MERRILL LYNCH
TECHNOLOGY
FUND, INC.
FUND LOGO
Semi-Annual Report
September 30, 1995
This report is not authorized for use as an offer of sale or
solicitation of an offer to buy shares of the Company unless
accompanied or preceded by the Company'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.
<PAGE>
Merrill Lynch
Technology Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH TECHNOLOGY FUND, INC.
Worldwide
Investments
As of 9/30/95
Ten Largest Holdings Percent of
Represented in the Portfolio Net Assets
Acclaim Entertainment, Inc. 13.9%
Informix Corp. 13.0
LSI Logic Corp. 10.9
Creative Technology Ltd.*. 9.9
3Com Corporation 5.2
Bay Networks Inc. 5.2
Electronic Arts, Inc. 5.2
cisco Systems, Inc. 5.1
Novell, Inc. 4.5
Polaroid Corporation 4.4
[FN]
*Includes holdings in Singapore and the United States.
<PAGE>
Ten Largest Industries Percent of
Represented in the Portfolio Net Assets
Educational/Entertainment Software 19.1%
Internetworking 15.5
Application Development Software 14.3
Application Specific Integrated Circuits 10.9
Microcomputer Software 9.9
Communications 5.2
Photography 4.4
Computer Peripherals 4.2
Communications Equipment 3.7
Machinery 3.2
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
James K. Renck, Vice President and Portfolio Manager
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Robert Harris, Secretary
Custodian
The Chase Manhattan Bank, N.A.
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, New York 11245
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
Transfer Agency Mutual Fund Operations
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
<PAGE>
DEAR SHAREHOLDER
Merrill Lynch Technology Fund, Inc. made money in the September
quarter. The Fund's total investment returns for Class A, Class B,
Class C and Class D Shares were +24.95%, +24.62%, +24.52%, and
+24.77%, respectively.
We were able to achieve these results because we eliminated nearly
all of the Fund's investments in Japanese stocks during the June
quarter and reinvested that cash in a limited number of US
technology stocks. By the end of September, the top ten stocks in
the portfolio represented 77.3% of net assets, and the cash position
was 7.5% of net assets. Despite the volatile start to the September
quarter, when many US technology stocks came under intense selling
pressure, we remained positive about specific investment
opportunities.
Portfolio Matters
During the September quarter, we made significant investments in the
internetworking industry. (Internetworking is that combination of
hardware and software which enables the connection of computers to
networks as well as connecting disparate networks.)
Several trends have surfaced which have accelerated the industry's
growth rate from about 40% annually to more than 50% per year.
First, ethernet switching has taken the networking world by storm.
Switches enable network administrators to dramatically increase the
speed and performance of their existing network investment with the
adoption of such technology. Second, corporate networks no longer
are confined to home offices. The network is being extended to all
locations and, more importantly, to those who travel between
locations. Remote access to networks has become a mandatory
requirement. Third, the Internet is quickly becoming part of
corporate America's networking strategy as an increasing number of
companies devise methods for leveraging this newly discovered asset.
For most of the last 12 months there has been a consolidation
underway in the internetworking industry. Small companies with point
products of unique technology focused on these high-growth segments
have been acquired, recently by older, established companies. From
this process, Bay Networks Inc. (BNET), cisco Systems, Inc. (CSCO)
and 3Com Corporation (COMS) have evolved to become the dominant
firms in the industry with a broad array of leading-edge products.
We initiated positions in cisco and Bay Networks in the quarter, and
added to our 3Com holding. Cisco recently surprised investors when
it reported its fourth fiscal quarter (ending July 31, 1995) with
72% revenue growth and 60% earnings growth. This was followed
shortly by 3Com reporting its first fiscal quarter (ending August
31, 1995) with revenue growth of 63% and earnings growth of 64%. Bay
Networks just reported its third fiscal quarter (ending September
30, 1995) and posted revenue growth of 46% and earnings growth of
66%.
