CLEMENTE GLOBAL GROWTH FUND, INC.
LETTER TO SHAREHOLDERS AUGUST 15, 1997
- -------------------------------------------------------------------------------
Dear Fellow Shareholders:
Clemente Global Growth Fund (Fund) had a net asset value
(NAV) per share of $12.01 on June 30, 1997, up 18.9% in the first
half of 1997 and 14.5% in the second quarter. The comparable
figures for the Fund's benchmark, the FT World Index, were
increases of 14.0% for the half, and 14.4% for the second
quarter. The price per share rose 34.2% in the first half, from
$7.50 at the start of the year to $10.0625 on June 30, 1997, and
the discount of price to NAV shrank from 25.96% to 16.2% by mid-
year 1997.
AN EVENTFUL QUARTER
At the annual shareholders' meeting on May 29, 1997, the
Fund's investment process was strengthened with the approval of a
proposal naming Wilmington Trust Company as manager of the US
portion of the Fund. The substantial US investment experience
and resources of Wilmington Trust helped end the Fund's heavy
under-weighting of the world's largest and, in recent years, best
performing market. The international portion of the portfolio
continues to be managed by Clemente Capital. The two teams are
led by E. Matthew Brown at Wilmington Trust and a new manager,
Thomas Prapas, at Clemente Capital. They consult on country
allocation decisions and pick stocks in a manner consistent with
the Fund's philosophy of investing in companies with above-
average long-term growth prospects. Stock selection continues to
rely on fundamental security analysis coupled with quantitative
valuation techniques. With these changes, the Board of Directors
hopes to lay the foundation for sustaining the strong performance
exhibited by the Fund thus far in 1997.
THE US LEADS THE WAY
US optimism, nurtured by expected slower growth, sturdy
corporate earnings and a generally benign inflation and interest
rate environment, gave a boost to global equity markets in the
second quarter. US equity prices surged in late April and, with
gains of 16.9% by quarter end, the US market offered a most
opportune moment for the new partnership with Wilmington Trust to
begin. The US weighting of the Fund rose from 15.4% to 28% as
varied new holdings, such as Air Products, Airtouch, Home Depot,
and Illinois Tool Works, joined some existing strong performers,
Worldcom, Health Management Associates, Intel, and Sungard
Systems.
A market weighting was maintained in Japan, where earnings
were picking up, valuations were less stretched than in other
major markets, and liquidity remained abundant. In a market that
outperformed the US in dollar terms - the Nikkei 225 was up 23.8%
- - we enjoyed good performances from blue chip exporters (e.g.,
Canon), slowly recovering banks (Bank of Tokyo-Mitsubishi) and
property companies (Mitsubishi Estate).
European plans for monetary union were thrown into disarray
by the electoral success of the French Socialists and by the fear
that the new currency, the Euro, would be made "soft" by broader
country coverage and by weaker criteria for entry. Although this
produced a measure of volatility, most equity markets enjoyed
good returns, particularly the Netherlands, Spain and
Switzerland. Our best performers in Europe were the Swiss
companies Sulzer and Alusuisse, with some exciting gains, as
well, in the auto sector (Porsche) and among software companies
such as SAP (Germany) and Baan (Netherlands).
In Asia/Pacific outside Japan, only Hong Kong had a
significant weighting, largely in "red chip" (China companies
sponsored by the public sector and listed in Hong Kong)
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
LETTER TO SHAREHOLDERS - CONTINUED
- -------------------------------------------------------------------------------
beneficiaries of China's soft landing and subsequent economic
recovery. Our modest efforts to enter a recovering South Korean
market did not reward us in the second quarter, and we were
largely absent from Southeast Asian markets which are suffering
from domestic financial crises, external account imbalances, and
currency instability.
Our emerging market strategy retained its focus on Latin
America which continued to perform well, outpacing all other
regions in the world. Venezuela, up 44.2%, and Brazil, up 25%,
led the way. Our strongest performers were long-standing holdings
in Brazil's telecom (Telebras) and electric utility (Cemig)
sectors.
