MERRILL LYNCH
GLOBAL
TECHNOLOGY
FUND, INC.
FUND LOGO
Annual Report
March 31, 1999
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.
Officers and
Directors
Terry K. Glenn, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Paul G. Meeks, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Gerald M. Richard, Treasurer, Norman R. Harvey, Senior Vice
President and Philip M. Mandel, Secretary of Merrill Lynch Global
Technology Fund, Inc. have recently retired. Their colleagues at
Merrill Lynch Asset Management, L.P. join the Fund's Board of
Directors in wishing Messrs. Richard, Harvey and Mandel well in
their retirements.
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
Merrill Lynch Global Technology Fund, Inc., March 31, 1999
DEAR SHAREHOLDER
For the quarter ended March 31, 1999, Merrill Lynch Global
Technology Fund, Inc.'s total returns for Class A, Class B, Class C
and Class D Shares were +4.30%, +4.01%, +4.01% and +4.23%,
respectively. The Fund performed in line with the unmanaged Standard
& Poor's (S&P) 500 Index, which posted a +4.98% return for the same
period. However, the Fund's quarterly relative performance masked
significant absolute and relative monthly swings. The Fund's Class A
Shares returned +7.83% in January, -12.03% in February and +9.95% in
March. The corresponding returns for the S&P 500 were +4.18%, -3.11%
and +4.00%, respectively. (Results shown do not reflect sales
charges and would be lower if sales charges were included. Complete
performance information can be found on pages 5--7 of this report
to shareholders.) Thus, January and March featured dramatic
outperformance by technology investors while February was absolutely
and relatively poor.
Despite a difficult February, we were surprised by the sector's
absolute strength during the March quarter. In our last report to
shareholders, we forecast that the large-capitalization technology
leaders in which we typically invest might be likely to decline
since they had significantly outperformed the market from the
October 8, 1998 trough. According to various financial publications,
the Fund was among the United States' best-performing equity mutual
funds. The Fund's Class A Shares had a total return of +46.7%
compared to the S&P 500's +21.3% in the fourth quarter of 1998 and
returned +92.2% (compared to the S&P 500's +33.9%) from its trough
on October 8, 1998 to its January 29, 1999 high.
For the quarter ended March 31, 1999, the Fund benefited from our
increased weighting in semiconductor capital equipment and Internet
stocks. Fund performance was also enhanced by our telecommunications
equipment holdings, a significant exposure since August 1998. On the
other hand, the most costly industry exposure was in software, a
group that has been negatively impacted by two issues. The first is
the likelihood that spending on software will be "crowded out" in
1999 by customers' increasing focus on Year 2000 preparedness in the
second half of the year. We feel that it is too early to make that
definitive of a statement for all types of software, and that such a
potential short-term phenomenon should not impact our long-term
investment strategy.
Second, many software companies are under the scrutiny of regulators
over purported aggressive accounting practices. Several software
firms have made acquisitions in recent years. Because software
companies have fewer tangible assets than other businesses, it is
difficult to accurately attribute the goodwill (the excess of the
cash paid over the acquired firm's understated book value) in such
transactions. Therefore, at the time of purchase, many software
acquirers immediately wrote off the majority of its price to an
account called "in-process research and development." Although it
will not impact cash earnings or cash flow whatsoever, such
aggressive charges may be reversed by the Securities & Exchange
Commission, and more goodwill may be added to the acquirers' balance
sheets that must be amortized over time, in order to lessen future
reported earnings. Although we feel that the software companies held
by the Fund have strong operating prospects, they may have been
obscured in investors' minds by this transitory regulatory cloud.
In terms of individual stocks, we benefited from holding some of the
technology sector's best performers, including Internet stalwart
America Online, Inc.; semiconductor capital equipment leader,
Applied Materials, Inc.; computer systems vendors EMC Corporation
and Sun Microsystems, Inc.; and telecommunications equipment players
Tellabs, Inc., ADC Telecommunications, Inc. and Uniphase
Corporation. Unfortunately, performance was hurt by power supplier
American Power Conversion Corporation; contract manufacturer SCI
Systems, Inc.; data networking vendor 3Com Corporation; distributor
Tech Data Corporation; software firms J.D. Edwards & Company and
Network Associates, Inc.; and consultant Keane, Inc. In our opinion,
fundamentals deteriorated significantly enough for these laggards
that we eliminated each position, with the exception of Keane and
Network Associates. Although Keane's revenue transition from Year
2000 business to other projects has not gone as smoothly as we had
hoped, we continue to be bullish on this company's long-term
prospects.
