,148,075 or 0.43% of total net assets.

(f) 

Securities were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts securities offered and sold outside of the United States from registration. Such securities cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. As of September 30, 2012, the aggregate market value of those securities was $850,562, representing 0.32% of net assets.

(g)

Floating or variable rate security - rate disclosed as of September 30, 2012.

(h) 

Less than 0.005% of net assets.

(i) 

Less than 0.0005%.

(j) 

Rate shown represents the bond equivalent yield to maturity at date of purchase.

See Notes to the Financial Statements.

 

 

 

 

Semi-Annual Report  |  September 30, 2012

  

 

17


Statement of Investments

   Clough Global Opportunities Fund

September 30, 2012 (Unaudited)

  

 

     Shares     Value  

COMMON STOCKS 117.75%

  

 

Consumer Discretionary 23.34%

  

 

Allison Transmission Holdings,
Inc.
(a)(b)(c)

    222,300      $ 4,472,676   

AMC Networks, Inc. - Class A(a)(d)

    93,200        4,056,064   

Arcos Dorados Holdings, Inc. - Class A(a)

    112,900        1,742,047   

Arezzo Industria e Comercio S.A.(a)

    92,080        1,660,597   

AutoZone, Inc.(a)(b)(d)

    15,500        5,729,885   

BorgWarner, Inc.(d)

    62,800        4,340,108   

Bosideng International Holdings, Ltd.

    22,744,000        6,394,326   

CBS Corp. -
Class B
(a)

    154,064        5,597,145   

China Lilang, Ltd.

    1,908,530        1,004,224   

Cia Hering(a)

    87,300        1,951,196   

Cinemark Holdings, Inc.(a)(b)

    333,353        7,477,108   

Ford Motor Co.(a)(b)

    1,410,854        13,911,020   

The Goodyear Tire & Rubber
Co.
(a)(b)(d)

    125,910        1,534,843   

H&R Block, Inc.(a)(b)

    1,049,528        18,188,320   

International Meal Co. Holdings
S.A.
(a)

    163,000        1,509,192   

Lamar Advertising Co. -
Class A
(a)(b)(d)

    95,070        3,523,294   

Liberty Global, Inc. - Class A(a)(b)(d)

    115,707        7,029,200   

Liberty Interactive Corp.-
Class A
(a)(b)(d)

    301,402        5,575,937   

Liberty Media Corp. - Liberty
Capital
(a)(b)(d)

    85,846        8,942,578   

Liberty Ventures - Series A(a)(b)(d)

    53,892        2,675,199   

Man Wah Holdings, Ltd.

    6,430,900        3,508,193   

News Corp. -

Class A
(a)

    227,332        5,576,454   

Orient-Express Hotels,
Ltd. - Class A
(a)(d)

    296,550        2,639,295   

priceline.com,
Inc.
(a)(b)(c)

    18,350        11,353,696   

Sally Beauty Holdings, Inc.(a)(d)

    239,883        6,018,665   

Time Warner, Inc.(a)

    178,836        8,106,636   

UNICASA Industria de Moveis
S.A.
(a)(c)(d)

    268,600        1,425,644   

Viacom, Inc. -
Class B
(a)(b)

    168,100        9,008,479   

The Walt Disney
Co.
(a)(b)

    87,848        4,592,693   
   

 

 

 
      159,544,714   
   

 

 

 

Consumer Staples 6.72%

  

 

Altria Group, Inc.(a)

    58,300        1,946,637   

Anheuser-Busch InBev NV - ADR(a)

    28,548        2,452,559   

Brazil Pharma
S.A.
(a)(c)

    790,115        4,762,711   
     Shares     Value  

Consumer Staples (continued)

  

 

China Mengniu Dairy Co., Ltd.

    780,000      $ 2,333,748   

Cia de Bebidas das Americas -
ADR
(a)

    50,662        1,938,835   

Green Mountain Coffee Roasters,
Inc.
(d)

    108,600        2,579,250   

Heineken NV

    94,600        5,639,433   

M Dias Branco
S.A.
(a)(d)

    52,200        1,710,517   

Molson Coors Brewing Co. - Class B(a)(b)

    152,513        6,870,711   

Raia Drogasil
S.A.
(a)

    57,248        650,914   

Reynolds American,
Inc.
(a)(b)

    123,000        5,330,820   

SABMiller PLC

    117,800        5,174,092   

Vinda International Holdings, Ltd.

    3,287,714        4,528,315   
   

 

 

 
      45,918,542   
   

 

 

 

Energy 12.78%

   

Coal 2.49%

   

Alpha Natural Resources,
Inc.
(a)(d)

    274,418        1,802,927   

Arch Coal,
Inc.
(a)(b)

    1,493,255        9,452,304   

CONSOL Energy, Inc.(a)

    105,383        3,166,759   

Peabody Energy Corp.(a)(b)

    116,735        2,602,023   
   

 

 

 
      17,024,013   
   

 

 

 

Natural Gas Leveraged Exploration & Production 1.69%

   

 

Cabot Oil & Gas Corp.(a)

    106,400        4,777,360   

EQT Corp.(a)

    81,200        4,790,800   

Range Resources Corp.

    28,300        1,977,321   
   

 

 

 
      11,545,481   
   

 

 

 

Non-North American Producers 0.46%

   

 

InterOil Corp.(a)(b)(d)

    40,409        3,121,999   
   

 

 

 

Oil Leveraged Exploration & Production 2.28%

   

 

Anadarko Petroleum Corp.(a)(b)

    55,100        3,852,592   

EOG Resources, Inc.(a)(b)

    25,900        2,902,095   

Kodiak Oil & Gas Corp.(a)(d)

    262,154        2,453,762   

Noble Energy,
Inc.
(a)(b)

    38,900        3,606,419   

Pioneer Natural Resources
Co.
(a)(b)

    26,661        2,783,408   
   

 

 

 
      15,598,276   
   

 

 

 

Oil Services & Drillers 3.16%

  

 

National Oilwell Varco, Inc.(a)(b)

    47,695        3,820,846   

Noble Corp.(a)(b)(d)

    86,600        3,098,548   

Oil States International, Inc.(a)(b)(d)

    49,426        3,927,390   

Schlumberger,
Ltd.
(a)

    45,600        3,298,248   
 

 

 

18

   www.cloughglobal.com


Clough Global Opportunities Fund

   Statement of Investments
   September 30, 2012 (Unaudited)

 

     Shares     Value  

Energy (continued)

   

Seadrill, Ltd.(a)(b)

    103,164      $ 4,046,092   

Weatherford International,
Ltd.
(a)(d)

    271,300        3,440,084   
   

 

 

 
      21,631,208   
   

 

 

 

Tankers 2.70%

   

Golar LNG Partners LP(a)

    102,759        3,292,399   

Golar LNG, Ltd.(a)(b)

    392,958        15,164,249   
   

 

 

 
      18,456,648   
   

 

 

 

TOTAL ENERGY

      87,377,625   
   

 

 

 

Energy Infrastructure & Capital Equipment 0.50%

  

Fluor Corp.(a)

    57,900        3,258,612   

KBR, Inc.(a)

    5,735        171,018   
   

 

 

 
      3,429,630   
   

 

 

 

Financials 27.95%

   

Business Development Corporations 6.00%

   

 

Ares Capital Corp.(a)

    822,236        14,093,125   

Golub Capital BDC, Inc.(a)

    226,900        3,607,710   

Medley Capital
Corp.
(a)

    146,188        2,056,865   

PennantPark Floating Rate Capital, Ltd.

    54,072        684,552   

PennantPark Investment
Corp.
(a)

    594,908        6,311,974   

Solar Capital, Ltd.(a)

    487,745        11,179,115   

Solar Senior Capital,
Ltd.
(a)

    167,431        2,998,689   

THL Credit, Inc.(a)

    4,759        66,769   
   

 

 

 
      40,998,799   
   

 

 

 

Capital Markets 1.50%

  

 

Ameriprise Financial, Inc.(a)

    40,700        2,307,283   

CITIC Securities Co.,
Ltd. - Class H

    999,445        1,763,260   

The Goldman Sachs Group, Inc.(a)

    34,564        3,929,236   

Indochina Capital Vietnam Holdings,
Ltd.
(c)(d)(e)

    25,655        32,838   

LPL Financial Holdings, Inc.(a)

    76,700        2,189,018   
   

 

 

 
      10,221,635   
   

 

 

 

Commercial Banks 2.03%

  

 

Fifth Third
Bancorp
(a)(b)

    266,100        4,127,211   

Grupo Financiero Santander Mexico SAB de CV - ADR(d)

    107,400        1,471,380   

Wells Fargo &
Co.
(a)(b)

    240,126        8,291,551   
   

 

 

 
      13,890,142   
   

 

 

 

 

Consumer Finance 1.00%

  

 
   

Mastercard, Inc. - Class A (a)(b)

    11,419        5,155,450   
     Shares     Value  

Financials (continued)

   

Visa, Inc. -
Class A
(a)

    12,541      $ 1,684,006   
   

 

 

 
      6,839,456   
   

 

 

 

Diversified Financials 7.74%

   

Bank of America Corp.(a)(b)

    3,024,436        26,705,770   

Citigroup, Inc.(a)(b)

    727,323        23,798,008   

JPMorgan Chase & Co.(a)

    59,800        2,420,704   
   

 

 

 
      52,924,482   
   

 

 

 

Insurance 1.57%

   

ACE, Ltd.(a)

    79,638        6,020,633   

Hartford Financial Services Group, Inc.(a)

    241,167        4,688,286   
   

 

 

 
      10,708,919   
   

 

 

 

Mortgage-Backed Securities Real Estate Investment Trusts 4.91%

   

 

American Capital Agency
Corp.
(a)

    298,515        10,325,634   

American Capital Mortgage Investment Corp.(a)

    120,153        3,019,445   

Capstead Mortgage Corp.(a)

    667,538        9,005,088   

CYS Investments, Inc.(a)

    250,662        3,531,827   

Dynex Capital, Inc.(a)

    405,253        4,356,470   

Hatteras Financial Corp.(a)

    118,287        3,334,510   
   

 

 

 
      33,572,974   
   

 

 

 

Real Estate Investment Trusts 2.01%

   

 

American Residential Properties, Inc.(a)(c)(d)(e)

    145,000        2,936,250   

Ascendas Real Estate Investment Trust

    3,597,000        7,063,861   

Ascott Residence Trust

    1,781,824        1,822,188   

Select Income REIT(a)(c)

    77,000        1,895,740   
   

 

 

 
      13,718,039   
   

 

 

 

Real Estate Management & Development 1.19%

   

 

BHG S.A. - Brazil Hospitality Group(a)(d)

    111,949        1,076,831   

BR Malls Participacoes S.A.(a)

    230,248        3,169,921   

Iguatemi Empresa de Shopping Centers S.A.(a)

    68,000        1,741,551   

Sonae Sierra Brasil
S.A.
(a)

    137,724        2,180,078   
   

 

 

 
      8,168,381   
   

 

 

 

TOTAL FINANCIALS

      191,042,827   
   

 

 

 

Health Care 1.62%

   

Aetna, Inc.(a)(b)

    66,700        2,641,320   
 

 

 

Semi-Annual Report  |  September 30, 2012

  

 

19


Statement of Investments

   Clough Global Opportunities Fund

September 30, 2012 (Unaudited)

  

 

     Shares     Value  

Health Care (continued)

  

 

Sanofi - ADR(a)(b)

    196,318        $8,453,453   
   

 

 

 
      11,094,773   
   

 

 

 

Industrials 5.52%

  

 

Brenntag AG

    27,270        3,490,313   

Cia de Locacao das Americas(a)(c)(d)

    871,500        3,619,697   

Covanta Holding
Corp.
(a)

    161,200        2,766,192   

Delta Air Lines,
Inc.
(a)(b)(d)

    676,807        6,199,552   

Sensata Technologies Holding NV(a)(b)(d)

    157,700        4,694,729   

TransDigm Group,
Inc.
(a)(b)(d)

    29,562        4,193,961   

United Continental Holdings, Inc.(a)(d)

    288,204        5,619,978   

US Airways Group,
Inc.
(a)(b)(d)

    521,785        5,457,871   

WABCO Holdings,
Inc.
(a)(d)

    29,000        1,672,430   
   

 

 

 
      37,714,723   
   

 

 

 

Information Technology 21.72%

  

 

Apple, Inc.(a)(b)

    34,369        22,933,059   

Baidu, Inc. - ADR(a)(d)

    22,300        2,605,086   

Broadcom Corp. -
Class A
(a)

    311,200        10,761,296   

Check Point Software Technologies,
Ltd.
(a)(d)

    41,811        2,013,618   

EMC Corp.(a)(b)(d)

    607,035        16,553,845   

Equinix, Inc.(a)(b)(d)

    16,743        3,449,895   

Fortinet, Inc.(a)(d)

    83,100        2,006,034   

Google, Inc. -
Class A
(a)(b)(d)

    35,347        26,669,312   

Informatica Corp.(a)(d)

    86,200        3,000,622   

Lenovo Group, Ltd.

    3,179,040        2,632,100   

Micron Technology,
Inc.
(a)(b)(d)

    1,593,970        9,539,910   

OCZ Technology Group, Inc.(a)(b)(d)

    246,143        854,116   

OmniVision Technologies,
Inc.
(a)(d)

    87,089        1,215,327   

QUALCOMM, Inc.(a)(b)

    236,423        14,774,073   

Responsys, Inc.(a)(d)

    159,100        1,627,593   

Seagate Technology

    207,724        6,439,444   

Sourcefire, Inc.(a)(d)

    78,600        3,853,758   

Telecity Group PLC

    185,035        2,675,712   

ViaSat, Inc.(a)(b)(d)

    126,328        4,722,141   

VMware, Inc. -
Class A
(a)(d)

    40,566        3,924,355   

Western Digital Corp.