PROSPECTS AND PERILS FOR THE REMAINDER OF 1997
The global equity market rally continued at a feverish pace
in the early weeks of July, no doubt encouraged by a generally
supportive global economic environment that promised a pick-up in
growth without a significant rise in inflation. But a number of
risks counseled caution.
Although the US economy has slowed from the very quick pace
of the first quarter, buoyant consumer sentiment and spending
could produce a rebound strong enough to move the Federal Reserve
toward tightening. Risks of overheating are hardly likely in
Germany or Japan, where economic recovery has been painfully
slow, but weaker currencies could bring about interest rate hikes
that are not justified by domestic economic conditions. The Thai
finance company/currency crisis has an impact beyond the region.
Emerging markets with relatively fixed exchange rates and
external financing problems will be more carefully scrutinized by
global investors, and we have to consider the possibility that
the Thai crisis may infect Argentina, Brazil, and other like
markets. Despite the turmoil already present, a measure of
currency stability may be at hand. With Japan's already
vulnerable banks exposed to the region's borrowers, and
Asia/Pacific trade almost 40% of Japan's total trade, the IMF and
Japan are likely to spearhead efforts to stabilize the regional
currencies.
There are no dramatic changes in strategy planned for the
coming quarter. Latin America is favored over Asia/Pacific,
although Brazilian growth and economic reforms have stalled,
while prospects have improved in Mexico and Venezuela. Regardless
of the market, the search is for high quality, sustainable
earnings, and these we hope to find in Kimberley Clark and Apasco
in Mexico, Cantv in Venezuela, and Unibanco in Brazil.
The "red chips" remain attractive in Hong Kong, but it is
also time to visit property companies, such as Cheung Kong, that
have lagged the market of late. Elsewhere in the region, we
remain without an appetite for Southeast Asia shares, but we will
probe for openings among the industrial companies, especially
electronics producers, in South Korea and Taiwan. Japan's market
weighting is focused on the beneficiaries of yen weakness,
retailers who will gain from a pick-up in consumer spending and
from a more competitive retail sector, and financial
institutions/property companies that are well-placed to weather
the slowly unwinding crisis.
Europe remains attractive despite high valuations. Support
comes not only from economic recovery, with low inflation and low
interest rates, but also from major restructuring. The corporate
sector must meet global competition as well as the demands of an
increasingly integrated European market; pension and savings
systems are changing and creating an avid appetite for equities
among hitherto reluctant household investors. We will again favor
the core markets, notably Germany, the Netherlands, and
Switzerland, but are likely to make future purchases in such
peripheral markets as Finland (Nokia) and Italy (Telecom Italia).
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
LETTER TO SHAREHOLDERS - CONTINUED
- -------------------------------------------------------------------------------
Wall Street is likely to remain resilient in the short-term,
with inflation under 2%, corporate earnings rising 21 quarters in
a row, and Federal Reserve Policy on hold. While the probability
is low, an upsurge in inflation, or an occasional cautionary
economic statistic, could produce a 10-15% correction. Another
short-term risk to the bull market may be some high profile
disappointments in earnings. The Fund will continue to be
somewhat under-weighted in the US, at 30-35% of the portfolio,
with the focus on companies that offer highly visible earnings
growth.
We have enjoyed a very supportive equity environment in the
first half of 1997, and the overall economic and corporate
earnings picture remains promising, but the risks present at the
start of the second quarter are still with us and caution remains
the order of the day. What we have going for us, in the event of
a correction, is a portfolio of companies that are well-managed
and positioned to take advantage of long-term opportunities in
local, regional, or global markets.
Thank you for your continuing support.
Sincerely,
/S/ E. Matthew Brown /s/ Thomas Prapas
E. Matthew Brown Thomas Prapas
Portfolio Manager (U.S.) Portfolio Manager (International)
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
REPORT OF THE ANNUAL MEETING JUNE 30, 1997
- -------------------------------------------------------------------------------
The Fund held its annual meeting on May 29, 1997. At that
meeting the shareholders voted on five proposals, all of which
passed. Proposal One was to approve a U.S. Advisory Agreement
among the Fund, Clemente Capital, Inc. and Wilmington Trust
Company pursuant to which Wilmington Trust would manage the U.S.
portion of the Fund's portfolio. The shareholders also voted on
Proposal Two, the election of one Class II director, Robert J.