Investment Strategy
In addition to being fully invested in preparation for technology
stocks regaining the market's leadership, our industry decisions
included increasing our exposure in three groups: semiconductors,
semiconductor capital equipment and Internet. Our decision to boost
the Fund's semiconductor-related exposure was based on evidence that
the industry probably troughed in the third quarter of 1998.
Consequently, we focused our efforts on semiconductor leaders with
strong intellectual property, such as microprocessor vendor Intel
Corporation and communications integrated circuit pioneer Vitesse
Semiconductor Corporation. Our semiconductor capital equipment
holdings included the who's who of the key enabling process
technologies for their partners, such as Teradyne, Inc., a leader in
back-end testing. Our decision to increase our Internet exposure was
not to capture improving fundamentals, but to purchase several
leadership stocks that had fallen significantly since technology
securities began to tumble in February 1999. So far, our decision to
add to our holdings in the America Online position, Yahoo! Inc., and
initiate a holding in Exodus Communications, Inc. has been sound.
Fiscal Year in Review
Since inception (June 26, 1998) through March 31, 1999, the Fund's
total returns for Class A, Class B, Class C and Class D Shares were
+35.90%, +34.80%, +34.80% and +35.60%, respectively, outperforming
the unmanaged S&P 500 gain of +14.75% for the same period. The nine-
month period was punctuated by several difficult months for
technology stocks, but it also featured strong relative
outperformance by this sector for the full period. The relative
momentum for technology companies continues to build. According to
Lipper Analytical Services, Inc., the average technology fund
outperformed the average equity fund by substantial margins over the
12-month period ended March 31, 1999, as well as the annualized
three-year, five-year and ten-year periods. This is not surprising,
since the sector is steadily becoming a greater portion of the
economy and the equity market's capitalization. In fact, technology
currently comprises about one-fifth of the weight of the S&P 500.
Since inception, our overweighted position in contract manufacturing
stocks contributed positively to the performance of the Fund
compared to most other technology funds. For example, two holdings,
Jabil Circuit, Inc. and Solectron Corporation, appreciated 145% and
131%, respectively, for the nine-month period ended March 31, 1999.
Other notable winners were EMC Corporation and Sun Microsystems
(computer systems); America Online and Yahoo! (Internet); Applied
Materials and Xilinx, Inc. (semiconductors); and Nokia Oyj (wireless
handsets and infrastructure).
In Conclusion
We did not have to raise much cash by selling securities because of
continued strong inflows into the Fund. However, as always, we will
look to prune our portfolio of stocks that may, for fundamental or
valuation reasons, become relatively inferior holdings. Because
investing in the technology sector can be volatile and product
cycles move so quickly, it is very easy to do countless hours of due
diligence and still be wrong. It is one of the reasons why we will
remain fully diversified (our largest concentration is limited to
25% of assets at time of purchase) across the sector's 17 industry
groups, and only hold up to 5% of our Fund's assets in any stock at
the time of purchase.
In summary, we continue to be short-term (over the next few months)
cautious on the technology sector and the prospects for the Fund. We
are more encouraged about the intermediate term (calendar 1999)
outlook. Last, we could not be more positive about the sector's
secular forecast for 1999.
We thank you for your continued investment in Merrill Lynch Global
Technology Fund, Inc., and we look forward to reporting to you again
in our upcoming quarterly report to shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Paul G. Meeks)
Paul G. Meeks
Senior Vice President and
Portfolio Manager
May 17, 1999
After more than 20 years of service, Arthur Zeikel recently retired
as Chairman of Merrill Lynch Asset Management, L.P. (MLAM). Mr.
Zeikel served as President of MLAM from 1977 to 1997 and as Chairman
since December 1997. Mr. Zeikel is one of the country's most
respected leaders in asset management and presided over the growth
of Merrill Lynch's asset management business. During his tenure,
client assets under management grew from $300 million to over $500
billion. Mr. Zeikel will remain on Merrill Lynch Global Technology
Fund, Inc.'s Board of Directors. We are pleased to announce that
Terry K. Glenn has been elected President and Director of the Fund.
