MERRILL LYNCH
GLOBAL UTILITY
FUND, INC.
[FUND LOGO]
STRATEGIC
Performance
Annual Report
November 30, 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.
Merrill Lynch
Global Utility Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #11693 -- 11/97
[RECYCLE LOGO]
Printed on post-consumer recycled paper
MERRILL LYNCH GLOBAL UTILITY FUND, INC.
[GRAPHIC PIE CHART OMITTED: SECTOR DIVERSIFICATION]
Sector Diversification
As a Percentage of
Equities as of
November 30, 1997
Telecommunications -- 43.8%
Utilities -- Electric -- 38.0%
Utilities -- Gas -- 14.7%
Utilities -- Water -- 3.5%
[GRAPHIC PIE CHART OMITTED: GEOGRAPHICAL DIVERSIFICATION]
Geographical Diversification
As a Percentage of Equities as of
November 30, 1997
Europe -- 36.4%
United States -- 41.8%
Americas (Ex-US) -- 14.9%
Asia/Pacific Basin -- 6.9%
Merrill Lynch Global Utility Fund, Inc., November 30, 1997
DEAR SHAREHOLDER
Volatility highlighted stock and bond markets worldwide during the
quarter ended November 30, 1997. The difficulties began in Southeast
Asia. Following the currency devaluations in several Southeast Asian
countries this summer, the Hong Kong dollar -- the value of which is
pegged to the US dollar -- came under speculative attack in foreign
currency markets. Monetary authorities in Hong Kong raised interest
rates to support the currency, and the Hong Kong stock market declined
sharply. This event raised investor concerns worldwide regarding the
viability of continued global economic growth.
At first, US stock market investors focused on the challenges that
would face US multinational corporations in the wake of the poorer
Asian economic prospects. The sell-off then broadened to other stocks
as well. Although the decline proved to be short-lived, investor
confidence was not definitively restored, and stock market volatility
continued. Although the US bond market benefited during periods when
investors anticipated slower economic growth, the release of stronger-
than-expected economic statistics led to periods of declining bond
prices.
As 1997 draws to a close, investors are likely to continue to focus on
the prospects for the US economy. Although the Federal Reserve Board
did not tighten monetary policy at its November 12 meeting, it remains
to be seen whether US economic growth remains moderate enough and
inflationary pressures sufficiently contained to preclude an increase
in short-term interest rates in the near term.
Fiscal Year in Review
The environment in the utility sector was mixed during the 12-month
period ended November 30, 1997. The unmanaged benchmark Financial
Times/Standard & Poor's (FT/S&P) -- Actuaries World Utility Index rose
23.7%, but underperformed the unmanaged S&P 500 Index, which
appreciated 28.5%. World utilities, together with their respective
local markets, presented widely divergent performances during the
year. For example, Pacific Basin utilities, reacting to currency
turmoil, were down 13.3%; North American utilities were up 30.7%; and
European utilities rose 31.2%. Utilities, particularly in the United
States and Europe, benefited from their defensive characteristics and
their improving fundamental outlook in an environment of
internationally declining long-term interest rates.
Merrill Lynch Global Utility Fund, Inc.'s Class A, Class B, Class C
and Class D Shares had total returns of +19.65%, +18.77%, +18.66% and
+19.35%, respectively. (Fund results shown do not reflect sales
charges and would be lower if sales charges were included. Complete
performance information, including average annual total returns, can
be found on pages 4 -- 8 of this report to shareholders.) Throughout
the fiscal year, the Fund's largest exposures were to the better-
performing European and US markets. At fiscal year-end, 76.1% of the
Fund's net assets were invested in these two regions. During the year,
the Fund was underexposed to the worst-performing markets of the
Pacific Basin, where only 6.7% of net assets were invested.
After the United States, the Fund was most heavily weighted in Italy,
which was the world's best-performing utility market for the year on a
local currency basis. However, within Europe, the Fund's performance
was adversely affected by its underweighting in the United Kingdom,
relative to the benchmark index, which after Italy, was the region's
second-best performing market. During the year, the Fund's performance
also was adversely affected by a significant underweighting to the
overall US utility market relative to the benchmark (38% and 52%,
respectively), and, within US utilities, to the better-performing US
telecommunications sector. During a period when the US dollar
strengthened in the face of increasing international turmoil, the
Fund's overweight to Europe, which was the world's best-performing
utility market in local currency terms, was significantly muted by
currency effects. For example, the European utilities in the FT/S&P --
Actuaries World Utility Index were up 42.22% in local currency terms
but only 31.76% in US dollar terms. Another, more direct measure of
this currency effect is the Federal Reserve Board's trade-weighted
dollar, which rose progressively from an annual rate of 8.4% in the
first quarter to 12.3% by the third quarter of 1997.
The Fund's modest exposure to the Asia/Pacific region was a positive
for overall Fund performance. We had a very small position in Hong
Kong; eliminated our sole position in Malaysia; completely avoided
investing in Japan during the year; and almost entirely eliminated our
small position in Thailand. The net result was little direct impact on
Fund performance from the Asian currency crisis.
However, Latin American emerging markets experienced a spillover
effect resulting from the Asian currency crisis which adversely
impacted Fund performance in the last quarter of the fiscal year.
Still, the Fund's overweighted exposure to South American markets
relative to the FT/S&P -- Actuaries World Utility Index added to the
Fund's absolute and relative performance for the full fiscal year. In
summary, stock selection and geographic weightings were positive
influences on Fund performance during the year.
