(ICON)
Global
Utility
Fund, Inc.
ANNUAL
REPORT
Sept. 30, 1996
(LOGO)
<PAGE>
Global Utility Fund, Inc.
Performance At A Glance.
The Global Utility Fund's Class A shares gained 8.7% for the
year
ended September 30, 1996, as compared to 2.4% for
the benchmark Financial Times World Utilities Index. The
Fund's international representation and diversification in
the natural gas area contributed to the gain. As shown
below,
the Fund's longer term record compares favorably with most
other
indices in the utility and related areas.
<TABLE>
Cumulative Total Returns1 As
of 9/30/96
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 8.7% 69.7% 111.2%
Class B 7.9 63.3 75.4
Class C 7.9 N/A 20.7
FT World Utilities* 2.4 53.5 53.5
Lipper Utility Avg** 8.7 59.9 82.4
<CAPTION>
Average Annual Total Returns1 As of
9/30/96
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 3.2% 10.0% 10.9%
Class B 2.9 10.2 10.6
Class C 6.9 N/A 9.1
</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 Utilities Index is currently
comprised of
approximately 174 world utility stocks representing
approximately 25
countries.
** These are the average returns of 90 funds for one year;
21 funds
for five years; and 16 funds since the inception of the
Class A
shares, as determined by Lipper Analytical Services.
How Investments Compared.
(As of 9/30/96)
(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 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.
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.
<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 primarily 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.
Natural Gas
Stocks Rise.
The Fund made significant investments
in natural gas stocks when gas prices
were under pressure 18 months ago. More
recently, natural gas prices and related
common stock prices have risen, as our
projections for tightening supply/demand
conditions were realized. We have used this
favorable period to take profits for the
Fund's shareholders.
Strategy Session.
In our March letter, we highlighted the Fund's significant
investment
in the natural gas area. The Fund's positions were largely
established
during depressed 1995 gas price levels in anticipation of
the subsequent
tightening of supply and demand. The average price of
natural gas
has expanded from about $1.50 per Mcf (thousand cubic feet)
in 1995
to more than $2.50 per Mcf in June 1996. Since both stock
prices and
the price of gas have advanced, we have taken profits and
reduced
the Fund's natural gas holdings to 12% of equity assets.
Telecommunications represents the largest segment of the
equity
portfolio, 48% of total equity assets, with a greater
representation
in the faster-growing foreign markets. The telecommunication
industry
is undergoing significant change as a result of the recently
signed
telecom reform bill. Regional bell companies are making
plans to
enter the long- distance business, and telecom-munication
companies
are exploring new services related to the growing Internet
and
wireless markets.
The electric utility sector represents 34% of equity assets.
The
domestic electric utility industry continues to reflect
important
changes in the regulatory environment, which has resulted in
increased
price competition. A number of domestic electric utility
companies
are seeking foreign or domestic merger partners in order to
diversify
and/or contain their cost structure.
Portfolio Breakdown.
Expressed as a percentage of
equity assets as of 9/30/96.
(PIE CHART)
<PAGE>
What Went Well.
Natural Gas
Our natural gas theme continued to benefit the Fund during
the past
six months with significant advances by domestic companies,
such as
Sonat, and some of the Fund's foreign gas transmission
companies, such as Australian Gas Light and TransCanada
Pipeline.
International Diversification
International holdings, which now comprise more than one-
half
of the Fund's equity assets, continued to contribute to
performance
with advances in the Italian markets (STET, Telecom Italia,
and
Telecom Italia Mobile), Philippine Long Distance, and
Telefonica
Espana.
Five Largest Holdings.
3.0% AT&T Corp.
Telecommunications
2.9% SBC Communications
Telecommunications
2.8% Telefonica Espana ADR
Telecommunications
2.5% Westcoast Energy
Natural Gas
2.4% Veba AG
Electric Utilities
Expressed as a percentage of total net
assets as of 9/30/96.
And Not So Well.
The Fund's domestic long-distance holdings (MCI, GTE, and
AT&T)
have been cutting prices on services, resulting in negative
crosscurrents for earnings and equity prices.
Looking Ahead.
Price competition is driving management of electric utility
companies
to control costs and diversify. For example, Rhode Island
became
the first state to allow all new industrial and commercial
customers,
all existing manufacturers, and all state users with loads
exceeding
1.5 megawatts to select the cheapest available power sources
by
mid-1997.
Likewise, the telecommunication industry remains dynamic
with new
technologies requiring dramatic changes in the networking
and wireless
industries. AT&T Corp. has recently completed a spin-off of
its
leading-edge subsidiary, Lucent Technologies, and will later
distribute to shareholders its NCR division. A new era
appears
certain, creating marketing opportunities for innovative new
companies and manufacturers of sophisticated new telecom
equipment.
