-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OyeGKqEG4VQoVXo1MhyXnOs3MJG6ZIKDkijXdUPXSERskEWSx4N4pnXqii5L9h+c 7ypHIMd8Cu6wFBU0tsz92w== 0001005477-99-003215.txt : 19990726 0001005477-99-003215.hdr.sgml : 19990726 ACCESSION NUMBER: 0001005477-99-003215 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990531 FILED AS OF DATE: 19990723 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL LYNCH GLOBAL UTILITY FUND INC CENTRAL INDEX KEY: 0000868452 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-06180 FILM NUMBER: 99669079 BUSINESS ADDRESS: STREET 1: P O BOX 9011 CITY: PRINCETON STATE: NJ ZIP: 08543-9011 BUSINESS PHONE: 6092823319 MAIL ADDRESS: STREET 1: P O BOX 9066 CITY: PRINCETON STATE: NJ ZIP: 08543-9011 N-30D 1 SEMI-ANNUAL REPORT MERRILL LYNCH GLOBAL UTILITY [GRAPHIC OMITTED] STRATEGIC Performance Semi-Annual Report May 31, 1999 MERRILL LYNCH GLOBAL UTILITY FUND, INC. Sector Diversification As a Percentage of Equities as of May 31, 1999 Pie graph depicting the following percentages: Telecommunications 54.4% Utilities--Electric 29.8% Utilities--Gas 11.0% Utilities--Water 4.8% Geographical Diversification As a Percentage of Equities as of May 31, 1999 Pie graph depicting the following percentages: Europe 49.9% United States 42.6% Asia/Pacific Basin 5.4% Americas (Ex-US) 2.1% Merrill Lynch Global Utility Fund, Inc., May 31, 1999 DEAR SHAREHOLDER There were some conflicting signals regarding the future direction of the US economy during the quarter ended May 31, 1999. However, on balance the economic outlook continued to be positive. The US economic expansion is ongoing, especially in the consumer sector. Economic growth is not occurring at inflationary rates, although the Organization of Petroleum Exporting Countries (OPEC) successfully engineered a near-term increase in the price of crude oil. Against this backdrop, the US Federal Reserve Board kept monetary policy on hold, but comments by Chairman Alan Greenspan suggested that tightening may occur if there are increasing signs of economic overheating. In fact, on June 30, 1999, the Federal Reserve Board increased the Federal Funds rate 0.25%. Outside of the United States, signs of growth are less apparent in other major industrial economies. Although the crisis in Yugoslavia has raised serious geopolitical concerns, it was not a significant factor in the economic or investment outlook. In Japan, there are not yet clear signs that Japan's economy is improving. There were growing signs of improvement in some emerging economies (most notably South Korea and Mexico), although concerns remain for others (such as Brazil and Argentina). In the US capital markets, long-term interest rates rose during the May quarter. Although the spread between yields on Treasury securities and corporate issues of similar maturities has narrowed somewhat, it remains wide by historic standards. Although the US stock market exhibited greater price volatility, its advances broadened beyond relatively few growth stocks to the previously languishing cyclical sectors. Investment Environment The consolidation trend in the utility sector is spreading worldwide. Merger and acquisition activity has increased both domestically and internationally. Examples include the combination of the UK-based international cellular company, Vodaphone Group PLC (a Fund holding) and US-based global cellular operator, AirTouch Communications. The bidding contest between the Italian company Olivetti SpA and Fund holding Deutsche Telekom AG for the telecommunications services provider Telecom Italia, also a Fund holding, is another example. Activity has not only focused on the fast growing telecommunications sector but has also taken place in the electric and water sectors. Scottish Power PLC is in the process of acquiring the Oregon-based electric utility company PacifiCorp., a Fund holding. In approving this transaction and the National Grid (UK)--New England Electric System purchase, Federal Energy Regulatory Commission Chairman James Hoecker said it was noteworthy that as US electric power markets deregulate, individual utilities are sought out by foreign buyers. "These mergers illustrate," he said, "how attractive US utilities are to foreign capital markets." Fund holding Vivendi, a leader in the water business and headquartered in France, has acquired United States Filter Corporation, which provides water and wastewater treatment systems, products and services to all customer classes. Yorkshire Water, of the United Kingdom, just announced its first US acquisition, the Connecticut-based water treatment service company, Aquarion Co. This recent cross-border activity in the utility sector is in addition to the numerous joint ventures and partnerships that have already occurred. Some examples in this area include the Philadelphia-based electric utility company PECO Energy Company joining with the UK-based nuclear electric company British Energy to purchase and/or operate nuclear plants in the United States. In addition, France Telecom and Deutsche Telekom each own a position in the US-based telecommunications provider Sprint Corp. Turning to US-based utility companies, we have seen an acceleration in the merger and acquisition activity that has been occurring for some time now. Recent activity in this region has included the natural gas company El Paso Energy proposing to buy Fund holding Sonat Inc., another natural gas pipeline company. Global Crossing Ltd., a provider of global long-distance telecommunications facilities and services which has agreed to purchase the telecommunications provider Frontier Corporation, a Fund holding, has found itself in a bidding war with Qwest Commu nications. On the electric side, Denver-based Fund holding New Century Energies, Inc. and Minneapolis-based Northern States Power have announced plans to merge operations. On the gas side, Dynegy, Inc., the natural gas and electric trading company, has agreed to buy Illinova Corp. This heightened level of activity among utilities might imply the opportunity for enhanced growth driven by both revenues and cost reductions. Combining common operations, increased usage of existing and new technologies over a larger operating base and labor force rationalization may all result in reduced expenditures. With the prospects for growth improving as a result of the current consolidation trend in the utility industry, we are likely to see attractive investment opportunities. Portfolio Matters During the May quarter, the Fund's overweighted strategy in European-based utility stocks was negatively impacted by the surprising strength in the US dollar relative to the euro. Reduced economic growth estimates for the region and nervousness over the direction of interest rates both in the United States and abroad, coupled with the military action in Kosovo, contributed to this euro weakness. Fundamentally, the outlook for many of the Fund's holdings in the European region has improved. Increased usage of the Internet is driving demand for basic telecommunications services, and better pricing with improved technology is raising the penetration and usage of mobile telephones. This has been particularly evident in the results from Italy, Spain and the United Kingdom. Finally, with continued higher interest rates in the United States a possibility and considering the adverse derivative effects they may have on emerging markets, the assessment of risk versus return among global utilities remains a challenge. During the May quarter, we added to one domestic utility company, Houston-based Reliant Energy, Inc. The company provides both electric and natural gas to consumers. The company also has interests in South American electric utilities. Recent news coming from the Texas regulatory authorities has been constructive for the company's outlook. We also eliminated three holdings based on valuation considerations. 