(ICON)
Global
Utility
Fund, Inc.
SEMI
ANNUAL
REPORT
March 31, 1998
(LOGO)
<PAGE>
Global Utility Fund, Inc.
Performance At A Glance.
The Global Utility Fund produced attractive,
double-digit returns for the six-
month period ended March 31, 1998. The equity
portion of the portfolio
experienced strong growth while the Fund's
holdings in the normally defensive,
higher yielding bond sector caused us to finish
behind the all-equity FT/S&P
Actuaries World Utilities Index and the average
utility fund as tracked by
Lipper Analytical Services. However, as shown
below, the Fund's longer term
record compares favorably with relevant indexes.
Cumulative Total Returns1
As of 3/31/98
<TABLE>
<CAPTION>
Since
6 Mos. 1 Year
5 Years Inception2
<S> <C> <C>
<C> <C>
Class A 19.92% 37.55%
102.89% 221.41%
Class B 19.48 36.53
95.33 164.04
Class C 19.48 36.53
N/A 81.58
Class Z 20.05 37.85
N/A 43.74
FT/S&P Actuaries
World Utilities Index3 26.78 47.72
98.90 145.17
Lipper Utility Avg4 21.67 39.43
87.44 ***
</TABLE>
Average Annual Total Returns1
As of 3/31/98
<TABLE>
<CAPTION>
Since
1 Year
5 Years Inception2
<S> <C>
<C> <C>
Class A 30.68%
14.03% 14.51%
Class B 31.53
14.21 14.80
Class C 35.53
N/A 17.69
Class Z 37.85
N/A 32.57
</TABLE>
Past performance is not indicative of future
results. Principal and investment
return will fluctuate so that an investor's
shares, when redeemed, may be
worth more or less than their original cost.
1Source: Prudential Investments 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. Class Z shares
are not subject to a sales charge or a
distribution fee.
2Inception dates: 1/2/90 Class A; 3/18/91 Class B;
8/1/94 Class C; 12/16/96
Class Z. The Fund operated as a closed-end fund
from its inception until
February 1, 1991.
3The Financial Times/S&P Actuaries World Utilities
Index is currently comprised
of approximately 172 world utility stocks
representing approximately 24
countries.
4Lipper returns are for all funds in each share
class for the 6-month, 1-, and
5-year periods.
***Lipper Since Inception returns are: Class A,
167.99%; Class B, 163.84%;
Class C, 84.93%; and Class Z, 40.58% for all
funds in each share class.
How Investments Compared.
(As of 3/31/98)
(GRAPH)
U.S. General General U.S.
Growth Bond Muni Debt Taxable
Funds Funds Funds Money Funds
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 returns 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 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
(PHOTO)
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 can be 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.
Strategy Session.
We continue to hold a large portion of Global
Utility Fund's assets in
international equities where we believe the growth
prospects are dynamic. For
example, the foreign telecommunications sector
continues to show above average
growth prospects and maintains an attractive long-
term outlook, despite Asian
disruptions. Fixed line penetrations are low and
the opportunities for data
and cellular expansion abound. As of March 31,
1998, 25.5% of the Fund's
equity holdings were comprised of foreign
telecommunications companies.
The U.S. telecommunications industry continues to
focus on legislative
solutions to allow the "Bells" to enter long-
distance markets, as well as
allowing long-distance companies to broaden into
local markets. Legal debates
involving both the Justice Department and the
Federal Communications
Commission continue, but growth in the Internet,
Intranet, and data
communication markets is clear and should expand
at double-digit rates. The
Fund remains significantly invested in U.S.
telecommunications, with 24.7% of
equity assets in this sector.
Despite our positive outlook for foreign markets
(in the telecommunications
sector as well as in other areas), in recent
months we have taken some profits
in the Fund's non-U.S. holdings in order to take
advantage of value
opportunities domestically. Recent additions
include some investments in the
U.S. gas transmission area (MCN Energy Group and
El Paso Natural Gas).
Portfolio Composition.
Sectors expressed as a percentage
of net assets as of 3/31/98.
(PIE CHART)
New AT&T Leadership.
The leadership change at AT&T is likely to further
energize the telecommuni-
cations markets, resulting in further cost
cutting, technological advances,
and international business alliances.
<PAGE>
What Went Well.
Telephone and Cellular.
Our patience with AT&T was rewarded during the
reporting period as financial
markets embraced the prospect of new leadership
under Michael Armstrong, who
initiated cost cuts and new market initiatives.
Good gains by long-distance
carriers MCI Communications and Sprint also
helped, as did a sharp advance in
Lucent Technologies. Internationally, the Fund
benefited from the advance in
Telecom Italia, Telef-nica de Espa-a, and Vodafone
Group.
U.S. Electrics and Water.
The Fund's domestic electric holdings responded to
a positive interest rate
environment, with CMS Energy, DPL, and Pinnacle
West Capital showing solid
advances. American Water Works also posted
admirable gains as growth and
consolidation continues in the water sector.
And Not So Well.
Emerging Markets Hurt.
Some of the Fund's holdings in emerging market
countries such as China
(Shandong Huaneng Power) did not do well, nor did
the Fund's Korea Electric
Power and Philippine Long Distance holdings, which
suffered from political
uncertainties in the Asian sector. We retain our
long-term optimism for
growth in Asia, however, because of positive
demographics and our belief in
the area's long-term chance for economic
prosperity.
Looking Ahead.
The growth in the international telecommunications
markets continues to be
dynamic, with the market expected to reach $1.1
trillion in the year 2000 from
about $600 billion in 1995. Therefore,
international and domestic participants
may benefit from well-above-average growth
markets, expanding customer bases,
potential mergers, and new opportunities in
foreign markets.