Within this environment, the trends toward domestic and
foreign
mergers continue. We anticipate further industry
consolidation
in both the domestic electric utility industry as well as
the
telecom-munication sector.
In the fourth quarter of this year, we expect a major
initial
public offering of Deutsche Telekom, which will be the
largest
ever European IPO.
The growth of international markets continues to offer
significant
investment opportu-nities in the electric utility and
telecommunication areas.
1
<PAGE>
Portfolio of Investments as of GLOBAL UTILITY FUND, INC.
September 30, 1996
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
US$
Value
Shares Description (Note
1)
<C> <S> <C>
- ------------------------------------------------------------
Electric Utilities--25.2%
528,000 China Light & Power Co., Ltd. (Hong
Kong) $
2,458,005
175,000 CMS Energy Corp.
5,271,875
200,000 DPL, Inc.
4,675,000
187,500 DQE, Inc.
5,226,562
100,000 DTE Energy Co.
2,800,000
100,000 Empresa Nacional de Electricidad
S.A.
(ADR) (Spain)
5,937,500
190,000 Espoon Sahko
(ADS) (Finland)
4,075,558
150,000 Huaneng Power International, Inc.*
(ADR) (China)
2,493,750
600,000 Iberdrola S.A. (Spain)
5,816,851
75,000 Korea Electric Power Corp.
(ADR) (Korea)
1,415,625
220,000 Pacific Gas & Electric Co.
4,785,000
100,000 Pinnacle West Capital Corp.
2,962,500
140,000 Public Service Co. of Colorado
4,970,000
80,000 RWE A.G. (Germany)
3,020,055
1,300,000 ScottishPower PLC (United Kingdom)
6,207,409
280,000 Shandong Huaneng Power
Co. Ltd. (ADR) (China)
2,520,000
100,000 Texas Utilities Co.
3,962,500
140,000 VEBA A.G. (Germany)
7,331,236
---------
- ----
75,929,426
- ------------------------------------------------------------
Gas Utilities--8.9%
618,705 Australian Gas Light Co. (Australia)
3,331,375
100,000 Burlington Resources, Inc.
4,437,500
120,000 Equitable Resources, Inc.
3,420,000
60,000 Sonat, Inc.
2,655,000
330,000 TransCanada Pipelines Ltd. (Canada)
5,293,664
470,000 Westcoast Energy, Inc. (Canada) $
7,556,714
---------
- ----
26,694,253
Telecommunications--33.2%
106,300 AirTouch Communications, Inc.*
2,936,538
175,000 AT&T Corp.
9,143,750
150,000 BCE, Inc. (Canada)
6,412,500
153,200 BC Telecom, Inc. (Canada)
3,064,900
100,000 Comsat Corp.
2,262,500
43,000 Empresas Telex-Chile S.A.(ADR)
(Chile)
258,000
50,000 GTE Corp.
1,925,000
210,000 MCI Communications Corp.
5,368,125
369 Nippon Telegraph & Telephone Corp.
(Japan)
2,716,036
125,000 NYNEX Corp.
5,437,500
100,000 Hellenic Telecom, Inc.* (Greece)
1,682,573
106,300 Pacific Telesis Group
3,574,338
87,600 Portugal Telecom S.A.
(ADS) (Portugal)
2,255,700
120,000 Royal PTT Nederland NV (Netherlands)
4,129,228
180,000 SBC Communications Inc.
8,662,500
70,000 Sprint Corp.
2,721,250
2,300,000 STET-Societa Finanziaria Telefonica
P.A. (Italy)
6,217,358
165,500 Tele Danmark (ADR) (Denmark)
3,909,937
20,000 Telecom Corp. of New Zealand Ltd.
(ADR) (New Zealand)
1,515,000
900,000 Telecom Italia S.P.A. (Italy)
1,998,858
900,000 Telecom Italia Mobile (Italy)
1,995,906
40,000 Telefonica de Argentina S.A.
(ADR) (Argentina)
995,000
150,000 Telefonica de Espana S.A.
(ADR) (Spain)
8,343,750
- ------------------------------------------------------------
- --------------------
2 See Notes to
Financial Statements.
<PAGE>
Portfolio of Investments as of GLOBAL UTILITY FUND,
INC.
