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
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Clough Global Allocation Fund
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(Exact name of registrant as specified in charter)
1625 Broadway, Suite 2200, Denver, Colorado 80202
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(Address of principal executive offices) (Zip code)
Erin E. Douglas, Secretary
Clough Global Allocation Fund
1625 Broadway, Suite 2200
Denver, Colorado 80202
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(Name and address of agent for service)
Registrant's telephone number, including area code: 303-623-2577
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Date of fiscal year end: May 31
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Date of reporting period: November 30
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Item 1. REPORTS TO STOCKHOLDERS.
[CLOUGH GLOBAL ALLOCATION FUND LOGO]
[GRAPHIC]
SEMI-ANNUAL
NOVEMBER 30, 2004
(UNAUDITED)
1
SHAREHOLDER LETTER
NOVEMBER 30, 2004
To the Shareholders of the Clough Global Allocation Fund:
This letter addresses the strategies we use to manage the Clough Global
Allocation Fund and provides our initial outlook towards investing in 2005.
The Fund began investing on July 29, 2004 and has seen four months of activity.
We are pleased with the Fund's performance to date. The Fund's offering price on
July 28, 2004 was $20 per share and it never closed below that level. The
closing market price for the period ended November 30, 2004, was $21.10 per
share. In addition, the Fund paid a $0.30 per share cash distribution on October
29, 2004, the first quarterly installment in what is planned to be a 6% annual
managed distribution. The net asset value at period-end was $20.44 per share, up
from $19.10 at inception. During the period, shares of the Fund consistently
sold at a premium to net asset value.
There have been three overriding determinants of the Fund's investment
strategies. First, the Fund is an asset allocation fund, and we aggressively
manage its stock/bond mix. While most mutual funds are limited to investing in
either stocks or bonds, Clough Capital has the ability to seek out opportunity
in either asset class.
Second, on the equity side, the Fund has a definite theme focus. We seek to
invest in what we believe are the five or six most attractive investment themes
in the global markets. Three current examples of themes in which the Fund is
invested are noted below:
a) Our largest equity exposure is in North American natural gas
exploration and production and the deep-water drilling equipment and
service industries. On the surface this appears to be a popular market
theme, but we think most investors have only a superficial
appreciation for what is happening on the energy front. The big North
American gas fields are depleting, reservoir levels are falling, and
though the number of rigs operating in North America is 65% higher
than 2 years ago, production of natural gas is actually down.
According to the CEO of one deep water drilling company, for the first
time in half a century, it will be necessary to develop completely new
fields to access new gas supplies. Most new gas fields lie under 5,000
feet of water and for that reason we are invested in both producers
and companies which provide equipment and services for offshore
drilling Currently, only 26 rigs exist in the world that are capable
of drilling at depths of more than 5,000 feet of water. Yet, over the
next 25 years the International Energy Agency estimates that $2.5
trillion will be spent to develop these resources, so we believe the
opportunity for the drilling industry is rather dramatic. That level
of spending contrasts with a current market capitalization for all
U.S. off-shore drilling companies which is a mere $38 billion. We
expect some stock price volatility in this sector as perspectives of
energy availability change, but we will try to take advantage of that
if or when it occurs.
b) We are investing in a portfolio of small capitalization banks, looking
forward to the consolidation which we believe will occur in the
financial service industry. If the consolidation occurs as we expect,
it is likely to benefit the stock prices of these institutions.
2
c) We hold a number of property/casualty insurance companies whose stocks
sell at 7-8 times earnings which we believe offers good value. We
believe it is highly likely that growing cash flows and limited
opportunities for market share gains will force the industry to
consolidate, materially strengthening its long-term profit outlook.
Finally, the Fund also has a global mandate. As of November 30, 2004, more
than 15% of the Fund's assets were invested outside the U.S. This strategy
reflects our belief that higher returns will come from non-U.S. financial
markets. Japan is the nucleus of our largest non-U.S. country focus. Japan
has the second largest financial market in the world, and while most
analysts argue over the sustainability of Japan's economic recovery, Japan
is a huge corporate restructuring story. Japanese corporations are building
cash balances and the proliferation of corporate merger activity and
leveraged buyouts are beginning to change Japan's investment landscape.
Business savings are soaring to the level of 25% of gross domestic product
(GDP); Japanese businesses are de-leveraging, and as they do, equity
holders may benefit. The potential opportunity is not unlike that which
characterized the early 1980's in the U.S. when America's financial markets
were inexpensive.
The Fund should also benefit from any rise in the value of the Japanese yen
relative to the U.S. dollar. Emerging markets will also be an important
sector investment in 2005. Many emerging economies have restructured their
financial sectors, enjoy strong current account surpluses and have viable
sources of domestic demand growth. The Fund holds investments in both
non-Japan Asia and Brazil, and we are beginning to examine investment in
Eastern Europe.
In 2005, we anticipate opportunities in selected market sectors and in
several geographies. As of November 30, 2004, the Fund was evenly invested
across stocks and fixed income securities, an asset allocation mix we have
had for most of the Fund's life. Much of the Fund's fixed income focus for
the moment is in shorter-dated U.S. fixed income securities. We suspect
there is some latent strength in the economy and hope to lock in somewhat
higher yields in coming months.
