MERRILL LYNCH
FUND FOR
TOMORROW, INC.
FUND LOGO
Quarterly Report
October 31, 1996
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. 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.
<PAGE>
Merrill Lynch
Fund For Tomorrow, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH FUND FOR TOMORROW, INC.
Concept Sectors
As a Percentage of Net Assets
As of October 31, 1996
Pie graph depicting Concept Sectors As a Percentage of Net Assets
As of October 31, 1996
Computer Technologies 6.6%
Demographic Trends 6.1%
Developing Foreign Economies 3.3%
Future Retailing 2.9%
Global Market Expansion 9.9%
Healthcare Cost Containment 17.8%
Industrial Outsourcing 2.7%
Industrial Renaissance 9.6%
Multimedia 4.6%
Next Generation Technology 6.4%
Strategic Growth Opportunities 5.6%
Telecommunications 12.0%
<PAGE>
Growth Stock Characteristics as of October 31, 1996
% of
Equity
Holdings
Bar graph depicting Growth Stock Characteristics as of October 31,
1996 as a % of Equity Holdings:
Emerging Growth 9.4% 8.3%
Established Growth 19.1% 17.8%
Stable Growth 25.5% 19.9%
DEAR SHAREHOLDER
Investor perceptions regarding the direction of the US economy
shifted over the course of the three-month period ended October 31,
1996. As the quarter began, concerns of an overheating economy and
spiraling inflation dominated the financial markets as investors
focused on the increasing possibility of monetary policy tightening
by the Federal Reserve Board. However, as it became apparent that
inflationary pressures were still under control--and when the
Federal Reserve Board did not tighten monetary policy at its
September 24 meeting--the investment outlook became more positive.
These developments, coupled with several economic data releases that
showed growth was at or below expectations, helped to assuage
investors' concerns about an overheating economy. Stock and bond
prices improved, with most broad-based stock market averages
reaching historic high levels. However, one factor potentially
overshadowing investor enthusiasm is the possibility that corporate
profits may have peaked for this economic cycle.
The US economy clearly has slowed from its strong growth rate during
the first half of 1996. Gross domestic product growth is slowing,
labor-cost pressures are subsiding, consumer confidence is easing,
and commodity prices are dropping. Investors are also anticipating
that President Clinton's re-election, combined with continued
Republican majorities in the House of Representatives and the
Senate, will prove positive for the nation's budget deficit. As 1996
draws to a close, investors are likely to continue to focus on the
economy. Evidence of continued growth at a non-inflationary pace
would be positive for the US capital markets.
<PAGE>
Portfolio Strategy
Generally favorable economic conditions throughout the quarter ended
October 31, 1996 enabled equity markets to stage a broad recovery
from the weakness experienced in the previous quarter. Economic
growth continued along a path of moderation, accompanied by well-
controlled inflation and stable interest rates. In addition, while
corporate earnings growth slowed and companies' results varied
widely, most companies continued to display positive trends. The
combination of these elements served to largely alleviate investor
concerns about a seemingly mature business cycle and the risks
associated with a lengthy period of rising stock prices.
The unmanaged Standard and Poor's 500 Composite Index achieved
record highs late in the quarter ended October 31, 1996, finishing
with a total return of +10.85% for the quarter. The smaller-
capitalization stocks of the unmanaged NASDAQ Industrials Index also
recovered most of their decline from the previous quarter, showing a
total return of +9.08%. Total returns for the Fund's Class A, Class
B, Class C and Class D Shares for the October quarter were +6.47%,
+6.19%, +6.22% and +6.44%, respectively. (Results shown do not
reflect sales charges and would be lower if charges were included.
For complete performance information, see pages 4--6 of this report
to shareholders.)
At the beginning of the October quarter, we became concerned about
the potential for higher volatility in aggressive growth stocks and
a scarcity of value opportunities among quality growth companies.
Therefore, we proceeded to adjust our investment activities toward a
slightly more defensive position by reducing some of the Fund's more
aggressive, higher-risk holdings that could be vulnerable in a
cautious stock market environment. In addition, we allowed cash
reserves to remain at an above-average level of approximately 12.5%
of total net assets throughout the quarter. While the near-term
effect of this strategy negatively impacted performance, we believed
that the reduction of risk within the portfolio was appropriate.
