<PAGE> 1
Clemente Global Growth Fund, Inc.
LETTER TO SHAREHOLDERS DECEMBER 31, 1997
================================================================================
Dear Shareholder:
Our efforts in 1997 paid dividends in more ways than one, thanks in large part
to timely responses made by the management and Directors of the Clemente Global
Growth Fund (CLM) to shareholder concerns about performance and discounts. In
the first half of the year, the Directors and shareholders of CLM approved a
restructuring of the management of the Fund, strengthening the investment
process, particularly by adding to CLM the formidable US investment capability
of Wilmington Trust. This made it possible to double, almost immediately, the
Fund's exposure to the soaring US equity market, and contributed mightily to the
strong performance of CLM in 1997.
The net asset value (NAV) of the Fund rose 22.6% during the past year, compared
to a return of 13.2% for the benchmark FT World Index, and the market return
(price appreciation plus dividends of $0.884 per share) was 37.6%. Progress
against the discount was also experienced, with a decline from 25.74% at the end
of 1996 to 18.15% at the end of 1997.
The management and Directors of CLM remain firmly committed to the closed-end
format for their global portfolio, and see ample justification for their
commitment in last year's results. Particularly instructive may be the returns
of CLM relative to the returns generated by open-end funds with a global
mandate. The average global fund in the Lipper universe of open-end funds was up
13.22% in 1997, and first quintile returns begin at 18.52%. CLM certainly
compares very favorably with the top-performing open-end funds in 1997. No doubt
our country strategy and stock selection have a great deal to do with this
out-performance, but the closed-end structure also played a significant role.
Our key decisions were to zero weight Asia outside Japan, to increase our US
weighting, to concentrate emerging market investments in Latin America, and to
continue over-weighting Europe. This strategy produced the strong performance
described above, but only because we were patient in making changes, waiting for
opportune moments, and avoiding the precipitous actions at dangerous moments
that often plague open-end funds facing redemptions.
Shareholders are well aware of these advantages of the closed-end format, but
many are nonetheless tempted by the quick gains to be had by eliminating the
discount. The weapon of choice is, of course, open-ending. The Directors and
managers of CLM are well aware of this weakness in closed-end funds, and have
taken further steps to address the discount, including the recent announcement
of tender offers, in 1998 and 1999, and a shareholder vote on open-ending in
2000, if the discount is not narrowed by the above actions and by continued good
performance. The portfolio managers should not, however, allow themselves to be
distracted by the on-going, and healthy, debate on how to best serve shareholder
interest. Their mandate is clear - to focus on investment strategy and stock
selection and strive for sustained superior results.
EXPLOSIVE EVENTS AND VOLATILE MARKETS IN 1997
The equity market roller coaster continued its wild ride in the final quarter of
1997. After a sharp correction in October, modest gains were experienced in
global equity markets the rest of the year, but in a manner that left investors
with a touch of vertigo - a week up was generally followed by a week down.
1
<PAGE> 2
Clemente Global Growth Fund, Inc.
LETTER TO SHAREHOLDERS-- CONTINUED DECEMBER 31, 1997
================================================================================
The trouble that began at mid-year, with a currency and financial crisis in
Thailand, soon engulfed almost the whole of Pacific Asia, including Japan, South
Korea and China, and the region's currency and equity markets literally
collapsed. These developments threatened the economies and financial systems of
North America and Europe, and undermined capital flows to other emerging
markets. In dollar terms, only the US market was up, with Europe roughly
unchanged. Losses were in the double digits in other regions during the last
quarter of 1997. For the year as a whole, Japan and Asia experienced large
sell-offs, while Europe (21.9%), the US (31.8%) and Latin America (28.1%) , the
heavily weighted regions in our portfolio, enjoyed strong gains.
By year end, our regional breakdown was as follows: Latin America, 12.6%; North
America, 37.7%; Japan, 13.7%; Europe, 36.2%. Besides the US and Japan, the
largest country weightings were Germany (6.5%), Mexico (5.9%), the Netherlands
(5.8%), and Brazil (5.0%). The largest sectoral weights were in financials
(22.8%), reflecting European restructuring and generally falling interest rates
outside of Asia; consumer goods and services (30.6%), in response to a cyclical
pick-up in Latin America and continental Europe, and to still strong consumer
sectors in the US and the UK; and capital goods (26.1%), as a result of
infrastructure development, corporate restructuring, and the information
technology revolution.
