MERRILL LYNCH
GLOBAL UTILITY
FUND, INC.
FUND LOGO
Semi-Annual Report
May 31, 1997
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.
Statements and other information herein are as dated and are subject
to change.
<PAGE>
Merrill Lynch
Global Utility Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH GLOBAL UTILITY FUND, INC.
Sector
Diversification
As a Percentage of
Equities as of
May 31, 1997
Pie graph depicting the following percentages:
Telecommunications 43.7%
Utilities--Electric 35.4%
Utilities--Gas 17.3%
Utilities--Water 3.6%
<PAGE>
Geographical
Diversification
As a Percentage of
Equities as of
May 31, 1997
Pie graph depicting the following percentages:
Europe 38.0%
Unites States 35.2%
Americas (Ex-US) 16.6%
Asia/Pacific Basin 10.2%
DEAR SHAREHOLDER
Stock and bond market turbulence increased during the three-month
period ended May 31, 1997. Mounting evidence of stronger-than-
expected economic growth suggested to investors that the Federal
Reserve Board (FRB) would make a preemptive strike to contain
inflationary pressures. These concerns were heightened by statements
made by FRB Chairman Alan Greenspan, and culminated in an increase
in the Federal Funds rate of 0.25% to 5.50% on March 25. As
investors became concerned that this might prove to be only the
first in a series of monetary policy tightening moves, interest
rates rose and stock and bond prices declined.
Following the FRB's action, investor sentiment fluctuated from
negative to more positive, depending upon whether the latest
economic data releases were perceived to suggest an overheating or
moderating trend. Stock prices were given a boost following a series
of strong corporate earnings reports and the likelihood that a
capital gains tax cut would be part of the Federal balanced budget
agreement. Nonetheless, clear-cut signs of continued low inflation
and moderate economic growth, as well as no further indications of
monetary policy tightening, are probably needed to bring stability
to the financial markets. Another potential positive for the US
financial markets would be a successful conclusion to the Federal
budget agreement currently under discussion by Congress and the
Clinton Administration.
<PAGE>
On the international front, the US dollar weakened relative to the
yen and the Deutschemark, although it gradually recovered during
May. Uncertainty over the progress of the European Monetary Union
helped stabilize the US dollar relative to the Deutschemark and
other European currencies.
Portfolio Matters
For the three months ended May 31, 1997, Merrill Lynch Global
Utility Fund, Inc.'s Class A, Class B, Class C and Class D Shares
provided total returns of +5.19%, +4.99%, +4.94% and +5.19%,
respectively. The Fund's returns exceeded the +2.24% total return of
Lipper Analytical Services, Inc.'s Utility Funds average of 97 funds
for the May quarter. The Fund's Class A and Class D Shares slightly
outperformed the +5.11% total return of the unmanaged Financial
Times/Standard & Poor's (FT/S&P)--Actuaries World Utility Index for
the May 31, 1997 quarter. (Results shown do not reflect sales
charges and would be lower if sales charges were included. For
complete performance information, including average annual total
returns, see pages 5--7 of this report to shareholders.)
Several factors, including selection of regions and specific
countries within each region, influenced the Fund's performance
during the May quarter. For example, Europe was the best-performing
region for utility equity investments as measured by the unmanaged
FT/S&P--Actuaries World Utility Index for the three-month period.
The three best-performing markets tracked by the Index were Spain,
Sweden and Italy, each with double-digit total returns. Austria,
Belgium, Norway and Denmark all had negative total returns for the
May quarter. Germany, the United Kingdom and Switzerland had total
returns between 5%--8%. Investments in Europe were significant to
Merrill Lynch Global Utility Fund, Inc., accounting for
approximately 38% of net assets. The two largest country weightings,
excluding the United States, are currently Spain and Italy. We have
no investments in Norway or Belgium and only limited exposure to
Austria and Denmark.
Stock selection was also a critical factor in the Fund's
performance. For example, in Spain the prices of two portfolio
holdings--Empresa Nacional de Electricidad, S.A. (Endesa) (ADR) and
Telefonica de Espana S.A.--increased by over 26% and 25%,
respectively, during the May quarter. Conversely, the price of Gas
Natural SDG, which was not a portfolio holding, declined by 11.1% in
the May quarter. Telefonica de Espana is the Fund's largest holding
and Endesa is among the Fund's top-ten holdings.
<PAGE>
In the United States, the critical investment factor was industry
selection. The total return for the unmanaged Standard & Poor's
Utility Index of 47 companies was -0.51% for the three-month period
ended May 31, 1997. Of the three utility sectors tracked by this
Index, natural gas pipelines had the best price performance,
followed by telecommunications and then electrics. Approximately 35%
of the Fund's net assets was invested in the United States as of May
quarter-end. The breakdown of the Fund's US-based equity assets was
approximately 20% in telecommunications, 26% in natural gas, 53% in
electrics and 1% in water. Clearly, the 46% of US-based net assets
invested in telecommunications and natural gas issues helped to
offset the modest negative price performance of the electrics. Over
the past several quarters, we have been gradually reducing our
exposure to the domestic utility sector and, in particular, to US-
based electric utility holdings. However, with the average current
yield on the Fund's domestic electric holdings significantly higher
than the yields of telecommunications and natural gas companies, the
total return aspect is compelling for this sector.