Investment activity during the quarter ended October 31, 1996
included the purchase of several new stocks that were based
primarily upon company-specific factors. For example, we added to
the Fund's computer technologies concept with investments in Sun
Microsystems, Inc. and Seagate Technology, Inc. These two companies
are leaders in work station computing and disk drive components,
respectively. In addition, Sun Microsystems, Inc. is rapidly
developing products that could be in the forefront of the internet
revolution. The share prices of both companies declined sharply
during the July quarter's weakness in technology issues, and
provided us with an attractive buying opportunity.
<PAGE>
Anticipating an upturn in department store sales and a potential
turnaround in profits for Nordstrom Inc., whose stock also had
declined to attractive levels, we added it to the Fund's portfolio.
However, our purchase of Abercrombie & Fitch Co. was primarily based
on the company's growth prospects within a market niche of casual
apparel. Other companies added to the Fund's portfolio included
Harman International Industries Inc., a producer of automobile audio
equipment, and Voice Control Systems Inc., a leader in speech
recognition technology.
Our review of investment performance during the October quarter
revealed several major contributing factors. On a broader basis,
most larger-capitalized stocks in the portfolio showed price
appreciation in line with or better than the stock market indexes.
Characteristic of the stock market as a whole, there seemed to be
little sector leadership with the possible exceptions of technology
and healthcare. With the help of recent additions to the Fund's
computer technologies concept, this group made a positive
contribution to the Fund's total return for the October quarter. In
particular, COMPAQ Computer Corp., Seagate Technology, Inc., and
International Business Machines Corp. appreciated well in excess of
the stock market as a whole. The Fund's holdings within the
healthcare concept continued their strong price performance of the
July quarter and, as a group, showed above-average appreciation. In
general, smaller-capitalized holdings tended to underperform during
the quarter ended October 31, 1996.
Thus far in fiscal year 1996, stock prices have reacted positively
to a favorable economic environment and generally positive earnings
reports. However, companies with high, longer-term growth
potentials, which experienced interim earnings disappointments,
often suffered because of their increased uncertainty and lower
degree of earnings visibility.
During the October quarter, the Fund was adversely impacted by
weakness in several of its more aggressive holdings, primarily
within its next generation technology concept, but also among other
emerging growth issues as well. The most notable casualty during the
October quarter was our holding of Molten Metal Technology, Inc.,
which declined sharply when the Department of Energy significantly
reduced its research and development funding for the company's
revolutionary hazardous waste technology. While we believe the
effectiveness and future commercialization of this company's
products have not diminished, near-term earnings will be reduced.
<PAGE>
Other short-term earnings disappointments involved our holdings of
Inter-Tel Inc. and Toolex-Alpha N.V. These companies, which are
involved in telecommunications and compact disc manufacturing,
respectively, have outstanding long-term growth prospects, but
reported near-term earnings disappointments. The Fund's holdings in
telecommunications companies were also negatively impacted by
uncertainty over the competitive aspects of various technologies. As
noted in previous shareholder letters, we emphasize investments
within a long-term thematic framework that possess high-growth
potentials that may not be recognized in the short term. While the
current environment of investor caution may not favor such
investments, we remain convinced that these stocks should provide
superior appreciation potential over the long term.
In Conclusion
Looking ahead, we are optimistic about continued moderate strength
in the economy in a low inflation, stable interest rate environment.
With this backdrop, we believe the equity markets will continue to
offer attractive investment opportunities. However, despite recently
favorable results, the outlook for corporate earnings is somewhat
less certain as competitive pressures and smaller productivity gains
could depress profit margins. Coupled with more intense investor
sensitivity to disappointing earnings reports, we would expect these
factors to cause considerable volatility in share prices, which
underscores the necessity of individual stock selectivity over the
upcoming months. Because more predictable earnings provide better
appreciation potential and greater interim stock price stability in
this environment, our investment activities will emphasize a
combination of visible earnings growth and reasonable share price
values.
We appreciate your ongoing interest in Merrill Lynch Fund For
Tomorrow, Inc., and we look forward to assisting you with your
financial needs in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent P. Dileo)
Vincent P. Dileo
Vice President and Portfolio Manager
<PAGE>
November 27, 1996
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years. (There is no initial
sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. 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.