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 our next report to shareholders. Sincerely, /s/ Terry K. Glenn Terry K. Glenn President and Director /s/ Walter D. Rogers Walter D. Rogers Senior Vice President and Portfolio Manager July 9, 1999 2 & 3 Merrill Lynch Global Utility Fund, Inc., May 31, 1999 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: o Class A Shares incur a maximum initial sales charge (front-end load) of 4% and bear no ongoing distribution or account main tenance fees. Class A Shares are available only to eligible investors. o 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 share conversions.) o 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. o 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 represen tation of future performance. Figures shown in the "Recent Performance Results" and "Average Annual Total Return" 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** ================================================================================ Class A Shares* ================================================================================ Year Ended 3/31/99 + 4.71% + 0.52% - -------------------------------------------------------------------------------- Five Years Ended 3/31/99 +15.35 +14.41 - -------------------------------------------------------------------------------- Inception (12/28/90) through 3/31/99 +13.96 +13.40 - -------------------------------------------------------------------------------- * Maximum sales charge is 4%. ** Assuming maximum sales charge. ================================================================================ % Return % Return Without CDSC With CDSC** ================================================================================ Class B Shares* ================================================================================ Year Ended 3/31/99 + 3.93% + 0.14% - -------------------------------------------------------------------------------- Five Years Ended 3/31/99 +14.47 +14.47 - -------------------------------------------------------------------------------- Inception (12/28/90) through 3/31/99 +13.08 +13.08 - -------------------------------------------------------------------------------- * 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 3/31/99 + 3.91% + 2.96% - -------------------------------------------------------------------------------- Inception (10/21/94) through 3/31/99 +16.39 +16.39 - -------------------------------------------------------------------------------- * 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 3/31/99 + 4.46% + 0.28% - -------------------------------------------------------------------------------- Inception (10/21/94) through 3/31/99 +17.04 +15.97 - -------------------------------------------------------------------------------- * Maximum sales charge is 4%. ** Assuming maximum sales charge. Recent Performance Results*
12 Month 3 Month Since Inception Total Return Total Return Total Return ================================================================================================ ML Global Utility Fund, Inc. Class A Shares +11.88% +0.79% +203.58% - ------------------------------------------------------------------------------------------------ ML Global Utility Fund, Inc. Class B Shares +11.06 +0.64 +184.52 - ------------------------------------------------------------------------------------------------ ML Global Utility Fund, Inc. Class C Shares +10.98 +0.60 +102.22 - ------------------------------------------------------------------------------------------------ ML Global Utility Fund, Inc. Class D Shares +11.62 +0.77 +107.60 ================================================================================================
* Investment results shown do not reflect sales charges; results shown would be lower if a sales charge was included. Total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. The Fund's since inception periods are Class A & Class B Shares, from 12/28/90 to 5/31/99 and Class C & Class D Shares, from 10/21/94 to 5/31/99. PORTFOLIO INFORMATION Worldwide Investments as of May 31, 1999 Ten Largest Holdings Percent of (Equity Investments) Net Assets Telefonica SA*.................................. 6.0% Vodafone Group PLC (ADR)........................ 4.3 Telecom Italia Mobile (TIM) SpA................. 4.1 Telecom Italia SpA (Registered Non-Convertible). 4.0 Telecom Italia SpA.............................. 3.9 Vivendi*........................................ 3.9 British Telecommunications PLC.................. 2.8 MCI WorldCom Inc................................ 2.4 Portugal Telecom SA (ADR)....................... 2.4 Ameritech Corporation........................... 2.3 * Includes combined holdings. Deletions BCT.Telus Communications Inc. BCT.Telus Communications Inc. (A Shares) PECO Energy Company TransCanada PipeLines Limited OFFICERS AND DIRECTORS Terry K. Glenn, President and Director Ronald W. Forbes, Director Cynthia A. Montgomery, Director Charles C. Reilly, Director Kevin A. Ryan, Director Richard R. West, Director Arthur Zeikel, Director Walter D. Rogers, Senior Vice President and Portfolio Manager Donald C. Burke, Vice President and Treasurer Ira P. Shapiro, Secretary Custodian The Chase Manhattan Bank, N.A. 4 MetroTech Center, 18th Floor Brooklyn, NY 11245 Transfer Agent Financial Data Services, Inc. 4800 Deer Lake Drive East Jacksonville, FL 32246-6484 (800) 637-3863 4 & 5 Merrill Lynch Global Utility Fund, Inc., May 31, 1999 SCHEDULE OF INVESTMENTS (in US dollars)
Percent Shares Value of Net COUNTRY Industries Held Common Stocks & Warrants & Rights Cost (Note 1a) Assets ==================================================================================================================================== Australia Telecommunications 721,400 +Cable & Wireless Optus Limited $ 982,720 $ 1,382,784 0.3% -------------------------------------------------------------------------------------------------------------------- Utilities--Gas 1,239,621 Australian Gas Light Company Limited 3,540,897 7,866,313 2.0 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in Australia 4,523,617 9,249,097 2.3 ==================================================================================================================================== Austria Utilities--Gas 24,320 EVN AG 1,896,384 3,517,099 0.9 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in Austria 1,896,384 3,517,099 0.9 ==================================================================================================================================== Brazil Telecommunications 28,000 +Embratel Participacoes SA (ADR) (b) 593,704 385,000 0.1 2,800 Tele Celular Sul Participacoes SA (ADR) (b) 45,069 52,675 0.0 9,333 Tele