(ICON)
Global
Utility
Fund, Inc.
SEMI
ANNUAL
REPORT
March 31, 1996
(LOGO)
<PAGE>
Global Utility Fund, Inc.
Performance At A Glance.
The Global Utility Fund's Class A shares gained 5.4% for the six months ended
March 31, 1996, compared to a 3.1% gain in the benchmark Financial Times
World Utilities Index, and a 6.6% gain in the Lipper Utility Fund Average.
The Fund's international securities and diversification in the natural
gas area contributed to the six-month gain. As shown below, the longer
term record of your Fund compares favorably with other indices in the
utility and related areas.
<TABLE>
Cumulative Total Returns1 As of 3/31/96
<CAPTION>
Six One Five Since
Months Year Years Inception2
<S> <C> <C> <C> <C>
Class A 5.4% 20.1% 77.4% 104.8%
Class B 5.1 19.3 70.5 70.8
Class C 5.1 19.3 N/A 17.5
FT World Utilities* 3.1 16.9 67.1 54.4
Lipper Utility Avg** 6.6 21.6 68.2 84.9
</TABLE>
<TABLE>
Average Annual Total Returns1 As of 3/31/96
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 14.1% 11.0% 11.3%
Class B 14.3 11.1 11.1
Class C 18.3 N/A 10.2
</TABLE>
Past performance is not indicative 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, Lipper Analytical Services
and Wellington Management. 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 charge 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.
* The Financial Times World Utility Index is currently comprised of
approximately 120 world utility stocks representing approximately
20 countries.
** These are the average returns of 87 funds in the utility category
for six months, 85 funds for one year; 22 funds for five years; and 17
funds since the inception of the Class A shares, as determined by
Lipper Analytical Services.
How Investments Compared.
(As of 3/31/96)
(GRAPH)
Source: Lipper Analytical Services. 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 averages 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 included historical 20-year average annual
returns. These returns assume the reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors have received
higher historical total returns from stocks than from most other
investments. Smaller capitalization stocks offer greater potential
for long-term growth but may be more volatile than larger capitalization
stocks.
General 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 significantly) and their returns have been historically
lower than those of stock funds.
General Municipal Debt Funds invest in bonds issued by state governments,
state agencies and/or municipalities. This investment provides income
that is usually exempt from federal and state income taxes.
U.S. Taxable Money Market Funds attempt to preserve a constant share value;
they don't fluctuate much in price but, historically their returns have
been generally among the lowest of the major investment categories.
*19 years for General Muni Debt Funds.
<PAGE>
William C. S. Hicks, Fund Manager (PICTURE)
Portfolio
Manager's Report
The Global Utility Fund invests primarily in the stocks and bonds of
utility companies from around the world. The Fund seeks to provide
total return, without incurring undue risk, by investing in
income-producing securities. There is no assurance that the Fund will
be able to achieve its investment objective. Investors should also
keep in mind that there are special risks associated with foreign
investing (such as currency fluctuations and social, political and
economic developments) and with investing in utility securities.
Telecommunications Bill Update.
Since our last report, telecommunications
reform legislation was finally passed by
Congress. This important bill places increased
emphasis upon competition rather than the dominant
control of regulatory boards. Although it will
be several years before major portions of the
bill are enacted, its impact is affecting our
current strategy.
Strategy Session.
During the past six months, we increased the Global Utility Fund's
international holdings, which comprised 50% of equity assets on March
31, 1996, up from 43% in the last report. We believed (and still do)
that the international markets had significant opportunity for unit
growth expansion because of the relatively low level of telephone and
electricity usage compared with the more developed countries.
Telecommunications remained the Fund's major equity investment area,
comprising 47% of equity assets on March 31, 1996 because growth
prospects for international telephone usage are well above average,
and the growth in cellular should be well into double digits. We did,
however, cut back on some of the Fund's telecommunications equipment
holdings because of inventory building at the manufacturing levels
and the resulting price competition which has pressured profit
margins. Once this inventory problem is solved, we will again
become interested in the equipment stocks which have above average
growth prospects on a longer term basis.
We continued to hold a significant weighting in the natural gas
securities, which comprised 15% of equity assets on March 31, 1996.
Rising gas prices in the past several months have confirmed our belief
in this underpriced asset class.
About 33% of equity assets were invested in the slower growing electric
utilities, with emphasis on companies with low cost reserves, good
regulation, and solid strategic management. Many of the companies in
the electric utility area have the capacity for paying relatively
high yields in a stock market where good current dividend yields are
difficult to find. Ideally, we look for companies with strong future
cash flow which will allow for dividend increases.
Telecommunication Stocks Dominate.
Expressed as a percentage of
equity assets as of 3/31/96.
(CHART)
<PAGE>
What Went Well.
Natural Gas Stock Prices Rise.
Pricing conditions for the natural gas industry have been difficult,
but we expected that they would improve and that stock prices would
rise. Indeed, the weather conditions in the winter of 1995-1996 turned
quite cold, resulting in lower gas inventories and in higher prices
for gas and many of the gas-related securities. Your Fund's significant
focus on natural gas stocks helped performance.
International Diversification.
Our investment in Espoon Sahko (Finnish utility), Iberdrola SA (Spain),
Veba AG (Germany), and KPT (Netherlands) showed well above average
gains and helped lift performance. As mentioned earlier, we have
increased the Fund's non-U.S. weightings from the last report, in
search of better growth prospects.
And Not So Well.
California Regulations Hurt Performance.
The Fund's investments in California utility stocks, despite good yields,
suffered from a most difficult regulatory environment. California
regulators have been a leader in revolutionary pricing techniques
such as retail wheeling which have put pressure on the operating
effectiveness of companies located within our largest state.