    159,574        6,180,301   
   

 

 

 
      148,431,597   
   

 

 

 

Materials 1.59%

  

 

Westlake Chemical Corp.(a)

    33,097        2,418,067   
     Shares     Value  

Materials (continued)

  

 

WR Grace & Co.(a)(b)(d)

    142,900        $8,442,532   
   

 

 

 
      10,860,599   
   

 

 

 

Telecommunication Services 4.78%

  

 

AT&T, Inc.(a)(b)

    147,500        5,560,750   

DiGi.Com Bhd

    1,450,000        2,504,826   

KT Corp.

    43,981        1,392,924   

Maxis Bhd

    3,314,700        7,504,572   

Philippine Long Distance Telephone Co.

    53,015        3,538,146   

Telekom Malaysia Bhd

    1,033,200        2,092,429   

Verizon Communications, Inc.(a)(b)

    136,662        6,227,687   

Vodafone Group PLC - ADR

    134,100        3,821,179   
   

 

 

 
      32,642,513   
   

 

 

 

Utilities 11.23%

  

 

Alliant Energy Corp.(a)

    73,600        3,193,504   

Ameren Corp.(a)(b)

    302,500        9,882,675   

American Electric Power Co., Inc.(a)(b)

    89,000        3,910,660   

CMS Energy Corp.(a)(b)

    205,800        4,846,590   

Duke Energy Corp.(a)

    42,400        2,747,520   

Edison International(a)(b)

    108,703        4,966,640   

Entergy Corp.(a)

    47,900        3,319,470   

FirstEnergy Corp.(a)(b)

    125,166        5,519,821   

National Fuel Gas Co.(a)

    67,900        3,669,316   

National Grid PLC - ADR(a)(b)

    176,911        9,793,793   

NiSource, Inc.(a)(b)

    190,673        4,858,348   

Northeast Utilities(a)(b)

    151,621        5,796,471   

OGE Energy Corp.(a)(b)

    137,730        7,638,506   

Public Service Enterprise Group, Inc.(a)

    103,300        3,324,194   

Westar Energy, Inc.(a)

    111,719        3,313,585   
   

 

 

 
      76,781,093   
   

 

 

 

TOTAL COMMON STOCKS

(Cost $743,023,845)

  

  

    804,838,636   
   

 

 

 

EXCHANGE TRADED FUNDS 2.29%

  

 

Market Vectors Gold Miners ETF(a)

    82,498        4,430,968   

SPDR® Gold Shares(a)(d)

    65,400        11,250,108   
   

 

 

 
      15,681,076   
   

 

 

 

TOTAL EXCHANGE TRADED FUNDS

(Cost $14,192,998)

  

  

    15,681,076   
   

 

 

 
 

 

 

20

   www.cloughglobal.com


Clough Global Opportunities Fund    Statement of Investments
   September 30, 2012 (Unaudited)

 

    

    

    

Shares

   

    

    

Value

 

PREFERRED STOCKS 0.44%

  

 

The Goodyear Tire & Rubber Co., 5.875%(a)

    67,800        $2,994,726   
   

 

 

 

TOTAL PREFERRED STOCKS

(Cost $3,394,237)

  

  

    2,994,726   
   

 

 

 

RIGHTS 0.10%

   

Liberty Ventures Rights, strike price $14.00(a)(b)

    50,459        683,215   
   

 

 

 

TOTAL RIGHTS

(Cost $604,784)

      683,215   
   

 

 

 

Description and

Maturity Date

   
 
Principal
Amount
  
  
    Value   

CORPORATE BONDS 0.35%

  

 

TAM Capital 2, Inc.

   

01/29/2020, 9.500% (a)(f)

    $2,205,000        2,419,987   

TOTAL CORPORATE BONDS

(Cost $2,170,546)

  

  

    2,419,987   
   

 

 

 

ASSET/MORTGAGE BACKED

SECURITIES 0.02%

  

  

 

Government National Mortgage Association (GNMA)

   

 

Series 2007-37, Class SA, 03/20/2037, 21.280%(a)(g)

    29,402        29,892   

Series 2007-37, Class SB, 03/20/2037, 21.280%(a)(g)

    109,293        113,995   
   

 

 

 

TOTAL ASSET/MORTGAGE

BACKED SECURITIES

(Cost $125,012)

  

  

  

    143,887   
   

 

 

 

GOVERNMENT & AGENCY

OBLIGATIONS 18.85%

  

  

 

U.S. Treasury Bonds

  

 

02/15/2031, 5.375% (a)

    7,850,000        11,364,099   

02/15/2036, 4.500%

    4,900,000        6,546,861   

U.S. Treasury Notes

  

 

01/31/2019, 1.250% (a)

    10,230,000        10,454,579   

11/15/2019, 3.375% (a)

    22,185,000        25,736,331   

05/15/2020, 3.500%

    7,000,000        8,200,395   

11/15/2021, 2.000% (a)

    42,535,000        44,425,808   

02/15/2022, 2.000% (a)

    21,220,000        22,082,063   
   

 

 

 

TOTAL GOVERNMENT &

AGENCY OBLIGATIONS

(Cost $128,606,341)

  

  

  

    128,810,136   
   

 

 

 
    

Number

of
Contracts

    Value  

CALL OPTIONS PURCHASED 0.17%

  

 

Cameron International Corp., Expires January, 2013, Exercise Price $57.50

    1,000        $340,000   

Ensco PLC, Expires January, 2013, Exercise Price $55.00

    1,000        320,000   

Market Vectors Oil Service ETF, Expires January, 2013, Exercise Price $53.33

    2,514        6,285   

Microsoft Corp., Expires January, 2013, Exercise Price $30.00

    1,792        213,248   

Noble Corp., Expires January, 2013, Exercise Price $40.00

    1,000        87,500   

Transocean, Ltd., Expires January, 2013, Exercise Price $50.00

    1,000        154,000   
   

 

 

 

TOTAL CALL OPTIONS

PURCHASED

(Cost $3,830,076)

  

  

  

    1,121,033   
   

 

 

 
    

Shares/

Principal
Amount

    Value  

SHORT-TERM

INVESTMENTS 12.89%

  

  

 

Money Market Fund

  

 

Dreyfus Treasury Prime Money Market Fund (0.000% 7-day yield)(h)

    32,916,424        32,916,424   
   

 

 

 

U.S. Treasury Bills

  

 

U.S. Treasury Bill Discount Notes

  

 

11/15/2012, 0.156%(a)(i)

    $22,200,000        22,196,125   

02/07/2013, 0.190%(a)(i)

    20,000,000        19,992,660   

04/04/2013, 0.181%(a)(i)

    13,000,000        12,990,822   
   

 

 

 
      55,179,607   
   

 

 

 

TOTAL SHORT-TERM

INVESTMENTS

(Cost $88,088,071)

  

  

  

    88,096,031   
   

 

 

 

Total Investments - 152.86%

(Cost $984,035,910)

  

  

    1,044,788,727   

Liabilities in Excess of
Other Assets - (52.86%)

   

    (361,275,258
   

 

 

 

NET ASSETS - 100.00%

  

    $683,513,469   
   

 

 

 
 

 

 

Semi-Annual Report  |  September 30, 2012

  

 

21


Statement of Investments    Clough Global Opportunities Fund
September 30, 2012 (Unaudited)   

 

SCHEDULE OF WRITTEN
OPTIONS
   Number of
Contracts
     Value  

CALL OPTIONS WRITTEN

     

CBS Corp., Expires December, 2012, Exercise Price $40.00

     771         $(46,260)   

News Corp., Expires January, 2013, Exercise Price $27.00

     1,128         (39,480)   

Time Warner, Inc., Expires December, 2012, Exercise Price $50.00

     907         (21,768)   

Viacom, Inc., Expires December, 2012, Exercise Price $57.50

     1,680         (151,200)   

Walt Disney Co., Expires January, 2013, Exercise Price $57.50

     870         (35,670)   
     

 

 

 

TOTAL CALL OPTIONS WRITTEN

(Premiums received $361,030)

        $(294,378)   
     

 

 

 

SCHEDULE OF

SECURITIES SOLD

SHORT (d)

   Shares      Value  

COMMON STOCK

     

Applied Materials, Inc.

     (270,700)         $(3,022,365)   

ASML Holding NV

     (55,400)         (2,973,872)   

Atlas Copco AB - A Shares

     (69,168)         (1,614,215)   

B/E Aerospace, Inc.

     (138,200)         (5,818,220)   

Banco Santander S.A.

     (880,754)         (6,558,854)   

Barclays PLC - ADR

     (287,192)         (3,983,353)   

BHP Billiton, Ltd. - ADR

     (120,360)         (8,257,900)   

BNP Paribas S.A.

     (77,668)         (3,690,872)   

The Boeing Co.

     (93,500)         (6,509,470)   

Caterpillar, Inc.

     (167,621)         (14,422,111)   

Core Laboratories NV

     (19,600)         (2,381,008)   

Credit Agricole S.A.

     (454,366)         (3,135,451)   

Cummins, Inc.

     (52,000)         (4,794,920)   

Deutsche Bank AG

     (162,418)         (6,439,874)   

F5 Networks, Inc.

     (17,200)         (1,800,840)   

Fiat SpA

     (575,246)         (3,069,240)   

Hexcel Corp.

     (64,000)         (1,537,280)   

Intel Corp.

     (205,800)         (4,667,544)   

Intesa Sanpaolo SpA

     (1,666,636)         (2,533,643)   

KLA-Tencor Corp.

     (60,800)         (2,900,464)   

Marathon Petroleum Corp.

     (48,400)         (2,642,156)   

Nabors Industries, Ltd.

     (168,400)         (2,362,652)   

Oracle Corp.

     (412,600)         (12,992,774)   

Petroleo Brasileiro S.A. - ADR

     (810,817)         (18,600,142)   

Phillips 66

     (55,500)         (2,573,535)   

Precision Castparts Corp.

     (45,000)         (7,350,300)   

Rio Tinto PLC - ADR

     (123,772)         (5,787,579)   

Sandvik AB

     (369,107)         (5,009,422)   

Siemens AG - ADR

     (28,900)         (2,894,335)   

SCHEDULE OF

SECURITIES SOLD

SHORT (d) (continued)

   Shares      Value  

Societe Generale S.A.

     (84,545)         $(2,401,044)   

Tesoro Corp.

     (62,900)         (2,635,510)   

United States Steel Corp.

     (173,591)         (3,310,380)   

Vale SA - ADR

     (406,752)         (7,280,861)   

Valero Energy Corp.

     (82,700)         (2,619,936)   
     

 

 

 
        (168,572,122)   
     

 

 

 

EXCHANGE TRADED FUNDS

  

  

iShares® Russell 2000® Index Fund

     (224,500)         (18,736,770)   

Market Vectors Semiconductor ETF

     (317,900)         (10,055,177)   

United States Oil Fund LP

     (570,587)         (19,474,134)   
     

 

 

 
        (48,266,081)   
     

 

 

 

TOTAL SECURITIES SOLD SHORT

(Proceeds $218,501,027)

  

  

     $(216,838,203)   
     

 

 

 

 

(a)

Pledged security; a portion or all of the security is pledged as collateral for securities sold short or borrowings as of September 30, 2012. (See Note 1 and Note 6)

 
(b)

Loaned security; a portion or all of the security is on loan at September 30, 2012.

 
(c)

Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. As of September 30, 2012, these securities had a total value of $19,145,556 or 2.80% of net assets.

 
(d)

Non-income producing security.

 
(e)

Fair valued security; valued by management in accordance with procedures approved by the Fund’s Board of Trustees. As of September 30, 2012, these securities had a total value of $2,969,088 or 0.43% of total net assets.

 
(f)

Securities were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts securities offered and sold outside of the United States from registration. Such securities cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. As of September 30, 2012, the aggregate market value of those securities was $2,419,987, representing 0.35% of net assets.

 
(g)

Floating or variable rate security – rate disclosed as of September 30, 2012.

 
(h)

Less than 0.0005%.

 
(i)

Rate shown represents the bond equivalent yield to maturity at date of purchase.

 
 

 

 

 

22

   www.cloughglobal.com


Clough Global Funds

   Statement of Investments
   September 30, 2012 (Unaudited)

 

Abbreviations:

AB – Aktiebolag is the Swedish equivalent of the term corporation

ADR – American Depositary Receipt

AG – Aktiengesellschaft is a German term that refers to a corporation that is limited by shares, i.e., owned by shareholders

Bhd – Berhad (in Malaysia, a form of a public company)

ETF – Exchange Traded Fund

LLC – Limited Liability Corporation

LP – Limited Partnership

Ltd. – Limited

NV – Naamloze Vennootschap (Dutch: Limited Liability Company)

PLC – Public Limited Liability

REIT – Real Estate Investment Trust

REMICS – Real Estate Mortgage Investment Conduits

S.A. – Generally designates corporations in various countries, mostly those employing the civil law

SpA – Societa` Per Azioni is an Italian shared company

For Fund compliance purposes, each Fund’s industry classifications refer to any one of the industry sub-classifications used by one or more widely recognized market indexes, and/or as defined by each Fund’s management. This definition may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease. Industries are shown as a percent of net assets. These industry classifications are unaudited.

See Notes to the Financial Statements.

