[CLEMENTE GRAPHIC]
Clemente Strategic
Value Fund, Inc.
SEMIANNUAL REPORT
--------------------------------
JUNE 30, 1999
<PAGE>
DIRECTORS AND OFFICERS
RONALD G. OLIN, Chairman and Director
GARY A. BENTZ, Director
RALPH W. BRADSHAW, Director and Treasurer
WILLIAM CLARK, Director
PHILLIP GOLDSTEIN, Director
GERALD HELLERMAN, Director
THOMAS H. LENAGH, Director
LEOPOLDO M. CLEMENTE, JR., President
WILLIAM H. BOHNETT, Secretary
MARIA DISTEFANO, Assistant Secretary
- ----------------------------------------------
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
<PAGE>
Clemente Strategic Value Fund, Inc.
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
August 6, 1999
Dear Fellow Shareholders:
I am pleased to report continued strong returns for the Clemente Strategic Value
Fund. The net asset value of the Fund increased +8.5% in the first half. The
market price of the Fund's shares increased +14.6% for the first six months of
1999, reflecting a continuing decrease in the discount which had been reduced to
- -6.4% by June 30. These results compare favorably with global indices and with
other closed-end funds.
Shareholder value advocacy and change at the Fund began in earnest in 1997, as
shares were accumulated at large discounts and progressively greater pressure
was applied by activists to improve performance. Corresponding "total investment
return" to shareholders was +37.6% in 1997, +36.4% in 1998 and +14.6% so far in
1999. This compares to +13.2%, +20.8%, and +8.6% respectively for the FT-
Actuaries World Index the Fund's benchmark, during the same time periods.
The current Board remains committed to utilizing the closed-end structure to
enhance shareholder value as described in my previous letter to shareholders. At
the annual meeting of the Fund held on May 21, 1999, the shareholders elected
the entire Board of seven directors nominated by the Fund, changed the name of
the Fund from the Clemente Global Growth Fund to the Clemente Strategic Value
Fund, and approved a change in the Fund's fundamental investment policies to
permit portfolio purchases of other closed-end funds. A shareholder proposal
recommending that the Fund open-end was defeated by a substantial margin.
Following the annual meeting, a decision was jointly reached by the advisers and
the Board to transition the Fund's current portfolio strategically so that,
under normal circumstances, at least 85% of the portfolio will consist of U.S.
equities. The remaining 15% may consist of foreign ADR's, closed-end funds
trading at discounts, or additional U.S. equity securities. The Fund's
fundamental investment objective of seeking long-term capital appreciation
remained unchanged. Significant progress has been made in restructuring the
portfolio, and the portfolio has substantially outperformed the S&P 500 Index of
U.S. securities, as well as the FT-Actuaries World Index, since May 21.
The Fund's extensive share buy-back program will continue. Since the program
began early last October, the Fund repurchased 912,800 shares through June 30,
which represents more than 15% of the shares outstanding. From October 6 through
June 30, the combined effects of improved portfolio performance and share
buybacks have resulted in a market price increase in the Fund's shares of +70%.
The Board, its Chairman, and the Fund's advisers remain committed to maximizing
shareholder value.
Cordially yours,
/s/ Ron Olin
- ------------------------------
Ron Olin
Chairman
1
<PAGE>
Clemente Strategic Value Fund, Inc.