Looking Ahead.
Trends toward globalization of the electric and telecommunications
industries continue to present investment opportunities for the
best-managed corporations and the manufacturers of infrastructure
equipment. The low saturation levels of telephone and utility equipment
in emerging countries also presents opportunities for technology-based
companies with operating vision.
We continue to develop a prudent and balanced strategy for investment
in this dynamic industry environment.
Five Largest Issuers.
3.2% AT&T Corp.
Telecommunications
2.8% SBC Communications
Telecommunications
2.3% Veba AG
Electricity
2.1% Telefon Espana ADR
Telecommunications
2.1% Westcoast Energy CAN
Natural Gas
Expressed as a percentage of total net assets as of 3/31/96.
1
<PAGE>
President's Letter May 1, 1996
(PICTURE)
Dear Shareholder:
Last year, stocks and bonds generally posted extraordinary returns.
Investors celebrated this performance by putting record amounts of
new money into mutual funds in the first few months of 1996. According
to figures released by the Investment Company Institute, a mutual fund
industry trade group, new investments in mutual funds reached an
all-time monthly high of $33 billion in January of 1996. An additional
$47 billion was invested in February and March.
While we are pleased that mutual funds are attracting new investors,
we're concerned that some of them may be "buying last year's returns."
Few expect 1995's virtual non-stop returns from the stock and bond
markets. In fact, 1996's markets have
been volatile so far (stock and bond prices go down just as they go up).
There's no better time than now to be talking with your Financial Advisor or
Registered Representative. She or he can help you determine reasonable
expectations about both the potential performance and risks associated with
your investments.
Board of Directors Election.
Late this summer, we'll be sending you a notice about a special shareholder
meeting to elect new Prudential mutual fund boards of directors. Your Board
of Directors has approved a proposal to place a common board of experienced
directors across many of Prudential's mutual funds to improve business
efficiency and reduce costs to your fund(s). The materials you'll receive
this summer will contain more complete information about this proposal.
Changes at Prudential.
Finally, there have been some important changes recently at Prudential that were
made with you in mind. Prudential Mutual Funds has moved under the umbrella of
Prudential's newly created "Money Management Group." This group manages and
administers nearly $190 billion in client assets and provides mutual funds,
annuities, defined benefit and defined contribution plans to our individual and
institutional investors. We plan to improve the range and quality of investment
products and services that we can provide you by better leveraging Prudential's
strengths. There will, however, be no change in the service you receive from
your Financial Advisor, Registered Representative or our Customer Service unit.
We're excited about our future and hope that you are, too. Thank you for your
continued support and confidence in Prudential Mutual Funds.
Sincerely,
Richard A. Redeker
President, Prudential Mutual Funds
2
<PAGE>
Portfolio of Investments as of March 31, 1996
(Unaudited) GLOBAL UTILITY FUND, INC.
<TABLE>
<CAPTION>
US$ Value
Shares Description (Note 1)
COMMON STOCKS--72.8%
<C> <S> <C>
Electric Utilities--24.6%
528,000 China Light & Power Co., Ltd.
(Hong Kong) $ 2,382,930
175,000 CMS Energy Corp. 5,162,500
200,000 DPL, Inc. 4,775,000
187,500 DQE, Inc. 5,414,063
100,000 DTE Energy Co. 3,362,500
100,000 Empresa Nacional de Electricidad
S.A. (ADR) (Spain) 5,700,000
200,000 Espoon Sahko Oy (ADS) (Finland) 3,676,000
150,000 Huaneng Power International Inc.
(ADR) (China) 2,568,750
600,000 Iberdrola S.A. (Spain) 5,543,467
75,000 Korea Electric Power Corp. (ADR)
(Korea) 1,725,000
85,714 London Electricity (United Kingdom) 968,490
195,000 Pacific Gas & Electric Co. 4,411,875
100,000 Pinnacle West Capital Corp. 2,887,500
140,000 Public Service Co. of Colorado 4,935,000
140,000 RWE A.G. (Germany) 5,628,298
1,300,000 Scottish Power PLC (United Kingdom) 6,858,090
280,000 Shandong Huaneng Power Development
Co. Ltd. (ADR) (China) 2,450,000
150,000 Southwestern Energy Co. 1,800,000
100,000 Texas Utilities Co. 4,137,500
160,000 VEBA A.G. (Germany) 7,786,746
-------------
82,173,709
- ------------------------------------------------------------
Gas Utilities--11.5%
618,705 Australian Gas & Light Co.
(Australia) 2,612,672
100,000 Burlington Resources Inc. 3,712,500
100,000 Cross Timbers Oil Co. 1,725,000
88,900 Enron Oil & Gas Co. 2,344,738
141,000 Equitable Resources, Inc. 4,124,250
21,900 MCN Corp. 506,438
84,200 National Fuel Gas Co. 2,915,425
100,000 Questar Corp. 3,300,000
150,000 Sonat Inc. 5,400,000
330,000 TransCanada Pipelines Ltd. (Canada) $ 4,602,510
470,000 Westcoast Energy Inc. (Canada) 7,115,723
-------------
38,359,256
- ------------------------------------------------------------
Telecommunications--33.5%
33,333 360 (Degrees) Communications Co.* 795,825
106,300 Airtouch Communications, Inc.* 3,308,588
175,000 AT&T Corp. 10,718,750
190,000 BCE Inc. (Canada) 6,721,250
153,200 British Columbia Telecom, Inc.
