SEMI ANNUAL REPORT March 31, 1995
Global Utility
Fund, Inc.
- ------------------------------
(ICON)
(LOGO)
<PAGE>
Letter to Shareholders
May 5, 1995
Dear Shareholder:
For the six months ended March 31, 1995, the domestic sector of the Global
Utility Fund outperformed its foreign counterpart, as international equities
were buffeted by fears of currency fluctuations. Despite a difficult foreign
market in the last six months, your Fund's performance almost equaled the
gain
in the benchmark Financial Times World Utility Index. The longer term record
of your Fund continues well above average compared with most indices.
Fund Overview
During the period, domestic electric utility stocks showed solid advances as
interest rates declined. In addition, the telecommunications industry
displayed internal dynamics as a result of the continuing strength in long
distance, and the opportunities in new areas such as cellular and media.
Congress is actively debating legislation that should affect the longer term
strategy of many of the major Bell operating companies, and we expect a
clarification of governmental policy later this year. Your Fund is solidly
represented in these attractive areas, with 32% of net assets in
telecommunications. Three of your Fund's largest equity holdings -- AT&T
(4.9% of net assets), US West (2.5%) and Southwestern Bell (2.2%) -- are in
the
telecommunications area and are highlighted below:
- -- AT&T: A leader in the growing global information highway and a beneficiary
of the expanding global telecommunications network. Recent expansion into
cellular via the acquisition of McCaw Cellular should extend the longer term
growth rate.
- -- US West: The seventh largest U.S. telephone holding company, with
investments in cellular telephone operations, cable television operations,
and international communications operations. US West serves the expanding
Western markets which show favorable demographic growth. The company's
-1-
<PAGE>
<TABLE>
FUND PERFORMANCE1
CUMULATIVE TOTAL RETURNS
As of March 31, 1995
<CAPTION>
6 Months 1 Year 5 Years Since Inception2
<S> <C> <C> <C> <C>
Global Utility Fund
Class A 0.2% 0.9% 74.0% 70.5%
Class B -0.2% 0.2% N/A 43.2%
Class C -0.2% N/A N/A -1.5%
Financial Times
World Utility
Index* 0.3 1.7 54.6 32.1
Lipper Utility
Fund Avg** 3.1 1.9 50.2 43.4
S&P Utility Index*** 6.9 7.3 46.8 33.1
</TABLE>
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS3
As of March 31, 1995
<CAPTION>
1 Year 5 Years Since Inception2
<S> <C> <C> <C>
Global Utility Fund
Class A -4.1% 10.6% 9.6%
Class B -4.8% N/A 9.1%
Class C N/A N/A -2.5%
</TABLE>
1.Source: Lipper Analytical Services, Inc. Past performance is no guarantee
of
future results. Investment return and principle value will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. These figures do not take into account sales charges. The
Fund charges a maximum front-end sales load of 5.00% for Class A shares.
Class B shares are subject to a declining contingent deferred sales charge
of 5%, 4%, 3%, 2%, 1% and 1% during the first six years. Class C shares are
subject to a 1% contingent deferred sales charge on redemptions during the
first year. Class B shares will automatically convert to Class A shares on
a quarterly basis after approximately seven years.
2.Inception dates: 1/2/90 Class A; 3/18/91 Class B; 8/1/94 Class C. The Fund
operated as a closed-end fund from its inception until February 1, 1991.
3.Source: Prudential Mutual Fund Management. These averages take into
account
applicable sales charges.
*The Financial Times World Utility Index is a market-capitalization-weighted
index, comprised of 154 world utility stocks (in 20 countries).
**These are the average returns of 81 funds in the utility category (as
determined by Lipper) for six months, 75 for one year, 19 for five years
and 18 since Class A inception.
***Standard & Poor's Utility Index is a weighted index, which provides a
broad indicator of utility stock price movements. It is comprised of 40
utility stocks.
N/A Performance data with respect to Class C is not available as operations
commenced 8/1/94.
-2-
<PAGE>
partnership with Time Warner should place the firm in a leadership position
for interactive home services, including cable.
- -- Southwestern Bell (SBC Communications): A diversified telephone operations
company with investments in cellular telephone service, cable television and
international ventures. SBC has developed a strong base business in the
growing Southwestern states including Texas. It's prospects are enhanced
by imaginative alliances to add wireless and international services.
