MERRILL
LYNCH
FUND FOR
TOMORROW,
INC.
Annual Report January 31, 1994
This report is not authorized for use as an offer of sale or a solicitation
of an offer to buy shares of the Fund unless accompanied or preceded by the
Fund's current prospectus. Past performance results shown in this report
should not be considered a representation of future performance. Invest-
ment return and principal value of shares will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost.
Merrill Lynch
Fund For Tomorrow, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH FUND FOR TOMORROW, INC.
GRAPHIC MATERIAL APPEARS HERE
SEE APPENDIX: GRAPHIC & IMAGE MATERIAL ITEMS 1 AND 2.
DEAR SHAREHOLDER
As 1993 drew to a close, the US economy showed signs of strong
improvement. The latest report for gross domestic product (GDP)
growth in the final quarter of 1993 was +7.5% in real terms, the
strongest quarterly performance since the fourth quarter of 1987.
GDP growth was led by interest rate-sensitive sectors, such as
housing, durable goods orders and business investment in capital
equipment. Consumer confidence also improved after remaining
lackluster throughout most of 1993. While the exceptionally
robust rate of growth may not be sustainable in the first quarter
of 1994 (especially considering the harsh winter weather experienced
by virtually half of the country in January), this strong showing
suggests that the US economy may at last be gaining momentum.
This was supported by the December increase in the Index of
Leading Economic Indicators, the fifth monthly rise in this
indicator of future economic activity.
<PAGE>
At the same time, the rate of inflation remains in
check. Nevertheless, concerns arose late in 1993 that
the rate of business activity might increase inflation-
ary pressures, which were reflected in an upturn of
longer-term interest rates. In January, Federal Reserve
Board Chairman Alan Greenspan indicated in Congres-
sional testimony that continued strong expansion of
economic activity would lead the central bank to
tighten monetary policy in an effort to contain infla-
tion. On February 4, 1994, the central bank broke with
tradition and publicly announced an increase in short-
term interest rates. In the weeks ahead, investors will
continue to gauge the pace of the economic expansion
and watch for signs of an overheating economy that
could prompt successive Federal Reserve Board actions
to raise short-term interest rates.
Portfolio Strategy
Continued gains in the nation's economic recovery
provided a favorable backdrop for the equity markets
during the quarter ended January 31, 1994. Virtually all
of the important indicators of current and future business
activity seemed to confirm that the economy was indeed
in an upturn and could show steady growth in 1994. Con-
sequently, the broadly based Standard & Poor's 500 Index
repeatedly reached new highs, while similar performance
was also attained by the NASDAQ Composite Index, which
is composed of smaller-capitalization companies. Following
the strong relative performance during the October quarter,
Merrill Lynch Fund For Tomorrow, Inc. again achieved
favorable performance comparisons for its last fiscal
quarter and concluded fiscal 1993 ahead of its most
relevant market indexes. (Complete performance infor-
mation, including average annual total returns, can be
found on pages 5 and 6 of this report to shareholders.)
<PAGE>
As mentioned in our last shareholder report, we have
been engaged in a significant restructuring program
with regard to the Fund's long-term investment strat-
egy. The changes that have been made over the past
six months were designed to redeploy assets from
predominantly industry-oriented investment criteria
to a potentially more dynamic "macro-concept" strat-
egy. Continuing this transition in the January quarter,
we reduced our holdings in many of the areas that
were not specifically representative of the new strat-
egy. In most cases, these sales were the result of stocks
having reached our price targets and in the aggregate,
the Fund realized capital gains. The proceeds from
these sales were reinvested in 18 new stocks which
directly relate to several of our concept categories and,
as such, have the potential for above-average apprecia-
tion. Among these new holdings, and similar to the
Fund's existing concept investments, some issues have
greater long-term appeal while others have attractive
shorter- or intermediate-term potential. However, in
each investment decision we have adhered to a defined
set of criteria: concept integrity, fundamental earnings,
growth prospects and reasonable market valuation.
The additions to the portfolio complemented several
previously established concept categories and formed
three new categories. Within our established
industrial renaissance group, we took a position in
International Business Machines Corp. based on
our research which suggests that the company is begin-
ning a restructuring process from which it can reassert
itself amidst the new trends in computer technology.
Within our telecommunications concept, we added
MCI Communications Corp., Pactel Corp. and Inter-Tel,
Inc., a well established industry leader and two new
entries in the dynamic telecom market, respectively.
We increased our multi-media concept exposure with
American Telecasting, Inc. and CableMaxx, Inc., two
companies engaged in wireless television broadcast-
ing, and ValueVision International, Inc., which par-
ticipates in television home shopping. Among other
new holdings are companies associated with future
retailing formats, industrial outsourcing, environ-
mental solutions, and developing foreign economies.
These stocks, along with other recent additions, are
noted on page 10 of this report to shareholders.
<PAGE>
One of the three new concept categories developed this
past quarter is computer technologies, which derives
from the rapid growth and changes occurring within
the broad areas of information systems and personal
computers. Here, we relocated two existing holdings
and added three new stocks, Valence Technology, Inc.,
Intel Corp. and Wonderware Corp. These companies are
engaged in revolutionary electronic power sources,
integrated circuits and industrial process information
systems, respectively. The second new concept cate-
gory is global market expansion, which encompasses
those companies which are likely to be driven by mark-
ets outside the United States. In this category we
placed several existing holdings which previously had
been bought primarily for their international exposure.
However, we expect to add substantially to this concept
in the future as global economic interdependence be-
comes increasingly important to corporate growth.