(Canada) 2,853,593
112,800 Comsat Corp. 2,636,700
43,000 Empresas Telex (ADR) (Chile) 408,500
70,000 GTE Corp. 3,071,250
210,000 MCI Communications Corp. 6,365,625
369 Nippon Telegraph & Telephone Corp.
(Japan) 2,711,502
50,000 Northern Telecom Ltd. (Canada) 2,387,500
135,000 NYNEX Corp. 6,733,125
106,300 Pacific Telesis Group 2,936,538
87,600 Portugal Telecom, S.A. (ADS)
(Portugal) 1,981,950
150,000 Royal PTT Nederland NV (Netherlands) 5,909,091
180,000 SBC Communications Inc. 9,472,500
100,000 Sprint Corp. 3,800,000
2,300,000 Stet-Societa Finanziaria Telefonica
P.A. (Italy) 4,575,049
165,500 Tele Danmark (ADR) (Denmark) 4,282,312
20,000 Telecom Corp. of New Zealand Ltd.
(ADR) (New Zealand) 1,432,500
900,000 Telecom Italia (Italy) 1,425,878
900,000 Telecom Italia Mobile* (Italy) 1,635,312
40,000 Telefonica de Argentina, S.A. (ADR)
(Argentina) 1,025,000
150,000 Telefonica de Espana, S.A. (ADR)
(Spain) 7,125,000
120,000 Telefonos de Mexico, S.A. (ADR)
(Mexico) 3,945,000
200,000 U.S. West Communications Group 6,475,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3 -----
<PAGE>
Portfolio of Investments as of March 31, 1996
(Unaudited) GLOBAL UTILITY FUND, INC.
<TABLE>
<CAPTION>
US$ Value
Shares Description (Note 1)
<C> <S> <C>
Telecommunications (cont'd.)
200,000 U.S. West Media Group* $ 4,125,000
75,000 Vodafone Group PLC (ADR) (United
Kingdom) 2,812,500
-------------
111,670,838
- ------------------------------------------------------------
Water Utilities & Other--3.2%
30,968 Alcatel Alsthom Compagnie Generale
d' Electricite (France) 2,876,832
83,900 American Water Works Co., Inc. 3,230,150
400,000 Anglian Water PLC (United Kingdom) 3,664,570
11,300 Technip S.A. (France) 989,256
-------------
10,760,808
-------------
Total common stocks
(cost $196,777,454) 242,964,611
-------------
PREFERRED STOCKS--1.4%
- ------------------------------------------------------------
Telecommunications--1.4%
Philippine Long Distance Telephone
Co., (The Philippines)
43,700 $3.50 Conv. Ser. III 2,261,475
80,000 $5.75 Conv. Ser. II (GDS) 2,510,000
-------------
Total preferred stocks (cost
$4,185,000) 4,771,475
-------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Moody's Amount US$ Value
Rating (000) Description (Note 1)
<C> <C> <S> <C>
DEBT OBLIGATIONS--24.4%
CORPORATE BONDS--22.0%
- ------------------------------------------------------------
Electric Utilities--10.5%
A1 $ 1,500 Alabama Power Co.,
6.375%, 8/1/99 1,496,055
Aa2 1,750 Central Illinois Light
Co.,
8.20%, 1/15/22 1,832,512
Baa1 1,000D Chilgener S.A.,
6.50%, 1/15/06 (Chile) 943,030
Aaa 2,000D Chubu Electric Power,
6.25%, 8/5/03
(Eurobonds) 1,941,250
A3 $ 1,500 Cincinnati Gas & Elec.
Co.,
5.80%, 2/15/99 $ 1,482,555
A1 1,000 Consolidated Edison Co.
Inc.,
7.625%, 3/1/04 1,033,470
Aa2 2,000 Duke Power Co.,
5.875%, 6/1/01 1,918,140
Ba3 875 El Paso Electric Co., Ser.
C,
8.25%, 2/1/03 866,250
Baa1 1,000D Empresa Electrica Del
Norte Grande S.A.,
7.75%, 3/15/06 (Chile) 997,500
Aa3 500 Florida Power & Light Co.,
6.00%, 7/1/03 478,320
A2 1,000 Iowa-Illinois Gas & Elec.
Co.,
6.95%, 10/15/25 921,460
Baa2 1,000 Louisiana Power & Light
Co.,
6.00%, 3/1/00 972,830
A1 1,500 Monongahela Power Co.,
7.375%, 7/1/02 1,543,755
A1 1,000 Northern States Power Co.,
5.75%, 12/1/00 965,240
Aa3 1,500 Ontario Hydro,
7.45%, 3/31/13 (Canada) 1,520,805
A2 1,000 Pacific Gas & Electric
Co.,
5.375%, 8/1/98 979,280
A2 1,000 Pacificorp,
8.75%, 2/12/98 1,042,890
Baa1 2,000 Philadelphia Electric Co.,
7.50%, 1/15/99 2,052,680
A1 2,000 Potomac Edison Co.,
8.875%, 8/1/21 2,131,620
Aa2 2,000 Southwestern Elec. Power
Co.,
5.25%, 4/1/00 1,913,900
Aa2 1,000 Southwestern Public Serv.
Co.,
7.25%, 7/15/04 1,022,510
Aa2 1,000 Tampa Electric Co.,
7.75%, 11/1/22 995,240
Baa2 2,000 Texas Utilities Electric
Co.,
9.27%, 1/14/00 2,167,500
Aaa 2,000D Tokyo Electric Power,
6.125%, 7/29/03
(Eurobonds) 1,927,500
</TABLE>
- --------------------------------------------------------------------------------
- ----- 4 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of March 31, 1996
(Unaudited) GLOBAL UTILITY FUND, INC.
<TABLE>
<CAPTION>
Principal
Moody's Amount US$ Value
Rating (000) Description (Note 1)
<C> <C> <S> <C>
Electric Utilities (cont'd.)
