MERRILL LYNCH
TECHNOLOGY
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
September 30, 1998
<PAGE>
MERRILL LYNCH TECHNOLOGY FUND, INC.
Portfolio Information As of 9/30/98
Ten Largest Holdings Percent of
Represented in the Portfolio Net Assets
Creative Technology Ltd....................... 11.1%
Seagate Technology, Inc....................... 5.2
COMPAQ Computer Corporation................... 5.1
Cisco Systems, Inc............................ 4.9
Microsoft Corporation......................... 4.8
Texas Instruments Incorporated................ 4.7
Linear Technology Corporation................. 4.6
Lucent Technologies Inc....................... 4.6
Intel Corporation............................. 4.2
Altera Corporation............................ 4.2
Ten Largest Industries Percent of
Represented in the Portfolio Net Assets
Semiconductors................................ 35.5%
Computer Peripherals.......................... 16.3
Software...................................... 12.3
Telecommunication Equipment................... 8.3
Personal Computers............................ 7.5
Data Communications........................... 6.0
Contract Manufacturers........................ 5.5
Electronic Design Automation.................. 2.2
Technology Services........................... 1.8
Components.................................... 1.3
<PAGE>
Merrill Lynch Technology Fund, Inc., September 30, 1998
DEAR SHAREHOLDER
Merrill Lynch Technology Fund, Inc. 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 quarter ended September 30, 1998, the world's
equity markets and technology stocks declined. During the quarter ended
September 30, 1998, the Fund's total returns for Class A, Class B, Class C and
Class D Shares were -11.78%, -11.90%, -11.73% and -11.62%, respectively, while
the MLO declined 11.04%. The Fund slightly lagged 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 strategy is to focus on leadership companies as defined
by top market shares and superior technology or business processes.
We believe that the strong get stronger, especially in the technology industry.
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.
After restructuring most of the Fund by the end of the September quarter, our
holdings were comprised of many of the "who's who" in the fastest-growing and
most important tech nology industries, such as: Cisco Systems, Inc. (data
networking); COMPAQ Computer Corporation (personal computers); Intel Corporation
(microprocessors); Lucent Technologies Inc. (telecommunications equipment); MCI
WorldCom, Inc. (telecom munications); Microsoft Corporation (desktop operating
system software); SAP AG (Systeme, Anwendungen, Produkte in der
Datenverarbeitung) (enterprise resource planning software); SCI Systems, Inc.
(contract manufacturing); and Sun Microsystems, Inc. (UNIX servers and
workstations).
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
about $30.0 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. In fact, the only stocks that accounted for 5% or more of the Fund's
net assets on September 30, 1998 were Creative Technology Ltd., COMPAQ Computer
Corporation and Seagate Technology, Inc., but we have been reducing their
weights. 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. Also, the Fund's largest industry position
was in semiconductors, which comprised over 35% of the Fund's net assets at
September 30, 1998. We will reduce the overweighting in this industry at
opportune times to at least the 25% industry limit under our diversification
guidelines. (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
restructuring. 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 99.1% 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. 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 Creative Technology Ltd.
(Singapore), ECI Telecommunications Limited (Israel) and SAP AG (Systeme,
Anwendungen, Produkte in der Datenverarbeitung) (Germany). Combined, they
accounted for 13% of the Fund's net assets at the close of the September
quarter, with Creative Technology representing 11%. 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.
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 will become overweighted in
less cyclical, more domestically oriented software and computer service
industries. Conversely, we will reduce our exposure in export-oriented, more
cyclical hardware, semiconductor and semiconductor capital equipment
industries.
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:
86.0% of net assets in US equities, 13.1% in foreign equities, and 0.9% 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 selected 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 plan to be 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.
2 & 3
<PAGE>
Merrill Lynch Technology Fund, Inc., September 30, 1998
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 at 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 Merrill Lynch Global Technology Fund, Inc. would acquire
substantially all of the assets and assume substantially all of the liabilities
of the Fund in exchange for newly issued shares of Merrill Lynch Global
Technology Fund, Inc. The plan of reorganization is subject to shareholder
approval. Merrill Lynch Global Technology Fund, Inc. is a registered,
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 Technology Fund, Inc., and we
look forward to serving your investment needs in the months ahead.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Paul G. Meeks
Paul G. Meeks
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:
o 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.
o Class B Shares are subject to a maximum contingent deferred sales charge
of 4% if redeemed during the first year, decreasing 1% each year
thereafter to 0% after the fourth year. In addition, Class B Shares are
subject to a distribution fee of 0.75% 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.)
o 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.
o 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
"Average Annual Total Return" tables assume reinvestment of all dividends
and capital gains distributions at net asset value on the ex-dividend
date. Investment return and principal value of shares will fluctuate so
that shares, when redeemed, may be worth more or less than their original
cost. Dividends paid to each class of shares will vary because of the
different levels of account maintenance, distribution and transfer agency
fees applicable to each class, which are deducted from the income
available to be paid to share holders.