The Fund's top ten holdings as of November 30, 1997 had price-only
appreciation of nearly 35% compared with the total return of the world
utility benchmark of +23.69%. These ten stocks accounted for just over
31% of the Fund's net assets. (For a complete listing of the Fund's
top ten holdings, see page 23 of this report to shareholders.)
Overall, the Fund's net assets as of November 30, 1997 were spread
across 74 companies in 22 countries. Normally, this level of
diversification would result in a reduction of local market risk and
regulatory and company specific risk and allow for greater
participation in faster growing emerging utility markets while the
Fund's higher dividend yields from the maturing companies in developed
markets added to total return. However, this year turbulent Asian
markets strengthened the US dollar against all major curren-cies and
adversely impacted the Fund given its basic 60% unhedged foreign/ 40%
domestic investment posture. Thus the positive influence of the Fund's
favorable stock and regional weightings were severely undermined
during its last fiscal quarter.
Portfolio Matters
For the quarter ended November 30, 1997, Merrill Lynch Global Utility
Fund, Inc.'s Class A, Class B, Class C, and Class D Shares provided
total returns of +9.64%, +9.46%, +9.47% and +9.59%, respectively,
compared to the +12.54% total return of the FT/S&P -- Actuaries World
Utility Index. The principal factor affecting the Fund's returns
during the November quarter was the strong performance of the US
utility market with a total return of +21.5% as compared to +4.15% for
international utilities (excluding the United States). Investors
flocked to the larger US utilities whose market capitalizations and
liquid issues afforded insulation from chaotic international markets.
Moreover, third-quarter earnings results, which were released during
the stock market volatility, revealed that these companies were in
fairly strong financial condition with little, if any, exposure to the
Asian crisis or currency spillover effects.
During the November quarter, we made only a few changes to the
holdings in the Fund. We eliminated TelecomAsia Corporation Public
Co., Ltd., a very small holding in Thailand, from the Fund's
portfolio. Continuing concerns over the health of the local economy
was the primary reason for the sale of the stock. Moreover, early in
the quarter we continued to reduce our exposure to the Chilean market.
Concerns surrounding the Chilean economy and its reliance on Asia for
buying its principal export, copper, increased the risk side of the
equation. We also made reductions in Italy and Spain because the
Fund's weightings in these two markets had become significant given
the long-term price appreciation of some of the positions held.
In Conclusion
We thank you for your investment in Merrill Lynch Global Utility Fund,
Inc., and we look forward to discussing our investment strategy with
you in future shareholder reports.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/WALTER D. ROGERS
Walter D. Rogers
Vice President and Portfolio Manager
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the Merrill
Lynch Select PricingSM System, which offers four pricing alternatives:
[bullet] 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.
[bullet] 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.)
[bullet] 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.
[bullet] 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.
<TABLE>
<CAPTION>
Performance
Summary --
Class A Shares
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 -- 11/30/97 14.80 16.97 -- 0.376 +17.38
Total $0.730 Total $3.265
Cumulative total return as of 11/30/97: +131.97%**
* 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>
<CAPTION>
Summary --
Class B Shares
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 -- 11/30/97 14.78 16.93 -- 0.284 +16.59
Total $0.730 Total $2.608
Cumulative total return as of 11/30/97: +119.97%**
* 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>
<CAPTION>
Summary --
Class C Shares
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 -- 11/30/97 14.75 16.89 -- 0.285 +16.57
Total $0.691 Total $1.188
Cumulative total return as of 11/30/97: +56.46%**
* 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>
<CAPTION>
Summary --
Class D Shares
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 -- 11/30/97 14.81 16.98 -- 0.348 +17.16
Total $0.691 Total $1.405
Cumulative total return as of 11/30/97: +59.20%**
* 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>
<CAPTION>
[GRAPHIC WORM CHART OMITTED: TOTAL RETURN BASED ON A $10,000
INVESTMENT]
Total Return Based on a $10,000 Investment
Plot Points for Global Utility Fund as of November 30, 1997
FT Actuaries FT Actuaries
Date Global Utility Fund - Global Utility Fund World Index Utilities Index
Class A* Class B*
<S> <C> <C> <C> <C>
12/28/90** $9,600 $10,000 $10,000 $10,000
Nov-91 $10,640 $11,005 $11,169 $11,286
Nov-92 $11,709 $12,017 $11,272 $12,075
Nov-93 $14,262 $14,524 $13,275 $14,956
Nov-94 $13,564 $13,711 $14,619 $14,505
Nov-95 $15,781 $15,820 $17,127 $17,007
Nov-96 $18,612 $18,521 $20,271 $18,645
Nov-97 $22,269 $21,997 $22,719 $23,062
<CAPTION>
FT Actuaries FT Actuaries
Date Global Utility Fund - Global Utility Fund World Index Utilities Index
Class C* Class D*
<S> <C> <C> <C> <C>
10/21/94** $10,000 $9,600 $10,000 $10,000
Nov-94 $9,765 $9,383 $9,666 $9,593
Nov-95 $11,267 $10,904 $11,324 $11,247
Nov-96 $13,186 $12,807 $13,403 $12,331
Nov-97 $15,646 $15,285 $15,022 $15,252
* Assuming maximum sales charge, transaction costs and other operating expenses, including advisory fees.