Investment Activities
During the May quarter, we added to our position in KN Energy, Inc.,
modestly reduced our position in Telecom Corporation of New Zealand
Ltd. (ADR), and eliminated our four bond positions as well as our
equity positions in AT&T Corp. and Lyonnaise des Eaux S.A. We sold
AT&T Corp., which was a relatively small position in the Fund's
portfolio, as a result of continuing earnings pressure at the
company. We eliminated our holding in the French-based water
company, Lyonnaise des Eaux, as a result of the announced merger
with Compagnie de Suez S.A. Compagnie de Suez is involved in various
businesses and, as a result, holders of the combined company will
own a more diversified conglomerate with a utility bias, where only
60% of total assets will be focused on core utility holdings.
Investment Outlook
Some European markets showed signs of weakness late in the May
quarter. Elections took place in both the United Kingdom and France
which resulted in the incumbent parties being voted out of office.
This factor had a direct impact on the performance of the European
region in May. Concern over the European Monetary Union heightened
following these May elections. It also resulted in investors
beginning to shift out of some of these European markets into
markets that had underperformed. At the present time, Japan appears
to have been a beneficiary of this investment shift. With the
Japanese economy experiencing only modest growth, coupled with
continuing problems in its financial system, the market rally may be
short-lived. In terms of utilities in Japan, regulatory risk exists
for the electric utilities as the emphasis on increasing competition
in the sector progresses. While this factor is not unique to the
Japanese electric utility sector, cost-cutting and reduced capital
expenditures are necessary to help the bottom line results as
revenues may come under pressure with competition. To date, we have
not seen managements undertake these actions and, in fact, we
continue to hear of rate increases being requested. The
telecommunications sector in Japan is mixed. Competition in the
mobile telephone business is intense. The principal telephone
company, Nippon Telephone & Telegraph Corp., is undergoing a
restructuring which has helped to boost the share value. Overall,
the fundamentals of the Japanese utility sector are mixed at best,
and utility stocks appear to be benefiting from the strength in the
overall market as opposed to industry-specific events.
<PAGE>
The flow of stock offerings is expected to pick up in the coming
months. France Telecom, which was to be privatized in May, postponed
the offering until after the French election. At the present time,
it is unclear whether the privatization will take place any time
soon, given the current political situation in the country. This may
also impact other transactions. To date, we know of several European
deals in some of the more emerging countries such as Portugal and
Greece. In general, investment opportunities continue to abound in
the utility sector. Many of the new issues are of companies with
either top-line growth or significant cost-cutting potential or
both. These characteristics are typical of most utility companies
overseas. We will continue to assess the risk/return ratios of
existing holdings relating to new opportunities.
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 upcoming shareholder reports.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Walter D. Rogers)
Walter D. Rogers
Vice President and
Portfolio Manager
June 26, 1997
<PAGE>
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.50% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 10 years. (There is no initial
sales charge for automatic sales conversions.)
* Class C Shares are subject to a distribution fee of 0.55% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% and an
account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of
all dividends and capital gains distributions at net asset value on
the ex-dividend date. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
<PAGE>
Class A Shares*
Year Ended 3/31/97 +16.18% +11.54%
Five Years Ended 3/31/97 +12.37 +11.46
Inception (12/28/90)
through 3/31/97 +11.73 +11.01
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/97 +15.32% +11.32%
Five Years Ended 3/31/97 +11.51 +11.51
Inception (12/28/90)
through 3/31/97 +10.87 +10.87
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 3/31/97 +15.26% +14.26%
Inception (10/21/94)
through 3/31/97 +13.34 +13.34
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
<PAGE>
Year Ended 3/31/97 +15.95% +11.31%
Inception (10/21/94)
through 3/31/97 +13.98 +12.09
[FN]
*Maximum sales charge is 4%.
**Assuming maximum 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**
<S> <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
1994 13.67 11.83 -- 0.480 -10.00
1995 11.83 13.86 0.245 0.483 +23.74
1996 13.86 14.80 0.446 0.525 +14.22
1/1/97--5/31/97 14.80 15.75 -- 0.106 + 7.19
------ ------
Total $0.730 Total $2.995
Cumulative total return as of 5/31/97: +111.82%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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
1994 13.63 11.81 -- 0.379 -10.62
1995 11.81 13.83 0.245 0.380 +22.73
1996 13.83 14.78 0.446 0.402 +13.34
1/1/97--5/31/97 14.78 15.71 -- 0.076 + 6.84
------ ------
Total $0.730 Total $2.400
<PAGE>
Cumulative total return as of 5/31/97: +101.58%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not reflect deduction of any sales charge; results
would be lower if sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $12.34 $11.81 -- $0.117 - 3.35%
1995 11.81 13.82 $0.245 0.383 +22.67
1996 13.82 14.75 0.446 0.403 +13.21
1/1/97--5/31/97 14.75 15.68 -- 0.076 + 6.86
------ ------
Total $0.691 Total $0.979
Cumulative total return as of 5/31/97: +43.43%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not reflect deduction of any sales charge; results
would be lower if sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $12.37 $11.84 -- $0.124 - 3.29%
1995 11.84 13.90 $0.245 0.445 +23.62
1996 13.90 14.81 0.446 0.488 +13.66
1/1/97--5/31/97 14.81 15.77 -- 0.097 + 7.18
------ ------
Total $0.691 Total $1.154
<PAGE>
Cumulative total return as of 5/31/97: +45.64%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
5/31/97 2/28/97 5/31/96 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $15.75 $15.08 $14.15 +14.78%(1) +4.44%
Class B Shares 15.71 15.04 14.11 +14.82(1) +4.45
Class C Shares 15.68 15.02 14.09 +14.77(1) +4.39
Class D Shares 15.77 15.09 14.16 +14.84(1) +4.51
Class A Shares--Total Return +18.94(2) +5.19(3)
Class B Shares--Total Return +18.04(4) +4.99(5)
Class C Shares--Total Return +17.97(6) +4.94(7)
Class D Shares--Total Return +18.71(8) +5.19(9)
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.446 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.519 per share ordinary
income dividends and $0.446 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.106 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.402 per share ordinary
income dividends and $0.446 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.076 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.400 per share ordinary
income dividends and $0.446 per share capital gains distributions.
