MERRILL LYNCH
GLOBAL
TECHNOLOGY
FUND, INC.
FUND LOGO
Semi-Annual Report
September 30, 1998
This report is not authorized for use as an offer of sale or
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 Technology Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH GLOBAL TECHNOLOGY FUND, INC.
Portfolio
Information
As of 9/30/98
Ten Largest Industries Percent of
Represented in the Portfolio Net Assets
Software 19.1%
Computer Systems 10.9
Contract Manufacturers 9.3
Telecommunication Equipment 8.5
Medical Technology 7.4
Semiconductor 6.4
Electronic Design Automation 6.1
Technology Services 5.3
Personal Computers 4.0
Components 3.7
Ten Largest Holdings Percent of
Represented in the Portfolio Net Assets
EMC Corporation 6.0%
HBO & Company 5.5
PeopleSoft, Inc. 5.1
Cadence Design Systems, Inc. 3.8
Citrix Systems, Inc. 3.5
MCI WorldCom, Inc. 3.4
COMPAQ Computer Corporation 2.9
Electronics for Imaging, Inc. 2.7
Microsoft Corporation 2.6
Keane, Inc. 2.5
Merrill Lynch Global Technology Fund, Inc., September 30, 1998
DEAR SHAREHOLDER
We are pleased to provide you with this first shareholder report for
Merrill Lynch Global Technology Fund, Inc. The Fund seeks long-term
capital appreciation through worldwide investment in equity
securities of issuers that we believe derive a substantial portion
of their income from products and services in technology-related
industries. In this and future reports to shareholders, we will
provide information on the Fund's performance, discuss our
investment strategies, list current portfolio investments, and
highlight some of the Fund's holdings.
Merrill Lynch Global Technology Fund, Inc. commenced operations on
June 26, 1998 with $427 million in net assets. The Fund, and
technology stocks in general, as measured by the unmanaged Merrill
Lynch 100 Technology Index (MLO), an index of the world's 100
largest technology companies, peaked on July 20, 1998. Throughout
the remainder of the period ended September 30, 1998, the world's
equity markets and technology stocks tumbled, culminating with a
sharp decline on August 31, 1998. For the quarter ended September
30, 1998, the Fund's total returns for Class A, Class B, Class C and
Class D Shares were -11.64%, -11.84%, -11.84% and -11.64%,
respectively, while the MLO dropped 11.04%. The Fund also performed
in line with the average technology fund over the September quarter
as measured by the Lipper Science and Technology Funds Average,
whose total return was -10.88%. Fortunately, technology stocks have
recovered somewhat since the end of September after reaching a new
low on October 8, 1998, which was below the low mark set on August
31, 1998.
Over the past few years, large-capitalization stocks have
outperformed smaller-capitalization issues. In fact, the media have
extensively reported that investors could not go wrong by owning
large-capitalization companies such as Microsoft Corporation, Intel
Corporation, International Business Machines Corporation, Cisco
Systems, Inc., Lucent Technologies Inc. and Dell Computer
Corporation (the top six companies in the MLO). However, during the
period ended September 30, 1998, these stocks underperformed the
broader averages, as investors took profits in these higher-valued
stocks.
Portfolio Matters
During the quarter ended September 30, 1998, the Fund was
essentially fully invested in equities that we believed were
reasonably priced current or future technology leaders. Our long-
term strategy is to focus on leadership companies as defined by top
market shares and superior technology or business processes. A
superior business process may be best described by an example of one
of our holdings, Dell Computer Corporation. Although Dell has been
growing at an accelerated rate in the personal computer industry, it
still lags COMPAQ Computer Corporation in worldwide market share by
a small amount. Since Dell spent less than 2% of its sales last
fiscal year on research and development, the company cannot be
described as a technology leader. However, we believe the company's
direct distribution of personal computers is truly superior and has
made Dell one of the best investments in its industry for several
years.