During the past six months, we reduced foreign exposure modestly, while
increasing investments in the domestic natural gas area. We believe these
stocks were unduly penalized by the warm winter weather during early 1995,
so we utilized this opportunity to increase Fund weightings in natural gas,
a clean fuel with favorable long-term prospects. New positions in Burlington
Resources (1.2% of net assets) and National Fuel Gas (0.7%) increase our
overall gas holdings to 5.0% of net assets.
Looking Ahead
In our opinion, the longer term opportunities for foreign and domestic global
utilities are quite favorable. Growing economies abroad will demand
technological advances in voice communications needed to remain competitive
in the new world order. Emerging economies in Latin America and Asia will
provide new markets for equipment and service companies. The United States
offers good growth prospects for clean natural gas fuel and electrical
demand.
We continue to emphasize a dual approach to portfolio management. The higher
yield portion of the portfolio emphasizes companies with well-protected
dividends or the prospect for dividend growth. The balance of the portfolio
has investments in more rapidly growing areas including the emerging
countries
of the world. The trend toward privatization continues, and we anticipate
new opportunities in this area in Germany, Greece and Asia.
As always, it is a pleasure to have you as a Global Utility Fund shareholder.
We look forward to continuing to serve your investment needs in the future.
Sincerely,
William C. S. Hicks
Portfolio Manager
-3-
<PAGE>
GLOBAL UTILITY FUND, INC. Portfolio of Invvestments
March 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
US$
Value
Shares Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--97.3%
Common Stocks--73.8%
Electric Utilities--28.8%
528,000 China Light & Power Co. Ltd.
(Hong Kong)................. $ 2,560,720
200,000 CMS Energy Corp............... 4,675,000
100,000 Detroit Edison Co............. 2,737,500
200,000 DPL, Inc...................... 4,175,000
125,000 DQE, Inc...................... 4,109,375
100,000 Empresa Nacional de
Electricidad S.A. (ADR)
(Spain)..................... 4,237,500
140,000 Entergy Corp.................. 2,922,500
200,000 Espoon Sahko Oy (ADS)
(Finland)................... 2,184,000
30,000 Evn Energie - Versorgung
Niederoesterreich AG
(Austria)................... 3,675,259
150,000 Huaneng Power International
Inc. (ADR) (China).......... 2,381,250
600,000 Iberdrola (Spain)............. 3,576,791
75,000 Korea Electric Power
Corporation (ADR) (Korea)... 1,546,875
200,000 London Electricity PLC
(United Kingdom)............ 1,893,083
200,000 Montana Power Co.............. 4,550,000
250,000 Pacific Gas & Electric Co..... 6,218,750
100,000 Pinnacle West Capital Corp.... 2,087,500
140,000 Public Service Co. of
Colorado.................... 4,305,000
250,000 Puget Sound Power & Light
Co.......................... 5,250,000
21,000 RWE, A.G. (Germany)........... 6,910,519
1,300,000 Scottish Power PLC (United
Kingdom).................... 6,786,800
250,000 Shandong Huaneng Power
Development Ltd. (China).... 2,250,000
100,000 Texas Utilities Electric
Co.......................... 3,175,000
130,000 The Southern Co............... 2,648,750
23,500 VEBA A.G. (Germany)........... 8,539,993
120,000 Western Resources, Inc........ 3,750,000
150,000 Wisconsin Energy Corp......... 4,068,750
------------
101,215,915
------------
Gas Utilities--5.2%
618,705 Australian Gas & Light Co.
(Australia)................. 1,912,381
100,500 Equitable Resources, Inc...... 2,801,437
84,200 National Fuel Gas Co.......... $ 2,357,600
330,000 TransCanada Pipelines Ltd.
(Canada).................... 4,205,433
470,000 Westcoast Energy Inc.
(Canada).................... 6,994,795
------------
18,271,646
------------
Other--3.9%
100,000 Burlington Resources Inc...... 4,075,000
120,000 Exxon Corp.................... 8,010,000
50,000 Sonat Inc..................... 1,500,000
------------
13,585,000
------------
Telecommunications--31.6%
106,300 AirTouch Communications,
Inc......................... 2,896,675
330,000 AT&T.......................... 17,077,500
190,000 BCE Inc. (Canada)............. 5,866,250
60,000 Bell Atlantic Corp............ 3,165,000
153,200 British Columbia Telephone Co.