Finally, we reclassified approximately 8% of the Fund's
portfolio in a new category called strategic growth
opportunities. We developed this category to describe
those stocks which are somewhat unique in their invest-
ment attraction, either through fundamental earnings
prospects, cyclical recovery potential, valuation anom-
alies or other company-specific characteristics.
Fiscal Year in Review
Merrill Lynch Fund For Tomorrow, Inc.'s fiscal year-end
marked the culmination of a series of major changes in
the Fund's investment strategy. Early in the year we
made a decision to de-emphasize many of the con-
sumer stock sectors which typically are not major
beneficiaries of an economic upturn. This decision
was based on our conviction that the recovery in the
US economy would be driven primarily by rising
industrial activity and global competitiveness rather
than by consumer spending. Consequently, the Fund's
exposure to industries such as food and beverage,
household products, healthcare and retail was reduced
from 40% of total assets to approximately 20% since the
beginning of the year. We believe this strategy enabled
the Fund to avoid much of the performance shortfall
experienced by these groups over the last 12 months.
The second strategic move during the year was a
significant shift to smaller companies, a sector which
historically outperforms the stock market averages
during the early stages of an economic upturn. These
activities began to accelerate around mid-year with
the purchase of numerous issues in the multi-media
and telecommunications industries. By the third fiscal
quarter the Fund had doubled its weighting in these
two areas to over 20% of total assets and significantly
participated in their strong market performance.
<PAGE>
Also adding to the Fund's performance during fiscal
1993 was the Fund's heavy exposure to the automotive
industry. Early in the year the Fund had a major
overweighted position in the automobile sector which
was largely maintained despite extraordinary price
performance. In fact, additional investments increased
the Fund's weighting in this area by 30% while the
market performance in these stocks nearly doubled.
Finally, in the third fiscal quarter we developed a
completely new investment strategy which we called
"concept tomorrow." As highlighted in the October
shareholder report, Merrill Lynch Fund For Tomorrow,
Inc. is now focusing its investment decisions on
macro investment trends or "concepts" which have
attractive investment implications over variable time
periods. The portfolio's restructuring began to reflect
these dynamic concepts in the third and fourth
quarters with the inclusion of 37 new stocks. Because
of outstanding appreciation among many of these new
holdings, we believe the "concept tomorrow" strategy
has contributed to the Fund's fiscal year outper-
formance of its most relevant unmanaged market
indexes, the Standard & Poor's 500 Index and the
NASDAQ Composite Index. We further believe that
this strategy has exciting potential for achieving
long-term performance objectives by capturing the
major investment themes in the United States and
within the growing economies around the world.
In Conclusion
Looking ahead, we remain optimistic about the US
economy and believe steady growth will enable com-
panies to show increasingly favorable earnings trends.
We believe that the stock market as a whole will con-
tinue to reflect those favorable developments,
but we also believe that the stock selection process
will become more focused on quantitative earnings
analysis than on economic forecasts. In addition, we
continue to view some of the international markets,
specifically the emerging markets in Latin America
and Asia, as potentially attractive areas of investment
opportunity. During the coming months we will be
researching new candidates for our concept categories
as well as examining new concepts that might produce
exciting investment opportunities.
We appreciate your ongoing interest in Merrill Lynch
Fund For Tomorrow, Inc., and we look forward to
assisting you with your financial needs and objectives
in the months and years ahead.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent P. Dileo)
Vincent P. Dileo
Vice President and Portfolio Manager
March 14, 1994
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Vincent P. Dileo, Vice President and Portfolio Manager
Gerald M. Richard, Treasurer
Susan B. Baker, Secretary
Custodian
The Bank of New York
110 Washington Street
New York, New York 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
PERFORMANCE DATA
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of Class
A and Class B Shares will fluctuate so that shares, when redeemed, may
be worth more or less than their original cost.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX GRAPHIC & IMAGE MATERIAL ITEM 3.
<PAGE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/93 +11.42% + 4.18%
Five Years Ended 12/31/93 +13.61 +12.09
Inception (10/26/88) +12.61 +11.16
through 12/31/93
[FN]
*Maximum sales charge is 6.5%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/93 +10.27% + 6.40%
Five Years Ended 12/31/93 +12.44 +12.44
Inception (3/5/84)
through 12/31/93 +13.07 +13.07
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Period Net Asset Value Capital Gains
Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/26/88--12/31/88 $16.05 $14.08 $1.471 $0.134 - 2.21%
1989 14.08 16.85 1.035 0.409 +30.13
1990 16.85 14.92 0.371 0.401 - 6.98
1991 14.92 16.71 2.199 0.553 +32.23
1992 16.71 16.37 0.679 0.612 + 6.12
1993 16.37 15.85 1.920 0.308 +11.42
1/1/94--1/31/94 15.85 16.39 -- -- + 3.41
------ ------
Total $7.675 Total $2.417
Cumulative total return as of 1/31/94: +91.36%**
<PAGE>
<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>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Period Net Asset Value Capital Gains
Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
3/5/84--12/31/84 $10.00 $10.98 -- $0.130 +11.12%
1985 10.98 13.37 $0.250 0.130 +25.75
1986 13.37 15.18 0.080 0.100 +14.90
1987 15.18 12.98 1.441 0.163 - 5.09
1988 12.98 14.07 1.555 0.201 +22.09
1989 14.07 16.85 1.035 0.227 +28.88
1990 16.85 14.92 0.371 0.235 - 7.96
1991 14.92 16.70 2.199 0.374 +30.79
1992 16.70 16.37 0.679 0.438 + 5.07
1993 16.37 15.77 1.920 0.217 +10.27
1/1/94--1/31/94 15.77 16.30 -- -- + 3.36
------ ------
Total $9.530 Total $2.215
Cumulative total return as of 1/31/94: +245.64%**
<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>
<TABLE>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
1/31/94 10/31/93 1/31/93 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Fund For Tomorrow, Inc. Class A Shares $ 16.39 $ 17.02 $ 16.29 +13.42%(1) +2.74%(2)
ML Fund For Tomorrow, Inc. Class B Shares 16.30 16.97 16.28 +13.09(1) +2.51(2)
Standard & Poor's 500 Index** 481.61 467.83 438.78 + 9.76 +2.95
NASDAQ Composite Index** 800.47 779.26 696.34 +14.95 +2.72
ML Fund For Tomorrow, Inc. Class A Shares--Total Return +15.78(3) +3.63(4)
ML Fund For Tomorrow, Inc. Class B Shares--Total Return +14.60(5) +3.37(6)
Standard & Poor's 500 Index--Total Return** +12.85 +3.63
<PAGE>
<FN>
*Investment results shown for the 3-month and 12-month periods are before the deduction of any sales charges.
