-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D63CiuhDPB1GasEv0W4VGJdoWixrfLu61hMoUAuqkEcSMQn425+SYK6UOxj0AQFs vw3xZh1VhfJGKjCT4MrlOQ== 0000950115-98-001056.txt : 19980529 0000950115-98-001056.hdr.sgml : 19980529 ACCESSION NUMBER: 0000950115-98-001056 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980528 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLEMENTE GLOBAL GROWTH FUND INC CENTRAL INDEX KEY: 0000814083 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133407699 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: SEC FILE NUMBER: 811-05150 FILM NUMBER: 98632903 BUSINESS ADDRESS: STREET 1: 237 PARK AVE STREET 2: C/O FURMAN SELZ CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2128083942 MAIL ADDRESS: STREET 1: 152 W 57TH ST 25TH FLOOR STREET 2: CARNEGIE HALL TOWER CITY: NEW YORK STATE: NY ZIP: 10019 N-30B-2 1 QUARTERLY REPORT Clemente Global Growth Fund, Inc. LETTER TO SHAREHOLDERS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- May 15, 1998 Dear Shareholders: Global equity markets experienced another dizzying ride in the first quarter of 1998. A generally benign economic environment, along with abundant liquidity, propelled the US and European equity markets to one record closing after another, but the journey upward was accompanied by heightened risks born of high valuations and the dangers of Asian contagion. After a slow start, Clemente Global Growth Fund (the Fund) rallied to match the 13.7% gains registered by the FT World Index, the Fund's benchmark, ending the first quarter with an NAV of $13.11. The price of the Fund's shares was $11.19 on March 31, 1998, up 18.5% from the start of the year, and the discount to NAV shrank from 18.15% on December 31, 1997 to 14.66% after the first quarter. STRONG GLOBAL EQUITY MARKETS IN A SEA OF UNCERTAINTY The year began on an ominous note: Indonesia's Suharto pushed aside the medicine prescribed by the financial doctors of the IMF, and his ailing economy and financial markets soon took a dramatic turn for the worse. The country's currency and equities plunged more than 70% in just a few days in January, and Pacific Asia generally followed with a more moderate but still precipitous decline. The rest of the quarter was characterized by cautious, generally recovering, Asian markets. One by one, the region's economies endorsed IMF agreements which put into motion macroeconomic stabilization plans and longer-term structural reforms, and brought smiles to the faces of investors. Swift rallies pushed Asian equities sharply higher, especially in Malaysia, the Philippines, South Korea and Thailand, but significantly short of levels enjoyed prior to the crash. Investors soon concluded that the rest of the trip back would require more tangible evidence of economic recovery and reform than had been displayed to date, and their renewed caution brought the rallies to a halt. North American and European equity markets generally shrugged off the dangers emanating from Asia and, clinging to the heady habits established the past couple of years, continued their move to record levels. Europe led the way, with most of its markets enjoying a quarterly return that surpassed the 12.68% turned in by the FT US Index. Economic recovery was proving to be sustainable, and stronger than expected. A benign inflation and interest rate environment contributed to the euphoria, with additional support from corporate restructuring which was reflected in mergers and acquisitions and in stronger earnings growth. Nor did the Euro turn out to be the disturbing influence expected by some. The road toward a single currency was relatively smooth, and promised further cuts in interest rates as part of the process of convergence. The US formula for success hadn't changed very much: a robust economy, with few signs of accelerating inflation; a steady Federal Reserve policy; abundant liquidity from mutual fund and overseas investors; a strong dollar; and generally positive earnings surprises. Asian uncertainty produced periods of weakness and volatility, but this was more than offset by merger mania. Nor was there much change in Japan's formula for failure: a stagnant economy; a fragile financial system with an on-going credit crunch; inadequate policy initiatives; bureaucracies that have lost their luster; and politics that are increasingly divisive. 1 Clemente Global Growth Fund, Inc. LETTER TO SHAREHOLDERS - CONTINUED - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE CLM PORTFOLIO RESPONDS TO HEIGHTENED RISK Extreme caution continued to dominate our strategy toward Asia. The portfolio's weighting in Japan was cut sharply. Exporters were sold because the impact of a weaker yen was being undermined by slowing regional economies and by depreciating ASEAN currencies, and domestic plays were not getting the support needed from a strong fiscal stimulus. A 13.8% weight at the end of 1997 was down to 7.3% by the end of the first quarter. The rest of the region faced an extended period of nagging financial concerns and sub-par economic growth, but positive, painful steps were being taken, and, while genuine stability was not at hand, some currencies and equities had