September 30, 1996
- ------------------------------------------------------------
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
US$ Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------
Telecommunications (cont'd)
120,000 Telefonos de Mexico S.A. (ADR-Class
L Shares) (Mexico) $
3,855,000
200,000 U.S. West Communications Group
5,950,000
75,000 Vodafone Group PLC
(ADR) (United Kingdom)
2,559,375
---------
- ----
99,890,622
- ------------------------------------------------------------
Water Utilities & Other--4.9%
30,968 Alcatel Alsthom (France)
2,612,258
167,800 American Water Works Co., Inc.
3,628,675
400,000 Anglian Water PLC (United Kingdom)
3,360,425
25,600 Lucent Technologies, Inc.
1,174,400
6,300 Technip S.A. (France)
575,844
200,000 U.S. West Media Group*
3,375,000
---------
- ----
14,726,602
Total common stocks
(cost $176,304,563)
217,240,903
---------
- ----
--------------------------------------------------------
- ----
PREFERRED STOCKS--1.8%
Philippine Long Distance Telephone
Co., (The Philippines)
43,700 $3.50 Conv. Ser. III (GDS)
2,540,063
80,000 5.75% Conv. Ser. II (GDS)
2,920,000
---------
- ----
Total preferred stocks (cost
$4,185,000)
5,460,063
---------
- ----
- ------------------------------------------------------------
<CAPTION>
Moody's Principal
Rating Amount
(Unaudited) (000)
<S> <C> <C> <C>
DEBT OBLIGATIONS--23.0%
CORPORATE BONDS--21.3%
- ------------------------------------------------------------
Electrical Utilities--12.8%
A1 $ 1,500 Alabama Power Co.,
6.375%, 8/1/99
1,491,450
Baa2 1,000D CSW Investments,
7.45%, 8/1/06
(United Kingdom)
994,400
Aa2 1,750 Central Illinois Light
Co.,
8.20%, 1/15/22
1,798,755
</TABLE>
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
US$ Value
(Unaudited) (000) Description
(Note 1)
<C> <C> <S> <C>
Baa1 $ 1,000D Chilgener S.A.,
6.50%, 1/15/06 (Chile) $
933,510
Aaa 2,000D Chubu Electric Power Co.
Inc., (Japan)
6.25%, 8/5/03
(Eurobonds)
1,935,000
A3 1,500 Cincinnati Gas & Elec.
Co.,
5.80%, 2/15/99
1,475,445
A1 1,000 Consolidated Edison Co., Inc.,
7.625%, 3/1/04
1,024,780
Aa2 2,000 Duke Power Co.,
5.875%, 6/1/01
1,903,360
Ba3 1,000 El Paso Electric Co.,
8.25%, 2/1/03, Ser. C
990,000
Baa1 1,000D Empresa Electrica
Pehuenche S.A.,
7.30%, 5/1/03 (Chile)
996,920
Baa1 1,000D Empresa Electrica del
Norte Grande S.A.,
7.75%, 3/15/06 (Chile)
994,840
Aa3 500 Florida Power & Light
Co.,
6.00%, 7/1/03
472,850
A2 1,000 GTE Florida, Inc.,
7.25%, 10/15/25
929,210
A2 1,000D Hydro-Quebec
7.50%, 4/1/16 (Canada)
971,350
A2 1,000 Iowa-Illinois Gas & Elec. Co.,
6.95%, 10/15/25
893,650
Baa2 1,000 Louisiana Power & Light
Co.,
6.00%, 3/1/00
967,570
A1 1,500 Monongahela Power Co.,
7.375%, 7/1/02
1,514,925
A1 1,000 Northern States Power
Co.,
5.75%, 12/1/00
957,410
A2 1,000 Pacificorp.,
8.75%, 2/12/98
1,032,850
Baa1 2,000 Philadelphia Electric
Co.,
7.50%, 1/15/99
2,036,580
A1 2,000 Potomac Edison Co.,
8.875%, 8/1/21
2,123,220
Aa2 2,000 Southwestern Elec. Power Co.,
5.25%, 4/1/00
1,906,100
Aa2 1,000 Southwestern Public Serv. Co.,
7.25%, 7/15/04
999,420
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
3
<PAGE>
Portfolio of Investments as of GLOBAL UTILITY FUND,
INC.
September 30, 1996
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount US$ Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
- ------------------------------------------------------------
Electrical Utilities (cont'd)
Baa3 $ 1,000 System Energy Resources, Inc.,
7.71%, 8/1/01 $
1,008,090
Aa2 1,000 Tampa Electric Co.,
7.75%, 11/1/22
966,520
Baa2 2,000 Texas Utilities Electric
Co.,
9.27%, 1/14/00
2,148,360
B1 1,000 Texas-New Mexico Power
Co.,
Deb.