SCHEDULE OF INVESTMENTS (UNAUDITED) JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
---------------- ------------
<S> <C> <C> <C>
COMMON STOCK -- 79.3%
FINLAND -- 5.8%
Nokia Corp. ADR Communication Services................... 52,000 $ 4,761,250
------------
GREECE -- 0.5%
Ergo Bank SA Financial/Banking........................ 3,900 417,358
------------
ITALY -- 1.4%
Telecom Italia ADR Communication Services................... 11,000 1,157,063
------------
JAPAN -- 4.1%
Nippon Telegraph ADR Communication Services................... 25,000 1,565,625
Softbank Corp. Technology............................... 9,000 1,822,513
------------
3,388,138
------------
KOREA -- 7.6%
Korea Telecom Corporation ADR Communication Services................... 19,600 784,000
Pohang Iron & Steel Ltd ADR Basic Materials.......................... 40,000 1,345,000
Samsung Electronics Technology............................... 37,529 4,117,783
------------
6,246,783
------------
MEXICO -- 1.4%
Fomento Econ ADR Consumer Staples......................... 28,000 1,116,500
------------
UNITED KINGDOM -- 10.0%
Vodafone Group PLC ADR Communication Services................... 33,000 6,501,000
Vodafone Group PLC Communication Services................... 90,316 1,779,553
------------
8,280,553
------------
UNITED STATES -- 48.5%
Air Products and Chemicals, Inc. Basic Materials.......................... 33,000 1,328,250
Analog Devices Technology............................... 39,000 1,957,312
AT&T Communication Services................... 23,000 1,283,688
Banc One Corp. Financial/Banking........................ 31,000 1,846,437
Cisco Systems, Inc. * Technology............................... 89,000 5,740,500
Dell Computer * Technology............................... 32,000 1,184,000
EMC Corp. * Technology............................... 30,000 1,650,000
Halliburton Co. Energy................................... 27,000 1,221,750
Health Management Assoc., Inc. * Healthcare............................... 112,500 1,265,625
Home Depot, Inc. Consumer Cyclicals....................... 63,000 4,059,562
Illinois Tool Works, Inc. Capital Goods............................ 27,600 2,263,200
Intel Corp. Technology............................... 29,000 1,725,500
MCI Worldcom, Inc. * Communication Services................... 48,400 4,165,425
Pacific Internet Technology............................... 20,000 947,500
Pepsico, Inc. Consumer Staples......................... 18,500 715,719
Protective Life Corp. Financial/Insurance...................... 36,400 1,201,200
Sungard Data Systems, Inc. * Technology............................... 60,000 2,070,000
Suntrust Banks, Inc. Financial/Banking........................ 20,000 1,388,750
</TABLE>
2 SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
Clemente Strategic Value Fund, Inc.
SCHEDULE OF INVESTMENTS (UNAUDITED) - CONTINUED JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
---------------- ------------
<S> <C> <C> <C>
Tyco International, Ltd. Capital Goods............................ 27,500 $ 2,605,624
Warner Lambert Co. Healthcare............................... 20,000 1,383,750
------------
40,003,792
------------
TOTAL COMMON STOCK (Cost $36,472,621)...................................... 65,371,437
------------
TIME DEPOSIT -- 20.7%
First Chicago National Bank
4.25% 07/01/99 (Cost $17,024,000)............................................... 17,024,000 17,024,000
------------
TOTAL INVESTMENTS (Cost $53,496,621)** -- 100.00%................................... $ 82,395,437
============
</TABLE>
ADR American Depository Receipts
* Non-Income Producing Security
** Summary of Total Investments:
COST VALUE
------------ ------------
Common Stock..................... $ 36,472,621 $ 65,371,437
Short-Term Instruments........... 17,024,000 17,024,000
------------ ------------
Total Investments................ $ 53,496,621 $ 82,395,437
============ ============
SEE NOTES TO FINANCIAL STATEMENTS 3
<PAGE>
Clemente Strategic Value Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) JUNE 30, 1999
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- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $53,496,621)............................................................... $ 82,395,437
Dividends receivable.................................................................................. 170,522
Other assets.......................................................................................... 85,624
-------------
Total Assets................................................................................... 82,651,583
-------------
LIABILITIES
Payable for shares bought back by Fund................................................................ 72,727
Payable for investment securities purchased........................................................... 3,943,233
Accrued expenses...................................................................................... 127,842
-------------
Total Liabilities.............................................................................. 4,143,802
-------------
NET ASSETS............................................................................................ $ 78,507,781
=============
Net assets consist of:
Common stock, $0.01 par (authorized 25,000,000 shares and 6,010,000 shares issued,
4,979,600 shares outstanding of common stock)................................................... $ 49,796
Paid-in Capital..................................................................................... 53,215,402
Cost of 1,030,400 shares held in treasury........................................................... (11,958,310)
Accumulated net investment loss..................................................................... (397,465)
Accumulated net realized foreign exchange loss...................................................... (287,395)
Accumulated net realized gain on investments........................................................ 9,000,653
Net unrealized appreciation of investments and translation of net assets denominated
in foreign currencies............................................................................ 28,885,100
-------------
Net Assets............................................................................................ $ 78,507,781
=============
Net Asset Value Per Share
($78,507,781 divided by 4,979,600 shares of common stock)........................................... $ 15.77
=============
</TABLE>
4 SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
Clemente Strategic Value Fund, Inc.