(Canada).................... 2,621,324
112,800 Comsat Corp................... 2,100,900
43,000 Empresas Telex (ADR)
(Chile)..................... 311,750
70,000 GTE Corp...................... 2,327,500
90,000 Hong Kong Telecommunications
(ADR)
(Hong Kong)................. 1,743,750
200,000 KPN Royal PTT Nederland
(Netherlands)............... 7,127,100
260,000 MCI Communications Corp....... 5,362,500
160,000 NYNEX Corp.................... 6,340,000
106,300 Pacific Telesis Group......... 3,215,575
43,700 Philippine Long Distance
Telephone Co. (GDS)
(Philippines)............... 2,463,588
6,300 PT Indonesian Satellite (ADR)
(Indonesia)................. 222,075
900,000 SIP (Italy)................... 2,108,186
180,000 Southwestern Bell Corp........ 7,582,500
133,800 Sprint Corp................... 4,047,450
2,300,000 Stet-Societa Finanziaria
Telefonica P.A. (Italy)..... 4,641,195
165,500 Tele Danmark (ADR)
(Denmark)................... 4,385,750
63,500 Telecommunications of New
Zealand Ltd.
(ADR) (New Zealand)......... 3,794,125
</TABLE>
-4- See Notes to Financial Statements.
<PAGE>
GLOBAL UTILITY FUND, INC.
<TABLE>
<CAPTION>
US$
Value
Shares Description (Note 1)
<C> <S> <C>
Telecommunications (cont'd.)
40,000 Telefonica de Argentina
S.A. (ADR)
(Argentina)............ $ 965,000
150,000 Telefonica de Espana S.A.
(ADR) (Spain).......... 5,625,000
120,000 Telefonos de Mexico S.A.
(ADR) (Mexico)......... 3,420,000
220,061 US WEST, Inc............. 8,802,440
75,000 Vodafone Group PLC (ADR)
(United Kingdom)....... 2,484,375
------------
110,697,508
------------
Water Utilities & Other--4.3%
30,000 Alcatel Alsthom Compagnie
Generale d' Electricite
(France)............... 2,718,681
83,900 American Water Works,
Inc.................... 2,433,100
400,000 Anglian Water PLC
(United Kingdom)....... 3,116,106
100,000 Ericsson (L.M.) Telephone
Co.,
B-free (Sweden)........ 6,235,550
11,300 Technip S.A. (France).... 637,666
------------
15,141,103
------------
Total common stocks
(cost $245,611,349)...... 258,911,172
------------
Preferred Stocks--0.8%
Telecommunications--0.8%
80,000 Philippine Long Distance
Telephone $5.75 Conv.
Ser. II (Philippines)
(cost $2,000,000)........ 2,830,000
------------
Debt Obligations--22.7%
Corporate Bonds--20.6%
<CAPTION>
Principal
Moody's Amount
Rating (000) Electric Utilities--11.8%
- ----- ---------
<C> <C> <S> <C>
Alabama Power Co.,
A1 $ 1,500 6.375%, 8/1/99........... 1,438,875
Central Illinois Light
Co.,
Aa2 1,750 8.20%, 1/15/22........... 1,763,353
Chubu Electric Power,
Aaa $ 2,000D 6.25%, 8/5/03
(Eurobonds)............ $ 1,810,000
Cincinnati Gas & Electric
Co.,
Baa1 1,500 5.80%, 2/15/99........... 1,408,245
Consolidated Edison Co.
Inc.,
Aa3 1,000 7.625%, 3/1/04........... 983,620
Duke Power Co.,
Aa2 2,000 5.875%, 6/1/01........... 1,830,060
Florida Power & Light
Co.,
Aa3 500 6.00%, 7/1/03............ 441,700
Houston Lighting & Power
Co.,
A2 1,000 6.50%, 4/21/03........... 926,540
Hydro-Quebec,
A1 C$2,000 7.00%, 6/1/04 (Canada)... 1,223,826
Iowa Gas & Electric Co.,
Aa3 1,000 6.95%, 10/15/25.......... 857,940
Long Island Lighting Co.,
Ba1 2,000 7.05%, 3/15/03........... 1,701,140
Louisiana Power & Light
Co.,
Baa2 1,000 6.00%, 3/1/00............ 925,710
Monongahela Power Co.,
Aa3 1,500 7.375%, 7/1/02........... 1,448,610
National Power PLC,
Aa3 1,000D 6.25%, 12/1/03
(Eurobonds)............ 889,900
Northern States Power
Co.,
A1 1,000 5.75%, 12/1/00........... 914,720
Ontario Hydro,
Aa3 1,500D 7.45%, 3/31/13
(Canada)............... 1,404,180
Pacific Gas & Electric
Co.,
A2 1,000 5.375%, 8/1/98........... 938,840
Pacificorp,
A2 1,000 8.75%, 2/12/98........... 1,031,190
Philadelphia Electric
Co.,
Baa1 2,000 7.50%, 1/15/99........... 1,984,800
Potomac Edison Co.,
Aa3 2,000 8.875%, 8/1/21........... 2,128,860
Powergen PLC,
Aa3 BP750 8.875%, 3/26/03
(Eurobonds)............ 1,196,899
Southwestern Electric
Power Co.,
Aa2 2,000 5.25%, 4/1/00............ 1,816,980
Southwestern Public
Service Co.,
Aa2 1,000 7.25%, 7/15/04........... 966,880
Tampa Electric Co.,
Aa1 1,000 7.75%, 11/1/22........... 952,640
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
GLOBAL UTILITY FUND, INC.