We believe that the domestic telecommunications
markets have solid 3% to 4%
unit base growth prospects, plus opportunities for
upgrades in areas such as
residential caller ID and the addition of second
lines for many residential
customers utilizing computers and other home
needs. We also believe the
opportunities for domestic wireless companies
continue to be excellent. Long-
distance companies and traditional wireline
competitors will continue to
pursue each other's markets.
It is clear that companies will continue to
upgrade their network
infrastructures and employ new technologies.
Customers demand better
reliability, increased bandwidth, and efficient,
flexible service. The demand
for data connectivity is growing very rapidly and
should prove to be one of
the most dynamic industry segments.
In the electric utility sector, foreign
opportunities appear to be greater
than domestic due to growth dynamics and economic
expansion. We continue to
monitor economic challenges in Asia and regulatory
developments in Latin
America.
Five Largest Holdings.
4.3% SBC Communications
Telecommunications
3.9% Telecom Italia
Telecommunications
3.0% US West Communications
Telecommunications
2.9% Scottish Power PLC
Electrics
2.7% Westcoast Energy
Natural Gas
Expressed as a percentage of net assets as of
3/31/98.
- --------------------------------------------------
- -----------------------------
1
<PAGE>
Portfolio of Investments as of March 31, 1998
(Unaudited)
GLOBAL UTILITY FUND, INC.
- --------------------------------------------------
- ----------
<TABLE>
<CAPTION>
US$ Value
Shares Description
(Note 1)
<C> <S>
<C>
- --------------------------------------------------
- ----------
LONG-TERM INVESTMENTS--97.2%
COMMON STOCKS--75.2%
- --------------------------------------------------
- ----------
Electrical Utilities--22.1%
125,000 CMS Energy Corp.
$ 5,867,187
150,000 COPEL (ADR-Peferred B
Shares)(Brazil)
2,184,375
300,000 DPL, Inc.
5,850,000
130,000 DQE, Inc.
4,842,500
100,000 DTE Energy Co.
3,931,250
200,000 Endesa S.A. (ADR) (Spain)
4,850,000
187,800 Espoon Sahko (ADR) (Finland)
4,517,118
150,000 Huaneng Power International, Inc.*
(ADR) (China)
3,525,000
120,000 Korea Electric Power Corp. (ADR)
(South Korea)
1,192,500
80,000 New Century Energies, Inc.
4,030,000
100,000 NIPSCO Industries, Inc.
2,800,000
100,000 Pinnacle West Capital Corp.
4,443,750
1,000,000 Scottish Power PLC (United Kingdom)
9,428,275
277,300 Shandong Huaneng Power Co. Ltd.
(ADR) (China)
2,045,088
150,000 Texas Utilities Holding Co.
5,896,875
100,000 VEBA AG (Germany)
7,093,617
- -------------
72,497,535
- --------------------------------------------------
- ----------
Gas Utilities--9.0%
500,000 Australian Gas Light Co. (Australia)
4,061,795
30,000 El Paso Natural Gas Co.
2,116,875
120,000 Equitable Resources, Inc.
3,990,000
50,000 MCN Energy Group, Inc.
1,868,750
240,000 TransCanada Pipelines Ltd. (Canada)
5,641,602
360,000 Westcoast Energy, Inc. (Canada)
8,854,533
90,000 YPF Sociedad Anonima (ADR-Class D
Shares) (Argentina)
3,060,000
- -------------
29,593,555
Telecommunications--37.1%
106,300 AirTouch Communications, Inc.*
$ 5,202,056
130,000 AT&T Corp.
8,531,250
110,000 BC Telecom, Inc. (Canada)
4,259,311
180,000 BCE, Inc. (Canada)
7,515,000
70,000 Bell Atlantic Corp.
7,175,000
50,000 Compania de Telecommunicaciones de
Chile, S.A., (ADR) (Chile)
1,378,125
43,000 Empresas Telex-Chile S.A. (ADR)
(Chile)
112,875
50,000 GTE Corp.
2,993,750
100,100 Hellenic Telecom Org. (Greece)
2,504,222
110,000 MCI Communications Corp.
5,448,437
50,000 Portugal Telecom, S.A. (ADS)
(Portugal)
2,621,875
320,000 SBC Communications Inc.
13,960,000
70,000 Sprint Corp.
4,738,125
40,000 Telecom Corp. of New Zealand Ltd.
(ADR) (New Zealand)
1,537,500
800,000 Telecom Italia Mobile S.p.A. (Italy)
4,298,291
300,000 Telecom Italia S.p.A. (Italy)
2,363,896
2,100,000 Telecom Italia S.p.A. (Risp
Nonconvertible) (Italy)
12,866,899
40,000 Telefonica de Argentina S.A.
(ADR-Class B Shares) (Argentina)
1,522,500
40,000 Telefonica de Espana, S.A. (ADR)
(Spain)
5,290,000
50,000 Telefonos de Mexico, S.A. (ADR-Class
L Shares) (Mexico)
2,818,750
180,000 US West Communications Group
9,855,000
200,000 Videsh Sanchar Nigam Ltd. (GDR)
(India)
2,450,000
75,000 Vodafone Group PLC
(ADR) (United Kingdom)
7,790,625
100,000 WorldCom Inc.
4,303,125
- -------------
121,536,612
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 2
<PAGE>
Portfolio of Investments as of March 31, 1998
(Unaudited)
GLOBAL UTILITY FUND, INC.
- --------------------------------------------------
- ----------
<TABLE>
<CAPTION>
US$ Value
Shares Description
(Note 1)
<C> <S>
<C>
- --------------------------------------------------
- ----------
Water Utilities & Other--7.0%
30,968 Alcatel Alsthom (France)
$ 5,813,029
167,800 American Water Works Co., Inc.