<PAGE>
In Conclusion
We thank you for your patience and continued investment in Merrill
Lynch Technology Fund, Inc., and we look forward to reporting to you
again in our upcoming quarterly report.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(James K. Renck)
James K. Renck
Vice President and Portfolio Manager
October 19, 1995
PERFORMANCE DATA
About Fund
Performance
Since October 21, 1994, investors have been 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.
<PAGE>
* 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 8 years.
* 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).
Performance data for the Fund's Class A and Class B Shares are
presented in the "Performance Summary" and "Average Annual Total
Return" tables below and on page 4. "Aggregate Total Return" tables
for Class C and Class D Shares are also presented on page 4. Data
for all of the Fund's shares are presented in the "Recent
Performance Results" table on pages 4 and 5.
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class A and Class B
Shares for the 12-month and 3-month periods ended September 30, 1995
and for Class C and Class D Shares for the since inception and 3-
month periods ended September 30, 1995. All data in this table
assume imposition of the actual total expenses incurred by each
class of shares during the relevant period.
None of the past results shown should 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. 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.
<PAGE>
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
4/27/92--12/31/92 $3.83 $4.90 -- $0.337 +37.05%
1993 4.90 4.50 $0.002 1.411 +22.44
1994 4.50 5.24 -- 0.442 +26.63
1/1/95--9/30/95 5.24 6.71 -- -- +28.05
------ ------
Total $0.002 Total $2.190
Cumulative total return as of 9/30/95: +172.10%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
4/27/92--12/31/92 $3.83 $4.87 -- $0.337 +36.29%
1993 4.87 4.43 $0.002 1.374 +20.89
1994 4.43 5.14 -- 0.405 +25.50
1/1/95--9/30/95 5.14 6.53 -- -- +27.04
------ ------
Total $0.002 Total $2.116
Cumulative total return as of 9/30/95: +162.71%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<PAGE>
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 9/30/95 +24.83% +18.28%
Inception (4/27/92) through 9/30/95 +33.92 +31.83
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/95 +23.55% +19.55%
Inception (4/27/92) through 9/30/95 +32.55 +32.40
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate
Total Return
% Return % Return
Class C Shares* Without CDSC With CDSC**
Inception (10/21/94) through 9/30/95 +21.38% +20.38%
[FN]
*Maximum contingent deferred sales charge is 1% and 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 (10/21/94) through 9/30/95 +22.28% +15.86%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
9/30/95 6/30/95 9/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $6.71 $5.37 $5.77 +16.29% +24.95%
Class B Shares 6.53 5.24 5.65 +15.58 +24.62
Class C Shares 6.50 5.22 5.75 +13.04 +24.52
Class D Shares 6.70 5.37 5.88 +13.95 +24.77
Class A Shares--Total Return +24.83(1) +24.95
Class B Shares--Total Return +23.55(2) +24.62
Class C Shares--Total Return +21.38(3) +24.52
Class D Shares--Total Return +22.28(4) +24.77
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++Investment results shown for Class C and Class D Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.372 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.342 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.364 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.370 per share ordinary
income dividends.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <C> <C> <C> <C>
Japan Components 200,000 SMK Corp. $ 1,432,563 $ 1,282,828 0.1%
