MERRILL LYNCH GLOBAL UTILITY FUND, INC.
FUND LOGO
Annual Report November 30, 1993
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless accompanied
or preceded by the Fund's current prospectus. Past performance results
shown in this report should not be considered a representation of
future performance. Investment return and principal value of shares
will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost.
Merrill Lynch
Global Utility Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH GLOBAL UTILITY FUND, INC.
Officers and
Directors
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Marc A. White, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Walter D. Rogers, Vice President
Gerald M. Richard, Treasurer
Patrick D. Sweeney, Secretary
Custodian
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10005
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
<PAGE>
Worldwide
Investments Top Ten Holdings Percent of
As of 11/30/93 (Equity Investments) Net Assets
Houston Industries, Inc. 2.3%
US West, Inc. 2.2
Hong Kong Telecommunications PLC 2.1
China Light & Power Co., Ltd. 2.1
Enron Corp. 1.8
General Public Utilities Corp. 1.8
Philadelphia Electric Co. 1.8
Sonat, Inc. 1.5
Telekom Malaysia BHD 1.5
Pacific Telesis Group 1.5
Additions
American Telephone & Telegraph Co.
British Telecommunications PLC (Ord.)
The Brooklyn Union Gas Co.
The Coastal Corp.
Compagnie Generale des Eaux (Bonus Rights)
Duke Power Co.
Enersis S.A. (ADR)
The Hong Kong & China Gas Co. Ltd.
Korea Electric Power Corp., 6.38% due 12/01/2003
New Jersey Resources Corp.
PacifiCorp
Public Service Co. of Colorado
SCEcorp
TelecomAsia Corporation Public Co. Ltd. PLC (ADR)
Deletions
Tenega Nasional BHD
Important Tax
Information
Of the ordinary income distributions paid quarterly by Merrill Lynch
Global Utility Fund, Inc. during the tax year ended November 30, 1993,
93.71% qualifies for the dividends received deduction for corporations.
Additionally, the Fund distributed long-term capital gains of $0.012388
per share to shareholders of record on December 16, 1992.
Please retain this information for your records.
<PAGE>
DEAR SHAREHOLDER
The US economy began to show some signs of improvement during the
November quarter with little evidence of an appreciable increase in
the rate of inflation. The industrial sector is demonstrating growing
strength, yet capacity utilization is still well below the levels
associated with rising inflation. Consumer spending has improved,
but the labor market remains soft. Despite the areas of economic
weakness that persist, concerns arose during the quarter that the
rate of business activity might increase inflationary pressures.
Other developments during the November quarter had significant
long-term implications for the US financial markets. Although Boris
Yeltsin's swift and apparently decisive victory over his hard-line
opponents in Russia created little immediate disruption in the world
financial markets, the future of political and economic reform in the
former Soviet Union is far from certain. Evidence of greater progress
toward a free-market economy and democratic government in Russia would
have more positive implications for the US financial markets over the
longer term. The outline for proposed healthcare reform is also very
important for the US economy. As the various healthcare reform proposals
are debated, investors will focus on their potential effects on the
Federal budget, the US economy and the quality of healthcare delivery
in the United States. Finally, the ratification of the North American
Free Trade Agreement by the US Congress was important not only for the
prospect of expanding trade with Canada and Mexico, but also as a
positive influence on the recently concluded round of negotiations
on the General Agreement on Tariffs and Trade. Further economic
integration and growth through trade liberalization would be
positive for the capital markets in the United States and around
the world.
Portfolio Matters
Merrill Lynch Global Utility Fund, Inc. ended the November quarter with
net assets of $678.2 million, up from $544.7 million at the end of August,
for an increase of 24.5%. During the quarter the Fund added to current
positions (to maintain portfolio weightings as net assets increased) and
invested in new positions. New investments were in natural gas, electric
and telecommunications companies.
The Brooklyn Union Gas Co., The Coastal Corp., New Jersey Resources
Corp. and The Hong Kong & China Gas Co. Ltd. are the four new positions
in the natural gas sector. The Brooklyn Union Gas Co. is a New York-based
company which primarily distributes natural gas. With 90% of its total gas
distribution made to residential and commercial users, Brooklyn Union's
earnings base is stable. The company's future earnings growth is expected
to be a function of its continued ability to find new markets such as the
natural gas-fueled fleet market and cogeneration. Brooklyn Union is also
benefiting from the growing conversion from oil to natural gas heat as a
result of tougher environmental laws.
<PAGE>
The Coastal Corp. operates one of the largest domestic natural gas
pipeline systems and also has operations in exploration and production,
oil refining, coal mining and chemicals. The company's share price lagged
those of other natural gas companies during their recent rally. Coastal
is undergoing a restructuring, with management changes and the possible
elimination of some operations. Coastal's financial position is likely
to improve as it reduces debt and earnings accelerate as we forecast in
the latter part of 1994 and 1995.
New Jersey Resources Corp. (NJR) is a public utility holding company.
Through its major subsidiary, New Jersey Natural Gas Co., NJR supplies
gas to over 325,000 customers in New Jersey. NJR has a relatively
strong earnings base and its customer growth is expected to continue,
primarily driven by conversions along existing gas mains. Its financial
position is strong as a result of a cost-cutting program, continued
customer growth, new opportunities for selling gas outside of its
territory and a total debt/capital ratio below 50%.
