CLEMENTE GLOBAL GROWTH FUND, INC.
LETTER TO SHAREHOLDERS DECEMBER 31, 1996
==============================================================================
Dear Fellow Shareholders,
After two years of dominance by US equities, overseas markets have
reclaimed the attention of global investors. Unlike 1995 when only one
market - Switzerland - outperformed the United States, this time, with a
surge at year end which is carrying over into 1997, a variety of equity
markets are matching or surpassing US gains. With investments in 54
companies, and 20 markets, Clemente Global Growth Fund (CLM) is in the
middle of this excitement. Particularly significant is CLM's 29.2%
position in the newly revived emerging markets, and its portfolio of core
holdings in established overseas markets.
The net asset value (NAV) of Clemente Global Growth Fund was $10.10 (ex-
dividend of $0.806 per share) at the end of 1996, up 3.56% for the year,
compared to gains of 13.21% for the Financial Times World Index (the FT
World Index). The performance of this benchmark index relative to CLM
depends in large part on its relatively high US weighting and its low
exposure to emerging markets. This is not always an advantage. By year
end 1996, overseas equities were outperforming the US, and the
international focus of CLM was being rewarded. Through February 13 of this
year, CLM's NAV was up 7.2%, versus a 2.88% rise in the FT World Index.
The CLM share price was $7.50 at year end 1996, and the discount to NAV
stood at 25.74%; on February 13, the price was 10% higher, at $8.25, and
the discount down to 23.8%.
YEAR-END DISTRIBUTION
The Directors of CLM declared a capital gains distribution of $0.806 per
share to shareholders of record as of the close of business on December 26,
1996. Including the distribution made earlier in the year, CLM paid out a
total of $0.926 per share in 1996, for a dividend yield of 12.35%.
THE PORTFOLIO REVIEW
Our 14.3% allocation to the US produced some stunning performances with
such stocks as INTEL (+103%), SUNTRUST BANK (+62.3%), and WORLDCOM
(+56.6%). Only HEALTH MANAGEMENT ASSOCIATES (-7%) was down among US
holdings. (The above individual stock returns, and the others that follow,
are all measured from purchase date to December 31, 1996).
The allocation to emerging markets (29.2%) was concentrated in Latin
America (18.9%) and, with the exception of the Philippines (5.1%), we
stayed away from emerging markets in Asia. We enjoyed solid performances
in Brazil, thanks to the telecommunications giant TELEBRAS (+36%), and the
utility company CEMIG (+21%), and in Mexico, on the back of a leisure
company CORPORACION INTERAMERICANA DE ENTRETENIMIENTO (+37%). The big
performer in the Philippines was SOUTHEAST ASIA CEMENT (+141%), a
beneficiary of the country's strong growth prospects, while two new
additions, a property developer, AYALA LAND, and BANK OF THE PHILIPPINE
ISLANDS, were also doing well as the year ended.
Country allocation combined with some interesting stock picks produced
favorable results in Europe. We were heavily weighted in the strong
Scandinavian markets, benefiting from the rise of SCHIBSTED (+26%), a
Norwegian publisher, SMEDVIG (+68), an energy play in Norway, and from the
recent good showing of NESTE OY (Finland's largest company, and another
play on energy), VALMET (Finland, diversified manufacturer), and TRYGG
HANSA (Sweden, insurance). Elsewhere in Europe, our biggest position is in
Ireland, a long-time favorite driven by economic restructuring and dynamic
growth. Here we find two of our best performers, THE BANK OF IRELAND
(+169%) and INDEPENDENT NEWS (+194%). In Holland, another market we have
liked for some time, our long-term holding of VNU has paid off with a 108%
return. Overall, we have 18 positions in Europe, and each had a positive
return at the end of 1996.
Our Asia strategy was very focused. Outside the Philippines and Japan,
Hong Kong was the biggest position. Expecting to benefit from China's
"soft landing", and from the seemingly peaceful transition to the coming
post-Deng era, we added two "red chips" (China companies trading in Hong
Kong): GUANGDONG INVESTMENTS, a diversified holding company with
investments in China that range from property, infrastructure, hotel and
travel services, and assorted manufacturing activities; GUANGSHEN RAILWAY,
which operates the only railroad between two of the Pearl River Delta's
most dynamic cities, Guangzhou and Shenzhen. A third Hong Kong holding,
CHEUNG KONG INFRASTRUCTURE, heavily involved in power plants, toll roads
and bridges, was up 61% at year end. Elsewhere in the region we lightened
our positions in the face of export weakness and policy tightening.
