Clough Global Equity

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: 811-21712

Clough Global Equity Fund

(exact name of registrant as specified in charter)

1290 Broadway, Suite 1100, Denver, Colorado 80203

(Address of principal executive offices) (Zip code)

Erin D. Nelson, Secretary

Clough Global Equity 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:    March 31, 2013


Item 1.   Reports to Stockholders.


LOGO

 


  SECTION 19(B) DISCLOSURE

 

  
March 31, 2013 (Unaudited)     

 

 

Clough Global Allocation Fund and Clough Global Equity Fund (each a “Fund” and collectively, the “Funds”), acting pursuant to a Securities and Exchange Commission (“SEC”) exemptive order and with the approval of each Fund’s Board of Trustees (the “Board”), have adopted a plan, consistent with each Fund’s investment objectives and policies to support a level distribution of income, capital gains and/or return of capital (the “Plan”). In accordance with the Plan, Clough Global Allocation Fund currently distributes $0.30 per share on a quarterly basis and Clough Global Equity Fund distributes $0.29 per share on a quarterly basis.

The fixed amount distributed per share is subject to change at the discretion of each Fund’s Board. Under the Plan, each Fund will distribute all available investment income to its shareholders, consistent with each Fund’s primary investment objectives and as required by the Internal Revenue Code of 1986, as amended (the “Code”). If sufficient investment income is not available on a quarterly basis, each Fund will distribute long-term capital gains and/or return of capital to shareholders in order to maintain a level distribution. Each quarterly distribution to shareholders is expected to be at the fixed amount established by the Board, except for extraordinary distributions and potential distribution rate increases or decreases to enable each Fund to comply with the distribution requirements imposed by the Code.

Shareholders should not draw any conclusions about either Fund’s investment performance from the amount of these distributions or from the terms of the Plan. Each Fund’s total return performance on net asset value is presented in its financial highlights table.

The Board may amend, suspend or terminate either Fund’s Plan without prior notice if it deems such action to be in the best interest of either Fund or its shareholders. The suspension or termination of the Plan could have the effect of creating a trading discount (if either Fund’s stock is trading at or above net asset value) or widening an existing trading discount. Each Fund is subject to risks that could have an adverse impact on its ability to maintain level distributions. Examples of potential risks include, but are not limited to, economic downturns impacting the markets, increased market volatility, companies suspending or decreasing corporate dividend distributions and changes in the Code. Please refer to each Fund’s prospectus for a more complete description of its risks.

Please refer to Additional Information for a cumulative summary of the Section 19(a) notices for each Fund’s current fiscal period. Section 19(a) notices for each Fund, as applicable, are available on the Clough Global Closed-End Funds website www.cloughglobal.com.

 


 

Clough Global Funds

   Table of Contents

 

 

        
        
       Shareholder Letter     2   
 
       Portfolio Allocation  
      

 

    Global Allocation Fund

    5   
      

 

    Global Equity Fund

    6   
      

 

    Global Opportunities Fund

    7   
 
       Report of Independent Registered Public Accounting Firm     8   
 
       Statement of Investments  
      

 

    Global Allocation Fund

    9   
      

 

    Global Equity Fund

    15   
      

 

    Global Opportunities Fund

    21   
 
       Statements of Assets and Liabilities     28   
 
       Statements of Operations     29   
 
       Statements of Changes in Net Assets     30   
 
       Statements of Cash Flows     31   
 
       Financial Highlights  
      

 

    Global Allocation Fund

    32   
      

 

    Global Equity Fund

    33   
      

 

    Global Opportunities Fund

    34   
 
       Notes to Financial Statements     35   
 
       Dividend Reinvestment Plan     48   
 
       Additional Information  
      

 

     Fund Proxy Voting Policies & Procedures

    49   
      

 

    Portfolio Holdings

    49   
      

 

    Notice

    49   
      

 

    Section  19(A) Notices

    49   
      

 

    Tax Designation

    49   
 
       Trustees & Officers     50   
        
        

 


Shareholder Letter

   Clough Global Funds

March 31, 2013 (Unaudited)

    

 

To our Shareholders:

Clough Global Allocation Fund (GLV)

During the twelve-months ended March 31, 2013, the Clough Global Allocation Fund’s total return, assuming reinvestment of all distributions, was 16.19% based on the net asset value and 17.81% based on the market price of the stock. The S&P 500 and the MSCI World Index returned 13.96% and 12.62% respectively over the same period. The Fund paid $1.20 per share in distributions during the year. As of March 31st , the Fund had distribution rate on the market price of 7.69%.

Clough Global Equity Fund (GLQ)

During the twelve-months ended March 31, 2013, the Clough Global Equity Fund’s total return, assuming reinvestment of all distributions, was 16.90% based on the net asset value and 22.60% based on the market price of the stock. The S&P 500 and the MSCI World Index returned 13.96% and 12.62% respectively over the same period. The Fund paid $1.16 per share in distributions during the year. As of March 31st , the Fund had distribution rate on the market price of 7.89%.

Clough Global Opportunities Fund (GLO)

During the twelve-months ended March 31, 2013, the Clough Global Opportunities Fund’s total return, assuming reinvestment of all distributions, was 15.87% based on the net asset value and 19.67% based on the market price of the stock. The S&P 500 and the MSCI World Index returned 13.96% and 12.62% respectively over the same period. The Fund paid $1.08 per share in distributions during the year. As of March 31st , the Fund had distribution rate on the market price of 8.39%.

The Funds were close to fully invested and benefitted from strong equity markets during their fiscal year ended March 31, 2013. Long positions returned 19.23% while the Funds’ short positions also returned a positive 2.78%.

The three most effective strategies during the year consisted of companies generating high free cash flow yields, financial companies and companies involved with the delivery of health care. H&R Block, a dominant provider of tax services, was a positive contributor to the Funds as were holdings of Ford Motor Group and Liberty Interactive, a media holding company. Detractors in the Funds came from a long position in OGX Petroleo e Gas, a Brazilian oil exploration company, and short positions in European banks and put options in the Standard and Poor’s Index.

There are a number of strong catalysts for further equity market gains in our view. For one, profit fundamentals are strong, and we can find a number of investable strategies. Developed world economies are in a sluggish expansion, but that is not new news and companies have adjusted to that reality by managing for cash and controlling investment. If companies manage investment to match slower demand, they will throw off free cash flow and that has been happening throughout the business expansion. Looking for those

free cash flow opportunities has been at the heart of our strategies for the past few years. In many industries and sectors we can find free cash flow yields as high as 7-10%, and that compares well with low bond yields.

Here are a few examples of our current opportunity set:

Wellpoint Inc. – Health maintenance organizations actually could be an important beneficiary of health care reform. Stable employment and sluggish hospital utilization are positives for the industry. The industry generates more than 20% EBITDA (earnings before interest, taxes, depreciation and amortization) margins; the P/E (price-to-earnings) ratios are 9. The stock sells at 90% of book value and at only one third of sales1 .

The Funds also own a number of industrial companies that generate free cash flow. Wherever the US advantage in energy costs can be linked to companies with high returns on capital and good managements, we can find investment opportunities. Wabco Holdings Inc. is gaining share of air disk brakes sold to the heavy duty truck industry. Since the company is using excess cash flow to buy back stock, the current shareholders increasingly own more of the enterprise. Allison Transmission Holdings Inc. should benefit from a cyclical rebound in heavy duty trucks and should generate cash flow which can be used to delever the balance sheet.

In the energy sector, we think Halliburton Company is well positioned to benefit from a pickup in drilling in the Gulf of Mexico given its strong North American footprint. Fifty deep water rigs are about to enter the Gulf in the coming months alone2 .

Our free cash flow strategy has led us to the semiconductor industry. We think an upturn in the cycle is imminent and the Funds are positioned in companies with strong balance sheets that we believe can generate free cash. Supply/demand characteristics are particularly strong in memory where consolidation, secular growth drivers, and constrained capital spending are providing for better pricing and profitability. Industry capital spending levels are the lowest in years and the top three NAND producers now control over 80% of the market1 . Micron Technologies should benefit from the acquisition of its largest Japanese competitor, Elpida. It purchased the company at a price well below replacement cost and gained exposure to handset growth in developed and emerging markets. To hedge this, the Fund holds short positions in companies exposed to the weakening personal computer industry.

A second positive for equities comes from US merger and acquisition and buyout activity, which is picking up as a result of strong business cash flow. The economy’s growth is grudging but persistent, and in a low interest rate world, acquisitions are an attractive growth avenue for many companies. Private equity funds are bursting with cash to deploy and banks seem ready to fund a seemingly unlimited amount of leveraged lending. And the numbers are ramping up. Liberty Global announced its intent to purchase Virgin Media for $23 billion and Comcast Corporation acquired the rest of NBC it did not own for $18 billion. Similarly, Michael Dell’s $24 billion attempt to buy in his namesake company will be funded by leveraged loans.

 

 

1

Source: Bloomberg (March 31, 2013)

2

Source: Halliburton, http://www.halliburton.com/ps default.aspx?navid=2103&pageid=2721

 

 

2   www.cloughglobal.com


Clough Global Funds

   Shareholder Letter
     March 31, 2013 (Unaudited)

 

Third, the rise in leveraged lending adds to the risks borne by investment grade bondholders whose securities would be downgraded should these companies pile on debt. In addition, high yield has been the safety trade for a lot of equity money in recent months and that opportunity may be wearing thin. With prices high and yields low, the call features imbedded in this paper reduce its attractiveness by limiting the upside. Stocks may be more attractive than corporate bonds.

We still believe the stocks of many banking and insurance franchises are undervalued. This is particularly true of financial companies with national franchises which sell at discounts to tangible book value. Bank of America Corp., Citigroup Inc. and American International Group Inc. are examples of companies whose stocks still sell as if the credit structure is tenuous, when we think its true quality has improved dramatically over the past four years. The Fund holds modest short positions in European financial institutions which will likely require large and costly recapitalization efforts.

We added two modest positions to the financial trade. It will be difficult for Great Britain to avoid being dragged down with Europe and we added a domestically focused British bank to our short list, while on the long side we added a large insurance company to our holdings of US financial companies. As the passage of time leaves the 2008 credit collapse behind we will opportunistically add US companies with strong financial franchises but whose equities sell at deep discounts to tangible book value.

We still think the investment opportunities globally are in the US and in Asia and the bulk of the Fund’s non-US investments are in Japan and China. The Bank of Japan has done its part to depreciate the Yen and should Prime Minister Shinzo Abe deliver on tax and regulation reforms the Japan story could go on for a long time. Japanese equities most leveraged to monetary inflation are the banks, the capital markets-brokerage and the real estate stocks and the Fund has positions in Nomura Holdings and Sumitomo Mitsui Financial Group. We are also finding opportunity in Japan’s depressed consumer stocks. In a deflationary environment, consumers defer spending and hoard cash. With an increase in asset prices and expectations for higher inflation, this dynamic reverses and consumer spending should accelerate. Consumer spending rose more than 5% in March, a strong uptick. We have built positions in underappreciated brands such as Kirin Holdings, as well as in retailer Don Quijote.

The Fund also has large holdings in high quality exporters such as auto makers Toyota Motor and Honda Motor. The case for automakers is straightforward. Toyota and Honda are global leaders whose competitiveness has eroded due to excessive Yen strength. The companies have lost market share in the mass market vs. Korean and US competitors, such as Hyundai and Ford Motor, as well as at the high end where the Lexus brand, for example, has given ground to BMW and Mercedes. The immediate benefit of the Yen depreciation shows up in earnings, which are surging. Toyota’s operating profits increase by approximately $400 million for every 1 Yen decline vs. the US dollar1. That is huge considering that Toyota’s depressed operating profits were just $4.5 billion in fiscal 20121.

China’s economic rebalancing continues to present opportunities, particularly in the consumer sector. While it’s important to note that slower growth in China also means slower retail sales growth, consumption remains robust and will likely outpace the rest of the economy. Consumer spending accelerated in the first quarter. Passenger vehicle sales grew 17% with the Chinese auto market poised to reach 21 million units in 2013, significantly larger than the US1. The airline sector is similarly large and air traffic grew over 13% in the first quarter1. Quite clearly, China’s consumer end markets are now huge and with growth rates so high, we think there are plenty of opportunities for investment. The Fund owns Sands China in the casino sector and Air China in airlines and has more broad exposure to the auto sector.

The China consumer landscape has always been fiercely competitive and that will continue to be the case. A huge and booming passenger car market, for example, offers many growth opportunities and for many global auto makers it’s a must win situation. Alas, not everyone will survive, let alone thrive. Consolidation is likely to occur over the next decade. The long term winners are being determined now and we find the most interesting opportunities in the domestic companies. It’s likely only a handful of domestic companies will emerge with enough scale and share to generate meaningful profits. The Fund owns Great Wall Motor, China’s most successful SUV (sports utility vehicle) provider with its market leading Haval series. Great Wall is the only large Chinese auto company without a Western joint venture partner and has wisely captured the leading market share in what is now a booming SUV market. The SUV market highlights the maturation of the Chinese consumer in our opinion. The SUV segment has evolved into primarily an upgrade purchase for a second or third time car buyer. Five years ago, the market was small and the primary SUV buyer was a taxi driver. First time buyers of autos in China were motivated by displaying their wealth when they purchased an automobile and very few wanted to run the risk of owning an SUV and being mistaken for a taxi driver. Today however, that has changed. China’s sprawling suburbs and more frequent trips to hypermarkets have highlighted the utility of the SUV and demand is booming. Great Wall now has over half its revenues in the high margin SUV segment and is still seeing strong growth there. Great Wall reported earnings last week which were very strong; SUV sales ramped 90% year-over-year and net profits expanded by 73.4%1. Despite strong share price gains, the shares remain inexpensive at just at just 12.1x expected earnings for 2013 and the market capitalization is now $16.7 billion1 .

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 distribution rate very attractive. One consideration regarding the dividend distribution rate in excess of 8% of the three Funds is this rate is calculated on market price, which has been magnified by the discount to NAV. Since the Funds trade at discounts over 11%, the distribution levels that we strive to maintain 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.

 

 

Annual Report  |  March 31, 2013   3


Shareholder Letter

   Clough Global Funds

March 31, 2013 (Unaudited)

    

 

We feel this dynamic is worth mentioning given a fair amount of attention that has been recently placed on the level of distributions within the universe of closed end mutual funds.

In conclusion, we are more sanguine about the Funds recent performance, particularly so far in 2013. We appreciate your confidence in us and endeavor to do the best job we can of investing your assets. If you have any questions about your investment, please call 1-877-256-8445.

Sincerely,

 

LOGO

Charles I. Clough, Jr.

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.

Call Options – An option to buy assets at an agreed price on or before a particular date.

Investment Grade – A rating that indicates a municipal or corporate bond has a relatively low risk of default.

Price to Earnings (P/E) Ratio – The price of a stock divided by its earnings.

Put Options – An option to sell assets at an agreed price on or before a particular date.

NAND flash memory – a type of non-volatile storage technology that does not require power to retain data.

GLV

        
Top 10 Equity Holdings*    % of Total Portfolio  

1. American International Group, Inc.

     3.86%   

2. Citigroup, Inc.

     3.75%   

3. Google, Inc. - Class A

     3.54%   

4. Bank of America Corp.

     3.10%   

5. Golar LNG, Ltd.

     1.71%   

6. Wells Fargo & Co.

     1.54%   

7. eBay, Inc.

     1.47%   

8. Honeywell International, Inc.

     1.47%   

9. Liberty Ventures - Series A

     1.45%   

10. TransDigm Group, Inc.

     1.36%   

 

GLQ

        
Top 10 Equity Holdings*    % of Total Portfolio  

1. Citigroup, Inc.

     4.13%   

2. American International Group, Inc.

     4.11%   

3. Google, Inc. - Class A

     3.84%   

4. Bank of America Corp.

     3.33%   

5. Golar LNG, Ltd.

     1.79%   

6. Honeywell International, Inc.

     1.76%   

7. TransDigm Group, Inc.

     1.70%   

8. eBay, Inc.

     1.57%   

9. Wells Fargo & Co.

     1.57%   

10. Liberty Ventures -
Series A

     1.54%   

 

GLO

       
Top 10 Equity Holdings*   % of Total Portfolio  

1. American International Group, Inc.

    3.84%   

2. Citigroup, Inc.

    3.74%   

3. Google, Inc. - Class A

    3.54%   

4. Bank of America Corp.

    3.09%   

5. Golar LNG, Ltd.

    1.71%   

6. Wells Fargo & Co.

    1.54%   

7. Honeywell International, Inc.

    1.46%   

8. eBay, Inc.

    1.46%   

9. Liberty Ventures - Series A

    1.45%   

10. TransDigm Group, Inc.

    1.35%   

Holdings are subject to change.

*Only

long positions are listed.

 

 

4   www.cloughglobal.com


Clough Global Allocation Fund

   Portfolio Allocation
     March 31, 2013 (Unaudited)

 

Asset Allocation*

  

 

 

Common Stocks - US

     68.17%   

Common Stocks - Foreign

     14.62%   

Exchange Traded Funds

     -14.54%   

 

 

Total Equities

     68.25%   

 

 

Government L/T

     20.66%   

Corporate Debt

     0.80%   

Preferred Stock

     0.35%   

Asset/Mortgage Backed Securities

     0.22%   

 

 

Total Fixed Income

     22.03%   

 

 

Short-Term Investments

     9.82%   

Other (Foreign Cash)

     0.18%   

Total Return Swap Contracts

     -0.28%   

 

 

Total Other

     9.72%   

 

 

 

 

TOTAL INVESTMENTS

     100.00%   

 

 

Global Securities Holdings^

  

 

 

United States

     64.27%   

U.S. Multinationals

     22.06%   

Japan

     5.36%   

China

     3.76%   

Ireland

     1.73%   

Norway

     1.71%   

Brazil

     1.47%   

Singapore

     1.18%   

Israel

     1.02%   

Hong Kong

     1.01%   

Netherlands

     0.81%   

Argentina

     0.32%   

Canada

     0.25%   

India

     -0.14%   

Australia

     -0.16%   

Germany

     -0.20%   

Luxembourg

     -0.32%   

South Korea

     -0.37%   

Italy

     -0.52%   

Great Britain

     -0.86%   

Sweden

     -1.07%   

France

     -1.31%   

 

 

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.