**An unmanaged broad-based Index comprised of common stocks. Total investment returns for unmanaged indexes are based on
estimates.
(1)Percent change includes reinvestment of $1.920 per share capital gains distributions.
(2)Percent change includes reinvestment of $1.040 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.308 per share ordinary income dividends and $1.920 per
share capital gains distributions.
(4)Percent change includes reinvestment of $0.143 per share ordinary income dividends and $1.040 per
share capital gains distributions.
(5)Percent change includes reinvestment of $0.217 per share ordinary income dividends and $1.920 per
share capital gains distributions.
(6)Percent change includes reinvestment of $0.139 per share ordinary income dividends and $1.040 per
share capital gains distributions.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Value Percent of
Concept Tomorrow Shares Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Computer Technologies
Personal Computer 150,000 Apple Computer, Inc. $ 7,677,505 $ 4,912,500 1.2%
Components 70,000 ++Creative Technology, Ltd. (Ordinary) 1,965,000 2,362,500 0.6
Semiconductor 100,000 Intel Corp. 6,537,500 6,525,000 1.6
Components 50,000 ++Valence Technology, Inc. 1,003,374 987,500 0.2
Information Systems 100,000 ++Wonderware Corp. 2,050,000 2,300,000 0.6
------------ ------------ ----
19,233,379 17,087,500 4.2
Demographic Trends
Insurance 100,000 AFLAC Inc. 1,219,738 2,787,500 0.7
Personal Healthcare 43,100 Bausch & Lomb Inc. 1,962,798 2,268,138 0.6
Health & Fitness 307,350 CML Group Inc. 5,535,775 5,570,719 1.4
Insurance 324,400 Capital Holding Corp. 12,447,224 11,759,500 2.9
Health & Fitness 16,600 ++Cobra Golf Inc. 348,600 535,350 0.1
Specialty Services 100,000 Sotheby's Holdings, Inc. (Class A) 1,228,352 1,650,000 0.4
Financial Services 50,000 SunAmerica Inc. 2,276,925 2,043,750 0.5
Leisure & Entertainment 50,000 ++Video Lottery Technologies, Inc. 811,885 1,087,500 0.3
Leisure & Entertainment 100,000 ++WMS Industries Inc. 2,696,774 2,487,500 0.6
------------ ------------ ----
28,528,071 30,189,957 7.5
Developing Foreign Economies
Automotive 43,500 Brilliance China Automotive Holdings Ltd. 969,269 712,313 0.2
Construction 50,000 ++Bufete Industrial S.A. (ADR)* 1,213,155 2,525,000 0.6
Food & Beverage 150,000 Compania Cervecerias Unidas S.A. (ADR)* 2,182,500 4,762,500 1.2
Food & Beverage 4,500 ++Cristalerias de Chile S.A. (ADR)* 107,437 128,250 0.0
Automotive 25,000 Ek Chor China Motorcycle Co., Ltd. 525,000 871,875 0.2
Multi-Industry 390,000 Grupo Carso S.A. de C.V. A1 1,512,623 4,510,631 1.1
Leisure & Entertainment 50,000 ++Grupo Televisa, S.A. de C.V. (GDS)** 3,200,000 3,550,000 0.9
Home Furnishings 115,000 ++Industrie Natuzzi S.p.A. (ADR)* 1,725,000 3,047,500 0.7
Telecommunications 140,000 Telefonos de Mexico, S.A. de C.V. (ADR)* 4,245,211 10,342,500 2.5
Energy 100,000 YPF S.A. (ADR)* 2,698,460 2,887,500 0.7
------------ ------------ ----
18,378,655 33,338,069 8.1
<PAGE>
Environmental Solutions
Pollution Technology 200,000 ++Molten Metal Technology, Inc. 3,085,894 5,050,000 1.2
Pollution Technology 100,000 ++Purus Inc. 1,414,126 1,175,000 0.3
Pollution Technology 180,000 ++Thermo Electron Corp. 6,840,000 7,717,500 1.9
------------ ------------ ----
11,340,020 13,942,500 3.4
Future Retailing
Specialty Retail 50,000 Authentic Fitness Corp. 1,556,250 1,381,250 0.3
Specialty Retail 105,700 ++Barnes & Noble, Inc. 2,517,000 2,272,550 0.6
Specialty Retail 50,000 ++Books-A-Million, Inc. 1,150,000 1,012,500 0.2
Private Label 160,000 ++Cott Corp. 5,005,001 4,300,000 1.1
Specialty Retail 70,000 ++Discount Auto Parts, Inc. 1,788,375 1,925,000 0.5
Private Label 119,100 ++Nutramax Products, Inc. 1,598,300 1,458,975 0.3
Private Label 170,000 ++The Perrigo Company, Inc. 3,787,810 5,142,500 1.3
Specialty Retail 50,000 ++Sports & Recreation, Inc. 1,225,000 1,950,000 0.5
Specialty Retail 200,000 Wal-Mart Stores, Inc. 5,258,570 5,300,000 1.3
------------ ------------ ----
23,886,306 24,742,775 6.1
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Value Percent of
Concept Tomorrow Shares Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Global Market Expansion
Financial Services 335,000 American Express Co. $ 10,153,775 $ 10,971,250 2.7%
Food & Beverage 199,600 CPC International, Inc. 8,965,425 9,755,450 2.4
Household Products 74,600 Colgate-Palmolive Co. 1,548,919 4,448,025 1.1
Food & Beverage 5,000 Nestle AG 2,943,330 4,878,549 1.2
Food & Beverage 180,000 PepsiCo, Inc. 4,562,124 7,267,500 1.8
Multi-Industry 100,000 York International Corp. 3,950,630 3,775,000 0.9
------------ ------------ ----
32,124,203 41,095,774 10.1
Healthcare Cost Containment
