UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-21583
Clough Global Allocation Fund
(exact name of registrant as specified in charter)
1290 Broadway, Suite 1100, Denver, Colorado 80203
(Address of principal executive offices) (Zip code)
Erin E. Douglas, Secretary
Clough Global Allocation Fund
1290 Broadway, Suite 1100
Denver, Colorado 80203
(Name and address of agent for service)
Registrants telephone number, including area code:
303-623-2577
Date of fiscal year end:
March 31
Date of reporting period:
March 31, 2010
Item 1.
Reports to Stockholders.
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2
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S
HAREHOLDER
L
ETTER
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March 31, 2010
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To our Shareholders:
During the 12 months ended March 31, 2010, the Clough Global Allocation Funds (the Fund) total return, assuming
reinvestment of all distributions, was 38.14% based on net asset value and 61.32% based on the market price of the stock. That compares with a 49.72% return for the S&P 500 for the same period. Since the Funds inception on July 28,
2004, the total growth in net asset value assuming reinvestment of all distributions has been 46.22%, this compares to a cumulative total return of 20.00% for the S&P 500 through March 31, 2010. The Funds compound annual return since
inception is 6.92% compared to 3.26% of the S&P 500 through March 31, 2010. Total distributions since inception have been $10.21 per share, and based on the current dividend rate of $0.30 per share, offer a yield of 7.54% on market price as
of March 31, 2010, of $15.92.
In coming months we think the combination of a shortage of yield in the bond markets, a decline in stock
market volatility and strong corporate cash flows will provide ongoing support for equities. We believe our strategy of identifying global profit cycles and having the patience to allow the financial markets time to recognize them should be quite
effective in a low interest rate world.
We see three reasons for the yield shortage. First, household debt declined 1.7% in 2009. It was the
first decline since 1945 according to a report in Barrons. Residential mortgages make up approximately 75% of consumer credit and represent a major source of yield. However, new mortgage supply is dependent upon the combination of new housing
investment and inflation of the housing stock. Housing is still depreciating and loan to value ratios are declining so neither new construction nor inflation is likely to reemerge anytime soon. This suggests little new yield supply will emerge on
the mortgage front.
Secondly, the contraction of the banking system is visibly underway. Bank loans fell 9% year on year in February
according to the Federal Reserve, and such declines are rare in the postwar period. According to the Wall Street Journal, the total number of retail bank branches will actually decline this year. Banks are aggressively pruning their sprawling
operations to get rid of locations deemed unattractive. Deposit rates are likely to remain at liquidation levels until the process is complete, a multi-year undertaking in our judgment.
Third, US business cash flow is strong. Again, according to the Wall Street Journal, non-financial businesses alone in the US have $932 billion in cash.
With so much of the corporate capital stock overbuilt, investment is likely to remain weak, businesses are likely to be managed for cash and debt is likely to be liquidated. In a nutshell so long as private debt is declining, the shortage of yield
will only worsen and the forced migration of investment capital abroad will likely be sustained.
Moreover, the deleveraging going on in the
economy is translating to the financial markets. The decline in financial market leverage and the lessening of speculative capital should bring about a decline in market volatility going forward. That seems equity bullish to us. Recent evidence of
this is the continued decline in volatility in the face of the threats of sovereign collapse and recent dollar strength. People own a lot less stock than they used to and that alone reduces selling pressure.
www.cloughglobal.com
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S
HAREHOLDER
L
ETTER
(
CONTINUED
)
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3
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March 31, 2010
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That leaves the economy with two pillars of stranded capital: (1) the large stock of household savings
trapped at the money rate; and (2) the pile of excess reserves at the Fed. The common fear is that private lending will revive and bring about the inflation event the world believes is coming. We dont think that is likely for a simple
reason. The base effect of todays huge private debt structure limits additional borrowing because the cost of servicing already existing debt restricts its further expansion. We think the real macro risk is the US recovery decelerates and
deflationary pressures reignite. As we opined in earlier communications this is not necessarily bearish for equities, particularly where investment and capacity is reduced and productivity is upgraded, nor will it short circuit the emergence of new
profit cycles in which we are investing.
It also suggests that capital will be available where good returns exist at very low cost. What is
so encouraging in the face of this is the number of emerging profit cycles we see in the world.
We still believe the major investment story
is emerging world consumption. Asian assets in particular will be the key beneficiary of low money rates in the developed economies. Predictions of a China credit bubble and a coming investment collapse remain a constant staple in the popular media
and we still think these analyses are too simplistic. In China, for example, the bank credit to GDP (gross domestic product) ratio is the lowest of all the major economies. Office building is 3% of GDP and urbanization still creates a continuing
housing shortage and the need to invest.
We have argued first of all that Chinas huge domestic savings rate, its foreign reserve
holdings and the high down payments required to purchase real estate all argue against widespread credit defaults. Household debt in China is around 17% of GDP compared to almost 100% in the US. And our belief is that its high investment rate is
still adding to the economys productivity. A recent Morgan Stanley research report notes how low Chinas capital to labor ratio is when compared to other economies. For example fixed capital formation per capita in China is only 14%, 11%,
6% and 4% respectively of that in Taiwan, Korea, the US and Japan. Of those four economies, only in the US and Japan are capital stock additions largely offsetting depreciation of the current capital stock. To us that suggests that return on
investment is still strong in China, and as its capital to labor ratio rises, so will productivity. Since there is so much stranded capital in the worlds financial markets, the needed capital will likely be available to China at low cost. To
look at Chinas capital formation or debt growth in the eyes of western standards is not a valid approach. For one, as China moves from an importer to an exporter of higher value capital goods, there is even more need for domestic capital
investment. And as Chinas consumers gradually adopt more of a credit culture, personal income growth of 10 12% should easily turn into consumption growth in the mid-teens. To us the popular negativism about China simply increases the
potential upside for stocks. Fortunately we are able to invest substantial research resources into trying to find the best investment opportunities not only in China but across the Asian consumer economies.
Bank credit is also growing rapidly in Brazil. In 2009 it grew 15%. Since credit and profit growth are highly correlated we think a strong profit uptrend
is likely. Real interest rates are still high (almost 4%) and mortgage activity is beginning to emerge. If real interest rates decline, domestic demand should surge. Mortgage debt is 3% of GDP and has a long way to rise.
2010 - Annual Report
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4
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S
HAREHOLDER
L
ETTER
(
CONTINUED
)
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March 31, 2010
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We have also maintained our energy investments. There is an enduring value to long lived oil reserves at a
time most are in unstable political hands. We believe oil production from current fields will soon peak and global oil supplies will gradually tighten. These barrels can be replaced but only at much higher costs and we have positioned the portfolio
to potentially benefit from the spending necessary to develop them. Moreover cost inflation is beginning to emerge in the deep water drilling sector and consolidation is beginning in both the oil and oil service industries. Exxon Mobils
acquisition of XTO Resources and Schlumbergers recent bid for Smith International put all of this in the spotlight.
Other themes of
note reflected in the Funds are focused on industries where restructuring has reduced capacity and enhanced productivity to the point we think even a modest increase in demand substantially increases profits. For example, if automobile demand simply
recovers to the level of scrappage, profitability among the original equipment auto parts companies should rise sharply. In fact it already has even at lower production rates. It is one of the few industries where pricing power is emerging. Pricing
power is even beginning to emerge among the tire manufacturers, whose profitability has been held back by raw materials cost increase. We see these cost increases reversing as replacement demand for tires and pricing recover in the months ahead. We
think the same dynamics are present in the aerospace industry where a recovery in travel demand after a long period of equipment parts underproduction is bringing on profit recovery.
Finally, our case for a longer period of lower money market rates will support profit recovery across the financial sector and the funds are well
represented there. Many life insurers still sell below book value because of lingering balance sheet issues, but the boom in corporate cash flows continues to allow quality spreads to collapse and we suspect many of those stocks will price closer to
stated book in the months ahead.
We sincerely appreciate your interest in our Fund. If you have any questions about your investment, please
call 1-877-256-8445.
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Sincerely,
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Charles I. Clough, Jr.
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Clough Capital Partners, L.P. is a Boston-based
investment management firm that has approximately $3.0 billion under management. For equities, the firm uses a global and theme-based investment approach based on identifying chronic shortages and growth opportunities. For fixed-income, Clough
believes changing economic fundamentals help reveal potential global credit market opportunities based primarily on flow of capital into or out of a country. Clough was founded in 2000 by Chuck Clough and partners James Canty and Eric Brock. These
three are the portfolio managers for the Clough Global Allocation Fund.
Forward-looking statements are based on information that is
available on the date hereof, and neither the fund manager nor any other person affiliated with the fund manager has any duty to update any forward-looking statements. Important factors that could affect actual results to differ from these
statements include, among other factors, material, negative changes to the asset class and the actual composition of the portfolio.
www.cloughglobal.com
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P
ORTFOLIO
A
LLOCATION
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5
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March 31, 2010
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Asset Type (as a % of Market
Value)
*
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Common Stock US
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51.96
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%
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Common Stock Foreign
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21.02
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%
|
ETFs
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-2.25
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%
|
|
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|
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Total Equities
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70.73
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%
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|
Corporate Debt
|
|
17.43
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%
|
Government L/T
|
|
3.03
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%
|
Asset/Mortgage backed
|
|
0.40
|
%
|
|
|
|
|
Total Fixed Income
|
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20.86
|
%
|
|
|
|
|
Short-Term Investments
|
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8.38
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%
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Options
|
|
0.15
|
%
|
Other (Foreign Cash)
|
|
-0.12
|
%
|
|
|
|
|
Total Other
|
|
8.41
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%
|
TOTAL INVESTMENTS
|
|
100.00
|
%
|
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|
|
|
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|
Global Breakdown (as a % of Market Value)^
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United States
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77.15
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%
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South Korea
|
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0.45
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%
|
Brazil
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5.63
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%
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|
British Virgin Islands
|
|
0.37
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%
|
Hong Kong
|
|
2.16
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%
|
|
Thailand
|
|
0.35
|
%
|
Canada
|
|
1.74
|
%
|
|
France
|
|
0.28
|
%
|
Bermuda
|
|
1.70
|
%
|
|
Singapore
|
|
0.23
|
%
|
China
|
|
1.58
|
%
|
|
Luxembourg
|
|
0.22
|
%
|
Japan
|
|
1.53
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%
|
|
United Kingdom
|
|
0.20
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%
|
Switzerland
|
|
1.38
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%
|
|
Germany
|
|
0.12
|
%
|
Papua New Guinea
|
|
1.31
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%
|
|
Israel
|
|
0.11
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%
|
Indonesia
|
|
1.00
|
%
|
|
Cayman Islands
|
|
0.03
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%
|
South Africa
|
|
0.93
|
%
|
|
Vietnam
|
|
0.03
|
%
|
Netherlands
|
|
0.88
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%
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|
India
|
|
-0.25
|
%
|
Greece
|
|
0.65
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%
|
|
Mexico
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|
-0.25
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%
|
Taiwan
|
|
0.47
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%
|
|
|
|
|
|
*
|
Includes securities sold short.
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^
|
Includes securities sold short and foreign cash balances.
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2010 - Annual Report
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6
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R
EPORT
OF
I
NDEPENDENT
R
EGISTERED
P
UBLIC
A
CCOUNTING
F
IRM
|
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March 31, 2010
|
To the Shareholders
and Board of Trustees of Clough Global Allocation Fund:
We have audited the accompanying statement of assets and liabilities of Clough Global
Allocation Fund (the Fund), including the statement of investments, as of March 31, 2010, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the periods presented. 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.
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. The Fund
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our
procedures included confirmation of securities owned as of March 31, 2010, by correspondence with the custodian and brokers. 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 as of March 31, 2010, the results of its operations and cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the
periods presented, in conformity with accounting principles generally accepted in the United States of America.
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Denver, Colorado
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May 19, 2010
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www.cloughglobal.com
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S
TATEMENT
OF
I
NVESTMENTS
|
|
7
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March 31, 2010
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Shares
|
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Value
|
COMMON STOCKS 112.81%
|
|
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|
Consumer/Retail 14.99%
|
|
|
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|
|
American Axle & Manufacturing Holdings,
Inc.
(a)
|
|
106,400
|
|
$
|
1,061,872
|
Anta Sports Products, Ltd.
|
|
323,600
|
|
|
534,315
|
Belle International Holdings, Ltd.
|
|
297,500
|
|
|
400,026
|
China Dongxiang Group Co.
|
|
1,196,000
|
|
|
862,620
|
China Lilang,
Ltd.
(a)
|
|
619,400
|
|
|
601,510
|
Compagnie Generale des Etablissements Michelin
|
|
14,306
|
|
|
1,054,236
|
Cooper Tire & Rubber Co.
|
|
28,700
|
|
|
545,874
|
Delta Dunia Makmur Tbk
PT
(a)
|
|
1,315,000
|
|
|
154,629
|
Federal - Mogul
Corp.
(a)
|
|
2,331
|
|
|
42,797
|
Ford Motor
Co.
(a)
|
|
208,819
|
|
|
2,624,855
|
Gafisa S.A. - ADR
|
|
26,000
|
|
|
357,240
|
The Goodyear Tire & Rubber
Co.
(a)
|
|
223,607
|
|
|
2,826,393
|
Huiyin Household Appliances Holdings Co.,
Ltd.
(a)
|
|
242,900
|
|
|
77,898
|
Hyatt Hotels
Corp.
(a)
|
|
10,400
|
|
|
405,184
|
Intercontinental Hotels Group PLC
|
|
11,206
|
|
|
175,492
|
Jardine Strategic Holdings, Ltd.
|
|
21,295
|
|
|
409,716
|
JOS A Bank Clothiers,
Inc.
(a)
|
|
18,500
|
|
|
1,011,025
|
Kraft Foods, Inc.
|
|
32,700
|
|
|
988,848
|
Lear
Corp.
(a)
|
|
5,600
|
|
|
444,360
|
Little Sheep Group,
Ltd.
(b)
|
|
59,000
|
|
|
32,979
|
New World Department Store China, Ltd.
|
|
104,700
|
|
|
100,867
|
Owens-Illinois,
Inc.
(a)
|
|
59,622
|
|
|
2,118,966
|
PCD Stores,
Ltd.
(a)
(b)
|
|
751,000
|
|
|
248,584
|
Ports Design, Ltd.
|
|
156,700
|
|
|
397,590
|
QuinStreet,
Inc.
(a)
|
|
37,700
|
|
|
641,277
|
Regal Hotels International Holdings, Ltd.
|
|
238,390
|
|
|
95,181
|
Starwood Hotels & Resorts Worldwide, Inc.
|
|
30,600
|
|
|
1,427,184
|
Tenneco,
Inc.
(a)
|
|
144,627
|
|
|
3,420,429
|
Tiger Airways Holdings,
Ltd.
(a)
(b)
|
|
197,200
|
|
|
250,914
|
TJX Cos, Inc.
|
|
20,600
|
|
|
875,912
|
TRW Automotive Holdings
Corp.