489,000 Tamura Corp. 3,759,508 3,225,424 0.3
200,000 Tokin Corp. 2,834,543 2,767,677 0.2
-------------- -------------- ------
8,026,614 7,275,929 0.6
Machinery 3,419,000 Ushio Inc. 37,465,179 37,988,889 3.2
Total Investments in Japanese
Stocks 45,491,793 45,264,818 3.8
Singapore Microcomputer 727,150 ++Creative Technology Ltd. 9,807,063 9,517,938 0.8
Software
Total Investments in Singaporean
Stocks 9,807,063 9,517,938 0.8
United Application 60,000 ++FTP Software, Inc. 1,666,872 1,665,000 0.1
States Development 155,600 ++Peoplesoft Inc. 6,052,916 14,081,800 1.2
Software 4,800,000 ++Informix Corp. 95,190,961 156,000,000 13.0
-------------- -------------- ------
102,910,749 171,746,800 14.3
Application 2,264,400 ++LSI Logic Corp. 79,898,858 130,769,100 10.9
Specific
Integrated
Circuits
Communications 225,000 ++Bolt Beranek and Newman, Inc. 8,117,850 8,409,375 0.7
2,946,700 ++Novell, Inc. 58,048,782 53,777,275 4.5
-------------- -------------- ------
66,166,632 62,186,650 5.2
Communications 604,500 ++Stratacom, Inc. 31,384,684 33,171,938 2.8
Equipment 262,900 ++Tellabs, Inc. 12,283,178 11,041,800 0.9
-------------- -------------- ------
43,667,862 44,213,738 3.7
Computer 601,000 Hewlett-Packard Company 47,928,974 50,108,375 4.2
Peripherals
<PAGE>
Educational/ 6,480,000 ++Acclaim Entertainment, Inc.++++ 103,211,387 166,050,000 13.9
Entertainment 1,679,400 ++Electronic Arts, Inc. 49,908,084 61,508,025 5.2
Software -------------- -------------- ------
153,119,471 227,558,025 19.1
Internetworking 1,370,000 ++3Com Corporation 44,878,340 62,335,000 5.2
1,160,000 ++Bay Networks Inc. 55,262,550 61,915,000 5.2
890,000 ++cisco Systems, Inc. 58,681,825 61,410,000 5.1
-------------- -------------- ------
158,822,715 185,660,000 15.5
Liquid Crystal 85,000 ++MRS Technology Inc. 1,126,251 403,750 0.0
Display Capital
Equipment
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Stocks Cost (Note1a) Net Assets
<S> <S> <C> <C> <C> <C> <C>
United Microcomputer 8,106,700 ++Creative Technology Ltd. ++++ $ 113,149,604 $ 108,427,112 9.1%
States Software
(concluded)
Photography 1,332,300 Polaroid Corporation 57,834,990 52,958,925 4.4
Semiconductors 613,000 ++Cirrus Logic, Inc. 29,950,478 35,017,625 2.9
Semiconductors-- 700,000 ++Integrated Device Technology, Inc. 19,118,439 17,412,500 1.5
Memory
Total Investments in
United States Stocks 873,695,023 1,086,462,600 90.8
Total Investments in Stocks 928,993,879 1,141,245,356 95.4
SHORT-TERM Face
SECURITIES Amount Issue
Commercial Paper* $40,708,000 Ford Motor Credit Co., 6.50%
due 10/02/1995 40,693,300 40,693,300 3.4
Total Investments in Commercial
Paper 40,693,300 40,693,300 3.4
<PAGE>
US Government Federal Home Loan Bank:
& Agency 40,000,000 5.58% due 10/25/1995 39,845,000 39,845,000 3.3
Obligations* 10,000,000 5.58% due 10/26/1995 9,959,700 9,959,700 0.8
Total Investments in US Government
& Agency Obligations 49,804,700 49,804,700 4.1
Total Investments in Short-Term
Securities 90,498,000 90,498,000 7.5
Total Investments $1,019,491,879 1,231,743,356 102.9
==============
Unrealized Depreciation on Forward Foreign Exchange Contracts** (1,015,257) (0.1)
Liabilities in Excess of Other Assets (34,028,855) (2.8)
-------------- ------
Net Assets $1,196,699,244 100.0%
============== ======
<FN>
*Commercial Paper and certain US Government & Agency Obligations
are traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Company.
**Forward foreign exchange contracts as of September 30, 1995 are as
follows:
Unrealized
Expiration Depreciation
Foreign Currency Sold Date (Note 1b)
YEN 7,703,400,864 October 1995 $(1,015,257)
Total Unrealized Depreciation on
Forward Foreign Exchange Contracts--Net
(US$ Commitment--$76,918,447) $(1,015,257)
===========
++Non-income producing security.
