<PAGE>
ANNUAL REPORT September 30, 1994
Global Utility
Fund, Inc.
(ICON)
(LOGO)
<PAGE>
Letter to Shareholders
November 10, 1994
Dear Shareholder:
The 12 months ended September 30, 1994 were unusually challenging for
investors in the utility industries. The domestic sector was particularly
affected by rising interest rates induced by the Federal Reserve's tightening
of the monetary supply. In addition, the domestic electric utility sector
was negatively influenced by adverse regulatory decisions in California and
New York.
GLOBAL MARKET
On the more positive side of the equation, foreign markets showed signs of
above-average growth and opportunity. As the global economy expands, there
is increasing need for the development of sophisticated telecommunications
and electric power infrastructures. The Global Utility Fund, with 42% of
its net assets invested abroad, is positioned to participate in these growing
and emerging markets.
FUND OVERVIEW
Unfortunately, over the past 12 months, the difficult environment for the
utility sectors resulted in a decline of -2.5% for Class A shares, and -3.2%
for Class B shares (performance data on Class C shares is not available since
Class C commenced operations on August 1, 1994). However, our results
compared favorably with the declines of -3.9% in the Financial Times World
Utility Index1, and -20.1% in the Dow Jones Electric Utility Index2.
Importantly, the longer term results of your Fund show an annualized
return since inception of +10.7% for A shares and +10.3% for B shares,
considerably better than the annualized gains3 of +6.0% for the FT World
Utility Index, and +9.0% for the S&P 500.
We continue to implement a "bar-bell" strategy for your Portfolio, with one
part of the bar emphasizing securities with well-protected dividends and
higher yields, such as Entergy, Iberdrola, NYNEX and Public Service of
Colorado. The second part of the bar invests in growth-oriented securities
with above-average expansion prospects, such as China Light & Power, Telecom
Italia, Telefonos de Mexico and Telefonica de Espana.
1 The Financial Times World Utility Index is a market-capitalization-weighted
index, comprised of 150 world utility stocks in 19 countries, which provides
an indicator of world utility stock price movements.
2 The Dow Jones Electric Utility Index is a price-weighted index, comprised
of 48 electric utility stocks, which provides an indicator of electric utility
stock price movements.
3 Since 1/2/90.
-3-
<PAGE>
TELECOMMUNICATIONS GROWTH
Telecommunications presents a window into an important growth market, and
therefore comprises the largest component of your Fund, 44% of total net
assets. A recent purchase was made of Tele Danmark, the leading domestic
and international telephone carrier in Danmark. This well-managed company
should have above-average growth prospects as volume expands as a result of
the broadening traffic with Scandinavia, Germany, and Europe. In addition,
the Company's earnings should benefit from management's increasing attention
to cost controls and state-of-the-art technology.
We also monitor the growing trend toward international privatization, which
often gives investors attractive price entry levels for new investments.
Opportunities in the future will likely come from investments in Indonesia,
Greece, Germany, and several South American countries.
"Telecommunications presents a window into an important growth market..."
LOOKING AHEAD
Looking ahead, we believe there are sound opportunities in the domestic
and foreign electric utility markets. Good values are available in the
United States markets, where yields are at their highest levels in many
years. We emphasize the faster growing service areas, good managements,
and the prospects for dividend increases.
As always, it is a pleasure to have you as a shareholder of the Global
Utility Fund. We look forward to identifying attractive investments in
the international utility industries.
Sincerely,
William C.S. Hicks
Portfolio Manager
-4-
<PAGE>
GLOBAL UTILITY FUND, INC. Portfolio of Investments
September 30, 1994
<TABLE>
<CAPTION>
US$
Value
Shares Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--98.6%
Common Stocks--74.9%
Electric Utilities--31.6%
528,000 China Light & Power Co., Ltd.
(Hong Kong)................. $ 2,685,371
200,000 CMS Energy Corp............... 4,350,000
120,000 Detroit Edison Co............. 3,060,000
240,000 DPL, Inc...................... 4,680,000
125,000 DQE, Inc...................... 3,625,000
130,000 Duke Power Co................. 5,070,000
15,000 Electrabel (Belgium).......... 2,492,851
10,000 Elektrowatt Ltd.
(Switzerland)............... 2,687,816
100,000 Empresa Nacional de
Electricidad S.A. (ADR)
(Spain)..................... 4,275,000
140,000 Entergy Corp.................. 3,255,000
30,000 Evn Energ Versorg (Austria)... 3,836,458
800,000 Iberdrola (Spain)............. 5,070,378
200,000 London Electricity (United
Kingdom).................... 2,162,589
320,000 Montana Power Co.............. 7,440,000
360,000 National Power PLC (United
Kingdom).................... 2,616,890
300,000 Pacific Gas & Electric Co..... 6,825,000
120,000 Public Service Co. of
Colorado.................... 3,240,000
250,000 Puget Sound Power & Light
Co.......................... 4,937,500
229,000 KPN Royal PTT Nederland
(Netherlands)............... 6,921,262
26,000 RWE, A.G. (Germany)........... 7,588,862
60,000 SCE Corp...................... 780,000
1,400,000 Scottish Power (United
Kingdom).................... 7,867,402
250,000 Shandong Huaneng Power
Development Ltd. (China).... 3,187,500
130,000 Southern Co................... 2,421,250
100,000 Texas Utilities Electric
Co.......................... 3,262,500
160,000 Unicom Corp................... 3,560,000
33,500 Veba A.G. (Germany)........... 11,141,417
120,000 Western Resources Inc......... 3,405,000
150,000 Wisconsin Energy Corp......... 3,806,250
------------
126,251,296
------------
Gas Utilities--4.5%
600,000 Australian Gas & Light Ltd.