Average Annual Total Return
<PAGE>
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/96 + 9.82% + 4.05%
Five Years Ended 9/30/96 +11.48 +10.29
Inception (10/26/88)
through 9/30/96 +11.95 +11.19
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/96 + 8.69% + 4.69%
Five Years Ended 9/30/96 +10.32 +10.32
Ten Years Ended 9/30/96 +10.61 +10.61
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 9/30/96 + 8.60% + 7.60%
Inception (10/21/94)
through 9/30/96 +16.99 +16.99
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
<PAGE>
Year Ended 9/30/96 + 9.60% + 3.85%
Inception (10/21/94)
through 9/30/96 +18.25 +15.01
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
PERFORMANCE DATA (continued)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<S> <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
1994 15.85 13.66 0.705 0.258 - 7.47
1995 13.66 15.84 1.354 0.195 +27.39
1/1/96--10/31/96 15.84 17.27 -- 0.109 + 9.71
------ ------
Total $9.734 Total $2.979
Cumulative total return as of 10/31/96: +139.32%**
<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>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<S> <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
1994 15.77 13.45 0.705 0.243 - 8.45
1995 13.45 15.40 1.354 0.195 +26.08
1/1/96--10/31/96 15.40 16.64 -- 0.109 + 8.75
------ ------
Total $11.589 Total $2.762
<PAGE>
Cumulative total return as of 10/31/96: +319.75%**
<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>
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $14.08 $13.39 $0.157 $0.059 - 3.32%
1995 13.39 15.33 1.354 0.195 +26.12
1/1/96--10/31/96 15.33 16.56 -- 0.109 + 8.73
------ ------
Total $1.511 Total $0.363
Cumulative total return as of 10/31/96: +32.58%**
<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>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $14.26 $13.65 $0.157 $0.059 - 2.71%
1995 13.65 15.79 1.354 0.195 +27.11
1/1/96--10/31/96 15.79 17.18 -- 0.109 + 9.49
------ ------
Total $1.511 Total $0.363
<PAGE>
Cumulative total return as of 10/31/96: +35.40%**
<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>
Recent Performance Results
<CAPTION>
12 Month 3 Month
10/31/96 7/31/96 10/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Fund For Tomorrow, Inc. Class A Shares* $17.27 $16.22 $16.65 + 8.80%(1) + 6.47%
ML Fund For Tomorrow, Inc. Class B Shares* 16.64 15.67 16.24 + 7.62(1) + 6.19
ML Fund For Tomorrow, Inc. Class C Shares* 16.56 15.59 16.17 + 7.59(1) + 6.22
ML Fund For Tomorrow, Inc. Class D Shares* 17.18 16.14 16.60 + 8.58(1) + 6.44
Standard & Poor's 500 Index** 705.27 639.95 581.50 +21.28 +10.21
NASDAQ Industrial Index** 1,076.64 987.06 940.80 +14.44 + 9.08
ML Fund For Tomorrow, Inc. Class A Shares--Total Return* +10.75(2) + 6.47
ML Fund For Tomorrow, Inc. Class B Shares--Total Return* + 9.60(2) + 6.19
ML Fund For Tomorrow, Inc. Class C Shares--Total Return* + 9.58(2) + 6.22
ML Fund For Tomorrow, Inc. Class D Shares--Total Return* +10.53(2) + 6.44
Standard & Poor's 500 Index--Total Return** +24.07 +10.85
<FN>
*Investment results do not reflect sales charges; results shown
would be lower if a sales charge was included.
**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 $0.788 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.304 per share ordinary
income dividends and $0.788 per share capital gains distributions.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Percent of
Concept Tomorrow Held Stocks Cost Value Net Assets
Computer Technologies
<S> <C> <S> <C> <C> <C>
Personal Computers 150,000 COMPAQ Computer Corp. $ 5,445,438 $ 10,443,750 2.7%
Components 50,000 Seagate Technology, Inc. 2,750,475 3,337,500 0.9
Systems 300,000 Silicon Graphics, Inc. 11,151,240 5,550,000 1.4
Systems 100,000 Sun Microsystems, Inc. 5,396,880 6,087,500 1.6
------------ ------------ ------
24,744,033 25,418,750 6.6
Demographic Trends
Medical Devices 100,000 Biomet, Inc. 1,534,375 1,600,000 0.4
Healthcare 100,000 HEALTHSOUTH Corp. 3,537,000 3,750,000 1.0
Leisure & Entertainment 50,000 Harrah's Entertainment,Inc. 1,235,976 837,500 0.2
Healthcare 100,000 Living Centers of America,
Inc. 3,353,090 2,337,500 0.6
Healthcare 110,000 Patterson Dental Co., Inc. 2,815,625 3,080,000 0.8
Pollution Technology 450,000 Philip Environmental Inc.