++++Investments in companies 5% or more of whose outstanding securities
are held by the Company (such companies are defined as "Affiliated
Companies" in Section 2 (a)(3) of the Investment Company Act of
1940) is as follows:
<PAGE>
Net Share Net Dividend
Industry Affiliate Activity Cost Income
Educational/ Acclaim
Entertainment Entertainment,
Software Inc. 605,000 $ 9,376,747 --
Microcomputer Creative
Software Technology Ltd. 275,500 3,011,641 --
Total $23,901,441
===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of September 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,019,491,879)(Note 1a) $1,231,743,356
Cash 6,575,406
Receivables:
Capital shares sold $ 3,565,532
Securities sold 1,100,000
Dividends 138,806 4,804,338
--------------
Deferred organization expenses (Note 1f) 52,762
Prepaid registration fees and other assets (Note 1f) 42,505
--------------
Total assets 1,243,218,367
--------------
Liabilities: Unrealized depreciation on forward foreign exchange contracts
(Note 1b) 1,015,257
Payables:
Securities purchased 34,138,750
Capital shares redeemed 9,371,060
Investment adviser (Note 2) 939,204
Distributor (Note 2) 653,318 45,102,332
--------------
Accrued expenses and other liabilities 401,534
--------------
Total liabilities 46,519,123
--------------
<PAGE>
Net Assets: Net assets $1,196,699,244
==============
Net Assets Class A Shares of Common Stock, $0.10 par value,
Consist of: 100,000,000 shares authorized $ 4,869,444
Class B Shares of Common Stock, $0.10 par value,
300,000,000 shares authorized 11,907,979
Class C Shares of Common Stock, $0.10 par value,
100,000,000 shares authorized 612,937
Class D Shares of Common Stock, $0.10 par value,
300,000,000 shares authorized 778,890
Paid-in capital in excess of par 908,341,481
Accumulated investment loss--net (5,197,546)
Undistributed realized capital gains on investments
and foreign currency transactions--net 64,149,449
Unrealized appreciation on investments and foreign
currency transactions--net 211,236,610
--------------
Net assets $1,196,699,244
==============
Net Asset Class A--Based on net assets of $326,839,026 and 48,694,436
Value: shares outstanding $ 6.71
==============
Class B--Based on net assets of $777,809,284 and 119,079,791
shares outstanding $ 6.53
==============
Class C--Based on net assets of $39,850,226 and 6,129,373
shares outstanding $ 6.50
==============
Class D--Based on net assets of $52,200,708 and 7,788,894
shares outstanding $ 6.70
==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended September 30, 1995
<S> <S> <C> <C>
Investment Interest and discount earned $ 4,918,576
Income: Dividends (net of $13,009 foreign withholding tax) 420,612
--------------
Total income 5,339,188
--------------
Expenses: Investment advisory fees (Note 2) 5,126,318
Account maintenance and distribution fees--Class B (Note 2) 3,369,416
Transfer agent fees--Class B (Note 2) 838,351
Transfer agent fees--Class A (Note 2) 297,316
Custodian fees 191,683
Printing and shareholder reports 190,763
Account maintenance and distribution fees--Class C (Note 2) 149,666
Registration fees (Note 1f) 113,869
Account maintenance fees--Class D (Note 2) 51,766
Accounting services (Note 2) 48,933
Transfer agent fees--Class D (Note 2) 43,877
Professional fees 41,390
Transfer agent fees--Class C (Note 2) 39,170
Amortization of organization expenses (Note 1f) 12,509
Directors' fees and expenses 9,566
Pricing fees 184
Other 11,957
--------------
Total expenses 10,536,734
--------------
Investment loss--net (5,197,546)
--------------
Realized & Realized gain from:
Unrealized Gain on Investments--net $ 114,352,922
Investments & Foreign currency transactions--net 3,109,589 117,462,511
Foreign Currency --------------
Transactions Change in unrealized appreciation on:
- --Net (Notes Investments--net 210,211,696
