MERRILL LYNCH
FUND FOR
TOMORROW, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
July 31, 1998
<PAGE>
MERRILL LYNCH FUND FOR TOMORROW, INC.
CONCEPT SECTORS
Pie graph depicting Concept Sectors As a Percentage of Net Assets As of July 31,
1998
Computer Technologies 11.9%
Demographic Trends 7.5%
Developing Foreign Economies 1.6%
Future Retailing 0.8%
Global Market Expansion 11.8%
Healthcare Cost Containment 13.3%
Industrial Outsourcing 4.1%
Industrial Renaissance 2.6%
Multimedia 9.3%
Next Generation Technology 2.1%
Strategic Growth Opportunities 8.1%
Telecommunications 7.1%
Cash* 19.8%
*Net of liabilities in excess of other assets.
PORTFOLIO INFORMATION
For the Quarter Ended July 31, 1998
Percent of
Ten Largest Equity Holdings Net Assets
COMPAQ Computer Corp. ........................4.3%
Bristol-Myers Squibb Co. .....................3.7
Avon Products, Inc. ..........................3.5
American Home Products Corp. .................3.4
Household International, Inc. ................3.2
Schering-Plough Corp. ........................3.2
Sun Microsystems, Inc. .......................3.1
Torchmark Corp. ..............................2.9
OzEmail, Ltd. (ADR) ..........................2.8
Carlton Communications PLC (ADR) .............2.7
Additions
Mellon Bank Corporation
*Petco Animal Supplies, Inc.
*Ventas, Inc.
Deletions
American Woodmark Corporation
Andrew Corp.
Avipal S.A.--Avicultura e Agropecuaria
Compania Anonima Nacional Telefonos de Venezuela (ADR)
Delta Air Lines, Inc.
General Motors Corp.
Gucci Group N.V. (NY Registered Shares)
Molten Metal Technologies, Inc.
*Petco Animal Supplies, Inc.
Philip Services Corp.
Thermotrex Corp.
United States Surgical Corp.
Vencor, Inc.
*Ventas, Inc.
*Added and deleted in the same quarter.
1
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
TO OUR SHAREHOLDERS
Mounting evidence of a slowing economy and the prospect of lower corporate
earnings growth led to greater volatility in the US financial markets during the
quarter ended July 31, 1998. At the same time, greater economic and political
uncertainties in Asia and Russia led investors to become concerned about the
outlook for economic activity worldwide. Although these developments were
negative for stock markets, they generally were beneficial to bond prices,
especially as inflationary trends remained subdued. As was widely anticipated,
the Federal Reserve Board did not move to tighten monetary policy.
In the United States, gross domestic product rose at a rate of 1.4% for the
second calendar quarter, down from the 5.5% rate for the first three months of
the year. The economic slowdown in Asia negatively impacted US exports, and the
protracted strike at General Motors Corporation also was a negative factor for
economic activity. However, the US dollar remained strong, especially relative
to the Japanese yen. The weakness of the Japanese economy continues to be a
source of concern not only for Asia, but also for the rest of the world as well.
In the months ahead, investors will continue to focus on the economic outlook in
Asia and its impact on worldwide economic activity and corporate earnings
results. If there were evidence of more buoyant yet moderate US economic growth
and a pick-up in corporate profits growth, we would expect stability to return
to the financial markets on a global basis. Absent these developments, market
volatility is likely to continue.
Portfolio Matters
For the quarter ended July 31, 1998, total returns for Merrill Lynch Fund for
Tomorrow, Inc.'s Class A, Class B, Class C and Class D Shares were -0.48%,
- -0.73%, -0.74% and -0.54%, respectively. The year- to-date ended July 31, 1998
total returns for the Fund's Class A, Class B, Class C and Class D Shares were
+12.56%, +11.77%, +11.76% and +12.29%, respectively. (Fund performance does not
reflect sales charges, and would be lower if sales charges were included.
Complete performance information can be found on pages 4 and 5 of this report to
shareholders.) The total returns for the unmanaged Standard & Poor's 500 Index
for the three months and seven months ended July 31, 1998 were +1.18% and
+16.46%, respectively.
In June and July we started to restructure the portfolio. We eliminated holdings
in companies where we believed stock prices could decline in response to a
significant slowdown in the real rate of growth of the US economy as well as
increased competition from companies in Asia that had a price advantage as a
result of the recent Asian currency devaluations. We sold our investment in
General Motors Corp. because of our concerns regarding the ability of the
organization to change its operational structure and improve productivity
rapidly enough to offset its competitive cost disadvantage relative to the major
Japanese auto companies, which have been taking market share from the US
companies at a fairly rapid pace since the fourth quarter of 1997. We eliminated
our position in Delta Air Lines, Inc. because of our concerns about the
company's relatively high valuation and the possibility of a slowdown in traffic
during the second half of 1998. In addition, we eliminated Gucci Group N.V. on
concerns about the potential negative effects of the continued declines in
overall retail sales in the major Asian markets, including Hong Kong and Japan.