 

 

 

Annual Report  |  March 31, 2013   5


Portfolio Allocation

   Clough Global Equity Fund

March 31, 2013 (Unaudited)

    

 

 

Asset Allocation*

  

 

 

Common Stocks - US

     77.27%   

Common Stocks - Foreign

     17.96%   

Exchange Traded Funds

     -14.69%   

 

 

Total Equities

     80.54%   

 

 

Government L/T

     14.32%   

Corporate Debt

     0.27%   

Preferred Stock

     0.35%   

 

 

Total Fixed Income

     14.94%   

 

 

Short-Term Investments

     4.71%   

Other (Foreign Cash)

     0.18%   

Total Return Swap Contracts

     -0.37%   

 

 

Total Other

     4.52%   

 

 

 

 

TOTAL INVESTMENTS

     100.00%   

 

 

Global Securities Holdings^

  

 

 

United States

     58.26%   

U.S. Multinationals

     24.77%   

Japan

     5.98%   

China

     4.22%   

Ireland

     1.99%   

Norway

     1.79%   

Hong Kong

     1.53%   

Brazil

     1.46%   

Singapore

     1.20%   

Netherlands

     1.15%   

Israel

     1.13%   

Canada

     0.88%   

Argentina

     0.40%   

India

     -0.14%   

Australia

     -0.17%   

Germany

     -0.25%   

Luxembourg

     -0.37%   

South Korea

     -0.38%   

Great Britain

     -0.52%   

Italy

     -0.53%   

Sweden

     -1.08%   

France

     -1.32%   

 

 

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
   March 31, 2013 (Unaudited)

 

 

Asset Allocation*

  

 

 

Common Stocks - US

     68.81%   

Common Stocks - Foreign

     14.94%   

Exchange Traded Funds

     -14.47%   

 

 

Total Equities

     69.28%   

 

 

Government L/T

     20.52%   

Corporate Debt

     0.77%   

Preferred Stock

     0.35%   

 

 

Total Fixed Income

     21.64%   

 

 

Short-Term Investments

     9.07%   

Other (Foreign Cash)

     0.20%   

Options

     0.09%   

Total Return Swap Contracts

     -0.28%   

 

 

Total Other

     9.08%   

 

 

 

 

TOTAL INVESTMENTS

     100.00%   

 

 

Global Securities Holdings^

  

 

 

United States

     63.17%  

U.S. Multinationals

     22.79%  

Japan

     5.35%  

China

     3.76%  

Ireland

     1.72%  

Norway

     1.71%  

Brazil

     1.47%  

Singapore

     1.19%  

Israel

     1.02%  

Hong Kong

     1.01%  

Netherlands

     0.81%  

Argentina

     0.32%  

Canada

     0.25%  

India

     -0.14%  

Australia

     -0.16%  

Germany

     -0.20%  

Luxembourg

     -0.32%  

South Korea

     -0.35%  

Great Britain

     -0.50%  

Italy

     -0.52%  

Sweden

     -1.07%  

France

     -1.31%  

 

 

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.

 

 

 

 

      

Annual Report  |  March 31, 2013

   7


Report of Independent Registered

Public Accounting Firm

    

 

  

 

To the Shareholders and Board of Trustees of

Clough Global Allocation Fund,

Clough Global Equity Fund, and

Clough Global Opportunities Fund

We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Clough Global Allocation Fund, Clough Global Equity Fund, and Clough Global Opportunities Fund (each a “Fund”, collectively the “Funds”), as of March 31, 2013, and the related statements of operations and cash flows for the year then ended, and the statements of changes in net assets and financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the periods indicated prior to March 31, 2012, were audited by another independent registered public accounting firm whose report dated May 18, 2011, expressed unqualified opinions on those financial highlights.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of March 31, 2013, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Clough Global Allocation Fund, Clough Global Equity Fund, and Clough Global Opportunities Fund as of March 31, 2013, the results of their operations and their cash flows for the year then ended, and the statement of changes in their net assets and their financial highlights for each of two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

COHEN FUND AUDIT SERVICES, LTD.

Cleveland, Ohio

May 21, 2013

 

      

8

   www.cloughglobal.com


Clough Global Allocation Fund

   Statement of Investments
     March 31, 2013

 

    Shares   Value

 

COMMON STOCKS 111.43%

Consumer Discretionary 23.01%

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

  99,755   $2,395,117

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

  48,700   642,840

Arezzo Industria e Comercio S.A.

  21,638   432,813

Ascena Retail Group,
Inc.
(a)(d)

  38,700   717,885

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

  17,200   1,330,248

Bosideng International Holdings, Ltd.

  2,395,590   743,747

Carnival Corp.(a)

  27,700   950,110

Charter Communications, Inc.(a)(b)(d)

  19,600   2,041,928

Cia Hering

  20,499   366,715

Denso Corp.

  13,500   570,059

Don Quijote Co., Ltd.

  8,400   371,658

Geely Automobile Holdings, Ltd.

  1,990,000   966,474

Great Wall Motor Co., Ltd.

  200,000   677,612

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

  62,492   1,838,515

Honda Motor Co., Ltd.

  14,648   560,183

Imax Corp.(a)(d)

  18,800   502,524

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

  22,287   1,083,371

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

  35,134   2,578,836

Liberty Global, Inc. -
Series C
(a)(d)

  12,200   837,286

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

  71,012   1,518,236

Liberty Media Corp.(a)(d)

  22,412   2,501,851

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

  38,386   2,901,214

Man Wah Holdings, Ltd.

  1,498,600   1,432,469

Michael Kors Holdings,
Ltd.
(a)(d)

  9,182   521,446

News Corp. - Class A(a)

  26,696   814,762

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

  53,406   526,583

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

  61,961   1,820,414

Samsonite International S.A.

  268,800   671,779

Sands China, Ltd.

  31,200   161,777

Service Corp.
International
(a)

  30,700   513,611

Signet Jewelers, Ltd.(a)

  14,300   958,100

Starz - Liberty Capital(a)(d)

  15,012   332,516

Time Warner, Inc.(a)

  21,055   1,213,189

Toyota Motor Corp.

  25,900   1,327,535

UNICASA Industria de Moveis S.A.(c)

  64,300   310,244

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

  37,000   2,278,090
    Shares    Value  

 

 

Consumer Discretionary (continued)

  

Wyndham Worldwide Corp.(a)

  35,700      $2,301,936   
    

 

 

 
       41,713,673   
    

 

 

 

Consumer Staples 3.53%

    

Brazil Pharma S.A.(c)

  183,320      1,279,135   

China Resources Enterprise, Ltd.

  116,000      343,701   

Green Mountain Coffee Roasters, Inc.(a)(b)(d)

  14,980      850,265   

Kirin Holdings Co., Ltd.

  55,000      882,828   

M Dias Branco S.A.

  12,300      489,991   

Mead Johnson Nutrition Co.(a)(b)

  21,800      1,688,410   

Vinda International Holdings, Ltd.

  601,498      858,558   
    

 

 

 
       6,392,888   
    

 

 

 

Energy 15.32%

    

Natural Gas Leveraged Exploration & Production 1.19%

  

Cabot Oil & Gas Corp.(a)(b)

 

18,300

     1,237,263   

Range Resources Corp.(a)(b)

 

11,300

     915,752   
    

 

 

 
       2,153,015   
    

 

 

 

Non-North American
Producers 0.88%

  

InterOil Corp.(d)

  21,019      1,599,756   
    

 

 

 

Oil Leveraged Exploration & Production 4.36%

  

Anadarko Petroleum Corp.(a)(b)

  15,106      1,321,020   

Continental Resources, Inc.(a)(d)

  8,000      695,440   

EOG Resources,
Inc.
(a)

  5,000      640,350   

Gulfport Energy
Corp.
(a)(b)(d)

  35,708      1,636,497   

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

  153,100      1,391,679   

Noble Energy, Inc.(a)(b)

  3,300      381,678   

Oasis Petroleum,
Inc.
(a)(d)

  32,400      1,233,468   

Whiting Petroleum Corp.(a)(d)

  12,000      610,080   
    

 

 

 
       7,910,212   
    

 

 

 

Oil Services & Drillers 7.00%

  

Cameron International
Corp.
(a)(b)(d)

  17,521      1,142,370   

Diamond Offshore Drilling, Inc.(a)(b)

  16,053      1,116,647   

Ensco PLC - Sponsored ADR - Class A(a)

  7,200      432,000   

FMC Technologies, Inc.(a)(d)

  13,300      723,387   

Halliburton Co.(a)(b)

  39,000      1,575,990   

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

  22,780      1,611,685   

Noble Corp.(a)(b)

  26,528      1,012,043   
 

 

Annual Report  |  March 31, 2013   9


Statement of Investments

   Clough Global Allocation Fund

March 31, 2013

    

 

    Shares   Value

 

Energy (continued)

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

  9,774   $797,265

Schlumberger, Ltd.(a)(b)

  6,200   464,318

Superior Energy Services, Inc.(a)(d)

  44,195   1,147,744

Transocean, Ltd.(a)(d)

  10,822   562,311

Weatherford International,
Ltd.
(a)(b)(d)

  173,943   2,111,668
   

 

    12,697,428
   

 

Tankers 1.89%

   

Golar LNG, Ltd.(a)(b)

  92,606   3,422,718
   

 

TOTAL ENERGY

    27,783,129
   

 

Energy Infrastructure & Capital Equipment 0.63%

Dresser - Rand Group, Inc.(a)(d)

  18,400   1,134,544
   

 

Financials 22.63%

   

Business Development Corporations 1.34%

Golub Capital BDC, Inc.(a)

  53,100   876,681

Medley Capital Corp.(a)

  8,543   135,407

PennantPark Investment Corp.(a)

  59,779   674,905

Solar Senior Capital, Ltd.(a)

  39,147   751,622
   

 

    2,438,615
   

 

Capital Markets 2.09%

CITIC Securities Co., Ltd. -
Class H

  215,184   465,155

Daiwa Securities Group, Inc.

  183,000   1,286,939

Haitong Securities Co., Ltd.(c)(d)

  522,996   718,210

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

  7,331   6,818

Nomura Holdings, Inc.

  214,400   1,320,996
   

 

    3,798,118
   

 

Commercial Banks 3.42%

Mitsubishi UFJ Financial Group, Inc.

  150,600   902,304

Mizuho Financial Group, Inc.

  473,100   1,010,178

Sumitomo Mitsui Financial Group, Inc.

  29,500   1,203,378

Wells Fargo & Co.(a)(b)

  83,578   3,091,550
   

 

    6,207,410
   

 

Diversified Financials 7.77%

Bank of America Corp.(a)(b)

  510,124   6,213,310

BB&T Corp.

  11,300   354,707
    Shares    Value

 

Financials (continued)

    

Citigroup, Inc.(a)(b)

  169,779    $7,511,023
    

 

     14,079,040
    

 

Insurance 4.27%

American International Group,
Inc.
(a)(b)(d)

  199,282    7,736,127
    

 

Real Estate Investment Trusts 3.43%

American Homes 4 Rent(c)(d)

  109,600    1,890,600

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

  34,000    748,000

Ascendas Real Estate Investment Trust

  838,000    1,756,601

Ascott Residence Trust

  549,077    610,897

GLP J - REIT

  682    732,461

Select Income REIT(a)(c)

  18,300    484,035
    

 

     6,222,594
    

 

Real Estate Management & Development 0.31%

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

  26,103    269,200

Sonae Sierra Brasil S.A.

  20,825    287,011
    

 

     556,211
    

 

TOTAL FINANCIALS

     41,038,115
    

 

Health Care 17.24%

    

Aetna, Inc.(a)(b)

  22,551    1,152,807

Akorn, Inc.(a)(d)

  64,800    896,184

Allergan, Inc.(a)(b)

  10,000    1,116,300

Amarin Corp. PLC -
ADR
(a)(b)(d)

  73,200    542,412

Biogen Idec, Inc.(a)(b)(d)

  4,645    896,067

Boston Scientific Corp.(a)(d)

  108,100    844,261

Catamaran Corp.(a)(d)

  13,300    705,299

Celgene Corp.(a)(d)

  17,600    2,040,016

Centene Corp.(a)(d)

  40,600    1,788,024

Cigna Corp.(a)

  18,900    1,178,793

Community Health Systems,
Inc.
(a)

  33,202    1,573,443

Elan Corp. PLC(a)(d)

  128,472    1,515,970

Express Scripts Holding Co.(a)(d)

  26,000    1,498,900

Forest Laboratories, Inc.(a)(b)(d)

  23,729    902,651

Gilead Sciences, Inc.(a)(d)

  41,420    2,026,681

HCA Holdings, Inc.(a)(b)

  57,677    2,343,416

Health Management Associates, Inc. - Class A(a)(b)(d)

  99,200    1,276,704

Jazz Pharmaceuticals PLC(a)(d)

  25,300    1,414,523

LifePoint Hospitals, Inc.(a)(d)

  32,490    1,574,465

Merck & Co., Inc.(a)(b)

  21,700    959,791

Pfizer, Inc.(a)(b)

  80,400    2,320,344

Sinopharm Group Co., Ltd.

  156,000    503,417
 

 

10   www.cloughglobal.com


Clough Global Allocation Fund

   Statement of Investments
     March 31, 2013

 

    Shares     Value  

 

 

Health Care (continued)

  

UnitedHealth Group, Inc.(a)

    24,100        $1,378,761   

WellPoint, Inc.(a)

    12,300        814,629   
   

 

 

 
      31,263,858   
   

 

 

 

Industrials 10.61%

  

Air China, Ltd. - H Shares

    1,863,283        1,656,241   

The Boeing Co.(a)(b)

    15,421        1,323,893   

Brenntag AG

    7,692        1,200,951   

Cia de Locacao das Americas(c)

    207,700        1,238,543   

Covanta Holding Corp.(a)

    54,500        1,098,175   

Honeywell International, Inc.(a)(b)

    39,000        2,938,650   

MRC Global, Inc.(a)(d)

    24,539        808,069   

Owens Corning(a)(b)(d)

    40,212        1,585,559   

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

    53,791        1,768,110   

TransDigm Group, Inc.(a)(b)

    17,793        2,720,905   

UTi Worldwide, Inc.(a)

    31,100        450,328   

WABCO Holdings,
Inc.
(a)(b)(d)

    34,668        2,447,214   
   

 

 

 
      19,236,638   
   

 

 

 

Information Technology 15.04%

  

ACI Worldwide, Inc.(a)(d)

    9,600        469,056   

Altera Corp.(a)

    22,300        790,981   

Analog Devices, Inc.(a)

    17,700        822,873   

Apple, Inc.(a)(b)

    3,000        1,327,890   

Canon, Inc.

    14,200        520,423   

Ciena Corp.(a)(d)

    45,100        722,051   

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

    54,200        2,938,724   

EMC Corp.(a)(d)

    16,059        383,650   

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

    8,939        7,097,834   

JDS Uniphase Corp.(a)(d)

    53,100        709,947   

Jive Software, Inc.(a)(d)

    53,100        807,120   

Maxim Integrated Products, Inc.(a)

    11,500        375,475   

Mellanox Technologies, Ltd.(a)(b)(d)

    36,900        2,048,319   

Microchip Technology,
Inc.
(a)

    13,900        510,964   

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

    176,604        1,762,508   

NXP Semiconductor
NV
(a)(d)

    53,884        1,630,530   

ON Semiconductor
Corp.
(a)(b)(d)

    222,415        1,841,596   

SanDisk Corp.(a)(d)

    20,700        1,138,500   

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

    28,193        1,365,669   
   

 

 

 
      27,264,110   
   

 

 

 

Materials 2.61%

  

Graphic Packaging Holding Co.(a)(d)

    153,406        1,149,011   
    Shares     Value  

 

 

Materials (continued)

  

Martin Marietta Materials, Inc.(a)

    13,750        $1,402,775   

Silgan Holdings, Inc.(a)

    8,657        409,043   

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

    22,900        1,774,979   
   

 

 

 
      4,735,808   
   

 

 

 

Telecommunication Services 0.25%

  

China Telecom Corp., Ltd. - Class H

    888,000        447,286   
   

 

 

 

Utilities 0.56%

  

China Resources Power Holdings Co., Ltd.

    166,000        497,195   

National Fuel Gas
Co.
(a)(b)

    8,555        524,849   
   

 

 

 
      1,022,044   
   

 

 

 

TOTAL COMMON STOCKS

(Cost $187,133,937)

  

  

    202,032,093   
   

 

 

 

EXCHANGE TRADED FUNDS 0.98%

  

ChinaAMC ETF Series - ChinaAMC CSI 300 Index ETF CNY
RQFII
(d)

    252,269        1,005,820   

CSOP FTSE China A50 ETF CNY RQFII(d)

    591,085        772,118   
   

 

 

 

TOTAL EXCHANGE TRADED FUNDS

(Cost $1,948,787)

  

  

    1,777,938   
   

 

 

 

PREFERRED STOCKS 0.38%

  

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

    15,900        691,809   
   

 

 

 

TOTAL PREFERRED STOCKS

(Cost $795,994)

  

  

    691,809   
   

 

 

 

Description and

Maturity Date

  Principal
Amount
    Value  

 

 

CORPORATE BONDS 0.89%

  

 

Provident Bank of Maryland 05/01/2018, 9.500% (a)

    $1,000,000        1,030,914   

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

    520,000        580,450   
   

 

 

 

TOTAL CORPORATE BONDS

(Cost $1,545,161)

  

  

    1,611,364   
   

 

 

 
 

 

      

Annual Report  |  March 31, 2013

   11


 

Statement of Investments    Clough Global Allocation Fund
March 31, 2013   

 

    

Description and

Maturity Date

 

    

Principal
Amount

    Value  

 

 

ASSET/MORTGAGE BACKED
SECURITIES 0.24%

   

Small Business Administration Participation Certificates

  

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

    $377,479        $441,859   
   

 

 

 

TOTAL ASSET/MORTGAGE BACKED SECURITIES

(Cost $377,478)

   

  

    441,859   
   

 

 

 

GOVERNMENT & AGENCY
OBLIGATIONS 22.85%

   

U.S. Treasury Bonds

  

11/15/2026, 6.500% (a)

    750,000        1,120,664   

11/15/2028, 5.250%

    1,185,000        1,606,971   

02/15/2031, 5.375% (a)

    1,875,000        2,611,230   

11/15/2041, 3.125% (a)

    2,300,000        2,318,688   

02/15/2042, 3.125%

    1,600,000        1,611,501   

U.S. Treasury Notes

   

02/15/2018, 3.500% (a)

    3,785,000        4,287,402   

05/15/2018, 3.875% (a)

    2,600,000        3,005,642   

01/31/2019, 1.250% (a)

    3,145,000        3,199,547   

11/15/2019, 3.375% (a)

    5,070,000        5,808,319   

05/15/2020, 3.500% (a)

    2,590,000        2,993,271   

08/15/2020, 2.625% (a)

    7,065,000        7,724,030   

11/15/2021, 2.000% (a)

    4,975,000        5,135,523   
   

 

 

 

TOTAL GOVERNMENT & AGENCY OBLIGATIONS

(Cost $41,702,117)

   

  

    41,422,788   
   

 

 

 
   

Shares/Principal

Amount

    Value  

 

 

SHORT-TERM INVESTMENTS 10.86%

  

Money Market Fund

  

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

    13,687,422        13,687,422   
   

 

 

 

U.S. Treasury Bills

  

U.S. Treasury Bills Discount Notes

  

06/20/2013, 0.116% (g)

    $3,000,000        2,999,583   

10/17/2013, 0.127% (a)(g)

    3,000,000        2,998,467   
   

 

 

 
      5,998,050   
   

 

 

 

TOTAL SHORT-TERM INVESTMENTS

(Cost $19,684,531)

  

  

    19,685,472   
   

 

 

 

Total Investments - 147.63%

(Cost $253,188,005)

  

  

    267,663,323   

Liabilities in Excess of Other
Assets -(47.63%)

   

    (86,354,061)   
   

 

 

 

NET ASSETS - 100.00%

  

    $181,309,262   
   

 

 

 

SCHEDULE OF

SECURITIES SOLD

SHORT (d)

  Shares     Value  

 

 

COMMON STOCKS (14.51%)

  

Energy (1.20%)

  

 

Construction & Engineering (0.29%)

  

Fluor Corp.