We believe that the strong get stronger, especially in the
technology sector. Once a company gains substantial market share, it
achieves critical economies of scale. Economies of scale allow these
market leaders to fund powerhouse research and development efforts
and to lock up the best modes of distribution. Many of these
industry leaders also offer "one-stop shopping" (that is, the
critical broad product line of hardware, software and services that
are appealing to customers). Finally, these leaders have access to
low-cost capital and skilled labor in order to continue to grow
their businesses.
During the September quarter, the Fund's holdings were comprised of
many of the "who's who" in the fastest-growing and most important
technology industries, such as: Applied Materials, Inc.
(semiconductor capital equipment); America Online, Inc. (Internet);
Cisco Systems, Inc. (data networking); Dell Computer Corporation
(personal computers); EMC Corporation (data storage); Genentech,
Inc. (biotechnology); HBO & Company (healthcare software and
services); Ingram Micro Inc. (wholesale distrib-ution); Intel
Corporation (microprocessors); Lucent Technologies Inc.
(telecommunications equipment); Microsoft Corporation (desktop
operating system software); Nokia Oyj (wireless handsets and
infrastructure); SAP AG (Systeme, Anwendungen, Produkte in der
Datenverarbeitung) (enterprise resource planning software); SCI
Systems, Inc. (contract manufacturing); Sun Microsystems, Inc. (UNIX
servers and workstations); and MCI Worldcom, Inc.
(telecommunications).
Because of our focus on technology leaders, we typically invest in
large-capitalization stocks. Few of the Fund's holdings have market
values of less than $2 billion, and the Fund's weighted average
market capitalization was $25.6 billion at September 30, 1998.
Further, we expect to maintain a diversified portfolio with no more
than 5% in any single equity at the time of purchase. As specified
in the Fund's prospectus, we also will not exceed 25% of total
assets in any industry. In fact, the only stocks that accounted for
5% or more of the Fund's net assets on September 30, 1998 were EMC
Corporation (6.0%), HBO & Company (5.5%) and Peoplesoft, Inc.
(5.1%). Each position was purchased up to the 5% limit. Relative
portfolio movements since their purchase accounted for the EMC and
HBO holdings being significantly above 5% at the end of September.
In keeping with our strategy of diversification, we plan to reduce
any position, regardless of how positively we view the company's
outlook, if it were to appreciate to 7.5% of net assets, to ensure
broad diversification. Also, the Fund's largest industry positions
were in software and computer systems, comprising 19.1% and 10.9% of
the Fund's net assets, respectively, at September 30, 1998. See page
1 of this report to shareholders for complete listings of the Fund's
ten largest industries and ten largest holdings represented in the
portfolio.
Currently, the world's equity markets are the most volatile they
have been in years, and technology stocks typically exaggerate the
market's movements. Furthermore, we have only recently completed the
portfolio's initial investment process. However, we plan to hold
core positions in technology leaders for an extended period,
provided no radical changes occur in their fundamental outlooks. We
may add to these positions on market dips, or we may reduce these
holdings when they appreciate beyond what fundamentals dictate.
Also, we intend to use a two-year price target for any investment.
Over a reasonable investment horizon, we expect to adhere to a 100%
annual turnover limit.
It is our intention to keep the Fund essentially fully invested at
all times in an attempt to avoid market timing and focus primarily
on long-term stock selection. At September 30, 1998, the Fund was
96.7% invested. Although our intent is to increase our foreign
holdings in technology leaders around the world, we do not believe
that valuations have been attractive enough to warrant purchase
given the obvious macroeconomic risks. Therefore, as of September
30, 1998, we were not significantly invested in companies that are
not domiciled in the United States. Our only foreign holdings on
September 30, 1998 were ECI Telecommunications Limited (Israel),
Nokia Oyj (Finland), Northern Telecom Limited (Canada) and SAP AG
(Systeme, Anwendungen, Produkte in der Datenverarbeitung) (Germany).