(Australia)................. 2,007,016
40,000 British Gas PLC (ADR) (United
Kingdom).................... 1,870,000
70,500 Equitable Resources, Inc...... 2,115,000
330,000 Transcanada Pipelines Ltd.
(Canada).................... 4,393,364
470,000 Westcoast Energy Inc.
(Canada).................... 7,744,944
------------
18,130,324
------------
Telecommunications--30.8%
106,300 AirTouch Communications,
Inc......................... $ 3,042,837
370,000 AT&T.......................... 19,980,000
205,000 BCE, Inc. (Canada)............ 7,354,375
90,000 Bell Atlantic Corp............ 4,770,000
153,200 British Columbia Telephone Co.
(Canada).................... 2,938,145
58,400 British Telecommunications PLC
(ADR) (United Kingdom)...... 3,343,400
112,800 Comsat Corp................... 2,890,500
70,000 GTE Corp...................... 2,126,250
90,000 Hong Kong Telecommunications
(ADR) (Hong Kong)........... 1,811,250
280,000 MCI Communications Corp....... 7,105,000
230,000 NYNEX Corp.................... 8,855,000
106,300 Pacific Telesis Group......... 3,268,725
15,000 Southern New England
Telecommunications, Inc....... 504,375
180,000 Southwestern Bell Corp........ 7,650,000
133,800 Sprint Corp................... 5,101,125
2,300,000 STET RISP Societa Funa Ciara
Telefonica P.A. (Italy)....... 5,889,737
900,000 Telecom Italia (Italy)........ 2,544,691
93,500 Telecommunications of New
Zealand, Ltd. (ADR) (New
Zealand).................... 4,756,812
165,500 Tele Danmark (ADR)
(Denmark)................... 4,509,875
20,000 Telefonica de Argentina S.A.
(ADR)
(Argentina)................. 1,385,000
170,000 Telefonica de Espana S.A.
(ADR) (Spain)............... 6,885,000
120,000 Telefonos de Mexico S.A. (ADR)
(Mexico).................... 7,500,000
220,061 U.S. West, Inc................ 8,527,364
------------
122,739,461
------------
Water Utilities--1.4%
83,900 American Water Works Co.,
Inc......................... 2,212,862
400,000 Anglian Water (United
Kingdom).................... 3,438,042
------------
5,650,904
------------
Other--6.6%
30,000 Alcatel Alsthom (France)...... 2,778,535
100,000 Ericsson (L.M.) Telephone Co.,
B-free (Sweden)............. 5,328,478
55,000 Ericsson (L.M.) Telephone Co.,
B-free (ADR) (Sweden)....... 2,949,375
120,000 Exxon Corp.................... 6,915,000
200,000 Raychem Corp.................. 8,200,000
------------
26,171,388
------------
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
GLOBAL UTILITY FUND, INC.
<TABLE>
<CAPTION>
Moody's US$
Rating Value
(Unaudited) Shares Description (Note 1)
<C> <C> <S> <C>
Total common stocks
(cost $273,895,892).... $298,943,373
------------
Preferred Stock--0.7%
Telecommunications--0.7%
80,000 Philippine Long Distance
Telephone $5.75 Conv.
Ser. II (Philippines)
(cost $2,000,000)...... 2,630,000
------------
Debt Obligations--23.0%
Corporate Bonds--21.2%
Principal
Amount
(000) Electric Utilities--11.6%
---------
Alabama Power Co.,
A1 $1,500 6.375%, 8/1/99........... 1,416,315
Central Illinois Light
Co.,
Aa2 1,750 8.20%, 1/15/22........... 1,685,197
Chubu Electric Power,
Aaa 2,000 (D) 6.25%, 8/5/03
(Eurobonds)............ 1,762,500
Commonwealth Edison Co.,
Baa3 1,500 9.05%, 10/15/99.......... 1,501,170
Consolidated Edison Co.