10.75%, 9/15/03
1,052,500
Aa3 2,000D Tokyo Electric Power
Co.,
6.125%, 7/29/03
(Eurobonds) (Japan)
1,935,000
A2 2,000 Virginia Electric & Power Co.,
6.625%, 4/1/03
1,950,420
------
- -------
38,404,485
- ------------------------------------------------------------
Gas Distribution & Other Industries--3.5%
A2 2,000D Alcan Aluminum Ltd.,
9.625%, 7/15/19
(Canada)
2,229,280
Baa2 1,000 Enron Corp.,
7.00%, 8/15/23
885,420
B1 1,000D Metrogas S.A.,
10.875%, 5/15/01
Ser. B (Argentina)
1,020,000
A2 1,600 Michigan Con. Gas Co.,
8.25%, 5/1/14
1,688,416
Northern Illinois Gas
Co.,
Aa1 500 5.875%, 5/1/00
484,435
Aa1 1,000 7.26%, 10/15/25
920,840
A2 2,000 Southern California Gas
Co.,
6.875%, 11/1/25
1,767,000
B1 1,500D Transportadora de Gas
del Sur S.A.
(Argentina)
7.75%, 12/23/98
1,479,375
------
- -------
10,474,766
- ------------------------------------------------------------
Telecommunications, Media & Related Industries--5.0%
Ba2 1,500 360 Communications Co.,
7.50%, 3/1/06
1,458,105
Aaa $ 2,000D BellSouth
Telecommunications,
6.125%, 9/23/08
(Eurobonds) $
1,845,000
Aaa 2,000D British Telecom Finance BV,
9.375%, 11/16/98
(Eurobonds) (United
Kingdom)
2,117,500
B1 1,000 Comcast Corp.,
Sr. Sub. Notes,
9.125%, 10/15/06
995,000
NR 1,000D Comtel Brasileira Ltda.,
10.75%, 9/26/04
(Brazil)
1,023,750
A1 1,550 Pacific Bell, Inc.,
8.70%, 6/15/01
1,665,258
Ba2 1,000D Philippine Long Distance
Telephone Co.,
9.25%, 6/30/06
(The Philippines)
1,021,800
Aa3 1,000 Southwestern Bell
Telephone Co.,
5.875%, 6/1/03
932,880
Ba1 1,000 TCI Communications Inc.,
Sr. Deb.
9.25%, 1/15/23
973,210
B1 1,500D Telecom Argentina S.A.,
8.375%, 10/18/00,
(Argentina)
1,462,500
Aa1 NZD1,000 Telecom Corp. New
Zealand Finance,
7.50%, 7/14/03
(Eurobonds) (New
Zealand)
668,753
B1 1,000D Telefonica de Argentina
S.A.,
11.875%, 11/1/04
(Argentina)
1,065,000
------
- -------
15,228,756
------
- -------
Total corporate bonds
(cost $64,901,125)
64,108,007
------
- -------
- ------------------------------------------------------------
- --------------------
4 See Notes to
Financial Statements.
<PAGE>
Portfolio of Investments as of GLOBAL UTILITY FUND,
INC.
September 30, 1996
- ------------------------------------------------------------
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount US$ Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
- -----------------------------------------------------------
CONVERTIBLE BONDS--0.7%
Baa2 $ 500D Compania de Telefonos de
Chile S.A.,
4.50%, 1/15/03 (Chile) $
610,625
Caa 1,500D International Cabletel,
Inc.,
7.25%, 4/15/05
(Eurobonds)
1,635,000
------
- -------
Total convertible bonds
(cost $2,000,000)
2,245,625
------
- -------
- ------------------------------------------------------------
U.S. GOVERNMENT SECURITIES--1.0%
United States Treasury
Notes,
2,000 6.125%, 7/31/00
1,981,560
1,000 7.50%, 11/15/01
1,043,280
------
- -------
Total U.S. Government
Securities
(cost $3,133,750)
3,024,840
------
- -------
Total debt obligations
(cost $70,034,875)
69,378,472
------
- -------
Total long-term
investments
(cost $250,524,438)
292,079,438
------
- -------
SHORT-TERM INVESTMENTS--1.8%
CORPORATE BOND--0.5%
$ 1,500D Ericsson (L.M.)
Telephone Co.
7.875%, 10/21/96
(Eurobonds) (Sweden) $
1,501,875
- ------------------------------------------------------------
REPURCHASE AGREEMENT--1.3%
3,716 Lanston (Aubrey) & Co.