(7)Percent change includes reinvestment of $0.076 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.483 per share ordinary
income dividends and $0.446 per share capital gains distributions.
(9)Percent change includes reinvestment of $0.097 per share ordinary
income dividends.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks & Warrants Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Telecommunications 100,000 Telecom Argentina STET S.A.
(ADR) (b) $ 3,770,294 $ 5,337,500 1.4%
200,000 Telefonica de Argentina S.A.
(ADR) (b) 4,140,594 7,250,000 2.0
------------ ------------ ------
7,910,888 12,587,500 3.4
Utilities--Electric 6,600 Central Costanera S.A. (ADR) (b)
(c) 158,400 242,999 0.1
Total Common Stocks in Argentina 8,069,288 12,830,499 3.5
Australia Utilities--Gas 2,000,000 Australian Gas & Light Co., Ltd. 5,280,752 11,921,958 3.3
Total Common Stocks in Australia 5,280,752 11,921,958 3.3
Austria Utilities--Gas 41,820 Energie-Versorgung Niederoesterreich
AG (EVN) 3,050,015 5,806,101 1.6
Total Common Stocks in Austria 3,050,015 5,806,101 1.6
Brazil Telecommunications 45,000 Telecomunicacoes Brasileiras S.A.
--Telebras (ADR) (b) 2,176,897 6,181,875 1.7
Total Common Stocks in Brazil 2,176,897 6,181,875 1.7
Canada Telecommunications 140,000 BC Telecom, Inc. 2,593,297 3,144,928 0.9
Utilities--Electric 369,100 Nova Scotia Power Co. 3,476,309 3,811,359 1.0
Utilities--Gas 200,000 Transcanada Pipeline Co. Ltd.
(ADR) (b) 3,147,485 3,900,000 1.1
Total Common Stocks in Canada 9,217,091 10,856,287 3.0
Chile Telecommunications 216,750 Compania de Telecomunicaciones
de Chile S.A. (ADR) (b) 3,711,460 7,423,688 2.0
<PAGE>
Utilities--Electric 65,000 Chilgener S.A. (ADR) (b) 1,495,000 1,787,500 0.5
390,000 Distribuidora Chilectra
Metropolitana S.A. (ADR) (b) (c) 4,249,463 10,968,750 3.0
------------ ------------ ------
5,744,463 12,756,250 3.5
Total Common Stocks in Chile 9,455,923 20,179,938 5.5
Denmark Telecommunications 160,000 Tele Danmark A/S (ADR) (b) 3,764,160 3,960,000 1.1
Total Common Stocks in Denmark 3,764,160 3,960,000 1.1
France Utilities--Water 89,715 Generale des Eaux S.A. 9,668,083 11,040,602 3.0
89,715 Generale des Eaux S.A. (Warrants)
(a) 0 61,423 0.0
Total Common Stocks & Warrants in
France 9,668,083 11,102,025 3.0
Germany Telecommunications 24,300 Deutsche Telekom AG 462,162 539,210 0.1
Utilities--Electric 140,000 Veba AG 4,568,890 7,918,033 2.2
Total Common Stocks in Germany 5,031,052 8,457,243 2.3
Hong Kong Utilities--Gas 1,440,000 The Hong Kong and China Gas Co.
Ltd. 1,627,410 2,509,035 0.7
100,000 The Hong Kong and China Gas Co.
Ltd. (Warrants) (a) 0 70,341 0.0
Total Common Stocks & Warrants in
Hong Kong 1,627,410 2,579,376 0.7
Indonesia Telecommunications 5,500 P.T. Indonesian Satellite Corp.
(Indosat) (ADR) (b) 176,275 164,313 0.0
29,600 P.T. Telekomunikasi Indonesia
(Persero) (ADR) (b) 532,800 984,200 0.3
Total Common Stocks in Indonesia 709,075 1,148,513 0.3
Italy Telecommunications 2,891,700 ++Seat S.p.A. 804,760 556,654 0.2
2,891,700 Societa Finanziara Telefonica S.p.A.
