MERRILL LYNCH
TECHNOLOGY
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Quarterly Report
June 30, 1998
<PAGE>
MERRILL LYNCH TECHNOLOGY FUND, INC.
Portfolio Ten Largest Holdings Percent of
Information Represented in the Portfolio Net Assets
As of 6/30/98
Creative Technology Ltd. ........................ 13.9%
Micron Technology, Inc. ......................... 6.8
BMC Software, Inc. .............................. 4.8
PMC-Sierra, Inc. ................................ 4.6
Microsoft Corporation ........................... 4.3
Lucent Technologies Inc. ........................ 4.3
Xilinx, Inc. .................................... 4.2
Gateway 2000, Inc. .............................. 4.1
Altera Corporation .............................. 4.1
Computer Associates International, Inc. ......... 3.8
Microcomputer Peripherals ....................... 14.8
Communications--Integrated Circuits ............. 12.5
Semiconductors--Memory .......................... 9.5
Computer Software ............................... 9.1
Semiconductors--Logic ........................... 8.4
Communications Equipment ........................ 6.5
Computer Hardware ............................... 4.1
Enterprise Software ............................. 3.8
Internetworking ................................. 3.8
Semiconductors--Analog .......................... 2.4
<PAGE>
Merrill Lynch Technology Fund, Inc., June 30, 1998
DEAR SHAREHOLDER
Increasing volatility characterized the capital markets during the three-month
period ended June 30, 1998. At times, US stock and bond prices reflected
expectations that the slowdown in Asian economic growth would impact US exports
and the US trade deficit and slow overall US business activity. The
deterioration of economic conditions in Japan was of particular concern, and
caused a sharp drop in the yen's value relative to the US dollar. During other
periods, US investors appeared to expect that the positive trends of a
moderately expanding economy, declining unemployment, enhanced productivity and
corporate profits growth would continue, unimpeded by developments in Asia. To
date, there have been only a few signs that Asia's troubles are influencing US
economic activity--such as a surge in the accumulation of inventories--largely
because domestic demand has remained strong. In Europe, the major event was the
greater progress toward achieving European Monetary Union, although there were
concerns that interest rates may have to be increased, especially in the United
Kingdom, to curtail potential inflationary pressures.
Portfolio Matters
Merrill Lynch Technology Fund, Inc.'s Class A, Class B, Class C and Class D
Shares had total returns of - 6.56%, - 6.90%, - 6.95% and - 6.82%, respectively,
for the three months ended June 30, 1998. (Complete performance results can be
found on pages 3 and 4 of this report to shareholders.)
Expectations concerning the duration and extent of the current economic slowdown
in Asia deteriorated substantially during the June quarter. Technology-related
companies with meaningful business interests in the region were especially
vulnerable. Concerns about personal computer demand, disk drive inventories and
excess semiconductor capacity and pricing intensified as the quarter progressed.
During the quarter ended June 30, 1998, Internet-related securities were the
best performing in the technology sector.
New Portfolio Manager Appointed
On August 4, 1998, Paul G. Meeks was appointed portfolio manager of the Fund. He
is responsible for the day-to-day management of the Fund's investments.
Mr. Meeks has been associated with the Manager since May 1998 as Senior Vice
President and Portfolio Manager of Merrill Lynch Global Technology Fund, Inc.
Prior to joining the Manager, Mr. Meeks held various positions with Jurika &
Voyles, L.P., including technology portfolio manager and analyst from 1994 to
1998, director of research from 1995 to 1998, principal from 1996 to 1998 and
portfolio manager of the Jurika & Voyles Mini-Cap Fund from 1997 to 1998. From
1992 to 1994, Mr. Meeks held various positions with Strong/Corneliuson Capital
Management, Inc., including equity analyst for technology companies.
Because of this change, we anticipate some differences in investment style. The
Fund will place less reliance on market timing. It is anticipated that the
Fund's investment strategy will involve a somewhat longer investment horizon, so
that portfolio turnover of the Fund is expected to be lower than that which the
Fund has experienced to date. It is also expected that the Fund will take
positions in a larger number of issuers. In addition, it is anticipated that the
Fund's portfolio will be more heavily invested in issuers that management
believes are leaders in their fields, as measured by market share or superiority
in technology, or companies that are likely to develop such leadership
positions.
In addition, the Fund's Board of Directors has authorized an examination of the
feasibility of a merger of the Fund with Merrill Lynch Global Technology Fund,
Inc. Any such merger would require the approval of the Board of Directors and
the stockholders of the Fund. We will keep you informed of any further
developments in future communications to shareholders.