A2 $ 2,000 Virginia Electric & Power
Co.,
6.625%, 4/1/03 $ 1,971,340
-------------
35,117,632
- ------------------------------------------------------------
Gas Distribution & Other Industries--4.6%
A2 2,000D Alcan Aluminum Ltd.,
9.625%, 7/15/19 (Canada) 2,139,440
Baa2 2,000 Enron Corp.,
7.00%, 8/15/23 1,796,320
A2 1,600 Michigan Con. Gas Co.,
8.25%, 5/1/14 1,733,312
Northern Illinois Gas Co.,
Aa1 500 5.875%, 5/1/00 487,760
Aa1 1,000 7.26%, 10/15/25 958,920
Ba3 1,075 Oryx Energy Co.,
8.125%, 10/15/05 1,052,092
Phillips Petroleum Co.,
Baa1 1,000 8.86%, 5/15/22 1,054,440
Baa1 1,500 7.20%, 11/1/23 1,381,890
A2 2,000 Southern California Gas
Co., Ser. EE,
6.875%, 11/1/25 1,818,180
NR 1,500D Transportadora De Gas del
Sur,
7.75%, 12/23/98
(Argentina) 1,449,375
Baa2 500 Union Oil Co.,
8.75%, 8/15/01 541,610
B1 1,000D YPF Sociedad Anonima,
8.00%, 2/15/04
(Argentina) 887,500
-------------
15,300,839
- ------------------------------------------------------------
Telecommunications, Media & Related
Industries--6.9%
Ba2 1,500 360 (Degrees) Communications Co.,
7.50%, 3/1/06 1,463,715
Aaa 2,000D BellSouth
Telecommunications,
6.125%, 9/23/08
(Eurobonds) 1,858,750
Aaa $ 2,000D British Telecom Finance
BV,
9.375%, 11/16/98
(Eurobonds) $ 2,147,500
B2 650 Cablevision Systems Corp.,
Sr. Sub. Notes,
9.25%, 11/1/05 650,000
B3 750 Chancellor Broadcasting
Co., Sr. Sub. Notes,
9.375%, 10/1/04 708,750
B1 2,000 Comcast Corp., Sr. Sub.
Deb.,
9.125%, 10/15/06 1,990,000
A1 1,500D Ericsson (L.M.) Telephone
Co.,
7.875%, 10/21/96
(Eurobonds) 1,515,937
Granite Broadcasting
Corp., Sr. Sub. Notes,
B3 200 10.375%, 5/15/05 202,250
B-@ 780 9.375%, 12/1/05 737,100
Aaa 500 Illinois Bell Telephone
Co., Ser. K,
7.625%, 4/1/06 506,785
Baa3 325 Northrop Grumman Corp.,
Sr. Deb.,
9.375%, 10/15/24 351,397
Aa3 1,550 Pacific Bell, Inc.,
8.70%, 6/15/01 1,693,437
B2 525 Paging Network, Inc., Sr.
Sub. Notes,
10.125%, 8/1/07 551,250
A1 1,000 Southwestern Bell
Telephone Co.,
5.875%, 6/1/03 940,770
Baa3 1,000 Tele Communications Inc.,
Sr. Deb.,
9.25%, 1/15/23 1,038,950
B1 1,500D Telecom Argentina S.A.,
8.375%, 10/18/00,
(Argentina) 1,421,250
Aa1 BP1,000 Telecom Corp. New Zealand
Finance,
7.50%, 7/14/03
(Eurobonds) 646,660
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5 -----
<PAGE>
Portfolio of Investments as of March 31, 1996
(Unaudited) GLOBAL UTILITY FUND, INC.
<TABLE>
<CAPTION>
Principal
Moody's Amount US$ Value
Rating (000) Description (Note 1)
<C> <C> <S> <C>
Telecommunications, Media & Related
Industries (cont'd.)
Telefonica de Argentina,
S.A., (Argentina)
NR $ 1,000D 8.375%, 10/1/00 $ 945,000
B1 1,000D 11.875%, 11/1/04 1,035,000
Ba2 1,000 Turner Broadcasting
Systems, Inc., Sr. Deb.
8.40%, 2/1/24 924,510
Ba3 1,000D Videotron Ltd., Sr. Sub.
Notes, (Canada)
10.25%, 10/15/02 1,035,000
B2 500 Young Broadcasting Inc.,
Sr. Sub. Notes,
9.00%, 1/15/06 467,500
-------------
22,831,511
-------------
Total corporate bonds
(cost $74,280,814) 73,249,982
-------------
CONVERTIBLE BONDS--0.7%
Baa2 500D Compania de Telefonos de
Chile, S.A.,
4.50%, 1/15/03 (Chile) 558,750
Caa 1,500D International Cabletel
Inc.,
7.25%, 4/15/05
(Eurobonds) 1,848,750
-------------
Total convertible bonds
(cost $2,000,000) 2,407,500
-------------
<CAPTION>
Principal
Amount US$ Value
(000) Description (Note 1)
<C> <S> <C>
U.S. GOVERNMENT SECURITIES--1.7%
United States Treasury
Notes,
$ 2,000 6.125%, 7/31/00 $ 2,001,240
3,000 7.50%, 11/15/01 3,183,750
500 6.50%, 5/15/05 503,280
-------------
Total U.S. government
securities
(cost $5,897,578) 5,688,270
-------------
Total debt obligations
(cost $82,178,392) 81,345,752
-------------
- ------------------------------------------------------------
Total Investments--98.6%
(cost $283,140,846; Note
4) 329,081,838
Other assets in excess of
liabilities--1.4% 4,534,125
-------------
Net Assets--100% $ 333,615,963
-------------
-------------
</TABLE>
- ---------------
*--Non-income producing security.