Looking ahead, we see two major investment flows in the world and hope to
capitalize on them. The U.S. is a big balance sheet economy. By that we
mean that $50 trillion in financial assets, consisting of $35 trillion in
bonds and $15 trillion in stocks, are supported by an economy which
produces only $12 trillion in terms of dollar GDP. This is the key reason
the financial markets in the aggregate will likely produce single digit
annual returns in the year ahead. To enhance those market returns, we will
attempt to exploit the movement of capital abroad by investing in what we
believe to be the most promising non-U.S. markets. We also think that a
massive transfer of wealth will occur from financial services, consumer
services and technology, to energy and materials and industries leveraged
to global trade. Finally, we will look for yield opportunities in the
British, Canadian and Australian fixed income markets.
Sincerely,
/s/ Charles I. Clough, Jr.
Charles I. Clough, Jr.
3
STATEMENT OF INVESTMENTS
NOVEMBER 30, 2004
SHARES VALUE
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COMMON STOCK 59.14%
COAL 2.40%
Arch Coal Inc. 16,900 $ 645,580
CONSOL Energy Inc. 30,400 1,298,080
Fording Canadian Coal Trust 10,000 746,000
KFX Inc.* 64,000 963,840
Massey Energy Co. 32,300 1,134,376
-----------------
4,787,876
-----------------
CONSUMER/RETAIL 3.70%
Albertson's, Inc. 18,500 468,050
B & G Foods Inc.* 67,000 996,960
Blue Nile* 30,600 788,868
Government Properties Trust 30,000 318,000
Lion Corp. 170,000 945,030
Martek Biosciences Corp.* 23,300 905,671
Saks Inc.* 10,000 139,100
Sapporo Holdings Ltd. 117,000 505,908
Wacoal Corp. 84,000 946,893
Wolverine World Wide, Inc. 15,000 449,250
York-Benimaru Co., Ltd. 33,000 912,351
-----------------
7,376,081
-----------------
ENERGY 12.42%
BJ Services Co. 30,000 1,520,100
Chesapeake Energy Corp. 157,000 2,826,000
Diamond Offshore Drilling, Inc. 45,000 1,685,700
ENSCO International Inc. 39,000 1,221,090
EOG Resources Inc. 20,000 1,501,400
FMC Technologies, Inc.* 25,000 821,250
GlobalSanteFe Corp. 33,000 1,036,200
Grant Prideco Inc.* 25,000 538,750
Halliburton Co. 20,000 827,000
Matrix Service Co.* 40,000 298,000
Murphy Oil Corp. 7,000 597,170
Nabors Industries Ltd.* 25,000 1,300,000
National-Oilwell, Inc.* 40,000 1,448,000
Noble Corp.* 15,000 726,750
Patterson-UTI Energy, Inc. 70,000 1,400,000
Petrokazakh Inc. - Class A 10,000 420,000
Petroleo Brasileiro S.A. - ADR 42,050 1,604,628
Royal Dutch Petroleum Co. - ADR 10,000 572,600
Suncor Energy Inc. 10,000 347,700
Talisman Energy Inc. 42,000 1,184,670
4
SHARES VALUE
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ENERGY (CONTINUED)
Transocean Inc.* 61,000 $ 2,456,470
Ultra Petroleum Corp.* 8,000 421,280
-----------------
24,754,758
-----------------
FINANCE 10.98%
ACOM Co., Ltd. 10,400 783,247
Aiful Corp. 7,000 795,880
Apollo Investment Corp.* 95,400 1,407,150
Astoria Financial Corp. 21,000 871,500
Bank Mutual Corp. 8,500 104,805
Bank of Yokohama, Ltd. 160,000 1,010,641
BankUnited Financial Corp. - Class A* 6,400 196,736
Brookline Bancorp, Inc. 98,000 1,587,600
Cohen & Steers, Inc. 143,000 2,558,270
Daiwa Securities Group Inc. 178,000 1,217,745
Fidelity Bankshares, Inc. 29,000 1,189,870
First Niagara Financial Group, Inc. 55,000 794,200
Freddie Mac 6,000 409,560
Independent Bank Corp. 24,500 846,720
Mitsubishi Tokyo Financial 47,000 445,560
NewAlliance Bancshares, Inc. 73,000 1,097,190
Nikko Cordial Corp. 148,000 739,245
Promise Co., Ltd. 13,000 909,571
Provident Financial Services, Inc. 40,000 777,200
Sovereign Bancorp, Inc. 105,000 2,294,250
Washington Mutual Inc. 18,000 732,780
Webster Financial Corp. 22,000 1,101,100
-----------------
21,870,820
-----------------
HEALTHCARE 1.45%
Biosphere Medical Inc.* 123,000 381,300
Elan Corp PLC - SPONS ADR* 5,000 132,000
Omnicare Inc. 36,400 1,179,724
Sepracor Inc.* 26,700 1,188,417
-----------------
2,881,441
-----------------
INDUSTRIAL 5.34%
Chicago Bridge & Iron Co. 20,000 774,000
Fluor Corp. 11,000 570,900
General Electric Co. 26,000 919,360
GOL Linhas Aereas Inteligentes S.A. - ADR* 50,000 1,193,000