 

 

Semi-Annual Report  |  September 30, 2012

  

 

23


Statements of Assets and Liabilities

     Clough Global Funds   

September 30, 2012 (Unaudited)

  

 

      Clough Global
Allocation Fund
     Clough Global
Equity Fund
     Clough Global
Opportunities Fund
 

ASSETS:

        

Investments, at value (Cost - see below)

   $ 246,134,501       $ 400,636,580       $ 1,044,788,727   

Cash

     63,958                 283,634   

Foreign Currency, at value (Cost $27,932, $45,727 and $119,890)

     27,932         45,727         119,890   

Deposit with broker for securities sold short

     50,539,822         82,111,324         212,541,510   

Dividends receivable

     515,491         860,500         2,179,329   

Interest receivable

     204,439         216,100         895,339   

Receivable for investments sold

     12,209,345         20,080,168         51,737,927   

 

 

Total Assets

     309,695,488         503,950,399         1,312,546,356   

 

 

LIABILITIES:

        

Due to custodian

             283,634           

Loan payable

     89,800,000         147,000,000         388,900,000   

Interest due on loan payable

     14,557         23,829         63,042   

Securities sold short (Proceeds $51,487,141, $83,813,260 and $218,501,027)

     51,100,272         83,174,109         216,838,203   

Options written, at value (Premiums received $83,951, $136,178 and $361,030)

     68,417         111,330         294,378   

Payable for investments purchased

     5,061,439         8,237,265         21,432,695   

Dividends payable - short sales

     4,515         7,349         19,185   

Interest payable - margin account

     20,506         33,617         87,194   

Accrued investment advisory fee

     174,401         364,743         1,057,556   

Accrued administration fee

     71,006         129,687         338,418   

Accrued trustees fee

     1,959         1,830         1,831   

Other payables and accrued expenses

     385         385         385   

 

 

Total Liabilities

     146,317,457         239,367,778         629,032,887   

 

 

Net Assets

   $ 163,378,031       $ 264,582,621       $ 683,513,469   

 

 

Cost of Investments

   $ 229,848,263       $ 373,609,113       $ 984,035,910   

 

 

COMPOSITION OF NET ASSETS:

        

Paid-in capital

   $ 171,150,108       $ 281,543,329       $ 790,350,128   

Overdistributed net investment income

     (6,224,954)         (10,689,715)         (30,833,873)   

Accumulated net realized loss on investment securities, written options, total return swaps, securities sold short and foreign currency transactions

     (18,235,769)         (33,962,467)         (138,485,100)   

Net unrealized appreciation in value of investment securities, written options, securities sold short and translation of assets and liabilities denominated in foreign currency

     16,688,646         27,691,474         62,482,314   

 

 

Net Assets

   $ 163,378,031       $ 264,582,621       $ 683,513,469   

 

 

Shares of common stock outstanding of no par value, unlimited shares authorized

     10,434,606         17,840,705         51,736,859   

 

 

Net assets value per share

   $ 15.66       $ 14.83       $ 13.21   

 

 

See Notes to the Financial Statements.

 

 

24

     www.cloughglobal.com   


Clough Global Funds

   Statements of Operations
   For the Six Months Ended September 30, 2012 (Unaudited)

 

      Clough Global
Allocation Fund
    Clough Global
Equity Fund
    Clough Global
Opportunities Fund
 

INVESTMENT INCOME:

      

Dividends (net of foreign withholding taxes of $52,920, $86,476 and $227,434)

   $ 2,718,768      $ 4,852,936      $ 11,528,798   

Interest on investment securities

     370,484        471,246        1,458,184   

Hypothecated securities income (See Note 6)

     45,685        70,500        215,832   

 

 

Total Income

     3,134,937        5,394,682        13,202,814   

 

 

EXPENSES:

      

Investment advisory fee

     1,056,109        2,209,857        6,405,048   

Administration fee

     429,987        785,727        2,049,615   

Interest on loan

     705,454        1,154,808        3,055,136   

Interest expense - margin account

     150,088        246,799        640,887   

Trustees fee

     68,028        68,098        68,098   

Dividend expense - short sales

     476,447        776,135        2,025,081   

Legal fees

     16,833        9,341        11,323   

Other expenses

     1,835        1,835        1,985   

 

 

Total Expenses

     2,904,781        5,252,600        14,257,173   

 

 

Net Investment Income/(Loss)

     230,156        142,082        (1,054,359

 

 

NET REALIZED GAIN/(LOSS) ON:

  

Investment securities

     (3,638,555     (5,864,749     (15,706,880

Securities sold short

     3,665,120        5,996,099        15,624,197   

Written options

     1,221,876        2,034,333        4,854,519   

Total return swap contracts

     (106,600     (174,134     (450,893

Foreign currency transactions

     (577,806     (949,229     (2,440,217

NET CHANGE IN UNREALIZED APPRECIATION/
(DEPRECIATION) ON:

   

Investment securities

     (821,944     (2,581,532     (3,735,604

Securities sold short

     (603,747     (981,101     (2,564,628

Written options

     151,019        248,690        716,723   

Translation of assets and liabilities denominated in foreign currencies

     (1,049     (1,709     (4,454

 

 

Net loss on investment securities, securities sold short, written options, total return swap contracts and foreign currency transactions

     (711,686     (2,273,332     (3,707,237

 

 

Net Decrease in Net Assets Attributable to Common Shares from Operations

   $ (481,530   $ (2,131,250   $ (4,761,596

 

 

See Notes to the Financial Statements.

 

 

Semi-Annual Report  |  September 30, 2012

  

 

25


Statements of Changes in Net Assets

   Clough Global Funds
  

 

     Clough Global Allocation Fund     Clough Global Equity Fund     Clough Global Opportunities Fund  
      For the Six
Months Ended
September 30,
2012
(Unaudited)
    For the
Year Ended
March 31, 2012
    For the Six
Months Ended
September 30,
2012
(Unaudited)
    For the
Year Ended
March 31, 2012
    For the Six
Months Ended
September 30,
2012
(Unaudited)
    For the
Year Ended
March 31, 2012
 

COMMON SHAREHOLDERS OPERATIONS:

  

Net investment income/(loss)

   $ 230,156      $ 2,710,451      $ 142,082      $ 3,679,630      $ (1,054,359   $ 7,360,979   

Net realized gain/(loss) from:

            

Investment securities

     (3,638,555     3,921,480        (5,864,749     5,899,035        (15,706,880     22,058,687   

Securities sold short

     3,665,120        (3,187,186     5,996,099        (5,060,458     15,624,197        (13,376,652

Written options

     1,221,876        533,161        2,034,333        888,686        4,854,519        2,113,455   

Total return swap contracts

     (106,600     -        (174,134     -        (450,893     -   

Foreign currency transactions

     (577,806     513,129        (949,229     855,880        (2,440,217     2,193,963   

Net change in unrealized
appreciation/(depreciation) on investment securities, securities sold short, written options and translation of assets and liabilities denominated in foreign currencies

     (1,275,721     (13,351,122     (3,315,652     (22,860,951     (5,587,963     (61,439,158

 

 

Net Decrease in Net Assets From Operations

     (481,530     (8,860,087     (2,131,250     (16,598,178     (4,761,596     (41,088,726

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS:

  

Net investment income

     (6,260,763     (12,521,527     (10,347,608     (20,279,371     (27,937,903     (54,503,782

Tax return of capital

                          (415,846            (1,372,025

 

 

Net Decrease in Net Assets from Distributions

     (6,260,763     (12,521,527     (10,347,608     (20,695,217     (27,937,903     (55,875,807

 

 

Net Decrease in Net Assets Attributable to Common Shares

     (6,742,293     (21,381,614     (12,478,858     (37,293,395     (32,699,499     (96,964,533

 

 

NET ASSETS ATTRIBUABLE TO COMMON SHARES:

  

Beginning of period

     170,120,324        191,501,938        277,061,479        314,354,874        716,212,968        813,177,501   

 

 

End of period*

   $ 163,378,031      $ 170,120,324      $ 264,582,621      $ 277,061,479      $ 683,513,469      $ 716,212,968   

 

 

*Includes Overdistributed Net

Investment Income of:

   $ (6,224,954   $ (194,347   $ (10,689,715   $ (484,189   $ (30,833,873   $ (1,841,611

 

 

See Notes to the Financial Statements.

 

 

26

   www.cloughglobal.com


Clough Global Funds

   Statements of Cash Flows
   For the Six Months Ended September 30, 2012 (Unaudited)

 

      Clough Global
Allocation Fund
     Clough Global
Equity Fund
     Clough Global
Opportunities Fund
 

CASH FLOWS FROM OPERATING ACTIVITIES:

        

Net decrease in net assets from operations

   $ (481,530)       $ (2,131,250)       $ (4,761,596)   

Adjustments to reconcile net increase/(decrease) in net assets from operations to net cash provided by operating activities:

        

Purchase of investment securities

     (229,349,813)         (353,653,374)         (984,821,583)   

Proceeds from disposition of investment securities

     223,760,943         344,117,536         964,161,397   

Proceeds from securities sold short transactions

     104,558,557         170,112,802         443,532,263   

Cover securities sold short transactions

     (99,009,825)         (161,206,188)         (420,476,768)   

Premiums received from written options transactions

     1,412,292         2,342,283         5,825,006   

Premiums paid on closing written options transactions

     (106,464)         (171,772)         (1,211,034)   

Purchased options transactions

     (3,881,970)         (6,441,190)         (16,338,959)   

Proceeds from purchased options transactions

     1,035,798         1,700,740         8,007,538   

Net proceeds from short-term investment securities

     10,848,319         19,357,747         46,077,170   

Net realized loss from investment securities

     3,638,555         5,864,749         15,706,880   

Net realized gain on securities sold short

     (3,665,120)         (5,996,099)         (15,624,197)   

Net realized gain on written options

     (1,221,876)         (2,034,333)         (4,854,519)   

Net realized loss on foreign currency transactions

     577,806         949,229         2,440,217   

Net change in unrealized depreciation on investment securities

     1,275,721         3,315,652         5,587,963   

Premium amortization

     131,144         120,561         572,269   

Discount accretion

     (15,531)         (29,538)         (73,770)   

Increase in deposits with brokers for securities sold short and written options

     (3,384,677)         (6,232,732)         (15,311,287)   

Decrease in dividends receivable

     71,825         111,081         306,995   

Increase/(Decrease) in interest receivable

     5,781         51,664         (120,579)   

Increase in interest due on loan payable

     2,822         4,619         12,221   

Decrease in dividends payable - short sales

     (75,008)         (122,485)         (319,499)   

Decrease in interest payable - margin account

     (3,191)         (5,051)         (13,710)   

Decrease in accrued investment advisory fee

     (8,255)         (18,649)         (56,448)   

Decrease in accrued administration fee

     (3,361)         (6,630)         (18,064)   

Decrease in accrued trustees fee

     (2,351)         (2,281)         (2,281)   

Increase in other payables

     85         85         35   

 

 

Net cash provided by operating activities

     6,110,676         9,997,176         28,225,660   

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

        

Cash distributions paid

     (6,260,763)         (10,347,608)         (27,937,903)   

 

 

Net cash used in financing activities

     (6,260,763)         (10,347,608)         (27,937,903)   

 

 

Net increase/(decrease) in cash and foreign currency

     (150,087)         (350,432)         287,757   

 

 

Cash and foreign currency, beginning of period

   $ 241,977       $ 396,159       $ 115,767   

Cash and foreign currency, end of period

   $ 91,890       $ 45,727       $ 403,524   

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

        

Cash paid during the period for interest from bank borrowing:

   $ 702,632       $ 1,150,189       $ 3,042,915   

See Notes to the Financial Statements.

 

 

Semi-Annual Report  |  September 30, 2012

  

 

27


Financial Highlights

   Clough Global Allocation Fund

For a share outstanding throughout the periods indicated

  

 

      For the
Six Months
Ended
September 30,
2012 (Unaudited)
     For the
Year Ended
March 31, 2012
     For the
Year Ended
March 31, 2011
     For the
Year Ended
March 31, 2010
     For the
Year Ended
March 31, 2009
     For the
Year Ended
March 31, 2008
 

PER COMMON SHARE OPERATING PERFORMANCE:

  

Net asset value - beginning of period

     $16.30         $18.35         $16.90         $13.24         $21.60         $22.61   

 

 

Income from investment operations:

                 

Net investment income

     0.02*          0.26*          0.38*          0.32*          0.30*          0.46*    

Net realized and unrealized gain/(loss) on investments

     (0.06)         (1.11)         2.27         4.44         (7.05)         1.47   

Distributions to preferred shareholders from:

                 

Net investment income

                                     (0.05)         (0.49)   

 

 

Total Income from Investment Operations

     (0.04)         (0.85)         2.65         4.76         (6.80)         1.44   

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:

  

Net investment income

     (0.60)         (1.20)         (1.20)         (0.46)         (0.81)         (1.72)   

Net realized gains

                                     (0.31)         (0.73)   

Tax return of capital

                             (0.64)         (0.44)           

 

 

Total Distributions to Common Shareholders

     (0.60)         (1.20)         (1.20)         (1.10)         (1.56)         (2.45)   

 

 

Net asset value - end of period

     $15.66         $16.30         $18.35         $16.90         $13.24         $21.60   

 

 

Market price - end of period

     $13.54         $13.94         $16.24         $15.92         $10.68         $18.90   

 

 

Total Investment Return - Net Asset Value:(1)

     0.38%         (3.48)%         17.30%         38.14%         (32.20)%         7.10%   

Total Investment Return - Market Price:(1)

     1.48%         (6.73)%         10.20%         61.32%         (37.50)%         1.77%   

RATIOS AND SUPPLEMENTAL DATA:

  

Net assets attributable to common shares, end of period (000s)

     $163,378         $170,120         $191,502         $176,317         $138,185         $225,359   

Ratios to average net assets attributable to common shareholders:

                 

Total expenses

     3.64%(2)          3.05%         2.87%         3.22%         3.35%(3)          2.10%(3)    

Total expenses excluding interest expense and dividends on short sales expense

     1.97%(2)          1.80%         1.74%         1.88%         2.76%(3)          1.73%(3)    

Net investment income

     0.29%(2)          1.61%         2.28%         1.96%         1.73%(3)          2.02%(3)    

Preferred share dividends

     N/A         N/A         N/A         N/A         0.30%         2.14%   

Portfolio turnover rate

     103%         192%         172%         115%         233%         136%   

 

 

AUCTION MARKET PREFERRED SHARES (“AMPS”)

  

Liquidation value, end of period, including dividends on preferred shares (000s)

     N/A         N/A         N/A         N/A         (4)          $95,052   

Total shares outstanding (000s)

     N/A         N/A         N/A         N/A         (4)          3.8   

Asset coverage per share(5)

     N/A         N/A         N/A         N/A         (4)          $84,319   

Liquidation preference per share

     N/A         N/A         N/A         N/A         (4)          $25,000   

Average market value per share(6)

     N/A         N/A         N/A         N/A         (4)          $25,000   

 

 

Borrowings at End of Period

  

Aggregate Amount Outstanding (000s)

     $89,800         $89,800         $89,800         $89,800         $60,200         N/A   

Asset Coverage Per $1,000 (000s)

     $2,819         $2,894         $3,133         $2,963         $3,295         N/A   

 

 

28

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Clough Global Allocation Fund

   Financial Highlights
   For a share outstanding throughout the periods indicated

 

*

Based on average shares outstanding.