The Hong Kong & China Gas Co. Ltd. is a Hong Kong-based gas utility
company. Incorporated in 1862, the company is Hong Kong's sole
supplier of Towngas, a naptha-based product primarily used for
cooking and water heating. The company has the ability to set its
own basic tariff since it is the only major Hong Kong-based utility
whose financial operation is not governed by the Scheme of Control, an
agreement between the Hong Kong government and most public utilities
that regulates their profits for specified periods.
We added five new electric utility stocks during the period: Duke Power
Co., Enersis S.A., PacifiCorp, Public Service Co. of Colorado and SCEcorp.
We also invested in a new electric utility fixed-income holding, Korea
Electric Power Corp.
Duke Power Co. is a North Carolina-based electric utility company. While
the dividend yield on its shares is currently below the industry average,
the company does offer the potential for above industry average dividend
growth. Duke's basic electric utility business provides a strong earnings
base, and future earnings growth is expected to be driven by cost reduction
and overseas expansion.
Enersis S.A. is a Chilean-based company that is involved in the generation
and distribution of electricity in Chile and Argentina. Through its owner-
ship of Endesa, a publicly held Chilean electric generation and trans-
mission company, Enersis has control of over 50% of Chile's installed
generation capacity and almost all of Chile's transmission facilities.
The company's focus is to improve returns by cutting costs and increasing
efficiency and productivity. In addition, the company's management expects
to carry this strategy into investments in other countries in South America.
<PAGE>
PacifiCorp is a Utah-based company whose principal line of business is
producing electricity in the Pacific Northwest; it also has interests in
telecommunications. We believe that PacifiCorp is well-positioned to par-
ticipate in a more competitive rate environment given its low industrial
rates. The company undertook a major restructuring over the past year
which has substantially improved its financial position.
We invested in Public Service Co. of Colorado, which will repower a nuclear
plant to burn natural gas at a price per kilowatt that is below new
construction prices, decreasing the company's financial risk. With its
competitive industrial rates, we believe that Public Service Co. of
Colorado's shares are currently undervalued.
SCEcorp. is a California-based company that primarily serves electric
utility customers in the southern part of the state. In addition to its
basic utility business, the company has a separate subsidiary, Mission
Energy, which invests and develops independent power projects around
the globe. Given a recent favorable rate ruling and the restoration of
earnings growth at Mission Energy, we believe SCEcorp. will prove an
attractive investment over the longer term.
Korea Electric Power Corp. (KEPCO) dominates Korea's electric utility
industry. The future growth rate of earnings is dependent on the government
giving KEPCO more freedom to increase the rates charged to its customers.
We purchased KEPCO US dollar-denominated bonds to participate in the rapidly
growing Korean market for electricity.
We added to the portfolio's telecommunications investments by
increasing our position in British Telecommunications PLC through
the purchase of ordinary shares. In addition, we reestablished a position
in American Telephone & Telegraph Co. (AT&T). At one time AT&T shares
were one of the Fund's largest holdings, but we sold the position based
on high valuations, coupled with uncertainty surrounding the company's
intention to purchase a stake in McCaw Cellular Communications and the
likelihood that the company would issue more shares to effect the purchase.
The company has since announced that it intends to purchase all of McCaw
Cellular in a stock-for-stock transaction. This factor, coupled with a
recent share price decline, resulted in our purchase of AT&T shares. An
additional reason for this purchase was the positive long-term outlook
for the long-distance telephone industry in general and the company in
particular. Finally, we added TelecomAsia Corporation Public Co. Ltd. PLC
to the portfolio. The company has been granted a 25-year concession from
the Telephone Organization of Thailand to install two million lines in the
Bangkok metropolitan area.
During the November quarter, we eliminated our position in Tenaga
Nasional BHD because of concerns over new entrants to the electric
utility market in Malaysia. We also reduced our position in Energie
Versorgung Niederoesterreich AG during the crisis in Russia since the
company relies so heavily on supplies of natural gas from Russia.
<PAGE>
Fiscal Year in Review
The Fund's strategy during the fiscal year has been to balance the higher
capital appreciation potential offered by utilities abroad with the higher
yields available from domestic utility issues. This combination has bene-
fited the Fund's total investment return over the fiscal year. Growth
rates abroad are based soundly upon higher demographic growth and the
building of needed infrastructures in developing economies. Global diver-
sification also reduces the risk inherent in being exposed to only one
country's economic and interest rate cycle.
In Conclusion
Weakness in the domestic utility sector during the November quarter
followed a period of strong price appreciation. Higher interest rates
spurred the selloff. Utility stocks outside of the United States also
began to lose some appeal to investors, reflecting general profit-
taking. We believe both the domestic and foreign selloffs were overdone
and that rebounding prices should occur, highlighting the underlying
value of these defensive investments.
We thank you for your investment in Merrill Lynch Global Utility Fund,
Inc., and we look forward to continuing to serve your investment needs
throughout the Fund's new fiscal year and beyond.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Walter D. Rogers)
Walter D. Rogers
Vice President and Portfolio Manager
December 29, 1993
PERFORMANCE DATA
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of shares
will fluctuate so that shares, when redeemed, may be worth more or less
than their original cost.
Total Return
Based on a
$10,000
Investment
GRAPHIC AND IMAGE MATERIALS APPEAR HERE.