Inc., 5.70%, dated
9/30/96, due 10/1/96
in the amount of
$3,716,588 (cost
$3,716,000; value of
collateral including
accrued
interest--$3,808,521)
3,716,000
------
- -------
Total short-term
investments
(cost $5,320,115)
5,217,875
------
- -------
- ------------------------------------------------------------
Total Investments--98.8%
(cost $255,844,553; Note
4)
297,297,313
Other assets in excess
of liabilities--1.2%
3,720,830
------
- -------
Net Assets--100% $
301,018,143
------
- -------
------
- -------
</TABLE>
- ---------------
*--Non-income producing security.
D--US$ Denominated Bonds.
ADR--American Depository Receipts.
ADS--American Depository Shares.
GDS--Global Depository Shares.
The Fund's current Statement of Additional Information
contains a description
of Moody's ratings.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
5
<PAGE>
Statement of Assets and Liabilities GLOBAL
UTILITY FUND, INC.
- ------------------------------------------------------------
- -------------------
<TABLE>
<S>
<C>
Assets
September 30, 1996
Investments, at value (cost
$255,844,553)...............................................
................... $297,297,313
Foreign currency, at value (cost
$136,056)...................................................
.............. 136,058
Cash........................................................
...............................................
39,024
Receivable for investments
sold........................................................
.................... 3,260,923
Dividend and interest
receivable..................................................
......................... 2,844,116
Receivable for Fund shares
sold........................................................
.................... 83,375
Deferred expenses and other
assets......................................................
................... 9,080
- --------------
Total
assets......................................................
...................................... 303,669,889
- --------------
Liabilities
Payable for Fund shares
reacquired..................................................
....................... 1,161,760
Payable for investments
purchased...................................................
....................... 541,800
Accrued
expenses....................................................
....................................... 504,560
Distribution fee
payable.....................................................
.............................. 178,156
Management fee
payable.....................................................
................................ 166,779
Withholding taxes
payable.....................................................
............................. 98,691
- --------------
Total
liabilities.................................................
...................................... 2,651,746
- --------------
Net
Assets......................................................
...........................................
$301,018,143
- --------------
- --------------
Net assets were comprised of:
Common stock, at
par.........................................................
........................... $ 20,028
Paid-in capital in excess of
par.........................................................
............... 243,967,457
- --------------
243,987,485
Undistributed net investment
income......................................................
............... 347,667
Accumulated net realized gains on investments and foreign
currency transactions.........................
15,225,749
Net unrealized appreciation on investments and foreign
currencies.......................................
41,457,242
- --------------
Net assets, September 30,
1996........................................................
..................... $301,018,143
- --------------
- --------------
Class A:
Net asset value and redemption price per share
($112,800,432 / 7,504,953 shares of common stock
issued and outstanding).............................
$15.03
Maximum sales charge (5.00% of offering
price)......................................................
.... 0.79
- --------------
Maximum offering price to
public......................................................
.................. $15.82
- --------------
- --------------
Class B:
Net asset value, offering price and redemption price per
share
($187,556,665 / 12,478,843 shares of common stock
issued and outstanding)............................
$15.03
- --------------
- --------------
Class C:
Net asset value, offering price and redemption price per
share
($661,046 / 43,982 shares of common stock issued and
outstanding)....................................
$15.03
- --------------
- --------------
</TABLE>
- ------------------------------------------------------------
- --------------------
6 See Notes to
Financial Statements.
<PAGE>
GLOBAL UTILITY FUND, INC.
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income September 30,
1996
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $679,951)................. $ 9,232,590
Interest and discount earned.......... 6,222,613
----------------
- --
Total income....................... 15,455,203
----------------
- --
Expenses
Management fee........................ 2,195,690
Distribution fee--Class A............. 300,305
Distribution fee--Class B............. 2,103,048
Distribution fee--Class C............. 6,078
Transfer agent's fees and expenses.... 537,000
Custodian's fees and expenses......... 284,000
Reports to shareholders............... 270,000
Audit fee and expenses................ 43,000
Directors' fees and expenses.......... 43,000
Registration fees..................... 35,000
Legal fees and expenses............... 32,000
Insurance............................. 7,000
Miscellaneous......................... 12,171
----------------
- --
Total expenses..................... 5,868,292
----------------
- --
Net investment income.................... 9,586,911
----------------
- --
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions
Net realized gain on:
Investment transactions............... 17,775,022
Foreign currency transactions......... 351,243
----------------
- --
18,126,265
----------------
- --
Net change in unrealized
appreciation/depreciation on:
Investments........................... (1,999,856)
Foreign currencies.................... 822,976
----------------
- --
(1,176,880)
----------------
- --
Net gain on investments and foreign
currencies............................ 16,949,385
----------------
- --
Net Increase in Net Assets
Resulting from Operations................ $ 26,536,296
----------------
- --
----------------
- --
</TABLE>
GLOBAL UTILITY FUND, INC.