    (7,900)        $(524,007)   

Oil Leveraged Exploration & Production (0.91%)

  

Petroleo Brasileiro S.A. - ADR

    (99,702)        (1,652,062)   
   

 

 

 

TOTAL ENERGY

  

    (2,176,069)   
   

 

 

 

Financials (3.84%)

  

Capital Markets (0.60%)

  

 

Deutsche Bank AG

    (27,829)        (1,088,670)   

Commercial Banks (3.24%)

  

BNP Paribas S.A.

    (18,304)        (939,461)   

Credit Agricole S.A.

    (107,144)        (882,566)   

Intesa Sanpaolo SpA

    (392,970)        (575,260)   

Lloyds Banking Group PLC

    (3,194,674)        (2,363,495)   

Societe Generale S.A.

    (19,913)        (654,220)   

UniCredit SpA

    (109,797)        (468,676)   
   

 

 

 
      (5,883,678)   
   

 

 

 

TOTAL FINANCIALS

  

    (6,972,348)   
   

 

 

 

Health Care (0.93%)

  

Owens & Minor, Inc.

    (18,026)        (586,927)   

Waters Corp.

    (11,700)        (1,098,747)   
   

 

 

 
      (1,685,674)   
   

 

 

 

Industrials (4.13%)

  

Caterpillar, Inc.

    (41,400)        (3,600,558)   

Sandvik AB

    (139,719)        (2,148,352)   

Siemens AG

    (4,777)        (514,551)   

United Technologies Corp.

    (13,200)        (1,233,276)   
   

 

 

 
      (7,496,737)   
   

 

 

 

Information Technology (3.25%)

  

F5 Networks, Inc.

    (14,400)        (1,282,752)   

Freescale Semiconductor, Ltd.

    (72,331)        (1,077,009)   

International Business Machines Corp.

    (11,100)        (2,367,630)   

Teradyne, Inc.

    (28,700)        (465,514)   

Texas Instruments, Inc.

    (19,500)        (691,860)   
   

 

 

 
      (5,884,765)   
   

 

 

 

Materials (1.16%)

  

Alcoa, Inc.

    (59,400)        (506,088)   

ArcelorMittal

    (50,513)        (650,740)   

Fortescue Metals Group, Ltd.

    (79,853)        (327,566)   
 

 

      

12

   www.cloughglobal.com


Clough Global Allocation Fund    Statement of Investments
   March 31, 2013

 

SCHEDULE OF
SECURITIES SOLD

SHORT (d)

   Shares      Value  

 

 

Materials (continued)

     

Vale S.A. - ADR

     (35,712)         $(617,461)   
     

 

 

 
        (2,101,855)   
     

 

 

 

TOTAL COMMON STOCKS

(Proceeds $26,065,398)

  

  

     (26,317,448)   
     

 

 

 

EXCHANGE TRADED FUNDS (22.43%)

  

iShares® FTSE China 25 Index Fund

     (74,954)         (2,765,803)   

iShares® MSCI Emerging Markets Index Fund

     (166,900)         (7,139,982)   

iShares® MSCI France Index Fund

     (6,444)         (149,565)   

iShares® MSCI Hong Kong Index Fund

     (19,496)         (386,801)   

iShares® MSCI South Korea Capped Index Fund

     (12,600)         (748,818)   

Market Vectors® Oil Service ETF

     (66,928)         (2,873,888)   

Powershares QQQ ™ Trust Series 1

     (148,169)         (10,219,216)   

SPDR® S&P 500® ETF Trust

     (60,800)         (9,518,240)   

United States Natural Gas Fund LP

     (140,358)         (3,071,033)   

United States Oil Fund LP

     (109,106)         (3,792,524)   
     

 

 

 

TOTAL EXCHANGE TRADED FUNDS

(Proceeds $39,616,834)

  

  

     (40,665,870)   
     

 

 

 

TOTAL SECURITIES SOLD SHORT

(Proceeds $65,682,232)

  

  

     $(66,983,318)   
     

 

 

 
 

 

      

Annual Report  |  March 31, 2013

   13


 

Statement of Investments    Clough Global Allocation Fund
March 31, 2013   

 

(a) 

Pledged security; a portion or all of the security is pledged as collateral for securities sold short or borrowings as of March 31, 2013. (See Note 1 and Note 6)

(b) 

Loaned security; a portion or all of the security is on loan at March 31, 2013.

(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 March 31, 2013, these securities had a total value of $9,070,702 or 5.00% of net assets.

(d) 

Non-income producing security.

(e) 

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 March 31, 2013, the aggregate market value of those securities was $580,450, representing 0.32% of net assets.

(f) 

Less than 0.0005%.

(g) 

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

Total Return Swap Contracts

 

Counter Party  

Reference

Entry/Obligation

 

Notional

Amount

   

Floating Rate Paid

by the Fund

  Floating Rate Index    

Termination

Date

   

Net Unrealized

Loss

 

 

 

Credit Suisse First Boston

 

Daqin Railway Co., Ltd.

  $ 382,418      75 Bps + 1-Month LIBOR     LIBOR 1-Month        8/26/2014      $ (7,731)   

Morgan Stanley

 

Bharti Infratel, Ltd.

    1,535,035      30 Bps + 1D FEDEF     1D FEDEF        12/30/2014        (283,102)   

Morgan Stanley

 

Citic Securities Co., Ltd.

    1,474,938      55 Bps + 1D FEDEF     1D FEDEF        6/19/2014        (229,832)   

Morgan Stanley

 

Daqin Railway Co., Ltd.

    865,999      55 Bps + 1D FEDEF     1D FEDEF        6/19/2014        (47,869)   
   

 

 

         

 

 

 
    $   4,258,390            $ (568,534)   
   

 

 

         

 

 

 

 

See Notes to the Financial Statements.

 

    

14

   www.cloughglobal.com


Clough Global Equity Fund    Statement of Investments
   March 31, 2013

 

    Shares     Value  

 

 

COMMON STOCKS 124.84%

  

Consumer Discretionary 26.47%

  

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

    174,073        $4,179,493   

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

    97,800        1,290,960   

Arezzo Industria e Comercio S.A.

    35,505        710,188   

Ascena Retail Group,
Inc.
(a)(d)

    63,000        1,168,650   

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

    28,000        2,165,520   

Bosideng International Holdings, Ltd.

    3,893,314        1,208,738   

Carnival Corp.(a)

    45,800        1,570,940   

Charter Communications, Inc.(a)(b)(d)

    35,100        3,656,718   

Cia Hering

    33,399        597,488   

Denso Corp.

    21,900        924,762   

Don Quijote Co., Ltd.

    13,800        610,581   

Geely Automobile Holdings, Ltd.

    3,275,000        1,590,553   

Great Wall Motor Co., Ltd.

    329,000        1,114,672   

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

    119,835        3,525,546   

Honda Motor Co., Ltd.

    24,030        918,978   

Imax Corp.(a)(b)(d)

    106,800        2,854,764   

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

    36,207        1,760,022   

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

    65,808        4,830,307   

Liberty Global, Inc. -
Series C
(a)(d)

    26,400        1,811,832   

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

    223,986        4,788,821   

Liberty Media Corp.(a)(d)

    43,768        4,885,822   

Liberty Ventures -
Series A
(a)(b)(d)

    66,034        4,990,850   

Man Wah Holdings, Ltd.

    2,456,000        2,347,620   

Michael Kors Holdings,
Ltd.
(a)(d)

    14,943        848,613   

News Corp. - Class A(a)

    43,551        1,329,176   

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

    119,537        1,178,635   

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

    100,871        2,963,590   

Samsonite International S.A.

    1,077,000        2,691,615   

Sands China, Ltd.

    51,600        267,554   

Service Corp.
International
(a)

    50,600        846,538   

Signet Jewelers, Ltd.(a)

    23,200        1,554,400   

Starz - Liberty Capital(a)(d)

    31,668        701,446   

Time Warner, Inc.(a)

    34,308        1,976,827   

Toyota Motor Corp.

    42,200        2,163,011   

UNICASA Industria de Moveis S.A.(c)

    104,600        504,689   

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

    60,200        3,706,514   
    Shares     Value  

 

 

Consumer Discretionary (continued)

  

Wyndham Worldwide Corp.(a)

    66,600        $4,294,368   
   

 

 

 
      78,530,801   
   

 

 

 

Consumer Staples 4.13%

  

Brazil Pharma S.A.(c)

    300,666        2,097,929   

China Resources Enterprise, Ltd.

    220,000        651,848   

Green Mountain Coffee Roasters, Inc.(a)(b)(d)

    27,178        1,542,623   

Kirin Holdings Co., Ltd.

    91,000        1,460,679   

M Dias Branco S.A.

    20,100        800,717   

Mead Johnson Nutrition Co.(a)(b)

    42,400        3,283,880   

Vinda International Holdings, Ltd.

    1,685,222        2,405,429   
   

 

 

 
      12,243,105   
   

 

 

 

Energy 17.78%

  

Energy Commodities 0.60%

  

Pacific Coast Oil
Trust
(a)(c)

    95,800        1,794,334   
   

 

 

 

Natural Gas Leveraged Exploration & Production 1.28%

   

Cabot Oil & Gas
Corp.
(a)(b)

    33,900        2,291,979   

Range Resources
Corp.
(a)(b)

    18,400        1,491,136   
   

 

 

 
      3,783,115   
   

 

 

 

Non-North American Producers 0.88%

  

InterOil Corp.(d)

    34,284        2,609,355   
   

 

 

 

Oil Leveraged Exploration & Production 5.30%

  

Anadarko Petroleum Corp.(a)(b)

    32,938        2,880,428   

Continental Resources, Inc.(a)(d)

    15,600        1,356,108   

EOG Resources, Inc.(a)

    10,000        1,280,700   

Gulfport Energy
Corp.
(a)(b)(d)

    70,031        3,209,521   

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

    289,800        2,634,282   

Noble Energy, Inc.(a)(b)

    7,700        890,582   

Oasis Petroleum,
Inc.
(a)(d)

    61,900        2,356,533   

Whiting Petroleum
Corp.
(a)(d)

    21,900        1,113,396   
   

 

 

 
      15,721,550   
   

 

 

 

Oil Services & Drillers 7.77%

  

Cameron International Corp.(a)(b)(d)

    28,483        1,857,092   

Diamond Offshore Drilling, Inc.(a)(b)

    26,400        1,836,384   

Ensco PLC - Sponsored ADR - Class A(a)

    17,700        1,062,000   
 

 

      

Annual Report  |  March 31, 2013

   15


 

Statement of Investments    Clough Global Equity Fund
March 31, 2013   

 

    Shares     Value  

 

 

Energy (continued)

  

FMC Technologies,
Inc.
(a)(d)

    27,400        $1,490,286   

Halliburton Co.(a)

    73,500        2,970,135   

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

    38,447        2,720,125   

Noble Corp.(a)(b)

    57,023        2,175,427   

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

    15,730        1,283,096   

Schlumberger, Ltd.(a)

    10,100        756,389   

Superior Energy Services, Inc.(a)(d)

    80,523        2,091,182   

Transocean, Ltd.(a)(d)

    22,701        1,179,544   

Weatherford International,
Ltd.
(a)(b)(d)

    300,211        3,644,562   
   

 

 

 
      23,066,222   
   

 

 

 

Tankers 1.95%

  

Golar LNG, Ltd.(a)(b)

    156,334        5,778,105   
   

 

 

 

TOTAL ENERGY

  

    52,752,681   
   

 

 

 

Energy Infrastructure & Capital Equipment 0.62%

  

Dresser-Rand Group, Inc.(a)(d)

    30,100        1,855,966   
   

 

 

 

Financials 23.94%

  

Business Development Corporations 1.39%

  

Golub Capital BDC,
Inc.
(a)

    87,100        1,438,021   

Medley Capital Corp.(a)

    14,000        221,900   

PennantPark Investment Corp.(a)

    109,073        1,231,434   

Solar Senior Capital, Ltd.(a)

    64,139        1,231,469   
   

 

 

 
      4,122,824   
   

 

 

 

Capital Markets 2.13%

   

CITIC Securities Co., Ltd. - Class H

    338,381        731,465   

Daiwa Securities Group, Inc.

    302,000        2,123,801   

Haitong Securities Co.,
Ltd.
(c)(d)

    849,355        1,166,385   

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

    10,996        10,226   

Nomura Holdings, Inc.

    372,800        2,296,957   
   

 

 

 
      6,328,834   
   

 

 

 

Commercial Banks 3.61%

  

Mitsubishi UFJ Financial Group, Inc.

    276,500        1,656,621   

Mizuho Financial Group, Inc.

    861,100        1,838,648   

Sumitomo Mitsui Financial Group, Inc.

    52,500        2,141,605   
    Shares     Value  

 

 

Financials (continued)

  

Wells Fargo &
Co.
(a)(b)

    136,982        $5,066,964   
   

 

 

 
      10,703,838   
   

 

 

 

Diversified Financials 8.32%

  

Bank of America Corp.(a)(b)

    882,719        10,751,518   

BB&T Corp.

    18,500        580,715   

Citigroup, Inc.(a)(b)

    301,626        13,343,934   
   

 

 

 
      24,676,167   
   

 

 

 

Insurance 4.47%

   

American International Group, Inc.(a)(b)(d)

    341,876        13,271,626   
   

 

 

 

Real Estate Investment Trusts 3.44%

  

American Homes 4 Rent(c)(d)

    181,300        3,127,425   

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

    56,000        1,232,000   

Ascendas Real Estate Investment Trust

    1,370,000        2,871,770   

Ascott Residence Trust

    899,766        1,001,070   

GLP J-REIT

    1,124        1,207,164   

Select Income
REIT
(a)(c)

    29,700        785,565   
   

 

 

 
      10,224,994   
   

 

 

 

Real Estate Management & Development 0.31%

  

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

    42,939        442,830   

Sonae Sierra Brasil S.A.

    34,054        469,333   
   

 

 

 
      912,163   
   

 

 

 

Thrifts & Mortgage Finance 0.27%

  

Oritani Financial Corp.(a)

    51,376        795,814   
   

 

 

 

TOTAL FINANCIALS

  

    71,036,260   
   

 

 

 

Health Care 18.79%

  

Aetna, Inc.(a)(b)

    36,613        1,871,657   

Akorn, Inc.(a)(d)

    133,600        1,847,688   

Allergan, Inc.(a)

    16,400        1,830,732   

Amarin Corp. PLC - ADR(a)(b)(d)

    140,700        1,042,587   

Biogen Idec,
Inc.
(a)(b)(d)

    8,124        1,567,201   

Boston Scientific Corp.(a)(d)

    213,600        1,668,216   

Catamaran
Corp.
(a)(b)(d)

    24,200        1,283,326   

Celgene Corp.(a)(d)

    30,600        3,546,846   

Centene Corp.(a)(d)

    76,300        3,360,252   

Cigna Corp.(a)

    36,600        2,282,742   

Community Health Systems, Inc.(a)

    63,241        2,996,991   

Elan Corp. PLC(a)(d)

    235,915        2,783,797   

Express Scripts Holding Co.(a)(d)

    48,300        2,784,495   
 

 

      

16

   www.cloughglobal.com


Clough Global Equity Fund    Statement of Investments
   March 31, 2013

 

    Shares     Value  

 

 

Health Care (continued)

   

Forest Laboratories,
Inc.
(a)(b)(d)

    20,212        $768,865   

Gilead Sciences, Inc.(a)(d)

    72,025        3,524,183   

HCA Holdings, Inc.(a)(b)

    100,915        4,100,176   

Health Management Associates, Inc. -
Class A
(a)(b)(d)

    161,200        2,074,644   

Jazz Pharmaceuticals
PLC
(a)(d)

    46,600        2,605,406   

LifePoint Hospitals, Inc.(a)(d)

    56,885        2,756,647   

Merck & Co., Inc.(a)(b)

    41,200        1,822,276   

Pfizer, Inc.(a)(b)

    152,700        4,406,922   

Sinopharm Group Co., Ltd.

    256,800        828,702   

UnitedHealth Group, Inc.(a)

    43,300        2,477,193   

WellPoint, Inc.(a)

    22,800        1,510,044   
   

 

 

 
      55,741,588   
   

 

 

 

Industrials 12.35%

   

Air China, Ltd. - H Shares

    3,344,671        2,973,022   

The Boeing Co.(a)(b)

    25,378        2,178,701   

Brenntag AG

    12,517        1,954,277   

Cia de Locacao das Americas(c)

    337,400        2,011,961   

Covanta Holding Corp.(a)

    106,700        2,150,005   

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

    104,400        840,420   

Honeywell International, Inc.(a)(b)

    75,300        5,673,855   

IHI Corp.

    285,251        863,616   

MRC Global, Inc.(a)(d)

    40,174        1,322,930   

Owens Corning(a)(b)(d)

    68,007        2,681,516   

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

    97,508        3,205,088   

TransDigm Group, Inc.(a)(b)

    35,894        5,488,910   

UTi Worldwide, Inc.(a)

    53,400        773,232   

WABCO Holdings, Inc.(a)(b)(d)

    64,176        4,530,184   
   

 

 

 
      36,647,717   
   

 

 

 

Information Technology 17.31%

  

ACI Worldwide, Inc.(a)(d)

    17,100        835,506   

Altera Corp.(a)

    42,900        1,521,663   

Analog Devices, Inc.(a)

    29,100        1,352,859   

Apple, Inc.(a)(b)

    5,600        2,478,728   

Canon, Inc.

    27,200        996,866   

Ciena Corp.(a)(d)

    88,400        1,415,284   

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

    93,600        5,074,992   

EMC Corp.(a)(d)

    26,388        630,409   

FleetCor Technologies,
Inc.
(a)(d)

    13,328        1,021,858   

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

    15,621        12,403,543   

JDS Uniphase Corp.(a)(d)

    104,100        1,391,817   
    Shares     Value  

 

 

Information Technology (continued)

  

Jive Software, Inc.(a)(d)

    104,900        $1,594,480   

Maxim Integrated Products, Inc.(a)

    25,300        826,045   

Mellanox Technologies,
Ltd.
(a)(b)(d)

    65,900        3,658,109   

Microchip Technology, Inc.(a)

    30,400        1,117,504   

Micron Technology,
Inc.
(a)(d)

    320,310        3,196,694   

NXP Semiconductor
NV
(a)(b)(d)

    122,924        3,719,680   

ON Semiconductor
Corp.
(a)(d)

    434,372        3,596,600   

SanDisk Corp.(d)

    34,100        1,875,500   

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

    54,794        2,654,221   
   

 

 

 
      51,362,358   
   

 

 

 

Materials 2.65%

  

Graphic Packaging Holding
Co.
(a)(d)

    249,287        1,867,160   

Martin Marietta Materials,
Inc.
(a)(b)

    22,365        2,281,677   

Silgan Holdings, Inc.(a)

    17,817        841,853   

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

    37,200        2,883,372   
   

 

 

 
      7,874,062   
   

 

 

 

Telecommunication Services 0.25%

  

China Telecom Corp., Ltd. - Class H

    1,452,000        731,373   
   

 

 

 

Utilities 0.55%

  

 

China Resources Power Holdings Co., Ltd.