5,296,187
300,000 Anglian Water PLC (United Kingdom)
4,697,391
41,000 ENI S.p.A. (ADR) (Italy)
2,777,750
35,000 Lucent Technologies, Inc.
4,475,625
- -------------
23,059,982
- -------------
Total common stocks
(cost $132,571,109)
246,687,684
----------------------------------------------
- --------------
PREFERRED STOCKS--1.5%
Philippine Long Distance Telephone
Co., (The Philippines)
43,700 $3.50 Conv. Ser. III (GDS)
2,272,400
80,000 5.75% Conv. Ser. II (GDS)
2,570,521
- -------------
Total preferred stocks
(cost $4,185,000)
4,842,921
- -------------
<CAPTION>
Principal
Moody's Amount
Rating (000)
DEBT OBLIGATIONS--20.5%
CORPORATE BONDS--18.9%
- --------------------------------------------------
- ----------
Electrical Utilities--12.3%
Ba1 $ 1,000 AES Corp.,
8.375%, 8/15/07
1,035,000
Baa2 1,000 Arizona Public Service Co.,
6.25%, 1/15/05
977,180
Baa1 1,000D Chilgener, S.A.,
6.50%, 1/15/06 (Chile)
957,900
Aaa 2,000D Chubu Electric Power Co.
Inc.,
6.25%, 8/5/03
(Eurobonds) (Japan)
2,002,500
Ba1 1,000 Cleveland Elec. Illum. Co.,
7.43%, 11/1/09
1,040,000
Ba3 1,000 CMS Energy Corp.,
8.125%, 5/15/02
1,029,140
A1 1,000 Consolidated Edison Co. of
NY, Inc.,
7.625%, 3/1/04
1,071,030
Baa2 1,000D CSW Investments,
7.45%, 8/1/06
(United Kingdom)
1,052,750
Aa3 1,000 Duke Energy Corp.,
5.875%, 6/1/01
$ 993,060
Baa1 1,000D Eastern Energy Limited,
6.75%, 12/1/06
(Australia)
1,010,190
Ba2 1,000 El Paso Electric Co.,
8.25%, 2/1/03, Ser. C
1,052,290
Baa1 1,000D Empresa Electric Pehuenche
S.A.,
7.30%, 5/1/03 (Chile)
994,810
Baa3 1,000D Empresa Electrica del Norte
Grande S.A.,
7.75%, 3/15/06 (Chile)
908,230
Florida Power Corp.,
Aa3 500 6.00%, 7/1/03
495,960
A1 595 6.75%, 2/1/28
597,106
Baa3 1,000 Gulf States Utilities Co.,
8.25%, 4/1/04
1,076,970
Baa1 1,000D Hyder PLC,
6.875%, 12/15/07
(United Kingdom)
1,015,000
Ba1** 1,000D Inversora Electrica Buenos
Aires S.A.,
9.00%, 9/16/04
(Argentina)
983,750
A1 1,500 Monongahela Power Co.,
7.375%, 7/1/02
1,569,420
Northern States Power Co.
Aa3 1,000 5.75%, 12/1/00
992,450
Aa3 1,000 6.50%, 3/1/28
988,000
Baa3 1,000 NRG Energy, Inc.,
7.50%, 6/15/07
1,044,240
A1 2,000 Potomac Edison Co.,
8.875%, 8/1/21
2,116,880
Baa2 1,000 PP&L Capital Funding Inc.,
6.79%, 11/22/04
1,025,740
A2 1,000D Quebec Hydro,
7.50%, 4/1/16 (Canada)
1,073,040
Baa1 1,000D Southern Investments UK
PLC,
6.80%, 12/1/06
(United Kingdom)
1,019,770
Aa3 2,000 Southwestern Electric Power
Co.,
5.25%, 4/1/00
1,971,980
Aa2 1,000 Southwestern Public Service
Co.,
7.25%, 7/15/04
1,050,440
Baa3 1,000 System Energy Resources,
Inc.,
7.71%, 8/1/01
1,021,850
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as of March 31, 1998
(Unaudited)
GLOBAL UTILITY FUND, INC.
- --------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Principal
Moody's Amount
US$ Value
Rating (000) Description
(Note 1)
<S> <C> <C>
<C>
- --------------------------------------------------
- ----------
Electrical Utilities (cont'd.)
Aa2 $ 1,000 Tampa Electric Co.,
7.75%, 11/1/22
$ 1,080,830
Ba3 1,000 Texas-New Mexico Power Co.,
10.75%, 9/15/03
1,080,330
Baa1 1,000 Texas Utilities Electric
Co.,
9.27%, 1/14/00
1,053,820
A2 1,000D United Utilities PLC,
6.45%, 4/1/08
(United Kingdom)
991,550
A2 2,000 Virginia Electric & Power
Co.,
6.625%, 4/1/03
2,034,100
Baa3 1,000 W3A Funding Corp.,
8.09%, 1/2/17
1,039,310
Baa2 1,000D Yorkshire Power Finance
Ltd.,
6.496%, 2/25/08
(United Kingdom)
988,238
- -------------
40,434,854
- --------------------------------------------------
- ----------
Gas Distribution & Other Related Industries--1.8%
Baa2 1,000 El Paso Natural Gas Co.,
7.50%, 11/15/26
1,062,260
Baa2 1,000 Enron Corp.,
7.00%, 8/15/23
962,480
Ba3 1,000D Metrogas, S.A.,
10.875%, 5/15/01, Ser. B
(Argentina)
1,060,000
A2 1,600 Michigan Consolidated Gas
Co.,
8.25%, 5/1/14
1,860,480
Aa1 1,000 Northern Illinois Gas Co.,
7.26%, 10/15/25
1,052,630
- -------------
5,997,850
- --------------------------------------------------
- ----------
Telecommunications, Media & Related Industries--
4.8%
Aa3 1,000 AT&T Corp.,
7.75%, 3/1/07
1,102,380
BellSouth
Telecommunications,
Aaa 2,000 6.125%, 9/23/08 (Eurobonds)
2,010,000
Aaa 2,000 7.00%, 10/1/25
2,113,560
Baa1 $ 1,000 Century Telephone
Enterprises, Inc.