In Conclusion
We thank you for your continued investment in Merrill Lynch Technology Fund,
Inc., and we look forward to reporting to you again in our next report to
shareholders.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
August 13, 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 shareholders.
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 -15.38% -6.56% +132.11%
- -----------------------------------------------------------------------------------------
ML Technology Fund, Inc. Class B Shares -16.19 -6.90 +117.71
- -----------------------------------------------------------------------------------------
ML Technology Fund, Inc. Class C Shares -16.31 -6.95 + 0.37
- -----------------------------------------------------------------------------------------
ML Technology Fund, Inc. Class D Shares -15.71 -6.82 + 3.44
=========================================================================================
</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 dates are: Class A and Class B Shares,
4/27/92; and Class C and Class D Shares, 10/21/94.
2 & 3
<PAGE>
Merrill Lynch Technology Fund, Inc., June 30, 1998
PERFORMANCE DATA (concluded)
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
==========================================================================
Year Ended 6/30/98 -15.38% -19.82%
--------------------------------------------------------------------------
Five Years Ended 6/30/98 + 8.57 + 7.41
--------------------------------------------------------------------------
Inception (4/27/92) through 6/30/98 +14.61 +13.61
--------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
==========================================================================
Year Ended 6/30/98 -16.19% -18.69%
--------------------------------------------------------------------------
Five Years Ended 6/30/98 + 7.46 + 7.46
--------------------------------------------------------------------------
Inception (4/27/92) through 6/30/98 +13.43 +13.43
--------------------------------------------------------------------------
* 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 6/30/98 -16.31% -16.93%
--------------------------------------------------------------------------
Inception (10/21/94) through 6/30/98 + 0.10 + 0.10
--------------------------------------------------------------------------
* 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 6/30/98 -15.71% -20.13%
--------------------------------------------------------------------------
Inception (10/21/94) through 6/30/98 + 0.92 - 0.54
--------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Percent of
COUNTRY Industries Held Stocks & Warrants Cost Value Net Assets
====================================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
Singa- Microcomputer Peripherals 4,966,950 Creative Technology Ltd. $ 66,564,329 $ 61,466,006 13.9%
apore ---------------------------------------------------------------------------------------------------------------------------
Total Investments in Singapore 66,564,329 61,466,006 13.9
====================================================================================================================================
United Communications 200,000 Ascend Communications, Inc. 8,094,925 9,900,000 2.2
States Equipment 227,000 Lucent Technologies Inc. 16,336,253 18,883,563 4.3
------------ ------------ ------
24,431,178 28,783,563 6.5
---------------------------------------------------------------------------------------------------------------------------
Communications-- 331,700 Applied Micro Circuits Corporation 8,395,675 8,603,469 2.0
Integrated Circuits 20,000 Broadcom Corporation (Class A) 480,000 1,472,500 0.3
410,000 Level One Communications, Inc. 11,446,570 9,635,000 2.2
432,800 PMC-Sierra, Inc. 15,271,648 20,233,400 4.6
485,000 Vitesse Semiconductor Corporation 11,322,067 14,974,375 3.4
------------ ------------ ------
46,915,960 54,918,744 12.5
---------------------------------------------------------------------------------------------------------------------------
Computer Hardware 360,600 Gateway 2000, Inc. 17,637,702 18,255,375 4.1
---------------------------------------------------------------------------------------------------------------------------
Computer Software 410,700 BMC Software, Inc. 18,881,590 21,330,731 4.8
175,000 Microsoft Corporation 15,057,035 18,965,625 4.3
------------ ------------ ------
33,938,625 40,296,356 9.1
---------------------------------------------------------------------------------------------------------------------------
Computers--Storage 400,000 Seagate Technology, Inc. 10,568,790 9,525,000 2.2
---------------------------------------------------------------------------------------------------------------------------
Enterprise Software 300,000 Computer Associates International, Inc. 16,276,330 16,668,750 3.8
---------------------------------------------------------------------------------------------------------------------------
High Technology 2,173 Iwerks Entertainment, Inc. 5,976 3,531 0.0
4,345 Iwerks Entertainment, Inc. (Warrants)(a) 0 0 0.0
------------ ------------ ------
5,976 3,531 0.0
---------------------------------------------------------------------------------------------------------------------------
Internet Services 30,000 America Online, Inc. 2,444,682 3,180,000 0.7