<PAGE>
SEE APPENDIX: GRAPHIC AND IMAGE MATERIAL. ITEM 1.
<TABLE>
<CAPTION>
Average Annual % Return Without % Return With
Total Return Sales Charge Sales Charge**
<S> <C> <C>
Class A Shares*
Year Ended 9/30/93 +24.71% +16.60%
Inception (12/28/90) through
9/30/93 +16.54 +13.74
<FN>
*Maximum sales charge is 6.5%.
**Assuming maximum sales charge.
<CAPTION>
% Return % Return
Without CDSC With CDSC**
<S> <C> <C>
Class B Shares*
Year Ended 9/30/93 +23.85% +19.85%
Inception (12/28/90) through
9/30/93 +15.66 +15.10
<FN>
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
</TABLE>
<TABLE>
<CAPTION>
Recent
Performance 12 Month 3 Month
Results* 11/30/93 8/31/93 11/30/92 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $13.22 $13.57 $11.23 +17.85%(1) -2.58%
Class B Shares 13.17 13.52 11.20 +17.72 (1) -2.59
Class A Shares--Total Return +21.80 (2) -1.98(3)
Class B Shares--Total Return +20.86 (4) -2.13(5)
<FN>
*Investment results shown for the 3-month and 12-month periods are before the deduction of any sales charges.
(1)Percent change includes reinvestment of $0.012 per share capital gains distributions.
(2)Percent change includes reinvestment of $0.410 per share ordinary income dividends and $0.012 per share capital
gains distributions.
(3)Percent change includes reinvestment of $0.084 per share ordinary income dividends.
(4)Percent change includes reinvestment of $0.326 per share ordinary income dividends and $0.012 per share capital
gains distributions.
(5)Percent change includes reinvestment of $0.064 per share ordinary income dividends.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US Dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Telecommunications 132,479 ++++Telecom Argentina Stet S.A. (ADR)++ $ 4,726,664 $ 6,193,393 0.9%
123,213 ++++Telefonica de Argentina S.A. (ADR)++ 4,464,581 6,653,502 1.0
Total Common Stocks in Argentina 9,191,245 12,846,895 1.9
Australia Utilities--Gas 2,267,000 Australian Gas & Light Co., Ltd. 5,711,381 6,952,152 1.0
Total Common Stocks in Australia 5,711,381 6,952,152 1.0
Austria Utilities--Gas 32,150 Energie Versorgung Niederoesterreich
AG (EVN) 2,718,269 3,852,246 0.6
Total Common Stocks in Austria 2,718,269 3,852,246 0.6
Canada Telecommunications 127,200 BCE, Inc. (ADR)++ 4,678,103 4,356,600 0.6
Utilities--Electric 425,600 Nova Scotia Power Co. 4,007,620 4,140,078 0.6
Utilities--Gas 552,700 Transcanada Pipeline Co. Ltd. (ADR)++ 8,288,749 8,221,413 1.2
Total Common Stocks in Canada 16,974,472 16,718,091 2.4
Chile Telecommunications 80,700 Compania de Telefonos de Chile,
S.A. (ADR)++ 5,531,550 6,778,800 1.0
Utilities--Electric 176,600 ++++Distribuidora Chilectra Metropolitana,
S.A. (ADR)++ 4,708,327 5,496,675 0.8
12,000 Enersis S.A. (ADR)++ 216,000 235,500 0.0
----------- ------------ ----
4,924,327 5,732,175 0.8
Total Common Stocks in Chile 10,455,877 12,510,975 1.8
France Utilities--Water 20,928 Compagnie Generale des Eaux
(Bonus Rights) (1) 0 729,403 0.1
20,928 Compagnie Generale des Eaux (Ord.) 8,793,918 9,191,602 1.4
Total Common Stocks in France 8,793,918 9,921,005 1.5
<PAGE>
Hong Kong Telecommunications 7,644,000 Hong Kong Telecommunications PLC 12,600,067 14,546,806 2.1
Utilities--Electric 2,461,200 China Light & Power Co., Ltd. 12,282,332 14,497,327 2.1
1,552,000 Hong Kong Electric Holdings, Ltd. 3,897,526 5,243,990 0.8
----------- ------------ ----
16,179,858 19,741,317 2.9
Utilities--Gas 2,068,000 The Hong Kong & China Gas Co. Ltd. 4,350,783 5,140,216 0.8
Total Common Stocks in Hong Kong 33,130,708 39,428,339 5.8
Italy Telecommunications 1,675,800 Italgas Torino 4,845,444 4,434,787 0.7
2,924,700 Societa Finanziara Telefonica
S.p.A. (STET) 5,439,622 4,828,837 0.7
5,351,250 Societa Italiana Esercizio Telecom
S.p.A. (SIP) 7,584,134 9,649,795 1.4
Total Common Stocks in Italy 17,869,200 18,913,419 2.8
Malaysia Telecommunications 1,344,000 Telekom Malaysia BHD 9,184,414 10,090,642 1.5
Total Common Stocks in Malaysia 9,184,414 10,090,642 1.5
Mexico Telecommunications 134,900 Telefonos de Mexico S.A. de C.V. (ADR)++ 7,053,717 7,520,675 1.1
Total Common Stocks in Mexico 7,053,717 7,520,675 1.1
New Zealand Telecommunications 209,300 Telecom Corporation of
New Zealand Ltd. (ADR)++ 7,213,264 8,947,575 1.3
Total Common Stocks in New Zealand 7,213,264 8,947,575 1.3
Philippines Telecommunications 129,500 Philippine Long Distance
Telephone Co. (ADR)++ 5,250,051 7,899,500 1.2
Total Common Stocks in the Philippines 5,250,051 7,899,500 1.2
Spain Telecommunications 512,300 Telefonica de Espana S.A. 5,828,343 6,109,633 0.9
Utilities--Electric 147,800 Empresa Nacional de Electricidad,
S.A. (ADR)++ 4,797,399 6,687,950 1.0
1,062,500 Iberdrola I S.A. 6,796,570 6,886,225 1.0
----------- ------------ ----