(STET) 5,447,174 11,355,066 3.1
3,900,000 Telecom Italia Mobile S.p.A. 2,605,057 11,445,527 3.1
3,700,000 Telecom Italia S.p.A 3,497,148 10,192,205 2.8
------------ ------------ ------
12,354,139 33,549,452 9.2
Utilities--Gas 1,786,300 Italgas Torino S.p.A. 5,169,953 5,500,770 1.5
<PAGE>
Total Common Stocks in Italy 17,524,092 39,050,222 10.7
Korea Utilities--Electric 114,200 Korea Electric Power Corp. (KEPCO)
(ADR) (b) 2,298,275 2,069,875 0.6
Total Common Stocks in Korea 2,298,275 2,069,875 0.6
Malaysia Telecommunications 860,000 Telekom Malaysia BHD 6,389,867 6,367,327 1.7
Total Common Stocks in Malaysia 6,389,867 6,367,327 1.7
Mexico Telecommunications 105,000 Telefonos de Mexico, S.A. de C.V.
(ADR) (b) 5,594,445 4,659,375 1.3
Total Common Stocks in Mexico 5,594,445 4,659,375 1.3
New Zealand Telecommunications 148,000 Telecom Corporation of New Zealand
Ltd. (ADR) (b) 3,059,233 5,679,500 1.5
Total Common Stocks in New Zealand 3,059,233 5,679,500 1.5
Peru Telecommunications 195,000 Telefonica del Peru S.A. (ADR) (b) 3,997,500 4,948,125 1.3
Total Common Stocks in Peru 3,997,500 4,948,125 1.3
Philippines Telecommunications 94,000 Philippine Long Distance Telephone
Co. (ADR) (b) 4,077,062 5,440,250 1.5
Utilities--Electric 96,330 Manila Electric Co. (MERALCO) 'B' 497,246 541,057 0.1
Total Common Stocks in the
Philippines 4,574,308 5,981,307 1.6
Portugal Telecommunications 205,740 Portugal Telecom, S.A. (ADR) (b) 4,576,844 7,920,990 2.2
Total Common Stocks in Portugal 4,576,844 7,920,990 2.2
Spain Telecommunications 537,300 Telefonica de Espana S.A. 6,164,064 15,494,751 4.2
Utilities--Electric 129,800 Empresa Nacional de Electricidad,
S.A. (Endesa) (ADR) (b) 4,566,202 10,075,725 2.8
92,000 HidroElectrica Del Cantabrico, S.A. 3,107,921 3,588,382 1.0
808,500 Iberdrola I S.A. 4,998,321 9,924,533 2.7
------------ ------------ ------
12,672,444 23,588,640 6.5
Total Common Stocks in Spain 18,836,508 39,083,391 10.7
Switzerland Utilities--Electric 4,300 Elektrowatt AG 1,687,158 1,634,334 0.4
<PAGE>
Total Common Stocks in Switzerland 1,687,158 1,634,334 0.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Common Stocks & Warrants Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Thailand Telecommunications 15,000 ++TelecomAsia Corporation Public Co.,
Ltd. PLC (ADR) (b) $ 328,050 $ 165,000 0.0%
Utilities--Electric 332,000 Electricity Generating Company of
Thailand (EGCOMP) 296,433 720,000 0.2
Total Common Stocks in Thailand 624,483 885,000 0.2
United Telecommunications 671,000 British Telecommunications PLC 4,688,465 4,861,870 1.3
Kingdom 180,000 Vodafone Group PLC (ADR) (b) 5,355,931 8,032,500 2.2
------------ ------------ ------
10,044,396 12,894,370 3.5
Utilities--Electric 208,000 National Power PLC 1,723,671 1,881,333 0.5
445,000 PowerGen PLC 3,253,482 5,073,059 1.4
------------ ------------ ------
4,977,153 6,954,392 1.9
Total Common Stocks in the United
Kingdom 15,021,549 19,848,762 5.4
United Telecommunications 70,000 Ameritech Corp. 2,996,450 4,585,000 1.3
States 91,800 BellSouth Corp. 2,702,773 4,165,425 1.1
108,000 Frontier Corp. 2,193,480 1,984,500 0.6
85,000 GTE Corp. 3,145,450 3,750,625 1.0
10,046 Lucent Technologies, Inc. 493,515 639,177 0.2
62,000 NYNEX Corp. 2,819,654 3,332,500 0.9
69,900 SBC Communications, Inc. 2,939,711 4,089,150 1.1
68,000 U S West Communications Group 1,895,186 2,490,500 0.7
------------ ------------ ------
19,186,219 25,036,877 6.9
<PAGE>
Utilities--Electric 156,000 Allegheny Power System, Inc. 4,213,210 4,075,500 1.1
87,200 Boston Edison Co. 2,722,264 2,245,400 0.6
166,962 CINergy Corp. 4,045,124 5,843,670 1.6
84,200 Consolidated Edison Co. of
New York 2,991,744 2,452,325 0.7
118,900 DTE Energy Co. 4,092,463 3,165,712 0.9
95,250 Dominion Resources, Inc. 3,965,452 3,298,031 0.9
85,000 Duke Power Co. 3,180,276 3,825,000 1.1
283,000 Edison International 6,379,546 6,615,125 1.8
188,300 GPU, Inc. 5,864,594 6,590,500 1.8
231,200 Houston Industries, Inc. 5,659,198 4,797,400 1.3
184,800 NIPSCO Industries, Inc. 5,394,297 7,484,400 2.0
159,000 New York State Electric & Gas
Corp. 5,705,686 3,458,250 0.9
140,500 PECO Energy Co. 4,344,731 2,669,500 0.7
183,000 PacifiCorp 3,657,980 3,637,125 1.0
124,000 Public Service Co. of Colorado 3,798,642 5,006,500 1.4
91,200 Southern Co. 2,022,770 1,938,000 0.5
------------ ------------ ------
68,037,977 67,102,438 18.3
Utilities--Gas 95,100 AGL Resources Inc. 1,781,042 1,818,787 0.5
130,000 The Brooklyn Union Gas Co. 3,371,550 3,623,750 1.0
185,500 The Coastal Corp. 4,952,363 9,298,187 2.5
30,000 KN Energy, Inc. 1,214,183 1,263,750 0.4
236,000 Questar Corp. 6,554,436 9,263,000 2.5
127,300 Sonat, Inc. 3,309,934 7,319,750 2.0
------------ ------------ ------
21,183,508 32,587,224 8.9
Utilities--Water 86,000 American Water Works Co., Inc. 1,617,875 1,849,000 0.5
Total Common Stocks in the United
States 110,025,579 126,575,539 34.6
Total Investments in Common Stocks
& Warrants 252,259,587 359,727,562 98.2
Face
Amount Short-Term Securities
Commercial Paper* $ 7,563,000 General Motors Acceptance Corp.,
5.62% due 6/02/1997 7,560,639 7,560,639 2.1
Total Investments in Short-Term
Securities 7,560,639 7,560,639 2.1
Total Investments $259,820,226 367,288,201 100.3
============
Liabilities in Excess of Other Assets (1,075,262) (0.3)
------------ ------
Net Assets $366,212,939 100.0%
============ ======
<PAGE>
<FN>
(a)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.
(b)American Depositary Receipts (ADR).
(c)The security may be offered and sold to "qualified institutional