Jacobs Engineering Group Inc.* 20,000 919,400
Kokuyo Co., Ltd. 56,000 642,146
Louisiana Pacific Corp. 39,000 954,330
5
SHARES VALUE
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INDUSTRIAL (CONTINUED)
Methanex Corp. 35,000 $ 614,600
Nisshinbo Industries, Inc. 137,000 938,587
Noritz Corp. 26,200 382,677
Shaw Group Inc.* 40,000 589,200
Smurfit - Stone Container Corp.* 30,000 538,800
Trinity Industries, Inc. 25,000 883,750
Willbros Group, Inc.* 40,000 720,400
-----------------
10,641,150
-----------------
INSURANCE 2.15%
Everest RE Group Ltd. 5,000 421,350
Infinity Property & Casualty 4,700 173,900
Metlife Inc. 28,000 1,092,000
MGIC Investment Corp. 5,000 340,000
PMI Group Inc. 10,000 411,800
Radian Group Inc. 7,000 358,750
Selective Insurance Group, Inc. 13,800 618,102
Specialty Underwriter's All* 50,000 480,500
XL Capital, Ltd. - Class A 5,200 391,872
-----------------
4,288,274
-----------------
MEDIA 2.72%
Echostar Communications - Class A 45,300 1,485,387
KT Corp. ADR 18,600 402,690
Iowa Telecommunications Services* 10,000 212,100
Nippon Broadcasting System 13,500 640,202
Toho Co., Ltd. 46,000 737,573
Utstarcom Inc.* 43,500 849,990
Viacom Inc. 30,885 1,098,579
-----------------
5,426,521
-----------------
METALS 5.59%
Alcoa Inc. 23,000 781,540
APEX Silver Mines Ltd.* 22,900 445,405
Cleveland-Cliffs Inc. 10,000 969,000
Falconbridge Ltd.* 15,200 401,821
Freeport McMoran Copper & Gold Inc. 20,300 794,339
Inco Ltd.* 10,400 391,872
Ivanhoe Mines Ltd.* 289,700 2,065,561
Newmont Mining Corp. 5,000 236,750
Olin Corp. 40,000 907,600
Oregon Steel Mills Inc.* 92,300 1,659,554
Pan American Silver Corp.* 36,300 655,578
POSCO - ADR 5,000 236,200
Schnitzer Steel Industries, Inc. - Class A 42,100 1,588,433
-----------------
11,133,653
-----------------
6
SHARES VALUE
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TECHNOLOGY 2.57%
Microsoft Corp. 60,000 $ 1,608,600
Nextel Communications, Inc. - Class A* 79,700 2,268,262
Radvision, Ltd.* 93,345 1,245,222
-----------------
5,122,084
-----------------
TRANSPORTATION 3.55%
Airport Facilities Co., Ltd. 59,000 309,606
East Japan Railway Co. 50 275,011
Frontline Ltd. 20,000 1,201,000
General Maritime Corp.* 5,000 227,250
Golar LNG, Ltd.* 52,000 771,212
Nippon Yusen Kabushiki Kaisha 146,000 777,494
OMI Corp. 57,000 1,218,090
Overseas Shipholding Group 18,000 1,182,420
Ship Finance International Ltd. 2,667 66,800
Teekay Shipping Corp. 9,000 479,340
Tsakos Energy Navigation, Ltd. 13,150 555,588
-----------------
7,063,811
-----------------
UTILITIES 6.27%
DTE Energy Co. 4,000 175,520
Dynegy Inc.-Class A* 205,000 1,158,250
Entergy Corp. 29,000 1,879,780
Exelon Corp. 14,000 583,940
FPL Group, Inc. 5,000 351,650
Great Plains Energy Inc. 50,000 1,480,500
Northeast Utilities 90,000 1,640,700
OGE Energy Corp. 30,000 775,500
Progress Energy Inc. 45,000 1,975,950
Southern Co. 11,000 360,690
Western Gas Resources Inc. 17,000 527,000
Williams Cos., Inc. 95,000 1,583,650
-----------------
12,493,130
-----------------
TOTAL COMMON STOCKS
(Cost $106,789,798) 117,839,599
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7
SHARES VALUE
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EXCHANGE TRADED FUNDS 6.08%
iSHARES
MSCI Brazil 149,000 $ 3,106,650
MSCI Hong Kong 142,500 1,718,550
MSCI Japan 487,000 5,020,970
MSCI Malaysia 133,300 979,755
MSCI Pacific 8,000 715,760
MSCI Taiwan 52,000 585,520
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TOTAL EXCHANGE TRADED FUNDS
(Cost $10,955,484) 12,127,205
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PREFERRED STOCK 0.65%
Ashford Hospital Trust 50,000 1,287,500
-----------------
TOTAL PREFERRED STOCK
(Cost $1,250,000) 1,287,500
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MUTUAL FUNDS 0.63%
ASA Bermuda Ltd. 23,000 1,030,860
J.P. Morgan Prime Money Market Fund 219,360 219,360
-----------------
TOTAL MUTUAL FUNDS
(Cost $1,216,352) 1,250,220
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PRINCIPAL
DUE DATE COUPON AMOUNT VALUE
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CORPORATE BONDS & NOTES 8.30%
AT&T Corp.
