In the event a Board approved independent pricing
service is unable to provide an evaluated price for a security or Clough Capital Partners L.P. (the “Adviser” or “Clough”)
believes the price provided is not reliable, securities of each Fund may be valued at fair value as described above. In these instances
the Adviser may seek to find an alternative independent source, such as a broker/dealer to provide a price quote, or by using evaluated
pricing models similar to the techniques and models used by the independent pricing service. These fair value measurement techniques
may utilize unobservable inputs (Level 3).
On a monthly basis, the Fair Value Committee of each Fund meets
and discusses securities that have been fair valued during the preceding month in accordance with the Funds’ Fair Value Procedures
and reports quarterly to the Board on the results of those meetings.
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
The following is a reconciliation of the investments in which significant unobservable inputs (Level 3) were used in determining
fair value:
Clough Global Equity Fund
|
Asset Type
|
|
Balance as of October 31, 2020
|
|
|
Realized Gain/(Loss)
|
|
|
Change in Unrealized Appreciation/ (Depreciation)
|
|
|
Purchases
|
|
|
Sales Proceeds
|
|
|
Transfer into Level 3
|
|
|
Transfer out of Level 3
|
|
|
Balance as of April 30, 2021
|
|
|
Net change in unrealized appreciation/ (depreciation) included in the Statements of Operations attributable to Level 3 investments held at April 30, 2021
|
|
|
Common Stocks
|
|
$
|
2,576,815
|
|
|
$
|
–
|
|
|
$
|
238,994
|
|
|
$
|
530,830
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
3,346,639
|
|
|
$
|
238,994
|
|
|
|
|
$
|
2,576,815
|
|
|
$
|
–
|
|
|
$
|
238,994
|
|
|
$
|
530,830
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
3,346,639
|
|
|
$
|
238,994
|
|
Clough Global Opportunities Fund
|
Asset Type
|
|
Balance as of October 31, 2020
|
|
|
Realized Gain/(Loss)
|
|
|
Change in Unrealized Appreciation/ (Depreciation)
|
|
|
Purchases
|
|
|
Sales Proceeds
|
|
|
Transfer into Level 3
|
|
|
Transfer out of Level 3
|
|
|
Balance as of April 30, 2021
|
|
|
Net change in unrealized appreciation/ (depreciation) included in the Statements of Operations attributable to Level 3 investments held at April 30, 2021
|
|
|
Common Stocks
|
|
$
|
6,789,627
|
|
|
$
|
–
|
|
|
$
|
571,137
|
|
|
$
|
1,220,452
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
8,581,216
|
|
|
$
|
571,137
|
|
|
|
|
$
|
6,789,627
|
|
|
$
|
–
|
|
|
$
|
571,137
|
|
|
$
|
1,220,452
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
8,581,216
|
|
|
$
|
571,137
|
|
The following is a summary of valuation techniques and quantitative
information used in determining the fair value of each Fund’s Level 3 investments at April 30, 2021:
|
Fund
|
|
Sector
|
|
Fair Value
|
|
|
Valuation Technique
|
|
Unobservable Input(a)
|
|
Premium/(Discount)
|
|
Clough Global Equity Fund
|
|
Health Care
|
|
$
|
2,297,013
|
|
|
Accomplishment & Goals and Index Performance Methods
|
|
Transaction Price
|
|
N/A
|
|
|
|
|
|
$
|
1,049,626
|
|
|
Common Stock Equivalent
|
|
Transaction Price
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clough Global Opportunities Fund
|
|
Health Care
|
|
$
|
6,167,977
|
|
|
Accomplishment & Goals and Index Performance Methods
|
|
Transaction Price
|
|
N/A
|
|
|
|
|
|
$
|
2,413,239
|
|
|
Common Stock Equivalent
|
|
Transaction Price
|
|
N/A
|
|
|
(a)
|
A change to the unobservable input may result in a significant
change to the value of the investment as follows:
|
|
Unobservable Input
|
Impact to Value if Input Increases
|
Impact to Value if Input Decreases
|
|
Transaction Price
|
Increase
|
Decrease
|
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
Foreign Securities: Each Fund may invest
a portion of its assets in foreign securities. In the event that a Fund executes a foreign security transaction, the Fund will
generally enter into a foreign currency spot contract to settle the foreign security transaction. Foreign securities may carry
more risk than U.S. securities, such as political, market and currency risks.
The accounting records of each Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of
exchange at period end. Amounts related to the purchase and sale of foreign securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions. Although the net assets and the values are presented
at the foreign exchange rates at market close, the Funds do not isolate the portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations arising from changes in prices of securities held.
The effect of changes in foreign currency exchange rates on investments
is reported with investment securities realized and unrealized gains and losses in the Funds’ Statements of Operations.
A foreign currency spot contract is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate. Each Fund may enter into foreign currency spot contracts
to settle specific purchases or sales of securities denominated in a foreign currency and for protection from adverse exchange
rate fluctuation. Risks to a Fund include the potential inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency
underlying all contractual commitments held by a Fund and the resulting unrealized appreciation or depreciation are determined
using prevailing forward foreign currency exchange rates. Unrealized appreciation and depreciation on foreign currency spot contracts
are reported in the Funds’ Statements of Assets and Liabilities as a receivable for investments sold or a payable for investments
purchased and in the Funds’ Statements of Operations with the change in unrealized appreciation or depreciation on translation
of assets and liabilities denominated in foreign currencies. These spot contracts are used by the broker to settle investments
denominated in foreign currencies.
A Fund may realize a gain or loss upon the closing or settlement
of the foreign transactions. Such realized gains and losses are reported with all other foreign currency gains and losses in the
Statements of Operations.
Exchange Traded Funds: Each Fund may
invest in Exchange Traded Funds (“ETFs”), which are funds whose shares are traded on a national exchange. ETFs may
be based on underlying equity or fixed income securities, as well as commodities or currencies. ETFs do not sell individual shares
directly to investors and only issue their shares in large blocks known as “creation units.” The investor purchasing
a creation unit then sells the individual shares on a secondary market. Although similar diversification benefits may be achieved
through an investment in another investment company, ETFs generally offer greater liquidity and lower expenses. Because an ETF
incurs its own fees and expenses, shareholders of a Fund investing in an ETF will indirectly bear those costs. Such Funds will
also incur brokerage commissions and related charges when purchasing or selling shares of an ETF. Unlike typical investment company
shares, which are valued once daily, shares in an ETF may be purchased or sold on a securities exchange throughout the trading
day at market prices that are generally close to the NAV of the ETF.
Short Sales: Each Fund may sell a security
it does not own in anticipation of a decline in the fair value of that security. When a Fund sells a security short, it must borrow
the security sold short and deliver it to the broker-dealer through which it made the short sale. A gain, limited to the price
at which a Fund sold the security short, or a loss, unlimited in size, will be recognized upon the termination of the short sale.
Each Fund's obligation to replace the borrowed
security will be secured by collateral deposited with the broker-dealer, usually cash, U.S. government securities or other liquid
securities. Each Fund will also be required to designate on its books and records similar collateral with its custodian to the
extent, if any, necessary so that the aggregate collateral value is at all times at least equal to the current value of the security
sold short. The cash amount is reported on the Statements of Assets and Liabilities as Deposit with broker for securities sold
short which is held with one counterparty. Each Fund is obligated to pay interest to the broker for any debit balance of the margin
account relating to short sales. The interest incurred by the Funds is reported on the Statements of Operations as Interest expense
– margin account. Interest amounts payable, if any, are reported on the Statements of Assets and Liabilities as Interest
payable – margin account.
Each Fund may also sell a security short if
it owns at least an equal amount of the security sold short or another security convertible or exchangeable for an equal amount
of the security sold short without payment of further compensation (a short sale against-the-box). In a short sale against-the-box,
the short seller is exposed to the risk of being forced to deliver stock that it holds to close the position if the borrowed stock
is called in by the lender, which would cause gain or loss to be recognized on the delivered stock. Each Fund expects normally
to close its short sales against-the-box by delivering newly acquired stock. Since the Funds intend to hold securities sold short
for the short term, these securities are excluded from the purchases and sales of investment securities in Note 4 and each Fund’s
Portfolio Turnover in the Financial Highlights.
|
Semi-Annual Report | April 30, 2021
|
45
|
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
Derivatives Instruments and Hedging Activities: The following
discloses the Funds’ use of derivative instruments and hedging activities.
The Funds’ investment objectives not
only permit the Funds to purchase investment securities, they also allow the Funds to enter into various types of derivative contracts,
including, but not limited to, purchased and written options, swaps, futures and warrants. In doing so, the Funds will employ strategies
in differing combinations to permit them to increase, decrease, or change the level or types of exposure to market factors. Central
to those strategies are features inherent to derivatives that make them more attractive for this purpose than equity securities;
they require little or no initial cash investment, they can focus exposure on only certain selected risk factors, and they may
not require the ultimate receipt or delivery of the underlying security (or securities) to the contract. This may allow the Funds
to pursue their objectives more quickly and efficiently than if they were to make direct purchases or sales of securities capable
of affecting a similar response to market factors.
Risk of Investing in Derivatives: The
Funds’ use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market.
In instances where the Funds are using derivatives to decrease or hedge exposures to market risk factors for securities held by
the Funds, there are also risks that those derivatives may not perform as expected, resulting in losses for the combined or hedged
positions.
Derivatives may have little or no initial cash
investment relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost.