Combined, they accounted for 3.6% of the Fund's net assets at the
close of the September quarter. During the quarter, we had few
investments in Japan or the Asia/Pacific region, essentially because
of the negative macroeconomic conditions that bring a multitude of
risks, and because of our doubts about the quick recovery of the
semiconductor and semiconductor capital equipment industries, which
are heavily represented in those regions.
In addition to focusing on US companies, we are attracted to
organizations that are less dependent on sales to regions in crisis.
We will continue to seek companies that may be less affected by
foreign competitors that are funded by undervalued currencies
relative to the US dollar, and that may be in such poor financial
condition that they may compete desperately and irrationally (for
example, sell products below cost). Therefore, we were overweighted
in less cyclical, more domestically oriented software and computer
service industries, such as: The BISYS Group, Inc.; BMC Software,
Inc.; Cadence Design Systems, Inc.; Citrix Systems, Inc.; Compuware
Corporation; DST Systems, Inc.; HBO & Company; Keane, Inc.;
Microsoft Corporation; Network Associates, Inc.; Peoplesoft, Inc.;
Symantec Corporation and Synopsys, Inc. Conversely, we were
underweighted in export-oriented, more cyclical hardware,
semiconductor and semiconductor capital equipment industries.
Although we maintained small positions in these industries, we are
invested in industry leaders such as Applied Materials, Inc.; COMPAQ
Computer Corporation; Dell Computer Corporation; International
Business Machines Corporation; Seagate Technology, Inc.; Sun
Microsystems, Inc.; and Texas Instruments, Incorporated.
Merrill Lynch Global Technology Fund, Inc., September 30, 1998
Our long-term outlook for the technology sector remains positive,
but we are cautious about the US equity market in the short term and
on the fundamentals of many foreign companies. While we continue to
be fully invested, our domestic focus was reflected in our overall
portfolio allocation at September 30, 1998: 93.1% of net assets in
US equities, 3.6% in foreign equities, and 3.3% in cash.
Despite some European companies' recent disappointing earnings
results, we continue to find opportunities in Europe to be much more
attractive than those in Asia. Our non-US investments are
predominantly European companies with global franchises and limited
reliance on Asian markets. We do not foresee any drastic change in
the recent economic strength exhibited by Europe.
Also, we will continue to monitor opportunities in Japan, Taiwan and
South Korea, all significant technology producers, but we are wary
of the pace of recovery in Southeast Asia, Latin America, and other
emerging markets and the prospects for meaningful economic reform in
Japan. Over the long term, we anticipate some recovery in these
markets, possibly as early as 1999.
Within the technology sector, we remained overweighted in industries
that we believed are less reliant on the weak markets of Asia and
Latin America, or have secular growth drivers that more than offset
geographical weakness. We believe that select software and computer
service companies should continue to post strong, visible earnings
in this environment. Contract manufacturers are riding the global
wave of outsourcing and, as such, we believe that they will continue
to exhibit above-trend earnings growth. In addition, these companies
possess reasonable valuations. We will remain underweighted in the
shares of semiconductor, semiconductor equipment and disk drive
companies as we wait for evidence that supply and demand in these
sectors are balanced.
Our outlook for technology stocks in 1999 is more positive than for
the balance of 1998, both in absolute terms and relative to the
broader market. We continue to believe that a portfolio of
technology leaders, trading below a market multiple but growing
earnings many times faster, should produce superior returns for
investors over the long term.
In Conclusion
On October 21, 1998, the Fund's Board of Directors approved a plan
of reorganization whereby the Fund would acquire substantially all
of the net assets and assume substantially all of the liabilities of
Merrill Lynch Technology Fund, Inc. in exchange for newly issued
shares of the Fund. The plan of reorganization is subject to
shareholder approval. Merrill Lynch Technology Fund, Inc. is a
registered, non-diversified open-end management investment company.
Both entities have a similar investment objective and are managed by
Merrill Lynch Asset Management, L.P.