Inc.,
Aa3 1,000 7.625%, 3/1/04........... 962,470
Aa3 1,000 7.50%, 6/15/23........... 865,620
Consumers Power Co.,
Baa3 750 6.375%, 9/15/03.......... 636,765
Duke Power Co.,
Aa2 2,000 5.875%, 6/1/01........... 1,798,100
Florida Power & Light
Co.,
Aa3 500 6.00%, 7/1/03............ 439,190
Houston Lighting & Power
Co.,
A2 1,000 6.50%, 4/21/03........... 903,790
A2 1,000 7.50%, 7/1/23............ 863,070
Hydro-Quebec,
A1 1,000 (D) 9.00%, 3/7/01 (Canada)... 1,035,000
A1 C$ 2,000 7.00%, 6/1/04 (Canada)... 1,246,192
Iowa Gas & Electric Co.,
Aa3 2,000 6.95%, 10/15/25.......... 1,621,000
Jersey Central Power &
Light Co.,
Baa1 1,000 7.125%, 10/1/04.......... 916,600
Long Island Lighting Co.,
Ba1 2,000 7.05%, 3/15/03........... 1,634,560
Louisiana Power & Light
Co.,
Baa2 1,000 6.00%, 3/1/00............ 910,720
Monongahela Power Co.,
Aa3 $ 1,500 7.375%, 7/1/02........... $ 1,413,435
National Power PLC,
Aa3 1,000 (D) 6.25%, 12/1/03
(Eurobonds)............ 865,700
Niagara Mohawk Power
Corp.,
Baa2 2,000 6.875%, 4/1/03........... 1,800,320
Northern States Power
Co.,
A1 1,000 5.75%, 12/1/00........... 904,950
Ontario Hydro,
Aa3 1,500 (D) 7.45%, 3/31/13
(Canada)............... 1,341,465
Pacific Corp.,
A2 1,000 8.75%, 2/12/98........... 1,034,340
Philadelphia Electric
Co.,
Baa1 2,000 7.50%, 1/15/99........... 1,970,380
Potomac Edison Co.,
Aa3 2,000 8.875%, 8/1/21........... 2,033,600
Powergen PLC,
Aa3 L 750 8.875%, 3/26/03
(Eurobonds)............ 1,125,533
Southwestern Electric
Power Co.,
Aa2 2,000 5.25%, 4/1/00............ 1,784,100
Southwestern Public
Service Co.,
Aa2 1,000 7.25%, 7/15/04........... 939,740
Tampa Electric Co.,
Aa1 1,000 7.75%, 11/1/22........... 875,600
Tennessee Valley
Authority,
NR 5,000 6.125%, 7/15/03.......... 4,437,500
Texas Utilities Electric
Co.,
Baa2 2,000 9.27%, 1/14/00........... 2,086,240
Tokyo Electric Power,
Aaa 2,000 (D) 6.125%, 7/29/03
(Eurobonds)............ 1,749,200
Virginia Electric & Power
Co.,
A2 2,000 6.625%, 4/1/03........... 1,827,000
------------
46,387,362
------------
Gas, Electric & Related
Industries--5.0%
Alcan Aluminum Ltd.,
A2 2,000 (D) 9.625%, 7/15/19
(Canada)............... 2,077,840
British Gas PLC,
Aa2 2,000 (D) 8.375%, 9/8/99
(United Kingdom)....... 2,047,500
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
GLOBAL UTILITY FUND, INC.
<TABLE>
<CAPTION>
Moody's Principal US$
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
Gas, Electric & Related Industries
(cont'd)
Cincinnati Gas & Electric
Co.,
Baa1 $ 1,500 5.80%, 2/15/99........... $ 1,390,515
Consolidated Natural Gas
Co.,
A1 2,000 5.75%, 8/1/03............ 1,701,580
Enron Corp.,
Baa2 2,000 7.00%, 8/15/23........... 1,623,000
Michigan Consolidated Gas
Co.,
A2 1,600 8.25%, 5/1/14............ 1,566,016
Northern Illinois Gas
Co.,
Aa1 500 5.875%, 5/1/00........... 459,275
Pacific Gas & Electric
Co.,
A1 1,000 5.375%, 8/1/98........... 928,180
Pennsylvania Power &
Light Co.,
A2 1,000 6.75%, 10/1/23........... 790,020
Phillips Petroleum Co.,
Baa2 1,000 8.86%, 5/15/22........... 959,080
Baa2 1,500 7.20%, 11/1/23........... 1,221,555
Southern California Gas
Co.,
A2 2,000 6.875%, 11/1/25.......... 1,621,360
Transport De Gas,
NR 1,500(D) 7.75%, 12/23/98
(Argentina)............ 1,368,750
Union Oil Co.,
Baa2 500 8.75%, 8/15/01........... 515,720
YPF Sociedad Anonima,
B1 2,000(D) 8.00%, 2/15/04
(Argentina)............ 1,715,000
------------
19,985,391
------------
Telecommunications, Media & Related
Industries--4.6%
AT&T,
Aa3 1,500 6.75%, 4/1/04............ 1,381,590
BellSouth
Telecommunications,
Aaa 2,000 6.125%, 9/23/08.......... 1,630,000
British
Telecommunications FIN
BV,
Aaa 2,000(D) 9.375%, 11/16/98
(United Kingdom)....... 2,109,200
Ericsson (L.M.) Telephone
Co.,
A1 $ 1,500(D) 7.875%, 10/21/96
(Sweden)............... $ 1,516,875
Illinois Bell Telephone
Co.,
Aaa 500 7.625%, 4/1/06........... 477,030
Aa1 1,450 6.625%, 2/1/25........... 1,159,710
New England Telephone &
Telegraph Co.,
Aa2 1,000 6.875%, 10/1/23.......... 815,870
Pacific Bell, Inc.,
Aa3 1,550 8.70%, 6/15/01........... 1,613,007
Rogers Cablesystems Ltd.,
Ba3 C$1,500 9.65%, 1/15/14
(Canada)............... 949,615
Southwestern Bell
Telephone Co.,
A1 500 6.125%, 3/1/00........... 463,530
A1 1,000 5.875%, 6/1/03........... 860,660
TCNZ Finance,
Aa1 L 1,000 7.50%, 7/14/03
(Eurobonds)............ 515,677
Telecom Argentina S.A.,
NR 1,500(D) 8.375%, 10/18/00,
(Argentina)............ 1,363,125
Telefonica de Argentina
S.A.,
NR 1,000(D) 8.375%, 10/1/00
(Argentina)............ 915,000
Turner Broadcasting
Systems, Inc.,
Ba2 1,000 8.40%, 2/1/24............ 778,490
U. S. West, Inc.,
Aa3 1,000 7.50%, 6/15/23........... 874,800
United Telephone Co.,
A2 1,000 6.25%, 5/15/03........... 882,500
------------
18,306,679
------------
Total corporate bonds
(cost $93,223,693)..... 84,679,432
------------
Convertible Bonds--0.2%
Compania de Telefonos de
Chile, S.A.,
Baa2 500(D) 4.50%, 1/15/03 (Chile)
(cost $500,000)........ 592,500
------------
</TABLE>
-7- See Notes to Financial Statements.
<PAGE>
<PAGE>
GLOBAL UTILITY FUND, INC.