This use of embedded leverage allows the Funds to increase their market value exposure relative to their net assets and can substantially
increase the volatility of the Funds’ performance.
Additional associated risks from investing
in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Funds. Typically,
the associated risks are not the risks that the Funds are attempting to increase or decrease exposure to, per their investment
objectives, but are the additional risks from investing in derivatives.
Examples of these associated risks are liquidity
risk, which is the risk that the Funds will not be able to sell the derivative in the open market in a timely manner, and counterparty
credit risk, which is the risk that the counterparty will not fulfill its obligation to the Funds. Associated risks can be different
for each type of derivative and are discussed by each derivative type in the notes that follow.
Each Fund may acquire put and call options
and options on stock indices and enter into stock index futures contracts, certain credit derivatives transactions and short sales
in connection with its equity investments. In connection with a Fund's investments in debt securities, it may enter into related
derivatives transactions such as interest rate futures, swaps and options thereon and certain credit derivatives transactions.
Derivatives transactions of the types described above subject a Fund to increased risk of principal loss due to imperfect correlation
or unexpected price or interest rate movements. Each Fund also will be subject to credit risk with respect to the counterparties
to the derivatives contracts purchased by a Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations
under a derivatives contract due to financial difficulties, each Fund may experience significant delays in obtaining any recovery
under the derivatives contract in a bankruptcy or other reorganization proceeding. Each Fund may obtain only a limited recovery
or may obtain no recovery in such circumstances.
Market Risk Factors: In addition, in pursuit of their investment
objectives, certain Funds may seek to use derivatives, which may increase or decrease exposure to the following market risk factors:
Equity Risk: Equity risk relates to the change in value
of equity securities as they relate to increases or decreases in the general market.
Foreign Exchange Rate Risk: Foreign
exchange rate risk relates to the change in the U.S. dollar value of a security held that is denominated in a foreign currency.
The value of a foreign currency denominated security will decrease as the dollar appreciates against the currency, while the value
of the foreign currency denominated security will increase as the dollar depreciates against the currency.
Option Writing/Purchasing: Each Fund
may purchase or write (sell) put and call options. One of the risks associated with purchasing an option among others, is that
a Fund pays a premium whether or not the option is exercised. Additionally, a Fund bears the risk of loss of premium and change
in value should the counterparty not perform under the contract. The cost of securities acquired through the exercise of call options
is increased by premiums paid. The proceeds from securities sold through the exercise of put options are decreased by the premiums
paid. Each Fund is obligated to pay interest to the broker for any debit balance of the margin account relating to options. Each
Fund pledges cash or liquid assets as collateral to satisfy the current obligations with respect to written options. The interest
incurred, if any, on the Funds is reported on the Statements of Operations as Interest expense – margin account. Interest
amounts payable by the Funds, if any, are reported on the Statements of Assets and Liabilities as Interest payable – margin
account.
When a Fund writes an option, an amount equal to
the premium received by a Fund is recorded as a liability and is subsequently adjusted to the current value of the option written.
Premiums received from writing options that expire unexercised are treated by a Fund on the expiration date as realized gains. The
difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is recorded as a realized gain
or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security or currency
in determining whether a Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of
the securities purchased by a Fund. Each Fund, as writer of an option, bears the market risk of an unfavorable change in the price
of the security underlying the written option. The Funds engaged in purchased and written options during the six months ended April
30, 2021.
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
Futures Contracts: Each Fund may enter
into futures contracts. A futures contract is an agreement to buy or sell a security or currency (or to deliver a final cash settlement
price in the case of a contract relating to an index or otherwise not calling for physical delivery at the end of trading in the
contract) for a set price at a future date. If a Fund buys a security futures contract, the Fund enters into a contract to purchase
the underlying security and is said to be "long" under the contract. If a Fund sells a security futures contact, the
Fund enters into a contract to sell the underlying security and is said to be "short" under the contract. The price at
which the contract trades (the "contract price") is determined by relative buying and selling interest on a regulated
exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation
margin”) is recorded by the Fund. Such payables or receivables, if any, are recorded for financial statement purposes as
variation margin payable or variation margin receivable by each Fund. Each Fund pledges cash or liquid assets as collateral to
satisfy the current obligations with respect to futures contracts. The cash amount, if any, is reported on the Statements of Assets
and Liabilities as Deposit with broker for futures contracts which is held with one counterparty. Management has reviewed the futures
agreement under which the futures contracts are traded and has determined that the Funds do not have the right to set-off, and
therefore the futures contracts are not subject to enforceable netting arrangements.
The Funds enter into such transactions for
hedging and other appropriate risk-management purposes or to increase return. While a Fund may enter into futures contracts for
hedging purposes, the use of futures contracts might result in a poorer overall performance for the Fund than if it had not engaged
in any such transactions. If, for example, the Fund had insufficient cash, it might have to sell a portion of its underlying portfolio
of securities in order to meet daily variation margin requirements on its futures contracts or options on futures contracts at
a time when it might be disadvantageous to do so. There may be an imperfect correlation between the Funds’ portfolio holdings
and futures contracts entered into by the Fund, which may prevent the Fund from achieving the intended hedge or expose the Fund
to risk of loss.
Futures contract transactions may result in
losses substantially in excess of the variation margin. There can be no guarantee that there will be a correlation between price
movements in the hedging vehicle and in the portfolio securities being hedged. An incorrect correlation could result in a loss
on both the hedged securities in a Fund and the hedging vehicle so that the portfolio return might have been greater had hedging
not been attempted. There can be no assurance that a liquid market will exist at a time when the Fund seeks to close out a futures
contract. Lack of a liquid market for any reason may prevent a Fund from liquidating an unfavorable position, and the Fund would
remain obligated to meet margin requirements until the position is closed. In addition, the Fund could be exposed to risk if the
counterparties to the contracts are unable to meet the terms of their contracts. With exchange-traded futures contracts, there
is minimal counterparty credit risk to the Funds since futures contracts are exchange-traded and the exchange’s clearinghouse,
as counterparty to all exchange-traded futures contracts, guarantees the futures contracts against default. The Funds engaged in
futures contracts during the six months ended April 30, 2021.
Swaps: A swap is an agreement that obligates
two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified
prices or rates for a specified amount of an underlying asset. Each Fund may utilize swap agreements as a means to gain exposure
to certain assets and/or to “hedge” or protect the Fund from adverse movements in securities prices or interest rates.
Each Fund is subject to equity risk and interest rate risk in the normal course of pursuing its investment objective through investments
in swap contracts. Swap agreements entail the risk that a party will default on its payment obligation to a Fund. If the other
party to a swap defaults, a Fund would risk the loss of the net amount of the payments that it contractually is entitled to receive.
If each Fund utilizes a swap at the wrong time or judges market conditions incorrectly, the swap may result in a loss to the Fund
and reduce the Fund’s total return.
Total return swaps involve an exchange by two
parties in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based
on the return of an underlying asset, which includes both the income it generates and any capital gains over the payment period.
A Fund’s maximum risk of loss from counterparty risk or credit risk is the discounted value of the payments to be received
from/paid to the counterparty over the contract’s remaining life, to the extent that the amount is positive. The risk is
mitigated by having a netting arrangement between a Fund and the counterparty and by the posting of collateral to a Fund to cover
the Fund’s exposure to the counterparty. Each Fund pledges cash or liquid assets as collateral to satisfy the current obligations
with respect to swap contracts. The cash amount is reported on the Statements of Assets and Liabilities as Deposit with broker
for total return swap contracts which is held with one counterparty.
International Swaps and Derivatives Association,
Inc. Master Agreements (“ISDA Master Agreements”) govern OTC financial derivative transactions entered into by a Fund
and those counterparties. The ISDA Master Agreements maintain provisions for general obligations, representations, agreements,
collateral and events of default or termination. Events of termination include conditions that may entitle counterparties to elect
to terminate early and cause settlement of all outstanding transactions under the applicable ISDA Master Agreement. Any election
to early terminate could be material to the financial statements.
During the six months ended April 30, 2021, the Funds invested in swap agreements consistent with the Funds’ investment strategies
to gain exposure to certain markets or indices.
|
Semi-Annual Report | April 30, 2021
|
47
|
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
Warrants/Rights: Each Fund may purchase
or otherwise receive warrants or rights. Warrants and rights generally give the holder the right to receive, upon exercise, a security
of the issuer at a set price. Funds typically use warrants and rights in a manner similar to their use of purchased options on
securities, as described in options above. Risks associated with the use of warrants and rights are generally similar to risks
associated with the use of purchased options. However, warrants and rights often do not have standardized terms, and may have longer
maturities and may be less liquid than exchange-traded options. In addition, the terms of warrants or rights may limit each Fund’s
ability to exercise the warrants or rights at such times and in such quantities as each Fund would otherwise wish. As of and during
the six months ended April 30, 2021, Clough Global Equity Fund and Clough Global Opportunities Fund held rights, and Clough Global
Dividend and Income Fund did not hold rights. Each Fund held no warrants.