Christian, to serve for a two year term and on Proposal Three,
the election of three Class III directors, Thomas H. Lenagh, Sam
Nakagama and G. Peter Schieferdecker, each to serve for a term of
three years. The shareholders voted on Proposal Four, the
ratification of the selection of Price Waterhouse LLP as the
Fund's independent accountants for the year ending December 31,
1997 and on Proposal Five, a shareholder proposal to request the
Board of Directors to seriously consider soliciting competitive
proposals for a new investment adviser. The results of the
voting were as follows:
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
FOR AGAINST WITHHELD NON VOTES
---------------------------------------------------
<S> <C> <C> <C> <C>
Proposal One - Approval of
U.S. Advisory Agreement......... 3,737,654 1,044,633 - 372,303
Proposal Two - Election
of one Class II
Director:
Robert J. Christian........... 4,243,710 40,312 - 1,063,356
Proposal Three - Election of
three Class III
Directors (as a group):
Thomas H. Lenagh
Sam Nakagama
G. Peter Schieferdecker.... 4,248,283 39,696 - 1,059,399
Proposal Four - Selection of Price
Waterhouse LLP................... 4,995,124 284,391 - 67,863
Proposal Five - Shareholder proposal 1,539,677 1,204,656 - 200,834
</TABLE>
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
JUNE 30, 1997
- -------------------------------------------------------------------------------
REPORT ON APPROVAL OF WILMINGTON TRUST COMPANY AS U.S ADVISER
TO THE FUND
Effective May 29, 1997, upon shareholder approval, and with
prior approval by the Board of Directors on April 1, 1997, the
Fund entered into a U.S. Advisory Agreement (the "U.S. Advisory
Agreement") with Wilmington Trust Company ("Wilmington Trust")
under which Wilmington Trust will assist Clemente Capital, Inc.
(the "Adviser") in providing a continuous investment program for
the U.S. portion of the Fund's portfolio (the "U.S. Portfolio"),
including research and selection with respect to all U.S.
securities, investments and cash equivalents. Securities of any
company whose primary trading market is located in the United
States are eligible for inclusion in the U.S. Portfolio.
Pursuant to the U.S. Advisory Agreement, Wilmington Trust: (a)
will determine from time to time what securities and other
investments will be purchased, retained or sold for the U.S.
Portfolio; (b) will manage in consultation with the Adviser the
U.S. Portfolio's temporary investments in securities; (c) will
place orders pursuant to its investment determinations for the
U.S. Portfolio, at its option either directly or through the
Adviser, and either directly with the issuer or with any broker
or dealer; (d) will not purchase shares of the Fund for itself or
for accounts with respect to which it exercises sole investment
discretion in connection with such transactions except as
permitted by the Fund's Board of Directors; (e) will consult with
the Adviser on a continuous basis as to the portion of the Fund's
total assets which shall be invested in the U.S. Portfolio; (f)
will attend regular business and investment related meetings with
the Fund's Board of Directors and the Adviser if requested to do
so by the Fund and/or the Adviser; and (g) will maintain books
and records with respect to the securities transactions for the
U.S. Portfolio, furnish to the Adviser and the Fund's Board of
Directors such periodic and special reports as they may request
with respect to the U.S. Portfolio, and provide in advance to the
Adviser all reports to the Board of Directors for examination and
review within a reasonable time prior to the Fund's Board
meetings.
Wilmington Trust and the Adviser have expressed to the Board
their intention to increase over time the U.S. portion of the
Fund's portfolio to a range of between 30% and 40% of the total
portfolio, subject to market conditions. Such a range more
nearly matches the U.S. weighting in the FT-Index, the Fund's
benchmark as defined below.