Mr. Glenn has held the position of Executive Vice President of MLAM
since 1983.
Mr. Zeikel's colleagues at MLAM join the Fund's Board of Directors
in wishing him well in his retirement from Merrill Lynch and are
pleased that he will continue as a member of the Fund's Board of
Directors.
Merrill Lynch Global Technology Fund, Inc., March 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:
* 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 +4.30% +35.90%
ML Global Technology Fund, Inc. Class B Shares +4.01 +34.80
ML Global Technology Fund, Inc. Class C Shares +4.01 +34.80
ML Global Technology Fund, Inc. Class D Shares +4.23 +35.60
<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>
Merrill Lynch Global Technology Fund, Inc., March 31, 1999
PERFORMANCE DATA (concluded)
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the Fund's
Class A Shares and Class B Shares compared to growth of an
investment in the S&P 500 Index. Beginning and ending values are:
6/26/98** 3/99
ML Global Technology Fund, Inc.++--
Class A Shares* $ 9,475 $12,877
ML Global Technology Fund, Inc.++--
Class B Shares* $10,000 $12,941
S&P 500 Index++++ $10,000 $11,475
A line graph depicting the growth of an investment in the Fund's
Class C Shares and Class D Shares compared to growth of an
investment in the S&P 500 Index. Beginning and ending values are:
6/26/98** 3/99
ML Global Technology Fund, Inc.++--
Class C Shares* $10,000 $13,345
ML Global Technology Fund, Inc.++--
Class D Shares* $ 9,475 $12,848
S&P 500 Index++++ $10,000 $11,475
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++ML Global Technology Fund, Inc. invests primarily in equity
securities of issuers that, in the opinion of the Manager, derive a
substantial portion of their income from products and services in
technology-related industries.
++++This unmanaged broad-based Index is comprised of common stocks.
Past performance is not predictive of future results.
Aggregate
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Inception (6/26/98) through 3/31/99 +35.90% +28.77%
[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 3/31/99 +34.80% +30.80%
[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 3/31/99 +34.80% +33.80%
[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 3/31/99 +35.60% +28.48%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<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 Contract 272,500 ++Celestica Inc. $ 7,859,914 $ 8,839,219 1.0%
Manufacturers
Telecommunications 121,000 Northern Telecom Limited (Nortel) 4,969,470 7,517,125 0.9
Equipment
Total Investments in Canada 12,829,384 16,356,344 1.9
Finland Telecommunications 112,600 Nokia Oyj 'A' (ADR)* 11,482,920 17,537,450 2.1
Equipment
Total Investments in Finland 11,482,920 17,537,450 2.1
Israel Telecommunications 213,400 ECI Telecom Limited 7,663,805 7,469,000 0.9
Equipment
Total Investments in Israel 7,663,805 7,469,000 0.9
Singapore Contract Manufacturers 366,400 ++Flextronics International Ltd. 7,730,216 18,732,200 2.2
Total Investments in Singapore 7,730,216 18,732,200 2.2
Sweden Telecommunications 445,000 Telefonaktiebolaget LM Ericsson
Equipment (ADR)* 10,202,389 10,596,563 1.2
Total Investments in Sweden 10,202,389 10,596,563 1.2
Taiwan Semiconductors 388,000 ++Taiwan Semiconductor Manufacturing
Company Ltd. (ADR)* 8,288,674 9,166,500 1.1
Total Investments in Taiwan 8,288,674 9,166,500 1.1
</TABLE>
Merrill Lynch Global Technology Fund, Inc., March 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Components 339,600 General Cable Corporation $ 7,258,586 $ 3,587,025 0.4%
States
Computer Systems 237,000 ++EMC Corporation 10,651,562 30,276,750 3.6
438,800 ++Electronics for Imaging, Inc. 8,197,483 17,442,300 2.0
90,200 International Business Machines
Corporation 13,736,742 15,987,950 1.9
180,000 ++Network Appliance, Inc. 7,119,126 9,135,000 1.1
166,000 ++Sun Microsystems, Inc. 7,466,687 20,750,000 2.4
------------ ------------ ------
47,171,600 93,592,000 11.0