Average Annual Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
================================================================================
Year Ended 9/30/98 -39.83% -42.99%
- --------------------------------------------------------------------------------
Five Years Ended 9/30/98 + 2.92 + 1.82
- --------------------------------------------------------------------------------
Inception (4/27/92) through 9/30/98 +11.80 +10.86
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
================================================================================
Year Ended 9/30/98 -40.32% -42.71%
- --------------------------------------------------------------------------------
Five Years Ended 9/30/98 + 1.90 + 1.90
- --------------------------------------------------------------------------------
Inception (4/27/92) through 9/30/98 +10.66 +10.66
- --------------------------------------------------------------------------------
* 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**
================================================================================
Year Ended 9/30/98 -40.36% -40.96%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 9/30/98 - 3.03 - 3.03
- --------------------------------------------------------------------------------
* 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**
================================================================================
Year Ended 9/30/98 -39.86% -43.02%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 9/30/98 - 2.25 - 3.58
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
Recent Performance Results*
<TABLE>
<CAPTION>
12 Month 3 Month Since Inception
Total Return Total Return Total Return
================================================================================================
<S> <C> <C> <C>
ML Technology Fund, Inc. Class A Shares -39.83% -11.78% +104.77%
- ------------------------------------------------------------------------------------------------
ML Technology Fund, Inc. Class B Shares -40.32 -11.90 + 91.79
- ------------------------------------------------------------------------------------------------
ML Technology Fund, Inc. Class C Shares -40.36 -11.73 - 11.41
- ------------------------------------------------------------------------------------------------
ML Technology Fund, Inc. Class D Shares -39.86 -11.62 - 8.58
================================================================================================
</TABLE>
* Investment results shown do not reflect sales charges; results shown would
be lower if a sales charge was included. Total investment returns are
based on changes in net asset values for the periods shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the ex-dividend date. The Fund's inception periods are Class A &
Class BShares, from 4/27/92 to 9/30/98 and Class C & Class D Shares, from
10/21/94 to 9/30/98. Merrill Lynch Technology Fund, Inc., September 30,
1998.
4 & 5
<PAGE>
Merrill Lynch Technology Fund, Inc., September 30, 1998
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Stocks & Warrants Cost (Note 1a) Net Assets
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Germany Software 88,000 SAP AG (Systeme, Anwendungen, Produkte
in der Datenverarbeitung)(ADR)(b) $ 3,436,013 $ 3,426,500 1.0%
-------------------------------------------------------------------------------------------------------------------
Total Investments in Germany 3,436,013 3,426,500 1.0
==================================================================================================================================
Israel Telecommunication 141,000 ECI Telecommunications Limited 3,551,438 3,454,500 1.0
Equipment
-------------------------------------------------------------------------------------------------------------------
Total Investments in Israel 3,551,438 3,454,500 1.0
==================================================================================================================================
Singapore Computer Peripherals 4,216,950 +Creative Technology Ltd. 57,832,135 37,952,550 11.1
-------------------------------------------------------------------------------------------------------------------
Total Investments in Singapore 57,832,135 37,952,550 11.1
==================================================================================================================================
United States Components 234,000 General Cable Corporation 3,593,257 4,329,000 1.3
-------------------------------------------------------------------------------------------------------------------
Computer Peripherals 700,000 +Seagate Technology, Inc. 18,145,420 17,543,750 5.2
-------------------------------------------------------------------------------------------------------------------
Computer Systems 79,000 +Sun Microsystems, Inc. 3,219,250 3,935,188 1.2
-------------------------------------------------------------------------------------------------------------------
Contract Manufacturers 100,000 +Flextronics International Ltd. 3,657,035 3,525,000 1.0
102,000 +Jabil Circuit, Inc. 3,711,358 3,544,500 1.0
123,000 +SCI Systems, Inc. 3,446,342 3,313,313 1.0
300,000 +Sanmina Corporation 6,722,982 8,418,750 2.5
------------ ------------ -----
17,537,717 18,801,563 5.5
-------------------------------------------------------------------------------------------------------------------
Data Communications 85,700 +Ascend Communications, Inc. 3,238,209 3,899,350 1.1
270,000 +Cisco Systems, Inc. 13,972,500 16,689,375 4.9
------------ ------------ -----
17,210,709 20,588,725 6.0
-------------------------------------------------------------------------------------------------------------------
Electronic Design 152,000 +Cadence Design Systems, Inc. 4,171,389 3,885,500 1.1
Automation 111,000 +Synopsys, Inc. 4,072,312 3,697,688 1.1
------------ ------------ -----
8,243,701 7,583,188 2.2
-------------------------------------------------------------------------------------------------------------------
Miscellaneous 4,345 Iwerks Entertainment, Inc.