6.30%, 1/15/08
$ 987,980
NR 1,000D Comtel Brasileira Ltd.,
10.75%, 9/26/04 (Brazil)
1,035,000
Baa1 1,000 GTE Corp.,
7.51%, 4/1/09
1,075,530
A2 1,000 GTE Florida, Inc.,
7.25%, 10/15/25
1,000,940
Aaa 1,000 Indiana Bell Telephone Co.,
Inc.
7.30%, 8/15/26
1,096,970
Aaa 1,000 New Jersey Bell Telephone
Co.,
8.00%, 6/1/22
1,171,920
Aaa 1,000D Nippon Telegraph &
Telephone Corp.,
6.00%, 3/25/08 (Japan)
990,000
A1 2,000 Pacific Bell,
6.625%, 11/1/09
2,046,780
Ba2 1,000D Philippine Long Distance
Telephone Co.,
9.25%, 6/30/06
(The Philippines)
970,350
- -------------
15,601,410
- -------------
Total corporate bonds
(cost $60,806,549)
62,034,114
- -------------
- --------------------------------------------------
- ----------
CONVERTIBLE BONDS--1.0%
Baa2 500D Compania de
Telecommunicaciones de
Chile, S.A.,
4.50%, 1/15/03 (Chile)
721,563
Caa 1,500 International Cabletel,
Inc.,
7.25%, 4/15/05
2,362,500
- -------------
Total convertible bonds
(cost $2,000,000)
3,084,063
- -------------
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 4
<PAGE>
GLOBAL UTILITY FUND, INC.
Portfolio of Investments as of March 31, 1998
(Unaudited)
- --------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Principal
Amount
US$ Value
(000) Description
(Note 1)
<C> <S>
<C>
- --------------------------------------------------
- ----------
U.S. GOVERNMENT SECURITIES--0.6%
$2,000 United States Treasury Note,
5.75%, 8/15/03
(cost $2,042,187)
$ 2,007,180
- -------------
Total debt obligations
(cost $64,848,736)
67,125,357
- -------------
Total long-term investments
(cost $201,604,845)
318,655,962
- -------------
- --------------------------------------------------
- ----------
SHORT-TERM INVESTMENTS--2.5%
REPURCHASE AGREEMENT
8,223 Paribas Finance, 5.40%, due 4/1/98
in the amount of $8,224,233 (cost
$8,223,000; value of collateral
including accrued
interest-$8,473,389)
8,223,000
- --------------------------------------------------
- ----------
Total Investments--99.7%
(cost $209,827,845; Note 4)
326,878,962
Other assets in excess of
liabilities--0.3%
1,074,222
- -------------
Net Assets--100%
$ 327,953,184
- -------------
- -------------
</TABLE>
- ---------------
*--Non-income-producing security.
**--Moody's Equivalent to S&P Rating.
D--US$ Denominated Bonds.
ADR--American Depository Receipts.
ADS--American Depository Shares.
GDR--Global Depository Receipts.
GDS--Global Depository Shares.
NR--Not rated by Moody's or Standard & Poor's.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 5
<PAGE>
Statement of Assets and Liabilities (Unaudited)
GLOBAL UTILITY FUND, INC.
- --------------------------------------------------
- ------------------------------
<TABLE>
March 31, 1998
<S>
<C>
Assets
Investments, at value (cost
$209,827,845).....................................
............................. $ 326,878,962
Foreign currency, at value (cost
$66,747)..........................................
........................ 66,736
Cash..............................................
..................................................
....... 29,434
Dividends and interest
receivable........................................
..................................
2,076,184
Receivable for Fund shares
sold..............................................
.............................. 65,873
Deferred expenses and other
assets............................................
............................. 5,751
- --------------
Total
assets............................................
................................................
329,122,940
- --------------
Liabilities
Payable for Fund shares
reacquired........................................
.................................
589,451
Distribution fee
payable...........................................
........................................
187,037
Management fee
payable...........................................
..........................................
180,522
Accrued
expenses..........................................
.................................................
180,130
Withholding taxes
payable...........................................
.......................................
32,616
- --------------
Total
liabilities.......................................
................................................
1,169,756
- --------------
Net
Assets............................................
..................................................
... $ 327,953,184
- --------------
- --------------
Net assets were comprised of:
Common stock, at
par...............................................
..................................... $
17,260
Paid-in capital in excess of
par...............................................
......................... 197,108,330
- --------------
197,125,590
Distributions in excess of net investment
income............................................
............ (566,966)
Accumulated net realized gains on investments
and foreign currency
transactions.........................
14,346,697
Net unrealized appreciation on investments and
foreign
currencies.......................................
117,047,863
- --------------
Net assets, March 31,
1998..............................................
................................... $
327,953,184
- --------------
- --------------
Class A:
Net asset value and redemption price per share
($126,956,152 / 6,680,986 shares of common
stock issued and
outstanding).............................
$19.00
Maximum sales charge (5.00% of offering
price)............................................
.............. 1.00
Maximum offering price to
public............................................
............................ $20.00
- --------------
- --------------
Class B:
Net asset value, offering price and redemption
price per share
($193,580,109 / 10,188,694 shares of common
stock issued and
outstanding)............................
$19.00
- --------------
- --------------
Class C:
Net asset value, offering price and redemption
price per share
($995,428 / 52,393 shares of common stock
issued and
outstanding)....................................