Contract 400,000 ++Jabil Circuit, Inc. 6,508,650 16,200,000 1.9
Manufacturers 369,000 ++Sanmina Corporation 15,557,318 23,431,500 2.8
440,000 Solectron Corporation 10,101,586 21,367,500 2.5
------------ ------------ ------
32,167,554 60,999,000 7.2
Data 165,000 ++Ascend Communications, Inc. 7,775,985 13,808,437 1.6
Communications 230,750 ++Cisco Systems, Inc. 14,599,324 25,281,547 3.0
------------ ------------ ------
22,375,309 39,089,984 4.6
Distribution 396,300 ++Ingram Micro Inc. (Class A) 16,537,696 9,040,594 1.1
Electronic Design 722,300 ++Cadence Design Systems, Inc. 21,310,029 18,599,225 2.2
Automation 331,000 ++Synopsys, Inc. 14,172,380 17,770,563 2.1
35,482,409 36,369,788 4.3
Internet 54,500 ++Amazon.com, Inc. 8,176,352 9,377,406 1.1
341,200 ++America Online, Inc. 17,754,505 49,815,200 5.9
62,000 ++Exodus Communications, Inc. 5,367,197 8,300,250 1.0
47,800 ++Yahoo! Inc. 7,533,251 8,039,363 0.9
------------ ------------ ------
38,831,305 75,532,219 8.9
Medical Technology 115,100 Medtronic, Inc. 7,661,056 8,258,425 1.0
Peripherals 73,000 ++Lexmark International Group,
Inc. (Class A) 7,553,161 8,157,750 1.0
134,600 Pitney Bowes Inc. 8,275,054 8,580,750 1.0
204,100 ++Seagate Technology, Inc. 5,139,702 6,033,706 0.7
------------ ------------ ------
20,967,917 22,772,206 2.7
Personal Computers 432,000 Compaq Computer Corporation 12,615,423 13,689,000 1.6
334,000 ++Dell Computer Corporation 10,875,470 13,652,250 1.6
------------ ------------ ------
23,490,893 27,341,250 3.2
Semiconductor 166,500 ++Applied Materials, Inc. 5,075,724 10,270,969 1.2
Equipment 147,500 ++KLA-Tencor Corporation 8,104,374 7,162,969 0.8
148,000 ++Novellus Systems, Inc. 9,628,539 8,140,000 1.0
170,100 ++Teradyne, Inc. 6,825,990 9,281,081 1.1
------------ ------------ ------
29,634,627 34,855,019 4.1
Semiconductors 130,000 ++Altera Corporation 7,669,064 7,726,875 0.9
117,700 Intel Corporation 12,256,922 13,991,587 1.7
360,000 ++Maxim Integrated Products, Inc. 10,841,870 19,462,500 2.3
183,700 Texas Instruments Incorporated 10,769,653 18,232,225 2.1
170,000 ++Vitesse Semiconductor Corporation 8,053,750 8,595,625 1.0
453,000 ++Xilinx, Inc. 12,246,496 18,346,500 2.2
------------ ------------ ------
61,837,755 86,355,312 10.2
Software 361,900 Autodesk, Inc. 11,350,399 14,634,331 1.7
343,700 ++BMC Software, Inc. 15,566,251 12,738,381 1.5
292,400 ++Citrix Systems, Inc. 9,819,093 11,111,200 1.3
958,400 ++Compuware Corporation 25,980,297 22,881,800 2.7
226,200 ++Microsoft Corporation 12,317,726 20,259,037 2.4
337,500 ++Network Associates, Inc. 15,133,179 10,357,031 1.2
229,500 ++Oracle Corporation 8,149,545 6,053,062 0.7
106,900 ++VERITAS Software Corporation 7,299,631 8,592,088 1.0
------------ ------------ ------
105,616,121 106,626,930 12.5
Technology Services 120,500 The BISYS Group, Inc. 4,808,125 6,778,125 0.8
267,700 ++DST Systems, Inc. 16,295,248 16,078,731 1.9
1,089,600 ++Keane, Inc. 41,662,588 23,222,100 2.7
325,000 ++Unisys Corporation 9,798,284 8,998,438 1.1
------------ ------------ ------
72,564,245 55,077,394 6.5
Telecommunications 332,100 ++MCI WorldCom Inc. 16,429,425 29,390,850 3.5
Telecommunications 169,000 ++ADC Telecommunications, Inc. 5,929,585 8,059,188 0.9
Equipment 54,600 Lucent Technologies Inc. 4,450,332 5,883,150 0.7
293,500 ++Tellabs, Inc. 17,012,652 28,689,625 3.4
75,600 ++Uniphase Corporation 3,958,968 8,675,100 1.0
------------ ------------ ------
31,351,537 51,307,063 6.0
Total Investments in the
United States 569,378,035 740,195,059 87.2
Total Investments in Stocks 627,575,423 820,053,116 96.6
SHORT-TERM Face
SECURITIES Amount Issue
Commercial $38,297,000 General Electric Capital Corp.,
Paper** 5.08% due 4/01/1999 38,297,000 38,297,000 4.5
Total Investments in Short-Term Securities 38,297,000 38,297,000 4.5
Total Investments $665,872,423 858,350,116 101.1
============
Liabilities in Excess of Other Assets (9,285,992) (1.1)
------------ ------
Net Assets $849,064,124 100.0%
============ ======
<FN>