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended September
30,
in Net Assets 1996 1995
<S> <C> <C>
Operations
Net investment income.......... $ 9,586,911 $
11,147,737
Net realized gain on investment
and foreign currency
transactions................ 18,126,265
7,315,262
Net change in unrealized
appreciation/depreciation on
investments and foreign
currencies.................. (1,176,880)
25,829,844
------------ --------
- ----
Net increase in net assets
resulting from operations... 26,536,296
44,292,843
------------ --------
- ----
Net equalization debits........ --
(312,052)
------------ --------
- ----
Dividends and distributions (Note
1)
Dividends from net investment
income
Class A..................... (4,066,553)
(4,310,107)
Class B..................... (5,504,314)
(6,511,221)
Class C..................... (16,044)
(11,932)
------------ --------
- ----
(9,586,911)
(10,833,260)
------------ --------
- ----
Distributions in excess of net
investment income
Class A..................... (8,056)
- --
Class B..................... (10,902)
- --
Class C..................... (32)
- --
------------ --------
- ----
(18,990)
- --
------------ --------
- ----
Distributions from net realized
gains
Class A..................... (3,456,002)
(2,642,246)
Class B..................... (6,126,168)
(5,681,058)
Class C..................... (16,333)
(6,975)
------------ --------
- ----
(9,598,503)
(8,330,279)
------------ --------
- ----
Fund share transactions (net of
share conversions ) (Note 5)
Net proceeds form shares
sold........................ 28,413,113
25,935,458
Net asset value of shares
issued in reinvestment of
dividends and
distributions............... 15,648,910
15,601,479
Cost of shares reacquired...... (102,550,920)
(113,332,033)
------------ --------
- ----
Net decrease in net assets from
Fund share transactions........ (58,488,897)
(71,795,096)
------------ --------
- ----
Total decrease.................... (51,157,005)
(46,977,844)
Net Assets
Beginning of year................. 352,175,148
399,152,992
------------ --------
- ----
End of year....................... $301,018,143
$352,175,148
------------ --------
- ----
------------ --------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
7
<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,
LLP (``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
- ------------------------------------------------------------
- --------------------
8
<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 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 fiscal year ended September 30,
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 undistributed net investment
income and decrease
accumulated net realized gains on investments by $78,798
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 LLC
(``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
- ------------------------------------------------------------
- --------------------
9
<PAGE>
Notes to Financial Statements 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
fiscal year ended September 30, 1996.
PMFD and PSI has advised the Fund that it has received
approximately $68,100 in
front-end sales charges resulting from sales of Class A
shares during the fiscal
year ended September 30, 1996. From these fees, PMFD and PSI
paid such sales
charges to affiliated broker-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, 1996, it
received approximately $728,700 and $700 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, 1996, the Fund incurred fees of approximately
$458,900 for the
services of PMFS. As of September 30, 1996, approximately
$37,000 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 fiscal year ended September 30, 1996 were
$41,795,046 and $113,701,639,
respectively.
The United States federal income tax basis of the Fund's
investments at
September 30, 1996 was $255,871,260 and accordingly, net
unrealized appreciation
of investments, for United States federal income tax
purposes was $41,426,053
(gross unrealized appreciation--$52,314,897; gross
unrealized
depreciation--$10,888,844).