<TABLE>
<CAPTION>
Principal US$
Moody's Amount Value
Rating (000) Description (Note 1)
<C> <C> <S> <C>
Electric Utilities (cont'd.)
Tennessee Valley
Authority,
NR $ 5,000 6.125%, 7/15/03.......... $ 4,567,200
Texas Utilities Electric
Co.,
Baa2 2,000 9.27%, 1/14/00........... 2,095,680
Tokyo Electric Power,
Aaa 2,000D 6.125%, 7/29/03
(Eurobonds)............ 1,811,800
Virginia Electric & Power
Co.,
A2 2,000 6.625%, 4/1/03........... 1,869,820
------------
41,330,008
------------
Gas Distribution & Other
Industries--4.8%
Alcan Aluminum Ltd.,
A2 2,000D 9.625%, 7/15/19
(Canada)............... 2,161,080
British Gas Finance PLC,
Aa2 2,000D 8.375%, 9/8/99
(Eurobonds)............ 2,055,000
Consolidated Natural Gas
Co.,
A1 2,000 5.75%, 8/1/03............ 1,757,320
Enron Corp.,
Baa2 2,000 7.00%, 8/15/23........... 1,668,740
Michigan Consolidated Gas
Co.,
A2 1,600 8.25%, 5/1/14............ 1,630,752
Northern Illinois Gas
Co.,
Aa1 500 5.875%, 5/1/00........... 466,570
Phillips Petroleum Co.,
Baa2 1,000 8.86%, 5/15/22........... 1,026,240
Baa2 1,500 7.20%, 11/1/23........... 1,296,405
Southern California Gas
Co.,
A2 2,000 6.875%, 11/1/25.......... 1,706,900
Transportadora De Gas,
NR 1,500D 7.75%, 12/23/98
(Argentina)............ 1,080,000
Union Oil Co.,
Baa2 500 8.75%, 8/15/01........... 515,940
YPF Sociedad Anonima,
B1 2,000D 8.00%, 2/15/04
(Argentina)............ 1,580,000
------------
16,944,947
------------
Telecommunications, Media & Related
Industries--4.0%
AT&T,
Aa3 1,500 6.75%, 4/1/04............ 1,415,010
BellSouth
Telecommunications,
Aaa $ 2,000D 6.125%, 9/23/08
(Eurobonds)............ $ 1,707,400
British Telecom FIN BV,
Aaa 2,000D 9.375%, 11/16/98
(Eurobonds)............ 2,106,800
Ericsson (L.M.) Telephone
Co.,
A1 1,500D 7.875%, 10/21/96
(Eurobonds)............ 1,515,000
Illinois Bell Telephone
Co.,
Aaa 500 7.625%, 4/1/06........... 490,525
Pacific Bell, Inc.,
Aa3 1,550 8.70%, 6/15/01........... 1,633,344
Southwestern Bell
Telephone Co.,
A1 1,000 5.875%, 6/1/03........... 884,830
TCNZ Finance,
Aa1 BP1,000 7.50%, 7/14/03
(Eurobonds)............ 607,986
Telecom Argentina S.A.,
B1 1,500D 8.375%, 10/18/00,
(Argentina)............ 1,200,000
Telefonica de Argentina
S.A.,
NR 1,000D 8.375%, 10/1/00
(Argentina)............ 790,000
B1 1,000D 11.875%, 11/1/04
(Argentina)............ 900,000
Turner Broadcasting Systems, Inc.,
Ba2 1,000 8.40%, 2/1/24............ 826,710
------------
14,077,605
------------
Total corporate bonds
(cost $77,828,279)....... 72,352,560
------------
Convertible Bonds--0.2%
Compania de Telefonos de
Chile, S.A.,
Baa2 500D 4.50%, 1/15/03 (Chile)
(cost $500,000).......... 473,750
------------
U. S. Government Obligations--1.9%
United States Treasury
Notes,
6,500 7.50%, 11/15/01
(cost $6,951,430)........ 6,613,750
------------
Total debt obligations
(cost $85,279,709)....... 79,440,060
------------
Total long-term
investments
(cost $332,891,058)...... 341,181,232
------------
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
GLOBAL UTILITY FUND, INC.