$19.00
- --------------
- --------------
Class Z:
Net asset value, offering price and redemption
price per share
($6,421,495 / 337,546 shares of common stock
issued and
outstanding).................................
$19.02
- --------------
- --------------
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 6
<PAGE>
GLOBAL UTILITY FUND, INC.
Statement of Operations (Unaudited)
- --------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income
March 31, 1998
<S>
<C>
Income
Dividends (net of foreign withholding taxes
of $149,928).............................
$ 2,703,453
Interest and discount earned................
2,615,159
- --------------
Total income.............................
5,318,612
- --------------
Expenses
Management fee..............................
1,018,841
Distribution fee--Class A...................
149,484
Distribution fee--Class B...................
900,938
Distribution fee--Class C...................
4,305
Transfer agent's fees and expenses..........
212,000
Custodian's fees and expenses...............
92,000
Registration fees...........................
40,000
Reports to shareholders.....................
26,000
Legal fees and expenses.....................
18,000
Audit fee...................................
17,000
Directors' fees and expenses................
8,000
Insurance...................................
3,000
Miscellaneous...............................
2,899
- --------------
Total expenses...........................
2,492,467
- --------------
Net investment income..........................
2,826,145
- --------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions.....................
16,560,836
Foreign currency transactions...............
6,309
- --------------
16,567,145
- --------------
Net change in unrealized appreciation
(depreciation) on:
Investments.................................
35,951,961
Foreign currencies..........................
(3,765)
- --------------
35,948,196
- --------------
Net gain on investments and foreign
currencies..................................
52,515,341
- --------------
Net Increase in Net Assets
Resulting from Operations......................
$ 55,341,486
- --------------
- --------------
</TABLE>
GLOBAL UTILITY FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- --------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Six Months
Ended
Year Ended
Increase (Decrease) March 31,
September 30,
in Net Assets 1998
1997
<S> <C>
<C>
Operations
Net investment income........ $ 2,826,145
$ 7,682,317
Net realized gain on
investment and foreign
currency transactions..... 16,567,145
23,452,259
Net change in unrealized
appreciation of
investments and foreign
currencies................ 35,948,196
39,642,425
-------------
- -------------
Net increase in net assets
resulting from
operations................ 55,341,486
70,777,001
-------------
- -------------
Dividends and distributions
(Note 1)
Dividends from net investment
income
Class A................... (1,384,951)
(3,467,695)
Class B................... (1,410,799)
(4,197,429)
Class C................... (6,681)
(16,595)
Class Z................... (23,714)
(598)
-------------
- -------------
(2,826,145)
(7,682,317)
-------------
- -------------
Distributions in excess of
net investment income
Class A................... (263,737)
(156,217)
Class B................... (414,260)
(189,092)
Class C................... (2,610)
(748)
Class Z................... (19,832)
(27)
-------------
- -------------
(700,439)
(346,084)
-------------
- -------------
Distributions from net realized gains
Class A................... (10,062,136)
(6,007,763)
Class B................... (14,811,699)
(9,775,323)
Class C................... (65,425)
(37,783)
Class Z................... (6,437)
- --
-------------
- -------------
(24,945,697)
(15,820,869)
-------------
- -------------
Fund share transactions (net of
share conversions) (Note 5)
Net proceeds from shares
sold...................... 18,044,937
40,299,964
Net asset value of shares
issued in reinvestment of
dividends and
distributions............. 23,557,071
19,609,298
Cost of shares reacquired.... (41,425,786)
(106,947,379)
-------------
- -------------
Net increase (decrease) in net
assets from Fund share
transactions................. 176,222
(47,038,117)
-------------
- -------------
Total increase (decrease)....... 27,045,427
(110,386)
Net Assets
Beginning of period............. 300,907,757
301,018,143
-------------
- -------------
End of period................... $ 327,953,184
$ 300,907,757
-------------
- -------------
-------------
- -------------
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 7
<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,
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 take 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.
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. Dividend income is
recorded on the ex-dividend date and interest
income is recorded on the accrual
basis. The Fund amortizes discounts on purchases
of debt securities as
adjustments to interest income. Expenses are
recorded on the accrual basis which
may require the use of certain estimates by
management.
- --------------------------------------------------
- ------------------------------
8
<PAGE>
Notes to Financial Statements (Unaudited)
GLOBAL UTILITY FUND, INC.
- --------------------------------------------------
- ------------------------------
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.
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
$6,309 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 Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has
responsibility for all
investment advisory services and supervises the
subadviser's performance of such
services. PIFM has entered into a subadvisory
agreement with Wellington;
Wellington furnishes investment advisory services
in connection with the
management of the Fund. PIFM 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 PIFM 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, PIFM compensates Wellington
for its services at an annual
rate of .50% of the Fund's average daily net
assets up to and including $250
million, .35% of the Fund's average daily net
assets of the next $250 million,
.30% of the Fund's average daily net assets of the
next $500 million and .25% of
the Fund's average daily net assets in excess of
$1 billion.
The Fund has a distribution agreement with
Prudential Securities Incorporated
('PSI'), which acts as the distributor of the
Class A, Class B, Class C and
Class Z shares of the Fund. The Fund compensates
PSI for distributing and
servicing the Fund's Class A, Class B and Class C
shares, pursuant to plans of
distribution (the 'Class A, Class B and Class C
Plans'), regardless of expenses
actually incurred by them. The distribution fees
are accrued daily and payable
monthly. No distributions or service fees are paid
to PSI as distributor of the
Class Z shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund
compensates PSI 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, 1998.
PSI has advised the Fund that it has received
approximately $17,000 in front-end
sales charges resulting from sales of Class A
shares during the six months ended
March 31, 1998. From these fees, 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 six months
ended March 31, 1998, it
received approximately $101,700 and $100 in
contingent deferred sales charges
imposed upon certain redemptions by Class B and
Class C shareholders,
respectively.