The effect of derivatives instruments on each Fund’s Statement
of Assets and Liabilities as of April 30, 2021:
|
|
|
Asset Derivatives
|
|
|
|
|
Risk Exposure
|
|
Statements of Assets and Liabilities Location
|
|
Fair Value
|
|
|
Clough Global Dividend and Income Fund
|
|
|
|
|
|
|
|
Foreign Currency Contracts (Futures Contracts)
|
|
Unrealized appreciation on futures contracts
|
|
$
|
1,221,656
|
(a)
|
|
Equity Contracts (Purchased Options)
|
|
Investments, at value
|
|
|
114,456
|
|
|
|
|
|
|
$
|
1,336,112
|
|
|
Clough Global Equity Fund
|
|
|
|
|
|
|
|
Foreign Currency Contracts (Futures Contracts)
|
|
Unrealized appreciation on futures contracts
|
|
$
|
2,241,673
|
(a)
|
|
Equity Contracts (Purchased Options)
|
|
Investments, at value
|
|
|
1,020,619
|
|
|
Equity Contracts (Total Return Swap Contracts)
|
|
Unrealized appreciation on total return swap contracts
|
|
|
863,648
|
|
|
|
|
|
|
$
|
4,125,940
|
|
|
Clough Global Opportunities Fund
|
|
|
|
|
|
|
|
Foreign Currency Contracts (Futures Contracts)
|
|
Unrealized appreciation on futures contracts
|
|
$
|
4,465,400
|
(a)
|
|
Equity Contracts (Purchased Options)
|
|
Investments, at value
|
|
|
2,020,364
|
|
|
Equity Contracts (Total Return Swap Contracts)
|
|
Unrealized appreciation on total return swap contracts
|
|
|
1,778,769
|
|
|
|
|
|
|
$
|
8,264,533
|
|
|
|
|
Liability Derivatives
|
|
|
|
|
|
|
Statements of Assets and Liabilities Location
|
|
Fair Value
|
|
|
Clough Global Dividend and Income Fund
|
|
|
|
|
|
|
|
Equity Contracts (Written Options)
|
|
Written options, at value
|
|
$
|
(29,700
|
)
|
|
Equity Contracts (Total Return Swap Contracts)
|
|
Unrealized depreciation on total return swap contracts
|
|
|
(192,659
|
)
|
|
Total
|
|
|
|
$
|
(222,359
|
)
|
|
Clough Global Equity Fund
|
|
|
|
|
|
|
|
Equity Contracts (Written Options)
|
|
Written options, at value
|
|
$
|
(67,500
|
)
|
|
Total
|
|
|
|
$
|
(67,500
|
)
|
|
Clough Global Opportunities Fund
|
|
|
|
|
|
|
|
Equity Contracts (Written Options)
|
|
Written options, at value
|
|
$
|
(135,000
|
)
|
|
Total
|
|
|
|
$
|
(135,000
|
)
|
|
|
(a)
|
Includes cumulative appreciation/(depreciation) of futures
contracts as reported in the Statements of Investments. Only the current day's net variation margin is reported within the Statements
of Assets and Liabilities.
|
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
The effect of derivatives instruments on each Fund's Statement of
Operations for the six months ended April 30, 2021:
|
Risk Exposure
|
|
Statements of Operations Location
|
|
Realized Gain/(Loss) on Derivatives Recognized in Income
|
|
|
Change in Unrealized Appreciation/ (Depreciation) on Derivatives Recognized in Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Clough Global Dividend and Income Fund
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts (Futures Contracts)
|
|
Net realized gain/(loss) on futures contracts/Net change in unrealized appreciation/(depreciation) on futures contracts
|
|
$
|
1,281,953
|
|
|
$
|
(1,115,176
|
)
|
|
Equity Contracts (Purchased Options)
|
|
Net realized gain/(loss) on investment securities/Net change in unrealized appreciation/(depreciation) on investment securities
|
|
|
138,439
|
|
|
|
(1,333,602
|
)
|
|
Equity Contracts (Total Return Swap Contracts)
|
|
Net realized gain/(loss) on total return swap contracts/Net change in unrealized appreciation/(depreciation) on total return swap contracts
|
|
|
3,109,966
|
|
|
|
(1,539,875
|
)
|
|
Equity Contracts (Written Options)
|
|
Net realized gain/(loss) on written options/Net change in unrealized appreciation/(depreciation) on written options
|
|
|
302,914
|
|
|
|
717,784
|
|
|
Total
|
|
|
|
$
|
4,833,272
|
|
|
$
|
(3,270,869
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clough Global Equity Fund
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts (Futures Contracts)
|
|
Net realized gain/(loss) on futures contracts/Net change in unrealized appreciation/(depreciation) on futures contracts
|
|
$
|
2,177,585
|
|
|
$
|
(1,879,513
|
)
|
|
Equity Contracts (Purchased Options)
|
|
Net realized gain/(loss) on investment securities/Net change in unrealized appreciation/(depreciation) on investment securities
|
|
|
(1,966,297
|
)
|
|
|
(3,061,605
|
)
|
|
Equity Contracts (Total Return Swap Contracts)
|
|
Net realized gain/(loss) on total return swap contracts/Net change in unrealized appreciation/(depreciation) on total return swap contracts
|
|
|
6,862,539
|
|
|
|
(2,203,418
|
)
|
|
Equity Contracts (Written Options)
|
|
Net realized gain/(loss) on written options/Net change in unrealized appreciation/(depreciation) on written options
|
|
|
171,145
|
|
|
|
1,631,327
|
|
|
Total
|
|
|
|
$
|
7,244,972
|
|
|
$
|
(5,513,209
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clough Global Opportunities Fund
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts (Futures Contracts)
|
|
Net realized gain/(loss) on futures contracts/Net change in unrealized appreciation/(depreciation) on futures contracts
|
|
$
|
4,375,766
|
|
|
$
|
(3,776,250
|
)
|
|
Equity Contracts (Purchased Options)
|
|
Net realized gain/(loss) on investment securities/Net change in unrealized appreciation/(depreciation) on investment securities
|
|
|
(3,167,852
|
)
|
|
|
(6,119,604
|
)
|
|
Equity Contracts (Total Return Swap Contracts)
|
|
Net realized gain/(loss) on total return swap contracts/Net change in unrealized appreciation/(depreciation) on total return swap contracts
|
|
|
13,708,529
|
|
|
|
(4,372,591
|
)
|
|
Equity Contracts (Written Options)
|
|
Net realized gain/(loss) on written options/Net change in unrealized appreciation/(depreciation) on written options
|
|
|
146,207
|
|
|
|
3,262,654
|
|
|
Total
|
|
|
|
$
|
15,062,650
|
|
|
$
|
(11,005,791
|
)
|
|
Semi-Annual Report | April 30, 2021
|
49
|
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
The average total return swap contracts notional amount during the six months ended April 30, 2021, is noted below for each
of the Funds.
|
Fund
|
|
Average Total Return Swap Contracts Notional Amount
|
|
|
Clough Global Dividend and Income Fund
|
|
$
|
2,170,031
|
|
|
Clough Global Equity Fund
|
|
|
5,586,338
|
|
|
Clough Global Opportunities Fund
|
|
|
11,254,149
|
|
The average monthly notional value of options contracts outstanding during the six months ended April 30, 2021, is noted below
for each of the Funds.
|
Fund
|
|
Average Purchased Option Contract Notional Amount
|
|
|
Average Written Option Contract Notional Amount
|
|
|
Clough Global Dividend and Income Fund
|
|
$
|
917,297,363
|
|
|
$
|
24,724,128
|
|
|
Clough Global Equity Fund
|
|
|
1,744,906,039
|
|
|
|
57,417,287
|
|
|
Clough Global Opportunities Fund
|
|
|
3,476,391,197
|
|
|
|
114,305,756
|
|
The average monthly notional value of futures
contracts outstanding during the six months ended April 30, 2021, is noted below for each of the Funds.
|
Fund
|
|
Average Futures Contracts Notional Amount
|
|
|
Clough Global Dividend and Income Fund
|
|
$
|
347,504,538
|
|
|
Clough Global Equity Fund
|
|
|
600,800,900
|
|
|
Clough Global Opportunities Fund
|
|
|
1,207,715,823
|
|
Certain derivative contracts are executed under
either standardized netting agreements or, for exchange-traded derivatives, the relevant contracts for a particular exchange which
contain enforceable netting provisions. A derivative netting arrangement creates an enforceable right of set-off that becomes effective,
and affects the realization of settlement on individual assets, liabilities and collateral amounts, only following a specified
event of default or early termination. Default events may include the failure to make payments or deliver securities timely, material
adverse changes in financial condition or insolvency, the breach of minimum regulatory capital requirements, or loss of license,
charter or other legal authorization necessary to perform under the contract.
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
The following tables present derivative financial instruments that
are subject to enforceable netting arrangements as of April 30, 2021.