buyers" under 144A of the Securities Act of 1933.
*Commercial Paper is traded on a discount basis; the interest rate
shown is the discount rate at the time of purchase by the Fund.
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of May 31, 1997
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$259,820,226) (Note 1a) $367,288,201
Receivables:
Dividends $ 822,077
Capital shares sold 60,987 883,064
------------
Prepaid registration fees and other assets (Note 1f) 29,263
------------
Total assets 368,200,528
------------
Liabilities: Payables:
Capital shares redeemed 1,157,497
Distributor (Note 2) 199,187
Investment adviser (Note 2) 180,340 1,537,024
------------
Accrued expenses and other liabilities 450,565
------------
Total liabilities 1,987,589
------------
Net Assets: Net assets $366,212,939
============
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000
Consist of: shares authorized $ 248,627
Class B Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 2,015,797
Class C Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 28,414
Class D Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 37,046
Paid-in capital in excess of par 251,567,334
Undistributed investment income--net 2,011,206
Undistributed realized capital gains on investments and foreign
currency transactions--net 2,847,822
Unrealized appreciation on investments and foreign currency
transactions--net 107,456,693
------------
Net assets $366,212,939
============
<PAGE>
Net Asset Class A--Based on net assets of $39,168,504 and 2,486,274 shares
Value: outstanding $ 15.75
============
Class B--Based on net assets of $316,747,358 and 20,157,971 shares
outstanding $ 15.71
============
Class C--Based on net assets of $4,456,567 and 284,140 shares
outstanding $ 15.68
============
Class D--Based on net assets of $5,840,510 and 370,464 shares
outstanding $ 15.77
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended May 31, 1997
<S> <S> <C> <C>
Investment Income Dividends (net of $442,174 foreign withholding tax) $ 7,038,959
(Notes 1d & 1e): Interest and discount earned 614,498
Other 26,250
------------
Total income 7,679,707
------------
Expenses: Account maintenance and distribution fees--Class B (Note 2) $ 1,211,453
Investment advisory fees (Note 2) 1,112,961
Transfer agent fees--Class B (Note 2) 256,514
Custodian fees 74,201
Printing and shareholder reports 69,555
Registration fees (Note 1f) 36,408
Professional fees 31,806
Transfer agent fees--Class A (Note 2) 26,501
Accounting services (Note 2) 25,464
Account maintenance and distribution fees--Class C (Note 2) 14,795
Directors' fees and expenses 11,424
Account maintenance fees--Class D (Note 2) 6,312
Transfer agent fees--Class D (Note 2) 3,411
Transfer agent fees--Class C (Note 2) 3,077
Pricing fees 1,195
Other 5,295
------------
Total expenses 2,890,372
------------
Investment income--net 4,789,335
------------
<PAGE>
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 2,872,854
(Loss) on Foreign currency transactions--net (25,781) 2,847,073
Investments & ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net 23,957,324
(Notes 1b, 1c, Foreign currency transactions--net (8,588) 23,948,736
1e & 3): ------------ ------------
Net realized and unrealized gain on investments and foreign
currency transactions 26,795,809
------------
Net Increase in Net Assets Resulting from Operations $ 31,585,144
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: May 31, 1997 Nov. 30, 1996
<S> <S> <C> <C>
Operations: Investment income--net $ 4,789,335 $ 11,621,285
Realized gain on investments and foreign currency transactions
--net 2,847,073 11,210,157
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net 23,948,736 41,368,999
------------ ------------
Net increase in net assets resulting from operations 31,585,144 64,200,441
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (573,122) (1,619,986)
Shareholders Class B (3,476,699) (10,429,834)
(Note 1g): Class C (37,816) (83,508)
Class D (63,781) (99,132)
Realized gain on investments--net:
Class A (1,172,347) (807,670)
Class B (9,833,032) (6,874,204)
Class C (98,232) (38,876)
Class D (130,954) (29,790)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (15,385,983) (19,983,000)
------------ ------------
<PAGE>
Capital Share Net decrease in net assets derived from capital share transactions (33,218,514) (90,445,913)
Transactions ------------ ------------
(Note 4):
Net Assets: Total decrease in net assets (17,019,353) (46,228,472)
Beginning of period 383,232,292 429,460,764
------------ ------------
End of period* $366,212,939 $383,232,292
============ ============
<FN>
*Undistributed investment income--net $ 2,011,206 $ 1,373,289
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
The following per share data and ratios have
been derived from information provided in the For the Six
financial statements. Months Ended
May 31, For the Year Ended November 30,
Increase (Decrease) in Net Asset Value: 1997++ 1996++ 1995 1994 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.09 $ 13.52 $ 12.08 $ 13.22 $ 11.23
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .25 .50 .51 .94 .40
Realized and unrealized gain (loss) on
investments and foreign currency transactions
--net 1.08 1.84 1.42 (1.57) 2.01
-------- -------- -------- -------- --------
Total from investment operations 1.33 2.34 1.93 (.63) 2.41
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.22) (.53) (.49) (.47) (.41)
Realized gain on investments--net (.45) (.24) -- (.04) (.01)