11/15/31 9.75% $ 10,000,000 11,637,500
Lucent Technologies Inc.
01/15/28 6.50% 5,000,000 4,287,500
McMoran Exploration Co.
10/06/11 5.25% 500,000 617,500
-----------------
TOTAL CORPORATE BONDS & NOTES
(Cost $16,492,833) 16,542,500
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8
PRINCIPAL
DUE DATE COUPON AMOUNT VALUE
--------------------------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES 29.61%
CALIFORNIA 12.40%
California St Economic Recovery
07/01/23 1.62% $ 15,000,000 $ 15,000,000
Los Angeles California Convention
08/15/21 1.62% 3,000,000 3,000,000
M-S-R Public Power Agency
07/01/22 1.40% 5,700,000 5,700,000
Orange County CA Transn Authority
12/15/30 1.40% 1,000,000 1,000,000
-----------------
24,700,000
-----------------
ILLINOIS 11.19%
Illinois Health Facs Authority
01/01/28 1.66% 15,000,000 15,000,000
Illinois Housing Development
07/01/27 1.66% 7,300,000 7,300,000
-----------------
22,300,000
-----------------
NEW YORK 6.02%
Metropolitan Transit Authority
1.42% 12,000,000 12,000,000
-----------------
12,000,000
-----------------
TOTAL MUNICIPAL BONDS & NOTES
(Cost $59,000,000) 59,000,000
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SOVEREIGN BONDS 10.38%
Treasury Sovereign - United Kingdom
12/07/09 5.75% 10,250,000 20,674,326
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TOTAL SOVEREIGN BONDS
(Cost $19,598,987) 20,674,326
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9
PRINCIPAL
DUE DATE COUPON AMOUNT VALUE
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U.S. GOVERNMENT & AGENCY OBLIGATIONS 25.67%
US TREASURY NOTES 20.66%
11/15/05 5.75% $ 40,000,000 $ 41,160,960
U.S. TREASURY BILL 5.01%
12/23/04 1.98% 10,000,000 9,987,900
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TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $51,153,088) 51,148,860
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Total Investments 140.46% 279,870,210
(Cost $266,456,542)
Liabilities in Excess of Other Assets -40.46% (80,623,854)
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NET ASSETS 100.00% $ 199,246,356
============================================================================================
*NON-INCOME PRODUCING SECURITY
ADR - AMERICAN DEPOSITARY RECEIPT
ALL SHARES OF SECURITIES ARE PLEDGED AS COLLATERAL FOR THE BORROWINGS UNDER THE
SECURITY AGREEMENT FOR THE FUND'S LINE OF CREDIT.
SHARES VALUE
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SECURITIES SOLD SHORT 3.00%
CDW Corp. 5,000 $ 328,600
Electronic Arts Inc.* 5,000 244,500
Ford Motor Co. 130,000 1,843,400
General Motors Corp. 45,400 1,751,986
Harley Davidson Inc. 5,000 289,100
New York Community Bancorp 20,000 395,600
Polaris Industries Inc. 5,000 329,500
Retail HOLDRs Trust 7,500 724,875
Tektronix Inc. 2,500 78,425
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5,985,986
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TOTAL SECURITIES SOLD SHORT
(Cost $5,964,290) $ 5,985,986
============================================================================================
10
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 2004
ASSETS:
Investments, at value (Cost - see below) $ 279,870,210
Deposit with broker for securities sold short 9,253,986
Dividends receivable 443,520
Interest receivable 881,740
Receivable for investments sold 384,015
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Total assets 290,833,471
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LIABILITIES:
Securities sold short (Proceeds $5,964,290) 5,985,986
Payable for investments purchased 12,396,808
Loan payable 72,856,298
Interest on loan payable 36,297
Dividends payable 23,424
Accrued investment advisory fee 122,610
Accrued administration fee 49,920
Accrued trustees fee 9,524
Accrued offering costs 106,248
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Total Liabilities 91,587,115
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NET ASSETS $ 199,246,356
============================================================================================
Cost of investments $ 266,456,542
============================================================================================
COMPOSITION OF NET ASSETS:
Paid in capital $ 185,784,834
Overdistributed net investment income (2,359,667)
Accumulated net realized gain on investments and
foreign currency transactions 2,400,557
Net unrealized appreciation in value of investments,
securities sold short and translation of assets and
liabilities denominated in foreign currencies 13,420,632
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NET ASSETS $ 199,246,356
============================================================================================
Shares of common stock outstanding of no par value,
unlimited shares authorized 9,745,658
============================================================================================
Net asset value per share $ 20.44
============================================================================================
SEE NOTES TO FINANCIAL STATEMENTS
11
STATEMENT OF OPERATIONS
FOR THE PERIOD JULY 28, 2004 (INCEPTION) TO NOVEMBER 30, 2004
INVESTMENT INCOME:
Dividends $ 627,894
Interest 668,580
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Total Income 1,296,474
--------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 468,555
Administration fee 190,769
Trustees fee 34,524
Dividend expense on short sales 23,424
Interest on outstanding loan payable 36,298
--------------------------------------------------------------------------------------------
Net Expenses 753,570
--------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 542,904
--------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investment securities 3,019,138
Foreign currency transactions (6,422)
Securities sold short (612,159)
Change in net unrealized appreciation/depreciation on:
Investment securities 11,562,205
Foreign currency transactions 1,880,123
Securities sold short (21,696)
--------------------------------------------------------------------------------------------