<TABLE>
<CAPTION>
Principal US$
Amount Value
(000) Description (Note 1)
<C> <S> <C>
U. S. Government Obligations--1.6%
United States Treasury
Notes,
$ 6,500 7.50%, 11/15/01
(cost $6,951,267)...... $ 6,508,125
------------
Total debt obligations
(cost $100,674,960).... 91,780,057
------------
Total long-term
investments
(cost $376,570,852).... 393,353,430
------------
SHORT-TERM INVESTMENTS--1.4%
Repurchase Agreement
5,806 Smith Barney Shearson,
Inc., 4.83% dated
9/30/94, due 10/3/94 in
the amount of
$5,808,337 (cost
$5,806,000;
collateralized by
$5,735,000 U.S.
Treasury Notes, 7.125%,
due 10/15/98;
approximate value
including accrued
interest-$5,920,771)... 5,806,000
------------
Total Investments--100.0%
(cost $382,376,852; Note
4)..................... 399,159,430
Liabilities in excess of
other assets........... (6,438)
------------
Net Assets--100%......... $399,152,992
------------
------------
</TABLE>
- ------------------
(D)--US$ Denominated Bonds.
ADR--American Depository Receipts.
The Fund's current Statement of Additional Information contains a description
of Moody's ratings.
NR--Not rated by Moody's or Standard & Poor's.
-8- See Notes to Financial Statements.
<PAGE>
GLOBAL UTILITY FUND, INC.
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets September 30, 1994
------------------
<S> <C>
Investments, at value (cost $382,376,852)............................................. $399,159,430
Foreign currency, at value (cost $397)................................................ 399
Dividends and interest receivable..................................................... 3,912,786
Receivable for investments sold....................................................... 1,093,103
Receivable for Fund shares sold....................................................... 319,115
Deferred expenses and other assets.................................................... 24,518
------------------
Total assets...................................................................... 404,509,351
------------------
Liabilities
Bank overdraft........................................................................ 1,347
Payable for Fund shares reacquired.................................................... 2,328,063
Payable for investments purchased..................................................... 2,129,264
Accrued expenses...................................................................... 336,985
Distribution fee payable.............................................................. 255,507
Management fee payable................................................................ 215,158
Withholding taxes payable............................................................. 90,035
------------------
Total liabilities................................................................. 5,356,359
------------------
Net Assets............................................................................ $399,152,992
------------------
------------------
Net assets were comprised of:
Common stock, at par................................................................ $ 29,218
Paid-in capital in excess of par.................................................... 374,462,368
------------------
374,491,586
Undistributed net investment income................................................... 72,918
Accumulated net realized gains on investments and foreign currency transactions....... 7,784,210
Net unrealized appreciation of investments and foreign currencies..................... 16,804,278
------------------
Net assets, September 30, 1994........................................................ $399,152,992
------------------
------------------
Class A:
Net asset value and redemption price per share
($126,253,657 / 9,241,608 shares of common stock issued and outstanding).......... $13.66
Maximum sales charge (5.00% of offering price)...................................... .72
------------------
Maximum offering price to public.................................................... $14.38
------------------
------------------
Class B:
Net asset value, offering price and redemption price per share
($272,673,154 / 19,959,437 shares of common stock issued and outstanding)......... $13.66
------------------
------------------
Class C:
Net asset value, offering price and redemption price per share
($226,181 / 16,558 shares of common stock issued and outstanding)................. $13.66
------------------
------------------
</TABLE>
See Notes to Financial Statements.
-9-
<PAGE>
<PAGE>
GLOBAL UTILITY FUND, INC.
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
September 30,
Net Investment Income 1994
-------------
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $627,644).................... $ 12,258,541
Interest and discount earned (net of
foreign withholding taxes of
$8,250)............................... 6,882,528
-------------
Total income.......................... 19,141,069
-------------
Expenses
Distribution fee--Class A............... 329,846
Distribution fee--Class B............... 2,704,662
Distribution fee--Class C............... 212
Management fee.......................... 2,628,090
Transfer agent's fees and expenses...... 650,000
Custodian's fees and expenses........... 309,000
Reports to shareholders................. 304,000
Registration fees....................... 104,000
Audit fee............................... 40,000
Directors' fees......................... 40,000
Legal fees and expenses................. 31,000
Amortization of organization expense.... 20,000
Miscellaneous........................... 22,308
-------------
Total expenses........................ 7,183,118
-------------
Net investment income..................... 11,957,951
-------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions................. 9,373,758
Foreign currency transactions........... (1,660,718)
-------------
7,713,040
-------------
Net change in unrealized appreciation/depreciation of:
Investments............................. (33,768,489)
Foreign currencies...................... (58,119)
-------------
(33,826,608)
-------------
Net loss on investments and foreign
currencies.............................. (26,113,568)
-------------
Net Decrease in Net Assets Resulting
from Operations........................... $ (14,155,617)
-------------
-------------
</TABLE>
GLOBAL UTILITY FUND, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended September 30,
Increase (Decrease) -----------------------------
in Net Assets 1994 1993
------------- ------------
<S> <C> <C>
Operations
Net investment income....... $ 11,957,951 $ 6,338,317
Net realized gain on
investment and foreign
currency transactions..... 7,713,040 4,731,887
Net change in unrealized
appreciation/depreciation
of investments and foreign
currencies................ (33,826,608) 34,345,128
------------- ------------
Net increase (decrease) in
net assets resulting from
operations................ (14,155,617) 45,415,332
------------- ------------
Net equalization (debits)
credits................... (35,657) 244,177
------------- ------------
Dividends and distributions (Note 1)
Dividends from net
investment income
Class A................... (4,289,998) (4,014,073)
Class B................... (6,607,500) (2,696,747)
Class C................... (1,343) --
------------- ------------
(10,898,841) (6,710,820)
------------- ------------
Distributions in excess of
net investment income
Class A................... -- (250,136)
Class B................... -- (168,046)
Class C................... -- --
------------- ------------
-- (418,182)
------------- ------------
Distributions from net
realized gains on
investment and foreign
currency transactions
Class A................... (1,779,709) (6,458,000)
Class B................... (3,106,733) (3,679,371)
------------- ------------
(4,886,442) (10,137,371)
------------- ------------
Fund share transactions (Note 5)
Net proceeds from shares
sold...................... 205,782,596 146,943,974
Net asset value of shares
issued in reinvestment of
dividends and
distributions............. 12,520,588 10,607,644
Cost of shares reacquired... (113,146,333) (37,058,428)
------------- ------------
Net increase in net assets
from Fund share
transactions................ 105,156,851 120,493,190
------------- ------------
Total increase................ 75,180,294 148,886,326
Net Assets
Beginning of year............. 323,972,698 175,086,372
------------- ------------
End of year................... $ 399,152,992 $323,972,698
------------- ------------
------------- ------------
</TABLE>
See Notes to Financial Statements.