Offsetting of Derivatives Assets
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Statements of Assets and Liabilities
|
|
|
|
|
Gross Amounts of Recognized Assets
|
|
|
Gross Amounts Offset in the Statements of Assets and Liabilities
|
|
|
Net Amounts Presented in the Statements of Assets and Liabilities
|
|
|
Financial Instruments(a)
|
|
|
Cash Collateral Received(a)
|
|
|
Net Amount
|
|
|
Clough Global Equity Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Swap Contracts
|
|
$
|
863,648
|
|
|
$
|
–
|
|
|
$
|
863,648
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
863,648
|
|
|
Total
|
|
$
|
863,648
|
|
|
$
|
–
|
|
|
$
|
863,648
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
863,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clough Global Opportunities Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Swap Contracts
|
|
$
|
1,778,769
|
|
|
$
|
–
|
|
|
$
|
1,778,769
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
1,778,769
|
|
|
Total
|
|
$
|
1,778,769
|
|
|
$
|
–
|
|
|
$
|
1,778,769
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
1,778,769
|
|
Offsetting of Derivatives Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Statements of Assets and Liabilities
|
|
|
|
|
Gross Amounts of Recognized Liabilities
|
|
|
Gross Amounts Offset in the Statements of Assets and Liabilities
|
|
|
Net Amounts Presented in the Statements of Assets and Liabilities
|
|
|
Financial Instruments(a)
|
|
|
Cash Collateral Pledged(a)
|
|
|
Net Amount
|
|
|
Clough Global Dividend and Income Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Swap Contracts
|
|
$
|
192,659
|
|
|
$
|
–
|
|
|
$
|
192,659
|
|
|
$
|
–
|
|
|
$
|
(192,659
|
)
|
|
$
|
–
|
|
|
Total
|
|
$
|
192,659
|
|
|
$
|
–
|
|
|
$
|
192,659
|
|
|
$
|
–
|
|
|
$
|
(192,659
|
)
|
|
$
|
–
|
|
|
|
(a)
|
These amounts are limited to the derivative asset/liability
balance and, accordingly, do not include excess collateral received/pledged, which is disclosed in the Statements of Investments.
|
|
Semi-Annual Report | April 30, 2021
|
51
|
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
Restricted Securities: Although the
Funds will invest primarily in publicly traded securities, they may invest a portion of their assets (up to 10% of its value) in
restricted securities. Restricted securities are securities that may not be sold to the public without an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act") or, if they are unregistered, may be sold
only in a privately negotiated transaction or pursuant to an exemption from registration.
Restricted securities as of April 30, 2021 were as follows:
|
Fund
|
|
Security
|
|
% of Net Assets
|
|
Acquisition Date
|
|
Principal Amount
|
|
|
Cost
|
|
|
Value
|
|
|
Clough Global Dividend and Income Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackstone Holdings Finance Co. LLC
|
|
0.55%
|
|
1/22/2021
|
|
|
500,000
|
|
|
$
|
557,557
|
|
|
$
|
545,708
|
|
|
|
|
Carvana Co.
|
|
0.52%
|
|
11/16/2020
|
|
|
500,000
|
|
|
|
504,590
|
|
|
|
515,625
|
|
|
|
|
Carvana Co.
|
|
1.05%
|
|
9/25/2020
|
|
|
1,000,000
|
|
|
|
988,218
|
|
|
|
1,039,810
|
|
|
|
|
Melco Resorts Finance, Ltd.
|
|
0.27%
|
|
9/21/2020
|
|
|
250,000
|
|
|
|
260,182
|
|
|
|
269,229
|
|
|
|
|
Nationstar Mortgage Holdings, Inc.
|
|
0.50%
|
|
3/16/2021
|
|
|
500,000
|
|
|
|
501,238
|
|
|
|
495,455
|
|
|
|
|
Sunac China Holdings, Ltd.
|
|
0.79%
|
|
1/16/2020
|
|
|
750,000
|
|
|
|
781,003
|
|
|
|
785,250
|
|
|
|
|
Teladoc Health, Inc.
|
|
0.79%
|
|
5/18/2020
|
|
|
700,000
|
|
|
|
721,272
|
|
|
|
786,187
|
|
|
|
|
Times China Holdings, Ltd.
|
|
0.11%
|
|
11/6/2019
|
|
|
111,111
|
|
|
|
111,218
|
|
|
|
111,454
|
|
|
|
|
Trinity Capital, Inc.
|
|
0.60%
|
|
1/9/2020
|
|
|
22,400
|
|
|
|
560,000
|
|
|
|
591,920
|
|
|
Total
|
|
|
|
5.18%
|
|
|
|
|
|
|
|
$
|
4,985,278
|
|
|
$
|
5,140,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clough Global Equity Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amphivena Therapeutics, Inc., Series C
|
|
0.65%
|
|
4/8/2019 8/8/2019 -
|
|
|
334,425
|
|
|
$
|
1,199,997
|
|
|
$
|
1,431,065
|
|
|
|
|
Arcellx, Inc., Series B
|
|
0.40%
|
|
12/22/2020
|
|
|
421,845
|
|
|
|
731,625
|
|
|
|
884,609
|
|
|
|
|
Arcellx, Inc., Series C
|
|
0.07%
|
|
3/26/2021
|
|
|
78,692
|
|
|
|
165,017
|
|
|
|
165,017
|
|
|
|
|
Centrexion Therapeutics Corp.
|
|
0.02%
|
|
3/19/2019
|
|
|
4,336
|
|
|
|
48,741
|
|
|
|
52,843
|
|
|
|
|
Centrexion Therapeutics Corp.
|
|
0.37%
|
|
12/18/2017
|
|
|
66,719
|
|
|
|
701,250
|
|
|
|
813,105
|
|
|
Total
|
|
|
|
1.51%
|
|
|
|
|
|
|
|
$
|
2,846,630
|
|
|
$
|
3,346,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clough Global Opportunities Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amphivena Therapeutics, Inc., Series C
|
|
0.77%
|
|
4/8/2019 8/8/2019 -
|
|
|
780,326
|
|
|
$
|
2,799,997
|
|
|
$
|
3,339,155
|
|
|
|
|
Arcellx, Inc., Series B
|
|
0.47%
|
|
12/22/2020
|
|
|
969,881
|
|
|
|
1,682,109
|
|
|
|
2,033,841
|
|
|
|
|
Arcellx, Inc., Series C
|
|
0.09%
|
|
3/26/2021
|
|
|
180,924
|
|
|
|
379,398
|
|
|
|
379,398
|
|
|
|
|
Centrexion Therapeutics Corp.
|
|
0.04%
|
|
3/19/2019
|
|
|
14,166
|
|
|
|
159,240
|
|
|
|
172,641
|
|
|
|
|
Centrexion Therapeutics Corp.
|
|
0.61%
|
|
12/18/2017
|
|
|
217,952
|
|
|
|
2,290,759
|
|
|
|
2,656,181
|
|
|
|
|
Sunac China Holdings, Ltd.
|
|
0.54%
|
|
1/16/2020
|
|
|
2,250,000
|
|
|
|
2,343,009
|
|
|
|
2,355,750
|
|
|
|
|
Times China Holdings, Ltd.
|
|
0.08%
|
|
11/6/2019
|
|
|
333,333
|
|
|
|
333,654
|
|
|
|
334,362
|
|
|
Total
|
|
|
|
2.60%
|
|
|
|
|
|
|
|
$
|
9,988,166
|
|
|
$
|
11,271,328
|
|
Income Taxes: Each Fund’s policy
is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. Therefore, no federal income tax provision is required. As of and during the six months
ended April 30, 2021, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize the interest and
penalties, if any, related to the unrecognized tax benefits as income tax expense in the Statements of Operations. During the six
months ended April 30, 2021, the Funds did not incur any interest or penalties.
The Funds file U.S. federal, state, and local
tax returns as required. The Funds’ tax returns are subject to examination by the relevant tax authorities until expiration
of the applicable statute of limitations, which is generally three years after the filing of the tax return but which can be extended
to six years in certain circumstances. Tax returns for open years have incorporated no uncertain tax positions that require a provision
for income taxes.
Distributions to Shareholders: Each
Fund intends to make a dividend distribution each month to Common Shareholders after payment of interest on any outstanding borrowings.
Any net capital gains earned by a Fund are distributed at least annually to the extent necessary to avoid federal income and excise
taxes. Distributions to shareholders are recorded by each Fund on the ex-dividend date. Each Fund has received approval from the Securities and Exchange Commission (the
“Commission”) for exemption from Section 19(b) of the 1940 Act, and Rule 19b-1 there under permitting each Fund to
make periodic distributions of long-term capital gains, provided that the distribution policy of a Fund with respect to its Common
Shares calls for periodic (e.g. quarterly/monthly) distributions in an amount equal to a fixed percentage of each Fund’s
average NAV 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.
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
Effective August 2017, each Fund’s Board
approved a managed dividend distribution rate of 10% of each Fund’s prior month average NAV. Subject to certain conditions,
these distribution policies remained in effect through July 2019. Effective August 2019, as approved by each Fund’s Board,
each Fund paid monthly distributions in an amount not less than the average distribution rate of a peer group of closed-end funds
selected by the Board. Effective January 1, 2020, the Funds' managed distribution policy was revised to set the monthly distribution
rate at an amount equal to one twelfth of 10% of each Fund's adjusted year-ending NAV, which is the average of the NAVs as of the
last five business days of the prior calendar year. Until July 2021, each Fund will pay monthly distributions in an amount not
less than the average distribution rate of a peer group of closed-end funds selected by the Board.
Securities Transactions and Investment Income:
Investment security transactions are accounted for on a trade date basis. Dividend income and Dividend expense-short sales are
recorded on the ex-dividend date. Certain dividend income from foreign securities will be recorded, in the exercise of reasonable
diligence, as soon as a Fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date and
may be subject to withholding taxes in these jurisdictions. Withholding taxes on foreign dividends are paid (a portion of which
may be reclaimable) or provided for in accordance with the applicable country’s tax rules and rates and are disclosed in
the Statements of Operations. Interest income, which includes amortization of premium and accretion of discount, is recorded on
the accrual basis. Realized gains and losses from securities transactions and unrealized appreciation and depreciation of securities
are determined using the identified cost basis for both financial reporting and income tax purposes.
Foreign Taxes: The Funds may be subject
to foreign taxes related to foreign income received (a portion of which may be reclaimable), capital gains on the sale of securities
and certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable regulations and rates
that exist in the foreign jurisdictions in which the Funds invest.