<TABLE>
<CAPTION>
Principal US$
Amount Value
(000) Description (Note 1)
<C> <C> <S> <C>
SHORT-TERM INVESTMENTS--0.9%
Repurchase Agreement
Smith Barney Shearson,
Inc.
$ 3,180 6.20%, dated 3/31/95, due
4/3/95 in the amount of
$3,181,643 (cost
$3,180,000;
collateralized by
$3,140,000 U.S.
Treasury Notes, 7.25%,
due 11/15/96;
approximate value
including accrued
interest-$3,249,076)... $ 3,180,000
------------
Total Investments--98.2%
(cost $336,071,058; Note
4)..................... 344,361,232
Other assets in excess of
liabilities--1.8%........ 6,450,536
------------
Net Assets--100%......... $350,811,768
------------
------------
</TABLE>
- ------------------
D--US$ Denominated Bonds.
ADR--American Depository Receipts.
ADS--American Depository Shares.
GDS--Global Depository Shares.
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.
-7- See Notes to Financial Statements.
<PAGE>
GLOBAL UTILITY FUND, INC.
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
Assets
March 31, 1995
- --------------
<S>
<C>
Investments, at value (cost
$336,071,058)................................................ $344,361,232
Foreign currency, at value (cost
$349,186)............................................... 354,882
Cash.........................................................................
............ 2,862
Receivable for investments
sold..........................................................
6,387,957
Dividends and interest
receivable........................................................
3,022,354
Receivable for Fund shares
sold..........................................................
195,983
Deferred expenses and other
assets....................................................... 19,707
- --------------
Total
assets.......................................................................
.. 354,344,977
- --------------
Liabilities
Forward currency contracts - net amount payable to
counterparties........................ 1,574,097
Payable for Fund shares
reacquired.......................................................
1,474,306
Distribution fee
payable.................................................................
219,568
Management fee
payable...................................................................
196,101
Withholding taxes
payable................................................................
44,547
Accrued
expenses.....................................................................
.... 24,590
- --------------
Total
liabilities..................................................................
.. 3,533,209
- --------------
Net
Assets.......................................................................
........ $350,811,768
- --------------
- --------------
Net assets were comprised of:
Common stock, at
par................................................................... $
26,714
Paid-in capital in excess of
par....................................................... 341,490,247
- --------------
341,516,961
Undistributed net investment
income...................................................... 124,517
Accumulated net realized gains on
investments............................................ 2,438,398
Net unrealized appreciation of investments and foreign
currencies........................ 6,731,892
- --------------
Net assets, March 31,
1995...............................................................
$350,811,768
- --------------
- --------------
Class A:
Net asset value and redemption price per share
($123,818,506 / 9,429,414 shares of common stock issued and
outstanding)............. $13.13
Maximum sales charge (5.00% of offering
price)......................................... .69
- --------------
Maximum offering price to
public....................................................... $13.82
- --------------
- --------------
Class B:
Net asset value, offering price and redemption price per share
($226,548,499 / 17,250,525 shares of common stock issued and
outstanding)............ $13.13
- --------------
- --------------
Class C:
Net asset value, offering price and redemption price per share
($444,763 / 33,867 shares of common stock issued and
outstanding).................... $13.13
- --------------
- --------------
</TABLE>
See Notes to Financial Statements.
-8-
<PAGE>
GLOBAL UTILITY FUND, INC.
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
March 31,
Net Investment Income 1995
-------------
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $257,531)................... $ 5,194,458
Interest and discount earned........... 3,622,958
-------------
Total income......................... 8,817,416
-------------
Expenses
Distribution fee--Class A.............. 150,022
Distribution fee--Class B.............. 1,234,681
Distribution fee--Class C.............. 1,585
Management fee......................... 1,196,981
Transfer agent's fees and expenses..... 335,000
Custodian's fees and expenses.......... 140,000
Reports to shareholders................ 45,000
Registration fees...................... 45,000
Audit fee.............................. 20,000
Directors' fees........................ 20,000
Legal fees and expenses................ 20,000
Amortization of organization expense... 10,000
Miscellaneous.......................... 14,571
-------------
Total expenses....................... 3,232,840
-------------
Net investment income.................... 5,584,576
-------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions
Net realized gain on:
Investment transactions................ 2,984,468
Foreign currency transactions.......... 322,289
-------------
3,306,757
-------------
Net change in unrealized appreciation/depreciation of:
Investments............................ (8,492,404)
Foreign currencies..................... (1,579,982)
-------------
(10,072,386)
-------------
Net loss on investments and foreign
currencies............................. (6,765,629)
-------------
Net Decrease in Net Assets Resulting
from Operations.......................... $ (1,181,053)
-------------
-------------
</TABLE>
GLOBAL UTILITY FUND, INC.