Health Maintenance 100,000 ++FHP International Corp. 2,275,000 2,675,000 0.6
Medical Products 100,000 United States Surgical Corp. 6,799,013 3,187,500 0.8
------------ ------------ ----
9,074,013 5,862,500 1.4
<PAGE>
Healthcare Technology
Biotechnology 25,000 ++Amgen Inc. 1,043,750 1,212,500 0.3
Biotechnology 197,200 ++Cambridge Biotech Corp. 1,683,640 640,900 0.2
Biotechnology 65,000 ++Chiron Corp. 3,681,187 6,191,250 1.5
Pharmaceuticals 100,900 Merck & Co., Inc. 4,232,024 3,682,850 0.9
Pharmaceuticals 100,000 Pfizer, Inc. 3,038,128 6,462,500 1.6
Pharmaceuticals 137,200 Schering-Plough Corp. 3,180,566 8,643,600 2.1
Pharmaceuticals 200,000 Wellcome PLC (ADR)* 3,050,000 2,000,000 0.5
------------ ------------ ----
19,909,295 28,833,600 7.1
Industrial Outsourcing
Automotive Components 81,600 ++Breed Technologies, Inc. 1,384,575 2,152,200 0.5
Automotive Components 50,000 Hayes Wheels International, Inc. 1,176,725 1,618,750 0.4
Specialty Services 32,400 ++Interim Services, Inc. 648,000 814,050 0.2
Automotive Components 210,000 Magna International, Inc. 3,191,250 10,526,250 2.6
------------ ------------ ----
6,400,550 15,111,250 3.7
Industrial Renaissance
Automobile 350,000 Chrysler Corp. 9,780,250 21,525,000 5.3
Automobile 100,000 Ford Motor Co. 4,590,380 6,700,000 1.6
Automobile 200,000 General Motors Corp. 7,896,900 12,275,000 3.0
Information Processing 150,000 International Business Machines Corp. 8,780,004 8,512,500 2.1
------------ ------------ ----
31,047,534 49,012,500 12.0
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Value Percent of
Concept Tomorrow Shares Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Multi-Media
Wireless Cable
Television 55,000 ++American Telecasting, Inc. $ 990,000 $ 1,251,250 0.3%
Wireless Cable
Television 125,000 ++CableMaxx, Inc. 1,506,875 1,562,500 0.4
Leisure &
Entertainment 100,000 ++LodgeNet Entertainment Corp. 1,451,730 1,350,000 0.3
Broadcasting &
Publishing 225,000 The News Corp. Ltd. (ADR)* 9,030,250 12,993,750 3.2
Wireless Cable
Television 44,000 ++Preferred Entertainment, Inc. 821,500 858,000 0.2
Leisure &
Entertainment 125,000 Time Warner, Inc. 3,491,400 5,000,000 1.2
Specialty Retail 50,000 ++ValueVision International, Inc.
(Class A) 663,125 600,000 0.2
Leisure &
Entertainment 175,000 The Walt Disney Co. 4,583,031 8,268,750 2.0
------------ ------------ ----
22,537,911 31,884,250 7.8
<PAGE>
Progressive Education
Education 100,000 ++Broderbund Software, Inc. 3,459,375 3,650,000 0.9
Education 71,000 ++Education Alternatives, Inc. 2,607,490 2,556,000 0.6
Education 140,000 ++Scholastic Corporation 6,019,125 5,915,000 1.5
------------ ------------ ----
12,085,990 12,121,000 3.0
Strategic Growth Opportunities
Textile & Apparel 200,000 ++Burlington Industries, Inc. 2,671,075 2,925,000 0.7
Apparel 150,000 ++Chic by H.I.S., Inc. 1,917,934 2,025,000 0.5
Retail Stores 50,000 Dayton Hudson Corp. 3,441,500 3,287,500 0.8
Housing 156,400 Kaufman and Broad Home Corp. 2,809,055 3,636,300 0.9
Housing 120,000 Lennar Corp. 2,831,580 4,230,000 1.0
Specialty Retail 150,000 The Limited, Inc. 3,962,130 2,662,500 0.7
Apparel 150,000 Liz Claiborne, Inc. 5,454,429 3,112,500 0.8
Broadcasting &
Publishing 237,900 The New York Times Co. 7,789,967 6,780,150 1.6
Footwear 100,000 Reebok International Ltd. 2,528,595 3,212,500 0.8
------------ ------------ ----
33,406,265 31,871,450 7.8
Telecommunications
Long Distance Telephone 215,000 ++ALC Communications Corp. 3,216,750 6,880,000 1.7
Components 100,000 ++ANTEC Corp. 2,292,650 2,525,000 0.6
Regional Telephone 100,000 Bell Atlantic Corp. 4,699,600 5,675,000 1.4
Regional Telephone 50,000 BellSouth Corp. 2,384,250 3,075,000 0.8
Components 35,400 ++BroadBand Technologies, Inc. 637,200 1,062,000 0.3
Components 150,000 ++Inter-Tel, Inc. 1,383,862 1,331,250 0.3
Long Distance Telephone 100,000 MCI Communications Corp. 2,764,060 2,750,000 0.7
Regional Telephone 50,000 ++MFS Communications Co., Inc. 1,113,100 1,925,000 0.5
Paging Systems 100,000 ++Metrocall, Inc. 1,347,502 1,725,000 0.4
Components 100,000 Northern Telecom Ltd. 2,771,630 3,250,000 0.8
Regional Telephone 100,000 Pacific Telesis Group 2,791,355 5,762,500 1.4
Cellular Telephone 200,000 ++Pactel Corp. 4,600,000 5,050,000 1.2
------------ ------------ ----
30,001,959 41,010,750 10.1
Total Common Stocks 297,954,151 376,103,875 92.3
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face Value Percent of
Amount Short-Term Securities Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Commercial $15,000,000 Corporate Asset Funding, Inc., 3.05%
Paper*** due 3/03/1994 $ 14,961,875 $ 14,961,875 3.7%
12,244,000 General Electric Capital Corp., 3.15%
due 2/01/1994 12,244,000 12,244,000 3.0