(a)
|
|
35,700
|
|
|
1,020,306
|
Wal-Mart Stores, Inc.
|
|
12,000
|
|
|
667,200
|
The Walt Disney Co.
|
|
15,800
|
|
|
551,578
|
|
|
|
|
|
|
|
|
|
|
|
26,427,857
|
|
|
|
Energy 22.39%
|
|
|
|
|
|
Coal 2.08%
|
|
|
|
|
|
Alpha Natural Resources,
Inc.
(a)
|
|
27,700
|
|
|
1,381,953
|
Arch Coal, Inc.
|
|
15,900
|
|
|
363,315
|
Massey Energy Co.
|
|
10,000
|
|
|
522,900
|
Walter Industries, Inc.
|
|
15,100
|
|
|
1,393,277
|
|
|
|
|
|
|
|
|
|
|
|
3,661,445
|
|
|
|
Exploration & Production 12.60%
|
|
|
|
|
|
Anadarko Petroleum Corp.
|
|
34,032
|
|
|
2,478,551
|
Cabot Oil & Gas Corp.
|
|
9,900
|
|
|
364,320
|
Canadian Natural Resources, Ltd.
|
|
9,900
|
|
|
732,996
|
EDP - Energias do Brasil
S.A.
(b)
|
|
15,100
|
|
|
289,798
|
2010 - Annual Report
|
|
|
8
|
|
S
TATEMENT
OF
I
NVESTMENTS
(
CONTINUED
)
|
|
March 31, 2010
|
|
|
|
|
|
|
|
|
Shares
|
|
Value
|
Exploration & Production (continued)
|
|
|
|
|
|
EOG Resources, Inc.
|
|
9,200
|
|
$
|
855,048
|
Exxon Mobil Corp.
|
|
7,900
|
|
|
529,142
|
Halliburton Co.
|
|
58,000
|
|
|
1,747,540
|
InterOil
Corp.
(a)
|
|
50,675
|
|
|
3,283,740
|
Newfield Exploration
Co.
(a)
|
|
15,600
|
|
|
811,980
|
Noble Energy, Inc.
|
|
27,259
|
|
|
1,989,907
|
Occidental Petroleum Corp.
|
|
36,800
|
|
|
3,111,072
|
OGX Petroleo e Gas Participacoes S.A.
|
|
143,700
|
|
|
1,344,599
|
PetroHawk Energy
Corp.
(a)
|
|
36,400
|
|
|
738,192
|
Petroleo Brasileiro S.A. - Sponsored ADR
|
|
33,030
|
|
|
1,307,658
|
Plains Exploration & Production
Co.
(a)
|
|
37,866
|
|
|
1,135,601
|
Southwestern Energy
Co.
(a)
|
|
13,992
|
|
|
569,754
|
Swift Energy
Co.
(a)
|
|
19,200
|
|
|
590,208
|
Ultra Petroleum
Corp.
(a)
|
|
7,200
|
|
|
335,736
|
|
|
|
|
|
|
|
|
|
|
|
22,215,842
|
|
|
|
Oil Services and Drillers 7.69%
|
|
|
|
|
|
Baker Hughes, Inc.
|
|
21,700
|
|
|
1,016,428
|
Cabot Corp.
|
|
9,100
|
|
|
276,640
|
Calfrac Well Services, Ltd.
|
|
19,200
|
|
|
400,768
|
Cameron International
Corp.
(a)
|
|
41,100
|
|
|
1,761,546
|
ENSCO International, Inc. - ADR
|
|
22,000
|
|
|
985,160
|
National Oilwell Varco, Inc.
|
|
37,793
|
|
|
1,533,640
|
Noble
Corp.
(a)
|
|
25,000
|
|
|
1,045,500
|
Oceaneering International,
Inc.
(a)
|
|
18,680
|
|
|
1,185,993
|
Suncor Energy, Inc.
|
|
52,882
|
|
|
1,720,780
|
Superior Well Services,
Inc.
(a)
|
|
45,163
|
|
|
604,281
|
Transocean,
Inc.
(a)
|
|
19,099
|
|
|
1,649,772
|
Trican Well Service, Ltd.
|
|
24,600
|
|
|
318,263
|
Weatherford International,
Ltd.
(a)
|
|
66,700
|
|
|
1,057,862
|
|
|
|
|
|
|
|
|
|
|
|
13,556,633
|
|
|
|
Tankers 0.02%
|
|
|
|
|
|
Golar LNG,
Ltd.
(a)
|
|
3,654
|
|
|
42,752
|
|
|
|
|
|
|
|
|
|
TOTAL ENERGY
|
|
|
|
|
39,476,672
|
|
|
|
Finance 17.04%
|
|
|
|
|
|
Banks 13.59%
|
|
|
|
|
|
AES Tiete S.A.
|
|
22,725
|
|
|
248,162
|
Banco Bradesco S.A. - ADR
|
|
35,310
|
|
|
650,763
|
Banco Santander Brasil S.A. - ADR
|
|
56,900
|
|
|
707,267
|
Bangkok Bank PLC
|
|
40,800
|
|
|
165,925
|
Bank Mandiri Tbk PT
|
|
2,660,000
|
|
|
1,563,932
|
Bank of America Corp.
|
|
225,900
|
|
|
4,032,315
|
Bank of China, Ltd.
|
|
1,335,000
|
|
|
711,840
|
BlackRock Kelso Capital Corp.
|
|
105,700
|
|
|
1,052,772
|
BOC Hong Kong Holdings, Ltd.
|
|
702,000
|
|
|
1,674,475
|
China Construction Bank Corp.
|
|
350,000
|
|
|
286,699
|
www.cloughglobal.com
|
|
|
S
TATEMENT
OF
I
NVESTMENTS
(
CONTINUED
)
|
|
9
|
March 31, 2010
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Value
|
Banks (continued)
|
|
|
|
|
|
CIT Group,
Inc.
(a)
|
|
29,000
|
|
$
|
1,129,840
|
Cyrela Brazil Realty S.A.
|
|
31,400
|
|
|
367,791
|
The Dai-ichi Life Insurance Co.,
Ltd.
(a)
(h)
|
|
215
|
|
|
321,960
|
Indochina Capital Vietnam Holdings,
Ltd.
(a)
(b)
|
|
24,452
|
|
|
81,303
|
Inpar
S.A.
(a)
|
|
146,300
|
|
|
263,255
|
Itau Unibanco Holding S.A. - ADR
|
|
63,440
|
|
|
1,395,046
|
Kasikornbank PLC
|
|
129,000
|
|
|
384,985
|
Knight Capital Group,
Inc.
(a)
|
|
108,786
|
|
|
1,658,986
|
Mizuho Financial Group, Inc.
|
|
346,800
|
|
|
686,255
|
New York Community Bancorp, Inc.
|
|
21,600
|
|
|
357,264
|
PDG Realty S.A. Empreendimentos e Participacoes
|
|
117,800
|
|
|
985,669
|
PennantPark Investment Corp.
|
|
177,530
|
|
|
1,839,211
|
Regions Financial Corp.
|
|
86,500
|
|
|
679,025
|
Siam Commercial Bank PCL
|
|
115,000
|
|
|
327,200
|
State Street Corp.
|
|
53,077
|
|
|
2,395,896
|
|
|
|
|
|
|
|
|
|
|
|
23,967,836
|
Non-Bank 3.45%
|
|
|
|
|
|
Apollo Investment Corp.
|
|
257,789
|
|
|
3,281,654
|
Ares Capital Corp.
|
|
149,524
|
|
|
2,218,936
|
Maiden Holdings,
Ltd.
(b)
|
|
23,900
|
|
|
176,621
|
Solar Capital,
Ltd.
(a)
|
|
18,900
|
|
|
399,546
|
|
|
|
|
|
|
|
|
|
|
|
6,076,757
|
|
|
|
|
|
|
|
|
|
TOTAL FINANCE
|
|
|
|
|
30,044,593
|
|
|
|
Gold/Metals 1.68%
|
|
|
|
|
|
Anglo American PLC -
ADR
(a)
|
|
7,194
|
|
|
155,678
|
Anglo Platinum,
Ltd.
(a)
|
|
12,362
|
|
|
1,255,930
|
China Molybdenum Co., Ltd.
|
|
239,000
|
|
|
200,084
|
Kinross Gold Corp.
|
|
16,000
|
|
|
273,440
|
Lonmin
PLC
(a)
|
|
34,800
|
|
|
1,076,245
|
|
|
|
|
|
|
|
|
|
|
|
2,961,377
|
|
|
|
Health Care 0.64%
|
|
|
|
|
|
BioMarin Pharmaceutical,
Inc.
(a)
|
|
17,127
|
|
|
400,258
|
BioSphere Medical,
Inc.
(a)
|
|
182,703
|
|
|
484,163
|
BioSphere Medical,
Inc.
(a)
(c)
|
|
50,000
|
|
|
132,500
|
Molecular Insight Pharmaceuticals,
Inc.
(a)
|
|
80,200
|
|
|
105,062
|
|
|
|
|
|
|
|
|
|
|
|
1,121,983
|
Industrial 12.30%
|
|
|
|
|
|
Aegean Marine Petroleum Network, Inc.
|
|
57,500
|
|
|
1,631,850
|
AMR
Corp.
(a)
|
|
142,000
|
|
|
1,293,620
|
Avis Budget Group,
Inc.
(a)
|
|
125,770
|
|
|
1,446,355
|
Bakrie Sumatera Plantations Tbk PT
|
|
1,527,000
|
|
|
83,067
|
BE Aerospace,
Inc.
(a)
|
|
94,295
|
|
|
2,871,283
|
BorgWarner,
Inc.
(a)
|
|
40,000
|
|
|
1,527,200
|
Bumi Resources Tbk PT
|
|
1,027,000
|
|
|
253,942
|
2010 - Annual Report
|
|
|
10
|
|
S
TATEMENT
OF
I
NVESTMENTS
(
CONTINUED
)
|
|
March 31, 2010
|
|
|
|
|
|
|
|
|
Shares
|
|
Value
|
Industrial (continued)
|
|
|
|
|
|
Chicago Bridge & Iron
Co.
(a)
|
|
95,479
|
|
$
|
2,220,842
|
China South City Holdings,
Ltd.
(a)
(b)
|
|
1,178,000
|
|
|
207,858
|
Crown Holdings,
Inc.
(a)
|
|
59,700
|
|
|
1,609,512
|
FANUC, Ltd.
|
|
7,500
|
|
|
795,807
|
Flowserve Corp.
|
|
2,600
|
|
|
286,702
|
Foster Wheeler,
Ltd.
(a)
|
|
46,500
|
|
|
1,262,010
|
Fosun International, Ltd.
|
|
8,000
|
|
|
6,399
|
General Cable
Corp.
(a)
|
|
75,700
|
|
|
2,043,900
|
JSR Corp.
|
|
14,200
|
|
|
296,637
|
Kingboard Chemical Holdings, Ltd.
|
|
41,980
|
|
|
191,131
|
Landstar System, Inc.
|
|
7,100
|
|
|
298,058
|
McDermott International,
Inc.
(a)
|
|
16,851
|
|
|
453,629
|
Metabolix,
Inc.
(a)
|
|
29,400
|
|
|
358,092
|
Mitsubishi Electric Corp.
|
|
45,000
|
|
|
413,467
|
Mitsui & Co., Ltd.
|
|
17,400
|
|
|
292,388
|
SMC Corp.
|
|
3,900
|
|
|
529,372
|
Terex
Corp.
(a)
|
|
16,799
|
|
|
381,505
|
TransDigm Group, Inc.
|
|
17,635
|
|
|
935,360
|
|
|
|
|
|
|
|
|
|
|
|
21,689,986
|
|
|
|
Insurance 9.34%
|
|
|
|
|
|
Aflac, Inc.
|
|
28,400
|
|
|
1,541,836
|
Arch Capital Group,
Ltd.
(a)
|
|
4,900
|
|
|
373,625
|
China Pacific Insurance Group Co.,
Ltd.
(a)
(b)
|
|
97,000
|
|
|
429,765
|
Everest Re Group, Ltd.
|
|
8,900
|
|
|
720,277
|
Genworth Financial,
Inc.
(a)
|
|
101,315
|
|
|
1,858,117
|
The Hartford Financial Services Group, Inc.
|
|
49,100
|
|
|
1,395,422
|
Korea Life Insurance Co., Ltd.
|
|
53,776
|
|
|
416,349
|
Lincoln National Corp.
|
|
84,688
|
|
|
2,599,921
|
Loews Corp.
|
|
67,400
|
|
|
2,512,672
|
MBIA,
Inc.
(a)
|
|
8,473
|
|
|
53,126
|
Montpelier Re Holdings, Ltd.
|
|
15,357
|
|
|
258,151
|
Primerica, Inc.
|
|
1,954
|
|
|
29,310
|
RenaissanceRe Holdings, Ltd.
|
|
13,500
|
|
|
766,260
|
Torchmark Corp.
|
|
21,555
|
|
|
1,153,408
|
XL Capital, Ltd.
|
|
124,500
|
|
|
2,353,050
|
|
|
|
|
|
|
|
|
|
|
|
16,461,289
|
|
|
|
Metals & Mining 0.47%
|
|
|
|
|
|
Gerdau S.A. - ADR
|
|
51,129
|
|
|
833,403
|
|
|
|
|
|
|
|
|
|
Real Estate 0.56%
|
|
|
|
|
|
Cheung Kong Holdings, Ltd.
|
|
63,000
|
|
|
811,412
|
Mingfa Group International Co.,
Ltd.
(a)
(b)
|
|
579,100
|
|
|
173,038
|
|
|
|
|
|
|
|
|
|
|
|
984,450
|
|
|
|
Real Estate Investment Trusts (REITs) 9.08%
|
|
|
|
|
|
Annaly Capital Management, Inc.
|
|
293,200
|
|
|
5,037,176
|
Anworth Mortgage Asset Corp.
|
|
160,614
|
|
|
1,082,538
|
www.cloughglobal.com
|
|
|
S
TATEMENT
OF
I
NVESTMENTS
(
CONTINUED
)
|
|
11
|
March 31, 2010
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Value
|
Real Estate Investment Trusts (REITs) (continued)
|
|
|
|
|
|
Apollo Commercial Real Estate Finance, Inc.
|
|
50,100
|
|
$
|
902,301
|
Capstead Mortgage Corp.
|
|
78,903
|
|
|
943,680
|
Chimera Investment Corp.
|
|
165,632
|
|
|
644,309
|
Hatteras Financial Corp.
|
|
98,400
|
|
|
2,535,768
|
Hatteras Financial
Corp.