D--US$ Denominated Bonds.
@ Standard & Poor's rating.
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.
- --------------------------------------------------------------------------------
- ----- 6 See Notes to Financial Statements.
<PAGE>
Statement of Assets and Liabilities (Unaudited) GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S>
<C>
Assets
March 31, 1996
Investments, at value (cost
$283,140,846)..................................................................
$329,081,838
Foreign currency, at value (cost
$115).....................................................................
119
Cash.........................................................................
.............................. 79,977
Dividend and interest
receivable...................................................................
........ 2,852,350
Receivable for investments
sold............................................................................
2,384,420
Forward currency contracts-net amount receivable from
counterparties....................................... 770,890
Receivable for Fund shares
sold............................................................................
138,547
Deferred expenses and other
assets.........................................................................
18,573
--------------
Total
assets.......................................................................
..................... 335,326,714
--------------
Liabilities
Payable for Fund shares
reacquired...................................................................
...... 934,070
Accrued
expenses.....................................................................
...................... 308,148
Distribution fee
payable......................................................................
............. 208,622
Management fee
payable......................................................................
............... 189,196
Withholding taxes
payable......................................................................
............ 63,436
Forward currency contracts-net amount payable to
counterparties............................................ 7,279
--------------
Total
liabilities..................................................................
..................... 1,710,751
--------------
Net
Assets.......................................................................
.......................... $333,615,963
--------------
--------------
Net assets were comprised of:
Common stock, at
par..........................................................................
.......... $ 22,514
Paid-in capital in excess of
par........................................................................
281,229,135
--------------
281,251,649
Accumulated distributions in excess of net investment
income............................................ (278,319)
Accumulated net realized gains on investments and foreign currency
transactions......................... 5,935,757
Net unrealized appreciation on investments and foreign
currencies....................................... 46,706,876
--------------
Net assets, March 31,
1996.........................................................................
........ $333,615,963
--------------
--------------
Class A:
Net asset value and redemption price per share
($121,003,479 / 8,164,652 shares of common stock issued and
outstanding)............................. $14.82
Maximum sales charge (5.00% of offering
price)..........................................................
.78
--------------
Maximum offering price to
public........................................................................
$15.60
--------------
--------------
Class B:
Net asset value, offering price and redemption price per share
($211,991,005 / 14,307,474 shares of common stock issued and
outstanding)............................ $14.82
--------------
--------------
Class C:
Net asset value, offering price and redemption price per share
($621,479 / 41,945 shares of common stock issued and
outstanding).................................... $14.82
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7 -----
<PAGE>
GLOBAL UTILITY FUND, INC.
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income March 31, 1996
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $296,080)................. $ 4,421,471
Interest and discount earned (net of
foreign withholding taxes of
$2,331)............................ 3,173,640
------------------
Total income....................... 7,595,111
------------------
Expenses
Management fee........................ 1,138,438
Distribution fee--Class A............. 154,720
Distribution fee--Class B............. 1,107,198
Distribution fee--Class C............. 2,900
Transfer agent's fees and expenses.... 344,000
Custodian's fees and expenses......... 134,000
Reports to shareholders............... 76,000
Registration fees..................... 38,000
Audit fee and expenses................ 21,000
Directors' fees and expenses.......... 20,300
Legal fees and expenses............... 20,000
Insurance............................. 4,000
Miscellaneous......................... 9,708
------------------
Total expenses..................... 3,070,264
------------------
Net investment income.................... 4,524,847
------------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions............... 9,734,850
Foreign currency transactions......... (913,808)
------------------
8,821,042
------------------
Net change in unrealized
appreciation/depreciation on:
Investments........................... 2,488,376
Foreign currencies.................... 1,584,378
------------------
4,072,754
------------------
Net gain on investments and foreign
currencies............................ 12,893,796
------------------
Net Increase in Net Assets
Resulting from Operations................ $ 17,418,643
------------------
------------------
</TABLE>
<TABLE>
GLOBAL UTILITY FUND, INC.
Statement of Changes in Net Assets (Unaudited)
<CAPTION>
Six Months Year Ended
Ended September
Increase (Decrease) March 31, 30,
in Net Assets 1996 1995
<S> <C> <C>
Operations
Net investment income.......... $ 4,524,847 $ 11,147,737
Net realized gain on investment
and foreign currency
transactions................ 8,821,042 7,315,262
Net change in unrealized
appreciation of investments
and foreign currencies...... 4,072,754 25,829,844
------------ ------------
Net increase in net assets
resulting from operations... 17,418,643 44,292,843
------------ ------------
Net equalization debits........... -- (312,052)
------------ ------------
Dividends and distributions (Note
1)
Dividends from net investment
income
Class A..................... (2,029,377) (4,310,107)
Class B..................... (2,839,293) (6,511,221)
Class C..................... (7,603) (11,932)
------------ ------------
(4,876,273) (10,833,260)
------------ ------------
Distributions in excess of net
investment income
Class A..................... (115,836) --
Class B..................... (162,065) --
Class C..................... (418) --
------------ ------------
(278,319) --
------------ ------------
Distributions from net realized
gains
Class A..................... (3,456,003) (2,642,246)
Class B..................... (6,126,168) (15,681,058)
Class C..................... (16,332) (6,975)
------------ ------------
(9,598,503) (8,330,279)
------------ ------------
Fund share transactions (net of
share conversions) (Note 5)
Net proceeds from shares
sold........................ 14,847,263 25,935,458
Net asset value of shares
issued in reinvestment of
dividends and
distributions............... 12,019,980 15,601,479
Cost of shares reacquired...... (48,091,976) (113,332,033)
------------ ------------
Net decrease in net assets from
Fund share transactions........ (21,224,733) (71,795,096)
------------ ------------
Total decrease.................... (18,559,185) (46,977,844)
Net Assets
Beginning of period............... 352,175,148 399,152,992
------------ ------------
End of period..................... $333,615,963 $352,175,148
------------ ------------
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
- ----- 8 See Notes to Financial Statements.