Total Short-Term Securities 27,205,875 27,205,875 6.7
Total Investments $325,160,026 403,309,750 99.0
============
Other Assets Less Liabilities 4,056,235 1.0
------------ -----
Net Assets $407,365,985 100.0%
============ =====
<FN>
*American Depositary Receipts (ADR).
**Global Depositary Shares (GDS).
***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.
++Non-income producing securities.
See Notes to Financial Statements.
</TABLE>
PORTFOLIO INFORMATION
For the Quarter Ended January 31, 1994
Percent of
Ten Largest Holdings Net Assets
Chrysler Corp. 5.3%
The News Corp. Ltd. (ADR) 3.2
General Motors Corp. 3.0
Capital Holding Corp. 2.9
American Express Co. 2.7
Magna International, Inc. 2.6
Telefonos de Mexico, S.A. de C.V. (ADR) 2.5
CPC International, Inc. 2.4
Schering-Plough Corp. 2.1
International Business Machines Corp. 2.1
<PAGE>
Additions
American Telecasting, Inc.
Authentic Fitness Corp.
Bufete Industrial S.A. (ADR)
CableMaxx, Inc.
Cott Corp.
Cristalerias de Chile S.A. (ADR)
Grupo Televisa, S.A. de C.V. (GDS)
Intel Corp.
Inter-Tel, Inc.
Interim Services, Inc.
International Business Machines Corp.
MCI Communications Corp.
Pactel Corp.
Purus Inc.
*Urban Outfitters Inc.
Valence Technology, Inc.
ValueVision International, Inc. (Class A)
Wonderware Corp.
YPF S.A. (ADR)
Deletions
AMR Corp.
Baxter International, Inc.
CUC International, Inc.
Campbell Soup Co.
Federated Department Stores, Inc.
Foundation Health Corp.
Iwerks Entertainment, Inc.
Johnson & Johnson
Masco Corp.
May Department Stores Co.
Maybelline, Inc.
NIKE, Inc. (Class B)
Paramount Communications Inc.
PETsMART, Inc.
SmithKline Beecham PLC (ADR)
Sunglass Hut International, Inc.
*Urban Outfitters Inc.
[FN]
*Added and deleted in the same quarter.
<PAGE>
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Statement of Assets and Liabilities as of January 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$325,160,026) (Note 1a) $403,309,750
Receivables:
Securities sold $ 11,571,509
Dividends 540,095
Capital shares sold 221,065 12,332,669
------------
Prepaid registration fees and other assets (Note 1e) 22,723
------------
Total assets 415,665,142
------------
Liabilities: Payables:
Securities purchased 4,682,119
Capital shares redeemed 1,564,587
Distributor (Note 2) 332,822
Investment adviser (Note 2) 222,314 6,801,842
Accrued expenses and other liabilities ------------ 1,497,315
------------
Total liabilities 8,299,157
------------
Net Assets: Net assets $407,365,985
============
Net Assets Class A Common Stock, $0.10 par value, 100,000,000 shares authorized $ 66,741
Consist of: Class B Common Stock, $0.10 par value, 100,000,000 shares authorized 2,432,299
Paid-in capital in excess of par 309,663,231
Undistributed realized capital gains on investments and foreign currency
transactions--net 17,063,594
Unrealized appreciation on investments and foreign currency
transactions--net 78,140,120
------------
Net assets $407,365,985
============
Net Asset Class A--Based on net assets of $10,942,174 and 667,410 shares outstanding $ 16.39
Value: Class B--Based on net assets of $396,423,811 and 24,322,986 shares ============
outstanding $ 16.30
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
Statement of Operations for the Year Ended January 31, 1994
<S> <S> <C> <C>
Investment Dividends (net of $115,733 foreign withholding tax) $ 6,696,939
Income Interest and discount earned 910,396
Notes (1c & 1d): Other income 256,079
------------
Total income 7,863,414
<PAGE> ------------
Expenses: Distribution fees--Class B (Note 2) $ 4,173,391
Investment advisory fees (Note 2) 2,782,877
Transfer agent fees--Class B (Note 2) 660,871
Printing and shareholder reports 107,083
Accounting services (Note 2) 88,054
Custodian fees 65,398
Registration fees (Note 1e) 56,799
Professional fees 54,276
Directors' fees and expenses 31,896
Amortization of organization expenses (Note 1e) 23,611
Transfer agent fees--Class A (Note 2) 14,014
Other 9,086
Total expenses ------------ 8,067,356
------------
Investment loss--net (203,942)
------------
Realized & Realized gain (loss) from:
Unrealized Investments--net 46,408,273
Gain (Loss) Foreign currency transactions (123,253) 46,285,020
on Investments Change in unrealized appreciation/depreciation on: ------------
& Foreign Investments--net 9,234,247
Currency Foreign currency transactions (6,804) 9,227,443
Transactions-- Net realized and unrealized gain on investments and ------------ ------------
Net (Notes 1b, foreign currency transactions 55,512,463
1d & 3): ------------
Net Increase in Net Assets Resulting from Operations $ 55,308,521
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended
January 31,
1994 1993