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Increase (Decrease) Six Months
in Net Assets Ended Year Ended
March 31, September 30,
1995 1994
------------ -------------
<S> <C> <C>
Operations
Net investment income...... $ 5,584,576 $ 11,957,951
Net realized gain on
investment and
foreign currency
transactions............. 3,306,757 7,713,040
Net change in unrealized
appreciation/depreciation
of investments and
foreign currencies....... (10,072,386) (33,826,608)
------------ -------------
Net decrease in net assets
resulting from
operations............... (1,181,053) (14,155,617)
------------ -------------
Net equalization debits.... (224,308) (35,657)
------------ -------------
Dividends and distributions
(Note 1)
Dividends from net
investment income
Class A.................. (2,169,565) (4,127,760)
Class B.................. (3,409,899) (6,256,835)
Class C.................. (5,112) (1,066)
------------ -------------
(5,584,576) (10,385,661)
------------ -------------
Distributions in excess of
net investment income
Class A.................. (18,019) --
Class B.................. (28,320) --
Class C.................. (43) --
------------ -------------
(46,382) --
------------ -------------
Distributions from net realized gains
Class A.................. (2,642,247) (1,941,947)
Class B.................. (5,681,058) (3,457,398)
Class C.................. (6,975) (277)
------------ -------------
(8,330,280) (5,399,622)
------------ -------------
Fund share transactions (net
of
share conversions) (Note 5)
Net proceeds from shares
sold..................... 13,488,742 205,782,596
Net asset value of shares
issued in reinvestment of
dividends and
distributions............ 11,383,563 12,520,588
Cost of shares
reacquired............... (57,846,930) (113,146,333)
------------ -------------
Net increase (decrease) in
net assets from Fund share
transactions............... (32,974,625) 105,156,851
------------ -------------
Total increase (decrease).... (48,341,224) 75,180,294
Net Assets
Beginning of period.......... 399,152,992 323,972,698
------------ -------------
End of period................ $350,811,768 $ 399,152,992
------------ -------------
------------ -------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-9-
<PAGE>
GLOBAL UTILITY FUND, INC.
Notes to Financial Statements
(Unaudited)
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, the value of which exceeds the principal
amount of the repurchase transaction including accrued interest. 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 period, 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 period 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 period. 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.
-10-
<PAGE>
Forward Currency Contracts: A forward currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. 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 or on specific receivables and payables denominated in a foreign
currency. The contracts are valued daily at current exchange rates and any
unrealized gain or loss is included in net unrealized appreciation or
depreciation on investments. Gain or loss is realized on the settlement date
of
the contract equal to the difference between the settlement value of the
original and renegotiated forward contracts. This gain or loss, if any, is
included in net realized gain (loss) on foreign currency transactions. Risks
may
arise upon entering into these contracts from the potential inability of the
counterparties to meet the terms of their contracts.
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 re-acquisitions 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 re-acquisitions 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
were amortized ratably over the period ended January 1995.
Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with AICPA 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 increase undistributed net
investment
income and decrease accumulated net realized gains on investments by $322,289
relating to realized foreign currency gains. 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
-11-
<PAGE>
Prudential Securities Incorporated (``PSI''), which acts as 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.
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 Plans were .25 of 1%, 1% and 1% of the
average daily net assets of the Class A, Class B and Class C shares for the
six
months ended March 31, 1995, respectively.
PMFD has advised the Fund that it has received approximately $43,800 in
front-end sales charges resulting from sales of Class A shares during the six
months ended March 31, 1995. 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 six months ended March 31, 1995, it
received approximately $536,500 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 six months ended March 31, 1995, the Fund incurred fees of
approximately $280,700 for the services of PMFS. As of March 31, 1995,
approximately $47,600 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 six months ended March 31, 1995, PSI earned approximately $3,000
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 six months
ended March 31, 1995 were $24,568,188 and $71,296,095, respectively.