- ------------------------------------------------------------
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
20,027,778 shares of
common stock issued and outstanding at September 30, 1996,
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, 1996:
Shares sold........................ 1,266,739 $
18,863,411
Shares issued in reinvestment of
dividends and distributions...... 339,649
5,017,345
Shares reacquired.................. (2,883,880)
(43,010,724)
---------- --------
- ----
Net decrease in shares outstanding
before conversion................ (1,277,492)
(19,129,968)
Shares issued upon conversion from
Class B.......................... 327,144
4,874,396
---------- --------
- ----
Net decrease in shares
outstanding...................... (950,348)
$(14,255,572)
---------- --------
- ----
---------- --------
- ----
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)
---------- --------
- ----
---------- --------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
10
<PAGE>
Notes to Financial Statements GLOBAL
UTILITY FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class B Shares
Amount
- ----------------------------------- ---------- --------
- ----
Year ended September 30, 1996:
<S> <C> <C>
Shares sold........................ 623,845 $
9,314,099
Shares issued in reinvestment of
dividends and distributions...... 718,862
10,600,234
Shares reacquired.................. (3,977,624)
(59,359,780)
---------- --------
- ----
Net decrease in shares outstanding
before conversion................ (2,634,917)
(39,445,447)
Shares reacquired upon conversion
into Class A..................... (327,061)
(4,874,396)
---------- --------
- ----
Net decrease in shares
outstanding...................... (2,961,978)
$(44,319,843)
---------- --------
- ----
---------- --------
- ----
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 Shares
Amount
- ----------------------------------- ---------- --------
- ----
<S> <C> <C>
Year ended September 30, 1996:
Shares sold........................ 15,751 $
235,603
Shares issued in reinvestment of
dividends and distributions...... 2,124
31,331
Shares reacquired.................. (12,124)
(180,416)
---------- --------
- ----
Net increase in shares
outstanding...................... 5,751 $
86,518
---------- --------
- ----
---------- --------
- ----
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>
- ------------------------------------------------------------
- --------------------
11
<PAGE>
Financial Highlights GLOBAL
UTILITY FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class A
-------------------
- -------------------------------------------
Year Ended September 30,
-------------------
- -------------------------------------------
1996
1995 1994 1993 1992
---------- ----
- ---- -------- -------- --------
<S> <C> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year..... $ 14.72 $
13.66 $ 14.63 $ 12.96 $ 12.62
---------- ----
- ---- -------- -------- --------
Income from investment operations
Net investment income.................. .51
.49 .47 .44 .53
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions........................ .73
1.35 (.82) 2.46 1.01
---------- ----
- ---- -------- -------- --------
Total from investment operations.... 1.24
1.84 (.35) 2.90 1.54
---------- ----
- ---- -------- -------- --------
Less distributions
Dividends from net investment income... (.51)
(.48) (.42) (.47) (.53)
Distributions in excess of net
investment income................... --
- -- -- (.01) --
Distributions from net realized
gains............................... (.42)
(.30) (.20) (.75) (.67)
---------- ----
- ---- -------- -------- --------
Total distributions................. (.93)
(.78) (.62) (1.23) (1.20)
---------- ----
- ---- -------- -------- --------
Net asset value, end of year........... $ 15.03 $
14.72 $ 13.66 $ 14.63 $ 12.96
---------- ----
- ---- -------- -------- --------
---------- ----
- ---- -------- -------- --------
TOTAL RETURN(a)........................ 8.65%
14.23% (2.49)% 23.87% 13.15%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000).......... $112,800
$124,423 $126,254 $138,714 $114,654
Average net assets (000)............... $120,122
$122,837 $139,166 $119,001 $120,708
Ratios to average net assets:
Expenses, including distribution
fees............................. 1.30%
1.31% 1.25% 1.30% 1.39%
Expenses, excluding distribution
fees............................. 1.05%
1.06% 1.02% 1.10% 1.19%
Net investment income............... 3.38%
3.58% 3.39% 3.37% 4.16%
For Class A, B and C shares:
Portfolio turnover rate............. 13%
15% 19% 14% 57%
Average commission rate paid per
share............................ $ 0.0542
- -- -- -- --
</TABLE>
- ---------------
(a) 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.
- ------------------------------------------------------------
- --------------------
12 See Notes to
Financial Statements.
<PAGE>
Financial Highlights GLOBAL
UTILITY FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class B Class C
-----------------
- --------------------------------------------- ----------
Year Ended
September
Year Ended September 30, 30,
-----------------
- --------------------------------------------- ----------
1996
1995 1994 1993 1992 1996
<CAPTION>
---------- -
- ------- -------- -------- ------- ----------
<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.................. .40
.39 .37 .34 .43 .40
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions........................ .74
1.34 (.82) 2.45 1.01 .74
---------- -
- ------- -------- -------- ------- ----------
Total from investment operations.... 1.14
1.73 (.45) 2.79 1.44 1.14
---------- -
- ------- -------- -------- ------- ----------
Less distributions
Dividends from net investment income... (.40)
(.38) (.32) (.37) (.43) (.40)
Distributions in excess of net
investment income................... --
- -- -- (.01) -- --
Distributions from net realized
gains............................... (.42)
(.30) (.20) (.75) (.67) (.42)
---------- -
- ------- -------- -------- ------- ----------
Total distributions................. (.82)
(.68) (.52) (1.13) (1.10) (.82)
---------- -
- ------- -------- -------- ------- ----------
Net asset value, end of period......... $ 15.03 $
14.71 $ 13.66 $ 14.63 $ 12.97 $ 15.03
---------- -
- ------- -------- -------- ------- ----------
---------- -
- ------- -------- -------- ------- ----------
TOTAL RETURN(b)........................ 7.90%
13.32% (3.22)% 22.87% 12.23% 7.90%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........ $187,557
$227,189 $272,673 $185,259 $60,432 $ 661
Average net assets (000)............... $210,305
$237,983 $270,466 $ 90,254 $45,661 $ 608
Ratios to average net assets:
Expenses, including distribution
fees............................. 2.05%
2.06% 2.02% 2.10% 2.19% 2.05%
Expenses, excluding distribution
fees............................. 1.05%
1.06% 1.02% 1.10% 1.19% 1.05%
Net investment income............... 2.62%
2.83% 2.68% 2.59% 3.43% 2.66%
<CAPTION>
August 1,
1994(a)
through
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.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
13
<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,
1996, 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, 1996 by correspondence with the custodian and
brokers. An audit
also includes assessing the accounting principles used and
significant estimates
made by management, as well as evaluating the overall
financial statement
presentation. We believe that our audits provide a
reasonable basis for our
opinion.