-------- -------- -------- -------- --------
Total dividends and distributions (.67) (.77) (.49) (.51) (.42)
-------- -------- -------- -------- --------
Net asset value, end of period $ 15.75 $ 15.09 $ 13.52 $ 12.08 $ 13.22
======== ======== ======== ======== ========
<PAGE>
Total Investment Based on net asset value per share 9.26%+++ 17.94% 16.34% (4.89%) 21.80%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses .87%* .84% .91% .86% .82%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 3.27%* 3.51% 3.73% 3.58% 3.57%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 39,169 $ 40,055 $ 44,775 $ 56,659 $ 81,718
Data: ======== ======== ======== ======== ========
Portfolio turnover .55% 5.03% 2.92% 17.02% 8.92%
======== ======== ======== ======== ========
Average commission rate paid++++ $ .0713 $ .0328 -- -- --
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding during the period.
++++For fiscal years beginning on or after September 1, 1995,
the Fund is required to disclose its average commission rate
per share for purchases and sales of equity securities. The
"Average Commission Rate Paid" includes commissions paid in
foreign currencies, which have been converted into US
dollars using the prevailing exchange rate on the date of
the transaction. Such conversions may significantly affect
the rate shown.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class B
<PAGE>
The following per share data and ratios have
been derived from information provided in the For the Six
financial statements. Months Ended
May 31, For the Year Ended November 30,
Increase (Decrease) in Net Asset Value: 1997++++ 1996++++ 1995 1994 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.05 $ 13.47 $ 12.04 $ 13.17 $ 11.20
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .19 .39 .38 .74 .33
Realized and unrealized gain (loss) on
investments and foreign currency transactions
--net 1.08 1.84 1.44 (1.46) 1.98
-------- -------- -------- -------- --------
Total from investment operations 1.27 2.23 1.82 (.72) 2.31
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.16) (.41) (.39) (.37) (.33)
Realized gain on investments--net (.45) (.24) -- (.04) (.01)
-------- -------- -------- -------- --------
Total dividends and distributions (.61) (.65) (.39) (.41) (.34)
-------- -------- -------- -------- --------
Net asset value, end of period $ 15.71 $ 15.05 $ 13.47 $ 12.04 $ 13.17
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 8.84%+++ 17.07% 15.38% (5.60%) 20.86%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 1.65%* 1.61% 1.68% 1.63% 1.59%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 2.49%* 2.74% 2.95% 2.82% 2.81%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $316,747 $335,487 $381,098 $459,185 $596,455
Data: ======== ======== ======== ======== ========
Portfolio turnover .55% 5.03% 2.92% 17.02% 8.92%
======== ======== ======== ======== ========
Average commission rate paid++++++ $ .0713 $ .0328 -- -- --
======== ======== ======== ======== ========
<CAPTION>
Class C
The following per share data and ratios have For the For the
been derived from information provided in the Six Months Period
financial statements. Ended For the Year Ended Oct. 21, 1994++
May 31, November 30, to Nov. 30,
Increase (Decrease) in Net Asset Value: 1997++++ 1996++++ 1995 1994
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.03 $ 13.46 $ 12.05 $ 12.34
Operating -------- -------- -------- --------
Performance: Investment income--net .18 .38 .39 .01
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net 1.08 1.84 1.43 (.30)
-------- -------- -------- --------
Total from investment operations 1.26 2.22 1.82 (.29)
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.16) (.41) (.41) --
Realized gain on investments--net (.45) (.24) -- --
-------- -------- -------- --------
Total dividends and distributions (.61) (.65) (.41) --
-------- -------- -------- --------
Net asset value, end of period $ 15.68 $ 15.03 $ 13.46 $ 12.05
======== ======== ======== ========
<PAGE>
Total Investment Based on net asset value per share 8.77%+++ 17.03% 15.38% (2.35%)+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses 1.70%* 1.66% 1.73% 1.60%*
Net Assets: ======== ======== ======== ========
Investment income--net 2.45%* 2.65% 2.85% 3.01%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 4,457 $ 3,325 $ 2,072 $ 445
Data: ======== ======== ======== ========
Portfolio turnover .55% 5.03% 2.92% 17.02%
======== ======== ======== ========
Average commission rate paid++++++ $ .0713 $ .0328 -- --
======== ======== ======== ========
Class D
The following per share data and ratios have For the For the
been derived from information provided in the Six Months Period
financial statements. Ended For the Year Ended Oct. 21, 1994++
May 31, November 30, to Nov. 30,
Increase (Decrease) in Net Asset Value: 1997++++ 1996++++ 1995 1994
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.10 $ 13.55 $ 12.09 $ 12.37
Operating -------- -------- -------- --------
Performance: Investment income--net .23 .50 .52 .02
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net 1.09 1.79 1.40 (.30)
-------- -------- -------- --------
Total from investment operations 1.32 2.29 1.92 (.28)
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.20) (.50) (.46) --
Realized gain on investments--net (.45) (.24) -- --
-------- -------- -------- --------
Total dividends and distributions (.65) (.74) (.46) --
-------- -------- -------- --------