FOCUS IN 1998: WHEN TO RETURN TO ASIA
The collapse of currencies and equity markets in Pacific Asia is almost
certainly overdone, and there is much value to be found in the wreckage created
by the crisis. But there is also much that remains worrisome about the region:
financial institutions are fragile and must be recapitalized and restructured;
foreign debt burdens are being postponed, not fundamentally eased; economic
adjustments have barely begun, and long periods of economic weakness and pain
lie ahead. The first rallies in Asia coincided with IMF, inter-government, or
inter-bank agreements that halted capital flight by promising solutions to the
region's foreign debt problems. A more sustainable rally, and the one that would
persuade us to enter the ravaged markets, would require credible policies for
dealing with the fundamental problems, economic and financial, plaguing the
region's economies. Growth will not be part of the ingredients generating
investor interest in 1998, and the pick-up likely in 1999 will remain well below
recent historical standards for the region. When we return to the region, the
focus will be on country and company financial risks. Korean exporters, Hong
Kong and Singapore banks and property companies, ASEAN telecommunications,
Korean and Taiwanese electronics, and established producers/distributors of
basic consumer goods are among the companies we will pursue for our re-entry
into Asia.
No dramatic short-term changes are planned in the US, where inflation is low,
long-term rates falling, and liquidity conditions favorable. A correction is
likely later in the year as corporate profits get squeezed by Asian weakness and
by rising labor costs, and here we might have a source of funds for investing in
Asia. European equities should have a good year: growth is picking up, inflation
and interest rates are falling, the strong dollar helps exports, corporate
profits are being boosted by restructuring and improved productivity. European
vulnerability to Asia risks must be evaluated country by country and company by
company. A sustained rally in Japanese equities requires economic recovery,
which, in turn, depends on a large fiscal stimulus. But a more aggressive policy
stance, promised on a number of occasions, seems unlikely before spring. If and
when that stimulus comes, attention will shift from the nifty fifty blue chip
exporters to domestic plays and second line stocks.
2
<PAGE> 3
Clemente Global Growth Fund, Inc.
LETTER TO SHAREHOLDERS-- CONTINUED DECEMBER 31, 1997
================================================================================
What we face in 1998 is a period of heightened risk and uncertainty, with
continued high volatility. Major external shocks cannot be ruled out, coming
mainly from Asia and possibly the Middle East, but the most probable scenario is
one of gradual retreat from the abyss. Now, more than ever, success depends on a
carefully defined strategy, a meticulous sorting out of the winners and losers
in Asia, and continued emphasis on steady earnings growth among corporations in
the increasingly rich European and US equity markets.
At the same time, CLM faces the need to satisfy shareholders who wish to
maximize the value of their investments. We hope that the proposals made by
management and Directors will meet these needs, and that we can stop short of
immediately open-ending the Fund. In the perilous, but opportunity-filled
circumstances in which we find ourselves, freedom from the often unplanned
changes resulting from redemptions can spell the difference between the success
or failure of an investment strategy. We ask that you continue to support our
efforts to exploit, on your behalf, the attractive investments generated by the
current turbulent global economic and financial environment.
Thank you for your continuing support.
Sincerely,
/s/ THOMAS PRAPAS /s/ MATTHEW BROWN
- --------------------------------- ----------------------------------
Thomas Prapas Matthew Brown
3
<PAGE> 4
Clemente Global Growth Fund, Inc.