In our opinion, such financial statements and financial
highlights present
fairly, in all material respects, the financial position of
Global Utility Fund,
Inc. as of September 30, 1996, 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 14, 1996
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, 1996) 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 $0.93 per share, comprised of $0.51 per share
ordinary income and
short-term capital gains which are taxable as ordinary
income and $0.42 per
share long-term capital gains which are taxable as such. The
Fund paid
distributions for Class B and Class C shares totaling $0.82
per share, comprised
of $0.40 per share ordinary income and short-term capital
gains which are
taxable as ordinary income and $0.42 per share long-term
capital gains which are
taxable as such. Further, we wish to advise you that 33% of
the ordinary income
dividends paid in 1996 qualified for the corporate dividend
received deduction
available to corporate taxpayers.
In January 1997, 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 1996.
- ------------------------------------------------------------
- --------------------
14
<PAGE>
[THIS PAGE INTENTIONALLY LEFT
BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT
BLANK]
<PAGE>
Comparing A $10,000 Investment.
- ---------------------------------------
The Global Utility Fund, Inc. vs. Morgan Stanley
Capital International World Index.
- --The Global Utility Fund, Inc.
//Morgan Stanley Capital International World Index
Average Annual
Total Returns
- -----------------------
With Sales Load
10.9% Since Inception Class A
10.0% for 5 Years (GRAPH)
3.2% for 1 Year
Without Sales Load
11.7% Since Inception
11.2% for 5 Years
8.7% for 1 Year
Average Annual
Total Returns
- ---------------------
With Sales Load
10.6% Since Inception Class B
10.2% for 5 Years (GRAPH)
2.9% for 1 Year
Without Sales Load
10.7% Since Inception
10.3% for 5 Years
7.9% for 1 Year
Average Annual
Total Returns
- --------------------
With Sales Load
9.1% Since Inception Class C
6.9% for 1 Year (GRAPH)
Without Sales Load
9.1% Since Inception
7.9% for 1 Year
Past performance is not indicative of future results.
Investment
return and principal value will fluctuate so an investor's
shares,
when redeemed, will be worth more or less than their
original cost.
The charts on the right are designed to give you an idea how
much
the Fund's returns can fluctuate from year to year by
measuring the
best and worst calendar years in terms of total annual
return
since inception of each share class.
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 (the Index) by
portraying
the initial account values at the commencement of operations
of
each class, and subsequent account values at the end of each
fiscal year (September 30), as measured on a quarterly
basis,
beginning in 1990 for Class A shares, in 1991 for Class B
shares
and in 1994 for Class C shares. For purposes of the graphs,
and
unless otherwise indicated, in the accompanying tables it
has been assumed (a) that the maximum applicable front-end
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 and Class C shares, assuming full redemption on
September
30, 1996; (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, beginning approximately
seven
years after purchase. This conversion feature is not
reflected
in the graph.
The 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
market capitalization of these companies represents
approximately
60% of the aggregate market value of the stock exchanges in
the
countries comprising the Index. The Index is unmanaged 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 in the Index may differ
substantially from the
securities in the Fund. The Index is not the only one that
may be
used to characterize performance of stock funds and other
indexes
may portray different comparative performance.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http:\\www.prudential.com
(LOGO)
Directors
Eugene C. Dorsey
Douglas H. McCorkindale
Thomas T. Mooney
Richard A. Redeker
Officers
Edward D. Beach, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Manager
Prudential Mutual Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
Wellington Management Company, LLP
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 Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave, 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.
This report is not authorized for distribution to
prospective
investors unless preceded or accompanied by a current
prospectus.
37936G303 MF150E
37936G204 Cat. #444356X
37936G402
