(ICON)
Global
Utility
Fund, Inc.
ANNUAL REPORT
September 30,1995
(LOGO)
<PAGE>
Global Utility Fund, Inc.
Performance At A Glance.
The domestic and foreign utility markets benefited from widely declining
international interest rates over the past year, which contributed to the
returns of the Global Utility Fund. The Fund's return over the past six
months, in particular, benefited from these declining rates, and helped
the Fund's Class A shares to better the gain in the benchmark Financial
Times World Utility index. We are pleased to report that the longer term
record of your Fund continues to compare favorably with most other indices.
<TABLE>
Cumulative Total Returns1 As of 9/30/95
<CAPTION>
One Three Five Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A 14.2% 38.1% 99.1% 94.4%
Class B 13.3 34.8 N/A 62.6
Class C 13.3 N/A N/A 11.8
*Lipper Utility Fund Avg 17.7 27.5 80.3 65.2
**Financial Times World
Utility Index 13.7 40.3 93.1 49.8
<CAPTION>
Average Annual Total Returns As of 9/30/95
One Three Five Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A 8.5% 9.5% 13.6% 11.3%
Class B 8.3 9.7 N/A 11.2
Class C 12.3 N/A N/A 10.1
</TABLE>
Past performance is not a guarantee of future results. Investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
1Source: Prudential Mutual Fund Management, Inc. and Lipper Analytical
Services, Inc. The cumulative total returns do not take into account sales
charges. The average annual total returns do take into account applicable
sales charges. The Fund charges a maximum front end sales load of 5% for
Class A shares. Class B shares are subject to a declining contingent deferred
sales charge (CDSC) of 5%, 4%, 3%, 2%, 1% and 1%, for six years. Class C
shares have a 1% CDSC for one year. Class B shares will automatically convert
to Class A shares on a quarterly basis, after approximately seven years.
2Inception 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.
* These are the average returns of 76 funds in the utility category for
one year; 18 funds for five years; and 23 since inception, as determined
by Lipper Analytical Services, Inc.
**Financial Times World Utility Index is currently comprised of 158 world
utility stocks representing approximately 20 countries.
How The Markets Compared.
Total Returns as of 9/30/95
(GRAPH)
Source: Lipper Analytical Services, Inc. Financial markets change, so a
mutual fund's past performance should never be used to predict future
results. The risks to each of the investments listed above are different -- we
provide 12-month total returns for several Lipper mutual fund categories to
show you that reaching for higher yields means tolerating more risk. The
greater the risk, the larger the potential reward or loss. In addition,
we've added historical 20-year average annual returns. These returns assume
the reinvestment of dividends.Stock funds will fluctuate a great deal.
Smaller capitalization stocks offer greater potential for long term growth
but may be more volatile than larger capitalization stocks. Investors
receive higher historical total returns from stocks than from most other
investments.
Bond funds provide more income than stock funds, which can help smooth out
their total returns year by year. But their prices still fluctuate (sometimes
a good deal) and their returns are historically lower than those of stock
funds.
Sector or specialty stock funds usually entail the greatest risks because
they are not widely diversified. They are designed for sophisticated investors
who can tolerate additional risk in exchange for higher potential rewards or
losses.
Money market funds attempt to preserve a constant share value; they
don't fluctuate much in price but their returns are generally among the lowest
of the major investment categories.
<PAGE>
William Hicks, Portfolio Manager (PHOTO)
Portfolio
Manager's Report
The Global Utility Fund is a diversified portfolio comprised of equity and
debt securities of domestic and foreign utility companies. The Fund seeks
to provide total return, without incurring undue risk, by investing primarily
in income-producing securities of domestic and foreign companies in the
utility industries. Investors should keep in mind that there are special
risks associated with foreign investing, such as currency fluctuations,
economic, political and social developments. The Fund is also subject to
the risks of the utility industry. These risks are described in detail
in the Fund's prospectus.
Geographic Diversification
as a % of 9/30/95 Net Assets
(GRAPH)
1. Strategy Session.
Favored Industries
Telecommunications remains our major area for investment at 43% of net
assets. The slower growing electric sector has been reduced to 37%,
whereas gas and gas transmission was raised to 12%. Water and other
holdings remained around 7%. Non-U.S. holdings comprised 46% of total
investments.
We believe that the expected Federal telecommunications bill will release
significant funds for investment in the telecommunications equipment area,
benefiting our investments in Ericsson, Northern Telecom, and AT&T. Ericsson
and AT&T are also major participants in the rapidly growing international
cellular business, which has growth prospects in excess of 20% per annum.
We also continue to emphasize gas and gas transmission companies based upon
our assumption of rising gas prices within the next twelve months. Natural
gas exploration and production companies have been experiencing very
difficult pricing conditions which we believe will alleviate in 1996 when
weather conditions compare with the abnormally warm winter of 1995. Better
industry costs and improved technology should allow gas companies to have
strong earnings gains in the years ahead.