-10-
<PAGE>
<PAGE>
GLOBAL UTILITY FUND, INC.
Notes to Financial Statements
Global Utility Fund, Inc. (the ``Fund'') is an open-end diversified
management investment company. The Fund was organized in Maryland on November
18, 1988 as a closed-end, diversified management investment company and on
December 15, 1989, sold 9,000 shares of common stock for $100,440 to Wellington
Management Company (``Wellington''). Investment operations commenced on January
2, 1990. On February 1, 1991, the Fund concluded operations as a closed-end
investment company and subsequently commenced operations as an open-end,
diversified management investment company.
The Fund seeks to achieve its investment objective of obtaining a high total
return, without incurring undue risk, by investing primarily in common stocks,
debt securities and preferred stocks of domestic and foreign companies in the
utility industries. Debt securities in which the Fund invests are generally
within the four highest ratings categories by a nationally recognized
statistical rating organization or, if not rated, are of comparable quality. The
ability of the issuers of the debt securities held by the Fund to meet their
obligations may be affected by economic developments in a specific country or
industry.
Note 1. Accounting The following is a summary
Policies of significant accounting pol-
icies followed by the Fund in the preparation of
its financial statements.
Securities Valuation: In valuing the Fund's assets, quotations of foreign
securities in a foreign currency are converted to U.S. dollar equivalents at the
then current exchange rate. Any security for which the primary market is on an
exchange is valued at the last sale price on such exchange on the day of
valuation or, if there was no sale on such day, the last bid price quoted on
such day. Portfolio securities that are actively traded in the over-the-counter
market, including listed securities for which the primary market is believed to
be over-the-counter, are valued at the mean between the most recently quoted bid
and asked prices provided by an independent pricing service or by principal
market makers. Securities for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the direction
of the Board of Directors of the Fund.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securi-
ties which mature in 60 days or less are valued at amortized cost.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian takes possession of the
underlying collateral securities. If the seller defaults and the value of the
collateral declines or if bankruptcy proceedings are commenced with respect to
the seller of the security, realization of the collateral by the Fund may be
delayed or limited.
Foreign Currency Translation: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, other assets and liabilities--at
the closing rates of exchange.
(ii) purchases and sales of investment securities, income and expenses--at
the rates of exchange prevailing on the respective dates of such
transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the fiscal year, the Fund does not
isolate that portion of the results of operations arising as a result of changes
in the foreign exchange rates from the fluctuations arising from changes in the
market prices of the securities held at fiscal year end. Similarly, the Fund
does not isolate the effect of changes in foreign exchange rates from the
fluctuations arising from changes in the market prices of long-term securities
sold during the fiscal year. Accordingly, realized foreign currency gains
(losses) are included in the reported net realized gain on investment
transactions.
The Fund recognizes foreign currency gains and losses from the holding of
foreign currencies, the sales and maturities of short-term securities and
forward currency contracts, and the difference between the amounts of dividends,
interest and foreign taxes recorded on the Fund's books and the U.S. dollar
equivalent of amounts actually received or paid.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the possibility of political and economic instability and
the level of governmental supervision and regulation of foreign securities
markets.
-11-
<PAGE>
<PAGE>
Forward Currency Contracts: The Fund enters into forward currency contracts in
order to hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings. A forward contract is a commitment to purchase or
sell a foreign currency at a future date (usually the security transaction
settlement date) at a negotiated forward rate. In the event that a security
fails to settle within the normal settlement period, the forward currency
contract is renegotiated at a new rate. The gain or loss arising from the
difference between the settlement value of the original and renegotiated forward
contracts is isolated and is included in net realized gains (losses) from
foreign currency transactions. Risks may arise as a result of the potential
inability of the counterparties to meet the terms of their contract.
Securities Transactions and Investment Income: Security transactions are
recorded on the trade date. Realized gains and losses from security and currency
transactions are calculated on the identified cost basis. Interest income is
recorded on the accrual basis and dividend income is recorded on the ex-dividend
date.
Net investment income (other than distribution fees) and unrealized and
realized gains or losses are allocated daily to each class of shares based upon
the relative proportion of net assets of each class at the beginning of the day.
