CLEMENTE GLOBAL GROWTH FUND, INC.
LETTER TO SHAREHOLDERS NOVEMBER 14, 1997
===============================================================
Dear Shareholder:
Global equity investors experienced a roller coaster ride in
the third quarter of 1997: markets enjoyed strong gains in July,
fell sharply in August, and recovered with a flourish in
September. Clemente Global Growth Fund (CLM) went along for the
ride, and, with the help of a few adjustments, came through the
turbulence in generally fine shape. Quarterly gains of 7.41% for
CLM and 2.76% for the FT World Index increased the year-to-date
gains, through three quarters, to 27.72% for the Fund and 17.17%
for the FT World Index. The price of CLM on the New York Stock
Exchange was $10.50 on September 30, 1997, up from $10.06 on June
30, 1997, an appreciation of 4.37% in the quarter, while the
discount expanded slightly from 16.22% to 18.60%.
A VOLATILE QUARTER USHERS IN A RISKIER ENVIRONMENT
The quarter began on a promising note. Buoyed by a pick-up in
world growth, and by still subdued inflation, equity markets in
the FT World Index rose 4.53% in July and made possible a 6.83%
increase in the NAV of CLM. But the world had become a more
dangerous place on July 2, as Thailand's currency plunged, and
equity markets could not overlook for long the turmoil enveloping
Southeast Asia, or the deterioration in the interest rate outlook
for Germany and the US. Down came both the FT World Index (-
6.90%) and CLM (-6.47%) during August. A very nervous optimism
returned in September and made possible a rebound in global
equity markets. The FT World Index rose 5.6% in US dollars,
while the CLM portfolio was up 7.5%.
A high degree of volatility characterized equity markets
everywhere, but the weakest performers were found, not
surprisingly, in Southeast Asian markets plagued by currency
crises and capital flight. European markets, supported by
economic recovery and company restructuring, turned in the
strongest performances. North American shares matched the average
gains of Europe, with Canadian stocks buoyed by a benign economic
environment, and US blue chips getting an assist from smaller cap
stocks. Latin America produced a modest advance, with
considerable variation from market to market.
PORTFOLIO STRATEGY AND RESPONSE TO THIRD QUARTER EVENTS
There was little change in trategy from the second quarter.
Equity markets continued to be supported by non-inflationary
growth, but uncertainties and risks were expected to rise, and
our strategy involved: overweight Europe, but expect some
turbulence as interest rate hikes could follow economic recovery
and the march toward EMU; underweight the US, and anticipate the
volatility that will accompany speculation about Federal Reserve
intentions or occasional disappointments in corporate earnings;
underweight Japan, and stick largely to blue-chip exporters who
represent the only signs of life in the moribund economy; stay
away from Southeast Asia and its financial market/currency
worries; continue to overweight a recovering and restructuring
Latin America.
With the fear that stronger than expected growth in the US
might trigger earlier than expected Federal Reserve tightening,
we kept an underweight position of about 30% to 32% in US
equities, with emphasis on companies judged capable of delivering
steady growth of earnings. Fitting this description were two
additions made during the quarter, namely, DRESSER INDUSTRIES, an
energy sector play, and PEPSICO, a consumer non-durable stock.
We lightened our Japanese holdings of companies that depended on
strong Asia/Pacific growth, such as the trading company ITOCHU,
or on an early domestic recovery, as in the case of KAWASAKI
HEAVY INDUSTRIES.
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
LETTER TO SHAREHOLDERS NOVEMBER 14, 1997
===============================================================
Positive surprises in European growth encouraged investment
in cyclicals, in addition to the on-going corporate restructuring
stories. Overweighting was maintained for the region, with focus
on Scandinavia, Germany, Holland, and growing interest in Italy
and Spain. A construction company, OCP CONSTRUCCIONES was added
in Spain, where the economy was growing faster than the European
average, and in Switzerland we purchased ZURICH VERSICHER, an
important player in the very dynamic European insurance sector.
Telecoms remain an important European theme, and this is
reflected in the purchases of a telecom carrier, TELECOM ITALIA,
and a telecom manufacturer, NOKIA of Finland. Another theme,
corporate restructuring and capital spending, led to the purchase
of SIEBE , a UK producer of industrial and electronic equipment.
Latin America, on the brink of sustainable growth, remained the
emerging market region of choice, with Mexico challenging Brazil
as the favorite market.
LOOKING AHEAD AT A RAPIDLY CHANGING GLOBAL ENVIRONMENT
A more defensive stance will be needed over the coming
quarters. The Asian currency crisis will not plunge the world
into recession, although Asian economies will be hard hit, and,
with the risk of escalating inflation abating, dramatic rises in
interest rates are not likely. Still, it would be wrong to treat
this merely as an Asian crisis, and the contagion observed thus
far in the fourth quarter of 1997 vividly demonstrates the folly
of that position.