(Warrants)(a) 0 0 0.0
-------------------------------------------------------------------------------------------------------------------
Personal Computers 550,000 COMPAQ Computer Corporation 17,627,775 17,393,750 5.1
154,400 +Gateway 2000, Inc. 7,201,451 8,048,100 2.4
------------ ------------ -----
24,829,226 25,441,850 7.5
-------------------------------------------------------------------------------------------------------------------
Semiconductors 410,000 +Altera Corporation 17,405,003 14,375,625 4.2
168,500 Intel Corporation 14,467,550 14,448,875 4.2
315,000 Linear Technology Corporation 21,232,812 15,750,000 4.6
490,200 +Maxim Integrated Products, Inc. 17,907,450 13,664,325 4.0
268,000 +Micron Technology, Inc. 8,025,686 8,157,250 2.4
432,800 +PMC-Sierra, Inc. 15,271,647 13,633,200 4.0
305,000 Texas Instruments Incorporated 15,462,557 16,088,750 4.7
485,000 +Vitesse Semiconductor Corporation 11,322,068 11,397,500 3.4
385,000 +Xilinx, Inc. 16,672,978 13,450,937 4.0
------------ ------------ -----
137,767,751 120,966,462 35.5
-------------------------------------------------------------------------------------------------------------------
Software 155,000 Autodesk, Inc. 4,194,285 4,068,750 1.2
210,700 +BMC Software, Inc. 9,975,592 12,642,000 3.7
149,000 +Microsoft Corporation 12,821,035 16,399,312 4.8
92,000 +Networks Associates, Inc. 3,602,499 3,266,000 0.9
176,000 +Symantec Corporation 4,131,002 2,310,000 0.7
------------ ------------ -----
34,724,413 38,686,062 11.3
-------------------------------------------------------------------------------------------------------------------
Technology Services 65,000 +DST Systems, Inc. 3,557,181 3,428,750 1.0
76,000 +Keane, Inc. 3,704,308 2,669,500 0.8
------------ ------------ -----
7,261,489 6,098,250 1.8
-------------------------------------------------------------------------------------------------------------------
Telecommunication 125,000 +ADC Telecommunications, Inc. 3,550,625 2,632,812 0.8
Equipment 227,000 Lucent Technologies Inc. 16,336,253 15,677,187 4.6
77,000 +Tellabs, Inc. 3,613,810 3,065,563 0.9
86,000 +Uniphase Corporation 3,440,000 3,504,500 1.0
------------ ------------ -----
26,940,688 24,880,062 7.3
-------------------------------------------------------------------------------------------------------------------
Telecommunications 83,000 +MCI WorldCom, Inc. 4,144,250 4,056,625 1.2
-------------------------------------------------------------------------------------------------------------------
Total Investments in the United States 303,617,871 292,910,725 86.0
==================================================================================================================================
Total Investments in Stocks & Warrants 368,437,457 337,744,275 99.1
==================================================================================================================================
<CAPTION>
SHORT-TERM Face
SECURITIES Amount Issue
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial $5,628,000 General Motors Acceptance Corp., 5.88%
Paper* due 10/01/1998 5,628,000 5,628,000 1.7
-------------------------------------------------------------------------------------------------------------------
Total Investments in Short-Term
Securities 5,628,000 5,628,000 1.7
==================================================================================================================================
Total Investments $374,065,457 343,372,275 100.8
============
Liabilities in Excess of Other Assets (2,735,349) (0.8)
------------ -----
Net Assets $340,636,926 100.0%
============ =====
==================================================================================================================================
</TABLE>
(a) Warrants entitle the Company to purchase a predetermined number of
shares of common stock and are non-income producing. The purchase
price and number of shares are subject to adjustment under certain
conditions until the expiration date.
(b) American Depositary Receipts (ADR).