(ADR)* 3,514,252 4,668,750 1.2
Insurance 150,000 Torchmark Corp. 6,152,112 7,256,250 1.9
------------ ------------ ------
22,142,430 23,530,000 6.1
Developing Foreign Economies
Telecommunications 3,000,000 CPT Telefonica Del Peru
Pacifico S.A. 5,895,366 6,363,636 1.7
Telecommunications 900 Korea Mobile
Telecommunication Corp. 533,107 446,614 0.1
Specialty Services 1,000,000 National Mutual Asia Ltd. 940,132 840,717 0.2
Building Materials 200,000 Royal Plastic Group Ltd. 1,866,878 3,728,839 1.0
Electronics 25,384 Samsung Electronics Company
(GDR)** 2,600,629 1,167,664 0.3
Electronics 7,650 Samsung Electronics Company
(New Shares) (GDR)** 679,371 263,925 0.0
------------ ------------ ------
12,515,483 12,811,395 3.3
Future Retailing
<PAGE>
Specialty Retail 22,000 Abercrombie & Fitch Co. 352,000 484,000 0.1
Specialty Retail 23,000 Harvey Nichols PLC 93,771 125,330 0.0
Specialty Retail 100,000 Nordstrom Inc. 3,912,500 3,600,000 1.0
Specialty Retail 200,000 Oakley, Inc. 4,725,175 2,975,000 0.8
Specialty Retail 288,900 OfficeMax, Inc. 2,872,100 3,900,150 1.0
------------ ------------ ------
11,955,546 11,084,480 2.9
Global Market Expansion
Cosmetics 174,400 Avon Products, Inc. 6,259,222 9,461,200 2.5
Food & Beverage 100,000 ConAgra Inc. 3,826,115 4,987,500 1.3
Machinery 10,000 Kubota Corp. (ADR)* 1,285,600 1,130,000 0.3
Machinery 50,000 Makita Corp. (ADR)* 796,875 681,250 0.2
Food & Beverage 160,000 PepsiCo, Inc. 2,644,800 4,740,000 1.2
Electronics 200,000 Philips Electronics N.V.
(ADR)* 8,214,486 7,050,000 1.8
Household Products 50,000 The Procter & Gamble Company 4,593,926 4,950,000 1.3
Transportation 300,000 Tranz Rail Holdings, Ltd.
(ADR)* 4,071,663 4,837,500 1.3
------------ ------------ ------
31,692,687 37,837,450 9.9
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Concept Tomorrow Held Stocks Cost Value Net Assets
Healthcare Cost Containment
<S> <C> <S> <C> <C> <C>
Pharmaceuticals 50,000 Astra AB (ADR)* $ 1,781,250 $ 2,293,750 0.6%
Medical Devices 100,000 Boston Scientific Corp. 4,133,851 5,437,500 1.4
Pharmaceuticals 100,000 Bristol-Myers Squibb Co. 7,907,000 10,575,000 2.8
Pharmaceuticals 100,000 Lilly (Eli) and Company 4,572,100 7,050,000 1.8
Pharmaceuticals 100,900 Merck & Co., Inc. 4,001,062 7,479,213 1.9
Information Services 240,000 Phamis, Inc. 4,407,503 3,600,000 0.9
Information Services 300,000 Physician Computer Network,
Inc. 3,074,250 2,662,500 0.7
Pharmaceuticals 50,000 Sandoz AG (ADR)* 1,942,188 2,900,000 0.8
Pharmaceuticals 274,400 Schering-Plough Corp. 3,180,566 17,561,600 4.6
Pharmaceuticals 100,000 Sequus Pharmaceuticals, Inc. 1,734,998 1,387,500 0.4
Medical Devices 100,000 United States Surgical Corp. 6,799,013 4,187,500 1.1
Medical Services 100,000 Vencor, Inc. 3,194,630 2,962,500 0.8
------------ ------------ ------
46,728,411 68,097,063 17.8
Industrial Outsourcing
<PAGE>
Specialty Services 5,000 Adecco S.A. (b) 1,159,631 1,409,401 0.4
Specialty Services 100,000 Greenwich Air Services Inc.