Increase (Decrease) in Net Assets:
<S> <S> <C> <C>
Operations: Investment income (loss)--net $ (203,942) $ 1,809,446
Realized gain on investments and foreign currency transactions--net 46,285,020 35,711,125
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net 9,227,443 (21,732,568)
------------ ------------
Net increase in net assets resulting from operations 55,308,521 15,788,003
<PAGE> ------------ ------------
Dividends & Investment income--net:
Distributions to Class A -- (140,584)
Shareholders Class B -- (1,649,597)
(Note 1f): Realized gain on investments--net:
Class A (1,437,834) (626,121)
Class B (52,604,277) (28,893,222)
Net decrease in net assets resulting from dividends ------------ ------------
and distributions to shareholders (54,042,111) (31,309,524)
------------ ------------
Capital Share Net decrease in net assets derived from capital share transactions (52,481,091) (10,849,719)
Transactions ------------ ------------
(Note 4):
Net Assets: Total decrease in net assets (51,214,681) (26,371,240)
Beginning of year 458,580,666 484,951,906
------------ ------------
End of year $407,365,985 $458,580,666
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived Class A
from information provided in the financial statements.
For the Year Ended January 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 16.29 $ 16.84 $ 15.49 $ 15.26 $ 14.96
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .15 .25 .36 .41 .30
Realized and unrealized gain on investments
and foreign currency transactions--net(1) 2.18 .49 3.74 .59 1.45
-------- -------- -------- -------- --------
Total from investment operations 2.33 .74 4.10 1.00 1.75
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.23) (.35) (.40) (.41)
Realized gain on investments--net (2.23) (1.06) (2.40) (.37) (1.04)
-------- -------- -------- -------- --------
Total dividends and distributions (2.23) (1.29) (2.75) (.77) (1.45)
-------- -------- -------- -------- --------
Net asset value, end of year $ 16.39 $ 16.29 $ 16.84 $ 15.49 $ 15.26
======== ======== ======== ======== ========
<PAGE>
Total Based on net asset value per share 15.78% 4.79% 28.35% 6.64% 10.92%
Investment ======== ======== ======== ======== ========
Return:*
Ratios to Expenses .88% .90% .95% .96% .89%
Average ======== ======== ======== ======== ========
Net Assets: Investment income--net .95% 1.35% 1.81% 2.58% 2.20%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $ 10,942 $ 11,394 $ 8,846 $ 5,478 $ 4,466
Data: ======== ======== ======== ======== ========
Portfolio turnover 48.63% 40.58% 48.28% 25.57% 15.23%
======== ======== ======== ======== ========
<FN>
*Total investment returns exclude the effects of sales loads.
(1)Foreign currency transaction amounts have been reclassified to conform to the 1994 presentation.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
The following per share data and ratios have been derived Class B
from information provided in the financial statements.
For the Year Ended January 31,
Increase (Decrease) in Net Asset Value: 1994++ 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 16.28 $ 16.82 $ 15.48 $ 15.24 $ 14.94
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net (.01) .06 .14 .24 .21
Realized and unrealized gain on
investments and foreign currency
transactions--net(1) 2.17 .52 3.77 .60 1.36
-------- -------- -------- -------- --------
Total from investment operations 2.16 .58 3.91 .84 1.57
Less dividends and distributions: -------- -------- -------- -------- --------
Investment income--net -- (.06) (.17) (.23) (.23)
Realized gain on investments--net (2.14) (1.06) (2.40) (.37) (1.04)
-------- -------- -------- -------- --------
Total dividends and distributions (2.14) (1.12) (2.57) (.60) (1.27)
-------- -------- -------- -------- --------
Net asset value, end of year $ 16.30 $ 16.28 $ 16.82 $ 15.48 $ 15.24
======== ======== ======== ======== ========
Total Invest- Based on net asset value per share 14.60% 3.75% 26.96% 5.59% 9.77%
ment Return:* ======== ======== ======== ======== ========
<PAGE>
Ratios to Expenses, excluding distribution fees .91% .92% .98% 1.00% .93%
Average ======== ======== ======== ======== ========
Net Assets: Expenses 1.91% 1.92% 1.98% 2.00% 1.93%
======== ======== ======== ======== ========
Investment income (loss)--net (.07%) .36% .83% 1.53% 1.20%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $396,424 $447,186 $476,106 $442,944 $516,402
Data: ======== ======== ======== ======== ========
Portfolio turnover 48.63% 40.58% 48.28% 25.57% 15.23%
======== ======== ======== ======== ========
<FN>
++Based on average shares outstanding during the period.
*Total investment returns exclude the effects of sales loads.