We also sold a number of companies where our fundamental analysis of the
business prospects relative to the valuations led us to believe that the
potential investment returns were outweighed by possible business and industry
problems. Finally, during the July quarter we also eliminated our positions in
Molten Metal Technologies, Inc., Philip Services Corp., Avipal S.A.--Avicultura
e Agropecuaria, Compania Anonima Nacional Telefonos de Venezuela, United States
Surgical
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
Corp., Vencor, Inc., Andrew Corp., American Woodmark Corporation and Thermotrex
Corp.
In June and July, we added Mellon Bank Corporation to the portfolio. The
company's management has been rapidly building the company's asset management
and services businesses and improving returns on assets and equity. We believed
that the stock valuation was attractive relative to our expectations for future
above-average growth of earnings and improving operational returns on equity.
In Conclusion
During the October quarter, we expect to continue to restructure the portfolio
by focusing on relatively large and high-quality growth companies where we
anticipate above-average returns on equity and growth in earnings. During the
July quarter, we focused on reducing the portfolio's exposure to companies which
we believed had limited future prospects for improving rates of return on
equity.
We appreciate your interest in Merrill Lynch Fund For Tomorrow, Inc.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Lawrence R. Fuller
Lawrence R. Fuller
Portfolio Manager
September 4, 1998
- --------------------------------------------------------------------------------
Effective June 5, 1998, Lawrence R. Fuller became portfolio manager of Merrill
Lynch Fund For Tomorrow, Inc. Mr. Fuller has been First Vice President of
Merrill Lynch Asset Management, L.P. (MLAM) since 1997. Prior thereto, he was
Vice President of MLAM from 1992 to 1997.
- --------------------------------------------------------------------------------
3
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 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.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 6/30/98 +15.61% + 9.54%
- --------------------------------------------------------------------------------
Five Years Ended 6/30/98 +15.43 +14.19
- --------------------------------------------------------------------------------
Inception (10/26/88)
through 6/30/98 +13.53 +12.90
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 6/30/98 +14.44% +10.62%
- --------------------------------------------------------------------------------
Five Years Ended 6/30/98 +14.24 +14.24
Ten Years Ended 6/30/98 +12.72 +12.72
- --------------------------------------------------------------------------------
* 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 6/30/98 +14.37% +13.41%
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 6/30/98 +18.27 +18.27
- --------------------------------------------------------------------------------
* 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*
================================================================================
Year Ended 6/30/98 +15.32% + 9.27%
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 6/30/98 +19.40 +17.67
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
4
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
PERFORMANCE DATA (concluded)
Recent Performance Results
<TABLE>
<CAPTION>
=====================================================================================================
Ten Years/
12 Month 3 Month Since Inception
Total Return Total Return Total Return
=====================================================================================================
<S> <C> <C> <C>
ML Fund For Tomorrow, Inc. Class A Shares* + 7.57% -0.48% +240.88%
- -----------------------------------------------------------------------------------------------------
ML Fund For Tomorrow, Inc. Class B Shares* + 6.45 -0.73 +230.23
- -----------------------------------------------------------------------------------------------------
ML Fund For Tomorrow, Inc. Class C Shares* + 6.45 -0.74 + 85.27
- -----------------------------------------------------------------------------------------------------
ML Fund For Tomorrow, Inc. Class D Shares* + 7.28 -0.54 + 91.91
- -----------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index** +19.28 +1.18 +422.19/+445.10/+161.20
- -----------------------------------------------------------------------------------------------------
NASDAQ Industrial Index** - 0.13 -9.38 +233.71/+216.45/+ 59.81
=====================================================================================================
</TABLE>
* Investment results shown do not reflect sales charges; results 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 ten-year/inception dates are:
Class A Shares, 10/26/88; Class B Shares, ten years ended 7/31/98; and
Class C and Class D Shares, 10/21/94.
** An unmanaged broad-based Index comprised of common stocks. Standard &
Poor's 500 Index ten years/since inception total returns are: from
10/26/88 to 7/31/98; for the ten years ended 7/31/98; and from 10/21/94 to
7/31/98, respectively. NASDAQ Industrial Index numbers are price
performance only. NASDAQ Industrial Index ten years/since inception total
returns are: from 10/31/88 to 7/31/98; for the ten years ended 7/31/98;
and from 10/31/94 to 7/31/98, respectively.