Net gain on investments, foreign currency transactions
and securities sold short 15,821,189
--------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 16,364,093
============================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
12
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD JULY 28, 2004 (INCEPTION) TO NOVEMBER 30, 2004
COMMON SHAREHOLDER OPERATIONS:
Net investment income $ 542,904
Net realized gain (loss) from:
Investment securities 3,019,138
Foreign currency transactions (6,422)
Securities sold short (612,159)
Change in net unrealized appreciation/depreciation from:
Investment securities 11,562,205
Foreign currency transactions 1,880,123
Securities sold short (21,696)
--------------------------------------------------------------------------------------------
Net increase in net assets from operations 16,364,093
--------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
From net investment income (2,902,571)
--------------------------------------------------------------------------------------------
Net decrease in net assets from distributions (2,902,571)
--------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares, net of offering costs 166,775,000
Proceeds from the underwriters' over-allotment
option excerised, net of offering costs 17,535,200
Net asset value of common stock issued to stockholders
from reinvestment of dividends 1,374,634
--------------------------------------------------------------------------------------------
Net increase in net assets from capital share transactions 185,684,834
--------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 199,146,356
--------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 100,000
--------------------------------------------------------------------------------------------
End of period * $ 199,246,356
============================================================================================
* INCLUDES OVERDISTRIBUTED NET INVESTMENT INCOME OF: $ (2,359,667)
SEE NOTES TO FINANCIAL STATEMENTS.
13
FINANCIAL HIGHLIGHTS
FOR THE PERIOD JULY 28, 2004 (INCEPTION) TO NOVEMBER 30, 2004
PER COMMON SHARE OPERATING PERFORMANCE
Net asset value - beginning of period $ 19.10
--------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.06
Net realized and unrealized gain on investments 1.62
--------------------------------------------------------------------------------------------
Total from investment operations 1.68
--------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
From net investment income (0.30)
--------------------------------------------------------------------------------------------
Total distributions (0.30)
--------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Common share offering costs charged to paid in capital (0.04)
--------------------------------------------------------------------------------------------
Total capital share transactions (0.04)
--------------------------------------------------------------------------------------------
Net asset value - end of period $ 20.44
============================================================================================
Market price - end of period $ 21.10
============================================================================================
TOTAL INVESTMENT RETURN - NET ASSET VALUE (1) 8.66%
TOTAL INVESTMENT RETURN - MARKET PRICE (1) 7.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000) $ 199,246
Ratio of expenses to average net assets 1.20%(2)
Ratio of expenses to average net assets (excluding
dividends on short sales) 1.16%(2)
Ratio of net investment income to average net assets 0.86%(2)
Portfolio turnover rate 40%
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A PURCHASE OF A COMMON SHARE
AT THE OPENING ON THE FIRST DAY AND A SALE AT THE CLOSING ON THE LAST DAY
OF EACH PERIOD REPORTED. TOTAL INVESTMENT RETURN ON NET ASSET VALUE
REFLECTS THE SALES LOAD OF $.90 PER SHARE. DIVIDENDS AND DISTRIBUTIONS, IF
ANY, ARE ASSUMED FOR PURPOSES OF THIS CALCULATION TO BE REINVESTED AT
PRICES OBTAINED UNDER THE TRUST'S DIVIDEND REINVESTMENT PLAN. TOTAL
INVESTMENT RETURNS DO NOT REFLECT BROKERAGE COMMISSIONS. TOTAL INVESTMENT
RETURNS FOR LESS THAN A FULL YEAR ARE NOT ANNUALIZED. PAST PERFORMANCE IS
NOT A GUARANTEE OF FUTURE RESULTS.
(2) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
14
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2004
1. SIGNIFICANT ACCOUNTING AND OPERATING POLICIES
Clough Global Allocation Fund is a closed-end management investment company (the
"Fund") that was organized under the laws of the state of Delaware by an
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.
The following summarizes the significant accounting policies of the Fund.
SECURITY VALUATION: The net asset value per Share of the Fund is determined no
less frequently than daily, on each day that the American 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 Fund's 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. Over-the-counter securities traded on NASDAQ
are valued based upon the closing price. 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 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
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
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.
15
INCOME TAXES: The 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.
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
applied to the Securities and Exchange Commission for an exemption from Section
19(b) of 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 Fund's average net asset value over a specified period of time
or market price per common share at or about the time of distribution or pay-out
of a level dollar amount.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Investment security transactions
are accounted for as of trade date. Dividend income is recorded on the
ex-dividend date. 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 Fund's 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. Actual results could differ from these estimates.