Strength in North America extended to Canada, where we enjoyed some good
gains in NEWBRIDGE NETWORKS (+32%), a provider of networking products for
global LAN and WAN applications. Also performing well at year end were a
resource company, NORANDA and a diversified holding company (POWER
CORPORATION OF CANADA) with investments in financial services, resources,
publishing, and communications.
The most challenging market continued to be Japan where we had a bit under
20% of our portfolio at the end of 1996. Our holdings focused on blue-chip
exporters who stood to gain from the weakening yen. Among the best
performers were HONDA (+18%), TDK (+44%), and CANON (+14%).
LOOKING AHEAD
The last three years, characterized as they have been by surprising
strength in the US equity markets and a lingering weakness in Japan and in
emerging markets, have raised some doubts about the benefits of global
diversification. But these doubts will again be put to rest - if this has
not already occurred after the strong overseas performances of late 1996 -
as we contemplate the following: more than one-half of the world's equity
market capitalization is abroad; growth is generally more robust among
emerging markets; structural changes in economies and financial systems are
creating exciting new opportunities for global investors; new emerging
markets are appearing each year; investors in established markets will not
be able to satisfy their needs by staying at home; and, like it or not, the
world is linked in ways that make it almost impossible for capital to
recognize the limits of national boundaries.
Early developments in 1997 demonstrate that the CLM portfolio is well
positioned for what is unfolding in the new year. A benign macroeconomic
environment, with steady growth and subdued inflation, is accompanied by
abundant liquidity, corporate restructuring, and prospects for continued
strong growth of corporate earnings. Near-term, the bets we have made
remain attractive: Brazil and Mexico in Latin America; Hong Kong, China,
and the Philippines in Asia; Germany, Holland, Ireland, Spain, Finland, and
Norway in Europe; blue-chip exporters in Japan; Canada and the US in North
America. In time , we will have to revisit ASEAN markets, as well as South
Korea and Taiwan, Japanese property and financial companies, Poland and
Russia in Eastern Europe.
The emerging market doldrums appear to be over, and new emerging markets
are catching the attention of global investors; but these investors are
also being attracted by established markets outside the US where economic
recovery and economic restructuring have lagged developments in the United
States. This is an environment particularly suited to CLM, and it promises
to continue to produce the kind of exciting results encountered in the
early weeks of 1997.
We thank you for your continued support.
Sincerely,
/s/ Lilia C. Clemente /s/ Leopoldo M. Clemente, Jr.
Lilia C. Clemente Leopoldo M. Clemente, Jr.
Chairman President
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
SUMMARY OF THE FUND'S DIVIDEND REINVESTMENT PLAN DECEMBER 31, 1996
==============================================================================
The Clemente Global Growth Fund, Inc. (the "Fund") intends to distribute,
at least annually, its net investment income from dividends and interest
and, to the extent necessary, its net realized capital gains. Pursuant to
the Dividend Reinvestment Plan (the "Plan"), shareholders may elect to have
all cash distributions automatically reinvested by American Stock Transfer
& Trust Company (the "Plan Agent") in Fund shares. Each registered
shareholder of the Fund may request an Enrollment Card of the Plan.
Thereafter, the Plan Agent will provide services relating to the Plan to
shareholders of the Fund who complete and return the Enrollment Card to the
Plan Agent.
If the Directors of the Fund declare a dividend from net investment income
or capital gains distribution payable either in shares or in cash,
participants in the Plan will receive shares of Common Stock, to be issued
by the Fund. If the market price of the shares is equal to or exceeds the
net asset value per share on the record date of any distribution (the
"Record Date"), the Fund will issue to the Plan Agent for the account of
participants the number of full shares, valued at net asset value, issuable
with respect to the total dividend payable to participants, and cash, if
any, for the excess of such total dividend not divisible into full shares
of the Fund. Such shares and cash, if any, will be paid to the Plan Agent,
and the Plan Agent will credit the account of the participant with such
shares and cash, if any, in accordance with their respective entitlements.