STATEMENT OF OPERATIONS (UNAUDITED) JUNE 30, 1999
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
1999
-----------
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld $17,107)................................................... $ 264,487
Interest............................................................................................ 89,744
-----------
Total income..................................................................................... 354,231
-----------
EXPENSES
Investment advisory fee............................................................................. 332,200
Administrative services fee......................................................................... 56,464
Custodian fees and expenses......................................................................... 34,949
Legal fee........................................................................................... 42,151
Directors fees...................................................................................... 37,192
Printing............................................................................................ 29,296
Audit fee........................................................................................... 27,057
Registration expenses............................................................................... 8,183
Transfer agency services............................................................................ 4,463
Insurance expense................................................................................... 2,091
Miscellaneous....................................................................................... 11,405
-----------
Total operating expenses before brokerage credits................................................... 585,451
Fees paid through brokerage credits................................................................. (16,889)
-----------
Net Expenses........................................................................................ 568,562
-----------
Net investment loss................................................................................... (214,331)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on:
Investment transactions............................................................................. 9,987,784
Foreign currency transactions....................................................................... (287,395)
Net change in unrealized appreciation (depreciation) on:
Investment transactions............................................................................. (3,876,615)
Translation of other assets and liabilities denominated in foreign currency......................... (13,717)
-----------
Net realized and unrealized gain on investments and foreign currency transactions..................... 5,810,057
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................. $ 5,595,726
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS 5
<PAGE>
Clemente Strategic Value Fund, Inc.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1999 1998
------------- ------------
(UNAUDITED)
<S> <C> <C>
Operations:
Net investment loss............................................... $ (214,331) $ (514,990)
Net realized gain (loss) on:
Investment transactions........................................ 9,987,784 (987,131)
Foreign currency transactions.................................. (287,395) (20,906)
Net change in unrealized appreciation (depreciation) on:
Investment transactions........................................ (3,876,615) 17,534,358
Translation of other assets and liabilities
denominated in foreign currency.............................. (13,717) 2,033
------------- ------------
Net increase in net assets resulting from operations................ 5,595,726 16,013,364
------------- ------------
Capital share transactions:
Shares repurchased................................................ (6,148,375) (4,903,683)
------------- ------------
Total increase (decrease) in net assets............................. (552,649) 11,109,681
------------- ------------
NET ASSETS:
Beginning of period............................................... 79,060,430 67,950,749
------------- ------------
End of period..................................................... $ 78,507,781 $ 79,060,430
============= ============
</TABLE>
6 SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
Clemente Strategic Value Fund, Inc.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED FOR THE YEAR ENDED DECEMBER 31,
JUNE 30, ---------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
---------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 14.52 $ 11.53 $ 10.10 $ 10.65 $ 10.73 $ 12.36
---------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)........ (0.03) (0.09) (0.05) (0.03) -- (0.03)
Net realized and unrealized gains
(losses) on investments, foreign
currency holdings and other assets
and liabilities denominated in
foreign currencies................ 1.16 2.96 2.36 0.41 0.42 (0.64)
---------- --------- --------- --------- --------- ---------
Net increase (decrease) from
investment operations............. 1.13 2.87 2.31 0.38 0.42 (0.67)