Wilmington Trust will utilize a growth equity strategy in
selecting investments for the Fund's U.S. Portfolio. Wilmington
Trust's objective is to outperform the S&P 500 Index over a full
market cycle through investing in companies with above-average
long-term growth prospects. Lead by E. Matthew Brown, who has
twenty-three years of investment experience in both fixed income
and equity investments, the Wilmington Trust growth equity team's
investment philosophy is to invest in fast growing companies
using fundamental security analysis along with quantitative
valuation techniques. Mr. Brown joined Wilmington Trust in
October of 1996. Prior to joining Wilmington Trust, he served as
Chief Investment Officer of PNC Bank, Delaware from 1993 through
1996, and as Investment Division Manager for Delaware Trust
Capital Management from 1990 through 1993.
The annual advisory fee rate payable by the Fund to Clemente
Capital under the Fund Advisory Agreement is comprised of a basic
fee of 1% (on an annual basis) of the month-end net assets of the
Fund, that is subject to an adjustment to a maximum of 1.5% (on
an annual basis) and a minimum of .5% (on an annual basis) based
upon the performance of the Fund relative to the FT-Actuaries
World Index (the "FT Index") on a rolling 36-month basis. The
terms of the U.S. Advisory Agreement provide that Wilmington
Trust will be
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
JUNE 30, 1997
- -------------------------------------------------------------------------------
paid 25% of the fees payable to the Adviser. These
payments are the responsibility of Clemente Capital and do not
represent an additional charge to the Fund.
The U.S. Advisory Agreement provides that Wilmington Trust
will pay all expenses incurred by it in connection with its
activities other than the cost of securities, commodities and
other investments (including brokerage commissions and other
transaction charges, if any) purchased for the Fund.
During 1996, Wilmington Trust purchased a 24.9% stake in the
Adviser and an affiliate of Wilmington Trust, Rodney Square
Management Corporation ("Rodney Square"), was subsequently hired
as the Fund's administrator and accounting agent. Prior to
selecting Rodney Square, the Board reviewed proposals from
several administrators to replace the Fund's then-current
administrator, who was exiting the business. In unanimous votes
by the Board and the non-interested Directors, Rodney Square's
proposal was approved and found to be competitive in price and
services offered. The contract with Rodney Square provides a
significant savings to the Fund versus the cost of its former
arrangements.
Wilmington Trust currently has a total of approximately $100
billion in assets under trust, custody and investment management
and ranks as the eighth largest personal trust company in the
United States. Wilmington Trust has been in the asset management
business for over 90 years and acts as investment adviser to the
Rodney Square family of registered funds. Significantly,
Wilmington Trust predominately focuses on investments in U.S.
securities and has extensive research capabilities in U.S.
stocks.
PORTFOLIO MANAGER FOR INTERNATIONAL PORTION OF FUND'S
PORTFOLIO
Thomas J. Prapas was appointed the portfolio manager for the
international portion of the Fund's portfolio effective April 30,
1997. Mr. Prapas has been employed by Clemente Capital as an
economist and Managing Director since June of 1986, and has
served as Treasurer of the Fund since January 1990. He is
responsible for developing and maintaining the country allocation
models of Clemente Capital, Inc., and has managed fixed income
and currency portfolios (Freedom Global Income Plus, San Miguel
Holdings), as well as equity accounts (Clemente Limited
Partnership, Wilmington Trust International Equity, Citizens
Global Growth Fund).
DESCRIPTION OF THE FUND'S INVESTMENT OBJECTIVES AND POLICIES
The Fund's objective is long-term capital appreciation
through investment primarily in equity securities of companies
located throughout the world, concentrating on securities markets
in the United States, Japan, Europe, the Asia/Pacific countries,
Canada and Australia and emerging securities markets in certain
developing countries. Under normal conditions, the Fund expects
to invest between 60% and 75% of its total assets in securities
traded outside of the United States. At any time, investments in
between 10 and 35 countries, inclusive of the United States, are
typically expected to be represented in the Fund's portfolio.