* Commercial Paper is traded on a discount basis; the interest rate
shown reflects the discount rate paid at the time of purchase by the
Company.
+ Non-income producing security.
See Notes to Financial Statements.
6 & 7
<PAGE>
Merrill Lynch Technology Fund, Inc., September 30, 1998
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
As of September 30, 1998
=================================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$374,065,457) (Note 1a) ................... $ 343,372,275
Receivables:
Capital shares sold ............................................................. $ 469,176
Dividends ....................................................................... 8,250 477,426
-----------
Prepaid registration fees and other assets (Note 1f) .............................. 17,757
-------------
Total assets ...................................................................... 343,867,458
-------------
=================================================================================================================================
Liabilities: Payables:
Capital shares redeemed ......................................................... 1,253,889
Custodian bank (Note 1h) ........................................................ 1,209,095
Investment adviser (Note 2) ..................................................... 287,066
Distributor (Note 2) ............................................................ 148,686 2,898,736
-----------
Accrued expenses and other liabilities ............................................ 331,796
-------------
Total liabilities ................................................................. 3,230,532
-------------
=================================================================================================================================
Net Assets: Net assets ........................................................................ $ 340,636,926
=============
=================================================================================================================================
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized .... $ 4,220,712
Consist of: Class B Shares of Common Stock, $0.10 par value, 300,000,000 shares authorized .... 4,855,033
Class C Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized .... 257,908
Class D Shares of Common Stock, $0.10 par value, 300,000,000 shares authorized .... 624,751
Paid-in capital in excess of par .................................................. 531,660,385
Accumulated investment loss--net .................................................. (3,356,813)
Accumulated realized capital losses on investments and foreign currency
transactions--net (Note 5) ........................................................ (147,911,977)
Accumulated distributions in excess of realized capital gains on investments--net..
(Note 1g) ........................................................................ (19,019,891)
Unrealized depreciation on investments--net ....................................... (30,693,182)
-------------
Net assets ........................................................................ $ 340,636,926
=============
=================================================================================================================================
Net Asset Class A--Based on net assets of $148,645,908 and 42,207,121 shares outstanding .... $ 3.52
Value: =============
Class B--Based on net assets of $161,608,329 and 48,550,329 shares outstanding .... $ 3.33
=============
Class C--Based on net assets of $8,525,015 and 2,579,080 shares outstanding ....... $ 3.31
=============
Class D--Based on net assets of $21,857,674 and 6,247,508 shares outstanding ...... $ 3.50
=============
=================================================================================================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended September 30, 1998
=================================================================================================================================
<S> <C> <C> <C>
Investment Interest and discount earned ...................................................... $ 976,544
Income Dividends ......................................................................... 154,136
(Notes 1d & 1e): -------------
Total income ...................................................................... 1,130,680
-------------
=================================================================================================================================
Expenses: Investment advisory fees (Note 2) ................................................. $ 2,257,240
Account maintenance and distribution fees--Class B (Note 2) ....................... 1,127,750
Transfer agent fees--Class B (Note 2) ............................................. 397,655
Transfer agent fees--Class A (Note 2) ............................................. 286,831
Printing and shareholder reports .................................................. 69,371
Accounting services (Note 2) ...................................................... 63,804
Account maintenance and distribution fees--Class C (Note 2) ....................... 60,526
Transfer agent fees--Class D (Note 2) ............................................. 44,033
Registration fees (Note 1f) ....................................................... 39,764
Professional fees ................................................................. 38,140
Account maintenance fees--Class D (Note 2) ........................................ 35,657
Transfer agent fees--Class C (Note 2) ............................................. 23,205
Directors' fees and expenses ...................................................... 19,820
Custodian fees .................................................................... 17,792
Pricing fees ...................................................................... 198
Other ............................................................................. 5,707
-----------
Total expenses .................................................................... 4,487,493
-------------
Investment loss--net .............................................................. (3,356,813)
-------------
=================================================================================================================================
Realized & Realized gain from investments--net ............................................... 10,007,159
Unrealized Gain Change in unrealized appreciation/depreciation on investments and foreign
(Loss) on currency transactions--net ....................................................... (85,531,968)
Investments & -------------
Foreign Currency Net Decrease in Net Assets Resulting from Operations .............................. $ (78,881,622)
Transactions--Net =============
(Notes 1b, 1c,
1e & 3):
=================================================================================================================================
</TABLE>
See Notes to Financial Statements.