(1)

Total investment return is calculated assuming a purchase of a common share at the opening on the first day and a sale at the closing on the last day of each period reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at price obtained under the Fund’s dividend reinvestment plan. Total investment returns do not reflect brokerage commissions on the purchase or sale of the Fund’s common shares. Past performance is not a guarantee of future results.

(2)

Annualized.

(3)

Ratios do not reflect dividend payments to preferred shareholders.

(4)

All series of AMPS issued by the Fund were fully redeemed, at par value, on May 22, 2008.

(5)

Calculated by subtracting the Fund’s total liabilities (excluding preferred shares) from the Fund’s total assets and dividing by the number of preferred shares outstanding.

(6)

Based on monthly prices.

See Notes to the Financial Statements.

 

 

Semi-Annual Report  |  September 30, 2012

  

 

29


Financial Highlights

   Clough Global Equity Fund

For a share outstanding throughout the periods indicated

  

 

    

For the

Six Months
Ended
September 30,
2012
(Unaudited)

  For the
Year Ended
March 31, 2012
  For the
Year Ended
March 31, 2011
  For the
Year Ended
March 31, 2010
  For the
Year Ended
March 31, 2009
  For the
Year Ended
March 31, 2008

PER COMMON SHARE OPERATING PERFORMANCE:

Net asset value - beginning of period

  $15.53   $17.62   $16.29   $12.28   $20.88   $22.17

 

Income from investment operations:

           

Net investment income

  0.01*   0.21*   0.30*   0.22*   0.16*   0.34*

Net realized and unrealized gain/(loss) on investments

  (0.13)   (1.14)   2.19   4.82   (7.21)   1.38

Distributions to preferred shareholders from:

           

Net investment income

          (0.03)   (0.53)

 

Total Income from Investment Operations

  (0.12)   (0.93)   2.49   5.04   (7.08)   1.19

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:

   

Net investment income

  (0.58)   (1.14)   (1.16)   (0.39)   (0.24)   (1.67)

Net realized gains

          (0.48)   (0.81)

Tax return of capital

    (0.02)     (0.64)   (0.80)  

 

Total Distributions to Common Shareholders

  (0.58)   (1.16)   (1.16)   (1.03)   (1.52)   (2.48)

 

Net asset value - end of period

  $14.83   $15.53   $17.62   $16.29   $12.28   $20.88
                     

Market price - end of period

  $12.90   $13.09   $15.37   $14.33   $9.77   $18.00
                     

Total Investment Return - Net Asset Value:(1)

  (0.09)%   (4.08)%   17.05%   43.62%   (34.55)%   6.24%

Total Investment Return - Market Price:(1)

  3.11%   (7.32)%   16.07%   58.80%   (39.60)%   0.86%

RATIOS AND SUPPLEMENTAL DATA:

           

Net assets attributable to common shares, end of period (000s)

  $264,583   $277,061   $314,355   $290,577   $219,059   $372,490

Ratios to average net assets attributable to common shareholders:

           

Total expenses

  4.06%(2)   3.43%   3.23%   3.57%   3.81%(3)   2.50%(3)

Total expenses excluding interest expense and dividends on short sales expense

  2.38%(2)   2.18%   2.10%   2.25%   2.26%(3)   2.14%(3)

Net investment income

  0.11%(2)   1.34%   1.87%   1.43%   0.95%(3)   1.53%(3)

Preferred share dividends

  N/A   N/A   N/A   N/A   0.20%   2.35%

Portfolio turnover rate

  98%   183%   173%   116%   207%   155%

 

AUCTION MARKET PREFERRED SHARES (“AMPS”)

Liquidation value, end of period, including dividends on preferred shares (000s)

  N/A   N/A   N/A   N/A   -(4)   $175,346

Total shares outstanding (000s)

  N/A   N/A   N/A   N/A   -(4)   7

Asset coverage per share(5)

  N/A   N/A   N/A   N/A   -(4)   $78,262

Liquidation preference per share

  N/A   N/A   N/A   N/A   -(4)   $25,000

Average market value per share(6)

  N/A   N/A   N/A   N/A   -(4)   $25,000

 

Borrowings at End of Period

           

Aggregate Amount Outstanding (000s)

  $147,000   $147,000   $147,000   $147,000   $98,200   N/A  

Asset Coverage Per $1,000 (000s)

  $2,800   $2,885   $3,138   $2,977   $3,231   N/A  

 

 

30

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Clough Global Equity Fund

   Financial Highlights
   For a share outstanding throughout the periods indicated

 

*

Based on average shares outstanding.

(1)

Total investment return is calculated assuming a purchase of a common share at the opening on the first day and a sale at the closing on the last day of each period reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at price obtained under the Fund’s dividend reinvestment plan. Total investment returns do not reflect brokerage commissions on the purchase or sale of the Fund’s common shares. Past performance is not a guarantee of future results.

(2)

Annualized.

(3) 

Ratios do not reflect dividend payments to preferred shareholders.

(4) 

All series of AMPS issued by the Fund were fully redeemed, at par value, on May 5, 2008.

(5) 

Calculated by subtracting the Fund’s total liabilities (excluding preferred shares) from the Fund’s total assets and dividing by the number of preferred shares outstanding.

(6) 

Based on monthly prices.

See Notes to the Financial Statements.

 

 

Semi-Annual Report  |  September 30, 2012

  

 

31


Financial Highlights

   Clough Global Opportunities Fund

For a share outstanding throughout the periods indicated

  

 

    

For the

Six Months
Ended
September 30,

2012
(Unaudited)

   

For the

Year Ended
March 31, 2012

   

For the

Year Ended
March 31, 2011

    For the
Year Ended
March 31, 2010
    For the
Year Ended
March 31, 2009
    For the
Year Ended
March 31, 2008
 

PER COMMON SHARE OPERATING PERFORMANCE:

  

Net asset value - beginning of period

    $13.84        $15.72        $14.68        $11.55        $19.03        $19.17   

Income from investment operations:

           

Net investment income/(loss)

    (0.02)*         0.14*         0.25*         0.17*         0.12*         0.35*    

Net realized and unrealized gain/(loss) on investments

    (0.07)        (0.94)        1.87        3.94        (6.20)        1.50   

Distributions to preferred shareholders from:

           

Net investment income

                                (0.04)        (0.46)   

Total Income from Investment Operations

    (0.09)        (0.80)        2.12        4.11        (6.12)        1.39   

DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:

  

Net investment income

    (0.54)        (1.05)        (1.08)        (0.29)        (0.06)        (1.46)   

Net realized gains

                                (0.03)        (0.07)   

Tax return of capital

           (0.03)               (0.69)        (1.27)          

Total Distributions to Common Shareholders

    (0.54)        (1.08)        (1.08)        (0.98)        (1.36)        (1.53)   

CAPITAL SHARE TRANSACTIONS:

  

Preferred share offering costs and sales load charged to paid-in capital

           -        -        -        0.00(1)        -   

Total Capital Share Transactions

                                0.00(1)          

Net asset value - end of period

    $13.21        $13.84        $15.72        $14.68        $11.55        $19.03   

Market price - end of period

    $11.70        $11.78        $13.85        $13.04        $9.20        $16.32   

Total Investment Return - Net Asset Value:(2)

    0.03%        (3.88)%        16.21%        37.93%        (32.68)%        8.06%   

Total Investment Return - Market Price:(2)

    4.09%        (7.14)%        15.27%        53.82%        (37.48)%        1.86%   

RATIOS AND SUPPLEMENTAL DATA:

  

Net assets attributable to common shares, end of period (000s)

    $683,513        $716,213        $813,178        $759,601        $597,605        $984,608   

Ratios to average net assets attributable to common shareholders:

           

Total expenses

    4.26 %(3)      3.61     3.40     3.72     3.84 %(4)      2.52 %(4) 

Total expenses excluding interest expense and dividends on short sales expense

    2.55 %(3)      2.35     2.25     2.39     2.38 %(4)      2.29 %(4) 

Net investment income/(loss)

    (0.32 )%(3)      1.04     1.74     1.19     0.80 %(4)      1.76 %(4) 

Preferred share dividends

    N/A        N/A        N/A        N/A        0.23     2.34

Portfolio turnover rate

    104%        193%        171%        115%        224%        171%   

AUCTION MARKET PREFERRED SHARES (“AMPS”)

  

Liquidation value, end of period, including dividends on preferred shares (000s)

    N/A        N/A        N/A        N/A        (5)         $450,380   

Total shares outstanding (000s)

    N/A        N/A        N/A        N/A        (5)         18   

Asset coverage per share(6)

    N/A        N/A        N/A        N/A        (5)         $79,722   

Liquidation preference per share

    N/A        N/A        N/A        N/A        (5)         $25,000   

Average market value per share(7)

    N/A        N/A        N/A        N/A        (5)        $25,000   

Borrowings at End of Period

  

Aggregate Amount Outstanding (000s)

    $388,900        $388,900        $388,900        $388,900        $239,500        N/A   

Asset Coverage Per $1,000 (000s)

    $2,758        $2,842        $3,091        $2,953        $3,495        N/A   

 

 

32

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Clough Global Opportunities Fund

   Financial Highlights
   For a share outstanding throughout the periods indicated

 

* 

Based on average shares outstanding.

(1)

Less than $0.005.

(2)

Total investment return is calculated assuming a purchase of a common share at the opening on the first day and a sale at the closing on the last day of each period reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at price obtained under the Fund’s dividend reinvestment plan. Total investment returns do not reflect brokerage commissions on the purchase or sale of the Fund’s common shares. Total investment returns for less than a full year are not annualized. Past performance is not a guarantee of future results.

(3)

Annualized.

(4)

Ratios do not reflect dividend payments to preferred shareholders.

(5)

All series of AMPS issued by the Fund were fully redeemed, at par value, on May 23, 2008.

(6)

Calculated by subtracting the Fund’s total liabilities (excluding preferred shares) from the Fund’s total assets and dividing by the number of preferred shares outstanding.

(7)

Based on monthly prices.

 

See Notes to the Financial Statements.

 

 

Semi-Annual Report  |  September 30, 2012

  

 

33


Notes to Financial Statements

   Clough Global Funds

September 30, 2012 (Unaudited)

  

 

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING AND OPERATING POLICIES

 

Clough Global Allocation Fund, Clough Global Equity Fund, and Clough Global Opportunities Fund, (each, a “Fund” and collectively, the “Funds”) are closed-end management investment companies that were organized under the laws of the state of Delaware by an Amended Agreement and Declaration of Trust dated April 27, 2004 and January 25, 2005, respectively for Clough Global Allocation Fund and Clough Global Equity Fund and an Agreement and Declaration of Trust dated January 12, 2006 for Clough Global Opportunities Fund. Each Fund is a non-diversified series with an investment objective to provide a high level of total return. Each Declaration of Trust provides that the Trustees may authorize separate classes of shares of beneficial interest.

The following is a summary of significant accounting policies followed by the Funds. These policies are in conformity with U.S. generally accepted accounting principles (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements during the reporting period. Management believes the estimates and security valuations are appropriate; however, actual results may differ from those estimates, and the security valuations reflected in the financial statements may differ from the value the Funds ultimately realize upon sale of the securities. The financial statements have been prepared as of the close of the New York Stock Exchange (“NYSE” or the “Exchange”) on September 30, 2012.

The net asset value per share of each Fund is determined no less frequently than daily, on each day that the Exchange is open for trading, as of the close of regular trading on the Exchange (normally 4:00 p.m. New York time). Trading may take place in foreign issues held by the Fund at times when a Fund is not open for business. As a result, each Fund’s net asset value may change at times when it is not possible to purchase or sell shares of a Fund.

Investment Valuation: Securities held by each Fund for which exchange quotations are readily available are valued at the last sale price, or if no sale price or if traded on the over-the-counter market, at the mean of the bid and asked prices on such day. Most securities listed on a foreign exchange are valued at the last sale price at the close of the exchange on which the security is primarily traded. In certain countries market maker prices are used since they are the most representative of the daily trading activity. Market maker prices are usually the mean between the bid and ask prices. Certain markets are not closed at the time that the Funds prices its portfolio securities. In these situations, snapshot prices are provided by the individual pricing services or other alternate sources at the close of the NYSE as appropriate. Securities not traded on a particular day are valued at the mean between the last reported bid and the asked quotes, or the last sale price when appropriate; otherwise fair value will be determined by the board-appointed fair valuation committee. Debt securities for which the over-the-counter market is the primary market are normally valued on the basis of prices furnished by one or more pricing services or dealer s at the mean between the latest available bid and asked prices. As authorized by the Trustees, debt securities (other than short-term obligations) may be valued on the basis of valuations furnished by a pricing service which determines valuations based upon market transactions for normal, institutional-size trading units of securities or a matrix method which considers yield or price of comparable bonds provided by a pricing service. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates value, unless the Trustees determine that under particular circumstances such method does not result in fair value. Over-the-counter options are valued at the mean between bid and asked prices provided by dealers. Financial futures contracts listed on commodity exchanges and exchange-traded options are valued at closing settlement prices.