(1)Foreign currency transaction amounts have been reclassified to conform to the 1994 presentation.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Fund For Tomorrow, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-end
investment management company. The Fund offers both Class A and Class
B Shares. Class A Shares are sold with a front-end sales charge. Class
B Shares may be subject to a contingent deferred sales charge. Both
classes of shares have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except that Class B
Shares bear certain expenses related to the distribution of such shares
and have exclusive voting rights with respect to matters relating to such
distribution expenditures. The following is a summary of significant
accounting policies followed by the Fund.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at their last sale prices as of the
close of business on the day the securities are being valued or,
lacking any sales on that day, at the mean between closing bid and
asked prices. Securities traded in the over-the-counter market are
valued at the last bid prices quoted by brokers that make markets
in the securities at the close of trading on the New York Stock
Exchange. Portfolio securities which are traded both in the over-
the-counter market and on a stock exchange are valued based upon the
prices or quotes obtained from the broadest and most representative
market. Securities and other assets for which market quotations are
not readily available are valued at fair value as determined in good
faith by or under the direction of the Board of Directors of the Fund.
Short-term securities are valued at amortized cost which approximates
market.
<PAGE>
(b) 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) such
transactions expressed in foreign currencies into US dollars. Realized
and unrealized gains or losses from investments include the effects of
foreign exchange rates on investments.
The Fund is authorized to enter into forward foreign exchange contracts
as a hedge against either specific transactions or portfolio positions.
Such contracts are not entered on the Fund's records. However, the effect
on operations is recorded from the date the Fund enters into such contracts.
Premium or discount is amortized over the life of the contracts.
(c) Income taxes--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies
and to distribute substantially all of its taxable income to its
shareholders. Therefore, no Federal income tax provision is required.
Under the applicable foreign tax law, a withholding tax may be imposed
on interest, dividends and capital gains at various rates.
(d) 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 that
if the ex-dividend date has passed, certain dividends from foreign
securities are recorded as soon as the funds are 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.
(e) Deferred organization expenses and prepaid registration fees--Costs
related to the organization of the second class of shares are charged to
expense over a period not exceeding five years. Prepaid registration fees
are charged to expense as the related shares are issued.
(f) Dividends and distributions to shareholders--Dividends and distributions
paid by the Fund are recorded on the ex-dividend dates.
(g) Reclassifications--Certain 1993 amounts have been reclassified to
conform to the 1994 presentation. Accumulated investment loss--net, in
the amount of $248,221, has been reclassified to undistributed realized
gains.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Merrill
Lynch Asset Management, L.P. ("MLAM"). Effective January 1, 1994, the
investment advisory business of MLAM was reorganized from a corporation
to a limited partnership. Both prior to and after the reorganization,
ultimate control of MLAM was vested with Merrill Lynch & Co., Inc.
("ML & Co."). The general partner of MLAM is Princeton Services, Inc.,
an indirect wholly-owned subsidiary of ML & Co. The limited partners
are ML & Co. and Merrill Lynch Investment Management, Inc. ("MLIM"),
which is also an indirect wholly-owned subsidiary of ML & Co. The
Fund has also entered into a Distribution Agreement and a Distribution
Plan with Merrill Lynch Funds Distributor, Inc. ("MLFD" or "Distributor"),
a wholly-owned subsidiary of MLIM.
<PAGE>
MLAM is responsible for the management of the Fund's portfolio and pro-
vides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Fund. For such services, the
Fund pays a monthly fee based upon the average daily value of the Fund's
net assets at the following annual rates: 0.65% of the average daily net
assets not exceeding $750 million; 0.60% of the average daily net assets
exceeding $750 million but not exceeding $1 billion; and 0.55% of the
average daily net assets exceeding $1 billion. The Investment Advisory
Agreement obligates MLAM to reimburse the Fund to the extent the Fund's
expenses (excluding interest, taxes, distribution fees, brokerage fees
and commissions, and extraordinary items) exceed 2.5% of the Fund's first
$30 million of average daily net assets, 2.0% of the next $70 million of
average daily net assets, and 1.5% of the average daily net assets in
excess thereof. No fee payment will be made to the Investment Adviser
which would result in Fund expenses exceeding on a cumulative annualized
basis the most restrictive applicable expense limitation in effect at the
time of such payment.
The Fund has adopted a Plan of Distribution (the "Plan") in accordance
with Rule 12b-1 under the Investment Company Act of 1940 pursuant to
which MLFD receives a fee from the Fund at the end of each month at the
annual rate of 1.0% of the average daily net assets of the Class B Shares
of the Fund. This fee is to compensate the Distributor for services it
provides and the expenses borne by the Distributor under the Distribution
Agreement. As authorized by the Plan, the Distributor has entered into
an agreement with Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"),
which provides for the compensation of MLPF&S for providing distribution-
related services to the Fund.
During the year ended January 31, 1994, MLFD earned underwriting
discounts of $2,638, and MLPF&S earned dealer concessions of $42,082
on sales of the Fund's Class A Shares.
MLPF&S also received contingent deferred sales reporting charges of
$172,596 relating to transactions in Class B Shares and $29,058 in
commissions on the execution of portfolio security transactions for
the Fund during the year.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLIM, MLPF&S, FDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended January 31, 1994 were $191,934,157 and $295,335,066,
respectively.
<PAGE>
Net realized and unrealized gains (losses) as of January 31, 1994 were
as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $46,408,273 $78,149,724
Foreign currency
transactions (123,253) (9,604)
----------- -----------
Total $46,285,020 $78,140,120
=========== ===========
As of January 31, 1994, net unrealized appreciation for Federal income
tax purposes aggregated $78,149,724, of which $95,859,715 related to
appreciated securities and $17,709,991 related to depreciated securities.