Centro Oeste Celular Participacoes SA (ADR) (b) 28,168 32,666 0.0 5,600 Tele Centro Sul Participacoes SA (ADR) (b) 327,620 302,400 0.1 560 Tele Leste Celular Participacoes SA (ADR) (b) 15,081 16,800 0.0 1,400 Tele Nordeste Celular Participacoes SA (ADR) (b) 20,801 42,350 0.0 560 Tele Norte Celular Participacoes SA (ADR) (b) 8,710 17,465 0.0 28,000 Tele Norte Leste Participacoes SA (ADR) (b) 431,194 458,500 0.1 5,600 Tele Sudeste Celular Participacoes SA (ADR) (b) 178,544 136,500 0.0 28,000 Telecomunicacoes Brasileiras SA--Telebras (ADR) (b) 2,167 1,750 0.0 1,400 Telemig Celular Participacoes SA (ADR) (b) 40,736 43,225 0.0 11,200 Telesp Celular Participacoes SA (ADR) (b) 360,556 261,100 0.1 28,000 Telesp Participacoes SA (ADR)(b) 1,057,399 612,500 0.2 ----------- ------------ --- 3,109,749 2,362,931 0.6 -------------------------------------------------------------------------------------------------------------------- Utilities--Electric 300,000 Companhia Paranaense de Energia--Copel (ADR) (b) 5,400,000 2,250,000 0.6 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in Brazil 8,509,749 4,612,931 1.2 ==================================================================================================================================== Denmark Telecommunications 160,000 Tele Danmark A/S (ADR) (b) 3,764,160 8,190,000 2.1 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in Denmark 3,764,160 8,190,000 2.1 ==================================================================================================================================== Finland Telecommunications 18,218 Sonera Group Oyj 160,197 356,959 0.1 -------------------------------------------------------------------------------------------------------------------- Utilities--Gas 495,000 Fortum Corporation, the IVO-Neste Group 3,139,431 2,689,830 0.7 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in Finland 3,299,628 3,046,789 0.8 ==================================================================================================================================== France Utilities--Water 204,222 Vivendi 7,476,968 15,152,251 3.8 204,222 Vivendi (Rights) (c) 0 211,278 0.1 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks & Rights in France 7,476,968 15,363,529 3.9 ==================================================================================================================================== Germany Telecommunications 24,300 Deutsche Telekom AG 462,162 971,301 0.3 6,843 Mannesmann AG 610,301 936,772 0.2 ----------- ------------ --- 1,072,463 1,908,073 0.5 -------------------------------------------------------------------------------------------------------------------- Utilities--Electric 40,000 RWE AG 1,799,334 1,791,130 0.4 70,000 Veba AG 2,284,445 4,001,305 1.0 4,000 Viag AG 1,764,306 1,826,660 0.5 ----------- ------------ --- 5,848,085 7,619,095 1.9 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in Germany 6,920,548 9,527,168 2.4 ==================================================================================================================================== Hong Kong Utilities--Gas 174,301 Hong Kong and China Gas Company Ltd. 178,364 247,267 0.0 7,202 Hong Kong and China Gas Company Ltd. (Warrants) (a) 0 1,003 0.0 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks & Warrants in Hong Kong 178,364 248,270 0.0 ==================================================================================================================================== Italy Telecommunications 2,775,000 Telecom Italia Mobile (TIM) SpA 2,012,515 16,355,295 4.1 1,505,555 Telecom Italia SpA 2,746,349 15,544,253 3.9 2,891,700 Telecom Italia SpA (Registered Non-Convertible) 5,447,174 15,743,716 4.0 ----------- ------------ --- 10,206,038 47,643,264 12.0 -------------------------------------------------------------------------------------------------------------------- Utilities--Electric 462,000 +AEM SpA 437,927 951,096 0.3 -------------------------------------------------------------------------------------------------------------------- Utilities--Gas 1,786,300 Italgas SpA 5,169,953 7,672,069 1.9 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in Italy 15,813,918 56,266,429 14.2 ==================================================================================================================================== Japan Telecommunications 290 Nippon Telegraph & Telephone Corporation (NTT) 2,475,448 2,835,128 0.7 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in Japan 2,475,448 2,835,128 0.7 ==================================================================================================================================== Mexico Telecommunications 35,000 Telefonos de Mexico SA (ADR) (b) 1,924,311 2,797,813 0.7 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in Mexico 1,924,311 2,797,813 0.7 ==================================================================================================================================== New Zealand Telecommunications 56,000 Telecom Corporation of New Zealand Limited (ADR) (b) 1,230,138 1,939,000 0.5 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in New Zealand 1,230,138 1,939,000 0.5 ==================================================================================================================================== Philippines Telecommunications 188,000 Philippine Long Distance Telephone Company (ADR) (b) 4,077,062 5,428,500 1.4 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in the Philippines 4,077,062 5,428,500 1.4 ==================================================================================================================================== Portugal Telecommunications 205,740 Portugal Telecom SA (ADR) (b) 4,576,844 9,309,735 2.4 -------------------------------------------------------------------------------------------------------------------- Utilities--Electric 80,820 EDP--Electricidade de Portugal, SA (ADR) (b) 3,540,889 2,909,520 0.7 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in Portugal 8,117,733 12,219,255 3.1 ==================================================================================================================================== Spain Telecommunications 486,846 +Telefonica SA 5,492,570 23,392,512 5.9 9,737 +Telefonica SA (New Shares) 0 467,854 0.1 ----------- ------------ --- 5,492,570 23,860,366 6.0 -------------------------------------------------------------------------------------------------------------------- Utilities--Electric 259,200 Endesa SA (ADR) (b) 2,556,672 5,589,000 1.4 46,000 Hidroelectrica del Cantabrico, SA 1,553,961 1,990,098 0.5 323,500 Iberdrola SA 2,035,162 4,644,910 1.2 ----------- ------------ --- 6,145,795 12,224,008 3.1 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in Spain 11,638,365 36,084,374 9.1 ==================================================================================================================================== United Kingdom Telecommunications 671,000 British Telecommunications PLC 4,688,465 11,184,558 2.8 226,062 Cable & Wireless PLC 2,882,398 2,787,173 0.7 88,000 Vodafone Group PLC (ADR) (b) 2,605,300 16,841,000 4.3 ----------- ------------ --- 10,176,163 30,812,731 7.8 --------------------------------------------------------------------------------------------------------------------