The banking and currency crises of Southeast Asia have
produced policy tightening, deteriorating growth prospects, and a
need for pervasive and dramatic structural reforms. The
immediate investment implications are clear: avoid direct contact
with the affected Southeast Asia countries, and recognize that,
while some exciting new opportunities are being sown during the
present turmoil, the road back is likely to be both long and
difficult. Making matters worse is the spread of the contagion
to Northeast Asia, and in particular to Hong Kong, where the peg
to the US dollar is being tested, and South Korea, where a
banking crisis is gathering steam. Again, direct contact will be
avoided, but this is not enough, for Asia/Pacific woes have
implications of varying degrees of seriousness for almost the
whole world. Let us briefly examine the implications for our
investment strategy.
- - Our Japanese exposure must be reassessed and very likely
reduced, especially a strategy that focuses on blue-chip
exporters and recovering bank/property companies. Fragile
Japanese banks will be further undermined by loans to the
region, and the weakened economies of Asia/Pacific will not
be able to absorb their normal 44% share of Japan's exports.
- - Almost all emerging markets will come under intense
scrutiny, especially if they are dependent on capital inflows
and have relatively fixed exchange rates. High on the list
are Eastern Europe, which we have avoided, and Latin America,
where we will have to reduce our exposure.
- - Europe will feel the heat, especially if Asian contagion
causes a Japanese recession and a dramatic slowing of US
growth. But there will be winners in a region that will
benefit from a sustained economic recovery, corporate
restructuring, and continued monetary convergence.
- - The United States will be another relative out-performer.
It is not immune, of course, to weaker export markets abroad,
or to the possibility that beleaguered public and private
financial institutions in Asia will sell US Treasuries in
order to satisfy a powerful need for cash. But the US economy
is vibrant,
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
LETTER TO SHAREHOLDERS NOVEMBER 14, 1997
===============================================================
inflation is under control, the fiscal deficit hovers
around zero, and the Federal Reserve has put tightening on hold in
the face of global capital market
uncertainty.
In summary, the most prudent response is to assume a
protracted period of adjustment, with deflationary forces,
volatile equity markets, and currency crises. In this world of
tightened economic policies, far-reaching structural change,
excess capacity, and intense global competition, success will
continue to depend on thorough stock analysis, and on the careful
selection of companies capable of producing highly visible and
sustainable earnings growth. Looking further out, we see some
exciting prospects: world-class companies selling at valuations
not seen in many years. But we must be patient just now, and
wait for their time to come.
/s/ E. Matthew Brown /s/ Thomas Prapas
E. Matthew Brown Thomas Prapas
Portfolio Manager (US) Portfolio Manager (International)
Clemente Global Growth Fund, Inc.
PORTFOLIO OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 1997
===============================================================================
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
COMMON STOCK - 99.5%
BRAZIL - 6.3%
Companhia Energetica De Minas
Gerais ADR Utilities................. 17,000 $ 938,984
Telecomunicacoes Brasileiras S.A. ADR Telecommunications........ 22,500 2,896,875
Uniao De Bancos Brasileiras S.A. GDR Banking................... 25,000 915,625
-----------
4,751,484
-----------
CANADA - 5.3%
Newbridge Networks Corp. * Telecommunication Equipment 38,800 2,323,150
Power Corporation of Canada Holding Company........... 55,700 1,706,253
-----------
4,029,403
-----------
FINLAND - 1.6%
Nokia Corp. ADR Telecommunication Equipment 13,000 1,219,563
-----------
GERMANY - 8.0%
Bayerische Vereinsbank AG Banking................... 37,000 2,147,592
Porsche AG - Preferred Shares Autos..................... 990 1,718,847
SAP AG Computer Services......... 8,600 2,206,933
-----------
6,073,372
-----------
HONG KONG - 2.9%
Cheung Kong Infrastructure Holdings,
Ltd.+ Construction............. 380,000 1,134,211
China Merchants Holdings International
Co., Ltd. Holding Company.......... 452,000 1,045,418
-----------
2,179,629
-----------
INDIA - 1.2%
Videsh Sanchar Nigam Ltd. Telecommunications....... 53,000 889,870
-----------
IRELAND - 2.5%
Bank of Ireland Banking.................. 149,730 1,871,903
-----------
ITALY - 1.4%
Telecom Italia SpA Telecom Services......... 163,000 1,081,375
-----------
JAPAN - 14.1%
Bank of Tokyo-Mitsubishi Banking.................. 84,000 1,590,845
Canon, Inc. Electrical Equipment..... 75,000 2,180,001
Honda Motor Co. Autos.................... 50,000 1,733,296
Mitsubishi Estate Co., Ltd. Real Estate.............. 44,000 637,655
<PAGE>
Clemente Global Growth Fund, Inc.