<PAGE>
Notes to Financial Statements (Unaudited) 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 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.
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>
Notes to Financial Statements (Unaudited) 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 Net 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. Expenses are recorded on the accrual basis which may require the use of
certain estimates by management.
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: During the six months ended March 31, 1996, the Fund discontinued
the accounting practice of equalization. Equalization is a practice whereby a
portion of the proceeds from sales and costs of repurchases of capital 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. The undistributed net investment income balance of
$220,108 at September 30, 1995, resulting from equalization, was transferred to
paid-in capital in excess of par.
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.
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 increase accumulated distributions in excess of net
investment income and decrease accumulated net realized gains on investments by
$63,567 relating to net 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 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 had a distribution agreement with Prudential Mutual Fund Distributors,
Inc. (``PMFD''), which acted as the distributor of the Class A shares of the
Fund through January 1, 1996. Effective January 2, 1996, Prudential Securities
Incorporated (``PSI''), became the distributor of the Class A shares of the Fund
and is serving the Fund under the same terms and conditions as under the
arrangement with PMFD. PSI is also the distributor of the Class B and Class C
shares of the Fund. The Fund
- --------------------------------------------------------------------------------
- ----- 10
<PAGE>
Notes to Financial Statements (Unaudited) GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
compensated PMFD and PSI 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 PSI, and PMFD for
the period September 1, 1995 through January 1, 1996 with respect to Class A
shares, 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, B and C shares, respectively, for the
six months ended March 31, 1996.
PMFD and PSI has advised the Fund that it has received approximately $43,300 in
front-end sales charges resulting from sales of Class A shares during the six
months ended March 31, 1996. From these fees, PMFD and PSI paid such sales
charges to Pruco Securities Corporation, affiliated broker-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, 1996, it
received approximately $385,200 and $600 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 six months ended March
31, 1996, the Fund incurred fees of approximately $263,500 for the services of
PMFS. As of March 31, 1996, approximately $49,500 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.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended March 31, 1996 were $29,829,974 and $62,658,065,
respectively.
At March 31, 1996, the Fund had an outstanding forward currency contract, both
to purchase and sell a foreign currency as follows:
<TABLE>
<CAPTION>
Value at Appreciation
Foreign Currency Settlement Date Current (Deprecia-
Purchase Contract Payable Value tion)
- -------------------- --------------- ----------- --------------
<S> <C> <C> <C>
Deutschemarks,
expiring 5/2/96... $ 1,980,000 $ 1,972,721 $ (7,279)
--------------- ----------- --------------
--------------- ----------- --------------
<CAPTION>
Value at Appreciation
Foreign Currency Settlement Date Current (Deprecia-
Sale Contract Receivable Value tion)
- -------------------- --------------- ----------- --------------
<S> <C> <C> <C>
Deutschemarks,
expiring 5/2/96... $15,000,000 $14,229,110 $ 770,890
--------------- ----------- --------------
--------------- ----------- --------------
</TABLE>
The United States federal income tax basis of the Fund's investments at March
31, 1996 was $283,167,553 and accordingly, net unrealized appreciation of
investments, for United States federal income tax purposes was $45,914,285
(gross unrealized appreciation--$56,635,629; gross unrealized
depreciation--$10,721,344).
- ------------------------------------------------------------
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 22,514,071 shares of
common stock issued and outstanding at March 31, 1996, Wellington owned 9,000
Class A shares.
- --------------------------------------------------------------------------------
11 -----
<PAGE>
Notes to Financial Statements (Unaudited) GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ----------------------------------- ---------- ------------
<S> <C> <C>
Six months ended March 31, 1996:
Shares sold........................ 639,074 $ 9,463,881
Shares issued in reinvestment of
dividends and distributions...... 251,076 3,694,022
Shares reacquired.................. (1,410,689) (20,932,833)
---------- ------------
Net decrease in shares outstanding
before conversion................ (520,539) (7,774,930)
Shares issued upon conversion from
Class B.......................... 229,890 3,411,163
---------- ------------
Net decrease in shares
outstanding...................... (290,649) $ (4,363,767)
---------- ------------
---------- ------------
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 from
Class B.......................... 1,102,435 14,545,652
---------- ------------
Net decrease in shares
outstanding...................... (786,307) $(11,254,555)
---------- ------------
---------- ------------
<CAPTION>
Class B
- -----------------------------------
<S> <C> <C>
Six months ended March 31, 1996:
Shares sold........................ 351,839 $ 5,257,041
Shares issued in reinvestment of
dividends and distributions...... 565,252 8,302,277
Shares reacquired.................. (1,820,462) (27,065,409)
---------- ------------
Net decrease in shares outstanding
before conversion................ (903,371) (13,506,091)
Shares reacquired upon conversion
into Class A..................... (229,976) (3,411,163)
---------- ------------
Net decrease in shares
outstanding...................... (1,133,347) $(16,917,254)
---------- ------------
---------- ------------
Class B Shares Amount
- ----------------------------------- ---------- ------------
<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
into Class A..................... (1,103,158) (14,545,349)
---------- ------------
Net decrease in shares
outstanding...................... (4,518,616) $(60,829,635)
---------- ------------
---------- ------------
<CAPTION>
Class C
- -----------------------------------
<S> <C> <C>
Six months ended March 31, 1996:
Shares sold........................ 8,444 $ 126,341
Shares issued in reinvestment of
dividends and distributions...... 1,613 23,681
Shares reacquired.................. (6,343) (93,734)
---------- ------------
Net increase in shares
outstanding...................... 3,714 $ 56,288
---------- ------------
---------- ------------
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.................. (3,578) (48,857)
---------- ------------
Net increase in shares
outstanding...................... 21,673 $ 289,094
---------- ------------
---------- ------------
</TABLE>
- ------------------------------------------------------------
Note 6. Dividends
On May 9, 1996, the Board of Directors of the Fund declared dividends of $.125
per Class A share and $.095 per Class B and Class C shares payable on May 17,
1996 to shareholders of record on May 14, 1996.