** Commencement of operations.
+ ML Global Utility Fund, Inc. invests at least 65% of its total assets in common stocks (including
preferred or debt securities convertible into common stocks), preferred stocks and debt securities
issued by domestic and foreign companies in the utilities industries.
++ This unmanaged market capitalization-weighted Index is comprised of nearly 2,200 equities from 24
countries in 12 regions, including the United States.
+++ This unmanaged market capitilization-weighted Index is comprised of utility stocks from any of the 24
countries that make up the Financial Times/Standard & Poor's -- Actuaries World Index.
Past performance is not predictive of future performance.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/97 +26.59% +21.52%
Five Years Ended 9/30/97 +13.23 +12.31
Inception (12/28/90)
through 9/30/97 +12.95 +12.27
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/97 +25.57% +21.57%
Five Years Ended 9/30/97 +12.38 +12.38
Inception (12/28/90)
through 9/30/97 +12.09 +12.09
* 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 9/30/97 +25.56% +24.56%
Inception (10/21/94)
through 9/30/97 +15.75 +15.75
* 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*
Year Ended 9/30/97 +26.24% +21.19%
Inception (10/21/94)
through 9/30/97 +16.41 +14.80
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
<TABLE>
<CAPTION>
Recent
Performance
Results*
12 Month 3 Month
11/30/97 8/31/97 11/30/96 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $16.97 $15.58 $15.09 +15.97%(1) +8.92%
Class B Shares 16.93 15.55 15.05 +16.01(1) +8.87
Class C Shares 16.89 15.51 15.03 +15.89(1) +8.90
Class D Shares 16.98 15.59 15.10 +15.96(1) +8.92
Class A Shares -- Total Return +19.65(2) +9.64(3)
Class B Shares -- Total Return +18.77(4) +9.46(5)
Class C Shares -- Total Return +18.66(6) +9.47(7)
Class D Shares -- Total Return +19.35(8) +9.59(9)
* 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 $0.492 per share ordinary income dividends and $0.446 per share capital
gains distributions.
(3) Percent change includes reinvestment of $0.111 per share ordinary income dividends.
(4) Percent change includes reinvestment of $0.369 per share ordinary income dividends and $0.446 per share capital
gains distributions.
(5) Percent change includes reinvestment of $0.091 per share ordinary income dividends.
(6) Percent change includes reinvestment of $0.370 per share ordinary income dividends and $0.446 per share capital
gains distributions.
(7) Percent change includes reinvestment of $0.088 per share ordinary income dividends.
(8) Percent change includes reinvestment of $0.454 per share ordinary income dividends and $0.446 per share capital
gains distributions.
(9) Percent change includes reinvestment of $0.104 per share ordinary income dividends.
</TABLE>
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
Thomas D. Jones, III, Secretary
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
<TABLE>
<CAPTION>
Merrill Lynch Global Utility Fund, Inc., November 30, 1997
SCHEDULE OF INVESTMENTS (in US dollars)
Shares Value Percent of
COUNTRY Industries Held Common Stocks & Warrants Cost (Note 1a) Net Assets
<S> <C> <C> <C> <C> <C> <C>
Argentina Telecommunications 200,000 Telecom Argentina STET S.A.
(ADR) (b) $3,770,294 $6,137,500 1.7%
200,000 Telefonica de Argentina S.A.
(ADR) (b) 4,140,594 6,612,500 1.9
------------ ------------- ------
7,910,888 12,750,000 3.6
Utilities -- Electric 6,600 Central Costanera S.A. (ADR)
(b)(d) 158,400 171,666 0.1
------------ ------------- ------
Total Common Stocks in
Argentina 8,069,288 12,921,666 3.7
============ ============= ======
Australia Utilities -- Gas 2,000,000 Australian Gas & Light Co.,
Ltd. 5,280,752 13,482,680 3.8
------------ ------------- ------
Total Common Stocks in
Australia 5,280,752 13,482,680 3.8
============ ============= ======
Austria Utilities -- Gas 41,820 Energie-Versorgung
Niederoesterreich AG (EVN) 3,050,014 5,393,085 1.5
------------ ------------- ------
Total Common Stocks in Austria 3,050,014 5,393,085 1.5
============ ============= ======
Brazil Telecommunications 45,000 Telecomunicacoes Brasileiras
S.A. -- Telebras (ADR) (b) 2,176,897 4,696,875 1.3
Utilities -- Electric 300,000 Companhia Paranaense de
Energia (Copel) (ADR) (b) 5,400,000 4,518,750 1.3
------------ ------------- ------
Total Common Stocks in Brazil 7,576,897 9,215,625 2.6
============ ============= ======
Canada Telecommunications 140,000 BC Telecom, Inc. 2,593,297 3,629,848 1.0
Utilities -- Electric 369,100 Nova Scotia Power Co. 3,476,309 4,175,457 1.2
Utilities -- Gas 200,000 Transcanada Pipeline Co. Ltd.