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
================================================================================
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
------ -----
COMMON STOCK -- 100.2%
<S> <C> <C> <C>
BRAZIL -- 5.0%
Companhia Energetica De Minas Gerais ADR Utilities ..................... 17,000 $ 738,633
Telecomunicacoes Brasileiras S.A. ADR Telecommunications ............ 15,900 1,851,356
Uniao De Bancos Brasileiras S.A. GDR Banking ....................... 25,000 804,688
----------
3,394,677
----------
CANADA -- 4.9%
Newbridge Networks Corp.* Telecommunication Equipment ... 38,800 1,353,150
Power Corporation of Canada Holding Company ............... 55,700 1,989,841
----------
3,342,991
----------
FINLAND -- 3.0%
Nokia Corp. ADR Telecommunication Equipment ... 13,000 910,000
Sampo Insurance Co. Ltd. Insurance ..................... 35,000 1,144,108
----------
2,054,108
----------
FRANCE -- 2.0%
Alcatel Alsthom Telecommunications ............ 10,500 1,342,891
----------
GERMANY -- 6.5%
Bayerische Vereinsbank AG Banking ....................... 21,000 1,382,151
Porsche AG - Preferred Shares Autos ......................... 990 1,660,795
SAP AG Computer Services ............. 4,600 1,405,748
----------
4,448,694
----------
IRELAND -- 1.7%
Bank of Ireland Banking ....................... 74,730 1,157,765
----------
ITALY -- 3.5%
Banca Commerciale Italiana Banking ....................... 375,000 1,312,776
Telecom Italia SpA Telecommunications ............ 163,000 1,048,457
----------
2,361,233
----------
JAPAN -- 13.7%
Bank of Tokyo-Mitsubishi Banking ....................... 84,000 1,152,905
Canon, Inc. Electrical Equipment .......... 75,000 1,738,507
Honda Motor Co. Autos ......................... 50,000 1,826,195
Mitsubishi Estate Co., Ltd. Real Estate ................... 44,000 476,412
Seven-Eleven Japan Co., Ltd. Retail ........................ 16,000 1,127,285
Takeda Chemicals Industries Pharmaceuticals ............... 42,000 1,191,335
TDK Corp. Electronics ................... 24,000 1,800,727
----------
9,313,366
----------
</TABLE>
4 SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
Clemente Global Growth Fund, Inc.
PORTFOLIO OF INVESTMENTS -- CONTINUED DECEMBER 31, 1997
================================================================================
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C> <C>
MEXICO -- 5.9%
Coca-Cola Femsa SA ADR Food & Beverages................ 24,000 $1,392,000
Corporacion Interamericana de
Entretenimiento SA Leisure Products................ 184,800 1,439,881
Grupo Financiero Banorte SA de CV Finance......................... 680,000 1,186,203
----------
4,018,084
----------
NETHERLANDS -- 5.8%
Baan Co., N.V.* Computer Services............... 43,000 1,417,043
Koninklijke Ahold N.V. Retail.......................... 45,000 1,181,448
Oce-Van Der Grinten N.V. Electrical Equipment............ 12,166 1,334,402
----------
3,932,893
----------
NORWAY -- 1.3%
Smedvig ASA (A Shares) Oil Integrated.................. 41,300 880,814
----------
SPAIN -- 4.4%
Acs Actividades De Construccion y
Servicios SA Building/Heavy Construction..... 48,000 1,170,396
Acs Actividades De Construccion y
Servicios SA (Rights)* Building/Heavy Construction..... 48,000 1,269
Vallehermoso SA Real Estate..................... 59,000 1,820,682
----------
2,992,347
----------
SWEDEN -- 1.8%
Astra AB ADR Medical-Drugs................... 72,000 1,237,500
----------
SWITZERLAND -- 3.5%
Alusuisse-Lonza Holding AG Multi - Industry................ 1,200 1,159,025
Zurich Versicherungsgesellschaft Insurance....................... 2,500 1,197,852
----------
2,356,877
----------
UNITED KINGDOM -- 2.7%
BAA plc Business/Public Services........ 92,954 751,120
Siebe plc Machinery Manufacturer.......... 54,000 1,069,617
----------
1,820,737
----------
UNITED STATES -- 32.8%
Air Products and Chemicals, Inc. Chemicals....................... 16,500 1,357,125
Airtouch Communications, Inc.* Telecommunications.............. 50,000 2,078,125
Baxter International, Inc. Medical Products................ 27,000 1,361,812
Cisco Systems, Inc. Computer Software............... 33,000 1,839,750
Dresser Industries, Inc. Machinery & Equipment........... 27,000 1,132,313
Harris Corp. Office Automation & Equipment... 32,800 1,504,700
Health Management Assoc., Inc.* Healthcare...................... 75,000 1,893,750
Home Depot, Inc. Retail.......................... 31,500 1,854,562
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS 5
<PAGE> 6
Clemente Global Growth Fund, Inc.
