MERRILL
LYNCH
GLOBAL
UTILITY
FUND, INC.
FUND LOGO
Semi-Annual Report May 31, 1994
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 re-
port 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
<PAGE>
MERRILL LYNCH GLOBAL UTILITY FUND, INC.
Officers and
Directors
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Walter D. Rogers, Vice President and Portfolio Manager
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
DEAR SHAREHOLDER
Inflationary concerns persisted during the May quarter. The Federal
Reserve Board followed up its initial increase in the Federal Funds
rate with three subsequent monetary policy tightening moves. At the
same time, investors viewed signs of economic strength as an
indication that the rate of inflation would soon accelerate. Among
the most troublesome statistics released was the mid-May rise in the
Commodity Research Bureau's inflation index. However, by quarter-end
this index had declined back to the levels at which it began the
year.
<PAGE>
Despite an upward revision in gross domestic product growth to 3.0%
for the first quarter of the year, later economic data releases
suggest a moderating trend. Disposable income fell 0.5% in April,
consumer spending dropped 0.4% after adjusting for inflation, and
sales of new homes also fell. Consumer confidence declined for the
first time in three months, reflected in sluggish retail sales.
However, employment data for May sent somewhat conflicting signals.
The unemployment rate dropped sharply in May from 6.4% to 6.0%, but
at the same time business payrolls grew only modestly.
In the weeks ahead, investors are likely to continue to focus their
attention on the direction of the economy and inflationary trends.
Evidence of stable and moderate economic growth, combined with
subdued inflationary pressures, would be a positive development for
the financial markets. The absence of these trends, along with
continued monetary policy tightening by the central bank, would
likely lead to continued volatility in stock and bond prices over
the near term.
Portfolio Matters
With higher interest rates and declining bond prices, the May
quarter was a difficult one for utility investments across all four
sectors (electric, telephone, gas and water) worldwide. Since the
end of the February quarter, the stock market sectors sustaining the
steepest declines have been the electric utilities in the United
States and the rest of the Americas and natural gas utilities in
Europe. Using Dow Jones World Industry Groups data, electric util-
ities in the United States and the Americas were down in price by
9.7%, and gas stocks in Europe were down 12.1%. On average, since
the end of the February quarter, the best-performing sector world-
wide was telephone stocks with a 1.7% decline. Positive results
came from the Asia/Pacific region with a 4.2% gain, followed by a
small decline of less than 1.0% in US telephone stock prices.
Merrill Lynch Global Utility, Inc.'s performance was aided by its
over 32% weighting in global telephone stocks, of which about 7% was
in companies in the Asia/Pacific region and 13% was in US-based
companies. The portfolio was negatively impacted by its 25% weight-
ing in US-based electric utility holdings given the very poor price
performance of the group. However, the yield provided by the domes-
tic electrics in the portfolio helped to cushion the impact on total
return. The Fund's exposure to European gas stocks, which as a
group performed poorly, is limited to Italgas Torino and Energie
Versorgung Niederoesterreich AG (EVN). Our Italgas investment
accounts for under 1% of net assets and actually showed a positive
price return for the quarter. EVN shares, which declined during the
May quarter, account for approximately 0.6% of net assets.
<PAGE>
During the May quarter, we made some changes to the Fund's port-
folio. We purchased seven new holdings and added to two existing
holdings. In addition, we eliminated one position in the gas sector
and reduced the weighting of another gas company. These changes
helped to diversify the portfolio geographically. Moreover, we
diversified our positions in Canada, the United Kingdom, Thailand
and the United States even further by adding one new position in
each country.
As a percentage of the Fund's net assets, the largest new position
was Tele Danmark A/S (ADR), a new issue that came to market in late
April. Tele Danmark offers investors a combination of a defensive
investment coupled with good earnings prospects. While earnings will
predominantly be driven by cost reductions, revenue growth is
expected to be rather healthy for this mature company, in the 4%--6%
range in our opinion. The company has a strong management team in
place and has a relatively modern network. Capital expenditures are
expected to be flat, which will in turn increase the company's net
cash flow. Overall, Tele Danmark appears to be well-positioned to
handle competition in its market, operates under a fair regulatory
scheme, and has an attractive valuation level.
Our second-largest new position was in the shares of the German
utility, VEBA AG. The company has operations in electricity, which
is by far the largest contributor to earnings, trading/transpor-
tation/services, oil, and chemicals. The timing of the purchase
related to the company's continuing focus on restructuring its
operations with an emphasis on its struggling chemical division.
The actions taken by VEBA's management should aid earnings growth
and in addition, may allow for a more aggressive dividend policy.