2. TAXES
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 Fund.
NET UNREALIZED APPRECIATION/DEPRECIATION OF INVESTMENTS BASED ON FEDERAL TAX
COSTS WERE AS FOLLOWS:
Gross appreciation (excess of value over tax cost) $ 14,277,910
Gross depreciation (excess of tax cost over value) (1,065,150)
----------------------------------------------------------------------------------------
Net unrealized appreciation $ 13,212,760
========================================================================================
Cost of investments for income tax purposes $ 266,635,754
========================================================================================
16
3. CAPITAL TRANSACTIONS
There are an unlimited number of no par value common shares of beneficial
interest authorized. Of the 9,745,658 common shares outstanding on November 30,
2004, ALPS Mutual Funds Services, Inc. owned 5,236 shares. The Fund issued
8,750,000 common shares in its initial public offering on July 28, 2004. These
common shares were issued at $20.00 per share before the underwriting discount
of $0.90 per share. An additional 650,000 common shares and 270,000 common
shares were issued on August 27, 2004 and September 15, 2004, respectively.
These common shares were also issued at $20.00 per share before the underwriting
discount of $0.90 per share. Offering costs of $386,800 (representing $.04 per
common share) were offset against proceeds of the offering and have been charged
to paid-in capital of the common shares. ALPS agreed to pay those offering costs
of the Fund (other than sales load, but inclusive of the reimbursement of the
underwriter expenses of $.0067 per common share) that exceed $.04 per common
share.
Transactions in common shares for the period ended November 30, 2004, were as
follows:
Common shares outstanding - beginning of period 5,236
Common shares issued in connection with initial public offering 8,750,000
Common shares issued from underwriters' over-allotment option exercised 920,000
Common shares issued as reinvestment of dividends 70,422
----------------------------------------------------------------------------------------
Common shares outstanding - end of period 9,745,658
----------------------------------------------------------------------------------------
4. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term securities,
for the period ended November 30, 2004 aggregated $310,800,127 and $59,943,481,
respectively. Purchase and sales of U.S. government and agency securities, other
than short-term securities, for the period ended November 30, 2004 aggregated
$48,296,634 and $6,995,245, respectively.
5. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS
Clough Capital Partners L.P. ("Clough") serves as the Fund's 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 Fund's average daily total assets, computed daily and payable
monthly.
ALPS Mutual Funds Services, Inc. ("ALPS") serves as the Fund's 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 Fund's 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.
17
6. LINE OF CREDIT
On October 27, 2004, a Security Agreement between the Fund and The Bank of New
York ("BONY") was executed which allows the Fund to borrow against a secured
line of credit from BONY an aggregate amount of up to $87,500,000. The
borrowings under the BONY line of credit are secured by pledging the Fund's
portfolio securities as collateral. During the period ended October 31, 2004,
the average borrowing was $3,156,779 with an average rate on borrowings of
3.24%.
7. OTHER
The Independent Trustees of the Fund receive a quarterly retainer of $3,500 and
an additional $1,500 for each meeting attended.
8. SUBSEQUENT EVENT
On December 1, 2004, the Fund issued 3,800 shares of auction market preferred
shares, each with a net asset and liquidation value of $25,000 per share plus
accrued dividends. Offering costs associated with the issuance of preferred
shares, estimated at $300,000, and the underwriters' sales load totaling
$950,000 was borne by the common shareholders as a direct reduction to
paid-in-capital.
18
DIVIDEND REINVESTMENT PLAN
NOVEMBER 30, 2004
Unless the registered owner of Common Shares elects to receive cash by
contacting The Bank of New York (the "Plan Administrator" or "BONY"), all
dividends declared on Common Shares will be automatically reinvested by the Plan
Administrator for shareholders in the 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 BONY as dividend
disbursing agent. You may elect not to participate in the Plan and to receive
all dividends in cash by contacting BONY, 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 the 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 the
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
19
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 the 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.
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, 101 Barclay Street, New York, New York
10286, 20th Floor, Transfer Agent Services,(800) 433-8191.
20
FUND PROXY VOTING & POLICIES PROCEDURES
NOVEMBER 30, 2004
Fund policies and procedures used in determining how to vote proxies relating to
portfolio securities are available without a charge, upon request, by contacting
the Fund at 1-877-256-8445 and on the Commission's website at
http://www.sec.gov.
PORTFOLIO HOLDINGS
NOVEMBER 30, 2004
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q within 60 days
after the end of the period. Copies of the Fund's Forms N-Q are available
without a charge, upon request, by contacting the Fund at 1-877-256-8445 and on
the Commission's website at http://www.sec.gov. You may also review and copy
Form N-Q at the Commission's Public Reference Room in Washington, D.C. For more
information about the operation of the Public Reference Room, please call the
Commission at 1-800-SEC-0330.