We thank you for your investment in Merrill Lynch Global Technology
Fund, Inc., and we look forward to reporting to you again in our
next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Paul G. Meeks)
Paul G. Meeks
Senior Vice President and
Portfolio Manager
November 11, 1998
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years. (There is no initial
sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% 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 "Recent Performance
Results" and "Aggregate 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.
<TABLE>
Recent
Performance
Results*
<CAPTION>
3 Month Since Inception
Total Return Total Return
<S> <C> <C>
ML Global Technology Fund, Inc. Class A Shares -11.64% -11.20%
ML Global Technology Fund, Inc. Class B Shares -11.84 -11.40
ML Global Technology Fund, Inc. Class C Shares -11.84 -11.40
ML Global Technology Fund, Inc. Class D Shares -11.64 -11.20
<FN>
*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 commenced operations on 6/26/98.
</TABLE>
Aggregate
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Inception (6/26/98) through 9/30/98 -11.20% -15.86%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Inception (6/26/98) through 9/30/98 -11.40% -14.94%
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Inception (6/26/98) through 9/30/98 -11.40% -12.29%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Inception (6/26/98) through 9/30/98 -11.20% -15.86%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Global Technology Fund, Inc., September 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Canada Telecommunication 121,000 Northern Telecom Limited $ 4,969,470 $ 3,872,000 0.8%
Equipment
Total Investments in Canada 4,969,470 3,872,000 0.8
Finland Telecommunication 62,600 Nokia Oyj (ADR)** 4,329,335 4,910,188 1.0
Equipment
Total Investments in Finland 4,329,335 4,910,188 1.0
Germany Software 93,200 SAP AG (Systeme, Anwendungen,
Produkte in der Datenverarbeitung)
(ADR)** 5,229,200 3,628,975 0.7
Total Investments in Germany 5,229,200 3,628,975 0.7
Israel Telecommunication 213,400 ECI Telecommunications Limited 7,663,805 5,228,300 1.1
Equipment
Total Investments in Israel 7,663,805 5,228,300 1.1
United Components 322,000 ++American Power Conversion Corporation 9,178,406 12,115,250 2.5
States 311,000 General Cable Corporation 6,781,681 5,753,500 1.2
------------ ------------ ------
15,960,087 17,868,750 3.7
Computer 204,100 ++Seagate Technology, Inc. 5,139,702 5,115,256 1.1
Peripherals
Computer Systems 499,000 ++EMC Corporation 22,421,426 28,536,563 6.0
618,800 ++Electronics for Imaging, Inc. 12,068,578 13,072,150 2.7
45,000 International Business
Machines Corporation 5,852,700 5,760,000 1.2
99,000 ++Sun Microsystems, Inc. 4,314,875 4,931,438 1.0
------------ ------------ ------
44,657,579 52,300,151 10.9
Contract 323,200 ++Flextronics International Ltd. 13,767,416 11,392,800 2.4
Manufacturers 332,500 ++Jabil Circuit, Inc. 10,756,600 11,554,375 2.4
421,300 ++SCI Systems, Inc. 15,320,030 11,348,769 2.4
369,000 ++Sanmina Corporation 15,557,318 10,355,063 2.1
------------ ------------ ------
55,401,364 44,651,007 9.3
Data 195,400 ++3Com Corporation 5,816,837 5,862,000 1.2
Communications 100,000 ++Ascend Communications, Inc. 4,789,690 4,550,000 1.0
78,750 ++Cisco Systems, Inc. 4,679,719 4,867,734 1.0
------------ ------------ ------
15,286,246 15,279,734 3.2
Distribution 93,300 ++Ingram Micro Inc. 3,936,473 4,997,381 1.0