Equalization: The Fund follows the accounting practice known as equalization by
which a portion of the proceeds from sales and costs of reacquisitions of Fund
shares, equivalent on a per share basis to the amount of distributable net
investment income on the date of the transaction, is credited or charged to
undistributed net investment income. As a result, undistributed net investment
income per share is unaffected by sales or reacquisitions of the Fund's shares.
Federal Income Taxes: It is the Fund's policy to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to shareholders.
Therefore, no federal income tax provision is required.
Withholding taxes on foreign dividends and interest are provided in
accordance with the Fund's understanding of the applicable country's tax rules
and rates.
Dividends and Distributions: Dividends from net investment income are declared
and paid quarterly. The Fund will distribute at least annually any net capital
gains in excess of loss carryforwards. Dividends and distributions are recorded
on the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for wash sales and foreign currency transactions.
Deferred Organization Expenses: A total of $100,000 of expenses were incurred in
connection with the organization of the Fund. These costs have been deferred and
are being amortized ratably over a period of sixty months from the date the Fund
commenced investment operations.
Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with Statement of Position 93-2:
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. The
effect of applying this statement was to decrease undistributed net investment
income and increase accumulated net realized gains on investment transactions by
$1,078,136 relating to realized foreign currency losses. Net investment income,
net realized gains and net assets were not affected by this change.
Note 2. Agreements The Fund has a manage-
ment agreement with Prudential Mutual Fund
Management (``PMF''). Pursuant to this agreement, PMF has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PMF has entered into a subadvisory agreement with Wellington;
Wellington furnishes investment advisory services in connection with the
management of the Fund. PMF pays for the cost of the subadviser's services, the
compensation of officers of the Fund, occupancy and certain clerical and
bookkeeping costs of the Fund. The Fund bears all other costs and expenses.
The management fee paid PMF is computed daily and payable monthly at an
annual rate of .70% of the Fund's average daily net assets up to and including
$250 million, .55% of the Fund's average daily net assets of the next $250
million, .50% of the Fund's average daily net assets of the next $500 million
and .45% of the Fund's average daily net assets in excess of $1 billion.
Pursuant to the subadvisory agreement, PMF compensates Wellington for its
services at an annual rate of .50% of the Fund's average daily net assets up to
and including $250 million, .35% of the Fund's average daily net assets of the
next $250 million, .30% of the Fund's average daily net assets of the next $500
million and .25% of the Fund's average daily net assets in excess of $1 billion.
The Fund has distribution agreements with Prudential Mutual Fund
Distributors, Inc. (``PMFD''), which acts as the distributor of the Class A
shares of the Fund, and with Prudential Securities Incorporated (``PSI''), which
acts as
-12-
<PAGE>
<PAGE>
distributor of the Class B and Class C shares of the Fund (collectively the
``Distributors''). The Fund compensates the Distributors for distributing and
servicing the Fund's Class A, Class B and Class C shares, pursuant to plans of
distribution (the ``Class A, B and C Plans''), regardless of expenses actually
incurred by them. The distribution fees are accrued daily and payable monthly.
On July 19, 1994, shareholders of the Fund approved amendments to the Class A
and Class B distribution plans under which the distribution plans became
compensation plans, effective August 1, 1994. Prior thereto, the distribution
plans were reimbursement plans, under which PMFD and PSI were reimbursed for
expenses actually incurred by them up to the amount permitted under the Class A
and Class B Plans, respectively. The Fund is not obligated to pay any prior or
future excess distribution costs (costs incurred by the Distributors in excess
of distribution fees paid by the Fund or contingent deferred sales charges
received by the Distributors). The rate of the distribution fees charged to
Class A and Class B shares of the Fund did not change under the amended plans of
distribution. The Fund began offering Class C shares on August 1, 1994.
Pursuant to the Class A, B and C Plans, the Fund compensates the Distributors
for distribution-related activities at an annual rate of up to .30 of 1%, 1% and
1%, of the average daily net assets of the Class A, B and C shares,
respectively. Such expenses under the Class A Plan were charged at an effective
rate of .23 of 1% of the average daily net assets of the Class A shares for the
fiscal year ended September 30, 1994 and are currently charged at a rate of .25
of 1% of the average daily net assets of the Class A shares. Such expenses under
the Class B and C Plans were both 1% of the average daily net assets of the
Class B and C shares for the fiscal year ended September 30, 1994.
PMFD has advised the Fund that it has received approximately $864,900 in
front-end sales charges resulting from sales of Class A shares during the fiscal
year ended September 30, 1994. From these fees, PMFD paid such sales charges to
dealers which in turn paid commissions to salespersons and incurred other
distribution costs.
PSI has advised the Fund that for the fiscal year ended September 30, 1994,
it received approximately $690,600 in contingent deferred sales charges imposed
upon certain redemptions by Class B shareholders.
PMFD is a wholly-owned subsidiary of PMF; PSI and PMF are indirect,
wholly-owned subsidiaries of The Prudential Insurance Company of America.
Note 3. Other Prudential Mutual Fund Ser-
Transactions vices, Inc. (``PMFS''), a
with Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent and
during the fiscal year ended September 30, 1994, the Fund incurred fees of
approximately $550,500 for the services of PMFS. As of September 30, 1994,
approximately $47,900 of such fees were due to PMFS. Transfer agent fees and
expenses in the Statement of Operations include certain out-of-pocket expenses
paid to non-affiliates.
For the fiscal year ended September 30, 1994, PSI earned approximately $2,400
in brokerage commissions from portfolio transactions executed on behalf of the
Fund.
Note 4. Portfolio Purchases and sales of
Securities investment securities, other
than short-term investments, for the fiscal year
ended September 30, 1994 were $194,984,686 and $76,144,136, respectively.