21
TRUSTEES & OFFICERS
NOVEMBER 30, 2004
Except for their service on the Company's Board of Directors, the independent
directors named above have not held any positions during the past two years with
the Fund; any investment company; any investment adviser; any underwriter of the
Fund; or any affiliate of the Fund or its investment advisers or underwriters.
Each independent trustee serves on the Fund's Audit Committee.
INTERESTED TRUSTEES AND OFFICERS
PRINCIPAL OCCUPATION(S) NUMBER OF
POSITION(S) HELD DURING PAST 5 YEARS* AND PORTFOLIOS IN FUND
WITH FUNDS/LENGTH OTHER DIRECTORSHIPS HELD COMPLEX OVER-
NAME, AGE AND ADDRESS OF TIME SERVED BY TRUSTEE SEEN BY TRUSTEE
-------------------------------------------------------------------------------------------------------------
W. ROBERT ALEXANDER Trustee and Mr. Alexander is the Chief 1
Age - 77 Chairman/Since Executive Officer & Chairman of
1625 Broadway, Ste. 2200 Inception ALPS. Mr. Alexander was Vice
Denver, CO 80202 Chairman of First Interstate
Bank of Denver, responsible
for Trust, Private
Banking, Retail Banking, Cash
Management Services and
Marketing. Mr. Alexander is
currently a member of the
Board of Trustees of the
Hunter and Hughes Trusts as
well as Chairman of Reaves
Utility Income
Fund, Financial Investors
Trust and Financial
Investors Variable
Insurance Trust. Because of
his affiliation with
ALPS, Mr. Alexander is
considered an "interested"
Trustee of the Fund.
JAMES E. CANTY Trustee and Mr. Canty is a founding partner, 1
Age - 42 Portfolio Manager/ Chief Financial Officer and
260 Franklin Street Since Inception General Counsel for Clough.
Boston, Massachusetts 02110 Prior to founding Clough in
2000, Mr. Canty worked as a
corporate and securities
lawyer and Director of
Investor Relations for
Converse, Inc. from 1995 to
2000. He was a corporate
and securities lawyer for
the Boston offices of
Goldstein & Manello, P.C.
from 1993 to 1995 and
Bingham, Dana and Gould
from 1990 to 1993. Mr. Canty
served as an Adjunct
Professor at Northeastern
University from 1996 to
2000. Mr. Canty is currently
a member of the Board of
Directors of Clough
Offshore Fund, Ltd. Because
of his affiliation with
Clough, Mr. Canty is
considered an "interested"
Trustee of the Fund.
22
INTERESTED TRUSTEES AND OFFICERS
PRINCIPAL OCCUPATION(S) NUMBER OF
POSITION(S) HELD DURING PAST 5 YEARS* AND PORTFOLIOS IN FUND
WITH FUNDS/LENGTH OTHER DIRECTORSHIPS HELD COMPLEX OVER-
NAME, AGE AND ADDRESS OF TIME SERVED BY TRUSTEE SEEN BY TRUSTEE
-------------------------------------------------------------------------------------------------------------
EDMUND J. BURKE President/Since Mr. Burke is President and a N/A
Age - 43 Inception Director of ALPS. Mr. Burke
1625 Broadway, Ste. 2200 joined ALPS in 1991 as Vice
Denver, CO 80202 President and National Sales
Manager. Because of his
position with ALPS, Mr. Burke
is deemed an affiliate of the
Trust as defined under the
1940 Act. Mr. Burke is
currently the President of
Reaves Utility Income Fund,
Financial Investors Trust and
Financial Investors
Variable Insurance Trust.
JEREMY O. MAY Treasurer/Since Mr. May is Managing Director of N/A
Age - 34 Inception ALPS. Mr. May joined ALPS in
1625 Broadway, Ste. 2200 1995 as a Controller. Because of
Denver, CO 80202 his position with ALPS, Mr. May
is deemed an affiliate of the
Trust as defined under the 1940
Act. Mr. May is currently the
Treasurer of Reaves Utility
Income Fund, Financial Investors
Trust, Financial Investors Variable
Insurance Trust and First Funds.
ERIN DOUGLAS Secretary/Since Ms. Douglas is Associate N/A
Age - 27 Inception Counsel of ALPS. Ms. Douglas
1625 Broadway, Ste. 2200 joined ALPS as Associate
Denver, CO 80202 Counsel in January 2003. Ms.
Douglas is deemed an
affiliate of the Trust as
defined under the 1940
Act. Ms. Douglas is currently
the Secretary of Financial
Investors Trust and
Westcore Funds.
23
INDEPENDENT TRUSTEES
PRINCIPAL OCCUPATION(S) NUMBER OF
POSITION(S) HELD DURING PAST 5 YEARS* AND PORTFOLIOS IN FUND
WITH FUNDS/LENGTH OTHER DIRECTORSHIPS HELD COMPLEX OVER-
NAME, AGE AND ADDRESS OF TIME SERVED BY TRUSTEE SEEN BY TRUSTEE
-------------------------------------------------------------------------------------------------------------
ROBERT BUTLER Trustee/Since Mr. Butler is currently an 1
Age - 63 Inception independent consultant for
12 Harvard Drive businesses. Mr. Butler was
Hingham, Massachusetts 02043 President of the Pioneer Funds
Distributor, Inc. from 1989 to
1998.He was Senior Vice-President
from 1985 to 1988 and Executive
Vice-President and Director from
1988 to 1999 of the Pioneer
Group, Inc. While at the Pioneer
Group, Inc. until his retirement
in 1999, Mr. Butler was a
Director or Supervisory Board
member of a number of subsidiary
and affiliated companies,
including: Pioneer First Polish
Investment Fund, JSC, Pioneer
Czech Investment Company and
Pioneer Global Equity Fund PLC.