8 & 9
<PAGE>
Merrill Lynch Technology Fund, Inc., September 30, 1998
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: Sept. 30, 1998 March 31, 1998
===================================================================================================================================
<S> <C> <C> <C>
Operations: Investment loss--net ........................................................ $ (3,356,813) $ (9,711,420)
Realized gain (loss) on investments and foreign currency transactions--net .. 10,007,159 (157,919,266)
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net .................................................. (85,531,968) 201,840,096
------------- -------------
Net increase (decrease) in net assets resulting from operations ............. (78,881,622) 34,209,410
------------- -------------
===================================================================================================================================
Distributions to Realized gain on investments--net:
Shareholders Class A ................................................................... -- (44,407,215)
(Note 1g): Class B ................................................................... -- (72,911,047)
Class C ................................................................... -- (3,812,765)
Class D ................................................................... -- (7,217,791)
In excess of realized gain on investments--net:
Class A ................................................................... -- (6,580,664)
Class B ................................................................... -- (10,804,619)
Class C ................................................................... -- (565,010)
Class D ................................................................... -- (1,069,598)
------------- -------------
Net decrease in net assets resulting from distributions to shareholders ..... -- (147,368,709)
------------- -------------
===================================================================================================================================
Capital Share Net increase (decrease) in net assets derived from capital shares (127,253,571) 7,796,208
Transactions (Note 4): transactions ................................................................ ------------- -------------
===================================================================================================================================
Net Assets: Total decrease in net assets ................................................ (206,135,193) (105,363,091)
Beginning of period ......................................................... 546,772,119 652,135,210
------------- -------------
End of period ............................................................... $ 340,636,926 $ 546,772,119
============= =============
===================================================================================================================================
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A**
---------------------------------------------------------
The following per share data and ratios For the
have been derived from information Six Months
provided in the financial statements. Ended For the Year Ended March 31,
Sept. 30, --------------------------------------------
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ..... $ 4.27 $ 5.07 $ 4.82 $ 4.89 $ 5.17
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net ............. (.02) (.04) (.03) (.03) .05
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net ........................ (.73) .46 .72 .28 .11
-------- -------- -------- -------- --------
Total from investment operations ......... (.75) .42 .69 .25 .16
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net ................. -- -- -- -- (.02)
In excess of investment income--net .... -- -- -- -- (.01)
Realized gain on investments--net ...... -- (1.06) (.44) (.17) (.05)
In excess of realized gain on
investments--net ....................... -- (.16) -- (.15) (.36)
-------- -------- -------- -------- --------
Total dividends and distributions ........ -- (1.22) (.44) (.32) (.44)
-------- -------- -------- -------- --------
Net asset value, end of period ........... $ 3.52 $ 4.27 $ 5.07 $ 4.82 $ 4.89
======== ======== ======== ======== ========
========================================================================================================================
Total Investment Based on net asset value per share ....... (17.56%)+ 3.96% 14.60% 5.15% 2.86%
Return:*** ======== ======== ======== ======== ========
========================================================================================================================
Ratios to Average Expenses ................................. 1.42%* 1.27% 1.30% 1.31% 1.33%
Net Assets: ======== ======== ======== ======== ========
Investment income (loss)--net ............ (.92%)* (.82%) (.63%) (.62%) .87%
======== ======== ======== ======== ========
========================================================================================================================
Supplemental Net assets, end of period (in thousands).. $148,646 $211,443 $222,118 $246,909 $254,188
Data: ======== ======== ======== ======== ========
Portfolio turnover ....................... 102.21% 206.40% 176.51% 108.36% 175.57%
======== ======== ======== ======== ========
</TABLE>
* Annualized.
** Based on average shares outstanding.
*** Total investment returns exclude the effects of sales loads.
+ Aggregate total investment return.
See Notes to Financial Statements.