(ADR) (b) 3,147,485 4,175,000 1.2
------------ ------------- ------
Total Common Stocks in Canada 9,217,091 11,980,305 3.4
============ ============= ======
Chile Telecommunications 113,750 Compania de Telefonos de
Chile S.A. (ADR) (b) 2,101,127 3,078,359 0.9
Utilities -- Electric 86,444 Chilgener S.A. (ADR) (b) 2,023,851 2,161,100 0.6
105,600 Distribuidora Chilectra
Metropolitana S.A. (ADR)
(b) (d) 1,309,780 2,635,776 0.7
------------ ------------- ------
3,333,631 4,796,876 1.3
------------ ------------- ------
Total Common Stocks in Chile 5,434,758 7,875,235 2.2
============ ============= ======
Denmark Telecommunications 160,000 Tele Danmark A/S (ADR) (b) 3,764,160 4,780,000 1.4
------------ ------------- ------
Total Common Stocks in Denmark 3,764,160 4,780,000 1.4
============ ============= ======
France Utilities -- Water 91,074 Generale des Eaux S.A. 9,841,922 12,035,192 3.4
89,715 Generale des Eaux S.A.
(Warrants) (a) 0 54,870 0.0
------------ ------------- ------
Total Common Stocks & Warrants
in France 9,841,922 12,090,062 3.4
============ ============= ======
Germany Telecommunications 24,300 Deutsche Telekom AG 462,162 492,530 0.1
Utilities -- Electric 40,000 RWE Aktiengesellschaft 1,799,334 1,960,540 0.5
4,000 VIAG Aktiengesellschaft 1,764,306 2,032,430 0.6
70,000 Veba Aktiengesellschaft 2,284,445 4,159,202 1.2
------------ ------------- ------
5,848,085 8,152,172 2.3
------------ ------------- ------
Total Common Stocks in Germany 6,310,247 8,644,702 2.4
============ ============= ======
Hong Kong Utilities -- Gas 144,050 The Hong Kong and China Gas
Co. Ltd. (f) 178,364 259,036 0.1
------------ ------------- ------
Total Common Stocks in Hong
Kong 178,364 259,036 0.1
============ ============= ======
Indonesia Telecommunications 5,500 P.T. Indonesian Satellite
Corp. (Indosat) (ADR) (b) 176,275 123,063 0.0
29,600 P.T. Telekomunikasi Indonesia
(Persero) (ADR) (b) 532,800 432,900 0.1
------------ ------------- ------
Total Common Stocks in
Indonesia 709,075 555,963 0.1
============ ============= ======
Italy Telecommunications 3,000,000 Telecom Italia Mobile S.p.A. 2,137,108 12,149,019 3.4
1,505,555 Telecom Italia S.p.A. 2,746,349 9,387,383 2.7
2,891,700 Telecom Italia S.p.A.
(Registered Non-Convertible) 5,447,174 11,400,728 3.2
------------ ------------- ------
10,330,631 32,937,130 9.3
Utilities -- Gas 1,786,300 Italgas Torino S.p.A. 5,169,953 6,892,659 2.0
------------ ------------- ------
Total Common Stocks in Italy 15,500,584 39,829,789 11.3
============ ============= ======
Korea Utilities -- Electric 178,300 Korea Electric Power Corp.
(KEPCO) (ADR) (b) 3,500,925 1,615,844 0.5
------------ ------------- ------
Total Common Stocks in Korea 3,500,925 1,615,844 0.5
============ ============= ======
Mexico Telecommunications 105,000 Telefonos de Mexico, S.A. de
C.V. (ADR) (b) 5,594,445 5,197,500 1.5
------------ ------------- ------
Total Common Stocks in Mexico 5,594,445 5,197,500 1.5
============ ============= ======
New Zealand Telecommunications 56,000 Telecom Corporation of New
Zealand Ltd. (ADR) (b) 1,230,138 2,296,000 0.7
------------ ------------- ------
Total Common Stocks in New
Zealand 1,230,138 2,296,000 0.7
============ ============= ======
Peru Telecommunications 195,000 Telefonica del Peru S.A.
(ADR) (b) 3,997,500 4,095,000 1.2
------------ ------------- ------
Total Common Stocks in Peru 3,997,500 4,095,000 1.2
============ ============= ======
Philippines Telecommunications 188,000 Philippine Long Distance
Telephone Co. (ADR) (b) 4,077,062 4,653,000 1.3
Utilities -- Electric 96,330 Manila Electric Co. (MERALCO)
'B' 497,246 336,390 0.1
------------ ------------- ------
Total Common Stocks in the
Philippines 4,574,308 4,989,390 1.4
============ ============= ======
Portugal Telecommunications 205,740 Portugal Telecom, S.A. (ADR)
(b) 4,576,844 9,438,322 2.7
Utilities -- Electric 10,820 +EDP -- Electricidade de
Portugal, S.A. (ADR) (b) 279,589 391,549 0.1
------------ ------------- ------
Total Common Stocks in
Portugal 4,856,433 9,829,871 2.8
============ ============= ======
Spain Telecommunications 477,300 Telefonica de Espana, S.A. 5,492,570 13,769,809 3.9
Utilities -- Electric 519,200 Empresa Nacional de
Electricidad, S.A. (Endesa)
(ADR)(b) 4,566,202 9,735,000 2.8