If the price of a security is unavailable in accordance with the aforementioned pricing procedures, or the price of a security is unreliable, e.g., due to the occurrence of a significant event, the security may be valued at its fair value determined by management pursuant to procedures adopted by the Board of Trustees. For this purpose, fair value is the price that a Fund reasonably expects to receive on a current sale of the security. Due to the number of variables affecting the price of a security, however; it is possible that the fair value of a security may not accurately reflect the price that a Fund could actually receive on a sale of the security. As of September 30, 2012, securities which have been fair valued represented 0.43%, 0.43% and 0.43% of net assets of Clough Global Allocation Fund, Clough Global Equity Fund, and Clough Global Opportunities Fund, respectively.

A three-tier hierarchy has been established to classify fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available.

Various inputs are used in determining the value of each Fund’s investments as of the reporting period end. These inputs are categorized in the following hierarchy under applicable financial accounting standards:

 

Level 1

 

 

Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that a Fund has the ability to access at the measurement date;

Level 2

 

 

Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and

 

 

34

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Clough Global Funds

   Notes to Financial Statements
   September 30, 2012 (Unaudited)

 

Level 3

 

 

Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.

The following is a summary of the inputs used as of September 30, 2012 in valuing each Fund’s investments carried at value. The Funds recognize transfers between the levels as of the beginning of the annual period in which the transfer occurred. There were no transfers between Levels 1 and 2 during the six months ended September 30, 2012.

Clough Global Allocation Fund

 

Investments in Securities at Value*    Level 1     Level 2      Level 3      Total  

Assets

          

Common Stocks

          

Consumer Discretionary

   $ 37,552,007      $       $       $ 37,552,007   

Consumer Staples

     10,803,586                        10,803,586   

Energy

     20,550,107                        20,550,107   

Energy Infrastructure & Capital Equipment

     805,576                        805,576   

Financials

     44,391,391        688,500         9,384         45,089,275   

Health Care

     2,600,198                        2,600,198   

Industrials

     8,912,920                        8,912,920   

Information Technology

     34,999,375                        34,999,375   

Materials

     2,565,028                        2,565,028   

Telecommunication Services

     7,659,079                        7,659,079   

Utilities

     18,429,112                        18,429,112   

Exchange Traded Funds

     3,694,466                        3,694,466   

Preferred Stocks

     702,303                        702,303   

Rights

     161,153                        161,153   

Corporate Bonds

            570,700                 570,700   

Asset/Mortgage Backed Securities

            512,012                 512,012   

Government & Agency Obligations

     32,531,327                        32,531,327   

Purchased Options

     1,560                        1,560   

Short-Term Investments

     17,994,717                        17,994,717   

TOTAL

   $   244,353,905      $   1,771,212       $ 9,384       $   246,134,501   
                                    

Other Financial Instruments

                                  

Liabilities

          

Written Options

   $ (68,417   $       $       $ (68,417

Securities Sold Short

     (51,100,272                     (51,100,272

TOTAL

   $ (51,168,689   $       $       $ (51,168,689
                                    

 

*

For detailed industry descriptions, see the accompanying Statement of Investments.

Clough Global Equity Fund

 

Investments in Securities at Value*    Level 1      Level 2      Level 3      Total  

Assets

           

Common Stocks

           

Consumer Discretionary

   $   66,221,108       $       $       $   66,221,108   

Consumer Staples

     19,569,530                         19,569,530   

Energy

     35,439,264                         35,439,264   

Energy Infrastructure & Capital Equipment

     1,297,182                         1,297,182   

Financials

     72,603,630         1,134,000         14,075         73,751,705   

Health Care

     4,250,236                         4,250,236   

Industrials

     15,183,518                         15,183,518   

Information Technology

     59,225,844                         59,225,844   

Materials

     4,161,364                         4,161,364   

Telecommunication Services

     12,490,602                         12,490,602   

Utilities

     36,463,779                         36,463,779   

Exchange Traded Funds

     6,015,798                         6,015,798   

 

 

Semi-Annual Report  |  September 30, 2012

  

 

35


Notes to Financial Statements

   Clough Global Funds

September 30, 2012 (Unaudited)

  

 

Clough Global Equity Fund (continued)

Investments in Securities at Value*    Level 1     Level 2      Level 3      Total  

Assets (continued)

          

Preferred Stocks

   $ 1,148,420      $       $       $ 1,148,420   

Rights

     262,256                        262,256   

Corporate Bonds

            850,562                 850,562   

Asset/Mortgage Backed Securities

            355,548                 355,548   

Government & Agency Obligations

     28,205,838                        28,205,838   

Purchased Options

     2,347                        2,347   

Short-Term Investments

     35,741,679                        35,741,679   

 

 

TOTAL

   $ 398,282,395      $ 2,340,110       $ 14,075       $ 400,636,580   

 

 

Other Financial Instruments

          

 

 

Liabilities

          

Written Options

   $ (111,330   $       $       $ (111,330)   

Securities Sold Short

     (83,174,109                     (83,174,109)   

 

 

TOTAL

   $ (83,285,439   $       $       $ (83,285,439)   

 

 

 

*For

detailed industry descriptions, see the accompanying Statement of Investments.

Clough Global Opportunities Fund

 

Investments in Securities at Value*    Level 1     Level 2      Level 3      Total  

Assets

          

Common Stocks

          

Consumer Discretionary

   $ 159,544,714      $       $       $ 159,544,714   

Consumer Staples

     45,918,542                        45,918,542   

Energy

     87,377,625                        87,377,625   

Energy Infrastructure & Capital Equipment

     3,429,630                        3,429,630   

Financials

     188,073,739        2,936,250         32,838         191,042,827   

Health Care

     11,094,773                        11,094,773   

Industrials

     37,714,723                        37,714,723   

Information Technology

     148,431,597                        148,431,597   

Materials

     10,860,599                        10,860,599   

Telecommunication Services

     32,642,513                        32,642,513   

Utilities

     76,781,093                        76,781,093   

Exchange Traded Funds

     15,681,076                        15,681,076   

Preferred Stocks

     2,994,726                        2,994,726   

Rights

     683,215                        683,215   

Corporate Bonds

            2,419,987                 2,419,987   

Asset/Mortgage Backed Securities

            143,887                 143,887   

Government & Agency Obligations

     128,810,136                        128,810,136   

Purchased Options

     1,121,033                        1,121,033   

Short-Term Investments

     88,096,031                        88,096,031   

 

 

TOTAL

   $ 1,039,255,765      $ 5,500,124       $ 32,838       $ 1,044,788,727   

 

 

Other Financial Instruments

          

 

 

Liabilities

          

Written Options

   $ (294,378   $       $       $ (294,378)   

Securities Sold Short

     (216,838,203                     (216,838,203)   

 

 

TOTAL

   $ (217,132,581   $       $       $ (217,132,581)   

 

 

 

*For

detailed industry descriptions, see the accompanying Statement of Investments.

 

 

36

   www.cloughglobal.com


Clough Global Funds

   Notes to Financial Statements
   September 30, 2012 (Unaudited)

 

The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:

CLOUGH GLOBAL ALLOCATION FUND

Investments in

Securities

  Balance as of
March 31, 2012
    Realized
gain/(loss)
  Change in
unrealized
appreciation/
(depreciation)
    Net
Purchases
   

Net

Sales

  Transfer
into
Level 3
    Transfer
out of
Level 3
    Balance as of
September
30, 2012
   

Net change in
unrealized appreciation/
(depreciation) included
in the Statement of
Operations attributable
to Level 3 investments
still held at

September 30, 2012

 

Common Stocks

    $19,963      $(71,735)     $72,065        $ –      $(10,909)     $ –        $ –        $9,384        $72,065   

 

 

Total

    $19,963      $(71,735)     $72,065        $ –      $(10,909)     $ –        $ –        $9,384        $72,065   

 

 

CLOUGH GLOBAL EQUITY FUND

Investments in

Securities

 

Balance

as of
March 31, 2012

   

Realized

gain/(loss)

  Change in
unrealized
appreciation/
(depreciation)
    Net
Purchases
   

Net

Sales

  Transfer
into
Level 3
   

Transfer out
of

Level 3

 

Balance

as of
September
30, 2012

   

Net change in
unrealized

appreciation/
(depreciation)
included in
the

Statement of
Operations
attributable
to Level 3
investments
still

held at

September
30, 2012

 

Common Stocks

    $    29,944      $(107,609)     $ 108,105        $ –      $(16,365)     $ –      $ –      $14,075        $ 108,105   

 

 

Asset/Mortgage Backed Securities

    585,045      2,523     (83,525          (201,871)     $ –      $(302,172)              

 

 

Total

    $  614,989      $(105,086)     $  24,580        $ –      $(218,236)     $ –      $(302,172)      $14,075        $ 108,105   

 

 

CLOUGH GLOBAL OPPORTUNITIES FUND

Investments in

Securities

  Balance as of
March 31, 2012
    Realized
gain/(loss)
  Change in
unrealized
appreciation/
(depreciation)
    Net
Purchases
   

Net

Sales

  Transfer
into
Level 3
    Transfer
out of
Level 3
    Balance as of
September
30, 2012
   

Net change in
unrealized appreciation/
(depreciation) included
in the Statement of
Operations attributable
to Level 3 investments
still held at

September 30, 2012

 

Common Stocks

    $69,869      $(251,107)     $252,264        $ –      $(38,188)     $ –        $ –        $32,838        $252,264   

 

 

Total

    $69,869      $(251,107)     $252,264        $ –      $(38,188)     $ –        $ –        $32,838        $252,264   

 

 

Foreign Securities: Each Fund may invest a portion of its assets in foreign securities. In the event that a Fund executes a foreign security transaction, the Fund will generally enter into a forward foreign currency contract to settle the foreign security transaction. Foreign securities may carry more risk than U.S. securities, such as political, market and currency risks.

The accounting records of each Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange at period end. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions.

The effect of changes in foreign currency exchange rates on investments is reported with all other foreign currency realized and unrealized gains and losses in the Funds’ Statements of Operations.

A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. Each Fund may enter into foreign currency contracts to settle specific purchases or sales of securities denominated in a foreign currency and for protection from adverse exchange rate fluctuation. Risks to a Fund include the potential inability of the counterparty to meet the terms of the contract.

 

 

Semi-Annual Report  |  September 30, 2012

  

 

37


Notes to Financial Statements    Clough Global Funds

September 30, 2012 (Unaudited)

  

 

The net U.S. dollar value of foreign currency underlying all contractual commitments held by a Fund and the resulting unrealized appreciation or depreciation are determined using prevailing forward foreign currency exchange rates. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Funds’ Statements of Assets and Liabilities as a receivable or a payable and in the Funds’ Statements of Operations with the change in unrealized appreciation or depreciation on translation of assets and liabilities denominated in foreign currencies. These spot contracts are used by the broker to settle investments denominated in foreign currencies.

A Fund may realize a gain or loss upon the closing or settlement of the foreign transaction. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statements of Operations.

As of September 30, 2012, the Funds had the following open spot foreign currency contracts:

Spot Foreign Exchange Contracts

 

Buy/Sell    Foreign
Currency Type
   Cost USD      Market Value USD      Settlement Date    Unrealized
Gain/(Loss)
 

Clough Global Allocation Fund

              

Buy

   GBP    $ 25,977       $ 25,829       10/2/12    $ (147)   

Sell

   MYR      (27,823)         (27,927)       10/2/12      (105)   
      $ (1,846)       $ (2,098)          $ (252)   

 

 

Clough Global Equity Fund

              

Buy

   GBP    $ 42,372       $ 42,132       10/2/12    $ (240)   

Sell

   MYR      (45,555)         (45,726)       10/2/12      (171)   
      $ (3,183)       $ (3,594)          $ (411)   

 

 

Clough Global Opportunities Fund

  

        

Buy

   GBP    $        110,130       $ 109,507       10/2/12    $ (623)   

Sell

   MYR      (119,436)         (119,885)       10/2/12      (449)   
      $ (9,306)       $ (10,378)          $ (1,072)   

 

 

Short Sales: Each Fund may sell a security it does not own in anticipation of a decline in the fair value of that security. When a Fund sells a security short, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale. A gain, limited to the price at which a Fund sold the security short, or a loss, unlimited in size, will be recognized upon the termination of the short sale.

Each Fund’s obligation to replace the borrowed security will be secured by collateral deposited with the broker-dealer, usually cash, U.S. government securities or other liquid securities. Each Fund will also be required to designate on its books and records similar collateral with its custodian to the extent, if any, necessary so that the aggregate collateral value is at all times at least equal to the current market value of the security sold short. The cash amount is reported on the Statement of Assets and Liabilities as Deposit with broker for securities sold short. The market value of securities held as collateral for securities sold short as of September 30, 2012, was $38,409,276, $54,129,685 and $120,980,701 for Clough Global Allocation Fund, Clough Global Equity Fund and Clough Global Opportunities Fund, respectively. Each Fund is obligated to pay interest to the broker for any debit balance of the margin account relating to short sales. The interest incurred on the Funds for the year ended September 30, 2012 is reported on the Statement of Operations as Interest expense – margin account. Interest amounts payable by the Funds as of September 30, 2012 are reported on the Statement of Assets and Liabilities as Interest payable – margin account.