10 & 11
<PAGE>
Merrill Lynch Technology Fund, Inc., September 30, 1998
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Class B**
----------------------------------------------------------
The following per share data and ratios For the
have been derived from information Six Months
provided in the financial statements. Ended For the Year Ended March 31,
Sept. 30, -------------------------------------------
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ............. $ 4.06 $ 4.89 $ 4.66 $ 4.78 $ 5.08
Operating -------- -------- -------- -------- --------
Performance: Investment loss--net ............................. (.04) (.09) (.08) (.09) (.01)
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net ........... (.69) .46 .69 .29 .11
-------- -------- -------- -------- --------
Total from investment operations ................. (.73) .37 .61 .20 .10
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net ......................... -- -- -- -- --+
In excess of investment income--net ............ -- -- -- -- --+
Realized gain on investments--net .............. -- (1.05) (.38) (.17) (.05)
In excess of realized gain on investments--net.. -- (.15) -- (.15) (.35)
-------- -------- -------- -------- --------
Total dividends and distributions ................ -- (1.20) (.38) (.32) (.40)
-------- -------- -------- -------- --------
Net asset value, end of period ................... $ 3.33 $ 4.06 $ 4.89 $ 4.66 $ 4.78
======== ======== ======== ======== ========
================================================================================================================================
Total Investment Based on net asset value per share ............... (17.98%)+++ 3.09% 13.20% 4.21% 1.78%
Return:*** ======== ======== ======== ======== ========
================================================================================================================================
Ratios to Average Expenses ......................................... 2.46%* 2.31% 2.35% 2.34% 2.38%
Net Assets: ======== ======== ======== ======== ========
Investment loss--net ............................. (1.96%)* (1.85%) (1.66%) (1.65%) (.10%)
======== ======== ======== ======== ========
================================================================================================================================
Supplemental Net assets, end of period (in thousands) ......... $161,608 $285,193 $375,630 $553,819 $614,935
Data: ======== ======== ======== ======== ========
Portfolio turnover ............................... 102.21% 206.40% 176.51% 108.36% 175.57%
======== ======== ======== ======== ========
================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class C**
---------------------------------------------------------
For the For the
The following per share data and ratios Six Period
have been derived from information Months Oct. 21,
provided in the financial statements. Ended For the Year Ended March 31, 1994++ to
Sept. 30, -------------------------------- March 31,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ............. $ 4.03 $ 4.87 $ 4.64 $ 4.76 $ 5.75
Operating -------- -------- -------- -------- --------
Performance: Investment loss--net ............................. (.04) (.09) (.08) (.09) --
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net ........... (.68) .45 .68 .29 (.62)
-------- -------- -------- -------- --------
Total from investment operations ................. (.72) .36 .60 .20 (.62)
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net ......................... -- -- -- -- (.02)
In excess of investment income--net ............ -- -- -- -- (.01)
Realized gain on investments--net .............. -- (1.05) (.37) (.17) (.04)
In excess of realized gain on investments--net.. -- (.15) -- (.15) (.30)
-------- -------- -------- -------- --------
Total dividends and distributions ................ -- (1.20) (.37) (.32) (.37)
-------- -------- -------- -------- --------
Net asset value, end of period ................... $ 3.31 $ 4.03 $ 4.87 $ 4.64 $ 4.76
======== ======== ======== ======== ========
================================================================================================================================
Total Investment Based on net asset value per share ............... (17.87%)+++ 2.87% 13.19% 4.22% (11.11%)+++
Return:*** ======== ======== ======== ======== ========
================================================================================================================================
Ratios to Average Expenses ......................................... 2.49%* 2.33% 2.37% 2.36% 2.59%*
Net Assets: ======== ======== ======== ======== ========
Investment loss--net ............................. (1.99%)* (1.87%) (1.68%) (1.69%) (.02%)*
======== ======== ======== ======== ========
================================================================================================================================
Supplemental Net assets, end of period (in thousands) ......... $ 8,525 $ 15,424 $ 19,015 $ 31,090 $ 23,259
Data: ======== ======== ======== ======== ========
Portfolio turnover ............................... 102.21% 206.40% 176.51% 108.36% 175.57%
======== ======== ======== ======== ========
================================================================================================================================
</TABLE>
* Annualized.
** Based on average shares outstanding.
*** Total investment returns exclude the effects of sales loads.
+ Amount is less than $.01 per share.
++ Commencement of operations.
+++ Aggregate total investment return.
See Notes to Financial Statements.