1b, 1c, Foreign currency transactions--net 6,618,930 216,830,626
1e & 3): -------------- --------------
Net Increase in Net Assets Resulting from Operations $ 329,095,591
==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
Sept. 30, March 31,
Increase (Decrease) in Net Assets: 1995 1995
<S> <S> <C> <C>
Operations: Investment income (loss)--net $ (5,197,546) $ 1,661,432
Realized gain on investments and foreign currency
transactions--net 117,462,511 870,828
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net 216,830,626 (29,622,966)
-------------- --------------
Net increase (decrease) in net assets resulting from
operations 329,095,591 (27,090,706)
-------------- --------------
Dividends & Investment income--net:
Distributions to Class A -- (1,262,702)
Shareholders Class B -- (287,745)
(Note 1g): Class C -- (41,855)
Class D -- (69,130)
In excess of investment income--net:
Class A -- (280,276)
Class B -- (63,869)
Class C -- (9,290)
Class D -- (15,345)
Realized gain on investments--net:
Class A -- (2,232,025)
Class B -- (4,866,620)
Class C -- (81,670)
Class D -- (110,609)
In excess of realized gain on investments--net:
Class A -- (16,321,125)
Class B -- (35,585,943)
Class C -- (597,190)
Class D -- (808,804)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders -- (62,634,198)
-------------- --------------
Capital Share Net increase (decrease) in net assets derived from capital
Transactions shares transactions (57,424,866) 615,613,902
(Note 4): -------------- --------------
<PAGE>
Net Assets: Total increase in net assets 271,670,725 525,888,998
Beginning of period 925,028,519 399,139,521
-------------- --------------
End of period $1,196,699,244 $ 925,028,519
============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A**
For the
The following per share data and ratios have been For the Period
derived from information provided in the Six Months April 27,
financial statements. Ended For the Year 1992++ to
Sept. 30, Ended March 31, March 31,
Increase (Decrease) in Net Asset Value: 1995 1995 1994 1993
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 4.89 $ 5.17 $ 5.08 $ 3.83
Operating -------- -------- -------- --------
Performance: Investment income (loss)--net (.01) .05 (.01) --
Realized and unrealized gain on investments and
foreign currency transactions--net 1.83 .11 1.51 1.59
-------- -------- -------- --------
Total from investment operations 1.82 .16 1.50 1.59
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.02) -- --
In excess of investment income--net -- (.01) -- --
Realized gain on investments--net -- (.05) (1.41) (.34)
In excess of realized gain on investments--net -- (.36) -- --
-------- -------- -------- --------
Total dividends and distributions -- (.44) (1.41) (.34)
-------- -------- -------- --------
Net asset value, end of period $ 6.71 $ 4.89 $ 5.17 $ 5.08
======== ======== ======== ========
Total Investment Based on net asset value per share 37.22%+++ 2.86% 35.68% 42.09%+++
Return:*** ======== ======== ======== ========
<PAGE>
Ratios to Average Expenses 1.33%* 1.33% 1.35% 1.59%*
Net Assets: ======== ======== ======== ========
Investment income (loss)--net (.29%)* .87% (.11%) .04%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $326,839 $254,188 $174,809 $100,830
Data: ======== ======== ======== ========
Portfolio turnover 79.96% 175.57% 350.64% 482.79%
======== ======== ======== ========
<CAPTION>
Class B**
For the
The following per share data and ratios have been For the Period
derived from information provided in the Six Months April 27,
financial statements. Ended For the Year 1992++ to
Sept. 30, Ended March 31, March 31,
Increase (Decrease) in Net Asset Value: 1995 1995 1994 1993
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 4.78 $ 5.08 $ 5.03 $ 3.83
Operating -------- -------- -------- --------
Performance: Investment loss--net (.04) (.01) (.05) (.04)