46,000 HidroElectrica Del Cantabrico,
S.A. 1,553,961 2,117,142 0.6
808,500 Iberdrola I, S.A. 4,998,321 10,333,395 2.9
------------ ------------- ------
11,118,484 22,185,537 6.3
------------ ------------- ------
Total Common Stocks in Spain 16,611,054 35,955,346 10.2
============ ============= ======
Thailand Utilities -- Electric 332,000 Electricity Generating Company
of Thailand (EGCOMP) 296,433 640,847 0.2
------------ ------------- ------
Total Common Stocks in
Thailand 296,433 640,847 0.2
============ ============= ======
United Kingdom Telecommunications 671,000 British Telecommunications PLC 4,688,465 5,164,549 1.4
100,000 Vodafone Group PLC (ADR) (b) 2,962,040 6,600,000 1.9
------------ ------------- ------
7,650,505 11,764,549 3.3
Utilities -- Electric 208,000 National Power PLC 1,723,671 1,981,023 0.6
370,000 PowerGen PLC 2,705,142 4,764,012 1.3
------------ ------------- ------
4,428,813 6,745,035 1.9
------------ ------------- ------
Total Common Stocks in the
United Kingdom 12,079,318 18,509,584 5.2
============ ============= ======
United States Telecommunications 46,000 AT&T Corporation 1,848,510 2,570,250 0.7
70,000 Ameritech Corp. 2,996,450 5,394,375 1.5
47,616 Bell Atlantic Corporation 2,819,654 4,249,728 1.2
91,800 BellSouth Corp. 2,702,773 5,026,050 1.4
108,000 Frontier Corp. 2,193,480 2,646,000 0.8
85,000 GTE Corp. 3,145,450 4,297,812 1.2
10,046 Lucent Technologies, Inc. 493,515 804,936 0.2
69,900 SBC Communications, Inc. 2,939,711 5,089,594 1.5
68,000 U S West Communications Group 1,895,186 3,072,750 0.9
108,000 WorldCom Corp. 3,572,937 3,456,000 1.0
------------ ------------- ------
24,607,666 36,607,495 10.4
Utilities -- Electric 156,000 Allegheny Energy, Inc. (c) 4,213,210 4,728,750 1.3
87,200 Boston Edison Co. 2,722,264 3,052,000 0.9
166,962 CINergy Corp. 4,045,124 5,948,021 1.7
84,200 Consolidated Edison Co. of
New York 2,991,744 3,178,550 0.9
118,900 DTE Energy Co. 4,092,463 3,901,406 1.1
95,250 Dominion Resources, Inc. 3,965,452 3,702,844 1.0
85,000 Duke Energy Co. 3,180,276 4,420,000 1.3
283,000 Edison International 6,379,546 7,587,937 2.2
188,300 GPU, Inc. 5,864,593 7,437,850 2.1
75,200 Houston Industries, Inc. 1,840,708 1,781,300 0.5
184,800 NIPSCO Industries, Inc. 5,394,297 8,650,950 2.5
124,000 New Century Energies Corp. 3,798,642 5,487,000 1.6
106,000 New York State Electric & Gas
Corp. 3,787,564 3,259,500 0.9
140,500 PECO Energy Co. 4,344,731 3,415,906 0.9
183,000 PacifiCorp 3,657,980 4,266,187 1.2
91,200 Southern Co. 2,022,770 2,188,800 0.6
100,000 Texas Utilities Holding Co. 3,506,000 4,000,000 1.1
------------ ------------- ------
65,807,364 77,007,001 21.8
Utilities -- Gas 102,500 The Coastal Corp. 2,726,261 6,002,656 1.7
30,000 K N Energy, Inc. 1,214,183 1,402,500 0.4
130,000 Keyspan Energy Corporation (e) 3,371,550 4,330,625 1.2
136,000 Questar Corp. 3,729,821 5,329,500 1.5
74,300 Sonat, Inc. 2,229,714 3,236,694 0.9
------------ ------------- ------
13,271,529 20,301,975 5.7
------------ ------------- ------
Total Common Stocks in the
United States 103,686,559 133,916,471 37.9
============ ============= ======
Total Investments in Common
Stocks & Warrants 231,360,265 344,074,001 97.5
============ ============= ======
<CAPTION>
Face
Amount Short-Term Securities
<S> <C> <C> <C> <C> <C> <C>
Commercial Paper* $9,047,000 General Motors Acceptance
Corp., 5.75% due 12/01/1997 9,044,110 9,044,110 2.6
------------ ------------- ------
Total Investments in
Short-Term Securities 9,044,110 9,044,110 2.6
============ ============= ======
Total Investments $240,404,375 353,118,111 100.1
============
Liabilities in Excess of Other Assets (412,976) (0.1)
------------- ------
Net Assets $352,705,135 100.0%
============= ======
* Commercial Paper is traded on a discount basis; the interest rate shown is the discount rate paid at
the time of purchase by the Fund.
(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) Formerly known as Allegheny Power System, Inc.
(d) The security may be offered and sold to "qualified institutional buyers" under Rule 144A of the
Securities Act of 1933.
(e) Keyspan Energy Corporation was the result of a merger between Brooklyn Union Gas Co. and Long Island
Lighting Co.
(f) The Fund's warrants were converted into shares.