(b)
|
|
50,300
|
|
|
1,296,231
|
Host Hotels & Resorts, Inc.
|
|
106,535
|
|
|
1,560,738
|
Invesco Mortgage Capital, Inc.
|
|
35,400
|
|
|
814,200
|
MFA Financial, Inc.
|
|
161,339
|
|
|
1,187,455
|
Regal Real Estate Investment Trust
|
|
37,439
|
|
|
9,210
|
|
|
|
|
|
|
|
|
|
|
|
16,013,606
|
|
|
|
Technology & Communications 18.58%
|
|
|
|
|
|
Arrow Electronics,
Inc.
(a)
|
|
47,800
|
|
|
1,440,214
|
Avnet,
Inc.
(a)
|
|
27,200
|
|
|
816,000
|
CA, Inc.
|
|
25,100
|
|
|
589,097
|
Centron Telecom International Holdings,
Ltd.
(a)
|
|
238,000
|
|
|
83,071
|
China Telecom Corp., Ltd.
|
|
688,000
|
|
|
339,381
|
Chunghwa Telecom Co., Ltd. - ADR
|
|
60,829
|
|
|
1,181,908
|
Cisco Systems,
Inc.
(a)
|
|
177,000
|
|
|
4,607,310
|
CommScope,
Inc.
(a)
|
|
18,400
|
|
|
515,568
|
Dell,
Inc.
(a)
|
|
34,600
|
|
|
519,346
|
Elpida Memory,
Inc.
(a)
|
|
13,000
|
|
|
255,995
|
Equinix,
Inc.
(a)
|
|
2,800
|
|
|
272,552
|
Google, Inc. - Class
A
(a)
|
|
3,500
|
|
|
1,984,535
|
Hitachi,
Ltd.
(a)
|
|
71,000
|
|
|
265,044
|
Honeywell International, Inc.
|
|
64,500
|
|
|
2,919,915
|
Intel Corp.
|
|
104,500
|
|
|
2,326,170
|
Magal Security Systems,
Ltd.
(a)
|
|
72,925
|
|
|
282,949
|
Microsoft Corp.
|
|
163,242
|
|
|
4,778,093
|
Net Servicos de Comunicacao S.A. -
ADR
(a)
|
|
91,234
|
|
|
1,181,480
|
NII Holdings,
Inc.
(a)
|
|
17,100
|
|
|
712,386
|
Qualcomm, Inc.
|
|
36,600
|
|
|
1,536,834
|
Samsung Electronics Co., Ltd.
|
|
976
|
|
|
705,615
|
Seagate
Technology
(a)
|
|
76,533
|
|
|
1,397,493
|
Time Warner, Inc.
|
|
26,200
|
|
|
819,274
|
Verizon Communications, Inc.
|
|
88,300
|
|
|
2,739,066
|
Western Digital
Corp.
(a)
|
|
10,400
|
|
|
405,496
|
Zhuzhou CSR Times Electric Co., Ltd.
|
|
39,000
|
|
|
73,939
|
|
|
|
|
|
|
|
|
|
|
|
32,748,731
|
|
|
|
Transportation 4.08%
|
|
|
|
|
|
Bombardier, Inc.
|
|
178,600
|
|
|
1,095,533
|
Gol Linhas Aereas Inteligentes S.A. - ADR
|
|
126,307
|
|
|
1,564,944
|
Localiza Rent A Car S.A.
|
|
57,400
|
|
|
603,582
|
Rheinmetall AG
|
|
4,100
|
|
|
292,113
|
Santos Brasil Participacoes S.A.
|
|
60,000
|
|
|
590,435
|
TAM S.A. - ADR
|
|
29,804
|
|
|
505,476
|
UAL
Corp.
(a)
|
|
107,200
|
|
|
2,095,760
|
US Airways Group,
Inc.
(a)
|
|
61,502
|
|
|
452,040
|
|
|
|
|
|
|
|
|
|
|
|
7,199,883
|
2010 - Annual Report
|
|
|
12
|
|
S
TATEMENT
OF
I
NVESTMENTS
(
CONTINUED
)
|
|
March 31, 2010
|
|
|
|
|
|
|
|
|
Shares
|
|
Value
|
Utilities 1.66%
|
|
|
|
|
|
Calpine
Corp.
(a)
|
|
180,296
|
|
$
|
2,143,719
|
DPL, Inc.
|
|
28,900
|
|
|
785,791
|
|
|
|
|
|
|
|
|
|
|
|
2,929,510
|
|
|
|
TOTAL COMMON STOCKS
(Cost $166,527,877)
|
|
|
|
|
198,893,340
|
|
|
|
|
|
|
|
|
|
EXCHANGE TRADED FUNDS 3.90%
|
|
|
|
|
|
iShares iBoxx $ High Yield Corporate Bond Fund
|
|
32,701
|
|
|
2,889,787
|
SPDR Gold
Shares
(a)
|
|
36,600
|
|
|
3,987,570
|
|
|
|
|
|
|
|
|
|
TOTAL EXCHANGE TRADED FUNDS
(Cost $5,377,132)
|
|
|
|
|
6,877,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description and
Maturity Date
|
|
Coupon
Rate
|
|
|
Principal
Amount
|
|
Value
|
CORPORATE BONDS 24.86%
|
|
|
|
|
|
|
|
|
ACE INA Holdings, Inc.
|
|
|
|
|
|
|
|
|
02/15/2017
|
|
5.700
|
%
|
|
$
|
200,000
|
|
216,241
|
Adaro Indonesia PT
|
|
|
|
|
|
|
|
|
10/22/2019
(d)
|
|
7.625
|
%
|
|
|
450,000
|
|
469,710
|
Alliant Techsystems, Inc.
|
|
|
|
|
|
|
|
|
04/01/2016
|
|
6.750
|
%
|
|
|
650,000
|
|
656,500
|
Anadarko Petroleum Corp.
|
|
|
|
|
|
|
|
|
09/15/2016
|
|
5.950
|
%
|
|
|
625,000
|
|
681,469
|
Analog Devices, Inc.
|
|
|
|
|
|
|
|
|
07/01/2014
|
|
5.000
|
%
|
|
|
350,000
|
|
369,990
|
Aon Corp.
|
|
|
|
|
|
|
|
|
12/14/2012
|
|
7.375
|
%
|
|
|
365,000
|
|
408,652
|
Apache Corp.
|
|
|
|
|
|
|
|
|
09/15/2013
|
|
6.000
|
%
|
|
|
600,000
|
|
672,772
|
Arrow Electronics, Inc.
|
|
|
|
|
|
|
|
|
04/01/2020
|
|
6.000
|
%
|
|
|
250,000
|
|
252,709
|
ArvinMeritor, Inc.
|
|
|
|
|
|
|
|
|
03/15/2018
|
|
10.625
|
%
|
|
|
425,000
|
|
442,000
|
AT&T, Inc.
|
|
|
|
|
|
|
|
|
02/15/2019
|
|
5.800
|
%
|
|
|
525,000
|
|
562,174
|
Ball Corp.
|
|
|
|
|
|
|
|
|
03/15/2018
|
|
6.625
|
%
|
|
|
650,000
|
|
667,875
|
Bank of America Corp.
|
|
|
|
|
|
|
|
|
12/01/2017
|
|
5.750
|
%
|
|
|
900,000
|
|
923,981
|
BE Aerospace, Inc.
|
|
|
|
|
|
|
|
|
07/01/2018
|
|
8.500
|
%
|
|
|
525,000
|
|
561,750
|
The Boeing Co.
|
|
|
|
|
|
|
|
|
03/15/2014
|
|
5.000
|
%
|
|
|
250,000
|
|
270,879
|
BorgWarner, Inc.
|
|
|
|
|
|
|
|
|
10/01/2019
|
|
8.000
|
%
|
|
|
400,000
|
|
432,133
|
Bottling Group LLC
|
|
|
|
|
|
|
|
|
01/15/2019
|
|
5.125
|
%
|
|
|
600,000
|
|
629,783
|
www.cloughglobal.com
|
|
|
S
TATEMENT
OF
I
NVESTMENTS
(
CONTINUED
)
|
|
13
|
March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
Description and
Maturity Date
|
|
Coupon
Rate
|
|
|
Principal
Amount
|
|
Value
|
CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
Burlington Northern Santa Fe Corp.
|
|
|
|
|
|
|
|
|
|
05/01/2017
|
|
5.650
|
%
|
|
$
|
725,000
|
|
$
|
777,805
|
CITIC Resources Holdings, Ltd.
|
|
|
|
|
|
|
|
|
|
05/15/2014
(d)
|
|
6.750
|
%
|
|
|
450,000
|
|
|
461,250
|
Computer Sciences Corp.
|
|
|
|
|
|
|
|
|
|
03/15/2018
(b)
|
|
6.500
|
%
|
|
|
400,000
|
|
|
443,528
|
The Connecticut Light & Power Co.
|
|
|
|
|
|
|
|
|
|
Series 09-A, 02/01/2019
|
|
5.500
|
%
|
|
|
450,000
|
|
|
475,449
|
Constellation Brands, Inc.
|
|
|
|
|
|
|
|
|
|
09/01/2016
|
|
7.250
|
%
|
|
|
675,000
|
|
|
696,938
|
Corning, Inc.
|
|
|
|
|
|
|
|
|
|
06/15/2015
|
|
6.050
|
%
|
|
|
400,000
|
|
|
402,182
|
Crown Americas LLC/
Crown Americas Capital Corp. II
|
|
|
|
|
|
|
|
|
|
05/15/2017
(b)
|
|
7.625
|
%
|
|
|
700,000
|
|
|
733,250
|
Devon Financing Corp., ULC
|
|
|
|
|
|
|
|
|
|
09/30/2011
|
|
6.875
|
%
|
|
|
630,000
|
|
|
680,020
|
Eaton Vance Corp.
|
|
|
|
|
|
|
|
|
|
10/02/2017
|
|
6.500
|
%
|
|
|
750,000
|
|
|
808,656
|
Enbridge Energy Partners LP
|
|
|
|
|
|
|
|
|
|
03/01/2019
|
|
9.875
|
%
|
|
|
375,000
|
|
|
488,062
|
Evergrande Real Estate Group, Ltd.
|
|
|
|
|
|
|
|
|
|
01/27/2015
(b)
|
|
13.000
|
%
|
|
|
375,000
|
|
|
386,250
|
Florida Power Corp.
|
|
|
|
|
|
|
|
|
|
06/15/2018
|
|
5.650
|
%
|
|
|
400,000
|
|
|
433,821
|
Ford Motor Credit Co., LLC
|
|
|
|
|
|
|
|
|
|
10/01/2014
|
|
8.700
|
%
|
|
|
850,000
|
|
|
922,521
|
Forest Oil Corp.
|
|
|
|
|
|
|
|
|
|
06/15/2019
|
|
7.250
|
%
|
|
|
600,000
|
|
|
606,000
|
General Cable Corp.
|
|
|
|
|
|
|
|
|
|
04/01/2017
|
|
7.125
|
%
|
|
|
700,000
|
|
|
697,375
|
General Dynamics Corp.
|
|
|
|
|
|
|
|
|
|
02/01/2014
|
|
5.250
|
%
|
|
|
590,000
|
|
|
648,805
|
General Mills, Inc.
|
|
|
|
|
|
|
|
|
|
02/15/2012
|
|
6.000
|
%
|
|
|
600,000
|
|
|
653,113
|
Gol Finance
|
|
|
|
|
|
|
|
|
|
04/03/2017
|
|
7.500
|
%
|
|
|
60,000
|
|
|
59,700
|
The Goldman Sachs Group, Inc.
|
|
|
|
|
|
|
|
|
|
01/15/2016
|
|
5.350
|
%
|
|
|
650,000
|
|
|
685,305
|
Goodrich Corp.
|
|
|
|
|
|
|
|
|
|
03/01/2019
(b)
|
|
6.125
|
%
|
|
|
425,000
|
|
|
462,656
|
The Goodyear Tire & Rubber Co.
|
|
|
|
|
|
|
|
|
|
05/15/2016
|
|
10.500
|
%
|
|
|
650,000
|
|
|
705,250
|
Hanesbrands, Inc.
|
|
|
|
|
|
|
|
|
|
12/15/2016
|
|
8.000
|
%
|
|
|
450,000
|
|
|
468,000
|
Hasbro, Inc.
|
|
|
|
|
|
|
|
|
|
05/15/2014
|
|
6.125
|
%
|
|
|
350,000
|
|
|
384,367
|
03/15/2040
|
|
6.350
|
%
|
|
|
75,000
|
|
|
74,349
|
2010 - Annual Report
|
|
|
14
|
|
S
TATEMENT
OF
I
NVESTMENTS
(
CONTINUED
)
|
|
March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
Description and
Maturity Date
|
|
Coupon
Rate
|
|
|
Principal
Amount
|
|
Value
|
CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
Hewlett-Packard Co.
|
|
|
|
|
|
|
|
|
|
03/01/2014
|
|
6.125
|
%
|
|
$
|
350,000
|
|
$
|
394,501
|
03/01/2018
|
|
5.500
|
%
|
|
|
300,000
|
|
|
326,534
|
Iron Mountain, Inc.
|
|
|
|
|
|
|
|
|
|
01/01/2016
|
|
6.625
|
%
|
|
|
625,000
|
|
|
623,438
|
Johnson Controls, Inc.
|
|
|
|
|
|
|
|
|
|
01/15/2016
|
|
5.500
|
%
|
|
|
800,000
|
|
|
857,259
|
JPMorgan Chase & Co.
|
|
|
|
|
|
|
|
|
|
04/23/2019
|
|
6.300
|
%
|
|
|
675,000
|
|
|
746,200
|
Lear Corp.
|
|
|
|
|
|
|
|
|
|
03/15/2018
|
|
7.875
|
%
|
|
|
525,000
|
|
|
533,531
|
McDonalds Corp.
|
|
|
|
|
|
|
|
|
|
02/01/2019
|
|
5.000
|
%
|
|
|
600,000
|
|
|
630,746
|
Montpelier Re Holdings, Ltd.
|
|
|
|
|
|
|
|
|
|
08/15/2013
|
|
6.125
|
%
|
|
|
250,000
|
|
|
258,147
|
Morgan Stanley
|
|
|
|
|
|
|
|
|
|
10/15/2015
|
|
5.375
|
%
|
|
|
600,000
|
|
|
623,769
|
Nabors Industries, Inc.
|
|
|
|
|
|
|
|
|
|
01/15/2019
|
|
9.250
|
%
|
|
|
550,000
|
|
|
685,215
|
National Oilwell Varco, Inc.
|
|
|
|
|
|
|
|
|
|
Series B, 08/15/2015
|
|
6.125
|
%
|
|
|
545,000
|
|
|
549,840
|
Newfield Exploration Co.
|
|
|
|
|
|
|
|
|
|
09/01/2014
|
|
6.625
|
%
|
|
|
400,000
|
|
|
413,000
|
05/15/2018
|
|
7.125
|
%
|
|
|
250,000
|
|
|
255,000
|
Oracle Corp.