<PAGE>
2. What Went Well.
Telecommunications
There were an unusual number of important events affecting the domestic and
foreign markets in the past six months. AT&T (6.2% of net assets), our
major portfolio holding, proposed splitting the company into three separate
companies: telephone services, telephone equipment manufacturing, and
computing. There will be a public offering of 15% of AT&T's attractive
equipment business, and the former NCR will be reduced in size and spun
off to shareholders. The company's cellular, long distance, and credit
card businesses as a separate division will have sales of almost $50 billion.
The resulting separation of operations should allow AT&T to broaden the sale
of its equipment to businesses outside of the United States, allowing for
future growth.
Electric Utilities
In addition to the AT&T split, there was an industry movement towards
domestic electric utilities seeking international diversification by merger.
The strategy of the U.S. companies is to identify favorable regulatory
environments abroad where U.S. businesses can add value. Also, there have
been a few domestic mergers, as high cost companies pick partners that will
offer benefits from restructuring.
3. What's New.
In Congress
There was progress in Congress toward the passage of Federal legislation
defining the telecommunication sector's boundaries of local and long distance
regulation. We expect a major telecommunications bill to be passed in the
late 1995, or certainly prior to the Presidential election. There is still
considerable speculation as to the final composition of the bill that will be
sent to the President's desk, but we believe the bill will encourage further
equipment spending.
Five Largest
Holdings
*6.2% A T & T Corp.
Largest long distance
telephone service provider.
United States
2.8% SBC Communications, Inc.
Telecommunications company.
United States
2.7% US West, Inc.
Regional telephone company.
United States
2.7% VEBA A.G.
Electricity Producer and
fourth largest industrial
company.
Germany
2.2% NYNEX Corp.
Telephone service for New
York and New England.
United States
* Expressed as a percentage of net assets.
4. Looking Ahead.
The globalization trends that are now well in place portend a favorable
electric and telecommunications investment environment. Emerging countries
must establish sound communications and electric utility infrastructures
in order to grow and prosper in a world of expanding opportunity. Your
portfolio management continues to pursue a balanced strategy for your
participation in this changing, positive investment area.
1
<PAGE>
President's Letter November 1, 1995
(PHOTO)
Dear Shareholder:
We hope you like the fresh look and information we've given your shareholder
letter. We've also introduced another feature, called Getting the Most Out
of Your Prudential Mutual Fund, which will appear from time to time at the
back of your report. Look for topics like "Understanding Risk & Reward" as
well as easy-to-understand explanations of financial terms. Why are we
providing such information? Because at Prudential Mutual Funds, we believe
an informed investor makes smart investment decisions.
On the Hill
As an informed investor, you should know about the "American Dream Savings
Account" that is part of the federal budget package now under debate in the
Senate. It is a type of Individual Retirement Account that offers a
common-sense approach to long-term saving. Investors should like it because --
- --You can withdraw funds -- without penalty -- to pay for certain expenses
like buying a first home, medical care or educational needs;
- --All account earnings would accumulate tax-free, not merely tax-deferred
like the current IRA;
- --You can make contributions past age 70 1/2, instead of having to take
distributions as the current law requires.
Of course, the federal budget process is never easy and while we hope this
measure is adopted, there's no way of knowing if it will be. So why not let
your Senator and/or Representative know your opinion today? Simply call
202-224-3121.
In Closing
One final note: if you're a Class B shareholder of Prudential Mutual Funds,
you'll begin noticing a change on your statements once you've held your
shares for seven years. At that time, they will automatically begin to
convert to Class A shares on a quarterly basis. Since Class A shares carry
lower annual distribution charges than Class B shares, your total returns
will be higher after the conversion than they would have been without it.
Conversions started earlier this year and beginning in December they will
take place during each calendar quarter -- December, March, June and
September. It's our way of thanking you for your loyalty -- and rewarding
you for maintaining a long-term investment program by helping you earn more
total investment return on your Prudential Mutual Fund. I hope you'll find
this information useful as you work with your financial advisor or registered
representative to develop your personal investment plan.
Thank you for choosing Prudential Mutual Funds for your mutual fund
investment.
Sincerely,
Richard A. Redeker
President
2
<PAGE>
GLOBAL UTILITY FUND, INC.
Portfolio of Investments as of September 30, 1995
- ------------------------------------------------------------
<TABLE>
<CAPTION>
US$ Value
Shares Description (Note 1)
<C> <S> <C>
------------------------------------------------------------
LONG-TERM INVESTMENTS--99.3%
COMMON STOCKS--74.2%
------------------------------------------------------------
Electric Utilities--25.3%
528,000 China Light & Power Co., Ltd.
(Hong Kong) $ 2,731,682
200,000 CMS Energy Corp. 5,250,000
100,000 Detroit Edison Co. 3,225,000
200,000 DPL, Inc. 4,625,000
187,500 DQE, Inc. 4,968,750
100,000 Empresa Nacional de Electricidad
S.A. (ADR) (Spain) 5,150,000
200,000 Espoon Sahko Oy (ADS) (Finland)* 2,584,000
150,000 Huaneng Power International, Inc.