11,593,969 13,574,175 2.0
Total Common Stocks in Spain 17,422,312 19,683,808 2.9
<PAGE>
Thailand Telecommunications 15,000 ++++TelecomAsia Corporation Public Co.,
Ltd. PLC (ADR)++ 328,050 328,050 0.0
Total Common Stocks in Thailand 328,050 328,050 0.0
United Kingdom Telecommunications 1,330,860 British Telecommunications PLC (Part Pay) 3,557,997 4,346,063 0.6
800,000 British Telecommunications PLC (Ord.) 5,573,765 5,580,408 0.8
Total Common Stocks in the United Kingdom 9,131,762 9,926,471 1.4
United States Telecommunications 111,200 American Telephone & Telegraph Co. 6,407,214 6,074,300 0.9
110,400 Ameritech Corp. 8,274,518 8,445,600 1.2
151,700 Bell Atlantic Corp. 8,027,948 9,102,000 1.3
163,400 BellSouth Corp. 9,162,908 9,334,225 1.4
257,700 GTE Corp. 9,016,758 9,567,113 1.4
205,700 NYNEX Corp. 8,342,529 8,767,962 1.3
175,100 Pacific Telesis Group 7,853,346 9,936,925 1.5
216,900 Southwestern Bell Corp. 7,422,726 9,218,250 1.4
319,900 US West, Inc. 14,757,846 14,955,325 2.2
----------- ------------ ----
79,265,793 85,401,700 12.6
Utilities--Electric 326,000 Allegheny Power System, Inc. 8,652,910 8,516,750 1.3
220,200 Boston Edison Co. 5,789,754 6,330,750 0.9
210,000 Central & SouthWest Corp. 5,840,299 6,247,500 0.9
231,200 Consolidated Edison Co. of New York 7,260,774 7,196,100 1.1
146,900 Detroit Edison Co. 4,899,043 4,737,525 0.7
110,250 Dominion Resources, Inc. 4,427,302 4,878,562 0.7
190,000 Duke Power Co. 8,095,413 7,980,000 1.2
267,500 Entergy Corp. 8,646,550 9,864,062 1.5
414,800 General Public Utilities Corp. 11,683,837 12,340,300 1.8
339,100 Houston Industries, Inc. 15,787,663 15,386,662 2.3
338,600 Long Island Lighting Co. 8,537,882 8,041,750 1.2
259,800 NIPSCO Industries, Inc. 6,905,271 8,248,650 1.2
235,000 New York State Electric & Gas Corp. 8,459,615 7,079,375 1.0
196,700 Northeast Utilities Co. 5,253,338 4,597,862 0.7
385,600 PSI Resources, Inc. 9,257,252 9,929,200 1.5
342,000 PacifiCorp 6,846,153 6,498,000 1.0
164,800 Pennsylvania Power & Light Co. 4,428,338 4,429,000 0.7
440,000 Philadelphia Electric Co. 12,186,735 12,320,000 1.8
100,400 Public Service Co. of Colorado 3,003,442 2,999,450 0.4
186,300 Rochester Gas & Electric Corp. 4,775,302 4,890,375 0.7
300,000 SCEcorp 6,765,509 6,112,500 0.9
202,100 Southern Co. 6,989,691 8,740,825 1.3
188,300 Texas Utilities Co. 7,596,591 8,049,825 1.2
203,300 Western Resources Co. 6,442,514 6,886,788 1.0
----------- ----------- ----
178,531,178 182,301,811 27.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US Dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United States Utilities--Gas 130,000 The Brooklyn Union Gas Co. $ 3,371,550 $ 3,412,500 0.5%
(concluded) 240,000 The Coastal Corp. 6,414,080 6,450,000 1.0
144,600 Consolidated Natural Gas Co. 6,463,720 6,669,675 1.0
236,300 El Paso Natural Gas Co. 8,352,615 8,565,875 1.3
399,100 Enron Corp. 8,119,749 12,421,988 1.8
258,300 NICOR Inc. 5,661,173 7,103,250 1.0
115,000 New Jersey Resources Corp. 3,262,177 2,975,625 0.4
250,000 Questar Corp. 6,792,478 8,218,750 1.2
338,300 Sonat, Inc. 7,262,851 10,445,012 1.5
116,300 Washington Gas Light Co. 4,016,691 4,753,762 0.7
365,000 Williams Co., Inc. 6,931,607 9,900,625 1.5
----------- ------------ ----
66,648,691 80,917,062 11.9
Total Common Stocks in the United States 324,445,662 348,620,573 51.5
Total Investments in Common Stocks 484,874,302 534,160,416 78.7
<CAPTION>
Face
Amount Fixed-Income Securities
<S> <S> <C> <S> <C> <C> <C>
Australia Miscellaneous US$ 7,960,000 Telstra Corp., Ltd., 6.50% due 7/31/2003 8,115,578 7,971,940 1.2
Total Fixed-Income Securities in Australia 8,115,578 7,971,940 1.2
Canada Utilities--Electric 2,000,000 Hydro-Quebec, 9.23% due 12/04/2000 2,038,540 2,327,282 0.3
Total Fixed-Income Securities in Canada 2,038,540 2,327,282 0.3
Japan Telecommunications 4,000,000 Nippon Telegraph & Telephone Corp., 9.50%
due 7/27/1998 4,244,380 4,578,884 0.7
Total Fixed-Income Securities in Japan 4,244,380 4,578,884 0.7
<PAGE>
Korea Telecommunications 2,500,000 Korea Telecom, 7.40% due 12/01/1999 2,499,500 2,593,768 0.4
Utilities--Electric 6,000,000 Korea Electric Power Corp., 6.38%
due 12/01/2003 5,913,060 5,838,378 0.9
Total Fixed-Income Securities in Korea 8,412,560 8,432,146 1.3
United States Telecommunications 4,000,000 Rochester Telephone Corp., 9.50%
due 6/01/2000 4,111,200 4,712,520 0.7
Utilities--Electric 4,000,000 Consumer Power Co., 8.875% due 11/15/1999 4,190,000 4,502,784 0.7
4,000,000 Niagara Mohawk Power Corp., 9.50%
due 6/01/2000 4,197,640 4,700,960 0.7
----------- ------------ ----
8,387,640 9,203,744 1.4
Total Fixed-Income Securities in the
United States 12,498,840 13,916,264 2.1
Total Investments in Fixed-Income