(Class A) 1,113,428 2,175,000 0.6
Specialty Services 100,000 Greenwich Air Services Inc.
(Class B) 1,165,198 1,675,000 0.4
Specialty Services 47,028 National Data Corporation (a) 2,127,181 1,934,027 0.5
Specialty Services 150,000 Olsten Corp. 3,190,200 3,000,000 0.8
------------ ------------ ------
8,755,638 10,193,428 2.7
Industrial Renaissance
Automotive 129,580 Chrysler Corp. 2,560,540 4,357,127 1.1
Transportation 75,000 Delta Air Lines, Inc. 5,782,613 5,315,625 1.4
Automotive 100,000 Ford Motor Co. 2,295,190 3,125,000 0.8
Automotive 100,000 General Motors Corp. 4,190,900 5,387,500 1.4
Information Systems 100,000 International Business
Machines Corp. 5,658,500 12,900,000 3.4
Oil Refining 100,000 Tosco Corp. 5,003,903 5,612,500 1.5
------------ ------------ ------
25,491,646 36,697,752 9.6
Multi-Media
Broadcasting Services 150,000 Carlton Communications PLC
(ADR)* 5,123,125 6,112,500 1.6
Components 30,100 Harman International
Industries Inc. 1,510,869 1,546,387 0.4
Information Services 400,000 OzEmail, Ltd. (ADR)* 4,632,341 2,600,000 0.7
Components 50,000 Toolex-Alpha N.V. (NY
Registered Shares) 1,050,000 437,500 0.1
Publishing Services 300,000 World Color Press Inc. 5,906,000 6,712,500 1.8
------------ ------------ ------
18,222,335 17,408,887 4.6
Next Generation Technology
Electronics 146,500 Affinity Technology Group,
Inc. 1,391,750 1,062,125 0.3
Semiconductors 182,600 Gasonics International Corp. 2,303,368 1,278,200 0.3
Pollution Technology 300,000 Molten Metal Technology, Inc. 5,221,520 3,975,000 1.0
Medical Devices 70,000 Neuromedical Systems Inc. 1,050,000 1,181,250 0.3
Environmental Equipment 119,400 Thermo Ecotek Corp. 1,281,614 1,805,925 0.5
Multi-Industry 155,000 Thermo Electron Corp. 2,617,778 5,657,500 1.5
Medical Devices 48,000 ThermoLase Corp. 1,212,000 942,000 0.3
Medical Devices 100,000 ThermoSpectra Corp. 1,547,300 1,312,500 0.3
Medical Devices 100,000 Thermotrex Corp. 1,586,723 3,550,000 0.9
Components 250,000 Voice Control Systems Inc. 1,446,537 1,625,000 0.4
Electronics 150,000 Whittaker Corp. 2,966,998 2,118,750 0.6
------------ ------------ ------
22,625,588 24,508,250 6.4
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Shares Percent of
Concept Tomorrow Held Stocks Cost Value Net Assets
Strategic Growth Opportunities
<S> <C> <S> <C> <C> <C>
Pharmaceuticals 100,000 American Home Products
Corp. $ 3,875,049 $ 6,125,000 1.6%
Leisure & Entertainment 100,000 Galoob (Lewis) Toys, Inc. 1,385,890 2,687,500 0.7
Specialty Services 100,000 Household International,
Inc. 6,712,565 8,850,000 2.3
Leisure & Entertainment 125,000 Mattel, Inc. 2,232,740 3,609,375 1.0
------------ ------------ ------
14,206,244 21,271,875 5.6
Telecommunications
Components 100,000 Andrew Corp. 2,973,417 4,862,500 1.3
Wireless Cable Television 150,000 CellularVision USA, Inc. 2,270,000 1,012,500 0.3
Telecommunications 250,000 Inter-Tel Inc. 3,075,112 3,781,250 1.0
Wireless Communication 210,000 InterCel, Inc. 3,540,000 3,412,500 0.9
Telecommunications 150,000 MCI Communications Corp. 3,895,310 3,750,000 1.0
Paging Services 305,000 Metrocall, Inc. 4,988,845 1,601,250 0.4
Components 349,400 Nokia Corp. AB (ADR)* 12,108,398 16,203,425 4.2
Wireless Communication 200,000 Palmer Wireless, Inc. 2,984,487 2,850,000 0.7
Telecommunications 150,000 Portugal Telecom S.A. (ADR)* 3,514,576 3,881,250 1.0
Telecommunications 100,000 Vodafone Group PLC (ADR)* 3,643,500 3,862,500 1.0
Wireless Communication 45,000 Western Wireless Corp.