(ADR) (China)* 2,587,500
600,000 Iberdrola S.A. (Spain) 4,545,976
75,000 Korea Electric Power Corporation
(ADR) (Korea) 1,903,125
150,000 London Electricity PLC
(United Kingdom) 2,050,476
225,000 Pacific Gas & Electric Co. 6,721,875
100,000 Pinnacle West Capital Corp. 2,625,000
140,000 Public Service Co. of Colorado 4,795,000
21,000 RWE, A.G. (Germany) 7,211,599
1,300,000 Scottish Power PLC (United Kingdom) 7,231,581
280,000 Shandong Huaneng Power Development
Ltd. (ADR) (China) 2,485,000
68,600 Southwestern Energy Co. 934,675
235,000 VEBA A.G. (Germany) 9,368,612
120,000 Western Resources, Inc. 3,915,000
150,000 Wisconsin Energy Corp. 4,237,500
-------------
89,147,351
- ------------------------------------------------------------
Gas Utilities--6.7%
618,705 Australian Gas & Light Co.
(Australia) 2,150,180
141,000 Equitable Resources, Inc. 4,159,500
21,900 MCN Corp. 432,525
84,200 National Fuel Gas Co. 2,420,750
100,000 Questar Corp. 3,212,500
330,000 TransCanada Pipelines Ltd. (Canada) $ 4,350,167
470,000 Westcoast Energy Inc. (Canada) 6,937,431
-------------
23,663,053
- ------------------------------------------------------------
Other--2.9%
100,000 Burlington Resources Inc. 3,875,000
100,000 Cross Timbers Oil Co. 1,425,000
150,000 Sonat Inc. 4,800,000
-------------
10,100,000
- ------------------------------------------------------------
Telecommunications--36.6%
106,300 AirTouch Communications, Inc.* 3,255,437
306,500 AT&T Corp. 20,152,375
190,000 BCE Inc. (Canada) 6,341,250
153,200 British Columbia Telecom, Inc.
(Canada) 2,673,747
112,800 Comsat Corp. 2,538,000
43,000 Empresas Telex (ADR) (Chile) 387,000
275,000 Ericsson (L.M.) Telephone Co.,
B-free (Sweden) 6,774,180
70,000 GTE Corp. 2,747,500
210,000 MCI Communications Corp. 5,473,125
369 Nippon Telegraph & Telephone Corp.
(ADR) (Japan) 3,191,291
150,000 Northern Telecom Ltd. (Canada) 5,343,750
160,000 NYNEX Corp. 7,640,000
106,300 Pacific Telesis Group 3,268,725
87,600 Portugal Telecom, S.A. (ADS)
(Portugal)* 1,686,300
150,000 Royal PTT Nederland NV (Netherlands) 5,321,253
180,000 SBC Communications Inc. 9,900,000
133,800 Sprint Corp. 4,683,000
2,300,000 Stet-Societa Finanziaria Telefonica
P.A. (Italy) 5,376,482
165,500 Tele Danmark (ADS) (Denmark) 4,282,312
20,000 Telecom Corporation of New Zealand
Ltd. (ADR) (New Zealand) 1,235,000
900,000 Telecom Italia (Italy) 1,489,173
900,000 Telecom Italia Mobile (Italy) 1,503,143
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3 -----
<PAGE>
<PAGE>
GLOBAL UTILITY FUND, INC.
Portfolio of Investments as of September 30, 1995
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
US$ Value
Shares Description (Note 1
<C> <S> <C>
- -------------------------------------------------------
Telecommunications (cont'd.)
40,000 Telefonica de Argentina S.A.
(ADR) (Argentina) $ 955,000
150,000 Telefonica de Espana S.A. (ADR)
(Spain) 6,206,250
120,000 Telefonos de Mexico S.A (ADR)
(Mexico) 3,810,000
200,000 US WEST, Inc. 9,425,000
75,000 Vodafone Group PLC (ADR)
(United Kingdom) 3,075,000
-------------
128,734,293
- ------------------------------------------------------------
Water Utilities & Other--2.7%
30,968 Alcatel Alsthom Compagnie
Generale d' Electricite (France) 2,610,718
83,900 American Water Works Co., Inc. 2,569,438
400,000 Anglian Water PLC (United Kingdom) 3,596,827
11,300 Technip S.A. (France) 745,358
-------------
9,522,341
-------------
Total common stocks
(cost $219,246,948) 261,167,038
-------------
PREFERRED STOCKS--1.6%
- ------------------------------------------------------------
Telecommunications--1.6%
Philippine Long Distance Telephone
Co. (Philippines)
43,700 $3.50 Conv. Ser. III 2,622,000
80,000 $5.75 Conv. Ser. II 3,080,000
-------------
Total preferred stocks (cost
$4,185,000) 5,702,000
-------------
RIGHTS*--0.1%
- ------------------------------------------------------------
Rights
Telecommunications--0.1%
275,000 Ericsson (L.M.) Telephone Co.,
B-free expiring October 1995
(Sweden) 320,882
</TABLE>
<TABLE>
Moody's Principal
Rating Amount US$ Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