6 & 7 Merrill Lynch Global Utility Fund, Inc., May 31, 1999 SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
Percent Shares Value of Net COUNTRY Industries Held Common Stocks & Warrants & Rights Cost (Note 1a) Assets ==================================================================================================================================== United Kingdom Utilities--Electric 208,000 National Power PLC $ 1,723,671 $ 1,619,454 0.4% (concluded) 370,000 PowerGen PLC 2,705,142 4,022,695 1.0 ----------- ------------ ---- 4,428,813 5,642,149 1.4 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in the United Kingdom 14,604,976 36,454,880 9.2 ==================================================================================================================================== United States Telecommunications 69,000 AT&T Corp. 1,848,510 3,829,500 1.0 140,000 Ameritech Corporation 2,996,450 9,213,750 2.3 95,232 Bell Atlantic Corporation 2,819,654 5,213,952 1.3 183,600 BellSouth Corporation 2,702,773 8,663,625 2.2 108,000 Frontier Corporation 2,193,480 5,683,500 1.4 85,000 GTE Corporation 3,145,450 5,360,313 1.4 108,000 +MCI WorldCom Inc. 3,572,937 9,321,750 2.4 139,800 SBC Communications Inc. 2,939,711 7,147,275 1.8 68,000 U S WEST, Inc. 1,895,186 3,676,250 0.9 ----------- ------------ ---- 24,114,151 58,109,915 14.7 -------------------------------------------------------------------------------------------------------------------- Utilities--Electric 156,000 Allegheny Energy, Inc. 4,213,210 5,440,500 1.4 87,200 BEC Energy 2,722,264 3,836,800 1.0 166,962 Cinergy Corp. 4,045,124 5,697,578 1.4 84,200 Consolidated Edison, Inc. 2,991,744 4,088,962 1.0 118,900 DTE Energy Company 4,092,463 5,179,581 1.3 85,000 Duke Energy Corporation 3,180,276 5,126,563 1.3 86,000 Edison International 1,925,397 2,365,000 0.6 212,000 Energy East Corporation 3,787,564 5,883,000 1.5 90,000 FPL Group, Inc. 5,071,746 5,236,875 1.3 127,300 GPU, Inc. 4,047,821 5,545,506 1.4 124,000 New Century Energies, Inc. 3,798,642 5,014,250 1.3 239,500 NiSource Inc. 3,715,746 6,691,031 1.7 183,000 PacifiCorp. 3,657,980 3,328,313 0.8 144,200 Reliant Energy, Inc. 3,802,144 4,398,100 1.1 91,200 The Southern Company 2,022,770 2,587,800 0.7 68,000 TECO Energy, Inc. 1,789,080 1,576,750 0.4 100,000 TXU 3,506,000 4,500,000 1.1 ----------- ------------ ---- 58,369,971 76,496,609 19.3 -------------------------------------------------------------------------------------------------------------------- Utilities--Gas 95,000 The Coastal Corporation 1,262,602 3,663,437 0.9 40,000 Enron Corp. 1,842,108 2,855,000 0.7 130,000 KeySpan Energy 3,371,550 3,510,000 0.9 168,000 Questar Corporation 2,475,460 3,202,500 0.8 46,300 Sonat Inc. 1,537,769 1,640,756 0.4 60,000 The Williams Companies, Inc. 1,978,230 3,108,750 0.8 ----------- ------------ ---- 12,467,719 17,980,443 4.5 -------------------------------------------------------------------------------------------------------------------- Utilities--Water 86,200 Philadelphia Suburban Corporation 1,869,462 1,896,400 0.5 -------------------------------------------------------------------------------------------------------------------- Total Common Stocks in the United States 96,821,303 154,483,367 39.0 ==================================================================================================================================== Total Investments in Common Stocks, Warrants & Rights 193,272,672 362,263,629 91.5 ==================================================================================================================================== Face Amount Short-Term Securities ==================================================================================================================================== Commercial Paper* $15,407,000 General Electric Capital Corp., 4.93% due 6/01/1999 15,400,670 15,400,670 3.9 16,145,000 Newell Company, 4.80% due 6/18/1999 16,101,947 16,101,947 4.1 -------------------------------------------------------------------------------------------------------------------- Total Investments in Short-Term Securities 31,502,617 31,502,617 8.0 ==================================================================================================================================== Total Investments $224,775,289 393,766,246 99.5 ============ Other Assets Less Liabilities 2,145,146 0.5 ------------ ----- Net Assets $395,911,392 100.0% ============ ===== ====================================================================================================================================
(a) Warrants entitle the Fund to purchase a predetermined number of shares of Common Stock and are non-income producing. 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 rights may be exercised until 6/25/1999. * Commercial Paper is traded on a discount basis; the interest rates shown reflect the discount rates paid at the time of purchase by the Fund. + Non-income producing security. See Notes to Financial Statements. 8 & 9 Merrill Lynch Global Utility Fund, Inc., May 31, 1999 STATEMENT OF ASSETS AND LIABILITIES
As of May 31, 1999 ================================================================================================================================ Assets: Investments, at value (identified cost--$224,775,289) (Note 1a)................. $393,766,246 Cash............................................................................ 680 Receivables: Securities sold............................................................... $ 2,614,503 Dividends..................................................................... 1,083,158 Capital shares sold........................................................... 256,923 3,954,584 ------------ Prepaid registration fees and other assets (Note 1f)............................ 28,775 ------------ Total assets.................................................................... 397,750,285 ------------ ================================================================================================================================ Liabilities: Payables: Capital shares redeemed....................................................... 1,279,111 Distributor (Note 2).......................................................... 201,732 Investment adviser (Note 2)................................................... 184,822 1,665,665 ------------ Accrued expenses and other liabilities.......................................... 173,228 ------------ Total liabilities............................................................... 1,838,893 ------------ ================================================================================================================================ Net Assets: Net assets...................................................................... $395,911,392 ============ ================================================================================================================================ Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000 shares $ 219,926 Consist of: Class B Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized.. 1,782,390 Class C Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized.. 55,079 Class D Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized.. 82,752 Paid-in capital in excess of par................................................ 221,113,438 Undistributed investment income--net............................................ 1,366,352 Undistributed realized capital gains on investments foreign currency transactions--net .......................................... 