Shares issued by the Fund will not be issued at a discount of more than 5%
from the current market value of the Fund's shares.
If the net asset value exceeds the market price of the Fund shares at the
Record Date, or if the Fund should declare a dividend or distribution
payable only in cash, the Fund will pay the cash amount of such dividend to
the Plan Agent, who will credit the account of the participants in
accordance with their respective entitlements. Accordingly, the Plan
Agent, as agent for the participants, will use the amount of the
distribution to purchase Fund shares in the open market, on the New York
Stock Exchange or elsewhere, for the participants' accounts on, or in any
event within 30 days after, the Record Date.
There is no charge to participants for reinvesting dividends or
distributions. The Plan Agent's fees for the handling of the reinvestment
of dividends and distributions will be paid by the Fund. However, each
participant's account will be charged a pro rata share of brokerage
commissions incurred with respect to the Plan Agent's open market purchases
in connection with the reinvestment of dividends or distributions.
The reinvestments of dividends and distributions will not relieve
participants of any tax which may be payable or required to be withheld on
such dividends or distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to notice of the
change sent to all shareholders at least 30 days before the Record Date for
such dividend or distribution. The Plan also may be amended or terminated
by the Plan Agent upon at least 90 days' written notice to all
shareholders. Participants may terminate participation in the Plan at any
time upon giving written notice 10 days prior to the applicable dividend or
distribution payment date. All correspondence concerning the Plan should
be directed to American Stock Transfer & Trust Company at 40 Wall Street,
46th Floor, New York, New York 10005, Attention Shareholder
Services/Clemente Global Growth Fund, Inc.
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996
==============================================================================
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C> <C>
COMMON STOCK - 105.1%
BRAZIL - 9.8%
Banco Bradesco SA - Preferred Shares Financial Services......... 135,000++ $ 980,753
Companhia Energetica De Minas
Gerais ADR Utilities.................. 35,000 1,192,383
Companhia Vale Do Rio Doce ADR Mining..................... 65,000 1,251,087
*Globex Utilitdades SA - Preferred Shares Retail..................... 21,000 342,402
Telecomunicacoes Brasileiras S.A. ADR Telecommunications......... 27,000 2,065,500
-----------
5,832,125
-----------
CANADA - 5.5%
Newbridge Networks Corp. Telecommunications......... 38,800 1,096,100
Noranda, Inc. Metals..................... 47,400 1,057,217
Power Corporation of Canada Holding Company............ 55,700 1,118,311
-----------
3,271,628
-----------
FINLAND - 3.7%
Neste Oy Oil - Integrated........... 46,180 1,112,340
Valmet Corp. Industrial Machinery....... 62,690 1,092,066
-----------
2,204,406
-----------
FRANCE - 2.4%
Salomon SA Leisure Products........... 17,000 1,443,372
-----------
GERMANY - 4.0%
Deutsche Telekom AG Sponsor ADR Telecommunications......... 16,000 326,000
Fresenius AG - Preferred Shares Healthcare................. 5,130 1,049,498
SGL Carbon AG Chemicals.................. 8,200 1,023,417
-----------
2,398,915
-----------
HONG KONG - 6.0%
Cheung Kong Infrastructure Holdings,
Ltd.+ Construction............... 380,000 1,007,111
*Guangshen Railway Co. Ltd. H Transportation............. 2,600,000 1,126,050
Guangdong Investments Financial Services......... 1,500,000 1,444,732
-----------
3,577,893
-----------
IRELAND - 6.0%
Bank of Ireland Financial Services......... 145,650 1,306,990
CRH plc Building Materials......... 99,500 1,017,794
Independent Newspapers plc Publications............... 254,163 1,257,600
-----------
3,582,384
-----------
JAPAN - 20.0%
Canon Inc. Electrical Equipment....... 75,000 $ 1,652,307
DDI Corp. Telecommunications......... 134 883,330