Securities 35,309,898 37,226,516 5.6
<CAPTION>
Short-Term Securities
<S> <S> <C> <S> <C> <C> <C>
United States Commercial 25,000,000 Cooper Industries, Inc., 3.05%
Paper* due 12/07/1993 24,987,292 24,987,292 3.7
20,000,000 Daimler Benz AG, 3.07% due 12/15/1993 19,976,122 19,976,122 2.9
30,000,000 PHH Corp., 3.08% due 12/16/1993 29,961,500 29,961,500 4.4
22,100,000 Preferred Receivables Funding Corp., 3.10%
due 12/22/1993 22,060,036 22,060,036 3.3
----------- ------------ ----
96,984,950 96,984,950 14.3
Repurchase
Agreement**
25,262,000 Carroll McEntee & McGinley Inc.,
purchased on 11/30/1993 to yield
3.20% to 12/01/1993 25,262,000 25,262,000 3.7
Total Investments in Short-Term
Securities 122,246,950 122,246,950 18.0
Total Investments $642,431,150 693,633,882 102.3
============
Liabilities in Excess of Other Assets (15,461,628) (2.3)
------------ -----
Net Assets $678,172,254 100.0%
============ =====
<PAGE>
<FN>
*Commercial Paper is traded on a discount basis; the interest rates
shown are the discount rates paid at the time of purchase by the Fund.
**Repurchase Agreements are fully collateralized by US Government
or Agency Obligations.
(1)The rights may be exercised until 12/20/1993.
++American Depositary Receipt (ADR).
++++Restricted securities as to resale. The value of the Fund's investment in
restricted securities was approximately $18,672,000, representing 2.8%
of net assets.
Acquisition Value
Issue Date Cost (Note 1a)
Distribuidora Chilectra $ 4,708,327 $ 5,496,675
Metropolitana, S.A. (ADR) 2/12/92
Telecom Argentina Stet S.A. (ADR) 3/23/92 4,726,664 6,193,393
TelecomAsia Corporation Public
Co., Ltd. PLC (ADR) 11/15/93 328,050 328,050
Telefonica de Argentina S.A. (ADR) 12/17/91 4,464,581 6,653,502
Total $14,227,622 $18,671,620
=========== ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of November 30, 1993
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$642,431,150) (Note 1a) $ 693,633,882
Cash 85,947
Receivables:
Capital shares sold $ 3,950,744
Dividends 2,423,076
Interest 674,535 7,048,355
-----------
Deferred organization expenses (Note 1f) 43,526
Prepaid registration fees and other assets (Note 1f) 40,218
--------------
Total assets 700,851,928
--------------
<PAGE>
Liabilities: Payables:
Securities purchased 20,375,446
Capital shares redeemed 1,304,378
Distributor (Note 2) 390,450
Investment adviser (Note 2) 355,527 22,425,801
-----------
Accrued expenses and other liabilities 253,873
--------------
Total liabilities 22,679,674
--------------
Net Assets: Net assets $ 678,172,254
==============
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized $ 618,096
Consist of: Class B Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized 4,528,532
Paid-in capital in excess of par 616,869,380
Undistributed investment income--net 3,052,683
Undistributed realized capital gains on investments and foreign currency transactions--net 1,900,387
Unrealized appreciation on investments and foreign currency transactions--net 51,203,176
--------------
Net assets $ 678,172,254
==============
Net Asset Class A--Based on net assets of $81,717,754 and 6,180,960 shares outstanding $ 13.22
Value: ==============
Class B--Based on net assets of $596,454,500 and 45,285,324 shares outstanding $ 13.17
==============
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended November 30, 1993
<S> <S> <C> <C>
Investment Dividends (net of $333,875 foreign withholding tax) $ 13,141,884
Income Interest and discount earned 4,046,159
(Notes 1d & 1e): --------------
Total income 17,188,043
--------------
Expenses: Distribution fees--Class B (Note 2) $ 2,574,752
Investment advisory fees (Note 2) 2,346,433
Transfer agent fees--Class B (Note 2) 306,683
Registration fees (Note 1f) 195,864
Printing and shareholder reports 103,861
Accounting services (Note 2) 81,576
Custodian fees 79,514
Professional fees 64,219
Transfer agent fees--Class A (Note 2) 34,960
Directors' fees and expenses 31,371
Amortization of organization expenses (Note 1f) 20,892
Other 11,547
------------
Total expenses 5,851,672
--------------
Investment income--net 11,336,371
--------------
<PAGE>
Realized & Realized gain from:
Unrealized Investments--net 4,662,953
Gain on Foreign currency transactions 53,369 4,716,322
Investments and ------------
Foreign Currency Change in unrealized appreciation on:
Transactions-- Investments--net 37,511,259
Net (Notes 1b, Foreign currency transactions 6,895 37,518,154
1e & 3): ------------ --------------
Net realized and unrealized gain on investments and foreign currency
transactions 42,234,476
--------------
Net Increase in Net Assets Resulting from Operations $ 53,570,847
==============
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION> For the Year Ended November 30,