12 & 13
<PAGE>
Merrill Lynch Technology Fund, Inc., September 30, 1998
FINANCIAL HIGHLIGHTS (concluded)
<TABLE>
<CAPTION>
Class D**
---------------------------------------------------------------
For the For the
The following per share data and ratios Six Period
have been derived from information Months Oct. 21,
provided in the financial statements. Ended For the Year Ended March 31, 1994+ to
Sept. 30, ---------------------------------- March 31,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ....... $ 4.25 $ 5.05 $ 4.81 $ 4.89 $ 5.88
Operating --------- --------- --------- --------- ---------
Performance: Investment loss--net ....................... (.02) (.05) (.04) (.05) (.02)
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net .......................... (.73) .46 .71 .29 (.60)
--------- --------- --------- --------- ---------
Total from investment operations ........... (.75) .41 .67 .24 (.62)
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net ................... -- -- -- -- (.02)
In excess of investment income--net ...... -- -- -- -- (.01)
Realized gain on investments--net ........ -- (1.05) (.43) (.17) (.04)
In excess of realized gain on
investments--net ......................... -- (.16) -- (.15) (.30)
--------- --------- --------- --------- ---------
Total dividends and distributions .......... -- (1.21) (.43) (.32) (.37)
--------- --------- --------- --------- ---------
Net asset value, end of period ............. $ 3.50 $ 4.25 $ 5.05 $ 4.81 $ 4.89
========= ========= ========= ========= =========
===============================================================================================================================
Total Investment Based on net asset value per share ......... (17.65%)+++ 3.90% 14.09% 4.94% (10.76%)+++
Return:*** ========= ========= ========= ========= =========
===============================================================================================================================
Ratios to Average Expenses ................................... 1.67%* 1.52% 1.55% 1.56% 1.80%*
Net Assets: ========= ========= ========= ========= =========
Investment loss--net ....................... (1.18%)* (1.07%) (.88%) (.89%) (.81%)*
========= ========= ========= ========= =========
===============================================================================================================================
Supplemental Net assets, end of period (in thousands) ... $ 21,858 $ 34,712 $ 35,372 $ 43,858 $ 32,646
Data: ========= ========= ========= ========= =========
Portfolio turnover ......................... 102.21% 206.40% 176.51% 108.36% 175.57%
========= ========= ========= ========= =========
===============================================================================================================================
</TABLE>
* Annualized.
** Based on average shares outstanding.
*** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
+++ Aggregate total investment return.
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. Significant 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.
(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 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.
o Financial futures contracts--The Company 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 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.
o Options--The Company is authorized to write and purchase covered call and
purchase 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
14 & 15
<PAGE>
Merrill Lynch Technology Fund, Inc., September 30, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
(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 exceeds the premium paid or
received).
Written and purchased options are non-income producing investments.
o 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.
o 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.
(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 Company 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) Prepaid registration fees--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 realized capital gains are due primarily to differing tax treatments
for futures transactions and post-October losses.
(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 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 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 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.
Pursuant to the Distribution Plans adopted by the Company, in accordance with
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, 1998, MLFD earned underwriting discounts
and direct 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 .................................. $332 $ 4,361
Class D .................................. $905 $12,341
- --------------------------------------------------------------------------------
For the six months ended September 30, 1998, MLPF&S received contingent deferred
sales charges of $404,920 and $5,523 relating to transactions in Class B and
Class C Shares, respectively. Furthermore, MLPF&S received contingent deferred
sales charges of $100,994 relating to transactions subject to front-end sales
charge waivers in Class A Shares.
In addition, MLPF&S received $14,040 in commissions on the execution of
portfolio security transactions for the Company for the six months ended
September 30, 1998.
Financial Data Services, Inc. ("FDS"), 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, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended September 30, 1998 were $428,530,554 and $550,665,679,
respectively.
Net realized gains (losses) for the six months ended September 30, 1998 and net
unrealized losses as of September 30, 1998 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Losses
- --------------------------------------------------------------------------------
Long-term investments .................... $10,007,392 $(30,693,182)
Short-term investments ................... (233) --
----------- ------------
Total .................................... $10,007,159 $(30,693,182)
=========== ============
- --------------------------------------------------------------------------------
As of September 30, 1998, net unrealized depreciation for Federal income tax
purposes aggregated $30,693,182, of which $14,514,489 related to appreciated
securities and $45,207,671 related to depreciated securities. The aggregate cost
of investments at September 30, 1998 for Federal income tax purposes was
$374,065,457.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions
was $(127,253,571) and $7,796,208 for the six months ended September 30, 1998
and for the year ended March 31, 1998, respectively.