Each Fund may also sell a security short if it owns at least an equal amount of the security sold short or another security convertible or exchangeable for an equal amount of the security sold short without payment of further compensation (a short sale against-the-box). In a short sale against-the-box, the short seller is exposed to the risk of being forced to deliver stock that it holds to close the position if the borrowed stock is called in by the lender, which would cause gain or loss to be recognized on the delivered stock. Each Fund expects normally to close its short sales against-the-box by delivering newly acquired stock.

Derivatives Instruments and Hedging Activities: The following discloses the Funds’ use of derivative instruments and hedging activities.

The Funds’ investment objectives not only permit the Funds to purchase investment securities, they also allow the Funds to enter into various types of derivative contracts, including, but not limited to, purchased and written options and warrants. In doing so, the Funds will employ strategies in differing combinations to permit them to increase, decrease, or change the level or types of exposure to market factors. Central to those strategies

 

 

38

   www.cloughglobal.com


Clough Global Funds

   Notes to Financial Statements
   September 30, 2012 (Unaudited)

 

are features inherent to derivatives that make them more attractive for this purpose than equity securities; they require little or no initial cash investment, they can focus exposure on only certain selected risk factors, and they may not require the ultimate receipt or delivery of the underlying security (or securities) to the contract. This may allow the Funds to pursue their objectives more quickly and efficiently than if they were to make direct purchases or sales of securities capable of effecting a similar response to market factors.

Market Risk Factors: In pursuit of their investment objectives, certain Funds may seek to use derivatives to increase or decrease their exposure to the following market risk factors:

Equity Risk: Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

Risk of Investing in Derivatives: The Funds use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Funds are using derivatives to decrease or hedge exposures to market risk factors for securities held by the Funds, there are also risks that those derivatives may not perform as expected, resulting in losses for the combined or hedged positions.

Derivatives may have little or no initial cash investment relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost. This use of embedded leverage allows the Funds to increase their market value exposure relative to their net assets and can substantially increase the volatility of the Funds’ performance.

Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Funds. Typically, the associated risks are not the risks that the Funds are attempting to increase or decrease exposure to, per their investment objectives, but are the additional risks from investing in derivatives.

Examples of these associated risks are liquidity risk, which is the risk that the Funds will not be able to sell the derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Funds. Associated risks can be different for each type of derivative and are discussed by each derivative type in the notes that follow.

Option Writing/Purchasing: Each Fund may purchase or write (sell) put and call options. One of the risks associated with purchasing an option among others, is that a Fund pays a premium whether or not the option is exercised. Additionally, a Fund bears the risk of loss of premium and change in market value should the counterparty not perform under the contract. The cost of securities acquired through the exercise of call options is increased by premiums paid. The proceeds from securities sold through the exercise of put options are decreased by the premiums paid. Each Fund is obligated to pay interest to the broker for any debit balance of the margin account relating to options. The interest incurred on the Funds for the six months ended September 30, 2012 is reported on the Statement of Operations as Interest expense – margin account. Interest amounts payable by the Funds as of September 30, 2012 are reported on the Statement of Assets and Liabilities as Interest payable – margin account.

When a Fund writes an option, an amount equal to the premium received by a Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by a Fund on the expiration date as realized gains. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is recorded as a realized gain or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security or currency in determining whether a Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by a Fund. Each Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option.

Written option activity for the six months ended September 30, 2012 was as follows:

CLOUGH GLOBAL ALLOCATION FUND:

     Written Call Options      Written Put Options  
      Contracts      Premiums      Contracts      Premiums  

Outstanding, March 31, 2012

     23       $ 40,409               $   

Positions opened

     2,666         185,704         1,200         1,226,588   

Exercised

     (23)         (40,409)                   

Expired

     (1,020)         (89,363)                   

Closed

     (400)         (12,390)         (1,200)         (1,226,588)   

Split

                               

Outstanding, September 30, 2012

     1,246       $ 83,951               $   

Market Value, September 30, 2012

      $ (68,417)          $   
   

 

 

Semi-Annual Report  |  September 30, 2012

  

 

39


Notes to Financial Statements

   Clough Global Funds

September 30, 2012 (Unaudited)

  

 

CLOUGH GLOBAL EQUITY FUND:        
      Written Call Options      Written Put Options  
      Contracts      Premiums      Contracts      Premiums  

Outstanding, March 31, 2012

     38       $ 66,763               $   

Positions opened

     4,317         297,970         2,000         2,044,313   

Exercised

     (38)         (66,763)                   

Expired

     (1,690)         (143,208)                   

Closed

     (600)         (18,584)         (2,000)         (2,044,313)   

Split

                               

Outstanding, September 30, 2012

     2,027       $ 136,178               $   

Market Value, September 30, 2012

      $ (111,330)          $   
                                     

 

CLOUGH GLOBAL OPPORTUNITIES FUND:        
      Written Call Options      Written Put Options  
      Contracts      Premiums      Contracts      Premiums  

Outstanding, March 31, 2012

     4,601       $ 601,577               $   

Positions opened

     14,956         918,655         4,800         4,906,351   

Exercised

     (101)         (177,450)                   

Expired

     (3,500)         (355,181)                   

Closed

     (10,600)         (626,571)         (4,800)         (4,906,351)   

Split

                               

Outstanding, September 30, 2012

     5,356       $ 361,030               $   

Market Value, September 30, 2012

      $ (294,378)          $   
                                     

Swaps: During the period the Fund engaged in total return swaps. A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset. The Fund may utilize swap agreements as a means to gain exposure to certain assets and/or to “hedge” or protect the Fund from adverse movements in securities prices or interest rates. The Fund is subject to equity risk and interest rate risk in the normal course of pursuing its investment objective through investments in swap contracts. Swap agreements entail the risk that a party will default on its payment obligation to the Fund. If the other party to a swap defaults, the Fund would risk the loss of the net amount of the payments that it contractually is entitled to receive. If the Fund utilizes a swap at the wrong time or judges market conditions incorrectly, the swap may result in a loss to the Fund and reduce the Fund’s total return. Swap agreements traditionally were privately negotiated and entered into in the over-the-counter market. However, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) of 2010 now permits certain swap agreements to be cleared through a clearinghouse and traded on an exchange or swap execution facility. New regulations under the Dodd-Frank Act could, among other things, increase the cost of such transactions.

Total return swaps involve an exchange by two parties in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income it generates and any capital gains over the payment period. The Fund’s maximum risk of loss from counterparty risk or credit risk is the discounted value of the payments to be received from/paid to the counterparty over the contract’s remaining life, to the extent that the amount is positive. The risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreements”) govern OTC financial derivative transactions entered into by a Fund and those counterparties. The ISDA Master Agreements maintain provisions for general obligations, representations, agreements, collateral and events of default or termination. Events of termination include conditions that may entitle counterparties to elect to terminate early and cause settlement of all outstanding transactions under the applicable ISDA Master Agreement. Any election to early terminate could be material to the financial statements.

During the six months ended September 30, 2012, the Funds invested in swap agreements consistent with the Funds’ investment strategies to gain exposure to certain markets or indices. There were no open swap agreements in the Funds at the end of the period.

Warrants: Each Fund may purchase or otherwise receive warrants or rights. Warrants and rights generally give the holder the right to receive, upon exercise, a security of the issuer at a set price. Funds typically use warrants and rights in a manner similar to their use of purchased options on securities, as described in options above. Risks associated with the use of warrants and rights are generally similar to risks associated with the use of purchased options. However, warrants and rights often do not have standardized terms, and may have longer maturities and may be less liquid

 

 

 

40

   www.cloughglobal.com


Clough Global Funds

   Notes to Financial Statements
   September 30, 2012 (Unaudited)

 

than exchange-traded options. In addition, the terms of warrants or rights may limit each Fund’s ability to exercise the warrants or rights at such times and in such quantities as each Fund would otherwise wish. Each Fund held no rights or warrants at the end of the period. The following tables disclose the amounts related to each Fund’s use of derivative instruments.

The effect of derivatives instruments on each Fund’s Balance Sheet as of September 30, 2012:

 

          Asset Derivatives  
Fund    Risk Exposure   

Statement of Assets and

Liabilities Location

   Contracts      Fair Value  

Clough Global Allocation Fund

   Equity Contracts    Investments, at value      624       $ 1,560   

Clough Global Equity Fund

   Equity Contracts    Investments, at value      939       $ 2,347   

Clough Global Opportunities Fund

   Equity Contracts    Investments, at value      8,306       $     1,121,033   
          Liability Derivatives  
Fund    Risk Exposure   

Statement of Assets and

Liabilities Location

   Contracts      Fair Value  

Clough Global Allocation Fund

   Equity Contracts    Options written, at value      1,246       $ (68,417

Clough Global Equity Fund

   Equity Contracts    Options written, at value      2,027       $ (111,330

Clough Global Opportunities Fund

   Equity Contracts    Options written, at value      5,356       $ (294,378

The effect of derivatives instruments on each Fund’s Statement of Operations for the six months ended September 30, 2012:

 

Fund

   Risk Exposure    Statement of Operations Location   

Realized Gain/(Loss) on

Derivatives Recognized

in Income

  

Change in

Unrealized

Gain/(Loss) on

Derivatives

Recognized

in Income

Clough Global Allocation Fund   

Equity

Contracts

   Net realized gain/(loss) on Investment securities/Net realized gain/(loss) on Written options/Net realized gain/(loss) on total return swap contracts/Net change in unrealized appreciation/(depreciation) on Investment securities/Net change in unrealized appreciation/(depreciation) on Written options    $  (2,507,484)    $  (430,949)
Clough Global Equity Fund   

Equity

Contracts

   Net realized gain/(loss) on Investment securities/Net realized gain/(loss) on Written options/Net realized gain/(loss) on total return swap contracts /Net change in unrealized appreciation/(depreciation) on Investment securities/Net change in unrealized appreciation/(depreciation) on Written options    (4,161,916)    (709,497)
Clough Global Opportunities Fund   

Equity

Contracts

   Net realized gain/(loss) on Investment securities/Net realized gain/(loss) on Written options/Net realized gain/(loss) on total return swap contracts /Net change in unrealized appreciation/(depreciation) on Investment securities/Net change in unrealized appreciation/(depreciation) on Written options    (8,628,074)    (3,914,070)

 

 

Semi-Annual Report | September 30, 2012

   41


Notes to Financial Statements

   Clough Global Funds

September 30, 2012 (Unaudited)

  

 

The average purchased and written option contracts volume and the average purchased and written option contracts notional volume during the six months ended September 30, 2012 is noted below for each of the Funds.

 

Fund

  

Average Purchased

Option Contract

Volume

  

Average Purchased
Option Contract

Notional Volume

    

Average Written

Option Contract
Volume

    

Average Written

Option Contract

Notional Volume

 

Clough Global Allocation Fund

   3,499    $ 37,270,844               881               $ 31,909,283         

Clough Global Equity Fund

   5,667      61,376,649               1,435                 52,864,155         

Clough Global Opportunities Fund

   22,603      184,265,812               5,643                 138,001,848         

The average contracts volume and the average total return swap contracts notional volume during the six months ended September 30, 2012 is noted below for each of the Funds.

 

Fund

  

Average Contract

Volume

   Average Notional Volume     

    

Clough Global Allocation Fund

   380,991    $ 218,546          

Clough Global Equity Fund

   618,734      355,578          

Clough Global Opportunities Fund

   1,614,647      925,619            

Income Taxes: Each Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. During the six months ended September 30, 2012, none of the Funds recorded a liability for any uncertain tax positions in the accompanying financial statements.

Each Fund files income tax returns in the U.S. federal jurisdiction and Colorado. The statute of limitations on each Fund’s federal and state tax filings remains open for the fiscal years ended March 31, 2012, March 31, 2011, March 31, 2010, and March 31, 2009 as well as for March 31, 2008 for state purposes only.

Distributions to Shareholders: Each Fund intends to make a level dividend distribution each quarter to Common Shareholders after payment of interest on any outstanding borrowings. The level dividend rate may be modified by the Board of Trustees from time to time. Any net capital gains earned by a Fund are distributed at least annually to the extent necessary to avoid federal income and excise taxes. Distributions to shareholders are recorded by each Fund on the ex-dividend date. Each Fund has received approval from the Securities and Exchange Commission (the “Commission”) for exemption from Section 19(b) of the Investment Company Act of 1940, as amended (the “1940 Act”), and Rule 19b-1 there under permitting each Fund to make periodic distributions of long-term capital gains, provided that the distribution policy of a fund with respect to its Common Shares calls for periodic (e.g. quarterly/monthly) distributions in an amount equal to a fixed percentage of each Fund’s average net asset value over a specified period of time or market price per common share at or about the time of distributions or pay-out of a level dollar amount. At this time, none of the Funds have implemented a managed distribution plan as permitted under the exemption.

Securities Transactions and Investment Income: Investment security transactions are accounted for as of trade date basis. Dividend income is recorded on the ex-dividend date. Certain dividend income from foreign securities will be recorded, in the exercise of reasonable diligence, as soon as a Fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date and may be subject to withholding taxes in these jurisdictions. Interest income, which includes amortization of premium and accretion of discount, is recorded on the accrual basis. Realized gains and losses from securities transactions and unrealized appreciation and depreciation of securities are determined using the highest cost basis for both financial reporting and income tax purposes.

Counterparty Risk: Each of the Funds run the risk that the issuer or guarantor of a fixed income security, the counterparty to an over-the-counter derivatives contract, a borrower of each Fund’s securities or the obligor of an obligation underlying an asset-backed security will be unable or unwilling to make timely principal, interest, or settlement payments or otherwise honor its obligations. In addition, to the extent that each of the Funds use over-the-counter derivatives, and/or has significant exposure to a single counterparty, this risk will be particularly pronounced for each of the Funds.

Other Risk Factors: Investing in the Funds may involve certain risks including, but not limited to, the following:

Unforeseen developments in market conditions may result in the decline of prices of, and the income generated by, the securities held by the Funds. These events may have adverse effects on the Funds such as a decline in the value and liquidity of many securities held by the Funds, and a decrease in net asset value. Such unforeseen developments may limit or preclude the Funds’ ability to achieve their investment objective.