|
|
|
|
|
|
|
|
|
|
04/15/2018
|
|
5.750
|
%
|
|
|
255,000
|
|
|
280,140
|
PacifiCorp
|
|
|
|
|
|
|
|
|
|
01/15/2019
|
|
5.500
|
%
|
|
|
600,000
|
|
|
642,699
|
Petrohawk Energy Corp.
|
|
|
|
|
|
|
|
|
|
06/01/2015
|
|
7.875
|
%
|
|
|
675,000
|
|
|
691,031
|
Pioneer Natural Resources Co.
|
|
|
|
|
|
|
|
|
|
03/15/2017
|
|
6.650
|
%
|
|
|
650,000
|
|
|
653,107
|
Precision Castparts Corp.
|
|
|
|
|
|
|
|
|
|
12/15/2013
|
|
5.600
|
%
|
|
|
400,000
|
|
|
424,562
|
The President and Fellows of Harvard College
|
|
|
|
|
|
|
|
|
|
10/01/2037
|
|
6.300
|
%
|
|
|
500,000
|
|
|
523,190
|
Prime Dig Pte, Ltd.
|
|
|
|
|
|
|
|
|
|
11/03/2014
(d)
|
|
11.750
|
%
|
|
|
300,000
|
|
|
326,250
|
Progress Energy
|
|
|
|
|
|
|
|
|
|
01/15/2019
|
|
5.300
|
%
|
|
|
600,000
|
|
|
632,304
|
Provident Cos, Inc.
|
|
|
|
|
|
|
|
|
|
07/15/2018
|
|
7.000
|
%
|
|
|
425,000
|
|
|
434,074
|
Public Service Co. of Colorado
|
|
|
|
|
|
|
|
|
|
06/01/2019
|
|
5.125
|
%
|
|
|
600,000
|
|
|
625,192
|
Public Service Electric & Gas Co.
|
|
|
|
|
|
|
|
|
|
11/01/2013
|
|
6.330
|
%
|
|
|
600,000
|
|
|
681,137
|
Range Resources Corp.
|
|
|
|
|
|
|
|
|
|
05/15/2019
|
|
8.000
|
%
|
|
|
600,000
|
|
|
643,500
|
Rearden G Holdings EINS GmbH
|
|
|
|
|
|
|
|
|
|
03/30/2020
(b)
|
|
7.875
|
%
|
|
|
440,000
|
|
|
447,700
|
www.cloughglobal.com
|
|
|
S
TATEMENT
OF
I
NVESTMENTS
(
CONTINUED
)
|
|
15
|
March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
Description and
Maturity Date
|
|
Coupon
Rate
|
|
|
Principal
Amount
|
|
Value
|
CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
Roche Holdings, Inc.
|
|
|
|
|
|
|
|
|
|
03/01/2019
(b)
|
|
6.000
|
%
|
|
$
|
600,000
|
|
$
|
664,232
|
Shimao Property Holdings, Ltd.
|
|
|
|
|
|
|
|
|
|
12/01/2016
(d)
|
|
8.000
|
%
|
|
|
450,000
|
|
|
429,909
|
Silgan Holdings, Inc.
|
|
|
|
|
|
|
|
|
|
08/15/2016
|
|
7.250
|
%
|
|
|
600,000
|
|
|
625,500
|
South Carolina Electric & Gas Co.
|
|
|
|
|
|
|
|
|
|
11/01/2018
|
|
5.250
|
%
|
|
|
400,000
|
|
|
419,442
|
Spirit Aerosystems, Inc.
|
|
|
|
|
|
|
|
|
|
10/01/2017
(b)
|
|
7.500
|
%
|
|
|
550,000
|
|
|
566,500
|
Star Energy Geothermal Wayang Windu, Ltd.
|
|
|
|
|
|
|
|
|
|
02/12/2015
(b)
|
|
11.500
|
%
|
|
|
450,000
|
|
|
478,125
|
Starwood Hotels & Resorts Worldwide, Inc.
|
|
|
|
|
|
|
|
|
|
05/15/2018
|
|
6.750
|
%
|
|
|
675,000
|
|
|
680,063
|
TAM Capital 2, Inc.
|
|
|
|
|
|
|
|
|
|
01/29/2020
(d)
|
|
9.500
|
%
|
|
|
520,000
|
|
|
517,400
|
Torchmark Corp.
|
|
|
|
|
|
|
|
|
|
06/15/2016
|
|
6.375
|
%
|
|
|
275,000
|
|
|
279,611
|
The Travelers Cos., Inc.
|
|
|
|
|
|
|
|
|
|
05/15/2018
|
|
5.800
|
%
|
|
|
275,000
|
|
|
295,066
|
TRW Automotive, Inc.
|
|
|
|
|
|
|
|
|
|
03/15/2014
(b)
|
|
7.000
|
%
|
|
|
575,000
|
|
|
569,250
|
Tyco International Finance S.A.
|
|
|
|
|
|
|
|
|
|
01/15/2019
|
|
8.500
|
%
|
|
|
450,000
|
|
|
558,977
|
United Technologies Corp.
|
|
|
|
|
|
|
|
|
|
02/01/2019
|
|
6.125
|
%
|
|
|
500,000
|
|
|
563,359
|
Vedanta Resources PLC
|
|
|
|
|
|
|
|
|
|
07/18/2018
(d)
|
|
9.500
|
%
|
|
|
375,000
|
|
|
412,500
|
Verizon Wireless Capital LLC
|
|
|
|
|
|
|
|
|
|
02/01/2014
(b)
|
|
5.550
|
%
|
|
|
400,000
|
|
|
437,485
|
Wal-Mart Stores, Inc.
|
|
|
|
|
|
|
|
|
|
02/15/2018
|
|
5.800
|
%
|
|
|
250,000
|
|
|
279,425
|
Weatherford International, Ltd.
|
|
|
|
|
|
|
|
|
|
03/01/2019
|
|
9.625
|
%
|
|
|
615,000
|
|
|
779,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CORPORATE BONDS
(Cost $40,601,810)
|
|
|
|
|
|
|
|
|
43,831,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET/MORTGAGE BACKED SECURITIES 0.57%
|
|
|
|
|
|
|
|
|
|
Freddie Mac REMICS
|
|
|
|
|
|
|
|
|
|
Series 2006-3155, Class SA,
|
|
|
|
|
|
|
|
|
|
11/15/2035
(e)
|
|
37.440
|
%
|
|
|
617,276
|
|
|
704,379
|
Government National Mortgage Association (GNMA)
|
|
|
|
|
|
|
|
|
|
Series 2007-37, Class SA,
03/20/2037
(e)
|
|
21.271
|
%
|
|
|
230,669
|
|
|
240,941
|
Series 2007-37, Class SB,
03/20/2037
(e)
|
|
21.271
|
%
|
|
|
63,951
|
|
|
64,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSET/MORTGAGE BACKED SECURITIES
(Cost $881,763)
|
|
|
|
|
|
|
|
|
1,010,220
|
|
|
|
|
|
|
|
|
|
|
2010 - Annual Report
|
|
|
16
|
|
S
TATEMENT
OF
I
NVESTMENTS
(
CONTINUED
)
|
|
March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
Description and
Maturity Date
|
|
Coupon
Rate
|
|
|
Principal
Amount
|
|
Value
|
GOVERNMENT & AGENCY OBLIGATIONS 4.32%
|
|
|
|
|
|
|
|
|
|
Small Business Administration Participation Certificates
|
|
|
|
|
|
|
|
|
|
Series 2008-20L, Class 1, 12/01/2028
|
|
6.220
|
%
|
|
$
|
554,851
|
|
$
|
607,310
|
U.S. Treasury Bonds
|
|
|
|
|
|
|
|
|
|
08/15/2018
|
|
4.000
|
%
|
|
|
6,800,000
|
|
|
7,006,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GOVERNMENT & AGENCY OBLIGATIONS
(Cost $7,874,023)
|
|
|
|
|
|
|
|
|
7,613,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expiration
Date
|
|
Exercise
Price
|
|
Number of
Contracts
|
|
Value
|
PURCHASED OPTIONS 0.26%
|
|
|
|
|
|
|
|
|
|
Purchased Call Options 0.14%
|
|
|
|
|
|
|
|
|
|
Halliburton Co.
|
|
January, 2011
|
|
$
|
30.00
|
|
350
|
|
131,250
|
Transocean, Ltd.
|
|
May, 2010
|
|
|
90.00
|
|
580
|
|
119,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL PURCHASED CALL OPTIONS
(Cost $896,310)
|
|
|
|
|
|
|
|
|
250,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased Put Options 0.12%
|
|
|
|
|
|
|
|
|
|
S&P 500 Index
|
|
April, 2010
|
|
|
1,080.00
|
|
420
|
|
55,650
|
S&P 500 Index
|
|
April, 2010
|
|
|
1,100.00
|
|
310
|
|
52,700
|
S&P 500 Index
|
|
April, 2010
|
|
|
1,125.00
|
|
340
|
|
102,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL PURCHASED PUT OPTIONS
(Cost $4,822,762)
|
|
|
|
|
|
|
|
|
210,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL PURCHASED OPTIONS
(Cost $5,719,072)
|
|
|
|
|
|
|
|
|
461,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares/
Principal Amount
|
|
Value
|
SHORT-TERM INVESTMENTS 11.95%
|
|
|
|
|
|
Money Market Fund
|
|
|
|
|
|
Dreyfus Treasury Prime Money Market Fund
|
|
|
|
|
|
(0.000% 7-day
yield)
(f)
|
|
6,100,808
|
|
$
|
6,100,808
|
|
|
|
U.S. Treasury Bills
|
|
|
|
|
|
U.S. Treasury Bill Discount Notes
|
|
|
|
|
|
9/23/2010,
0.169%
(g)
|
|
5,000,000
|
|
|
4,994,775
|
12/16/2010,
0.246%
(g)
|
|
10,000,000
|
|
|
9,981,290
|
|
|
|
|
|
|
|
|
|
TOTAL SHORT-TERM INVESTMENTS
(Cost $21,078,921)
|
|
|
|
|
21,076,873
|
|
|
|
|
|
|
www.cloughglobal.com
|
|
|
S
TATEMENT
OF
I
NVESTMENTS
(
CONTINUED
)
|
|
17
|
March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
Shares/
Principal Amount
|
|
Value
|
|
Total Investments - 158.67%*
(Cost $248,060,598)
|
|
|
|
$
|
279,763,921
|
|
|
|
|
Liabilities in Excess of Other Assets - (58.67%)
|
|
|
|
|
(103,447,179
|
)
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS - 100.00%
|
|
|
|
$
|
176,316,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE OF OPTIONS WRITTEN
|
|
Expiration
Date
|
|
Exercise
Price
|
|
Number of
Contracts
|
|
Value
|
|
Call Options Written
|
|
|
|
|
|
|
|
|
|
|
|
Halliburton Co.
|
|
January, 2011
|
|
$
|
45.00
|
|
350
|
|
$
|
(10,675
|
)
|
Transocean, Ltd.
|
|
May, 2010
|
|
|
100.00
|
|
580
|
|
|
(18,560
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CALL OPTIONS WRITTEN
(Premiums received $452,200)
|
|
|
|
|
|
|
|
|
|
(29,235
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Put Options Written
|
|
|
|
|
|
|
|
|
|
|
|
S&P 500 Index
|
|
April, 2010
|
|
|
1,000.00
|
|
730
|
|
|
(31,025
|
)
|
S&P 500 Index
|
|
April, 2010
|
|
|
1,050.00
|
|
340
|
|
|
(28,050
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL PUT OPTIONS WRITTEN
(Premiums received $2,110,258)
|
|
|
|
|
|
|
|
|
|
(59,075
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPTIONS WRITTEN
(Premiums received $2,562,458)
|
|
|
|
|
|
|
|
|
$
|
(88,310
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE OF SECURITIES SOLD SHORT
|
|
Shares
|
|
|
Value
|
|
Common Stocks
|
|
|
|
|
|
|
|
Antofagasta PLC
|
|
(14,700
|
)
|
|
$
|
(231,995
|
)
|
AvalonBay Communities, Inc.
|
|
(2,226
|
)
|
|
|
(192,215
|
)
|
Berkshire Hathaway, Inc.
|
|
(24,900
|
)
|
|
|
(2,023,623
|
)
|
Boston Properties, Inc.
|
|
(8,500
|
)
|
|
|
(641,240
|
)
|
Caterpillar, Inc.
|
|
(15,200
|
)
|
|
|
(955,320
|
)
|
Cie Generale dOptique Essilor International S.A.
|
|
(5,600
|
)
|
|
|
(357,535
|
)
|
Encana Corp.
|
|
(5,600
|
)
|
|
|
(173,768
|
)
|
Federal Realty Investment Trust
|
|
(5,600
|
)
|
|
|
(407,736
|
)
|
First Solar, Inc.
|
|
(4,700
|
)
|
|
|
(576,455
|
)
|
Genuine Parts Co.
|
|
(21,194
|
)
|
|
|
(895,447
|
)
|
Harley-Davidson, Inc.
|
|
(21,900
|
)
|
|
|
(614,733
|
)
|
ICICI Bank, Ltd. - ADR
|
|
(14,922
|
)
|
|
|
(637,169
|
)
|
IDEXX Laboratories, Inc.
|
|
(3,600
|
)
|
|
|
(207,180
|
)
|
Kohls Corp.
|
|
(5,300
|
)
|
|
|
(290,334
|
)
|
Macys, Inc.
|
|
(13,700
|
)
|
|
|
(298,249
|
)
|
Marathon Oil Corp.
|
|
(28,500
|
)
|
|
|
(901,740
|
)
|
Nabors Industries, Ltd.
|
|
(34,300
|
)
|
|
|
(673,309
|
)
|
Patterson-UTI Energy, Inc.
|
|
(52,800
|
)
|
|
|
(737,616
|
)
|
PetSmart, Inc.
|
|
(5,300
|
)
|
|
|
(169,388
|
)
|
Pitney Bowes, Inc.
|
|
(15,277
|
)
|
|
|
(373,523
|
)
|
POSCO - ADR
|
|
(3,500
|
)
|
|
|
(409,535
|
)
|
Quest Diagnostics, Inc.
|
|
(15,000
|
)
|
|
|
(874,350
|
)
|
2010 - Annual Report
|
|
|
18
|
|
S
TATEMENT
OF
I
NVESTMENTS
(
CONTINUED
)
|
|
March 31, 2010
|
|
|
|
|
|
|
|
|
SCHEDULE OF SECURITIES SOLD SHORT (continued)
|
|
Shares
|
|
|
Value
|
|
Unit Corp.
|
|
(21,247
|
)
|
|
$
|
(898,323
|
)
|
Valero Energy Corp.
|
|
(45,000
|
)
|
|
|
(886,500
|
)
|
VCA Antech, Inc.
|
|
(4,900
|
)
|
|
|
(137,347
|
)
|
Vornado Realty Trust
|
|
(630
|
)
|
|
|
(47,691
|
)
|
WW Grainger, Inc.