---------- --------- --------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS
Distribution from net investment
income.......................... -- -- -- -- -- --
Distribution from net realized
capital and currency gains...... -- -- (0.88) (0.93) (0.50) (0.96)
---------- --------- --------- --------- --------- ---------
TOTAL DIVIDENDS AND DISTRIBUTIONS... -- -- (0.88) (0.93) (0.50) (0.96)
---------- --------- --------- --------- --------- ---------
SHARES REPURCHASED
Effect of Shares Repurchased........ 0.12 0.12 -- -- -- --
---------- --------- --------- --------- --------- ---------
Increase (decrease) in net asset
value............................. 1.25 2.99 1.43 (0.55) (0.08) (1.63)
---------- --------- --------- --------- --------- ---------
Net asset value, end of period...... $ 15.77 $ 14.52 $ 11.53 $ 10.10 $ 10.65 $ 10.73
========== ========= ========= ========= ========= =========
PER SHARE MARKET VALUE, END OF
PERIOD............................ $ 14 3/4 $ 12 7/8 $ 9 7/16 $ 7 1/2 $ 8 3/8 $ 8 1/2
========== ========= ========= ========= ========= =========
TOTAL INVESTMENT RETURN*............ 14.56%** 36.42% 37.62% 0.64% 4.59% (15.91)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in
000's)............................ $ 78,508 $ 79,060 $ 67,951 $ 59,520 $ 62,781 $ 63,216
Ratios to average net assets:
Operating expenses+............... 1.51%** 1.91% 1.74% 1.53% 1.58% 1.75%
Net investment income (loss)+..... (0.57)%** (0.69)% (0.46)% (0.25)% (0.02)% (0.25)%
Portfolio turnover.................. 69.01% 50.39% 81.56% 120.66% 84.98% 81.73%
</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 purposes of this calculation, to be
reinvested at prices obtained under the Fund's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions or sales
charges.
** Annualized
*** Non-Annualized
+ The ratios of operating expenses and net investment loss to average net
assets before brokerage credits were 1.55%** and (0.61)%**, respectively,
for the period ending June 30, 1999.
SEE NOTES TO FINANCIAL STATEMENTS 7
<PAGE>
Clemente Strategic Value Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 1999
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- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES -- Clemente Strategic
Value 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.
Effective May 21, 1999, the Clemente Global Growth Fund, Inc. changed its name
to the Clemente Strategic Value Fund, Inc.
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 on the
following basis:
(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
8
<PAGE>
Clemente Strategic Value Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
At December 31, 1998, the Fund had a capital loss carryover in the amount of
$987,131, which is available as a reduction of future net capital gains realized
through 2006.
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, 1998, $20,906 of net realized foreign currency loss was
reclassified to net investment loss and the total net investment loss of
$289,903 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 $33,833 during fiscal 1998.
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.
9
<PAGE>
Clemente Strategic Value Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The applicable performance period is a rolling 36-month period whereby the
most recent calendar month is substituted for the earliest month as time passes.
The Basic Fee for each month may be increased to a maximum of 1.50% (on an
annualized basis) or decreased to a minimum of 0.50% (on an annualized basis)
depending on the extent by which the Fund's performance varies from the
FT-Actuaries Index over the performance period as set forth below.
The following table illustrates the full range of permitted increases or
decreases of the Basic Fee on an annualized basis:
<TABLE>
<CAPTION>
PERCENTAGE POINT
DIFFERENCE BETWEEN
PERFORMANCE OF FUND ADJUSTMENT FEE AS MONTHLY
AND % CHANGE IN BASIC TO BASIC FEE ADJUSTED FEE
FT-ACTUARIES INDEX FEE (ANNUALIZED) (ANNUALIZED) 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 Wilmington Trust a monthly fee at the rate of 25% of
the net fees payable to
10
<PAGE>
Clemente Strategic Value Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the Investment Adviser. The fee paid to Wilmington Trust by the Investment
Adviser amounted to $83,050.
The Fund incurred $332,200 in investment advisory fees for the six-months ended
June 30, 1999, which represents a 12% reduction from the Basic Fee of 1%.
Pursuant to an Administration and Accounting Services Agreement (the
"Administration and Accounting Services Agreement") with the Fund dated January
20, 1998, PFPC Inc. ("PFPC" or "the Administrator") serves as the Fund's
administrator and accounting agent. Under the Administration and Accounting
Services Agreement, PFPC 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. PFPC 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. Prior to January 20, 1998, Rodney
Square Management Corp., a wholly owned subsidiary of Wilmington Trust Company
and an indirect affiliate of the Investment Adviser, served as the Fund's
administrator and accounting agent providing the same services as listed above.