PSI and PIFM are indirect, wholly owned
subsidiaries of The Prudential Insurance
Company of America.
The Fund, along with other affiliated registered
investment companies (the
'Funds'), has a credit agreement (the 'Agreement')
with an unaffiliated lender.
The maximum commitment under the Agreement is
$200,000,000. Interest on any such
borrowings outstanding will be at market rates.
The purpose of the Agreement is
to serve as an alternative
- --------------------------------------------------
- ------------------------------
9
<PAGE>
Notes to Financial Statements (Unaudited)
GLOBAL UTILITY FUND, INC.
- --------------------------------------------------
- ------------------------------
source of funding for capital share redemptions.
The Fund has not borrowed any
amounts pursuant to the Agreement during the six
months ended March 31, 1998.
The Funds pay a commitment fee at an annual rate
of .055 of 1% on the unused
portion of the credit facility. The commitment fee
is accrued and paid quarterly
on a pro rata basis by the Funds. The Agreement
expired on December 30, 1997 and
has been extended through December 29, 1998 under
the same terms.
- --------------------------------------------------
- ----------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a
wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent and during the
six months ended March 31,
1998, the Fund incurred fees of approximately
$175,000 for the services of PMFS.
As of March 31, 1998, approximately $29,000 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 nonaffiliates.
- --------------------------------------------------
- ----------
Note 4. Portfolio Securities
Purchases and sales of investment securities,
other than short-term investments,
for the six months ended March 31, 1998 were
$34,590,046 and $60,998,524,
respectively.
The United States federal income tax basis of the
Fund's investments at March
31, 1998 was $209,854,552 and, accordingly, net
unrealized appreciation of
investments was $117,024,409 (gross unrealized
appreciation--$122,084,670; gross
unrealized depreciation--$5,060,261).
- --------------------------------------------------
- ----------
Note 5. Capital
The Fund offers Class A, Class B, Class C and
Class Z 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 qualify to purchase Class A
shares at net asset value. Class Z
shares are not subject to any sales or redemption
charge and are offered
exclusively for sale to a limited group of
investors.
The Fund has authorized 2 billion shares of common
stock at $.001 par value per
share equally divided into Class A, B, C and Z
shares.
Transactions in shares of common stock were as
follows:
<TABLE>
<CAPTION>
Class A Shares
Amount
- ----------------------------------- ----------
- ------------
<S> <C>
<C>
Six months ended March 31, 1998:
Shares sold........................ 256,629
$ 4,536,230
Shares issued in reinvestment of
dividends and distributions...... 499,774
2,351,492
Shares reacquired.................. (1,089,129)
(19,186,263)
----------
- ------------
Net decrease in shares outstanding
before conversion................ (332,726)
(6,298,541)
Shares issued upon conversion from
Class B.......................... 116,898
2,130,817
----------
- ------------
Net decrease in shares
outstanding...................... (215,828)
$ (4,167,724)
----------
- ------------
----------
- ------------
Year ended September 30, 1997:
Shares sold........................ 2,086,998
$ 33,076,632
Shares issued in reinvestment of
dividends and distributions...... 435,125
6,684,084
Shares reacquired.................. (3,491,626)
(55,793,270)
----------
- ------------
Net decrease in shares outstanding
before conversion................ (969,503)
(16,032,554)
Shares issued upon conversion from
Class B.......................... 361,364
5,915,705
----------
- ------------
Net decrease in shares
outstanding...................... (608,139)
$(10,116,849)
----------
- ------------
----------
- ------------
<CAPTION>
Class B
- -----------------------------------
Six months ended March 31, 1998:
Shares sold........................ 306,714
$ 5,411,367
Shares issued in reinvestment of
dividends and distributions...... 903,377
15,085,685
Shares reacquired.................. (1,137,919)
(20,039,967)
----------
- ------------
Net increase in shares outstanding
before conversion................ 72,172
457,085
Shares reacquired upon conversion
into Class A..................... (116,986)
(2,130,817)
----------
- ------------
Net decrease in shares
outstanding...................... (44,814)
$ (1,673,732)
----------
- ------------
----------
- ------------
</TABLE>
- --------------------------------------------------
- ------------------------------
10
<PAGE>
Notes to Financial Statements (Unaudited)
GLOBAL UTILITY FUND, INC.
- --------------------------------------------------
- ------------------------------
<TABLE>
<CAPTION>
Class B Shares
Amount
- ----------------------------------- ----------
- ------------
<S> <C>
<C>
Year ended September 30, 1997:
Shares sold........................ 420,178
$ 6,760,201
Shares issued in reinvestment of
dividends and distributions...... 841,794
12,870,440
Shares reacquired.................. (3,146,002)
(50,674,248)
----------
- ------------
Net decrease in shares outstanding
before conversion................ (1,884,030)
(31,043,607)
Shares reacquired upon conversion
into Class A..................... (361,305)
(5,915,705)
----------
- ------------
Net decrease in shares
outstanding...................... (2,245,335)
$(36,959,312)
----------
- ------------
----------
- ------------
<CAPTION>
Class C
- -----------------------------------
Six months ended March 31, 1998:
Shares sold........................ 118,133
$ 2,085,375
Shares issued in reinvestment of
dividends and distributions...... 4,188
69,944
Shares reacquired.................. (113,295)
(2,006,373)
----------
- ------------
Net increase in shares
outstanding...................... 9,026
$ 148,946
----------
- ------------
----------
- ------------
Year ended September 30, 1997:
Shares sold........................ 14,373
$ 229,180
Shares issued in reinvestment of
dividends and distributions...... 3,544
54,192
Shares reacquired.................. (18,532)
(297,270)
----------
- ------------
Net decrease in shares
outstanding...................... (615)
$ (13,898)
----------
- ------------
----------
- ------------
<CAPTION>
Class Z
- -----------------------------------
Six months ended March 31, 1998:
Shares sold........................ 342,508
$ 6,011,965
Shares issued in reinvestment of
dividends and distributions...... 2,878
49,950
Shares reacquired.................. (10,885)
(193,183)
----------
- ------------
Net increase in shares
outstanding...................... 334,501
$ 5,868,732
----------
- ------------
----------
- ------------
December 16, 1996(a) through
September 30, 1997:
Shares sold........................ 13,848
$ 233,951
Shares issued in reinvestment of
dividends and distributions...... 35
582
Shares reacquired.................. (10,838)
(182,591)
----------
- ------------
Net increase in shares
outstanding...................... 3,045
$ 51,942
----------
- ------------
----------
- ------------
</TABLE>
- ---------------
(a) Commencement of offering of Class Z shares.