5
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value Percent of
Concept Tomorrow Held Stocks Cost (Note 1a) Net Assets
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
Computer Technologies
===================================================================================================================================
Personal Computers 400,000 COMPAQ Computer Corp. $ 3,045,990 $ 13,150,000 4.3%
Personal Computers 100,000 + Gateway 2000, Inc. 3,347,740 5,400,000 1.7
Systems 100,000 + GenRad, Inc. 2,891,093 1,500,000 0.5
Systems 75,000 + Networks Associates, Inc. 2,524,250 3,571,875 1.2
Systems 300,000 + Silicon Graphics, Inc. 11,151,240 3,337,500 1.1
Systems 200,000 + Sun Microsystems, Inc. 5,396,880 9,437,500 3.1
------------ ------------ -----
28,357,193 36,396,875 11.9
===================================================================================================================================
Demographic Trends
===================================================================================================================================
Insurance 50,000 Chubb Corporation (The) 4,123,238 3,668,750 1.2
Healthcare 200,000 + HEALTHSOUTH Corp. 3,537,000 5,025,000 1.6
Banking & Financial 70,000 Mellon Bank Corporation 4,781,839 4,716,250 1.5
Leisure & Entertainment 100,000 + Royal Olympic Cruise Lines Inc. 1,500,000 787,500 0.3
Insurance 200,000 Torchmark Corp. 4,206,236 8,762,500 2.9
------------ ------------ -----
18,148,313 22,960,000 7.5
===================================================================================================================================
Developing Foreign Economies
===================================================================================================================================
Specialty Services 1,000,000 National Mutual Asia Ltd. 940,132 561,493 0.2
Conglomerate 200,000 Quinenco S.A. (ADR)* 3,755,087 1,925,000 0.6
Building Materials 100,000 + Royal Group Technologies Ltd. 1,047,206 2,382,533 0.8
------------ ------------ -----
5,742,425 4,869,026 1.6
===================================================================================================================================
Future Retailing
===================================================================================================================================
Retail Apparel 40,000 + Children's Place Retail Stores, Inc. (The) 560,000 400,000 0.1
Specialty Retail 138,900 + OfficeMax, Inc. 1,605,433 2,022,731 0.7
------------ ------------ -----
2,165,433 2,422,731 0.8
===================================================================================================================================
Global Market Expansion
===================================================================================================================================
Cosmetics 124,400 Avon Products, Inc. 4,441,715 10,760,600 3.5
Electrical Equipment 74,760 General Electric Company 2,278,626 6,677,003 2.2
Food & Beverage 160,000 PepsiCo, Inc. 2,438,212 6,210,000 2.0
Electronics 100,000 Philips Electronics N.V. (NY Registered Shares) 4,983,486 8,168,750 2.7
Electronics 50,000 Sony Corp. (ADR)* 4,327,630 4,250,000 1.4
------------ ------------ -----
18,469,669 36,066,353 11.8
===================================================================================================================================
Healthcare Cost Containment
===================================================================================================================================
Pharmaceuticals 133,333 Astra AB (ADR)* 1,781,250 2,549,994 0.8
Pharmaceuticals 100,000 Bristol-Myers Squibb Co. 3,953,500 11,393,750 3.7
Miscellaneous 7,888 Coram Healthcare Corporation (Warrants) (a) 0 0 0.0
Pharmaceuticals 100,000 Lilly (Eli) and Company 2,286,050 6,725,000 2.2
Pharmaceuticals 50,900 Merck & Co., Inc. 2,535,791 6,276,606 2.0
Pharmaceuticals 50,000 Novartis AG (ADR)* 1,942,188 4,175,000 1.4
Pharmaceuticals 100,800 Schering-Plough Corp. 580,167 9,752,400 3.2
------------ ------------ -----
13,078,946 40,872,750 13.3
===================================================================================================================================
</TABLE>
6
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
SCHEDULE OF INVESTMENTS (continued)
<TABLE>
<CAPTION>
Shares Value Percent of
Concept Tomorrow Held Stocks Cost (Note 1a) Net Assets
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
Industrial Outsourcing
===================================================================================================================================
Information Services 50,000 + Ceridian Corp. $ 1,959,250 $ 2,859,375 0.9%
Systems 100,000 + Computer Sciences Corporation 3,878,500 6,400,000 2.1
Specialty Services 250,000 + Sitel Corporation 3,939,288 1,203,125 0.4
Computer Software 50,000 + Sterling Commerce, Inc. 1,838,339 1,978,125 0.7
------------ ------------ -----
11,615,377 12,440,625 4.1
===================================================================================================================================
Industrial Renaissance
===================================================================================================================================
Information Systems 60,000 International Business Machines Corp. 1,700,550 7,950,000 2.6
===================================================================================================================================
Multimedia
===================================================================================================================================
Broadcasting Services 200,000 Carlton Communications PLC (ADR)* 7,266,875 8,200,000 2.7
Components 150,000 Harman International Industries Inc. 6,836,788 5,915,625 1.9
Information Services 400,000 OzEmail, Ltd. (ADR)* 4,632,341 8,625,000 2.8
Cable Television 150,000 + Tele-Communications Liberty Media Group
(Series A) 1,786,112 5,915,625 1.9
------------ ------------ -----
20,522,116 28,656,250 9.3
===================================================================================================================================
Next Generation Technology
===================================================================================================================================
Environmental Equipment 118,900 + Thermo Ecotek Corp. 1,276,302 1,976,712 0.6
Multi-Industry 180,000 + Thermo Electron Corp. 4,093,294 4,140,000 1.4
Components 150,000 + Voice Control Systems Inc. 834,037 309,375 0.1
------------ ------------ -----
6,203,633 6,426,087 2.1
===================================================================================================================================
Strategic Growth Opportunities
===================================================================================================================================
Pharmaceuticals 200,000 American Home Products Corp. 3,875,049 10,300,000 3.4
Leisure & Entertainment 300,000 + Galoob (Lewis) Toys, Inc. 4,238,645 2,850,000 0.9
Specialty Services 200,000 Household International, Inc. 4,517,232 9,950,000 3.2
Home Furnishings 100,000 Shaw Industries, Inc. 1,512,010 1,850,000 0.6
------------ ------------ -----
14,142,936 24,950,000 8.1
===================================================================================================================================
Telecommunications