The aggregate cost of investments at January 31, 1994 for Federal income
tax purposes was $325,160,026.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions was
$52,481,091 and $10,849,719 for the years ended January 31, 1994 and
January 31, 1993, respectively.
NOTES TO FINANCIAL STATEMENTS (concluded)
Transactions in capital shares for Class A and Class B
Shares were as follows:
Class A Shares for the Year Dollar
Ended January 31, 1994 Shares Amount
Shares sold 188,941 $ 3,088,274
Shares issued to shareholders
in reinvestment of dividends
and distributions 82,693 1,266,935
--------- ------------
Total issued 271,634 4,355,209
Shares redeemed (303,511) (4,894,524)
--------- ------------
Net decrease (31,877) $ (539,315)
========= ============
<PAGE>
Class A Shares for the Year Dollar
Ended January 31, 1993 Shares Amount
Shares sold 440,206 $ 7,150,770
Shares issued to shareholders
in reinvestment of dividends
and distributions 42,882 680,591
--------- ------------
Total issued 483,088 7,831,361
Shares redeemed (309,233) (5,086,052)
--------- ------------
Net increase 173,855 $ 2,745,309
========= ============
Class B Shares for the Year Dollar
Ended January 31, 1994 Shares Amount
Shares sold 2,491,455 $ 40,734,290
Shares issued to shareholders
in reinvestment of dividends
and distributions 3,009,988 45,992,774
---------- ------------
Total issued 5,501,443 86,727,064
Shares redeemed (8,646,525) (138,668,840)
---------- ------------
Net decrease (3,145,082) $(51,941,776)
========== ============
Class B Shares for the Year Dollar
Ended January 31, 1993 Shares Amount
Shares sold 3,307,518 $ 54,848,135
Shares issued to shareholders
in reinvestment of dividends
and distributions 1,691,582 26,706,346
---------- ------------
Total issued 4,999,100 81,554,481
Shares redeemed (5,842,097) (95,149,509)
---------- ------------
Net decrease (842,997) $(13,595,028)
========== ============
5. Loaned Securities:
At January 31, 1994, the Fund held US Treasury Notes as collateral
for portfolio securities loaned, each having a market value of
approximately $15,500,000.
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Fund For Tomorrow, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Merrill Lynch Fund For
Tomorrow, Inc. as of January 31, 1994, the related statements of
operations for the year then ended and changes in net assets for
the two years then ended, and the financial highlights for each
of the years in the five-year period then ended. These financial
statements and the financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion
on these financial statements and the financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned at January 31, 1994, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Fund For Tomorrow, Inc. as of January 31, 1994, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
Deloitte & Touche
Princeton, New Jersey
March 4, 1994
</AUDIT-REPORT>
<TABLE>
IMPORTANT TAX INFORMATION
The following information summarizes all per share distributions declared by Merrill Lynch Fund For Tomorrow, Inc. during the fiscal
year ended January 31, 1994:
<CAPTION>
Record Payable Domestic Qualifying Domestic Non-Qualifying Total Long-Term
Date Date Ordinary Income Ordinary Income Ordinary Income Capital Gains
<S> <C> <C> <C> <C> <C>
Class A Shares:
07/06/93 07/14/93 $0.156834 $0.007687 $0.164521 $0.879946
12/13/93 12/21/93 $0.102868 $0.040207 $0.143075 $1.040217
Class B Shares:
07/06/93 07/14/93 $0.074519 $0.003653 $0.078172 $0.879946
12/13/93 12/21/93 $0.099859 $0.039031 $0.138890 $1.040217
The domestic qualifying ordinary income qualifies for the dividends-received deduction for corporations.
Please retain this information for your records.
</TABLE>
<PAGE>
APPENDIX GRAPHIC AND IMAGE MATERIAL.
ITEM 1:
Concept Sectors
Pie graph depicting Concept Sectors As a Percentage of Net Assets
As of January 31, 1994:
Computer Technologies--4.2%
Demographic Trends--7.5%
Developing Foreign Economies--8.1%
Environmental Solutions--3.4%
Future Retailing--6.1%
Global Market Expansion--10.1%
Healthcare Cost Containment--1.4%
Healthcare Technology--7.1%
Industrial Outsourcing--3.7%
Industrial Renaissance--12.0%
Multi-Media--7.8%
Progressive Education--3.0%
Telecommunications--10.1%
Strategic Growth Opportunities--7.8%
Cash--7.7%
[FN]
*Net of liabilities in excess of other assets.
ITEM 2:
Growth Stock Characteristics
Bar graph depicting Growth Stock Characteristics as a % of
Equity Holdings:
Emerging Growth 5.8% 18.1%
Established Growth 21.4% 19.9%
Stable Growth 18.7% 16.1%
<PAGE>
TTEM 3:
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Class
A Shares compared to growth of an investment in the S&P 500 Index.
Beginning and ending values are:
10/26/88** 1/94
ML Fund For Tomorrow, Inc. ++--
Class A Shares* $ 9,350 $17,892
S&P 500 Index ++++ $10,000 $20,251
A line graph depicting the growth of an investment in the Fund's Class B
Shares compared to growth of an investment in the S&P 500 Index. Beginning
and ending values are:
3/05/84** 1/94
ML Fund for Tomorrow, Inc. ++--
Class B Shares* $10,000 $34,564
S&P 500 Index ++++ $10,000 $43,077
[FN]
*Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
**Commencement of Operations.
++ML Fund for Tomorrow, Inc. invests in a quality-oriented portfolio of
securities of companies whose products and services are believed by the
Fund's management to represent attractive investment opportunities. The
Fund invests primarily in common stocks but may invest in convertible
securities, preferred stocks and bonds.
++++This unmanaged broad-based Index is comprised of common stocks.