Certain foreign countries impose a capital
gains tax which is accrued by the Funds based on the unrealized appreciation, if any, on affected securities. Any accrual would
reduce a Fund’s NAV. The tax is paid when the gain is realized and is included in capital gains tax in the Statements of
Operations.
Counterparty Risk: Each of the Funds
run the risk that the issuer or guarantor of a fixed income security, the counterparty to an over-the-counter derivatives contract,
a borrower of each Fund’s securities or the obligor of an obligation underlying an asset-backed security will be unable or
unwilling to make timely principal, interest, or settlement payments or otherwise honor its obligations. In addition, to the extent
that each of the Funds use over-the-counter derivatives, and/or has significant exposure to a single counterparty, this risk will
be particularly pronounced for each of the Funds.
Other Risk Factors: Investing in the Funds may involve certain
risks including, but not limited to, the following:
Unforeseen developments in market conditions
may result in the decline of prices of, and the income generated by, the securities held by the Funds. These events may have adverse
effects on the Funds such as a decline in the value and liquidity of many securities held by the Funds, and a decrease in NAV.
Such unforeseen developments may limit or preclude the Funds’ ability to achieve their investment objective.
Investing in stocks may involve larger price fluctuation and greater
potential for loss than other types of investments. This may result in the securities held by the Funds being subject to larger
short-term declines in value compared to other types of investments.
The Funds may have elements of risk due to
their investments in foreign issuers located in various countries outside the U.S. Such investments may subject the Funds to additional
risks resulting from future political or economic conditions and/or possible impositions of adverse foreign governmental laws or
currency exchange restrictions. Investments in securities of non-U.S. issuers have unique risks not present in securities of U.S.
issuers, such as greater price volatility and less liquidity.
Fixed income securities are subject to credit
risk, which is the possibility that a security could have its credit rating downgraded or that the issuer of the security could
fail to make timely payments or default on payments of interest or principal. Additionally, fixed income securities are subject
to interest rate risk, meaning the decline in the price of debt securities that accompanies a rise in interest rates. Bonds with
longer maturities are subject to greater price fluctuations than bonds with shorter maturities.
|
Semi-Annual Report | April 30, 2021
|
53
|
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
The Funds invest in bonds which are rated below
investment grade. These high yield bonds may be more susceptible than higher grade bonds to real or perceived adverse economic
or industry conditions. The secondary market, on which high yield bonds are traded, may also be less liquid than the market for
higher grade bonds.
A novel coronavirus and the resulting COVID-19
respiratory infection have resulted in a global pandemic and major disruption to economies and markets around the world. The pandemic
has led to extreme short-term market volatility and may have adverse long-term effects on U.S. and world economies. Liquidity for
many instruments has been reduced, and some sectors of the economy and individual issuers have experienced particularly large losses.
The economic impacts of the global pandemic may adversely impact the Funds’ ability to reach their investment objectives
and may adversely affect the value and liquidity of the Funds’ investments. Because of uncertainties in valuation, values
reflected in these financial statements may differ from the value received upon sales of those investments. These circumstances
may continue for an extended period of time, and may adversely affect the value and liquidity of the Funds’ investments.
2. FEDERAL INCOME TAXES
Classification of Distributions: Net
investment income/(loss) and net realized gain/(loss) may differ for financial statement and tax purposes. The character of distributions
made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ
from the fiscal year in which the income or realized gain was recorded by the Funds.
The tax character of the distributions paid by the Funds during
the year ended October 31, 2020, were as follows:
|
|
|
Ordinary Income
|
|
|
Long-Term Capital Gains
|
|
|
Return of Capital
|
|
|
Total
|
|
|
Clough Global Dividend and Income Fund October 31, 2020
|
|
$
|
1,651,697
|
|
|
$
|
–
|
|
|
$
|
8,511,559
|
|
|
$
|
10,163,256
|
|
|
Clough Global Equity Fund October 31, 2020
|
|
$
|
7,857,353
|
|
|
$
|
9,579,556
|
|
|
$
|
–
|
|
|
$
|
17,436,909
|
|
|
Clough Global Opportunities Fund October 31, 2020
|
|
$
|
22,599,834
|
|
|
$
|
4,666,647
|
|
|
$
|
7,249,086
|
|
|
$
|
34,515,567
|
|
Tax Basis of Investments: Net unrealized appreciation/(depreciation)
of investments based on federal tax cost as of April 30, 2021, were as follows:
|
|
|
Clough Global Dividend and Income Fund
|
|
|
Clough Global Equity Fund
|
|
|
Clough Global Opportunities Fund
|
|
|
Gross appreciation (excess of value over tax cost)(a)
|
|
$
|
27,317,066
|
|
|
$
|
64,086,689
|
|
|
$
|
122,815,252
|
|
|
Gross depreciation (excess of tax cost over value)(a)
|
|
|
(6,776,950
|
)
|
|
|
(16,722,178
|
)
|
|
|
(33,415,231
|
)
|
|
Net unrealized appreciation
|
|
$
|
20,540,116
|
|
|
$
|
47,364,511
|
|
|
$
|
89,400,021
|
|
|
Cost of investments for income tax purposes
|
|
$
|
357,338,191
|
|
|
$
|
662,510,432
|
|
|
$
|
1,328,112,379
|
|
|
|
(a)
|
Includes appreciation/(depreciation) on securities sold
short.
|
The difference between book and tax basis unrealized appreciation
is attributable primarily to wash sales and tax treatment of certain other investments.
3. CAPITAL TRANSACTIONS
Common Shares: There are an unlimited number of no par value
common shares of beneficial interest authorized for each Fund.
The Board of each Fund announced, on April
20, 2015, that it had approved a share repurchase program in accordance with Section 23(c) of the 1940 Act. Under the share repurchase
program, each Fund may purchase up to 5% of its outstanding common shares as of April 9, 2015, in the open market, through the
Funds’ fiscal year end of October 31, 2015. The Board of each Fund approved, in October 2015, to extend the share repurchase
program through the Funds’ fiscal year end of October 31, 2016. The Board of each Fund approved, in December 2016, to extend
the share repurchase program through the Funds’ fiscal year end of October 31, 2017. In
April 2017, the Board temporarily suspended the share repurchase program in light of prevailing discount rates.
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
On October 13, 2017, the Funds commenced tender
offers which expired on November 10, 2017. Each Fund’s tender offer was oversubscribed, and as a result, Clough Global Equity
Fund and Clough Global Opportunities Fund purchased 37.5% of its respective outstanding common shares of beneficial interest and
Clough Global Dividend and Income Fund purchased 32.5% of its outstanding common shares of beneficial interest. A total of 4,998,066,
10,052,547 and 31,646,419 shares, for Clough Global Dividend and Income Fund, Clough Global Equity Fund and Clough Global Opportunities
Fund, respectively, were properly tendered and not withdrawn. The Funds accepted 3,373,469, 6,615,414 and 19,334,647 shares, for
Clough Global Dividend and Income Fund, Clough Global Equity Fund and Clough Global Opportunities Fund, respectively, for cash
payment totaling $49,421,321, $95,394,270 and $232,209,110 at a purchase price of $14.65, $14.42 and $12.01 per common share for
Clough Global Dividend and Income Fund, Clough Global Equity Fund and Clough Global Opportunities Fund, respectively, which is
98.5% of the net asset value per common share determined as of the close of the regular trading session of the NYSE on November
13, 2017. Accordingly, on a pro rata basis, Clough Global Dividend and Income Fund, Clough Global Equity Fund and Clough Global
Opportunities Fund accepted approximately 67%, 66% and 61%, respectively, of the shares properly tendered.
In a rights offering that expired on August
23, 2019, Clough Global Dividend and Income Fund shareholders exercised rights to purchase 1,401,287 shares at $10.42 per share
for proceeds, net of expenses of $176,000, of $14,425,411. The subscription price of $10.42 per share was established on August
23, 2019, which represented 85% of the reported net asset value on August 23, 2019.
In a rights offering that expired on August
23, 2019, Clough Global Equity Fund shareholders exercised rights to purchase 2,205,138 shares at $11.24 per share for proceeds,
net of expenses of $203,000, of $24,582,751. The subscription price of $11.24 per share was established on August 23, 2019, which
represented 95% of the reported market price per share, based on the average of the last reported sales price of a common share
on the Exchange for the five trading days preceding August 23, 2019.