PORTFOLIO OF INVESTMENTS -- CONTINUED DECEMBER 31, 1997
================================================================================
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C> <C>
Illinois Tool Works, Inc. Diversified .................. 27,600 $ 1,659,450
Intel Corp. Semiconductors ............... 14,500 1,018,625
Pepsico, Inc. Food & Beverages ............. 18,500 674,094
Protective Life Corp. Insurance .................... 18,200 1,087,450
Sungard Data Systems, Inc.* Computer Services ............ 60,000 1,860,000
Suntrust Banks, Inc. Banking ...................... 20,000 1,427,500
Tricon Global Restaurants, Inc. Retail ....................... 1,850 53,765
Worldcom, Inc.* Telecommunications ........... 48,400 1,464,100
------------
22,267,121
------------
VENEZUELA -- 1.7%
Compania Anonima Telefonos De
Venezuela ADR Telecommunication Services.... 27,000 1,123,875
------------
TOTAL COMMON STOCK (COST $52,805,780) ....................................... 68,045,973
------------
TIME DEPOSIT -- 6.1%
Chase Manhattan Time Deposit,
5.00%, 01/02/98 (Cost $4,165,000) .............................................. 4,165,000 4,165,000
------------
TOTAL INVESTMENTS (COST $56,970,780)** -- 106.3% .................................... 72,210,973
OTHER ASSETS AND LIABILITIES, NET -- (6.3)% ......................................... (4,260,224)
------------
NET ASSETS -- 100.0% ................................................................ $ 67,950,749
============
</TABLE>
ADR American Depository Receipts
GDR Global Depository Receipts
* Non-Income Producing Security
** Summary of Total Investments:
<TABLE>
<CAPTION>
COST VALUE
----------- -----------
<S> <C> <C>
Common Stock............... $52,805,780 $68,045,973
Short-Term Instruments..... 4,165,000 4,165,000
----------- -----------
Total Investments.......... $56,970,780 $72,210,973
=========== ===========
</TABLE>
6 SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
Clemente Global Growth Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1997
================================================================================
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments, at value (cost $56,970,780) ................ $ 72,210,973
Cash .................................................... 1,158,487
Dividends receivable .................................... 59,097
Accrued interest receivable ............................. 579
Foreign tax reclaims .................................... 7,448
Other assets ............................................ 6,194
------------
Total Assets ....................................... 73,442,778
------------
LIABILITIES
Distribution payable .................................... 5,210,714
Investment advisory fee payable ......................... 31,889
Administrative services fee payable ..................... 8,613
Accrued expenses and other payables ..................... 240,813
------------
Total Liabilities .................................. 5,492,029
------------
NET ASSETS .............................................. $ 67,950,749
============
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 ....................................... 53,505,305
Cost of 117,600 shares held in treasury .............. (850,032)
Accumulated net investment loss ....................... (2,489)
Net unrealized appreciation of investments
and translation of net assets denominated
in foreign currencies ............................... 15,239,041
------------
Net Assets .............................................. $ 67,950,749
------------
Net Asset Value Per Share
($67,950,749 divided by 5,892,400
shares of common stock) .............................. $ 11.53
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS 7
<PAGE> 8
Clemente Global Growth Fund, Inc.
STATEMENT OF OPERATIONS DECEMBER 31, 1997
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Dividends (net of foreign withholding taxes of $58,528) ........ $ 771,839
Interest ..................................................... 106,364
------------
Total income .............................................. 878,203
------------
EXPENSES
Investment advisory fee ...................................... 342,682
Custodian fees and expenses .................................. 151,634
Administrative services fee .................................. 103,013
Legal fee .................................................... 138,446
Directors' fees and expenses ................................. 75,234
Audit fee .................................................... 59,000
Printing ..................................................... 41,706
Registration expenses ........................................ 41,979
Transfer agency services ..................................... 9,464
Insurance expense ............................................ 2,863
Miscellaneous ................................................ 226,657
------------
Total operating expenses .................................. 1,192,678
------------
Net investment loss ............................................ (314,475)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES TRANSACTIONS
Net realized gain (loss) on:
Investments and options transactions ......................... 7,014,674
Foreign currency transactions ................................ (222,666)
Net change in unrealized appreciation (depreciation) on:
Investments and options transactions ......................... 7,164,743
Translation of other assets and liabilities denominated
in foreign currencies ........................................ (1,078)
------------
Net realized and unrealized gain on investments and foreign
currencies transactions ...................................... 13,955,673
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........... $ 13,641,198
============
</TABLE>
8 SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
Clemente Global Growth Fund, Inc.