|
|
(6,600
|
)
|
|
|
(713,592
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,325,913
|
)
|
|
|
|
Exchange Traded Funds
|
|
|
|
|
|
|
|
Energy Select Sector SPDR Fund
|
|
(45,172
|
)
|
|
|
(2,598,294
|
)
|
iShares MSCI Mexico Investable Market Index Fund
|
|
(11,974
|
)
|
|
|
(639,052
|
)
|
iShares Russell 2000 Index Fund
|
|
(75,000
|
)
|
|
|
(5,085,750
|
)
|
United States Natural Gas Fund LP
|
|
(42,274
|
)
|
|
|
(292,113
|
)
|
United States Oil Fund LP
|
|
(20,700
|
)
|
|
|
(834,210
|
)
|
Vanguard REIT ETF
|
|
(63,095
|
)
|
|
|
(3,080,298
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,529,717
|
)
|
|
|
|
TOTAL SECURITIES SOLD SHORT
(Proceeds $23,152,074)
|
|
|
|
|
$
|
(27,855,630
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Abbreviations:
|
|
|
ADR - American Depositary Receipt
AG - Aktiengesellschaft is a German acronym on company names meaning Public Company
ETF - Exchange Traded Fund
LLC -
Limited Liability Company
LP - Limited Partnership
MSCI - Morgan Stanley Capital International
PLC - Public Limited Company
|
|
PT - equivalent to Public Limited Company in Indonesia
REMICS - Real Estate Mortgage Investment Conduits
S.A. - Generally designates corporations in various countries, mostly those employing the civil law
S&P - Standard & Poors
SPDR - Standard & Poors Depositary Receipt
Tbk - Terbuka (stock symbol in Indonesian)
ULC - Unlimited Liability Company
|
*
|
All securities are being held as collateral for borrowings (See note 6), written options and/or
short sales as of March 31, 2010.
|
(a)
|
Non-Income Producing Security.
|
(b)
|
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, 2010, these securities had a total value of $8,376,067 or 4.75% of net assets.
|
(c)
|
Private Placement; these securities may only be resold in transactions exempt from registration
under the Securities Act of 1933. As of March 31, 2010, these securities had a total value of $132,500 or 0.08% of net assets.
|
(d)
|
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 Funds Board of Trustees. As of March 31, 2010, the aggregate market value of those securities was $2,617,019, representing 1.48% of
net assets.
|
(e)
|
Floating or variable rate security - rate disclosed as of March 31, 2010.
|
(g)
|
Discount at purchase.
|
(h)
|
Fair valued security; valued in accordance with procedures approved by the Funds Board of
Trustees. As of March 31, 2010, these securities had a total value of $321,960 or 0.18% of net assets.
|
For Fund compliance purposes, the Funds 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 Fund 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 Financial Statements
www.cloughglobal.com
|
|
|
S
TATEMENT
OF
A
SSETS
& L
IABILITIES
|
|
19
|
March 31, 2010
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
Investments, at value (Cost - see below)
|
|
$
|
279,763,921
|
|
Cash
|
|
|
902,523
|
|
Deposit with broker for securities sold short and written options
|
|
|
13,836,366
|
|
Dividends receivable
|
|
|
808,252
|
|
Interest receivable
|
|
|
797,166
|
|
Receivable for investments sold
|
|
|
9,026,989
|
|
|
|
|
|
|
Total Assets
|
|
|
305,135,217
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
Foreign cash due to custodian (Cost $291,097)
|
|
|
291,050
|
|
Loan payable
|
|
|
89,800,000
|
|
Interest due on loan payable
|
|
|
6,940
|
|
Securities sold short (Proceeds $23,152,074)
|
|
|
27,855,630
|
|
Options written, at value (Premiums received $2,562,458)
|
|
|
88,310
|
|
Payable for investment purchased
|
|
|
10,478,123
|
|
Dividends payable - short sales
|
|
|
20,455
|
|
Interest payable - margin account
|
|
|
23,376
|
|
Accrued investment advisory fee
|
|
|
177,065
|
|
Accrued administration fee
|
|
|
72,091
|
|
Accrued trustees fee
|
|
|
5,435
|
|
|
|
|
|
|
Total Liabilities
|
|
|
128,818,475
|
|
|
|
|
|
|
|
|
Net Assets
|
|
$
|
176,316,742
|
|
|
|
|
|
|
Cost of Investments
|
|
$
|
248,060,598
|
|
|
|
|
|
|
|
|
Composition Of Net Assets:
|
|
|
|
|
Paid-in capital
|
|
$
|
189,295,706
|
|
Overdistributed net investment income
|
|
|
(352,131
|
)
|
Accumulated net realized loss on investments, options, securities sold short and foreign currency transactions
|
|
|
(42,119,636
|
)
|
Net unrealized appreciation in value of investments, securities sold short and translation of assets and liabilities denominated
in foreign currency
|
|
|
29,492,803
|
|
|
|
|
|
|
Net Assets
|
|
$
|
176,316,742
|
|
|
|
|
|
|
Shares of common stock outstanding of no par value, unlimited shares authorized
|
|
|
10,434,606
|
|
|
|
|
|
|
Net assets value per share
|
|
$
|
16.90
|
|
|
|
|
|
|
See Notes to Financial Statements
2010 - Annual Report
|
|
|
20
|
|
S
TATEMENT
OF
O
PERATIONS
|
|
For the Year Ended March 31, 2010
|
|
|
|
|
|
Investment Income:
|
|
|
|
|
Dividends (net of foreign withholding taxes $87,990)
|
|
$
|
5,168,993
|
|
Interest on investment securities (Net of foreign withholding taxes of $1,015)
|
|
|
3,507,112
|
|
Hypothecated securities income (See Note 6)
|
|
|
46,671
|
|
|
|
|
|
|
Total Income
|
|
|
8,722,776
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
Investment advisory fee
|
|
|
2,034,079
|
|
Administration fee
|
|
|
828,161
|
|
Interest on loan
|
|
|
1,299,923
|
|
Trustees fee
|
|
|
140,368
|
|
Dividend expense - short sales
|
|
|
681,094
|
|
Interest expense - margin account
|
|
|
267,476
|
|
Other expenses
|
|
|
165,640
|
|
|
|
|
|
|
Total Expenses
|
|
|
5,416,741
|
|
|
|
|
|
|
|
|
Net Investment Income
|
|
|
3,306,035
|
|
|
|
|
|
|
|
|
Net Realized Gain/(Loss) On:
|
|
|
|
|
Investment securities
|
|
|
(9,280,504
|
)
|
Securities sold short
|
|
|
(10,892,481
|
)
|
Written options
|
|
|
9,954,687
|
|
Foreign currency transactions
|
|
|
(92,011
|
)
|
Net change in unrealized appreciation/(depreciation) on investments, options, securities sold short and translation of assets and
liabilities denominated in foreign currencies
|
|
|
56,613,978
|
|
|
|
|
|
|
Net gain on investments, options, securities sold short and foreign currency transactions
|
|
|
46,303,669
|
|
|
|
|
|
|
Net Increase in Net Assets Attributable to Common Shares from Operations
|
|
$
|
49,609,704
|
|
|
|
|
|
|
See Notes to Financial Statements
www.cloughglobal.com
|
|
|
S
TATEMENTS
OF
C
HANGES
IN
N
ET
A
SSETS
|
|
21
|
March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
Year Ended
March 31,
2010
|
|
|
For the
Year Ended
March 31,
2009
|
|
Common Shareholders Operations:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
3,306,035
|
|
|
$
|
3,110,417
|
|
Net realized gain/(loss) from:
|
|
|
|
|
|
|
|
|
Investment securities
|
|
|
(9,280,504
|
)
|
|
|
(67,100,746
|
)
|
Securities sold short
|
|
|
(10,892,481
|
)
|
|
|
29,251,211
|
|
Written options
|
|
|
9,954,687
|
|
|
|
7,944,236
|
|
Foreign currency transactions
|
|
|
(92,011
|
)
|
|
|
(167,609
|
)
|
Net change in unrealized appreciation/(depreciation) on investments, options, securities sold short and translation of assets and
liabilities denominated in foreign currencies
|
|
|
56,613,978
|
|
|
|
(43,388,529
|
)
|
Distributions to Preferred Shareholders from:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
|
|
(544,694
|
)
|
|
|
|
|
|
|
|
|
|
Net Increase/(Decrease) in Net Assets Attributable to Common Shares from Operations
|
|
|
49,609,704
|
|
|
|
(70,895,714
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions To Common Shareholders:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(4,763,937
|
)
|
|
|
(8,507,063
|
)
|
Net realized gains on investments
|
|
|
|
|
|
|
(3,193,929
|
)
|
Tax return of capital
|
|
|
(6,714,129
|
)
|
|
|
(4,576,993
|
)
|
|
|
|
|
|
|
|
|
|
Net Decrease in Net Assets from Distributions
|
|
|
(11,478,066
|
)
|
|
|
(16,277,985
|
)
|
|
|
|
|
|
|
|
|
|
Net Increase/(Decrease) in Net Assets
|
|
|
|
|
|
|
|
|
Attributable to Common Shares
|
|
|
38,131,638
|
|
|
|
(87,173,699
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets Attributable To Common Shares:
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
138,185,104
|
|
|
|
225,358,803
|
|
|
|
|
|
|
|
|
|
|
End of period*
|
|
$
|
176,316,742
|
|
|
$
|
138,185,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Includes overdistributed net investment Income of:
|
|
$
|
(352,131
|
)
|
|
$
|
|
|
See Notes to Financial Statements
2010 - Annual Report
|
|
|
22
|
|
S
TATEMENT
OF
C
ASH
F
LOWS
|
|
For the Year Ended March 31, 2010
|
|
|
|
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
Net increase in net assets from operations
|
|
$
|
49,609,704
|
|
Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities:
|
|
|
|
|
Purchase of investment securities
|
|
|
(283,021,794
|
)
|
Proceeds from disposition of investment securities
|
|
|
272,131,570
|
|
Cover securities sold short transactions
|
|
|
144,549,618
|
|
Proceeds from securities sold short transactions
|
|
|
(150,478,576
|
)
|
Written options transactions
|
|
|
9,946,975
|
|
Proceeds from written options transactions
|
|
|
(197,828
|
)
|
Purchased options transactions
|
|
|
(24,792,364
|
)
|
Proceeds from purchased options transactions
|
|
|
2,195,183
|
|
Purchased options exercised
|
|
|
207,378
|
|
Net purchases of short-term investment securities
|
|
|
(20,087,330
|
)
|
Net realized loss from investment securities
|
|
|
9,280,504
|
|
Net realized loss on securities sold short
|
|
|
10,892,481
|
|
Net realized gain on written options
|
|
|
(9,954,687
|
)
|
Net change in unrealized appreciation on investment securities
|
|
|
(56,613,978
|
)
|
Premium amortization
|
|
|
190,685
|
|
Discount accretion
|
|
|
(132,821
|
)
|
Decrease in deposits with brokers for securities sold short and written options
|
|
|
19,990,843
|
|
Increase in dividends receivable
|
|
|
(395,706
|
)
|
Increase in interest receivable
|
|
|
(237,690
|
)
|
Increase in receivable for investments sold
|
|
|
(1,119,945
|
)
|
Increase in interest due on loan payable
|
|
|
3,917
|
|
Increase in payable for investments purchased
|
|
|
9,952,928
|
|
Decrease in dividends payable -short sales
|
|
|
(47,787
|
)
|
Increase in interest payable -margin account
|
|
|
15,222
|
|
Increase in accrued investment advisory fee
|
|
|
46,213
|
|
Increase in accrued administration fee
|
|
|
18,816
|
|
Increase in accrued trustees fees
|
|
|
411
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
(18,048,058
|
)
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
Proceeds from bank borrowing
|
|
|
29,600,000
|
|
Cash distributions paid
|
|
|
(11,478,066
|
)
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
18,121,934
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
73,876
|
|
|
|
|
|
|
|
|
Cash, beginning balance
|
|
$
|
537,597
|
|
Cash and foreign currency, ending balance
|
|
$
|
611,473
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
Cash paid during the period for interest from bank borrowing:
|
|
$
|
1,296,006
|
|
See Notes to Financial Statements
www.cloughglobal.com
I
NTENTIONALLY
L
EFT
B
LANK
|
|
|
24
|
|
F
INANCIAL
H
IGHLIGHTS
|
|
March 31, 2010
|
|
|
|
|
|
|
|
For the
Year Ended
March 31, 2010
|
|
Per Common Share Operating Performance
|
|
|
|
|
Net asset value beginning of period
|
|
$
|
13.24
|
|
|
|
|
|
|
Income from investment operations:
|
|
|
|
|
Net investment income
|
|
|
0.32
|
*
|
Net realized and unrealized gain/(loss) on investments
|
|
|
4.44
|
|
Distributions to Preferred Shareholders from:
|
|
|
|
|
Net investment income
|
|
|
|
|
|
|
|
|
|
Total from Investment Operations
|
|
|
4.76
|
|
|
|
|
|
|
|
|
Distributions to Common Shareholders from:
|
|
|
|
|
Net investment income
|
|
|
(0.46
|
)
|
Net realized gain
|
|
|
|
|
Tax return of capital
|
|
|
(0.64
|
)
|
|
|
|
|
|
Total Distributions to Common Shareholders
|
|
|
(1.10
|
)
|
|
|
|
|
|
|
|
Capital Share Transactions:
|
|
|
|
|
Common share offering costs charged to paidin capital
|
|
|
|
|
Preferred share offering costs and sales load charged to paidin capital
|
|
|
|
|
|
|
|
|
|
Total Capital Share Transactions
|
|
|
|
|
|
|
|
|
|
Net asset value end of period
|
|
$
|
16.90
|
|
|
|
|
|
|
Market price end of period
|
|
$
|
15.92
|
|
|
|
|
|
|
|
|
Total Investment Return Net Asset
Value
(1)
:
|
|
|
38.14
|
%
|
Total Investment Return Market
Price
(1)
:
|
|
|
61.32
|
%
|
|
|
Ratios and Supplemental Data
|
|
|
|
|
Net assets attributable to common shares, end of period (000)
|
|
$
|
176,317
|
|
Ratios to average net assets attributable to common shareholders:
|
|
|
|
|
Total
expenses
(2)
|
|
|
3.22
|
%
|
Total expenses excluding interest expense and dividends on short sales
expense
(2)
|
|
|
1.88
|
%
|
Net investment
income
(2)
|
|
|
1.96
|
%
|
Preferred share dividends
|
|
|
N/A
|
|
Portfolio turnover rate
|
|
|
115
|
%
|
|
|
Auction Market Preferred Shares (AMPS)
|
|
|
|
|
Liquidation value, end of period, including dividends on preferred shares (000)
|
|
|
N/A
|
|
Total shares outstanding (000)
|
|
|
N/A
|
|
Asset coverage per
share
(5)
|
|
|
N/A
|
|
Liquidation preference per share
|
|
|
N/A
|
|
Average market value per
share
(6)
|
|
|
N/A
|
|
^
|
As approved by the Board of Trustees of the Fund, the fiscal year-end changed from May 31 to March 31, effective March 15, 2006.
|
*
|
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 closing on the last day of each period reported. Total investment return on net asset value excludes a sales load of $0.90 per share for the period, effectively reducing the net asset value at issuance from $20.00 to $19.10.
Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Funds dividend reinvestment plan. Total investment returns do not reflect brokerage commissions on the purchase or
sale of the Funds common shares. Total investment returns for less than a full year are not annualized. Past performance is not a guarantee of future results.
|
www.cloughglobal.com
|
|
|
F
INANCIAL
H
IGHLIGHTS
|
|
25
|
March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the
Year Ended
March 31, 2009
|
|
|
For the
Year Ended
March 31, 2008
|
|
|
For the
Year Ended
March 31, 2007
|
|
|
For the Period
June 1, 2005 to
March 31, 2006^
|
|
|
For the Period
July 28, 2004
(inception) to
May 31, 2005
|
|
$
|
21.60
|
|
|
$
|
22.61
|
|
|
$
|
24.42
|
|
|
$
|
20.78
|
|
|
$
|
19.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.30
|
*
|
|
|
0.46
|
*
|
|
|
1.79
|
|
|
|
0.92
|
|
|
|
0.93
|
|
|
(7.05
|
)
|
|
|
1.47
|
|
|
|
(0.98
|
)
|
|
|
4.75
|
|
|
|
1.99
|
|
|
(0.05
|
)
|
|
|
(0.49
|
)
|
|
|
(0.47
|
)
|
|
|
(0.31
|
)
|
|
|
(0.14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6.80
|
)
|
|
|
1.44
|
|
|
|
0.34
|
|
|
|
5.36
|
|
|
|
2.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.81
|
)
|
|
|
(1.72
|
)
|
|
|
(1.44
|
)
|
|
|
(1.05
|
)
|
|
|
(0.93
|
)
|
|
(0.31
|
)
|
|
|
(0.73
|
)
|
|
|
(0.71
|
)
|
|
|
(0.67
|
)
|
|
|
|
|
|
(0.44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.56
|
)
|
|
|
(2.45
|
)
|
|
|
(2.15
|
)
|
|
|
(1.72
|
)
|
|
|
(0.93
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13.24
|
|
|
$
|
21.60
|
|
|
$
|
22.61
|
|
|
$
|
24.42
|
|
|
$
|
20.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10.68
|
|
|
$
|
18.90
|
|
|
$
|
20.82
|
|
|
$
|
23.99
|
|
|
$
|
22.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(32.20%
|
)
|
|
|
7.10
|
%
|
|
|
1.59
|
%
|
|
|
25.99
|
%
|
|
|
13.89
|
%
|
|
(37.50%
|
)
|
|
|
1.77
|
%
|
|
|
(4.77
|
%)
|
|
|
13.85
|
%
|
|
|
18.24
|
%
|
|
|
|
|
|
$
|
138,185
|
|
|
$
|
225,359
|
|
|
$
|
235,962
|
|
|
$
|
248,354
|
|
|
$
|
205,260
|
|
|
|
|
|
|
|
3.35
|
%
|
|
|
2.10
|
%
|
|
|
2.02
|
%
|
|
|
2.07
|
%
(3)
|
|
|
1.89
|
%
(3)
|
|
|
|
|
|
|
2.76
|
%
|
|
|
1.73
|
%
|
|
|
1.75
|
%
|
|
|
1.64
|
%
(3)
|
|
|
1.37
|
%
(3)
|
|
1.73
|
%
|
|
|
2.02
|
%
|
|
|
2.63
|
%
|
|
|
2.73
|
%
(3)
|
|
|
1.23
|
%
(3)
|
|
0.30
|
%
|
|
|
2.14
|
%
|
|
|
2.10
|
%
|
|
|
1.62
|
%
(3)
|
|
|
0.82
|
%
(3)
|
|
233
|
%
|
|
|
136
|
%
|
|
|
187
|
%
|
|
|
182
|
%
|
|
|
236
|
%
|
|
|
|
|
|
|
|
(4)
|
|
$
|
95,052
|
|
|
$
|
95,042
|
|
|
$
|
95,051
|
|
|
$
|
95,050
|
|
|
|
(4)
|
|
|
3.8
|
|
|
|
3.8
|
|
|
|
3.8
|
|
|
|
3.8
|
|
|
|
(4)
|
|
$
|
84,319
|
|
|
$
|
87,106
|
|
|
$
|
90,370
|
|
|
$
|
79,029
|
|
|
|
(4)
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
|
(4)
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
(2)
|
Ratios do not reflect dividend payments to preferred shareholders.
|
(4)
|
All series of AMPS issued by the Fund were fully redeemed, at par value, on May 22, 2008.
|
(5)
|
Calculated by subtracting the Funds total liabilities (excluding Preferred Shares) from the
Funds total assets and dividing by the number of preferred shares outstanding.
|
(6)
|
Based on monthly prices.
|
See Notes to Financial Statements
2010 - Annual Report
|
|
|
26
|
|
N
OTES
TO
F
INANCIAL
S
TATEMENTS
|
|
March 31, 2010
|
1. SIGNIFICANT ACCOUNTING AND OPERATING POLICIES
Clough Global Allocation Fund (the Fund) is a closed-end management investment company that was organized under the laws of the state of
Delaware by an Amended Agreement and Declaration of Trust dated April 27, 2004. The Fund is a non-diversified series with an investment objective to provide a high level of total return. The Declaration of Trust provides that the Trustees may
authorize separate classes of shares of beneficial interest.
Security Valuation:
The net asset value per share of the Fund is
determined no less frequently than daily, on each day that the New York Stock Exchange (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 the Fund is not open for business. As a result, the Funds net asset value may change at times when it is not possible to purchase or sell shares of the Fund. Securities held by the 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. 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 at the mean between the latest available bid and asked prices. As authorized by the Trustees, debt securities (other than short-term
obligations) may be valued on the basis of valuations furnished by a pricing service which determines valuations based upon market transactions for normal, institutional-size trading units of securities. Short-term obligations maturing within 60
days are valued at amortized cost, which approximates value, unless the Trustees determine that under particular circumstances such method does not result in fair value. Over-the-counter options are valued at the mean between bid and asked prices
provided by dealers. Financial futures contracts listed on commodity exchanges and exchange-traded options are valued at closing settlement prices. Securities for which there is no such quotation or valuation and all other assets are valued at fair
value in good faith by or at the direction of the Trustees.
Foreign Securities:
The Fund may invest a portion of its assets in foreign
securities. In the event that the 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 the 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
included with the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Funds Statement of Operations.
A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The 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 the Fund include the potential inability of the counterparty to meet
the terms of the contract.
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27
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March 31, 2010
|
|
The net
U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using prevailing forward foreign currency exchange rates. Unrealized appreciation
and depreciation on foreign currency contracts are reported in the Funds Statement of Assets and Liabilities as a receivable or a payable and in the Funds Statement of Operations with the change in unrealized appreciation or
depreciation. There were no outstanding foreign currency contracts for the Fund as of March 31, 2010.
The 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 Statement of Operations.
Fair Valuation:
If the price of a security is unavailable in accordance with the Funds 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 pursuant to procedures adopted by the Board of Trustees. For this purpose, fair value is the price that the 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 the Fund could actually
receive on a sale of the security. As of March 31, 2010, securities which have been fair valued represented 0.18% of the Funds net assets.
A threetier 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 entitys 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 the Funds investments as of the reporting period end. These inputs are categorized in the following hierarchy under applicable financial accounting standards:
|
|
|
|
|
Level 1
|
|
-
|
|
quoted prices in active markets for identical investments
|
|
|
|
Level 2
|
|
-
|
|
Significant observable inputs (including quoted prices for similar investments, interest rates, prepayments speeds, credit risk, etc.)
|
|
|
|
Level 3
|
|
-
|
|
Significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments)
|
2010 - Annual Report
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28
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March 31, 2010
|
The following is a summary of the inputs used as of March 31, 2010 in valuing the Funds
investments carried at value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in Securities at Value*
|
|
Level 1
|
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Common Stocks
|
|
$
|
198,571,380
|
|
|
$
|
321,960
|
|
$
|
|
|
$
|
198,893,340
|
|
Exchange Traded Funds
|
|
|
6,877,357
|
|
|
|
|
|
|
|
|
|
6,877,357
|
|
Corporate Bonds
|
|
|
|
|
|
|
43,831,613
|
|
|
|
|
|
43,831,613
|
|
Asset/Mortgage Backed Securities
|
|
|
|
|
|
|
1,010,220
|
|
|
|
|
|
1,010,220
|
|
Government & Agency Obligations
|
|
|
7,006,128
|
|
|
|
607,310
|
|
|
|
|
|
7,613,438
|
|
Purchased Options
|
|
|
461,080
|
|
|
|
|
|
|
|
|
|
461,080
|
|
Short-Term Investments
|
|
|
21,076,873
|
|
|
|
|
|
|
|
|
|
21,076,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
233,992,818
|
|
|
$
|
45,771,103
|
|
$
|
|
|
$
|
279,763,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Instruments*
|
|
|
|
|
|
|
|
|
|
|
Options Written
|
|
$
|
(88,310
|
)
|
|
$
|
|
|
$
|
|
|
$
|
(88,310
|
)
|
Securities Sold Short
|
|
|
(27,855,630
|
)
|
|
|
|
|
|
|
|
|
(27,855,630
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
(27,943,940
|
)
|
|
$
|
|
|
$
|
|
|
$
|
(27,943,940
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
For detailed Industry descriptions, see the accompanying Statement of Investments.
|
All securities of the Fund were valued using either Level 1 or Level 2 inputs during the period ended March 31, 2010. Thus, a reconciliation of
assets in which significant unobservable inputs (Level 3) were used is not applicable for this Fund.
Options:
The Fund may
purchase or write (sell) put and call options. One of the risks associated with purchasing an option among others, is that the Fund pays a premium whether or not the option is exercised. Additionally, the Fund bears the risk of loss of premium and
change in market value should the counterparty not perform under the contract. Put and call options purchased are accounted for in the same manner as portfolio securities. 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.
When
the Fund writes an option, an amount equal to the premium received by the 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 the Fund on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain,
or, if the premium is less than the amount paid for the closing purchase transaction, as a realized 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
the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The 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 and purchased options are non-income producing securities.
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29
|
March 31, 2010
|
|
Written option activity for the year ended March 31, 2010 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Written Call Options
|
|
Written Put Options
|
|
|
|
Contracts
|
|
Premiums
|
|
Contracts
|
|
|
Premiums
|
|
Outstanding, March 31, 2009
|
|
|
|
$
|
|
|
1,000
|
|
|
$
|
2,767,999
|
|
Positions opened
|
|
930
|
|
|
452,200
|
|
6,810
|
|
|
|
9,494,773
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
|
|
|
|
(6,190
|
)
|
|
|
(9,972,669
|
)
|
Closed
|
|
|
|
|
|
|
(550
|
)
|
|
|
(179,845
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, March 31, 2010
|
|
930
|
|
$
|
452,200
|
|
1,070
|
|
|
$
|
2,110,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Value, March 31, 2010
|
|
|
|
$
|
29,235
|
|
|
|
|
$
|
59,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short Sales:
The Fund may sell a security it does not own in anticipation of a decline in the fair value of that
security. When the 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 the Fund sold the security short, or a loss,
unlimited in size, will be recognized upon the termination of the short sale.
Derivatives Instruments and Hedging Activities:
The Fund
may write or purchase option contracts to adjust risk and return of their overall investment positions. The following tables disclose the amounts related to the Funds use of derivative instruments and hedging activities.
The effect of derivatives instruments on the Balance Sheet as of March 31, 2010:
|
|
|
|
|
|
|
|
|
Asset Derivatives
|
Derivatives not accounted for as
hedging instruments
|
|
Balance
Sheet
Location
|
|
Contracts
|
|
Fair Value
|
|
|
|
Equity Contracts
|
|
Investments, at value
|
|
2,000
|
|
$461,080
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
$461,080
|
|
|
|
|
|
|
|
|
|
Liability Derivatives
|
Derivatives not accounted for as
hedging instruments
|
|
Balance Sheet
Location
|
|
Contracts
|
|
Fair Value
|
|
|
|
Equity Contracts
|
|
Options written, at value
|
|
2,000
|
|
$88,310
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
$88,310
|
|
|
|
|
|
|
|
The number of options contracts held at March 31, 2010 is
representative of options contracts activity during the year ended March 31, 2010.
The effect of derivatives instruments on the
Statement of Operations for the year ended March 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
Derivatives not
accounted for as
hedging instruments
|
|
Location of Gain/(Loss)
On Derivatives Recognized
in Income
|
|
Realized
Gain/(Loss)
On Derivatives
Recognized
in
Income
|
|
|
Change in Unreal-
ized
Gain/(Loss)
On Derivatives
Recognized
in
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Contracts
|
|
Net realized gain (loss) on Investment securities and Written options/Net change in
unrealized appreciation (depreciation) on investments, options, securities sold short and translation of
assets and liabilities denominated
in foreign
currencies
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(10,129,111
|
)
|
|
$
|
(2,349,803
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
$
|
(10,129,111
|
)
|
|
$
|
(2,349,803
|
)
|
|
|
|
|
|
|
|
|
|
|
|
2010 - Annual Report
|
|
|
30
|
|
N
OTES
TO
F
INANCIAL
S
TATEMENTS
(
CONTINUED
)
|
|
March 31, 2010
|
Income Taxes:
The Funds 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.
The Fund files income tax returns in the U.S. federal jurisdiction and Colorado. The statue of limitations on the Funds federal and state tax
filings remains open for the fiscal years ended March 31, 2010, March 31, 2009, March 31, 2008, and March 31, 2007.
Distributions to Shareholders:
The Fund intends to make a level dividend distribution each quarter to Common Shareholders after payment of
interest on any outstanding borrowings or dividends on any outstanding preferred shares. The level dividend rate may be modified by the Board of Trustees from time to time. Any net capital gains earned by the Fund are distributed at least annually
to the extent necessary to avoid federal income and excise taxes. Distributions to shareholders are recorded by the Fund on the ex-dividend date. The 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 thereunder permitting the Fund to make periodic distributions of long-term capital gains, provided that the
distribution policy of the fund with respect to its Common Shares calls for periodic (e.g. quarterly/monthly) distributions in an amount equal to a fixed percentage of the Funds average net asset value over a specified period of time or market
price per common share at or about the time of distributions or pay-out of a level dollar amount. At this time, the Fund has not implemented a managed distribution plan as permitted under the exemption.
Securities Transactions and Investment Income:
Investment security transactions are accounted for as of trade date. Dividend income is recorded on
the ex-dividend date. Certain dividend income from foreign securities will be recorded as soon as the 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 accrued as earned. 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.