The net result is expected to allow for a positive revaluation of
the stock by local investors as well as create more investor
interest in the company from abroad.
During a stock offering that took place during the May quarter, we
took a small position in the developing market of India with the
purchase of an Indian electric utility, CESC Ltd. The company's
operations consist of the generation, transmission and distribution
of electric power in the cities of Calcutta and Howrah and adjoining
areas in West Bengal. The company currently faces no competition in
its distribution area, and it sells electricity directly to over 1.1
million end-users, including residential customers as well as in-
dustrial and commercial customers. Unit sales to residential cus-
tomers increased by 5.9% on average per year between 1989 and 1993.
The current regulatory scheme under which CESC operates appears
favorable, given that the Indian government is trying to make the
electric market attractive to more developers and investors in
response to the country's need for power and frequent blackouts.
Coal is the primary fuel source used by the company in the gener-
ation of electricity.
Westcoast Energy Inc., another company added during the May quarter,
is a Canadian energy company that has operations in natural gas
pipelines, gas distribution and other related businesses. West-
coast's pipeline distribution systems carry Canadian natural gas
to markets in British Columbia, other sections of Canada and to the
western part of the United States. We believe that the earnings
prospects of the company are good as is its ability to raise its
dividend.
<PAGE>
PowerGen PLC, another new addition, is a UK-based power generation
company. As one of the country's two generation companies, PowerGen
has had among the fastest earnings and dividend growth of the mature
UK utilities. The company's dividend cover is high, its balance
sheet is in excellent shape, and annual dividend growth is in the
mid-to high-teen range. The company has been improving earnings
principally by reducing costs. With most of the cost cutting done,
the focus is shifting towards finding new sources of growth such as
power projects outside of the United Kingdom. PowerGen is conserv-
atively managed, and therefore we expect the diversification outside
of the United Kingdom to be done well. The stock was purchased
given its above industry average expected dividend growth and
current valuation level versus National Power, the other UK-based
power generation company.
We also purchased Jasmine International Public Co., Ltd., a telecom-
munications company based in Thailand. The company participates in
several areas such as new telecommunications concessions; the
design, supply and installation of telecommunications equipment; and
consultancy and maintenance. The company does not manufacture any
telecommunications equipment but imports it from abroad from various
companies. Jasmine's customer base includes government agencies and
state enterprises. We established only a very small position in the
company, since demand for the offering exceeded the supply. The
stock will start trading in July.
National Fuel Gas Company, another new addition, is an integrated
US-based company that consists of a gas distribution utility which
accounts for over 50% of its revenues. Gas supply, transmission,
storage operations and oil and gas exploration and production
operations make up the rest of the company. The company's gas
distribution operations serve parts of western New York, including
the city of Buffalo, and northwestern Pennsylvania. In addition to
its diversified energy asset base, the stock offers an above-average
market yield coupled with steady dividend and earnings growth.
We added to our existing position in BC Telecom, Inc. given that
its prospects remain attractive and the position was small as a
percentage of net assets. We also added to our position in Duke
Power Co. The Fund's position in Consolidated Natural Gas Co. was
eliminated because of the negative earnings estimate revision for
the company following the release of first quarter earnings and the
stock's valuation level. We also reduced our position in El Paso
Natural Gas Co. given concern over pipeline overcapacity in
California, the most important market for El Paso.
<PAGE>
Investment Outlook
We plan to continue increasing the Fund's foreign holdings given the
clouded prospects in the United States for electric utility stocks
and the Fund's present broad-based weighting in US-based telephone
stocks. US electric utility stocks were hit by two events during the
May quarter. The first was a proposal by the California Public
Utility Commission to open up the retail market to competition. The
second was the announcement by FPL Corp. to cut its dividend by 32%,
which reduces its payout ratio and allows for the buy back of stock
and also allows the company to be classified as a growth stock to
participate in a more competitive investment environment. The FPL
announcement caught investors by surprise since the company is
financially strong and this move was not necessary from a financial
perspective. The investment community is now focusing on which
utility may be next in terms of cutting its dividend, and this,
combined with the uncertainty in California, is creating weakness in
the domestic electric utility stocks. In light of these develop-
ments, over the near term, foreign utilities will probably offer
both greater growth potential and less near-term stock price
volatility for the Fund.
In Conclusion
We thank you for your investment in Merrill Lynch Global Utility
Fund, Inc., and we look forward to discussing our investment
strategy and outlook with you in future shareholder reports.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Walter D. Rogers)
Walter D. Rogers
Vice President and Portfolio Manager
July 1, 1994
<PAGE>
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.