Net asset value, end of period $ 15.77 $ 15.10 $ 13.55 $ 12.09
======== ======== ======== ========
Total Investment Based on net asset value per share 9.18%+++ 17.45% 16.21% (2.26%)+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses 1.12%* 1.07% 1.15% 1.08%*
Net Assets: ======== ======== ======== ========
Investment income--net 3.03%* 3.30% 3.36% 3.25%*
======== ======== ======== ========
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 5,840 $ 4,365 $ 1,516 $ 239
Data: ======== ======== ======== ========
Portfolio turnover .55% 5.03% 2.92% 17.02%
======== ======== ======== ========
Average commission rate paid++++++ $ .0713 $ .0328 -- --
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
++++++For fiscal years beginning on or after September 1, 1995,
the Fund is required to disclose its average commission rate
per share for purchases and sales of equity securities. The
"Average Commission Rate Paid" includes commissions paid in
foreign currencies, which have been converted into US dollars
using the prevailing exchange rate on the date of the
transaction. Such conversions may significantly affect the
rate shown.
+++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. These unaudited financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal recurring nature.
The Fund offers four classes of shares under the Merrill Lynch
Select Pricing SM System. Shares of Class A and Class D are sold with
a front-end sales charge. Shares of Class B and Class C may be
subject to a contingent deferred sales charge. All classes of shares
have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except that Class B, Class C and
Class D Shares bear certain expenses related to the account
maintenance of such shares, and Class B and Class C Shares also bear
certain expenses related to the distribution of such shares. Each
class has exclusive voting rights with respect to matters relating
to its account maintenance and distribution expenditures. The
following is a summary of significant accounting policies followed
by the Fund.
<PAGE>
(a) Valuation of securities--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
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. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Directors as
the primary market. Securities which are traded both in the over-the-
counter market and on a stock exchange are valued according to the
broadest and most representative market. Options written are valued
at the last sale price in the case of exchange-traded options or, in
the case of options traded in the over-the-counter market, the last
asked price. Options purchased are valued at the last sale price in
the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the last bid price. Short-
term securities are valued at amortized cost, which approximates
market value. Other investments, including futures contracts and
related options, are stated at market value. Securities and assets
for which market value quotations are not available are valued at
their fair value as determined in good faith by or under the
direction of the Fund's Board of Directors.
(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.
(c) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the equity, debt and currency
markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
* Options--The Fund is authorized to write and purchase call options
and put options. When the Fund writes 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 exceeds the premium paid or received).
<PAGE>
Written and purchased options are non-income producing investments.
* Forward foreign exchange contracts--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.
* Foreign currency options and futures--The Fund may also purchase
or sell listed or over-the-counter foreign currency options, foreign
currency futures and related options on foreign currency futures as
a short or long hedge against possible variations in foreign
exchange rates. Such transactions may be effected with respect to
hedges on non-US dollar denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated
to be purchased by the Fund.
(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 dates. Dividends from foreign securities
where the ex-dividend date may have passed are subsequently recorded
when the Fund has determined 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.
<PAGE>
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"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is
the limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
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.
Pursuant to the distribution plans (the "Distribution Plans")
adopted by the Fund in accordance with Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon the
average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.50%
Class C 0.25% 0.55%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the Distributor
and MLPF&S for providing account maintenance services to Class B,
Class C and Class D shareholders. The ongoing distribution fee
compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended May 31, 1997, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
<PAGE>
Class A $160 $2,009
Class D $709 $5,709
For the six months ended May 31, 1997, MLPF&S received contingent
deferred sales charges of $262,832 and $582, relating to
transactions in Class B Shares and Class C Shares, respectively.
In addition, MLPF&S received $4,740 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended May 31, 1997.