Diversified 50,500 Lockheed Martin Corporation 5,024,624 5,091,031 1.0
Technology 763,200 ++Thermo Electron Corporation 23,731,283 11,495,700 2.4
------------ ------------ ------
28,755,907 16,586,731 3.4
Electronic Design 722,300 ++Cadence Design Systems, Inc. 21,310,030 18,463,794 3.8
Automation 331,000 ++Synopsys, Inc. 14,172,380 11,026,438 2.3
------------ ------------ ------
35,482,410 29,490,232 6.1
Internet 86,300 ++America Online, Inc. 9,215,071 9,600,875 2.0
39,000 ++Yahoo! Inc. 3,334,371 5,048,063 1.0
------------ ------------ ------
12,549,442 14,648,938 3.0
Medical Technology 65,000 ++Boston Scientific Corporation 4,966,650 3,339,375 0.7
76,000 ++Genentech, Inc. 5,084,768 5,462,500 1.2
919,700 HBO & Company 29,532,852 26,556,338 5.5
------------ ------------ ------
39,584,270 35,358,213 7.4
Personal Computers 432,000 COMPAQ Computer Corporation 12,615,423 13,662,000 2.9
74,000 ++Dell Computer Corporation 3,431,750 4,865,500 1.0
10,800 ++Gateway 2000, Inc. 567,567 562,950 0.1
------------ ------------ ------
16,614,740 19,090,450 4.0
Semiconductor 140,700 Intel Corporation 10,763,381 12,065,025 2.5
180,000 ++Maxim Integrated Products, Inc. 4,991,870 5,017,500 1.0
183,700 Texas Instruments Incorporated 10,769,653 9,690,175 2.0
121,000 ++Xilinx, Inc. 4,307,621 4,227,437 0.9
------------ ------------ ------
30,832,525 31,000,137 6.4
Semiconductor 166,500 ++Applied Materials, Inc. 5,075,724 4,204,125 0.9
Equipment
Software 361,900 Autodesk, Inc. 11,350,399 9,499,875 2.0
91,700 ++BMC Software, Inc. 4,743,500 5,502,000 1.1
237,700 ++Citrix Systems, Inc. 15,972,120 16,876,700 3.5
90,600 ++Compuware Corporation 5,050,950 5,334,075 1.1
113,100 ++Microsoft Corporation 12,317,726 12,448,069 2.6
337,500 ++Network Associates, Inc. 15,133,179 11,981,250 2.5
744,700 ++PeopleSoft, Inc. 31,974,144 24,295,837 5.1
194,100 ++Symantec Corporation 5,116,753 2,547,562 0.5
------------ ------------ ------
101,658,771 88,485,368 18.4
Technology 120,500 ++BISYS Group, Inc. (The) 4,808,125 5,249,281 1.1
Services 154,200 ++DST Systems, Inc. 10,570,653 8,134,050 1.7
345,100 ++Keane, Inc. 18,682,937 12,121,637 2.5
------------ ------------ ------
34,061,715 25,504,968 5.3
Telecommunication 355,000 ++ADC Telecommunications, Inc. 12,511,878 7,477,187 1.6
Equipment 54,600 Lucent Technologies Inc. 4,450,332 3,770,812 0.8
293,500 ++Tellabs, Inc. 17,012,652 11,684,969 2.4
98,000 ++Uniphase Corporation 5,131,995 3,993,500 0.8
------------ ------------ ------
39,106,857 26,926,468 5.6
Telecommunications 332,100 ++MCI WorldCom, Inc. 16,429,425 16,231,387 3.4
Total Investments in the
United States 500,533,237 447,739,296 93.1
Total Investments in Stocks 522,725,047 465,378,759 96.7
</TABLE>
Merrill Lynch Global Technology Fund, Inc., September 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
SHORT-TERM Face Value Percent of
SECURITIES Amount Issue Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Commercial Paper* $ 13,393,000 General Motors Acceptance Corp.,
5.88% due 10/01/1998 $ 13,393,000 $ 13,393,000 2.8%
Total Investments in Short-Term
Securities 13,393,000 13,393,000 2.8
Total Investments $536,118,047 478,771,759 99.5
============
Other Assets Less Liabilities 2,289,081 0.5
------------ ------
Net Assets $481,060,840 100.0%
============ ======
<FN>
*Commercial Paper is traded on a discount basis; the interest rate
shown reflects the discount rate paid at the time of purchase by the
Fund.