*American Depositary Receipts (ADR).
**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.
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Technology Fund, Inc., March 31, 1999
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of March 31, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$665,872,423)(Note 1a) $858,350,116
Receivables:
Securities sold $ 4,037,891
Capital shares sold 2,840,005
Dividends 206,559 7,084,455
------------
Deferred organization expenses (Note 1f) 62,661
Prepaid registration fees and other assets (Note 1f) 107,045
------------
Total assets 865,604,277
------------
Liabilities: Payables:
Securities purchased 11,401,206
Custodian bank (Note 1h) 1,679,879
Capital shares redeemed 1,625,313
Investment adviser (Note 2) 713,093
Distributor (Note 2) 606,192 16,025,683
------------
Accrued expenses and other liabilities 514,470
------------
Total liabilities 16,540,153
------------
Net Assets: Net assets $849,064,124
============
Net Assets Class A Shares of Common Stock, $0.10 par value,
Consist of: 100,000,000 shares authorized $ 304,600
Class B Shares of Common Stock, $0.10 par value,
200,000,000 shares authorized 4,192,176
Class C Shares of Common Stock, $0.10 par value,
100,000,000 shares authorized 945,604
Class D Shares of Common Stock, $0.10 par value,
100,000,000 shares authorized 848,870
Paid-in capital in excess of par 650,295,181
Unrealized appreciation on investments--net 192,477,693
------------
Net assets $849,064,124
============
Net Asset Class A--Based on net assets of $41,382,488 and
Value: 3,046,001 shares outstanding $ 13.59
============
Class B--Based on net assets of $565,110,880 and
41,921,763 shares outstanding $ 13.48
============
Class C--Based on net assets of $127,461,077 and
9,456,040 shares outstanding $ 13.48
============
Class D--Based on net assets of $115,109,679 and
8,488,698 shares outstanding $ 13.56
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Period June 26, 1998++ to March 31, 1999
<S> <S> <C> <C>
Investment Interest and discount earned $ 1,847,393
Income Dividends (net of $43,859 foreign withholding tax) 522,515
(Notes 1d & 1e): ------------
Total income 2,369,908
------------
Expenses: Investment advisory fees (Note 2) $ 4,613,190
Account maintenance and distribution fees--Class B (Note 2) 3,085,703
Account maintenance and distribution fees--Class C (Note 2) 722,200
Transfer agent fees--Class B (Note 2) 425,912
Registration fees (Note 1f) 292,430
Account maintenance fees--Class D (Note 2) 153,562
Transfer agent fees--Class C (Note 2) 105,219
Printing and shareholder reports 101,400
Custodian fees 75,848
Transfer agent fees--Class D (Note 2) 71,238
Accounting services (Note 2) 65,791
Directors' fees and expenses 36,609
Professional fees 27,999
Transfer agent fees--Class A (Note 2) 21,848
Amortization of organization expenses (Note 1f) 11,058
Pricing fees 306
Other 6,903
------------
Total expenses 9,817,216
------------
Investment loss--net (7,447,308)
------------
Realized & Realized gain (loss) from:
Unrealized Investments--net $ 6,603,836
Gain (Loss) on Foreign currency transactions--net (8) 6,603,828
Investments & ------------
Foreign Currency Unrealized appreciation on investments--net 192,477,693
Transactions--Net ------------
(Notes 1b, 1c, Net Increase in Net Assets Resulting from Operations $191,634,213
1e & 3): ============
<FN>
++Commencement of operations.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Technology Fund, Inc., March 31, 1999
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
June 26, 1998++ to
Increase (Decrease) in Net Assets: March 31, 1999
<S> <S> <C>
Operations: Investment loss--net $ (7,447,308)
Realized gain on investments and foreign currency transactions--net 6,603,828
Unrealized appreciation on investments--net 192,477,693
------------
Net increase in net assets resulting from operations 191,634,213
------------
Capital Share Net increase in net assets derived from capital share transactions 657,329,911