    264,000        790,720   

National Fuel Gas Co.(a)

    13,901        852,826   
   

 

 

 
      1,643,546   
   

 

 

 

TOTAL COMMON STOCKS

(Cost $ 341,792,067)

  

  

    370,419,457   
   

 

 

 

EXCHANGE TRADED FUNDS 1.10%

  

ChinaAMC ETF Series - ChinaAMC CSI 300 Index ETF CNY
RQFII
(d)

    498,937        1,989,308   

CSOP FTSE China A50 ETF CNY RQFII(d)

    970,429        1,267,644   
   

 

 

 

TOTAL EXCHANGE TRADED FUNDS

(Cost $ 3,558,531)

  

  

    3,256,952   
   

 

 

 
 

 

      

Annual Report  |  March 31, 2013

   17


 

Statement of Investments    Clough Global Equity Fund
March 31, 2013   

 

    Shares     Value  

 

 

PREFERRED STOCKS 0.38%

  

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

    26,000        $1,131,260   
   

 

 

 

TOTAL PREFERRED STOCKS

(Cost $1,301,625)

  

  

    1,131,260   
   

 

 

 

Description and

Maturity Date

 

Principal

Amount

    Value  

 

 

CORPORATE BONDS 0.29%

  

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

    $775,000        865,094   
   

 

 

 

TOTAL CORPORATE BONDS

(Cost $763,253)

  

  

    865,094   
   

 

 

 

GOVERNMENT & AGENCY OBLIGATIONS 15.60%

  

U.S. Treasury Bonds

   

11/15/2026, 6.500% (a)

    1,850,000        2,764,305   

11/15/2028, 5.250% (a)

    1,800,000        2,440,969   

02/15/2031, 5.375% (a)

    2,175,000        3,029,027   

11/15/2041, 3.125% (a)

    3,900,000        3,931,687   

02/15/2042, 3.125%

    2,700,000        2,719,408   

U.S. Treasury Notes

   

02/15/2018, 3.500% (a)

    5,230,000        5,924,204   

05/15/2018, 3.875% (a)

    4,900,000        5,664,479   

01/31/2019, 1.250% (a)

    4,055,000        4,125,330   

11/15/2019, 3.375% (a)

    6,670,000        7,641,319   

05/15/2020, 3.500% (a)

    4,110,000        4,749,939   

08/15/2020, 2.625% (a)

    3,000,000        3,279,843   
   

 

 

 

TOTAL GOVERNMENT & AGENCY OBLIGATIONS

(Cost $46,457,584)

   

  

    46,270,510   
   

 

 

 
   

Shares/Principal

Amount

    Value  

 

 

SHORT-TERM INVESTMENTS 5.13%

  

Money Market Fund

   

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

    13,229,693        13,229,693   
   

 

 

 

U.S. Treasury Bills

  

 

U.S. Treasury Bills Discount Notes 06/20/2013, 0.116%(g)

    $2,000,000        1,999,722   
   

 

 

 

TOTAL SHORT-TERM INVESTMENTS

(Cost $15,229,176)

  

  

    15,229,415   
   

 

 

 
          Value  

 

 

Total Investments - 147.34%

(Cost $409,102,236)

  

  

    $437,172,688   

Liabilities in Excess of Other
Assets - (47.34%)

   

    (140,463,071)   
   

 

 

 

NET ASSETS - 100.00%

  

    $296,709,617   
   

 

 

 

SCHEDULE OF SECURITIES

SOLD SHORT (d)

  Shares     Value  

 

 

COMMON STOCKS (15.47%)

  

Energy (1.20%)

   

Construction & Engineering (0.29%)

  

Fluor Corp.

    (13,000)        $(862,290)   

Oil Leveraged Exploration & Production (0.91%)

  

Petroleo Brasileiro S.A. - ADR

    (163,136)        (2,703,164)   
   

 

 

 

TOTAL ENERGY

  

    (3,565,454)   
   

 

 

 

Financials (3.89%)

  

Capital Markets (0.64%)

  

Deutsche Bank AG

    (48,414)        (1,893,955)   

Commercial Banks (3.25%)

  

BNP Paribas S.A.

    (29,806)        (1,529,806)   

Credit Agricole S.A.

    (174,070)        (1,433,848)   

Intesa Sanpaolo SpA

    (638,415)        (934,561)   

Lloyds Banking Group PLC

    (5,277,991)        (3,904,782)   

Societe Generale S.A.

    (32,352)        (1,062,890)   

UniCredit SpA

    (182,023)        (776,979)   
   

 

 

 
      (9,642,866)   
   

 

 

 

TOTAL FINANCIALS

  

    (11,536,821)   
   

 

 

 

Health Care (1.12%)

  

Owens & Minor, Inc.

    (35,633)        (1,160,210)   

Waters Corp.

    (23,200)        (2,178,712)   
   

 

 

 
      (3,338,922)   
   

 

 

 

Industrials (4.24%)

   

Caterpillar, Inc.

    (68,300)        (5,940,051)   

Sandvik AB

    (227,648)        (3,500,369)   

Siemens AG

    (7,923)        (853,420)   

United Technologies Corp.

    (24,600)        (2,298,378)   
   

 

 

 
      (12,592,218)   
   

 

 

 

Information Technology (3.81%)

  

F5 Networks, Inc.

    (28,000)        (2,494,240)   

Freescale Semiconductor, Ltd.

    (126,088)        (1,877,450)   
 

 

      

18

   www.cloughglobal.com


Clough Global Equity Fund

   Statement of Investments
   March 31, 2013

 

SCHEDULE OF SECURITIES

SOLD SHORT (d)

  Shares     Value  

 

 

Information Technology (continued)

  

International Business Machines Corp.

    (19,600)        $(4,180,680)   

Teradyne, Inc.

    (47,300)        (767,206)   

Texas Instruments, Inc.

    (55,800)        (1,979,784)   
   

 

 

 
      (11,299,360)   
   

 

 

 

Materials (1.21%)

   

Alcoa, Inc.

    (97,800)        (833,256)   

ArcelorMittal

    (93,098)        (1,199,347)   

Fortescue Metals Group, Ltd.

    (130,637)        (535,888)   

Vale S.A. - ADR

    (58,436)        (1,010,359)   
   

 

 

 
      (3,578,850)   
   

 

 

 

TOTAL COMMON STOCKS

(Proceeds $45,556,747)

  

  

    (45,911,625)   
   

 

 

 

EXCHANGE TRADED FUNDS (22.78%)

  

iShares® FTSE China 25 Index Fund

    (123,940)        (4,573,386)   

iShares® MSCI Emerging Markets Index Fund

    (275,600)        (11,790,168)   

iShares® MSCI France Index Fund

    (10,515)        (244,053)   

iShares® MSCI Hong Kong Index Fund

    (32,147)        (637,796)   

iShares® MSCI South Korea Capped Index Fund

    (20,900)        (1,242,087)   

Market Vectors® Oil Service ETF

    (109,808)        (4,715,156)   

Powershares QQQ ™ Trust Series 1

    (241,809)        (16,677,567)   

SPDR® S&P 500® ETF Trust

    (99,350)        (15,553,243)   

United States Natural Gas Fund LP

    (267,015)        (5,842,288)   

United States Oil Fund LP

    (181,341)        (6,303,413)   
   

 

 

 

TOTAL EXCHANGE TRADED FUNDS

(Proceeds $65,866,373)

  

  

    (67,579,157)   
   

 

 

 

TOTAL SECURITIES SOLD SHORT

(Proceeds $111,423,120)

  

  

    $(113,490,782)   
   

 

 

 
 

 

      

Annual Report  |  March 31, 2013

   19


 

Statement of Investments    Clough Global Equity Fund
March 31, 2013   

 

(a)

Pledged security; a portion or all of the security is pledged as collateral for securities sold short or borrowings as of March 31, 2013. (See Note 1 and Note 6)

(b)

Loaned security; a portion or all of the security is on loan at March 31, 2013.

(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 March 31, 2013, these securities had a total value of $16,910,007 or 5.70% of net assets.

(d)

Non-income producing security.

(e)

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 March 31, 2013, the aggregate market value of those securities was $865,094, representing 0.29% of net assets.

(f)

Less than 0.0005%.

(g)

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

Total Return Swap Contracts

 

Counter Party  

Reference

Entry/Obligation

 

Notional

Amount

   

Floating Rate Paid

by the Fund

 

Floating

Rate Index

 

Termination

Date

    Net Unrealized
Loss
 

 

 

Morgan Stanley

 

Annui Conch Cement Co., Ltd.

  $ 1,702,413      55 Bps + 1D FEDEF   1D FEDEF     6/19/2014      $ (252,531

Morgan Stanley

 

Bharti Infratel, Ltd.

    2,468,093      30 Bps + 1D FEDEF   1D FEDEF     12/24/2014        (455,184

Morgan Stanley

 

Citic Securities Co., Ltd.

    2,434,134      55 Bps + 1D FEDEF   1D FEDEF     6/19/2014        (379,294

Morgan Stanley

 

Daqin Railway Co., Ltd.

    816,958      55 Bps + 1D FEDEF   1D FEDEF     6/19/2014        (37,690

Morgan Stanley

 

Daqin Railway Co., Ltd.

    1,868,700      55 Bps + 1D FEDEF   1D FEDEF     6/17/2013       (75,256 )
   

 

 

         

 

 

 
    $  9,290,298           $ (1,199,955 )
   

 

 

         

 

 

 

 

 

See Notes to the Financial Statements.

 

    

20

   www.cloughglobal.com


Clough Global Opportunities Fund    Statement of Investments
   March 31, 2013

 

 

    Shares     Value  

 

 

COMMON STOCKS 114.17%

  

Consumer Discretionary 23.37%

  

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

    421,758        $10,126,410   

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

    206,600        2,727,120   

Arezzo Industria e Comercio S.A.

    92,080        1,841,828   

Ascena Retail Group, Inc.(a)(d)

    163,700        3,036,635   

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

    72,800        5,630,352   

Bosideng International Holdings, Ltd.

    10,128,233        3,144,462   

Carnival Corp.(a)

    117,100        4,016,530   

Charter Communications,
Inc.
(a)(b)(d)

    83,000        8,646,940   

Cia Hering

    87,300        1,561,744   

Denso Corp.

    56,800        2,398,470   

Don Quijote Co., Ltd.

    35,500        1,570,696   

Geely Automobile Holdings, Ltd.

    8,410,000        4,084,444   

Great Wall Motor Co., Ltd.

    846,500        2,867,994   

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

    266,620        7,843,960   

Honda Motor Co., Ltd.

    62,078        2,374,046   

Imax Corp.(a)(d)

    79,700        2,130,381   

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

    95,070        4,621,353   

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

    149,207        10,951,794   

Liberty Global, Inc. - Series C(a)(d)

    52,000        3,568,760   

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

    301,402        6,443,975   

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

    95,256        10,633,427   

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

    162,945        12,315,383   

Man Wah Holdings, Ltd.

    6,430,900        6,147,114   

Michael Kors Holdings, Ltd.(a)(d)

    38,883        2,208,166   

News Corp. - Class A(a)

    113,732        3,471,101   

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

    227,014        2,238,358   

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

    264,683        7,776,387   

Samsonite International S.A.

    1,136,400        2,840,067   

Sands China, Ltd.

    132,400        686,514   

Service Corp. International(a)

    129,900        2,173,227   

Signet Jewelers, Ltd.(a)

    60,300        4,040,100   

Starz - Liberty Capital(a)(d)

    64,056        1,418,840   

Time Warner, Inc.(a)

    89,336        5,147,540   

Toyota Motor Corp.

    109,700        5,622,802   

UNICASA Industria de Moveis S.A.(c)

    268,600        1,295,979   

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

    157,100        9,672,647   

 

     Shares     Value  

Consumer Discretionary (continued)

  

Wyndham Worldwide Corp.(a)

    150,900        $9,730,032   
   

 

 

 
      177,005,578   
   

 

 

 

Consumer Staples 3.59%

  

Brazil Pharma S.A.(c)

    790,115        5,513,112   

China Resources Enterprise, Ltd.

    490,000        1,451,843   

Green Mountain Coffee Roasters, Inc.(a)(b)(d)

    63,342        3,595,292   

Kirin Holdings Co., Ltd.

    233,000        3,739,980   

M Dias Branco S.A.

    52,200        2,079,475   

Mead Johnson Nutrition Co.(a)(b)

    92,200        7,140,890   

Vinda International Holdings, Ltd.

    2,565,714        3,662,213   
   

 

 

 
      27,182,805   
   

 

 

 

Energy 16.77%

   

Natural Gas Leveraged Exploration & Production 1.21%

   

Cabot Oil & Gas
Corp.
(a)(b)

    78,100        5,280,341   

Range Resources Corp.(a)(b)

    47,800        3,873,712   
   

 

 

 
      9,154,053   
   

 

 

 

Non-North American Producers 0.90%

  

InterOil Corp.(d)

    89,594        6,818,999   
   

 

 

 

Oil Leveraged Exploration & Production 4.42%

  

Anadarko Petroleum Corp.(a)(b)

    63,794        5,578,785   

Continental Resources, Inc.(a)(d)

    33,700        2,929,541   

EOG Resources, Inc.(a)

    21,300        2,727,891   

Gulfport Energy
Corp.
(a)(b)(d)

    151,158        6,927,571   

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

    650,200        5,910,318   

Noble Energy, Inc.(a)(b)

    14,000        1,619,240   

Oasis Petroleum,
Inc.
(a)(d)

    137,700        5,242,239   

Whiting Petroleum Corp.(a)(d)

    50,700        2,577,588   
   

 

 

 
      33,513,173   
   

 

 

 

Oil Services & Drillers 8.32%

  

Cameron International Corp.(a)(b)(d)

    141,282        9,211,586   

Diamond Offshore Drilling, Inc.(a)

    67,694        4,708,795   

Ensco PLC - Sponsored ADR - Class A(a)

    75,400        4,524,000   

FMC Technologies, Inc.(a)(d)

    57,000        3,100,230   

Halliburton Co.(a)(b)

    165,300        6,679,773   
 

 

      

Annual Report  |  March 31, 2013

   21


 

Statement of Investments    Clough Global Opportunities Fund
March 31, 2013   

 

    Shares     Value  

 

 

Energy (continued)

   

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

    96,724        $6,843,223   

Noble Corp.(a)(b)

    113,525        4,330,979   

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

    41,036        3,347,307   

Schlumberger, Ltd.(a)

    26,200        1,962,118   

Superior Energy Services, Inc.(a)(d)

    188,326        4,890,826   

Transocean, Ltd.(a)(d)

    86,606        4,500,048   

Weatherford International,
Ltd.
(a)(b)(d)

    736,624        8,942,615   
   

 

 

 
      63,041,500   
   

 

 

 

Tankers 1.92%

   

Golar LNG, Ltd.(a)(b)

    392,958        14,523,728   
   

 

 

 

TOTAL ENERGY

      127,051,453   
   

 

 

 

Energy Infrastructure & Capital Equipment 0.64%

  

Dresser-Rand Group, Inc.(a)(d)

    78,100        4,815,646   
   

 

 

 

Financials 22.90%

   

Business Development Corporations 1.32%

  

Golub Capital BDC, Inc.(a)

    226,900        3,746,119   

Medley Capital
Corp.
(a)

    36,615        580,348   

PennantPark Investment Corp.(a)

    217,489        2,455,451   

Solar Senior Capital, Ltd.(a)

    167,431        3,214,675   
   

 

 

 
      9,996,593   
   

 

 

 

Capital Markets 2.12%

  

CITIC Securities Co., Ltd. - Class H

    915,445        1,978,882   

Daiwa Securities Group, Inc.

    772,000        5,429,054   

Haitong Securities Co., Ltd.(c)(d)

    2,218,182        3,046,141   

Indochina Capital Vietnam

   

Holdings, Ltd.(c)(d)

    25,655        23,859   

Nomura Holdings, Inc.

    907,100        5,588,973   
   

 

 

 
      16,066,909   
   

 

 

 

Commercial Banks 3.47%

  

Mitsubishi UFJ Financial Group, Inc.

    637,500        3,819,514   

Mizuho Financial Group, Inc.

    2,001,700        4,274,092   

Sumitomo Mitsui Financial Group, Inc.

    124,900        5,094,981   

Wells Fargo & Co.(a)(b)

    353,528        13,077,001   
   

 

 

 
      26,265,588   
   

 

 

 
    Shares     Value  

 

 

Financials (continued)

  

Diversified Financials 7.87%

  

Bank of America
Corp.
(a)(b)

    2,157,881        $26,282,991   

BB&T Corp.

    47,600        1,494,164   

Citigroup, Inc.(a)(b)

    719,338        31,823,513   
   

 

 

 
      59,600,668   
   

 

 

 

Insurance 4.32%

   

American International Group,
Inc.
(a)(b)(d)

    842,640        32,711,285   
   

 

 

 

Real Estate Investment Trusts 3.49%

  

American Homes 4 Rent(c)(d)

    463,700        7,998,825   

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

    145,000        3,190,000   

Ascendas Real Estate Investment Trust

    3,597,000        7,539,968   

Ascott Residence Trust

    2,342,253        2,605,965   

GLP J-REIT

    2,886        3,099,534   

Select Income REIT(a)(c)

    77,000        2,036,650   
   

 

 

 
      26,470,942   
   

 

 

 

Real Estate Management & Development 0.31%

  

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

    111,949        1,154,530   

Sonae Sierra Brasil S.A.

    89,108        1,228,088   
   

 

 

 
      2,382,618   
   

 

 

 

TOTAL FINANCIALS

  

    173,494,603   
   

 

 

 

Health Care 17.50%

  

Aetna, Inc.(a)(b)

    95,462        4,880,017   

Akorn, Inc.(a)(d)

    274,300        3,793,569   

Allergan, Inc.(a)

    42,500        4,744,275   

Amarin Corp. PLC - ADR(a)(b)(d)

    309,500        2,293,395   

Biogen Idec,
Inc.
(a)(b)(d)

    19,599        3,780,843   

Boston Scientific
Corp.
(a)(d)

    457,500        3,573,075   

Catamaran
Corp.
(a)(b)(d)

    56,200        2,980,286   

Celgene Corp.(a)(d)

    75,300        8,728,023   

Centene
Corp.
(a)(b)(d)

    170,800        7,522,032   

Cigna Corp.(a)

    81,100        5,058,207   

Community Health Systems,
Inc.
(a)(b)

    140,228        6,645,405   

Elan Corp.
PLC
(a)(d)

    543,397        6,412,085   

Express Scripts Holding Co.(a)(d)

    110,000        6,341,500   

Forest Laboratories, Inc.(a)(b)(d)

    100,529        3,824,123   

Gilead Sciences,
Inc.
(a)(d)

    174,548        8,540,634   

HCA Holdings, Inc.(a)(b)

    246,747        10,025,331   

Health Management Associates, Inc. - Class A(a)(b)(d)

    419,942        5,404,653   
 

 

      

22

   www.cloughglobal.com


Clough Global Opportunities Fund    Statement of Investments
   March 31, 2013

 

    Shares     Value  

 

 

Health Care (continued)

   

Jazz Pharmaceuticals PLC(a)(d)

    106,500        $5,954,415   

LifePoint Hospitals,
Inc.
(a)(d)

    137,399        6,658,356   

Merck & Co., Inc.(a)(b)

    92,000        4,069,160   

Pfizer, Inc.(a)(b)

    340,100        9,815,286   

Sinopharm Group Co., Ltd.