The Fund employs a multi-disciplinary approach that weighs
financial, economic and political factors to evaluate on a global
basis relative country, industry and company attractiveness. The
Fund's decision-making process includes (i) macroeconomic
analysis of countries in which investments are being considered,
including assessments of local stock markets and political risk,
prospects for growth and inflation, and trends for interest and
exchange rates; (ii) comparative industry studies, including
competitive position,
<PAGE>
CLEMENTE GLOBAL GROWTH FUND, INC.
JUNE 30, 1997
- ------------------------------------------------------------------------------
government regulation, the anticipated effects of technological
innovation and forecasts for profits by industry sector; and (iii)
a macroeconomic analysis of a company's potential earnings
growth, products, financial profile and quality of management.
The Adviser believes that global investing offers
opportunities for greater returns. In recent years, a number of
economies in developing countries and elsewhere have grown faster
than the U.S. economy. A diversified portfolio including
investments in companies located in such countries may offer the
opportunity for greater capital appreciation than investments in
U.S. companies. In addition, advances in technology and improved
and lower-cost communications have increased the globalization of
securities trading. The Adviser has developed a comprehensive
database, internal research and a network of external research
sources in both the developed and emerging securities markets
that it believes will enable it to select appropriate
investments. Consistent with its investment restrictions, the
Fund may invest in companies of any size, and is not limited to
investing only in companies of small and mid-size market
capitalizations.
The Fund will maintain a flexible investment policy and its
portfolio assets may be shifted among the U.S. and non-U.S.
companies. By following a global investment strategy, the
Adviser intends to maximize its investment opportunities, while
allowing for broader industry and geographic diversification than
if investments were made only in U.S. companies.
<PAGE>
CLEMENTE GLOBAL GROWTH FUND,INC.
PORTFOLIO OF INVESTMENTS (UNAUDITED) JUNE 30, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C> <C>
COMMON STOCK - 96.9%
ARGENTINA - 0.9%
Disco S.A. * Retail............... 50,000 $ 663,695
-----------
BRAZIL - 9.7%
Companhia Energetica De Minas
Gerais ADR Utilities........... 35,000 1,806,875
Telecomunicacoes Brasileiras S.A. ADR Telecommunications.. 27,000 4,097,250
Uniao De Bancos Brasileiras S.A. Banking............. 25,000 928,125
-----------
6,832,250
-----------
CANADA - 4.3%
Newbridge Networks Corp. * Telecommunication
Equipment............ 38,800 1,687,800
Power Corporation of Canada Holding Company...... 55,700 1,368,977
-----------
3,056,777
-----------
GERMANY - 6.5%
Bayerische Vereinsbank AG Banking.............. 37,000 1,518,680
Porsche AG - Preferred Shares Autos................ 990 1,322,204
SAP AG Computer Services.... 8,600 1,732,773
-----------
4,573,657
-----------
HONG KONG - 5.2%
Beijing Enterprises Holdings, Ltd. Diversified Operations. 6,000 37,795
Cheung Kong Infrastructure
Holdings, Ltd.+ Construction......... 380,000 1,101,186
China Merchants Holdings
International Co., Ltd. Holding Company...... 452,000 1,406,100
Guangshen Railway Co., Ltd. * Transportation....... 2,600,000 1,141,073
-----------
3,686,154
-----------
IRELAND - 2.3%
Bank of Ireland Banking.............. 147,382 1,617,008
-----------
JAPAN - 16.4%
Bank of Tokyo-Mitsubishi Banking.............. 84,000 1,690,329
Canon, Inc. Electrical Equipment. 75,000 2,047,292
Eisai Co., Ltd. Pharmaceuticals...... 59,000 1,120,150
Honda Motor Co. Autos................ 50,000 1,509,222
Itochu Corp. International Trade.. 100,000 539,820
Kawasaki Heavy Industries, Ltd. Transportation
Equipment......... 236,000 1,100,533
Mitsubishi Estate Co., Ltd. Real Estate.......... 44,000 639,035
Seven-Eleven Japan Co., Ltd. Retail............... 16,000 1,212,277
TDK Corp. Electronics.......... 24,000 1,765,921
-----------
11,624,579
-----------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CLEMENTE GLOBAL GROWTH FUND,INC.