Transactions ------------
(Note 4):
Net Assets: Total increase in net assets 848,964,124
Beginning of period 100,000
------------
End of period $849,064,124
============
<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 March 31, 1999
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 (.05) (.13) (.13) (.07)
Realized and unrealized gain on investments
and foreign currency transactions--net 3.64 3.61 3.61 3.63
-------- -------- -------- --------
Total from investment operations 3.59 3.48 3.48 3.56
-------- -------- -------- --------
Net asset value, end of period $ 13.59 $ 13.48 $ 13.48 $ 13.56
======== ======== ======== ========
Total Investment Based on net asset value per share 35.90%+++ 34.80%+++ 34.80%+++ 35.60%+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses 1.25%* 2.27%* 2.28%* 1.50%*
Net Assets: ======== ======== ======== ========
Investment loss--net (.74%)* (1.76%)* (1.76%)* (1.00%)*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 41,382 $565,111 $127,461 $115,110
Data: ======== ======== ======== ========
Portfolio turnover 49.72% 49.72% 49.72% 49.72%
======== ======== ======== ========
<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., March 31, 1999
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. The Fund's
financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of
management accruals and estimates. 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. 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 rela-ting 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.
* 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. Rea-
lized 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 reflecting an overnight overdraft which resulted from
a failed trade which settled the next day.
(i) Reclassification--Generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of
$6,603,836 have been reclassified between undistributed net
investment income and undistributed net realized capital gains,
$843,472 has been reclassified between undistributed net investment
income and paid-in excess of par and $8 has been reclassified
between paid-in capital in excess of par and undistributed net
realized capital gains. These classifications have no effect on net
assets or net asset values per share.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
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 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% --
Merrill Lynch Global Technology Fund, Inc., March 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 period June 26, 1998 to March 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 $ 145 $ 2,491
Class D $32,129 $2,094,686
For the period June 26, 1998 to March 31, 1999, MLPF&S received
contingent deferred sales charges of $846,091 and $90,355 relating
to transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $74,762 in commissions on the execution
of portfolio security transactions for the Fund for the period June
26, 1998 to March 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 period June 26, 1998 to March 31, 1999 were $884,207,054 and
$263,236,452 respectively.
Net realized gains (losses) for the period June 26, 1998 to March
31, 1999 and net unrealized gains as of March 31, 1999 were as
follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $ 6,604,821 $192,477,693
Short-term investments (985) --
Foreign currency transactions (8) --
------------ ------------
Total $ 6,603,828 $192,477,693
============ ============
As of March 31, 1999, net unrealized appreciation for Federal income
tax purposes aggregated $192,477,693, of which $241,237,759 related
to appreciated securities and $48,760,066 related to depreciated
securities. The aggregate cost of investments at March 31, 1999 for
Federal income tax purposes was $665,872,423.
4. Capital Share Transactions:
Net increase in net assets derived from capital share trans-
actions was $657,329,911 for the period June 26, 1998 to
March 31, 1999.