From 1975 to 1984 Mr. Butler was
a Vice-President of the National
Association of Securities
Dealers.
MR. ADAM CRESCENZI Trustee/Since Mr. Crescenzi is a founding 1
Age - 62 Inception partner of Telos Partners, a
100 Walden Street business advisory firm founded in
Concord, Massachusetts 01742 1998. Prior to that, he served as
Executive Vice President of CSC
Index. Mr. Crescenzi is currently
a member of the Board of
Directors of the Boch Center
for the Performing Arts, a
Trustee of Dean College, and
Chairman of the Board of
Directors of Creative Realities
and ICEX, Inc.
24
PRINCIPAL OCCUPATION(S) NUMBER OF
POSITION(S) HELD DURING PAST 5 YEARS* AND PORTFOLIOS IN FUND
WITH FUNDS/LENGTH OTHER DIRECTORSHIPS HELD COMPLEX OVER-
NAME, AGE AND ADDRESS OF TIME SERVED BY TRUSTEE SEEN BY TRUSTEE
-------------------------------------------------------------------------------------------------------------
JOHN F. MEE, ESQ. Trustee/Since Mr. Mee is an attorney practicing 1
Age - 62 Inception commercial law, family law,
One Gateway Center, products liability and criminal law.
Suite 350 He was an instructor in the Harvard
Newton, Massachusetts 01742 Law School Trial Advocacy Workshop
from 1990 to 2002. Mr. Mee is a
member of the Bar of the
Commonwealth of Massachusetts. He
serves on the Board of Directors
of Holy Cross Alumni Association.
RICHARD C. RANTZOW Trustee/Since Mr. Rantzow was the Chief 1
Age - 66 Inception Financial Officer and a Director
1625 Broadway, Suite 2200 of Ron Miller Associates, Inc.
Denver, Colorado 80202 (manufacturer). Prior to that, Mr.
Rantzow was Managing
Partner (until 1990) of the
Memphis office of Ernst &
Young. Mr. Rantzow is also
Chairman of First Funds
Trust.
JERRY G. RUTLEDGE Trustee/Since Mr. Rutledge is the President and 1
Age - 60 Inception owner of Rutledge's Inc., a retail
1 South Tejon Street clothing business. Mr. Rutledge is
Colorado Springs, currently Director of the
Colorado 80903 American National Bank and a
Regent of the University of
Colorado.
INTENTIONALLY LEFT BLANK
[CLOUGH GLOBAL ALLOCATION FUND LOGO]
1625 Broadway, Suite 2200
Denver, CO 80202
1-877-256-8445
[GRAPHIC]
[ALPS MUTUAL FUNDS SERVICES, INC. LOGO]
This Fund is neither insured nor guaranteed by the U.S. Government, the FDIC,
the Federal Reserve Board or any other governmental agency or insurer.
For more information about the Fund, including a prospectus, please visit
www.cloughglobal.com or call 1-877-256-8445.
Item 2. CODE OF ETHICS.
Not applicable to semi-annual report.
Item 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semi-annual report.
Item 4. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Not applicable to semi-annual report.
Item 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
Item 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments is included as part of the Report to Stockholders filed
under Item 1 of this form.
Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
Item 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANIES.
Not applicable.
Item 9. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
The Board of Trustees has not yet adopted procedures by which shareholders may
recommend nominees to the Board of Trustees.
Item 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act
of 1940, as amended) are effective based on their evaluation of these
controls and procedures as of a date within 90 days of the filing date of
this document.
(b) There was no change in the Registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company
Act of 1940, as amended) during the second fiscal quarter of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the Registrant's internal
control over financial reporting.
Item 11. EXHIBITS.
(a)(1) Not applicable to semi-annual report.
(a)(2) The certifications required by Rule 30a-2(a) of the Investment
Company Act of 1940, as amended, and Section 302 of the Sarbanes-Oxley Act
of 2002 are attached hereto as Ex99.Cert.
(a)(3) Not applicable.
(b) A certification for the Registrant's Principal Executive Officer and
Principal Financial Officer, as required by Rule 30a-2(b) of the Investment
Company Act of 1940, as amended, and Section 906 of the Sarbanes-Oxley Act
of 2002 are attached hereto as Ex99.906Cert.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CLOUGH GLOBAL ALLOCATION FUND
By: /s/ Edmund J. Burke
-------------------
Edmund J. Burke
President
Date: February 4, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CLOUGH GLOBAL ALLOCATION FUND
By: /s/ Jeremy O. May
-----------------
Jeremy O. May
Treasurer
Date: February 4, 2005