- --------------------------------------------------------------------------------
- ----- 12
<PAGE>
Financial Highlights (Unaudited) GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class
A
- ---------------------------------------------------------------------------
Six Months
Ended Year
Ended September 30,
March 31,
- ------------------------------------------------------------
1996 1995 1994
1993 1992 1991(a)
---------- -------- --------
-------- -------- --------
<S> <C> <C> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period... $ 14.72 $ 13.66 $ 14.63
$ 12.96 $ 12.62 $ 10.50
---------- -------- --------
-------- -------- --------
Income from investment operations
Net investment income.................. .23 .49 .47
.44 .53 .57
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions........................ .55 1.35 (.82)
2.46 1.01 2.23
---------- -------- --------
-------- -------- --------
Total from investment operations.... .78 1.84 (.35)
2.90 1.54 2.80
---------- -------- --------
-------- -------- --------
Less distributions
Dividends from net investment income... (.25) (.48) (.42)
(.47) (.53) (.62)
Distributions in excess of net
investment income................... (.01) -- --
(.01) -- --
Distributions from net realized
gains............................... (.42) (.30) (.20)
(.75) (.67) (.08)
---------- -------- --------
-------- -------- --------
Total distributions................. (.68) (.78) (.62)
(1.23) (1.20) (.70)
---------- -------- --------
-------- -------- --------
Redemption fee retained by Fund........ -- -- --
-- -- .02
---------- -------- --------
-------- -------- --------
Net asset value, end of period......... $ 14.82 $ 14.72 $ 13.66
$ 14.63 $ 12.96 $ 12.62
---------- -------- --------
-------- -------- --------
---------- -------- --------
-------- -------- --------
TOTAL RETURN(b)........................ 5.36% 14.23% (2.49)%
23.87% 13.15% 27.63%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........ $121,003 $124,423 $126,254
$138,714 $114,654 $132,804
Average net assets (000)............... $123,776 $122,837 $139,166
$119,001 $120,708 $151,217
Ratios to average net assets:
Expenses, including distribution
fees............................. 1.29%(c) 1.31% 1.25%
1.30% 1.39% 1.49%
Expenses, excluding distribution
fees............................. 1.04%(c) 1.06% 1.02%
1.10% 1.19% 1.36%
Net investment income............... 3.10%(c) 3.58% 3.39%
3.37% 4.16% 5.06%
For Class A, B and C shares:
Portfolio turnover rate............. 9% 15% 19%
14% 57% 135%
Average commission rate paid per
share............................ $ 0.0569 -- --
-- -- --
</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. Total
returns for periods of less than a full year are not annualized.
(c) Annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13 -----
<PAGE>
Financial Highlights (Unaudited) GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
Class C
- -------------------------------------------------------------- ----------
Six Months
Six Months
Ended Year Ended
September 30, Ended
March 31,
- ---------------------------------------------- March 31,
1996 1995 1994
1993 1992 1996
---------- -------- --------
-------- ------- ----------
<S> <C> <C> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period... $ 14.71 $ 13.66 $ 14.63
$ 12.97 $ 12.63 $ 14.71
---------- -------- --------
-------- ------- ----------
Income from investment operations
Net investment income.................. .18 .39 .37
.34 .43 .18
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions........................ .56 1.34
(.82) 2.45 1.01 .56
---------- -------- --------
-------- ------- ----------
Total from investment operations.... .74 1.73
(.45) 2.79 1.44 .74
---------- -------- --------
-------- ------- ----------
Less distributions
Dividends from net investment income... (.20) (.38)
(.32) (.37) (.43) (.20)
Distributions in excess of net
investment income................... (.01) --
- -- (.01) -- (.01)
Distributions from net realized
gains............................... (.42) (.30)
(.20) (.75) (.67) (.42)
---------- -------- --------
-------- ------- ----------
Total distributions................. (.63) (.68)
(.52) (1.13) (1.10) (.63)
---------- -------- --------
-------- ------- ----------
Net asset value, end of period......... $ 14.82 $ 14.71 $ 13.66
$ 14.63 $ 12.97 $ 14.82
---------- -------- --------
-------- ------- ----------
---------- -------- --------
-------- ------- ----------
TOTAL RETURN(b)........................ 5.06% 13.32%
(3.22)% 22.87% 12.23% 5.06%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........ $221,991 $227,189 $272,673
$185,259 $60,432 $ 621
Average net assets (000)............... $221,440 $237,983 $270,466
$ 90,254 $45,661 $ 580
Ratios to average net assets:
Expenses, including distribution
fees............................. 2.04%(c) 2.06%
2.02% 2.10% 2.19% 2.04%(c)
Expenses, excluding distribution
fees............................. 1.04%(c) 1.06%
1.02% 1.10% 1.19% 1.04%(c)
Net investment income............... 2.35%(c) 2.83%
2.68% 2.59% 3.43% 2.37%(c)
<CAPTION>
August 1,
1994(a)
Year Ended through
September 30, September 30,
1995 1994
------------- -------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period... $ 13.66 $ 13.93
----- -----
Income from investment operations
Net investment income.................. .39 .06
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions........................ 1.34 (.24)
----- -----
Total from investment operations.... 1.73 (.18)
----- -----
Less distributions
Dividends from net investment income... (.38) (.07)
Distributions in excess of net
investment income................... -- --
Distributions from net realized
gains............................... (.30) (.02)
----- -----
Total distributions................. (.68) (.09)
----- -----
Net asset value, end of period......... $ 14.71 $ 13.66
----- -----
----- -----
TOTAL RETURN(b)........................ 13.32% (1.32)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........ $ 563 $ 226
Average net assets (000)............... $ 410 $ 131
Ratios to average net assets:
Expenses, including distribution
fees............................. 2.06% 2.06%(c)
Expenses, excluding distribution
fees............................. 1.06% 1.06%(c)
Net investment income............... 2.83% 2.46%(c)
</TABLE>
- ---------------
(a) Commencement of offering of Class C shares.