**American Depositary Receipts (ADR).
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of September 30, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$536,118,047)(Note 1a) $478,771,759
Receivables:
Securities sold $ 9,596,470
Capital shares sold 663,115
Dividends 24,874 10,284,459
------------
Deferred organization expenses (Note 1f) 108,600
Prepaid registration fees and other assets (Note 1f) 200,000
------------
Total assets 489,364,818
------------
Liabilities: Payables:
Securities purchased 4,969,470
Custodian bank (Note 1h) 1,341,821
Capital shares redeemed 777,439
Investment adviser (Note 2) 386,499
Distributor (Note 2) 333,300 7,808,529
------------
Accrued expenses and other liabilities 495,449
------------
Total liabilities 8,303,978
------------
Net Assets: Net assets $481,060,840
============
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000
Consist of: shares authorized $ 213,753
Class B Shares of Common Stock, $0.10 par value, 200,000,000
shares authorized 3,642,205
Class C Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 866,454
Class D Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 706,628
Paid-in capital in excess of par 538,429,124
Accumulated investment loss--net (1,443,252)
Accumulated realized capital losses on investments--net (4,007,784)
Unrealized depreciation on investments--net (57,346,288)
------------
Net assets $481,060,840
============
Net Asset Class A--Based on net assets of $18,985,279 and 2,137,528
Value: shares outstanding $ 8.88
============
Class B--Based on net assets of $322,608,932 and 36,422,048
shares outstanding $ 8.86
============
Class C--Based on net assets of $76,745,116 and 8,664,536
shares outstanding $ 8.86
============
Class D--Based on net assets of $62,721,513 and 7,066,275
shares outstanding $ 8.88
============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Technology Fund, Inc., September 30, 1998
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Period
June 26, 1998++ to
September 30, 1998
<S> <S> <C> <C>
Investment Interest and discount earned $ 1,317,528
Income Dividends (net of $1,771 foreign withholding tax) 104,652
(Notes 1d & 1e): ------------
Total income 1,422,180
------------
Expenses: Investment advisory fees (Note 2) $ 1,296,405
Account maintenance and distribution fees--Class B (Note 2) 866,949
Account maintenance and distribution fees--Class C (Note 2) 209,762
Transfer agent fees--Class B (Note 2) 120,649
Registration fees (Note 1f) 100,553
Custodian fees 72,939
Account maintenance fees--Class D (Note 2) 42,087
Printing and shareholder reports 35,839
Accounting services (Note 2) 32,633
Transfer agent fees--Class C (Note 2) 30,383
Transfer agent fees--Class D (Note 2) 19,663
Directors' fees and expenses 12,120
Professional fees 10,265
Transfer agent fees--Class A (Note 2) 6,002
Amortization of organization expenses (Note 1f) 5,867
Pricing fees 1,297
Other 2,019
------------
Total expenses 2,865,432
------------
Investment loss--net (1,443,252)
------------
Realized & Realized loss on investments--net (4,007,784)
Unrealized Loss on Unrealized depreciation on investments--net (57,346,288)
Investments--Net ------------
(Notes 1b, 1c, Net Decrease in Net Assets Resulting from Operations ($62,797,324)
1e & 3): ============
<FN>
++Commencement of operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
June 26, 1998++ to
Increase (Decrease) in Net Assets: September 30, 1998
<S> <S> <C>
Operations: Investment loss--net ($1,443,252)
Realized loss on investments--net (4,007,784)
Unrealized depreciation on investments--net (57,346,288)
------------
Net decrease in net assets resulting from operations (62,797,324)
------------
Capital Share Net increase in net assets derived from capital share transactions 543,758,164
Transactions ------------
(Note 4):
Net Assets: Total increase in net assets 480,960,840
Beginning of period 100,000
------------
End of period $481,060,840
============
<FN>
++Commencement of operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have
been derived from information provided in the
financial statements. For the Period
June 26, 1998++ to September 30, 1998
Increase (Decrease) in Net Asset Value: Class A Class B Class C Class D
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00
Operating
Performance: Investment loss--net (.01) (.03) (.03) (.01)
Realized and unrealized loss on investments--net (1.11) (1.11) (1.11) (1.11)
-------- -------- -------- --------
Total from investment operations (1.12) (1.14) (1.14) (1.12)
-------- -------- -------- --------