PFPC provides administrative and accounting assistance to the Fund. Under the
Administration Agreement, the Fund has agreed to pay a monthly fee at the annual
rate of 0.15% of the Fund's average weekly net assets subject to a minimum fee
of $65,000 per annum. For the six months ended June 30, 1999, the Administrator
earned fees in the amount of $56,464.
Certain officers of the Fund are also 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 $42,151 for the six
months ended June 30, 1999, 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 months ended June 30, 1999 were $64,759,273
and $41,530,602, respectively.
For Federal income tax purposes, the cost of securities owned at June 30, 1999,
was $53,496,621 and the net unrealized appreciation of investments was
$28,898,816. Net unrealized appreciation was composed of gross appreciation of
$29,202,035 for those investments having an excess of value over cost, and gross
depreciation of $303,219 for those investments having an excess of cost over
value.
The Fund has an arrangement with a broker whereby brokerage credits are used to
pay certain operating expenses on behalf of the Fund.
NOTE 4. CAPITAL STOCK -- There are 25 million shares of $.01 par value common
stock authorized. Of the 4,979,600 shares outstanding at June 30,1999, the
Investment Adviser owned 10,000 shares.
A Director of the Fund owns or controls either directly or indirectly 1,692,953
or 34% of the oustanding shares of the Fund with an aggregate market value of
$26,697,869 at June 30, 1999.
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
11
<PAGE>
Clemente Strategic Value Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. SHARE REPURCHASE PROGRAM -- On October 5, 1998, the Fund commenced a
share repurchase program for purposes of enhancing shareholder value and
reducing the discount at which the Fund's shares traded from their net asset
value. From that date through June 30, 1999, the Fund repurchased 912,800 shares
or 15.49% of its Common Stock at an average price per share of $12.46 and an
average discount of 10.25% from net asset value per share. The Fund expects to
continue to repurchase its outstanding shares at such time and in such amounts
as it believes will further the accomplishment of the foregoing objectives,
subject to review by the Board of Directors.
REPORT OF THE FUND'S ANNUAL MEETING
The Fund held its annual meeting on May 21, 1999. At the meeting, the
shareholders voted to elect seven directors for a one year term: Gary A. Bentz,
Ralph W. Bradshaw, William Clark, Phillip Goldstein, Gerald Hellerman, Thomas
Lenagh and Ronald G. Olin. The Fund sought shareholder approval to amend the
Fund's Articles of Incorporation to change the name of the Fund to "Clemente
Strategic Value Fund, Inc.". The shareholders voted on the ratification of the
selection of PricewaterhouseCoopers, LLP as the Fund's independent accountants
for the year ending December 31, 1999. The shareholders also voted on a proposal
to eliminate the fundamental investment policy prohibiting the Fund from
investing in other investment companies and a proposal recommending that the
Board take the necessary steps to open-end the Fund.
The results of the voting were as follows:
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
FOR WITHHELD AGAINST NON-VOTES
--- -------- ------- -----------
<S> <C> <C> <C> <C>
ELECTION OF DIRECTORS
Gary A. Bentz 4,137,436 205,713
Ralph W. Bradshaw 3,931,336 411,813
William Clark 4,137,436 205,713
Phillip Goldstein 4,136,854 206,295
Gerald Hellerman 4,135,854 207,295
Thomas Lenagh 3,930,136 413,013
Ronald G. Olin 3,931,207 411,942
Amend Fund's Articles of Incorporation 3,987,912 144,011 100,864
Selection of PricewaterhouseCoopers LLP 4,141,051 35,913 166,186
Proposal to eliminate the fundamental investment
policy 2,892,234 184,884 100,707
Shareholder proposal to open-end the Fund 934,264 2,289,252 69,930
</TABLE>
12
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SUMMARY OF GENERAL INFORMATION
- --------------------------------------------------------------------------------
THE FUND
Clemente Strategic Value 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 Strategic
Value 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
Strategic Value 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 Strategic Value
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.