---------------------------------------------------------------------------------------------------------------------------
Internetworking 180,000 Cisco Systems, Inc. 13,972,500 16,571,250 3.8
---------------------------------------------------------------------------------------------------------------------------
Microcomputer Peripherals 200,000 Quantum Corporation 4,717,500 4,137,500 0.9
---------------------------------------------------------------------------------------------------------------------------
Semiconductor Capital 150,000 Ade Corporation 4,633,000 2,193,750 0.5
Equipment
---------------------------------------------------------------------------------------------------------------------------
Semiconductors--Analog 340,200 Maxim Integrated Products, Inc. 12,859,950 10,758,825 2.4
---------------------------------------------------------------------------------------------------------------------------
Semiconductors--Logic 610,000 Altera Corporation 25,315,003 17,995,000 4.1
80,000 Aspec Technology Inc. 1,049,529 520,000 0.1
550,000 Xilinx, Inc. 23,272,620 18,700,000 4.2
------------ ------------ ------
49,637,152 37,215,000 8.4
---------------------------------------------------------------------------------------------------------------------------
Semiconductors--Memory 1,214,500 Micron Technology, Inc. 40,085,759 30,134,781 6.8
205,000 Texas Instruments, Inc. 9,518,057 11,954,063 2.7
------------ ------------ ------
49,603,816 42,088,844 9.5
---------------------------------------------------------------------------------------------------------------------------
Total Investments in the United States 287,643,161 284,596,488 64.4
---------------------------------------------------------------------------------------------------------------------------
Total Investments in Stocks & Warrants 354,207,490 346,062,494 78.3
====================================================================================================================================
<CAPTION>
SHORT-TERM Face
SECURITIES Amount Issue
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial Paper* $21,750,000 CIT Group Holdings, Inc., 6.50%
due 7/01/1998 21,750,000 21,750,000 4.9
21,437,000 General Motors Acceptance Corp.,
6.50% due 7/01/1998 21,437,000 21,437,000 4.9
---------------------------------------------------------------------------------------------------------------------------
Total Investments in Short-Term Securities 43,187,000 43,187,000 9.8
====================================================================================================================================
Total Investments $397,394,490 389,249,494 88.1
============
Other Assets Less Liabilities 52,524,996 11.9
------------ ------
Net Assets $441,774,490 100.0%
============ ======
====================================================================================================================================
Net Asset Value: Class A--Based on net assets of $182,612,479 and 45,807,415 shares outstanding $ 3.99
============
Class B--Based on net assets of $219,918,176 and 58,211,188 shares outstanding $ 3.78
============
Class C--Based on net assets of $11,536,471 and 3,074,973 shares outstanding $ 3.75
============
Class D--Based on net assets of $27,707,364 and 6,992,170 shares outstanding $ 3.96
============
====================================================================================================================================
</TABLE>
* Commercial Paper is traded on a discount basis; the interest rates
shown are the discount rates paid at the time of purchase by the Fund.
(a) Warrants entitle the Fund to purchase a predetermined number of shares
of common stock and are non-income producing. The purchase price and
the number of shares are subject to adjustment under certain conditions
until the expiration date.
4 & 5
<PAGE>
Merrill Lynch Technology Fund, Inc., June 30, 1998
STOCK PORTFOLIO CHANGES
For the Quarter Ended June 30, 1998
================================================================================
Additions
*ARM Holdings PLC
*AT&T Corp.
America Online, Inc.
Aspec Technology Inc.
BMC Software, Inc.
*Bay Networks, Inc.
Broadcom Corporation (Class A)
*CIENA Corporation
*Dell Computer Corporation
*EMC Corporation
Gateway 2000, Inc.
*International Business Machines Corp.
Iwerks Entertainment, Inc.
*Manhattan Associates, Inc.
Microsoft Corporation
*Mobius Management Systems, Inc.
Quantum Corporation
Seagate Technology, Inc.
*WorldCom Inc.
================================================================================
Deletions
3Dfx Interactive, Inc.
*ARM Holdings PLC
*AT&T Corp.
At Home Corporation (Series A)
*Bay Networks, Inc.
C-Cube Microsystems, Inc.
*CIENA Corporation
*Dell Computer Corporation
*EMC Corporation
Integrated Device Technology, Inc.
Intel Corporation
*International Business Machines Corp.
Linear Technology Corporation
*Manhattan Associates, Inc.
*Mobius Management Systems, Inc.
*WorldCom Inc.
================================================================================
*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
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
6 & 7
<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--6/98
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