Transactions in capital shares for each class were as follows:
Class A Shares
for the Period Dollar
June 26, 1998++ to March 31, 1999 Shares Amount
Shares sold 4,203,702 $ 45,983,223
Shares redeemed (1,160,201) (12,333,818)
------------- -------------
Net increase 3,043,501 $ 33,649,405
============= =============
[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 March 31, 1999 Shares Amount
Shares sold 47,293,584 $ 496,077,139
Shares redeemed (5,297,659) (58,872,700)
Automatic conversion of shares (76,662) (877,438)
------------- -------------
Net increase 41,919,263 $ 436,327,001
============= =============
[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 March 31, 1999 Shares Amount
Shares sold 11,344,612 $ 118,580,717
Shares redeemed (1,891,072) (20,384,308)
------------- -------------
Net increase 9,453,540 $ 98,196,409
============= =============
[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 March 31, 1999 Shares Amount
Shares sold 9,420,462 $ 99,236,824
Automatic conversion of shares 76,412 877,438
------------- -------------
Total issued 9,496,874 100,114,262
Shares redeemed (1,010,676) (10,957,166)
------------- -------------
Net increase 8,486,198 $ 89,157,096
============= =============
[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 proposed
reorganization was considered at the meeting of the stockholders of
Merrill Lynch Technology Fund, Inc. held on January 12, 1999 and at
the adjournments thereof. The reorganization did not receive the
requisite vote of a majority of the shares of Merrill Lynch
Technology Fund, Inc. outstanding in order to consummate the
reorganization.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Global Technology Fund, Inc.:
We have audited the accompanying statement of assets and liabilities
of Merrill Lynch Global Technology Fund, Inc., including the
schedule of investments, as of March 31, 1999, the related
statements of operations and changes in net assets, and the
financial highlights for the period from June 26, 1998 (commencement
of operations) to March 31, 1999. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at March
31, 1999 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Global Technology Fund, Inc. as of March 31, 1999, the
results of its operations, the changes in its net assets, and the
financial highlights for the period from June 26, 1998 (commencement
of operations) to March 31, 1999, in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
May 17, 1999
</AUDIT-REPORT
Merrill Lynch Global Technology Fund, Inc., March 31, 1999
PORTFOLIO CHANGES (unaudited)
For the Quarter Ended March 31, 1999
Additions
*Allaire Corp.
Altera Corporation
Amazon.com, Inc.
*Autoweb.com, Inc.
Celestica Inc.
*Covad Communications
Exodus Communications, Inc.
*Ivillage Inc.
KLA-Tencor Corporation
Lexmark International Group, Inc.
(Class A)
Medtronic, Inc.
Network Appliance, Inc.
Novellus Systems, Inc.
Oracle Corporation
*Pcorder.Com Inc.
*Perot Systems Corporation (Class A)
Pitney Bowes Inc.
*Prodigy Communications Corp.
*Rowecom Inc.
Taiwan Semiconductor
Manufacturing Company Ltd.
(ADR)
*Tut Systems Inc.
*Vignette Corporation
Vitesse Semiconductor Corporation
Yahoo! Inc.
Deletions
3Com Corporation
*Allaire Corp.
American Power Conversion Corporation
*Autoweb.com, Inc.
*Covad Communications
*Ivillage Inc.
J.D. Edwards & Company
*Pcorder.Com Inc.
*Perot Systems Corporation (Class A)
*Prodigy Communications Corp.
*Rowecom Inc.
SCI Systems, Inc.
Symantec Corporation
Tech Data Corporation
*Tut Systems Inc.
*Vignette Corporation
[FN]
*Added and deleted in the same quarter.
PORTFOLIO INFORMATION (unaudited)
As of March 31, 1999
Ten Largest Holdings Percent of
Represented in the Portfolio Net Assets
America Online, Inc. 5.9%
EMC Corporation 3.6
MCI WorldCom Inc. 3.5
Tellabs, Inc. 3.4
Cisco Systems, Inc. 3.0
Sanmina Corporation 2.8
Keane, Inc. 2.7
Compuware Corporation 2.7
Solectron Corporation 2.5
Sun Microsystems, Inc. 2.4
Ten Largest Industries Percent of
Represented in the Portfolio Net Assets
Software 12.5%
Semiconductors 11.3
Telecommunications Equipment 11.1
Computer Systems 11.0
Contract Manufacturers 10.4
Internet 8.9
Technology Services 6.5
Data Communications 4.6
Electronic Design Automation 4.3
Semiconductor Equipment 4.1