    660,000        2,129,841   

UnitedHealth Group, Inc.(a)

    103,100        5,898,351   

WellPoint, Inc.(a)

    52,300        3,463,829   
   

 

 

 
      132,536,691   
   

 

 

 

Industrials 10.73%

   

Air China, Ltd. - H Shares

    7,886,695        7,010,351   

The Boeing Co.(a)

    65,271        5,603,515   

Brenntag AG

    32,697        5,104,977   

Cia de Locacao das Americas(c)

    871,500        5,196,870   

Covanta Holding Corp.(a)

    230,700        4,648,605   

Honeywell International, Inc.(a)(b)

    165,000        12,432,750   

MRC Global, Inc.(a)(d)

    102,755        3,383,722   

Owens Corning(a)(b)(d)

    170,389        6,718,438   

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

    227,770        7,486,800   

TransDigm Group, Inc.(a)(b)

    75,162        11,493,773   

UTi Worldwide, Inc.(a)

    129,400        1,873,712   

WABCO Holdings,
Inc.
(a)(b)(d)

    146,560        10,345,670   
   

 

 

 
      81,299,183   
   

 

 

 

Information Technology 15.20%

  

ACI Worldwide, Inc.(a)(d)

    40,900        1,998,374   

Altera Corp.(a)

    88,200        3,128,454   

Analog Devices, Inc.(a)

    74,700        3,472,803   

Apple, Inc.(a)(b)

    12,500        5,532,875   

Canon, Inc.

    59,900        2,195,305   

Ciena Corp.(a)(d)

    191,000        3,057,910   

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

    229,200        12,427,224   

EMC Corp.(d)

    67,822        1,620,267   

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

    37,907        30,099,295   

JDS Uniphase Corp.(a)(d)

    224,900        3,006,913   

Jive Software, Inc.(a)(d)

    224,600        3,413,920   

Maxim Integrated Products, Inc.(a)

    48,800        1,593,320   

Mellanox Technologies, Ltd.(a)(b)(d)

    155,700        8,642,907   

Microchip Technology, Inc.(a)

    58,600        2,154,136   

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

    747,514        7,460,190   

NXP Semiconductor
NV
(a)(b)(d)

    227,887        6,895,861   
    Shares     Value  

 

 

Information Technology (continued)

  

ON Semiconductor
Corp.
(a)(b)(d)

    941,271        $7,793,724   

SanDisk Corp.(d)

    87,700        4,823,500   

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

    120,339        5,829,221   
   

 

 

 
      115,146,199   
   

 

 

 

Materials 2.65%

   

Graphic Packaging Holding Co.(a)(d)

    648,731        4,858,995   

Martin Marietta Materials, Inc.(a)(b)

    58,237        5,941,339   

Silgan Holdings, Inc.(a)

    36,533        1,726,184   

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

    97,400        7,549,474   
   

 

 

 
      20,075,992   
   

 

 

 

Telecommunication Services 0.25%

  

 

China Telecom Corp., Ltd. - Class H

    3,756,000        1,891,899   
   

 

 

 

Utilities 0.57%

   

China Resources Power Holdings Co., Ltd.

    692,000        2,072,643   

National Fuel Gas Co.(a)

    36,300        2,227,005   
   

 

 

 
      4,299,648   
   

 

 

 

TOTAL COMMON STOCKS

(Cost $788,608,907)

  

  

    864,799,697   
   

 

 

 

EXCHANGE TRADED FUNDS 1.00%

  

ChinaAMC ETF Series - ChinaAMC CSI 300 Index ETF CNY
RQFII
(d)

    1,067,411        4,255,866   

CSOP FTSE China A50 ETF CNY RQFII(d)

    2,503,368        3,270,079   
   

 

 

 

TOTAL EXCHANGE TRADED FUNDS

(Cost $8,249,207)

  

  

    7,525,945   
   

 

 

 

PREFERRED STOCKS 0.39%

  

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

    67,800        2,949,978   
   

 

 

 

TOTAL PREFERRED STOCKS

(Cost $3,394,237)

  

  

    2,949,978   
   

 

 

 
 

 

      

Annual Report  |  March 31, 2013

   23


 

Statement of Investments    Clough Global Opportunities Fund
March 31, 2013   

 

Description and

Maturity Date

  Principal
Amount
    Value  

 

 

CORPORATE BONDS 0.87%

  

Provident Bank of Maryland 05/01/2018, 9.500% (a)

    $4,000,000        $4,123,656   

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

    2,205,000        2,461,331   
   

 

 

 

TOTAL CORPORATE BONDS

(Cost $6,304,003)

  

  

    6,584,987   
   

 

 

 

GOVERNMENT & AGENCY OBLIGATIONS 23.05%

  

U.S. Treasury Bonds

   

11/15/2026, 6.500% (a)

    5,300,000        7,919,361   

11/15/2028, 5.250% (a)

    4,650,000        6,305,837   

02/15/2031, 5.375% (a)

    7,850,000        10,932,350   

11/15/2041, 3.125% (a)

    10,100,000        10,182,062   

02/15/2042, 3.125%

    7,000,000        7,050,316   

U.S. Treasury Notes

   

02/15/2018, 3.500% (a)

    9,230,000        10,455,144   

05/15/2018, 3.875% (a)

    15,500,000        17,918,248   

01/31/2019, 1.250% (a)

    10,230,000        10,407,429   

11/15/2019, 3.375% (a)

    31,395,000        35,966,897   

05/15/2020, 3.500% (a)

    11,000,000        12,712,733   

08/15/2020, 2.625% (a)

    23,065,000        25,216,526   

11/15/2021, 2.000% (a)

    18,935,000        19,545,957   
   

 

 

 

TOTAL GOVERNMENT & AGENCY OBLIGATIONS

(Cost $175,761,544)

   

  

    174,612,860   
   

 

 

 
    Number of
Contracts
    Value  

 

 

CALL OPTIONS PURCHASED 0.10%

  

Micron Technology, Inc., Expires April, 2013, Exercise Price $9.00

    7,000        752,500   
   

 

 

 

TOTAL CALL OPTIONS PURCHASED

(Cost $686,404)

  

  

    752,500   
   

 

 

 
   

Shares/Principal

Amount

    Value  

 

 

SHORT-TERM INVESTMENTS 10.19%

  

Money Market Fund

  

 

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

    54,183,505        54,183,505   
   

 

 

 

U.S. Treasury Bills

  

U.S. Treasury Bills Discount Notes 06/20/2013, 0.116%(g)

    $11,000,000        10,998,471   
    Principal
Amount
    Value  

 

 

SHORT-TERM INVESTMENTS (continued)

  

10/17/2013,
0.127%
(a)(g)

    $12,000,000        $11,993,868   
   

 

 

 
      22,992,339   
   

 

 

 

TOTAL SHORT-TERM INVESTMENTS

(Cost $77,172,197)

  

  

    77,175,844   
   

 

 

 

Total Investments - 149.77%

(Cost $ 1,060,176,499)

  

  

    1,134,401,811   

Liabilities in Excess of Other
Assets - (49.77%)

   

    (376,949,952)   
   

 

 

 

NET ASSETS - 100.00%

  

    $757,451,859   
   

 

 

 

SCHEDULE OF SECURITIES

SOLD SHORT (d)

  Shares     Value  

 

 

COMMON STOCKS (14.67%)

  

Energy (1.22%)

  

Construction & Engineering (0.29%)

  

Fluor Corp.

    (33,400)        $(2,215,422)   

Oil Leveraged Exploration & Production (0.93%)

  

Petroleo Brasileiro S.A. - ADR

    (423,207)        (7,012,540)   
   

 

 

 

TOTAL ENERGY

  

    (9,227,962)   
   

 

 

 

Financials (3.88%)

  

Capital Markets (0.61%)

  

Deutsche Bank AG

    (118,044)        (4,617,881)   

Commercial Banks (3.27%)

  

BNP Paribas S.A.

    (77,668)        (3,986,344)   

Credit Agricole S.A.

    (454,366)        (3,742,701)   

Intesa Sanpaolo SpA

    (1,666,636)        (2,439,751)   

Lloyds Banking Group PLC

    (13,253,619)        (9,805,338)   

Societe Generale S.A.

    (84,545)        (2,777,634)   

UniCredit SpA

    (464,705)        (1,983,628)   
   

 

 

 
      (24,735,396)   
   

 

 

 

TOTAL FINANCIALS

  

    (29,353,277)   
   

 

 

 

Health Care (0.94%)

  

Owens & Minor, Inc.

    (76,341)        (2,485,663)   

Waters Corp.

    (49,200)        (4,620,372)   
   

 

 

 
      (7,106,035)   
   

 

 

 

Industrials (4.18%)

  

Caterpillar, Inc.

    (174,900)        (15,211,053)   

Sandvik AB

    (591,007)        (9,087,462)   

Siemens AG

    (20,228)        (2,178,843)   
 

 

      

24

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Clough Global Opportunities Fund    Statement of Investments
   March 31, 2013

 

SCHEDULE OF SECURITIES

SOLD SHORT (d)

  Shares     Value  

 

 

Industrials (continued)

  

United Technologies Corp.

    (55,500)        $(5,185,365)   
   

 

 

 
      (31,662,723)   
   

 

 

 

Information Technology (3.28%)

  

F5 Networks, Inc.

    (61,100)        (5,442,788)   

Freescale Semiconductor, Ltd.

    (305,876)        (4,554,494)   

International Business Machines Corp.

    (46,700)        (9,961,110)   

Teradyne, Inc.

    (121,400)        (1,969,108)   

Texas Instruments, Inc.

    (82,500)        (2,927,100)   
   

 

 

 
      (24,854,600)   
   

 

 

 

Materials (1.17%)

  

Alcoa, Inc.

    (251,200)        (2,140,224)   

ArcelorMittal

    (213,866)        (2,755,157)   

Fortescue Metals Group, Ltd.

    (337,576)        (1,384,776)   

Vale S.A. - ADR

    (150,949)        (2,609,908)   
   

 

 

 
      (8,890,065)   
   

 

 

 

TOTAL COMMON STOCKS

(Proceeds $110,032,170)

  

  

    (111,094,662)   
   

 

 

 

EXCHANGE TRADED FUNDS (22.68%)

  

iShares® FTSE China 25 Index Fund

    (317,365)        (11,710,769)   

iShares® MSCI Emerging Markets Index Fund

    (706,200)        (30,211,236)   

iShares® MSCI France Index Fund

    (27,230)        (632,008)   

iShares® MSCI Hong Kong Index Fund

    (82,473)        (1,636,264)   

iShares® MSCI South Korea Capped Index Fund

    (50,200)        (2,983,386)   

Market Vectors® Oil Service ETF

    (283,210)        (12,161,037)   

Powershares QQQ ™ Trust Series 1

    (625,861)        (43,165,633)   

SPDR® S&P 500® ETF Trust

    (257,250)        (40,272,488)   

United States Natural Gas Fund LP

    (593,743)        (12,991,097)   

United States Oil Fund LP

    (462,218)        (16,066,698)   
   

 

 

 

TOTAL EXCHANGE TRADED FUNDS

(Proceeds $167,389,888)

  

  

    (171,830,616)   
   

 

 

 

TOTAL SECURITIES SOLD SHORT

(Proceeds $277,422,058)

  

  

    $(282,925,278)   
   

 

 

 
 

 

      

Annual Report  |  March 31, 2013

   25


 

Statement of Investments    Clough Global Opportunities Fund
March 31, 2013   

 

 

(a)

Pledged security; a portion or all of the security is pledged as collateral for securities sold short or borrowings as of March 31, 2013. (See Note 1 and Note 6)

(b) 

Loaned security; a portion or all of the security is on loan at March 31, 2013.

(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 March 31, 2013, these securities had a total value of $38,427,846 or 5.07% of net assets.

(d) 

Non-income producing security.

(e)

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 March 31, 2013, the aggregate market value of those securities was $2,461,331, representing 0.32% of net assets.

(f) 

Less than 0.0005%.

(g) 

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

Total Return Swap Contracts

 

Counter Party  

Reference

Entry/Obligation

 

Notional

Amount

    Floating Rate Paid by
the Fund
  Floating Rate Index    

Termination

Date

    Net Unrealized
Loss
 

 

 

Credit Suisse First Boston

 

Daqin Railway Co., Ltd.

  $ 1,618,020      75 Bps + 1-Month LIBOR     LIBOR 1-Month        8/26/2014      $ (32,711

Morgan Stanley

 

Bharti Infratel, Ltd.

    6,471,229      30 Bps + 1D FEDEF     1D FEDEF        12/30/2014        (1,193,472

Morgan Stanley

 

Citic Securities Co., Ltd.

    6,241,939      55 Bps + 1D FEDEF     1D FEDEF        6/19/2014        (972,649

Morgan Stanley

 

Daqin Railway Co., Ltd.

    3,664,039      55 Bps + 1D FEDEF     1D FEDEF        6/19/2014        (202,533
   

 

 

         

 

 

 
    $  17,995,227            $ (2,401,365
   

 

 

         

 

 

 

 

See Notes to the Financial Statements.

 

    

26

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Clough Global Funds    Statement of Investments
   March 31, 2013

 

Abbreviations:

1D FEDEF - Federal Funds Effective Rate (Daily)

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

Bps - Basis Points

CNY - Chinese Yuan Renminbi

CSI - China Securities Index Company Limited

CSOP - China Southern Asset Management

ETF - Exchange Traded Fund

FTSE - Financial Times and the London Stock Exchange

LP - Limited Partnership

Ltd. - Limited

MSCI - Morgan Stanley Capital International

NV - Naamloze Vennootschap (Dutch: Limited Liability Company)

PLC - Public Limited Liability

REIT - Real Estate Investment Trust

RQFII - Renminbi Qualified Foreign Institutional Investors

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

SpA - Societa` Per Azioni is an Italian shared company

S&P - Standard & Poor’s

SPDR - Standard & Poor’s Depositary Receipt

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.

 

    

Annual Report  |  March 31, 2013

   27


Statements of Assets and Liabilities    Clough Global Funds
March 31, 2013   

 

 

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

 

 

ASSETS:

        

Investments, at value (Cost - see below)

   $ 267,663,323       $ 437,172,688       $ 1,134,401,811   

Foreign Currency, at value (Cost $8,633, $14,018 and $36,461)

     8,633         14,017         36,459   

Deposit with broker for securities sold short

     69,072,139         115,094,100         288,724,152   

Deposit with broker for total return swap contracts

     3,850,739         9,222,940         17,120,506   

Dividends receivable

     202,045         367,910         852,151   

Interest receivable

     365,746         438,395         1,736,223   

Receivable for investments sold

     10,183,297         13,195,836         23,790,622   

 

 

Total Assets

     351,345,922         575,505,886         1,466,661,924   

 

 

LIABILITIES:

        

Due to custodian

     602,714         1,008,842         2,452,399   

Loan payable

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

Interest due on loan payable

     12,881         21,086         55,786   

Securities sold short (Proceeds $65,682,232, $111,423,120 and $277,422,058)

     66,983,318         113,490,782         282,925,278   

Payable for investments purchased

     11,720,236         15,400,543         30,625,097   

Unrealized depreciation on total return swap contracts

     568,534         1,199,955         2,401,365   

Dividends payable - short sales

     29,277         47,574         123,926   

Interest payable - margin account

     30,756         42,497         130,312   

Accrued investment advisory fee

     201,780         427,853         1,205,202   

Accrued administration fee

     82,153         152,126         385,664   

Accrued trustees fee

     4,971         4,971         4,971   

Other payables and accrued expenses

     40         40         65   

 

 

Total Liabilities

     170,036,660         278,796,269         709,210,065   

 

 

Net Assets

   $ 181,309,262       $ 296,709,617       $ 757,451,859   

 

 

 

 

Cost of Investments

   $ 253,188,005       $ 409,102,236       $ 1,060,176,499   

 

 

 

 

COMPOSITION OF NET ASSETS:

        

Paid-in capital

   $ 166,087,962       $ 266,419,905       $ 733,569,470   

Overdistributed net investment income

     (1,019,963)         (2,013,693)         (5,320,120)   

Accumulated net realized gain/(loss) on investment securities, written options, total return swap contracts, securities sold short and foreign currency transactions

     3,637,097         7,502,996         (37,111,674)   

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

     12,604,166         24,800,409         66,314,183   

 

 

Net Assets

   $ 181,309,262       $ 296,709,617       $ 757,451,859   

 

 

 

 

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

   $ 17.38       $ 16.63       $ 14.64   

 

 

 

 

 

 

See Notes to the Financial Statements.

 

      

28

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Clough Global Funds    Statements of Operations
   For the Year Ended March 31, 2013

 

 

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

 

 

INVESTMENT INCOME:

  

  

Dividends (net of foreign withholding taxes of $70,125, $115,993 and $283,059)

   $ 4,417,103       $ 7,799,345       $ 18,716,677   

Interest on investment securities

     712,340         784,896         2,806,077   

Hypothecated securities income (See Note 6)

     107,608         172,215         501,159   

 

 

Total Income

     5,237,051         8,756,456         22,023,913   

 

 

EXPENSES:

        

Investment advisory fee

     2,142,138         4,495,628         12,957,443   

Administration fee

     872,156         1,598,446         4,146,382   

Interest on loan

     1,180,722         1,932,809         5,113,396   

Interest expense - margin account

     269,047         444,573         1,145,258   

Trustees fee

     127,364         127,563         127,563   

Dividend expense - short sales

     688,498         1,121,623         2,920,235   

Other expenses

     26,838         19,758         21,502   

 

 

Total Expenses

     5,306,763         9,740,400         26,431,779   

 

 

Net Investment Loss

     (69,712)         (983,944)         (4,407,866)   

 

 

 

 

NET REALIZED GAIN/(LOSS) ON:

        

Investment securities

     24,958,582         40,944,160         85,789,337   

Securities sold short

     3,273,485         5,058,198         14,018,291   

Written options

     1,756,731         2,891,304         7,011,300   

Total return swap contracts

     (112,013)         (174,134)         (473,796)   

Foreign currency transactions

     (736,407)         (1,185,512)         (3,066,474)   

NET CHANGE IN UNREALIZED APPRECIATION/(DEPRECIATION) ON:

  

Investment securities

     (2,632,864)         (1,538,547)         9,736,891   

Securities sold short

     (2,291,702)         (3,687,914)         (9,730,672)   

Written options

     135,484         223,842         650,071   

Total return swap contracts

     (568,534)         (1,199,955)         (2,401,365)   

Translation of assets and liabilities denominated in foreign currencies

     (2,585)         (4,143)         (11,019)   

 

 

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

     23,780,177         41,327,299         101,522,564   

 

 

Net Increase in Net Assets Attributable to Common Shares from Operations

   $ 23,710,465       $ 40,343,355       $ 97,114,698   

 

 

 

 

 

 

See Notes to the Financial Statements.