PORTFOLIO OF INVESTMENTS (UNAUDITED) - CONTINUED SEPTEMBER 30, 1997
===============================================================================
SHARES/PRINCIPAL
AMOUNT VALUE
------ -----
Seven-Eleven Japan Co., Ltd. Retail.................. 16,000 $ 1,193,628
Takeda Chemicals Industries Pharmaceuticals......... 42,000 1,251,926
TDK Corp. Electronics............. 24,000 2,134,301
-----------
10,721,652
-----------
MEXICO - 5.4%
Apasco S.A. Building Materials...... 133,000 1,009,082
Corporacion Interamericana de
Entretenimiento S.A. Leisure Products........ 277,800 1,667,701
Kimberly-Clark De Mexico S.A. Paper & Related Products 270,000 1,401,885
-----------
4,078,668
-----------
NETHERLANDS - 4.0%
Baan Co., N.V.* Computer Services........ 21,500 1,546,181
Oce-Van Der Grinten N.V. Electrical Equipment..... 12,099 1,527,382
-----------
3,073,563
-----------
NORWAY - 1.6%
Smedvig ASA (A Shares) Oil Integrated........... 41,300 .1,245,659
-----------
PERU - 1.3%
CPT Telefonica del Peru S.A. (B Shares) Telecommunications....... 410,000 958,875
-----------
SPAIN - 3.6%
OCP Construcciones S.A. Building/Heavy Construction 12,000 1,151,059
Vallehermoso S.A. Real Estate.............. 59,000 1,621,750
-----------
2,772,809
-----------
SWEDEN - 1.5%
Trygg-Hansa AB (B Shares) Insurance................ 47,000 1,175,216
-----------
SWITZERLAND - 3.0%
Alusuisse-Lonza Holding AG Multi-Industry........... 1,200 1,173,483
Zurich Versicherungsgesellschaft Insurance................ 2,500 1,085,987
-----------
2,259,470
-----------
UNITED KINGDOM - 2.6%
BAA plc Business/Public Services. 92,954 902,386
Siebe plc Machinery Manufacturer... 54,000 1,086,798
-----------
1,989,184
-----------
UNITED STATES - 31.6%
Air Products and Chemicals, Inc. Chemicals............... 16,500 1,368,469
Airtouch Communications, Inc. * Telecommunications...... 50,000 1,771,875
<PAGE>
Clemente Global Growth Fund, Inc.
PORTFOLIO OF INVESTMENTS (UNAUDITED) - CONTINUED SEPTEMBER 30, 1997
===============================================================================
SHARES/PRINCIPAL
AMOUNT VALUE
------ -----
Baxter International, Inc. Medical Products........ 27,000 $ 1,410,750
Cisco Systems, Inc. Computer Software....... 22,000 1,607,375
Dresser Industries, Inc. Oil Field Machinery &
Equipment............. 27,000 1,161,000
Fluor Corp. Construction............ 22,500 1,206,563
Harris Corp. Office Automation &
Equipment............. 32,800 1,500,600
Health Management Assoc., Inc.* Healthcare.............. 50,000 1,581,250
Home Depot, Inc. Retail - Building Products 31,500 1,641,937
Illinois Tool Works, Inc. Diversified............. 27,600 1,380,000
Intel Corp. Semiconductors.......... 23,000 2,123,188
Pepsico, Inc. Beverages............... 18,500 750,406
Sungard Data Systems, Inc.* Computer Services....... 60,000 1,455,000
Suntrust Banks, Inc. Banking................. 34,000 2,309,876
Worldcom, Inc.* Telecommunications...... 78,400 2,773,400
-----------
24,041,689
-----------
VENEZUELA - 1.6%
Compania Anonima Telefonos De
Venezuela ADR Telecommunications...... 27,000 1,235,250
-----------
Total Common Stock (Cost $53,295,895)...................................... 75,648,634
-----------
TIME DEPOSITS - 2.1%
First National Bank Chicago 5.50%, 10/01/97 (Cost $1,570,000)....$1,570,000 1,570,000
-----------
TOTAL INVESTMENTS (COST $54,865,895)** - 101.6% $77,218,634
-----------
OTHER ASSETS AND LIABILITIES, NET - (1.6)%...................................... (1,185,720)
-----------
NET ASSETS - 100.0%............................................................. $76,032,914
-----------
NET ASSET VALUE PER SHARE....................................................... $12.90
===========
<FOOTNOTE>
+ Security restricted as to resale to institutional investors under Rule 144A
of the Securities Act.