Increase (Decrease) in Net Assets: 1993 1992
<S> <S> <C> <C>
Operations: Investment income--net $ 11,336,371 $ 5,967,216
Realized gain (loss) on investments and foreign currency
transactions--net 4,716,322 (1,675,682)
Change in unrealized appreciation on investments and foreign
currency transactions--net 37,518,154 7,399,602
------------ ------------
Net increase in net assets resulting from operations 53,570,847 11,691,136
------------ ------------
Dividends & Investment income--net:
Distributions Class A (1,417,410) (991,785)
to Shareholders Class B (8,066,873) (4,581,932)
(Note 1g): Realized gain on investments--net:
Class A (33,059) --
Class B (223,915) --
------------ ------------
Net decrease in net assets resulting from dividends and distributions to
shareholders (9,741,257) (5,573,717)
------------ ------------
Capital Share Net increase in net assets derived from capital share
Transactions transactions 404,174,719 112,505,457
(Note 4): ------------ ------------
Net Assets: Total increase in net assets 448,004,309 118,622,876
Beginning of year 230,167,945 111,545,069
------------ ------------
End of year* $678,172,254 $230,167,945
============ ============
*Undistributed investment income--net $ 3,052,683 $ 1,200,595
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A Class B
For the For the
Period Period
The following per share data and ratios have been For the Dec. 28 For the Dec. 28
derived from information provided in the Year Ended 1990++ to Year Ended 1990++ to
financial statements. November 30, Nov. 30, November 30, Nov. 30,
1993 1992 1991 1993 1992 1991
Increase (Decrease) in Net Asset Value:
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.23 $ 10.67 $ 10.00 $ 11.20 $ 10.65 $ 10.00
Operating ------- ------- ------- -------- -------- -------
Performance: Investment income--net .40 .47 .49 .33 .39 .40
Realized and unrealized gain on investments and
foreign currency transactions--net++++ 2.01 .57 .56 1.98 .57 .58
------- ------- ------- -------- -------- -------
Total from investment operations 2.41 1.04 1.05 2.31 .96 .98
Less dividends and distributions: ------- ------- ------- -------- -------- -------
Investment income--net (.41) (.48) (.38) (.33) (.41) (.33)
Realized gain on investments--net (.01) -- -- (.01) -- --
------- ------- ------- -------- -------- -------
Total dividends and distributions (.42) (.48) (.38) (.34) (.41) (.33)
------- ------- ------- -------- -------- -------
Net asset value, end of period $ 13.22 $ 11.23 $ 10.67 $ 13.17 $ 11.20 $ 10.65
======= ======= ======= ======== ======== =======
Total Investment Based on net asset value per share 21.80% 10.05% 10.83%+++ 20.86% 9.20% 10.05%+++
Return:** ======= ======= ======= ======== ======== =======
Ratios to Average Expenses, excluding distribution fees .82% 1.01% 1.28%* .84% 1.02% 1.29%*
Net Assets: ======= ======= ======= ======== ======== =======
Expenses .82% 1.01% 1.28%* 1.59% 1.77% 2.04%*
======= ======= ======= ======== ======== =======
Investment income--net 3.57% 4.47% 5.57%* 2.81% 3.65% 4.78%*
======= ======= ======= ======== ======== =======
Supplemental Net assets, end of period (in thousands) $81,718 $29,772 $20,579 $596,455 $200,396 $90,966
Data: ======= ======= ======= ======== ======== =======
Portfolio turnover 8.92% 30.91% 20.51% 8.92% 30.91% 20.51%
======= ======= ======= ======== ======== =======
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
++++Foreign currency transaction amounts have been reclassified to conform to the 1993 presentation.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Utility Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Fund offers both Class A and Class B
Shares. Class A Shares are sold with a front-end sales charge. Class B
Shares may be subject to a contingent deferred sales charge. Both classes
of shares have identical voting, dividend, liquidation and other rights
and the same terms and conditions, except that Class B Shares bear certain
expenses related to the distribution of such shares and have exclusive
voting rights with respect to matters relating to such distribution
expenditures. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of Securities--Securities traded in the over-the-
counter market are valued at the last available bid price or yield
equivalents obtained from one or more dealers in the over-the-counter
market prior to the time of valuation. Portfolio securities which are
traded on stock exchanges are valued at the last sale price on the
principal market on which such securities are traded, as of the close
of business on the day the securities are being valued or, lacking any
sales, at the last available bid price.