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
5/31/94 2/28/94 5/31/93 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $12.66 $13.13 $12.35 +2.72%(1) -3.58%
Class B Shares 12.62 13.08 12.31 +2.73(1) -3.52
Class A Shares--Total Return +6.15(2) -2.76(3)
Class B Shares--Total Return +5.43(4) -2.89(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 $0.027 per share capital gains distributions.
(2) Percent change includes reinvestment of $0.429 per share ordinary income
dividends and $0.027 per share capital gains distributions.
(3) Percent change includes reinvestment of $0.107 per share ordinary income dividends.
(4) Percent change includes reinvestment of $0.337 per share ordinary income
dividends and $0.027 per share capital gains distributions.
(5) Percent change includes reinvestment of $0.081 per share ordinary income dividends.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/94 + 4.84% -1.97%
Inception (12/28/90) through
3/31/94 +11.84 +9.56
[FN]
*Maximum sales charge is 6.5%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/94 + 4.07% + 0.07%
Inception (12/28/90) through
3/31/94 +10.98 +10.94
[FN]
*Maximum contingent deferred sales charge is 4% and is
reduced to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
12/28/90--12/31/90 $10.00 $10.01 -- -- + 0.10%
1991 10.01 10.93 -- $0.508 +14.74
1992 10.93 11.40 $0.012 0.469 + 8.97
1993 11.40 13.67 0.027 0.424 +24.13
1/1/94--5/31/94 13.67 12.66 -- 0.107 - 6.60
------ ------
Total $0.039 Total $1.508
Cumulative total return as of 5/31/94: +45.11%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was included.
</TABLE>
<PAGE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
12/28/90--12/31/90 $10.00 $10.01 -- -- + 0.10%
1991 10.01 10.92 -- $0.435 +13.84
1992 10.92 11.38 $0.012 0.391 + 8.12
1993 11.38 13.63 0.027 0.337 +23.17
1/1/94--5/31/94 13.63 12.62 -- 0.081 - 6.81
------ ------
Total $0.039 Total $1.244
Cumulative total return as of 5/31/94: +41.42%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Value Percent of
Industries Held Common Stocks & Warrants Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
COUNTRY
Argentina
Telecommunications 138,479 Telecom Argentina Stet S.A. (ADR)++ (1) $ 5,075,039 $ 9,001,135 1.4%
128,513 Telefonica de Argentina S.A. (ADR)++ (1) 4,824,906 9,269,000 1.4
------------ ------------ ------
9,899,945 18,270,135 2.8
Utilities--Electric 6,600 Central Costanera S.A. (ADR)++ (1) 158,400 245,850 0.0
Total Common Stocks in Argentina 10,058,345 18,515,985 2.8
Australia
Utilities--Gas 2,479,584 Australian Gas & Light Co., Ltd. 6,364,362 7,577,976 1.2
Total Common Stocks in Australia 6,364,362 7,577,976 1.2
<PAGE>
Austria
Utilities--Gas 34,850 Energie Versorgung Niederoesterreich AG (EVN) 3,050,014 3,855,809 0.6
Total Common Stocks in Austria 3,050,014 3,855,809 0.6
Canada
Energy 400,000 Westcoast Energy Inc. 6,901,727 6,950,000 1.1
Telecommunications 321,700 BC Telecom, Inc. 6,009,937 5,952,031 0.9
Utilities--Electric 458,600 Nova Scotia Power Co. 4,322,473 3,849,260 0.6
Utilities--Gas 573,700 Transcanada Pipeline Co. Ltd. (ADR)++ 8,602,384 7,458,100 1.1
Total Common Stocks in Canada 25,836,521 24,209,391 3.7
Chile
Telecommunications 84,300 Compania de Telefonos de Chile S.A. (ADR)++ 5,871,894 7,671,300 1.2
Utilities--Electric 186,000 Distribuidora Chilectra Metropolitana S.A. (ADR)++ (1) 5,031,451 8,067,750 1.2
28,000 Enersis S.A. (ADR)++ 544,224 644,000 0.1
------------ ------------ ------
5,575,675 8,711,750 1.3
Total Common Stocks in Chile 11,447,569 16,383,050 2.5
Denmark
Telecommunications 331,000 Tele Danmark A/S (ADR)++ 7,787,106 8,275,000 1.3
Total Common Stocks in Denmark 7,787,106 8,275,000 1.3
France
Utilities--Water 26,922 Compagnie Generale des Eaux 11,509,640 11,954,172 1.8
40,000 Lyonnaise des Eaux-Dumez 3,989,365 4,058,280 0.6
------------ ------------ ------
15,499,005 16,012,452 2.4
Total Common Stocks in France 15,499,005 16,012,452 2.4
Germany
Utilities--Gas 20,000 VEBA AG 6,526,985 6,155,718 0.9
Total Common Stocks in Germany 6,526,985 6,155,718 0.9
<PAGE>
Hong Kong
Telecommunications 7,644,000 Hong Kong Telecommunications, Ltd. PLC 12,600,067 15,138,593 2.3