- ------------------------------------------------------------
DEBT OBLIGATIONS--23.4%
CORPORATE BONDS--21.8%
- ------------------------------------------------------------
Electric Utilities--11.9%
Alabama Power Co.,
A1 $ 1,500 6.375%, 8/1/99 $ 1,497,060
Central Illinois Light
Co.,
Aa2 1,750 8.20%, 1/15/22 1,851,850
Chubu Electric Power,
Aaa 2,000D 6.25%, 8/5/03 (Eurobonds) 1,942,500
Cincinnati Gas & Electric Co.,
Baa1 1,500 5.80%, 2/15/99 1,465,200
Consolidated Edison Co. Inc.,
A1 1,000 7.625%, 3/1/04 1,054,350
Duke Power Co.,
Aa2 2,000 5.875%, 6/1/01 1,938,880
Florida Power & Light Co.,
Aa3 500 6.00%, 7/1/03 472,915
Houston Lighting & Power Co.,
A2 1,000 6.50%, 4/21/03 991,400
Hydro-Quebec,
A2 C$ 2,000 7.00%, 6/1/04 (Canada) 1,365,912
Iowa-Illinois Gas & Electric Co.,
A2 1,000 6.95%, 10/15/25 943,150
Louisiana Power & Light Co.,
Baa2 1,000 6.00%, 3/1/00 971,830
Monongahela Power Co.,
A1 1,500 7.375%, 7/1/02 1,560,780
National Power PLC,
Aa3 1,000D 6.25%, 12/1/03 (Eurobonds) 963,125
Northern States Power Co.,
A1 1,000 5.75%, 12/1/00 964,820
Ontario Hydro,
Aa3 1,500D 7.45%, 3/31/13 (Canada) 1,537,350
Pacific Gas & Electric
Co.,
A2 1,000 5.375%, 8/1/98 972,720
Pacificorp,
A2 1,000 8.75%, 2/12/98 1,049,790
Philadelphia Electric Co.,
Baa1 2,000 7.50%, 1/15/99 2,059,860
Potomac Edison Co.,
A1 2,000 8.875%, 8/1/21 2,131,900
</TABLE>
- --------------------------------------------------------------------------------
4 See Notes to Financial Statements.
<PAGE>
GLOBAL UTILITY FUND, INC.
Portfolio of Investments as of September 30, 1995
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount US$ Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
- -----------------------------------------------------------
Electric Utilities (cont'd.)
Powergen PLC,
Aa3 BP 750 8.875%, 3/26/03
(Eurobonds) $ 1,197,098
Southwestern Electric Power Co.,
Aa2 $ 2,000 5.25%, 4/1/00 1,913,120
Southwestern Public Service Co.,
Aa2 1,000 7.25%, 7/15/04 1,035,030
Tampa Electric Co.,
Aa2 1,000 7.75%, 11/1/22 1,017,600
Tennessee Valley
Authority,
NR 5,000 6.125%, 7/15/03 4,872,650
Texas Utilities Electric
Co.,
Baa2 2,000 9.27%, 1/14/00 2,184,740
Tokyo Electric Power,
Aaa 2,000D 6.125%, 7/29/03
(Eurobonds) 1,926,250
Virginia Electric & Power Co.,
A2 2,000 6.625%, 4/1/03 1,994,360
-------------
41,876,240
- ------------------------------------------------------------
Gas Distribution & Other Industries--5.2%
Alcan Aluminum Ltd.,
A2 2,000D 9.625%, 7/15/19 (Canada) 2,264,520
British Gas Finance PLC,
Aa2 2,000D 8.375%, 9/8/99 (Eurobonds) 2,121,250
Consolidated Natural Gas
Co.,
A1 2,000 5.75%, 8/1/03 1,884,000
Enron Corp.,
Baa2 2,000 7.00%, 8/15/23 1,843,480
Michigan Consolidated Gas Co.,
A2 1,600 8.25%, 5/1/14 1,769,184
Northern Illinois Gas Co.,
Aa1 500 5.875%, 5/1/00 490,135
Phillips Petroleum Co.,
Baa1 1,000 8.86%, 5/15/22 1,093,170
Baa1 1,500 7.20%, 11/1/23 1,424,445
Southern California Gas
Co.,
A2 2,000 6.875%, 11/1/25 1,885,940
Transportadora De Gas,
NR $ 1,500D 7.75%, 12/23/98
(Argentina) $ 1,365,000
Union Oil Co.,
Baa2 500 8.75%, 8/15/01 548,785
YPF Sociedad Anonima,
B1 2,000D 8.00%, 2/15/04 (Argentina) 1,710,000
-------------
18,399,909
- ------------------------------------------------------------
Telecommunications, Media & Related Industries--4.7%
AT&T Corp.,
Aa3 1,500 6.75%, 4/1/04 1,513,920
BellSouth Telecommunications,
Aaa 2,000D 6.125%, 9/23/08
(Eurobonds) 1,861,250
British Telecom Finance
BV,
Aaa 2,000D 9.375%, 11/16/98
(Eurobonds) 2,166,250
Ericsson (L.M.) Telephone
Co.,
A1 1,500D 7.875%, 10/21/96
(Eurobonds) 1,524,375
Illinois Bell Telephone
Co.,
Aaa 500 7.625%, 4/1/06 508,185
Pacific Bell, Inc.,
Aa3 1,550 8.70%, 6/15/01 1,715,276
Paging Network Inc.,
B2 525 10.125%, 8/1/07 547,313
Southwestern Bell Telephone Co.,
A1 1,000 5.875%, 6/1/03 947,470
Telecom Argentina S.A.,
B1 1,500D 8.375%, 10/18/00
(Argentina) 1,350,000
Telecom Corp. New Zealand
Finance,
Aa1 BP1,000 7.50%, 7/14/03 (Eurobonds) 630,856
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5 -----
<PAGE>
<PAGE>
GLOBAL UTILITY FUND, INC.