Realized and unrealized gain on investments and
foreign currency transactions--net 1.79 .11 1.48 1.58
-------- -------- -------- --------
Total from investment operations 1.75 .10 1.43 1.54
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- --++++ -- --
In excess of investment income--net -- --++++ -- --
Realized gain on investments--net -- (.05) (1.38) (.34)
In excess of realized gain on investments--net -- (.35) -- --
-------- -------- -------- --------
Total dividends and distributions -- (.40) (1.38) (.34)
-------- -------- -------- --------
Net asset value, end of period $ 6.53 $ 4.78 $ 5.08 $ 5.03
======== ======== ======== ========
Total Investment Based on net asset value per share 36.61%+++ 1.78% 34.22% 40.77%+++
Return:*** ======== ======== ======== ========
Ratios to Average Expenses, excluding account maintenance and
Net Assets: distribution fees 1.36%* 1.38% 1.36% 1.53%*
======== ======== ======== ========
Expenses 2.36%* 2.38% 2.36% 2.53%*
======== ======== ======== ========
Investment income (loss)--net (1.33%)* (.10%) (1.08) .93%*
======== ======== ======== ========
<PAGE>
Supplemental Net assets, end of period (in thousands) $777,809 $614,935 $224,330 $ 57,592
Data: ======== ======== ======== ========
Portfolio turnover 79.96% 175.57% 350.64% 482.79%
======== ======== ======== ========
<CAPTION>
Class C** Class D**
For the For the
The following per share data and ratios have For the Period For the Period
been derived from information provided in the Six Months Oct. 21, Six Months Oct. 21,
financial statements. Ended 1994++ to Ended 1994++ to
financial statements. Sept. 30, March 31, Sept. 30, March 31,
1995 1995 1995 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 4.76 $ 5.75 $ 4.89 $ 5.88
Operating -------- -------- -------- --------
Performance: Investment loss--net (.04) -- (.02) (.02)
Realized and unrealized gain (loss) on
investments and foreign currency transactions--net 1.78 (.62) 1.83 (.60)
-------- -------- -------- --------
Total from investment operations 1.74 (.62) 1.81 (.62)
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.02) -- (.02)
In excess of investment income--net -- (.01) -- (.01)
Realized gain on investments--net -- (.04) -- (.04)
In excess of realized gain on investments--net -- (.30) -- (.30)
-------- -------- -------- --------
Total dividends and distributions -- (.37) -- (.37)
======== ======== ======== ========
Net asset value, end of period $ 6.50 $ 4.76 $ 6.70 $ 4.89
======== ======== ======== ========
Total Investment Based on net asset value per share 36.55%+++ (11.11%)+++ 37.01%+++ (10.76%)+++
Return:*** ======== ======== ======== ========
Ratios to Average Expenses, excluding account maintenance and
Net Assets: distribution fees 1.38%* 1.59%* 1.33%* 1.55%*
======== ======== ======== ========
Expenses 2.38%* 2.59%* 1.58%* 1.80%*
======== ======== ======== ========
Investment loss--net (1.33%)* (.02%)* (.54%)* (.81%)*
======== ======== ======== ========
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 39,850 $ 23,259 $ 52,201 $ 32,646
Data: ======== ======== ======== ========
Portfolio turnover 79.96% 175.57% 79.96% 175.57%
======== ======== ======== ========
<FN>
++Commencement of Operations.
++++Amount is less than $.01 per share.
+++Aggregate total investment return.
*Annualized.
**Based on average shares outstanding during the period.
***Total investment returns exclude the effect of sales loads.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Signiflcant Accounting Policies:
Merrill Lynch Technology Fund, Inc. (the "Company") is registered
under the Investment Company Act of 1940 as a non-diversified, open-
end management investment company. These unaudited financial
statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. The Company 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 Company.