fallen to levels that made them compelling investments. Impressed by South Korea's quick response to the present crisis, and by their close collaboration with the IMF and international banks, we made a modest investment in that country's exporters. Europe remained our favorite region, particularly the banking, financial, and telecommunications sectors where we added five new names. This was the largest change in the portfolio, during the first quarter, and served to increase our overall European weightings from 36.2% to 47.1%. A modest decline in North America, from 37.7% to 35.5% was the result of reduced holdings in Canada where the currency proved vulnerable, and profits were taken in two successful holdings. Emerging markets exposure fell from 12.5% at the start of the quarter to 10.2% at the end. Asian entries replaced some of the Latin American positions that were deemed vulnerable in the slower growth environment of 1998. The biggest country weights at the end of the first quarter 1998: US (33.9%), Germany (7.6%), Japan (7.3%), the Netherlands (6.9%), Spain (6.3%), and Switzerland (5.0%). The largest changes involved reductions in Japan (-5.5%), Canada (-3.4%), and Mexico (-2.5%), and increased weightings in South Korea (+3.0%), France (+2.3%), the UK (+2.1%), and Spain (1.9%). OPPORTUNITY AND RISK: NORMAL INGREDIENTS FOR AN INVESTMENT STRATEGY There are a number of positive factors, including a favorable growth/inflation environment, with good earnings growth momentum (except Asia/Pacific); and large flows of funds into equities as a result of structural changes in pension systems, and in the overall uses of savings. But there are major risks, as well: a weak yen may induce another round of currency instability in Asia; Asian contagion has abated, but new shocks cannot be ruled out as painful policies create political and social tensions; ample liquidity is inflating valuations, and may be creating a "bubble" in the established equity markets of Europe and North America. The above environment suggests the following investment strategy for the next one or two quarters: o Low allocations (3-5%) in Asia, ex Japan, focusing a very cautious interest on China, South Korea, the Philippines and Thailand. o Japan remains underweight, with a blend of blue-chip exporters and high quality plays on policy-induced domestic recovery and reform. o Latin America, bouncing back from Asian contagion, and with generally attractive valuations, will keep its modestly overweight position. 2 Clemente Global Growth Fund, Inc. LETTER TO SHAREHOLDERS - CONTINUED - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o Europe is the most attractive place for equities despite valuations that are historically high. Those markets are trailing the US cycle in both business restructuring and economic activity, and companies and economies in Europe should show gains through 1999. o Valuations call for under-weighting the US market, but strong earnings and ample liquidity suggest maintaining the present level of holdings (32-35%). This strategy has yielded good results in the first half of the second quarter: the CLM portfolio is up 16.9% for the year through May 14, 1998, the FT World Index 14.6%. The portfolio has not been able to escape the volatility of the markets, and the situation is not likely to improve any time soon. Our protection must lie in our diversified holdings, and in the careful assessment of risk and potential return for each and every stock in our portfolio. As we have stressed in previous shareholder letters, the closed-end structure of this Fund, by allowing us to implement our strategy in a patient, disciplined manner, contributes mightily to the performance of the Fund. We thank you for your support, and look forward to the next step in our global quest for opportunity. Cordially yours, /s/ Thomas Prapas /s/ E. Matthew Brown - ----------------- -------------------- Thomas Prapas E. Matthew Brown 3 Clemente Global Growth Fund, Inc. SCHEDULE OF NET ASSETS (UNAUDITED) MARCH 31, 1998 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
SHARES/PRINCIPAL AMOUNT VALUE ---------------- ----- COMMON STOCK -- 97.8% BRAZIL -- 3.7% Telecommunicacoes Telecommunications Brasileiras S.A. ADR Services................... 6,000 $ 1,947,144 Uniao De Bancos Brasileiras S.A. GDR Banking...................... 25,000 906,250 ----------- 2,853,394 ----------- CANADA -- 1.5% Power Corporation of Canada Diversified Financial Ltd. Services................... 29,700 1,149,673 ----------- FINLAND -- 3.6% Nokia Corp. ADR Telecommunications Equipment.................. 13,000 1,403,188 Sampo Insurance Co. Ltd. Insurance.................... 35,000 1,384,410 ----------- 2,787,598 ----------- FRANCE -- 4.2% Alcatel Alsthom Compagnie Telecommunications Services................... 10,500 1,970,967 AXA-UAP Insurance.................... 12,000 1,235,698 ----------- 3,206,665 ----------- GERMANY -- 7.3% Bayerische Vereinsbank AG Banking...................... 21,000 1,532,979 Porsche AG -- Preferred Shares Autos........................ 990 2,237,663 SAP AG Computer Services............ 4,600 1,835,682 ----------- 5,606,324 ----------- IRELAND -- 1.9% Bank of Ireland Banking...................... 74,730 1,477,461 ----------- ITALY -- 4.1% Banca Commerciale Italiana* Banking...................... 375,000 1,871,019 Telecom Italia SpA Telecommunications Services................... 163,000 1,284,778 ----------- 3,155,797 ----------- JAPAN -- 7.4% Honda Motor Co., Ltd. Autos........................ 50,000 1,799,761 Itochu Corp. Finance...................... 35,000 83,989 Nichiei Co., Ltd. Finance...................... 12,100 1,088,855 Obayashi Corp. Construction................. 185,000 908,692 Sanwa Bank, Ltd. Banking...................... 96,000 856,686 TDK Corp. Electronics.................. 13,000 1,004,116 ----------- 5,742,099 -----------