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- -----------------
Operations:
<S> <C> <C>
Net investment loss ....................................... $ (314,475) $ (159,578)
Net realized gain (loss) on:
Investments ............................................ 7,014,674 3,454,734
Foreign currency transactions .......................... (222,666) (222,807)
Net change in unrealized appreciation (depreciation) on:
Investments ............................................ 7,164,743 (859,173)
Translation of net assets denominated in
foreign currencies .................................. (1,078) 340
------------ ------------
Net increase in net assets resulting from operations: ....... 13,641,198 2,213,516
------------ ------------
Distributions to shareholders from:
Net realized gain on investments .......................... (5,210,714) (5,474,039)
------------ ------------
Total increase (decrease) in net assets ..................... 8,430,484 (3,260,523)
------------ ------------
NET ASSETS
Beginning of year ........................................... 59,520,265 62,780,788
------------ ------------
End of year ................................................. $ 67,950,749 $ 59,520,265
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS 9
<PAGE> 10
Clemente Global Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
================================================================================
NOTE 1. ORGANIZATION AND SIGNIFICANT 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 traded 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 primary exchange 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
10
<PAGE> 11
Clemente Global Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1997
================================================================================
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.
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. At
December 31, 1997, $222,666 of net realized foreign currency loss was
reclassified to net investment loss and the total net investment loss of
$534,652 was reclassified to capital. Net foreign currency losses incurred after
October 31 ("Post October" losses) within the taxable year are deemed to arise
on the first business day of the Fund's next taxable year. The Fund incurred and
will elect to defer net foreign currency losses of $2,489 during fiscal 1997.
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 pays 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
11
<PAGE> 12
Clemente Global Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1997
================================================================================
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:
<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, an indirect affiliate of the
Investment Adviser ("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
12
<PAGE> 13
Clemente Global Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1997
================================================================================
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 by the Investment Adviser
amounted to $52,418 for the year ended December 31, 1997.
The Fund incurred $342,682 in investment advisory fees for the year ended
December 31, 1997, which represents a 50% reduction 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 year ended December 31, 1997, RSMC earned fees in the amount of
$103,013.
Certain directors and officers of the Fund are also directors and officers of
the Investment Adviser or Wilmington Trust Company. 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. The Fund incurred fees totaling
$138,446 for the year ended December 31, 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 year ended December 31, 1997 were $54,438,747
and $63,684,648, respectively.
For Federal income tax purposes, the cost of securities owned at December 31,
1997 was $56,970,780 and the net unrealized appreciation of investments was
$15,240,193. Net unrealized appreciation was composed of gross appreciation of
$16,052,008 for those investments having an excess of value over cost, and gross
depreciation of $811,815 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, 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.
NOTE 6. SUBSEQUENT EVENT -- RSMC and the Fund have entered into an agreement
with PFPC, Inc. ("PFPC") pursuant to which PFPC will provide the Fund accounting
and administration services previously provided by RSMC. Effective January 20,
1998, the services previously provided by RSMC will be provided by PFPC.
13
<PAGE> 14
Clemente Global Growth Fund, Inc.
FINANCIAL HIGHLIGHTS
================================================================================
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE 1997 1996 1995 1994 1993
- ------------------------------- ----------- ---------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......... $ 10.10 $ 10.65 $ 10.73 $ 12.36 $ 9.43
----------- ---------- --------- --------- ---------
Net investment income (loss) (0.05) (0.03) -- (0.03) 0.02
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ............................... 2.36 0.41 0.42 (0.64) 3.56
----------- ---------- --------- --------- ---------
Total from investment operations .............. 2.31 0.38 0.42 (0.67) 3.58
----------- ---------- --------- --------- ---------
Distributions to shareholders from:
Net investment income -- -- -- -- --
Net realized capital and currency gains .... (0.88) (0.93) (0.50) (0.96) (0.65)
----------- ---------- --------- --------- ---------
Total from distributions ...................... (0.88) (0.93) (0.50) (0.96) (0.65)
----------- ---------- --------- --------- ---------
Increase (decrease) in net asset value ........ 1.43 (0.55) (0.08) (1.63) 2.93
----------- ---------- --------- --------- ---------
Net asset value, end of period ................ $ 11.53 $ 10.10 $ 10.65 $ 10.73 $ 12.36
=========== ========== ========= ========= =========
Per share market value, end of period ......... 9-7/16 7-1/2 8-3/8 8-1/2 11-1/4
=========== ========== ========= ========= =========
Total investment return* ..................... 37.62% 0.64% 4.59% (15.91)% 53.55%
=========== ========== ========= ========= =========
Net assets, end of year (in 000's) ............ $ 67,951 $ 59,520 $ 62,781 $ 63,216 $ 72,830
Ratios to average net assets/supplemental data:
Net investment income (loss) ............... (0.46)% (0.25)% (0.02)% (0.25)% 0.16%
Operating expenses ......................... 1.74% 1.53% 1.58% 1.75% 1.68%
Portfolio turnover rate ....................... 81.56% 120.66% 84.98% 81.73% 125.31%
Average commission rate paid** ................ $ 0.0132 $ 0.0050 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 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.