Options written are valued based upon the last asked price in the
case of exchange-traded options or, in the case of options traded in
the over-the-counter market, at the average of the last asked price as
obtained from one or more dealers. Options purchased by the Fund are
valued at their last bid price in the case of exchange-traded options or,
in the case of options traded in the over-the-counter market, at the
average of the last bid price as obtained from two or more dealers. Other
investments, including futures contracts and related options, are stated
at market value.
Securities and assets 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, including
valuations furnished by a pricing service retained by the Fund.
<PAGE>
Short-term securities are valued at amortized cost, which approxi-
mates market value.
(b) Foreign Currency Transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized.
Assets and liabilities denominated in foreign currencies are valued at
the exchange rate at the end of the period. Foreign currency transactions
are the result of settling (realize or valuing (unrealized) such transactions
expressed in foreign currencies into US dollars. Realized and unrealized
gains or losses from investments include the effects of foreign exchange
rates on investments.
The Fund is authorized to enter into forward foreign exchange contracts as
a hedge against either specific transactions or portfolio positions. Such
contracts are not entered on the Fund's records. However, the effect on
operations is recorded from the date the Fund enters into such contracts.
Premium or discount is amortized over the life of the contracts.
(c) Options--When the Fund sells an option, an amount equal to the premium
received by the Fund is reflected as an asset and an equivalent liability.
The amount of the liability is subsequently marked to market to reflect the
current market value of the option written.
When a security is purchased or sold through an exercise of an option, the
related premium paid (or received) is added to (or deducted from) the basis
of the security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent
of the premiums received or paid (or gain or loss to the extent the cost of
the closing transaction is less than or exceeds the premiums paid or
received).
Written and purchased options are non-income producing
investments.
(d) Income Taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income
to its shareholders. Therefore, no Federal income tax provision is
required. Under the applicable foreign tax law, a withholding tax
may be imposed on interest, dividends and capital gains at various
rates.
(e) Security Transactions and Investment Income--Security transactions
are recorded on the dates the transactions are entered into (the trade
dates). Interest income (including amortization of discount) is recognized
on the accrual basis. Dividend income is recorded on the ex-dividend date,
except that if the ex-dividend date has passed, certain dividends from
foreign securities are recorded as soon as the Fund is informed of the
ex-dividend date. Realized gains and losses on security transactions are
determined on the identified cost basis.
<PAGE>
(f) Deferred Organization Expenses and Prepaid Registration Fees--
Deferred organization expenses are charged to expense over a five-year
period. Prepaid registration fees are charged to expense as the related
shares are issued.
(g) Dividends and Distributions--Dividends and distributions paid
by the Fund are recorded on the ex-dividend dates.
(h) Reclassification--Certain 1992 amounts have been reclassified
to conform to the 1993 presentation.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management ("MLAM"). MLAM is the name under which
Merrill Lynch Investment Management, Inc. ("MLIM") does business. MLIM
is an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. The
Fund has also entered into a Distribution Agreement with Merrill Lynch
Funds Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned subsidiary
of MLIM.
NOTES TO FINANCIAL STATEMENTS (concluded)
MLAM is responsible for the management of the Fund's portfolio and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operation of the Fund. For such services, the Fund pays
a monthly fee of 0.60%, on an annual basis, of the average daily value of
the Fund's net assets. The most restrictive annual expense limitation
requires that the Investment Adviser reimburse the Fund to the extent
the Fund's expenses (excluding interest, taxes, distribution fees,
brokerage fees and commissions, and extraordinary items) exceed 2.5%
of the Fund's first $30 million of average daily net assets, 2.0% of
the next $70 million of average daily net assets and 1.5% of the average
daily net assets in excess thereof. MLAM's obligation to reimburse the
Fund is limited to the amount of the advisory fee. No fee payment will
be made to the Investment Adviser during any fiscal year which will cause
such expenses to exceed the most restrictive expense limitation applicable
at the time of such payment.
Effective January 1, 1994, the investment advisory business of MLAM
reorganized from a corporation to a limited partnership. The general
partner of MLAM is Princeton Services, Inc., an indirect wholly-owned
subsidiary of Merrill Lynch & Co.
<PAGE>
The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940 pursuant to which MLFD
receives a fee from the Fund at the end of each month at the annual rate
of 0.75% of the average daily net assets of the Class B Shares of the Fund.
This fee is to compensate the Distributor for the services it provides and
the expenses borne by the Distributor under the Distribution Agreement. As
authorized by the Plan, the Distributor has entered into an agreement with
Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S") which provides for
the compensation of MLPF&S for providing distribution-related services to
the Fund. For the year ended November 30, 1993, MLFD earned $2,574,752
under the Plan, all of which was paid to MLPF&S pursuant to the agreement.