Eisai Co. Ltd. Pharmaceuticals............ 59,000 1,157,647
Honda Motor Co. Autos...................... 50,000 1,424,254
Mitsubishi Heavy Industries, Ltd. Heavy Machinery............ 164,000 1,298,438
Mitsui Fudosan Co. Real Estate................ 106,000 1,058,165
Namco, Ltd. Leisure Products........... 34,300 1,047,880
Nomura Securities, Co., Ltd. Financial Services......... 54,000 808,598
Shiseido Co., Ltd. Chemicals.................. 87,000 1,003,260
TDK Corp. Electronics................ 24,000 1,559,364
-----------
11,893,243
-----------
KOREA - 1.8%
Samsung Display Devices Co. Electrical Equipment....... 19,000 1,087,065
-----------
MEXICO - 6.5%
*Controladora Comericial Mexicana
SA de CV Retail..................... 960,000 889,286
Corporacion Interamericana
Entretemiento SA Leisure Products........... 547,800 1,488,796
*Grupo Cementos Chihuahua SA DE CV Building Materials......... 500,000 583,109
Hylsamex SA - BCP Iron & Steel Producer...... 233,000 923,105
-----------
3,884,296
-----------
NETHERLANDS - 3.9%
Oce-Van Der Grinten N.V. Electrical Equipment....... 12,000 1,290,012
Vernidge Nederlandse
Uitgevbedri Verigd Bezit Publications............... 50,000 1,034,325
-----------
2,324,337
-----------
NORWAY - 4.1%
Schibsted ASA Publications............... 70,900 1,293,474
Smedvig ASA - A Shares Oil Integrated............. 41,300 897,742
Smedvig ASA - B Shares Oil Integrated............. 10,325 210,008
-----------
2,401,224
-----------
PERU - 2.6%
CPT Telefonica del Peru SA B Telecommunications......... 820,000 1,540,650
-----------
PHILIPPINES - 5.1%
Ayala Land Inc. - B Shares Real Estate................ 900,000 $ 1,027,085
Bank of Philippine Islands Financial Services......... 200,000 1,209,677
*Southeast Asia Cement Holdings Co. Building Materials......... 7,009,780 813,292
-----------
3,050,054
-----------
RUSSIA - 0.9%
*Gazprom ADR+ Energy Services............ 30,000 529,500
-----------
SOUTH AFRICA - 2.4%
De Beers Centenary Linked Units Mining..................... 49,750 1,425,874
-----------
SPAIN - 2.1%
Vallehermoso SA Real Estate................ 59,000 1,267,590
-----------
SWEDEN - 1.5%
Trygg-Hansa AB - B Shares Insurance.................. 47,000 873,619
-----------
UNITED KINGDOM - 2.5%
British Airport Authority plc Public Services............ 180,000 1,483,483
-----------
UNITED STATES - 14.3%
*Health Management Associates, Inc. Healthcare................. 50,000 1,125,000
Intel Corp. Semiconductors............. 23,000 3,011,563
*Sunbase Asia, Inc. Machinery.................. 118,000 634,250
Suntrust Banks, Inc. Financial Services......... 34,000 1,674,500
Worldcom, Inc. Telecommunications......... 78,400 2,043,300
-----------
8,488,613
-----------
TOTAL COMMON STOCK (COST $54,244,905)................................................ 62,560,271
-----------
WARRANTS - 0.9%
JAPAN
*Morgan Stanley Group Nikkei 225 Index Call
Warrant due 08/15/97 (Strike level Yen 18,158.73) (a)
(COST $792,103).................................................................. 142,500 552,187
-----------
TIME DEPOSIT - 2.5%
Morgan Grenfell London Time Deposit
5.00% 01/02/97 (COST $1,448,000)................................................. $1,448,000 $ 1,448,000
-----------
TOTAL INVESTMENTS (COST $56,485,008) - 108.5%......................................... $64,560,458
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES - (8.5)%........................................ (5,040,193)
-----------
NET ASSETS - 100.0%................................................................... $59,520,265
===========
</TABLE>
ADR American Depositary Receipts
* Non-Income Producing Security
+ Security restricted as to resale to institutional investors under Rule
144A of the Securities Act
++ These represent units that are equivalent to 1,000 Brazilian shares.
(a) These warrants enable a holder to realize a cash settlement value in
U.S. $ equal to the greater value of (i) 0 or (ii)
U.S. $1 x (spot Nikkei 225 Index - strike level)
------------------------------------------------
4 x (Yen / U.S. $1.00)
upon exercise of the warrants.