Use of Estimates:
The Funds
financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. This requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period.
Credit Risk:
Credit risk is the risk that a fixed-income securitys issuer will be unable or unwilling to meet its financial obligations
(e.g., may not be able to make principal and/ or interest payments when they are due or otherwise default on other financial terms) and/or may go bankrupt. The Fund may lose money if the issuer or guarantor of a fixed-income security is unable or
unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations.
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CONTINUED
)
|
|
31
|
March 31, 2010
|
|
Credit risk also relates to the risk that a counterparty will be unable or unwilling to meet commitments it
has entered into with the Fund (sometimes described as counterparty risk). All securities transactions are cleared through and held in custody by the Funds prime brokers, which results in concentration of counterparty risk. The Fund is subject
to such risk to the extent that these institutions may be unable to fulfill their obligations either to return the Funds securities or repay amounts owed. This risk, however, is mitigated by the prime brokers rules and regulations
governing their business activities, including maintenance of net capital requirements and segregation of customers funds and securities from holdings of the firm.
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.
The tax character of the distributions paid by the Fund during the periods
ended March 31, 2010 and March 31, 2009 were as follows:
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
Distributions paid from:
|
|
|
|
|
|
|
Ordinary Income
|
|
$
|
4,763,937
|
|
$
|
9,051,757
|
Long-Term Capital Gain
|
|
|
|
|
|
3,193,929
|
Return of Capital
|
|
|
6,714,129
|
|
|
4,576,993
|
|
|
|
|
|
|
|
Total
|
|
$
|
11,478,066
|
|
$
|
16,822,679
|
|
|
|
|
|
|
|
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 period ended March 31, 2010,
certain differences were reclassified. The Fund decreased accumulated net investment loss by $1,105,771, increased accumulated net realized loss by $1,105,639 and decreased paid in capital by $132. These differences were primarily due to the
differing tax treatment of certain investments.
At March 31, 2010, the Fund had available for tax purposes unused capital loss
carryovers of $10,763,701 and $25,799,419, expiring March 31, 2017 and March 31, 2018, respectively.
As of March 31, 2010, the
components of distributable earnings on a tax basis were as follows:
|
|
|
|
|
Undistributed net investment income
|
|
$
|
|
|
Accumulated net realized loss
|
|
|
(42,225,819
|
)
|
Unrealized appreciation
|
|
|
26,771,336
|
|
Other Cumulative Effect of Timing Differences
|
|
|
2,475,519
|
|
|
|
|
|
|
Total
|
|
$
|
(12,978,964
|
)
|
|
|
|
|
|
2010 - Annual Report
|
|
|
32
|
|
N
OTES
TO
F
INANCIAL
S
TATEMENTS
(
CONTINUED
)
|
|
March 31, 2010
|
Net unrealized appreciation/depreciation of investments based on federal tax cost as of March 31, 2010,
were as follows:
|
|
|
|
|
Gross appreciation (excess of value over tax cost)
|
|
$
|
41,335,799
|
|
Gross depreciation (excess of tax cost over value)
|
|
|
(12,298,479
|
)
|
Net depreciation (excess of value over tax cost) of foreign currency and derivatives
|
|
|
(2,265,984
|
)
|
|
|
|
|
|
Net unrealized appreciation
|
|
$
|
26,771,336
|
|
|
|
|
|
|
Cost of investments for income tax purposes
|
|
$
|
250,782,065
|
|
|
|
|
|
|
Post October Loss:
Under current tax law, capital and currency losses realized after October 31 may be deferred
and treated as occurring on the first day of the following fiscal year. For the fiscal year ended March 31, 2010, the Fund elected to defer capital losses occurring between November 1, 2009 and March 31, 2010 in the amount of
$5,662,699 and currency losses of $85,709 respectively.
3. CAPITAL TRANSACTIONS
Common Shares:
There are an unlimited number of no par value common shares of beneficial interest authorized. Of the 10,434,606 common shares
outstanding on March 31, 2010, ALPS Fund Services (ALPS) owned 5,787 shares.
Transactions in common shares were as follows:
|
|
|
|
|
|
|
For the Year
Ended
March 31, 2010
|
|
For the Year Ended
March
31, 2009
|
|
|
|
Common shares outstanding - beginning of period
|
|
10,434,606
|
|
10,434,606
|
Common shares issued as reinvestment of dividends
|
|
|
|
|
|
|
|
|
|
Common shares outstanding - end of period
|
|
10,434,606
|
|
10,434,606
|
|
|
|
|
|
Preferred Shares:
In April 2008 the Fund announced its intent
to redeem all outstanding shares of its Auction Market Preferred Shares (AMPS). Proper notice was sent to AMPS holders on or before May 22, 2008, and all outstanding AMPS issued by the Fund were redeemed at par, in their entirety,
pursuant to their terms.
The Fund obtained alternative financing to provide new funding in order to redeem the AMPS and provide up to 33%
leverage to the Fund going forward. The Funds Board of Trustees approved the refinancing in April 2008. See Note 6 Leverage, for further information on the borrowing facility used by the Fund during the year ended, and as of,
March 31, 2010.
4. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term securities, for the year ended March 31, 2010 aggregated $282,982,538 and
$272,131,570 respectively. Purchases and sales of U.S. government and agency securities, other than short-term securities, for the year ended March 31, 2010 aggregated $8,402,040 and $20,341,031, respectively.
www.cloughglobal.com
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OTES
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INANCIAL
S
TATEMENTS
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CONTINUED
)
|
|
33
|
March 31, 2010
|
|
5. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS
Clough Capital Partners L.P. (Clough) serves as the Funds investment adviser pursuant to an Investment Advisory Agreement with the Fund.
As compensation for its services to the Fund, Clough receives an annual investment advisory fee of 0.70% based on the Funds average daily total assets, computed daily and payable monthly. ALPS serves as the Funds administrator pursuant
to an Administration, Bookkeeping and Pricing Services Agreement with the Fund. As compensation for its services to the Fund, ALPS receives an annual administration fee of 0.285% based on the Funds average daily total assets, computed daily
and payable monthly. ALPS will pay all expenses incurred by the Fund, with the exception of advisory fees, trustees fees, portfolio transaction expenses, litigation expenses, taxes, cost of preferred shares, expenses of conducting repurchase
offers for the purpose of repurchasing fund shares, and extraordinary expenses.
Both Clough and ALPS are considered to be
affiliates of the Fund as defined in the 1940 Act.
6. LEVERAGE
In January 2009, the Fund entered into a Committed Facility Agreement (the Agreement) with BNP Paribas Prime Brokerage, Inc. (BNP)
that allowed the Fund to borrow up to an initial limit of $60,200,000 (the Initial Limit). During the year ended March 31, 2010, Fund and BNP amended the Agreement to increase the borrowing limit on several occasions, subject to the
applicable asset coverage requirements of Section 18 of the 1940 Act. In April, June and September of 2009 the Fund borrowed additional amounts of $11,000,000, $11,000,000, and $7,600,000, respectively. Borrowings under the Agreement are
secured by assets of the Fund. Interest is charged at the three month LIBOR (London Inter-bank Offered Rate) plus 1.10% on the amount borrowed and 1.00% on the undrawn balance. The 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. The Arrangement fee paid for
the year ended March 31, 2010 totaled $149,250 and is included in Other expenses in the Statement of Operations. For the year ended March 31, 2010, the average amount borrowed under the agreement and the average interest rate for the
amount borrowed were $83,909,589 and 1.55% respectively. As of March 31, 2010, the amount of such outstanding borrowings is $89,800,000. The interest rate applicable to the borrowings on March 31, 2010 was 1.39%.
In addition, BNP has the ability to reregister the collateral 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 (Hypothecated Securities) with all attendant rights of ownership. The Fund can recall any Hypothecated Securities upon demand and without condition and BNP is obligated to return such security or
equivalent security to the Fund the lesser of five days or the standard market settlement time in the principal market in which the Hypothecated Securities are traded after such request. If the Fund recalls a Hypothecated Security in connection with
a sales transaction and BNP fails to return the Hypothecated Securities or equivalent securities in a timely fashion, BNP shall remain liable to the Funds custodian for the ultimate delivery of such Hypothecated Securities or equivalent
securities to the executing broker for the sales transaction and for any buy-in costs that the executing broker may impose with respect to the failure to deliver. If Hypothecated
2010 - Annual Report
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|
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34
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|
N
OTES
TO
F
INANCIAL
S
TATEMENTS
(
CONTINUED
)
|
|
March 31, 2010
|
Securities are not returned by BNP to the Fund by the deadline to exercise a corporate action (conversion, sub-division, consolidation, etc.) with respect to such Hypothecated Securities, the
Fund can request, and BNP shall, to the extent commercially reasonable under the circumstances, return equivalent securities in such form that will arise if the right had been exercised. The 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 Hypothecated Securities against any amounts owed to BNP under the Agreement. The 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.
As of March 31, 2010, the value of securities on loan was $ 10,356,232.
The Board of Trustees has approved the Agreement. No violations
of the Agreement have occurred during the fiscal year ended March 31, 2010.
The Fund receives income from BNP based on the value of the
hypothecated securities. This income is recorded as Hypothecated Securities Income on the Statement of Operations. The interest incurred on borrowed amounts is recorded as Interest on Loan in the Statement of Operations, a part of Total Expenses.
Total Expenses are used to calculate some of the ratios shown in the Financial Highlights. This differs from the way the dividends paid on the AMPS were recorded in prior years as those amounts were excluded from Total Expenses on the Statement of
Operations. This change in presentation, based on accounting principles generally accepted in the U.S., can cause the ratio of expenses to average net assets (as shown in the Financial Highlights) to increase compared to prior fiscal years. This is
a reflection of how the information is presented on the financial statements, rather than a true increase in the cost of leverage (financing vs. the AMPS now redeemed).
7. OTHER
The Independent Trustees of
the Fund receive a quarterly retainer of $3,500 and an additional $1,500 for each board meeting attended. The Chairman of the Board of Trustees receives a quarterly retainer of $4,200 and an additional $1,800 for each board meeting attended. The
Chairman of the Audit Committee receives a quarterly retainer of $3,850 and an additional $1,650 for each board meeting attended.
8.
SUBSEQUENT EVENTS
Management has evaluated whether any events or transactions occurred subsequent to March 31, 2010 through the date
of issuance of the Funds financial statements, and determined that there were no other material events or transactions that would require recognition or disclosure in the Funds financial statements.
www.cloughglobal.com
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D
IVIDEND
R
EINVESTMENT
P
LAN
|
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35
|
March 31, 2010 (Unaudited)
|
|
Unless the registered owner of Common Shares elects to receive cash by contacting The Bank of New York
Mellon (the Plan Administrator or BNY Mellon), all dividends declared on Common Shares will be automatically reinvested by the Plan Administrator for shareholders in the Funds 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 BNY Mellon as dividend disbursing agent. You may elect not to participate in the Plan and to receive all dividends in cash by contacting BNY Mellon, 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 reinvest 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 Shareholders Common
Shares are registered. Whenever the Fund declares a dividend or other distribution (together, a Dividend) payable in cash, nonparticipants 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 the Fund (Newly Issued Common Shares) or (ii) by purchase of outstanding Common Shares on the open market (OpenMarket 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 participants 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 OpenMarket 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
exdividend 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 OpenMarket Purchases. If, before the
Plan Administrator has completed its OpenMarket 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 OpenMarket
Purchases, the Plan
2010 - Annual Report
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36
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|
D
IVIDEND
R
EINVESTMENT
P
LAN
(
CONTINUED
)
|
|
March 31, 2010 (Unaudited)
|
provides that if the Plan Administrator is unable to invest the full Dividend amount in OpenMarket 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 OpenMarket 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 shareholders 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 the Fund. However, each participant will pay a pro rata share of
brokerage commissions incurred in connection with OpenMarket 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.
The 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, the 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, The Bank of New York Mellon,
101 Barclay Street, New York, New York 10286, 11E, Transfer Agent Services, 800 4338191.
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A
DDITIONAL
I
NFORMATION
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37
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March 31, 2010 (Unaudited)
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F
UND
P
ROXY
V
OTING
P
OLICIES
& P
ROCEDURES
March 31, 2010 (unaudited)
Fund 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 the Fund voted proxies relating to portfolio securities held by the Fund for the period ended June 30, 2009, are available without charge, upon request, by contacting the Fund at
1-877-256-8445 and on the Commissions website at http://www.sec.gov.
P
ORTFOLIO
H
OLDINGS
March 31, 2010 (unaudited)
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form NQ
within 60 days after the end of the period. Copies of the Funds Form NQ are available without a charge, upon request, by contacting the Fund at 18772568445 and on the Commissions website at http:// www.sec.gov.
You may also review and copy Form NQ at the Commissions Public Reference Room in Washington, D.C. For more information about the operation of the Public Reference Room, please call the Commission at 1800SEC0330.
N
OTICE
March 31, 2010 (unaudited)
Notice is hearby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may purchase at market
prices from time to time shares of its common stock in the open market.
T
AX
D
ESIGNATIONS
March 31, 2010 (Unaudited)
The Fund hereby designates the following as a percentage of taxable ordinary income distributions, or up to the maximum amount allowable, for the fiscal
year ended March 31, 2010:
|
|
|
|
Corporate Dividends Received Deduction
|
|
21.94
|
%
|
|
|
|
|
Qualified Dividend Income
|
|
26.29
|
%
|
|
|
|
|
2010 - Annual Report
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38
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T
RUSTEES
& O
FFICERS
|
|
September 30, 2009 (Unaudited)
|
Information pertaining to the Trustees and Officers of the Trust is set forth below. Trustees deemed to be interested persons of the Trust as defined in
the 1940 Act are referred to as Interested Trustees. Additional information about the Trustees is available, without charge, upon request by contacting the Fund at 18772568445.
NON-INTERESTED TRUSTEES
|
|
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|
Name, Age & Address
|
|
Position(s)
Held with
Fund
|
|
Length of
Time Served
|
|
Principal Occupation(s)
During Past 5 Years
|
|
Number of
Portfolios in
Fund
Complex
Overseen by
Trustee
(1)
|
|
Other Directorships
Held by Trustee
During the Past
Five Years
|
|
|
|
|
|
|
Andrew C.
Boynton
Age, 54
Carroll School
of Management
Boston College
Fulton Hall 510
140 Comm. Ave.
Chestnut Hill,
MA 02467
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|
Trustee
|
|
Since
March 23, 2005
|
|
Mr. Boynton is currently the Dean of the Carroll School of Management at Boston College. Mr. Boynton served as Professor of Strategy from 1996 to 2005 and Program Director of the
Executive MBA Program from 1998 to 2005 at International Institute of Management Development, Lausanne, Switzerland.
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3
|
|
Mr. Boynton is also Trustee of the Clough Global Equity Fund and Clough Global Opportunities Fund.
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Robert L.
Butler
Age, 69
1290 Broadway
Ste. 1100
Denver, CO
80203
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|
Trustee
Chairman
|
|
Since Inception
Since
July 12, 2006
|
|
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.