Utilities--Electric 4,061,200 China Light & Power Co., Ltd. 23,403,683 22,604,569 3.5
1,552,000 Hong Kong Electric Holdings, Ltd. 3,897,526 4,861,614 0.7
------------ ------------ ------
27,301,209 27,466,183 4.2
Utilities--Gas 2,626,800 The Hong Kong & China Gas Co., Ltd. 4,674,416 5,542,274 0.9
218,900 The Hong Kong & China Gas Co., Ltd. (Warrants)(b)(2) 0 125,381 0.0
------------ ------------ ------
4,674,416 5,667,655 0.9
Total Common Stocks & Warrants in Hong Kong 44,575,692 48,272,431 7.4
India
Utilities--Electric 49,500 CESC Ltd. (Units) 2,640,330 2,450,250 0.4
Total Common Stocks in India 2,640,330 2,450,250 0.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
Industries Held Common Stocks & Warrants Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
COUNTRY
Italy
Telecommunications 1,786,300 Italgas Torino $ 5,169,953 $ 5,827,088 0.9%
3,091,700 Societa Finanziaria Telefonica S.p.A. (STET) 5,780,442 8,686,297 1.3
5,505,250 Societa Italiana Esercizio Telecom S.p.A. (SIP) 7,916,167 14,879,054 2.3
------------ ------------ ------
18,866,562 29,392,439 4.5
Total Common Stocks in Italy 18,866,562 29,392,439 4.5
Malaysia
Telecommunications 1,385,000 Telekom Malaysia BHD 9,502,659 10,202,380 1.6
Total Common Stocks in Malaysia 9,502,659 10,202,380 1.6
Mexico
Telecommunications 140,000 Telefonos de Mexico, S.A. de C.V. (ADR)++ 7,377,170 8,697,500 1.3
Total Common Stocks in Mexico 7,377,170 8,697,500 1.3
New Zealand
Telecommunications 216,500 Telecom Corporation of New Zealand Ltd. (ADR)++ 7,525,095 10,094,313 1.6
<PAGE>
Total Common Stocks in New Zealand 7,525,095 10,094,313 1.6
Philippines
Telecommunications 134,100 Philippine Long Distance Telephone Co. (ADR)++ 5,583,592 9,487,575 1.5
Total Common Stocks in the Philippines 5,583,592 9,487,575 1.5
Spain
Telecommunications 537,300 Telefonica de Espana S.A. 6,164,064 7,293,486 1.1
Utilities--Electric 154,800 Empresa Nacional de Electricidad S.A. (ADR)++ 5,123,952 7,372,350 1.1
92,000 Hidrocantabrico S.A. 3,107,921 2,904,906 0.4
808,500 Iberdrola I S.A. 4,998,320 5,946,695 0.9
------------ ------------ ------
13,230,193 16,223,951 2.4
Total Common Stocks in Spain 19,394,257 23,517,437 3.5
Thailand
Telecommunications 44,200 Jasmine International Public Co., Ltd. 611,419 611,419 0.1
15,000 TelecomAsia Corporation Public Co., Ltd. LC (ADR)++ (1) 328,050 562,500 0.1
Total Common Stocks in Thailand 939,469 1,173,919 0.2
United Kingdom
Telecommunications 845,000 British Telecommunications PLC (Ord.) 5,900,759 4,633,720 0.7
1,426,860 British Telecommunications PLC (Part Pay) 6,877,400 5,263,042 0.8
60,000 Vodafone Group PLC (ADR)++ 5,355,931 4,822,500 0.7
------------ ------------ ------
18,134,090 14,719,262 2.2
Utilities--Electric 445,000 Powergen PLC (Ord.) 3,253,482 3,047,360 0.5
Total Common Stocks in the United Kingdom 21,387,572 17,766,622 2.7
United States
Telecommunications 175,100 Airtouch Communications, Inc. 3,298,013 4,268,063 0.7
111,200 American Telephone & Telegraph Co. 6,407,214 6,060,400 0.9
220,800 Ameritech Corp. 8,274,518 8,638,800 1.3
151,700 Bell Atlantic Corp. 8,027,948 8,096,988 1.2
163,400 BellSouth Corp. 9,162,908 9,722,300 1.5
257,700 GTE Corp. 9,016,758 7,956,488 1.2
208,000 MCI Communications Corp. 5,645,600 4,992,000 0.8
205,700 NYNEX Corp. 8,342,529 7,765,175 1.2
175,100 Pacific Telesis Group 4,555,333 5,318,662 0.8
216,900 Southwestern Bell Corp. 7,422,726 8,920,012 1.4
319,900 US West, Inc. 14,757,846 12,835,987 2.0
------------ ------------ ------
84,911,393 84,574,875 13.0
<PAGE>
Utilities--Electric 117,000 AES China Generating Co., Ltd. 1,872,000 1,433,250 0.2
326,000 Allegheny Power System, Inc. 8,652,910 6,927,500 1.1
220,200 Boston Edison Co. 5,789,754 6,083,025 0.9
210,000 Central & SouthWest Corp. 5,840,299 4,620,000 0.7
231,200 Consolidated Edison Co. of New York 7,260,774 6,386,900 1.0
146,900 Detroit Edison Co. 4,899,043 3,782,675 0.6
110,250 Dominion Resources, Inc. 4,427,302 4,354,875 0.7
265,000 Duke Power Co. 10,851,663 9,540,000 1.5
267,500 Entergy Corp. 8,646,550 7,724,062 1.2
414,800 General Public Utilities Corp. 11,683,837 11,873,650 1.8