(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 period reported
and includes reinvestment of dividends and distributions.
Total return for periods of less than a full year are not annualized.
(c) Annualized.
- --------------------------------------------------------------------------------
- ----- 14 See Notes to Financial Statements.
<PAGE>
Getting
The Most
From Your
Prudential
Mutual
Fund
Change Your Mind.
You can exchange your shares in most Prudential Mutual Funds for shares in most
other Prudential Mutual Funds, without charges. This may be most helpful if your
investment needs change.
Reinvest Dividends Free Of Charge.
Reinvest your dividends and/or capital gains distributions automatically --
without charge.
Invest For Retirement.
There is no minimum investment for an IRA. Plus, you defer taxes on your
investment earnings by investing in an IRA.
If you'd like, you can contribute up to $2,000 a year in an IRA. If you are
married, you and your spouse (if not working outside the home) can contribute
up to $2,250 a year. (Withdrawals are taxed as ordinary income and may be
subject to a 10% penalty prior to age 59 1/2.)
Change Your Job.
You can take your pension with you. Use a rollover IRA to manage your
company-sponsored retirement plan while retaining the special tax-deferred
advantages.
Invest In Your Children.
There's no fee to open a custodial account for a child's education or other
needs.
Take Income.
Would you like to receive monthly or quarterly checks in any amount from your
fund account? Just let us know. We'll take care of it. Of course, there are
minimum amounts. And shares redeemed may be subject to tax, and Class B and C
shares may be subject to contingent deferred sales charges. We'll gladly
answer your questions.
Keep Informed.We want to keep you up-to-date. Of course, you receive account
activity statements every quarter. But you also receive annual and semi-annual
fund reports, as well as other important updates on events that affect your
investments, including tax information.
This material is only authorized for distribution when preceded or accompanied
by a current prospectus. Read the prospectus carefully before you invest or send
money.
<PAGE>
Getting
The Most
From Your
Prudentia
Mutual
Fund
How many times have you read these letters -- or other financial materials --
and stumbled across a word that you don't understand?
Many shareholders have run into the same problem. We'd like to help. So we'll
use this space from time to time to explain some of the words you might have
read, but not understood. And if you have a favorite word that no one can
explain to your satisfaction, please write to us.
Basis Point: One 1/100th of 1%. For example, one half of one percentage point
is 50 basis points.
Call Option: A contract giving the holder a right to buy stocks or bonds at a
predetermined price (called the strike price) before a predetermined expiration
date. A buyer of a call option generally expects to benefit from a rise in the
price of the stock or bond.
Capital Gain/Capital Loss: The difference between the cost of a capital asset
(for example, a stock, bond or mutual fund share) and its selling price. Under
current law the federal income tax rate for individuals on a long-term capital
gain is 28%.
Collateralized Mortgage Obligations (CMOs): Pools of mortgage-backed securities
sliced in maturity ranges that bear differing interest rates. These instruments
are sensitive to changes in interest rates and homeowner refinancing activity.
They are subject to prepayment and maturity extension risk.
Derivatives: Securities that derive their value from another security. The rate
of return of these financial products rises and falls -- sometimes very
suddenly -- in response to changes in some specific interest rate, currency,
stock or other variable.
Discount Rate: The interest rate charged by the Federal Reserve on loans to
banks and other depository institutions.
Federal Funds Rate: The interest rate charged by one bank to another on
overnight loans.
Futures Contract: An agreement to deliver a specific amount of a commodity or
financial instrument at a set price at a stipulated time in the future.
Leverage: The use of borrowed assets to enhance return on equity. The
expectation is that the interest rate charged will be lower than the return on
the investment. While leverage can increase profits, it can also magnify losses.
Liquidity: The ease with which a financial instrument (or mutual fund) can be
bought or sold (converted into cash) in the financial markets.
Price/Earnings Ratio: The price of a share of stock divided by the earnings per
share for a 12-month period.
Put Option: An agreement to sell something, such as shares of stock, by a
certain time for a specified price. An option need not be exercised.
Spread: The difference between two values; most often used to describe the
difference between prices bid and asked for a security.
Yankee Bond: A bond denominated in U.S. dollars but sold by a foreign company
or government in the U.S. market.
<PAGE>
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
(800) 225-1852http:\\www.prudential.com
Directors
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
Distributor
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 Massachusetts Avenue, N.W.
Washington, DC 20036
The views expressed in this report and information about the Fund's portfolio
holdings are for the period covered by this report and are subject to change
thereafter.
The accompanying financial statements as of March 31, 1996 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.
<PAGE>
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Prudential Mutual Funds BULK RATE
One Seaport Plaza U.S. POSTAGE
New York, NY 10292 PAID
(800) 225-1852 Permit 6807
New York, NY
37936G303
37936G204 MF150E2
37936G402 Cat# 444357V
