Clemente Global Growth Fund, Inc.
LETTER TO SHAREHOLDERS
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November 16, 1998
Dear Shareholder:
For global equity investors, the best thing about the third quarter 1998 is that
it came to an end with a whimper, thanks to a timely intervention by the Federal
Reserve, and not with the big bang that many had feared.
Volatile markets became increasingly more volatile during the course of the
quarter. The confidence that pushed equity markets higher, during the early
weeks of summer, turned to panic by mid-July in the face of a currency and debt
crisis in Russia. In a flash, the financial crisis spread to Latin America,
threatened the prospects for corporate earnings and global economic growth, and
revealed a dangerous exposure of US and European banks to countries and
companies struggling to meet debt obligations. The credit crunch that gripped
Asia was ready to envelop other parts of the world. Panic selling ebbed somewhat
by mid-September, and a modest rebound ensued, but the rally was cut short at
month's end by the near-collapse of Long Term Capital Management, and by fears
that other hedge funds might be in similarly vulnerable circumstances. It was
then that Mr. Greenspan came to the rescue!
The Net Asset Value (NAV) of Clemente Global Growth Fund (CLM) fell 16.34%
during the quarter, while the FT World Index, CLM's benchmark, declined by
12.80%. For the nine months ending September 30, 1998, CLM was down 0.95%, the
FT World Index up 0.08%. The price of CLM shares fell 12.44% in the third
quarter, to $10.56, but were up 11.92% since the start of 1998. The discount of
price to NAV fell from 18.15% at the end of 1997, to 11.63% at mid-year, and
then to 7.51% at the start of the fourth quarter.
HEIGHTENED RISKS AND THE CLM RESPONSE
CLM had finished the first half of the year with a 350 basis points out
performance of the FT World Index. This had been accomplished with a portfolio
of highly liquid, largely blue-chip companies in the US and Europe. These same
highly liquid shares contributed to our relative under performance on the way
down. They were the easiest shares to sell when panic took hold of investors in
August and much of September.
Our major concern early in the quarter was to reduce exposure to the risks
emanating from Pacific Asia and Russia. Concretely, this led to sells of Latin
American shares and to the paring of holdings in markets vulnerable to Latin
American upheaval, notably Spain and Portugal. We evaluated the sustainability
of earnings growth for every position in the portfolio, and identified positions
where negative surprises were a distinct possibility.
Regional strategy did not change during the third quarter: Europe remained
overweight (at 50%), especially the core currency countries and Spain and Italy;
the US weighting was at 35-40%; Japan's 5.3% share was little more than half of
the FT weighting; and emerging market exposure fell to 5% of the portfolio.
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Clemente Global Growth Fund, Inc.
LETTER TO SHAREHOLDERS - CONTINUED
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AN UNEASY STABILITY IS AT HAND
A global recession is unlikely, but risks are growing. The Asia/Pacific region
is in recession, with little help from Japan, and the pace of growth is expected
to decelerate in both the US and Europe. Price pressures are generally
non-existent, with deflation in Japan and in many commodity and primary goods
markets, and sharply lower inflation in the mature economies of Europe and North
America. The key to stemming the downward cycles gripping much of the world's
financial system will be the monetary policies of the major central banks, with
the role of the Federal Reserve in the US particularly significant. Without
increased liquidity, economies and financial markets will have great difficulty
overcoming the depressing effects of a global credit crunch. The CLM portfolio
will continue to favor liquid securities in liquid markets, with a focus on
companies that enjoy strong balance sheets and highly visible and sustainable
earnings.
NEW QUARTER BEGINS ON A POSITIVE NOTE
The willingness of the US to provide liquidity to troubled global financial
markets has given new life to equity investments, and the CLM portfolio has
enjoyed a strong rebound.
At the same time, value has been added by the buyback program which has now been
expanded so that the Fund's managers are authorized to buy shares of the Fund
whenever there is more than a nominal discount of share price to Net Asset
Value. No limitations exist on the amount of repurchases, or the time period,
except those defined by the Securities and Exchange Commission.
The investment managers expect to work very closely with the new Board of
Directors of the Fund to enhance shareholder value not only by exploiting global
equity markets, but also through the repurchases program, and through reductions
in Fund expenses.
As always, we thank you for your support.
Cordially yours,
/s/ Thomas Prapas /s/ Young Zoh /s/ E. Matthew Brown
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Thomas Prapas Young Zoh E. Matthew Brown
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Clemente Global Growth Fund, Inc.
SCHEDUEL OF NET ASSETS (UNAUDITED) SEPTEMBER 30, 1998
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<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
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<S> <C> <C> <C>
COMMON STOCK -- 91.7%
BRAZIL -- 1.3%
Telesp PN Pfd. Telecommunications Services............. 6,000 $ 870,710
-----------
CANADA -- 1.6%
Power Corporation of Canada Ltd. Diversified Financial Services.......... 59,400 1,064,439
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FINLAND -- 4.5%
Nokia Corp. ADR Telecommunications Equipment............ 26,000 2,039,375
Sampo Insurance Co. Ltd. A Insurance............................... 35,000 997,323
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3,036,698
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FRANCE -- 3.0%
Alcatel Alsthom Compagnie Telecommunications Services............. 10,500 932,950
AXA-UAP Insurance............................... 12,000 1,098,344
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2,031,294
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GERMANY -- 7.7%
Bayerische Vereinsbank AG Banking................................. 21,000 1,545,457
Porsche AG -- Preferred Shares Autos................................... 990 1,717,773
SAP AG Computer Services....................... 4,600 1,948,604
-----------
5,211,834
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GREECE -- 1.6%
Ergo Bank SA Banking................................. 13,000 1,047,204
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IRELAND -- 2.0%
Bank of Ireland Banking................................. 75,637 1,345,177
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ITALY -- 4.5%
Banca Commerciale Italiana* Banking................................. 188,000 1,132,471
INA Insurance............................... 310,000 790,735
Telecom Italia SpA Telecommunications Services............. 163,000 1,114,155
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3,037,361
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JAPAN -- 4.9%
Honda Motor Co., Ltd.* Autos................................... 50,000 1,524,390
Sony Corp.* Electronics............................. 12,700 885,417
TDK Corp. Electronics............................. 13,000 888,187
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3,297,994
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</TABLE>
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Clemente Global Growth Fund, Inc.