At March 31, 1995, the Fund had an outstanding forward currency contract
to
sell a foreign currency as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Sale Contract Receivable Value Depreciation
- ------------------ --------------- ----------- --------------
<S> <C> <C> <C>
Deutschemarks,
expiring
11/1/95......... $ 15,000,000 $16,574,097 $ (1,574,097)
--------------- ----------- --------------
--------------- ----------- --------------
</TABLE>
The United States federal income tax basis of the Fund's investments at
March
31, 1995 was substantially the same as for financial reporting purposes and,
accordingly, net unrealized appreciation of investments, for United States
federal income tax purposes was $8,263,467 (gross unrealized
appreciation--$32,130,098; gross unrealized depreciation--$23,866,631).
Note 5. Capital The Fund 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.
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 26,713,806
shares
of common stock issued and outstanding at March 31, 1995, Wellington owned
9,000
Class A shares.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
----------- ------------
<S> <C> <C>
Six months ended
March 31, 1995:
Shares sold.................... 440,008 $ 5,605,365
Shares issued in reinvestment
of dividends and
distributions................ 233,761 3,006,516
Shares reacquired.............. (1,497,105) (19,515,675)
----------- ------------
Net decrease in shares
outstanding before
conversion................... (823,336) (10,903,794)
Shares issued upon conversion
from Class B................. 1,011,142 13,276,368
----------- ------------
Net increase in shares
outstanding 187,806 $ 2,372,574
----------- ------------
----------- ------------
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)
----------- ------------
----------- ------------
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
Class B Shares Amount
----------- ------------
<S> <C> <C>
Six months ended
March 31, 1995:
Shares sold.................... 581,414 $ 7,648,805
Shares issued in reinvestment
of dividends and
distributions................ 651,305 8,365,194
Shares reacquired.............. (2,929,718) (38,312,974)
----------- ------------
Net decrease in shares
outstanding before
conversion................... (1,696,999) (22,298,975)
Shares reacquired upon
conversion into Class A...... (1,011,913) (13,276,368)
----------- ------------
Net decrease in shares
outstanding (2,708,912) $(35,575,343)
----------- ------------
----------- ------------
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
----------- ------------
----------- ------------
<CAPTION>
Class C
<S> <C> <C>
Six months ended
March 31, 1995:
Shares sold.................... 17,803 $ 234,572
Shares issued in reinvestment
of dividends and
distributions................ 920 11,853
Shares reacquired.............. (1,414) (18,281)
----------- ------------
Net increase in shares
outstanding.................. 17,309 $ 228,144
----------- ------------
----------- ------------
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.
Note 6. Dividends On May 4, 1995, the Board
of Directors of the Fund declared dividends of
$.12 per Class A share and $.095 per Class B and Class C shares payable on
June
30, 1995 to shareholders of record on June 23, 1995.
-13-
<PAGE>
GLOBAL UTILITY FUND, INC.
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Class A
-------------------------------------
- -------------------------------------------
January 2,
Six Months
1990D
Ended Year Ended
September 30, Through
March 31, ----------------------
- ------------------------- September 30,
1995 1994 1993
1992 1991# 1990#
<S> <C> <C> <C>
<C> <C> <C>
---------- -------- --------
- -------- -------- -------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $ 13.66 $ 14.63 $ 12.96
$ 12.62 $ 10.50 $ 11.16
---------- -------- --------
- -------- -------- -------------
Income from investment operations
Net investment income............... .24 .47 .44
.53 .57 .48
Net realized and unrealized gain
(loss) on investment and foreign
currency transactions............. (.23) (.82) 2.46
1.01 2.23 (.67)
---------- -------- --------
- -------- -------- -------------
Total from investment
operations...................... .01 (.35) 2.90
1.54 2.80 (.19)
---------- -------- --------
- -------- -------- -------------
Less distributions
Dividends from net investment
income............................ (.24) (.42) (.47)
(.53) (.62) (.41)
Distributions in excess of net
investment income................. -- -- (.01)
- -- -- --
Distributions from net realized
capital and currency gains........ (.30) (.20) (.75)
(.67) (.08) --
---------- -------- --------
- -------- -------- -------------
Total distributions............... (.54) (.62) (1.23)
(1.20) (.70) (.41)
---------- -------- --------
- -------- -------- -------------
Capital charge in respect of
issuance of shares................ -- -- --
- -- -- (.06)
Redemption fee retained by Fund..... -- -- --
- -- .02 --
---------- -------- --------
- -------- -------- -------------
Net asset value, end of period...... $ 13.13 $ 13.66 $ 14.63
$ 12.96 $ 12.62 $ 10.50
---------- -------- --------
- -------- -------- -------------
---------- -------- --------
- -------- -------- -------------
TOTAL RETURN##...................... .20% (2.49)% 23.87%
13.15% 27.63% (1.98)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)..... $ 123,819 $126,254 $138,714
$114,654 $132,804 $ 161,892
Average net assets (000)............ $ 120,347 $139,166 $119,001
$120,708 $151,217 $ 166,915
Ratios to average net assets:
Expenses, including distribution
fees............................ 1.26%* 1.25% 1.30%
1.39% 1.49% 1.05%*
Expenses, excluding distribution
fees............................ 1.01%* 1.02% 1.10%
1.19% 1.36% 1.05%*
Net investment income............. 3.55%* 3.39% 3.37%
4.16% 5.06% 5.97%*
Portfolio turnover rate............. 7% 19% 14%
57% 135% 27%
</TABLE>
- ---------------
* Annualized.