PORTFOLIO OF INVESTMENTS (UNAUDITED) - CONTINUED JUNE 30, 1997
- -------------------------------------------------------------------------------
SHARES/PRINCIPAL
AMOUNT VALUE
------ -----
KOREA - 1.2%
Hanil Bank Banking.............. 142,000 $ 799,246
SK Telecom Co., Ltd. Telecommunications... 130 66,878
-----------
866,124
-----------
MEXICO - 1.7%
Corporacion Interamericana
de Entretenimiento S.A. Leisure Products..... 277,800 1,189,272
-----------
NETHERLANDS - 4.3%
Baan Co., N.V.* Computer Services..... 21,500 1,462,511
Oce-Van Der Grinten N.V. Electrical Equipment.. 12,099 1,566,830
-----------
3,029,341
-----------
NORWAY - 3.5%
Schibsted ASA Publications.......... 70,900 1,410,490
Smedvig ASA (A Shares) Oil Integrated........ 41,300 1,036,948
-----------
2,447,438
-----------
PERU - 1.5%
CPT Telefonica del Peru S.A.
(B Shares) Telecommunications.... 410,000 1,080,620
-----------
PHILIPPINES - 0.3%
Ayala Land, Inc. (B Shares) Real Estate........... 225,000 206,877
-----------
SPAIN - 2.3
Vallehermoso S.A. Real Estate........... 59,000 1,597,773
-----------
SWEDEN - 1.3%
Trygg-Hansa AB (B Shares) Insurance............. 47,000 941,340
-----------
SWITZERLAND - 3.6%
Alusuisse-Lonza Holding AG Multi-Industry........ 1,200 1,249,157
Sulzer AG Engineering/Machinery. 1,500 1,290,877
-----------
2,540,034
-----------
THAILAND - 0.8%
Bangkok Bank Co., Ltd. Banking............... 80,000 552,152
-----------
UNITED KINGDOM - 1.5%
BAA plc Business/Public
Services............. 91,680 844,622
Norwich Union plc Insurance............. 34,400 182,936
-----------
1,027,558
-----------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CLEMENTE GLOBAL GROWTH FUND,INC.
PORTFOLIO OF INVESTMENTS (UNAUDITED) - CONTINUED JUNE 30, 1997
- -------------------------------------------------------------------------------
SHARES/PRINCIPAL
AMOUNT VALUE
------ -----
UNITED STATES - 28.0%
Air Products and Chemicals, Inc. Chemicals............ 16,500 $ 1,340,625
Airtouch Communications, Inc.* Telecommunications... 50,000 1,368,750
Baxter International, Inc. Medical Products..... 27,000 1,410,750
Cisco Systems, Inc. Computer Software.... 22,000 1,476,750
Fluor Corp. Construction......... 22,500 1,241,719
Harris Corp. Office Automation &
Equipment........... 16,400 1,377,600
Health Management Assoc., Inc. * Healthcare........... 50,000 1,425,000
Home Depot, Inc. Retail - Building
Products............ 21,000 1,447,687
Illinois Tool Works, Inc. Diversified.......... 27,600 1,378,275
Intel Corp. Semiconductors....... 11,500 1,630,844
Sungard Data Systems, Inc.* Computer Services.... 30,000 1,395,000
Suntrust Banks, Inc. Banking.............. 34,000 1,872,125
Worldcom, Inc. * Telecommunications... 78,400 2,508,800
-----------
19,873,925
-----------
VENEZUELA - 1.6%
Compania Anonima Telefonos
De Venezuela ADR Telecommunications... 27,000 1,164,375
-----------
Total Common Stock (Cost $51,199,856)......................... 68,570,949
-----------
TIME DEPOSIT - 2.9%
Morgan Grenfell London Time Deposit
5.00%, 07/01/97 (Cost $2,021,000) ......................... $2,021,000 2,021,000
-----------
TOTAL INVESTMENTS (COST $53,220,856)** - 99.8%.................... $70,591,949
OTHER ASSETS AND LIABILITIES, NET - 0.2%.......................... 161,985
-----------
NET ASSETS - 100.0%............................................... $70,753,934
===========
NET ASSET VALUE PER SHARE......................................... $12.01
======
<FOOTNOTE>
+ Security restricted as to resale to institutional investors under Rule
144A of the Securities Act.