Investing in stocks may involve larger price fluctuation and greater potential for loss than other types of investments. This may cause the securities held by the Funds to be subject to larger short-term declines in value.

 

 

42

   www.cloughglobal.com


Clough Global Funds

   Notes to Financial Statements
   September 30, 2012 (Unaudited)

 

The Funds may have elements of risk due to concentrated investments in foreign issuers located in a specific country. Such concentrations may subject the Funds to additional risks resulting from future political or economic conditions and/or possible impositions of adverse foreign governmental laws or currency exchange restrictions. Investments in securities of non-U.S. issuers have unique risks not present in securities of U.S. issuers, such as greater price volatility and less liquidity. At September 30, 2012, Clough Global Allocation Fund, Clough Global Equity Fund and Clough Global Opportunities Fund each had a significant concentration of their investment securities in companies based in the United States – 111.53%, 110.10% and 113.05% of net assets, respectively.

Fixed income securities are subject to credit risk, which is the possibility that a security could have its credit rating downgraded or that the issuer of the security could fail to make timely payments or default on payments of interest or principal. Additionally, fixed income securities are subject to interest rate risk, meaning the decline in the price of debt securities that accompanies a rise in interest rates. Bonds with longer maturities are subject to greater price fluctuations than bonds with shorter maturities.

The Funds invest in bonds which are rated below investment grade. These high yield bonds may be more susceptible than higher grade bonds to real or perceived adverse economic or industry conditions. The secondary market, on which high yield bonds are traded, may also be less liquid than the market for higher grade bonds.

2. TAXES

 

Classification of Distributions: Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Funds. The amount and characteristics of the tax basis distributions and composition of distributable earnings/(accumulated losses) are finalized at fiscal year end; accordingly, tax basis balances have not been determined as of September 30, 2012.

The tax character of the distributions paid by the Funds during the year ended March 31, 2012 were as follows:

 

    Clough Global Allocation
Fund
    Clough Global Equity
Fund
    Clough Global Opportunities
Fund
 

Ordinary Income

  $ 12,521,527      $ 20,279,371      $ 54,503,782   

Long-Term Capital Gain

                    

Return of Capital

           415,846        1,372,025   

Total

  $ 12,521,527      $ 20,695,217      $ 55,875,807   
   

Net unrealized appreciation/(depreciation) of investments based on federal tax cost as of September 30, 2012, were as follows:

 

      Clough Global
Allocation Fund
    Clough Global
Equity Fund
    Clough Global
Opportunities Fund
 

Gross unrealized appreciation on investments (excess of value over tax cost)

     $18,468,568        $31,588,632        $71,405,572   

Gross unrealized depreciation on investments (excess of tax cost over value)

     (5,301,080     (9,535,873     (24,558,205

Net unrealized appreciation

     13,167,488        22,052,759        46,847,367   
   

Cost of investments for income tax purposes

     $232,967,013        $378,583,821        $997,941,360   
   

3. CAPITAL TRANSACTIONS

 

Common Shares: There are an unlimited number of no par value common shares of beneficial interest authorized for each Fund.

Transactions in common shares were as follows:

 

     Clough Global Allocation Fund      Clough Global Equity Fund     

Clough Global Opportunities

Fund

 
    

For the

Six Months

Ended

September 30,

2012

    

For the

Year Ended

March 31,
2012

    

For the

Six Months

Ended

September 30,

2012

    

For the

Year Ended

March 31,
2012

    

For the

Six Months

Ended

September 30,

2012

    

For the

Year Ended

March 31,
2012

 

Common Shares Outstanding - beginning of period

     10,434,606         10,434,606         17,840,705         17,840,705         51,736,859         51,736,859   

Common shares issued as reinvestment of dividends

                                               

Common shares outstanding - end of period

     10,434,606         10,434,606         17,840,705         17,840,705         51,736,859         51,736,859   
   

 

 

Semi-Annual Report  |  September 30, 2012

  

 

43


Notes to Financial Statements

   Clough Global Funds

September 30, 2012 (Unaudited)

  

 

4. PORTFOLIO SECURITIES

 

Purchases and sales of investment securities, other than short-term securities, for the six months ended September 30, 2012, are listed in the table below.

 

Fund   

Purchases

of Securities

    

Proceeds from

Sales

of Securities

    

Purchases of

Long-Term

U.S. Government

Obligations

    

Proceeds from

Sales of

Long-Term

U.S. Government

Obligations

 

Clough Global Allocation Fund

   $ 173,483,485       $ 183,571,440       $ 53,353,783       $ 42,148,671   

Clough Global Equity Fund

     296,784,118         310,014,250         48,825,487         37,078,272   

Clough Global Opportunities Fund

     736,464,067         780,834,785         222,802,985         175,964,123   

5. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS

 

Clough Capital Partners L.P. (“Clough”) serves as each Fund’s investment adviser pursuant to an Investment Advisory Agreement (each an “Advisory Agreement” and collectively, the “Advisory Agreements”) with each Fund. As compensation for its services to the Fund, Clough receives an annual investment advisory fee of 0.70%, 0.90% and 1.00% based on Clough Global Allocation Fund’s, Clough Global Equity Fund’s and Clough Global Opportunities Fund’s, respectively, average daily total assets, computed daily and payable monthly. ALPS Fund Services, Inc. (“ALPS”) serves as each Fund’s administrator pursuant to an Administration, Bookkeeping and Pricing Services Agreement with each Fund. As compensation for its services to the Fund, ALPS receives an annual administration fee of 0.285%, 0.32%, and 0.32% based on Clough Global Allocation Fund’s, Clough Global Equity Fund’s and Clough Global Opportunities Fund’s, respectively, average daily total assets, computed daily and payable monthly. ALPS will pay all expenses incurred by each Fund, with the exception of advisory fees, trustees’ fees, portfolio transaction expenses, litigation expenses, taxes, expenses of conducting repurchase offers for the purpose of repurchasing fund shares, interest on margin accounts, interest on loans, dividends on short sales, and extraordinary expenses.

Both Clough and ALPS are considered to be “affiliates” of the Funds as defined in the 1940 Act.

6. COMMITTED FACILITY AGREEMENT AND LENDING AGREEMENT

 

In January 2009, each Fund entered into a financing package that includes a Committed Facility Agreement (the “Agreement”) with BNP Paribas Prime Brokerage, Inc. (“BNP”) that allowed each Fund to borrow funds. Each Fund is currently borrowing the maximum commitment covered by the agreement. Borrowings under the Agreement are secured by assets of each Fund that are held by a Fund’s custodian in a separate account (the “pledged collateral”) valued at $162,109,038, $284,081,511 and $745,254,139 for Clough Global Allocation Fund, Clough Global Equity Fund and Clough Global Opportunities Fund, respectively. Each Fund may, with 30 days notice, reduce the Maximum Commitment Financing (Initial Limit amount plus the increased borrowing amount in excess of the Initial Limit) to a lesser amount if drawing on the full amount would result in a violation of the applicable asset coverage requirement of Section 18 of the 1940 Act. Interest is charged at the three month LIBOR (London Inter-bank Offered Rate) plus 1.10% on the amount borrowed and 1.00% on the undrawn balance. Each Fund also pays a one time arrangement fee of 0.25% on (i) the Initial Limit and (ii) any increased borrowing amount in the excess of the Initial Limit, paid in monthly installments for the six months immediately following the date on which borrowings were drawn by the Fund. For the six months ended September 30, 2012 the average borrowings outstanding for Clough Global Allocation Fund, Clough Global Equity Fund and Clough Global Opportunities Fund under the agreement were $89,800,000, $147,000,000 and $388,900,000, respectively, and the average interest rate for the borrowings was 1.55%. As of September 30, 2012, the outstanding borrowings for Clough Global Allocation Fund, Clough Global Equity Fund and Clough Global Opportunities Fund were $89,800,000, $147,000,000 and $388,900,000, respectively. The interest rate applicable to the borrowings of Clough Global Allocation Fund, Clough Global Equity Fund and Clough Global Opportunities Fund on September 30, 2012 was 1.46%.

The Lending Agreement is a separate side-agreement between each Fund and BNP pursuant to which BNP may borrow a portion of the pledged collateral (the “Lent Securities”) in an amount not to exceed the outstanding borrowings owed by a Fund to BNP under the Agreement. The Lending Agreement is intended to permit each Fund to significantly reduce the cost of its borrowings under the Agreement. BNP has the ability to reregister the Lent Securities in its own name or in another name other than the Fund to pledge, re-pledge, sell, lend or otherwise transfer or use the collateral with all attendant rights of ownership. (It is each Fund’s understanding that BNP will perform due diligence to determine the creditworthiness of any party that borrows Lent Securities from BNP.) Each Fund may designate any security within the pledged collateral as ineligible to be a Lent Security, provided there are eligible securities within the pledged collateral in an amount equal to the outstanding borrowing owed by a Fund. During the period in which the Lent Securities are outstanding, BNP must remit payment to each Fund equal to the amount of all dividends, interest or other distributions earned or made by the Lent Securities.

Under the terms of the Lending Agreement, the Lent Securities are marked to market daily, and if the value of the Lent Securities exceeds the value of the then-outstanding borrowings owed by a Fund to BNP under the Agreement (the “Current Borrowings”), BNP must, on that day, either (1) return Lent Securities to each Fund’s custodian in an amount sufficient to cause the value of the outstanding Lent Securities to equal the Current Borrowings; or (2) post

 

 

44

   www.cloughglobal.com


Clough Global Funds

   Notes to Financial Statements
   September 30, 2012 (Unaudited)

 

cash collateral with each Fund’s custodian equal to the difference between the value of the Lent Securities and the value of the Current Borrowings. If BNP fails to perform either of these actions as required, each Fund will recall securities, as discussed below, in an amount sufficient to cause the value of the outstanding Lent Securities to equal the Current Borrowings. Each Fund can recall any of the Lent Securities and BNP shall, to the extent commercially possible, return such security or equivalent security to each Fund’s custodian no later than three business days after such request. If a Fund recalls a Lent Security pursuant to the Lending Agreement, and BNP fails to return the Lent Securities or equivalent securities in a timely fashion, BNP shall remain liable for the ultimate delivery to each Fund’s custodian of such Lent Securities, or equivalent securities, and for any buy-in costs that the executing broker for the sales transaction may impose with respect to the failure to deliver. Each Fund shall also have the right to apply and set-off an amount equal to one hundred percent (100%) of the then-current fair market value of such Lent Securities against the Current Borrowings.

The Board of Trustees has approved each Agreement and the Lending Agreement. No violations of the Agreement or the Lending Agreement have occurred during the six months ended September 30, 2012.

Each Fund receives income from BNP based on the value of the Lent Securities. This income is recorded as Hypothecated Securities income on the Statements of Operations. The interest incurred on borrowed amounts is recorded as Interest on Loan in the Statements of Operations, a part of Total Expenses.

7. OTHER

 

The Independent Trustees of each Fund receive from each Fund a quarterly retainer of $3,500 and an additional $1,500 for each board meeting attended. The Chairman of the Board of Trustees of each Fund receives a quarterly retainer from each Fund of $4,200 and an additional $1,800 for each board meeting attended. The Chairman of the Audit Committee of each Fund receives a quarterly retainer from each Fund of $3,850 and an additional $1,650 for each board meeting attended.

8. SUBSEQUENT EVENTS

 

The Funds have evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the financial statements were issued. Based on this evaluation, no adjustments were required to the financial statements.

 

 

Semi-Annual Report  |  September 30, 2012

  

 

45


Dividend Reinvestment Plan

   Clough Global Funds

September 30, 2012 (Unaudited)

  

 

Unless the registered owner of Common Shares elects to receive cash by contacting Computershare (the “Plan Administrator”), all dividends declared on Common Shares will be automatically reinvested by the Plan Administrator for shareholders in each Fund’s Dividend Reinvestment Plan (the “Plan”), in additional Common Shares. Shareholders who elect not to participate in the Plan will receive all dividends and other distributions in cash paid by check mailed directly to the shareholder of record (or, if the Common Shares are held in street or other nominee name, then to such nominee) by Computershare as dividend disbursing agent. You may elect not to participate in the Plan and to receive all dividends in cash by contacting Computershare, as dividend disbursing agent, at the address set forth below. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Plan Administrator prior to the dividend record date; otherwise such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution. Some brokers may automatically elect to receive cash on your behalf and may re–invest that cash in additional Common Shares for you. If you wish for all dividends declared on your Common Shares to be automatically reinvested pursuant to the Plan, please contact your broker.