339,100 Houston Industries, Inc. 15,787,663 10,935,975 1.7
338,600 Long Island Lighting Co. 8,537,882 6,814,325 1.0
259,800 NIPSCO Industries, Inc. 6,905,271 7,988,850 1.2
235,000 New York State Electric & Gas Corp. 8,459,615 5,904,375 0.9
196,700 Northeast Utilities Co. 5,253,338 4,474,925 0.7
440,000 PECO Energy Co. (a) 12,186,735 11,990,000 1.8
385,600 PSI Resources, Inc. 9,257,252 8,483,200 1.3
342,000 PacifiCorp 6,846,153 6,027,750 0.9
164,800 Pennsylvania Power & Light Co. 4,428,338 3,646,200 0.6
200,000 Public Service Co. of Colorado 6,071,450 5,200,000 0.8
186,300 Rochester Gas & Electric Corp. 4,775,302 4,215,037 0.7
300,000 SCEcorp 6,765,509 4,200,000 0.6
404,200 Southern Co. 6,989,691 7,477,700 1.2
188,300 Texas Utilities Co. 7,596,591 6,213,900 1.0
203,300 Western Resources Co. 6,442,514 5,692,400 0.9
------------ ------------ ------
186,227,436 161,990,574 25.0
Utilities--Gas 130,000 Brooklyn Union Gas Co. 3,371,550 3,055,000 0.5
240,000 The Coastal Corp. 6,414,080 6,780,000 1.0
116,300 El Paso Natural Gas Co. 4,496,795 3,896,050 0.6
399,100 Enron Corp. 8,119,749 12,172,550 1.9
258,300 NICOR Inc. 5,661,173 6,941,812 1.1
31,000 National Fuel Gas Company 945,500 941,625 0.1
115,000 New Jersey Resources Corp. 3,262,177 2,760,000 0.4
250,000 Questar Corp. 6,792,478 8,000,000 1.2
338,300 Sonat, Inc. 7,262,851 9,641,550 1.5
116,300 Washington Gas Light Co. 4,016,691 4,419,400 0.7
365,000 Williams Co., Inc. 6,931,607 10,265,625 1.6
------------ ------------ ------
57,274,651 68,873,612 10.6
Total Common Stocks in the United States 328,413,480 315,439,061 48.6
<PAGE>
Total Investments in Common Stocks & Warrants 552,775,785 577,479,308 88.7
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Face Value Percent of
Industries Amount Fixed-Income Securities Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
COUNTRY
Australia
Telecommunications US$ 7,960,000 Telstra Corp., Ltd., 6.50% due 7/31/2003 (1) $ 8,115,578 $ 7,262,505 1.1%
Total Fixed-Income Securities in Australia 8,115,578 7,262,505 1.1
Canada
Utilities--Electric 2,000,000 Hydro-Quebec, 9.23% due 12/04/2000 2,038,540 2,172,960 0.3
Total Fixed-Income Securities in Canada 2,038,540 2,172,960 0.3
Japan
Telecommunications 4,000,000 Nippon Telegraph & Telephone Corp., 9.50%
due 7/27/1998 4,244,380 4,344,240 0.7
Total Fixed-Income Securities in Japan 4,244,380 4,344,240 0.7
Korea
Telecommunications 2,500,000 Korea Telecom, 7.40% due 12/01/1999 2,499,500 2,458,000 0.4
Utilities--Electric 6,000,000 Korea Electric Power Corp., 6.375% due 12/01/2003 5,913,060 5,205,540 0.8
Total Fixed-Income Securities in Korea 8,412,560 7,663,540 1.2
United States
Telecommunications 4,000,000 Rochester Telephone Corp., 9.25% due 6/01/2000 4,111,200 4,360,600 0.7
Utilities--Electric 4,000,000 Consumer Power Co., 8.875% due 11/15/1999 4,190,000 4,154,920 0.6
4,000,000 Niagara Mohawk Power Corp., 9.50% due 6/01/2000 4,197,640 4,297,880 0.7
------------ ------------ ------
8,387,640 8,452,800 1.3
Total Fixed-Income Securities in the United States 12,498,840 12,813,400 2.0
<PAGE>
Total Investments in Fixed-Income Securities 35,309,898 34,256,645 5.3
<CAPTION>
Short-Term Securities
<S> <C> <S> <C> <C> <C>
United States
Commercial Paper* 39,000,000 Matterhorn Capital Corp., 3.82% due 6/01/1994 39,000,000 39,000,000 6.0
Repurchase 962,000 Swiss Bank Corp., purchased on 5/31/1994 to yield
Agreement** 4.20% to 6/01/1994 962,000 962,000 0.2
Total Investments in Short-Term Securities 39,962,000 39,962,000 6.2
Total Investments $628,047,683 651,697,953 100.2
============
Liabilities in Excess of Other Assets (1,435,963) (0.2)
------------ ------
Net Assets $650,261,990 100.0%
============ ======
<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.
++American Depositary Receipts (ADR).
(a) Formerly Philadelphia Electric Co.
(b) Warrants entitle the Fund to purchase a predetermined number of shares
of Common Stock. The purchase price and number of shares are subject
to adjustment under certain conditions until the expiration date.
(1) Restricted security pursuant to Rule 144A. The value of the Fund's investment in
restricted securities was approximately $34,409,000, representing 5.3% of net assets.