===================================================================================================================================
Telecommunications 100,000 + ADC Telecommunications, Inc. 2,867,500 3,343,750 1.1
Telecommunications 200,000 Alcatel Alsthom Cie Generale d'Electricite
S.A. (ADR)* 5,087,260 7,837,500 2.5
Telecommunications 300,000 Inter-Tel Inc. 2,153,750 4,800,000 1.6
Components 20,000 Nokia Corp. AB (ADR)* 377,850 1,742,500 0.6
Telecommunications 100,000 + RSL Communications, Ltd. (Class A) 2,200,000 3,962,500 1.3
------------ ------------ -----
12,686,360 21,686,250 7.1
------------ ------------ -----
===================================================================================================================================
Total Stocks 152,832,951 245,696,947 80.2
===================================================================================================================================
</TABLE>
7
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
SCHEDULE OF INVESTMENTS (concluded)
<TABLE>
<CAPTION>
Face Value Percent of
Amount Short-Term Securities Cost (Note 1a) Net Assets
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial $13,500,000 Allied Signal Inc., 5.52% due 8/12/1998 $ 13,477,230 $ 13,477,230 4.4%
Paper** 3,036,000 Associates Corp. of North America, 5.65%
due 8/03/1998 3,035,047 3,035,047 1.0
7,000,000 Corporate Asset Funding Co. Inc., 5.55%
due 8/06/1998 6,994,604 6,994,604 2.3
14,000,000 Delaware Funding Corp., 5.53%
due 8/21/1998 13,956,989 13,956,989 4.5
10,000,000 Park Avenue Receivables Corp., 5.54%
due 8/06/1998 9,992,305 9,992,305 3.3
14,000,000 Republic Industries, Inc., 5.54% due 9/02/1998 13,931,058 13,931,058 4.5
===================================================================================================================================
Total Short-Term Securities 61,387,233 61,387,233 20.0
===================================================================================================================================
Total Investments $214,220,184 307,084,180 100.2
============
Liabilities in Excess of Other Assets (765,225) (0.2)
------------ -----
Net Assets $306,318,955 100.0%
============ =====
===================================================================================================================================
</TABLE>
* American Depositary Receipts (ADR).
** Commercial Paper is traded on a discount basis; the interest rates
shown reflect the discount rates paid at the time of purchase by the
Fund.
+ Non-income producing security.
(a) Warrants entitle the Fund to purchase a predetermined number of
shares of common stock and are non-income producing. The purchase
price and number of shares are subject to adjustment under certain
conditions until the expiration date.
See Notes to Financial Statements.
8
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of July 31, 1998
<TABLE>
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$214,220,184) (Note 1a) ........ $ 307,084,180
Cash ................................................................... 30,250
Receivables:
Capital shares sold .................................................. $ 1,889,494
Dividends ............................................................ 175,726 2,065,220
-------------
Prepaid registration fees and other assets (Note 1f) ................... 29,506
-------------
Total assets ........................................................... 309,209,156
=============
===============================================================================================================================
Liabilities: Payables:
Capital shares redeemed .............................................. $ 2,407,639
Investment adviser (Note 2) .......................................... 174,879
Distributor (Note 2) ................................................. 98,402 2,680,920
-------------
Accrued expenses and other liabilities ................................. 209,281
-------------
Total liabilities ...................................................... 2,890,201
-------------
===============================================================================================================================
Net Assets: Net assets ............................................................. $ 306,318,955
=============
===============================================================================================================================
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000 shares
Consist of: authorized ............................................................. $ 60,040
Class B Shares of Common Stock, $0.10 par value, 100,000,000 shares
authorized ............................................................. 282,281
Class C Shares of Common Stock, $0.10 par value, 100,000,000 shares
authorized ............................................................. 10,889
Class D Shares of Common Stock, $0.10 par value, 100,000,000 shares
authorized ............................................................. 1,424,458
Paid-in capital in excess of par ....................................... 193,457,732
Undistributed investment income--net ................................... 1,652,596
Undistributed realized capital gains on investments and foreign
currency transactions--net ............................................. 16,566,966
Unrealized appreciation on investments and foreign currency
transactions--net ...................................................... 92,863,993
-------------
Net assets ............................................................. $ 306,318,955
=============
===============================================================================================================================
Net Asset Value: Class A--Based on net assets of $10,476,540 and 600,403 shares
outstanding ............................................................ $ 17.45
=============
Class B--Based on net assets of $47,113,361 and 2,822,815 shares
outstanding ............................................................ $ 16.69
=============
Class C--Based on net assets of $1,808,601 and 108,892 shares
outstanding ............................................................ $ 16.61
=============
Class D--Based on net assets of $246,920,453 and 14,244,580 shares
outstanding ............................................................ $ 17.33
=============
===============================================================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
FINANCIAL INFORMATION (continued)
Statement of Operations for the Six Months Ended July 31, 1998
<TABLE>
<S> <C> <C> <C>
Investment Dividends (net of $160,526 foreign withholding tax) .................... $ 2,963,146
Income Interest and discount earned ........................................... 786,543
(Notes 1d & 1e): -------------
Total income ........................................................... 3,749,689
-------------
============================================================================================================================
Expenses: Investment advisory fees (Note 2) ...................................... $ 1,028,111
Account maintenance fees--Class D (Note 2) ............................. 309,463
Account maintenance and distribution fees--Class B (Note 2) ............ 272,663
Transfer agent fees--Class D (Note 2) .................................. 194,870