** Summary of Total Investments:
COST VALUE
---- -----
Common Stock............ $54,244,905 $62,560,271
Warrants................ 792,103 552,187
Short-Term Instruments.. 1,448,000 1,448,000
----------- -----------
Total Investments....... $56,485,008 $64,560,458
=========== ===========
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1996
==============================================================================
ASSETS
Investments, at value (cost $56,485,008)......... $64,560,458
Cash............................................. 800
Dividends receivable............................. 39,578
Accrued interest receivable...................... 201
Foreign tax reclaims............................. 1,431
Other assets..................................... 6,869
-----------
Total Assets.................................. 64,609,337
-----------
LIABILITIES
Distribution payable............................. 4,753,256
Payable for investments purchased................ 99,540
Investment advisory fee payable.................. 31,591
Administrative services fee payable.............. 10,517
Accrued expenses payable......................... 194,168
-----------
Total Liabilities............................. 5,089,072
-----------
NET ASSETS....................................... $59,520,265
===========
Net Assets consist of:
Common stock, $0.01 par (authorized
25,000,000 shares and 6,010,000
shares issued, 5,892,400 shares
outstanding of common stock).................. $ 58,924
Paid-in Capital................................. 54,040,756
Cost of 117,600 shares held in treasury......... (850,032)
Distributions in excess of net realized gains... (1,804,759)
Net unrealized appreciation of investments
and translation of net assets denominated
in foreign currencies......................... 8,075,376
-----------
Net Assets....................................... $59,520,265
===========
Net Asset Value Per Share
($59,520,265 / 5,892,400 shares of
common stock)................................... $10.10
===========
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
STATEMENT OF OPERATIONS DECEMBER 31, 1996
==============================================================================
INVESTMENT INCOME
Dividends (net of foreign withholding
taxes of $54,643)............................... $ 680,846
Interest......................................... 138,609
-----------
Total income.................................. 819,455
-----------
EXPENSES
Investment advisory fee......................... 319,763
Custodian fees and expenses..................... 159,121
Administrative services fee..................... 124,368
Legal fee....................................... 95,135
Directors' fees and expenses.................... 73,607
Audit fee....................................... 61,900
Printing........................................ 42,777
Registration expenses........................... 37,038
Transfer Agency services........................ 12,908
Insurance expense............................... 5,213
Miscellaneous................................... 47,203
-----------
Total operating expenses...................... 979,033
-----------
Net investment loss.............................. (159,578)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES TRANSACTIONS
Net realized gain (loss) on:
Investments and options transactions............ 3,454,734
Foreign currency transactions................... (222,807)
Net change in unrealized appreciation
(depreciation) on:
Investments and options transactions............ (859,173)
Translation of other assets and liabilities
denominated in foreign currencies............. 340
-----------
Net realized and unrealized gain on
investments and foreign currencies
transactions.................................... 2,373,094
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ 2,213,516
===========
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
==============================================================================
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
Operations:
Net investment loss..................... $ (159,578) $ (14,962)
Net realized gain (loss) on:
Investments and options
transactions......................... 3,454,734 3,301,718
Foreign currency transactions.......... (222,807) (104,377)
Net change in unrealized
appreciation (depreciation) on:
Investments and options
transactions......................... (859,173) (670,316)
Translation of net assets
denominated in foreign currencies.... 340 2,746
----------- -----------
Net increase in net assets resulting
from operations:........................ 2,213,516 2,514,809
----------- -----------
Distributions to shareholders from:
Net realized gain on investments........ (5,474,039) (2,950,185)
----------- -----------
Total decrease in net assets............. (3,260,523) (435,376)
NET ASSETS
Beginning of year........................ 62,780,788 63,216,164
----------- -----------
End of year.............................. $59,520,265 $62,780,788
============ ===========
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996
==============================================================================
NOTE 1. ACCOUNTING POLICIES - Clemente Global Growth Fund, Inc. (the
"Fund") was incorporated in Maryland on May 1, 1987 as a closed-end,
diversified management investment company. The Fund had no operations
until June 30, 1987, other than the sale of 10,000 shares of common stock
for $100,000 to Clemente Capital, Inc. (the "Investment Adviser") on June
9, 1987.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
SECURITY VALUATION: Portfolio securities which are traded only on stock
exchanges or on the NASDAQ National Market System are valued at the last
sale price as of the close of business on the day the securities are being
valued, or if no sales prices are reported, at the mean between closing bid
and asked prices. Other over-the-counter portfolio securities are valued
at the most recent bid prices obtained from one or more dealers that make
markets in the securities. Short-term obligations, maturing within 60 days
of the valuation date, are to be valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available are valued at their fair value as determined in good
faith by the Board of Directors.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of
investments are calculated on the identified cost basis. Dividend income
is recorded on the ex-dividend date. Interest income is accrued as earned.