+ Non-income producing security.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
As of November 30, 1997
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $240,404,375) (Note 1a) $353,118,111
Cash 2,050
Receivables:
Dividends $655,665
Securities sold 42,749
Capital shares sold 42,707 741,121
-------------
Prepaid registration fees and other assets (Note 1f) 23,044
-------------
Total assets 353,884,326
-------------
Liabilities: Payables:
Capital shares redeemed 632,763
Distributor (Note 2) 172,869
Investment adviser (Note 2) 157,420 963,052
-------------
Accrued expenses and other liabilities 216,139
-------------
Total liabilities 1,179,191
-------------
Net Assets: Net assets $352,705,135
=============
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000 shares
Consist of: authorized $228,746
Class B Shares of Common Stock, $0.10 par value, 100,000,000 shares
authorized 1,780,852
Class C Shares of Common Stock, $0.10 par value, 100,000,000 shares
authorized 32,480
Class D Shares of Common Stock, $0.10 par value, 100,000,000 shares
authorized 40,835
Paid-in capital in excess of par 211,803,197
Undistributed investment income -- net 707,132
Undistributed realized capital gains on investments and foreign
currency transactions -- net 25,398,877
Unrealized appreciation on investments and foreign currency
transactions -- net 112,713,016
-------------
Net assets $352,705,135
=============
Net Asset Class A -- Based on net assets of $38,825,316 and 2,287,456 shares
Value: outstanding $16.97
=============
Class B -- Based on net assets of $301,458,774 and 17,808,519 shares
outstanding $16.93
=============
Class C -- Based on net assets of $5,486,086 and 324,804 shares
outstanding $16.89
=============
Class D -- Based on net assets of $6,934,959 and 408,345 shares
outstanding $16.98
=============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Year Ended November 30, 1997
<S> <C> <C> <C>
Investment Income Dividends (net of $904,012 foreign withholding tax) $13,006,997
(Notes 1d & 1e): Interest and discount earned 880,338
-------------
Total income 13,887,335
-------------
Expenses: Account maintenance and distribution fees -- Class B (Note 2) $2,367,232
Investment advisory fees (Note 2) 2,188,667
Transfer agent fees -- Class B (Note 2) 381,042
Custodian fees 133,904
Printing and shareholder reports 109,273
Registration fees (Note 1f) 69,787
Professional fees 61,516
Transfer agent fees -- Class A (Note 2) 37,960
Account maintenance and distribution fees -- Class C (Note 2) 35,517
Accounting services (Note 2) 33,629
Directors' fees and expenses 19,467
Account maintenance fees -- Class D (Note 2) 14,195
Transfer agent fees -- Class C (Note 2) 5,362
Transfer agent fees -- Class D (Note 2) 5,273
Pricing fees 2,081
Other 9,442
-------------
Total expenses 5,474,347
-------------
Investment income -- net 8,412,988
-------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments -- net 25,398,929
(Loss) on Foreign currency transactions -- net (119,365) 25,279,564
Investments & -------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions -- Net Investments -- net 29,203,085
(Notes 1b, 1c, Foreign currency transactions -- net 1,975 29,205,060
1e & 3): ------------- -------------
Net realized and unrealized gain on investments and foreign currency
transactions 54,484,624
-------------
Net Increase in Net Assets Resulting from Operations $62,897,612
=============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended November 30,
Increase (Decrease) in Net Assets: 1997 1996
<S> <C> <C> <C>
Operations: Investment income -- net $8,412,988 $11,621,285
Realized gain on investments and foreign currency transactions -- net 25,279,564 11,210,157
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions -- net 29,205,060 41,368,999
------------- -------------
Net increase in net assets resulting from operations 62,897,612 64,200,441
------------- -------------
Dividends & Investment income -- net:
Distributions to Class A (1,226,228) (1,619,986)
Shareholders Class B (7,470,524) (10,429,834)
(Note 1g): Class C (104,297) (83,508)
Class D (159,532) (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 (20,195,146) (19,983,000)
------------- -------------
Capital Share Net decrease in net assets derived from capital share transactions (73,229,623) (90,445,913)
Transactions ------------- -------------
(Note 4):
Net Assets: Total decrease in net assets (30,527,157) (46,228,472)
Beginning of year 383,232,292 429,460,764
------------- -------------
End of year* $352,705,135 $383,232,292
============= =============
* Undistributed investment income -- net (Note 1h) $707,132 $1,373,289
============= =============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following per share data and ratios have been derived Class A
from information provided in the financial statements.
For the Year Ended November 30,
1997++ 1996++ 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $15.09 $13.52 $12.08 $13.22 $11.23
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income -- net .47 .50 .51 .94 .40
Realized and unrealized gain (loss) on
investments and foreign currency
transactions -- net 2.35 1.84 1.42 (1.57) 2.01
---------- ---------- ---------- ---------- ----------
Total from investment operations 2.82 2.34 1.93 (.63) 2.41
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income -- net (.49) (.53) (.49) (.47) (.41)
Realized gain on investments -- net (.45) (.24) -- (.04) (.01)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.94) (.77) (.49) (.51) (.42)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $16.97 $15.09 $13.52 $12.08 $13.22
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 19.65% 17.94% 16.34% (4.89%) 21.80%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses .82% .84% .91% .86% .82%
Net Assets: ========== ========== ========== ========== ==========
Investment income -- net 2.98% 3.51% 3.73% 3.58% 3.57%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year (in thousands) $38,825 $40,055 $44,775 $56,659 $81,718
Data: ========== ========== ========== ========== ==========
Portfolio turnover 6.23% 5.03% 2.92% 17.02% 8.92%
========== ========== ========== ========== ==========
Average commission rate paid+++++ $.0234 $.0328 -- -- --
========== ========== ========== ========== ==========
<CAPTION>
The following per share data and ratios have been derived Class B
from information provided in the financial statements.