 

      

Annual Report  |  March 31, 2013

   29


Statements of Changes in Net Assets    Clough Global Funds
  

 

 

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

 

 

 
   

For the

Year

Ended

March 31,

2013

   

For the

Year

Ended

March 31,

2012

   

For the

Year

Ended

March 31,

2013

   

For the

Year

Ended

March 31,

2012

   

For the

Year

Ended

March 31,

2013

   

For the

Year

Ended

March 31,

2012

 

 

 

COMMON SHAREHOLDERS OPERATIONS:

  

Net investment income/(loss)

  $ (69,712   $ 2,710,451      $ (983,944   $ 3,679,630      $ (4,407,866   $ 7,360,979   

Net realized gain/(loss) from:

           

Investment securities

    24,958,582        3,921,480        40,944,160        5,899,035        85,789,337        22,058,687   

Securities sold short

    3,273,485        (3,187,186     5,058,198        (5,060,458     14,018,291        (13,376,652

Written options

    1,756,731        533,161        2,891,304        888,686        7,011,300        2,113,455   

Total return swap contracts

    (112,013            (174,134            (473,796       

Foreign currency transactions

    (736,407     513,129        (1,185,512     855,880        (3,066,474     2,193,963   

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

    (5,360,201     (13,351,122     (6,206,717     (22,860,951     (1,756,094     (61,439,158

 

 

Net Increase/(Decrease) in Net Assets From Operations

    23,710,465        (8,860,087     40,343,355        (16,598,178     97,114,698        (41,088,726

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS:

  

Net investment income

    (9,391,145     (12,521,527     (15,521,413     (20,279,371     (55,875,807     (54,503,782

Net realized gains

    (3,130,382            (5,173,804                     

Tax return of capital

                         (415,846            (1,372,025

 

 

Net Decrease in Net Assets from Distributions

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

 

 

Net Increase/(Decrease) in Net Assets Attributable to Common Shares

    11,188,938        (21,381,614     19,648,138        (37,293,395     41,238,891        (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*

  $ 181,309,262      $ 170,120,324      $ 296,709,617      $ 277,061,479      $ 757,451,859      $ 716,212,968   

 

 

 

 

* Includes Overdistributed Net

Investment Income of:

  $ (1,019,963   $ (194,347   $ (2,013,693   $ (484,189   $ (5,320,120   $ (1,841,611

 

 

 

 

See Notes to the Financial Statements.

 

      

30

   www.cloughglobal.com


Clough Global Funds    Statements of Cash Flows
   March 31, 2013

 

 

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

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

  

Net increase in net assets from operations

   $ 23,710,465       $ 40,343,355       $ 97,114,698   

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

        

Purchase of investment securities

     (561,312,166)         (923,575,326)         (2,306,707,617)   

Proceeds from disposition of investment securities

     572,155,103         919,940,630         2,338,848,984   

Proceeds from securities sold short transactions

     249,603,069         415,844,355         1,057,199,069   

Cover securities sold short transactions

     (230,293,367)         (380,327,262)         (977,008,394)   

Premiums received from written options transactions

     1,889,477         3,105,788         7,733,811   

Premiums paid on closing written options transactions

     (173,155)         (281,248)         (1,324,088)   

Purchased options transactions

     (4,832,478)         (7,962,002)         (20,827,392)   

Proceeds from purchased options transactions

     1,035,798         1,700,740         10,404,590   

Net proceeds from short-term investment securities

     9,163,533         39,880,563         57,026,515   

Net realized gain from investment securities

     (24,958,582)         (40,944,160)         (85,789,337)   

Net realized gain on securities sold short

     (3,273,485)         (5,058,198)         (14,018,291)   

Net realized loss on total return swap contracts

     112,013         174,134         473,796   

Net realized gain on written options

     (1,756,731)         (2,891,304)         (7,011,300)   

Net realized loss on foreign currency transactions

     736,407         1,185,512         3,066,474   

Net change in unrealized depreciation on investment securities, securities sold short, written options, total return swap contracts and translation of assets and liabilities denominated in foreign currencies

     5,360,201         6,206,717         1,756,094   

Net payments on total return swap contracts

     (112,013)         (174,134)         (473,796)   

Premium amortization

     344,623         369,219         1,528,782   

Discount accretion

     (21,435)         (40,736)         (102,983)   

Increase in deposits with brokers for securities sold short and total return swap contracts

     (25,767,733)         (48,438,448)         (108,614,434)   

Decrease in dividends receivable

     385,271         603,671         1,634,173   

Increase in interest receivable

     (155,526)         (170,631)         (961,463)   

Increase in due to custodian

     602,714         1,008,842         2,452,399   

Increase in interest due on loan payable

     1,146         1,876         4,965   

Decrease in dividends payable - short sales

     (50,246)         (82,260)         (214,758)   

Increase in interest payable - margin account

     7,059         3,829         29,408   

Increase in accrued investment advisory fee

     19,124         44,461         91,198   

Increase in accrued administration fee

     7,786         15,809         29,182   

Increase in accrued trustees fee

     661         860         859   

Decrease in other payables

     (260)         (260)         (285)   

 

 

Net cash provided by operating activities

     12,427,273         20,484,392         56,340,859   

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

  

Cash distributions paid

     (12,521,527)         (20,695,217)         (55,875,807)   

 

 

Net cash used in financing activities

     (12,521,527)         (20,695,217)         (55,875,807)   

 

 

Effect of exchange rates on cash

     (139,090)         (171,317)         (544,360)   

 

 

Cash and foreign currency, beginning of period

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

Cash and foreign currency, end of period

   $ 8,633       $ 14,017       $ 36,459   

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

  

Cash paid during the period for interest from bank borrowing:

   $ 1,179,576       $ 1,930,933       $ 5,108,431   

 

 

See Notes to the Financial Statements.

 

      

Annual Report  |  March 31, 2013

   31


Financial Highlights    Clough Global Allocation Fund
For a share outstanding throughout the periods indicated   

 

 

    For the
Year Ended
March 31, 2013
    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

 

 

 

PER COMMON SHARE OPERATING PERFORMANCE:

  

Net asset value - beginning of period

    $16.30        $18.35        $16.90        $13.24        $21.60   

 

 

Income from investment operations:

         

Net investment income/(loss)

    (0.01)*        0.26*        0.38*        0.32*        0.30*   

Net realized and unrealized gain/(loss) on investments

    2.29        (1.11)        2.27        4.44        (7.05)   

Distributions to preferred shareholders from:

         

Net investment income

                                (0.05)   

 

 

Total Income/(Loss) from Investment Operations

    2.28        (0.85)        2.65        4.76        (6.80)   

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:

  

Net investment income

    (0.90)        (1.20)        (1.20)        (0.46)        (0.81)   

Net realized gains

    (0.30)                             (0.31)   

Tax return of capital

                         (0.64)        (0.44)   

 

 

Total Distributions to Common Shareholders

    (1.20)        (1.20)        (1.20)        (1.10)        (1.56)   

 

 

Net asset value - end of period

    $17.38        $16.30        $18.35        $16.90        $13.24   

 

 

 

 

Market price - end of period

    $15.07        $13.94        $16.24        $15.92        $10.68   

 

 

 

 

Total Investment Return - Net Asset Value:(1)

    16.19%        (3.48)%        17.30%        38.14%        (32.20)%   

Total Investment Return - Market Price:(1)

    17.81%        (6.73)%        10.20%        61.32%        (37.50)%   

RATIOS AND SUPPLEMENTAL DATA:

  

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

    $181,309        $170,120        $191,502        $176,317        $138,185   

Ratios to average net assets attributable to common shareholders:

         

Total expenses

    3.24%        3.05%        2.87%        3.22%        3.35%(2)   

Total expenses excluding interest expense and dividends on short sales expense

    1.93%        1.80%        1.74%        1.88%        2.76%(2)   

Net investment income/(loss)

    (0.04)%        1.61%        2.28%        1.96%        1.73%(2)   

Preferred share dividends

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

Portfolio turnover rate

    250%        192%        172%        115%        233%   

 

 

Borrowings at End of Period

         

Aggregate Amount Outstanding (000s)

    $89,800        $89,800        $89,800        $89,800        $60,200   

Asset Coverage Per $1,000 (000s)

    $3,019        $2,894        $3,133        $2,963        $3,295   

 

*

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)

Ratios do not reflect dividend payments to preferred shareholders.

 

 

See Notes to the Financial Statements.

 

      

32

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Clough Global Equity Fund    Financial Highlights
   For a share outstanding throughout the periods indicated

 

 

    

For the

Year Ended

March 31, 2013

    

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

 

 

 

PER COMMON SHARE OPERATING PERFORMANCE:

  

Net asset value - beginning of period

     $15.53         $17.62         $16.29         $12.28         $20.88   

 

 

Income from investment operations:

              

Net investment income/(loss)

     (0.06)*         0.21*         0.30*         0.22*         0.16*   

Net realized and unrealized gain/(loss) on investments

     2.32         (1.14)         2.19         4.82         (7.21)   

Distributions to preferred shareholders from:

              

Net investment income

                                     (0.03)   

 

 

Total Income/(Loss) from Investment Operations

     2.26         (0.93)         2.49         5.04         (7.08)   

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:

  

Net investment income

     (0.87)         (1.14)         (1.16)         (0.39)         (0.24)   

Net realized gains

     (0.29)                                 (0.48)   

Tax return of capital

             (0.02)                 (0.64)         (0.80)   

 

 

Total Distributions to Common Shareholders

     (1.16)         (1.16)         (1.16)         (1.03)         (1.52)   

 

 

Net asset value - end of period

     $16.63         $15.53         $17.62         $16.29         $12.28   

 

 

Market price - end of period

     $14.70         $13.09         $15.37         $14.33         $9.77   

 

 

Total Investment Return - Net Asset Value:(1)

     16.90%         (4.08)%         17.05%         43.62%         (34.55)%   

Total Investment Return - Market Price:(1)

     22.60%         (7.32)%         16.07%         58.80%         (39.60)%   

RATIOS AND SUPPLEMENTAL DATA:

  

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

     $296,710         $277,061         $314,355         $290,577         $219,059   

Ratios to average net assets attributable to common shareholders:

              

Total expenses

     3.67%         3.43%         3.23%         3.57%         3.81%(2)   

Total expenses excluding interest expense and dividends on short sales expense

     2.35%         2.18%         2.10%         2.25%         2.26%(2)   

Net investment income/(loss)

     (0.37)%         1.34%         1.87%         1.43%         0.95%(2)   

Preferred share dividends

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

Portfolio turnover rate

     250%         183%         173%         116%         207%   

 

 

Borrowings at End of Period

  

Aggregate Amount Outstanding (000s)

     $147,000         $147,000         $147,000         $147,000         $98,200   

Asset Coverage Per $1,000 (000s)

     $3,018         $2,885         $3,138         $2,977         $3,231   

 

*

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)

Ratios do not reflect dividend payments to preferred shareholders.

See Notes to the Financial Statements.

 

      

Annual Report  |  March 31, 2013

   33


Financial Highlights    Clough Global Opportunities Fund

For a share outstanding throughout the periods indicated

  

 

 

    

For the

Year Ended

March 31, 2013

    

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

 

 

 

PER COMMON SHARE OPERATING PERFORMANCE:

  

        

Net asset value - beginning of period

     $13.84         $15.72         $14.68         $11.55         $19.03   

 

 

Income from investment operations:

              

Net investment income/(loss)

     (0.09)*         0.14*         0.25*         0.17*         0.12*   

Net realized and unrealized gain/(loss) on investments

     1.97         (0.94)         1.87         3.94         (6.20)   

Distributions to preferred shareholders from:

              

Net investment income

                                     (0.04)   

 

 

Total Income/(Loss) from Investment Operations

     1.88         (0.80)         2.12         4.11         (6.12)   

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:

  

Net investment income

     (1.08)         (1.05)         (1.08)         (0.29)         (0.06)   

Net realized gains

                                     (0.03)   

Tax return of capital

             (0.03)                 (0.69)         (1.27)   

 

 

Total Distributions to Common Shareholders

     (1.08)         (1.08)         (1.08)         (0.98)         (1.36)   

 

 

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

     $14.64         $13.84         $15.72         $14.68         $11.55   

 

 

Market price - end of period

     $12.87         $11.78         $13.85         $13.04         $9.20   

 

 

Total Investment Return - Net Asset Value:(2)

     15.87%         (3.88)%         16.21%         37.93%         (32.68)%   

Total Investment Return - Market Price:(2)

     19.67%         (7.14)%         15.27%         53.82%         (37.48)%   

RATIOS AND SUPPLEMENTAL DATA:

  

           

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

  

 

$757,452

  

     $716,213         $813,178         $759,601         $597,605   

Ratios to average net assets attributable to common shareholders:

              

Total expenses

     3.86%         3.61%         3.40%         3.72%         3.84%(3)   

Total expenses excluding interest expense and dividends on short sales expense

     2.52%         2.35%         2.25%         2.39%         2.38%(3)   

Net investment income/(loss)

     (0.64)%         1.04%         1.74%         1.19%         0.80%(3)   

Preferred share dividends

     N/A         N/A         N/A         N/A         0.23%   

Portfolio turnover rate

     241%         193%         171%         115%         224%   

 

 

Borrowings at End of Period

              

Aggregate Amount Outstanding (000s)

     $388,900         $388,900         $388,900         $388,900         $239,500   

Asset Coverage Per $1,000 (000s)

     $2,948         $2,842         $3,091         $2,953         $3,495   

 

*

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)

Ratios do not reflect dividend payments to preferred shareholders.

See Notes to the Financial Statements.

 

      

34

   www.cloughglobal.com


Clough Global Funds    Notes to Financial Statements
   March 31, 2013

 

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 Board of 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 March 28, 2013.

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 dealers at the mean between the latest available bid and asked prices. As authorized by the Board of 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 Board of 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. Total return swaps are priced based on valuations provided by a board approved independent third party pricing agent. If a total return swap price cannot be obtained from an independent third party pricing agent the Fund shall seek to obtain a bid price from at least one independent and/or executing broker.

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 March 28, 2013, there were no fair valued securities.

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;

 

      

Annual Report  |  March 31, 2013

   35


 

Notes to Financial Statements    Clough Global Funds
March 31, 2013   

 

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

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 March 31, 2013 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 year end ended March 31, 2013.

Clough Global Allocation Fund

 

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

 

 

Assets

           

Common Stocks

           

Consumer Discretionary

   $       41,713,673       $       $  –       $       41,713,673   

Consumer Staples

     6,392,888                         6,392,888   

Energy

     27,783,129                         27,783,129   

Energy Infrastructure & Capital Equipment

     1,134,544                         1,134,544   

Financials

     38,392,697         2,645,418                 41,038,115   

Health Care

     31,263,858                         31,263,858   

Industrials

     19,236,638                         19,236,638   

Information Technology

     27,264,110                         27,264,110   

Materials

     4,735,808                         4,735,808   

Telecommunication Services

     447,286                         447,286   

Utilities

     1,022,044                         1,022,044   

Exchange Traded Funds

     1,777,938                         1,777,938   

Preferred Stocks

     691,809                         691,809   

Corporate Bonds

             1,611,364                 1,611,364   

Asset/Mortgage Backed Securities

             441,859                 441,859   

Government & Agency Obligations

     41,422,788                         41,422,788   

Short-Term Investments

     19,685,472                         19,685,472   

 

 

TOTAL

   $ 262,964,682       $     4,698,641       $  –       $ 267,663,323   

 

 

Other Financial Instruments

           

 

 

Liabilities

           

Securities Sold Short

   $ (66,983,318)       $       $  –       $ (66,983,318)   

Total Return Swap Contracts**

             (568,534)                 (568,534)   

 

 

TOTAL

   $ (66,983,318)       $ (568,534)       $  –       $ (67,551,852)   

 

 

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

**Swap contracts are reported at their unrealized appreciation/(depreciation) at measurement date, which represents the change in the contract’s value from trade date.

Clough Global Equity Fund

 

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

 

 

Assets

           

Common Stocks

           

Consumer Discretionary

   $     78,530,801       $       $  –       $       78,530,801   

Consumer Staples

     12,243,105                         12,243,105   

Energy

     52,752,681                         52,752,681   

Energy Infrastructure & Capital Equipment

     1,855,966                         1,855,966   

Financials

     66,666,609         4,369,651                 71,036,260   

Health Care

     55,741,588                         55,741,588   

Industrials

     36,647,717                         36,647,717   

Information Technology

     51,362,358                         51,362,358   

Materials

     7,874,062                         7,874,062   

Telecommunication Services

     731,373                         731,373   

Utilities

     1,643,546                         1,643,546   

 

      

36

   www.cloughglobal.com


Clough Global Funds    Notes to Financial Statements
   March 31, 2013

 

Clough Global Equity Fund (continued)

Investments in Securities at Value*

   Level 1      Level 2      Level 3      Total  

 

 

Assets (continued)

           

Exchange Traded Funds

   $ 3,256,952       $       $  –       $ 3,256,952   

Preferred Stocks

     1,131,260                         1,131,260   

Corporate Bonds

             865,094                 865,094   

Government & Agency Obligations

     46,270,510                         46,270,510   

Short-Term Investments

     15,229,415                         15,229,415   

 

 

TOTAL

   $     431,937,943       $     5,234,745       $  –       $     437,172,688   

 

 

Other Financial Instruments

           

 

 

Liabilities

           

Securities Sold Short

   $ (113,490,782)       $       $  –       $ (113,490,782)   

Total Return Swap Contracts**

             (1,199,955)                 (1,199,955)   

 

 

TOTAL

   $ (113,490,782)       $ (1,199,955)       $  –       $ (114,690,737)   

 

 

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

**Swap contracts are reported at their unrealized appreciation/(depreciation) at measurement date, which represents the change in the contract’s value from trade date.

Clough Global Opportunities Fund

 

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

 

 

Assets

           

Common Stocks

           

Consumer Discretionary

   $ 177,005,578       $       $  –       $ 177,005,578   

Consumer Staples

     27,182,805                         27,182,805   

Energy

     127,051,453                         127,051,453   

Energy Infrastructure & Capital Equipment

     4,815,646                         4,815,646   

Financials

     162,281,919         11,212,684                 173,494,603   

Health Care

     132,536,691                         132,536,691   

Industrials

     81,299,183                         81,299,183   

Information Technology

     115,146,199                         115,146,199   

Materials

     20,075,992                         20,075,992   

Telecommunication Services

     1,891,899                         1,891,899   

Utilities

     4,299,648                         4,299,648   

Exchange Traded Funds

     7,525,945                         7,525,945   

Preferred Stocks

     2,949,978                         2,949,978   

Corporate Bonds

             6,584,987                 6,584,987   

Government & Agency Obligations

     174,612,860                         174,612,860   

Purchased Options

     752,500                         752,500   

Short-Term Investments

     77,175,844                         77,175,844   

 

 

TOTAL

   $     1,116,604,140       $     17,797,671       $  –       $     1,134,401,811   

 

 

Other Financial Instruments

           

 

 

Liabilities

           

Securities Sold Short

   $ (282,925,278)       $       $  –       $ (282,925,278)   

Total Return Swap Contracts**

             (2,401,365)                 (2,401,365)   

 

 

TOTAL

   $ (282,925,278)       $ (2,401,365)       $  –       $ (285,326,643)   

 

 

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

**Swap contracts are reported at their unrealized appreciation/(depreciation) at measurement date, which represents the change in the contract’s value from trade date.