The United States federal income tax basis of the Fund's investments at
September 30, 1994 was substantially the same as for financial reporting
purposes and, accordingly, net unrealized appreciation of investments, for
United States federal income tax purposes was $16,782,578 (gross unrealized
appreciation--$40,801,306; gross unrealized depreciation--$24,018,728).
Note 5. Capital The Fund currently offers
Class A, Class B and Class C shares. Class A
shares are sold with an initial sales charge of up to 5.00%. Class B shares are
sold with a contingent deferred sales charge which declines from 5% to zero
depending upon the period of time the shares are held. Class C shares are sold
with a contingent deferred sales charge of 1% during the first year. Class B
shares will automatically convert to Class A shares on a quarterly basis
approximately seven years after purchase commencing in or about February 1995.
The Fund has authorized 2 billion shares of common stock at $.001 par value
per share equally divided into Class A, B and C shares. Of the 29,217,603 shares
of common stock issued and outstanding at September 30, 1994, Wellington owned
9,000 Class A shares.
-13-
<PAGE>
<PAGE>
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
----------- ------------
<S> <C> <C>
Year ended September 30, 1994:
Shares sold.................... 2,859,207 $ 40,670,293
Shares issued in reinvestment
of dividends and
distributions................ 258,584 3,610,183
Shares reacquired.............. (3,357,016) (46,899,659)
----------- ------------
Net decrease in shares
outstanding.................. (239,225) $ (2,619,183)
----------- ------------
----------- ------------
Year ended September 30, 1993:
Shares sold.................... 1,862,744 $ 25,585,453
Shares issued in reinvestment
of dividends and
distributions................ 374,695 4,861,664
Shares reacquired.............. (1,606,170) (21,380,960)
----------- ------------
Net increase in shares
outstanding.................. 631,269 $ 9,066,157
----------- ------------
----------- ------------
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Amount
----------- ------------
<S> <C> <C>
Year ended September 30, 1994:
Shares sold.................... 11,406,193 $164,883,607
Shares issued in reinvestment
of dividends and
distributions................ 637,874 8,909,183
Shares reacquired.............. (4,744,947) (66,246,473)
----------- ------------
Net increase in shares
outstanding.................. 7,299,120 $107,546,317
----------- ------------
----------- ------------
Year ended September 30, 1993:
Shares sold.................... 8,729,213 $121,358,521
Shares issued in reinvestment
of dividends and
distributions................ 439,311 5,745,980
Shares reacquired.............. (1,169,345) (15,677,468)
----------- ------------
Net increase in shares
outstanding.................. 7,999,179 $111,427,033
----------- ------------
----------- ------------
</TABLE>
<TABLE>
<CAPTION>
Class C
<S> <C> <C>
August 1, 1994* through
September 30, 1994:
Shares sold.................... 16,482 $ 228,696
Shares issued in reinvestment
of dividends................. 90 1,222
Shares reacquired.............. (14) (201)
----------- ------------
Net increase in shares
outstanding.................. 16,558 $ 229,717
----------- ------------
----------- ------------
</TABLE>
- ---------------
* Commencement of offering of Class C shares.
-14-
<PAGE>
<PAGE>
GLOBAL UTILITY FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
Class A Class B Class C
------------------------------------------------------------- --------------------------------------------- -------------
PER January 2, March 18, August 1,
SHARE 1990(D) 1991(D)(D) 1994(D)(D)(D)
OPERATING Year Ended September 30, Through Year Ended September 30, Through Through
--------------------------------------------- September 30, ----------------------------- September 30, September 30,
PERFOR
MANCE: 1994 1993 1992 1991# 1990# 1994 1993 1992 1991 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net
asset
value,
beginning
of
period... $ 14.63 $ 12.96 $ 12.62 $ 10.50 $ 11.16 $ 14.63 $ 12.97 $ 12.63 $ 11.97 $ 13.93
Income
from
investment
operations
Net
investment
income... .47 .44 .53 .57 .48 .37 .34 .43 .25 .03
Net
realized
and
unrealized
gain
(loss)
on
investment
and
foreign
currency
trans-
actions... (.82) 2.46 1.01 2.23 (.67) (.82) 2.45 1.01 .63 (.21)
Total
from
investment
opera-
tions... (.35) 2.90 1.54 2.80 (.19) (.45) 2.79 1.44 .88 (.18)
Less
distributions
Dividends
from
net
investment
income... (.44) (.47) (.53) (.62) (.41) (.34) (.37) (.43) (.22) (.09)
Distributions
in excess
of net
investment
income -- (.01) -- -- -- -- (.01) -- -- --
Distributions
from net
realized
capital
and
currency
gains... (.18) (.75) (.67) (.08) -- (.18) (.75) (.67) -- --
Total
distri-
butions... (.62) (1.23) (1.20) (.70) (.41) (.52) (1.13) (1.10) (.22) (.09)
Capital
charge
in
respect
of
issuance
of
shares... -- -- -- -- (.06) -- -- -- -- --
Redemption
fee
retained
by
Fund.. -- -- -- .02 -- -- -- -- -- --
Net
asset
value,
end
of
period... $ 13.66 $ 14.63 $ 12.96 $ 12.62 $ 10.50 $ 13.66 $ 14.63 $ 12.97 $ 12.63 $ 13.66
TOTAL
RETURN##... (2.49)% 23.87% 13.15% 27.63% (1.98)% (3.22)% 22.87% 12.23% 7.44% (1.32)%
RATIOS/SUPPLEMENTAL
DATA:
Net
assets,
end
of
period
(000)... $126,254 $138,714 $114,654 $132,804 $ 161,892 $272,673 $185,259 $60,432 $30,147 $ 226
Average
net
assets
(000)... $139,166 $119,001 $120,708 $151,217 $ 166,915 $270,466 $ 90,254 $45,661 $18,923 $ 131
Ratios to
average net
assets:###
Expenses,
including
distribution
fees... 1.25% 1.30% 1.39% 1.49% 1.05%* 2.02% 2.10% 2.19% 2.47%* 2.06%*
Expenses,
excluding
distribution
fees... 1.02% 1.10% 1.19% 1.36% 1.05%* 1.02% 1.10% 1.19% 1.47%* 1.06%*
Net
investment
income... 3.39% 3.37% 4.16% 5.06% 5.97%* 2.68% 2.59% 3.43% 4.16%* 2.46%*
Portfolio
turnover
rate... 19% 14% 57% 135% 27% 19% 14% 57% 135%
19%
</TABLE>
- ---------------
* Annualized.