(Class A) 1,057,500 742,500 0.2
------------ ------------ ------
44,051,145 45,959,675 12.0
Total Stocks 283,131,186 334,819,005 87.5
Face
Amount Short-Term Securities
Commercial $11,930,000 General Electric Capital
Paper*** Corp., 5.56% due 11/01/1996 11,930,000 11,930,000 3.1
6,000,000 IBM Credit Corp., 5.24%
due 12/19/1996 5,958,080 5,958,080 1.6
10,000,000 Lucent Technologies, Inc.,
5.24% due 12/16/1996 9,934,500 9,934,500 2.6
10,000,000 Morgan (J.P.) & Company,
Inc., 5.39% due 11/08/1996 9,989,519 9,989,519 2.6
5,000,000 Preferred Receivables
Funding Corp., 5.26% due
12/02/1996 4,977,353 4,977,353 1.3
------------ ------------ ------
42,789,452 42,789,452 11.2
<PAGE>
US Government & 5,000,000 Federal National Mortgage
Agency Obligations*** Association, 5.17% due
12/06/1996 4,974,868 4,974,868 1.3
Total Short-Term Securities 47,764,320 47,764,320 12.5
Total Investments $330,895,506 382,583,325 100.0
============
Liabilities in Excess of Other Assets (1,911) 0.0
------------ ------
Net Assets $382,581,414 100.0%
============ ======
Net Asset Class A--Based on net assets of $43,270,762 and
Value: 2,505,316 shares outstanding $ 17.27
============
Class B--Based on net assets of $107,065,528 and
6,433,054 shares outstanding $ 16.64
============
Class C--Based on net assets of $8,986,538 and
542,739 shares outstanding $ 16.56
============
Class D--Based on net assets of $223,258,586 and
12,997,358 shares outstanding $ 17.18
============
<FN>
*American Depositary Receipts (ADR).
**Global Depositary Receipts (GDR).
***Commercial Paper and certain US Government & Agency Obligations
are traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Fund.
(a)Formerly CIS Technologies, Inc.
(b)Formerly ADIA S.A.
</TABLE>
PORTFOLIO INFORMATION
For the Quarter Ended October 31, 1996
Percent of
Ten Largest Equity Holdings Net Assets
<PAGE>
Schering-Plough Corp. 4.6%
Nokia Corp. AB (ADR) 4.2
International Business Machines Corp. 3.4
Bristol-Myers Squibb Co. 2.8
COMPAQ Computer Corp. 2.7
Avon Products, Inc. 2.5
Household International, Inc. 2.3
Merck & Co., Inc. 1.9
Torchmark Corp. 1.9
Philips Electronics N.V. (ADR) 1.8
Additions
Abercrombie & Fitch Co.
Harman International
Industries Inc.
Nordstrom Inc.
*SRS Labs, Inc.
*Sabre Group Ltd.
Seagate Technology, Inc.
Sun Microsystems, Inc.
*United Auto Group, Inc.
Voice Control Systems Inc.
Deletions
Boston Technology, Inc.
CAI Wireless Systems, Inc.
CUC International, Inc.
Cementos Norte Pacasmayo S.A.
Champion Technology
Holdings Ltd.
Consorcio Alimentos Fabril
Pacifico S.A.
Geotek Communications, Inc.
Indigo N.V. (ADR)
MFS Communications Co., Inc.
Party City Corporation
*SRS Labs, Inc.
*Sabre Group Ltd.
*United Auto Group, Inc.
Viacom, Inc. (Class B)
[FN]
*Added and deleted in the same quarter.
OFFICERS AND DIRECTORS
<PAGE>
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A.Montgomery, 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
90 Washington Street, 12th Floor
New York, New York 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