(2) Non-income producing security.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of May 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$628,047,683)(Note 1a) $651,697,953
Cash 207,283
Receivables:
Dividends $ 2,173,456
Capital shares sold 1,952,686
Interest 866,060 4,992,202
------------
Deferred organizational expenses (Note 1f) 43,526
Prepaid registration fees and other assets (Note 1f) 35,134
------------
Total assets 656,976,098
------------
<PAGE>
Liabilities: Payables:
Securities purchased 3,249,594
Capital shares redeemed 2,400,685
Distributor (Note 2) 382,681
Investment adviser (Note 2) 345,715 6,378,675
------------
Accrued expenses and other liabilities 335,433
------------
Total liabilities 6,714,108
------------
Net Assets: Net assets $650,261,990
============
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000
Consist of: shares authorized $ 582,057
Class B Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 4,569,754
Paid-in capital in excess of par 619,338,281
Undistributed investment income--net 3,230,076
Accumulated realized capital losses on investments and foreign
currency transactions--net (1,114,299)
Unrealized appreciation on investments and foreign currency
transactions--net 23,656,121
------------
Net assets . $650,261,990
============
Net Asset Class A--Based on net assets of $73,713,378 and 5,820,579 shares outstanding $ 12.66
Value: ============
Class B--Based on net assets of $576,548,612 and 45,697,537 shares outstanding $ 12.62
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended May 31, 1994
<S> <S> <C> <C>
Investment Dividends (net of $328,600 foreign withholding tax) $ 11,877,867
Income Interest and discount earned 2,765,008
(Notes 1d & 1e): ------------
Total income 14,642,875
------------
Expenses: Distribution fees--Class B (Note 2) $ 2,280,730
Investment advisory fees (Note 2) 2,068,015
Transfer agent fees--Class B (Note 2) 287,917
Custodian fees 251,758
Printing and shareholder reports 82,638
Registration fees (Note 1f) 59,576
Accounting services (Note 2) 57,404
Professional fees 34,008
Transfer agent fees--Class A (Note 2) 31,605
Directors' fees and expenses 11,364
Amortization of organization expenses (Note 1f) 9,526
Other 9,776
------------
Total expenses 5,184,317
------------
Investment income--net 9,458,558
------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net (1,198,293)
(Loss) on Foreign currency transactions--net 30,665 (1,167,628)
Investments and ------------
Foreign Currency Change in unrealized appreciation on:
Transactions--Net Investments--net (27,552,434)
(Notes 1b, 1e & 3): Foreign currency transactions--net 5,407 (27,547,027)
------------ ------------
Net realized and unrealized loss on investments and foreign
currency transactions (28,714,655)
------------
Net Decrease in Net Assets Resulting from Operations $(19,256,097)
------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the Year
Months Ended Ended
Increase (Decrease) in Net Assets: May 31, 1994 Nov. 30, 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 9,458,558 $ 11,336,371
Realized gain (loss) on investments and foreign currency
transactions--net (1,167,628) 4,716,322
Change in unrealized appreciation on investments and foreign currency
transactions--net (27,547,027) 37,518,154
------------ ------------
Net increase (decrease) in net assets resulting from operations (19,256,097) 53,570,847
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (1,362,335) (1,417,410)
Shareholders Class B (7,918,856) (8,066,873)
(Note 1g): Realized gain on investments--net:
Class A (219,759) (33,059)
Class B (1,627,301) (223,915)
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (11,128,251) (9,741,257)
------------ ------------
Capital Share Net increase in net assets derived from capital share transactions 2,474,084 404,174,719
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase (decrease) in net assets (27,910,264) 448,004,309
Beginning of period 678,172,254 230,167,945
------------ ------------
End of period* $650,261,990 $678,172,254
============ ============
<FN>
*Undistributed investment income--net $ 3,230,076 $ 3,052,709