Net asset value, end of period $ 8.88 $ 8.86 $ 8.86 $ 8.88
======== ======== ======== ========
Total Investment Based on net asset value per share (11.20%)+++ (11.40%)+++ (11.40%)+++ (11.20%)+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses 1.33%* 2.35%* 2.36%* 1.58%*
Net Assets: ======== ======== ======== ========
Investment loss--net (.23%)* (1.25%)* (1.25%)* (.50%)*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 18,985 $322,609 $ 76,745 $ 62,722
Data: ======== ======== ======== ========
Portfolio turnover 9.98% 9.98% 9.98% 9.98%
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Technology Fund, Inc., September 30, 1998
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Technology Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. Prior to
commencement of operations on June 26, 1998, the Fund had no
operations other than those relating to organizational matters and
the issue of 10,000 capital shares of the Fund to Merrill Lynch
Asset Management, L.P. ("MLAM") for $100,000. These unaudited
financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results
for the interim period presented. All such adjustments are of a
normal recurring nature. The Fund offers four classes of shares
under the Merrill Lynch Select Pricing SM System. Shares of Class A
and Class D are sold with a front-end sales charge. Shares of Class
B and Class C may be subject to a contingent deferred sales charge.
All classes of shares have identical voting, dividend, liquidation,
and other rights and the same terms and conditions, except that
Class B, Class C and Class D Shares bear certain expenses related to
the account maintenance of such shares, and Class B and Class C
Shares also bear certain expenses related to the distribution of
such shares. Each class has exclusive voting rights with respect to
matters relating to its account maintenance and distribution
expenditures. The following is a summary of significant accounting
policies followed by the Fund.
(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
quotations are not readily 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) 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.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. 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
contract 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.
* Options--The Fund is authorized to write and purchase call 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.
* Forward foreign exchange contracts--The Fund is authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Fund's records. However, the effect on
operations is recorded from the date the Fund enters into such
contracts. Premium or discount is amortized over the life of the
contracts.
* Foreign currency options and futures--The Fund may also purchase
or sell listed or over-the-counter foreign currency options, foreign
currency futures and related options on foreign currency futures as
a short or long hedge against possible variations in foreign
exchange rates. Such transactions may be effected with respect to
hedges on non-US dollar denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated
to be purchased by the Fund.
(c) 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.
(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 substantially 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). Dividend income is recorded on the ex-
dividend dates. Dividends from foreign securities where the ex-
dividend date may have passed are subsequently recorded when the
Fund has determined the ex-dividend date. Interest income (including
amortization of discount) is recognized on the accrual basis.
Realized gains and losses on security transactions are determined on
the identified cost basis.
(f) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a period not exceeding five years. Prepaid
registration fees are charged to expense as the related shares are
issued.
(g) Dividends and distributions to shareholders--Dividends and
distributions paid by the Fund are recorded on the ex-dividend
dates.
(h) Custodian bank--The Fund recorded an amount payable to the
Custodian Bank resulting from a timing difference of security
transaction settlements.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
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 "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 administrative services necessary for the operation of
the Fund. As compensation for its services to the Fund, MLAM
receives monthly compensation at the annual rate of 1.0% of the
average daily net assets of the Fund.