ADR American Depository Receipts
* Non-Income Producing Security
** Summary of Total Investments:
COST VALUE
----------- -----------
Common Stock................ $51,199,856 $68,570,949
Short-Term Instruments...... 2,021,000 2,021,000
----------- -----------
Total Investments........... $53,220,856 $70,591,949
=========== ===========
</FOOTNOTE>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CLEMENTE CLOBAL GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) JUNE 30, 1997
- -------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $53,220,856).......... $70,591,949
Cash.............................................. 165
Dividends receivable.............................. 232,420
Accrued interest receivable....................... 281
Foreign tax reclaims.............................. 24,095
Other assets...................................... 4,500
-----------
Total Assets................................... 70,853,410
-----------
LIABILITIES
Investment advisory fee payable................... 27,015
Administrative services fee payable............... 16,970
Accrued expenses and other payables............... 55,491
-----------
Total Liabilities.............................. 99,476
-----------
NET ASSETS........................................ $70,753,934
===========
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)
Accumulated net investment income................ 133,379
Accumulated net realized loss.................... (2,408)
Net unrealized appreciation of investments and
translation of net assets denominated in foreign
currencies...................................... 17,373,315
-----------
Net Assets........................................ $70,753,934
===========
Net Asset Value Per Share
($70,753,934 /5,892,400 shares of common stock). $ 12.01
===========
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CLEMENTE CLOBAL GROWTH FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED) JUNE 30, 1997
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign withholding
taxes of $49,278)............................. $ 588,474
Interest....................................... 57,818
------------
Total income 646,292
------------
EXPENSES
Investment advisory fee....................... 158,593
Custodian fees and expenses................... 80,312
Administrative services fee................... 47,558
Legal fee..................................... 46,443
Directors' fees and expenses.................. 36,450
Audit fee..................................... 28,395
Printing...................................... 21,492
Registration expenses......................... 20,479
Transfer agency services...................... 4,686
Insurance expense............................. 2,386
Miscellaneous................................. 66,119
------------
Total operating expenses.................... 512,913
------------
Net investment income.......................... 133,379
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES TRANSACTIONS
Net realized gain (loss) on:
Investments and options transactions........... 1,973,253
Foreign currency transactions.................. (170,902)
Net change in unrealized appreciation on:
Investments and options transactions........... 9,295,643
Translation of other assets and liabilities
denominated in foreign currencies............. 2,296
------------
Net realized and unrealized gain on investments
and foreign currencies transactions............ 11,100,290
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................................ $ 11,233,669
============
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CLEMENTE CLOBAL GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
SIX-MONTH
PERIOD ENDED
JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
Operations:
Net investment income (loss) ............... $ 133,379 $ (159,578)
Net realized gain (loss) on:
Investments ............................... 1,973,253 3,454,734
Foreign currency transactions.............. (170,902) (222,807)
Net unrealized appreciation (depreciation) on:
Investments................................ 9,295,643 (859,173)
Translation of net assets denominated in
foreign currencies......................... 2,296 340
------------ -----------
Net increase in net assets resulting
from operations:............................ 11,233,669 2,213,516
------------ -----------
Distributions to shareholders from:
Net realized gain on investments............ - (5,474,039)
------------ -----------
Total increase (decrease) in net assets...... 11,233,669 (3,260,523)
------------ -----------
NET ASSETS
Beginning of period.......................... 59,520,265 62,780,788
------------ -----------
End of period................................ $ 70,753,934 $59,520,265
============ ===========
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CLEMENTE CLOBAL GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 1997
- -------------------------------------------------------------------------------
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, 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 the end of the period, resulting from changes in
the foreign exchange rate.