Transfer agent fees--Class B (Note 2) .................................. 54,243
Printing and shareholder reports ....................................... 51,677
Accounting services (Note 2) ........................................... 39,175
Registration fees (Note 1f) ............................................ 38,487
Professional fees ...................................................... 36,750
Custodian fees ......................................................... 24,837
Directors' fees and expenses ........................................... 13,355
Account maintenance and distribution fees--Class C (Note 2) ............ 11,429
Transfer agent fees--Class A (Note 2) .................................. 9,603
Transfer agent fees--Class C (Note 2) .................................. 2,415
Pricing fees ........................................................... 758
Other .................................................................. 9,257
-------------
Total expenses ......................................................... 2,097,093
-------------
Investment income--net ................................................. 1,652,596
-------------
============================================================================================================================
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net ..................................................... 16,655,040
(Loss) on Foreign currency transactions--net ................................... (9,806) 16,645,234
Investments & -------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net ..................................................... 20,283,292
(Notes 1b, 1c, Foreign currency transactions--net ................................... 6 20,283,298
1e & 3): ------------- -------------
Net realized and unrealized gain on investments and foreign
currency transactions .................................................. 36,928,532
-------------
Net Increase in Net Assets Resulting from Operations ................... $ 38,581,128
=============
============================================================================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: July 31, 1998 Jan. 31, 1998
=================================================================================================================================
<S> <C> <C> <C>
Operations: Investment income(loss)--net ............................................. $ 1,652,596 $ (546,845)
Realized gain on investments and foreign currency transactions--net ...... 16,645,234 57,675,676
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net ....................................... 20,283,298 (15,555,095)
------------- -------------
Net increase in net assets resulting from operations ..................... 38,581,128 41,573,736
------------- -------------
=================================================================================================================================
Distributions to Realized gain on investments--net:
Shareholders Class A ................................................................ (103,113) (3,096,223)
(Note 1g): Class B ................................................................ (498,222) (12,917,948)
Class C ................................................................ (17,750) (663,684)
Class D ................................................................ (2,393,172) (45,397,650)
------------- -------------
Net decrease in net assets resulting from distributions to shareholders .. (3,012,257) (62,075,505)
------------- -------------
=================================================================================================================================
Capital Share Net decrease in net assets derived from capital
Transactions share transactions ....................................................... (38,068,515) (61,802,479)
(Note 4): ------------- -------------
=================================================================================================================================
Net Assets: Total decrease in net assets ............................................. (2,499,644) (82,304,248)
Beginning of period ...................................................... 308,818,599 391,122,847
------------- -------------
End of period* ........................................................... $ 306,318,955 $ 308,818,599
============= =============
=================================================================================================================================
*Undistributed investment income--net ..................................... $ 1,652,596 --
============= =============
=================================================================================================================================
</TABLE>
See Notes to Financial Statements
11
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
FINANCIAL INFORMATION (continued)
Financial Highlights
<TABLE>
<CAPTION>
Class A+
------------------------------------------------------------
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended For the Year Ended January 31,
July 31, ----------------------------------------------
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ............. $ 15.61 $ 17.16 $ 16.26 $ 13.55 $ 16.39
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net ........................... .12 .07 .08 .07 .09
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net ........... 1.89 1.99 3.04 4.19 (1.97)
---------- ---------- ---------- ---------- ----------
Total from investment operations ................. 2.01 2.06 3.12 4.26 (1.88)
---------- ---------- ---------- ---------- ----------
Less distributions from realized gain on
investments--net ................................. (.17) (3.61) (2.22) (1.55) (.96)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ................... $ 17.45 $ 15.61 $ 17.16 $ 16.26 $ 13.55
========== ========== ========== ========== ==========
==================================================================================================================================
Total Investment Based on net asset value per share ............... 12.85%++ 12.43% 19.99% 31.82% (11.23%)
Return:** ========== ========== ========== ========== ==========
==================================================================================================================================
Ratios to Average Expenses ......................................... .95%* .99% 1.00% 1.07% .98%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net ........................... 1.40%* .40% .46% .44% .59%
========== ========== ========== ========== ==========
==================================================================================================================================
Supplemental Net assets, end of period (in thousands) ......... $ 10,477 $ 13,552 $ 39,605 $ 34,231 $ 8,665
Data: ========== ========== ========== ========== ==========
Portfolio turnover ............................... 7.69% 17.63% 39.96% 67.38% 45.86%
========== ========== ========== ========== ==========
==================================================================================================================================
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Based on average shares outstanding.
++ Aggregate total investment return.
See Notes to Financial Statements.