<PAGE>
(a) Valuation of securities--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Directors as
the primary market. Securities which are traded both in the over-the-
counter market and on a stock exchange are valued according to the
broadest and most representative market. Options written are valued
at the last sale price in the case of exchange-traded options or, in
the case of options traded in the over-the-counter market, the last
asked price. Options purchased are valued at the last sale price in
the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the last bid price. Short-
term securities are valued at amortized cost, which approximates
market value. Other investments, including futures contracts and
related options, are stated at market value. Securities and assets
for which market quotations are not readily available are valued at
their fair value as determined in good faith by or under the
direction of the Company's Board of Directors.
(b) Derivative financial instruments--The Company 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 Company may purchase or sell
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 Company
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Company 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 Company as unrealized gains or
losses. When the contract is closed, the Company 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.
<PAGE>
* Options--The Company is authorized to write and purchase call and
put options. When the Company writes an option, an amount equal to
the premium received by the Company 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 Company enters into a closing transaction), the
Company 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 is exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
* Forward foreign exchange contracts--The Company 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 Company's records. However, the effect on
operations is recorded from the date the Company enters into such
contracts. Premium or discount is amortized over the life of the
contracts.
* Foreign currency options and futures--The Company 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 Company, sold by the Company but not yet
delivered, or committed or anticipated to be purchased by the
Company.
(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 Company'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.
<PAGE>
(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 date, except if the ex-dividend date has passed, certain
dividends from foreign securities are recorded as soon as the
Company is informed of 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 five-year period. 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 Company are recorded on the ex-dividend
dates. Distributions in excess of net investment income and realized
capital gains are due primarily to differing tax treatments for
futures transactions and post-October losses.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Company 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 Company has also entered into a
Distribution Agreement and Distribution Plans with Merrill Lynch
Funds Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Company's portfolio
and provides the administrative services necessary for the operation
of the Company. As compensation for its services to the Company,
MLAM receives monthly compensation at the annual rate of 1.0% of the
average daily net assets of the Company. Certain states in which
shares of the Company are qualified for sale impose limitations on
the expenses of the Company. The most restrictive annual expense
limitation requires that MLAM reimburse the Company to the extent
that expenses (excluding interest, taxes, distribution fees,
brokerage fees and commissions, and extraordinary items) exceed 2.5%
of the Company's first $30 million of average daily net assets, 2.0%
of the Company's next $70 million of average daily net assets, and
1.5% of the average daily net assets in excess thereof. MLAM's
obligation to reimburse the Company is limited to the amount of the
investment advisory fee. No fee payment will be made to MLAM during
any fiscal year which will cause such expenses to exceed the most
restrictive expense limitation applicable at the time of such
payment.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)]
Pursuant to the distribution plans (the "Distribution Plans")
adopted by the Company, pursuant to Rule 12b-1 under the Investment
Company Act of 1940, the Company 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 Distribution
Maintenance 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
Company. 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 September 30, 1995, MLFD earned
underwriting discounts and commissions and MLPF&S earned dealer
concessions on sales of the Company's Class A and Class D Shares as
follows:
MLFD MLPF&S
Class A $ 3,995 $ 49,866
Class D $13,226 $220,333
For the six months ended September 30, 1995, MLPF&S received
contingent deferred sales charges of $1,658,484 and $36,198 relating
to transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $10,605 in commissions on the execution
of portfolio security transactions for the six months ended
September 30, 1995.
<PAGE>
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Company's transfer agent.
Accounting services are provided to the Company by MLAM at cost.
Certain officers and/or directors of the Company are officers and/or
directors of MLAM, PSI, MLPF&S, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended September 30, 1995 were $798,482,143 and
$698,872,413, respectively.
Net realized and unrealized gains (losses) as of September 30, 1995
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $114,353,437 $212,251,477
Short-term investments (515) --
Forward foreign exchange contracts 3,074,940 (1,015,257)
Foreign currency transactions 34,649 390
------------ ------------
Total $117,462,511 $211,236,610
============ ============
As of September 30, 1995, net unrealized appreciation for Federal
income tax purposes aggregated $212,251,477, of which $230,833,040
related to appreciated securities and $18,581,563 related to
depreciated securities. The aggregate cost of investments at
September 30, 1995 for Federal income tax purposes was
$1,019,491,879.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions was $(57,424,866) and $615,613,902 for the six months
ended September 30, 1995 and the year ended March 31, 1995,
respectively.