14 SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 15
Clemente Global Growth Fund, Inc.
REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 1997
================================================================================
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, 1997, 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, 1997 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Philadelphia, PA 19103
February 13, 1998
15
<PAGE> 16
Clemente Global Growth Fund, Inc.
TAX INFORMATION (UNAUDITED ) DECEMBER 31, 1997
================================================================================
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 $0.884311 per share from net long-term capital
gains during the year ended December 31, 1997. Pursuant to Section 852 of the
Internal Revenue Code, the Fund designates $5,210,714 as capital gain dividends
for the fiscal year ended December 31, 1997. Of this total capital gain dividend
amount, the Fund made a 20 percent rate gain distribution of $5,210,714.
16
<PAGE> 17
Clemente Global Growth Fund, Inc.
DIVIDEND REINVESTMENT PLAN DECEMBER 31, 1997
================================================================================
Clemente Global Growth Fund, Inc. (the "Fund") has established a plan for the
automatic investment of dividends and distributions (the "Plan") pursuant to
which dividends and capital gain distributions to shareholders will be paid in
or reinvested in additional shares of the Fund. All shareholders of record are
eligible to join the Plan. American Stock Transfer & Trust Company acts as agent
(the "Agent") for participants under the Plan.
Shareholders whose shares are registered in their own names may elect to
participate in the Plan by completing an authorization form and returning it to
the Agent. Shareholders whose shares are held in the name of a broker or nominee
should contact such broker or nominee to determine whether or how they may
participate in the Plan.
Dividends and distributions are reinvested under the Plan as follows. If the
market price per share on the date for the dividend or distribution (the
"Valuation Date"), equals or exceeds the net asset value per share on that date,
the Fund will issue new shares to participants valued at the net asset value or,
if the net asset value is less than 95% of the market price on the Valuation
Date, then valued at 95% of the market price. If net asset value per share on
the Valuation Date exceeds the market price per share on that date. The Agent
will buy shares on the open market, on the New York Stock Exchange, for the
participants' accounts. If, before the Agent has completed its purchases, the
market price exceeds the net asset value of shares, the average per share
purchase price paid by the Agent may exceed the net asset value of shares,
resulting in the acquisition of fewer shares than if the dividend or
distribution has been paid in shares issued by the Fund at net asset value.
There is no charge to participants for reinvesting dividends or distributions
payable in either shares or cash. The Agent's fees for handling of reinvestment
of such dividends and distributions will be paid by the Fund. There will be no
brokerage charges with respect to shares issued directly by the Fund as a result
of dividends or distributions payable either in shares or cash. However, each
participant will be charged by the Agent a pro rata share of brokerage
commissions incurred with respect to the Agent's open market purchases in
connection with the reinvestment of dividends or distributions payable only in
cash.
For purposes of determining the number of shares to be distributed under the
Plan, the net asset value is computed on the Valuation Date and compared to the
market value of such shares on such date. The Plan may be terminated by a
participant by delivery of written notice of termination to the Agent. Upon
termination, the Agent will cause a certificate or certificates for the full
shares held for a participant under the Plan and a check for any fractional
shares to be delivered to the former participant.
Distributions of investment company taxable income that are invested in
additional shares generally are taxable to shareholders as ordinary income. A
capital gain distribution that is reinvested in shares is taxable to
shareholders as long-term capital gain, regardless of the length of time a
shareholder has held the shares or whether such gain was realized by the Fund
before the shareholder acquired such shares and was reflected in the price paid
for the shares.
17
<PAGE> 18
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 --
PFPC Inc.
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
18
<PAGE> 19
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.
[LOGO]
CLEMENTE GLOBAL
GROWTH FUND, INC.
ANNUAL REPORT
=================
DECEMBER 31, 1997
19