ADR American Depository Receipts
GDR Global Depository Receipts
* Non-Income Producing Security
** Summary of Total Investments:
COST VALUE
----------- -----------
Common Stock............ $53,295,895 $75,648,634
Short-Term Instruments.. 1,570,000 1,570,000
----------- -----------
Total Investments....... $54,865,895 $77,218,634
=========== ===========
</FOOTNOTE>
</TABLE>
<PAGE>
<PAGE>
DIRECTORS AND OFFICERS -
LILIA C. CLEMENTE, CHAIRMAN AND DIRECTOR
LEOPOLDO M. CLEMENTE, JR., PRESIDENT AND DIRECTOR
ADRIAN C. CASSIDY, DIRECTOR
ROBERT J. CHRISTIAN, DIRECTOR
THOMAS H. LENAGH, DIRECTOR
+ SAM NAKAGAMA, DIRECTOR
+ ROBERT B. OXNAM, DIRECTOR
+ G. PETER SCHIEFERDECKER, DIRECTOR
BARON J.G.A. SIRTEMA VAN GROVESTINS, DIRECTOR
WILLIAM H. BOHNETT, SECRETARY
THOMAS J. PRAPAS, TREASURER
MARIA DISTEFANO, ASSISTANT SECRETARY
- ----------------
+ Members of Audit Committee
- -------------------------------------------------------
EXECUTIVE OFFICES -
152 W. 57th Street, New York, NY 10019
(For latest net asset value and market data,
please call 212-765-0700 or access our web
site at http://www.clementecapital.com.
For shareholder inquiries, please call
1-800-937-5449)
INVESTMENT ADVISERS -
Clemente Capital, Inc.
Wilmington Trust Company
ADMINISTRATOR -
Rodney Square Management Corporation
TRANSFER AGENT AND REGISTRAR -
American Stock Transfer & Trust Company
CUSTODIAN -
Brown Brothers Harriman & Co.
LEGAL COUNSEL -
Fulbright & Jaworski L.L.P.
INDEPENDENT ACCOUNTANTS -
Price Waterhouse LLP
<PAGE>
[Outside Cover -- divided into two sections]
[Left Section]
SUMMARY OF GENERAL INFORMATION
==============================
THE FUND
Clemente Global Growth Fund, Inc. is a closed-end investment company whose
shares trade on the New York Stock Exchange. The Fund seeks long-term
capital appreciation primarily through investment in equity securities of
companies located throughout the world. The Fund is managed by Clemente
Capital, Inc. and Wilmington Trust Company.
SHAREHOLDER INFORMATION
Daily market prices for the Fund's shares are published in the New York
Stock Exchange Composite Transactions section of most newspapers under the
designation "ClemGlb". The Fund's New York Stock Exchange trading symbol
is CLM. Net asset value (NAV) and market price information about Clemente
Global Growth Fund, Inc. shares are published each Monday in The Wall
Street Journal, The New York Times and other newspapers. For general
information visit us at our web site http://www.clementecapital.com. For
shareholder account inquiries call 1-800-937-5449.
DIVIDEND REINVESTMENT PLAN
Through its voluntary Dividend Reinvestment Plan, shareholders of Clemente
Global Growth Fund, Inc. may elect to receive dividends and capital gains
distributions in the form of additional shares of the Fund.
- ---------------------------------------------------------------------------
THIS REPORT IS TRANSMITTED TO THE SHAREHOLDERS OF CLEMENTE GLOBAL GROWTH
FUND, INC. FOR THEIR INFORMATION. THIS IS NOT A PROSPECTUS, CIRCULAR OR
REPRESENTATION INTENDED FOR USE IN THE PURCHASE OF SHARES OF THE FUND OR
ANY SECURITIES MENTIONED IN THIS REPORT.
NOTICE IS HEREBY GIVEN IN ACCORDANCE WITH SECTION 23(C) OF THE INVESTMENT
COMPANY ACT OF 1940 THAT THE FUND MAY PURCHASE AT MARKET PRICES FROM TIME
TO TIME SHARES OF ITS COMMON STOCK IN THE OPEN MARKET.
- ---------------------------------------------------------------------------
[Right Section]
[GRAPHIC] Clemente Logo
CLEMENTE GLOBAL
GROWTH FUND, INC.
QUARTERLY REPORT
==================
SEPTEMBER 30, 1997
<PAGE>