Pursuant to the Distribution Plans adopted by the Fund, in
accordance with Rule 12b-1 under the Investment Fund Act of 1940,
the Fund pays the Distributor an ongoing account maintenance fee and
distribution fee. The fees are accrued daily and paid monthly at
annual rates based upon the average daily net assets of the shares
as follows:
Account
Maintenance Distribution
Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
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 period June 26, 1998 to September 30, 1998, MLFD earned
underwriting discounts and MLPF&S earned dealer concessions on sales
of the Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $ 29 $ 445
Class D $13,871 $1,836,945
For the period June 26, 1998 to September 30, 1998, MLPF&S received
contingent deferred sales charges of $83,190 and $11,638 relating to
transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $65,472 in commissions on the execution
of portfolio security transactions for the Fund for the period June
26, 1998 to September 30, 1998.
Merrill Lynch Global Technology Fund, Inc., September 30, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
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 period June 26, 1998 to September 30, 1998 were $561,935,039
and $35,203,192, respectively.
Net realized losses for the period June 26, 1998 to September 30,
1998 and net unrealized losses as of September 30, 1998 were as
follows:
Realized Unrealized
Losses Losses
Long-term investments $ (4,006,799) $(57,346,288)
Short-term investments (985) --
------------- ------------
Total $ (4,007,784) $(57,346,288)
============= ============
As of September 30, 1998, net unrealized depreciation for Federal
income tax purposes aggregated $57,346,288, of which $22,213,770
related to appreciated securities and $79,560,058 related to
depreciated securities. The aggregate cost of investments at
September 30, 1998 for Federal income tax purposes was $536,118,047.
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
was $543,758,164 for the period June 26,1998 to September 30, 1998.
Transactions in capital shares for each class were as follows:
Class A Shares for the Period Dollar
June 26, 1998++ to September 30, 1998 Shares Amount
Shares sold 2,595,556 $ 25,614,113
Shares redeemed (460,528) (4,238,895)
------------ -------------
Net increase 2,135,028 $ 21,375,218
============ =============
[FN]
++Prior to June 26, 1998 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
Class B Shares for the Period Dollar
June 26, 1998++ to September 30, 1998 Shares Amount
Shares sold 37,731,884 $ 376,776,025
Shares redeemed (1,288,489) (12,040,862)
Automatic conversion of shares (23,847) (230,730)
------------ -------------
Net increase 36,419,548 $ 364,504,433
============ =============
[FN]
++Prior to June 26, 1998 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
Class C Shares for the Period Dollar
June 26, 1998++ to September 30, 1998 Shares Amount
Shares sold 9,261,542 $ 92,488,979
Shares redeemed (599,506) (5,444,376)
------------ -------------
Net increase 8,662,036 $ 87,044,603
============ =============
[FN]
++Prior to June 26, 1998 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
Class D Shares for the Period Dollar
June 26, 1998++ to September 30, 1998 Shares Amount
Shares sold 7,309,457 $ 73,117,860
Automatic conversion of shares 23,818 230,730
------------ -------------
Total issued 7,333,275 73,348,590
Shares redeemed (269,500) (2,514,680)
------------ -------------
Net increase 7,063,775 $ 70,833,910
============ =============
[FN]
++Prior to June 26, 1998 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
5. Reorganization Plan:
On October 21, 1998, the Fund's Board of Directors approved a plan
of reorganization whereby the Fund would acquire substantially all
of the assets and liabilities of Merrill Lynch Technology Fund, Inc.
in exchange for newly issued shares of the Fund. The plan of
reorganization is subject to Merrill Lynch Technology Fund, Inc.
shareholder approval. Merrill Lynch Technology Fund, Inc. is a
registered, non-diversified, open-end management investment company.
Both entities have a similar investment objective and are managed by
MLAM.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Paul G. Meeks, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
Brown Brothers Harriman &Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