Non-U.S. withholding tax is recorded as a reduction of income.
FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are
maintained in United States dollars.
Foreign currency amounts are translated as follows into U.S. dollars at the
foreign exchange rates obtained from an independent investment data service
which reports the exchange rates as of the close of the respective non-U.S.
market:
(i) market value of investment securities and other assets and
liabilities at the exchange rate on the valuation date.
(ii) purchases and sales of investment securities, income and expenses
at the exchange rate prevailing on the respective date of such
transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain or
loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, currency gains and losses realized
between the trade and settlement dates on securities transactions, and the
difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of the
assets and liabilities other than investments in securities at year end,
resulting from changes in the foreign exchange rates.
TAXES: No provision for Federal income tax is required since it is the
policy of the Fund to comply with the provisions of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of
its taxable income, including any net realized gains, in an amount
sufficient to relieve the Fund of any Federal income tax liability. The
Fund intends to comply with the requirements of the Internal Revenue Code
as long as qualification is determined by the Board of Directors to be in
the best interests of the shareholders.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund records dividends
and distributions to its shareholders on the ex-dividend date.
The amounts of dividends from net investment income and of distributions
from net realized gains are determined in accordance with federal income
tax regulations which may differ from generally accepted accounting
principles. These "book/tax" differences are considered either temporary
or permanent in nature. To the extent these differences are permanent in
nature, such amounts are reclassified within the composition of net assets
based on their federal tax-basis treatment; temporary differences do not
require reclassification. Dividends and distributions to shareholders
which exceed net investment income or net realized gains for financial
reporting purposes but not for tax purposes are reported as dividends in
excess of net investment income or distributions in excess of net realized
gains. To the extent they exceed net investment income and net realized
gains for tax purposes, they are reported as distributions of capital.
OPTION ACCOUNTING PRINCIPLES: When the Fund purchases a call or put
option, the premium paid is recorded as an investment which is subsequently
marked-to-market to reflect the current market value. If a purchased
option expires, the Fund will realize a loss to the extent of the premium
paid. If the Fund enters into a closing sale transaction, a gain or loss
is realized for the difference between the proceeds from the sale and the
cost of the option. If a put option is exercised, the cost of the security
or currency sold upon exercise will be increased by the premium originally
paid. If a call option is exercised, the cost of the security purchased
upon exercise will be increased by the premium originally paid.
NOTE 2. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS - The Fund will
pay to the Investment Adviser as compensation for the services provided by
the Investment Adviser under the Investment Advisory Agreement, a monthly
fee comprised of a basic fee of 1% (on an annualized basis) of the month-
end net assets of the Fund (the "Basic Fee") that is subject to adjustment
as described below based on the investment performance of the Fund in
relation to the investment record of the FT-Actuaries World Index (the "FT-
Actuaries Index").
Adjustments to the Basic Fee are made by comparison of the Fund's
investment performance for the applicable performance period with the
investment record of the FT-Actuaries Index for the same period. The
applicable performance period is a rolling 36-month period whereby the most
recent calendar month is substituted for the earliest month as time passes.
The Basic Fee for each month may be increased to a maximum of 1.50% (on an
annualized basis) or decreased to a minimum of 0.50% (on an annualized
basis) depending on the extent by which the Fund's performance varies from
the FT-Actuaries Index over the performance period as set forth below.