D Commencement of investment operations.
# 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.
See Notes to Financial Statements.
-14-
<PAGE>
GLOBAL UTILITY FUND, INC.
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Class C
Class B
- -------------------------
-------------------------------------------
- ----------------------- Six
March 18, Months August 1,
Six Months
1991D Ended 1994DD
Ended Year Ended August 31,
Through March Through
March 31, ----------------------------
- ----- September 30, 31, September 30,
1995 1994 1993
1992 1991 1995 1994
<S> <C> <C> <C>
<C> <C> <C> <C>
---------- -------- -------- --
- ----- ------------- ------- -------------
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period...................... $ 13.66 $ 14.63 $ 12.97 $
12.63 $ 11.97 $ 13.66 $ 13.93
---------- -------- -------- --
- ----- ------------- ------- -------------
Income from investment
operations
Net investment income......... .19 .37 .34
.43 .25 .19 .06
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions................ (.23) (.82) 2.45
1.01 .63 (.23) (.24)
---------- -------- -------- --
- ----- ------------- ------- -------------
Total from investment
operations................ (.04) (.45) 2.79
1.44 .88 (.04) (.18)
---------- -------- -------- --
- ----- ------------- ------- -------------
Less distributions
Dividends from net investment
income...................... (.19) (.32) (.37)
(.43) (.22) (.19) (.07)
Distributions in excess of net
investment income........... -- -- (.01)
- -- -- -- --
Distributions from net
realized capital and
currency gains.............. (.30) (.20) (.75)
(.67) -- (.30) (.02)
---------- -------- -------- --
- ----- ------------- ------- -------------
Total distributions......... (.49) (.52) (1.13)
(1.10) (.22) (.49) (.09)
---------- -------- -------- --
- ----- ------------- ------- -------------
Net asset value, end of
period...................... $ 13.13 $ 13.66 $ 14.63 $
12.97 $ 12.63 $ 13.13 $ 13.66
---------- -------- -------- --
- ----- ------------- ------- -------------
---------- -------- -------- --
- ----- ------------- ------- -------------
TOTAL RETURN#................. (.19)% (3.22)% 22.87%
12.23% 7.44% (.19)% (1.32)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)....................... $ 226,548 $272,673 $185,259
$60,432 $30,147 $ 445 $ 226
Average net assets (000)...... $ 247,615 $270,466 $ 90,254
$45,661 $18,923 $ 318 $ 131
Ratios to average net assets:
Expenses, including
distribution fees......... 2.01%* 2.02% 2.10%
2.19% 2.47%* 2.01%* 2.06%*
Expenses, excluding
distribution fees......... 1.01%* 1.02% 1.10%
1.19% 1.47%* 1.01%* 1.06%*
Net investment income....... 2.80%* 2.68% 2.59%
3.43% 4.16%* 2.80%* 2.46%*
Portfolio turnover rate....... 7% 19% 14%
57% 135% 7% 19%
</TABLE>
- ---------------
* Annualized.
D Commencement of offering of Class B shares.
DD Commencement of offering of Class C shares.
# 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.
See Notes to Financial Statements.
-15-
<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
Grace Torres, 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
Independent Accountants
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 M Street, N.W.
Washington, D.C. 20036
Chicago, IL 60610-4795
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll free (800) 225-1852, Collect (908) 417-7555
The accompanying financial statements as of March 31, 1995 were not
audited and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
37936G303
37936G204 MF 105E2
37936G402 (LOGO) Cat #444357V