<PAGE>
CLEMENTE CLOBAL GROWTH FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED JUNE 30, 1997
- -------------------------------------------------------------------------------
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 either considered 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 and 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.
<PAGE>
CLEMENTE CLOBAL GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)- CONTINUED JUNE 30, 1997
- -------------------------------------------------------------------------------
The following table illustrates the full range of permitted
increases or decreases of the Basic Fee on an annualized
basis:
<TABLE>
<CAPTION>
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
------------------ ----- ------------ ----------- --------
<S> <C> <C> <C> <C>
+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 .00 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
</TABLE>
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.
Pursuant to a U.S. Advisory Agreement (the "New Agreement") among
the Fund, the Investment Adviser and Wilmington Trust Company
("Wilmington Trust"), dated May 29, 1997, Wilmington Trust
manages the U.S. portion of the Fund's portfolio subject to
the supervision of the Board of Directors. Under the terms of
the New Agreement, the Investment Adviser has agreed to pay
Wilmington Trust a monthly fee at the rate of 25% of the net
fees payable to the Investment Adviser. The fee paid to
Wilmington Trust is paid by the Investment Adviser.
<PAGE>
CLEMENTE CLOBAL GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)- CONTINUED JUNE 30, 1997
- ------------------------------------------------------------------------------
The Fund incurred $158,593 in investment advisory fees for the
six-month period ended June 30, 1997, which represents a
reduction of $158,593 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 six-month period ended June 30,
1997, RSMC earned fees in the amount of $47,558.
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 out of pocket expenses. The
Fund incurred fees totaling $46,443 for the six-month period
ended June 30, 1997, 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 six-
month period ended June 30, 1997 were $33,649,323 and
$39,459,728, respectively.
For Federal income tax purposes, the cost of securities owned at
June 30, 1997 was $53,220,856 and the net unrealized
appreciation of investments was $17,371,093. Net unrealized
appreciation was composed of gross appreciation of $18,020,241
for those investments having an excess of value over cost, and
gross depreciation of $649,148 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 June 30, 1997, 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 CLOBAL GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS JUNE 30, 1997
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED
JUNE 30, 1997 YEARS ENDED DECEMBER 31,
----------------------------------------------
PER SHARE OPERATING PERFORMANCE (UNAUDITED) 1996 1995 1994 1993 1992
- --------------------------------- ---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $10.10 $10.65 $10.73 $12.36 $9.43 $10.82
Net investment income (loss)............ 0.02 (0.03) - (0.03) 0.02 0.01
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions........................... 1.89 0.41 0.42 (0.64) 3.56 (0.35)
------ ------ ------ ------ ------ ------
Total from investment operations........ 1.91 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.. 1.91 (0.55) (0.08) (1.63) 2.93 (1.39)
------ ------ ------ ------ ------ ------
Net asset value, end of period.......... $12.01 $10.10 $10.65 $10.73 $12.36 $ 9.43
====== ====== ====== ====== ====== ======
Per share market value, end of period... 10 1/16 7 1/2 8 3/8 8 1/2 11 1/4 7 3/4
======= ====== ====== ====== ====== ======
Total investment return**.............. 34.16% 0.64% 4.59% (15.91)% 53.55% (3.56)%
Net assets, end of year (in 000's)...... $70,754 $59,520 $62,781 $63,216 $72,830 $55,540
Ratios to average net assets/supplemental
data:
Net investment income (loss)........... 0.42%* (0.25)% (0.02)% (0.25)% 0.16% 0.10%
Operating expenses..................... 1.62%* 1.53 % 1.58% 1.75% 1.68% 2.29%
Portfolio turnover rate................. 107.68%* 120.66% 84.98% 81.73% 125.31% 82.49%
Average commission rate paid***......... $0.0127 $0.0050 N/A N/A N/A N/A
<FOOTNOTE>
* Annualized
** 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 purpose 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.
</FOOTNOTE>
</TABLE>
<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.
SEMI-ANNUAL REPORT
==================
JUNE 30, 1997