Portfolio of Investments as of September 30, 1995
- ------------------------------------------------------------
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount US$ Value
(Unaudited) (000) Description (Note 1)
(000) 1)
<C> <C> <S> <C>
- ------------------------------------------------------------
Telecommunications, Media & Related Industries (cont'd.)
Telefonica de Argentina
S.A.,
NR $ 1,000D 8.375%, 10/1/00
(Argentina) 895,000
B1 1,000D 11.875%, 11/1/04 (Argentina) $ 997,500
Turner Broadcasting Systems, Inc.,
Ba2 1,000 8.40%, 2/1/24 967,010
Videotron Ltd.,
Ba3 1,000D 10.25%, 10/15/02 (Canada) 1,045,000
-------------
16,669,405
-------------
Total corporate bonds
(cost $77,401,542) 76,945,554
-------------
CONVERTIBLE BONDS--0.7%
- ------------------------------------------------------------
Compania de Telefonos de
Chile, S.A.,
Baa2 500D 4.50%, 1/15/03 (Chile) 506,250
International Cabletel
Inc.,
NR 1,500D 7.25%, 4/15/05 (Eurobonds) 1,800,000
-------------
Total convertible bonds
(cost $2,000,000) 2,306,250
-------------
U. S. GOVERNMENT OBLIGATIONS--0.9%
- ------------------------------------------------------------
United States Treasury
Notes,
3,000 7.50%, 11/15/01
(cost $3,368,438) 3,212,820
-------------
Total debt obligations
(cost $82,769,980) 82,464,624
-------------
Total long-term
investments
(cost $306,201,928) 349,654,544
-------------
<CAPTION>
Principal
Amount US$ Value
(000) Description (Note 1)
<C> <C> <S> <C>
SHORT-TERM INVESTMENTS--0.4%
- ------------------------------------------------------------
Repurchase Agreement
$ 1,638 Morgan (J.P.) Securities
Inc.
6.40%, dated 9/29/95, due
10/2/95 in the amount of
$1,638,874 (cost
$1,638,000;
collateralized by
$1,766,000 U.S. Treasury
Bonds, 6.25%, due
8/15/23; approximate
value including accrued
interest-$1,684,556) $ 1,638,000
- ------------------------------------------------------------
Total Investments--99.7%
(cost $307,839,928; Note
4) 351,292,544
Other assets in excess of
liabilities--0.3% 882,604
-------------
Net Assets--100% $ 352,175,148
-------------
-------------
</TABLE>
- ---------------
*--Non-income producing security.
D--US$ Denominated Bonds.
ADR--American Depository Receipts.
ADS--American 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.
- -----------------------------------------------------------------------------
6 See Notes to Financial Statements.
<PAGE>
Statement of Assets and Liabilities GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S>
<C>
Assets
September 30, 1995
Investments, at value (cost
$307,839,928)...................................................................
$ 351,292,544
Foreign currency, at value (cost
$569)......................................................................
581
Dividend and interest
receivable...................................................................
......... 3,428,026
Receivable for investments
sold.........................................................................
.... 651,553
Receivable for Fund shares
sold.........................................................................
.... 41,940
Deferred expenses and other
assets..........................................................................
21,425
--------------
Total
assets.......................................................................
...................... 355,436,069
--------------
Liabilities
Bank
overdraft....................................................................
.......................... 11,642
Payable for Fund shares
reacquired...................................................................
....... 1,074,760
Forward currency contracts-net amount payable to
counterparties............................................. 822,296
Payable for investments
purchased....................................................................
....... 614,126
Distribution fee
payable......................................................................
.............. 212,094
Accrued
expenses.....................................................................
....................... 198,667
Management fee
payable......................................................................
................ 189,642
Withholding taxes
payable......................................................................
............. 137,694
--------------
Total
liabilities..................................................................
...................... 3,260,921
--------------
Net
Assets.......................................................................
........................... $ 352,175,148
--------------
--------------
Net assets were comprised of:
Common stock, at
par..........................................................................
........... $ 23,934
Paid-in capital in excess of
par.........................................................................
302,672,556
--------------
302,696,490
Undistributed net investment
income......................................................................
67,751
Accumulated net realized gains on investments and foreign currency
transactions.......................... 6,776,785
Net unrealized appreciation on investments and foreign
currencies........................................ 42,634,122
--------------
Net assets, September 30,
1995.........................................................................
..... $ 352,175,148
--------------
--------------
Class A:
Net asset value and redemption price per share
($124,423,176 / 8,455,301 shares of common stock issued and
outstanding).............................. $14.72
Maximum sales charge (5.00% of offering
price)...........................................................
.77
--------------
Maximum offering price to
public.........................................................................