12
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class B+
------------------------------------------------------------
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended For the Year Ended January 31,
July 31, -----------------------------------------------
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ............. $ 15.01 $ 16.59 $ 15.79 $ 13.33 $ 16.30
Operating --------- --------- --------- ---------- ----------
Performance: Investment income (loss)--net .................... .03 (.13) (.10) (.08) (.06)
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net ........... 1.82 1.92 2.95 4.09 (1.96)
--------- --------- --------- ---------- ----------
Total from investment operations ................. 1.85 1.79 2.85 4.01 (2.02)
--------- --------- --------- ---------- ----------
Less distributions from realized gain
on investments--net .............................. (.17) (3.37) (2.05) (1.55) (.95)
--------- --------- --------- ---------- ----------
Net asset value, end of period ................... $ 16.69 $ 15.01 $ 16.59 $ 15.79 $ 13.33
========= ========= ========= ========== ==========
==================================================================================================================================
Total Investment Based on net asset value per share ............... 12.29%++ 11.20% 18.80% 30.43% (12.22%)
Return:** ========= ========= ========= ========== ==========
==================================================================================================================================
Ratios to Average Expenses ......................................... 1.99%* 2.03% 2.06% 2.13% 1.99%
Net Assets: ========= ========= ========= ========== ==========
Investment income (loss)--net .................... .37%* (.74%) (.58%) (.55%) (.38%)
========= ========= ========= ========== ==========
==================================================================================================================================
Supplemental Net assets, end of period (in thousands) ......... $ 47,113 $ 60,646 $ 104,828 $ 112,239 $ 119,186
Data: ========= ========= ========= ========== ==========
Portfolio turnover ............................... 7.69% 17.63% 39.96% 67.38% 45.86%
========= ========= ========= ========== ==========
==================================================================================================================================
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Based on average shares outstanding.
++ Aggregate total investment return.
See Notes to Financial Statements.
13
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class C++
---------------------------------------------------------------
For the For the
Six For the Period
The following per share data and ratios have been derived Months Year Ended Oct. 21,
from information provided in the financial statements. Ended January 31, 1994+ to
July 31, ----------------------------------- Jan. 31,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ...... $ 14.94 $ 16.47 $ 15.71 $ 13.28 $ 14.08
Operating --------- --------- --------- --------- ---------
Performance: Investment income (loss)--net ............. .03 (.11) (.10) (.10) (.04)
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net ......................... 1.81 1.88 2.94 4.08 (.54)
--------- --------- --------- --------- ---------
Total from investment operations .......... 1.84 1.77 2.84 3.98 (.58)
--------- --------- --------- --------- ---------
Less distributions from realized gain
on investments--net ....................... (.17) (3.30) (2.08) (1.55) (.22)
========= ========= ========= ========= =========
Net asset value, end of period ............ $ 16.61 $ 14.94 $ 16.47 $ 15.71 $ 13.28
========= ========= ========= ========= =========
===============================================================================================================================
Total Investment Based on net asset value per share ........ 12.28%+++ 11.15% 18.80% 30.32% (4.12%)+++
Return:** ========= ========= ========= ========= =========
===============================================================================================================================
Ratios to Average Expenses .................................. 2.00%* 2.06% 2.07% 2.14% 2.26%*
Net Assets: ========= ========= ========= ========= =========
Investment income (loss)--net ............. .34%* (.68%) (.61%) (.67%) (.87%)*
========= ========= ========= ========= =========
===============================================================================================================================
Supplemental Net assets, end of period (in thousands) .. $ 1,809 $ 2,926 $ 8,430 $ 6,385 $ 80
Data: ========= ========= ========= ========= =========
Portfolio turnover ........................ 7.69% 17.63% 39.96% 67.38% 45.86%
========= ========= ========= ========= =========
===============================================================================================================================
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
14
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
<TABLE>
<CAPTION>
Class D++
---------------------------------------------------------------
For the For the
Six For the Period
The following per share data and ratios have been derived Months Year Ended Oct. 21,
from information provided in the financial statements. Ended January 31, 1994+ to
July 31, ----------------------------------- Jan. 31,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ...... $ 15.52 $ 17.09 $ 16.20 $ 13.54 $ 14.26
Operating --------- --------- --------- --------- ---------
Performance: Investment income (loss)--net ............. .10 --## .04 .03 (.01)
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net ......................... 1.88 1.99 3.03 4.18 (.49)
--------- --------- --------- --------- ---------
Total from investment operations .......... 1.98 1.99 3.07 4.21 (.50)
--------- --------- --------- --------- ---------
Less distributions from realized gain
on investments--net ....................... (.17) (3.56) (2.18) (1.55) (.22)
--------- --------- --------- --------- ---------
Net asset value, end of period ............ $ 17.33 $ 15.52 $ 17.09 $ 16.20 $ 13.54
========= ========= ========= ========= =========
===============================================================================================================================
Total Investment Based on net asset value per share ........ 12.73%+++ 12.07% 19.73% 31.47% (3.50%)+++
Return:** ========= ========= ========= ========= =========
===============================================================================================================================
Ratios to Average Expenses .................................. 1.19%* 1.23% 1.25% 1.33% 1.43%*
Net Assets: ========= ========= ========= ========= =========
Investment income (loss)--net ............. 1.18%* (.01%) .22% .22% (.23%)*
========= ========= ========= ========= =========
===============================================================================================================================
Supplemental Net assets, end of period (in thousands) .. $ 246,920 $ 231,695 $ 238,260 $ 227,908 $ 156,947
Data: ========= ========= ========= ========= =========
Portfolio turnover ........................ 7.69% 17.63% 39.96% 67.38% 45.86%
========= ========= ========= ========= =========
===============================================================================================================================
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++ Based on average shares outstanding.