2,309,094 Unrealized appreciation on investments and foreign currency transactions--net... 168,982,361 ------------ Net assets...................................................................... $395,911,392 ============ ================================================================================================================================ Net Asset Class A--Based on net assets of $40,805,139 and 2,199,258 shares outstanding.... $ 18.55 Value: ============ Class B--Based on net assets of $329,595,911 and 17,823,904 shares outstanding.. $ 18.49 ============ Class C--Based on net assets of $10,152,423 and 550,789 shares outstanding...... $ 18.43 ============ Class D--Based on net assets of $15,357,919 and 827,522 shares outstanding...... $ 18.56 ============ ================================================================================================================================
See Notes to Financial Statements. STATEMENT OF OPERATIONS
For the Six Months Ended May 31, 1999 ================================================================================================================================ ================================================================================================================================ Investment Income Dividends (net of $308,603 foreign withholding tax)............................. $ 4,473,043 (Notes 1d & 1e): Interest and discount earned.................................................... 791,683 ------------ Total income.................................................................... 5,264,726 ------------ ================================================================================================================================ Expenses: Account maintenance and distribution fees--Class B (Note 2)..................... $ 1,235,977 Investment advisory fees (Note 2)............................................... 1,183,543 Transfer agent fees--Class B (Note 2)........................................... 163,823 Custodian fees.................................................................. 76,456 Accounting services (Note 2).................................................... 50,112 Printing and shareholder reports................................................ 45,040 Account maintenance and distribution fees--Class C (Note 2)..................... 38,004 Professional fees............................................................... 32,508 Registration fees (Note 1f)..................................................... 31,012 Account maintenance fees--Class D (Note 2)...................................... 17,219 Transfer agent fees--Class A (Note 2)........................................... 17,093 Directors' fees and expenses.................................................... 16,398 Transfer agent fees--Class D (Note 2)........................................... 5,675 Transfer agent fees--Class C (Note 2)........................................... 5,107 Other........................................................................... 5,558 ------------ Total expenses ................................................................. 2,923,525 ------------ Investment income--net.......................................................... 2,341,201 ------------ ================================================================================================================================ Realized & Realized gain (loss) from: Unrealized Gain Investments--net.............................................................. 2,341,149 (Loss) on Foreign currency transactions--net............................................ (32,046) 2,309,103 Investments & ------------ Foreign Currency Change in unrealized appreciation/depreciation on: Transactions--Net Investments--net.............................................................. 7,450,782 (Notes 1b, 1c, Foreign currency transactions--net............................................ (17,927) 7,432,855 1e & 3): ------------ ------------ Net realized and unrealized gain on investments and foreign currency transactions.......... ...................................... 9,741,958 ------------ Net Increase in Net Assets Resulting from Operations............................ $ 12,083,159 ============ ================================================================================================================================
See Notes to Financial Statements. 10 & 11 Merrill Lynch Global Utility Fund, Inc., May 31, 1999 STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the Months Ended Year Ended Increase (Decrease) in Net Assets: May 31, 1999 Nov. 30, 1998 ============================================================================================================================== Operations: Investment income--net....................................................... $ 2,341,201 $ 5,869,907 Realized gain on investments and foreign currency transactions--net.......... 2,309,103 29,339,193 Change in unrealized appreciation/depreciation on investments and foreign currency transactions--net ....................................... 7,432,855 48,836,490 ------------ ------------ Net increase in net assets resulting from operations......................... 12,083,159 84,045,590 ------------ ------------ ============================================================================================================================== Dividends & Investment income--net: Distributions to Class A.................................................................... (275,501) (942,410) Shareholders Class B.................................................................... (956,638) (4,895,531) (Note 1g): Class C.................................................................... (29,650) (94,022) Class D.................................................................... (78,058) (178,336) Realized gain on investments--net: Class A.................................................................... (3,200,306) (2,800,654) Class B.................................................................... (24,711,996) (21,708,174) Class C.................................................................... (613,584) (400,316) Class D.................................................................... (915,061) (489,776) ------------ ------------ Net decrease in net assets resulting from dividends and distributions to shareholders......................................... (30,780,794) (31,509,219) ------------ ------------ ============================================================================================================================== Capital Share Net increase (decrease) in net assets derived from capital Transactions share transactions........................................................ 25,548,336 (16,180,815) (Note 4): ------------ ------------ ============================================================================================================================== Net Assets: Total increase in net assets................................................. 6,850,701 36,355,556 Beginning of period.......................................................... 389,060,691 352,705,135 ------------ ------------ End of period*............................................................... $395,911,392 $389,060,691 ============ ============ ============================================================================================================================== * Undistributed investment income--net......................................... $ 1,366,352 $ 364,998 ============ ============ ==============================================================================================================================