$15.49
--------------
--------------
Class B:
Net asset value, offering price and redemption price per share
($227,189,455 / 15,440,821 shares of common stock issued and
outstanding)............................. $14.71
--------------
--------------
Class C:
Net asset value, offering price and redemption price per share
($562,517 / 38,231 shares of common stock issued and
outstanding)..................................... $14.71
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7 -----
<PAGE>
GLOBAL UTILITY FUND, INC.
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income September 30, 1995
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $664,037)................. $ 10,797,681
Interest and discount earned (net of
foreign withholding taxes of
$10,858)........................... 6,858,948
------------------
Total income....................... 17,656,629
------------------
Expenses
Management fee........................ 2,361,766
Distribution fee--Class A............. 307,092
Distribution fee--Class B............. 2,379,836
Distribution fee--Class C............. 4,099
Transfer agent's fees and expenses.... 638,000
Custodian's fees and expenses......... 303,000
Reports to shareholders............... 272,000
Registration fees..................... 97,000
Audit fee............................. 40,000
Directors' fees....................... 40,000
Legal fees and expenses............... 25,000
Insurance............................. 9,000
Amortization of organization
expense............................ 2,467
Miscellaneous......................... 29,632
------------------
Total expenses..................... 6,508,892
------------------
Net investment income.................... 11,147,737
------------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions............... 7,322,854
Foreign currency transactions......... (7,592)
------------------
7,315,262
------------------
Net change in unrealized
appreciation/depreciation on:
Investments........................... 26,670,048
Foreign currencies.................... (840,204)
------------------
25,829,844
------------------
Net gain on investments and foreign
currencies............................ 33,145,106
------------------
Net Increase in Net Assets
Resulting from Operations................ $ 44,292,843
------------------
------------------
</TABLE>
GLOBAL UTILITY FUND, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended September 30,
in Net Assets 1995 1994
<S> <C> <C>
Operations
Net investment income....... $ 11,147,737 $ 11,957,951
Net realized gain on
investment and foreign
currency transactions.... 7,315,262 7,713,040
Net change in unrealized
appreciation/depreciation
of investments and
foreign currencies....... 25,829,844 (33,826,608)
-------------- --------------
Net increase (decrease) in
net assets resulting from
operations............... 44,292,843 (14,155,617)
-------------- --------------
Net equalization debits........ (312,052) (35,657)
-------------- --------------
Dividends and distributions
(Note 1)
Dividends from net
investment income
Class A.................. (4,310,107) (4,127,760)
Class B.................. (6,511,221) (6,256,835)
Class C.................. (11,932) (1,066)
-------------- --------------
(10,833,260) (10,385,661)
-------------- --------------
Distributions from net
realized gains
Class A.................. (2,642,246) (1,941,947)
Class B.................. (5,681,058) (3,457,398)
Class C.................. (6,975) (277)
-------------- --------------
(8,330,279) (5,399,622)
-------------- --------------
Fund share transactions (net of
share conversions) (Note 5)
Net proceeds from shares
sold..................... 25,935,458 205,782,596
Net asset value of shares
issued in reinvestment of
dividends and
distributions............ 15,601,479 12,520,588
Cost of shares reacquired... (113,332,033) (113,146,333)
-------------- --------------
Net increase (decrease) in net
assets from Fund share
transactions................ (71,795,096) 105,156,851
-------------- --------------
Total increase (decrease)...... (46,977,844) 75,180,294
Net Assets
Beginning of year.............. 399,152,992 323,972,698
-------------- --------------
End of year.................... $ 352,175,148 $ 399,152,992
-------------- --------------
-------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
8 See Notes to Financial Statements.
<PAGE>
Notes to Financial Statements GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
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 Policies
The following is a summary of significant accounting policies 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 securities 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 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.
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
- --------------------------------------------------------------------------------
9 -----
<PAGE>
<PAGE>
Notes to Financial Statements GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
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
amortized over the period ended January 1995.
Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with American Institute of Certified
Public Accountants (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 decrease undistributed net investment income and increase
accumulated net realized gains on investments by $7,592 relating to net
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 management 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
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
- --------------------------------------------------------------------------------
10
<PAGE>
<PAGE>
Notes to Financial Statements GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
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
fiscal year ended September 30, 1995, respectively.
PMFD has advised the Fund that it has received approximately $73,400 in
front-end sales charges resulting from sales of Class A shares during the fiscal
year ended September 30, 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 fiscal year ended September 30, 1995, it
received approximately $984,000 and $800 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
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 Transactions with Affiliates
Prudential Mutual Fund Services, Inc. (``PMFS''), a wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent and during the fiscal year ended
September 30, 1995, the Fund incurred fees of approximately $543,700 for the
services of PMFS. As of September 30, 1995, approximately $41,100 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, 1995, PSI earned approximately $3,000
in
brokerage commissions from portfolio transactions executed on behalf of the
Fund.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the fiscal year ended September 30, 1995 were $53,348,051 and $130,063,782,
respectively.
At September 30, 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 $15,822,296 $ (822,296)
--------------- ----------- --------------
--------------- ----------- --------------
</TABLE>
The United States federal income tax basis of the Fund's investments at
September 30, 1995 was $307,866,635 and accordingly, net unrealized appreciation
of investments, for United States federal income tax purposes was $43,425,909
(gross unrealized appreciation--$53,872,119; gross unrealized
depreciation--$10,446,210).