For the Year Ended November 30,
1997++ 1996++ 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $15.05 $13.47 $12.04 $13.17 $11.20
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income -- net .35 .39 .38 .74 .33
Realized and unrealized gain (loss) on
investments and foreign currency
transactions -- net 2.35 1.84 1.44 (1.46) 1.98
---------- ---------- ---------- ---------- ----------
Total from investment operations 2.70 2.23 1.82 (.72) 2.31
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income -- net (.37) (.41) (.39) (.37) (.33)
Realized gain on investments -- net (.45) (.24) -- (.04) (.01)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.82) (.65) (.39) (.41) (.34)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $16.93 $15.05 $13.47 $12.04 $13.17
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 18.77% 17.07% 15.38% (5.60%) 20.86%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.59% 1.61% 1.68% 1.63% 1.59%
Net Assets: ========== ========== ========== ========== ==========
Investment income -- net 2.22% 2.74% 2.95% 2.82% 2.81%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year (in thousands) $301,459 $335,487 $381,098 $459,185 $596,455
Data: ========== ========== ========== ========== ==========
Portfolio turnover 6.23% 5.03% 2.92% 17.02% 8.92%
========== ========== ========== ========== ==========
Average commission rate paid+++++ $.0234 $.0328 -- -- --
========== ========== ========== ========== ==========
<CAPTION>
Class C
For the
Period
The following per share data and ratios have been derived Oct. 21,
from information provided in the financial statements. 1994+ to
For the Year Ended Nov. 30, Nov. 30,
1997++ 1996++ 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <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 .33 .38 .39 .01
Realized and unrealized gain (loss) on investments
and foreign currency transactions -- net 2.35 1.84 1.43 (.30)
---------- ---------- ---------- ----------
Total from investment operations 2.68 2.22 1.82 (.29)
---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income -- net (.37) (.41) (.41) --
Realized gain on investments -- net (.45) (.24) -- --
---------- ---------- ---------- ----------
Total dividends and distributions (.82) (.65) (.41) --
---------- ---------- ---------- ----------
Net asset value, end of period $16.89 $15.03 $13.46 $12.05
========== ========== ========== ==========
Total Investment Based on net asset value per share 18.66% 17.03% 15.38% (2.35%)++++
Return:** ========== ========== ========== ==========
Ratios to Average Expenses 1.63% 1.66% 1.73% 1.60%*
Net Assets: ========== ========== ========== ==========
Investment income -- net 2.07% 2.65% 2.85% 3.01%*
========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $5,486 $3,325 $2,072 $445
Data: ========== ========== ========== ==========
Portfolio turnover 6.23% 5.03% 2.92% 17.02%
========== ========== ========== ==========
Average commission rate paid+++++ $.0234 $.0328 -- --
========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++ Based on average shares outstanding.
++++ Aggregate total investment return.
+++++ 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.
See Notes to Financial Statements.
<CAPTION>
Class D
For the
Period
The following per share data and ratios have been derived Oct. 21,
from information provided in the financial statements. 1994+ to
For the Year Ended Nov. 30, Nov. 30,
1997++ 1996++ 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <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 .43 .50 .52 .02
Realized and unrealized gain (loss) on investments and
foreign currency transactions -- net 2.35 1.79 1.40 (.30)
---------- ---------- ---------- ----------
Total from investment operations 2.78 2.29 1.92 (.28)
---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income -- net (.45) (.50) (.46) --
Realized gain on investments -- net (.45) (.24) -- --
---------- ---------- ---------- ----------
Total dividends and distributions (.90) (.74) (.46) --
---------- ---------- ---------- ----------
Net asset value, end of period $16.98 $15.10 $13.55 $12.09
========== ========== ========== ==========
Total Investment Based on net asset value per share 19.35% 17.45% 16.21% (2.26%)++++
Return:** ========== ========== ========== ==========
Ratios to Average Expenses 1.06% 1.07% 1.15% 1.08%*
Net Assets: ========== ========== ========== ==========
Investment income -- net 2.70% 3.30% 3.36% 3.25%*
========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $6,935 $4,365 $1,516 $239
Data: ========== ========== ========== ==========
Portfolio turnover 6.23% 5.03% 2.92% 17.02%
========== ========== ========== ==========
Average commission rate paid+++++ $.0234 $.0328 -- --
========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++ Based on average shares outstanding.
++++ Aggregate total investment return.
+++++ 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.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Utility Fund, Inc., November 30, 1997
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 four classes of shares
under the Merrill Lynch Select PricingSM 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.
(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.
[bullet] 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).
Written and purchased options are non-income producing investments.
[bullet] 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.
[bullet] 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 dates. Realized gains and
losses on security transactions are determined on the identified cost
basis.
(f) Prepaid registration fees -- Prepaid registration fees are charged
to expense as the related shares are issued.
(g) Dividends and distributions -- Dividends and distributions paid
by the Fund are recorded on the ex-dividend dates.
(h) Reclassification -- Generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of $118,564
have been reclassified between undistributed net realized capital
gains and undistributed net investment income. These reclassifications
have no effect on net assets or net asset values per share.
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 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 year ended November 30, 1997, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer concessions
on sales of the Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $311 $4,006
Class D $1,670 $11,122
For the year ended November 30, 1997, MLPF&S received contingent
deferred sales charges of $414,164 and $1,002, relating to
transactions in Class B Shares and Class C Shares, respectively.
In addition, MLPF&S received $29,245 in commissions on the execution
of portfolio security transactions for the Fund for the year ended
November 30, 1997.