The following table illustrates the full range of permitted increases or
decreases of the Basic Fee on an annualized basis:
PERCENTAGE POINT
DIFFERENCE BETWEEN
PERFORMANCE OF FUND ADJUSTMENT FEE AS
AND % CHANGE IN BASIC TO BASIC FEE ADJUSTED MONTHLY
FT-ACTUARIES INDEX FEE (ANNUALIZED) (ANNUALIZED) FEE RATE
- ------------------ ----- ------------ ------------ ----------
+10% or greater 1% +.50% 1.50% 1/12 x 1.50%
+9 1 +.40 1.40 1/12 x 1.40
+8 1 +.30 1.30 1/12 x 1.30
+7 1 +.25 1.25 1/12 x 1.25
+6 1 +.20 1.20 1/12 x 1.20
+5 1 +.15 1.15 1/12 x 1.15
+4 1 +.10 1.10 1/12 x 1.10
+3 1 +.075 1.075 1/12 x 1.075
+2 1 +.05 1.05 1/12 x 1.05
+1 1 +.025 1.025 1/12 x 1.025
0 1 0 1.00 1/12 x 1.00
- -1 1 -.025 .975 1/12 x .975
- -2 1 -.05 .95 1/12 x .95
- -3 1 -.075 .925 1/12 x .925
- -4 1 -.10 .90 1/12 x .90
- -5 1 -.15 .85 1/12 x .85
- -6 1 -.20 .80 1/12 x .80
- -7 1 -.25 .75 1/12 x .75
- -8 1 -.30 .70 1/12 x .70
- -9 1 -.40 .60 1/12 x .60
- -10 or greater 1 -.50 .50 1/12 x .50
In calculating the investment performance of the Fund as compared with the
investment record of the FT-Actuaries Index, dividends and other
distributions of the Fund and dividends and other distributions reported
with respect to component securities of the FT-Actuaries Index during the
performance period will be treated as having been reinvested. Also, the
withholding taxes paid or accrued by the Fund are added back in calculating
the Fund's performance in order to be comparative with the FT-Actuaries
Index.
The Fund incurred $319,763 in investment advisory fees for the year ended
December 31, 1996, which represents a reduction of $319,763 from the Basic
Fee.
Pursuant to an Administration and Accounting Services Agreement (the
"Administration and Accounting Services Agreement") with the Fund dated
November 20, 1996, Rodney Square Management Corporation ("RSMC"), a wholly
owned subsidiary of Wilmington Trust Company and an indirect affiliate of
the Investment Adviser, serves as the Fund's administrator and accounting
agent. Under the Administration and Accounting Services Agreement, RSMC
generally assists in all aspects of the Fund's operations, other than
providing investment advice, subject to the overall authority of the Fund's
Board of Directors. RSMC determines the Fund's weekly and monthly net
asset value, prepares such figures for publication, maintains certain of
the Fund's books and records that are not maintained by the Investment
Adviser, custodian or transfer agent, and assists in the preparation of
financial information for the Fund's income tax returns, proxy statements,
quarterly and annual shareholder reports.
Under the terms of the Administration and Accounting Services Agreement,
the Fund has agreed to pay RSMC a monthly fee at the annual rate of 0.15%
of the Fund's assets up to $100 million, 0.08% on the next $200 million,
and 0.06% on the Fund's assets over $300 million, subject to a minimum fee
of $65,000 per annum. For the period from November 20, 1996 through
December 31, 1996, RSMC earned fees in the amount of $10,517.
Prior to November 20, 1996, Furman Selz LLC served as the Fund's
administrator. Pursuant to an Administration Agreement with the Fund, the
Fund agreed to pay Furman Selz LLC a monthly fee at the annual rate of
0.20% of the Fund's month end net assets. For the period from January 1,
1996 through November 19, 1996, Furman Selz LLC earned fees in the amount
of $113,851.
Certain directors and officers of the Fund are also directors and officers
of the Investment Adviser. Each unaffiliated director receives an annual
fee of $8,000 plus $500 for every meeting attended, together with a
reimbursement of out of pocket expenses. At December 31, 1996, the Fund
has included in accrued expenses payable $17,500 in fees payable to the
Fund's directors. The Fund incurred fees totaling $95,135 for the year
ended December 31, 1996, for legal services to a law firm of which the
Fund's Secretary is a partner.
NOTE 3. PORTFOLIO SECURITIES - Purchases and sales of securities, other
than short-term investments, for the year ended December 31, 1996, were
$74,802,327 and $75,363,447, respectively.
For Federal income tax purposes, the cost of securities owned at December
31, 1996 was $56,245,093 and the net unrealized appreciation of investments
was $8,315,365. Net unrealized appreciation was composed of gross
appreciation of $11,362,831 for those investments having an excess of value
over cost, and gross depreciation of $3,047,466 for those investments
having an excess of cost over value.