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
For the For the
Six Period
The following per share data and ratios have been derived Months Dec. 28,
from information provided in the financial statements. Ended For the Year 1990++ to
May 31, Ended November 30, Nov. 30,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.22 $ 11.23 $ 10.67 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment income--net .23 .40 .47 .49
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net (.53) 2.01 .57 .56
-------- -------- -------- --------
Total from investment operations (.30) 2.41 1.04 1.05
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.22) (.41) (.48) (.38)
Realized gain on investments--net (.04) (.01) -- --
-------- -------- -------- --------
Total dividends and distributions (.26) (.42) (.48) (.38)
-------- -------- -------- --------
Net asset value, end of period $ 12.66 $ 13.22 $ 11.23 $ 10.67
======== ======== ======== ========
Total Investment Based on net asset value per share (2.32%)+++ 21.80% 10.05% 10.83%+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses .83%* .82% 1.01% 1.28%*
Net Assets: ======== ======== ======== ========
Investment income--net 3.42%* 3.57% 4.47% 5.57%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 73,713 $ 81,718 $ 29,772 $ 20,579
Data: ======== ======== ======== ========
Portfolio turnover 2.61% 8.92% 30.91% 20.51%
======== ======== ======== ========
<CAPTION>
<PAGE>
Class B
For the For the
Six Period
The following per share data and ratios have been derived Months Dec. 28,
from information provided in the financial statements. Ended For the Year 1990++ to
May 31, Ended November 30, Nov. 30,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.17 $ 11.20 $ 10.65 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment income--net .18 .33 .39 .40
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net (.52) 1.98 .57 .58
-------- -------- -------- --------
Total from investment operations (.34) 2.31 .96 .98
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.17) (.33) (.41) (.33)
Realized gain on investments--net (.04) (.01) -- --
-------- -------- -------- --------
Total dividends and distributions (.21) (.34) (.41) (.33)
-------- -------- -------- --------
Net asset value, end of period $ 12.62 $ 13.17 $ 11.20 $ 10.65
======== ======== ======== ========
Total Investment Based on net asset value per share (2.63%)+++ 20.86% 9.20% 10.05%+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses, excluding distribution fees .84%* .84% 1.02% 1.29%*
Net Assets: ======== ======== ======== ========
Expenses 1.59%* 1.59% 1.77% 2.04%*
======== ======== ======== ========
Investment income--net 2.65%* 2.81% 3.65% 4.78%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $576,549 $596,455 $200,396 $ 90,966
Data: ======== ======== ======== ========
Portfolio turnover 2.61% 8.92% 30.91% 20.51%
======== ======== ======== ========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++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.
<PAGE>
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.
Short-term securities are valued at amortized cost, which
approximates 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 (realized) or
valuing (unrealized) assets or liabilities 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.
<PAGE>
(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.
(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.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). Effective January 1,
1994, the investment advisory business of MLAM was reorganized from
a corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of MLAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of MLAM is
Princeton Services, Inc., an indirect wholly-owned subsidiary of ML
& Co. The limited partners are ML & Co. and Merrill Lynch Investment
Management, Inc. ("MLIM"), which is also an indirect wholly-owned
subsidiary of ML & Co. The Fund has also entered into a Distribution
Agreement and a Distribution Plan with Merrill Lynch Funds Distri-
butor, Inc. ("MLFD" or "Distributor"), a wholly-owned subsidiary
of MLIM.