 

      

Annual Report  |  March 31, 2013

   37


 

Notes to Financial Statements    Clough Global Funds
March 31, 2013   

 

In the event a board approved independent pricing service is unable to provide an evaluated price for a security or Clough Capital Partners L.P. (the “advisor”) believes the price provided is not reliable, securities of each Fund may be valued at fair value as described above. In these instances the advisor may seek to find an alternative independent source, such as a broker/dealer to provide a price quote, or by using evaluated pricing models similar to the techniques and models used by the independent pricing service. These fair value measurement techniques may utilize unobservable inputs (Level 3).

On a monthly basis, the Fair Value Committee of each Fund meets and discusses securities that have been fair valued during the preceding month in accordance with the Fund’s Fair Value Procedures and reports quarterly to the Board of Trustees on the results of those meetings.

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)
     Sales Proceeds    

Transfer

out of
Level 3

    Balance
as of
March
31,
2013
    

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

March 31,
2013

 

 

 

Common Stocks

   $ 19,963      $ (71,735 )   $ 69,500      $ (10,910 )   $ (6,818 )   $  –       $  –   

 

 

Total

   $ 19,963      $ (71,735 )   $ 69,500      $ (10,910 )   $ (6,818 )   $  –       $  –   

 

 

Clough Global Equity Fund

 

Investments in

Securities

   Balance
as of
March 31,
2012
     Realized
Gain/
(Loss)
    Change in
Unrealized
Appreciation/
(Depreciation)
    Sales Proceeds     Transfer
out of
Level 3
    Balance
as of
March 31,
2013
     Net change in
unrealized
appreciation/
(depreciation)
included in
the
Statements of
Operations
attributable
to Level 3
investments
held at
March 31,
2013
 

 

 

Common Stocks

   $ 29,944      $ (107,610 )   $ 104,257     $ (16,365 )   $ (10,226   $  –       $  –   

 

 

Asset/Mortgage Backed Securities

     585,045        5,902       (118,718 )     (472,229 )               

 

 

Total

   $ 614,989      $ (101,708 )   $ (14,461 )   $ (488,594 )   $ (10,226   $  –       $  –   

 

 

Clough Global Opportunities Fund

 

Investments in

Securities

   Balance
as of
March 31,
2012
     Realized
Gain/
(Loss)
    Change in
Unrealized
Appreciation/
(Depreciation)
     Sales Proceeds     Transfer
out of
Level 3
    Balance
as of
March 31,
2013
     Net change in
unrealized
appreciation/
(depreciation)
included in
the
Statements of
Operations
attributable
to Level 3
investments
held at
March 31,
2013
 

 

 

Common Stocks

   $ 69,869      $ (251,107 )   $ 243,285      $ (38,188 )   $ (23,859 )   $  –       $  –   

 

 

Total

   $ 69,869      $ (251,107 )   $ 243,285      $ (38,188 )   $ (23,859 )   $  –       $  –   

 

 

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.

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

 

      

38

   www.cloughglobal.com


Clough Global Funds    Notes to Financial Statements
   March 31, 2013

 

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.

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 Statements 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 March 31, 2013, was $27,492,302, $40,005,654 and $97,099,108 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 March 31, 2013 is reported on the Statements of Operations as Interest expense – margin account. Interest amounts payable by the Funds as of March 31, 2013 are reported on the Statements 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 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.

 

      

Annual Report  |  March 31, 2013

   39


 

Notes to Financial Statements    Clough Global Funds
March 31, 2013   

 

Each Fund may acquire put and call options and options on stock indices and enter into stock index futures contracts, certain credit derivatives transactions and short sales in connection with its equity investments. In connection with a Fund’s investments in debt securities, it may enter into related derivatives transactions such as interest rate futures, swaps and options thereon and certain credit derivatives transactions. Derivatives transactions of the types described above subject a Fund to increased risk of principal loss due to imperfect correlation or unexpected price or interest rate movements. Each Fund also will be subject to credit risk with respect to the counterparties to the derivatives contracts purchased by a Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivatives contract due to financial difficulties, each Fund may experience significant delays in obtaining any recovery under the derivatives contract in a bankruptcy or other reorganization proceeding. Each Fund may obtain only a limited recovery or may obtain no recovery in such circumstances.

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 year ended March 31, 2013 is reported on the Statements of Operations as Interest expense – margin account. Interest amounts payable by the Funds as of March 31, 2013 are reported on the Statements 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 year ended March 31, 2013 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           185,897           1,450           1,703,580     

    Exercised

       (23)           (40,409)                         

    Expired

       (1,020)           (89,363)           (250)           (476,993)     

    Closed

       (1,646)                   (96,534)           (1,200)                   (1,226,587)     

 

    Outstanding, March 31, 2013

               $                   $     

 

    Market Value, March 31, 2013

          $              $     

 

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           298,287           2,400           2,807,501     

    Exercised

       (38)           (66,763)                         

    Expired

       (1,690)           (143,209)           (400)           (763,188)     

    Closed

       (2,627)           (155,078)           (2,000)           (2,044,313)     

 

    Outstanding, March 31, 2013

               $                   $     

 

    Market Value, March 31, 2013

          $              $     

 

 

 

 

      

40

   www.cloughglobal.com


Clough Global Funds    Notes to Financial Statements
   March 31, 2013

 

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           919,489           5,800           6,814,322     

    Exercised

       (101)           (177,450)                         

    Expired

       (3,500)           (355,181)           (1,000)           (1,907,971)     

    Closed

       (15,956)                 (988,435)           (4,800)               (4,906,351)     

 

    Outstanding, March 31, 2013

               $                   $     

 

    Market Value, March 31, 2013

          $              $     

 

Swaps: During the period each 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. Each 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. Each 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 a Fund. If the other party to a swap defaults, a Fund would risk the loss of the net amount of the payments that it contractually is entitled to receive. If each 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. A 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 a Fund and the counterparty and by the posting of collateral to a 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 year ended March 31, 2013, the Funds invested in swap agreements consistent with the Funds’ investment strategies to gain exposure to certain markets or indices.

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 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 on derivatives instruments on each Fund’s Statements of Assets and Liabilities as of March 31, 2013:

 

    

Asset Derivatives

     
  

 

Fund    Risk Exposure    Statement of Assets and Liabilities Location    Number of
Contracts
     Fair Value      

 

Clough Global Opportunities Fund    Equity Contracts    Investments, at value      7,000       $ 752,500     

 

     Liability Derivatives      
  

 

Fund    Risk Exposure    Statement of Assets and Liabilities Location    Notional Amount      Fair Value      

 

Clough Global Allocation Fund    Equity Contracts    Unrealized depreciation on total return swap contracts    $ 4,258,390       $   (568,534)     

 

 

 

 

      

Annual Report  |  March 31, 2013

   41


 

Notes to Financial Statements    Clough Global Funds
March 31, 2013   

 

     Liability Derivatives      
  

 

Fund    Risk Exposure    Statement of Assets and Liabilities Location    Notional Amount      Fair Value      

 

Clough Global Equity Fund    Equity Contracts    Unrealized depreciation on total return swap contracts    $ 9,290,298       $ (1,199,955)     

 

Clough Global Opportunities Fund    Equity Contracts    Unrealized depreciation on total return swap contracts    $ 17,995,227       $   (2,401,365)     

 

The effect of derivatives instruments on each Fund’s Statement of Operations for the year ended March 31, 2013:

 

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/Net change in unrealized appreciation/(depreciation) on Total return swap contracts    $ (3,035,051   $ (910,076

 

 
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/Net change in unrealized appreciation/(depreciation) on Total return swap contracts    $ (4,986,020   $ (1,776,384

 

 
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/Net change in unrealized appreciation/(depreciation) on Total return swap contracts    $ (11,729,249   $ (3,606,948

 

 

The average purchased and written option contracts volume and the average purchased and written option contracts notional volume during the year ended March 31, 2013 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

    1,926   $          22,188,425      542   $        19,242,948

  Clough Global Equity Fund

    3,101   $          36,315,764      882   $        31,707,095

  Clough Global Opportunities Fund

  14,044   $        112,710,201   3,249   $        82,254,671

 

The average total return swap contracts volume and the average total return swap contracts notional volume during the year ended March 31, 2013 is noted below for each of the Funds.

 

  Fund    Average Swap
Contract Shares
Volume
   Average Swap Contract
Notional Volume

 

  Clough Global Allocation Fund

      509,661    $          870,462

  Clough Global Equity Fund

   1,018,199    $        1,822,154

  Clough Global Opportunities Fund

   2,156,367    $        3,677,779

 

 

 

 

      

42

   www.cloughglobal.com


Clough Global Funds    Notes to Financial Statements
   March 31, 2013

 

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. As of and during the year ended March 31, 2013, the Funds did not have a liability for any unrecognized tax benefits. The Funds file U.S. federal, state, and local tax returns as required. The Funds’ tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return but which can be extended to six years in certain circumstances. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes.

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.

Securities Transactions and Investment Income: Investment security transactions are accounted for on a 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.

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 March 31, 2013, 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 – 95.46%, 78.22% and 84.50% 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.

New Accounting Pronouncements: In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in the ASU enhance disclosures about offsetting of financial assets and liabilities to enable investors to understand the effect of these arrangements on a Fund’s financial position. In January 2013, FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.

 

      

Annual Report  |  March 31, 2013

   43


 

Notes to Financial Statements    Clough Global Funds
March 31, 2013   

 

The amendments in ASU No. 2013-01 clarify the intended scope of disclosures required by ASU No. 2011-11. These ASUs are effective for interim and annual reporting periods beginning on or after January 1, 2013. The Funds believe the adoption of these ASUs will not have a material impact on the financial statements.

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 tax character of the distributions paid by the Funds during the years ended March 31, 2013 and March 31, 2012 were as follows:

 

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

 

 

 
Distributions Paid From:    2013      2012      2013      2012      2013      2012  

 

 

Ordinary Income

   $ 9,391,145       $ 12,521,527       $ 15,521,413       $ 20,279,371       $ 55,875,807       $ 54,503,782   

Long-Term Capital Gains

     3,130,382                 5,173,804                           

Return of Capital

                             415,846                 1,372,025   

 

 

Total

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

 

 

Components of Earnings: Tax components of distributable earnings are determined in accordance with income tax regulations which may differ from composition of net assets reported under accounting principles generally accepted in the United States. Accordingly, for the year ended March 31, 2013, certain differences were reclassified. These differences relate primarily to the differing tax treatment of commodities, passive foreign investment companies (PFICs), foreign currencies and other investments.

The reclassifications were as follows:

 

     Paid-in Capital     

Increase Net

Investment Income

    

Increase/(Decrease)

Accumulated Net

Realized Gain/(Loss)

 

 

 

Clough Global Allocation Fund

   $ (5,062,146)       $ 8,635,241       $ (3,573,095)   

Clough Global Equity Fund

     (15,123,424)         14,975,853         147,571   

Clough Global Opportunities Fund

     (56,780,658)         56,805,164         (24,506)   

Included in the amounts reclassified for Clough Global Opportunities Fund was $904,851 of net operating loss.

Capital Losses: As of March 31, 2013, Clough Global Opportunities Fund had capital loss carryforwards which may reduce the Funds’ taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus may reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Funds of any liability for federal tax. Pursuant to the Code, such capital loss carryforwards will expire as follows:

 

Expiration Date    Clough Global Opportunities Fund

 

March 31, 2018

   $30,946,429

During the year ended March 31, 2013, $8,327,692, $ 17,188,410 and $ 65,328,915 of capital loss carryforwards were utilized by the Clough Global Allocation Fund, Clough Global Equity Fund, and Clough Global Opportunities Fund, respectively.

Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized in tax years beginning after December 22, 2010, may be carried forward indefinitely, and the character of the losses is retained as short-term and/or long-term. Under the law in effect prior to the Act, net capital losses were carried forward for eight years and treated as short-term. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.

 

      

44

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Clough Global Funds    Notes to Financial Statements
   March 31, 2013

 

The Funds elect to defer to the year ending March 31, 2014, late year ordinary losses in the amounts of:

 

Fund    Amount  

 

 

Clough Global Allocation Fund

   $ 275,764   

Clough Global Equity Fund

   $ 793,569   

Clough Global Opportunities Fund

   $   2,139,761   

Tax Basis of Distributable Earnings: Tax components of distributable earnings are determined in accordance with income tax regulations which may differ from composition of net assets reported under GAAP.

As of March 31, 2013, the components of distributable earnings on a tax basis were as follows:

 

    

Clough Global

Allocation Fund

    

Clough Global Equity

Fund

    

Clough Global

Opportunities Fund

 

Accumulated Capital Gains/(Losses)

     4,875,005         9,407,775         (30,946,429)   

Unrealized Appreciation

     10,617,876         21,668,589         56,951,952   

Other Cumulative Effect of Timing Differences

     (271,581)         (786,652)         (2,123,134)   

 

 

Total

   $ 15,221,300       $ 30,289,712       $ 23,882,389   

 

 

Tax Basis of Investments: Net unrealized appreciation/(depreciation) of investments based on federal tax cost as of March 31, 2013, were as follows:

 

    

Clough Global

Allocation Fund

    

Clough Global

Equity Fund

    

Clough Global

Opportunities Fund

 

 

 

Gross appreciation (excess of value over tax cost)

   $ 17,284,722       $ 33,219,472       $ 83,432,005   

Gross depreciation (excess of tax cost over value)

     (4,795,694)         (8,280,840)         (18,568,924)   

Net depreciation of foreign currency and derivatives

     (1,871,152)         (3,270,043)         (7,911,129)   

 

 

Net unrealized appreciation

   $ 10,617,876       $ 21,668,589       $ 56,951,952   

 

 

Cost of investments for income tax purposes

   $ 255,174,295       $ 412,234,056       $ 1,069,538,730   

 

 

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

Year Ended

March 31, 2013

    

For the

Year Ended

March 31, 2012

    

For the

Year Ended

March 31, 2013

    

For the

Year Ended

March 31, 2012

    

For the

Year Ended

March 31, 2013

    

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   

 

 

4. PORTFOLIO SECURITIES

 

Purchases and sales of investment securities, other than short-term securities, for the year ended March 31, 2013, are listed in the table below.

 

Fund   

Cost of Investments

Purchased

    

Proceeds From

Investments Sold

    

Purchases of Long-Term

U.S. Government

Obligations

    

Proceeds from Sales of

Long-Term U.S.

Government Obligations

 

 

 

Clough Global Allocation Fund

   $ 484,991,148       $ 511,935,799       $ 80,425,136       $ 59,882,805   

Clough Global Equity Fund

     839,846,311         863,373,753         82,783,514         52,542,738   

Clough Global Opportunities Fund

     1,960,285,054         2,067,147,902         329,900,770         235,435,652   

 

 

 

 

      

Annual Report  |  March 31, 2013

   45


 

Notes to Financial Statements    Clough Global Funds
March 31, 2013   

 

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”), as amended in September 2012, 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 $177,818,764, $292,967,805 and $767,826,684 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 0.75% on the amount borrowed and 0.65% 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 year ended March 31, 2013 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 1.30%. As of March 31, 2013, 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 March 31, 2013 was 1.03%.

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 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 year ended March 31, 2013.

 

      

46

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Clough Global Funds    Notes to Financial Statements
   March 31, 2013

 

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.

 

      

Annual Report  |  March 31, 2013

   47


Dividend Reinvestment Plan    Clough Global Funds
March 31, 2013 (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.

 

      

48

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Clough Global Funds    Additional Information
   March 31, 2013 (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.

SECTION 19(A) NOTICES

 

The following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related rules adopted there under. Each Fund estimates the following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages are disclosed for the fiscal year-to-date cumulative distribution amount per share for the Fund.

The amounts and sources of distributions reported in these 19(a) notices are only estimates and not for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.

 

    

Total Cumulative Distributions for the year

ended March 31, 2013

     % Breakdown of the Total Cumulative Distributions for the
year ended March 31, 2013
  

 

 

     Net
Investment
Income
    

 

Net
Realized
Capital
Gains

     Return of
Capital
     Total Per
Common
Share
     Net
Investment
Income
  

 

Net
Realized
Capital
Gains

   Return of
Capital
   Total Per
Common
Share

 

  Clough Global Allocation Fund

   $ 0.0391       $ 0.2743       $ 0.8866       $ 1.2000       3.26%    22.86%    73.88%    100.00%

  Clough Global Equity Fund

   $ 0.0033       $ 0.2867       $ 0.8700       $ 1.1600       0.28%    24.72%    75.00%    100.00%

 

Each Fund’s dividend policy is to distribute all or a portion of its net investment income to its shareholders on a quarterly basis. In order to provide shareholders with a more stable level of dividend distributions, each Fund may at times pay out less than the entire amount of net investment income earned in any particular quarter and may at times in any particular quarter pay out such accumulated but undistributed income in addition to net investment income earned in that quarter. As a result, the dividends paid by each Fund for any particular quarter may be more or less than the amount of net investment income earned by the Fund during such quarter. Each Fund’s current accumulated but undistributed net investment income, if any, is disclosed in the Statements of Assets and Liabilities, which comprises part of the financial information included in this report.

TAX DESIGNATIONS

 

Pursuant to Section 852(b)(3) of the Internal Revenue Code, Clough Global Allocation Fund and Clough Global Equity Fund designate $3,130,382 and $5,173,804 respectively as a long-term capital gain distribution.

The Funds hereby designate the following as a percentage of taxable ordinary income distributions, or up to the maximum amount allowable, for the calendar year ended December 31, 2012:

 

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

 

  Corporate Dividends Received Deduction

  6.67%   3.25%   0.00%

  Qualified Dividend Income

  6.87%   3.46%   0.00%

Please consult a tax advisor if you have questions about federal or state income tax laws, or how to prepare your tax returns.