Transactions in capital shares for each class were as follows:
<PAGE>
Class A Shares for the Six Months Dollar
Ended September 30, 1995 Shares Amount
Shares sold 6,330,896 $ 35,563,482
Shares redeemed (9,633,863) (53,879,741)
------------ ------------
Net decrease (3,302,967) $(18,316,259)
============ ============
Class A Shares for the Year Dollar
Ended March 31, 1995 Shares Amount
Shares sold 31,862,508 $174,435,046
Shares issued to shareholders
in reinvestment of dividends and
distributions 3,494,000 17,829,324
------------ ------------
Total issued 35,356,508 192,264,370
Shares redeemed (17,158,170) (92,814,537)
------------ ------------
Net increase 18,198,338 $ 99,449,833
============ ============
Class B Shares for the
Six Months Ended Dollar
September 30, 1995 Shares Amount
Shares sold 24,752,107 $140,016,402
Automatic conversion of shares (798,947) (4,160,528)
Shares redeemed (33,475,351) (187,753,418)
------------ ------------
Net decrease (9,522,191) $(51,897,544)
============ ============
<PAGE>
Class B Shares for the
Year Ended Dollar
March 31, 1995 Shares Amount
Shares sold 110,181,775 $589,755,859
Shares issued to shareholders
in reinvestment of dividends and
distributions 7,328,692 36,567,423
------------ ------------
Shares redeemed (31,692,920) (163,195,508)
Automatic conversion
of shares (1,346,902) (7,153,389)
------------ ------------
Net increase 84,470,645 $455,974,385
============ ============
Class C Shares for the
Six Months Ended Dollar
September 30, 1995 Shares Amount
Shares sold 2,696,966 $ 14,763,092
Shares redeemed (1,453,995) (7,863,744)
------------ ------------
Net increase 1,242,971 $ 6,899,348
============ ============
Class C Shares for the Period
October 21, 1994++ to Dollar
March 31, 1995 Shares Amount
Shares sold 5,309,942 $ 27,166,187
Shares issued to shareholders
in reinvestment of dividends and
distributions 128,715 635,854
------------ ------------
Total issued 5,438,657 27,802,041
Shares redeemed (552,255) (2,727,441)
------------ ------------
Net increase 4,886,402 $ 25,074,600
============ ============
[FN]
++Commencement of Operations.
<PAGE>
Class D Shares for the
Six Months Ended Dollar
September 30, 1995 Shares Amount
Shares sold 5,682,126 $ 31,904,889
Automatic conversion of shares 779,903 4,160,528
------------ ------------
Total issued 6,462,029 36,065,417
Shares redeemed (5,352,731) (30,175,828)
------------ ------------
Net increase 1,109,298 $ 5,889,589
============ ============
Class D Shares for the Period
October 21, 1994++ to Dollar
March 31, 1995 Shares Amount
Shares sold 8,332,225 $ 43,660,136
Automatic conversion of shares 1,316,991 7,153,389
Shares issued to shareholders
in reinvestment of dividends and
distributions 174,684 883,900
------------ ------------
Total issued 9,823,900 51,697,425
Shares redeemed (3,144,304) (16,582,341)
------------ ------------
Net increase 6,679,596 $ 35,115,084
============ ============
[FN]
++Commencement of Operations.
<PAGE>
PORTFOLIO CHANGES
For the Quarter Ended September 30, 1995
Additions
Bay Networks Inc.
Bolt Beranek and Newman, Inc.
Cirrus Logic, Inc.
cisco Systems, Inc.
FTP Software, Inc.
Novell, Inc.
Stratacom, Inc.
Tellabs, Inc.
Deletions
Koyo Seiko Co., Ltd.
Tivoli Systems, Inc.