Transactions in common shares were as follows:
|
|
|
Clough Global Dividend and Income Fund
|
|
|
|
|
For the Six Months Ended April 30, 2021
|
|
|
For the Year Ended October 31, 2020
|
|
|
Common Shares Outstanding - beginning of period
|
|
|
8,407,724
|
|
|
|
8,407,724
|
|
|
Common Shares Issued as reinvestment of dividends
|
|
|
7,316
|
|
|
|
–
|
|
|
Common Shares Outstanding - end of period
|
|
|
8,415,040
|
|
|
|
8,407,724
|
|
Transactions in common shares were as follows:
|
|
|
Clough Global Equity Fund
|
|
|
|
|
For the Six Months Ended April 30, 2021
|
|
|
For the Year Ended October 31, 2020
|
|
|
Common Shares Outstanding - beginning of period
|
|
|
13,230,829
|
|
|
|
13,230,829
|
|
|
Common Shares Outstanding - end of period
|
|
|
13,230,829
|
|
|
|
13,230,829
|
|
Transactions in common shares were as follows:
|
|
|
Clough Global Opportunities Fund
|
|
|
|
|
For the Six Months Ended April 30, 2021
|
|
|
For the Year Ended October 31, 2020
|
|
|
Common Shares Outstanding - beginning of period
|
|
|
32,224,412
|
|
|
|
32,224,412
|
|
|
Common Shares Outstanding - end of period
|
|
|
32,224,412
|
|
|
|
32,224,412
|
|
|
Semi-Annual Report | April 30, 2021
|
55
|
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
4. PORTFOLIO SECURITIES
Purchases and sales of investment securities, excluding securities
sold short intended to be held for less than one year and short-term securities, for the six months ended April 30, 2021, are listed
in the table below.
|
Fund
|
|
Cost of Investments Purchased
|
|
|
Proceeds From Investments Sold
|
|
|
Purchases of Long-Term U.S. Government Obligations
|
|
|
Proceeds from Sales of Long-Term U.S. Government Obligations
|
|
|
Clough Global Dividend and Income Fund
|
|
$
|
84,244,467
|
|
|
$
|
77,288,936
|
|
|
$
|
20,293,437
|
|
|
$
|
26,342,074
|
|
|
Clough Global Equity Fund
|
|
|
255,231,493
|
|
|
|
233,621,369
|
|
|
|
36,247,484
|
|
|
|
52,689,707
|
|
|
Clough Global Opportunities Fund
|
|
|
537,831,410
|
|
|
|
475,731,753
|
|
|
|
76,729,906
|
|
|
|
123,638,333
|
|
5. INVESTMENT ADVISORY AND
ADMINISTRATION AGREEMENTS
Clough serves as each Fund’s investment
adviser pursuant to an Investment Advisory Agreement (each an “Advisory Agreement” and collectively, the “Advisory
Agreements”) with each Fund. As compensation for its services to the Fund, Clough receives an annual investment advisory
fee of 0.70%, 0.90% and 1.00% based on Clough Global Dividend and Income Fund’s, Clough Global Equity Fund’s and Clough
Global Opportunities Fund’s, respectively, average daily total assets, computed daily and payable monthly. ALPS Fund Services,
Inc. (“ALPS”) serves as each Fund’s administrator pursuant to an Administration, Bookkeeping and Pricing Services
Agreement with each Fund. As compensation for its services to each Fund, ALPS receives an annual administration fee based on each
Fund’s average daily total assets, computed daily and payable monthly. ALPS will pay all expenses incurred by each Fund,
with the exception of advisory fees, interest, dividend expenses tied to short sales, trustees’ fees, portfolio transaction
expenses, litigation expenses, taxes, expenses of conducting repurchase offers for the purpose of repurchasing fund shares, costs
of preferred shares, certain expenses related to regulatory filings and extraordinary expenses.
Both Clough and ALPS are considered to be “affiliates”
of the Funds as defined in the 1940 Act.
6. COMMITTED FACILITY AGREEMENT
AND LENDING AGREEMENT
Each Fund entered into a financing package
that includes a Committed Facility Agreement (the “Agreement”) dated January 16, 2009, as amended, between each Fund
and BNP Paribas Prime Brokerage, Inc. (“BNP”) that allows each Fund to borrow funds from BNP. Each Fund entered a Special
Custody and Pledge Agreement (the “Pledge Agreement”) dated December 9, 2013, as amended, between each Fund, the Funds’
custodian, and BNP. As of October 31, 2016, the Pledge Agreement was assigned from BNP to BNP Paribas Prime Brokerage International,
Ltd. Per the Pledge Agreement, borrowings under the Agreement are secured by assets of each Fund that are held by the Fund’s
custodian in a separate account (the “pledged collateral”). On April 30, 2021, the pledged collateral was valued at
$90,244,755, $218,761,605 and $435,532,426 for the Clough Global Dividend and Income Fund, Clough Global Equity Fund and Clough
Global Opportunities Fund, respectively. Each Fund may, with 30 days notice, reduce the Maximum Commitment Financing (Initial Limit
amount plus the increased borrowing amount in excess of the Initial Limit) to a lesser amount if drawing on the full amount would
result in a violation of the applicable asset coverage requirement of Section 18 of the 1940 Act. Interest is charged at the three
month LIBOR (London Inter-bank Offered Rate) plus 0.70% on the amount borrowed and 0.65% on the undrawn balance. Each Fund also
pays a one-time arrangement fee of 0.25% on (i) the Initial Limit and (ii) any increased borrowing amount in the excess of the
Initial Limit, paid in monthly installments for the six months immediately following the date on which borrowings were drawn by
the Fund.
The Maximum Commitment Financing allowed under
the Agreement is $50,500,000, $107,500,000 and $212,500,000 for the Clough Global Dividend and Income Fund, Clough Global Equity
Fund and the Clough Global Opportunities Fund, respectively. For the six ended April 30, 2021, the average borrowings outstanding
for Clough Global Dividend and Income Fund, Clough Global Equity Fund and Clough Global Opportunities Fund under the agreement
were $50,500,000, $101,972,376 and $201,588,398, respectively, and the average interest rate for the borrowings was 0.91%. As of
April 30, 2021, the outstanding borrowings for Clough Global Dividend and Income Fund, Clough Global Equity Fund and Clough Global
Opportunities Fund were $50,500,000, $107,500,000 and $212,500,000, respectively. The interest rate applicable to the borrowings
of Clough Global Dividend and Income Fund, Clough Global Equity Fund and Clough Global Opportunities Fund on April 30, 2021, was
0.88%.
The Lending Agreement is a separate side-agreement
between each Fund and BNP pursuant to which BNP may borrow a portion of the pledged collateral (the “Lent Securities”)
in an amount not to exceed the outstanding borrowings owed by a Fund to BNP under the Agreement. The Lending Agreement is intended
to permit each Fund to significantly reduce the cost of its borrowings under the Agreement. BNP has the ability to re-register
the Lent Securities in its own name or in another name other than the Fund to pledge, re-pledge, sell, lend or otherwise transfer
or use the collateral with all attendant rights of ownership. (It is each Fund’s understanding that BNP will perform due
diligence to determine the creditworthiness of any party that borrows Lent Securities from BNP.)
Each Fund may designate any security within the pledged collateral as ineligible to be a Lent Security, provided there are eligible
securities within the pledged collateral in an amount equal to the outstanding borrowing owed by a Fund. During the year in which
the Lent Securities are outstanding, BNP must remit payment to each Fund equal to the amount of all dividends, interest or other
distributions earned or made by the Lent Securities.
|
Clough Global Funds
|
Notes to Financial Statements
|
April 30, 2021 (Unaudited)
Under the terms of the Lending Agreement, the
Lent Securities are marked to market daily, and if the value of the Lent Securities exceeds the value of the then-outstanding borrowings
owed by a Fund to BNP under the Agreement (the “Current Borrowings”), BNP must, on that day, either (1) return Lent
Securities to each Fund’s custodian in an amount sufficient to cause the value of the outstanding Lent Securities to equal
the Current Borrowings; or (2) post cash collateral with each Fund’s custodian equal to the difference between the value
of the Lent Securities and the value of the Current Borrowings. If BNP fails to perform either of these actions as required, each
Fund will recall securities, as discussed below, in an amount sufficient to cause the value of the outstanding Lent Securities
to equal the Current Borrowings. Each Fund can recall any of the Lent Securities and BNP shall, to the extent commercially possible,
return such security or equivalent security to each Fund’s custodian no later than three business days after such request.
If a Fund recalls a Lent Security pursuant to the Lending Agreement, and BNP fails to return the Lent Securities or equivalent
securities in a timely fashion, BNP shall remain liable for the ultimate delivery to each Fund’s custodian of such Lent Securities,
or equivalent securities, and for any buy-in costs that the executing broker for the sales transaction may impose with respect
to the failure to deliver. Should the borrower of the securities fail financially, the Funds have the right to reduce the outstanding
amount of the Current Borrowings against which the pledged collateral has been secured. Although risk is mitigated by the collateral,
the Funds could experience a delay in recovering their securities and possible loss of income or value if the borrower fails to
return the borrowed securities. Under the terms of the Lending Agreement, each Fund shall have the right to apply and set-off an
amount equal to one hundred percent (100%) of the then current fair value of such Lent Securities against the Current Borrowings.
As of April 30, 2021, the value of the Lent Securities for Clough Global Dividend and Income Fund, Clough Global Equity Fund and
Clough Global Opportunities Fund were $39,657,504, $85,710,169 and $174,182,876, respectively.
The Board has approved each Agreement and the Lending Agreement.
No violations of the Agreement or the Lending Agreement have occurred during the six months ended April 30, 2021.
Each Fund receives income from BNP based on
the value of the Lent Securities. This income is recorded as Hypothecated securities income on the Statements of Operations. The
interest incurred on borrowed amounts is recorded as Interest on loan in the Statements of Operations, a part of Total Expenses.
On July 27, 2017, the Chief Executive of the
UK Financial Conduct Authority (“FCA”), which regulates LIBOR, announced that the FCA will no longer persuade nor require
banks to submit rates for the calculation of LIBOR after 2021. Such announcement indicates that the continuation of LIBOR on the
current basis cannot and will not be guaranteed after 2021. Prior to 2021, it is expected that market participants will focus on
the transition mechanisms by which references to LIBOR in existing contracts or instruments may be amended. When LIBOR is discontinued,
the successor reference rate may be lower or higher than market expectations. This may cause the Funds to pay more or less interest
on borrowings and could impact the Funds’ performance or NAV.