For the year ended November 30, 1993, MLFD earned underwriting discounts
of $89,960, and MLPF&S earned dealer concessions of $1,420,365 on sales of
Class A Shares. MLPF&S also received contingent deferred sales charges of
$537,201 relating to Class B Share transactions and $99,827 in commissions
on the execution of portfolio security transactions for the Fund during the
period.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of Merrill
Lynch & Co., Inc., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLIM, MLPF&S, FDS, MLFD, and/or Merrill Lynch & Co., Inc.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended November 30, 1993 were $355,323,536 and $29,824,441,
respectively.
Net realized and unrealized gains (losses) as of November 30, 1993
were as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $ 4,662,955 $ 51,202,732
Short-term investments (2) --
Foreign currency transactions 53,369 444
------------ ------------
Total $ 4,716,322 $ 51,203,176
============ ============
As of November 30, 1993, net unrealized appreciation for Federal income
tax purposes aggregated $51,202,732, of which $57,866,566 related to
appreciated securities and $6,663,834 related to depreciated securities.
At November 30, 1993, the aggregate cost of investments for Federal income
tax purposes was $642,431,150.
<PAGE>
4. Capital Stock Transactions:
Net increase in net assets derived from capital share transactions was
$404,174,719 and $112,505,457 for the years ended November 30, 1993 and
November 30, 1992, respectively.
Transactions in capital shares for Class A and Class B shares were
as follows:
Class A Shares for the Year Ended Dollar
November 30, 1993 Shares Amount
Shares sold 4,349,217 $ 56,997,490
Shares issued to shareholders in
reinvestment of dividends and
distributions 85,983 1,081,152
--------- ------------
Total issued 4,435,200 58,078,642
Shares redeemed (905,090) (11,584,655)
--------- ------------
Net increase 3,530,110 $ 46,493,987
========= ============
Class A Shares for the Year Ended Dollar
November 30, 1992 Shares Amount
Shares sold 1,310,420 $ 14,652,320
Shares issued to shareholders in
reinvestment of dividends 67,282 724,651
--------- ------------
Total issued 1,377,702 15,376,971
Shares redeemed (655,555) (7,180,713)
--------- ------------
Net increase 722,147 $ 8,196,258
========= ============
Class B Shares for the Year Ended Dollar
November 30, 1993 Shares Amount
Shares sold 30,702,352 $399,813,619
Shares issued to shareholders in
reinvestment of dividends and
distributions 501,195 6,292,835
---------- ------------
Total issued 31,203,547 406,106,454
Shares redeemed (3,809,433) (48,425,722)
---------- ------------
Net increase 27,394,114 $357,680,732
========== ============
<PAGE>
Class B Shares for the Year Ended Dollar
November 30, 1992 Shares Amount
Shares sold 11,092,786 $123,538,723
Shares issued to shareholders in
reinvestment of dividends 291,061 3,142,568
---------- ------------
Total issued 11,383,847 126,681,291
Shares redeemed (2,034,872) (22,372,092)
---------- ------------
Net increase 9,348,975 $104,309,199
========== ============
5. Subsequent Event:
On December 15, 1993, the Fund's Board of Directors declared an ordinary
income dividend of $0.124013 per Class A Share and a $0.099074 per Class B
Share, and a capital gains distribution of $0.026921 per Class A and Class B
Share, payable on December 23, 1993, to shareholders of record as of
December 15, 1993.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Global Utility Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Merrill Lynch Global Utility
Fund, Inc. as of November 30, 1993, the related statements of operations
for the year then ended and changes in net assets for each of the years
in the two-year period then ended, and the financial highlights for the
two-year period then ended and the period December 28, 1990 (commencement
of operations) to November 30, 1991. These financial statements and the
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
the 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 the 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 securities owned at November 30, 1993 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.
<PAGE>
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Global Utility Fund, Inc. as of November 30, 1993, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
Deloitte & Touche
Princeton, New Jersey
December 31, 1993
</AUDIT-REPORT>
APPENDIX: GRAPHIC AND IMAGE MATERIAL
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Class A and
Class B Shares compared to growth of an investment in the Financial Times--
Actuaries World Index and the Financial Times--Actuaries World Utility Index.
Beginning and ending values are:
12/28/90** 11/31/93
ML Global Utility
Fund, Inc. ++--Class A Shares* $ 9,350 $ 13,890
ML Global Utility
Fund, Inc. ++--Class B Shares* $ 10,000 $ 14,324
Financial Times--
Actuaries World Index++++ $ 10,000 $ 13,275
Financial Times--Actuaries
World Utility Index ++++++ $ 10,000 $ 14,924
[FN]
*Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
**Commencement of Operations.
++ML Global Utility Fund, Inc. invests at least 65% of its total assets
in common stocks (including preferred or debt securities convertible
into common stocks), preferred stocks and debt securities issued by
domestic and foreign companies in the utilities industries.
++++This unmanaged market capitilization-weighted Index is comprised of
nearly 2,200 equities from 24 countries in 12 regions, including the
United States.
++++++This unmanaged market capitilization-weighted Index is comprised of
utility stocks from any of the 24 countries that make up the Financial
Times--Actuaries World Income.