(D) Commencement of investment operations.
(D)(D) Commencement of offering of Class B shares.
(D)(D)(D) Commencement of offering of Class C shares.
# Prior to February 4, 1991, the Fund was organized as a
closed-end fund.
## Total return does not consider the effects of sales loads.
Total return is calculated assuming a purchase of shares
on the first day and a sale on the last day of each period
reported and includes reinvestment of dividends and
distributions. Total return for periods of less than a full
year are not annualized.
### Because of the event referred to in (D)(D)(D) and the timing
of such, the ratios for the Class C shares are not
necessarily comparable to that of Class A or B shares and
are not necessarily indicative of future ratios.
See Notes to Financial Statements.
-15-
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
Global Utility Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
Global Utility Fund, Inc., including the portfolio of investments, as of
September 30, 1994, the related statements of operations for the year then ended
and of changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the four years in the period then ended
and for the period January 2, 1990, (commencement of investment operations)
through September 30, 1990. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
September 30, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Global Utility Fund,
Inc. as of September 30, 1994, the results of its operations, the changes in its
net assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
November 10, 1994
FEDERAL INCOME TAX INFORMATION
We are required by the Internal Revenue Code to advise you within 60 days of
the Fund's fiscal year end (September 30, 1994) as to the federal tax status of
dividends paid by the Fund during such fiscal year. Accordingly, we are advising
you that during the fiscal year, the Fund paid distributions for Class A shares
totaling $0.62 per share, comprised of $0.48 per share ordinary income and
short-term capital gains which are taxable as ordinary income and $0.14 per
share long-term capital gains which are taxable as such. The Fund paid
distributions for Class B shares totaling $0.515 per share, comprised of $0.375
per share ordinary income and short-term capital gains which are taxable as
ordinary income and $0.14 per share long-term capital gains which are taxable as
such. The Fund paid ordinary income dividends for Class C shares totaling $0.085
per share. Further, we wish to advise you that 44% of the ordinary income
dividends paid in 1994 qualified for the corporate dividend received deduction
available to corporate taxpayers.
In January 1995, you will be advised on IRS Form 1099 DIV or substitute 1099
DIV as to the federal tax status of the distributions received by you in
calendar year 1994.
-16-
<PAGE>
<PAGE>
* Prior to February 4, 1991, the Fund operated as a closed-end investment
company.
These graphs are furnished to you in accordance with SEC regulations. They
compare a $10,000 investment in Global Utility Fund (Class A, Class B, and Class
C) with a similar investment in the Morgan Stanley Capital International World
Index (World Index) by portraying the initial account values at the commencement
of operations of each class and subsequent account values at the end of each
fiscal year (September 30) beginning in 1990 for Class A, in 1991 for Class B
and 1994 for Class C shares. For purposes of the graphs and, unless otherwise
indicated, the accompanying tables, it has been assumed that (a) the current
maximum sales charge was deducted from the initial $10,000 investment in Class A
shares; (b) the maximum applicable contingent deferred sales charge was deducted
from the value of the investment in Class B shares and Class C shares, assuming
full redemption on September 30, 1994; (c) all recurring fees (including
management fees) were deducted; and (d) all dividends and distributions were
reinvested. Class B shares will automatically convert to Class A shares on a
quarterly basis approximately seven years after purchase. This conversion
feature is expected to be implemented on or about February 1995 and is not
reflected in the graph.
The World Index is a weighted index comprised of approximately 1500 companies
listed on the stock exchanges of the U.S.A., Europe, Canada, Australia, New
Zealand and the Far East. The combined market capitalization of these companies
represents approximately 60% of the aggregate market value of the stock
exchanges in the countries comprising the World Index. The World Index is an
unmanaged index and includes the reinvestment of all dividends, but does not
reflect the payment of transaction costs and advisory fees associated with an
investment in the Fund. The securities which comprise the World Index may differ
substantially from the securities in the Fund's portfolio. The World Index is
not the only index which may be used to characterize performance of global
utility funds and other indexes may portray different comparative performance.
-17-
<PAGE>
<PAGE>
Directors
Daniel S. Ahearn
Edward D. Beach
Thomas T. Mooney
John B. Neff
Richard A. Redeker
Sir Michael Sandberg
Robin B. Smith
Nancy H. Teeters
Officers
Edward D. Beach, President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Ronald Amblard, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
Wellington Management Company
75 State Street
Boston, MA 02109
Distributors
Prudential Mutual Fund Distributors, Inc.
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906-5000
Independent Accountants
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Kirkpatrick & Lockhart
1800 M Street, N.W.
Washington, D.C. 20036
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll Free (800) 225-1852, Collect (908) 417-7555
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
37936G303
37936G204 MF105E
37936G402 (LOGO) Cat.#444356X