7. SUBSEQUENT EVENT
On May 10, 2021, the Boards of GLV, GLQ, and
GLO authorized and set terms of an offering to each Funds shareholders of rights to purchase additional shares of the Funds. Shareholders
on a record date to be established by each Fund's Board would be issued transferable rights entitling them to subscribe for one
additional share for every five shares held (the “Primary Subscription”), with the right to subscribe for additional
shares not subscribed for by others in the Primary Subscription. Each Fund anticipates that the offering will commence in May 2021
and will continue for approximately 30 days. The rights offering is subject to the effectiveness of each Fund's registration statement
filed with the U.S. Securities and Exchange Commission.
|
Semi-Annual Report | April 30, 2021
|
57
|
|
Clough Global Funds
|
Dividend Reinvestment Plan
|
April 30, 2021 (Unaudited)
Unless the registered owner of Common Shares
elects to receive cash by contacting DST Systems, Inc. (the “Plan Administrator”), all dividends declared on Common
Shares will be automatically reinvested by the Plan Administrator for shareholders in each Fund’s Dividend Reinvestment Plan
(the “Plan”), in additional Common Shares. Shareholders who elect not to participate in the Plan will receive all dividends
and other distributions in cash paid by check mailed directly to the shareholder of record (or, if the Common Shares are held in
street or other nominee name, then to such nominee) by the Plan Administrator as dividend disbursing agent. You may elect not to
participate in the Plan and to receive all dividends in cash by contacting the Plan Administrator, as dividend disbursing agent,
at the address set forth below. Participation in the Plan is completely voluntary and may be terminated or resumed at any time
without penalty by notice if received and processed by the Plan Administrator prior to the dividend record date; otherwise such
termination or resumption will be effective with respect to any subsequently declared dividend or other distribution. Some brokers
may automatically elect to receive cash on your behalf and may re–invest that cash in additional Common Shares for you. If
you wish for all dividends declared on your Common Shares to be automatically reinvested pursuant to the Plan, please contact your
broker.
The Plan Administrator will open an account
for each Common Shareholder under the Plan in the same name in which such Common Shareholder’s Common Shares are registered.
Whenever a Fund declares a dividend or other distribution (together, a “Dividend”) payable in cash, non–participants
in the Plan will receive cash and participants in the Plan will receive the equivalent in Common Shares. The Common Shares will
be acquired by the Plan Administrator for the participants’ accounts, depending upon the circumstances described below, either
(i) through receipt of additional unissued but authorized Common Shares from a Fund (“Newly Issued Common Shares”)
or (ii) by purchase of outstanding Common Shares on the open market (“Open–Market Purchases”) on the American
Stock Exchange or elsewhere. If, on the payment date for any Dividend, the closing market price plus estimated brokerage commissions
per Common Share is equal to or greater than the net asset value per Common Share, the Plan Administrator will invest the Dividend
amount in Newly Issued Common Shares on behalf of the participants. The number of Newly Issued Common Shares to be credited to
each participant’s account will be determined by dividing the dollar amount of the Dividend by the net asset value per Common
Share on the payment date; provided that, if the net asset value is less than or equal to 95% of the closing market value on the
payment date, the dollar amount of the Dividend will be divided by 95% of the closing market price per Common Share on the payment
date. If, on the payment date for any Dividend, the net asset value per Common Share is greater than the closing market value plus
estimated brokerage commissions, the Plan Administrator will invest the Dividend amount in Common Shares acquired on behalf of
the participants in Open–Market Purchases. In the event of a market discount on the payment date for any Dividend, the Plan
Administrator will have until the last business day before the next date on which the Common Shares trade on an “ex–dividend”
basis or 30 days after the payment date for such Dividend, whichever is sooner (the “Last Purchase Date”), to invest
the Dividend amount in Common Shares acquired in Open–Market Purchases. If, before the Plan Administrator has completed its
Open–Market Purchases, the market price per Common Share exceeds the net asset value per Common Share, the average per Common
Share purchase price paid by the Plan Administrator may exceed the net asset value of the Common Shares, resulting in the acquisition
of fewer Common Shares than if the Dividend had been paid in Newly Issued Common Shares on the Dividend payment date. Because of
the foregoing difficulty with respect to Open–Market Purchases, the Plan provides that if the Plan Administrator is unable
to invest the full Dividend amount in Open–Market Purchases during the purchase period or if the market discount shifts to
a market premium during the purchase period, the Plan Administrator may cease making Open–Market Purchases and may invest
the uninvested portion of the Dividend amount in Newly Issued Common Shares at the net asset value per Common Share at the close
of business on the Last Purchase Date provided that, if the net asset value is less than or equal to 95% of the then current market
price per Common Share; the dollar amount of the Dividend will be divided by 95% of the market price on the payment date.
The Plan Administrator maintains all shareholders’
accounts in the Plan and furnishes written confirmation of all transactions in the accounts, including information needed by shareholders
for tax records. Common Shares in the account of each Plan participant will be held by the Plan Administrator on behalf of the
Plan participant, and each shareholder proxy will include those shares purchased or received pursuant to the Plan. The Plan Administrator
will forward all proxy solicitation materials to participants and vote proxies for shares held under the Plan in accordance with
the instructions of the participants.
In the case of Common Shareholders such as
banks, brokers or nominees which hold shares for others who are the beneficial owners, the Plan Administrator will administer the
Plan on the basis of the number of Common Shares certified from time to time by the record shareholder’s name and held for
the account of beneficial owners who participate in the Plan.
There will be no brokerage charges with respect
to Common Shares issued directly by a Fund. However, each participant will pay a pro rata share of brokerage commissions incurred
in connection with Open–Market Purchases. The automatic reinvestment of Dividends will not relieve participants of any federal,
state or local income tax that may be payable (or required to be withheld) on such Dividends. Participants that request a sale
of Common Shares through the Plan Administrator are subject to brokerage commissions.
Each Fund reserves the right to amend or terminate the Plan. There
is no direct service charge to participants with regard to purchases in the Plan; however, each Fund reserves the right to amend
the Plan to include a service charge payable by the participants.
All correspondence or questions concerning the Plan should be directed
to the Plan Administrator, DST Systems, Inc., 333 West 11th Street, 5th Floor, Kansas City, Missouri 64105.
|
Clough Global Funds
|
Additional Information
|
April 30, 2021 (Unaudited)
FUND PROXY VOTING POLICIES & PROCEDURES
Each Fund’s policies and procedures used
in determining how to vote proxies relating to portfolio securities are available on the Funds’ website at http://www.cloughglobal.com.
Information regarding how each Fund voted proxies relating to portfolio securities held by each Fund for the period ended June
30, are available without charge, upon request, by contacting the Funds at 1-877-256-8445 and on the Commission’s website
at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Funds file their complete schedule of portfolio
holdings with the Commission for each fiscal quarter on Form N-PORT within 60 days after the end of the period. Copies of the Funds’
Form N-PORT are available without a charge, upon request, by contacting the Funds at 1–877–256–8445 and on the
Commission’s website at http://www.sec.gov.
NOTICE
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that each Fund may purchase at market prices from time to time shares of its common stock in the open market.
SECTION 19(A) NOTICES
The following table sets forth the estimated
amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related
rules adopted there under. Each Fund estimates the following percentages, of the total distribution amount per share, attributable
to (i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term
capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages
are disclosed for the fiscal year-to-date cumulative distribution amount per share for each Fund.
The amounts and sources of distributions reported
in these 19(a) notices are only estimates and not for tax reporting purposes. The actual amounts and sources of the amounts for
tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may
be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you
how to report these distributions for federal income tax purposes.
|
|
|
Total Cumulative Distributions for the period ended April 30, 2021
|
|
|
% Breakdown of the Total Cumulative Distributions for the period ended April 30, 2021
|
|
|
|
|
Net Investment Income
|
|
|
Net Realized Capital Gains
|
|
|
Return of Capital
|
|
|
Total Per Common Share
|
|
|
Net Investment Income
|
|
|
Net Realized Capital Gains
|
|
|
Return of Capital
|
|
|
Total Per Common Share
|
|
|
Clough Global Dividend and Income Fund
|
|
$
|
0.0734
|
|
|
$
|
–
|
|
|
$
|
0.5150
|
|
|
$
|
0.5884
|
|
|
|
12.47
|
%
|
|
|
–
|
|
|
|
87.53
|
%
|
|
|
100.00
|
%
|
|
Clough Global Equity Fund
|
|
$
|
–
|
|
|
$
|
0.7572
|
|
|
$
|
–
|
|
|
$
|
0.7572
|
|
|
|
–
|
|
|
|
100.00
|
%
|
|
|
–
|
|
|
|
100.00
|
%
|
|
Clough Global Opportunities Fund
|
|
$
|
–
|
|
|
$
|
0.6142
|
|
|
$
|
–
|
|
|
$
|
0.6142
|
|
|
|
–
|
|
|
|
100.00
|
%
|
|
|
–
|
|
|
|
100.00
|
%
|
Each Fund’s dividend policy is to distribute
all or a portion of its net investment income to its shareholders on a monthly basis. In order to provide shareholders with a more
stable level of dividend distributions, each Fund may at times pay out less than the entire amount of net investment income earned
in any particular month and may at times in any particular month pay out such accumulated but undistributed income in addition
to net investment income earned in that month. As a result, the dividends paid by each Fund for any particular month may be more
or less than the amount of net investment income earned by the Fund during such month. Each Fund’s current accumulated but
undistributed net investment income, if any, is disclosed in the Statements of Assets and Liabilities, which comprises part of
the financial information included in this report.
|
Semi-Annual Report | April 30, 2021
|
59
|
|
Clough Global Funds
|
Investment Advisory Agreement Approval
|
April 30, 2021 (Unaudited)
On April 15, 2021, the Board of Trustees (the
“Board” or the “Trustees”) of each of Clough Global Dividend and Income Fund (“GLV”), Clough
Global Equity Fund (“GLQ”) and Clough Global Opportunities Fund (“GLO” and together with GLV and GLQ, each,
a “Fund” and collectively, the “Funds”) met to, among other things, review and consider the renewal of
the Investment Advisory Agreements between each Fund and Clough (each, an “Advisory Agreement” and collectively, the
“Advisory Agreements”). During their review of each Advisory Agreement, the Trustees, including the Trustees who are
not “interested persons” of the Fund (the “Independent Trustees”), as that term is defined in the Investment
Company Act of 1940, as amended (the “1940 Act”), considered all factors that it believed to be relevant, including
those discussed below. The Board did not identify any one factor as dispositive, and each Board member may have attributed different
weights to the factors considered.