See Notes to Financial Statements. FINANCIAL HIGHLIGHTS
Class A ------------------------------------------------------------ The following per share data and ratios have For the been derived from information provided in Six Months the financial statements. Ended For the Year Ended November 30, May 31, --------------------------------------------- Increase (Decrease) in Net Asset Value: 1999+ 1998+ 1997+ 1996+ 1995 ================================================================================================================================= Per Share Net asset value, beginning of period ........... $ 19.49 $ 16.97 $ 15.09 $ 13.52 $ 12.08 Operating -------- -------- -------- -------- ------- Performance: Investment income--net ......................... .17 .41 .47 .50 .51 Realized and unrealized gain on investments and foreign currency transactions--net ....... .48 3.77 2.35 1.84 1.42 -------- -------- -------- -------- ------- Total from investment operations ............... .65 4.18 2.82 2.34 1.93 -------- -------- -------- -------- ------- Less dividends and distributions: Investment income--net ....................... (.12) (.42) (.49) (.53) (.49) Realized gain on investments--net ............ (1.47) (1.24) (.45) (.24) -- -------- -------- -------- -------- ------- Total dividends and distributions .............. (1.59) (1.66) (.94) (.77) (.49) -------- -------- -------- -------- ------- Net asset value, end of period ................. $ 18.55 $ 19.49 $ 16.97 $ 15.09 $ 13.52 ======== ======== ======== ======== ======== ================================================================================================================================= Total Investment Based on net asset value per share ............. 3.48%++ 26.47% 19.65% 17.94% 16.34% Return:** ======== ======== ======== ======== ======== ================================================================================================================================= Ratios to Average Expenses ....................................... .81%* .82% .82% .84% .91% Net Assets: ======== ======== ======== ======== ======== Investment income--net ......................... 1.84%* 2.26% 2.98% 3.51% 3.73% ======== ======== ======== ======== ======== ================================================================================================================================= Supplemental Net assets, end of period (in thousands) ....... $ 40,805 $ 41,977 $ 38,825 $ 40,055 $ 44,775 Data: ======== ======== ======== ======== ======== Portfolio turnover ............................. 3.37% 6.56% 6.23% 5.03% 2.92% ======== ======== ======== ======== ======== =================================================================================================================================
* Annualized. ** Total investment returns exclude the effects of sales loads. + Based on average shares outstanding. ++ Aggregate total investment return. See Notes to Financial Statements. 12 & 13 Merrill Lynch Global Utility Fund, Inc., May 31, 1999 FINANCIAL HIGHLIGHTS (concluded)
Class B ------------------------------------------------------------ The following per share data and ratios have For the been derived from information provided in Six Months the financial statements. Ended For the Year Ended November 30, May 31, --------------------------------------------- Increase (Decrease) in Net Asset Value: 1999+ 1998+ 1997+ 1996+ 1995 ================================================================================================================================= Per Share Net asset value, beginning of period ........... $ 19.42 $ 16.93 $ 15.05 $ 13.47 $ 12.04 Operating -------- -------- -------- -------- ------- Performance: Investment income--net ......................... .10 .27 .35 .39 .38 Realized and unrealized gain on investments and foreign currency transactions--net ....... .49 3.74 2.35 1.84 1.44 -------- -------- -------- -------- ------- Total from investment operations ............... .59 4.01 2.70 2.23 1.82 -------- -------- -------- -------- ------- Less dividends and distributions: Investment income--net ....................... (.05) (.28) (.37) (.41) (.39) Realized gain on investments--net ............ (1.47) (1.24) (.45) (.24) -- -------- -------- -------- -------- ------- Total dividends and distributions .............. (1.52) (1.52) (.82) (.65) (.39) -------- -------- -------- -------- ------- Net asset value, end of period ................. $ 18.49 $ 19.42 $ 16.93 $ 15.05 $ 13.47 ======== ======== ======== ======== ======== ================================================================================================================================= Total Investment Based on net asset value per share ............. 3.15%++ 25.40% 18.77% 17.07% 15.38% Return:** ======== ======== ======== ======== ======== ================================================================================================================================= Ratios to Average Expenses ....................................... 1.58%* 1.59% 1.59% 1.61% 1.68% Net Assets: ======== ======== ======== ======== ======== Investment income--net ......................... 1.09%* 1.48% 2.22% 2.74% 2.95% ======== ======== ======== ======== ======== ================================================================================================================================= Supplemental Net assets, end of period (in thousands) ....... $329,596 $327,589 $301,459 $335,487 $381,098 Data: ======== ======== ======== ======== ======== Portfolio turnover ............................. 3.37% 6.56% 6.23% 5.03% 2.92% ======== ======== ======== ======== ======== ================================================================================================================================= Class C ------------------------------------------------------------ The following per share data and ratios have For the been derived from information provided in Six Months the financial statements. Ended For the Year Ended November 30, May 31, --------------------------------------------- Increase (Decrease) in Net Asset Value: 1999+ 1998+ 1997+ 1996+ 1995 ================================================================================================================================= Per Share Net asset value, beginning of period ........... $ 19.37 $ 16.89 $ 15.03 $ 13.46 $ 12.05 Operating -------- -------- -------- -------- ------- Performance: Investment income--net ......................... .10 .25 .33 .38 .39 Realized and unrealized gain on investments and foreign currency transactions--net ....... .49 3.73 2.35 1.84 1.43 -------- -------- -------- -------- ------- Total from investment operations ............... .59 3.98 2.68 2.22 1.82 -------- -------- -------- -------- ------- Less dividends and distributions: Investment income--net ....................... (.06) (.26) (.37) (.41) (.41) Realized gain on investments--net ............ (1.47) (1.24) (.45) (.24) -- -------- -------- -------- -------- ------- Total dividends and distributions .............. (1.53) (1.50) (.82) (.65) (.41) -------- -------- -------- -------- ------- Net asset value, end of period ................. $ 18.43 $ 19.37 $ 16.89 $ 15.03 $ 13.46 ======== ======== ======== ======== ======== ================================================================================================================================= Total Investment Based on net asset value per share ............. 3.11%++ 25.34% 18.66% 17.03% 15.38% Return:** ======== ======== ======== ======== ======== ================================================================================================================================= Ratios to Average Expenses ....................................... 1.64%* 1.64% 1.63% 1.66% 1.73% Net Assets: ======== ======== ======== ======== ======== Investment income--net ......................... 1.06%* 1.38% 2.07% 2.65% 2.85% ======== ======== ======== ======== ======== ================================================================================================================================= Supplemental Net assets, end of period (in thousands) ....... $ 10,152 $ 7,954 $ 5,486 $ 3,325 $ 2,072 Data: ======== ======== ======== ======== ======== Portfolio turnover ............................. 3.37% 6.56% 6.23% 5.03% 2.92% ======== ======== ======== ======== ======== ================================================================================================================================= Class D ------------------------------------------------------------ The following per share data and ratios have For the been derived from information provided in Six Months the financial statements. Ended For the Year Ended November 30, May 31, --------------------------------------------- Increase (Decrease) in Net Asset Value: 1999+ 1998+ 1997+ 1996+ 1995 ================================================================================================================================= Per Share Net asset value, beginning of period ........... $ 19.49 $ 16.98 $ 15.10 $ 13.55 $ 12.09 Operating -------- -------- -------- -------- ------- Performance: Investment income--net ......................... .15 .36 .43 .50 .52 Realized and unrealized gain on investments and foreign currency transactions--net ......... .49 3.77 2.35 1.79 1.40 -------- -------- -------- -------- ------- Total from investment operations ............... .64 4.13 2.78 2.29 1.92 -------- -------- -------- -------- ------- Less dividends and distributions: Investment income--net ....................... (.10) (.38) (.45) (.50) (.46) Realized gain on investments--net ............ (1.47) (1.24) (.45) (.24) -- -------- -------- -------- -------- ------- Total dividends and distributions .............. (1.57) (1.62) (.90) (.74) (.46) -------- -------- -------- -------- ------- Net asset value, end of period ................. $ 18.56 $ 19.49$ 16.98 $ 15.10 $ 13.55 ======== ======== ======== ======== ======== ================================================================================================================================= Total Investment Based on net asset value per share ............. 3.42%++ 26.09% 19.35% 17.45% 16.21% Return:** ======== ======== ======== ======== ======== ================================================================================================================================= Ratios to Average Expenses ....................................... 1.06%* 1.07% 1.06% 1.07% 1.15% Net Assets: ======== ======== ======== ======== ======== Investment income--net ......................... 1.65%* 1.97% 2.70% 3.30% 3.36% ======== ======== ======== ======== ======== ================================================================================================================================= Supplemental Net assets, end of period (in thousands) ....... $ 15,358 $ 11,541$ 6,935 $ 4,365 $ 1,516 Data: ======== ======== ======== ======== ======== Portfolio turnover ............................. 3.37% 6.56% 6.23% 5.03% 2.92% ======== ======== ======== ======== ======== =================================================================================================================================
* Annualized. ** Total investment returns exclude the effects of sales loads. + Based on average shares outstanding. ++ Aggregate total investment return. See Notes to Financial Statements. 14 & 15 Merrill Lynch Global Utility Fund, Inc., May 31, 1999 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's financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management accruals and estimates. 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 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 or purchased are valued at the last sale price in the case of exchange-traded options. In the case of options traded in the over-the-counter market, valuation is the last asked price (options written) or the last bid price (options purchased). 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. o 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. o Financial futures contracts--The Fund may purchase or sell financial futures contracts and options on such futures contracts. Upon entering into a contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the con tract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. o 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. o 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. 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 ("MLFD" or the "Distributor"), a division of Princeton Funds Distributor, Inc. ("PFD"), which is 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% -- - -------------------------------------------------------------------------------- 16 & 17 Merrill Lynch Global Utility Fund, Inc., May 31, 1999 NOTES TO FINANCIAL STATEMENTS (concluded) Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("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, 1999, 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 ................................. $ 104 $ 1,401 Class D ................................. $13,987 $ 1,308 - -------------------------------------------------------------------------------- For the six months ended May 31, 1999, MLPF&S received contingent deferred sales charges of $76,436 and $1,575, relating to transactions in Class B Shares and Class C Shares, respectively. In addition, MLPF&S received $15,520 in commissions on the execution of portfolio security transactions for the Fund for the six months ended May 31, 1999. Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is the Fund's transfer agent. Accounting services are provided to the Fund by MLAM at cost. Certain officers and/or directors of the Fund are officers and/or directors of MLAM, PSI, FDS, PFD, and/or ML & Co. 3. Investments: Purchases and sales of investments, excluding short-term securities, for the six months ended May 31, 1999 were $12,372,147 and $13,856,978, respectively. Net realized gains (losses) for the six months ended May 31, 1999 and net unrealized gains (losses) as of May 31, 1999 were as follows: - -------------------------------------------------------------------------------- Realized Unrealized Gains (Losses) Gains (Losses) - -------------------------------------------------------------------------------- Long-term investments ................... $ 2,341,149 $ 168,990,957 Foreign currency transactions ........... (32,046) (8,596) ------------ -------------- Total ................................... $ 2,309,103 $ 168,982,361 ============ ============== - -------------------------------------------------------------------------------- As of May 31, 1999, net unrealized appreciation for Federal income tax purposes aggregated $168,990,957, of which $174,792,311 related to appreciated securities and $5,801,354 related to depreciated securities. The aggregate cost of investments at May 31, 1999 for Federal income tax purposes was $224,775,289. 4. Capital Share Transactions: Net increase (decrease) in net assets derived from capital share transactions was $25,548,336 and ($16,180,815) for the six months ended May 31, 1999 and for the year ended November 30, 1998, respectively. Transactions in capital shares for each class were as follows: - -------------------------------------------------------------------------------- Class A Shares for the Six Months Dollar Ended May 31, 1999 Shares Amount - -------------------------------------------------------------------------------- Shares sold ............................. 460,727 $ 8,671,350 Shares issued to shareholders in reinvestment of dividends and distributions ....................... 151,390 2,775,990 ----------- ------------ Total issued ............................ 612,117 11,447,340 Shares redeemed ......................... (567,022) (10,596,841) ----------- ------------ Net increase ............................ 45,095 $ 850,499 =========== ============ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class A Shares for the Year Dollar Ended November 30, 1998 Shares Amount - -------------------------------------------------------------------------------- Shares sold ............................. 431,597 $ 7,895,940 Shares issued to shareholders in reinvestment of dividends and distributions ....................... 179,840 2,998,839 ----------- ------------ Total issued ............................ 611,437 10,894,779 Shares redeemed ......................... (744,730) (13,435,233) ----------- ------------ Net decrease ............................ (133,293) $ (2,540,454) =========== ============ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class B Shares for the Six Months Dollar Ended May 31, 1999 Shares Amount - -------------------------------------------------------------------------------- Shares sold ............................. 1,960,434 $ 36,635,125 Shares issued to shareholders in reinvestment of dividends and distributions ....................... 1,090,530 19,944,062 ----------- ------------ Total issued ............................ 3,050,964 56,579,187 Automatic conversion of shares .......... (20,521) (384,555) Shares redeemed ......................... (2,070,925) (38,548,826) ----------- ------------ Net increase ............................ 959,518 $ 17,645,806 =========== ============ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class B Shares for the Year Dollar Ended November 30, 1998 Shares Amount - -------------------------------------------------------------------------------- Shares sold ............................. 1,798,516 $ 32,421,070 Shares issued to shareholders in reinvestment of dividends and distributions ....................... 1,251,468 20,655,107 ----------- ------------ Total issued ............................ 3,049,984 53,076,177 Automatic conversion of shares .......... (55,904) (1,011,761) Shares redeemed ......................... (3,938,213) (70,455,451) ----------- ------------ Net decrease ............................ (944,133) $(18,391,035) =========== ============ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class C Shares for the Six Months Dollar Ended May 31, 1999 Shares Amount - -------------------------------------------------------------------------------- Shares sold ............................. 193,663 $ 3,619,997 Shares issued to shareholders in reinvestment of dividends and distributions ....................... 30,849 562,620 ----------- ----------- Total issued ............................ 224,512 4,182,617 Shares redeemed ......................... (84,267) (1,555,912) ----------- ----------- Net increase ............................ 140,245 $ 2,626,705 =========== =========== - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class C Shares for the Year Dollar Ended November 30, 1998 Shares Amount - -------------------------------------------------------------------------------- Shares sold ............................. 160,601 $ 2,882,085 Shares issued to shareholders in reinvestment of dividends and distributions ....................... 25,572 421,385 ----------- ----------- Total issued ............................ 186,173 3,303,470 Shares redeemed ......................... (100,433) (1,783,048) ----------- ----------- Net increase ............................ 85,740 $ 1,520,422 =========== =========== - -------------------------------------------------------------------------------- Class D Shares for the Six Months Dollar Ended May 31, 1999 Shares Amount - -------------------------------------------------------------------------------- Shares sold ............................. 278,776 $ 5,229,936 Automatic conversion of shares .......... 20,442 384,555 Shares issued to shareholders in reinvestment of dividends and distributions ....................... 46,223 848,030 ----------- ----------- Total issued ............................ 345,441 6,462,521 Shares redeemed ......................... (109,991) (2,037,195) ----------- ----------- Net increase ............................ 235,450 $ 4,425,326 =========== =========== - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class D Shares for the Year Dollar Ended November 30, 1998 Shares Amount - -------------------------------------------------------------------------------- Shares sold ............................. 476,893 $ 8,231,578 Automatic conversion of shares .......... 55,711 1,011,761 Shares issued to shareholders in reinvestment of dividends and distributions ....................... 33,182 554,571 ----------- ----------- Total issued ............................ 565,786 9,797,910 Shares redeemed ......................... (382,059) (6,567,658) ----------- ----------- Net increase ............................ 183,727 $ 3,230,252 =========== =========== - -------------------------------------------------------------------------------- 5. Subsequent Event: On July 8, 1999, the Fund's Board of Directors declared an ordinary income dividend in the amount of $.111393 per Class A Share, $.074864 per Class B Share, $.070686 per Class C Share and $.099714 per Class D Share, payable on July 15, 1999 to shareholders of record as of July 7, 1999. 18 & 19 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--5/99 [RECYCLE LOGO] Printed on post-consumer recycled paper -----END PRIVACY-ENHANCED MESSAGE-----