The Plan Administrator will open an account for each Common Shareholder under the Plan in the same name in which such Common Shareholder’s Common Shares are registered. Whenever a Fund declares a dividend or other distribution (together, a “Dividend”) payable in cash, non–participants in the Plan will receive cash and participants in the Plan will receive the equivalent in Common Shares. The Common Shares will be acquired by the Plan Administrator for the participants’ accounts, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized Common Shares from a Fund (“Newly Issued Common Shares”) or (ii) by purchase of outstanding Common Shares on the open market (“Open–Market Purchases”) on the American Stock Exchange or elsewhere. If, on the payment date for any Dividend, the closing market price plus estimated brokerage commissions per Common Share is equal to or greater than the net asset value per Common Share, the Plan Administrator will invest the Dividend amount in Newly Issued Common Shares on behalf of the participants. The number of Newly Issued Common Shares to be credited to each participant’s account will be determined by dividing the dollar amount of the Dividend by the net asset value per Common Share on the payment date; provided that, if the net asset value is less than or equal to 95% of the closing market value on the payment date, the dollar amount of the Dividend will be divided by 95% of the closing market price per Common Share on the payment date. If, on the payment date for any Dividend, the net asset value per Common Share is greater than the closing market value plus estimated brokerage commissions, the Plan Administrator will invest the Dividend amount in Common Shares acquired on behalf of the participants in Open–Market Purchases. In the event of a market discount on the payment date for any Dividend, the Plan Administrator will have until the last business day before the next date on which the Common Shares trade on an “ex–dividend” basis or 30 days after the payment date for such Dividend, whichever is sooner (the “Last Purchase Date”), to invest the Dividend amount in Common Shares acquired in Open–Market Purchases. If, before the Plan Administrator has completed its Open–Market Purchases, the market price per Common Share exceeds the net asset value per Common Share, the average per Common Share purchase price paid by the Plan Administrator may exceed the net asset value of the Common Shares, resulting in the acquisition of fewer Common Shares than if the Dividend had been paid in Newly Issued Common Shares on the Dividend payment date. Because of the foregoing difficulty with respect to Open–Market Purchases, the Plan provides that if the Plan Administrator is unable to invest the full Dividend amount in Open–Market Purchases during the purchase period or if the market discount shifts to a market premium during the purchase period, the Plan Administrator may cease making Open–Market Purchases and may invest the uninvested portion of the Dividend amount in Newly Issued Common Shares at the net asset value per Common Share at the close of business on the Last Purchase Date provided that, if the net asset value is less than or equal to 95% of the then current market price per Common Share; the dollar amount of the Dividend will be divided by 95% of the market price on the payment date.

The Plan Administrator maintains all shareholders’ accounts in the Plan and furnishes written confirmation of all transactions in the accounts, including information needed by shareholders for tax records. Common Shares in the account of each Plan participant will be held by the Plan Administrator on behalf of the Plan participant, and each shareholder proxy will include those shares purchased or received pursuant to the Plan. The Plan Administrator will forward all proxy solicitation materials to participants and vote proxies for shares held under the Plan in accordance with the instructions of the participants.

In the case of Common Shareholders such as banks, brokers or nominees which hold shares for others who are the beneficial owners, the Plan Administrator will administer the Plan on the basis of the number of Common Shares certified from time to time by the record shareholder’s name and held for the account of beneficial owners who participate in the Plan.

There will be no brokerage charges with respect to Common Shares issued directly by a Fund. However, each participant will pay a pro rata share of brokerage commissions incurred in connection with Open–Market Purchases. The automatic reinvestment of Dividends will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such Dividends. Participants that request a sale of Common Shares through the Plan Administrator are subject to brokerage commissions.

Each Fund reserves the right to amend or terminate the Plan. There is no direct service charge to participants with regard to purchases in the Plan; however, each Fund reserves the right to amend the Plan to include a service charge payable by the participants.

All correspondence or questions concerning the Plan should be directed to the Plan Administrator, Computershare, P.O. Box 358035, Pittsburgh, PA 15252-8035.

 

 

46

   www.cloughglobal.com


Clough Global Funds

   Additional Information
   September 30, 2012 (Unaudited)

 

FUND PROXY VOTING POLICIES & PROCEDURES

 

Each Fund’s policies and procedures used in determining how to vote proxies relating to portfolio securities are available on the Funds’ website at http://www.cloughglobal.com. Information regarding how each Fund voted proxies relating to portfolio securities held by each Fund for the period ended June 30, are available without charge, upon request, by contacting the Funds at 1-877-256-8445 and on the Commission’s website at http://www.sec.gov.

PORTFOLIO HOLDINGS

 

The Funds file their complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N–Q within 60 days after the end of the period. Copies of the Funds’ Form N–Q are available without a charge, upon request, by contacting the Funds at 1–877–256–8445 and on the Commission’s website at http://www.sec.gov. You may also review and copy Form N–Q at the Commission’s Public Reference Room in Washington, D.C. For more information about the operation of the Public Reference Room, please call the Commission at 1–800–SEC–0330.

NOTICE

 

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

SHAREHOLDER MEETING

 

On July 16, 2012, the Funds held their annual meeting of Shareholders for the purpose of voting on a proposal to re-elect Trustees of the Funds. The results of the proposal for each Fund were as follows:

Proposal: To re-elect the following trustees to the Clough Global Allocation Fund Board.

 

      James E. Canty    Robert L. Butler    Richard C. Rantzow

For

   9,488,498    9,502,154    9,483,444

Withheld

   206,210    192,553    211,263

Proposal: To re-elect the following trustees to the Clough Global Equity Fund Board.

 

      Andrew C. Boynton*    Adam D. Crescenzi    Jerry G. Rutledge

For

   16,368,087    16,332,575    16,333,666

Withheld

   337,006    372,518    371,427

Proposal: To re-elect the following trustees to the Clough Global Opportunities Fund Board.

 

      Edmund J. Burke    John F. Mee

For

   47,123,827    46,996,186

Withheld

   1,921,419    2,049,060

 

*

Effective September 28, 2012, Andrew C. Boynton resigned as a Trustee of each Fund due to other time commitments.

 

 

Semi-Annual Report  |  September 30, 2012

  

 

47


Investment Advisory Agreement Approval    Clough Global Funds

September 30, 2012 (Unaudited)

  

 

On July 11, 2012, the Board of Trustees of each Fund met in person to, among other things, review and consider the renewal of the Advisory Agreements. In its consideration of the Advisory Agreements, the Trustees, including the non-interested Trustees, considered in general the nature, quality and scope of services to be provided by Clough.

Prior to the beginning of their review of the Advisory Agreements, counsel to the Funds, who also serves as independent counsel to the non-interested Trustees, discussed with the Trustees their fiduciary responsibilities in general and also specifically with respect to the renewal of the Advisory Agreements.

Representatives from Clough presented Clough’s materials regarding consideration of renewal of the Advisory Agreements. The Board noted that included in the Board materials were responses by Clough to a questionnaire drafted by legal counsel to the Funds to assist the Board in evaluating whether to renew the Advisory Agreements (the “15(c) Materials”). The Board noted that the 15(c) Materials were extensive, and included information relating to: each Fund’s investment results; portfolio composition; advisory fee and expense comparisons; financial information regarding Clough; descriptions such as compliance monitoring and portfolio trading practices; information about the personnel providing investment management services to the Funds; and the nature of services provided under the Advisory Agreements.

The Board reviewed the organizational structure of Clough and the qualifications of Clough and its principals to act as each Fund’s investment adviser. The Board considered the professional experience of the portfolio managers, including the biographies of Eric A. Brock, James E. Canty and Charles I. Clough, Jr., Partners at Clough, as well as Robert Zduncyzk, portfolio manager of the Clough Global Allocation Fund and Clough Global Opportunities Fund, emphasizing that Messrs. Brock, Canty, Clough and Zduncyzk each had substantial experience as an investment professional. The Trustees, all of whom currently serve as Trustees for the Funds, acknowledged their familiarity with the expertise and standing in the investment community of Messrs. Brock, Canty, Clough and Zduncyzk, and their satisfaction with the expertise of Clough and the services provided by Clough to the Funds. The Trustees concluded that the portfolio management team was well qualified to serve the Funds in those functions.

The Board next reviewed Clough’s procedures relating to compliance and oversight with respect to Clough’s brokerage allocation and soft dollar policies. The Trustees noted that Clough’s order management systems contain pre-trade compliance functions that review each trade against certain of the Funds’ investment restrictions and applicable 1940 Act and Internal Revenue Code restrictions, and noted the efforts that Clough’s Chief Compliance Officer will undertake to summarize monthly for Clough’s management, and quarterly for the Trustees, any violations that may occur, as well as any other violations detected through the manual monitoring that supplements the order management system’s testing. The Board noted the recent addition of certain personnel by Clough. The Board discussed with representatives from Clough the various other investment products managed by Clough other than the Funds. The Board also noted the adequacy of Clough’s facilities. The Trustees concluded that Clough appeared to have adequate procedures and personnel in place to ensure compliance by Clough with applicable law and with each Fund’s investment objectives and restrictions.

The Board next reviewed the terms of the Advisory Agreements, noting that Clough would receive a fee of 0.70%, 0.90% and 1.00% based on Clough Global Allocation Fund’s, Clough Global Equity Fund’s and Clough Global Opportunities Fund’s, respectively, average daily total assets. The Trustees reviewed the fees charged by Clough to other clients for which it provides comparable services. The Trustees then reviewed Clough’s income statement for the year ended December 31, 2011, and its balance sheet as of that date. The Trustees further reviewed a profit and loss analysis as it relates to Clough’s advisory business and compared the profitability analysis to that provided by Clough to the Board in previous years.

The Board discussed the possible benefits Clough may accrue because of its relationship with the Funds as well as potential benefits that accrue to the Funds because of their relationship with Clough. The Board noted that Clough does not realize any direct benefits due to the allocation of brokerage and related transactions on behalf of the Funds.

The Board reviewed and discussed materials prepared and distributed in advance of the meeting regarding the comparability of the investment advisory fees of the Funds with the investment advisory fees of other investment companies, which had been prepared at the request of ALPS by Lipper Analytical Services (“Lipper”). Lipper’s report contained information regarding investment performance, comparisons of cost and expense structures of each Fund with other funds’ cost and expense structures, as well as comparisons of each Fund’s performance with the performance during similar periods of members of an objectively identified peer group and related matters.

As the Funds are unique in the marketplace, Lipper had a difficult time presenting a large peer group for comparison. The Trustees compared fees from ten (10) other leveraged closed-end investment companies versus each Fund’s fees. The investment advisory fee for this group ranged from 0.70% to 1.00%, with a median of 0.913%. The Board noted that as prepared by Lipper, the gross total expenses for this group ranged from 1.154% to 2.049%, with a median of 1.510% and the Clough Global Allocation Fund’s, Clough Global Equity Fund’s and Clough Global Opportunities Fund’s gross total expenses were 1.743%, 1.961% and 2.049%, respectively. The Board discussed the other non-management expenses category included in Lipper’s expense ratio components. Discussion ensued and the Board noted that the total expense ratio includes investment related expenses such as the interest on each Fund’s leverage and dividend interest on short sales. The Board noted that they believe investment related expenses are operational in nature and should not be considered a management expense. Excluding the investment related expenses from the total expense ratio, the Board noted that each Fund’s net overall expenses are comparable to their peer group. The Board further noted that in addition to the

 

 

48

   www.cloughglobal.com


Clough Global Funds

   Investment Advisory Agreement Approval
   September 30, 2012 (Unaudited)

 

Lipper report, the Board has received in the past from Clough a comparative fund universe with a peer universe more similar in nature to the Funds. The Trustees then reviewed each Fund’s performance as compared to the performance of the closed-end fund universe selected by Lipper. For the one-year ended performance as of March 31, 2012, the performance data ranged from a high of 6.08% to a low of -14.27% with a median of 1.19%. The Cough Global Allocation Fund’s, Clough Global Equity Fund’s and Clough Global Opportunities Fund’s performance during such time period was -3.48%, -4.08% and -3.88%, respectively.

The Trustees further noted that the objectives of the funds in the Lipper analysis differed from each Fund’s objectives and policies. The Trustees believed that the Lipper report, augmented by Clough’s analysis received at previous meetings, provided a sufficient comparative universe.

At this point, Mr. Burke and Mr. Canty, both “interested persons” of the Funds, as well as the other representatives of ALPS and Clough, left the meeting. The non-interested Trustees, with the assistance of legal counsel, reviewed and discussed in more detail the information that had been presented relating to Clough, the Advisory Agreements and Clough’s profitability.

Mr. Burke, Mr. Canty, and the representatives of ALPS and Clough re-joined the meeting. The Board of Trustees of the Fund, present in person, with the non-interested Trustees present in person voting separately, unanimously concluded that the investment advisory fee of 0.70%, 0.90% and 1.00% based on Clough Global Allocation Fund’s, Clough Global Equity Fund’s and Clough Global Opportunities Fund’s, respectively, average daily total assets are fair and reasonable for each respective Fund and that the renewal of the Advisory Agreements is in the best interests of each Fund and its shareholders.

 

 

Semi-Annual Report  |  September 30, 2012

  

 

49


LOGO


Item 2.    Code of Ethics.
Not applicable to semi-annual report.
Item 3.    Audit Committee Financial Expert.
Not applicable to semi-annual report.
Item 4.    Principal Accountant Fees and Services.
Not applicable to semi-annual report.
Item 5.    Audit Committee of Listed Registrants.
Not applicable.
Item 6.    Schedule of Investments.
Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form.
Item 7.    Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to semi-annual report.
Item 8.    Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to semi-annual report.
Item 9.    Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
Not applicable.


Item 10.    Submission of Matters to a Vote of Security Holders.

There have been no material changes by which shareholders may recommend nominees to the Board of Trustees.

 

Item 11.    Controls and Procedures.

 

  (a) The registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.

 

  (b) There was no change in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 12.    Exhibits.

(a)(1) Not applicable to semi-annual report.

(a)(2) The certifications required by Rule 30a-2(a) of the Investment Company Act of 1940, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto as Ex-99.Cert.

(a)(3) Not applicable.

(b) A certification for the Registrant’s Principal Executive Officer and Principal Financial Officer, as required by Rule 30a-2(b) of the Investment Company Act of 1940, as amended, and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as Ex-99.906Cert.


SIGNATURES

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

 

CLOUGH GLOBAL ALLOCATION FUND
By:   

/s/ Edmund J. Burke

  
   Edmund J. Burke   
   President & Trustee   
Date:    December 7, 2012   
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
CLOUGH GLOBAL ALLOCATION FUND
By:   

/s/ Edmund J. Burke

  
   Edmund J. Burke   
   President/Principal Executive Officer   
Date:    December 7, 2012   
By:   

/s/ Jeremy O. May

  
   Jeremy O. May   
   Treasurer/Principal Financial Officer   
Date:    December 7, 2012