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.
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 year ended November 30, 1997 were $22,273,321 and
$109,629,246, respectively.
Net realized and unrealized gains (losses) as of November 30, 1997
were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $25,398,929 $112,713,736
Foreign currency transactions (119,365) (720)
------------ ------------
Total $25,279,564 $112,713,016
============ ============
As of November 30, 1997, net unrealized appreciation for Federal
income tax purposes aggregated $112,713,736, of which $118,277,878
related to appreciated securities and $5,564,142 related to
depreciated securities. The aggregate cost of investments at November
30, 1997 for Federal income tax purposes was $240,404,375.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions was
$73,229,623 and $90,445,913 for the years ended November 30, 1997 and
November 30, 1996, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Year Dollar
Ended November 30, 1997 Shares Amount
Shares sold 153,463 $2,379,323
Shares issued to shareholders
in reinvestment of dividends
and distributions 129,136 1,920,920
------------ ------------
Total issued 282,599 4,300,243
Shares redeemed (649,437) (10,126,477)
------------ ------------
Net decrease (366,838) $(5,826,234)
============ ============
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 Year Dollar
Ended November 30, 1997 Shares Amount
Shares sold 742,021 $11,572,951
Shares issued to shareholders
in reinvestment of dividends
and distributions 907,341 13,394,936
------------ ------------
Total issued 1,649,362 24,967,887
Automatic conversion of shares (116,073) (1,799,482)
Shares redeemed (6,016,308) (94,007,577)
------------ ------------
Net decrease (4,483,019) $(70,839,172)
============ ============
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 conversioin 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 Year Dollar
Ended November 30, 1997 Shares Amount
Shares sold 203,432 $3,216,009
Shares issued to shareholders
in reinvestment of dividends
and distributions 11,912 178,063
------------ ------------
Total issued 215,344 3,394,072
Shares redeemed (111,820) (1,799,829)
------------ ------------
Net increase 103,524 $1,594,243
============ ============
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
============ ============
Class D Shares for the Year Dollar
Ended November 30, 1997 Shares Amount
Shares sold 240,150 $3,891,095
Automatic conversion of shares 115,735 1,799,482
Shares issued to shareholders
in reinvestment of dividends
and distributions 16,802 252,302
------------ ------------
Total issued 372,687 5,942,879
Shares redeemed (253,415) (4,101,339)
------------ ------------
Net increase 119,272 $1,841,540
============ ============
Class D Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 1,906,770 $26,889,122
Automatic conversion of shares 109,766 1,536,242
Shares issued to shareholders
in reinvestment of dividends
and distributions 7,595 106,392
------------ ------------
Total issued 2,024,131 28,531,756
Shares redeemed (1,846,953) (26,064,462)
------------ ------------
Net increase 177,178 $2,467,294
============ ============
5. Subsequent Event:
On December 1, 1997, the Fund's Board of Directors declared an
ordinary income dividend in the amount of $.053353 per Class A Share,
$.032182 per Class B Share, $.030114 per Class C Share, $.046512 per
Class D Share and a long-term capital gains distribution in the amount
of $1.235641 per share for each of the four classes, payable on
December 29, 1997 to shareholders of record as of December 18, 1997.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Global Utility Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Merrill Lynch Global Utility
Fund, Inc. as of November 30, 1997, the related statements of
operations for the year then ended and changes in net assets for each
of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended.
These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned at November 30, 1997 by
correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Global Utility Fund, Inc. as of November 30, 1997, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
January 8, 1998
<TABLE>
<CAPTION>
IMPORTANT TAX INFORMATION (unaudited)
The following information summarizes the distributions paid by Merrill Lynch Global Utility Fund, Inc. to all classes of
shares during the fiscal year ended November 30, 1997:
Domestic Domestic Foreign
Record Payable Qualifying Non-Qualifying Foreign Source Total Withholding Taxes
Date Date Ordinary Income Income Income Ordinary Income (Per Share)
<S> <C> <C> <C> <C> <C> <C>
12/13/96 12/23/96 84.32% 5.44% 10.24% 100% $.005328
4/03/97 4/11/97 70.65% 3.49% 25.86% 100% $.008626
7/01/97 7/10/97 70.65% 3.49% 25.86% 100% $.013341
10/06/97 10/14/97 70.65% 3.49% 25.86% 100% $.010142
In addition, the Fund paid a long-term capital gain distribution of $.446232 per share to shareholders of record on
December 13, 1996.
Please retain this information for your records.
</TABLE>
PORTFOLIO INFORMATION (unaudited)
Worldwide
Investments as of
11/30/97
Ten Largest Holdings Percent of
(Equity Investments) Net Assets
Telefonica de Espana, S.A. 3.9%
Australian Gas & Light Co., Ltd. 3.8
Generale des Eaux S.A. 3.4
Telecom Italia S.p.A. (Registered Non-Convertible) 3.4
Telecom Italia Mobile S.p.A. 3.2
Iberdrola I, S.A. 2.9
Empresa Nacional de Electricidad, S.A. (Endesa)
(ADR) 2.8
Portugal Telecom, S.A. (ADR) 2.7
Telecom Italia S.p.A. 2.7
NIPSCO Industries, Inc. 2.5
Deletion (Equity Investments)
TelecomAsia Corporation Public Co., Ltd. PLC (ADR)