For the six months ended May 31, 1997, the Fund paid Merrill Lynch
Security Pricing Service, an affiliate of MLPF&S, $58 for security
price quotations to compute the net asset value of the Fund.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
NOTES TO FINANCIAL STATEMENTS (concluded)
Certain officers and/or directors of the Fund are officers and/or
directors of MLAM, PSI, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended May 31, 1997 were $2,018,943 and
$45,949,550, respectively.
Net realized and unrealized gains (losses) as of May 31, 1997 were
as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $ 2,872,854 $107,467,975
Foreign currency transactions (25,781) (11,282)
------------ ------------
Total $ 2,847,073 $107,456,693
============ ============
As of May 31, 1997, net unrealized appreciation for Federal income
tax purposes aggregated $107,467,975, of which $116,977,161 related
to appreciated securities and $9,509,186 related to depreciated
securities. The aggregate cost of investments at May 31, 1997 for
Federal income tax purposes was $259,820,226.
<PAGE>
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $33,218,514 and $90,445,913 for the six months ended May 31,
1997 and for the year ended November 30, 1996, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended May 31, 1997 Shares Amount
Shares sold 102,878 $ 1,554,465
Shares issued to shareholders
in reinvestment of dividends
and distributions 98,052 1,406,686
------------- -------------
Total issued 200,930 2,961,151
Shares redeemed (368,950) (5,571,394)
------------- -------------
Net decrease (168,020) $ (2,610,243)
============= =============
Class A Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 178,410 $ 2,530,252
Shares issued to shareholders
in reinvestment of dividends
and distributions 135,223 1,872,625
------------- -------------
Total issued 313,633 4,402,877
Shares redeemed (971,846) (13,721,257)
------------- -------------
Net decrease (658,213) $ (9,318,380)
============= =============
Class B Shares for the Six Months Dollar
Ended May 31, 1997 Shares Amount
Shares sold 434,485 $ 6,567,640
Shares issued to shareholders in
reinvestment of dividends and
distributions 723,301 10,352,942
------------- -------------
Total issued 1,157,786 16,920,582
Automatic conversion of shares (71,826) (1,072,778)
Shares redeemed (3,219,528) (48,608,365)
------------- -------------
Net decrease (2,133,568) $ (32,760,561)
============= =============
<PAGE>
Class B Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 1,480,280 $ 20,727,309
Shares issued to shareholders
in reinvestment of dividends
and distributions 975,884 13,460,853
------------- -------------
Total issued 2,456,164 34,188,162
Automatic conversion of shares (110,150) (1,536,242)
Shares redeemed (8,345,774) (117,187,340)
------------- -------------
Net decrease (5,999,760) $ (84,535,420)
============= =============
Class C Shares for the Six Months Dollar
Ended May 31, 1997 Shares Amount
Shares sold 86,133 $ 1,305,361
Shares issued to shareholders
in reinvestment of dividends and
distributions 8,423 120,453
------------- -------------
Total issued 94,556 1,425,814
Shares redeemed (31,696) (479,980)
------------- -------------
Net increase 62,860 $ 945,834
============= =============
Class C Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 116,923 $ 1,634,417
Shares issued to shareholders
in reinvestment of dividends and
distributions 7,871 109,069
------------- -------------
Total issued 124,794 1,743,486
Shares redeemed (57,428) (802,893)
------------- -------------
Net increase 67,366 $ 940,593
============= =============
<PAGE>
Class D Shares for the Six Months Dollar
Ended May 31, 1997 Shares Amount
Shares sold 58,451 $ 873,533
Shares issued to shareholders
in reinvestment of dividends and
distributions 11,884 170,785
Automatic conversion of shares 71,609 1,072,778
------------- -------------
Total issued 141,944 2,117,096
Shares redeemed (60,552) (910,640)
------------- -------------
Net increase 81,392 $ 1,206,456
============= =============
Class D Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 1,906,770 $ 26,889,122
Shares issued to shareholders
in reinvestment of dividends and
distributions 7,595 106,392
Automatic conversion of shares 109,766 1,536,242
------------- -------------
Total issued 2,024,131 28,531,756
Shares redeemed (1,846,953) (26,064,462)
------------- -------------
Net increase 177,178 $ 2,467,294
============= =============
PORTFOLIO INFORMATION
Worldwide
Investments as of
5/31/97
Ten Largest Holdings Percent of
(Equity Investments) Net Assets
<PAGE>
Telefonica de Espana S.A. 4.2%
Australian Gas & Light Co., Ltd. 3.3
Telecom Italia Mobile S.p.A. 3.1
Societa Finanziara Telefonica S.p.A. (STET) 3.1
Generale des Eaux S.A. 3.0
Distribuidora Chilectra Metropolitana S.A. (ADR) 3.0
Telecom Italia S.p.A. 2.8
Empresa Nacional de Electricidad, S.A. (ADR) 2.8
Iberdrola I S.A. 2.7
The Coastal Corp. 2.5
Addition (Equity Investments)
*Generale des Eaux S.A. (Warrants)
Deletions (Equity Investments)
AT&T Corp.
Lyonnaise des Eaux S.A.
[FN]
*Acquired through a corporate action of Generale des Eaux S.A.
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
<PAGE>
Custodian
The Chase Manhattan Bank
4 MetroTech Center, 18th Floor
Brooklyn, NY 11245
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