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.
<PAGE>
Pursuant to a distribution plan (the "Distribution Plan") adopted
by the Fund in accordance with Rule 12b-1 under the Investment Com-
pany Act of 1940, the Fund pays the Distributor an ongoing account
maintenance fee and distribution fee, which are accrued daily and
paid monthly at the annual rate of 0.25% and 0.50%, respectively,
of the average daily net assets of the Class B Shares of the Fund.
Pursuant to a subagreement with the Distributor, Merrill Lynch
provides account maintenance and distribution services to the Fund
with respect to Class B Shares. 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 six months ended May 31, 1994, MLFD
earned $2,280,730 under the Plan, all of which was paid to MLPF&S
pursuant to the agreement.
NOTES TO FINANCIAL STATEMENTS (concluded)
For the six months ended May 31, 1994, MLFD earned underwriting
discounts of $16,858, and MLPF&S earned dealer concessions of
$283,874 on sales of Class A Shares. MLPF&S also received contin-
gent deferred sales charges of $567,791 relating to Class B
Share transactions and $16,044 in commissions on the execution
of portfolio security transactions for the Fund during the period.
During the period May 25, 1994 to May 31, 1994, the Fund paid
Merrill Lynch Security Pricing Service, an affiliate of MLPF&S, $585
for security price quotations to compute the Net Asset Value of the
Fund.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., 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 ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended May 31, 1994 were $85,026,332 and
$15,926,570, respectively.
Net realized and unrealized gains (losses) as of May 31, 1994 were
as follows:
<PAGE>
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $(1,198,280) $23,650,270
Short-term investments (13) --
Foreign currency transactions 30,665 5,851
----------- -----------
Total $(1,167,628) $23,656,121
=========== ===========
As of May 31, 1994, net unrealized appreciation for Federal income
tax purposes aggregated $23,650,270, of which $63,422,050 related to
appreciated securities and $39,771,780 related to depreciated
securities. The aggregate cost of investments at May 31, 1994 for
Federal income tax purposes was $628,047,683.
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
was $2,474,084 and $404,174,719 for the six months ended May 31,
1994 and the year ended November 30, 1993, respectively.
Transactions in capital shares for Class A and Class B Shares were
as follows:
Class A Shares for the Six Months Dollar
Ended May 31, 1994 Shares Amount
Shares sold 1,164,608 $ 15,436,072
Shares issued to shareholders in
reinvestment of dividends &
distributions to shareholders 94,663 1,224,287
------------ ------------
Total issued 1,259,271 16,660,359
Shares redeemed (1,619,653) (21,145,568)
------------ ------------
Net decrease (360,382) $ (4,485,209)
============ ============
<PAGE>
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 &
distributions to shareholders 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 B Shares for the Six Months Dollar
Ended May 31, 1994 Shares Amount
Shares sold 7,269,220 $ 96,031,158
Shares issued to shareholders in
reinvestment of dividends &
distributions to shareholders 594,022 7,672,819
------------ ------------
Total issued 7,863,242 103,703,977
Shares redeemed (7,451,029) (96,744,684)
------------ ------------
Net increase 412,213 $ 6,959,293
============ ============
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 &
distributions to shareholders 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
============ ============
5. Commitments:
At May 31, 1994, the Fund had entered into forward foreign exchange
contracts under which it agreed to purchase various currencies with
an approximate value of $3,250,000.
<PAGE>
PORTFOLIO INFORMATION
Worldwide
Investments as of
May 31, 1994
Top Ten Holdings Percent of
(Equity Investments) Net Assets
China Light & Power Co., Ltd. 3.5%
Hong Kong Telecommunications, Ltd. PLC 2.3
Societa Italiana Esercizio Telecom
S.p.A. (SIP) 2.3
US West, Inc. 2.0
Enron Corp. 1.9
PECO Energy Co. 1.8
Compagnie Generale des Eaux 1.8
General Public Utilities Corp. 1.8
Houston Industries, Inc. 1.7
Williams Co., Inc. 1.6
Additions
Airtouch Communications, Inc.*
CESC Ltd. (Units)
The Hong Kong & China Gas Co., Ltd. (Warrants)
Jasmine International Public Co., Ltd.
National Fuel Gas Company
PowerGen PLC (Ord.)
Tele Danmark A/S (ADR)
VEBA AG
Westcoast Energy Inc.
Deletion
Consolidated Natural Gas Co.
[FN]
*Airtouch Communications, Inc. was acquired as a result of a spinoff
from Pacific Telesis Group.