- --------------------------------------------------
- ------------------------------
11
<PAGE>
Financial Highlights (Unaudited)
GLOBAL UTILITY FUND, INC.
- --------------------------------------------------
- ------------------------------
<TABLE>
<CAPTION>
Class A
----
- --------------------------------------------------
- ---------------------
Six
Months
Ended Year Ended
September 30,
March 31, -----------------------------------
- -------------------------
1998 1997 1996 1995
1994 1993
----
- ------ -------- -------- --------
- -------- --------
<S> <C>
<C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....... $
17.52 $ 15.03 $ 14.72 $ 13.66
$ 14.63 $ 12.96
----
- ------ -------- -------- --------
- -------- --------
Income from investment operations
Net investment income......................
.21 .49 .51 .49
.47 .44
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................
3.03 3.34 .73 1.35
(.82) 2.46
----
- ------ -------- -------- --------
- -------- --------
Total from investment operations........
3.24 3.83 1.24 1.84
(.35) 2.90
----
- ------ -------- -------- --------
- -------- --------
Less distributions
Dividends from net investment income.......
(.21) (.49) (.51) (.48)
(.42) (.47)
Distributions in excess of net investment
income..................................
(.04) (.02) -- --
- -- (.01)
Distributions from net realized gains......
(1.51) (.83) (.42) (.30)
(.20) (.75)
----
- ------ -------- -------- --------
- -------- --------
Total distributions.....................
(1.76) (1.34) (.93) (.78)
(.62) (1.23)
----
- ------ -------- -------- --------
- -------- --------
Net asset value, end of period............. $
19.00 $ 17.52 $ 15.03 $ 14.72
$ 13.66 $ 14.63
----
- ------ -------- -------- --------
- -------- --------
----
- ------ -------- -------- --------
- -------- --------
TOTAL RETURN(a)............................
19.92% 26.90% 8.65% 14.23%
(2.49)% 23.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............
$126,956 $120,825 $112,800 $124,423
$126,254 $138,714
Average net assets (000)...................
$119,916 $116,303 $120,122 $122,837
$139,166 $119,001
Ratios to average net assets:
Expenses, including distribution fees...
1.20%(b) 1.21% 1.30% 1.31%
1.25% 1.30%
Expenses, excluding distribution fees...
.95%(b) .96% 1.05% 1.06%
1.02% 1.10%
Net investment income...................
2.32%(b) 3.00% 3.38% 3.58%
3.39% 3.37%
For Class A, B, C and Z shares:
Portfolio turnover rate.................
12% 13% 13% 15%
19% 14%
Average commission rate paid per
share................................ $
0.0173 $ 0.0529 $ 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. Total returns for periods of
less than a full year are not
annualized.
(b) Annualized.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 12
<PAGE>
Financial Highlights (Unaudited)
GLOBAL UTILITY FUND, INC.
- --------------------------------------------------
- ------------------------------
<TABLE>
<CAPTION>
Class B
----
- --------------------------------------------------
- ---------------------
Six
Months
Ended Year Ended
September 30,
March 31, -----------------------------------
- -------------------------
1998 1997 1996 1995
1994 1993
----
- ------ -------- -------- --------
- -------- --------
<S> <C>
<C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....... $
17.52 $ 15.03 $ 14.71 $ 13.66
$ 14.63 $ 12.97
----
- ------ -------- -------- --------
- -------- --------
Income from investment operations
Net investment income......................
.14 .37 .40 .39
.37 .34
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................
3.03 3.34 .74 1.34
(.82) 2.45
----
- ------ -------- -------- --------
- -------- --------
Total from investment operations........
3.17 3.71 1.14 1.73
(.45) 2.79
----
- ------ -------- -------- --------
- -------- --------
Less distributions
Dividends from net investment income.......
(.14) (.37) (.40) (.38)
(.32) (.37)
Distributions in excess of net investment
income..................................
(.04) (.02) -- --
- -- (.01)
Distributions from net realized gains......
(1.51) (.83) (.42) (.30)
(.20) (.75)
----
- ------ -------- -------- --------
- -------- --------
Total distributions.....................
(1.69) (1.22) (.82) (.68)
(.52) (1.13)
----
- ------ -------- -------- --------
- -------- --------
Net asset value, end of period............. $
19.00 $ 17.52 $ 15.03 $ 14.71
$ 13.66 $ 14.63
----
- ------ -------- -------- --------
- -------- --------
----
- ------ -------- -------- --------
- -------- --------
TOTAL RETURN(a)............................
19.48% 25.96% 7.90% 13.32%
(3.22)% 22.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............
$193,580 $179,270 $187,557 $227,189
$272,673 $185,259
Average net assets (000)...................
$180,683 $185,693 $210,305 $237,983
$270,466 $ 90,254
Ratios to average net assets:
Expenses, including distribution fees...