 

 

 

      

Annual Report  |  March 31, 2013

   49


Trustees & Officers    Clough Global Funds
March 31, 2013 (Unaudited)   

 

 

 

    Name, Addressand Age      Position(s) Held
with the Funds
     Term of office
and length of
service with
GLV2, GLQ&
GLO4
    

Principal Occupation(s)

During Past Five Years

     Number of
Portfolios in
Fund Complex
Overseen by
Trustee5
     Other Directorships
Held by Trustee During
the Past Five Years

 

    Non-Interested Trustees/Nominees

 

    Robert L. Butler

    Age, 72

     Chairman of the Board and Trustee     

Trustee since: GLV: 2004 GLQ: 2005 GLO: 2006

 

Term expires: GLV: 2015 GLQ: 2013 GLO: 2014

     Since 2001, Mr. Butler has been an independent consultant for businesses. Mr. Butler has over 45 years experience in the investment business, including 17 years as a senior executive with a global investment management/natural resources company and 20 years with a securities industry regulation organization, neither of which Mr. Butler has been employed by since 2001.      3      N/A

 

    Adam D. Crescenzi

    Age, 70

     Trustee     

Trustee since: GLV: 2004 GLQ: 2005 GLO: 2006

 

Term expires: GLV: 2014 GLQ: 2015 GLO: 2013

     Mr. Crescenzi is a Trustee of Dean College. He has been a founder and investor of several start-up technology and service firms. He currently is the Founding Partner of Simply Tuscan Imports LLC since 2007. He also serves as a Director of two non-profit organizations. He retired from CSC Index as Executive Vice-President of Management Consulting Services.      3      N/A

 

    John F. Mee

    Age, 69

     Trustee     

Trustee since: GLV: 2004 GLQ: 2005 GLO: 2006

 

Term expires: GLV: 2013 GLQ: 2014 GLO: 2015

     Mr. Mee is an attorney practicing commercial law, family law, product liability and criminal law. Mr. Mee is currently a member of the Bar of the Commonwealth of Massachusetts. He serves on the Board of Directors of The College of the Holy Cross Alumni Association and Concord Carlisle Scholarship Fund, a Charitable Trust. Mr. Mee was from 1990 to 2009 an Advisor at the Harvard Law School Trial Advocacy Workshop.      3      N/A

 

    Richard C. Rantzow

    Age, 74

     Trustee     

Trustee since: GLV: 2004 GLQ: 2005 GLO: 2006

 

Term expires: GLV: 2015 GLQ: 2013 GLO: 2014

     Mr. Rantzow has over 40 years experience in the financial industry. His professional experience includes serving as an audit partner with Ernst & Young which specifically involved auditing financial institutions. Mr. Rantzow has also served in several executive positions in both financial and non-financial industries. Mr. Rantzow’s educational background is in accounting and he is a Certified Public Accountant who has continued to serve on several audit committees of various financial organizations.      3      N/A

 

 

 

      

50

   www.cloughglobal.com


Clough Global Funds    Trustees & Officers
   March 31, 2013 (Unaudited)

 

 

    Name, Addressand Age      Position(s) Held
with the Funds
     Term of office
and length of
service with
GLV2, GLQ&
GLO4
    

Principal Occupation(s)

During Past Five Years

     Number of
Portfolios in
Fund Complex
Overseen by
Trustee5
     Other Directorships
Held by Trustee During
the Past Five Years

 

    Non-Interested Trustees/Nominees

 

    Jerry G. Rutledge

    Age, 68

     Trustee     

Trustee since: GLV: 2004 GLQ: 2005 GLO: 2006

 

Term expires: GLV: 2014 GLQ: 2015 GLO: 2013

     Mr. Rutledge is the President and owner of Rutledge’s Inc., a retail clothing business. Mr. Rutledge was from 1994 to 2007 a Regent of the University of Colorado. In addition, Mr. Rutledge is currently serving as a Director of the University of Colorado Hospital. Mr. Rutledge also served as a Director of the American National Bank from 1985 to 2009.      4      Mr. Rutledge is currently a Trustee of the Financial Investor Trust.

 

    Hon. Vincent W. Versaci

    Age, 42

     Trustee     

Trustee since: GLV: 2013 GLQ: 2013 GLO: 2013

 

Term expires: GLV: 2014 GLQ: 2015 GLO: 2016

     Judge Versaci has served as a Judge and Supreme Court Justice in the State of New York since January, 2003. Currently, Judge Versaci is assigned as an Acting Supreme Court Justice and presides over the Surrogate’s Court for Schenectady County, New York. Previously, Judge Versaci has served as an Adjunct Professor at Schenectady County Community College and a practicing attorney with an emphasis on civil and criminal litigation primarily in New York State Courts.      3      N/A

 

    Interested Trustees6 / Nominees

 

    Edmund J. Burke7

    Age, 52

     Trustee and President     

Trustee since: GLV: 2006 GLQ: 2006 GLO: 2006

 

Term expires: GLV: 2013 GLQ: 2014 GLO: 2015

 

President since: GLV: 2004 GLQ: 2005 GLO: 2006

     Mr. Burke joined ALPS in 1991 and is currently the Chief Executive Officer and President of ALPS Holdings, Inc., and a Director of ALPS Advisors, Inc., ALPS Distributors, Inc., ALPS Fund Services, Inc., and FTAM Distributors, Inc. Mr. Burke is deemed an affiliate of each Fund as defined under the 1940 Act.      4      Mr. Burke is also Trustee, Chairman and President of Financial Investors Trust. Mr. Burke is a Trustee and Vice President of the Liberty All-Star Equity Fund and is a Director and Vice President of the Liberty All-Star Growth Fund, Inc.

 

    James E. Canty8

    Age, 50

 

    Clough Capital

    Partners, LP

    One Post Office Square

    40th Floor

    Boston, MA 02109

     Trustee     

Trustee since: GLV: 2004 GLQ: 2005 GLO: 2006

 

Term expires: GLV: 2015 GLQ: 2013 GLO: 2014

    

Mr. Canty is a founding partner and Portfolio Manager for Clough. Mr. Canty is deemed an affiliate of each Fund as defined under the 1940 Act.

Mr. Canty is currently a member of the Board of Directors of Clough Offshore Fund, Ltd and Clough Offshore Fund (QP), Ltd. Mr. Canty is also currently a Trustee of St. Bonaventure University. Mr. Canty is a Certified Public Accountant.

     3      N/A

 

 

 

      

Annual Report  |  March 31, 2013

   51


 

Trustees & Officers    Clough Global Funds
March 31, 2013 (Unaudited)   

 

 

    Name, Addressand Age      Position(s) Held
with the Funds
     Term of office
and length of
service with
GLV2, GLQ&
GLO4
    

Principal Occupation(s)

During Past Five Years

     Number of
Portfolios in
Fund Complex
Overseen by
Trustee5
     Other Directorships
Held by Trustee During
the Past Five Years

 

    Officers

 

    Jeremy O. May

    Age, 43

     Treasurer      Officer since9: GLV: 2004 GLQ: 2005 GLO: 2006      Mr. May joined ALPS in 1995 and is currently President and Director of ALPS and Director of ALPS Advisors, Inc., ALPS Distributors, Inc., ALPS Holdings, Inc. and ALPS Portfolio Solutions Distributors, Inc. Mr. May is deemed an affiliate of each Fund as defined under the 1940 Act. Mr. May is also the Treasurer of the Liberty All-Star Equity Fund, Liberty All-Star Growth Fund, Inc., Financial Investors Trust and Financial Investors Variable Insurance Trust. Mr. May is also President, Chairman and Trustee of the Reaves Utility Income Fund. Mr. May is currently on the Board of Directors of the University of Colorado Foundation.      N/A      N/A

 

    Erin D. Nelson, Esq.

    Age, 36

     Secretary      Officer since9: GLV: 2004 GLQ: 2005 GLO: 2006      Ms. Nelson joined ALPS in 2003 and is currently Vice-President and Assistant General Counsel of ALPS and Vice-President of ALPS Advisors, Inc., ALPS Distributors, Inc., and ALPS Portfolio Solutions Distributors, Inc. Ms. Nelson is deemed an affiliate of each Fund as defined under the 1940 Act.      N/A      N/A

 

    Theodore J. Uhl

    Age, 38

     Chief Compliance Officer      Officer since9: GLV: 2010 GLQ: 2010 GLO: 2010      Mr. Uhl joined ALPS in October 2006, and is currently Vice President and Deputy Compliance Officer of ALPS. Prior to his current role, Mr. Uhl served as Senior Risk Manager for ALPS from October 2006 until June 2010. Before joining ALPS, Mr. Uhl served as Sr. Analyst with Enenbach and Associates (RIA), and a Sr. Financial Analyst at Sprint. Because of his position with ALPS, Mr. Uhl is deemed an affiliate of the Trust as defined under the 1940 Act. Mr. Uhl is currently Chief Compliance Officer of Drexel Hamilton Mutual Funds, Financial Investors Trust, Reaves Utility Income Fund and Transparent Value Trust.      N/A      N/A

 

 

 

      

52

   www.cloughglobal.com


Clough Global Funds    Trustees & Officers
   March 31, 2013 (Unaudited)

 

 

    Name, Addressand Age      Position(s) Held
with the Funds
     Term of office
and length of
service with
GLV2, GLQ&
GLO4
    

Principal Occupation(s)

During Past Five Years

     Number of
Portfolios in
Fund Complex
Overseen by
Trustee5
     Other Directorships
Held by Trustee During
the Past Five Years

 

    Officers                         

 

    Dawn Cotten

    Age, 35

     Assistant Treasurer     

Officer since9: GLV: 2010

GLQ: 2010

GLO: 2010

     Ms. Cotten joined ALPS in June 2009 as a Vice President, Fund Controller. Prior to joining ALPS, Ms. Cotten served as Assistant Vice President of Fund Accounting for Madison Capital Management from February 2009 to June 2009. Prior to this, Ms. Cotten served as Financial Reporting Manager for Janus Capital Group. Ms. Cotten is deemed an affiliate of each Fund as defined under the 1940 Act. Ms. Cotten is currently Assistant Treasurer of RiverNorth Funds, Stone Harbor Investment Funds, Stone Harbor Emerging Markets Income Fund and Stone Harbor Emerging Markets Total Income Fund.      N/A      N/A

 

1 

Address: 1290 Broadway, Suite 1100, Denver, Colorado 80203, unless otherwise noted.

 

2 

GLV commenced operations on July 28, 2004.

 

3 

GLQ commenced operations on April 27, 2005.

 

4 

GLO commenced operations on April 25, 2006.

 

5 

The Fund Complex for all Trustees, except Mr. Rutledge and Mr. Burke, consists of the Clough Global Allocation Fund, Clough Global Equity Fund and Clough Global Opportunities Fund. The Fund Complex for Mr. Rutledge and Mr. Burke consists of  Clough Global Allocation Fund, Clough Global Equity Fund, Clough Global Opportunities Fund and the Clough China Fund, a series of the Financial Investors Trust.

 

6 

“Interested Trustees” of a Fund as defined in the 1940 Act.

 

7 

Mr. Burke is considered to be an “Interested Trustee” because of his affiliation with ALPS, which acts as each Fund’s administrator.

 

8 

Mr. Canty is considered to be an “Interested Trustee” because of his affiliation with Clough, which acts as each Fund’s investment adviser.

 

9 

Officers are elected annually and each officer will hold such office until a successor has been elected by the Board.

 

 

 

      

Annual Report  |  March 31, 2013

   53


LOGO

 


Item 2. Code of Ethics.

 

  (a) The registrant, as of the end of the period covered by the report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller or any persons performing similar functions on behalf of the registrant.

 

  (b) Not Applicable.

 

  (c) During the period covered, by this report, no amendments were made to the provisions of the code of ethics adopted in 2 (a) above.

 

  (d) During the period covered by this report, no implicit or explicit waivers to the provision of the code of ethics adopted in 2 (a) above were granted.

 

  (e) Not Applicable.

 

  (f) The registrant’s Code of Ethics is attached as an Exhibit 12.A.1 hereto.

 

Item 3. Audit Committee Financial Expert.

The registrant’s Board of Trustees has determined that the registrant has as least one audit committee financial expert serving on its audit committee. The Board of Trustees has designated Richard C. Rantzow as the registrant’s “audit committee financial expert.” Mr. Rantzow is “independent” as defined in paragraph (a)(2) of Item 3 to Form N-CSR.

Mr. Rantzow was the Chief Financial Officer and a Director of Ron Miller Associates, Inc. Prior to that, Mr. Rantzow was managing partner of the Memphis office of Ernst & Young until 1990.

 

Item 4. Principal Accounting Fees and Services.

 

  (a)

Audit Fees: The aggregate fees billed for each of the last two fiscal years for professional services rendered by Cohen Fund Audit Services, Ltd (“Cohen”) for fiscal year ended March 31, 2013 and for fiscal year ended March 31, 2012 for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for fiscal years 2013 and 2012 were $20,000 and $20,000, respectively.

 

  (b)

Audit-Related Fees: The aggregate fees billed in each of the last two fiscal years for assurance and related services by Cohen that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 in 2013 and $0 in 2012.


  (c)

Tax Fees: The aggregate fees billed in each of the last two fiscal years for professional services rendered by Cohen for tax compliance, tax advice, and tax planning for fiscal year ended March 31, 2013 and Deloitte & Touche LLP for fiscal year ended March 31, 2012 were $3,000 in 2013 and $3,000 in 2012. These fees are comprised of fees relating income tax return preparation fees, excise tax return preparation fees and review of dividend distribution calculation fees.

 

  (d)

All Other Fees: The aggregate fees billed in each of the last two fiscal years for products and services provided by Cohen, other than the services reported in paragraphs (a) through (c) of this Item were $0 in 2013 and $0 in 2012. These services include agreed upon procedures related to the ratings for the Auction Market Preferred Shares.

 

  (e)(1) Audit Committee Pre-Approval Policies and Procedures: All services to be performed by the Registrant’s principal auditors must be pre-approved by the registrant’s audit committee.

 

  (e)(2) No services described in paragraphs (b) through (d) were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

 

  (f) Not applicable.

 

  (g) The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant were $0 for 2013 and $0 for 2012.

 

  (h) Not applicable.

 

Item 5. Audit Committee of Listed Registrant.

The registrant has a separately designated standing audit committee established in accordance with Section 3 (a)(58)(A) of the Exchange Act and is comprised of the following members:

Robert L. Butler

Adam D. Crescenzi

John F. Mee

Richard C. Rantzow, Committee Chairman

Jerry G. Rutledge

Hon. Vincent W. Versaci


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.

Attached, as Exhibit Item 7, is a copy of the policies and procedures of Clough Capital Partners LP, the investment advisor of the registrant.

 

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

(a)(1) As of: March 31, 2013

 

Portfolio Managers
Name
   Title   

Length of

Service

  

Business Experience: 5

Years

Charles I. Clough, Jr.    Partner and Portfolio Manager    Since Inception    Founding Partner Clough Capital Partners LP. Portfolio Manager for pooled investment accounts, separately managed accounts, and investment companies for over ten years.
Eric A. Brock    Partner and Portfolio Manager    Since Inception    Founding Partner Clough Capital Partners LP. Portfolio Manager for pooled investment accounts, separately managed accounts, and investment companies for over ten years.
James E. Canty    Partner and Portfolio Manager    Since Inception    Founding Partner of Clough Capital LP. Portfolio Manager, Chief Financial Officer and General Counsel for pooled investment accounts, separately managed accounts, and investment companies for over ten years. Mr. Canty is currently a member of the Board of Directors of Clough Offshore Fund, Ltd and Clough Offshore Fund (QP), Ltd. and Board of Trustees of Clough Global Equity Fund and Clough Global Opportunities Fund. Because of his affiliation with Clough, Mr. Canty is an ‘‘interested’’ Trustee of the Fund.


(a)(2) As of March 31, 2013, the Portfolio Managers listed above are also responsible for the day-to-day management of the following:

 

Portfolio

Managers

Name

   Registered
Investment
Companies
   Other Pooled
Investment
Vehicles (1)
  

Other

Accounts(2)

  

Material Conflicts

If Any

Charles I Clough, Jr.

  

4 Accounts

$2,446.0 million Total Assets

 

  

5 Accounts

$1,345.8 million

Total Assets

 

  

4 Accounts

$381.4 million Total Assets

 

   See below (3)

Eric A. Brock

  

4 Accounts

$2,446.0 million Total Assets

 

  

5 Accounts

$1,345.8 million

Total Assets

 

  

4 Accounts

$381.4 million Total Assets

 

   See below (3)

James E. Canty

  

4 Accounts

$2,446.0 million Total Assets

 

  

5 Accounts

$1,345.8 million

Total Assets

 

  

4 Accounts

$381.4 million Total Assets

 

   See below (3)
(1)  The advisory fees are based in part on the performance for each account.
(2)  The advisory fee is based in part on the performance for four accounts totaling $381.4 million in assets.
(3)  Material Conflicts:

Material conflicts of interest may arise as a result of the fact that the Portfolio Managers also have day-to-day management responsibilities with respect to both the Fund and the various accounts listed above (collectively with the Fund, the “Accounts”). These potential conflicts include:

Limited Resources. The Portfolio Managers cannot devote their full time and attention to the management of each of the Accounts. Accordingly, the Portfolio Managers may be limited in their ability to identify investment opportunities for each of the Accounts that are as attractive as might be the case if the Portfolio Managers were to devote substantially more attention to the management of a single Account. The effects of this potential conflict may be more pronounced where the Accounts have different investment strategies.

Limited Investment Opportunities. If the Portfolio Managers identify a limited investment opportunity that may be appropriate for more than one Account, the investment opportunity may be allocated among several Accounts. This could limit any single Account’s ability to take full advantage of an investment opportunity that might not be limited if the Portfolio Managers did not provide investment advice to other Accounts.


Different Investment Strategies. The Accounts managed by the Portfolio Managers have differing investment strategies. If the Portfolio Managers determine that an investment opportunity may be appropriate for only some of the Accounts or decide that certain of the Accounts should take different positions with respect to a particular security, the Portfolio Managers may effect transactions for one or more Accounts which may affect the market price of the security or the execution of the transaction, or both, to the detriment or benefit of one or more other Accounts.

Variation in Compensation. A conflict of interest may arise where Clough or Clough Associates, LLC, as applicable, is compensated differently by the Accounts that are managed by the Portfolio Managers. If certain Accounts pay higher management fees or performance-based incentive fees, the Portfolio Managers might be motivated to prefer certain Accounts over others. The Portfolio Managers might also be motivated to favor Accounts in which they have a greater ownership interest or Accounts that are more likely to enhance the Portfolio Managers’ performance record or to otherwise benefit the Portfolio Managers.

Selection of Brokers. The Portfolio Managers select the brokers that execute securities transactions for the Accounts that they supervise. In addition to executing trades, some brokers provide the Portfolio Managers with research and other services which may require the payment of higher brokerage fees than might otherwise be available. The Portfolio Managers’ decision as to the selection of brokers could yield disproportionate costs and benefits among the Accounts that they manage, since the research and other services provided by brokers may be more beneficial to some Accounts than to others.

(a)(3) Portfolio Manager Compensation as of March 31, 2013.

The Portfolio Managers Charles Clough, James Canty and Eric Brock each receive a fixed base salary from Clough. The base salary for each Portfolio Manager is typically determined based on market factors and the skill and experience of each Portfolio Manager. Additionally, Clough distributes substantially all of its annual net profits to those Portfolio Managers, with Mr. Clough receiving a majority share and the remainder being divided between Mr. Brock and Mr. Canty.

(a)(4) Dollar Range of Securities Owned as of March 31, 2013.

 

Portfolio Managers   

Dollar Range of the Registrant’s Securities

Owned by the Portfolio Managers

Charles I. Clough, Jr.

   Over $1,000,000

Eric A. Brock

   $25,001 - $50,000

James E. Canty

   $100,001 - $500,000


Item 9.  Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.

None

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

No material changes to the procedures by which the shareholders may recommend nominees to the registrant’s Board of Trustees have been implemented after the registrant’s last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.

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) The Code of Ethics that applies to the registrant’s principal executive officer and principal financial officer is attached hereto as Exhibit 12.A.1.

(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.


(c) The Proxy Voting Policies and Procedures are attached hereto as Ex99. Item 7.

(d) Pursuant to the Securities and Exchange Commission’s Order granting relief from Section 19(b) of the Investment Company Act of 1940 dated September 21, 2009, the form of 19(a) Notices to Beneficial Owners are attached hereto as Exhibit 12(d).


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 EQUITY FUND

 

By:     

/s/ Edmund J. Burke

     Edmund J. Burke
     President & Trustee
Date:      June 7, 2013

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 EQUITY FUND

 

By:     

/s/ Edmund J. Burke

     Edmund J. Burke
     President/Principal Executive Officer
Date:      June 7, 2013
By:     

/s/ Jeremy O. May

     Jeremy O. May
     Treasurer/Principal Financial Officer
Date:      June 7, 2013