- ------------------------------------------------------------
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. A special exchange privilege is also available for
shareholders who qualified to purchase Class A shares at net asset value.
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 23,934,353 shares of
common stock issued and outstanding at September 30, 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>
Year ended September 30, 1995:
Shares sold........................ 932,622 $ 12,467,912
Shares issued in reinvestment of
dividends and distributions...... 332,880 4,408,412
Shares reacquired.................. (3,154,244) (42,676,531)
---------- ------------
Net decrease in shares outstanding
before conversion................ (1,888,742) (25,800,207)
Shares issued upon conversion
and/or
exchange from Class B and Class
C................................ 1,102,435 14,545,652
---------- ------------
Net decrease in shares
outstanding...................... (786,307) $(11,254,555)
---------- ------------
---------- ------------
</TABLE>
- --------------------------------------------------------------------------------
11 -----
<PAGE>
Notes to Financial Statements GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Amount
- ----------------------------------- ---------- ------------
Year ended September 30, 1994:
<S> <C> <C>
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)
---------- ------------
---------- ------------
<CAPTION>
Class B
- -----------------------------------
<S> <C> <C>
Year ended September 30, 1995:
Shares sold........................ 976,906 $ 13,147,835
Shares issued in reinvestment of
dividends and distributions...... 849,891 11,174,827
Shares reacquired.................. (5,242,255) (70,606,948)
---------- ------------
Net decrease in shares outstanding
before conversion................ (3,415,458) (46,284,286)
Shares reacquired upon conversion
and/or exchange into Class A..... (1,103,158) (14,545,349)
---------- ------------
Net decrease in shares
outstanding...................... (4,518,616) $(60,829,635)
---------- ------------
---------- ------------
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 Shares Amount
- ----------------------------------- ---------- ------------
<S> <C> <C>
Year ended September 30, 1995:
Shares sold........................ 23,879 $ 319,711
Shares issued in reinvestment of
dividends and distributions...... 1,372 18,240
Shares reacquired.................. (3,555) (48,554)
---------- ------------
Net increase in shares outstanding
before conversion................ 21,696 289,397
Shares reacquired upon exchange
into Class A..................... (23) (303)
---------- ------------
Net increase in shares
outstanding...................... 21,673 $ 289,094
---------- ------------
---------- ------------
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.
- --------------------------------------------------------------------------------
2
<PAGE>
<PAGE>
Financial Highlights GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class
A
- ------------------------------------------------------------
Year Ended
September 30,
- ------------------------------------------------------------
1995 1994 1993
1992 1991(a)
-------- --------
- -------- -------- --------
<S> <C> <C> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year............ $ 13.66 $ 14.63 $
12.96 $ 12.62 $ 10.50
-------- --------
- -------- -------- --------
Income from investment operations
Net investment income......................... .49 .47
.44 .53 .57
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... 1.35 (.82)
2.46 1.01 2.23
-------- --------
- -------- -------- --------
Total from investment operations........... 1.84 (.35)
2.90 1.54 2.80
-------- --------
- -------- -------- --------
Less distributions
Dividends from net investment income.......... (.48) (.42)
(.47) (.53) (.62)
Distributions in excess of net investment
income..................................... -- --
(.01) -- --
Distributions from net realized gains......... (.30) (.20)
(.75) (.67) (.08)
-------- --------
- -------- -------- --------
Total distributions........................ (.78) (.62)
(1.23) (1.20) (.70)
-------- --------
- -------- -------- --------
Redemption fee retained by Fund............... -- --
-- -- .02
-------- --------
- -------- -------- --------
Net asset value, end of year.................. $ 14.72 $ 13.66 $
14.63 $ 12.96 $ 12.62
-------- --------
- -------- -------- --------
-------- --------
- -------- -------- --------
TOTAL RETURN(b)............................... 14.23% (2.49)%
23.87% 13.15% 27.63%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)................. $124,423 $126,254
$138,714 $114,654 $132,804
Average net assets (000)...................... $122,837 $139,166
$119,001 $120,708 $151,217
Ratios to average net assets:
Expenses, including distribution fees...... 1.31% 1.25%
1.30% 1.39% 1.49%
Expenses, excluding distribution fees...... 1.06% 1.02%
1.10% 1.19% 1.36%
Net investment income...................... 3.58% 3.39%
3.37% 4.16% 5.06%
Portfolio turnover rate....................... 15% 19%
14% 57% 135%
</TABLE>
- ---------------
(a) Prior to February 4, 1991, the Fund was organized as a closed-end fund.