NOTE 4. CAPITAL STOCK - There are 25 million shares of $.01 par value
common stock authorized. Of the 5,892,400 shares outstanding at December
31, 1996, the Investment Adviser owned 10,000 shares.
NOTE 5. OTHER MATTERS - The Fund, in its ordinary course of business,
invests in companies and emerging markets which may entail additional risks
due to the potential political and economic instability of certain
countries, the risks of restriction of repatriation, expropriation,
nationalization or confiscatory taxation and the relative price volatility
and liquidity of such emerging markets.
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
==============================================================================
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
PER SHARE OPERATING PERFORMANCE 1996 1995 1994 1993 1992
- ------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year................. $10.65 $10.73 $12.36 $9.43 $10.82
------ ------ ------ ------ ------
Net investment income (loss)....................... (0.03) - (0.03) 0.02 0.01
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions..................................... 0.41 0.42 (0.64) 3.56 (0.35)
------ ------ ------ ------ ------
Total from investment operations................... 0.38 0.42 (0.67) 3.58 (0.34)
------ ------ ------ ------ ------
Distributions to shareholders from:
Net investment income............................ - - - - (0.02)
Net realized capital and currency gains.......... (0.93) (0.50) (0.96) (0.65) (1.03)
------ ------ ------ ------ ------
Total from distributions........................... (0.93) (0.50) (0.96) (0.65) (1.05)
------ ------ ------ ------ ------
Increase (decrease) in net asset value............. (0.55) (0.08) (1.63) 2.93 (1.39)
------ ------ ------ ------ ------
Net asset value, end of year....................... $10.10 $10.65 $10.73 $12.36 $ 9.43
====== ====== ====== ====== ======
Per share market value, end of year................ 7 1/2 8 3/8 8 1/2 11 1/4 7 3/4
====== ====== ====== ====== ======
Total investment return*........................... 0.64% 4.59% (15.91)% 53.55% (3.56)%
====== ====== ====== ====== ======
Net assets, end of year (in 000's)................. $59,520 $62,781 $63,216 $72,830 $55,540
Ratios to average net assets/supplemental data:
Net investment income (loss)..................... (0.25)% (0.02)% (0.25)% 0.16% 0.10%
Operating expenses............................... 1.53% 1.58% 1.75% 1.68% 2.29%
Portfolio turnover rate............................ 120.66% 84.98% 81.73% 125.31% 82.49%
Average commission rate paid**..................... $0.0050 N/A N/A N/A N/A
</TABLE>
* Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each period reported. Dividends and
distributions, if any, are assumed, for the purposes of this calculation,
to be reinvested at prices obtained under the Fund's dividend
reinvestment plan. Total investment return does not reflect brokerage
commissions or sales charges.
** Computed by dividing the total amount of brokerage commissions paid by
the total number of shares of investment securities purchased and sold
during the period for which commissions were charged as required by the
SEC for fiscal years beginning on or after September 1, 1995.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 1996
==============================================================================
To the Board of Directors and Shareholders
of Clemente Global Growth Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Clemente Global Growth Fund, Inc. (the "Fund") at December 31, 1996, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at December 31, 1996 by correspondence
with the custodian and brokers, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Philadelphia, PA 19103
February 14, 1997
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
TAX INFORMATION (UNAUDITED) DECEMBER 31, 1996
==============================================================================
By now, shareholders to whom year-end tax reporting is required by the IRS
should have received their Form 1099-DIV from the Fund.
The Fund paid distributions of $0.862713 per share from net long-term
capital gains during the year ended December 31, 1996. Pursuant to Section
852 of the Internal Revenue Code, the Fund designates $5,082,906 as capital
gain dividends for the fiscal year ended December 31, 1996.
<PAGE>
DIRECTORS AND OFFICERS -
LILIA C. CLEMENTE, CHAIRMAN AND DIRECTOR
LEOPOLDO M. CLEMENTE, JR., PRESIDENT AND DIRECTOR
ADRIAN C. CASSIDY, 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 ADVISER -
Clemente Capital, Inc.
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 small and medium sized
equities located throughout the world. The Fund is managed by Clemente
Capital, Inc.
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.
ANNUAL REPORT
=============
DECEMBER 31, 1996