Prior to the beginning of their review of the
Advisory Agreements, counsel to the Funds, who also serves as independent counsel to the Independent Trustees, discussed with the
Trustees their role and fiduciary responsibilities in general and also specifically under the 1940 Act with respect to the renewal
of each Advisory Agreement.
Representatives from Clough discussed Clough’s
materials relating to the Trustees’ consideration of renewal of the Advisory Agreements. It was noted that included in the
Board materials were responses by Clough to a request letter prepared by legal counsel on behalf of the Independent Trustees to
the Funds to assist the Board in evaluating whether to renew the Advisory Agreements (the “15(c) Materials”). It was
also noted that the 15(c) Materials were extensive, and included information relating to: each Fund’s investment results,
portfolio composition, advisory fee and expense comparisons and profitability to Clough; financial information regarding Clough;
descriptions of policies, including compliance monitoring and portfolio trading practices; information about the personnel providing
investment management services to the Funds; and the nature of services provided under each Advisory Agreement. In addition, the
Independent Trustees considered information provided to them at prior Board meetings in presentations from Clough Capital representatives.
The Board considered the organizational structure
and business operations of Clough. The Board also considered the qualifications of Clough and its principals to act as each Fund’s
investment adviser. The Board considered the professional experience of the portfolio managers, Charles I. Clough, Jr. and Robert
Zdunczyk, (collectively, the “Portfolio Managers”), emphasizing that each of the Portfolio Managers had substantial
experience as an investment professional. The Trustees acknowledged their familiarity with the expertise and standing in the investment
community of the Portfolio Managers, and their satisfaction with the expertise of Clough and the services provided by Clough to
the Funds. The Trustees concluded that the portfolio management team was well qualified to serve the Funds in those functions.
The Board considered various investment products
managed by Clough other than the Funds. The Board also considered the adequacy of Clough’s facilities. The Trustees concluded
that Clough appeared to have adequate procedures and personnel in place to ensure compliance by Clough with applicable law and
with each Fund’s investment objectives and restrictions.
The Board considered the terms of the Advisory
Agreements, pursuant to which Clough receives a fee of 0.70%, 0.90% and 1.00% based on the average daily total assets of Clough
Global Dividend and Income Fund, Clough Global Equity Fund and Clough Global Opportunities Fund, respectively. The Trustees considered
the fees charged by Clough to other clients for which it provides comparable service, Clough’s balance sheet for the year
ended December 31, 2020, and a profit and loss analysis as it relates to Clough’s advisory business.
The Board considered Clough’s procedures
relating to compliance and oversight, a copy of which was included in the Board materials. The Board further considered information
provided by Clough on whether Clough has experienced or anticipates it may experience conflicts of interest in managing the Funds.
The Board considered that the materials contained information regarding Clough’s business continuity and disaster recovery
plans as well as steps Clough has undertaken to reasonably detect and prevent cybersecurity crimes. The Board also considered information
related to Clough’s trading activities and how Clough monitors best execution. The Board considered the possible benefits
Clough may accrue because of its relationship with the Funds as well as potential benefits that accrue to the Funds because of
their relationship with Clough. The Board considered that, other than soft dollar arrangements, Clough does not realize any direct
benefits due to the allocation of brokerage and related transactions on behalf of the Funds.
The Board considered materials regarding the
comparability of the investment advisory fees of the Funds with the investment advisory fees of other investment companies (each,
an “Expense Group”), which had been prepared by Strategic Insight, an Asset International Company (“Strategic
Insight”). The Board also considered information in the Strategic Insight report regarding each Fund’s investment performance
as well as comparisons of each Fund’s performance with the performance during similar periods of other funds in its Expense
Group and comparisons of cost and expense structures of each Fund with the cost and expense structures of other funds in the relevant
Expense Group, and related matters.
The Board took into consideration that the
Funds may be unique in the registered fund marketplace and that Strategic Insight had a difficult time presenting a large peer
group for comparison. For each Fund, the Board considered fees from other leveraged closed-end investment companies that Strategic
Insight classified as “global funds” (as well as funds that Clough recommended be included) versus Clough Global Dividend
and Income Fund’s, Clough Global Equity Fund’s and Clough Global Opportunities Fund’s fees as part of the expense
group (the “Expense Group”). The Board considered the extent to which each Fund utilizes
leverage and short sales, thereby increasing its investment-related expenses and concluded that the use of leverage and short sales
is an important part of each Fund’s investment strategy to attempt to meet each Fund’s investment objective. The Board
also considered that investment related expenses should be viewed as operational in nature and should not be considered a management
expense. The Board further considered that Strategic Insight defined investment related expenses to include, but not be limited
to, dividends on securities sold short, interest expense, reverse repurchase agreements, swaps, tender costs, and auction fees.
|
Clough Global Funds
|
Investment Advisory Agreement Approval
|
April 30, 2021 (Unaudited)
For GLV, the Board considered that the investment
advisory fee for managed assets in the Expense Group ranged from GLV’s low of 0.700% to 1.105%. For GLV, the Board also considered
that as reported by Strategic Insight, the net total expense ratio for the Expense Group on managed assets, excluding investment
related expenses, ranged from the low of 1.387% to 1.894%, with a median of 1.611% and GLV at 1.894%.
For GLQ, the Board considered that the investment
advisory fee for managed assets in the Expense Group ranged from 0.700% to 1.000%, with GLQ at 0.900%. For GLQ, the Board also
considered that as reported by Strategic Insight, the net total expense ratio for the Expense Group on managed assets, excluding
investment related expenses, ranged from 1.387% to 2.199%, with a median of 1.750% and GLQ at 2.199%.
For GLO, the Board considered that the investment
advisory fee for managed assets in the Expense Group ranged from 0.700% to 1.105%, with GLO at 1.000%. For GLO, the Board also
considered that as reported by Strategic Insight, the net total expense ratio for the Expense Group on managed assets, excluding
investment related expenses, ranged from 1.387% to 2.352%, with a median of 1.631% and GLO at 2.352%.
The Trustees took into consideration each Fund’s performance
as compared to the performance of each Fund’s Expense Group for the one year ended February 21, 2021.
|
|
·
|
For GLV, the one year net total return performance data
for GLV’s Expense Group ranged from a high of 47.18% to a low of -3.20% with a median of 12.07%. GLV’s performance
was 9.84%.
|
|
|
·
|
For GLQ, the one year net total return performance data for
GLQ’s Expense Group ranged from a high of 52.38% to a low of 1.01% with a median of 12.07%. GLQ’s performance was
46.07%.
|
|
|
·
|
For GLO, the one year total return performance data for
GLO’s Expense Group ranged from a high of 45.04% to a low of 1.01% with a median of 12.07%. GLO’s performance was
45.04%.
|
The Trustees also considered each Fund’s performance as compared
to the performance of each Fund’s Expense Group for the one year ended December 31, 2020.
|
|
·
|
For GLV, the 2020 annual net total return performance
data for GLV’s Expense Group ranged from a high of 29.51% to a low of -10.52% with a median of 8.46% and GLV at 8.46%.
|
|
|
·
|
For GLQ, the 2020 annual net total return performance
data for GLQ’s Expense Group ranged from a high of 34.65% to a low of -13.27% with a median of 3.38% and GLQ at 34.65%.
|
|
|
·
|
For GLO, the 2020 annual net total return performance
data for GLO’s Expense Group ranged from a high of 35.63% to a low of -6.61% with a median of 3.46% and GLO at 35.63%.
|
The Trustees also considered the profit and loss information on
each Fund provided by Clough.
The Independent Trustees met in executive session and with the assistance
of legal counsel reviewed and discussed in more detail the information that had been presented relating to Clough, the Advisory
Agreements and Clough’s profitability.
After executive session, the Board of Trustees
of the Fund, present in person, with the Independent Trustees present in person voting separately, unanimously concluded that the
investment advisory fee of 0.70% of Clough Global Dividend and Income Fund’s total assets, 0.90% of Clough Global Equity
Fund’s total assets and 1.00% of Clough Global Opportunities Fund’s total assets are fair and reasonable for each respective
Fund and that the renewal of each Advisory Agreement is in the best interests of each respective Fund and its shareholders.
|
Semi-Annual Report | April 30, 2021
|
61
|