+++ Aggregate total investment return.
## Amount is less than $.01 per share.
See Notes to Financial Statements.
15
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
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 management investment
company. These unaudited financial statements reflect all adjustments which are,
in the opinion of management, necessary to a fair statement of the results for
the interim period presented. All such adjustments are of a normal recurring
nature. The Fund offers four classes of shares under the Merrill Lynch Select
PricingSM System. Shares of Class A and Class D are sold with a front-end sales
charge. Shares of Class B and Class C may be subject to a contingent deferred
sales charge. All classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that Class B, Class C
and Class D Shares bear certain expenses related to the account maintenance of
such shares, and Class B and Class C Shares also bear certain expenses related
to the distribution of such shares. Each class has exclusive voting rights with
respect to matters relating to its account maintenance and distribution
expenditures. The following is a summary of significant accounting policies
followed by the Fund.
(a) Valuation of investments--Portfolio securities which are traded on stock
exchanges are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. Securities
traded in the over-the-counter market are valued at the last available bid price
prior to the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange designated by or
under the authority of the Board of Directors as the primary market. Securities
which are traded both in the over-the-counter market and on a stock exchange are
valued according to the broadest and most representative market. Options written
are valued at the last sale price in the case of exchange-traded options or, in
the case of options traded in the over-the-counter market, the last asked price.
Short-term securities are valued at amortized cost, which approximates market
value. Other investments are stated at market value. Securities and assets for
which market value quotations are not available are valued at their fair value
as determined in good faith by or under the direction of the Fund's Board of
Directors.
(b) Derivative financial instruments--The Fund may engage in various portfolio
strategies to seek to increase its return by hedging its portfolio against
adverse movements in the equity, debt and currency markets. Losses may arise due
to changes in the value of the contract or if the counterparty does not perform
under the contract.
o Options--The Fund is authorized to write covered call options. When the Fund
writes an option, an amount equal to the premium received by the Fund is
reflected as an asset and an equivalent liability. The amount of the liability
is subsequently marked to market to reflect the current market value of the
option written. When a security is sold through an exercise of an option, the
related premium received is deducted from the basis of the security sold. When
an option expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premium received (or
gain or loss to the extent of the cost of the closing transaction exceeds the
premium received).
Written options are non-income producing investments.
(c) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are valued at the exchange
rate at the end of the period. Foreign currency transactions are the result of
settling (realized) or valuing (unrealized) assets or liabilities expressed in
foreign currencies into US dollars. Realized and unrealized gains or losses from
investments include the effects of foreign exchange rates on investments.
(d) Income taxes--It is the 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.
(e) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Dividend income is recorded on ex-dividend dates. Dividends from foreign
securities where the ex-dividend date may have passed are subsequently recorded
when the Fund has determined the ex-dividend date. Interest income (including
amortization of discount) is recognized on the accrual basis. Realized gains and
16
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
losses on security transactions are determined on the identified cost basis.
(f) Prepaid registration fees--Prepaid registration fees are charged to expense
as the related shares are issued.
(g) Dividends and distributions to shareholders--Dividends and distributions
paid by the Fund are recorded on the ex-dividend dates.
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"). The general partner of MLAM is Princeton
Services, Inc. ("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch &
Co., Inc. ("ML & Co."), which is the general partner. The Fund has also entered
into a Distribution Agreement and Distribution Plans with Merrill Lynch Funds
Distributor ("MLFD" or "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary of Merrill Lynch
Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and provides 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.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are accrued daily
and paid monthly at annual rates based upon the average daily net assets of the
shares as follows:
- --------------------------------------------------------------------------------
Account
Maintenance Distribution
Fee Fee
- --------------------------------------------------------------------------------
Class B .................................. 0.25% 0.75%
Class C .................................. 0.25% 0.75%
Class D .................................. 0.25% --
- --------------------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner
& Smith Inc. ("MLPF&S"), a subsidiary of ML & Co., also provides account
maintenance and distribution services to the Fund.
The ongoing account maintenance fee compensates the Distributor and MLPF&S for
providing account maintenance services to Class B, Class C and Class D
shareholders. The ongoing distribution fee compensates the Distributor and
MLPF&S for providing shareholder and distribution-related services to Class B
and Class C shareholders.
For the six months ended July 31, 1998, MLFD earned underwriting discounts and
direct commissions and MLPF&S earned dealer concessions on sales of the Fund's
Class A and Class D Shares as follows:
- --------------------------------------------------------------------------------
MLFD MLPF&S
- --------------------------------------------------------------------------------
Class A .................................. $119 $ 681
Class D .................................. $566 $9,416
- --------------------------------------------------------------------------------
For the six months ended July 31, 1998, MLPF&S also received contingent deferred
sales charges of $34,855 and $43 relating to transactions in Class B and Class C
Shares, respectively.
In addition, MLPF&S received $9,000 in commissions on the execution of portfolio
security transactions for the Fund for the six months ended July 31, 1998.