4 Clemente Global Growth Fund, Inc. SCHEDULE OF NET ASSETS (UNAUDITED) - CONTINUED MARCH 31, 1998 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
SHARES/PRINCIPAL AMOUNT VALUE ---------------- ----- KOREA -- 3.1% Daewoo Heavy Industries Ship Building................ 250,000 $ 1,281,626 Samsung Electro-Mechanics Electronics.................. 51,000 1,082,631 ----------- 2,364,257 ----------- MEXICO -- 3.3% Coca-Cola Femsa SA ADR Food & Beverages............. 72,000 1,471,500 Grupo Financiero Banorte SA de CV* Banking...................... 680,000 1,101,693 ----------- 2,573,193 ----------- NETHERLANDS -- 6.8% Baan Co., N.V.* Computer Services............ 43,000 2,056,479 Koninklijke Ahold N.V. Retail....................... 45,000 1,452,741 Oce-Van Der Grinten N.V. Electrical Equipment......... 12,166 1,749,605 ----------- 5,258,825 ----------- SPAIN -- 6.2% Acs Actividades De Construccion y Servicios Building/Heavy SA Construction............... 54,000 1,956,941 Argentaria Corp. BC Banking...................... 7,119 589,433 Vallehermoso S.A. Real Estate.................. 59,000 2,280,933 ----------- 4,827,307 ----------- SWEDEN -- 1.9% Astra AB ADR Pharmaceutical............... 72,000 1,494,000 ----------- SWITZERLAND -- 4.9% Alusuisse-Lonza Holding AG Multi-Industry............... 1,200 1,456,234 Union Bank Swiss Bearer Banking...................... 560 914,673 Zurich Versicherungsgesellschaft Insurance.................... 2,500 1,451,315 ----------- 3,822,222 ----------- UNITED KINGDOM -- 4.7% BAA PLC Business/Public Services..... 92,954 906,719 Lloyds TSB GRP Banking...................... 70,000 1,091,916 Orange PLC * Telecommunications Services................... 71,000 452,399 Siebe PLC Machinery/Manufacturing...... 54,000 1,178,275 ----------- 3,629,309 ----------- UNITED STATES -- 33.2% Air Products and Chemicals, Inc. Chemicals.................... 16,500 1,367,438 Airtouch Communications, Telecommunications Inc.* Services................... 50,000 2,446,875 Baxter International, Inc. Medical Products............. 27,000 1,488,375
5 Clemente Global Growth Fund, Inc. SCHEDULE OF NET ASSETS (UNAUDITED) - CONTINUED MARCH 31, 1998 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
SHARES/PRINCIPAL AMOUNT VALUE ---------------- ----- Cisco Systems, Inc.* Computer Software............ 33,000 $ 2,256,375 Dresser Industries, Inc. Machinery/Manufacturing...... 27,000 1,297,688 Harris Corp. Office Automation & Equipment.................. 32,800 1,709,700 Health Managment Assoc., Inc.* Healthcare................... 75,000 2,146,875 Home Depot, Inc. Retail....................... 31,500 2,124,281 Illinois Tool Works, Inc. Machinery/Manufacturing...... 27,600 1,787,100 Intel Corp. Semiconductors............... 14,500 1,131,906 Pepsico, Inc. Food & Beverages............. 18,500 789,719 Protective Life Corp. Insurance.................... 18,200 1,328,600 Sungard Data Systems, Inc.* Computer Services............ 60,000 2,208,750 Suntrust Banks, Inc.* Banking...................... 20,000 1,507,500 Worldcom, Inc.* Telecommunications Services................... 48,400 2,084,225 ----------- 25,675,407 ----------- TOTAL COMMON STOCK (COST $53,662,692)............. 75,623,531 ----------- TIME DEPOSIT -- 0.8% First National Bank 5.25% 04/01/98 (Cost $574,000) ............................. 574,000 574,000 ----------- TOTAL INVESTMENTS (Cost $54,236,692) -- 98.6%............... 76,197,531 OTHER ASSETS AND LIABILITIES, NET -- 1.4%................... 1,044,023 ----------- NET ASSETS -- 100% (applicable to 5,892,400 common shares outstanding).............................................. $77,241,554 =========== NET ASSET VALUE PER SHARE ($77,241,554 divided by 5,892,400)................................................ $ 13.11 ===========
ADR American Depository Receipts GDR Global Depository Receipts * Non-Income Producing Security ** Summary of Total Investments: COST VALUE ----------- ----------- Common Stock...................... $53,662,692 $75,623,531 Short-Term Instruments............ 574,000 574,000 ----------- ----------- Total Investments................. $54,236,692 $76,197,531 =========== =========== 6 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. CLEMENTE GLOBAL GROWTH FUND, INC. QUARTERLY REPORT MARCH 31, 1998 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 +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 vlue 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 -----END PRIVACY-ENHANCED MESSAGE-----