Transactions in capital shares for each class were as follows:
- --------------------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended September 30, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold .............................. 5,940,283 $ 24,610,677
Shares redeemed .......................... (13,247,132) (54,479,234)
----------- ------------
Net decrease ............................. (7,306,849) $(29,868,557)
=========== ============
- --------------------------------------------------------------------------------
16 & 17
<PAGE>
Merrill Lynch Technology Fund, Inc., September 30, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended March 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold .............................. 14,964,900 $ 71,410,844
Shares issued to shareholders
in reinvestment of distributions ......... 8,838,083 45,869,650
----------- ------------
Total issued ............................. 23,802,983 117,280,494
Shares redeemed .......................... (18,121,971) (89,086,567)
----------- ------------
Net increase ............................. 5,681,012 $ 28,193,927
=========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Six Months Dollar
Ended September 30, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold .............................. 5,348,529 $ 20,270,477
Shares redeemed .......................... (26,502,756) (102,569,811)
Automatic conversion of shares ........... (583,617) (2,228,841)
----------- ------------
Net decrease ............................ (21,737,844) $(84,528,175)
=========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended March 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold .............................. 19,604,583 $ 91,957,240
Shares issued to shareholders
in reinvestment of distributions ......... 14,953,197 74,317,386
----------- ------------
Total issued ............................. 34,557,780 166,274,626
Shares redeemed .......................... (40,126,849) (188,834,322)
Automatic conversion of shares ........... (898,029) (4,025,429)
----------- ------------
Net decrease ............................. (6,467,098) $(26,585,125)
=========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Six Months Dollar
Ended September 30, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold .............................. 504,064 $ 1,809,903
Shares redeemed .......................... (1,752,561) (6,621,068)
----------- ------------
Net decrease ............................. (1,248,497) $ (4,811,165)
=========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended March 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold .............................. 2,933,295 $ 13,806,155
Shares issued to shareholders
in reinvestment of distributions ......... 764,385 3,776,060
----------- ------------
Total issued ............................. 3,697,680 17,582,215
Shares redeemed .......................... (3,776,280) (17,726,568)
----------- ------------
Net decrease ............................. (78,600) $ (144,353)
=========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Six Months Dollar
Ended September 30, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold .............................. 920,212 $ 3,587,235
Automatic conversion of shares ........... 556,501 2,228,841
----------- ------------
Total issued ............................. 1,476,713 5,816,076
Shares redeemed .......................... (3,401,818) (13,861,750)
----------- ------------
Net decrease ............................. (1,925,105) $ (8,045,674)
=========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended March 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold .............................. 4,505,104 $ 21,202,799
Automatic conversion of shares ........... 861,473 4,025,429
Shares issued to shareholders
in reinvestment of distributions ......... 1,452,639 7,510,141
----------- ------------
Total issued ............................. 6,819,216 32,738,369
Shares redeemed .......................... (5,645,964) (26,406,610)
----------- ------------
Net increase ............................. 1,173,252 $ 6,331,759
=========== ============
- --------------------------------------------------------------------------------
5. Capital Loss Carryforward:
At March 31, 1998, the Fund had a net capital loss carryforward of approximately
$60,435,000, all of which expires in 2006. This amount will be available to
offset like amounts of any future taxable gains.
6. Reorganization Plan:
On October 21, 1998, the Company's Board of Directors approved a plan of
reorganization whereby Merrill Lynch Global Technology Fund, Inc. would acquire
substantially all of the assets and liabilities of the Company in exchange for
newly issued shares of Merrill Lynch Global Technology Fund, Inc. The plan of
reorganization is subject to approval by the Company's shareholders. Merrill
Lynch Global Technology Fund, Inc. is a registered, diversified, open-end
management investment company. Both entities have a similar investment objective
and are managed by MLAM.
PORTFOLIO CHANGES
For the Quarter Ended September 30, 1998
Additions
ADC Telecommunications, Inc.
Autodesk, Inc.
Cadence Design Systems, Inc.
*Ciena Corporation
COMPAQ Computer Corporation
DST Systems, Inc.
*EBay, Inc.
ECI Telecommunications Limited
Flextronics International Ltd.
General Cable Corporation
Intel Corporation
Jabil Circuit, Inc.
Keane, Inc.
Linear Technology Corporation
MCI WorldCom, Inc.
Networks Associates, Inc.
SAP AG (Systeme, Anwendungen, Produkte in der Datenverarbeitung) (ADR)
SCI Systems, Inc.
Sanmina Corporation
Sun Microsystems, Inc.
Symantec Corporation
Synopsys, Inc.
Tellabs, Inc.
Uniphase Corporation
Deletions
Ade Corporation
America Online, Inc.
Applied Micro Circuits Corporation
Aspec Technology Inc.
Broadcom Corporation (Class A)
*Ciena Corporation
Computer Associates International, Inc.
*EBay, Inc.
Iwerks Entertainment, Inc.
Level One Communications, Inc.
Quantum Corporation
* Added and deleted in the same quarter.
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
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
The Chase Manhattan Bank
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, NY 11245
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
18 & 19
<PAGE>
This report is not authorized for use as an offer of sale or a 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. Statements and
other information herein are as dated and are subject to change.
Merrill Lynch
Technology Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #16091--9/98
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