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
MLAM, PSI, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended July 31, 1998 were $21,845,184 and $91,664,475, respectively.
Net realized gains (losses) for the six months ended July 31, 1998 and net
unrealized gains (losses) as of July 31, 1998 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Gains (Losses)
- --------------------------------------------------------------------------------
Long-term investments .................... $ 16,655,208 $ 92,863,996
Short-term investments ................... (168) --
Foreign currency transactions ............ (9,806) (3)
------------ ------------
Total .................................... $16,645,234 $92,863,993
============ ============
- --------------------------------------------------------------------------------
17
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
As of July 31, 1998, net unrealized appreciation for Federal income tax purposes
aggregated $92,863,996, of which $111,318,394 related to appreciated securities
and $18,454,398 related to depreciated securities. The aggregate cost of
investments at July 31, 1998 for Federal income tax purposes was $214,220,184.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions was
$38,068,515 and $61,802,479 for the six months ended July 31, 1998 and for the
year ended January 31, 1998, respectively.
Transactions in capital shares for each class were as follows:
- --------------------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................... 115,855 $ 1,935,290
Shares issued to shareholders
in reinvestment of
distributions .................... 5,429 96,693
----------- -------------
Total issued ..................... 121,284 2,031,983
Shares redeemed .................. (389,276) (6,759,782)
----------- -------------
Net decrease ..................... (267,992) $ (4,727,799)
=========== =============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................... 1,197,905 $ 20,864,302
Shares issued to shareholders
in reinvestment of
distributions .................... 180,489 2,873,039
----------- -------------
Total issued ..................... 1,378,394 23,737,341
Shares redeemed .................. (2,817,447) (50,445,255)
----------- -------------
Net decrease ..................... (1,439,053) $ (26,707,914)
=========== =============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the
Six Months Ended Dollar
July 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................... 254,913 $ 4,193,205
Shares issued to shareholders
in reinvestment of
distributions .................... 25,325 431,529
----------- -------------
Total issued ..................... 280,238 4,624,734
Automatic conversion of
shares ........................... (342,494) (5,553,817)
Shares redeemed .................. (1,155,220) (19,221,124)
----------- -------------
Net decrease ..................... (1,217,476) $ (20,150,207)
=========== =============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the
Year Ended Dollar
January 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................... 852,979 $ 14,843,653
Shares issued to shareholders
in reinvestment of
distributions .................... 734,764 11,120,083
----------- -------------
Total issued ..................... 1,587,743 25,963,736
Automatic conversion of
shares ........................... (542,990) (9,274,818)
Shares redeemed .................. (3,322,941) (57,782,855)
----------- -------------
Net decrease ..................... (2,278,188) $ (41,093,937)
=========== =============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the
Six Months Ended Dollar
July 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................... 56,141 $ 889,067
Shares issued to shareholders
in reinvestment of
distributions .................... 944 16,004
----------- -------------
Total issued ..................... 57,085 905,071
Shares redeemed .................. (144,051) (2,368,601)
----------- -------------
Net decrease ..................... (86,966) $ (1,463,530)
=========== =============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the
Year Ended Dollar
January 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................... 203,919 $ 3,547,005
Shares issued to shareholders
in reinvestment of
distributions .................... 39,199 597,135
----------- -------------
Total issued ..................... 243,118 4,144,140
Shares redeemed .................. (559,154) (9,692,133)
----------- -------------
Net decrease ..................... (316,036) $ (5,547,993)
=========== =============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................... 187,922 $ 3,259,266
Automatic conversion
of shares ........................ 330,739 5,553,817
Shares issued to shareholders
in reinvestment of
distributions .................... 120,386 2,129,637
----------- -------------
Total issued ..................... 639,047 10,942,720
Shares redeemed .................. (1,321,034) (22,669,699)
----------- -------------
Net decrease ..................... (681,987) $ (11,726,979)
=========== =============
- --------------------------------------------------------------------------------
18
<PAGE>
Merrill Lynch Fund For Tomorrow, Inc. July 31, 1998
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................... 265,722 $ 4,736,667
Automatic conversion
of shares ........................ 525,220 9,274,818
Shares issued to shareholders
in reinvestment of
distributions .................... 2,574,802 39,929,189
----------- -------------
Total issued ..................... 3,365,744 53,940,674
Shares redeemed .................. (2,380,236) (42,393,309)
----------- -------------
Net increase ..................... 985,508 $ 11,547,365
=========== =============
- --------------------------------------------------------------------------------
5. Reorganization Plan:
On July 28, 1998, the Fund's Board of Directors approved a plan of
reorganization whereby Merrill Lynch Fundamental Growth Fund, Inc. would acquire
substantially all of the assets and liabilities of the Fund in exchange for
newly issued shares of Merrill Lynch Fundamental Growth Fund, Inc. Merrill Lynch
Fundamental Growth Fund, Inc. is a registered, diversified, open-end management
investment company. Both entities have a similar investment objective and are
managed by MLAM.
OFFICERS AND DIRECTORS
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
Gerald M. Richard, Treasurer
Susan B. Baker, Secretary
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
19
<PAGE>
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospec-tus. 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
Fund For Tomorrow, Inc.
Box 9011
Princeton, NJ
08543-9011 #10261--7/98
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