(b) 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 year reported and includes reinvestment of
dividends and distributions.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13 -----
<PAGE>
<PAGE>
Financial Highlights GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Class C
- ----------------------------------------------------------------
- -------------
March 18,
1991(b)
Year Ended September
30, through Year Ended
- ---------------------------------------------- September 30, September
30,
1995 1994 1993
1992 1991 1995
<S> <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
-------- --------
- -------- ------- ------- -------
Income from investment operations
Net investment income......................... .39 .37
.34 .43 .25 .39
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... 1.34 (.82)
2.45 1.01 .63 1.34
-------- --------
- -------- ------- ------- -------
Total from investment operations........... 1.73 (.45)
2.79 1.44 .88 1.73
-------- --------
- -------- ------- ------- -------
Less distributions
Dividends from net investment income.......... (.38) (.32)
(.37) (.43) (.22) (.38)
Distributions in excess of net investment
income..................................... -- --
(.01) -- -- --
Distributions from net realized gains......... (.30) (.20)
(.75) (.67) -- (.30)
-------- --------
- -------- ------- ------- -------
Total distributions........................ (.68) (.52)
(1.13) (1.10) (.22) (.68)
-------- --------
- -------- ------- ------- -------
Net asset value, end of period................ $ 14.71 $ 13.66 $
14.63 $ 12.97 $ 12.63 $ 14.71
-------- --------
- -------- ------- ------- -------
-------- --------
- -------- ------- ------- -------
TOTAL RETURN(d)............................... 13.32% (3.22)%
22.87% 12.23% 7.44% 13.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $227,189 $272,673
$185,259 $60,432 $30,147 $ 563
Average net assets (000)...................... $237,983 $270,466 $
90,254 $45,661 $18,923 $ 410
Ratios to average net assets:
Expenses, including distribution fees...... 2.06% 2.02%
2.10% 2.19% 2.47%(a) 2.06%
Expenses, excluding distribution fees...... 1.06% 1.02%
1.10% 1.19% 1.47%(a) 1.06%
Net investment income...................... 2.83% 2.68%
2.59% 3.43% 4.16%(a) 2.83%
Portfolio turnover rate....................... 15% 19%
14% 57% 135% 15%
<CAPTION>
August 1,
1994(c)
through
September 30,
1994
<S> <C>
-------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 13.93
-----
Income from investment operations
Net investment income......................... .06
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... (.24)
-----
Total from investment operations........... (.18)
-----
Less distributions
Dividends from net investment income.......... (.07)
Distributions in excess of net investment
income..................................... --
Distributions from net realized gains......... (.02)
-----
Total distributions........................ (.09)
-----
Net asset value, end of period................ $ 13.66
-----
-----
TOTAL RETURN(d)............................... (1.32)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $ 226
Average net assets (000)...................... $ 131
Ratios to average net assets:
Expenses, including distribution fees...... 2.06%(a)
Expenses, excluding distribution fees...... 1.06%(a)
Net investment income...................... 2.46%(a)
Portfolio turnover rate....................... 19%
</TABLE>
- ---------------
(a) Annualized.
(b) Commencement of offering of Class B shares.
(c) Commencement of offering of Class C shares.
(d) 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.
- --------------------------------------------------------------------------------
14 See Notes to Financial Statements.
<PAGE>
<PAGE>
Independent Auditors' Report GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors
Global Utility Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Global Utility Fund, Inc. as of September 30,
1995, 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 five years in the period then ended.
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, 1995 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
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, 1995, 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 9, 1995
- --------------------------------------------------------------------------------
15 -----
<PAGE>
Federal Income Tax Information GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Code to advise you within 60 days of the
Fund's fiscal year end (September 30, 1995) 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 $0.78 per share, comprised of $0.495 per share ordinary income and
short-term capital gains which are taxable as ordinary income and $0.285 per
share long-term capital gains which are taxable as such. The Fund paid
distributions for Class B and Class C shares totaling $0.68 per share, comprised
of $0.395 per share ordinary income and short-term capital gains which are
taxable as ordinary income and $0.285 per share long-term capital gains which
are taxable as such. Further, we wish to advise you that 55% of the ordinary
income dividends paid in 1995 qualified for the corporate dividend received
deduction available to corporate taxpayers.
In January 1996, 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 1995.
- --------------------------------------------------------------------------------
16
<PAGE>
The Global Utility Fund, Inc. and the MSCI World Index:
Comparing a $10,000 Investment.
Class A
(GRAPH)
Class B
(GRAPH)
Class C
(GRAPH)
Past performance is not a guarantee of future performance. Principal and
investment return will fluctuate so that an investor's shares may be worth
more or less than their original cost.
These graphs are furnished to you in accordance with SEC regulations. They
compare a $10,000 investment in the Global Utility Fund (Class A, Class B
and Class C) with a similar investment in the Morgan Stanley Capital
International "World" Index (MSCI) 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), as measured
on a quarterly basis, beginning in 1990 for Class A shares, in 1991 for
Class B shares 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 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, 1995;
(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 was begun in February
1995 and is not reflected in this graph.
The MSCI World Index is a weighted index, comprised of approximately 1,500
companies listed on the stock exchanges of the U.S., Europe, Canada,
Australia, New Zealand and the Far East. The combined capitalization of
these companies represents about 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 funds and other indexes may portray different
comparative performance.
<PAGE>
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll Free (800) 225-1852
(LOGO)
Directors
Daniel S. Ahearn
Edward D. Beach
Thomas T. Mooney
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
Stephen M. Ungerman, Assistant 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, DC 20036
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
37936G303 MF105E
37936G204 Cat. #444356X
37936G402