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|
3
|
|
Mr. Butler is
also Trustee and
Chairman of the
Clough
Global
Equity Fund and
Clough Global
Opportunities Fund.
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www.cloughglobal.com
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T
RUSTEES
& O
FFICERS
(
CONTINUED
)
|
|
39
|
March 31, 2010 (Unaudited)
|
|
NON-INTERESTED TRUSTEES
|
|
|
|
|
|
|
|
|
|
|
Name, Age
& Address
|
|
Position(s)
Held with
Fund
|
|
Length of
Time Served
|
|
Principal Occupation(s)
During Past 5 Years
|
|
Number
of
Portfolios in
Fund
Complex
Overseen by
Trustee
(1)
|
|
Other Directorships
Held by Trustee
During the Past
Five Years
|
|
|
|
|
|
|
Adam D. Crescenzi
Age, 67
1290 Broadway
Ste. 1100
Denver, CO
80203
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|
Trustee
|
|
Since Inception
|
|
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 is retired from CSC Index as Executive Vice-President of
Management Consulting Services.
|
|
3
|
|
Mr. Crescenzi is also Trustee and Chairman of the Nominating Committee of the Clough Global Equity Fund and Clough Global Opportunities Fund.
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|
|
|
|
|
|
John F. Mee
Age, 66
1290 Broadway
Ste. 1100
Denver, CO
80203
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|
Trustee
|
|
Since Inception
|
|
Mr. Mee is an attorney practicing commercial law, family law, products 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.
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|
3
|
|
Mr. Mee is also Trustee of the Clough Global Equity Fund and Clough Global Opportunities Fund.
|
(1)
|
The Fund Complex for all Trustees, except Mr. Rutledge, consists of the Clough Global Allocation Fund, Clough Global Equity Fund and Clough Global Opportunities
Fund. The Fund Complex for Mr. Rutledge 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
|
2010 - Annual Report
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40
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|
T
RUSTEES
& O
FFICERS
(
CONTINUED
)
|
|
March 31, 2010 (Unaudited)
|
NON-INTERESTED TRUSTEES
|
|
|
|
|
|
|
|
|
|
|
Name, Age
& Address
|
|
Position(s)
Held with
Fund
|
|
Length of
Time Served
|
|
Principal Occupation(s)
During Past 5 Years
|
|
Number
of
Portfolios in
Fund
Complex
Overseen by
Trustee
(1)
|
|
Other Directorships
Held by Trustee
During the Past
Five Years
|
|
|
|
|
|
|
Richard C. Rantzow
Age, 71
1290 Broadway
Ste. 1100
Denver, CO
80203
|
|
Trustee
Vice Chairman
|
|
Since Inception
Since
July 12, 2006
|
|
Mr. Rantzow has over 30 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. Rantzows
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.
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|
3
|
|
Mr. Rantzow is also a Trustee and Chairman of the Audit Committee of the Clough Global Equity Fund, Clough Global Opportunities Fund and
Liberty All-Star Equity Fund and Director and Chairman of the Audit Committee of the Liberty All-Star Growth Fund, Inc. Mr. Rantzow was from 1992 to 2005 Chairman of the First Funds Family of mutual funds.
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|
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|
Jerry G. Rutledge
Age,
65
1290 Broadway
Ste. 1100
Denver, CO
80203
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|
Trustee
|
|
Since Inception
|
|
Mr. Rutledge is the President and owner of Rutledges 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 until 2009.
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|
4
|
|
Mr. Rutledge is also a Trustee of the Clough Global Equity Fund, Clough Global Opportunities Fund and Financial Investor Trust.
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T
RUSTEES
& O
FFICERS
(
CONTINUED
)
|
|
41
|
March 31, 2010 (Unaudited)
|
|
INTERESTED TRUSTEES
|
|
|
|
|
|
|
|
|
|
|
Name, Age
& Address
|
|
Position(s)
Held with
Fund
|
|
Length of
Time Served
|
|
Principal Occupation(s)
During Past 5 Years
|
|
Number
of
Portfolios in
Fund
Complex
Overseen by
Trustee
(1)
|
|
Other Directorships
Held by Trustee
During the Past
Five Years
|
|
|
|
|
|
|
Edmund J. Burke
Age, 49
1290 Broadway
Ste. 1100
Denver, CO
80203
|
|
Principal Executive Officer and President
Trustee
|
|
Since Inception
Since
July 12, 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. Because of his position with ALPS, Mr. Burke is deemed an affiliate of the Fund as defined under the 1940
Act.
|
|
3
|
|
Mr. Burke is also a Trustee and Principal Executive Officer/President of the Clough Global Equity Fund and Clough Global Opportunities Fund.
Mr. Burke is also Trustee, Chairman and President of Financial Investors Trust, Trustee and Vice President of the Liberty All-Star Equity Fund and Director and Vice-President of the Liberty All-Star Growth Fund, Inc.
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|
|
|
|
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|
James E. Canty
Age, 48
One Post Office
Square 40th Floor
Boston, MA
02109
|
|
Trustee
|
|
Since Inception
|
|
Mr. Canty is a founding partner, Chief Financial Officer and General Counsel for Clough. Because of his affiliation with Clough, Mr. Canty is considered an interested
Trustee of the Fund. Mr. Canty is currently a member of the Board of Directors of Clough Offshore Fund, Ltd.
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|
3
|
|
Mr. Canty is also a Trustee of the Clough Global Equity Fund and Clough Global Opportunities Fund.
|
(1)
|
The Fund Complex for all Trustees, except Mr. Rutledge, consists of the Clough Global Allocation Fund, Clough Global Equity Fund and Clough Global Opportunities
Fund. The Fund Complex for Mr. Rutledge 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
|
2010 - Annual Report
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42
|
|
T
RUSTEES
& O
FFICERS
(
CONTINUED
)
|
|
March 31, 2010 (Unaudited)
|
OFFICERS
|
|
|
|
|
|
|
Name, Age
and Address
|
|
Position(s)
Held with
Fund
|
|
Length of Time Served
|
|
Principal Occupation(s) During Past 5 Years
|
|
|
|
|
Jeremy O. May
Age, 40
1290 Broadway
Ste. 1100
Denver, CO
80203
|
|
Treasurer
|
|
Since Inception
|
|
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 FTAM Distributors, Inc. Because of his positions with ALPS, Mr. May is deemed an affiliate of the Fund as defined under the 1940 Act. Mr. May is also the Treasurer of the Clough Global Equity Fund, Clough Global Opportunities
Fund, 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 ALPS Variable Insurance Trust and Reaves
Utility Income Fund. Mr. May is currently on the Board of Directors of the University of Colorado Foundation.
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|
|
Erin E. Douglas
Age, 33
1290 Broadway
Ste. 1100
Denver, CO
80203
|
|
Secretary
|
|
Since Inception
|
|
Ms. Douglas is Vice-President and Senior Associate Counsel of ALPS and Vice-President of ALPS Advisors, Inc., ALPS Distributors, Inc., and
FTAM Distributors, Inc. Ms. Douglas joined ALPS as Associate Counsel in 2003. Ms. Douglas is deemed an affiliate of the Fund as defined under the 1940 Act. Ms Douglas is also Secretary of the Clough Global Equity Fund, Clough Global Opportunities
Fund, Caldwell & Orkin Funds, Inc. and was formerly Secretary of Financial Investors Trust, from 2004 to 2007.
|
|
|
|
|
Michael T. Akins
Age, 33
1290 Broadway
Ste. 1100
Denver, CO
80203
|
|
Chief Compliance Officer
|
|
Since
September 20, 2006
|
|
Mr. Akins is Vice-President and Deputy Chief Compliance Officer of ALPS. Mr. Akins joined ALPS in 2006. Mr. Akins previously served as
Assistant Vice-President and Compliance Officer for UMB Financial Corporation from 2003 to 2006. Mr. Akins is deemed an affiliate of the Fund as defined under the 1940 Act. Mr. Akins also serves as Chief Compliance Officer of the Clough Global
Equity Fund, Clough Global Opportunities Fund, Financial Investors Trust and Reaves Utility Income Fund.
|
|
|
|
|
Dawn Cotten
Age, 32
1290 Broadway
Ste. 1100
Denver, CO
80203
|
|
Assistant Treasurer
|
|
Since
March 8, 2010
|
|
Ms. Cotten joined ALPS in June 2009 as a 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 the Fund as defined under the 1940
Act.
|
|
|
|
|
Monette R. Nickels
Age
38
1290 Broadway
Ste. 1100
Denver, CO
80203
|
|
Tax
Officer
|
|
Since
March 10,
2010
|
|
Ms. Nickels is Senior Vice President and Director of Tax Administration of ALPS. Ms. Nickels joined ALPS in 2004 as Director of Tax Administration. Ms. Nickels is deemed an
affiliate of the Fund as defined under the 1940 Act. Ms. Nickels is also Tax Officer of ALPS Variable Insurance Trust, ALPS ETF Trust, Clough Global Equity Fund, Clough Global Opportunities Fund, Financial Investors Trust, Financial Investors
Variable Insurance Trust, Liberty All-Star Equity Fund, Liberty All-Star Growth Fund, Inc. and Reaves Utility Income Fund.
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www.cloughglobal.com
2010 - Annual Report
www.cloughglobal.com
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 registrants principal executive officer,
principal financial officer, principal accounting officer or controller or any persons performing similar functions on behalf of the registrant.
|
|
(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.
|
|
(f)
|
The registrants Code of Ethics is attached as Exhibit 12.A.1 hereto.
|
Item 3.
Audit Committee Financial Expert.
The registrants 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 registrants audit committee financial expert. Mr. Rantzow is independent as defined in paragraph (a)(2) of Item 3 to Form N-CSR.
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 the principal accountant for the audit of the
registrants annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for fiscal years 2010 and 2009 were $28,333 and $28,333, respectively.
|
|
(b)
|
Audit-Related Fees
: The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrants financial statements and are not reported under paragraph (a) of this Item were $0 in 2010 and $0 in 2009.
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|
|
|
|
|
|
|
(c)
|
|
Tax Fees
: The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and
tax planning were $2,760 in 2010 and $4,165 in 2009.
|
|
|
|
|
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(d)
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All Other Fees
: The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services
reported in paragraphs (a) through (c) of this Item were $0 in 2010 and $0 in 2009. These services include agreed upon procedures related to the ratings for the Auction Market Preferred Shares.
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(e)(1)
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Audit Committee Pre-Approval Policies and Procedures
: All services to be performed by the Registrants principal auditors must be pre-approved by the
registrants audit committee.
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(e)(2)
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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.
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(f)
|
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Not applicable.
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(g)
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The aggregate non-audit fees billed by the registrants accountant for services rendered to the registrant, and rendered to the registrants 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 2010 and $0 for 2009.
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(h)
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Not applicable.
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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:
Andrew C. Boynton
Robert L. Butler
Adam D. Crescenzi
John F. Mee
Richard C. Rantzow, Committee
Chairman
Jerry G. Rutledge
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.
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Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
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Attached, as Exhibit Item 7, is a copy of the registrants policies and procedures.
Item 8.
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Portfolio Managers of Closed-End Management Investment Companies.
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(a)(1) As of: March 31, 2010
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Portfolio Managers
Name
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Title
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Length of
Service
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Business
Experience: 5 Years
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Charles I. Clough, Jr.
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Partner and Portfolio Manager
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Since Inception
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Founding Partner Clough Capital Partners LP. Portfolio Manager for pooled investment
accounts, separately managed accounts, and investment companies for over ten years.
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Eric A. Brock
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Partner and Portfolio Manager
|
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Since Inception
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Founding Partner Clough Capital Partners LP. Portfolio Manager for pooled investment
accounts, separately managed accounts, and investment companies for over ten years.
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James E. Canty
|
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Partner and Portfolio Manager
|
|
Since Inception
|
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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 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.
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(a)(2) As of March 31, 2010, the Portfolio Managers listed above are also responsible for the day-to-day management of the following:
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Portfolio
Managers
Name
|
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Registered
Investment
Companies
|
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Other Pooled
Investment
Vehicles
(1)
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Other
Accounts
(2)
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Material
Conflicts
If Any
|
Charles I Clough, Jr.
|
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4 Accounts
$
2,115.2
million
Total
Assets
|
|
4 Accounts
$
700.4
million
Total
Assets
|
|
3 Accounts
$
221.3
million
Total
Assets
|
|
See
below
(3)
|
Eric A. Brock
|
|
4 Accounts
$
2,115.2
million
Total
Assets
|
|
4 Accounts
$
700.4
million
Total
Assets
|
|
3 Accounts
$
221.3
million
Total
Assets
|
|
See
below
(3)
|
James E. Canty
|
|
4 Accounts
$
2,115.2
million
Total
Assets
|
|
4 Accounts
$
700.4
million
Total
Assets
|
|
3 Accounts
$
221.3
million
Total
Assets
|
|
See
below
(3)
|
(1)
|
The advisory fees are based in part on the performance for each account.
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(2)
|
The advisory fee is based in part on the performance for two account totaling $215.8 million in assets.
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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 Accounts 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, 2010.
The Portfolio Managers 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 its annual net profits to the three Portfolio Managers, with Mr. Clough receiving a majority share and the remainder being divided evenly between
Mr. Brock and Mr. Canty.
(a)(4) Dollar Range of Securities Owned as of March 31, 2010.
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|
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Portfolio Managers
|
|
Dollar Range of the Registrants Securities
Owned by the Portfolio Managers
|
Charles I. Clough, Jr.
|
|
$100,000 - $500,000
|
Eric A. Brock
|
|
$50,001 - $100,000
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James E. Canty
|
|
$50,001 - $100,000
|
|
|
|
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.
There have been no material changes by which Shareholders may recommend nominees to the Board of
Trustees.
Item 11.
Controls and Procedures.
|
(a)
|
The registrants principal executive officer and principal financial officer have concluded that the Registrants 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 Registrants 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 Registrants internal control over financial reporting.
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Item 12.
Exhibits.
(a)(1) The Code of Ethics that applies to the registrants 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 Registrants 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 is attached hereto as Ex99. Item 7.
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.
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|
|
CLOUGH GLOBAL ALLOCATION FUND
|
|
|
By:
|
|
/s/ Edmund J. Burke
|
|
|
Edmund J. Burke
|
|
|
President & Trustee
|
|
|
Date:
|
|
June 7, 2010
|
Pursuant to the requirements of the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
|
|
CLOUGH GLOBAL ALLOCATION FUND
|
|
|
By:
|
|
/s/ Edmund J. Burke
|
|
|
Edmund J. Burke
|
|
|
President/Principal Executive Officer
|
|
|
Date:
|
|
June 7, 2010
|
|
|
|
By:
|
|
/s/ Jeremy O. May
|
|
|
Jeremy O. May
|
|
|
Treasurer/Principal Financial Officer
|
|
|
Date:
|
|
June 7, 2010
|
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