1.95%(b) 1.96% 2.05% 2.06%
2.02% 2.10%
Expenses, excluding distribution fees...
.95%(b) .96% 1.05% 1.06%
1.02% 1.10%
Net investment income...................
1.57%(b) 2.25% 2.62% 2.83%
2.68% 2.59%
</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. Total returns for periods of
less than a full year are not
annualized.
(b) Annualized.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 13
<PAGE>
Financial Highlights (Unaudited)
GLOBAL UTILITY FUND, INC.
- --------------------------------------------------
- ------------------------------
<TABLE>
<CAPTION>
Class C Class Z
----
- --------------------------------------------------
- ------------- ----------
August 1,
Six
Months
1994(c) Six Months
Ended Year Ended September 30,
through Ended
March 31, ----------------------------------
September 30, March 31,
1998 1997 1996 1995
1994 1998
----
- ------ -------- -------- --------
- ------------- ----------
<S> <C>
<C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....... $
17.52 $ 15.03 $ 14.71 $ 13.66
$ 13.93 $ 17.54
----
- ------ -------- -------- --------
- ------------- ----------
Income from investment operations
Net investment income......................
.14 .37 .40 .39
.06 .23
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................
3.03 3.34 .74 1.34
(.24) 3.03
----
- ------ -------- -------- --------
- ------------- ----------
Total from investment operations........
3.17 3.71 1.14 1.73
(.18) 3.26
----
- ------ -------- -------- --------
- ------------- ----------
Less distributions
Dividends from net investment income.......
(.14) (.37) (.40) (.38)
(.07) (.23)
Distributions in excess of net investment
income..................................
(.04) (.02) -- --
- -- (.04)
Distributions from net realized gains......
(1.51) (.83) (.42) (.30)
(.02) (1.51)
----
- ------ -------- -------- --------
- ------------- ----------
Total distributions.....................
(1.69) (1.22) (.82) (.68)
(.09) (1.78)
----
- ------ -------- -------- --------
- ------------- ----------
Net asset value, end of period............. $
19.00 $ 17.52 $ 15.03 $ 14.71
$ 13.66 $ 19.02
----
- ------ -------- -------- --------
- ------------- ----------
----
- ------ -------- -------- --------
- ------------- ----------
TOTAL RETURN(a)............................
19.48% 25.96% 7.90% 13.32%
(1.32)% 20.05%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............ $
995 $ 760 $ 661 $ 563
$ 226 $ 6,422
Average net assets (000)................... $
863 $ 727 $ 608 $ 410
$ 131 $ 1,862
Ratios to average net assets:
Expenses, including distribution fees...
1.95%(b) 1.96% 2.05% 2.06%
2.06%(b) .95%(b)
Expenses, excluding distribution fees...
.95%(b) .96% 1.05% 1.06%
1.06%(b) .95%(b)
Net investment income...................
1.57%(b) 2.25% 2.66% 2.83%
2.46%(b) 2.57%(b)
<CAPTION>
December 16,
1996(d)
through
September 30,
1997
-----
- --------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....... $
15.02
- -----
Income from investment operations
Net investment income......................
.34
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................
2.59
- -----
Total from investment operations........
2.93
- -----
Less distributions
Dividends from net investment income.......
(.34)
Distributions in excess of net investment
income..................................
(.07)
Distributions from net realized gains......
- --
- -----
Total distributions.....................
(.41)
- -----
Net asset value, end of period............. $
17.54
- -----
- -----
TOTAL RETURN(a)............................
19.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............ $
53
Average net assets (000)................... $
16
Ratios to average net assets:
Expenses, including distribution fees...
.96%(b)
Expenses, excluding distribution fees...
.96%(b)
Net investment income...................
3.25%(b)
</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 period reported and includes
reinvestment of dividends and
distributions. Total returns for periods of
less than a full year are not
annualized.
(b) Annualized.
(c) Commencement of offering of Class C shares.
(d) Commencement of offering of Class Z shares.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 14
<PAGE>
Getting The Most From Your Prudential Mutual Fund.
When you invest through Prudential Mutual Funds,
you receive financial advice
through a Prudential Securities financial advisor
or Prudential/Pruco
Securities registered representative. Your advisor
or representative can
provide you with the following services:
There's No Reward Without Risk; But Is This Risk
Worth It?
Your financial advisor or registered
representative can help you match the
reward you seek with the risk you can tolerate.
And risk can be difficult to
gauge --sometimes even the simplest investments
bear surprising risks. The
educated investor knows that markets seldom move
in just one direction -- there
are times when a market sector or asset class will
lose value or provide little
in the way of total return. Managing your own
expectations is easier with help
from someone who understands the markets and who
knows you!
Keeping Up With The Joneses.
A financial advisor or registered representative
can help you wade through the
numerous mutual funds available to find the ones
that fit your own individual
investment profile and risk tolerance. While the
newspapers and popular
magazines are full of advice about investing, they
are aimed at generic groups
of people or representative individuals, not at
you personally. Your financial
advisor or registered representative will review
your investment objectives
with you. This means you can make financial
decisions based on the assets and
liabilities in your current portfolio and your
risk tolerance -- not just based
on the current investment fad.
Buy Low, Sell High.
Buying at the top of a market cycle and selling at
the bottom are among the
most common investor mistakes. But sometimes it's
difficult to hold on to an
investment when it's losing value every month.
Your financial advisor or
registered representative can answer questions
when you're confused or worried
about your investment, and remind you that you're
investing for the long haul.
<PAGE>
Getting The Most From Your Prudential 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 up to 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.
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
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Eugene C. Dorsey
Douglas H. McCorkindale
Thomas T. Mooney
Richard A. Redeker
Officers
Richard A. Redeker, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Manager
Prudential Investments 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 LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., N.W.
Washington, D.C. 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, 1998 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>
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
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