SCHEDULE OF NET ASSETS (UNAUDITED) - CONTINUED SEPTEMBER 30, 1998
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<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
KOREA -- 1.3% ---------------- -----------
<S> <C> <C> <C>
Samsung Electronics Electronics............................. 32,889 $ 898,638
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NETHERLANDS -- 6.3%
Koninklijke Ahold N.V. Retail.................................. 45,900 1,370,854
Oce-Van Der Grinten N.V. Electrical Equipment.................... 48,664 1,639,275
Wolters Kluwer Broadcasting/Publishing................. 6,500 1,247,188
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4,257,317
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SPAIN -- 5.6%
Argentaria Corp. BC Banking................................. 28,476 566,253
Superdiplo S.A.* Retail.................................. 46,000 1,196,424
Vallehermoso S.A. Real Estate............................. 177,000 1,974,765
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3,737,442
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SWEDEN -- 1.3%
Netcom Systems AB B* Telecommunications Services............. 26,000 872,803
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SWITZERLAND -- 4.4%
Alusuisse-Lonza Holding AG Multi-Industry.......................... 1,200 1,143,386
United Bank of Switzerland* Banking................................. 2,800 546,120
Zurich Allied* Insurance............................... 2,500 1,240,690
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2,930,196
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UNITED KINGDOM -- 5.0%
BAA PLC Business/Public Services................ 94,120 958,891
General Electric Company PLC Electronics............................. 125,000 913,433
Lloyds TSB GRP Banking................................. 70,000 777,990
Orange PLC* Telecommunications Services............. 71,000 681,718
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3,332,032
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UNITED STATES -- 36.7%
Air Products and Chemicals, Inc. Chemicals............................... 33,000 981,750
Airtouch Communications, Inc.* Telecommunications Services............. 50,000 2,850,000
Baxter International, Inc. Healthcare.............................. 27,000 1,606,500
</TABLE>
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Clemente Global Growth Fund, Inc.
SCHEDULE OF NET ASSETS (UNAUDITED) - CONTINUED SEPTEMBER 30, 1998
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<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
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<S> <C> <C> <C>
Cisco Systems, Inc.* Computer Software....................... 49,500 $ 3,059,719
Halliburton Co. Energy & Equipment Services............. 27,000 771,188
Health Managment Assoc., Inc.* Healthcare.............................. 112,500 2,053,125
Home Depot, Inc. Retail.................................. 63,000 2,488,500
Illinois Tool Works, Inc. Machinery/Manufacturing................. 27,600 1,504,200
Intel Corp. Semiconductors.......................... 14,500 1,243,375
MCI Worldcom, Inc.* Telecommunications Services............. 48,000 2,365,550
Network Associates* Computer Services....................... 22,500 798,750
Pepsico, Inc. Food & Beverages........................ 18,500 544,594
Protective Life Corp. Insurance............................... 36,400 1,310,400
Sungard Data Systems, Inc.* Computer Services....................... 60,000 1,890,000
Suntrust Banks, Inc. Banking................................. 20,000 1,240,000
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24,707,651
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TOTAL COMMON STOCK (COST $46,979,943).................................... 61,678,790
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TIME DEPOSIT -- 8.7%
Morgan Guaranty Trust
5.10% 10/01/98 (Cost $5,905,000)............................................. 5,905,000 5,905,000
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TOTAL INVESTMENTS (Cost $52,884,943)** 100.4%..................................... 67,583,790
OTHER ASSETS AND LIABILITIES, NET (0.40%)......................................... (271,495)
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NET ASSETS -- 100% (applicable to 5,892,400 common shares outstanding)............ $67,312,295
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NET ASSET VALUE PER SHARE ($67,312,295 divided by 5,892,400)...................... $ 11.42
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</TABLE>
* Non-Income Producing Security
** Summary of Total Investments:
COST VALUE
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Common Stock..................... $46,979,943 $61,678,790
Short-Term Investments........... 5,905,000 5,905,000
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Total Investments................ $52,884,943 $67,583,790
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DIRECTORS AND OFFICERS
RONALD G. OLIN, Chairman and Director
LEOPOLDO M. CLEMENTE, JR., Vice Chairman,
President and Director
GARY A. BENTZ, Director
RALPH W. BRADSHAW, Director
PHILLIP GOLDSTEIN, Director
+GERALD HELLERMAN, Director
THOMAS H. LENAGH, Director
SAM NAKAGAMA, Director
+G. PETER SCHIEFERDECKER, Director
WILLIAM H. BOHNETT, Secretary
THOMAS J. PRAPAS, Treasurer
MARIA DISTEFANO, Assistant Secretary
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+Members of Audit Committee
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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 --
PricewaterhouseCoopers LLP
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SUMMARY OF GENERAL INFORMATION
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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.
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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.
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Clemente Global
Growth Fund, Inc.
QUARTERLY REPORT
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SEPTEMBER 30, 1998
